So no, it is not the end of crypto, no matter how many scams, rug-pulls, bans, etc, etc.
Sorry to burst the bubble and to give the answer you didn't want to hear, especially for those who have been begging for its end after 14+ years for it to all be banned and to be 100% totally shutdown.
This is just such an awful betrayal of their mission. The Economist should know better, and everyone I have spoken to which is senior in their readership does know better. This is still a pro-crypto-scam article.
They repeat the same scam-artist lies, crypto is somehow an innovation in "trust", somehow more "efficient" than existing infrastructure, somehow "smart contracts" are more reliable than actual contracts. Things "become possible".
How can an article like this, at the moment the Emporer's clothes start to fall off, be written? By the economist.
It is just as-if homeopathy falls away and The Lancest is still interested in "innovations in water science"! This is, in my view, genuinely unconscionable.
The problems blockchains solves are highly academic csci issues around "trust" and "programming" in absurdly distributed systems. They have nothing to do with trust, risk, contracts, ownership or rights in anything like an economic, political or moral sense.
Repeating these lies now is such an awful betrayal of their obligations to their readers. They should be the ones informing the public on the actual economic meaning of these terms, and not participating in trying to keep the flame of these pyramid schemes alive.
EDIT: since the article is paywalled, consider the following quote:
> Amid the wreckage of the past week, it is worth remembering the technology’s underlying potential. Conventional banking requires a vast infrastructure to maintain trust between strangers. This is expensive and is often captured by insiders who take a cut. Public blockchains, by contrast, are built on a network of computers, making their transactions transparent and, in theory, trustworthy. Interoperable, open-source functions can be built on top of them, including self-executing smart contracts that are guaranteed to function as written. A system of tokens, and rules governing them, can collectively offer a clever way to incentivise open-source contributors. And arrangements that would be expensive or impractical to enforce in the real world become possible—allowing artists to retain a stake in the profits from the resale of their digital works, for instance.
For this to appear in a serious article on crypto outside of the scamming community is outrageous. The economist here is repeating a fraud.
The Economist represents a world viewpoint from the days of the United Kingdom: as in a small island nation with a monarchy exerting centralized economic control over a vast worldwide imperial empire.
Why would they like cryptocurrency in any way, unless the Bank of England had monopolistic control over it?
I'm sorry but no one in their right mind will come away from this article thinking that this is a "pro-crypto-scam" article. The article is actually very critical.
> The problems blockchains solves are highly academic csci issues around "trust" and "programming" in absurdly distributed systems. They have nothing to do with trust, risk, contracts, ownership or rights in anything like an economic, political or moral sense.
It's hard to understand what you mean here. The whole innovation behind Bitcoin is to eliminate the need for trust in a centralized entity. This is not controversial at all and claiming otherwise, or even worse, that it's a "lie", deserves some elaboration...
> The whole innovation behind Bitcoin is to eliminate the need for trust in a centralized entity
Err, nope. That's the scam.
A blockchain is a kind of database which requires no single machine to be nominated as the single-source-of-truth. that's it.
This has nothing to do with centralisation, power, trust, or anything of that kind.
The sense of "centralisation" in blockchain means computer network centralisation, as in how one connects databases. And "trust" in the sense that entries in that database are "reliable" in some academic sense.
This has absolutely nothing to do with eliminating the need for "trust in centralised entities" -- such a claim is not only absurd, but the premise of a scam. A scam which continues to be perpetrated. And this article participates.
If "eliminating the need for trust in centralised entities" is an absurd claim and a lie, then it follows that there exists a centralized entity you need to trust to use Bitcoin. What is that centralized entity?
PS: When people say that Bitcoin is decentralized, they also mean it in the colloquial sense, not only in the CS academic jargon. Entities like PayPal or the Federal Reserve Bank are centralized and require trust. They have to be run by trusted people. In contrast, Bitcoin isn't run by anyone. It is governed by a protocol which is mostly set in stone. No centralized party can suddenly decide to "print" more Bitcoin or freeze accounts. This is what people mean.
Is it purchasing bitcoin? ...how do I do that? I'd need to rely on the two mining companies, right? And the exchanges? Or not?
And can I use bitcoin as currency in any shop? No? If I could, I'd be relying on the state to provide the same rights behind all economic transactions to enable, that right?
And what happens if the handful of "wales" decide to off-load their coins in the middle of my negotiation when I'm buying my tesla... suddenly, all my deflationary currency has been magically radically inflated by a cabal of SV billionaires.
Money isnt the kind of thing that "centralisation" even applies to in any coherent sense. If BTC is suppose to be money, then it's supposed to be a system for book-keeping aggregate promises across the global collective of human beings.
The value of money, it's "use" in any sense, is subject to provision of economic systems by central authorities, and subject to wild forces of decentralisation and centralisation.
The networking sense of "centralisation" which applies to blockchain is a pun. It's irrelevant. It has nothing to do with any of this. It could be called, "wide-broadcast machine signalling"
> Is it purchasing bitcoin? ...how do I do that? I'd need to rely on the two mining companies, right? And the exchanges? Or not?
Transacting on the Bitcoin network: sending BTC from one party to another. There are more than two mining companies, otherwise Bitcoin's security model fails (see 51% attack). Of course, centralized exchanges are... centralized.
> And can I use bitcoin as currency in any shop? No? If I could, I'd be relying on the state to provide the same rights behind all economic transactions to enable, that right?
When people say that Bitcoin doesn't require trust, they don't mean that nothing requires trust anymore. They just mean that they don't have to trust a centralized party to run the Bitcoin network, because there is no such entity.
Beyond that, you indeed still need to trust the people you transact with or trust that you will be able to sue them if they scam you, etc.
> And what happens if the handful of "wales" decide to off-load their coins in the middle of my negotiation when I'm buying my tesla... suddenly, all my deflationary currency has been magically radically inflated by a cabal of SV billionaires.
Yes.
> Money isnt the kind of thing that "centralisation" even applies to in any coherent sense.
Yes it is. Even before Bitcoin, (de)centralization was used to contrast fiat money vs commodity money.
> The value of money, it's "use" in any sense, is subject to provision of economic systems by central authorities, and subject to wild forces of decentralisation and centralisation.
Yes. There is a risk that the use of Bitcoin could be outlawed by some governments, although it would be difficult to enforce in practice.
We are largely in agreement as you concede my points. But you want to retain this word as applied, eg., to bitcoin.
The sound of rain falling is neither "centralised" nor "decentralised". It isnt the kind of thing which could be either *in the relevant sense of the word*.
When we talk about centralisation in economics and politics we arent talking about where databases are.
Bitcoin is as centralised *a system* as any which exist, and much much more so than paper money.
This idea that you can send a signal betweeen two machines you own and make some changes to your wallet is a gross misdirection.
That has nothing to do with any of the value props of crypto. It has no economic or political meaning. It's purely a technical property of the technology.
> We are largely in agreement as you concede my points.
Concede would mean that I changed my mind. I didn't. You said some true things but which are irrelevant to your original claim.
> When we talk about centralisation in economics and politics we arent talking about where databases are.
Perfectly agree (as I thought I had made abundantly clear in my previous comments). I'm sure for example that Paypal has databases all over the world and yet it is not "decentralized" in this context (in the economical/political sense).
Centralization in this context refers to who is in charge. A centralized economy is one that is managed by centralized planners. A central bank has central bankers in control. Paypal has executives in control. There is no centralized entity that controls Bitcoin.
Central banks only "control" money in the sense that they have been granted the exclusive monopoly by the state to provide banks with it (and so on).
The state has not taken any view, yet, on who should have such a monopoly on crypto; but they can. Defacto monopolies exist in the form of the two mining companies.
This is all extrinsic to crypto.
Likewise, literally printing paper money is "decentralised". There's nothing about the present technology of "fiat" money any more or less "decentralised".
What you're talking about is how the state grants monopolies. And, as far as that's concerned, crypto will not fair well in that regard -- not at all!
I see you've reduced your position from "Bitcoin is a scam" to "Bitcoin has some potential vulnerabilities".
The 51% attack vulnerability is a well-known risk. It was described in Satoshi Nakamoto's white paper. In practice, it is highly unlikely due to many reasons which I won't elaborate here but I there's a lot of material about it online.
As long as there is more than one government, no one government can take control over Bitcoin. They can possibly outlaw its use within their own borders (with difficulty).
imagine you have a smart contract that says A promises to pay B X when they complete task Y. If task Y is not representable on-chain, how do you execute the contract? How do you certify that the thing Y was done exactly as expected? There are very few meaningful things that you could slot in for Y that would not require some kind of out-of-chain verification. Say B says I did Y and A says, sorry, you didn't. How does B get their money, etc. They need courts, notaries, trusted fiduciaries. At which point, why did you have a smart contract anyway?
> They repeat the same scam-artist lies, crypto is somehow an innovation in "trust", somehow more "efficient" than existing infrastructure, somehow "smart contracts" are more reliable than actual contracts. Things "become possible".
I can't read the article through the paywall to read any clarification on these points, but some of what you mentioned in that list above is arguably true.
* Say what you will about crypto, but it is an unbelievable accounting invention and innovation in trust. Crypto the technology is distinct from centralized exchanges.
* In terms of electricity usage and transaction speed, most crypto might not be very efficient (yet), but what efficiency are they talking about? If crypto-adoption can replace many bankers and finance employees because the network automatically does a lot of their day-to-day tasks, then there's an argument that crypto is highly efficient in some areas.
* Are smart contracts more reliable than traditional contracts? Well, that's highly debatable: you have the existing legal system that can sometimes be used to enforce contracts, but not always. But if the conditions of a smart contract are met, there's probably no conceivable force on Earth short of either a gargantuan cyberattack or the electricity going down network-wide that can stop it from executing. Sure, you might argue that smart contracts have numerous potential flaws (unreliable data, bugs in the contract, no possibility of rollback, etc) but there are good counterpoints, improvements in these areas, and some similar flaws in existing contracts. For instance: people intentionally cheat on traditional contracts all of the time and just dare others to sue: that's much harder with smart contracts that automatically execute once the agreed upon conditions are met.
The mainstream response to this debacle is a bit incomprehensible.
FTX was the antithesis of cryptocurrency; it was a centralised exchange, that was also trying to become a bank, and was AFAICT trying to kill DeFi [0].
The failure/success of FTX has no relation to the soundness of cryptocurrency.
I do however hope that this crash means fewer people will speculate on the prices such that it can finally stabilise a bit (and be useful without using stablecoins).
No true scotsman. "The USSR wasn't real communism."
What cryptocurrency could be or should be in an ideal world is irrelevant. If cryptocurrency fails to live up to its ideals, it may be because these ideals are impossible to fulfill. That could be due to technological limitations, human nature, or something else. And in this case, we have no choice but to judge crypto for what it looks like in the world of today.
What matters is what cryptocurrency looks like in practice. And that is FTX, Mt Gox, Three Arrows, and others.
Crypto isn't sound enough to have mass adoption.
The USSR was real communism. And FTX is crypto principles at work.
That's irrelevant to the comment you're responding to. The point is that there may be people who use it rationally, but how it works in the real world now that it's leaking out beyond its initial user base is getting really problematic.
You do realise this is nothing new and you can use TransferWise, MPesa or PayTM for this right?
Bitcoin is slower than all this and violently fluctuates which loses people's money quickly. People also need to pay their bills in fiat anyway so whoever is receiving the Bitcoin needs to cash out to fiat anyway.
At that point you might as well just use fiat instead.
All of these options you listed are significantly more expensive, and some of the contractors I work with don't even have that option due to KYC requirements - these people don't have access to functioning governments, they don't have passports. Also, most of my contractors don't use/have bank accounts (because where they live it costs money to have one) - so no way to take out the money if they used these services.
I did this dance at least 100 times and never ever had a problem with price fluctuation. Bitcoin is pretty stable on a 3-day timeframe.
Genuine question: How do you use it? Do you mean you use it to make purchases, or do you mean you hold it as a store of value, and that's the use? Something else?
I don't hold Bitcoin. I use it for cross-continent transactions. I buy it from people in my city using a local FB group or (way in the past) Localbitcoins.com and then send it to the recipient. They usually use Localbitcoins to convert it to their own currency AFAIK. The fees (transfer and exchange) are much lower this way - usually less than 0.5% all things considered. Compared to $100+ fee to just transfer the money + 5-10% currency exchange fee (both my and the recipient's currency aren't the most well known).
2 days - I get the BTC around noon, transfer it immediately, in the evening I get a confirmation from the recipient that they got it, and then I see them transfer it to someone the second day. Sometimes it's just 1 day.
This is a silly criticism, as long as the concepts of "cryptocurrency as a decentralized idea" and "cryptocurrency as many people use it in practice" are described by a single word.
If the article is correct about "practicurrency", then you're responding to someone saying that it won't affect "decencurrency". One of them is indeed not a Scotsman. All you're saying is that the word has more than one definition for two wildly different things.
It is impossible for a monetary system to be decentralized, safe, and have mass adoption. Because security requires either inconvenience or centralization, and inconvenience is a hard barrier to mass adoption.
People here did not own any crypto. It's a simple fact, not some nebulous idea of what is or isn't communism. People gave money to fraudsters, who said "give us money and we'll hold crypto on your behalf", but FTX didn't actually have that crypto. They just ran with the money.
I get the point and I can understand how it can feel like that from the outside. But the same people that are saying that FTX is not crypto now, were saying it before and same applies to Coinbase, Kraken, Binance... Luna and Terra were crypto, though, economically unsound design with Ponzi economics but crypto. And the litmus test is actually super simple and foolproof. Does whatever you are doing settle a transaction in a public, tamper-resistant ledger that is cryptographically verifiable? FTX business and operations does not involve such a thing. It's a traditional corporation, established in the Bahamas, running some SQL/noSQL DB or perhaps more likely paper napkins as a system of record... And as such was vulnerable to the same kind of abuses that have plagued financial fraud forever.
Here is actual projects that are implemented in a blockchain:
Nothing of this has failed. It's working 24/7 without maintenance windows. Everything is on-chain, publicly verifiable, automated and involves no humans.
The short answer is yes, but your question implies a fundamental misunderstanding of Bitcoin and blockchains. The coins do not exist "in your wallet" - the wallet just holds your keys that prove you own some of the coins visible to everybody on the public blockchain.
If you want a really great learning aid, search for "Island of Yap Blockchain" and read any of the million articles about it.
Probably most of the ones exchanging fiat for cryptocurrency. But you can use defi if you want to swap crypto for crypto, and you can always send direct to buy something, although most merchants probably immediately convert to fiat using an exchange.
No, you can trade crypto on a decentralized exchange like a token trading contract on ethereum. You do have the risk of bugs in the code or poorly coded contracts with backdoor but the code is public.
Not because of NFTs, people that chose to learn how to use crypto natively find it easier, faster and less of a hassle, than the people that chose to say these are insurmountable barriers to adoption and stick with those custodial exchanges
Just like with general computer use, after a certain point people can’t blame the user experience on their own incompetence
It was everything cryptocurrency - flim-flam, inflated values, the whole thing being based on hot air, technological pipe-dreams and unrealistic ideals.
Like it or not, this is the cryptocurrency ecosystem, and it has everything to do with cryptocurrency being an unregulated wild west of dodgy finance, scams and fraud. Cryptocurrency has enabled this stuff.
You might not like that this is where it's gone, but it is a direct consequence of the ideals of unregulated 'money'. The scammers and the chancers move in, because why wouldn't they? Create a system that is resistant to regulation and open to so much exploitation and they will exploit.
The problem with hoping for stable valuations is that very, very few people are interested in that, because they can't get rich off it. I too hope that all of this crap dies and cryptocurrency goes back to being a handful of cypherpunks swapping tokens around, because at that point the great ripoff and fraud on the general public will have come to an end.
Let's regulate all this the fuck out of existence. Sounds like everyone will be happy.
To be clear, Bitcoin was never meant as unregulated money, it was meant as an non-manipulatable supply of money. Nothing in Bitcoin is incompatible with government regulation of your computers or behavior.
awfully convenient how SBF was highly connected to the current leaders of the Federal Reserve and SEC and all this went down right as they are pushing for a Central Bank backed digital currency and gives them the perfect excuse to try and kill off actual crypto
Now do Terra/Luna and every other crypto project that imloded the same way. It's not a conspiracy if everyone around the world is doing the same thing.
It is the ray of light which exposes the ideological con taking place: trust between machines isnt trust in an economic sense. Centralisation of power has nothing to do with computer network decentralisation.
The scam here is, at first, ideological. There's a techbro-libertarian wordplay taking place which must be exposed. The blockchain has nothing to offer "trust", "contracts", "rights", "rewards". Nothing.
And much worse than this, it makes all of the existing problems with these "in western society" worse.
What every single major "crypto" project exposes is the radical disconnect between building functioning social economic institutions and programming "on the chain".
ie., what their collapse shows is that the emporer has no clothes.
When this sinks in, that all we were ever talking about is a stupid append-only log, *then*, hopefully everything else falls away.
As in, the homeopathic vial was only ever water, all along.
Ah! I really don't get the idea of a distributed immutable append-only log which is reproduced on all clients and whose integrity is cryptographically guaranteed by recomputing hashes on each append.
Nor do I understand anything at all about systems of power, accountability, the political intuitions of the state and the economy. I've no idea how central banks regulate the supply of money; i'm totally at a loss as to how trust in the ability for people to keep their promises is the guarantor of the value of money. I'm bamboozled by financial risk, and have no idea how productive economic systems create value by taking bets on economically productive activity.
Rather, I'm a rube. I've been told that when you plug computers together and copy-paste cryptographic ledgers then we can get rid of The Fed. So that's what I choose to believe.
I was playing the part of a crypto-advocate who doesnt know any of those things, and so thinks that a database is going to solve questions about the design of political and economic institutions.
It's a genuinely profoundly misinformed view, exploited by scammers. It's so egregiously misformed it's popularity is incomprehensible.
It's a lot like those on the far-left who think all world problems can be solved by taxing a few billionaires. An ideological fantasy.
The big issue is that soundness of technology is great and all but money at the end of the day depends on social factors and practicality (not smart contracts, immutable transactions, merkle trees, etc.)
The narrative around crypto sells the idea of decentralization but doesn't deliver.
(1) Put money into anything and people will show up to try to get as much as they can. That is: money is a centralizing force.
(2) Crypto, the technology, doesn't have a mechanism in place to resist centralization -- one person or entity can own as much as they can get their hands on.
Just (1) and (2) means centralization is built-in to crypto.
There are some accelerants too, though:
(3) Crypto resists regulation. What people think of as the decentralized nature of crypto is actually about resisting intervention by external parties. Obviously, that can be good, but also lets people buy, sell, trade, borrow, accumulate crypto without limits.
(4) Crypto is confusing. I think this lets people believe the things about crypto they want to believe, leading the the wildly optimistic narratives around it.
As long as there is money in crypto, you will see the same thing keep happening: money goes in, crypto moves around, for a while everything seems to be following the narrative, then, suddenly, the money is gone, the crypto is gone or worthless and we have some more threads about it on HN.
