How it is going: "US’ First Crypto Bank Reveals Date of Commencement"
IDK, while I really like the tech of the various DLT implementations, I am not so sure the world needs cryptoCURRENCIES. With Apple/Google pay, we have fully functional digital currencies right now.
While this is true, early Bitcoin adopters started to conflate the two. Broadly speaking, Bitcoin has seen three or four phases:
1) Cypherpunks with a strong counter-cultural note till 2013
2) BTC as a currency + payment system ("Cheaper and faster than Western Union!") till 2016 after 1) exhausted the addressable market which is small. Lightning network is the semi-centralized attempt at resuscitating this but I have my doubts.
3) "Digital gold", SoV from 2017 when 2) fell on its face
From 3) on, you can't really call it a currency anymore as it just doesn't work well. And if it is no longer a functioning currency (despite El Salvador calling it one), IDK what the point is, really.
Whats the point of trading and investing in non voting stocks? Personally, I have never been a crypto bull. But the thing is you don't have to get the point, and I don't either. There seems to be a large appetite for risk. Add in to the fact that the risk is outside of (for what we/I know) the control of any one individual entity and it becomes pretty attractive.
That’s why the coins I have more faith in are coins which incentivize things like distributed compute/storage. However, currency in google play or whatever is missing features that “cash” provides. Sometimes I don’t want credit card companies/payment gateways/stores selling my purchase data to the highest bidder and would prefer anonymity.
Problem is how do you solve the need to eventually provide a real name and address for products to be shipped. Even if payment providers can be blind to what you are buying, the store/courier company still needs it.
Inversion of control. An idea that could be quite easily implemented by national postal services who already have a database of all addresses.
Instead of an address, you basically use a "PO Box number", which is an opaque handle. When you post it, it goes into the Royal Mail/USPS or whoever and they translate the PO Box into an address and deliver it to you.
Someone still has your address but the post office already have it so it's not much worse.
Mostly I mean: walk into a store, grab a few things off the shelf, and pay with bitcoins—the way cash is used.
If I use any current digital forms of payment, someone is watching/recording the transactions and pairing them with my ID for some ad campaign.
Oh and: I should be able to stroll up to a traffic light and be able to donate some BTC to a homeless person via Bluetooth without getting out of my car (so I don’t give them COVID)
Be your own bank and enter the centralized payment systems whenever you want.
Tbh I think the environmental impact of a true PoW blockchain used around the world isn't really worth it for the collective human species. But for each individual person who owns a good amount of btc, it's worth it.
Do you have any idea of the true environmental impact of your day-to-day economic choices? Whether or not an economic activity is “worth it” for the human species is an unanswerable question.
Of course it's subjective, but answerable. If everyone on earth had a monster truck that they drove around for 10 hours a day for fun... that would probably be considered wasteful by anybody reasonable.
Why would I want to be further locked into Apple/Google’s ecosystem? Sure its convenient, and I also work for Big Tech, but my idealistic self tells me that value infrastructure should be owned by no single/oligopoly of central entities.
They also don’t provide a digital currency - its an abstraction/wrapping for the native countries currency. In my mind sufficiently decentralized (sybil resistant) currencies are the only true digital currencies.
Also as an aside given the top post on Stripe atm, I want to see decentralized identity take off - its a better use case for DLT imo. The networks security would come from the token value of an underlying crypto.
Interesting to see so much development in crypto but within my tech and personal circles, no one still really uses it. It's still hard to use as it is to send payments vs traditional means with PayPal/Venmo. I also had friends that got into the NFT craze but had a hard time in just setting up a wallet and even more to setup and use MetaMask.
I want crypto to succeed but I'm not seeing the use within the public. Really all I see is the FOMO of getting rich in crypto investments.
The usability is going to be there. People will use centralized stuff like Paypal and Venmo and then move to handling their own stuff.
Metamask was just copying some addresses and stuff. I realize that the average person can't even come close to doing it yet, but soon it'll be all QR scanning and stuff and they can prob do it.
