Tesla Buys $1.5B in Bitcoin, Will Accept as Payment

[daniel]

Another problem with bitcoin: I read somewhere that a really large number of coins are irretrievably lost on defunct hard drives, and a much larger number is being hoarded and has never been exchanged or spent and nobody knows whether it's been lost or is just being hoarded. The uncertainty about the total number of existing coins makes it impossible to calculate a reasonable price.

And I just heard today on a recent episode of the Slate Money podcast that the algorithm for etherium (but not bitcoin) is well suited for mining with high-level graphics chips and because of this etherium miners are buying up so many of these chips that makers of gaming computers are having a hard time getting chips for their computers. It's a weird world when huge amounts of resources, both material and energy, are being used to make money by producing a digital token that has no legitimate use, but has market value solely because of human greed.

 

[Ostrichsak]

Another problem with bitcoin: I read somewhere that a really large number of coins are irretrievably lost on defunct hard drives, and a much larger number is being hoarded and has never been exchanged or spent and nobody knows whether it's been lost or is just being hoarded. The uncertainty about the total number of existing coins makes it impossible to calculate a reasonable price.

And I just heard today on a recent episode of the Slate Money podcast that the algorithm for etherium (but not bitcoin) is well suited for mining with high-level graphics chips and because of this etherium miners are buying up so many of these chips that makers of gaming computers are having a hard time getting chips for their computers. It's a weird world when huge amounts of resources, both material and energy, are being used to make money by producing a digital token that has no legitimate use, but has market value solely because of human greed.

But you're fine when those same graphics cards used for gaming instead for the betterment of mankind, right? The way so much of this crypto currency stuff is presented by people who have no idea what they're talking about is hysterical. Like we have any idea how many dollars are in circulation currently. Doesn't seem to make it impossible to calculate a reasonable price on those though, does it?

 

[daniel]

But you're fine when those same graphics cards used for gaming instead for the betterment of mankind, right? The way so much of this crypto currency stuff is presented by people who have no idea what they're talking about is hysterical. Like we have any idea how many dollars are in circulation currently. Doesn't seem to make it impossible to calculate a reasonable price on those though, does it?

You make a valid point about gaming cards.

However, we actually do know how many dollars are in circulation: In physical currency (paper money) there's about 1.5 trillion dollars, and the total money supply (M2) is about 14 trillion dollars. More importantly, most of this money is in use and circulation, and its value remains relatively constant so that people and businesses can make budgets, confident that the money they earn today will have the same buying power (as near as makes no difference) tomorrow. By contrast, the vast majority of crypto is not circulated, it is used only for speculation and black-market transactions, and its value is so volatile that you cannot make any sort of budget plans with it, other than "hold on for dear life" and hope it goes up.

And I just heard on a podcast the other day that the rise of digital ransomware has gone hand-in-hand with the rise of crypto, because before crypto there was no untraceable way to move money other than physical currency. The great "boon" of crypto is that if you have the skills you can take over somebody else's computer and demand ransom, and remain anonymous and untraceable.

Speculation and crime are the only real uses for crypto. And the external cost to society of crypto is massive pollution since most mining operations are run on cheap coal-fired electric plants, and the energy consumption is massive. It's a real pyramid scheme since the whole thing is going to collapse once there are no longer enough new coins to be mined to pay for the high transaction costs, which are now being paid by the miners.

 

[Ostrichsak]

You make a valid point about gaming cards.

However, we actually do know how many dollars are in circulation: In physical currency (paper money) there's about 1.5 trillion dollars, and the total money supply (M2) is about 14 trillion dollars. More importantly, most of this money is in use and circulation, and its value remains relatively constant so that people and businesses can make budgets, confident that the money they earn today will have the same buying power (as near as makes no difference) tomorrow. By contrast, the vast majority of crypto is not circulated, it is used only for speculation and black-market transactions, and its value is so volatile that you cannot make any sort of budget plans with it, other than "hold on for dear life" and hope it goes up.

And I just heard on a podcast the other day that the rise of digital ransomware has gone hand-in-hand with the rise of crypto, because before crypto there was no untraceable way to move money other than physical currency. The great "boon" of crypto is that if you have the skills you can take over somebody else's computer and demand ransom, and remain anonymous and untraceable.

Speculation and crime are the only real uses for crypto. And the external cost to society of crypto is massive pollution since most mining operations are run on cheap coal-fired electric plants, and the energy consumption is massive. It's a real pyramid scheme since the whole thing is going to collapse once there are no longer enough new coins to be mined to pay for the high transaction costs, which are now being paid by the miners.

FUD.

 

[AdamMacDon]

You make a valid point about gaming cards.

However, we actually do know how many dollars are in circulation: In physical currency (paper money) there's about 1.5 trillion dollars, and the total money supply (M2) is about 14 trillion dollars. More importantly, most of this money is in use and circulation, and its value remains relatively constant so that people and businesses can make budgets, confident that the money they earn today will have the same buying power (as near as makes no difference) tomorrow. By contrast, the vast majority of crypto is not circulated, it is used only for speculation and black-market transactions, and its value is so volatile that you cannot make any sort of budget plans with it, other than "hold on for dear life" and hope it goes up.

And I just heard on a podcast the other day that the rise of digital ransomware has gone hand-in-hand with the rise of crypto, because before crypto there was no untraceable way to move money other than physical currency. The great "boon" of crypto is that if you have the skills you can take over somebody else's computer and demand ransom, and remain anonymous and untraceable.

