Item — HN Reader

  I can do all these things already.

You're absolutely right, but just like you can send a letter in the mail, email does the same thing but is digitally native to the internet.

Up until the invention of Bitcoin, there was ZERO scalable way for me @joeblau to send you @louwrentius money the way I send an email. By that, I mean the only thing I need to rely on is a protocol (like SMTP) and you'll receive it.

  What problem / which problems are being solved here?

The problem is that money (paper money/currency) is not the only thing that has value which human beings transfer among each other. We share music, art, poetry, equity in companies, ideas, code, etc. What Ethereum does is take the idea of "Digital trustless money transfer" and expands it to "Digital trustless value transfer"

  I don't understand what this means. What does this do for real-life applications?

Let's say I own TSLA stock and I want to sell it to you. I can't, without going through a middle-person. I need to send my shares to a brokerage (they take cuts and fees and do insider trading crap that they disguise as legal) then you buy the shares from then.

If it's mine, why can't I just transfer the shares straight to you for the listed price (Currently $567.60)? Because there is no platform digital trustless value transfer that will ensure that we both get what we want: Me getting the money, and you getting the shares.

4 comments

In your example, that middle-person verifies that what you are purporting to sell, TSLA stock, is in fact TSLA stock. They provide value by way of quality assurance and recourse if fraud is involved.

How can I be sure what you're selling me is in fact what you say it is? And if it's not, what recourse do I have?

If I buy something directly from another person on Facebook Marketplace or Craigslist, I'm not going to pay full retail price, even if the item is unused, because I'm giving up any form of recourse if the item is defective that I would have received had I purchased directly from the manufacturer.

  How can I be sure what you're selling me is in fact what you say it is? And if it's not, what recourse do I have?

A fundamental design in cryptocurrencies is that it's mathematically impossible to create "fake" tokens without some sort of quantum computer. What this means is that the DEcentralized Exchange (DEX) that you're performing the trade on will have liquidity for the pair of assets and as you click the right button to select TSLA for USD, you're getting TSLA. There is no mathematical way to get scammed.

For your example of FB marketplace/Craigslist, you want an Escrow service with a way to have you or a 3rd party validate you're not getting ripped off. That type of service exists via cryptographic primitives in both Bitcoin and Ethereum allowing a transaction to be blocked if there is something fraudulent.

Bitcoin wastes an obscene amount of energy for a theoretical maximum of seven transactions per second globally. How is that even remotely scalable?

Today's big Ethereum news is the launch of new tech that eliminates that energy wastage, without sacrificing security or decentralization.

It also lays the groundwork for scaling tech that will vastly increase the transactions per second.

I'm not a Bitcoin advocate, I just recognize the value the invention provided and I recognize that this whole cryptocurrency space relies on it being successful for long enough for anything else usurp it. If Bitcoin got hacked right now, everything crashes with it.

Compared to Bitcoin, there are consensus mechanisms that are a lot faster (3 orders of magnitude), cheaper (almost free transaction cost), near instant finality (seconds, not 1 hour) and leave almost zero carbon footprint. They just haven't been proven out at scale yet.

> there are consensus mechanisms that are a lot faster (3 orders of magnitude)

Correct me if I'm wrong, but this still falls far short of like, VISA.

PoS and Sharding on ETH (part of ETH2) should theoretically allow it to surpass VISA's transaction bandwidth. (Visa Currently reported to be around 65k Tx/s, though average volume is somewhere in the 1-5k Tx/s)

You're not wrong :-D

Yes, and the production launch of that new consensus mechanism is what happened today on Ethereum. It runs on a minimum of 16K nodes, and last I checked had about 60% more than that.

> Up until the invention of Bitcoin, there was ZERO scalable way for me @joeblau to send you @louwrentius money the way I send an email. By that, I mean the only thing I need to rely on is a protocol (like SMTP) and you'll receive it.

Maybe because it's not a need most people have?

> The problem is that money (paper money/currency) is not the only thing that has value which human beings transfer among each other. We share music, art, poetry, equity in companies, ideas, code, etc. What Ethereum does is take the idea of "Digital trustless money transfer" and expands it to "Digital trustless value transfer"

This still means nothing to me. I can't relate to this.

> Let's say I own TSLA stock and I want to sell it to you. I can't, without going through a middle-person. (they take cuts and fees..)

So it's about not wanting to pay transaction fees for buying stock. Hmm, doesn't really sell it to me, quite frankly.

It's fine to criticize a technology and saying that you don't understand what problem it solves, but responding to every comment, even those that make clearly valid points, with "means nothing to me" and "not a problem for me" without any counterarguments is quite rude. These people are taking the time to answer your questions.

For example, intermediaries such as brokerages and banks taking money from your investments and selling your data (and order flow in the case of trading) is clearly inefficient and unnecessary, even if you don't care about it personally.

They make a pretty common point. Nobody around e.g. me has an ability to have even a glimpse of understanding what eth/crypto is except for speculation and low-tech fraud, and then for me "sharing value like art and album via crypto as a futuristic mean to share digital values" is bird-gibberish nonsense. General population will never be too smart on average to benefit from this "whatever".