I don't disagree this is the direction we're moving in, but what need is there to move to handling your own stuff?
If I spoke to 99% of my non tech friends - who (thanks to things like the NHS Covid Check In app) now get QR codes - I don't think any would feel the need to avoid using Stirling and a bank?
(Edit: particularly when contactless/phone/watch payment is so ubiquitous in the UK)
Perhaps it's a little like the Linux vs Windows/macOS/iOS/Android thing - "have complete control of your computer! Prevent people from spying on you! Tinker under the hood!" - and yet most of us are content with changing the background picture and happy if we don't get malware.
I wonder if cryptocurrency is doomed to the same fate. If we take away the speculation and get rich quick - for the average person, what's left? If it won't make me rich (and there's a risk it'll make me poor!), why move from what I already have that works (arguably) far better?
This was also the refrain in 2017. Billions were raised to make it happen.
Four years later, what does the cryptocurrency industry have to show? Mass market adoption seems as unlikely as ever.
QR codes don't solve anything when the basic design is so user-hostile — for the end user, crypto is unsafe money that you can lose at any time even if you think you're taking precautions. The only reasonable solutions available are centralized, and at that point you're competing against Apple, Google, Visa, etc.
Yeah I agree to a point. I think the narrative of "You control YOUR money!" is enticing to a good amount of people. Overall for the average person with low liquid assets, having it in a bank makes way more sense for fraud protection etc.
I think the average people will use Paypal/Venmo as a novelty and also to get the volatile investment gains. Then the individualists will hold theirs cold storage.
It's not actually hard at all; instead it's just that the easy methods are not well known, since most crypto news is all about crypto investments and get-rich-quick schemes. Easy to use payments systems are absolutely in place. lobstr, for instance, looks dead simple to me
>but within my tech and personal circles, no one still really uses it.
It seems it's been made almost deliberately hard to use in the US as a currency because of the tax situation surrounding it (reporting it as capital gains and tracking when you bought/sold). Normal people aren't going to be excited about it when they find they have to pay capital gains tax for that coffee, or equivalent Venmo transfer.
Edit: If I'm wrong about tax situation let me know. But I started to use a crypto transaction tracking service so I can do my taxes easily next year. The tax situation surrounding crypto makes me nervous.
I paid a friend ~6 XMR to take out two 50' fur trees, I removed a sink and related plumbing for .3 XMR, and another friend paid me about .1 XMR as a thank you for hosting all within the span of a week.
You have to find the directories in your area, but I've been amazed how many capable freedom focused people are now not only accepting crypto payments, but prefer it.
Ooh, a crypto bank could be cool. Maybe the bank could create its own class of coin, and make it so that each bank_coin can be redeemed for a btc they have in deposits. Since not everyone needs their btc often since they're hodling all the time, the bank could probably lend out more bank_coins than they have bitcoin to help others get access to more assets and get a return on the loans. As long as everyone didn't withdraw at the same time it'd probably be fine.
While this view of Bitcoin might sound like it is a betrayal of Bitcoin's original vision of fully peer‐to‐peer cash, it is not a new vision. Hal Finney, the recipient of the first Bitcoin transaction from Nakamoto, wrote this on the Bitcoin forum in 2010: Actually there is a very good reason for Bitcoin‐backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases. Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others. George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self‐regulating.
This patronizing line of commentary is so tiresome. I guarantee the median Bitcoin industry participant has an excellent knowledge of banking history. Half the people in Bitcoin are there because they’re aware of the trends in fiat money since Executive Order 6102, August 15th 1971, etc.
There could be some kind of Crypto Deposit Insurance Corporation (CDIC) to insure deposit accounts in case everyone does try to withdraw at the same time. You might want an entity with deep pockets and serious longevity (like maybe a sovereign state?) to offer that so you could trust that it would exist for the foreseeable future
What a great idea! The sovereign state could even offer loan guarantees to help stabilize the system during financial crises. Wow, crypto is really turning into a game-changing innovation!
