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Comment by jandrese | Hacker News Reader

What use is a currency (or commodity!) that you can't convert into a good or service? It seems like a fundamental problem if the theoretical advantages of a currency are lost the instant you try to use it to buy something.

Otherwise we're just wasting gigawatts of electricity to print Monopoly money.

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The assumption has always been that cryptocurrency driven markets would emerge completely decoupled from states and their systems of financial regulation, and so conversion would be neither necessary, nor desired. Everything you could possibly want to buy, legal or illegal, would be payable through the crypto market. Cryptocurrencies were supposed to undermine fiat, or at least render it unnecessary, barring taxes, not cooperate with it.

It took a serious tin hat warrior to actually believe that line. "If everybody in the world instantly switches over to my new currency overnight everything will be awesome!" That's so far divorced from reality only pure mathematicians could love it.

Not to mention it would never work, the blockchain has way too much overhead (many many orders of magnitude) to support an entire world's worth of exchanges every day. There literally isn't enough electricity in the world. People would have to do all of their transfers on third party exchanges that undermine all of the crypto guarantees of the currency in the first place. They're no better than putting your fiat currency in a bank run by criminals that have no respect for laws. And I'm not talking euphemistically about regular bankers here, I'm talking about full up scam artists. I mean why not, it's not like the law is going to get you. There are no pesky regulations to get in the way. No annoying insurance adjusters breathing down your neck. You have total freedom to scam everybody all day long.

Also consider nearly all of Bitcoin and other cryptocurrencies are "premined" in the sense that only a few early adopters control more then half the supply due to how the work readjustment algorithms are skewed to generate all the coins very easy for a few users but later new users don't have equal access to produce coins as easily or cheaply as those other users.

Also consider nearly all corporations are "premined" in the sense that only a few early founders/early investors control more then half the shares and new investors don't have equal access to buy shares as easyly (sic) or cheaply as those other investors.

Curious what you mean by "There literally isn't enough electricity in the world."?

BTC uses the same amount of energy to produce an empty block as it uses to produce a full block.

It has diminishing returns on the amount of work you get out of each hash, so if you wanted to support millions or billions of transactions per second (world scale) it would become impossible to sustain.

There's also the problem that the block size is capped which is maybe what you were referring to?

A majority of "everything you could possibly want to buy" includes physical goods and physical services.

Markets cannot be completely decoupled from states as long as they trade in real goods and services - as long as you're not trading solely in virtual goods, the other part of the transaction still requires you to interact with the real world under the jurisdiction of some state, and thus the whole transaction, including the cryptocurrency (and the source of that cryptocurrency) is subject to those rules.

If you sell some virtual services for cryptocurrency and later want to buy a car with the proceeds, then not only the car purchase, but also your sale of these virtual services must have been done "cooperating" with all the rules of fiat - states can and will forbid using the proceeds made in markets completely decoupled from their systems of financial regulation; they will use their hold over the physical markets to try and regulate the virtual markets also as much as possible. In the long run, if cryptocurrencies won't cooperate, then they'll be ostracized - there's nothing stopping the gov't from passing a law that simply prohibits any legitimate merchant to accept bitcoin, greatly limiting the range of things that you can actually buy.

>Otherwise we're just wasting gigawatts of electricity to print Monopoly money.

The sooner people realize this is exactly what is happening, the better.

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