Pricing a "market cap" for a crypto when only a tiny percentage of it is trading in the market is not a realistic measure of value.
I'm not aware of any reason why the Bitcoin network couldn't switch to VPN-level overlay networks. Using Tor would be somewhat problematic, given the limited bandwidth. But I'm pretty sure that it'd be doable. Other options include Orchid and Loki.
Mining could be an interesting issue. Government pressure could render large-scale mining operations unworkable. But as I understand it, the Bitcoin network could function just as well with far^N less mining capacity. Difficulty would just decrease with less mining competition. And that would mitigate the key negative impact of electricity usage.
Not too many years ago, there were trusted services that sold Bitcoin (and Liberty Reserve and Pecunix) for cash sent anonymously through the mail. I haven't needed that for years, but I'm pretty sure that such services still exist. And given the escrow sector that's developed to serve dark marketplaces, trust is likely far more verifiable.
Cryptocurrency and meatspace money are now entirely separate for me. I earn all the cryptocurrency that I need anonymously online. And I don't risk manifesting it as meatspace cash. While that's not currently workable for most people, I don't see why it couldn't become so.
How do you buy things in real life?
The point is that my online anonymous coward personas and my meatspace identity are as isolated as I can manage.
i.e., you cannot fulfil your meatspace needs using cryptocurrency as of yet. It doesn't matter that you are able to isolate your identity online from your meatspace identity.
And this is what gov't can easily enforce - through money laundering laws. If ever cryptocurrency becomes prevalent enough to offer meatspace usage directly, you can bet your bottom dollar that gov't will regulate, and prevent anonymous spending (at least, for any large-ish amounts).
For example, cryptocurrencies could displace cash for gig economy tips. Maybe they already have, for all I know. Also for online porn and gambling.
Now, most people I know who hold Bitcoin are motivated primarily by other reasons. But still, I can cut down my cash spending/donations by a few $1000/yr just by doing those things above — which have fairly loose ties to my physical person — with Bitcoin.
I've also done some privacy-related development. For example, a client wanted a private IKEv2 server with a nested VPN chain backend. To provide iOS devices with anonymity that was stronger than VPN services provide, but also easy to use.
Also, oil has large carry costs. Many things with large carry costs are called toxic garbage and have negative value. Oil is just a useful so it mostly has positive value, but the moment you can’t use it, it joins in valuations other toxic garbage.
https://cointelegraph.com/news/trueusd-audit-shows-full-us-d...
Not only are many of them full backed, but they all trade extremely close to parity with one another. Which means that they are all considered relatively safe by the people actually holding them.
trading rather than holding. The people doing the trades are the ones determining the pricing. The people holding are reducing the supply of the asset in the market, but they're not actively participating in pricing of trades.
"Stablecoins" are not stable. How many times do we have to learn this lesson in finance? The probability distribution underlying this stuff is not what stability proponents think it is. They will be stable until they aren't, and then they will blow up. Chasing stability in inherently unstable systems is a fool's game.
1. Pegged value currencies are subject to Soros-breaking-the-Pound style attacks.
2. USDC is based on Ethereum, a first-generation cryptocurrency with numerous design flaws, at both the protocol and scripting language level. On top of that is an increasingly complex network of DeFi apps which can be exploited in sophisticated ways, as we saw with recent multi-part hack across several DeFi apps.
3. The US Dollar itself may be heading into a period of instability, given the massive US Govt debt and Federal Reserve operations.
You can stick your head in the sand and pretend stablecoins are stable, or you can acknowledge they’re more likely one more in a long history of financial folly.
(Their governments finally put an end to it. But I'm not sure you want to include that in the 'system'?)
There's no good reason to encourage value generation through inaction. That's one of the many good reasons to have abandoned deflationary currencies.
From the banks point of view, funds in checking accounts and funds issued as cash were pretty much the same. Just that the cash didn't pay interest, and you didn't know who had it. And it could get lost and never come back to you. (Though perhaps similar to people abandoning accounts sometimes?)
Holding the notes issued by a bank was equivalent to giving the bank a no interest loan. The bank itself invested the funds in loans to other companies. You forewent consumption and took on some risk.
Nominal GDP was remarkably stable over that time in Scotland. In reverse that means that one pound represented about the same share of total economic activity year after year. (The absolute, real amount of economic activity increased a lot.)
So people will take 99.99999999% losses and not 60-80%.
Real dollars go in.... IOUs out of a bull's behind come out.
The short term solution to "everything's fucked" is to stop making it even more fucked.
That's not a solution, that's a vague sentiment.
Regulation can be good, regulation can be bad, how you do it matters far more.
"USDC IS NOT LEGAL TENDER. USDC IS A DIGITAL CURRENCY AND COINBASE HAS NO RIGHT TO USE ANY USDC YOU HOLD ON COINBASE. COINBASE IS NOT A DEPOSITORY INSTITUTION, AND YOUR USDC WALLET IS NOT A DEPOSIT ACCOUNT. YOUR USDC WALLET IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC)."
(https://help.coinbase.com/en/coinbase/getting-started/genera...)
https://help.coinbase.com/en/coinbase/getting-started/genera...
But every line in the disclaimer are probably applicable to bond/USD ETFs as well, but people aren't exactly fleeing from those.
But either way, I think most people would not tend to view something like USDC as a bond (in which the bond holder is a creditor to the bond-issuing organization, with the associated risk-adjusted return on capital), but more like cash.
1. Criminals don't want their activities to be tracked on a public ledger. Cash is anonymous. Bitcoin is not.
2. Criminals already have money laundering systems in-place, and relationships with corrupt bankers.
3. Cash is accepted at more places. So it's more useful to have.
We're talking trillions of dollars in USD crime here. It's not even close.
That's a massively higher share for cryptocurrencies than in legitimate transactions, isn't it?
While BTC is tracked between wallets and that's easily measured, it's unclear how to measure wallets being transferred between people.
There's a non zero chance that your criminal extortion scheme won't end up with bill serial numbers tracked by federal authorities. Hence that's probably why 97% of ransomware uses BTC.
Before Bitcoin, they were using stuff like Walmart giftcards.
What payment processor would ransomware use? Credit card processors would close their account. Nobody can close your Bitcoin account. That can be used for crime, but also is a legitimate protection against the abuses of governments and banks.
That's awkward, given that:
* "All the bitcoins in the world [are] worth roughly $160.4 billion" - Investopedia
* USD M2 (2018): $16.1T - https://tradingeconomics.com/united-states/money-supply-m2
So really, BTC is used at least as much, relatively speaking, for crime, as USD.
[1] https://www.wired.com/story/was-bitcoin-created-by-this-inte...