When Crypto was young it was this cool new technology that mostly interesting because of the underlying tech. But even back then it was mostly valuable for buying drugs online and other illegal stuff.
Now it's that and a way to scam people of their life savings. I do hope it dies out, it should have been heavily regulated from the get go. Way too many people saw these high production commercials with their favorite celebrities they trust telling them to invest in crypto and lost everything.
It never had a real use outside of scamming people and buying illegal shit, no matter how hard others pushed to normalize crypto it never happened. And why would it? Everyone was yelling at people to hold. Don't spend it, it will go to the moon!
And sure it keeps your money away from the spooky scary government. But I prefer my government insured bank account using a government managed currency and recourse for any scams/hacks that might happen to me.
But I don't think it will ever die. Just like MLMS, pyramid schemes and other crap like that.
Also don't even get me started on these centralized exchanges where you don't even own your key and have to verify your identity (Which is how most users interacted with crypto). It's completely counter to the point of crypto.
What exactly do you mean by that, because if you do mean American dollar, I can point out multiple parties who simply cannot use US currency? Hell, I can point out to transactions that are prohibited if they even touch some type of activity and are in US dollars.
And that's a fair point. But the problem is Crypto is an investment playground by people from rich countries and legitimate uses of it in countries like say Venezuela is an extremely small part of total transactions.
> We show that the vast majority of Bitcoin transactions between real entities are
for trading and speculative purposes. Starting from 2015, 75% of the real bitcoin
volume has been linked to exchanges or exchange-like entities such as on-line wallets,
OTC desks, and large institutional traders.
So 75% of the transactions are just speculative trading, not transactions for goods or services, which is what is being discussed. Taking the paper's numbers at face value, as a percentage of non-speculative transactions, illicit transactions are 12%, which is quite high.
There are also papers which quantify the amount of illegal activity as high as 46% [1] in 2018.
Illicit activity is still probably the most durable use non-investment use-case for Bitcoin, and realistically will be the most enduring use case going forward.
In some sense, yes the ultimate purpose of a bearer currency in the era of government controlled custodial currencies is having a currency that the government can't seize from you or put prior restraint on you spending. Thus by definition, the main use case is "illicit".
But remember that "illicit" also includes sending donations to protestors in Canada when the government froze their bank accounts, or sending payments to dissident organizations that have been blacklisted and denied banking services, etc.
We can also say that the primary use case of signal is "illicit" communication -- that is, attempts to skirt eavesdropping by various government security organizations, and this is why Signal received funding from the U.S. government - it was a device to assist in coordinating anti-government protests in nations the US wanted to oppose. For the same reason, the U.S. Navy created and funded Tor.
So this is a two way street -- the ability to send payments and securely communicate even if your government doesn't want you to do that is great when they are used to support dissidents in nations you oppose, but not so great when they are used for similar purposes at home, or when they are used for organized crime. Just because a technology's primary use case is "Illicit" doesn't mean it's not a valuable or useful technology.
Illegal transactions are also 11-12% of the USA's economy.[1]
In 2019, forex volume was $6.6T per day [2], or $1716T per year. Meanwhile global GDP was only $87.5T [3]. In other words, almost 95% of global currency volume is speculation. Why would anyone use currencies that are mainly used for speculation?
Both the traditional and crypto economies are reflections of human behavior, but because crypto is more transparent, you can see it for yourself. And a lot of people don't like what they see. But it's not a new problem nor unique to new currencies or technologies.
> In other words, almost 95% of global currency volume is speculation. Why would anyone use currencies that are mainly used for speculation?
Much of that trading volume, speculative or not supports the international trade of real goods and services and hedges currency risk for large international companies [1]. The same cannot be said of Bitcoin, which does provide the same utility.
> Illegal transactions are also 11-12% of the USA's economy.[1]
Much of that figure are payments for untaxed, but otherwise legal activities. On the other hand, crypto figures are straight up payments for illegal activities.
Not really, the speculation has nothing to do with human behaviour. The conventional money system and the thousands of cryptocurrencies that copy it are inherently speculative and reward people for being indecisive aka being liquid. Liquidity is the ability to instantly change your mind and that ability has very little to do with human nature and more to do with the nature of your money.
I'm from Argentina but live in the UK: in 2020 my mom needed an urgent oncological treatment and the only method I had to transfer the money was using a cryptocurrency. I really don't like to talk about this stuff but when people here in HN keep making arguments like "oh who needs this stuff, I can send money to my friends with the Monzo app" it really makes me feel like my problems as someone from the third world don't matter at all
I think most people here agree that it is unnecessarily hard and expensive to transfer money between countries. However cryptocurrency is a technological solution to a regulatory problem. This issue could be solved tomorrow by legislation if governments would cooperate and work to do so. All the efforts pushing cryptocurrency for this particular niche would be better served pushing for international standards for cheap and simple instant money transfers.
> All the efforts pushing cryptocurrency for this particular niche would be better served pushing for international standards for cheap and simple instant money transfers.
That seems impossible given today's geopolitics. Crypto remittance at least works.
Maybe that is true of transferring money between USA and Russia, or between USA and the EU, or the USA and any other country outside of Canada and Mexico, but there is no reason that the UK and Argentina don’t have a bilateral agreement in place that would make transferring money between the two countries quick, cheap, and easy.
>there is no reason that the UK and Argentina don’t have a bilateral agreement in place that would make transferring money between the two countries quick, cheap, and easy.
This may be true but the fact is there is no such agreement and therefore the friction remains. Crypto at least provides a universal low friction option to everyone with no need for disinterested political groups to spend precious time to take action.
GP was talking about Argentina and the UK. Both have pretty functioning governments, and pretty stable relation. This could easily be solved for most people today. Even China and India have stable governments that pass legislation and adopt international standards. You will only find exceptions in places like the USA, Iran and Russia. However most people don’t live there.
I'm quite tired for a proper response right now but I wanted to point out that this has nothing to do with UK-Argentina bilateral relations: Argentina's economy has a very complex history, specially during the past 20 years, and things that you give for granted like transferring money internationally with your bank or having a savings account are simply not an option.
Is there any crossover in a Venn diagram of "government is so bad you need crypto" and "government is good enough that they won't shut off the internet to control the people"? If there isn't then crypto isn't very useful in those places.
It is hard to shut off the Internet (or at least should be, if it is properly decentralized).
Point in case: Russia. Government has been trying to block everything they don't like for some ten years now I think. Controlling all the uplinks from the country is just not feasible (although they're working on buying everything out I believe), so it was in fact easier for them to make all the ISPs install some blocking equipment themselves, which works pretty poorly.
Many times they were successful, but they couldn't shut Telegram down for example. When TLS ECH is finally adopted it's basically game over for them.
Even China cannot block Github, because it would harm their economy too much. Chinese developers need to access Github (PyPi, NPM), or they are not productive. The global software industry is built on the top of Western science that relies of on freedom of information. Thus, they need to let free information to flow against the authorianship will.
That's interesting! I thought China developers had npm / PyPI etc. mirrored so that they don't have to deal with the slowed worldwide versions.
UPD: that said, I agree that the Chinese Firewall is about as far as you can shut off the Internet in a modern country (at least without turning into another North Korea).
Most governments that are so bad you need crypto are not that bad because of repression necessarily, but because of corruption or incompetence. Corruption or incompetence doesn't care enought to "shut down the internet" and if they do odds are a bad job will be done of it.
and competition is healthy anyway, even for governments. That transfers of money in the US are relatively slow and relatively expensive is a technical issue for the FED to resolve; already a solved problem in the Eurozone.
So bad people did bad things to stupid people using made up numbers, so people with guns should take other made up numbers and give them to people with guns, and tell the people with guns to make sure the bad people don’t do bad things to the stupid people, because they know what’s best for them because they’re too stupid and incapable of becoming strong enough for the big scary world?
> so people with guns should take other made up numbers and give them to people with guns, and tell the people with guns to make sure the bad people don’t do bad things to the stupid people
I think people who are doing the telling actually don't have guns; but are sitting atop a made-up hierarchy.
This is true. However, the people with the guns believe in the hierarchy so effectively the people doing the telling have the force of violence behind their words.
> I do hope it dies out, it should have been heavily regulated from the get go.
On the other hand, if it had been heavily regulated from the get-go, there would be tremendous pressure to bail it out now, so maybe it's for the best that it wasn't regulated by the government.
It would have been nice if there was a countervailing force to the billionaire-savior cults promoting it, but unfortunately our media environment promotes those ideas rather than combat them.
> On the other hand, if it had been heavily regulated from the get-go, there would be tremendous pressure to bail it out now, so maybe it's for the best that it wasn't regulated by the government.
This isn’t true at all. The FTX collapse is more akin to something like Madoff’s Ponzi scheme, which was significantly larger and did not get a bailout.
The financial bailouts you’re comparing this to were mostly loans that were paid back with interest, which init equivalent to the government handing money over to compensate for someone’s fraud.
The idea behind the regulation would be to prevent these situations from becoming so large in the first place. FTX deliberately avoided locations with regulation so they could perpetuate their fraud. So, no, regulations in the US would not have impacted how FTX operated in the Bahamas nor would they have any interest in bailing out a foreign company.
Finally, regulation doesn’t cause bailouts. There’s no rule that says regulated industries get bailouts while unregulated industries don’t. You’re conflating two completely different topics and trying to pass them off as one in the same.
> The idea behind the regulation would be to prevent these situations from becoming so large in the first place.
I agree that's the idea, but how do you identify a ponzi scheme via regulation before it is revealed as a ponzi scheme?
> Finally, regulation doesn’t cause bailouts. There’s no rule that says regulated industries get bailouts while unregulated industries don’t.
I didn't say cause. I said pressure. Yes, the auto industry received a big bailout in 2008 and the cruise industry during the pandemic. There were other pressures that made those happen, right or wrong.
When bitcoin first came onto the scene I personally knew a guy who was running a website to act as an exchange. It was small because bitcoin itself at that time was very small.
Then bitcoin had its very first dip and it became unprofitable to mine bitcoins. When that happened he shuttered the website and kept everyone's bitcoins.
I knew of bitcoin early on due to this guy, but even then I had no interest and considered it bullshit. Then when I saw what this guy did it just solidified my opinion that it can't be trusted.
That's not to say that in theory there aren't uses for it, but it's 100% speculative and nothing else. People try to compare it to things like gold for protecting your money from inflation, but that's completely nonsensical.
If the value of gold crashes it still has an inherent value because it's a useful physical good (looking pretty is not the only application of gold). a bitcoin has ZERO inherent value. It's not possible for the value of gold to go to zero, but it's absolutely possible for the value of a bitcoin to go to zero.
crypto will never go away, but it absolutely should.
The government doesn't need a cryptocoin to monitor transactions, or to make using paper currency illegal. It can already do what you think it needs a cryptocoin to do, and it doesn't do it because it supports wealthy people being able to launder money and avoid taxes. US politics runs entirely on laundered money and misdirected/avoided taxes. You're lobbying for the swamp.
I anticipate CBDC being something for the peons to use, not the elite. Yes, the government can monitor transactions, but it currently has to jump through a lot more loopholes to do so. I understand and agree with your sentiment, with the additional point that smaller banks are also going to be made obsolete if a CBDC is rolled out.
But the wealthy and connected will most certainly have their own way of getting around the system. Whether that means moving their money into physical assets, or onto the market, I don't know. I don't think cash is going to go away, but I do see the government incentivizing regular people to solely use CBDC, and once you're on that system, you are a serf.
I have seen a lot of resistance against GNU Taler so I think if any country adopts a CDBC it will be fully surveiled with no privacy for customers. After all that is what people want. They don't want privacy in their CDBCs.
Well, if that happens I hope they implement negative interest rates on them because that would end the need for surveillance and political corruption within a decade.
Broadscale, crypto seems to have had an "Eternal September" moment and I think that's where the problems really began. Back in the early days before crypto entered the mainstream, it was pretty much like any other internet project. It was cool to be able to buy a pizza with internet funny money but by then it was still pretty small and everyone knew the inherent risks.
Then came the "Eternal September" where cryto went mainstream and many people started pitching this formerly niche project as a real investment vehicle. And people bought in thinking it was like any other investment. IMHO cyrpto itself isn't bad, it's all the people that pitched it like an old school investment vehicle.
I remember getting into Bitcoin in early 2010 when the pizza thing happened. Even back then it was hyped to me as an investment and an alternative to the corrupt financial system.
There's always been an undercurrent of this stuff. The eternal September came years later, after big scams like Mt Gox had already long imploded.
I guess you could argue that it wasn't a scam because it wasn't the leadership doing the theft, but it's a bit of a meaningless distinction in the end. Lots of bitcoins were stolen, withdrawals were halted, and customers lost their money regardless.
> When that happened he shuttered the website and kept everyone's bitcoins.
> I knew of bitcoin early on due to this guy, but even then I had no interest and considered it bullshit. Then when I saw what this guy did it just solidified my opinion that it can't be trusted.
But isn't it instead an early lesson in "not your keys not your coin" maxim that Bitcoin advocates preach?
> If the value of gold crashes it still has an inherent value because it's a useful physical good (looking pretty is not the only application of gold). a bitcoin has ZERO inherent value.
Yes, but: 1) it's very difficult to self-custody gold (it's bulky, needs a safe place for storage — and if you put it in a bank, you need to be able to trust that you can get it out again); 2) it's very difficult to transfer, especially cross borders, especially in large amounts; 3) it's very difficult to use as an actual money, whereas bitcoin could conceivably be used as such (especially with Lightning).
Your parent was talking about gold in the niche case of protecting from inflation, and passed no judgement over the merit of doing so, only that it was better then cryptocurrency in that particular niche.
If you want to purchase gold to protect your money from inflation (which you probably shouldn’t) then you probably buy it through some insured exchange—maybe even through your bank—that will keep it for you, if you don’t trust any exchange, that is your problem. If you need to transfer your money, or use it, then you’re not protecting it against inflation anymore are you? So you will just use regular money for that.
Anyway, you shouldn’t buy gold to protect your money from inflation. Instead you probably should just risk an inflation and keep your money in a savings account, or buy secure government bonds for it, or something.
> "not your keys not your coin" maxim that Bitcoin advocates preach?
I keep seeing this phrase crop up throughout the past several days of cryptocurrency news, and something always rubbed me the wrong way about it, but I couldn't put my finger on it until today.
It's demanding a change in human nature to accommodate the system, rather than changing the system to accommodate human nature.
It's really not that different than the people who, 15 years ago, were saying, "Well, of course your accounts got hacked, because you didn't create a separate 27-character totally random password for every single account you need, like I do, and never store those passwords anywhere except your head!"
People don't want to deal with a hardware token every single time they want to do anything with their money...and the only reason they have to, with cryptocurrency, is because its proponents think an unregulated "decentralized" financial system where the only law is code is a good idea. (Of course, it was never going to stay unregulated forever. None of the aspects of cryptocurrency that rely on the government not paying attention can last more than another few years.)
Self-custody means users withdrawing their coins from exchanges or other custodial services.
>"Well, of course your accounts got hacked, because you didn't create a separate 27-character totally random password for every single account you need, like I do, and never store those passwords anywhere except your head!"
The keys can be recorded as a seed phrase. Typically this is a sequence of dictionary words. Look into it before you dismiss it so flippantly. Things have come a long way to make things easier for the user. There are also dedicated hardware wallet devices for key storage.
If you're not transacting or conducting business with cryptocurrency, why do you care so much? It is literally none of your business. Nobody is forcing you to pay taxes or finance wars with BTC.
I wasn't aware that something had to be "my business" before I was allowed to discuss it on HN.
And "dedicated hardware wallet devices" are exactly the kind of thing that I'm talking about here. There is no way those are going to be appealing to mainstream users; thus, if cryptocurrency were ever to genuinely enter the mainstream, the vast, vast majority of users would be keeping their crypto on exchanges.
Y'know, exactly the way the vast, vast majority of people keep their money in regular bank accounts. Which don't require this kind of rigamarole, and never result in regular people (ie, not the very wealthy) losing money, because it's all regulated and insured by the government.
(Yes, I know FDIC insurance has a limit. The limit is high enough that regular people will never even have to care that it exists.)
That's fine if you want to champion the cause of the normie. Just don't do it in a paternalistic way. If people were satisfied with the high transaction costs and regulatory overhead of traditional finance, they wouldn't be in crypto.
There are a few more reasonable options here.
1) Create or advocate for a cryptocurrency with reversible transactions and all of the regulatory features you desire. Let the market decide how large that niche is.
2) Loosen or advocate for loosening the existing regulations on traditional financial products so that they are competitive with some of the features of cryptocurrency. See also, Zelle. Another product HN seemed to hate.
Yesterday someone was arguing that Peter Thiel is a super villain. Another full page of comments was decrying one of PayPal's policies necessitated by regulations. People are generally unhappy with PayPal's fee structure, but they continue to use it. The fees and draconian policies are largely required to comply with regulations. Want more personable human support? That also costs money.
The argument for regulating cryptocurrency is basically an argument for creating a captured and gatekept ecosystem. Of course, I get it. "Think of the children", "Think of the helpless normies", same story. What we will get instead will be more PayPals.
As for scams and outright Ponizis, it is worth noting that those go on under the watchful eye of the regulatory state you love so well. Bernie Madoff was similarly connected and even served on regulatory boards. SBF, the disgraced FTX head had direct connections to the SEC and chairman Gary Gensler. SBF even testified, asking for more regulation.
I'm doubtful, but still hopeful for the possibility of a good faith discussion. Regulation is not a pancea against fraud. Instead it creates an atmosphere were connected insiders can create greater frauds. The FTX debacle is illustrative of this. Yet here we are hearing the same appeals for more regulation from would be saviors of normies. Posters who themselves do not use cryptocurrency and insist that it has no legitimate use.
For myself I just wanted to run a few online games with payouts for players in cryptocurrency. Now players also want NFT character saves. I've never used a centralized exchange. I don't make big money in this niche. I do have fun. The community is happy. Nobody is crying about valuations. Actual users of cryptocurrency aren't saying, "There outta be a law!". None of my users are claiming, "If only there were a statist savior protecting us from this video game!" or, "This game would be so much better with barriers to entry for developers"
From that perspective, yes I do feel comfortable asking you and the rest of HN's passionate cryptocurrency haters to butt out. You could also go out and build a better alternative in the marketplace of ideas.
You are looking for a Crypto utopia where everyone is as "enlightened" as you. When something goes mainstream that gets lost. However I suspect if Crypto hadn't gained the popularity (and paper value) it did it might not be as fun as you think.
>You are looking for a Crypto utopia where everyone is as "enlightened" as you.
I'm not sure how you read my comment as elitist or utopian. All I'm asking here is that paternalists don't ruin it with saviorism, regulatory capture and gatekeeping.
>When something goes mainstream that gets lost.
Isn't this an elitist sentiment?
Our community has fun with people who aren't deep into tech at all. I started it with faucet rewards integrated into an io game. Anyone can install a wallet when transactions are free. Couldn't be further from what you're projecting.
