Same thing with crypto. Yes, currently a lot of people buy and sell crypto with government-backed currency. However, the whole point is to have currency that you can use in place of normal currency. Currency that you are paid in, that you shop in, that you pay your bills in, that you pay back your friends with. At the start, there is a lot of fiat <-> crypto. But the goal is to make it so that people can use crypto for everything, and therefore never need to sell it for any major currency.
If you use crypto, every year you will need to "drop out" into fiat less and less. Just like every year your electric car gets greener.
Ironically the analogy extends even better to your parting shot:
> this stuff is just cumbersome currency that roasts the planet.
Again, short-term thinking. As a purely digital currency, cryptocurrency gets greener every year as the grid gets greener. If you want to save the planet, the first step is to electrify everything. Step 2 is to make your electricity production as green as possible (preferably with nuclear).
I like that the currency I use is managed by my government. Why should I want to switch?
There are billions of people who are abused by their government, who cannot trust their government, who's local money is debased by their government at a whim. You are privileged (there's that word) to have a government that you feel you can trust to control the value of your savings and your purchasing power. You do not see the value proposition because there is not much of one for you. Cryptocurrency doesn't exist for you. It exists for the people who do need it. And again, there are billions of people who need it, as much as half the world's population, possibly more.
The United States inflated the money supply by many trillions of dollars in the past year, which decreases the buying power of the dollar. With savings accounts paying close to 0% interest, due to inflation, savers are losing money in these accounts each year.
And while the goal of the Fed is to manage the economy to have about 2% inflation, in reality, the things that people care about—higher education, medical care, real estate in many cities—has inflated much more than 2% annually.
The dollar is being debased gradually; one day it could be sudden.
But leave that aside, you said you like government-managed currency and I believe you. Venezuelans don't. The way I see it, what's stopping the EUR and USD from going down that spiral is momentum, rather than some law of nature.
I'm not convince the issuing schedule for BTC is ideal either. Grin, to pick a cybercoin which has some interesting technical innovations, issues one coin per minute, forever, and since coins are lost, this might be better.
But I like the idea of a transnational currency, where no one government is in a position to change the rate of issue, and I think Bitcoin has real potential as a refuge for value to flee to, in the event that the increasingly reckless experiments which Western governments and their central banks are making with their currencies come back to bite us.
Don't think it would spell the end of sovereign currencies, either. It would force them to be more honest, though, and that would be a good thing.
Say what? Coins were intrinsically valued and not used like currency as it is today. It wasn't until about the 1500s we even really see currency being used and it was hand waves a bunch of stuff thanks to the Dutch merchant class. In Rome people didn't spend money, they hoarded it, because the pile itself was a sign of wealth. Spending it was looked down upon. They instead purchased primarily through bartering of goods and resources. There was no middle class either to spend money, you were nobility, a solider, or a slave.
A lot of folks want to apply modern economics to historical contexts where it cannot be. There's too much missing when taking in only from the lens of Economics to evaluate or judge things accurately.
Second, that deflationary period was caused by a huge increase in productivity... it is known as "the second industrial revolution", and global production efficiency took off during that period.
Third, the fact that there was only 4% actually shows that growth was artificially constrained by a limited money supply; productive efficiency increased so much, we should have had better growth than we did. We would have, if we were able to grow the money supply with the economy.
In fact, the only thing that kept the money supply from completely stopping economic growth is that there actually WAS a huge increase in the money supply caused by massive gold and silver mining.
Your third point also sounds like story-telling, or fitting a story to the evidence. Does that mean it is the only possible explanation for what occurred? If not, how can we determine which explanation is correct?
I guess my point is that time period is clearly an outlier in a number of ways, which is why it is one of the only examples of high growth + deflation periods in history... it doesn't change the conclusion that you should aim for a small amount of inflation if you want economic growth. A single counter-example doesn't change the conclusion; just because we know there are people who have won huge jackpots in the lottery doesn't mean we stop suggesting saving money for retirement.
