TLDR: meme coin rug pulls, among other issues around centralization
Crypto-believers often blame greedy financiers as the cause of the Great Recession in 2008. But we argue that crypto is not immune to these same risks.
Public blockchains operate on a distributed peer-to-peer network. This network provides each user a complete record of transactions that is updated in real time. Users can send digital cash between themselves without relying on a centralized authority.
Since each user has a full record of transactions, the system promises full transparency. But our research demonstrates that public blockchains, and the cryptocurrencies that run on them, do not actually replace trust with transparency.
Speculation, manipulation and market crashes remain very real dangers, regardless of whether the financial system is centralized or decentralized.
Centralization of power in the hands of insiders is still a major issue in the cryptocurrency space. This is particularly an issue for emerging cryptocurrencies like memecoins. Memecoins are a type of cryptocurrency named after internet memes or similar jokes. They draw their value entirely from speculation.
The same could be said for the stock market.
By replacing trust with transparency, cryptocurrency promises to put individuals in charge of their monetary transactions.
Our research demonstrates that this is only a partial view. In reality, crypto is dependent on social practices behind the technology.
This article seems to be substituting the fact that crypto is extremely risky as an investment, for an argument that it doesn’t provide users with financial autonomy. That’s just incoherent, and the research they cite directly contradicts it. The article complains that social factors and devs have influence over the direction of a cryptocurrency, and cite a paper that says, in reference to people involved in Monero development:
The first is that none of the social worlds express a desire to monitor routine transactions, despite the obvious business and tax-collection value of such data.
That is exactly what “putting individuals in charge of their monetary transactions” requires and entails. The values behind the protocol are out in the open, the code is public, the consensus mechanism is public and (sometimes, for the good ones at least) successfully enforces what the particular cryptocurrency is meant to be. It is successful in being beyond various forms of outside control. But I guess the authors think that is a bad thing? That it might somehow be a better investment if it didn’t grant people autonomy instead? There’s no real organized point here beyond “crypto bad”.
I think it is more that the transparency that crypto promises doesn’t actually address market manipulation problems.
I don’t know how that argument doesn’t track for you. Crypto fundamentally can’t give you financial autonomy because it’s a very risky investment. You’d have to be one of the lucky few for that plan to work out.
“Will make you rich” is not what I mean by financial autonomy, and it isn’t what the article seems to be referencing. What I mean is the ability to use and have money without getting permission or needing to trust your bank or government or credit card oligopoly. It does that. That might not yet be a pressing need for most people in well off countries, but places where those things are corrupt or unusable have seen a big growth in real world use (admittedly mostly with USD stablecoins, rather than cryptocurrencies directly). I don’t think there’s much guarantee these things will remain relatively neutral and trustworthy here either, the way things have been going.
Wait so are these things a currency or an investment? I wouldn’t use an investment as my spending money.
Also, the people building and governing crypto coins are not trustworthy given the massive amounts of corruption we’ve already seen from them
The one the linked study references, Monero, is generally regarded by its community as a currency more than an investment. This is reflected in design choices that prioritize user privacy, at the expense of being delisted from most major exchanges, banned from many countries, and the resulting lack of investment and price growth. Obviously whether you want to use something as an investment or for practical reasons is up to you, but to be clear I wouldn’t recommend speculative investing in cryptocurrency. Not being a solid investment doesn’t mean cryptocurrencies never live up to what they are trying to be and accomplish.
Also, the people building and governing crypto coins are not trustworthy given the massive amounts of corruption we’ve already seen from them
Like what? When it comes down to it, these are open source software projects, with a higher than normal level of oversight and often many safeguards and redundancies in place to prevent abuse by devs. For example Ethereum intentionally has multiple separate client implementations made by separate people that implement the same protocol, as a safeguard against bugs or attacks affecting the whole network at once. Devs do not have the final say either, because what ultimately determines what code is running on the network is the consensus mechanism, dictated by which software miners or stakers choose to use.
Transparency and decentralization means that even when there arguably is corruption, it’s limited. A decade ago there was a schism in Bitcoin; much of the community believed that for it to function as digital cash, low fees were needed, but the core developers took the stance that making the changes required for this would otherwise weaken the network, a position many saw as disingenuous and driven by hidden motives. A community hard fork and much censorship on r/Bitcoin later, the market decided, core devs emerged as the winners, and Bitcoin shifted its values to serving as ‘digital gold’ rather than usable digital cash. But to put it in perspective, I would say this was at worst a minor amount of corruption, it isn’t like these actions are the same sort of thing as having control over a large collection of user funds and running off with it, because they basically couldn’t be; the code is open source, there is a genuine degree of decentralization here, no one is the CEO of Bitcoin.
“Massive” corruption happens in cases where transparency and decentralization have been intentionally removed, such as the various manipulations and outright thefts perpetrated by centralized crypto exchanges, or the thousands of memecoins that never published their code or cryptographically verified that it was the same as the code actually deployed and turned out to be outright scams/malware that let you put money in but never take it out, or concealed the large share of tokens the devs hold in reserve to dump on you. But the technology offers solutions; you can refuse to engage with things that are centralized or opaque, you can tell who is trustworthy by who provides you the means to not need to trust them to begin with.
Your last paragraph really proves what I’m saying. Nothing in these systems prevents the real world types of fraud that everyday people are susceptible to because those are social problems. The technical safe guards that you describe require a user to be knowledgeable in order to audit and prove that they’re being used effectively.
Monero might be a good project making good decisions now, but what’s is stopping it from taking a course similar to the one you described bitcoin taking? It sounds like the only thing in the way is the current community.
Just remember that Satoshi’s wallet has almost a million bitcoin in it. Which is worth somewhere around 80 billion USD at the moment.
Well … DUH. It is a nonexistent “currency” that only has value because people can be tricked into thinking it has value.
Even bitcoin, there are a select few who hold most of the coins. You want a coin like Digibyte. Community owned. Finite amount. Fast speeds.
In crypto, there aren’t too many real options. Do your research.
Do your research.
https://www.coinlore.com/coin/digibyte/richlist
1000 people hold 66% of all digibyte in existence lol
Are we sure that’s not just the size of the community? I’ve never heard of digibyte
It’s been around for a long time. It was very popular back in like 2017, but fell off because it’s value proposition was “we are a shitty fork of the Litecoin codebase with a few constants changed (which was in itself a shitty fork of the Bitcoin codebase with a few constants changed) and no other meaningful changes”
In crypto there are no real options. Please stop with this rhetoric.
Agreed. Crypto is a waste of time and energy.
Fuck every crypto.
We will switch to back rubs as a system of currency.
that sounds fucking awesome…
I used to think it had some potential use case many years ago. But now I totally agree with your statement.
Its just a big scam and a waste of time and energy.
