Why I’m Cryptophobic
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bvp.com
Money has value because of the value of the economic transactions in which its conducted.
Government-backed currencies are forced to have value in the sense they force people to use it for their taxes. The US, additionally, forces the world to use it for oil trades.
Value is in those economic transactions. A currency is just a "liquifying" of that value, to make it easier to spread around. So that 1hr of my time/output can be more easily traded for 1hr of another persons. We are still just trading output.
For BTC (or any coin) to have any value, it needs actual economic transactions to be conducted in it. If there arent any, its value is smoke-and-mirrors; its not real. If you can't trade the market cap of bitcoin for actual economic output, it isnt actual economic value.
Imagine doing that right now. Imagine BTC was actually used for any scale of economic transactions. It would collapse overnight.
There arent really many counterexamples and arguably the counterexamples have extenuating circumstances (e.g. dinar under saddams occupation).
Even if it’s just an economist weirdo I’d be curious to see what the argument is there
https://www.irs.gov/businesses/small-businesses-self-employe...
This idea is at odds with the concept of the modern nation state. You can't have running state institutions and an army that, in theory, should provide some level of security of the state borders. Having many groups of people, each exchanging peanuts, beans or stones would lead to a decreased level of trust and no concept of national unity.
Good.
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What are some of the counterexamples?
The notion of property rights is only relevant with a central authority who is able to enforce it. Which could be a nation state, tribal chief or a lord. In the jungle you only own whatever you are able to defend. Even your own life.
The innovation of bitcoin is precisely making this statement no longer true. The "property" might only be digital data, rather than physical things, so you can argue that it is no longer true in only a limited context, but it is not longer absolutely true.
Maintaining BTC itself requires physical inputs and physical property rights. You need fiat to buy energy. Your house with mining rigs needs enforcement of property rights.
> You need fiat to buy energy.
This is a circular argument and not true. You can buy energy today with gold or bitcoin.
The same was true for salt, and many more local kinds of money that existed.
It's also the same trust you need for fiat money. This, and trust that your government won't create a huge lot of it in an instant (slow rates of money creation are fine). Turns out that governments have a lot of leverage to enforce the first, more relevant kind of trust, so the total trust required decreases.
The idea of cryptocoins was to remove the trust on nobody creating a lot of money very fast. But in doing so, they also lost the leverage to enforce that people will accept it.
For 'fiat currency', it's the fact that the state has a monopoly on violence and has decreed both [A] that they will accept the fiat currency for fulfillment of tax obligations, and [B] that they will not enforce a claim of debt if you have offered to pay it in fiat currency and the debtee didn't accept your offer.
For gold it's the fact that gold is considered intrinsically pretty by some, and has industrial uses.
The same can be said for iron, wood, or even air - but those are far less rare. Wood has value just as gold does - it's just that folks tend not to trade trailers full of wood as a fungible because it is unwieldy.
Stocks have intrinsic value too: It's a tiny voting share, and gives the right to enjoy a share of dividends.
Bitcoin has __nothing__. Whatsoever. It's real easy to look at the ridiculous price of stocks in companies that make it incredibly difficult to use your vote and which never pay out any dividends, or the sheer unfathomable levels of business done in terms of USD or EUR and how it seems to dwarf the intrinsic, and conclude that the intrinsic is just not important...
But is that a jump you can make?
As you said:
> I accept 100 euro bills for my labour because I believe I'll continue to be able to trade them for food and shelter.
You sure? Maybe it's 1% 'because I have absolute guarantees I can pay my taxes with this, and I have a guarantee that I can trade them for food and shelter because if I pay my bills with dollars and the recipient no longer wants them, they have no legal recourse to force me to make good in any other way'. Presumably you have certain outstanding debts that work like this (if not just simply your tax bill, which is inevitable, then your power bill, your rent or mortgage, etc), so that euro bill __already has value__ the moment you receive it. You can take your mental bookkeeping of 'oh yeah the month is halfway through so I absolutely do, unambiguously, owe my bank half a month's mortgage at the very least', and immediately reduce that amount by €100,-, given that you are holding a €100,- bill in your hands and the state has decreed that they will tell the bank to get fucked if they decide they no longer want to accept your euro for paying off that mortgage.
As for Bitcoin, the original Bitcoin paper talks about replacing trust with code, and I just don't buy it. Sure, you can trust that Bitcoin aren't spent more than once and all that, the maths take care of that. But it fails to consider all the institutions that integrate the Bitcoin world with the rest of social/economical reality, and all that arises there like price volatility, transactions taking forever, exchanges getting hacked, and that Bitcoin-as-a-casino, excuse me, object of speculation, has a far bigger impact on its day-to-day than for e.g. the Euro. The paper doesn't consider that reality at all, but those things mean that 1000EUR worth of Bitcoin is a lot less useful than a stack of fifties.
If you don't pay your taxes, you don't get to participate in the local economy for very long. Men with guns will eventually come to your home and take your stuff and/or take your freedom.
You can't even do direct barter without cash without incurring a tax obligation in the US, https://www.irs.gov/taxtopics/tc420, so even if you live your life like this, you still need to find a way to get actual dollars to pay your taxes. This is what creates the basic and permanent demand for dollars.
The simple truth is that every government is at its core the biggest, baddest gang in the land. The old royalty were literally mob bosses, and often presented themselves as gaudily and arrogantly as the street gang bosses in the modern age. They have the monopoly on violence in their realm and then printed a bunch of tokens that they demand as tribute for the promise of letting you live your life in peace. Because they control the issuance of these tokens, they effectively control the flow of the economy and can more easily manipulate people. They can't arrest everyone, so there's still a fine balancing act required to keep the masses generally consenting of the arrangement, with just the right show of force to reinforce the system.
But other things beyond currency are still money, like gold and bitcoin, because money is just something scarce that you hoard in the hope that in the future, you can trade it for at least as much goods and services as you originally traded for the money, if not more. Anything scarce can be monetized when the currency becomes less scarce, which is part of what is driving up housing as people hoard it as a better store of value than currency. And importantly, making the thing you store this ethereal "money" in even more scarce relative other things increases the value of your own, which is part of the driving force behind NIMBYs who block new housing developments.
Yes, this is the part where the government (state or federal) delivers value, such as education, healthcare, natsec, and generally facilitates the ability to do business via the court system. I think it’s disingenuous to make the argument you’re making without acknowledging the value that government provides.
Were.
I don't know if you subscribe to the political analysis of Adam Curtis but in the past two decades governments have been passing their power to private banks, corporations, QANGOs and "non majoritarian" think-tanks like it's a hot potato. The new breed of politicians are not statesmen but revolving-door temporary managers who would sell-off and outsource the whole country for personal convenience.
Other than a monopoly on violent power (which is vanishing fast in the USA as private cops and prisons take over) it's hard to locate the power of government sometimes. Even the military is dissolving into a loose collection of defence contractors. In the UK our intellgence services were more or less sold to Amazon.
The OP article seems dead set against anarcho-libertarianism but it is by no means pro-government, or explicitly pro-democracy. With regard to money and economics, from my moderately pro-government/state stance I see the great mistake governments are making is giving up on cash.
Physical currency is an absolutely vital component of a stable economy. Its very lack of instantaneous fluidity (it relative inconvenience) means it acts like a capacitor to stabilise markets if you can manage circulation and interest. Moreover, governments have a strict monopoly on that, and physical currencies can take on many new guises with modern cash technology. Abandoning that would be suicide.
If governments get into a battle to take the ground of purely digital currencies against crypto, they will lose. They are making this mistake in an attempt to gain legibility (surveillance). Ultimately they will have to choose between surveillance and economic control. And since the value of surveillance is massively over-rated I am optimistic we'll pull out of the Orwellian misadventure in time.
Anyone genuinely interested in defending against the "ideology of crypto" (as this article posits) should be investing in new cash technologies (some of which I have mentioned in earlier comments here). They should be promoting a plurality of diverse cash equivalents (many of which can be implemented using cryptographic technology - not necessarily block-chain).
Governments are made of individual actors, in the US these are often buying cryptocurrency. Their friends have invested in and built cryptocurrency companies. They hold investments in cryptocurrency companies.
Cryptocurrency IS the capacitor you're talking about, the policy of the US is showing this more weekly.
Based on this statement, the currency need not be physical. It sounds like all that’s really necessary is to moderate the money supply (something that is already done in a federal reserve banking system).
What am I missing? Is there some other aspect of physical currency that makes it advantageous?
No one facing a hyperinflationary death spiral says "oh well, at least the government will take taxes in this crap" they desperately cast around for a stable place to put wealth.
But I don't think you can say the same about bitcoin. Bitcoin's fundamental utility is low, even compared to other cryptocurrencies.
Gold has useful unique properties over other metals. Bitcoin does not even have useful unique properties over other cryptocurrencies.
https://mappingignorance.org/2017/02/09/electronegative-gold...
Makes me wonder if there are a ton of unexplored properties and usecases for rare metals that we just haven't discovered yet.
One: gold is the og currency, it doesn't have to prove its value because it already did. Two: it is also being actively used for transactions, look no further than jewelry. If you have gold, you will find someone who is willing to exchange it for something else with material value in any city on the planet. This is not the case for crypto.
No? You don't think the following statement is as true as the one you made?
"If you have Bitcoin, you will find someone who is willing to exchange it for something else with material value in any city on the planet"
My experience would tell me otherwise, but maybe I'm a outlier.
1: Cryptocurrencies can still operate over distributed mesh networks or sneaker-nets in a semi-doomsday scenario.
2: With gold, it is difficult to verify its authenticity vs some impostor alloy without the necessary tech/knowledge.
Edit: the bottom line is that in a doomsday scenario, people have little use for bitcoins or shiny yellow rocks.
Bitcoin wins.
See, we can do this all day. There are points of comparison and points of departure.
However, gold has a fundamentally stronger argument for its value. Gold is useful: it has unique physical and chemical properties.
Gold is drastically more difficult to transact in than bitcoin or any cryptocurrency. Not only is it extremely difficult to create exact change to pay in gold (shaving of milligrams per dollar?) but there is zero infrastructure or education on how to verify that the gold is real. Even modern nation state banks have been fooled by tungsten cored bars of gold.
