Hacker News Reader

Comment by cromka | Hacker News Reader

> Cryptocurrency market is extremely volatile. This isn't that far from normal.

I think you inadvertently confirm OPs point. Cryptocurrencies with their volatility cannot replace regular currencies.

Cryptocurrency is a misnomer. Most cryptos aren't trying to be currencies in the traditional sense. For example, RAI is a stablecoin on Ethereum that's not pegged to any fiat currencies. You can think of RAI as a stable form of ETH.

What does that even mean?

It means that ETH which is a decentralized cryptocurrency can be used as a collateral for an algorithmic stablecoin called RAI that adjusts its price based on the price of ETH from a Uniswap price feed and a PID controller and arbitrage. To mint RAI you need to deposit ETH. The goal of RAI is to create a stablecoin which dampens the price movements of ETH over long periods of time.

The fact the community felt the need to invent a "stablecoin" isn't terribly reassuring

Why not? Its a new asset, what is wrong with improvement? I mean using that logic does it also disturb you that somebody invented the seat belt? Would you prefer they didnt invent seat belts? Would that have been more reassuring of the relative safety of the vehicle if they never admitted that you could die in a car crash? The point of stable coins is really only apparent if you're trading crypto just like the importance of seat belts might make more sense to somebody that drives daily.

On the contrary, decentralized stablecoins are some of the most exciting things in the space. The MakerDAO system, which issues the DAI stablecoin, is earning 2.5 million every year, distributed to token holders. It has survived multiple market crashes. Algorithmic stablecoins attempt the same thing w/o collateral, and seem to have done well in this drawdown as well.

Are you talking about the RAI that traded at $0.0186 a few days ago and that you can now sell for $0.00022 ? That's a "stablecoin"?

https://atomars.com/trading/RAIUSDT

No, that's not the RAI I'm talking about. This is https://www.coingecko.com/en/coins/rai

Thats the thing, they arent currencies, they are assets that can act like currencies when convenient.

> hey arent currencies, they are assets

The irony here of course is that the only way that Crypto currencies would meet any standard definition of an asset would be if they were functioning currencies.

Going with Investopedia's straightforward definition "An asset is a resource with economic value", how is a non-currency crypto coin in any way a resource or possess economic value?

Presumably your complaint is that cryptocurrencies don't have "economic value", but what theory of value are you using to decide that?

Exchange theory of value says that a commodity has two values: a use value (what it can do for you outside of the market) and an exchange value (what others will give you for it in the market).

I think it'd be correct to say that cryptocurrency has no use value, but it obviously does have economic value. And it's far from the only asset with these characteristics.

Simple. Gold is an asset that is not used as currency but provides the holder with certain desired benefits and the asset can be liquidated if needed. Crypto is similar in that it prodives a financial vehicle that posesses certain properties. Im not saying they should all be thought of as digital gold but that lile gold, they provide value not only in thier price tag but in some inherent property that provides value to the user (this property varies wildly from crypto to crypto and is what makes each project distinct and unique.

Let's shift this one level up:

Simple. Bitcoin is an asset that is not used as currency but provides the holder with certain desired benefits and the asset can be liquidated if needed. Skepticoin is similar in that it provides a financial vehicle that possesses certain properties. I'm not saying it should be thought of as digital bitcoin but that it's like bitcoin, it provides value not only in its price tag but in some inherent property that provides value to the user.

If someone is willing to pay me interest to use my belongings to generate loans, then those belongings have a value. If you think that banking has value, then banks who use the blockchain ecosystem to provide banking services are generating value, correct? The question I would then ask, on the spectrum of risk, value generated, and trust, do these blockchain based financial institutions offer a complementary or competing product vs traditional banking. As of thus year, I would say yeah. I am close to converting a chunk of savings to stable coin abd putting it with a insurance backed blockchain financial institution, and am looking to ear a much higher apy than a traditional bank.

650B is a small market cap for a global currency.

Gold is 12T. Once Bitcoin gets to 10T, volatility should drop.

This makes no sense. 1 BTC still equals 1 BTC.

Currencies are used to purchase things. If the purchasing power of 1 BTC changes dramatically, it matters.

You're assuming I care how much something costs in dollars.

This makes me wonder how you pay for basic living expenses like rent/mortgage, food, clothes, etc

If you are a US citizen you will have to pay taxes in dollars.

Dollars are one of the easiest things to buy with Bitcoin, so how is that a problem?

I also need water to live my life, but that doesn't make me feel the need to price everything in gallons of water.

Fluctuating prices suck for paying taxes.

Buy bitcoin at $1 on Jan 1, sell at $10 on dec 31. I now owe taxes on $9 in gains, so I’ll need USD$3 on April 15. If on Jan 2, I buy more Bitcoin at $10 and it drops to $6 on April 15 that will suck because then I’ll need to sell half my Bitcoin to pay taxes.

Do you care how many chickens or how many beers you can get with BTC?

Unless you're a Buddhist monk living on donated food, you have to.

Yeah, because websites won't adjust the price in crypto for goods and services if its price relative to dollars drops.

I'm long on crypto myself, but come on. This crash still affects the prices of goods and services, unless all you're buying is other crypto and nothing else. We are nowhere near the point where shops don't assume they have to check the bitcoin/usd cost every few minutes to adjust their pricing.

Reply on news.ycombinator.com