Right. It explains the Policies behind a possible use of Cryptocurrency which might create problems for the Sovereignty of the State and Stability of Financial Systems. This is a very valid reason to be cautious.
However i am not very clear as to how the US (and some other countries) are regulating it? What are they doing differently?
if we are suggesting that fiat has no intrinsic value, cryptocurrencies definately also have no intrinsic value, unless you can feed and shelter yourself with the factors of very large prime numbers
We aren't suggesting anything, that's what fiat means. There are projects of cryptos backed with different things, for example stable coins with dollars, or synthetic stable coins with overcollaterized loans of other cryptos.
if a cryptocurrency is backed by dollars, gold or anything else, it is not "intrinsically" worth anything, it is only worth anything because of what it is backed by.
But stablecoins are identical to central banks. They involve a central authority pinky promising not to print more of the token. And surprise surprise they do print as many as they want (USDT/USDC)
Cryptocurrencies are supported by more democratic means than fiat currencies. Anyone has freedom to use the cryptocurrency or not, which affects its value. The supporters of some cryptocurrencies often have quasi-religious faith in it. Support and consent from humans does have value.
Compare this with a fiat currency whose value is supported mostly only by a government forcing their citizens to pay taxes in this fiat currency, and forcefully taking down alternatives.
Which of the currencies has more intrinsic value? What happens when the government can't manage to ban the alternatives anymore?
I think most people in wealthy countries do not feel forced to use their domestic currency - a strong claim otherwise would need some sort of good survey data to back it up. (And in fact where I live I am free to also buy crypto, no problem, still don't feel forced to use domestic currency).
You have to pay taxes in the county's fiat, right? Thats what is meant by being forced to use it because if you don't you go to prison and if you resist that you get killed.
Social contracts don't encompass country-level laws (at least since passports appeared and freedom of movement vanished). A contract implies you have a choice: to abide by the rules and participate, or leave. Citizens of most countries don't have this realistic choice, as most of the world is legally closed to immigration.
And to come back to the case of currency, the exclusive use of a single government-sanctioned currency is a recent phenomenon, not some deeply ingrained tradition. Local communities, governments and businesses frequently issued their own, and long distance trades were settled in commodities.
Social contracts DO encompass country level laws, at least in some countries people on average think so.
Government created currencies with broad uptake are very old, not sure where that idea comes from that it is something new. Ancient Rome didn't just settle in commodities across the republic and empire. Early coinage was a major contributor to the creation of commerce and it was often tied to government/rulers. Those coins might not have been totally exclusive but nevertheless kind of a lingua franca version of currency precisely because they had enforcement behind them (social as well as governmental).
Anyone can hold different views on what societies and governments should or should not do, mandate, etc. - but until you get the votes (or power) to enact your views it will be tough going if you want a different society.
Social contract is a philosophical theory of legitimacy of state power, it isn't true because its based on 16century contract law that nobody is using any more and because it has other philosophically untennable problems. What citizens think about philosophical concepts is completely irrelevant.
I think you guys are misunderstanding the term "intrinsic value". If a currency is intrinsically valuble, that means it is valuble as a commodity on its own, i.e it is worth something outside of it's use as an exchange token. Dollars have the same intrinsic value as a sheet of used high quality paper. Gold is "intrinsically valuble" because it is useful for many things, such as manufacturing computer hardware or jewellery.
Cryptocurrency is not intrinsically valuble in any sense aside from the value people place in it, which is not "intrinsic". In fact it is incidentally the same reason the dollar has any more value than its material cost. Also your argument that cryptocurrency is good because anyone can use it is strange, literally everyone is allowed to use the dollar, and pretty much everyone agrees that a dollar is worth a dollar, to the point that calling such a belief "faith" sounds ridiculous.
Here's an explainer of the saying (in Dutch) and some possible English alternatives, like : "That’s like grading your own exam”. And literally a "conflict of interest".
Not really like-for-like though - in this case a more appropriate saying would be "don't let a licenced professional purveyor of meat with provenance trails judge unlicenced masked street-vendors of meat-like substances of unknown origin during a time of unprecedented household pet disappearances".
The research and discussions between devs on protocol changes are public. The mechanics of who gets access to make transactions, who prints currency, and how transactions are confirmed is public.
Unknown to you maybe, not unknown by bankers or bureaucrats.
These systems have evolved over a very long period, with that comes mostly good but definitely some inefficiency which is periodically cleaned out when stimulus reach a breaking point.
I wouldn't be so quick to dismiss the current system, it's on balance been a good system - doesn't mean it can't be improved of course but I think improvement should be the name of the game rather than wholesale rejection just because you don't understand why it is the way it is.
I'm not dismissing anything except the idea that Bitcoin is somehow opaque or unknown.
> Unknown to you maybe, not unknown by bankers or bureaucrats.
The difference is that I, as someone who is not a banker or a bureaucrat, do not have access to the information. With Bitcoin the code and developer communities are completely public.
Central banks are no more licensed than your local ICO. Some are better than others. Given the issues India has had with its currency, they might not want to throw stones...
People in the west may have no idea about India's institutions and the progress they have achieved. RBI (banking), TRAI (telecom) etc regulators have been amazing. For ex: UPI (https://en.wikipedia.org/wiki/Unified_Payments_Interface) etc
Doesn't change your point too much, but the RBI isn't a bank per se, it's a regulatory body that makes decisions about currency supply, transaction procedures and limits, etc.
No? Bitcoin is a completely transparent system of record that is resistant to byzantine actors and can resist censorship/bans through decentralized infrastructure.
It's not "about" anything, it's a piece of tech. There is a bunch of cryptobro culture around it that varies depending on which part of the web you frequent, some of which slants heavily libertarian that would espouse the sort of things you are talking about.
Ultimately Bitcoin is still a solution looking for a problem. Banks aren't the problem because they happen to work quite well already.
> 37. We have seen that crypto-technology is underpinned by a philosophy to evade Government controls. Cryptocurrencies have specifically been developed to bypass the regulated financial system. These should be reason enough to treat them with caution.
Well duh. Way to prove the point that we need to evade government control. Zero self-awareness. No examination into why people may not trust their government. Just do what we say. This from the same government that already demonetized* the currency used by the same people they want to be trusted by.
This from the same government that already devalued the currency used by the same people they want to be trusted by
It was “demonetised”. To be fair and accurate context, a window of few months was provided to get the demonetise notes replaced with the equivalent amount of new notes.
I think they actually slightly miss the point. I didn't think the intention was to evade government controls, it was to provide a superior alternative. Some might say there's no difference, but I think it's an important distinction.
Same with "bypassing" the regulated financial system. It's an alternative, and the reason it's unregulated is because it's new and governments haven't pulled their finger out and fucking well regulated it - they were lazily hoping it would blow over, and now that it is big enough to be a threat they're blaming it for existing.
This is exactly the reason I expect more countries to follow suit. Without regulation to prevent scams, the shovel of the Bitcoin rush is lawyers. Unfortunately, the global nature of cryptocurrency makes cross-border scams easy and hard to litigate, which means the only regulation that will work is an outright ban.
I mean - from a sensible discussion perspective, DO we need to evade all government control? I hate paying my taxes as much as I'm sure you do and yeah, it absolutely stings when I see them wasting £500k on a "ban E2E encryption campaign" (or all the other idiotic shit that goes on), but ultimately I kind of like having my bins emptied, my roads smooth, a fire department, a National Health Service, my bank account protected etc etc.
People may not trust the government (and I say this from the UK, so I appreciate I'm still relatively lucky all things considered), but in terms of evading Government controls, I can't believe we won't see governments thinking about this if more people are choosing to find ways around obscuring their income and contributions to the things that keep society from completely falling apart.
FWIW - not arguing against cryptocurrency, just positing idea that the whole my-finances-are-secret bank-yourself crypto utopia might not be all that.
Remember Bitcoin appeared in the context of the 2008 financial crisis, when the US government effectively authorized the bailout of massively-overleveraged banks and put the burden on the taxpayer in the form of a diluted currency. When you look at things from that perspective, crypto becomes the only way out (or one of the only practical ways out) for people who don't like having to carry the burden of moronic bankers and of the ones who have the control over money creation. I would also like to live in a world where none of this is necessary, but we don't.
"for people who don't like having to carry the burden of moronic bankers"
I don't understand whats the gameplan here.
So I don't like carrying the burdain of military adventures in the middle east, and the guy over there doesn't want him money to be wasted on space while we have problems down here/oversized military/given to poor people.
Suppose now we are all 100% successfull at thos tax evasion (which we won't be), whats next? Government collapse and anarchy? Like what's the gameplan?
Making the government accountable for what they spend money on seems like a good direction to go in. The government programs you mention are only possible because of easy access to the money printer, Bitcoin solves this.
As for what's next, collapse/anarchy etc, who can really say? As always it's up to the people. Bitcoin places sensible limits on government spending power (and therefore on government power more generally). Governments now have to compete and act sensibly with the tax money they're "responsible" for in the same way any of us are responsible for how we spend our money.
> Making the government accountable for what they spend money on seems like a good direction to go in.
But you are not making them accountable, you are just making everyone poorer. They could still get away with collapsing the economy because of democratic deficit/partisanship/qualified immunity/shortcomings of the justice system/etc. These are the real causes.
> As for what's next, collapse/anarchy etc, who can really say?
If someone is advocating a change to the global financial system, I'd like a better answer than this. Communists sound like grand planners in comparison
So you want crypto currencies in order to remove control over money supply from states and banks and replace it with a fixed or at least predetermined money supply? Everything else in the current system is fine or do you have additional reasons?
Yes, a fixed supply is definitely one of the reasons I'm in favor of crypto over fiat. There are many others. I'm not even necessarily arguing solely in favor of crypto but it does come across as the most practical solution to a lot of problems with governance nowadays.
I want people to be precise about what they want so that there is actually something concrete one can discuss without hand-waving all the time. Fixed money supply, for example, does not require any crypto currency, just pass the necessary laws to fix the amount of money at the current level. And we can now think about the consequences of this, for example that it will encourage not spending money.
You say that like having fixed-supply money is a trivial factor, when it's actually the central problem with fiat currency and the reason we even need crypto. Giving governments the ability to pass laws to allow an arbitrary amount of fiat to be printed is the problem, because it effectively gives them the power to do what they like with no accountability to their electorate. Having a fixed-supply is not a matter of laws being passed, because in the real world, governments just do not want practical limits to their own spending power. The cycle of governments printing and diluting the currency until financial collapse is literally as old as recorded history.
> Which?
Precious metals, commodities (which is a large enough category in itself).
> just pass the necessary laws to fix the amount of money at the current level
Go ahead and pass the law. I'll wait.
It'll never happen. But let's say for the sake of argument it did. Another law could come along to change it again. Why trust laws and corrupt government officials? They are unnecessary soon-to-be antiquated relics of days when no better option existed.
Precisely. I think it was Warren Buffett who said "show me the incentives and I'll tell you the outcome" or something to that effect. Governments are incentivized to seize as much power as money creation allows them. The only thing that has held them back from constantly brrring the money printer is inflation, as it is obviously bad for winning votes. Interesting to see how the Fed will manage 7.5% inflation by raising rates 0.25% and even then there's a high chance they will U-turn almost immediately. I really wonder what Biden must be thinking about Powell right now.
As if the scammers and con-artists operating in crypto are ANY better than the banks. Banks are not perfect, but they are highly regulated, and come with a ton of consumer protections. There's none of that in crypto, and people are getting scammed or having their crypto stolen ALL the time.
No one claimed there weren't scammers in crypto, this is a phoney argument. The existence of scammers using fiat currency doesn't stop you from supporting fiat currency. This is about as legit an argument as the usual "pedos/terrorists/drug-dealers/mafia use the internet/encrypted messaging therefore internet/encrypted messaging BAD".
If people kept it simple and bought crypto like bitcoin or ethereum, they’d be fine. They get lured into get-rich-quick scams because of poor education and decision making skills.
If your concern is diluted currency, there are already tons of ways to hedge against that. Precious metals are traditional, but basically any non cash asset will work.
Crypto is not about tax evasion and privacy. Bitcoin is radically transparent. The beauty of bitcoin is that the monetary policy is immutable and you understand exactly how the future looks for it. With fiat currencies, you have to have religious-like trust in your government authorities that they will behave themselves with their power to create new currency out of thin air.
Exactly. Plus, when provided a system that requires no trust (BTC, for example) why would anybody prefer a system that requires massive trust and faith (fiat currencies)?
> All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India.
And so they may, for probably 4th or 5th time. Cryptocurrency on- and off-ramps can be somewhat controlled, but overall it's a pretty difficult thing to ban in practice.
The average investment (as per RBI) in crypto assets is 3000 INR or so, the vast majority of which is via crypto exchanges.
The earlier bans were indirect (RBI asking Banks asking Payment processors to close down exchange ramps) and didn't stand up to legal scrutiny. A direct ban via legislation ought to work in practice. Exchanges (and other companies offering crypto in India) have already de-risked against this by getting registered in Singapore.
A ban doesn't have to work perfectly, it just has to dissuade enough users.
> but overall it's a pretty difficult thing to ban in practice.
That applies to just about everything. We have laws against tax evasion, fraud, murder... but people can (and do) still do these things. Just because a law doesn't or can't physically stop people doing things doesn't mean we shouldn't have the law.
The point is, if it is banned then you will severely constraint the ecosystem. On-off ramps and other intermediators will have to shut down, institutional participants will be forced to withdraw etc etc. Sure no doubt a handful of participants will flaunt the rules and continue to participate, trying to keep the dream alive, but for all practical purposes it'll be dead in the water.
You can also ban drugs or even alcohol, both are a stellar success stories.
Crypto isn't likely to go away and the whole situation resembles to a global prisoners dilemma, I think the best governments could do is to come up with a sensible regulation.
Drugs and alcohol are fun (and/or they have inherent value).
Crypto is only fun when it’s arbitrarily going up in value, which would seem to be somewhat curtailed but these bans.
Of course crypto can be used to obtain (illegal) drugs, but it’s not clear that “sorta hard way to sometimes buy certain kinds of also illegal things” is as inherently valuable..
