[HN Gopher] MasterCard to open up network to cryptocurrencies
___________________________________________________________________
MasterCard to open up network to cryptocurrencies
Author : ArtTimeInvestor
Score : 941 points
Date : 2021-02-11 14:54 UTC (1 days ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| sktrdie wrote:
| Aliens: look at this species they've come up with this weird
| concept of "money". Some of them have more & can obtain more
| resources with it. Because they can't trust each other they need
| a book-keeping system that uses more resources than they needed
| in the first place! Quite ironic.
| whitepaint wrote:
| If you could provide a better solution, a Nobel Prize is
| waiting for you. It is truly extraordinary what people have
| achieved. Especially since around 18th century (wonder why..).
| impostervt wrote:
| Unclear what this actually means. Can I pay my credit card bill
| using crypto? That's a taxable event and a pain in the butt to
| track.
|
| Can I buy stuff from merchants using crypto, and they receive
| crypto? Useful, but most merchants will want fiat currency, so
| someone on the chain will have to convert it to dollars, which
| again would be a taxable event.
| loceng wrote:
| I don't get it - you're trying to avoid paying tax into the
| society that you're using, benefitting from?
|
| Edit to add: Many replies are acting as if it's difficult to
| automatically, digitally track conversions and taxes, to then
| pay your taxes? It's a digital "currency" we're talking about
| here.
| BitwiseFool wrote:
| As a point of order, tax avoidance is perfectly legal and
| encouraged by the IRS. Tax evasion is illegal.
|
| There are many legitimate and ethical reasons why someone
| would want to avoid taxes they're not obligated to pay.
|
| To your second point about calculating and tracking these
| expenses, it gets messy really quickly. Certainly do-able,
| but messy nonetheless. Imagine having a 1099 that is dozens
| of pages long because it's basically your yearly credit card
| statement. Imagine having to pay a capital gains tax of like
| 5 cents on a starbucks purchase. Interestingly enough, this
| isn't a requirement when paying for things using foreign
| exchange. You don't have to track gains if you take a
| vacation to Europe and pay for things using Euros. So I think
| the goal is to have crypto transaction treated like a Forex
| purchase.
| mindvirus wrote:
| I think the OP is noting that it makes taxes complicated.
| Imagine having to track and report every time you went to
| Starbucks to the IRS, which you would have to if you
| converted crypto to dollars to buy a coffee.
| impostervt wrote:
| No, I don't mean sales tax. I mean converting from crypto to
| fiat, in the US, is treated like capital gains. So you get to
| pay taxes twice on the event.
| drcode wrote:
| It's not about paying taxes, it's about not wanting to have
| to declare the cheeseburger you bought for lunch as a line
| item on your year-end taxes.
| loceng wrote:
| So how do you protect against the actions of bad actors -
| who otherwise then have free reign to do whatever the fuck
| they want in your "country"/area that you seem to not think
| you'll need to defend from bad actors?
|
| Or you want a wild west, free-for-all environment? In your
| own house, do you want to have control of who gets to come
| in or not? It's that same type of control that is
| inherently tied to security and safety.
| thebean11 wrote:
| It's much easier to pay taxes for transactions on crypto
| exchanges. They have APIs for tax software to call into.
|
| I don't trust a traditional bank, or much less some random
| retailer accepting crypto, to get this right. Huge headache.
| [deleted]
| xur17 wrote:
| > Edit to add: Many replies are acting as if it's difficult
| to automatically, digitally track conversions and taxes, to
| then pay your taxes? It's a digital "currency" we're talking
| about here.
|
| As someone who has to deal with this every year, yes, even if
| it is "tracked automatically", it's a huge pita to manage.
| proto-n wrote:
| Let's be a bit more charitable interpreting what they said:
| "a pain in the butt to track". Lots of little profit taking
| events to report on your tax form, yeah it's painful. But
| also means that you intend to pay the tax, not avoid it.
| bondarchuk wrote:
| I think the point is that you can hold crypto but your credit
| card will automatically convert some of it to fiat whenever you
| pay for something.
|
| https://mstr.cd/3tLaPZM
|
| > _Consumers can instantly convert their cryptocurrencies into
| traditional fiat currency, which can be spent everywhere
| Mastercard is accepted around the world. Currency will always
| enter Mastercard's network as traditional fiat currency._
| cbradford wrote:
| I thought the whole idea of Bitcoin was to get out of the
| financial system that Mastercard is a central piece of.
| paulpan wrote:
| Right, I view this announcement as a ploy by Mastercard to stay
| relevant and probably appease their investors.
|
| One of the key selling points of bitcoin and other
| cryptocurrencies is removing the middleman from transactions.
| Arguably miners in the proof of work consensus are a middleman
| but not as much as the 2.5-3.5% charged by the likes of Visa
| and Mastercard.
|
| The other one, as OP mentioned, is permissionless or
| decentralization - the freedom from the whims of governments
| and traditional banking systems. I don't see how Mastercard can
| straddle between the two without some deception.
| neals wrote:
| Can't really call it freedom if you're not going to allow
| specific companies to join and use it though...
| PretzelPirate wrote:
| The original idea of Bitcoin was to have a currency that wasn't
| in government control - not to keep the government and big
| banks away from it.
|
| The current world of cryptocurrency gives you a choice of
| trusting big banks or not, and having the same economic
| opportunities regardless of the level of trust you are
| comfortable with.
| the_local_host wrote:
| > The original idea of Bitcoin was to have a currency that
| wasn't in government control
|
| I've never understood this. With an immutable ledger of all
| transactions, governments simply have to make it illegal to
| transact anonymously (or pseudonymously), watch the
| blockchain, and investigate any un-attributed transactions.
|
| It would actually enhance governments' surveillance
| capabilities against anyone not willing to run the risk of
| trying to obscure their identity, which I expect would be
| most people.
|
| If you can intimidate the participants, the inescapable math
| of the whole thing becomes a tool that can be used against
| those participants. You don't need to control a currency if
| you can control anyone who holds it.
| stale2002 wrote:
| > governments simply have to make it illegal to transact
| anonymously
|
| How? Are you suggesting that every single government in the
| world would collude together to ban crypto?
|
| What if, at least one of those probably western, countries
| chooses to make the simple decision of _not_ being a parody
| of a distopian government?
|
| Then other governments who _have_ chosen to be a storybook
| parody of distopian would be unable to tell the different
| between these _legally_ anonymous transactions that are in
| the normal country that is allowing these transaction, and
| between _illegal_ transactions that are not in that
| country.
|
| They couldn't simply watch the blockchain, as 1 country is
| defecting by not acting like an absurd example of a
| totalitarian government that is in no way similar to how
| modern day western countries act.
|
| > You don't need to control a currency if you can control
| anyone who holds it.
|
| But multiple absurd totalitarian governments that pop up
| overnight wouldn't be able to control everyone who owns
| crypto, as there would certain be countries that decide to
| make the simple decision of not acting like a story book
| parody of an evil government.
| solosoyokaze wrote:
| 1. It would be prohibitively expensive for the government
| to track down every blockchain transaction IRL to find the
| identity behind the wallet (if even possible). This cost
| rises with adoption.
|
| 2. Different crypto currencies have different roles. If you
| want to avoid traceability altogether, use zCash.
| the_local_host wrote:
| 1) Why would it be prohibitively expensive? In the face
| of severe enough penalties, most people would simply
| report their transactions as required, _and_ report who
| they transacted with.
|
| The number of transactions that needed to be investigated
| would be a small percentage of the total, and possibly
| traceable through means other than cracking keys.
|
| 2) Regardless of whatever zCash is, my point is that
| Bitcoin's immutable and complete ledger lends itself to
| complete surveillance. The math may be uncrackable, but
| the users are not, and privacy would go out the window if
| they're forced to transact with registered IDs.
| solosoyokaze wrote:
| > forced to transact with registered IDs.
|
| It's prohibitively expensive precisely because being
| forced to transact with registered IDs is going to be
| less and less of a requirement moving forward. With DeFi
| exchanges, we'll see more transactions that stay out of
| state surveillance.
|
| You're correct that BTC isn't ideal for privacy though.
| That's why zCash and Monero will also be important
| currencies.
| PragmaticPulp wrote:
| You don't need to track down every transaction. You just
| need to flag the fraudulent/stolen/illegal coins on the
| blockchain and require exchanges to confiscate those
| coins as they come through the system.
|
| Blockchain is a public ledger of every Bitcoin
| transaction ever. It's trivial to track these things.
| It's trivial to identify downstream coins from upstream
| illegal activity. Far easier than with traditional
| currency.
|
| The exchanges will play ball because they want to
| continue exchanging (making money). The Bitcoin hodlers
| will play ball because it makes their investment more
| legitimate and reduces the supply of coins, increasing
| the value of their stash.
| solosoyokaze wrote:
| The exchanges are becoming decentralized. Not just
| exchanges but other financial services, including the
| ability to earn interest. There are also other coins that
| are less traceable than BTC. It's only going to get more
| difficult for governments to track crypto, not less.
| PragmaticPulp wrote:
| If all you care about is crypto and you're happy to use
| exchanges that don't care about regulations, that works.
|
| But if you want to get money back out of the system or
| spend that money on anything, it has to go through an
| exchange located in your jurisdiction.
|
| Also, watch out for the services that claim to deliver
| abnormally high interest on crypto investments. There's
| no free lunch.
| 3np wrote:
| Some countries have explicitly put restrictions on
| dealing with privacy-preserving currencies like Monero
| and ZCash.
|
| Japanese exchanges and service providers, for example,
| are not allowed to touch them.
| solosoyokaze wrote:
| This is why the DeFi work on Ethereum is exciting, so you
| can have exchanges and other financial services not tied
| to restrictive legislation.
| rokhayakebe wrote:
| _governments simply have to make it illegal to transact
| anonymously_
|
| Making something illegal does not give a government control
| over it. Many websites/apps are illegal in many countries.
| Yet governments have near zero control over their citizens
| using those products. VPN.
| PragmaticPulp wrote:
| VPN hides activity.
|
| Bitcoin makes it public record.
|
| Regulating Bitcoin transactions is extremely easy due to
| the public ledger. You simply make it illegal for
| exchanges to transact with coins that are known to be
| stolen or otherwise flagged. Then all exchanges are
| forced to blacklist coins on that list, as well as
| descendant transactions from those blacklisted coins.
|
| Now there are two classes of addresses on the blockchain:
| Those that are clean, and those that are tainted with
| illegal activity transactions. The tainted coins are
| worth less than untainted coins as fewer and fewer
| exchanges will touch them.
|
| Ironically, Bitcoin speculators will support this move
| because it reduces the supply of Bitcoin. Reducing the
| supply of Bitcoin increases the relative value of their
| clean Bitcoin.
| RhodoGSA wrote:
| I can exchange my coins on a DEX - No third party
| required.
| _jjkk wrote:
| Whether or not it's a DEX doesn't matter at all.
|
| In this hypothetical world of regulation which has made
| some BTC "tainted" through surveillance, it will always
| be in the BTC receiver's best interest to verify the
| coins are "clean". Only a fool (or fellow criminal) would
| transact with tainted coins; most people would probably
| not use a DEX, or else use one which verified clean coins
| anyway without being regulated to do so.
| RhodoGSA wrote:
| Hmm, i think we have different thoughts about what a DEX
| is. Decentralized exchange allows me to conduct exchanges
| anonymously. I can convert back and forth between many
| different coins and wallets. Although it still goes on
| the ledger each time it's transacted, verifying who it
| went to, who is came from, and how it was traded is
| impossible. I can use a VPN to connect to the DEX, I can
| push my trade through a mining firm and many other ways.
| Any government 'Banning Bitcoin' is just a giant
| advertisement for bitcoin and will only lead to that
| nations fall as other nations take the cue to 'Stick it'
| to the nation that banned it by investing.
| _jjkk wrote:
| The point is, a government can make it illegal to sell
| goods for crypto. As well as making it illegal to
| transact crypto anonymously. So unless you find some
| black market for all your material goods, you will be
| FORCED to "exit" some of your crypto into fiat at some
| point. It is at this point that the design of BTC in
| particular makes it impossible to hide this "exit",
| because a government can easily surveil the blockchain
| and keep track of "verified" coins / addresses.
|
| Any time a transaction is spotted between a registered
| and unregistered address, just send a friendly police van
| to the address on file and seize the registered wallet.
| Rinse and repeat until unregistered wallets can virtually
| only transact between each other.
| hammock wrote:
| What is the VPN for bitcoin?
| averynicepen wrote:
| For the record, currently recommended best practice is to
| create a new Bitcoin address for every transaction.
| Although the ledger is public, using it on a regular basis
| would mean you have hundreds of addresses per user.
|
| For targeted investigations, blockchain crypto is already
| being a hugely useful tool for 3 letter agencies. But for
| dragnet policies of mass de-anonymized transactions, I
| currently can't think of a way for this to actually work
| with limited resources.
|
| Currently, anonymization is being defeated at the source by
| requiring registration with all major crypto exchanges. But
| once the coins start to circulate like cash, wallet to
| wallet, you would need to force registration on the wallets
| (in order to match identity to the addresses) - but there
| are many options that are either heavily security focused
| or free and open-source, so it would be difficult to find a
| single choke point to regulate.
|
| Depends on what the future of crypto wallet adoption looks
| like, I suppose. Monopolization does tend to happen...
| 3np wrote:
| You're absolutely right - it's a very double-edged sword.
| Pure on-chain bitcoin in its current form is the perfect
| tool for totalitarian control - guess why the CCP is hyped
| about their CBDC?
|
| I think that the question of if we end up being caught
| without an exit or not comes down to if privacy-preserving
| technology (on-chain like Monero and/or off-chain like
| Lightning) gets adopted by businesses and individuals
| enough for it to be too late to pull back once powers that
| be have the understanding, capabilities and intention to do
| so.
| tshaddox wrote:
| Copyright infringement was also always illegal (and still
| is). That doesn't mean that Napster, BitTorrent, etc.
| didn't massively increase access to music outside the
| control of the copyright system.
| bob33212 wrote:
| Perfect analogy. From 1998-2006 it was easier to get
| pirated music than pay for it. Once the music industry
| realized that the days of people paying $20 per CD that
| they may only listen to a few times were over, the
| streamers took over and now 90+% of music is listened to
| with permission of the centralized gate keepers.
|
| Regulators and other parties will catch up eventually.
| When there is a 500% tax on homes/cars you purchase with
| BTC the whole "decentralization/permissionless" idea will
| fade away.
| runeks wrote:
| No, the idea of Bitcoin is to have an asset that you can
| withdraw from the financial system.
|
| This is only possible in our current financial system if you
| want to take delivery of physical bank notes.
| PragmaticPulp wrote:
| Bitcoin transactions cost $8 each and that's exactly what the
| Bitcoin miners want
|
| The idea that Bitcoin was going to become a new currency was
| never true with the low transaction limit and Hugh transaction
| cost.
| mshumi wrote:
| A hardfork to algorand consensus would solve this
| BitwiseFool wrote:
| I see where you are coming from. I see bitcoin as a tool that
| can be used both inside and outside of the traditional
| financial system. It's ultimately up to you, the bitcoin
| holder, to decide if you want it transacted through the bitcoin
| client or if you want Mastercard to be a middleman.
| ArtTimeInvestor wrote:
| The game Paypal currently plays with Crypto is the closest thing
| to printing money I have ever seen:
|
| Their users can "buy and sell Bitcoin" and pay "no fees". How
| does Paypal make money? "From the spread". The difference between
| bid and ask. And who sets the spread? Drumroll ... Paypal!
|
| Since you cannot transfer your bitcoins out, when you sell your
| bitcoins, Paypal pays you whatever they like.
|
| So far, Paypal only offers this in the United States. And do the
| Americans take this offer? Yes! They buy over a billion dollars
| worth of Bitcoin per month on Paypal. If this continues, it means
| that every American from toddler to senior buys $50 worth of
| Bitcoin per year.
|
| Other companies in the finance industry will want the same free
| lunch. Run on crypto in 3..2..1..
|
| This will continue until the first companies will start to offer
| you to transfer your crypto out. Then slowly the market will
| normalize. Now everyone has crypto. In their
| paypal/mastercard/bank/whatever account and/or in their own
| wallet.
|
| Looks like chances for broader crypto adoption are pretty good.
| koonsolo wrote:
| Quote from Elon Musk: "If PayPal had executed the plan that I
| wanted to execute on, I think it would probably be the most
| valuable company in the world".
| whimsicalism wrote:
| Paypal could have become like Alipay/Wechat Pay in China, but
| it didn't.
| bondarchuk wrote:
| ..what was the plan?
| koonsolo wrote:
| If I remember correctly, replace money, or at least all
| banks.
| xirbeosbwo1234 wrote:
| Which plan was that? The one Musk was fired for pushing, i.e.
| getting them to switch all their infrastructure to _Microsoft
| Windows_?
|
| Elon Musk is best ignored.
| koonsolo wrote:
| On which system you run has very little to do with how
| successful you can get your company.
| globular-toast wrote:
| That's how all currency trading works. Why do you think this is
| unique to Bitcoin or crypto?
|
| More than 95% of "money" in circulation was created in the
| private banking sector. That's the closest thing to printing
| money because that's actually what it is.
|
| Paypal is just taking a cut for providing a service. Don't like
| it? Don't use it.
| ArtTimeInvestor wrote:
| You can show up at a bank and demand your balance in central
| bank money aka cash.
|
| The equivalent for Bitcoin would be that Paypal has to send
| your balance to you on the blockchain. But they do not do
| that. They will pay you in dollars. How much dollars? However
| much they like.
| warkdarrior wrote:
| We'll see whether consumers like their offering.
|
| [checking...] It looks like they are doing alright:
| https://www.coindesk.com/paypal-2020-results-outstanding-
| fin...
| xirbeosbwo1234 wrote:
| Yes, the cryptocurrency markets are famously rational.
| ascar wrote:
| > You can show up at a bank and demand your balance in
| central bank money aka cash.
|
| If everyone would try to do that the system would collapse.
| The system is built upon the assumption that the vast
| majority of people don't do that.
| globular-toast wrote:
| When people do do that, it's called a bank run:
| https://en.wikipedia.org/wiki/Bank_run
|
| This happened to Northern Rock in the UK in 2007. The
| bank failed and was nationalised as a result.
| Drakim wrote:
| I'm confused, if I buy bitcoin from Paypal, and I want to
| use that bitcoin to pay for say, Pizza, would Paypal not
| allow me to do that?
| globular-toast wrote:
| > You can show up at a bank and demand your balance in
| central bank money aka cash.
|
| Of course you can. Whether you get it or not is another
| matter. Have you ever tried it? Do you know anyone who has
| tried it? Sure, for trivial amounts you can do it. But do
| you think you can just waltz into your bank and walk out
| with $50,000 in cash? Good luck.
| mianos wrote:
| I did this often. Then I would buy a can of spam. :)
| abluecloud wrote:
| Same with their forex rates. What's new.
| [deleted]
| X6S1x6Okd1st wrote:
| MasterCard is only allowing stablecoins. Your insight sounds
| good, but unrelated to this.
| jimmydorry wrote:
| Not quite to that extreme, but both banks and paypal do the
| same with fiat too. They make A LOT of money on the exchange
| from one currency to another at rates that they determine.
| parliament32 wrote:
| Thing is this is exactly how it works with literally every
| other forex ever. If you go buy CAD with your USD from your
| local bank, of course they make money on the spread, the exact
| same way.
| kgwgk wrote:
| But you get the foreign currency! You can take it to a
| foreign country to spend it in blackjack and hookers.
|
| That looks more like a bucket shop.
| sschueller wrote:
| That is outright scam in my view. They never have to hold
| bitcoin. They may as well sell paypal coin. Robinhood and
| Revolut do the same thing. If you can't transfer out your
| bitcoin, you don't have any bitcoin.
| dan-robertson wrote:
| That would be illegal. And probably it would be the SEC (ie a
| regulator that actually does things) who would be making sure
| that PayPal or Robinhood or whoever aren't lying.
| liquidify wrote:
| They couldn't do that. If they didn't actually have any
| crypto, in the event of a large scale increase in price
| combined with a large scale cash out, Paypal would have to
| eat the difference from buy to sell price. They would lose
| their shirt. At minimum, Paypal is buying some percentage of
| the crypto sales in actual crypto to act as a hedge. However,
| it is more likely they are closer to 1 to 1 backing since
| they probably believe that there will be large upward
| movements in the future and they believe they can make money
| on both the spreads and the actual bitcoin (assuming they
| ever care to sell it).
| Mc_Big_G wrote:
| You're giving Paypal and Robinhood too much credit. It
| wouldn't surprise anyone if they both consider themselves
| "too big to fail" and do not have sufficient crypto to
| cover themselves. It's easy to imagine the meetings where
| someone "important" says "That will never happen, end of
| discussion." and then it turns out they they're wrong and
| they get bailed out (or not).
| sz4kerto wrote:
| These meetings don't exist. Occasionally fraud and
| negligence happens, but not this casually. People running
| PayPal-sized companies are neither completely stupid not
| completely evil. A bit yes, but not this much.
| hanniabu wrote:
| > Paypal would have to eat the difference from buy to sell
| price.
|
| Why? If they never offer withdrawals then they don't need
| to worry about that.
| function_seven wrote:
| If I buy a BTC for $30,000, then later decide to sell it
| for $47,000, Paypal will lose $17,000 if they didn't
| actually have a BTC somewhere in their vault.
|
| This is the same idea as bucket shop operations that
| "trade" stocks with their clients without actually
| processing trades on any exchange.
|
| When prices are rising, with new buyers available, then a
| bucket shop can do just fine for themselves. As soon as
| they have more sellers than buyers, at a price higher
| than they came in, the shop is the one that has to cover
| the difference.
| quietbritishjim wrote:
| If no one can transfer bitcoin out of the PayPal system
| then the only way for you to sell it for $47,000 is to
| find someone else on PayPal willing to buy it for that
| amount (or actually a bit more because of the spread). So
| PayPal don't lose anything.
|
| Admittedly this doesn't sound right to me, but it's what
| the parent commenters seem to be saying.
| liquidify wrote:
| It doesn't work like this. If paypal's customers decide
| to cash out as a whole, then that means there is a net
| sell. There won't be enough buyers in paypal to cover the
| sells. They would need to expose themselves to another
| market by buying / selling actual bitcoin to be able to
| float like you describe.
| mamborambo wrote:
| In most financial systems, there has to be a "banker" to
| make the market, i.e. they have to close the deals when
| the aggregate buy/sell deals end in surplus or deficits.
| So Paypal has to close the ending position -- at least
| that is my understanding.
| Hippocrates wrote:
| I assume that they don't hold the bitcoin but contract out
| the holding of the coins (or keys) to some 3rd party who
| specializes. They still make money on the spread and the
| buy/sell price gouge may be even larger to cover fees of
| whoever actually holds the crypto. Holdings may not be 1:1
| still but it should be some safe amount.
| Slartie wrote:
| They could just as well hedge the "PayPal-Bitcoin" they
| hand out to their customers with unbacked Bitcoin futures.
| They don't necessarily have to buy the underlying as long
| as they can find some other party who's willing to engage
| in a bet about the future of the Bitcoin price.
|
| Though I must admit that it's doubtful for them to find
| enough cash to take the other side of this bet, so most
| likely they have to resort to actual Bitcoin bought from
| liquid exchanges or OTC.
| oillio wrote:
| Bitcoin futures are running at about 25% per annum carry.
|
| They absolutely can find counterparties to take that
| trade, but it would be much more efficient to trade in
| the spot markets. The real question is if they have
| custody operations setup to handle the coin.
|
| I expect they outsource these backend operations to the
| likes of Coinbase, Gemini, or Fidelity. They probably
| won't allow customers to transfer their Bitcoin out until
| they move custody in house, which is no easy task.
| skybrian wrote:
| Or maybe even buy more Bitcoin than they need? It seems to
| have worked out well for Tesla so far.
|
| As Matt Levine pointed out yesterday, a mainstream company
| can make money by buying Bitcoin and then making an
| announcement that sounds like they're going to use it. (It
| doesn't matter whether that plan works out or not, as long
| as the price of Bitcoin goes up.)
|
| For Paypal, getting their own customers to buy Bitcoin
| (that they already own) would be a way of hedging, if
| they're long Bitcoin to begin with.
| golem14 wrote:
| IMO Tesla tries to get around China currency controls and
| lets people in China buy Teslas with bitcoin. I guess
| that is part of the reason why Tesla was hauled in front
| of the Chinese government recently. It _is_ a good idea
| if it works out.
| globular-toast wrote:
| When you get paid at the end of the month do you think there
| is a bloke with a wheelbarrow full of gold, or salt, or even
| bits of paper running between banks ensuring you get your
| salary? You've just figured out the entire private banking
| sector ;)
| pbourke wrote:
| It's one thing to do it with fiat currency, because
| ultimately there's a central bank involved as the first
| lender.
|
| With "fractional reserve crypto" all hell seems like it can
| break loose - much like the pre-central banking era of
| monetary instability.
| efwfwef wrote:
| I remember seeing Revolut doing that, worse the price of
| buying Bitcoin was actually much higher than what you could
| get on other trading exchanges. What a fucking scam. At the
| time I didn't understand that people were buying Bitcoin only
| to gamble with it, and I couldn't wrap my head around buying
| Bitcoin on Revolut without the ability to move these to a
| different address.
| gruez wrote:
| It's not any different than precious metal ETFs.
| cturner wrote:
| It is a similar dynamic, but I would be more inclined to
| trust the ETF.
|
| 1) For the metals ETFs I know about, the underlying is held
| by a bank which is a separate legal vehicle to the ETF.
| Since the ETF and the bank are both publicly-listed firms,
| their full-reserve commitments would be regularly audited
| to a high standard.
|
| 2) Brokers participate in risky activity that is unrelated
| to digital asset trading. This seems like a higher risk
| profile than a firm that is streamlined to maintain a
| single ETF.
|
| 3) The broker acts as custodian for your digital assets,
| but not for your shares.
|
| Imagine that you buy a digital asset through your broker
| and they become insolvent a week later. Assuming your
| contract gives you no special rights, you would sit on the
| books as one creditor alongside unpaid vendors and unpaid
| employees. Years later, you may get back cents in the
| dollar.
|
| Whereas you would have full and immediate rights to any ETF
| you had bought through that broker on the same day. They
| have no influence once it has settled.
| oillio wrote:
| For a view on what this looks like from a legal
| standpoint check out the MtGox collapse
| https://en.wikipedia.org/wiki/Mt._Gox
| rantwasp wrote:
| _Fed has entered the room_
| kungito wrote:
| I think Binance has the same thing. They have the "Binance
| pegged BTC" and you have to pay an additional fee to get the
| "real BTC" which you could put in the "real BTC wallet"
|
| https://www.binance.com/en/blog/421499824684901264/Experienc...
| 3np wrote:
| Revolut is pulling the exact same bullshit to a T.
|
| If it weren't such an obvious move I'd say PayPal carbon-copied
| it from Revolut. Can't wait for the competition to put pressure
| on them.
| nhumrich wrote:
| this isn't entirely true, PayPal does charge a transaction fee
| every time you sell or buy
| ArtTimeInvestor wrote:
| Not when selling or buying crypto.
| tinyhouse wrote:
| Not true.
| ArtTimeInvestor wrote:
| Holla, it is indeed not true. According to the fees
| section here, they changed it a month ago and added fees
| on top of the spread:
|
| https://www.paypal.com/us/smarthelp/article/cryptocurrenc
| y-o...
| GekkePrutser wrote:
| Lol.. You can't transfer them out??
|
| What's the point of buying them then? Sounds more like a lease
| thing.
| eswat wrote:
| Pretty much. Many want exposure to the price appreciation
| without having to deal with minutae like custody.
| Triv888 wrote:
| Webull does the same thing... 1% spread in both directions I
| think (2% total). At least Coinbase are honest and charge a fee
| and don't claim to be fee-free.
| LegitShady wrote:
| crypto you can't move out of a particular broker is just
| company scrip
| xirbeosbwo1234 wrote:
| crypto is just company scrip
| pbourke wrote:
| It's company scrip backed by tulip bulbs.
| TobySKT wrote:
| Digital learning offers a productive alternative to conventional
| classroom-based learning. With eLearning solutions you can access
| learning materials at any time and on any device. Have a great
| idea for a custom education software? Steelkiwi offers
| educational innovators a full-cycle eLearning software
| development strategy featuring advanced technologies, lean
| design, and an emphasis on learners
| https://steelkiwi.com/expertise/elearning-software-developme...
| sschueller wrote:
| I don't want mastercard supporting crypto. I want the merchants
| and payment providers supporting crypto so I do not have to use
| mastercard and their "rules". If I want to pay for porn or send a
| donation to wikileaks I do not want mastercard/paypal or anyone
| else other than the government (if it's legal I should be allowed
| to pay for it) deciding if that is ok.
| phatfish wrote:
| Hasn't Wikileaks published crypto addresses for a long time?
| You can send directly to them right now. I'd be very surprised
| if there wasn't a porn site out there taking payment directly
| though a Bitcoin address too.
| PragmaticPulp wrote:
| Bitcoin transaction fees are currently around $8.
|
| My credit card pays me 2% to use it.
|
| No one wants to use the Bitcoin blockchain for average
| transactions.
|
| No one is buying Bitcoin as anything other than a speculative
| investment right now.
| Erlich_Bachman wrote:
| Made a transaction last week, paid 0.50 $. Transaction went
| through just fine. What am I doing wrong?
| maeln wrote:
| And let's not forget that bitcoin can process on average less
| than 7 transactions per seconds. That's incredibly slow. It
| can be used for anything irl as long as this fundamental
| problem is not fixed. Nobody will spend 10+ minutes in front
| of the cashier waiting for the transaction to be confirmed.
|
| Most cryptocurrencies are plagued by the same issue. Everyone
| and their mother still come out with their own
| cryptocurrencies, but none has been proven to have any actual
| usefulness outside of speculation. I guess Monero and ZCash
| are at least really used as a transaction method because of
| the "black market", but, outside of anonymity, they also have
| the same fundamental issue that btc has.
| agumonkey wrote:
| I have a feeling that traditional cc system are slower than
| the time user waits for confirmation. Isn't it buffer based
| like disk io ? the bank has a buffer to accept any card
| that is legit (for small transactions) and the rare time a
| problem occurs they deal with it on the side ?
| dragonwriter wrote:
| > I have a feeling that traditional cc system are slower
| than the time user waits for confirmation.
|
| Raising this in response to Bitcoin's limited throughput
| is a nonsequitur, as this is latency, not throughout.
| Yes, the time between initiating and settling a credit
| card transaction is nontrivial, but that doesn't effect
| the number of transactions the system can process per
| second. If the credit card system didn't have the
| throughput to handle transactions at the rate they are
| initiated, there's be an ever-growing queue, and there
| isn't.
| agumonkey wrote:
| note that I don't promote bitcoin .. i just want to avoid
| people judging the current credit card system from afar.
| koonsolo wrote:
| Nano has 0 fees and 1< second transactions. What is your
| argument against that?
| PragmaticPulp wrote:
| Sounds great. Why not just use the nano technology to let
| me move around the USD in my bank account?
|
| Why do we have to invent an all new currency for these
| technologies to use? There is no good reason, other than to
| make early adopters wealthy, which they would like very
| much.
|
| What's stopping the US government from taking nano and
| creating a USD-backed version?
| koonsolo wrote:
| Exactly. So where is it? I've been using the internet
| since 1997. Banks had the chance to make it. I read here
| all the time "a single database would be a better
| solution". So where is the single database? Where is the
| instant money transfer? Where is the free money transfer
| over country borders?
|
| My wife lived in US for a while, she is now in EU. She
| still has some bank account there with a few thousand
| dollars on it. She can't transfer it to EU (some
| limitation of that account), she can only get cheques, or
| ask for some credit card. I told her to see how to
| purchase crypto with that card, and then transfer the
| money like that. It's fucking 2021, are you serious?????
|
| So yeah, if you expect banks to come up with a system
| that can compete with current gen crypto, good luck to
| you.
| PragmaticPulp wrote:
| > Where is the free money transfer over country borders?
|
| I use a major US bank. They offer $0 wire transfers to EU
| accounts. Wire goes out same-day.
|
| Would much rather do that than transfer to a crypto
| exchange, convert to crypto (with fee), send crypto (with
| fee), exchange crypto on the other end (with fee), and
| the transfer to other bank.
| koonsolo wrote:
| Alright, can you send some 0 fee, instant money to Cuba,
| Nepal, Burundi, Bolivia?
|
| > Wire goes out same-day.
|
| That it goes "out" the same day is pretty obvious. That
| it arrives 1 second later a bit less.
| rank0 wrote:
| I've read briefly about nano and its super interesting. I
| don't really understand how its feasible though. What is
| the incentive for operating a node in the network?
|
| A cryptocurrency that would ACTUALLY be used as a currency
| needs a resilient network. But if operating a node yields
| no financial incentive, how is that network supposed to be
| created?
| Shoue wrote:
| The incentive is the exact thing you're worried about:
| merchants get to avoid fees. If Nano ever takes off as a
| payment method, then you'd probably see e.g. large
| grocery chains operating Nano nodes to avoid fees.
| PragmaticPulp wrote:
| Cool. But why not just use the nano technology with a
| USD-backed currency instead?
|
| Cut out all of the alternative currency speculation and
| just let the technology do the work on people's money.
| ketamine__ wrote:
| Like USDC.
| jcbrand wrote:
| It looks to me like Nano will suffer from the free-rider
| problem.
|
| If Nano becomes an established currency, then a grocery
| chain can just rely on the existing Nano nodes to process
| its transactions (which will still be free), they don't
| need to run their own node for it.
| MadSudaca wrote:
| They can publicize their brand with a node. Moreover, if
| they want special functionality they may have to run
| their own node. In general, running nodes is so cheap
| that is not prohibitive to wider audiences. Today there
| are easily more than a hundred nodes running, exchanges,
| services, etc. The number is bound to increase as the
| ecosystem grows.
| mshumi wrote:
| Hardfork BTC to use Algorand consensus. Put stablecoins on
| the same chain. See the magic happen.
| lawn wrote:
| We shouldn't forget that there are other cryptos that don't
| have these ridiculous fees.
|
| Also, your credit card pays you 2% because they extract a
| larger fee from the merchant, who will raise prices to cover
| that expense. So you're not really saving money.
| warkdarrior wrote:
| Will the merchants give me a 2+% discount and cover the BTC
| transaction fee if I pay in Bitcoin?
| 3np wrote:
| One of the largest consumer electronics merchant in Japan
| does give you a discount if you pay with bitcoin,
| coincidentally.
| sharedfrog wrote:
| Intellimeds.net gives 8% off.
| Mc_Big_G wrote:
| No one wants to buy gold because the fees to move it are
| currently around $100.
| IshKebab wrote:
| > My credit card pays me 2% to use it.
|
| That's not how it really works, but you're right that $8 is a
| pretty insane transaction fee.
| vortico wrote:
| Bitcoin is only good for large transactions, but there are
| 1000000 cryptocurrencies that solve this problem such as BCH,
| USDT, and LTC. Use one of them.
| PragmaticPulp wrote:
| Honestly, why?
|
| My credit card pays me 2% to use it.
|
| If there's a problem with my transaction, I click some
| buttons and the card company reversed the charges.
|
| If I lose my card, I call them up and get another one
| overnight without losing all my money.
|
| Why would I give all of that up, pay exchange fees on both
| ends of a transaction, pay transaction fees (however
| small), and wait longer for my transactions to clear?
| ahnick wrote:
| Most people can't put >$20,000 on their credit card and
| large money transfers over traditional financial
| institutions (wires/ACH) at best take many hours or days.
| rkangel wrote:
| The parent comment is making a philosophical/ethical
| point - there is a lot of power concentrated into two
| private companies (Mastercard and Visa). They are the
| gatekeepers to being able to take payments, without them
| you can't have consumer income, and they make moral
| judgements that make it hard to operate certain kinds of
| (legal) businesses.
| PragmaticPulp wrote:
| Sure, but why not use a stablecoin cryptocurrency?
|
| Why do we need to invent an all-new alternative currency
| and asset class just to use these technologies? Why do I
| have to invest in 1 of 1000s of altcoins just to
| arbitrary change numbers in a shared ledger?
| Erlich_Bachman wrote:
| Because the US monetary policy and inflation, and USD not
| being backed by anything, and because people don't want
| this power in corruptable governments.
|
| This is not even some dispited facts (that this is one of
| major reasons for why some people want a new currency),
| this thing has been discussed over and over into
| oblivion, since the beginning of cryptocurrencies. It is
| a question that has been answered millions of times at
| this point. You just haven't researched any of it.
| artificialLimbs wrote:
| You can't get deplatformed from $whateverCoin like you
| can with credit cards.
| [deleted]
| exdsq wrote:
| I regularly invoice internationally. I can get a crypto
| payment through with a small transaction fee (a few cent
| for $20k) which clears in ~5 minutes, or I can get a
| payment that takes several days to clear with a larger
| fee. Crypto works perfectly for me!
| joosters wrote:
| Or you could use any of the far cheaper options for
| international payments (Transferwise, etc)... why do
| cryptocurrency enthusiasts think that all international
| payments need to be done via Western Union?
| exdsq wrote:
| That's a $7.50 charge, this is cheaper. I do however use
| those methods if the client won't pay in crypto.
| tshaddox wrote:
| I don't think anyone would argue that you should stop
| using your credit card if it's working well for you and
| you're very happy with it. But of course, credit card
| companies are only solvent because on average they're
| _not_ paying their users to use it. Miss one or two
| bills, or make one big purchase that you wouldn 't have
| without the credit line, and you'll likely wipe out all
| the rewards you've "earned."
| NoSorryCannot wrote:
| Taking the bigger picture, those rewards and disputes
| aren't free. These things get paid for by transaction
| fees, cardholders that carry balances, and vendors taking
| a loss. On the whole, prices for everything go up, but
| people fortunate enough to have "good" credit cards get a
| slight discount at the expense of those who don't.
|
| I'm not necessarily saying this system is better or worse
| than some alternative, just pointing out that it's not
| all upside.
| stblack wrote:
| This is so ignorant. Please raise your game.
|
| Bitcoin transaction fees are set by the sender. At least,
| that's true if you aren't a nOOb and you control your own
| wallet.
|
| Transaction fees vary, at this very moment, between 1
| satoshi/vbyte to 9,900 satoshi/vbyte. That range is 10^5. See
| https://mempool.space/
|
| Last week at this time, a tx could be placed in the very next
| block for 13 sat/vbyte.
|
| But sure, claim it's "$8". But it's better to educate
| yourself before sprouting off like that.
|
| With Bitcoin you pay the fees you want to pay. If you want
| fast settlement, you pay more. If you want to pay next to
| zero, you can do that too.
| loceng wrote:
| So would these longer settlement times, at a lower cost,
| then necessitate using a centralized escrow service to
| verify trustworthiness?
| 4AoZqrH2fsk5UB wrote:
| Im bullish on Monero becoming a winner in the space. It's private
| and transaction fees are pennies.
|
| Mentioned elsewhere in the thread was a larger problem: the
| amount of time it takes to settle up. I'm very curious how this
| will be addressed.
| throwawaysea wrote:
| The last thing I want is to help the MasterCard and Visa duopoly
| persist, given how many times these companies have polices others
| by instituting payment blocks on people like Wikileaks. I view
| cryptocurrency as an alternative to the current financial system
| and not something meant to be leveraged by these incumbents.
| warkdarrior wrote:
| People who want to avoid the "duopoly" can transact directly
| with the blockchain, no?
| wayeq wrote:
| a positive story about crypto? unleash the HN Boomer kraken!
| Kiro wrote:
| The public thinks Bitcoin is the currency of hackers.
| Decentralized, technical, innovative and challenging the whole
| financial backbone. In reality... We have threads like this.
| Never seen so much hate for Bitcoin as on HN.
| rantwasp wrote:
| "People fear what they don't understand and hate what they
| can't conquer."
|
| Bitcoin itself may end up being worthless or being a fortune.
| The block-chain technology is the revolutionary part that is
| here to stay and will only continue to grow in the future.
| nexthash wrote:
| Don't invest in what you don't understand is the #1 rule of
| investing. If you jump off the deep end without knowing
| what's at the bottom, you are at a high risk of losing what
| you put in. New technology always comes with this risk.
| That's kind of why most don't touch crypto - its far too
| technically complex for them to even comprehend the risks.
|
| If you've followed crypto and blockchain for long enough
| though, you realize that the risks are high and the value is
| low. It's a shitty technology, and a shitty investment. The
| cryptoverse is filled with volatility, no real-world "thing"
| to tie value back to, and scams upon scams.
|
| Blockchain is an innefficient, energy-guzzling excuse for a
| database. _Oh but you forgot its decentralized_ So what? Most
| applications don 't need decentralization - it makes them
| inefficient and slow. Why do you think the general trend of
| the world has been centralization into hubs, cities, and
| services? Here's a nice refuter of the blockchain hype:
|
| http://doyouneedablockchain.com/
|
| And of course, the classic:
|
| https://twitter.com/vgcerf/status/1019987651301081089
| rantwasp wrote:
| it's okay to not see the potential.
|
| blockchain is more than a distributed database. in a
| distributed database someone is still in charge and can
| make decisions unilaterally about how the data is altered.
|
| in blockchain you have a bunch of entities that can
| transact with each other with zero trust and without the
| need of a central authority. that is the truly innovative
| aspect of the blockchain and what sets it apart.
