It might be useful for the title of this post to clarify that this is the co-creator of Dogecoin, it’s not mentioned anywhere on the linked thread itself but is very relevant framing for the content. I didn’t realize who this was until I saw this thread linked elsewhere with that context
Worse yet, this culture of shaming people for changing their minds/position is embarrassingly unintellectual and socially dangerous. Its one the most toxic attributes leftover from old timey gender role ideas.
Cryptos make rich people richer, and are sold to poor people the same way lottery tickets are. ”Look at old Pete here, he used to be a loser like you, but he believed and now he’s got $millions in the bank”
Was recently watching "Becoming a god in central Florida", a Netflix sitcom about a fraudulent MLM scheme in the 90s. I was struck by how similar the vibe was to today's crypto community; anyone who wasn't making money or who questioned the value proposition of the overpriced cleaning products simply didn't understand, didn't believe hard enough, and those who refused to get involved were the enemy, their lack of belief viewed as an attack on the scheme ('no-coiners', anyone?)
I've said it before, but over here in Europe, a lot of the good ol' boys from the 80s/90s/00s MLM scene pivoted to crypto the second it hit the mainstream - if not before that.
If I were to invest in anything related to crypto today, I'd conduct the due-diligence of a lifetime before sinking a cent into the investment, even going as far as hiring private investigators to fine-comb through the people involved. I don't think any tech sector has more veteran con-men than crypto - these folks have been scamming people for a lifetime.
For sure. It really has become a more distributed lottery.
The people I know who are obsessed with slot machines and buying lottery tickets are the people I know that own dogecoin.
This whole thing gets more absurd as USD Coin and Binance USD climb to the top with Tether.
The whole space to me feels like such a massive waste of resources and brain power.
A poor person could've invested $50 in Bitcoin when it was priced at $1. That poor person would now be a millionaire if they would've held on to that since. It is not all rich people marketing to poor people, or at least it didn't start that way.
I don't disagree in terms of rich people controlling the crypto ecosystem now. That is one aspect I'm not liking about crypto right now. Too much manipulation, although I think that's at least partly coming from the traditional institutions jumping in and playing the games they do with traditional markets. Plenty goes on behind the scenes in traditional markets, even though they are regulated, and yes, crypto has less regulation, so they probably can get away with more.
I love crypto technology but I think there's stuff going on behind the scenes that regular folk have no idea, and I'm starting to wonder if the grand ideas crypto people have are incorrect. I think the way it will succeed is when big institutions accumulate enough and then it's in their interest to manipulate the crypto market up. I.e. see banks in the Big Short accumulating enough of what Michael Burry was betting on all along, and at that point they revised the indices that track the housing markets, since it was in their interest to at that point.
In the end I don't think crypto is much different than what goes on in equity markets now. Rich people and big institutions control that market too. Meme stocks are essentially also lottery tickets. Way out of balance P/E ratios mean traditional fundamentals are out the window. It's all about momentum and trends now. The one difference, and a benefit I see for traditional markets, is the government will bail them out. The government would be fine if crypto crashes. I think that's the scary part about investing in crypto, but there is also higher potential for upside in crypto markets.
> and are sold to poor people the same way lottery tickets are.
Crypto has never been heavily marketed to poor people. They don't have the capital to buy in at any meaningful scale. The lottery ticket appeal is that you might win $10k or $1m off of a $1 or $2 ticket. There is no mass scale marketing effort pushing $1/$2 of Bitcoin or Dogecoin to poor people with that con-pitch. To this day poor people have barely any stake in the crypto world. For crypto, the lottery players are the small contingent of middle class persons that bother with it (which still isn't very many).
Actual lottery tickets on the other hand, are prominently marketed to poor people all over the place, front and center in many common stores.
Walk into an average convenience store or liquor store, you're telling me they have a large display of dozens of cryptos with updating price quotes appealing to poor people about how big the prizes are and how they can win a million dollars with a $2 ticket? Nope.
They are marketed to people in my experience who are relatively poor. I know a guy who has a problem making rent who has all of his savings (about 1k) in dogecoin or other gambles like individual stocks. I have also met a ton of service people like bartenders and waiters who are involved in crypto.
