No, it isn't. Cryptocurrencies in this aspect are the same as the fiat money you and I use today.
The problem was everyone deciding to brand Bitcoin as an investment vehicle instead of as a currency.
Cryptocurrencies are money. The benefits are immediately realizable. If I gave you $5 in exchange for a service worth more than $10, promising that due to market forces that $5 would soon have the buying power of $10, you would laugh in my face and demand the $10 immediately, not later. Yet somehow we decided this was OK to do with crypto.
It has to do with a lack of knowledge, partially due to world governments initially being hostile towards crypto and then indifferent.
Were this technology correctly introduced to society by trusted parties with regulated information, we wouldn't be having this conversation about whether or not cryptocurrency is flawed due to an inherent volatility that comes with low market adoption.
No; it's not. Cryptocurrency exists as an alternative to the government-granted monopoly on the financial sector, which consumes a huge amount of value from every transaction in the economy, causing a great deal of unneccesary misery for regular people.
This is the story of financial sector parasites hijacking a legitimate hope for emancipation from them.
Yes, it is, in the traditional financial system. Crypto is an attempt at building an alternative, with different trade-offs. You might not agree with the trade-offs, most people don't - I mostly don't, but it's definitely a choice, it's not inevitable.
I think there's a fundamental issue here that prevents us from reaching an understanding.
ANYTHING can be used as money. The systems that we currently have in place has lots of big problems, but "we" decided to use them and that's why they are popular. We could also decide to use a cryptocurrency as money, and it would be equally valid, and it would become our "money" - that bit is fine and I'm not arguing with it.
What I am commenting on, and what I am calling bullshit, is the cold hard reality of crypto - there hasn't been a coin invented yet that is anything but a ponzi scheme. Everything from bitcoin to ETH to dogecoin is just a scam to make some people rich, even if it started with good intentions(and I believe Bitcoin really was started with the intention to become a currency).
The second this changes, and we have a cryptocurrency that is actually used as money and not a plaything, I'll happily stop complaining about it.
I think the fundamental and radical idea of cryptocurrency is that this is not true. Currency can have value even if it isn't derived from the point of a sword.
I know crypto has a lot of scam baggage and that is unavoidable for a permissionless system, I think. Regardless, the idea that you can wrest away the levers and dials of monetary policy away from world powers and put it in the hands of a permissionless system is a powerful and potentially system-altering one. I have been a fan of cryptocurrency for this reason since well before people were writing news articles about them.
I think the phenomenal success of crypto to this point is a strong indicator that you might be wrong, or at least not totally right
so what bitcoin (and of course other crypto) is, is complex and ultimately subjective : it's different things to different people, just like money.
It does some things money can do & does some things that money cannot. FIAT money is the same, It does some s bitcoin can't but cannot do some things bitcoin can.
instead of advancing a concrete definition of crypto - which as i said is a subjective argument - i'd encourage you to look at what money, monetarism & fiat really are.
It's equally subjective, and arguably a more difficult concept that crypto.
At the moment, traditional cash can be spent much more freely than crypto, which is one of things limiting it's utility as a currency. But similarly, the lack of an immutable ledger, a practically infinite(or a least unknown) supply, and risk of physical counterfeits limits Cash as store of value.
....right now...crypto is something. Even if it's yet to be fully realised. It's mainstream, at least as an investible asset and It has some utility as currency, albeit limited.
For people in developed countries, with established currencies backed by a military force, either directly of indirectly, it will seem quite absurd that crypto could/should replace cash.
For people in unstable regimes, countries who've experienced hyperinflation, it's a massively attractive proposition.
It may not be what informed observers want it to be, but it's still what every single person I've seen trumpeting the virtues of cryptocurrency here on HN has been shooting for.
The argument is invariably "the value of cryptocurrency is giving us a currency that's not controlled by central banks". Never have I seen someone saying cryptocurrency should be used because it's highly volatile and great for speculating.
So there seems to be a significant divide between the people who use cryptocurrency (but don't attach a moral value to it) and the people who believe in cryptocurrency (but ignore what it's actually used for).