Speculation and crime are the only real uses for crypto. And the external cost to society of crypto is massive pollution since most mining operations are run on cheap coal-fired electric plants, and the energy consumption is massive. It's a real pyramid scheme since the whole thing is going to collapse once there are no longer enough new coins to be mined to pay for the high transaction costs, which are now being paid by the miners.

But of that physical cash, I don't think you (or anyone) can really claim to know how much is stockpiled in safes (or perhaps hidden elsewhere and forgotten about). How much of it is owned by the drug cartels alone? At least with crypto you can see literally every wallet on the network, and their log of transactions so you can filter for say, money that hasn't moved in a year. That 1.5 trillion figure is just what the Fed noted down as they ran the money printer, with perhaps an adjustment for damaged bills turned in to the banks or mints.

You don't need to "hope" BTC goes up, the inflationary mechanics of cash (which are healthy in small amounts) mixed with the aforementioned stockpiling and loss of BTC almost guarantee it. What you are not certain of is how rocky of a ride it will be, and it is likely to have MASSIVE ups and downs, where as cash just steadily decreases in value over time (with compounding, it really does add up, look how a millionaire used to be someone who is crazy wealthy, and now in my city it's merely someone who has paid off their house).

Your last paragraph has many incorrect statements, I highly recommend reading Satoshi Nagamoto's white paper on BTC if you are interested in educating yourself. If you just want to repeat talking points learned from mainstream "news" and forum "experts", go for it. But if you are interested in knowledge, it's only 8 pages of your time: https://bitcoin.org/bitcoin.pdf

The one thing we agree on is that Tesla offering to accept BTC is more of a news headline than something actually desired by customers. If you were going to buy a car with one of two assets, do you choose the one that is losing value at a VERY consistent rate or the asset that is gaining value rapidly if averaged over the last 10 years? Basic math makes this one a no-brainer. If someone wanted out of their crypto stash, there are easier ways than buying a car with it. Since the interest rates are artificially forced into the gutter, the most common sense way to buy a car today is put a minimal down payment down, and just pay monthly. Let the bank give you free money after adjusting for inflation.

 

[daniel]

But of that physical cash, I don't think you (or anyone) can really claim to know how much is stockpiled in safes (or perhaps hidden elsewhere and forgotten about). How much of it is owned by the drug cartels alone? At least with crypto you can see literally every wallet on the network, and their log of transactions so you can filter for say, money that hasn't moved in a year. That 1.5 trillion figure is just what the Fed noted down as they ran the money printer, with perhaps an adjustment for damaged bills turned in to the banks or mints.
...

When talking about the supply of dollars, physical cash is only about one-tenth of the total. Most is electronic. But what differentiates it from crypto is that you can plan for the future with dollars because you know what they'll be worth. The volatility of crypto makes it useless as currency. Its only uses are speculation and crime. Also, mistaken or fraudulent transactions in dollars can be reversed. With crypto, you're screwed.

The vast majority of dollars are electronic. The dollar has that in common with crypto. But mistakes can be reversed and the value is predictable. Both of these are necessary for something to be useful as currency.

Lastly, an industrial market economy requires investment in order to function, and for investment to be attractive the currency has to have a predictable value. Would you invest your bitcoins in a stock or bond that was expected to pay 5% annual interest or dividends? If the US switched to bitcoin, investment would disappear, businesses would have no capital with which to function, and the economy would collapse. Nobody who understands the first thing about economics would use crypto for anything other than speculation, and its only value as speculation is its scarcity. It has no actual use (other than crime, since it is untraceable.) And as noted above, the transaction cost is enormous, although at present it is born by the miners, who make enough profit mining, but that profit diminishes as mining depletes the supply of remaining coins. Once there are no more coins to mine (or so few that it's no longer worth the electricity) people trying to exchange coins will have to pay the transaction costs, which are many times greater than the transaction costs for dollars.

 

[AdamMacDon]

When talking about the supply of dollars, physical cash is only about one-tenth of the total. Most is electronic. But what differentiates it from crypto is that you can plan for the future with dollars because you know what they'll be worth. The volatility of crypto makes it useless as currency. Its only uses are speculation and crime. Also, mistaken or fraudulent transactions in dollars can be reversed. With crypto, you're screwed.

The vast majority of dollars are electronic. The dollar has that in common with crypto. But mistakes can be reversed and the value is predictable. Both of these are necessary for something to be useful as currency.

Lastly, an industrial market economy requires investment in order to function, and for investment to be attractive the currency has to have a predictable value. Would you invest your bitcoins in a stock or bond that was expected to pay 5% annual interest or dividends? If the US switched to bitcoin, investment would disappear, businesses would have no capital with which to function, and the economy would collapse. Nobody who understands the first thing about economics would use crypto for anything other than speculation, and its only value as speculation is its scarcity. It has no actual use (other than crime, since it is untraceable.) And as noted above, the transaction cost is enormous, although at present it is born by the miners, who make enough profit mining, but that profit diminishes as mining depletes the supply of remaining coins. Once there are no more coins to mine (or so few that it's no longer worth the electricity) people trying to exchange coins will have to pay the transaction costs, which are many times greater than the transaction costs for dollars.