There are plenty of well established crypto apps that make receipt, verification, and conversion into your preferred cryptocurrencies or fiat currencies instant and effortless.
My parents bought my childhood home with physical gold bars (around ~3.5kg gold, in bar of 37.5g each)
https://www.americaslibrary.gov/jb/gilded/jb_gilded_monument...
I actually agree with you. :)
It's also intrinsically valuable for jewelry and industrial purposes. It's irreplaceable in electronics, for example.
Cryptocurrency that can't be sold to someone else has absolutely no value. In fact, it has negative value because of transaction fees, something that plain cash doesn't have. I can send someone $100k with a $0 transaction fee.
First silver, then gold, then platinum, now palladium and rhodium have ridiculous values associated with them.
She proposes three ways, including valuing cryptocurrency as we do precious metals.
Why would Bitcoin collapse if it was used at "any" scale? Low max transactions per second? It is used by some people (even if not many) to pay for real things as well as wages! Are you saying an "economic" transaction has to be a commodity or taxes?
I think any specific currency is valuable because people believe it is so. No single characteristic defines value.
You need to pay attention to the actual economic transactions taking place. Looking at a graph of pure speculative value and calling it an economy is, more or less, a scam.
You'll see that when it all disappears.. moreso than the cashflow of, eg., an actual business.
I think many cryptocurrencies are useless and driven purely by marketing and speculation and most tokens are unregulated securities. Bitcoin is someone's attempt at inventing an "ideal" currency and it is being bootstrapped into value and existence. How else could it work? Maybe it will fail, maybe not.
> Imagine BTC was actually used for any scale of economic transactions. It would collapse overnight.
You never explained why and I am honestly interested in your reasoning here. Are you implying BTC can't scale? It seems like two contradicting thoughts - if it is used, then it becomes less valuable.
I believe your last two sentences hit the nail on the head (albeit being oxymoronic). Things have value because people are willing to pay for them. That's it. If companies can be traded below book value, Tesla can be worth more than the next five automakers combined and NFTs can cost six digits there seems to be no intrinsic value.
You're mixing up things. I can draw a one-off picture, that doesn't make the drawing valuable (sadly. If you want to buy my paintings, hmu). The value needs to be attributed by a shared denominator, which for the example of Mona Lisa is cultural prestige. Crypto has zero inherent cultural prestige, it's only value lies in social attribution. Wallets on hard drives are meaningless unless we decide that they aren't. The mona lisa isn't worth what it is if we decide otherwise, but it does have inherent value. Crypto does not. For crypto to have value, someone else needs to pay Dollar/Euro/whatever at an exchange. That's the value of crypto - the exchange rate.
If an artist signs an NFT or Colored Coin with a keypair that is associated with their public identity, shouldn't that be analogous to an autograph? If a physical, signed artistic work has more value than an unsigned work, does that mean that if you take the physical artistic work out of the equation you're left with the value of the signature? It's a funny question I guess. Like imagine people collecting PGP autographs.
Maybe art has some intrinsic value, but I think a large part of the "value" of an art piece is associated with the cultural relevance of the piece. It would follow that if you can associate a transaction output with some cultural relevance in the same sense that traditional artwork does, then it could have value, albeit not much.
This assumes that an original painting and a perfect replica of it have equal value. That might be the case if you don't know which is the original, but in the case of the Mona Lisa - and in the case of the NFT - you almost certainly can figure that out.
This is true for every economic good, including paintings. Whether the value is "inherent" or not is irrelevant, you need a transaction or the value is just theory. Culture could also forget about the significance of the Mona Lisa, it has happened before, see for example https://en.wikipedia.org/wiki/Archimedes_Palimpsest, a mathematical text that our culture considers having very high value, but was overwritten into a prayer book by a culture that considered the work less valuable than the material it was written on.
That's such a silly argument. There are thousands of paintings around the world with the same level of scarcity as the Mona Lisa, but have far less value.
Scarcity drives up prices on items that already have some perceived value. It doesn't create any value itself.
It all depends where you look. In some niches, BTC is used a lot. In some niches it isn't used by anyone (hi HN!) But it's a big world out there, and if you look outside your bubble it's not hard to find people using it.
Re: the last paragraph, BTC did indeed crumple under load for a long time around ~2016, and transaction fees were very high as a result. But lightning network has appeared since then and fees are back down to reasonable levels, well under $1. Those were serious growing pains, but we made it through just fine.
[1]: https://news.ycombinator.com/item?id=31914284
[2]: https://www.wsj.com/articles/how-crypto-is-helping-ukraine-r...
The floor is different from what people will sell it to you for right now.
AMZN may have a floor of $ASSETS / #SHARES (or something, I just made that up), but that doesn't mean anyone will sell it to you for that right now.
I’ll sell an American-style options contract to someone who thinks BTC is going anywhere near there at Black-Scholes -75. And I’ll have no trouble financing it.
You want the other side?
They have full openly auditable reserves and all their code is open source and visible on their respective smartchains. Wanting an institution to provide a sub-par solution for this is a cop-out. Put up or shut-up.
You can buy puts at the $25k strike dated June 2023 for $4300-4800.
[1] https://app.ledgerx.com/btc There was a link that doesn't require login but I forgot it.
EOY 2022 $15k strike: $1700-2000
EOY 2022 $10k strike: $700-950
June 2023 $25k strike: $7400-7900
As well as it needs to be when you’re up against Yi He, that chick gives Bill Gates nightmares: she’s a fucking force of nature.
Are your court shoes laced?
If you want to take a big position, talk to someone like Wintermute who has a big OTC desk, or if you want a better deal, find a friend of a friend. Someone you know knows a whale.
You’re talking 12k-15k, which is a much more interesting options chain.
Maybe you already knew that, but if not you’re a natural.
You think BTC is going to drop like 20x in a sane options duration?
I think a lot of people would sell you that.
I don't understand what Black-Scholes means, but if you're willing to take 10 to 1 odds in my favour I'll draw up a smart contract: we both deposit USDC and receive tokens for our position which can be resold if desired; if bitcoin hits $1000 or less according to the Chainlink BTC_USD oracle at any point between now and 10 years from now, I get 10 USDC for every one of mine wagered
we know that you know, and that we know, but the comment was saying that most people don't.
Those are basic for doing business. People share them with everybody they deal with.
I already have to trust my power company, most of my credit cards, my ISP, my gas company, and my landlord with my bank info, all of which are probably less secure and trustworthy than Pornhub...
Contrast that with explicitly authorizing PornHub to withdraw from your account at their discretion, as is the case when you're giving them your account/routing number on a web form. That info then gets stored in some database.
And no, I don't give utility companies or landlords or what have you such authorization, either. I mail them a check (thereby not giving them cause to store the account info long-term and not giving them consent to auto-withdraw), or I use a credit or debit card (which I can dispute or change far more easily than I can a bank account). If they accepted cryptocurrencies, then I'd pick that over either of those options.
That bar is so low I couldn't even trip over it.
I could use that data to extort at least 10% of those people easily (religious people, celebrities, politicians, etc). This is disregarding the price that I'd get for just leaking the other 90%.
Now imagine the fallout of somebody downloading the same info for a local brewery, a big tech company like Atlassian, a household brand like Staples, or even great big Amazon.
Ukraine's banking system is both online and functional:
https://kyivindependent.com/hot-topic/ukraines-banking-mirac...
Regarding donations to Ukraine, the total value of donations to Ukraine has been around $900M so far [1], of which only $7M has been in crypto (according to your WSJ article), so less than 1%.
1. https://fortune.com/2022/04/15/how-much-donated-ukraine-war/...
Vitalik alone donated $5M. https://fortune.com/2022/04/08/vitalik-buterin-ukraine-donat...
This page says $60M has been donated to one specific organization https://donate.thedigital.gov.ua/
Here's another one that says they've collected $9M https://unchain.fund/
I'm sure there are others.
In some niches, BTC is used a lot.
The value if BTC is primarily driven by day-trader hype, IMHO.
In my opinion, there will need to be a great clearing out for cryptocurrencies and blockchain technologies to mature, and things will need to get very boring. The "clearing out" means $0 BTC, DOGE, ETH, LTC, etc. The "boring" part means things staying stable. Otherwise, it doesn't look like there is enough room for other cryptocurrencies (like SOL as an NFT/smart contract platform) to succeed in the market, and scams will be the only viable business models because they are fast.
In this scenario, labor power has been replaced by GPU power, which can be measured in terms of electricity. Everything from ordering a meal at a restaurant to building a house to designing a new computer system can be measured this way, and the price of everything is tightly coupled to the price of electricity and the price of compute.
Under these conditions, it might make sense that programs/robots would incorporate smart contracts or participate in some sort of generalized proof-of-work system to finance themselves. Running a program would require currency as input to cover the computational cost of actually running the program, even if the program is open source.
That's where I see this going. Traditional currency is great for incentivizing human labor, but the problem is it's not designed to be programmable.
The same old behaviour should be applied to machines, it doesn't matter how much resource a machine takes to do the job, what is important is the output. The pay should not be X*Watts, but X agreed in advance for training that specific neural network, this type of market incentives evolution, where the machines that can do the same job with lower resources have the lower hand
In the past nearly everyone was a serf and they provided their goods/services to their lieges in exchange for basic needs like having someplace to live.
In the present it's pretty much the same thing, except with us serfs being paid wages (which we then end up spending most of as rent and taxes) and serving multiple lieges.
Witness Moscow commuters not being able to enter their metro as Apple Pay cuts them off.
Witness the AML surveillance regime shutting out entire countries:
https://www.coindesk.com/policy/2020/10/23/money-reimagined-...
Per your example, ok Apple Pay got cut off. Is the transit system going to support crypto? Will they be able to run their business and make that transition with regulators? It’s a drastic measure that cuts one off from the structures that they physically exist in, and unless those structures are overall crypto-supportive, they would just be putting themselves further between a rock and hard place (which as we’ve seen by the lack of serious business adoption, companies and orgs are not really willing to take that risk in any meaningful way)
Edit: I agree with your use of the term “regime” and am not arguing against the sentiment of your point. Just that I don’t think crypto actually has the backbone to solve it, there’s not enough physical-world tie in yet for it to have the leverage it needs to truly overcome the global financial regimes that are neck-deep in fiat and physical assets that actually impact everyday peoples’ lives.
