New study detects lottery-like behavior in cryptocurrency markets
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In my experience the primary goal for most crypto holders is to be a part of a new elite. This is why the most popular currencies have a fixed supply. That way, if they're popular earlier adopters get to be a part of the elite. With such a premise it makes sense to treat crypto like the lottery as the gain/loss likelihood is very similar to say, Mega Millions.
I do see value in a crypto that's pinned at a weighted average of every single currencies' worldwide weight. That way you get the advantage of crypto, but it's a perfectly stable currency. Needless to say, very few people at least on HN have bragged about owning an inflationary crypto currency. Why? Because they're not getting rich nor is there an opportunity for them to be a part of the techno-elite.
My biggest concern is a fixed-supply currency gives no government the ability to provide stimulus if necessary. Many advocates argue that governments shouldn't provide stimulus but history shows that's generally a terrible idea (the gold standard, for example, contributed in some ways to The Great Depression).
EDIT: I don't feel like responding individually, but I will say that I've read both the Bitcoin and Ethereum whitepaper and there's nothing about grievances of traditional governments usage of printing of their currencies.
I feel that the "that's a feature" is more a post-hoc rationalization that allows one to say they're in the right while simultaneously benefiting early adopters. Regardless, every government in world history that's pinned their currency to something that's relatively fixed has had a severe depression with some part of that depression being contributed to said pinning. It's just not good economics. Feel free to respond with a contrary example if you'd like.
That's a feature. Not a bug.
Good, that's the intention.
It’s not uncommon for popular cryptocurrencies to fork, doubling their supply overnight in absolute terms. One usually prevails, but several popular forks continue to chug along.
Now we’ve even moved on to minting arbitrary NFT tokens of things to continue increasing the supply of crypto assets.
If you look past singular cryptocurrencies, the entire cryptosphere has become a money printer.
This new supply in the form of another cryptocurrency will go through price-discovery and it may turn out that it will fail to reach or maintain any significant market capitulation.
Rather than some central authority (ab)using their position to weigh into the answer to that question that they themselves are asking.
I see this equivalent to updating a contract unilaterally and arguing it is an upgrade versus letting the contract that both parties agreed on stay intact and sign additional contracts.
If the government had printed SARS-COV-2-USD, we could have collectively decided it is backed by hot air and valued it differently but instead we were forced to dilute the supply of our already existent supply.
the expenses to keep the system running are diluted too.
That's... that's the whole point.
There is a very good argument for fiat as well as a good argument for crypto.
If every government in the world is printing money like crazy, how is this "stable". In the US, 23% of the money supply was created in the last year, with no visible inflation (excluding asset prices, home, energy, etc). God knows what it'll be 5 years from now
What has been "stimulated" by the US creating 12 trillion in new asset besides re-inflating stock prices?
It reminds me of a joke about a group being really hungry so deciding to slice their pizza into 10 slices as opposed to 8. Money is supposed to be a unit of account. I think you can try to play games with it but in the end you're messing with complex systems with a high probability of creating unintended consequences (e.g. credit crisis, bail out, hyperinflation etc).
It's stable because during a recession, as loans are closed out or default or just don't get issued, money gets destroyed/created slower.
The government may be printing money, but fractional reserve banks aren't. This is a point on which most people who talk about printing presses are completely ignorant of.
Again, its a complicated system. Playing games is dangerous, especially when everything is politicized and no one is held accountable for their actions.
What the US has "stimulated" is preventing the economy from going into a recession. There are many businesses that are open today because of the money the US gov't has put into the economy. There are landlords that have been paid because of the money put into the economy. And the US economy is forecasted to have over 6% growth this year.
Don't conflate the economy doesn't seem like it's booming/stimulated with the money the US gov't has pumped into the economy has done nothing. I know I can't prove a counterfactual, but if we had done nothing, the US would not IMO be fairing so well right now.
Take a look at where the money went. Buying $800 billion of mortgage backed securities and 1.96 trillion in long term treasuries. A lot of other line items. 1.54 trillion in Loan and Grant Programs. You can argue that these somehow all of these trickled down to keeping businesses open, as perfectly designed by the masters of the universe that have only our interests at heart, but I'm skeptical. I personally think a lot of these were designed to reinflate asset prices for the already wealthy capital holders. Why is it that asset prices re-inflated to pre-covid levels? Is the future prospects of these enterprises somehow much higher than pre-covid? How does this make sense?
Also, the stock market is not the economy. Those treasuries are what allowed us to send money to people, to subsidize student loan interest, to fund extended UI benefits, to fund Operation Warp Speed, to purchase 100's of millions of doses of vaccines.
There are valid critiques of our system, free markets, capitalism, and even some modicum of truth that the government does a lot to reward already successful people, but your pushing a bunch of rhetoric that is borderline conspiracy and not really backing it up an understanding of how the economy works.
It's not stable for most governments, and they risk an inflationary crisis if they go too far.
But the US government is a bit different: the dollar is backed up on one side by Saudi oil exports and OPEC agreements to reinvest profits into US Treasury bonds. And on the other side is the Fifth Fleet.