They are fun till hangover kicks in, to counter the downward trending crypto prices :)
Banning crypto also creates a massive incentive to find alternate ways to sell to this market which is quite large given India's population. Only this time the government gets nothing.
> Crypto is only fun when it’s arbitrarily going up in value
If you treat it like a casino then that is true.
Ideally, it takes over fiat currencies altogether and takes away the government’s ability to Arbitrarily create money out of thin air whenever it benefits them.
That may be your ideal but it is most definitely not mine.
I don’t understand how people can compare the austerity debacle and resulting outcomes in Greece with what the US was able to do (and turn a profit on) post financial crisis and decide that somehow the Greek way was better, countries shouldn’t be able to use monetary countermeasures, and these constraints will magically produce better politicians who will get it all right, because otherwise it would go wrong.
We’ll still get the incompetence, it will still go wrong, and the results are just worse all around.
Crypto fans obsessed with the handling of the financial crisis should brush up on the concept of Panglossian optimism.
> Crypto is only fun when it’s arbitrarily going up in value, which would seem to be somewhat curtailed but these bans.
From what I understand a huge use case for crypto is sending remittances. About 12 billion USD was sent to India from the USA in 2017 and the fees associated with a crypto transaction pale in comparison to that of Western Union.
The down side, of course, is the question of legality and market volatility.
This is not a use case that I personally have a use for, but I certainly understand the appeal of it.
> fees associated with a crypto transaction pale in comparison to that of Western Union.
Sending 1k USD to India via Wise costs 7.5 USD. The only reason remittance via crypto currencies seems cheaper is because pretty much every coin trades at a premium on Indian exchanges.
Off topic but I think you mean flout not flaunt. Although having read the link below it seems the misuse of flaunt may eventually become correct English[0].
I work for one of the most well known, fully decentralised, opensource crypto currencies. I'm therefore quite familiar with our objectives (to take over the world, mwhaha) .. but no seriously:
1. Govts can (and should) regulate -exchanges- who are setting the exchange rate at the same time as offering to be the bank for poorly educated crypto holders, so they can use folks money to buy low and sell high.
2. Govts (already) make it a legal obligation to declare and pay tax, crypto is no different than dealing in cash.
People who break the laws of their country should be tried under those laws, ie: tax evasion.. this isn't new to crypto.
What the RBI are saying is they object to crypto removing their ability to.. (see point 1.) control the supply. When they talk about managing the economy, what they mean is 'their ability to print money'. Furthermore they argue their ability to make up the rules as they go is enshrined and justified by the notion that 'that's how it's always been done'.. well welcome to technological advancement? Crypto is FAR from perfect right now but it is based on a premise that a truly fair and un-cheatable system is possible, and that has govts terrified.
Unfortunately, I suspect this will continue. There is undoubtedly a place for Crypto, but I would advise those who believe it will replace 'fiat' to take a course in economics or learn the role of the federal reserve and why it was created in the US.
Political views aside, many believe economic policy to be a key pillar of a government and anything threatening this power will be squashed at all costs in countries where this pillar exists.
Where this pillar exists being the key here, which is why we are seeing national adoption in countries that lack it. Despite this, an outright ban is indeed lazy and removes a country from the global Crypto economy.
Just take a walk in one of the popular neighborhoods in Istanbul and ask who Jerome Powell is to one of the random people there. They will tell you. Federal Reserve was created for some reason in the past. But, I think we might need something better now.
My argument is not premised on if Crypto creates a superior monetary system or not, but rather any government seeking to protect its most guarded powers will squash it.
I don't care if governments print money. Contrary to popular wisdom, 2-3% inflation per year is intended by central banks, because to have less that that reduces investment in venture capital and reduces the incentive to start buisnesses/do productive things with your money.
They don't print money to "cheat" or because they want more money, that would be stupid - the overall amount minted in most countries is barely above the replacement rate for currency lost/destroyed/missing. If they were doing it to profit, the amount printed is just a drop in the ocean comapred to the amount made through tax, so it would be a stupid idea.
Governments control the money supply specifically to control the inflation rate, which is a lever they can move to respond to market conditions, keeping it low when the economy is growing, and raising it during recessions to incentivise investment. When governments can't do that, recessions hit MUCH harder, see: greece, portugal, ireland, and many other countries in the eurozone who weren't able to use monetary policy and were hit by devastating recessions as a result.
In any case, you "work" for an open source currency? I presume some money is earmarked from the transaction cost to pay developers?
Do you think thats because the central bank maliciously printed a couple million dollars (hilariously low compared to the trillions of dollars the government handles) or because the world went through a pandemic, a recession and one of the largest demographic changes in the last 50 years?
Hint: across all countries in europe, the average inflation rate was also well above target.
I think they printed way too much money as it is obvious by your own benchmark. Another data point that shows that stimulus was too high is that people straight up stop working (check the subscriber growth in r/antiwork for example). I don’t get your point about “a couple million dollars”, the stimulus was in the order of 10 trillion dollars
What do you mean "as is obvious by my benchmark"? The "stimulus" is unrelated to the central bank's printing. In 2020, the fed printed 146 billion dollars (a particularly low year!). In 2021, they printed between 340 billion and 430 billion(unsure why the number is uncertain still but there you go). In 2022, they estimate they will print between 310-360 billion dollars worth of currency. Thats in an entire year.
You may note this number is less than 4% of the 10 trillion earmarked for the stimulus, and was raised primarily to increase inflation intentionally during the coronavirus to stimulate investment in the economy. It's also less than it has been at many points in the past.
None of these numbers are unusual or unprecedented. In 2014, the fed printed $300 billion dollars worth of notes. In 2013, they printed 472 billion.
What is done with the money that is printed? It is not part of the federal government's spending. It is used to buy bonds and other securities from banks as part of quantitive easing. The federal reserve is not instructed by the government. Board members are appointed by congress yes, but keep their jobs for 14 years. Right now, the board consists of 3 republicans and 1 democrat. The chair is a republican.
Literally the rest of the earth manages to get along just fine. If you're suggesting a bank controlled by a single idiot centralised dictator has the potential to fail, I can point to many thousands of rug pulls on the supposedly "immune" blockchain.
Love it when this gets dragged out. Nevermind the hundreds(?) of other countries that have nearly a century of mostly-stable economic activity under non-gold-backed fiat currency.
This is like saying that all pilots are actually trying to crash airplanes because some airplanes have crashed in the past.
My speculation is that, on a long enough timeframe, every country eventually becomes a loser when they are using government-controlled currencies. Corruption is inevitable..
>because to have less that that reduces investment in venture capital and reduces the incentive to start buisnesses/do productive things with your money.
Seems like we came up with this solution after creating the problem.
It's not just about controlling the supply. India has foreign exchange regulations to keep the country's economy stable. This includes regulating both the inflow (Investments from foreign firms) and the outflow (remittances and more) of foreign exchange.
I think RBI governor did not consider many scenarios, he says "ban is unlikely to be effective is a superficial argument", i believe banning would be ineffective because that will at any rate see a flight of untraceable capital to safer havens. Those who have made impressive gains wont sit there hoping to get crashed and burnt. If the government is after taxes they have to legalize it, if they are after power to arbitrarily exercise monetary easing well tough luck technology trumps bad actors and arbitrary systems.
India doesn't have the power to use a block explorer. It is to advanced.
>AEs have the political power to control the crypto companies. The recent instance >where the US recovered bitcoins from the hackers of the oil pipeline in US, is an >example that notwithstanding claims of non-traceability of cryptocurrencies, AE >Governments wield enough power to access the records. India or most other > countries would lack such advantages.
I think it's a sarcastic comment, saying a "block explorer" is all it takes to trace these and implying that the document is dumb for saying otherwise.
I don't know the details of the case well enough, but this is a usual type of comment on HN, and my a priori assumption would be it's probably oversimplifying reality and ignoring context as is also usual.
> Thus, increased acceptance of cryptocurrencies would result in effective ‘Dollarization’ of our economy6. Dollarization, it is well understood, would undermine the ability of authorities to control money supply or interest rates, as monetary policy would not have any impact on the non-Rupee currencies or payment instruments. When that happens, India loses not just its currency, a defining feature of its sovereignty, but its policy control of the economy. With loss of traction for monetary policy, the ability to control inflation would be materially weakened.
If I transacted in, say, cans of beans, would that also undermine sovereignty and control of the economy?
Sounds to me that the mentioned sovereignty and control are very fragile. Sovereignty should come through consent of citizens and voluntary participation, not tyranny.
And since the Rupee devalued 2.4 times against the USD in the past 27 years, I argue that such inflation control was abused, punishing savers and encouraging debt, essentially translating to financial repression.
Yes, if you convinced a lot of people to transact in cans of beans, you would be undermining the control of the government. Just look at countries that don't have a (viable) currency. They are using dollars or euros and are subject to a foreign powers monetary policy.
Also no country defines sovereignty through voluntary consent. Laws applies to you whether you agree or not.
Democracy, as opposed to oligarchy, is where the people are ultimately sovereign.
Sure, laws apply to the ones disagreeing, but in theory, the government serves the people, not rules it.
Central banks however, have a large amount of control over everyone's financial life, yet the signal from voting is only very dimly forwarded to this institution, and there are limited checks and balances governing it.
>If I transacted in, say, cans of beans, would that also undermine sovereignty and control of the economy?
From what I seen in my country's past the government will always get the blame and is asked to pay when people get scammed, then the goverment adds new laws to prevent future scams.
Say you borrow some money to buy a house and you use a foreign currency, and a year later that currency doubles, you get screwed. This actually happened and people asked the government to fix it. Sorry for poor details I don't like financial stuff so avoid it if possible
It's obvious that giving the power to crash your economy to a foreign group is losing sovereignty, what happens if some hackers or government crashes bitcoin? I suspect the government will be blamed as usual because it did not see it coming and prevent it.
As long as the government is not imposed by a foreign nation or some Illuminati then I would say the majority of the population should also take all the criticism not only the institution.
IMO if the population wants the government to protect them from scams and foreign financial group playing with their money then it is what it is, a weakness of democracy, where majority rules.
It's interesting how they disparage cryptocurrency by defining it as not being a "currency" and having no utility, yet advise banning it as it competes as a currency to the Rupee.
But in this case, crypto is superior to government created currency is just about every objective way. The only argument I feel is still valid is in regards to volatility. But that is mostly because crypto is still tethered to fiat trading pairs. Once it is truly stand-alone and loses that volatile connection to fiat, there will be no remaining compelling arguments against it. At that point, it’ll be time to show empathy to the biggest fiat bag holders.
That would be really sad and I genuinely hope it doesn’t happen that way. Honestly, it’s one of my biggest fears. How do we make such a seismic shift with the fewest number of casualties?
> crypto-bros
This makes me lose respect for your entire take. Name-calling a diverse group of people is always a display of ignorance and bigotry.
Yes, but you didn’t answer my question with anything meaningful, despite my direct interpretation of your stance on this. Surely, you should think of an solution before such a hopeful proposal?
I do speculate that there will be a massive number of casualties during the transition from fiat to cryptocurrencies, sadly. But it’s NOT the goal. I just don’t believe it is possible to cleanly move from fiat to cryptocurrency in a clean, neat, and equitable way. It’ll be chaotic, disruptive, and sad in many ways. And despite all that, I believe it’ll be worth it. Much like other chaotic events that resulted in increased freedom for regular citizens.
Future generations will benefit greatly once the transition is completed. And THAT is the goal. To create a world where sound money is the default. Where you can work for money, save it, and live your life without worrying about what bullshit the fed is up to.
> Why is there so much marketing and messaging around “Don’t be left behind”, similar to how you phrased it earlier?
I can answer for myself. I speculate that a transition from fiat to crypto is inevitable unless a black swan event occurs. (Eg a new way to represent value is invented that is superior to fiat and crypto that is currently inconceivable today)
If the transition to crypto does occur, it clearly benefits early adopters. In late phases of the transition, there will be very few people willing to trade crypto for fiat.
Herein lies ammo for the crowd shouting “CRYPTO IS A PONZI”. But the truth is that all desirable possessions are this way. If you bought beach-front property in a great city decades ago, you’re going to be able to sell it to the next “sucker” for a huge profit. Likewise, Apple stock. Likewise, a baseball rookie card. Etcetc
> Okay, but how massive?
This is a difficult question. It depends on if the transition is a gradual, long term grind. Or if some event occurs that shocks the system and causes a mad rush to cryptocurrencies. I hope for the former and fear for the latter.
> In late phases of the transition, there will be very few people willing to trade crypto for fiat.
How many people are left without crypto? How do you envision this scenario playing out?
> In late phases of the transition, there will be very few people willing to trade crypto for fiat.
Given that supply is limited, how do people transition sustainably? If the supply is only hodlers, they obviously don’t want fiat. Why is anyone exchanging for fiat once the transition is certain?
> But the truth is that all desirable possessions are this way
But currency is a tool, not a “desirable possession”. It shouldn’t be limited to niches of the real world population. Not everybody needs beach front property, but they do need money.
> I hope for the former and fear for the latter.
As one prepares for this future, what is the expected usable value of the coin they are hodling? How do you know if you have enough for when fiat is worthless? Should one own a full Bitcoin? More? Less?
The further we transition to crypto, the more people will have the option to be paid in crypto for their jobs. In this way, nobody will be "left without crypto". People with life savings in fiat that refuse to transition will be the clear losers. Sadly, I think it will be elderly that do not understand crypto and have never questioned currency that have the most to lose here.
> But currency is a tool, not a “desirable possession”.
So people don't desire to possess $1,000,000? This is clearly not a truthful statement.
It’s very telling that you’re ignoring half of my questions in every response.
> People with life savings in fiat that refuse to transition will be the clear losers.
Who is forcing them to transition? Is it the government? Why did the government change currencies to crypto, without aiding their citizens?
> Sadly, I think it will be elderly that do not understand crypto
What about normal people? What price and coin do you suggest I buy, and in what quantity to prepare myself for this future?
> So people don't desire to possess $1,000,000?
