I am often asked if I will “return to cryptocurrency”
twitter.com
twitter.com
https://www.cnbc.com/2021/07/14/dogecoin-co-creator-jackson-...
Really though, it's surprising that a lot of people have this same knee-jerk reaction to someone having an opinion and then changing it when making a comment (here, Reddit, etc.). Obviously it's not great to change your opinion with the wind or to simply please others but it's sad that any form of changing your opinion is seen as negative. Even for people that I would trust to be authorities on the subject like Jackson Palmer are not given the benefit of the doubt. Maybe it's a natural reaction to someone who doesn't conform to the group mentality on some subject.
I'm really lost.
> @TerrysFishyTips: Billy when you made #doge coin did you try to consider energy usage or was that not something you thought about? How can the dev community make doge more efficient?
> @BillyM2K: i made doge in like 2 hours i didn't consider anything
[edit] So with this in mind, no, I don't find their position hypocritical. I quite enjoy following Billy's twitter. It's one of the most friendly/positive in the space, he's clearly trying to uh, do only good everyday if you will.
[1] https://twitter.com/BillyM2k/status/1392952014854778883?s=20
Elon Musk could have picked anything, he picked Dogecoin because... satire.
I think people still don't get in an inter-connected world for 7 billion people and losing established religions and other old mind memes jokes are worth billions, people will lose and gain lives over them, they will spend parts of their lives centred around jokes. They won't go to church, community markets or medieval fairs, they'll go to Dogecoin stores, why not?
Dogecoin was just a cookie cutter crypto with marketing and I would think mostly others took his idea and meme'ed it to the moon.
He can change his mind, but it still is what is was day one.
Changing your mind about something is a sign of open-mindedness, not lack of self-reflection
- Brandon Sanderson, Oathbringer
I don't know how far back in time it takes for a disconnect of 'who was I then to do that?' or 'I can't believe I did that' but sometimes I think back to recent things and get so embarrassed my face turns red and heats up.
Like Bill Burr sometimes I have to scream it out and wriggle to release the shame.
The simultaneous part is important, if your beliefs change and your actions change accordingly; that doesn't count as hypocrisy in my book.
It seems to me that his personal journey granted him a privileged vantage point to talk about this topic, with more insight than the vast majority of people.
Clearly, if anyone did that exercise in self-reflection, it was him. Don't you agree?
And why is he, of all people, the one being singled out and required to meet all those high bars?
That's very different than the crypto lovers that don't change their opinion because of greed.
Without this cycle we would have never gotten out of the Stone Age.
And then advocating for something which makes logically sense to help other who don't follow to deep into the topic itself.
Awesome person :)
It sounds like he's (successfully)advocating against participating in crypto to me.
I don't see what he has to be ashamed about? Nobody died. He created a thing as a joke, took it seriously, looked at it seriously and re-evaluated the pursuit. He comes out wealthier and wiser.
fact /fakt/
noun: fact; plural noun: facts a thing that is known or proved to be true.
40 years ago, the following was a fact: "There is a country in Europe named Yugoslavia".
It is clearly not true anymore.
So, existence proof that facts can change.
You are talking about two different facts.
You may want to put some temporal logic spin on it, if that makes you happier (technically, it makes me happier, but I am content with saying "facts can change"), but the question I was trying to answer was "do facts change". I think I demonstrated that what once was factual may stop being factual.
At least this is the view that many functional programmers like to use and I find it useful.
In that model, a statement that can vary in time isn't a fact.
But the general thrust of his point remains. When the time constraints of a fact elapse and allow a new fact to replace the old fact, he changes his position. New information allows for new opinions.
Arguing about the definitions of words to score points is meaningless pedantry. You don't want to argue the actual point, that you should be able to change your mind when situations change or you learn new information. Because doing so would make you look like you're just stubborn and easily led. But for some reason, you can't agree with the quote because then you'd be granting something to the person you're currently debating with. Or to the side of the debate you agree with, seeing as we're dealing with multiple responders.
But all of this is to discuss the credibility of the Dogecoin founder. And that's a fair discussion to have, because his credibility and motives are very much relevant to why he should have certain opinions.
But now it seems the entire discussion is being done a very meta level. Where we're no longer talking about his qualifications, his stake in the success or failure of crypto, his reasons for making statements, etc. No, now we're discussing the dictionary definition of "fact".
> 40 years ago, the following was a fact: "There is a country in Europe named Yugoslavia".
It is clearly not true anymore.
So, existence proof that facts can change.
If you never do that, how can you learn anything?
- Business and work in general makes rich people richer. Remember that rich is very relative. You are a very wealthy person compared to a random person in some countryside in China.
- Considering the previous point, are you saying that people who have some money should not do anything to make more money? Should they stay the same, or should they become poorer? What do you advocate to do this? Prevent them from working? Take money from them forcefully?
All I hear from people in the crypto world is that you SHOULDN'T invest if you don't have money you're willing to lose. Crypto investment is a dream only for delusional people who want to get rich quick. If you do that then lose your money, you don't get to complain. You're free to choose, if you choose wrong, lose, and then not take responsibility for your choice and blame others, then you're truly a loser.
Michael Saylor, the most visible corporate Bitcoin warrior, advised people to mortgage their homes and borrow as much as they could to buy Bitcoin at the literal top of the market (to the day).
The number of people in crypto who believe in a libertarian, anarcho-capitalist world are on the order of 0.01% - the millions of retail traders punting Dogecoin around are just trying to get rich and don’t give a damn about the tech or some greater cause. And that’s because that is how crypto is actually marketed to the masses.
> The number of people in crypto who believe in a libertarian, anarcho-capitalist world are on the order of 0.01%
Where do you get your numbers?
> And that’s because that is how crypto is actually marketed to the masses.
Again, I don't see anyone "marketing" for it. People should understand what they're working with before selling their houses and "investing it" in bitcoin ffs. If they do that then they're dumb!
There is a high concentration of scamming around cryptos. There are the obvious thefts and frauds. But a good fraction of crypto businesses make their money pushing tokens in a manner remarkably similar to pump and dumps.
That said, for the reasons described here (crypto being a wealth transfer to the wealthy), I think it is here to stay.
Because unlike everything else, crypto has been designed from the ground up such that society is unable to rectify the bad elements.
