[HN Gopher] Why I'm Cryptophobic
___________________________________________________________________
Why I'm Cryptophobic
Author : luisha
Score : 199 points
Date : 2022-06-30 13:39 UTC (9 hours ago)
(HTM) web link (www.bvp.com)
(TXT) w3m dump (www.bvp.com)
| rvz wrote:
| Like the failed removal of all closed-source software called for
| by the free-software movement towards the likes of tech bros at
| Microsoft, Google, Meta and many other developer still creating
| it, the same tech bros are now calling for the complete removal
| and destruction of crypto screaming for all it to die in a fire
| (which I'm afraid it simply won't.)
|
| Both the crypto skeptics and the crypto maximalists screaming
| about their very utopian and absolute ideas are both going to be
| very disappointed once crypto regulations come around the corner.
| viksit wrote:
| Relevant counterpoint from the same firm. The antidote to crypto
| phobia.
|
| https://www.bvp.com/atlas/the-antidote-to-cryptophobia
| puranjay wrote:
| > state's fiat powers come from its credibility, transparency and
| the power of taxation
|
| Nope. State's fiat powers come from its monopoly on violence.
|
| Completely opaque and corrupt states have fiat currencies too.
| Many thriving ones. The only reason people use these fiat
| currencies is because not doing so invites violence from the
| state - imprisonment and fines at best, actual physical violence
| at worst.
| tduan wrote:
| I've always been supportive and even excited about what the
| technology promises, but when I reconcile it with any use cases,
| I simply can't get behind the valuations we see. Excluding it
| being the main payment vehicle for banks, institutions, and
| individuals (I strongly disagree with this prospect), all the
| other use cases become increasingly niche. BTC at it's peak was
| at a 2 trillion dollar market cap. Gold at the same time was
| ~10-12 trillion. I respect lindyness and 3000+ years of gold
| being the best store of value, is enough confidence that BTC
| isn't gonna be the next big thing - if it aims to replace it.
| mjburgess wrote:
| There needs to be some basic economics here..
|
| Money has value because of the value of the _economic
| transactions_ in which its conducted.
|
| Government-backed currencies are _forced_ to have value in the
| sense they _force_ people to use it for their taxes. The US,
| additionally, forces the world to use it for oil trades.
|
| _Value_ is in those economic transactions. A currency is just a
| "liquifying" of that value, to make it easier to spread around.
| So that 1hr of my time/output can be more easily traded for 1hr
| of another persons. We are still _just trading output_.
|
| For BTC (or any coin) to have any value, it needs actual economic
| transactions to be conducted in it. If there arent any, its value
| is smoke-and-mirrors; its not real. If you can't trade the market
| cap of bitcoin for _actual economic output_ , it isnt actual
| economic value.
|
| Imagine doing that right now. Imagine BTC was actually used for
| any scale of economic transactions. It would collapse overnight.
| cypress66 wrote:
| As much as I enjoy (and actually use) crypto, you touch a very
| important point.
|
| No current cryptocurrency that is even remotely decentralized,
| offers good throughput / scalability / tps.
|
| Bitcoin has Lightning and it's in my opinion fundamentally
| flawed in its UX. It hasn't picked up much adoption after many
| years for what it's worth.
|
| Ethereum has many L2 solutions in development but they are many
| years away from being finished (actually scalable, safe,
| decentralized)
|
| I don't know much about other cryptocurrencies but from what
| I've seen they all are either very centralized or not scalable
| either (see the Blockchain Trillema)
| koonsolo wrote:
| Nano uses what they call a "block lattice" which is based on
| DAG's. Seems to work both in theory and practice: 0 fees,
| sub-second transactions and can handle thousands of tps.
| welshwelsh wrote:
| Imagine a future where the vast majority of work is automated.
| Most of this is computationally expensive work, such as
| training large neural networks, and the average program takes a
| substantial amount of resources to run, comparable to paying a
| human worker.
|
| In this scenario, labor power has been replaced by GPU power,
| which can be measured in terms of electricity. Everything from
| ordering a meal at a restaurant to building a house to
| designing a new computer system can be measured this way, and
| the price of everything is tightly coupled to the price of
| electricity and the price of compute.
|
| Under these conditions, it might make sense that
| programs/robots would incorporate smart contracts or
| participate in some sort of generalized proof-of-work system to
| finance themselves. Running a program would require currency as
| input to cover the computational cost of actually running the
| program, even if the program is open source.
|
| That's where I see this going. Traditional currency is great
| for incentivizing human labor, but the problem is it's not
| designed to be programmable.
| maury91 wrote:
| People being paid by the hour is just a result of simplifying
| work, in the very past everyone was a merchant and they sold
| their goods/services.
|
| The same old behaviour should be applied to machines, it
| doesn't matter how much resource a machine takes to do the
| job, what is important is the output. The pay should not be
| X*Watts, but X agreed in advance for training that specific
| neural network, this type of market incentives evolution,
| where the machines that can do the same job with lower
| resources have the lower hand
| yellowapple wrote:
| > in the very past everyone was a merchant and they sold
| their goods/services
|
| In the past nearly everyone was a serf and they provided
| their goods/services to their lieges in exchange for basic
| needs like having someplace to live.
|
| In the present it's pretty much the same thing, except with
| us serfs being paid wages (which we then end up spending
| most of as rent and taxes) and serving multiple lieges.
| bandrami wrote:
| I normally push back at calling consumer capitalism
| "freedom", but the freedom to leave your employment is a
| huge one and the serfs didn't have that. The whole idea
| of just being able to pick up and move somewhere would be
| alien to most historical peasants.
| yellowapple wrote:
| That's part of what I'm getting at with the "multiple
| lieges" bit. Feudal lordship and fealty are more fungible
| now than they were centuries ago, but the fundamental
| power dynamic remains; being able to swap out lords
| ostensibly at will is one of those "illusion of freedom"
| things that helps us feel slightly less bad about our
| exploitation.
| aabhay wrote:
| Why not? What's to prevent two parties from creating a
| digital smart contract denominated in dollars? Don't we
| already do this with things like credit card pre-auth? And
| the best part is that the transaction is backed by a
| predictable rule of law as long as the transaction takes
| place within a country.
| ETH_start wrote:
| The traditional financial system and the political system
| it rests on are too unstable.
|
| Witness Moscow commuters not being able to enter their
| metro as Apple Pay cuts them off.
|
| Witness the AML surveillance regime shutting out entire
| countries:
|
| https://www.coindesk.com/policy/2020/10/23/money-
| reimagined-...
| throwaway413 wrote:
| If a geopolitical climate is too volatile for fiat to
| provide value, what good is it that crypto can isolate
| its stability (it can't) if the humans who would use it
| have bigger problems than how to pay with money they
| already have in some form? Supply chains, physical
| force/warfare, climate, etc. If fiat is breaking down,
| there are surely bigger problems at play. How does
| solving the ability to transfer money solve the overall
| stability of the situation?
|
| Per your example, ok Apple Pay got cut off. Is the
| transit system going to support crypto? Will they be able
| to run their business and make that transition with
| regulators? It's a drastic measure that cuts one off from
| the structures that they physically exist in, and unless
| those structures are overall crypto-supportive, they
| would just be putting themselves further between a rock
| and hard place (which as we've seen by the lack of
| serious business adoption, companies and orgs are not
| really willing to take that risk in any meaningful way)
|
| Edit: I agree with your use of the term "regime" and am
| not arguing against the sentiment of your point. Just
| that I don't think crypto actually has the backbone to
| solve it, there's not enough physical-world tie in yet
| for it to have the leverage it needs to truly overcome
| the global financial regimes that are neck-deep in fiat
| and physical assets that actually impact everyday
| peoples' lives.
| ETH_start wrote:
| >>Per your example, ok Apple Pay got cut off. Is the
| transit system going to support crypto? Will they be able
| to run their business and make that transition with
| regulators?
|
| That's the big question. But assuming for a moment that
| crypto can act as a substitute for traditional
| centralized payment systems, then it has significant
| advantages in some contexts over those systems.
| tsimionescu wrote:
| > But assuming for a moment that crypto can act as a
| substitute for traditional centralized payment systems,
| then it has significant advantages in some contexts over
| those systems.
|
| Except that, fundamentally, distributed permission-less
| systems can't come close to the computational efficiency
| of centralized systems. So this is like "assuming
| perpetual motion machines existed, we could build a post-
| scarcity society" levels of assumption.
| ETH_start wrote:
| I don't think that is established. Distributed and
| permissionless systems don't need to handle the overhead
| of access control. They do have the computational
| overhead of massive redundancy, but that can be
| significantly reduced with zk-(SNARK/STARK) cryptography
| that provides succinct zero-knowledge proofs of validity.
|
| With zk-proofs, the redundancy of a blockchain can be
| significantly reduced without comprimising security. What
| redundancy remains provides the high process integrity
| that critical applications like financial transactions
| require.
| automatic6131 wrote:
| My sibling-in-christ, you are talking about an imaginary
| future. You cannot start to base the economy of today on your
| science fiction. Even if we were moving the direction of your
| sci-fi (and we're not, because you are even describing a
| PHYSICALLY IMPOSSIBLE SCENARIO _), it would be so far in the
| future as to be stupid to start today. You might as well
| start building landing pads for asteroid mined metals.
|
| _ Physically impossible: yes - you've suggested using a
| currency made by the infinitely wasteful PoW system to
| finance the power used to compute something useful. You might
| as well try to fly by pulling on the arms of your chair.
| bufferoverflow wrote:
| Your comment sort of works against BTC, because it was
| intentionally crippled. But there are many other coins that
| will do just fine for day to day transactions.
|
| But also the premise of your argument (taxes and oil) is weak.
| The value of these transactions pales in comparison with the
| rest of the transactions. So government enforcement has little
| to do with the value of USD. It has value, because people
| believe it, they trust it will be accepted and / or easily
| converted to the currency of their choice.
| mjburgess wrote:
| Why do they trust that?
|
| D'you think it might have something to do with the state
| willing to violently require you accept its currency?
| tsimionescu wrote:
| State authority is only truly relevant for collapsing
| currencies - for a functioning economy and currency, trust
| and availability are far more important.
|
| Back in medieval and later times, when states were much
| weaker than they are today, especially economically, and
| especially small states, people chose which currencies they
| trusted, and often ignored the coins their local state was
| minting in favor of other, more trust-worthy coins minted
| in other places. Those places had no direct power over the
| people using their currency, and these people were not
| paying any taxes to them - they were simply choosing a
| currency they knew was likely to keep its values over the
| years.
|
| This does happen occasionally in the modern day, with USD-
| based economies outside the USA, typically in countries
| with runaway hyper-inflation in their local currency.
| bufferoverflow wrote:
| Cryptocurrencies don't do that, and they are still worth
| more than zero.
|
| Trust is the key.
| babypuncher wrote:
| Just using BTC to replace all of McDonald's daily debit/credit
| card transactions would completely destroy the system. I don't
| know why people think they are refuting your argument by
| pointing out low-volume examples like porn sites.
| jrm4 wrote:
| But this feels like "Just using Model T's to transport all of
| the corn in the early 1900's would destroy the Model T
| system." Doesn't really say anything meaningful about "the
| impact of cars and trucks."
|
| I don't get why this is a useful argument; BTC and/or Crypto
| is definitely going to evolve. The question is how.
| Night_Thastus wrote:
| [deleted]
| jrm4 wrote:
| Honestly, that someone can be this confidently incorrect
| is really fascinating to me, both in theory and practice.
|
| Even setting aside the fact that you're wrong in practice
| (i.e. there are already far more efficient
| cryptocurrencies in existence today) it's just very weird
| that the sort of person who goes to a site like this will
| confidently say something that's roughly equivalent to
| "We've reached the maximum speed of CPUs, they cannot get
| faster than this."
| zeven7 wrote:
| This sums up how I feel about so many crypto related
| comments on HN. Just look at this thread. It's full of
| people confidently presenting 100% false statements as
| facts. Several of the comments contain something like "I
| looked into crypto years ago and then I saw problem X and
| discarded it." My guess is remorse because they could
| have been "early" compounded with confirmation bias.
|
| To anyone who spent a few hours, days, weeks looking into
| crypto a few years ago and thinks you have any idea
| what's been going on in research in the field since then
| you're sorely mistaken.
| ipaddr wrote:
| Most people did not have a car in the early 1900s. Not
| everyone can go into space today, it doesn't scale. BTC
| may have a maximum number of transactions today but many
| are using bitcoin and the big advantage is it doesn't
| matter how much you move you pay the same transaction
| fee. It is not ready for micro payments but works great
| for larger payments.
| ben_w wrote:
| What size transaction do you think it helps with? My
| transaction fees are usually zero, even internationally,
| with the only exception being trivial costs when I
| visited the USA. Conversely, when I bought a flat I was
| legally required to add the _much larger_ in-all-but-name
| transaction fee of having a lawyer sign off that I and my
| money and my payment of it and the flat itself and the
| seller I was buying it from were all legit, and still
| would have had that even if I 'd used BTC.
| 2muchcoffeeman wrote:
| I think the argument for this would be that things like
| smart contracts could do away with lawyers and such.
|
| Except who vets the smart contracts? How does the
| customer execute the transaction in a fool proof way?
| jrm4 wrote:
| You've perfectly hit why "Smart Contracts" are perhaps
| literally the worst named thing in tech. They're not
| smart, and they're not contracts.
|
| In real life, the things we "Contracts" are not the the
| execution of the transaction itself, they are the written
| statement that attempts to describe the intent of the
| parties and most importantly -- what you do if things go
| wrong.
|
| Despite what I've said above, I will _definitely_ go full
| Luddite and say we are not remotely close to a world in
| which the lawyers are not needed.
| Sargos wrote:
| > The key difference is that BTC and all cryptocurrencies
| in general are not getting better about being scalable to
| many total transactions and transactions/second - they're
| getting worse.
|
| > This is true for all blockchain-based currencies, and
| it's fundamental to the technology. There is no "fix".
| It's not just a case of poorly written code or limited
| infrastructure, it's the core premise of the idea that's
| rotten.
|
| You are very confident for someone who seemingly hasn't
| researched much about optimistic and zero knowledge
| rollups. These systems inherit the security of Ethereum
| while providing exponentially greater transaction
| throughout which means scale improves and these networks
| cannot steal your money or do anything nefarious.
| ben_w wrote:
| Just using BTC to replace all of McDonald's daily
| transactions _in the Berlin metropolitan area alone_ would be
| enough to destroy the system. (Of course this is where people
| come along and talk about layers on top of BTC, but all those
| seem to me to just be extra ways to replace trivial
| transaction-level auditing with Turing-hard code auditing).
| dont__panic wrote:
| It also seems like those "layers on top of BTC" erode one
| of the only aspects of blockchain that has appeal for me --
| the full transparency of the system, such that you can see
| every exchange of BTC on the network.
|
| The minute you offload any of that to other systems, you're
| essentially creating dark pools and money laundering
| opportunities because of differential oversight.
| germandiago wrote:
| Money not stolen by who do not earn it. I love the idea.
| smoldesu wrote:
| If there's _one_ thing that people should correctly point
| out as scams in the world of crypto, it should be L2
| chains. Every single one of them is a ploy to enrich
| their creator, full-stop. I don 't even know what kind of
| pipe dream they sell to their investors to get capital.
|
| It's particularly funny, because I remember Justin Sun
| trying to scam people like this years before
| cryptocurrency had really taken off. Back then, though,
| everyone who had skin in the game _actually cared_ about
| the health of the community, and the guy lost millions of
| dollars trying some really insane hostile takeover
| tactics. Nowadays though, nobody cares. The hucksters of
| this world make their money hand over fist now.
| engmgrmgr wrote:
| That's a rather myopic view.
|
| You could look at L2s as a sort of credit card system,
| and from a systems and technology POV there's nothing
| inherently "scammy" about it. For web3 applications of
| any meaningful large scale, L2 solutions are necessary.
|
| For better or worse, the L2 developer platforms that I
| assume you're referring to are essentially low-code
| solutions to abstract away the actual systems software
| engineering aspect of web3 development. Are the low-code
| SaaS companies overvalued or "scammy"? I'm not suggesting
| they are or are not.
|
| Well-staffed tech companies building web3 applications
| often build their own implicit L2 solutions because it's
| just how you connect things in a distributed system with
| modern L1 blockchain constraints.
| aaroninsf wrote:
| This is as clear and succinct a statement as to why
| "web3" has nothing to offer as I have read.
|
| Translation: we will rebuild existing financial
| institutions with a bunch of move-fast break-things
| poorly-regulated "difi" companies which will both
| intentionally and through ignorance recapitulate every
| flaw of the existing financial industry.
|
| Purpose: as in the Celsius case, to intentionally exploit
| regulatory response time so as to extract money through
| opaque extra-legal and unethical exploits, intended to
| allow ourselves and chosen insiders to run off it,
| leaving deluded last-fools holding the bag.
|
| There is literally no benefit to anyone except the VC
| backing the scam, who are using chaff and FOMO to farm
| rubes.
| smoldesu wrote:
| > Well-staffed tech companies building web3 applications
| often build their own implicit L2 solutions because it's
| just how you connect things in a distributed system with
| modern L1 blockchain constraints.
|
| Sure. The banks do the exact same thing, which is what
| makes them so goddamn profitable to run. The problem is
| that the entire cryptocurrency space _now_ has to choose
| between two destinies:
|
| a. Default on the trustless model in order to continue
| scaling, passing the actual verification process to
| private validators who may or may not be scamming you.
|
| b. Let every token lose it's value, allow the system to
| suffocate and continue pushing for airtight security
| until the bitter end.
|
| Now, neither of those are attractive choices. I'll tell
| you what, though: I'd rather have a $20 bill than $20,000
| of Monopoly money.
| pbalau wrote:
| > I'd rather have a $20 bill than $20,000 of Monopoly
| money
|
| All currencies we use are smoke and mirrors. The
| difference is that that $20 bill is backed by well armed
| US Marines and an crypto currency is not
| stingraycharles wrote:
| I'm a relative crypto noob, but I did see certain
| "lightspeed" transactions which would allow for high-
| volume and "instant" transactions. Is this also
| considered an L2 chain, or not? If not, how does it
| circumvent the limitations of the bitcoin blockchain
| without sacrificing transparency?
| smoldesu wrote:
| > Is this also considered an L2 chain, or not?