While I don’t deny that people like large numbers on their bank statement, the goal of owning so much currency is to exchange it for products and services. They don’t care if it’s USD or BTC, as long as everyone else accepts the same. What they will care about is when you tell them that you have to exchange fiat for BTC/etc at a volatile price with built-in deflationary mechanisms. Again, you’ve ignored my question about supply and how to sustainably on-ramp the entire world populace into crypto.
> It’s very telling that you’re ignoring half of my questions in every response.
I've enjoyed this thread but I can only provide it so much time and effort. Hopefully, you will find other sources to help answer your questions.
> Who is forcing them to transition? Is it the government? Why did the government change currencies to crypto, without aiding their citizens?
Free markets & will-toward-freedom forces the change. In theory, governments could accumulate crypto now and airdrop it to citizens later.
> Again, you’ve ignored my question about supply and how to sustainably on-ramp the entire world populace into crypto.
There is no such God-like control over this transition. I've clearly stated that I don't believe it will be pretty and equitable. It will be messy and chaotic.
but I used homeopathic remedy and it helped me, and no one telling me otherwise will change my mind, since I directly experienced relief. Are there parallels here for the many uses of some crypto? "cry for me, Argentina"
> yet advise banning it as it competes as a currency to the Rupee.
You're (perhaps unintentionally) misrepresenting their case as saying "competes as a currency" being the main reason for the ban. They lay out the many reasons for it, including (and I'm giving their opinion here, not mine) its inherent lack of stability, the energy usage, control being in the hands of foreign companies/economies, and also that when people try to use it as a currency, it can lead to destabilization because it tilts the advantage in favour of currencies of A[dvanced]E[conomie]s. The last point is the one you mention, and even it isn't a concern about cryptocurrencies themselves being competition, just it opening doors for stronger and potentially destructive competition from already stronger currencies.
The more of your own wealth tied up in a crypto asset, the more you have an interest in ensuring no manipulation occurs. An exact inverse to the speaker's thesis. Crypto is underrated for it's incentive solutions from a praxeological standpoint, not just the technical/cryptography one
It's like saying that more aluminum you own the more you have an interest in ensuring no manipulation. Same for oil. No idea what praxeology says about it but it's definitely not what happens in the real world.
It's not like that at all. Aluminium is a commodity good - it holds value regardless of other people's valuations and expectations. Cryptocurrency is entirely dependent on other people agreeing that it is valuable, and that means trust and utility.
That's not right though, the more you have invested in crypto the more you're incentivized to try and boost the value of crypto. That's not the same thing as saying no manipulation occurs. In fact, manipulation is good for you as long as it increases the value of crypto.
If you plan to hold crypto long term manipulation might be bad in that it might damage the long-term prospects of crypto, but that's literally just a question of what time horizon your investment is vs what time horizon the manipulation happens. If Tether turns out to be a scam it only matters if it turns out to be a scam before you sell.
No, if crypto becomes the dominant medium of exchange. In this way it would be determined by factors of supply and demand same as money has always been for thousands of years.
The dollar is more susceptible to manipulation than crypto. If you cared about manipulation, you would be an advocate for literally anything rather than the petrodollar - crypto included.
They pretty much nailed it in the last paragraph...
> Writing in the New York Times Adrian Chen noted as far back as 2013 that Bitcoin is built on a weird mix of speculative greed bolstered by a utopian cyberlibertarian ideology and likened it to a digital gold rush. Indeed, hyperbole continues to characterise all aspects of the crypto world. Crypto messaging does not appear to be directed at the rational or sensible.
Dan Olson's now epic "Line Goes Up" https://youtu.be/YQ_xWvX1n9g ... a masterful takedown of crypotcurrency and NFT's, it also demonstrates what a shit-show this has all become. Much MUCH worse than in Chen's 2013 article.
A reasonable conclusion for advice to a government. Currency controls and manipulation are the most powerful controls nation state governments have. The important question remains, is what is good for the government, good for its people?
I am increasingly feeling that the majority in any democracy is willing to use authoritarian methods to achieve their goals. They are suspending due process in Canada because of a peaceful protest. This allows banks to freeze accounts and seize assets. This is what China does. If I were Canadian, I would be very concerned about the safety of my money in Canadian dollars in a Canadian bank. Canada is just the latest example of this kind of creeping authoritarianism. I wonder if they realise how much this will hurt the trust in the Canadian dollar and Canadian financial institutions, and the massive push for crypto adoption that will result.
Democracy isn't about getting rid of government action. It's about enabling the people to control that action. These freedom convoys are protesting in an illegal way that disrupts people's ability to live their lives by blocking traffic, and have kept it up for weeks. At what point is the protest imposing unacceptable tyranny on the individuals who live on those streets? Certainly you would be against a government blockading people's homes.
The price, measured in freedom, is too high in my opinion. In passing the Emergency Act the Canadian Government:
- has given the banks the right to freeze bank accounts of suspected protesters without evidence and granted the banks full immunity. Even if the banks are mistaken or outright abuse this right, they can never be held liable in a court of law
- has suspended the rights of the accused to defend themselves in a court of law stripping them of all due process rights
- can now force two truck companies to carry out the government’s orders or face severe punishment. The tow truck companies haven’t even been accused of any crime but they have been stripped of their right to autonomy
Civil liberties, once lost, are difficult or impossible to recover. I don’t believe the government can resist using their new powers again, now that the genie is out of the bottle.
The right for dissidents to peacefully protest is essential to the functioning of a healthy democracy. With these latest moves, the Canadian people are decidedly less free. I don’t think the loss of freedoms was worth the price. This time the government targeted a movement that many Canadians disagree with, let’s hope for your sake they never target a minority you personally support, lest you suddenly find yourself unbanked.
To play The devil's advocate, what would you instead recommend to the government to do so that people could carry on with their lives and not have their likelihood shut down?
> Civil liberties, once lost, are difficult or impossible to recover. I don’t believe the government can resist using their new powers again, now that the genie is out of the bottle.
It might be new in Canada but governments have been doing this (using similar emergency laws) during the pandemic for a while. An anti-authoritarian person may feel that's extremely scary, while someone else may ask what else should a government do to prevent millions from dying, given that there are no pandemic-specific laws.
> what would you instead recommend to the government to do so that people could carry on with their lives and not have their likelihood shut down?
I understand how frustrating this is for Canadians who don't agree with either the protesters message or their tactics, but the suspending civil liberties for all Canadians is a dangerous precedent. It should only be used as a last resort and I don't think the Canadian Gov has exercised all their existing legal options yet.
> What could the government do?
1. The leader of the Canadian government is the leader of all Canadians, even those he doesn't agree with. Rather than paint the entire protest movement as racist, misogynists with unacceptable views, one reasonable first tactic could have been to engage in dialogue with the protesters to hear out their grievances, perhaps with the aid of a mediator. Dialogue leads to de-escalation, marginalizing dissidents leads to escalation as we have seen here.
2. Before resorting to suspending civil liberties, access to the courts and due process, perhaps the government could have started by enforcing the laws already on the books. This is what they did at the Windsor-Detroit border and it appears they were able to end the blockade without violence from either side. It appears that in Ottawa, the police were reluctant to enforce the existing laws. This is a different problem and pretending the government had no choice but to employ draconian measures is disingenuous.
>These freedom convoys are protesting in an illegal way
"Illegal" is whatever the government decides. In Canada, they have written broad laws to make most forms of protest illegal. I am annoyed by protests for things I don't care about (or even dislike), but I acknowledge that protest has an extremely important place in democracy. It has been the force for positive change throughout history. To acquiesce to the de facto position that protesting should be illegal - and that is the effective message here - underscores a profound lack of understanding of the importance of the deeply democratic act.
I can't recall the exact Monty Python line, but the sentiment seems appropriate now: "you may protest in the designated protesting square in the fenced section behind parliament. Just don't make any noise."
To quote the infamous American Congresswoman Alexandria Ocasio-Cortez, "the whole point of protesting is to make ppl uncomfortable."
The point is worse things were happening in the summer of 2020 but governments weren’t freezing funds then. This shows the actions are completely arbitrary and based on political ideology. Protection of civil liberties is not subject to the whims of the rulers nor even the whims of the majority in a free society.
Not taking sides with the merits of the protests, but it is laughable that a Canadian government which was lecturing an Indian one on how to handle protests is using these tactics.
Government printing fiat is fantastic for the government. Government controlled currency is terrible for individual freedom and for democracies. We just never had an alternative before. Stripping away this power from the government is another important step in human liberty.
Getting off the gold standard was also fantastic for governments and has resulted in one of the longest histories of economic stability and growth the world has ever seen[0].
We’ve had plenty of alternatives and most of them have been tried and studied. Having strong central monetary policy has resulted in large societal benefits.
Ah, the libertarian paradise. History tells us exactly what that world would look like: 1% bitcoin trillionaires, 99% indentured serfs. You’re probably imagining yourself to be in that 1%, but my guess is you’re wrong about that.
I disagree quite strongly, seigniorage the value created when issuing currency is a huge issue. Privatizing seigniorage a currently a public good (excluding some very dysfunctional government) and making it a private good collectively makes most people worse off. Even a government with problems the wealth from seigniorage is going to be far more widely distributed and spent on common benefits.
It’s just encouraging productive use of capital and a more transparent, liquid, financialized real estate industry. Probably good for the economy. Would reduce housing prices probably too.
This would have been reasonably accurate if Bitcoin was the only cryptocurrency. But no mention of dapps, web3, etc. means the speaker is missing a huge portion of the space.
For me the most important part of this article is the comparison of how Bitcoin operates in the US vs other less powerful economies. Specifically how cryptocurrencies are primarily priced in dollars, the US has enough international power and control over the existing financial system to leverage control over crypto-exchanges, and how moving economic activity out of the Rupee into crypto-currencies significantly risks damaging the the rupee. This is something that is probably often missed by people in this conversation but it's very common in economies with weak currencies to see other strong currencies used in their place (plenty of places in Turkey accept dollars and euros for example) and this has a real impact on government policy.
The hope is that in the future crypto breaks free of the connection to fiat. Rather than comparing crypto against $USD it will be compared against $BTC. This is why it’s essential for $BTC to maintain and expand upon its role as a source of value. It’s the best path we have to break the bondage to $USD and other government-controlled fiat currencies.
Sadly I think the only people that would do the extra step will be older people who grew up with USD and still desire it.
Do you mentally compare USD to other random obscure currencies? Of course not. And in a future when USD has been replaced, nobody will care to mentally determine USD prices.
Another way to consider it: when you go to the grocery store, you don’t think about how many sats something costs. Because USD is still king.
>The hope is that in the future crypto breaks free of the connection to fiat
wow, I don't know what kind of hope this is, and I avoid commenting on any crypto currency[0]. Since the comment appears to be genuine, I've felt compelled.
[0]: calling it them "crypto" is an insult to the rest of the cryptography, though
I think that having more than one type of money to represent different types of value is a reasonable thing to want.
We're operating under this illusion that all value is the same because we use USD as a unit of account, but it causes a lot problems. To give just one example, look at US policy in Latin America in the 80s: We would give weapons to terrorists, and the bargain was that once they had overthrown their governments, the new ones would respect our money. Then, having made ourselves into aristocrats, we'd come in and make off with their natural resources (e.g. Chilean copper).
Better would be that if you want to influence people in a community that you aren't a member of, you have to contribute types of value that actually align with the values of those people.
Of course having only two types, as GP suggests: fiat-value and crypto-value--that's a pretty impoverished type system. I'd rather have carbon-footprint-value and space-exploration-value and infrastrucure-maintenance-value... so that the allocation of types of value in my wallet are sort of an expression of my political will. This way, poison-the-well-and-sell-bottled-water-value can be rejected by pretty much everybody (as it should), while other sectors remain untarnished.
Well it would have a unit, call it parsecs or whatever, and individuals would configure their wallets to hold it at some percentage. If I'm a space nerd maybe I keep 50% of my wealth in parsecs, or if I think space exploration is a misallocation of resources maybe I keep 0% of it in parsecs.
I like the spirit of what you're saying here. It touches on why I think crypto/decentralized systems could have a domino effect that disrupts how people organize and govern. You like space and would be able to "vote" for it directly.
You’ve just invented capitalism and the stock market. Seriously though, in a free market system if you want to support space travel you would invest and thus own a portion of companies making space travel possible. Problem is that theses systems are not going to be mutually exclusive like you want because everything will always be tradable. If I have gold and you have space coloration there will always be a trade that makes it worth while.
It might be properly called capitalism, but it's not the capitalism that we practice.
Because the money we use is not specific about its intent, people have to accept or reject it all together. It's too big to fail. You can't decline to do business in slavery-money because you have no way of knowing which money is slavery-money. It's all just money-money.
In a typed-value system, you can notice that a certain kind of value is associated with economic activity that hurts people, and you can respond by setting it to 0% in your wallet. This will prevent you from accidentally contributing to its continuation. If all of the good guys do this, then the only people left for the bad guys to do business with will be other bad guys--which will make it more expensive for them to operate.
Sure, factions will emerge, but rather than being delusional about their own efficacy and a drag on the entire system, unsustainable or otherwise objectionable economies will eventually find that nobody accepts their money, and they'll have to change their ways.
You shouldn't be able to retire on wealth made at future generations' expense. Instead, saving for retirement should involve contributing to endeavors that future generations will be happy about.
> If I have gold and you have space coloration there will always be a trade that makes it worth while.
By keeping gold to yourself (and out of the electronics that are useful for making space ships) you're holding back the projects that I think are important. So there's one reason for me to not value your gold, what reason do I have to value it?
This hope died years ago, when the early bitcoin enthusiasts were replaced by the modern "number go up" ones.
This won't ever happen because pretty much nobody who matters wants this. BTC today is firmly a "store of value", where "value" is measured in USD, and the only point of it is to buy it low, and sell high, for USD.
You won't find many today who think buying pizza in BTC is a good idea.
BTC is also completely unsuitable for using as a currency given the block size limit.
> the only point of it is to buy it low, and sell high, for USD
Until the point that nobody wants to be the USD bag holder.
Plenty of boomers still don’t think of saving USD as a terrible idea because they were trained their whole life to have faith in it. They are being robbed in plain sight, sadly. But younger generations won’t put up with it.
