[HN Gopher] The political case for a blanket cryptocurrency ban
___________________________________________________________________
The political case for a blanket cryptocurrency ban
Author : louwrentius
Score : 224 points
Date : 2021-03-31 16:10 UTC (6 hours ago)
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(TXT) w3m dump (www.stephendiehl.com)
| herve76 wrote:
| Dont poke the bear or...
| thebean11 wrote:
| Even if you take the most cynical approach towards crypto,
| banning crypto is simply not the governments job.
|
| At best, this is equivalent to banning beanie babies (no real
| negative affects for society, but stupid and a big overreach).
|
| At worst, it's equivalent to banning the internet (sets the
| country behind decades as the rest of the world adopts the new
| technology and profits from it).
| mmastrac wrote:
| The government[0] has regulatory authority over environmental
| issues, so why wouldn't this be the government's job?
|
| [0] ie: all of them
| thebean11 wrote:
| Banning crypto is a gigantic overreach when the government
| won't even try the obvious solutions like carbon taxes (which
| would indirectly discourage crypto mining).
| paulgb wrote:
| Most crypto (I believe currently approx. 90%) is mined
| outside of the US. Miners have already been moving from
| China to Iran[1], in part to avoid environmental
| regulations. As long as there exist jurisdictions that are
| not party to a carbon tax, crypto mining is highly
| incentivized to move there. Putting aside the issue of
| overreach, if the US wanted to reduce carbon, blocking
| inflows to crypto exchanges would be more impactful than
| taxing domestic mining.
|
| [1] https://www.nasdaq.com/articles/inner-mongolia-to-shut-
| down-...
| alkonaut wrote:
| The problem with carbon taxes is it affects jobs that can't
| easily use less electricity and still produces a lot of
| jobs/value. The paper and steel industry wouldn't like
| carbon taxes high enough to affect Bitcoin. Bitcoin power
| use is also very easy to move internationally.
| BitwiseFool wrote:
| I see the situation in the exact opposite way. Passing a
| Carbon Tax, while sensible, would run in major opposition
| because it would basically effect every citizen. But
| banning cryptocurrency would be much easier since the
| majority of the population doesn't own any and it can be
| framed in very positive terms.
| tshaddox wrote:
| > But banning cryptocurrency would be much easier since
| the majority of the population doesn't own any and it can
| be framed in very positive terms.
|
| Sounds unrealistic. Remember the war on drugs?
| BitwiseFool wrote:
| In my personal experience most people think of
| cryptocurrencies as a Ponzi scheme, some kind of money
| laundering operation, a tremendous waste of energy, or
| some combination of those three. In light of that, I
| think a cryptocurrency ban would be easy for politicians
| to sell to the public using those terms.
|
| How effective the ban would be is another question, but I
| am mainly talking about how I think the politicians would
| justify the ban.
| tshaddox wrote:
| Oh, I didn't realize you only meant how easy it would be
| to _pass_ the ban. Of course it would be easy to pass a
| federal ban in the United States, where it 's easy to
| pass many things even when they're extremely unpopular.
| Marijuana is still banned federally despite well over two
| thirds of the country opposing the ban!
| webinvest wrote:
| > But banning cryptocurrency would be much easier since
| the majority of the population doesn't own any and it can
| be framed in very positive terms.
|
| How exactly do you ban or confiscate bitcoin? New bitcoin
| wallets are created without touching the internet access.
| Internet access is only needed when sending bitcoin but
| not when receiving bitcoin. By the time someone sends it,
| it's too late, you can't confiscate it because they don't
| have it anymore. If the government bans or starts
| monitoring the bitcoin network for activity, people can
| still send slips of paper through the mail with the
| private and public key to one of their wallet.
|
| Combine that with a brain wallet and you can literally
| store bitcoin in your brain. Try doing that with gold.
| [deleted]
| webinvest wrote:
| > But banning cryptocurrency would be much easier since
| the majority of the population doesn't own any and it can
| be framed in very positive terms.
|
| How exactly do you ban or confiscate bitcoin? New bitcoin
| wallets are created without even touching the internet!
| It can be done from the middle of the Mojave desert
| without any proof of it ever happening or existing.
| Internet access is needed when sending bitcoin but not
| when receiving bitcoin. By the time someone sends it,
| it's too late, you can't confiscate it because they don't
| have it anymore. If the government bans or too heavily
| monitors the bitcoin network for activity, people can
| still send slips of paper through the mail with the
| private and public key to one of their wallets and trade
| around pieces of paper instead.
|
| Combine that with a brain wallet and you can literally
| store bitcoin in your brain and pass through borders
| carrying nothing on hand. Try doing any of that with
| gold, Euros, Dollars, or Chinese Yuan.
|
| The only thing stopping bitcoin is exponentially higher
| transaction costs but paradoxically higher transaction
| costs make small bitcoin holders effectively illiquid.
| This reduction in supply further drives up the price
| infinitely until most bitcoin is rendered illiquid or
| until people think slow cryptocurrencies with high
| transaction fees are stupid.
| thebean11 wrote:
| Usually across-the-board regulation is seen as upholding
| the free market more than regulation that targets
| specific individuals or industries.
| spaced-out wrote:
| If the government is able to ban crypto currency because it's
| unnecessary and uses too much energy, couldn't they apply
| that logic to nearly any other modern luxury?
| alkonaut wrote:
| I pay 66% taxes on fuel. My car has a $15k tax when sold
| and $1.5k/yearly tax. In Denmark it would have been much
| _much_ worse than this (probably north of $30k fees when
| new).
|
| You don't ban things you can tax with good results. Banning
| is for things you can't tax. It's a clumsy instrument.
| flaque wrote:
| They do! Gas taxes, bans of gas vehicles, required emission
| standards, etc.
| adhoc32 wrote:
| Miners pay for the electricity they consume which
| includes environmental taxes. Why ban them?
| viklove wrote:
| I think the real solution here is banning coal, natural
| gas, etc., not the downstream users of it. If I want to
| mine BTC with 100% nuclear/wind/solar energy, then the
| problem is solved right?
| ledauphin wrote:
| technically, any process with negative externalities
| should not necessarily be free of societal (i.e.
| governmental) limits. All of the "renewable" sources of
| energy you've mentioned here have some form of negative
| externality.
|
| of course, in my non-expert opinion, it would be
| preferable for the government to focus directly on the
| negative externalities rather than second or third order
| causes thereof.
| toomuchtodo wrote:
| The government has regulatory authority over monetary policy
| and currency, so why wouldn't this be the government's job? You
| might take issue with their decision, but the authority is
| there.
|
| https://www.occ.treas.gov/
|
| https://www.law.cornell.edu/uscode/text/31/5103
|
| https://www.federalreserve.gov/aboutthefed/fract.htm
| nwienert wrote:
| Many seem to argue the coins aren't currency but securities,
| including SEC.
| toomuchtodo wrote:
| The SEC uses the Howey Test to determine whether a coin is
| classified as a security or not.
|
| https://www.leewayhertz.com/howey-test/
| thebean11 wrote:
| I think there's a bit more nuance to this than a binary
| "does" or "does not" have authority. I'm not claiming it's
| unconstitutional to ban crypto, or that they literally don't
| have the authority.
|
| I'm claiming it's a bad, authoritarian move that isn't in the
| interest of their constituents, and is not in the spirit of
| US laws.
| toomuchtodo wrote:
| You're free to your opinion, but I see little benefit in a
| technology for your average constituent that is more
| expensive than instant payments to move funds, has a highly
| volatile value (which is an anti pattern of a currency),
| and provides little to no recourse in the event there is
| fraud or theft (again, an anti-pattern crypto proponents
| champion as some sort of feature). One person's
| authoritarianism is another's properly functioning
| regulatory environment. If crypto is instead treated as a
| commodity (Bitcoin), than that and similar crypto tech can
| be regulated as a commodity by government (which the CFTC
| and IRS does today).
|
| The US government has the authority to regulate crypto's
| use as a currency and absolutely should exert that
| regulatory power.
| thebean11 wrote:
| > I see little benefit in a technology
|
| I disagree that this should ever be a cause for banning
| something. It's not the government's job to pick and
| choose which technologies or products will be successful
| or useful.
| ur-whale wrote:
| The federal reserve is not the government.
|
| As they will tell you a every opportunity they get, they're
| an "independent" agency.
| toomuchtodo wrote:
| They're chartered by Congress and operate under US statute.
| They are a GSE for all intents and purposes (although I
| agree they attempt to keep monetary policy at arms length
| from politicians for obvious reasons), and they're on the
| record that they won't deploy a digital currency without
| specific legislation permitting it [1].
|
| [1] https://www.nytimes.com/2021/03/22/business/jerome-
| powell-sa...
| einpoklum wrote:
| Without arguing for or against such a ban - it is literally in
| the purview of governments. Control and regulation of financial
| mechanisms is a key part of state sovereignty. So, such a ban
| would is much more "the government's job" than banning a
| product like beanie babies.
|
| It's also not the equivalent of banning the Internet; perhaps -
| similar to banning gambling through the Internet. In the sense
| that it may be impossible to properly enforce, but can
| certainly happen and in some world states:
|
| https://www.nodeposit365.com/features/countries-that-have-ba...
|
| Again, none of this is to say cyptocurrencies should or
| shouldn't be banned; or even that governments should or
| shouldn't ban things at all, or exist at all etc.
| smeej wrote:
| You're right that the political case is easy to make.
| Governments do already claim the authority to control and
| regulate these things.
|
| The interesting question about Bitcoin is whether it could
| ever be robust enough that they _couldn 't_ successfully
| regulate or control it, even if they very much wanted to and
| most people agreed it would be appropriate for them to do so.
| subsubzero wrote:
| Here's a revolutionary idea, if you don't like a particular asset
| don't buy it. if you think its a terrible idea etc. don't use
| your money to own it. How other people choose to utilize their
| assets is their own business.
| nbardy wrote:
| Anyone who dismisses crypto as useless hasn't used the software.
|
| Here's some use cases I've used in the last month:
|
| I secured an instant loan based off collateral with faxing or
| calling my bank. Doing this at schwabb took weeks.
|
| Another one, "thegraph" a distributed super computer to make
| public blockchain data indexed and queryable.
|
| Another, Bitclout, a social network build on the blockchain.
|
| Now the data of my social network is trustless distributed,
| verified and forkable.
|
| I can build a business on top of it and I don't have to worry
| about getting the firehouse shut down like I did with Twitter.
|
| Bitcoin was horse that drove the consensus making technical
| progress of distributed computing. The coins are less interesting
| than the distributed computing revolution.
| chriselles wrote:
| Isn't cryptocurrency fundamentally about real or perceived lack
| of equity and trust?
|
| Isn't the real aspirational promise of cryptocurrency really just
| a container that will retain the purchasing power of your savings
| with low friction?
| burnished wrote:
| Its not clear to me why it is fundamentally more acceptable for
| Wall street to speculate on "crazier things every day before
| lunch". The money hedge funds are making isn't coming out of
| nowhere, its not like the games they play are net positive. Their
| big pay outs are still coming out of the pockets of regular
| people. It seems like the difference with Bitcoin is that an
| individual gets to choose whether they want to participate or
| not.
| JohnJamesRambo wrote:
| Let's go the other way and ban fiat. Money printing is a much
| greater threat to world security.
|
| Print way too much money, run out of resources and room to pump,
| crash to rock bottom, start a war, then start over again is the
| historic cycle we are stuck on until we fix this.
|
| https://en.wikipedia.org/wiki/Debasement
|
| https://fred.stlouisfed.org/series/M1SL
| argvargc wrote:
| Cryptocurrency presently is also the only usable alternative to
| fiat. And it _is_ World Backup Day.
| tome wrote:
| I don't see anything in the reference that you provide that
| elaborates on "start a war". Perhaps you could provide the
| elaboration?
| oleganza wrote:
| Wars are inherently destructive and can only be funded for
| prolonged periods of time with mountains of debt. Especially
| if you can extract taxes backing this debt relatively
| painlessly. Extracting Bitcoin from individual wallets is no
| small feat, and Bitcoin-backed (fractionally, of course)
| notes would not have the same advantage as paper bills over
| gold coins. Bitcoin is divisible, storable and transferrable
| well enough to be used as-is.
| tome wrote:
| None of this explains why fiat currency leads to starting a
| war.
| gher-shyu3i wrote:
| Fiat currency allows the government to make its citizens
| pay for its usurious debts, by printing more money. This
| is not possible with gold or bitcoin.
| tome wrote:
| I'm still not seeing an argument that fiat currency leads
| to war ...
| xwowsersx wrote:
| If gambling is bad then state governments shouldn't be able to
| run lottos. We either leave people to engage in what we might
| consider a vice or prohibit it. If we prohibit, the government
| shouldn't be able to have a monopoly on what is, arguably, an
| even more "gambly" gamble.
| sb057 wrote:
| >The most expedient actions would be fourfold:
|
| >Halt foreign entities trading in dollar cash-equivalent crypto
| assets.
|
| >Add Chinese and other foreign cryptocurrency exchanges hiding in
| tax-havens to sanctioned entities lists.
|
| Lunacy! The author is effectively arguing for American global
| economic dominion! These are the exact steps you would want to
| take to ensure international isolation.
| sakopov wrote:
| I find it funny that we only talk about blanket bans and
| increased regulation when the poor start accumulating wealth. We
| saw this when GME was going through the roof and Lee Cooperman
| went live on CNN to bash retail investors. Similarly, when
| bitcoin starts trending up we have Ray Dalio talking about future
| crypto ban. Hedge funds really don't like this I take it. But I
| digress, a crypto ban would be disruptive to a very innovative
| tech (crypto speculation aside) in finance. However, regulation
| and taxation is likely a better approach not only for world
| governments, but also for taking projects like Bitcoin to a more
| sustainable and environmentally-friendly realm of operation.
| fcanesin wrote:
| What a idiotic essay, the same arguments could be made for the
| ban of most precious metal mining since majority of it goes to
| storage deposits.
|
| Cryptocurrencies actually bring several benefits and better
| solutions for the problem of trust in a store-of-value or
| exchange contract. The world needs Bitcoin now more than ever, we
| are already living in a multilateral world where US and China
| exert pressure to force international contracts to be denominated
| in USD abs RMB.
|
| That is an awful deal when both countries can print unlimited
| amounts and distribute to their preferences like happened during
| this pandemic, specially in the US.
| louwrentius wrote:
| Governments print money to keep society from collapsing.
|
| What you rail against is a feature not a bug. So many
| cryptocoin advocates don't seem to understand how societies
| work.
|
| The world can do without BTC just fine. Now more than ever. It
| doesn't actually solve a problem we face.
|
| Only those who have Bitcoin seem so adamant about it. No
| coincidence right? Because we know it needs more 'suckers' to
| buy into the ponzi because no value is ever created.
| scoofy wrote:
| >Bitcoin is the textbook speculative mania for our time.
|
| This is either false or unknowable, there are plenty of reasons
| why bitcoin speculation is happening, and it's because it has
| been a very long time since there has been a new desirable
| commodity.
|
| >The largest elephant in the room is the environmental damage
| done by bitcoin mining.
|
| This is very true, i don't think it's the largest elephant
| though.
|
| >Cryptocurrencies disproportionately victimize vulnerable people
| and those in marginalized communities without access to
| traditional investments or financial advisory.
|
| This is nonsense. Desperately marginalized communities have no
| access to safe economic vehicles, which bitcoin does,
| theoretically, provide.
|
| >Cryptocurrency is, by design, the single greatest enabling
| factor in the rise of exponential explosion in ransomware
| extortion attacks. A network which is designed to evade
| sanctions...
|
| This i believe is the best argument for banning it. There is no
| better tool for extortion in the world than an anonymous,
| unrestricted asset. We should expect to see a dramatic rise in
| kidnappings worldwide in the future as bitcoin becomes more
| accepted.
|
| The author leaves out what I believe is the main reason I've
| stayed away from bitcoin, and it's another reason to ban it.
|
| It's easy to steal.
|
| It only takes one 0-day wipe you out, irreversibly, and
| completely. My bank could get hacked, but we, as a society, can
| just decide that I still have the assets I had before, the paper
| stocks and coupons are in a drawer somewhere. The loan contracts
| are in a filing cabinet (or they should be). I get my bank
| statements every month. There's some cash and some gold in a
| vault. A breach is, at least theoretically, reversible. That's
| not true with bitcoin.
| heywintermute wrote:
| >It's easy to steal.
|
| >It only takes one 0-day wipe you out, irreversibly, and
| completely. My bank could get hacked, but we, as a society, can
| just decide that I still have the assets I had before, the
| paper stocks and coupons are in a drawer somewhere. The loan
| contracts are in a filing cabinet (or they should be). I get my
| bank statements every month. There's some cash and some gold in
| a vault. A breach is, at least theoretically, reversible.
| That's not true with bitcoin.
|
| Isn't this more just an argument that cryptocurrency's are just
| riskier because unlike tradition financial
| institutions/investments they are unregulated and lack
| protections such as insurance etc. Maybe I am just getting
| caught up in semantics but a 0-day wiping out the value of
| Bitcoin/Crypto with no vehicle in place to restore that value
| to its owners if something were to happen just makes it
| extremely risky/highly speculative investment not necessarily
| easy to steal
| scoofy wrote:
| It's a simple equation.
|
| n = How many 0-days are out the there that could topple the
| systems in control of the BTC I own.
|
| p = The probability that said exploit is used on me and my
| wallet and not someone else.
|
| n * p = my risk of losing everything
|
| p is very small, but n is very, VERY... big
|
| With tradition assets, they are backed with contracts that
| can make potential thefts unwound or made whole in some other
| way. With crypto, every ocean's 11-style cat-burglar in the
| world has access to every bank in the world... and that can't
| be unwound.
| jayd16 wrote:
| >This is either false or unknowable
|
| Alright well that means it could also be true...
| scoofy wrote:
| I, obviously, bring it up because the author is making
| statements of fact that they can't possibly know to be true.
| This should be a reasonable criticism of the author. Don't
| talk nonsense if you're trying to write a serious argument.
| Luker88 wrote:
| So yesterday in HN there was a link to a medium post on the same
| thing, but limited to Proof of Work instead of the whole
| cryptocoins. Got flagged pretty quickly, but there was a link to
| a petition inside with links to various problems of proof of
| work: https://www.change.org/StopBurncoins
|
| IMHO the problem is not cryptocoins themselves as is suggested
| here, but just proof of work.
|
| A total ban would barely work anyway, as the system is completely
| decentralized, and to fully ban it we would need basically all
| countries to agree on the ban.
| sitkack wrote:
| NFTs are interesting because they are an entity in of
| themselves, they could be the root of value. Apologies, I don't
| have all the money words to make this sound smart.
| ethagnawl wrote:
| > The darker perspective is that cryptocurrency may be taking a
| demographic who would otherwise have had gambling problems and
| legitimates their addiction by wrapping it up in a veneer of
| technical legitimacy.
|
| Granted it's a small sample set, but this rings _very_ true with
| respect to many people I "know" (acquaintances I'm connected to
| on various social media platforms) who've jumped onto the
| "crypto" bandwagon in recent times.
| washedup wrote:
| What a terrible article. Crypto is a new technology that will
| likely have many uses, to advocate banning it nationally is
| dangerous and would quickly put us behind the rest of the world.
|
| There are easier ways around the "energy use dilemma": carbon
| tax. If your energy used for mining comes from renewable
| resources, then there is no issue.
| Sanzig wrote:
| Unless you are running completely detached from the public
| grid, consuming renewable energy for crypto mining absolutely
| indirectly produces CO2. You are buying renewable energy that
| could otherwise be sold to another customer/jurisdiction where
| it would displace fossil fuel usage.
|
| This isn't an academic exercise, this is an issue that
| renewables operators are dealing with right now. Hydro-Quebec
| is the state-owned corporation which handles all generation,
| transmission, and distribution in the province of Quebec. As
| the name implies, the vast majority of Quebec's generating
| capacity comes from large hydroelectric facilities located in
| the north. The company sells hydropower to the northeastern
| United States during times of day when demand is high. This is
| a mutually beneficial arrangement: the profits from the sale of
| hydropower in peak periods allows Hydro-Quebec to subsidize its
| own ratepayers who enjoy the lowest electricity rates in North
| America, and the Northeast US in turn doesn't have to build as
| many peaking power plants which are typically gas-fired
| facilities that produce CO2.
|
| However, the low cost of electricity in Quebec has made it
| extremely popular with crypto miners, to the point where Hydro-
| Quebec has been forced to place miners into a 300 MW allocation
| block [1]. Miners who didn't manage to get into the allocation
| block are charged a rate that is more than double the normal
| rate in order to try and disincentivize their activities.
|
| If the crypto miners weren't in Quebec, this excess energy
| would be sold to the northeastern US where it would displace
| the capacity of some CO2-generating peaker plants. But because
| it's being diverted to crypto mining, the energy doesn't get
| used for that.
|
| [1] https://www.hydroquebec.com/blockchain/
| quickthrower2 wrote:
| Taxing the miners is only possible with a single world
| government. One country can't do it. I suggested earlier that
| taxing the money coming into Bitcoin via the exchanges, similar
| to a "stamp duty" (not "gst" as that can be claimed back)
| collection of tax but for carbon would be the way to go. For
| example 30% tax on purchasing real crypto from an exchange.
| senthil_rajasek wrote:
| In addition to the shortcomings mentioned in the article a major
| problem of cryptocurrencies is the inability of local goverments
| to issue bonds that fund critical community projects like
| schools, safety and roads.
| djschnei wrote:
| How do crypto currencies diminish the ability of governments to
| issue bonds?
| lucasnortj wrote:
| Cryptos are trash, ban them now
| anm89 wrote:
| This stuff really doesn't warrant a response. Simply say "good
| luck banning it".
|
| There are a large complicated set of reasons why it isn't going
| to happen but the proof of this is that many governments have
| many reasons theyd love to ban crypto but they don't because in
| the end they perceive it to be either an economic or political
| loss and can't make it happen.
|
| Anyway, this isn't keeping me up at night.
| thorwasdfasdf wrote:
| >> "Bitcoin is the textbook speculative mania for our time"
|
| This misses the point of bitcoin entirely. People need to
| understand Bitcoin solves a problem: a very big problem. This
| problem was caused by the gov and fed defaulting on it's
| obligation to maintain a stable currency. As a result, cash can
| no longer be used as a store of value. And by artificially
| suppressing interest rates, the fed/gov has eliminated yet
| another class of investement: fixed income. So with two major
| asset classes eliminated: cash and fixed income, it doesn't leave
| much else.
|
| The only asset classes we have remaining are equities, real
| estate and commodities. Real estate, there's no easy way to
| invest in it in a scalable way. So, what are you going to do put
| ALL your money in Equities? with no diversification. People
| desperately need a store of value, they can't just work until
| their 120 year old.
|
| Bitcoin solves this problem: it's a store of value. For a lot of
| people, bitcoin is NOT speculation, it's a long term buy and hold
| asset that you hold for a long time. And the tax rules encourage
| such buy and hold behavior. those that are selling the moment it
| goes up, are going to pay dearly in capital gains taxes 30, 40,
| 50%+ in some states.
| biztos wrote:
| Sure, people are using Bitcoin as a store of value, but I think
| a lot of those people think it will just keep going up.
|
| Which is not a super rational thing to believe about an asset
| whose value has no relation to anything in the real world, and
| nothing to prop it up but the people who believe the same
| thing.