That's the big question. But assuming for a moment that crypto can act as a substitute for traditional centralized payment systems, then it has significant advantages in some contexts over those systems.
Except that, fundamentally, distributed permission-less systems can't come close to the computational efficiency of centralized systems. So this is like "assuming perpetual motion machines existed, we could build a post-scarcity society" levels of assumption.
With zk-proofs, the redundancy of a blockchain can be significantly reduced without comprimising security. What redundancy remains provides the high process integrity that critical applications like financial transactions require.
It’s been around for a bit already, why is it not more widely adopted compared to BTC/ETH, any thoughts?
https://polynya.medium.com/rollups-data-availability-layers-...
zcash initially used zk-proofs only for privacy. It is only now looking to utilize it for scalability.
Physically impossible: yes - you've suggested using a currency made by the infinitely wasteful PoW system to finance the power used to compute something useful. You might as well try to fly by pulling on the arms of your chair.
There is a small amount of industrial demand, but this is far too tiny to justify gold's gigantic market capitalization. Valued on industrial demand alone gold would maybe worth $100/oz, yet today it trades at $1700/oz. And it has held a lofty valuation more than half a century after all major economies abandoned any gold standard behind their fiat currencies.
The only possible explanation for gold's continued valuation is that it's quite possible for assets to exist as money-like stores of value without necessarily needing to possess a functioning role as a medium of exchange or unit of account. Moreover what we can see is that store of value assets are highly path-dependent. Rhodium has similar properties to gold, yet gold is far more widely used as a store of value. The sole explanation for this is because of gold's historical narrative.
That doesn't mean that gold isn't a viable medium of exchange - it obviously is, just go to a market of your choice and trade it for goods. In fact, it's the single most viable medium of exchange, globally, since currencies are tied to economies, and economies can crash. Gold can not, thus is it valuable.
A glance at the gold prices and economies of the 19th century show that in fact the gold price certainly can crash due to gold strikes.
In addition, the stock of the planet’s gold is negligible compared to the global economy (the hard to quantify set of transactions that people do with each other) so by definition can only operate at the margins. If the world crashes so far that gold is a meaningful proportion, will there be much to transact at all?
>If the world crashes so far that gold is a meaningful proportion, will there be much to transact at all?
This is where I start speculating, but couldn't we just create an arbitrary new currency and tie it to gold?
How is that different from using the gold? i.e. has the same limitations.
There are rational reasons for the gold standard having been dropped.
What do you think this means? Because gold is only worth what you can trade it for - the exchange rate.
It has no "inherent value" - you don't eat gold.
The thing about money is that it is a technology. But unlike other technologies, such as an electric toothbrush, for instance, it has an additional quirk: without belief, it doesn't work. Regardless of whether or not I believe in electricity, an electric tooth brush turns on and off; if the participants in an economy don't have faith in the economy, the economy falters. Money's value lies in this belief, whether it is the belief that I can buy groceries or pay taxes. It is a faith that is a function of utility: there is the interdependence of the gods' delivering and my belief that they will; should the gods not deliver sufficiently, my faith wavers; likewise, if enough of the faith of the masses wavers, the gods fail to deliver.
Gold is like an old god: its faith has a lot of coinage. However, its rule is not necessarily omnipresent.
Scenario: we are in a post-nuclear apocalypse. I have a small trading post and a can of beans; you have a solid gold coin. Challenge: convince me why I should take the coin.
Very nice point, you're not wrong. That being said:
>we are in a post-nuclear apocalypse. I have a small trading post and a can of beans; you have a solid gold coin. Challenge: convince me why I should take the coin.
Because it has properties that qualify it as a method of exchange (portability, provable chemical composition [...]) -- the same reasons it worked the first time. Mr Bean-Haggler, what else do you suggest we use for exchange? Mud? :-)
The reason I use the post-apocalyptic scenario is exactly because of this rupture of social relations. It is not the ghost of the previous civilization trying to reconstitute itself. It is a place in a wilderness onto which people might stumble. (Admittedly, this might not be communicated well and too informed by my early secondary consumption of old western movies.)
Without this broader social context, the concept of trade becomes purely localized. My needs are not serviced by an explicit diffuse network which is conceptualized as an aspect not just of society but constitutive of reality. Operating on a faith, we take the conceptualization as reality and can accept, in our lives now, intermediary exchange: I firmly believe that by accepting an electronic transfer to my bank, I will be able to buy sweet and salty food that is engineered to appeal to my dietary obsessions as bequeathed by a combination of evolution and social conditioning.
In the midst of such a thought experiment, however, I am not guaranteed to encounter another haggard individual in this hypothesized godforsaken world for a very long time. Neither am I guaranteed that any individual I meet will have such social relations as to value such an intermediary, either.
Intermediary exchange is only viable once the pool of social relations grows beyond a certain bounds.
The function of my acceptance of any system is the fulfillment of my needs, to some degree. In such a scenario, the only way those needs can be serviced is an equivalence of exchange. In this case, food is required for immediate survival, the tools of procuring such, and shelter, etc. Intermediaries, in such a scenario, provide no guarantee to provide such. So such must be acquired directly. I can eat beans. To take the gold assumes, incorrectly, I can obtain another can or equivalent. That incorrect assumption is a holdover from the fundamental and all-pervasive faith we are at present steeped in and that must be maintained for our reality to function.
Gold is transitorily convenient provided you exercise military force over a domain - that is you can force gold to be accepted for debts within your dominion. Nothing about it makes it intrinsically valuable otherwise - and more importantly you having gold doesn't grant you wealth because you didn't economically contribute to the system to start with.
Turning up with all the gold you want would get it rejected or siezed because it wasn't an approved coinage.
I unironically suggest having a box or two as a hedge, no associated weapon needed.
The reason people believe gold will retain meaningful value in a situation where nothing else does is thousands of years of history where it did work out like that. It's debatable (to say the least) whether Bitcoin with its mere twelve years of history and inherent dependency on easily disrupted digital networks could have the same properties.
Gold is conceptually very similar to bitcoin, except gold can't be forked or copied. Which is why in the long term, I prefer gold.
This is what gives Bitcoin much of its value as well.
> Gold is conceptually very similar to bitcoin, except gold can't be forked or copied
This touches on another thing that makes Bitcoin valuable - consensus. Enough people agree to use it that it becomes the defacto standard.
Bitcoin (and Ether to a lesser extent) are the “rough consensus and running code” of decentralized algorithmic money
The two points are related. It was much easier to synthesize Bitcoin when fewer people were using it, and it’s market value was less.
This auto-scaling of difficulty with interest/value was added as a security mechanism but actually plays a key monetary role as well.
Not really. You just need some way for nodes to communicate. That could happen over the Internet, or it could happen over mail, or it could happen over a team of ravens carrying transaction data on little scrolls (hell, given corvid intelligence, they might even be able to execute smart contracts in transit).
Practically, you are talking nonsense and it's patently impossible. You cannot run any crypto currency with a system of letters even if you're transporting them with the full infrastrcture of the modern world with it's airmail and diesel vans.
Try and do it with letters delivered on foot. It is actually impossible.
The existence of IP over Avian Carrier demonstrates otherwise. It's slow and it's lossy, but it's good enough for a blockchain.
The vast majority of gold investors are not physically storing it on their own property. Most invest through funds, derivatives, ETFs, etc. If civilization collapses to the point the Internet can no longer support a peer-to-peer network moving 1 MB every 10 minutes, then it's almost certainly the case that you won't be able to sell your GLD stock at NASDAQ.
The point being that while some gold investment demand may be as an armageddon hedge, the behavior of most investors is not consistent with that being the central driving factor. Ergo gold has utility as a store of value for macro conditions that fall short of civilization and the Internet collapses.
But also the premise of your argument (taxes and oil) is weak. The value of these transactions pales in comparison with the rest of the transactions. So government enforcement has little to do with the value of USD. It has value, because people believe it, they trust it will be accepted and / or easily converted to the currency of their choice.
D'you think it might have something to do with the state willing to violently require you accept its currency?
Trust is the key.
Back in medieval and later times, when states were much weaker than they are today, especially economically, and especially small states, people chose which currencies they trusted, and often ignored the coins their local state was minting in favor of other, more trust-worthy coins minted in other places. Those places had no direct power over the people using their currency, and these people were not paying any taxes to them - they were simply choosing a currency they knew was likely to keep its values over the years.
This does happen occasionally in the modern day, with USD-based economies outside the USA, typically in countries with runaway hyper-inflation in their local currency.
Bitcoin is a 0 calorie apple, today you can exchange it for 1 banana, people who hold it think tomorrow they'll be able to get 2 bananas for it.
At the end of the day we are biological entities, value is what survival and reproduction benefits we think something can provide, and if enough people are paying that price then its value is that price in dollars.
This matters. Even gold, at least I can wear it and display my wealth. You can’t even display your crypto wealth like that. It is entirely lacking in any “real” value.
Idea: luxury tshirt made out of a $5 white tee with a wallet QR code slapped on the front showing off the balance of the shirt. Or a ring. Crypto fine jewelry.
I'd feel much safer displaying large sums of wealth online by posting a wallet than by wearing luxury goods in public.
It's the web3 version - in web 2 I'd be instagramming my knockoff Rolex I bought in Tijuana
Would you show off real SOL tokens of that qty?
I wonder if there's an argument to be made that nothing is of any real value unless there's also some risk of losing it.
e.g. you drop your apple in a gutter, or someone takes it from you, or it turns out to have a nice fat worm inside it
Life, for example, is extremely valuable. Everyone loses it, but there’s no getting it back. If you lose the apple, you can probably get another relatively easily, unless we’re talking a post-apocalypse situation…
If you're looking for a commodity to have trade or exchange value, then it must be tradeable or exchangeable. That's the notion of "inalienable" as used in the US Declaration of Independence: rights which cannot be alienated (separated) from the individual posessing them. Life, liberty, happiness being the three used in that document.