An industrial market economy makes a lot of sense in an industrial age. However, as we transition into an information age I highly recommend watching some of Vitalik Buterin's interviews. You may gain some valuable insight into how our concepts of money and value could change over the next century. Remember, the current system we live in is both fairly young and likely to change drastically in the future.

 

[daniel]

An industrial market economy makes a lot of sense in an industrial age. However, as we transition into an information age I highly recommend watching some of Vitalik Buterin's interviews. You may gain some valuable insight into how our concepts of money and value could change over the next century. Remember, the current system we live in is both fairly young and likely to change drastically in the future.

A stable currency and the ability to dispute fraudulent transactions do not change as you move from an industrial economy to an information economy. And you still need production of goods, which means you still need investment, and investment does not happen without a stable currency. Information has become critical and will become more so. But without industry you have no goods. From cell phones to potatoes, industry is still what produces everything you need.

Transactions in crypto are outrageously expensive, hidden only by the pyramid built into the scheme, and it is industry that enables the mining of new coins that presently pays those transaction costs. Once there are not enough new coins available to pay the costs, the whole crypto edifice will come crumbling down. And you need computers to run and access all that information, and without investment those computers don't get built and without a stable currency there's no investment.

Crypto is great for criminals and tax evaders. And until the bubble breaks it's an opportunity for speculators. It has no legitimate uses, and its carbon footprint is obscene.

 

[AdamMacDon]

A stable currency and the ability to dispute fraudulent transactions do not change as you move from an industrial economy to an information economy. And you still need production of goods, which means you still need investment, and investment does not happen without a stable currency. Information has become critical and will become more so. But without industry you have no goods. From cell phones to potatoes, industry is still what produces everything you need.

Transactions in crypto are outrageously expensive, hidden only by the pyramid built into the scheme, and it is industry that enables the mining of new coins that presently pays those transaction costs. Once there are not enough new coins available to pay the costs, the whole crypto edifice will come crumbling down. And you need computers to run and access all that information, and without investment those computers don't get built and without a stable currency there's no investment.

Crypto is great for criminals and tax evaders. And until the bubble breaks it's an opportunity for speculators. It has no legitimate uses, and its carbon footprint is obscene.

So have you done research about these opinions of yours, or are you merely repeating what you have been told by the mainstream media? I suggest to start looking at zk-SNARKs and other zero-knowledge blockchains. Believe it or not BTC != all crypto. In fact it is one of thousands of coins. BTC has great value as a long term value store for the wealthy, but long term it is not for the average person. Other tech is already here, this isn't theoretical.

As for everything we need to stay alive today, what happens to the price of potatoes or cell phones when we eliminate all humans from production of said goods? How does one determine value? Do we really need such old fashioned zero-sum economics games at that point? I highly recommend reading Critical Path by Buckminister Fuller. It provides some insights on how we can easily manage resources on earth without the current paradigm of needing to "work for a living" that so many people worship (including myself 5 years ago).

Keep in mind at one point in recent history, most people would have belittled the electric car and robotaxi concepts as fantasy

 

[daniel]

So have you done research about these opinions of yours, or are you merely repeating what you have been told by the mainstream media? I suggest to start looking at zk-SNARKs and other zero-knowledge blockchains. Believe it or not BTC != all crypto. In fact it is one of thousands of coins. BTC has great value as a long term value store for the wealthy, but long term it is not for the average person. Other tech is already here, this isn't theoretical.

As for everything we need to stay alive today, what happens to the price of potatoes or cell phones when we eliminate all humans from production of said goods? How does one determine value? Do we really need such old fashioned zero-sum economics games at that point? I highly recommend reading Critical Path by Buckminister Fuller. It provides some insights on how we can easily manage resources on earth without the current paradigm of needing to "work for a living" that so many people worship (including myself 5 years ago).

Keep in mind at one point in recent history, most people would have belittled the electric car and robotaxi concepts as fantasy

"They laughed at Fulton" is not a valid argument for anybody's preferred flavor of craziness. How we can or should run an economy when people are no longer needed to produce anything is a valid question and may become critical one day. But an energy-intensive and wildly-unstable quasi-currency is not the answer. And "long-term store of value" crypto is most definitely not.

Crypto produces nothing. Speculating in it may make you very rich or very poor. But even if it were stable, hoarding commodities as a store of value is an anti-social practice since it contributes nothing.

You need only some basic Economics 101 to understand why crypto is useless as currency except for transactions that you want to keep secret because they are illegal. Crypto is perfect if you are kidnapping people or hacking computers for ransom. I just read about a guy who bought an NFT for $500 worth of crypto. Then the art work the NFT was linked to disappeared. His NFT now points to an invalid URL. Because he paid in crypto, he has no recourse to get his money back. The crooks win. The honest but stupid guy loses. The obscene energy usage alone would be enough to condemn crypto even if it did have some legitimate value. But it does not.

To answer your direct question: No, I have not watched every crackpot YouTube video extolling the marvels of cryptocurrency. I also don't watch YouTube videos of flat-earthers, young-earth creationists, or people ranting about how Tesla is bound to fail real soon now.

 

[Cleo-n-Company]

"They laughed at Fulton" is not a valid argument for anybody's preferred flavor of craziness. How we can or should run an economy when people are no longer needed to produce anything is a valid question and may become critical one day. But an energy-intensive and wildly-unstable quasi-currency is not the answer. And "long-term store of value" crypto is most definitely not.