|
| Bitcoin is up something like 800% for the year. It might be up
| another 800% in six months! Or it might go down to $10000! Or
| $1000, $100, $10 -- any of these would make exactly as much
| sense as the ~$60K we see right now.
|
| Taxes aside, that strikes me as a pretty volatile place to be
| storing your value. Not everybody has the option of USD or CHF
| but still... it sure does _look_ like a speculative bubble.
| (For actual "mania" maybe see NFT's instead.)
| thorwasdfasdf wrote:
| >> Bitcoin is up something like 800% for the year. It might
| be up another 800% in six months! Or it might go down to
| $10000!
|
| That was the case in 2017. Not anymore, things have changed.
|
| the fundamentals of bitcoin are based on what people believe
| it will be worth and this has changed drastically in
| mid-2020. Mid 2020 is the year WallStreet "got" bitcoin. this
| fundamentally changed it's future path. You have all these
| hedge fund managers and institutions that are willing to pour
| trillions of dollars into this asset to gain some exposure.
| And now that, that's begun it's setting off a chain reaction.
|
| You've got to remember, the impetus for all this. It's not
| that bitcoin is some ideal form of investment. The driver for
| bitcoin and equity growth is the destruction of an existing
| asset class: fixed income. That 100 trillion worldwide wealth
| of fixed income has to go somewhere (not that all of it has
| to get sold). either it will go into bitcoin or equities or
| gold. it could go to cash but then it'll get wiped out.
| endisneigh wrote:
| Do you personally own any crypto?
| samatman wrote:
| It's also not rational to believe that a sovereign currency
| which is backed only by government fiat cannot crash due to
| inflationary spirals.
|
| After all, if it should happen to be the case for the
| currencies we all use right now, it would be the first time
| that this experiment, which has been tried often enough
| throughout history, hasn't ended in that particular way.
|
| We've put all our eggs in that basket, and it's working... so
| far!
|
| I'm glad there's a hedge against that outcome though. If the
| worst happened, and the debt balloon triggers ECB, the Fed,
| and their Asian cousins, to initiate hyperinflationary money
| printing, we'll all be grateful that there's an alternative
| to going back to shipping convoys protecting boats loaded up
| with gold and silver.
|
| I don't even think the aforementioned hyperinflationary
| spiral is inevitable, or even more likely than not. But I
| repeat, _it is irrational_ not to consider it a real risk,
| given history, and that outcome would lead to immeasurable
| human suffering, which cryptocurrencies cannot prevent, but
| can at least ameliorate.
| Sanzig wrote:
| > Real estate, there's no easy way to invest in it in a
| scalable way.
|
| Of course there is. It's called a REIT (Real Estate Investment
| Trust). If you want even more diversification, you can buy ETFs
| and mutual funds which hold multiple REITs in multiple market
| segments. You don't need to physically own a property to get
| real estate exposure...
|
| > So, what are you going to do put ALL your money in Equities?
| with no diversification. People desperately need a store of
| value, they can't just work until their 120 year old.
|
| You can buy bonds specifically indexed to inflation. In the
| United States, these are referred to as TIPS (Treasury
| inflation-protected securities). There are plenty of places to
| get exposure to these on the secondary market, eg: via ETFs.
|
| I find it a bit silly to claim that you're interested in a
| store of value while holding a highly volatile asset like
| Bitcoin. By definition, a store of value should have low
| volatility and basically track inflation. Bitcoin has behaved
| far more like a speculative investment: yes, it's substantially
| trended upwards, but it's also been highly volatile. How do you
| reconcile accepting Bitcoin but rejecting equities, which have
| historically outpaced inflation by a significant margin?
| thorwasdfasdf wrote:
| TIPs I believe use the CPI, and so do other instruments like
| this. The CPI undercounts inflation by almost 1 to 1.5%.
| we've discussed this one many times: just look at bic mac
| index, housing prices, car prices. there are many buckets in
| the CPI and at least several of them don't fully count
| inflation, sometimes quite brazenly too: comparing beef
| prices to chicken prices instead of beef to beef, simply
| because beef has gone up faster than chicken.
|
| the appeal of bitcoin is there's a fixed supply as opposed to
| fiat which can increase exponentially.
|
| I never said reject equities. I want to invest in as many
| asset classes as possible, including equities, real estate
| and gold.
|
| The macro picture for equities is looking a little less rosy
| than it did 30 or 50 years ago. Equities are supposed to
| follow earnings growths, which is basically just population
| growth + productivity per capita increases plus dividends. if
| you break the 3 of those down and compare them to the last 50
| years, you'll quickly see, future fundamentals are less rosy:
| - labor population growth has slowed to 0.5%, from 1.5% - per
| capita productivity growth is at all time lows - and
| dividends for s&p500 are now at 1.5%, down from 4.5%.
|
| Whereas the fundamentals for past growth were (4.5+1.5+2=8%
| real), the future fundamentals now show: (1.5+0.5+1.5=3.5%).
| cryptica wrote:
| >> [cryptocurrency] entices masses of dumb money investors to
| pour their savings into what is effectively a unregulated
| speculative momentum investment untethered to any real economic
| activity.
|
| As if that was different for the stock market or the rest of the
| economy... The entire economy is propped up by the money printers
| at this stage. Bitcoin and crypto are just better at getting hold
| of that freshly printed money for obvious reasons. If the
| government bans crypto, they will have to ban the stock market
| too.
| [deleted]
| bayesian_horse wrote:
| There are some good reasons for banning cryptocurrencies.
| "Speculative nature" certainly isn't a good reason.
| tome wrote:
| Really? The SEC bans all sorts of securities issuances for
| exactly that reason.
| csomar wrote:
| I think this article is a very nice example of why the US is
| superior (or at least I think is superior) to China. The
| political system that allows someone (or some entity) uninhibited
| power over its citizens, institutions, companies and rights; or
| the political system where power is fragmented and people need to
| converge toward a solution (through potential infighting in a big
| building), need to convince other people using words (through
| media, lobbying, NGO work, etc...), and need to accept
| compromises with people who have wildly different ideas and
| ideals than theirs.
|
| The author positioned himself as the sole source of truth. Then,
| as a judge, deemed _all_ cryptocurrencies and their operators as
| an _evil_. Then, wants to use the full powers of the United
| States (judicial, police, regulators, diplomatic) to enforce his
| ruling.
|
| It's not even clear why this author should have any authority? He
| doesn't have any projects, ran any companies (or any mentions of
| that) or did any significant academic work. His whole blog is a
| crypto rage: https://www.stephendiehl.com/blog.html
| ur-whale wrote:
| > His whole blog is a crypto rage
|
| Indeed, and that makes it quite hard to to pay any attention to
| what he has to say or read to the end of the article.
| vegardx wrote:
| There's a lot of talk about building a fair system to replace the
| current we have, and there's a lot of good arguments to why the
| current system is corrupt and serves an elite. That said, all the
| talk about inequality and how crypto currency solves this is real
| rich coming from people that was already extremely privileged and
| would benefit almost immeasurably from it.
| pmurt7 wrote:
| This guy didn't buy Bitcoin so he want government to ban it. I am
| joking, but I am sure there is some truth to that. If we start
| banning what is a bit shady, we will end up shutting down 80% of
| businesses out there that make money.
| tome wrote:
| This is a strange sort of argument and seeing it so often from
| cryptocurrency proponents makes me feel that the pro-
| cryptocurrency are _weaker_ not stronger.
|
| On the one hand, yes, I'm sad that I didn't buy $100 of bitcoin
| ten years ago and hold until now. Who wouldn't be? But on the
| other hand, how does this even bear resemblance to an argument?
|
| > "The political case for a ban on fossil fuels"
|
| _So sad that you didn 't buy some Exxon huh?
|
| > "The political case for a ban on tobacco"
|
| _So sad that you didn't buy some Philip Morris huh?
|
| > "The political case for a ban on energy trading"
|
| _So sad that you didn 't buy some Enron huh?_
|
| "So sad that you didn't buy some bitcoin huh?" is like the
| opposite of the sour grapes fable: "I was able to reach the
| grapes so they must be sweet".
| SwimSwimHungry wrote:
| Objectively, it's a humble-brag, as if Bitcoin users are
| somehow among the enlightened and, by anyone "missing out",
| they will forever be poor.
|
| Or wait... actually I was told it's not too late! Bitcoin is
| only just getting started! If you don't buy now, you'll miss
| out on more future gains! Right!?
|
| Well, it's becoming less of a compelling argument, when to
| even 2x your input, BTC would have to hit a mind boggling
| $118k USD per coin as of this very post. In essence, we are
| finding a diminishing point of returns already. You can do
| better than that much more easily and quicker on the stock
| market right now, by comparison.
|
| It's like coiners want to play both sides of fence. They want
| to ridicule and taunt those that they say didn't see the
| light in 2009 or thereabouts, but at the same time, gain new
| recruits, so they can continue to fatten their holdings all
| the same.
| GhostVII wrote:
| Instead of regulating specific areas we think pollute more than
| they are worth, we should just have a cap-and-trade system for
| carbon emissions. Let people decide if it is worth it for them to
| pay for the emissions caused by Bitcoin, or sports cars, or
| whatever else pollutes without providing real value. What you do
| with the share of the emissions you have purchased is none of the
| government's business, but we should make everyone pay for their
| negative externalities.
| Dumblydorr wrote:
| Most of the article's arguments work if you replace the word
| "Gold" for the word cryptocurrency. Gold itself is just a yellow
| metal, it is valuable largely for the human belief that it has
| value, though admittedly it is somewhat pretty, a good conductor
| of electrons, and has historical value due to its ease of work
| and use in numerous ancient artifacts.
|
| Still, as a currency or value holder, gold is simply a metal that
| people think has value. Crypto too has value because people think
| it has value. It is "mined" like gold, though newer coins don't
| have this quality due to Proof of Stake, thus reducing carbon
| emissions drastically. And if people are willing to trade paper
| or metal for digital objects, is it anyone's place to ban that
| trade? What about digital money for digital crypto, can we ban
| that?
|
| All currencies like pieces of paper, digital objects, metallic
| circles, seashells, beaver pelts: They all have value because
| humans value them.
| kn0where wrote:
| The US actually did ban possessing large amounts of gold during
| the Great Depression, so there's legal and historical
| precedent.
| webinvest wrote:
| But the US dollar was tied to a fixed amount of gold back
| then. When overseas influential creditors demanded that the
| US give them gold for their dollars like the US said it
| would, the US complied by buying it from US citizens at a
| fixed price 20-50% below prevailing gold market value. Once
| all the gold was given away, the US was able to abandon the
| gold standard. Once the gold standard was abandoned, the US
| was able to escape from the Great Depression of the early
| 1930s. Countries that left the gold standard sooner recovered
| faster from the Great Depression than countries that were
| slower to abandon the gold standard.
|
| The US dollar is not backed by any amount of bitcoin so I
| don't expect to see this happen with bitcoin.
| brigandish wrote:
| Gold definitely has value:
|
| - it's rare but not too rare
|
| - malleable
|
| - doesn't rust or tarnish
|
| - non toxic
|
| - doesn't need the tech that platinum, the only other possible
| choice that satisfies the rest of the list, would need for it
| to become money instead
|
| Useful and scarce == valuable.
|
| https://www.visualcapitalist.com/why-gold-is-money-a-periodi...
| runarberg wrote:
| Also one of the best conductors found in the natural world.
| nayuki wrote:
| The metals for best electrical conductivity are silver
| (1st), copper, gold, aluminum (4th).
| kipchak wrote:
| I think gold makes more sense if you think of wealth as useful
| largely as a status indicator in the conspicuous consumption
| sens or peacocking. A gold necklace displays wealth and
| presumably status in the same way designer clothes or a luxury
| car does.
|
| Beaver pelts or cars wear down over time though unlike gold,
| and the amount of crypto one holds is hard to display
| ostentatiously, at least for now. BAT, Steemit or crypto.com's
| card colors based on staking amounts seem to be ideas heading
| in that direction though.
| thebean11 wrote:
| There is a lot more "paper" gold than physical gold in
| jewelry or gold bars. The overwhelming of gold and gold
| derivatives are not using it to signal their status.
| kipchak wrote:
| True, though the paper gold is valuable because someone
| could potentially take delivery, though that valuation on
| it's own is likely much less than it's current price if
| 1934-1970 is anything to go by.
| pushrax wrote:
| Gold mining is also environmentally intensive, as is
| transporting gold for trade.
|
| Proof of stake is also a "mining" operation insofar as it
| produces a limited supply at a macro-predictable rate.
| Ensorceled wrote:
| Gold has been valuable for centuries. There is no BitGold
| network that, if it went under, would cause your gold to simply
| evaporate. Once mined and processed, gold is incredibly stable,
| 2000 year old gold coins can be dug up and sold as antiques.
|
| All currencies have value, not because "humans" value them, but
| because some organization of humans said "this piece of paper
| is legal tender". They lose their value when that political
| organization falters. What political organization is behind
| bitcoin etc.
|
| Beaver pelts stopped being useful as a "currency" when there
| was no ready market for furs, it was never a currency, it was a
| fungible asset.
| gher-shyu3i wrote:
| > There is no BitGold network that, if it went under, would
| cause your gold to simply evaporate.
|
| However, if a government does go down, then its currency
| evaporates.
| amoitnga wrote:
| but gold doesn't
| dragonwriter wrote:
| > However, if a government does go down, then its currency
| evaporates.
|
| Sometimes, sometimes the successor regime accepts/redeems
| it; I think that has been far more common when governments
| actually failed in the modern era.
| tome wrote:
| > Most of the article's arguments work if you replace the word
| "Gold" for the word cryptocurrency
|
| I don't see it. Doesn't seem to apply to ponzi scheme, or
| facilitating cyber attacks, or the environmental impact.
| Perhaps you could give some explicit examples.
| tachyonbeam wrote:
| I don't like the way bitcoin mining wastes energy, but mining
| gold certainly has an environmental impact. Most of the
| machinery is currently powered by fossil fuels, and most of
| the gold isn't used for useful applications AFAIK.
|
| I'm glad some cryptos are moving to proof of stake, and I
| wonder if bitcoin will be able to make that transition too,
| or if the miners have too much to lose to let that happen?
| tome wrote:
| > mining gold certainly has an environmental impact
|
| Can you quantify the environmental impact of gold mining?
| How does it compare to the CO2 output of a medium-sized
| country?
| saalweachter wrote:
| Looks like 0.8 tonnes / troy oz?
| https://www.spglobal.com/marketintelligence/en/news-
| insights...
|
| Given 3000 tons of gold mined per year, that should be
| roughly 70 megatons of CO2 / year.
|
| [I am pleased to report that this falls squarely in my
| previous estimate of 30-150 megatons / year that was
| based on the cost to mine gold, the cost of fuel, and the
| CO2 emitted by fuel.]
| tome wrote:
| - Fossil CO2 Emissions (2016) 35,753 megatons globally
|
| - so gold mining is 0.2% of global CO2 emissions!?
|
| - Bitcoin mining energy use is at least 78TWh annually
|
| - 480-500g of carbon dioxide produced for every kWh
| consumed
|
| - So mining bitcoin produces 40 megatons of CO2 per year,
| which is the same order of magnitude of gold mining.
|
| - And mining bitcoin is 0.1% of global CO2 emissions
|
| (I would be grateful if someone would check my
| calculation)
|
| References:
|
| https://www.theguardian.com/technology/2021/mar/10/bitcoi
| n-r...
|
| https://www.worldometers.info/co2-emissions/
| saalweachter wrote:
| > so gold mining is 0.2% of global CO2 emissions!?
|
| Looks like iron & steel is 7.2%. Non-ferrous metals are
| listed at 0.7%, so gold is ~1/3 of the CO2 of non-ferrous
| metal production.
|
| Paper ("and pulp") is 0.6%.
|
| https://ourworldindata.org/emissions-by-sector
| saalweachter wrote:
| Bringing this around to carbon taxes, a $20 / ton carbon
| tax would raise the cost of producing gold by about $16 /
| troy ounce, and the cost of electricity by around 1 cents
| / kWh. Googling says it's currently about 700 kWh / BTC
| transaction, which would create a "carbon surcharge" of
| about $7 / transaction.
| beiller wrote:
| This here is the problem. Gold does use a lot of CO2 yes
| (heavy equipment construction and operation), but that's
| not even the worst thing. Mining literally is poisoning
| water, and destroying very large ecosystems. And carbon
| tax won't stop that. And 90% of gold is speculative (if
| you include jewelry).
| tinktank wrote:
| > Since the entire premise of cryptocurrency is as a speculative
| investment to redeem for Dollars or Euros,
|
| True of: - Stocks - Housing - Commodities (precious or otherwise)
| carlosrg wrote:
| Is it just me or some people are starting to lose their mind over
| Bitcoin and crypto? The visceral hate it is getting seems out of
| place, and the arguments are getting more desperate (now we
| should ban crypto?)
|
| Don't know if that's the case with the author, but from what I've
| been seeing in social networks and such, it looks like some
| people have decided crypto is an alt-right thing (not true) and
| we should "cancel" it. Ironic, because there's nothing more
| conservative that _banning_ crypto and sticking to fiat.
| frockington1 wrote:
| Highly likely its all media and propaganda driven. After
| passing $2 trillion in 'covid relief' and shooting for another
| $4 trillion in 'infrastructure', work will need to be done to
| keep consumer confidence in fiat
| artifact_44 wrote:
| We can't allow the poors to pillage the planet.. That's reserved
| for "wallstreets crazy traders".
| ggreer wrote:
| I find it funny that the environmental arguments have come out
| again. Major news companies were making the same argument about
| the Internet back in the 90s.[1] Pretty much any activity has
| some effect on the environment, so the argument tends to be used
| when few other criticisms can stick.
|
| 1. https://www.forbes.com/forbes/1999/0531/6311070a.html
| jamal-kumar wrote:
| If my computer was spewing out clouds of black smoke, I might
| start to care
| javert wrote:
| This ignores the positive arguments for bitcoin.
|
| Bitcoin is objective, hard, honest money. Many view that as a
| very good thing, myself included.
|
| Governments steal inordinate amounts of energy from the populace
| with their money printing.
|
| The Pharaohs built the pyramids using slave labor. This was a
| monstrous, immoral waste of human energy.
|
| Modern governments accomplish the same thing with money printing.
|
| That is the system Stephen Diehl supports.
| kibleopard wrote:
| > Bitcoin is objective, hard, honest money
|
| Yes, definitely makes sense when the main usage of it is money
| laundering and mindless speculation
| javert wrote:
| That isn't the case, but believe what you want.
| kibleopard wrote:
| I mean, if you'd like to see some academic research backing
| up that it is indeed the case, see here:
| https://academic.oup.com/rfs/article-
| abstract/32/5/1798/5427...
|
| "We find that approximately one-quarter of bitcoin users
| are involved in illegal activity. We estimate that around
| $76 billion of illegal activity per year involve bitcoin
| (46% of bitcoin transactions), which is close to the scale
| of the U.S. and European markets for illegal drugs."
|
| I would love if you could point me towards a current use of
| Bitcoin that isn't as a currency for illegal goods, or as
| an investment vehicle -- I'm genuinely curious why you
| think what I said isn't the case.
| lui8906 wrote:
| Things have changed since your study. Chainalysis
| released a report in February (they are a company who
| specialise in tracking illegal transactions). The TLDR is
| that illegal transactions make up 0.4% of BTC
| transactions these days.
|
| > https://en.cryptonomist.ch/2021/01/20/chainalysis-
| crypto-ill...
| javert wrote:
| Thanks for sharing this.
| javert wrote:
| I do think it's currently mainly used as an investment
| vehicle.
|
| I don't think that is the same as "mindless speculation,"
| which is what you said before.
|
| Michael Saylor, who is the CEO of an S&P 600 company,
| makes a good case for bitcoin as a store of wealth. You
| can google him and see his arguments if you want.
|
| Also, BTW, money laundering != illegal drug activity.
| Those are two different crimes.
| kibleopard wrote:
| Will look him up - thanks!
| orthecreedence wrote:
| Jeez. I have my own issues with cryptocurrencies, but blanket
| banning them? How do you even enforce this??
|
| Also, if you're going to bring ecology into it, then instead of
| advocating for the ban of cryptocurrencies, it makes much more
| sense to put your energy into banning the economic system which
| systematically incentivizes externalities (of which carbon
| pollution is one).
| nathias wrote:
| typical nocoiner FUD
| pmurt7 wrote:
| This guy will be mad when he finds out than Ethereum 2.0 will be
| energy efficient (no more mining).
| pmurt7 wrote:
| Here we go again, the "right-wing populism" narrative to ban
| crypto.
| christiansakai wrote:
| AFAIK, crypto is very popular with right-wing.
| pmurt7 wrote:
| Do you think terrorist organisations use BTC ? Of course no,
| they are fine with USD. Should we ban USD too?
| tome wrote:
| I always assumed they would use BTC for some of their
| transactions! Why wouldn't they? You said "Of course no,
| they are fine with USD" so do you have any evidence that
| they don't?
| pmurt7 wrote:
| Do you really think The Islamic State use BTC to buy
| weapons on the Dark Web?
| tome wrote:
| I guess you're replying to me. I have no idea, but that
| seems a non sequitur. Where's your evidence that no
| terrorist group uses BTC for any of their transactions?
| fancyfredbot wrote:
| You can't really frame a ban as a way of protecting the little
| guy if your ban causes everyone who "invested" so far to
| immediately lose everything. You'd almost certainly be sued and
| end up paying compensation. Even a partial ban restricting who
| can invest would be open to accusations of elitism and
| politically difficult.
|
| I suspect that a politician who thinks the crypto market is going
| to crash will wait for that to happen before implementing a ban.
| At that point you will not need to pay compensation and there
| will be political support for it.
|
| In the meantime the government's best option is probably tight
| regulation and prosecution of any outright fraudulent operations.
| quickthrower2 wrote:
| A carbon tax/price might work assuming you could get that
| through. Then tax a percentage on Bitcoin purchases via
| exchanges to aloe for the carbon emissions.
| fancyfredbot wrote:
| Agree it might be workable, although Tobin taxes like this
| haven't had a lot of support in the past. Also, enforcement
| is likely to be a bit of a nightmare!
|
| It would raise some money you could use to mitigate
| environmental impact, but I'm not sure that a reasonable tax
| level would actually disuade anyone from putting their money
| in so less helpful from that point of view.
| the_local_host wrote:
| I think cryptocurrencies are idiotic, but this essay just does
| not make a case for a blanket ban at all, nor do I think one is
| necessary.
|
| The environmental impact should be regulated, but other than
| that, governments should just stay out of it and let the
| cryptocurrency landscape be the wild frontier its proponents want
| it to be. May the best obfuscated smart contract code win, until
| no one wants to play anymore.
| biztos wrote:
| Other than the miners paying the market price for electricity,
| how would the environmental impact be regulated?
| jlos wrote:
| >>> In social media era, everyday our adversaries are running
| very effective military-inspired psyops campaigns to sow division
| and polarization within the body politic.
|
| Am I the only one who thinks this is a 2 way street and our
| governments are actively doing the same to our adversaries?
| frockington1 wrote:
| They are likely doing it to their subjects as well
| rybosworld wrote:
| Seems to me that Stephen is not well informed on crypto in
| general. This article is really only relevant to Bitcoin.