This doesn't mean undeniable, and there might be some value which can be extracted through threats of denial: "your money or your life".
And there are aspects of value which can be exchanged though the good itself doesn't move: title, copyright, and patent rights might be three such of these. If I transer you land title, the land itself doesn't move, but the claim to usefruct from it does.
A hypothetically nontransferable, non-appropriable technical asset is still subject to claims if a superior right or denial of access to that asset may still be claimed.
And in general, a currency which is used to facilitate trade should in general be portable, readily recognisable, divisible, durable, and homogeneous, all attributes William Stanley Jevons proposed in 1875:
https://archive.org/details/moneyexchange00jevorich/page/30/...
(He also claimed money required intrinsic value, which appears to be an error. Rather, intrinsic value exchanges for trust within the financial system.)
That said, an interesting suggestion.
> Breathable air and drinkable water have the greatest real value of anything, but their marginal values are zero and near zero respectively for a number of reasons
Case in point. Sure, abundant now. But when they are not, which we know is actually happening, that “0 marginal value” will quickly become “whatever we can afford so we can survive”.
The original QE decision by the fed was taken during a meeting that has meeting notes that can be downloaded. I highly advise you to do so if you are under the illusion that the decision was made by highly competent experts basing their decisions on hard data and well-made, objective models.
I understand cash has this same issue. Assets do not - they provide an actual value to the physical world - which is what my point was in the above statement. A crypto t shirt can still provide value as a t shirt, regardless of the value of the coins it holds. I’ll admit it’s a reach, but just to illustrate the point.
What gives money its value? Well it depends on the money. Fraud, violence, trust, in the case of Bitcoin: cryptography and game theory.
Not quite - if someone, anyone, wants something that someone else has, they're prepared to buy it. That's the price. You might say tulips are valueless, but that wasn't the case when people wanted them - https://en.wikipedia.org/wiki/Tulip_mania
I'm sure everyone has said "I wouldn't pay X for Y", but someone has paid X for Y. X is the price.
As much as many on HN like to hate on crypto, people want to buy it, and people also want to sell it. That means there's a market and therefore a value to it for those people.
People don't want to sell it, they have to, in order to pay the electricity bills for the mining (in their countries normal currency, for that matter).
There is no inherent value - you can only sell if the exchanges find someone who is willing to buy.
The value to the seller is the Dollar/Euro they get at the exchange. The value for the buyer is speculation on the price, which someone else then has to pay at the exchange in normal currency. There is exactly zero value in crypto itself.
I choose not to. But other people do.
> Money has value because of the value of the economic transactions in which its conducted.
As the OP said, little pieces of paper have essentially no intrinsic value. But use it for transactions, and it has suddenly has a value forced on it. We've all seen zombie apocalypse films with cash blowing around in the street and the survivors ignoring it for good reason, no one _values_ it.
Bitcoin is the same, it's a bit of paper in the sense that it's just some numbers on disc somewhere with no _intrinsic_ value, yet as soon as it's a medium of exchange, _which it is_, it has value. There are transactions made in bitcoin.
There are many reasons to want something, but broadly you can argue that you either want something because you believe owning the thing will make your life better in some way (food, housing, transportation, ...); or you can want something because you think someone else will pay more for it later down the line, in which case the value of the thing is entirely speculative to you.
Some things are not entirely one or the other. People wanted tulips because they are pretty. Eventually they became a status symbol, demand grew faster than supply, and quickly people started buying tulips not because they wanted them, but because someone else might pay more later. So tulips became a speculative bubble, which eventually collapsed.
No direct analogy intended but it's an important historical fact. A lot of money was made on the South Seas as well.
The minute you offload any of that to other systems, you're essentially creating dark pools and money laundering opportunities because of differential oversight.
It's particularly funny, because I remember Justin Sun trying to scam people like this years before cryptocurrency had really taken off. Back then, though, everyone who had skin in the game actually cared about the health of the community, and the guy lost millions of dollars trying some really insane hostile takeover tactics. Nowadays though, nobody cares. The hucksters of this world make their money hand over fist now.
I can't say for sure without actually seeing the tech, but if a company promises to scale cryptocurrency transactions then they're probably doing it on an L2 chain. The problems with this are obvious: trusting a single party to handle all of your transactions and not abuse that insider info is crazy. These people are going to use their power over the chain to eke out every cent they can, otherwise it doesn't make financial sense to operate in the first place. It looks attractive from a VC standpoint, but that's because it's a deliberate honeypot.
You could look at L2s as a sort of credit card system, and from a systems and technology POV there’s nothing inherently “scammy” about it. For web3 applications of any meaningful large scale, L2 solutions are necessary.
For better or worse, the L2 developer platforms that I assume you’re referring to are essentially low-code solutions to abstract away the actual systems software engineering aspect of web3 development. Are the low-code SaaS companies overvalued or “scammy”? I’m not suggesting they are or are not.
Well-staffed tech companies building web3 applications often build their own implicit L2 solutions because it’s just how you connect things in a distributed system with modern L1 blockchain constraints.
Sure. The banks do the exact same thing, which is what makes them so goddamn profitable to run. The problem is that the entire cryptocurrency space now has to choose between two destinies:
a. Default on the trustless model in order to continue scaling, passing the actual verification process to private validators who may or may not be scamming you.
b. Let every token lose it's value, allow the system to suffocate and continue pushing for airtight security until the bitter end.
Now, neither of those are attractive choices. I'll tell you what, though: I'd rather have a $20 bill than $20,000 of Monopoly money.
All currencies we use are smoke and mirrors. The difference is that that $20 bill is backed by well armed US Marines and an crypto currency is not
Translation: we will rebuild existing financial institutions with a bunch of move-fast break-things poorly-regulated "difi" companies which will both intentionally and through ignorance recapitulate every flaw of the existing financial industry.
Purpose: as in the Celsius case, to intentionally exploit regulatory response time so as to extract money through opaque extra-legal and unethical exploits, intended to allow ourselves and chosen insiders to run off it, leaving deluded last-fools holding the bag.
There is literally no benefit to anyone except the VC backing the scam, who are using chaff and FOMO to farm rubes.
It doesn’t matter if it’s crypto or gold, there will always be people manipulating financial systems, but that doesn’t mean any system is inherently good or bad.
https://en.m.wikipedia.org/wiki/Financial_crisis_of_33
https://en.m.wikipedia.org/wiki/Financial_crisis_of_2007%E2%...
I actually agree with that about Bitcoin.
Web3 is generally done on EVM or cosmos chains, some of which are L2s (and some of which are loosely considered L2s). But most of them are still separate chains, so not L2s in the sense that the Lightning network is an L2. If you're looking at EVM chains, then L2s are certainly required to handle significant throughput, but the "lack of transparency" mentioned by GP isn't an issue with them.
Which is interesting for many applications but kind of kills BTC as something that could be an everyday currency.
I'm already uncomfortable with the amount of data my bank has about me. No matter what scheme has been used to obfuscate it, I'm not comfortable with that data being held by anyone with a hard drive and internet connection.
I don't get why this is a useful argument; BTC and/or Crypto is definitely going to evolve. The question is how.
Except who vets the smart contracts? How does the customer execute the transaction in a fool proof way?
In real life, the things we "Contracts" are not the the execution of the transaction itself, they are the written statement that attempts to describe the intent of the parties and most importantly -- what you do if things go wrong.
Despite what I've said above, I will definitely go full Luddite and say we are not remotely close to a world in which the lawyers are not needed.
"Building a house" is not a contract. It's an act.
They're NOT CONTRACTS. They're automated transaction robots.
I gave up telling people not to call cryptocurrency "crypto" — I would suggest suggesting a better term, or expect to be disappointed/it to continue.
Now, as a lawyer, I could just sit back and wait for the f**ups to happen and get paid cleaning them up -- and I might -- but also, I like the idea of warning people as well.
> This is true for all blockchain-based currencies, and it's fundamental to the technology. There is no "fix". It's not just a case of poorly written code or limited infrastructure, it's the core premise of the idea that's rotten.
You are very confident for someone who seemingly hasn't researched much about optimistic and zero knowledge rollups. These systems inherit the security of Ethereum while providing exponentially greater transaction throughout which means scale improves and these networks cannot steal your money or do anything nefarious.
Even setting aside the fact that you're wrong in practice (i.e. there are already far more efficient cryptocurrencies in existence today) it's just very weird that the sort of person who goes to a site like this will confidently say something that's roughly equivalent to "We've reached the maximum speed of CPUs, they cannot get faster than this."
To anyone who spent a few hours, days, weeks looking into crypto a few years ago and thinks you have any idea what's been going on in research in the field since then you're sorely mistaken.
DeFi may need to evolve, and it may need to do something other than blockchain - but something pre-product/market fit shouldn’t have a multi trillion dollar market cap.
The breaking of the gold standard has allowed the US government to extend its monetary base significantly, which is a price future generations (read: our generations) will be footing the bill for.
I'm a bitcoin maximalist, but I don't mind if all existing banks were to build a second layer that scales vastly, so long as I'm allowed to settle my bitcoin in their ecosystem with bitcoin on chain.
This is why second layer solutions are being built, which offer the option of settling on-chain at the user's request. Second layer systems allow you to transact within that system without needing to publish each transaction. Block space is valuable, and your 1c purchase probably isn't worth putting on everyone's hard disk for all eternity.
Bitcoin is actively managed to prevent bloat to keep it decentralized. A layered system allows you to scale massively, much like the OSI model used by the internet.
https://watcher.guru/news/morgan-stanley-says-bitcoin-lightn...
Suppose I want to buy something online using crypto. I buy up $X worth and transfer it to the vendor. They transfer whatever it was that they bought, but they immediately redeem the bitcoin for $X, give or take a small amount from market moves.
There’s no net demand for crypto here, and the increase in crypto price from my purchase will roughly be offset by their sale.
I think the only way to explain crypto prices is through buyers hoping that they’ll be used as a store of value. I don’t agree with that, but that’s a different story.
No current cryptocurrency that is even remotely decentralized, offers good throughput / scalability / tps.
Bitcoin has Lightning and it's in my opinion fundamentally flawed in its UX. It hasn't picked up much adoption after many years for what it's worth.