"People don't want to deal with a hardware token every single time they want to do anything with their money"
Maybe not, but they have to regardless. Banks force this on users anyway (outside the USA). To pay for things I have to use either a chip card (token), or equivalent embedded in my phone (a token), or log in to e-banking using a chip card PIN pad (token) or my phone again, or auth an online CC tx with a phone app (token).
But no matter what I do the only way to move money around without invoking a hardware cryptographic token at some point, is use paper money and physical coins.
So this isn't really something new. Bitcoin was just ahead of the curve in this regard. Also, it's really hard for banks to reverse transactions outside of the USA. What makes bank money "safe" compared to crypto is simply that:
1. Governments will bail banks out because they're too big to fail. Of course you end up paying for it through inflation anyway.
2. Everything is KYCd/AMLd up the wazoo so even if money is drained from your account in the same way it could be for a cryptocurrency, the perps will find it much harder to evade capture.
It is stating the truth. If you don't like it, don't participate on the market. If you don't like it and insist on participating on the market, you will get scammed.
None of that has any ethical or sociological consideration inbuilt. It's a simply observation of the system.
Anyway, yes, that means the system is bad. But this is an ethical and sociological consideration.
The weird thing to me is that the total mass of silver mined is only about 8x the total mass of silver, but the price spread is 80x.
Copper is much more abundant, over 400x more copper than silver has been mined, but silver is almost as scarce as gold. It really seems like the price spread should be closer.
Uh, I wear some gold on me and cross borders with it and keep it at home when not and there's this thing called pawn shop in my village and otherwise and... are you sure those you mentioned are real problems? Or maybe you mean only the large amounts problems - in which case we should underline bitcoin aims to solve the problems of the rich, which most people on earth are not.
> If the value of gold crashes it still has an inherent value because it's a useful physical good (looking pretty is not the only application of gold).
The value of gold is protected by the fact that the majority of it's holdings (at least, according to this[1]) aren't used for speculation. Still, a good chunk of them are, which means there can be pretty huge swings and it's considered a poor investment.
Have tried to say the inherent value of a dollar is because it's backed by the U.S. military, but fundamentally, it's the same reason. Dollars aren't held as speculative assets. The poor returns from the dollar are one of the reasons why people push other investments. If currency does enter into speculative territory, bad things can (and do) happen. See Hot Money[2].
Anything, even if it has inherent value, can be extremely dangerous when there's a large number of speculators. Because no matter the value, speculation can drive the price much, much higher. And it's a snowballing effect - the more an asset rises, the more people want to buy it for speculative reasons, and the more people buy it the more it rises.
And then any inherent value (if it even exists) looses significance - you're in a game of chicken with the other investors, trying to both hold on as long as you can and get out before everyone else does. The winner gets the fortune, the loser is left holding the bag.
The thing is, almost everyone in the crypto space seems interested in speculation. It might be speculation + decentralized voting rights or speculation + digital ownership, but speculation is always at the heart of it. The idea that if you get in early you'll be able to cash out for a big profit. Of course a space almost entirely driven by speculation is going to be inherently dangerous and unstable, and the "opportunities" are the same type as those of a casino.
One could argue that the complete and utter strawman by the other poster is more likely to start a flamewar than someone asking if they understood the actual point.
But let me guess, if I press you on this I'm going to get banned in a week or so for such and such reason.
Sure, but it always feels like the other person started it and did worse—so everybody always argues that.*
Let's assume you are right and the other person is wrong. Posting an unsubstantive snark is the worst way to respond. It poisons the atmosphere, evokes worse from others, and ultimately discredits your own position (which, if you're right, means you're discrediting the truth—and that hurts everyone**).
What you should do instead is one of the following:
(1) respectfully provide correct information, so we can all learn; or
(2) chalk it up to the internet being wrong about everything and just move on.
guidelines state to assume good faith, I asked if they understood the actual point.
What's happened here is my assumption of good faith with a question got turned into a warning by the mod because they, themselves, did not assume good faith on my part.
So the question becomes, are those guidelines taken seriously by the moderators of this site or not?
If they are, then maybe admit to your error and lets all just move on.
It was obviously an unsubstantive comment, unduly personal, and basically a variation on "did you even read the article" which the site guidelines ask people not to post. That makes it flamebait, regardless of your intention when you posted it. I don't think it was a borderline call, nor is it hard to understand.
Ironically, the sort of legalistic pleading you're resorting to is a sign of a lack of the good faith you're claiming. So is the style of your reply sequence: never admit or accept a thing, never address what the other person says, and simply bring up a new argument every time. These are troll tactics, whether you're using them that way intentionally or not (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...), and part of how we moderate HN is not to dance that way.
It's never been clear to me why some people think implication cannot be considered an accusation.
You jumped the gun and have caused more issues than you've avoided. Your warning was more about preparation to ban me than anything related to the actual conversation.
I get it. I understand. Just do it now if you're so inclined, it will save both our time.
I wasn't preparing to ban you! I looked at your history quickly and what I saw was mostly pretty good. I'm just asking you not to post things like https://news.ycombinator.com/item?id=33643127 for what ought to be obvious reasons.
Re the word 'troll', the link I provided points to a thwack of explanations of how precisely we use that word. It doesn't have to do with impugning someone's intent (which we have no way of knowing); it has to do with the effects that certain kinds of posts tend to have on the threads (which we have plenty of ways of knowing, as they are externally observable). I'm not accusing you, by implication or otherwise, of anything more than making such a post. That's why I asked you not to do that!
The other poster took the idea you expressed - that "[crypto is] 100% speculative and nothing else" - and further explored the idea, and some markets they have seen where the price action either devolves or remains rational.
What exactly did he do that was a "strawman"? Why are you so angry? It was an interesting comment thread, and then you are acting as if persecuted by the other commenter and HN moderators.
They spent 90% of their post talking about gold also being speculative rather than crypto.
I asked if they understood my actual point because I was never denying that gold had speculation, but that when that speculation collapses gold still has value due to it's application in the physical world.
Gold is priced way higher than it's worth due to speculation, yes, but it does have intrinsic value in industrial processes and electronics. I wouldn't invest in shiny pebbles personally but there is a very real, fundamental difference.
I suspected early period Bitcoin gained enormous deposits from corrupt "Tiger" traitors (or defectors) in the Communist Party. They exited China's smog for Canada, for example.
I'd go a step further with the comparison to gold. If everyone would stop mining gold today, gold would retain value (or perhaps even go up in value). On the flipside, if we turned off all bitcoin miners today, bitcoin would go to zero instantly (as its worthless without continuous resources being pumped into it).
This is why I'm sympathetic to those who say its ponzi scheme, it only has value because of new resources continuing to be poured into it.
>if we turned off all bitcoin miners today, bitcoin would go to zero instantly
isn't true. You couldn't trade them normally with the miners off but you could start mining up the day after - it only takes a couple of computers really.
The mining reward is not supposed to be the end state of the system. It is a subsidy, reducing over time, to get the system established.
Once established, the idea is that transaction fees are used and the distributed nature of the network causes a natural competition to be the most efficient so miners can charge the lowest fees while making a profit.
I guess it's a different scenario but if all the existing miners were turned off today, there is nothing to stop me running the open source bitcoin software on a spare computer myself the day after. I guess if you ban that for all time and all places bitcoin would be over.
My impression of the intent of the statement was "disable mining altogether" not "turn off the existing physical mining rigs until someone turns one back on"
But you understand why this hasn't happened yet right? if everyone else turned off their miners, I for one would be interested in money and turn one on
I've read elsewhere that below $13K it is not profitable to mine bitcoins.
We're very close to this threshold now, given what is happening now and during the next few weeks I would not be surprised if BTC is going below that threshold.
I think it's time to stash a few bottles of champagne.
Different mechanism, Bitcoin's difficulty adjusts based on how quickly blocks are mined so that on average 1 block is mined every 10 minutes.
The protocol adjusts every 2016 blocks, if it takes longer than two weeks (20160 minutes) to mine the 2016 blocks then the difficulty decreases, if it takes less than two weeks to mine 2016 blocks then the difficulty increases.
The adjustment algorithm still requires blocks to be generated before it adjusts. If enough miners shut down at the same time, time between blocks will skyrocket, pushing the difficulty adjustment forward even further and crippling the transaction throughput.
It really depends from miners to miners. As effectively it's about how cheap your energy cost is. Since there's no transport cost, your cost is to acquire cheaper energy.
Normal people would notice and agitate for the internet to be restored. Most people’s daily lives would be significantly impacted.
In contrast, only speculators would notice bitcoin going offline. They might laugh at the guys who told them they weren’t going to make it but that’d be it. Nothing would break, nobody would be in line ahead of them failing to buy something, etc.
That matters because bitcoin’s floor value is zero: as a very weak fiat currency, the only reason to use it is when you think it’ll be profitable and if that confidence drops miners will stop putting more hard money into the system.
> The floor value of EVERY company is $0, but what is your point in saying that?
There's a big difference between something like a Beanie Baby, which has a base value of whatever someone will pay for a toy (you're not getting rich, but it's not zero), a company whose shares convey fractional ownership of assets and an ongoing revenue stream, and a very weak fiat currency like Bitcoin which has value only to the degree to which your buyer believes they will be able to resell it at a profit.
With a strong fiat currency like the US dollar, that belief is anchored by the size of the related economy and the millions of people who are guaranteed to use USD to pay taxes and other government fees, sell goods and services to the government or be paid by it, and the millions of business relationships specified in dollars. Yes, that could change over time but it's not something which happens quickly except in disaster scenarios where the value of any currency is moot and you wouldn't be running Bitcoin miners in any case.
I believe that's what we call a pyramid scheme. It only works as long as resources are being poured into it. The second the money flow stops, it instantly collapses.
> If everyone would stop mining gold today, gold would retain value (or perhaps even go up in value). On the flipside, if we turned off all bitcoin miners today, bitcoin would go to zero instantly (as its worthless without continuous resources being pumped into it).
"Mining" in bitcoin means two different things, creating new coins AND adding transactions to the ledger. If mining reward went to 0 (which will actually happen someday), and new coins stopped being created, miners would still be able get a profit from transaction fees, although it wouldn't be "mining" in the same sense as gold.
I think Bitcoin has no value. But I don't think mining issue you raise is a reason why. The difficulty of mining is pegged to size of the mining pool so you don't actually need that many miners to operate the whole network.
Mining is bad for other reasons--it's a huge waste of resources when bitcoin is worth a lot of money.
>if we turned off all bitcoin miners today, bitcoin would go to zero instantly
You talk about this like this is an easy action with profound consequences. It's like saying If everyone killed themselves, there would be no people. This is trivially true, but it's not going to happen.
>(as its worthless without continuous resources being pumped into it).
All forms of transaction has some form of resources put into it. The quantity of resources is what is at issue here. Bitcoin does not need the massive quantity of resources it currently uses to operate. That is an artifact of the high value of Bitcoin coupled with the subsidy of the mining reward.
I'm not sure if the creator(s) of Bitcoin evaluated what kind of value a Bitcoin should have over time, The mining reward halving rate suggests that they were not expecting it to have a continual average rise above 20% per year (which makes sense because that would be insane). To date, however, it _has_ been averaging more than that, resulting in an increase in value of the mining reward relative to other currencies. Should the value drop or simply not increase for a extended period, the mining subsidy becomes less. Then only the most efficient miners can make money mining and the difficulty drops to a new equilibrium as the ones who can no longer make money drop out.
> It's not possible for the value of gold to go to zero
The price might go to zero, though. The price of oil, which is arguably more useful than gold, went negative a couple of years back. Having intrinsic value doesn't necessarily mean it is exchangeable, especially if it needs to be exchanged at a given moment in time.
The exchange value might fluctuate but the use value remains, in the case of oil and gold. Bitcoin has no use value. Could say that about other financial instruments and derivatives, but they serve a purpose to those who use them. There's a big difference to exchange value and use value though, Marx made a career out of defining it.
Its value is all well and good if you personally have a use for it, but if you are merely stockpiling it in hopes of selling it later then that doesn't help much if the price has fallen to zero. You might be left with something pretty to look at and little more as you hold out for a recovery, if you don't take the bath and end up with nothing.
Which could also be said about Bitcoin. I'm sure someone out there would find some kind of academic interest in looking at Bitcoins or enjoy collecting them. There might be almost no value in Bitcoin, but it would probably never erode completely.
In fiction there's an idea known as 'plot armor'. In essence, it's the idea that causality and realism are suspended for some reasons related to the plot.
Your scenario here is plot armor.
Sure, if we pretend that gold stops having ANY use outside of being pretty, then when it stops being considered pretty it's value will go to 0.
But the fact is, gold has a myriad of uses besides being pretty and those uses give it an inherent value.
And when you go to sell it, others' use of it is what sets the sell value, not your personal use of it. It doesn't matter that I'm not personally using it for conductivity if the person I'm selling it to is (or someone downstream of them is).
> Sure, if we pretend that gold stops having ANY use outside of being pretty
I fail to see the purpose of this 'pilot amor'. There is no reason why gold would stop being useful beyond being pretty. This fiction you've come up with doesn't even make any sense and certainly has no relevance to the discussion.
However, that doesn't mean there is always a user available. When we saw the price of oil go negative there were still just as many uses for oil as there ever was, but for various reasons there weren't buyers in that moment. Gold is not immune to the same.
In case you are still confused, let me be clear: Price and value are not the same thing.
I used the phrase 'inherent value' to describe what you're referring to as 'use value'. But of course someone decided they had to argue against it by arguing that the trade value between countries went negative at one point (which isn't all that surprising but has nothing to do with the original point).
arguably 'use value' is a better phrase, but given the surrounding explanations, the poster engaged in a clear strawman.
Oil (and gas) are specific cases, not relatable to gold...
The point with oil is its extraction can't be stoped overnight, and thus has to be stored in case of excessive production, which has itself a cost.
Demand droped significantly when the lockdown occured ; storage facilities where saturated ; and oil was kept in oil tankers which are pretty expensive.
The price of oil futures went negative. The spot price of oil has never and will never hit zero or negative.
You can't use your regular intuition about commodity prices when talking about futures contracts. The negative price was a one-day event, and all it really represents is a higher-than-normal premium on the calendar spread.
Although I agree with almost everything you said, under certain conditions it would be possible for certain prices of gold to go to zero, or even negative.
it honestly sounds a lot like banking. We just have some rules now to prevent this sort of thing. It's not bitcoin that's the problem... It's the money changers.
If an item only works well in theory, then the item itself is the problem.
A firearm is absolutely, 100% safe as long as no one ever interacts with it.
Because we are humans, in a society, and everything we do relies on human interactions, if Bitcoin (and crypto in general) cannot operate positively and effectively, except in theory, then it is the problem, regardless of the underlying reason.
the history of money seems to be lost on you. It literally went through the same sorts of things. Fiat works because we learned. My Good that gun comparison was dumb.
Can you teach me about this, like with a link or something? I have known wealthy people who for generations kept a portfolio like 60% equities, 35% cash and very liquid things like bonds, ~3-5% gold, usually in the form of equities that track gold.
I am not saying that is good.. I don't know. Tell me why it is bad. Thank you.
However, I don’t get how holding gold – which doesn’t generate dividends and therefore cannot benefit from compound interest – could be a good long term invest, compared to, say, an accumulating ETF.
I don't think I've ever seen a convincing argument that the physical "usefulness" of gold is a significant factor behind its market value.
The closest is the argument that it's useful as marker for indicating wealth/status/privilege, because of its rarity (and obviously the skill involved in crafting it into various ornaments/utensils etc.).
But yes, arguably more useful than cryptocurrency (where there's value in the concept of a distributed cryptographically-backed ledger, and the software that exists to support it, but not really in any individual unit of a cryptographic currency). Then again, there's really no absolute utility in units of fiat-issued currency either - it just happens to be the only sort of currency that governments accept for paying taxes (therefore necessary for keeping yourself out of jail).
If the value dropped to
Zero, I’d “buy” them all and then run my own miner to confirm the transaction and sail off into the virtual sunset with my story about how I bought all the bitcoin in the world. I’d keep running the miner and publishing my chain. But then someone would come along with more hashpower than me and rewrite all my transactions with their longer chain and my sunset would turn to darkness, and I’d be poor again… but ironically they’d probably not be worth zero anymore. Then people would rewrite that chain with more hashpower… And so on, until greed secures the transactions again and restores value.
At which point I’d turn my miner off and wind the chain back to when I was rich on my private virtual island for one and live happily ever after.
> People try to compare it to things like gold for protecting your money from inflation, but that's completely nonsensical.
It's just like gold. You give me your gold and I'll take it all right now, saving you from losing it incrementally or at a later date. Not your vault, not your bars. Theft-as-a-Service. /s
Gold has a special status because of how long we've mythologized it, but generally you'd be encouraged to invest/buy futures in things that impact your life and income directly. Your inputs and outputs.
If you produce food from fertilizer and power then those are your three important commodities. Gold isn't a great fit because you can't eat it, fertilize with it, or run a tractor on it. You have to do a gold-to-dollars transaction first which can waste a fair bit of the value.
If you forward packets and consume electricity to do so then holding gold also isn't economically relevant, but by trading proofs of work which were generated by burning electricity you track the value of your commodities and do so natively.
If we used HashCash (or similar) to solve the initial-contact problem then we'd be creating a secondary market in the proofs and they could be used as currency by a related ecosystem like hosting providers with little friction or risk.
Tulips didn't cause the problem, speculators (and scammers) did.
A lot of things have no value to most people. Go to an antique show or an art auction and you yourself may see boring drawings and literal garbage, but many others pay handsomely for it! BTC has no visual or any sensory representation so it's not apples-to-apples but it's a collector's item at the very least.
As it stands, without crypto, you are pretty much a hostage to visa, mastercard, discover, and amex to exchange money effectively, and those companies are opinionated to a disturbing extent about who they deny business with when it comes to something so important.
While those companies are not operated as some sort of common carrier of transactions crypto is essential for a free global society.
Apparently Trump of all people actually tried to make it so[0], but Biden seems to have taken it down.
While I don't use it a lot anymore myself, I'm struggling to think of any service or product I use whose provider would not happily accept cash as payment. There are more than a couple of small restaurants here that only accept cash. My barber only accepts cash.
And by definition, a Ponzi must continue to expand, and expand quickly. Regulators are literally waiting until cyrpto completely runs out of possible new customers to intervene. The government is maximizing the damage that crypto does.
Thank god we haven't gotten to crypto for kids yet, but crypto bonuses on credit cards is getting very close.
The great part about this is that you are not forced to use cryptocurrency. It is entirely voluntary.
I like cryptocurrency as an open platform. I don't have a problem with the market clearing out the speculative mania. I do disagree with detractors who admit that they have no use for cryptocurrency demanding regulation. If you like regulated markets, stick to them. If you love the security of the petrodollar, good on you. Live and let live.
Can I just publish a few cryptogames without the obscene generalizations?
The worst part of this is that the entire FTX debacle comes on the heels of SBF demanding even more regulatory capture. Shades of Bernie Madoff. The insider connections to regulatory bodies and SEC board members. History repeats itself.
As long as there are a) scammers and b) people willing to invest in scammy things, these sorta things never die. They'll learn and adapt and come up with newer ways. Still the cynicism towards crypto on a whole is healthy and a much needed thing we need.