|
| Take a project like Brave for instance which is disrupting the
| online advertising model: https://brave.com/ (I am completely
| unaffiliated, just a fan of the project)
|
| Can you look at this project and tell me with a straight face it
| is bad for the environment and should be banned by government?
| Because that's basically what Stephen has done when he lumped
| every crypto together.
| nightski wrote:
| I used to have a lot of respect for him, he's very intelligent
| and a great hacker. But man he's really gone down the rabbit
| hole basically on the edge of consipiracy theorist lately. It's
| sad. His viewpoints are naive and he never proposes viable
| solutions.
|
| It's easy to say ban "X" when that is never going to happen. If
| he was really interested in a solution he would acknowledge the
| benefits that people are getting out of Bitcoin and provide
| alternative solutions.
|
| But meanwhile people will continue to complain about Bitcoin
| while it's market cap will continue to rise and it will keep on
| growing in usage.
|
| All major banks are now planning serious efforts in the crypto
| space with massive investments. This isn't going to go away
| with magical thinking.
| cryptica wrote:
| >> He is CTO at Adjoint - "digitises cash and settlement
| processes for multinational corporates."
|
| How can anyone respect such person? His job is as unethical
| as it gets. He is a monster and a woke hypocrite.
| namdnay wrote:
| The thing is, Im not sure Brave really needs a cryptocurrency.
| It seems that a centralized DB would be enough.
| rybosworld wrote:
| Sure it might work with a database, just as you don't need a
| blockchain to do what Visa does. But Brave is really one of
| the best showcases for what crypto can achieve imo.
|
| They've tied anonymity, opt-in advertisements, and
| micropayments into one thing. I think it would actually be
| more difficult to do this without a cryptocurrency.
| scsilver wrote:
| The unifiying protocol of a token(BAT) is a political
| feature. It aligns incentives out of the box. Stakeholders
| become shareholders, stakeholders become financially aligned.
| The problem with this can be speculation distorting the
| market, making it to expensive to transact, reducing or
| eliminating its value.
| boringg wrote:
| Ban? That silly. How you kill something you don't like is tax it
| heavily. Add on the carbon tax equivalent to each bitcoin
| transaction as well as tax the capital gains/losses. Interest
| will deflate on it's own.
| djschnei wrote:
| You know capital gains tax already applies to all crypto
| transactions, right?
| boringg wrote:
| Of course I do.
| meiji163 wrote:
| >Cryptocurrency is a pseudo-asset built around the dubious notion
| of "speculation for speculation's sake"
|
| No, some people think scarcity and trustlessness make it a good
| store of value. This is not even addressed in the article.
|
| > Cryptocurrencies disproportionately victimize vulnerable people
| and those in marginalized communities without access to
| traditional investments or financial advisory.
|
| I don't see any good evidence for this, the goal of many DeFi
| projects is to increase access.
|
| Overall an unfair and needlessly inflammatory evaluation. The
| idea that all cryptocurrency is a scam that "masses of dumb money
| investors" buy into is overbearingly pretentious, and a non-
| starter for legitimate criticism IMO.
| jeffreyrogers wrote:
| The political case against it is that banning cryptocurrency will
| cause a non-negligible fraction of the population to lose a large
| amount of money solely through government action.
| kipchak wrote:
| I think the "how" part is the most interesting question here,
| both in terms of political justification (people who bought $100
| of BTC on their coinbase app won't be very pleased) and practical
| enforcement. Of authors suggested measures, I think only the
| first would be necessary to result in a de-facto ban.
|
| "Halt all wire transfers of dollars in and out of cryptocurrency
| exchanges.
|
| Halt foreign entities trading in dollar cash-equivalent crypto
| assets.
|
| Add Chinese and other foreign cryptocurrency exchanges hiding in
| tax-havens to sanctioned entities lists.
|
| Regulate the sale of any existing cryptocurrency assets to US
| persons by classifying them as securities investment contracts
| moving forward."
| blisterpeanuts wrote:
| From the article: "The United States is a deeply economically
| unequal society and the proliferation of get-rich-quick schemes
| taps into a deep weakness in the American mindset."
|
| When has the United States _not_ been this way? The first
| explorers came over here hoping to find a trove of far East
| spices or gold, and make a killing. The Spanish did make a
| killing on gold for quite some years, even as they destroyed
| entire civilizations. Some American pioneers just wanted a piece
| of land on which to raise a family and support themselves away
| from tyranny. But many others were looking for gold or other
| quick riches. The history of our stock exchanges has been one
| pump-and-dump after another.
|
| Diehl's other criticism, that crypto mining is environmentally
| destructive, has some merit, but is that a reason to ban an
| entire industry? What about people fortunate enough to be near
| hydroelectric plants, or people with solar electric or nuclear?
| Building extra coal-fired plants in China to power crypto
| operations does sound bad, but even China is moving away from
| polluting sources; they have a desperate need to clean up their
| environment and they are working hard on nuclear and solar
| alternatives, not to mention that they are developing cheap,
| affordable electric vehicles.
|
| Every currency system is built on trust. The U.S. dollar, which
| is the world's reference currency, is increasingly shaky; last
| year the Treasury created more dollars in a single year than in
| all years previously. A lot of people are very worried that a
| currency collapse from excessive debt and a weak economy is
| coming in the not-too-distant future.
|
| Crypto currency is an interesting and powerful new technology
| that may actually save us from monetary collapse; I wouldn't
| dismiss it as a dangerous boondoggle just yet.
|
| At any rate, I don't see how Mr. Diehl's prescription for banning
| crypto could possibly be implemented; private companies have the
| right to create products for sale or trade as long as they are
| not dangerous. Even tobacco and guns, both known to potentially
| kill people, are still huge profitable industries albeit highly
| regulated.
| BitwiseFool wrote:
| Is "Electricity Neutrality" a concept? Does the government have
| any control over how I use the electricity that I pay for? This
| is a genuine question and I'm not trying to be snarky.
| namdnay wrote:
| It's a good question. I'd say that the government already gives
| itself the right to mandate how you burn your petrol for
| example, by setting emissions regulations.
|
| And more pragmatically, banning crypto would be less
| politically suicidal than implementing a carbon tax
| golemotron wrote:
| The article neglects the best argument for crypto. It will
| force us to do more energy research and put more money into
| hydroelectric, solar, and nuclear. We shouldn't let concerns
| about the environmental problems of current energy sources lead
| us to destroy an incentive structure that can lead us away from
| them. Harness the tiger, don't put it down.
| [deleted]
| ggreer wrote:
| I don't know of any place requiring different rates and
| metering for certain uses, but many power companies offer such
| things as an option. For example: In California, PG&E offers
| different metering plans for electric vehicles.[1] These plans
| make it much more expensive to charge your vehicle during peak
| hours (daytime) and significantly cheaper to charge during the
| night. Though once you are on separate meters, you're at risk
| of PG&E unilaterally jacking up your rates for charging your
| car.[2]
|
| I didn't notice the difference in rates until just now, but
| California's cheapest off-peak rate of 14 cents per kWh is
| almost twice what I pay for electricity in Washington (8 cents
| per kWh). It currently costs me $6 to fully charge my car. If I
| had to pay California rates, charging would cost $11-38
| depending on the time of day.
|
| 1. https://www.pge.com/en_US/residential/rate-plans/rate-
| plan-o...
|
| 2. https://www.forbes.com/sites/bradtempleton/2019/11/19/pge-
| ra...
| ur-whale wrote:
| > don't know of any place requiring different rates and
| metering for certain uses
|
| I don't know about electricity, but this certainly exists for
| fossil fuels.
|
| In some country, diesel has a completely different price if
| you use it in your car or use it in your tractor to plow a
| field.
| rocqua wrote:
| I don't think it is. If you want a big enough electrical cable,
| you need a deal with the local energy supplier. They can add
| whatever clause they want.
|
| Personally, I don't see much of a reason for Electricity
| neutrality. It's not like the power companies could use their
| discretion to disadvantage their competition. Nor does the
| contention for power lead to large barriers for entry.
| superjan wrote:
| I think the most convincing argument is that Bitcoin is an
| enabler for crime. Governments have a responsibility here.
| djoldman wrote:
| There is a horrific waste of resources devastating the
| environment that has gone on for far too long without detection.
|
| Hundreds of thousands of computer servers running almost 24/7,
| hundreds of thousands of people driving to work, burning energy
| on their development machines. Hundreds of billions of dollars
| spent on making products (and wasting energy) to support this
| industry, which then must be transported, wasting more energy.
|
| We must ban this scourge: entertainment!
|
| This entertainment industry (TV shows, movies, podcasts, video
| games, etc. used primarily for entertainment) adds nothing and is
| unproductive.
|
| /s
|
| But not totally sarcasm. Maybe bitcoin isn't truly solving all
| the problems we hoped it could. Perhaps those problems will be
| solved by a better version, maybe Ethereum or some other
| cryptocurrency.
|
| Let's not kid ourselves into thinking that energy isn't wasted in
| other parts of the economy. What's a "legitimate" use of energy?
| I think most Americans, generally protective of individual
| rights, would say let the market decide.
|
| If Americans want to pay for TV shows, let the entertainment
| industry burn energy to give it to them.
|
| If Americans want to buy/sell/transfer Bitcoin, whether to watch
| their "investment" go up and down in value, or for some other
| reason, let them.
| lmilcin wrote:
| I think people just don't appreciate how much energy is being
| wasted for bitcoin mining.
|
| Bitcoin mining currently uses 10x the amount of power used by
| Google and 50% of what ALL DATACENTERS IN THE WORLD are using.
|
| https://www.bbc.com/news/science-environment-56215787
|
| This also means that our efforts to replace non-renewable
| sources of energy are being wasted as we are just adding
| capacity to bitcoin mining network. When you are paying your
| taxes and subsidize "green" energy know that part of your
| subsidy just goes to shit.
| djoldman wrote:
| I think you're right, it's difficult to imagine the scale.
|
| Let's also look at something else: the US department of
| defense:
|
| "...The U.S. military also produced more greenhouse gases
| than Morocco, Peru, Hungary, Finland, New Zealand and Norway.
| According to the research from Brown University, the Pentagon
| would be the world's 55th largest CO2 emitter if it was a
| country..." [0]
|
| I think reasonable people could disagree as to whether or not
| all those emissions were worth it. The point is that many
| people think the U.S. military is by and large a complete
| waste of resources analogous to the waste of the Bitcoin
| network.
|
| If we're going to condemn Bitcoin, let's condemn all the
| other resource and energy wastes out there.
|
| [0]https://www.forbes.com/sites/niallmccarthy/2019/06/13/repo
| rt...
| lmilcin wrote:
| If you think bitcoin will cause military to go away you are
| naive in the extreme.
|
| Military is there because we don't know how to do better.
|
| Just like democracy is a shit show of inefficiency but we
| just have not figured out better system of government yet.
|
| But we know how to transfer money without burning huge
| amount of energy and that is the point.
| djoldman wrote:
| I didn't mean to imply that Bitcoin or any other
| cryptocurrency will cause militaries to go away.
|
| >Military is there because we don't know how to do
| better.
|
| This is exactly my point. Many people think we *do* know
| how to do better: stop spending so much of our resources
| and energy on militarization.
|
| If we want to say that Bitcoin is a waste of energy,
| let's also point out all the other things people think
| are a waste of energy.
| lmilcin wrote:
| You can't get rid of military unless you want to become
| completely defenseless and open to conquer.
|
| Peace is a temporary equilibrium where nobody profits
| from starting hostilities. Nobody profits from starting
| hostilities because they know it is going to cost them.
|
| If you are not being robbed or beaten or raped that is
| because there is police and government that can ensure
| anybody doing this faces good chance of paying high price
| for this.
|
| Between governments this is done with a prospect of war
| but that prospect only exists if there is military to
| back it up.
|
| Just go and ask China or Russia to reduce their military
| efforts. See what comes out of it.
|
| You need to read some history, man.
| djoldman wrote:
| Perhaps the US could significantly lessen its resource
| and energy spend on the military and achieve the same
| benefits, no?
|
| What about the entertainment industries of the world? Is
| it ok to spend resources on entertainment but not
| bitcoin?
| duckfang wrote:
| Notice: When Wall street decides to horrible things with money in
| its various ways, nobody bats an eye. When fraud happens, nobody
| goes to jail. It's business as usual.
|
| When the People decides to do horrible things with money in its
| various ways, we see hardware manufacturers attempt to lock down
| hardware to prevent it (nVidia), we see the SEC collectively lose
| their shit, we see completely inconsistent rules from the IRS how
| to even handle it, and we see calls for its ban.
|
| Rules for thee, but not for me.
| louwrentius wrote:
| You can't justify your own 'bad behaviour' by pointing at
| someone else's bad behaviour.
|
| That is whataboutism, to distract from - I believe - valid and
| substantiated criticism.
|
| I agree that so much is wrong with Wall Street, but that is
| another discussion. That is a separate issue to me.
| duckfang wrote:
| Then you are missing my point of criticism.
|
| The elites put together the artifact that we call the Stock
| Market. And when the elites play there, they have pretty much
| a free reign to do as they wish. Sure, there are rules... But
| as how they're enforced is a whole other matter. And for even
| the rules that are enforced - if they only have a fine
| component, they are _only_ meant for the lower classes. Fines
| for the elites are only a cost of doing business.
|
| And my comments weren't exclusively of bitcoin or other
| cryptocurrencies. I remember what happened around late
| February 2021 regarding shorting GME and /r/wallstreetbets .
| It was yet another case of a hedge fund trying to bankrupt a
| company in the same way that Toys-R-Us, Sears, and others
| have had happen to them (by the elite class, no less). And
| when r/WSB fought against them, corporate elite sycophants
| like Robinhood and others forbid the very transactions. .
| When the masses comes together, the elites effectively
| unionize into a huge bloc, but that didn't save Melvin
| Capital.
|
| What you call whataboutism is what I call "inherent rigging
| of the market by the elites against the middle class". It
| just so happens that the elites didn't get into
| cryptocurrency until much later, so we see these kinds of
| one-sided articles.
| hakesdev wrote:
| Whataboutism - why do I see this word so much these days?
|
| Whenever I see it, I notice people are often basically trying
| shut down an honest comparative analysis by another party.
| elliekelly wrote:
| > Rules for thee, but not for me.
|
| There are all kinds of rules that apply to Wall Street that
| cryptocurrency seeks (and for the most part, has managed) to
| avoid. I don't disagree there is an entirely different system
| of "justice" for wealthy, white collar, Wall Street criminals
| but to say Wall Street is without regulation while
| cryptocurrency is somehow beholden to rules is patently and
| laughably untrue.
| cryptochamorro wrote:
| No one blames fiat for the destruction of entire countries and
| assassinations of leaders who tried to get away from being
| beholden to X financial system.
|
| Money drives people to do insane things. Governments only care
| about the environment insofar as to stay in power and to keep
| their citizens from interrupting their gravy train.
|
| Look at the numerous examples politicians using "green"
| initiatives to line their own pockets.
|
| Attacking cryptocurrency is in their best interest because they
| can't control it. Full stop.
| kmeisthax wrote:
| Government can almost certainly control cryptocurrency, or at
| least make the lives of those involved with it very difficult.
|
| They could, for example, pass laws that mandate backdoors,
| which would mean any cryptocurrency developers in the country
| would be thrown in jail if they didn't comply. They could also
| ban operating P2P nodes in the cryptocurrency's network. Due to
| the nature of P2P it isn't possible to hide the fact that
| you're running a node, unless you also close the entire network
| off to new users. (Case study: BitTorrent filesharing lawsuits)
| The government would just have to run their own nodes and
| connect to other users to collect information on who needs to
| be arrested.
|
| I don't think people on HackerNews entirely appreciate how much
| their ability to do cool fun hacker stuff is a function of
| living in an advanced democracy where there are significant
| limitations on the power of government upon which the
| government has agreed to remain, people's innocence is presumed
| in criminal proceedings, and private actors trying to curtail
| said freedoms are looked upon with skepticism, if not outright
| legal condemnation.
| frankbreetz wrote:
| >>Governments only care about the environment insofar as to
| stay in power
|
| If the people care about the environment and will vote people
| out of office who don't take care of the environment, that
| seems like a system that works. If a small number people are
| allowed to destroy the environment, that takes away the
| people's right to a livable planet.
|
| >>Look at the numerous examples politicians using "green"
| initiatives to line their own pockets.
|
| One can make money and help the environment it doesn't have to
| be one or the other
| nayuki wrote:
| The fact that this author repeatedly upholds China as a good
| example of technological progress is disturbing.
| xapxap wrote:
| So sad that you didn't buy some huh?
| ThemalSpan wrote:
| I don't think he is.
| verdverm wrote:
| HN is not supportive of antagonistic, low quality comments.
| Please take that level of discourse elsewhere
| bpodgursky wrote:
| HN is absolutely supportive of antagonistic snarky, low
| quality comments which happen to align with the zeitgeist.
| This one doesn't.
| spir wrote:
| I work in the cryptocurrency industry. I perceive Stephen as
| being 42% correct, yet so angry about it that it'll take him
| another decade, or more, to appreciate the other 58%.
| musesum wrote:
| A shift in perspective for BTC is underway, from transaction
| platform (Yellen on the Con side) to a trans-national asset class
| (Saylor & Musk on the Pro side). So, now the discussion is on the
| energy spent on mining:
| https://www.forbes.com/sites/lawrencewintermeyer/2021/03/10/...
|
| IMO, currency is a belief system backed by Joules.
| Bluestein wrote:
| > currency is a belief system backed by Joules.
|
| That is a very insightful definition ...
| bitcoinmonger wrote:
| I have a solution to the energy consumption problem.
|
| Instead of banning Bitcoin completely, just make it illegal for
| individuals to run cryptocurrency nodes or perform mining
| operations. In it's place, each government can then run their own
| cluster of nodes for the general public to use as a
| cryptocurrency.
|
| This way, the general population has access to cryptocurrency,
| but government can monitor and control all of the transactions
| that take place to ensure that no illegal activity arises. In
| addition, governments could also control the issuance of private
| and public keys, which means that funds can be easily confiscated
| in the event of fraudulent behaviour.
|
| Of course, the main issue with this setup is that the nodes will
| be centralized, and therefore are at a greater risk of physical
| attack. This can be solved through physical force, which will
| consume energy in itself, but will be far more efficient than
| using a globally distributed proof-of-work mechanism for
| protecting the transaction history of the currency.
|
| Furthermore, in the event that a nation state scale attack takes
| place to try and undermine the transaction history of the
| government-run nodes, the force required to protect these ledgers
| can be scaled up to match it (e.g. war). However, I believe this
| to be an unlikely scenario, and so the overall cost involved with
| protecting the cryptocurrency would be less than what is
| currently consumed by proof-of-work.
|
| In short; instead of using electrical energy to protect the
| integrity of the currency, we use physical force instead (which
| will be far more energy-efficient).
|
| To me, this quite clearly solves the energy consumption, without
| having to perform an outright ban on the technology. This way,
| everyone benefits.
| djschnei wrote:
| > but government can monitor and control all of the
| transactions that take place to ensure that no illegal activity
| arises.
|
| I don't mean any disrespect when I say this, but when I read
| comments like, after the initial shock subsides, there is
| always a realization that we all have such widely varying and
| disconnected worldviews that I simply don't understand how mass
| governance could every work without eventually succumbing to
| violent conflict... Not trying to make any comment on the
| underlying merit of either worldview, just that it's like we
| live in completely different realities... It's very depressing,
| to be completely honest.
| biztos wrote:
| If you're going to trust the government to validate the
| blockchain then you don't need any proof of work anymore. You
| just need proof of Government: depending on the government,
| that might be a trillion-dollar SQL database built by Palantir,
| or it might be a physical stamp in red ink on a dot-matrix
| printout of every newly verified block.
| dclaw wrote:
| I'm really getting sick of this argument that bitcoin or any
| other cryptocurrency is using some ridiculous/insane amount of
| electricity while completely ignoring the costs of running the
| entire existing financial system. There are companies literally
| tunnelling through mountains to lay fiber so that they can make
| thousandths of a cent on stock trades and that's not worse? Come
| on.
| jude- wrote:
| Just do the following:
|
| * Implement a universal carbon tax. Make CO2-based mining
| unprofitable.
|
| * Require KYC/AML checks and tax reporting from all exchanges,
| and prosecute/block those that don't.
|
| Wholesale banning cryptocurrency is a fool's errand without a
| massive restriction on general-purpose computing and Internet
| usage. So, let's attack the problems they create instead, since
| we already have the tools and legal precedent for doing so.
| seaourfreed wrote:
| Stephen Diehl's goal is control others. He doesn't value citizens
| having sound currency via non-money printing. It is a free
| country so the part of the country building a financial system
| around non-money printing digital currencies will do that.
| Stephen doesn't need to buy into it. Those who want a non-money
| printing digital currency driven financial system will opt-in.
| Opt-in and opt-out is what happens in free countries. Stephen
| should focus on allowing people to be free, make their individual
| choice. He should stop trying to control other people.
| tomjen3 wrote:
| I read the words the great reset and just skipped reading, I
| suggest you do the same.
| christiansakai wrote:
| I think the main premise of this article is the fact that
| crypto's carbon emission is insane, especially Bitcoin, which I
| agree (I don't hold Bitcoin for this exact reason). But there are
| many other crypto that uses Proof of Stake, way way greener than
| Proof of Work, such as Cardano. Even Ethereum is transitioning to
| Proof of Stake.
|
| This article should be re-titled "The Political Case for a
| Blanket Proof of Work Ban".
| SavantIdiot wrote:
| Monero, Ravencoin, and Tether use a proof-of-work function that
| requires CPUs and defeats GPUs and ASICs, so there is an
| argument to be made that perhaps there is a slightly greener
| proof-of-work function. I don't quite understand how their
| function RandomX works, it requires a VM, lots of memory, and
| randomly generated work functions that need to be translated by
| the VM. Been hunting for a good page to explain this, but the
| point is: it aims to make mining more decentralized because the
| average user can still participate.
|
| I don't like proof of stake because again, the rich get richer
| in this scenario, which works against the decentralized core
| value of cryptocurrency.
| hpoe wrote:
| Wasn't that posted like 2 days ago on HN already?
| datafl4sh wrote:
| https://news.ycombinator.com/item?id=26623182
| pmurt7 wrote:
| Yeah the guy regularly posts his agenda on HN:
|
| https://news.ycombinator.com/from?site=stephendiehl.com
| revel wrote:
| The big problem with the way that "cryptocurrencies" are talked
| about is that cryptocurrency is, at least in the mainstream
| vernacular, synonymous with bitcoin. Bitcoin is an outlier in
| terms of how it works and what it does. Most tokens sit on top
| of Ethereum and at this point it's probably more accurate to
| describe cryptocurrencies as being synonymous with ETH, not
| BTC.
|
| In my opinion regulatory action against PoW is all but
| inevitable. Ethereum is a platform, so there are powerful
| incentives to make it work more efficiently and use less power.
| Those plans are already well under way and, whenever Ethereum
| 2.0 gets launched, the power consumption of the crypto sector
| will drop dramatically and the network will be massively more
| powerful, attracting subsequent adoption. In this case, miners
| and developers have aligned interests. That's not the case for
| Bitcoin. Existing miners benefit from PoW, so I don't expect
| Bitcoin to migrate without some regulatory arm twisting.