I have also met quite a few software engineers who are not poor but don' have nearly the level of wealth of the people manipulating these markets who have gotten involved with this stuff. These people aren't poor but relative to the scammers they are, and when they lose money in hurts. I know one engineer for example who lost his life savings on some alt coins in this mid thirties.
I know liquor stores with crypto ATMs with displays. If you log into paypal, you can buy crypto. They're absolutely marketing to people with not much money.
It's true that shitcoins are basically a casino but I don't think it's fair to generalize that to the entire cryptocurrency ecosystem. We have real projects that provide real innovations and uses such as Ethereum and Monero.
A large chunk of society works this way. How many products are only trying to make crowds spend money uselessly so a group of educated wealthy people make another profit (until the next trend).
Crypto is yet-another-trading-market nothing new expect maybe marketing)
Crypto is money but this time I'm the one in power instead of the government! There are entrenched powers in the government system? No problem, we can become the entrenched power in the new cryptocurrency!
Literally nobody in the cryptocurrency space is thinking about how to make fiat fair and sustainable because they actually like the flaws of fiat and just want to amplify them for their own benefit.
Some crypto like Dogecoin sure. However, some crypto is bets on tech - e.g. those that try to achieve something like DEXs or synthetic assets - not that different than investing in stock or startups.
Every retail instition I know of, and appears on CNBC (a place that bankers, hedge fund guys, Jimmy Prop guy Cramer (I actually feel for Cramer. I had no idea he was having migraines over half the days in a month.), etc.) are creating their own crypto.
They are all believers now.
It does seem like they are just in it to take money from the Retail Investors investors though like they always do. Meaning I have seen to many Bull to Bear Markets, and when the switch happens--it's the Retail investor that looses everything.
(I guess we will know how it all turns out in a few years. If I had Bitcoins, I would sell. The competition is almost exponential. New crypto are coming on daily. Every money licker wants their own crypto.)
I don't think Jim Cramer is creating his own crypto. Where did you hear that? I don't watch his show but a quick google search produced no results. He has said he has invested in Bitcoin and Ethereum, but also seemed to have gotten out as soon as they started to go down.
However, I don't disagree that retail investors may end up with issues with crypto, but I don't think traditional markets are necessarily safe for retail investors either. Big money controls both crypto and traditional markets. Governments can bail out traditional markets, but in the end big money gets most of the bailout, too. Traditional markets, at least right now, are less volatile than crypto, but things like March 2020 show that they aren't for certain, either. It sounds like we don't really disagree though since you referred to watching various bull and bear cycles.
- Business and work in general makes rich people richer. Remember that rich is very relative. You are a very wealthy person compared to a random person in some countryside in China.
- Considering the previous point, are you saying that people who have some money should not do anything to make more money? Should they stay the same, or should they become poorer? What do you advocate to do this? Prevent them from working? Take money from them forcefully?
All I hear from people in the crypto world is that you SHOULDN'T invest if you don't have money you're willing to lose. Crypto investment is a dream only for delusional people who want to get rich quick. If you do that then lose your money, you don't get to complain. You're free to choose, if you choose wrong, lose, and then not take responsibility for your choice and blame others, then you're truly a loser.
I’ll take issue with your last point. Many in crypto are evangelical about it, but follow up everything with a “DYOR” as if that absolves whatever their statement was.
Michael Saylor, the most visible corporate Bitcoin warrior, advised people to mortgage their homes and borrow as much as they could to buy Bitcoin at the literal top of the market (to the day).
The number of people in crypto who believe in a libertarian, anarcho-capitalist world are on the order of 0.01% - the millions of retail traders punting Dogecoin around are just trying to get rich and don’t give a damn about the tech or some greater cause. And that’s because that is how crypto is actually marketed to the masses.
You're talking about fixed or restricted-supply cryptocurrencies, which do indeed almost always have some Ponzi aspect. These might represent a majority of the current cryptocurrency landscape, but isn't close to being a fundamental truth.
Algorithmic stablecoins like RAI[1] don't have a Ponzi component to them, for instance. You use the dApp and that's it.