|
| I can't say for sure without actually seeing the tech,
| but if a company promises to scale cryptocurrency
| transactions then they're _probably_ doing it on an L2
| chain. The problems with this are obvious: trusting a
| single party to handle all of your transactions and not
| abuse that insider info is crazy. These people are going
| to use their power over the chain to eke out every cent
| they can, otherwise it doesn 't make financial sense to
| operate in the first place. It looks attractive from a VC
| standpoint, but that's because it's a deliberate
| honeypot.
| jrumbut wrote:
| > one of the only aspects of blockchain that has appeal
| for me -- the full transparency of the system, such that
| you can see every exchange of BTC on the network.
|
| Which is interesting for many applications but kind of
| kills BTC as something that could be an everyday
| currency.
|
| I'm already uncomfortable with the amount of data my bank
| has about me. No matter what scheme has been used to
| obfuscate it, I'm not comfortable with that data being
| held by anyone with a hard drive and internet connection.
| dcolkitt wrote:
| The continued existence of gold as a store of value (and to a
| lesser extent silver) contradicts this model. Very few economic
| transactions are denominated in gold, either as a medium of
| exchange or a unit of account.
|
| There is a small amount of industrial demand, but this is far
| too tiny to justify gold's gigantic market capitalization.
| Valued on industrial demand alone gold would maybe worth
| $100/oz, yet today it trades at $1700/oz. And it has held a
| lofty valuation more than half a century after all major
| economies abandoned any gold standard behind their fiat
| currencies.
|
| The only possible explanation for gold's continued valuation is
| that it's quite possible for assets to exist as money-like
| _stores of value_ without necessarily needing to possess a
| functioning role as a medium of exchange or unit of account.
| Moreover what we can see is that store of value assets are
| highly path-dependent. Rhodium has similar properties to gold,
| yet gold is far more widely used as a store of value. The sole
| explanation for this is because of gold 's historical
| narrative.
| Aunche wrote:
| Gold is used for jewelry more than it used as a store of
| value. Even as a store of value, Gold has an advantage of
| cryptocurrency in that you can actually store it.
| Cryptocurrency presupposes the existence of the internet. If
| all the world reserve currencies collapse, there is a good
| chance that the internet would go down with it, and your
| cryptocurrency would be worthless.
| dcolkitt wrote:
| > Gold has an advantage of cryptocurrency in that you can
| actually store it.
|
| The vast majority of gold investors are not physically
| storing it on their own property. Most invest through
| funds, derivatives, ETFs, etc. If civilization collapses to
| the point the Internet can no longer support a peer-to-peer
| network moving 1 MB every 10 minutes, then it's almost
| certainly the case that you won't be able to sell your GLD
| stock at NASDAQ.
|
| The point being that while some gold investment demand may
| be as an armageddon hedge, the behavior of most investors
| is not consistent with that being the central driving
| factor. Ergo gold has utility as a store of value for macro
| conditions that fall short of civilization and the Internet
| collapses.
| yellowapple wrote:
| > Cryptocurrency presupposes the existence of the internet.
|
| Not really. You just need _some_ way for nodes to
| communicate. That could happen over the Internet, or it
| could happen over mail, or it could happen over a team of
| ravens carrying transaction data on little scrolls (hell,
| given corvid intelligence, they might even be able to
| execute smart contracts in transit).
| automatic6131 wrote:
| Theoretically, maybe you could do it over letters. Just
| like you could run a computing algorith with horsemen and
| flags in place of a CPU (like in the scifi novel, Three
| Body Problem).
|
| Practically, you are talking nonsense and it's patently
| impossible. You cannot run any crypto currency with a
| system of letters even if you're transporting them with
| the full infrastrcture of the modern world with it's
| airmail and diesel vans.
|
| Try and do it with letters delivered on foot. It is
| actually impossible.
| yellowapple wrote:
| > Practically, you are talking nonsense and it's patently
| impossible.
|
| The existence of IP over Avian Carrier demonstrates
| otherwise. It's slow and it's lossy, but it's good enough
| for a blockchain.
| tsimionescu wrote:
| I thought IPoAC only works on the 91st day of each year
| (or 92nd for leap years)...
| [deleted]
| pavlov wrote:
| Very few economic transactions are denominated in gold, but
| having it is a hedge for the contingency of finding yourself
| in a situation where you can only do a transaction in gold,
| and then it can be life-saving (bribing your way out of a
| European country in 1944, etc.)
|
| The reason people believe gold will retain meaningful value
| in a situation where nothing else does is thousands of years
| of history where it did work out like that. It's debatable
| (to say the least) whether Bitcoin with its mere twelve years
| of history and inherent dependency on easily disrupted
| digital networks could have the same properties.
| hans1729 wrote:
| >Very few economic transactions are denominated in gold,
| either as a medium of exchange or a unit of account.
|
| That doesn't mean that gold isn't a viable medium of exchange
| - it obviously is, just go to a market of your choice and
| trade it for goods. In fact, it's the single most viable
| medium of exchange, globally, since currencies are tied to
| economies, and economies can crash. Gold can not, thus is it
| valuable.
| gumby wrote:
| > economies can crash. Gold can not...
|
| A glance at the gold prices and economies of the 19th
| century show that in fact the gold price certainly can
| crash due to gold strikes.
|
| In addition, the stock of the planet's gold is negligible
| compared to the global economy (the hard to quantify set of
| transactions that people do with each other) so by
| definition can only operate at the margins. If the world
| crashes so far that gold is a meaningful proportion, will
| there be much to transact at all?
| hans1729 wrote:
| The exchange rate for gold (i.e. the interface of an
| economy with the material) can crash, not gold itself,
| thus the inherent value. That was my point, sorry if that
| wasn't coming across.
|
| >If the world crashes so far that gold is a meaningful
| proportion, will there be much to transact at all?
|
| This is where I start speculating, but couldn't we just
| create an arbitrary new currency and tie it to gold?
| gumby wrote:
| > This is where I start speculating, but couldn't we just
| create an arbitrary new currency and tie it to gold?
|
| How is that different from using the gold? i.e. has the
| same limitations.
|
| There are rational reasons for the gold standard having
| been dropped.
| XorNot wrote:
| > The exchange rate for gold (i.e. the interface of an
| economy with the material) can crash, not gold itself,
| thus the inherent value.
|
| What do you think this means? Because gold is _only_
| worth what you can trade it for - the exchange rate.
|
| It has no "inherent value" - you don't eat gold.
| apocalypstyx wrote:
| >economies can crash. Gold can not, thus is it valuable.
|
| The thing about money is that it is a technology. But
| unlike other technologies, such as an electric toothbrush,
| for instance, it has an additional quirk: without belief,
| it doesn't work. Regardless of whether or not I believe in
| electricity, an electric tooth brush turns on and off; if
| the participants in an economy don't have faith in the
| economy, the economy falters. Money's value lies in this
| belief, whether it is the belief that I can buy groceries
| or pay taxes. It is a faith that is a function of utility:
| there is the interdependence of the gods' delivering and my
| belief that they will; should the gods not deliver
| sufficiently, my faith wavers; likewise, if enough of the
| faith of the masses wavers, the gods fail to deliver.
|
| Gold is like an old god: its faith has a lot of coinage.
| However, its rule is not necessarily omnipresent.
|
| Scenario: we are in a post-nuclear apocalypse. I have a
| small trading post and a can of beans; you have a solid
| gold coin. Challenge: convince me why I should take the
| coin.
| samatman wrote:
| More likely, in North America at least, we would have an
| accepted exchange rate for 9mm and 5.56 and I'd need more
| than a can of beans for one cartridge.
|
| I unironically suggest having a box or two as a hedge, no
| associated weapon needed.
| hans1729 wrote:
| >Gold is like an old god: its faith has a lot of coinage.
| However, its rule is not necessarily omnipresent.
|
| Very nice point, you're not wrong. That being said:
|
| >we are in a post-nuclear apocalypse. I have a small
| trading post and a can of beans; you have a solid gold
| coin. Challenge: convince me why I should take the coin.
|
| Because it has properties that qualify it as a method of
| exchange (portability, provable chemical composition
| [...]) -- the same reasons it worked the first time. Mr
| Bean-Haggler, what else do you suggest we use for
| exchange? Mud? :-)
| mitchdoogle wrote:
| It's post apocalypse - you trade whatever you find. The
| most important commodities will be food, water, medicine.
| Gold would be practically worthless - it's not going to
| help anyone survive.
| XorNot wrote:
| Proving you're not getting duped with plated lead is
| actually pretty hard to do without high technology, hence
| the reason gold coinage came into existence and then gold
| depositories and banking and all the rest.
|
| Gold is transitorily convenient provided you exercise
| military force over a domain - that is you can force gold
| to be accepted for debts within your dominion. Nothing
| about it makes it intrinsically valuable otherwise - and
| more importantly you having gold doesn't grant you wealth
| because you didn't economically contribute to the system
| to start with.
|
| Turning up with all the gold you want would get it
| rejected or siezed because it wasn't an approved coinage.
| apocalypstyx wrote:
| As an intermediary, currency requires a minimum amount of
| social relations. Its value, if it can be said to have
| one, lies in its use as an indirect measure of the degree
| of faith in a particular set of social constructs.
|
| The reason I use the post-apocalyptic scenario is exactly
| because of this rupture of social relations. It is not
| the ghost of the previous civilization trying to
| reconstitute itself. It is a place in a wilderness onto
| which people might stumble. (Admittedly, this might not
| be communicated well and too informed by my early
| secondary consumption of old western movies.)
|
| Without this broader social context, the concept of trade
| becomes purely localized. My needs are not serviced by an
| explicit diffuse network which is conceptualized as an
| aspect not just of society but constitutive of reality.
| Operating on a faith, we take the conceptualization as
| reality and can accept, in our lives now, intermediary
| exchange: I firmly believe that by accepting an
| electronic transfer to my bank, I will be able to buy
| sweet and salty food that is engineered to appeal to my
| dietary obsessions as bequeathed by a combination of
| evolution and social conditioning.
|
| In the midst of such a thought experiment, however, I am
| not guaranteed to encounter another haggard individual in
| this hypothesized godforsaken world for a very long time.
| Neither am I guaranteed that any individual I meet will
| have such social relations as to value such an
| intermediary, either.
|
| Intermediary exchange is only viable once the pool of
| social relations grows beyond a certain bounds.
|
| The function of my acceptance of any system is the
| fulfillment of my needs, to some degree. In such a
| scenario, the only way those needs can be serviced is an
| equivalence of exchange. In this case, food is required
| for immediate survival, the tools of procuring such, and
| shelter, etc. Intermediaries, in such a scenario, provide
| no guarantee to provide such. So such must be acquired
| directly. I can eat beans. To take the gold assumes,
| incorrectly, I can obtain another can or equivalent. That
| incorrect assumption is a holdover from the fundamental
| and all-pervasive faith we are at present steeped in and
| that must be maintained for our reality to function.
| aabhay wrote:
| Gold is the world's best physical commodity to use as a store
| of value -- it doesn't degrade or tarnish, is easily molded
| into coins or other symbols, melts easily, has a highly fixed
| supply (synthesizing it is prohibitively expensive), and
| (now) increasingly is not tied to an industrial output so can
| weather GDP fluctuations. So in a battle Royale of all
| commodities, gold wins. That said, all commodities are
| affected by price action by speculators, so the actual traded
| value of gold can be very unrealistic.
|
| Gold is conceptually very similar to bitcoin, except gold
| can't be forked or copied. Which is why in the long term, I
| prefer gold.
| daniel-cussen wrote:
| Gold and bitcoin are practically identical.
| derac wrote:
| Good has a long history of use as a store of value.
| Bitcoin has a few years of being valuable. So did beanie
| babies. Noone knows if Bitcoin will be worth 0 or 100,000
| in 5 years.
| kloch wrote:
| > a highly fixed supply (synthesizing it is prohibitively
| expensive)
|
| This is what gives Bitcoin much of its value as well.
|
| > Gold is conceptually very similar to bitcoin, except gold
| can't be forked or copied
|
| This touches on another thing that makes Bitcoin valuable -
| consensus. Enough people agree to use it that it becomes
| the defacto standard.
|
| Bitcoin (and Ether to a lesser extent) are the "rough
| consensus and running code" of decentralized algorithmic
| money
|
| The two points are related. It was much easier to
| synthesize Bitcoin when fewer people were using it, and
| it's market value was less.
|
| This auto-scaling of difficulty with interest/value was
| added as a security mechanism but actually plays a key
| monetary role as well.
| aabhay wrote:
| What makes you trust consensus? Consensus is fickle. Gold
| is unique in its physical properties. Even if you can't
| agree on which country has a trustworthy currency, you
| have to trust gold.
| tablespoon wrote:
| > The US, additionally, forces the world to use it for oil
| trades.
|
| That is not true. The US isn't forcing anyone to use the
| dollar, e.g.: https://www.wsj.com/articles/saudi-arabia-
| considers-acceptin...
| bioemerl wrote:
| With sanctions against Russia the US is actually doing the
| opposite. Forcing them not to use the USD.
| mattwilsonn888 wrote:
| "Force." The real question is, why do they want to use the
| Dollar so bad?
| uoaei wrote:
| Trusting the WSJ on this is like trusting Fox News to say
| that angry people on primetime TV with reactionary rhetoric
| doesn't have any effect on political discourse.
| hackernudes wrote:
| So scarcity pays no role in value? Is the Mona Lisa not
| valuable? If money is printed it doesn't lose value?
|
| Why would Bitcoin collapse if it was used at "any" scale? Low
| max transactions per second? It is used by some people (even if
| not many) to pay for real things as well as wages! Are you
| saying an "economic" transaction has to be a commodity or
| taxes?
|
| I think any specific currency is valuable because people
| believe it is so. No single characteristic defines value.
| scoopertrooper wrote:
| > Is the Mona Lisa not valuable?
|
| That's such a silly argument. There are thousands of
| paintings around the world with the same level of scarcity as
| the Mona Lisa, but have far less value.
|
| Scarcity drives up prices on items that already have some
| perceived value. It doesn't create any value itself.
| mjburgess wrote:
| Every crypto coin trading at 0USD is likewise scarce.
|
| You need to pay attention to the actual economic transactions
| taking place. Looking at a graph of pure speculative value
| and calling it an economy is, more or less, a scam.
|
| You'll see that when it all disappears.. moreso than the
| cashflow of, eg., an actual business.
| hackernudes wrote:
| It is true that not all scarce things are valuable. But
| isn't scarcity is a good quality for a currency? Fiat
| currencies fail because of money printing.
|
| I think many cryptocurrencies are useless and driven purely
| by marketing and speculation and most tokens are
| unregulated securities. Bitcoin is someone's attempt at
| inventing an "ideal" currency and it is being bootstrapped
| into value and existence. How else could it work? Maybe it
| will fail, maybe not.
|
| > Imagine BTC was actually used for any scale of economic
| transactions. It would collapse overnight.
|
| You never explained why and I am honestly interested in
| your reasoning here. Are you implying BTC can't scale? It
| seems like two contradicting thoughts - if it is used, then
| it becomes less valuable.
| nixpulvis wrote:
| Another issue of HN debates values.
| theplumber wrote:
| I think Bitcoin will have as much value as the hypercard
| protocol has now. It's not really as valuable as Mona Lisa
| but you could say it has some value.
| wolframhempel wrote:
| Scarcity can support existing value - e.g. in creating a Gold
| Standard or some other means to artificially limit money
| supply - but it is not an intrinsic value. There are
| countless things that are both scarce and valueless.
|
| I believe your last two sentences hit the nail on the head
| (albeit being oxymoronic). Things have value because people
| are willing to pay for them. That's it. If companies can be
| traded below book value, Tesla can be worth more than the
| next five automakers combined and NFTs can cost six digits
| there seems to be no intrinsic value.
| hans1729 wrote:
| >So scarcity pays no role in value? Is the Mona Lisa not
| valuable?
|
| You're mixing up things. I can draw a one-off picture, that
| doesn't make the drawing valuable (sadly. If you want to buy
| my paintings, hmu). The value needs to be attributed by a
| shared denominator, which for the example of Mona Lisa is
| cultural prestige. Crypto has zero inherent cultural
| prestige, it's _only_ value lies in social attribution.
| Wallets on hard drives are meaningless unless we decide that
| they aren 't. The mona lisa isn't worth what it is if we
| decide otherwise, but it _does_ have _inherent_ value. Crypto
| does not. For crypto to have value, someone else needs to pay
| Dollar /Euro/whatever at an exchange. _That 's_ the value of
| crypto - the exchange rate.
| kwertyoowiyop wrote:
| NFTs = attempted cultural prestige for crypto?
| hans1729 wrote:
| Ha, nice. Problem: art receives value wrt the artwork,
| not the canvas, so the screenshot-meme wins. (Unless the
| cultural prestige lies in the underlaying technology
| itself, in which case the piece of art is the blockchain-
| implementation, not embedded content)
| yellowapple wrote:
| > Problem: art receives value wrt the artwork, not the
| canvas, so the screenshot-meme wins.
|
| This assumes that an original painting and a perfect
| replica of it have equal value. That might be the case if
| you don't know which is the original, but in the case of
| the _Mona Lisa_ - and in the case of the NFT - you almost
| certainly can figure that out.
| cowtools wrote:
| Sure, but it is a suitable canvas, is it not?
|
| If an artist signs an NFT or Colored Coin with a keypair
| that is associated with their public identity, shouldn't
| that be analogous to an autograph? If a physical, signed
| artistic work has more value than an unsigned work, does
| that mean that if you take the physical artistic work out
| of the equation you're left with the value of the
| signature? It's a funny question I guess. Like imagine
| people collecting PGP autographs.
|
| Maybe art has some intrinsic value, but I think a large
| part of the "value" of an art piece is associated with
| the cultural relevance of the piece. It would follow that
| if you can associate a transaction output with some
| cultural relevance in the same sense that traditional
| artwork does, then it could have value, albeit not much.
| datadata wrote:
| > For crypto to have value, someone else needs to pay
| Dollar/Euro/whatever at an exchange. That's the value of
| crypto - the exchange rate.
|
| This is true for every economic good, including paintings.
| Whether the value is "inherent" or not is irrelevant, you
| need a transaction or the value is just theory. Culture
| could also forget about the significance of the Mona Lisa,
| it has happened before, see for example
| https://en.wikipedia.org/wiki/Archimedes_Palimpsest, a
| mathematical text that our culture considers having very
| high value, but was overwritten into a prayer book by a
| culture that considered the work less valuable than the
| material it was written on.