But the US consistently presents a carrot/stick model for the dollar: if you're a country and you play ball – price your exports in dollars, invest in US government debt – you find access to US and other Western military equipment and training. That's why US weapons are being used in the Yemeni civil war.
Refuse to play along and you'll pay the price. It may not be something as dramatic as an invasion, though – sanctions don't spill American blood and can be very effective in crippling economies. Chávez wanted to kill the dollar and move to a basket of currencies and gold; now, Maduro is letting banks open local accounts and transfer money in dollars.
Ok, serious question here:
Can you actually point to me a statement where Gaddafi, or any official Libyan government statement for that matter, actually outlines anything approaching a concrete plan or concrete steps to the establishment of such a thing? When I try to follow links back to an actual source for this claim, I fail to end up at any reputable site reporting on a primary source here. Instead, the trails seem to end in sites that push very hard for a gold standard and I suspect have a strong bias towards inventing a hypothesis on unsupported facts that Western Globalists killed Gaddafi to keep the gold standard down.
I will point out that it is well-known that Gaddafi was a pan-Africanist, and my recollection is that he was very much in favor of the African Union following the European Union's example and introducing a single currency for the continent, and he made a few statements to that effect. But that's not the same as actually having any actual concrete plans, especially because these statements were made over a decade before Libya's civil war started.
Pardon the archive link, the State Department seems to be having some server issues today.
It's hard to be certain of the accuracy of Blumenthal's claims, naturally, but this is a long-time confidant of the then-Secretary of State making them.
Inflation lags printing and the lag is longer when the velocity of money is slow, like it is now. Once people start spending again, the inflation will be visible.
New cryptos are being minted all the time. If a government wanted to issue more fiat as a crypto token it could do so directly.
The values of currencies are only relative (established by exchange rates). How do you calculate an average for all the existing currencies (weighted or otherwise)? What am I missing?
From Bitcoin's genesis block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks".
It’s a complete coincidence. Again if that was an explicit goal it would be in the white paper.
You might actually be correct — I personally doubt it, but it’s a funny thought... to think that we all just over-indexed on this trivial detail.
[1] https://john-tromp.medium.com/a-case-for-using-soft-total-su...
This part doesn’t sound very different from investing in startups, where everyone is hoping to get in really early on the next unicorn. Seems to me the main difference is that this kind of “investment” is generally only available to people who are already “elite” in some sense (i.e. sufficiently wealthy and/or connected).
What's the upper limit on how rich a person should be in your view?
Most people don’t realize this. A great book on the topic is Lords of Finance which outlines how the gold standard made the Great Depression truly great.
Even during covid, I don’t think people realize just how fundamentally important Fed actions were to basic things like keeping food on grocery store shelves.
> An Ohio farmer, Roscoe Filburn, was growing wheat to feed animals on his own farm. The US government had established limits on wheat production, based on the acreage owned by a farmer, to stabilize wheat prices and supplies. Filburn grew more than was permitted and so was ordered to pay a penalty. In response, he said that because his wheat was not sold, it could not be regulated as commerce, let alone "interstate" commerce (described in the Constitution as "Commerce... among the several states"). The Supreme Court disagreed: "Whether the subject of the regulation in question was 'production', 'consumption', or 'marketing' is, therefore, not material for purposes of deciding the question of federal power before us.... But even if appellee's activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce and this irrespective of whether such effect is what might at some earlier time have been defined as 'direct' or 'indirect
It was illegal for farmers to grow wheat above a certain amount... on their own land... to feed their own animals...
You have people trying to tinker with complicated system. Gold is not complicated. It's a unit of account. There's a fixed amount of it with a pretty well known supply and demand. This is the way the world existed since 1971. That's the main value prop of crypto currencies, and by the price appreciation and interest, its a pretty strong feature. Its good to have a fixed unit of account available in the world when money supply can jump by 25% at any time due to the actions of a dozen or so individuals appointed by politicians
At least until someone lands a autonomous mining craft on an asteroid full of it can crashes the market. Anything can be upset by changes in technology.
https://en.wikipedia.org/wiki/Post-quantum_cryptography
>In contrast to the threat quantum computing poses to current public-key algorithms, most current symmetric cryptographic algorithms and hash functions are considered to be relatively secure against attacks by quantum computers
The wheat limits already assumed that farmers would feed their own animals first and then sell the remainder on the open market. The goal was to prevent the price of wheat from dropping too low by limiting the amount available for non-feed purposes. However, by doing the opposite, selling up to the limit and then growing "extra" to feed his own animals, Filburn was deliberately contravening the wheat restrictions. If he had succeeded in challenging the law, everyone would have done the same, the supply of wheat would have skyrocketed, and the price of wheat would have dropped through the floor, financially ruining Filburn and thousands of other farmers.
The wheat restrictions worked for the purpose they were intended: they eliminated the swings in wheat prices during a time of economic crisis, allowing the price (and the market) to stabilize. It worked so well that the these restrictions were included in successor laws and are still part of U.S. agricultural law today.
And they are unconstitutional.
The wheat restrictions were constitutional and the power to impose such restrictions is still part of U.S. law.
Just to be clear, there are restrictions on how much wheat you can grow now in the U.S.? (And if so: On your own land? To feed your own animals?)