BTC is completely unsuitable to be used as a currency, since it's deflationary. Would you buy a car if waiting meant you could have it at half price? Of course not, that'd be stupid. So you'll sit on your hoard, while the economy implodes.
However, if everything else is inflationary then simply not inflating would be deflationary on a relative scale. It is a near zero chance that countries don’t keep inflation strong.
If you mean to say it's not deflationary because there's a limited amount of it that doesn't technically decrease, that doesn't help.
First, Bitcoin does lose coins over time. When wallet keys are lost, or "dust" happens, that means that money can't ever be spent again. This is independent of the USD value.
Second, the economy can grow. Eg, if the population grows, or a factory starts producing more goods, then there's now more stuff per unit of currency. That's still deflation.
> Until the point that nobody wants to be the USD bag holder.
Plenty of boomers still don’t think of saving USD as a terrible idea because they were trained their whole life to have faith in it. They are being robbed in plain sight, sadly. But younger generations won’t put up with it.
I'm not sure whether you're opposed to the USD compared to other currencies, or cash in general opposed to stocks/bonds etc. For the former point, the US military's strength* ensures that the dollar is likely to stay the strongest of currencies even in a medium-term environment (say 50-100 years in my estimate), with only the Euro coming close.
For the latter, I don't think that was what the earlier posters were talking about.
* I'm not saying spending so much on the military is necessarily a good idea, neither am I a US citizen
I think this comment completely misunderstands what most people's savings are. 401Ks and the like are usually invested in a bunch of equities, bonds, and mutual funds. The value of these is commonly denominated in USD (if you live in the US), but they are not USD!
Most people already don't "save" USD. They save equities and then trade them back into USD when it's time to retire. I don't see how BTC changes this other than adding another equity to the list of stuff you can invest in.
Let’s assume BTC replaces fiat (USD). One way that it changes what you’ve described is that you wouldn’t be forced to gamble on equities or other assets to stay afloat. You’d have the option to simply hang on to your currency until another asset class enticed you enough to invest. It affords you some time to simply do nothing. Currently, you can’t afford to sit and wait and research assets. You need to stay out of fiat to stay afloat, constantly restructure your portfolio, etc. if you don’t do these things, you bleed buying power over time.
With sound money, people could work and save without needing to constantly gamble just to
maintain buying power.
If Bitcoin were to always increase in value (deflationary) there is a strong disincentive to ever buy anything with it. This makes it useless as a currency which means it can't replace USD. Why buy something now when you can buy it for less in the future? You could buy the famous pizza for a tiny fraction of a Bitcoin today
As long as we have fiat, bitcoin WILL always increase in value. Because bitcoin supply is capped and fiat will continue to lose buying power year after year. At this stage, there is no incentive to hold fiat and huge incentive to hold as much bitcoin as possible.
If bitcoin replaces fiat, bitcoin becomes the main representation of value. It no longer goes up against a trading pair of fiat. I speculate that its buying power would stabilize and become fairly static.
I don't think you've thought this through, if holding bitcoin accelerates in value more than say companies actually doing things then we're going to transfer a substantial portion of today's current wealth to the people who currently own bitcoin.
If BTC replaces fiat, I don't believe it would increase in buying power at a rapid rate. I think it would gradually increase in buying power over time only because the total supply will gradually shrink due to lost coins / dust /etc.
Imagine what would happen in this imaginary world when GDP increases. More things are being produced which means there are more things that need to be sold. But there is a fixed number of coins to buy things with. Each coin has to be able to buy more things.
Do you think that soundness is enough to convince the people being born now to pursue BTC when they're older?
They'll see it as this thing that the old people are all hoarding, and they'll have none of it... Why sign on for an uphill battle for BTC over any other token?
Seems to me that crypto projects should have tangible side effects, so that future generations can value them (or not) based on whether they want to see more of those effects. Compared to that, a fat BTC wallet in cold storage looks like somebody who sucked value out of their community rather than reinvesting it to make positive changes. Why reward such a person by valuing their tokens?
The obvious point is that anyone who wants to pay their taxes is going to be a "USD bagholder". Boomers generally don't save in USD. They save in USD denominated assets (like bitcoin). Interest rates being lower than inflation does rebalance the economy from wealth to income, but I actually think that's something we should encourage right now.
>You won't find many today who think buying pizza in BTC is a good idea.
Because the more you think about Bitcoin and the more you learn about how fiat works the more broken the world seems and Bitcoin becomes all that matters.
Despite being just numbers it's the only value in the world that real and you can truly own. You can't even truly own a house in most of the world.
The bigger will be "consumer" possibilities and adoption of bitcoin token the bigger will be a payout for 51% attacker, same with relative price of each token and same with amount of financial instruments available. Bitcoin tokens are like a self destruct system which ticks faster to the explosion the more energy and adoption it has.
How? If I want a unit of any cryptocurrency, I have to hand over an equal value of USD to obtain it.
My employer can't pay me in crypto because they only have USD flowing in to their business in exchange for their products and services.
What you describe would require basically the entire economy to somehow abandon its fiat currency and switch to crypto - - - I think if this scenario is supposed to be taken remotely seriously, you have to explain how that scenario is supposed to develop - something more than hope that in the future...
> What you describe would require basically the entire economy to somehow abandon its fiat currency and switch to crypto - - - I think if this scenario is supposed to be taken remotely seriously, you have to explain how that scenario is supposed to develop
Gradually, then Suddenly
Unfortunately I believe we get there via chaos, winners, and losers. I don’t believe the transition will be equitable and clean because I don’t see any way that would be possible. And yet, it’ll be worth it in order to have sound money.
Maybe you should try to look further than yourself. Miners are getting paid in crypto, crypto exchanges are getting paid in crypto. It just has to start somewhere. Investors with crypto staking are getting paid in crypto, or hodlers see their assets increase in value.
> I would say crypto is already kickstarted, let's just see how far it can take us.
It will take us only up to the point where we can no longer convert crypto into actual currency (you know, "money"). After that whoever has crypto will be left "holding the bag", and all the boiler-room operators will have long-ago cashed out.
I wish we could just have digital currency that is traceable, secure, and stable without all the insane hyper-libertarian social-Darwinist scammer stuff.
But if we're going to talk about "room for improvement" crypto is much farther from being perfect than the US dollar, Euro, Yen and virtually any other fiat currency that seem to have so many issues according to the crypto enthusiasts.
In fact, crypto currency can't even function as a currency at this point. Not even close.
Currency, as a concept, is very precisely defined and also exhaustively studied. Actual currency is also controlled by policy-makers and regulatory regimes in every country on earth. Actual currency is a complex concept but one that has been with human civilization for as long as it has been around. One decent definition here: https://en.wikipedia.org/wiki/Currency
Of course if you are asking as a rhetorical question - there is room for improvement. BUT - there have been millennia of variations on the concept, experiments, and many failures. As recent history, why don't you read about the United States prior to the Federal Reserve Act. Each state (or even smaller jurisdictions or communities) could produce their own currencies. Company towns operated on their own scrip (analogous to their own chains). How was that? Imagine taking a trip from Town A to Town B and discovering that your money is not accepted at the Town B tavern and inn. Or, is accepted but at a 50% discount to Town B's currency. Which is not accepted for purchase in town A. That was reality in the US and in other places too.
Actual modern fiat currency is still imperfect, as is every cryptocurrency, every computer, and every other thing devised by humans. But. Somehow we have around $90 trillion (equivalent) of economic activity on our humble and imperfect planet, operating on fiat currency systems.
So, I'd ask back, (1) what are the shortcomings of this amazingly successful world economy that operates on fiat currencies and (2) how, precisely, does cryptocurrency improve upon these shortcomings, WITHOUT creating negative externalities that negate proposed benefit?
What you are describing is not employment. Rather, you are describing activities that produce crypto.
For example, miners are getting paid in crypto. OK, but what are they using to buy the computers they use and to pay electric bills and the like? I'm guessing is is hard currency...
I don't understand this. If they buy BTCINR, they will hold and own BTC, BTCINR will go up, and USDBTC will go down (ever so slightly, or not at all) due to statistical arbitrage traders. No direct USD transaction took place. In what way are they supporting the USD? I get the separate point that BTC
itself may displace INR, but not the USD point.
One, flight to safety. When markets crash, risk assets sell off in favour of dollars. (Yes, crypto still behaves like a risk asset.) If the rupee is selling off in favour of Bitcoin and that prompts a crisis, the rupee will enter a death spiral.
Two, more potently, the world’s financial rails run on dollars. Hell, most of crypto runs on dollars. For a capital controlled economy like India’s, Bitcoin is an off ramp for converting INR into USD.
Currently the perception is USD is safer than INR, but that can change at any time. There is no reason not to use stable coins denominated in INR if INR becomes more trusted. Imagine if the US printed 40 percent of their currency of all time in a single year leading to subsequent years of the highest USD inflation in 40 years.. which just happens to be exactly the time we are living in.
No one in India uses it for that purpose. UPI is significantly better than anything crypto has come up with. Crypto is purely a gambling vehicle in India
So instead of one exchange rate you would need to deal with two. Not to mention the risk of the crypto in question being insanely volatile. Remittances are huge in India but no one really uses crypto for this purpose
Which isn't a technical but a political problem. So what you are saying is that cryptocurrencies are a technical solution to a political problem. I would love to hear more about that.
The network can be used by anyone whether you have a political problem or not you can use it for remittances to save costs or maybe the other party you are sending to doesn't have a bank account or something
If you have a good non authoritarian government stable coins can be used to rollout a payment solution cheaply that works in any place an internet exist that could save you tons of money
You can use cryptocurrencies to get around currency restriction or failing currency which is mostly political problem and you use the crypto networks to help you in that
There are products like Revolut which do this and even allow currency exchanges at market rates by using the current underlying frameworks without the need for inventing a speculation medium.
This is one of the weakest arguments in favour of crypto as it is not like you can't work with the current systems.
a distributed trusted ledger, where each selfish agent has to cooperate, while all transaction are out in public ... all on mathematical foundations, and it actually works in practice?
I don't think your appreciation of blockchain is wrong. I think it is your appreciation for the greatest achievements in theoretical physics and mathematics that is.
I agree with you one this...but for whatever reason it is not the prevailing opinion on HN. I think that is largely due to the fact that many people on here knew of it early enough to become fabulously rich, but dismissed it out of hand without really looking into it.
Oh yes, exactly how big minds on r/cryptocurrency said recently - gamers from r/gaming and r/pcgaming don't know how to properly play games and don't see true benefits of play2earn promised by crypto apologists; and programmers on r/programming are one month juniors after online courses who have no idea about computer science, blockchains and finance. Yes, that is definitely what's going on.
the comparison to theoretical physics is regarding theoretical computations that actually do turn out as working in the real world.
many mathematical concepts (most in fact) are abstract concepts in N dimensional spaces. It is theoretical physics when theory and reality have to match.
that is the genius of Bitcoin, a theory that actually works in practice
Does it? Bitcoin was supposed to be a currency, and it was supposed to be distributed. I hear it started pretty well, but we eventually ended up with pathologically concentrated mining power (a relatively low number of players create all the Bitcoins), and an exchange structure closer to a pyramid scheme / speculative bubble / value store than an actual currency. And don't get me started on the ludicrous costs in energy and silicon.
As far as I can tell the experiment failed, and we should shut it down before it does even more harm than it already has.
And any assessment calling Bitcoin and Blockchain on par with the greatest achievements in mathematics is suspect. Don't conflate Bitcoin with the underlying mathematical concepts that enabled them. Symmetric and asymmetric cryptography have immensely changed the way everyone on earth lives. Blockchain and Bitcoin have become buzzwords with no widespread new application beyond speculative investing.
> Bitcoin and blockchain are genius technology, on par with the greatest achievements in mathematics and theoretical physics.
The only genius about those technologies is cryptography. If that's enough to make technologies build on top of it on par with the greatest achievements then every single crypto trojan is one of humans greatest achievements.
I think we can both agree that the Wright brothers were pretty genius. They no doubt accomplished something that can be described as a feat of engineering.
Now, the CEO of Spirit airlines clearly isn't a genius, but he doesn't build things anyways, so it's kind of an apple to oranges comparison. Let's instead use an example that's closer to the original cryptography to crypto currency comparison shall we?
Let's compare the Wright brothers to an engineer called Josh working at an airplane manufacturer of your choosing. I will go with Boeing but you choose whichever you would like.
Whenever Josh builds a new plane he uses knowledge passed down and refined by previous aviation engineers, knowledge that can eventually be traced back to the Wright brothers.
He builds on this knowledge and as such creates great plans. This makes him a pretty good engineer!
But does it make his plains "on par" with the greatest achievements of humanity? If so, at what point do they stop being on par? Will they ever? Is every plane one of humanities greatest achievements?
And if that's the case, is every tire on every car one of humanities greatest achievements?
I think we both agree that cryptography is a great achievement of mathematics. It's something that will see uses well into the future. But that's cryptography as a whole, not a specific algorithm.
Crypto currency and blockchains are not world altering inventions. They are simply products of engineering, build on mathematical knowledge.
And while you might be able to argue that they are good engineer, they definitely are not mathematical or theoretical physics achievements. They are simply a product using those achievement, just like databases, rockets and cars are.
Are you saying that there is no business that transacts in tulip bulbs?
Are you saying there are no resellers of tulip bulbs? No tulip bulb traders?
> The average bulb grower in Holland sells almost $200,000 worth of bulbs every year,
It is also worth noting (though not directly relevant) that the "Tulip Mania" probably never happened, it is all a myth or greatly embellished story, told and retold countless of times, each time growing in claims.
Makes for a captivating story to audiences looking for validation.
No reasonably informed person is talking about Tulips when they cite Tulip mania, they're talking about the speculative bubble around Tulips. To put it in a different context, when we talk about the global financial crisis of 2007, no one suggests we should ban owning houses, but we did need to heavily regulate the financial instruments that drove the creation of that bubble. And if we're going to talk about mania I've got a great example of mania for you:
> Bitcoin and blockchain are genius technology, on par with the greatest achievements in mathematics and theoretical physics.
