The crypto thread

[Moriarte]

Recent collapses of exchanges already showed it's pretty much the same game as conventional banking on that score.

Well, the cynic would say: don’t hold your anarchy cash in an exchange! And he would be right, as his money wouldn’t be snatched by Bankman-Fried.

As for centralised vs decentralised computing, you're missing the point that the decentralised computer is having to process vastly more information per transaction (the blockchain ledger). And that the amount of information increases proportionally the more transactions are processed. Ideas of blockchain being even theoretically sustainable rely on the idea that computer technology is improving fast enough to keep up with the constant increase in processing required, which seems very dodgy to me.

Thanks for clarifying your point. There are degrees of centralisations to combat what you’re describing in crypto space. Ethereum sharding is one of those solutions.

 

[MrCynical]

Banks can’t cut costs, interbank competition has driven those costs so high, there’s barely margin to be made in the financial sector.

It's this bit that's causing confusion. It doesn't make much sense for competition to be driving transaction costs higher. Also, the above suggestion that banking cartels are a thing, even at a regional level, is not really compatible with the idea there's no margin for reducing transaction costs. It's kind of one or the other, unless you have a "cartel" that isn't doing anything.

Why would this happen, if the change is driven by individuals writing and using open source software? It is obvious why it happens in a centralised system, but that is exactly why we should have an alternative.

Let me offer an analogous situation. There are free open source versions of all elements of Microsoft Office. Yet Microsoft Office remains the standard despite substantial fees. Why is that?

There are multiple reasons of course, but from what I've seen a lot of it boils down to the fact Microsoft Office is that bit more "polished", reliable, and the bar for a user to start working with it is a crucial smidge lower. In itself, not that surprising - there are people being paid to improve Microsoft Office and keep it shiny, whereas the open source equivalents, not so much. Plus the kind of people who write open source software tend not to be great at judging whether something is user friendly in my experience.

So, to move back to crypto. My expectation would be that your hypothetical open source crypto system would get displaced by a centralised, closed, for profit system that does much the same thing. But it's that bit shinier, that bit more convenient to use, and is kept that way because there's a major organization behind it making as much money as possible by keeping it that way compared to open sources options.

 

[Samson]

Let me offer an analogous situation. There are free open source versions of all elements of Microsoft Office. Yet Microsoft Office remains the standard despite substantial fees. Why is that?

There are multiple reasons of course, but from what I've seen it boils down to the fact Microsoft Office is that bit more "polished", reliable, and the bar for a user to start working with it is a crucial smidge lower. In itself, not that surprising - there are people being paid to improve Microsoft Office and keep it shiny, whereas the open source equivalents, not so much. Plus the kind of people who write open source software tend not to be great at judging whether something is user friendly in my experience.

So, to move back to crypto. My expectation would be that your hypothetical open source crypto system will get displaced by a centralised, closed, for profit system that does much the same thing. But is that bit shinier, that bit more convenient to use, and is kept that way because there's a major organization behind it making as much money as possible by keeping it that way compared to open sources options.

Fair enough, I understand your point. That seems pretty indistinguishable from "the banks get their stuff in order and drop transaction fees by 2 or 3 orders of magnitude" and that would be a far better outcome than what we have now.

To speak to your MS office comparison, do many individuals pay for MS office?

 

[uppi]

They are just automated contracts. I don’t immediately see why they’re such a bad idea, perhaps you can expand. In my bank I’ve been using an analogue to smart contract to pay for my cell phone, for a decade. Quite helpful.

The big difference is that if the automatic payment your bank offers does something you did not intend (like paying a 100 times of what you wanted), you can go to the bank and demand that they undo the transaction. If they refuse, you can take this to the courts to get your money back. So the final arbiter is a human who you can reason with.

For these smart contracts, there is no way to appeal, because the code is the final arbiter. If the code does not do what you intended, there is nothing you can do about it. And getting code to do exactly what you intend is tricky.

 

[Samson]

It seems to me that smart contracts are missing a decent test environment. Getting code to do exactly what you intend is tricky, testing it does what what you intend should be a lot easier.

 

[MrCynical]

Yep - the issue with "smart" contracts is you're creating "computer says no" situations where there is literally no human who can overrule it. It's bad enough already getting these kind of problems resolved, and getting through to a human who can go "yeah, it's not supposed to do that" and fix it. Deliberately making it so no such human intervention can be made seems downright idiotic to me.