They can also spin off an insurance arm called Crypto Deposit Insurance Corp, and provide CDIC insurance to depositors in case their bank becomes insolvent.
I mean, what else would you call it? It's not really that clever IMO. But yes, I see the recreation of all these traditional institutions but with a crypto flavoring to be a little unnecessary and instead of reinvisioning specific financial instruments and other types of financial products, people are just reskinning the same underlying products + mechanisms.
I mean, the idea of trading one coin for a "new" coin is pretty wide spread now. And the coin can be printed by the contract owner, if they specify it that way. So if people want to buy in to that system they totally can, and it can exist now. Its surprisingly easy to create your own coin, and the nice part about creating smart apps on blockchains is that you don't have to worry about hosting.
I think some kind of IOUs would work really well here! While we are at it, we also could do this for USD on the blockchain. We could say "tether" them while embezzling the real USD.
> Since not everyone needs their btc often since they're hodling all the time, the bank could probably lend out more bank_coins than they have bitcoin to help others get access to more assets and get a return on the loans.
I know you're trying to be cute, but the SPDI charter that Kraken Bank has prohibits fractional reserves. Kraken must hold your deposit.
> If Kraken Financial had been in full operation in March 2020, it may not only have ended up insolvent by mid-March but would likely have been subject to a bank run. In practice, it has more in common with a prime money market fund than a bank.
BPI isn't an impartial source of information. They are essentially a think tank / lobby group for incumbent banks. See their about page: https://bpi.com/about-us
Maybe? Their thesis seems pretty straightforward though. Kraken deposits are uninsured. Kraken intends to invest your deposits in fixed income assets, which are vulnerable to capital losses if interest rates rise, among other things (e.g. corporate bonds). If these investments go negative, Kraken will have less than 100% reserves and there's no insurance to help customers, so the rational thing to do is withdraw all assets before others do.
> Kraken intends to invest your deposits in fixed income assets
They don't source this claim at all, they just assert it and expect you to follow along.
It's always easy to craft a just-so-story that sounds reasonable. We could find theories all over the internet about why existing banks today should collapse any minute. What matters is the expertise and credibility of the source.
You joke, but a lot of BTC advocates would probably be satisfied if we still had a gold-backed dollar. A paper note backed by BTC is at least marginally better than a paper note backed by nothing.
The U.S. government collects taxes throughout the world and those taxes MUST be paid in US dollars. Most international trade eventually (if not exclusively) passes through the dollar system. Since no jurisdiction is entirely self-reliant, basically all aspects of the economic system touch on the dollar directly or indirectly. That tax collection is enforced by an apparatus with many levers of power including, but not limited to, the military and its nuclear weapons. So yes, the dollar is backed by the threat of nuclear annihilation in some sense.
Paper notes - fiat - are anything but unbacked. It's commonly backed by the voting taxpayer being willing to go along with the taxation system that underwrites the funding of the government, including the currency the government controls.
The government systems of the US extract 35%-40% of the economy in taxation & spending obligations (inflation). Unbacked? That's ~$7+ trillion of annual tax revenue ($8+ trillion of annual spending) from the world's largest economy.
It's one of the more ridiculous myths endlessly circulated by the delusional goldbug types for pretty much the entire past century. When confronted with the facts of reality about how taxation actually works and the fact that fiat isn't actually unbacked, they always instantly run away from their premise (and I say this as a fan of gold as an inflation hedge).
Fiat is backed by a lot of guns pointed at the taxpayer's collective head, ensuring the ability to collect tax revenue from the nation's productive output; whether a given taxpayer likes it or not, whether they agree or not, whether they resist or not, it simply does not matter, the guns (along with the reach of the regulatory body) ensures compliance. In 99%+ of cases they don't even need the guns, they merely need you to understand they're always there as an option. The only thing a goldbug can do when confronted with this fact of reality, is argue that it's immoral to hold a gun to the taxpayer's head to extract taxation, which is a moot argument ultimately: your neighbors all support that virtual gun being held to your head to collect the taxes.