| nexthash wrote:
| No, no, _no_! That 's the whole reason behind why it
| sucks... you can't trust it! You have to verify every
| record on that chain by yourself, and if you make a
| mistake in a transaction or other operation there is no
| court or process that can give you restitution. Its also
| very inefficient (massively slow) compared to a
| distributed database, while functionally doing the same
| thing. There are barely any use cases where you _don 't_
| want central authority and you _want_ distributed
| storage... centralized databases are always going to be
| more efficient and convenient. If you want to use a
| inefficient, crappy excuse for a database be my guest.
| rantwasp wrote:
| not sure if you're a troll, but that's the reason why you
| trust it. you can actually verify every transaction that
| happened on the chain.
|
| the way this is done is not unlike any system that uses
| event sourcing (including the distributed databases that
| you worship).
|
| here is a killer use case for blockchain: supply chain
| management with a lot of entities and lack of trust.
| smart contracts are a thing.
|
| also, there are blockchain implementation that are really
| performant (don't get stuck on bitcoin)
| Gibbon1 wrote:
| > supply chain management with a lot of entities and lack
| of trust.
|
| This tells me you know zero about supply chain
| management.
| rantwasp wrote:
| hmm. if you ever had to deal with a supply chain and
| understand all the moving parts you cannot make the
| argument above with a straight face.
| nexthash wrote:
| Oh, and would you mind explaining to us your experience
| with supply chain management?
| PragmaticPulp wrote:
| Bitcoin started as a fun distributed systems experiment.
|
| It mutated into a sort of global pyramid scheme that consumes
| >0.5% of the world's energy consumption to perform deliberately
| useless calculations.
|
| Modern bitcoin isn't even about blockchain. Most people just
| put money in their exchange, click the exchange button, and
| watch the number go up and down. Never even touches the
| blockchain. It's all about speculation and convincing others to
| become the next layer in the pyramid of hodlers.
|
| Modern Bitcoin isn't about tech or distributed systems or
| challenging the financial system (with $8 transaction fees that
| go to mining companies and exchange fees that skim every
| trade). It's been captured by the financial system and pumped
| as a speculative investment, all so financial institutions and
| giant mining operations can profit off of the frenzy.
| f430 wrote:
| This seems like a bad idea.
| lupajz wrote:
| Anybody kind here whou would explain me how is this different
| from Binance card https://www.binance.com/en/cards ? Of course
| Binance card is not available everywhere but excluding this
| restriction these two are the same system, right ?
| tboyd47 wrote:
| It's important for people to read the actual press release:
| https://mstr.cd/3tLaPZM There's good info here which will be new
| info to many.
|
| Why did they do this? It turns out that about a third of
| Nigerians report using or holding cryptocurrency (!).
| https://www.statista.com/chart/18345/crypto-currency-adoptio...
| Second place are Vietnam and the Phillipines. For all, the #1
| reason was for remittances.
|
| Haven't we all had it drilled into our heads by CNBC and the
| likes that crypto was nothing but a big speculative bubble?
| Woops, I guess that was a big lie.
|
| > Users will also benefit from Wirex's Cryptoback(tm) rewards
| program, which automatically gives customers up to 1.5% back in
| Bitcoin for every purchase made in-store.
|
| It does appear that they will support transfers to external
| wallets (!), contrary to what has been claimed elsewhere in this
| thread -> https://wirexapp.com/help/article/how-do-i-transfer-
| cryptocu...
|
| The card is not yet available to US customers, although,
| apparently it is in the works -> https://news.bitcoin.com/wirex-
| launching-us-after-receiving-...
| nexthash wrote:
| Set this chart to "all" and tell me that this price movement is
| not a bubble. There is no earthly reason for why a "BitCoin" is
| worth $47,459.66 as of this post.
|
| https://www.coindesk.com/price/bitcoin
|
| Cryptocurrency adoption in 3rd world countries like Nigeria,
| Vietnam, and the Philippines is not a good thing. It's actually
| really sad, because it means they cannot rely on or trust their
| country's currency. Therefore, they are forced to place bets in
| a volatile and dangerous game to keep their life savings. If
| Bitcoin or Ethereum or Dogecoin go bust, they will still lose
| everything, because there is no trust, recourse, or regulation
| tolerated in a decentralized system. Well, not much worse than
| their home country's currency, I guess.
| hntrader wrote:
| I can say the same things about artwork or gold.
|
| To me these things are totally useless, paint on a canvas
| (when I could just look at a photo of the same thing) and a
| shiny piece of metal, no utility whatsoever, who cares?
|
| Well the value doesn't come from one person's assertion of
| value, it's supply and demand. Apparently enough people like
| paint on a canvas and shiny metal for their own reasons.
| Tijdreiziger wrote:
| Paint on a canvas doesn't waste the same amount of
| electricity as the country of Argentina.
| hntrader wrote:
| That's a negative externality which doesn't pertain to
| how valid the current valuation is, which is the subject
| I was addressing.
|
| Externalities by definition don't feature into the price,
| although perhaps they do only to a very small extent in
| the case of BTC because of political/regulation risks
| leading to a risk premium effect.
| nexthash wrote:
| Sorry, but in case you don't have much intuition, let me
| fill you in. People value gold and artwork because it is
| beautiful and you can have it for yourself. Gold also has
| several utilitarian uses. Now compare these things to a
| digital token. Can I frame and admire a digital token? Can
| I use it for anything? Do I even understand what it is or
| how it works most of the time? No.
|
| So it therefore has no value for me. Millions of people
| like me have the same basic intuition. Others, like you,
| are driven by ideology and see digital tokens as something
| nice and valuable that can be "kept", for ideological
| reasons. This value has no basis in anything physical like
| looks or usefulness, and has no battle-tested authority
| telling you it is responsible for making it useful.
|
| Decentralization doesn't count, because as I've already
| said many times there is no trust or recourse in a
| decentralized system with random people. So you haven't
| given me a reason for why a "Bitcoin" should be worth
| $40k+. That's why I say its sad that authorities in other
| countries are so unreliable that people have to buy into
| this disreputable game to stay afloat.
| splintercell wrote:
| I pay my Spanish teacher in Latin America using crypto.
| Can't do that using gold, or paintings.
|
| Blockchain is a global consensus network. The consensus
| is on a data structure's definition, rules and it's
| actual data.
| efwfwef wrote:
| Yes you can frame and admire a digital token, or rather
| the address holding the funds.
|
| Gold's value has nothing to do with its utility.
|
| I don't get your people's arguments. You keep repeating
| "a digital asset can't have real value" when the last 10
| years have proven you wrong. You fool!
| nexthash wrote:
| So you pay $40k+ for bitcoin just so you can frame some
| numbers and letters and say you paid $40k+ for those
| numbers and letters?
|
| Gold's value comes from the fact that it doesn't dull or
| dim over time, and has many uses in the electronics and
| jewelry industries. If you have the resources to get gold
| and own it, that is a clear sign of status and value.
|
| Can't say the same with crypto for any counts. All of
| crypto's value comes from speculation. Over the last 10
| years, I've seen the same tired drum beat, that 'crypto
| is valuable because of decentralization, supply
| regulation, and censorship resistance' but these are so
| vapid and completely different from reality and what
| people _actually_ need. There is no convenience, no
| government backing, and no trust. So the only people
| using these fake tokens are disreputables and hedge funds
| /speculators looking to exploit and get fun returns.
| efwfwef wrote:
| No, Gold value comes from the fact that we all agreed
| that it should have a value, and it's scarce. Same for
| Bitcoin.
|
| And yes you can parade the fact that you own a bitcoin
| address, this is after all probably the only reason most
| people know about Craig S. Wright
|
| > There is no convenience, no government backing, and no
| trust
|
| convenience is in stablecoins, government backing is in
| CBDC, trust is anchored at the foundation of any
| cryptocurrency project...
|
| Let me put it this way: as long as people will find ways
| to do things with Bitcoin (remittances, darkmarket, etc.)
| that they couldn't do with Gold or USD or whatever, then
| it'll have value. 40k of value? I don't know, but it will
| still have value.
| nexthash wrote:
| A little bit of value. But as a decentralized utopian
| panacea? Nope. If I was given the choice between a
| Bitcoin and a bar of gold, I'd definitely take the bar of
| gold.
| efwfwef wrote:
| Do you know what is actually worth more NOW? Because what
| matters is really what is worth more NOW.
| hntrader wrote:
| I can look at artwork on my computer for free, or print
| out a high resolution image that's indistinguishable for
| a few dollars. Yet people pay a fortune for the "real
| thing", even though their eye doesn't know the
| difference.
|
| Tell me again how this is in any way rational or logical?
| It's not, you've just bought into the narrative that
| artwork has legitimate value but haven't bought into the
| narrative that BTC has legitimate value.
|
| You are trying to push your subjective opinion of value
| as an assertion. Just because _you_ derive utility from
| original art but not bitcoin doesn 't mean there's value
| in the former and not the latter. Value is assigned by
| supply and demand, not by an authoritative top-down
| council composed of u/nexthash.
|
| It may well be the case that the market's opinion of
| BTC's value changes and the price drops to near nothing.
| But then again maybe people will wake up to the fact that
| an original artwork is indistinguishable from a photo,
| and the art market collapses too :-)
| hanniabu wrote:
| > Set this chart to "all" and tell me that this price
| movement is not a bubble
|
| It's a new asset class, of course it's going to see huge
| gains as it picks up adoption and of course if you zoom all
| the way out it'll look like a bubble. The bubble goes bust
| every few years and comes back stronger. That's a healthy
| market.
|
| > It's actually really sad, because it means they cannot rely
| on or trust their country's currency.
|
| That's a huge benefit and reason why bitcoin will become
| popular. It's a portable store of value outside the control
| of any government. It doesn't have the same issues as the US
| dollar for example where other countries need to be concerned
| about how not only their country is performing, but also the
| US since their reserves are in USD.
|
| This is also why it's gaining popularity around the world.
| Trust in governments is rapidly decreasing and the world as a
| whole is destabilizing due to polarization, poverty/wealth
| gaps, and rising environmental concerns.
|
| > there is no trust
|
| That's the point. It's trustless. You don't need to worry
| about it.
| splintercell wrote:
| They can, and are, holding stablecoins [1]
|
| 1. https://businessday.ng/sponsored/article/how-nigerians-
| are-u...
| tboyd47 wrote:
| > Stablecoins enjoy a one-to-one ratio. For Nigerians, this
| means stablecoin prices are pegged to a certain ratio with
| the U.S. dollar.
|
| I'm new to stablecoins and trying to understand the
| situation. Is this not the same thing Brazil did with the
| URV [0] -- that is, replacing their ruined state currency
| with a temporary one pegged to the USD -- only coming from
| the private sector instead of the government?
|
| > Other benefits of buying into stablecoins include: (snip)
| ...has no central authority which could breach payment...
| (snip)
|
| How is it possible to "peg" one currency to another without
| a centralized issuing body? Bitcoins can be mined by anyone
| with enough computing power, and stability is only achieved
| via an engineered stalemate between miners, node operators,
| and exchanges. How do these "stablecoins" achieve their
| stability without controlling issuance of coins at the top
| level?
|
| My understanding is that altcoins derive their value from
| their fungibility with Bitcoin; that's why when Bitcoin
| tanks, it brings the entire ecosystem down with it. How are
| these stablecoins any different? If Bitcoin's value fell by
| 80% tomorrow, bringing down Ethereum, LTC, and Doge, what
| keeps these stablecoins' value from falling down with it?
|
| ---
|
| [0] https://en.wikipedia.org/wiki/Unidade_real_de_valor
| splintercell wrote:
| There are multiple ways to achieve stablecoins.
|
| - centralized issuing authority backs the coins with
| dollars, here although the trust is the same as in a
| central authority, for people in Nigeria and Brazil, its
| asymmetric compared to people in the US. For Americans, a
| central authority is a central authority. For Nigerians,
| a central authority in US (or Carribean etc) is vastly
| different from a central authority in Nigeria. Example:
| USDC, USDT, PAX
|
| - Seigniorage-style stablecoins, these coins try to
| algorithmically issue or reduce the total coins to keep
| the price stable. This seems to have never worked. Most
| stablecoins in this design failed.
|
| - collateralized stablecoins - These stablecoins try to
| hold a certain amount of collateral in 'unstable'
| currency (like ETH/BAT etc) and try to maintain that
| collateral. If the price of the stablecoin moves away
| from $1, then it creates profit opportunities for people
| to benefit from it and help bring the price down. For
| example: Dai, Havven. These are experimental but seems to
| be working well.
| PragmaticPulp wrote:
| > Therefore, they are forced to place bets in a volatile and
| dangerous game to keep their life savings
|
| Is there any evidence that people in these countries are
| rushing to transfer their cash into Bitcoin? Not just a
| couple people that some news reporter found, but actual
| statistics?
|
| Realistically, if these people have access to out-of-country
| transfers they're going to switch to USD, not transfer to a
| Bitcoin exchange and switch to digital money that they can't
| actually use for any transactions.
|
| On the other hand, Bitcoin would be a very attractive vehicle
| for oppressive governments to embezzle funds out of their
| country at scale, as they control the strings to the banks
| and the regulations. Their only concern is not getting caught
| or seeing their money confiscated.
| hakanito wrote:
| Demand grows, but the bitcoin supply is limited. Price
| increases. Also, after each halving the bitcoin miner payout
| gets cut in half, so price has to increase for the network to
| stay alive.
|
| BTC follows the stock-to-flow model pretty accurately
| https://www.lookintobitcoin.com/charts/stock-to-flow-model/
| Erlich_Bachman wrote:
| > Set this chart to "all" and tell me that this price
| movement is not a bubble.
|
| If all that was necessary to reliably predict a price was
| looking at a chart, we would all live in a very different
| world.
|
| Oh and BTW, phrase `why a "BitCoin"` makes it very clear that
| you are not familiar with this field and have done very
| little research.
| known wrote:
| Is this why Musk promoting cyptocurrencies.
| chenster wrote:
| FOMO
| suikadayo wrote:
| Everyone on this thread seems to be missing the point that
| they'll be working with stablecoins on Ethereum and other smart
| contracts chains, and not Bitcoin.
| glsdfgkjsklfj wrote:
| Not even that. they will likely implement their own private-
| ledger-per-country system. The press release mention only one
| market that is currently trading via informal SMS and WAP bank
| apps with little access to actual money, so why not remove the
| money entirely?
| glsdfgkjsklfj wrote:
| here's the "source" (source mentioned on the MC pressrelesed
| which is the source of the article) of which
| "cryptocurrencies" they are considering
| https://www.statista.com/chart/18345/crypto-currency-
| adoptio...
|
| notice how they clump "cryptocurrency" with "digital
| currencies" as the same thing.
| Sargos wrote:
| Hacker News is still trying to grasp Bitcoin so I feel like
| Ethereum is going to take another few years to even begin
| productive discussions.
| seibelj wrote:
| HN should have been on the cutting edge of crypto, given its
| "hacker" supposed ethos, but a large group of no-coiners
| couldn't understand it and have posted the same tired
| arguments ad nauseum for years.
|
| There are a lot of people on HN who love and support crypto
| but the arguments are exhausting and you get nothing but
| downvotes. All of my friends and family I convinced to buy
| and hold have been texting me how I changed their lives. It's
| just so sad to see what this website did to engineers who
| normally have open minds but were convinced to hate crypto.
| whitepaint wrote:
| I've read many good arguments against cryptos here. If 80%
| drop happens within the next month, nobody really would be
| surprised. Cryptos can still easily fail. I hold Ether
| (just it) because what they are doing is really
| extraordinary but gazillion things might go wrong with it,
| Bitcoin, and others.
| lifty wrote:
| Do you think the code will fail, the consensus model, or
| there are no uses cases? If you have concerns about this
| I would love to hear them.
|
| But if you are only afraid that the price can fall 90%,
| then who cares? Let it fall, there is too much hype
| anyway, to the point it has created great division
| between coiners and no-coiners. For example, the 2001
| stock market crash, it cleared out projects based on
| fluff and the rest continued to build. I would reckon we
| would see a similar dynamic now, but probably with faster
| market cycles.
| whitepaint wrote:
| 2 most likely possibilities imo: some huge vulnerability
| that has not yet been found, and something much much
| better coming out.
| lifty wrote:
| Sure, vulnerabilities and bugs can happen. They get fixed
| and people move on. Something much better coming out is
| not an existential risk for the cryptocurrency/blockchain
| space, quite the opposite, it's very positive.
| whitepaint wrote:
| Is it positive for Bitcoin if Ethereum proves that POS is
| way way superior? And if people actually start using
| Ether as a currency in shops, start using it with many
| dapps etc.? What if something much better than that comes
| up? Are you absolutely sure Bitcoin survives in the long-
| term?
| hanniabu wrote:
| I do believe one day Ethereum will overtake Bitcoin, but
| I think we may be a few years away from that (possibly
| next cycle). Reason being is that everyone's first
| exposure to crypto is Bitcoin. It's hard enough for them
| to understand that. After that they have a better
| foundation to start understanding Ethereum. Once you
| understand Ethereum and see the network effects it has
| and that all innovation is happening there it's pretty
| easy to see how it has more growth potential. The ability
| to stake is what I think will really steal from Bitcoin's
| "store of value" narrative though as it offers people
| interest and will also lock up circulation which will
| help with price stability.
| PragmaticPulp wrote:
| Ask yourself: What drives the price increase? Are people
| buying because they expect to use Bitcoin? Or because
| they expect the price will go up?
|
| If it's the latter, it's a self-reinforcing cycle: The
| price goes up because people buy. People buy because the
| price goes up.
|
| So what happens when the popular narrative switches? What
| happens when the price goes down for years at a time and
| people watch their money dwindle? Will people wait around
| for the price to skyrocket again? Or will they see their
| friends getting rich in altcoins or meme stocks or NFT
| trading cards and sell their BTC to get in on the next
| hot trend?
| nemo44x wrote:
| The price did go down for about a couple years and here
| we are today. I think if anything people are more likely
| to buy the dips and see it as a buying opportunity rather
| than a reason to.
|
| So what drives the increase in price? Many reasons.
| Because it's going up? Sure, that's accounts for some.
| It's a store of value against a government that printed
| 22% of all dollars ever created last year? Yeah. In a
| world that seems increasingly chaotic and unpredictable
| in places that always seemed stable it is attractive
| because it's a global store of value that can be tapped
| if you ever have to flee? Sure.
|
| I think these are just a few reasons why it's going up in
| value. It's quite scarce and everyone knows the rules and
| no one controls it. Not a government, a corporation, or a
| person. So yeah, it can and probably will take hits but I
| think in the long run it's just a thing that makes a lot
| of sense to more and more people as part of a well
| diversified portfolio.
| PragmaticPulp wrote:
| > It's a store of value against a government that printed
| 22% of all dollars ever created last year?
|
| What asset isn't a store of value? Inflation, by
| definition, is when the price of something inflates.
| Bitcoin's price is inflating in dollar terms. Someone
| invested in stocks and real estate is protected from US
| dollar inflation.
|
| The idea that Bitcoin is the only way to protect against
| inflation, or even that it's a good way to protect
| against inflation, is largely a narrative pressed by
| people who want you to buy more Bitcoin. That is, they
| want you to inflate Bitcoin via demand-pull inflation.
| Ironic, isn't it?
|
| > is attractive because it's a global store of value that
| can be tapped if you ever have to flee?
|
| You really think all those people buying and holding
| Bitcoin in their Coinbase and Robinhood accounts are
| doing so because they might flee the country?
|
| Again, the narrative that Bitcoin is a mechanism for
| fleeing oppressive governments is largely a myth. If
| someone wanted to get their money out of a country, they
| don't need to invest in Bitcoin long-term. They just need
| to transfer in, cross the border, and transfer out.
|
| Let's be honest: Most people are speculating.
|
| > It's quite scarce
|
| It was literally invented out of thin air by programming.
| The maximum number is finite, but it's ironic to declare
| a resource scarce when there are thousands of altcoins
| online, and even multiple forks of Bitcoin.
|
| > I think in the long run it's just a thing that makes a
| lot of sense to more and more people as part of a well
| diversified portfolio.
|
| Price goes up because other people buy it because price
| goes up...
| shawnz wrote:
| Having more speculators actually makes it more likely
| that the asset is fairly valued.
|
| Speculators are the driving force which "correct" the
| price of overvalued or undervalued assets. More
| speculators mean that assets will reach their "fair
| price" more quickly. In this way speculators actually
| reduce volatility and make it harder to manipulate the
| market.
|
| Keep in mind that speculators are not necessarily in long
| positions, they could also be shorting Bitcoin (which
| would be the logical thing to do if you believe there's a
| bubble).
| nemo44x wrote:
| Stocks and real estate are great. You should own that
| too. BTC is unique in that it is protected from
| government and corporate mismanagement. Real estate and
| stocks - not so much.
|
| There's so many good reasons BTC should be in your
| portfolio that I'd call it irresponsible to not own it at
| this point.
|
| I do think there are some seriously sour grapes among
| those that thought they were too smart for it or
| something and they feel they've missed the train. But
| it's real and it's a revolution and people will end up
| owning BTC indirectly through ETF's or other aggregate
| investments. I don't really care though - maybe it's just
| not for everyone.
|
| Could be wrong but I haven't been the last 8.5 years I've
| been invested as the vision and potential of it is so
| obvious to me. Of course if I had a dollar for every time
| I've read it's a fad/tulips/useless/etc (I think the new
| one is it's bad for the environment lol) I'd be doing
| just as well.
| grapehut wrote:
| I think a lot of it is just people not wanting to admit
| they were wrong. It's far easier to double down. I remember
| almost being convinced by patio11 that bitcoin was stupid
| and dumping it at like $30, but thankfully didn't. Now I
| get a bit of a kick out seeing him come out of the
| woodworks when ever bitcoin or tether hits a hiccup
| gloating how they were right!
| globular-toast wrote:
| > All of my friends and family I convinced to buy and hold
| have been texting me how I changed their lives.
|
| Because they're enjoying life without private banks? Or
| because they've realised gains from the bubble? If you
| "understand Bitcoin" as you claim, you must realise the
| latter cannot go on forever.
| PragmaticPulp wrote:
| Bitcoin was all over the news a decade ago.
|
| The reason it's not popular is that the early narrative
| wasn't "too the moon!" The narrative was that Bitcoin was
| the currency of the future and that we'd all be using
| Bitcoin for transactions.
|
| Anyone who actually used Bitcoin at the time could see how
| there was no chance of it taking off as a payment
| mechanism. That's still true today, especially with $8+
| transaction fees.
|
| The difference is that everyone dropped the pretense of
| actually using bitcoin and instead went all-in on the
| speculation narrative. People buy it because the price goes
| up, and the price goes up because people buy it.
|
| Works great until a down cycle, when everyone rushes for
| the exits and tells themselves they'll buy back in at a
| lower price.
|
| > All of my friends and family I convinced to buy and hold
| have been texting me how I changed their lives.
|
| Changed their lives how? By revolutionizing the way they
| pay for things with cryptocurrency? Or by getting in on an
| investment that went up?
|
| Be warned that the exact opposite happens when Bitcoin goes
| back down. Look back at Reddit posts during previous
| crashes for a reminder: Suicide hotline warnings, stories
| about people losing half of their retirement, and so on.
|
| If the only redeeming quality of Bitcoin is that the price
| goes up as more people get in on it, it's hardly different
| than an MLM or pyramid scheme that relies on a constant
| influx of new money to keep the show going.
| heidar wrote:
| Given what you're commenting all over this post, it's
| pretty clear you don't follow developments in the
| cryptocurrency space much.
|
| Bitcoin is stale, there's no development or innovation
| happening. It has become a store of value only. The only
| possible solution that could change that is the Lightning
| network or other Layer 2 protocols.
|
| There are plenty of other coins however that are doing
| super exciting innovation. Bitcoin Cash and Nano are some
| examples. They're actually solving problems and moving
| the technology forward. And they're being adopted as
| payment methods as a result.
|
| It makes me incredibly sad to see how many people
| (especially on HN) have no idea about that, and have
| adopted an anti-crypto stance like it's some ideological
| war, constantly citing the same old tired arguments.
| PragmaticPulp wrote:
| Can we please dispense with the ad-hominem attacks?
|
| I've been following cryptocurrency since 2009/2010, and
| I've worked adjacent to the space at one point.
|
| There are plenty of us who were enthusiastic about
| cryptocurrencies before the narrative moved away from
| distributed systems and turned into a pure financial play
| for everyone involved.
|
| > There are plenty of other coins however that are doing
| super exciting innovation.
|
| The real question is: Why must they be coins?
|
| Why can't they simply develop blockchain technology that
| doesn't revolve around inventing an all-new currency?
|
| The competition for innovation is fun. The competition
| for everyone to buy each cryptocurrency on exchanges and
| then pump it across social media is not.
|
| I'll be excited again when we can stop inventing new
| currencies left and right and just skip straight to
| distributed systems for managing our existing cash. I
| don't want to have to invest in 20 different
| cryptocurrencies out of the 1000s on the market just to
| be able to interact with all of the different systems. I
| don't want to manage my payment methods like investments.
| And frankly, I don't think the average person cares about
| the underlying innovation because they just want to
| speculate.
| hanniabu wrote:
| > Why must they be coins? Why can't they simply develop
| blockchain technology that doesn't revolve around
| inventing an all-new currency?
|
| To make it trustless, provide a proper incentive model,
| and for security.
|
| > just skip straight to distributed systems for managing
| our existing cash
|
| That doesn't work. Fiat is tied to nation states and are
| under direct influence by them. One example is how after
| Trump's term a lot of countries have been divesting away
| from having so much of their reserves tied to USD.
|
| The other thing is removal of middlemen and having
| transparent and predictable inflation. You can't do that
| with fiat. There's central banks that will always be
| there. Even if you distribute the processing to remove
| Visa and the like, you will always have the central banks
| there.
| hanniabu wrote:
| > There are plenty of other coins however that are doing
| super exciting innovation. Bitcoin Cash and Nano are some
| examples.
|
| You really had me where you mentioned exciting
| innovation. I thought you were going to go into Ethereum,
| the EVM, smart contracts, DeFi, etc. But then you mention
| BCH and Nano lol. While I guess you can say there's
| advancements there over Bitcoin, in the grand scheme of
| the ecosystem Ethereum is where all the actual innovation
| is happening.
| heidar wrote:
| Sorry for not mentioning your favourite coin, please
| don't be offended. The Ethereum roadmap is exciting, so
| is the BCH one, I just wanted to list some examples to
| make it clear that Bitcoin itself does not have much
| interesting going on.
| ausbah wrote:
| all that innovation is cool and all, but it seems a bit
| egotistical to be upset that people haven't heard of your
| awesome cool thing when a vast vast majority of people
| haven't heard about or use your thing
| heidar wrote:
| This is a HN post where people are sharing their (mostly
| negative) opinions on cryptocurrencies, not the comment
| section on a YouTube video about knitting.
|
| Also, I have nothing to do with these awesome cool
| things, but thanks for giving me credit for them.
| gverrilla wrote:
| Can I ask you something: where do you get proper info
| about what's happening on crypto? Is there some honest
| party reporting it? Because all I've seen is "this is no
| financial advice" financial advice disguised as news or
| blogging, and the bitcoin forum. I'm saying that because
| I really feel only a few people are really on the loop.
| Thanks for any input
| hanniabu wrote:
| It's tough. It's the same issue as how to get stay
| informed with the news. You just kind of have to dive in
| and you figure out what's what. I'd lend you some
| resources but there's a lot going on in the space so
| without knowing your interest it'd be hard to send you in
| any direction.
|
| Overall though I think the best thing to do is follow the
| people that are actually getting things done or directly
| involved. For example Andreas Antonopoulos has been in
| the scene for a long time and speaks well at various
| depth from the tech to more abstracted views
| (https://aantonop.com/). However he's mostly involved in
| Bitcoin. On the Ethereum side there's a few different
| resources from Vitalik's blog (main cofounder) to the
| developer roundup notes, to straight up reading their
| forum and proposals.
|
| If you're wondering more about the trading side then my
| personal favorites that don't waste your time or try to
| sell you stuff are Willy Woo (@woonomic), Plan B
| (@100trillionUSD), and Benjamin Cowen (Youtube). Will
| does chain analysis for bitcoin, Plan B develops macro
| price prediction models, and Cowen covers a handful of
| assets from a mathematical and risk-adjusted return
| perspective.
| supersour wrote:
| I think the more productive sentiment would be to try and
| have a more in depth discussion about Ethereum instead of
| attacking HN ad-hominem.
|
| So, as someone who doesn't know much about crypto aside from
| "it's bitcoin!", please tell me, what advantage do
| stablecoins/Ethereum provide that fixes the problems
| presented with bitcoin? I actually want to learn more.
|
| I would be interested to know about the volatility
| specifically and also if these currencies are less
| susceptible to a 51% attack or a fork.
| chizhik-pyzhik wrote:
| Stablecoins are a way to use the Ethereum network (or
| another blockchain) to send value that is pegged to the US
| dollar. There are a lot of stablecoins now (USDC, DAI,
| USDT) and they have various mechanisms for staying pegged
| to the dollar, some more effective than others.
|
| Using stablecoins allows you the advantages of the Ethereum
| network (interoperability with ethereum loan platforms and
| other smart contracts) without having to be concerned with
| the price of ETH.
|
| Stablecoins have the same level of security as their
| underlying blockchain. To double-spend ethereum-based
| stablecoins you need to 51% attack Ethereum itself.
| ORioN63 wrote:
| I want to add that Ethereum gas (fees), are at the moment
| quite expensive.
|
| That being said, there's work being done to lower that
| and competing blockchains are coming up, that support the
| EVM (Ethereum Virtual Machine) or at the very least
| supporting Solidity (which in turn compiles to EVM
| assembly).
|
| There's a amazing fintech ecosystem being created in
| Ethereum, with decentralized exchanges, trustable
| oracles, DAOs, etc. It's definitely worth the look.
| janaagaard wrote:
| > hey'll be working with stablecoins on Ethereum and other
| smart contracts chains, and not Bitcoin.
|
| Interesting, but where do you get that from?
| motohagiography wrote:
| Given their volatility and lack of a derivatives market to drive
| liquidity, I wonder what the banking capitalization requirements
| for crypto-currencies will be.
|
| I can see the argument of "it's just another currency for
| exchange, how is this hard," but the difference today is it's
| super high volatility, without a rescue facility, and given
| bitcoin's public ledger of every bad person who has ever owned
| it, it is arguably less fungible than cash because MC would have
| to track the provenance of every block it had on its books.
|
| Your mastercard probably won't be a bitcoin wallet either due to
| card chip capabilities, and I'd bet heavily they will just
| support it as another virtual currency and do your real bitcoin
| settlement asynchronously on their back end in a hypothecated and
| risk-managed form, and even then it will be a private ledger with
| their bitcoin capital levels levered way up.
|
| IMO, the entire levered business model and capitalization
| requirements when applied to cryptos sets banks up for the
| squeeze to end all squeezes, like when countries demand delivery
| of their physical gold from bullion banks and it creates
| political instability, except next time it will be 4chan
| organizing to get delivery of their bitcoin. For an issuer to act
| as a bank maintaining a float of cryptocurrencies to facilitate
| settlement seems like a super interesting hard problem.
|
| Edit: this will probably be handled by reserving the right to pay
| you in bonds or IoUs instead of bitcoin, just like paper gold and
| silver today, which reduces the usefulness of doing your BTC
| payments through them in the first place.
| 3np wrote:
| CME has derivates. As do several other exchanges. Some argue
| that the derivates are actually part of driving price movements
| these days, but it's not the consensus yet.
|
| Interesting take, BTW - I don't see it as impossible. There's
| some possibility this is the greatest trojan horse ever (unless
| it was just inevitable just like the internet was).
| hntrader wrote:
| Derivatives are typically leading crypto spot markets
| (although recently it flipped for a while) It's been that way
| for a few years. I'm talking Bitmex, Binance derivatives, not
| CME.
| purple_ferret wrote:
| What exactly does this mean?
|
| Basically what Visa is doing by facilitating the Coinbase card or
| something more involved?
| maceurt wrote:
| I am not big on cryptocurrency. Look how the price of these
| "currencies" fluctuate like crazy, because people buy and treat
| it like an investment. What is the actual current practical
| utility of cryptocurrency except for buying/selling illegal
| things online? People are so horny to get in on the next
| computer/iphone/etc that they forget that new ideas can fail.
| radicalriddler wrote:
| Don't people buy fiat currency as investments? People speculate
| in the FX markets all the time. How is this any different,
| rather than it's newer and thus more volatile due to not having
| found it's place.
| nemo44x wrote:
| A store of value protected from (and even a beneficiary of)
| government mismanagement, central bank mismanagement, corporate
| mismanagement, etc.
|
| Because we are forced to generally keep our wealth in things
| susceptible to political influence it's nice to have a place to
| store value away from that.
|
| My homes value can be wrecked by a variety of government or
| central bank policies. Same with my equities and bonds. So
| having a part of your wealth in BTC is frugal as a protection
| from these things. It is outside the scope of these influences.
| maceurt wrote:
| > A store of value protected from (and even a beneficiary of)
| government mismanagement, central bank mismanagement,
| corporate mismanagement, etc.
|
| Precious Gold/ Silver is way more adverse to risk than crypto
| and actually exists as a physical good.
|
| > My homes value can be wrecked by a variety of government or
| central bank policies.
|
| Crypto can be affected by those things also. I see the
| utility in certain aspects, but I don't understand the gold
| rush when there a lot better decentralized currencies.
| nemo44x wrote:
| Gold can be confiscated and actually has been in the past.
| Also, it's easy to lose. I personally feel gold has less
| value than a globally distributed proof of work and value
| store. Saying that, at what point did I say you should buy
| gold instead? By all means, hold both BTC and precious
| metals as a part of a well diversified portfolio.
|
| Maybe there are better decentralized currencies (that's a
| matter of opinion) but there were better operating systems
| than Windows. It's about mindshare.
|
| Honestly, just look at BTC's performance over the last 10
| years. It has been the #1 asset class by far.
| maceurt wrote:
| BTC can be confiscated too, you don't think Government
| can take hard drives or get access to cloud data storage.
| hanniabu wrote:
| Gold is not portable. Bitcoin has portability. You can
| store billions of dollars on a piece of paper in your
| pocket.
| zoover2020 wrote:
| What if my government bans Bitcoin? Wouldn't that ruin the
| whole picture? It feels like an unrelagated market, waiting
| to be regulated
| Acrobatic_Road wrote:
| they can pass a law banning bitcoin; they can also ban the
| tides from coming in.
| solosoyokaze wrote:
| There is a ton of utility in crypto. Here's one scenario I've
| never seen discussed but is absolutely real:
|
| Imagine you're an abused spouse or child who needs money to
| escape their situation. Opening up a bank account isn't an
| option for a lot of people, but _anyone_ can instantly open a
| crypto "account" and start stashing a nest egg away from the
| prying eyes of their oppressors. Crypto is the only option for
| this, and I've seen it successfully used like this multiple
| times.
|
| The existing banking system favors those in power and those in
| good standing in the existing systems. If you're underage or
| financially dependent on an abuse spouse, it's a lot more
| obvious why you might want a way to store and transact money
| outside of that system.
| thehappypm wrote:
| This scenario is hard to imagine being worth a trillion
| dollars.
| solosoyokaze wrote:
| Think of it this way. How many people on earth can't easily
| get a bank account (people under the age of 18 included)?
| It's a huge number that suggests massive scale in that use-
| case alone.
| hanniabu wrote:
| What about wealthy individuals that want to divest some of
| their wealth from the influence of nation states. When a
| country struggles that has direct impact on the currency
| and we're seeing that even in the US as the money supply
| increased 22% last year and will be up to 40% with the
| recent stimulus. This also isn't just and issue with the
| US. I think it was Belgium (?) that recently reported
| negative interest rates. Countries have also started
| divesting away from USD in their reserves since Trump was
| president. So this is a real concern that
| people/governments have that this offers a solution to.
|
| BTW gold doesn't solve this because when you buy it it's
| being held by someone else, whom is tied to the country it
| resides in, and you're back to square one. Even if you were
| to buy it physically and keep it in your own safe you're
| still stuck with the same problems because it's not
| portable. Bitcoin is portable.
| nmfisher wrote:
| Where is this nest egg coming from?
| solosoyokaze wrote:
| Friends, supporters, paid work... an increasing number of
| sources as more and more crypto infrastructure comes
| online.
| crazydoggers wrote:
| There's always lots of bluster and comments about cryptocurrency
| with things like this and not always much concrete information.
|
| I think as a tech community here on HN we should try to focus on
| why these changes are occurring so quickly and what the
| repercussions are. Let's talk constructively about the risks and
| opportunities more than we do about who's buying, who's selling,
| on and on.... is it a bubble.. does it have value, etc etc.
| Clearly it's here to stay and clearly large chunks of our economy
| will soon be dealing with it.
|
| So let's instead talk about constructive ways to move regulation
| forward. Expand education and communication etc.
|
| For instance I have a concern that we'll leave a large percentage
| of people further behind as digital cryptocurrency becomes a
| larger part of the economic system.
| JulianRaphael wrote:
| I like the spirit of your comment - that's the actual hacker
| mindset. Way too many comments on Bitcoin/Crypto-related
| submissions on HN are just knee-jerk reactions that don't
| really contribute to a constructive conversation. When I
| started lurking on HN in 2010, it was a very different culture.
| I miss these days!
|
| Regarding your concern around economic inequality: why do you
| think that people would fall further behind? I'd argue that
| cryptocurrencies have had a positive effect on inequality,
| particularly in countries like Argentina, Nigeria, Venezuela,
| etc. Without cryptocurrencies, people in these countries -
| particularly the ones who don't have assets in other countries
| - would have lost a lot of wealth due to the financial
| instability of their respective economies. As cryptocurrencies
| are here to stay, I'd even argue that they are currently still
| underpriced and hence provide many people from the lower income
| strata of society in 1st world countries with an opportunity to
| improve their financial wellbeing. This might not be true for
| people who don't understand technology, but then I ask myself
| what the current system has to offer to improve inequality for
| those who lag behind economically and in terms of education.
|
| A constructive idea how we could avoid further deterioration in
| terms of economic inequality: countries / communities could set
| up cryptocurrency trusts similar to Norway's Oil investment
| funds that are funded from cryptocurrency that was mined from
| e.g. excess energy in the grid from renewables. They could then
| invest a certain percentage of their cryptocurrency in
| trustworthy DeFi platforms to further increase yield. Returns
| from these trusts are invested into causes that benefit the
| public, e.g. education, health care, etc.
| crazydoggers wrote:
| Where were you the other day! Lol.
|
| Excellent points. I think like with a lot of tech, if there's
| a potential to liberate people, there's also the potential
| for it to work against them too. The internet helped foster
| open communication when it evolved, helping with the fall of
| the USSR and the lifting of the iron curtain... but it has
| evolved now in many places as a way to spread more
| propaganda, and track citizens movements etc.
|
| Crypto trusts sound like a good idea. I also like how the US
| targeted family's and kids for savings bonds back in the day.
| Get people started in the direction of understanding
| financial instruments, and then teach them more as they go.
|
| Ultimate I'm in the educate, educate, educate camp. If we can
| lobby our collective governments to start that earlier than
| later, so much the better. When people can see cryptocurrency
| working for them rather than just the financial sectors, then
| it's no longer the "enemy".
|
| Maybe we can have a small fund of highly divisible crypto, or
| even a totally separate chain that schools can use. Kids in
| computer science classes then have an on ramp to learning how
| it works.
|
| It's already a mystery to most. I do fear what might happen
| when the vast majority of people don't understand what may
| become a significant part of their economy.
| JulianRaphael wrote:
| Agreed, at the end of the day all technology is but a tool.
| Technological progress also requires human progress, i.e.
| we have to upgrade our mental models and values as
| technology allows us to engage at unprecedented scale.
| Critical thinking and empathy seem to be the two key
| missing skills in the 21st century and modern society
| doesn't place a lot of emphasis on developing these skills.
| That's where I'm fully with you: the key is to educate,
| educate and educate. But we also need to upgrade our
| education system accordingly!
|
| My strongest criticism of the cryptocurrency movement is
| that there are very few genuine educators. Hackers who
| truly believe in decentralisation and self-empowerment and
| are able to communicate the basic concepts in a way that
| kids and older people can get it. OG Whales who have made a
| fortune and now could invest into tools and services to
| make cryptocurrencies accessible to everyone. Or even seed
| some of the crypto funds that could help drive upward
| mobility for people from lower income strata. The idea
| behind cryptocurrencies and the values are so much more
| important than their price and getting rich quick. But
| instead of educating and sharing some of their wealth, most
| prominent cryptocurrency advocates just talk about the
| price of Bitcoin, engage in ad hominem attacks on folks who
| don't get it and boast with their wealth.
|
| Imagine what all these millions and billions of wealth
| could achieve in terms of educating the masses and winning
| them over for the cause!
| kseistrup wrote:
| Wirex is gonna use this, AFAIK.
|
| [?] https://wirexapp.com/
|
| (Use https://wirexapp.com/r/kseistrup if you wanna sign up
| through a referral link.)
| randomopining wrote:
| Bitcoin = store of value. Network effect is reducing the chance
| of government intervention, as well as blockchain tail risks.
|
| Getting 1 of the 21 million bitcoins is like decentralized proof
| of saying "I had 48k worth of value in Feb 2021!"
|
| It locks in the value that you created forever. Otherwise
| governments will just keep printing money, and your value gets
| diluted arbitrarily.
|
| Assuming the mechanisms of protection for the blockchain holds,
| it should work out exactly as that.
