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Comment by camgunz | Hacker News Reader

You're talking about a commodity, not a currency. No one walks around with gold nuggets (or jugs of milk, or bales of wheat) in their pocket because our economy doesn't use the barter system.

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.

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Well, its a long number that satisfies a simple predicate, set by fiat, that makes this class of numbers rare. It is the ultimate "artificial scarcity"! It's too bad there can't be a better way to add new values into the system that scales better with, say, how much the system is used, or how much utility it gives to people, instead of how much oil you can afford to burn to get one.

It’s just a long number with no intrinsic worth. Like money.

Money is backed by a central bank that is accountable to a government body. Crypto is backed by speculation and tech bros (shorthand for the hyper technocratic libertarian).

Shared speculation is pretty powerful.

Accountable to a government body with opaque motives and capture over its citizens. Crypto has inspectable source code and miners and coin holders can jump ship if shenanigans are perceived

How’d that Ethereum DAO attack go? Some folks just decided to hard fork the chain. Much trust, such governance.

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.

Then the market decided that the new chain was more valuable than the original. Still decentralized. Forks are fair game.

Hence why crypto can't be taken seriously as a currency. Imagine explaining to a non tech family member or friend why their dollars have zero value now because they’re on the wrong chain.

That's not how forks work.

If they had sold some items for Eth just before the fork, they will never recover the Eth, and they may be unable to recover the items either. So yes, in a fork people lose money.

forks set their genesis state as a snapshot of a block on the original chain. if anything you now have twice as much money since your account has funds on the old chain and the new one

Let's say you just sent someone 1000 dollars in exchange for 1 Eth, sometime close to the fork. Before the transaction, you have 1000 USD and 0 Eth. In the old block chain, the transaction goes through, your wallet has 1 Eth, and theirs has 0. In the forked block chain, their wallet has 1 Eth, your has 0. However, regardless of which block chain you choose to believe in, they have the 1000 dollars.

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.

Crypto is nascent and I would expect finger burning as part of the path to long term stability. I'm not personally wedded to any of the current implementations in their current versions, but long term the concept of crypto currency supplants governmental fiat money

Crypto is backed by immense amounts of power (electricity), and more specifically, computing power (which is scarce)

Money (at least in the US) is backed by the "full faith of the US Government" for whatever that is worth.

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.

It is literally worth trillions ($27t)! The credit-worthiness of the USD is so good we've sold trillions of them. It's just such an inarguable stat haha.

If the US or EU (etc.) valued their goods and services in BTC, banked in BTC, built monetary and foreign policy around BTC then you would be correct. It is all meaningless, and that's the definition of fiat.

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.

I agree with the argument that it doesn’t make sense for the United States. Other countries using USD already don’t have control over monetary policy.

Oh yeah, totally fair and an interesting difference between Diem and other cryptocurrencies. I still think volatility and transaction latency/costs are an issue, but assuming we fix those (and stipulating they can be fixed) it doesn't seem unwise for smaller countries to use cryptocurrencies. It would more or less be gold standard monetary policy in a box, and while that system has drawbacks, a nice thing about it is it's pretty hard to corrupt. It would be harder (not impossible, but meaningfully harder) to manipulate currency and politically choose winners and losers via monetary policy, which is a big deal especially for growing or newly stable countries.

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.

Also agreed on Diem. My best guess is it’s a way to legally get around the legacy financial system to some end. Which end I don’t know yet.

Being able to pay your taxes with it gives it some more worth than just numbers.

Paying US taxes doesn’t count. That’s like saying I can pay gas fees with ETH.

This is not specific to the US. You pay Japanese taxes in Yen.

You changed the subject completely. What does your comment have to do with it being regulated or not?

You're trying to make a semantic argument and say that cryptocurrencies aren't regulated until you sell them for other currencies that are. My counterargument--where admittedly I skipped some steps and didn't explain very well--is that that turns cryptocurrencies into a commodity, not a currency, and that cryptocurrencies are particularly valueless commodities.

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=...

[2]: https://news.bitcoin.com/cryptocurrency-act-of-2020/

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