Ethereum has many L2 solutions in development but they are many years away from being finished (actually scalable, safe, decentralized)
I don't know much about other cryptocurrencies but from what I've seen they all are either very centralized or not scalable either (see the Blockchain Trillema)
I don’t have a horse in the race, just trying to understand.
Also, nobody quits MasterCard et al because it relies on the internet...the transactions are cached, and the few problems when things come back online are dealt with as a standard "doing business" item — everywhere from insurance agencies to corner stores.
The key to a cryptocurrency store can be memorized in your head. That means I can have 2mil in my head, with no other way to access it. I take it wherever I go, and can access it when there is internet. I can also send it to whoever I want, no limit.
This is literally a 1st. How high people value that, is not up to me alone. But you cannot deny that it has some value. And as long as it has some value, the above works. It basically bootstrapped itself. Claiming it has a value of 0 is very short sighted.
That is not true. The US isn't forcing anyone to use the dollar, e.g.: https://www.wsj.com/articles/saudi-arabia-considers-acceptin...
Saudi Arabia only get to price in Yuan, because the US can't afford to invade China. The unipolar world is fraying at the seams, and one wonders what will happen to the dollar when the US government can no longer lean on the petrodollar to enforce it's world reserve status.
Check Lyn Alden's piece on the history of the US Dollar as world reserve asset [0] for a vastly superior exposition of facts regarding this matter.
Would you say there is value in having the capability to transact with someone else? There is some value there, no matter how many alternatives and how little that value is. That value scales exponentially with the number of potential transactional partners because each additional partner gives all other partners a new potential transactional partner.
So at scale, even if the value of having the option to trade is minuscule, it balloons into real value when every single person on earth is a potential trade partner. That is the inherent value of a cryptocurrency network.
Likewise, that's the same market for any currency proposal -- including all the coins currently trading at 0 USD.
Money's job is not to have inherent use-value, as then people would use it up. Its value is relational, it tracks the economic exchanges with actual inherent value. But not perfectly, since you can eg., have hyperinflation, etc. So money has a life of its own above the economic transactions, but this is unsustainable, hence inflation which is "money falling back to earth".
There is no earth for crypto to fall to, ie., no place of actual economic productivity.
Facebook isn't valuable because anyone on Earth could use it. It is valuable because people do use it and its value has the network effects.
Coins trading at 0 USD have no users, thus their value is 0.
Money must have inherent value (at least the capability of being traded) for it to be money.
Well obviously, on the superficial level there's plain old greed.
But on a more existential level, bitcoiners are acknowledging that proof of work will lose to proof of lead, in any kind of direct confrontation.
So backing its security with math isn't enough, coiners want it backed with armed force. like fiat.
With Bitcoin’s hash rate at an all time high, it’s more secure than ever - can we say it’s the most secure system in the world?
Of course the tradeoff for BTC is like insane consumption of power (currently Argentina size).
With BTC, I don’t think the use case will ever be to handle small sums of money. Transaction speed and fees don’t make sense for it.
Even if Bitcoin was primarily transferred between custodians between clients, it would still be better than USD (assuming a stable market cap) and give clients far more options while also forcing banks to disclose reserves.
Then you moved the goal post. If Bitcoin is pointless because it has no use case, you would have started with that point and not been drawn into critiquing an aspect reliant on the assumption it is useful.
Higher velocity of money would lead to zero value? That's not commonly what basic economy dictates.
This being 2022, let's try to keep our concepts clear as to not rehash the debate from ten years ago. BTC is a currency, a blockchain, a programmable transaction language, a piece of software, and a protocol. It is good to suggest which one of these we imagine in use, and how that use is done.
Otherwise we risk saying that imagine if the physical $100 bill was used for all McDonald's transactions, clearly that wouldn't work, they are too hard to subdivide and even if they weren't there simply aren't enough of them, and therefore it is unusable as a currency.
Clearly McDonald's couldn't operate each and every economical transaction by settling them publicly on the BTC block chain, that much is obvious. But just as clearly there's nothing stopping Visa from denominating transactions in BTC, or utilizing that type of transactions internally, or utilizing the public Lightning network, or whatever it is McDonald's use in El Salvador. That much we probably agree on so let's leave that discussion in the past decade.
I think you missed his actual point, which to be fair wasn't explicitly stated and I don't think is widely known. The bitcoin network can not handle large transaction volumes, like at all- its absurdly low. Somewhere around 10/second is where I understood it to stand, and I recall reading a paper that talked about changes that could theoretically get that to 40/s. A quick googling on the state of the art of this has it reporting 7/second: https://www.google.com/search?q=max+transactions+per+second+...
I know this because this came up around 2016ish during one of the booms, and while I was previously crypto-curious and even a bit enthusiastic about the possibilities, once I saw that, I immediately lost all interest and got out. Other coins like Bitcoin Cash tried to address this, but the numbers were still absurdly low for what was supposed to be a completely decentralized currency to replace all others. Which is actually why Coinbase, FTX and the like rose so quickly and became so important- they enable transfers off chain.
Companies like McDonalds operate on credit via privately owned payment rails because ACH and cash are way too slow. Even when it takes cash that cash is not physically shipped to a bank vault at McDonalds HQ but instead local restaurants make cash drops to other private companies, banks, that then take possession of the cash and use their own private network to credit a remote account.
Even tax payment portals allow use of the payment rails of private companies because paper USD is too impractical.
Still, the fixed supply of federal reserve issued USD is what all these magic third party payment rails create an abstracion layer for.
No one Bitcoin advocate that knows how it works is saying Bitcoin will be used -directly- for daily commerce. Even in El Salvador venmo-like apps have emerged that batch Bitcoin transactions and use credit, much like Visa does to abstract slow ACH or cash.
These proprietary credit systems defeat a lot of the point of Bitcoin though, so open off-chain credit systems like Lightning exist. My local Coffee shop accepts Lightning which in short allows us to just continually cancel and re-issue signed Bitcoin transactions off-chain we never publish until one of us needs to settle which in some cases could be years, and that is fine.
Unlike Visa, the benefits of credit solutions like Lightning are available to all replacing KYC and credit checks with cryptography.
Also going back to your point about taxes, several states have serious efforts to get Bitcoin permitted for tax payment: https://www.deseret.com/2022/2/8/22918061/wyoming-arizona-bi...
I see a lot of clearly incorrect information being displayed here about l2 such as Lightning Network, and at odds with reality. I'm not addressing the posts but it seems lately HN comments have nearly become a pile-on of misinformation bike-shedding about Bitcoin and in the face of reality, these folks want to spread outright lies and falsities. You may not own Bitcoin and you may not like it, but it's going far when hundreds of comments are so boldly misleading. For folks who are into science and technology, and some who are hackers, the ethos doesn't check out spreading misinformation about energy usage, centralization, and fairness of the system. When I was growing up, hacking was all about freedom to explore, libertarian bent, and/or anarchy.
The cypherpunk movement from which Bitcoin sprang was very libertarian or even one could say classical liberal. This article attempts numerous times to, for some reason, compare libertarianism to communism which is quite absurd. Libertarianism is for as little system of government as necessary, for staunch individual liberty and property rights, and hands-off free market economies. Clearly, communism is for state controlled property and no individual rights, one-world state, and no individual rights at all. Communism seeks to replace free-market economies with everyone equal and no individual rights. It's absurd on it's face to even compare libertarianism to communism when they're at opposite poles. At any rate, I would hope people don't take all these fear-mongering anti-crypto articles just at face value and do some research into what crap they're reading.
There's something else El Salvador has too. Two really fast ACH networks. The fastest one can do inter-bank transactions in seconds during banking hours. And a second slower one that takes about 15 minutes but covers more banks and is available every day of the year. Payments cards are slower though, they usually take between 2 to 5 days to clear.
Further, I've heard people emphasise crypto as being useful for things such as smart contracts and dApps. Even with a Lower transaction value, one could still theoretically do some higher value transactions with crypto.
I am not endorsing this argument, but I have heard of it.
That said, I think Adam (the original article) is closer to being right.
He doesn't even get into the thing that originally made me incredibly excited about the potential of blockchain tech—the way it lets one create a new sort of custom and irrevocable 'physics' for information and incentives. But the same irrevocability is now what makes me deeply concerned. If we get something wrong, it may be impossible to change, unlike normal human systems. It's like building Facebook, except the original design might be at least partially locked in functionally forever—and so issues created by naive founders can never be resolved and may warp our political and economic systems.
I have also generally found that crypto/blockchain/web3 doesn't address the problems its adherents say it can solve ( https://aviv.medium.com/the-magical-decentralization-fallacy... ), particularly changing power structures to get to a better world. Trying to find alternative solutions to address the power issues around centralized platforms is what eventually led me down a very different path ( to http://platformdemocracy.com/ ).
> If we get something wrong, it may be impossible to change, unlike normal human systems.
It's not far fetched that blockchains will change as humans adapt to new challenges. An example is already happening: Eth is transitioning from PoW to PoS and moving to a layer two centric ecosystem to meet block space demand.
There are real concerns with adding functionality on top of the blockchain without understanding its immutability - like the ridiculous suggestion of putting twitter or a period tracking app on-chain.
> the people en masse, should they choose to actually understand and use the decentralized blockchain
I used to work for financial traders. Our company was essentially the same as the companies of professional gamblers. We knew we were playing zero-sum games. Our goal was to create asymmetries in information and skill such that we got the money that other people were putting in. In the markets we played in, the opposition was mostly other well-funded players. But you can bet that there are well-funded groups with snowdrifts of math PhDs who are happy to take money from "the people en masse" that decide to trade in the markets.
Those people already exist in the non-blockchain financial economy. From predatory lenders to fake health care plans [1] to ponzi schemers, frauds, and grifters. What mainly keeps them in check is regulation, not regular people "choosing to actually understand". Because what distinguishes "the people en masse" from the people who prey on them is that the predators can devote all their time and attention to one particular hustle, while "the people en masse" have to defend against every hustle, while trying to be good at their jobs, take care of their families, and live their lives.
So the hustlers are always going to be one step ahead from regular folk. Doubly so in an unregulated, rapidly evolving space with metastasizing complexity like you see in the cryptocurrency/ico/nft/defi/web3/wft space.
