He’s criticizing Eth for being a “ science experiment”? The entire crypto ecosystem is just an experiment, including bitcoin. It’s all immature and unstable.
Now replace spent matches with spent compute.
The cycles are not wasted - they secure a digital currency.
Banks and governments use immense resources to secure fiat currency.
But why though? Is the USD that insecure? Is fraud so prevalent that its debasing the value of currency? Do we literally need to spend 70TWh per year, and that's just in its current state as a semi novelty currency/commodity, to secure the concept of money? Can you imagine how much it would cost to run bitcoin if it was the primary reserve currency of the world?
If I use a car that gets 1 mile per gallon to visit my grandma, I'm wasting basically all the gas I buy, despite it getting me to my destination.
Proof of work is waste.
Bitcoin mining depends on finding a hash that starts with a whole bunch of zeros, which is more or less equivalent to being just close enough to a jesus that you can sell it for money.
Joining a mining pool gets you a relatively fixed payout, counteracting the lottery nature. You'd only have to burn one box of matches to get a guaranteed payout of 300/730000 of a jesus match.
Yes it's still a waste of power.
Now i'm not expecting nor wanting to get into a debate about the theory of value. I do not expect to be able to win, nor do I want to, but I do hope some doubt is cast into the proposition:
> Matches have a value, you light them and they produce a certain amount of energy
Matches have a _utility_, not necessarily a value. Additionally, compute is _also_ just "burning resources", only its electricity instead of potassium chlorate. Arguably a more fungible form.
> regardless of the fact that it has no debt instruments, lacks liquidity and is completely unregulated and prone to theft.
Only one of the four accusations stands up to any critical thought - which is that it is "completely unregulated". If that is the core of your argument against distributed, trustless currency, then that argument applies equally to all pre Federal Reserve transactions the world over, and I'm not sure what the implied problem is.
The best quote from the first and most approachable of the links above:
> All new mediums of exchange spawn skepticism, and should. For much of the 19th century, paper money was held in ill repute because it seemed so ephemeral and detached from value that could be easily recognized: land, gold, size of armies.
Labour is how time gets saved -- one person spends their time doing something so that another person doesn't need to spend their time on it, and thus the person spending the time gets some money as a token for the time they spent.
(But I agree with your point.)
Time is the sacrifice. If everybody could have a high standard of living and not work, most would chose not to work and spend that time with their families instead. Obviously, there are some who find meaning or purpose in a lifestyle of work, and chose to do so even if they don't need the compensation which comes out of it. Each to his own.
The key distinction between the currency and Bitcoin is the government's use of force to mandate that people accept the currency as a unit of payment for services (and use it to pay taxes). There is no intrinsic value. After all, it is merely paper or digital numbers.
It's amusing that anti-bitcoiners will use the government force argument to try and push people away from bitcoin. "Bitcoin is no good because it is not backed by government force."
When people hear that, they say. "Oh my god, really? How can I get some?"
Because no one can be compelled to accept Bitcoin to extinguish my debts to them (i.e. by the courts) and I can't pay my taxes in Bitcoin to my local government (no, "just-in-time currency exchange doesn't count).
So given these problems, what is the exchange rate of Bitcoin into anything else supposed to be? Given, again, that eventually, everyone transacting in Bitcoin needs to transact out of Bitcoin in order to meet local obligations like taxes, or just to acquire goods someone actually wants to accept payment in.
Bitcoin is a lot like gold, in that people might find some cosmetic and novelty value in it which gives it more then 0 value. But unlike gold, it consumes a lot of real world resources (electricity, structured silicon) in order to continue existing.
To quote:
> Because no one can be compelled to accept Bitcoin to extinguish my debts to them (i.e. by the courts) and I can't pay my taxes in Bitcoin to my local government (no, "just-in-time currency exchange doesn't count).
In the edge cases of (almost) immediately resolved debt, this is a non-problem, given that we can simply agree not to complete a transaction in case one of the parties involved doesn't want to accept Bitcoin. Hence, the fact that you cannot be compelled to accept Bitcoin is irrelevant in this situation.
debit noun Definition of debit (Entry 2 of 2) 1a : a record of an indebtedness specifically : an entry on the left-hand side of an account constituting an addition to an expense or asset account or a deduction from a revenue, net worth, or liability account
I would say yes all transactions involved debt.