In general, without some form of inflation, you end up with a deflationary spiral because people stop spending and the economy seizes up. No one will spend money if just holding it makes it more valuable. It then becomes a race to horde as much as you can for as long as you can. It's also, quite uhhh... perplexing for me, to not increase the money supply when populations are increasing; because, they're increasing the value of the money by increasing demand for it.
Central banks are the result and answer to reckless unregulated financial markets crashing, being manipulated, and destroying lives... Oh shit, kind of sounds like bitcoin, doesn't it? Everyone does this "central bank boogeyman" and thinks it should go away but they all absolutely ignore why they exist in the first place.
There's a ton of quality stuff to be debated in regards to economics-- this is not one of them.
People, and state economists, have confused inflation and deflation so much for their propaganda that right now is almost imposible to have a discussion around it primarily because different people don't mean the same things when they use those words.
Is the inflation you talk about consumer price inflation? is it assets price inflation? or is it money supply inflation? is the deflation caused by increases in productivity or is it caused by decrease in demand? Is inflation a product of regulations? of corruption? or was it caused by central banks and politicians' stupidity?
Those are all very different situations that require very different approaches, but because the "inflation-good deflation-bad" mantra has been repeated for so long (without any actual proof!) idiots now can't see past it, and think it's fine because they call themselves economists.
That's quite the number of negations you've got there. I assume you want to say that a mild inflation make economic sense, but I think you're actually saying the opposite due to the 3 negations (no one, zero evidence, bad).
How do you define scientist, and who else isn't included?
Like, micro-economists do a lot of interesting experimental work that certainly seems like science.
Macro-economics is pretty much entrail-reading because we fundamentally don't understand how the modern economy functions, and is massively political and hijacked by a variety of interests, but that's a subfield that even economists agree is problematic.
Actually to my mind that is all you need for science: observe, make a falsifiable hypothesis, try to falsify your own hypothesis.
That is... not most economics.
They have most of the same issues as economics (modulo the political stuff), but everyone seems OK with it.
Also, Popper's falsification is a pretty unrealistic account of how science actually works, and it only really works as advertised where you can run effective experimental designs (which economics and geology, amongst other disciplines) have a problem with.
If you have a theory that is impossible to falsify experimentally, we're no longer talking about science (at least if your idea of science is the pursuit of objective truth). Modern "science" running amok with people more concerned with attempting to prove themselves correct than find the truth doesn't change that.
> Popper's falsification is a pretty unrealistic account of how science actually works
That's the rub though. A pretty strong argument can be made that "science" is not working and that "scientists" have lost their way, if you look at things like the reproducibility crisis.
Even assuming what you say is true, if not experiments and attempts at falsifying your ideas, how does one pursue the truth?
How would you suggest we run randomised experiments on the climate (or the macro-economy)?
This happened fairly often, and it's called debasement:
A fun quote from the Wikipedia page:
> If done too frequently, debasement may lead to a new coin being adopted as a standard currency
Indeed a risk!
With a 60 Grin block reward and 1 minute block interval, it's actually 1 Grin per second, forever.
Obviously this is a huuuuge question, but it's such a good one.
The simplest compact answer, at least to me (and it may in fact be an oversimplification) goes something like this:
* Nearly invariably (and with a decreasing number of exceptions as technology advances), states which have control over both sides of the economic equation (ie, monetary concerns as well as national finance) find themselves unable to resist devolving into empire, and a specific type of empire called a "welfare-warfare" state, where the money supply is carefully controlled in such a way as to produce just enough support (often through pseudoscientific 'macro-economic' analysis and 'unemployment' prevention) to preclude revolution, while also projecting military power on poorer parts of the world in order to capture resources in a misguided effort to service the never-ending debt that accompanies the fiat money system.
In this view (and to be clear, it's one I hold), states with these powers (a clear conflict of interest, IMO) will continue to plunder the earth and attempt to enslave its people indefinitely, and can only be practically stopped by the economic adjustment that comes from the introduction of a hard currency (which causes the cycle of debt service to become impossibly onerous, even for an empire state).
