Bitcoin, Cryptocurrency and Blockchain Discussion Thread

[wdolson]

Economic regulation actually has two entirely separate aspects, both necessary:

Law enforcement, when it works, regulates individual behavior. When it fails it's often because legislators, influenced by business lobbyists, tie regulators' hands. When it succeeds it stops things like insider trading and reckless behavior by bankers, etc.

I was actually talking about regulating the money supply. A modern economic system needs a currency as a medium of exchange to allow people and businesses to buy, sell, invest, and borrow. Workers need to be paid and they need to buy stuff. Businesses need to buy equipment and raw materials, for which they often need to borrow capital, and they need to sell their products. For a currency to function as a medium of exchange there needs to be the right amount of it in circulation.

Agreed. Both are needed.

This is something the pseudo-economists who boost crypto fail to understand: For a currency to function as a medium of exchange there needs to be the right amount of it in circulation. Not so much that its value falls; not so little that there's not enough available to mediate all the exchanges that need to happen. One of the principal causes of the Great Depression was the gold standard: The supply of gold is just how much gold there is. Miners are constantly digging more of it out of the ground, but the supply is unregulated. Crypto is unregulated: The supply is either fixed by the algorithm or changes with "mining" activity, but there is no person or government or collective actively matching the supply to the needs of the economy. Crypto boosters just don't get this: We need a regulated supply of money.

In addition, for a currency to function as a medium of exchange, its value needs to be relatively stable. Crypto fails spectacularly in this. So-called "stable coins" attempt to peg their value to the dollar or to another fiat currency, but in the long run they always fail.

The result of all the above is that crypto, including the granddaddy of all crypto, Bitcoin, ends up being 99% hoarded in the hopes that it will rise in value. That's the mantra of so many boosters: Hold On for Dear Life. Don't spend it. Don't cash out for real money. Just hold on and you'll get rich when the price rises. (Except when it doesn't and people lose their shirt.) Currency has to circulate or it's not currency. Cryptocurrency is not currency because most of it is being hoarded, not circulated.

I have seen it argued that the rapid technological growth the world has seen since WW II has a lot to do with the movement away from the gold standard and the adoption of fiat currency that can be created at will. New capital can be created when needed to fuel technological growth.

 

[heltok]

For a currency to function as a medium of exchange there needs to be the right amount of it in circulation. Not so much that its value falls; not so little that there's not enough available to mediate all the exchanges that need to happen. One of the principal causes of the Great Depression was the gold standard: The supply of gold is just how much gold there is. Miners are constantly digging more of it out of the ground, but the supply is unregulated. Crypto is unregulated: The supply is either fixed by the algorithm or changes with "mining" activity, but there is no person or government or collective actively matching the supply to the needs of the economy. Crypto boosters just don't get this: We need a regulated supply of money.

In addition, for a currency to function as a medium of exchange, its value needs to be relatively stable. Crypto fails spectacularly in this. So-called "stable coins" attempt to peg their value to the dollar or to another fiat currency, but in the long run they always fail.

I remember when I got into crypto in 2012, back then it was a lot of AnCaps and libertarians who were speculating about how money works or should work. Before the movement was overtaken by speculators it was mostly a social movement and an experiment. I think that's one of the things that attracted me to Bitcoin the most, that instead of debating if a currency that was deflationary could work or not, now we got to run the experiment and find out. If the results would be a utopia or total chaos we didn't know, but at least we would know. It was this intellectual debates about the nature of reality and finally we could see if Krugman et al were right or wrong.

I invested in Ethereum ICO and mainly follow Ethereum since Bitcoin 1MB hardfork as I felt the dream of Bitcoin died when Gavin was kicked out. Ethereum adds the complex contracts, did away with the energy consuming mining and is actually deflationary rather than disinflationary, which vibes with me.

I find it sad to see the same arguments from 2012 back over and over. I thought the experiment and results would finally settle some of the debates. But I guess people disagree on the results or as with Tesla "they might have had great quarters every quarter for the last few years, but the next quarter is when the story finally changes" over and over again. At least I feel that some of these debates are settled enough for me. Deflationary currencies don't collapse, volume of trade could still go up on them for several years. Currencies don't need to be stable to function as a medium of exchange. But I accepted that not everyone will agree on this...

I recommend newcomers to read these two books, the are really good:

Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money: Popper, Nathaniel: 9780062362506: Amazon.com: Books

Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money [Popper, Nathaniel] on Amazon.com. *FREE* shipping on qualifying offers. Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money

www.amazon.com

Amazon.com: The Infinite Machine: How an Army of Crypto-hackers Is Building the Next Internet with Ethereum eBook : Russo, Camila: Kindle Store

The Infinite Machine: How an Army of Crypto-hackers Is Building the Next Internet with Ethereum - Kindle edition by Russo, Camila. Download it once and read it on your Kindle device, PC, phones or tablets. Use features like bookmarks, note taking and highlighting while reading The Infinite...

www.amazon.com

 

[ChooseFreedom]

The people who promote those other cryptocurrencies would disagree violently with you. In fact, every cryptocurrency is an algorithm on a blockchain. Each is a little different in its own way, but Bitcoin is not fundamentally different from many of them.



Each digital transaction of Bitcoin is HUGELY more expensive than a similar transaction in dollars. Right now, the "miners" are paying for it. They won't keep paying forever because the supply of new coins for them to mine will dry up and they'll either close up shop or start charging the actual (exorbitant!) transaction cost to the customers.



I'd like to see you explain how someone without access to the internet could buy, spend, accept, or cash out of Bitcoin, or any other crypto. Crypto is blockchain on the internet. You need to access the internet to use it.



And the fixed, deflationary nature of it is precisely why it's useless as currency. Deflation was why the Great Depression crashed the economy.



True.



Talk to the people who got wiped out when SBF stole all their Bitcoin.

