I am someone from a developing country who regularly used crypto either to get paid, or to pay for things online.
Does crypto have issues? yes. Is it good enough that in occasion it was my preferred payment method? yes.
Crypto community and companies are maybe bad, but if you zoom out into IT overall there is a fair share of greed and misuse. The internet is full of scams, gurus selling courses with false claims, spam emails that drain your grandpa's account, affiliate programs with 70% margin to sell fake products from questionable weight loss ebooks with health-harming diets to fragrances claiming to be perfumes that attract females supported by endless fake video testimonies, online communities encouraging hate, demoralization, and lack of belief in society.
Seem to me that those articles are nothing but status quo bias, does crypto has bad aspects? yes, is it worse than say internet? I don't know.
In both of your examples, crypto provides an advancement in live valuation that the other industries cannot.
Despite you making them rhetorical demonizations of crypto, the answers are actually “maybe? we don't know, what does Forrester and other market research firms say, do they have that data?”
(Other times when this is pointed out, people typically reveal that they view everything else as more useful than crypto - which naturally would then include gurus and affiliate programs - so their market size and country size emissions doesn't actually matter when this point is more accurately challenged. Just wondering if you had a more articulate argument or a more predictable one)
I remember nicer days when crypto had some value, and yes exchanges were already shady and did a lot of washing, but there was clearly a closer approximation to market sentiment and real world use cases. Nowadays everything seems to be revolve around derivatives, margin lending, yielding and staking to be margin lent again. The problem, IMO, might actually have been smart contracts.
A family member started getting pretty deep in the crypto game, and went to one crypto conference. Afterwards, we hung out and he was really deflated. He just said, "none of these people understand what's going on. I asked what would happen when the underlying asset values went down, and they tied themselves in knots trying to unravel their own cleverness".
Crypto is interesting to me in the way that algotrading is interesting. Lots of interesting math doing fun things, but not worth really doing unless you have _massive_ resources. To me, there is 1 huge potential win for crypto - replacing clearing houses and banking infrastructure. Winning that is going to make a small number of investors extraordinarily wealthy.
There is 1 other interesting case for crypto, which is a common API that doesn't care who the winner is. But that's a questionable win.
Everything else in the crypto/defi/web 3.0 world is just a scaled MLM ecosystem.
The thing they describe as the box is literally a Ponzi scheme. You put in some money and you get high guaranteed return.
You have money, and you even can cash out some unless too many people try to cash out at the same time. Then it turns out there's no money to cover the returns.
Key innovation that further obfuscates this is that instead of cashing out directly you might use IOUs from the Ponzi scheme as a collateral to borrow some money and never pay it back leaving your Ponzi collateral with person that borrowed you money.
Noone has an incentive to cash out direclty to not endanger percieved valuability of Ponzi box. And everybody has incentive to push as much IOUs to as many new people as possible in exchange for hard currency.
Many---nearly all---altcoins are dangerously close to ponzi schemes, except bitcoin. Bitcoin stands apart as the sole protocol that's really decentralized and doesn't promise ridiculous returns.
However, given that Bitcoin is jn the process of monetizing and may become the world's base layer of money, it stands to gain a lot of value the long term compared to the melting icebergs of central bank and commercial bank created fiat currencies.
If this doesn't make sense, please read "The Bitcoin Standard" and "Inventing Bitcoin" to understand this technological advance.
One can prefer sundials to watches, but reality was changed when the watch was invented.
It’s not a Ponzi scheme. It’s a bubble—the belief is that prices will rise on the open market.
You get tokens for putting money in the box. You can sell the tokens on an exchange later for cash. The cash comes from exchange participants, not box people. All the box people receive the tokens they expect. They don’t receive tokens from new box people.
If it’s 1995 and Toys R Us is giving away Beanie Babies to the first 250,000 Elmo buyers, that’s not a Ponzi. If somebody buys lots of Elmos to flip Beanie Babies knowing 250,000 Beanie Babies are going to hit the market, they are delusional. It’s still not a Ponzi. It’s a bubble.
I disagree with you on the smart contracts being the problem. a) Bitcoin doesn't use them, b) none of the issues you raise are caused by smart contracts. ALL of those are caused by large exchanges luring people in on the promise of free money.
The margin lending, staking, and all the rest are not Bitcoin, but Bitcoin!TM [1].
This isn't a "real bitcoin hasn't been tried" argument. It's a "if you treat it as any other asset or stock and play the Wall Street game, then of course it will look like Wall Street".
Bitcoin is the solution to the fundamentally broken debt-driven economy. Critics don't get it because they lump it together with "cryptocurrency". While technically a cryptocurrency, Bitcoin does not exhibit any of the ponzi, scam-like shenanigans that are easily observable in shitcoins. Yes, there is a lot of crazy stuff happening with wash trading - but this is a byproduct of lack of regulation and has nothing to do with the thing that is Bitcoin. Most critics just don't understand what problem Bitcoin solves. They think it has something to do with replacing currency, or sending payments. Bitcoin is a financial freedom tool for billions of people, the likes of which do not browse Hacker News. Those people get Bitcoin instantly. They don't need articles like this one to tell them why their needs are unmet by the traditional finance system. The thing that Bitcoin critics lack is the understanding of credit markets, central banking and manipulation of money - the source of a large number of problems in the world. To them, everything is fine. Reminds me of that meme where the place is on fire and the dog is sitting in the middle of the room - that's the Bitcoin critic.