Those guns have very broad public support generally, meaning most of the population - in most every country on the planet - supports tax collection, by force if necessary. They may disagree on nuance, or about what the ideal rate of taxation is, however the public very strongly supports collecting taxes. There's a reason every functional nation & government uses a fairly typical tax collection system: the public broadly supports the concept and will tolerate it. And if you refuse to pay taxes, the public is generally ok with sending in the guns to make you pay your taxes as needed. The public ultimately knows they benefit in various important ways from tax collection, even if everyone simultaneously grits their teeth about paying taxes.
It's probably more reasonable to argue that the US Dollar is supported even more strongly than if it merely had gold behind it and not the guns of tax extraction. The US Government has the ability to take enormous arbitrary sums from the population (see: Covid spending), via the Fed and its capacity to 'print' as they deem it necessary. The USD has more economy behind it accordingly than it would with just gold behind it; it has probably 50%-60% of all possible economic activity behind it as needed, which is a high-end figure for what the governments of the US can perhaps take out of the economy before prompting an extremely negative social reaction. Gold could never come remotely close to matching up to that kind of financial backing.
Having backing (support) is not the same thing as saying that the dollar would retain more or less value over time if it had a gold requirement behind it however, those are two entirely different matters. The USD simultaneously has massive backing behind it, and it's going to endlessly be devalued by the fiscal mismanagement in DC.
To your credit, this is a relatively coherent statement of this line of argument (“USD is valuable due to artificial demand from tax collection”). Unfortunately it doesn’t really hold up to careful scrutiny. If the only demand for the dollar were to fulfill tax obligations, there would be a massive surfeit of dollars. Price is not linear in demand. Most of the dollar’s value is due to monetization, not a just-so story about wha it’s useful for. This is true for any and every kind of money.
There is actually a coherent way in which the dollar is backed by guns, but it’s the enforcement of the petrodollar system - nothing to do with taxes.
I know you're being sarcastic but you know what has happened? All these exchanges issued their own tokens that is backed by NOTHING and have their own tokenomics. One of the reasons people assigned value to those tokens was the more you owned the larger discount you got in trading fees. In same cases better savings rate.
What's funny is it started the same way your clever little remark did but it didn't end the same way.
I think the really sad part here is you think that revisiting an old problem will lead us to the exact same old solution despite decades of advancement.
> I think the really sad part here is you think that revisiting an old problem will lead us to the exact same old solution despite decades of advancement.
I mean yeah. Traditional banking is very lucrative, especially at lower reserve requirements and capital investment regulations.
People don't want to admit it, but cryptocurrencies will absolutely go the way of tulips & beanie babies.
Various -technological aspects- from bitcoin and co's innovations will be lifted and utilized in new ways, but right now we should just be calling them "crypto-hold-forevers" or "crypto-get-rich-quick-schemes" or "crypto-buzzwords-to-sell-contracts" instead of -currencies-.
For one, Tulips had one boom and one bust, whereas crypto has had at least four cycles. It's more like the dot com. There is some real, high-value innovation surrounded by lots of cargo-culting grifters, and in the end there will be a few big winners, and a lot of losers.
This is great news. As a major bitcoin holder, I still have to keep some cash in a traditional bank to write checks, receive payroll, and use a debit card. A bitcoin bank would allow me to store that last remaining % in BTC.
99.999% of people who 'receive payroll' should not be storing all of their money in cryptocurrency. The majority of that group can't even easily come up with $1,000 in the case of an unexpected financial emergency.
I personally only own bitcoin, but obviously there's other opinions out there. The way I see it, the goal of bitcoin is to store value, whereas the goal of other projects is to achieve some non-SoV utility (payments, smart contracts, etc). First, solving the money problem is a much bigger deal than solving utility problems. Second, as the bitcoin ecosystem evolves, I believe technological solutions will be developed on top of bitcoin for those utilities, negating the need for separate tokens.