The same is true about the majority of the workings of the internet, or the electrical engineering that built their phones or dozens of other things people use everyday without understanding. How is that relevant in this case?

Because laypeople know what benefit the internet or their phones provide. No layperson knows what the benefit of cryptocurrency is.

> laypeople know what benefit the internet

Yes that's true now, but what about in 1997? That's what year it is in Ethereum now.

Well to be fair, transferring information instantly was pretty great even in 1997.

Hell laypeople until the mid 2000s still didn't grasp what the Internet could be other than it was a stock market bonanza. Sounds familiar...

But crypto proponents describe use cases, not inner workings. Use cases for telecom were obvious much earlier that the internet itself, thousands of years of lost messages and messengers.

So uh, this remote sound transmitter seems like it might find niche use in the classical music orchestra space, but we don't see the talk-to-friends use case working out. Who would want to talk to their friends that often?

  Maybe because it's not a need most people have?

Most may the the right word. This is really about a lot of small wins over the current system, not really one right answer that solves everything.

  This still means nothing to me. I can't relate to this.

This is fair, I don't know you personally so I don't know what lifestyle you're living.

  So it's about not wanting to pay transaction fees for buying stock. Hmm, doesn't really sell it to me, quite frankly

It's not really about that, it's more about zero counter party risk. This exists in lots of areas, but without knowing you, it's hard for me to come up with a concrete example of why this matters to you.

>Maybe because it's not a need most people have?

There was no internet before 1969, clearly that's because no one needed it.

>This still means nothing to me. I can't relate to this.

This is clearly a difficult subject but its ok, not everyone is smart enough to understand

>So it's about not wanting to pay transaction fees for buying stock. Hmm, doesn't really sell it to me, quite frankly.

Now you're just trolling.

Why am I paying fees if there's no middle-person?

Assuming you mean transaction fees on the Bitcoin and Ethereum (or similar) networks:

Transaction fees are an important economic inventive for persons or organizations who run the “nodes” that make up the network. The hardware, electricity, and maintenance by humans needed to run those nodes cost money, and running them is not an altruistic endeavor. One of the goals is to make a profit; staking/mining rewards and transaction fees make that possible.

Aren't transaction fees economic incentives for persons or organizations who run banks that make up the "nodes" of our current network? So everyone is now a bank? Or rather, anyone can choose to run a bank? But then as time passes some banks will get big, and it becomes impractical for anyone else to choose to run a bank, but now the New Big Banks are not accountable to any government as they (technically) are today...

I'm skeptical because I read this and it sounds like using technology to create a system with even less accountability and whose outcomes, however horrific, will be justified by "That's just how the system works; I don't know what to tell you."

Yes, it allows anyone in the world with the means and know-how to become part of the “banking infrastructure”, i.e. to run one/more nodes that make up the network. This is the most fundamental and important aspect of the technology.

Wait, but then we went full-circle again.

What problem is cryptocurrency solving then?

Ethereum (or Bitcoin) is not controlled or regulated by a single entity or group of entities with exclusive membership.

The software behind it is open source and anyone with the know-how can contribute to its improvement.

Anyone with the means and know-how can be part of the network, i.e. operate one/more nodes on the network. With e.g. Ethereum 2.0 (ETH2) the bar is much lower in terms of hardware and electricity costs. For example, I’m running an ETH2 node at home on an Intel NUC (Core i3) with the BIOS set to “low power mode”; its power draw is hovering around 10 Watts, and it would be around 4 Watts if I wasn’t also running a non-mining ETH1 node on the same box (presently necessary as the ETH2 network transitions away from being an ETH1+ETH2 hybrid).

Pretty much anyone with a computer can setup a wallet and near instantly send/receive funds to anyone else in the world who also has a wallet. There is no red tape and no regulation/interference (in the tech itself, that is; your local government may have some laws).

There is the difficulty of acquiring cryptocurrency with USD, CNY, etc. But in most places it’s not that difficult to setup an account with an exchange; or you can arrange for a direct transfer if you know someone who is willing to swap crypto for cash (just be aware of local laws).

The fees are a business decision, not a technical requirement.

1. Middle-people are a technical requirement. That's the point.

2. What happens if I send BTC without paying the middle-people a fee?

If the recipient doesn't typically receive it in seconds (and there's a public log of every sent and received 'message') let's stop making stuff up like bitcoin makes sending money like sending an email.

It depends.

* you can mine your own transaction if you have the ability

* you can use a layer 2 state channel network like lightening (bitcoin/litecoin) or raiden (ethereum) to exchange value without a miner.

* if you are worried about fees, there are networks like EOS which don't have have them.

* there is at least 1 ethereum wallet that will pay your fees for you.

* if you use monero, the miner can't distinguish your transaction from anyone else's, so there's little to worry about with regard to selective censorship.

* if a bitcoin/ethereum miner does censor you, it doesn't mean your transaction doesn't get processed because there are other miners.

Hope this info is helpful.