It's still early days for cryptocurrency. As I was explaining to a friend today, traditional finance hates crypto because they make their living applying financial dogma while crypto takes, as its fundamental assumption, "money doesn't work like that." The problem is people involved in crypto tend to be either (A) computer science dudes who live a life of abstraction or (B) libertarian buttheads who say "fiat" like it was a four letter word. There aren't a lot of big picture people and those who are talking about it find no audience. I think the US government is big picture. Fundamentally? cryptocurrency permits a trustless exchange of value without any threat of violence to back it up. That' something entirely new under the sun, something the human race has never encountered before. It also, obviously, permits an nth-decimal-place level of accounting across all digital frontiers. It's an accountant's wet dream - most of the fantasies of the early cypherpunks took the form of "we will beat the government... at computing!" which can be true for six to eight months under the best possible conditions. Ultimately? Crypto can eliminate the middle man in transactions. It can automate all the stuff we currently need banks for. I think that's a big deal, and I think it's going to be revolutionary. But I also think it'll make it a whole lot harder to avoid taxation and tariffs, and i gotta ask what kind of fucking moron thinks your average government wouldn't jump on that shit. I suspect Bitcoin would have evolved to something else if Paul Calder LeRoux weren't in jail. An Ethereum proof of stake node can run on a raspberry pi. Technically it can run on your phone but that's the low-power version - everything Uniswap or any of the other Web3 services is running on the beacon chain. There are currently 292,000 validators running on the beacon chain. Most of them are virtualized, with many running on DigitalOcean or AWS. Unlike proof of work chains, there is no advantage to bringing more firepower to the table - a lightweight instance does the same job as a heavyweight. Presume Raspberry Pis. Presume 12.5W ea. Presume ten million validators, a fully built-out chain. That's 125MW. By way of comparison, Bitcoin most likely topped out at 132TW last summer - we're at six orders of magnitude less. Compare and contrast: there are three million small businesses in the United States. Presume each one of them has a credit card reader. We've got a Square - it sucks down 20W. The existing credit card infrastructure in the United States consumes on the order of half the power of a fully-formed proof of stake network under the most egregious estimate.Until we have widespread quantum computing, it's all a major energy problem, and that's at least two or three decades away.
That's if we let it, right? What incentive would banks have to get behind something that would fundamentally, I hate this word, disrupt their business unless they see long-term financial gains from it? Or are forced to through regulation, which I don't think we are anywhere near. Also agreeing with am_Unition on trying to grasp the concept of "trustless".It can automate all the stuff we currently need banks for. I think that's a big deal, and I think it's going to be revolutionary.
I mean if you look at any historical example you care to name, "revolution in banking" generally doesn't come from the smallfolk. If anything, you can't have a middle class without merchant-brokers and crypto makes merchant-brokerism open to pretty much anybody. They make a percentage, same as they ever did. You put your money in the bank because they pay you a percentage to loan it out. Currently? They get to charge a tiny bit more than the government lets them charge, which again, got fucking crazy in October 2019 and we don't talk about it anymore but holy shit y'all. Here's the thing tho - if I can pay you 0.08% with a passbook savings account, but I can make 5% with staked ether, why don't I offer you 4%? Why doesn't the guy down the street offer you 4.1%? Why doesn't Paypal offer you 4.2% to keep you in the ecosystem? Why doesn't a custodial staking service offer you 4.9% because really all you need is a server? Right now if I write you a check, it's good because there's a bank behind it. The bank is good for it because there's a government behind it. The government is good for it because if the bank don't pay, people go to jail. Graeber pointed out that "government" is a state monopoly on violence, that's it, full stop. We say "the government is allowed to hurt people who break the rules so that the rules don't get broken." If I send you crypto, it's good because the entire rest of the crypto ecosystem agrees it's good. This happens automagically without any human intervention. The entire exchange is recorded forever in every place that the crypto can be turned into something else (dollars, yen, chickens, pizzas, clock cycles, whatever). It does not require the intervention of a government, and it does not require thee or me to have any faith in one another whatsoever. That has never happened before, ever, anywhere on planet earth.What incentive would banks have to get behind something that would fundamentally, I hate this word, disrupt their business unless they see long-term financial gains from it?
Also agreeing with am_Unition on trying to grasp the concept of "trustless".
Fantastic response. Thanks, 'bl00. I'm still working out how "trustless" the proof of stake formulation (and specific implementations) really is/are. I don't understand why it's so different if e.g. Visa gets a cut of a transaction vs. awarding crypto to blockchain tabulators (thus devaluing the currency), which have become increasingly large-scale operations. It's just interesting that crypto turned out to be nowhere near disruptive as promised. I absolutely agree that in time, things could change, but I'm desperately jonesing for societal stability at the moment. There is quite enough disruption right now. I'll revisit this all in the near-ish future, thankfully it doesn't feel as pressing as it did a few years ago.
It's simpler than it seems. Basic Prisoner's Dilemma coding. For purposes of exposition, you are now a node. Ethereum is now textiles. - You show up online and get in the sewing circle. To do this you have to "stake" a phat chunk of change. For Ethereum, it's 32 ETH. - Someone in the sewing circle, chosen randomly by algorithm, says "It's time for a new quilt!" This person gets a tip in the form of fabric. - Everyone knits a bunch of fabric into a quilt. - Everyone agrees that you have made a quilt. Note that you have to bring a fuckton of fabric with you to prove that you are a quilt maker in good standing. Note also that for every quilt you make, you get a little bit more fabric. Further note that if you slack off and don't make a quilt, the sewing circle takes a little of your fabric. Note also that whoever tattles on you first GETS YOUR FABRIC. Finally, note that "making quilts" is substantially more lucrative than "not making quilts" and that "not making quilts" is substantially more lucrative than "lying about making quilts." It costs a lot more than $300 to compete with Visa. YET Again, early days.I don't understand why it's so different if e.g. Visa gets a cut of a transaction vs. awarding crypto to blockchain tabulators (thus devaluing the currency), which have become increasingly large-scale operations.
It's just interesting that crypto turned out to be nowhere near disruptive as promised.
I’ll add a shameless plug for rocketpool here. Fully decentralized staking+fully liquid. Pretty much the only protocol I would run shared validators through