* For a less oversimplified version, I might recommend Ron Paul's book "End the Fed", which is an introduction to the history of hard-money economics and can be read in a day or two.
* For an even less oversimplified version, you'll need to delve into the "Chicago School" and / or "Austrian School" of economics. Milton Friedman and Ludwig Von Mises are probably the best known scholars of each.
* The cycle of debt needs to be bootstrapped. You need some initial borrowing well beyond current (expected) repayment capacity. This implies both some overspending and lack of due diligence by lenders willing to extend the rope.
* The debt is denominated in a currency the borrower doesn't control. If you're American borrowing dollars, or Russia borrowing roubles, you can always deflate the currency to moot the debt.
* The state has no legal leverage against lenders. A continuation of the tactics above-- I could imagine a desperate nation simply refusing to redeem its bonds, or even prosecuting people attempting to claim then.
There may be incentives and default-approaches that encourage the growth of empire to feed a debt addiction, but it's far from the only way. In the worst case, you end up with a default and limited to dealing with lenders who are legally required to deal with you (i.e. requiring pension plans or state-owned enterprises to sponge up government bonds) until someone else is willing to take a punt.
The reverse argument actually works much better: throughout millenia of metallic standards countries regularly fought wars to plunder gold reserves from weaker states to repay their debts or boost their economy. And didn't even make enough from doing so to be able to afford welfare. Now they don't have to acquire shiny metal every time things are bad, they very seldom fight wars and even relinquished control over the empires they'd built under the gold standard. If there is a causal relationship between monetary systems and empire building, it's quite clear that it works the opposite way round and fiat money reduces the tendency to use military power in service of economic growth.
Or, not quite at hyperinflation, but your government is enacting policies based on MMT or similar and you are worried that this could hurt you (as a holder of the currency) in the long-run.
Or, maybe you're worried about governments being able to dictate what you are allowed to purchase with "their" money.
Or, maybe you want to send your money somewhere your government doesn't want you to send it (or their government doesn't want the other party to get it).
Obviously there is a lot more to cryptocurrency than just "not being issued by a government" as well though. There is general privacy benefits (Monero) or the promise of innovation if you have programmable money / contracts (Ethereum).
The typical counterargument is something like "well what about Saudi Arabia", but I think it's pretty easy for an oppressive regime to just say "you can't use cryptocurrency" and punish you severely for it--to the degree you won't.
Anyway, I just don't think cryptocurrency is a solution to this, and even if it is it's antidemocratic.
But your gov banned wikileaks bank accounts in the past and that is the perfect example of the case when the gov is definitely is a malicious actor (while their behaviour perfectly rational from their side of things).
Govs do war crimes, mass espionage and human rights violations. That should be addressed as well.
The government is persecuting WikiLeaks financially because that is easy to do. Even if a cryptocurrency were to take off as a currency and still be untraceable, the government would just move on to some other form of persecution. The real problem to be addressed is the persecution of a useful legitimate organization by an ostensibly democratic government. The form that persecution takes is secondary.
That hasn't worked yet for Wikileaks. If this worked and/or was the best way to deal with the types of problems Wikileaks is exposing, there would be no need for Wikileaks to exist.
The reason Wikileaks does exist is because, typically, when we attempt to address atrocities "democratically" we get nowhere.
On the other hand...
> Inventing a new currency that is, for a little while, hard to track by the government
This _has_ worked for Wikileaks in the past. When the US persecuted Wikileaks, Bitcoin helped to heavily negate the immediate impact of this action.
> The form that persecution takes is secondary.
In that case, why can't the form that Wikileaks' solutions take be secondary as well? If we are in agreement that Wikileaks is an important organization, then when addressing atrocities "democratically" fails, what would be wrong with short-term innovation?
Not quite. We assume that government is controlled by the people and thus I have some influence in its operation. The state often does truly horrible things, but so do plenty of organizations that I cannot control at all. I'll take the one that I have some degree of influence on.