I don't find that surprising or scandalous. Wheat is (approximately) fungible, so if you produce more for yourself, you're decreasing the marginal demand for wheat in the market. Besides, barring everyone from overproducing wheat makes more sense than only banning people who somehow intend to sell the wheat:
1. Intent is hard to prove or judge
2. By not applying a blanket ban, you're unfairly hurting net consumers of wheat, or farmers who can't internalise their wheat consumption and rewarding those who can.
I'm having a hard time seeing how the blanket ban was wrong in any way.
Before this decision, the federal government did not have the "right" to compel a property owner what (not) to do with his land. The framers of the Consitution were pretty clear about states' rights, and limits of federal power. Prior to this decision, a reasonable reader of the Constitution and case law would have concluded "yea, the federal gov't cannot compel the property owner in this way".
The (court decision) and ban is wrong because A) it's essentially a Constitutional rewrite without the amendment process and B) the Federal gov't does not have the moral authority to mandate how a property owner interacts with his own property. The intent from the 1790 text is pretty clear about the hierarchy of individual rights > state rights > federal rights.
To be clear: I'm not arguing against federal regulation of interstate commerce. The Constitution defined that as "commerce [...] between the states". There needed to be an Amendment to formally redefine (or clarify) that section. There was no Amendment process for this expansion of gov't power.
Or they want to get away from government controlled artificially inflated currency.
Now, there is a competing narrative that bitcoin doesn't even need to take over as a currency. Rock solid store of value that is impossible to debase is more than enough to still be worth at least an order of magnitude more. It's a technology to protect savers from having their wealth stolen through currency inflation. Wealthy people already protect themselves with a diversified basket of assets and treat currency like a hot potato. But the poor and middle class often don't have the knowledge, time, or access to protect their wealth.
The trend of widening wealth inequality in the US seems to have taken off right around the time we abandoned the gold standard in the 70s. It used to be that everyone could just save their currency and that was a really good store of value. Now savings accounts yield ~0.5% and you have to put your money in more risky assets just to preserve your value.
It could be that we end up with a world with both bitcoin as a reserve asset, where you sweep all your excess cash that you don't want to invest, and government fiat currencies, which they can continue to use for stimulus and to print their way out of debt, but without debasing savers to do it as they are now.
[0] https://mleverything.substack.com/p/performance-of-gold-sinc...
I did the math to find out what the melt value of a $10 1913 gold coin would be today in 2021. Over that more than 100 year time frame, the CAGR of gold is 5%/year.
Since 10.91% is far higher than 5% or 7%, I’m inclined to believe that investing in productive companies is far better than investing in a hunk of yellow metal that just sits there.
Gold appreciation was ~0% from 1930-1970. Post fiat-currency it grew at 5-7%. That has to mean something...
Gold was nationalized by the US Government in the 1930s and it wasnt legal for US citizens to own or trade again until the 1970s. https://en.wikipedia.org/wiki/Gold_Reserve_Act
The more interesting observation in my opinion, is that priced in gold, market index growth isn't nearly as impressive as dollar denominated numbers would lead you to believe. Priced in gold (excluding dividends) the S&P 500 still hasn't recovered from the dotcom bubble, it's just barely made it back to pre global financial crisis levels, and even that is on par with the 60s. [1]
The fiat standard distorts our view of the world and tricks us into seeing growth that isn't real. It's like if the CGPM [2] cut off a sliver from the meter stick every year (before pegging to universal constants) which makes it seem like you're growing in height your entire life, even though in reality you stop growing in your 20s and even start shrinking in old age.
[0] https://www.longtermtrends.net/stocks-vs-gold-comparison/
[1] https://www.macrotrends.net/1437/sp500-to-gold-ratio-chart
[2] https://en.wikipedia.org/wiki/General_Conference_on_Weights_...
Only keep enough cash to handle emergencies, e.g. 3-12 months of expenses to handle job loss. You don't want 100% of your wealth in potentially volatile assets, because job loss will often correlate with market corrections, forcing you to sell your assets at the worst possible time, when you would ideally be buying.
However, one trick you can use is to borrow against your assets. Not only do you not need to sell at a bad time, but you don't get dinged by capital gains tax. There are pitfalls here that can make it dangerous, but here's an example of executing it, https://www.mrmoneymustache.com/2021/01/29/margin-loan-ibkr-...
as opposed to new banks and funds, who want to be part of the established elite?
> Needless to say, very few people at least on HN have bragged about owning an inflationary crypto currency. Why? Because they're not getting rich
people don't brag about failed businesses either.
> Regardless, every government in world history that's pinned their currency to something that's relatively fixed has had a severe depression with some part of that depression being contributed to said pinning. It's just not good economics.
yeah but people could afford a home 50 years ago so theres that to consider.
you're accounting for the ability to curb the impact of a depressive event, which is good, but an inflationary currency might have a bigger, deeper impact over 40 years than on the surface.
Digital SDRs, also known as IMFcoin. It's coming. Likely in the next two years. It won't be decentralized.
If people have consensus to fork and create more coins, then so it will be; but that decision will not be made alone by a single actor.
It’s happened many times already in the blockchain space.
