Bring crypto back to currency
rohan.ga
rohan.ga
https://docs.google.com/document/d/1iUscaSy6HHLVz2e2rjQfQtx5...
There are some good reasons why global-consensus cryptocurrencies can't generally be used as money:
https://perry.kundert.ca/range/finance/holochain-consistency...
That is actually a little like how US money used to work--badly--before the civil war. A storekeeper would keep a third-party guide behind the counter, regularly published for their city or region. The guide would help them recognize the designs of private notes from different banks, and contain recommendations for what value (if any) someone could place on the note depending on the reputation of the bank and how far away they'd have to go to the nearest branch.
"It costs $3? Okay, here's a $5 from the Far South Bank."
"That's a long ways from here in Middleville, traveler, I'll take it as $4."
"If you can give me $2 from Extreme North Bank for change, then I'll take the deal. Otherwise $1 for something local isn't as useful for me since I'm leaving tomorrow."
"Sorry, today I can only make change in local stuff or Eastern Railroad."
You can always exchange every cryptocurrency for every other cryptocurrency, 24/7, without having to ask any bankster or do-gooder bureaucrat for permission.
Once wealth-backed dynamic-issuance cryptocurrencies eliminate the need for any Fiat on- or off-ramps, the circuit will be closed -- nobody will ever have to ask a gate-keeper for permission to create wealth, monetize that wealth, or execute a mutually agreeable transaction with that money.
Nor will they be forced to use sub-standard money.
The existing power structures will be ... displeased.
a basket of basic, thickly traded commodities should be chosen; perhaps a basket of specific amounts of basic elements, thermal and electrical energy, and basic food commodities, priced as delivered to several large markets.
A control algorithm such as the PID loop used in process control or robotics is employed to adjust K over time.
Ultimately money is a social construct based merely on shared belief. Algorithms can used to enhance and support this social construct, but I do not see how it could wholly replace human/social interventions.
The thing about non-fraudulent, wealth-backed money is that there is no barrier to entry, nor is there a barrier to exit. Unlike usury-based money, a wealth-backed currency can cleanly decrease in usage, down to zero. People withdraw wealth pledged to created the money, by returning the amount of money created, and then take their wealth elsewhere.
Thus, if people don't like the valuations arrived at by the "basket" underlying the value of each unit of money (ie. something becomes undesirably in/deflationary), they can move to another form of money -- ideally, one that constitutes its "basket" based on a more representative set of the society's basic commodities. In the ideal embodiment, this basket would evolve over time (eg. as energy production moves from coal to oil to natural gas to nuclear to renewables over the years, for example, the energy commodity component of the basket would be revised automatically).
As for the PID loop, there are much more advanced controls methodologies that improve error rejection (eg. Kalman filtering), stability (Model Predictive or State Space control), etc. Furthermore, limits on the introduction (or withdrawal) of wealth (and hence newly created units of money) should reflect the current size of the ecosystem to limit shocks that would adversely interfere with the control stability. (ie. you can't create 10x the current size of the economy in newly issued money all at once.)
They just want a medium of exchange that changes value slowly enough that they can be reasonably sure they know what the currency is worth. If cryptocurrency somehow replaces fiat money, people will turn to financial companies and pay an extra fee so that they bring back the advantages of the fiat money.
99.9% of users will just appreciate the fact that their money retains its purchasing power (as measured in civilization supporting commodities), across multiple generations. Not just for a few years; their grandkids will be able to purchase the same amount of "stuff" with it).
Those that want to create wealth and then monetize that wealth to (for example) purchase property or businesses will appreciate the non-corruptible value management features.
I don't see how cryptocurrency enables this, because I don't think this is the result of currency being fiat. I think it's a result of currency being a token of wealth rather than wealth itself.
> will appreciate the non-corruptible value management features.
I can't comment on this because I'm not really sure what you mean by it
If it's cheaper to mine, it won't be more profitable. See dogecoin. It'll create more token and at a decreased value.