Of course the people pushing all other cryptos would argue that. Their entire validity relies on it!
They are fundamentally different because every single one of them are centralized, have a company that runs it, can change the rules of their "blockchain" any time they want.
The SEC made Bitcoin a commodity and everything else a security for these reasons! Just because they put what is essentially their company stock shares on a blockchain doesn't make them anything like Bitcoin. They are just trying to profit off the phenomenon.
Those companies could just as easily exist off chain. But they're trying to capitalize on the trend. They're deceivers, scammers, ponzi's.

Bitcoin has no CEO, no Board of Directors, no company running it. No private group changing the rules when it suits them (see ETH).
Bitcoin is owned by EVERYONE that owns it and especially those who run their own node. There are 10's of thousands of nodes. And you need pretty much all of them to agree to make any changes to the protocol. (see Block Size Wars)

The miners do charge a fee for transactions. And that already is the majority of their revenue. About 19 million of the 21 million Bitcoin have already been mined. And the remaining ~2 million will spread out from now through about the year 2140.
So if your opinion were correct, miners would have already closed up shop because the BTC reward for posting a new block on the chain isn't worth it alone. The mining industry has known that from the beginning. It will be a fee structured business going forward. Especially after next year's halving event.
The fees won't get out of hand because it's a competitive market. A new block gets made roughly every 10 minutes. So if you don't want to pay a certain fee this block, a new miner will have the chance 10 minutes later, and they could accept your fee max and include your transaction. It's an open market.

Have you ever used Western Union to send internationally? You're losing up to 20% of what you're sending in fees.
You can look at the Bitcoin blockchain and see no one pays anything remotely close to that. In fact there have been transactions in the $millions for fees as little as $11.
If you want your transaction to be in the next block, you can pay a higher fee. If not, you can wait.
The current banking system's transactions don't process instantly. Only looks like it on the surface because the banks are honoring them in the meantime. It actually can take several days for them to be truly verified.
Sure handing someone cash for a purchase is the fastest, but money has gone digital, and cash is slowly going away. Probably not in our lifetime, but eventually.

How to use the Bitcoin network without internet:

4 Ways To Use The Bitcoin Network Without An Internet Connection

One often-heard comment is how the governments can end Bitcoin by shutting off the Internet globally. While that certainly would

cryptomode.com

Are these easy and convenient? Not yet. But if you are one of the billions of people on the planet without access to a bank account, you'll be happy to figure it out.

Broaden your mindset.
You should probably look into some non-Keynesian teachings on the Great Depression.
Too long to explain here, but it was the Federal Reserve's decisions that drug out the depression far longer than it should've been.

Inflation is theft! Printing money, expanding the money supply, weakens the currency. No exceptions. It's never a good thing. Civilizations thrived long before governments created their own money. It was a slower growth, sure, but manipulating the money has failed every single time in the history of mankind! The current sh!t show is no different. It's just on a much larger scale, which is worse!


Not your keys, not your coins. Everyone needs to know that. Educate yourself. Do not leave your bitcoins on an exchange!
To be self-sovereign, you must self-custody. And the ability to do that is getting easier and easier every year!

And by the way, 95% of the SBF clients had OVER $250k in deposits! Which is above the FDIC insurance amount.
So those clients aren't like us. They're the rich elite and big corporations. They'll be just fine.

 

[JRP3]

But if you are one of the billions of people on the planet without access to a bank account, you'll be happy to figure it out.

Those people probably don't have internet access either.

 

[ChooseFreedom]

...is that a serious question?

Pretty obviously if it takes say (using generic figures here) 100 watts of power to move $1 in value with BTC, and it takes 200 watts of power to move $1,000 in value using actual money, then banks win the energy use race pretty handily.

The cost to do huge #s of transactions is vastly lower for real banking than for BTC transacting (and indeed more fundamentally-- the real banking system CAN do massive #s almost instantly... BTC physically can not by design. It scales badly.

There's been lots of proposed forks to "fix" the bad scalability issue--- and workarounds like the lightning network, but it's still orders of magnitude worse than real modern digital banking in capacity, speed, cost, and scalability.




You appear to read (and believe) a lot of misinformation about the Fed my dude.

A CBDC is a thing the fed has discussed, but have taken no steps to actually create or implement. They don’t even have the ability or authority to create one without congress passing a law authorizing it. (this, too, is gone into detail in their FAQs-- which I think you could benefit a lot from reading)

A bunch of cryptobros mistakenly claimed FedNow was the first step in getting a CBDC rolling, but once again they had no idea how actual banking or money work and were 100% wrong.




Again you appear to be making up magic powers the fed does not actually have.




Good news! They aren't allowed to do any of that!




Don't read the news much I guess?

Massive #s of peaker coal plants have been shut down in recent years specifically by battery energy storage and distribution.

A lot of it using batteries from Tesla.

And they've got an existing (fairly new) megafactory ramping up to make a ton more, and another one recently announced to be built. That's apart from the huge # of megapack type storage being built by various chinese cell makers and others.


The entire system as a whole is just ridiculously inefficient. A large portion of the energy is just lost in transit. The farther it has to travel, the more is lost.




Yes- the fact it's hard and slow and expensive to transact is intentional.

And makes it really bad at being actual currency because all of those things are the opposite of what you want in a currency.





Which is why you're SOL if you're the victim of fraud and paid in bitcoin. It's just gone man.

But if someone defrauds me with real money I just call my bank or credit card company and they instantly credit it back to my account.




I mean, people really bad with money management pay a lot of fees.... it'd be great if high schools taught basic money management skills... but rich people love dumb people so good luck getting that to happen!




I mean--- even if you did, "get your $ back with proof of fraud" is infinitely better than BTCs "If victim of fraud, your $ is just gone- no recourse" option.




The free market as you seem to imagine it never really existed though.

You don't think super rich people running big companies weren't doing horrible things to their workers BEFORE 1913 or something?

Generally the stuff they did before then was FAR worse (in the US anyway)




Very noble- but bitcoin ain't gonna do any of that. It's a terrible substitute for actual money, and a fair % of your arguments in its favor were based on things that aren't actually true, or things you haven't really thought out (like how you get useful transaction speeds if it needed to transact the # of times a second real banks do).