I'm not sure it should be regulated. But it should be dyed. I should have the ability to say, "No crypto in my retirement portfolio, please." and have that be a knowable and enforceable property.
There's this unfortunate mixing up of the technology, the community, and the bad actors within the community. Ultimately, more crime gets committed with USD than with cryptocurrencies, yet we don't blame the dollars for those crime the way we blame crypto.
There's a bigger paradigm here that I believe few people understand and that I will desperate attempt to explain. I may be about to write a word salad, but here's hoping.
When the Internet was young, before e-commerce was a thing, it was a delightful space where you could publicly post your e-mail address and never worry about the repercussions. If you ran a server and a hacker gained access, it was on you to improve your security.
Eventually, commerce found the Internet and everything changed. Once money was involved, bad actors started to get involved. This is when we started to experience the delights of e-mail spam, a problem we never really fully solved. And something changed about how we handle those hackers. Now that money is involved, if a hacker gains access to your system, instead of being responsible for your own server you can just call the police. And wow, did they crack down on hackers in the early days. They were bad at catching them, but when they did the punishments were disproportionate. It made things safe enough for commerce to grow, but it didn't make us nor the Internet much "better" in the long run. Rather, it put us in a rut.
Compare that with introduction of Bitcoin - which was money from the moment it was created. Because Bitcoin was about money since the beginning, it also attracted those bad actors from the beginning. However, the Bitcoin paradigm is different. Instead of being connected to the existing financial system, it's a self-contained Internet-native system where the responsibility of security is put (to some degree) in the user's hands. But we users are a bit lazy, especially after being hand-fed dumbed-down UX for decades. That makes us vulnerable because we trust instead of verify. But Bitcoin teaches us to learn, to understand, and hopefully to be more responsible.
I believe that Bitcoin and it's derivative technologies have created something akin to a bug zapper. It attracts bad actors like nothing ever has before. And the only viable retort is to improve technology and educate - the opposite of the traditional system where we give the state a monopoly on violence and then ask them to fix it for us.
If you look over the history of cryptocurrency, you'll see a history of rising and falling value and popularity tied to hacks, exploits, crimes, scams, etc. Often, the news declares the end of the entire enterprise. Yet, each time, the scene not only comes back - it comes back stronger.
What I see is greed and wealth attempting to exploit Bitcoin the way the traditional system gets exploited - but always failing in the long run. And with each failure, the wealth in play gets absorbed into Bitcoin. Meanwhile, we continue to harden and improve Bitcoin and the ecosystem around it. In my mind, it's like a worm that is slowly eating the world's wealth through an ongoing interaction with bad actors. I do not believe it can nor should be stopped.
So this idea that crypto is inherently a scam is the result of scammers being drawn to crypto. It's easy for the public to believe this. But Bitcoin and things like it are, in my opinion, the medicine we need to move through this and on to something else.
The succinct term you want is "anti-fragility". Cryptocurrency networks have anti-fragile properties, the same kinds that allow the Internet to be an unworkable mess that nonetheless serves billions.
And you're absolutely right. Bad actors use crypto to go to war with each other; the winner is always crypto. This time, with the FTX scandal, it's gone to places as high as the US Democratic Party. And you would think, "so now they'll just ban it." But it was designed to resist that; furthermore, when you are in the midst of a power struggle, which every government is, crypto is a loaded gun to scramble for - a way to avoid getting freezed out or silenced. The resulting internal dissent has helped to make crypto bans ineffectual everywhere they've been tried, globally.
On one point, I fully agree with you - the whole purpose of regulations is to stop schemes from getting out of hand before the money is gone, because once it's gone, it can't usually be recouped.
But that said, I feel something is fundamentally lacking in our education system that people were convinced to put money into this shithole because Matt Damon or Tom Brady or Giselle Bundchen said it was a good idea. I mean, I have sympathy but part of me is like "Stupid is as stupid does". When celebrities started hawking crypto, it was the definite equivalent of "shoe shine boy giving stock tips" to me.
I see this point of view a lot on Hacker News because it's dominated by people living in places like the US. Let me add a little perspective on how Bitcoin is used in lower- and middle-income countries from my personal experience.
If you live in a country with a highly functional banking system and
no kleptocracy, Bitcoin is probably a bit puzzling unless you have
family in Cuba. But it’s not puzzling at all for those of us who live
somewhere in the middle of the broad spectrum between Switzerland and
Somalia, because most places have a little kleptocracy. Argentina
is a stable democracy, far from being “a failed state,”† but if you
want to send US$500 abroad via non-Bitcoin means it’s basically
impossible, and the only broadly available savings vehicle is real
estate (“ahorrar en ladrillos”), which of course grossly inflates
real-estate prices, with a substantial part of the capital city
occupied by empty apartments someone bought “as an investment”.
Historically, Argentines have saved by buying dollars, but that’s
limited to US$200 a month now, and then only if you have a
non-under-the-table job (about a third of total employment is under
the table):
Something like 300,000 people out of a country of 40 million are legally permitted to buy dollars.
You can see that in September 02019 when this measure was imposed the
price of a dollar was AR$63.50; now it’s AR$305. So whatever savings
you had in pesos in 02019 have lost 79% of their value to peso
devaluation. In fact, whatever savings you had in pesos a week ago have lost 4%.
I’ve been using Bitcoin to get paid for several years at this
point where I live here in Argentina.
It’s currently 14 years after Bitcoin’s invention, and some
people think it’s regressing instead of progressing. Well, 14 years after
the internet’s invention was 01983; not only couldn’t you get so much
as a weather report online, much less IRC, but many of the early
interesting experiments like NLS at SRI had shut down, and more and
more places were disabling guest access to their hosts—you couldn’t
run so much as a game of ADVENT without getting a username. And a
password. Things were seriously regressing. The only people you
could talk to on the internet were other people who really bought into
the subculture.
In 02001 a lot of Argentines had saved dollars in their
dollar-denominated, "government insured" bank accounts.
This did not preserve their savings
through the financial crisis that year; the cash-strapped government
limited withdrawals to a trickle, then converted dollar deposits to
pesos at a one-to-one rate, then released the exchange-rate peg, at
which point peso went overnight from being worth US$1 to being worth
US$0.25 before settling at about US$0.31 for the next few years. The
US did something similar in 01933. There was no recourse for this scam.
You might think alternatives to banks like credit unions
would protect their customers better, since the customers are the owners,
but Credicoop depositors
suffered the same two-thirds confiscation of savings as depositors in
for-profit banks. And they pay the same 3% tax on bank transactions
including checks. That’s more than a fast Bitcoin transaction fee of
US$15 for transactions over US$500.
But we’re not a failed state. There are no gangs of bandits roving
the streets in Argentine cities (though there are some pretty bad
slums where you’ll get robbed if you wander in without knowing
anybody). Courts, free public hospitals, and roads continue to
function, though there are more potholes than a couple years ago. Argentine
infant mortality is 10 per 1000 live births, down from almost 20 in
the late 01990s and the same as the late 01980s in the US; life
expectancy ...
> I see this point of view a lot on Hacker News because it's dominated by people living in places like the US.
Totally. And it's not just about "stable countries".
People in Cyprus (except the russians, who were warned a few days before and had the time to move their funds) saw the money on their bank account used to do bank bail-ins. Probably a test to see how the population would react when the same would happen EU wise (as bank bail-ins are now, by law, mandatory in the EU for failing banks).
People in Spain were incentivized by the banks to put their savings into products yelding x% then the banks defaulted on the principal. That one's even more vicious than the Cyprus case.
The FED and ECB printed trillions for years and year... But we're to believe that saving confiscated through inflations are due to only to supply chain issue and to the war that started in Ukraine. Yeah. Sell me a bridge too please.
So far people in Spain and Cyprus who had put their money in BTC are still winning. Those who got their money confiscated by bail in and by bank-sold shady investments not so much.
Every time I see the "Bitcoin for remittance" logic, the first question I ask is: what is the use case or demand for Bitcoin at the third world where you are sending your money? Why should anyone want that except for speculation? Clearly, Bitcoin is not being accepted at the mom-and-pop shop in Bangladesh (they don't even take credit card), so what are the people supposed to do with the Bitcoin once they receive it?
The answer that I have experienced is that it is being sold to the poorly informed local speculator, who have banked their hopes and dreams of getting rich someday to buying Bitcoin. In that way, Bitcoin is actually stripping wealth from the global poor and draining it back to the wealthy ones.
Well, as I explained, savings is a demand for Bitcoin that isn't the same thing as "hopes and dreams of getting rich someday". Just having an asset that doesn't reliably evaporate like the peso or the bolivar is a pretty big win already, even if you aren't going to get rich.
Another important use case that I didn't mention is leaving the country to live somewhere better. Suppose you've saved up money in, to use examples I know something about, Argentina or Venezuela, and you've managed to do it in a form that doesn't evaporate due to inflation: US$100 bills, emeralds, gold, real estate. Now you want to move to Spain, Uruguay, or Mexico. Getting those savings safely out of the country with you is going to be very challenging indeed; Argentine customs has dogs that are trained to sniff out dollar bills, for example. (And of course in the case of real estate it's impossible.)
Again, maybe this is an example of "buying illegal shit": you aren't supposed to be able to escape these places with your life savings, because otherwise how can kleptocracy keep klepting? But obviously (at least to me) being able to take your savings with you makes the world a better place, even if it's illegal.
But it's definitely not "stripping wealth from the global poor and draining it back to the wealthy ones". The "heavily regulated", "government insured", "government managed" world banking system is what does that.
Maybe fleeing the country like this sounds like an extremely marginal, unimportant use case to you, but if so, that's probably because you don't know anybody from Cuba, Ecuador, or Venezuela. Not only are significant percentages of those countries' populations already living abroad, but even larger percentages of the people living there today depend on family members living abroad.
I don't know anything about Bangladesh. I've never been there and I don't know anyone from there very well. Maybe the situation is different there and Bangladeshi people only invest in Bitcoin because they think they'll get rich. What are your experiences there?
Are you concerned about the falling ratio of Bitcoin to USD? Or is the hope that this storm removes a lot of the scam artists/ponzi schemes and the ratio stabilizes in a way?
Edit to add: it seems like the relative ratio doesn't matter much for the scenarios you describe because it is much better than the swings in local currency compared to USD.
Bitcoin has in fact lost more value than the Argentine peso (or any other fiat currency) over the last year, and this is its largest fall ever (it has fallen over 70% twice before, but I think this is the first time it's ever fallen 73%), and this is a big concern for its use as a savings vehicle, though only a minor inconvenience for its use for international remittances.
Also, because the US$ has itself lost about 10% of its value over that last year, the fall is even worse in real terms than in nominal terms, closer to 75%.
Over other periods of time, like the last two years or the last six months, this is not the case (that is, the peso has done worse than Bitcoin over those periods), and certainly anyone with savings in Bitcoin is hoping that a year from now it is at or near its current value, or even above it, rather than having fallen another 70% to US$4500. But it could. There is no guarantee, and my observation of periods of past Bitcoin volatility does not make me optimistic that scam artists will go away as a result.
There is no prospect that the peso will have equal or higher value a year from now; both the general dynamics of central-bank-controlled fiat currencies and the specific pathologies of Argentina militate strongly against it. The long-run expected value of the peso is zero — it's not a question of whether it will inflate over time, just how fast. Plausibly ruining the peso's usefulness as a unit of long-term account or a vehicle for savings is a worthwhile tradeoff for improving its usefulness as a medium of exchange; that opinion certainly has widespread acceptance among economists.
So clearly anyone who invests their savings in pesos will inherit the wind; it's possible that whoever invests their savings in Bitcoin will as well.
If these people followed the savings logic they would have bought and sold RAI. Why would anyone want to put their savings in an extremely volatile cryptocurrency?
Are you pretending that the government's ability to create fiat currency out of thin air doesn't endanger anyone? Printing trillions over the past few years is what is throwing us into a worldwide depression.
You think the "spooky scary government" is harmless? The US government has used its funds to kill over 20 million people since WWII without officially being at war. 90% of those killed in US drone strikes are bystanders.
Domestically, we see unrestrained corruption from nearly all of our elected officials leading to every outcome to its own citizens. Poisoned water supplies, missing disaster response, war. But as long as your bank account is insured, everything is cool?
Cryptocurrency was created for, and remains suitable for, valid uses that are not "drugs and other illegal stuff." But this is a new technology without guardrails. Bad actors are a problem. So is FUD from competition and disinformation like the parent.
This is a growing technology that requires a level of knowledge to safely use until it is mature enough for mass adoption.
If the fiat system is so bad why did Bitcoin copy it then? The only exception is RAI which does not copy the fiat system by allowing negative rates. Negative rates allow the system to reduce the money supply.
>> It never had a real use outside of scamming people and buying illegal shit,
Some anecdotal evidence to support what you're saying.
I work at a large health care company. When crypto and blockchain was getting popular, there was a huge push in the company to adopt blockchain and to a degree, crypto. I'm talking hour long presentations by blockchain companies, videos, and trainings. It was heralded as the dawning age of technology where people can be treated and pay in crypto, while at the same time, all their medical files being securely stored on the blockchain. They pushed it as the next step in 100% digitizing health care.
3 months later? It was dropped. Not just dropped, either. It was silenced throughout the entire company. The sharepoint sites promoting it internally were gone, the videos, presentations, and trainings were all scrubbed from the company sites and resources, like it never existed.
I started asking around and found out the executives found out about several exchanges going under and taking millions of people's money and how blockchain was more of a solution in search of a problem. That combination became too toxic for them to invest and be associated with.
Outside of cash there needs to be a viable method to do anonymous transactions- be it illegal or not. I don’t think crypto is going away for this reason alone.
Cash is backed by the military force and economic heft of the country issuing it. For an alternative to exist, it must first and foremost be able to hold its value reliably and that is precisely the niche filled by gold.
It can and that's what it exactly does by keeping its value outside the reach of external influences such as military forces and economic decisions by a handful of people but only governed by its own mathematical law.
It's just that people don't understand the nature of crypto but only see it as a new risk asset class which is disappointing after its 13 years of existence and it's the only reason it's going up and down massively by people not having the fundamental belief of what it's actually about.
> It never had a real use outside of scamming people and buying illegal shit
HashCash was invented to make spam expensive and save email.
> Everyone was yelling at people to hold. Don't spend it, it will go to the moon!
No, most of us "in the community" were having fun buying pizzas with it. The vast majority of the people involved early started for the features it unlocked, we didn't foresee being able to ride it to riches like this because nobody could picture our families using it or putting money into it. We thought it would remain a protocol-level thing.
> And sure it keeps your money away from the spooky scary government.
Horses for courses. I like having some "untraceable" internet money for buying things overseas, like servers, etc. If I wanted to have posters put up in Moscow I could find and pay someone in BTC but not from USD.
> But I prefer my government insured bank account using a government managed currency and recourse for any scams/hacks that might happen to me.
Generally, yes. Modulo inflation, "haircuts", forced confiscation, looking suspicious because you have too much money, etc.
No, There is no entity to bail out corrupted, centralized crypto exchanges. The philosophy is that what doesn't kill you makes you just stronger. So, Crypto will come back stronger than ever. Nothing is too big to fail in crypto, unlike cancerous financial institutions in the current system
I was speaking more to the naysayers calling for the death of crypto every time prices dropped significantly over the last 13 years or so, nevermind the fact that crypto hasn't failed as of now.
Meta is looking rough, and if we're to go by the definition of failure that media and others are applying to crypto rn, then Meta is a failure, though it isnt.
1. Biggest pushers are seemingly tech-bros from FANG companies. These companies are laying off staff in record numbers. The biggest cryptocoin believers therefore, will have less income than ever before (in ~3 months or so, after their severance is paid, they'll have to start drawing on savings if they didn't get a job yet... and getting a job in this economy is going to be harder)
2. Fed Rate hikes. Cryptocoins and stablecoins (especially "staking" concepts) were rationally attractive when your savings account returned 0% and when Treasury Bonds were 0.1% to 1.5%. A risky yield-earning instrument may have been... erm... risky, but it seemed like even with the risks you'd beat a savings account. Today, HYSA savings accounts are 3% and the St. Louis Fed President argues they're going to 5%. Its a much more difficult to sell yield-making instruments (such as "staking" Ethereum) when the "safe" risk-free rate is at 5%.
3. Inflation. Instead of being a hedge on inflation, cryptocoins collapsed in the face of it. There are still inflation worries in the economy.
4. Mainstream awareness. Earlier this year, Cryptocoins bombarded the typical normie with advertisements. Matt Daemon said "Fortune favors the bold" for Crypto.com. FTX had Larry David do ads for them. FTX bought out the Miami Heat stadium naming rights. NFTs were on talk-shows, being shilled by Jimmy Fallon and Paris Hilton. Cryptocoin's era of growth is over, everyone is now "aware" of cryptocoins and adjacently NFTs. Entering the public consciousness only happens once, from now and forever more, people are "aware" of cryptocoins and have formed opinions on it. It will not happen again.
5. Scammy reputation. The Celsius and FTX bankruptcies are in the public consciousness. (See #4: for many people, FTX was the public face of cryptocoins thanks to their superbowl ads). That these institutions couldn't even last 1 year after their commercial will forever damage cryptocoin reputation. Sure, Mt. Gox had similar issues back in 2014, but Mt. Gox didn't buy the naming rights to a stadium or host Superbowl commercials.
Seeing cryptocoins grow under these circumstances seems like a longshot to me.
The 'risk' is that the developers don't successfully implement withdrawal or that the whole network goes down. Two, imho, huge risks and part of the reason I don't personally stake at this time. That said, eip-1559 and 'the merge' did happen, without much of a hitch at all, which are pretty major accomplishments. Confidence in the developers is a bit higher now as a result.
Care to comment on the Ethereum Foundation now removing all reference to a date in which “staked” ETH can be withdrawn? Or perhaps commenting on the fact that to become a validator requires 23 ETH, or approximately $28,000 of upfront investment that cannot be withdrawn in order to achieve your stated yield?
Indeed. It should be noted that the Fed Rate / Risk Free Rate / Overnight lending rate is... well... overnight lending. Its the rate you get for a 1-day loan for tomorrow.
Its about as risk-free as you can get. So when the Fed Rate goes from 3% to 3.75% or whatever (for overnight loans), all other loans (ie: riskier 6-month, or 12-month, or 10-year, etc. etc.) have to go up in yields to compensate.
-------
Its difficult to compare Ethereum "staking" with traditional finance, because traditional finance has much better guarantees. My SWVXX and VMFXX money at 3.6% can be withdrawn (or deposited) at 5pm every business day. Its extremely liquid, far more so than Ethereum staking.
Further adding to the complications, Coinbase allows you to trade cbETH (wrapped Ethereum), which is Ethereum that has been staked at Coinbase. Its not entirely clear when cbETH can be withdrawn and turned back into ETH.
These tokens have also been trading at discounts to ETH if you want to just buy and hold the token, which should eventually reach parity to ETH. That can also be an additional gain, but incurs additional risk.