> Again, I don't see anyone "marketing" for it. People should understand what they're working with before selling their houses and "investing it" in bitcoin ffs. If they do that then they're dumb!
Aaaand there it is. A slightly longer form of “DYOR”. If you go around evangelizing something that turns out to be damaging, you’re not absolved of all responsibility simply because you add “not investment advice”. If people who promote crypto really didn’t intend it as investment advice, they wouldn’t say anything. The whole point is that maybe other people will pump your bags. And if it all goes sideways, then you can always point at “not investment advice” because the vast majority of promoters and traders don’t understand the first thing about what a blockchain is, much less “tokenomics” or smart contract code (and exploits).
You may be an expert, and not in it to get rich quick. But you’re naive if you can’t see that the huge majority around you are in it for very different reasons.
In other things in life, there are things like consumer protection. You can tell your credit card agency to refund you, you can use the judicial system to sue scammers. If you lose login secrets to your bank account, you can call the bank, they know who you are, the problem can be solved.
Crypto currency is designed from the ground up with the goal of eliminating all such centralized power and protection mechanisms. Anything that goes wrong is your fault and you have no recourse, and that is not a flaw that will be fixed, that is the most central thing in its design.
Society has protections for the weak, crypto is designed to remove those protections.
This is hyperbolic. There are many insured custody services for cryptocurrencies, similar to fiat banks. Secure storage is a big topic in the crypto space, and it is certainly not a goal of cyptocurrencies to weaken protection mechanisms (centralized or otherwise).
Argument for big blocks: Faster and cheaper transactions (lower fee), as well as more transactions per second. Can use more like cash, i.e. Bitcoin Cash. Everything should be done on-chain. They also argue that small blocks are a money grab from Blockstream so that the network is forced to adopt layer 2 solutions that Blockstream develops.
Argument for keeping block size the same ("small blocks"): Larger blocks means more hard drive space and bandwidth are required, and mining becomes more centralized based on those increased requirements. Big blocks are a money grab from the miners, since they make more money on bigger blocks. An additional concern is if the availability of hard drive space will increase in line with the growth of the network. They suggest to use the Bitcoin Core network more as a settlement layer and a store of value, and not everything needs to be on-chain. They suggest layer 2 solutions like the Lightning Network to use Bitcoin more like cash and enable fast transactions, as well as increase the number of transactions per second. I understand the Lightning Network has some caveats, but from what I've heard from institutions like NYDIG and Strike, that are already using it, it is already working as is.
All I'm saying is maybe it's not just a small problem. The decisions affect a global network and some of the decisions were said to potentially cause major problems.
The point is that there are much bigger problems in a worldwide currency than block size. In comparison, block size is small potatoes. And the block size problem split the community into two that hate each other. They don't just disagree, but consider the other side to be actively sabotaging the system.
You are right though, it is a bit ridiculous. What would you have them working on instead, just wondering? Fixing the environmental issues? Adoption? What else?
Do you have a source for that? Because it's a pretty serious accusation to make.
I take issue with him telling individuals to accrue debt to acquire Bitcoin (companies I have less of an issue taking debt on). That's also the least reasonable part of the interview though. I think overall he makes a lot of good points as to why Bitcoin makes sense in the majority of the interview. However, I'm not one of those crypto people that only looks at one side of this. Yes, sometimes ridiculous things are suggested, but there is some good to this technology, too.
Algorithmic stablecoins like RAI[1] don't have a Ponzi component to them, for instance. You use the dApp and that's it.
Reflexer is collateralized by ETH which is traded 65% of the time against USDT which is backed by chewing gum and hope. This USDT trading determines the price of ETH which in turn determines the collateralization rate of RAI.
What kind of logical fallacy are you trying to make here? If someone sets up an exchange for bananas/pokemon cards and it ends up grossing a majority of the global banana trading volume, that doesn't mean the price of bananas is suddenly backed by pokemon cards.
Furthermore, the mechanism through which Reflexer maintains the stablecoin's price is independent from the collateral asset. It works just as well whether the collateral asset is traded against USDT or fiat.
The mechanism through which that stability is achieved is often 1:1 redeemability for another stable asset through a central portal, but that's orthogonal to the concept of a stablecoin itself.
I didn't feel the need to expound on this as I specified "algorithmic stablecoin" in my comment and provided a link to the project's homepage which features a short FAQ entry answering that very question:
> RAI is actually one of the first stablecoins. What most people call "stablecoins" are actually pegged coins. Pegged coins are oscillating around a specific value (usually pegged to fiat coins such as USD, EUR etc). RAI, on the other hand, is not pegged to anything. The system behind RAI only cares about the market price getting as close as possible to the redemption price.
Unless you mean "understand how the price behaves", in which case RAI is pretty simple too.
The stability of U.S. dollars without the hassle of opening a bank account. Which, generously, means faster transaction times; realistically, skipping AML.
Given Tether doesn't actually hold much cash, it's more akin to a money market fund that pays no interest.
Crypto is yet-another-trading-market nothing new expect maybe marketing)
Literally nobody in the cryptocurrency space is thinking about how to make fiat fair and sustainable because they actually like the flaws of fiat and just want to amplify them for their own benefit.
The only thing I can think of is stopping the constant debasement that the poorer holders are unaware of.
I don't think cryptocurrencies solve anything though, they're equally not backed and they don't even have weapons or an economy behind
Without a concrete safeguard, we would eventually fall back into the debasement scenario again.
I believe this is the problem bitcoin is attempting to solve. The asset/value is inseparable from the monetary network which makes it easily auditable.
They are all believers now.
It does seem like they are just in it to take money from the Retail Investors investors though like they always do. Meaning I have seen to many Bull to Bear Markets, and when the switch happens--it's the Retail investor that looses everything.
(I guess we will know how it all turns out in a few years. If I had Bitcoins, I would sell. The competition is almost exponential. New crypto are coming on daily. Every money licker wants their own crypto.)
However, I don't disagree that retail investors may end up with issues with crypto, but I don't think traditional markets are necessarily safe for retail investors either. Big money controls both crypto and traditional markets. Governments can bail out traditional markets, but in the end big money gets most of the bailout, too. Traditional markets, at least right now, are less volatile than crypto, but things like March 2020 show that they aren't for certain, either. It sounds like we don't really disagree though since you referred to watching various bull and bear cycles.