| hackernudes wrote:
| OK, maybe the Mona Lisa was not a good example. But if
| somehow Da Vinci had produced a billion copies of the Mona
| Lisa it would not be nearly as valuable! My other point in
| that paragraph was that if a country prints more units of
| currency the value goes down, so scarcity is important to
| value.
| hans1729 wrote:
| Scarcity isn't 100% important for value - leverage is.
| Leverage can be tied to scarcity, but doesn't have to, it
| all depends on the goods which are being exchanged.
| Artworks exist just once, coupled with the attributed
| prestige the value increases. Guns exist a bunch, their
| price doesn't scale relative to their scarcity. Food is
| not priced relative to the amount on the market, but to
| the demand of the consumer. If the demand is high and so
| is scarcity, the price rises, but if demand is low but
| scarcity is high, the price stays low. [...]
| datadata wrote:
| Modern art reproducers can make copies of the Mona Lisa
| that experts can't easily distinguish from the original.
| This kind of replica fraud happens often in the art
| world. I find it interesting to try to justify the value
| of the original when it is almost zero cost to have an
| exact replica of the original. The scarcity is not real,
| or at least the scarcity of being able to enjoy the
| intrinsic value of looking at the painting is not real.
| When you remove that part, the value lies only in being
| able to verify the authenticity of the work, rather than
| in its quality as art.
| ntoskrnl wrote:
| Who says BTC isn't used for payments? Many porn sites ONLY
| allow you to pay with crypto, including PornHub[1], and they're
| keeping the lights on somehow. It's being used by the Ukrainian
| military to pay their suppliers while the banking system is
| offline[2]. It's being used for remittances. I had to pay my
| rent with it once. Also VPNs, etc. There's far more global
| economic activity conducted in BTC than in gold.
|
| It all depends where you look. In some niches, BTC is used a
| lot. In some niches it isn't used by anyone (hi HN!) But it's a
| big world out there, and if you look outside your bubble it's
| not hard to find people using it.
|
| Re: the last paragraph, BTC did indeed crumple under load for a
| long time around ~2016, and transaction fees were very high as
| a result. But lightning network has appeared since then and
| fees are back down to reasonable levels, well under $1. Those
| were serious growing pains, but we made it through just fine.
|
| [1]: https://news.ycombinator.com/item?id=31914284
|
| [2]: https://www.wsj.com/articles/how-crypto-is-helping-
| ukraine-r...
| mikeyouse wrote:
| That's not true for PHub -- Just went to confirm and the
| first option is bank transfer, the second is crypto. What
| percentage of people who pay for PHub do you think even own
| crypto? My guess would be <1%.
| yellowapple wrote:
| There's no way in any number of Hells that I'd trust
| PornHub with my banking info.
| mikeyouse wrote:
| Right - as a commenter on a technical forum - how much
| overlap do you think there is between yourself and the
| age/infosec knowledge/technical savvy of the type of
| person who pays for PHub in 2022?
| yellowapple wrote:
| Doesn't really make much of a difference; "only give your
| banking info to those you highly trust and only if it's
| absolutely necessary" has been common sense for longer
| than the Internet has existed.
| noirbot wrote:
| Is it? Cause a lot of stuff still happens by check even
| now, which literally has your name and your account and
| routing numbers just printed on it, which you used to
| order by sending all of that information via the mail to
| a random printing company.
|
| I already have to trust my power company, most of my
| credit cards, my ISP, my gas company, and my landlord
| with my bank info, all of which are probably less secure
| and trustworthy than Pornhub...
| yellowapple wrote:
| Sure, but a check is at least ostensibly ephemeral (even
| if there's nothing preventing someone from jotting down
| the account/routing number), and there are legal
| protections against using that info for transactions
| other than that consented to on the check (hence the
| signature and memo line and such).
|
| Contrast that with explicitly authorizing PornHub to
| withdraw from your account at their discretion, as is the
| case when you're giving them your account/routing number
| on a web form. That info then gets stored in some
| database.
|
| And no, I don't give utility companies or landlords or
| what have you such authorization, either. I mail them a
| check (thereby not giving them cause to store the account
| info long-term and not giving them consent to auto-
| withdraw), or I use a credit or debit card (which I can
| dispute or change far more easily than I can a bank
| account). If they accepted cryptocurrencies, then I'd
| pick that over either of those options.
| colpabar wrote:
| you completely ignored the question lol
|
| we know that _you_ know, and that _we_ know, but the
| comment was saying that most people don 't.
| yellowapple wrote:
| No, I directly addressed the question: it's _common
| sense_ , i.e. entirely independent of tech-savviness or
| age or other factors. It's indeed common sense passed
| down to me from people far less tech-savvy (and far
| older) than myself.
| marcosdumay wrote:
| You mean your name and bank account number?
|
| Those are basic for doing business. People share them
| with everybody they deal with.
| melony wrote:
| I would trust them a lot more than your average consumer
| fintech. They have been around for a _long_ time and
| their engineering is nothing to be sniffed at.
| tsimionescu wrote:
| Why not? They're a far more reputable business than many
| online stores, for example.
| remram wrote:
| Pornhub runs ads.
| danans wrote:
| > It's being used by the Ukrainian military to pay their
| suppliers while the banking system is offline
|
| Ukraine's banking system is both online and functional:
|
| https://kyivindependent.com/hot-topic/ukraines-banking-
| mirac...
|
| Regarding donations to Ukraine, the total value of donations
| to Ukraine has been around $900M so far [1], of which only
| $7M has been in crypto (according to your WSJ article), so
| less than 1%.
|
| 1. https://fortune.com/2022/04/15/how-much-donated-ukraine-
| war/...
| zeven7 wrote:
| > only $7M has been in crypto
|
| Vitalik alone donated $5M.
| https://fortune.com/2022/04/08/vitalik-buterin-ukraine-
| donat...
|
| This page says $60M has been donated to one specific
| organization https://donate.thedigital.gov.ua/
|
| Here's another one that says they've collected $9M
| https://unchain.fund/
|
| I'm sure there are others.
| mjburgess wrote:
| You're right that BTC has a floor because there's some
| economy behind it. I'd say in the 100USD-1000USD/coin range.
| benreesman wrote:
| I'll sell you that contract up to what I can finance it at.
| dmoy wrote:
| You completely ignored what GP said.
|
| The _floor_ is different from what people will sell it to
| you for right now.
|
| AMZN may have a floor of $ASSETS / #SHARES (or something,
| I just made that up), but that doesn't mean anyone will
| sell it to you for that right now.
| hinkley wrote:
| That's just the sort of definition of Floor that leads to
| internet breaking production outages.
| benreesman wrote:
| Thank you.
| benreesman wrote:
| Anyone can invent quasi-financial terms to make grandiose
| claims. The beauty of the market is that loudmouths don't
| participate in the market for long.
|
| I'll sell an American-style options contract to someone
| who thinks BTC is going anywhere near there at Black-
| Scholes -75. And I'll have no trouble financing it.
|
| You want the other side?
| mattnewton wrote:
| Not the person you are responding to, but is there
| somewhere reputable offering these kinds of contracts to
| no-name retail investors like myself? I would absolutely
| load up on something like 12,000 - 15,000 USD bitcoin
| puts depending on the time decay people are offering and
| how certain I could be that they would actually let me
| exercise them, and not freeze trading or even go belly up
| during the crash. I am somewhat.. skeptical I will be
| able to exercise them on an primarily crypto exchange
| like Binance that has blocked trading during freefalls
| before that is structurally dependent on the price of
| crypto to some extent.
| benreesman wrote:
| Also, not to pile on, but GP said 100-1000USD BTC. I'll
| sell puts at that until my Saudi buds run out of money to
| lend me.
|
| You're talking 12k-15k, which is a much more interesting
| options chain.
| mattnewton wrote:
| Right, I've learned the hard way that if my models are
| that out of line with the market then my models are wrong
| in ways that will cost me a lot of money. Satoshi himself
| could reveal to me the future price of bitcoin is
| intrinsically around $1,000 USD as a little understood
| fact of how the blockchain works, and I still wouldn't
| trade on that today with prices where they are. Even a
| instantaneous divine revelation from God to all mankind
| would take a long time to propagate through the markets
| and you would lose your money in the meantime.
| benreesman wrote:
| I don't know whether or not you've studied economics or
| financial mathematics, but you've concisely and
| concretely identified something called the Weak-Form
| Efficient Market Hypothesis.
|
| Maybe you already knew that, but if not you're a natural.
| SilasX wrote:
| In the US, LedgerX[1] (now owned by FTX) is a reputable,
| regulated exchange. The longest-dated put I see for $15k
| is EOY 2022 and is trading at a spread of $2000-8000.
|
| You can buy puts at the $25k strike dated June 2023 for
| $4300-4800.
|
| [1] https://app.ledgerx.com/btc There was a link that
| doesn't require login but I forgot it.
| mattnewton wrote:
| Thank you, this could be exactly what I was looking for,
| I will look into this.
| SilasX wrote:
| Glad to help! Late correction, though, I think I was
| reading the call side by accident, some of the puts are a
| lot cheaper.
|
| EOY 2022 $15k strike: $1700-2000
|
| EOY 2022 $10k strike: $700-950
|
| June 2023 $25k strike: $7400-7900
| MacsHeadroom wrote:
| There are dozens of dApps where anyone with an internet
| connection and money can buy/sell puts and other options
| on BTC anonymously.
|
| They have full openly auditable reserves and all their
| code is open source and visible on their respective
| smartchains. Wanting an institution to provide a sub-par
| solution for this is a cop-out. Put up or shut-up.
| mattnewton wrote:
| With a centralized service I don't need a law degree, I
| can quickly ask an expert what my rights are and
| understand an option, and there is a (limited and slow,
| but existant) method to make myself whole in the event of
| a problem. Each dApp is its own special setup and it can
| be quite complicated to figure out exactly how it
| behaves, who to sue if it doesn't, and who to pay money
| to find these things out for me. I hope you'll forgive me
| for being worried about trusting that with any
| significant sum of money.
| benreesman wrote:
| Depends on the size. At retail size counterparty risk of
| e.g. Binance or FTX is a talking point, not a legitimate
| concern.
|
| If you want to take a big position, talk to someone like
| Wintermute who has a big OTC desk, or if you want a
| better deal, find a friend of a friend. Someone you know
| knows a whale.
| mattnewton wrote:
| I mean, my use of belly up is definitely hyperbole. But,
| that the position of say, 12,000 usd per coin expiring in
| December is a huge enough dip from current prices that it
| is likely to come true only in the event of a large
| crash, and during the last crash Binance froze
| withdrawals and there was a large backlog of "stuck"
| transactions on the blockchain. I don't know how these
| options execute but if I have to move bitcoin on the
| blockchain to unwind the position I would be afraid of
| being able to actually unwind it at the most favorable
| price in a time window, making the risk actually higher
| than typical models. Or maybe I dont know what I am
| talking about and Binance options wouldn't need to
| actually move coins on the chain to close out the
| position?
| px43 wrote:
| Shh.. you're scaring all the people who think their
| computer science degree gives them exceptional insight
| into how money works.
| benreesman wrote:
| In fairness, I was one of those people until I landed at
| a satellite office of my SV company in New York and
| started hanging out with real finance players.
| FabHK wrote:
| You're selling puts on BTC struck at 1000 at a discount?
| Yes, I'll take a few.
| benreesman wrote:
| I said 75 bps off what Black Scholes kicks out, gets a
| little weird with the thin market, and the expiration has
| to make sense, but in general, fuck yes?
|
| You think BTC is going to drop like 20x in a sane options
| duration?
|
| I think a lot of people would sell you that.
| joebob42 wrote:
| I don't think "is this where the price is going" really
| has anything to do with what gp was even saying.
| someo1ne wrote:
| Happy to buy btc for $1000 of you!!
| douglaswlance wrote:
| Cryptocurrencies have inherent value.
|
| Would you say there is value in having the capability to
| transact with someone else? There is some value there, no
| matter how many alternatives and how little that value is. That
| value scales exponentially with the number of potential
| transactional partners because each additional partner gives
| all other partners a new potential transactional partner.
|
| So at scale, even if the value of having the option to trade is
| minuscule, it balloons into real value when every single person
| on earth is a potential trade partner. That is the inherent
| value of a cryptocurrency network.
| mjburgess wrote:
| Well that's the total addressable market: all possible users
| of any currency.
|
| Likewise, that's the same market for any currency proposal --
| including all the coins currently trading at 0 USD.
|
| Money's job is not to have _inherent_ use-value, as then
| people would use it up. Its value is relational, it tracks
| the economic exchanges with actual inherent value. But not
| perfectly, since you can eg., have hyperinflation, etc. So
| money has a life of its own above the economic transactions,
| but this is unsustainable, hence inflation which is "money
| falling back to earth".
|
| There is no earth for crypto to fall to, ie., no place of
| actual economic productivity.
| douglaswlance wrote:
| It's not all _possible_ users. It 's all _actual_ users.
|
| Facebook isn't valuable because anyone on Earth could use
| it. It is valuable because people do use it and its value
| has the network effects.
|
| Coins trading at 0 USD have no users, thus their value is
| 0.
|
| Money must have inherent value (at least the capability of
| being traded) for it to be money.
| peyton wrote:
| I really don't buy the old taxes-make-the-money-work chestnut.
| Far too many counterexamples.
| anonporridge wrote:
| Taxes aren't why money generally works (money emerges
| naturally in human societies), but taxes are what makes
| national currencies work.
|
| If you don't pay your taxes, you don't get to participate in
| the local economy for very long. Men with guns will
| eventually come to your home and take your stuff and/or take
| your freedom.
|
| You can't even do direct barter without cash without
| incurring a tax obligation in the US,
| https://www.irs.gov/taxtopics/tc420, so even if you live your
| life like this, you still need to find a way to get actual
| dollars to pay your taxes. This is what creates the basic and
| permanent demand for dollars.
|
| The simple truth is that every government is at its core the
| biggest, baddest gang in the land. The old royalty were
| literally mob bosses, and often presented themselves as
| gaudily and arrogantly as the street gang bosses in the
| modern age. They have the monopoly on violence in their realm
| and then printed a bunch of tokens that they demand as
| tribute for the promise of letting you live your life in
| peace. Because they control the issuance of these tokens,
| they effectively control the flow of the economy and can more
| easily manipulate people. They can't arrest everyone, so
| there's still a fine balancing act required to keep the
| masses generally consenting of the arrangement, with just the
| right show of force to reinforce the system.
|
| But other things beyond currency are still money, like gold
| and bitcoin, because money is just something scarce that you
| hoard in the hope that in the future, you can trade it for at
| least as much goods and services as you originally traded for
| the money, if not more. Anything scarce can be monetized when
| the currency becomes less scarce, which is part of what is
| driving up housing as people hoard it as a better store of
| value than currency. And importantly, making the thing you
| store this ethereal "money" in even more scarce relative
| other things increases the value of your own, which is part
| of the driving force behind NIMBYs who block new housing
| developments.
| catlifeonmars wrote:
| > so there's still a fine balancing act required to keep
| the masses generally consenting of the arrangement
|
| Yes, this is the part where the government (state or
| federal) delivers value, such as education, healthcare,
| natsec, and generally facilitates the ability to do
| business via the court system. I think it's disingenuous to
| make the argument you're making without acknowledging the
| value that government provides.
| nonrandomstring wrote:
| > The simple truth is that every government is at its core
| the biggest, baddest gang in the land.
|
| Were.
|
| I don't know if you subscribe to the political analysis of
| Adam Curtis but in the past two decades governments have
| been passing their power to private banks, corporations,
| QANGOs and "non majoritarian" think-tanks like it's a hot
| potato. The new breed of politicians are not statesmen but
| revolving-door temporary managers who would sell-off and
| outsource the whole country for personal convenience.
|
| Other than a monopoly on violent power (which is vanishing
| fast in the USA as private cops and prisons take over) it's
| hard to locate the power of government sometimes. Even the
| military is dissolving into a loose collection of defence
| contractors. In the UK our intellgence services were more
| or less sold to Amazon.
|
| The OP article seems dead set against anarcho-
| libertarianism but it is by no means pro-government, or
| explicitly pro-democracy. With regard to money and
| economics, from my moderately pro-government/state stance I
| see the great mistake governments are making is giving up
| on cash.
|
| Physical currency is an absolutely vital component of a
| stable economy. Its very lack of instantaneous fluidity (it
| relative inconvenience) means it acts like a capacitor to
| stabilise markets if you can manage circulation and
| interest. Moreover, governments have a strict monopoly on
| that, and physical currencies can take on many new guises
| with modern cash technology. Abandoning that would be
| suicide.
|
| If governments get into a battle to take the ground of
| purely digital currencies against crypto, they will lose.
| They are making this mistake in an attempt to gain
| legibility (surveillance). Ultimately they will have to
| choose between surveillance and economic control. And since
| the value of surveillance is massively over-rated I am
| optimistic we'll pull out of the Orwellian misadventure in
| time.
|
| Anyone genuinely interested in defending against the
| "ideology of crypto" (as this article posits) should be
| investing in new cash technologies (some of which I have
| mentioned in earlier comments here). They should be
| promoting a plurality of diverse cash equivalents (many of
| which can be implemented using cryptographic technology -
| not necessarily block-chain).
| globalreset wrote:
| SkyMarshal wrote:
| Edit: Oh, gotcha, failed/ing states with currencies that
| hyperinflated despite being the only accepted currency for
| taxes.
|
| --
|
| What are some of the counterexamples?
| wuliwong wrote:
| To me, the stronger government intervention is taxing the use
| of cryptocurrencies (or pretty much anything except dollars
| in the US) when buying something with it. There is a capital
| gains tax event that happens if you buy something with BTC,
| for example. So you have to pay extra to use non-dollars for
| transactions but also a regular person's taxes would become
| extremely complicated if they used non-dollars for all their
| transactions.
| datadata wrote:
| Excellent point. This also lends to it being easier for US
| tax subjects to use the dollar as a unit of account and
| ignore its (small, but not insignificant and always
| trending downward) value changes. I think a crypto wallet
| app that optimized for this problem would be super
| valuable, e.g. making doing taxes of these transactions
| seamless, and suggesting paying using a currency that is
| optimal for taxes (e.g. realizing a loss if that is
| possible, because then your purchase would come with a tax
| credit.) There are also efforts by legislators to enable de
| minimis exemptions for crypto transactions (taxes waived if
| the transaction size is sufficiently small)
| samatman wrote:
| I agree with this, it's a market of last resort but it hasn't
| prevented hyperinflation ever.