| PragmaticPulp wrote:
| > Getting 1 of the 21 million bitcoins is like decentralized
| proof of saying "I had 48k worth of value in Feb 2021!"
|
| Bitcoin doesn't prove anything about your USD value. Bitcoin
| blockchain only proves how many Bitcoin you have. Nothing about
| how much they're worth.
|
| No one cares how much your 1BTC was valued at an arbitrary date
| in the past. The only thing that matters is how much someone
| else is willing to pay for it _right now_.
|
| If you buy 1BTC for $48K, you don't have $48K. You have $0 and
| 1BTC. Someone else has your $48K.
|
| > It locks in the value that you created forever. Otherwise
| governments will just keep printing money, and your value gets
| diluted arbitrarily.
|
| What is inflation? Inflation is when the price of something is
| pushed up. You don't need to buy Bitcoin to avoid inflation.
| You can also buy stocks, or real estate, or gold, or
| businesses, or any other number of investments. Basically, do
| anything other than put cash under your mattress and you'll
| avoid currency inflation. Bitcoin isn't even close to unique in
| this regard. People have been investing to avoid inflation for
| centuries before Bitcoin came along. This idea that Bitcoin is
| the only way to avoid USD inflation is a deliberately
| misleading narrative from the people who want you to buy
| Bitcoin instead of other assets. Fear-mongering.
|
| Bitcoin, however, is inflating in US dollar terms. It is
| inflating due to demand-pull inflation, by the textbook
| definition of inflation. The fixed supply of Bitcoin isn't what
| drives the price up. The only thing that drives the price up is
| demand.
|
| > Assuming the mechanisms of protection for the blockchain
| holds, it should work out exactly as that.
|
| No, blockchain has no notion of price. USD prices of BTC are
| purely a function of exchanges. Exchanges don't even touch the
| blockchain until you withdraw from the exchange.
|
| Blockchain only protects your 1BTC. It doesn't protect your
| $48K value. The $48K value comes from other people buying
| Bitcoin. Why are they buying Bitcoin? Because they expect the
| price to go up. Why do they expect the price to go up? Because
| other people are buying Bitcoin.
| nexthash wrote:
| Sorry to burst your bubble, but if a government wants to
| prevent you from using a cryptocurrency it has many tools at
| its disposal. Firstly, they control the ground upon which you
| stand. If they don't like that you are using crypto, they will
| simply arrest you and charge you with a newly-formed crime like
| 'digital tax evasion'. Secondly, if they can't find who is
| using crypto, they have the power to shut down the Internet or
| simply censor requests. No ISP has the military force to
| prevent a government from walking through the door and cutting
| the cable.
|
| Point is, as long as you are on their turf, you _will_ follow
| their rules. Unless you want to make your own rules, in which
| case you will have to fight the government, become the
| government, and realize that having no control over a currency
| being used in your turf can be really bad for you and your
| citizens. You have no control over its value to at least try
| keep the economy stable, and they will have nowhere to turn in
| event of a financial crime or scam. No courts, no recourse, no
| trust.
| randomopining wrote:
| 1. As larger entities are getting into it, it will decrease
| the chance that the government cracks down.
|
| 2. There are obviously ways to transact anonymously, also
| P2P/OTC.
|
| 3. The government gets to tax all exchange crypto... easy
| revenue source.
| [deleted]
| catmanjan wrote:
| How do you transact in crypto without internet?
|
| Maybe that's musk's long term plan with satellites
| randomopining wrote:
| What about encryption?
| nexthash wrote:
| You don't seem to get it, do you? Your government decides
| it can't regulate crypto, so it bans it. People use
| crypto anyway. Government raids telecom and puts filters
| on Internet. People use encryption. Government shuts down
| Internet. People use satellite internet. Government make
| penalty for using crypto a life sentence, because they
| can. Drives around with vans detecting sat signals. You
| can't fight them on their turf.
| randomopining wrote:
| How do you shut the internet down when the economy runs
| on the internet? Lol.
|
| I don't think you've thought this through, even though
| you're so adamant.
| RhodoGSA wrote:
| Your government can ban bitcoin, but every government
| would to ban it otherwise you are going to just piss off
| your populace. They'd also never be able to spin the
| internet back up without bitcoin spinning right back up
| with it. Also, Tesla is an s&p 500 company. If they made
| Tesla lose 1.5B for some philosophical argument about
| control they would crash the market.
| Consultant32452 wrote:
| How long will it take before the float on networks like
| Visa/Mastercard grant them the ability to perform 50% attacks on
| the blockchain?
|
| Note: I don't really understand how this all works, so if my
| question is silly, I'd love to learn.
| RealityVoid wrote:
| There is not _a_ blockchain but multiple and on Bitcoin this
| would not grant these payment processors any power to perform
| 51% attacks. I think currently it is out of the power of one
| single attacker to perform such a feat (maybe China?) And am
| not sure if they would even want to if they could since they
| would be very invested in the cosystem by that point. Overall,
| I think BTC is extremely secure.
| pragmaticCrypto wrote:
| People often think crypto == bitcoin. I think there are 4
| categories that people should think about: 1. Crypto as asset
| class (BTC/ ETH) 2. Crypto for transactions - usually pegged to a
| dollar or other fiat eg. USDC 3. Crypto as a utility/ asset
| backed token - filecoin etc 4. fraud.
|
| I think mastercard visa etc will focus on #2 above and it will
| bring extremely powerful dynamic to these ecosystems
| PragmaticPulp wrote:
| #2 (crypto transactions backed by traditional currency) is far
| and away the most useful of these categories.
|
| Unfortunately, it doesn't offer the speculative upside of
| something like Bitcoin. People don't actually care if their
| transactions are carried across a blockchain or a database, as
| long as it gets done.
|
| Bitcoin is hot specifically because it's so detached from any
| real-world use cases or metrics that might put bounds on its
| price. There's a narrative that because no one can determine an
| upper limit for Bitcoin price, there's infinite upside. Of
| course that narrative is no different than any other arbitrary
| asset, but the Bitcoin narrative is strong because it's been in
| the news so much.
| qqii wrote:
| Pegged tokens like USDC and USDC can still be used to
| speculate in DeFi platform like AAVE with pretty lucrative
| returns.
| PragmaticPulp wrote:
| Where do the returns come from?
|
| Does the interest return come from actual investments? Or
| is it paid forward by newcomers? The latter is the literal
| definition of a ponzi scheme.
|
| There's no free lunch when it comes to generating interest.
| qqii wrote:
| It is as the other commenter said, returns come from
| other people borrowing collateral and paying interest on
| it.
|
| It may also interest you to know that AAVE was granted an
| Electronic Money Institution license by the U.K.
| Financial Conduct Authority (https://register.fca.org.uk/
| s/firm?id=0010X00004U9vVAQAZ).
| rodiger wrote:
| Borrowers pay more than lenders. You get a cut of those
| fees as interest. There's risk there of course, but it
| isn't magic money or a ponzi.
| warkdarrior wrote:
| So the borrowing costs must be quite high to warrant that
| revenue.
| cdiddy2 wrote:
| Currently 18% borrow APY with 143M USDC being borrowed.
| You can check it here https://app.aave.com/markets
| 0xcb0 wrote:
| I'm pretty sure Mastercard did know that there are a lot of CC
| companies that already use crypto. And they just want to get a
| share of that pie. And if they do it now, their share can still
| be enormous. If they just take the same percentage the use now
| for traditional payments, the will get a lot of exposure to
| crypto. And they might speculate that the whole sector will grow
| over the next X years. And just them onboarding, will make it
| more likely for this to happen.
|
| I use a crypto backed cc since nearly 1 year. It's NOT that you
| are paying in crypto, you still have to convert the coins to a
| stable currency and the top up your card with it. There are cards
| that 'make it look' like you are paying in crypto. But the do the
| same thing in the background.
| [deleted]
| PragmaticPulp wrote:
| These stories usually spur more enthusiasm for buying
| cryptocurrency, but ironically those buyers aren't interested in
| spending cryptocurrency using their MasterCard.
|
| They're hoping other people will buy cryptocurrency from these
| announcements, driving the price up. Or, more likely, they're
| just hoping other people will buy cryptocurrency and _not_ use it
| in these spending systems.
|
| Spending cryptocurrency would result in selling that
| cryptocurrency, which would drive the price down. That's not what
| cryptocurrency investors actually want.
|
| Should also note that MasterCard crypto transactions almost
| certainly won't be settled on the blockchain. Not with $8 Bitcoin
| transaction fees. They'll just be denominated in cryptocurrency
| and people can deposit/withdraw in certain cryptocurrencies.
| MasterCard only needs to buy and sell on the blockchain as needed
| to provide an FX window. The actual transactions would be stored
| in traditional database systems (aside from customer
| deposits/withdrawals, just like Coinbase)
|
| Why? Because MasterCard would get to act as an exchange and
| collect exchange fees. Exchange fees are a great way to charge
| consumers for spending their own money in 2021, when normal
| credit cards actually pay people 1-2% to use them.
| Cryptocurrency's inefficiency is their financial upside.
| dman7 wrote:
| We're not actually certain whether Mastercard will include
| volatile cryptocurrencies, such as Bitcoin. Reading this
| article (https://arstechnica.com/tech-
| policy/2021/02/mastercard-will-...), their requirements suggest
| supporting stablecoins (i.e. USDC). These cryptocurrencies are
| pegged to the dollar and _should_ be backed by a reserve. In
| that case, your argument about price movements doesn 't apply
| here.
| TylerE wrote:
| That's a rather heavy _should_. I 'd bet dollars to pesos at
| least some of them are operating fractional reserve schemes,
| or have the reserve "invested" in crypto.
| dman7 wrote:
| True. I'm mainly referring to the fact that some
| stablecoins, such as Tether, are not honest about their
| actual reserves:
| https://news.ycombinator.com/item?id=25788409
| PragmaticPulp wrote:
| Stablecoins are, in theory, just a cryptocurrency
| representation of actual money in the bank somewhere.
|
| I'm all for it, if it's properly audited and confirmed that
| the funds are in place.
|
| I'm a huge proponent of cryptocurrency technology as long as
| it doesn't:
|
| 1) Depend on wasting ever-increasing amounts of electricity
| doing arbitrary useless proof-of-work
|
| 2) Create a new currency out of thin air, when all we really
| want is a way to move our existing money around. I don't want
| to have to buy an arbitrary cryptocurrency from some early
| adopters at an inflated price just to move my USD from point
| A to point B.
| runeks wrote:
| > Should also note that MasterCard crypto transactions almost
| certainly won't be settled on the blockchain. Not with $8
| Bitcoin transaction fees.
|
| They could easily settle merchant balances on the blockchain.
| An $8 fee is nothing compared to the revenue of a merchant.
|
| Assuming e.g. a 1.5% credit card fee, a merchant pays $8 in
| fees when receiving ~$500 in payments.
| Consultant32452 wrote:
| It won't take long before Visa/MasterCard either adopt the
| Lightning network or create their own layer-2 service to
| alleviate transaction fees.
| PragmaticPulp wrote:
| Why would they use any blockchain when they could get the
| same job done with a database and legal agreements, like
| they have been doing for decades?
| Consultant32452 wrote:
| If you send me bitcoin in exchange for a widget, I'm
| eventually going to want to spend that bitcoin and I may
| not be doing that on the Visa network. At some point they
| have to offload those transactions back to the blockchain
| so the coins can actually get to my wallet.
|
| If they go the DB route as you suggest, they would
| basically be creating Visa Bucks, backed by bitcoin
| (which they'd have to buy), that can only be spent on the
| Visa network.
| PragmaticPulp wrote:
| > At some point they have to offload those transactions
| back to the blockchain so the coins can actually get to
| my wallet.
|
| The vast majority of Bitcoin exchange participants choose
| to keep their coins in the exchange, not their own
| personal wallet.
|
| > If they go the DB route as you suggest, they would
| basically be creating Visa Bucks, backed by bitcoin
| (which they'd have to buy), that can only be spent on the
| Visa network.
|
| Every exchange uses a DB backend.
|
| They only engage with the blockchain when someone
| performs a withdrawal to another institution that they
| don't have an agreement with, such as when you withdraw
| to your wallet.
|
| And you will pay the transaction fees for that blockchain
| interaction ($8+ currently). If you're not paying
| transaction fees for other operations on their platform,
| it's clearly not touching the blockchain.
|
| Every exchange operates this way. It isn't a new concept.
| PragmaticPulp wrote:
| You're ignoring the consumer's transaction fee for making the
| purchase in the first place. Who pays that?
|
| Even if you turn this into a credit card that a consumer pays
| off once a month, how many consumers want to pay $8 for the
| privilege of paying their credit card bill?
|
| Also, $8 is just the current transaction fee, with virtually
| zero vendors accepting Bitcoin. If Bitcoin became popular,
| the transaction fees would become prohibitively expensive.
| The transaction fees have been in the $60 range before, and
| that's still before any widespread vendor adoption.
|
| Bitcoin isn't usable for transactions at scale. It's by
| design. Bitcoin has rejected proposals to increase the block
| size. Bitcoin holders don't want anyone doing anything with
| Bitcoin other than holding it
| 14 wrote:
| Wouldn't MC just buy thousands of BitCoins then just keep
| track of how many they owe you and not actually interact
| with the block chain every time?
| PragmaticPulp wrote:
| Yes, that was my point in the higher comment:
|
| > Should also note that MasterCard crypto transactions
| almost certainly won't be settled on the blockchain
|
| This is just an exchange service where Mastercard
| collects exchange fees, in the same way that PayPal
| offers cryptocurrency payments.
| [deleted]
| soheil wrote:
| > Spending cryptocurrency would result in selling that
| cryptocurrency, which would drive the price down. That's not
| what cryptocurrency investors actually want.
|
| Is this necessarily true? If you have a merchant that accepts
| cryptocurrency why would that drive down the price? (e.g. Tesla
| [1])
|
| [1] https://www.cnbc.com/2021/02/08/tesla-
| buys-1point5-billion-i...
| PragmaticPulp wrote:
| What do you vendors do with any of the money you pay them?
|
| They spend it on paying employees and buying raw materials.
| It's getting spent (sold) one way or another.
|
| Tesla is no exception.
| soheil wrote:
| It requires a network-effect for it to work, if more and
| more vendors accept crypto then how is that fundamentally
| different that fiat currency to buy raw materials and pay
| employees with?
| PragmaticPulp wrote:
| In a hypothetically pure Bitcoin economy, that could
| work. But If we all switched to Bitcoin, the speculative
| upside would be exhausted and we'd be stuck with all of
| Bitcoin's flaws and limitations. If you think $8
| transaction fees are high now, how bad do you think it
| will be if every transaction was suddenly a Bitcoin
| transaction? Trick question, because Bitcoin has hard
| used block size limitations and it literally cannot
| support transactions at scale. By design.
|
| With the speculative upside removed, why would anyone
| choose to use Bitcoin? Why Bitcoin over any other
| cryptocurrency with significantly better technology?
| soheil wrote:
| I don't understand why you're assuming we need a pure
| Bitcoin economy for there to be a network effect. If
| sufficient number of vendors accept Bitcoin that will be
| enough to create a network effect. Once you have a
| network effect with a size less than the size of the
| entire economy there will always be upside to own Bitcoin
| since that size can continue to grow.
| PragmaticPulp wrote:
| I don't understand why you're assuming companies would
| willingly choose to use Bitcoin over banking
| alternatives.
|
| Even companies who transact in Bitcoin generally won't be
| sending Bitcoin blockchain transactions on the blockchain
| with all of the associated fees, not to mention risks of
| keeping your company's money in a computer program where
| a rogue employee or hacker could simply embezzle the
| money instantly and irreversibly. They'd use banking
| services, which would handle the transactions for them
| off the blockchain (charging exchange fees as
| appropriate).
|
| Not to mention: Using Bitcoin as a currency only sounds
| good in times when the price is going up. As soon as it
| starts becoming volatile again (it will) everyone
| remembers that maybe it's not a great idea to keep your
| company's funds tied up in one of the most volatile
| currencies of all time.
| vmception wrote:
| > maybe it's not a great idea to keep your company's
| funds tied up in one of the most volatile currencies of
| all time.
|
| and they will have bought put options or sold futures or
| created a collar
|
| going to have to leave that argument in _last_ decade
| when these options weren 't available, and educate
| companies that are ignorant in how hedging works
| soheil wrote:
| Oh I don't know let me list a few: *
| International transactions easier than regular currencies
| * No third-party seizure * Security and control
| (user autonomy) * Anonymity, privacy and no
| tracking (just make sure your wallet ID is not to your
| personal ID) * No risk of chargebacks (better for
| vendors) * Transparent and neutral (how much did
| you trust banks in 2008?)
|
| You may not value some of the above and indeed some
| vendors may not, but I don't think you can say that is
| true about everyone.
| PragmaticPulp wrote:
| In practice, companies have zero desire to be their own
| banks.
|
| The liability would be massive, and the risk of a rogue
| employee walking away with the private keys is just too
| high. It's a two-edged sword: Those same upsides are just
| as attractive to potential embezzlers as they are to
| honest companies.
|
| In an era where we hear about database breaches and
| security incidents on a daily basis, do you honestly
| believe that companies would do better by operating their
| own cryptocurrency wallets?
|
| So what happens in practice? Companies would still use
| banking services, just like they always have. Banks would
| "hold" the cryptocurrency and handle transactions for
| them.
| nhumrich wrote:
| because price is currently calculated similar to how stocks
| are calculated. While not entirely accurate, it essentially
| goes down when there are more sellers than buyers, and up
| when there are buyers but little sellers. What drives prices
| up, is more people buying than selling at market rate, which
| requires the market rate to go up, in order to find more
| sellers.
| soheil wrote:
| Exchanging != selling cryptocurrency
|
| If I buy a Tesla with bitcoin and Tesla keeps recirculating
| the same bitcoin or at least majority of it to purchase raw
| material without selling it why does that must drive down
| the price of bitcoin?
| nhumrich wrote:
| Because almost certainly, the implementation will be for
| the company, mastercard, tesla, etc, to immediately turn
| around and sell the crypto for $.
| [deleted]
| PretzelPirate wrote:
| I'm in the minority in that I'd like to be able to spend my
| cryptocurrency in a way that:
|
| 1. The card handles also selling some off for taxes every
| transaction and put that in an interest-accruing account.
|
| 2. The card tracked my capital gains for each transaction for
| easy reporting on taxes.
|
| 3. The card provider will help manage fees - I'd rather bulk
| deposit funds to a layer2 and have fee-less payments over
| having to wonder what the current network fee is.
|
| I'd prefer if it wasn't MasterCard since I use Visa cards, but
| I can't complain too much.
|
| The reason I want this is that I have a lot of money in
| cryptocurrencies and I'd rather not sell them into other assets
| at the moment.
| ValentineC wrote:
| > _I'd prefer if it wasn't MasterCard since I use Visa cards,
| but I can't complain too much._
|
| I'm curious: is this because your preferred bank mainly
| issues Visa cards, or are there things about MasterCard that
| you don't like?
| PretzelPirate wrote:
| My bank mainly issues Visa cards. I've had multiple cards
| throughout my life, and I've never had a master card
| before.
|
| I'd like to just add this feature to my existing cards that
| I already have set up for payments.
|
| Completely off topic:
|
| What I really want in life is:
|
| 1. If I could have a virtual credit card that could act as
| a proxy card and would let me use different cards based on
| the items I was purchasing (ex: if I'm getting gas, one of
| my credit cards may give better rewards)
|
| 2. A virtual mailing address that would resolve to my
| current address when used with any shipping provider. I
| move every few years and hate mail forwarding and updating
| my address everywhere.
| throwaway1777 wrote:
| Settle down and have kids. Your problems will be solved.
| jkepler wrote:
| Not necessarily if one works for a firm that moves you
| every few years. My family and I have lived in 5 cities
| in the past six years, due to changing work assignments.
| stolsvik wrote:
| I hope they pay you well. Moving is the worst.
| PKop wrote:
| How is this not solved by simply selling portions into fiat
| that cover expected spending needs, i.e. budgeting, and then
| transferring to bank account which is tied to your current
| credit card?
|
| "Spending" and "transacting" is a solved problem, namely fiat
| and credit.
|
| Why do crypto-assets, specifically Bitcoin, need to solve
| this problem?
| Slartie wrote:
| > 1. The card handles also selling some off for taxes every
| transaction and put that in an interest-accruing account.
|
| > 2. The card tracked my capital gains for each transaction
| for easy reporting on taxes.
|
| How should it ever do that? It would basically have to limit
| you to spend Bitcoin that you acquired over that exact same
| card (like when you buy Bitcoin via PayPal) and that you hold
| in a virtual wallet provided by that card network operator.
| Otherwise they'd be unable to tell how many $ you paid to
| acquire the Bitcoin you just spent.
|
| As a related question: how comfortable would you be with a
| cryptocurrency-backed electronic payment card that would
| require you to keep your Bitcoin in the wallet of
| Visa/MasterCard/whatever (or their associated banks or crypto
| custodians) in order to spend them?
| oillio wrote:
| You could enter your basis when you transfer coins into the
| account.
|
| This is how it works with other assets. If you transfer
| stocks between brokerage accounts, they communicate the
| basis as well.
| jkepler wrote:
| > Otherwise they'd be unable to tell how many $ you paid to
| acquire the Bitcoin you just spent.
|
| This is a massive reconciliation and record keeping
| overhead problem if you live in a jurisdiction that taxes
| crypto transactions for capital gains/losses. Michael
| Saylor said just recently in his interview with What
| Bitcoin Did that MicroStrategy plans to only use bitcoin as
| a treasury reserve asset and not as a transactional
| currency precisely because of the record keeping overhead.
| dillondoyle wrote:
| Yikes. I was going to reply this is my biggest
| question/concern.
|
| Cap Gains on btc profit is crazy insane. I guess it's offset
| if value increases 100% since you bought - but that's still a
| big tax tax on anything you buy.
|
| Maybe you can get lucky and set some type of tax advantage
| first in first out during down swings to take a loss?
| dalbasal wrote:
| Well...
|
| Cryptocurrency people are hoping for all sort of things...
| that's part of why enthusiasm can be currently quantified at a
| $1trn.
|
| While I'm sure you're right for most of the current bets
| (bitcoin owners are long, after all), there's something to be
| said for blind, dumb momentum. Connecting more people &
| financial nodes to the network, however disintermediated, for
| whatever reason.
|
| Maybe the "mastercard model" of denominating in bitcoin and
| clearing yourself in dollars is an early version of how bitcoin
| transaction costs actually get to normal. That's not unlike how
| stocks, bonds, forex & such are exchanged.
|
| I know. I know. Irony. Inevitable though, I think. Pretty much
| all currency & currency-like stuff gets moved around through
| clearing houses. Direct blockchain transactions are the
| theoretically ultimate transaction in the same way that NYSE
| transactions are theoretically ultimate. Actual stock
| transactions generally happen within a broker, the broker's
| broker or whoever else is between them and the actual stock
| market. The logic is similar.
|
| TLDR... People are giddy or hypocritical because they're long
| (or short) on bitcoin. That doesn't mean that momentum isn't
| momentum.
| oorion wrote:
| Bitcoin Cash functions as peer to peer electronic currency with
| low fees. No need for Mastercard when using it.
| systemvoltage wrote:
| What's the point of an unstable, volatile, frantically
| manipulated currency that is susceptible to social media pump
| and dump schemes (Elon + Doge)?
|
| Currency and its exchange rate needs to be relatively stable
| for the world to put trust into it. Saying that BTC is stable,
| but the rest of the world's fiat currency is fluctuating makes
| no sense.
|
| US dollar provides stability and security, I feel confident
| that a cappuccino will cost me $4. Crypto's volatility deters
| me from using it, simply put. There is no buffer that you would
| have with a Treasury. Converting from BTC to coffee makes BTC
| exchange rate go down.
| jernejzen wrote:
| You mean stable currency that is supported by 24$ trillion of
| national debt?
| fouldiplomacy wrote:
| "unstable, volatile, frantically manipulated currency" --
| this is often the case with any news, not just "pump and
| dump" schemes. Take the Chinese CNY. The CCP have been
| undervaluing it for years for the purpose of attracting
| business.
|
| the USD is very much subject to social media and traditional
| news manipulation. When the US decides it wants a stimulus
| package or other types of debt, it drives down the dollar's
| value. Granted the US is good about making payments to
| creditors, i.e bonds, it is not immune to fluctuation.
|
| It is sad but the way of the dollar is slipping and the
| global demand currency. It is slowly being replaced by the
| CNY and other market demands.
|
| Lastly, the Treasury does not control the dollar. It the
| Foreign exchange markets. (https://www.fool.com/knowledge-
| center/who-determines-the-val...)
| barrenko wrote:
| By Austrian economics- you can have stable prices OR stable
| money. We are being scammed for the last 100 hundred years,
| and the price volatility one sees in Bitcoin et al. is
| precisely the reflection of actual supply and demand
| constantly battling it out on the marketplace.
|
| The fact that dollar or euro seem stable is only possible
| with the violent tempering of national banks and the like
| of IMF. They only _seem_ stable.
|
| Money as a measure of value for other goods is something
| that is crashing constantly and will continue to do so
| until we let go of of the crazy attempt to do so.
|
| *no intended for you personally, just a good place to plug
| my two cents (pun intended)
|
| I'd advise anyone to read some Mises or the Dao of Capital
| by Spitznagel, the book is whip smart and applicable to
| basically any endeavour.
| mdtusz wrote:
| USD price does fluctuate and inflate over time yes, but the
| difference is that this is essentially an invisible effect
| on day to day life for anyone that is not doing forex
| trading.
|
| The reason the US dollar is "stable" is partially due to
| the fact that it is backed by the US government. It is a
| requirement that businesses operating in the US accept
| payment in US dollars. Until somewhere mandates that
| bitcoin _must_ be accepted, it will never truly be a
| currency, the same way that gold is not a currency, and the
| same way that wheat, or potash, or shares in GME is not a
| currency.
|
| There's also a concept of "sticky" prices that most
| economists are quite familiar with - this assists in
| keeping the price of a coffee stable, whether or not
| technophiles accept it or not. Even if the price of the US
| dollar fell by 50% today, your coffee would still cost you
| around $2 or $3 tomorrow (assuming the coffee shop was even
| open).
| ggreer wrote:
| > It is a requirement that businesses operating in the US
| accept payment in US dollars.
|
| People and businesses in the US have to pay the US
| government in US dollars, but there's no law requiring
| that a business accept any particular currency.[1][2]
|
| That said, if you do try to make your own currency, the
| feds will find some way to shut you down.[3]
|
| 1. https://www.federalreserve.gov/faqs/currency_12772.htm
|
| 2. https://www.treasury.gov/resource-
| center/faqs/Currency/Pages...
|
| 3.
| https://www.forbes.com/sites/nathanlewis/2017/04/18/what-
| is-...
| kungito wrote:
| But did you ever wonder where the stability of USD comes
| from? It all comes down to how big the transaction volume of
| your currency is. Things like "Petrodollar" https://en.wikipe
| dia.org/wiki/Petrodollar_recycling#Petrodol... increase the
| volume and provide additional stability. As "market cap" of
| bitcoin increases, so does the stability. All things
| considered, bitcoin still is very bad because of the
| transaction throughput which still remains an unsolved
| problem. I don't see how arbitrage can happen on the price if
| the transactions are so expensive. I guess BTC will end up
| living in the various exchange siloses
| ardy42 wrote:
| > But did you ever wonder where the stability of USD comes
| from? It all comes down to how big the transaction volume
| of your currency is.
|
| I don't think it's that simple. Transaction volume doesn't
| just appear from nowhere.
|
| IMHO, the stability of the US dollar mainly comes from the
| geopolitical & economic position of the US coupled with
| trust that its government won't totally mismanage it.
| Bitcoin has neither of those things and never will.
| centimeter wrote:
| > Transaction volume doesn't just appear from nowhere.
|
| Indeed, it takes time to bootstrap a currency. That's why
| it's absurd to expect Bitcoin to be stable when it's less
| than 10% the market cap of any other significant reserve
| asset, and may plausibly keep increasing its dominance in
| the reserve asset market.
|
| > Bitcoin has neither of those things and never will.
|
| I disagree - I trust much more strongly that Bitcoin will
| not be mismanaged than the USD, because bitcoin is
| governed by very simple and utile rules that are
| practically impossible to change, whereas the USD can be
| and has been inflated substantially.
|
| I don't think your first point (the economic position of
| the US) is as important as you think, especially as
| Bitcoin comes to be the reserve asset of a larger and
| larger set of productive economic actors.
| ardy42 wrote:
| > I disagree - I trust much more strongly that Bitcoin
| will not be mismanaged than the USD, because bitcoin is
| governed by very simple and utile rules that are
| practically impossible to change, whereas the USD can be
| and has been inflated substantially.
|
| Following fixed, unchanging rules is kind of the opposite
| of being managed, let alone well-managed.
|
| > ...especially as Bitcoin comes to be the reserve asset
| of a larger and larger set of productive economic actors.
|
| "If" not "as": that hasn't happened yet and it's quite
| likely that it won't happen.
| centimeter wrote:
| For a monetary asset, being "managed" is a liability.
| ardy42 wrote:
| > For a monetary asset, being "managed" is a liability.
|
| I'm not so sure of that. For instance: Bitcoin isn't
| money, but something that people hoard and speculate on.
| If it was more actively managed, its parameters could
| perhaps have been tweaked until it started actually
| acting more like money.
| strangeattractr wrote:
| I've always wondered why people are so obsessed with
| petrodollar recycling? The USD has been a global reserve
| currency since the 1920s and superseded the GBP completely
| post-Bretton Woods. The petrodollar mechanism is not what
| caused the USD to be stable nor a safe haven asset. It's
| because the US has strong property rights, deep and liquid
| capital markets, a large and diverse economy and most
| importantly is willing to absorb the financial flows
| associated with being the reserve currency (mercantilist
| economies will not accept the appreciation these bring).
| rokobobo wrote:
| Did you mean "market share" (as in, notional share of all
| transactions) as opposed to "market cap" (as in, the sum of
| all bitcoin supply, multiplied by the current price)?
| janoside wrote:
| What's the point, you ask...
|
| Here is Ross Stevens, CEO of Stone Ridge Asset Management,
| describing "the point" for an hour:
|
| https://www.microstrategy.com/en/bitcoin/videos/bitcoin-
| macr...
|
| It sounds like you've made up your mind about Bitcoin, but I
| believe you've missed the big picture. The above video, if
| you watch it with an open mind, will help you to glimpse it.
| Hint: it's not about cappuccino, it's about living in a world
| of competitively devaluing currencies and resulting asset
| inflation.
| BTCOG wrote:
| These people are all disingenuous actors. They know the
| point, but they want to flood all of these threads and act
| clueless. Bitcoin is digital gold, gold's replacement. It's
| been here for 12 years and yet, all these actors show up in
| every Bitcoin thread. It's the greatest monetary shift in
| hundreds of years.
|
| ArcticBull below me shows up in EVERY single Bitcoin thread
| to trash talk Bitcoin. Here's where we are at; some love
| Bitcoin, and others show up just to talk trash. Bitcoin is
| only going to grow beyond $100k the next couple years
| regardless of how sourly "ArcticBull" wants to astroturf.
| raiyu wrote:
| Bitcoin is a modern day example of what happens when you
| have a currency that has deflation instead of inflation
| at it's core.
|
| It becomes actually more expensive to buy anything in the
| present, as a result, consumers stop purchasing, and as a
| result economic activity decreases.
|
| DigitalGold is also non-sensical, because that is simply
| designed to track against inflation, to prevent the loss
| of today's buying power tomorrow because of inflation.
| But when something appreciates 10,000x it's not really a
| hedge against inflation anymore, but a different
| speculative instrument entirely.
| fennecfoxen wrote:
| Opinion: NYSE:GLD and NYSE:IAU are better at being
| "digital gold" than a blockchain thing ever will be.
| BTCOG wrote:
| @ArcticBull - Why would I ever want to make 100% ROI on a
| rigged stock market when I've made thousands of % in hard
| money?
| arcticbull wrote:
| see, with those glasses on it's not possible to have a
| real meaningful conversation. I'm sorry, bitcoin is in no
| way 'hard money'.
| imtringued wrote:
| The irony behind bubbles is that you cannot profit off of
| them by acting rationally. If everyone participating in
| the bubble were acting 100% rationally, the bubble
| wouldn't exist in the first place.
| Geee wrote:
| Yeah, I noticed this too and he has many very flawed
| arguments. It looks like he just wants to spam as many
| comments as possible and confuse people.
| arcticbull wrote:
| > ArcticBull below me shows up in EVERY single Bitcoin
| thread to trash talk Bitcoin. Here's where we are at;
| some love Bitcoin, and others show up just to talk trash.
| Bitcoin is only going to grow beyond $100k the next
| couple years regardless of how sourly "ArcticBull" wants
| to astroturf.
|
| So what? My argument has _never_ been about price but
| about fundamentals. The fundamentals are crap. I don 't
| care if gets to $100K in the "next couple of years" and
| neither should you. The price going up doesn't make it
| good, the price going down doesn't make it bad.
|
| Spending an Argentina of power for 7 tx/sec makes it
| _horrifyingly bad_.
|
| Wanna make a 100% ROI? That's not that hard. Risky, but
| you can make one overnight if you spend some time on
| r/WallStreetBets.
| whobar wrote:
| Hedge fund managers are never going to publicise an
| impartial view about anything, especially not something
| they are heavily invested in. Forming a positive opinion
| about Bitcoin based on what two hedge fund managers, both
| bullish on BTC, have to say, seems pretty dumb.
|
| Unless fiat is abolished, the price of something in BTC
| will always be pegged to USD. As USD devalues as a result
| of inflation, the price of a product in BTC decreases.
|
| I don't see the difference between someone in Venezuela
| choosing to hold their net worth in BTC (which could halve
| at any moment), versus their native, rapid inflationary
| currency. Both are risky, but if the central bank sorted
| itself out and fixed the currency issue, no one will have
| any reason to hold BTC any more.
| lottin wrote:
| Please don't fall for the trap of calling actual money
| fiat as if bitcoin wasn't fiat. If at some point bitcoin
| becomes money it will be fiat money, as bitcoin is not
| backed by a commodity. So far bitcoin isn't money because
| it's not _the most liquid asset_. In order to buy
| anything with bitcoins, first you 'll have sell them for
| actual money and use that to buy stuff, hence not money.
| TwoHeadedBeast wrote:
| Good point, I think they've borrowed the terminology from
| goldbugs without really understanding it.
| arcticbull wrote:
| Indeed - if your government is crap, you have bigger
| problems to worry about than your currency. Once you sort
| out the government you no longer have to worry about your
| currency. There's no world where simultaneously you have
| an untrustworthy government and you can bandaid over it
| with crypto.
| [deleted]
| codebolt wrote:
| Any real value analysis of Bitcoin that doesn't take Tether
| into account isn't worth much. As long as the whole crypto
| market is built around a currency issued by an unregulated
| and unaudited company with a mile-long list of past
| controversies, any unbiased take on the future of Bitcoin
| has to allow for a significant downside risk.
| heterodoxxed wrote:
| Tether is a real Michael Burry moment for me. They claim
| to have 30 billion in reserves right now and are
| "printing" a billion tethers at a time. Yet nobody can
| confirm their reserves and the company itself is absurdly
| opaque.
|
| Either there is an incredible amount of criminal fraud
| behind this or... this is perfectly reasonable?
|
| Except nobody can really explain or confirm why.
| codebolt wrote:
| Yes, but as long as nothing is stopping them from simply
| minting out of thin air, I wouldn't bet against their
| ability to keep pushing the prices up.
|
| Daily volumes of tether trades are consistently a high
| multiple of the total supply. (Today it's 130bln vs
| 30bln.) So I don't know if it's safe to even trust that
| number.
|
| As per Steins law, anything that cannot go on forever
| must eventually stop. Question is how long?
| fl0wenol wrote:
| If they want non-idiots to use their stuff, then they
| need to open up and give a few tours of their "vaults" or
| whatever.
| arcticbull wrote:
| You haven't shared "the point" just a link to
| MicroStrategy, a failed software company whose CEO had to
| pay an $11 million dollar SEC settlement decades ago for
| cooking the books, making a desperate Hail Mary play buying
| near the top of a speculative mania in a bid to gain
| relevancy. MSTR is the new "Long Island Iced Tea" -> "Long
| Blockchain Inc" rebrand [1]
|
| Humorously enough, the same is roughly true of Tesla, a car
| company which sells 5% as many cars at Toyota while valued
| about twice what the entire rest of the car market put
| together is worth.
|
| Their only source of profit is selling carbon credits to
| traditional automakers who won't need them anymore as
| they're all moving electric too. One more Hail Mary
| distraction to maintain the _one thousand three hundred_ P
| /E ratio. In a _manufacturing_ business. Not software with
| zero marginal cost. Manufacturing. The industry average P
| /E is right around 15.
|
| > ...it's about living in a world of competitively
| devaluing currencies and resulting asset inflation.
|
| Currency is an intentionally-lossy temporary store of
| value. It only needs to hold its value for as long as it
| takes you to buy assets with them. At 2% inflation it does.
| Anything else is a straw-man you'd recognize if you
| attended ECON 101.
|
| Asset inflation isn't inflation, it's an ROI. CPI is
| inflation.
|
| This is a typical set of r/Bitcoin talking points that are
| easily debunked.
|
| [1] https://qz.com/1659246/the-fbi-wants-more-information-
| about-...
| throwaway20875 wrote:
| >CPI is inflation
|
| Lol
| arcticbull wrote:
| Right, yeah, if you pretend how much AAPL appreciated
| matters to anyone, asset inflation counts. Otherwise,
| it's CPI, and [citation needed] if you want to posit
| otherwise.
| danhak wrote:
| Housing, healthcare, education and childcare costs
| matter. I don't believe CPI is accurately capturing the
| skyrocketing costs of these things, which are the most
| significant expenses for most households.
| arcticbull wrote:
| And yet you and everyone else are unable to produce any
| meaningful sources or analysis that justify your beliefs.
| [citation needed] and we can talk about it.
|
| Healthcare is a social policy matter, not monetary
| policy, and nothing to do with increase in the money
| supply. You take that up with your representatives not
| the Fed.
|
| Housing is a function of city council zoning policy. You
| take that up with your city council not the Fed, or with
| the federal government it you want Japanese style zoning
| rules. [1]
|
| Childcare is social policy, not monetary policy, and you
| take that up with your representatives not the Fed.
|
| You can't just point to anything you don't like and say
| the Fed Did It or is responsible for it. All they do is
| control the money supply. Nothing more.
|
| A reduction in your welfare isn't inflation. Necessities
| can outpace inflation. It's bad social policy, but it
| happens. What you fail to understand is that these prices
| will continue to outstrip a platonic ideal even if
| denominated in Bitcoin because the increase in pricing
| has nothing to do with monetary policy. Any temporary
| reprieve is due to speculative mania.
|
| [1] http://urbankchoze.blogspot.com/2014/04/japanese-
| zoning.html
| chordalkeyboard wrote:
| > the increase in pricing has nothing to do with monetary
| policy.
|
| This is incorrect.
| [deleted]
| arcticbull wrote:
| Inflation adjusted $/sqft on average across the US
| housing costs exactly the same as it did in the 1970s.
| With interest rates 1/5 of what they were back then, each
| square foot is actually much more affordable.
|
| I admit I misspoke, because of course, monetary policy
| controls interest rates, but I maintain that a change in
| affordability is not dominated by inflation but rather
| other social policies. Houses are twice is big and
| families are 20% smaller.
|
| Happy to debate more but [citation needed].
|
| [1] https://fee.org/articles/new-homes-today-have-twice-
| the-squa...
| chordalkeyboard wrote:
| > Inflation adjusted $/sqft on average across the US
| housing costs exactly the same as it did in the 1970s.
|
| > Inflation adjusted
|
| Inflation is a result of monetary policy. So when you've
| adjusted the price for the monetary policy, you see that
| 50 years of capital accumulation and efficiency has been
| soaked up by monetary policy.
|
| > I admit I misspoke, because of course, monetary policy
| controls interest rates, but I maintain that a change in
| affordability is not dominated by inflation but rather
| other social policies. Houses are twice is big and
| families are 20% smaller.
|
| Things are supposed to get cheaper as capital
| accumulates. Social policies undoubtedly have an effect.
| So does increasing the money supply. An increase in the
| number of currency units necessarily causes each unit to
| be worth less, ceteris paribus.
|
| > Happy to debate more but [citation needed].
|
| I'm not sure how to proceed. The notion that one could
| print money and have each currency unit correspond to the
| same amount of physical goods is prima facie false.
| arcticbull wrote:
| > "I'm not sure how to proceed. The notion that one could
| print money and have each currency unit correspond to the
| same amount of physical goods is prima facie false."
|
| No, it's not, you're looking at half the equation. Value
| of money is a function of both supply and velocity. If
| velocity drops but supply increases commensurately, each
| unit of currency corresponds to the same amount of
| physical goods. [1]
|
| This should be dead obvious to you, as the money supply
| doubled last year but the price of Apples went up 2%. Not
| 100%. Same with the entire CPI basket. Housing actually
| got cheaper. Rent went down a ton.
|
| > Inflation is a result of monetary policy. So when
| you've adjusted the price for the monetary policy, you
| see that 50 years of capital accumulation and efficiency
| has been soaked up by monetary policy.
|
| We are talking in constant dollars that have a 0%
| notional rate of inflation. That's what inflation-
| adjusted means in this context.
|
| What do you mean by "50 years of capital accumulation"?
