Can someone give me a good explain?
Is that any different than a ponzi/pyramid scheme?
Crypo cannot create or destroy fiat currency. So if you sell your crypto and make a profit in dollars, it's exactly because someone else bought it at a higher price than you did.
And they expect someone else will buy it from them, in just the same way...
So every dollar that comes out of cryptocurrency is because a later investor put a dollar in.
Doesn't that sound like the definition of a Ponzi scheme?
The core of the coin ecosystem are the stable coins, which are generally pegged to fiat, but are only backed by fractional reserves of cash. So the same USD can be recycled many times to buy Bitcoin.
Not only that, but the stable coin operators are under no obligation to exchange their coins back to you for the pegged currency at face value.
Tether is essentially an unregulated bank with nominal deposits totaling 73 billion USD, no obligation to pay depositors, a huge amount of minimally disclosed liabilities, and unaudited financial reserves.
Ponzi was but an amateur.
>but are only backed by fractional reserves of cash.
Maybe tether, but that isn't true of all, or even most stablecoins. Some stablecoins are overcollateralized rather than fractionally lent. As for the obligation, USDC for example is a fully audited system (by firm Grant Horton, who performs weekly audits), backed 1:1 by cash/cash equivalents and redeemable for $1 USD.
https://coinmarketcap.com/view/stablecoin/
However, even USDC is still doing fractional reserve banking because an unspecified amount of its reserves are tied up in securities that have maturities up to 90 days, so they are still susceptible to a bank run. Though, granted they seem to be running a much more respectable operation than Tether.
The third biggest stable coin BUSD, looks pretty shady as well. They release monthly audited accounts (good), but they're terse as hell. What liabilities do they have? Have these reserves been used as collateral in loans? Which banks are they in? What steps have the firm taken to audit these funds? No way to know, we're just get a terse list of aggregate numbers.
In the gold market, you are buying a contract to deliver you physical gold at a point in time.
Similarly with tulips, Beanie babies, fine art, and old watches the underlying asset is what it is.
MLMs and other traditional pyramid schemes also do typically hand you real assets, and so are not inherently Ponzi schemes.
But when that extrinsic demand is driven by fraudulent claims (like Madoff's "beat the market every year" returns), then it can be considered a Ponzi scheme, because they don't even get the tulips or Picassos or whatever, they get nothing.
The gray area, especially with MLMs, is what kind of support and service benefits you get - these are often fraudulent or misleading (Ponzi scheme) but they don't inherently have to be.
The decentralization is only useful in a world where the central authority (e.g. banking system, governments) are not trustworthy, and this excludes legal activities where a legal remedy is enormously valuable. I've heard that international transactions are a use case, but realistically if a country reneged on a financial transaction the remedy is and always would be soft- or hard-power based (diplomacy, sanctions, military).
The pseudonymity is only useful to the extent that you don't want the government to track you. But our societies have generally decided that the government should have oversight into how we spend our money to stop criminal activity. Agree or not, this is the consensus: so it makes no sense to argue that the government should then tolerate a system that undermines its rules.
If we wanted to allow anonymous transactions, we could do so much more efficiently by simply removing KYC regulations on the banks. We aren't going to do that, and in fact KYC is broadly being implemented at crypto exchanges so for the overwhelming majority of crypto users there is no real benefit: you're already centralized and everyone already knows what you're doing.
Even for the speculative investors there is limited utility: they could simply invest in derivative securities on traditional markets without incurring the incredible cost of performing crypto transactions.
This is a fundamentally unfair question. People waste lots of resources on things I don't think we need. There is a powerful principle in modern economies that if people have money then they don't need to justify what they think is a good idea to you, me, the government or anyone else unless there are compelling reasons to.
"Do you need this?" isn't a question that is asked anywhere except when there is measurable harm. Mining bitcoins doesn't cause measurable harm. If it does, then that is an argument that we shut down the electricity grid - a different debate.
We may as well ban half the technology we have. People don't need any of it.
That doesn’t mean we need to ban Bitcoin as a country mandating all computation bound proof of work coins on date X would allow for a transition. However existing miners already have significant investments and are going to keep trying to profit from them which makes such transitions problematic.
It’s exactly the same argument that led to the ban of CFCs, incandescent light bulbs, direct electric space heating, and cars without catalytic converters the list goes on and on.
I don’t see a problem allowing e.g one Bitcoin to be mined but that doesn’t mean it should be any easier to set up a mining shop than to establish a new golf course.
The answer I suppose is that a) what’s legal isn’t necessarily what can be enforced and b) just like no one would find your single cannabis plant, this is probably about industrial level mining where authorities have insight through permits for construction, permits for yearly emissions, use of cooling water and so on.