It always does.

"this time it's different" is a punchline, not a plan.

Okay, serious question.

You spend all this time defending the current system, and yet you end this post with a proverbial hands thrown in the air.
So you obviously know the current system is broken and will eventually fail.
But you're completely against something that can be better? Bitcoin is in it's teens of existence. I know it's not perfect.
But it is already better in many ways, and getting better all the time.
So what is it going to take for you to see it as a better option? Have you asked yourself?

Better fraud control?
Easier usage?

• Innovation takes energy. And it's Bitcoin's proof of work that makes it so secure, so I won't apologize for it's usage. It's using mostly renewables, and continues to be a positive influence in the overall energy space, so I'm not sorry it uses energy.
• The Lightning Network has already shown it can surpass the volume of the VISA network, and will continue to grow.
• The government relies on the Fed to keep the economy going. If the Fed says "we need our CBDC", what makes you think they won't give it to them? Pass the laws, and hand it over. It's what they've always done. Laws had to be passed for it to exist at all.

There's only 24 hrs in a day. I don't claim to know everything, nor is there time. So sure, I admit most of my info comes from one side.
I'm not alone in that. But I am open, and willingly learn from both sides when I can. That's what sent me down the BTC rabbit hole in the first place.

 

[ChooseFreedom]

Those people probably don't have internet access either.

You may have read my post wrong.
I linked to an article showing 4 ways to use the Bitcoin network without access to the internet.
So you're right, most of them may not, but they don't need it to use Bitcoin.
And, this is a Tesla site, so I'm sure you're aware of Elon's satellite project that is giving many of these areas their first access to the internet.

 

[daniel]

How to use the Bitcoin network without internet:

4 Ways To Use The Bitcoin Network Without An Internet Connection

One often-heard comment is how the governments can end Bitcoin by shutting off the Internet globally. While that certainly would

cryptomode.com

1. Amateur radio. If you are too poor to have internet, you definitely don't have amateur radio. And it's not enough to have a basic ham radio transceiver. You need specialized equipment. There's probably some guy in a jungle with no cable service who has a fancy amateur radio setup, but this will not help normal folks who don't have internet service.

2. Blockstream satellite. Great: You don't have internet but you have a flibbing satellite communications system??? Again, maybe there's some rich guy living in the jungle. This won't help ordinary folks.

3. & 4. Pony Direct and SMSPushTX. Both require cell phones. If you have a cell phone you probably have internet. If you don't have a cell phone this won't help you. Again, there may be some folks who have cell phones and no internet, but they're not the people we're talking about. So these may help a few, but still leave out a lot of people.

And we're back to the fact that the folks pushing crypto (including Bitcoin) simply don't understand economics. There's a saying about pseudoscientists: Scientists don't understand everything, but pseudoscientists don't understand anything. It applies to pseudo-economists also: Economists don't understand everything about economics, but the pseudo-economists pushing crypto don't understand anything about economics.

Money needs to circulate in order for an economy to function. Buying, selling, and investing. If you stuff your money in a mattress (or, the digital equivalent: stuff it in a digital wallet) and just let it sit there, it's not serving the purpose it was created for: to mediate exchange and provide capital for economic activity. Inflation is necessary so that people will invest their money rather than stuffing it in a mattress. People buy crypto and stuff it in a digital wallet (or an exchange) in the hope that it will rise in value, so it's not serving the basic purpose of money. It's doing nothing. It's just sitting there.

 

[JRP3]

You may have read my post wrong.
I linked to an article showing 4 ways to use the Bitcoin network without access to the internet.
So you're right, most of them may not, but they don't need it to use Bitcoin.
And, this is a Tesla site, so I'm sure you're aware of Elon's satellite project that is giving many of these areas their first access to the internet.

@daniel covered the issues above.

 

[Knightshade]

Okay, serious question.

You spend all this time defending the current system, and yet you end this post with a proverbial hands thrown in the air.

I haven't "defended the current system"

I've just pointed out why crypto is not only not better, it's functionally worse at most of the tasks the current system does.

I also pointed out most of your stated understanding of the current system is factually and fundamentally wrong- including providing sources correcting your inaccurate claims abuot it-- and perhaps your evaluation of it is suffering as a result.

Many of the things you think are "wrong" actually aren't. That doesn't mean it's perfect, or that there's not ways to improve it- but if you don't even really know how it works it's tough to take you seriously when you say you've got something that 'fixes' things that aren't even the case.

So you obviously know the current system is broken and will eventually fail.

Entropy is a fundamental law of the universe. Everything eventually fails.

But you're completely against something that can be better?

Not at all. I can just recognize bitcoin ain't it.

I listed a bunch of, specific, reasons why.

Bitcoin is in it's teens of existence. I know it's not perfect.
But it is already better in many ways, and getting better all the time.

One of your fundamental points about it was nobody controls it and it can't be changed by any specific individuals.

But somehow it's also going to keep changing and improving?

So what is it going to take for you to see it as a better option? Have you asked yourself?

Yes. I've looked at it in comparison to actual money, in all the ways actual money is and needs to be used- and it's pretty reliably worse at all of them.

Your inability to see that is...odd.

Better fraud control?

I mean-- ANY would be nice.

But as YOU point out, it's fundamental to the nature of bitcoin that that is impossible.

Transactions are intentionally one way and irreversable.

If someone defrauds me out of bitcoin, it's gone. I have no recourse, and that's on purpose

If someone defrauds me via bank or credit card, I get 100% of my money back, and typically quite easily and quickly.

Easier usage?

You can dumb down the usage quite a bit- and many have- but all by centralizing the "holding" of the bitcoin-- the very thing you insist is Bad.

Individuals holding their own cold wallets is the most secure and pure way-- but it's also the hardest for anybody to turn into a useful currency.

And even then you have outrageous transaction fees relative to real money, and a complete inability to handle the type of transaction volume real money needs.