Reflexer is collateralized by ETH which is traded 65% of the time against USDT which is backed by chewing gum and hope. This USDT trading determines the price of ETH which in turn determines the collateralization rate of RAI.
When England went back onto the gold standard in 1925 it was a form of extreme austerity. That's because the govt can't easily create more money supply if needed. That's similar to the problem with BTC and cryptos with limited availablity. It just favours the early entrants.
"Creating more money" is simply diluting existing holders of money. Capital != money, value != money, productivity != money. Printing more money does not create wealth - it redistributes it to preferred recipients. The gold standard reinforces economic discipline. America and Britain were able to inflate more effectively than others because of having a monopoly on reserve currencies and owning the rails of international settlement, by requiring all countries to settle in their currencies. Essentially they exported their inflation to all other countries to benefit their own citizens.
> The gold standard reinforces economic discipline
The gold standard actually doesn't do anything because no nation on Earth uses it any more. We have lots of evidence that when it was used, it created instability and economic chaos. Nobody who seriously studies economics things a "return to the gold standard" is a good idea. Here's an example poll of people who have studied economics at the highest level for their entire lives: https://www.igmchicago.org/surveys/gold-standard/
Conspiracy theories about the gold standard are peddled on youtube/twitter because it's easier to blame things on conspiracy theories than to understand complex topics. Kind of like climate change or covid.
This is true and I'm surprised at how little it is discussed and how long it took me to understand this simple fact.
if you have a bunch of participants with money, and create new money,either you 1) give each participant an equal amount (this drives relative wealth towards equality) 2) give each participant an amount proportional to their wealth (result: nothing changes, relative wealth of all participants is the same) 3) you give to some and not others (all youve done is funnel relative wealth from some to others, while
pretending you have created money)
in real life, 'money creation' is almost exclusively 3)
This is fairly accurate, based on my understanding of how our reserve currency system works (in the US). However, it's not quite accurate that printing more money doesn't create wealth.
The ability of our financial system to create more money (print) allows lenders to lend more money, which translates to growth, assuming the debt created is used for something that can generate wealth (like creating a small business or buying an asset that appreciates).
Furthermore, the US centralized banking system has helped developing nations to grow, as we've lent those nations money. So - the US printed more money to lend to foreign nations, who used the money to develop their countries, improving mortality rates, poverty rates, etc, all while the US GDP continues to grow with those countries. It's not just wealth redistribution, it's wealth creation.
All that said, it's not a system without flaws. The system has effectively exported the US labor force to those developing countries. The environmental costs of exporting labor are massive. Not all money loaned out has been used well. Our monetary policy has (most likely) pushed us into wars (WMDs anyone? No? Ok. Don't sell oil in Euros).
"Capital != money, value != money, productivity != money."
Yes, we know that.
But you are missing the point of Monetary Policy.
During a crisis for example, we need to 'reallocate' financing faster than the system will allow for it.
A huge natural disaster that hits an otherwise productive economic centre may mean there is never any recovery, because everyone is unwilling to re-invest.
But if the government steps in with $50B in investment, not only does that spark rebuilding directly, but is also brings back investment.
War is another example: if you're invaded, the economy won't react quickly enough to form some kind of physical defence force. That's why you have civic functions i.e. the Army, which needs direct investment, maybe from lose monetary policy.
In normal times, the central bank can made adjustments much more quickly than the economy can react with higher or lower wages.
France/Spain lose competitiveness because their salaries might be too much. Nobody will accept a pay cut. But a little bit of loser monetary policy will take care of that.
Obviously, printing money doesn't cure anything, just like 'Making A Law' doesn't cure anything.
Monetary Policy can be abused just like the Treasury, just like the Judiciary just like Security Forces.
It's just a form of governance, that's it.
But using 'Gold' you lose the ability to have any governance and are guaranteed to fail during disaster like board that you nailed from your boat to the dock will break when the tide comes in. You'd use a rope in that scenario, i.e. 'monetary policy'.
> "You can believe that 99% of crypto is bullshit while also believing that the 1% that isn't will change the world"
Is this a quote from someone?
Because you can believe anything, believes are not a good method to find what is truth. But it is part of the pump and dump strategy, make people believe that something is valuable and them dump on them all your worthless assets.