Your concern here isn't big enough.
Your implicitly assuming that it functions like Gold and/or USD in some healthy way.
The biggest concern is really that it operates like a distributed wildcat banking system without any kind of FDIC or Fed backing up the currency. Once there is a panic then it will unwind with no kinds of circuit breakers in place.
Everyone treats "the full faith and credit of the US government" as a joke and so think that a financial system that ignores the whole history of bank panics doesn't even need to pay lip service to those ideas and it'll be fine. Economic history shows that this will end badly for crypto -- like a law of gravity. It may also end badly for the US before too long, but everyone is due for a lesson in why those words are there for a reason.
And nobody needs crypto to pay their groceries, rent, mortgage or taxes. Everyone can choose to quit crypto tomorrow and most of the population of the world won't care. It is incredibly difficult to quit the USD.
Arguing about inflationary/deflationary currencies implicitly adopts the language that there's something useful there, when its just a really large distributed ponzi scheme that hasn't collapsed yet.
>I've read both the Bitcoin and Ethereum whitepaper and there's nothing about grievances of traditional governments usage of printing of their currencies
and
>[The desire to be a part of a "new elite"] is why the most popular currencies have a fixed supply. That way, if they're popular earlier adopters get to be a part of the elite.
Technical papers tend to focus on their contribution to knowledge. In Bitcoin's case it's a distributed systems paper that shows a globally consistent database is possible in an adversarial network with no central coordinator, if finality properties are allowed to be probibalistic in the short term. Though an cryptography author may feel passionately about Bill of Rights, 4th Amendment protections, they needn't say it in a paper they write about a cryptographic primative.
and
If we are to assume bitcoin is a "popular currency" and want to read the opinions of early thinkers rather than straw-man them:
I also do think that there is potential value in a form of unforgeable token whose production rate is predictable and can't be influenced by corrupt parties. This would be more analogous to gold than to fiat currencies. [1]
[1] https://www.mail-archive.com/cryptography@metzdowd.com/msg09...
>I do see value in a crypto that's pinned at a weighted average of every single currencies' worldwide weight. [People holding these 'weighted average' currencies a]re not getting rich
How is it that these supposed weighted average monies are superior while simultaneously no one in the market place is demanding them while simultaneously the demand for bitcoin is increasing?
The exchange ratio, what you're saying is price, cannot be arbitrarily decreed (Thou shall have X weighted exchange ratio with all government monies). Exchange ratios / prices are the result of many individual agents swaping, exchanging with eachother. All previous attempts at information/digital monies (see bmoney) failed because of this misunderstanding of how prices arise.
>My biggest concern is a fixed-supply currency gives no government the ability to provide stimulus if necessary.
How does printing/diluting money create wealth? If someone wants to work for a money that's costly for them to obtain (via work) and costless for someone else to obtain (money printing) they're free to do so -- the problem is that one will bankrupt themselves doing so relative to someone wants to work for a money that's just as costly for everyone else to obtain. Those still holding their wealth in fiat monies (euro, dollar, yuan, yen) or fiat-economy derivatives (bonds, fiat-company equities/stocks) are exposed to this bankrupcy potential -- it's the same dynamic as all currency debasements manifest.
>every government in world history that's pinned their currency to something that's relatively fixed has had a severe depression with some part of that depression being contributed to said pinning. It's just not good economics.
Governments aren't economies, Whether people can produce more than they consume (a functioning economy) is orthogonal to whether the same people who have the monopoly on violence also are trying to enforce a monetary monopoly as well. If a government fails because it consumes more than it produces, that reflects a failure in the management of said government -- not because someone, somewhere has a money in their posession. Typically, it's marginally harder for people to produce more than they consume when they're forced to be subject to a cartel/monopoly.
Even if government currencies were to somehow disappear, it would still be trivially easy for anyone to launch a new currency, just by deploying a short script on any smart contract chain.
With multiple currencies, we're closer to the competing private currencies advocated by Hayek, who thought they'd bring about a stable economy without need for manual intervention. I'm not competent to judge whether he was right, but it's clear we're not going back to an equivalent of the gold standard.
I consider myself an intelligent person. Maybe I'm not, but I try to take informed decisions and stay up to date with the latest technology developments. Even with this, I have a very mediocre understanding of cryptocurrencies. I do understand well how a blockchain works, but I would be lying if I said that I understand well the economic dynamics of the cryptocurrency market.
For starters, there are a gazillion of tradeable cryptocurrencies with different premises and value propositions. They all have extremely different dynamics with the only common denominator being the concept of a blockchain.
I do invest on cryptocurrencies and I try to use some signals, mainly trying to understand the viability of the coins I pick in the long term and their potential impact on the financial system. It's not a very scientific analysis, but I can tell you it's deeper than the analysis than most people who invest in crypto do.
Most people just put money on Crypto markets because its exuberant growth. They are not thinking on whether this is a viable investment or not. They just want to participate and most times this is with an all-in win or lose mentality. And I'm not only talking about retail investment. Many institutional investors are operating on the same idea.