• Innovation takes energy. And it's Bitcoin's proof of work that makes it so secure, so I won't apologize for it's usage. It's using mostly renewables, and continues to be a positive influence in the overall energy space, so I'm not sorry it uses energy.

• 
  
  I mean- you should be. Since it's fundamentally worse as money, yet consumes far more energy per unit of value moved, it's inferior to actual money by this measure.
  
  

  [*]The Lightning Network has already shown it can surpass the volume of the VISA network, and will continue to grow.

  
  In theory it could. But brings a bunch of disadvantages that include some of the things you insisted BTC would solve in the first place, plus additional disadvantages.
  
  Funding a Lightning Network wallet requires users to send BTC from a traditional Bitcoin wallet, and creating a payment channel involves locking up funds.
  
  Once funds are locked into a payment channel, they can freely transact, but the funds can only be recovered after that channel is closed. Moreover, offline transaction scams are possible, as one party may close a channel when the other is offline to try to steal funds.
  
  Actually here I just grabbed a list of cons from reddit for you I'll stick in a quote block.
  
  

  Difficulty of running a well functioning node. The promised automation still hasn't been forthcoming, and it doesn't really look like it will be here anytime soon.
  
  Game theory problems
  
  You must maintain coin that you can't actually spend, just to be able to receive funds and participate. This is not insignificant. It would be like saying that in order to receive a monthly $5k to your checking account, you must always maintain $5k of unspendable funds in your checking account.
  
  Keeping coins in a hot wallet on a server, SBC, or your home PC incurs risk, beyond cold storage.
  
  Keeping coins locked in an HTLC, where your counterparty might disappear due to hardware/software failures, or human incapacitation, means that you could be waiting for some time, just to gain access to your funds again.
  
  Conversely, if you use a low time-frame HTLC, you could be vulnerable (or dependent on a watchtower), in the case you experience hardware/software failures, and your counterparty notices that you disappeared.
  
  And for all of these game theory problems, you gain very little in terms of routing fees to compensate for the extra risk and effort required. And this doesn't appear to be changing anytime soon.
  
  3. Routing problems. People like to compare LN to TCP/IP. I used to do that. But the comparison breaks down when you realized that IP packets are assisted in routing as it travels from node to node; not solely the responsibility of the sender. Without this, I doubt the internet would function even at a fraction of it's current abilities.
  
  4. Privacy. Due to this routing problem, LN comes inbuilt with a number of tools for senders to route packets. The only problem? The same tools you need for effective path discovery, are the same tools recently shown to also be effective at determining node balances, channel capacity, and determining the sender/receiver, with surprisingly high accuracy. If you think about it, this makes sense. The ability to route effectively requires known network topology. Known network topology is inheretly agonistic towards effective privacy.
  
  5. Flood Attacks. It was also shown last year, that a relatively low resource actor could leverage an attack putting funds at risk. There are some mitigations, but it is still inherently a problem, especially on a congested main chain.
  
  6. Fees, scalability. Like it or not, LN channels MUST sometimes settle on the mainchain. Some clever engineering could reduce this need, but it can't eliminate it. At some point, Bitcoin blocks will have to get larger if LN will even work at all as a scalability solution for small payments.
  
  Finally, adoption. Why has LN been stagnant at around 1k BTC for years now? Well, all of these problems mean that people either have to be tech nerds with extra time to run their own node, or use a custodial solution. Knowing you might have to pay high fees just to open/close a channel, and the potential for having funds at risk, means people would rather just use some other blockchain. It's a problem of friction, and there doesn't seem to be any solution for quite some time (years), before that frictional cost is reduced enough to incentivize LN adoption.

  
  So basically you lose most of the advantages you claim BTC gets you using the LN, and gain some extra disadvantages, and as point 6 brings up since these eventually need to settle on the chain it's unlikely this ACTUALLY fixes the scalability/cost problem over a massive # of transactions if it ever gets to that point.
  
  
  
  

  [*]The government relies on the Fed to keep the economy going. If the Fed says "we need our CBDC", what makes you think they won't give it to them? Pass the laws, and hand it over. It's what they've always done. Laws had to be passed for it to exist at all.

  
  I mean... sure? But first they HAVEN'T said they need it... and even then it shows "the fed" isn't the issue at all, because they only have the power(s) congress has given it and the board itself is an agency of the government and reports to them... SOMEBODY is going to determine economic policy in a nation after all. So not sure what your objection even is about this at this point?
  
  Possibly now that you've had many of your myths about the fed dispelled, you're not sure either?
  
  
  
  

  There's only 24 hrs in a day. I don't claim to know everything, nor is there time. So sure, I admit most of my info comes from one side.
  I'm not alone in that. But I am open, and willingly learn from both sides when I can. That's what sent me down the BTC rabbit hole in the first place.

  
  Fair enough-- but again given how MANY of your perceptions of how the "regular" side works were fundamentally untrue- you might want to reconsider how accurate your conclusions are?
  
  
  
  

  Of course the people pushing all other cryptos would argue that. Their entire validity relies on it!
  They are fundamentally different because every single one of them are centralized, have a company that runs it, can change the rules of their "blockchain" any time they want.
  The SEC made Bitcoin a commodity and everything else a security for these reasons!

  
  The SEC did not "make" it a commodity. The current chairman THINKS it is. He hasn't "made" anything.
  
  On the other hand the chair of the CFTC thinks Etherium is ALSO a commodity.
  
  
  

  CFTC Chair Says Ethereum Is a Commodity—Despite Gensler’s ‘Bitcoin Only’ Position - Decrypt

  Rostin Behnam parts ways with his SEC counterpart over whether Ethereum is a security and subject to federal regulation.

  decrypt.co
  
  And not just ether either- he suggests many (all?) stablecoins would ALSO be commodities.
  
  The problem is there's multiple "tests" in current law that could make either answer correct depending which you use, and who uses it.
  