> Because no one can be compelled to accept Bitcoin to extinguish my debts to them (i.e. by the courts) and I can't pay my taxes in Bitcoin to my local government (no, "just-in-time currency exchange doesn't count).
Imagine that! People are willing to accept my bitcoin as a payment for their services voluntarily, and not because they are forced to?
Turns out that there are quite a large number of people who like the idea of economic freedom and dislike the idea of this big cartel telling them what they can or can't do, who they can or can't trade with. They might dislike it so much that they're willing to make the hurdles, and take risks, in order to exchange between currencies to meet their obligations under such repressive systems and achieve some level of financial sovereignty outside it.
People want the choice. They want the choice because the government who holds a monopoly over many businesses in the geographical region they reside often does a bloody awful job, and their prices are too high (a giant chunk of ones earnings, then another chunk of everything they buy). Private enterprises could offer far better service at lower costs and have them delivered on time. If they under-perform, people could pull out their money and pay someone else for the services.
The main obstacle for this kind of voluntary trade is the men with guns saying "That kind of business can't operate here because this is our turf."
In fact it's worse then that - since the value of early Bitcoins is less then the value of later Bitcoins, but all Bitcoins are going up in buying power, the electricity company is eventually the richest entity in Bitcoin without even having to be malevolent.
Of course, this doesn't happen because none of them can pay their taxes (or their suppliers taxes) in Bitcoin. In fact no one using Bitcoin can - everyone eventually has to sell all their Bitcoins to someone to recover the currency they need to do that. But who's buying it then? There's a finite amount - if it stays in use it's worth more then you sold it for when you try to get it back - or, since everyone eventually has to sell it, it's worth less - and less again.
Your assumptions are all resting on the idea that Bitcoin can't be used to pay taxes. This is already pretty flawed in a few places where it is possible. It will be flawed in many places fairly soon, because governments don't want to miss the boat either.
But Bitcoin maximalists don't actually care about this government thing. They would rather it collapse in on itself so that they can instead spend their money with businesses which make much better use of it than politicians.
For that reason, there is a demand for Bitcoin, and while the demand exists, people are willing to pay more to acquire it. At this point, they have to pay more because they're buying from a market with reduced liquidity, largely because existing hodlers would rather keep hold of it because they're pretty confident it will continue to appreciate in value over time.
And in the current world, where the government sanctioned financial services (paypal, mastercard etc) are actively unpersoning people for having unorthodox political views, there is clearly a growing market for an alternative financial instrument which this cartel does not control.
There is a finite amount of Bitcoin total by nature of the protocol. The electricity company is vital to Bitcoin being usable since it's a digital currency. The miners might be necessary too, but they need huge amounts of electricity - which if they had to pay in Bitcoin, means they are paying some portion of the dwindling number of Bitcoins to the electricity company. As is every Bitcoin user. And every bit of Bitcoin they get is worth slightly more after they get it then it was when it was paid, so their purchasing power is going up and up and up. You can't even found a new electricity company and try to compete on price, because beyond some point the original buyer can buy your new cheaper electricity without measurably reducing their spending power, and to capture the market they need to somehow not enrich you too much while doing it. And then of course, best case you just have 2 big electricity companies controlling all the wealth forever. Deflationary currencies are bad.
> Your assumptions are all resting on the idea that Bitcoin can't be used to pay taxes. This is already pretty flawed in a few places where it is possible.
"Just in time" Bitcoin -> currency conversions do not count. They don't count because they depend on an exchange rate (and are provided by a private company in all examples). The government's tax office is not accepting Bitcoin - it's letting someone act as a payment provider but the payment provider is still paying them in the local currency (and taxes are being assessed in local currency, not Bitcoin).
If the price of Bitcoin collapses, you'll owe more Bitcoins. If my local currency collapses, I'm still only taxed on the portion of my earnings in that currency.
