Where are all the crypto use cases?

I've heard many smart people who I trust complain that "after 13 years, there are still no use cases for crypto."

If you're reading this, I'd like you to know that I think you're pretty smart. This argument is very reasonable to think; CEOs of major companies have made this claim, folks calling themselves rationalists have made this claim, wicked smart people make this claim.

It's wrong though. Or at least, it doesn't stand up to scrutiny because it isn't falsifiable. If you firmly believe this claim, there's no new information you could learn that would cause you to update your belief towards the negative.

First, this claim conflates many different technologies with the introduction of Bitcoin. Bitcoin did not claim to have "use cases" beyond Bitcoin. It's unfair to judge Ethereum (which launched 7 years ago) or Solana (which launched 2 years ago), both of which do claim to enable "use cases", by Bitcoin's 13-year history. Smart contract platforms are a different technology than blockchains, even if they are colloquially used interchangeably. Many major projects on Ethereum, have only a few years of history: Uniswap's proof of concept started in 2018 with a "real" version launched in 2020. Common development frameworks are similarly recent; Hardhat started in 2019, Forge started in 2022.

Why use 13 years? Why not start the clock at the development of Hashcash, a proof-of-work system proposed in 1997. Or, why not start in 1983 with the proposal of "ecash"?

Few technologies have a clear start point. Did the internet start in Tim Berners-Lee in 1990? Or in 1982 with TCP/IP? Or in the 1970's with CYCLADES? Or in 1969 with ARPANET? Or in 1965 with the invention of packet switching? Or in 1950's with time-sharing? Can you distinguish the internet from computers or information theory? Maybe it starts at radio or the telegraph.

An arbitrary time frame makes this argument hard to falsify. If you'd like to say that crypto is early, set the time frame at the start of usage of ZK rollups. If you'd like to say crypto has had "long enough", set the time frame at ecash.

Pro-crypto people will say that "it's early" because the majority of the projects they're familiar with really did start within the last year or two. They also are intimately familiar with the problems that need solved and in many cases are actively working to solve them.

Second, there are use cases for "crypto". Most notably: money. Money that's not issued by a central government is a perfectly reasonable use case. Crypto is successful at being money. If you don't believe me, then I'm happy to sell you the laptop I'm writing this on for 1,000 ETH instead of 1,000 USD.

You may think decentralized money is bad or not useful to you in particular, but if you can't accept money as a use case, then that's a hint that this claim may be unfalsifiable. After all, you could always keep moving the goal post.

Let's move the goal post to "no use cases for crypto aside from cryptocurrencies".

In this case, there's still an obvious use case: cheap loans. Right now, you can take out a loan without involving a bank from one of the many crypto lending protocols. You put up some collateral and can take out a loan for extremely cheap, because there isn't a bank in the middle to take a cut. There's billions in lending protocols, and despite some hiccups, they basically work.

You may point to hacks, or not-yet-fully-decentralized protocols, or you may say that you've never used one, but the fact remains: loans should count as a use case, which disproves the claim.

We can pump out a number of other popular use cases, and for each one, I'll let you move the goal post to not include that particular project.

Even NFTs, despite being fairly stupid, should count as a use case. It might be stupid to buy a skin in League of Legends, but many people do it. It's not that unreasonable to understand why one would buy a skin they could potentially trade around later. It might be stupid to buy a print of your favorite artist, but many people do it. It's not that unreasonable to imagine why one would support their favorite artist by buying an NFT from them.

Now, you might say that all of these are perfectly fine use cases, however you meant that "there isn't a use case apart from something you could otherwise do with a database." After all, isn't the blockchain just a bad database?

This argument misunderstands what a blockchain does. A blockchain is not a database. People may say that it is, as an anology to help someone understand it. But there is not a single project that uses a blockchain in the same way you'd use a database: it's vastly too slow and too expensive.

A blockchain is an escrow without a third party. That is the use case. It lets you surrender control of some data to a computer that no one has control over. Because no one has control over it, you can have it keep track of a ledger and create money, create marketplaces that don't charge rent, and companies that are controlled by everyone.

For example, say you attempted to create Filecoin without crypto. You instead need to route the money through a bank somewhere. Whoever controls that bank controls Filecoin and has an incentive to charge money on every transaction. As more people use the marketplace, centralized Filecoin's network effect would grow, making it harder and harder for anyone to compete and remove centralized Filecoin's cut. Decentralized Filecoin has the same network effect, but the value acrues to the protocol, making it harder and harder over time for any single party to extract rent. Thus Filecoin becomes the cheapest possible commodity market with no single intermediary taking a cut.

In other words, crypto's use case is the one that it claims: decentralization. It's use case is to cut out middlemen, break up monopolies, and fight aggregators. It's certainly not the case that crypto is entirely useless.

It may still be the case that crypto is "more bad than good", but the claim "after 13 years, there are still no use cases for crypto" is not a rational fact. It's, at best, a statement of opinion or identity.

from Hacker News https://ift.tt/fcSHUE4