To be honest, I don't really believe in crypto. All the blockchain stuff is mostly solutions looking for problems. And, after all these years, cryptocurrencies still haven't replaced regular money. I still can't buy a coffee with bitcoin. There were numerous efforts to create such a cryptocurrency, but they've all failed — because governments aren't letting go of the control they have over everything, and they have the necessary physical force to enforce these views. Currently, all I see about cryptocurrencies, is people mostly using them for trading or see them as an investment. Sometimes they buy drugs with them. And that's really it.
Though, yes, if I wanted easy money, I could go work at such a company. Or I could as well go to a FAANG-ish megacorp and earn craploads by working an hour a day.
It is a new application, but I'm not sold on it at all. I don't see anything that cryptocurrencies do that fiat currencies do not do better. Irreversible transactions, for example, is touted as a benefit, but I believe is a major disadvantage. As a result of them, consumer protections against theft and fraud are impossible to implement. Any reverse payment requires the cooperation of the fraudulent actor.
Furthermore, the decentralized nature of bitcoin cannot last indefinitely, and arguably has already ended. All mining nodes need to have a record of all balances, in order to verify that incoming transactions are valid. This places a limit on the ability to contribute to trust by mining, and will result in further centralization of miners. If a cryptocurrency were to replace fiat currency, it would not be a change from centralized currency to decentralized. Rather, it would be a from a centralized currency controlled by an elected government to a centralized currency controlled by conglomerations of miners.
I have done my best to understand their use, their applications, and their limits. With that in mind, I believe cryptocurrencies to be a obfuscated form of pyramid scheme, with additional externalities of heavy power use.
Sure. It's basically the fact that the sentiment regarding crypto in the traditional world of financial advising has been equated to ponzi schemes. The value of the technology hadn't been validated or proven to point where holding BTC had any inherit value beyond what others who wanted the BTC were willing to pay for it. The market pressures weren't real.
However, smart contracts and the adoption of the blockchain by technology's bigger players has provided some validation to what's happening. Regardless of the white papers, and how one individually assessed the thesis, it didn't have market adoption and it wasn't as if BTC was actually producing something. So investing in BTC (a virtual commodity in limited value) had no real business purpose.
So crypto was in the same boat as ponzi schemes, until very recently. Now it's being taken seriously due to providing actual value.
The only thing BTC is really good for right now is to act as an intermediary between it and alts--since you can buy BTC and ETH with fiat, then transfer those to alts. BTC isn't a valid currency for transactions for a variety of reasons. It is simply the backbone of the crypto economy at this point, and the grandfather of the technology--so there's some lure to it as a limited asset that, so long as someone wants it, someone can sell.
Cryptocurrency has many positive values that are not replicated by any other financial instrument when taken together as a whole:
* No middle man
* Nearly instant transfer at low cost
* Non-geographically bound
* Non-governmentally bound
* Potentially untraceable depending on how you use it
* Incorruptible
* Uncensorable
* No central point of failure
* Transparent and open (as in source and freedom)
* Programmable and automatable
* It is the first system to solve the byzantine generals problem.
My point though is that anyone who has been paying at least even slight attention would know that there is a purpose and value to the design of and usage of bitcoin and other cryptocurrencies and to claim otherwise is an embarrassing display of ignorance.
One could argue crypto is a corruption of proper money, since transactions can't be reversed. Imagine the scenario where you wanted to metaphorically 'burn' 1M dollars. Say you hand Coinbase $1M in exchange for Bitcoin, then purposefully delete your wallet.dat and made it irrecoverable. The $1M is still there in Coinbase's account. It didn't get absorbed into the BTC blockchain. If you could think of money as a form of speech - then crypto just tramples all over that notion.
No arguments. Crypto is a form of payment system, if we want it or not. It is however an unregulated and uninsured currency system that may or may not have actual capital backing it up (depending on the coin). My point is you will see wild swings of interesting things happening precisely because of the unregulated nature of it. This is not 'new' because of crypto. It has happened before, it will happen again. Regulation also does not necessarily means 'it will not happen'. It usually just slows it down enough to catch it before it gets wildly out of hand. Also as a payment system crypto is interesting, as many people seem to be using it as an investment vehicle precisely because of those wild swings.