> But Bitcoin maximalists don't actually care about this government thing.
However governments care a lot if you don't pay your taxes. And the utilities care a lot if you don't pay them.
If electricity providing is such a lucrative business, then there will be an extremely competitive market for providing that service, and no one company is going to be able to charge silly fees because they will make themselves obsolete. It is only through a government granted monopoly that such companies are able to exist.
Governments care that you pay your tax, but their ability to enforce their tax collection relies on violence, and ability to prove the taxes need paying. Bitcoin creates an economy where the latter is more difficult, perhaps impractical with more private technologies.
It might turn out that governments have to move to being more voluntary models of trade, else they might not be able to acquire enough taxes to fund their operations.
So you are saying that bitcoin would only ever become more and more valuable?
How can you similtaneously believe this statement, and that bitcoin is worthless?
They can't both be true. Either bitcoin is deflationary, IE, it goes up and up in value, and becomes more and more valuable, or it isn't.
Which is it? Is bitcoin worthless, or it is so extremely valuable and amazing, that it is going to take over the entire world with how deflationary it is?
Personally, I'd want to support something that you apparently believe is so useful that it is going to take over the world.
The reality is, with nothing backing it (i.e. no government accepting it for taxes), it's not actually worth anything in the long run because eventually everyone has to cash out.
Which isn't to say it's not worth anything now - but the market is exploitative. The goal is to convince everyone to buy in, so those who are in can get out, hopefully taking a profit (not in Bitcoin) along the way.
My point, is that anyone looking at Bitcoin and wondering if they should enter it should absolutely not. Deflationary crypto is a rigged game in favor of those who got in first, and you can never catch up (barring their irrationality). Bitcoin's highs are not going to be repeated, and anyone asking you to buy in wants you to do so so they can get out.
But this is already happening. There are multiple places around the world that accept bitcoin to pay for their taxes.
> it's not actually worth anything in the long run because eventually everyone has to cash out.
Is gold worth nothing, because eventually people have to cash out? Gold is also deflationary.
What people need to understand is that deflationary currencies have existed for centuries. The idea of a federal reserve, constantly controlling inflation rates, is a new phenomenon.
People 200 years ago somehow survived with deflationary currencies.
I am in favor of free choice. And I see no reason why people shouldn't have the choice to own a deflationary currency. If you don't like deflationary currencies, all you have to do is simply not use it, and leave the rest of us who disagree alone.
> Is gold worth nothing, because eventually people have to cash out? Gold is also deflationary.
Gold is not used as a currency today. Neither is Bitcoin. The argument over deflationary currency presumes a world in which Bitcoin fulfills the stated objective of it's adherents as a currency.
Bitcoin and gold are both commodities today. As a commodity Bitcoin has very little to recommend it. Strictly speaking this is true of gold as well, but gold is historically very complicated, and has the benefit of being a physical resource which displays some physical scarcity (of note: gold as a currency isn't strictly deflationary, your inflation rate it just pegged to the rate of mining and discovery).
On gold as a currency - Middle Ages economies routinely bankrupted themselves by making huge windfalls in gold, and failing to recognize that all they'd done was drive a lot of inflation (i.e. the Spanish after they found the Americas - they didn't raise taxes, so the royal treasury found itself in debt even though by simple thinking they should've been very wealthy). Bitcoin has all these problems, but unlike gold also consumes resources to retain it's value. A block of gold after 10 years is still just a block of gold.
> I am in favor of free choice.
And I'm not arguing anything should be illegal. I am arguing rational people should recognize what Bitcoin is, and think carefully about how they value it. It is not what it's advocates say, and it is mostly powered by the reality that your average person does not think carefully about the nature of money very often.
At the end of the day, something has value because two people agree it does. One painting is worth $100million and another $100 because two people agree that’s what it’s worth. Why two people agree something has value is the matter of endless debate. But I assure everyone reading that the commenter I am responding to is not certain to the answer, and actually no one really knows. This is philosophy, we can all have opinions.
