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.
No I'm saying this is a frankly stupid argument to make. Crypto has almost a century of financial crimes, history, and policy to draw on. The fact that they're stepping on the same rakes despite them being labeled is a point against the entire sector. Anyone smart enough to build an alternative financial system is probably doing more legitimate work in the actual financial sector, leaving crypto to 29 year old geniuses who barely understand they're running ponzi schemes.
You're arguing that we should try out this new, unregulated, and terrible alternative financial system that seems to only be filled with such trustworthy people as scam artists, terrorists, drug dealers, and war criminals because a system designed before computers existed sucked ass. Your audacity is shocking.
The story of crypto is the story of recreating the existing financial system from scratch, particularly including all its regulations that make the current modern financial system so annoying. Yes, the current financial regulations suck, but each one was put into place because of failures like you see in crypto every day. In the long run cyrpto regulation will wind up looking much like modern financial regulation because it suffers from the same pressures, incentives, and attack surfaces as the modern financial system. This isn't to say that the current financial regulation regime is good in any sense of the word, just that it's effective at what it's explicitly designed to respond to. Crypto that lacks the regulation of modern finance will suffer from one set of problems; modern financial regulation suffers from another set of problems emergent from the system of regulation itself. That crypto doesn't suffer from problems caused by the system of regulations does not make it inherently better than modern finance
Yeah, but the Wild West nature of crypto is its selling point, maybe even its raison d'etre. What would be the point in regulated crypto? It won't do anything that the traditional banking system doesn't already do.
I feel like this argument isn’t stated enough. I’m not financially savvy and can’t determine if crypto is just re-inventing abstractions in which we’ll ultimately see the same societal patterns develop.
Crypto isn't an exception to any of your concerns. Easily manipulated by foriegn governments, no assurance in import/exports, no assurance on value for employment opportunities, ripe for fraud and as for inflation - until Crypto actually behaves like a currency all your doing is betting against the dollar and if the dollar collapses then all you're doing is ensuring instability and perptetuating exactly what you say you solve
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.
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.
There's enormous amounts of legitimate business happening in crypto. You're just saying you don't like the technology. Crypto drive sales of real goods and services. And prevents central banks from debasing the currency.
I'm not convinced crypto has failed to be a value store or an effective means of currency and these "arguments" don't really talk about the meat of the problems crypto faces.
1. Regulation is pretty much the defining factor in cryptos status as a "real" currency. It's never going to be legal tender without legislation.
2. The idea that the value of a dollar is intrinsic or demonstrable is hilarious. The gold standard is long gone and the petrodollar is a doomed idea that fluctuates wildly. Economics is neither predictable nor rationale, because humans are not. See: gamestop.
3. The amazing derison on the subject. Only America could develop such a polarizing narrative about something fairly mundane.
4. I work in fintech in a part of the world that's still developing. The banks should be scared of crypto and banks such as Monzo. The key quality here is ability to react to a market. Crypto is not as quick as cash but it's MUCH faster than inter-bank transfers (st least this side of the world).
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.
This seems to be the exact line of thought that Scott is challenging. He agrees with you, "Yes, The Crypto Financial System Is Just Reinventing The Regular Financial System Except Worse In Every Way, And That’s Fine".
If you live in a stable economy with good governance and a trustworthy financial system, you don't need crypto. Unfortunately, that does not describe everyone in the world. It may not even describe half of the world.
Sure it's not a new problem, but it's one of the things people claim will be solved by crypto currency. If crypto currency is just regular currency except controlled by a non-democratic entity then it's a step back, not a step forward.
To me the argument is the opposite: what is the reason for cryptocurrencies to exist if not for money laundering and generally avoiding regulations/fees you'd otherwise be subject to?
Your post makes a lot of sense to me from a fundamental econ perspective, however, I know I don't know enough about the topic of crypto-currencies in general to trust my opinion much. I'd love to see the strongest possible counter-argument to yours to help me understand why so many people seem to disagree.
The modern monetary system used to have all of the same obvious scams. They made participating in any economic activity risky and depressed local as well as global economic activity as a result. None of these scams are new and the regulations and tools that crypto is attempting to get away from were created as a response to these scams in the past.
To my mind Crypto has not yet made the case that it is better than the current system and the extreme impact that all these scams have on the currencies they are run on, e.g. high volatility in price, indicates that they are substantially worse as a currency than the US dollar.
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