Crypto produces nothing. Speculating in it may make you very rich or very poor. But even if it were stable, hoarding commodities as a store of value is an anti-social practice since it contributes nothing.

You need only some basic Economics 101 to understand why crypto is useless as currency except for transactions that you want to keep secret because they are illegal. Crypto is perfect if you are kidnapping people or hacking computers for ransom. I just read about a guy who bought an NFT for $500 worth of crypto. Then the art work the NFT was linked to disappeared. His NFT now points to an invalid URL. Because he paid in crypto, he has no recourse to get his money back. The crooks win. The honest but stupid guy loses. The obscene energy usage alone would be enough to condemn crypto even if it did have some legitimate value. But it does not.

To answer your direct question: No, I have not watched every crackpot YouTube video extolling the marvels of cryptocurrency. I also don't watch YouTube videos of flat-earthers, young-earth creationists, or people ranting about how Tesla is bound to fail real soon now.

So here's an interesting real world observation about Crypto. This steers far and wide from the theoretical / mathematical / philosophy behind its construct.

But still worth noting, from my view of who invests and believes in it - at least in my world.

I know of 3 family members actively involved / investing in Crypto.

None of these 3 individuals are employed. None of these 3 individuals have ever been gainfully employed on a consistent basis.

One of them is a family member who has never held a steady job. He inherited real estate when his father passed. He sold the apartments - spent most of his time playing poker until Covid slowed down his access to games. Now he's fully into Crypto. Of note too - he's a tax evader. Some days I think it's time to turn him in to the IRS.

Family member # 2 has some money through a divorce. She also doesn't work, and of some note in my world, is the #1 believer of assorted conspiracy theories in my family circle. She also buys and sells Crypto.

Family member # 3 does not work. She decided to take out huge credit card advances to try her hand at Crypto. She never pays for dinner when the family gets together and orders pizza.

So of course your family experiences may differ. But if this is a cross-section of current Crypto reality - let's call a spade a spade, and get the tulips ready for delivery.

But sorry - I must say - I would not be surprised if

 

[AdamMacDon]

"They laughed at Fulton" is not a valid argument for anybody's preferred flavor of craziness. How we can or should run an economy when people are no longer needed to produce anything is a valid question and may become critical one day. But an energy-intensive and wildly-unstable quasi-currency is not the answer. And "long-term store of value" crypto is most definitely not.

Crypto produces nothing. Speculating in it may make you very rich or very poor. But even if it were stable, hoarding commodities as a store of value is an anti-social practice since it contributes nothing.

You need only some basic Economics 101 to understand why crypto is useless as currency except for transactions that you want to keep secret because they are illegal. Crypto is perfect if you are kidnapping people or hacking computers for ransom. I just read about a guy who bought an NFT for $500 worth of crypto. Then the art work the NFT was linked to disappeared. His NFT now points to an invalid URL. Because he paid in crypto, he has no recourse to get his money back. The crooks win. The honest but stupid guy loses. The obscene energy usage alone would be enough to condemn crypto even if it did have some legitimate value. But it does not.

To answer your direct question: No, I have not watched every crackpot YouTube video extolling the marvels of cryptocurrency. I also don't watch YouTube videos of flat-earthers, young-earth creationists, or people ranting about how Tesla is bound to fail real soon now.

I am merely pointing out that perhaps the zeitgeist of today is not all-knowing and is for sure incorrect in many ways. Unless you disagree with that statement?

You did not in fact directly answer the question. My question was have you done any actual research of your own about crypto, and if so, which articles or videos have you seen? How many hours of research do you estimate you have put in? I do not mean simply reading the headline of some mainstream media article, which is often misleading. I mean actually digging deep and trying to understand and minimize your own ignorance? I would not ask you to watch "every crackpot YouTube video" as that is obviously a fools errand and impossible. I am more just curious as to how much actual research you have done versus just parroting what you are told?

For a man who seems so sure of the failings of bitcoin, I am also curious to hear what you think are alternatives. Do you really think the already struggling federal reserve is just going to continue infinitely? I am very interested to hear your take.

 

[50amp]

Largest holders
Do the names on this list not give people pause?

 

[daniel]

I am merely pointing out that perhaps the zeitgeist of today is not all-knowing and is for sure incorrect in many ways. Unless you disagree with that statement?

You did not in fact directly answer the question. My question was have you done any actual research of your own about crypto, and if so, which articles or videos have you seen? How many hours of research do you estimate you have put in? I do not mean simply reading the headline of some mainstream media article, which is often misleading. I mean actually digging deep and trying to understand and minimize your own ignorance? I would not ask you to watch "every crackpot YouTube video" as that is obviously a fools errand and impossible. I am more just curious as to how much actual research you have done versus just parroting what you are told?

For a man who seems so sure of the failings of bitcoin, I am also curious to hear what you think are alternatives. Do you really think the already struggling federal reserve is just going to continue infinitely? I am very interested to hear your take.

I have not done any actual research. Actual research consists of original work, potentially leading to a published paper. Watching YouTube videos or reading books by proponents or opponents of a given hypothesis is not research. Depending on the quality of the books read or the videos watched it can range from education to stupidification.

I do not keep lists of everything I read or all the sources I consult, but I have a solid layperson's understanding of very basic economics and access to the same information we all have about cryptocurrencies.

