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.
IMHO the problem with crypto is the very thing that its proponents cite as one of its key benefits, its decentralised nature.
We are told that crypto is supposedly a way to "stick it to the man", to fight those "evil banks/governments".
The trouble is that unlike fiat currency, there is no fundamental means of valuation. Crypto is worth what its worth on the day based largely or exclusively on entirely non-economic valuation, which is why its so incredibly volatile.
The trouble is that you cannot escape the truth that the world is based on trade. People make goods, people supply services and other people buy goods and buy services. People also buy and sell essential commodities. This happens both domestically and cross-border.
The value of fiat currency is ultimately tied to the economics of global, and therefore provides an objective means to value said currencies, both themselves and relative to other currencies.
You don't get that with crypto.
Well, you could argue that you do to a limited extent, but that limited extent would only make crypto comparible to emerging world fiat currency of some tiny country.... high-frequency boom and bust cycles, high volatility, potential for episodes of illiquidity etc.
Crypto is far too broad a term to use and say it's the same as Gold.
In many ways it worse (PoW for Bitcoin), in some its better (banking for the bankless). However you can have Crypto that has an inflationary mechanism that's codified (can still be gamed), none the less it can be inline with modern monetary schemes.
Crypto does have utility, but there's only room for one: bitcoin.
Everything else is just a me-too derivative that can add nothing except the possibility of central control (like the "digital dollar").
The ability to instantly transmit the hardest asset known to man (harder than gold, in the sense of inflation resistance) does have utility, regardless of what critics say.
It has downsides too: the ability to be lost or stolen if custody is sloppy, energy use, and many others. But the balance between its utility and its limitations is something that enough holders recognize that it maintains a value above $26k for now.
The US debt recently increased by the entire market cap of bitcoin ($275 billion [1]) in a single day.
That doesn't guarantee anything, but in the old days when the global reserve currency started to become frankly inflationary, there was no easy recourse - you could only jump to the next best national fiat (which could have the same problems or worse), or gold (with all of its limitations). Now, due to bitcoin, an alternative exists.
People on HN are smarter than me, and they all seem to hate bitcoin with passion, but I haven't yet understood why. I think it might be harder to recognize its value when it's part of your implicit cultural background: the dollar is money. We lack the perspective of our great grandparents, who lived through the great depression, and understand that the dollar has no intrinsic value, either. Once that epiphany is reached by the masses, the appreciation in bitcoin value could come quickly.
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.
First, the most basic role of money is to be a medium of exchange. With reasonable overhead and in acceptable time, people need to be able to exchange money for goods and services. Crypto fails this in every practical way. If I want to buy pizza with bitcoin, my overhead exceeds the value of the pizza, the average time to make the purchase is longer than the average time to order, have it made, delivered, and get eaten by my family. (Have you ever SEEN hungry teenagers tear into pizza.) Also if people started trying to buy pizza with bitcoin, you'd quickly run into the problem that the maximum number of transactions per second on the bitcoin network is a fraction of the number of pizzas sold per second.
Yes, yes. This is all improvable. I've heard that for years. But these issues are not new, and haven't gone away.
OK, what next? You are making a big deal out of the fact that there are poor people in horrible third world countries who want to use crypto to escape authoritarian oversight. At best this is a red herring, I lean towards calling it disingenuous. A far more important use case for crypto is crooks trying to get paid for their ransomware attacks without themselves being caught by law enforcement. And the third world has benefitted far more from payment networks like M-PESA than all of crypto.
Besides, the single best way to help the poor people in horrible third world countries is to continue the worldwide economic progress of the last couple of centuries. Few understand how astonishing the improvement in human life is. Watch https://www.youtube.com/watch?v=jbkSRLYSojo for a 5 minute video demonstrating how dramatic it is.
Moving on, crypto is nowhere near as decentralized as boosters claim. A handful of central players are responsible for owning most crypto, doing most mining, and so on. Moxie, the lead developer behind Signal (great app, BTW), decided to experiment with NFTs. What he found was shocking. First, we are one website hack away from, say, all bored apes turning into pictures of shit. Second, his experiment verifying accidentally pissed off a couple of companies that everyone else uses to get their view of the blockchain. The result? The contents of the blockchain notwithstanding, his NFT disappeared! See https://moxie.org/2022/01/07/web3-first-impressions.html for more details of his experiments.