| People don't accumulate or hold dollars for exactly this
| reason. They accumulate and hold assets and value, whose
| performance matches or exceeds inflation.
|
| > Things are supposed to get cheaper as capital
| accumulates. Social policies undoubtedly have an effect.
| So does increasing the money supply. An increase in the
| number of currency units necessarily causes each unit to
| be worth less, ceteris paribus.
|
| I'm not sure what that means. Things aren't supposed to
| get anything as capital accumulates.
|
| An increase in number of currency units may or may not
| cause each unit to be worth less, as velocity is the
| missing half of the equation. With that in mind the goal
| is each unit to be worth 2% less each year, to
| incentivize higher velocity of money and investment.
|
| It's a straw man to say that your buying power drops 2%
| each year as a result of inflation. You're only penalized
| for inflation for the period between you receiving the
| dollars and using them to purchase assets whose
| performance exceeds inflation.
|
| [1] https://www.investopedia.com/terms/v/velocity.asp
| chordalkeyboard wrote:
| > No, it's not, you're looking at half the equation.
| Value of money is a function of both supply and velocity.
| If velocity drops but supply increases commensurately,
| each unit of currency corresponds to the same amount of
| physical goods. [1]
|
| for consumer goods, "velocity" is the rate at which those
| goods are consumed. People aren't generally choosing to
| starve themselves or pay rent on 4 apartments according
| to economic conditions.
|
| i should have included "ceteris paribus" with my
| statement but I thought it was obviously implied.
|
| > This should be dead obvious to you, as the money supply
| doubled last year but the price of Apples went up 2%. Not
| 100%. Same with the entire CPI basket. Housing actually
| got cheaper. Rent went down a ton.
|
| Ceteris is not paribus. The increase in money supply
| soaked up all the decrease in prices people 'should' have
| experienced.
|
| > We are talking in constant dollars that have a 0%
| notional rate of inflation. That's what inflation-
| adjusted means in this context.
|
| I understand what "inflation-adjusted" means. Once you
| adjust for the price increase due to people's dollars
| being worth less, the commodity costs the same. Of course
| people aren't paying in notional inflation-adjusted
| dollars, they are paying in the actual dollars that have
| depreciated, so they end up paying more for less, because
| of monetary policy. The value they miss out on accrues to
| people who get the new money earlier.
|
| > What do you mean by "50 years of capital accumulation"?
|
| I mean that the capital stock of the economy has
| increased over the past 50 years as a result of people
| investing their surplus in capital goods. This results in
| increased productivity and (ceteris paribus) a lower real
| cost of goods and services.
|
| > People don't accumulate or hold dollars for exactly
| this reason. They accumulate and hold assets and value,
| whose performance matches or exceeds inflation.
|
| Yes, because monetary policy results in depreciation of
| fiat currency.
|
| > I'm not sure what that means. Things aren't supposed to
| get anything as capital accumulates.
|
| Things are supposed to get cheaper as capital accumulates
| because labor is more efficient when combined with tools,
| resulting in more outputs and the subsequent decrease in
| real price.
|
| > An increase in number of currency units may or may not
| cause each unit to be worth less, as velocity is the
| missing half of the equation.
|
| You're missing the part where I said " _ceteris paribus_
| ", a commonly specified requirement for assertions about
| the connection between theory and economic reality.
|
| > It's a straw man to say that your buying power drops 2%
| each year as a result of inflation. You're only penalized
| for inflation for the period between you receiving the
| dollars and using them to purchase assets whose
| performance exceeds inflation.
|
| It's not a strawman, its literally the case.
|
| Additionally this requirement to invest dollars before
| they depreciate leads to asset prices skyrocketing
| without support from the underlying fundamentals. This
| leads to people who are already invested (the rich, the
| wealthy, the established old money, the upper class)
| gaining disproportionately, and new investors being
| priced out. Hence monetary policy is directly responsible
| for the rich getting richer and the poor being left
| behind.
| imtringued wrote:
| >I'm not sure how to proceed. The notion that one could
| print money and have each currency unit correspond to the
| same amount of physical goods is prima facie false.
|
| The entire problem is that it's not false at all. There
| are various ways to produce more physical goods without
| employing more domestic workers. Every time the fed is
| printing money that money gets invested in a way that
| does not result in decreased unemployment. It's being
| used to produce more physical goods which keeps the price
| of physical goods constant.
|
| Ultimately the only truly scarce "good" is labor.
| Everything derives from it. If prices are not rising that
| means labor is not scare at all, which is idiotic because
| there are lots of ways to productively deploy that labor.
| chordalkeyboard wrote:
| > The entire problem is that it's not false at all. There
| are various ways to produce more physical goods without
| employing more domestic workers. Every time the fed is
| printing money that money gets invested in a way that
| does not result in decreased unemployment. It's being
| used to produce more physical goods which keeps the price
| of physical goods constant.
|
| I was unclear and I should have included _ceteris
| paribus_ , but you're correct. The fed keeps the price of
| goods constant when it should be decreasing.
|
| > Ultimately the only truly scarce "good" is labor.
| Everything derives from it. If prices are not rising that
| means labor is not scare at all, which is idiotic because
| there are lots of ways to productively deploy that labor.
|
| Raw materials are also truly scarce, and you've neglected
| to apply the same level of analysis here as you did
| above.
| danhak wrote:
| > Housing is a function of city council zoning policy...
|
| This is the laughably reductionist take that predictably
| appears on HN when folks think the dynamics of San
| Francisco apply everywhere.
|
| Housing costs have nothing to do with the Fed? Really?
| You don't believe record low mortgage rates are driving
| demand at all?
|
| Nah, it must be city council zoning policy that is
| sending home prices soaring all over the country---even
| in rural and unincorporated areas.
| arcticbull wrote:
| I'm sorry you're just wrong about that though.
|
| On average, the price per square foot of housing in the
| US is exactly the same now as it was in the 1970s, on an
| inflation adjusted basis. [1] In major metros, that
| number is higher, because of city policy, but on average,
| the number is flat. That means on an inflation adjusted
| basis in rural areas houses are _cheaper_ per square
| foot.
|
| Once you take into account that interest rates are about
| 1/5th of what they were back then, it's clear, housing is
| actually more affordable now than it ever was (per square
| foot).
|
| Yes, zoning matters in rural areas. Minimum size rules,
| minimum setback rules -- all sorts of code changes --
| have conspired alongside the 20% decrease in average
| family size and the changing tastes for more space, to
| make houses _twice as big_. Same price per square foot --
| or lower! -- Twice as big. Twice as expensive.
|
| I was wrong to say it has "nothing" to do with it, but it
| is by far not the dominant force as evidenced by the
| numbers.
|
| If you're unhappy about poor folks not being able to
| afford the houses that's again _social policy_ not
| _monetary policy_. I am too. But inflation isn 't why.
|
| By all means have at those windmills though, and please,
| cite your sources so we can have a debate on facts.
|
| [edit] You're missing my point. Pricing in metros is more
| expensive because of council policy. Pricing outside the
| city is higher because they're twice as big. End of
| story. Please CITE YOUR SOURCES. This. Is. Not.
| Inflation.
|
| You having a worse quality of life is not inflation.
|
| Yes, white flight may or may not contribute to it. That's
| not Fed policy. That's social policy. And that's my
| point.
|
| [1] https://fee.org/articles/new-homes-today-have-twice-
| the-squa...
| [deleted]
| [deleted]
| imcoconut wrote:
| You're not necessarily wrong that the causes of the
| increases in prices for things like healthcare, etc. are
| due to policy issues, among other things. But you can
| kind of make that argument for any good or service - that
| that the increase in the price of x is a "specific
| industry/policy issue" and not a "monetary issue".
|
| That doesn't negate the fact that people are still paying
| higher prices. If the fed is mandated with controlling
| the increase in prices then it is still upon them to
| address it, no? The fact that monetary policy is not a
| primary cause of the good/service specific inflation is
| irrelevant.
| arcticbull wrote:
| > That doesn't negate the fact that people are still
| paying higher prices. If the fed is mandated with
| controlling the increase in prices then it is still upon
| them to address it, no? The fact that monetary policy is
| not a primary cause of the good/service specific
| inflation is irrelevant.
|
| If 'everything is going up the same amount' then sure. If
| one particular contributor makes an outsized move in the
| wrong direction what's the fed to do? Fire up the printer
| at the cost of all of the other areas of life that aren't
| going up?
|
| Healthcare contributes to inflation, sure, but if
| government passes a 50% tax on all healthcare procedures
| overnight, that's not the Fed's job to rectify. It's not
| their job to fight Congress on how relatively expensive
| certain things are. If the government decides healthcare
| should only be for the rich (...er) then it's not the
| Fed's job to change that.
|
| They would account for what the newly more expensive
| healthcare cost does to inflation as a whole, and
| increase or decrease the money supply to match.
|
| Their job is systemic, not targeted. Want cheaper
| healthcare? Talk to congress, not Janet Yellen.
| imtringued wrote:
| >Housing costs have nothing to do with the Fed? Really?
| You don't believe record low mortgage rates are driving
| demand at all?
|
| Imagine if you are a bathroom remodeling company and
| people are building new bathrooms for $5k. You can build
| a bathroom for $4K. Suddenly the fed is loosening its
| monetary policy and people are building bathrooms like
| crazy with their bathroom mortgages. They are willing to
| pay $10k per bathroom but your costs didn't change. It's
| now extremely profitable to build bathrooms and that's
| exactly what you are going to do. You're going to hire
| lots of workers so that everyone can get their bathrooms.
| Turns out, a competitor does the exact same thing but
| they sell their bathrooms for $9k. Add more competitors
| and the price will be very close to the cost of
| construction.
|
| Now replace the bathroom with the entire house. Suddenly
| you realize something. It's very difficult to find land
| to build your new house and even if you did you would
| have to upzone the property by tearing an existing
| property down and building a 2-3 story multifamily home
| there. Unfortunately, doing this is illegal in many
| places and where it is legal permits are being denied for
| arbitrary reasons.
|
| You can't tell me that construction companies can't make
| money off new construction because the cost of housing is
| too low.
| SpicyLemonZest wrote:
| Rural and unincorporated areas have strict zoning too.
| Look at Tuolomne county (https://www.arcgis.com/apps/weba
| ppviewer/index.html?id=3e926...) for an example I could
| easily find a graphic for. The vast majority of
| privately-held land in the county is zoned RR (brown, 1
| unit per 5 acres), AG (1 unit per 18.5 acres), or TPZ (1
| unit per 37 acres).
| rank0 wrote:
| There's actually considerable debate on the subject. I
| find it reasonable that things which are outside the CPI
| basket can indeed experience inflation.
|
| https://www.investopedia.com/articles/07/consumerpriceind
| ex....
|
| If 25% of circulating USD were created last year, and our
| economic value is the same or even diminished, wouldn't
| it follow that there must be significant inflation?
| arcticbull wrote:
| > If 25% of circulating USD were created last year, and
| our economic value is the same or even diminished,
| wouldn't it follow that there must be significant
| inflation?
|
| Not necessarily, no. The value of money is a function of
| supply and velocity. If the velocity went down and the
| supply went up 25% the fed can still nail its 2% target.
| [1, 2, 3] If the velocity increases next year the fed can
| shrink the supply commensurately to maintain its targets.
|
| [1] https://www.investopedia.com/terms/v/velocity.asp
|
| [2] https://www.stlouisfed.org/on-the-
| economy/2014/september/wha...
|
| [3] https://www.investopedia.com/ask/answers/042015/how-
| does-mon...
| rank0 wrote:
| That's very interesting I was not familiar with the
| concept of velocity.
|
| It still seems to me that velocity can vary depending on
| the underlying entity. So unless every asset has the same
| velocity measure as the items in the CPI basket, it seems
| that there has to be some amount of inflation somewhere
| like possibly US equities.
| arcticbull wrote:
| The idea of velocity is pretty simple. If you print a $1T
| coin and hand it to me, then I throw it in a safe and
| forget the code, did the increase in supply cause any
| material increase in inflation experienced at the point
| of sale by the average person? Probably not. The supply
| went up, but the average velocity went down
| commensurately.
|
| How this interacts with assets is in my opinion not super
| clear. Pricing of assets is supply and demand, unlike the
| CPI basket. The CPI basket is based on human need.
| There's no human need for AAPL shares. However, there's a
| ton of stimulus money, and folks who remember 2008's
| V-shaped recovery, and a bunch of people stuck at home
| day trading. I think that's much more likely to be
| driving asset prices than supply. After all supply is
| enacted by changing lending parameters.
|
| To the extent asset prices don't put pressure on CPI,
| they reflect an increase in welfare, not an increase in
| inflation.
| imtringued wrote:
| The velocity of a particular Bitcoin arrives at 0 given
| enough time. Bitcoin get lost. These Bitcoin cannot move
| and thus contribute to the deflation of Bitcoin. They
| effectively shrink the money supply.
| arcticbull wrote:
| True, but that's a uniquely Bitcoin problem, and it's one
| of the many reasons Bitcoin is not fit for purpose.
| jerry1979 wrote:
| CPI probably doesn't reflect inflation the way Fed looks
| at it. They use PCE[1]:
|
| >An accurate measure of inflation is important for both
| the U.S. federal government and the Federal Reserve's
| Federal Open Market Committee (FOMC), but they focus on
| different measures. For example, the federal government
| uses the CPI to make inflation adjustments to certain
| kinds of benefits, such as Social Security.[3] In
| contrast, the FOMC focuses on PCE inflation in its
| quarterly economic projections and also states its
| longer-run inflation goal in terms of headline PCE.
|
| [1] https://www.stlouisfed.org/publications/regional-
| economist/j...
| imtringued wrote:
| That's quite interesting but the overall picture is the
| same in both CPI and PCE. It's just another way to
| measure inflation in consumer goods and services. Compare
| that to the usual Bitcoin advocates talking about
| inflation of the dollar relative to Bitcoin. It's
| measuring something completely different.
| DSingularity wrote:
| You know, your point about Tesla has given me lots of
| conflict. What did I miss? Obviously this question came
| when I sold off my TSLA stock at 500$ thinking -- it was
| overvalued -- and then watching it rise to the equivalent
| of 4,000$. I reached the conclusion it's no longer solely
| about cash flow and debt ratios and market cap and
| addressable market and whatever other traditional metrics
| we previously used to value companies. The emotional
| component has become more important.
|
| People are buying TSLA because they want to do something
| about climate change. Or maybe cause they worship Musk.
| This is probably holding for other companies in other
| industries. Bitcoin is definitely not only being bought
| because it's digital gold. It's being bought because
| people are emotionally attached to resetting the system.
| A bunch of middle fingers to the dollar rich (Bitcoin
| poor) by a bunch dollar poor (Bitcoin rich). This is why
| people are buying BTC.
|
| Whether it is TSLA or BTC -- value itself is being
| disrupted.
| whobar wrote:
| I think you can't judge whether TSLA is overvalued or not
| until they are no longer instantly selling out of all
| their products. People are bullish on TSLA because they
| have a product that many, many people want, more than
| they have the capability to supply.
|
| Once they have their peak production capacity and have
| surplus stock across all markets we will get a better
| idea of their true value.
|
| The most that the price of TSLA and BTC have in common is
| that both their values can be represented on a graph.
| arcticbull wrote:
| Yes, I agree, but I'm confident they're not worth twice
| the sum total of the entire car market by themselves.
|
| > The most that the price of TSLA and BTC have in common
| is that both their values can be represented on a graph.
|
| Well, that and one holds a chunk of the other. They're
| also surprisingly heavily correlated from a price action
| POV. I suspect there's a bit more going on than meets the
| eye. Burry tweeted the crazy level of correlation a few
| days ago.
| arcticbull wrote:
| > People are buying TSLA because they want to do
| something about climate change.
|
| I hope given Tesla's new affinity with Bitcoin that what
| they want to do is "make it worse" lol. Tesla is
| literally selling its green energy credits to dirty car
| companies, then throwing it at Chinese coal miners.
|
| The market goes through particularly bubblicious periods
| of pricing mania from time to time. It's happening now,
| it's happened before, and it'll happen again. I wouldn't
| read too much into it. "..in the short
| run, the market is like a voting machine--tallying up
| which firms are popular and unpopular. But in the long
| run, the market is like a weighing machine--assessing the
| substance of a company." - Benjamin Graham
|
| Prior to the pandemic stimmy money, poor people weren't
| investing and middle class folks were. When the pandemic
| hit, poor people lost their jobs, middle class folks kept
| them. Both poor and middle class folks received stimmy
| money. The middle class folks invested it.
|
| The whole run up there were trillions on the side-line,
| and folks who remember 2008 weren't about to let another
| V shaped recovery pass them by. They plowed money into
| whatever they could. Literally everything exploded in
| value last year. My personal trading account is up almost
| 14X on a 1-year basis today.
|
| It's nothing to do with fundamentals, just a bubble.
| It'll revert in time, and then it'll grow again.
| DSingularity wrote:
| It will only revert if people sell. What if nobody sells
| because they equate selling with giving up on their
| dreams of fighting climate change?
| kipchak wrote:
| Retail might never sell, I doubt commercial institutions
| Vanguard for example would not sell for idealistic
| reasons.
| DSingularity wrote:
| Vanguard doesn't try to call tops. If they sell shares it
| would be to lock in profit and diversify their EV
| investment.
| arcticbull wrote:
| Again, Tesla makes climate change worse by investing in
| Bitcoin so if climate change is the driver they should
| sell ASAP. I think you're overestimating the average
| speculator's love of the environment.
|
| Yes, this time could be different. Past performance is
| not an indication of future performance. That said, it
| would be the _first_ time something 's gone parabolic
| upward (while lacking the fundamentals) without
| retracing, and I don't see any reason this time would be
| different.
|
| [edit: Check this out: (1) https://imgur.com/a/HATGeWr
| (2) https://imgur.com/a/umQLsnK]
| DSingularity wrote:
| I'm not debating the subtleties of Tesla's carbon
| footprint. Im just asking what if the people buying TSLA
| are not buying for profit? What if they are buying
| because they believe it is the way they can fight climate
| change.
|
| Will it eventually retrace? Probably. Almost surely. But
| it will probably not matter at that point relative to
| today.
|
| I think we are in an era where stocks are mostly detached
| from fundamentals. Ask yourself who truly cares about
| fundamentals? It's the uber wealthy who are trying to
| preserve their capital. Wealth disparity is huge so those
| numbers are fewer.
|
| The Robinhood investors aren't pouring over spreadsheets
| to decide where the best PE ratio tradeoff is most
| favorable. They aren't trying to balance growth and
| income. They are literally buying whatever hyped them the
| most.
|
| Now regarding the AMD chart. You should consider it in
| context of their defeat by Intel and subsequent
| turnaround. That, I think, drove the price movements
| shown in the chart. Did profit taking from amazing runs
| also matter? Probably. But you can't ignore that AMD was
| nearly bankrupt and had to reinvent itself because it
| lost so much ground to Intel.
| janoside wrote:
| Your view on currency exposes your extremely elitist
| bias.
|
| Are you aware that a large portion of the population is
| unable to purchase assets? What do you say to these
| people? What do you say as the dollars they earn pay less
| of their rent? Less of their healthcare? Soon...less of
| their groceries?
| arcticbull wrote:
| Nah quite the opposite. The world has had 14 years to buy
| Bitcoin. Happened at the same time as the iPhone.
| Everyone in these poor countries has iPhones or android
| devices and nobody wants Bitcoin for them except the
| first world pushers. I defer to the locals. If they
| thought it was any good they'd use it. They don't.
|
| I would tell those people that if their government is
| broken they have bigger problems than their currency and
| once they solve their leadership problems the currency
| won't be an issue anymore. Tough but true. Nothing there
| changes with Bitcoin and it's $20 transaction fees.
| [deleted]
| hertzrat wrote:
| Investing in Bitcoin seems like investing in GameStop: so
| many people are obsessed and want in on it but almost nobody
| really understands what's going on or why the value is
| growing. They just want the easy money. Regardless of whether
| Bitcoin is a good investment or not, this is not a healthy
| way for an investment market to work
| chemmail wrote:
| Typical worldview of a frog in a well.
| literallycancer wrote:
| scp twice a day to keep the plebs at bay
| KorematsuFred wrote:
| A lot of currencies in the world are not stable and some are
| worse than some shitcoin. Also, there are some ridiculous
| restrictions on what you can do with your own money. For
| example in India you simply can't leave the country with your
| money. What are you going to do ? Bitcoin is helpful.
| janeroe wrote:
| > What's the point of an unstable, volatile, frantically
| manipulated currency
|
| I don't know, but for some reason people keep using USD. Even
| though in the long run BTC keeps growing and USD will only
| lose its value.
| deevolution wrote:
| How can you possibly back up the claim that the USD is
| stable? My grandparents were able to buy several acres of
| land and build a house for 80k in the 1970s. Doing the same
| today costs 500k+!!! It's completely outrageous. Ths USD is
| far from stable and anyone who thinks so is either insanely
| privileged or ignorant!
| dkersten wrote:
| Because the cappuccino will continue to cost them $4
| tomorrow, next week and next month. Sure, its value changes
| and a cappuccino may even cost a different amount sometime
| in the future, but its easy to know the value of the money
| you have because the exchange rate between dollars and
| items in the shop doesn't change so much.
|
| Contrast that with bitcoin, where the value often changes
| by many, many cappuccino's in a single day.
| Geee wrote:
| You can choose to become poor slowly or to get rich
| slowly. The short-term volatility doesn't matter in the
| long run.
| lmm wrote:
| In the long run we're all dead. Short-term volatility
| matters a lot given gambler's ruin etc.
| kpommerenke wrote:
| Moderate inflation is a feature, not a bug, due to sticky
| wages [1]. Without inflation you get longer lasting
| recessions and worse unemployment. [1]:
| https://en.wikipedia.org/wiki/Nominal_rigidity
| lxgr wrote:
| Predictable inflation is a form of stability.
| Erlich_Bachman wrote:
| "I would choose a volatile 200% increase over a year than
| a stable predictable 10% decrease." Michael J. Saylor
| lxgr wrote:
| Is this for an investment or a currency? There's a reason
| there is both.
| centimeter wrote:
| It's reasonable to expect the value of Bitcoin to stabilize
| as it becomes a more popular store of value.
|
| The US dollar provides stability and security over a very
| short timescale. It's been inflating for decades (punishing
| dollar holders and waged/salaried workers) and based on the
| current political environment (insane dollar printing, "MMT"
| having political currency, etc.) there's a substantial risk
| of serious dollar instability in the next few decades.
| X6S1x6Okd1st wrote:
| It's kind of moot w.r.t. MasterCard. They will only accept
| stablecoins which are generally pegged to usd
| toomuchtodo wrote:
| Someone's bonus and job depends on them appearing
| "innovative".
| systemvoltage wrote:
| This is an important point I missed, thanks.
|
| I am totally on board a pegged crypto currency that tracks
| US dollar. For me and many others I presume, stability is
| far more important than anything else that crypto
| currencies have to offer.
| X6S1x6Okd1st wrote:
| Well there are certainly plenty to choose from, the major
| downside to stablecoins is that you need to place trust
| in the mechanism that ensures they are actually stable.
| Tether is the biggest one and it's pretty unclear whether
| they are trust worthy.
|
| IMO one of the most important properties of
| cryptocurrencies is that you only need to place trust in
| the code & that the miners are selfish.
| AgentME wrote:
| Not to invalidate your point, but Tether is a
| particularly untrustworthy example. USDC is another
| centralized stablecoin that's more transparently managed
| than Tether, and then DAI is a decentralized stablecoin
| that keeps its value through a smart contract that
| manages collateral and minting in order to keep its value
| steady.
| graeme wrote:
| Like Tether? They're currently in the middle of a fraud
| case alleging they are not at all backed by USD and thus
| the peg is supported by fiat and liable to fall off.
|
| (I mean this in the dictionary sense of the word fiat that
| gives meaning to the phrase fiat currency. I don't mean
| tether is supported by fiat currency)
| lui8906 wrote:
| > Crypto's volatility deters me from using it, simply put.
|
| There is stable coins which have held a consistent peg
| against the US dollar for a couple of years now. You get all
| the benefit of high APY yield (relative to a bank account)
| and none of the volatility of a Doge or a BTC.
| lottin wrote:
| You can be certain that an investment opportunity is a scam
| when it promises above-market returns with no additional
| risk.
| deeeeplearning wrote:
| Savings Account APY != Market Returns. Fyi
| scsilver wrote:
| These currencies will inflate in value as their network grows
| wider. Each new user adds value like a telephone network.
| Eventually, there will be a point where everyone who wants to
| be connected is connected, they have bought the bitcoin they
| want and bitcoin prices reach an steady state. At that point,
| it should be stable enough to use as a currency.
| PragmaticPulp wrote:
| It's fascinating to watch MLM logic sweep the tech world.
|
| Get in on the ground floor of this opportunity, then
| convince all of your friends to buy in, then they convince
| all of their friends...
|
| Once the speculation upside is gone, why would anyone want
| to buy Bitcoin? That's the real question.
| scsilver wrote:
| Its not MLM its network effects. Every node added to a
| transactional network adds real world value to that
| network. Its etreamly evident in telephone networks.
|
| The reason people would want to buy bitcoin once it has
| grown out of its speculation is the vast marketplace of
| people and vendors who accept bitcoin as tender + the use
| of bitcoin as a hedge against the inflation of your local
| fiat currency.
|
| It becomes another investment vehicle to diversify with.
| centimeter wrote:
| MLM dynamics actually do apply to monetized assets in
| some cases. Cf. "Bubble Theory Of Money", Gresham's Law.
|
| Once the speculation upside is gone, you would use
| Bitcoin because it's the best available reserve and
| settlement asset. What are your other options?
| Inflationary USD or Yuan? Few rational actors would
| prefer to hold those.
| ForHackernews wrote:
| > Inflationary USD
|
| lolz https://www.macrotrends.net/countries/USA/united-
| states/infl...
| centimeter wrote:
| CPI is a joke of a metric. Very few economists take it
| seriously.
| imtringued wrote:
| It really isn't a joke. It tracks changes in cost of
| living pretty well.
|
| The real mystery is why the fed is committing to supply
| side economics in a demand starved economy. That's the
| exact opposite of what you should do.
| ForHackernews wrote:
| Does the Fed have anything it can do on the demand side?
| I'm pretty rusty on my macroeconomics, but I thought you
| needed fiscal policy to buy stuff if you want to juice
| demand.
| ForHackernews wrote:
| What metric would you prefer?
| trhway wrote:
| my favorite is M3
| https://fred.stlouisfed.org/series/MABMM301USM189S
|
| Edit: I thought it was obvious, yet in response to
| comment below - theoretically to get real inflation one
| has to adjust the M3 for the growth of the total amount
| of "stuff" in the economy. As that growth is just
| 1-2%/year , the M3 shape is visually indistinguishable
| from the real inflation on any given time period of up to
| several years.
| ForHackernews wrote:
| In response to your edit, I don't know how you can claim
| that "real" (according to who? you?) inflation is somehow
| divorced from the purchasing power of a dollar. What
| matters to most humans is how far their wages go at the
| shop.
|
| Hand-waving at money supply and "total amount of stuff"
| without reference to prices makes as much sense as
| arguing "Well obviously daily commutes were shorter in
| 2019 than 1919 because cars are much faster than horses.
| Just look at my chart of relative top speeds!"
| trhway wrote:
| You forgot the second part - the total miles commuted.
| The same is inflation - faster growing total money
| divided by slower growing total "stuff".
| ForHackernews wrote:
| That's not a measure of inflation, it's just a measure of
| money supply.
| georgeplusplus wrote:
| inflation is defined as expansion or contraction in the
| money supply
| ForHackernews wrote:
| https://www.investopedia.com/terms/i/inflation.asp
|
| > Inflation is the decline of purchasing power of a given
| currency over time.
|
| https://www.economicshelp.org/macroeconomics/inflation/de
| fin...
|
| > A more exact definition of inflation is a sustained
| increase in the general price level in an economy.
| Inflation means an increase in the cost of living as the
| price of goods and services rise.
|
| https://www.economicsonline.co.uk/Definitions/Inflation.h
| tml
|
| > Inflation refers to a rise in the average level of
| prices sustained over time, which also corresponds to a
| fall in the internal (domestic) purchasing power of
| money.
| PragmaticPulp wrote:
| > What are your other options? Inflationary USD
|
| Investors don't have to choose between investing in
| Bitcoin or parking their money in cash.
|
| The stock market, real estate, commodities, and other
| assets don't lose their value if USD inflates.
|
| The narrative that the only two choices are to buy
| Bitcoin or lose out to inflation is a fiction designed to
| convince people to buy more Bitcoin. Bitcoin isn't the
| only investment option.
|
| > Inflationary USD or Yuan? Few rational actors would
| prefer to hold those.
|
| Evidence suggests otherwise.
| UShouldBWorking wrote:
| You (and most of the world) continues to miss the point of
| Bitcoin, just read the title of the white paper. It is a
| digital CASH payments network.
|
| This threatens the bankers and government so they have
| largely coopted the project and twisted Bitcoin Core into
| some sick settlement layer for their "second layer" products.
|
| Real Bitcoin (now called Bitcoin Cash) continues to be stable
| with low fees and instant transactions.
| clusterfish wrote:
| The point is money laundering. Why do you think
| cryptocurrencies are still legal? Politicians need it.
| MichaelBurge wrote:
| Volatility is a non-issue with the release of CME futures.
| You can short Bitcoin or Ethereum futures to lock in your
| price with respect to USD at any time.
|
| The base futures contracts are 5 Bitcoin i.e. notional value
| of $200k, but that's merely an inconvenience and not a
| fundamental blocker to subdivide the futures contract or have
| someone do it for you.
|
| I think for years payment companies like Bitpay have had
| price guarantees for merchants(probably using futures in the
| backend), but you do have more counterparty risk dealing with
| unregulated exchanges.
| reedjosh wrote:
| >What's the point of an unstable, volatile, frantically
| manipulated currency that is susceptible to social media pump
| and dump schemes (Elon + Doge)?
|
| BTC is only volatile as not enough people use it. Further, if
| you stay on USD, every year a cappuccino will cost you more.
| Fractional reserve banking is practically a license to print
| USD. We're not funding the stimulus or really any of our
| government via tax anymore. Inflation is the real tax.
| mlthoughts2018 wrote:
| If you live in a situation where the only local fiat currency
| is even worse, then the "volatility fee" of cryptocurrency
| may be well worth the money to decouple yourself from that
| bad fiat currency risk. Maybe you can purchase things
| directly with the cryptocurrency, or maybe you just wait
| until you can drive across the border to a place with more
| stable fiat currency, sell cryptocurrency for that currency,
| and buy milk. Simple currency exchange or traditional
| custodial stores of value like precious metals wouldn't work,
| since you're still beholden to the original fiat currency
| problem.
|
| At any given time, some small slice of world currency demand
| will be focused on this "protection from unstable fiat
| currency" and some other small slice would be like a prepper
| mindset hedging their perceived risk of facing that (eg "but
| what if the US dollar collapses?" from people with very
| extreme risk aversion preferences).
|
| That total "market cap" demand for cryptocurrency will surely
| be way, way lower than traditional fiat currencies, but it
| may still be much higher than the current total market cap
| for crypto, which means there is room for completely rational
| speculative buying and holding of crypto, depending on your
| outlook and risk preferences, for perfectly sound reasons.
|
| I highly doubt Bitcoin is ever going to become a major direct
| medium of exchange. But also it does not need to become that.
| It can offer big value in a lesser role that would still
| justify speculative buying of crypto today.
| fennecfoxen wrote:
| > If you live in a situation where the only local fiat
| currency is even worse
|
| Then you start buying and transacting with good old Yankee
| dollars, as the good people in places like Zimbabwe and
| Argentina and Cuba and other such places have done, because
| this is the low volatility option and dollars are widely
| accepted. You _don 't_ buy the cryptocurrencies, as they
| are subject to wild price swings and only marginally
| accepted.
|
| If you can't buy dollars, something like gold is a much
| better hedge than bitcoin.
| mlthoughts2018 wrote:
| Gold would specifically _not_ be a good choice in that
| situation, because you have to pay a custodian to deal
| with the gold and store it for you. That means either
| transacting in the original risky fiat currency any time
| you convert between the currency and gold (such as to buy
| things), or else transacting in the original risky fiat
| currency to get a foreign exchange to another currency
| and then transacting with a custodian - which defeats the
| whole purpose of converting the asset away from the
| original fiat currency that exposes untenable risk.
| barrenko wrote:
| Just look up what happened the last two years in
| Venezuela and Argentina, we no longer need to guess...
| PragmaticPulp wrote:
| If someone is in a country with a collapsing local
| currency, they still have to transfer that money to a
| Bitcoin exchange before they can transfer the Bitcoin.
|
| If the currency is collapsing, who's going to trade Bitcoin
| for the collapsing currency? That's the necessary first
| step in this process.
|
| If I'm just trying to cross the border with Bitcoin in my
| mind wallet so I can convert it back to cash on the other
| side, why does it matter if 1 BTC is $10 or $10,000,000? It
| doesn't, because moving money round-trip through a currency
| is a matched pair of buy and sell trades in a short period.
| Net zero, long term.
|
| This narrative that Bitcoin is somehow going to save
| refugees from oppressive governments is possible, but
| deeply flawed in practice. Either way, it's not a long term
| driver of demand.
|
| Frankly, it's far more likely that the dictators of such
| countries would use Bitcoin to flee the country with their
| citizen's money and avoid prosecution than the other way
| around.
| mlthoughts2018 wrote:
| This is why you would speculatively buy Bitcoin and hold
| it long before that happened, at a time when people are
| happy to accept your fiat currency for Bitcoin. People
| learning from experience in Venezuela, Zimbabwe, North
| Korea, would probably feel glad to put some fraction of
| savings into crypto just in case, knowing that the
| interim volatility risk of it sitting in crypto is a
| worthwhile price to pay to have a reserve money supply
| that does not need to pass back through their original
| fiat currency on the way to being spent (as precious
| metals, stocks, bonds, securities, options, etc. all
| would).
| imtringued wrote:
| Ok, now lets say you did the Bitcoin thing and your
| assets are safe. You are still suffering from poor
| governance and Bitcoin isn't going to change that one
| bit.
| mlthoughts2018 wrote:
| You can take a bus to Colombia and actually buy food or
| medicine. You call that nothing, so fine, don't but
| Bitcoin if that works for you. It's surprising you don't
| think others might possibly disagree.
| fennecfoxen wrote:
| > If the currency is collapsing, who's going to trade
| Bitcoin for the collapsing currency?
|
| Well, you'd probably find someone wanting to trade
| Bitcoin for goods, and as part of the transaction,
| someone else would end up using local currencies to buy
| those goods.
|
| ... Of course, in the general case, you're probably more
| likely to find someone who wants to trade USD for those
| goods.
| PragmaticPulp wrote:
| > Well, you'd probably find someone wanting to trade
| Bitcoin for goods
|
| If your net worth is tied up in goods, assets, and other
| non-cash investments, you don't need Bitcoin to avoid
| currency inflation.
| GrumpyNl wrote:
| Marketing and marketing, jump the bitcoin bandwagon.
| koonsolo wrote:
| With any fiat currency, you are indeed aware that it devalues
| at a steady pace.
| herbst wrote:
| A coffee in switzerland costs you 5 usd today when it cost 4
| usd a few years back. Stable really is relative even with
| major currencies.
|
| I dont hold USD because it relatively loses in value for
| months and years now.
| krisdol wrote:
| Full disclosure: I own about $11 worth of bitcoin if I round
| up a bit, so this might be biased.
|
| The most convincing "point" of bitcoin I've heard is to
| accomodate transfer of large sums of money across borders,
| quickly, with minimal transaction costs and oversight.
| Everyone here can afford the fee to transact 8 billion
| dollars worth of bitcoin. And settlement happens in seconds
| to a couple minutes. That's appealing to people trying to
| move millions or billions of dollars around.
| blackbrokkoli wrote:
| Yeah, sure settlement _in Bitcoin_ happens within a few
| minutes. Getting that converted into usable money is a
| whole other story, no?
|
| I can basically think of two scenario types when you are in
| need of international, spontaneous money transfer:
|
| a) "I just got carjacked in Sierra Leone and need some
| money for an hotel and a flight home"
|
| b) "I have some weird novel business and I would like to
| pay my contractors in East Timor biweekly"
|
| I cannot image using Bitcoin for either, first one because
| of the convert-to-money-thing, second one because of the
| volatility. There is also some kind of - how do you call
| this - meta-trust that I just don't have in Bitcoin: Go
| off-grid for two weeks and there is a non trivial chance
| that some weird shit happened within crypto that is now an
| obstacle (crash or rally, outlawing, split, ...). That does
| not happen with US dollars.
|
| I got the feeling that this is yet another incredibly
| obscure use case that doesn't even really work Bitcoin
| fanatics (not directed at the quite reasonable parent
| comment) use to justify their gambling and Lambo-dreams.
| Just like "it could be the new gold" or "what if the US gov
| collapses".
|
| But I am certainly no expert in international money
| transfer by any means, so feel free to change my mind!
| FalconSensei wrote:
| > Go off-grid for two weeks and there is a non trivial
| chance that some weird shit happened within crypto that
| is now an obstacle
|
| For people in countries with a more stable
| economy/currency, this is very true. Even in countries
| with a bigger inflation, things are a bit more
| predictable.
|
| But of course, different countries/economies/currencies
| have different realities.
| SuoDuanDao wrote:
| >Go off-grid for two weeks and there is a non trivial
| chance that some weird shit happened within crypto that
| is now an obstacle (crash or rally, outlawing, split,
| ...). That does not happen with US dollars.
|
| That is fair, but it would be more accurate to say 'has
| not happened with US dollars since 1930'. Currencies
| collapse is not that unusual an occurrence, my own
| (German) grandparents live through five separate currency
| regimes in the same country. Being truly uncorrelated
| with most other investments can be a real selling point
| for a hedge like BTC.
|
| Disclosure: I own several cryptocurrencies including BTC
| which I mentally categorise as 'collectables'.
| throw89323432 wrote:
| I had contractor on Litecoin in Russia for 6 months.
| Worked pretty well.
| faffe wrote:
| Out of curiosity, can I know why you did use Litecoin
| rather than others crypto???
| brianobush wrote:
| Speed of transactions and less fees.
| GoblinSlayer wrote:
| Life outside of USA is basically cryptozoology:
| https://www.reuters.com/article/us-crypto-currencies-
| africa-...
| sorbits wrote:
| _> And settlement happens in seconds to a couple minutes_
|
| That is incorrect. On average it takes 10 minutes to mine a
| block, but you have to submit the transaction to be
| included in the block, so > 10 minutes before it appears on
| the blockchain.
|
| However, there are actually many block chains, as miners
| creates block in parallel, it's the longest one that is the
| "official", but the minute you see your transaction in a
| block, you do not know if this block will stay in the
| longest chain, so in general you want at least 5 new
| blocks, after your block, before it is considered "safe".
|
| So now we are talking about one hour to do a transaction,
| and that assumes that the network is not overloaded,
| because there is also a cap on number of transactions that
| can be included in a block.
|
| All in all, it is a _terrible_ system for fast
| transactions.
| tomca32 wrote:
| I live and work in the US, but originally I'm from
| Croatia. I wire money every month to my family back
| there.
|
| It takes 5 work days for the wire to fully clear. Since 5
| days is a full work week, it almost always bleeds over to
| the weekend and in reality takes 7 days.
|
| BTC might still be a terrible system for international
| transactions but it's still 168 times faster than the one
| that exists now.
| sorbits wrote:
| _> BTC might still be a terrible system for international
| transactions but it 's still 168 times faster than the
| one that exists now._
|
| It is 168 times faster than _what you currently use_.
|
| There are services like TransferWise who specialize in
| fast international money transfers.
|
| I could imagine that part of your delay is because the
| bank your family use (in Croatia) does not themselves
| handle international transfers, so they go through an
| intermediary bank, only adding delays.
|
| I have often done ~12 hours international wires from
| Wells Fargo (U.S.) to Asia, and here the delay could
| simply have been due to the time zone.
|
| Within the European Monetary Zone I often see money
| arrive in 10-30 minutes (crossing borders).
| tomca32 wrote:
| That's a fair comment. I don't use Transferwise, rather
| just wire money via Chase Bank to an IBAN account. You
| are right that there is an intermediary bank involved in
| the process.
|
| Also yes, within Europe, an IBAN to IBAN transfer is
| pretty much instantaneous. However US is not in the IBAN
| system, so that's a different story.
|
| There are probably multiple reasons why the transfer
| takes a week, but the spirit of my comment was that an
| hour long (at worst) transaction time for BTC is actually
| very fast if you look at it through the international
| money transfer lens.
| omegaworks wrote:
| My worry is that we will continue to see the pace of
| international money transfers increase as competition,
| trust and infrastructure improves. Bitcoin, on the other
| hand, is limited structurally by the very mechanism that
| guarantees its accuracy. Today miners burn 77Kwh of
| energy to mine the block that records your
| transaction[1]. Sure hashing tech might get more
| efficient, but the block mining complexity increases to
| keep their discovery rate constant at one every 10
| minutes[2]. This does not set a cap on the energy usage
| of mining for the network.
|
| 1. https://www.vice.com/en/article/ywbbpm/bitcoin-mining-
| electr...
|
| 2. https://digiconomist.net/bitcoin-energy-consumption/
| brianobush wrote:
| Staking (for Ethereum 2.0) will be the mechanism over the
| current proof of work method. This will reduce the energy
| cost significantly by removing the requirement of mining.