You're basically demonstrating the mania that you decry. I'd love to hear on what basis you can possibly argue that bitcoin/blockchain is somehow on the same level as the discovery of gravity, or the discovery of radioactivity, or the theory of relativity.
gravity did not need to be discovered :-) everyone was subjected to it all the time
on a more serious note, for what is worth, discovering radioactivity was accidental, there was no premeditated thought process, so that does not count ;-)
now when it comes to relativity - that indeed required a radical idea, the constancy of speed of light. Which required a genius. Like bitcoin. I did not say bitcoin was better than the theory of relativity, I said on par.
When evaluating any information from any source, whether from a government or not, you should keep human biases in mind.
The thing to keep in mind here is that India's bankers are giving their opinion on the current biggest competitor to their power and livelihoods. And the report says as much.
> The basic purpose of blockchain, or more generally the distributed ledger, the technology on which these crypto-products run, is to make financial intermediation, and therefore banks, redundant.
Imagine thinking any bureaucracy can give an honest assessment on the thing that makes them obsolete. Any opinion they give out should be evaluated through the lens of them losing their power and livelihoods. Any report from central bankers on crypto is the equivalent of McDonalds executives giving their opinion on Burger King.
Blockchain does not make banking obsolete. We can already do business by moving raw currency around, but hardly anyone does that. There is a whole crypt banking sector that provides exchanges, custody, lending...
And if you take inflation overhead, consumed by miners and other services to keep BTC or ETH running (5% to 10% annually), there is not much advantage over existing banking.
It doesn't, but Satoshi thought it would. See for example the Genesis block.
> There is a whole crypt banking sector that provides exchanges, custody, lending...
Back in the day, the idea was to make every citizen financially sovereign. It didn't work in practice because those services you mention are useful. (Just like crypto has trouble working as a payment infrastructure, because chargebacks are an useful and demanded service)
> India's bankers are giving their opinion on the current biggest competitor to their power and livelihoods
Some of crypto’s biggest backers are on Wall Street. For obvious reasons. Crypto is making Wall Street billions while letting them preach from beneath a populist veneer.
This is true of individual crypto-holders too. The people with billions in crypto are all over twitter saying how holding coins and NFTs is for the people.
The crypto ecosystem is almost exactly the same as the massive wealth concentration in America, except worse. The narrative from those at the top, and the willingness of people to defend them, is the same.
People rabidly defending Elon Musk is equally strange. He’s trolling on the internet, not looking out for you.
It's clearly important to understand the biases and potential conflicts of interest when analyzing a source. No source is free of bias, and figuring out what those biases are is an important part of critical thinking.
However, a source can be completely biased and still be correct. Any counterarguments need to be based primarily on the provided evidence and conclusions, not the "trustworthiness" of the arguer.
Sorry but to me that logic applies more to crypto than countries. Crypto is a solution with no problem and it’s flush with 100s of billions and so all those billions are hell bent on finding a problem and keep pushing for it
Your privilege is showing. A huge portion of the world is under-banked or completely unbanked. It's one of the largest barriers to quality of life improvement on the planet. Say what you will about crypto's current state, but mathematically enforced property rights wrapped around a weightless, trustless, and borderless currency solves very real problems for some of the worlds least privileged people.
Sure, next time an armed militia thug comes around for "taxes" show him your magical numbers.
I mean, this huge portion goes straight from "unbanked" to using a convoluted highly technical solution that has high volatility and no legal recourse whatsoever... stonks!
I just envision an old man yelling at clouds. I won't convince you. Maybe go read about some bottom up adoptions of bitcoin in places like Nigeria. Or don't, I don't care. You shouldn't buy any and probably should short it.
Speaking of legal recourse, we just recently saw the Government of Canada try and stamp out a form of political protest by trying to arbitrarily freeze participants' bank accounts. Regardless of how you feel about that particular protest, the type of legal recourse many people might think exists with banks might not actually exist, particularly for those who don't toe the line with all of their government's viewpoints, or if there's an actual emergency.
As far as high volatility goes, the question you should be asking is "volatility, relative to what"? The rate of Bitcoin "inflation" is known and transparent. Now compare that to the power of the virtual printing press and the effects of inflation on fiat currencies' buying power.
This is an oxymoron. How can you mathematically enforce a purely social concept? Property rights aren't tangible things; they are creations purely of law and of the societies they inhabit. Can you mathematically enforce that no one build a house on the land I own? That no one picks an apple from my apple tree, except with my permission?
I just don't see how cryptocurrency helps the unbanked--what does it bring that M-PESA doesn't bring? Furthermore, how are those benefits worth the externalities of cryptocurrency, specifically the massive energy consumption that undoubtedly fuels the climate change that is slowly worsening the lives of many of the unbanked it's purporting to help?
> This is an oxymoron. How can you mathematically enforce a purely social concept? Property rights aren't tangible things; they are creations purely of law and of the societies they inhabit. Can you mathematically enforce that no one build a house on the land I own? That no one picks an apple from my apple tree, except with my permission?
Land or an apple tree aren't natively digital assets. So no, they cannot be cryptographically enforced. Bitcoin is natively digital. If I alone have access to a wallet (i.e. memorized a seed-phrase), my rights to that bitcoin are enforced cryptographically and defended by the power of the network. "Ownership" meaning I have exclusive rights to "spend" them.
"Social construct" still absolutely comes into play though. The social construct is money. Bitcoin being money is a manifestation of a social construct. Are you suggesting something being a social construct means that they are not "real"? Because that would be a MUCH larger debate.
> I just don't see how cryptocurrency helps the unbanked--what does it bring that M-PESA doesn't bring?
A trustless and self-sovereign way to store value? This becomes increasingly important the more corrupt your Government is. For example, if your government wanted to freeze your money because you participated in a protest they don't like.
> Furthermore, how are those benefits worth the externalities of cryptocurrency, specifically the massive energy consumption that undoubtedly fuels the climate change that is slowly worsening the lives of many of the unbanked it's purporting to help?
Electricity consumption, in and of itself, does not fuel climate change. CO2 emissions do. Also depends on the relative climate cost between one system and the system it looks to replace. For example, electric cars are bad for the environment if you look at them in a vacuum. But, they are better than ICE cars. So they are applauded.
I think this is a major point of misunderstanding with the value of crypto currencies. Yes you are protected from say inflation in a currency with a corrupt government, but you will never be protected from someone with more force than you. Meaning, unless you know that no one will hold you at gun point and ask for your password, you are not safe from your government or anyone else. And when I say gunpoint I mean it literally and also figuratively with threats of prison and worse. Hell even in the US 4.5 billion in crypto was confiscated. Why didn’t those people just not give their password to keep the money? Because in the end government control goes way beyond a password.
That's a presumption about ownership of anything under the reign of a government. How is that argument crypto specific at all? Also, that 4.5 billion was mostly confiscatable because of poor key management - not people handing over their keys under duress. Also also, pretending like telling a bank to freeze an account vs threatening you into giving your keys are the same is ridiculous.
Because crypto is thought of as a unique cross border banking solution but you still end up at the whims of your own governments laws, regulations, and their level of protection. Countries like China have banned crypto exchanges, Canada has confiscated crypto for protesting. It’s not this miracle bank account only you have access to that everyone hoped it would be.
...And other countries/states have embraced Bitcoin. The China ban was going to be "the end", fast forward less than a year and the network is stronger than ever. It has more users than it ever has. Bitcoin continues to grow regardless of these actions. It simply doesn't care.
You didn't address the difference between unilateral government-bank cooperative freezing of accounts en masse vs. what's required to strong-arm keys from a single person. Do you acknowledge they aren't even close to the same thing?
No those are very much the same thing. If you can say give me your key or go to prison, the password doesn’t work that well. I would add that crypto is no longer even decentralized as well. Good luck find someone trust worthy to trade into and out of any fiat currency with only your wallet and without using or involving a centralized exchange or program. When goods and services aren’t able to be purchased in the crypto denomination that means on and off ramps actually make buying anything with crypto more expensive after paying any exchange fees. The only benefit would be if crypto went up in relation to fiat currency, but the ones getting rich are those earlier holders only. This is because when you buy crypto you are buying from another person. That other person took your fiat money in order to sell crypto, it was never created upon the moment you bought it except with certain stable coins which are essentially just banks for regular fiat currency, not actually crypto and definitely not decentralized.
You are wrong or being dishonest. The government calling up the bank and saying "Hey, friend. Freeze these 5000 accounts. Thanks!" clearly has less friction than strong-arming 5000 people for their wallet keys.
> Good luck find someone trust worthy to trade into and out of any fiat currency with only your wallet and without using or involving a centralized exchange or program.
I literally do this exact thing pretty frequently. HodlHodl and Bisq both allow you to do this in a trustless and decentralized way. And things will only improve with projects like 'TBD' from Dorsey.
> When goods and services aren’t able to be purchased in the crypto denomination...
But they are! Let's see... this week I've bought coffee with bitcoin, I've bought a new golf hat, I bought a magazine subscription, and a VPN subscription. This month I bought an iPad utilizing bitrefill. Early days? Sure. "Aren't available" is bullshit though.
> The only benefit would be if crypto went up in relation to fiat currency, but the ones getting rich are those earlier holders only.
What? You're just wrong... Bitcoin is up 250% in the last 2 years. I've been in for 1.5 years and it's literally out performed everything else I own.
I see your point, there’s more friction at scale but on an individual level I question if the friction is enough. I hadn’t seen those programs, but it looks like they are at least able to make a trade to a traditional bank account via which does make things better even if you are limited once it gets into your bank account. I’m wondering if I could make a $1M+ transfer to an account without an issue, maybe a few hundred or thousand works fine without setting off alarms with the banks and govt simply because it’s not worth their time. But the heart of it is really being able to actually buy and sell goods and services. It seems that every time a company starts accepting it they stop, Tesla, valve, and more. I think that’s pretty much going to be determined by government regulation and the way governments tax transactions. If they are taxing it like an asset and not letting it inflate or deflate tax free like a currency then it will get really tough to do taxes for sellers. Yes earlier is better, 2 years ago is better than now and I’d probably estimate 2 years from now will be better than now as well as long as adoption continues to increase and more true use cases evolve. I may be a bit pessimistic but it feels like we should be well beyond the ability to buy and sell goods easily if it were to reach mass adoption. But obviously from your responses I have a lot to learn myself even as things are changing.
The problem is the utopia you are envisioning only happens if the whole world is moulded into either one government or no government at all. All those paperless mathematical property rights are constructs of individual governments that are in turn a by product of the borders between geographical places. Crypto only will exist when there is peace and more importantly prosperity, without a network, energy and resources there is no crypto.
You need to read this not as an assessment of merit, but as a strategic outlook. Central banks see crypto as dangerous to the economy and threatening to their power and their country's sovereignty. Central banks have a lot of power. It stands to reason that they will use that power with the aim of either destroying or co-opting the technology. The merits of cryptocurrency and its underlying ideology are unimportant, because those building and using it (for the most part) and negligible power compared to the institutions it would threaten.
* The RBI (Reserve Bank of India) Governor and Deputy Governor have, more than once, publicly expressed the view that all cryptocurrencies should be banned for all purposes. A few years ago the RBI even instructed banks not to work with cryptocurrency exchanges, but that was overruled by the Supreme Court two years later with the justification that there was no law to do that and that this action was disproportionate.
* The Prime Minister of India, Narendra Modi, has publicly made statements that cryptocurrency is “spoiling the youth” and that all countries should come together to control (which in his view is banning) them.
* In the recent annual budget announcements, the finance minister announced an unexpected 30% tax on all income from “virtual digital asset transfers” without allowing any set offs (except the base cost). Also added was a 1% TDS (tax deducted at source, or tax withholding) for every transaction calculated on the transaction amount!
Given these biases against cryptocurrencies and the strict need for capital and current account controls on Indian Rupee transfers that the RBI is addicted to manage (it actually prefers a steadily but continuously depreciating Rupee), it’s not a surprise that public utterances about macroeconomic stability would be published as a stance. The RBI and the Finance Ministry have been struggling to get a grip on the economic levers (with COVID making it worse), and believe that anything they cannot control easily is a threat to them, first and foremost.
The Indian government is more focused on protectionism and controls than on capitalizing on opportunities.
>>> The Indian government is more focused on protectionism and controls than on capitalizing on opportunities.
Crypto is an opportunity? Heck no, when you want to replace the existing system there must be some outstanding benefit which the new system should provide. Crypto has no such thing. In fact it would be trivial for the government to come out with some e-currency since UPI (https://en.wikipedia.org/wiki/Unified_Payments_Interface) is already in place.
300 comments
[ 3.5 ms ] story [ 263 ms ] threadHowever i am not very clear as to how the US (and some other countries) are regulating it? What are they doing differently?
> Crypto messaging does not appear to be directed at the rational or sensible.
Don't ask the winery owner if their wine is good, as they say.
But anyway, it's very readable without almost any financial jargon, so anybody can read it and make his own mind on the topic.
currently there are more crypto currencies with intrinsic value than there is goverment crypto, as fiat by definition has no intrinsic value
The link is more like an opinion piece than an analysis.
Compare this with a fiat currency whose value is supported mostly only by a government forcing their citizens to pay taxes in this fiat currency, and forcefully taking down alternatives.
Which of the currencies has more intrinsic value? What happens when the government can't manage to ban the alternatives anymore?
And to come back to the case of currency, the exclusive use of a single government-sanctioned currency is a recent phenomenon, not some deeply ingrained tradition. Local communities, governments and businesses frequently issued their own, and long distance trades were settled in commodities.
Government created currencies with broad uptake are very old, not sure where that idea comes from that it is something new. Ancient Rome didn't just settle in commodities across the republic and empire. Early coinage was a major contributor to the creation of commerce and it was often tied to government/rulers. Those coins might not have been totally exclusive but nevertheless kind of a lingua franca version of currency precisely because they had enforcement behind them (social as well as governmental).
Anyone can hold different views on what societies and governments should or should not do, mandate, etc. - but until you get the votes (or power) to enact your views it will be tough going if you want a different society.
