I disagree with this part of the paragraph. Maybe legitimising Bitcoin was hijacked by cryptobros later on to push their own narrative, but the people who originally got into Bitcoin simply wanted to be an accepted currency for goods and services, nothing more and nothing less.
I mean the "pay for starbucks using bitcoin" ship sailed, what, 10 years ago? Bitcoin is absolutely nothing more than a giant pump & dump scam. Of course pedants will say "technically it isn't a pump & dump" just like "technically it isn't a pyramid scheme"... Bitcoin might not meet the technical definition of any of those... but it is a scam none the less.
You can't convince them - in their mind, you are part of the "scam", and hence not trustworthy.
No point in debating, they will buy in when it clicks for them.
Why bother with Bitcoin, when you can just use money from a country with a competent Federal Reserve? IIRC many countries have "dollarized" (either de jure or de facto).
Eh, that's pretty obviously untrue under any reasonable definition of "competent Federal Reserve."
Now, there are definitely unreasonable an/or extreme ideological definitions under which you could make such a statement (e.g. the most reasonable of these are monomanically overoptimizing to one metric), but those definitions are irrelevant and can be ignored.
It's not obvious. Is any central bank that debases currency through money printing without some kind of fixed peg/ratio to a scarce asset competent?
No. This is self-evidently true as, by doing so, they are perniciously taxing the savings of the poor in order to feather the nests of the (asset-)rich.
There is no avoiding the truth of this inviolable fact as Cantillion himself described many years ago.
You're...
>> monomanically overoptimizing to one metric
As long as they do the debasing competently, as in the currency is able to sustain a healthy economy, then they're a competent central bank.
Bitcoin could never sustain a healthy economy, for instance, because it strongly promotes hoarding and speculation.
This is a contradiction in terms...
Bitcoin promotes hoarding no more than gold does. And speculation no more than FX or commodities trading does.
If a payment currency was pegged to bitcoin and the backing ratio remained fixed things would be fine like they were when we had the gold standard or even the later USD reserve currency standard when the USD was backed by gold.
However history had shown that these arrangements did not hold as central bankers simply couldn't resist firing up the printer and breaking the peg with the scarce backing asset. Political pressures, wars, whatever the reason. Every peg was broken.
Human greed, misplaced albeit well-intentioned mistakes, and simple human fallibility will continue to tempt even the most honourable people close to the money spigot. It's happened throughout the ages and human nature will not change in this regard.
Bitcoin _algorithmically_ prevents this debasement and so it is literally the perfect base monetary asset. No one can fuck with it.
> This is a contradiction in terms...
No it isn't. For instance, I can see carefully controlled debasing (e.g. inflation) as motivation to put money some use rather than sit on it, for instance.
> Bitcoin promotes hoarding no more than gold does. And speculation no more than FX or commodities trading does.
Maybe gold promotes hoarding too much, as well. When you get down to it, it's also questionable to tie your money supply to the availability of some arbitrarily-chosen commodity. Do you want deflation until someone discovers some big gold deposit, then things swing inflationary? Bitcoin seems even worse since it's designed to be deflationary, since people will irretrievably loose them and at some point no more will be made.
Google for: „cantillon effect“ (also accounts for inequalities inside one country like the US)
I would mock them, call it a ponzi scheme, call them shills, etc.
I think Satoshi did it right. He said -
> If you don't believe me or don't get it, I don't have time to try to convince you, sorry.
He said this when Bitoin was still extremely niche and inexpensive.
But because you asked, I'm going to tell you what the personal event taught me - people are irrational.
Watch "Gods Must be Crazy" and try to understand the allegory of the bottle and what effect it has on the tribe.
That's what Bitcoin has achieved in cyberspace.
It's far more likely that in 50 years we will see negative interest rates on cash and thereby complete abolishment of the business cycle, involuntary unemployment and growth dependence than a move back to a currency designed to maintain dynasties.
Sounds like Herbalife to me.
Yeah, it didn't take long for the aristocracy to click that owning land and passing it onto their heirs for all eternity is good for humanity and the landless peasants are just jealous that they can't abuse their own landless peasants.
And comparing money with land is also incorrect - having Bitcoins in a wallet that you're never going to spend is as useful as having no Bitcoins at all. Unlike land, where you can live, extract resources, grow food, etc.
Alternatively, you could say everything is a scam. For example the USA is a scam. It only exists because people play along and collectively decide it exists.
At most you could argue that tanks would come and force people to play along if they stopped. So is that perhaps your threshold for something not being a scam? What is the minimum number of tanks that stand ready to enforce an idea, to make you call it "not a scam anymore"?
These kinds of arguments held water when BTC doubled after two years or something, not anymore.
Yes, did you not realize that?!