It's from Preston Byrne (added this in my original comment).
The reason I think it's relevant is that posts like Palmer's attack only the "scam side" of crypto (the 99%) without acknowledging the "new paradigm" (1%) side
Yes there are scams, yes there are pumps and dumps, yes there are insiders who control too much liquidity. But you also have to do justice to the promise of the tech.
It was not previously possible for anyone with an internet connection to take out a loan via a decentralised protocol (MakerDAO), or exchange assets via a decentralised contract (Uniswap), or have a digital proof of authenticity (NFTs). And all of this without middle-men taking fees, opaque leverage throughout the system (see Archegos) and gating access to only certain participants (the richer half of the world who have a bank account).
Change the world in some as-yet undiscovered way? I have much less than 1% confidence that any of the crypto ideas I've heard so far will change the world.
My wife and I paid off our student loan debts with a 0% interest loan and no need to go through a bank. Our position is well over-collateralized and interest generated from other DeFi lending positions will pay off the loan in full.
Not to mention, Ethereum as a settlement layer for stablecoins is gaining exponential adoption. There's a non-insignificant chance it disrupts the traditional banking rails (i.e. ACH, wire, SWIFT, etc.).
Bitcoin has been around longer than the iPhone. When it started I think we were all still in Windows XP.
If Bitcoin hasn’t yet discovered a killer app, when will it?
But yeah yeah, it took tens of thousands of years between humans seeing lightning start fires and the charcoal grill… if it took that long, I'm sure it will be tens of thousands of years before Bitcoin finds a use. Better keep buying and holding!
That’s kind of like saying “the Nokia brick phone has been around forever, if it hasn’t discovered a killer app, when will it?”
Bitcoin was just the first blockchain to really find adoption, it’s nowhere near where 99% of the innovation in crypto is happening today. Far more interesting projects that are providing actual value today.
My feelings of meh about crypto have nothing to do with the technology and everything to do with the fact that I can't think of a problem it solves in my life or any way it makes my life easier, more enjoyable or more interesting.
Interesting read. One thing I don't understand is that he still presents decentralization as something to strive for (as lots of people in the crypto space do), but then he criticizes the consequences of decentralization:
> Despite claims of “decentralization”, the cryptocurrency industry is controlled by a powerful cartel of wealthy figures who, with time, have evolved to incorporate many of the same institutions tied to the existing centralized financial system they supposedly set out to replace.
> Cryptocurrency is like taking the worst parts of today's capitalist system (eg. corruption, fraud, inequality) and using software to technically limit the use of interventions (eg. audits, regulation, taxation) which serve as protections or safety nets for the average person.
From what I understand, people in that space seem to think that because something is decentralized, people will automatically distribute equally between themselves power and authority. That seems really naive. As with any "free for all" type of space, the law of the strongest applies. The "cartel" that he speaks of taking control of crypto is a natural consequence of decentralization. An important part of central authorities in the modern world is to guarantee some freedom from exploitive forces. Democracy, unions, laws are a way to achieve that goal.
I wonder if it's a consequence of people thinking about the state as fundamentally bad? I often see criticism from some people, both left and right-wing, that the state is good for nothing, but it seems clear (in the view of the author) who wins when the state can't exercise its authority. Maybe it's time for some people to review their views about decentralization and its consequences.
Yes, that worldview, i. e. that the intangible structures created by societies (governments, laws, banks) are inherently bad is rather popular with the tech crowd. Witness how they approach free speech issues, putting all their stock in technological solutions (Tor) while generally either complaining about relevant laws or cynically dismissing all initiatives as corrupt.
With regard to central banks, the community is at about the level of the 1920s, where monetary policy was arguably worse than some default law of physics, like the availability of actual gold, might have been. That ignores the bit of history that came later, and the progress that’s been made. That’s why they’re all afraid of runaway inflation, although it has not happened within anyone’s lived experience in western democratic countries.
It’s fun to remember how paranoid the crypto community was at the beginning of being targeted by governments for encroaching on their power. When, in reality, the response was mostly just benign curiosity, and governments only reacted when there were tangible harms to prevent, such as fraud and, more recently, skyrocketing CO_2 emissions. It’s almost as if the FED isn’t a shady private institutions owned by the Rothschild’s out to exploit the common man.