I have a deep understanding of all of the latter. I work in capital markets daily. I do not know anyone serious with my level of experience in the actual markets who thinks bitcoin is the answer.
There are several issues with tradFi. Pointing that out is like saying the sun will rise tomorrow. In some cases, people are working on a fix. In other cases, the inefficiency and criminal activity is not ceasing because the scale is too small for overburdened regulators to care about.
Not one of these uses bitcoin as a fix. Whoever is building it has almost never been in finance. They think tech bros can easily understand finance cos numbers! Except finance is extremely advanced. It’s like trying to join a full ML team after running a single random forest regression or something. The consequence of such hubris is sentences like this:
> Bitcoin is the solution to the fundamentally broken debt-driven economy.
The debt driven economy is by design. It’s not a fucking flaw like the hard money idiots listening to Peter Schiff daily want to believe. Sometimes it goes to excess and we get 2008. Doesn’t mean the older idea was better. There is no wealth distribution in a hard money paradigm that makes sense.
For simple terms since you’re obviously not in the field, ask yourself where is money created? If you say central banks, go back to Econ 101 and study better this time.
Exactly. This is a problem. It can be so advanced that almost nobody understands it.
Now take a look at how advanced Bitcoin is:
Total circulation will be 21,000,000 coins. It'll be distributed
to network nodes when they make blocks, with the amount cut in half
every 4 years.
first 4 years: 10,500,000 coins
next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
next 4 years: 1,312,500 coins
etc...
When that runs out, the system can support transaction fees if
needed. It's based on open market competition, and there will
probably always be nodes willing to process transactions for free.
Satoshi Nakamoto
> There is no wealth distribution in a hard money paradigm that makes sense.
Care to explain how one can come to this claim based on first principles?
Maybe I'm misinterpreting this sentence of yours. I read it as: a hard money paradigm will inevitably lead to a very undesirable wealth distribuation (Gini coefficient --> 1) and there's no way to fix/prevent this other than moving from hard money to soft money.
I'd refute this claim. There are completely obvious ways to prevent Gini --> 1. Effective redistribution from wealthy to poor. The only hurdle to that is political systems, voters, governments or monarchs deciding to and then enacting it. Absolutely possible.
> For simple terms since you’re obviously not in the field, ask yourself where is money created? If you say central banks, go back to Econ 101 and study better this time.
The Fed itself directly created 8T USD since 2009 (QE). Some of it in the past two years even went straight to consumer's pockets via the Treasury in the form of stimmies and forgivable PPP loans (helicopter money/MMT).
Where did the rest of the increase in M2 come from? Fractional reserve lending by banks -- at interest rates artificially suppressed by Fed policies specifically to encourage lending/money creation.
Before the Fed was created in 1913, USD was created by fractional reserve lending by banks at market determined interest rates and the marginal increase in monetary gold and silver from mining output (typically 1-2%/yr).
This historic monetary system was dynamically unstable as mining output was uncorrelated with natural business cycles and unbackstopped banks were subject to runs during downturns. The Fed was created to solve these problems, specifically the panic of 1907.
Over time it's mission evolved from being a lender of last resort to actively targeting employment and consumer prices. Since the 1987 crash however, this official mandate was effectively replaced with one targeting asset prices - primarily stocks and houses (wealth effect targeting).
Normal business cycles were now increasingly distorted by the fed Fed responding to (or not wanting to hurt) asset prices for fear it would psychologically affect consumer and business spending and eventually employment.
This lead to a new instability: bigger booms created or exaggerated by easy Fed money, followed by bigger busts during the tightening phase.
Each boom/bust cycle led to more micromanagement by the Fed and thus more instability. Since 2008 (QE), and especially after 2020 (helicopter money) they have gone completely off the rails as seen by the M2 chart above and soaring consumer prices. "Inflation is always and everywhere a monetary phenomenon - Milton Friedman"
Bitcoin is not ever going to replace the fiat economy, it simply solves the wealth preservation problem by acting as gold v2.0. This is a huge deal as most empires in history have risen and fallen via currency manipulation, hurting millions of people in the process. The life preservers have finally arrived, just in time.
People should ask "whose design?" then. Who's the beneficiary of this design?
What do you think is more likely to be true?
A. The wealthy/influencial/powerful/elites use their (disproportionate) power to influence the design of fundamentals of society - such as the monetary system - in a way that benefits/stabilizes their position at the top.
B. The wealthy/influencial/powerful/elites just let the design of fundamentals of society - such as the monetary system - be in whatever way it's shaped by society or political processes.
