Another question arises: what is it good for? It certainly isn't empancipating or empowering ordinary people.
https://www.coindesk.com/bitcoin-adoption-venezuela-research
Unless Venezuelans are mining their own at massive scale, I'm not sure how they actually hedged inflation via crypto, since they likely had some ability to buy an intermediary currency anyway.
Here's a detailed thread[0] with global examples of empowerment of ordinary people. One example from the thread:
" 7/ Democracy movements and opposition leaders in Russia, Nigeria, Belarus, and elsewhere have used Bitcoin to receive donations and continue their human rights work while their traditional bank accounts have been frozen or suspended:
[0] https://twitter.com/gladstein/status/1377040725414580224?s=1...
I'm part of the bitcoin community on Clubhouse of just regular people who've benefited greatly from bitcoin.
I'm personally investing in bitcoin due to the uncertain future of USD. It's simple: the dollar is loosing buying its buying power and bitcoin is gaining buying power. USD, gold, bonds, etc. are trending towards zero when graphed against bitcoin.
I'm old enough to remember when a person could save in USD and get a return higher than the inflation rate and be able to retire comfortably.
I remember seeing people who thought they could retire comfortably in 2008 until the economy blewup and we had senior citizens competing with high school kids for jobs bagging groceries.
You can read about how financialized our economy has become and how bitcoin solves this problem: "Bitcoin is the Great Definancialization" — https://unchained-capital.com/blog/bitcoin-is-the-great-defi...
Bitcoin has averaged over 200% a year for the past 10 years--and that was before billions of institutional money began flowing in.
Apparently, it saved the bacon of some Venezuelans.
It seems that bitcoin was useful in this particular instance only because of the failure of multiple other systems. Fixing those failure would seem like the easier option indeed.
Another alternative: You come up with a new way to do X which is 10X better. Then, you get the classic S-shaped adoption curve.
Another alternative: You expand the context of your operations, so that those governments just become little annoyances and quaint dusty backwaters inside a larger world.
My question was simply: What is keeping banks and governments around the world from standardizing money transfer between nations, like they did so well 150 years ago with mail? And my statement: Perhaps it is easier to settle on a standard way of transferring money between nation states then to rely on bitcoin to save some people from hyperinflation + predatory money transfer solutions.
That's one way you can think of the next generation of blockchain. Think of it as a "container" for transactions. Lots of transactions in 2021 are still frightfully primitive. The whole recent GME/Robinhood debacle is actually an example. The only reason why online trading companies need such large amounts of liquidity, is that it takes days for the transactions to fully settle!
Blockchain will transition from a weird, new, shiny doohickey, to a way to facilitate transactions. Just like the Internet did.
But really only if it would be difficult to obtain and safely keep USD.
Bitcoin isn't unstable. It has a fixed supply of 21M. It is the other currencies to which it is compared that are unstable. Bitcoin allows you to measure fiat currency instability.
The rest of the world's unstable goods like gold, fiat currency, real estate, stocks, cars, and even groceries are always fluctuating in BTC value but BTC stays perfectly level.
Edit: I now again have no idea if they are or not. Looking at their comment history it doesn't appear they are.
I tried to be absurd enough in my initial post to make it clear. When that failed, my reaction was to add more absurdity. It's not the first time this has failed. I should have known better when imitating a group that defies parody, like crypto aherents.
Let me give you an example. Chuck E. Cheese tokens are hardly worth anything. They're a terrible store of value. Why is this? Because Mr. Cheese can direct more to be minted at any time in an attempt to quantitatively ease the Chuck E. Cheese economy.
One day, Chuck E. Cheese will go out of business for good, and no more of his tokens will be minted. At that point the value will stabilize and, relative to depreciating assets like USD, stocks, bonds, or other things that aren't types of coin, it'll actually skyrocket. Limited supply equals stable or increasing value, forever.
Any object is worth approximately (all the world's wealth) / (number of that object in existence). This guarantees Bitcoin will always have value since supply is limited to 21 million.
It's also why my cheese tokens become sound money if Chuck E. Cheese goes bankrupt and is no longer operating, but they're junk right now while they can still be used to play arcade games.
It's also why I'm forking a new version of Bitcoin with the supply limited to 21 thousand. It's also got stable value and currently isn't trading for much but I'm holding it with the expectation that the value of every other asset in existence will rapidly depreciate soon.