I don't think there's a powerful cartel controlling the industry. If you'd imagine that, they would be controlling the market, not the industry per se, it's production..
Anyhow, most industries are controlled by few players outside of crypto. Perhaps the right question would be if the existence of crypto as a new component of the system can somehow decrease injustice in the system as a whole. I don't know the answer, but I would gamble it's No - for now. The way I see it in the near future (maximum 10y) we'll get obvious reasons to answer Yes, though.
Well it's easy to argue that most crypto projects are get rich quick schemes by their creators. A lot of people haven't even heard of OneCoin [1], but I think it's what most of the crypto community actually looks like when you remove the whole "progressive" or "building future" branding.
I think he describes the current crypto landscape accurately, but I'm becoming more and more bullish on the long term decentralized finance vision. Imagine solving open source funding by OSS developers selling insurance for their projects on decentralized programmatic insurance markets.
> selling insurance for their projects on decentralized programmatic insurance markets
One of the problems with crypto is people treating it like fairy dust. There are remarkably few, perhaps vanishingly so, business models that do not work centralised that do decentralised.
This is one. What is the pay-out? Who makes what guarantees? How are they enforced?
If a business plan requires crypto—as opposed to being enhanced by it—it’s probably dead on arrival.
This is a super undeveloped idea, but I was thinking about something along these lines:
1. OSS users pay a monthly premium for insurance on the software (incl transient dependencies) that is critical to their business.
2. Part of the cash flow from premiums is pooled into an insurance fund that pays interest to OSS developers. The rest is payed out directly to OSS devs.
3. If there is a bug in an insured OSS project, policy holders have a claim on the pool. The magnitude of the claim depends on the severity of the bug and the time it remains open. Future payouts to the OSS project with the bug are directed to the fund until the payed out insurance benefit is covered.
The hardest part is coming up with a decentralized consensus mechanism for establishing the existence, severity and resolution of bugs, but there is a lot of experimentation going on in DeFi to solve similar problems.
As to why it should be decentralized, it's the same reason OSS is decentralized: you don't want a single actor to control OSS funding.
The problem with OSS funding isn't the technical mechanism that money is sent. The problem is that people don't want to pay period. The ONLY viable crypto use case is currency. The blockchain can't solve issues that require attachment to the real world.
Like the tweeter points out, they're not really all that decentralized. They're controlled by an anonymous cartel that's not accountable to anyone. At least national currencies are controlled by central banks that are accountable to governments that are in turn accountable to the people.
Readit News
https://www.cnbc.com/2021/07/14/dogecoin-co-creator-jackson-...
Without this cycle we would have never gotten out of the Stone Age.
That's very different than the crypto lovers that don't change their opinion because of greed.
And then advocating for something which makes logically sense to help other who don't follow to deep into the topic itself.
Awesome person :)
If you never do that, how can you learn anything?
If I were to invest in anything related to crypto today, I'd conduct the due-diligence of a lifetime before sinking a cent into the investment, even going as far as hiring private investigators to fine-comb through the people involved. I don't think any tech sector has more veteran con-men than crypto - these folks have been scamming people for a lifetime.
Behind MLM (https://behindmlm.com/) makes a decent job at following the worst offenders
https://youtu.be/a9FA0b61zSE
Thanks for the show recommendation.
This whole thing gets more absurd as USD Coin and Binance USD climb to the top with Tether.
The whole space to me feels like such a massive waste of resources and brain power.
I don't disagree in terms of rich people controlling the crypto ecosystem now. That is one aspect I'm not liking about crypto right now. Too much manipulation, although I think that's at least partly coming from the traditional institutions jumping in and playing the games they do with traditional markets. Plenty goes on behind the scenes in traditional markets, even though they are regulated, and yes, crypto has less regulation, so they probably can get away with more.
I love crypto technology but I think there's stuff going on behind the scenes that regular folk have no idea, and I'm starting to wonder if the grand ideas crypto people have are incorrect. I think the way it will succeed is when big institutions accumulate enough and then it's in their interest to manipulate the crypto market up. I.e. see banks in the Big Short accumulating enough of what Michael Burry was betting on all along, and at that point they revised the indices that track the housing markets, since it was in their interest to at that point.