| jtolds wrote:
| I came here to say this exact same thing. There is seriously
| interesting and useful real work being done under the umbrella
| term "decentralized finance" or DeFi. It is hard to cut through
| the noise of get rich quick schemes, but at the core, the DeFi
| stuff, built on top of green cryptocurrency (proof of stake),
| along with quickly improving zero-knowledge proof tech, is
| actually useful and groundbreaking.
|
| Bitcoin and proof of work should totally be banned.
| salawat wrote:
| Proof of Stake is not inherently decentralized, you realize
| that, right? It'll trend toward centalization over time as
| coins end up getting delegated to the asset class equivalents
| of banks and brokers. They _will_ pop up. Once they do, They
| _will_ be regulated. Then you 're back to square one.
| nbardy wrote:
| And then you have a monetary system that runs a blockchain
| instead of this paper system the US has.
|
| Not everyone wants to take down banks or destroy fiat.
| einpoklum wrote:
| I'm not sure. Do these DeFi schemes involve currencies which
| cannot be cancelled or created in large amounts by political
| decision (e.g. democratic)? If the answer is "yes", then
| these may be just another form of pyramid scheme, perhaps
| less taxing on the environment.
| jtolds wrote:
| The answer is not yes, and there is clear evidence that
| cryptocurrencies are cancelled and created democratically.
|
| https://vitalik.ca/general/2021/03/23/legitimacy.html
| (https://news.ycombinator.com/item?id=26560626) talks about
| the Steem/Hive split, and explains how the community
| democratically overrode the network owner's undemocratic
| decisions.
| christiansakai wrote:
| Indeed, the world of cyptocurrency/blockchain research has
| many ground breaking papers and news are often real time,
| even crypto news aggregator can't keep up with it. HN crowd
| refuses to care about it because of bad taste of crypto in
| general.
| samvher wrote:
| Do you have recommendations on where to find this stuff?
|
| I agree that there seems to be a lot of interesting work
| going on and the ideas of decentralized finance have a lot
| of potential. At the moment it really is hard to cut
| through the noise though and from what I can find just
| searching for an afternoon it looks like a minefield. I'm
| hoping that the bad stuff will all fade away and something
| useful will remain.
| christiansakai wrote:
| You can join each crypto's subreddits/youtube/twitter to
| find more. This is basically what crypto news aggregator
| do. They just read articles/watch youtube videos all day.
| jtolds wrote:
| It's a bummer because zkRollups and their ilk in particular
| are flat out amazing new cryptographic constructions, but
| because they weren't developed by Schneier or Rivest or
| DJB, the wider programming industry is ignoring them.
| superkuh wrote:
| >This article should be re-titled "The Political Case for a
| Blanket Proof of Work Ban".
|
| I don't see the difference between that and "The Political Case
| for a Blanket Cryptocurrency Ban". The outcome is the same.
| Etherium has not proven proof of stake can work at scale. If it
| does that will be great. But it's no certain thing and it'll
| probably mean more Eth forks like Eth classic. Most other
| cryptocurrencies are tied to bitcoin's ecosystem to have value
| at all.
| je_bailey wrote:
| To say that "Etherium has not proven proof of stake can work
| at scale" is true but means not a whole lot. Since it implies
| other's haven't. Cardano, as an example, will be 100%
| decentralized Proof of Stake within the next few hours. I see
| no reason at this point for bitcoins existence but the
| technology that's being built on top of blockchains is
| fascinating and shouldn't be condemned for something that
| bitcoin can't do.
| louwrentius wrote:
| I think personally that proof of stake and proof of work both
| don't matter in the end.
|
| I believe that _all_ cryptocurrencies are at their heart scams.
|
| Proof of stake doesn't change this dynamic.
|
| As I see it, cryptocurrencies doesn't actually solve any real,
| significant problems we face as a (global) society.
|
| And to pick one important thing: they exclusively enable
| crypolocker randsomeware, and we know their devastating impact.
|
| Dollars are abused too, but the dollar gives so much back, our
| societies are based on it.
|
| I see no benefit to society of cryptocurrencies and I would
| really like to see them go.
|
| Nothing good has come from them. Zero.
| runj__ wrote:
| "Scam" would indicate intent which I'd seriously think you'd
| be hard pressed to find behind the bitcoin white paper, it
| would be a really bad, slow scam if it included the number of
| steps where bitcoin would be where it is right now.
|
| I can put a virus on someone's computer and make them mail
| physical dollars or make dead-drops or whatever to remove it,
| ransomware is not a problem of cryptocurrency.
| ur-whale wrote:
| > I think the main premise of this article is the fact that
| crypto's carbon emission is insane
|
| I disagree.
|
| The author of the article is the worst kind of statist there
| is, and many of his arguments fall in the "big brother ought to
| protect their poor defenseless citizens, whether they like it
| or not".
|
| The CO2 emission argument is just the icing on the cake.
| slibhb wrote:
| The main premise of the article is that cryptocurrencies are
| "speculation for speculation's sake," i.e. gambling, and that's
| bad. Also, the article claims that they contribute to
| inequality. The green stuff is basically a side note.
|
| I don't think it's a terribly strong case but I suppose it
| depends on whether you agree that crypto is gambling and if you
| think gambling should banned. Anyway, I think lots of people
| stupidly speculate on things. I cast my vote by not speculating
| on those things. Should I be able to stop others from
| speculating?
| luxuryballs wrote:
| I wonder how many people who got into crypto and found
| something they clicked with and were able to make something
| of compared with a dead end job would feel about this whole
| "contributes to inequality" nonsense. Not everything is for
| everyone, and that's OK, but there's something out there for
| everyone.
| einpoklum wrote:
| > I wonder how many people who got into crypto and found
| something they clicked with and were able to make something
| of compared with a dead end job
|
| For every one of these people who bought cryptocurrency and
| "made something", there is someone - for the sake of
| discussion, another poor sap with a dead end job - who just
| bought cryptocurrency and hasn't made anything. And lots
| more from the second group who have made a tiny minority of
| crypto owners rich.
| luxuryballs wrote:
| Sure but that doesn't take away from the other guy, not
| everything is for everyone, that's ok.
| louwrentius wrote:
| That doesn't seem to justify the environmental impact to
| me.
| tarsinge wrote:
| The way people "invest" in the stock market nowadays is no
| different. Long gone are the days of buying a share for
| dividends and voting power. People now are just betting on
| what they will be able to dump the bags at the time of their
| retirement in a giant casino. Crypto is just the end game.
| iujjkfjdkkdkf wrote:
| Gambling, e.g. casino or sports betting is different because
| for some it's a fun pastime and participants are (more or
| less) aware of what it's about.
|
| "Crypto" - not the underlying tech which is potentially
| interesting and may have merit in some incarnation - but
| buying or trading "assets" grounded in the tech, is
| essentially a quasi-legal pump and dump scheme right now.
| There is a rich history of securities law that is designed to
| thwart predatory investment schemes, and all of that has been
| circumvented by allowing people to trade in these assets.
|
| I generally agree that adults should be able to do what they
| want, but I don't think we have found a way to balance that
| with what right now is effectively one big fraud.
| tolmasky wrote:
| It would be difficult to qualify Bitcoin as pump and dump
| without inadvertently also including many other assets at
| this point (which is perhaps a reasonable position to
| take!). That is to say, the more time passes, the fewer
| properties it exclusively shares with things we
| traditionally consider pump-and-dump. Bitcoin has for
| example now outlasted many startups (12 years and
| counting). Again, many people _do_ think startups and /or
| the VC-ecosystem are a convoluted pump-and-dump, fair
| enough. Some would say that Uber is a massive pump and dump
| scheme that gives out rides below market value as a side-
| effect. I suppose you could argue that Bitcoin is similarly
| a pump-and-dump scheme that allows some people to for
| example donate to the internet archive as a side-effect.
| But if Bitcoin is still around 12 years from now, would we
| feel safe saying it's probably something "else"?
| grawprog wrote:
| How is cryptocurrency different than all the other non-real
| digital goods that have become valuable over the years?
|
| Games like second life and Eve did the digital currency
| thing way before bitcoin. How is a pretend coin you can
| trade for money different than a pretend game currency you
| can trade for money?
|
| Because one is traded on the stock market and increasingly
| accepted in real world transactions?
|
| There was and likely still is, people making livings off
| earning digital video game currency, selling digital assets
| and converting it to real money. Not to mention every
| person that made actual money off mmorpg marketplaces.
|
| Seems like cryptocurrencies just remove the game part and
| cut right to the economic part. With games, it's the people
| creating the currency through their actions and time,
| farming gold, working in Eve, etc. With cryptocurrency it's
| GPUs and stuff...though I guess technically, your GPU's
| doing the work for the game currency too.
|
| The concept doesn't seem to have changed, buy make-believe
| thing that exists only on a computer everybody agrees is
| worth money and the value of said make believe thing
| changes based on how many people have or want the make-
| believe thing.
| NovemberWhiskey wrote:
| In EVE Online, the only permitted flow is as follows: you
| buy subscription time for real money from CCP Games.
| Others can then buy subscription time from you for in-
| game currency. In-game currency can only be spent in-
| game.
|
| It doesn't really seem very similar to cryptocurrency to
| me; could you explain some more about how you think it's
| the same?
| grawprog wrote:
| https://www.playerauctions.com/eve-isk/
|
| That website appears to me to be very much like an
| exchange for trading EVE online ISK for USD.
|
| The average rate seems to be between $42-$45 for 5000
| ISK.
|
| It seems to be a time based currency where its value is
| based on a player's willingness to spend time grinding.
| fsociety wrote:
| I will push back and say that the current wave of hype is
| gambling, not ponzi schemes. Some of it is pump and dump
| but generally there are cryptocurrencies which aren't. The
| gambling aspect came to light with many of the new DeFi
| apps.
|
| DeFi kinda started as decentralized exchanges but seemingly
| changed into apps which allow you to leverage tokens. This
| is like gambling for tech geeks. Probably this will die and
| be replaced by gambling for non-tech savvy individuals.
|
| The more interesting side, for me personally, is powering
| financial assets on the blockchain. There is still work
| that needs to be done here.
|
| I'm particularly worried about how easy theft of tokens can
| be, but I think that is a solvable problem. Perhaps through
| technical means or perhaps through banks holding your
| assets and covering you with something similar to FDIC or
| insurance.
|
| So all-in-all I don't think it's fair to call this one big
| fraud or pump-and-dump schemes. Some are yes but many
| aren't. Like the dotcom bubble many will lose all invested
| money however the general promise and tech will deliver
| something world changing.
| grncdr wrote:
| I think a lot of people find trading crypto assets at least
| as fun as say, slot machines.
| lowbloodsugar wrote:
| Its odd that I can drop a hundred grand at the Venetian,
| but not in a mates start-up.
| tome wrote:
| You can't? In what jurisdiction? I dropped ten grand in a
| mate's (UK) startup a couple of years ago and all we
| needed was an accountant to formalise the transaction and
| issue me a share certificate.
| JumpCrisscross wrote:
| If you buy the case, which I do in part, then the solution
| isn't to prohibit it. It's to tax it.
| cryptonector wrote:
| All economic activity that depends on others is speculation,
| at the end of the day. Every currency is a ponzi scheme of
| sorts.
| throwawayfire wrote:
| Gambling-adjacent reasons are: it's difficult to tax in a
| fair way (what proportion the capital gains due on crypto
| have been paid?), and has potential to be used as a front for
| organised money laundering.
| hervature wrote:
| The problem with governments creating welfare states is that
| other citizens (and the government) become responsible for
| the financial implosion of individuals which incentivizes
| stupid behavior. I don't believe gambling should be banned
| but should taxpayers be liable for the healthcare of someone
| who used their health insurance money to speculate on
| cryptocurrency? This is actually the main division between
| conservatives and liberals (I mean small government vs. big
| government) that conservatives are so bad at articulating.
| Once the government is responsible for the well-being of its
| citizens, it has weird effects like banning cryptocurrency
| because they don't want to be left holding the bag.
| simion314 wrote:
| But you put a tax on gambling then you might have even more
| money if the guy would have spent his money on vacations
| around the world. So put a tax on crypto
| generating/transactions.
| SavantIdiot wrote:
| > healthcare of someone who used their health insurance
| money to speculate on cryptocurrency?
|
| You've got it backwards. You are making health insurance
| profit-driven, when it should be a government service. So
| then there would be no "individual's health insurance
| money" to quibble about.
|
| > Once the government is responsible for the well-being of
| its citizens, it has weird effects like banning
| cryptocurrency
|
| Wow, that's one helluva strawperson argument. Governments
| have always been responsible for the well-being of its
| citizens.
|
| This idea of blaming hypothetical "stupid people" is
| trotted out by libertarians who want to punish the poor for
| dumb behavior, but give the rich a pass for equally-or-more
| dumb behavior that has a 1,000x more negative impact on
| society, simply because rich=smart=superior in their minds.
| smeej wrote:
| You're setting up your own strawperson at the end there.
|
| The kind of libertarian who's excited about Bitcoin is
| the kind that, with Satoshi in Bitcoin's genesis block,
| criticizes the bailout of banks and thinks they should
| have been allowed to fail, because that's what would keep
| them in check and prevent their walking all over regular
| people.
| SavantIdiot wrote:
| That's actually not a strawperson. I didn't set up an
| argument and knock it down. But go ahead and avoid my
| criticism of your point, it speaks volumes.
| hervature wrote:
| I think you thought the post you commented on (mine) made
| that response (I did not), but the only thing that it
| speaks volumes of is your eagerness to personally insult
| the opposing side by insinuating they can't engage in
| constructive debate. In my analogy, I tried to reflect an
| example of a typical decision available to a US citizen
| as that's the main audience here. The argument holds for
| any government service that people in financial ruin
| benefit from. In this case, the most applicable would be:
| should individuals who lose all their money speculating
| be able to file for bankruptcy? Bankruptcy is a social
| benefit that gives people a chance at a restart. Should
| we give that privilege to people who intentionally use it
| as a call option? Perhaps I should have used this
| example, but the other is a real monthly expense for many
| Americans and so I thought fit the narrative better.
|
| And yes, your last comment is a strawman because any
| libertarian who believes in individual choice and
| consequence also believes the same for businesses and
| rich people. You're attacking a group of people who exist
| but that I wouldn't call libertarians.
| mullingitover wrote:
| > The problem with governments creating welfare states is
| that other citizens (and the government) become responsible
| for the financial implosion of individuals which
| incentivizes stupid behavior.
|
| At the same time, allowing extreme wealth inequality
| incentivizes stupid behavior on the part of capital (like
| wasting capital on unproductive speculation, or driving the
| working class foundation of the population to poverty).
| Welfare states put sensible checks on capital, and honestly
| capital should welcome policies that keep the population
| from doing rash things like nationalizing all their assets
| out of desperation.
| UnpossibleJim wrote:
| There is speculative trading in stocks and bonds, but not as
| frequently. It is a choice that a trader can make, though and
| hasn't been regulated away. I have no problem with government
| regulation on Cryptocurrency for speculation if the same laws
| effect the trading of stacks and bonds.
|
| The "green" issue of Crypto mining is a harder regulatory
| issue for our government to get involved in, though. While on
| the one hand, I applaud their pro action, on the other hand,
| the hypocrisy is on a scale almost never seen. A government
| which has simultaneously rolled back environmental
| regulation, wildlife areas and expanded oil pipelines, shale
| extractions, fracking and offshore drilling while continuing
| a war on "terrorism", which is an ideal, not an enemy. A
| forever war, if you will. This is a polluter much bigger than
| crypto miners, so you'll excuse me if I have to take the
| concern about the environmental impact concern from the
| Senate all that seriously...... sorry. Went off the track.
| Either way, there are larger polluters to tackle than Crypto
| that take less control away from people.
| CerealFounder wrote:
| You guys are all dissecting his points like academics. I
| think the real thing is that the environmental piece is a
| strong enough weakness to make an emotional argument to build
| support within the non-hardcore communities with the cloaked
| motivation (as always) being one of control or financial
| power. The no-cryptos are betting on a growing swell of anti-
| anti-environmental ideas in general with this one.
|
| Currency/whatever crypto is, is just a system of trust. Logic
| is likely to have little to do with the downfall if it comes.
| Scrolling through the comments the Crypto-religious right is
| out in full effect and tbh, I understand it. For many people
| they have moved up many brackets of the wealth ladder and
| they probably should reject anyone coming for their system
| with vigor.
|
| I think the downside of the crypto religious complex is going
| to be, that if any of these emotional arguments (coming to
| kill crypto) become mainstream and compelling, the tenor of
| arguments is going to push the crypto and no-crypto sides
| apart cartoonishly (think modern dems and republicans) and
| the choices of resolution will have to be loud and final.
|
| Make no mistake, crypto is much closer to a political
| religious sect than it is a science.
| christiansakai wrote:
| In conclusion, none of the points addressed in this article
| hold strong ground.
| maigret wrote:
| Until the environmental problem is clearly solved, it still
| holds strong.
| api wrote:
| Most cryptocurrency activity is speculation, but so is a huge
| proportion of what happens on Wall St. Are we going to ban
| hedge funds? What about casinos or even worse state-backed
| lotteries?
|
| It's the same sort of hypocrisy as deplatforming Parler.
| While I did not weep for Parler, YouTube and Facebook are the
| largest platforms for alt-right/fascist propaganda. YouTube's
| "rabbit hole algorithm" is by far the most powerful engine of
| indoctrination, and while the most egregious stuff has mostly
| been kicked off the platform it's still full of "soft pill"
| fascist/racist material. I am not sure things like Qanon or
| the alt-right in general would even exist (to such a degree)
| were it not for YouTube.
|
| A ban or tax on proof of work mining is tempting but it would
| just offshore that activity. I suppose you could ban PoW
| cryptocurrencies but there are many alternatives.
|
| This is generally a shitty article.
| louwrentius wrote:
| I think whataboutism is actually the real shitty thing
| here.
|
| Yes, I think there is a lot wrong within 'Wall Street'. But
| those wrongs don't justify the existence of
| cryptocurrencies in any way.
|
| And most of all: it doesn't absolve cryptocurrencies in any
| way of their terrible impact on our world.
|
| Just the facilating of cryprolocker attacks alone are
| enough to justify a ban in my view.
| api wrote:
| It's not whataboutism. It's hypocrisy. It's deeply
| hypocritical to attack cryptocurrency when we have a
| massive parasitic financial industry that does far more
| damage than anything cryptocurrency has ever done.
|
| For just one example, look at how hedge fund and foreign
| capital speculation in housing is making a home
| unaffordable for millions upon millions of people and
| contributing to middle class decline and homelessness.
|
| It's a bit like making pot illegal when hard liquor and
| cigarettes are legal. What it really amounts to is the
| existing parasitic financial industry using the state to
| remove a competitor to its own gambling and destructive
| speculation operation.
| thro7654 wrote:
| Whataboutism _is_ about hypocrisy.
|
| Argument: X is bad because Y. Counter: But Z is also bad
| because Y and I don't hear you saying anything about
| that! Conclusion: So X isn't bad.
|
| E.g. the typical Soviet whataboutism:
|
| Argument: The USSR doesn't respect human rights and
| that's bad. Counter: A u vas negrov linchuyut (but at
| your place, you lynch negroes). I.e. the US doesn't
| respect human rights either. Conclusion: So the USSR
| isn't bad.
|
| The mere presence of Z does not invalidate the argument
| that X is bad because of Y. It's irrelevant, which is why
| tu quoque is just that, a fallacy of relevance.
| api wrote:
| In this case it's about consistency. If marijuana is
| illegal then alcohol should be illegal too. If
| cryptocurrency is illegal than socially harmful property
| speculation, shorting stocks and then trashing companies
| in the press, casinos, state lotteries, and so on should
| also be illegal.
|
| Inconsistency in these kinds of areas just makes a
| mockery of the legal system and encourages corruption.
|
| There are tons and tons of other problems with this
| proposal I didn't get into, such as how cryptocurrency is
| defined. Are we going to start making data structures
| like linked lists of cryptographic hashes illegal? In-
| game virtual currencies? Amusement park tokens tracked in
| a database? Any law would be either overly broad or
| trivially circumventable.
| louwrentius wrote:
| What you may point out is hypocrisy. That hypocrisy still
| doesn't change anything about cryptocurrencies
| themselves.
|
| Real or perceived hypocrisy doesn't absolve
| cryptocurrencies in any way. What they are and what they
| to account for has to stand on itself, on its own.
|
| Two wrongs don't make a right.
|
| You also seem to be a bit disingenuous: cryptographic
| hashes don't boil the ocean. Amusement park tokens idem.
| They aren't used for ransomware.
|
| So this attempt at some kind of slippery slope argument
| isn't really working, if you would ask me.
|
| When money is at stake, logic and reason is the first to
| fly out of the window. Whatever necessary to make the
| grift going will be said.
| agentultra wrote:
| I think part of the problem with believing that "at some
| undetermined point in the future, it will improve," is not a
| compelling argument _against_ turning off crypto-currencies.
| From an emissions perspective Ethereum has been clinging to the
| belief that Proof-of-Stake is better, in theory, and is
| perennially, "just around the corner." In the mean time it has
| been and continues to run on Proof-of-Work and contributes in
| no small part to the environmental impact these crypto-coins
| have.
|
| Internal combustion engines are already really close to their
| peak efficiency vs emissions output and they still contribute a
| huge and growing amount to overall CO2 emissions. We need to
| design cities to curb the need for cars, replace as many as we
| can with electric, and design better, more accessible public
| transportation. Not seek more efficient internal combustion
| engines and promote their use.
|
| Crypto-currencies account for an abysmally small number of
| financial transactions in the world. Literally inconsequential.
| And they chewed up an astounding amount of energy in order to
| process them. To scale that up to a world where _everyone_ buys
| their bread and milk and candy bars with crypto-coins is...
| well not feasible would be the polite way to put it if you
| still understand physics and the laws of thermodynamics.
|
| I think there are plenty of other reasons to ban crypto-
| currencies when we get to regulation and protecting consumers.
|
| It wouldn't take much for the governments of the world to shut
| the whole enterprise down and I think they should.
| purple_ferret wrote:
| There are many problems with Proof of Stake (inflation,
| centralization, etc). Cardano mainnet doesn't even exist yet.
| Smoke and mirrors.
| djschnei wrote:
| Cardano mainnet doesn't exist? What?...
|
| The Mainnet has 2,289 active stake pool operators, which
| comes out to >99% decentralized, with 71.09% of the total ADA
| in circulation being actively staked on those pools
| ($26.83b/$37.7b). It has an incredibly active and healthy
| mainnet...
| kanwisher wrote:
| With no smart contracts or actual usable functionality. Its
| just a chain with staking and nothing useful
| djschnei wrote:
| https://i.redd.it/9v8n8zaugjp61.jpg
|
| Nothing useful is a HUGE stretch - unless only smart
| contracts are 'useful'. The ecosystem is new but growing
| rapidly. Let's circle back to this comment in 1-2 months?
| christiansakai wrote:
| That remains to be seen. Ethereum has their own way of
| solving PoS weakness and Cardano has their own way. You need
| to read more.
| svachalek wrote:
| Inflation and centralization are just as possible on PoW (see
| Binance Smart Chain) and just as easy to avoid on PoS.
|
| Cardano main net has been around a long time. It just doesn't
| support smart contracts yet.