This whole thing gets more absurd as USD Coin and Binance USD climb to the top with Tether.
The whole space to me feels like such a massive waste of resources and brain power.
They're almost literally financially enslaved to their countries central bank, which devalues their only legal form of life savings by 25% every month by printing more and more (for government members) and no other country will give them banking access but their own, which has regulated against them using any alternative currencies than the one the central bank controls.
Just imagine if the US made it illegal to own any currency besides USD, and then started printing so much that you lost 90% of the value of your savings every 3-6 months.
They've experienced 10,000,000% inflation since 2014. That would turn someone's retirement account of $5,000,000 into $49.95.
The only option there is a digital store of wealth that doesn't discriminate against them based on their citizenship, unlike every central bank in the world. Otherwise, the rug is just constantly being pulled out from under you, and your only legal store of value is the things you can buy in the store and keep in your closet to sell later. Back to a financial system more primitive than in ancient Athens (400BC).
Americans benefit from a global banking structure that is rigged in their favor. Their government prints the global reserve currency, most countries in the world welcome them with open arms and offer banking solutions, and their hegemony is backed by hundreds of military bases armed with tanks, airplanes, and soldiers across the world, and miltiary ships across the seas.
It's very easy for all the rich tech people in this thread living in stable countries to denounce crypto as useless, because to them, right now, it is. But it is careless to denounce it as a concept.
The tweeter mentioned that it is a right wing tool. In the US that has a dirty connotation, and I agree that coming from the US, we can see first hand the dangers of unfettered right wing policy. But people coming from countries that have experienced extreme left wing governments that describe daily common horrors far worse than people peeing in bottles on Amazon's factory floors.
A little bit of sympathy for them and the real life saving use case the "right wing" tool of decentralised finance against the troubles they experience could go a long way.
All that said, I was very skeptical of the crypto community for a long time as well, because it is most of the same people who do MLM schemes. But real life experience has now made it impossible for me to ignore that the underlying tech has real humanitarian use cases as well, and those should be nurtured.
I have friends living in Venezuela, and one of them had to receive medical treatment that he could only afford thanks to a crypto transaction.
Yet, I assure you that crypto was completely irrelevant in that equation. Crypto's only role was ensuring a way for medical professionals in Venezuela to be paid through means other than domestic transactions and out of Venezuela regime's radar. This time around it was crypto, but it could as easily be a transfer to an offshore account. The end goal is the same.
And let's not fool ourselves into believing that people are in crypto to pay doctors.
And I'm under no delusions that much of the crypto market isn't more than a glorified ponzi scheme, my post acknowledges that.
Except for:
- Selling/buying illegal stuff (like drugs or credit cards numbers)
- Ransomware and other scams
With cryptocurrency I'm completely out of luck and my money is gone forever by design.
Bitcoin is about having the option to choose between custodial and permissionless.
XMR really doesn't feel like it offers that.
You can do this without ever having to identify yourself to advertising firms or anyone else.
* Making payments to parties underserved by banks, whether it's legal cannabis dispensaries, or Wikileaks when the credit card companies blockaded them.
* Triggering financial exchanges, without the friction (and risk of PII theft associated with the identity-based accounts that centralized custodians use) of signing up to a traditional online brokerage or exchange, via crypto transfers to self-executing smart contracts like decentralized exchanges.
If I were to invest in anything related to crypto today, I'd conduct the due-diligence of a lifetime before sinking a cent into the investment, even going as far as hiring private investigators to fine-comb through the people involved. I don't think any tech sector has more veteran con-men than crypto - these folks have been scamming people for a lifetime.
Behind MLM (https://behindmlm.com/) makes a decent job at following the worst offenders
Thanks for the show recommendation.
But alt coins is gambling.
Crypto has never been heavily marketed to poor people. They don't have the capital to buy in at any meaningful scale. The lottery ticket appeal is that you might win $10k or $1m off of a $1 or $2 ticket. There is no mass scale marketing effort pushing $1/$2 of Bitcoin or Dogecoin to poor people with that con-pitch. To this day poor people have barely any stake in the crypto world. For crypto, the lottery players are the small contingent of middle class persons that bother with it (which still isn't very many).
Actual lottery tickets on the other hand, are prominently marketed to poor people all over the place, front and center in many common stores.
Walk into an average convenience store or liquor store, you're telling me they have a large display of dozens of cryptos with updating price quotes appealing to poor people about how big the prizes are and how they can win a million dollars with a $2 ticket? Nope.
I have also met quite a few software engineers who are not poor but don' have nearly the level of wealth of the people manipulating these markets who have gotten involved with this stuff. These people aren't poor but relative to the scammers they are, and when they lose money in hurts. I know one engineer for example who lost his life savings on some alt coins in this mid thirties.
I don't disagree in terms of rich people controlling the crypto ecosystem now. That is one aspect I'm not liking about crypto right now. Too much manipulation, although I think that's at least partly coming from the traditional institutions jumping in and playing the games they do with traditional markets. Plenty goes on behind the scenes in traditional markets, even though they are regulated, and yes, crypto has less regulation, so they probably can get away with more.
I love crypto technology but I think there's stuff going on behind the scenes that regular folk have no idea, and I'm starting to wonder if the grand ideas crypto people have are incorrect. I think the way it will succeed is when big institutions accumulate enough and then it's in their interest to manipulate the crypto market up. I.e. see banks in the Big Short accumulating enough of what Michael Burry was betting on all along, and at that point they revised the indices that track the housing markets, since it was in their interest to at that point.
In the end I don't think crypto is much different than what goes on in equity markets now. Rich people and big institutions control that market too. Meme stocks are essentially also lottery tickets. Way out of balance P/E ratios mean traditional fundamentals are out the window. It's all about momentum and trends now. The one difference, and a benefit I see for traditional markets, is the government will bail them out. The government would be fine if crypto crashes. I think that's the scary part about investing in crypto, but there is also higher potential for upside in crypto markets.
if you have a bunch of participants with money, and create new money,either you 1) give each participant an equal amount (this drives relative wealth towards equality) 2) give each participant an amount proportional to their wealth (result: nothing changes, relative wealth of all participants is the same) 3) you give to some and not others (all youve done is funnel relative wealth from some to others, while pretending you have created money)
in real life, 'money creation' is almost exclusively 3)
The gold standard actually doesn't do anything because no nation on Earth uses it any more. We have lots of evidence that when it was used, it created instability and economic chaos. Nobody who seriously studies economics things a "return to the gold standard" is a good idea. Here's an example poll of people who have studied economics at the highest level for their entire lives: https://www.igmchicago.org/surveys/gold-standard/
Conspiracy theories about the gold standard are peddled on youtube/twitter because it's easier to blame things on conspiracy theories than to understand complex topics. Kind of like climate change or covid.