In the end I don't think crypto is much different than what goes on in equity markets now. Rich people and big institutions control that market too. Meme stocks are essentially also lottery tickets. Way out of balance P/E ratios mean traditional fundamentals are out the window. It's all about momentum and trends now. The one difference, and a benefit I see for traditional markets, is the government will bail them out. The government would be fine if crypto crashes. I think that's the scary part about investing in crypto, but there is also higher potential for upside in crypto markets.
Crypto has never been heavily marketed to poor people. They don't have the capital to buy in at any meaningful scale. The lottery ticket appeal is that you might win $10k or $1m off of a $1 or $2 ticket. There is no mass scale marketing effort pushing $1/$2 of Bitcoin or Dogecoin to poor people with that con-pitch. To this day poor people have barely any stake in the crypto world. For crypto, the lottery players are the small contingent of middle class persons that bother with it (which still isn't very many).
Actual lottery tickets on the other hand, are prominently marketed to poor people all over the place, front and center in many common stores.
Walk into an average convenience store or liquor store, you're telling me they have a large display of dozens of cryptos with updating price quotes appealing to poor people about how big the prizes are and how they can win a million dollars with a $2 ticket? Nope.
I have also met quite a few software engineers who are not poor but don' have nearly the level of wealth of the people manipulating these markets who have gotten involved with this stuff. These people aren't poor but relative to the scammers they are, and when they lose money in hurts. I know one engineer for example who lost his life savings on some alt coins in this mid thirties.
Except for:
- Selling/buying illegal stuff (like drugs or credit cards numbers)
- Ransomware and other scams
Crypto is yet-another-trading-market nothing new expect maybe marketing)
Literally nobody in the cryptocurrency space is thinking about how to make fiat fair and sustainable because they actually like the flaws of fiat and just want to amplify them for their own benefit.
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But alt coins is gambling.
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They are all believers now.
It does seem like they are just in it to take money from the Retail Investors investors though like they always do. Meaning I have seen to many Bull to Bear Markets, and when the switch happens--it's the Retail investor that looses everything.
(I guess we will know how it all turns out in a few years. If I had Bitcoins, I would sell. The competition is almost exponential. New crypto are coming on daily. Every money licker wants their own crypto.)
However, I don't disagree that retail investors may end up with issues with crypto, but I don't think traditional markets are necessarily safe for retail investors either. Big money controls both crypto and traditional markets. Governments can bail out traditional markets, but in the end big money gets most of the bailout, too. Traditional markets, at least right now, are less volatile than crypto, but things like March 2020 show that they aren't for certain, either. It sounds like we don't really disagree though since you referred to watching various bull and bear cycles.
- Business and work in general makes rich people richer. Remember that rich is very relative. You are a very wealthy person compared to a random person in some countryside in China.
- Considering the previous point, are you saying that people who have some money should not do anything to make more money? Should they stay the same, or should they become poorer? What do you advocate to do this? Prevent them from working? Take money from them forcefully?
All I hear from people in the crypto world is that you SHOULDN'T invest if you don't have money you're willing to lose. Crypto investment is a dream only for delusional people who want to get rich quick. If you do that then lose your money, you don't get to complain. You're free to choose, if you choose wrong, lose, and then not take responsibility for your choice and blame others, then you're truly a loser.
Michael Saylor, the most visible corporate Bitcoin warrior, advised people to mortgage their homes and borrow as much as they could to buy Bitcoin at the literal top of the market (to the day).
The number of people in crypto who believe in a libertarian, anarcho-capitalist world are on the order of 0.01% - the millions of retail traders punting Dogecoin around are just trying to get rich and don’t give a damn about the tech or some greater cause. And that’s because that is how crypto is actually marketed to the masses.
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Algorithmic stablecoins like RAI[1] don't have a Ponzi component to them, for instance. You use the dApp and that's it.
[1] https://reflexer.finance
Reflexer is collateralized by ETH which is traded 65% of the time against USDT which is backed by chewing gum and hope. This USDT trading determines the price of ETH which in turn determines the collateralization rate of RAI.