When a transaction happens the two people very probably don't agree on the value. Rather, the seller values the painting at "less or equal" of the strike price and the buyer values it at "equal or more". The transaction happens if those two regions overlap somewhat.
Because it has value to me, and to many other humans who I know and trust, which gives it _extrinsic_ or subjective value. To be snarky: Maybe you should learn to think through others ideas, or read their suggested reading, before accusing them of ignorance.
But moving on, Bitcoin is not just a store of value. It's electronically transmittable without middle men. You can think of it as gold you can teleport across the globe. Lots of people would find this to be "intrinsic value."
If you want to improve the metaphor find a way to make it so that as a holder of matches I can have very high confidence that there is an upper limit of N matches that can exist at any given time extending far into the future.
Also add some way for me to transfer my matches to another match holder in ten minutes (or an hour, or whatever reasonable interval) regardless of the physical distance between us.
Anything could technically be used as currency. Historically people have always used something that is difficult to forge, because forgery results in inflation, meaning the currency which they hold loses its purchasing power over short times. It ends up not worth the labor they put in to earn it. If that were known at the time they done the labor, they would've asked for payment in something else.
Bitcoin is the best currency that has existed, because it is the first which is absolutely infeasible to forge, and it is simultaneously easy to verify its authenticity.
It's estimated that $70 million dollars in counterfeit money is in circulation in the US. At an estimate of $0.12 per kWh of electrical use Bitcoin uses approximately 70 tWh of power a year. Lets see that comes out to about $120m. At what point is the cure worse than the disease? Again this is just for Bitcoin in its current state as a semi-novelty currency/commodity. How much would it cost to operate the grid for bitcoin if it was the worlds primary reserve currency?
Before your government can create its next spending budget, it needs to pay off its debts with interest. A big chunk of every dollar of tax you pay is taken before the government can even think about what it is going to spend the rest on. This is a viscous cycle because the government can't meet public demand with the remaining money it has and needs to borrow more again!
Each time they print, it devalues the dollar in your pocket by a few cents. This means when the government needs to pay back its debt with the interest, the money it is using to pay back is not worth as much as when they borrowed it. Ooops.
The cost to operate the Bitcoin grid is unimportant, because it is voluntary, and not taken from the public purse. You can chose not to participate directly if you don't want to put in resources, and rely on some other industry much in the same way you seem keen to rely on a government to do things for you.
Deflation causes spending to stop because people hoard money, as spending stops, economies dry up, and voila... economic stagnation at best. But no one without a formal education is Economics is likely to even be remotely aware of that.
Inflation, and Keynesian economics, have empirically served the world quite well. The government's and social policies that go with them not so consistent BUT and this is the important part-- Economics doesn't give a fuck. Inflation is a tool to allow an economy to grow, deflation is a tool to shrink an economy.
Economics is the science of resource management, it's not an opinion. Your opinion is as depressing to me as it is empirically wrong.
Here's an example of deflation: Moore's Law. If computing power is going to double in 18 months, then a computer I buy now will be worth much less in 18 months. If that's the case, best not buy that computer and wait 18 months right?
Another example is a car. It loses 20% of its value on purchase and continues to lose value year on year and is eventually worth nothing.
But nobody would buy a car if that were the case!
Economic theorists are mostly employees or funded by the banks, the central banks and the governments. There's a "consensus" among them that inflation = good because it benefits the industries they work for.
Anyway, it does not matter, because Bitcoin cannot be inflated, and if people now have the choice to hold a deflationary currency or an inflationary one, let them pick! We'll see if those economists were right after all when people actually have a choice.
"No investment" being the core point - the rich may get richer currently, but they have to buy stocks, bonds, start companies in order to do so - take risks and temporarily at least hand their money to people with less.
Under a deflationary model, they don't - the incentive is to avoid spending and investment, since the 100% safe investment is holding your money. The rich get richer - the poor are forced to part with any currency they have and can never join. Of course the system collapses if you don't have to buy in (i.e. no taxes) because why should anyone join such a regressive system?
Which, incidentally, is very much the reason no one should be getting into Bitcoin - all the coins were mined by early adopters, and you getting into Bitcoin is just allowing everyone who has cheap coins to cash out.