Before covid it was 1.6 NZ to the US, now it's about 1.4 - so a loss of about 10%. If you had 1600 NZD in 2019 and bought USD, kept it under the matress, and sold it, you'd have lost NZD200.
That's not great, but it's a similar range of NZD vs AUD, NZD vs CHF, CHF vs USD, etc.
Now if you had 1600BTC in 2019 and bought USD, well that's tricky -- when in 2019?
In Jan 2019 it was about 3500, by May 2019 it was about 5000 USD to the BTC, in June it was about 10,000, it fluctuated by about 20% over summer, dropped back to 7,000 in December. It stayed in that whole 7k-14k range until November 2020 when it ballooned upto about 60k over the next few months.
In the last couple of years, gold has gone from about 1200 to 1700, 40% change in the last 2 years. Silver about 30%. Other currencies that haven't had printing about 20% fluctuation. Rice about 20%, Wheat about 40%, Soy about 50% - those comodities do fluctuate a fair bit over long time though.
Bitcoin has increased around 1,000%. That's so far out from EVERYTHING ELSE that it isn't currencies shifting, it's crypto.
Not really. If you own 1 fiat dollar today and I double the money supply tomorrow, I have just halved the value of your fiat dollar over time. Your share of the money supply has been diluted[1]. 1 nominal FD tomorrow is worth 0.5FD in real terms all else held constant.
Of course this thought experiment is trivial and oversimplified because the real question is about purchasing power. But consider that majority of USD in existence were "printed"[2] last year. Consider that the global fiat monetary base expanded by ~50% last year.
"Since 1933, the U.S. dollar has lost 92 percent of its domestic purchasing power. Even at its “moderate” 1994 inflation rate of 2.7 percent, the dollar will lose another half of its purchasing power by 2022."
https://www.google.com/amp/s/fee.org/articles/central-banks-...
Nominally.
How do you grok the practice of coin-clipping? You hand in one gold coin which is then clipped and you are given a coin with a smaller percentage of gold in it. 1 solidus is still nominally worth 1 solidus. But it's really worth 0.x a solidus. Does this debasement matter? The coin has the same name but it's not the same coin.
> bitcoin has also gained and (occasionally lost) buying power.
Over the long term, Bitcoin can only gain and has only gained purchasing power, algorithmically.
Unlike with fiat, your proportional share, based on your stack of coins, of the total value in the economy has not changed. This assumes a Bitcoin Standard where bitcoin is the world currency. (Some of us already live on a Bitcoin Standard preemptively.)
With fiat, your share has been debased. 1 usd is not equal to 1 usd over time. With Bitcoin, your ruler is always accurate. 1 satoshi = 1 satoshi over time unto eternity. Fiat cannot make that claim.
That's what we mean when we say 1 btc = 1 btc.
> "1 oz of Gold has always been worth 1 oz of gold."
Now you see why gold was the world's hardest money. It's chemical stability guaranteed this statement. Hardly any other commodities behave this way. Unless you have examples?
That's not how modern money is reckoned. It's a neat aside, but it has nothing to do with a modern currency.
> Over the long term, Bitcoin can only gain and has only gained purchasing power, algorithmically.
True. As of this moment it's gained before. Day to day it's an entirely different matter.
> Unlike with fiat, your proportional share, based on your stack of coins, of the total value in the economy has not changed. This assumes a Bitcoin Standard where bitcoin is the world currency. (Some of us already live on a Bitcoin Standard preemptively.)
Bitcoins are being generated. It's a planned inflation - how do you reckon that with the share not changing? You have less porportions of the total Bitcoin supply. Unless wealth is created from nothing with every bitcoin generated you've lost a proportion of the wealth. It only works right now because it's being measured against things, if it ever became the determining standard, you'd be experiencing inflation with it.
> With fiat, your share has been debased. 1 usd is not equal to 1 usd over time. With Bitcoin, your ruler is always accurate. 1 satoshi = 1 satoshi over time unto eternity. Fiat cannot make that claim.
Again, this is a nonsense argument. You either have to accept that the 1973 $1 bill is still worth a dollar (relative to the dollar) or you have to admit that a 2010 Bitcoin is not worth the same as a 2021 bitcoin.
> Now you see why gold was the world's hardest money. It's chemical stability guaranteed this statement. Hardly any other commodities behave this way. Unless you have examples?