First, not all cryptos share Bitcoin's open ledger characteristics.
Look up Monero, ZCash, Grin, Beam : they all implement untraceable transactions, not just pseudo-anonymous ones like Bitcoin.
Second, pseudonymous transactions is far from being the only interesting property of Bitcoin. Among others, no centralized control is a key aspect.
As a non-criminal, what use would I have for untraceable transactions?
As a non-criminal, what you would you have a need for privacy?
Or worse, imagine using your Bitcoin wallet in a store, and the business owner sees that you have $100k in the wallet you just paid with (because it's public knowledge). He then calls his friends who will follow you and try to kidnap and torture you to hand them over.
To me, money and profit is less important than freedom. Web 3.0 to me is a chance to build a better future.
(For the record, I have no investments in btc, eth, or any proof of work chains. I am invested in AVAX, which has a more energy efficient consensus protocol)
Run by babies who will manually change the output of the computer when it calculates something they don’t like.
I personally don't believe in cryptocurrency and blockchain in general, but also I must say if I believed in it 10 years ago I would be financially much better off :)
Erlich Bachman Vs Psilocybin. (Making The World a Better Place.):
https://www.youtube.com/watch?v=4tLvzyb3_Uc
Silicon Valley: Making the World a Better Place | SXSW Convergence 2016:
https://www.youtube.com/watch?v=eE9Dvd_NEBg
OH GOD this is hilarious! Zach Woods is so perfectly in character that I'm afraid he may actually be as deeply disturbed as the character he plays on the show. His impression of the Little Lord Fauntleroy of the Grindr empire was perfect! The setup starts at 3:40.
https://en.wikipedia.org/wiki/Zach_Woods
I won't transcribe his NFSW joke, but later there's some excellent clean discussion too (starting at 13:18):
Steven Leckart (Moderator, Writer and Filmmaker)> You guys need to understand, these guys get pitched all the time by Silicon Valley. Like, we were in the back room, and there were guys from a -- can I say who it is? Should I say who it is?
(Off Camera)> Naaaaaw!
Leckart> But like this tech company that we've all read about in the news is coming up and like handing business cards, and cornering them, and telling them all about their, like, business strategies. And there is no hint -- it's like a deer in the headlights, right, like? Like you are just going to take this conversation and find a way to weave it into the show. And I sort of wondered, like, does Silicon Valley, are they just completely out to lunch about what you're doing? Like, why does anyone talk to you about this stuff?
Martin Star (Bertram Glfoyle)> They want to be a part of the show.
For instance, there are tons of stories of PayPal randomly pulling the rug under legitimate businesses, and destroying them in the process.
Or how the US government blocked payments to WikiLeaks when they presented proof of war crimes US committed.
Crypto is like digital cash in this sense, as nobody can prevent you from paying with it.
the other thing is that (for the 9 billionth time) people are clueless and associating all of crypto with bitcoin.
There are tons of chains that aren't proof of work and there's also nothing suggesting proof of work can't run on renewable energy either, something like 60% of chinese mining was.
You act like we have infinite energy of all types. But we don't - it's close to a zero-sum game.
80% of US energy comes from fossil fuels. If your blockchain uses a huge amount of renewable energy, then some other application is forced to use fossil fuels.
Check out GNU Taler (and alternatives), which really are payment systems instead of currency alternatives
I haven't seen physical cash in almost two years (one exception, a contractor wanted to dodge some tax) and the system just works effortlessly.
Tapping a card is easier and faster then counting change.
I don't see how paying a $20 gas fee and waiting 15 minutes would improve the situation.
Second, higher competition in the payments ecosystem would force providers to reduce their fees. The glaring example is what is happening in San Salvador, where by using Bitcoin they are likekly to save 450 USD millions/year in fees.
More like shift 450mm/year into the pockets of the people running Chivo while creating a media circus to distract from the president's takeover of the judiciary.
Freedom!
That's why the government even preemptively allocated $150mm for them, I guess?
> you are free to choose whatever wallet you want.
Unless you want assistance at one of the official facilities, or the promised stimulus. Half the population is supposedly on Chivo. Defaults matter, especially if your goal is graft and not a sustainable and beneficial economic policy.
I also notice you only tried to contradict the parts critical to dear bitcoin, not about growing autocracy.
This is like saying "why do I need encryption, I don't have anything to hide".
Many people do not have this privilege.
We should reopen the thread with a different premise.
"Crypto currencies have no place or value in the western world"
If the current demand for it, as measured by the market price is any kind of indicator, you have your work cut out for you trying to convince people.
Nobody ever fought encryption because of its environmental impact and contribution to global warming and wasted energy, or because it burns lots of coal and causes cancer and lung disease.