The second problem is some of the smartest people in the world rather point out its flaws than recognise the potential and help fix the flaws
They are smarter than me - they focus on what matters. Small things, that they can control. God forbid the world does fly apart at the seams, and maybe some of these epistemological economic thoughts will have been worth thinking - I sure hope it doesn't happen and the smartest people can continue living in tiny boxes. It means a better world, a more stable world. And we do need smart people studying a set of ligaments their whole lives.
I find it no surprise that those of us who grew up in extremely chaotic situations tend to think 'bigger' and have a harder time thinking 'smaller'. I do not know the world will remain stable enough to support my career - but all the doctors I know are sure of it.
You'll get replies from very well employed, very smart people, who can probably write you an excellent simulation of our discussion, but who will refuse to conceptualize an abstract theory of value, or a world were currency creation happens in a slightly different way. Why would they? It's of no practical value unless the world ends - and you don't want the world to end, do you?
People who fought for monarchy because the alternative is chaos were probably smart people. People who fought for heliocentricism were probably very smart, but didn't feel like uprooting the foundation of their world view. Being dumb enough to think thoughts like "well, but what if", in the face of replies like "but it hasn't in a long time!" is only useful if only a tiny subset of us do it. The right strategy for most humans is to ignore that kind of talk. So be it.
For example, gold is a store of value so firing an employee lets you avoid associated with that employee and you can still hire that employee as long as the gold exists, right?? Right?? Everyone knows that gold stops aging and fired peoplee don't need food or shelter.
Honestly we have way too much of this going on in our society. Management with delusional ideas about how to run a company is often spouting more or less this exact same line. Not everything you can dream of is possible in reality.
The idea that anyone can create money out of electrons is really no better than the idea that anyone can create money out of paper. There is no real reason to believe the first will be any more successful than the second.
There are close to 10,000 different cryptocurrencies currently in use. And the number is increasing all the time. You don't have to be really smart to see that over time, these are all likely to tend toward the same value. The essential elements that will seal their fate --- trust and consensus --- or the lack thereof.
The part of the idea that does have some merit is "digital" currency. The Fed is working on it. And when it arrives, crypto will likely vanish back into the electronic ether from whence it sprang.
If too many people can easily make the product, the market quickly becomes saturated and the value starts to tend toward zero and people losing interest in it.
Also, in this particular case the product is defective. It doesn't actually function as stated --- as a currency that is widely accepted to buy a huge variety of things both large and small with minimal fees, high transaction volume and low wait times?
These are basically just instruments for speculation and fraud. History shows that such schemes can't and won't be sustained over time.
You just restated your previous claim, you still didn't give any reason why the value must go to zero-- By the same logic, the market for websites is also saturated, therefore the value of the internet is going to zero.
You don't have 10,000 companies all producing the same type of product. If you did, the value of most of them would go to zero really fast.
Also, you can't easily clone most listed companies at no cost. There are significant barriers to entry in the stock market --- which explains why you don't have 10,000 companies all doing the same thing.
You can't clone bitcoin at no cost. To clone bitcoin you would have to invest the same amount of energy that has been expended thus far to proof of work.
You're misinterpreting my original statement and ignoring my explanation.
If too many people can easily make the product, the
market quickly becomes saturated ...
You are basically saying that there can't ever be consensus because there isn't yet a consensus. That's a possible and maybe even likely outcome, but it doesn't obviously follow.
Could it happen? Sure. In the same way that a monkey with a keyboard could produce a best seller. But there is absolutely zero reason to expect or believe it will happen any time soon.
But invest now to get in on the ground floor --- just in case.
You are also ignoring network effects entirely. Number of users of Bitcoin have increased year after year.
The cloner would have to exert the same energy to mining that Satoshi Nakamoto did/does --- zero. Others will do this for you.
But thanks for pointing out the absurdity/weakness of Bitcoin and one of the reasons why it fails as a currency. You do know there are other options for cloning.
I generally agree with you though that cloning a PoS blockchain is easy in this regard, those ones also are protected by network effects.
It's more true in 2022, no time travel required.
Unlike 2008, the awareness and the operations needed to mine a bitcoin clone are already in place, fully setup and operational, running 24/7. Just offer rewards like bitcoin did back in 2008 and the existing miners will be all over it like white on rice.
There is very little additional expense to mining a clone alongside bitcoin. The equipment will be running either way.
This really shouldn't be surprising to anyone familiar with the growth of the web. Just like cloning a crypo, it'd be trivial to make a new Twitter, but extremely difficult to gain the same level of network effect.