The gold standard actually doesn't do anything because no nation on Earth uses it any more. We have lots of evidence that when it was used, it created instability and economic chaos. Nobody who seriously studies economics things a "return to the gold standard" is a good idea. Here's an example poll of people who have studied economics at the highest level for their entire lives: https://www.igmchicago.org/surveys/gold-standard/
Conspiracy theories about the gold standard are peddled on youtube/twitter because it's easier to blame things on conspiracy theories than to understand complex topics. Kind of like climate change or covid.
if you have a bunch of participants with money, and create new money,either you 1) give each participant an equal amount (this drives relative wealth towards equality) 2) give each participant an amount proportional to their wealth (result: nothing changes, relative wealth of all participants is the same) 3) you give to some and not others (all youve done is funnel relative wealth from some to others, while pretending you have created money)
in real life, 'money creation' is almost exclusively 3)
The ability of our financial system to create more money (print) allows lenders to lend more money, which translates to growth, assuming the debt created is used for something that can generate wealth (like creating a small business or buying an asset that appreciates).
Furthermore, the US centralized banking system has helped developing nations to grow, as we've lent those nations money. So - the US printed more money to lend to foreign nations, who used the money to develop their countries, improving mortality rates, poverty rates, etc, all while the US GDP continues to grow with those countries. It's not just wealth redistribution, it's wealth creation.
All that said, it's not a system without flaws. The system has effectively exported the US labor force to those developing countries. The environmental costs of exporting labor are massive. Not all money loaned out has been used well. Our monetary policy has (most likely) pushed us into wars (WMDs anyone? No? Ok. Don't sell oil in Euros).
Yes, we know that.
But you are missing the point of Monetary Policy.
During a crisis for example, we need to 'reallocate' financing faster than the system will allow for it.
A huge natural disaster that hits an otherwise productive economic centre may mean there is never any recovery, because everyone is unwilling to re-invest.
But if the government steps in with $50B in investment, not only does that spark rebuilding directly, but is also brings back investment.
War is another example: if you're invaded, the economy won't react quickly enough to form some kind of physical defence force. That's why you have civic functions i.e. the Army, which needs direct investment, maybe from lose monetary policy.
In normal times, the central bank can made adjustments much more quickly than the economy can react with higher or lower wages.
France/Spain lose competitiveness because their salaries might be too much. Nobody will accept a pay cut. But a little bit of loser monetary policy will take care of that.
Obviously, printing money doesn't cure anything, just like 'Making A Law' doesn't cure anything.
Monetary Policy can be abused just like the Treasury, just like the Judiciary just like Security Forces.
It's just a form of governance, that's it.
But using 'Gold' you lose the ability to have any governance and are guaranteed to fail during disaster like board that you nailed from your boat to the dock will break when the tide comes in. You'd use a rope in that scenario, i.e. 'monetary policy'.
It is still the govt's word that the taxes, GDP etc will grow over time to pay off those debts which it owes to the central bank, isn't it?
Is this a quote from someone?
Because you can believe anything, believes are not a good method to find what is truth. But it is part of the pump and dump strategy, make people believe that something is valuable and them dump on them all your worthless assets.
The reason I think it's relevant is that posts like Palmer's attack only the "scam side" of crypto (the 99%) without acknowledging the "new paradigm" (1%) side
Yes there are scams, yes there are pumps and dumps, yes there are insiders who control too much liquidity. But you also have to do justice to the promise of the tech.
It was not previously possible for anyone with an internet connection to take out a loan via a decentralised protocol (MakerDAO), or exchange assets via a decentralised contract (Uniswap), or have a digital proof of authenticity (NFTs). And all of this without middle-men taking fees, opaque leverage throughout the system (see Archegos) and gating access to only certain participants (the richer half of the world who have a bank account).
These days I tend to send skeptical folk this writeup on the problems with centralised finance, and associated DeFi solutions: https://john-street-capital.medium.com/fintech-3-0-re-archit...
My wife and I paid off our student loan debts with a 0% interest loan and no need to go through a bank. Our position is well over-collateralized and interest generated from other DeFi lending positions will pay off the loan in full.