Thanks for the insight. It will be really interesting to see were bitcoin and altcoins land in 20 years. I'm a crypto-noob personally and have only dabbled, but in the short term the world outside of bitcoin looks pretty damn interesting.
It doesn't have to be a binary option. If you have control of your money and want to put it in the hands of a centralized organization you should be able to do that.
The question I have is whether "cryptocurrencies" are fundamentally flawed because they are not linked into the fiat money system or whether it just a few examples that fail either due to their politics, proof-of-work or some other variable?
As far as I understand it, the only reason that real money has real value is because it is backed by banks and we trust the banks. We trust the banks because they make money by providing us the stability so it is a win-win.
Not sure why I was downvoted, this was a genuine question.
I understand the idea of having decentralised currency to specifically avoid being "controlled" by central banks but the example of BitCoin has not worked and I wonder if this is purely a technical issue specifically with Bitcoin (slow ledger, associated with crime, instability) or whether it is even possible to get the stability and value from any system that is not anchored to anything tangible.
The dream for me would be to have my USD denominated paycheck deposited into my account as BTC. I get to skip what we in crypto call fiat onramp, where I have to deposit money into something like Coinbase then pay a fee to buy BTC manually.
you must have a nice balance of stable savings somewhere, not BTC. Bonds, fiat cash? I'm trying to understand the circumstances by which someone would dream of 25-100% volatility in their paycheck?
I remember reading like circa ~2013 about how cryptocurrencies could usher in a new kind of bank, whereby the bank would publish the BTC addresses it used. Then the public could decide for themselves on the stability/solvency of the bank based on how much reserves were found in these addresses, and then they could also see what was coming into and leaving the bank.
Of course the whole idea relied on trusting the bank to publicly release all of the addresses it uses. And I forget the exact problem is was supposed to help address, but it was something along the lines of like, no one really knows how exposed banks are, except for themselves and the regulators, and even then, bank regulation and stability was akin to a black box.
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[ 3.3 ms ] story [ 136 ms ] threadHow it is going: "US’ First Crypto Bank Reveals Date of Commencement"
IDK, while I really like the tech of the various DLT implementations, I am not so sure the world needs cryptoCURRENCIES. With Apple/Google pay, we have fully functional digital currencies right now.
1) Cypherpunks with a strong counter-cultural note till 2013
2) BTC as a currency + payment system ("Cheaper and faster than Western Union!") till 2016 after 1) exhausted the addressable market which is small. Lightning network is the semi-centralized attempt at resuscitating this but I have my doubts.
3) "Digital gold", SoV from 2017 when 2) fell on its face
From 3) on, you can't really call it a currency anymore as it just doesn't work well. And if it is no longer a functioning currency (despite El Salvador calling it one), IDK what the point is, really.
Instead of an address, you basically use a "PO Box number", which is an opaque handle. When you post it, it goes into the Royal Mail/USPS or whoever and they translate the PO Box into an address and deliver it to you.
Someone still has your address but the post office already have it so it's not much worse.
If I use any current digital forms of payment, someone is watching/recording the transactions and pairing them with my ID for some ad campaign.
Oh and: I should be able to stroll up to a traffic light and be able to donate some BTC to a homeless person via Bluetooth without getting out of my car (so I don’t give them COVID)
Tbh I think the environmental impact of a true PoW blockchain used around the world isn't really worth it for the collective human species. But for each individual person who owns a good amount of btc, it's worth it.
They also don’t provide a digital currency - its an abstraction/wrapping for the native countries currency. In my mind sufficiently decentralized (sybil resistant) currencies are the only true digital currencies.
Also as an aside given the top post on Stripe atm, I want to see decentralized identity take off - its a better use case for DLT imo. The networks security would come from the token value of an underlying crypto.
https://stripe.com/identity
I want crypto to succeed but I'm not seeing the use within the public. Really all I see is the FOMO of getting rich in crypto investments.
