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(learning to ignore these people was the most financially rewarding thing I've done in my life)
By transaction costs I not only mean the fees you pay to the miners by the way. Every time there is deflation, there is an opportunity transaction cost made up by the difference in price between the forward pulled transaction and the change in price due to deflation of the reverse transaction that would happen in the future. (Assuming equilibrium of sales and purchases over a lifetime).
Companies must source inputs ahead of time, so they are spending money first and earning it later. In other words, they must sell low and buy high. Any enterprise must overcome the hurdle rate imposed by deflation induced transaction costs. This is why deflation kills an economy. The easiest way to reduce transaction costs is by not producing anything and that is why the Bitcoin economy has remained small.
I know crypto has a lot of scam baggage and that is unavoidable for a permissionless system, I think. Regardless, the idea that you can wrest away the levers and dials of monetary policy away from world powers and put it in the hands of a permissionless system is a powerful and potentially system-altering one. I have been a fan of cryptocurrency for this reason since well before people were writing news articles about them.
I think the phenomenal success of crypto to this point is a strong indicator that you might be wrong, or at least not totally right
Being resistant to scams is one of the key features of modern finance. The joke that cryptocurrencies continue to rediscover the history of finance is not just a joke, it is the reality.
So many of the things that the crypto world complains about with fiat currency are actually things that allow the whole system to function well, and came about to combat scams and frauds that people don't want.
People don't want a Wild West economy.
Not to sound nitpicky but an idea cant dis-/proof anything.
Trust is the only foundation of cryptocurrencies, and your argument is a good example of biased reasoning to coat it with such (i guess you still hodl). The volatility of cryptocurrencies will be their downfall aka. loss of trust in the long term because people already have the expectation of rising value, whereas a stable currency would require a roughly 1:1 exchange, which would make it hot garbage for pretty much all the hypsters. They value hodling and not circulation, which is the primary use case of a currency.
My argument is a systemic one. I am not pointing to graphs or big players.
Bitcoin is a token that represents an amount of wasted electricity. It has no value other than the intrinsic ones people place on it, like a currency. We can decide that bitcoin is worthless tomorrow and it would be. If you do the same for dollars, you have the US military to answer to...
It's really more civilian law enforcement that maintains the value of the dollar and blocks alternative currencies from widespread adoption. If you incur a tax liability to the US government then you have to settle the debt using dollars: they won't take gold or Bitcoin or cattle. And if you fail to pay then eventually they'll use violence (or the threat thereof) to seize your assets.
Not in Mesoamerican civilizations (Aztec, Mayans). Also not for the Chinese, who used silver for currency (and gold for ceremonial purposes).
Around the Mediterranean, gold became a currency 'only' around 500BC with the Lydians—which is a very long time after the first economic records we have, which take back to Ur III, the Babylonians (Hammurabi), Ancient Egypt.
https://en.wikipedia.org/wiki/Debasement as an example of what happens when gold ends up a currency.
The debasement is an inevitable fact that those metaphorical doors are closing and opening over time. In fact, the impression that gold bugs give is that the government and general public should force all those doors to stay open at great expense, while they do nothing as if laziness was a virtue that demands compensation.
Finally, someone who understands money. As opposed to the typical "but my military!", as if no country with a strong military had ever had its currency fail...
I would only emphasize the importance of the scarcity aspect of money, which seems to be a (purposely) forgotten lesson nowadays. It reminds me of the historical importance of the Spanish Price Revolution, which with its 1.2% yearly inflation, nowadays it would be considered laughable.
Has there been a widely accepted currency (true currency) that hasn't had military might behind it? Has there been a dramatic military failure that hasn't been followed by currency decline?
Military, state and currency are all interlinked on a pretty deep level.
Yes, even today, for example, Costa Rica has no military yet they have their own currency. Its Central Bank manipulates its value by buying and selling the currency in the free market, which is what many countries do nowadays (although not always by the same mechanisms).
> Has there been a dramatic military failure that hasn't been followed by currency decline?
Yes, unless by "dramatic military failure" you mean having their economy destroyed, at which point of course the currency fails, but that's because economy destruction leads to currency failure regardless of any military defeats.
However, the better question is: has any country with a strong military ever had its currency fail without any military defeat?
And the answer is yes, plenty, which proves that having a strong military has nothing to do with having a stable currency.
Let's say your currency starts to fail (say, due to hyperinflation)... what is the government going to do with the military to prevent the collapse? Order them to intimidate the market?! That's a completely ridiculous proposition...