| mantenpanther wrote:
| Hostile and clearly framed article from the first sentence. Could
| not read it further.
| herodotus wrote:
| I am sorry that you did that. I believe that Bitcoin's
| intrinsic energy usage is a big big problem, and I would have
| been interested in a reasoned counter-argument from someone who
| is in favour of Bitcoin or other crypto-currencies. After all,
| I read HN mostly to learn and grow. I especially enjoy
| informative comments on articles and the ensuing debates.
| _trampeltier wrote:
| Of course energy is a problem. But at the same time you would
| to have to ban all sport cars, forbid to heat a building more
| than 20C etc. And not all people live in a "safe" country and
| it's still more easy to transmit cryptos to some countrys
| than use the incompatible way from offical banc transaction.
| artifact_44 wrote:
| Ok. Let's ban capitalism.
| mantenpanther wrote:
| Bitcoins energy usage might be it's most important property
| as an asset. Blatanly discrediting it because of ,,energy
| usage" is the simple route. I prefer to dig deeper for the
| truth. Maybe PoS is part of the solution, but I'm not
| convinced of a purely virtual system without a physical
| anchor.
|
| An overview of counter-argumebtd to the main bitcoin
| criticisms: https://www.lynalden.com/misconceptions-about-
| bitcoin/
|
| Regarding energy usage some arguments are: using stranded
| energy (exists very much), stabilizing energy nets
| (especially with renewables), incentivizing renewable
| research.
| fisf wrote:
| The easiest counter argument to that is that transition to
| proof-of-stake based Crypto should be encouraged.
|
| But the article only makes sweeping statements without much
| depth. .
|
| "Cryptocurrencies disproportionately victimize vulnerable
| people and those in marginalized communities without access
| to traditional investments or financial advisory"
|
| The same could be said about large segments of the
| traditional finance and banking industry. Yet nobody wants a
| blanket ban of this sector.
|
| It is a very low effort article, that has a very clear bias.
| tfang17 wrote:
| Didn't people make the same arguments about the Internet?
| tome wrote:
| They didn't make the argument that the internet was a ponzi
| scheme or that it used energy equivalent to a medium-sized
| country. Did you have some other arguments in mind?
| keiferski wrote:
| The hullabaloo over Bitcoin's environmental cost is a classic
| example of people focusing on _things that are easily visible_
| and being totally oblivious to _ones that are unseen or not
| obvious._ What is the energy cost of the current currency system
| and the political structure that keeps it in use? I'm going to
| guess that it is significantly higher than Bitcoin.
|
| That's not even mentioning Proof of Stake, which will essentially
| solve all of these problems.
| alkonaut wrote:
| Even making that comparison suggests that there is a situation
| in which cryptocurrency is effectively and widely used _as
| currency_ side by side with fiat.
|
| I don't see that ever happening. I don't think governments can
| (or should!) give up that much control over the financial
| system.
|
| And this argument actually reaches back to prove itself: since
| crypto will always be used for speculation and not fill a
| useful role in transactions, all the energy used is effectively
| wasted!
| einpoklum wrote:
| > and the political structure that keeps it in use?
|
| 1. False equivalence, since the environmental concern is about
| the generation of cryptocurrency not its social implications vs
| a crypto-currency-free world.
|
| 2. You've expanded this question so much that it is not
| possible to answer. The political structure that keeps money is
| use is basically the political structure of almost all world
| states, and capitalist/money-based economies. So the cost is
| about 100% of all energy expenditure. What's the alternative?
| You would need to imagine an anti-capitalist revolution
| creating a non-exchange-based economy (so not USSR-style
| either). I happen to think that's a swell idea, but you realize
| there is absolutely no way you can estimate how much less
| energy humanity would use up in such a different reality than
| today's.
| tome wrote:
| > > and the political structure that keeps it in use?
|
| > 1. False equivalence
|
| It's additionally a false equivalence because those political
| structures also keep in place the things you want to buy with
| bitcoin, such as shops, factories, and things you produce
| bitcoin with, such as power stations and computers.
| MrMan wrote:
| And indeed all those structures provide the support system
| for crypto itself. It is not outside the existing system.
| The rhetoric makes it seem like an independent and
| autonomous system but it is part of the existing technical
| and financial system. It will not replace the rest of the
| system, evidenced by recent cooptation by Visa and PayPal,
| the creation of exchanges, taxation and KYC rules. The real
| world exists and crypto is not an escape.
| keiferski wrote:
| I meant more the actual nuts-and-bolts of fiat currency, not
| the entire political structure of capitalism. Obviously this
| is an unanswerable question, but ultimately the point is that
| the current currency system no doubt consumes a huge amount
| of energy. If the predominant currency of the world were a
| Proof of Stake crypto, it seems logical to assume that actual
| energy costs would go way down.
| blululu wrote:
| This feels overly specific. Implementing something like a
| Pigovian tax is standard practice where negative externalities
| are concerned. There is no need for an outright ban if properly
| taxed. There are also much larger negative externalities to
| cryptocurrency than CO2. Ransomware payments are a clear cut
| example that a ban might not even address and are easy to tax.
| ur-whale wrote:
| The level of gripe and sourness in this article is amazing.
|
| He's basically raising the "evil that is crypto" to levels that
| would make you believe that a large number people's lives are
| being actively ruined by Bitcoin.
|
| I wonder how someone can get so angry with something that
| abstract ... I wouldn't be surprised if his agenda wasn't
| motivated by something less than noble.
| DickingAround wrote:
| This article seems to intentionally ignore the core reason for
| cryptocurrencies; escaping inflation and control. The article
| then proposes to use the law to bring those people back within
| the control of fiat and government oversight.
|
| I no longer think the environmental argument is really plausible
| here. Clearly crypto mining is emitting using a lot of power and
| some of that is CO2. But the competition is fiat; backed by
| fighter jets and nukes; literally. How is it that someone can't
| steal your money? The bank makes sure. How is it the bank can be
| sure? The cops protect them. How is it the cops aren't
| overwhelmed? The military protects them. Law and order stands on
| the backs of a lot of stuff and CO2. Bitcoin is an example of one
| little piece of this not needing all that stuff. Instead it's
| protected by this mining fleet. And if you want to contest
| ownership there's no one to invade, no one to attack; the best
| you can do is make a fleet and try to mine. It's a small step in
| the direction of getting away from all these endless wars and
| control. A little step away from needing to point guns at
| eachother to protect our pile of stuff. And this author is saying
| "point guns at them and make them give it up". That's crazy. Just
| leave them alone.
|
| (If you need to point guns to save the environment, do that
| specifically. Carbon tax CO2)
| TezNoble1988 wrote:
| The idea that inflation is some sort of creeping evil that
| needs to be "solved for" is a made up fantasy of cryptocurrency
| zealots and libertarians. There's nothing inherently "wrong" or
| "bad" about inflation when it is controlled and stable, and in
| fact some low level of positive inflation is a good thing.
| Inflation is a bogeyman that was invented by the crypto-
| industrial complex to justify the environmental disaster and
| criminal danger that cryptocurrencies wreak on society.
| nbardy wrote:
| Inflation is a problem when there is no way to beat it and
| it's hidden in stimulus bills that the majority of the
| country is too busy working to pay bills to spend time
| understanding.
|
| Most of my friends can't afford investment in the market. So
| when the stock market goes up that's them losing value on
| their dollar and wages.
|
| Inflation is fine for those who are part of the asset class.
| TezNoble1988 wrote:
| There is very little consensus around whether these
| stimulus bills will create inflationary pressure or not.
| Inflation generally isn't a concern when unemployment is
| high; if anything, short-term inflation may be caused by a
| drop in supply and excess savings caused by COVID, a
| systemic event which would also cause BTC-denominated
| prices to increase if consumer goods were actually priced
| in BTC.
|
| I'm not sure what you mean by, "when the stock market goes
| up that's them losing value on their dollar and wages" ->
| that simply doesn't make sense
| nbardy wrote:
| > that simply doesn't make any sense.
|
| It does you just don't understand yet. Let me try and
| explain.
|
| Inflation measured by the government in CPI is a bad
| metric. It doesn't include ownership in assets which is
| the ability to retire.
|
| We already had inflation if you measure the cost of
| retirement in USD. With the spending package we drove a
| bull run.
|
| The SP500 going up in price is equivalent to the value of
| USD going down for anyone who doesn't own part of the
| market. They have to buy in at higher and higher cost.
|
| Younger generations have been priced out of an ability to
| own and in turn retire. While those who owned assets
| experienced a nice boost this year.
|
| When the cost of retirement goes up the value of USD goes
| down just like anything else.
| simonsarris wrote:
| Back in 2017 I wrote an article about the "backed by fighter
| jets and nukes" point because it seemed by far the most
| intuitive way to reason about it.
|
| https://medium.com/@simon.sarris/the-guns-of-bitcoin-1f77930...
| Fern_Blossom wrote:
| First, I'd like to really understand why people say crypto
| "escapes inflation". The only argument has been the artificial
| scarcity mechanisms built in the currency. Scarcity is a
| seasoning to the concept of value, not the main course. I don't
| know of anyone in economics in the last 100 years that has ever
| pushed forward the idea that scarcity is all you need to create
| value... except for Youtube economic cartoons.
|
| "Fiat currency" isn't backed by violence. It's backed by
| production in goods and/or services. You can see this easily
| play out in command-control economies. The resource rich, like
| Venezuela back in the day, was a prosperous country for a few
| years. Gov controlled oil meant that's how they made money.
| When the price of a barrel of oil is high, they just pump that
| oil, increasing the need of the international community to
| purchase their currency, bringing up the value. When their oil
| wasn't needed due to diversification of supply and the drop in
| price, no one "wants" said currency since the country had
| nothing anyone wanted. Thus, the value goes down and you have
| hyperinflation due to high economic specialization. All the
| military equipment they bought and posturing, which led to a
| hilarious wannabe propaganda-scare video, during the good years
| didn't amount to shit. You really think if Bitcoin magically
| became the almighty currency, war would disappear? I'm serious
| when I say this, quit watching Sesame Street and other
| children's shows. Be an adult. Read a history book. No good
| change will come from praying to unicorns.
|
| On average, less than 1% of a country's population is active
| law enforcement in the western world. It's just a hair over 1%
| in the US according to Bureau of Labor numbers and that
| includes all the admin/support/not-arresting LE as well. Y'all
| need to quit looking underneath your beds and checking your
| closest for the blue boogey man. They do a whole hell of a lot
| more than just "protect the banks". That's what G4S does with
| their tactical muffin tops. At that, here's a good example of
| the difference between what a police officer can do and what a
| sheriff deputy can do: https://www.npr.org/sections/thetwo-
| way/2011/06/06/137002727... This happens more often than you
| think throughout the country. We don't hear about it because
| banks and other financial institutions swiftly put gag clauses
| in settlements. Banks do a fantastic job of teaching you how
| you can't use the justice system in your favor when in reality,
| you have more power than you imagine. Stop watching them
| youtube videos and go to the local library to learn more about
| local laws and procedures.
|
| Contest ownership... yea, still a problem with Bitcoin. Just
| look up "Bitcoin stolen" in your search engine of choice and
| there's article, after article, after article of theft and a
| cold day in hell's chance of retrieving it. There's nothing
| special there on that front. It's a preferred means of trade
| for the black market for a good reason.
|
| On one level, I don't care about the crypto ponzi scheme being
| played out. Let it happen. Madoff tricked a whole hell of a lot
| of people for around 20 years. Good. What ruffles my feathers,
| pushing a political agenda because you want to be rich in
| monopoly money, then use it to buy ice cream. Then throwing a
| fit because the cashier won't accept it. Yea, the amount of
| excess CO2 created by crypto mining is a valid and big problem.
| It's another industrial sized country on the world grid because
| of it. You act like this is some magic cure for "the poors", to
| help distribute wealth and other fantasies. Because there's a
| magic mechanism for a rich cat in USD to not do the same in
| BTC? The same way they garnered wealth in USD, GBP, JPY or EUR
| will do the same thing in any other new currency, making the
| point to the "revolution" null and void. Oh wait, Musk already
| started that. What's that, they found a good way for a loophole
| in being able to issue refunds in USD or BTC according to how
| they see fit depending which is cheaper? Yea, that sweet sweet
| "for the people" currency not going into the hands of the, what
| is he now, 3rd richest? 2nd richest? But I guess that makes him
| a fellow poor too since he's not 1st. Great step forward for
| that great reset. Let me tell ya'.
| louwrentius wrote:
| Thank you for this. I am serious. I wish you would put this
| on a blog somewhere and not let this gem die in de depths of
| H... HN.
| tome wrote:
| > This article seems to intentionally ignore the core reason
| for cryptocurrencies; escaping inflation
|
| I'm extremely confused by this argument that I see again and
| again. If you want to avoid your assets losing value to
| inflation that you can buy assets that are resistant to
| inflation, such as stocks, real estate, land, gold, inflation-
| adjusted bonds ...
|
| I just don't see that cryptocurrencies are particularly useful
| for that. What's the deal here?
| oxymoran wrote:
| A)I don't have $150k+ To just go invest in land or real
| estate that I'm not going to reside in.
|
| B)Are stocks and bonds inflation resistant if they are priced
| in the inflating currency? Not just normal year over year
| inflation but the type of inflation that happens when you
| debase a currency. Regardless, I already own these, the first
| rule of investing is diversification.
|
| C)gold is inflation resistant and tangible so I agree that is
| the best option if you are truly worried about SHTF but it's
| also heavy and more expensive to secure.
|
| Bitcoin, in my opinion, is a hedge on the hegemony of the US
| dollar which I see weakening going forward. The US dollar is
| the global reserve currency thanks to the global oil
| industry. That gives the US a lot of power. But between the
| switch away from oil, the weakening of the dollar, and the
| rise of China the US currency dominance looks to be coming to
| an end. There is no other currency that could act as a global
| reserve currency except China, which would essentially make
| China the worlds superpower. That is where Bitcoin comes in:
| it can be the new global currency instead of China when the
| US dollar loses its place. Gold and paper only has value
| because we imagine that they have value, I don't see how
| Bitcoin is any more or less imaginary.
| intuitionist wrote:
| A share of Weyerhaeuser stock costs around 35 bucks and
| gets you a (modestly levered) claim on forestland, one of
| the most inflation-protected assets in history. A round lot
| costs around 3500. If you prefer hard metals, there are
| highly liquid ETFs that trade in even smaller
| denominations. If you want exposure to these asset classes
| you can mostly get them.
| guenthert wrote:
| > A)I don't have $150k+ To just go invest in land or real
| estate that I'm not going to reside in.
|
| Then I doubt that inflation should be much of a concern to
| you. Just make sure that other income you clearly depend on
| is adjusted to inflation.
| kgwgk wrote:
| > B)Are stocks and bonds inflation resistant if they are
| priced in the inflating currency?
|
| The parent comment said "inflation-adjusted bonds". If you
| don't know what that means, look it up.
|
| As for stocks, they are priced in an inflating currency in
| the same way that real estate or dogecoin are priced in an
| inflating currency.
| tome wrote:
| A) REITs exist
| https://en.wikipedia.org/wiki/Real_estate_investment_trust
|
| B) Yes, stocks are not directly affected by the currency in
| which they are nominally denominated! Yes, inflation-
| adjusted bonds are not affected by inflation in the
| currency in which they are denominated, assuming you
| believe RPI to be a good measure of inflation.
|
| C) You can buy gold without having to store it yourself!
| For example SGLN or https://www.bullionvault.com/ (no
| connection other than being a happy customer)
|
| > Bitcoin, in my opinion, is a hedge on the hegemony of the
| US dollar which I see weakening going forward
|
| If you really wanted a hedge on the US dollar you could buy
| oil, gold, JPY, EUR, CHF, GBP. Buying the hugely volatile
| asset called bitcoin doesn't seem like a good way to hedge
| USD.
|
| > Gold and paper only has value because we imagine that
| they have value
|
| No, gold has value because of demand in industrial process
| and jewellry. "Paper" has value because governments can
| demand you to pay it to them in return for participating in
| economic activity within their borders.
|
| If these arguments are _really_ what bitcoin supporters
| believe about the value of bitcoin then the whole bitcoin
| enterprise is in for a big shock.
| gher-shyu3i wrote:
| > A) REITs exist https://en.wikipedia.org/wiki/Real_estat
| e_investment_trust
|
| Are there REITs that don't deal with interest?
| tome wrote:
| I don't know what you mean.
| tgsovlerkhgsel wrote:
| They're very similar to gold in this regard. They have a
| value because people think they have a value. They're a lot
| easier to store, transport and transact with than gold bars
| though.
|
| And I have my doubts whether Bitcoin mining is more
| destructive than gold mining. It's possible (it's a LOT of
| energy), but gold mining is also pretty nasty.
| webinvest wrote:
| Bitcoin mining is not destructive. The production of
| electricity via Coal, natural gas, oil, and biomass is. It
| makes more sense to ban the direct source of these carbon
| dioxide emissions than the downstream users of the
| electricity. Cryptocurrency mining is very compatible with
| renewable energy sources because it can be mined from
| anywhere, the energy usage is very predictable, and the
| mining can tolerate rare occurrences of loosing power. The
| publicly traded company RIOT sources 100% of it's bitcoin
| mining energy from renewable sources.
|
| Also, as a comparison, nearly all the gold mining machinery
| runs on gasoline.
| ahallock wrote:
| There seems to be an inverse correlation between the value of
| BTC and DXY.
| rybosworld wrote:
| I think the major point is that Bitcoin seems to benefit
| disproportionately from inflation. It may be the case that
| it's the single best hedge against inflation. But yes, there
| are lot's of things that protect against inflation.
| tome wrote:
| > Bitcoin seems to benefit disproportionately from
| inflation
|
| Does it? On what basis would one know that? Why should it
| benefit from inflation more than gold, say?
| rybosworld wrote:
| My argument would be it's the only thing on that list of
| inflation hedges that has a fixed supply.
|
| Lot's of gold is mined each year. Houses are built. Stock
| is issued, etc. Bitcoin has a well-established upper
| limit.
| tome wrote:
| > [Bitcoin is] the only thing on that list of inflation
| hedges that has a fixed supply.
|
| Aha! That brings me to my next question. In what sense
| does bitcoin actually have a fixed supply? Sure, a loose
| coalition of people agree for it to have a fixed supply
| at the moment, but if enough of the miners, core
| developers, etc. agree they can change the rules
| arbitrarily, viz. hard forks.
|
| Why should we believe that bitcoin _really_ has a fixed
| supply, just because everyone has roughly stuck to the
| rules so far?
| ur-whale wrote:
| Every single thing you said applies to the greenback.
|
| Therein lies your answer: if a large enough number of
| people place faith into something, it "takes".
| rybosworld wrote:
| That's mostly a matter of economic incentives. It's
| technically possible but it's similar to the idea of a
| rich person lighting a pile of money on fire.
|
| If a proposal to raise the cap is introduced, price would
| react negatively, hurting miners, and making it more
| (relatively) expensive to mine. It's unlikely there is
| any scenario where it is economically feasible to try to
| raise the supply cap.
| notahacker wrote:
| A [relative] lack of block rewards to earn hurts miners
| too...
| tome wrote:
| Can you point me to some more thorough analysis of your
| claim? I've heard such things before but I've never seen
| it modelled and worked through. Until I see such an
| analysis I can't help thinking the argument is "we've
| thought about it a bit and it seems like it will be OK".
| smeej wrote:
| Nobody knows how much gold is in the earth, much less in
| not-so-distant asteroids.
|
| The supply of gold might, technically, be "fixed" in the
| sense that no more of it is being _created,_ but more of
| it could be discovered at any time.
|
| Bitcoin's supply is mathematically demonstrably fixed.
| Nobody's ever going to discover a new vein of Bitcoin in
| the earth's crust, or on an asteroid.
| caeril wrote:
| We know to a pretty good approximation how much gold is
| in the earth, and where it is. That's not even a minor
| consideration for mining geologists and engineers
| anymore.
|
| The primary limitation as of now is ore quality, which
| directly dictates how much energy is required for
| smelting, and we have a good idea of the decline curve
| thereof. We know roughly when it will be economically
| profitable to extract the stuff from seawater, which
| isn't too far off. In the end, it's a question of energy.
| Very similar to proof-of-work tokens like BTC, in that
| regard.
| smeej wrote:
| We certainly think we know. But we've thought an awful
| lot of things as a human species that turned out not to
| be true.
|
| Gold is presumably scarce. Bitcoin is _provably_ scarce.
| firmnoodle wrote:
| The argument is that Bitcoin not only has a provable
| total fixed supply & rate of future supply and that it
| has more utility than gold because it's easier to
| transfer and harder to fake.
| ur-whale wrote:
| > harder to fake
|
| Also harder to take.
| aarongray wrote:
| Real estate has clearly been shown to not be resistant to
| inflation over the past year.
| tome wrote:
| Could you elaborate?
| aarongray wrote:
| Home prices in my area are up around 15% over the past
| year.
| tome wrote:
| I'm confused. That suggests that real estate is very much
| resistant to inflation.
| aarongray wrote:
| Haha I was wrong, I see what you were saying now. I
| thought you were saying that resistance == unaffected.
| But you were saying that the price of real estate rises
| when inflation occurs, so buy it before inflation
| happens. My bad. :)
| Kranar wrote:
| That makes real estate investments a good defense against
| inflation. A good defense against inflation are assets
| whose price increases at a rate higher than the rate of
| inflation. A bad defense would be an asset whose price
| increases at a rate lower than that of inflation.
| Hydraulix989 wrote:
| Do you really believe real estate should be an
| investment, rather than a place to live?
| Kranar wrote:
| I absolutely do think it should be an investment and I
| think treating housing like an investment has
| substantially increased the quality of housing. A great
| deal of advances in materials, construction, electrical
| work, plumbing, you name it... is because housing is
| treated like an investment and people are willing to
| spend money to keep their asset in top shape.
|
| Furthermore I believe that investing in real estate
| promotes those asset owners to contribute to the
| neighborhoods they've invested in. When you invest in
| something you are participating in its growth and you're
| attempting to align your well being with the well being
| of the asset you're invested in. That's a great thing.
|
| The downside to real estate investment is that it could
| prevent future people from participation. The solution to
| that isn't to stop treating real estate as an investment,
| it's to allow more opportunities for building and to
| incentivize people to build entirely new communities
| instead of pigeon holing everyone into a handful of
| existing mega cities.
| guenthert wrote:
| > I absolutely do think it should be an investment
|
| I think this is treated differently in different
| cultures. In Germany, while there is a real-estate as
| investment market, many people don't (expect to) move
| much during their lifetime. They buy their home
| ('Eigenheim') essentially for life (sans the tail end in
| a nursing home). Still many put a lot of time and money
| into those houses they don't expect to sell. It's a
| quality-of-life thing (and some bragging rights). You can
| (and some do) spend easily a fortune on a kitchen alone.
| You even find more than one kind of light switch there.
|
| So I'm not quite convinced that real-estate as investment
| is necessary to drive housing quality.
| Kranar wrote:
| An investment isn't marked by the expectation to rapidly
| sell. I have many assets that I've held for years and
| intend to hold for the rest of my life, they are still
| investments.
|
| I am not an expert on the German real-estate market, but
| the first search results on Google indicate that Germany
| has a very active real-estate investment market and that
| home ownership in Germany is among the lowest in the
| world, the majority of Germans rent their home.