| omegaworks wrote:
| How do people plan on transitioning? Bitcoin holders will
| find themselves unable to transact their coin if miners
| move to Ethereum en masse.
| brianobush wrote:
| I wouldn't consider TransferWise fast. I used to send
| money to Canada from the US and it took a day or so for
| verification and settlement.
| africanboy wrote:
| honest question: what's the advantage of bitcoins over
| amazon gift cards (or any other prepaid credit)?
|
| they are immediate, cheap and can be exchanged for real
| money for free.
| tomca32 wrote:
| I don't know. I never tried doing that. Amazon is pretty
| useless in Croatia so that probably wouldn't work, but
| there might be some prepaid cards that would.
|
| I don't know, haven't explored that option honestly.
| FalconSensei wrote:
| Awesome, go to the supermarket, pay with BTC and wait
| there for an hour for your transaction to complete.
|
| Or try to buy anything time/quantity limited, so you
| don't get it because the transaction took too long to
| complete.
|
| Meanwhile, in Canada, I just do a money transfer by email
| without any fees (if sending more than $10), and it's
| almost instant if the receiver have auto-deposit set up.
| makruiten wrote:
| How does that email system work? Can't you just do free
| instant wire transfers in Canada?
| Jtsummers wrote:
| Possibly something like Zelle (in the US, not sure where
| else). Using someone's contact information (phone or
| email) you can send money to them quickly and easily.
| They can set it up with whichever bank and change it as
| they desire, no banking information never needs to be
| communicated between the two parties.
| sizzle wrote:
| Why would you have to wait an hour? A credit card isn't
| instant? Isn't there some level of trust involved here?
| imtringued wrote:
| You won't have to wait an hour because MasterCard will
| support Bitcoin. However, this completely goes against
| the idea of decentralization.
| faffe wrote:
| Actually the article mention " select crypto" but not the
| BTC.
|
| And to be honest I do not see the point for them to
| support a decentralised currency like. just complying
| with the regulatory rules ( KYC, anti Money
| laundering,etc...) Would be a real nightmare
| jkepler wrote:
| But how quickly does SWIFT or ACH settle? When one wires
| money overseas, settlement is counted in days, not
| minutes or hours as in bitcoin's case. Most of us use
| layer 2 or 3 solutions in our legacy national currency
| systems, such as Cash App, PayPal, Venmo, etc. Non elite
| don't have access directly to FedWire or ACH or SWIFT...
| it all has to pass through banks and other 'trusted third
| parties.'
|
| Also, eventually most lower-value transactions in bitcoin
| will be on layer two technologies, like the lightning
| network (peer to peer) or liquid bitcoin (federated peer
| to peer, mostly for exchanges and traders to quickly move
| funds between exchanges).
| zhte415 wrote:
| It doesn't take days. RTGS is named rhat for a reason.
|
| If you're also doing FX that'll be minutes for major
| currencies. Should you be going through a network of
| correspondence banks from obscure bank to obscure bank it
| might be longer but even then rarely days. If currency
| controls some dalay depending on regulatory setup. Even
| if the banks do netting, cheaper than RTGS, that should
| be just a couple of hours between reasonably large banks.
|
| What you may have is a problem with your bank or it using
| ACH.
| systemvoltage wrote:
| That's the thing. By the time the transfer takes place, BTC
| exchange rate is now 7% off. How convenient is the transfer
| mechanism when the underlying is a speculative instrument?
|
| Until BTC exchange rate gets stable or gets pegged do the
| ground, it's gonna float around in the air of extreme
| volatility and manipulation - pretty risky adventure to
| transfer large sums of money.
| spmurrayzzz wrote:
| This is problematic for layer 1 settlement for sure. But
| there are layer 2 solutions that can help with the
| slippage issue (lightning network being the most
| prevalent). With a sufficient density of multisig wallet
| availability, as a proxy for liquidity, transactions are
| near-instant.
|
| That said, there are differences in settlement guarantees
| at layer 2 that might make certain use cases less
| optimal.
| vineyardmike wrote:
| > for layer 1 settlement for sure. But there are layer 2
|
| layers?
| jkepler wrote:
| Sure. Layers, like the Internet is made up of protocol
| layers.
|
| Bitcoin on-chain is layer one: slow, sure, and after 6
| confirmations considered irreversible and immutable.
|
| Layer 2 protocols would include the lightning network and
| the liquid bitcoin protocols - both systems designed for
| different use cases, with differing technological
| benefits and risks. There may be other layer 2 systems
| that I'm not aware of.
|
| Some might consider the OpenBazaar marketplace protocol,
| the Open Timestamps (https://opentimestamps.org/)
| application, or the Bisq decentralized bitcoin/fiat
| exchange to be layer 2 applications, as they're built
| directly on top of bitcoin but includes protocols. But I
| think they're simple examples of the kinds of
| applications that can be built on top of the programmable
| trust-net that bitcoin represents.
|
| Because bitcoin is a decentralized and permissionless
| technology protocol, anyone who thinks of a way to build
| on top of it can do so---without needing anyone else's
| permission.
|
| Layer 3 might be applications built on top of layer 2,
| such as the censorship resistant Juggernaut chat app,
| built on top of the lightning network:
| https://www.getjuggernaut.com/. As layer 2 matures, I
| imagine we'll begin to see a wave of creativity unleashed
| globally as people create layer 3 applications.
| spmurrayzzz wrote:
| Yea this terminology is borrowed from the OSI model for
| networking, with which you're likely familiar. It
| originally was used as just an analogy, but has
| increasingly just become the way the space describes (and
| markets) the different protocol layers of
| cryptocurrencies generally.
| panarky wrote:
| I prefer to own an asset with high volatility that gets
| more valuable over time than an asset with low volatility
| that gets less valuable over time.
| edgyquant wrote:
| We aren't talking about assets and what you've just said
| is the reason we have controlled inflation. Currency
| isn't supposed to incentivize hoarding it, quite the
| opposite in fact.
| vntok wrote:
| Not everyone agrees with that view. I for one would
| rather people spent their hard-earned money in a smart,
| slow and well-thought way than feel compelled by
| inflation to do so fast and lose.
| lmm wrote:
| People should spend or invest thoughtfully, but they
| should spend or invest - if people are encouraged to
| hoard a pile of wealth so they can live off the labour of
| others while contributing nothing themselves, that's bad
| for society. So central banks tend to aim for low but
| nonzero inflation (e.g. the Fed's 2% target).
| pertymcpert wrote:
| Yeah but that disincentivizes investments.
| vntok wrote:
| Another way of looking at it: that incentivizes better
| investments.
| edgyquant wrote:
| Not really. If you can earn risk free appreciation on a
| currency the smart thing to do is not spend it. This
| incentivizes hoarding money, not making smarter
| investments.
| vntok wrote:
| Nope, you are therefore incentivized to spend that money
| in objects or services that will bring in _more_ value to
| you than the risk-free "interest" or gains brought by
| the mere deflation. Ergo, smarter investments.
| pertymcpert wrote:
| No, it disincentivizes investments full stop. People
| aren't making dumb investments deliberately. You don't
| get any new information about whether an investment is
| smart or not based on your currency being deflationary.
| vntok wrote:
| In developed countries (ex in Europe), fiat currency
| officially loses at least 2% of its worth each year on
| average (or you yourself lose 2% worth of purchasing
| power every year, depending on how you see it). In
| reality it's much more of course.
|
| Bitcoin gains 200% of its worth each year on average.
|
| Owning bitcoin, any investment you make that brings home
| more than 200% a year (+ fin. taxes - fiat inflation)
| when risk-adjusted is worth making.
|
| Anything else is an objective loss, so you want to really
| assess what it will bring you subjectively before making
| it.
|
| In other words, "given that you are basically paid by the
| financial system to hold bitcoin, any bitcoin you spend
| should be for something that you value more than what it
| pays", i.e a smarter investment.
| arnavs wrote:
| One reason I dislike inflation is that I don't want my
| currency -- a utility object -- having opinions about my
| financial life. Inflationary monetary policy and its
| consistent 'nudge' to spend is the economic equivalent of
| the pop-up.
|
| Of course, you could argue that a hard cap is equally
| opinionated. But I think it's a much more 'neutral'
| position, where it deflates because of real economic
| growth, and you spend it because of your own time
| preference.
| edgyquant wrote:
| They may not agree, but currency isn't supposed to be an
| investment it's supposed to be a rationing device.
| ur-whale wrote:
| >we have controlled inflation
|
| We do not have controlled inflation (I'm assuming you're
| talking about USistan). Please remember that the fed is
| an independent institution which refuses to get audited.
| edgyquant wrote:
| I am beyond sick of this Libertarian lie that has somehow
| gone mainstream. The Federal Reserve is audited bi-
| annually by both a public and private commission
|
| https://www.newyorkfed.org/aboutthefed/fedpoint/fed35.htm
| l
|
| https://www.federalreserve.gov/faqs/about_12784.htm
|
| In regards to your first point, inflation is targeted at
| ~2.5% a year. Some years do better and some do worse but
| on average that is the inflation rate. I challenge you to
| look at the inflation rates (provided below) in the first
| half of last century and provide a reasoned argument for
| why having years with +16% inflation (and years with -10%
| inflation) is a better system of currency than what we
| have now where people freak out if the deviation is over
| 2%. The gold standard provided a volatility that only
| hurt those with less money, and the argument your making
| is a fallacy (and is the reason I left the Libertarian
| party four years ago.)
|
| https://inflationdata.com/Inflation/Inflation_Rate/Histor
| ica...
| kelnos wrote:
| It absolutely is controlled[0], just perhaps not
| controlled in a way you would personally like.
|
| (Also, I recommend you quit it with the "USistan" stuff.
| It comes off as childish and detracts from the point
| you're making.)
|
| [0] Maybe "strongly influenced" is a better framing when
| talking about the Fed.
| panarky wrote:
| Inflation is only "controlled" for some baskets of goods.
|
| If your basket of goods consists of salty snacks and
| consumer electronics, then yes, inflation is controlled.
|
| But if your basket of goods consists of Hamptons real
| estate and fine art, then your inflation rate feels a lot
| steeper.
|
| Investors are finding it very difficult to discover
| investments that don't depreciate with respect to that
| second basket of goods.
|
| That's why institutions, family offices and high net
| worth individuals are shifting single-digit percentage
| allocations into Bitcoin.
| IgorPartola wrote:
| Where have you seen real estate get cheaper over time?
| NYC? SF? Somewhere else?
|
| Also when it comes to setting up an economic system, high
| net worth individuals are the last people we should be
| worrying about, not the first.
| edgyquant wrote:
| I'm talking about currency not appreciating commodities,
| assets or investment. The US dollar, and the currencies
| of most western nations, is/are in fact controlled and
| inflate at a targeted rate.
| panarky wrote:
| When I think about inflation, I think about the
| purchasing power of money for the basket of goods I'm
| likely to purchase. I'm less interested in theoretical or
| academic concepts like the rate of growth of M2 or the
| velocity of money. Preserving purchasing power over time
| is my priority.
| MrMan wrote:
| But the people who run the euro zone and the dollar zone
| have it setup for (they hope) constant mild inflation.
| This incentivizes a search for productive investments
| like ycombinator instead of hoarding treasure, which is
| not a productive investment
| adventured wrote:
| You're talking about something entirely different from
| what the parent comment is. What you're talking about is
| a long-term investment.
| kelnos wrote:
| People who want to move millions or billions of dollars
| around don't care about a $30 wire fee. What they _do_ care
| about is recourse in the case of fraud or mistakes, which
| Bitcoin by design does not give you.
|
| Moving large amount of money without government
| interference, however, is certainly a feature of Bitcoin
| that fiat currency usually doesn't have. And there are some
| (though perhaps not many?) non-shady reasons why someone
| might want this.
| MrMan wrote:
| By the time recourse and other modern financial
| conveniences are built on btc it will lose its luster for
| the hucksters
| mancerayder wrote:
| Forget million and billions. Hasn't anyone on this thread
| lived and worked abroad? Transferring 10s of thousands from
| the US to the EU or vice versa costs a ton in the banks
| skimming off the back of exchange rates that they choose
| and fees. There are ways to do it via trading accounts but
| it's a pain.
| louloulou wrote:
| It's actually pretty cheap and easy these days with a
| transferwise account. But I agree, it used to be a
| massive pain, and still is for smaller currencies or more
| closed-off banking systems like japan.
| cortesoft wrote:
| The price volatility is way more expensive than transaction
| cost, if you have billions of dollars.
| ad31mar wrote:
| It's usually in your favour tho.
|
| Anyways, there are plenty of stablecoins if that's your
| thing and you can use Bitcoin (the network) for the rails
| only.
| cortesoft wrote:
| I don't think I'd be making decisions on risk for
| BILLIONS of dollars based on something "usually" being in
| my favor.
|
| Also, stablecoins staying "stable" is a huge risk you are
| taking on if you use them.
|
| Again, if you have billions of dollars, you are going to
| be doing a lot more risk analysis and want a lot less
| uncertainty than you are going to get with any sort of
| cryptocurrency that exists today.
| u678u wrote:
| No if you have millions or billions basic wire transfers
| are instant and cheap. It is more interesting for if you
| have a few hundred or a few thousand dollars, where a
| $10-$50 fee is significant. Or you want to bypass
| regulations or bureaucracy eg send money to a friend in
| Argentina or Lebanon which have currency controls.
| anonisko wrote:
| https://twitter.com/JackMallers/status/134686775325322035
| 6
| ur-whale wrote:
| > basic wire transfers are instant and cheap
|
| This is _woefully_ incorrect. Wire transfers are neither
| instant nor cheap, depending on the source and
| destination country.
|
| If you wire from US to US, or EU to EU, they yeah, maybe.
|
| The moment you move large sums across borders, especially
| to /from countries that aren't in the US's "good guys"
| list (as dumb and childish as that sounds, this is
| typical language in USistan for politicians and media),
| things gets very tricky.
| heavyset_go wrote:
| It costs a few dollars to transfer money via Western
| Union, and the receiver can pick up the money almost
| instantly.
| whatshisface wrote:
| Bitcoin's use as a way of bypassing currency controls is
| one of the best arguments against it, because
| governments, already prone to suspicion towards anything
| that might upset their monetary policy, will have no
| quarter towards anything that upsets their laws.
| red_trumpet wrote:
| That's just not true. Every Bitcoin transaction is
| conserved in the blockchain, so a government can easily
| reconstruct the money flow.
| smartties wrote:
| And the transactions made on the exchange ? and
| decentralized exchange ? Can they all be tracked and
| reconstructed ?
| heavyset_go wrote:
| Pretty sure exchanges need to follow KYC laws.
| faffe wrote:
| BTC is not anonymous. In theory, it is possible to track
| all the transactions. That the main reason why others
| crypto like Monero or Dash had emerged
| Alupis wrote:
| That, and folks like Elon Musk perpetrating blatant Pump
| 'n Dump Schemes[1].
|
| Eventually it'll be regulated after a bunch of
| opportunistic "investors" get hosed - which ironically,
| will make the dump even worse.
|
| [1] https://www.valuethemarkets.com/2021/02/09/if-
| dogecoin-is-a-...
| cacarr wrote:
| The dump doesn't seem to have happened yet, though. DOGE
| has stabilized at about $.07, down from ~$.08.
| ska wrote:
| I've never understood this argument. Moving large amounts
| of one currency between countries isn't expensive or slow
| (relative to how quickly you typically need to do this).
| Assuming you are allowed to do it at all. Oversight is a
| different story, but there aren't many legitimate reasons
| to want to do that (probably none that aren't problematic).
| There are, of course, a ton of illegitimate reasons but
| that's a different conversation.
|
| Getting that 1mm+ from one currency to another is a whole
| different story, but that story only gets _worse_ if you
| involve crypto.
|
| Paying $40 in wire fees to move $200 sucks, but it's just
| not an issue on large transactions. So I think your real
| use case is lots of small transactions, not a few big ones.
| And unless you can spend the crypto directly, the
| volatility can kill this application pretty easily.
|
| What am I missing?
| MrMan wrote:
| I get free wire transfers at my bank
| irae wrote:
| It is not that simple once you cross borders to countries
| USD is used by all kinds of criminals. When you have
| honest business, you are screwed by the system.
|
| Here in Brazil, getting money in and out is a nightmare
| if above 5k USD.
|
| I live in Brazil and work for a US company. My first
| month payment took 3 months to clear, and because of 3
| accumulated payments I got audited and the 4th pay got
| delayed again. The first one that cleared in 3 days was
| the 6th payment. All payments were charged 40 USD to my
| employer, but 20 was charged by middle man every month.
|
| I also have a US based health insurance but (again) I
| currently live in Brazil. I had a surgery reimbursement
| be withheld for 65 days, I had to send dozens of
| documents and when they finally cleared, I had not only
| lost to exchange rates, on middle man bank took 20 USD
| and my branch in Brazil took an extra 170 USD.
| waprin wrote:
| I used to think cryptocurrency was a solution in search of a
| problem, but the Robinhood fiasco has made me think
| otherwise. I find their clearing house explanation woefully
| insufficient in details, and open to the possiblity of being
| technically the truth but misleading (for example, they gave
| mass margin to lots of new accounts so they technically
| lacked collateral, but if they stopped new signups then
| cleared cash non-margin accounts would have been able to
| freely trade).
|
| Some might call me a conspiracy theorist, but the fact
| remains there's no good way to verify any of what they're
| telling us is true, other than to trust people with billion
| dollar reasons to mislead, or rely on an SEC which has
| repeatedly failed to do its job and stand up to big
| institutions (see Moody's subprime ratings, or Robinhood
| already getting fined by SEC but for trivial amounts).
|
| There's certainly pump and dumps, fraud and manipulation in
| crypto, but some could argue a lot of stocks exist right now
| with terrible fundamentals but huge market caps that nobody
| labels a pump and dump because "serious" institutions say the
| valuations are "forward looking."
|
| All this is to say, finance is a game with massive incentives
| to deceive and manipulate. We see that in the traditional
| finance space and in the crypto space . But long term, Id
| argue in many ways the decentralized nature of crypto lends
| itself to far more transparency than our traditional systems.
|
| Now, that doesn't mean it makes sense to buy coffee with
| crypto, or that a specific coin is the solution, especially
| one with the type of technical challenges BTC has. But in a
| broader sense, I do think decentralized finance is starting
| to look more and more like the future, if the alternative is
| to continually put trust into institutions that repeatedly
| betray that trust.
| MrMan wrote:
| This is some kind of astroturfing
| dang wrote:
| This is against the site guidelines. Would you mind
| reviewing
| https://news.ycombinator.com/newsguidelines.html and
| sticking to the rules when posting to HN? We'd appreciate
| it. As they say, if you're worried about abuse, the thing
| to do is to email hn@ycombinator.com so we can look into
| it. For many past explanations on this issue, see https:/
| /hn.algolia.com/?sort=byDate&dateRange=all&type=comme....
|
| Also, could you please stop posting unsubstantive
| comments generally? You've unfortunately been doing a ton
| of that lately. We're trying for something a bit
| different than that on this site--if you'd optimize more
| for signal/noise in your HN comments, we'd appreciate it.
| nexthash wrote:
| Call me back when crypto is being used for anything normal
| - buying groceries, homes, pay checks, etc rather than
| trading and speculation. As of now, if my job attempts to
| pay me in DogeCoin I will quit and file a complaint with
| the NLRB. The thing is, no matter how much you think the
| current financial system is crooked, there is always a way
| to settle disputes through courts and regulators.
|
| The worst financial hiccups happen in areas _without_
| regulation. There were no rules on selling subprime
| mortgages or shorting more stock than exists, but unlike in
| the cryptoverse if something blows up it can be patched
| with legislation and restitution to victims. If your crypto
| gets stolen or a coin gets pumped and dumped, there is no
| recourse. With no connection to the real world comes no
| trust and no mercy.
| ball_of_lint wrote:
| Dogecoin is designed to have massive amounts of inflation
| and would never be seriously considered.
|
| Bitcoin is being used for normal things. Want to buy a
| Tesla?
| recursive wrote:
| Yes. How? Where?
| ryder9 wrote:
| with enormous fees?
| herbst wrote:
| In switzerland both our national amazon alternative
| (relatively huge) and main food delivery network accept
| bitcoin and several other crypto currencies. Including
| weird stuff like Tron and Monero.
|
| I spend more in crypto some months than other currencies.
| anythingdude321 wrote:
| so nice to see the hackernews crowd finally figuring it
| out!
|
| i totally agree with you. i feel that if you keep digging,
| you'll find yourself convinced over time that BTC's
| "technical challenges" are not the flaws that they
| originally appear, and that in the long run crypto does
| make sense as a currency itself, in addition to a financial
| infrastructure.
| [deleted]
| denkmoon wrote:
| Really the only time you want to actually spend crypto is for
| regulated items. Porn + sex related items, and drugs. Maybe
| firearms and illegal information (ie. stolen credit cards,
| account credentials, malware).
|
| This move by MC seems at odds with their recent spat with
| Pornhub, but I would not be the first to accuse financial
| organisations of hypocrisy.
| twaybtclong wrote:
| I had 2% of my net worth in currencies subject to social
| media pump and dump schemes. It ballooned to 100% and now I
| have airplanes and stocks.
|
| Is that worth 2% of your net worth? You should read about
| optionality. You don't have to be poor if you understand
| risk.
| tgraves83 wrote:
| I agree that paying for things directly with bitcoin doesn't
| make sense. However, that doesn't mean bitcoin doesn't have a
| use case as a global settlement network and volatility isn't
| what's important, it's liquidity, which bitcoin has far more
| of then any other cryptocurrency.
|
| For an example of this take a look at something like Strike
| Global using bitcoin's lightning network.
|
| https://jimmymow.medium.com/announcing-strike-
| global-2392b90...
| tw04 wrote:
| >it's liquidity, which bitcoin has far more of then any
| other cryptocurrency.
|
| "Far more of than any other cryptocurrency" is kind of a
| moot point. Does "bitcoin" (the people converting it to
| cash) have enough reserves in any _real_ currency to cover
| even 10% of its value? There 's no federal government
| backing it, and as best I can tell nothing to prevent the
| proverbial "run on the bank".
|
| I still struggle to see how bitcoin has anymore intrinsic
| value than collecting pokemon cards. It's worth something
| right up until it isn't without a major government
| supporting it.
| Erlich_Bachman wrote:
| > "bitcoin"
|
| What does using quotes mean? Why not just write Bitcoin?
| tgraves83 wrote:
| It doesn't sound like you bothered reading the link I
| posted. Price volatility caused by a "run on the bank"
| doesn't really matter if you are sending payments between
| two people using different currencies. The link I posted
| describes an app that as an example allows a payment to
| be sent from someone in the US to someone in Europe and
| have it settled instantly. Bitcoin is only used on the
| end of each transaction and converted in and out of
| dollars and euro's instantaneously making it's price
| irrelevant.
|
| The intrinsic value argument is old and tired at this
| point so I'm not even going to bother with it.
|
| Yes, Bitcoin at this stage is extremely volatile and
| anyone buying it to hold as an investment should
| understand it can lose or gain a lot of value quickly.
| However, it does have multiple use cases at this point
| that clearly the market has determined have some type of
| value. We're still figuring that out.
|
| As a side note, if you do some digging you can find some
| pretty good on-chain analytics that can theoretically put
| a sort of floor on the price based on how coins have
| moved over time. There are now quite a few sites like
| glassnode.com, cryptoquant.com, coinmentrics.io etc that
| provide this data or if you are technical enough set up
| your own node and verify it for yourself.
| tw04 wrote:
| I DID read the link. As with everything bitcoin related,
| the actual meat of the problem is hand-waved away with
| marketing BS.
|
| >Strike then takes the bitcoins and automatically
| converts them back into Euros using its real-time
| automated risk management and trading infrastructure.
|
| Really, they convert Bitcoin into Euros with a "real-time
| automated risk management and trading infrastructure"?
| That explains literally nothing. Who owns the Euro
| currency that is willing to sell it for bitcoin? Where is
| the liquidity coming from?
| tgraves83 wrote:
| Have you ever used a cryptocurrency exchange? I admit,
| there have been some bad actors in the space as there is
| in any nascent technology, but at this point there are a
| number of legitimate and even regulated exchanges in
| multiple jurisdictions.
|
| You can easily look up the volume traded on these
| exchanges. There are still some shady exchanges out there
| so I'd mainly look at the more trusted/regulated ones
| like Coinbase Pro, Bitstamp, Gemini, Kraken etc.
|
| Strike has already released a working app for US
| customers that I've been using without issue for payments
| to friends and family as an alternative to Venmo/PayPal.
| [deleted]
| tw04 wrote:
| I guess you still haven't explained where the liquidity
| is coming from. Coinbase and the rest explicitly call out
| the fact that there is NOT instant settlement, and that
| your request may or may not be fulfilled at the agreed
| price.
|
| That means Strike needs to have reserve currency to cover
| any fluctuations between the time they "instantly settle"
| your transaction, and when they actually are able to
| convert that into USD or Euro or _insert currency_ at an
| exchange.
|
| I keep getting downvotes and yet nobody can explain the
| magic handwaving to me with anything other than "but my
| transaction worked". It's great that's working when their
| transaction flow is probably measured in the hundreds of
| thousands of dollars, but plenty of pyramid schemes churn
| along just fine until they grow.
| tgraves83 wrote:
| I believe Strike is upfront about the fact they are using
| the stable coin USDC at the exchange for that part of the
| transaction. USDC is backed by Circle and Coinbase and is
| probably regarded as the most trusted centralized stable
| coin. The downvotes are probably because of the
| "intrinsic value" and Ponzi scheme arguments which people
| that have been in this space for a decade have grown
| tired of.
| arnavs wrote:
| You're right to distinguish between currencies with
| exogenous demand (like USD) and those like BTC. But the
| "bank run" comment makes no sense, even for beanie
| babies.
|
| Bank runs exist in a fractional reserve context --
| because banks lend out their deposits (which stimulates
| growth), your listed balance is actually an IOU. That is,
| an obligation to "cover" deposit balances, which can be
| met or not.
|
| Now think of people trading beanie babies. One person
| sells a beanie baby, the other person parts with $10k.
| What is there to "cover"? Who is keeping what in reserve?
| The answer is nothing and nobody --- in a world where
| beanie babies were currency, this would be perfectly
| fine.
|
| tl;dr you actually need (fractional-reserve) banks for a
| "run on the bank"
| vbezhenar wrote:
| Your view must be skewed by privilege of having stable
| currency. Currency of my country lost 250% of its value over
| last 7 years. It's not bitcoin-level volatile, but close to
| it. Thankfully I have an option to use USD to hoard money,
| but that option is not something that's given, in many
| countries you just can't exchange for fair price.
|
| I agree that for someone living in US or EU there's no much
| point using BTC.
| undefined1 wrote:
| > I agree that for someone living in US or EU there's no
| much point using BTC
|
| at the moment, but we are seeing institutional failure all
| around. as trust in the institutions fall, the importance
| and value of crypto/decentralization increases.
| cma wrote:
| How did it lose more than 100% of its value?
| sz4kerto wrote:
| I'm living in an EU-member country. Our currency has lost
| half of its value compared to the USD since 2008.
|
| How? 'Slowly and steadily.'
| forty wrote:
| Interestingly we have the opposite problem, our customers
| mostly pay in USD and many of our employees are paid in
| EUR, which is pretty high vs USD lately, and that
| difference costs us quite a lot.
| u678u wrote:
| This is pretty misleading though, 2008 the USD tanked.
| GBPUSD and EURUSD were crazy high and currencies like
| RON, PLN had bigger swings, but if you look 20 years you
| can't say things have changed that much, esp with all the
| other changes in the world.
| scandox wrote:
| I think they mean mathematically how could it lose more
| than 100%.
| lazide wrote:
| My guess is they meant their equivalent of the $4
| cappuccino is now $10 (or more) in their local currency,
| which while not mathematically correct is probably the
| most intuitive way to understand it (as compared to
| losing 60% which would more than double prices).
|
| Not the poster though.
| vbezhenar wrote:
| You're right. 1 USD = 155 KZT in 2014, 1 USD = 425 KZT
| right now.
| buran77 wrote:
| In all honesty though if you started using BTC as your
| main currency*, replacing your national currency, one day
| you'd have your money in BTC, the next day their value
| would be wiped out. We're not talking about a slow and
| steady decline, halving of the value in a decade. We're
| talking "no money to buy food for the next few months".
| Many people in countries with unstable currencies are
| particularly vulnerable to this kind of fluctuations
| because in general they have nothing to absorb the shock,
| no assets, no savings, etc. Unlike traders these people
| can't just wait for the rebound, by that time they're
| bankrupt.
|
| BTC is useful for exactly the scenarios it's almost
| exclusively used in now: speculative transactions (buy
| low, sell high), or transactions for less than legal
| stuff and the overwhelming majority of proponents are in
| these 2 camps. There's a much smaller group of proponents
| made up of people who don't understand currencies in
| general (besides the basics, like spending them), or
| cryptocurrencies in particular.
|
| I'm sure _some_ form of electronic tender would fill this
| role you 're describing but it's not BTC and probably
| none of the major cryptocurrencies on the market now.
|
| * (putting aside the network capacity, number of
| transactions/sec, the cost of producing a BTC and of a
| transaction, etc. which make it completely unsuitable for
| the purpose of _using_ the currency instead of just
| storing and trading it, which is probably the only
| significant purpose of BTC today)
| lazide wrote:
| I don't think you're wrong. You might be missing a bigger
| game though.
|
| BTC is fundamentally deflationary in nature - let's
| ignore the price volatility and the like for now, I'll
| cover that later.
|
| It has also so far proven incredibly resistant to attack,
| both inside and outside the community and despite easy
| billion dollar payouts if an attack would be successful.
|
| There are also efforts making good progress (lightning
| network among others), addressing structural issues, and
| large scale semi regulated brokers with good track
| records (coinbase, kraken).
|
| The price volatility is speculative, and while some is
| get rich quick (well, a lot), some is also what happens
| in a deflationary spiral.
|
| If we speculate that Bitcoin will end up being a 'not
| able to be broken by a greedy gov't like all the other
| currencies' means of exchange, the current price is
| cheap. Every large institution will need some to clear
| central bank type transactions (the part that may be what
| ends up on the blockchain), and 14 million ish isn't
| enough at current prices.
|
| If we speculate that will never happen; the current price
| is ridiculous and it's all just a giant Ponzi scheme.
|
| Frankly, neither of these options it is fair to rule out,
| and the volatility is because of uncertainty and the wide
| variability in value for Bitcoin between these options.
|
| We're entering a stage where global attitudes are
| shifting to one of distrust, especially between countries
| and citizens and their gov'ts, and some means of exchange
| that doesn't require a distrusted entity to play nice has
| value, even if it isn't 50k per.
| MrMan wrote:
| Let's talk larger game - assume the btc-denominated
| economic zone becomes non-negligible in size. The best
| defense for neighboring economic zones is good fiscal
| governance. Because BTC land will be an anarchic mess. It
| will have multiple germanies and Greece's and Nigeria's
| within it, and Cartel controlled sub zones, etc. who will
| deal with rising levels of indebtedness in BTC
| instruments? Who will deal with fraud, cartels seizing
| companies and households' reserves, or simply defaulting
| on debt in this "trust less" Dystopia?
|
| Vastly different levels of productivity between regions
| of the same economic zones or between zones can result in
| crazy social friction without trade regulation and
| controls - how will BTC land manage this friction?
|
| Additionally - the energy and security requirements of
| btc zone participants will become crushing. Why will
| market participants continue to labor in this spiraling
| High energy hell when they can retreat to the much lower
| energy state of a trustful, managed economic zone? It
| will be like a breath of fresh air.
| buran77 wrote:
| > There are also efforts making good progress
|
| I agree but in the grand scheme of currencies and payment
| infrastructures they barely got out the door.
|
| I believe today and for the foreseeable future BTC will
| be adequate almost exclusively for speculative traders
| and people who need legal deniability. Most people throw
| around narrow interpretations for why BTC would be good
| and they're all good explanations if you look just at
| selected arguments. Take the "BTC is great as a currency
| in countries with steady high inflation" stance which
| might hold if you consider only a really narrow set of
| set of BTC criteria.
|
| I'm not ruling out anything for _some_ future really. As
| a personal opinion I believe there 's room for e-coins
| (I'll stay away from the "crypto" nomenclature as they
| may not rely on a blockchain or crypto per se) but BTC in
| particular has no real room in a CB for more than a fad
| (also speculative). Think at the central mandate of a CB:
| price stability and inflation. Controlling these is
| quintessentially antithetical to BTC as a main currency,
| or as _a_ currency. BTC as a decentralized currency takes
| central banking out of the equation. Or conversely
| central banks take decentralized currencies out of the
| equation.
|
| So even if you think of it pragmatically, no government
| or central bank (since they should be as independent from
| each other as it gets) would allow replacing the
| country's currency with BTC both for "selfish" reasons -
| they'd lose control. But maybe even more importantly for
| national security reasons. No country wants a coin which
| can be sent spinning just because some CEO (or worse,
| your enemy) decided to pull a shady maneuver for personal
| gain.
|
| The kind of control currencies need to be fit for the
| purpose of a general, national currency for your citizens
| simply precludes using BTC at that scale. Should BTC ever
| become as "big" as a real national currency I'm certain
| it would show many of the same cracks. Except the small
| players (average Joe) would have nobody to turn to when
| things go sour. No central authority, no central
| responsibility. You see this whenever there's a new hack
| or financial maneuver that parts people from their hard
| earned cryptomoney how they suddenly lose that blind
| faith in "the coin that governments can't control" and
| start asking for regulation. You can only regulate when
| you have control.
| lazide wrote:
| First part of your argument - Isn't this literally the
| argument against every new anything?
|
| Second part - I think you're also misunderstanding?
| Central banks hold gold and other countries currencies
| for international clearing, export/import, and national
| security reasons. A central bank is not holding them for
| price stability and inflation control. Only a small
| handful of central banks (the fed) meaningfully target
| those goals, and if they do it is for their own fiat
| currency.
|
| If you think a central bank is going to hesitate to hold
| a useful asset for international exchange purposes if a
| 'ceo or worse your enemy' could send it spinning, you're
| not paying attention? China's central bank holds at least
| $1 trillion US dollars for instance
| [https://en.m.wikipedia.org/wiki/Foreign-
| exchange_reserves_of...], along with Euros and every
| other currency useful for it's goals. There is a huge
| variety of foreign reserves currencies in wide use [https
| ://data.imf.org/?sk=E6A5F467-C14B-4AA8-9F6D-5A09EC4E62A..
| .] covering everything from Chinese renmenbi to Swiss
| Francs and UKP. All of these change dramatically relative
| to each other on short notice, all are enemies or
| economic competitors with some selection of people using
| them as reserve currencies, and there is no central
| authority to go crying to if one of them defaults on
| their debts or inflates their currencies.
|
| And third part - I'm not saying it's likely any
| government would replace it's fiat currency with BTC or
| any other currency out of it's control. I'm saying
| Zimbabwe and many other places don't really run on their
| local currency, they run on what people use (currently
| dollars in most cases, but some places BTC is getting
| traction) - because their gov'ts destroy the utility of
| the their local currencies and people can't trust it.
| buran77 wrote:
| > First part of your argument - Isn't this literally the
| argument against every new anything?
|
| Oh, that wasn't meant to be an argument against something
| new. As I said repeatedly, it's an argument against BTC
| as it exists now and as it will be for the foreseeable
| future. The expectations for a stable "national" currency
| are incompatible with the pillars of BTC. That was my
| original point.
|
| The Fed, the ECB, the Central Bank of China all have
| price stability and inflation as a mandate, of course for
| their own currency. And this should already hint that
| they want control over their national currency. Gold and
| other countries' currencies are explicitly things that
| are regulated by the respective countries and/or
| "relatively" stable. I'm not aware of any national
| currency as volatile as BTC. They're all substantially
| more more resilient to outside manipulation _because_
| they 're regulated and traceable. Governments and Central
| Banks don't want their country or citizens to rely on a
| currency they don't have any control over especially in
| places like US, EU, China, Japan. Just think of the UK
| refusing to give up the GBP to adopt the EUR because it
| involved losing control of the currency. So while I can
| imagine a bank (central or commercial) holding BTC one
| day as an asset, I'm having a really hard time seeing the
| "unregulated currency BTC" being used as a "national
| currency" in any place that matters.
|
| > If you think a central bank is going to hesitate to
| hold a useful asset for international exchange purposes
| if a 'ceo or worse your enemy' could send it spinning,
| you're not paying attention?
|
| If you were to ask Mario Draghi or Christine Lagarde they
| would tell you no CB should hold BTC. I'm not saying I
| can see the future but I'm trying to understand what you
| know and they don't.
|
| When China deliberately weakened the yuan to gain an
| advantage in the trade war with US (to boost exports) it
| was immediately noticed and attributed and that could be
| (was?) used as justification for sanctions and tariffs.
| Bitcoin is decentralized and pseudo-anonymous.
|
| > I'm saying Zimbabwe and many other places don't really
| run on their local currency, they run on what people use
| (currently dollars in most cases, but some places BTC is
| getting traction) - because their gov'ts destroy the
| utility of the their local currencies and people can't
| trust it.
|
| So they rely on a well regulated currency like the USD.
| How would BTC improve on this? The USD is stable enough
| for Zimbabwe to use _because_ it 's under central
| control.
|
| Taking more practical approach for the regular person, at
| the absolute minimum a currency is supposed to come with
| consumer protections that are derived from regulation.
| BTC was specifically designed to curtail regulations.
| This won't be fixed by faster or more efficient networks.
| That can't be "fixed" at all because it's one of BTC's
| tenets: stay unregulated and out of gov't control. So
| your citizens are not only using an unregulated currency
| that offers them no protections, they're also _extremely_
| vulnerable to outside manipulation.
|
| BTC is an unstable coin, that cannot be regulated to
| offer consumer protections or complying with anti money
| laundering laws. In theory this recommends it to
| speculators and people who are looking to be shielded
| from the law. The reality just happens to match the
| theory to a T.
|
| Some e-currency will surely fit the bill one day though
| but I'm not entirely sure if there's one to be both
| regulated and unregulated at the same time, to make
| everyone happy.
| lazide wrote:
| I think you're fundamentally misunderstanding my comment,
| and we're mostly agreeing with each other - apologies if
| I wasn't clear!
|
| I was quite explicitly referring to speculative future
| events, and how their odds of happening directly impact
| current pricing of bitcoin.
|
| USD is reasonably well regulated now and has been
| historically - by some definition - at least as well as
| any of its competitor currencies, though none of them are
| looking particularly great right now by traditional
| measures.
|
| What are the odds it will remain so for 10 years? 20
| years? 50 years? Less than 100%, better than 0%.
|
| As BTC addresses issues over the next 10, 20, 50 years -
| could it be a viable option for central bank clearing in
| the way JPY, USD, or gold is now? What are the odds?
| 100%? 0%?
|
| With the work, attention, and considering the existing
| progress it's made, will it be a viable option for a
| trans-national or even national currency over the same
| time frames? What are the odds? 0%? 100%?
|
| I'm pointing out that 1) none of those options is clearly
| a 0% or 100% outcome over the time frames we're talking
| about 2) depending on your individual judgement and how
| optimistic or pessimistic you are about various parts of
| these equations, depends on what you think BTC's value
| currently is.
|
| Even people just hedging their bets against a not
| impossible outcome can lead to a deflationary spiral,
| leading to high prices until there is clear data one way
| or another where things will end up.
| f00zz wrote:
| They probably mean that USD is up 250% against their
| currency.
| nexthash wrote:
| It doesn't make a difference whether a currency is paper or
| digital - if digital currency takes over in your country,
| the exact same thing will happen. The government will
| regulate its use, punish those using crypto 'unlawfully',
| and print more when it needs to, making it lose value.
|
| See, it doesn't matter what the technology behind a
| currency is, it ain't going anywhere on your government's
| turf without permission. They have the ability, if they
| choose, to go door to door looking for 'unlawful money
| launderers' or any other designation they slap on the use
| of crypto and there's nothing you can do about it.
| hertzrat wrote:
| In practice, how would "print more" work for blockchain?
| vishnugupta wrote:
| > Currency of my country lost 250% of its value over last 7
| years. It's not bitcoin-level volatile, but close to it.
|
| The way I understand volatility, it means wild swings in
| both directions over short periods. Your country's currency
| however has been monotonically weakening. And the citizens
| have been able to react to that steady decline by storing
| their wealth in different forms, as you said yourself that
| you've been storing it in USD.
|
| For sure even USD denominated assets have periods of
| volatility as we saw March last year when the entire world
| sought to refuge in the safety of US treasury bills or
| currency. Oil too witnessed some crazy gyrations like
| negative future pride. But they are in reaction to the
| extraordinary phase the world was going through then, when
| the world and hence the business practically shut down.
| Something which hasn't happened in at least a generation.
|
| Butcoin prices on the other hand regularly swing 10-15 in a
| day. Definitely not something you'd call stable compared to
| any of the world's current currencies. Perhaps these swings
| will dampen over time?
| elyobo wrote:
| I'm not sure what you mean by "lost 250% of its value" -
| that seems impossible, so I guess something has been lost
| in translation! Can you clarify?
| Ashanmaril wrote:
| Everyone who had money before now owes 250% of it.
|
| But people who were in debt are doing great!
| bbarnett wrote:
| There are loads of cases of hyper-inflation, which means
| that the currency's real-world value decreases.