 

[Samson]

The thing is the is a scale of human intervention from "Oh, this was wrong please fix it" to getting the courts involved. That usually ends up with richest wins, so not having human intervention may be an advantage.

 

[EnglishEdward]

The big difference is that if the automatic payment your bank offers does something you did not intend (like paying a 100 times of what you wanted), you can go to the bank and demand that they undo the transaction. If they refuse, you can take this to the courts to get your money back. So the final arbiter is a human who you can reason with.

For these smart contracts, there is no way to appeal, because the code is the final arbiter. If the code does not do what you intended, there is nothing you can do about it. And getting code to do exactly what you intend is tricky.

Quite. If someone picks my pocket or mugs me and steals my credit cards,
then provided I report it reasonably promptly, it is the bank's loss.

 

[uppi]

It seems to me that smart contracts are missing a decent test environment. Getting code to do exactly what you intend is tricky, testing it does what what you intend should be a lot easier.

Testing good and necessary, but once a code reaches certain complexity, it is almost impossible to think of and test all the edge cases. I find my self too often starring at code and thinking: "It is not supposed to do that and all the tests run fine. This should not be possible...hmm...except when...oh...oh...damn!"

 

[Samson]

Testing good and necessary, but once a code reaches certain complexity, it is almost impossible to think of and test all the edge cases. I find my self too often starring at code and thinking: "It is not supposed to do that and all the tests run fine. This should not be possible...hmm...except when...oh...oh...damn!"

True, but smart contracts should not normally need much complexity. They do not have loops for example.

 

[uppi]

True, but smart contracts should not normally need much complexity. They do not have loops for example.

The Ethereum Virtual Machine is Turing complete and does support loops. And a decent number of smart contracts does support loops.

Even if the programming languages did not support loops, it would be easy to create (even inadvertently) by using two contracts calling each other.

Worse, you do not control when, how and in what order smart contracts are executed, which means you have to treat everything as concurrent code, which is notoriously hard to get correct (and to test!) . You need to worry about reentrancy, for example.

I had a look at some fairly simple examples and there is a considerable amount of thinking required to get code which is not blatantly exploitable.

 

[warpus]

For example, nothing about that "seachaintoken" you linked to has to be blockchain based in order to clean up the sea - the only thing being on the blockchain gains them is maybe a bunch of cryptobros blindly throwing money and hype.

I don't think you read enough about the project to understand what's going on.

The blockchain solution they are using now was the only thing that's worked for them. They literally tried everything else and nothing's worked so well, until now. Here are some of my guesses why:

1. Super low overhead costs (the blockchain already exists, you don't need to hire coders to build a system for you)
2. 100% Transparency
3. It's impossible to hack the ledger/db. No fudging of data possible
4. All you need to get on and use this is access to the internet. No software to buy and get trained on, etc.

A lot of these organizations don't have a lot of $$ to hire coders to build a tracking system that's both secure and transparent. That's a TALL order. It'd be very expensive. I bet until now they've been using spreadsheets and pieces of paper, which is very easy for somebody to modify and cheat the system. In fact, that's what's been happening, up until recently. These sorts of projects were having a hard time incentivizing locals to help them out, because there was no good way to track how much genuine trash these people collected. Now there is. There was a ton of cheating going on and none of it was efficient, until now.

I get you stand against the blockchain in all ways and you hate it, but it seems that your eyes are a bit closed here. Research things better and the truth will come out

 

[MrCynical]

I don't think you read enough about the project to understand what's going on.

The blockchain solution they are using now was the only thing that's worked for them. They literally tried everything else and nothing's worked so well, until now. Here are some of my guesses why:

1. Super low overhead costs (the blockchain already exists, you don't need to hire coders to build a system for you)
2. 100% Transparency
3. It's impossible to hack the ledger/db. No fudging of data possible
4. All you need to get on and use this is access to the internet. No software to buy and get trained on, etc.

None of this has any connection to the alleged objective of cleaning plastic from the seas. At best this could be regarded as a fundraising method, which might be used for an environmental charity - and an ineffective one it would appear.

As for the claim "it's the only thing that's worked for them", there's the issue it looks suspiciously like it's already defunct. Their token's value is listed on the site you linked to as "$0.0000003053" and hasn't altered by a nano-cent since your last post, so no one's using it. Other sites list it as zero or NaN. The link to their blog journal just gives a 404 error. It looks like this project was functionally abandoned before you even linked to it here. There's nothing to indicate anyone's still working on this.