I can't believe people are still falling for this ponzi scheme
What the author is describing here, a trusted group of institutions that buy and sell currency to maintain an inflation target is called a 'central bank'. Or in this case, a bunch of central banks. In fact even the proposal to automate and do this algorithmically goes back to Friedman.
(Theorizing about cryptocurrency is fun as long as you ignore how actually-existing crypto, like actually-existing communism, is working out in the real world. Although that doesn't mean all the underlying principles are wrong...)
the idea is old but gains new life to the rise of defi.
I always liked this idea, and I a few cryptocurrencies/blockchains tried to do something like it, including Stellar Lumens[1]. Just looked it up to post this and they abandoned it back in 2019.
Unlike the tokens of other blockchains, lumens aren’t mined or awarded by the protocol over time. Instead, 100 billion lumens were created when the Stellar network went live, and for the first 5 or so years of Stellar’s existence, the supply of lumens also increased by 1% annually, by design.
That inflation mechanism was ended by community vote in October 2019. And in November 2019, the overall lumen supply was reduced. Now there are about 50 billion lumens, total, in existence, and no more lumens will be created.
I'm no economist, but inflation should reflect an increse in growth and productivity. The fact that these coins don't tend to consistently devalue might say something about how useful they are for doing the job of a real currency.
An increase in growth and productivity should reflect deflation: more goods and services with the same amount of currency. Absent intervention, inflation simply does not happen as a long-term secular trend in a growing economy.
As mentioned in another thread, pre-modern US had growth rates higher than the modern US (~4%) with an immaterially changed CPI over a ~130 year period. This was with two punctuated sessions of central banks and wars which issued debt notes (currency).
In addition: it should be noted that Japan has had a deflationary currency for 30 years and is an economic dynamo. The only problematic aspect of that—which can be seen in the BOJ's recent ill-fated attempt to increase the interest rate—is it makes government debt (and all debt) harder to pay back. However the point remains: deflation has had an immaterial effect on standard of living.
This 2-4% number has no fundamental basis, Ampleforth is the only cryptocurrency that seems to solve this basic concept of how much supply and how to distribute it
https://satoshi.nakamotoinstitute.org/posts/p2pfoundation/3/
This fundamentally misunderstands the point of Bitcoin's creation (and currency). The ideal currency does not inflate at all, which makes it inimical to government spending and debt. As modern fiat is inherently based upon debt, this makes it non-ideal from the perspective of governments, but ideal for everyone else.
Inflation to drive monetary velocity is a ridiculous concept, as is inflation. Inflation is scarcity of goods purchased in the present relative to money supply: fewer goods and services at the expense of more currency. People want goods and services, not currency.
During multiple periods of US history—including much of the 1789-1913 era—the US paid out no interest on US bonds, as the value was in its safety, and the value of the dollar was worth more at its redemption. More goods and services relative to the comparatively smaller increase in currency made savers wealthy without investment. Outside of wars, pre-modern US had a deflationary currency in its run up to becoming the pre-eminent power on the planet.
Let me stop you right there. You may want that, but that's just, like, your opinion man. Most people, like 99% of people, do not want hard money and the tradeoffs it entails.
The problem with the idea of inflation (read: "scarcity") to drive monetary velocity is it messes with investment. There is no shortage of people wanting to invest capital for increased returns in the future. But if you force consumption without a plan, you're consuming in the present for the sake of it.
A farmer can plant seeds and return an investment on that, or you can eat your seed crop. Forced inflation is forced returns in the present for lower returns in the future. Due to prices functioning as a regression between the exchange of goods and services, this one-to-one mapping is not as obvious, but it is definitively what happens.
You cannot consume what you do not produce. And investment requires deferred consumption. Forced monetary velocity is forced consumption at the expense of investment.
That means it doesn't matter if you happened to have most of your economic assets in cash, or in potatoes, or in uranium ore, or in a house, etc. It means that there's no weird externality which is tipping the scales or "choosing" winners and losers.