People make mistakes, some of them are greedy, powerful people want to keep their power, etc..
You can't fix people with a currency.
And humans are creative, if you switch over to crypto, they'll find a new way of doing the same old things..
My government not wanting me to send money somewhere: Well, this might be a clichè, but apart from slightly limiting my freedom this prevents bad guys doing nasty stuff aswell.
Bad guys get around it one or the other way. You do not.
At least with fiat currency, you have a central bank that can TRY to take steps to fix those conditions.
Using a cryptocurrency is kind of like a technological band-aid to a political problem. Viewed through the lens as a form of peaceful protest against the government, it makes sense. Otherwise, it's completely your call if you want to make transactions where the receiver has no obligation to provide the product or service you paid for.
And those people are probably screwed anyway, unfortunately for them. If a big government hates your guts... you're not going to make it.
Might be safer for them to buy gold and just bolt.
How about the first point, that it solves a problem most people don't have? Why would this be a mass market product? What's the benefit for J. Random?
So I hate to use the word I'm about to use, because of the modern connotations associated with it, but it does apply here. There are billions of people who are abused by their government, who cannot trust their government, who's local money is debased by their government at a whim. You are privileged (there's that word) to have a government that you feel you can trust to control the value of your savings and your purchasing power. You do not see the value proposition because there is not much of one for you. Cryptocurrency doesn't exist for you. It exists for the people who do need it. And again, there are billions of people who need it, as much as half the world's population, possibly more.
> whose local money is debased by their government at a whim
How do you reconcile this with the wild speculation happening for Bitcoin, the only widely adopted cryptocurrency? It would definitely not be a solid investment vehicle. I mean, I understand the desire to use it out of desperation, but it's still not a solid alternative. You're just at the whims of the world's miners and speculators.
Fiat currency may appear stable, but it is not. It appears stable because it is used as the unit of account for all other assets in a country. In the long run, any freely floating asset will be more stable than any fiat currency managed the way modern ones are managed, via a central bank, provided that the supply change of that freely floating asset is predictable. Gold, for example, has a supply increase that is predictable. Central bank controlled fiat currencies are by definition not predictable in their supply, and this makes assets that are more suited to saving/investment, regardless of short term volatility. Nobody can empty your savings into their own pocket by printing gold or bitcoin.
having an optional liquid payment system outside of their control solves that
and the existence of that optional liquid payment system has the possibility of making their controlled one redundant
The Trusty Libertarian Neighborhood Watch?
I believe that fraud is easier to identify and financially punish on public blockchains. Exchanges and other entities already have the ability to blacklist an address's assets and prevent them from off-ramping into fiat ms being used in future transfers. Businesses exist today to prevent payments of blacklisted assets. Compared to cash, blockchain based cryptoassets have more choice in enforcement against fraud. Also, crypto assets can be seen by all publicly on chain. It fairly easy to trace the work of cryptoasset fraudsters
Because the status quo is here and change is costly and risky. Because we know about the limitations and failure modes of the status quo.
If the whole point of cryptocurrencies is to work around the government and cryptocurrencies are going to strip them of various tools they use (control over inflation and monetary mass, monetary controls in the sense of taking money outside of a country, etc), governments will most likely not allow that, for pretty solid reasons.
It's an interesting experiment, I'll grant it that. But I don't think it can have its cake and eat it, too. I guess we'll have to wait and see.
I'm happy to pause all cryptocurrency mining and transactions until humanity is carbon free. I doubt long BTCs will be though.
- Cryptocurrency uses tons of electricity
- Climate change is real and super bad
I would (obviously) rather have a livable Earth than cryptocurrency, and I don't think that's weird.
- Climate change is real, but I think it would need to be much worse than it is in order to justify halting human progress. In fact, continued human progress is our best bet for halting climate change.
- False dichotomy.
Just because you buy and sell gold with major currencies doesn't mean gold is regulated. Crypto isn't much different. If you can get it anonymously, you can move it anywhere you want as long as you stay on the blockchain. Once you leave the blockchain, you aren't dealing with crypto anymore. Once you sell gold you aren't dealing with gold anymore.