 

[warpus]

None of this has any connection to the alleged objective of cleaning plastic from the seas. At best this could be regarded as a fundraising method, which might be used for an environmental charity - and an ineffective one it would appear.

As for the claim "it's the only thing that's worked for them", there's the issue it looks suspiciously like it's already defunct. Their token's value is listed on the site you linked to as "$0.0000003053" and hasn't altered by a nano-cent since your last post, so no one's using it. Other sites list it as zero or NaN. The link to their blog journal just gives a 404 error. It looks like this project was functionally abandoned before you even linked to it here. There's nothing to indicate anyone's still working on this.

The price of a token should really have zero impact on the ability of an organization to use that blockchain for whatever purpose. You don't need to own any of the token to use the blockchain except for when you pay gas, and in this case I bet the gas fees are minimal (i.e. fractions of a cent). These organizations aren't trading these tokens, they probably don't care about the trading price.

To address your point about this particular blockchain project going defuct though. It is possible that that particular initiative was abandoned for whatever reason. I'm not really sure. There are multiple organizations using the blockchain to help track collected garbage, I simply found some information about one of them.

There are more, it was I was easily able to find an article about one such initiative: https://businessnorway.com/articles...ain-technology-and-ocean-plastic-certificates

I don't think you understand that these organizations aren't crypto projects. The organizations had nothing to do with crypto/the blockchain until they decided to use the technology to help them track garbage. I can't remember if the link I posted linked to the crypto side of things OR the cleanup org side of things OR a promo that talked about both of them. Maybe the above article will clear some things up!

 

[MrCynical]

The price of a token should really have zero impact on the ability of an organization to use that blockchain for whatever purpose. You don't need to own any of the token to use the blockchain except for when you pay gas, and in this case I bet the gas fees are minimal (i.e. fractions of a cent). These organizations aren't trading these tokens, they probably don't care about the trading price.

Then why bother with a token at all? The vast majority of the information on that website is very standard crypto-token plugging, with a bit of "it's eco-friendly" theming wrapped around it. The idea that it's about removing plastic from the ocean is such a transparent afterthought, and there's this huge logical chasm between:

1) Cryptotokens and blockchain
2) ?????
3) Less plastic in ocean

The disconnect between what they're plugging, and the alleged purpose is so blatant, that I find it genuinely baffling how this was ever taken as a coherent concept.

I don't think you understand that these organizations aren't crypto projects. The organizations had nothing to do with crypto/the blockchain until they decided to use the technology to help them track garbage. I can't remember if the link I posted linked to the crypto side of things OR the cleanup org side of things OR a promo that talked about both of them. Maybe the above article will clear some things up!

The example you linked to was an unambiguous cryptoproject, complete with token, plans for a "game", NFTs - all the usual rubbish.

As to the article above, the idea that blockchain is actually a helpful tool relies on the idea that efforts to clean up the oceans are being hampered by hackers breaking into those old-fashioned spreadsheets and falsifying them, so organisations don't know how much plastic has been collected. This is complete nonsense. There is a lot of falsification in this area, but this is due to the organisations themselves distorting or flat out making up information about their alleged efforts. Also the tendency of "subcontracting" things through deliberately opaque chains of companies to provide a fig leaf of deniability when it turns out nothing useful is being done in the end.

Blockchain does precisely nothing to prevent information that's false in the first place from being entered into a ledger. It might prevent some external party from subsequently editing that false information, but I wouldn't bet a single cent (however many thousand seachaintokens that is...) that there are people bothering to try and hack into ocean clean-up records to alter them. Much easier just to lie in the first place. I'm not buying that blockchain is doing anything useful here beyond getting a smidge of publicity by claiming a link to a trending topic.

 

[Birdjaguar]

N.Y. Couple Guides El Salvador on Bitcoin
Former Russian TV hosts advise country and have crypto investments there
BY SANTIAGO PÉREZ

SAN SALVADOR, El Salvador— Two New Yorkers who created a popular financial news show on Russian state television and cashed in on the crypto boom have emerged as key advisers to the Salvadoran government on its adoption of bitcoin. Max Keiser and Stacy Herbert are investing in bitcoin ventures in the Central American country and are founding backers of a crypto exchange that is helping manage El Salvador’s sovereign debt sale that is linked to bitcoin. The so-called Volcano Token bond will be backed by proceeds from bitcoin mined using geothermal power from a volcano. The couple first visited the country in 2021, the same year President Nayib Bukele adopted bitcoin as a national currency for the highly indebted nation. They are major supporters of the president, advocating his policies on social media, where they have almost 700,000 followers.