When I'm talking Fed Rate, its _OVERNIGHT LENDING_. Its not "eventually reach parity with dollar", its "this will turn into a real dollar tomorrow". Its a loan that is as safe as you can possibly get.
You're trying to compare Ethereum staking with the Fed's overnight lending. The risk/reward structures at play here are completely different.
The Fed Rate is the shortest, and safest, loan in the entire marketplace. Ethereum staking is kinda similar in some respects (as a yield granted by the "Ethereum system" itself, its kinda sorta like a central bank rate), but it... really isn't. Because it has an ill-specified withdrawal time.
> You're trying to compare Ethereum staking with the Fed's overnight lending.
I don't know how you're drawing that conclusion from my comment.
I am responding to your comment about coinbase and suggesting that they aren't the only product on the market. I also wanted to point out the fact that there are other actually liquid solutions to eth staking.
The coinbase product is more like staking as a service, but centralized, and not recommended.
> 3. Inflation. Instead of being a hedge on inflation, cryptocoins collapsed in the face of it.
I don't disagree with the other points but... That one remains to be seen. Bitcoin was precisely created as a gigantic middle finger to the central bank's endless money printing to bail out the financial system. That's the message in the genesis block ("Chancellor on the brink of second bank bail out": it's as political as it gets). The early adopters, before the poker players (Bitcoin was used to facilitate players-to-players transfer on poker sites before Silkroad and drugs where I thing IIRC), were libertarians and anarchists fed up with the FED.
This hasn't changed, so far. There are only going to ever be 21 million Bitcoin. Ethereum, at the moment, is deflationary (more ETHs are burned than created through proof-of-stake).
You get, what, 5% on your USD: great. But real inflation is, say, 12%. So that's still 7% down.
There's a price at which people are going to enter BTC and Ethereum with the promise that it won't be inflated to death.
Many may not like it. "Inflation in the two digits, good!. Helicopter Ben: savior of the economy. Bank bail outs mutualizing losses: perfection by our beloved state!".
But there are still people out there who see the value in something that cannot be printed at will.
I'd say especially so when the FTX and Tether of this world, at times in bed with officials, are printing at will their worthless token and dumping them on retail with the blessing of the New York Times.
> There are still inflation worries in the economy.
Precisely.
I'm certainly not keeping all my life savings in cryptocurrencies. I was all in cash after the war in Ukraine started and I'm certainly enjoying the firesales on many stocks right now (Stanley, Makita, ASML, Intel, 3M and a shitload of stocks I handpicked are totally on sale: it was time to sale when everybody was yelling "TINA" and the war in Ukraine started and it's time to buy now that everybody is yelling "falling knifes, it may fall another 90%"... Yeah, sure. If all the companies I handpicked are falling 90% more, I'll load up the truck and retire in a fancy yacht in a few years).
But this entire USDT/FTX scam (with the blessing of the SEC and CFTC), these shitty tokens created out of SBF's farts (sorry but it's how it is) and these centralized exchanges makes me want to go bullish on BTC / ETH. I'm waiting for tether to go bust to go in bigger.
Many hate it here: BTC may not be worth much but "your keys your coins" and as long as it's not totally outlawed, nobody is going to prevent me from storing BTC (mo matter their value) on a hardware wallet.
And f--k fractional reserve banking, f--k bail-ins (Cyprus), f--k the vicious states stealing people's money (Spain, where banks offered crazy return rates to their customers then defaulted on the principal) and certainly f--k mutualized bank bailouts.
I have zero confidence in USD / EUR. I have zero confidence in banks. I believe in stocks and, yes, in BTC and ETH on my own hardware wallet.
> You get, what, 5% on your USD: great. But real inflation is, say, 12%. So that's still 7% down.
Sure. But lets say you put $100,000 into BTC last year, exactly 1-year ago. BTC's price on Nov 17, 2021 was $60,3xx or so. So you'd have 1.66 BTC. Today, that BTC is worth $16,650 or so. Or $27,639
Then, real inflation is... I don't think 12% but I don't feel like arguing. So I'll use your numbers. According to your 12% inflation number, you're at $24322.32 in 2021 dollars.
That is to say, if I stuck with US Dollars, I'd largely have most of my money. If you used BTC, you'd have lost most of your money.
---------
We've had the big inflation event that the BTC community was "hoping" for for years. And BTC *FAILED* the test. Everyone who bet on an "inflation hedge" lost most of their money.
> I was all in cash after the war in Ukraine started
I bought oil. An oldie but a goodie strategy. Wars need oil, and Ukraine/Russia have substantial oil trade, so I knew that oil prices would rise.
Also, because oil is a huge component of inflation, its... like... actually an inflation hedge? (EDIT: I guess others could have bought food futures, like grain and/or corn, given the huge amount of Farmland in Ukraine that's been hampered by the war, plus also as an inflation hedge since Food is another major component of inflation. That would have done well too)
>Bitcoin was precisely created as a gigantic middle finger to the central bank's endless money printing to bail out the financial system
If the Fed ran the dollar like Bitcoin the US economy would disappear and be replaced by speculators. If anything it proves that the concept of combining both the medium of exchange store of value function into one currency is a massive failure in either direction.
If people were rational then countries like Argentina could have abolished inflation and deflation by separating the medium of exchange and store of value functions.by now but since people love inflation and deflation so much they get what they deserve.
Some great content there. Randomly clicked at one reportedly from 2011[1]:
>Beyond the most hardcore users, skepticism has only increased. Nobel Prize-winning economist Paul Krugman wrote that the currency’s tendency to fluctuate has encouraged hoarding. Stefan Brands, a former ecash consultant and digital currency pioneer, calls bitcoin “clever” and is loath to bash it but believes it’s fundamentally structured like “a pyramid scheme” that rewards early adopters.
They were correct on both counts. Since then, proponents have simply stopped trying to sell it as a currency (buy your games in bitcoin! pay your rent in bitcoin! -- that was the initial pitch), and its pyramid scheme structure has only been exploited, not fixed.
It will continue to fall under increased scrutiny and market regulation until it's no longer profitable to run any kind of financial system on it.
There will still be believers and people who will throw money at it and try.
But I think they will have a harder time convincing investors going forward.
I suspect it will end up mirroring the MLM market: still there, still profitable for a few, but depends largely on an uninformed base of people getting roped in by their friends and relatives who are already caught up in it.
> Moreover, sceptics should acknowledge that nobody can predict which innovations will bear fruit and which will not. People should be free to devote time and money to fusion power, airships, the metaverse and a host of other technologies that may never come good. Crypto is no different. As the virtual economy develops, useful decentralised applications may yet appear—who knows? The underlying technology continues to improve.
> Instead of over-regulating or stamping out crypto, regulators should be guided by two principles. One is to ensure that theft and fraud are minimised, as with any financial activity. The other is to keep the mainstream financial system insulated from further crypto-ructions.
I know people knock the Economist for pretty superficial analysis, but honestly appreciate their level-headed take here.
It's not level-headed. They've started with the classical Economist premise: gov regulation bad. Then rather than understand or research cypto, they contrast lies told by charlatans against an unmentioned "sceptical" reality. They then conclude with their premise.
This is an exercise in pure ideology, conveys no information, and presents the scam sales-pitch around crypto entirely verbatim.
It is that most common of trap that classical liberals fall into, defending private forces of unfreedom on the basis that they underpin the "free" market. What a bleak picture, and as a defender of free markets, a betray of that world view.
Freedom, as a contingent property of markets, is a careful and precious thing. It requires us to be on the guard against a variety of feudal forces, the pinnace of which could be nothing other than crypto.
Here, The Economist, on the basis of classical liberalism, advocates for a feudalist scam. It's quite saddening.
> The disappointment is that, 14 years after the Bitcoin blockchain was invented, little of this promise has been realised. Crypto’s frenzy drew in talent from bright graduates to Wall Street professionals, and capital from vc firms, sovereign-wealth and pension funds. Vast quantities of money, time, talent and energy have been used to build what amount to virtual casinos. Efficient, decentralised versions of mainstream financial functions, such as currency exchanges and lending, exist. But many consumers, fearful of losing their money, do not trust them. Instead they are used to speculate on unstable tokens. Money-launderers, sanctions-dodgers and scammers abound.
Here's the thing: Bitcoin doesn't need you, Mr. Entrepreneur. It doesn't need your black turtleneck savant charisma. It doesn't need your ambition. It doesn't need your "innovation." It doesn't need your groveling before regulators to build your moat. And most of all, it doesn't need your VC money.
This is a problem for said entrepreneurs and VCs. Because they have turtlenecks beanbags, money, innovation, and groveling just burning holes in their collective pockets - waiting to find an outlet.
But it turns out that "crypto" and "DeFi" do need Mr. Entrepreneur and his merry band of VCs. A lot. Why? Because these are efforts to replicate the existing financial system on the sandy foundation of "blockchain." And that's an expensive business.
Toss in the loosest monetary policy in US history and the recipe is complete. A quorum of charismatic entrepreneurs fleecing gullible VCs and depositors out of fake wealth, tossing it into a big pile, dousing with a liberal quantity of gasoline, and setting the entire thing ablaze.
This may or may not be the end of "crypto," but Bitcoin continues to operate just as before - without the need for exchanges, regulators, entrepreneurs, financiers, or visionaries.
Here's the thing: the public doesn't need Bitcoin. The public needs quite a few of the services and functions that the existing financial system provides. Bitcoin on its own is unable to provide many / most of these.
The last handful of True Believers can shuffle Bitcoin among themselves indefinitely, this is true. But does that have any more significance to the world than a multiplayer game someone creates for only them and their friends to play, handing game items back and forth among themselves?
> This may or may not be the end of "crypto," but Bitcoin continues to operate just as before - without the need for exchanges, regulators, entrepreneurs, financiers, or visionaries.
Bitcoin absolutely needs exchanges. Sure, it's a self contained decentralized system that could keep churning along without needing anything but computation and the internet, but the day you can't exchange btc for fiat is the day bitcoin goes back to 2010, when it was a curiosity that isn't useful for much of anything. The only reason crypto is interesting to anyone except the most true of true believers is that you can exchange it for real money. What is the point of it without exchanges?
The point is that exchange of bitcoin for goods and services is possible without trusted third parties. Whether you approve of what is being traded is a separate question.
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[ 3.1 ms ] story [ 293 ms ] thread(Although in this case I wish the answer would be yes)
I think we hit a paradox.
So no, it is not the end of crypto, no matter how many scams, rug-pulls, bans, etc, etc.
Sorry to burst the bubble and to give the answer you didn't want to hear, especially for those who have been begging for its end after 14+ years for it to all be banned and to be 100% totally shutdown.
Crypto is here to stay.
Some difference in unimportant details.
The central feature is the vector for scam delivery!
BTC has held above $16k, which is really saying something considering the circumstances.
Heck, Mt. Gox hasn't even paid out yet!
Crypto is dead until your neighbor that is dumber than you starts getting richer than you, again!
I don't know, my BTC is still worth one BTC.
What inflation? 1 USD is still 1 USD.
They repeat the same scam-artist lies, crypto is somehow an innovation in "trust", somehow more "efficient" than existing infrastructure, somehow "smart contracts" are more reliable than actual contracts. Things "become possible".
How can an article like this, at the moment the Emporer's clothes start to fall off, be written? By the economist.
It is just as-if homeopathy falls away and The Lancest is still interested in "innovations in water science"! This is, in my view, genuinely unconscionable.
The problems blockchains solves are highly academic csci issues around "trust" and "programming" in absurdly distributed systems. They have nothing to do with trust, risk, contracts, ownership or rights in anything like an economic, political or moral sense.
Repeating these lies now is such an awful betrayal of their obligations to their readers. They should be the ones informing the public on the actual economic meaning of these terms, and not participating in trying to keep the flame of these pyramid schemes alive.
EDIT: since the article is paywalled, consider the following quote:
> Amid the wreckage of the past week, it is worth remembering the technology’s underlying potential. Conventional banking requires a vast infrastructure to maintain trust between strangers. This is expensive and is often captured by insiders who take a cut. Public blockchains, by contrast, are built on a network of computers, making their transactions transparent and, in theory, trustworthy. Interoperable, open-source functions can be built on top of them, including self-executing smart contracts that are guaranteed to function as written. A system of tokens, and rules governing them, can collectively offer a clever way to incentivise open-source contributors. And arrangements that would be expensive or impractical to enforce in the real world become possible—allowing artists to retain a stake in the profits from the resale of their digital works, for instance.
For this to appear in a serious article on crypto outside of the scamming community is outrageous. The economist here is repeating a fraud.
Why would they like cryptocurrency in any way, unless the Bank of England had monopolistic control over it?
I'm angry that they're repeating pro-cypto ideology. If you read the article, they do not want gov control. They want the scams to play out.
I expect better from the economist. It shares a readership with the FT, and the FT has not fallen victim to this hysteria.
> The problems blockchains solves are highly academic csci issues around "trust" and "programming" in absurdly distributed systems. They have nothing to do with trust, risk, contracts, ownership or rights in anything like an economic, political or moral sense.
It's hard to understand what you mean here. The whole innovation behind Bitcoin is to eliminate the need for trust in a centralized entity. This is not controversial at all and claiming otherwise, or even worse, that it's a "lie", deserves some elaboration...
Err, nope. That's the scam.
A blockchain is a kind of database which requires no single machine to be nominated as the single-source-of-truth. that's it.
This has nothing to do with centralisation, power, trust, or anything of that kind.
The sense of "centralisation" in blockchain means computer network centralisation, as in how one connects databases. And "trust" in the sense that entries in that database are "reliable" in some academic sense.
This has absolutely nothing to do with eliminating the need for "trust in centralised entities" -- such a claim is not only absurd, but the premise of a scam. A scam which continues to be perpetrated. And this article participates.
PS: When people say that Bitcoin is decentralized, they also mean it in the colloquial sense, not only in the CS academic jargon. Entities like PayPal or the Federal Reserve Bank are centralized and require trust. They have to be run by trusted people. In contrast, Bitcoin isn't run by anyone. It is governed by a protocol which is mostly set in stone. No centralized party can suddenly decide to "print" more Bitcoin or freeze accounts. This is what people mean.
But in any case, what is "using" bitcoin?
Is it purchasing bitcoin? ...how do I do that? I'd need to rely on the two mining companies, right? And the exchanges? Or not?
And can I use bitcoin as currency in any shop? No? If I could, I'd be relying on the state to provide the same rights behind all economic transactions to enable, that right?
And what happens if the handful of "wales" decide to off-load their coins in the middle of my negotiation when I'm buying my tesla... suddenly, all my deflationary currency has been magically radically inflated by a cabal of SV billionaires.
Money isnt the kind of thing that "centralisation" even applies to in any coherent sense. If BTC is suppose to be money, then it's supposed to be a system for book-keeping aggregate promises across the global collective of human beings.
The value of money, it's "use" in any sense, is subject to provision of economic systems by central authorities, and subject to wild forces of decentralisation and centralisation.
The networking sense of "centralisation" which applies to blockchain is a pun. It's irrelevant. It has nothing to do with any of this. It could be called, "wide-broadcast machine signalling"
> Is it purchasing bitcoin? ...how do I do that? I'd need to rely on the two mining companies, right? And the exchanges? Or not?
Transacting on the Bitcoin network: sending BTC from one party to another. There are more than two mining companies, otherwise Bitcoin's security model fails (see 51% attack). Of course, centralized exchanges are... centralized.
> And can I use bitcoin as currency in any shop? No? If I could, I'd be relying on the state to provide the same rights behind all economic transactions to enable, that right?
When people say that Bitcoin doesn't require trust, they don't mean that nothing requires trust anymore. They just mean that they don't have to trust a centralized party to run the Bitcoin network, because there is no such entity.
Beyond that, you indeed still need to trust the people you transact with or trust that you will be able to sue them if they scam you, etc.
> And what happens if the handful of "wales" decide to off-load their coins in the middle of my negotiation when I'm buying my tesla... suddenly, all my deflationary currency has been magically radically inflated by a cabal of SV billionaires.
Yes.
> Money isnt the kind of thing that "centralisation" even applies to in any coherent sense.
Yes it is. Even before Bitcoin, (de)centralization was used to contrast fiat money vs commodity money.
> The value of money, it's "use" in any sense, is subject to provision of economic systems by central authorities, and subject to wild forces of decentralisation and centralisation.
Yes. There is a risk that the use of Bitcoin could be outlawed by some governments, although it would be difficult to enforce in practice.
The sound of rain falling is neither "centralised" nor "decentralised". It isnt the kind of thing which could be either *in the relevant sense of the word*.
When we talk about centralisation in economics and politics we arent talking about where databases are.
Bitcoin is as centralised *a system* as any which exist, and much much more so than paper money.
This idea that you can send a signal betweeen two machines you own and make some changes to your wallet is a gross misdirection.
That has nothing to do with any of the value props of crypto. It has no economic or political meaning. It's purely a technical property of the technology.
Concede would mean that I changed my mind. I didn't. You said some true things but which are irrelevant to your original claim.
> When we talk about centralisation in economics and politics we arent talking about where databases are.
Perfectly agree (as I thought I had made abundantly clear in my previous comments). I'm sure for example that Paypal has databases all over the world and yet it is not "decentralized" in this context (in the economical/political sense).
Centralization in this context refers to who is in charge. A centralized economy is one that is managed by centralized planners. A central bank has central bankers in control. Paypal has executives in control. There is no centralized entity that controls Bitcoin.
The state has not taken any view, yet, on who should have such a monopoly on crypto; but they can. Defacto monopolies exist in the form of the two mining companies.
This is all extrinsic to crypto.
Likewise, literally printing paper money is "decentralised". There's nothing about the present technology of "fiat" money any more or less "decentralised".
What you're talking about is how the state grants monopolies. And, as far as that's concerned, crypto will not fair well in that regard -- not at all!
The 51% attack vulnerability is a well-known risk. It was described in Satoshi Nakamoto's white paper. In practice, it is highly unlikely due to many reasons which I won't elaborate here but I there's a lot of material about it online.
As long as there is more than one government, no one government can take control over Bitcoin. They can possibly outlaw its use within their own borders (with difficulty).
I can't read the article through the paywall to read any clarification on these points, but some of what you mentioned in that list above is arguably true.
* Say what you will about crypto, but it is an unbelievable accounting invention and innovation in trust. Crypto the technology is distinct from centralized exchanges.
* In terms of electricity usage and transaction speed, most crypto might not be very efficient (yet), but what efficiency are they talking about? If crypto-adoption can replace many bankers and finance employees because the network automatically does a lot of their day-to-day tasks, then there's an argument that crypto is highly efficient in some areas.
* Are smart contracts more reliable than traditional contracts? Well, that's highly debatable: you have the existing legal system that can sometimes be used to enforce contracts, but not always. But if the conditions of a smart contract are met, there's probably no conceivable force on Earth short of either a gargantuan cyberattack or the electricity going down network-wide that can stop it from executing. Sure, you might argue that smart contracts have numerous potential flaws (unreliable data, bugs in the contract, no possibility of rollback, etc) but there are good counterpoints, improvements in these areas, and some similar flaws in existing contracts. For instance: people intentionally cheat on traditional contracts all of the time and just dare others to sue: that's much harder with smart contracts that automatically execute once the agreed upon conditions are met.