[1] https://www.nytimes.com/2020/01/02/health/christian-health-c...
I don’t disagree. This is always going to be the case in any global market with information asymmetries - grandma’s investments are not going to do as well as a hedge fund with a team of 50.*
The difference is: the people entering CeFi are having access to their funds revoked, and a counterparty failing to repay debts while fleeing to Dubai. while the people entering DeFi have not had access to their funds affected, and are not worrying about counterparty risk.
This is why it is a shift in power - the users retain control of their funds and leveraged positions, as opposed to placing that power entirely in the hands of tradfi and CeFi companies.
* ironically a lot of big players like 3AC are getting wiped out too, so it isn’t always true
Strange hang-up to have. Irrevocability is not a trait that is fundamental to blockchain applications.
If the application is smart-contract based, irrevocability is a choice at the source code level. Just because one transaction in a block is irrevocable doesn't mean that another transaction in a future block can't undo whatever arbitrary state change was committed in the first. It depends entirely on what you make possible in the contract code.
Neither does the claim hold water for L1s that are the application (e.g. Bitcoin, Monero, etc.). If the entire Bitcoin core development team turned rogue, social consensus from the broader Bitcoin community would soon establish a new canonical chain. Hard forks can be and have been used. This is blockchain 101. Cryptographic and economic guarantees are not fundamental; the social layer is.
Regular economics uses the same dirty trick when it talks about value creation rather than wealth-weighted value creation. It stuffs all its dirty laundry in that one weight term and then "forgets" to talk about it. Oops!
Case in point, the Hive hard fork.
One very prominent and widely unliked individual purchased majority ownership of the STEEM token. Weighted by wealth, they could now control the chain, its governance, and most notably unlock tokens (20% of the supply) that were (per social consensus between Steem and its community) not supposed to be unlocked.
So, what did the Steem community do in response? They hard forked the platform, launching Hive. All STEEM holders could migrate their assets to Hive, except the individual in question who attempted to takeover Steem via wealth. The malicious elite was cut off entirely. Today, two years on, Hive is still gaining in activity and has more than twice the market cap of STEEM. Comparatively, Steem has become a ghost town.
I would argue that this trait is not unique to blockchain systems -- in fact, if you presented this argument without context, I doubt many readers would put blockchain in the top 5 potential referents. See: economic systems, political power struggles, social structures, etc.
Satoshi thought bailouts were the problem, but concentrated power was the problem. The libertarian "cure" of stronger property rights only exacerbates power concentration because concentrated power is in the best position to exploit stronger property rights. Cue exponential growth.
It's likely that you aren't considering this possibility because, of course, the average token contract does not do this. It would be a significant trust violation if a contract controller circumnavigated the need for signature checking or allowance setting in order to perform arbitrary token transfers. That does *not* mean the possibility for it to be done does not exist.
At the end of the day, token balances are just key-values in the contract storage, and how those values are changed is enforced at the contract code level. That code can say whatever its controller wants it to say, and if they deploy with the ability to update, they can alter the code as necessary in the future. Token contracts are extremely simply, easy to audit, and so are seldom deployed to be updateable.
To summarize, "irrevocable outcome" is not a fundamental trait of a smart contract application. It is a choice at the code level, with tradeoffs, which can be adapted to suit the application.
But what if that system is now affecting many other people, or the entire planet in a significant way? Should they have some voice over that?
Under a traditional governance regime the answer is that that is at least possible to change. It may be difficult, but it does not violate the laws of physics and can happen in less time than the heat death of the universe. But we can now write software that makes it functionally impossible for anyone to make that choice, even potentially the original designers. That is an option that we did not have before. It's in some sense the essence of trustlessness.
In some cases, this might be the right trade-off. For example, beyond the blockchain, this is also a way to think about encrypted communications. It is a very significant new power that we can now wield.
But it must be wielded carefully, and that doesn't seem to be happening.
So yes, blockchain applications don't need to be irrevocable. But the ability to make them so is something that could have a very significant implications—potentially negative.
As a somewhat tongue in cheek example, but with a little bit too much reality to be comfortable, this irrevocability might allow you to "create" a paperclip maximizer DAO (incentivized at the social layer, with humans doing the work).
This is an important point you are making. What you must recognize is that they absolutely can have some voice over that.
Just as we can write software (or smart contracts) that allow no one to update and fix such issues. We can write software that allows one person to do it. Or we can lock the ability behind a multisig, requiring a majority of the software's developers to do so. Still not good enough for the use case due to far-reaching trust ramifications? Then we write code that delegates the ability to trigger such an update to the entire userbase of the application.
In the world of contract platforms, you have to keep in mind that contracts and the tools that you can build with them are primitives. They are composable. There is no problem in building a DAO to control the ability to update a contract (or trigger arbitrary functions to remedy critical situations caused by unexpected and undesired state changes). This is already done in practice in various applications--and sometimes with undesirable outcomes! Of course, these are still experimental times and lessons are still being learned.
The difference is in the authority of who gets to reverse transactions. For example, Tether can freeze and generally arbitrarily control USDT token. USDT therefore isn't really a cryptocurrency, since now a central authority can seize it. It seems to me that this authority undermines why one might want to use crypto in the first place. I don't think you can have it both ways.
The point is that you can have it any way you like it. There are no hard and fast rules like "irrevocability" as described above.
You can have a contract be not updateable, final, and verify its source code to know there are no malicious functions. Or you can have one that is updateable by its developer. Or one that is updateable by an elected authority. Or updateable by a DAO of the contract's users. There's no single way to do it or perfect solution.
Like most software development, it is the understanding of application requirements and selection of tradeoffs.
To be clear, the process that I am describing there is not some newfangled idea that I just dreamed up. It's something that has been used by France, Ireland, South Korea, even the EU as whole, is likely to be institutionalized as part of the governance of these organizations. It's just fairly new so not that many people have heard about it.
Anarcho =/= "centralized authority is corrupt and evil"
He has redefined anarchism (no authority) to suit his needs and attached the negative connotation in his defining characteristics.
The paradigm, which he has missed, is that the blockchain IS the "state". The authority of the system is derived from its working mechanism and therefore does not require outside governance.
Citing oppososition from leftist progressives as surprising....? The group that demands the most compliance to ideaology and greatest support for expanding federal government? This isn't difficult mental exercise or requiring some contortion to find plausible. Their opinion is the obvious conclusion.
I find here further evidence that VC is a bunch of wealthy hacks hiring their smart friends to wax knowledgeable to the rest of us, lower cretins.
In that cash-based society, the government had no real idea how much cash I owned. I also had full freedom of transaction. Somehow taxes still got paid and crime wasn't really worse.
Apparently, this is now a far right position.
If a world where this is fixed invokes your phobia, good luck to you. Dare the Govt actually ask you for your money (instead of stealing it) for funding a war and we'll see how many wars we fight.
"Everyone being free to invest" is a bit of an elitist claim, as most in the US live paycheck to paycheck and are hurt by inflation. Cost of ownership of houses skyrocketing over decades, and CPI being oriented around very basic goods points to inflation being hidden away.
The US is incapable of paying their debt and must continue funding the economy via more QE. Other nations have moved to their currencies to trade with each other (Euro, Ruble, Yuan etc). This game won't last forever.
[1]: https://bitcoinmagazine.com/culture/how-the-fed-hides-costs-...
Inflation has also been <2% for decades in the Euro area, Switzerland, and other jurisdictions.
> most in the US live paycheck to paycheck and are hurt by inflation.
If you live pay check to pay check, you don't care about inflation. You care about real wages.
Europe is interesting in that certain parts of the Euro zone run high deficits and need bailouts while some of the others are disciplined. I don't have a clear theory for why inflation in Europe has been stagnant all along.
[1]: https://ecommerceinstitut.de/bitcoin-wealth-is-becoming-more....
I find it very strange because I feel like we've been able to do project out to "better working technology" quite well in the past. Supply and demand, y'all. Will at least some people have a use case for crypto? Yes. Can we use the example of bitcoin and other crypto's to relatively safely assume that in the future, there will be a cryptocurrency that more-or-less does what it says on the tin? I think it's silly not to.
START from that point in your discussions, because it's probably coming.
Every new crypto project claims to be the second coming. There are no stable heuristics which don't get exploited by the next wave of marketing. The only way to make good bets in crypto is to deeply understand what teams are working on and make intelligent judgements.
What broad crypto skeptics don't understand is that every alt-coiner shares their critical point of view, but has the know-how to attempt (or pretend to attempt) a solution to those problems.
(I fully understand why one would absolutely not believe his motives given his appearance, but I'd encourage people to consider it anyway. I actually believe him and am throwing some money in his projects. THAT BEING SAID, I am NOT putting any money in crypto that I can't stand to lose and I personally do not believe anyone should)
Clearly there's much more to it. For example, cryptocurrencies with those two properties you mentioned are a dime a dozen. I could make one right now by git cloning bitcoin, changing some properties, then running it. And in practice there are thousands with high volume exchange-value. Digital currencies, when combined with ubiquitous exchanges, have such substitutability that I'm not sure there's much of a "network effect" or "lock in", when it's so easy to swap and pay with any of them. "value decided by the market" might be flimsy in this case.
What do you think Bitcoin is about?
> For example, cryptocurrencies with those two properties you mentioned are a dime a dozen.
I don't think so. Only one project have remained unchanged since its inception.
The only thing it does have going for it is a perfect pump and dump economics. Crypto "believers" are really only truly believing in this ponzi scheme economics, which is a shame since they'd make more money by using real financial instruments. If crypto was really so good, we shouldn't have to worry about "investing" in it, we'd all just buy some to use it for day to day transactions. Which categorically is not viable at all any time soon.