Crypto is extremely speculative. The more speculative an investment is, the less predictable. So, I totally buy the idea of a lottery-like behavior. This is going to be the case until crypto coins start morphing into actual transactable currencies that can be used for commerce, remittances, wages, etc.
It's a gold rush in the wild west, it starts off very inefficient, actual scams abound and crazy speculation is everywhere, like a gold rush at the end of the day there is probably something with value under all the craziness, that is what happens when things are new and people don't understand it, they are the ones that are establishing the parameters of its function, what it can and cant do. It seems like all mainstream blockchain related discussion is basically people circle jerking about how it is 100000% a scam or how it is the new paradigm with no space in between, which is pretty disappointing.
Peter Schiff was right back then... https://www.youtube.com/watch?v=sgRGBNekFIw
and he's still right now. https://twitter.com/peterschiff/status/1345427870546538509
probably less than 1% made a lot of money, the rest lost some.
So according to your research 99% of people who have bought it have lost money. That's complete bullshit, I personally don't know anyone who has lost money, they have all made significant returns, so unless they represent your 1%, I say again, you are talking bollocks.
it's accurate
you don't have to believe me, just think that Satoshi alone owns 1% of the bitcoins in circulation, than there are a major crime organization in Bulgaria that owned $ 1.2 billion worth of btc (currently owned by the Bulgaria government), the FBI that seized many bitcoins around the World (1.5% of the total), including those of silkroad, followed by btc trading companies.
only a quarter million users (4% of the total) own a full bitcoin, while the majority owns less than a half bitcoin.
they bought at X and sold at X minus some, not much, but a loss nonetheless
or bought at Y and sold at Y plus some small amount and.never tried again, for various reasons including "not worth the risk".
technically not a loss, but not a good investment either.
also many thousands wallets are inaccessible because the keys were lost (a friend of mine made almost two bitcoins in payments 8 years ago, he lost the keys soon after...)
while the 1% got extremely rich, the 99% had neither the capital or the will to risk to get there. which is completely understandable.
do you own BTC?
anyway, you don't have to believe me (again)
> According to bitinfo, which tracks the total number and value of bitcoin addresses, 75% of addresses are home to less than 0.01 bitcoin, and 97.54% have a balance of less than one bitcoin
hardly nonsense
I understand it fine.
It's bitcoiners that do that.
if they said there are 6 millions addresses but it's actually a couple thousands entities holding them, it would be too obvious that bitcoins serve an insignificant portion of the society, usually already very rich.
The fact that having a single address it's not good practice it's proof that bitcoins are inherently unsafe
imagine if bank said "it's good practice to own many bank accounts". how many people would trust them with their money?
their nominal (aka imaginary) value is right now $60,000 dollars each, in real money
if btc could not be traded in fiat currencies, which is the real goal of every btc investor, their value would drop again to zero
because that's their real (aka physical) value
I don't think they are fiat money. Fiat money has actual utility as you need it to pay your taxes.
I wouldn't go so far as to say that fiat must have "actual utility" though. Being forced to use a currency in order to avoid prison time is more like extortion, rather than utility.
Crypto isn't fiat, though, in any case.
1. https://www.merriam-webster.com/dictionary/fiat 2. https://www.etymonline.com/search?q=fiat
https://en.wikipedia.org/wiki/Fiat_money https://en.wikipedia.org/wiki/Intrinsic_value_(numismatics)
If fiat money is a bad thing, then I guess we're all doomed since the entire worlds economy is based on fiat money.
cryptocurrency will have the ability to solve global equality problems like no other tech has been able to in history.
Don't mistake me as saying bitcoin will be that instrument as there are many technically superior cryptocurrencies out there. Take cardano, for example, it's built in such a way that it could do more global tx/second than VISA currently does and likely use less electricity to achieve that goal.
Yes, it's easy and cheap
And of course, many people here on Hacker News have a rather privileged Western notion, that you can, in fact, legally send money just wherever. That's not universal. Capital controls restrict that heavily in many places, such that it can be illegal for people to send money out of the country. So the formal banking system is no help there.
Assuming that you can trade Bitcoin on both ends, it really is often the simplest way to simply move money between people outside the formal banking system, especially internationally. For better and worse, it cuts right through all of the red tape: no wire transfer declarations, no capital control declarations, no government-mandated exchange rates, no tax reporting, no KYC requirements, no ID requirements.
so it would be illegal to send crypto money
if we are exploring illegal ways to do things, crypto is just one of many solutions and probably not the cheapest or easiest
> Assuming that you can trade Bitcoin on both ends, it really is often the simplest way to simply move money between people outside the formal banking system
Talking about Africa, as an Italian with African roots, it's not.
the idea that you need cutting edge technology to solve developing countries problems is a die hard one and represent a "rather privileged Western notion", developing countries have their own systems that already work.
When there is a mobile network, people are able to send money even without an internet connection using mobile phones of 4 generations ago. In Africa it is possible since middle 2000s.
For example: https://it.wikipedia.org/wiki/M-Pesa
In many African countries, where China is financing developing projects, you can use WeChat.