The gold standard prevented governments (somewhat) from inflating their currencies. The reason we say “gold standard” is because the pound was convertible into gold until WW1. With the outbreak of the war, the bank had a rush on their reserves, which they had printed far more notes than they had available.
The solution was to ban the conversion of paper into gold, seize all additional gold, and force all international colonies to back their currencies with pounds and USD rather than gold.
This is not a conspiracy, it’s simply the history of how we went from a gold standard to the fiat standard. There are good reasons for why this happened. I just simply believe it’s a mistake and view the current strangeness in our global economies as a side effect of all the odd characteristics of a system where the lender of last resort (central banks) can print money at will. It’s a very strange system and I think it is bad. However I still myself must live in this system and think, reason, and invest accordingly.
https://www.natwestgroupremembers.com/banking-in-wartime/ban...
Ironically, while the "Austrian School" blames credit for the Great Depression...Austria's banks were the first to fail, because Austria didn't move off the gold standard as quickly as its neighbors did, and Austria was one of the hardest-hit countries during the Great Depression.
But again, I have a radically different view of economic history from the mainstream, which I accept and am ok with.
It is still the govt's word that the taxes, GDP etc will grow over time to pay off those debts which it owes to the central bank, isn't it?
No you don't have to take on new debt to issue new currency.
Let's say you're a dictator running a banana republic. Your currency used to be modestly stable, prior to your coup. It even stabilized for a while after your coup, as you made a lot of fake promises around stability and economic improvements that the West wanted to hear. Then you begin your authoritarian implementation, you start breaking things to maintain your grip on power. The currency begins to devalue, slowly at first, and then more rapidly. The economy starts to shake apart, you implement price controls and various regulations to restrict & control supply chains. Things just keep getting worse, tax revenue isn't what it used to be and keeps getting worse. International debt markets are no longer believers, they don't trust you to repay anything. Now you're struggling to pay for routine governmental things including salaries for workers to keep the government functioning, or police & military to maintain order (which you're rapidly losing control of as your nation spirals into chaos). So you turn to rampant printing of your nation's already badly weakened currency (you order the printing presses from the Germans, Giesecke and Devrient GmbH). There's no need to issue debt as you do it, you just print new fiat bills and give it to whomever is still willing to accept it in exchange for goods or services (and you definitely force it upon your government employees, which they promptly ditch - at an increasingly steep conversion fee - in pursuit of USD). The word is out, everybody knows what you're doing to the national currency, it proceeds to sink like a stone. You just keep adding zeros on to the new bills as you print them. Maybe you get more desperate and fake-outlaw USD and turn its use into a black market (in reality you and your cronies, and the elites, will still be utilizing USD freely; and the USD black market will be understood as a common presence, it's just that now you can arbitrarily smash people that go near it for any reason at any time, everybody is now a criminal).
The ability of our financial system to create more money (print) allows lenders to lend more money, which translates to growth, assuming the debt created is used for something that can generate wealth (like creating a small business or buying an asset that appreciates).
Furthermore, the US centralized banking system has helped developing nations to grow, as we've lent those nations money. So - the US printed more money to lend to foreign nations, who used the money to develop their countries, improving mortality rates, poverty rates, etc, all while the US GDP continues to grow with those countries. It's not just wealth redistribution, it's wealth creation.
All that said, it's not a system without flaws. The system has effectively exported the US labor force to those developing countries. The environmental costs of exporting labor are massive. Not all money loaned out has been used well. Our monetary policy has (most likely) pushed us into wars (WMDs anyone? No? Ok. Don't sell oil in Euros).
One major issue of our debt-based, easy-money society is that everyone understands the Fed explicitly backs the regulated banking system from default and implicitly backs the shadow banking system, as the collapse and subsequent bailout of less-regulated firms has repeatedly shown us. The profits are privatized and the losses are socialized. Another problem is that all firms eventually revert to being financial services firms - it is more profitable for Macy’s to provide 20% interest credit cards than it is to sell clothes (half their revenue pre-bankruptcy) with the clothes merely a means to get people signed up for credit cards. They accomplish this by being able to borrow from the capital markets at very cheap rates, then lend their cheap money to consumers at high rates, and then securitize and resell the debt.
What I advocate and want is impossible to achieve. Instead I make my own investments and plans based upon my knowledge of the world, the financial systems, and how things shake out. For example, the 30 year fixed rate mortgage is a both a huge subsidy to the well-off and one of the few ways you can build wealth to protect against inflation. The situation with housing is complex but the end result is what you see everywhere in developed countries - ever increasing prices and society-wide view of property as an investment - not only the US but especially in Canada. Buy as much property, for as much government subsidized debt, as you as an individual can afford.
Yes, we know that.
But you are missing the point of Monetary Policy.
During a crisis for example, we need to 'reallocate' financing faster than the system will allow for it.
A huge natural disaster that hits an otherwise productive economic centre may mean there is never any recovery, because everyone is unwilling to re-invest.
But if the government steps in with $50B in investment, not only does that spark rebuilding directly, but is also brings back investment.
War is another example: if you're invaded, the economy won't react quickly enough to form some kind of physical defence force. That's why you have civic functions i.e. the Army, which needs direct investment, maybe from lose monetary policy.
In normal times, the central bank can made adjustments much more quickly than the economy can react with higher or lower wages.
France/Spain lose competitiveness because their salaries might be too much. Nobody will accept a pay cut. But a little bit of loser monetary policy will take care of that.
Obviously, printing money doesn't cure anything, just like 'Making A Law' doesn't cure anything.
Monetary Policy can be abused just like the Treasury, just like the Judiciary just like Security Forces.
It's just a form of governance, that's it.
But using 'Gold' you lose the ability to have any governance and are guaranteed to fail during disaster like board that you nailed from your boat to the dock will break when the tide comes in. You'd use a rope in that scenario, i.e. 'monetary policy'.