Cryptocurrency is not intrinsically valuble in any sense aside from the value people place in it, which is not "intrinsic". In fact it is incidentally the same reason the dollar has any more value than its material cost. Also your argument that cryptocurrency is good because anyone can use it is strange, literally everyone is allowed to use the dollar, and pretty much everyone agrees that a dollar is worth a dollar, to the point that calling such a belief "faith" sounds ridiculous.
I guess letting a Bank judge his own competitor is an even worse offence?
Which would be more appropriate to your quote, i believe.
Ps. Heb alvast die uitdrukking nog nooit gehoord in België ( Never heard that expression in Belgium)
https://hoezegjeinhetengels.nl/slager-keurt-zijn-eigen-vlees...
Over het algemeen gebruikt als de producent een oordeel geeft over zijn product.
als in "Wij van WC eend ..."
You might not agree with the principles of Bitcoin, or the valuation, but it’s certainly transparent.
Those inner workings are analogous to the SWIFT protocol. Memorising its messenger codes won’t teach you much about banking.
Where it matters—who owns what, controls what and to what end—both are opaque.
These systems have evolved over a very long period, with that comes mostly good but definitely some inefficiency which is periodically cleaned out when stimulus reach a breaking point.
I wouldn't be so quick to dismiss the current system, it's on balance been a good system - doesn't mean it can't be improved of course but I think improvement should be the name of the game rather than wholesale rejection just because you don't understand why it is the way it is.
> Unknown to you maybe, not unknown by bankers or bureaucrats.
The difference is that I, as someone who is not a banker or a bureaucrat, do not have access to the information. With Bitcoin the code and developer communities are completely public.
Central banks are no more licensed than your local ICO. Some are better than others. Given the issues India has had with its currency, they might not want to throw stones...
Pray, enlighten us.
https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis...
Isn't that what Bitcoin is about? Getting rid of these often political decisions?
It's not "about" anything, it's a piece of tech. There is a bunch of cryptobro culture around it that varies depending on which part of the web you frequent, some of which slants heavily libertarian that would espouse the sort of things you are talking about.
Ultimately Bitcoin is still a solution looking for a problem. Banks aren't the problem because they happen to work quite well already.
One thing is sure - there are people who don't agree with that.
For example: people whose money was confiscated during https://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_fina...
Well duh. Way to prove the point that we need to evade government control. Zero self-awareness. No examination into why people may not trust their government. Just do what we say. This from the same government that already demonetized* the currency used by the same people they want to be trusted by.
In 1995, 1 USD = 32 INR.
In 2022, 1 USD = 75 INR.
Add to that the fact that USD is also losing value itself.
How much of this change is the fault of Indian government?
https://tradingeconomics.com/india/money-supply-m3
Same with "bypassing" the regulated financial system. It's an alternative, and the reason it's unregulated is because it's new and governments haven't pulled their finger out and fucking well regulated it - they were lazily hoping it would blow over, and now that it is big enough to be a threat they're blaming it for existing.
Exemplary politicking.
People may not trust the government (and I say this from the UK, so I appreciate I'm still relatively lucky all things considered), but in terms of evading Government controls, I can't believe we won't see governments thinking about this if more people are choosing to find ways around obscuring their income and contributions to the things that keep society from completely falling apart.
FWIW - not arguing against cryptocurrency, just positing idea that the whole my-finances-are-secret bank-yourself crypto utopia might not be all that.
I don't understand whats the gameplan here.
So I don't like carrying the burdain of military adventures in the middle east, and the guy over there doesn't want him money to be wasted on space while we have problems down here/oversized military/given to poor people.
Suppose now we are all 100% successfull at thos tax evasion (which we won't be), whats next? Government collapse and anarchy? Like what's the gameplan?
As for what's next, collapse/anarchy etc, who can really say? As always it's up to the people. Bitcoin places sensible limits on government spending power (and therefore on government power more generally). Governments now have to compete and act sensibly with the tax money they're "responsible" for in the same way any of us are responsible for how we spend our money.
LOL.
Tether has entered the chat....
And replaces it with something _even_ worse.
But you are not making them accountable, you are just making everyone poorer. They could still get away with collapsing the economy because of democratic deficit/partisanship/qualified immunity/shortcomings of the justice system/etc. These are the real causes.
> As for what's next, collapse/anarchy etc, who can really say?
If someone is advocating a change to the global financial system, I'd like a better answer than this. Communists sound like grand planners in comparison
I do not believe in endlessly kicking the debt spiral can, towards repression of future generations.
Bitcoin enforces fiscal soundness by virtue of not being debase-able, and providing much-needed competition to national currencies.
I like how the two options are pay insane taxes and inflation or anarchy.
Feel like I’m being held hostage.
>Everything else in the current system is fine
Do you really think anyone here believes that?
There are many others.
Which?
> Which?
Precious metals, commodities (which is a large enough category in itself).
Go ahead and pass the law. I'll wait.
It'll never happen. But let's say for the sake of argument it did. Another law could come along to change it again. Why trust laws and corrupt government officials? They are unnecessary soon-to-be antiquated relics of days when no better option existed.
Also, banks being regulated, don't make me laugh.
If people kept it simple and bought crypto like bitcoin or ethereum, they’d be fine. They get lured into get-rich-quick scams because of poor education and decision making skills.
> All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India.
And so they may, for probably 4th or 5th time. Cryptocurrency on- and off-ramps can be somewhat controlled, but overall it's a pretty difficult thing to ban in practice.
The earlier bans were indirect (RBI asking Banks asking Payment processors to close down exchange ramps) and didn't stand up to legal scrutiny. A direct ban via legislation ought to work in practice. Exchanges (and other companies offering crypto in India) have already de-risked against this by getting registered in Singapore.
A ban doesn't have to work perfectly, it just has to dissuade enough users.
That much it can probably accomplish, especially given the current level of censorship of the Internet.
That applies to just about everything. We have laws against tax evasion, fraud, murder... but people can (and do) still do these things. Just because a law doesn't or can't physically stop people doing things doesn't mean we shouldn't have the law.
The point is, if it is banned then you will severely constraint the ecosystem. On-off ramps and other intermediators will have to shut down, institutional participants will be forced to withdraw etc etc. Sure no doubt a handful of participants will flaunt the rules and continue to participate, trying to keep the dream alive, but for all practical purposes it'll be dead in the water.
Crypto isn't likely to go away and the whole situation resembles to a global prisoners dilemma, I think the best governments could do is to come up with a sensible regulation.
Crypto is only fun when it’s arbitrarily going up in value, which would seem to be somewhat curtailed but these bans.
Of course crypto can be used to obtain (illegal) drugs, but it’s not clear that “sorta hard way to sometimes buy certain kinds of also illegal things” is as inherently valuable..
Banning crypto also creates a massive incentive to find alternate ways to sell to this market which is quite large given India's population. Only this time the government gets nothing.
If you treat it like a casino then that is true.
Ideally, it takes over fiat currencies altogether and takes away the government’s ability to Arbitrarily create money out of thin air whenever it benefits them.
I don’t understand how people can compare the austerity debacle and resulting outcomes in Greece with what the US was able to do (and turn a profit on) post financial crisis and decide that somehow the Greek way was better, countries shouldn’t be able to use monetary countermeasures, and these constraints will magically produce better politicians who will get it all right, because otherwise it would go wrong.
We’ll still get the incompetence, it will still go wrong, and the results are just worse all around.
Crypto fans obsessed with the handling of the financial crisis should brush up on the concept of Panglossian optimism.
https://en.wikipedia.org/wiki/Greek_government-debt_crisis
From what I understand a huge use case for crypto is sending remittances. About 12 billion USD was sent to India from the USA in 2017 and the fees associated with a crypto transaction pale in comparison to that of Western Union.
The down side, of course, is the question of legality and market volatility.
This is not a use case that I personally have a use for, but I certainly understand the appeal of it.
Sending 1k USD to India via Wise costs 7.5 USD. The only reason remittance via crypto currencies seems cheaper is because pretty much every coin trades at a premium on Indian exchanges.
- Crypto is fun for people who are in a repressive government (Canada).
- Crypto is fun for people who live in a country that is being mismanaged monetarily (Venezuela/Lebanon/Turkey).
- Crypto is fun for people who want to leave a country with capital controls (China)
- Crypto is fun for people who want their capital to not be debased unless they join a ponzi scheme (Stonks)
And how do the valuations of crypto currencies differ from a Ponzi scheme?
[0] https://www.merriam-webster.com/words-at-play/is-it-wrong-to...
1. Govts can (and should) regulate -exchanges- who are setting the exchange rate at the same time as offering to be the bank for poorly educated crypto holders, so they can use folks money to buy low and sell high.
2. Govts (already) make it a legal obligation to declare and pay tax, crypto is no different than dealing in cash.
People who break the laws of their country should be tried under those laws, ie: tax evasion.. this isn't new to crypto.
What the RBI are saying is they object to crypto removing their ability to.. (see point 1.) control the supply. When they talk about managing the economy, what they mean is 'their ability to print money'. Furthermore they argue their ability to make up the rules as they go is enshrined and justified by the notion that 'that's how it's always been done'.. well welcome to technological advancement? Crypto is FAR from perfect right now but it is based on a premise that a truly fair and un-cheatable system is possible, and that has govts terrified.
Political views aside, many believe economic policy to be a key pillar of a government and anything threatening this power will be squashed at all costs in countries where this pillar exists.
Where this pillar exists being the key here, which is why we are seeing national adoption in countries that lack it. Despite this, an outright ban is indeed lazy and removes a country from the global Crypto economy.
They don't print money to "cheat" or because they want more money, that would be stupid - the overall amount minted in most countries is barely above the replacement rate for currency lost/destroyed/missing. If they were doing it to profit, the amount printed is just a drop in the ocean comapred to the amount made through tax, so it would be a stupid idea.
Governments control the money supply specifically to control the inflation rate, which is a lever they can move to respond to market conditions, keeping it low when the economy is growing, and raising it during recessions to incentivise investment. When governments can't do that, recessions hit MUCH harder, see: greece, portugal, ireland, and many other countries in the eurozone who weren't able to use monetary policy and were hit by devastating recessions as a result.
In any case, you "work" for an open source currency? I presume some money is earmarked from the transaction cost to pay developers?
Hint: across all countries in europe, the average inflation rate was also well above target.
You may note this number is less than 4% of the 10 trillion earmarked for the stimulus, and was raised primarily to increase inflation intentionally during the coronavirus to stimulate investment in the economy. It's also less than it has been at many points in the past.
None of these numbers are unusual or unprecedented. In 2014, the fed printed $300 billion dollars worth of notes. In 2013, they printed 472 billion.
What is done with the money that is printed? It is not part of the federal government's spending. It is used to buy bonds and other securities from banks as part of quantitive easing. The federal reserve is not instructed by the government. Board members are appointed by congress yes, but keep their jobs for 14 years. Right now, the board consists of 3 republicans and 1 democrat. The chair is a republican.
You're welcome to take a look at the Federal reserve currency print order archive here: https://www.federalreserve.gov/paymentsystems/currency_print...
Venezuela, for example?
This is absolute bullshit.
Literally your little bubble in your mind manages to get along just fine.
The economy
Exists.
It's right there - I can go to the store and buy things with my money. Don't be ridiculous.
https://www.statista.com/statistics/268225/countries-with-th...
Damn pesky facts. Always messing up the way you Feel!
This is like saying that all pilots are actually trying to crash airplanes because some airplanes have crashed in the past.
Here are 19 other countries with double-digit inflation right now:
https://www.statista.com/statistics/268225/countries-with-th...
My speculation is that, on a long enough timeframe, every country eventually becomes a loser when they are using government-controlled currencies. Corruption is inevitable..
Seems like we came up with this solution after creating the problem.
Crypto (by design) bypasses all these controls. Even large crypto exchanges cannot abide by them: https://www.theblockcrypto.com/post/108178/india-law-enforce...
>AEs have the political power to control the crypto companies. The recent instance >where the US recovered bitcoins from the hackers of the oil pipeline in US, is an >example that notwithstanding claims of non-traceability of cryptocurrencies, AE >Governments wield enough power to access the records. India or most other > countries would lack such advantages.
I don't know the details of the case well enough, but this is a usual type of comment on HN, and my a priori assumption would be it's probably oversimplifying reality and ignoring context as is also usual.
Uh, who's claiming that? Cryptocurrency transactions are _super_ traceable.
> AEs have the political power to control the crypto companies.
You won't find scammer's name on block explorer.
If I transacted in, say, cans of beans, would that also undermine sovereignty and control of the economy?
Sounds to me that the mentioned sovereignty and control are very fragile. Sovereignty should come through consent of citizens and voluntary participation, not tyranny.
And since the Rupee devalued 2.4 times against the USD in the past 27 years, I argue that such inflation control was abused, punishing savers and encouraging debt, essentially translating to financial repression.
Also no country defines sovereignty through voluntary consent. Laws applies to you whether you agree or not.
Sure, laws apply to the ones disagreeing, but in theory, the government serves the people, not rules it.
Central banks however, have a large amount of control over everyone's financial life, yet the signal from voting is only very dimly forwarded to this institution, and there are limited checks and balances governing it.
From what I seen in my country's past the government will always get the blame and is asked to pay when people get scammed, then the goverment adds new laws to prevent future scams.
Say you borrow some money to buy a house and you use a foreign currency, and a year later that currency doubles, you get screwed. This actually happened and people asked the government to fix it. Sorry for poor details I don't like financial stuff so avoid it if possible
https://www.businessinsider.com/the-swiss-franc-surge-crushe...
https://en.wikipedia.org/wiki/Caritas_(Ponzi_scheme)
It's obvious that giving the power to crash your economy to a foreign group is losing sovereignty, what happens if some hackers or government crashes bitcoin? I suspect the government will be blamed as usual because it did not see it coming and prevent it.
As long as the government is not imposed by a foreign nation or some Illuminati then I would say the majority of the population should also take all the criticism not only the institution.
IMO if the population wants the government to protect them from scams and foreign financial group playing with their money then it is what it is, a weakness of democracy, where majority rules.
Do you mean the majority of the world’s population? The goal is make everyone except crypto-hodlers into fiat bag holders?