As for example that their value is highly volatile precisely because it is unregulated, as opposed to fiat currencies which are regulated to maintain a predictable value (those that are not are dismissed as basically worthless, or to be polite, "soft" currencies.) As for example that by design they cannot be recovered when lost or stolen. As for example that any given cryptocurrency has a pre-established limit on the number of coins. The ability to regulate the money supply is absolutely essential if an economy is to function. A fixed money supply would be a disaster, as the gold standard was. As for example that most bitcoin (on this topic I don't know about the others) is never used in exchanges but merely held as speculation. As for example that transactions in crypto are the most energy-costly currency transactions in the world, by a huge margin. All this is common knowledge and can be found from many reliable sources of information.

Of course you can blithely assert that "the mainstream" is "just saying" these things, that there's a great conspiracy of disinformation about crypto because "they" don't want "us" to "take control" of our own transactions.

Obviously the Federal Reserve cannot last forever because nothing lasts forever. But crypto will not last forever either. In fact, once computers are sufficiently powerful, the bitcoin blockchain itself will be hacked and will collapse. And if that doesn't happen, the gradual inevitable loss of coins will mean that eventually there won't be any left. And in any case there's not nearly enough bitcoin to mediate trade in today's world. As for the myriad of other cryptos, remember that at one time every bank issued its own currency and it was chaos. A well-regulated economy requires a unified currency. And here's something that fiat and crypto have in common: If the internet collapses, the whole house of cards falls down. Your crypto will be worth less than my dollars.

The U.S. monetary system is far from perfect. Crypto is very near being the worst possible alternative: Useless for commerce because its value is so unstable; useless for investment because nobody invests it, they only hoard it; and useless as a "store of value" because it has no real value. (Dollars are not a store of value either: A wise person keeps enough dollars or other fiat currency on hand for near-term expenses and emergencies, and invests the rest in something that pays a return.) The purpose of currency is to mediate exchanges of goods and services. People use dollars (or other fiat currencies in other countries) for the exchange of goods and services because their value is predictable. And because fraudulent exchanges can be disputed. Neither is the case with crypto.

 

[AdamMacDon]

I have not done any actual research. Actual research consists of original work, potentially leading to a published paper. Watching YouTube videos or reading books by proponents or opponents of a given hypothesis is not research. Depending on the quality of the books read or the videos watched it can range from education to stupidification.

I do not keep lists of everything I read or all the sources I consult, but I have a solid layperson's understanding of very basic economics and access to the same information we all have about cryptocurrencies.

As for example that their value is highly volatile precisely because it is unregulated, as opposed to fiat currencies which are regulated to maintain a predictable value (those that are not are dismissed as basically worthless, or to be polite, "soft" currencies.) As for example that by design they cannot be recovered when lost or stolen. As for example that any given cryptocurrency has a pre-established limit on the number of coins. The ability to regulate the money supply is absolutely essential if an economy is to function. A fixed money supply would be a disaster, as the gold standard was. As for example that most bitcoin (on this topic I don't know about the others) is never used in exchanges but merely held as speculation. As for example that transactions in crypto are the most energy-costly currency transactions in the world, by a huge margin. All this is common knowledge and can be found from many reliable sources of information.

Of course you can blithely assert that "the mainstream" is "just saying" these things, that there's a great conspiracy of disinformation about crypto because "they" don't want "us" to "take control" of our own transactions.

Obviously the Federal Reserve cannot last forever because nothing lasts forever. But crypto will not last forever either. In fact, once computers are sufficiently powerful, the bitcoin blockchain itself will be hacked and will collapse. And if that doesn't happen, the gradual inevitable loss of coins will mean that eventually there won't be any left. And in any case there's not nearly enough bitcoin to mediate trade in today's world. As for the myriad of other cryptos, remember that at one time every bank issued its own currency and it was chaos. A well-regulated economy requires a unified currency. And here's something that fiat and crypto have in common: If the internet collapses, the whole house of cards falls down. Your crypto will be worth less than my dollars.

The U.S. monetary system is far from perfect. Crypto is very near being the worst possible alternative: Useless for commerce because its value is so unstable; useless for investment because nobody invests it, they only hoard it; and useless as a "store of value" because it has no real value. (Dollars are not a store of value either: A wise person keeps enough dollars or other fiat currency on hand for near-term expenses and emergencies, and invests the rest in something that pays a return.) The purpose of currency is to mediate exchanges of goods and services. People use dollars (or other fiat currencies in other countries) for the exchange of goods and services because their value is predictable. And because fraudulent exchanges can be disputed. Neither is the case with crypto.

Could you mention some of the research you have done? Note that "research" as I use it does not necessarily mean in an academic sense. I am not asking you to cite a paper here. Academia is another system people cling to that is clearly showing significant issues and is ageing rather poorly. I am curious to hear about what sources inform your opinions of crypto currency. Tell me how you came to your "solid layperson's understanding", please. A couple youtube videos you have watched will suffice and are far better than being totally ignorant to how something functions. One does not need to write academic papers to understand something.

Why is a currency that needs regulation to be stable necessarily a positive in your opinion? Also what is stable? I disagree fundamentally that a currency that is manipulated by the interests of a select few wealthy people in a privately held corporation is really that stable. Can you see how subjective the claim of "stability" is? I perhaps would suggest that "established" might be a better word. Since we left the gold standard (as flawed as it was) things have been anything but stable. Housing manias, dot com bubble, crypto bubbles, oil shocks. Not what I would define as "stable" personally.