FTX was the antithesis of cryptocurrency; it was a centralised exchange, that was also trying to become a bank, and was AFAICT trying to kill DeFi [0].
The failure/success of FTX has no relation to the soundness of cryptocurrency. I do however hope that this crash means fewer people will speculate on the prices such that it can finally stabilise a bit (and be useful without using stablecoins).
[0] https://www.coindesk.com/policy/2022/11/15/the-sbf-bill-what...
No true scotsman. "The USSR wasn't real communism."
What cryptocurrency could be or should be in an ideal world is irrelevant. If cryptocurrency fails to live up to its ideals, it may be because these ideals are impossible to fulfill. That could be due to technological limitations, human nature, or something else. And in this case, we have no choice but to judge crypto for what it looks like in the world of today.
What matters is what cryptocurrency looks like in practice. And that is FTX, Mt Gox, Three Arrows, and others.
Crypto isn't sound enough to have mass adoption.
The USSR was real communism. And FTX is crypto principles at work.
Bitcoin is slower than all this and violently fluctuates which loses people's money quickly. People also need to pay their bills in fiat anyway so whoever is receiving the Bitcoin needs to cash out to fiat anyway.
At that point you might as well just use fiat instead.
I did this dance at least 100 times and never ever had a problem with price fluctuation. Bitcoin is pretty stable on a 3-day timeframe.
Just obtaining Bitcoin is expensive unless you have a high trust off-chain method to prevent double-spending.
If the article is correct about "practicurrency", then you're responding to someone saying that it won't affect "decencurrency". One of them is indeed not a Scotsman. All you're saying is that the word has more than one definition for two wildly different things.
People here did not own any crypto. It's a simple fact, not some nebulous idea of what is or isn't communism. People gave money to fraudsters, who said "give us money and we'll hold crypto on your behalf", but FTX didn't actually have that crypto. They just ran with the money.
Here is actual projects that are implemented in a blockchain:
- A exchange, e.g. Uniswap: https://uniswap.org/
Here is a smart contract that executes its transactions: https://etherscan.io/address/0x68b3465833fb72a70ecdf485e0e4c...
You can see the transactions live. You can see the code that runs this exchange: https://etherscan.io/address/0x68b3465833fb72a70ecdf485e0e4c...
- Lending and borrowing, e.g. Aave: https://aave.com/
- Decentralized staking, e.g. RocketPool: https://rocketpool.net ...
Nothing of this has failed. It's working 24/7 without maintenance windows. Everything is on-chain, publicly verifiable, automated and involves no humans.
If you want a really great learning aid, search for "Island of Yap Blockchain" and read any of the million articles about it.
Just like with general computer use, after a certain point people can’t blame the user experience on their own incompetence
Like it or not, this is the cryptocurrency ecosystem, and it has everything to do with cryptocurrency being an unregulated wild west of dodgy finance, scams and fraud. Cryptocurrency has enabled this stuff.
You might not like that this is where it's gone, but it is a direct consequence of the ideals of unregulated 'money'. The scammers and the chancers move in, because why wouldn't they? Create a system that is resistant to regulation and open to so much exploitation and they will exploit.
The problem with hoping for stable valuations is that very, very few people are interested in that, because they can't get rich off it. I too hope that all of this crap dies and cryptocurrency goes back to being a handful of cypherpunks swapping tokens around, because at that point the great ripoff and fraud on the general public will have come to an end.
Let's regulate all this the fuck out of existence. Sounds like everyone will be happy.
thesis-antithesis-synthesis
The scam here is, at first, ideological. There's a techbro-libertarian wordplay taking place which must be exposed. The blockchain has nothing to offer "trust", "contracts", "rights", "rewards". Nothing.
And much worse than this, it makes all of the existing problems with these "in western society" worse.
What every single major "crypto" project exposes is the radical disconnect between building functioning social economic institutions and programming "on the chain".
ie., what their collapse shows is that the emporer has no clothes.
When this sinks in, that all we were ever talking about is a stupid append-only log, *then*, hopefully everything else falls away.
As in, the homeopathic vial was only ever water, all along.
Nor do I understand anything at all about systems of power, accountability, the political intuitions of the state and the economy. I've no idea how central banks regulate the supply of money; i'm totally at a loss as to how trust in the ability for people to keep their promises is the guarantor of the value of money. I'm bamboozled by financial risk, and have no idea how productive economic systems create value by taking bets on economically productive activity.
Rather, I'm a rube. I've been told that when you plug computers together and copy-paste cryptographic ledgers then we can get rid of The Fed. So that's what I choose to believe.
I was playing the part of a crypto-advocate who doesnt know any of those things, and so thinks that a database is going to solve questions about the design of political and economic institutions.
It's a genuinely profoundly misinformed view, exploited by scammers. It's so egregiously misformed it's popularity is incomprehensible.
It's a lot like those on the far-left who think all world problems can be solved by taxing a few billionaires. An ideological fantasy.
Not really.
The narrative around crypto sells the idea of decentralization but doesn't deliver.
(1) Put money into anything and people will show up to try to get as much as they can. That is: money is a centralizing force.
(2) Crypto, the technology, doesn't have a mechanism in place to resist centralization -- one person or entity can own as much as they can get their hands on.
Just (1) and (2) means centralization is built-in to crypto.
There are some accelerants too, though:
(3) Crypto resists regulation. What people think of as the decentralized nature of crypto is actually about resisting intervention by external parties. Obviously, that can be good, but also lets people buy, sell, trade, borrow, accumulate crypto without limits.
(4) Crypto is confusing. I think this lets people believe the things about crypto they want to believe, leading the the wildly optimistic narratives around it.
As long as there is money in crypto, you will see the same thing keep happening: money goes in, crypto moves around, for a while everything seems to be following the narrative, then, suddenly, the money is gone, the crypto is gone or worthless and we have some more threads about it on HN.
Now it's that and a way to scam people of their life savings. I do hope it dies out, it should have been heavily regulated from the get go. Way too many people saw these high production commercials with their favorite celebrities they trust telling them to invest in crypto and lost everything.
It never had a real use outside of scamming people and buying illegal shit, no matter how hard others pushed to normalize crypto it never happened. And why would it? Everyone was yelling at people to hold. Don't spend it, it will go to the moon!
And sure it keeps your money away from the spooky scary government. But I prefer my government insured bank account using a government managed currency and recourse for any scams/hacks that might happen to me.
But I don't think it will ever die. Just like MLMS, pyramid schemes and other crap like that.
Also don't even get me started on these centralized exchanges where you don't even own your key and have to verify your identity (Which is how most users interacted with crypto). It's completely counter to the point of crypto.
In other words, could you elaborate?
Also I don't want to ban crypto. I want to crack down on these exchanges which encouraged everyone to gamble on crypto and lost a ton of people money.
That is because it is overwhelmingly used for standard non-shady stuff, like trading legal goods and services. Crypto can't make a similar claim.
> For example, illegal transactions, scams and gambling together make up less than 3% of volume.
I think that remains to be proven and I don't think it's anywhere near certain.
https://www.federalreserve.gov/faqs/currency_12770.htm
> We show that the vast majority of Bitcoin transactions between real entities are for trading and speculative purposes. Starting from 2015, 75% of the real bitcoin volume has been linked to exchanges or exchange-like entities such as on-line wallets, OTC desks, and large institutional traders.
So 75% of the transactions are just speculative trading, not transactions for goods or services, which is what is being discussed. Taking the paper's numbers at face value, as a percentage of non-speculative transactions, illicit transactions are 12%, which is quite high.
There are also papers which quantify the amount of illegal activity as high as 46% [1] in 2018.
Illicit activity is still probably the most durable use non-investment use-case for Bitcoin, and realistically will be the most enduring use case going forward.
1. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3102645
But remember that "illicit" also includes sending donations to protestors in Canada when the government froze their bank accounts, or sending payments to dissident organizations that have been blacklisted and denied banking services, etc.
We can also say that the primary use case of signal is "illicit" communication -- that is, attempts to skirt eavesdropping by various government security organizations, and this is why Signal received funding from the U.S. government - it was a device to assist in coordinating anti-government protests in nations the US wanted to oppose. For the same reason, the U.S. Navy created and funded Tor.
So this is a two way street -- the ability to send payments and securely communicate even if your government doesn't want you to do that is great when they are used to support dissidents in nations you oppose, but not so great when they are used for similar purposes at home, or when they are used for organized crime. Just because a technology's primary use case is "Illicit" doesn't mean it's not a valuable or useful technology.
In 2019, forex volume was $6.6T per day [2], or $1716T per year. Meanwhile global GDP was only $87.5T [3]. In other words, almost 95% of global currency volume is speculation. Why would anyone use currencies that are mainly used for speculation?
Both the traditional and crypto economies are reflections of human behavior, but because crypto is more transparent, you can see it for yourself. And a lot of people don't like what they see. But it's not a new problem nor unique to new currencies or technologies.
[1]: https://www.investopedia.com/articles/markets/032916/how-big...
[2]: https://www.financemagnates.com/institutional-forex/executio...
[3]: https://www.statista.com/statistics/268750/global-gross-dome...
Much of that trading volume, speculative or not supports the international trade of real goods and services and hedges currency risk for large international companies [1]. The same cannot be said of Bitcoin, which does provide the same utility.
https://www.federalreserve.gov/econres/notes/feds-notes/the-...
Much of that figure are payments for untaxed, but otherwise legal activities. On the other hand, crypto figures are straight up payments for illegal activities.
https://en.wikipedia.org/wiki/Gresham%27s_law
[1] And it's highly likely the CIA is still, in 2022, deeply tied in drug trafficking and drug money laundering.
That seems impossible given today's geopolitics. Crypto remittance at least works.
This may be true but the fact is there is no such agreement and therefore the friction remains. Crypto at least provides a universal low friction option to everyone with no need for disinterested political groups to spend precious time to take action.
Again, many countries around the globe don't have a functional government capable of produce such legislation _tomorrow_.
It will either become just as slow as the accursèd centralized fiat currencies, or it will be outright banned.
Any regulatory hurdles that cryptocurrency allows you to avoid for now, it won't for long. It is not, and cannot be, a long-term solution.
Point in case: Russia. Government has been trying to block everything they don't like for some ten years now I think. Controlling all the uplinks from the country is just not feasible (although they're working on buying everything out I believe), so it was in fact easier for them to make all the ISPs install some blocking equipment themselves, which works pretty poorly.
Many times they were successful, but they couldn't shut Telegram down for example. When TLS ECH is finally adopted it's basically game over for them.
Even China cannot block Github, because it would harm their economy too much. Chinese developers need to access Github (PyPi, NPM), or they are not productive. The global software industry is built on the top of Western science that relies of on freedom of information. Thus, they need to let free information to flow against the authorianship will.
https://en.wikipedia.org/wiki/Censorship_of_GitHub#China
UPD: that said, I agree that the Chinese Firewall is about as far as you can shut off the Internet in a modern country (at least without turning into another North Korea).
I think people who are doing the telling actually don't have guns; but are sitting atop a made-up hierarchy.
On the other hand, if it had been heavily regulated from the get-go, there would be tremendous pressure to bail it out now, so maybe it's for the best that it wasn't regulated by the government.
It would have been nice if there was a countervailing force to the billionaire-savior cults promoting it, but unfortunately our media environment promotes those ideas rather than combat them.
This isn’t true at all. The FTX collapse is more akin to something like Madoff’s Ponzi scheme, which was significantly larger and did not get a bailout.
The financial bailouts you’re comparing this to were mostly loans that were paid back with interest, which init equivalent to the government handing money over to compensate for someone’s fraud.
The idea behind the regulation would be to prevent these situations from becoming so large in the first place. FTX deliberately avoided locations with regulation so they could perpetuate their fraud. So, no, regulations in the US would not have impacted how FTX operated in the Bahamas nor would they have any interest in bailing out a foreign company.
Finally, regulation doesn’t cause bailouts. There’s no rule that says regulated industries get bailouts while unregulated industries don’t. You’re conflating two completely different topics and trying to pass them off as one in the same.
I agree that's the idea, but how do you identify a ponzi scheme via regulation before it is revealed as a ponzi scheme?
> Finally, regulation doesn’t cause bailouts. There’s no rule that says regulated industries get bailouts while unregulated industries don’t.
I didn't say cause. I said pressure. Yes, the auto industry received a big bailout in 2008 and the cruise industry during the pandemic. There were other pressures that made those happen, right or wrong.
Then bitcoin had its very first dip and it became unprofitable to mine bitcoins. When that happened he shuttered the website and kept everyone's bitcoins.
I knew of bitcoin early on due to this guy, but even then I had no interest and considered it bullshit. Then when I saw what this guy did it just solidified my opinion that it can't be trusted.
That's not to say that in theory there aren't uses for it, but it's 100% speculative and nothing else. People try to compare it to things like gold for protecting your money from inflation, but that's completely nonsensical.
If the value of gold crashes it still has an inherent value because it's a useful physical good (looking pretty is not the only application of gold). a bitcoin has ZERO inherent value. It's not possible for the value of gold to go to zero, but it's absolutely possible for the value of a bitcoin to go to zero.
crypto will never go away, but it absolutely should.
But the wealthy and connected will most certainly have their own way of getting around the system. Whether that means moving their money into physical assets, or onto the market, I don't know. I don't think cash is going to go away, but I do see the government incentivizing regular people to solely use CBDC, and once you're on that system, you are a serf.
Well, if that happens I hope they implement negative interest rates on them because that would end the need for surveillance and political corruption within a decade.
Then came the "Eternal September" where cryto went mainstream and many people started pitching this formerly niche project as a real investment vehicle. And people bought in thinking it was like any other investment. IMHO cyrpto itself isn't bad, it's all the people that pitched it like an old school investment vehicle.
There's always been an undercurrent of this stuff. The eternal September came years later, after big scams like Mt Gox had already long imploded.
> I knew of bitcoin early on due to this guy, but even then I had no interest and considered it bullshit. Then when I saw what this guy did it just solidified my opinion that it can't be trusted.
But isn't it instead an early lesson in "not your keys not your coin" maxim that Bitcoin advocates preach?
> If the value of gold crashes it still has an inherent value because it's a useful physical good (looking pretty is not the only application of gold). a bitcoin has ZERO inherent value.
Yes, but: 1) it's very difficult to self-custody gold (it's bulky, needs a safe place for storage — and if you put it in a bank, you need to be able to trust that you can get it out again); 2) it's very difficult to transfer, especially cross borders, especially in large amounts; 3) it's very difficult to use as an actual money, whereas bitcoin could conceivably be used as such (especially with Lightning).
If you want to purchase gold to protect your money from inflation (which you probably shouldn’t) then you probably buy it through some insured exchange—maybe even through your bank—that will keep it for you, if you don’t trust any exchange, that is your problem. If you need to transfer your money, or use it, then you’re not protecting it against inflation anymore are you? So you will just use regular money for that.
Anyway, you shouldn’t buy gold to protect your money from inflation. Instead you probably should just risk an inflation and keep your money in a savings account, or buy secure government bonds for it, or something.
I keep seeing this phrase crop up throughout the past several days of cryptocurrency news, and something always rubbed me the wrong way about it, but I couldn't put my finger on it until today.
It's demanding a change in human nature to accommodate the system, rather than changing the system to accommodate human nature.
It's really not that different than the people who, 15 years ago, were saying, "Well, of course your accounts got hacked, because you didn't create a separate 27-character totally random password for every single account you need, like I do, and never store those passwords anywhere except your head!"
People don't want to deal with a hardware token every single time they want to do anything with their money...and the only reason they have to, with cryptocurrency, is because its proponents think an unregulated "decentralized" financial system where the only law is code is a good idea. (Of course, it was never going to stay unregulated forever. None of the aspects of cryptocurrency that rely on the government not paying attention can last more than another few years.)
>"Well, of course your accounts got hacked, because you didn't create a separate 27-character totally random password for every single account you need, like I do, and never store those passwords anywhere except your head!"
The keys can be recorded as a seed phrase. Typically this is a sequence of dictionary words. Look into it before you dismiss it so flippantly. Things have come a long way to make things easier for the user. There are also dedicated hardware wallet devices for key storage.
If you're not transacting or conducting business with cryptocurrency, why do you care so much? It is literally none of your business. Nobody is forcing you to pay taxes or finance wars with BTC.
And "dedicated hardware wallet devices" are exactly the kind of thing that I'm talking about here. There is no way those are going to be appealing to mainstream users; thus, if cryptocurrency were ever to genuinely enter the mainstream, the vast, vast majority of users would be keeping their crypto on exchanges.
Y'know, exactly the way the vast, vast majority of people keep their money in regular bank accounts. Which don't require this kind of rigamarole, and never result in regular people (ie, not the very wealthy) losing money, because it's all regulated and insured by the government.
(Yes, I know FDIC insurance has a limit. The limit is high enough that regular people will never even have to care that it exists.)
There are a few more reasonable options here.
1) Create or advocate for a cryptocurrency with reversible transactions and all of the regulatory features you desire. Let the market decide how large that niche is.
2) Loosen or advocate for loosening the existing regulations on traditional financial products so that they are competitive with some of the features of cryptocurrency. See also, Zelle. Another product HN seemed to hate.
Yesterday someone was arguing that Peter Thiel is a super villain. Another full page of comments was decrying one of PayPal's policies necessitated by regulations. People are generally unhappy with PayPal's fee structure, but they continue to use it. The fees and draconian policies are largely required to comply with regulations. Want more personable human support? That also costs money.
The argument for regulating cryptocurrency is basically an argument for creating a captured and gatekept ecosystem. Of course, I get it. "Think of the children", "Think of the helpless normies", same story. What we will get instead will be more PayPals.
As for scams and outright Ponizis, it is worth noting that those go on under the watchful eye of the regulatory state you love so well. Bernie Madoff was similarly connected and even served on regulatory boards. SBF, the disgraced FTX head had direct connections to the SEC and chairman Gary Gensler. SBF even testified, asking for more regulation.
I'm doubtful, but still hopeful for the possibility of a good faith discussion. Regulation is not a pancea against fraud. Instead it creates an atmosphere were connected insiders can create greater frauds. The FTX debacle is illustrative of this. Yet here we are hearing the same appeals for more regulation from would be saviors of normies. Posters who themselves do not use cryptocurrency and insist that it has no legitimate use.
For myself I just wanted to run a few online games with payouts for players in cryptocurrency. Now players also want NFT character saves. I've never used a centralized exchange. I don't make big money in this niche. I do have fun. The community is happy. Nobody is crying about valuations. Actual users of cryptocurrency aren't saying, "There outta be a law!". None of my users are claiming, "If only there were a statist savior protecting us from this video game!" or, "This game would be so much better with barriers to entry for developers"
From that perspective, yes I do feel comfortable asking you and the rest of HN's passionate cryptocurrency haters to butt out. You could also go out and build a better alternative in the marketplace of ideas.
I'm not sure how you read my comment as elitist or utopian. All I'm asking here is that paternalists don't ruin it with saviorism, regulatory capture and gatekeeping.
>When something goes mainstream that gets lost.