If Elon Musk wanted to make "MuskCoin", he could and instantly have a huge number of people jump on board. He has already proven this just by meddling in the current crypto market for his own amusement.
Lots of other companies/individuals with clout and name recognition could easily do the same.
The only reason they don't --- they recognize the ultimate futility of it. Musk has even poked fun at the absurdity of it all.
It's just one example of how your "network effect" could be overcome very quickly.
Any individual or company with market presence and name recognition could do this if they were so inclined. You could easily have ChaseCoin, FordCoin, FidelityCoin, NFLCoin and 10,000 more if they thought it was practical and profitable and would be successful over the long term.
But allowing anyone to "mint" their own money is really an argument *against* the basic concept of a "currency". The world has already been there, seen that and done that. And most "smart people" (and companies) recognize that this is not in the best long term interests of themselves or the overall economy.
How you symbolize that agreement is actually irrelevant.
There is no limit to the agreements that humans can make so the idea of limiting them by decree is absurd.
The most problematic part is that holding onto money is a onesided arrangement that requires no consent or agreement. You can literally leave the other party hanging.
It is kinda like doing homework in a group and waiting on the results of the second guy so you can work on your part. You will eventually stop waiting and just borrow the homework from another group so you can finally get started with your damn part of the homework.
No one is limiting the number of cryptocurrencies. If you and your friends want to make your own "CryptoNickel" currency, go for it. No one is stopping you.
No one is stopping others from doing the same too --- and therein lies the problem --- the exercise is self defeating outside your unique circle of friends. Just a wild guess but you probably won't be using "CryptoNickel" to pay rent or buy groceries. Why is this?
Because as I noted above, "CryptoNickel" is missing essential elements of a truly functional currency --- trust and consensus --- not just among your friends but society at large. And a distributed electronic accounting system is no substitute for these missing elements.
The reason why there are lots of experts criticizing the current implementations and crypto concepts is because it's vastly easier to realize the flaws in one's idea than coming up with a new proposal. Yes, PoW works but it does not make sense, it's just a very interesting gimmick that makes cryptocurrency doable. That does not mean it actually makes sense or that it represents a stable foundation for a digital currency in practice.
You say that PoW works and makes cryptocurrency doable, yet you conclude that it is a failure. But you don't define what the goal of it is. What specific goal would you want crypto to achieve to falsify your belief that it is a failure?
Can you say the same for cryptocurrency? Where does the value of a cryptocurrency come from? The answer is "from its scarcity", but scarcity itself doesn't make something valuable. What makes Bitcoin valuable is its tradeability with real world currencies, such as the Euro and the Dollar, and the fact that people want to spend them to get Bitcoin. Bitcoin is not a real currency, is just a very complicated bank with extra steps, based on an asset whose value basically depends by the biggest Ponzi scheme ever known to man.
There are two notions of scarcity: Scarcity of bitcoin themselves (21 million), and scarcity around being able to create different cryptocurrency. Clearly the only weakness is in the later. Two points on this: Bitcoin commands a majority of proof of work energy. This does tie the digital scarcity of bitcoin to something in the physical world. You can't create another bitcoin without spending a similar amount on PoW. It's not that the scarcity of energy consumed translates to value in bitcoin directly, but rather it gives a high cost for creating an alternative to bitcoin. This is not unlike state issue fiats-- the Yen has value because Japan is a large state. I wouldn't trust a fiat from a state that was just created and had no citizens. So the scarcity of powerful states translates into a scarcity of fiat. Second, Bitcoin was the original invention of true digital scarcity. This makes it a natural place for a focal point. This by itself does not mean bitcoin has value, but it should be better at becoming valuable than other cryptocurrencies.
But bitcoin is also used for transactions and payments. It has growing links to the real economy just like other fiat currencies. The trend here is growing. If the trend continues-- meaning more and more businesses and workers take bitcoin as payment, surely you must conclude at some point bitcoin would then have real value, just like the Yen example?
> Bitcoin is not a real currency, is just a very complicated bank with extra steps, based on an asset whose value basically depends by the biggest Ponzi scheme ever known to man.
I think this is disingenuous-- A ponzi means that through intentional and planned deception invested funds are stolen. Sure, bitcoin is volatile and might crash again. But there is no structured fraud here, it is a free market, nothing like a Ponzi.
You still didn't define a falsifiable goal-- What would have to happen for you to consider cryptocurrencies to be successful, what is the end of the tunnel? It feels to me like you are assuming it will fail (it is a ponzi!), and then working backwards from that assumption to find how to justify it.