I don't know about Diem in particular, but a state or corporate issued currency is not a general indictment of cryptocurrency.
The difference between cryptocurrencies and other commodities is that other commodities have intrinsic worth. You can drink milk, you can eat wheat. You can't do anything with cryptocurrency, it's just a long, meaningless number.
I’d elect for a suboptimal government over such mechanisms any day, which seems to be a global consensus when you observe the lack of volatility in reserve currency values.
So if the forked chain becomes accepted, then they have 1000 USD and 1 Eth, while you have 0 dollars and 0 Eth, and you're never going to make the mistake of trusting a cryptocurrency ever again.
What distinguishes one fiat from another is "do important people believe in it". There may come a day when that's true for cryptocurrencies, but that day is not today.
Further, I doubt it ever will come, because cryptocurrency's core scarcity hamstrings monetary policy. No competent government would ever accept such restrictions. This is a feature for cryptocurrency enthusiasts (digital gold bugs) but a huge shortcoming for everyone else.
But for those countries, it really seems like choosing Diem is the worst of both worlds. You're still pinned to the Dollar, you're still at the whim of unaccountable controlling stakeholders, and you have all the downsides of cryptocurrency on top of it. I struggle to think of a group outside of Facebook that Diem is at all good for, honestly.
https://seekingalpha.com/article/145722-what-really-backs-th...
a lot of people like that crypto isn't backed by a gov, but i'd like to believe that most people would agree that the government has some intrinsic worth.
FWIW, you're saying that while cryptocurrency stays on the blockchain it's not regulated. That's definitely not true in the US--people have gone to jail for not complying with financial regulation and reporting laws [1]--and is likely soon to be even less true [2].
[1]: https://digitalcommons.nyls.edu/cgi/viewcontent.cgi?article=...
Q: Is this fundamentally different to having a suitcase full of cash?
... other than https://xkcd.com/538/ ?
Yes, government can't print bitcoin. If you store cash - in the long term you will lose buying power. If bitcoin gets adopted as a store of value - nobody will be able to print it at will.
Depends on the border.
As long as you declare the cash to the authorities, there are many borders you can cross with great flipping wads of cash. Some industries operate mostly on cash (restaurants, for example), and "suitcases full of cash" isn't just for mobsters and movie villains.
Maybe if we could use the inherent incalculability of the three-body problem as the basis for a cryptocurrency. You'd need to observe the universe to "find" astrocoins.
It would be Astrology on steroids.
Of course that leaves out verifiability, encryption, anonymous identity yet ownership.
What if you (somehow) knew both parts of the quantum uncertainty portions of a particle because you initiated the system. Then you could demonstrate ownership by being able to predict the location or the momentum at any time based on that.
But it would be fun to hold cryptocoins called Heisenbergs
But that is an actual physical particle.
...no? Diem/Libra is built on Cosmos, which is a proof-of-stake system, not a proof-of-work system. Validator nodes in a proof-of-stake system do not compete to work ever harder to mine the same resources.
There are a rather large number of such validator nodes (100+ at minimum), but that's also true of banks when you translate their Highly-Available mainframe stacks into equivalent Highly-Available commodity-PC stacks. (I.e. they're not spending any more electricity per tx than the ACH system is.)
Depends on the regulation type we're talking about. Yes, state may require KYC, AML, and taxes, but in case of bitcoin they can't regulate the inflation.
Seems like a viable reason to create a cryptocurrency that isn't intended to bypass state regulations.
An eco friendly Cryptocurrency mining use case is that gives electricity generation a baseline price regardless of where it is generated.
I think... it's a little tenuous because the price would based on like, math, algorithms and ASICs more than scarcity of fuel (or pollution, or what have you), but definitely an interesting idea.
It’s pretty obvious — the price spikes with the rise of certain internet grifts and wanes as they settle down.
Facebook is trying to create yet another world bank