1. A payment processor for users to turn money into tokens
2. A payment processor for news sites to turn tokens into money
3. A software provider to handle the actual microtransaction part of this (unless they want to learn how to become software developers themselves)?
It seems to me like all the blockchain does here is to make it so this transaction needs 3 software providers instead of just one!
The argument I had originally heard was "the transaction costs of credit cards is so high, we need a system that works for many tiny payments. But of course, most of the cryptocurrency transaction fees are still pretty high, and a dedicated "tiny transaction" company would presumably be able to offer the same service for less cost than a distributed equivalent.
Transaction fees for bitcoin sent via the lightning network (which is a layer 2 solution) are in the "less than a cent" category and are settled in a few seconds. This is not fiction, this is i.e. how Trump made his for-the-cameras bitcoin payment during his campaign.
Lightning isn't even a good solution for most diehard bitcoin users. It's a failed project.
It would take 27 years to onboard every internet user to the lightning network unless you start adding level 3 aggregators and then at that point you lose all the benefit of it being on chain at all.
It would take almost 2 years just to onboard every American assuming during that time there were zero other bitcoin transactions. Then you need to add the fees for the on and off ramps to the individual transaction fees to get the real cost per transaction noting that these would go up quite a bit as the competition between lightning and non-lightning uses of the transaction space would drive prices higher.
The throughput is arbitrarialy limited by bitcoin's current block size, which hasn't been increased since satoshi's era.
Most cryptocurrencies have an adaptive block-size mechanism which allows the blocks to grow to a reasonable size which could facilitate such an onboarding of users. So it isn't a technical problem, it is just a question of bitcoin's current leadership, which is controlled by companies like blockstream.
People have been debating the blocksize for a very long time now and there doesn't seem to be any large desire to change it so while the ability to increase it exists changing anything that fundamental about bitcoin seems to be a non-starter and while that is true lightning is pointless as a solution for the masses.
Even if you increase the block size 100x though you're still not improving the numbers much since my very generous numbers ignore activity outside of lightning and assume a single on chain transaction for every user and a perfect network.
Maybe your understanding of lightning is wrong here. Yes you open channels, and transactions in lightning need open channels, but you do NOT NEED to open channels for specific transactions. You open channels once, and transact over them for years. I run a lightning node with more than 15 channels (each to different lightning nodes) that are all older than 1 year (I route payments, so I have way more channels than needed). You can batch-open channels, i.e. I could have opened all my 15 channels with a single on-chain transaction. Taproot update would make those "commitment transactions" onchain way smaller (in byte) than needed to in the past.
Once channels are open, the users on the lightning network can transact back and forth without any new channel opens/closure and thus no on-chain settlement. Hence: Throughput in lightning is not at all limited on the bitcoin transaction throughput.
You mistake is, you overestimate the amount of people who want to be self custodial. You don't need to onboard every human being in the world on-chain.
Given the US example that would be several years in the absolute best for lightning case to onboard even 5% of individuals. Lightning is doomed from the start.
And if you don't care about self custody then the overhead of using a blockchain is a waste.
It is not black/white. It is okay to have the freedom to become self-custodial anytime, but not everybody needs to transact in self-custody all the time.
Taproot was another major step that enables lightning upgrades in future versions (such as zero-fee channel opens) that is barely discussed. The number of X years for onboarding Y amount of people is not accurate, as it disregards all major developments of the last 5 years.
You need enough users for providers to bother making it an option to pay with so it really is black and white. You might get a few niche providers offering it as a payment method without a critical mass of users but most companies aren't going to invest time and effort into implementing a payment system a tiny percentage of users have access too and if I need to trade money with my friends the low % means that in the vast majority of cases they aren't going to have lightning available either.
It will be on bitcoin, and bitcoin only. Except the payment will done with Lightning. And the lightning network will probably be used to send a stablecoin, utilizing taproot assets. But shurely not some shitcoins that is x402 built on (Ethereum, Solana & Co.) :)
> 1. People who have insider information, or at least more sophisticated predictive capability than your average person.
This bucket as you've defined it is too broad.
There are a few different kinds of non-gambler participants in prediction markets:
1. People with "insider information" as we think of it - they "know" the answer to the market because they are "involved" somehow.
2. People who aim to do superior analysis of publicly available information to produce an edge. For example, an AI firm with better hurricane prediction modeling may try to monetize that by betting on whether or not a hurricane will impact an area.
2b. People who do the work to create new information. For example, the Trump 2024 election market on polymarket famously had better odds for Trump than polling. It turned out that a mega whale was bidding Trump up because he had paid for his own private polling in battleground states and that gave him confidence Trump was going to win.
