It's pretty amazing watching crypto speedrun the last 200 years of financial history failures all over again.
We saw this when COVID began. The stock markets were plummeting as people increasingly realized that COVID was not gonna be gone by Easter, and that this would affect us for some time and how impactful it would be.
With crypto, the only thing that the falling prices is tell us that another layer of the onion of scams that crypto is built upon has been peeled, and the only real question is how deep the layers go and whether there even is something of value deep inside.
Also the lack of standards and the terrible promise of decentralization, yet the reality of centralized markets and brokers. (This is a more modern failure).
I firmly believe crypto is useless. Unlike gold (with metallic and useful properties) or other floated currencies that map back to an economy. Crypto essentially represents spent energy.
If crypto, esp BTC was able to be back converted into the energy used to produce it, that'd be great. But it can't so it's just a net negative IMO.
gold was useless for 99.5% of human history, until the advent of electronics
Even Silver corrodes. Gold never corrodes. It's excessively stable, malleable, and perfect for art pieces.
Since Gold is excessively stable, there are no worries about rashes or itchiness if you wear it all day.
In an age before modern plastics, that is basically miraculous.
If people don't understand stone age economics and why gold was seen as valuable even before modern electronics, oh boy... How do they make sense of more modern concepts? We often discuss a lack of education, especially in terms of science and technology. The situation regarding economics education is so dire most aren't even aware there is an issue.
yeah, so exactly like I said, it was pretty much useless
>In an age before modern plastics, that is basically miraculous.
have you heard about glass?
Have you ever worked with glass vs gold?
Dropped a piece of art(isanal good) made of glass and see it shatter and one made of gold and not much happening to it?
That's just two of dozens of reasons why your comparison makes no sense.
we're in the bi-hourly crypto hate thread. the threshold for being useful is set to "is it necessary for basic survival?". "a store of value with additional attached utility" doesn't make the cut, and must be banned to atone for our carbon sins
>Have you ever worked with glass vs gold?
the post above compares gold to plastics
No one wears glass all day.
My Nylon strap for my watch is pleasant and cheap. But the very material itself didn't exist before the 1930s IIRC.
If we're talking about materials that existed even in 2000BCE, gold is one of those metals that you could wear all the time, and never get a rash, allergic reaction, or otherwise get itchy.
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Glass isn't flexible or malleable. Even if we use fiberglass today, its a carcinogen and very bad for the human body. Certainly not a material you want to be wearing all the time.
If that's your worry (and not that you shouldn't), consider that the risk of confiscation of your bank balance or stock accounts is far higher given that those are merely entries in a database held by a third party.
I got a buddy with a bunch of money in Celsius right now, that feels like its been confiscated.
Apparently, cryptocoins can also be "confiscated", and are unable to be sold during these times of duress.
Over say, Iron?
Yes. Because iron rusts. An iron-coin does not last forever. Copper, Silver, and Gold are easier to take care of, but even old copper/silver coins tarnish and corrode away with time.
Gold does not. A gold coin made 100 years ago would be as brilliant today as it was back then... with minimal maintenance.
There's a _REASON_ why gold was chosen, all across the world, from MesoAmerica, to Europe, to Asia, as a unit of currency.
All traded goods and services essentially represent spent energy.
Crypto is only valuable if you can find a bigger fool, and you are not the one holding the proverbial hot potato.
It only gained popularity by people hoping to get rich in regular currency from the value changing. It morphed into being basically another type of security that gets traded and rises and falls with the general stock market.
And that's ignoring all the scam and theft that has happened. I used to feel bad I didn't buy bitcoin when I was younger, but these days I feel good that I stayed away from cryptocurrency in general.
mind if a propose this as an example of a strawman on wikipedia? it doesn't get any better
Btw it's somewhat ironic because Celsius is essentially a bank and not a blockchain company at all. They've simply found this niche where they're largely unregulated because they're dealing with tokens that are not considered legal tender in most countries and have super shady business practice when you look into it deeper. So this is essentially the old model, branded as blockchain and taking money from people who hold cryptocurrency but do not understand it. The likes who buy Dogecoin on Robinhood.
If lending business were on-chain, everyone could look at the exact figures and observe the risks. Maker vaults aren't defaulting, are they? Also a smart contract once securely deployed can not be arbitrarily stopped. So there is no chance for anyone freeze your funds like this centralized platform does now. These are exactly the problems blockchains can solve, if people only understood and used them. With traditional banks, we've tackled the problem trying to use government regulation, but we all know it doesn't really work. Contracts that can not easily be gamed are a much better solution, at least for the base layer of financial system.