My wife and I paid off our student loan debts with a 0% interest loan and no need to go through a bank. Our position is well over-collateralized and interest generated from other DeFi lending positions will pay off the loan in full.
Not to mention, Ethereum as a settlement layer for stablecoins is gaining exponential adoption. There's a non-insignificant chance it disrupts the traditional banking rails (i.e. ACH, wire, SWIFT, etc.).
I didn't go into detail in the initial post since it sounds a bit crazy, but the loan will actually pay itself off since Alchemix is depositing my $30k into Yearn. The yields generated from Yearn gradually pay down my debt automatically. Other interest bearing positions (apps like Compound and "yield farming" on various new protocols) will also help me pay off the loan faster.
The alternative to this is that I could've taken $15k from the initial $30k and paid off our loans outright. But, using Alchemix is more capital efficient. Student debts are now paid and I also have $30k of capital generating yield instead of only $15k if I had simply paid the loans upfront.
Also, this was not my scenario but a common view: it can make sense to draw a loan so that you're not liquidating long-term holdings. Imagine I hold $100k in bitcoin and need to pay off $15k in student debt. If I sell my BTC, I'll incur capital gains tax and also have a smaller long-term holding. Alternatively, I can borrow $15k against the BTC, pay no tax, and keep my BTC position in full. There are various ways to then generate interest on the BTC and pay back the borrowed funds.
Some platforms offering 0% loans include Liquity and Alchemix.
In fact this “DeFi” thing should have a negative interest rate to compensate for the fact that this borrower will be paying them more and more each payment.
What happened is that you used DeFi to leverage your financial position, not pay off debts.
Don't lie to people.
https://news.ycombinator.com/item?id=27845492
And I'm not increasing my overall debt position on my personal balance sheet. Rather, I shifted the debt from student loans at ~5.5% to a DeFi protocol where the borrow rate is effectively negative.
If so, that doesn't seem that groundbreaking. You could have simply liquidated enough of your gains to pay your student loans off. Instead, you're now in a leveraged position. It's very possible that your collateral could drop below the LTV threshold, causing a liquidation, which would magnify the losses you'd have if you weren't levered. There's no free lunch.
It's certainly interesting that DeFi creates new schemes for creating leverage, with minimal intermediation, but I wouldn't call it groundbreaking. It's an incremental development in financial engineering.
EDIT: read some of your other comments that you made while I was writing mine. It sounds like you're using stablecoins as your collateral, which seems like a smart move, and you've effectively converted your student loan into a DeFi loan at a lower rate. But I'd still be concerned that while your more mundane risks aren't that high (like asset prices and interest rates), you may have exposure to more complex risks.
I'm not saying this isn't innovative, but I still stand by the opinion that this is more incremental than revolutionary.
Building these options is alot of fun and very lucrative
And yes, there are definitely risks; it's not for everyone!
Is this a quote from someone?
Because you can believe anything, believes are not a good method to find what is truth. But it is part of the pump and dump strategy, make people believe that something is valuable and them dump on them all your worthless assets.
The reason I think it's relevant is that posts like Palmer's attack only the "scam side" of crypto (the 99%) without acknowledging the "new paradigm" (1%) side
Yes there are scams, yes there are pumps and dumps, yes there are insiders who control too much liquidity. But you also have to do justice to the promise of the tech.
It was not previously possible for anyone with an internet connection to take out a loan via a decentralised protocol (MakerDAO), or exchange assets via a decentralised contract (Uniswap), or have a digital proof of authenticity (NFTs). And all of this without middle-men taking fees, opaque leverage throughout the system (see Archegos) and gating access to only certain participants (the richer half of the world who have a bank account).
These days I tend to send skeptical folk this writeup on the problems with centralised finance, and associated DeFi solutions: https://john-street-capital.medium.com/fintech-3-0-re-archit...
It really is hilarious how similar the naysaying here is to the internet/email says.
If Bitcoin hasn’t yet discovered a killer app, when will it?
But yeah yeah, it took tens of thousands of years between humans seeing lightning start fires and the charcoal grill… if it took that long, I'm sure it will be tens of thousands of years before Bitcoin finds a use. Better keep buying and holding!
Bitcoin was just the first blockchain to really find adoption, it’s nowhere near where 99% of the innovation in crypto is happening today. Far more interesting projects that are providing actual value today.
Bitcoin was released in 2009. The iPhone was released in 2007.
So its an unproductive assumption
> Despite claims of “decentralization”, the cryptocurrency industry is controlled by a powerful cartel of wealthy figures who, with time, have evolved to incorporate many of the same institutions tied to the existing centralized financial system they supposedly set out to replace.
> Cryptocurrency is like taking the worst parts of today's capitalist system (eg. corruption, fraud, inequality) and using software to technically limit the use of interventions (eg. audits, regulation, taxation) which serve as protections or safety nets for the average person.
From what I understand, people in that space seem to think that because something is decentralized, people will automatically distribute equally between themselves power and authority. That seems really naive. As with any "free for all" type of space, the law of the strongest applies. The "cartel" that he speaks of taking control of crypto is a natural consequence of decentralization. An important part of central authorities in the modern world is to guarantee some freedom from exploitive forces. Democracy, unions, laws are a way to achieve that goal.
I wonder if it's a consequence of people thinking about the state as fundamentally bad? I often see criticism from some people, both left and right-wing, that the state is good for nothing, but it seems clear (in the view of the author) who wins when the state can't exercise its authority. Maybe it's time for some people to review their views about decentralization and its consequences.
Anyhow, most industries are controlled by few players outside of crypto. Perhaps the right question would be if the existence of crypto as a new component of the system can somehow decrease injustice in the system as a whole. I don't know the answer, but I would gamble it's No - for now. The way I see it in the near future (maximum 10y) we'll get obvious reasons to answer Yes, though.
With regard to central banks, the community is at about the level of the 1920s, where monetary policy was arguably worse than some default law of physics, like the availability of actual gold, might have been. That ignores the bit of history that came later, and the progress that’s been made. That’s why they’re all afraid of runaway inflation, although it has not happened within anyone’s lived experience in western democratic countries.