> Bitcoin is a financial freedom tool for billions of people, the likes of which do not browse Hacker News
These people are most vulnerable of the lot. They live hand to mouth, don't posses computing devices (may be cheap China smartphone). I cannot fathom how this demography manages bitcoin assets, manages to purchase their basic needs (which is all they can afford) using coins and not to mention this market crash when even millionaires are feeling the pinch.
What you describe here is grouping of thousands of different types of demographics into one. The reality is very different depending where you live, and your level of technology access varies. A fleeing Ukrainian is very well versed in Bitcoin - Ukraine has one of the highest levels of adoption. A Nigerian is also very versed in Bitcoin - despite their government's attempt at curtailing use, they still find a way. A kid in Congo may or may not have access to a smart phone - that I have no way of knowing, but I do know that cell phone access is ubiquitous in Africa despite what many imagine or believe. Sure, their needs may be better served by a stable coin, but that does not relieve bitcoin of value. A Salvadorian may or may not understand Bitcoin - but this is like asking the population to understand how your email protocol works - there's a lot to learn. Even in a country like Japan, Bitcoin is becoming a safe haven with the Yen losing 20% of its value when comparing to USD.
Going back to the topic of the "most vulnerable", a bank that you and I take for granted is a luxury in many of Africa's nations. Bitcoin is a permission-less banking system. Does it have technological hurdles for the average person to overcome? Yes. But this is all being worked on right now by people I talk to every day. The same way that most people have no idea how SMTP works, you won't really need to understand behind the scenes of Bitcoin. There are various levels of autonomy and people will fall on the spectrum of where they are comfortable, with the level of privacy / security that most fits their Bitcoin education.
Usually when describing something in the face of scrutiny, one describes a use case. If someone questions the validity of hammers, the solution isn't to say "we call this a hammer." It's to show how hammers are used.
I doubt most crypto folks have any idea of credit markets or central banking. What they have expertise in is the manipulation of money. Bitcoin, and all of crypto, is Wall Street's love interest for a reason.
Some of us have read Bastiat (in French!), Mises, Hayek, Rothbart, Solerno, and other "heterodox" Austrian economists, and have a better understanding of how money arises and how central bank interference in monetary and credit markets creates the boom and bust business cycles.
Bitcoin, with its Austrian hard money roots, stands head and shoulders above the crazy scammy mess of all the centralized altcoins (or "crypto" if you lile) that you right to criticize. Please don't lump real technological and computer science innovation in with a the crypto rug-pulls.
Most of them watched some youtube video providing a conspiracy theory view on banking, "fiat" currencies and debt-as-money.
They think they have deep insights when saying "banks create money out of thin air", or "there is not enough money in the economy to pay down all debt". They also use the word "fiat" as if it's bad that a currency is backed by a government.
All the above are strong indication that there is something fundamental about the monetary system that someone fails to understand.
A lot of crypto has been bought because the buyer were under such illusions.
>Sorry this is all too vague. How do you define "broken" and what does this post-debt-driven economy look like?
Look up % of world population living in hyperinlationary environments to get your answer. The post-debt driven economy is one where a handful of people cannot devalue your labor with a press of a button.
> Whats the use case here exactly?
Freedom from corrupt governments that debase your currency into oblivion, only to adopt another currency which suffers from the same ultimate fate. Financial inclusion is the use case. It's broad, it's ambitious and ultimately to entrepreneurial interpretation.
You literally have to go through a regulated exchange to onboard and unload your illicit transactions. Not to mention your entire transaction history is public up to the exchange event. The biggest money launderers of today are literally the world's biggest banks. Go look up Deuche Bank money laundering fines.
This is pretty hilarious though, Bitcoin is exactly the same as a variety of other cryptocurrencies, which are carbon copies of it. Identical. But right on cue here come the bitcoin maximalists to explain that theirs is special.
Here's the only reason it's special - brand recognition. That's it. That's what you have over the various forks and clones. First mover advantage.
And this is what tells me that the technology isn't really solving anything, and nobody actually gives a fuck about it - other coins fix problems with BTC, they either make it more anonymous, or resolve transactions faster, or more of them, or all sorts of other things. But BTC still rules the roost because the whole thing is built on hype and sentiment and nothing more.
Actually, what you call brand recognition could be monetary adoption, as every nongovernmental money such as gold or silver had widespread adoption on their merits.
Bitcoin solved the Byzantine generals' problem in adversarial network contexts, by its innovative deployment of proof-of-work. Thus, bitcoin invented thermodynamically secured property rights, and property rights are a fundamental building block for human flourishing. Bitcoin provides a decentralized trustless source of truth, and none of the other cryptos do that because they're not nearly as widely adopted.
Bitcoin is a strong base layer that faster more anonymous payments can be based upon, such as Lightning or Liquid, and things like CoinJoin and PayJoin, which are trust less and noncustodial. You can't start with a squishly base layer and then build stable systems, but if you start with solid fundamentals, privacy and better user experiences can be built on top.