Of course you could do the same with companies like Celsius and insure and regulate them better, but in the end customers are paying for it, it doesn't come free. Also big banks do still fail, are you aware how much money has been paid for bank bailouts just in the past decades? The thing is many don't notice they're paying for it, because they don't understand where the money comes from.
My argument is that Celsius would never have gotten as big if the customers knew what happens with their money. This business model shouldn't even be legal, same as what many more traditional banks are involved in. In fact, often it isn't legal in the first place even according to current regulation. But once they get to a certain size, laws don't apply to them as they apply to the rest of us. This is a problem, regulation is clearly not working properly in the banking sector.
Account holders shouldn't have lost (haven't checked) but the stock evaporated overnight, so anyone holding any shares lost everything in a blink.
https://www.federalreservehistory.org/essays/banking-panics-...
I don't see why all countries would outlaw "crypto".
I hate that term for it's semantic shift, but that kind of rebellious tribalism fueled this drum beat.
Each class of cryptocurrency technologies, institutions and securities has an analog in the list above. And each will lead to new protections. Maybe Big Brokerage will invest at most X% in cryptocurrencies but not ones repackaged into NFTs.
Etc.
This isn't a bull market, or a bear. To borrow a perhaps racist or outdated term, it's a Buffalo market, and regulators are at the buffet.
Tether is analogous to the gold standard but without verifying the gold exists in reserves, or ever existed at all. Exchanges are facilitating billions in money laundering and fraud while eating massive fees and paying millions to founders. Transactions can be hidden behind shell wallets/groups and filtered through many exchanges reducing transparency and increasing odds of successful illegal activity.
There is a ton of legitimate criticism just looking at the fraud side of Crypto and how lack of regulation in that space enables a ton of crime. It's often drowned out by PR or the next big blockchain based thing that seems flashy but still comes with all the same problems as regular physical money.
It's like asking your IT group to install spyware on users workstations instead of respecting or enforcing HR policy. It's a people problem, not a tech problem.
Bitcoin et al are a Paypal killer, as in a low cost way to transmit currency or whatever, but you can do that in other less wasteful ways.
It's a shame what it turned into is something people place on comprmised mnachines to silently siphon up CPU cycles for profit.
(Especially since often those profits went towards things like Juche nukes.)
You're talking about Proof of Stake or you imagine some other novel way of transferring currency digitally, without centralization and securely?
It takes nearly half of the US budget with their military to secure the USD value by destabilizing poor countries and exploiting them for their crude oil, which is the most traded commodity in the world by fiat. In relation it's trivial to dissociate your identity from crypto you own, making it impossible for someone to prove you have crypto to steal, even with a gun to your head. All secured by harmless nerds using fractions of a percent of the worlds electricity usage, which doesn't even begin to approach the electricity the military utilizes from even a single one of the largest militarized nations.
It's obvious to me that neither of these are honest positions to take in a debate about the benefits and costs of these classes of assets.
The US is a net exporter of oil and has been for years now.
Are you joking or do you not realize that the Onion is satire?
The US spends a little less than 12% of its annual budget on its military
I think one would find it very hard to argue that military spending is discretionary for any major nation in the layman sense of that word, even if the US's military spending is beyond control (on the flip side, the US also gets much less value for its military spending relative to say the value China gets for its military spending).
The value of a national currency is a reflection of the rest of the world's confidence in that nation to meet its obligations. The money is essentially a marker for future goods and services.
The US military's reason for being is to protect the US from other nations, thereby keeping the US's resources available for its own use, its citizens capable of performing services, etc. It is also used to secure US interests abroad. Having its current resources, a populace capable of processing those resources, and the ability to acquire more is the reason the rest of the world is confident in our ability to provide future goods and services. A marker for US resources is a solid bet. That marker is called the US Dollar. Ergo, the military's job is to secure the dollar.
That's the rough train of thought that leads you to claiming that every dollar spent on defense is a dollar spent on defending the dollar.
How would thousands of computers spinning in circles computing useless sha hashes protect your national borders, coasts, and other physical assets, resources and people?
And it's not the defense that's the issue, it's the money spent on the defense that they're comparing. They're saying that while crypto may cost $X to support, it's less than $Y where $Y is the total expenditure of the US Army.