Slight inflation isn't better than perfect balance, it's just a reluctant compromise, since it's the safer direction in which to fall when dealing with an unstable equilibrium.
While a constant 1-2% inflation may be ideal for fiat currency, I think a cryptocurrency should have the simplest and fairest possible emission model of a fixed yearly supply. This gives an inflation rate after n years of 1/n, making the currency disinflationary. While it takes 50 years to get inflation down to 2% this avoids the wealth concentration seen in nearly all existing cryptocurrencies that vastly tip the emission to the first few years.
Like it or not, there are already a TON of experiments that are far smarter than this one in operation now, on e.g. Ethereum.
The "Number-go-up" cult is run by Blocksteam and Co. and has little to do with actual cryptocurrencies.
Goods would be less sats over time.
Inflation is bad for everyone apart for the people who print the money, hence the mess we're in.
Is a ridiculously wrong assumption to make.
Bitcoin is open source, fork it with your preferred settings and convince others to join your network.
Bitcoin maximalists claim tail emission will never happen, but that’s just an opinion.
The author has clearly never read Adam Smith.
First side note, Proof-of-work isn't dead, but it should be. Proof-of-stake is vastly superior (return isn't based on how much electricity you burn, but by putting up risked collateral and running that)
So, Hex. You stake/invest/lock up your coins for a fixed period of time, and the system gives you more back at the end of the term at a fixed percentage; like how so many financial products are supposed to work.
And even better, all "penalties" (e.g. you end stake too early or late) go back to the "on-time" stakers as a bonus.
(yeah, the founders a weirdo but what can you do)
Richard Heart has been charged by the SEC for the usual crypto scam stuff and spent many months dodging subpoenas.
Charges and subpoenas need their day in court of course but it reads like the quintessential crypto story of embezzlement, fraud, etc for a guy to flash Veblen goods on social media.
Obviously I'm not guaranteeing anything, but I find his IRL strategies more interesting and compelling than any theory I've seen. Enough to put real, but not significant, money in.
He doesn't seem to agree with you or he wouldn't be dodging subpeanas.
This adds another layer of stupidity on top, proposing that people buy a deflationary asset that they are not required to own.
Everything which is based on either fiat or crypto is also a scam by extension; stocks, bonds, derivatives, etc... Our entire financial system is built on an unsound, virulently corrupt foundation. Much energy is spent on keeping up appearances, but beneath every statistic hides a dark reality.
It probably comes down partly to the sheer number of white collar 'bs' jobs. There exist millions upon millions of 'knowledge workers' who distort narrow slices of the world's knowledge in the pursuit of narrow financial goals... But by the millions, their distortions add up to total surface-corruption of all knowledge. Everything is as rigged as it can possibly be, but looks only just as plausible as needed to continue existing.
IMO, the growing divide between appearance and reality explains the growing divide between the haves and the have-nots. Now we're at a stage that we ran out of people who are smart and corrupt enough to provide enticing justifications for all the contradictions so that's why the system now resorts to censorship and ad-hominem attacks; not addressing questions that are raised because no response exists which sounds coherent; even to the masses of midwits.
We're moving towards an Idiocracy wherein increasingly stupid, arrogant people who cannot see contradictions in increasingly weak official narratives are promoted to positions of power solely for the purpose of maintaining the system's domination by a small number of elites. Literally building a moat out of human stupidity.
A massive problem is that really stupid people, who (subconsciously) know that they're stupid, tend to trust authority figures and experts almost 100%... Because they know, deep down, that they cannot trust their own judgement about anything. These super-idiots actually think they're intelligent because they believe that one's intelligence is directly correlated to one's ability to trust the narratives fed to them by 'more knowledgeable' authority figures.
It's a self-serving view of intelligence, whereby stupid people see their inability to comprehend certain complex concepts as a form of intelligence in itself; they believe that their minds are hyper-efficient because they can reach their material goals without having to do all the tedious intellectual work; they go straight for the reward. Based on this definition, human polymaths with PhDs are idiots and cockroaches are geniuses but OK...
End rant.