But I feel like big things are happening in the cryptocurrency and blockchain world, such as Web3.0, and I'm not sure I understand them.
Can someone ELI5 what the fuss around cryptocurrency and blockchain?
Specifically, I'm looking for answering to the following questions:
1. Is blockchain a revolutionary technology and what's it's real applications (other than cryptocurrency)?
2. Is cryptocurrency the future of money? And why its hated on HN?
3. What the hell is Web3.0 and how its related to the above 2?
Thanks!
2. For Central Bank Digital Currencies (CBDCs) it is. It is hated here because somehow Bitcoin and Ethereum == ALL cryptocurrencies and all of them are enabling tons of scams and ponzi schemes; especially the latter by introducing ICOs, Tokens, DAOs and NFTs.
3. No-one knows what Web 3.0 is. The people who are screeching and hyping it the most are from the Ethereum hype squad since they have their investments in it; despite that you cannot even do 1. and 2. properly with it.
As long as you cannot pay your groceries quickly and cheaply with the above cryptocurrencies without using some complicated beta quality contraptions, crypto-skeptics will ask how is it any better than Apple / Google Pay?
1. Blockchains can essentially serve as a decentralized database, and for some chains decentralized computations, such as Ethereum chains. It is possible to build web applications using data from the chain efficiently using a variety of technologies, and you can build some pretty slick applications effectively replacing a traditional backend with these kinds of technologies. Also it gets a lot of heat in general, because Ethereum is absurdly expensive and it's financially impossible to use, and the current scaling solution is quite complex and they have a lot of work to mask the complexities before it has any hope of achieving widescale longterm adoption. In short you literally cannot use Ethereum if you only have $20 because it's impossible to move due to fees, unless you are using one of their sidechains or layer 2 solutions. It's quite convoluted.
However you can use other chains like Solana, which gets a lot of hate from people on HN because it's more centralized than ETH. However, if you use both it's quite clear which is working better right now as an end user - SOL costs a fraction of a cent to transact and finishes within seconds, ETH costs $50 to multiple hundreds of dollars for a transaction and takes like 45 seconds to even multiple hours if you paid just slightly too little gas. I strongly recommend checking out other chains than ETH, Solana has a growing ecosystem and a lot of exciting projects being worked on in the space. (disclaimer - I own almost no SOL, about $20, but am developing projects in the SOL ecosystem because of the above end user experiences I have had using both ETH chains and SOL)
2. I don't know if it's the future of money, but it is a cool emerging field. It gets a lot of heat because it is ripe for scamming as it's nearly impossible to regulate, and also for reasons mentioned above. I've seen a bunch of people upset because they tried out web3 apps and buying NFTs and the like, but on ETH only to realize it cost them hundreds of dollars in gas.
There's a lot of value imo especially if you look past the get rich quick types and try out more financially practical chains. But back on whether it's the future of money - I think we'll have to see how countries that are adopting crypto play out by example. I wouldn't be surprised if we have more official government fiat tokenized on some of these platforms in the coming years.
3. From my viewpoint, Web3 focuses on technologies that allow for decentralization and verified ownership of content. It's possible right now to create apps that are hosted on decentralized permaweb hosting solutions such as Arweave. Whether or not this is going to be a successful model, it is a very interesting field to work in and there are some really slick things that you can do that may not be obvious at first glance. I think that there is a lot of value in a hybridized model myself of centralized services that leverage a decentralized database to verify identity / authorize access. There's quite a lot of possibilities that I can think of in such a model and think that some people get hung up on things like "how can we replace twitter/facebook/youtube/your favorite silicon valley company web site in a decentralized model" instead of trying to create completely different experiences (of who knows whether they will be successful). Web3 relates to the above 2 since the underlying idea is using a blockchain as a decentralized database, as well as having decentralized computation as well. Currently the computations allowed on chains like ETH are quite simple but there are projects that could allow for off-chain computations whose results get published back to the chain to allow for more complex applications.
You have a monthly membership at your local gym, and you go there 5 times a week to build up your fitness. You've gotten really strong, and fit, you're happy with your life, you've even made some friends at the gym. You decide with xmas coming up, that you and some of your friends at the gym would like to go on a ski holiday.
But you built your fitness at the gym. The gym owns your fitness, not you. So you have to ask them permission to use the fitness to go on a ski holiday. But they don't have a commercial arrangement, with the resort you want to go to, and the resort hasn't built a connection to the gym's API. The gym also doesn't want you to be able to socialize with the friends you made at the gym in locations that aren't owned by the gym, where they can be a part of the "experience". They basically want to own it all.
That's the world we currently live in. You put your thoughts, photos, videos, etc onto social media, and they then own it.
In Web3, you own your data. It is in your wallet, and you decide who gets access to it. Even if you build your fitness at the gym, the fitness is in your wallet. When you go to the ski resort, you just use it there, because there is a distributed standard understanding of how the protocol of using muscles works.
So, to me, that's Web3, and blockchain is like the SQL which makes this distributed environment work. Just like SQL vs Mongo, etc etc. I'm not saying it's the only way it could work, but so far, it seems like a good general solution (ignoring that atm, it isn't ideal storing actual data on the blockchain, but it's good for managing "transactions").
So, is blockchain revolutionary technology? Sure, it does a very good job of managing consensus in a robust way.
Is crypto the future of money? I think this is possibly the wrong question. Does crypto have a future in facilitating transactions may be a better question. I believe it does. Maybe something takes the place of "money" for day to day transactions, maybe not. But there are a lot of use cases where it makes sense to use cryptocurrency instead of other systems.
For example, moving money internationally (and no you don't have to be a drug dealer to want to do that, regular people do it every day). If you live in the US, and you are sending money to your family in Peru (as an example), you likely are sending USD via Western Union. The family member you are sending the money to might not have a bank account (57% of Peruvians do not have bank accounts). They have to go to the Western Union office to collect the money. That could be a day travel or more away. When they get to the Western Union office, they wait in line, and Western Union charges them a fee and it can take days to make the transfer.
With crypto, when I was sending money internationally, the cost was less than 1% and the transaction was completed in minutes. So yes, there are real world applications.
Why is crypto hated on HN? I'm not sure it is, but there are probably some vocal haters. In a conversation with my co-founder yesterday, after years of having occasional discussions regarding crypto, we got to the bottom of why he hates it. He sees the hype-cycle, the garbage and scams, and doesn't want to have anything to do with it. I completely agree. We're in the crap stage. The internet went through the same phase, where people wondered what it was good for, it was all nigerian scams, you would never use your credit card on the internet, or trust a person you met, VCs were pumping money into pet stores, and grocery stores that nobody ever used, etc etc etc.
But it was also during this phase of the internet that Amazon, Yahoo, and Netscape started. So it isn't all bad, but the majority of it is pretty bad. The people who are taking a long-term view and building something they think is good for society are the ones who will be here after the storm comes through and blows out all the scammers, and people just looking to make fast money.