> I'm certain this technology will find a place in the future after it has matured
Why? It doesn’t solve any real problem that anyone has ever had.
Why? It doesn’t solve any real problem that anyone has ever had.
It solved the problem of ransomware payments, before winlockers used to ask for gift cards which didn't scale well.
It solved the liberty reserve problem where the US government shuts down your sketchy no-KYC money transfer platform.
At a very general level cryptocurrency has solved the "anonymous online payments"-problem.
These are all very real problems solved by cryptocurrency.
Blockchains solve the problem of having a decentralized public database, currency is just a particular use
That's not a problem. A problem is something like this: "as a video editor/doctor/..., I need something that helps me...".
Yours is just a tech description.
As far as I can tell, over a decade in, blockchain is still hunting for one.
You could say the same thing about Walmart's money orders and check-cashing services, but that doesn't use an entire country's worth of electricity, suck up the world's supply of GPUs, or support the same number of scammers.
I‘ll leave the interpretation of this statement up to you ;)
It provides a mechanism that enables distant parties to be confident that they hold copies of the same document.
That’s all.
The users really hate the decentralized aspect of crypto, as shown by immediately giving away their wallet to some "trusted" third party if it reduces fees.
People hate manual IT management. We are nearing the point at which the idea of doing this will be compared to cranking a car engine by hand to start it. If decentralized systems can’t offer this kind of “it just works” experience then the future is 100% centralized.
Bank accounts also don’t shrink in value the way Bitcoin does sometimes.
Venezuela's problem isn't inflation - that's a symptom. Venezuela's problem is the Maduro government. Solve the latter and you solve the former.
There are very real challenges from inflationary monetary supplies in countries like Argentina, Turkey, Venezuela and notably Zimbabwe.
Seriously, in Venezuela there have been recently shortages of: milk, meat, coffee, rice, oil, precooked flour, butter, toilet paper, personal hygiene products and medicines. Some Venezuelans have resorted to eating wild fruit and garbage [1]. Somehow resolving inflation through a cryptocurrency with $50 transaction fees that loses 27% of its value in one week every few months doesn't change any of that. It's just a different set of problems.
However, overthrowing the government will resolve both issues.
Sometimes there are no easy answers.
[edit] And in fact it appears that Venezuela is moving in that direction. Domestic banks are already allowed to offer USD denominated accounts, and the government is making it easier to use [1].
It's not a surprise as of course, the dollar is a much better currency.
In fact as the article points out it is estimated 66% of transactions in Venezuela are now conducted using the US dollar. Once that gets to 100%, will you concede that "Venezuela" wasn't ever a great talking point? After all it's clear, the people have spoken: economic activity in USD is preferred over BTC in Venezuela by an absolute landslide. Is this not a scathing indictment of BTC and crypto in general? In a failed state with hyperinflation - a flagship use case - the population was given many options, including both BTC and USD. They picked USD.
[1] https://www.bloomberg.com/news/articles/2021-01-13/venezuela...
If you're rich, you can keep borrowing money at rock bottom rates to invest and get richer, if you're just an average person, everything around you is becoming more and more expensive, yet your compensation doesn't change.
Inflation is a function of both supply and velocity. Velocity is low because US savings are at an all-time high. The central bank has a number of tools to contract the supply once velocity increases. [1]
Your statement that an increase in supply leads to a commensurate reduction in the value of each unit is strictly false. And something you can measure by going to the grocery store and checking if your bill is 100% higher this year than last.
[1] https://www.stlouisfed.org/on-the-economy/2014/september/wha...
What I'm telling you is that supply is simply half the picture, and you're neglecting the other half of the picture. If you print a $10 trillion dollar coin, then give it to me and I throw it into a vault, has that increased the price of goods? No. Supply went up, velocity went down commensurately. This is what you're seeing in a macro scale.
Yes the central bank actively manages the money supply, and maintains a consistent 2% inflation rate. Inflation is good for debtors (i.e. most people) as debts are denominated in the currency of the year of issue and repaid with inflated money. So long as wages keep pace (they do [1]) it's generally a benefit.
Money isn't long-term savings. It's a short-term store of value that only needs to be fungible, cheap to transact, and retain the bulk of its value for as long as you hold it. Above all, it just needs to be predictable. Anything else is honestly a non-goal. Your job as a participant in the economy is to spend that money on basic needs or invest it productively.
[1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
Maybe you live in a country with a independent central bank but many countries are far more corrupt and the goverments make their central bank print money for themselves and have huge inflation rates. Cryptocurrency gives them a way to protect their savings from that.
Correct, however US personal savings rates are at all-time highs. [1] So, you are correct, the banks aren't taking the money and locking it into vaults. However, people are taking their money and locking it up in savings accounts and investment accounts. This is reducing velocity. The "printing" was to offset this reduction in velocity and avoid a deflationary spiral. Through lending, so they can be used for productive things.
This also explains how asset prices spiked without actually causing inflation.
> Cryptocurrency gives them a way to protect their savings from that.
I don't want to get too far down this rabbit hole, but literally everything that isn't currency is inflation-proof. Inflation only affects currency. So, if you buy real estate, or stocks, or even un-productive assets like gold, silver or cryptocurrencies, you're equally protected from inflation. It may underperform, but now we're talking about rate of return in constant-dollar terms.
Cryptocurrencies do protect you from inflation, yes, but they have massive deficiencies that make them a poor choice relative to their peer investments, in my opinion. Such as the rampant fraud in the space. This hinders price discovery, and makes it impossible to determine a real value. It also causes massive swings of 27% week-to-date. That's an annualized inflation rate of 25,000,000% when measuring the value of a bitcoin against CPI.
I’m curious how an inflation free money might stop people starving in a country unable to provide even the most basic services?
Decoupled from government maybe - though to a degree all the major central banks are. But it’s the passive management by an unelected group who made completely arbitrary decisions accountable to nobody with no consideration for what makes a good currency.
On the other hand crypto apologists propose us currencies which are uncontrollably printed by some anonymous guys in the non extradition offshore. Just last year 75% of all Tethers were printed out of thin air, since USDT trading amount is 14 times bigger than USD (not even counting tricks like Bitfinex listing USD while actually trading tethers behind the scenes) we can assume that whole crypto community is propped up by a lot of hot air and cut paper.
tl;dr - Look, USD currency management looks bad (or suboptimal). - Let's replace it with even worse scheme! HODL!