Are you really rallying this hard against people discarding its economic value without understanding something as basic as deflation?
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Deflation is more deadly to a currency than inflation. By far.
You reduce interest rates to 0% and then what? You can try negative interest rates, but with the kind of deflation BTC has seen you would need negative triple digit interest rates which is a complete absurdity.
You'd probably see the government outlaw physical cash to boot, forcing you to use a bank and forcing the bank to constantly siphon your money if you don't spend it quickly enough.
It would be a literal hellscape.
I also don't think Bitcoin will just keep doubling every year forever.
But all that is besides the point.
As for "people discarding the economic value of Bitcoin", clearly right now it has value, so those people are wrong. Whether it will still have value next year is another question. But right now, you can sell 1 Bitcoin for 56000$, so it provably has value.
Understanding why that would be disastrous to the point of irrevocably destroying a nation and leaving millions in abject poverty should be table stakes when you have the bravado to shrug off the fear mongering economists who study this stuff for a living.
Maybe you are the one who is clueless?
Are there even any examples of deflation ruining things, apart from Krugman's babysitting exchange? I don't think we should hinge the faith of nations on that one story, which may as well have many other explanations besides the deflation theory.
You don't even know if BTC would increase by 10000% in 5 years, if the nation would run on it.
Also new currencies have been created a lot of times in the past, technically their value would also have been increasing by 10000% over night.
Economists have lots of different opinions, you can not simply appeal to "economists say x". There are economists advocating socialism and economists advocating capitalism, for example. There are even economists advocating Bitcoin.
Ever heard of The Great Depression???? Go read up on it and tell me if deflation made things better or worse.
> Bitcoin exists and hasn't left millions in abject poverty yet.
Bitcoin is not the official currency of a country! The closest cases we have to that are failing economies where BTC is used as a life raft and its taken * 10 million percent * inflation to finally make BTC an attractive alternative!
>You don't even know if BTC would increase by 10000% in 5 years, if the nation would run on it.
The only way it wouldn't have is if it was highly regulated... sounds like a great match for BTC right?
Like you realize we ran this experiment before right? Do you know what the gold standard was? And why we moved away from it? Hint: Go look up deflation and it's role in the Great Depression again.
Leaving the gold standard gave the government tools like interest rates that didn't have to compete with a commodity. Let alone a commodity increasing in value 10,000% in 5 years
> Economists have lots of different opinions, you can not simply appeal to "economists say x".
This is like stabbing your thigh with an icepick then saying "Doctors have a lot of different opinions, you can not simply appeal to "doctors say x" when someone points out that doctors would not like people to stab their thighs with icepicks.
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Your comment as a whole just tells me this is not even worth the effort I've put in to get to this point. I'm not even trying to be rude, you don't have the basics to even make conversing about this productive for either of us, so let's end it here.
It seems quite ridiculous to claim the Great Depression was caused by Deflation. It might as well have been the other way round.
I have a Billion Reichsmark at home. Was the collapse of Nazi Germany caused by Inflation? I rather doubt it. An egg cost 100000 Reichsmark in the end because there were few eggs to go around. In the Great Depression, presumably labor was cheap because there were more workers than demand for work.
As for the gold standard, most economists agree that we don't know how the experiment will end yet. What if the central banks keep interest rates low forever - nobody knows how that game will end. And they can not easily raise rates again now without bankrupting a lot of people.
In any case it seems humans have existed for thousands of years without central banks setting interest rates.
"This is like stabbing your thigh with an icepick then saying "Doctors have a lot of different opinions, you can not simply appeal to "doctors say x" when someone points out that doctors would not like people to stab their thighs with icepicks."
What an idiotic comparison.
"you don't have the basics to even make conversing about this productive for either of us, so let's end it here."
Yeah you know nothing about reasoning. But you are entitled to your beliefs and cherry picked "facts", of course. Let's hope you won't get responsibility for any nations money supply any time soon.
The fact that it's technology, and that it's opensource doesn't mean it's not used for scams (and almost exclusively for scams).
In what sense do you claim BTC is used "almost exclusively for scams"? Seems to me for the most part it is simply being traded. Do you mean Ransomware? What fraction of BTC transactions happen because of that?
You have to read context and understand what people are saying. When people say "Bitcoin is scam" they mean the way it's used, not the tech itself.
> In what sense do you claim BTC is used "almost exclusively for scams"?
In the sense of the word scam.
I was wrong though. Bitcoin is used almost exclusively for two things: scams and hoarding. There are almost no other uses.
> Do you mean Ransomware?
No, I don't.
It just comes across as "those people have no idea what they are talking about".
Honestly I don't care that much about people using BTC for scams. I care about the tech.
I find it difficult when people say "BTC will be worth xxxxxxxx$ soon". That kind of statement may be scammy, or at least speculative. But that is different from the tech.