|
| No one facing a hyperinflationary death spiral says "oh well,
| at least the government will take taxes in this crap" they
| desperately cast around for a stable place to put wealth.
| pydry wrote:
| Taxes are only a chunk of what makes fiat money work but
| theyre probably the largest chunk.
|
| There arent really many counterexamples and arguably the
| counterexamples have extenuating circumstances (e.g. dinar
| under saddams occupation).
| bluetomcat wrote:
| Paying taxes in a given currency means that the government
| forces the use of that currency nation-wide. Without a
| central tax authority requiring that currency, groups of
| people could start exchanging, say, peanuts for the mutual
| exchange of goods and services. Since you can't pay your
| taxes in peanuts, you would want to hold national currency
| instead of peanuts.
| yakak wrote:
| I would want to exchange peanuts and consequently owe no
| taxes. That is why the US has very complicated rules to
| discourage bartering and gives every sign it would
| complicate and eventually outlaw quid-pro-quo family/friend
| arrangements for things like child and elder care if large
| and powerful groups of people weren't still extended family
| oriented.
| elil17 wrote:
| Genuinely curious here: has anyone actually proposed
| making family helping with childcare illegal (or perhaps
| taxed?)
|
| Even if it's just an economist weirdo I'd be curious to
| see what the argument is there
| yakak wrote:
| The exceptions in the rules here for example are almost
| certainly directly constructed by Congress or anger from
| Congress and not particularly consistent with how the IRS
| expands laws by expanding existing theories if left
| alone:
|
| https://www.irs.gov/businesses/small-businesses-self-
| employe...
| bombcar wrote:
| Most IRS rulings and much of tax law itself are to try to
| patch over loopholes that are being exploited (the very
| page describes the various checks they have in place).
| bluetomcat wrote:
| > I would want to exchange peanuts and consequently owe
| no taxes.
|
| This idea is at odds with the concept of the modern
| nation state. You can't have running state institutions
| and an army that, in theory, should provide some level of
| security of the state borders. Having many groups of
| people, each exchanging peanuts, beans or stones would
| lead to a decreased level of trust and no concept of
| national unity.
| yakak wrote:
| I don't get your point or you don't get mine. The
| individual individual's incentives are to have benefits
| without them being measurable income so Tax being about
| dollars makes dollars less desirable without many more
| actions from the state to force dollar measurable
| transactions.
| yellowapple wrote:
| > This idea is at odds with the concept of the modern
| nation state.
|
| Good.
| benmanns wrote:
| For example with USD, this also requires not just
| transacting in USD once a year, but hedging in the national
| currency, as many crypto earners and traders are learning.
| If you get paid 1 BTC when BTC is worth $50k, you really
| should sell and hold 15-50% of it immediately to cover your
| tax obligation. If the price drops to $20k, you can sell
| and book a $30k loss, but you may only be able to deduct
| $3k of it against your $50k in income, leaving you in a bad
| spot come April 15.
| klntsky wrote:
| It's not taxes but salaries.
| danachow wrote:
| As stated it's bollocks - but also a straw man. The value
| depends on the value of the state in question. A wealthy
| state will force money to have some value if they collect
| taxes in that currency. A completely dysfunctional state with
| no wealth or services doesn't exchange any value for taxes.
| But for the US, Europe, China, whatever - not Zimbabwe - it's
| a major factor
| rvense wrote:
| As far as I can tell, money is so entirely based on trust
| that it might as well consist of it, trust in in some fuzzy
| combination of other people's continued rationality and
| things staying roughly the same. I accept 100 euro bills for
| my labour because I believe I'll continue to be able to trade
| them for food and shelter.
| enaaem wrote:
| Fiat is indeed based on trust. The trust that the
| government remain functioning. Fiat is a government backed
| claim on economic production. That's not trivial, because
| the government is the sole arbiter and enforcer of property
| rights. Fiat determines what resources you can legally
| assign to you, according to the rules of the sole arbiter
| of property rights.
|
| The notion of property rights is only relevant with a
| central authority who is able to enforce it. Which could be
| a nation state, tribal chief or a lord. In the jungle you
| only own whatever you are able to defend. Even your own
| life.
| datadata wrote:
| > The notion of property rights is only relevant with a
| central authority who is able to enforce it.
|
| The innovation of bitcoin is precisely making this
| statement no longer true. The "property" might only be
| digital data, rather than physical things, so you can
| argue that it is no longer true in only a limited
| context, but it is not longer absolutely true.
| enaaem wrote:
| Absolute truth is not relevant because 99.99% of what you
| need to sustain yourself is physical. It's practically
| 100%.
|
| Maintaining BTC itself requires physical inputs and
| physical property rights. You need fiat to buy energy.
| Your house with mining rigs needs enforcement of property
| rights.
| datadata wrote:
| The physical inputs to bitcoin are decentralized and
| robust against disruption. You don't need to be a miner
| yourself to store or transact.
|
| > You need fiat to buy energy.
|
| This is a circular argument and not true. You can buy
| energy today with gold or bitcoin.
| marcosdumay wrote:
| Gold was based on trust. Trust that the next merchant you
| deal with will want it.
|
| The same was true for salt, and many more local kinds of
| money that existed.
|
| It's also the same trust you need for fiat money. This,
| and trust that your government won't create a huge lot of
| it in an instant (slow rates of money creation are fine).
| Turns out that governments have a lot of leverage to
| enforce the first, more relevant kind of trust, so the
| total trust required decreases.
|
| The idea of cryptocoins was to remove the trust on nobody
| creating a lot of money very fast. But in doing so, they
| also lost the leverage to enforce that people will accept
| it.
| enaaem wrote:
| With Cryptos you need to trust that you can convert it to
| fiat. Crypto trust is still a reliant on fiat trust. Any
| business accepting crypto, even drug dealers, need to
| convert their cryptos to fiat, because they need to pay
| the bills, pay their mortgage in system reliant on
| government enforced property rights.
| rzwitserloot wrote:
| The central tenet is the underlying intrinsic value. There
| are many fungible concepts that operate on a valuation that
| seems like it is being bought and sold solely on the basis
| that others think it is valuable too. However, usually
| there's a seed of intrinsics, something fundamental whose
| value will always be there.
|
| For 'fiat currency', it's the fact that the state has a
| monopoly on violence and has decreed both [A] that they
| will accept the fiat currency for fulfillment of tax
| obligations, and [B] that they will not enforce a claim of
| debt if you have offered to pay it in fiat currency and the
| debtee didn't accept your offer.
|
| For gold it's the fact that gold is considered
| intrinsically pretty by some, and has industrial uses.
|
| The same can be said for iron, wood, or even air - but
| those are far less rare. Wood has value just as gold does -
| it's just that folks tend not to trade trailers full of
| wood as a fungible because it is unwieldy.
|
| Stocks have intrinsic value too: It's a tiny voting share,
| and gives the right to enjoy a share of dividends.
|
| Bitcoin has __nothing__. Whatsoever. It's real easy to look
| at the ridiculous price of stocks in companies that make it
| incredibly difficult to use your vote and which never pay
| out any dividends, or the sheer unfathomable levels of
| business done in terms of USD or EUR and how it seems to
| dwarf the intrinsic, and conclude that the intrinsic is
| just not important...
|
| But is that a jump you can make?
|
| As you said:
|
| > I accept 100 euro bills for my labour because I believe
| I'll continue to be able to trade them for food and
| shelter.
|
| You sure? Maybe it's 1% 'because I have absolute guarantees
| I can pay my taxes with this, and I have a guarantee that I
| can trade them for food and shelter because if I pay my
| bills with dollars and the recipient no longer wants them,
| they have no legal recourse to force me to make good in any
| other way'. Presumably you have certain outstanding debts
| that work like this (if not just simply your tax bill,
| which is inevitable, then your power bill, your rent or
| mortgage, etc), so that euro bill __already has value__ the
| moment you receive it. You can take your mental bookkeeping
| of 'oh yeah the month is halfway through so I absolutely
| do, unambiguously, owe my bank half a month's mortgage at
| the very least', and immediately reduce that amount by
| EUR100,-, given that you are holding a EUR100,- bill in
| your hands and the state has decreed that they will tell
| the bank to get fucked if they decide they no longer want
| to accept your euro for paying off that mortgage.
| rvense wrote:
| Well, in my country my taxes are deducted from my salary
| before I receive it, so the psychology of that is a bit
| different. But I think we agree, what I'm saying is fiat
| money is valuable because of the stability of the
| institutions that order our society/ies, and because
| there is an unspoken agreement that most of us want
| things to stay roughly as they are and believe that they
| will. If too many cracks appear there, people start
| acting very different.
|
| As for Bitcoin, the original Bitcoin paper talks about
| replacing trust with code, and I just don't buy it. Sure,
| you can trust that Bitcoin aren't spent more than once
| and all that, the maths take care of that. But it fails
| to consider all the institutions that integrate the
| Bitcoin world with the rest of social/economical reality,
| and all that arises there like price volatility,
| transactions taking forever, exchanges getting hacked,
| and that Bitcoin-as-a-casino, excuse me, object of
| speculation, has a far bigger impact on its day-to-day
| than for e.g. the Euro. The paper doesn't consider that
| reality at all, but those things mean that 1000EUR worth
| of Bitcoin is a lot less useful than a stack of fifties.
| lrvick wrote:
| Big companies are not using actual printed paper money
| directly. Cash, like Bitcoin, is great for peer to peer
| transactions, but too slow and impractical for the population
| to all use end to end for all daily transactions.
|
| Companies like McDonalds operate on credit via privately owned
| payment rails because ACH and cash are way too slow. Even when
| it takes cash that cash is not physically shipped to a bank
| vault at McDonalds HQ but instead local restaurants make cash
| drops to other private companies, banks, that then take
| possession of the cash and use their own private network to
| credit a remote account.
|
| Even tax payment portals allow use of the payment rails of
| private companies because paper USD is too impractical.
|
| Still, the fixed supply of federal reserve issued USD is what
| all these magic third party payment rails create an abstracion
| layer for.
|
| No one Bitcoin advocate that knows how it works is saying
| Bitcoin will be used -directly- for daily commerce. Even in El
| Salvador venmo-like apps have emerged that batch Bitcoin
| transactions and use credit, much like Visa does to abstract
| slow ACH or cash.
|
| These proprietary credit systems defeat a lot of the point of
| Bitcoin though, so open off-chain credit systems like Lightning
| exist. My local Coffee shop accepts Lightning which in short
| allows us to just continually cancel and re-issue signed
| Bitcoin transactions off-chain we never publish until one of us
| needs to settle which in some cases could be years, and that is
| fine.
|
| Unlike Visa, the benefits of credit solutions like Lightning
| are available to all replacing KYC and credit checks with
| cryptography.
|
| Also going back to your point about taxes, several states have
| serious efforts to get Bitcoin permitted for tax payment:
| https://www.deseret.com/2022/2/8/22918061/wyoming-arizona-bi...
| R0b0t1 wrote:
| A more compelling theory suggest that money has value because
| it is coercively used to extract value from a society via
| taxes. People desire it because the government's monopoly on
| force requires them to pay taxes in it.
| chaosbolt wrote:
| Well an apple has value because it's food, but if today people
| are willing to pay 1 banana for it and tomorrow they're willing
| to pay 2 bananas for it, the apple still has the same value it
| did yesterday because the calories in it haven't changed, but
| you can actually obtain twice the calories you could've
| obtained yesterday by taking the banana (2 bananas today), so
| its value today has doubled.
|
| Bitcoin is a 0 calorie apple, today you can exchange it for 1
| banana, people who hold it think tomorrow they'll be able to
| get 2 bananas for it.
|
| At the end of the day we are biological entities, value is what
| survival and reproduction benefits we think something can
| provide, and if enough people are paying that price then its
| value is that price in dollars.
| throwaway413 wrote:
| This is well said, I'm gonna borrow that - "crypto is like a
| 0 calorie apple."
|
| This matters. Even gold, at least I can wear it and display
| my wealth. You can't even display your crypto wealth like
| that. It is entirely lacking in any "real" value.
|
| Idea: luxury tshirt made out of a $5 white tee with a wallet
| QR code slapped on the front showing off the balance of the
| shirt. Or a ring. Crypto fine jewelry.
| mattwilsonn888 wrote:
| This is not deep. This is you getting confused about how
| money works. Nothing you are _realizing_ applies specially
| to specific money like gold or Bitcoin - it applies to all
| money and frankly it makes little sense.
| throwaway413 wrote:
| Would you mind elaborating please? I am not following
| your point.
|
| I understand cash has this same issue. Assets do not -
| they provide an actual value to the physical world -
| which is what my point was in the above statement. A
| crypto t shirt can still provide value as a t shirt,
| regardless of the value of the coins it holds. I'll admit
| it's a reach, but just to illustrate the point.
| tuesdayrain wrote:
| >Even gold, at least I can wear it and display my wealth.
| You can't even display your crypto wealth like that
|
| I'd feel much safer displaying large sums of wealth online
| by posting a wallet than by wearing luxury goods in public.
| throwaway413 wrote:
| Oh totally agree - someone can just pull a necklace right
| off you. I was just surfacing the point that at least
| gold does has some value on its own as a status symbol -
| there is a market for jewelry outside of gold as a
| transfer protocol. An bitcoin wallet without ability to
| transfer it is just some used up memory, it doesn't have
| any value on its own. See coins going to 0 when exchanges
| close their doors. All the banks in the world could close
| and people would still find shiny rocks attractive and
| admirable. We have for thousands of years.
| bckr wrote:
| > someone can just pull a necklace right off you
|
| I wonder if there's an argument to be made that nothing
| is of any real value unless there's also some risk of
| losing it.
|
| e.g. you drop your apple in a gutter, or someone takes it
| from you, or it turns out to have a nice fat worm inside
| it
| throwaway413 wrote:
| I like that. Risk of losing it, and difficulty of
| recovery of the same or an equal asset.
|
| Life, for example, is extremely valuable. Everyone loses
| it, but there's no getting it back. If you lose the
| apple, you can probably get another relatively easily,
| unless we're talking a post-apocalypse situation...
| Hellbanevil wrote:
| jesushax wrote:
| Totally agree. For example, I have 10,000 SOL (Solana
| tokens) that I regularly screenshot and show off. It's
| all on devnet, though, so it's free and worthless.
|
| It's the web3 version - in web 2 I'd be instagramming my
| knockoff Rolex I bought in Tijuana
| MacsHeadroom wrote:
| Real value doesn't matter. "Marginal" value is what
| matters. Breathable air and drinkable water have the
| greatest real value of anything, but their marginal values
| are zero and near zero respectively for a number of reasons
| (chiefly scarcity).
| throwaway413 wrote:
| Marginal value itself is unstable compared to real value.
| Sure, the amount of air you require may change, albeit
| insignificantly. Marginal value can go +/- total value at
| any moment due to external factors.
|
| > Breathable air and drinkable water have the greatest
| real value of anything, but their marginal values are
| zero and near zero respectively for a number of reasons
|
| Case in point. Sure, abundant now. But when they are not,
| which we know is actually happening, that "0 marginal
| value" will quickly become "whatever we can afford so we
| can survive".
| mattwilsonn888 wrote:
| Bitcoin doesn't need to be money, especially not on layer 1, to
| have value. USD doesn't get its value as a currency from slow
| and expensive wire transfers, and it gets very little value at
| all from being a store of value.
|
| Even if Bitcoin was primarily transferred between custodians
| between clients, it would still be better than USD (assuming a
| stable market cap) and give clients far more options while also
| forcing banks to disclose reserves.
| thelamest wrote:
| Transfers can be dirt cheap with normal money (e.g.: Single
| Euro Payment Area), and your banking system can be
| transparent enough (the US one already is), if your
| regulating body cares about it. The average individual
| neither can change it, nor cares. If many people can't help
| themselves but get fleeced, as happened recently on a large
| scale in the crypto space, at best you can struggle to
| recreate regulatory agencies in some kludgey crypto form.
| Most egregiously, all this is still worse than pointless,
| because the true differential value-add in crypto comes from
| enabling value flows for undesirable activities like crime,
| and it's only possible thanks to horrible incentive system
| that rewards wasting energy.
| jrm4 wrote:
| Weird argument, you're presuming that it has no value today
| because it doesn't work YET. But, that's like the whole point
| of e.g. IPO's. People sometimes put money in something in the
| belief that it, or something related to it, will work later.
| luma wrote:
| So when, exactly, is "later"? Bitcoin is nearing it's 14th
| birthday which seems like plenty of time to make it "work".
| jrm4 wrote:
| The argument I've been making is that Bitcoin is the
| equivalent of the Model T; the prototype thing that
| essentially "proves" the technology can, and even _will_
| work, but it won 't be the actual thing. It will likely be
| a different cryptocurrency.
| tsimionescu wrote:
| Bitcoin can't scale to real numbers of transactions (say,
| enough to handle the daily needs of a small town)
| fundamentally by design. Investing in Bitcoin with the
| expectation that it will ever scale to Visa levels of tps is
| like investing in an early-stage cold fusion start-up.
| soVeryTired wrote:
| It's not obvious to me that transactions are the key here.
|
| Suppose I want to buy something online using crypto. I buy up
| $X worth and transfer it to the vendor. They transfer whatever
| it was that they bought, but they immediately redeem the
| bitcoin for $X, give or take a small amount from market moves.
|
| There's no net demand for crypto here, and the increase in
| crypto price from my purchase will roughly be offset by their
| sale.
|
| I think the only way to explain crypto prices is through buyers
| hoping that they'll be used as a store of value. I don't agree
| with that, but that's a different story.
| solotronics wrote:
| Gold having value over a long period of time is a counter
| argument. Nobody is transacting in gold yet it is valuable.
| NhanH wrote:
| For a long time (thousand of years), people in Asia
| transacted in gold for high value items.
|
| My parents bought my childhood home with physical gold bars
| (around ~3.5kg gold, in bar of 37.5g each)
| michael1999 wrote:
| That is incorrect. The Bank of International Settlement
| definitely uses gold for payment. In rare events, a country
| will do physical settlement via shipping, but it is usually
| done via paper claims.
|
| https://www.bis.org/banking/balsheet/statofacc200831.pdf
| treeman79 wrote:
| Long hold for Aluminum didn't exactly work out.
|
| https://www.americaslibrary.gov/jb/gilded/jb_gilded_monument.
| ..
