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ericb

I can't really understand this point of view.

Digital scarcity is finally invented, but people feel like it will have no use-cases?

Automated finance bots (smart contracts) that work without keeping a server up has no use-cases?

All fiat currencies are deflated continuously, but you believe 100% of people will prefer this?

The ability to embed money into a digital good has no value?

How can it ever go to zero if there's someone out there who thinks it might be worth accumulating just for the remote chance that one of these ideas works out?

The idea of it going to "zero" seems irrational to me.

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> Digital scarcity is finally invented,

Totally untrue. Cryptocurrencies are artificially scarce, not actually scarce; this is most obvious when two chains hard-fork and the sum of their combined value exceeds the total value of the parent chain. You can't "fork" a scarce resource.

Even without a fork, the scarcity is still an illusion because the consensus protocol can be modified to create an infinite number of tokens if that is the prerogative of the developers or community.

> Automated finance bots (smart contracts) that work without keeping a server up has no use-cases

Of course an automated finance bot needs a server, it's just a distributed and computationally expensive one instead of a centralized one that costs pennies to operate (and I say this as someone who has written profitable trading bots)

> All fiat currencies are deflated continuously, but you believe 100% of people will prefer this

The reason people prefer fiat money is because fiat money can be used buy goods and services and cryptocurrencies generally cannot without jumping through a bunch of hoops that offer no clear benefits in return. The OpSec that goes into "being your own bank" is not worth the cost to the overwhelming majority of people.

> How can it ever go to zero

I do agree that it is unlikely to ever go to zero simply because the limited utility cryptocurrencies do provide (irreversible pseudonymous online payments) will always have a niche use case that will keep the price above zero.

> You can't "fork" a scarce resource.

A fork gets you nothing on the original chain, just like inventing "new dollars" gets you nothing except what the market decides "new dollars" are worth. Digital scarcity is still there. If I have an item on that blockchain, you can't take it from me by forking. The only way to "move" that asset would be to get my private key. Forks are an anomaly the market is still figuring out.

> Of course an automated finance bot needs a server, it's just a distributed and computationally expensive one instead of a centralized one that costs pennies to operate

This misses the point. If I want to make a trading bot, I have to find a host, initiate a business relationship with them, and keep it running and highly available. If I make an ethereum smart contract, I set and forget. If I want people to interact with my bot and know it's source code, I can do that on ethereum. Is there another way you can think of to do this and have the bot be transparent--in other words a guarantee that the source code you looked at is actually the source code you're interacting with?

> The OpSec that goes into "being your own bank" is not worth the cost to the overwhelming majority of people.

This is only true until people notice the deflation. The ability to convert electricity to money that doesn't automatically shrink (even if it is not ready-cash) is very valuable in places where it is shrinking quickly.

Forks aren't as simple as you might think - who gets to determine what the "original chain" is in the event of a fork? Suppose that ETH forked and one version changed some consensus rules to increase the supply of currency, and Vitalik, the Ethereum Foundation, all of the miners/stakers, and users moved to that chain - wouldn't that be ETH? But it would violate the principle of fixed digital scarcity.

Confiscation of assets is obviously possible via forks as well, but the fact that someone can't take your money without your private key doesn't relate to scarcity.

> digitally scarcity

As long as crypto is pegged to a fiat currency like USD then the scarcity effect is going to be destroyed by speculative valuations.

USD isn't going to stop being fiat because it's too useful for it to be fiat when doing market regulation.

USD might stop being standard currency, but I expect other countries are going to maintain fiat standards because being able to vary the nominal amount of money supply is a better policy tool than merely controlling gold, because it opens up another theater of war beyond maintaining hard power.

>All fiat currencies are deflated continuously, but you believe 100% of people will prefer this?

I have no idea if 100% of people will prefer it, certainly, some who hold immense amounts of a currency will not, but it was one of the smartest ideas mankind ever had, because it introduced the ability to control the money supply and made currency a very important tool in ensuring stability and made it an effective means of exchange.

Cryptocurrencies are not a means of exchange. They're basically a pile of gold that people imagine themselves sitting on and that increases in value without them doing anything. Which is good if you're one of the few people who have much of it, but it is absolutely detrimental to society at large, which is uninteresting to the libertarianism on steroids that underpins the crypto-craze.