  This is not "bitcoin is magical, special, and TOTES DIFFERENT FROM EVERYTHING ELSE IN LAW
  
  This is a genital-battle between the two agencies over who gets to regulate what... neither has force of law at this time- Only congress can do that... so again you appear to have misunderstood some things from the CryptoBro sources you are using.
  
  
  

  Not your keys, not your coins. Everyone needs to know that. Educate yourself. Do not leave your bitcoins on an exchange!
  To be self-sovereign, you must self-custody. And the ability to do that is getting easier and easier every year!

  
  How do you reconcile this with the lightning network requiring you to do the opposite of all of that if you want to actual transact with anything approaching reasonable speed, cost, and scalability (and even then it has many many issues I previously noted?)

 

[heltok]

Imo people spend to much effort on what box to put things into, how to label things, semantics etc. Imo it's better to focus on the direct attributes than what box they fit into. Legal stuff might influence now and then, but I don't think crypto really cares, haven't seen arguments around legalities have too much predictive power over the last decade. Sometimes it will be banned somewhere, sometimes it will be taxes in some way somewhere. These changes now and then. But still crypto is here, usage is up and same debates are still running...

 

[ChooseFreedom]

I'll just leave this here as to why the current Keynesian "economy" is doomed to fail:

WTF Happened In 1971?

"I don't believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can't take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can't stop." - F.A. Hayek 1984

wtfhappenedin1971.com

Every example you would ever need to show how fiat has failed. (some of my faves below)

History:

https://bitcoinmagazine.com/culture/central-banking-then-and-now

Looks like the American Institute of Economic Research seems to think Bitcoin is a good thing.
The famous words of Herbert Spencer, “It takes varied reiterations to force alien concepts upon reluctant minds."

The Possibilities Inspire: A Review of ‘Check Your Financial...

"Across the world, Gladstein’s investigative journalism shows how Bitcoin is a tool for individuals and communities to protect their wealth and promote their well-being in the face of repressive regimes. It is a sobering perspective" ~ David Waugh

www.aier.org

Amazon.com: Bitcoin vs Altcoins: The Battle for Dominance eBook : Champagne, Phil, Pysh, Preston: Kindle Store

Amazon.com: Bitcoin vs Altcoins: The Battle for Dominance eBook : Champagne, Phil, Pysh, Preston: Kindle Store

www.amazon.com

“I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can’t stop.” – F.A. Hayek 1984
Bitcoin is that way. Non-violent, apolitical, can't be shut down or "banned". If everyone starts using it instead of fiat, the governments will have no choice but to follow us and adjust.


If we "need" inflation, why is it that it didn't really seem to be needed prior to 1974?
This is just one product, but it's certainly one that could be in any/every version of The Fed's "basket of goods" that calculates their version of the adjusted rate of inflation.

If this chart was updated today, there would be an even steeper spike from 2015-2023:

Yeah, fiat seems to be working really well.

Futures trading was fairly parallel to actual industrial production until 1971. What changed? Oh yeah, money went from being backed by gold to being backed by nothing.

Love this one. Shows how wars bring us together (common enemies). But unsound money has done nothing but divide us for decades.

When your hard earned money is being stolen from you through inflation and debasement, it becomes more and more important to you.

Broken money leads to broken people.

One of the top causes of divorce: Financial problems

These are all you need to see to know what's wrong with our healthcare system. Corporate greed.

Most people are ignorant (as in just don't know, not being mean) about the actual failures of fiat money.
Sometimes because they just haven't been exposed to the information, but also a lot of people prefer to stay blinded to it, simply because they feel helpless about it and wouldn't know where to start to try and fix it even if they wanted to.
As the examples above show, this is a FAR BIGGER PROBLEM than just the money. But the money is at the ROOT of all of these problems. And Bitcoin is the fix to the problem. Bitcoin is the answer to your questions of "how".
Society needs to return to taking personal responsibility for your own actions, your own finances, your own life!
And you no longer need the government's sh!tcoin to do so.

 

[daniel]

There's a saying in science: "Scientists don't know everything, but pseudoscientists don't know anything."

The same applies to economics: "Economists don't know everything, but pseudoeconomists (including crypto boosters) don't know anything."

Another similarity between pseudoscientists and pseudoeconomists: They love to hunt for and find anomalies. If there's a fossil that doesn't seem to fit into the evolutionary picture, the pseudoscientists will present it as proof of divine Creation. Whenever economics fails to make the economy run like an artisanal music box, the pseudoeconomists will declare that we're all doomed if we don't switch to Bitcoin or their favorite alternative crypto.

Nobody is capable of regulating the money supply perfectly so as to avoid all unpleasantness. But an unregulated money supply is a complete disaster. And an unregulated market (which crypto is) is an open invitation to frauds, cheats, hustlers, and plain old crooks. Crypto is a thousand times worse than a well-regulated fiat monetary system. Everything that's bad about fiat is a thousand times worse with crypto.

Rather than studying economics, the pseudoeconomists just declare that they know more than people who have studied the subject for years. But of course it's understandable that if you've once bought into crypto, you'll do everything you can to foment disinformation about fiat, in the hopes of boosting the value of your crypto speculation. Because that's all it really is: A microscopic amount of crypto transaction is actual buying and selling of legal goods, and none of it is investing in productive enterprises like factories. Nearly all crypto transactions are speculative buying and selling of crypto for fiat currencies or for other crypto. And a huge portion of crypto transactions are people trading crypto with themselves in order to make it appear that there's a bigger market for it than there actually is.

In the real world, with the exception of an insignificant portion of transactions, crypto has two uses: Speculation, and black-market trading. And nearly all merchants who accept crypto exchange it for fiat currency the instant they receive it. And they set the real price of their goods in fiat currency, and adjust the crypto prices by the minute. In fact, you pay more if you pay in crypto, because they have to add a percentage to their price in crypto to allow for the fact that in the minute that passes between receiving your crypto and exchanging it for real money, the value of the crypto could fall.