The mainstream media these days is clearly struggling to survive, and hence the quality of reporting has dropped. The press are cutting costs like mad trying to survive in a whole where the price of information is dropping rapidly. You could of course debate for days how much the drop in quality is, but the one can see the shift towards hastily throw together opinion pieces pumped out in an ever faster manner. I would not posit that they are so much malicious as they are misinformed and suffering from lack of quality editing. Source: Newsroom employment in the United States declined 23% between 2008 and 2019

Nothing lasts forever, of course. The real question is which do you see falling first? I suspect this is the crux of our disagreement, as well as the fact that you seem to equate all crypto to BTC. The fed reserve has really only been such a prominent presence in everyday American life since the great depression. If either house of cards (or the internet) falls down at this point, we are all in for some suffering (especially regarding the internet). The real question is which solution suits the 21st and 22nd centuries best.

Assuming you mean "BTC" when you say "crypto" (as most issues you mention are solved with other coins), I am curious what other replacements you see for the current Federal Reserve system? Or are you of the camp that despite it's flaws, we should stick with this clearly broken system and not bother looking for replacements?

The other question for you is do you subscribe to the belief that value is some static state, or do you perceive it as dynamic and ever-changing?

 

[daniel]

Again, I have done no research, nor have I gotten my understanding (basic as it is) from YouTube videos (perhaps the most unreliable source of "information" in today's world). A lifetime of reading have given me basic literacy in economics. Some people think that reading or watching videos is "research." That's a misuse of the word. Research is original investigation.

Item: Multiple currencies lead to inefficiency.

Item: Transactions in crypto are massively energy-intense.

Item: Pretty much all crypto is owned by people who are "holding on for dear life," so it does not circulate and is therefore not even worth considering as "currency." Pretty much all fiat currency circulates. Even if you keep it in a savings account, the bank loans it out to people who spend it.

The Fed is flawed because it's run by people. But crypto is just useless. It's not a solution to the problem.

If it walks like a duck and quacks like a duck, it's probably a duck. Crypto walks like a pyramid scheme and it quacks like a pyramid scheme. Anybody who wants to can create a new crypto and generate "value" and get rich if they can convince other people to buy into it. That's what con artists do: They convince people to buy useless stuff.

To answer your specific question on value: There are two kinds of value: There is use-value and there is market-value. Use value is when something is useful. Food and steel have use value because you can eat the one and you can build things out of the other. The use-value of food doesn't change much because we have to eat. The use-value of steel can change as technology changes, giving it more or fewer uses. Market-value is what somebody is willing to pay for something. This can change wildly. And the less the use-value is for a thing, the more uncertain will be its market-value. Crypto, having no real use-value except to criminals, will have a more uncertain market-value.

On currency stability: As I explained previously, the purpose of currency is to mediate transactions in an economy too complex for barter: What do you barter when you want a car and your income is from repairing people's plumbing? Currency solves that. But if the market-value of your currency can drop 50% or rise 100% in a day, you have no way of knowing what to charge for your services. That's why currency must be stable. The economy has booms and depressions because that's inherent in capitalism and because there are always crooks who will game the system. But without a stable currency, whole whole thing collapses because trade comes to a halt. If everybody is HODLing the currency, there's no money in circulation. And with an absolute fixed quantity of money there will often be too much or too little even if it does circulate. Your mention of bubbles shows a fundamental misunderstanding of the issue: Because even through all these things, the value of the currency has remained relatively stable. Adopting an unregulated currency that has no protections for the consumer against fraud will not prevent commodity bubbles.

Our economic system has many flaws. Switching to a pyramid-scheme for money solves none of them. On the contrary, it adds to them by providing one more route for a very few people to become fabulously wealthy if they're lucky enough to get in at the start of a fad. And it creates opportunities for con artists to make money by creating ever more cryptos and convincing marks that their new crypto will be the next big hit, and the marks buy it, not to use it as currency, but in hopes that their speculation will make them fabulously wealthy.

 

[Exelion]

Crypto produces nothing. Speculating in it may make you very rich or very poor. But even if it were stable, hoarding commodities as a store of value is an anti-social practice since it contributes nothing.

You need only some basic Economics 101 to understand why crypto is useless as currency except for transactions that you want to keep secret because they are illegal.

Unfortunately, you also need to read up on the same material. Actually, I suggest Economics 100, the pre-requisite for Economics 101, you probably skipped it. Crypto produces nothing, but guess what? Neither does any other currency, like Euros, Yens, Francs, or your almighty dollar that you seem to bank so much trust in. None of these currencies contribute anything other than a medium of trade. People believe in their value just as much as they *believe* in anything else, like stocks (which I'll bet you own), precious metals (like gold), baseball cards, comic books, or, Cryptocurrency (which you hate because, you have none).
Government likes fiat currency because they can regulate and tax it. They have somewhat of a control by printing more, or burning more, or both.

If everyone is HODLing bitcoin, like you said, it would be worth a whole lot more than it is now. But its not, because people are trading it every single second, millions of transactions a day. it is around $60,000 right now because there's a long line of people wanting to sell it for more, and there's a long line of people wanting to buy it for less than that. once someone steps up and agrees to a price, it gets logged, and then documented. It's pretty simple. But then again, that's how trade works. It would be the same for dollars, seashells, baseball cards, or sticks of gum in the playground. Makes sense?