Anyway, you can already send money to Burundi, Cameroon, Ghana, Kenya, Madagascar, Malawi, Mozambique, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe (and many others https://www.xoom.com/about) using Xoom
Yes, Iran or Venezuela or North Korea are not there, because that would be illegal for an US business, but it's illegal to send crypto as well. The hard part of sending money to such countries is not technical, it's legal, I understand if people want to send money back to their families, but it's an hard task by design when people living in those countries aren't even allowed to leave the country or own a bank account in a foreign country (because of the US)
https://www.euronews.com/2020/02/13/italian-banks-are-closin...
Crypto doesn't solve that problem, it only makes the people at both ends liable.
Do you think that the US would allow bitcoins to flow in Iran to finance what they consider an enemy regime? (rightfully or not)
Besides, if you want to send money to some controversial countries, there are other solutions, already available https://yekpay.com/en/irr-remittance/transfer-money
You don't need no crypto and developing countries need no Western saviours.
If your family was barely surviving in a restricted country I'm sure you would send funds to them as well. I don't derive ethics from existing power structures and I certainly sleep better at night helping people regardless of regulations.
You're free to have your own ethics and disagree with me - that's the beauty of trustless systems, you can make your own decisions as can I.
I don't really understand why people don't read other people comments
I've literally said "as an Italian with roots in Africa" my African family was dirty poor and my Italian family isn't reach either.
I guess you are not from a poor country, so why are you imposing your rich country world view on me?
trustless systems are THE problem in a "restricted country" you'd know if you'd ever visited one.
They can and will take waway from you everything at will, imagine what would happen to a family that suddenly has money to spend but nobody can say where the money is coming from...
if there's no proof that the money is yours, you can't claim the ownership, taking it away from you it's easier.
"but... but... there's an entry in a global immutable ledger that says that the money was transfered from this anonymous wallet to my anonymous wallet and..."
"so you have no document proving that the money is yours! they are legally of the government now. we're also taking the keys of the wallet."
living the life of warlords or mobsters or arms dealer, hiding the sources of your income like criminals, is not what people in developing countries want!
they want banks and laws like everybody else
they don't want to try to be rich by investing in a pump and dump speculative asset so that Musk can make more money.
They absolutely want trusted systems, as small as possible, so they can trust them, not the global financial tools of the richest 1% elité
> if there's no proof that the money is yours, you can't claim the ownership, taking it away from you it's easier.
You seem to have little clue how cryptocurrencies even work here. You can't take someones crypto without taking their private key and you won't even be able to know how much crypto exists in someones wallet without the private key.
Now of course someone can put a gun to your head and demand your private key, but they won't have any indication that you even OWN a private key with crypto whereas with fiat they can just raid your house and claim the cash.
In no circumstance is it easier for a central authority to take crypto than cash.
I'm not sure what ledger you think will prevent criminals from taking cash from your house or bank in the same manner. If you think a thug with a gun can't demand your bank login the same as they can demand your private key then you really don't know what you're talking about. I could relay personal experience, but again I don't consider arguments from some notion of anecdotal authority to be valid so I'll let you just google the situation if you'd like where people at gunpoint are made to withdraw cash from ATMs. It's common enough.
Again, there's no situation where crypto is easier to steal than a countries fiat.
paraphrasing Asimov
my ignorance is not as good as your knowledge
> You seem to have little clue how cryptocurrencies even work here
doesn't a point stand on its own, not based on the authority of the person making the point?
who said that? ... I can't remember
anyway, I was involved in btc from 2014 to 2016.
dropped it and never looked back.
> Now of course someone can put a gun to your head and demand your private key, but they won't have any indication that you even OWN a private key with crypto whereas with fiat they can just raid your house and claim the cash.
that's why we have banks and don't keep our money under the mattress.
so that the bank is responsible of keeping it safe and I don't lose it if the bank gets robbed.
what happens to my bitcoins if someone robs them?
but let's imagine you are in a poor country, can't open a bank account because the system doesn't accept you, you don't trust it, there is no bank system in your country, whatever...
now imagine you need to buy something that your family needs. you convert your bitcoins to fiat money (someway, that's another cane of worms entirely), because of course you can buy a Tesla with bitcoins, but not primary goods, and you are back at square one: you have cash in your home that is not safe.
> I'm not sure what ledger you think will prevent criminals from taking cash from your house or bank in the same manner
do you seriously don't know?
> people at gunpoint are made to withdraw cash from ATMs. It's common enough.
it's not.
because you can only withdraw a small amount of money from ATM (€ 250 in Italy) so the incentive is close to zero.
thieves steal the ATM machine and try to break it later
it's extremely rare, but it happens.
but even then the incentive is very low, because if you break an ATM machine the money inside is tainted with a special paint that makes it useless and highly recognizable.
> Again, there's no situation where crypto is easier to steal than a countries fiat.
bitcoins are useful only when converted to fiat money.
you can't buy bread for your family with bitcoins in Somalia.
You can't in Italy as well.
infact they steal your fiat money, which is much more valueable for a thief.
anyway you seem to not understand how developing countries work, at all.
money is not stolen from you, it's seized by corrupt governments and corrupt police forces.
crypto doesn't solve that, in any way.
if you can hide crypto, they will seize the goods you buy with them.
don't believe the hype
-- Public Enemy
If the vulnerability is when you buy goods or hold fiat then crypto isn't the problem. Your bank is safe, so is your wallet. If an attacker takes the keys to your bank or the keys to your wallet you are compromised. Maybe your bank is insured and will refund your withdrawals if you can prove you were forced to withdraw by an attacker. I'm sure that's something that would happen in Italy, but in the poor parts of the world I'm familiar with that is not the case.