Edit: more inclusive
> crypto-bros
This makes me lose respect for your entire take. Name-calling a diverse group of people is always a display of ignorance and bigotry.
Future generations will benefit greatly once the transition is completed. And THAT is the goal. To create a world where sound money is the default. Where you can work for money, save it, and live your life without worrying about what bullshit the fed is up to.
Okay, but how massive? What is acceptable to you relative to the world population?
> But it’s NOT the goal.
Why is there so much marketing and messaging around “Don’t be left behind”, similar to how you phrased it earlier?
> Much like other chaotic events that resulted in increased freedom for regular citizens.
Maybe you could provide some examples that display a similar situation?
> live your life without worrying about what bullshit the fed is up to.
Monetary policy needs to influence wages etc, and lead to equitable outcomes vs inflation. Crypto won’t solve societal ills like this.
I can answer for myself. I speculate that a transition from fiat to crypto is inevitable unless a black swan event occurs. (Eg a new way to represent value is invented that is superior to fiat and crypto that is currently inconceivable today)
If the transition to crypto does occur, it clearly benefits early adopters. In late phases of the transition, there will be very few people willing to trade crypto for fiat.
Herein lies ammo for the crowd shouting “CRYPTO IS A PONZI”. But the truth is that all desirable possessions are this way. If you bought beach-front property in a great city decades ago, you’re going to be able to sell it to the next “sucker” for a huge profit. Likewise, Apple stock. Likewise, a baseball rookie card. Etcetc
> Okay, but how massive?
This is a difficult question. It depends on if the transition is a gradual, long term grind. Or if some event occurs that shocks the system and causes a mad rush to cryptocurrencies. I hope for the former and fear for the latter.
How many people are left without crypto? How do you envision this scenario playing out?
> In late phases of the transition, there will be very few people willing to trade crypto for fiat.
Given that supply is limited, how do people transition sustainably? If the supply is only hodlers, they obviously don’t want fiat. Why is anyone exchanging for fiat once the transition is certain?
> But the truth is that all desirable possessions are this way
But currency is a tool, not a “desirable possession”. It shouldn’t be limited to niches of the real world population. Not everybody needs beach front property, but they do need money.
> I hope for the former and fear for the latter.
As one prepares for this future, what is the expected usable value of the coin they are hodling? How do you know if you have enough for when fiat is worthless? Should one own a full Bitcoin? More? Less?
> But currency is a tool, not a “desirable possession”.
So people don't desire to possess $1,000,000? This is clearly not a truthful statement.
> People with life savings in fiat that refuse to transition will be the clear losers.
Who is forcing them to transition? Is it the government? Why did the government change currencies to crypto, without aiding their citizens?
> Sadly, I think it will be elderly that do not understand crypto
What about normal people? What price and coin do you suggest I buy, and in what quantity to prepare myself for this future?
> So people don't desire to possess $1,000,000?
While I don’t deny that people like large numbers on their bank statement, the goal of owning so much currency is to exchange it for products and services. They don’t care if it’s USD or BTC, as long as everyone else accepts the same. What they will care about is when you tell them that you have to exchange fiat for BTC/etc at a volatile price with built-in deflationary mechanisms. Again, you’ve ignored my question about supply and how to sustainably on-ramp the entire world populace into crypto.
I've enjoyed this thread but I can only provide it so much time and effort. Hopefully, you will find other sources to help answer your questions.
> Who is forcing them to transition? Is it the government? Why did the government change currencies to crypto, without aiding their citizens?
Free markets & will-toward-freedom forces the change. In theory, governments could accumulate crypto now and airdrop it to citizens later.
> Again, you’ve ignored my question about supply and how to sustainably on-ramp the entire world populace into crypto.
There is no such God-like control over this transition. I've clearly stated that I don't believe it will be pretty and equitable. It will be messy and chaotic.
You're (perhaps unintentionally) misrepresenting their case as saying "competes as a currency" being the main reason for the ban. They lay out the many reasons for it, including (and I'm giving their opinion here, not mine) its inherent lack of stability, the energy usage, control being in the hands of foreign companies/economies, and also that when people try to use it as a currency, it can lead to destabilization because it tilts the advantage in favour of currencies of A[dvanced]E[conomie]s. The last point is the one you mention, and even it isn't a concern about cryptocurrencies themselves being competition, just it opening doors for stronger and potentially destructive competition from already stronger currencies.
If you plan to hold crypto long term manipulation might be bad in that it might damage the long-term prospects of crypto, but that's literally just a question of what time horizon your investment is vs what time horizon the manipulation happens. If Tether turns out to be a scam it only matters if it turns out to be a scam before you sell.
No, if crypto becomes the dominant medium of exchange. In this way it would be determined by factors of supply and demand same as money has always been for thousands of years.
The dollar is more susceptible to manipulation than crypto. If you cared about manipulation, you would be an advocate for literally anything rather than the petrodollar - crypto included.
> Writing in the New York Times Adrian Chen noted as far back as 2013 that Bitcoin is built on a weird mix of speculative greed bolstered by a utopian cyberlibertarian ideology and likened it to a digital gold rush. Indeed, hyperbole continues to characterise all aspects of the crypto world. Crypto messaging does not appear to be directed at the rational or sensible.
Adrian Chen's article... https://www.nytimes.com/2013/11/27/opinion/much-ado-about-bi...
Dan Olson's now epic "Line Goes Up" https://youtu.be/YQ_xWvX1n9g ... a masterful takedown of crypotcurrency and NFT's, it also demonstrates what a shit-show this has all become. Much MUCH worse than in Chen's 2013 article.
- has given the banks the right to freeze bank accounts of suspected protesters without evidence and granted the banks full immunity. Even if the banks are mistaken or outright abuse this right, they can never be held liable in a court of law
- has suspended the rights of the accused to defend themselves in a court of law stripping them of all due process rights
- can now force two truck companies to carry out the government’s orders or face severe punishment. The tow truck companies haven’t even been accused of any crime but they have been stripped of their right to autonomy
Civil liberties, once lost, are difficult or impossible to recover. I don’t believe the government can resist using their new powers again, now that the genie is out of the bottle.
The right for dissidents to peacefully protest is essential to the functioning of a healthy democracy. With these latest moves, the Canadian people are decidedly less free. I don’t think the loss of freedoms was worth the price. This time the government targeted a movement that many Canadians disagree with, let’s hope for your sake they never target a minority you personally support, lest you suddenly find yourself unbanked.
> Civil liberties, once lost, are difficult or impossible to recover. I don’t believe the government can resist using their new powers again, now that the genie is out of the bottle.
It might be new in Canada but governments have been doing this (using similar emergency laws) during the pandemic for a while. An anti-authoritarian person may feel that's extremely scary, while someone else may ask what else should a government do to prevent millions from dying, given that there are no pandemic-specific laws.
I understand how frustrating this is for Canadians who don't agree with either the protesters message or their tactics, but the suspending civil liberties for all Canadians is a dangerous precedent. It should only be used as a last resort and I don't think the Canadian Gov has exercised all their existing legal options yet.
> What could the government do?
1. The leader of the Canadian government is the leader of all Canadians, even those he doesn't agree with. Rather than paint the entire protest movement as racist, misogynists with unacceptable views, one reasonable first tactic could have been to engage in dialogue with the protesters to hear out their grievances, perhaps with the aid of a mediator. Dialogue leads to de-escalation, marginalizing dissidents leads to escalation as we have seen here.
2. Before resorting to suspending civil liberties, access to the courts and due process, perhaps the government could have started by enforcing the laws already on the books. This is what they did at the Windsor-Detroit border and it appears they were able to end the blockade without violence from either side. It appears that in Ottawa, the police were reluctant to enforce the existing laws. This is a different problem and pretending the government had no choice but to employ draconian measures is disingenuous.
"Illegal" is whatever the government decides. In Canada, they have written broad laws to make most forms of protest illegal. I am annoyed by protests for things I don't care about (or even dislike), but I acknowledge that protest has an extremely important place in democracy. It has been the force for positive change throughout history. To acquiesce to the de facto position that protesting should be illegal - and that is the effective message here - underscores a profound lack of understanding of the importance of the deeply democratic act.
I can't recall the exact Monty Python line, but the sentiment seems appropriate now: "you may protest in the designated protesting square in the fenced section behind parliament. Just don't make any noise."
To quote the infamous American Congresswoman Alexandria Ocasio-Cortez, "the whole point of protesting is to make ppl uncomfortable."
Please do more research on the ‘Free Banking Era’, private currency was common.
Crypto is global, inclusionary, no worry about counterfeits, highly liquid, etcetc
Gold, free banking…state-backed currency is the historical exception.
We’ve had plenty of alternatives and most of them have been tried and studied. Having strong central monetary policy has resulted in large societal benefits.
[0] https://en.m.wikipedia.org/wiki/Gold_standard#Impact
Source?
> You’re probably imagining yourself to be in that 1%
My dream is much simpler. I’d like more time with my wife and daughter.
If the answer is close enough to "no", then you know this is not a democracy.
How's giving the government more money going to solve anything?
Do you mentally compare USD to other random obscure currencies? Of course not. And in a future when USD has been replaced, nobody will care to mentally determine USD prices.
Another way to consider it: when you go to the grocery store, you don’t think about how many sats something costs. Because USD is still king.
wow, I don't know what kind of hope this is, and I avoid commenting on any crypto currency[0]. Since the comment appears to be genuine, I've felt compelled.
[0]: calling it them "crypto" is an insult to the rest of the cryptography, though
We're operating under this illusion that all value is the same because we use USD as a unit of account, but it causes a lot problems. To give just one example, look at US policy in Latin America in the 80s: We would give weapons to terrorists, and the bargain was that once they had overthrown their governments, the new ones would respect our money. Then, having made ourselves into aristocrats, we'd come in and make off with their natural resources (e.g. Chilean copper).
Better would be that if you want to influence people in a community that you aren't a member of, you have to contribute types of value that actually align with the values of those people.
Of course having only two types, as GP suggests: fiat-value and crypto-value--that's a pretty impoverished type system. I'd rather have carbon-footprint-value and space-exploration-value and infrastrucure-maintenance-value... so that the allocation of types of value in my wallet are sort of an expression of my political will. This way, poison-the-well-and-sell-bottled-water-value can be rejected by pretty much everybody (as it should), while other sectors remain untarnished.
How would you represent/express space exploration value?
By holding a token and using it as money, I give power to whoever controls its issuance. I'd like more choices about who that is.
Because the money we use is not specific about its intent, people have to accept or reject it all together. It's too big to fail. You can't decline to do business in slavery-money because you have no way of knowing which money is slavery-money. It's all just money-money.
In a typed-value system, you can notice that a certain kind of value is associated with economic activity that hurts people, and you can respond by setting it to 0% in your wallet. This will prevent you from accidentally contributing to its continuation. If all of the good guys do this, then the only people left for the bad guys to do business with will be other bad guys--which will make it more expensive for them to operate.
Sure, factions will emerge, but rather than being delusional about their own efficacy and a drag on the entire system, unsustainable or otherwise objectionable economies will eventually find that nobody accepts their money, and they'll have to change their ways.
You shouldn't be able to retire on wealth made at future generations' expense. Instead, saving for retirement should involve contributing to endeavors that future generations will be happy about.
> If I have gold and you have space coloration there will always be a trade that makes it worth while.
By keeping gold to yourself (and out of the electronics that are useful for making space ships) you're holding back the projects that I think are important. So there's one reason for me to not value your gold, what reason do I have to value it?
This won't ever happen because pretty much nobody who matters wants this. BTC today is firmly a "store of value", where "value" is measured in USD, and the only point of it is to buy it low, and sell high, for USD.
You won't find many today who think buying pizza in BTC is a good idea.
BTC is also completely unsuitable for using as a currency given the block size limit.
Now: we use the Crypto.Com Visa™ credit card with a Bitcoin sticker on it.
Until the point that nobody wants to be the USD bag holder.
Plenty of boomers still don’t think of saving USD as a terrible idea because they were trained their whole life to have faith in it. They are being robbed in plain sight, sadly. But younger generations won’t put up with it.
Apparently yes, a bunch of people are buying cars now at temporarily inflated prices when prices are expected to tank
https://autos.yahoo.com/analysts-warn-possible-used-car-1510...
If you mean to say it's not deflationary because there's a limited amount of it that doesn't technically decrease, that doesn't help.
First, Bitcoin does lose coins over time. When wallet keys are lost, or "dust" happens, that means that money can't ever be spent again. This is independent of the USD value.
Second, the economy can grow. Eg, if the population grows, or a factory starts producing more goods, then there's now more stuff per unit of currency. That's still deflation.
That's exactly what happens with computers and, last I heard, computers are still being purchased.
I'm not sure whether you're opposed to the USD compared to other currencies, or cash in general opposed to stocks/bonds etc. For the former point, the US military's strength* ensures that the dollar is likely to stay the strongest of currencies even in a medium-term environment (say 50-100 years in my estimate), with only the Euro coming close.
For the latter, I don't think that was what the earlier posters were talking about.
* I'm not saying spending so much on the military is necessarily a good idea, neither am I a US citizen
Most people already don't "save" USD. They save equities and then trade them back into USD when it's time to retire. I don't see how BTC changes this other than adding another equity to the list of stuff you can invest in.
With sound money, people could work and save without needing to constantly gamble just to maintain buying power.
If bitcoin replaces fiat, bitcoin becomes the main representation of value. It no longer goes up against a trading pair of fiat. I speculate that its buying power would stabilize and become fairly static.
> Let’s assume BTC replaces fiat (USD)
If BTC replaces fiat, I don't believe it would increase in buying power at a rapid rate. I think it would gradually increase in buying power over time only because the total supply will gradually shrink due to lost coins / dust /etc.
They'll see it as this thing that the old people are all hoarding, and they'll have none of it... Why sign on for an uphill battle for BTC over any other token?
Seems to me that crypto projects should have tangible side effects, so that future generations can value them (or not) based on whether they want to see more of those effects. Compared to that, a fat BTC wallet in cold storage looks like somebody who sucked value out of their community rather than reinvesting it to make positive changes. Why reward such a person by valuing their tokens?