It’s fun to remember how paranoid the crypto community was at the beginning of being targeted by governments for encroaching on their power. When, in reality, the response was mostly just benign curiosity, and governments only reacted when there were tangible harms to prevent, such as fraud and, more recently, skyrocketing CO_2 emissions. It’s almost as if the FED isn’t a shady private institutions owned by the Rothschild’s out to exploit the common man.
I think this doesn’t make any sense but maybe I just don’t understand.
One of the problems with crypto is people treating it like fairy dust. There are remarkably few, perhaps vanishingly so, business models that do not work centralised that do decentralised.
This is one. What is the pay-out? Who makes what guarantees? How are they enforced?
If a business plan requires crypto—as opposed to being enhanced by it—it’s probably dead on arrival.
1. OSS users pay a monthly premium for insurance on the software (incl transient dependencies) that is critical to their business.
2. Part of the cash flow from premiums is pooled into an insurance fund that pays interest to OSS developers. The rest is payed out directly to OSS devs.
3. If there is a bug in an insured OSS project, policy holders have a claim on the pool. The magnitude of the claim depends on the severity of the bug and the time it remains open. Future payouts to the OSS project with the bug are directed to the fund until the payed out insurance benefit is covered.
The hardest part is coming up with a decentralized consensus mechanism for establishing the existence, severity and resolution of bugs, but there is a lot of experimentation going on in DeFi to solve similar problems.
As to why it should be decentralized, it's the same reason OSS is decentralized: you don't want a single actor to control OSS funding.
edit: wording
You’re replacing a single actor you can sue in court with a dynamic, pseudo-anonymous committee one can lobby that will make its decision based on rules or whims. That sounds like a step backwards.
Separately, why would anyone pay the premium? If you want a bug fixed and are willing to pay for it, you’d get the job done faster hiring the dev on freelance.
Swapping this to a simple insurance model exposes the flaws. Unfortunately, there is a lot of this going on in crypto. (Though I am of the belief that people are free to lose their money, as long as it doesn’t become a political problem.)
This is exactly the problem that decentralized oracles are trying to solve. Consensus courtesy of cryptography and game theory.
> Separately, why would anyone pay the premium? If you want a bug fixed and are willing to pay for it, you’d get the job done faster hiring the dev on freelance.
Nothing solves bugs faster than the original dev being financially incentivized to fix it ASAP.
This solves the vote tallying problem. But that’s not the real problem. Trusting the people making the decision is. Cryptographically guaranteed kangaroo courts don’t help anyone.
OSS isn't decentralized at all, there's always at least some group of core devs who hold the commit rights and who make releases. And they will want to control their funding.
If there was a central entity controlling OSS funding they could for example prevent forked projects from succeeding.
That's the thing, on the internet, simple old fashioned money is not like simple old fashioned money. Keeping accounts and transferring old fashioned money between peers on the internet is not trivial.
Discounting the on-boarding problem, crypto is way closer to cash than payment processing networks like Visa, Mastercard, Paypal. Accepting crypto for any kind of work is trivial, you just generate a standard address/QR code that can be read by any other standard wallet, and receive a standard crypto that can be exchanged freely.
Start a Patreon-like business where corporations/users can sign up to give a monthly donation-subscription-contribution to a slew of OSS developers, anywhere from $1 / mo to $$$. Reduce the friction of financially supporting every tiny project you make use of. Throw in a nice suite of uniform communication channels for bug requests and version announcements.
OSS dev: I want to make a living from my OSS work without starting a business around it or seeking employment.
Insurance usually goes the other direction. Large organizations can amortize risk. Individuals need to mitigate risk. Having somebody buy insurance on my code makes me less likely to want to release it rather than more likely.
OSS devs would risk future earnings only.
All you did there was state the basic tenet of capitalist wage labour, except no taxes.
There are some solid ideas behind cryptocurrency and perhaps your example is an illustration of how those good ideas could work. Many of the proponents of cryptocurrency describe such use-cases and it seems perfectly sound and air-tight on the surface.
But the current reality is that the OVERWHELMING use-cases of crypto-currency are wild get-rich-quick shell-games, illicit trade and tax-avoidance schemes. This is showing no signs of sobering up, in fact it has become worse. People keep saying that it will "settle down" but there is NO EVIDENCE for that.
The truly disturbing thing about cryptocurrency is that it reveals the possibility that "money", as a concept, is NOT necessarily a medium to exchange goods and services. It is something much more complex and fluid. Cryptocurrency, as a currency, takes all the awful and volatile hidden features of money, accelerates them and makes them overt and central to it's operation.
I think many of us find that idea repulsive. If crypto (as it currently exists) becomes the money of the future, it will mean that the vast majority of the population who earn money by exchanging their labor will find themselves at the mercy of wild and random fluctuations in the value of their labor. Their labor will mean less or more not because of what they actually do, but because of completely unrelated fluctuations caused by "millionaires" and institutions acting on whims, or even joking around. You could argue that it happens now with dollar money, but that kind of fluctuation has been almost always slow. Crypto promises to make crazy fluctuations the norm.
Vitalik Buterin, for example, famously donated ~1 billion "dollars" towards India COVID relief. Except that it wasn't really dollars, it was some cryptocoin that he was gifted ("shiba-shitto" or something like that). That value plummeted almost immediately. I don't know what it is now, it seems the news orgs have lost interest in the story. I do hope that India COVID relief got something out of it, but would have been better if they didn't have to hire crypto people to process that "money" into something useable when they're dealing with a pandemic.
I agree with you btw just wanted to link to context
[1] https://etherscan.io/tx/0xb65bcbb85c1633b0ab4e4886c3cd8eeaeb...
Yeah, the way I presented the idea above, it's closer to a cooperative than an insurance company. I think it's more important for the buyers of the "insurance" to get their bugs resolved quickly than it is to receive monetary compensation, so the purpose of the payouts is really just to incentivize OSS developers to resolve bugs quickly by penalizing their future earnings if they fail to do so.
But if real insurance with real payouts is desirable, then that's solvable by raising capital for the fund in an ICO and directing some of the cash flow to investors. If I'm not mistaken this is how you'd start an insurance company today: you'd need to meet some capital requirements before being allowed to sell insurance to the public and you'd do that by raising money from investors.
What are those DeFi projects? If someone can figure out such high level consensus mechanisms that would be fascinating.