It doesn't. When the tech is exclusively used for hoarding and scamming, it becomes synonymous with its use.
> Honestly I don't care that much about people using BTC for scams. I care about the tech.
This really is a non-sensical statement. Tech doesn't exist in a vacuum.
There are a gazillion startups in Bitcoin, I don't think they are all into hoarding and scamming.
Sorry, you still sound like the people who have no idea what they are talking about.
And as I said, dollars are being used for scamming a lot, too.
"This really is a non-sensical statement. Tech doesn't exist in a vacuum."
Of course I care about what can be done with the tech, but not about the scams. There are many other uses. However, I don't have to convince you, it doesn't matter to me.
They are.
> Sorry, you still sound like the people who have no idea what they are talking about.
I know exactly what I'm talking about. Show me a start up, and I will show you how the very same things can be done and are being already done faster, and more efficiently without Bitcoin.
Apart from the very, very, very small use case of sending money to failed states, and even that use case is hinging on a lot of ifs.
> And as I said, dollars are being used for scamming a lot, too.
Yes, but that's not their primary use.
> There are many other uses.
If there were, it wouldn't be used almost exclusively the way it's used right now.
Right, so how can I get a bank account that nobody can shut down?
"Yes, but that's not their primary use."
Neither is bitcoin's. So is gold also a scam, in your opinion?
I mean if Bitcoin is a scam, it is probably one of the most complicated scams ever? How many millions of lines of code have already been written for the Bitcoin ecosystem?
"If there were, it wouldn't be used almost exclusively the way it's used right now."
So gold is also a scam?
What's a bank account when there's literally nothing useful you can do with it, except hoard, scam, and trade other meaningless tokens?
> Neither is bitcoin's.
The absolute vast majority use cases for bitcoin are scams and hoarding.
> I mean if Bitcoin is a scam, it is probably one of the most complicated scams ever?
It's not. It's very, very simple.
> How many millions of lines of code have already been written for the Bitcoin ecosystem?
You assume that having many lines of code is equal to something not being a scam.
There exactly two kinds ow people who peddle bitcoin and crypto: scammers who know what they are doing (and yes, writing millions of lines of code), and gullible idiots.
> So gold is also a scam?
Outside of technical uses? Yes, mostly, as in the usual scenario of "you need to hoard gold because soon everything will fall, and you'll need gold". So are diamonds. There are very many scams. But blockchains, and bitcoin among them, take the current crown.
So you can not give me the thing that Bitcoin delivers, without Bitcoin. Case closed.
Sorry, you are clueless, and your attitude may bite you in the ass in the long run. Discussion is over. You can keep your beliefs.
I have given you that. "Bank account that can't be shut down" is meaningless if it doesn't provide any function beyond storing bitcoin.
> Sorry, you are clueless,
I'm not.
> You can keep your beliefs.
These are not beliefs. These are things grounded in reality. Unlike, you know, anything bitcoin-related.
You can not just store bitcoin. Your assumptions are ridiculously wrong.
While you can not pay everywhere easily with Bitcoin yet, you also have to think of it in terms of insurance. When pressure increases and more and more people get cancelled, more and more people will seek refuge in Bitcoin. There are many scenarios where Bitcoin can provide a way out. Extreme cases like having to flee the country - are you going to carry gold bars across the border?
A quick google claims 2 Billion unbanked people in the world. People who can't get a bank account for some reason or other.
With Bitcoin, nobody can prevent you from having a bank account.
So, what else are you going to store there?
> you also have to think of it in terms of insurance.
Ah yes. Insurance. With bitcoin's price fluctuating as much as 300% over the course of the year.
> When pressure increases and more and more people get cancelled
There are 9 billion people in the world. How many "got canceled", for whatever the term "canceled" means to you. 10? 100? This will definitely make Bitcoin a global means of payment, surely.
> A quick google claims 2 Billion unbanked people in the world. People who can't get a bank account for some reason or other.
Ah. "For some reason or another". Could you tell me those "some reasons"?
Let me help you.
--- start quote ---
[In the US] the majority of the unbanked and underbanked are American-born while a growing number are immigrants where the two groups have low income as a commonality and lack the minimum balance to open checking and savings accounts
--- end quote ---
Wells Fargo requires you to have 25 dollars to open a checking account. People who don't have 25 dollars to open a checking account will surely flock to Bitcoin, where such a simple thing as a transaction can cost anywhere from 3 to 60 dollars per transaction over the course of the year.
Same goes for other unbanked populations across the world, the vast majority of whom live in developing countries.
> With Bitcoin, nobody can prevent you from having a bank account.
There are exactly two kinds of people who peddle bitcoin and other cryptocurrencies: scammers who know exactly what they are doing, and gullible fools with a very tenuous understanding of reality.