Bitcoin is also currently solving the natural gas industry's problem of flaring methane... portable mining rigs use the methane to generate electricity to provide network security to the Bitcoin network, while making natural gas extraction cleaner. Bitcoin mining is also incentivising and paying for the production of clean renewable energy on larger scales than anyone had figured how to fund. And some people use bitcoin mining to provide home heating in the winter. No other crypto is doing those things.
> Bitcoin does not exhibit any of the ponzi shenanigans
Really? How do you call something where there is no underlying product generating value, and you need to have someone else put money in to get your money out? It's literally the definition of a ponzi pyramid.
Bitcoin is voluntary. The goal is better money. If you take on that big of a challenge, you kinda need people to participate with their "old" money. It's called adoption. Just like internet would have no value if nobody participated, bitcoin has no value if nobody participates. Do you send email to yourself? No. Do you shop from a non-existing platform? no.
Key factor of Ponzi is that it guarantees you high (height arbitrarily made up by scheme organizer) periodic return on your investment and promises you get your money back eventually.
Bitcoin makes no such promises. It routinely had >80% drops in price.
The author is a bit melodramatic. Yes there are mostly scams in the space, but that is not a bug, its a feature of less regulation.
Most advocates of Crypto like most critics think about Crypto from the perspective of a consumer, which is misguided. How many people, especially technically minded people, know the boring technical intricacies of the financial sector? Not many.
The concepts, if not necessarily the current implementations of them will be used by large financial institutions to generate better margins, help High net worth individuals to avoid taxes better and possibly some other very boring things around decentralized consensus algorithms.
Defi is interesting to Vanguard and Citi, not to the consumer.
It will not revolutionize the world, nor destroy it... like most technology it will create a few successful companies and make some people rich.
PS Just to be clear, it is currently a dumpster fire that needs to be regulated ASAP. But its not going to do much more than pump a bit of cash from poor people to scumbags, that is not new.
Humans are so funny. Blaming the flawed tools we create for the problems caused by using them in all of our flawed manners.
Bitcoin is a tool, like any other. Tools can be used constructively or destructively. The ease and affordability of transferring remittances internationally is the single most useful case for Bitcoin. In those instances value is not kept in BTC except for the duration of the transfer so it is not as susceptible to the market fluctuations. On top of that it is much faster and sometimes cheaper even for more local transactions like invoices for freelancers to be done via BTC.
The banking systems have failed in a lot of ways related to the above use cases. In the US it can still take days for a check or transfer to clear. Red tape and fees abound when transferring large amounts between parties. PayPal will just shutoff your account because they don't want the risk. etc. etc.
In the future I expect to see BTC to mainly utilized for these types of financial transfers and less as a long-term store of value. Of course like any item of value there will always be the speculation side.
> In the future I expect to see BTC to mainly utilized for these types of financial transfers and less as a long-term store of value.
I have, in Sweden, the options of Swish and SEPA to transfer money. Swish is internal to Swedish residents, so to anyone who has Swish tied to their bank account I can instantly send money knowing their phone number.
With SEPA Instant Transfer I can send money anywhere in the EU, up to 100,000€, and it's guaranteed it takes less than 10 seconds.
These have been solved elsewhere, look inside the US who benefits from the fees charged to you, look who controls the lobbying power to keep these fees being charged to you. Boom, you now know that in the US the biggest limitation is always who has more money than you and control the policies you live under.
It's the same in other parts of the world, of course, but so much worse in the US...
Absolutely correct. There are plenty of payment solutions like SEPA coming out in different markets, now. Money transfer is a known problem. These work brilliantly in contries that are not controlled by the most tyrannical and/or non-functional regimes, as long as you stay within the law. (Even China has such systems in Alipay and Wechat Pay)
So what crypto adds (beyond a hypothetical store of value) is the ability to keep your assets and transactins invisible (or nearly invisible) to the government.
Not all of us have the privilege of having been born un Sweden. Your comment reeks of privilege and dissociation with the rest of the world, where things work very differently.
> wise.com is laughing. M-Pesa is laughing. EU SEPA is laughing.
Not sure how SEPA helps an immigrant in the US trying to send money back home. Or a million other situations not involving places that have SEPA.
Your other options are greedy corporations. Wise wants $7 to transfer 1000 bucks to Europe. Bitcoin will continue working if corporations fail, change policies, arbitrarily decide not to do business with you, or jack up prices. Bitcoin is not subject to the whims of a single private organization.
Government sponsored options are also beholden to all sorts of invasive inspection as well. If you want to send more than $10k it can be a lot more work in some places.
> I can also assure you perpetual futures would not be allowed to trade on any exchange inside the legitimate financial system.
I don't disagree that the point of perpetual futures on crypto exchanges is primarily to facilitate speculation and gambling, but they're just delta 1 derivatives (track the underlying 1:1) in the form of a CFD, different in mechanism but no different in use case to regular futures, which themselves are traded widely on traditional exchanges. And these perps are quite useful to temporarily hedge holdings, even more convenient than regular futures since you don't have to bother with rollover. The instrument itself is really cool. The criticism should be directed to the high amounts of leverage which is only ever useful in a gambling context, and the marketing + gamification aspects which are clearly targeted at encouraging gambling behavior. If Binance got rid of their perpetual futures, users could still gamble all the same using Binance's regular futures contracts.