>> > people at gunpoint are made to withdraw cash from ATMs. It's common enough.
it's not.
this is just ignorant - I've witnessed this multiple times. Maybe it's you living in Italy that has no exposure to the realities of poorer countries if you're ignorant of this common attack.
crypto is as easy to steal as any other property.
I was just playing along the game "crypto is safer"
it's not
> If an attacker takes the keys to your bank or the keys to your wallet you are compromised
Nope.
If I can prove that the keys to my bank account were stolen I don't lose anything.
That's why, again, we use banks.
> Maybe your bank is insured and will refund your withdrawals if you can prove you were forced to withdraw by an attacke
it's a requirement for members of the World Bank
go see the list of Countries
it includes places like Liberia, Afghanistan, Nicaragua
of course in Colombia or Los Angeles (same level of criminal behaviour) it happens more than in safer places, that still means that the greatest danger is losing your life, not your money.
and how is that different when using crypto?
I don't think that people using crypto become magically bullet proof.
> this is just ignorant - I've witnessed this multiple times. Maybe it's you living in Italy that has no exposure to the realities of poorer countries if you're ignorant of this common attack.
where exactly?
can you point me to some info?
you probably don't know that banks have to reimburse you if someone stole your money from the ATM, because it's their duty to protect them.
but even admitting you are right, they can only steal the amount of money you can withdraw from the ATM
if they get the keys to your wallet using the proverbial gun pointed at your head, you lose everything and can't get it back
police can't even do anything about it (to make it clear, you can prove you had the money before they were stolen, because the bank keeps a log of the transactions made by the ATM machine and can tie them to your persona, how can you prove those bitcoins were your property? if you own the keys you own the wallet)
The only service around that allowed a Canadian friend to send me money was PayPal. His bank and mine didn't feel like talking to each other.
Wire transfers really aren't designed for your $300. You can complain that EFT should be easier (like they are in Europe) but that isn't a problem with the currency. You could have sent your friend a check for < $1, if the time to clear was acceptable.
I get that change is frustratingly slow in this, but none of it requires a fundamental currency or technology change. I just paid my rent by phone for $0 in fees, and regularly exchange funds with friends for the same. Between countries this is harder but that's more regulatory than technical.
Unless you are taking the (extreme) view that states shouldn't be able to see, control, or tax/tariff such transactions your issue is with the regulatory hurdles and incentives to integrate incorporating them, not on the networks (or currencies).
Is this supposed to be an insult? Are you some Austrian Economics/Gold Standard kook?
[0] https://twitter.com/PeterSchiff/status/1377626254619328524
https://twitter.com/PeterSchiff/status/1377626254619328524 "I was wrong about Bitcoin"
Unless I am mistaken, it seems like cryptocurrencies that currently exist can all be called fiduciary money but not fiat money, as the fiat term seems to tightly connect with government decrees and issuing. There might be a form of crypto out there officially issued or backed by decree by governments, but the major known ones aren't AFAIK. Do you have examples in mind?
(This short summary seems to correlate with all I've read: https://quickonomics.com/different-types-of-money/ )
If that is the case (crypto != fiat), then I would have trouble understanding what your argument is.
It's not quite fiduciary money because there is no issuer that gives any promises of convertibility. Perhaps you could argue there is some implied promise of convertibility due to the prominence of fiat<->crypto exchanges?
It seems closest to commodity money, because it's value depends on asset scarcity, but it's not a real commodity with utility in and of itself. Then again, it's not clear that gold was actually valuable to people before they started using it as money. It's possible that use as jewelry emerged after use as money to peacock and show off wealth, and industrial use is a relatively modern invention.
Crypto is a novel invention of self-securing abstract scarcity. It's a scarce number in a database. Its scarcity is assured by the properties of the network, rather than trust in an issuing authority. It just doesn't fit perfectly in any of our pre-existing categories.
When someone like Elon Musk or Chamath gives him any ounce of attention, he spends hours talking about it. Classic.
He might be right. But he's 50% seeking attention.
This has no bearing on the (societal) value of bitcoin. The dollar is also fiat money and everyone loves it.
Is this an industry-standard term? It seems like an awful definition and awful use of the word “lottery”.
I can think of using bitcoin for remittances or drug purchases, but other than that I have trouble thinking of compelling examples.
Some companies have announced cryptocurrency-related initiatives, but the only benefit to them is that lottery-like speculator behavior might pump up their stock. (See companies like Long Blockchain, formerly known as Long Island Iced Tea.)
Also, there's utility in a trustless, predictable, uncorruptible source of scarcity. Meanwhile, the supply of gold is difficult to audit, we have no idea to what extent nation states are manipulating its supply.
The value of a deflationary monetary policy cannot be understated.
[0] https://www.reddit.com/r/CryptoCurrency/comments/mhpaar/file...