|
| I actually agree with you. :)
| pmw wrote:
| Both the argument and your counter argument are discussed by
| Lyn Alden here: https://www.lynalden.com/cryptocurrencies/.
|
| She proposes three ways, including valuing cryptocurrency as
| we do precious metals.
| bitxbitxbitcoin wrote:
| If anything this is an argument for Bitcoin also having
| "value" without being used by the average Joe for day to day
| transactions like buying a coffee.
| zach_garwood wrote:
| Gold has utility. You can't make circuits out of Bitcoins.
| lamp987 wrote:
| You think gold has the value it has because a miniscule
| amount of it is used in circuits?
| cowtools wrote:
| I think it has a more stable value if the demand for gold
| is more diversified across industries.
| nightski wrote:
| But most Gold is not used for circuits. Not only that, gold
| can be mined on demand and has an ever increasing supply
| (gold does not really disappear).
| cowtools wrote:
| Sure, but a not-insignificant amount of gold is still
| used for industrial applications. Even if gold wasn't
| used as money or in jewlery, I imagine it would still be
| quite expensive: at least half of it's current price. The
| same could be said of other precious metals.
|
| But I don't think you can say the same about bitcoin.
| Bitcoin's fundamental utility is low, even compared to
| other cryptocurrencies.
|
| Gold has useful unique properties over other metals.
| Bitcoin does not even have useful unique properties over
| other cryptocurrencies.
| daniel-cussen wrote:
| It would definitely be worth half its price as a reserve
| currency for purely industrial reasons, if not a bit
| more. Like if it became impossible to balance payments
| with it, well like if it became irradiated long-term like
| in _Goldfinger_ , but there was still some clean gold
| left and it was just for industry. People would totally
| invent new uses for it at half the price. They just don't
| even consider it because it's expensive.
| cowtools wrote:
| This reminds me, I was looking at the periodic table the
| other day and I noticed that gold actually has a pretty
| high electronegativity: almost as high as carbon!
|
| https://mappingignorance.org/2017/02/09/electronegative-
| gold...
|
| Makes me wonder if there are a ton of unexplored
| properties and usecases for rare metals that we just
| haven't discovered yet.
| hans1729 wrote:
| That's not right.
|
| One: gold is the og currency, it doesn't have to prove its
| value because it already did. Two: it is also being actively
| used for transactions, look no further than jewelry. If you
| have gold, you will find someone who is willing to exchange
| it for something else with material value in any city on the
| planet. This is not the case for crypto.
| capableweb wrote:
| > This is not the case for crypto
|
| No? You don't think the following statement is as true as
| the one you made?
|
| "If you have Bitcoin, you will find someone who is willing
| to exchange it for something else with material value in
| any city on the planet"
|
| My experience would tell me otherwise, but maybe I'm a
| outlier.
| hans1729 wrote:
| Scenario: a country-wide blackout occurs. You're haggling
| with local farmers for food. Which has value to them,
| bits on a hard drive or solid gold?
| cowtools wrote:
| I agree with your point, but consider the following:
|
| 1: Cryptocurrencies can still operate over distributed
| mesh networks or sneaker-nets in a semi-doomsday
| scenario.
|
| 2: With gold, it is difficult to verify its authenticity
| vs some impostor alloy without the necessary
| tech/knowledge.
|
| Edit: the bottom line is that in a doomsday scenario,
| people have little use for bitcoins or shiny yellow
| rocks.
| ludston wrote:
| You can verify gold with a vessel of water, an already
| verified piece of gold and a set of scales. It's taught
| in story form to primary age children with the famous
| quote "Eureka I found it!"
| cowtools wrote:
| Interesting point. I don't have any comment, but it looks
| like this guy disagrees with you:
| https://news.ycombinator.com/item?id=31933490
| datadata wrote:
| For daily transactions at the current gold price, it
| would be extremely hard to do this sort of measurement
| that way with any precision without very specialized
| equipment. A gram of gold (around $60) is a reasonable
| daily transaction size and has a volume of 0.05ml. In
| order to distinguish metals of similar densities, you'd
| have to be able to measure just a fraction of that volume
| accurately. Maybe there is some clever system to scale
| this down, but wasn't obvious to me.
| nradov wrote:
| We have never seen a distributed mesh network that worked
| correctly in the real world at scale. The OLPC project
| tried doing that but ran into severe technical problems.
| So it's not necessarily impossible, but I simply don't
| believe we will have an operating mesh network in that
| scenario.
|
| https://wiki.laptop.org/go/Mesh_Network_Details
| samatman wrote:
| Counter scenario: you're fleeing a country ahead of war,
| and you know that metal detectors will be involved and
| your gold _will be_ taken. But they will not be checking
| every piece of paper you have, everyone is in a hurry.
| The bank run already happened and reinsurance depends on
| the capital staying functional.
|
| Bitcoin wins.
|
| See, we can do this all day. There are points of
| comparison and points of departure.
| capableweb wrote:
| If the farmer is unwilling, you'll find someone else.
| That was one of the conditions right? That you'll be able
| to find _someone_ "who is willing to exchange it for
| something else with material value in any city on the
| planet". Not the likelihood of a farmer during a country-
| wide blackout. This is just moving the goalposts.
| cowtools wrote:
| I think bitcoin is about as difficult to transact as
| gold, although in ideal circumstances cryptocurrency
| should be easier to transact than gold.
|
| However, gold has a fundamentally stronger argument for
| its value. Gold is useful: it has unique physical and
| chemical properties.
| anonporridge wrote:
| This strikes me as obviously untrue.
|
| Gold is drastically more difficult to transact in than
| bitcoin or any cryptocurrency. Not only is it extremely
| difficult to create exact change to pay in gold (shaving
| of milligrams per dollar?) but there is zero
| infrastructure or education on how to verify that the
| gold is real. Even modern nation state banks have been
| fooled by tungsten cored bars of gold.
|
| There are plenty of well established crypto apps that
| make receipt, verification, and conversion into your
| preferred cryptocurrencies or fiat currencies instant and
| effortless.
| cowtools wrote:
| Interesting point. I don't have anything interesting to
| say, but maybe you should argue with this other guy:
| https://news.ycombinator.com/item?id=31933417
| smt88 wrote:
| Gold has thousands of years of history as a currency (or
| backing a currency).
|
| It's also intrinsically valuable for jewelry and industrial
| purposes. It's irreplaceable in electronics, for example.
|
| Cryptocurrency that can't be sold to someone else has
| absolutely no value. In fact, it has _negative_ value because
| of transaction fees, something that plain cash doesn 't have.
| I can send someone $100k with a $0 transaction fee.
| hinkley wrote:
| Gold also has enough value as a material to both lift the
| value of it and complicate the making of things with it.
|
| First silver, then gold, then platinum, now palladium and
| rhodium have ridiculous values associated with them.
| tuesdayrain wrote:
| Your mistake is valuing cryptocurrency purely as a currency. In
| reality BTC and other cryptos have combined properties of
| currencies, commodities, securities, as well as unique elements
| that can't be found elsewhere. Crypto is its own asset class
| and trying to value it using old models of other assets is
| bound to fail.
| ChainOfFools wrote:
| there is so much soft-corruption pressure and old fashioned
| lobbying from Bitcoin kingpins to insinuate BTC into various
| nations' fiat pools. Why is this, when making bitcoin into fiat
| undermines the entire point of bitcoin.
|
| Well obviously, on the superficial level there's plain old
| greed.
|
| But on a more existential level, bitcoiners are acknowledging
| that proof of work will lose to proof of lead, in any kind of
| direct confrontation.
|
| So backing its security with math isn't enough, coiners want it
| backed with armed force. like fiat.
| mattwilsonn888 wrote:
| You're all over the place, and "making Bitcoin into fiat" can
| have many meanings. I doubt it means to you what it means to
| most.
| carapace wrote:
| Giordano Bruno said that whatever has the most value and the
| least cost of storage _becomes_ money.
| mathattack wrote:
| I will play the devils advocate here. What if it's value is
| more like a store of value (gold) rather than a currency. We
| can't pay all of our bills in gold, but it's a store of value
| you can buy in and out of.
|
| I don't have a horse in the race, just trying to understand.
| anbende wrote:
| Right, except that gold has inherent value. Historically we
| thought it was pretty and made jewelry out of it. It's
| important for a variety of technology products. It's a value
| store because it is consistently valuable first. Bitcoin
| skips that step.
| mattwilsonn888 wrote:
| Gold _pays_ for that step. No one sensible would prefer the
| gold UX compared to Bitcoin. It beats it in every way other
| than 'shiny!'
| koonsolo wrote:
| Gold has pretty big downsides as a store of value. It's
| heavy, hard to transport, ... .
|
| The key to a cryptocurrency store can be memorized in your
| head. That means I can have 2mil in my head, with no other
| way to access it. I take it wherever I go, and can access
| it when there is internet. I can also send it to whoever I
| want, no limit.
|
| This is literally a 1st. How high people value that, is not
| up to me alone. But you cannot deny that it has _some_
| value. And as long as it has _some_ value, the above works.
| It basically bootstrapped itself. Claiming it has a value
| of 0 is very short sighted.
| eropple wrote:
| Gold's shiny and has industrial applications. What's
| Bitcoin's inherent value floor?
| mattwilsonn888 wrote:
| Doing everything the majority of the economy of gold does
| (industrial uses can be ignored) better, except being
| shiny. If 'shiny' is your real argument then reconcile
| Pokemon Cards without ruining your argument.
| eropple wrote:
| "The economy of gold" doesn't do much of anything except
| extract wealth from a particularly extremist subset of
| "economic freethinkers" and my generation's parents when
| they watch too much Fox News, so I'm glad we're in
| agreement.
| kreetx wrote:
| You can cheaply create more Pokemon cards while you
| actually need to mine the gold, no-one can't debase it at
| will.
| waynecochran wrote:
| I don't follow the last statement. If a cryptocurrency was used
| for decentralized buying and selling, folks were not using it
| for speculation, and thus it became a stable currency would it
| not flourish?
| pclmulqdq wrote:
| This is why Monero is doing really well right now as a
| currency, but it has become a bit of a dirty word among
| crypto bros. For many people in cryptocurrency, the price
| action is the point. People are tired of saving and seeing
| inflation eat their savings. They want to get rich, and they
| believe that no investment lets them do it. That's why the
| Gamestop fiasco became such a phenomenon, and I think that is
| why Bitcoin is so volatile and why it is what it is.
|
| In my opinion, there will need to be a great clearing out for
| cryptocurrencies and blockchain technologies to mature, and
| things will need to get very boring. The "clearing out" means
| $0 BTC, DOGE, ETH, LTC, etc. The "boring" part means things
| staying stable. Otherwise, it doesn't look like there is
| enough room for other cryptocurrencies (like SOL as an
| NFT/smart contract platform) to succeed in the market, and
| scams will be the only viable business models because they
| are fast.
| lottin wrote:
| The demand for a currency fluctuates according to various
| factors, therefore if the supply remains fixed its price will
| not be stable.
| waynecochran wrote:
| For argument sake, lets say it was as stable as the price
| of Silver...
| diogenes1 wrote:
| which is fine, since you can back another cpi/whatever
| automated chainlink index adjusted asset with it. Sure the
| efficiency will not be as good as fiat but it's robust
| lottin wrote:
| I thought we were talking about price stability.
| antoniuschan99 wrote:
| Isn't the value in money both in security (eg. Dollar backed by
| Superpower) and economic transaction?
|
| With Bitcoin's hash rate at an all time high, it's more secure
| than ever - can we say it's the most secure system in the
| world?
|
| Of course the tradeoff for BTC is like insane consumption of
| power (currently Argentina size).
|
| With BTC, I don't think the use case will ever be to handle
| small sums of money. Transaction speed and fees don't make
| sense for it.
| pavel_lishin wrote:
| What sort of security are you referring to?
| [deleted]
| kreetx wrote:
| Expensive to fork I presume.
| xorcist wrote:
| > Imagine BTC was actually used for any scale of economic
| transactions. It would collapse overnight.
|
| Higher velocity of money would lead to zero value? That's not
| commonly what basic economy dictates.
|
| This being 2022, let's try to keep our concepts clear as to not
| rehash the debate from ten years ago. BTC is a currency, a
| blockchain, a programmable transaction language, a piece of
| software, and a protocol. It is good to suggest which one of
| these we imagine in use, and how that use is done.
|
| Otherwise we risk saying that imagine if the physical $100 bill
| was used for all McDonald's transactions, clearly that wouldn't
| work, they are too hard to subdivide and even if they weren't
| there simply aren't enough of them, and therefore it is
| unusable as a currency.
|
| Clearly McDonald's couldn't operate each and every economical
| transaction by settling them publicly on the BTC block chain,
| that much is obvious. But just as clearly there's nothing
| stopping Visa from denominating transactions in BTC, or
| utilizing that type of transactions internally, or utilizing
| the public Lightning network, or whatever it is McDonald's use
| in El Salvador. That much we probably agree on so let's leave
| that discussion in the past decade.
| kevstev wrote:
| > Higher velocity of money would lead to zero value? That's
| not commonly what basic economy dictates.
|
| I think you missed his actual point, which to be fair wasn't
| explicitly stated and I don't think is widely known. The
| bitcoin network can not handle large transaction volumes,
| like at all- its absurdly low. Somewhere around 10/second is
| where I understood it to stand, and I recall reading a paper
| that talked about changes that could theoretically get that
| to 40/s. A quick googling on the state of the art of this has
| it reporting 7/second: https://www.google.com/search?q=max+tr
| ansactions+per+second+...
|
| I know this because this came up around 2016ish during one of
| the booms, and while I was previously crypto-curious and even
| a bit enthusiastic about the possibilities, once I saw that,
| I immediately lost all interest and got out. Other coins like
| Bitcoin Cash tried to address this, but the numbers were
| still absurdly low for what was supposed to be a completely
| decentralized currency to replace all others. Which is
| actually why Coinbase, FTX and the like rose so quickly and
| became so important- they enable transfers off chain.
| lrvick wrote:
| I appreciate that we both replied with the same points at
| almost the same time.
| DrBazza wrote:
| > For BTC (or any coin) to have any value, it needs actual
| economic transactions to be conducted in it. If there aren't
| any, its value is smoke-and-mirrors; its not real.
|
| Not quite - if someone, anyone, wants something that someone
| else has, they're prepared to buy it. That's the price. You
| might say tulips are valueless, but that wasn't the case when
| people _wanted_ them -
| https://en.wikipedia.org/wiki/Tulip_mania
|
| I'm sure everyone has said "I wouldn't pay X for Y", but
| someone _has_ paid X for Y. X is the price.
|
| As much as many on HN like to hate on crypto, people want to
| buy it, and people also want to sell it. That means there's a
| market and therefore a value to it for those people.
| mint2 wrote:
| It's a unique move to non-ironically point out btc has value
| because tulips once had value, aka one of the most notorious
| bubbles of all time. Most people pointing to the tulip bubble
| comparing Bitcoin are giving an example of why Bitcoin is
| misguided. This is the first time I've seen someone say
| Bitcoin is like tulips thus it has value.
| samatman wrote:
| Here's the interesting thing about tulips: after the bubble
| popped, bulbs recovered to a stable and profitable price, and
| the Dutch have been exporting them in great numbers ever
| since. Tulip mania was a resounding success and an enduring
| source of wealth for the Netherlands.
|
| No direct analogy intended but it's an important historical
| fact. A lot of money was made on the South Seas as well.
| hans1729 wrote:
| >people want to buy it, and people also want to sell it. That
| means there's a market and therefore a value to it for those
| people.
|
| People don't _want_ to sell it, they _have to_ , in order to
| pay the electricity bills for the mining (in their countries
| normal currency, for that matter).
|
| There is no inherent value - you can only sell if the
| exchanges find someone who is willing to buy.
|
| The value to the seller is the Dollar/Euro they get at the
| exchange. The value for the buyer is speculation on the
| price, _which someone else then has to pay at the exchange in
| normal currency_. There is exactly zero value in crypto
| itself.
| DrBazza wrote:
| Not at all - I can buy a bitcoin now, and then sell it,
| having not mined it.
|
| I choose not to. But other people do.
|
| > Money has value because of the value of the economic
| transactions in which its conducted.
|
| As the OP said, little pieces of paper have essentially no
| intrinsic value. But use it for transactions, and it has
| suddenly has a value forced on it. We've all seen zombie
| apocalypse films with cash blowing around in the street and
| the survivors ignoring it for good reason, no one _values_
| it.
|
| Bitcoin is the same, it's a bit of paper in the sense that
| it's just some numbers on disc somewhere with no
| _intrinsic_ value, yet as soon as it's a medium of
| exchange, _which it is_, it has value. There are
| transactions made in bitcoin.
| ookdatnog wrote:
| Answering the question "why does Y have value X" with
| "because people/someone are/is willing to buy Y at price X"
| is technically correct but a cop-out. When people ask why
| something has value, they are typically asking _why_ someone
| is willing to give money for it, what 's the motivation. And
| the reason why people are willing to pay for something can be
| very relevant, especially if you want to figure out whether
| something will rise in value or collapse.
|
| There are many reasons to want something, but broadly you can
| argue that you either want something because you believe
| owning the thing will make your life better in some way
| (food, housing, transportation, ...); or you can want
| something because you think someone else will pay more for it
| later down the line, in which case the value of the thing is
| entirely speculative to you.
|
| Some things are not entirely one or the other. People wanted
| tulips because they are pretty. Eventually they became a
| status symbol, demand grew faster than supply, and quickly
| people started buying tulips not because they wanted them,
| but because someone else might pay more later. So tulips
| became a speculative bubble, which eventually collapsed.
| nathias wrote:
| ah yes, the "basic economics" that you just make up as you go
| ...
| cowtools wrote:
| Rebut the parent comment
| globalreset wrote:
| melony wrote:
| You are describing fractional reserve banking. Banking
| licenses have their authority ultimately derived from the
| state's monopoly on violence.
| globalreset wrote:
| MrMan wrote:
| Yes thats life
| 627467 wrote:
| > too high maintenance to be a store of value like gold
|
| Really? because the price/value flutuates too much? How is
| storing 1B dollars in gold lower maintenance than storing 1B
| dollars in BTC or other high-liquidity crypto?
| cowtools wrote:
| Maybe the author thinks it is easier to steal or harder to
| secure bitcoin than gold. I think it is sort of nuanced and
| could go either way, but I would agree that bitcoin is easier
| to store: especially with a trusted multisig setup.