Yeah yeah. Bitcoin is an open financial network that anybody can use and nobody controls and is secured by energy. What an amazing, historical feat of human ingenuity. It's neutral and just like the internet can be used by anybody. We're not going to apologise for its energy use.
>Yeah yeah. Bitcoin is an open financial network that anybody can use and nobody controls and is secured by energy. What an amazing, historical feat of human ingenuity. It's neutral and just like the internet can be used by anybody. We're not going to apologise for its energy use.
If you think the ends justifies the means, I suppose you could do anything.
Bitcoin disappearing tomorrow wouldn't make a dent in our current fossil fuel emissions. Bitcoin mining ASICs don't emit CO2. Take it up with policymakers who subsidize fossil fuels.
I don't think that's quiet right. To paraphrase Kranzberg, Bitcoin is neither good nor bad; nor is it neutral".
We can debate whether it's good or bad on net, but the fact that crypto provides monetary incentives for mining it (and thus spending electricity and computer equipment) is not up for debate.
But whether that is a bad thing definitely is up for debate. Bitcoin mining is a buyer of last resort for stranded renewable energy. It also incentivises renewable energy capture. Energy isn't fungible, it can't be magically teleported to where it can be used. Energy consumption in itself isn't something to be ashamed of or avoided. Personally I think mining Bitcoin with fossil fuels is wrong, but trying to tell people what they can compute is a dangerous road to go down.
There is a technological foundation that gets lost between all the money games that are being played on top of it and gets ignored or dismissed as a result, so you get opinions like "Bitcoin Is A Hideous Monstrosity Made Out Of Computers And Greed That Must Be Destroyed Before It Devours The World".
There is no room for discussion here, and it's depressing to see how many people want to throw the baby out with the bathwater; instead of asking for it to be regulated in a sane manner they want to outright ban the use of said technology, which I would define as barbaric... imagine banning fire because people got burnt!
The blockchain, smart contracts and NFTs are amazing technologies that could do wonders for mankind if properly used, but too many people, including tech literates, refuse to dig into it after seeing folks being defrauded out of their life savings and ruining their lives because they took a loan for hundreds of thousands of dollars on a jpeg of a badly drawn monkey.
For them crypto is bad, period. There is nothing else to talk about because it's an absolute truth, what subject should there be to discuss? Might as well argue about the possibility of God not existing with religious extremists.
The problem is that the cryptocurrency space is not a homogenous entity. It's like painting the web as a hideous monstrosity because you disapprove of online gambling, Facebook and that the NASDAQ index fell recently. The title refers to Bitcoin but the content relates to Tether, Binance, Terra/Luna, etc.
Readit News
Does crypto have issues? yes. Is it good enough that in occasion it was my preferred payment method? yes.
Crypto community and companies are maybe bad, but if you zoom out into IT overall there is a fair share of greed and misuse. The internet is full of scams, gurus selling courses with false claims, spam emails that drain your grandpa's account, affiliate programs with 70% margin to sell fake products from questionable weight loss ebooks with health-harming diets to fragrances claiming to be perfumes that attract females supported by endless fake video testimonies, online communities encouraging hate, demoralization, and lack of belief in society.
Seem to me that those articles are nothing but status quo bias, does crypto has bad aspects? yes, is it worse than say internet? I don't know.
Did "affiliate programs with 70% margin" emit more CO2 than New Zealand?
Once the scam can cripple whole countries, it becomes dangerous. https://en.wikipedia.org/wiki/Albanian_Civil_War
Despite you making them rhetorical demonizations of crypto, the answers are actually “maybe? we don't know, what does Forrester and other market research firms say, do they have that data?”
(Other times when this is pointed out, people typically reveal that they view everything else as more useful than crypto - which naturally would then include gurus and affiliate programs - so their market size and country size emissions doesn't actually matter when this point is more accurately challenged. Just wondering if you had a more articulate argument or a more predictable one)
Only decent link I can find on this is from 13 years ago with 33TWh:
https://www.theguardian.com/environment/green-living-blog/20...
https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...
I remember nicer days when crypto had some value, and yes exchanges were already shady and did a lot of washing, but there was clearly a closer approximation to market sentiment and real world use cases. Nowadays everything seems to be revolve around derivatives, margin lending, yielding and staking to be margin lent again. The problem, IMO, might actually have been smart contracts.
Crypto is interesting to me in the way that algotrading is interesting. Lots of interesting math doing fun things, but not worth really doing unless you have _massive_ resources. To me, there is 1 huge potential win for crypto - replacing clearing houses and banking infrastructure. Winning that is going to make a small number of investors extraordinarily wealthy.
There is 1 other interesting case for crypto, which is a common API that doesn't care who the winner is. But that's a questionable win.
Everything else in the crypto/defi/web 3.0 world is just a scaled MLM ecosystem.