Ms. Herbert, who describes herself as “fairy godmother, volcano blonde and keeper of the vision,” has been introduced as the head of El Salvador’s National Bitcoin Office. Mr. Keiser says he serves as a senior adviser to Mr. Bukele, a role confirmed by people familiar with his work. The bitcoin experiment in El Salvador hasn’t alleviated the country’s poverty and lack of funding needed for government spending. Bitcoin use in the country is scarce, financial sector and business executives say. Central-bank data shows cryptocurrencies make up less than 2% of foreign remittances, which are a main source of income for El Salvador’s $29 billion economy. The country was racked by gang violence and had one of the world’s highest homicide rates until Mr. Bukele suspended constitutional and civil rights a year ago to confront gangs. More than 60,000 people with suspected ties to criminal groups have been detained since then. Homicides plunged as a result, the government says. Ms. Herbert and Mr. Keiser declined requests for an interview and didn’t respond to questions about their work in El Salvador. Mr. Bukele didn’t respond to requests for comment.

On YouTube shows and podcasts, the couple said they have made investments in bit-coin exchanges over the past decade. The couple’s Heisenberg Capital invested in the parent company of Bitfinex, one of the world’s largest crypto exchanges, according to S& P Global Market Intelligence. A Bitfinex spokesman declined to comment. Mr. Keiser brought Bitfinex on board as a financial technology provider for the planned $1 billion Volcano Token offering, said one person familiar with the couple’s work. Bitfinex has said in statements that it advised Mr. Bukele’s administration on the country’s new law for the issuance of crypto assets, and that it will apply for a trading license under the legislation. Bitfinex is also an investor in El Zonte Capital, the U.S. couple’s new fund set up to invest in bitcoin ventures in El Salvador, the couple has said.

Ms. Herbert joined the National Bitcoin Office nine months after the launch of El Zonte Capital. The fund said on Twitter that it aims to invest up to $10 million on “seeding the first generation of Salvadoran bitcoin unicorns.” A unicorn is a privately held startup worth at least $1 billion. The fund said it made its first investment last year in Galoy, a developer of financial software for using bitcoin. Ms. Herbert says in her government position she acts as a gatekeeper to prevent scams, determining who is eligible to do bitcoin business in the country. “To be clear, I will receive no salary, nor any contracts from either El Salvador or any private company. I am doing this for President Bukele,” she said on Twitter. “We don’t get remunerated in any way,” Mr. Keiser told an interviewer on a Salvadoran YouTube channel last week. “I would say it’s just really an act of love.” Ms. Herbert’s title at the National Bitcoin Office hasn’t been previously reported.

Photographs taken at a conference last month in San Salvador show signage identifying her as its director. People familiar with her work say she had a leading role in the government office since its creation last year. Mr. Keiser said he met Ms. Herbert in an internet cafe in southern France about two decades ago. They became critics of central banks and multilateral lenders, which they say push colonial interests. Beginning in 2009, the couple ran the “Keiser Report,” a financial news show broadcast on the Russian state RT television network, where Mr. Keiser railed against financial corruption and bankers preying on the working class. In one 2013 broadcast, he claimed to have become a “bitcoin millionaire,” when the asset’s value was just above $40. “I’m loving it,” he said, and predicted the U.S. dollar’s demise. The couple ended the show after Russia’s invasion of Ukraine, Ms. Herbert wrote in a tweet. They are celebrities of sorts in El Salvador. Residents approach them to take selfies with Mr. Keiser. On Twitter, they recently posted photos of themselves at a white tablecloth dinner at El Salvador’s presidential palace. Other posts included images of Mr. Keiser celebrating his birthday with a bitcoin-themed cake alongside Mr. Bukele.