Isn't this an elitist sentiment?
Our community has fun with people who aren't deep into tech at all. I started it with faucet rewards integrated into an io game. Anyone can install a wallet when transactions are free. Couldn't be further from what you're projecting.
Maybe not, but they have to regardless. Banks force this on users anyway (outside the USA). To pay for things I have to use either a chip card (token), or equivalent embedded in my phone (a token), or log in to e-banking using a chip card PIN pad (token) or my phone again, or auth an online CC tx with a phone app (token).
But no matter what I do the only way to move money around without invoking a hardware cryptographic token at some point, is use paper money and physical coins.
So this isn't really something new. Bitcoin was just ahead of the curve in this regard. Also, it's really hard for banks to reverse transactions outside of the USA. What makes bank money "safe" compared to crypto is simply that:
1. Governments will bail banks out because they're too big to fail. Of course you end up paying for it through inflation anyway.
2. Everything is KYCd/AMLd up the wazoo so even if money is drained from your account in the same way it could be for a cryptocurrency, the perps will find it much harder to evade capture.
None of that has any ethical or sociological consideration inbuilt. It's a simply observation of the system.
Anyway, yes, that means the system is bad. But this is an ethical and sociological consideration.
Slight nitpick, Total gold above the earth's surface is less than a cube with sides 25 metres each.
Copper is much more abundant, over 400x more copper than silver has been mined, but silver is almost as scarce as gold. It really seems like the price spread should be closer.
The value of gold is protected by the fact that the majority of it's holdings (at least, according to this[1]) aren't used for speculation. Still, a good chunk of them are, which means there can be pretty huge swings and it's considered a poor investment.
Have tried to say the inherent value of a dollar is because it's backed by the U.S. military, but fundamentally, it's the same reason. Dollars aren't held as speculative assets. The poor returns from the dollar are one of the reasons why people push other investments. If currency does enter into speculative territory, bad things can (and do) happen. See Hot Money[2].
Anything, even if it has inherent value, can be extremely dangerous when there's a large number of speculators. Because no matter the value, speculation can drive the price much, much higher. And it's a snowballing effect - the more an asset rises, the more people want to buy it for speculative reasons, and the more people buy it the more it rises.
And then any inherent value (if it even exists) looses significance - you're in a game of chicken with the other investors, trying to both hold on as long as you can and get out before everyone else does. The winner gets the fortune, the loser is left holding the bag.
The thing is, almost everyone in the crypto space seems interested in speculation. It might be speculation + decentralized voting rights or speculation + digital ownership, but speculation is always at the heart of it. The idea that if you get in early you'll be able to cash out for a big profit. Of course a space almost entirely driven by speculation is going to be inherently dangerous and unstable, and the "opportunities" are the same type as those of a casino.
[1] https://en.wikipedia.org/wiki/Gold_holdings [2] https://en.wikipedia.org/wiki/Hot_money
https://news.ycombinator.com/newsguidelines.html
But let me guess, if I press you on this I'm going to get banned in a week or so for such and such reason.
something something assume good faith?
Sure, but it always feels like the other person started it and did worse—so everybody always argues that.*
Let's assume you are right and the other person is wrong. Posting an unsubstantive snark is the worst way to respond. It poisons the atmosphere, evokes worse from others, and ultimately discredits your own position (which, if you're right, means you're discrediting the truth—and that hurts everyone**).
What you should do instead is one of the following:
(1) respectfully provide correct information, so we can all learn; or
(2) chalk it up to the internet being wrong about everything and just move on.
* https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
** https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
What's happened here is my assumption of good faith with a question got turned into a warning by the mod because they, themselves, did not assume good faith on my part.
So the question becomes, are those guidelines taken seriously by the moderators of this site or not?
If they are, then maybe admit to your error and lets all just move on.
Ironically, the sort of legalistic pleading you're resorting to is a sign of a lack of the good faith you're claiming. So is the style of your reply sequence: never admit or accept a thing, never address what the other person says, and simply bring up a new argument every time. These are troll tactics, whether you're using them that way intentionally or not (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...), and part of how we moderate HN is not to dance that way.
You jumped the gun and have caused more issues than you've avoided. Your warning was more about preparation to ban me than anything related to the actual conversation.
I get it. I understand. Just do it now if you're so inclined, it will save both our time.
Re the word 'troll', the link I provided points to a thwack of explanations of how precisely we use that word. It doesn't have to do with impugning someone's intent (which we have no way of knowing); it has to do with the effects that certain kinds of posts tend to have on the threads (which we have plenty of ways of knowing, as they are externally observable). I'm not accusing you, by implication or otherwise, of anything more than making such a post. That's why I asked you not to do that!
What exactly did he do that was a "strawman"? Why are you so angry? It was an interesting comment thread, and then you are acting as if persecuted by the other commenter and HN moderators.
I asked if they understood my actual point because I was never denying that gold had speculation, but that when that speculation collapses gold still has value due to it's application in the physical world.
They obviously misunderstood me.
This is why I'm sympathetic to those who say its ponzi scheme, it only has value because of new resources continuing to be poured into it.
but I'm in the middle of getting warned and moderated by dang for daring to ask such a question!
>if we turned off all bitcoin miners today, bitcoin would go to zero instantly
isn't true. You couldn't trade them normally with the miners off but you could start mining up the day after - it only takes a couple of computers really.
"Well yea you could do that change to tank the value, but imagine if you just undid it huh???"
The point was without mining entirely, there is no value
Once established, the idea is that transaction fees are used and the distributed nature of the network causes a natural competition to be the most efficient so miners can charge the lowest fees while making a profit.
So if we turn off all the bitcoin miners, it wouldn't be possible to transact. All you could do is look at it, like a read-only excel sheet.
We're very close to this threshold now, given what is happening now and during the next few weeks I would not be surprised if BTC is going below that threshold.
I think it's time to stash a few bottles of champagne.
As it becomes unprofitable miners stop, and the difficulty drops so that it becomes cheaper to mine, until it reaches an equilibrium
The protocol adjusts every 2016 blocks, if it takes longer than two weeks (20160 minutes) to mine the 2016 blocks then the difficulty decreases, if it takes less than two weeks to mine 2016 blocks then the difficulty increases.
In contrast, only speculators would notice bitcoin going offline. They might laugh at the guys who told them they weren’t going to make it but that’d be it. Nothing would break, nobody would be in line ahead of them failing to buy something, etc.
That matters because bitcoin’s floor value is zero: as a very weak fiat currency, the only reason to use it is when you think it’ll be profitable and if that confidence drops miners will stop putting more hard money into the system.
You can be mad that people paid $$$ for Beanie Babies but that does mean that there value is nothing.
There's a big difference between something like a Beanie Baby, which has a base value of whatever someone will pay for a toy (you're not getting rich, but it's not zero), a company whose shares convey fractional ownership of assets and an ongoing revenue stream, and a very weak fiat currency like Bitcoin which has value only to the degree to which your buyer believes they will be able to resell it at a profit.
With a strong fiat currency like the US dollar, that belief is anchored by the size of the related economy and the millions of people who are guaranteed to use USD to pay taxes and other government fees, sell goods and services to the government or be paid by it, and the millions of business relationships specified in dollars. Yes, that could change over time but it's not something which happens quickly except in disaster scenarios where the value of any currency is moot and you wouldn't be running Bitcoin miners in any case.
"Mining" in bitcoin means two different things, creating new coins AND adding transactions to the ledger. If mining reward went to 0 (which will actually happen someday), and new coins stopped being created, miners would still be able get a profit from transaction fees, although it wouldn't be "mining" in the same sense as gold.
Mining is bad for other reasons--it's a huge waste of resources when bitcoin is worth a lot of money.
You talk about this like this is an easy action with profound consequences. It's like saying If everyone killed themselves, there would be no people. This is trivially true, but it's not going to happen.
>(as its worthless without continuous resources being pumped into it).
All forms of transaction has some form of resources put into it. The quantity of resources is what is at issue here. Bitcoin does not need the massive quantity of resources it currently uses to operate. That is an artifact of the high value of Bitcoin coupled with the subsidy of the mining reward.
I'm not sure if the creator(s) of Bitcoin evaluated what kind of value a Bitcoin should have over time, The mining reward halving rate suggests that they were not expecting it to have a continual average rise above 20% per year (which makes sense because that would be insane). To date, however, it _has_ been averaging more than that, resulting in an increase in value of the mining reward relative to other currencies. Should the value drop or simply not increase for a extended period, the mining subsidy becomes less. Then only the most efficient miners can make money mining and the difficulty drops to a new equilibrium as the ones who can no longer make money drop out.
The price might go to zero, though. The price of oil, which is arguably more useful than gold, went negative a couple of years back. Having intrinsic value doesn't necessarily mean it is exchangeable, especially if it needs to be exchanged at a given moment in time.
Which could also be said about Bitcoin. I'm sure someone out there would find some kind of academic interest in looking at Bitcoins or enjoy collecting them. There might be almost no value in Bitcoin, but it would probably never erode completely.
Your scenario here is plot armor.
Sure, if we pretend that gold stops having ANY use outside of being pretty, then when it stops being considered pretty it's value will go to 0.
But the fact is, gold has a myriad of uses besides being pretty and those uses give it an inherent value.
And when you go to sell it, others' use of it is what sets the sell value, not your personal use of it. It doesn't matter that I'm not personally using it for conductivity if the person I'm selling it to is (or someone downstream of them is).
IOW, stop posting fiction.
I fail to see the purpose of this 'pilot amor'. There is no reason why gold would stop being useful beyond being pretty. This fiction you've come up with doesn't even make any sense and certainly has no relevance to the discussion.
However, that doesn't mean there is always a user available. When we saw the price of oil go negative there were still just as many uses for oil as there ever was, but for various reasons there weren't buyers in that moment. Gold is not immune to the same.
In case you are still confused, let me be clear: Price and value are not the same thing.
> IOW, stop posting fiction.
Sage advice.
I used the phrase 'inherent value' to describe what you're referring to as 'use value'. But of course someone decided they had to argue against it by arguing that the trade value between countries went negative at one point (which isn't all that surprising but has nothing to do with the original point).
arguably 'use value' is a better phrase, but given the surrounding explanations, the poster engaged in a clear strawman.
The point with oil is its extraction can't be stoped overnight, and thus has to be stored in case of excessive production, which has itself a cost.
Demand droped significantly when the lockdown occured ; storage facilities where saturated ; and oil was kept in oil tankers which are pretty expensive.
The negative price reflected the cost of storage.
There is no such issue with gold.
You can't use your regular intuition about commodity prices when talking about futures contracts. The negative price was a one-day event, and all it really represents is a higher-than-normal premium on the calendar spread.
See: https://www.marketwatch.com/story/oil-prices-went-negative-a...
A firearm is absolutely, 100% safe as long as no one ever interacts with it.
Because we are humans, in a society, and everything we do relies on human interactions, if Bitcoin (and crypto in general) cannot operate positively and effectively, except in theory, then it is the problem, regardless of the underlying reason.
I am not saying that is good.. I don't know. Tell me why it is bad. Thank you.
However, I don’t get how holding gold – which doesn’t generate dividends and therefore cannot benefit from compound interest – could be a good long term invest, compared to, say, an accumulating ETF.
No financial advice.
It's like saying that sausages are bad, and should go away from existence, because the dog ate them off the kitchen counter.
The real point is that if the value that isn't tied to its usefulness ever goes away, it still has value. bitcoins do not.
At which point I’d turn my miner off and wind the chain back to when I was rich on my private virtual island for one and live happily ever after.
It's just like gold. You give me your gold and I'll take it all right now, saving you from losing it incrementally or at a later date. Not your vault, not your bars. Theft-as-a-Service. /s
Gold has a special status because of how long we've mythologized it, but generally you'd be encouraged to invest/buy futures in things that impact your life and income directly. Your inputs and outputs.
If you produce food from fertilizer and power then those are your three important commodities. Gold isn't a great fit because you can't eat it, fertilize with it, or run a tractor on it. You have to do a gold-to-dollars transaction first which can waste a fair bit of the value.
If you forward packets and consume electricity to do so then holding gold also isn't economically relevant, but by trading proofs of work which were generated by burning electricity you track the value of your commodities and do so natively.
If we used HashCash (or similar) to solve the initial-contact problem then we'd be creating a secondary market in the proofs and they could be used as currency by a related ecosystem like hosting providers with little friction or risk.
Tulips didn't cause the problem, speculators (and scammers) did.
While those companies are not operated as some sort of common carrier of transactions crypto is essential for a free global society.
Apparently Trump of all people actually tried to make it so[0], but Biden seems to have taken it down.
[0]: https://archive.is/wrpvO
While I don't use it a lot anymore myself, I'm struggling to think of any service or product I use whose provider would not happily accept cash as payment. There are more than a couple of small restaurants here that only accept cash. My barber only accepts cash.
That kind of shit gives the scams a legitimacy they can't buy otherwise.
Thank god we haven't gotten to crypto for kids yet, but crypto bonuses on credit cards is getting very close.
FTFY. Nothing about this is exclusive to governments.
I like cryptocurrency as an open platform. I don't have a problem with the market clearing out the speculative mania. I do disagree with detractors who admit that they have no use for cryptocurrency demanding regulation. If you like regulated markets, stick to them. If you love the security of the petrodollar, good on you. Live and let live.
Can I just publish a few cryptogames without the obscene generalizations?
The worst part of this is that the entire FTX debacle comes on the heels of SBF demanding even more regulatory capture. Shades of Bernie Madoff. The insider connections to regulatory bodies and SEC board members. History repeats itself.
There's a bigger paradigm here that I believe few people understand and that I will desperate attempt to explain. I may be about to write a word salad, but here's hoping.
When the Internet was young, before e-commerce was a thing, it was a delightful space where you could publicly post your e-mail address and never worry about the repercussions. If you ran a server and a hacker gained access, it was on you to improve your security.
Eventually, commerce found the Internet and everything changed. Once money was involved, bad actors started to get involved. This is when we started to experience the delights of e-mail spam, a problem we never really fully solved. And something changed about how we handle those hackers. Now that money is involved, if a hacker gains access to your system, instead of being responsible for your own server you can just call the police. And wow, did they crack down on hackers in the early days. They were bad at catching them, but when they did the punishments were disproportionate. It made things safe enough for commerce to grow, but it didn't make us nor the Internet much "better" in the long run. Rather, it put us in a rut.
Compare that with introduction of Bitcoin - which was money from the moment it was created. Because Bitcoin was about money since the beginning, it also attracted those bad actors from the beginning. However, the Bitcoin paradigm is different. Instead of being connected to the existing financial system, it's a self-contained Internet-native system where the responsibility of security is put (to some degree) in the user's hands. But we users are a bit lazy, especially after being hand-fed dumbed-down UX for decades. That makes us vulnerable because we trust instead of verify. But Bitcoin teaches us to learn, to understand, and hopefully to be more responsible.
I believe that Bitcoin and it's derivative technologies have created something akin to a bug zapper. It attracts bad actors like nothing ever has before. And the only viable retort is to improve technology and educate - the opposite of the traditional system where we give the state a monopoly on violence and then ask them to fix it for us.
If you look over the history of cryptocurrency, you'll see a history of rising and falling value and popularity tied to hacks, exploits, crimes, scams, etc. Often, the news declares the end of the entire enterprise. Yet, each time, the scene not only comes back - it comes back stronger.
What I see is greed and wealth attempting to exploit Bitcoin the way the traditional system gets exploited - but always failing in the long run. And with each failure, the wealth in play gets absorbed into Bitcoin. Meanwhile, we continue to harden and improve Bitcoin and the ecosystem around it. In my mind, it's like a worm that is slowly eating the world's wealth through an ongoing interaction with bad actors. I do not believe it can nor should be stopped.
So this idea that crypto is inherently a scam is the result of scammers being drawn to crypto. It's easy for the public to believe this. But Bitcoin and things like it are, in my opinion, the medicine we need to move through this and on to something else.
And you're absolutely right. Bad actors use crypto to go to war with each other; the winner is always crypto. This time, with the FTX scandal, it's gone to places as high as the US Democratic Party. And you would think, "so now they'll just ban it." But it was designed to resist that; furthermore, when you are in the midst of a power struggle, which every government is, crypto is a loaded gun to scramble for - a way to avoid getting freezed out or silenced. The resulting internal dissent has helped to make crypto bans ineffectual everywhere they've been tried, globally.
But that said, I feel something is fundamentally lacking in our education system that people were convinced to put money into this shithole because Matt Damon or Tom Brady or Giselle Bundchen said it was a good idea. I mean, I have sympathy but part of me is like "Stupid is as stupid does". When celebrities started hawking crypto, it was the definite equivalent of "shoe shine boy giving stock tips" to me.
If you live in a country with a highly functional banking system and no kleptocracy, Bitcoin is probably a bit puzzling unless you have family in Cuba. But it’s not puzzling at all for those of us who live somewhere in the middle of the broad spectrum between Switzerland and Somalia, because most places have a little kleptocracy. Argentina is a stable democracy, far from being “a failed state,”† but if you want to send US$500 abroad via non-Bitcoin means it’s basically impossible, and the only broadly available savings vehicle is real estate (“ahorrar en ladrillos”), which of course grossly inflates real-estate prices, with a substantial part of the capital city occupied by empty apartments someone bought “as an investment”. Historically, Argentines have saved by buying dollars, but that’s limited to US$200 a month now, and then only if you have a non-under-the-table job (about a third of total employment is under the table):
<https://www.ambito.com/finanzas/dolares/cronologia-del-cepo-...>
Something like 300,000 people out of a country of 40 million are legally permitted to buy dollars.
You can see that in September 02019 when this measure was imposed the price of a dollar was AR$63.50; now it’s AR$305. So whatever savings you had in pesos in 02019 have lost 79% of their value to peso devaluation. In fact, whatever savings you had in pesos a week ago have lost 4%.
I’ve been using Bitcoin to get paid for several years at this point where I live here in Argentina. It’s currently 14 years after Bitcoin’s invention, and some people think it’s regressing instead of progressing. Well, 14 years after the internet’s invention was 01983; not only couldn’t you get so much as a weather report online, much less IRC, but many of the early interesting experiments like NLS at SRI had shut down, and more and more places were disabling guest access to their hosts—you couldn’t run so much as a game of ADVENT without getting a username. And a password. Things were seriously regressing. The only people you could talk to on the internet were other people who really bought into the subculture.
In 02001 a lot of Argentines had saved dollars in their dollar-denominated, "government insured" bank accounts. This did not preserve their savings through the financial crisis that year; the cash-strapped government limited withdrawals to a trickle, then converted dollar deposits to pesos at a one-to-one rate, then released the exchange-rate peg, at which point peso went overnight from being worth US$1 to being worth US$0.25 before settling at about US$0.31 for the next few years. The US did something similar in 01933. There was no recourse for this scam.
You might think alternatives to banks like credit unions would protect their customers better, since the customers are the owners, but Credicoop depositors suffered the same two-thirds confiscation of savings as depositors in for-profit banks. And they pay the same 3% tax on bank transactions including checks. That’s more than a fast Bitcoin transaction fee of US$15 for transactions over US$500.