There are no underlying assets.
You are literally conflating one tokenomic example to the entire space.
You have money, and you even can cash out some unless too many people try to cash out at the same time. Then it turns out there's no money to cover the returns.
Key innovation that further obfuscates this is that instead of cashing out directly you might use IOUs from the Ponzi scheme as a collateral to borrow some money and never pay it back leaving your Ponzi collateral with person that borrowed you money.
Noone has an incentive to cash out direclty to not endanger percieved valuability of Ponzi box. And everybody has incentive to push as much IOUs to as many new people as possible in exchange for hard currency.
However, given that Bitcoin is jn the process of monetizing and may become the world's base layer of money, it stands to gain a lot of value the long term compared to the melting icebergs of central bank and commercial bank created fiat currencies.
If this doesn't make sense, please read "The Bitcoin Standard" and "Inventing Bitcoin" to understand this technological advance.
One can prefer sundials to watches, but reality was changed when the watch was invented.
You get tokens for putting money in the box. You can sell the tokens on an exchange later for cash. The cash comes from exchange participants, not box people. All the box people receive the tokens they expect. They don’t receive tokens from new box people.
If it’s 1995 and Toys R Us is giving away Beanie Babies to the first 250,000 Elmo buyers, that’s not a Ponzi. If somebody buys lots of Elmos to flip Beanie Babies knowing 250,000 Beanie Babies are going to hit the market, they are delusional. It’s still not a Ponzi. It’s a bubble.
The margin lending, staking, and all the rest are not Bitcoin, but Bitcoin!TM [1]. This isn't a "real bitcoin hasn't been tried" argument. It's a "if you treat it as any other asset or stock and play the Wall Street game, then of course it will look like Wall Street".
[1]: https://www.epsilontheory.com/in-praise-of-bitcoin/
Deleted Comment
There are several issues with tradFi. Pointing that out is like saying the sun will rise tomorrow. In some cases, people are working on a fix. In other cases, the inefficiency and criminal activity is not ceasing because the scale is too small for overburdened regulators to care about.
Not one of these uses bitcoin as a fix. Whoever is building it has almost never been in finance. They think tech bros can easily understand finance cos numbers! Except finance is extremely advanced. It’s like trying to join a full ML team after running a single random forest regression or something. The consequence of such hubris is sentences like this:
> Bitcoin is the solution to the fundamentally broken debt-driven economy.
The debt driven economy is by design. It’s not a fucking flaw like the hard money idiots listening to Peter Schiff daily want to believe. Sometimes it goes to excess and we get 2008. Doesn’t mean the older idea was better. There is no wealth distribution in a hard money paradigm that makes sense.
For simple terms since you’re obviously not in the field, ask yourself where is money created? If you say central banks, go back to Econ 101 and study better this time.
Exactly. This is a problem. It can be so advanced that almost nobody understands it.
Now take a look at how advanced Bitcoin is:
Care to explain how one can come to this claim based on first principles?
Maybe I'm misinterpreting this sentence of yours. I read it as: a hard money paradigm will inevitably lead to a very undesirable wealth distribuation (Gini coefficient --> 1) and there's no way to fix/prevent this other than moving from hard money to soft money.
I'd refute this claim. There are completely obvious ways to prevent Gini --> 1. Effective redistribution from wealthy to poor. The only hurdle to that is political systems, voters, governments or monarchs deciding to and then enacting it. Absolutely possible.
The Fed itself directly created 8T USD since 2009 (QE). Some of it in the past two years even went straight to consumer's pockets via the Treasury in the form of stimmies and forgivable PPP loans (helicopter money/MMT).
https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
That's a non-trivial amount, 41% of total M2 and 61% of the increase in M2 since 2009:
https://fred.stlouisfed.org/series/M2SL
Where did the rest of the increase in M2 come from? Fractional reserve lending by banks -- at interest rates artificially suppressed by Fed policies specifically to encourage lending/money creation.
Before the Fed was created in 1913, USD was created by fractional reserve lending by banks at market determined interest rates and the marginal increase in monetary gold and silver from mining output (typically 1-2%/yr).
This historic monetary system was dynamically unstable as mining output was uncorrelated with natural business cycles and unbackstopped banks were subject to runs during downturns. The Fed was created to solve these problems, specifically the panic of 1907.
Over time it's mission evolved from being a lender of last resort to actively targeting employment and consumer prices. Since the 1987 crash however, this official mandate was effectively replaced with one targeting asset prices - primarily stocks and houses (wealth effect targeting).
Normal business cycles were now increasingly distorted by the fed Fed responding to (or not wanting to hurt) asset prices for fear it would psychologically affect consumer and business spending and eventually employment.
This lead to a new instability: bigger booms created or exaggerated by easy Fed money, followed by bigger busts during the tightening phase.
Each boom/bust cycle led to more micromanagement by the Fed and thus more instability. Since 2008 (QE), and especially after 2020 (helicopter money) they have gone completely off the rails as seen by the M2 chart above and soaring consumer prices. "Inflation is always and everywhere a monetary phenomenon - Milton Friedman"
People should ask "whose design?" then. Who's the beneficiary of this design?
