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thoughts on cryptocurrency


Whenever someone mentions cryptocurrency, for most people it brings up strong negative associations. And I think that's a very good starting point, because the overall space encourages behavior that – yes, it makes someone money – but overall is a net negative to humanity.

In my opinion that has little to do with money laundering and centralization of wealth, as both of those concepts are commonly executed with utilization of conventional cash. As long as economic inequality exists in its current magnitude, I doubt cryptocurrencies could significantly affect it in either direction. Not being affected by inflation wouldn't solve the distribution of wealth, much like competing over network rewards wouldn't significantly skew it much further.

Just the vast prevalence of grift in the cryptosphere (yes, "Web3" is going great) is a solid reason for people to distance themselves from the whole space. For a quick moment I'd like to divert attention to an inherently harmless concept that's bringing in an excess amount of scams - NFT's.

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On a conceptual level, NFT's or non-fungible tokens exist to store a tiny amount of information. That information remains distributed across multiple servers.

So.. NFT's don't exactly have to reference external media, but so it happened that it was considered the easiest way to convince people they are worth something, and it was also the type that spread the most.

issues with nft's referencing external media

a) NFT's referencing external media may end up pointing at something that is no longer hosted, or something completely different

b) NFT's referencing external media cannot prove ownership over that media as anyone can create NFT's referencing other people's media. And don't even get me started how it's artist's fault for not being a part of your scheme

Now, even among crypto communities it's often said that those so-called art NFT's are pointless and give a bad image to the tech of NFT's which allows to do much more.

Examples of better application of NFT's range from decentralized domains (which can act as an alias when sending money to someone, or point to a website on IPFS if your browser supports those domains), to virtual in-game items that are tradable on marketplaces outside the game itself.

While we're getting closer to something useful, unfortunately these still suffer from some issues which I'll detail below.

issues with nft's in general

a) They are advertised as a way to take away control from centralized companies, but to get NFT's that provide some utility in a decentralized way you usually need approval from centralized companies (and you need to pay them)

b) If you're lucky and find NFT's that are issued in a fair and decentralized way, the utility is likely provided by a centralized entity at which point why need the NFT at all?

c) If you forget your wallet's recovery key or have it stolen, the NFT's are gone forever and nobody can return them to you. Money can be replaced but a super rare collectible card or a house deed? Gone

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I have not forgotten about energy waste! Ultimately, it varies from network to network, and trust me I'm not downplaying the energy usage of networks that don't require mining, the difference is something like 99.95% less used energy than networks with mining.

Personally, I just don't think those medium-country-sized amounts of energy spent on mining are warranted? You'll see some coins migrate away from it, but some are very reluctant to change.

And if you were to shout "just burn crypto altogether" I'd stare blankly and say "yeahh". The problem though, we still live in a world where sourcing money even on basic necessities or things needed to help us develop as people and creators is entirely up to ourselves. And, depending on location or occupation, traditional banks can be much worse, if they're even willing to service you to begin with.

It's still upsetting to me how much we're willingly losing to fees. Last week a person has donated to an Ukrainian charity on my behalf, 10 percent of what they paid has been lost to void. If cryptocurrency was actually trying to improve our financial system at least a little bit, surely it would make it possible to transfer 100% of the value to recipient without rentseekers taking a slice?

In search of a cryptocurrency that could actually come close to being a positive for the world, I've explored quite a few. I considered purposely avoiding any mentions of their names, but if you filter out the ones that charge a fee, you're left with just about two. One of them relied on a central server to approve transactions, with a long-term plan to get rid of it at some point. The other, nano, was missing measures against flood attacks and lacked mandatory privacy, but otherwise worked very close to what you'd expect from a currency. You'd send 1.00 and the recipient would get 1.00. Simple concept but not really something you'd see in cryptosphere.

It might deviate from these values, or end up being replaced by something else, but for now it's a rare case of something I'd like to support.