The Meaning of Bitcoin
maraoz.com
maraoz.com
Crypto people tend to have an infinite dose of "f** you got mine" even if they didn't get theirs.
I don’t know though how sound this argument really is as I don’t see what value bitcoin has outside its monetary worth.
Can you really use this stuff? Not really. At best is a difficult to scale — if at all — database for transactions.
Though similar things could be said about paper money as well — that it is nothing but the agreed upon value — but at least that can exchange hands far more easily in a much more scalable and flexible manner.
if the seller is happy at the price they are selling at and the buyer is happy at the price they are buying at, where does the "someone had to lose a dollar" come from?
if the seller sold to the buyer, then it went up, the only "dollars lost" would be hypothetical opportunity cost had the seller decided to hold instead.
am i missing something?
"Yep, for every person who gains a dollar someone had to lose a dollar. No value was created."
right or wrong?
For investments of which the only purpose is to make more money, right.
Of course it's not that black and white, since every investment technically has at least two utility purposes: 1) hedging 2) emotional utility (the false hope of getting rich).
Inconsistent rewards foster addictive patterns like nothing else.
I personally have only Bitcoin and some small amount of ETH. I don't consider myself a gambler and think that these smaller cryptocurrencies are very far away from Bitcoin, which is very stable and safe these days as the toolset is quite developed.
That comes from the hope of recovering their loss one day and dumping the bags on somebody else.
Things which other people seem to readily accept, such as ATM's having limits, the nature of card payments being inherently asymmetric, the middlemen, "know your customer", etc.
All of that stuff just seems insane to me. It's as if someone were standing at my door, telling me that I can't take more than seven items out of my house per day, asking me why I'm moving furniture around, etc.
If you're happy with that stuff, great, stick with it. I'm not.
It is not and never was about "getting rich". That's the side effect of the utility of the system.
I’m sure there’s a niche somewhere. But when you say “pretty popular payment option”, it sounds like it’s a rival to Visa and Mastercard, and that prices would be listed in crypto instead of euro. That’s absolutely not true.
Re: Nigeria, anecdotally my few friends from the country tell me that the crypto boom is primarily about local influencers promoting their own coins as investments, not actual payments.
You can transfer cash in person by handing someone coins or notes. It might be illegal in some jurisdictions to do that for high amounts or certain items, but it is at least physically possible i.e. permissionless.
Bitcoin is that, but online.
The regulations you are describing affect what are essentially financial institutions operating on top of the system.
The act of sending Bitcoin is permissionless by design.
That's it, that's all it is. Nothing more, nothing less.
You can’t drive at 100mph on the wrong side of the road. You can’t mess with the plumbing and electricity in ways that would affect the grid, even if you do it on your own property.
There are of course places in the world that are so empty or so undeveloped that you can make your own rules off-grid. But most people don’t want that because it’s a lot of work and means you’re largely disconnected from others. Bitcoin as a currency has the same problem.
It works. What's the problem?
Are you saying that me merely using Bitcoin endangers others and is akin to driving into oncoming traffic?
edit: Sure, driving into oncoming traffic is bad. So let's criminalize and punish that, rather than banning vehicles because I could drive on the pavement and cause havoc.
The problem with crypto is where it interacts with the financial system. The exchanges are hives of scum and villainy. Criminals use it for money laundering and ransomware. That’s the part where you do need to follow the existing rules and laws, whether you like them or not.
I feel like a steelman argument for Bitcoin specifically is somewhat easier to make than one for NFTs or quasi-investment share tokens, in that it’s at least not a transparent Ponzi scheme by its issuers (one might argue it is one by its current holders, though).
The problems of Bitcoin are largely different to those of stablecoins, NFTs etc.
> one might argue [bitcoin] is [a Ponzi scheme] by its current holders
Going on Twitter and saying "buy BTC!" isn't a Ponzi scheme...
I agree that problems of Bitcoin are different from other neighboring technologies, people lump them into one and tend to use the same arguments (energy usage, scams, ponzi schemes, illegitimate, crime only use case, etc.).
This article at least starts to make the argument of why something like Bitcoin is needed and how it solves real world problems.
The article contains no real information, in fact can't even support its own title because apparently stablecoins are more attractive to those living in high inflation environments than Bitcoin.
The reader is left with no more information about "The Meaning of Bitcoin" than they entered with. No attempt is made to inform the reader about how cryptocurrency solves inflation or any of the other proposed issues with centrally-controlled currencies, besides reminding the reader that "stablecoins" exist. Well "stable" is in the name so it must be true, right? End article.
> In December 2001, Argentine President Fernando de la Rua imposed an ATM withdrawal limit of $250 per week.
