Idk about that characterization, but I don’t see how crypto changes anything. They’ll just hold you in contempt until you turn over the keys or hack you.
Plenty of us have cold storage wallets from years ago. Not theoretically impossible to track but pretty darn difficult. To contrast, any and every bank account and ETF holdings (in the USA) are extremely KYC'd.
> yet didn't the truckers get robbed by the government?
No.
In the end, a few accounts were proactively and temporarily frozen by banks acting on their own, which they could (possibly would) have done due to fintrac [1] requirements.
Your analogy is fair, but I'm not sure it works in the way you want it to. Cryptocurrency now exhibits a lot of the same issues that the Old West exhibited then (lawlessness, criminality, etc). But the Old West didn't result in some free-market hard-currency utopia. Eventually the powers that be brought in the same regulations, police, courts, etc that governed everything else. So that "Old West" was destroyed. In your analogy, that would be the "status quo financial system" taking over crypto and either outlawing it or changing it beyond all recognition.
> I for one, take this perceived negative bias as a confirmation that Bitcoin is a genuine threat to the existing financial system.
I think you are taking things the wrong way. I, too, dislike our current financial system and want it to radically change. And I, too, hope that cryptocurrency can play a part in that. Your assumption that others feel "threatened" by cryptocurrency just because they point out the negatives isn't a good one. They are just being reasonable and fair.
> Am I just a dumb ass?
No, but be careful of becoming a shill for crypto. Don't slide down the slippery slope of ignoring things that are bad -- or claiming that they aren't -- just because crypto may align with some of your values and beliefs. I'm not saying you are. But the wording of your original post leaves one to wonder whether you value your vision of a utopian financial system above the very real tragedies occurring every day in crypto. You can both love crypto and hate those tragedies.
Theoretically I can stand up a mining operation in my apartment. That means that the 51% attack (as long as it can be detected) can be thwarted by folks at the grass roots level (as long as they actually care). Am I wrong about this?
You are practically wrong about this - the number of people who need to notice and attempt to a 51% attack is enormous ... and not possible to do after the fact
Before the fact? Sure - but then the 51% issue doesn't happen, and you get to precrime
I'm not an expert on this by any means, but I would think that mechanisms exist that allows for the evolution of the technology to protect itself. The key for me is that we strive for a financial foundation that no-one can debase.
I view Bitcoin as an agreement and an understanding of a unit of value that we can all rely on.
I'm not sure what you mean by the 'old ruse'. The use of gold in ancient times was adopted because it removed the need to trust the other guy's currency.
Unless Satoshi shows up tomorrow and cashes out his coin I think we are not in danger of diluting the value of Bitcoin - which would be like the 'old ruse' I think.
I think the biggest 'positive' is that the government in control of the currency is unable to alter the value of it. It is clear that inflation is bad for the citizenry, yet that has been done throughout the ages by every dying civilization. I'm simply looking/hoping for a mechanism to stop it. It would be a 'positive' for you too!
Is Bitcoin the ultimate answer? I can't say, but it is a good first step.
"It is clear that inflation is bad for the citizenry."
No. It is clear that both hyper-inflation and deflation are bad for the citizenry. However, modest inflation is generally a net positive.
"yet [inflation] has been done throughout the ages by every dying civilization." Do you have any real data for this? Sounds like bullshit to me.
Also, it seems preferable that government be in control of the currency rather than random speculators. Controlling the currency can be a useful tool if used responsibly. If you have bad government, then bitcoin isn't going to save you.
Roman Empire is a biggie. The Weimar Republic is the most obvious.
I guess we are now arguing 'Austrian Economics' vs. 'Keynesian Economics'... This is a fair simplification. As long as you hold real assets to protect your wealth, the government's debasement of the currency (modest inflation) is of no concern.
Clearly, when a person lives from paycheck to paycheck the only concern is "Can I buy food next week?" and "Can I pay the rent on the 1st?". Wealth preservation and modest inflation is not on the radar. However, it is still hurting the man that earns $12/hr, no matter the modesty of the inflation.