Moving to crypto or gold after it falls is much too late as your holdings would lose its value, but that's up to you. I can't say what would be used in such a case, but if countries with failing currencies are an example, they moved to buying USD, Bitcoin etc. Ultimately, you move to the best alternative and in the case of fiat, BTC imo is the one but who knows. I don't think you can just create a new blockchain and expect it to all work out after the fact :)
I would still say based on the practicality if you look at any cryptocurrency it would falter under the load of transactions as large as the whole US for example. So it's a bit early to bet the farm on any one of them. Also if a govt will support cryptocurrency they will create their own one so they can profit off their own ponzi, so to speak. They wouldn't be in favor of enriching Bitcoin whales just to take advantage of the 1s and 0s previously established in the btc Blockchain
Lightning network on Bitcoin already supports a higher throughput than visa
I don't argue that blockchain tech will keep improving. I just say if it's going to be a currency of the future why do we have to spend money on it now? Won't we be able to create parallel blockchains to increase token supply? It's not an intrinsically valued asset, like buying a stock (which some have returned more money than speculative bitcoin purchasing). Why should the bitcoin believers tell everybody to buy it if there's nobody accepting it for payments?
Re: parallel Blockchain- there are thousands of Bitcoin copycats since 2011. They're either dead or dying. See the top ten list on coinmarketcap over time. Point is that value will accumulate on what everybody agrees on and there's no way somebody's CrapCoin where they own 60% of tokens and dump it on the market will gain traction with it's inherent risks (security, centralization, lack of differentiation etc).
Bitcoiners themselves don't spend using Bitcoin yet but this change is happening as more and more people believe in it as something that holds value and isn't going to 0. It'll take time and I have patience.
I’d be impressed if more than a thousand people who owned Bitcoin a decade ago still own the same bitcoins.
My thesis looking at the volume and prices during the pandemic is that most people who own Bitcoin still despite the price increases are underwater.
You can’t tell how many buyers are underwater from the average buying price being higher than currently price, but it does tell you that a lot of people is currently losing money with Bitcoin.
[0] https://m.investing.com/news/stock-market-news/survey-showed...
1) Cryptocurrency transactions cost less than the cost of electricity: a market will form farming the price discrepancy between electricity and coins (solarpunk?)
2) Cryptocurrency transactions cost more than the cost of electricity: a market will form to compensate miners for the extra electricity (money laundering? what goes here?)
If mining costs keep getting more expensive, eventually the network will be so throttled that it will petrify. Also I feel like the cost of mining tied (or passed) the cost of coins a few years ago. So I don't understand why anyone would want to be a miner now. Which suggests a hidden incentive to be a miner.
I stumbled onto this article from 2017 when BitCoin was close to the $20,000 it is today, and it cost about $3,000 to mine a BitCoin in Louisiana, maybe not counting hardware cost?
https://www.marketwatch.com/story/in-one-chart-heres-how-muc...
Bitcoin fees have nothing to do with the price or the cost of mining; fees are basically proportional to (transaction throughput demand) / (fixed transaction throughput supply).
I've seen various reports saying the cost to mine 1 BTC is between $8,000 and $13,000 so miners are still profitable. Note that mining ASICs have increased their efficiency since 2017 but difficulty has also increased.
I think it is vaguely accurate to say that fees and mining costs are linked, *however*, currently the coinbase block reward is a bigger deal. Example: most recent block https://www.blockchain.com/btc/block/743055 created 6.25 bitcoin out of thin air, plus 0.186 bitcoin from all its fees. In the future, when fees make up a larger share of this, miners will indeed start to get income from fees. Then, we will see an interesting dynamic where automatic difficulty adjustments and competition between miners entering and exiting the market will result in miners electricity costs aligning with bitcoin transaction fees. In other words, every unit of value that goes into a bitcoin transaction will result in that much value being spent by a miner on their electricity bill.
But your point is good - miners are not really in a traditional supply/demand relationship with transactors, because block space is perfectly inelastic. There will be 7 slots per second (amortized), no matter what. Although... a petulant miner could artificially restrict this supply, by perhaps declaring that they'll never mine a transaction that pays less than X fee. This would only apply to the blocks that they mine, but the effect on overall supply could be nontrivial?
Nope. State's fiat powers come from its monopoly on violence.
Completely opaque and corrupt states have fiat currencies too. Many thriving ones. The only reason people use these fiat currencies is because not doing so invites violence from the state - imprisonment and fines at best, actual physical violence at worst.
Really? because the price/value flutuates too much? How is storing 1B dollars in gold lower maintenance than storing 1B dollars in BTC or other high-liquidity crypto?
Bitcoin owners have a lot of cheap security options based on their spending habits risk model.
I simpathyze with positions close to that.
I do not understand what is harmful about trying to be free and not surveilled. Harmful for whom? For the people who wish to keep social control, smash you with taxes and do intervention and cheat, like the inflation we are suffering now in Europe bc someone decided to print money willy-nilly? Who benefited from this printing of money? The SAME people who printed it. Who pays? Yes you guessed right... normal citizens. I firmly believe we have the right to protect ourselves from abuses like these.
On top of that the ONLY purpose of the European Central Bank is to keep inflation under 2%... Come on... who can believe these people anymore... I do not. Even the same people responsible for it (Draghi and Lagarde among others) are still there as if nothing had happened.
I'm still optimistic because I think that the current way the world runs is not going to work in the long run. Something radical has to change or we will destroy the planet. I don't know if Bitcoin will play a role in this and if it's going to be positive or negative but things need to change.
I have two specific points in the articles that didn't make sense.
1. Bitcoin whales can only affect the price of Bitcoin. They have no power over Bitcoin itself.
2. The article also makes the point that Bitcoin is weakening local currencies (fiat) which doesn't make sense since inflation is mostly driven by money printing and other economic factors.
This article makes a fairly strong case that authoritarian politics could readily mix with the economics feeding on each other in an unstoppable vicious circle that eventually leads to financial and societal cataclysm.
https://www.investopedia.com/terms/d/dutch_tulip_bulb_market...
How Crypto comes out on the other end remains to be seen, but there can probably be some technologies that can be salvaged in legal and shipping contracts, for sure. As far as digital currency and items goes, in games and life, that remains to be seen... proof of work currency will probably die, if I had to guess though.
Never say never. Greed and speculation have a long and robust history. This crypto speculation and greed reminds of of the price of tulips. [1] During that craze a single tulip bulb could purchase a mansion.
[1] https://www.investopedia.com/terms/d/dutch_tulip_bulb_market...
Fun fact, bitcoin client had a poker lobby in it, and it was announced mere weeks after Liberty Reserve court ruling jailing its founder for 20 to life for money laundering.
Individual or groups behind bitcoin were watching that Liberty Reserve trial very very closely and e-gold/liberty reserve was very popular amongst the online poker industry ;)
There's many more interesting facts you can discover but I won't spoil them.
https://www.smithsonianmag.com/history/there-never-was-real-...
In the link I posted is this gem: "Peter Garber in the 1980s published an academic article on the Tulipmania. First, he notes that tulips are not alone in their meteoric rise: 'a small quantity of ... lily bulbs recently was sold for 1 million guilders ($480,000 at 1987 exchange rates),' demonstrating that even in the modern world, flowers can command extremely high prices."
I wasn't making a point about the degree of societal collapse from tulip mania. I made the point that there is a long history of greed and speculation.
Crypto doesn't have any underlying value. It's just greater fool investing, there is no underlying cashflow, asset or company. Future cash flow comes from greater fools buying in.
When you say "the internet" I think you mean the wave of web1 companies? Same as flowers above, there are real uses and value creation, which can be priced in many ways.
If you were a middle age farmer, sure you might like to look at or smell a flower but you would be crazy to say stop growing wheat and plant tulips. But as society advances markets can emerge to serve needs of people that were not possible before.
I agree crypto tokens is just speculative investing. But that doesn't imply that the value doesn't stick-- it doesn't have to either collapse to zero or go up forever. Monetary premium is a real thing and necessary for humans to transact. You can't predict what money we will use in the future.
>10 accounts own 88% of Binance Coin
Correlating addresses to people like this is such a rookie mistake in a world with CEXes and smart contracts, why the hell is this person being taken seriously?
In the current financial system i give you ALL of my info and hope you don't rob me blind.
In crypto i sent you money.
Small distinction, but one that will be increasingly more important as we modernize.
I participate in 30 different defi pools across tons of different protocols, have money in various excahnges, run like 10 different nodes on Eth, BTC, Sol, Filecoin, etc.
I was lucky enough to get into crypto in 2014 and treated it like a game. Started mining from my gaming rig and have been addicted since. I haven't put any money into the ecosystem besides harware (My filecoin node as $12k, gaming rig is $25k, bought 2 helios miners, bought some NGX chips for ZK's, etc.)
I used to love runescape. I would love waking up, checking my flips in the grand exchange, running dailys like farming and checking my ales, etc. As i got older, i discovered blockchain has similiar mechanics. Now it's one of my favorite things in the world to check the various defi pools available, read about different projects, leveraged trading, 'daily's and is just a distraction from my real life. work.
So in short, crypto is a game. As long as people keep taking it too seriously, they will lose the game.
>giving the info to centralised entity like a bank is bad?
Well my first and prime example would be to talk to any greek citizen during 2008. The goverment took a percent of all the citizens money to pay their debts. Countless credit card scams have happened because i am trusting all of my data on the cybersecurity of (Upwork, linkedin, outlook, google, tinder, etc. etc.) as you go down the list of entities with your full name, address, & credit card information you start to realize that you have lost control of your financial self-sovernty.
I've played this game with my friends and it's a fun one; Give me your full name and i can buy your information on the darknet, including current/ past credit card info, Social Security number, past addresses, past-employers, tax information, etc.
Why does having a huge public web of transactions on the slowest ledger ever created help? What happens to your "sovereignty" when everyone can see your purchases patterns? What happens when grandma loses her wallet key?
re: Greece, worth hearing Yanis Varoufakis on crypto: https://www.youtube.com/watch?v=bS0W-Whl0T0
top comment: "How fantastic to let this man expose how incredibly dangerous governments are, without him even realizing [he's] doing it."
Also, the entire time he seems to conflate crypto with CBDC which are nothing alike.
>what's the problem? On the few times I've lost money to online fraud, the bank returned it to me.
How is that not a problem?! I really don't understand this sentiment. There is hundreds of millions of fraud occuring on these systems that employ thousands of people for flagging, eliminating, and reimbursing people due to it being a fundamentlly flawed system. Pull vs. Push here is an important distinction. Having a public private key, even within the current financial system (Not talking crypto here) would be an order of magnitude improvement and would eliminate all of this.