> I sometimes read from people in developed countries, offended by bitcoin’s carbon emissions or by the huge amount of scams in the crypto space. ... To really get crypto, you have to have been fucked by some third party with power over your money. Be it a government, a bank, a business, or an ex-employer, it will come.
The idea that an overreaching authoritarian government will just sit there scratching their heads and admit defeat to a decentralized database if they truly perceived crypto as a threat is hilarious.
See also: https://world.hey.com/dhh/i-was-wrong-we-need-crypto-587ccb0... for a strong case of why it's important for universal human rights.
Aside from the obvious ease with which a government can undermine the network, it's participants, and so on -- there is also the lack of incentive for anyone not ideologically committed to interpreting a blockchain as currency, to do so.
A database, of any type, is just a set of numbers. The meaning of those numbers is a social and institutional practice. Contracts enforcing that meaning is a legal and political one.
This article displays the same extraordinary naivety of tech libertarians that I'd assumed had now past. Money is a social institution. Social institutions will not be replaced by anyone's preferred system of rules.
This is a common flaw in all utopian thinking, that necessarily and forever, all people will have more incentive to listen to them and follow their rules, than to ignore them or kill them. There is no evidence for the former, and daily mountains of evidence of the latter.
The final incentive to accept the dollar is the threat to your life, and all people you'd conspire with, to undermine it. This is the only known solution to forming stable contracts and society-wide reliable institutions.
You can't pay your taxes in Bitcoin: you can only use Bitcoin to buy enough local currency to pay your taxes from someone else who has some. Which they get from the state.
While the endpoint of this is jail and the monopoly on violence of government, it's also just regular economic reality: you can't buy something if you don't have anything the seller will accept. And the government doesn't accept Bitcoin.
1. "Bitcoin is inevitable" and governments will be forced to buy it as "digital gold" to prevent a collapse of the world financial system.
2. Governments are already sneakily stockpiling BTC as insurance against a collapse of the world financial system.
What you can't handwave way is: in your utopia, why does everyone have more of an incentive to buy-into your system than to ignore it or destroy it?
This is the fundamental question of all national social institutions. A distributed database is so far away from answering the problem that it comes across, at best, as childlike.
No utopian projects can answer this question, and utopians in my experience, hate it: the communitists as much as the libertairian objectivists. They are all committed to a theory of sin in which we live in a fallen world because people do not behave the right way, and if we just programmed to them to behave that way, all our problems would be solved. Neither care to note how radically different their opponents programs are.
Ironically, of course, the utopian is the problem that they are trying to solve: a person with a Mission to divest from The Existing Social Order, and found a new one. The very existence of people with this mindset demonstrates that some people will prefer to destroy an order than to participate in it -- if they could. They are each trying to forment The Final Civil War.
Thankfully many, but not all, countries today have got out of this doom-loop.
They will put you in jail; withdraw your business licence and suspend your limited liability; deny your bankruptcy claims; tax you into oblivion; and so on. The state has every incentive to destroy a private currency, or a private army, or a private police force.
The only reasons states have take some interest in bitcoin and the like is that they aren't currencies. If there was any viable way of making ordinary daily economic transactions in BTC, it wouldnt exist. Inside the crypto system, "coins" are mere tokens with basically no ability to be traded for any goods or services. To buy anything you need to exist the system into an actual currency. So long as that latter step is required, BTC/etc. isnt a political project in the sense of this article.
"Money" isn't much more than a veil over the good-and-services of a society, an approximate quantitative measure of their marginal value. Governments require control over the money supply to manage this activity (eg., in pandemics) so they can, eg., prevent a widespread economic depression by temporarily exploiting inefficiencies the gap between the notional-and-actual value of money, giving people lots of it. Woe betide anyone who sells cars in BTC when there's a war on; you'll be in prision as a traitor.
My point was that during any major event in which the state requires control over the money supply, people making any meaningful difference to that control, won't be free to do so. In order to conduct a modern war, all states need to place large parts of their economies on a war-footing and requisition industries for defence (eg., iirc, 40% of the UA economy is now on defence).
Since BTC isnt a currency, trading with it has little impact on any state; it might as well be old bottles of wine. If it were to ever gain this status, and companies during a war were meaningfully offering their services in it, that would severly interfere with a state's ability to operate.
This just won't happen. It's absurd even to imagine it. If the libertarian problem with the state is how it uses its overwhelming legal, political, social etc. power to mismanage and economy and force people into capital controls etc... it's the dumbest thing in the world to suppose that by having people install a database, you've somehow undermined the state's ability to act.
I don't see how currency is similar to an army or police force, could you elaborate?