EDIT: And Moore's law is an ideal example of this problem really - at every point you shouldn't buy a new computer unless the present value you'll gain from one is outweighed by the depreciation in the future. Turns out computers are pretty amazing so this is a lot less of a problem - but computers actually do things. Bitcoins don't.
If you use the same argument in reverse for an inflationary economy it doesn't add up. The argument would be that everyone would avoid saving. This is only true if you have hyperinflation. Small amounts of inflation are manageable. The same is true for deflation. If deflation is low, the effects it has are manageable. If we have hyperdeflation, then sure, people will avoid spending as much as possible.
If deflation is low, the amount which could be gained by holding the currency is tiny compared to the amount which could be gained by investing it in productive enterprises. The same is true in the inflationary model, because lenders must pay interest on borrowed money, their productive enterprises must earn at least the the amount lent plus the interest and the difference due to inflation, or they'd be making losses.
> Of course the system collapses if you don't have to buy in (i.e. no taxes) because why should anyone join such a regressive system?
This is why socialist types repeat the same mistakes over and fail to recognize them, or the value of free markets. The reason people would join such a system is because they want to get wealthy too!. People desire wealth. If they desire it enough, they will be productive and climb the ladder to get into the club. If they are unproductive, they will probably whine and complain that they should be entitled to other people's wealth. Socialism is a utopian ideal because it ignores human nature.
Bitcoin is extremely risky at this point, and was even more so 9 years ago. The people who invested then took massive risks in doing so. People investing now are taking huge risks. It will be a risky investment until it becomes pervasive. There will probably many more cycles of inflation and deflation because adoption does not match the supply rate. If people earn money from taking this risk, good on them. If people don't take the risk, they're not going to be part of the club. You've got to be in it to win it. Bitcoin is not like land rights which are exclusively granted by rulers or taken by force. There is no restriction and anybody can be an equal party.
The early adopters who have mined coins need to pay their electricity bills. It's not free money. They've had to sell the coins into a market. The distribution of coins is much more widespread than the mining process because of this. People hodl bitcoin even during inflationary periods because they believe it has a strong selling point which will give it leverage in the longer term. (They're low time preference people. Not necessarily the already wealthy.)
> And Moore's law is an ideal example of this problem really - at every point you shouldn't buy a new computer unless the present value you'll gain from one is outweighed by the depreciation in the future. Turns out computers are pretty amazing so this is a lot less of a problem - but computers actually do things. Bitcoins don't.
This is precisely my point. People still buy computers. The thing they spend their money on is more useful than the money itself. This is true of anything really. People need things to live, they need leisure and entertainment, and they're willing to spend a bit of money on it now, even though it will be cheaper later. It applies to most commodities: they lose value over time faster than the currency does. This is what makes the currency desirable to hold over those other commodities when people don't need to spend.
Inflation has the perverse incentive that it encourages people to spend when they don't need to spend. People are trained to have high time preference lifestyles, which are extremely hard to escape from if you're a low earner. You see the behaviours of low earners often do not help their situations at all, which is why they often get stuck in their economic position. The argument that economies should encourage spending (particularly among low earners) obviously doesn't help them either. They should be encouraged to save. The idea of intentionally building things to only last a few years, so that they need to buy a new one every few years doesn't help them (or landfills) either, but is supposedly "good for the economy."
Only in the presence of a Reserve Bank, which Bitcoin doesn't have. There's no ability for any authority to increase the number of Bitcoins possible, which means it's permanently deflationary.
Inflationary currencies pay interest via Reserve Bank policies in order to be managed. Bitcoin has no such mechanisms, nor can any be implemented.
> The reason people would join such a system is because they want to get wealthy too!
Which is why ICOs are so popular. Why pay tribute to the original Bitcoin miners when you can just become you're own, recognizing that the only thing holding up the value is irrational in the first place (doesn't mean it's not a real way to get people to part with their money).
> The thing they spend their money on is more useful than the money itself.