Because the more you think about Bitcoin and the more you learn about how fiat works the more broken the world seems and Bitcoin becomes all that matters.
Despite being just numbers it's the only value in the world that real and you can truly own. You can't even truly own a house in most of the world.
You can transact with your bitcoins *today* without being affected by the blocksize: just use the Lightning network.
It's a solved problem, so it's stupid to bring it up again and again nowadays.
My employer can't pay me in crypto because they only have USD flowing in to their business in exchange for their products and services.
What you describe would require basically the entire economy to somehow abandon its fiat currency and switch to crypto - - - I think if this scenario is supposed to be taken remotely seriously, you have to explain how that scenario is supposed to develop - something more than hope that in the future...
Gradually, then Suddenly
Unfortunately I believe we get there via chaos, winners, and losers. I don’t believe the transition will be equitable and clean because I don’t see any way that would be possible. And yet, it’ll be worth it in order to have sound money.
Maybe you should try to look further than yourself. Miners are getting paid in crypto, crypto exchanges are getting paid in crypto. It just has to start somewhere. Investors with crypto staking are getting paid in crypto, or hodlers see their assets increase in value.
Diamonds are getting bought with crypto: https://www.cnbc.com/2022/02/10/billion-year-old-black-diamo...
Houses in Dubai are getting bought with crypto.
I would say crypto is already kickstarted, let's just see how far it can take us.
It will take us only up to the point where we can no longer convert crypto into actual currency (you know, "money"). After that whoever has crypto will be left "holding the bag", and all the boiler-room operators will have long-ago cashed out.
I wish we could just have digital currency that is traceable, secure, and stable without all the insane hyper-libertarian social-Darwinist scammer stuff.
What is actual currency and why does it have value? And do you feel "actual currency" is perfect as-is with no room for any improvement?
But if we're going to talk about "room for improvement" crypto is much farther from being perfect than the US dollar, Euro, Yen and virtually any other fiat currency that seem to have so many issues according to the crypto enthusiasts.
In fact, crypto currency can't even function as a currency at this point. Not even close.
Of course if you are asking as a rhetorical question - there is room for improvement. BUT - there have been millennia of variations on the concept, experiments, and many failures. As recent history, why don't you read about the United States prior to the Federal Reserve Act. Each state (or even smaller jurisdictions or communities) could produce their own currencies. Company towns operated on their own scrip (analogous to their own chains). How was that? Imagine taking a trip from Town A to Town B and discovering that your money is not accepted at the Town B tavern and inn. Or, is accepted but at a 50% discount to Town B's currency. Which is not accepted for purchase in town A. That was reality in the US and in other places too.
Actual modern fiat currency is still imperfect, as is every cryptocurrency, every computer, and every other thing devised by humans. But. Somehow we have around $90 trillion (equivalent) of economic activity on our humble and imperfect planet, operating on fiat currency systems.
So, I'd ask back, (1) what are the shortcomings of this amazingly successful world economy that operates on fiat currencies and (2) how, precisely, does cryptocurrency improve upon these shortcomings, WITHOUT creating negative externalities that negate proposed benefit?
For example, miners are getting paid in crypto. OK, but what are they using to buy the computers they use and to pay electric bills and the like? I'm guessing is is hard currency...
One, flight to safety. When markets crash, risk assets sell off in favour of dollars. (Yes, crypto still behaves like a risk asset.) If the rupee is selling off in favour of Bitcoin and that prompts a crisis, the rupee will enter a death spiral.
Two, more potently, the world’s financial rails run on dollars. Hell, most of crypto runs on dollars. For a capital controlled economy like India’s, Bitcoin is an off ramp for converting INR into USD.
That is incredibly useful for developing countries and the ecosystem of p2p allow in and out to fiat in a relatively smooth way
crypto currency network replaces swift which is a more cumbersome system with higher price and delay of days to send money between countries
If you have a good non authoritarian government stable coins can be used to rollout a payment solution cheaply that works in any place an internet exist that could save you tons of money
You can use cryptocurrencies to get around currency restriction or failing currency which is mostly political problem and you use the crypto networks to help you in that
This is one of the weakest arguments in favour of crypto as it is not like you can't work with the current systems.
It conflates two different, unrelated concepts: the tulips and the mania.
We have not banned tulips because of the Tulip mania.
Bitcoin and blockchain are genius technology, on par with the greatest achievements in mathematics and theoretical physics.
That some of this technology is misused and misinterpreted, incorrectly assessed, used for scams, has no bearing on the technology itself.
How one can say that with a straight face is beyond me.
And I say this as someone that find blockchain mechanisms/ideas very interesting.
how is that not genius?
I don't think your appreciation of blockchain is wrong. I think it is your appreciation for the greatest achievements in theoretical physics and mathematics that is.
many mathematical concepts (most in fact) are abstract concepts in N dimensional spaces. It is theoretical physics when theory and reality have to match.
that is the genius of Bitcoin, a theory that actually works in practice
As far as I can tell the experiment failed, and we should shut it down before it does even more harm than it already has.
yeah of course, but there are many other genius discoveries that had to go along with it
The only genius about those technologies is cryptography. If that's enough to make technologies build on top of it on par with the greatest achievements then every single crypto trojan is one of humans greatest achievements.
the first person building a airplane is a genius,
the CEO of Spirit Airlines is not a genius
I think we can both agree that the Wright brothers were pretty genius. They no doubt accomplished something that can be described as a feat of engineering.
Now, the CEO of Spirit airlines clearly isn't a genius, but he doesn't build things anyways, so it's kind of an apple to oranges comparison. Let's instead use an example that's closer to the original cryptography to crypto currency comparison shall we?
Let's compare the Wright brothers to an engineer called Josh working at an airplane manufacturer of your choosing. I will go with Boeing but you choose whichever you would like.
Whenever Josh builds a new plane he uses knowledge passed down and refined by previous aviation engineers, knowledge that can eventually be traced back to the Wright brothers.
He builds on this knowledge and as such creates great plans. This makes him a pretty good engineer!
But does it make his plains "on par" with the greatest achievements of humanity? If so, at what point do they stop being on par? Will they ever? Is every plane one of humanities greatest achievements?
And if that's the case, is every tire on every car one of humanities greatest achievements?
I think we both agree that cryptography is a great achievement of mathematics. It's something that will see uses well into the future. But that's cryptography as a whole, not a specific algorithm.
Crypto currency and blockchains are not world altering inventions. They are simply products of engineering, build on mathematical knowledge.
And while you might be able to argue that they are good engineer, they definitely are not mathematical or theoretical physics achievements. They are simply a product using those achievement, just like databases, rockets and cars are.
True, but now we grow them as flowers, rather than hold them as a potential source of value or use them for exchange.
Are you saying that there is no business that transacts in tulip bulbs?
Are you saying there are no resellers of tulip bulbs? No tulip bulb traders?
> The average bulb grower in Holland sells almost $200,000 worth of bulbs every year,
It is also worth noting (though not directly relevant) that the "Tulip Mania" probably never happened, it is all a myth or greatly embellished story, told and retold countless of times, each time growing in claims.
Makes for a captivating story to audiences looking for validation.
> Bitcoin and blockchain are genius technology, on par with the greatest achievements in mathematics and theoretical physics.
You're basically demonstrating the mania that you decry. I'd love to hear on what basis you can possibly argue that bitcoin/blockchain is somehow on the same level as the discovery of gravity, or the discovery of radioactivity, or the theory of relativity.
on a more serious note, for what is worth, discovering radioactivity was accidental, there was no premeditated thought process, so that does not count ;-)
now when it comes to relativity - that indeed required a radical idea, the constancy of speed of light. Which required a genius. Like bitcoin. I did not say bitcoin was better than the theory of relativity, I said on par.
The thing to keep in mind here is that India's bankers are giving their opinion on the current biggest competitor to their power and livelihoods. And the report says as much.
> The basic purpose of blockchain, or more generally the distributed ledger, the technology on which these crypto-products run, is to make financial intermediation, and therefore banks, redundant.
Imagine thinking any bureaucracy can give an honest assessment on the thing that makes them obsolete. Any opinion they give out should be evaluated through the lens of them losing their power and livelihoods. Any report from central bankers on crypto is the equivalent of McDonalds executives giving their opinion on Burger King.
And if you take inflation overhead, consumed by miners and other services to keep BTC or ETH running (5% to 10% annually), there is not much advantage over existing banking.
It doesn't, but Satoshi thought it would. See for example the Genesis block.
> There is a whole crypt banking sector that provides exchanges, custody, lending...
Back in the day, the idea was to make every citizen financially sovereign. It didn't work in practice because those services you mention are useful. (Just like crypto has trouble working as a payment infrastructure, because chargebacks are an useful and demanded service)
Some of crypto’s biggest backers are on Wall Street. For obvious reasons. Crypto is making Wall Street billions while letting them preach from beneath a populist veneer.
The crypto ecosystem is almost exactly the same as the massive wealth concentration in America, except worse. The narrative from those at the top, and the willingness of people to defend them, is the same.
People rabidly defending Elon Musk is equally strange. He’s trolling on the internet, not looking out for you.
However, a source can be completely biased and still be correct. Any counterarguments need to be based primarily on the provided evidence and conclusions, not the "trustworthiness" of the arguer.
I mean, this huge portion goes straight from "unbanked" to using a convoluted highly technical solution that has high volatility and no legal recourse whatsoever... stonks!
As far as high volatility goes, the question you should be asking is "volatility, relative to what"? The rate of Bitcoin "inflation" is known and transparent. Now compare that to the power of the virtual printing press and the effects of inflation on fiat currencies' buying power.
This is an oxymoron. How can you mathematically enforce a purely social concept? Property rights aren't tangible things; they are creations purely of law and of the societies they inhabit. Can you mathematically enforce that no one build a house on the land I own? That no one picks an apple from my apple tree, except with my permission?
I just don't see how cryptocurrency helps the unbanked--what does it bring that M-PESA doesn't bring? Furthermore, how are those benefits worth the externalities of cryptocurrency, specifically the massive energy consumption that undoubtedly fuels the climate change that is slowly worsening the lives of many of the unbanked it's purporting to help?
Land or an apple tree aren't natively digital assets. So no, they cannot be cryptographically enforced. Bitcoin is natively digital. If I alone have access to a wallet (i.e. memorized a seed-phrase), my rights to that bitcoin are enforced cryptographically and defended by the power of the network. "Ownership" meaning I have exclusive rights to "spend" them.
"Social construct" still absolutely comes into play though. The social construct is money. Bitcoin being money is a manifestation of a social construct. Are you suggesting something being a social construct means that they are not "real"? Because that would be a MUCH larger debate.
> I just don't see how cryptocurrency helps the unbanked--what does it bring that M-PESA doesn't bring?
A trustless and self-sovereign way to store value? This becomes increasingly important the more corrupt your Government is. For example, if your government wanted to freeze your money because you participated in a protest they don't like.
> Furthermore, how are those benefits worth the externalities of cryptocurrency, specifically the massive energy consumption that undoubtedly fuels the climate change that is slowly worsening the lives of many of the unbanked it's purporting to help?
Electricity consumption, in and of itself, does not fuel climate change. CO2 emissions do. Also depends on the relative climate cost between one system and the system it looks to replace. For example, electric cars are bad for the environment if you look at them in a vacuum. But, they are better than ICE cars. So they are applauded.
You didn't address the difference between unilateral government-bank cooperative freezing of accounts en masse vs. what's required to strong-arm keys from a single person. Do you acknowledge they aren't even close to the same thing?
You are wrong or being dishonest. The government calling up the bank and saying "Hey, friend. Freeze these 5000 accounts. Thanks!" clearly has less friction than strong-arming 5000 people for their wallet keys.
> Good luck find someone trust worthy to trade into and out of any fiat currency with only your wallet and without using or involving a centralized exchange or program.
I literally do this exact thing pretty frequently. HodlHodl and Bisq both allow you to do this in a trustless and decentralized way. And things will only improve with projects like 'TBD' from Dorsey.
> When goods and services aren’t able to be purchased in the crypto denomination...
But they are! Let's see... this week I've bought coffee with bitcoin, I've bought a new golf hat, I bought a magazine subscription, and a VPN subscription. This month I bought an iPad utilizing bitrefill. Early days? Sure. "Aren't available" is bullshit though.
> The only benefit would be if crypto went up in relation to fiat currency, but the ones getting rich are those earlier holders only.
What? You're just wrong... Bitcoin is up 250% in the last 2 years. I've been in for 1.5 years and it's literally out performed everything else I own.
Now you're thinking! And you're starting to see why crypto is a much bigger deal that it first seems.
There are so many "Oh shit, if this then that" moments as you figure out where we're likely headed.
* The RBI (Reserve Bank of India) Governor and Deputy Governor have, more than once, publicly expressed the view that all cryptocurrencies should be banned for all purposes. A few years ago the RBI even instructed banks not to work with cryptocurrency exchanges, but that was overruled by the Supreme Court two years later with the justification that there was no law to do that and that this action was disproportionate.
* The Prime Minister of India, Narendra Modi, has publicly made statements that cryptocurrency is “spoiling the youth” and that all countries should come together to control (which in his view is banning) them.
* In the recent annual budget announcements, the finance minister announced an unexpected 30% tax on all income from “virtual digital asset transfers” without allowing any set offs (except the base cost). Also added was a 1% TDS (tax deducted at source, or tax withholding) for every transaction calculated on the transaction amount!
Given these biases against cryptocurrencies and the strict need for capital and current account controls on Indian Rupee transfers that the RBI is addicted to manage (it actually prefers a steadily but continuously depreciating Rupee), it’s not a surprise that public utterances about macroeconomic stability would be published as a stance. The RBI and the Finance Ministry have been struggling to get a grip on the economic levers (with COVID making it worse), and believe that anything they cannot control easily is a threat to them, first and foremost.
The Indian government is more focused on protectionism and controls than on capitalizing on opportunities.
Crypto is an opportunity? Heck no, when you want to replace the existing system there must be some outstanding benefit which the new system should provide. Crypto has no such thing. In fact it would be trivial for the government to come out with some e-currency since UPI (https://en.wikipedia.org/wiki/Unified_Payments_Interface) is already in place.