Crypto Conversation

[fidel]

https://www.currentaffairs.org/2022/...die-in-a-fire/

UC-Berkeley’s Nicholas Weaver has been studying cryptocurrency for years. He thinks it’s a terrible idea that will end in disaster.

[OldPhiKap]

https://www.currentaffairs.org/2022/...die-in-a-fire/

UC-Berkeley’s Nicholas Weaver has been studying cryptocurrency for years. He thinks it’s a terrible idea that will end in disaster.

Very interesting read (so far), thanks.

[thedukeman]

Very interesting times in the cryptoverse. Currently hovering around Microstrategy and Tesla's cost basis for BTC. Excited to see what happens in the coming months.

[budwom]

Very interesting read (so far), thanks.

anyone out there have any use for my three million tulips?

[thedukeman]

anyone out there have any use for my three million tulips?

Do you have a discord for this tulip coin?

[budwom]

Do you have a discord for this tulip coin?

I do, plus I have all the original packaging!

[-jk]

https://www.currentaffairs.org/2022/...die-in-a-fire/

UC-Berkeley’s Nicholas Weaver has been studying cryptocurrency for years. He thinks it’s a terrible idea that will end in disaster.

Very interesting read. I think he doesn’t like all the “crypto” stuff.

So the stock market and the bond market are a positive-sum game. There are more winners than losers. Cryptocurrency starts with zero-sum. So it starts with a world where there can be no more winning than losing. We have systems like this. It’s called the horse track. It’s called the casino. Cryptocurrency investing is really provably gambling in an economic sense. And then there’s designs where those power bills have to get paid somewhere. So instead of zero-sum, it becomes deeply negative-sum.

Effectively, then, the economic analogies are gambling and a Ponzi scheme. Because the profits that are given to the early investors are literally taken from the later investors. This is why I call the space overall, a “self-assembled” Ponzi scheme. There’s been no intent to make a Ponzi scheme. But due to its nature, that is the only thing it can be...

There is no problem that cryptocurrency solves, and to the extent that it is functional, it does things worse than we can already do them with existing electronic payment systems. To the extent it has advantages, the advantage is doing crimes. And every other claim made for the superiority of cryptocurrency as currency falls apart if you scrutinize it.

-jk

[fidel]

Very interesting read. I think he doesn’t like all the “crypto” stuff.
-jk

He seems to have a strong opinion.

I have looked into BTC being non-inflationary and of course that statement only pertains to money supply driven inflation. It is still susceptible to other inflationary causes (supply/demand issues, both goods and wages), but also the supply/demand of BTC coins themselves (what we are seeing now - the urgency to ‘get in early’ causing high demand).

I can see a lot of positives for the unbanked, bypassing the usual (costly) intermediaries that charge higher rates for smaller volumes. However, without some kind of oversight, they become easy targets for fraud with nowhere to turn for support.

[Wheat/"/"/"]

An alternate take….


“When it comes to something as complex as the economy, how do we as humans think we can manage everything so neatly?”

“ The current inflation of the Bitcoin network is 1.77%, and it is dropping. A person can know that if they buy bitcoin, they’ll store wealth into the future with certainty, as there’s no way for anyone to devalue or create a new bitcoin.”


“You don’t know how many dollars will be created between now and five years from now, but I can with confidence tell you how many new bitcoin will be issued. Which would be more reliable, in your view? The asset that costs $0 to produce, with an unlimited supply, or the asset with known rules, a network of fierce advocates and a cost associated with the creation of new units? We live in a world where dollars and bitcoin coexist, and it’s not an all-or-nothing decision.”

“The goal of money is to allow for economic output to be saved for future consumption. Holding cash today in the inflationary environment for a client is a guaranteed recipe to lose purchasing power – while the exact opposite has been true over the years for bitcoin. Money needs to have demand for it to have value. According to a recent report from Grayscale, 25% of investors with $10,000 or more in investable assets own bitcoin. (Editor’s note: Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.) The demand for bitcoin is increasing, according to Glassnode, as are on-chain analytics as more and more entities begin to own bitcoin.”

[Skydog]

An alternate take….


“When it comes to something as complex as the economy, how do we as humans think we can manage everything so neatly?”

“ The current inflation of the Bitcoin network is 1.77%, and it is dropping. A person can know that if they buy bitcoin, they’ll store wealth into the future with certainty, as there’s no way for anyone to devalue or create a new bitcoin.”


“You don’t know how many dollars will be created between now and five years from now, but I can with confidence tell you how many new bitcoin will be issued. Which would be more reliable, in your view? The asset that costs $0 to produce, with an unlimited supply, or the asset with known rules, a network of fierce advocates and a cost associated with the creation of new units? We live in a world where dollars and bitcoin coexist, and it’s not an all-or-nothing decision.”

“The goal of money is to allow for economic output to be saved for future consumption. Holding cash today in the inflationary environment for a client is a guaranteed recipe to lose purchasing power – while the exact opposite has been true over the years for bitcoin. Money needs to have demand for it to have value. According to a recent report from Grayscale, 25% of investors with $10,000 or more in investable assets own bitcoin. (Editor’s note: Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.) The demand for bitcoin is increasing, according to Glassnode, as are on-chain analytics as more and more entities begin to own bitcoin.”

My bitcoin buys 1/2 of what it did last year. That s the opposite of holding value and is many times the cost if inflation.

[OldPhiKap]

An alternate take….