Libertarians assume that if there's no democratic control over the currency, somehow, Reality, will make everything turn out ok. Well we tried that for a very long time, and it was a disaster. Every crisis is much worse if you cannot control the money supply.
In any case, no modern state would ever give this up. Its vital for their being able to deliver policies that people want, and to managing times of crisis.
Could someone explain this to me — I thought that loans on cryptocurrency platforms had to be collateralized by cryptocurrency? How could someone buy a house with a crypto loan if they didn’t already have enough to buy one in the first place?
Anytime you engage in any transaction using bitcoin, the other party must necessarily know your wallet number. Then the other party can easily check every single transaction made with that wallet for the history of bitcoin, and can do additional checks in the future. Of course you can get a new wallet, but moving the money from the old wallet to the new wallet will also appear for everyone to see.
Thus any government agent, creditor or ordinary stalker can figure out a way to sell you something or buy something from you using bitcoin, and voila they have your entire financial history.
The writer of the original article is being dangerously misleading when he implies bitcoin is anonymous. There are people languishing in jails right now because they thought bitcoin was anonymous.
“ A world where no government or politician can change the rules one random day. A world where financial innovation moves at the pace of programmers, not legislators.”
The attitude I see a lot (mostly by Americans and Western Europeans) is that "Crypto is not useful to me, therefor it is not useful to anyone" - forgetting that it's a global network open to everyone and anyone. And that other countries exist that are difficult places to live at times.
If your government is going as far to prevent you to own USD, they aren't going to view cryptocurrencies any more favorably anyways.
Instead of dollar bills for peso bills you exchange a crypto transaction for peso bills.
Circumventing policies of a government deemed defective can help on the short terms and narrow perspective, but it won’t fix the fundamental issue.
Currency, be it banker’s bill, digital crytowhatever, are just a marginal side apparatus here.
I’m not an Economist, and I have no idea of what Fernando de la Rua had as insight of outcomes for his decisions. What should have the government tried to stop a precipitating bank run? Would a world where everywhere would follow maraoz economical wishes be a better necessarily a better one?
Exactly this. People in these countries really don't know the problems from the rest of the world.
When an international fintech player get into market (TransferWise, PayPal, etc) they always optimize the experience for users from the US and western EU first. I doubt many people know you can't send money to Ukraine via Paypal unless you mark the transaction as "for Friends or Family", which means you lose all the customer protection. Paypal is worse than crypto in almost every aspect in this case.
It is a possibility. The US's debt payments are a similar order of magnitude to their military spending and there is not really a scenario where the principle will get paid back in real terms. And the US's net international investment position is eyewatering. It isn't obvious that the money was well spent in the negative interest rate years, although maybe there has been a lot of capital formation in the US that flew under my radar it is early days yet of positive interest rates.
We're also probing at a big war and there are real questions over what the US will do to USD holdings in the event that risk materialises. We all see what is happening to Russia's assets.
It isn't particularly obvious that the USD is a safer currency in the abstract than the Argentine Peso. Certainly as a foreigner it looks a bit risky. It might also become unreliable for internal use, the debt situation or a political blow up are both ways it could go bad. The situation is something of a spectacle.
The killer app will be the day Putin offers oil for BTC. When nations conduct business on crypto, then sanctions mean next to nothing and will cost real blood and treasure to enforce.
I mean, I wouldn’t be surprised that some people in HN would find that making cannibalism illegal is an outrageous restriction of their holy personal freedom. I would find it surprising that it would not shape a clear anti-cannibalism consensus.
Now of course cryptocurrency is nothing close to cannibalism, of course.
"Bitcoin is awesome!" article concluded by, "my friends in Argentina save in stablecoins". Wait, why don't they use Bitcoin if it's so great?
>Lucky for them, bitcoin will always be there, waiting with open arms… immutable, unwavering, eternal, unbiased, welcoming, and untamed.
It will be hilarious when they see what happens to transaction fees and/or network hash distribution as mining rewards dry up. Or maybe they ignore that because the vast majority of Bitcoin changes hands off-chain through exchanges. Which makes:
>To really get crypto, you have to have been fucked by some third party with power over your money. Be it a government, a bank, a business, or an ex-employer, it will come.
Quite ironic because most activity in crypto is being facilitated through 3rd parties, and even if one uses an offline wallet the vast majority are using exchanges to cash in/out as needed. I'd wager a bet that more people have been screwed over by some crypto entity than their government or banks.
But yeah, Bitcoin/crypto is great as long as the wash trading, price-pumping sham can continue and "number goes up." Good thing all the cryptobros price things in their local currencies and not BTC! Hmm something about inflation again...