Fiat currency is far from perfect. It has all sorts of flaws and weaknesses. But crypto is a scam from start to finish. You might make a lot of money speculating on it, and it's made billionaires of a few people who got in at the start. Or you might lose your shirt. Because that's all it is: It's gambling that there will be a greater fool to buy it from you at a profit. If you enjoy gambling, more power to you! But it just doesn't work as currency, for all the reasons that have been listed in detail in this thread.

 

[ChooseFreedom]

Nobody is capable of regulating the money supply perfectly so as to avoid all unpleasantness. But an unregulated money supply is a complete disaster. And an unregulated market (which crypto is) is an open invitation to frauds, cheats, hustlers, and plain old crooks. Crypto is a thousand times worse than a well-regulated fiat monetary system. Everything that's bad about fiat is a thousand times worse with crypto.

You could've just stopped at "Nobody is capable of regulating the money supply".

What are you considering an unregulated money supply?
Give me one example, just one, of a pre-BTC unregulated money supply, and how it failed.
Are you talking about the barter system, African glass beads, shells, salt, what?

You clearly think that the USD is a "well regulated" system. Am I right? The lesser of all evils at least.

What are you considering the "bad" things about fiat, and how are those worse with Bitcoin? (not crypto, all of those are scams, we can agree on that)
So tell me a negative of fiat that is worse with Bitcoin.


Characteristics of Sound Money:

- Divisibility: Gold - bad: bars to coins, not easily divided
Fiat - better: USD: 1/100 of dollar = penny
BTC - best: bitcoin: 1/100,000,000 = satoshi

- Portability: Gold - bad: heavy, takes up a lot of space at volume
Fiat - better: paper is lighter, coins still heavy, electronic is good
BTC - best: completely portable, don't even need a wallet

- Widely accepted: Gold - good: would be accepted by most, if verified, if the government allows you to own it.
Fiat - good: each country has it's own, so finding acceptance is mostly regional.
USD better than most
BTC - better: limited global acceptance, albeit still growing faster than any other

- Scarce: Gold - better: the global supply of gold only grows at about 2% per year.
Fiat - bad: fiat money printing is non-stop and used whenever a government wants.
BTC - best: 21 million is all that will ever exist.

- Durable: Gold - better: stands the test of time, doesn't corrode, won't easily burn, melts to verify purity.
Fiat - bad: paper burns, coins have very little precious metal, electronic is centralized making it susceptible to hacks, scams, etc.
BTC - best: completely online, nothing physical to lose, steal, or damage.

- Stability of Value: Gold - better: historically held it's value very well, but does fluctuate.
Fiat - good/bad: short-term USD is typically stable, but historically bad as the USD has lost 99% of it's value since 1900. Non-USD has been even worse
BTC - bad/good: being such a new form of money, the fluctuations in value look wide in the short-term. Time will show as adoption grows, the highs and lows will lessen and if viewed on a chart from inception to current, it has a more steady upward trend in the long run.



Fiat:
- Big Brother regulated: you can't take $10k out of your bank without telling them why. And if they don't like your answer, they can deny giving you your own money. Do you really think that's because they want to stop fraud, terrorism, or "plain old crooks"? No, it's because they want to "control the flow of money". Right. The real reason is to put up road blocks on bank runs. Why? Because fractional reserve banking has made every bank in the world insolvent. They're very good at hiding it, but the truth is, they no longer are required to keep 10% reserves. If 10% of their customers all go in and ask for half of "their" money, the bank doesn't have it. Not just, we don't have it on site, they don't have it, period. It's not liquid, and most of it isn't remotely available. I could search for figures, but they exist.

Bitcoin:
- Uses an open-source software that is open to everyone, yet controlled by no one, because it doesn't need to be. It's a zero sum system. No one can manipulate it to benefit more than anyone else, without actual proof of work. Which isn't manipulation, it's used to secure the system, verify the system, and actually eliminate the fraud and bad apples.


Fiat:
- Highly manipulated by the Gov and Fed, leading to inflation (is bad, no matter what you think), which is theft to everyone who isn't close to the money printer (banks, lobbying corps).
For example, look at the price of TV's vs their capabilities. It has been nothing but deflationary. So why can't everything else where technology has improved it's efficiency, lowered it's production costs, be deflationary as well? It's because the Fed knows this house of cards economy structure is built on debt, and nothing else. Ever since 1971, we've lived in a proof-of-debt system. Banks create fiat out of thin air through loans made on fractional deposits. Without the constant creation of new debt, new fiat, the system crumbles.
High activity does not equal growth.
This system is built to encourage spending, discourage saving. That was not the case prior to 1971. A family with one income earner, usually without a college degree, could afford their own house, a car, 2.5 kids and a dog, and be able to retire with a pension and enough to live comfortably the rest of their life.
Now, 2 college degreed spouses live paycheck-to-paycheck just to get by. Forget buying a house, having kids, and retirement is disappearing without pensions. We have elderly people working in grocery stores into their 70's because they couldn't save money at the same rates as inflation, and their Wall Street-connected 401k only makes money for the brokers. So inflation steals their money's buying power more every single year.

Bitcoin:
- Deflationary because the supply is fixed at 21 million, never to be changed. This means it's value will go up over time, not down like every fiat in history. This also means people can actually start saving again, lowering their time preference and planning for the future. Unlike today, where you have to spend your fiat as fast as possible so you don't lose it's value. A sound, deflationary, money demands smarter decisions. Huge corporations don't work in a deflationary economy. We can go back to more "Mom & Pop" shops, more local micro-econ. Government also shrinks, because the out-of-control spending can't happen when when there's no money printer to bail them out.

Fiat:
- backed by guns, I mean, trust in the centralized Government. They are the only ones who can create it, protect it, steal it from other countries through war and political pressure, manipulate it, I mean, regulate it.

Bitcoin:
- backed by a vast network of decentralized computers running a program that runs 24/7, verifies all transactions, kicks out any "crooks", maintains the integrity of the reward system keeping it fair to all, and can't be shut down by anyone.

 

[daniel]

You could've just stopped at "Nobody is capable of regulating the money supply".

What are you considering an unregulated money supply?