|
| Either those people are renting from the government, or
| they are renting from a private landlord, either an
| individual or a corporation. If they are renting from a
| private landlord, and once again my very cursory research
| indicates 96.7% of housing is privately owned, then
| that's a big sign that the landlord owns the property for
| the purpose of deriving an income from it. Given that 56%
| of homes in Germany are rented out (one of the highest
| rates in the world), that indicates that at a minimum,
| 56% of homes in Germany satisfy the textbook definition
| of being investment properties.
| frockington1 wrote:
| Why not be both?
| lvs wrote:
| I'm not sure anyone in this thread knows what inflation
| is. If the cost of housing rises, that is inflationary
| against all other fungible assets that could be used to
| purchase housing. That is, one requires a larger quantity
| of all assets -- dollars, crypto, stocks, bodily fluids,
| etc. -- to acquire a roof over one's head. Only if the
| cost to purchase housing is somehow lower by holding
| value in a particular asset could you get ahead of the
| inflationary pressure caused by rising housing prices.
| Too many cryptonuts think inflation just means "money
| supply." That is play time economics.
| Kranar wrote:
| Inflation as it's being used in this conversation and in
| general is measured against a specific currency. I mean
| you could, I suppose, use the term to measure the cost of
| a specific asset against a basket of other assets, but
| that is not really standard and if you wish to use it
| that way you should qualify your usage as such to avoid
| confusion.
|
| Using your approach you'd end up saying something like
| Apple is experiencing inflation because its price has
| gone up more against housing, oil, General Electric
| stock. Yeah, that could be done, but it's not the way the
| word is being used in this conversation. We're talking
| about inflation of US dollars against a basket of goods
| as measured by the CPI as opposed to talking about an
| increase in housing costs relative to Apple stock.
| lvs wrote:
| The only thing you said that is true is in the last
| sentence. The basket of goods affecting inflation is
| heavily influenced by the cost of housing. All you care
| about when holding a store of value is how much of that
| denominated fungible asset can be exchanged for things
| you need to live.
| Kranar wrote:
| Ah, so according to you my first sentence is false then?
| Let's see what a simple Google search yields:
|
| >Inflation is the decrease in the purchasing power of a
| currency.
|
| >Inflation is the decline of purchasing power of a given
| currency over time.
|
| >Inflation is a persistent rise in the average level of
| prices over time in a given currency.
|
| > Inflation occurs when prices rise, decreasing the
| purchasing power of your dollars.
|
| Those are literally the top search results for
| "inflation" when I Google the term. Now certainly your
| Google search for that term may differ from mine and you
| are certainly welcome to share your findings. Until then
| I will rest satisfied that my first sentence expressing
| that inflation is almost always understood to be with
| respect to a currency is also true.
| lvs wrote:
| I think you're definitely learning more just reading
| Google. Enjoy!
| White_Wolf wrote:
| actually 15% sounds about right and normally would be
| higher this time because of all the printed money. I would
| of expected something like 35-45%.
|
| Resistant to inflation means that the price increases
| roughly with the same % as inflation.
| pingpongchef wrote:
| Stocks and bonds are still coupled to fiat currencies and
| will be directly impacted by their perceived deficiencies
| when compared to crypto.
|
| Hard assets like real estate, land, gold don't fit that bill,
| but each of their own tradeoffs. Right now cryptocurrencies
| are making gains against those hard assets so they are more
| attractive. An investor may wish to diversify among some or
| all of these options.
| vkou wrote:
| Stocks are not coupled to fiat, fiat is just the common
| medium of exchange for them. Nobody will stop me from
| trading my GOOG share for a goat, or a baseball card, if I
| so choose.
|
| Stocks are coupled to the productive output of the firm the
| stock is issued by, which is coupled to it's real world
| productivity - which, again, for convenience is measured in
| a fiat currency.
| JumpCrisscross wrote:
| > _Nobody will stop me from trading my GOOG share for a
| goat, or a baseball card, if I so choose._
|
| Nitpick, but the SEC would object to that. That said,
| American securities regulation has a unique philosophy,
| _i.e._ every securities trade must be registered and
| follow a narrow book of rules unless specifically
| exempted.
|
| Your broader point, of financial and real assets being
| proven hedges against inflation, stands.
| tome wrote:
| The transaction must be denominated in dollars, but must
| dollars actually change hands? I don't think so.
| Companies buy other companies with stock issues all the
| time.
| JumpCrisscross wrote:
| > _transaction must be denominated in dollars, but must
| dollars actually change hands?_
|
| I believe it's the other way around. It can be
| denominated in anything, but trading _e.g._ the deed to
| your house for some Apple stock is a no no. (Doesn 't
| have to be U.S. dollars, though.)
| [deleted]
| tome wrote:
| No, neither inflation-adjusted bonds nor stocks are
| "coupled" to fiat currencies. You may argue that RPI is not
| a true measure of inflation. OK, sure. You may argue it's
| hard to persuade people to buy a hamburger for $2 when it
| was $1 last year. But the same applies to cryptocurrency
| (when it's not in a mass speculative bubble)!
| abakker wrote:
| I never understand the counter-inflation argument...most
| economists understand inflation is something to be managed, but
| it is far from proven that target inflation is bad. There are
| many useful economic properties of inflation.
|
| Meanwhile, Bitcoin has undergone such massive speculative
| appreciation that everything around it has deflated in
| comparison. As a result, bitcoin is spectacularly less useful
| than it would have been. It is no longer useful as a method of
| transaction and really only a ledger and store of value.
|
| this inflation argument is specious. It just isn't the problem
| that demanded an unregulated anonymous deflationary currency.
| seibelj wrote:
| It has never been proven that deflation is bad - Keynesians
| claim this is the worst thing in the world, but I still have
| never had it explained to me coherently way deflation is
| inherently a bad thing.
| uhhhhhhhhhhhhhh wrote:
| As the universe expands, so too must our money supply.
| whytaka wrote:
| Because deflation means less jobs and less jobs means less
| people being able to buy food, and starving people are
| dangerous.
|
| Deflation seems good if you're sitting on wealth. You'd be
| happy to wait things out just buying the basics and let the
| economy kind of reset from necessities upwards. But lots of
| other people are starving by that point.
| jl2718 wrote:
| No. Deflation slaughters the wealthy in the markets. No
| need for the uprising.
|
| It's great for anybody that can provide a useful service
| for cash. Especially farmers. Farmers suffered all
| through the 1920s because they mortgaged their land
| during WW1 to massively increase supply, and then the
| demand disappeared. The problem, they said was not
| starving people, but that food was too cheap! So the big
| indebted farms banded together to stop food shipments
| from family farms, and the government responded by giving
| the big farms a handout.
|
| So no, deflation doesn't mean starving people. I talked
| to a bunch of old people about this. Work was rare, but
| you only needed a few unskilled labor hours a week to pay
| for food and housing, and that was always available. They
| said life was pretty good if you didn't have a mortgage.
|
| But really we're talking about lack of inflation here.
| Not deflation. Deflation only and necessarily must occur
| with inflation preceding it.
| seibelj wrote:
| > _Because deflation means less jobs_
|
| Source?
| whytaka wrote:
| Deflation incentivizes delaying purchases. Less purchases
| means less revenue. Less revenue means smaller budgets
| for employed staff.
| seibelj wrote:
| That's your opinion - I don't see any source. My opinion
| is that it doesn't cause less jobs - I think it would
| eventually cause more sustainable jobs as malinvestment
| is removed from the economy.
| baq wrote:
| Deflationary crises were common before the invention of
| the central bank and fiat currencies. Instead of
| believing go read some history.
| seibelj wrote:
| The historical incidents of deflation are insignificant
| and very few. The incidents of hyperinflation are common,
| and incidents of high inflation are guaranteed with fiat
| currencies with very few exceptions.
| notahacker wrote:
| Deflation by definition implies means that stuff will be
| worth less in future than it is now.
|
| This is bad for investors and producers spending money now
| in the hope of earning more money in future.
|
| On the other hand, simply holding onto cash is risk free,
| and that cash will have increased purchasing power in
| future (at the expense of the producers forced into
| offering lower prices to get money circulating again)
|
| An economic system which deters investment, production and
| consumption but rewards inactivity is not a healthy one.
| seibelj wrote:
| On the contrary, inflation forces you to buy products and
| invest in things you don't necessarily need, in order to
| escape the intentional destruction of your wealth. In a
| world where we are trying to avoid mindless consumption,
| inflation encourages that.
|
| Deflation doesn't discourage investment and consumption.
| You still need to eat, have shelter, and pursue
| happiness. It increases the bar at which you will part
| with your money, as merely holding it has a high level of
| return. This is a superior system to me.
| notahacker wrote:
| > Deflation doesn't discourage investment and
| consumption...it increases the bar at which you will part
| with your money
|
| Euphemistically rephrasing something is not a refutation.
| Inflation does not make investment decisions "mindless",
| but deflation does make the average risk adjusted return
| on an investment negative.
|
| > It increases the bar at which you will part with your
| money, as merely holding it has a high level of return.
| This is a superior system to me.
|
| The "high level of return" is at the expense of people
| who are _not_ freeloading, who are forced to create this
| return for others by making more stuff for less money.
| Why is it superior for the monetary system to be designed
| to reward those who put in no effort and take no risks at
| the expense of those who do?
| seibelj wrote:
| I am philosophically opposed to a system where by
| intentional design, everyone's money is debased
| continuously. It's weird and immoral. You are forcing
| everyone to be a mini-hedge fund manager, or hire someone
| else to be one for them, to avoid the government-decision
| of destroying your wealth. It's just stupid.
|
| You can have an economy with a single dollar, if it can
| split far enough. Printing new money isn't increasing the
| total amount of wealth in the world. It is
| redistribution.
| [deleted]
| nradov wrote:
| The fears over deflation are mostly just hand waving
| without much support from real world data. As a prime
| example consider computers. How much computing capacity
| could you purchase for $1000 in 2001 versus today? The
| deflation in that market has been huge, and yet customers
| keep buying new computers.
| abakker wrote:
| the Keynesian wisdom was that Inflation is good for
| borrowers and that deflation is good for lenders. Most
| governments are managing for borrowers since borrowers tend
| to be investing and it has been a long-held economic axiom
| that investment is good.
|
| Deflation decreases the value of work you have already
| done.
| seoaeu wrote:
| Deflation can be devastating to those in debt. If you take
| out a loan for a house or a tractor, then subsequently
| discovering that you have to pay back substantially more
| than you borrowed (before even factoring in interest!)
| could be quite a shock.
|
| To give a simplified example, if a farmer takes out a $50k
| loan, then at current prices they might be thinking that
| can be repaid by selling 10,000 bushels of produce at
| $5/bushel. However, if there is subsequently 20% deflation,
| then the price would fall to $4/bushel and the farmer would
| all of a sudden find they have to sell an additional 2500
| bushels to get out of debt. If they can't, they risk losing
| everything to foreclosure.
| seibelj wrote:
| Exactly - in a deflationary world debt would be far less
| common. There would be much wider and typical use of
| equity, and innovations around equity to make it as
| common as debt is today.
| karpierz wrote:
| If your currency deflates, that means a dollar today is
| worth less than a dollar tomorrow. When you invest money
| (via loans or buying equity), you trade currency for
| tangible assets, like stocks or capital.
|
| In order for the investment to make sense, the growth on
| the asset needs to be larger than the growth of the value
| of the money, plus risk. So in a deflationary currency,
| loan interest rates must be higher to be worth it. If loan
| interest rates are higher, then the cost of doing business
| increases. If the cost of doing business grows, the price
| of goods to increases. And when the price of goods
| increases, this causes the amount of goods sold to drop.
| This causes the income of the business to drop. Which
| increases the risk of investment, causing interest rates to
| go up.
|
| This cycle continues until everyone is holding on to their
| cash, and no one is spending. The way to break the cycle is
| to have cash start to lose value, or inflate. Then the
| interest rates drop, and people start to spend their money.
|
| Another way to think about it is:
|
| Say it costs 1.00$ to make a loaf of bread in 2020. By
| 2030, there's a robot that can make a loaf of bread for
| 0.10$ in 2020 dollars. So because society has become more
| productive in those 10 years, the work you did in 2020 is
| now worth 0.10$ 2020 dollars. So we can think of a dollar
| as representing the cost of goods, at the time that you did
| it. So if you make 1$ worth of bread in 2020, it should be
| able to buy the same amount of bread in the future. So we
| inflate the currency 10x, so bread still costs for 1$ in
| 2030, but now there's 10x the amount of bread to go around,
| and people make 10x the salary, so for people who are
| currently making money, bread is 10x cheaper.
|
| Now, you still want some inflation on top of this, since
| you want to push people away from sitting on money and
| towards putting that money to productive use. But that's
| the core rationale.
| ablekh wrote:
| > The way to break the cycle is to have cash start to
| lose value, or inflate. Then the interest rates drop, and
| people start to spend their money.
|
| If people's money starts losing value, the last thing
| they would do is to be concerned with interest rates.
| With less valuable money, people would simply be able to
| afford a smaller consumption basket and, thus, spending
| will stay flat & consumption will decrease.
|
| > ... people make 10x the salary ...
|
| Where did this come from? Just because the productivity
| would increase 10x / cost would decrease 10x, it does not
| mean that _workers_ would receive 100% of the relevant
| benefits. Most likely, 90%, if not more, of those would
| be routed to business owners (and robots ' owners, if the
| machines are leased instead of bought).
| karpierz wrote:
| > If people's money starts losing value, the last thing
| they would do is to be concerned with interest rates.
| With less valuable money, people would simply be able to
| afford a smaller consumption basket and, thus, spending
| will stay flat & consumption will decrease.
|
| If your money starts losing value, do you A) put it under
| the mattress or B) trade it for things that you can
| either use now or that retain/grow their value in the
| future?
|
| Now, if you're talking about erosion of wages over,
| that's less of an issue of inflation, and more an issue
| of the power dynamic between owners of capital and owners
| of labour.
|
| > Where did this come from? Just because the productivity
| would increase 10x / cost would decrease 10x, it does not
| mean that workers would receive 100% of the relevant
| benefits. Most likely, 90%, if not more, of those would
| be routed to business owners (and robots' owners, if the
| machines are leased instead of bought).
|
| Sorry, I understand the confusion given I used the term
| 'salary'. I should have said something along the lines of
| 'value' or 'goods'. The split between workers and owners
| depends on the surrounding conditions.
|
| The point is that dollars are tokens that represent goods
| produced, at the time they were produced. Not how much
| energy or effort went into those goods.
| jl2718 wrote:
| No. It's worth $10 because you saved your (non-
| inflationary) money. And you spent the last 10 years
| making a bread robot instead of working in the financial
| sector.
|
| And how is 'investing' a productive use of capital? In
| deflationary regime, business is about cash flow.
| Inflationary regime investments are all speculation, and
| everybody has to play the game.
|
| This Keynesian argument comes from a nihilistic disregard
| for social structures, the environment, and future
| generations. Look him up. "In the long run, we'll all be
| dead" - Keynes
| karpierz wrote:
| Investing is a productive use of cash. Cash is a token
| that represents the goods produced to earn it. You can
| redeem it for goods, or lend it to someone if they can
| make better use of it. If they can make better use of it
| now, you make a deal that they'll give you more of these
| tokens later.
|
| If you hold onto cash, it does nothing. If you invest it,
| either directly, or by giving it to another entity to
| invest on your behalf (IE, a chequeing account at a bank
| or mutual fund), it allows someone else to make use of
| it, and in exchange, you will be repaid with more cash in
| the future.
| noahtallen wrote:
| If in a deflationary environment people hold onto their
| money, then there will be less spending. That means less
| business income. That means small business close, and big
| businesses hire less people. That means people get less
| money, which leads to less spending, etc.
|
| If we want to have something like UBI to take care of
| income instead of work, that still comes from tax
| dollars, which relies on economic activity (capital gains
| from investment, income tax, sales tax, etc).
|
| In other words, less economic activity has specific
| impact on real world people and how much money they can
| get. It's not just about investing, not just about
| billionaires.
| atwebb wrote:
| Things brings up a side point I can't quite understand.
|
| How does the price of BTC, which is almost infinitely
| divisible, affect usage?
|
| I see comments like "We're early, price can still rise, etc".
| Outside of a store of value any usage / institutional use for
| transactions wouldn't matter right? The BTC is a proxy for
| the money / collateral on the sides.
|
| If I buy a hamburger with BTC:
|
| If it is settled in BTC then the burger price would adjust
| often.
|
| If it is settled in anything else, I just adjust the sat /
| slice of BTC I use.
|
| Am I missing something? Outside of a store of value.
| dia80 wrote:
| Deflation. The price of the burger in BTC has largely been
| falling. Why spend your appreciating* bitcoins when they
| will bu worth more tomorrow. If the price is stable this
| effect goes away and you might as well spend them.
|
| * Who knows if this will continue
| greycol wrote:
| Because to complete a bitcoin transaction it needs to be
| accepted on the block chain.
|
| That incurs a relatively high flat fee (somewhere between
| $5-$50 dollars in recent times).
|
| It doesn't make sense to pay this fee for small amounts
| (though is great for large amounts).
|
| You can get around this by using exchanges and the
| equivalent of credit cards where multiple transactions are
| rolled up into one wallet to wallet transaction. This comes
| at the expense of volatility or if your bullish it comes at
| the expense of having to float a growing bitcoin reserve.
|
| This is not an option for a lot of businesses, basically
| you need a 3rd party provider for it to make sense for
| these businesses and realistically that means they're
| getting cash value at time of trade and it's the provider
| that is taking on the volatility risk/reward of waiting to
| trade there bitcoin.
| caeril wrote:
| > it is far from proven that target inflation is bad
|
| Target inflation is specifically intended to promote
| consumption. Consumption, particularly in the form of atoms,
| not bits, is approximately 90% correlated with greenhouse gas
| emissions, despite all our efforts to roll out renewables.
|
| Setting the "inflation is good" argument alongside an article
| decrying the climate impact of inflation-resistant currencies
| is . . . well, it's an interesting take.
|
| Unless and until we are manufacturing/growing and
| transporting consumptive goods via renewable and sustainable
| means, promoting inflation is most certainly contrary to
| climate stability.
| pydry wrote:
| >Target inflation is specifically intended to promote
| consumption.
|
| No, it's intended to erode debt. Inflation is effectively a
| transfer of wealth from creditor to debtor.
| api wrote:
| It does do that, but the primary purpose is to push
| _investment_. To protect money from inflation you have to
| put it to work. Wealth is a verb, not a noun.
| dnautics wrote:
| No, it's a transfer of wealth from saver to debtor,
| reminding you that the biggest debtors are also
| creditors.
| nradov wrote:
| No that's not how it works in the typical case. Lenders
| set their interest rates based on expected future
| inflation rates over the term of the loan. Debts only
| really get eroded when interest rates are fixed and
| actual inflation greatly outpaces expected inflation.
| Like in the hyper inflation that occurred in Zimbabwe,
| Venezuela, Serbia, etc.
| pydry wrote:
| Interest rates for most debts are fixed. They are
| determined by supply and demand, much like any other
| price.
| murftown wrote:
| Sure, but what debt does the average person own which is
| eroded? The money in their bank account.
| abakker wrote:
| This is valid, but not quite the same. Inflation encourages
| consumption of Goods. Bitcoin encourages the consumption of
| goods too. To just maintain bitcoin takes a lot of energy.
| It is a bigger stretch to blame environmental degradation
| on the math of inflation than it is to look at the direct
| environmental costs of actually maintaining the bitcoin
| network.
|
| inflation encourages investment in renewables. the
| deflationary nature of bitcoin appreciation means owners of
| bitcoin are going to defer current investment in renewables
| because the future value of bitcoin is greater than the
| present value of clean energy.
| webinvest wrote:
| Inflation has been encouraging investment in oil and gas
| companies. Just look at the stock market returns by
| sector since Jan 2021 and see which one stands out! >.>
|
| Investors like oil & gas because has a low enough Price
| to EPS ratio to feel like an undervalued safe haven and
| it still pays dividends like nothing else.
|
| Don't forget: every $100 invested in bitcoin is $100 of
| bitcoin sold. There is always somebody on the sell-side.
| When they receive the money, they may also do productive
| (likely technology-based) work with it.
| quickthrower2 wrote:
| If we are Saying fiat is backed by fighter jets then Bitcoin is
| backed by selling dangerous fake MDMA. That's if we are getting
| into that way of arguing which hopefully we are not.
| rybosworld wrote:
| That's really not a solid argument. Bitcoin doesn't depend on
| drugs to have value, anymore than the US dollar does.
| bayesian_horse wrote:
| Bitcoin does seem to depend to a large degree on money
| laundering and speculation on money laundering.
|
| You might not like it, but that is definitely the reality.
| Other kinds of currency and investment are a few times more
| useful as long as you are doing legitimate business.
| quickthrower2 wrote:
| The Bitcoin network could happy live without those
| things, as could trade, but price action depends on them.
|
| For example the 10000 BTC pizza was one of the early
| purchases. If BTC stayed at 0.1c then you could still use
| it and it was used.
|
| Caveat to this is now the mining infra means that
| returning to 1c coins would kill Bitcoin as a secure
| network since no one would mine for profit - the only
| reason to mine is the 51% attack
| thirtythree wrote:
| Source?
| Kranar wrote:
| If you're being serious, the safest drugs were the ones sold
| online using Bitcoin. The Silk Road was actually an
| unbelievably reliable and safe way to acquire drugs. A system
| for rating vendors and reporting issues, incredibly
| competitive market that put pressure on vendors along with
| delivery right to your home or the closest post office by the
| USPS instead of having to either meet a dealer in a sketchy
| part of town or have them come deliver it to you themselves.
| SkyBelow wrote:
| Exactly what bitcoin is backed by is something of a mystery
| for economist to debate. Much of it is people speculating,
| but I don't see anything unreasonable with saying much of the
| value, at least pre-speculation, is from its use to carry out
| illegal transactions. There is some use in other areas so I
| wouldn't say it was ever entirely the case, but I don't see
| what's wrong with arguing it was a major factor and is still
| somewhat of a factor. I do expect between speculation and alt
| coins better made for hiding activity it is a small and
| shrinking factor now, but I could be wrong.
| wk_end wrote:
| I'm not sure if there's a good way to measure how much CO2 is
| used to enforce fiat, but I very strongly suspect that it's
| nowhere near as much as Bitcoin requires per economic unit or
| whatever. Bitcoin's already using several country's worth of
| CO2 and it's still (compared to fiat) very fringe.
|
| Also bear in mind that much of that CO2 generated by the force
| you're describing, aside from the people guarding the banks
| directly, is amortized across all the other things that force
| guards. Even if fiat were replaced by Bitcoin overnight almost
| all of it would still need to be around.
| beiller wrote:
| Bitcoin doesn't use several countries worth of CO2. It has
| been "calculated" that "cryptocurrency" uses as much
| electricity as a small country. But that is not Bitcoin.
| Bitcoin does not use GPUs to mine. They use specialized chips
| which are far more efficient than GPUs. Etherium is the
| currency burning all the electricity. Also, you are
| conflating CO2 with electricity. Which is not correct in my
| opinion because electricy can generated via nuclear, wind and
| solar. In fact,any miners migrate to those power generation
| modes because it's cheaper for them. Electricity price is
| part of the ROI of mining.