Pretty much. Getting real world data like this onto a blockchain such that the representation of it on the blockchain can be trusted is as yet an unsolved problem. Blockchains are great at managing data created internally in a trustworthy way, but not data created externally.
1. users pay monthly fee/premium
2. part of that is kept in a pool, part is payed to the developers
3. when bugs happen, funky stuff happens with the pooled money.
See, I didn't need any crypto for that.
Maybe one day crypto can reduce the legal overhead, maybe not.
The hard part is getting people to actually pay for things that they could have for free.
Do you know what the reminds me of? RedHat. RedHat sold (and still sells, I guess) Open Source software together with maintenance contracts (pretty close to what you call insurance).
They needs lots of marketing and sales staff to attract customers. Who replaces the marketing and sales people in the crypto world? Who does the convincing?
Mind you, every successful country today runs on a MIXED economic system, and communism (or anarchy for that matter) failed every time it was tried.
?
> It doesn't align with my politics or belief system, and I don't have the energy to try and discuss that with those unwilling to engage in a grounded conversation.
Like himself. Given what he just said about cryptocurrency being 'inherently right-wing' which that is completely baseless.
Obviously it is heavily manipulated and it is not exclusive to cryptocurrencies, just like forex and the stock market but the main difference is that it is highly unregulated. I expect more exchanges to use more than just KYC, AML checks and the rise of implementing CBDCs to drive cryptocurrencies past the wild west stage that it is today.
Good luck trying to ignore it because it is here to stay. (Even if you are the creator of a meme coin)
There is the price argument which I think will remain , given how historically inflation scares people.
But it's just exciting as a social enviornment. All the young kids who are into crypto today...they might move on tomorrow, but the connections you can make while you are in this amazing melting pot will last forever.
And it's not like they are dumb connections either..
Crypto is a college experience 2.0 ,or... for those who are not American the chance to experience US College environment for the first time
This is why Musk jumped in it head first before doing a 180 after realizing the fact that this thing was in fact not built by him and thus had to be destroyed.
The various flavors of crypto can be compared with the different colleges.
Bitcoin...I imagine it as a weird mix of University of Miami, Stanford, MIT and George Mason
And the experience is quite similar for most of them: first time living away from parents, first serious relationships, first time taking LSD, and finally starting to appreciate the intricacies of French or the Citric Acid Cycle.
None of which strikes as particularly close to what I gather is the daily life of cryptobros.
It's not the same thing without top notch sports. Other countries don't have that. If you are a 'cryptobro' with a decent following that's not that different than being the QB of Michigan or Ohio State given the median age of people which are into BTC.
Okay there are very few girls and no cheerleading...that's a bummer, but it's still early , maybe they'll arrive now that Bitcoin Central has moved to Miami
Corruption is always a problem everywhere, but it would seem to get worse with greater centralization of control.
By the late 1980s, Soviet price controls and centralized distribution rules, incentivized black market growth by providing opportunity for tremendous profit. Ultimately, it overtook the regular gov't markets - resulting in the famous empty shelves we iconically associate with the collapse of the USSR.
Most gov't officials participated in these black markets. This also led to massive organized crime groups, which became so profitable, that they became the oligarchs who ultimately took over the country when the gov't collapsed from bankruptcy.
The notion that capitalism creates corruption is laughable with these massive recent examples.
The most corrupt nations throughout modern history have always been on the Socialist spectrum, without exception. Including National Socialist Germany, Communist Cuba, Communist China, Communist Vietnam, Socialist Iraq, Communist North Korea, Theocratic-Socialist Iran, Socialist Syria, Socialist Zimbabwe, Socialist Venezuela as well as Soviet Russia, all of which were/are Socialist derivatives.
Next thing you'll say is that Somalia, South Sudan, Congo, Haiti and Afghanistan are all socialist too!
No need to further read. After such nonsense the opinion of this person has no credibility left. If you have to put politics into every f*** thing you express then I pass on anything you have to say.
I don't know (or care) what this person politics are, but there's something to be said for speaking the language your audience is listening in.
>I don't know (or care) what this person politics are, but there's something to be said for speaking the language your audience is listening in.
Neither do I but its on twitter so hes probably catering to the general twitter audience.
CTRL-W
I think an effective way to fight capitalism would be to rethink the banking system. We need public banks which will invest in the productive sector like manufacturing instead of speculating. That's how banks used to operate actually. Well yes crypto definitely won't get us there right now.
I assume this is not easily generalized but I'm curious to know more about this, what the context is, what the historical turning points are.
First, capitalism doesn't necessarily require breaking the law, and capitalists use the banking system to a great extent.
Second, many cryptocurrency transactions are logged and more discoverable ("observed") than bank transfers.
How do you fight capitalism by avoiding wire transfers?
We need a bingo for when and how people include 'right-wing' into things for likes.
it's rarely useful for any level of civil discourse; it's general usage these past few years is to inflame a side or draw a border between Them and Us.
No, its libertarian, not right-wing. They are basically on orthogonal axes (the US’s superficially unidimensional partisan divide and the fact that the right-wing party is the more prone to try to sell itself to libertarians may confuse Americans about this, though.)
Much of leftist political theory is coming at libertarianism from the view that liberalism provides necessary but not sufficient conditions for freedom. We have to go further than classical liberalism to get more freedom.
Capital L Libertarian is a very right-wing political faction in the USA, but libertarianism is not that.
You can definitely find some folks into crypto that identify as libertarian socialists or left anarchists, but I think they're a minority.
Hell, the right implementation of the decentralisation of currency (obviously not what we have right now with bitcoin) could be more equitable than what we have right now with centralised currency.
Cryptocurrency is about choice and voice. Coordination and communication tools. There are American right wingers with their tokens and systems they’ve designed. But there is also things like CirclesUBI which is much more socialist and gaining momentum in the Berlin indie art scene.
Of course if you aren’t engaging with the space you just see speculation and hear about hacks and crime and people who became millionaires. what you will hear about is what Silicon Valley vcs pour millions of dollars into things they want you hearing about.
But actually engaging with devs in the space and the different subcultures you can find people you get along with. You can find communities and daos doing things you are interested in and share your political alignment. Most people I know working in the space have European left wing leanings.
Also a reminder. You don’t have to spend any money to be involved. Write code, join chat rooms, work on things you enjoy and want to make. That is going to obviously be much more rewarding than gambling on the back of VCs bags.