Nothing pyramid about it. There's no people inviting two people to meetings, forking over $640.00 for a website, invitations to trainings teaching about whales and sharks. No asking to get family and friends to go to meetings, and no fallout when such scams die and get reincarnated again in the near future as something else. This is simply an intro to a new digital currency, one that is a little different in the way its created and transacted.

Nothing more. The unfortunate thing about not understanding one thing, is not understanding another, and then equating them to be the same thing. Back to school for you!

 

[AdamMacDon]

Again, I have done no research, nor have I gotten my understanding (basic as it is) from YouTube videos (perhaps the most unreliable source of "information" in today's world). A lifetime of reading have given me basic literacy in economics. Some people think that reading or watching videos is "research." That's a misuse of the word. Research is original investigation.

Item: Multiple currencies lead to inefficiency.

Item: Transactions in crypto are massively energy-intense.

Item: Pretty much all crypto is owned by people who are "holding on for dear life," so it does not circulate and is therefore not even worth considering as "currency." Pretty much all fiat currency circulates. Even if you keep it in a savings account, the bank loans it out to people who spend it.

The Fed is flawed because it's run by people. But crypto is just useless. It's not a solution to the problem.

If it walks like a duck and quacks like a duck, it's probably a duck. Crypto walks like a pyramid scheme and it quacks like a pyramid scheme. Anybody who wants to can create a new crypto and generate "value" and get rich if they can convince other people to buy into it. That's what con artists do: They convince people to buy useless stuff.

To answer your specific question on value: There are two kinds of value: There is use-value and there is market-value. Use value is when something is useful. Food and steel have use value because you can eat the one and you can build things out of the other. The use-value of food doesn't change much because we have to eat. The use-value of steel can change as technology changes, giving it more or fewer uses. Market-value is what somebody is willing to pay for something. This can change wildly. And the less the use-value is for a thing, the more uncertain will be its market-value. Crypto, having no real use-value except to criminals, will have a more uncertain market-value.

On currency stability: As I explained previously, the purpose of currency is to mediate transactions in an economy too complex for barter: What do you barter when you want a car and your income is from repairing people's plumbing? Currency solves that. But if the market-value of your currency can drop 50% or rise 100% in a day, you have no way of knowing what to charge for your services. That's why currency must be stable. The economy has booms and depressions because that's inherent in capitalism and because there are always crooks who will game the system. But without a stable currency, whole whole thing collapses because trade comes to a halt. If everybody is HODLing the currency, there's no money in circulation. And with an absolute fixed quantity of money there will often be too much or too little even if it does circulate. Your mention of bubbles shows a fundamental misunderstanding of the issue: Because even through all these things, the value of the currency has remained relatively stable. Adopting an unregulated currency that has no protections for the consumer against fraud will not prevent commodity bubbles.

Our economic system has many flaws. Switching to a pyramid-scheme for money solves none of them. On the contrary, it adds to them by providing one more route for a very few people to become fabulously wealthy if they're lucky enough to get in at the start of a fad. And it creates opportunities for con artists to make money by creating ever more cryptos and convincing marks that their new crypto will be the next big hit, and the marks buy it, not to use it as currency, but in hopes that their speculation will make them fabulously wealthy.

So you have done no research of any kind, including youtube videos (which by the way can be research, medium of transmission does not negate the educational value of information) yet feel comfortable making sweeping proclamations? How have you educated yourself to the point that you feel comfortable doing so?

Multiple currencies are inefficient: yet we have over 100 fiat currencies today. I tend to agree on this point, but regardless the reality cannot be ignored.

Transactions in BITCOIN are inefficient by design. Again you relate BTC to all crypto, which is obviously incorrect.

Again, stockpiling is more of a BTC thing due to the cap of 21 million coins. Sure people stockpile other currencies, but people also stockpile fiat. There are coins with support for over a billion TPS in theory. Even assuming the applied TPS rate is 1000 fold less, a million transactions per second doesn't scream "hodl for dear life".

I don't think many people need to be conned into buying BTC with the Fed pumps the M1/M2 supplies by 40% in a year. It's more like being pushed into buying BTC than pulled in by a scammer.

Generally I agree with your opinion of value, except I would term "market value" as "abstract value". For example, what about art? Are Van Gogh paintings really worth 100 million dollars? Who decides that? Is it even worth trying to quantify that? If you wouldn't term a painting a ponzi scheme then why is BTC? Most of those 7 figure plus art pieces are really a way for the wealthy to park money safe from inflation and speculate. Yet somehow that is acceptable because that medium is old and established, digital currencies are not. And before you suggest that art is pretty to look at and BTC isn't, many of those art pieces sit in a climate controlled vault and are never really appreciated in a meaningful way. Personally, I'd rather see that money parking done with BTC so the art pieces can be enjoyed at a more reasonable price tag. But that's just me.

I agree both BTC and fiat have flaws. Big ones too. But again I am curious if crypto is so terrible, what do you see as a potential replacement for our current system? Crypto can and has been improving rapidly. Fiat has not. I am wondering what other options you see out there?

 

[daniel]

Excelion: Currency has no innate value. It has value because it is useful as currency. Crypto is not used as currency, except by criminals and a vanishingly small number of legitimate transactions, too small to count. All those other crypto transactions are speculators buying and selling in hopes that somebody will buy it from them for more than they paid. Massive amounts of transactions, costing huge amounts of energy (mostly from cheap coal-fired plants in places like China) and nothing being bought and sold. Just crypto being traded for fiat.