|
| Here's the worst I've ever heard of:
|
| https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
|
| Yes, you read that right:
|
| "However, Zimbabwe's peak month of inflation is estimated
| at 79.6 billion percent month-on-month, 89.7 sextillion
| percent year-on-year in mid-November 2008."
|
| I recall interviews with government employees, who were
| quitting in droves. The Government wasn't keeping up with
| inflation, so at the end of 2 weeks, your check was
| basically worthless.
|
| The place was falling apart.
|
| People would _run_ to the bank, cash pay checks, and buy
| STUFF. Anything. Anything physical. TVs, couches, bikes,
| blenders, ANYTHING. In one interview, a woman 's living
| room was filled with random pieces of furniture, stacked
| to the ceiling, and a TV.
|
| To trade. For barter.
|
| Because even an hour later, that paycheck was worth so
| much less.
|
| Madness.
| nexthash wrote:
| Yeah, it's crazy sad. Apparently the same thing is
| starting to happen now in Zimbabwe _again_ with a 737.9%
| annual increase. At this point they are screwing over
| their people and any reasonable citizen shouldn 't rely
| on or trust the currency at all.
|
| https://www.bloomberg.com/news/articles/2020-07-14/zimbab
| we-...
| recursive wrote:
| For mere hyper-inflation, it seems there's a cap of 100%
| value loss. It's something else together to lose more
| value than there was in the first place.
| dragonwriter wrote:
| > Currency of my country lost 250% of its value
|
| Unless it acquired significant negative value, no, it
| didn't.
|
| I'm not sure if you mean it declined to 1/2.5 times it's
| value (-60%) following the popular-but-annoying usage of "
| _n_ times less" but converted to percentage (it 's an idiom
| that isn't used with percentages and is mathematically
| wacky to start with) or if you mean to say it declined by
| 2.5 times it's post-decline value (-71%), using the ending
| rather than the starting value to calculate the percentage
| change.
| jariel wrote:
| " Currency of my country lost 250% of its value over last 7
| years. "
|
| The problem is not your Central Bank, it's almost assuredly
| a total dysfunction of government and the civil services -
| which will have effects more far reaching that Central Bank
| problems.
|
| The solution is not BTC.
|
| It's to use something common and trusted, temporarily, like
| USD or Euros until there is enough credibility in the
| system for external parties to accept your own currency.
|
| Or - to overthrow your government, install leaders with
| integrity and hope that international bodies accept the
| change, because if they do, you'll be in a much easier
| position issuing your own currency than having to issue
| debt in a foreign denomination.
|
| Put another way: it's not a currency problem, it's a
| governance/management problem that exhibits itself in
| currency problems and other things.
|
| BTC will not really help you have a better managed
| government.
| hertzrat wrote:
| The average person in your neighbour hood is sitting
| reading the paper, contemplating: "I'm worried about
| inflation. should I buy some Bitcoin, or should I
| overthrow the government? I think I'll try the overthrow
| option today"
| jariel wrote:
| In those situations, the average person is definitely
| thinking 'overthrow the government' because everything is
| crumbling around it.
|
| This is what causes they hyper sensitivity,
| authoritarianism, and 'blame America for Everything'.
|
| But yes, BTC is completely unpragmatic.
|
| USD, at least in Latin America, has the benefit that it
| will creep into the system irrespective of what anyone in
| charge says.
|
| Nobody needs to be told that USD's are 'good' the
| hairdresser, cabbie, landlord, grocer will just take it.
|
| I wonder if Euros have the same effect in E. Europe and
| North Africa. Maybe these days.
| rustybelt wrote:
| Am I dumb? How does something lose over 100% of it's value?
| fredsir wrote:
| Isn't it 250% loss in buying value? So because of
| inflation everything now cost 2,5x what it did. Usually
| your paycheck can afford 100 apples but after inflation
| your paycheck can only afford 40.
| dalmo3 wrote:
| If you had money for 100 apples, and now you only have
| money for 40 apples, you're down 60%, not 250%.
| fredsir wrote:
| Sure, but that was not the claim by the parent. It's a
| bit unintuitive the way the parent wrote the claim, but
| the parent said the currency lost its value by 250% which
| is not really possible. What I think the parent means is
| that it became 2,5 times less worth. That is, what before
| could buy 100 apples can now buy 40 apples since
| 100/1=100 and 100/2,5=40, and as you say it, that means
| the value is down by 60% - same thing. At least that is
| how I understand what the parent claimed.
| srg0 wrote:
| > Currency of my country lost 250% of its value over last 7
| years.
|
| I doubt population of your country at large can afford
| bitcoin transaction fees for their daily shopping.
|
| BTW, are you saying that your currency has negative value
| now? I assume you mean a 2.5x inflation multiplier over 7
| years, or +14% per year. That's mild compared to an order
| of magnitude walk of the BTC-USD rate over just one year.
|
| The only real use case for BTC I see is moving capital
| between jurisdictions.
| Wowfunhappy wrote:
| Are there places where you can buy Bitcoin with lower fees
| than buying US dollars?
| quickthrower2 wrote:
| Do you think stablecoins are a good choice? Use USD but
| without government inteference.
| xirbeosbwo1234 wrote:
| Bitcoin, at least, absolutely does not solve this problem.
| Let's leave aside its volatility for now and assume it
| magically stays at exactly the same price. You are then
| left using a currency where each transaction costs several
| dollars and takes a half an hour, _and that 's the present
| state of affairs when no one is using it_. So you would
| keep your cryptocurrency in a bank and transfer it through
| the normal channels, which opens it up to the same
| government controls you're concerned about. That's if
| you're allowed to hold cryptocurrency at all.
|
| Hyperinflation is a problem of massive corruption and
| incompetence in government. It doesn't happen by accident
| in an otherwise stable society. If you're concerned about
| hyperinflation, you should assume the bank (or "exchange")
| will be subverted and transactions will be censored.
| Bitcoin was built to solve those problems, but does not
| scale and so cannot.
|
| This is, by the way, the only situation where I'm at all
| sympathetic to cryptocurrencies. If someone can come up
| with a cryptocurrency that scales and that isn't controlled
| by cartels, I'll be glad that it can be used in unstable
| parts of the world.
| SailingSperm wrote:
| 30 mins for FINAL international settlement of arbitrary $
| amounts between $0.001 - $100B IS fast - and the uptime
| for the BTC network is 100% since inception ~2011.
|
| If you're really wanting to compare apples to apples -
| For traditional banks doing cross border transactions, it
| takes up to five days at most global banks, not counting
| weekends or bank holidays to actually settle with a lot
| more intermediaries involved.
| shawnz wrote:
| > So you would keep your cryptocurrency in a bank and
| transfer it through the normal channels
|
| You do your daily spending through the normal channels,
| sure, but why would you need to keep your cryptocurrency
| _savings_ in a bank in such a situation?
| xirbeosbwo1234 wrote:
| Bitcoin is _fantastically_ slow. It can handle about 120
| million transactions per year. That is absolutely 100%
| unusable for anything at scale. If 30 million people used
| Bitcoin, they could each do about one transaction every
| three months and the fees would be sky-high. That is not
| good enough, not even for savings.
|
| Other cryptocurrencies are faster by smallish constant
| factors. None of them, at this time, are scalable. None
| of them are fast enough to be usable by millions of
| people.
| sfblah wrote:
| I don't actually understand. Things can't lose any more
| than 100% of their value. What do you mean by 250%? Do you
| mean inflation was at a 250% rate?
| [deleted]
| arcticbull wrote:
| > Your view must be skewed by privilege of having stable
| currency. Currency of my country lost 250% of its value
| over last 7 years. It's not bitcoin-level volatile, but
| close to it. Thankfully I have an option to use USD to
| hoard money, but that option is not something that's given,
| in many countries you just can't exchange for fair price.
|
| > I agree that for someone living in US or EU there's no
| much point using BTC.
|
| This is quite a tenuous argument however.
|
| First, currency is only intended to be stored for as long
| as necessary to purchase the necessities of life or value
| preserving investments. Losing 250% of value over 7 years
| is an inflation rate of 14% annually, a hair over 1% per
| month. At the end of each month you're left with 99% of the
| value you started the month with. That's sub-optimal but
| certainly not a dealbreaker if everything else were stable
| and functional.
|
| The early 1980s in the US had similar inflation rates [1].
|
| Assuming your country isn't sanctioned you could have
| dropped that money into all sorts of safe havens.
|
| Further, the issue is of course transaction fees. They're
| about $20 each right now, and the only place those fees are
| palatable are rich countries with stable financial systems.
| In countries without stable financial systems they're
| prohibitively expensive. You can avoid that with Layer 2,
| but of course, Layer 2 offers none of the benefits you seek
| with Bitcoin in the first place. Exchanges are centralized,
| trustful and censorable.
|
| It genuinely, truly meets the needs of nobody who isn't
| speculating.
|
| It's basically the "ruined fresco" of payment methods. From
| a distance it looks right but as you zoom in you realize
| mistakes were most definitely made. [2]
|
| [1] https://www.usinflationcalculator.com/inflation/histori
| cal-i...
|
| [2] https://www.npr.org/sections/thetwo-
| way/2012/09/20/161466361...
| halukakin wrote:
| Even if BTC were available to all countries, it wouldn't
| have stopped local currency value losses. And ironically
| hoarding stronger currencies makes local currencies lose
| value even faster.
| dash2 wrote:
| Sure, but it protects the individual saver, and
| governments are capable of debauching their currency with
| or without the existence of BTC.
| tenaciousDaniel wrote:
| It's sad that this aspect of the conversation so often gets
| replaced by everything else. This is (IMO) the most
| important point about digital currency - the promise of
| providing consumers in unstable economies the chance to
| convert to a more stable currency without government
| intrusion. We're still not there, but that should be the
| north star for crypto (again, in my opinion).
| ccheney wrote:
| You're right, we're still not there yet. I love the idea
| of cryptocurrency but it's being treated more like a
| speculative investment vehicle than a currency for goods
| & services. Sure, you can buy some stuff with it but its
| volatility is generated through all of the speculators.
|
| It needs to be stabilized if we're ever going to replace
| fiat currency.
| l_pan_ wrote:
| It has already been
| https://www.investopedia.com/terms/s/stablecoin.asp
|
| Andreessen Horowitz invested $15 million in
| https://en.wikipedia.org/wiki/Dai_(cryptocurrency)
| toomuchtodo wrote:
| What happens to stablecoins when central banks hand out
| digital wallets [1] to everyone alongside instant
| payments [2]?
|
| [1]
| https://www.atlanticcouncil.org/blogs/econographics/the-
| rise...
|
| [2] https://en.wikipedia.org/wiki/Instant_payment#Example
| s_of_in...
| GoblinSlayer wrote:
| Fiat systems impose the risk of opacity, regulatory
| heuristics and reversible transactions.
| [deleted]
| grey-area wrote:
| But none of that requires cryptocurrencies in their
| current form.
|
| You're talking about a supranational currency, and I have
| sincere doubts that grifters of all sorts would not try
| to take over and manipulate such a currency, as they have
| for bitcoin.
|
| The governance is more important than the tech IMO.
| MrMan wrote:
| The globe has a few supranational currencies already we
| have some experience in this
| halukakin wrote:
| Say everyone in an unstable economy were paid in usd. If
| that country has foreign deficit, if that country has
| high government debt. What happens? How can the
| government keep paying its own employees? How does it pay
| retiree checks? How does it subsidize farming when
| needed? As long as a country cannot print usd itself,
| this is a fast shortcut to unemployment, hunger, etc...
|
| Strong currencies are not the solution to poor
| governance. Good governance and democracy makes a country
| and its currency strong. Not vice versa.
| vivekd wrote:
| >Good governance and democracy makes a country and its
| currency strong. Not vice versa.
|
| The issue with this argument is that good government is a
| very hard problem that in many cases has no clear
| immediate solutions. While things like crypto many not be
| a solution they are a vood stopgap solution for the
| problems created by bad governments - at least until we
| can get thw good governance problem solved
| ardy42 wrote:
| > Strong currencies are not the solution to poor
| governance. Good governance and democracy makes a country
| and its currency strong. Not vice versa.
|
| That's a good point. Too many people propose
| individualist solutions to social problems, and all their
| "solution" would do is make the social problem worse.
|
| I think that stems often stems from an overzealous faith
| in free markets, which leads to a distorted idea that
| individual self interest factored over all of society
| _always_ results in social benefits, so you only need to
| consider things from the perspective of an individual
| (which is also far more familiar to most people).
| Sometimes individual self interest does lead to social
| benefits, but often it doesn 't.
| imtringued wrote:
| Markets only exist within the context of a political
| system. They are just a tool to reach a certain policy
| outcome. The idea of using the free market to replace
| poor governance is laughable. It's the opposite. You have
| to set the right policies and incentives and only then
| will the free market show its true beauty. Markets fail
| or succeed because of improper or proper governance.
|
| It's like a genetic/ML algorithm that is optimizing for a
| cost function. If your cost function is awful your
| algorithm will be awful but that's not an argument in
| favor of getting rid of cost functions entirely.
| reedjosh wrote:
| > Markets fail or succeed because of improper or proper
| governance.
|
| I have yet to see proper governance last long enough to
| be of any note and worse governance tends to quickly flip
| to favor the powerful.
| ajmurmann wrote:
| Hong Kong and Singapore might be great examples
| reedjosh wrote:
| TBH, I'm ignorant of these countries' regulatory systems.
| You may be right. What makes them good examples?
| ardy42 wrote:
| The latter is famously authoritarian capitalist, and the
| former just gutted its civil liberties?
|
| Also, IIRC, they both benefited from being trade gateways
| into the PRC economy, especially when it was more closed
| than it is now.
| Spivak wrote:
| Thank you! Sure fine at some base level there is still
| technically market in a purely anarcho-capitalist system
| but that doesn't suddenly imply that the markets we have
| aren't essentially a pseudo-central planning systems that
| actually work.
|
| A market is useless if it doesn't actually allocate goods
| and labor efficiently and in the way people want.
| __MatrixMan__ wrote:
| Suppose you've got two political systems each vying for
| legitimacy. They each have their own currency, and their
| own set of policy outcomes.
|
| Is it so laughable that whichever one achieves the best
| results for its users will be the one to establish both
| market and political dominance? Is letting such a
| competition play out via the value of their respective
| currencies any better than traditional means of resolving
| this kind of conflict (i.e. war)?
|
| I'm not saying I have ultimate faith in the market to do
| the right thing--it frequently doesn't. But it sounds
| like you're saying that it can't.
|
| Granted, BTC's political system involves allocating power
| based on who can waste the most energy--so it's a pretty
| laughable alternative to existing governments--but in
| principle I don't see why markets can't mediate the rise
| and fall political systems in a way that roughly mirrors
| the way that political systems mediate the rise and fall
| of companies.
|
| There's that saying: - Those who make peaceful revolution
| impossible make violent revolution inevitable.
|
| It seems to me that collectively changing whose currency
| we use based on their capacity for sound governance is
| the kind of peaceful revolution that we ought to strive
| for.
| gbear605 wrote:
| A market doesn't work in countries without a strong
| government, since for a market to work, there needs to be
| faith that the other party isn't going to break the rules
| of the market. If you're trying to sell your goods and
| someone comes in with a gun, then you have to hope that
| either you have a gun or can call police. If you have to
| resort to using a gun, then that leads to huge costs and
| lots of dead people.
| boogies wrote:
| > If you have to resort to using a gun, then that leads
| to huge costs and lots of dead people.
|
| Is that more true for you using a gun than it is for
| police using a gun?
| eek04_ wrote:
| Yes. Police is regulated and has a lot of conventions
| (laws) and resources that enforce those conventions.
| Ultimately, it goes back to a fairly well-resourced court
| of law, which is willing to take a fairly high cost to
| make a decision, as a shared cost paid through taxes.
|
| With individuals making those decisions, the decisions
| will be made at much lower cost, and this will result in
| lower quality of decisions.
| gbear605 wrote:
| If it's you using a gun, you get Somalia. If it's the
| police using a gun, you get the US. (If it's the police
| using a baton, you get the UK). It works because the
| threat isn't just physical harm but also social
| consequences. Even going back through history, there
| would be governmental consequences for not abiding by
| fair trade, whether that was the local lord throwing you
| in the stockades or the rest of your tribe ostracizing
| you.
| __MatrixMan__ wrote:
| I'm not gonna say that that doesn't happen, but it's
| surely not the only thing that happens in places without
| an authority. People want to exchange goods, and they're
| typically willing to be clever in order to make that
| happen.
|
| Already cryptocurrencies are implementing webs of trust
| to guard against this kind of thing (CirclesUBI). There
| are also things like MAD escrow (particl). And there's
| the old fashioned way, which is to get the community
| together and set up your own impromptu government.
|
| I'm not saying that markets function _well_ without
| readily available trust. But to say that they cease to
| exist in those contexts is surely taking it too far.
| leppr wrote:
| That's precisely the main innovation of Bitcoin. Without
| the aid of a central authority, people are able to decide
| on a set of rules that must be respected to play in the
| market. People can switch to different "markets" with
| different rules at will.
|
| The value of these markets is itself decided through a
| free market.
|
| Given a sufficient level of digitization, it's not hard
| to imagine how many kind of real world markets could be
| backed by Bitcoin-like systems.
| dmitriid wrote:
| > Without the aid of a central authority, people are able
| to decide on a set of rules that must be respected to
| play in the market.
|
| What you mean to say: people will reinvent laws and
| governance.
| __MatrixMan__ wrote:
| That's right, but what's new about this time is that the
| "how bad things have to get before we rethink laws and
| governance"-threshold had changed, as has the "how
| efficient of a government we'll accept before we stop
| iterating"-threshold.
|
| Governments run themselves but until recently, economies
| didn't. Now that there are two memes (besides violence)
| that are each independently capable of mediating coersion
| on a global scale, we can play them against each other
| and select for the one we like best.
| gbear605 wrote:
| Governments have always (always) been involved in
| economies. Rome imported hundreds of tons of grain a year
| and gave them out free to its citizens. Hammurabi's code
| mandated fixed medical payments and regulated
| professions. Don't get me started on China. And taxation
| has been around as long as there has been agriculture,
| although it's much better nowadays since the taxman won't
| come in and tax all the food you own just before winter,
| leaving you to starve.
| adrianN wrote:
| Except for very narrow use cases I don't see how the
| rules you can enforce in a digital space like a
| blockchain network help when you don't have a stable
| meatspace system of law. A bitcoin transaction can be
| mathematically as bullet proof as you want, but that
| doesn't help make your meatspace assets any more bullet
| proof.
| CryptoPunk wrote:
| It doesn't take much law to make cryptocurrency secure
| for a person to hold: just protection from home invasion
| and torture. It can work quite well in otherwise highly
| dysfunctional societies.
|
| Other forms of property ownership are much more fragile,
| and require a much more sophisticated legal system.
| simiones wrote:
| Ok, so no one can steal my crypto. But what if they
| accept my payment, and then they don't give me the items
| I payed for? Or vice versa - if I'm selling something and
| I give them the item, but they don't initiate the
| payment? What if the company I work for isn't
| transferring the BTC in our contract at the end of the
| month, because they ran out because their own customers
| haven't been paying?
|
| With a regular currency, the government can print more
| money and at least have a chance for things going back to
| normal once the currency has a chance to go back up in
| value. But with a currency that's not controlled, you
| won't get payed in worthless money (inflation), you just
| won't get payed at all! And instead of getting back your
| lost value if the currency rises in power, you'll have to
| hope the contract will be honored at a later date, or
| massively overload the legal system.
| CryptoPunk wrote:
| Commerce generally works quite well, to the point that it
| works even when there is no legal compulsion to not
| cheat.
|
| Bad actors are ostracized while good actors build
| followings, leading to reputation acting as an effective
| mechanism to find good actors to trade with, and
| incentivize people to become good actors.
|
| In any case, when people are free to choose between
| government-recognized currency and non-governmental
| digital currency, they will choose the one that best
| suits each circumstance, leading to greater overall
| utility.
| simiones wrote:
| Yes, in a functioning economy. Here we are discussing
| what happens as an economy breaks down - as people stop
| being able to pay their debts, for various reasons.
| fakedang wrote:
| Will that be enough? AFAIK, every country's government
| (or some warlord) has a monopoly on violence and the law.
| If they wanted to, they could easily just draft a law
| mandating crypto to be stored in particular forms else
| can't be used/traded. Or they could simply invade your
| home on some bullshit pretext and seize all of your
| crypto. Both instances have happened before (and have
| been posted on HN too) and I've seen both of them in both
| autocracies and Western democracies.
|
| Imo, there's nothing better to secure your assets better
| than some form of monopoly on the law, or a monopoly on
| violence, or even better a combination of the two. This
| is also why billionaire classes simply consider crypto a
| wealth store asset and not a secure store of assets.
| CryptoPunk wrote:
| In theory, there is nothing an autocratic government
| can't do to you.
|
| But leaders pay a political price for instituting
| draconian enforcement measures, while their country pays
| an economic price, which makes them less likely. It's one
| thing to send armed agents to storm the homes of
| executives of a large private bank to shake down the
| bank. It's another to do it against end-users at a scale
| where it becomes effective.
|
| You may be right about the most secure form of property.
| Many don't have access to jurisdictions that can offer
| people in their income class that kind of security of
| property. For them, I think in some situations
| cryptocurrency can be a very secure form of property
| comparatively speaking. Cryptocurrency can be thought of
| as a poor man's offshore bank account, literally
| speaking.
| fakedang wrote:
| > Many don't have access to jurisdictions that can offer
| people in their income class that kind of security of
| property. For them, I think in some situations
| cryptocurrency can be a very secure form of property
| comparatively speaking. Cryptocurrency can be thought of
| as a poor man's offshore bank account, literally
| speaking.
|
| Actually I didn't mean monopoly on the law and monopoly
| of violence that way. I meant that billionaires invest a
| lot of cash into politics and personal security (legal
| and otherwise) for good reason. It would be very hard for
| a politician to go head to head against a billionaire
| donor, since he would just donate to the other guy the
| next time. Similarly, they get to influence a lot of
| things including who might head the city's police force
| or what policies to implement on a regional or national
| level. It's the same thing everywhere, whether you're in
| the Indian or Pakistani badlands, the heart of the EU or
| smack in the middle of NYC or SF.
|
| I agree with crypto being the poor man's offshore, but a
| poor man wouldn't need an offshore. Not to mention, the
| barrier to open an offshore account is much less than the
| cost of BTC right now.
| ardy42 wrote:
| > But leaders pay a political price for instituting
| draconian enforcement measures, while their country pays
| an economic price, which makes them less likely. It's one
| thing to send armed agents to storm the homes of
| executives of a large private bank to shake down the
| bank. It's another to do it against end-users at a scale
| where it becomes effective.
|
| I don't think the political price is as high as you
| think, and armed agents don't have to storm the homes of
| end-users at scale. All they have to do is storm enough
| homes discourage people by making it clear the risk is
| real, and everyone internalizes the rules.
|
| If cryptocurrency is contraband, it's the worse kind of
| contraband because it _advertises that you use it to the
| authorities_ through easily monitored channels (since you
| have to connect to identifiable internet services to use
| it).
| CryptoPunk wrote:
| >>All they have to do is storm enough homes discourage
| people by making it clear the risk is real, and everyone
| internalizes the rules.
|
| I suspect the scale of enforcement needed to discourage
| widespread usage would be very large, and incur political
| and economic costs that are prohibitive. That's
| corroborated by the fact that the USD circulates widely
| in countries suffering high inflation, despite it being
| in the best interest of the elite of these countries for
| people to only use the national currency.
|
| >>If cryptocurrency is contraband, it's the worse kind of
| contraband because it advertises that you use it to the
| authorities through easily monitored channels (since you
| have to connect to identifiable internet services to use
| it).
|
| Only if public access to strong encryption is prohibited,
| and there are economic costs associated with a country
| doing that.
| higglerburyfinn wrote:
| > based on who can waste the most energy
|
| not unrelated is the disk storage the block chain will
| eventually require, now ZFS and storage density arms
| races make sense
| MrMan wrote:
| This is why I called Bitcoin "naive and antisocial". I
| perceive a long-standing willingness on the part of
| crypto proponents to willfully ignore why monetary policy
| exists and how it is tied to society's needs. Self-
| governance cannot be cast aside in favor of a currency
| managed by a network of miners remote from the Economic
| output, debt and other expressions of local social
| economy. I called it evil and I wasn't being hyperbolic.
| dorgo wrote:
| (self-)governance is big topic in crypto. I predict that
| crypto will reinvent all the societal structures and
| processes to form a digital
| market+government+jurisdiction because a currency alone
| can't address all the problems you mentioned.
| nathias wrote:
| Of course monetary policy is good for the guys
| implementing it, crypto is here for the rest of us.
| Making monetary policy tied to a currency and immutable
| is one of the great benefits of crypto, akin to having
| monetary policies be part of constitution.
| eek04_ wrote:
| I don't believe it will be a benefit. Current monetary
| policy is to keep inflation positive and low, while
| addressing economic shocks that make money velocity low
| by increasing the supply.
|
| A low positive inflation effectively makes all prices
| that are denominated in a fixed amount of the currency
| slowly lower. This helps the economy - ie, people and
| companies acting in the economy - deal with changes more
| easily, since their contracted prices are going down. It
| also avoids the problem with deflation: Keeping money to
| spend in the future makes more sense to an individual,
| thus money velocity goes down, thus less things happen
| (and all actors earn less.)
|
| That's also why increasing the money supply for crises is
| good: It allows the same activity to go on, even if each
| unit of currency moves less. People can get paid the same
| even if everybody save up money. If there's a fixed
| amount of currency, they can't, since the currency that
| would be used to pay them is now bound up in their
| savings.
| nathias wrote:
| > A low positive inflation effectively makes all prices
| that are denominated in a fixed amount of the currency
| slowly lower. This helps the economy - ie, people and
| companies acting in the economy
|
| This helps the people who have capital and is paid for by
| the people who only have wages. I am a person that only
| has a wage, so I choose bitcoin.
| MrMan wrote:
| You can't opt out of society without consequences
| cmoscoso wrote:
| Do you mean society or big government?
| [deleted]
| CryptoPunk wrote:
| >>What happens? How can the government keep paying its
| own employees? How does it pay retiree checks? How does
| it subsidize farming when needed? As long as a country
| cannot print usd itself, this is a fast shortcut to
| unemployment, hunger, etc...
|
| In these countries, those in power rob the public blind.
| They steal the country's wealth and do anything they can
| to hold on to and expand their power. Giving the state
| more power just means giving the elite more power to rob.
|
| The point is that when a state is inept and driving the
| country into bankruptcy, the grey/black market can be a
| lifeline keeping people alive.
|
| You don't want to chain the population to the efficacy of
| state, by closing off avenues to non-state payment-
| systems and currencies.
|
| The internet, and the currencies built on it, can provide
| alternate, superior governance systems for financial and
| economic collaboration that can operate in parallel with
| state-administered ones.
| conanbatt wrote:
| The gov can still pay its employees with its own
| currency. There are plenty of bimonetary economies.
| vishnugupta wrote:
| > As long as a country cannot print usd itself, this is a
| fast shortcut to unemployment, hunger, etc...
|
| We don't even need to make up hypothetical examples. We
| have a live one in Greece. The Greek citizens went
| through this exact ordeal for the exact reason you
| stated. They couldn't print EUR and the ECB wouldn't
| extent monetary support to Greek government.
| LudwigNagasena wrote:
| The Greek citizens went through this because the Greek
| government has been lying for many years in its financial
| reports.
| deeeeplearning wrote:
| Lol found the German
| Mtinie wrote:
| Is the assertion wrong? Cursory, recent research and my
| own recollection matches with the comment you were
| responding to.
|
| https://www.ft.com/content/33b0a48c-ff7e-11de-8f53-00144f
| eab...
| deeeeplearning wrote:
| I think the real reason is that Greece was more or less
| forced by the EU to accept austerity and a bad loan it
| can't possibly repay. The leadup to this was irrelevant.
| dmpk2k wrote:
| Both can be true (and are).
| m00dy wrote:
| I agree.
| intenex wrote:
| Wait - so why are other countries like Germany in the EU
| fine despite also not being able to arbitrarily issue
| their own national fiat currency?
| RobertoG wrote:
| They are not. Germany is a net exporter, obviously not
| all the countries can be net exporter at the same time.
|
| You can't have a stable monetary union without a fiscal
| capacity. The inevitable debt crisis in the Euro-zone are
| stopped by the ECB buying debt in the secondary markets.
|
| The hypocrisy of the system is obvious to however takes
| the time to see how it works.
| [deleted]
| blake1 wrote:
| They were eventually given the right to "print" EUR. One
| of the many problems with the euro system that periphery
| countries have unfortunately been subjected too.
| totalZero wrote:
| I don't think the answer to this question plays out the
| way you want it to...
|
| 1. Countries that have natural resources can raise
| capital when they need to, either by selling/taxing
| rights to those resources or by selling nationalized
| resources. Ecuador for example uses the dollar and also
| produces about a half of a million barrels of oil per
| day.
|
| 2. For many developing countries, the whole point of
| using the dollar is that it precludes monetary over-
| engineering or corrupt practices that give rise to
| inflation. This makes the economy safer for the have-
| nots, who have fixed local-denominated savings and/or
| earn a fixed local-denominated wage.
|
| 3. Simply using the dollar makes it easier to facilitate
| trade, tourism, and remittances. Panama does a lot of
| shipping and transit. Ecuador is a tourist destination.
| Remittances are the major source of foreign income to El
| Salvador.
|
| Those countries that accept dollars and also maintain a
| dollar-pegged local currency are able to conduct monetary
| policy while also establishing a measure of confidence in
| the stability of their currency.
| IG_Semmelweiss wrote:
| I think this is only half the story.
|
| What you are missing in your detail is that ecuador
| actually got itself into a very serious currency bind
| precovid, and it seems to be staying that way.
|
| So this would validate parent comment and actually negate
| your assertion that parent was incorrect.
|
| That being said, this is half the story. And its the
| other part that matters. This is the first time ecuador
| gets in trouble post USD adoption. Where it goes from
| here will directly prove or disprove the very thesis,
| that parent comment assumed was a foregone conclusion.
|
| Thus , your refutation may be correct after all, except
| for what i believe are different reasons.
| totalZero wrote:
| > ecuador actually got itself into a very serious
| currency bind precovid, and it seems to be staying that
| way.
|
| Ecuador had protests over removal of fuel subsidies to
| satisfy IMF debt conditions in Oct 2019. Hard to see how
| that's a "currency bind" in any sense.
|
| > This is the first time ecuador gets in trouble post USD
| adoption.
|
| Uh...what? You're just making stuff up.
|
| Ecuador defaulted on two bond issues in 2008.
|
| Ecuador had to borrow billions from China in 2015 when
| petroleum prices collapsed. This affected the country for
| two or three years. Public sector workers had to wait
| months for their salaries at times. In an alternate
| reality where Ecuador uses its own currency, the
| government would have printed its way through that
| problem and the resulting devaluation would have hurt
| everyone with savings or wages.
| IG_Semmelweiss wrote:
| A currency bind as in, they have no reserves to pay for
| their expenses / debt. This specific sort of problem no
| country that can print their own currency has but that
| doesnt mean that such recourse does not cause problem on
| its own. But thats not my point.
|
| I dont argue for printed currency. We are actually in
| agreement there. I'm responding to parent halukakin who
| said
|
| "Strong currencies are not the solution to poor
| governance. Good governance and democracy makes a country
| and its currency strong. Not vice versa. "
|
| I contend that ecuador could prove that statement wrong.
| The 2008 crisis caught everyone off guard. Once Ecuador
| comes out of this crisis, we will really see if this
| experience will be enough to institute good governance
| reforms which were elusive during the constant ups downs
| of local currency inflation.
| Wowfunhappy wrote:
| Yeah, it's not great, but I don't think using Bitcoin
| solves any of those problems...
| jariel wrote:
| "Strong currencies are not the solution to poor
| governance."
|
| Yes they are.
|
| It's really upside down that you'd point out that
| 'governments can just print money to pay people!' as
| somehow being an advantage of good governance.
|
| Well, partly, but it depends on a high degree of
| integrity, if absent, will entail total dissolution.
|
| In absence of a government with integrity, then a 'strong
| currency' such as one that the government has no control
| over, say a Caribbean Island that uses USD for example,
| is preferable to anything else.
|
| "Good governance and democracy makes a country and its
| currency strong. Not vice versa. "
|
| First - democracy has nothing to do with it.
|
| Second - 'good governance' is the opposite of printing
| money to pay bills.
|
| In an unstable economy, USDs or Euros are preferable to
| worthless paper or Bitcons.
| wonderwonder wrote:
| This is an accurate statement when approached from a top
| down nation / state level. Approached from the level of
| an average person living in countries with highly
| volatile currencies, they just want a currency that is
| not reliably going to be less than it was the day before.
| It allows those people the opportunity to detach from the
| issue of "poor governance" over which they have no
| control and gives them some independence from it.
|
| This is especially true for refugees. They run the very
| real risk of being killed for any money they are carrying
| but if one has one's keys memorized then no one knows you
| have funds and you are somewhat safer.
|
| Over 1/3 of the world's population lives in countries
| with declining or unstable democracies, crypto currencies
| provide a small cushion from that in some situations.
| simiones wrote:
| If the economy is not working, people won't get the value
| they are used to. This can essentially be handled in 2
| ways:
|
| 1. Inflation, which means that everyone is getting the
| money they are owed, but can't do as much with them
|
| 2. Defaults/bankruptcy/breach of contract - people and
| businesses just run out of money and stop paying their
| debts
|
| If your country can print money, you will be in situation
| 1. If your country can't print money (e.g. because it is
| using BTC or USD or Euros or whatever currency they can't
| control), then you'll be in situation 2.
|
| I for one prefer situation 1, because there is a chance
| of recovery from there, and normal life can go on
| somewhat naturally.
| reedjosh wrote:
| > Say everyone in an unstable economy were paid in usd.
|
| Then that country would be paying the unseen tax of
| inflation as the US banking system prints more and more
| USD. Said country would basically be a US colony.
| arcticbull wrote:
| This happens in many countries already, the inflation tax
| of the US banking system is 2% and not an issue. That
| does not make Panama or Hong Kong US colonies.
| reedjosh wrote:
| That 2% number depends upon whether you trust the people
| inflating the USD to tell you what the inflation rate is.
|
| Feel free to call shadowstats crazy, but nothing in it is
| false. It's just another perspective.
| http://www.shadowstats.com/alternate_data/inflation-
| charts
| arcticbull wrote:
| "Shadow government statistics" is indeed nutters and not
| all perspectives deserve equal footing.
| enriquec wrote:
| asks for evidence, gets link with evidence, dismisses as
| "nutters" without addressing the evidence at all. He is
| showed you the CPI as calculated pre-1980 with a page
| explaining the changes in methodology and why they're
| flawed. How is that "nutters"? You aren't having a
| discussion in good faith.
| Geee wrote:
| You are right. The official inflation rate is wrong and
| misleading.
| arcticbull wrote:
| Why don't you provide some data instead of conjecture. We
| generally don't accept that the government inflation
| numbers are just plain wrong without substantiation.
| IG_Semmelweiss wrote:
| Sometimes common sense trumps data.
|
| You dont need data to know that the sky is blue.
|
| That being said parent did not help himself throwing
| statements out there without a foundation.
|
| Here is what i believe he should have said:
|
| CPI for goods fails in the following:
|
| Accounting for changes in sizes and quality of certain
| products (i.e. instead of raising prices vendor will
| lower quality or amount of product )
|
| Accounting for healthcare costs is fundamentally flawed.
| This only factors out of pocket costs when the majority
| of americans are effectively paying 80% of healthcare
| premiums via reduced grosd wages in the form of "employer
| contributions"
|
| Accounting for substitutions of products in the cpi
| itself which are not reliable substitutes, or the
| exclusion of certain items (housing) which are clearly
| inflationary.
|
| There is also a lot of criticism made for the boskin
| commision changes
| https://en.m.wikipedia.org/wiki/Boskin_Commission to cpi
| which messed with base prices and thus with true
| measurement of cpi.
| [deleted]
| arcticbull wrote:
| > Sometimes common sense trumps data.
|
| Data always trumps common sense, that's why we have
| science :) - if science had a motto that would be it!
| Sometimes we need more data, but common sense is often
| trivially wrong.
|
| I would argue we do in fact need data to show the sky is
| blue. The data shows us the sky is not in fact "blue" but
| rather a blend of various peaks and valleys of radiation.
| [2] It's not so much blue as a bunch of colors at once
| that happen to be blue-dominant. Further it's actually
| the "inverse of blue" in that blue is allowed to pass but
| all the other colors are absorbed.
|
| > Accounting for substitutions of products in the cpi
| itself which are not reliable substitutes, or the
| exclusion of certain items (housing) which are clearly
| inflationary.
|
| Housing on a $/sqft basis has tracked inflation since the
| 1970s across the US. What's changed is zoning policy, but
| zoning policy isn't a function of money supply. [1]
|
| A reduction in welfare is not necessarily inflation or
| monetary policy, it can just as easily be social policy.
| You can't pin all society's ills on the evil Fed and
| their consistent and predictable 2% rate of inflation.
|
| > Accounting for healthcare costs is fundamentally
| flawed.
|
| Healthcare costs exceed inflation. That's not a function
| of monetary policy, it's a function of a fundamentally
| flawed healthcare system in the US that needs to be
| fixed. That's not the Fed's job, that's social policy.
|
| > There is also a lot of criticism made for the boskin
| commision changes
| https://en.m.wikipedia.org/wiki/Boskin_Commission to cpi
| which messed with base prices and thus with true
| measurement of cpi.
|
| Peoples needs, wants and expectations change over time.
| In the same way the S&P 500 and Dow Jones cycle through
| companies that are no longer relevant, doing so with the
| CPI basket is the only rational thing to do. For
| instance, Caviar and Lobster used to be crap food for
| poor people -- they're crazy expensive now. Is that
| inflation? Of course not. Totally fair to eject them from
| the basket.
|
| [1] https://fee.org/articles/new-homes-today-have-twice-
| the-squa...
|
| [2] https://www.antenna-
| theory.com/tutorial/whyistheskyblue/purp...
| omegaworks wrote:
| It makes them economically dependent. Explicit rather
| than implicit client states of the US. Colonies in all
| but name.
|
| When President Arnulfo Arias tried exercising his
| nation's right to issue sovereign currency, he was
| deposed in a US-backed coup on October 2, 1941.
| MrMan wrote:
| Switching from one currency you can't control to another
| doesn't sound good
| omegaworks wrote:
| Exactly. The Bitcoin folks like to point to a "shadow
| cabal" that controls US currency as though that same
| problem doesn't exist in Bitcoin's architecture. At least
| we know the names of everyone serving on the Federal
| Reserve's board.
|
| Bitcoin, on the other hand, can be controlled by any
| miner or group of miners having over 50% of the network's
| hash rate[1]. We don't know the identities of the miners
| and we have seen them engage in political actions that
| change the behavior of the currency[2].
|
| 1. https://www.investopedia.com/terms/1/51-attack.asp
|
| 2. https://en.wikipedia.org/wiki/List_of_bitcoin_forks
| variaga wrote:
| TIL Zimbabwe, Ecuador, El Salvador, Palau, East Timor and
| the British Virgin Islands are all "basically US
| colonies".
|
| What about countries that don't use the dollar as
| currency directly, but keep a fixed exchange rate to the
| dollar - they would be paying the unseen tax of inflation
| too, right? With a fixed exchange rate if the dollar
| value falls, so will the value of their currency. So that
| would mean Hong Kong, Cuba, Jordan and the Netherlands
| are all "basically US colonies" too. (China may be kind
| of surprised about that first one.)
|
| Does this work for other currencies, or just $USD? Are
| Martinique, Andorra, Montenegro and Kosovo "basically EU
| colonies"? - they all use the Euro as currency, but are
| not part of either the EU or the EEA.
|
| We don't actually have to hypothesize about what would
| happen if an unstable economy switched everything over to
| dollars (or Euros), either directly or by exchange rate
| peg, because it has already happened, many times.
|
| https://www.worlddata.info/currencies/usd-us-dollar.php
| reedjosh wrote:
| Your argument from incredulity doesn't make what I say
| less true. Maybe my language was a bit strong, but
| there's no denying if somebody can freely make more of
| something you value, then they're gaining from your use
| of said valuable.
| IG_Semmelweiss wrote:
| Montenegro and Ecuador are effective colonies in their
| most developed areas.
|
| Most of the valuable property in major metros is owned
| directly by US-based or EU-based emigrees , who paid top
| dollar for property that has a ROC duration in excess of
| 20 years.
|
| Most of the metro areas on these countries are rapidly
| turning hollow projects which cheap rents or undeveloped
| land. It is quickly becoming like paris.
|
| Flat rental 2000 EUR. Buy price: 2M EUR.
|
| When someone that is not a local is taking all your
| valuable land... Thats the textbook definition of colony
| RobertoG wrote:
| Andorra is definitely a EU colony, or more precisely, a
| France/Spain colony used for fiscal evasion.
| nathias wrote:
| yes, calling them colonies are a stretch but there is a
| relation of dominance there, not just because of
| inflation but the whole credit system
| jariel wrote:
| Not at all.
|
| It may not be optimal for certain reasons to use USD, and
| they'd lose some advantages, but there are others to be
| gained that might make it worth it.
|
| To the extent there are no real capital controls on USD
| anywhere - and - the US Fed is separate from the
| government, then nobody is going to be a 'colony' of the
| US by using USD.
| [deleted]
| l_pan_ wrote:
| Well said. I believe this is why the US and many others
| abandoned the gold standard.