Just look around right now. Is the current inflation rate modest? Did everyone get a raise to account for the CPI going up? Will everyone get an 8.5% raise next year?
In my opinion decoupling the currency from anyone's "control" is the key idea behind Bitcoin.
I hate to break it to you, but the hyperinflation of the Weimar Republic ended around 1923 and the Republic prospered afterwards. Till the Great Depression, which was in big parts driven by speculative assets .... Wonder where I've heard that before.
And in the aftermath, the 1930s introduced austerity and deflation policies to the Weimar Republic, which was the final straw.
Not sure why the correction of a common misconception is being downvoted here.
If you want to learn more about the history of the German economy between 1900-1945, the authority on the subject is the British historian Adam Tooze. He has a couple of books on the subject, listed on Wikipedia if you want to check them out.
Inflation in the form of government spending on infrastructure or wealth transfers to poorer citizens is not 'clearly' bad, there's significant academic debate on the subject. Disincentivizing cash-hoarding drives economic growth, and has done so for the past 50 years.
And the reason why this is important is because an asset that is not liquid has no utility as a currency. Put another way, if my $1 today would be worth $1.20 tomorrow, it would be in my best interest to "HODL" on to it instead of using it.
This would be a fantastic scenario for me as an individual, in the short term. Eventually, though, I'd have to buy some bread; the problem is that the baker decided to HODL their currency instead of buying flour (because that would be in their own best interest). Everyone would be sitting on heaps of unusable wealth.
Government action around the world has had a definite impact on cryptocurrency pricing, both positive and negative. The idea that a government cannot control cryptocurrencies is ludicrous, because they can simply ban them if they feel the need to.
If any real cryptocurrency actually manages to catch on for normal payments, I'd expect the government to force businesses accepting it to only accept transactions from "validated" wallets to ensure that the proper amount of tax is being paid. Any "unvalidated" wallets would risk a visit from the local tax agency for attempted tax fraud or whatever. Technology won't stop legislation.
Also, if anything is inflated right now, it's the price of cryptocurrencies. They're volatile to a comical level and the ones that are reasonably stable have such high processing fees that they're utterly useless for actual payment. The solution proposed by enthusiasts seems to be centralization (Lightning network etc.) which ruins most of the theoretical benefits of cryptocurrencies. Nobody with the intention to buy groceries buys any cryptocurrencies, except for the one country where cryptocurrency companies have managed to convince the government that their system is a good solution (and even there the actual currency gets converted to US dollar in the end).
Inflation, artificial or otherwise, is simply something that can happen in a free economy. So is deflation, of course, but deflation tends to be bad for trade, so the world's current attempts to keep everyone rich revolve around artificial infinite inflation. Inflation, as a concept, isn't necessarily a problem; every currency on earth has suffered through it at some point. It's more of a consequence and a goal of economic policy than a disease to civilization. It's true, many collapses of civilizations have coincided with inflation events, but the economy is bound to collapse when a civilization collapses.
Turkey actually willingly let its currency deflate, with terrible results for the general population as prices for common items skyrocketed. Risking arbitrary spikes and dips in value isn't much better than the current system, in my opinion.
I thought the Lira lost its value, which is 'inflation'. If it was experiencing deflation then it would become more and more valuable, because it is becoming scarcer.
Inflation is caused by the oversupply of money, it is because the government in charge of that currency is printing it w/o limits. It is a way to pay back loans with cheap money.
Indeed, governments can ban things, but if there is a market for the banned item then there is going to be a supply. Governments don't seem to have the means to block drugs entering prisons, how will they stop ordinary citizens that feel the need to protect themselves from doing what they need to do?
Indeed using Bitcoin for payment does not seem a good fit. However, Bitcoin could be viewed as the world reserve currency that is impossible to debase. This can give stability to all other currencies that are based on it. I think that would be a good thing. It would reduce governments' ability to deficit spend, thus reduce the likelihood of financing armies that can be used for aggression... It would not eliminate wars entirely, but would make financing them very difficult.