AdamMacDon: Educating yourself is not "research." Research has a specific meaning. Real research is done by scientists, historians, scholars, etc., digging up data, doing experiments, making careful observations, etc. Going to school is not research. Reading books or even scientific papers is not research. And watching YouTube videos is definitely not research.

A few people stockpile fiat currency. Mostly criminals. U.S. $100 bills are very popular with drug dealers. Honest people keep a small amount of fiat currency for small purchases and the rest of their money is in the bank, which keeps a small amount of currency on hand and lends out most of it. So it circulates. Over and over, around and around. Crypto in a "wallet" is not circulating. It's not being used to buy houses or cars or for operating expenses for a business.

Art has both use-value and market-value. Its use-value is that (if it's good) it gives pleasure to the people that look at it. It's market-value is whatever people are willing to pay for it. The art market is as insane as the tulip market back when "Its onion root they then so high did hold/ that one was for a meadow sold." (Andrew Marvell -- The Mower Against Gardens.) I don't own any Van Gogh though I love his paintings. I once saw a painting in the style of Renoir that was so beautiful that I wanted it badly, but I was not about to pay the $20,000 the gallery was asking for it. Maybe if I saw it in a gallery today and it was still going for that I'd sell some shares of TSLA and buy it, but the way the art market works, if whoever bought it back then tried to sell it back to the gallery, they'd probably offer him $5,000 for it, and sell it for $50,000. My own art collection has no works by anybody you've ever heard of, but it gives me great enjoyment. None of it has any significant re-sale value and I don't care because it beautifies my home. But to your point, works by the really famous artists have some real use-value because they are brilliant creations, but their market-value is grossly inflated because people are willing to pay so much for it.

And this is not the fault of fiat currency. It would be the same in crypto. This is because capitalism produces fabulously wealthy individuals who are willing to pay whatever they must for something they want. Heck, I once paid $40 at a charity auction for a lithograph I later found out I could have bought from the artist for $20. I just really wanted it and I was willing to pay double its true market value. (I still have that lithograph and I love it. It's an old man with pince-nez glasses and the most wonderful expression on his face.)

And while the value of art and oil and artichokes and tulips are subject to market forces, fiat currency is useful and can be used as currency because its value is kept stable. Crypto is unregulated so the very thing that proponents love about it makes it useless as currency. It cannot serve the one purpose it's touted for. It can and does serve the needs of criminals extremely well. And it has made the early speculators fabulously wealthy without their having done any actual work at all.

 

[Exelion]

Excelion: Currency has no innate value. It has value because it is useful as currency. Crypto is not used as currency, except by criminals and a vanishingly small number of legitimate transactions, too small to count.

Anything can be used as a currency. Currency has value only when people believe it does. That's the primary reason its called *fiat* as you are also using that term. So in your view, only criminals and investors have cryptocurrency? USDC, BUSD, PAX, DAI, those are all cryptocurrencies (that are not bitcoin) that are used for transactions by quite a few companies (and growing) that have the same value as the USD. With a value pegged to the dollar, and merchants willing to accept it (like VISA), that pretty much breaks the argument of criminals/investors HODLing it. Then again, with that same argument, you could call Disney a criminal enterprise when it printed out *Disney Dollars* which was currency used in its theme parks.

AdamMacDon: Educating yourself is not "research." Research has a specific meaning. Real research is done by scientists, historians, scholars, etc., digging up data, doing experiments, making careful observations, etc. Going to school is not research. Reading books or even scientific papers is not research. And watching YouTube videos is definitely not research.

Do you know any scientists, historians, scholars, etc? I work with many. Actually, several HUNDRED of them. I'll go show them this, especially the part about *reading books and scientific papers is not research* and see what they say. Just to summarize, everything you stated above that is *not* research, is research. Especially the school, and books. Yes, even the Youtube. Some of them present really good Youtube material. It's not just for social media influencers, although there's a lot of those.

A few people stockpile fiat currency. Mostly criminals. U.S. $100 bills are very popular with drug dealers. Honest people keep a small amount of fiat currency for small purchases and the rest of their money is in the bank,

This makes no sense. Money in the bank is still fiat currency. There is no difference between a Benjamin stuffed in your mattress and $100.00 stored in a bank. In one case, $100 is represented by a piece of cloth with lots of security features and the other is electronically stored (and earns a tiny bit of interest).

but their market-value is grossly inflated because people are willing to pay so much for it.

No, its the demand of so many people willing to pay more than the guy next to them that raises the value of the item, not the *market* dictating the value of the item. A market is just a market. It doesn't state the value of anything, its not a Kelley Blue Book, it's not a Sports Trading card valuating company. If everyone in the world looked at a Monet and said it was the ugliest thing in the world, it's value would drop instantly.

And while the value of art and oil and artichokes and tulips are subject to market forces, fiat currency is useful and can be used as currency because its value is kept stable.

And unfortunately, this is also not true. One only needs to look at the past government of Zimbabwe (with its 100 trillion dollar bills!), current Vietnam (500,000 VND notes), Pre-WW2 era Germany, and even great-depression era of the USA and see that governments cannot ultimately control the values of their currencies. Governments *try* to. That's what they like, that's what they make attempts to do. But its not guaranteed, it's subject to market changes, and ultimately, its not under anyone's control, really. If you want to argue with that, tell me what the cost of a dozen eggs will be in 10 years, in US dollars.