| forty wrote:
| Why would someone give btc against a more risky local
| money? What I wonder is, why is it more convenient for
| someone who has some unstable money available to trade it
| for btc rather than euro directly for example? - i assume
| the end goal is to convert it back to a real money you
| can use to purchase thing?
| heavyset_go wrote:
| They wouldn't. A lot of cryptocurrency justifications
| hinge on made up scenarios. They also ignore the fact
| that it costs money to even send or spend most
| cryptocurrency, or the fact that it must be liquidated in
| 99.9% of spending scenarios, and ignore the challenges in
| buying or selling cryptocurrency in the first place.
|
| Most exchanges require several forms of ID and
| verification to buy or sell cryptocurrency. I had to use
| a smartphone to take a picture of myself with my photo ID
| before I could even use most exchanges. Someone who
| doesn't have photo ID, computer or a working smartphone
| are out of luck in that scenario.
|
| Bitcoin might make sense for remittance, with the
| intention that it is then liquidated after being
| received.
| GoblinSlayer wrote:
| Why would someone give euro against a more risky local
| money?
| forty wrote:
| hence my question, what does btc change?
| hnick wrote:
| I can think of a few things.
|
| It's less regulated so it's more likely people will make
| poor trades - maybe it's not in their interest as you are
| implying, but they do it anyway.
|
| Countries can make owning foreign currency illegal. BTC
| is easier to hide than Euros (cash or electronic). You
| can trade BTC back to cash without a paper trail by
| writing down a private key.
|
| In terms of why someone would sell BTC for a failing
| currency? Maybe they are also a local and have expenses
| to pay. Otherwise, it's likely the seller is selling for
| USD or something and there's an intermediate conversion
| so someone else who needs it ends up with the local
| currency. It's pretty common to get out of the currency
| as much as possible (assets, other currencies, BTC) then
| only dip back in for as little as possible to pay local
| expenses.
| sjy wrote:
| Governments with unstable currencies sometimes impose
| restrictions on the ability to buy and sell them, and
| bitcoin makes it easier to evade these.
| dragonwriter wrote:
| > This is (IMO) the most important point about digital
| currency - the promise of providing consumers in unstable
| economies the chance to convert to a more stable currency
| without government intrusion.
|
| Well, except that the conversion into/out of fiat and the
| access to the network to transact the crypto are all
| things the government will usually be quite able to
| interfere with.
| sorbits wrote:
| Normally the government leverages its power to keep its
| currency stable. If a country fails at that, the
| residents tend to switch to another country's currency,
| for example USD is widely accepted in countries with
| unstable currencies, and this makes sense, since a lot of
| commodity prices are set in USD.
|
| What we have seen with crypto currencies are extreme
| volatility, not useful to base a country's economy on,
| and because it is decentralized, no-one can really
| intervene to control this volatility, by e.g. changing
| the interest rate, and nothing is priced in crypto
| currencies, to sort of keep it tied to something.
|
| The only metric for what a coin should cost seems to be
| the electricity/leasing of computers required to mine
| one. But even this metric is not good, as it is
| proportional to the size of the network, which is not a
| constant, and is likely to grow, as the price goes up.
| lazide wrote:
| Devils advocate - it is possible the large swings are
| also because it does not have the counterbalancing effect
| of a large economy on it, and as it gets used more often
| that will change.
|
| Being able to buy something I want today, because the
| price went up from yesterday, or saving today when I
| would have spent, because the price has dropped today
| causes a regulating effect.
|
| Right now the usage of it is low, small changes in this
| equation have an outsized effect.
| leppr wrote:
| I agree assets with fixed inflation, be them
| cryptocurrencies or precious metals, make poor
| currencies, but some cryptocurrency projects are actually
| working on algorithmically price-stable currencies (ie. a
| cryptocurrency with a dynamic supply, not pegged to
| another fiat currency).
|
| When/if the supply problem is solved, and a more
| environnementally friendly consensus mechanism than PoW
| developed, there won't be many arguments against adopting
| cryptocurrencies as the default payment method.
|
| [1]: https://debaseonomics.io/, https://reflexer.finance/
| MrMan wrote:
| But that is still the future.
| vbezhenar wrote:
| For some countries official rate is terrible and buying
| USD unofficially is dangerous (it's prohibited and you
| can end up with fake dollars). BTC might be somewhat
| safer, as can keep anonymity and there's no fake BTC.
|
| About volatility: you're right but the thing is: even if
| BTC is volatile, over longer period its value rises up.
| Nobody lost any USD yet if he kept his BTC long enough.
| [deleted]
| jariel wrote:
| " This is (IMO) the most important point about digital
| currency - the promise of providing consumers in unstable
| economies the chance to convert to a more stable currency
| without government intrusion. "
|
| This was never the promise of blockchains or
| decentralized currencies because those things cannot
| fulfill the promise.
|
| There's a much more pragmatic answer and that's to use
| Euros, USDs, Pounds or RMBs for a decade or so until the
| government has legitimacy.
|
| 'Cash' is useful in these economies.
|
| Also, it's possible to provide digitized banking for the
| purposes of transferring money without the notion of
| introducing new, funny currencies.
| Thorentis wrote:
| Why is encouraging people in such countries to use <some
| cryptocurrency> better than making the US Dollar more
| accessible to these people? If stability is the goal, I
| find it hard to accept that DogeCoin is the answer to the
| developing/third world's economic problems.
| herbst wrote:
| How is usd tho? Sure its more stable than bitcoin, but in
| the last months and years it relatively lost value to
| eur/chf when bitcoin only increased. Both solutions have
| issues however only one made holding money lucrative
| tenaciousDaniel wrote:
| I don't think DogeCoin is the answer to anything at all,
| tbh.
| netflixandkill wrote:
| It was the answer to "how many people can I get in on
| this joke?" while playing around with litecoin.
| kolinko wrote:
| The value is in ease of use for some cases.
|
| Or, in other words, what's the point of having a stable
| currency if you can't use it in smart contracts?
| michaelmrose wrote:
| If your credit card gives you 1% back but charges walmart 2%
| and walmart takes this 2% into account when setting their
| prices then you aren't getting paid to use your credit card you
| are paying 1%.
| kristianp wrote:
| Are you talking about flyer miles when you say the card gives
| you 1% back? (I'm not in the USA, so I might not know what
| you're referring to)
| gpanders wrote:
| Many credit cards literally give cash back (in the form of
| a statement credit).
| cableshaft wrote:
| > ...ironically those buyers aren't interested in spending
| cryptocurrency using their MasterCard.
|
| > They're hoping other people will buy cryptocurrency from
| these announcements, driving the price up.
|
| So what? Does every investor use the products of the companies
| they invest in? Professional investors don't care about that,
| they care about how well the company is doing and what they
| think its trajectory will be (up or down), not whether they
| personally will use the services offered.
| PragmaticPulp wrote:
| Bitcoin isn't a company, though. It's an asset. Bitcoin
| itself doesn't do better or worse or grow in value. It's just
| moving up and down according to supply and demand.
| 3np wrote:
| I'm not so sure.
|
| A move like this can increase the confidence that the Bitcoin
| price won't go down in the long-term - that is, someone do
| wants to spend their bitcoin in the future, and signals of
| greater market confidence increase the perceived likelihood of
| that.
|
| The more I believe bitcoin is here to stay, the more
| comfortable I feel allocating savings in it.
|
| This time is also a bit different; 2017 was almost entirely
| retail, this time it's a lot more businesses and institutions
| driving the BTC market.
| olalonde wrote:
| Bitcoin is used as a speculative investment today only because
| it is so underpriced. Once its value stabilizes, its use in day
| to day transactions will grow.
|
| > Should also note that MasterCard crypto transactions almost
| certainly won't be settled on the blockchain.
|
| And neither are USD transactions. In fact, USD doesn't even
| have a blockchain! The great thing with Bitcoin is once you
| want to cash out your Bitcoin, you can take it with you "on
| chain" without any intermediary (and it's a bit more convenient
| than carrying bags of cash).
| EGreg wrote:
| False. It will never be a mainstream medium of exchange
| because its block size can only handle 10 transactions per
| second.
|
| It will be a reserve asset, used to back actual payment
| systems.
|
| And eventually other newer technologies will supplant it, as
| long as there are "synthetic bitcoins" that can be on that
| new network, crypto collateralized.
|
| If that new network launches as a sidechain though, then free
| unstaked BTC will be a perpetually dwindling amount of coins,
| and perpetually going up in price like collectibles or gold.
| With no other thing giving them value other than everyone
| else wanting it, and the miners / HODLers shilling it. It is
| a perfect investmen vehicle, it can go to $50 Billion a free
| coin once most coins are staked in other things. So,
| ironically, competitors better in every way will drive up the
| price for those who don't switch and keeo HODLing for
| decades. And mining rewards will be worth so much that
| electricity will be wasted on a bigger and bigger scale until
| people can't afford to power their homes since bitcoin mining
| makes more $. It's sad... but where is the flaw in the logic
| kristianp wrote:
| That new network has existed for years, the lightning
| network.
| raiyu wrote:
| Bitcoin is used as a speculative instrument because by
| definition it is deflationary. Which means it is more
| expensive to buy something with it today, then tomorrow. Just
| look at Chamath's tweet about how he bought a property for
| Bitcoin in 2014 for $1.4MM but today that same amount of
| bitcoin would be $100MM+
|
| https://markets.businessinsider.com/currencies/news/chamath-.
| ..
|
| This creates an environment there is never a reason to use
| the currency for a purchase, strictly because it's supply is
| completely limited and never increasing over time.
|
| Since the world economy continues to grow as GDP, output, and
| the population grows, it stands to reason that if Bitcoin in
| any way parallels our real world economic scenario, it would
| continue to rise in price per unit, because the overall GDP
| continues to increase.
|
| As a result, it in fact never stabilizes, unless overall GDP
| stops growing.
|
| Since it never stops growing, it never makes sense to use it
| for a purchase, and so you have a flywheel effect of ever
| increasing upward price pressure.
| wuliwong wrote:
| It is only by definition deflationary if you are
| specifically talking about price deflation. I know that has
| grown to be the popular use of the term but
| inflation/deflation is much better defined by the
| increase/decrease in the supply itself. By that definition,
| BTC is still inflationary for the near future until it hits
| the 21 million BTC limit. It's just far less inflationary
| than USD.
| BenoitEssiambre wrote:
| And this can go on until GDP is forced to shrink because
| people and businesses are all hoarding crypto tokens
| instead of participating in the real economy. This happened
| almost a hundred years ago when the world got too excited
| about gold. It' scary to think it could happen again with
| cryptocoins.
| jkepler wrote:
| What historical period are you referring to? If you look
| at the first 200 years of US history, for example, there
| was plenty of real world growth on spite of slow price
| deflation. Gold and silver jointly backed the banking
| system until the Federal reserve started the current USD
| system in 1913.
|
| In much of the rest of the world, the 40 years prior to
| WW1 were largely characterized by economic growth, while
| on an international (albeit decentralized on a national
| level) gold standard.
|
| What event are you thinking if?
| BenoitEssiambre wrote:
| The pre ww1 world was probably too different from today
| to draw lessons applicable today and in any case there
| were recessions every few years back then: https://en.wik
| ipedia.org/wiki/List_of_recessions_in_the_Unit...
|
| Gold tied assets hoarding caused the great depression.
| jkepler wrote:
| Thanks for your response.
|
| Perhaps the pre-WW1 period is too different from today
| because we're still living in the 100-year+ experiment if
| central banks and applied Keynesian theory. If the
| Austrian school's business cycle theories are correct,
| recessions are longer and more painful under central
| banks' manipulated monetary markets because
| malinvestments are rarely cleared from the economy: those
| enterprises get bailed out instead, and taxpayers foot
| the bill.
|
| Do you have a source for asserting that people saving
| gold caused the great depression?
| sgeisler wrote:
| Probably an unpopular opinion on a VC site, but to some
| degree recessions are good and needed to weed out
| underperforming and utterly useless companies to free up
| resources. The lack of such and bail-outs/rescuing
| attempts by governments to "save jobs" [1] have delayed
| necessary restructuring for way too long. Also, if
| recessions are the norm rather than the exception I'd
| expect people and companies to be more prepared (e.g. by
| being less leveraged, keeping more savings), so that the
| actual event isn't as bad on a personal level and it's
| just about capital reallocation.
|
| [1] an especially bullshitty argument, since ideally we'd
| want to get rid of jobs that don't add (enough) value to
| make the economy more efficient. I think the wasted human
| resources and ingenuity are the greatest tragedy.
| BenoitEssiambre wrote:
| Except low aggregate demand recessions do no such thing.
| It's often the opposite. Recessions keep alive
| inefficient manual labor intensive, low tech service
| industries because they make available cheap
| unemployed/underemployed labor. That's on top of the
| inefficiency of people doing nothing and living off of
| unemployment benefit/welfare.
|
| Under performing companies get much more efficiently
| "creatively destructed" in an economy that is running hot
| where only the more efficient, well tooled businesses can
| afford employees at tight labor market wages. On top of
| this, fewer human resources are left wastefully idle.
| imtringued wrote:
| High interest rates weed out underperforming companies.
| That's exactly what inflation is for. The reality is that
| CPI inflation is still dead and the fed is irresponsibly
| following a 0% interest rate strategy that will never
| work out.
| steeve wrote:
| How can it stabilize when it has a fixed amount of BTC?
| jrwr wrote:
| Also, The fixed amount is a rule that has not been hit yet.
| It can be changed is software as nothing on chain prevents
| more then the total allowed BTC. its just a good idea that
| the amount of BTC is limited.
| anm89 wrote:
| No currencies are "stable" inflationary, deflationary or
| neutral. Stabilize means that volatility reduces, not
| ceases to exist.
| arcticbull wrote:
| Yes there are, thanks to positive control from central
| banks. That's the point of central banks. Provide and
| maintain stability through the active expansion and
| contraction of supply against an index.
| anm89 wrote:
| Show me a currency that has the exact same inflation
| figures every month for a single year and I'll send you a
| bitcoin.
|
| Or alternately, just view a currency index like the DXY
| to see very closely that nothing comes close to this.
|
| Here is what some real inflation data looks like (as
| viewedin terms of CPI). It can't even decide if it wants
| to stay positive or negative on a monthly basis.
|
| https://tradingeconomics.com/euro-area/inflation-rate-mom
| arcticbull wrote:
| > Show me a currency that has the exact same inflation
| figures every month for a single year and I'll send you a
| bitcoin.
|
| That's strictly not a goal. The goal is a long-to-medium
| term target average.
|
| > Or alternately, just view a currency index like the DXY
| to see very closely that nothing comes close to this.
|
| DXY has little to do with domestic spending power, only
| the relative strength of one currency compared to a
| basket of other foreign currencies when spending abroad.
|
| High vs low DXY measures the relative pricing of imports
| vs exports. Strong dollar means cheaper imports. Weak
| dollar means more competitive exports. This isn't really
| inflation related, it's a separate target. After all, I
| believe every central bank in the DXY basket has the same
| inflation targets to within a reasonable band. [1]
|
| People overwhelmingly spend within the country not
| abroad.
|
| > It can't even decide if it wants to stay positive or
| negative on a monthly basis.
|
| That monetary policy takes time to be reflected in
| measurements in a multi-trillion dollar system isn't a
| bug.
|
| The data you show me looks pretty. darn. good.
|
| > ... and I'll send you a bitcoin.
|
| Please don't. I care about the earth too much to have you
| blow 22 days (650kWh) of electricity and 100g of e-waste
| on you sending me one. If I wanted a Bitcoin I'd have
| plenty. You're welcome to sell it at an exchange, and
| donate the proceeds to an environmental organization like
| Ducks Unlimited [2].
|
| That of course has the double effect of reducing the
| price, which reduces the quantity of electricity wasted
| on its production and security, which reduces CO2
| emissions -- while also saving the wetlands.
|
| [1] https://www.investopedia.com/terms/u/usdx.asp#:~:text
| =The%20....
|
| [2] https://www.ducks.org/support/donateOnlineSecureN2-HC
| T.aspx?...
| anm89 wrote:
| You still haven't provided any data of any country
| showing consistent inflation. Hell, do it over a 10 year
| period annually. You still can't. No bitcoin for you and
| the wetlands.
| arcticbull wrote:
| I have no idea what you're talking about. [1]
|
| Average them out. 1.75%. Right on the button.
|
| The ducks are going to love you!
|
| Again, the goal is not to have the number exactly on
| every single year, it's to have it within a range. It's
| within a range. It's within a pretty tight range. Mission
| accomplished, even in light of the crazy pandemic years
| and everything else that's happened in the last 12 years.
|
| [1] https://www.statista.com/statistics/244983/projected-
| inflati...
| lottin wrote:
| Since bitcoin doesn't produce income and it's not backed by
| anything there is no way to tell whether it's 'underpriced'.
| PragmaticPulp wrote:
| It's ironic that the best bull case for Bitcoin is that
| maybe it's so devoid of actual use cases that no one can
| tell if it's overpriced relative to its (lack of) utility.
| arcticbull wrote:
| Remember that in the near term the block reward is fixed
| in BTC and variable in electricity costs. The more
| expensive BTC, the more power is wasted mining. The BTC
| has to be sold off as its mined and paid to electric
| companies. To sustain this selling, more new money has to
| come in as a function of price to retain stability.
|
| At current price and block reward, Tesla's investment of
| $1.5B pays only 6 weeks of electric bills.
| agentdrtran wrote:
| "Once its value stabilizes, its use in day to day
| transactions will grow." and how will it grow when it's a
| fixed amount of currency with a fixed amount of transactions
| per second?
| nemo44x wrote:
| You can divide it over and over. The source code is a
| living document and transaction speed can be implemented
| either off chain, in the code base itself, or otherwise.
|
| It's weird to see so many opinions on this website that
| think BTC is a static thing that can't or won't adopt
| useful pull requests that miners agree are useful.
|
| It's like if it were the mid-90's and everyone was just as
| skeptical of e-commerce of the web in general.
|
| Useful things get better.
| imtringued wrote:
| >It's weird to see so many opinions on this website that
| think BTC is a static thing that can't or won't adopt
| useful pull requests that miners agree are useful.
|
| The last time this happened we got Bitcoin Cash.
| zucker42 wrote:
| > in the code base itself
|
| There was a fierce debate that lead to a hard fork over
| increasing transaction throughput by raising the block
| size, so I think it's really not a given that BTC will
| change to increase transaction speed.
|
| Also, one problem people have with Bitcoin is that the
| idea of every node of the network storing and processing
| every transaction is fundamentally not scalabe. Sure BTC
| can change and adapt, but it's hard to overcome a
| fundamental design shortcoming.
| nemo44x wrote:
| Right and look at the result - Bitcoin Cash is a failure.
| This is true democracy. We tested both solutions and the
| champion still stands.
|
| When there is incentive (if there ever is) then miners
| will adopt changes that make sense. But you need a true
| consensus. This built in conservatism is a great feature
| of BTC.
| BTCOG wrote:
| Funny how all voices of reason in the Bitcoin threads get
| downvoted into oblivion. I'm upvoting your posts to make
| them seen. Correct. Bitcoin Cash was a fork that tried to
| prove an incorrect point, and lost the fairest way
| possible.
|
| Increasing block size is simply a bad idea. You do not
| move fast and break things in mission-critical code.
| Bitcoin is more focused on working (as it does) and
| remaining secure. Bitcoin is the best money the world has
| EVER seen, and it's not important to be able to buy
| frivolous things with Bitcoin. What is important is
| making sure value transfer is safe and secure. Those of
| us who routinely truly use Bitcoin understand we can
| easily send $50-100 or whichever value you prefer and put
| in low fees around $0.50-2 and just wait on the money to
| securely transfer. Not many of us using Bitcoin care if
| that takes 1-24 hours. The currency aspect is very beta
| yet, and may even take a few more years to mature and
| will have to come in layer 2.
| ryder9 wrote:
| except it charged me to use money, my credit card gives
| me 1-2% back from all the money I spent... why would I
| ever use bitcoin in any normal transactions? also, why
| would I buy bitcoin to spend it if it's so volatile it
| can depreciate 10-20% in a day?
| devname wrote:
| I want people to earn and spend Bitcoin Cash. Almost all
| bitcoiners want this.
| cheaprentalyeti wrote:
| If all bitcoiners wanted that Bitcoin Cash would be worth
| more than Bitcoin.
| UncleOxidant wrote:
| > Spending cryptocurrency would result in selling that
| cryptocurrency, which would drive the price down.
|
| An economy based on BTC would be highly deflationary as no one
| would want to spend - why buy something today when it'll be
| cheaper in a week or a month? Scarcity isn't necessarily a good
| feature for a currency. Ideally supply of a currency should
| increase as more people enter the economy. Such a currency
| would aim for stability instead of aiming for the currency
| itself to increase in value (as happens for BTC or even
| physical gold).
| emteycz wrote:
| Finally some solution for consumerism that could work! Yay
| Bitcoin!
| nybble41 wrote:
| > why buy something today when it'll be cheaper in a week or
| a month?
|
| Because you need it today?
|
| We already see this all the time in subsets of the market
| which experience deflating prices. If you wait a year to buy
| that fancy device you're wanting there will most likely be a
| better model available at a lower cost. People still buy the
| current model, though, because there is a cost to waiting
| which offsets the expected price deflation.
| PragmaticPulp wrote:
| It's a different situation when the currency itself is
| deflationary, not the goods being purchased.
|
| Instead of thinking in terms of buying a phone, think of
| this in terms of capital allocation and investment.
|
| Deflationary currencies are designed to accrue value to
| those who don't use them. An economy built on the idea of
| incentivizing people to not spend any money is not good at
| all.
|
| Everyone knows about the downsides of excessive inflation,
| but deflationary spirals are a well-known economic problem.
| In short: Deflation reduces demands for goods, which causes
| producers to lower production targets, which causes people
| to be laid off, which further reduces demand for goods and
| so on.
|
| A hypothetical Bitcoin economy rewards early adopters
| massively at the expense of newcomers. The current wealth
| situation is already heavily biased toward older
| generations, even on an age-adjusted basis (see charts:
| https://www.wealthmanagement.com/client-
| relations/illustrati... ). If you think that's bad, just
| imagine a Bitcoin economy where the underlying financial
| system accrues wealth to the older holders, at the expense
| of newcomers to the system.
|
| People love Bitcoin because they think they're the ones
| getting in at the ground floor, getting wealthy at the
| expense of the new arrivals. The love for Bitcoin would
| flip very quickly as young people realize they're deeply on
| the losing end of that deal.
| nybble41 wrote:
| > An economy built on the idea of incentivizing people to
| not spend any money is not good at all.
|
| It's better not to induce anyone to over-spend _or_
| under-spend. I would not advocate a _deliberately_
| deflationary monetary policy any more than I would
| advocate a deliberately inflationary one. The supply
| should remain as constant as possible so as to avoid
| injecting noise into a very important economic signaling
| mechanism regarding the dividing line between socially
| beneficial investment (above-average returns) and
| malinvestment (below-average returns). Between the two,
| though, IMHO it 's better to err on the side of
| deflation. It's easier to correct for underconsumption or
| underinvestment (just start spending or investing more)
| vs. getting back resources which have already been wasted
| on unproductive excess consumption or malinvestment. When
| you inflate the money supply in an attempt to drive
| people to consume more than they need or else invest in
| ventures that may or may not actually make a positive
| contribution to the average rate of return just to avoid
| being penalized for holding cash you're actively
| contributing to the destruction of wealth and making
| everyone collectively worse off. (Though of course not
| _everyone_ is worse off; those individuals closest to the
| supply of new money benefit disproportionately from
| receiving it at pre-inflated rates before it becomes
| diluted throughout the economy.)
|
| "Deflationary spirals" are a well-known economic _myth_.
| There is no general correlation between monetary
| deflation and a shrinking economy, much less a self-
| destructive feedback loop. Gradual, unforced deflation
| does not significantly affect the demand for goods--
| people still need things _now_ , they can't just wait
| forever for prices to improve--and while nominal wages do
| obviously decrease over time, nominal prices of consumer
| goods tend to decrease even faster, resulting in an
| increase in purchasing power. As opposed to the situation
| with money supply inflation, where prices tend to rise
| faster than wages.
| PragmaticPulp wrote:
| Bitcoin, as a currency, is deflationary.
|
| Bitcoin, as an asset, is wildly inflating. I could buy 1
| BTC for $5K not long ago, but now it costs me almost $50K
| to buy the _same_ exact amount of Bitcoin.
|
| Inflation isn't strictly a function of the fed or the
| supply. Inflation can happen from demand-pull, which is
| definitely happening in the Bitcoin world.
|
| Now that the cryptocurrency cat is out of the bag, the
| idea of a singular deflationary cryptocurrency only works
| if you pretend that all of the other cryptocurrencies
| don't exist.
|
| Instead, we're seeing constant supply growth in the
| cryptocurrency space as new altcoins come online all the
| time. Even Bitcoin itself has been forked multiple times,
| effectively increasing the supply (albeit with caveats).
| I can trivially exchange BTC for BCH, so it doesn't
| really matter much that they're on different chains now.
|
| The idea that cryptocurrency supply is fixed only works
| if you deliberately ignore all but 1 cryptocurrency.
| pmontra wrote:
| > Spending cryptocurrency would result in selling that
| cryptocurrency
|
| Not necessarily. I could give you the address of 0.001 BTC over
| the MasterCard network and you give me something I can eat (I
| don't know if this is how it will work, but why not?) No BTC is
| converted in fiat currency. You can hoard you BTCs for years or
| change them in dollars as soon as you receive them. Your
| choice.
|
| Edit: I must give you the private key too.
| PragmaticPulp wrote:
| Doesn't work.
|
| You can't guarantee that you haven't memorized the private
| key. You can't guarantee you haven't traded the same key
| multiple times.
|
| The only way the receiver can truly guarantee ownership of
| the BTC is to put it in a transaction, which costs money.
| pmontra wrote:
| They downvoted you but technically you are right. And yet
| MasterCard could make it work because double spending those
| coins would be a fraud and they'll go after their double
| spending customers. They can guarantee the coins with the
| weight of their legal department.
| PragmaticPulp wrote:
| Regardless, "spending" Bitcoin in an economy where
| Bitcoin isn't the dominant currency will, on average,
| result in downward price pressure.
|
| Unless you restrict the transactions to only be among
| Bitcoin users, which isn't going to happen because the
| providers make their money from exchange fees.
|
| It's strange that so many commenters are going through
| mental gymnastics to pretend that the only rational thing
| to do with Bitcoin is to buy or trade it, but never sell
| it.
| beaner wrote:
| I'm a cryptocurrency holder and I would love it if it were
| easier to spend.
| X6S1x6Okd1st wrote:
| There's many ways to value cryptocurrency. One of them is
| largely driven by network effect, except it's directed edges of
| accepts and pays in.
|
| This is a huge addition to the network with a giant amount of
| accepts edges.
| me551ah wrote:
| I don't get why bitcoin is worth so much.Bitcoin is called a
| store of value like gold, but gold has inherent uses. If the
| price of gold went to zero then you could still use it to make
| jewellery or use it for electrical conductivity. If the price
| of bitcoin goes to zero then it's worthless. It's also not
| environmentally friendly and bitcoin mining uses up 0.21% of
| the world's power supply. And all of this energy is used to
| calculate billions of hashes per second out of which all but
| one will be discarded. There is also increased regulatory focus
| from governments who see it as a threat , with India even going
| so far as to suggest they would ban it.
| alantrrs wrote:
| We live in the information age. Information has a lot of
| value, most software companies' main asset is information.
| Visa, Mastercard and all the banks are companies that are
| valued very highly because they provide the infrastructure
| for managing money. Bitcoin is not just the asset, it is the
| network and the infrastructure. It's a whole system that
| works semi autonomously by by aligning the incentives of all
| of its members. Wouldn't you say that's valuable?
| BTCOG wrote:
| Do you typically just copy/paste the same comment on every
| Bitcoin article rather than think of nuanced commentary? Are
| you a part of ArcticBull's astroturfing campaign?
|
| Edit: I see that you've copy/pasted it once but some other
| commentary on Bitcoin seems mostly genuine.
| ric2b wrote:
| > If the price of gold went to zero then you could still use
| it to make jewellery or use it for electrical conductivity.
| If the price of bitcoin goes to zero then it's worthless.
|
| Does it really matter if the bottom is 5% instead of 0%? Is
| that honestly something you think about when choosing an
| investment?
| krsdcbl wrote:
| I'd argue that the demand for gold jewelry would drop
| accordingly to the gold price falling to zero. Jewelry is a
| secondary form of said value store, nothing inherently useful
| OOPMan wrote:
| Well, unlike Bitcoins, I can put gold jewellery in a sack
| and use it as a cosh ;-)
| bmurphy1976 wrote:
| Four or five years ago I mined Dogecoin on a lark using a
| laptop for a month. I converted that to BTC at some point and
| it's worth more than I ever anticipated. It won't change my
| life but I could have some fun with the money.
|
| I'm not inclined to transfer it to USD, but I'd happily spend
| some of it were it easy to do so. Maybe buy some stocks,
| upgrade my PC, or get a PS5 and some games? Sure, why not!
|
| I'm only sitting on it because it's a hassle to use it, not
| because I believe it's going to suddenly grow 100x in size. If
| I really cared about the growth I'd immediately move it to some
| index funds.
| PragmaticPulp wrote:
| > I'm not inclined to transfer it to USD, but I'd happily
| spend some of it were it easy to do so.
|
| Spending it is effectively the same thing as converting it to
| USD.
|
| Why are you hesitant to convert it to USD to buy something,
| yet you'd be happy to have a 3rd party service handle the
| BTC-USD conversion in the background and collect their profit
| on the exchange?
|
| There's no free lunch. Mastercard isn't doing this out of a
| desire to offer free services to the people. They're
| collecting profit by offering worse exchange rates than you
| can get on an exchange by yourself. Same story for PayPal and
| other providers.
| bmurphy1976 wrote:
| There's a big difference. Having to find an exchange and
| hook everything up to my bank account is a hassle
| (especially when I have no need to do it). Sending BTC to
| somebody using an Android app isn't and is something I have
| done frequently (e.g. donating BTC to parties who have
| helped me or offer something I enjoy).
|
| I don't want a world where I have to transfer the BTC to
| USD to use it, I want a world where I can just use it.
| MasterCard acting an an intermediary is fine with me,
| somebody has to bootstrap this.
| argvargc wrote:
| 200% YoY average return, and you'd move it to index funds?
|
| https://www.casebitcoin.com/images/stories/charliebilello_re.
| ..
| koonsolo wrote:
| Mastercard just tries to be relevant in an environment where
| they will not be relevant anymore.
|
| Just look at the Nano cryptocurrency for example: 0 fees and <1
| second transactions. You can send 0.00001 dollar or 9 billion
| to anyone in the world at any time. All you need is a phone.
|
| Crypto is going to disrupt a lot of things. If it's not clear
| by now, you will be in for a surprise.
| Sargos wrote:
| Mastercard is a payment support platform. They take the
| burden off of the business owners and let them focus on their
| business instead of the minutia of interfacing with the
| financial system. That doesn't go away with cryptocurrencies.
| In fact it might be more needed than ever as there are now
| multiple payment networks with lots of intricacies such as
| coin storage, keeping track of transactions for taxes, etc.
|
| Visa and Mastercard are likely still going to be important in
| the future just for the sheer fact that business owners will
| take at least a decade to update their backend stack to be
| sophisticated enough to handle the various payment APIs, UX
| problems, etc that crypto brings. With Visa and Mastercard
| your existing PoS terminals still work (now with crypto) and
| you can continue focusing on selling books or groceries or
| whatever else you do instead of being a financial systems
| engineer.
| koonsolo wrote:
| People can pay with their phone using a simple QR code.
| Merchants can check on any computer with a web browser.
|
| How complex does Mastercard make it right now?
|
| Like I said, it's a dinosaur ready to go extinct.
| Sargos wrote:
| That's from an end users perspective. From a merchant's
| perspective if they provide that QR code they now have
| the additional burden of custody of a bunch of crypto
| assets which means learning about, installing, making a
| specific bank account to sell the coins, dealing with tax
| burdens, etc which is a lot of work and risk for someone
| already overworked and stressed by their primary
| business.
|
| Or they can just use a payment network like Visa or
| Mastercard and not have to worry about any of that. You
| pay with BTC or ETH and the merchant receives USD.
| Everyone's happy. The merchant doesn't have to hire an
| additional crypto-specialized IT person or spend 6 months
| diving down the rabbit hole like we did. They just run
| their business.
| koonsolo wrote:
| Sorry, maybe I'm just ignorant, but since when do
| Mastercard and Visa handle taxes and everything you
| describe?
| Sargos wrote:
| In this case it would be their ability to prevent you
| from having to deal with crypto taxes since you just
| receive USD like normal.
| koonsolo wrote:
| All businesses have accountants to figure that out.
| Sargos wrote:
| Yeah and those accountants charge by the hour. Crypto
| taxes take up a lot of hours (and that's if your
| accountant already knows how to deal with crypto). The
| vast majority of small businesses don't have dedicated
| accountants and having to pay for the overhead of dealing
| with crypto is not in their already strained budgets.
| PragmaticPulp wrote:
| > Just look at the Nano cryptocurrency for example: 0 fees
| and <1 second transactions. You can send 0.00001 dollar or 9
| billion to anyone in the world at any time. All you need is a
| phone.
|
| Sounds great! But why can't we just use that technology to
| move our existing money around? Why do I have to trade my USD
| for NANO, transfer the NANO, and then trade the NANO back to
| USD at the other end?
|
| Why wouldn't I simply engage with a bank that lets me use the
| same open-source technology to simply move the USD from one
| place to another? I don't want to become an investor in Nano
| just to transact any more than I want to buy PayPal shares to
| use PayPal.
| argvargc wrote:
| We can and do, they're called stablecoins. It's not
| possible to send fiat around unless you digitise it first,
| and this needs to be done in such a way that it's
| impossible to mint more in the process and such that this
| is verifiable by everyone - hence (most) stablecoins.
|
| Edited to add: Also XRP is used as a bridge-currency to
| automagically do what you described, but with XRP in place
| of NANO. This is a product that due to regulatory
| uncertainty is not widely used yet, but it is still offered
| to, and used by various banking and payment firms who have
| signed up for it with Ripple. It's been hampered by the SEC
| in the US, but is still used elsewhere.
| tehlike wrote:
| A friend of mine basically put it this way: bitcoin can't
| become medium of exchange before it becomes medium of value.
| You can read this as: if you are holding btc, it's in your best
| interest to hold more without selling.
| temp8964 wrote:
| How do you apply this logic to USD? You either want to hold
| it or want to use it? Since everybody need to use USD, so
| nobody should hold USD?
| hackinthebochs wrote:
| It's an entirely different beast when everyone is forced to
| use USD as a medium of exchange.
| mcosta wrote:
| You are only forced to pay taxes in USD.
| jkepler wrote:
| If its only taxes that are forced on us, why then do US
| notes say that they're legal tender for all debts public
| and private. That sounds like force to me: I may want
| payment in bitcoin or Swiss francs or whatever, but if
| the payee wants to pay me in USD in the USA, am I free to
| refuse their payment as non-valid? Or am I forced to
| accept Federal Reserve Notes?
| dane-pgp wrote:
| > if the payee wants to pay me in USD in the USA, am I
| free to refuse their payment as non-valid?
|
| Yes.
|
| Legal tender for debts only means that you have to accept
| the notes if you have issued credit to the payer. For
| example, if they ate at your restaurant and came to
| settle the bill, they would owe you the amounts printed
| on the menu for the items that they ordered, but if they
| came into your cheese shop and wanted to buy some Swiss
| cheese, you could choose to only carry out the
| transaction if they paid in Swiss Francs.
| code_duck wrote:
| Crypto would get a large boost if a mandatory customer
| with a multi-hundred billion dollar "market" decided to
| require it.
| JumpCrisscross wrote:
| > _How do you apply this logic to USD? You either want to
| hold it or want to use it?_
|
| Of course it applies. Holding lots of dollars ( _e.g._ as
| hard cash or in a checking account) is stupid. That is the
| purpose and benefit of (mild) inflation: to incentivise
| consuming or investing them.
| temp8964 wrote:
| What if cryptocurrencies do not have the inflation
| problem?
| ivalm wrote:
| But inflation isn't a problem, it's a benefit. We want
| people to spend or invest (in production) their money;
| economy works best when money is actively circulated, not
| hoarded. The problem with a totally fixed money supply is
| that as productivity grows new investments are
| disincentivizes, as a fixed currently holder get the
| benefits of aggregate productivity increases (through
| deflation) without risking his money in investing in
| companies.
| JumpCrisscross wrote:
| > _What if cryptocurrencies do not have the inflation
| problem?_
|
| Then it is rational to hold, not spend, them.
| Deflationary currencies don't function. (They can be
| stores of value.)
| dna_polymerase wrote:
| Also people don't expect the dollar to become more
| valuable anytime soon, so spending it doesn't effect
| seller's remorse a day later, which happens to everyone
| spending ETH or BTC these days.
| Jtsummers wrote:
| And, since USD is inflationary, we expect it to become
| less valuable (real value) over time which encourages
| investment and spending today. Since we don't have crazy
| levels of inflation this doesn't fully discourage savings
| (with a 10% or higher inflation rate you have very little
| incentive to save, with 1 or 2% your savings lose value
| over time, but slow enough that it's still worth saving).
| Economies are improved and sustained by moving money, not
| by stagnant money.
| nybble41 wrote:
| > Economies are improved and sustained by moving money,
| not by stagnant money.
|
| A common misconception. The health of an economy lies in
| the goods that are exchanged; money is merely a
| placeholder. They are improved by producing more goods
| than are consumed, which creates room for investment in
| capital goods (tools for enhancing the productivity of
| goods and labor) and the research and development of
| improved technology (learning to make better tools).
|
| "Stagnant" money just means that more goods were produced
| than were consumed, and the surplus was not _actively_
| invested. The surplus still exists, and continues to fuel
| investment (by others) so long as the money remains
| unspent. The "stagnant" money is off the market, not
| competing for goods and services, and as such contributes
| to a reduction in prices similar to what would occur if
| that money were simply destroyed (albeit temporarily),
| shrinking the money supply. In effect this leaves the
| decision about how the surplus of goods should be
| invested up to other market participants.
|
| If the owner of the "stagnant" money knows of ways to
| invest which would provide an ROI better than the average
| rate of return on the market (i.e. the rate of deflation)
| then they should do so, earning themselves a profit and
| raising the average rate of return. However, below-
| average investments-- _mal_ investments--would lower the
| average rate of return and reduce overall economic
| growth, and ought to be discouraged. It's better for
| everyone for the owner to simply sit back, "hoard" the
| money, and receive a passive reward for producing more
| than they consumed than it would be for them to actively
| invest in ventures with below-average realized returns
| and thus divert resources from better-performing
| ventures, but that is exactly what an actively
| inflationary monetary policy encourages by driving people
| who lack the competency to choose _good_ investments to
| invest in the market anyway merely to avoid losses due to
| money supply inflation.
| Jtsummers wrote:
| It would've been better if I'd been more deliberate with
| that sentence, you're right. "money" was my shorthand for
| "things moving in the economy, including financial
| measures like cash and the exchange of goods and
| services". Just measuring the movement of money means
| that two people could create an apparently vibrant
| economy by exchanging $1,000 between them every minute of
| every day, but such an economy would be absolutely bereft
| of any real value or health.
|
| "Stagnant" was my way of referring to hoarded money
| that's not actually invested in anything. Yes, it's
| equivalent to removing it from the economy and it reduces
| the nominal price of goods and services, which also means
| it reduces the nominal wages (over time). Which means old
| money is given a much stronger benefit in the economy
| when they finally spend it, and new money (including new
| entrants like an 18 year old getting their first full
| time job) are severely penalized not due to any actual
| lack of skill or ability, but due to their entering the
| economy 100 years too late.
| jkepler wrote:
| 2% inflation over 30 years destroys over half the
| purchasing power of the saved money. So no, moderate
| inflation doesn't encourage saving. It encourages the
| unbridled consumerism that has created environmental
| catastrophe.
|
| Bitcoin, as a deflationary asset, encourages lower time
| preference, which encourages saving and real investing
| (generating real world value rather than paper gains),
| resulting in less consumerism and better stewarding of
| resources.
| Jtsummers wrote:
| I said it doesn't _fully_ discourage it. I did not say
| that it _encourages_ saving. Read my post.
|
| BTC does _not_ encourage real investing, only _hoarding_.
| The hoarded BTC is not used in any productive investment
| or way because no one will loan it when it gains much
| more value than most businesses can produce merely by
| existing. When it can increase in apparent value by 100%
| in just a few weeks, there is no reason to invest your
| BTC because no business (or very few, and none
| sustainably) will have similar returns.
| hackinthebochs wrote:
| Absolutely. Bitcoin as a store of value had to come before
| its use as a medium of exchange. Why would anyone exchange a
| currency for a product when you didn't expect its value to
| hold until you could use it? If its only value was driven by
| the demand as a medium of exchange, its value would fluctuate
| with this demand. In the early days this would be detrimental
| to its ability to serve the role as a medium of exchange. How
| long would you need to hold your coins before there was
| enough demand for exchange again?
|
| It is the speculators buying and holding that create the
| expectation that its value will hold over time, thus making
| it viable as a medium of exchange.
| uncletammy wrote:
| Although I follow the logic, I think your friend is wrong. A
| consequence of trying to make bitcoin BTC a "store of value"
| first has led to huge investment centralization as well as a
| drastic reduction in the number viable use cases.