The basic issue with cryptocurrency is that very little of it is actually new. You talk about ideas which threaten monetary policy--except those 'ideas' were actually the typical monetary policy not a hundred years ago. So it's worth asking yourself why monetary policy was changed from your favored position before trying to convince everybody else that it should be changed back.
You know, a decade ago, I actually thought that cryptocurrency and blockchain were interesting ideas that might be well worth pursuing. But it has increasingly felt like a solution in search of a problem--it's hard to find any use cases that aren't already better solved with other solutions. And in these kinds of discussions, the cryptocurrency adherents themselves struggle to proffer any such problem that doesn't boil down to--as someone else put it--wanting to live in Galt's Gulch. Which isn't exactly a compelling problem for most of the world's population. And comments like yours aren't helping to move the needle in the direction you want it to move.
Sure. I just see cryptocurrency more as an esoteric investment vehicle than a currency, because I don't use it so I often forget it's capabilities as an actual currency. In that respect, it's not all that different to my eyes than complex derivatives in the early 2000s. In both cases we have overly complex systems that very few people truly understand, backed by real money through people investing.
I think people that are interested in just making money, over most/all other considerations (such as having a fulfilling career, or serving some need), gravitate towards industries where they are closer to direct money. Finance is one of those areas, so we get more people in that area that aren't as adverse to breaking a few rules or screwing some people over.
I agree regulation would solve some of the problems of cryptocurrency, but the cost would be to lose a lot of the benefits of a cryptocurrency, to the point where I'm not sure the use case of it anymore. What does a regulated cryptocurrency get you that you can't achieve through a more traditional, centralized currency system? I think people just need more education on what to expect, which is something that's fundamentally a little different than centralized currency, and part of that education needs to be about risk.
The problems we're seeing with cryptocurrencies are utterly unsurprising if you know what money really is and how it actually works.
I think people who are excited about cryptocurrencies assume that money is merely a tool to facilitate transactions between parties of people. The fundamental model of this is two people bartering goods, lol, in some sort of imagined "forest primeval" before money was invented. That money is just a substitute for that behavior. It's hopelessly naive.
Maybe it's because most of those people have actually sincerely thought about it but saw cryptocurrencies to be a worse solution than the current ones? Most cryptocurrencies are fiat currencies (just not derived from government trust) after all, and most currency problems stems from those questions of trust (so let's assume that everyone adopts one: it won't solve any societal problem).
Cryptocurrencies require just as much consensus and trust as regular currency. If I don't believe that bits and bytes on a hard drive are worth anything, then cryptocurrency is as good as tulips.
I think what people need to realize about cryptocurrencies is that they aren't going to derive their value from being convertible to fiat currency.
Rather cryptocurrencies are going to be revolutionary in the sense of how they can be combined with other technologies.
For example, what if World of Warcraft used a cryptocurrency based system for ingame currency? Where the ingame money was actually finite and that in theory the players in the game could suffer from an economic depression. Or a few players could hoard all the wealth in the game. etc. etc.
The game would be way different than it is now, which is to say that it just emulates an economy, not actually implements one.
This is probably a bad example to get what I am trying to say. So lets imagine a different scenario. Let's say we wanted to build a social network, where we didn't actually want everybody to just be able to say whatever they want without a threat of consequence. What we want is a social network where you have to do something to earn the ability to speak, and once you speak you lose the currency to be able to speak again until you do something once again to earn the ability to speak.
What you have to do in order to earn the ability to act depends on the service in question, but the same basic concept of a cryptocurrency is what underlying the system. In that the platform only has value when the ability to act is a limited and highly valued resource.
The problem was everyone deciding to brand Bitcoin as an investment vehicle instead of as a currency.
Cryptocurrencies are money. The benefits are immediately realizable. If I gave you $5 in exchange for a service worth more than $10, promising that due to market forces that $5 would soon have the buying power of $10, you would laugh in my face and demand the $10 immediately, not later. Yet somehow we decided this was OK to do with crypto.
It has to do with a lack of knowledge, partially due to world governments initially being hostile towards crypto and then indifferent.
Were this technology correctly introduced to society by trusted parties with regulated information, we wouldn't be having this conversation about whether or not cryptocurrency is flawed due to an inherent volatility that comes with low market adoption.
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