Moving on, all of the defi platforms that you named have something big in common. They are riding on the back of a bubble inflated by fraudulent Ponzi schemes, controlled by a handful of people. They use all sorts of phrases like "arbitrage" and "yield farming". But all those are simply euphemisms that round to "Ponzi". Without the fraud, the whole ecosystem implodes. Because it rests on nothing real.
Oh, sure. Defi offers automated trading protocols to allow you to do things like hedge risks. Automated trading strategies have an important role in our world. But they have limits. For example when everyone tries to hedge the same risks with the same trading strategy, it doesn't work. The traditional finance world learned that the hard way on Monday, October 19, 1987, and has had periodic reminders since. It won't work better in the defi world.
Another limitation of automation is that if someone figures out how to exploit it, your money disappears arbitrarily fast. Crypto enthusiasts treat the regular heists of large amounts of crypto as teething pains. But actually they are an intrinsic part of the platform that can't be eliminated. Once you eliminate the Ponzi underpinning, crypto trading strategies do what you don't want it to, and don't do what you do want it to. You lose both ways.
Moving on, every crypto enthusiast that I have met has an understanding of finance that pays attention to SOME of the stakeholders, and not others. There are a lot of hidden stakeholders in finance, and you ignore them at your peril. The excellent series https://www.bitsaboutmoney.com/ says a lot about that topic.
One of the big ones is government. Crypto enthusiasts think that they have taken government out of the equation, and that this is a good thing. They are wrong on both counts.
First of all the things we actually need, like pizzas, are in the power of governments to control. The mediums of exchange that people actually use, like fiat currency, are also in the power of governments. And, failing all else, governments can send men with guns and lock you up. In fact they regularly do this to people. You aren't getting rid of governments, you have to figure out how to coexist with them.
The result is that if you and the government disagree about where the government's jurisdiction ends, the government is usually right. For example https://twitter.com/AFTXcreditor/status/1653883349021106179 shows FTX attempting to claw back $3.9 billion from Genesis that happened on "irreversible" blockchains. At this point, this is just redistributing the losses. But the people at the heart of crypto are admitting here that these "irreversible" transactions are actually reversible in practice. Oops.
Going the other way, governments are at least somewhat responsive to the people (more so now than historically, and they vary widely). And those regulatory regimes that you don't like incorporate a lot of real world experience. Are they perfect? No! But they also work out better on average in real use cases than crypto does.
And finally, about ridicule. You're the one who first went to saying that everyone who disagrees with you is "embarrassing themselves" with their ignorance. Which you did repeatedly and rudely. Until you have the common decency to apologize for your past behavior, it is sheer unmitigated gall for you to complain about anyone else's.
Now I just demonstrated that I am far from ignorant. And that it is possible to be both educated on the topic and come to the opinion that this Kool-Aid is poisonous. Hopefully you learned something from the experience. And hopefully you improve your behavior.
Crypto is credit money with zero obligations allowing all participants to walk away without notice.
Modern fiat currency is credit money created in accordance to promised obligations that bind participants over a time period.
Limited supply crypto is trying to be exclusive akin to feudalism, past economic power is strongly entrenched, families can pass their amassed wealth to their heirs while late comers are doomed to have very little economic power.
Unlimited supply fiat is trying to be non exclusive akin to democracy, past economic power means very little and is eroded through inflation, new comers can go to a bank and get newly created money if there isn't enough in the economy.
Fiat currencies are a tool of trade that serve their institutions/governments to increase the efficiency of their real world economy. Militaries protect themselves, the land and its people but not the currency.
Cryptocurrencies do not interact with the real world beyond expending energy, they are bounded by their underlying blockchain. The miners(supposedly equivalent to militaries) only protect the blockchain/currency, they don't even protect themselves let alone the land and its people.
If you want to gamble buy cryptocurrencies, they are better than the casino.
Try to define crypto through a process Of eliminating all the things it once claimed to be but clearly is not.
It's not a practical currency.
It's not a commodity.
It's not a store of value.
It's not stable.
It's not independent of fiat. One of the first things crypto markets did was try to address the stability issue by tying crypto to fiat using "stablecoins".
So what exactly is crypto really good for?
Relieving those who don't really understand markets and finance from the burden of their fiat. And facilitating crime and money laundering.
I think there is a citation needed here, because I don't see how crypto has proven itself to be inherently and fundamentally worse. I think that fiat is the ultimate war money that has cost more human lifes than any other monetary system so far.