Last year, Bitfinex said it transferred more than $1 million of bitcoin to the couple to make digital wallet-to-wallet donations to Salvadorans affected by gang violence. Fernanda Alvarado, a 19year-old student who runs a coffee-liqueur business with her mother, said a group of entrepreneurs from the gang-riddled municipality of Ilopango were invited to meet with the couple last year. “I was shocked. All of a sudden she transferred about $1,000 in bitcoin to my digital wallet,” Ms. Alvarado said, referring to Ms. Herbert. “We used it to buy supplies, but we had to convert the funds into dollars because suppliers don’t accept bitcoin.” Mr. Keiser inspired the Bukele administration to issue government debt linked to bit-coin, Mr. Bukele has said. “I’m sure #Bitcoiners can arrange a $1 billion lending facility stop-gap for El Salvador,” Mr. Keiser wrote on Twitter in mid-2021, during talks between El Salvador and the International Monetary Fund for a $1.3 billion loan. Negotiations stalled over Mr. Bukele’s policies, including his plans to adopt bitcoin as legal tender, according to people familiar with the talks. The country has since been shut off from international capital markets.




Bitcoin use in El Salvador is scarce, financial sector and business executives say. JOSE CABEZAS/ REUTERS

STEPHEN MCCARTHY/ SPORTSFILE/ GETTY IMAGES

Stacy Herbert has been introduced as the head of the National Bitcoin Office. Max Keiser during a bitcoin conference in 2022. EVA MARIE UZCATEGUI/ BLOOMBERG NEWS

The IMF urged Salvadoran authorities to remove bitcoin as legal tender. Raphael Espinoza, the IMF’s mission chief to El Salvador, said IMF staff continue to explore options for engagement on a possible financial aid program.
After adopting the crypto-currency, Mr. Bukele made a series of announcements of bitcoin purchases totaling more than $110 million. But the announcements ceased as the market value of the country’s bitcoin holdings plunged. The cryptocurrency is down by about 40% since its adoption as a national currency in September 2021. There is no public registry of bitcoin holdings at the treasury or central bank, economists and lawyers say. If Salvadorans had followed the president’s lead, “the fall in value would have unleashed a systemic catastrophe,” said Ricardo Castañeda, senior economist at the Central American Institute for Fiscal Studies, an independent, Guatemala- based think tank.

—Kejal Vyas, Ben Foldy and Caitlin Ostroff contributed to this article.

 

[Moriarte]

39 y.o. president and the bitcoin city
IMF
Mara Salvatrucha
Shady advisors and their volcano tokens

And probably a hell of a lot of coke. Going to be a script for the movie one day.

 

[EnglishEdward]

Ms. Herbert, who describes herself as “fairy godmother, volcano blonde and keeper of the vision,”

And probably a hell of a lot of coke. Going to be a script for the movie one day.

Quite....perhaps one where when it goes horribly wrong ... they decide to sacrifice the high priestess by dropping her into a volcano...

 

[Samson]

A new type of "adversarial transaction", that asks questions about legal ownership and the security of PoS

Over $25 million taken from an MEV bot by malicious validator

It's a dog-eat dog-world in the crypto universe, where everyone's trying to steal money from everyone else.

MEV bots are a phenomenon that became popular in recent times: bots that use various techniques to extract value by inspecting pending blockchain transactions and then sending advantageous transactions of their own. In this case, a bot was performing a "sandwich attack": sending transactions just before and just after a pending transaction, which manipulate the price of the underlying asset, allowing the bot operator to "steal" value from the victim — "steal" in quotes, because there is some debate over whether MEV bots are really stealing, or are operating within the rules laid out for them.

In order to manipulate prices in this way, they have to put a substantial amount of money at risk. A "rogue" Ethereum validator appeared to replace some of the transactions that were being executed by the bot, leading to a loss of WBTC, USDT, Dai, and WETH totaling a bit over $25 million.

More details

An attacker compromised some of these MEV bots on April 3, by substituting their regular transactions with malicious ones, resulting in the theft of their funds. In doing so, the attacker inflicted substantial losses on the MEV bots.

Joseph Plaza, decentralized finance trader at Wintermute, explained that the exploiter likely set "bait" transactions to lure the MEV bots. The attacker then replaced the initial baiting transactions with new, malicious ones, allowing them to steal the funds. To prepare for the attack, the perpetrator deposited 32 ETH to become a validator 18 days before the incident.

Plaza added that the attacker probably waited until it was their turn to propose a block as a validator, which coincided with the attack. They subsequently reorganized the contents of the block and created a new one containing their malicious transactions in order to drain assets.

 

[Hygro]

My first take of the MEV bot part is this sounds like how Robinhood’s customers make their money, by getting to insert themselves in time between trades to take a profit.