| thatguy0900 wrote:
| What's stopping a group of people from abducting you and
| beating you for your bitcoin or breaking into your house when
| your not home to find and take your wallet? Those same police.
| That argument doesn't really hold up, it's not like someone
| can't force you to give them your bitcoins
| 6gvONxR4sf7o wrote:
| > But the competition is fiat; backed by fighter jets and
| nukes; literally.
|
| I don't like this meme. Fiat currency is backed by an entire
| democracy that includes a military, but the key piece here
| isn't the military, it's the democracy. Despite all the
| problems in the US and our economic system, the folks in charge
| of the currency generally have the right mandate (stable
| employment and stable prices).
| redisman wrote:
| Bitcoin also runs on infrastructure that is backed by the
| exact same forces. Networks, electricity, the computers. You
| couldn't have Bitcoin if those resources weren't protected by
| your government.
|
| Otherwise I can for example find the top 100 largest Bitcoin
| miners and walk up to their door with guns and demand all
| their Bitcoins or I'll blow up the mines.
| andreilys wrote:
| _And if you want to contest ownership there 's no one to
| invade, no one to attack; the best you can do is make a fleet
| and try to mine_
|
| No one except for the owners of major BTC mining operations.
|
| If a state actor, such as China, was motivated enough to
| identify, capture and coerce these miners it would be pretty
| easy to perform a 51% attack given that China accounts for
| around 65% of all bitcoin mining globally.
| dnautics wrote:
| "pretty easy"? Exactly how do you Envision this attack going
| down, step by step?
| blake1 wrote:
| Government agents show up at the data center and confiscate
| the servers in the mining pool. The coerce the owners into
| turning over the login credentials.
|
| Or they just deploy their own mining pool.
|
| Or the just tax all of their citizens' cryptos.
|
| They have lots of options, since they have the power of the
| state behind them.
| c0achmcguirk wrote:
| That's an awful lot of work to perform a double-spend.
| Whoopty doo.
| dnautics wrote:
| Why wouldn't the network soft fork?
| hudon wrote:
| If stakeholders can manipulate the network to ignore a
| chain with more work, you've kind of undermined the whole
| proof-of-work thing and conceded that Bitcoin is
| ultimately subject to politics just like any other
| financial system.
| tubbyjr wrote:
| Semantics, semantics, semantics, that's all your
| arguments are.
|
| Soft and hard forks are a defensive mechanism against 51%
| attacks, essentially making them an always losing
| proposition outside of the immediate-term where the
| attack is occuring, because the attacker has to expend so
| much money, and then a simple code change could revert
| it, which would likely happen in consensus for the
| network if such a malicious attack would occur. Hence, no
| rational actor will likely even consider a 51% attack.
| snarf21 wrote:
| China can rinse/repeat on any soft fork. There is also
| the ability to block crypto networks at the ISP level.
| paulgb wrote:
| > it would be pretty easy to perform a 51% attack
|
| Yes, and the elephant in the room with Bitcoin is that it's
| only going to get easier. Despite the categorization of
| Bitcoin as non-inflationary, the computational power of the
| network is currently ~85% subsidized by block rewards that
| grant miners new coins (i.e., inflation). Once those are
| diminished through halvings, either transaction costs will
| have to go up about 7x to match the current incentive, or the
| network difficulty will come down as miners go offline. If
| the latter happens, not only will the hash rate go down,
| there will be a flood of mining hardware on the market as
| miners exit the game.
|
| Oh, and if "layer two" solutions ever do take off, there will
| be downward pressure on transaction fees, too.
| hudon wrote:
| Or the network finds consensus on an algorithm change where
| the block subsidy keeps going, thereby continuing to pay
| the miners. The 21 million bitcoin cap isn't as immutable
| as people claim. It's just that most Bitcoin stakeholders
| agree to keep it there, for now.
|
| That Bitcoin is some immutable "backed by math" financial
| system has been a charade all along. It's very much backed
| by people, and proof-of-work is a Rube Goldberg machine
| used to distract the tech-literate.
| fphhotchips wrote:
| Of course the problem with this approach is that (at
| least part of) the Bitcoin community see it as non-
| inflationary - see above. So if you remove that cap then
| the value surely comes down significantly.
| mhluongo wrote:
| Ha! Look up "user activated soft fork" or "UASF".
|
| Ultimately, Bitcoin is backed by node operators and
| widespread social consensus. Thinking China can just split
| and control the network is a pretty serious misunderstanding
| of the power dynamic in this system.. one we all had
| demonstrated at the conclusion of the block size wars.
| hudon wrote:
| > Bitcoin is backed by node operators and widespread social
| consensus
|
| Satoshi wanted it to be backed by Proof of Work, but now
| you're saying Bitcoin is backed by social consensus... just
| like the US Dollar I guess?
| hackinthebochs wrote:
| Proof of work is just the mechanism to determine social
| consensus.
| mhluongo wrote:
| Of course it's backed by social consensus. Money is a
| social construct, not sure why you're trying to move the
| goalposts
| jude- wrote:
| Who cares what Satoshi wanted? He/she/they do not control
| the system.
| SkyBelow wrote:
| >If a state actor, such as China, was motivated enough to
| identify, capture and coerce these miners it would be pretty
| easy to perform a 51% attack given that China accounts for
| around 65% of all bitcoin mining globally.
|
| This is because people don't consider it likely. Once it
| happens, people will move to new crypto and will devalue any
| crypto that is too centrally mined by a single country.
| khmmr wrote:
| You do understand that cops and fighter jets and nukes are the
| only reason why you are not slaving in labor camp for some
| foreign power? It's a necessity. Bitcoin is useless for
| anyone's physical safety. As of today is provides almost zero
| value at all. You could argue, that censorship resistance is
| helpful for people living in authoritarian regimes but that's
| about it, so the only value it has comes from it being
| "illegal" in some region. At the same time Bitcoin is already
| wasting as much resources as some mid-sized European country.
| The environmental argument is relevant in every way.
| smeej wrote:
| This is such an underappreciated point.
|
| U.S. dollars are backed by violence. Bitcoin is backed by math.
|
| I don't know what you want backing _your_ money in the world
| you hope to leave for future generations, but I know what I
| want backing mine.
| dionidium wrote:
| It's not underappreicated; it's facile. _Everything_ you do
| in society is backed by the state 's monopoly on violence.
| What are you going to do when I storm into your house with
| guns, kill your family, and demand access to your wallet?
| Appeal to math?
| smeej wrote:
| Given that you would first have to 1) Identify me as a
| target worth pursuing (not possible from my wallet
| addresses if I practice adequate sanitizing of inputs); 2)
| Figure out where I live (also not possible from wallet
| addresses, or even people who have sent to me); and 3)
| Verify I even had enough shards of a key accessible to me
| in my home to transfer funds to you anyway (not to mention
| 4) Outgun me), all the violence in the world isn't going to
| bypass the math.
|
| If you're violent enough, nothing is going to protect me or
| the people I love from you, but that's regardless of
| whether my money is in Bitcoin or USD. There's no
| _disadvantage_ for Bitcoin here.
|
| The added difficulty of your obtaining the reward you seek
| actually reduces your incentive to try. The only incentive
| to kill me then is blind violence, and I guess you can
| admit to that motivation if you want, but it's protective
| for me against anyone less psychotically violent than that.
| tome wrote:
| What math prevents a big enough group of miners and users
| rolling back the blockchain?
| jude- wrote:
| I'd rather that happen to my country's wealth than have it
| bombed out of existence.
| tome wrote:
| Seems like a non sequitur and moreover a false dilemma.
| jude- wrote:
| If the choice is between having my country's wealth
| destroyed by military invasion, versus being destroyed by
| someone mining blocks somewhere, I'd take the latter. You
| asked, not me.
| [deleted]
| tome wrote:
| I'm still not quite seeing the argument. Your country
| could also be bombed out of existence in order to seize
| or destroy its hashing power. I really don't see how
| bitcoin being "backed by math" saves you there.
| jude- wrote:
| It doesn't, obviously. But that's not what you were
| asking.
| smeej wrote:
| The sheer cost of spooling up enough hardware and paying
| for the electricity to run it.
|
| That's literally the entire point of proof of work.
| 2421n wrote:
| And if I force you to give me your decryption keys or make a
| transfer at gunpoint, will the math still protect you?
| smeej wrote:
| It very well might. If I simply don't have enough shards of
| the key or keys for the multisignature address, sure, you
| can still kill me, but you can't get the money from me.
| It's impossible.
|
| You can see my related comment below, but if you're
| motivated by the money, this protects me. You'll never get
| it if I'm dead.
|
| If you're motivated by violence, though, nothing protects
| me. But the same is every bit as true if my money is in
| USD.
| samatman wrote:
| Prevention of domestic crime and violent projection of
| power in international affairs are unrelated uses of the
| sovereign monopoly on force.
|
| It is reasonable to object to USA's use of the latter while
| enjoying the benefits of the former. Indeed I do so.
| jonnycomputer wrote:
| Of course crypto depends on the government. Miners can have
| their infrastructure investment stolen. Holders of currencies
| can be robbed, or extorted. The transfer of those currencies
| pass through infrastructure set up and maintained or regulated
| by governments.
|
| And frankly, it takes energy to mine, so if crypto became
| integral to national political and economic interests, there is
| not going to be any net change in energy politics. You are not
| unlinking the petroleum and currency in those petrodollars,
| you're replacing it with something that directly links to two
| inescapably.
| lmilcin wrote:
| > Clearly crypto mining is emitting using a lot of power and
| some of that is CO2.
|
| All of it is CO2. Let me explain.
|
| When you burn energy for bitcoin mining, you don't just use
| capacity of your local energy producer, you are delaying
| removal of legacy power producers.
|
| Before a particular power producer (for example burning coal)
| can be turned off, the capacity must be created from other
| sources (for example renewable). If you decide to start burning
| huge amount of energy, before those CO2 guzzlers can be turned
| off we will now have to build even more capacity -- exactly the
| amount you are burning to mine bitcoin, but it also means that
| while this is happening the CO2 is still being emitted.
|
| This assumes that introduction of new renewable sources of
| energy is independent from bitcoin mining. As far as I know
| this is true.
|
| Or in other words: if introduction of renewable sources of
| energy is independent of bitcoin mining, the energy production
| from these sources is the same regardless of whether the
| bitcoin mining exists or not. Logically what this means that
| what is changing is energy production from non-renewable
| sources and it could be explained that they are working at
| either higher capacity or their removal is delayed.
| samatman wrote:
| This is the lump of labor fallacy applied to energy, let's
| call it the lump of energy fallacy.
|
| Increased demand for energy brings more energy supply into
| the market. New energy is mostly renewable energy.
|
| Old plants are shut down when they are unprofitable. That can
| be because they're inherently too expensive to run, because
| the carbon inputs are being taxed too heavily (I think this
| is a good one), or because the governing body controlling the
| physical location of the power plant has declared them
| illegal (since you can't profitably sell something you're
| forbidden from selling).
|
| I'm not making the "Bitcoin is good because it drives
| renewable energy investment" argument, which is too handwavey
| for my taste. I'm saying your argument is incoherent.
|
| Reducing carbon emissions from power plants is mainly about
| pricing the externality they generate. Cryptocurrencies, in
| fact, _any application for that generated power_ , neither
| harm nor help achieve that outcome. It's irrelevant special
| pleading, and it's a distraction from this urgent goal.
| kortilla wrote:
| > This assumes that introduction of new renewable sources of
| energy is independent from bitcoin mining. As far as I know
| this is true.
|
| It is not. There are marooned renewable energy sources (dams)
| that have had limited usage (the dams being mainly for flood
| control) until miners came along. Building high capacity
| transmission lines to them wasn't economical.
| lmilcin wrote:
| So where and how much of the mining network utilizes this
| or similar?
|
| We are looking for at least significant portion of 130TWh
| the mining network currently uses. I just don't see all
| those old dams adding anywhere close to 1% of that value
| (although you have a chance to post your sources).
|
| You see, bitcoin mining currently uses 10x the amount of
| capacity used by Google and 50% of what _ALL DATACENTERS IN
| THE WORLD_ are using.
|
| https://www.bbc.com/news/science-environment-56215787
|
| Your argument doesn't hold any water (pun intended).
| majormajor wrote:
| The "backed by guns" argument ignores the more powerful backing
| force of a society's _belief_ and actions. Things don 't daily
| come to the point of us being forced to believe our currency is
| valuable with guns and nukes, we just created this system
| because it's one we wanted to live in, and having such a fiat
| currency makes a lot of things easier. Bitcoin, on the other
| hand, is using its energy constantly.
| thoughtstheseus wrote:
| Backed by taxes. You'll always need to pay taxes.
| abrahamepton wrote:
| This is pretty damn incoherent.
|
| > the core reason for cryptocurrencies; escaping inflation and
| control
|
| Maybe in a whitepaper. In the real world, it's mostly about
| speculation and enabling crime.
|
| > Law and order stands on the backs of a lot of stuff and CO2.
| Bitcoin is an example of one little piece of this not needing
| all that stuff.
|
| Ok...? This is nonsensical.
|
| > Instead it's protected by this mining fleet. And if you want
| to contest ownership there's no one to invade, no one to
| attack; the best you can do is make a fleet and try to mine.
|
| Or someone can beat you up and make you give them your
| password. Rubber-hose decryption has a long track record and is
| trivial for the right actor to implement, this isn't some weird
| edge-case.
|
| > It's a small step in the direction of getting away from all
| these endless wars and control.
|
| Citation badly needed; how does cryptocurrency "get away from
| all these endless wars"?
|
| > Carbon tax CO2
|
| Ok, this is correct and not incoherent.
| Tenoke wrote:
| >enabling crime.
|
| Is this about DNMs? Because last I checked their volume is
| tiny.
| fphhotchips wrote:
| Ransomware is a key one, also.
| RinTohsaka wrote:
| > Maybe in a whitepaper. In the real world, it's mostly about
| speculation and enabling crime.
|
| Speculation I could agree with... however,
|
| Crime? Really? Got anything to back this up? The vast
| majority of crime is performed using cash.
|
| https://hodlhard.io/blog/bitcoin-crime/
| thesz wrote:
| I performed a napkin calculation about percentage of
| criminal transactions using $100 bills [1].
|
| [1] https://twitter.com/sergueyz/status/1365040381155491841
|
| Quote: "$100 bill spans 22-23 years with about 20
| operations per year, 450 operations in total, 220 for
| median. We need to calculate probability p that operation
| is not illicit. p=0.2^(1/220)=0.9927. Probability that
| operation is illicit is 1-p=0.0073 or 0.73%."
|
| I was answering clearly biased twit about "only 1% of
| transactions using bitcoin are criminal and 70%-80% of $100
| bills are used in criminal transactions". The calculation
| above is for worst case of 80%. For best case of 70% of
| transactions are illicit, the probability of single
| transaction being illicit drops to 0.55% (fifty five
| hundredths of percent).
|
| Thus, bitcoin carries from one and a third (1.36=1/0.73) to
| almost twice (1.8=1/0.55) more percentage of illicit
| transactions than money.
| tubbyjr wrote:
| How many angels can dance on the head of a pin?
| boc wrote:
| > Just last week, the United Nations alleged that North
| Korea was funding its nuclear weapons program using funds
| from hacked cryptocurrency exchanges, alongside other
| thefts. The U.N. believes that over $300 million in crypto
| assets have been stolen by various North Korean hackers.[1]
|
| > Iranian thinktanks have also emphasized the need for the
| nation's government to use cryptocurrencies to circumvent
| US-led international sanctions. It now appears that the
| Office of President Hassan Rouhani has become more serious
| about using crypto. [2]
|
| A rapidly growing percent of nuclear weapons proliferation
| is being funded by crypto. That's way worse for the planet
| than crime performed using cash.
|
| [1] https://www.coindesk.com/doj-charges-3-north-korean-
| hackers-...
|
| [2] https://www.crowdfundinsider.com/2021/03/172786-iran-
| is-repo...
| celticninja wrote:
| What's the issue with Iran using it? Or is it that Iran
| are just "bad guys" therefore if they use it must be bad.
|
| In that basis let's get rid of nuclear power because Iran
| use that. I think they also have the internet so while we
| are at it let's get rid of that.
| chrischen wrote:
| > In that basis let's get rid of nuclear power because
| Iran use that.
|
| That's exactly what they did.
| perardi wrote:
| https://www.researchgate.net/publication/333388187_Sex_Drug
| s...
|
| https://blog.chainalysis.com/reports/darknet-markets-
| cryptoc...
|
| Anecdotally: people buy lots of drugs using
| cryptocurrencies. Not that I would _ever_ do such a
| thing...
| ramphastidae wrote:
| > Maybe in a whitepaper. In the real world, it's mostly about
| speculation and enabling crime.
|
| That's the same line authoritarian governments used to
| demonize encrypted communications.
| apotheon wrote:
| The real complaint from the surveillance police state is
| that people use encryption for privacy -- whether it's
| basic communications privacy (end-to-end encrypted text and
| voice) or basic financial privacy (cryptocurrencies that
| aren't being made progressively more trackable).
|
| Part of that "used for crime" shit is about things that are
| against the law just because nobody reported buying a car
| or something like that, too.
| lmilcin wrote:
| There is no "core" reason for cryptocurrencies. This is
| romantic bullshit perpetuated by people invested in it.
|
| The reality is, as I have predicted long ago, if bitcoin
| becomes large portion of worlds financial flow it will just be
| taken over by financial institutions and perverted for their
| use.
|
| These guys have much more experience at this (ie subverting
| financial systems) than you can imagine.
|
| Bitcoin is not going to stop wars and bring law and order.
|
| If bitcoin was supposed to be the safest method to move funds
| around then why people have higher chance of loosing their
| bitcoin for various reasons than almost any other kind of
| equity?
|
| You are just naive.
| biolurker1 wrote:
| Have you ever taken a step back and realizing how much hate
| is there in your speech and why is it so?
| agentultra wrote:
| If you want to reduce the number of wars and conflicts there
| are better, more effective ways.
|
| Work towards ending racism; support young girls, women, and
| LGBTQ+ folks around the world; support environmental
| protections and projects that reduce food waste and increase
| water security; support fiscal policies that reduce wealth
| inequality; and topple authoritarian dictators and fascists.
|
| In this techno-libertarian utopia when someone defrauds you and
| steals your crypto-coins your only recourse is to buy the
| justice you can afford. Exchanges have already done this to
| folks who've been defrauded and sought recourse.
|
| Regulation and protections are in place to protect consumers
| just as much as they are there to limit damage from bad actors.
|
| I don't buy this notion that the world would be better off
| without a central banking system.
| nbardy wrote:
| > and topple authoritarian dictators and fascists.
|
| This makes the violence worse every time the Americans
| stumble in and think they know how to fix a country by
| instilling new leadership.
| imtringued wrote:
| >This article seems to intentionally ignore the core reason for
| cryptocurrencies; escaping inflation and control.
|
| You aren't escaping inflation. You're escaping a savings glut
| which is the mortal enemy of inflation.
| hakesdev wrote:
| This. 100%.
|
| Bitcoin (like gold since the gold standard ended) is just a
| "check" on Fiat currencies and can act as insulation from
| central banks that issue too much money too quickly.
|
| Fiats will continue to exist alongside bitcoin/cryptos, they'll
| just eventually have to "compete" a bit more (i.e., not be
| printed so readily by gov'ts) or else they'll become
| significantly less relevant.
| bayesian_horse wrote:
| Or governments will just ban the use of cryptocurrency and
| instantly marginalize its use.
|
| Lots of good reasons to do so, if only to prevent the
| democratic power over market regulation becoming "much less
| relevant".
| hakesdev wrote:
| It seems to me you've not thought through the game theory
| of banning cryptocurrency very much.
|
| There's an immediate competitive advantage (in the form of
| increased business activity & tax revenue) to the first
| country to adopt clear, consistent rules regards CCs and
| their use. If a few big countries try to ban it, that
| competitive advantage becomes even stronger for any country
| willing to buck the trend.
| lamontcg wrote:
| Bitcoin is like a decentralized banking system with no
| controls at all against a systemic bank run. No FDIC or Fed.
|
| It has been small enough that a single Billionaire could bail
| it out when it got into trouble.
|
| Once you hit the point where it'd take > $10B's to bail out
| Bitcoin it is going to unwind eventually in a bank run/panic.
|
| This time is not different, and those who fail to understand
| the past are doomed to repeat it.
|
| And its driven at this point by greed and "number go up".
|
| And the reason why people like it is that they put $10 USD
| fiat in one day and draw out $100 USD fiat some time down the
| road, and its that ability to extract fiat from it that it is
| tied to. It isn't any kind of alternative. Everyone watches
| how much it climbs in USD denominated terms. Nobody remembers
| "1 BTC = 1 BTC" even as a joke any more.
|
| Bitcoin is also extremely easy for the vast majority of the
| population to quit. You don't need it to buy groceries, you
| don't need it to pay your mortgage or your taxes. When the
| supply of $USD in the system goes to zero and the price
| collapses from a large enough height, there will not be any
| floor to it.
| hakesdev wrote:
| If you don't understand why competition in monetary
| commodities is a good thing then... I don't have any time
| for you.
| lamontcg wrote:
| If you don't understand why bitcoin isn't [workable]
| money then... I don't have any time for you.
| hakesdev wrote:
| that isn't (fortunately) for you to decide ;-)
| jonnycomputer wrote:
| And frankly, bitcoin is intentionally deflationary, and that is
| almost certainly bad for economies. Why should I buy now when
| I'll save money by buying later? Why should I start my business
| now when my investment capital will be worth more later?
| kortilla wrote:
| The Bitcoin network depends on a global functioning Internet.
| That depends on all of the defense, government cooperation, etc
| to stay stable.
| gremlinsinc wrote:
| I'm not the biggest proponent of bitcoin, some of that is angst
| from not hodling any, but a lot is I feel it was more of a
| "concept" or "mvp". Ethereum/Cardano and other newer
| chains/tech are the actual "reason" for crypto. DeFi, and De-
| centralized autonomous organizations are the real world-
| changing things, eventually we could see a coin with automated
| taxation/basic income and identities (sybil-proof), it could
| essentially "beat" poverty and income inequality.
|
| Bitcoin is an energy hog, and not very exciting... but don't
| throw the baby out with the bathwater cause there's TON of
| exciting research on blockchain that's way better. I think
| long-term bitcoin may fall out of popularity, esp as all the
| new things hit w/ ethereum, cardano, and their competitors and
| all the sub-chains on them and level-2 making it so
| transactions aren't nearly as costly.
| mhluongo wrote:
| Thanks for this. The level of discourse around Bitcoin on HN
| gives me ulcers.. really appreciate the breath of fresh air.
| bourgoin wrote:
| Why does it make a difference whether your wealth is denoted by
| USD, Bitcoin, milk caps, or Rai Stones? If tanks roll over your
| capital city and your countrymen are made to kneel in a row,
| what good is it that you can refuse to give up the private
| keys? And how does the medium of exchange have any bearing on
| nations going to war over control of oil, rare earth minerals,
| strategic islands?
|
| It seems to me you're implying that the colossal environmental
| damage inherent to a Bitcoin-driven world economy would be
| offset by the abolition of militaries, police, and banks, but I
| don't see how you make that jump. $trillions of military
| spending are used to secure resources and strategic assets and
| ensure national security, not to defend against bank robberies.
| A world without militaries or police is unimaginably different
| from our world in so many more ways than just the medium of
| exchange.