Also, I'm not sure your counterpoint is that legitimate. No one is investing in gold in the hopes that it doubles or triples in value, whereas that is clearly the hopes of many BTC or ETH buyers.
Scroll down this list[0] and you'll find many projects providing a ton of utility (and some, I'm sure, that do not, but I'm definitely not claiming all crypto projects are legitimate/useful)
This is just adding margin into decentralized trading.
[0] https://aave.com/flash-loans/
[1] https://medium.com/keeperdao/a-keepers-guide-to-arbitrage-mi...
You just blanket state that DAOs are providing utility. I asked you how these things are doing that.
The specific DAO's I linked to build products that allow for shared arbitrage profits and an autonomous decentralized stablecoin respectively- the utility is found in the effective distributed markets they help optimize.
The very fact that you can trade coins or earn interest on a loan in a decentralized manner is the utility. Composable financial legos are pretty useful.
i think the idea is that people buy lottery tickets or scratch cards for the same reason they do these stocks, it's a form of gambling entertainment.
Here's how the paper defines 'lottery-like'.
Yes, the current price of crypto is based on speculation, not in their current utility.
But there also was a dotcom bubble 20 years ago. Does that mean that the World Wide Web is useless?
Cryptocurrencies will be highly useful as stores of value and maybe as currency. We're just not there yet.
This is just the Gartner hype cycle, with the addition that for the first time we have a global market completely parallel to the traditional one with much less regulation. No wonder people are going to speculate with it. It's our new toy.
The utility of the WWW was eminently visible to experts even before it existed.
I have yet to meet an expert in equivalent fields who complains that the core issues in finance can be solved by cryptocurrencies.
In fact I don't really see any issues that can be solved by crypto. Trust issues? Crypto users are as likely if not more to be scammed and the technology itself doesn't build trust any more than a webpage does; it's the backing of a legal system that does.
International transfers? Google for a few minutes and you can find plenty of places where you can get mostly decent rates. The only places I can think of where this is an issue are Argentina and Venezuela, but that's not a niche that corresponds with the current or future crypto market valuations.
Descentralized trust? If there's one thing I trust less than human institutions, it's "bug-free" code.
Its like saying librarians didnt see any issues with the storage of information before the internet came along.
The ‘issues solved’ by programmable money are the opportunity for full automation of the finance industry and for businesses to interact with it via smart contracts (instead of accountants and lawyers)
Uniswap could be a replacement for all the worlds exchanges, real estate agencies, commodities markets (including livestock) and your business could buy items from these markets with a script.
Combine this with something like self driving cars delivering goods and you have a whole supply chain that functions with zero human involvement.
No. But the web's sole claim to usefulness wasn't as a "store of value". Just as well it was useful for other things, because it turned out that speculator driven bubbles aren't superior places to store value...
https://www.youtube.com/watch?v=bbr3NC9oqp4&list=PL_xlkwLDH1...
You could see what happens when large group of irrational agents enters the market in the case of GameStop.
Someone had built-out a cage with 50 to 60 really nice high-end racks of shiny, new bitcoin mining hardware. Snazzy logos, brushed steel chassis and lots of blue LEDs (I think the LEDs are required, in order to be cool). The structured cabling was a work of art. They really went the extra mile to look good.
These machines crunched away for maybe a month, and the next time I visited the datacenter, every machine in the cage was turned off and dark. No more blue LEDs. They stayed that way for months, until the datacenter needed the floor space and carted the junk away. I believe the hardware was recycled, I don't know who got the racks.
I dug into the story a little and found that the company hadn't paid their power bill. I believe that the hardware wasn't paid for, either, but it was not as efficient as newer hardware and not useful to anyone, so they just left it.
Scammers and waste, all the way down.
If the stocks do have fundamentals and the PE ratio makes sense relative to the growth factor, then it isn't pure gambling.
On Jan 1st 2020 it had a P/E radio of 25:1
Does that make sense?
Disclaimer: I know nothing
GME is a symptom of a broken system.
Similarly a lottery ticket will never produce dividends or cashflow. You pick a number and hope it is the lucky one.
Each crypto currency (well most) act like a collectors marked, i.e like art, antiques, trading cards and so on.
The only lottery aspect is weather or not niche currencies become well established, kinda like weather or new sources of classical collectibles become well established.
Some now would argue that collectibles in difference to crypto currencies have a real world value which backs them but that's a misconception such real world value is most times completely negligible if the collectors marked fails. In some cases it will even cost you money to get right of the now basically worthless collectibles.
Also similar to there being cryptocurrency which are a scam there are collectibles which are such. Like supposedly priceless pictures being sold for over a thousand dollar being only worth like 5 dollar or so, i.e. you basically lose the full investment
In my experience, until 1-2 years ago, btc movements were anticorrelated with the market. This seems to have reversed around the time that financial institutions entered into the BTC market.
Since you seem to be ignorant of this, Bernard L. Madoff Investment Securities LLC and Enron were also "companies," so your response isn't as witty as you think.
Going back to the reason for this thread, saying we "missed the boat" on anything does not mean it is a pyramid scheme -- I think I've demonstrated that and I'm not sure what the point of your comments is any more.