But we’re not a failed state. There are no gangs of bandits roving the streets in Argentine cities (though there are some pretty bad slums where you’ll get robbed if you wander in without knowing anybody). Courts, free public hospitals, and roads continue to function, though there are more potholes than a couple years ago. Argentine infant mortality is 10 per 1000 live births, down from almost 20 in the late 01990s and the same as the late 01980s in the US; life expectancy ...
Totally. And it's not just about "stable countries".
People in Cyprus (except the russians, who were warned a few days before and had the time to move their funds) saw the money on their bank account used to do bank bail-ins. Probably a test to see how the population would react when the same would happen EU wise (as bank bail-ins are now, by law, mandatory in the EU for failing banks).
People in Spain were incentivized by the banks to put their savings into products yelding x% then the banks defaulted on the principal. That one's even more vicious than the Cyprus case.
The FED and ECB printed trillions for years and year... But we're to believe that saving confiscated through inflations are due to only to supply chain issue and to the war that started in Ukraine. Yeah. Sell me a bridge too please.
So far people in Spain and Cyprus who had put their money in BTC are still winning. Those who got their money confiscated by bail in and by bank-sold shady investments not so much.
We'll see.
The answer that I have experienced is that it is being sold to the poorly informed local speculator, who have banked their hopes and dreams of getting rich someday to buying Bitcoin. In that way, Bitcoin is actually stripping wealth from the global poor and draining it back to the wealthy ones.
Another important use case that I didn't mention is leaving the country to live somewhere better. Suppose you've saved up money in, to use examples I know something about, Argentina or Venezuela, and you've managed to do it in a form that doesn't evaporate due to inflation: US$100 bills, emeralds, gold, real estate. Now you want to move to Spain, Uruguay, or Mexico. Getting those savings safely out of the country with you is going to be very challenging indeed; Argentine customs has dogs that are trained to sniff out dollar bills, for example. (And of course in the case of real estate it's impossible.)
Again, maybe this is an example of "buying illegal shit": you aren't supposed to be able to escape these places with your life savings, because otherwise how can kleptocracy keep klepting? But obviously (at least to me) being able to take your savings with you makes the world a better place, even if it's illegal.
But it's definitely not "stripping wealth from the global poor and draining it back to the wealthy ones". The "heavily regulated", "government insured", "government managed" world banking system is what does that.
Maybe fleeing the country like this sounds like an extremely marginal, unimportant use case to you, but if so, that's probably because you don't know anybody from Cuba, Ecuador, or Venezuela. Not only are significant percentages of those countries' populations already living abroad, but even larger percentages of the people living there today depend on family members living abroad.
I don't know anything about Bangladesh. I've never been there and I don't know anyone from there very well. Maybe the situation is different there and Bangladeshi people only invest in Bitcoin because they think they'll get rich. What are your experiences there?
Edit to add: it seems like the relative ratio doesn't matter much for the scenarios you describe because it is much better than the swings in local currency compared to USD.
Also, because the US$ has itself lost about 10% of its value over that last year, the fall is even worse in real terms than in nominal terms, closer to 75%.
Over other periods of time, like the last two years or the last six months, this is not the case (that is, the peso has done worse than Bitcoin over those periods), and certainly anyone with savings in Bitcoin is hoping that a year from now it is at or near its current value, or even above it, rather than having fallen another 70% to US$4500. But it could. There is no guarantee, and my observation of periods of past Bitcoin volatility does not make me optimistic that scam artists will go away as a result.
There is no prospect that the peso will have equal or higher value a year from now; both the general dynamics of central-bank-controlled fiat currencies and the specific pathologies of Argentina militate strongly against it. The long-run expected value of the peso is zero — it's not a question of whether it will inflate over time, just how fast. Plausibly ruining the peso's usefulness as a unit of long-term account or a vehicle for savings is a worthwhile tradeoff for improving its usefulness as a medium of exchange; that opinion certainly has widespread acceptance among economists.
So clearly anyone who invests their savings in pesos will inherit the wind; it's possible that whoever invests their savings in Bitcoin will as well.
But maybe not.
Bitcoin is widely enough used to be a viable option. In Argentina, Tether is even more widely used. DAI and Rai aren't.
You think the "spooky scary government" is harmless? The US government has used its funds to kill over 20 million people since WWII without officially being at war. 90% of those killed in US drone strikes are bystanders.
Domestically, we see unrestrained corruption from nearly all of our elected officials leading to every outcome to its own citizens. Poisoned water supplies, missing disaster response, war. But as long as your bank account is insured, everything is cool?
Cryptocurrency was created for, and remains suitable for, valid uses that are not "drugs and other illegal stuff." But this is a new technology without guardrails. Bad actors are a problem. So is FUD from competition and disinformation like the parent.
This is a growing technology that requires a level of knowledge to safely use until it is mature enough for mass adoption.
Some anecdotal evidence to support what you're saying.
I work at a large health care company. When crypto and blockchain was getting popular, there was a huge push in the company to adopt blockchain and to a degree, crypto. I'm talking hour long presentations by blockchain companies, videos, and trainings. It was heralded as the dawning age of technology where people can be treated and pay in crypto, while at the same time, all their medical files being securely stored on the blockchain. They pushed it as the next step in 100% digitizing health care.
3 months later? It was dropped. Not just dropped, either. It was silenced throughout the entire company. The sharepoint sites promoting it internally were gone, the videos, presentations, and trainings were all scrubbed from the company sites and resources, like it never existed.
I started asking around and found out the executives found out about several exchanges going under and taking millions of people's money and how blockchain was more of a solution in search of a problem. That combination became too toxic for them to invest and be associated with.
Crypto will never fill that void.
It can and that's what it exactly does by keeping its value outside the reach of external influences such as military forces and economic decisions by a handful of people but only governed by its own mathematical law.
It's just that people don't understand the nature of crypto but only see it as a new risk asset class which is disappointing after its 13 years of existence and it's the only reason it's going up and down massively by people not having the fundamental belief of what it's actually about.
HashCash was invented to make spam expensive and save email.
> Everyone was yelling at people to hold. Don't spend it, it will go to the moon!
No, most of us "in the community" were having fun buying pizzas with it. The vast majority of the people involved early started for the features it unlocked, we didn't foresee being able to ride it to riches like this because nobody could picture our families using it or putting money into it. We thought it would remain a protocol-level thing.
> And sure it keeps your money away from the spooky scary government.
Horses for courses. I like having some "untraceable" internet money for buying things overseas, like servers, etc. If I wanted to have posters put up in Moscow I could find and pay someone in BTC but not from USD.
> But I prefer my government insured bank account using a government managed currency and recourse for any scams/hacks that might happen to me.
Generally, yes. Modulo inflation, "haircuts", forced confiscation, looking suspicious because you have too much money, etc.
A fool and his money…
So sick and tired of this absolute grift, it always 100% guaranteed ends in failure.
That’s really saying something!
I was speaking more to the naysayers calling for the death of crypto every time prices dropped significantly over the last 13 years or so, nevermind the fact that crypto hasn't failed as of now.
Meta is looking rough, and if we're to go by the definition of failure that media and others are applying to crypto rn, then Meta is a failure, though it isnt.
But this is one of the most pro-crypto articles I've ever read. It may as well be a submarine, in the PG sense.
1. Biggest pushers are seemingly tech-bros from FANG companies. These companies are laying off staff in record numbers. The biggest cryptocoin believers therefore, will have less income than ever before (in ~3 months or so, after their severance is paid, they'll have to start drawing on savings if they didn't get a job yet... and getting a job in this economy is going to be harder)
2. Fed Rate hikes. Cryptocoins and stablecoins (especially "staking" concepts) were rationally attractive when your savings account returned 0% and when Treasury Bonds were 0.1% to 1.5%. A risky yield-earning instrument may have been... erm... risky, but it seemed like even with the risks you'd beat a savings account. Today, HYSA savings accounts are 3% and the St. Louis Fed President argues they're going to 5%. Its a much more difficult to sell yield-making instruments (such as "staking" Ethereum) when the "safe" risk-free rate is at 5%.
3. Inflation. Instead of being a hedge on inflation, cryptocoins collapsed in the face of it. There are still inflation worries in the economy.
4. Mainstream awareness. Earlier this year, Cryptocoins bombarded the typical normie with advertisements. Matt Daemon said "Fortune favors the bold" for Crypto.com. FTX had Larry David do ads for them. FTX bought out the Miami Heat stadium naming rights. NFTs were on talk-shows, being shilled by Jimmy Fallon and Paris Hilton. Cryptocoin's era of growth is over, everyone is now "aware" of cryptocoins and adjacently NFTs. Entering the public consciousness only happens once, from now and forever more, people are "aware" of cryptocoins and have formed opinions on it. It will not happen again.
5. Scammy reputation. The Celsius and FTX bankruptcies are in the public consciousness. (See #4: for many people, FTX was the public face of cryptocoins thanks to their superbowl ads). That these institutions couldn't even last 1 year after their commercial will forever damage cryptocoin reputation. Sure, Mt. Gox had similar issues back in 2014, but Mt. Gox didn't buy the naming rights to a stadium or host Superbowl commercials.
Seeing cryptocoins grow under these circumstances seems like a longshot to me.
The 'risk' is that the developers don't successfully implement withdrawal or that the whole network goes down. Two, imho, huge risks and part of the reason I don't personally stake at this time. That said, eip-1559 and 'the merge' did happen, without much of a hitch at all, which are pretty major accomplishments. Confidence in the developers is a bit higher now as a result.
source: validator rewards section of https://ultrasound.money/
Its about as risk-free as you can get. So when the Fed Rate goes from 3% to 3.75% or whatever (for overnight loans), all other loans (ie: riskier 6-month, or 12-month, or 10-year, etc. etc.) have to go up in yields to compensate.
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Its difficult to compare Ethereum "staking" with traditional finance, because traditional finance has much better guarantees. My SWVXX and VMFXX money at 3.6% can be withdrawn (or deposited) at 5pm every business day. Its extremely liquid, far more so than Ethereum staking.
Further adding to the complications, Coinbase allows you to trade cbETH (wrapped Ethereum), which is Ethereum that has been staked at Coinbase. Its not entirely clear when cbETH can be withdrawn and turned back into ETH.
https://ethereum.org/en/staking/pools/
These tokens have also been trading at discounts to ETH if you want to just buy and hold the token, which should eventually reach parity to ETH. That can also be an additional gain, but incurs additional risk.
You're ignoring the issue here.
When I'm talking Fed Rate, its _OVERNIGHT LENDING_. Its not "eventually reach parity with dollar", its "this will turn into a real dollar tomorrow". Its a loan that is as safe as you can possibly get.
You're trying to compare Ethereum staking with the Fed's overnight lending. The risk/reward structures at play here are completely different.
The Fed Rate is the shortest, and safest, loan in the entire marketplace. Ethereum staking is kinda similar in some respects (as a yield granted by the "Ethereum system" itself, its kinda sorta like a central bank rate), but it... really isn't. Because it has an ill-specified withdrawal time.
I don't know how you're drawing that conclusion from my comment.
I am responding to your comment about coinbase and suggesting that they aren't the only product on the market. I also wanted to point out the fact that there are other actually liquid solutions to eth staking.
The coinbase product is more like staking as a service, but centralized, and not recommended.
https://ethereum.org/en/staking/#how-to-stake-your-eth
I don't disagree with the other points but... That one remains to be seen. Bitcoin was precisely created as a gigantic middle finger to the central bank's endless money printing to bail out the financial system. That's the message in the genesis block ("Chancellor on the brink of second bank bail out": it's as political as it gets). The early adopters, before the poker players (Bitcoin was used to facilitate players-to-players transfer on poker sites before Silkroad and drugs where I thing IIRC), were libertarians and anarchists fed up with the FED.
This hasn't changed, so far. There are only going to ever be 21 million Bitcoin. Ethereum, at the moment, is deflationary (more ETHs are burned than created through proof-of-stake).
You get, what, 5% on your USD: great. But real inflation is, say, 12%. So that's still 7% down.
There's a price at which people are going to enter BTC and Ethereum with the promise that it won't be inflated to death.
Many may not like it. "Inflation in the two digits, good!. Helicopter Ben: savior of the economy. Bank bail outs mutualizing losses: perfection by our beloved state!".
But there are still people out there who see the value in something that cannot be printed at will.
I'd say especially so when the FTX and Tether of this world, at times in bed with officials, are printing at will their worthless token and dumping them on retail with the blessing of the New York Times.
> There are still inflation worries in the economy.
Precisely.
I'm certainly not keeping all my life savings in cryptocurrencies. I was all in cash after the war in Ukraine started and I'm certainly enjoying the firesales on many stocks right now (Stanley, Makita, ASML, Intel, 3M and a shitload of stocks I handpicked are totally on sale: it was time to sale when everybody was yelling "TINA" and the war in Ukraine started and it's time to buy now that everybody is yelling "falling knifes, it may fall another 90%"... Yeah, sure. If all the companies I handpicked are falling 90% more, I'll load up the truck and retire in a fancy yacht in a few years).
But this entire USDT/FTX scam (with the blessing of the SEC and CFTC), these shitty tokens created out of SBF's farts (sorry but it's how it is) and these centralized exchanges makes me want to go bullish on BTC / ETH. I'm waiting for tether to go bust to go in bigger.
Many hate it here: BTC may not be worth much but "your keys your coins" and as long as it's not totally outlawed, nobody is going to prevent me from storing BTC (mo matter their value) on a hardware wallet.
And f--k fractional reserve banking, f--k bail-ins (Cyprus), f--k the vicious states stealing people's money (Spain, where banks offered crazy return rates to their customers then defaulted on the principal) and certainly f--k mutualized bank bailouts.
I have zero confidence in USD / EUR. I have zero confidence in banks. I believe in stocks and, yes, in BTC and ETH on my own hardware wallet.
Sure. But lets say you put $100,000 into BTC last year, exactly 1-year ago. BTC's price on Nov 17, 2021 was $60,3xx or so. So you'd have 1.66 BTC. Today, that BTC is worth $16,650 or so. Or $27,639
Then, real inflation is... I don't think 12% but I don't feel like arguing. So I'll use your numbers. According to your 12% inflation number, you're at $24322.32 in 2021 dollars.
That is to say, if I stuck with US Dollars, I'd largely have most of my money. If you used BTC, you'd have lost most of your money.
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We've had the big inflation event that the BTC community was "hoping" for for years. And BTC *FAILED* the test. Everyone who bet on an "inflation hedge" lost most of their money.
> I was all in cash after the war in Ukraine started
I bought oil. An oldie but a goodie strategy. Wars need oil, and Ukraine/Russia have substantial oil trade, so I knew that oil prices would rise.
Also, because oil is a huge component of inflation, its... like... actually an inflation hedge? (EDIT: I guess others could have bought food futures, like grain and/or corn, given the huge amount of Farmland in Ukraine that's been hampered by the war, plus also as an inflation hedge since Food is another major component of inflation. That would have done well too)
I’m eager to learn at which institutions you plan to buy and sell your stocks, and which currency you are planning to use to do so.
If the Fed ran the dollar like Bitcoin the US economy would disappear and be replaced by speculators. If anything it proves that the concept of combining both the medium of exchange store of value function into one currency is a massive failure in either direction.
If people were rational then countries like Argentina could have abolished inflation and deflation by separating the medium of exchange and store of value functions.by now but since people love inflation and deflation so much they get what they deserve.
http://bitcoinisdead.org/
>Beyond the most hardcore users, skepticism has only increased. Nobel Prize-winning economist Paul Krugman wrote that the currency’s tendency to fluctuate has encouraged hoarding. Stefan Brands, a former ecash consultant and digital currency pioneer, calls bitcoin “clever” and is loath to bash it but believes it’s fundamentally structured like “a pyramid scheme” that rewards early adopters.
They were correct on both counts. Since then, proponents have simply stopped trying to sell it as a currency (buy your games in bitcoin! pay your rent in bitcoin! -- that was the initial pitch), and its pyramid scheme structure has only been exploited, not fixed.
[1] https://99bitcoins.com/the-rise-and-fall-of-bitcoin/
Looks like Bitcoin has been announced dead about twice a week since its inception!
This will probably continue for the foreseeable future.
There will still be believers and people who will throw money at it and try.
But I think they will have a harder time convincing investors going forward.
I suspect it will end up mirroring the MLM market: still there, still profitable for a few, but depends largely on an uninformed base of people getting roped in by their friends and relatives who are already caught up in it.
Like Avon but for tech bros.
https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...
"Any headline that ends in a question mark can be answered by the word no."
> Instead of over-regulating or stamping out crypto, regulators should be guided by two principles. One is to ensure that theft and fraud are minimised, as with any financial activity. The other is to keep the mainstream financial system insulated from further crypto-ructions.
I know people knock the Economist for pretty superficial analysis, but honestly appreciate their level-headed take here.
This is an exercise in pure ideology, conveys no information, and presents the scam sales-pitch around crypto entirely verbatim.
It is that most common of trap that classical liberals fall into, defending private forces of unfreedom on the basis that they underpin the "free" market. What a bleak picture, and as a defender of free markets, a betray of that world view.
Freedom, as a contingent property of markets, is a careful and precious thing. It requires us to be on the guard against a variety of feudal forces, the pinnace of which could be nothing other than crypto.
Here, The Economist, on the basis of classical liberalism, advocates for a feudalist scam. It's quite saddening.
Here's the thing: Bitcoin doesn't need you, Mr. Entrepreneur. It doesn't need your black turtleneck savant charisma. It doesn't need your ambition. It doesn't need your "innovation." It doesn't need your groveling before regulators to build your moat. And most of all, it doesn't need your VC money.
This is a problem for said entrepreneurs and VCs. Because they have turtlenecks beanbags, money, innovation, and groveling just burning holes in their collective pockets - waiting to find an outlet.
But it turns out that "crypto" and "DeFi" do need Mr. Entrepreneur and his merry band of VCs. A lot. Why? Because these are efforts to replicate the existing financial system on the sandy foundation of "blockchain." And that's an expensive business.
Toss in the loosest monetary policy in US history and the recipe is complete. A quorum of charismatic entrepreneurs fleecing gullible VCs and depositors out of fake wealth, tossing it into a big pile, dousing with a liberal quantity of gasoline, and setting the entire thing ablaze.
This may or may not be the end of "crypto," but Bitcoin continues to operate just as before - without the need for exchanges, regulators, entrepreneurs, financiers, or visionaries.
The last handful of True Believers can shuffle Bitcoin among themselves indefinitely, this is true. But does that have any more significance to the world than a multiplayer game someone creates for only them and their friends to play, handing game items back and forth among themselves?
Bitcoin absolutely needs exchanges. Sure, it's a self contained decentralized system that could keep churning along without needing anything but computation and the internet, but the day you can't exchange btc for fiat is the day bitcoin goes back to 2010, when it was a curiosity that isn't useful for much of anything. The only reason crypto is interesting to anyone except the most true of true believers is that you can exchange it for real money. What is the point of it without exchanges?
The point is that exchange of bitcoin for goods and services is possible without trusted third parties. Whether you approve of what is being traded is a separate question.