What do you think is more likely to be true?
A. The wealthy/influencial/powerful/elites use their (disproportionate) power to influence the design of fundamentals of society - such as the monetary system - in a way that benefits/stabilizes their position at the top.
B. The wealthy/influencial/powerful/elites just let the design of fundamentals of society - such as the monetary system - be in whatever way it's shaped by society or political processes.
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These people are most vulnerable of the lot. They live hand to mouth, don't posses computing devices (may be cheap China smartphone). I cannot fathom how this demography manages bitcoin assets, manages to purchase their basic needs (which is all they can afford) using coins and not to mention this market crash when even millionaires are feeling the pinch.
Going back to the topic of the "most vulnerable", a bank that you and I take for granted is a luxury in many of Africa's nations. Bitcoin is a permission-less banking system. Does it have technological hurdles for the average person to overcome? Yes. But this is all being worked on right now by people I talk to every day. The same way that most people have no idea how SMTP works, you won't really need to understand behind the scenes of Bitcoin. There are various levels of autonomy and people will fall on the spectrum of where they are comfortable, with the level of privacy / security that most fits their Bitcoin education.
You might find this short video interesting (only 10 seconds or so): https://twitter.com/HODLneverSODL/status/1518134911244320769...
Citation needed (to put it mildly). How is Bitcoin improving on e.g. M-Pesa?
Is there much adoption compared to M-Pesa, outside of fantasy?
If you're not familiar with M-Pesa, then you don't know this subject at all.
> Those people get Bitcoin instantly.
https://www.theguardian.com/music/2022/jun/17/jay-z-bitcoin-...
M-Pesa only works in some African countries? And it relies on the benevolence of Vodafone Group and governments?
34 > 30
is that much adoption?
Usually when describing something in the face of scrutiny, one describes a use case. If someone questions the validity of hammers, the solution isn't to say "we call this a hammer." It's to show how hammers are used.
I doubt most crypto folks have any idea of credit markets or central banking. What they have expertise in is the manipulation of money. Bitcoin, and all of crypto, is Wall Street's love interest for a reason.
Bitcoin, with its Austrian hard money roots, stands head and shoulders above the crazy scammy mess of all the centralized altcoins (or "crypto" if you lile) that you right to criticize. Please don't lump real technological and computer science innovation in with a the crypto rug-pulls.
They think they have deep insights when saying "banks create money out of thin air", or "there is not enough money in the economy to pay down all debt". They also use the word "fiat" as if it's bad that a currency is backed by a government.
All the above are strong indication that there is something fundamental about the monetary system that someone fails to understand.
A lot of crypto has been bought because the buyer were under such illusions.
Sorry this is all too vague. How do you define "broken" and what does this post-debt-driven economy look like?
>They don't need articles like this one to tell them why their needs are unmet by the traditional finance system.
Whats the use case here exactly?
Look up % of world population living in hyperinlationary environments to get your answer. The post-debt driven economy is one where a handful of people cannot devalue your labor with a press of a button.
> Whats the use case here exactly? Freedom from corrupt governments that debase your currency into oblivion, only to adopt another currency which suffers from the same ultimate fate. Financial inclusion is the use case. It's broad, it's ambitious and ultimately to entrepreneurial interpretation.
It's the solution to nothing. Nothing.
This is pretty hilarious though, Bitcoin is exactly the same as a variety of other cryptocurrencies, which are carbon copies of it. Identical. But right on cue here come the bitcoin maximalists to explain that theirs is special.
Here's the only reason it's special - brand recognition. That's it. That's what you have over the various forks and clones. First mover advantage.
And this is what tells me that the technology isn't really solving anything, and nobody actually gives a fuck about it - other coins fix problems with BTC, they either make it more anonymous, or resolve transactions faster, or more of them, or all sorts of other things. But BTC still rules the roost because the whole thing is built on hype and sentiment and nothing more.
Bitcoin solved the Byzantine generals' problem in adversarial network contexts, by its innovative deployment of proof-of-work. Thus, bitcoin invented thermodynamically secured property rights, and property rights are a fundamental building block for human flourishing. Bitcoin provides a decentralized trustless source of truth, and none of the other cryptos do that because they're not nearly as widely adopted.
Bitcoin is a strong base layer that faster more anonymous payments can be based upon, such as Lightning or Liquid, and things like CoinJoin and PayJoin, which are trust less and noncustodial. You can't start with a squishly base layer and then build stable systems, but if you start with solid fundamentals, privacy and better user experiences can be built on top.
Bitcoin is also currently solving the natural gas industry's problem of flaring methane... portable mining rigs use the methane to generate electricity to provide network security to the Bitcoin network, while making natural gas extraction cleaner. Bitcoin mining is also incentivising and paying for the production of clean renewable energy on larger scales than anyone had figured how to fund. And some people use bitcoin mining to provide home heating in the winter. No other crypto is doing those things.