You can transfer BTC. What else can you do with a bank account?
"Ah yes. Insurance. With bitcoin's price fluctuating as much as 300% over the course of the year."
It's still early days. Fluctuation is better than devaluation to zero.
"There are 9 billion people in the world. How many "got canceled", for whatever the term "canceled" means to you. 10? 100? This will definitely make Bitcoin a global means of payment, surely."
At least a billion people in China, for starters. And you vastly underestimate the number of people who are being cancelled. You only hear about the famous cases. The number of people whose funds have been frozen by PayPal is legion. Also the people who are not cancelled yet may still be unhappy about constantly having to worry and having watch their steps to avoid being cancelled. It's not a good feeling. Sometimes stories even make it to Hacker News, maybe you missed them.
"People who don't have 25 dollars to open a checking account will surely flock to Bitcoin, where such a simple thing as a transaction can cost anywhere from 3 to 60 dollars per transaction over the course of the year."
Even those people will have banking needs, and the transaction costs are being tackled with things like Lightning. Fiat banking is not free, either.
"There are exactly two kinds of people who peddle bitcoin and other cryptocurrencies: scammers who know exactly what they are doing, and gullible fools with a very tenuous understanding of reality."
Or people who see the issues in our current system and try to create something better. People like you will probably be unable to understand the mindset of pioneers.
MtGox & Bitfinex & the Satoshi mystery should have been enough to end cryptocurrency's future as a security instrument. They weren't. There's more than 1 fool born every minute, I suppose.
I am aware of the pre-mined Satoshi coins, but it's perfectly possible that the key to those got lost forever by now if they weren't explicitly designed as a pump & dump/kill switch for Satoshi's benefit.
Why is a fixed supply a bad idea for a day to day currency? Just look at Bitcoin.
A currency is effectively a public good, it's needed to facilitate trade. People sell stuff for currency and this creates a chain of transactions. If someone saves money beyond what they intend to spend, it's like damming a river. There are less transactions on the other side, in extreme cases no transactions may happen, which means an infinite chain of transactions has been interrupted. If the owner of the dam periodically releases the water (spends the money) then people downstream don't mind it. However, the dam owner may abuse his power and charge these people for the privilege of not having their water drained. (real interest) People get indebted to the dam owner but at least the infinite chain of transactions is no longer interrupted.
However, there is a problem with this. The dam owner makes it harder to make a living. Everyone starts building their own dam because it is more profitable than working. Suddenly, there are droughts everywhere even though there is no lack of water in the dams. That's how you get a 30s style depression. It's like panic buying money instead of toilet paper. All these Bitcoin investors are panic buying into it, for whatever (possibly valid) reason.
When you think about it, a fixed supply currency is meant to be exclusive for elites that don't want to give up their power.
In my opinion we might be in a mini depression (Japan and euro area) since 2008 or maybe even 2001. Our money systems are more flexible than a gold standard, however, pessimistic outlooks prevent banks from lending to small businesses. So you get a lopsided recovery at the top income spectrum where the rich are highly credit worthy and get their shoes kissed by the banks, meanwhile the average person still gets up to 10% interest for a small $10k loan.
Please explain how does me not spending money stops others from spending theirs?
On the positive side, economy with a large number of savers would be less vulnerable to crisis. Governments won't be afraid to let zombie-companies die, because they know that people are not going to starve when this happens.
Unfortunately, they built the currency to be deflationary, so it’s only used for speculation.
The governments are unable to rebase it to fund their wars and propaganda though, so naturally they don't like it.
> While this view of Bitcoin might sound like it is a betrayal of Bitcoin's original vision of fully peer‐to‐peer cash, it is not a new vision. Hal Finney, the recipient of the first Bitcoin transaction from Nakamoto, wrote this on the Bitcoin forum in 2010: Actually there is a very good reason for Bitcoin‐backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases. Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others. George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self‐regulating.
The overall system is just software, and it can be improved.
L1 is capable of 4.6 transactions per second.
L2 is capable of 25 million per second currently.
L3 will be in existence long before getting a channel to every human on Earth becomes a problem (please note that this is something the traditional financial system has also failed to do, despite hundreds of years and legislative support).
I've not even got anything against LN per se, what I'm pushing back on is the marketing that it's some sort of panacea, that it makes BTC a viable payment mechanism, or even that its particularly interesting.
At this point it looks like a bait and switch. We were promised a decentralized currency and we just got a get rich quick scheme.
Meanwhile buttcoins have ridiculous spikes in miner fees. New bullshit "distributed app" like the next cryptokitties is clogging Ethereum again? Now moving $10 costs $40! Money of the future!
Current stablecoins are fraudulent wildcat banks. Research Tether.