You aren't forced to use crypto because fiat exists. If fiat would be replaced by crypto, you would be forced.
Crypto is not democratic, it's redundant and it heavily biased towards the one with most resources. It's an oligarchy.
Crypto is exactly as real as cash. Both crypto and cash have value because people think they have value.
That's it.
And please don't reply "you need to pay taxes with it", if an economically failed state uses a currency that no one wants, it doesn't have value even if the state requires it for taxes.
And this is true for everything. Things have value because people value them. Even food. A steak has no value if no one wants to eat it.
Ah, yes I don't disagree. IMO, I don't think the use case for crypto is to replace fiat, but I can see how those that operate from that assumption/desire would experience friction.
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.
Bitcoin wanted to be the world's currency, with a techno goldbug understanding of what money is. That shades a lot of what we think of as crypto.
There are a lot of different versions of the idea though. A lot of variety exists in crypto now, and very little is deterministic. I don't want to rule out the positive possibilities, and outlawing is broad brush. The PCB grunted at crypto here. We can do
That said, the variety of possibilities also creates danger. Underregulated stable coins, for example, get very sketchy once you reach a certain size. If they keep growing, start embellished with dolaralized interest payments and such.... you now have a rogue banking system issuing its own US dollars. Good luck with that. The scale of fraud, and treacherously borderline fraud can be epic. I don't think we should downplay these.
OTOH, this is true of every part of the financial sector. Lets not pretend the current way the financial sector is structured isn't riddled with the kinds of problems crypto poses.
A country with some clever CB people, even a small one, should be bold and bring crypto into the pax. There's a lot you can do with a designed-4-a-purpose currency, and crypto is a very viable way to do many things. Bitcoin's origins, and much of crypto's present, is secrecy oriented. But, it's actually more natural to design a cryptocurrency for transparency. That's useful in a lot of circumstances.
Take time to understand wtf is going on and regulate, ban or encourage specific things for specific reasons. There's a lot to be gained, not just a lot to be lost. A properly regulated stable coin might be a great idea.
Keynes has made a comeback during the pandemic, and people are relearning war era ideas about controlling inflation. In that context and considering 2021's low interest rates, national savings bonds will probably soon be considered in various places. You don't need crypto to do this, but it does give you more flexibility in how you do it.
I think the discussion over crypto is, like many other discussions currently, broken. Two groups of people arguing their side, not realising they are both wrong (and both right).
Good for you on getting in early. Crypto, as a concept, is extremely neat. It is a libertarians dream. It is an interesting movement, in this time of centralisation and consolidation of power.
Crypto, as a tool however, is a solution looking for a problem. A problem that most people do not have. The only reason that crypto is currently huge, is because it (currently) is a Make Money Fast scheme. Should crypto ever become a mainstream way of performing transactions, it will still have to abide by the rule of law, or risk becoming illegal.
If Bitcoin could develop and improve, all the while without being a ponzi-scheme, it would be great. And who knows, if POS ever worked out and we manage to transition the whole ecosystem, it may find some usecases in smaller applications. But as it is, POW is generating the CO2 of a large country, providing money to the wrong people (and I'm not talking about you), and preparing financial crash.
If you're sitting on a pile of bitcoins since 2012, I understand your point of view. But I'm not convinced it's a net benefit to us all.
I disagree that there was a better crypto than Bitcoin. It's very much a long and very technical discussion that I can't afford right now, but I wanted you to know that your opinion is not universal - it's much less clear cut than "there was a better crypto, why not use it?".
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.
There is place for both systems. Most crypto people have made peace with the fact that they can lose it all. People overestimate conventional finance. Conventional finance is incredibly flimsy if you dig into it. Leveraged beyond repair, ductaping one unprecedented monetary experiment after another. No conventional currency has preserved substantial purchasing power over a span of say 100 years maximum. The mathematical proof of supply limits alone is an unbeatable feature. Myself, not a crypto fan at all, I am sure crypto will be banned at some point, but just on the merit it's as good as anything.
Fair enough, but Bitcoin certainly can be either of those things, even if it's not right now. History shows us any currency can have those problems. Inflation can become so high that as a medium of exchange it's pointless. It can become so unstable in value that people use something else.
Bitcoin is no panacea, but the "fake money" argument seems misplaced to me. It's current failings are not failings of crypto-currency in general.
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.
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