|
| Bitcoin owners have a lot of cheap security options based on
| their spending habits risk model.
| reledi wrote:
| Harvesting and storage of a naturally occurring element is
| lower maintenance in theory. It is easily stored a thousand
| years ago and a thousand years from now, even if some global
| catastrophic event occurred that renders modern technology
| useless.
| sixQuarks wrote:
| Yeah, I stopped taking the author seriously after this
| ridiculous statement.
| Geee wrote:
| I don't think that Bitcoin is extremely anarchist / libertarian.
| It would be similar to gold standard. There would be no unlimited
| funding for governments through central banks. It would limit
| government spending, but also ensure that politicians are wise
| and responsible. In my opinion, democracy needs hard money
| standard to function properly.
| myfavoritedog wrote:
| germandiago wrote:
| This caught my eye: "anarcho-libertarian roots" is tagged as
| destructive.
|
| I simpathyze with positions close to that.
|
| I do not understand what is harmful about trying to be free and
| not surveilled. Harmful for whom? For the people who wish to keep
| social control, smash you with taxes and do intervention and
| cheat, like the inflation we are suffering now in Europe bc
| someone decided to print money willy-nilly? Who benefited from
| this printing of money? The SAME people who printed it. Who pays?
| Yes you guessed right... normal citizens. I firmly believe we
| have the right to protect ourselves from abuses like these.
|
| On top of that the ONLY purpose of the European Central Bank is
| to keep inflation under 2%... Come on... who can believe these
| people anymore... I do not. Even the same people responsible for
| it (Draghi and Lagarde among others) are still there as if
| nothing had happened.
| BenoitEssiambre wrote:
| That is kind of a scary article. I tend to dislike crypto
| arguments that make it political. There are pure economic
| arguments against it, from free market laissez-faire Friedmanian
| perspective, from centrist perspective and more obviously from
| the left wing perspective, that show crypto as dangerous for
| society. No need to make it another wedge issue (I tried to be
| somewhat politically neutral here:
| https://benoitessiambre.com/specter.html ).
|
| This article makes a fairly strong case that authoritarian
| politics could readily mix with the economics feeding on each
| other in an unstoppable vicious circle that eventually leads to
| financial and societal cataclysm.
| bendtheblock wrote:
| all money is political. good starting point:
| https://washingtonspectator.org/paranoia-on-parade/
| zackmorris wrote:
| I have a dumb question that's probably user error on my part, but
| I can't seem to find a simple answer for: shouldn't BitCoin
| transaction fees (and thereby price) eventually stabilize to the
| cost of electricity plus hardware? And if so, then why would
| price fluctuate? It seems like there are 2 options:
|
| 1) Cryptocurrency transactions cost less than the cost of
| electricity: a market will form farming the price discrepancy
| between electricity and coins (solarpunk?)
|
| 2) Cryptocurrency transactions cost more than the cost of
| electricity: a market will form to compensate miners for the
| extra electricity (money laundering? what goes here?)
|
| If mining costs keep getting more expensive, eventually the
| network will be so throttled that it will petrify. Also I feel
| like the cost of mining tied (or passed) the cost of coins a few
| years ago. So I don't understand why anyone would want to be a
| miner now. Which suggests a hidden incentive to be a miner.
|
| I stumbled onto this article from 2017 when BitCoin was close to
| the $20,000 it is today, and it cost about $3,000 to mine a
| BitCoin in Louisiana, maybe not counting hardware cost?
|
| https://www.marketwatch.com/story/in-one-chart-heres-how-muc...
| wmf wrote:
| I don't understand what mental model you're using for the
| relationship between price, fees, and mining costs.
|
| Bitcoin fees have nothing to do with the price or the cost of
| mining; fees are basically proportional to (transaction
| throughput demand) / (fixed transaction throughput supply).
|
| I've seen various reports saying the cost to mine 1 BTC is
| between $8,000 and $13,000 so miners are still profitable. Note
| that mining ASICs have increased their efficiency since 2017
| but difficulty has also increased.
| leijurv wrote:
| I don't think that's true, fees are not proportional to that.
| Fees compete for a finite and precise limited space in
| blocks. There's no limit to how high fees could grow in this
| competition, because only the 7 most lucrative transactions
| get mined per second.
|
| I think it is vaguely accurate to say that fees and mining
| costs are linked, *however*, currently the coinbase block
| reward is a bigger deal. Example: most recent block
| https://www.blockchain.com/btc/block/743055 created 6.25
| bitcoin out of thin air, plus 0.186 bitcoin from all its
| fees. In the future, when fees make up a larger share of
| this, miners will indeed start to get income from fees. Then,
| we will see an interesting dynamic where automatic difficulty
| adjustments and competition between miners entering and
| exiting the market will result in miners electricity costs
| aligning with bitcoin transaction fees. In other words, every
| unit of value that goes into a bitcoin transaction will
| result in that much value being spent by a miner on their
| electricity bill.
| wmf wrote:
| OK, what you're saying is that after the block reward ends,
| fees will equal miner _revenue_ and miners will mine harder
| until equilibrium where their costs equal their revenue.
| That 's correct but it's important to understand that the
| causality flows from fees to miner costs, not vice versa.
| Miners cannot force fees up or down.
| leijurv wrote:
| Well it's a continuous process: today the fees make up
| maybe three percent of revenue, but that fluctuates as
| transaction space demand changes, and as the coinbase
| halves every few years.
|
| But your point is good - miners are not really in a
| traditional supply/demand relationship with transactors,
| because block space is perfectly inelastic. There will be
| 7 slots per second (amortized), no matter what.
| Although... a petulant miner could artificially restrict
| this supply, by perhaps declaring that they'll never mine
| a transaction that pays less than X fee. This would only
| apply to the blocks that they mine, but the effect on
| overall supply could be nontrivial?
| WC3w6pXxgGd wrote:
| upsidesinclude wrote:
| This is really long and I gave it my best shot, but from the
| onset it's intellectually dishonest.
|
| Anarcho =/= "centralized authority is corrupt and evil"
|
| He has redefined anarchism (no authority) to suit his needs and
| attached the negative connotation in his defining
| characteristics.
|
| The paradigm, which he has missed, is that the blockchain IS the
| "state". The authority of the system is derived from its working
| mechanism and therefore does not require outside governance.
|
| Citing oppososition from leftist progressives as surprising....?
| The group that demands the most compliance to ideaology and
| greatest support for expanding federal government? This isn't
| difficult mental exercise or requiring some contortion to find
| plausible. Their opinion is the obvious conclusion.
|
| I find here further evidence that VC is a bunch of wealthy hacks
| hiring their smart friends to wax knowledgeable to the rest of
| us, lower cretins.
| fleddr wrote:
| I once lived in such an extreme anarcho libertarian society. It
| was called the 80s.
|
| In that cash-based society, the government had no real idea how
| much cash I owned. I also had full freedom of transaction.
| Somehow taxes still got paid and crime wasn't really worse.
|
| Apparently, this is now a far right position.
| water8 wrote:
| Crypto was supposed to be inflation hedge but it is clearly not.
| It is a speculative market pure and simple.
| jrm4 wrote:
| A great deal of the discussion here is surprisingly not smart
| because it's presuming that the current technical landscape is
| the forever technical landscape (i.e. mostly a presumption that
| looks like "Crypto, the entity, is just like BTC is today".).
|
| I find it very strange because I feel like we've been able to do
| project out to "better working technology" quite well in the
| past. Supply and demand, y'all. Will at least some people have a
| use case for crypto? Yes. Can we use the example of bitcoin and
| other crypto's to relatively safely assume that in the future,
| there will be a cryptocurrency that more-or-less does what it
| says on the tin? I think it's silly not to.
|
| START from that point in your discussions, because it's probably
| coming.
| mattwilsonn888 wrote:
| There's a reason the mostly unsavvy crypto skeptic hates the
| idea of crypto improving: they cannot financially capitalize on
| it.
|
| Every new crypto project claims to be the second coming. There
| are no stable heuristics which don't get exploited by the next
| wave of marketing. The only way to make good bets in crypto is
| to deeply understand what teams are working on and make
| intelligent judgements.
|
| What broad crypto skeptics don't understand is that every alt-
| coiner shares their critical point of view, but has the know-
| how to attempt (or pretend to attempt) a solution to those
| problems.
| jrm4 wrote:
| Absolutely. And I know I'll get clowned for mentioning him
| but gonna do it anyway: This is why I find Richard Heart so
| interesting if you believe his motives. His claim is "I'm
| already rich, so it's not about money, I actually want to
| improve on Satoshi's work and make a good crypto."
|
| (I fully understand why one would absolutely not believe his
| motives given his appearance, but I'd encourage people to
| consider it anyway. I actually believe him and am throwing
| some money in his projects. THAT BEING SAID, I am NOT putting
| any money in crypto that I can't stand to lose and I
| personally do not believe anyone should)
| logifail wrote:
| > "Contrary to popular belief the crypto market did not collapse"
|
| Umm, shades of the Iraqi Information Minister in that statement.
| Take a look at the USD/Bitcoin chart for the last 12 months.
| silentsea90 wrote:
| Imagine a world where you live as a slave with your owner having
| rights over your time to the extent they'd like. That sucks.
| Well, fiat is that with the Govt stealing your productive time
| (since your time was spent on earning money) to the tune of 7-8%
| (officially) and likely 10-15% unofficially. This is in addition
| to 40% tax. You effectively spend 50% of your working time
| serving the Govt. Would you vote yes on sending troops to Iraq,
| funds to Ukraine, military industrial complex etc? That's how
| your time is "invested".
|
| If a world where this is fixed invokes your phobia, good luck to
| you. Dare the Govt actually ask you for your money (instead of
| stealing it) for funding a war and we'll see how many wars we
| fight.
| hahaxdxd123 wrote:
| Imagine living in a deflationary world where you live as a
| slave to unaccountable powerful holders of Bitcoin, where a man
| who holds 20% of the worlds wealth will continue to do so
| forever into perpetuity, at 0 risk. Do you think this is a
| world where real wealth creation (goods, intellectual property,
| etc) is possible?
| silentsea90 wrote:
| Nobody holds 20% of Bitcoin, and early BTC whales have been
| selling to make their profits so we're getting less
| concentrated[1]. It helps that BTC has taken a decade to rise
| to this value with plenty of selling and redistribution along
| the way. I don't see your point but perhaps you don't mind
| sharing more :) I don't disagree that concentration is a
| problem but the existing system has enough concentration
| already. I don't want states printing away to glory, and
| bitcoin can't be printed so that's a HUGE improvement
|
| [1]: https://ecommerceinstitut.de/bitcoin-wealth-is-becoming-
| more....
| FabHK wrote:
| Nonsense. Inflation has been running at below 2% for decades,
| and everyone is free to invest their savings in shares, gold,
| other currencies, or even crypto. Comparing that to slavery is
| not only fundamentally wrong, but distasteful.
| silentsea90 wrote:
| US debt is skyrocketing, expenses like war paid for by
| debt[1]. Inflation in the US has been 2% but only because it
| was in a position of strength with the world accepting USD as
| the global reserve. That's changing steadily both with
| excessive printing and the world rejecting US debt
| instruments as a savings asset.
|
| "Everyone being free to invest" is a bit of an elitist claim,
| as most in the US live paycheck to paycheck and are hurt by
| inflation. Cost of ownership of houses skyrocketing over
| decades, and CPI being oriented around very basic goods
| points to inflation being hidden away.
|
| The US is incapable of paying their debt and must continue
| funding the economy via more QE. Other nations have moved to
| their currencies to trade with each other (Euro, Ruble, Yuan
| etc). This game won't last forever.
|
| [1]: https://bitcoinmagazine.com/culture/how-the-fed-hides-
| costs-...
| FabHK wrote:
| > Inflation in the US has been 2% but only because it was
| in a position of strength with the world accepting USD as
| the global reserve.
|
| Inflation has also been <2% for decades in the Euro area,
| Switzerland, and other jurisdictions.
|
| > most in the US live paycheck to paycheck and are hurt by
| inflation.
|
| If you live pay check to pay check, you don't care about
| inflation. You care about real wages.
| silentsea90 wrote:
| Real wages have been stagnant while the money supply ever
| increasing. This wasn't the case until 1971, when the US
| removed the gold peg: https://wtfhappenedin1971.com/
|
| Europe is interesting in that certain parts of the Euro
| zone run high deficits and need bailouts while some of
| the others are disciplined. I don't have a clear theory
| for why inflation in Europe has been stagnant all along.
| wvlia5 wrote:
| Love it. First they mock you, then they fear you, then they
| accept you.
| bendtheblock wrote:
| this is a pithy phrase with about as much logic as "Live,
| Laugh, Love"
| fleddr wrote:
| That article is a whole lot of words where it never really
| becomes very clear what the big "fear" is about, until we finally
| arrive at this:
|
| "A feudal system in which the masses are duped into farming the
| lands of their crypto overlords."
|
| Sounds quite a lot like our current system, but I digress. This
| fearful scenario requires the so-called hyperbitcoinization
| scenario where all of the world's wealth will be absorbed by
| Bitcoin (or other crypto). A market cap of 100T or more.
|
| Which will never happen. It's easily suppressed by regulation.
| Most of the current elite won't allow it, and the people
| themselves, whom are already in the mood for protests, surely
| aren't going to sit by and end up dirt poor because they missed
| crypto.
|
| As for crypto being libertarian, not really. Most are in it
| because it's a "number go up" technology, in good times that is.
| There's a small minority of loud mouths whom see it as a
| religion, but the vast majority are pragmatists, or plain
| gamblers.
|
| Even if you consider the die-hard position, the so-called
| "anarcho libertarian", the author makes it out to be as if they
| are the devil themselves. All they say is that money should have
| controlled inflation and that there's freedom of transaction. I
| guess that's an extreme right wing position now? How very scary.
| It's pretty much how the 80s cash-based society was, except for
| the inflation part.
|
| The biggest gap in these kind of "crypto scary" articles is that
| they fail to sympathize with the root cause. There's claims like
| "well, our current system may not be perfect, but at least it's
| democratic and accountable".
|
| That sounds nice, but it doesn't mean anything. Young people
| experience one financial hardship after the other and grow up
| living in a monetary and economic system that is plain broken.
|
| Where exactly can you "vote" on the 2008 crash, aggressive
| monetary expansion, zero interest rates on savings, 10%
| inflation? None of these things are democratic, they are hollow
| words.
|
| Does crypto solve these problems? Probably not, but the above
| backdrop explains the appeal. In a system that doesn't work at
| all, why not throw the little you have in crypto? There's the
| potential to win big, and if instead you lose it all...it wasn't
| that much to begin with anyway.
|
| If we'd have a sound monetary and economical system, that ensures
| a middle class existence and reasonable wealth for all, one that
| doesn't boom and bust all the time, one that preserves purchase
| power and savings, one that enables upwards mobility and the
| building up of assets, if we'd have all of that and in a stable
| sense...yes, then crypto has no use case or appeal. But we don't
| have any of that.
|
| Own the failing of the current system. The status quo is
| completely broken.
| wmf wrote:
| Even if crypto bandits skim 1% off the economy, that's too
| much.
|
| But yeah, we need to give people alternatives to being poor
| forever or winning the lottery.
| janandonly wrote:
| I am also cryptophobic.
|
| That is why I only use Bitcoin.
|
| Bitcoin, not crypto.
|
| See also: https://news.ycombinator.com/item?id=31932273
| javajosh wrote:
| Bitcoin's primary value is access to gray or black markets.
|
| Bitcoins secondary value is appreciation, which depends on the
| primary value, plus a transient state where the public becomes
| aware of this new value at a pace that outstrips new BC
| generation.
|
| Bitcoin's tertiary value is marketplace/exchange operation,
| which depends on both primary and secondary values.
|
| But all of it rests on forbidden market access. The cost is
| considerable: a very high rate of consumption of both (dirty)
| energy and chip manufacturing capacity. There is also the cost
| of participation risk in totally unregulated markets, costs
| which have no upper bound.
|
| So, fuck Bitcoin. Use cash.
| pclmulqdq wrote:
| But also, it is a terrible currency for accessing true black
| markets. It is 100% traceable. Lots of people have gotten
| caught buying bad stuff because they used Bitcoin. Just use
| cash. Or use Monero/Zcash.
| PaulHoule wrote:
| That link to mass movements such as communism is an important
| point.
| [deleted]
| lvass wrote:
| All these grandiose words for the pecuniary value of a market
| whose entire capitalization is considerably lower than Google, a
| company that can't even prevent it's main product from becoming
| absolute crap. A market that's also remarkably absent of utility.
| Cryptocurrencies are a drop (that's the closest to evaporating)
| in the ocean of money, this article reads as if Baader-Meinhof
| phenomenom discovered how to write by itself.
|
| >10 accounts own 88% of Binance Coin
|
| Correlating addresses to people like this is such a rookie
| mistake in a world with CEXes and smart contracts, why the hell
| is this person being taken seriously?
| IncRnd wrote:
| > The world has never seen an economic phenomenon like crypto.
| There is no historical analogous technology trend or investment
| craze that comes close to capturing the sustained and frenzied
| momentum of crypto that has engulfed so many and that will
| continue to do.
|
| Never say never. Greed and speculation have a long and robust
| history. This crypto speculation and greed reminds of of the
| price of tulips. [1] During that craze a single tulip bulb could
| purchase a mansion.
|
| [1]
| https://www.investopedia.com/terms/d/dutch_tulip_bulb_market...
| thesausageking wrote:
| "Tulip Mania" wasn't real. The "bubble" was a very small group
| of speculators and it did not have any larger affect on the
| industry. The stories about it were made up and come from
| propaganda pamphlets published by Dutch Calvinists who were
| worried that consumerism was causing societal decay:
|
| https://www.smithsonianmag.com/history/there-never-was-real-...
| IncRnd wrote:
| According to your link it was real. "That's not to say that
| everything about the story is wrong; merchants really did
| engage in a frantic tulip trade, and they paid incredibly
| high prices for some bulbs. And when a number of buyers
| announced they couldn't pay the high price previously agreed
| upon, the market did fall apart and cause a small crisis--but
| only because it undermined social expectations."
|
| In the link I posted is this gem: "Peter Garber in the 1980s
| published an academic article on the Tulipmania. First, he
| notes that tulips are not alone in their meteoric rise: _' a
| small quantity of ... lily bulbs recently was sold for 1
| million guilders ($480,000 at 1987 exchange rates),'_
| demonstrating that even in the modern world, flowers can
| command extremely high prices."