|
| Investment centralization is bad because it makes it much
| more susceptible to regulatory capture by the industries
| crypto stands to disrupt. We're already seeing this now. The
| same big banks that called crypto a scam have suddenly become
| bullish after a few years of quietly buying coins. We need
| regular people on the streets advocating for crypto.
|
| The reduced use cases is a problem because it minimizes
| adoption and the network effect, both of which are vital for
| the long term survival of the network.
| rowland66 wrote:
| If your goal is to buy and never sell, then btc is the ideal
| investment. You can buy the btc, destroy your private key,
| and nobody will ever be able to sell it, not even your
| grandkids poking around in the attic 20 years after you have
| died.
| PragmaticPulp wrote:
| If it's in your best interest to buy and never sell, why
| would anyone want to use it for exchange?
|
| Bitcoin's deflationary nature discourages spending and
| selling, by definition. The high transaction costs discourage
| it even further.
| T0Bi wrote:
| How is bitcoin deflationary when it (currently) has a fixed
| inflation?
| adam_arthur wrote:
| Deflationary relative to the USD and other fiat
| currencies. The world is never going to run primarily on
| BTC, so talking about inflation purely in terms of number
| of BTC is a bit pointless :)
| uncletammy wrote:
| When people say it's deflationary, they mean "in the long
| run". Bitcoin has a fixed, predetermined inflation
| schedule which approaches zero over time. So, considering
| the inflation schedule alone, it's "eventually"
| deflationary.
|
| When you start to account for other things like lost and
| unrecoverable coins, it becomes severely deflationary and
| much sooner. Things like grandpa taking his encrypted
| wallet to the grave or in the case of bitcoin BTC, small
| coins that can't be moved because the fee is higher than
| the coin's value.
|
| At the time of writing this, coins worth less than ~
| $6.15 (USD) aren't able to be spent*. That means if you
| bought a $4 coffee with BTC and paid with a tenner (a
| coin [input] worth $10) , you'd lose the change. It would
| remain unspendable until the network starts unclogging.
|
| * By "arent able to be spent" I mean, reasonable fee
| estimations for getting the transaction into a block
| within an amount of time that you can be sure the
| transaction won't get dropped from the mempool. I used
| https://bitcoiner.live to estimate the fee which was the
| most generous of the three I looked at.
| edm0nd wrote:
| got em
| tfehring wrote:
| Inflation isn't strictly a measure of the monetary base.
| The dominant factor in "inflation" of (almost?) all
| cryptocurrencies is demand, not supply.
|
| Now, you can make the argument that that's not really
| inflation - that BTC won't predictably ~double in value
| every year going forward, and therefore one shouldn't be
| afraid to spend it - but the idea that the tiny rate of
| increase in supply should be a major factor in that
| decision is pretty silly. Also, it's not obvious that
| it's being mined faster than it's being eliminated due to
| lost keys.
| PragmaticPulp wrote:
| Contrary to the pop-culture definition, inflation isn't
| purely driven by fiscal policy or money supply. Supply
| and demand (aka cost-push inflation and demand-pull
| inflation) are the main drivers. Fiscal policy modulates
| these factors, but inflation existed long before fiscal
| intervention.
|
| Bitcoin adoption is a deflationary process because an
| increasing number of people are competing over a fixed
| (ultimately) supply of Bitcoin.
|
| If more people want Bitcoin, the price goes up. Why do
| more people want Bitcoin? Because the price goes up. The
| cycle reverses when the price starts going down.
| Jtsummers wrote:
| It's getting wider ownership over time so BTC supply is
| increasingly limited per person/entity interested in it,
| and the increase in supply is at a decreasing rate over
| time. This wider ownership and the (ultimately) fixed
| amount means that it will, even if not monotonically, be
| a deflationary currency (to the extent that it even is a
| currency). The rate of new BTC production has to overcome
| this deflationary pressure, and since there's always less
| coming out over time the potential inflationary pressure
| of minting new BTC will become increasingly
| insignificant.
|
| Any currency with a limited supply will tend to be
| deflationary over time, though not necessarily
| experiencing a deflationary spiral depending on the
| overall economy around it. An active economy will see
| enough movement of the currency that deflation will,
| hopefully, be small. But an inactive economy (like
| bitcoin's) with people hoarding rather than spending will
| see higher-than-healthy (from an economic perspective,
| it's great for the hoarders if they can use it later)
| deflation rates.
| koboll wrote:
| If bitcoin is a currency, then the prices of things in
| bitcoin have fallen over time. What cost 40,000 BTC a
| decade ago now costs 1 BTC.
|
| But bitcoin is more of an asset than a currency, so
| speaking of it in terms of inflation / deflation leads to
| oddities, like this.
| PragmaticPulp wrote:
| > But bitcoin is more of an asset than a currency, so
| speaking of it in terms of inflation / deflation leads to
| oddities, like this.
|
| Assets inflate and deflate. It's not an oddity.
| tehlike wrote:
| Bitcoin is not used for medium of exchang, at scale, that's
| the point.
| PragmaticPulp wrote:
| So your point is that Bitcoin isn't a medium of exchange?
| tehlike wrote:
| Not yet, not at scale.
| octocop wrote:
| > If it's in your best interest to buy and never sell, why
| would anyone want to use it for exchange?
|
| Define best interest here. I mean saving money and
| investing it to make more money is also in everyone's best
| interest, but that is certainly not the case. So why is
| that?
| Jtsummers wrote:
| There's a difference between investing in companies,
| states, and individuals (stocks, bonds, loans), saving in
| a bank (depending on the structure is usually tied to
| some kind of investment like those, but not controlled by
| the saver), and hoarding something under the mattress.
|
| Holding BTC is the same as the last one. The holdings are
| not invested in anything remotely productive, it's just
| speculation on the future value.
| octocop wrote:
| I would have to disagree with you. Seeing what has
| happened to crypto the last few years, it's very apparent
| that things are changing. Everyone on here is talking
| like bitcoin or any other crypto is the disease and not a
| symptom. I believe that it's merely a symptom, a anarchy
| of sort, against the old ways.
| ivalm wrote:
| Investing money in productive enterprise is the thing
| that is in societal benefit. Investing money in a virtual
| asset that has no other benefit and massive ecological
| costs is not a benefit.
| [deleted]
| octocop wrote:
| We will see. As far as I can tell, it's the productive
| enterprises and everyday people that are ruining the
| environment. But hey, your comment sounded smart, which
| is the the real goal here.
| uncletammy wrote:
| > If it's in your best interest to buy and never sell, why
| would anyone want to use it for exchange?
|
| It's not in your best interest to buy and never sell.
| Current investors are just incredibly short sighted. If
| bitcoin isn't usable by (and useful to) the majority of the
| world, it will never get enough investment to serve as a
| buffer against the drastic price swings caused by
| speculators.
|
| Smart investors know that simply holding coins isn't enough
| in the long run. Finding new use cases and encouraging
| adoption and use is the only way crypto stands a chance.
| simonebrunozzi wrote:
| > They're hoping other people will buy cryptocurrency from
| these announcements, driving the price up.
|
| Mostly right.
| oogetyboogety wrote:
| How will it compare to what Square does? Centralization always
| occurs at the point of the exchange, I guess. It does seem a
| little less criminal than what Robinhood was doing.
| Triv888 wrote:
| > Should also note that MasterCard crypto transactions almost
| certainly won't be settled on the blockchain.
|
| That is almost certainly wrong... otherwise, they could claim
| to have bitcoins and would not really need any?
| gt565k wrote:
| You are so wrong.
|
| Spending crypto using a card is actually what people want in
| order to avoid taxes on crypto as it's treated as a security
| from the IRS tax perspective.
|
| Anyone who has made money on crypto would love it if they can
| just spend the crypto as currency and buy every day things with
| it and remove the tax liability from having to convert to fiat.
|
| 15% tax capital gains, no thanks, let me spend it on food and
| furniture.
| draaglom wrote:
| _people_ may believe that but I don't think the IRS does.
| Spending crypto that has appreciated in value on goods and
| services is still a taxable event for CGT purposes.
| PragmaticPulp wrote:
| Exactly. "Spending" the cryptocurrency is just convenient
| UX over the exchange process.
|
| Using a credit card that abstracts the details doesn't get
| you off the hook from paying capital gains tax.
| 01100011 wrote:
| Does bartering an investment vehicle allow you to escape
| capital gains? If so, that seems like a loophole that should
| be closed. Why should you be exempt from gains on your
| capital investment?
|
| It seems like MasterCard should be reporting each swap of
| crypto for dollars to the IRS and sending you a tax form at
| the end of the year. If that's not the case, expect
| regulatory action to correct it.
| jkepler wrote:
| Nope, bartering (at least in the US) is still taxable on
| the fair market value of whatever you're exchanging.
| kelnos wrote:
| Spending the crypto through a card will not stop the IRS from
| coming after you for their cut.
| svachalek wrote:
| At least in the US, spending crypto is taxed the same as
| selling it.
|
| https://www.coinbase.com/learn/tips-and-tutorials/crypto-
| and...
| gnaritas wrote:
| You are wrong, the ability to spend it in no way removes your
| tax liability. Currency traders still owe taxes on their
| gains, it doesn't matter what currency it is, if you make
| gains you owe taxes. You don't owe money because you convert
| to fiat, you owe money because you made gains.
| martamorena923 wrote:
| OMG in what country do you live? 15%??? We have to pay 50% on
| this in Canada, well at least the ones who are in the top
| earning bracket.
|
| I would gladly pay the 15%. I mean how greedy is it to make
| these kind of gains in crypto and then trying to avoid a
| measly 15% of tax lol.
| xsmasher wrote:
| Are you sure you pay 50% in tax on the profits? A quick
| google suggests that 50% of the profits counts as income,
| which is then taxed at your income rate. 50*50 = 25% in the
| top bracket.
|
| In the US long-term cap gains is 0%, 15%, or 20% - not far
| off from 25%.
| whatshisface wrote:
| > _Spending cryptocurrency would result in selling that
| cryptocurrency, which would drive the price down. That's not
| what cryptocurrency investors actually want._
|
| That's a misunderstanding of how these things work. If selling
| drove the price down, then the price would never go up! Why?
| Because nobody can buy without a sale on the other side of the
| transaction. The common belief that selling lowers the price
| comes from the fact that if you put out a big sell-now order on
| a market, it will eat through the asks sitting there already.
| However in the slightly longer term others will put up new
| asks, up to the equilibrium where the price is close enough to
| the perceived value that there's no money to be made, after
| tax, by going in to move it closer. The phrase "Sell! Sell!
| Sell!" is based on the idea of selling at any price because you
| want to get rid of it so badly, but that's not a normal sale.
| That only happens when a party suddenly realizes that they have
| too much of something, not when they are doing everything as
| expected.
| PragmaticPulp wrote:
| A system for spending Bitcoin would inherently put sell
| orders in at market price (directly or indirectly). This
| consumes the highest priced bids and moves the price down.
|
| It's the same story with any currency. Basic foreign exchange
| concepts.
| whatshisface wrote:
| Smart sellers don't sell everything at the market price as
| soon as they can, because that would cut through the crust
| of fair asks into the mantle of waiting opportunists.
| Instead they spread it out, at a rate the ongoing volume
| can bear.
| ivalm wrote:
| If you sell Bitcoin every time you buy bread then you
| just sell whenever. It will be a large flow of market
| orders even if there aren't enough asks.
| whatshisface wrote:
| You don't sell Bitcoin every time you buy bread, the
| merchant obtains bitcoin and sells it when they think
| they should. If nobody is holding Bitcoin, you have to
| buy it when you buy bread, which means there's a 1:1
| balance between buying and selling with each transaction.
| If everybody is holding bitcoin, then the merchant will
| not mind waiting a little to offload it, because they
| know they will do better by taking their time.
|
| I guess you're describing a situation where Bitcoin is
| used purely as a store of value and never as a medium of
| exchange. I can agree that a fiat store of value, if
| never used as a medium of exchange, or even a numeraire,
| is on very shaky ground.
| ivalm wrote:
| Baker definitely should sell Bitcoin every time someone
| buys bread, otherwise they would be taking on currency
| risk, which is insane. Since they paid for
| flour/labor/amortized capex in fiat, if BTC price moves
| down they won't be able to cover their obligation. This
| means a baker need to sell at least as much BTC as would
| cover their fiat costs. Since bakery margins are low it
| means they should sell most of the BTC they get every
| time someone buy bread from them.
|
| Again, in real/practical world merchants are not there to
| invest in crypto, they are there to produce tangible
| goods and collect surplus of exchange tokens ---
| everything that is not profit needs to be de-risked.
| imtringued wrote:
| There are two sides of an orderbook. There are sell orders
| (ask) and buy orders (bid).
|
| When your sell order is higher than the highest bid it will
| be put onto the order book. If your buy order is lower than
| the lowest ask it will be put onto the order book.
|
| You can sell or buy instantaneously by fulfilling an existing
| order. When you do a market order the exchange automatically
| presents you with the most favorable order. Once that
| favorable order is gone it will take the second most
| favorable order and so on. Each new order is less favorable
| than the last one.
|
| By repeatedly selling Bitcoin you are clearing the order book
| on the buy side. Less buyers mean lower prices.
| derefr wrote:
| But the whole point of a bank doing something like this, is
| that they have the reserves needed to not have to buy/sell
| on the open market. They can take your "sold" token and
| give _you_ the observed market rate for it; then put the
| tokens you gave them in their own holding account, listing
| them on the exchange for the price _they 're_ willing to
| pay, and wait. They're in no hurry to liquidate.
|
| If a buyer then comes along who's willing to pay that price
| --and that price is higher than the current market price
| for the token--then the token goes up in value.
| agumonkey wrote:
| I wonder what kind of subtle systemic effect will twist the
| whole crypto thing on its head to the point people will forget
| what it was in the first place.
| ca98am79 wrote:
| I am very interested in spending cryptocurrency using my
| MasterCard, especially and only if it does not result in a
| capital gains transaction that I have to report on my taxes. If
| I have to report each transaction to the IRS, I am not
| interested and will not spend it. If I do NOT have to report
| it, I will use it all the time
| anm89 wrote:
| And the people buying it even though they don't want to spend
| via mastercard are smart to do so.
|
| They understand that it's building up the network effects,
| creating onramps, and improving the ecosystem.
|
| Over the long run I highly doubt mastercard will be a
| meaningful player in the crypto space but they definitely have
| the ability to hasten its adoption.
| teekert wrote:
| Yeah, that is basically what all the exchanges do. The
| blockchain does not support that use case at all.
| liquidify wrote:
| Some blockchains don't support that use case. Others do.
| scotty79 wrote:
| When Visa and MasterCard will warm up to bitcoin they will have
| ideal product for all the bitcoin millionaires.
|
| When you are long on bitcoin you almost don't care about
| volatility. Because you can't predict the future the only good
| time to buy bitcoin is when you have too much dollars and the
| only good time when to sell bitcoins is when you have not
| enough dollars.
|
| Sure, now you have 10 mln dollars in BTC at all tine high, and
| 2 mln after price drops but in day to day purchases it doesn't
| matter.
|
| MasterCard could offer joint dollar-bitcoin account that works
| as follows:
|
| You have some amount of dollars on that account, whenever you
| pay for something price is deducted from dollar balance.
|
| If dollar balance is insufficient then some portion of bitcoin
| is sold automatically from your bitcoin balance to give you
| some multiples of thousands of dollars. You could also have
| manual trading available if you want to gamble a bit and buy
| some bitcoins if it dropped to 20% of last ATH or sell some ...
| I don't know when... when you are drunk and think you can
| predict the end of the bull run..
|
| Not sure how much bitcoins would someone entrust MasterCard
| with current bankruptcy law but if it was significant enough
| amount then all bitcoin millionaires would get to use their
| fortunes totally hassle free.
| kelnos wrote:
| > _Sure, now you have 10 mln dollars in BTC at all tine high,
| and 2 mln after price drops but in day to day purchases it
| doesn 't matter._
|
| This doesn't track at all, unless it is a safe assumption
| that the general trend of Bitcoin will always be up, and you
| are able to time the market to do any major withdrawals at
| higher prices. Or, you don't have any major withdrawals, and
| you luck out in that your many small withdrawals average out
| at a higher price.
|
| None of that is guaranteed, and with Bitcoin's volatility,
| you're in for a bit of a ride every step of the way.
|
| For people who have big Bitcoin hoards due to (say) mining
| back when mining was cheap, maybe they won't mind the swings
| so much since all of it is "free surprise money", but this
| doesn't really work for people who bought into Bitcoin in the
| last 5 years or so (either by buying coins with fiat
| currency, or by building expensive mining rigs and burning
| electricity).
|
| (If you're solely talking about the first kind of person,
| then: apologies! In that case I think you're pretty much on
| the nose.)
| scotty79 wrote:
| Compare this to wealth of Elon Musk. This month he's the
| richest person on planet, two months ago he wasn't even in
| top 10 (I think). Did anything changed for him? No. Can he
| not be the richest man on the planet in two months? Sure.
| Will it change anything for him? Still no.
|
| I pretty much think about people who got into bitcoin early
| and they have more than 1000% gain and just hodl because
| they don't have much use for that kind of money.
|
| Their daily purchases would be minuscule percentage of
| their bitcoin wealth.
| PragmaticPulp wrote:
| The future would be very weird if the singular
| determinant of a person's success in life is how early
| they invested in Bitcoin.
|
| Which is one of many reasons why we're not going to have
| a mass switchover to Bitcoin. It wouldn't actually
| benefit the average person, but it would make early
| adopters ridiculously wealthy for having clicked the
| right buy button at the right time and not lost their
| private key along the way.
|
| In reality, once Bitcoin becomes a mechanism for the
| early adopters to wield wealth over the later adopters,
| everyone who didn't get rich early on will switch to
| playing a different game. No reason to go all-in on
| Bitcoin if the system is stacked in so far in favor of
| early adopters that you'll never be one of the wealthy
| ones.
| spats1990 wrote:
| >In reality, once Bitcoin becomes a mechanism for the
| early adopters to wield wealth over the later adopters,
| everyone who didn't get rich early on will switch to
| playing a different game. No reason to go all-in on
| Bitcoin if the system is stacked in so far in favor of
| early adopters that you'll never be one of the wealthy
| ones.
|
| Where I live, this is how some people my age are starting
| to feel about real estate. Maybe that's why cryptos are
| so popular, for better or worse, among younger people.
| rawtxapp wrote:
| This is very similar to what I'm currently doing, just
| borrowing against my Bitcoin holdings using MakerDAO, I have
| good liquidity on a day to day basis and my Bitcoin is still
| appreciating.
| oillio wrote:
| Is this a long term solution? Or do you plan on selling
| Bitcoin to pay back the loan when you think we are near the
| top?
| rawtxapp wrote:
| As long as there's no bugs in the smart contract, I don't
| plan on ever paying down that debt, since I expect the
| value of BTC to rise much faster than the value of my
| debt. My liquidation price is very low and if it were to
| reach that, it would mean a catastrophe anyways.
| throwawayForMe2 wrote:
| The additional benefit here is with a loan there is no tax
| event, a major advantage over selling.
| PragmaticPulp wrote:
| This isn't a new situation or unique to Bitcoin, though.
|
| It's the exact same story for any high net worth investors
| with most of their net worth tied up in stocks.
|
| If you have 10 million dollars invested, be it stocks or
| Bitcoin, then pulling out $10K (0.1%) here and there to top
| up your cash account or pay your credit card off each month
| isn't exactly a huge deal. Investing that last 0.1% into
| stocks or Bitcoin at all times doesn't make a measurable
| impact on your overall returns.
| yarcob wrote:
| > Exchange fees are a great way to charge consumers for
| spending their own money in 2021, when normal credit cards
| actually pay people 1-2% to use them
|
| Credit card companies in the US are a special kind of evil.
| They charge huge fees, force vendors not to pass the fees on to
| customers, and then pretend to be the consumer's best friend by
| returning a bit of the fees to them.
|
| They insert themselves between buyer and seller, drive prices
| up, and their customers think they are saving money.
| PragmaticPulp wrote:
| Paying with Bitcoin or any other cryptocurrency requires the
| customer to pay the transaction fees.
|
| Regardless of what you think about credit card companies,
| which payment method do you think the average consumer would
| choose?
|
| 1) Pay by credit card, get 2% cash back, reserve option to
| reverse charges if vendor fails to deliver, don't lose all of
| your money if you lose your credit card.
|
| 2) Pay by Bitcoin, pay $8 transaction fee, wait 10-30 minutes
| for transaction to be confirmed, resubmit if transaction fee
| was too low, no recourse if vendor runs away with your money,
| lose all of your money if you forget your password.
|
| Realistically, any crypto-as-payment service will either
| charge the merchants large fees (to cover risk, volatility,
| exchange, transaction costs) and/or collect profit on the
| exchange rate.
|
| There's no free lunch, but the lunch is definitely not
| cheaper on the Bitcoin side for average transactions.
| maclured wrote:
| > Realistically, any crypto-as-payment service will either
| charge the merchants large fees
|
| Particl doesn't thanks to MAD escrow -
| https://particl.wiki/learn/marketplace/mad-escrow/
| ric2b wrote:
| Nothing stops you from having Bitcoin credit cards. In fact
| they already exist.
|
| Dollar bills don't have any of the advantages you mentioned
| either. How fast and secure do you think mailing them to
| some company is?
|
| A lot of these arguments are really just cherry-picking
| whichever portion of the financial system best suits your
| argument at the time and pretending they're only possible
| if they're built on top of pieces of paper.
| PragmaticPulp wrote:
| > Dollar bills don't have any of the advantages you
| mentioned either. How fast and secure do you think
| mailing them to some company is?
|
| No one mails paper dollar bills around.
|
| Bitcoin always sounds fantastic when compared to these
| straw-man alternate universes where everyone is mailing
| dollar bills around, but let's stick to reality where no
| one does that.
|
| > pretending they're only possible if they're built on
| top of pieces of paper.
|
| USD isn't literally built on top of paper money.
| Cryptocurrency, however, is literally invented out of
| thin air by programmers. New cryptocurrencies are
| released every week. Even Bitcoin gets forked at times.
| vmception wrote:
| > Spending cryptocurrency would result in selling that
| cryptocurrency, which would drive the price down. That's not
| what cryptocurrency investors actually want
|
| that's really assuming a lot
|
| a _closed loop_ cryptocurrency transaction does not result in
| selling
|
| mastercard may or may not be offering that capability
|
| mastercard offering that capability makes the cryptocurrency
| proponents vision a reality
| PragmaticPulp wrote:
| They're not interested in making the vision of cryptocurrency
| a reality any more than it enhances their bottom line.
|
| Mastercard is offering exchange services. They will collect
| exchange fees on transactions, just like PayPal and other
| providers.
|
| They won't even bring blockchain into this any more than
| necessary. They'll handle it in databases like everyone else,
| only engaging with the blockchain as necessary for deposits
| and withdrawals.
| tshaddox wrote:
| In fact, for every transaction where a unit of cryptocurrency
| is bought, that same unit is also sold.
| vmception wrote:
| yeah sold for a candy bar and the merchant still has the
| cryptocurrency and pays their overhead costs in the same
| cryptocurrency who buy their own candy bars from a
| different merchant in cryotocurrency
|
| Payment networks like mastercard integrating cryptocurrency
| make this more practical instead of handwaiving a gradual
| organic adoption idea
| bouncycastle wrote:
| I think MasterCard will use a different type of cryptocurrency
| than you are familiar with, called "stablecoins", like the USDC
| and/or DAI. These are pegged to the USD and never go up or
| down.
|
| Most likely, they will use things like a "state channels" for
| the actual transactions. State channels are like pre-paid
| cards, where the channel gets settled after the entire card is
| spent.
|
| But why? Well, cryptocurrency makes sense over traditional
| currency, because it's programmable, auditable & composable
| with many other dapps that exist on the blockchain.
| Solvitieg wrote:
| It's bizarre that in this tread, the US dollar is treated like an
| immaculate flawless tool for transferring value. But in every
| thread about economics, its agreed the US dollar lacks trusts, is
| being manipulated by the fed, and is the leading cause of gross
| wealth inequality.
| nexthash wrote:
| What is your evidence for these claims? Bitcoin and other
| cryptocurrencies go through multiple price fluctuations a day.
| The American dollar currently underpins and backs a majority of
| the world's financial system [1]. Sure it isn't flawless, but
| its way better than something that has no backing from
| _anything_. I would prefer to use the currency issued by the
| world 's most powerful independent state, because they are
| probably gonna be around for a while.
|
| [1]
| https://en.wikipedia.org/wiki/International_use_of_the_U.S._...
| Solvitieg wrote:
| I'm not making claims, I'm posting my opinion about what I
| read on this website.
| lotsofpulp wrote:
| Because it's still the best option. I know my USD tomorrow
| is going to be worth less than USD today. But I don't think
| there is a better option for some portion of my assets, and
| I still trust that it will be useful to me in the future.
|
| But I also don't keep more than a few years worth of USD,
| instead I hold other equities that I believe will increase
| in value relative to USD. USD gives me liquidity, but not
| necessarily a good store of value. Other assets give me
| store of value, but not liquidity.
| warkdarrior wrote:
| > the US dollar [...] is the leading cause of gross wealth
| inequality
|
| I have never seen this claim made before. Do we have an
| explanation on why the US dollar causes inequality? Would it
| improve if the US changed their currency to Yuan or Euro
| tomorrow? Also, how will cryptocurrencies prevent gross wealth
| inequality?
| MadSudaca wrote:
| It will help people who don't buy assets to keep their wealth
| over time. That is, the great majority of the world's
| population.
| orbots wrote:
| Anyone know what the "select" cryptocurrencies are?
|
| The focus on Bitcoin's lack of intrinsic value and energy use is
| really getting boring.
|
| I read Hacker News comments for more information on a story.
|
| How about some of that for a switch? Go bitch about intrinsic
| value and ecological disaster on one of the other bitcoin threads
| please.
| hanniabu wrote:
| > Anyone know what the "select" cryptocurrencies are?
|
| Ethereum is pretty much where everything is happening and has
| been the case for a few years. On that platform there's
| multiple projects that are interesting and show promise like
| Uniswap, Aave, Synthetic, Maker, Vechain, Filecoin, etc.
| hoka-one-one wrote:
| I think this is a miss guided application and it's a sign that
| the cryptocurrency space is struggling to find a use case beyond
| as a store of value.
|
| Please upvote my very original opinion that hasn't been rehashed
| on nearly every cryptocurrency thread on hacker news.
| nikolay wrote:
| I am not sure who in their right mind will buy BTC at $48K a
| piece! There's nothing major that's has happened, yet, the bubble
| has inflated from $6K to $47K only because it's now harder to
| steal electricity in China and the rest of the world to mine
| bitcoins. Every week in Bulgaria we hear for a new electricity
| thieves who got caught and have stolen electricity for millions -
| often in the middle of nowhere like in small villages, farms,
| etc. Didn't China started to crackdown on miners last summer [0]?
| And, yes, all marketplaces are manipulated by the same miner
| cartels. I am not sure how China has allow this so far -
| especially when many used Bitcoin as a vehicle to export capital.
| So far, Bitcoin is wasting as much electricity as Argentina, but
| if this bubble keeps inflated so that the Chinese miners can stay
| in business, where are we going to end up soon?
|
| [0]: https://news.bitcoin.com/chinese-government-crackdowns-
| and-c...
| zionic wrote:
| Mining participation does not change the issuance of new
| bitcoin. If there was 1 miner in the entire world the issuance
| would be the same. Please educate yourself more about crypto in
| general, understanding the core concepts only takes a few
| minutes of research.
| RealityVoid wrote:
| While you are right, I do not think truly understanding it is
| as easy as a few minutes of research. It was quite mind
| bending for me the first time I read about BTC.
| nikolay wrote:
| I don't think you still get it. Do you?
| RealityVoid wrote:
| Honestly, I think you really do not get it. Why would the
| loss of ability to mine lead to a price increase of
| Bitcoin? The mining efforts are driven by the price, not
| viceversa. I am certain you are familiar with it for a
| long time, but the way you put the problem kind of points
| out you are missing something.
| nikolay wrote:
| Being rewarded coins or earning fees is the same thing -
| without the incentive to mine, the whole system
| collapses.
| RealityVoid wrote:
| This is correct, but you did not address what I was
| saying - why would a reduction in hashing power lead to
| an increase in Bitcoin price, as you were suggesting
| here:
|
| " the bubble has inflated from $6K to $47K only because
| it's now harder to steal electricity in China and the
| rest of the world to mine bitcoins. "
|
| Also, I know who Paul LeRoux is but I find I highly
| unlikely he is satoshi.
| nikolay wrote:
| Why would I want to touch something laden with crime with a
| 10-foot pole?! And something so detrimental to climate?
| Bitcoin didn't, isn't, and is not gonna change anything -
| it's nothing but a speculation tool! Can we please stop
| inflating its bubble? Yes, there are meaningful
| cryptocurrencies, but Bitcoin holds no future - it's like
| sticking to VHS when there's Bluray or to a 3.5-inch floppy
| when there's MicroSD.
| hanniabu wrote:
| > Why would I want to touch something laden with crime with
| a 10-foot pole?!
|
| So I guess you should get rid of your USD....
| nikolay wrote:
| When I was mining Bitcoin when it was possible, maybe you
| were in diapers. Your response is so typical: "you don't get
| it." In fact, I do get it, and you don't. Educate yourself,
| because exposing your ignorance publicly!
| axiosgunnar wrote:
| While I agree with your sentiment, saying ,,maybe you were
| in diapers" makes your argument look weak.
| nikolay wrote:
| Well, I'm tired of this "you just don't get it". If they
| keep this argument, it means they are new to it as for
| years, I kept hearing it over and over again. Instead if
| sending to the mandatory "whitepaper", they should at
| least learn who Paul Le Roux is.
| villgax wrote:
| Lol, now Indian government will be all hunky dory with such news
| articles related to crypto in the country.
| plaidfuji wrote:
| This is being wayy overanalyzed.
|
| MasterCard is in the business of payments. Millions of people now
| have a bunch of idle money sitting in a potential payment vehicle
| outside of their current network. Anything MasterCard can do to
| start to siphon off some of that value is good for them. This has
| nothing to do with ideology, philosophy or technology. And d4mn
| right it's a good sign for the Bitcoin bulls.
| [deleted]
| Thorentis wrote:
| I wonder where this puts crypto's such as Bitcoin Cash (BCH),
| whose main benefit is having a faster and cheaper network? Is the
| final card Bitcoin has to play, the fact that it has the brand
| awareness to hide its faults behind the MasterCard/Visa network?
| OnlyMortal wrote:
| What could possibly go wrong?
| georgeplusplus wrote:
| So what exactly is MasterCard offering that relates to
| cryptocurrencies? What I gathered from the article was "it was
| planning to offer support for some cryptocurrencies on its
| network this year" But does not seem to go into detail further
| than that.
| maxkwallace wrote:
| To everyone saying "my credit card pays me 2% to use it", no,
| your credit card charges the merchant 2.3%+ to use it, that gets
| bundled into the price, and they give you 2% of that as a
| kickback.
| rokhayakebe wrote:
| This is like saying "your employer does not pay you. They
| charge clients then give you 20%."
| PragmaticPulp wrote:
| > "my credit card pays me 2% to use it", no, your credit card
| charges the merchant 2.3%+ to use it,
|
| Consumers do not care about anything other than the net price
| they pay.
|
| Stores that take Bitcoin payments flip this around, passing the
| transaction cost to consumers.
|
| If I'm ordering a $50 thing online and the store takes Bitcoin,
| I have two options:
|
| 1) Pay with my credit card, for a net cost of $49 to me and a
| guarantee that if they don't deliver I can reverse the charges.
|
| 2) Pay with Bitcoin, for a net cost of $58 with the current $8
| transaction fee, and zero recourse if the vendor fails to
| deliver.
|
| $49 and money-back guarantee versus $58 and zero recourse. Why
| would anyone choose the latter?
| averynicepen wrote:
| The merchants would be the ones choosing the latter. As you
| mentioned, a lot of stores are interested in accessing the
| broader market of people who pay with credit cards/digital
| payment systems, but are forced to pay the 2.3% credit card
| fees. Bitcoin offers them the ability to remove this
| transaction cost but keep the convenience of cashless digital
| payments, in which case the savings can then be rolled into
| lower costs, benefiting the customer.
|
| This is still contingent on using a Lightning network to
| reduce fees on smaller day-to-day transactions, which I agree
| are too high with Bitcoin proper.
|
| The original Bitcoin whitepaper actually outlines this as one
| of the main problems it aims to solve, and I'll let the paper
| do the talking: Commerce on the Internet has
| come to rely almost exclusively on financial institutions
| serving as trusted third parties to process electronic
| payments. While the system works well enough for most
| transactions, it still suffers from the inherent
| weaknesses of the trust based model.Completely non-
| reversible transactions are not really possible, since
| financial institutions cannot avoid mediating disputes.
| The cost of mediation increases transaction
| costs, limiting the minimum practical transaction size
| and cutting off the possibility for small casual
| transactions,and there is a broader cost in the
| loss of ability to make non-reversible payments
| for non-reversible services. With the possibility of
| reversal, the need for trust spreads. Merchants must be wary
| of their customers, hassling them for more information than
| they would otherwise need.A certain percentage of fraud is
| accepted as unavoidable. These costs and payment
| uncertainties can be avoided in person by using physical
| currency, but no mechanism exists to make payments over a
| communications channel without a trusted party.
| What is needed is an electronic payment system based on
| cryptographic proof instead of trust,allowing any two willing
| parties to transact directly with each other without the need
| for a trusted third party. Transactions that are
| computationally impractical to reverse would protect
| sellers from fraud, and routine escrow mechanisms could
| easily be implemented to protect buyers.
|
| [Source: https://bitcoin.org/bitcoin.pdf]
| xur17 wrote:
| Some merchants do pass the savings on to the user for using
| Bitcoin vs credit cards, and there are ways to pay with
| Bitcoin (lightning) that involve negligible fees.
| PragmaticPulp wrote:
| > nd there are ways to pay with Bitcoin (lightning) that
| involve negligible fees.
|
| Cool, where can I use this Lightning network?
|
| It exists and works, right?
| jtsiskin wrote:
| Any of these merchants: https://coingate.com/stores
| xur17 wrote:
| Yes, I use it quite frequently. Quite a few wallets
| support it, and a small but growing list of merchants /
| exchanges work with it:
|
| * Bitfinex
|
| * River financial
|
| * Fold App
|
| * Bitrefill
|
| * OKEx
| bagacrap wrote:
| I'm not sure how that's different? When a merchant accepts
| cash, they have to pay for physical security and pickup, it's
| prone to theft or miscounting, etc. So cash isn't free.
| Accepting card payments is also not free. Merchant pays visa
| for convenience (to both merchant and customer); visa kicks
| some back to customer.
| cesarb wrote:
| I've seen this said a lot, but in my experience whenever a
| merchant has different prices for cash and credit card, the
| cash price is always lower. So whatever the merchant is
| paying to Visa and/or MasterCard, it's more than it costs to
| handle cash.
| leighfuu wrote:
| Traditionally the discount for cash in many professions is
| due to avoiding tax.
|
| i.e. a plumber will do a job for cheaper if they are paid
| in cash as they won't be declaring that work in their
| accounts - avoiding the ~20% tax that would be due
| otherwise.
| BitwiseFool wrote:
| While true, I know of many small businesses that give
| cash discounts because the credit card fees ruin the
| profit margin on small purchases. Sometimes they even
| lose money on transactions. For instance if you buy a
| scone for a $1.05, the credit card fees alone might come
| out to 38C/ for the merchant. This is why you often see
| "minimum card purchase $5" at coffee shops and small
| businesses.
| PragmaticPulp wrote:
| Yes, the fee is usually fixed cost plus percentage, which
| makes small transactions very expensive.
|
| The small transaction problem is vastly worse with
| Bitcoin, though. The catch is that the transaction fee is
| paid by the buyer, so that $1.05 scone costs the consumer
| $8.05.
|
| $1.05 goes to the consumer $8 transaction fee goes to the
| miner Some fraction (eventually most) of that $8
| transaction fee goes to the energy company supplying the
| miners with electricity.
|
| Now your $1.05 scone transaction includes the cost of
| charging a Tesla battery 3 times over, because that's how
| much energy went into the transaction on the blockchain.
| BitwiseFool wrote:
| Absolutely true. I'm not advocating for crypto to replace
| credit card transactions, as that would be insanely
| impractical and wasteful. I wanted to draw some attention
| to how badly merchants are treated when they accept card
| payments.
| maxkwallace wrote:
| You're correct, but it is different. There is no free way to
| accept payments. I personally pay with a 2% cash back card
| myself. I just hope people have a full picture of the costs
| and benefits of each approach. Crypto transaction fees are
| expensive but there are also a lot of hidden costs of the
| credit system.
|
| https://twitter.com/maxfield_wall/status/1287097229220536321
|
| I lived in Taipei for a year and almost all transactions
| there are cash, debit, or bank transfer. You can do a bank
| transfer to anyone instantly for pennies. Really puts the ACH
| system to shame. Some things are better than getting 2% back.
| BitwiseFool wrote:
| Losing money to credit card transaction fees is actually a
| huge problem the average person does not know about. The
| problem is that these credit card companies charge a
| percentage based on each transaction which screws over the
| merchant in two ways. One, it is inflation resistant. Two,
| Visa/Mastercard do not pass savings and efficiencies onto the
| client, they pocket the difference.
|
| Just as an illustration, if a merchant's profit margin on an
| item is 10% and the cc fees are 3%, they've lost a third of
| their profit on that sale.
| tobias3 wrote:
| Here in the EU, credit card transaction fees are capped at
| 0,3%. So no shenanigans, but cryptocurrencies would have to
| fall within this range as well.
| hackissimo123 wrote:
| Is that the case in the whole EU? Because my AmEx gives me 1%
| cashback here in the UK, and that's been true since long
| before Brexit.
| whimsicalism wrote:
| https://www.gov.uk/government/news/credit-and-debit-card-
| fee....
| ValentineC wrote:
| Non-partner Amex's are considered "three party card
| schemes", and therefore not subject to the interchange caps
| [1].
|
| This means that there's a chance your merchant has been
| paying more for each Amex payment.
|
| [1] https://curia.europa.eu/jcms/upload/docs/application/pd
| f/201...
| AmericanChopper wrote:
| > Here in the EU, credit card transaction fees are capped at
| 0,3%. So no shenanigans
|
| This isn't true. Interchange fees are capped at that rate,
| but that's only one portion of the total transactional fee
| charged to merchants for processing card payments.
| globular-toast wrote:
| And, by the way, the merchant incorporates that cost into their
| price.
| ryder9 wrote:
| so that means companies will charge less for a product if you
| pay via BTC than USD right? lmao...
| strombofulous wrote:
| Something I've always been confused about, maybe you know the
| answer -
|
| Don't merchant's already charge the amount that causes
| (number of units sold) * (profit per unit) to be as high as
| possible? If visa suddenly dropped the transaction fee to 1%,
| I don't think stores would pass the 2% savings on to the
| customer
| globular-toast wrote:
| If free markets existed, that is how they would operate.
| Sellers would be small, independent, have perfect knowledge
| of the market and would always seek to maximise profit.
|
| But free markets don't exist. There are many reasons why
| merchants might not always aim to maximise profit. They
| might instead seek the security of a loyal customer base,
| for example. In many markets, sellers ruthlessly compete on
| price, often at the cost of short term profit. Supermarkets
| in the UK is a good example. If transaction costs for
| supermarkets were reduced that would absolutely be seen by
| the customers.
| 35fbe7d3d5b9 wrote:
| So the merchant sets the price of a bag of chips at $2.00. I
| want to buy it. I could:
|
| * Pay $2.00 with my credit card and get $.04 back = $1.96
|
| * Pay $2.00 with cash and get $0 back = $2.00
|
| * Pay $2.00 with btc and get $-x satoshis back because I have
| to pay transaction fees + fees to convert to fiat = $2.00 +
| some amount of fees that change daily
|
| Hm.
| qwerty456127 wrote:
| What if we could just attach a MasterCard to a bitcoin wallet
| rather than a bank account and then use it to pay at any ordinary
| POS terminal so the conversion would be done seamlessly and the
| store would get ordinary money? Is this what they are going to
| implement?
| marshmallow_12 wrote:
| the tesla bandwagon is being jumped on by mastercard.
| Trumpi wrote:
| What a clever way to tie an identity to a crypto wallet!
| smithza wrote:
| Serious question: what happens when nobody wants their HW assets
| to verify the blockchain? What happens when the infrastructure
| falls apart or the demands on the blockchain verification
| outpaces the number of machines available to verify? Can you
| buy/sell btc off of the internet? Why would we want a future with
| digital assets that are inherently relying upon things that can
| fall apart with an EMP (not trying to be a doomsayer/fearmonger)?
| hanniabu wrote:
| It was have to be a global catastrophe, and at that point
| there's honestly probably more important things to worry about.
| Nevertheless, the blockchain can be rebooted from a checkpoint.
| This hasn't been done before but there's no doubt it's doable
| and I'm sure a somebody will put forth a proposal in the coming
| years for this.
| grishka wrote:
| So how would they ruin it with KYC/AML this time?
| superkuh wrote:
| No, no. KYC/AML ruins actual means of getting Bitcoin. This
| ploy for siphoning off money by Mastercard is perhaps the one
| thing in reality that is _not_ good for Bitcoin intrinsically.
| No need for KYC here.
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