For example, Linux has fewer desktop viruses written to target it than Windows, which is a big part of why it can be a good security decision to use Linux. And genuinely, regardless of the reason, Linux desktop environments do tend to have fewer viruses targettng them.
However, the reason why Linux has fewer desktop viruses is because it's not the OS that most ordinary people use, so it would be incorrect for people to say, "Linux should be the dominant OS for everyone because it has fewer viruses." Because if it was the dominant desktop OS that everyone used, it would have more viruses. Primarily targeting Windows is an effect of malware authors wanting to target as many people as possible. But Windows is not the cause of them writing viruses, they are not writing viruses because they want to target Windows, they want to target people and they use Windows to do so.
And in the same way, in theory yeah, you could look at something like Bitcoin and say that it's not being used in the same ways that the USD to fund certain actions/industries. But to argue that Bitcoin is a better currency because it doesn't get used to fund military spending... The military uses the USD to accomplish its goals. The USD is not itself the goal.
Like you said:
> The value of a national currency is a reflection of the rest of the world's confidence in that nation to meet its obligations.
The US would still want to signal and defend that confidence in a world where it used Bitcoin. So really when we talk about the cost and energy use of Bitcoin, we're assuming that in a world where Bitcoin was the dominant US currency those energy costs would be in addition to all of the existing military spending and energy usage. Because when say that the US military is defending a signal of stability/confidence, it's not the signal itself that the US is defending, it's defending what the signal says.
I don't see anyone arguing that. The contrived argument I made was that USD requires a military to be stable. Bitcoin only requires proof of work. It's not a straight forward argument and I don't think it's quite a genuine argument because the US would have a military regardless (I think?) but it does stand to reason that without the US military the USD would not be the reserve currency of the world and therefore would not be nearly as stable.
Do keep in mind the context I proposed the argument was not intended to be a genuine argument, but rather an example of someone making a more all-or-nothing, bad-faith argument.
I'm not sure I agree.
Proof of work requires a functioning Internet, functioning supply lanes for GPUs, low-ish latency, general consumer confidence in the chain, proportional miners to Bitcoin's value so that it's actually secure, etc... Not to mention that Bitcoin itself requires a lot more than proof of work to function as a usable currency.
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Further, this is kind of begging the question a bit. Saying that the USD requires massive military presence to sustain is not the same as saying that Bitcoin requires massive energy to sustain, for all of the reasons people have talked about.
The fact that the USD military would still be around if the USD went away is the reason why the argument that military energy usage should be counted in Bitcoin's favor is a flawed argument. But if cryptocurrencies went away, we wouldn't need proof of work at all. That energy cost would legitimately vanish. And I just want to kind of jump back to that point, because if feels like there's kind of a weird slight-of-hand happening here.
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The flow of logic we're following is:
- It's good that Bitcoin proponents otherwise play defense, otherwise we'd start talking about military costs of the USD
- Military costs of the USD are not dependent on the USD and likely wouldn't disappear if the USD went away
- Nevertheless this was just an example of a flawed argument, not a real argument
- ???
- Therefore, the arguments against crypto are similarly flawed.
But that doesn't follow. The fact that you can come up with a flawed argument for trying to use military costs as an argument for crypto, and the fact that we all kind of agree that it's a flawed argument, does not automatically imply that therefore all criticism of crypto is similarly flawed.
Even if the USD vanished completely and Bitcoin took over, there is basically no reason to believe that the US military would go away or that the US would stop interfering in foreign markets. And banking regulation/enforcement would just switch to targeting exchanges/platforms, blocking specific coins, and move on.
Independent of the whole cryptocurrency thing, there are good reasons to want better payment methods that give people more freedom/privacy, but "this will dismantle the military-industrial complex" isn't really one of them. Last I checked, there's nothing in the Bitcoin protocol that says it can't be used for bribes, oil, or guns.
It's just a wild fantasy. Imagine going back to the Cold War and thinking that if the USD wasn't around that the US and the Soviet Union would have stopped building nukes.
Why should we "exert control"? Maybe if folks didn't think they needed to build a bunch of aircraft carriers they'd stop building coal plants.
We should adopt a second strike nuclear policy, decommision our silos, and shift to an array of submarine and other movable launchers for a smaller set of nuclear weapons rather than the old cold war model, now that we live in a multipolar world.
We didn't build nukes because we wanted to protect the USD, it was a fight about ideas like Communism, national control, etc...