|
| I wasn't making a point about the degree of societal collapse
| from tulip mania. I made the point that there is a long
| history of greed and speculation.
| thesausageking wrote:
| You were responding to a claim that there have never been
| other cases of sustained momentum of speculation. The price
| spike for Tulipmania took place over about 18 months.
| Bitcoin launched 13 years ago and was first above $1k in
| 2017. They're not at all similar. I agree with the parent
| comment.
| IncRnd wrote:
| No, that wasn't the claim I responded to. Twice, my
| comment explicitly mentioned the novelty of greed and
| speculation as the claim.
| datadata wrote:
| Whenever this comparison is drawn, it must also be pointed out
| that after the speculative bubble, the Netherlands has remained
| for centuries the center of a profitable and stable flower
| industry that was born in that time. The collapse was real and
| the speculation was real, but the emergence of a new industry
| was also real. This is also similar example to the dot com
| bubble.
| bendtheblock wrote:
| nice rebuttal - but the "profitable and stable flower
| industry" is the trade of an underlying commodity with
| utility value i.e. the flowers. there is no such underlying
| asset with crypto. the part that is parallel is the rife
| speculation that left many bust.
| datadata wrote:
| Flowers were not a commodity before there was a market for
| them. Internet did not have commercial value before the
| speculative wave, in fact very little profits were made
| even by the end of the dot com boom. Agree there is rife
| speculation in crypto, but rife speculation does not prove
| that there won't be future sustained value. When dot com
| boom imploded it was because people similarly thought there
| was no value in the internet.
| bendtheblock wrote:
| Flowers are used for decoration, dies, teas, scents.
| Sometimes they may be overvalued.
|
| Crypto doesn't have any underlying value. It's just
| greater fool investing, there is no underlying cashflow,
| asset or company. Future cash flow comes from greater
| fools buying in.
|
| When you say "the internet" I think you mean the wave of
| web1 companies? Same as flowers above, there are real
| uses and value creation, which can be priced in many
| ways.
| datadata wrote:
| In 1999, what web1 companies had cash flows or even a
| business model that could become profitable? In hindsight
| it is obvious because we know that things worked out, but
| at the time it was just speculation, and the crash was
| the market calling it worthless. Similar objections then
| around what underlying value is and how the tech was
| useless. The ways to monetize often were invented much
| later (eg search ads).
|
| If you were a middle age farmer, sure you might like to
| look at or smell a flower but you would be crazy to say
| stop growing wheat and plant tulips. But as society
| advances markets can emerge to serve needs of people that
| were not possible before.
|
| I agree crypto tokens is just speculative investing. But
| that doesn't imply that the value doesn't stick-- it
| doesn't have to either collapse to zero or go up forever.
| Monetary premium is a real thing and necessary for humans
| to transact. You can't predict what money we will use in
| the future.
| bendtheblock wrote:
| it does imply that the value doesn't stick - in fact
| that's exactly what I'm saying. there is no value beyond
| the expectation that another greater fool will buy it
| from you in future.
| mattwilsonn888 wrote:
| Do bubbles, after popping, collect and reconstitute themselves
| in analogy or reality? Tulips certainly didn't. Bitcoin really
| is a slow motion multiplicitis analogy to your "muh Tulips."
| IncRnd wrote:
| Not sure why you wrote that. You are responding to a comment
| about the history of greed and speculation, which many who
| tout crypto also share.
| bendtheblock wrote:
| the history of this type of speculation and others like it,
| that leaves many bust, was documented in _Extraordinary Popular
| Delusions and the Madness of Crowds_ published in 1841
| https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion...
| xhkkffbf wrote:
| There are other more practical examples too. For a time, the
| banks in the United States would issue their own paper currency
| that could be redeemed at the bank. The paper money traded up
| or down based upon the reputation of the bank and, to some
| extent, the distance to the nearest branch. It's pretty much an
| exact analogy to the world of alt coins, except the physical
| details like the location of the bank made a difference.
| UnpossibleJim wrote:
| Great minds and all that, we seemingly posted this same article
| at the same time =)
| upupandup wrote:
| You don't even need to go back that far: e-gold, liberty
| reserve.
|
| Fun fact, bitcoin client had a poker lobby in it, and it was
| announced mere weeks after Liberty Reserve court ruling jailing
| its founder for 20 to life for money laundering.
|
| Individual or groups behind bitcoin were watching that Liberty
| Reserve trial very very closely and e-gold/liberty reserve was
| very popular amongst the online poker industry ;)
|
| There's many more interesting facts you can discover but I
| won't spoil them.
| deadbunny wrote:
| [citation needed]
| upupandup wrote:
| you know how to use google right?
| deadbunny wrote:
| Yep and I can't find any reference to the bitcoin core
| client ever having anything to do with poker.
| IncRnd wrote:
| It did.
|
| https://github.com/trottier/original-
| bitcoin/blob/master/src...
|
| https://news.ycombinator.com/item?id=28830211
| deadbunny wrote:
| Thanks. Looks like it was more GUI code copied from
| something else then removed a few commits later rather
| than it actually having a "poker lobby" feature as
| implied though.
| upupandup wrote:
| You better work on your Google skills more
| UnpossibleJim wrote:
| As to whether or not Crypto becomes a legitimate form of currency
| is neither here nor there, but in its current history it has
| (seemingly - I am not an economic historian) mirrored the Dutch
| tulip trade of the 1600's in many ways:
|
| https://www.investopedia.com/terms/d/dutch_tulip_bulb_market...
|
| How Crypto comes out on the other end remains to be seen, but
| there can probably be some technologies that can be salvaged in
| legal and shipping contracts, for sure. As far as digital
| currency and items goes, in games and life, that remains to be
| seen... proof of work currency will probably die, if I had to
| guess though.
| tromp wrote:
| > And similarly, crypto rewards its early followers and doesn't
| promise an expanded pie, but a changing of the guard.
|
| Nearly all crypto does indeed concentrate wealth onto early
| adopters, by emitting the majority of supply in the first few
| years (or even all at launch).
|
| But fixing the block subsidy avoids such concentration, leaving
| most supply to later generations, much like gold.
|
| Such a purely linear emission deters speculation while
| encouraging use as a currency.
| cowtools wrote:
| I completely agree. Another thing I've been thinking about is
| this:
|
| What if, instead of creating inflation by adding new coins, you
| create "inflation" by directly decreasing the value of
| transaction outputs, and you just keep the coinbase reward
| constant?
|
| Depending on the model, you could make it so that outputs
| eventually go to zero, so they won't need to be recorded on the
| ledger forever. The old outputs just get garbage-collected.
| wmf wrote:
| _What if you create "inflation" by directly decreasing the
| value of transaction outputs_
|
| This is called demurrage and it's been discussed a few times.
| People find it very confusing when their wallet balance
| magically goes down but they find it less confusing when
| their balance stays constant but prices increase.
| ooaa wrote:
| This article raised some very interesting points through
| comparing the movement to religion and the fact that the peoples
| wealth is affected makes it that much more potent.
|
| I'm still optimistic because I think that the current way the
| world runs is not going to work in the long run. Something
| radical has to change or we will destroy the planet. I don't know
| if Bitcoin will play a role in this and if it's going to be
| positive or negative but things need to change.
|
| I have two specific points in the articles that didn't make
| sense.
|
| 1. Bitcoin whales can only affect the price of Bitcoin. They have
| no power over Bitcoin itself.
|
| 2. The article also makes the point that Bitcoin is weakening
| local currencies (fiat) which doesn't make sense since inflation
| is mostly driven by money printing and other economic factors.
| rafaelero wrote:
| So much drama. It all comes down to: do you want to use a
| currency whose rules are immutable and its value is decided by
| the market or do you want a government backed currency that can
| change its monetary policy according to its discretion?
| Everything else is just words.
| leijurv wrote:
| Why do you think it all comes down to that?
|
| Clearly there's much more to it. For example, cryptocurrencies
| with those two properties you mentioned are a dime a dozen. I
| could make one right now by git cloning bitcoin, changing some
| properties, then running it. And in practice there are
| thousands with high volume exchange-value. Digital currencies,
| when combined with ubiquitous exchanges, have such
| substitutability that I'm not sure there's much of a "network
| effect" or "lock in", when it's so easy to swap and pay with
| any of them. "value decided by the market" might be flimsy in
| this case.
| [deleted]
| yellowapple wrote:
| > The future I fear is one with a new anarcho-libertarian power
| structure that lacks transparency, accountability, and is the
| antithesis of democracy.
|
| That's the money quote (around which most of the article
| revolves), and my response to it is simple:
|
| I love watching privileged people squirm.
|
| Anarchism (and more broadly libertarianism) is the _realization_
| of transparency, accountability, and democracy to their greatest
| extremes - even (hell, _especially_ ) when those extremes
| conflict with the capitalist _status quo_. The author, being
| "one of the top investors in Israel", has a vested interest in
| convincing the rest of us otherwise, such that we continue to buy
| into the legacy financial system that's actively failing (if not
| outright exploiting) people even in _developed_ economies, let
| alone developing ones. He half-heartedly tries to address this in
| the postscript...
|
| > I know crypto has been helpful for remittances, refugees,
| dissidents and even non-profits, but that has very little to do
| with the trillion-dollar crypto economy that has emerged.
|
| ...but he's flat wrong here, too. Cryptocurrency's usefulness for
| remittances, refugees, dissidents, and non-profits is _exactly_
| why that trillion dollar industry emerged in the first place, and
| the fact that it 's leaving rich and powerful people like him
| shaking in their boots is the best advertising said industry
| could ever hope to get.
| api wrote:
| This is kind of a straw man, but I don't think he's wrong. The
| problem is that he's kind of straw manning what "libertarian"
| means in this context and by doing so he's landing a much weaker
| blow against crypto than he could.
|
| Libertarian, if words are to mean things, is roughly the view
| that the _initiation of force_ should be extremely strictly
| limited. This includes the idea of small government since
| government has a legal monopoly on the initiation of force, but
| it also includes an aversion to private initiation of force
| including everything from riots and gang violence to... scams.
|
| Scams and fraud count because any understanding of what _force_
| means that is not paper-thin includes the idea that deception and
| even perhaps some "dark pattern" style attacks on human
| cognition constitute force. Force is anything that attempts to
| contravene the independent will of another human being. That can
| be done by whacking someone on the head, pointing a gun at them,
| or gaslighting and lying to them to the point that their
| judgement is deeply impaired. In standard issue "pure"
| libertarian theory the only justification for force is in
| response to its use, but since scams and fraud are force there is
| justification for someone (usually a minimal rights-protecting
| government) to intervene.
|
| One of my central problems with crypto is that it's not what it
| claims to be at all. There are many ways crypto isn't what it
| claims to be including being a bad currency and a bad inflation
| hedge, but it's also not what it _politically_ claims to be.
|
| Crypto is neither "libertarian" (rights-respecting) nor truly
| decentralized.
|
| It's not a rights-respecting libertarian thing because it's
| absolutely lousy with scams and fraud of virtually every
| imaginable kind. It's not truly decentralized because proof of
| work tends toward centralization due to industrial economies of
| scale and proof of stake tends toward centralization due to its
| structural biasing of the system toward intense levels of wealth
| concentration. With either PoW or PoS you eventually end up with
| closed syndicates more or less owning the currency. Then you have
| cryptocurrencies with actual companies behind them or de-facto
| rulers like Ethereum.
|
| With those factors leading to centralization and with scams and
| fraud and all kinds of opaque intermediaries popping up what you
| end up with is something far less transparent and honest than a
| central bank. All the criticisms of central banking apply, but
| more so.
|
| Gold is decentralized because it's just matter and anyone can
| hold it without asking anyone's permission. Honestly even paper
| money, while "fiat," is more decentralized in that exchange is
| completely permissionless.
|
| So while there are valid criticisms of libertarianism, it's not
| the problem. It's much, much worse than that. Crypto as presently
| organized and operated is a full-on scam, period. It's not what
| it claims to be.
|
| The libertarians and decentralization advocates are among the
| _marks_ in this scam.
| AlexandrB wrote:
| > Force is anything that attempts to contravene the independent
| will of another human being. That can be done by whacking
| someone on the head, pointing a gun at them, or gaslighting and
| lying to them to the point that their judgement is deeply
| impaired.
|
| I find this definition of force somewhat counter to most
| libertarian positions I've seen. When it comes to
| employer/employee relationships, what is the need to eat other
| than "pointing a gun at [the employee]"? Under this definition
| of force, how can employees _ever_ enter into contractual
| agreements with employers freely? Especially at bottom of the
| labor ladder, where the struggle to meet basic needs is more
| acute.
| api wrote:
| There is no easy canned answer. If there were easy answers to
| questions like this the world would be way simpler. Yet I
| can't even imagine how you can have a free society without
| some respect for the honesty. Without that at the very least
| people will start taking the law into their own hands, which
| leads to collapse and the tyranny of the nearest person with
| a big stick.
| immigrantheart wrote:
| I wonder if there is a balance between the:
|
| - "The future I fear is one with a new anarcho-libertarian power
| structure that lacks transparency, accountability, and is the
| antithesis of democracy."
|
| - "I truly trust that my government is capable to govern and have
| my best interests in mind"
|
| Because I know I am stuck in between the two extremes. Crypto is
| just a way to hedge the possibility the 2nd one goes rogue.
|
| But the crazy part is, yes I am aware of all the points in the
| article above, but that's exactly why I do crypto.
|
| This article is soooo good I will give it to my peers every time
| they ask me "why crypto"
| [deleted]
| clintonwoo wrote:
| I generally agree with the article. I would say that people using
| "crypto" as a hedge against inflation are sorely mistaken as the
| correlation with inflation is probably incredibly low. It's too
| volatile to be a store of wealth. It has no intrinsic value. It's
| incredibly resource inefficient. It's not an "investment" since
| it doesn't produce anything, and financially it has performed
| worse than real investments.
|
| The only thing it does have going for it is a perfect pump and
| dump economics. Crypto "believers" are really only truly
| believing in this ponzi scheme economics, which is a shame since
| they'd make more money by using real financial instruments. If
| crypto was really so good, we shouldn't have to worry about
| "investing" in it, we'd all just buy some to use it for day to
| day transactions. Which categorically is not viable at all any
| time soon.
| silentsea90 wrote:
| Forget everything else, simply having an asset that's limited
| in quantity and almost impossible to seize is significantly
| better than any other alternative. A cursory reading of the
| rise and fall of civilizations and currencies will tell you how
| flawed the current fiat system is and how much better BTC is
| clintonwoo wrote:
| Sure but how many people need to worry about their life
| savings being seized? Out of 300 million in the US for
| example? Maybe just criminals? Also I don't think
| civilization falling is really much to worry about. It would
| take years for civilization to fall, and if it does we can
| just buy gold or something with a real tangible value. Or
| maybe we can move to a crypto after it falls, which is
| something we can do after the fact. And TBH there's no reason
| why any specific coin used today would be used in that
| situation either. In that event we can just create a new
| Blockchain to avoid the ponzi effect.
| diogenes1 wrote:
| so badly written wtf
| TrapLord_Rhodo wrote:
| The reason why me and my friends use crypto is simple.
|
| In the current financial system i give you ALL of my info and
| hope you don't rob me blind.
|
| In crypto i sent you money.
|
| Small distinction, but one that will be increasingly more
| important as we modernize.
| tgarv wrote:
| Do you think that benefit outweighs the wild variance in
| valuation of most cryptocurrencies? I'm not trying to be a
| dick, I'm genuinely curious.
| TrapLord_Rhodo wrote:
| To be honest - and this is to my detriment; I have no idea
| how much crypto i have/ what it's worth at any given moment.
| So... no haha.
|
| I participate in 30 different defi pools across tons of
| different protocols, have money in various excahnges, run
| like 10 different nodes on Eth, BTC, Sol, Filecoin, etc.
|
| I was lucky enough to get into crypto in 2014 and treated it
| like a game. Started mining from my gaming rig and have been
| addicted since. I haven't put any money into the ecosystem
| besides harware (My filecoin node as $12k, gaming rig is
| $25k, bought 2 helios miners, bought some NGX chips for ZK's,
| etc.)
|
| I used to love runescape. I would love waking up, checking my
| flips in the grand exchange, running dailys like farming and
| checking my ales, etc. As i got older, i discovered
| blockchain has similiar mechanics. Now it's one of my
| favorite things in the world to check the various defi pools
| available, read about different projects, leveraged trading,
| 'daily's and is just a distraction from my real life. work.
|
| So in short, crypto is a game. As long as people keep taking
| it too seriously, they will lose the game.
| bendtheblock wrote:
| I don't follow the automatic assumption that giving the info to
| centralised entity like a bank is bad? What is that you are
| fearing? And why is that more likely than Crypto sinking or
| going to zero, you losing your wallet key or someone hacking
| your wallet? Code is law - so you're left with nothing.
| TrapLord_Rhodo wrote:
| My point is that the current financial system is not secure
| in any sense. Why would i have to give you my entire credit
| card information to make a payment. Why are you 'pulling'
| money from my account instead of me sending it to you. Why
| have we failed to implement a public/private key relationship
| with our financial data?
|
| >giving the info to centralised entity like a bank is bad?
|
| Well my first and prime example would be to talk to any greek
| citizen during 2008. The goverment took a percent of all the
| citizens money to pay their debts. Countless credit card
| scams have happened because i am trusting all of my data on
| the cybersecurity of (Upwork, linkedin, outlook, google,
| tinder, etc. etc.) as you go down the list of entities with
| your full name, address, & credit card information you start
| to realize that you have lost control of your financial self-
| sovernty.
|
| I've played this game with my friends and it's a fun one;
| Give me your full name and i can buy your information on the
| darknet, including current/ past credit card info, Social
| Security number, past addresses, past-employers, tax
| information, etc.
| bendtheblock wrote:
| My question to you is: what's the problem? On the few times
| I've lost money to online fraud, the bank returned it to
| me.
|
| Why does having a huge public web of transactions on the
| slowest ledger ever created help? What happens to your
| "sovereignty" when everyone can see your purchases
| patterns? What happens when grandma loses her wallet key?
|
| re: Greece, worth hearing Yanis Varoufakis on crypto:
| https://www.youtube.com/watch?v=bS0W-Whl0T0
| TrapLord_Rhodo wrote:
| > re: Greece, worth hearing Yanis Varoufakis on crypto:
| https://www.youtube.com/watch?v=bS0W-Whl0T0
|
| top comment: "How fantastic to let this man expose how
| incredibly dangerous governments are, without him even
| realizing [he's] doing it."