Really? How do you call something where there is no underlying product generating value, and you need to have someone else put money in to get your money out? It's literally the definition of a ponzi pyramid.
Bitcoin makes no such promises. It routinely had >80% drops in price.
Most advocates of Crypto like most critics think about Crypto from the perspective of a consumer, which is misguided. How many people, especially technically minded people, know the boring technical intricacies of the financial sector? Not many.
The concepts, if not necessarily the current implementations of them will be used by large financial institutions to generate better margins, help High net worth individuals to avoid taxes better and possibly some other very boring things around decentralized consensus algorithms.
Defi is interesting to Vanguard and Citi, not to the consumer.
It will not revolutionize the world, nor destroy it... like most technology it will create a few successful companies and make some people rich.
PS Just to be clear, it is currently a dumpster fire that needs to be regulated ASAP. But its not going to do much more than pump a bit of cash from poor people to scumbags, that is not new.
Bitcoin is a tool, like any other. Tools can be used constructively or destructively. The ease and affordability of transferring remittances internationally is the single most useful case for Bitcoin. In those instances value is not kept in BTC except for the duration of the transfer so it is not as susceptible to the market fluctuations. On top of that it is much faster and sometimes cheaper even for more local transactions like invoices for freelancers to be done via BTC.
The banking systems have failed in a lot of ways related to the above use cases. In the US it can still take days for a check or transfer to clear. Red tape and fees abound when transferring large amounts between parties. PayPal will just shutoff your account because they don't want the risk. etc. etc.
In the future I expect to see BTC to mainly utilized for these types of financial transfers and less as a long-term store of value. Of course like any item of value there will always be the speculation side.
I have, in Sweden, the options of Swish and SEPA to transfer money. Swish is internal to Swedish residents, so to anyone who has Swish tied to their bank account I can instantly send money knowing their phone number.
With SEPA Instant Transfer I can send money anywhere in the EU, up to 100,000€, and it's guaranteed it takes less than 10 seconds.
These have been solved elsewhere, look inside the US who benefits from the fees charged to you, look who controls the lobbying power to keep these fees being charged to you. Boom, you now know that in the US the biggest limitation is always who has more money than you and control the policies you live under.
It's the same in other parts of the world, of course, but so much worse in the US...
So what crypto adds (beyond a hypothetical store of value) is the ability to keep your assets and transactins invisible (or nearly invisible) to the government.
This is demonstratably false. The problem has been solved elsewhere in the world, much better than in the US, without any bitcoin or crypto at all.
> In the US it can still take days for a check or transfer to clear.
As noted, "in the US" is your problem. Also "hasty generalisation".
> In the future I expect to see BTC to mainly utilized for these types of financial transfers
wise.com is laughing. M-Pesa is laughing. EU SEPA is laughing.
Not sure how SEPA helps an immigrant in the US trying to send money back home. Or a million other situations not involving places that have SEPA.
Your other options are greedy corporations. Wise wants $7 to transfer 1000 bucks to Europe. Bitcoin will continue working if corporations fail, change policies, arbitrarily decide not to do business with you, or jack up prices. Bitcoin is not subject to the whims of a single private organization.
Government sponsored options are also beholden to all sorts of invasive inspection as well. If you want to send more than $10k it can be a lot more work in some places.
Problem identified.
I don't disagree that the point of perpetual futures on crypto exchanges is primarily to facilitate speculation and gambling, but they're just delta 1 derivatives (track the underlying 1:1) in the form of a CFD, different in mechanism but no different in use case to regular futures, which themselves are traded widely on traditional exchanges. And these perps are quite useful to temporarily hedge holdings, even more convenient than regular futures since you don't have to bother with rollover. The instrument itself is really cool. The criticism should be directed to the high amounts of leverage which is only ever useful in a gambling context, and the marketing + gamification aspects which are clearly targeted at encouraging gambling behavior. If Binance got rid of their perpetual futures, users could still gamble all the same using Binance's regular futures contracts.
But when I did some YOLO trades with insane leverage I felt what addicts feel. So I never touched leverage again except maybe 1.5x at most.
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If you think the ends justifies the means, I suppose you could do anything.
We can debate whether it's good or bad on net, but the fact that crypto provides monetary incentives for mining it (and thus spending electricity and computer equipment) is not up for debate.
There is no room for discussion here, and it's depressing to see how many people want to throw the baby out with the bathwater; instead of asking for it to be regulated in a sane manner they want to outright ban the use of said technology, which I would define as barbaric... imagine banning fire because people got burnt!
The blockchain, smart contracts and NFTs are amazing technologies that could do wonders for mankind if properly used, but too many people, including tech literates, refuse to dig into it after seeing folks being defrauded out of their life savings and ruining their lives because they took a loan for hundreds of thousands of dollars on a jpeg of a badly drawn monkey.
For them crypto is bad, period. There is nothing else to talk about because it's an absolute truth, what subject should there be to discuss? Might as well argue about the possibility of God not existing with religious extremists.