There's an ideology called Bitcoin maximalism or toxic Bitcoin maximalism, which defends the truth and the ideals of cryptocurrency against this greedy and manipulative "crypto industry" he is talking about. Bitcoin maximalism is basically the free market / "hyper-capitalist" answer to all the scamming that's going on in the industry.
It's like the early Internet. There were a lot of scams on the Internet, and also early Internet companies which were pump&dump-scams. It gets better when people get more educated and learn not to trust anyone. I'm not sure what are his suggestions, but authoritarianism certainly doesn't solve this issue.
Well 8 years later people still think that, but that’s not the point.
A belief system wasn’t necessary back then, only cognition.
People should stop exalting him just like he asks.
It wasn't at that point though. Litecoin was already created by tweaking btc and I was seeing people on irc do the same for fun with ease. Launching a btc-copy with different params wasn't the big achievment he had, attaching it to the right meme and getting people into it was.
It is literally a fork of Bitcoin with extra tweaks and a famous internet meme. Any Joe, Jane and, Jimbob can do just that in 15 minutes, hence the reason why the cryptocurrency market is still in its infantile stage and very unregulated.
8 years later its gotten easier for the retail investors signing up at major exchanges to buy it right now. The whales who accumulated however...
But:
"I believe that cryptocurrency is an inherently right-wing, hyper-capitalistic technology built primarily to amplify the wealth of its proponents"
Wow. Right. Wing.
"Despite claims of “decentralization”, the cryptocurrency industry is controlled by a powerful cartel of wealthy figures who, with time, have evolved to incorporate many of the same institutions tied to the existing centralized financial system they supposedly set out to replace."
Ok, sounds a bit like conspiracy theory (who are those wealthy figures? Elon Musk was playing with cryptos, yes, but this is Elon Musk, and he does all kind of funky stuff like electric cars or space travel), but yes, at some point cryptos might be somehow institutionalized and it will be done to avoid issues that crypto currencies have. Oddly enough the author lists them in the same twit:
"Lose your savings account password? Your fault. Fall victim to a scam? Your fault. Billionaires manipulating markets? They’re geniuses."
So, actually it would not hurt to "incorporate many of the same institutions tied to the existing centralized financial system".
The bad thing that happened to cryptos was that they become an investment instrument, not the mean of payment. They were supposed to be "a better gold" of old times. But right now everything is an investment instrument. The other thing are technical issues that bitcoin has (other cryptos are small players right now), slow transactions, energy consumption and the risk that someone finally manages to gather 51% of digging power and will take over the network.
Seems like the kind of thing large corporations can manipulate and avoid whereas individuals cannot. I'm not a crypto person but it seems like crypto at least has the potential to offer some of those protections to individuals that were once the province of the powerful.
Buy Bitcoin purchasing items is a pain, the value may be higher or lower than last week or yesterday, seemingly manipulated by unknown whales totally legally. If the money is in an unregulated exchange it can be lost with little recompense. Buy one of the more exotic coins you may make a fortune or loose everything overnight because of a coding error or just because.
There is much literature about the topic that explain why regulation and audits are needed to protect not only the average person but the whole economy. You can find some information here https://opentextbc.ca/principlesofeconomics/chapter/28-2-ban...
The "taxation" part is mention as cryptocurrencies are used for tax-avoidance and fraud.
- https://www.cnbc.com/2021/05/31/cryptocurrency-poses-a-signi... - https://www.ft.com/content/aa9834a1-8e3a-46c9-a2d8-13b10882c... ...
Banking, at high level, is not complicated and it is very interesting to see how regulation keeps a safe and sound economic system and how failures to regulate make markets collapse. For a historical perspective you can study The Great Depression, as many regulations were created to avoid similar systematic failures.
> Lose your savings account password? Your fault. > Fall victim to a scam? Your fault. > Billionaires manipulating markets? They’re geniuses.
So the problem is that there's no 'daddy state' offering to save people from themselves. I guess nobody offers that, you 're on your own currently but nobody also pretends like it's safe either. In the end these rants are like an open admission that "people are stupid and they don't even know it and need to be protected at all times". This is well known but technology has a chance to change it by empowering and arming the individual
It might not seem like now, but we are still in the early days of crpytocurrency, being this overly hung up on the current state of things is missing the forest for the trees.
the early adopters were college students and professors since that's where it was available. as far as "criminals" it would have only been those pesky "hackers" who were mostly acting from curiosity. there wasnt any big opportunity for financial fraud on the "internet" because there was no commerce on the internet. the commercialization had to happen first and that required massive buy-in long before criminals could have any fertile ground to operate upon.
> and its detractors talked about how it "couldn't scale",
ive never seen such a thing, in the early 90s most of us didnt even have terms like that queued up
> was bad for the environment,
never heard of this
The fact that after all this time proponents are celebrating it being made legal tender in a tiny dysfunctional country is a very good sign of how the horizons have narrowed. After 13 years of the web no arguments about "potential" were even needed - the evidence was embedded in all our lives.
His primary argument is “A is bad”. But then he adds “B is bad, and A is associated with B”. But B is tautologically half the audience, so you lose them, and this becomes support for A. Then there are those that think A is good, but B is bad. Presumably this is the intended audience. You just told them that they are associated with B, so you start out with ideological antagonism instead of making a direct point. You are left with only those that hate both A and B, and of course they will re-tweet, but in this case, it’s still just a bunch of opinions, no personal account or facts that could be used to direct change.
In the bigger picture, cryptocurrency is a confluence of technologies that are not going away. It can be used for almost any ideology, and some of those will be popular and some of those will be violently opposed and some will be made illegal. But, in the long run, the one that will survive, for any specific group, is the one that facilitates the strongest social organization. So ultimately, opinions of ideological taste, one way or another, are irrelevant.
Let me reiterate: I think he has some reasonable points within his opinions, and we should consider them even if we disagree.
I'm having trouble digesting his rationale. He makes many claims without further explanation.
Was looking for a perspective on how crypto could be bad for society, but was a disappointed in reading it.
Although, I will say, those points massively contradict with the second tweet in ways that are even less obvious, but significantly more enraging if they are well-understood. If you look into all of his complaints, the main offenders are the institutions that have been given some form of legal monopoly to do so.