Unfortunately, scammers are everywhere. I think it is my responsibility to do the best I can to avoid falling for various schemes. I hold that Bitcoin is not the cause of the scams. I unfortunately missed the early days of Bitcoin because I was concerned about being robbed and secondarily I did not understand (or even known about) the intent Satoshi had when he invented the thing...
Debasement of currency happens for a few key reasons, most of which are far removed from modern financing in the West. And Bitcoin is, by design, both wasteful in terms of energy, and volatile, which excludes it from any reserve currency status. Remember, these are emergent from the design of the platform and incentives keep Bitcoin from changing.
Deficit spending... sigh. I am sorry, but this idea that deficit spending is irresponsible is often tied to beliefs in gold-backed currencies, hyper inflation being inevitable due to 'money printing' and other misconceptions.
Deficit spending is not bad. Any government who did not deficit spend is basically tying both hands behind their backs. It is an incredibly useful tool that can be used as both to kick-start an ailing economy, or cool an over hot economy through higher interest bond sales. Politicians who insist on no-deficit budgets are generally scammers or populists and, in my experience, will ignore this rule once in power.
The main reason deficit spending is not an issue is that inflation eats away at debt over time. Countries, being effectively immortal, don't have to worry about retirement and so can continue to build wealth and finance debt for centuries to come.
How those loans are spent is a whole different kettle of fish.
> I hold that Bitcoin is not the cause of the scams.
I wish I could agree, as someone who remains eternally hopeful for crypto. Unfortunately, it's almost certainly not the case.
When half a billion dollars goes missing from the US banking system, we can follow the paper trail every time. Criminals never cash out at that scale, especially when they wire money digitally. There's always an account to find, a wire transfer to track, or another bank to contact. The centralization is their saving grace against these scams. When half a billion dollars goes missing from a DAO or someone's cold wallet, they're fucked. Those coins get tumbled and are almost certainly never seen again. The bad guys win every time, which makes it highly unattractive for any investment at scale.
Which raises the ultimatum of Bitcoin, and cryptocurrency as a whole: to hold, or not to hold? That is the question. Custody is the bottom line here, and there's no easy answer. The public will always prefer to have someone else manage their account, which removes their agency and increases the capability of private parties debasing the asset. The higher the demand, the further the centralization progresses. Unfortunately, that demand is nearly unlimited and the benefits of managing your own wallet are slim compared to the work and upfront knowledge it requires.
> It would reduce governments' ability to deficit spend, thus reduce the likelihood of financing armies that can be used for aggression... It would not eliminate wars entirely, but would make financing them very difficult.
This is completely false. There is not a single first-world country that would base the value of their currency on crypto, and having cryptocurrency exist as an independent fiat makes it extraordinarily easy to fund combat. Terrorist organizations could accept donations via untraceable coins and cash out anonymously. Extremist sects could fund themselves privately without scrutiny. Even in your idyllic example, it would only embolden countries like Russia to pillage their neighbors since they don't need to worry about the consequences of financial sanctions, being cut off from the world's banking system, or even worrying about the value of their own currency.
If anything, the world embracing crypto all at once would escalate the financing of combat to unconscionable heights.
But.. this isn’t true on two counts: Cartels smuggle huge amounts of money all the time, and the bitcoin hack involving a YC founder ended with the coins recovered. They were unable to tumble the coins without losing them.
Cartels smuggle cash. Cash is fairly untraceable, so it makes sense. If anything, it reinforces the idea that removing accountability from money encourages bad behavior.
> the bitcoin hack involving a YC founder ended with the coins recovered
Sometimes you get a happy ending. There's plenty of stories about the Wild West that don't end with two dead cowboys. On the other hand though, our banking system can almost universally guarantee a happy ending. Axie Infinity hacks simply don't happen on there. When someone is dumb enough to try it, they're in custody by the end of the day and their money likely never even left the source account in the first place.
Be that as it may, do we really want to enable everyone to have cartel-level money smuggling capabilities? Is that the sort of power we should strive to democratize?
Yes. Everybody, or nobody. Why should some have it and others not?