In short, it's mostly incorrect to suggest that prediction market participants are either illegitimate insiders or gamblers; there is a third class of actors that are a very important cohort: those who do the work to create better predictions and monetize their work by betting in the markets. This third cohort of professional predictors is the most important in long-term prediction market growth.
> we live under a system that is arranged for the sole benefit of the owners of capital
This is totally false. The vast majority of consumers enjoy huge benefits from the system while owning almost no capital. For example, Walmart customers or iPhone owners.
A lot of people can't tell the difference between capitalism (which has made their lives materially wealthy beyond imagination) and the root cause of today's economic troubles for ordinary people, which is affordability, which is mostly driven by the housing crisis, which is dominated by nimbyism in megacities.
Fix megacity housing regulation to enable cheap/low risk building that the market wants, and you fix the affordability crisis.
No need to rebuild the (greatest system in the history of humankind) from scratch.
This is good analysis. The main longitudinal aspect omitted is that the profitability of the attack goes up as long as the price of BTC doesn't double or more each halving.
In ~6 more years, Bitcoin will undergo two more halvings, so if the price of BTC is not ~400k by then, then attack will have become more feasible.
In the near future every nation state will be vying for the largest stake of the BTC mining pie and the BTC race will be bigger than the Space Race and the Nuclear Arms Race combined and adjusted for inflation.
Only because it is being subsidized by 20 to 40 gigawatts of electricity. It is basically a ponzi scheme where the increasing difficulty transfers wealth from new comers to early adopters.
Did you read the paper? There exists a technology that has purely enforceable property rights. What is that actually worth? I don't know.
Yeah yeah, I've read the arguments about liquidity issues, shutting down the rails, making it illegal to trade, etc. but that's beside the point and depends on a thousand future variables to play out. So I don't know if btc will make it or not, but I do know property rights mean everything to humans. They literally determine whether not one is a slave (I am my own property). So just the ability to have a technology enables pure property rights to a world where nobody really has enforceable property rights over anything seems pretty interesting to me.
A 5$ wrench bar is enough to make you give me all the moneroj you have eventually. I won't know when that point is and will just continue using the wrench until I am sufficiently sure you have given me all.
> So just the ability to have a technology enables pure property rights to a world where nobody really has enforceable property rights over anything seems pretty interesting to me.
Bitcoin doesn't enforce property rights. The only thing you own is your bitcoin. The fact that I "own" my house and the land it is built on is enforced by the state with guns.
You're not getting what I'm saying. Before this technology, the concept of property rights could not be defended, depending on the attacker. This tech allows that, even if it is just for one use case.
Cars have the benefit of transporting humans and goods around.
It's more like saying a hypothetical car which moves itself by using gasoline as a propellant rather than fuel for its combustion engine would have negative value.
Sure, using fuel (of all things) for propulsion would be one way to move a vehicle, but it would be inefficient by design.
Bitcoin, at least, was created during a time where there was no alternative to security-by-inefficency, but PoS and other consensus mechanisms are pretty battle-tested now
Bitcoin has the benefit of being the first way in human history of being able to transfer value between two countries in a way that a corrupt bureaucrat, judge, or customs official can't freeze, reverse, or steal it. That's the benefit Bitcoin brings humanity, and to me, I prefer it to having a car.
Proof of Stake is an absurd security proposition. Stakeholders are immediately centralized. In every single PoS coin, the governance immediately becomes the exchanges because they always hold the most coins. They can and have used this to guide PoS coins towards governance unfavorable to the users, like as happened with Steem.
Bitcoin consumes 20 to 40GW to process 7 transactions per second. Using 30GW means about 4 billion joules per transaction. And transactions per second don't scale with more electricity. It is the least efficient technology ever created.
Crypto is a casino (often fraudulent) and a scam factory.
It's also the source of at least one great new global public institution (Ethereum) and is likely to run much of the global economy in the coming decades.
If you hate or are skeptical about crypto, it is crucial to at least understand the difference between three things:
1. Casino/scams/hacks
2. Crypto/on-chain technology
3. Ethereum as a decentralized chain and global public institution
I've been a full-time Ethereum person for many years. I hate the casino. I hate the scams and hacks. But I see something very special going on here. So let me try to describe it
The casino is just terrible and it'll likely get much worse. The steady stream of scam shit tokens sold to unsuspecting investors shows no sign of slowing down. And wait until r/wallstreetbets discovers perps (perpetual futures). Perps for equities are already live and scaling up.