Gold, for one. The amount of gold there is, is what there is. The gold standard was a major cause of the Great Depression, and the major reason it lasted so long.

Give me one example, just one, of a pre-BTC unregulated money supply, and how it failed.

See above.

So tell me a negative of fiat that is worse with Bitcoin.

Fiat cannot be perfectly regulated. Crypto (including BTC) cannot be regulated at all. The amount there is is what there is. Even just the U.S. economy is far too large to be mediated by the amount of Bitcoin that can ever exist, and it's a lot worse if we talk about the global economy.

One of the MANY things that crypto boosters don't understand is that for trade to operate smoothly, the amount of currency in circulation must suit the amount of goods being traded.

Of course scammers can always make another crypto, creating "money" out of thin air, which is what you accuse government of doing, and nobody can stop them. With crypto you'll never have a quantity of currency that matches the economy's need for currency.

Characteristics of Sound Money: [...snip]

Scarcity is not what you want for good money. The correct amount is what you want: Not too much, not too little. Crypto cannot achieve this. Gold cannot achieve this.

Another thing that crypto boosters fail to comprehend: Money serves three purposes: Exchange, store of value, and investment. For store of value you'd like a constant value. But for investment there has to be a small, steady, predictable amount of inflation. The reason nobody will ever invest crypto is that they hope it will rise in price. When the currency rises in price, nobody invests, and a modern industrial economy cannot function without investment. Inflation insures that people will invest their money rather than stuffing it in a mattress, or leaving it in a crypto wallet.

... you can't take $10k out of your bank without telling [the government] why.

Lie.

And if they don't like your answer, they can deny giving you your own money.

Lie.

Bitcoin:
- Uses an open-source software that is open to everyone, yet controlled by no one, because it doesn't need to be. It's a zero sum system. No one can manipulate it to benefit more than anyone else, without actual proof of work. Which isn't manipulation, it's used to secure the system, verify the system, and actually eliminate the fraud and bad apples.

The very fact that it cannot be "manipulated" is what you fail to see as its supreme flaw, making it useless as currency. Again, you fail to comprehend how critical it is that the amount of currency in circulation matches the amount needed for trade and investment.

Fiat:
- Highly manipulated by the Gov and Fed, leading to inflation (is bad, no matter what you think), which is theft to everyone who isn't close to the money printer

Again, zero inflation means zero investment and the entire industrial economy grinds to a halt. The pseudoeconomists promoting crypto (to bolster their own speculation) simply fail to comprehend the necessity of investment.

Bitcoin:
- Deflationary because the supply is fixed at 21 million, never to be changed. This means it's value will go up over time, not down like every fiat in history. This also means people can actually start saving again,

Exactly: The quantity is fixed, so there's just not enough available to mediate commerce and productive activity.

What's really stark here, and that you again fail to comprehend, is that if the value of the currency keeps rising, nobody will ever invest in or engage in productive activity. The entire economy will collapse because everybody will keep all their money in their digital wallet.

Let's say you invest a better mouse trap. You want to build them to sell. You go to your neighbor and tell him "I need 1,000 BTC so I can buy lumber and steel so I can make mousetraps to sell. We'll make 10% profit because my mousetraps are so good. Your neighbor is going to tell you "No way! My BTC is going to be worth double by next year. I'm keeping it. I'm not going to invest in your mousetrap factory." Multiply that by all the productive activity of the whole economy.

Crypto is useless as currency because there's not enough of it and its value is too unstable. As a store of value it's a gamble. You might win, you might lose. And nobody will invest it in productive enterprise.

Bitcoin:
- backed by a vast network of decentralized computers running a program that runs 24/7, verifies all transactions, kicks out any "crooks", maintains the integrity of the reward system keeping it fair to all, and can't be shut down by anyone.

"Kicks out crooks"??? Are you kidding me??? Crooks LOVE crypto. When a crook takes your BTC and fails to deliver what was promised, you have NO recourse. When a crook hacks your computer or kidnaps your child and you have to pay ransom in BTC, you have no recourse. (The same is true of cash, but BTC is just SOOOOO much easier for the crooks.)

Right now the whole system of maintaining the ledger is financed by the node operators mining more coins. Once there are no more coins, they'll have to start charging to maintain the ledger. And that's WAY more expensive than what banks do. Small purchases will cost more to process than the cost of the thing you're buying.

 

[heltok]

My intuition says that yes, fiat is bad. Elon seems to agree. I think a lot of freethinking highly intelligent people get the same intuition. It's not a clean solution, it adds lots of complexity and obscurity. I will give a few random examples of this:

When a random counterfeits the dollar it's a horrible crime and everyone suffers, when the government does it's good for the economy. Criminals are counterfeiting like crazy, just visit any major darknet site and read the reviews for counterfeit money to get a picture of how much physical cash is being sold and how people find ways to introduce them in the market...

Superdollar - Wikipedia

en.wikipedia.org

Italy seizes 556,000 euros in fake coins minted in China

Italian police on Friday seized 556,000 euros ($692,000) in fake euro coins minted in China from a ship container in the port city of Naples, investigators said.

www.reuters.com

Adding inflation to mess with people's natural time preference to make it higher would not make sense in any other domain with crime, obesity, unwanted pregnancies and social decay.

Time preference - Wikipedia

en.wikipedia.org

All the countries that are moving higher in the good metrics have low inflation, the countries with high inflation generally are going lower in the good metrics. Some noise over short time periods, but extend the time period and the picture becomes clearer.

Swiss deflation: francly, we do not mind | Financial Times

archived 15 Jul 2023 00:08:43 UTC

archive.is

The small European nation of Switzerland beat sky-high inflation. Here's how

Inflation in Switzerland hit a 29-year high of 3.5% in 2022, well below the double-digit rates of other advanced economies.

www.cnbc.com

Also the way we calculated inflation is so midwit. Doing it in periods of 1jan-31dec is clearly bad, if december has +20% inflation then should jan-dec next year aim for +2% or -18%? If january has +20% inflation should feb-dec aim for -18% or +2%? Answer is +2% and -18% which makes zero sense... If you are gonna do it, then at least do it intelligently. Btw the +2% goal is just a random artefact of NZ deciding to aim for 2%. It used to be 0-2% with an upper limit of 2%.