Note well: In this post, I am not taking a position as to whether "everybody" is the correct answer, or whether "nobody" is. I just want everyone to be at the same level.
I'm not saying that the US would tie the dollar to Bitcoin willingly. It would have to do it out of necessity to be able to interact with nations that have resources that the US needs.
This of course applies to all countries, not just the US. The dollar as the world reserve currency enables the US to rob the recipients of the value of their holdings after the fact. I don't think any nation is happy about that. It would also reduce undue influence of a single nation across the world and therefore maybe reduce the attractiveness of terrorist organizations' railing against it.
A currency that can't be debased is a stabilizing factor in international affairs (my take). This also translates to each country's citizens, they can't be robbed by their government...
Financial (or economic) sanctions affect the target country's citizens. I would submit that after the sanctions on Russia, Putin has gained support from the Russian people. Iran has been sanctioned for how many years? Yet Iran's citizens don't find the means to depose of their leadership... Maybe they like the way things are... Sanctions and all.
In my opinion your statement "the world embracing crypto all at once would escalate the financing of combat to unconscionable heights" is unsupported. Bitcoin is available now (has been for a decade), so what keeps bad actors from using it to purchase arms now. The international monetary system is not a gate (to cash out Bitcoin purchases). The Mexican cartels apparently have no problem using the banking system to finance their operations...
> I'm not saying that the US would tie the dollar to Bitcoin willingly. It would have to do it out of necessity to be able to interact with nations that have resources that the US needs.
I think the idea that the dollar would be replaced by a faceless, useless currency is pretty unfounded. There's no draw to using Bitcoin, even the digital yuan has a better shot at dethroning the dollar than Bitcoin does. Plus, what makes Bitcoin any better than the hundreds of altcoins that came after it, many of them fixing the problems inherent to Bitcoin?
> This also translates to each country's citizens, they can't be robbed by their government...
Right. Now they can only be robbed by each other and the rapid fluctuation of an asset they have no control over, with no stability guarantees. Every day can be a bubble in the Bitcoin-based world!
> Maybe they like the way things are... Sanctions and all.
They have no choice but to like it. I can assure you that the wealthier Russians who woke up to a post-SWIFT nation didn't "like the way things are", nor was Putin very happy when Apple and Google decided to close up shop domestically. I'm not an extremist proponent of sanctions, but there is definitely value in having a network that can shun a nation when they start committing war crimes.
> Bitcoin is available now (has been for a decade), so what keeps bad actors from using it to purchase arms now
Nothing. As a matter of fact, Bitcoin kicked off a digital arms race to make even more private currencies like Monero which are now the preferred medium for transacting pretty much anything illegal, from drugs to weapons.
It is encouraging that there is a lot of interest in looking at the weaknesses of Bitcoin and crypto in general. This, I think, is "a good thing." However, the author is not one to bring forward a well reasoned case (initially I thought I was reading an article written by a 15 yr old). There are references to all kinds of documents, but it is clear that the author does not have the technical background to clearly convey (or pinpoint) the supposed issues that he is highlighting. Instead we are to believe the arguments because crypto is a kind of tulip mania and those that buy in are suckers...
As long as there are oppressive financial systems (central banks, the world bank, the current financial pyramid) crypto (decentralized) currencies are going to be around and will provide a needed _service_. The harder the folks (running the 'official Ponzi scheme') fight crypto the more valuable crypto currency technology will be, more smart folks will pay attention to it and it will evolve further.
Since there is no way on Earth that the financial elite will just give up and go away, demand for crypto transactions will be ever present. They can pass laws to make it illegal, but that means that servicing the demand is going to be even more profitable. Consider that the risk of owning an outlawed crypto currency is nowhere near to carrying around a kilo of white powder...
Every time a windbag (insider/rich guy/financial guru), like Taleb or Bill Gates, bad mouths crypto, it should be considered an endorsement of the concept.
Which crypto you choose to put your fiat into however, is your business.
When a government is able to engage in financial retribution against its critics, its own citizenry, Bitcoin might be necessary.