Computers are one good in many-faceted economy. Deflationary currency means the currency is worth more against everything in the economy with each passing day. So not only will I not buy a computer with it, I will also not put it in a bank (why risk it?), not buy stocks, bonds, or even really loan it to anyone. In fact the right thing to do (if there was anything pinning it's value) would be to first spend all my non-Bitcoin money on necessities, and acquire and sit on, in offline wallets, as much Bitcoin as possible. But Bitcoin is a currency - to even be useful people have to actually use it.
So why don't people do this? For the aforementioned reasons - no one can actually require me to hold Bitcoin to pay taxes or extinguish debts. So just sitting on it is foolish since there's no real way to predict when the irrational market will end - except over the long term, I do know the price must crash since every Bitcoin market participant must eventually cash-out to pay taxes and electricity bills and what have you. So in fact there's nothing holding it up. The only actual reason anyone has to hold Bitcoins is when they get ramsomware'd.
Thank god there is no reserve bank. Markets do a far better job than individual people nearly every time.
Eventually, deflation in bitcoin will be very low and will be only down to people losing their private keys. In practice, I think this will become less common as people realize the importance of having redundant and secure storage of keys, perhaps involving several distinct parties.
If the human population begins to shrink, which is expected after a while based on observations from developed economies of reduced birth rates, then eventually bitcoin may have less demand and therefore lose purchasing power. Before then, we will see demand which far outpaces the rate of supply.
> Which is why ICOs are so popular. Why pay tribute to the original Bitcoin miners when you can just become you're own, recognizing that the only thing holding up the value is irrational in the first place (doesn't mean it's not a real way to get people to part with their money).
Yes, people want to get rich, and ICOs will continue to be a think for as long as people get away with it. I think many people have begun to realize the nature of them though, because they've had their gambles and been left holding useless bags. Some get rich, some lose money. You can't prevent greed, nor stupidity. Some people don't learn after repeated failure, as we see with gambling addicts all over. Those are fine, because they're throwing away their money at government sanctioned businesses. (Unlicensed gambling not OK of course!)
The desire to get rich is not the only usecase for bitcoin though - it is just a particularly prevalent attitude towards the currency because most people do not understand austrian economics and its practical use as a medium to enable free trade in a way that existing currencies do not.
Bitcoin also enables an economy of microtransactions which were previously not possible. People will be able to pay per article they read, per video they watch, in real time.
> Deflationary currency means the currency is worth more against everything in the economy with each passing day. So not only will I not buy a computer with it, I will also not put it in a bank (why risk it?), not buy stocks, bonds, or even really loan it to anyone. In fact the right thing to do (if there was anything pinning it's value) would be to first spend all my non-Bitcoin money on necessities, and acquire and sit on, in offline wallets, as much Bitcoin as possible. But Bitcoin is a currency - to even be useful people have to actually use it.
People will use Bitcoin when they want goods or services from people who accept it. They'll also hodl it, because most of them have a low time preference. Also, given they hold both bitcoin and fiat, they will typically spend the fiat before digging into their Bitcoin. This is Gresham's Law - bitcoin is the better money.
As I've mentioned. People will still pay for goods and services which are useful and valuable to them. They will be more reluctant to spend if deflation is high. If deflation is low, they will probably not pay much attention similar to how people generally pay little attention to low inflation.
Bitcoin is currently volatile and moving between inflation and deflation. It is inflationary when demand is not meeting the supply, which is still increasing. It is deflationary when demand exceeds the rate of supply, as was the case throughout 2017. We will see many more such cycles, because the demand for economic freedom exists, and other currencies are not able to provide a solution to it.
> So why don't people do this? For the aforementioned reasons - no one can actually require me to hold Bitcoin to pay taxes or extinguish debts. So just sitting on it is foolish since there's no real way to predict when the irrational market will end - except over the long term, I do know the price must crash since every Bitcoin market participant must eventually cash-out to pay taxes and electricity bills and what have you. So in fact there's nothing holding it up. The only actual reason anyone has to hold Bitcoins is when they get ramsomware'd.