History shows systems rarely 'change'. More likely than not they are replaces. That's what BTC is an attempt at.
Both the crypto skeptics and the crypto maximalists screaming about their very utopian and absolute ideas are both going to be very disappointed once crypto regulations come around the corner.
Nearly all crypto does indeed concentrate wealth onto early adopters, by emitting the majority of supply in the first few years (or even all at launch).
But fixing the block subsidy avoids such concentration, leaving most supply to later generations, much like gold.
Such a purely linear emission deters speculation while encouraging use as a currency.
What if, instead of creating inflation by adding new coins, you create "inflation" by directly decreasing the value of transaction outputs, and you just keep the coinbase reward constant?
Depending on the model, you could make it so that outputs eventually go to zero, so they won't need to be recorded on the ledger forever. The old outputs just get garbage-collected.
This is called demurrage and it's been discussed a few times. People find it very confusing when their wallet balance magically goes down but they find it less confusing when their balance stays constant but prices increase.
https://www.bvp.com/atlas/the-antidote-to-cryptophobia
Now, tell me what to take as a direction? How contradicting views will spoil one's own thought process!!
- "The future I fear is one with a new anarcho-libertarian power structure that lacks transparency, accountability, and is the antithesis of democracy."
- "I truly trust that my government is capable to govern and have my best interests in mind"
Because I know I am stuck in between the two extremes. Crypto is just a way to hedge the possibility the 2nd one goes rogue.
But the crazy part is, yes I am aware of all the points in the article above, but that's exactly why I do crypto.
This article is soooo good I will give it to my peers every time they ask me "why crypto"
Furthermore, the article makes a lot of assumptions. "Crypto presents anarcho-libertarians with an escape hatch that seemingly puts one’s no wealth, data, and resources beyond the reach of the state or a corporation". On paper this sounds plausible, but in reality (by using an exchange for example) bigger whales can be better identified.
To be clear, I own crypto, because I like the technology. Off-course it would be impossible to create a society where I make my (untraceable) money by working and spent this money in buying a house or car. You need some form of control, so you can't go around robbing people and using that stolen money to fund your lifestyle.
But the big problem BTC tackles is that the money I make is not influenced by printing more, thus making it less valuable. Maybe the whole world should go back to the gold standard and keep the amount of money going around the same.
This comment is fueled by the prejudice that people just tend to speak about history without knowing it that well to prove a point. I might be wrong.
Umm, shades of the Iraqi Information Minister in that statement. Take a look at the USD/Bitcoin chart for the last 12 months.
That's the money quote (around which most of the article revolves), and my response to it is simple:
I love watching privileged people squirm.
Anarchism (and more broadly libertarianism) is the realization of transparency, accountability, and democracy to their greatest extremes - even (hell, especially) when those extremes conflict with the capitalist status quo. The author, being "one of the top investors in Israel", has a vested interest in convincing the rest of us otherwise, such that we continue to buy into the legacy financial system that's actively failing (if not outright exploiting) people even in developed economies, let alone developing ones. He half-heartedly tries to address this in the postscript...
> I know crypto has been helpful for remittances, refugees, dissidents and even non-profits, but that has very little to do with the trillion-dollar crypto economy that has emerged.
...but he's flat wrong here, too. Cryptocurrency's usefulness for remittances, refugees, dissidents, and non-profits is exactly why that trillion dollar industry emerged in the first place, and the fact that it's leaving rich and powerful people like him shaking in their boots is the best advertising said industry could ever hope to get.
"A feudal system in which the masses are duped into farming the lands of their crypto overlords."
Sounds quite a lot like our current system, but I digress. This fearful scenario requires the so-called hyperbitcoinization scenario where all of the world's wealth will be absorbed by Bitcoin (or other crypto). A market cap of 100T or more.
Which will never happen. It's easily suppressed by regulation. Most of the current elite won't allow it, and the people themselves, whom are already in the mood for protests, surely aren't going to sit by and end up dirt poor because they missed crypto.
As for crypto being libertarian, not really. Most are in it because it's a "number go up" technology, in good times that is. There's a small minority of loud mouths whom see it as a religion, but the vast majority are pragmatists, or plain gamblers.
Even if you consider the die-hard position, the so-called "anarcho libertarian", the author makes it out to be as if they are the devil themselves. All they say is that money should have controlled inflation and that there's freedom of transaction. I guess that's an extreme right wing position now? How very scary. It's pretty much how the 80s cash-based society was, except for the inflation part.
The biggest gap in these kind of "crypto scary" articles is that they fail to sympathize with the root cause. There's claims like "well, our current system may not be perfect, but at least it's democratic and accountable".
That sounds nice, but it doesn't mean anything. Young people experience one financial hardship after the other and grow up living in a monetary and economic system that is plain broken.
Where exactly can you "vote" on the 2008 crash, aggressive monetary expansion, zero interest rates on savings, 10% inflation? None of these things are democratic, they are hollow words.
Does crypto solve these problems? Probably not, but the above backdrop explains the appeal. In a system that doesn't work at all, why not throw the little you have in crypto? There's the potential to win big, and if instead you lose it all...it wasn't that much to begin with anyway.
If we'd have a sound monetary and economical system, that ensures a middle class existence and reasonable wealth for all, one that doesn't boom and bust all the time, one that preserves purchase power and savings, one that enables upwards mobility and the building up of assets, if we'd have all of that and in a stable sense...yes, then crypto has no use case or appeal. But we don't have any of that.
Own the failing of the current system. The status quo is completely broken.
But yeah, we need to give people alternatives to being poor forever or winning the lottery.
Libertarian, if words are to mean things, is roughly the view that the initiation of force should be extremely strictly limited. This includes the idea of small government since government has a legal monopoly on the initiation of force, but it also includes an aversion to private initiation of force including everything from riots and gang violence to... scams.
Scams and fraud count because any understanding of what force means that is not paper-thin includes the idea that deception and even perhaps some "dark pattern" style attacks on human cognition constitute force. Force is anything that attempts to contravene the independent will of another human being. That can be done by whacking someone on the head, pointing a gun at them, or gaslighting and lying to them to the point that their judgement is deeply impaired. In standard issue "pure" libertarian theory the only justification for force is in response to its use, but since scams and fraud are force there is justification for someone (usually a minimal rights-protecting government) to intervene.
One of my central problems with crypto is that it's not what it claims to be at all. There are many ways crypto isn't what it claims to be including being a bad currency and a bad inflation hedge, but it's also not what it politically claims to be.
Crypto is neither "libertarian" (rights-respecting) nor truly decentralized.
It's not a rights-respecting libertarian thing because it's absolutely lousy with scams and fraud of virtually every imaginable kind. It's not truly decentralized because proof of work tends toward centralization due to industrial economies of scale and proof of stake tends toward centralization due to its structural biasing of the system toward intense levels of wealth concentration. With either PoW or PoS you eventually end up with closed syndicates more or less owning the currency. Then you have cryptocurrencies with actual companies behind them or de-facto rulers like Ethereum.
With those factors leading to centralization and with scams and fraud and all kinds of opaque intermediaries popping up what you end up with is something far less transparent and honest than a central bank. All the criticisms of central banking apply, but more so.
Gold is decentralized because it's just matter and anyone can hold it without asking anyone's permission. Honestly even paper money, while "fiat," is more decentralized in that exchange is completely permissionless.
So while there are valid criticisms of libertarianism, it's not the problem. It's much, much worse than that. Crypto as presently organized and operated is a full-on scam, period. It's not what it claims to be.
The libertarians and decentralization advocates are among the marks in this scam.
I find this definition of force somewhat counter to most libertarian positions I've seen. When it comes to employer/employee relationships, what is the need to eat other than "pointing a gun at [the employee]"? Under this definition of force, how can employees ever enter into contractual agreements with employers freely? Especially at bottom of the labor ladder, where the struggle to meet basic needs is more acute.
Global finance is a big deal, to put it mildly.
Crypto is a flea on the ass of the foreign exchange market (which it superficially resembles), which is a bacterium on the ass of the derivatives market.
It’s. Just. Not. That big of a deal.
There’s been a lot of scams, some serious people here and there are doing real work in the space (don’t argue with me: take it up with Liskov and Waddler).
But if we put the wisdom of crowds on a forum like this to work on the dog wagging the tail with the flea on it, it would be a potentially useful discussion.
Le sigh.
Yup. Total crypto market cap is less than a couple of large S&P 500 companies. The SNR is just so insane in that community that it seems like a bigger deal than it is.
The energy cost is debatable (energy displacement is complex), the ASICs used to mine BTC are keeping someone’s Verilog sharp, and scams? There are 17 payday loan places in a 3 mile radius of my house, not counting pawn shops.
This is not enlightened humanitarianism.
Everyone on here knows an annoying asshole who rubs it in everyone’s face that they’re generationally wealthy over a speculative bet in 2015.
I fucking hate intellectual dishonesty. Especially from smart people.
There are trailing indicators and leading indicators. The fact that something like Dogecoin can be invented as a joke (according to its investors) and be said to have a market cap of over $8 billion is an indicator - that's 8 "unicorns". Bitcoin's market cap is over $350 billion. You are right that it has to be seen in the context of global finance, but other parts of global finance were bubbly at the end of last year, and if there's confusion over that, Dogecoin's 8 billion dollar market cap is an indicator, even if eight billion dollar is not that much in the context of global finance.
Anyone who talks about market price action in the short/medium-term a priori doesn’t have alpha. People with Alpha trade it.
That is why I only use Bitcoin.
Bitcoin, not crypto.
Bitcoins secondary value is appreciation, which depends on the primary value, plus a transient state where the public becomes aware of this new value at a pace that outstrips new BC generation.
Bitcoin's tertiary value is marketplace/exchange operation, which depends on both primary and secondary values.
But all of it rests on forbidden market access. The cost is considerable: a very high rate of consumption of both (dirty) energy and chip manufacturing capacity. There is also the cost of participation risk in totally unregulated markets, costs which have no upper bound.
So, fuck Bitcoin. Use cash.