“When it comes to something as complex as the economy, how do we as humans think we can manage everything so neatly?”

“ The current inflation of the Bitcoin network is 1.77%, and it is dropping. A person can know that if they buy bitcoin, they’ll store wealth into the future with certainty, as there’s no way for anyone to devalue or create a new bitcoin.”


“You don’t know how many dollars will be created between now and five years from now, but I can with confidence tell you how many new bitcoin will be issued. Which would be more reliable, in your view? The asset that costs $0 to produce, with an unlimited supply, or the asset with known rules, a network of fierce advocates and a cost associated with the creation of new units? We live in a world where dollars and bitcoin coexist, and it’s not an all-or-nothing decision.”

“The goal of money is to allow for economic output to be saved for future consumption. Holding cash today in the inflationary environment for a client is a guaranteed recipe to lose purchasing power – while the exact opposite has been true over the years for bitcoin. Money needs to have demand for it to have value. According to a recent report from Grayscale, 25% of investors with $10,000 or more in investable assets own bitcoin. (Editor’s note: Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.) The demand for bitcoin is increasing, according to Glassnode, as are on-chain analytics as more and more entities begin to own bitcoin.”

My bitcoin buys 1/2 of what it did last year. That s the opposite of holding value and is many times the cost if inflation.

Therein lies the fallacy I think. The author compares a BTC to BTC, and says they have steady value in relation to each other because no more are created — and thus they maintain relative value to each other whereas a dollar may devalue comparatively to another dollar if more are printed by the Treasury. And that is true. But the real comparison isn’t BTC to BTC, but rather USD to BTC. Russia may not print any more Rubles, that doesn’t mean it’s a worthy investment or a readily-usable currency. But a Ruble is still worth a Ruble.

And while the USD is a fiat currency, it is backed by the full faith and credit of the USA with a close to 250-year history of paying its debts. BTC only has value if someone will exchange a non-BTC for it (whether goods, services, or currency) and is not backed by anything tangible. Finite quantity alone does not make something intrinsically valuable it seems to me. I have a ton of old VCR tapes, and they don’t make those anymore. But I could not get my purchase price back for them today, even without adjusting the original purchase price to today’s dollars.

[budwom]

^agreed...and are you implying that my Betamax tapes aren't worth all that much? Now I've got them AND tulips to worry about.

[OldPhiKap]

^agreed...and are you implying that my Betamax tapes aren't worth all that much? Now I've got them AND tulips to worry about.

Let me know what they offer you down at Second & Charles.

But I am not an economist and I find the discussion interesting. I am always open to the possibility that I’m wrong.

[budwom]

Let me know what they offer you down at Second & Charles.

But I am not an economist and I find the discussion interesting. I am always open to the possibility that I’m wrong.

Had to look up Second and Charles, we don't have them (or much else) around here. It certainly is interesting that for many of us who are in or approaching Geezerhood, we've had all sorts of media come and go. Eight tracks were once big, then cassettes took over the world, then away they went as CDs showed up, and now they're gone, off in Floppy Disk Land by and large. I do have a very nice collection of Duke games on Betamax tapes, should be worth a small (very very small) fortune by now.

[fidel]

An alternate take….

Again, it is talking about money supply inflation. There are many alternatives to BTC (such as gold) that do a similar job. Nothing about BTC makes it inherently better for that. The argument they make delicately avoids being clear what they mean by 1.77% inflation (new coins mined).

It also assumes BTC is an ‘asset’, which I still am not comfortable with. It’s value is only because it is agreed to be valuable. The prices aren’t swinging because of anything happening in the greater market, it’s pure supply/demand on BTC itself. So it isn’t structurally sound for holding ‘value’ at all.

As far as money to be for ‘saving’, it’s actually for the simplicity of commerce. I don’t think many of us are holding large sums of cash if we understand the impacts of inflation. There are many investment vehicles, or even better portfolios of investment vehicles, that helps us bridge changing conditions in the market.

Additionally, BTC is subject to environments that have rarely been tested. What happens if china jumps in? Jumps out again? Can it manipulate the demand enough to impact valuations when you want to spend here in the states? Look at what moving to the Euro did to Greece, Spain, Portugal in the last 10 years. Sure, the euro exchange became the actual money supply of these countries, but the impacts of a single currency across markets where different forces are in play becomes a similar concern.

At the end of the day I can’t find anything in the current capabilities of BTC that supports super bowl commercials stating that ‘fortune favors the brave’.

[thedukeman]

Idk if this is as much a conversation as it is the same points being regurgitated over and over again about crypto as a whole failing or succeeding.

[OldPhiKap]

Idk if this is as much a conversation as it is the same points being regurgitated over and over again about crypto as a whole failing or succeeding.

Fair.

[Indoor66]

I am always open to the possibility that I’m wrong.

NOOOO. I don't believe they. You are wrong.

[Jeffrey]

BTC only has value if someone will exchange a non-BTC for it (whether goods, services, or currency) and is not backed by anything tangible. Finite quantity alone does not make something intrinsically valuable it seems to me.

Very true, there was already a finite quantity of Bitcoin when someone traded 10,000 Bitcoins for two Papa John's pizzas (IIRC, just 12 years ago).

[OldPhiKap]

Very true, there was already a finite quantity of Bitcoin when someone traded 10,000 Bitcoins for two Papa John's pizzas (IIRC, just 12 years ago).

Serious case of the munchies right there, I’m guessing.