> it is absolutely detrimental to society at large

This may or may not be the case, but regardless, individual decisions are usually made based on an individual's self-interest rather than the warm fuzzy feelings about helping society.

> Cryptocurrencies are not a means of exchange.

It is not necessarily true that that will remain the case. Either way, that doesn't matter if society coalesces around one of them as the "WorldWide Ledger" because individuals are incentivized to avoid inflation.

There is no incentive for any average citizen to engage in crypto-currency activity if it is a shoddy means of exchange and favours individuals who own a large pile of it. Most individuals are debtors, not creditors, and for them, inflation is a boon because it benefits them and erodes debt burden over time at expense of creditors.

It is in the interest of someone who uses money as a means of exchange and not as a store of value (which is the overwhelming majority of individuals) to reject crypto-currencies in favour of fiat currency.

Your average citizen gains nothing from adopting a currency that is highly volatile, concentrated in the hands of a few, and awful at completing everyday transactions.

> Your average citizen gains nothing from adopting a currency that is highly volatile, concentrated in the hands of a few, and awful at completing everyday transactions.

Maybe, but those problems are not necessarily permanent, and it can be valuable without targeting the "average citizen." As a counterpoint to your "gains nothing" view, many "average citizens" used bitcoin for transactions in the early days, only to find out that holding some of their currency in bitcoin made them rich, so they did gain something. Even if that is only a small possibility, the possibility is still there.

> As a counterpoint to your "gains nothing" view, many "average citizens" used bitcoin for transactions in the early days, only to find out that holding some of their currency in bitcoin made them rich, so they did gain something. Even if that is only a small possibility, the possibility is still there.

Confirming that it is preferable to "HODL" than spend this currency...and any gains were at the cost of new bagholders who in turn expected to sell their coins for an even higher price.

I'm sure that's intended as some sort of damning critique, but that's true of most assets in a portfolio. Real estate, commodities, stocks, currency, options, index funds, precious metals--all held in hopes of selling for a higher price.

Then don't call it a crypto currency and pretend its going to replace fiat currencies any time soon.

A currency is something people want as means of exchanging goods and services, an investment instrument isn't that.

And crypto has performed terribly as an investment instrument as well...can you imagine the chaos if the stock market swung 5-15% from one week to the next for months on end?

Lastly you're conveniently ignoring that stocks can pay dividends, and don't serve only as a speculative asset... Because publicly traded companies generally produce something useful and of tangible value to society, unlike cryptocurrency projects.

Market forces will ensure a bitcoin exodus until central bankers stop acting like mental patients with unlimited printer ink cartridges.

The Bretton Woods System ended under Nixon to prop up the military ambitions of this nation, bad move using debt to start pointless wars. Current monetary system structure is deeply flawed, until reform BTFD in BTC.

Note: If you don't feel like paying for the next war, it's a nice bonus in BTC's favor.

Not being ever able to make more coins is a pretty serious feature! Whereas USD can be printed any time.

Individual cryptocurrencies are inflationary or deflationary depending on their algorithm. Monero, for example, has a 2% tail inflation built in to account for lost money and an expanding economy. Inflation can also be tweaked or changed based on an agreement of the miners, or whatever else is built into the protocol - it could be a consensus mechanism beyond mining, or a central administration (which wouldn't be different than fiat really). My main gripe is that the popular logarithmic inflation curves are WAY out of whack and reward the early adopters way too much, making it more of a ponzi scheme than something useful, and ultimately making themselves poorer because if someone feels ripped off, they can invest in a new coin where they are the early adopter, essentially inflating the total money supply.

That said, inflation isn't always a good thing for some people. Neither is a centrally controlled money supply which also has its own winners and losers

Sure you can conceive of a crypto currency that is centrally controlled, targets inflation and focusses on price stability, but then you have simply invented 'crypto-fiat'.

The key point is that Ponzi schemes you are talking about are not an accidental byproduct, they're the entire point. There's no reason to reinvent electronic banking, we already have electronic fiat money that works very reliably.

Cryptocurrencies are digital gold and basing an economy on them would be like bringing the gold standard back. The problem being that every economist will tell you, for good reasons, that this is a terrible idea. Cryptocurrencies are not a technological innovation, they're a technological regression. They make things that we already can do more complicated and energy expensive which is the opposite of what technology is supposed to do.

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