|
| And if you can't point guns at people to make them give up part
| of their pile, how will you implement the CO2 tax?
| nyolfen wrote:
| the US dollar is backed by the petrodollar arrangement: oil
| exporters accept dollars for oil in exchange for defense
| guarantees and other benefits. everyone needs oil, so
| everyone needs dollars. the dollar is inextricably tied to
| oil consumption and the US is strategically invested in it.
| add to this that the US military is the single largest
| institutional consumer of oil on the planet. there is no
| coherent argument that bitcoin is worse for the environment
| than this. bitcoin only wants _cheap_ energy; it is agnostic
| about what generates it, and incentivizes renewables since
| they tend to be the cheapest.
| [deleted]
| Luker88 wrote:
| > clearly crypto mining is emitting using a lot of power and
| some of that is CO2. But the competition is fiat; backed by
| fighter jets and nukes; literally
|
| just 2 points:
|
| * using crypto will not make the military stop existing
|
| * switching to Proof Of Stake would solve almost all bitcoin
| problems
|
| ...but bitcoin will not even consider keeping PoW and switching
| to argon2, since the investment of miners in dedicated hardware
| is too great
|
| So I think honestly the bitcoin community is stuck. It will not
| change, not even when there are options that would only improve
| the technology underneath. Still stuck at less than 10
| transactions/sec, I see.
|
| As a tech enthusiast, bitcoin has lost all its value to me. As
| an investor, the quick value fluctuations and overall value
| increase are a great thing.
|
| To me, the conclusion is that bitcoin is not anymore about tech
| (the project is completely static at this point), it's not
| about anonymity (it never was anonymous), it's not about
| distributed stuff (dedicated hardware and search for cheaper
| power are concentrating mining). It's just about quick
| investment that gets you money. Everything else feels like a
| lie.
| jude- wrote:
| > switching to Proof Of Stake would solve almost all bitcoin
| problems
|
| This will also create a very severe problem: it makes it so
| the means of coin production exist solely in the hands of the
| coin owners today. Those coin owners won't ever sell you
| enough coins for you to be a competitive staker. At least
| with PoW, I can make more coins through extrinsic means --
| i.e. better mining hardware.
| gremlinsinc wrote:
| I've contemplated the idea of a coin that has a single
| wallet per person (sybil-proof identities must be
| implemented), these wallets have a max-limit of 1 billion
| coins, and coins are minted/staked and applied randomly to
| the lowest 5%, maybe it'd have a use-it-or-lose-it thing
| built in as well, where if you just sit on your coins and
| never have any transactions occur it just assumes you might
| be a "dead" account and recycles a percentage of your coins
| for "unuse", and that percentage goes up the longer you are
| without any transactions until it just redistributes your
| entire wallet...
|
| Example would be if you had 1 US bank account sitting on a
| billion, never used it, so the govt is like, well you're
| not using that so we'll give it to someone else lol.
|
| I personally am against billionaires existing. So, capping
| a coin at 1 billion or 999 million, makes sense to me - but
| only if there can ever be only 1 wallet per person. There
| could maybe be sub-wallets, but these are more like drawers
| in a dresser where the dresser is the wallet, and the
| drawers are compartments. Maybe a compartment in the wallet
| is a joint compartment that you share with a spouse, child,
| or a business/DAO or some other form of trust...
|
| There's a lot of things possible, that could happen... but
| I think PoW still makes bad sense, because we do have a
| global warming issue that is starting to pick up in terms
| of severity.
| jude- wrote:
| > (sybil-proof identities must be implemented),
|
| I stopped reading at this point.
| VectorLock wrote:
| Just solve this one intractable problem and everything
| else is easy.
| Paradigma11 wrote:
| 1.) If they dont sell it, its the same as it not existing
| or having been lost. Liquidity is not a problem in the PoS
| blockchains that have been operating for years (for example
| Tezos).
|
| 2.) You have to pay taxes on staking rewards. So unless
| they intend to lose money they have to sell at least that
| much.
| temp8964 wrote:
| One more factor though: path dependency. For historical
| reason, BTC is the most popular cryptocurrency. Maybe as you
| said, an altcoin with PoW is a better choice. (Or maybe there
| are other reasons PoW is not good. Let's just take your
| statement as true for the sake of discussion.)
|
| But you can't change everybody's mind like turn off a switch.
| Adoption takes time and change people's mind is difficult,
| but it doesn't make everyone else to be lying.
| neuralRiot wrote:
| >This article seems to intentionally ignore the core reason for
| cryptocurrencies; escaping inflation and control.
|
| Probably the article ignores it but not the governments or
| corporations who suddenly are worried about the environment.
| gher-shyu3i wrote:
| Good points. There's also the argument that some of us want
| nothing to do with interest and usury. And fiat currencies by
| definition are usurious currencies due to how the government
| runs its finances.
| [deleted]
| zozbot234 wrote:
| The "core reason" for cryptocurrency is to provide
| decentralized trust, albeit at very high cost. "Escaping
| inflation and control" is not the issue here; the real upside
| is to provide a baseline of control by market participants
| where there's currently none, e.g. in places without a
| functioning financial system.
|
| Cryptocurrency is _very_ niche tech at best, that most people
| will have _zero_ use for - but it should nonetheless be
| available. The OP article does not account for this at all, and
| is thus extremely misguided.
| samvher wrote:
| > But the competition is fiat; backed by fighter jets and
| nukes; literally. How is it that someone can't steal your
| money? The bank makes sure. How is it the bank can be sure? The
| cops protect them. How is it the cops aren't overwhelmed? The
| military protects them.
|
| At first glance, I find this an interesting take and it makes
| me rethink some things. But I don't think I find it very
| convincing, or at least it's too exaggerated. Fighter jets and
| nukes primarily protect physical property and institutions, not
| cash. The primary purpose of banks is to lend, i.e. to allocate
| resources, not to protect people's cash. And police don't spend
| much of their time on currency theft - it's much more about
| order in public space. A side effect of all these things is a
| stable society in which cash can thrive (backed by the idea
| that you can pay your taxes in it).
|
| I'm willing to believe that bitcoin would survive certain modes
| of societal collapse that fiat currency wouldn't. I'm not sure
| that those modes are particularly likely to happen.
| EVa5I7bHFq9mnYK wrote:
| To build a factory to perfectly counterfeit US dollar bills
| costs a few million dollars. It's certainly within technical
| abilities of Russia or North Korea. The only thing that stops
| them building such factory is American nukes.
| pydry wrote:
| Nukes very much did not prevent North Korea from
| counterfeiting US dollar bills:
| http://news.bbc.co.uk/2/hi/programmes/panorama/3819345.stm
| EVa5I7bHFq9mnYK wrote:
| The paper dollar still trades on par with electronic
| dollar, which is the evidence that the breach has not
| occured.
| kodah wrote:
| It's a reasonable world view. Our currency is backed by
| "Trust". Trust in what? A system that is reinforced by all of
| those things, for stability's sake.
| Jetrel wrote:
| One point of comparison that's a hell of a point in favor of
| fiat currencies, is the that because fiat is just based on a
| really nebulous 'general consensus' rather than any sort of
| 'hard store of value', the same thing that's a bogeyman (of
| authorities deciding to cancel out all of your assets by
| executive decision) can work in reverse.
|
| Most of our forms of fraud protection, like identity theft,
| bank robbery, etc, basically boil down to the government
| looking at you and going "boy, that's not fair what happened
| to you. Even though the closest thing we have to a hard store
| of value's been taken from you, we're just going to literally
| rewrite the books and set you back to the state where you had
| your money." It literally treats storage of money like a
| database restore.
|
| The beauty of that is they can do that without losing
| anything (besides slightly inflating the system) - with hard
| currency (whether gold or BTC), they have to actually deplete
| their reserve of stored value.
|
| ---
|
| The most extreme example of this historically, was the
| national debt crisis britain had during the south sea bubble,
| where most of the country got wrapped up in a giant stock-
| buying scheme for a company that ended up having no value.
| This ponzi-scheme crashed, and it briefly looked like
| something like half the country was going to go bankrupt.
|
| What was amazing about it was that the government realized
| they had absolute executive power, and just forcibly reset
| the economy. They just decreed that all of the debts related
| to it were cancelled, and dictated that individual assets
| which had been collateral for the debt (like people's houses)
| had to be returned to them. Many instances of "stores of
| currency value" got wiped out, but the important thing the
| government provided was a _floor_ - you might have all the
| money you earned on south sea speculation deleted, but they
| guaranteed the average person didn 't end up in poverty.
| louwrentius wrote:
| Thank you for sharing this. I think many people may not
| know/understand this aspect /feature of our existing
| banking system and the role of government.
|
| Or they deliberately try to ignore the entire safety
| mechanism because it goes against their narrative that
| government control is bad, it collides with this
| libertarian spiel. All to keep the grift going.
|
| When not understanding or misunderstanding things makes you
| more money (let's you recruit new 'suckers') a honest
| discussion will start to become impossible.
| lottin wrote:
| > Fighter jets and nukes primarily protect physical property
| and institutions, not cash.
|
| This is basically it. I don't know how bitcoin advocates
| expect property rights (in fact, _any_ right) to be upheld in
| the absence of a coercive state. They have become so removed
| from reality that they don 't see the most obvious things.
| kbelder wrote:
| I'm expecting that someday, my defense budget will be part
| of my Amazon Prime fees.
| thedrbrian wrote:
| > This is basically it. I don't know how bitcoin advocates
| expect property rights (in fact, any right) to be upheld in
| the absence of a coercive state. They have become so
| removed from reality that they don't see the most obvious
| things.
|
| Errr something something blockchain?
| kurthr wrote:
| The same way that their super-secret-extra-long password
| protects them from someone with a wrench. It doesn't.
|
| However, it does make money laundering, speculative kiting,
| and paying for illegal services easier. Those are arguably
| the opposite or orthogonal to property rights, but they are
| useful to the those with money and power.
| ur-whale wrote:
| > The primary purpose of banks is to lend
|
| This is really not the case anymore in the 21st century,
| especially with interest rates where they are now.
| vharuck wrote:
| Exactly. As long as people need land and die when shot, there
| will be militaries.
| jasode wrote:
| _> But I don't think I find it very convincing, or at least
| it's too exaggerated. Fighter jets and nukes primarily
| protect physical property and institutions, not cash._
|
| Typically, the concept of "military force" like fighter jets,
| aircraft carriers, etc in criticism about fiat currency
| (especially $USD) is about _connecting the dots_ to explain
| the strength of that currency.
|
| E.g., USA gets Saudi Arabia to sell oil _denominated in $USD_
| and in exchange, Saudi Arabia monarchy gets "protection"
| from invasion by enemies like Iraq. This is one concept of
| the _" petrodollar"_. This military protection requires
| fighter jets, etc. This makes $USD valuable to acquire by
| other foreign countries that want to buy oil. In contrast,
| Bitcoin doesn't need the expense of the military to decree
| that it's valuable; people just voluntarily agree to exchange
| it for value. (E.g. exchange 10000 bitcoins for 2 large
| pizzas.[1])
|
| The (wasted?) energy for defending the $USD is more
| _diffused_ among different institutions so it 's harder to
| measure -- and thus harder to criticize. In any case, energy
| usage also includes the Treasury Dept's Secret Service anti-
| counterfeiting force running around the world to stop fake
| currency. The Bureau of Engraving that prints the sheets of
| paper currency. US Mint stamping coins. All the above require
| enormous energy expenditure as well. Then you have the energy
| costs of the Fed Reserve, member banks, etc all doing
| settlement with each other and the associated security
| systems to protect from hacking. Bitcoin doesn't need any of
| that. Does bitcoin use more or less energy than the
| _collective sum of energy to maintain integrity of $USD_? I
| have no idea. What 's the best complete accounting of the
| carbon footprint for $USD?
|
| [1] https://bitcointalk.org/index.php?topic=137.0
| ericmay wrote:
| I think you can only really fairly compare the energy use
| to the physical infrastructure of the $USD (and/or other
| currencies) because the defense of the Petrodollar also
| defends general energy usage which all industries and
| organizations benefit from. Oil is used for plastics in
| medicine, computers, cars, fuel, fertilizer, you name it.
| The defense of the Petrodollar would be a defense of all of
| those things. From an energy standpoint can you fairly
| proportion out what energy is used to defend the $USD by
| industry or in a more succinct way?
|
| The fact that Nvidia can create chips for GPUs, and Amazon
| can package them up and deliver them and all your other
| computer parts to your front door is also subsidized by the
| Petrodollar. Everything is!
|
| If the U.S. just stopped defending the Petrodollar, it's
| not like the $USD just goes away or ceases to be valuable.
| The fighter jets don't disappear or stop being made.
|
| It's also slowly becoming outdated. The U.S. is a net
| exporter of energy and the shale revolution has made the
| Middle East just a bit less important.
|
| Anyway - I don't think it's a great exercise to compare
| Bitcoin energy usage to the "energy usage" of the $USD
| exactly because it's so difficult to really measure. You
| also have to think forward a little bit - as
| cryptocurrencies proliferate more companies will arise
| around new technologies, custodianship, etc. so when we
| talk about some abstract number of people in an office
| _now_ supporting the $USD, we have no idea what the future
| number of people supporting the cryptocurrency networks
| will be in the future - it might actually create more jobs
| _and_ more energy usage.
|
| I see one real advantage to Cryptocurrency: protection
| against government misuse of monetary policy.
|
| But aside from that, it's still up in the air for me to see
| how things go. The $USD is a pretty good currency (mostly
| holds value in the short term, accepted everywhere, highly
| liquid), but it isn't a phenomenal store of value. All of
| these fiat currencies and cryptocurrencies are going to be
| competing in an arena and it's going to be interesting to
| watch.
| pas wrote:
| Not just denominated, settled. They literally want USD for
| their oil instead of SAR (riyal). (Sure, SAR is pegged to
| USD.)
|
| Here's a very thought provoking article about the "dollar
| system": https://phenomenalworld.org/analysis/the-class-
| politics-of-t...
| selectodude wrote:
| Why would they want riyal for their oil? That would cause
| massive price action and destabilize their currency
| causing wild swings in the value of the riyal depending
| on the demand for oil. The last thing in the world an
| export economy wants is a currency that becomes stupidly
| expensive when people want it and worthless when people
| don't. Settling in dollars allows for a stable riyal.
| imtringued wrote:
| The "exorbitant privilege"? You mean the exorbitant
| privilege to create government debt to cancel out a
| savings glut? I've never understood this argument. I
| always heard how the USA is "riding" or "abusing" the US
| to achieve some nefarious goal when from my perspective
| it was always the inverse.
|
| Since I lacked the necessary knowledge I tried to think
| about how the effects work from first principles and I
| always came to the same conclusion. When it helps it does
| nothing and when it hurts the downsides are grave and a
| strong economy is necessary to just be able to counteract
| the effects of the exorbitant burden. This is compared to
| the misguided idea that the dollar having the global
| reserve "status" as some benefit that helps the USA.
|
| Global reserve status is basically equivalent to a
| partial currency union similar to the eurozone. There are
| two potential effects. Either your currency becomes
| stronger than the average currency in the currency union
| or your currency becomes weaker. Germany is "riding" the
| effect of a weaker euro to export goods and thus creates
| a savings glut in the nations it is exporting goods to.
| The reserve situation is that your currency becomes
| stronger than it should be. You get nations like Greece
| or Spain that are struggling with debt because additional
| savings can only exist if there is a debt somewhere to
| balance savings and investments.
|
| Once I started reading up on the downsides [0] of having
| your currency be a major global reserve currency it
| pretty much confirmed everything and it made the
| situation completely hopeless. There are no good answers
| here. The hands of the USA are tied and the situation is
| pretty dire.
|
| The USA obviously has a stronger currency than it would
| usually have. This means importing products from overseas
| becomes the obvious choice and domestic consumption is
| avoided. The weak demand causes unemployment and now you
| are at the ultimate economic dilemma. Do you create
| government debt to create investments for the savings
| glut or do you let people become unemployed so that
| domestic savings go down to make room for foreign
| savings? The only choice is to just do endless deficit
| spending thanks to the "exorbitant privilege". It's not
| really a choice.
|
| [0]
| https://carnegieendowment.org/chinafinancialmarkets/56856
| imtringued wrote:
| I honestly don't understand your comment. You're comparing
| two completely different things. Bitcoin mining protects
| the currency.
|
| Meanwhile you talk about the USA securing its access to oil
| by using a potent "weapon" called the US dollar, delivered
| by the US military. The dollar isn't what's being
| protected, what's being protected is the entire economic
| system of the USA that is dependent on oil. If it was
| really about the dollar then the USA could protect it
| within its own borders. The US dollar is already strong
| enough as it is.
|
| Comparing these completely different things makes no sense.
| There is no Bitcoin nation.
| hackinthebochs wrote:
| > The dollar isn't what's being protected, what's being
| protected is the entire economic system of the USA that
| is dependent on oil.
|
| The two are inextricably linked. You could not run an
| economy of this size without a currency to underpin
| trading value and denominating debt. So defending the
| strength of the economy is defending the strength of the
| currency the economy is denominated in.
| 1vuio0pswjnm7 wrote:
| The "mining fleet", if it uses computers, requires electricity.
| Who controls the supply and sale of electricity.
|
| Nothing against desire to solve world problems but Bitcoin
| seems to be creating more problems than it purports to solve.
|
| The author calls cryptocurrencies a "predatory investment
| scheme". In practice, is this not correct. Is it not the lack
| of "law and order" with respect to cryptocurrencies that allows
| for this to occur. Please explain. Show me how cryptocurrency
| is solving world problems. Evidence, not speculation.
|
| When I was young people said that "money" itself was the root
| of all evil. Today, people online try to convince us that "fiat
| currency" is the problem. It does not feel like the same
| idealism.
|
| The original Satoshi paper made his idea sound like it would be
| possible to implement as peer-to-peer^1 without third parties.
| All the implementations I have seen to date involve third
| parties. Doubtful a coincidence that the third parties are all
| profiting from that involvement.
|
| 1. The term now has multiple meanings. Here it is used in the
| original, Napster sense. Peer-to-peer networking, not, e.g.,
| peer-to-peer financial.
| Lazare wrote:
| > I no longer think the environmental argument is really
| plausible here. Clearly crypto mining is emitting using a lot
| of power and some of that is CO2. But the competition is fiat;
| backed by fighter jets and nukes; literally.
|
| That seems like a non-sequitur. Proof of work crypto generates
| an astonishing large amount of CO2 to little effect. Some other
| alternatives are bad in other ways, yes, but that doesn't make
| the CO2 go away.
|
| I live in a small, peaceful, stable country with a very small
| military and very safe banks. If you're _really_ trying to make
| some sort of argument that fiat currencies can 't exist without
| a significant CO2 expenditure to try and enforce neoliberal
| orthodoxy at the barrel of a gun then that is very obviously
| untrue.
|
| > Instead it's protected by this mining fleet. And if you want
| to contest ownership there's no one to invade
|
| So your argument is that nobody will steal my fiat currency
| from my electronic wallet (aka, bank account) because of the
| police, but nobody will steal my crypto currency from my
| electronic wallet because of their respect for pure math; no
| need for law and order?
|
| Respectfully, you might want to try and develop that argument a
| _little_ further.
|
| > It's a small step in the direction of getting away from all
| these endless wars and control.
|
| Key driver of most wars is resources, especially energy, not
| _money_. I 'm confident that we are not collectively dumb
| enough as a species to end up in a state where we're fighting
| wars to obtain energy resources to fuel blockchain mining, but
| that is a thing that can theoretically happen.
|
| I think you're falling prey to the is/ought distinction. It
| would be _nice_ if crypto currencies could somehow create world
| peace, resolve the contradictions of late stage capitalism,
| cure cancer, <fill in your dream here>. But they obviously
| can't, and I would suggest pretending otherwise is pointless.
| VectorLock wrote:
| >And if you want to contest ownership there's no one to invade,
| no one to attack; the best you can do is make a fleet and try
| to mine
|
| Or with all the mining concentrated in China, you can, as the
| Chinese government, take state ownership of all those miners
| and don't have to spend a jet or nuke to do it.
| CynicusRex wrote:
| I don't understand why people can't see it's all one big pyramid
| scheme. The early 'adopters' pay small amounts of money for a big
| percentage of the total amount of 'coins', and the late
| 'adopters' pay large amounts of money for a small percentage of
| the total amount of 'coins'. And once people have it, they have
| every incentive to get as many people to buy it as well, because
| only then they profit.
|
| A blanket ban is a good idea. This cancer deserves no place in
| the economy.
| jamal-kumar wrote:
| I usually see people who have a lot of disparaging things to say
| about stuff they clearly have a misunderstanding of as missing
| out on the fun. Also he doesn't seem to realize that despite
| lauding Japan's payment infrastructure that SBI Holdings utilizes
| ripple to make the remittances go fast... they're probably going
| to end up relocating in that country, leaving the USA even
| further in the dust
|
| https://www.coindesk.com/japan-xrp-ripple-suit
| endisneigh wrote:
| So if the whole world went to crypto (particularly one with a
| fixed amount) and something like the Great Depression happened
| what would the governments do to provide stimulus? Or is the idea
| that governments never do so?
| [deleted]
| arrosenberg wrote:
| This is America, banning things rarely works as intended. A
| carbon tax solves this problem just fine.
| colinmhayes wrote:
| Miners would just move to China.
| sremani wrote:
| They are already there. US will not be the first country to
| ban Crypto. The countries that are facing acute Capital
| flight post-corona would do that. US will use its regulatory
| regime to firewall crypto into its own thing. But if BTC
| becomes a threat to USD in a realistic way (which is not
| evident in medium term), then game on!
| edouard-harris wrote:
| > This is America
|
| Note that the author of the post is based in London, UK:
| https://www.stephendiehl.com/
| ur-whale wrote:
| > Note that the author of the post is based in London
|
| But clearly positions himself as as USian.
| jb775 wrote:
| To anyone who thinks a ban would never happen, look into how the
| US govt banned gold ownership after the great depression.
| djschnei wrote:
| I lost my keys in a boating accident!
| hakesdev wrote:
| Bitcoin (like gold since the gold standard ended) is just a
| "check" on Fiat currencies and can act as insulation from central
| banks that issue too much money too quickly.
|
| Fiats will continue to exist alongside bitcoin/cryptos, they'll
| just eventually have to "compete" a bit more (i.e., not be
| printed so readily by gov'ts) or else they'll become
| significantly less relevant.
| frockington1 wrote:
| With $1.9 trillion freshly printed for 'covid relief' and
| another $4 trillion on the way in the form of 'infrastructure',
| fiat will likely face more competition by the end of the year
| stopBurncoins wrote:
| So yesterday in HN we linked to a medium post of mine where I
| expanded on the problems of Proof of work, and linked to a
| change.org petition to ban proof of work to force projects move
| to proof of stake.
|
| It got flagged, but nice to see that somehow the argument itself
| is not that unapproachable, so I'll link the petition here:
| https://www.change.org/StopBurncoins
|
| It's full of links on the issue of power, carbon pollution and
| more.
|
| IMHO the problem is not cryptocoins themselves as is suggested
| here, but just proof of work
| boring_twenties wrote:
| So what's the alternative? We just accept that Paypal & friends
| get to be the final, unaccountable arbiters of who gets to
| transact online?
|
| That's wholly unacceptable.
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