The scams will get much, much worse. Crypto (on-chain) lets you send bearer assets over the internet, it's scam fuel. The bad guys will have access to a sophisticated internet financial system, too.
Hacks in mature protocols should get much better over time due to improved bug-finding techniques, including AI/tool-assisted auditing and formal verification.
The technology of crypto offers the world a number of benefits, including inherently globalized payments and instant settlement.
Centralized deployments of crypto technology are a big segment of the future. For example, Stripe is actively working on a centralized chain named Tempo that's optimized for payments. It is basically fintech 2.0 on the blockchain, but entirely centralized.
The last and most important part of crypto is the rise of decentralized chains. There are only two chains that are remotely decentralized, Bitcoin and Ethereum. Bitcoin has no programmable app layer, so its utility is limited beyond the whatever value the world assigns to BTC.
Ethereum is a decentralized programmable chain, a new kind global public institution. Ethereum can make a highly credible commitment that the rules of the programming environment will be followed in all cases. This makes Ethereum a uniquely excellent neutral hub for global commerce.
Ethereum's decentralization (what we sometimes call "credible neutrality") is driving massive grassroots adoption among corporations and institutions. This is the #1 thing in crypto to keep an eye on because if Ethereum gets large enough it will become a de facto global economic backbone.
I understand you hate crypto. I've lived since 2018 full-time in the industry, and it's been often soul-sucking and harrowing. Many days I hate it. But Ethereum as a platform is benevolent, virtuous, productive, and probably a key part of humanity's future.
I don't think many people on HN realize how globally systemically important public blockchains are on track to become, especially Ethereum.
The understandable hatred of the casino and many scams has blinded most of HN as to the true potential of the technology and its associated new public institutions.
That's what a decentralized public blockchain is, a new kind of public institution.
One small example of this is that the most state-of-the-art perpetual futures market in the world is an Ethereum Layer 2 named Lighter https://app.lighter.xyz/markets/
2. Tokenizing all assets (equities, commodities, real estate, etc.)
3. Being able to use those stablecoins/tokenized assets in DeFi protocols that are more automated, more impartial, and less extractive than corresponding traditional finance systems. Including lending and marketplaces to buy/sell. Many industries will see parts of their back offices go onchain. Tokenized real estate + onchain swapping = onchain real estate markets. Stablecoins + onchain swapping = onchain forex markets.
4. All of these being inherently global, so anyone in the world with a mobile phone can access these assets and the onchain financial system.
5. All of these being size-agnostic. The same assets and technologies work with a 5 cent buy of tokenized TSLA stock just as they do with a 50 million buy.
6. All of these capabilities enjoy instant settlement. The act of trading the tokenized asset also settles the trade. There is no more T+1 settlement risk or delay. This reduces risk and improves capital efficiency.
7. Decentralized public chains, especially Ethereum, offer new kinds of credible commitments that are strong enough to bind corporations and governments because the agreements are automated by the highly decentralized chain. Centralized chains (almost all chains) can't do this because they are too easy to rewrite history if governments apply pressure. When using Ethereum, instead of relying on a counterparty to keep their word and then suing them if they don't, parts of that agreement can become automated by the chain, reducing risk of breach of contract and cost of compliance. Maximum decentralization greatly reduces overall risk, which is very valuable at global scale.
8. Generally increased permissionless innovation, stronger property rights, and freer markets. Anybody can use onchain or build onchain, there's no gatekeepers.
> Tokenizing all assets (equities, commodities, real estate, etc.)
How does that work?
The blockchain can only enforce its desired state on the blockchain itself. It cannot affect the real world unless you delegate said effects to a trusted party... which defeats the whole point of a decentralized, trust-less blockchain, and you could let that trusted party just run a centralized database.
How do you reconcile the ability to lose a private key with real-world assets? In the "fiat" system we rely on courts to be the ultimate arbiters in such cases and it works well enough. In this system, what should happen if someone owning a tokenized real estate asset loses the corresponding private key?
> The act of trading the tokenized asset also settles the trade
This again only works on the blockchain. When the tokens represent real-world assets the two are not in sync, and there's a risk they may not be reconcilable (you "buy" some real-estate on the blockchain, but the government having jurisdiction over the real-world location contests your ownership claim and people in uniform with guns prevent you from entering into said real estate).
> which defeats the whole point of a decentralized, trust-less blockchain, and you could let that trusted party just run a centralized database
A centralized token (like USDC) being held in a trustless wallet is much much better and more useful than the traditional financial system.
For example, USDC in my wallet can be lent out in any onchain lending venue I pick and be sent to anybody in the world instantly.