Silver. Sheep, salt. 1 measure of any commodity has always equaled itself.
Bitcoin is just a commodity right now. That's it. If it becomes the standard currency it'll experience deflation as the supply grows just like any other currency.
M3 money supply in 2009 was 8.48T
M3 money supply in 2014 was 11.67T
M3 money supply in 2019 was 15.32T
So 60% of money in existence in 2019 was created in the previous 15 years
Are you imply that means that the purchasing power of the dollar has dropped 70% then, and a dohicky that cost $1 in 2004 would cost $2.40 in 2019 in line with M3 increase?
The cost of bread in 2004 was 97c, and was $1.36 in 2019 - increasing at 2.3% per year. [0]
A pound of chicken went from $1.03 to $1.45 - 2.3% per year [2]
A gallon of milk dropped from $3.23 to $3.19 in that time period [1]
Official inflation figures for 2004-2019 are $1.35, about 2% per year, and that includes the time period of the 2008 crash.
Rental price for an acre of cropland across the US in 2004 was $76.5, in 2019 it was $140, increase of 4.1% per year [4]
Rental price for a primary residence has increased 3.05% per year [5]
In that time GDP has increased by about 3.8% per year [3]
Median wages have increased by about 2.6% per year [6]
That period included the massive money printing of 2008 crash, none of it says hyperinflation, despite the federal reserve "printing" $3.9T between 2009 and 2014.
[0] https://www.statista.com/statistics/236635/retail-price-of-w...
[1] https://www.statista.com/statistics/236854/retail-price-of-m...
[2] https://www.statista.com/statistics/236834/retail-price-of-f...
[3] https://countryeconomy.com/gdp/usa?year=2019
[4] https://quickstats.nass.usda.gov/results/58B27A06-F574-315B-...
[5] https://www.in2013dollars.com/Rent-of-primary-residence/pric...
[chuckle] Now do assets as well. Do healthcare and school fees and energy for good measure.
> […] dohicky […]
Also see Jeff Booth's "The Price of Tomorrow" for a discussion on the deflationary effects of technology.
Also consider velocity of money and if it slows as governments and commercial banks print.
Also, M3 contains illiquid assets. Perhaps, better to think in terms of base money? https://cryptovoices.com/basemoney
For fun, the history of McDonald's menu prices.
> Official inflation figures for 2004-2019 are $1.35, about 2% per year, and that includes the time period of the 2008 crash
Inflation is perhaps a vector.[0]
> Median wages have increased by about 2.6% per year
US centric but consider also https://wtfhappenedin1971.com/
That's not a cost you need to live. You need to pay for food, housing, healthcare, energy. You don't need stocks in amazon.
> [chuckle] Now do assets as well. Do healthcare and school fees and energy for good measure.
Total healthcare spending in the US[0] in 2004 was $6094 per capita. In 2019 it was $11072 -- 4.1% per year increase. By comparison in 1989 it was $2440 per capita, so for 1989-2004 it was 6.3% per year.
Electricity increased 2.75% per year from 2004 to 2019 [1]
Average retail electricity price for industrial consumers in 2005 was 5.73c/kWh, in 2019 it was 6.83c/kWh, 1.3% per year [2]
A gallon of gas in 2004 was $1.85 in 2004, it's $2.60 in 2019, an increase of 2.3% per year [3]
I see little to show that inflation is any different to the official inflation figures. I do see evidence that the wealthiest part of the US is becoming even more wealthy
Cost per pupil increased 2.6% per year [4]
What's your point? Despite M0 goign from 600b to 3500b from 2004-2019 (average 12.5% per year), there was no effect on the cost of things people pay for, which broadly stayed in the 0-5% per year range, as it did before 2004.
[0] https://data.oecd.org/healthres/health-spending.htm
[1] https://www.statista.com/statistics/190680/us-industrial-con...
[2] https://www.statista.com/statistics/190680/us-industrial-con...
[3] https://www.statista.com/statistics/204740/retail-price-of-g...
[4] https://nces.ed.gov/programs/digest/d19/tables/dt19_236.55.a...
I'm sure you're absolutely correct about everything. Thank you for your time.
This strikes me as both true, and difficult to put any real value against. It's an existence proof more than practical use cases. Intuitively the value of that alone is both non-zero, and a lot less that BTC "valuation" - but where in between?