Then we have technology moving forward with deflationary currencies such as ether. Some currencies even pay interest just for holding the deflationary currency with PoS. As friction from going from a currency to another goes down with technology then holding fiat makes even less sense even if you transact in fiat. Maybe humans are slow to learn, but as more and more of the economy is run by artificial agents, they will have less problem with adapting to use digital currencies. Imo it's pretty obvious that we will see hyperinflation on fiat currency sooner or later as people jump ship to deflationary currencies. I recommend to get out before everyone else does.

 

[Knightshade]

Daniel already tore up this post pretty good, but the hilarious bit I wanted to point out:


You:

- Portability: Gold - bad: heavy, takes up a lot of space at volume
Fiat - better: paper is lighter, coins still heavy, electronic is good
BTC - best: completely portable, don't even need a wallet

Also you:

- Durable: Gold - better: stands the test of time, doesn't corrode, won't easily burn, melts to verify purity.
Fiat - bad: paper burns, coins have very little precious metal, electronic is centralized making it susceptible to hacks, scams, etc.
BTC - best: completely online, nothing physical to lose, steal, or damage.

Yes. Nobody has ever lost any bitcoin ever.

And there's totally a way to recover it if someone scams you out of it.


No-- wait... the opposite of that.

As explained like 50 times in the thread already crypto is far worse than real actual money in terms of hacks and scams.

if someone hacks my credit card and charges $30,000 in crap on it- I lose zero dollars
If someone hacks whatever is storing my BTC key and moves it out, it's gone. No recourse.


If I pay someone in fiat with my credit card (or paypal, or many other methods using real actual money) and they scam me on the purchase, I can recover 100% of my loss.
If I pay someone in Crypto and they scam me on the purchase I can recover 0% of my loss.


If simply lose my bank account number or debit card, I can walk into a bank and still get my money.
If I lose my cold wallet (or jump drive I'm storing my key on or whatever) my crypto is gone and nobody can ever access it again. It effectively ceases to exist.


Crypto is massively worse here specifically because transactions are totally unregulated and irreversible. The very things you think are advantages over fiat are things that make it tremendously less appealing as a currency.

My intuition says that yes, fiat is bad. Elon seems to agree. I think a lot of freethinking highly intelligent people get the same intuition.

Elon also falls for a lot of QANON level nonsense all the time because the richest guy in the world can't be bothered to fact check before giving his hot takes, and he's been "sure" we'd have L4-L5 self driving every year for nearly a decade now.


He's an awesome example of someone who is VERY smart, and an expert on a few specific topics, and thus automatically assumes he's an expert on every topic, while frequently making it clear to anyone listening that he's not.

 

[heltok]

Dollars have been lost also. A lot of the fees we pay whenever we transact with credit cards goes to paying for fraud. And there are ways to let third party hold your assets with crypto currencies if you want to do that. It will cost you and maybe today the services are not great, but it's possible to do it if you have a turing complete programming language on top of the currency. Imo better to have the choice than to not have the choice of being your own bank.

 

[Knightshade]

Dollars have been lost also.

Sure, occasionally someone drops a $20 bill from their pocket.... I'm unaware of anyone losing half a billion dollars in one shot by throwing out a jump drive like James Howells did though.

And of course when your bank goes under the deposits are insured, unlike say the billions that vanished when FTX went under.


In pretty much every example in the actual real world crypto ends up being much worse than actual money at everything, no matter how great people "feel" it should be in theory.

A lot of the fees we pay whenever we transact with credit cards goes to paying for fraud.

Which I suppose is still better than all the fees you pay to transact on the block chain in exchange for zero fraud protection. Again fiat wins.

And there are ways to let third party hold your assets with crypto currencies if you want to do that.

Sure. Like Mt Gox. Or FTX.

Again- crypto is measurable worse than real money.

It will cost you and maybe today the services are not great, but it's possible to do it

This always sounds like people explaining communism is awesome it's just every version anyone has applied in the real world was done wrong, but it's POSSIBLE for it to be great.

if you have a turing complete programming language on top of the currency.

.... what? We've had turing complete programming languages for generations. Etherium was specifically built as a Turing Complete blockchain. And yet it solves none of the many shortcomings of crypto versus actual real money.

Imo better to have the choice than to not have the choice of being your own bank.

You have the choice of being your own bank with fiat too though, you can always stuff cash in your mattress.

It's incredibly dumb compared to the alternatives, but you can choose to do it.

Or you can chose to put it in places that are insured and easy to transact from. A choice you don't really have with crypto where there's no protection for losing the funds at all, and transactions are hard and expensive and only useful when they get translated back into actual money.

 

[daniel]

Another thing to note is that nobody presents cash or cash accounts as a way to store wealth. That's not its purpose. The purpose of a cash account is to have ready cash available for expenses, routine or unexpected. Investments are the way to store wealth. And investments (if you're not a gullible fool) pay interest and dividends. They store your wealth AND they pay you for the use of your money.

Crypto, OTOH, is presented by its boosters as a way to store wealth. It sits in your wallet doing nothing, earning no interest, and going up or down in value according to the vagaries of the market for it. Yes, some exchanges pay you interest, but that's a Ponzi scheme: They're paying you out of the money from new investors. Or, as in the case of FTX, they're pretending to pay you interest while actually stealing your money.

Fiat has plenty of problems and will never be ideal. Crypto is useless for any legitimate activity and is a scam from start to finish.

 

[heltok]

Sure, occasionally someone drops a $20 bill from their pocket.... I'm unaware of anyone losing half a billion dollars in one shot by throwing out a jump drive like James Howells did though.

Try 6.6B

Missing Iraq money may have been stolen, auditors say

Missing Iraq money may have been stolen, auditors say

www.latimes.com