|
| Also, the entire time he seems to conflate crypto with
| CBDC which are nothing alike.
|
| >what's the problem? On the few times I've lost money to
| online fraud, the bank returned it to me.
|
| How is that not a problem?! I really don't understand
| this sentiment. There is hundreds of millions of fraud
| occuring on these systems that employ thousands of people
| for flagging, eliminating, and reimbursing people due to
| it being a fundamentlly flawed system. Pull vs. Push here
| is an important distinction. Having a public private key,
| even within the current financial system (Not talking
| crypto here) would be an order of magnitude improvement
| and would eliminate all of this.
| bendtheblock wrote:
| I think you're right about online fraud being much
| reduced with public private key tech, but if it's such a
| good idea why has no one been able to do it?
| TrapLord_Rhodo wrote:
| the IMF has no incentive to change the way it's doing
| things & would require a 'rewrite' of the current
| infrastracture. Also, public/ private key encryption is
| not quantum-safe, so eventually we need another way.
| (There is ton of research being done on quantum-safe
| cryptographic proofs)
|
| History shows systems rarely 'change'. More likely than
| not they are replaces. That's what BTC is an attempt at.
| neocognitronx wrote:
| "The world has never seen an economic phenomenon like crypto." -
| I'm not an expert but the whole state of crypto just looks like
| buying stocks before stock exchanges and market regulations were
| in place.
|
| This comment is fueled by the prejudice that people just tend to
| speak about history without knowing it that well to prove a
| point. I might be wrong.
| benreesman wrote:
| Both the rabid pro-crypto and rabid anti-crypto people seem to be
| missing that the prices move on the monetary policy of the United
| Stated Federal Reserve: more visibly the FOMC target guidance,
| the underwater part of the iceberg is the balance sheet.
|
| Global finance is a big deal, to put it mildly.
|
| Crypto is a flea on the ass of the foreign exchange market (which
| it superficially resembles), which is a bacterium on the ass of
| the derivatives market.
|
| It's. Just. Not. That big of a deal.
|
| There's been a lot of scams, some serious people here and there
| are doing real work in the space (don't argue with me: take it up
| with Liskov and Waddler).
|
| But if we put the wisdom of crowds on a forum like this to work
| on the dog wagging the tail with the flea on it, it would be a
| potentially useful discussion.
|
| Le sigh.
| ramesh31 wrote:
| >It's. Just. Not. That big of a deal.
|
| Yup. Total crypto market cap is less than a couple of large S&P
| 500 companies. The SNR is just so insane in that community that
| it seems like a bigger deal than it is.
| elil17 wrote:
| Crypto has social effects (wasting energy production capacity,
| scams, wasting computer hardware and chip fab capacity) outside
| of its economic effects that do make it a big deal.
| benreesman wrote:
| You're seriously here to make the case that these basis
| points on the numbers that move real human beings around like
| pieces on a chessboard is why HN foams at the mouth over
| cyber-money?
|
| The energy cost is debatable (energy displacement is
| complex), the ASICs used to mine BTC are keeping someone's
| Verilog sharp, and scams? There are 17 payday loan places in
| a 3 mile radius of my house, not counting pawn shops.
|
| This is not enlightened humanitarianism.
|
| Everyone on here knows an annoying asshole who rubs it in
| everyone's face that they're generationally wealthy over a
| speculative bet in 2015.
|
| I fucking hate intellectual dishonesty. Especially from smart
| people.
| cowtools wrote:
| I've argued in another thread that we can expect those
| adverse effects to decrease as hype dies down and the
| coinbase reward for bitcoin and others decreases.
| Ologn wrote:
| > It's. Just. Not. That big of a deal.
|
| There are trailing indicators and leading indicators. The fact
| that something like Dogecoin can be invented as a joke
| (according to its investors) and be said to have a market cap
| of over $8 billion is an indicator - that's 8 "unicorns".
| Bitcoin's market cap is over $350 billion. You are right that
| it has to be seen in the context of global finance, but other
| parts of global finance were bubbly at the end of last year,
| and if there's confusion over that, Dogecoin's 8 billion dollar
| market cap is an indicator, even if eight billion dollar is not
| that much in the context of global finance.
| benreesman wrote:
| So trade it!
|
| Anyone who talks about market price action in the
| short/medium-term a priori doesn't have alpha. People with
| Alpha trade it.
| avivo wrote:
| There is also a rebuttal article by the same fund:
| https://www.bvp.com/atlas/the-antidote-to-cryptophobia/
|
| That said, I think Adam (the original article) is closer to being
| right.
|
| He doesn't even get into the thing that originally made me
| incredibly excited about the potential of blockchain tech--the
| way it lets one create a new sort of custom and irrevocable
| 'physics' for information and incentives. But the same
| irrevocability is now what makes me deeply concerned. If we get
| something wrong, it may be impossible to change, unlike normal
| human systems. It's like building Facebook, except the original
| design might be at least partially locked in functionally
| _forever_ --and so issues created by naive founders can never be
| resolved and may warp our political and economic systems.
|
| I have also generally found that crypto/blockchain/web3 doesn't
| address the problems its adherents say it can solve (
| https://aviv.medium.com/the-magical-decentralization-fallacy...
| ), particularly changing power structures to get to a better
| world. Trying to find alternative solutions to address the power
| issues around centralized platforms is what eventually led me
| down a very different path ( to http://platformdemocracy.com/ ).
| whatisweb3 wrote:
| I loosely agree with you but am a little more optimistic. I see
| centralized lenders and services like Celsius and 3AC
| collapsing and running off with money, or blocking withdrawals
| - this would not occur had the loans been made on-chain through
| smart contracts, and DeFi platforms like Aave are holding up
| just fine during this downturn. This is an example of a shift
| of power away from incumbents and toward the people en masse,
| should they choose to actually understand and use the
| decentralized blockchain.
|
| > If we get something wrong, it may be impossible to change,
| unlike normal human systems.
|
| It's not far fetched that blockchains will change as humans
| adapt to new challenges. An example is already happening: Eth
| is transitioning from PoW to PoS and moving to a layer two
| centric ecosystem to meet block space demand.
|
| There are real concerns with adding functionality on top of the
| blockchain without understanding its immutability - like the
| ridiculous suggestion of putting twitter or a period tracking
| app on-chain.
| wpietri wrote:
| To me this is fundamentally contradictory:
|
| > the people en masse, should they choose to actually
| understand and use the decentralized blockchain
|
| I used to work for financial traders. Our company was
| essentially the same as the companies of professional
| gamblers. We knew we were playing zero-sum games. Our goal
| was to create asymmetries in information and skill such that
| we got the money that other people were putting in. In the
| markets we played in, the opposition was mostly other well-
| funded players. But you can bet that there are well-funded
| groups with snowdrifts of math PhDs who are happy to take
| money from "the people en masse" that decide to trade in the
| markets.
|
| Those people already exist in the non-blockchain financial
| economy. From predatory lenders to fake health care plans [1]
| to ponzi schemers, frauds, and grifters. What mainly keeps
| them in check is regulation, not regular people "choosing to
| actually understand". Because what distinguishes "the people
| en masse" from the people who prey on them is that the
| predators can devote all their time and attention to one
| particular hustle, while "the people en masse" have to defend
| against _every_ hustle, while trying to be good at their
| jobs, take care of their families, and live their lives.
|
| So the hustlers are always going to be one step ahead from
| regular folk. Doubly so in an unregulated, rapidly evolving
| space with metastasizing complexity like you see in the
| cryptocurrency/ico/nft/defi/web3/wft space.
|
| [1] https://www.nytimes.com/2020/01/02/health/christian-
| health-c...
| whatisweb3 wrote:
| > So the hustlers are always going to be one step ahead
| from regular folk.
|
| I don't disagree. This is always going to be the case in
| any global market with information asymmetries - grandma's
| investments are not going to do as well as a hedge fund
| with a team of 50.*
|
| The difference is: the people entering CeFi are having
| access to their funds revoked, and a counterparty failing
| to repay debts while fleeing to Dubai. while the people
| entering DeFi have not had access to their funds affected,
| and are not worrying about counterparty risk.
|
| This is why it is a shift in power - the users retain
| control of their funds and leveraged positions, as opposed
| to placing that power entirely in the hands of tradfi and
| CeFi companies.
|
| * ironically a lot of big players like 3AC are getting
| wiped out too, so it isn't always true
| thebeastie wrote:
| I had a look at the platform democracy page and I couldn't see
| any explanation of how the process avoids capture by particular
| interest groups.
| avivo wrote:
| It's a good question. There are several kinds of answers, two
| of which I allude to but don't go into a lot of detail. The
| answers based off of peer reviewed research can be found in
| the article in Science that I quote. There is also the answer
| based off a sort of existence proof--so far, even when this
| is been done at a high level around extremely controversial
| and impactful issues, this has not appeared to be a
| significant problem.
|
| To be clear, the process that I am describing there is not
| some newfangled idea that I just dreamed up. It's something
| that has been used by France, Ireland, South Korea, even the
| EU as whole, is likely to be institutionalized as part of the
| governance of these organizations. It's just fairly new so
| not that many people have heard about it.
| syzygyhack wrote:
| > But the same irrevocability is now what makes me deeply
| concerned.
|
| Strange hang-up to have. Irrevocability is not a trait that is
| fundamental to blockchain applications.
|
| If the application is smart-contract based, irrevocability is a
| choice at the source code level. Just because one transaction
| in a block is irrevocable doesn't mean that another transaction
| in a future block can't undo whatever arbitrary state change
| was committed in the first. It depends entirely on what you
| make possible in the contract code.
|
| Neither does the claim hold water for L1s that _are_ the
| application (e.g. Bitcoin, Monero, etc.). If the entire Bitcoin
| core development team turned rogue, social consensus from the
| broader Bitcoin community would soon establish a new canonical
| chain. Hard forks can be and have been used. This is blockchain
| 101. Cryptographic and economic guarantees are not fundamental;
| the social layer is.
| jjoonathan wrote:
| But that's just it: bad choices in the social layer become
| nearly irrevocable once a self-interested, powerful elite
| emerges. The bad choices put them on top and they will do
| anything to stay there.
| syzygyhack wrote:
| Not at all. If a self-interested minority emerges, the
| majority can fork away anew (see: Steem & Hive).
| jjoonathan wrote:
| lol. You forgot to weight by wealth.
|
| Regular economics uses the same dirty trick when it talks
| about value creation rather than wealth-weighted value
| creation. It stuffs all its dirty laundry in that one
| weight term and then "forgets" to talk about it. Oops!
| syzygyhack wrote:
| Weight by wealth? You are failing to understand the basic
| concept of a hard fork. Social consensus doesn't care
| what your number on the blockchain says.
|
| Case in point, the Hive hard fork.
|
| One very prominent and widely unliked individual
| purchased majority ownership of the STEEM token. Weighted
| by wealth, they could now control the chain, its
| governance, and most notably unlock tokens (20% of the
| supply) that were (per social consensus between Steem and
| its community) not supposed to be unlocked.
|
| So, what did the Steem community do in response? They
| hard forked the platform, launching Hive. All STEEM
| holders could migrate their assets to Hive, except the
| individual in question who attempted to takeover Steem
| via wealth. The malicious elite was cut off entirely.
| Today, two years on, Hive is still gaining in activity
| and has more than twice the market cap of STEEM.
| Comparatively, Steem has become a ghost town.
| hwbehrens wrote:
| > _But that 's just it: bad choices in the social layer
| become nearly irrevocable once a self-interested, powerful
| elite emerges. The bad choices put them on top and they
| will do anything to stay there._
|
| I would argue that this trait is not unique to blockchain
| systems -- in fact, if you presented this argument without
| context, I doubt many readers would put blockchain in the
| top 5 potential referents. See: economic systems, political
| power struggles, social structures, etc.
| jjoonathan wrote:
| Agreed 100%.
|
| Satoshi thought bailouts were the problem, but
| concentrated power was the problem. The libertarian
| "cure" of stronger property rights only exacerbates power
| concentration because concentrated power is in the best
| position to exploit stronger property rights. Cue
| exponential growth.
| nemetroid wrote:
| The outcomes of malfunctioning "smart contracts" are
| irrevocable.
| syzygyhack wrote:
| Wrong. Smart contracts can be updated. If they are deployed
| with the ability to update, any outcome can be revoked. It
| is as simple as adding a new function.
| jazzyjackson wrote:
| ?? Updating a smart contract does not rollback the
| history of transactions, a wallet drained due to a buggy
| contract is drained for good, that's what "irrevocable
| outcome" refers to.
| syzygyhack wrote:
| You're missing the point. You don't need to rollback past
| transactions that make unwanted changes to the contract
| state. If you have the ability to update a contract, you
| can add whatever functionality you need to undo a given
| state transition. You invoke the new function with a new
| transaction. The old transactions don't suddenly not
| happen. Your new transaction simply reverses the state
| changes, making it as if they hadn't affected the state
| at all.
|
| It's likely that you aren't considering this possibility
| because, of course, the average token contract does not
| do this. It would be a significant trust violation if a
| contract controller circumnavigated the need for
| signature checking or allowance setting in order to
| perform arbitrary token transfers. That does *not* mean
| the possibility for it to be done does not exist.
|
| At the end of the day, token balances are just key-values
| in the contract storage, and how those values are changed
| is enforced at the contract code level. That code can say
| whatever its controller wants it to say, and if they
| deploy with the ability to update, they can alter the
| code as necessary in the future. Token contracts are
| extremely simply, easy to audit, and so are seldom
| deployed to be updateable.
|
| To summarize, "irrevocable outcome" is not a fundamental
| trait of a smart contract application. It is a choice at
| the code level, with tradeoffs, which can be adapted to
| suit the application.
| leijurv wrote:
| I've heard the metaphor that "writing your ledgers in pen
| instead of pencil doesn't make transactions irreversible" -
| meaning that in the same sense, actions on the blockchain
| could be coded to be irreversible.
|
| The difference is in the authority of who gets to reverse
| transactions. For example, Tether can freeze and generally
| arbitrarily control USDT token. USDT therefore isn't really a
| cryptocurrency, since now a central authority can seize it.
| It seems to me that this authority undermines why one might
| want to use crypto in the first place. I don't think you can
| have it both ways.
| syzygyhack wrote:
| It may undermine why you want to use USDT. I don't see why
| it would affect your desire to use DAI, for example.
|
| The point is that you can have it any way you like it.
| There are no hard and fast rules like "irrevocability" as
| described above.
|
| You can have a contract be not updateable, final, and
| verify its source code to know there are no malicious
| functions. Or you can have one that is updateable by its
| developer. Or one that is updateable by an elected
| authority. Or updateable by a DAO of the contract's users.
| There's no single way to do it or perfect solution.
|
| Like most software development, it is the understanding of
| application requirements and selection of tradeoffs.
| avivo wrote:
| It is a choice at the software later. And who is making that
| choice? It's the initial people who actually write that
| software.
|
| But what if that system is now affecting many other people,
| or the entire planet in a significant way? Should they have
| some voice over that?
|
| Under a traditional governance regime the answer is that that
| is at least possible to change. It may be difficult, but it
| does not violate the laws of physics and can happen in less
| time than the heat death of the universe. But we can now
| write software that makes it functionally impossible for
| anyone to make that choice, even potentially the original
| designers. That is an option that we did not have before.
| It's in some sense the essence of trustlessness.
|
| In some cases, this might be the right trade-off. For
| example, beyond the blockchain, this is also a way to think
| about encrypted communications. It is a very significant new
| power that we can now wield.
|
| But it must be wielded carefully, and that doesn't seem to be
| happening.
|
| So yes, blockchain applications don't need to be irrevocable.
| But the ability to make them so is something that could have
| a very significant implications--potentially negative.
|
| As a somewhat tongue in cheek example, but with a little bit
| too much reality to be comfortable, this irrevocability might
| allow you to "create" a paperclip maximizer DAO (incentivized
| at the social layer, with humans doing the work).
| syzygyhack wrote:
| > But what if that system is now affecting many other
| people, or the entire planet in a significant way? Should
| they have some voice over that?
|
| This is an important point you are making. What you must
| recognize is that they absolutely _can_ have some voice
| over that.
|
| Just as we can write software (or smart contracts) that
| allow no one to update and fix such issues. We can write
| software that allows one person to do it. Or we can lock
| the ability behind a multisig, requiring a majority of the
| software's developers to do so. Still not good enough for
| the use case due to far-reaching trust ramifications? Then
| we write code that delegates the ability to trigger such an
| update to the entire userbase of the application.
|
| In the world of contract platforms, you have to keep in
| mind that contracts and the tools that you can build with
| them are primitives. They are composable. There is no
| problem in building a DAO to control the ability to update
| a contract (or trigger arbitrary functions to remedy
| critical situations caused by unexpected and undesired
| state changes). This is already done in practice in various
| applications--and sometimes with undesirable outcomes! Of
| course, these are still experimental times and lessons are
| still being learned.
| [deleted]
| endisneigh wrote:
| I'd be more interested in seeing what number of crypto buyers are
| underwater. Despite popular belief the amount of people who own
| Bitcoin exponentially decreases the further back you go.
|
| I'd be impressed if more than a thousand people who owned Bitcoin
| a decade ago still own the same bitcoins.
|
| My thesis looking at the volume and prices during the pandemic is
| that most people who own Bitcoin still despite the price
| increases are underwater.
| soneca wrote:
| Not exactly what you asked and I am not sure how correct is
| this number [0], but it is said that the average Bitcoin
| purchase price is $21k.
|
| You can't tell how many buyers are underwater from the average
| buying price being higher than currently price, but it does
| tell you that a lot of people is currently losing money with
| Bitcoin.
|
| [0] https://m.investing.com/news/stock-market-news/survey-
| showed...
| UmbertoNoEco wrote:
| Abandon this thread ASAP. HN "economists" are in full force with
| all the wacky theories. If mainstream economists hardly get one
| thing right, you'll only be totally misled by the clueless crowd
| here.
| debacle wrote:
| The greatest evil of cryptocurrency is that it destroyed any hope
| for real micropayments.
| cowtools wrote:
| I disagree. I think internet advertising is what killed
| micropayments. If anything, cryptocurrencies would be really
| useful for micropayments if they weren't used as poker chips.
| capableweb wrote:
| How so? Flattr et al still exists, and can be used, even if
| cryptocurrencies also exists.
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