"China has spearheaded record levels of central bank purchases of gold globally in the first nine months of the year, as countries seek to hedge against inflation and reduce their reliance on the dollar.
Central banks have bought 800 tonnes in the first nine months of the year, up 14 per cent year-on-year, according to a report by the World Gold Council, an industry group."
https://www.ft.com/content/abc39431-1755-4906-b11e-ee9e53baa...
If I am dealing in X I don't buy more X incase X's value decreases
The parent comment is correct, gold hasn't been a standard for a long time to base the value of currency on. It is simply a commodity with a relatively stable value up until now.
The only thing currency value is based on is how much people are willing to pay for it and as correlation to that how many people are willing to accept it as payment.
I invite you to walk into your local grocery store and attempt to pay in anything other than your local currency, you will fins out just how worthless that is as a currency.
So for me, a non-US citizen who isn't doing any dealing with people willing to accept dollars, dollars are as much a currency as pet rocks are. They can be converted into currency but they are not currency. Gold holds the same property although I would much rather hold gold than US dollars and that is where your quote on central banks come in.
I'm much more likely to get the same amouny of currency from gold than from US dollars on the future should I choose to sell it.
Did Rai stones have a meaningful military and economy behind them?
* https://en.wikipedia.org/wiki/Rai_stones
Or various sea shells?
* https://en.wikipedia.org/wiki/Shell_money
The earliest recorded economies (e.g. Ur III) ran on credit:
* https://www.sfu.ca/~poitras/jesho_UR_14.pdf
The blockchain doesn't protect jack shit. if someone wants to take out key infrastructural concentrations it's the police forces of the respective territories these mining farms are located in that are going to guarantee the actual security for the protocol.
The great irony here is that this very protocol or, rather the people who promote it, are doing so specifically to undermine the stability of the economies they depend on for their project's physical security.
It's amazing that these self- dealing sociopaths have made it as far as they have.
Could you please list the countries that are moving to bitcoin, as you say?
1. https://en.wikipedia.org/wiki/Legality_of_cryptocurrency_by_...
I'm not against the idea of a fully-digital currency, even a crypto-currency, but Bitcoin is never going to be viable.
I have doubts about the "bitcoin is better commodity money" idea myself, but they have more to do with the fact that Bitcoin is probably quite easy to kill at superpower scale and less to do with the idea that we will never see commodity money ever again.
2. Attack the blockchain itself. It can stand bozo-scale hacks, but NSA scale? They control the internet backbone. They can just drop the packets. They have hardware backdoors all over the place and have been known to successfully hack completely airgapped setups. Maybe they even bring clever math/chips to the fight. That's more speculative than necessary, but again, not actually very speculative next to their historical accomplishments.
3. Deploy police to server room. Or special ops, if they played the non-extradition-country game correctly.
We aren't talking about Goldfinger levels of infrastructure. No secret island nuclear program is necessary... but even if it were, remember that superpowers are absolutely capable of that sort of thing.
Government officials that seek crypto bans end up with conflicts of interest. This is a recurring theme across the various countries that have announced such things. They don't deploy the secret taxpayer dollars to combat it, because they quickly get an angry phone call from a so-and-so on the inside.
The superpower system works within an imaginary of imperial expansion, where everyone's motives converge on putting more assets on their balance sheet even if it means lying about how the books got that way. During the rise of the modern nations that meant supporting a stronger state and a bigger bureaucracy. If we define the quality of the accounting at scale as the goal, then blockchains are just a next progression in technology. That's still compatible with governance and power-seeking, it just changes the landscape of power in a way that shifts around the motives. The number of middlemen involved isn't zero, it doesn't stop corrupt dealing, but it has some substance, particularly in the largest scale of international finance, where you really can't "look to an authority".
It's not common for a superpower to deploy its strength. Most of the time you would be right to laugh off the suggestion that it would. Most issues are pretty minor on this scale and internet tough guy rhetoric tends to overestimate the importance of every stupid thing. However, the BTC maximalist scenario is not minor on this scale. It's up there with oil. If it comes for the USD, there will be a fight.
I would bet on BTC today (and have). I would not bet on it to win this fight.
There, done.
The blockchain is secured by proof of work, but proof of work is secured by proof of lead.
As an example in support of "this piece isn't about payment systems" bit, the piece doesn't seem to mention things like credit-cards either... but that doesn't imply the author is an credit-card hater ideologue.