It is that nobody is requiring you to hold bitcoin which is its main selling point. It is voluntary. There is a high demand for voluntary trade, and it is not being provided by governments. This might be mainly black markets or grey markets right now, but those terms are whatever the government wants to label them, which changes all the time. This can be seen for example in Toronto, where not long ago, the narrative was "drugs are bad." Now it's "cannabis good!" (As long as you buy it from a licensed seller so we can collect some of the money, and if you dare try to sell it without a license, we'll send in the guns).
People are fed up of being told what they can and can't do. If they want drugs, they'll get drugs, and they'll acquire the currency the drug sellers take if they have to. The same thing applies to many markets which the government does not allow because of stupid laws, or because they hold the monopoly which they can only maintain with the use of force.
This is not how deflation works. There's plenty of online material on this subject, you would do well to get familiar with it: https://en.wikipedia.org/wiki/Deflation
>the choice to hold a deflationary currency or an inflationary one, let them pick! We'll see if those economists were right after all when people actually have a choice.
We have them already. They just aren’t called currencies because their price instability makes them somewhat useless as currencies. See: gold.
Right. The deflationary argument is that people won't spend money because the money appreciates in value over time versus the things they would spend it on. Those examples, and there are many others tell a different story. People will buy things which have utility, even if they lose value relative to the currency over time.
>We have them already. They just aren’t called currencies because their price instability makes them somewhat useless as currencies. See: gold.
You say the price of gold is unstable, because you're taking a dollar as your reference point. Dollars are actually far more volatile than gold because they can be printed arbitrarily, where gold is only found in limited amounts. If you measure the value of the dollar in terms of gold, over time, you'll see which is really the useless one!
The reason gold is not used much any more is largely due to the historical practices of confiscation and outlawing of possession. Admittedly, it is not the best commodity to use as currency due to its weight and difficulty to verify the authenticity of.
Thankfully, Bitcoin can solve all of those problems. It can't necessarily be confiscated if you manage your keys correctly. Possession can be plausibly deniable. It doesn't have the problems of transport, and it is trivial to verify the authenticity of. As a bonus, it is well suited to our digital age where much of commerce is conducted remotely.
Kenysian and austrian concepts are not mutually exclusive
The normal funding cycle is this: government issues bond in exchange for cash now. These are treasury auctions and they happen constantly.
There is no injection of money in this process. If you don’t believe that, ask yourself this. Why did the exact same process work when the US dollar was backed by gold?
There’s nothing particularly special about AirBnB in terms of software. It’s barely more complex than Bitcoin.
But implementing games so that cheating is prohibitively expensive is very hard. That’s why we only have pretty simple games so far, like “ledger” and “compute”.
But we will some day have the entire set of Games Whose Cheats Can, With Some Effort, Be Made Prohibitively Expensive available to us as cryptocurrencies.
Tokens in those systems will all have intrinsic value proportionate to the value those games have in society.
I find many other issues with your framing of bitcoin, but the above is the most glaring, to me.
He's responding to people saying "hey, why are you criticising ETH, don't you like this stuff?" And he's saying that even the "blue chip" cryptocurrency projects are still very experimental phases and he takes them seriously enough to criticize them.
Depending on whether you want something cool to experiment with, or something to actually use, one is far better than the other.
https://medium.com/@tuurdemeester/why-im-short-ethereum-and-...
[0] https://www.themorgan.org/exhibitions/the-great-experiment
You don't see the instability, it's just people can't use it much more with the current implementation. Unstable future perhaps the parent meant.
that's a pretty stable thing you're describing. and lightning is actually in beta now and has grown quite a bit.
> Unstable future perhaps the parent meant
the only stable thing about future is heat death of the universe. and even that is possibly up for debate.
shifting goalposts much?
https://thenextweb.com/hardfork/2018/06/26/lighting-network-...
But that article doesn't mention that the limit is artificially imposed so that people aren't risking too much money on unproven code.
As the system is shown to be stable, that limit will be raised and eventually removed, and the issue here will no longer exist.
Plus, failure in this case means "using the blockchain", and for larger amounts of money the fees are generally a fraction of the amount transferred, even during times of high mempool.