Metamask was just copying some addresses and stuff. I realize that the average person can't even come close to doing it yet, but soon it'll be all QR scanning and stuff and they can prob do it.
If I spoke to 99% of my non tech friends - who (thanks to things like the NHS Covid Check In app) now get QR codes - I don't think any would feel the need to avoid using Stirling and a bank?
(Edit: particularly when contactless/phone/watch payment is so ubiquitous in the UK)
But the narrative is enticing: "Control YOUR money/value!"
Perhaps it's a little like the Linux vs Windows/macOS/iOS/Android thing - "have complete control of your computer! Prevent people from spying on you! Tinker under the hood!" - and yet most of us are content with changing the background picture and happy if we don't get malware.
I wonder if cryptocurrency is doomed to the same fate. If we take away the speculation and get rich quick - for the average person, what's left? If it won't make me rich (and there's a risk it'll make me poor!), why move from what I already have that works (arguably) far better?
This was also the refrain in 2017. Billions were raised to make it happen.
Four years later, what does the cryptocurrency industry have to show? Mass market adoption seems as unlikely as ever.
QR codes don't solve anything when the basic design is so user-hostile — for the end user, crypto is unsafe money that you can lose at any time even if you think you're taking precautions. The only reasonable solutions available are centralized, and at that point you're competing against Apple, Google, Visa, etc.
I think the average people will use Paypal/Venmo as a novelty and also to get the volatile investment gains. Then the individualists will hold theirs cold storage.
DeFi DApps have happened in the past four years allowing you to easily invest and spent your cryptos from your browser.
Stable coins and lending protocols have happened enabling you to earn interest on your dollars without exposing yourself to Bitcoin‘s volatility.
Decentralized exchanges happened allowing you to swap between coins without the need for a centralized exchange in that case.
Major wallets integrate many of these features allowing you to manage cryptos from your smartphone.
Progress happened you’re just not looking for it.
It seems it's been made almost deliberately hard to use in the US as a currency because of the tax situation surrounding it (reporting it as capital gains and tracking when you bought/sold). Normal people aren't going to be excited about it when they find they have to pay capital gains tax for that coffee, or equivalent Venmo transfer.
Edit: If I'm wrong about tax situation let me know. But I started to use a crypto transaction tracking service so I can do my taxes easily next year. The tax situation surrounding crypto makes me nervous.
You have to find the directories in your area, but I've been amazed how many capable freedom focused people are now not only accepting crypto payments, but prefer it.
Wow this is such an advancement in banking and finance!
While this view of Bitcoin might sound like it is a betrayal of Bitcoin's original vision of fully peer‐to‐peer cash, it is not a new vision. Hal Finney, the recipient of the first Bitcoin transaction from Nakamoto, wrote this on the Bitcoin forum in 2010: Actually there is a very good reason for Bitcoin‐backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases. Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others. George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self‐regulating.
And if that happens, you probably need a World Cryptocurrency Bank, and an International Cryptocurrency Fund as well.
Wow, things are going to get fun!
I know you're trying to be cute, but the SPDI charter that Kraken Bank has prohibits fractional reserves. Kraken must hold your deposit.
> If Kraken Financial had been in full operation in March 2020, it may not only have ended up insolvent by mid-March but would likely have been subject to a bank run. In practice, it has more in common with a prime money market fund than a bank.
Sounds about right
They don't source this claim at all, they just assert it and expect you to follow along.
It's always easy to craft a just-so-story that sounds reasonable. We could find theories all over the internet about why existing banks today should collapse any minute. What matters is the expertise and credibility of the source.
Assuming you are believe the US dollar is a paper note "backed by nothing." Many people strongly disagree with this statement.
This is a meaningless statement. Please explain explicitly how you think nuclear weapons ensure that the dollar has some trade value.
The US government doesn’t offer nuking privileges at a fixed price, to my knowledge.
[0]: http://www.libertydollar.org/index.php
The government systems of the US extract 35%-40% of the economy in taxation & spending obligations (inflation). Unbacked? That's ~$7+ trillion of annual tax revenue ($8+ trillion of annual spending) from the world's largest economy.