Not to mention, Ethereum as a settlement layer for stablecoins is gaining exponential adoption. There's a non-insignificant chance it disrupts the traditional banking rails (i.e. ACH, wire, SWIFT, etc.).
If Bitcoin hasn’t yet discovered a killer app, when will it?
But yeah yeah, it took tens of thousands of years between humans seeing lightning start fires and the charcoal grill… if it took that long, I'm sure it will be tens of thousands of years before Bitcoin finds a use. Better keep buying and holding!
Bitcoin was released in 2009. The iPhone was released in 2007.
Bitcoin was just the first blockchain to really find adoption, it’s nowhere near where 99% of the innovation in crypto is happening today. Far more interesting projects that are providing actual value today.
So its an unproductive assumption
> Despite claims of “decentralization”, the cryptocurrency industry is controlled by a powerful cartel of wealthy figures who, with time, have evolved to incorporate many of the same institutions tied to the existing centralized financial system they supposedly set out to replace.
> Cryptocurrency is like taking the worst parts of today's capitalist system (eg. corruption, fraud, inequality) and using software to technically limit the use of interventions (eg. audits, regulation, taxation) which serve as protections or safety nets for the average person.
From what I understand, people in that space seem to think that because something is decentralized, people will automatically distribute equally between themselves power and authority. That seems really naive. As with any "free for all" type of space, the law of the strongest applies. The "cartel" that he speaks of taking control of crypto is a natural consequence of decentralization. An important part of central authorities in the modern world is to guarantee some freedom from exploitive forces. Democracy, unions, laws are a way to achieve that goal.
I wonder if it's a consequence of people thinking about the state as fundamentally bad? I often see criticism from some people, both left and right-wing, that the state is good for nothing, but it seems clear (in the view of the author) who wins when the state can't exercise its authority. Maybe it's time for some people to review their views about decentralization and its consequences.
With regard to central banks, the community is at about the level of the 1920s, where monetary policy was arguably worse than some default law of physics, like the availability of actual gold, might have been. That ignores the bit of history that came later, and the progress that’s been made. That’s why they’re all afraid of runaway inflation, although it has not happened within anyone’s lived experience in western democratic countries.
It’s fun to remember how paranoid the crypto community was at the beginning of being targeted by governments for encroaching on their power. When, in reality, the response was mostly just benign curiosity, and governments only reacted when there were tangible harms to prevent, such as fraud and, more recently, skyrocketing CO_2 emissions. It’s almost as if the FED isn’t a shady private institutions owned by the Rothschild’s out to exploit the common man.
Anyhow, most industries are controlled by few players outside of crypto. Perhaps the right question would be if the existence of crypto as a new component of the system can somehow decrease injustice in the system as a whole. I don't know the answer, but I would gamble it's No - for now. The way I see it in the near future (maximum 10y) we'll get obvious reasons to answer Yes, though.
[1] https://www.youtube.com/watch?v=64xcgvEJ3Ys
One of the problems with crypto is people treating it like fairy dust. There are remarkably few, perhaps vanishingly so, business models that do not work centralised that do decentralised.
This is one. What is the pay-out? Who makes what guarantees? How are they enforced?
If a business plan requires crypto—as opposed to being enhanced by it—it’s probably dead on arrival.
1. OSS users pay a monthly premium for insurance on the software (incl transient dependencies) that is critical to their business.
2. Part of the cash flow from premiums is pooled into an insurance fund that pays interest to OSS developers. The rest is payed out directly to OSS devs.
3. If there is a bug in an insured OSS project, policy holders have a claim on the pool. The magnitude of the claim depends on the severity of the bug and the time it remains open. Future payouts to the OSS project with the bug are directed to the fund until the payed out insurance benefit is covered.
The hardest part is coming up with a decentralized consensus mechanism for establishing the existence, severity and resolution of bugs, but there is a lot of experimentation going on in DeFi to solve similar problems.
As to why it should be decentralized, it's the same reason OSS is decentralized: you don't want a single actor to control OSS funding.
edit: wording
I think this doesn’t make any sense but maybe I just don’t understand.