> lose a private key with real-world assets
You're right, private key security is super important. The practical solution here is that there will be many different kinds of wallets with different trust assumptions and recovery models, and people/corporations will be directed to use the one that's net best for them. Many will be fully or semi custodial.
> When the tokens represent real-world assets the two are not in sync, and there's a risk they may not be reconcilable
Right. The idea here is to have very stringent evaluations of tokenization frameworks, to figure out which real-world asset tokens are actually quality bearer assets (from both a legal and technical standpoint) and which are not. An early example of the work here is BlueChip's stablecoin ratings https://bluechip.org/en
the tokenized assets are only as good as their backing entity allows them to be. It's a centralized system with a facade of decentralization. Same applies to stablecoins.
You inherit all of the inefficiency of cryptocurrency and none of the decentralization. This is why the idea was abandoned back with colored coins in like 2013. With etherium, you inherit even more centralization due to the nature of the scripting system and PoS.
> It's a centralized system with a facade of decentralization. Same applies to stablecoins.
Centralized assets in an on-chain wallet are much more useful than in the traditional financial system, for many reasons, but it comes down to friction reduction.
It's true that perp platforms are zero-sum games mostly catering to extremely high risk traders that overwhelmingly rely on luck more than skill. I don't use perp platforms myself.
It's also true that perp platforms can provide very accessible and efficient hedging. For example, if you own NVDA and don't want exposure to their quarterly results volatility, you can take a much smaller amount of collateral than your underlying NVDA shares and use that to open a 10x leveraged short on NVDA in the same size as your main NVDA position. This makes you "delta neutral" so the USD value of your position won't change even if NVDA craters on quarterly results. All without selling your underlying shares. Then you can close the short after the quarterly results are absorbed by the market.
We should be increasingly skeptical of the claim that crypto can't do better than the existing system.
I myself use defi all the time. At this moment, I could go borrow money on the blockchain and send it to anybody in the world with 5 minutes of notice. I can also swap dollars into gold or NVDA 24/7/365 with 5 minutes of notice. How can we claim this isn't better than the incumbent traditional finance system?
“We should be increasingly skeptical of the claim that crypto can't do better than the existing system.”
This is a fact because you can already do that with regulated and safe banking apps such as Transferwise, Revolut, PayPal, Zelle, Venmo, CashApp, MoneyGram, Western Union, MPesa etc.
Using a blockchain for this stuff is already cumbersome (which network?), remember long silly address numbers, incurs additional fees, rapidly fluctuates in price quotes, and you can’t get your money back if you’ve been scammed or you send your ‘cryptos’ to the wrong wallet.
This does not scream to me the future of finance, instead it is an unregulated ‘wildcat-banking-esque’ speculative scam that makes it easy to lose your money very quickly.
'growing evidence that blockchain will soon..." is basically the line we've heard for the last 15 years.
I'm more open than most to crypto, I worked at Coinbase during IPO and Avalanche for a short contract after that. But yes, I alternate between it's a total scam and it's a technology waiting for a use case.
Yeah, it may well end up being used for "maxipayments" too, as coupled with biometrics, perhaps.
But what will make it ubiquitous?
Also, there's something cumbersome and risky about using today's wallet apps. Imagine you're taking a train, about to buy a book on Amazon, and the guy next to you pulls out a knife and wants you to drain your wallet into his when he sees what you're doing. Or your computer is hacked somehow? Or you get a home invasion?
I think as money-printing keeps ramping up, people will just gravitate to crypto anyway.
But in the future, I expect AIs to become more common: at one point there was only Bitcoin and no long-tail of coins. And all these new AIs will need to be trained. Will x402 make that easy for them? How will the AIs access the new and original knowledge?
People will just expect AI as they expect sat-nav today in their cars, and eventually will expect self-driving cars. When was the last time you went into a library to access a physical encyclopedia? Banks may eventually fall away too as clusters of relationships form across the world to provides goods and services of value and seek refuge from tariffs but also access to resources.
Globalization is fine, but maybe the tech just wasn't/isn't ready yet? Cultural groups are also becoming increasingly intertwined too - but so are AI translation abilities.
One example is the potential for tokenization on public blockchains to provide a more globalized, automated, and efficient foundation, with stronger property rights, for global financial asset operations.
If I had a nickel for every claim about the "potential" of blockchain over the past almost two decades... I could almost buy one Bitcoin.
If blockchain has such potential why hasn't that turned into useful implementations or products? Surely enough time has passed to work out the details.
https://www.x402.org/
https://www.8004scan.io/networks
https://www.x402scan.com/