It's one of the more ridiculous myths endlessly circulated by the delusional goldbug types for pretty much the entire past century. When confronted with the facts of reality about how taxation actually works and the fact that fiat isn't actually unbacked, they always instantly run away from their premise (and I say this as a fan of gold as an inflation hedge).
Fiat is backed by a lot of guns pointed at the taxpayer's collective head, ensuring the ability to collect tax revenue from the nation's productive output; whether a given taxpayer likes it or not, whether they agree or not, whether they resist or not, it simply does not matter, the guns (along with the reach of the regulatory body) ensures compliance. In 99%+ of cases they don't even need the guns, they merely need you to understand they're always there as an option. The only thing a goldbug can do when confronted with this fact of reality, is argue that it's immoral to hold a gun to the taxpayer's head to extract taxation, which is a moot argument ultimately: your neighbors all support that virtual gun being held to your head to collect the taxes.
Those guns have very broad public support generally, meaning most of the population - in most every country on the planet - supports tax collection, by force if necessary. They may disagree on nuance, or about what the ideal rate of taxation is, however the public very strongly supports collecting taxes. There's a reason every functional nation & government uses a fairly typical tax collection system: the public broadly supports the concept and will tolerate it. And if you refuse to pay taxes, the public is generally ok with sending in the guns to make you pay your taxes as needed. The public ultimately knows they benefit in various important ways from tax collection, even if everyone simultaneously grits their teeth about paying taxes.
It's probably more reasonable to argue that the US Dollar is supported even more strongly than if it merely had gold behind it and not the guns of tax extraction. The US Government has the ability to take enormous arbitrary sums from the population (see: Covid spending), via the Fed and its capacity to 'print' as they deem it necessary. The USD has more economy behind it accordingly than it would with just gold behind it; it has probably 50%-60% of all possible economic activity behind it as needed, which is a high-end figure for what the governments of the US can perhaps take out of the economy before prompting an extremely negative social reaction. Gold could never come remotely close to matching up to that kind of financial backing.
Having backing (support) is not the same thing as saying that the dollar would retain more or less value over time if it had a gold requirement behind it however, those are two entirely different matters. The USD simultaneously has massive backing behind it, and it's going to endlessly be devalued by the fiscal mismanagement in DC.
There is actually a coherent way in which the dollar is backed by guns, but it’s the enforcement of the petrodollar system - nothing to do with taxes.
What's funny is it started the same way your clever little remark did but it didn't end the same way.
I think the really sad part here is you think that revisiting an old problem will lead us to the exact same old solution despite decades of advancement.
I mean yeah. Traditional banking is very lucrative, especially at lower reserve requirements and capital investment regulations.
Various -technological aspects- from bitcoin and co's innovations will be lifted and utilized in new ways, but right now we should just be calling them "crypto-hold-forevers" or "crypto-get-rich-quick-schemes" or "crypto-buzzwords-to-sell-contracts" instead of -currencies-.
They could if they had been saving in bitcoin :)
Part 15: Free Banking Era[0]
[0]https://en.wikipedia.org/wiki/History_of_central_banking_in_...
As far as I understand it, the only reason that real money has real value is because it is backed by banks and we trust the banks. We trust the banks because they make money by providing us the stability so it is a win-win.
I understand the idea of having decentralised currency to specifically avoid being "controlled" by central banks but the example of BitCoin has not worked and I wonder if this is purely a technical issue specifically with Bitcoin (slow ledger, associated with crime, instability) or whether it is even possible to get the stability and value from any system that is not anchored to anything tangible.
Is the jury still out or do we know it can work?
Of course the whole idea relied on trusting the bank to publicly release all of the addresses it uses. And I forget the exact problem is was supposed to help address, but it was something along the lines of like, no one really knows how exposed banks are, except for themselves and the regulators, and even then, bank regulation and stability was akin to a black box.