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The Cryptocurrency Singularity

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Re: The Cryptocurrency Singularity

#21

Post by leot »

Per the other comments here, the applicability of Gresham's law as the author describes is questionable.

However, the author's broader point appears to be that the economic impact of a deflationary currency is largely unknown, and as expressed is worth considering. IANAE, but it seems at least conceptually possible that there could be an economy in which every actor's rational decision was to always buy some token because it appreciated so reliably. Consider, e.g., Shubik's "Dollar Auction" paradox, in which a sequence of rational decisions can lead to an ultimately irrational final outcome. Coupled with Bitcoin's expenditure of energy as proof of work, Bitcoin could prove to behave like a kind of superintelligence akin to one of Bostrom's paperclip maximizers, except it's one that consumes more and more energy resources as it attempts to maximize the value of Bitcoin.

Re: The Cryptocurrency Singularity

#22

Post by eosophos »

Once Bitcoin gets linked up with Litecoin, lightning network, and atomic swaps, seems like it will become more viable as a payment channel. It still beats me, however, as to why anyone would by anything with it if it might be worth twice as much in 6 months. Of course, it could also be worth half as much.

Re: The Cryptocurrency Singularity

#23

Post by clarkmoody »

root_axis wrote: post #18
sagitariusrex wrote: post #6

Whenever I read articles like this I'm reminded of this quote by Richard Buckminster Fuller "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." IMHO this is what Bitcoin is all about. Not a get-rich-quick scheme or whatever insults some people throw at it, but a sound, arguably better alternative to fiat currencies. Aside: If you h…

Bitcoin is not "better" than fiat currencies, it's worse in every way except for the fact that it is not operated by a central authority. In terms of convenience, security, and ease of use it is clearly worse. The world does need a "back channel" currency, and bitcoin is a perfect fit for this, but it will never move beyond that because there's simply no reason for the masses to use it.

Each type of currency has advantages on different dimensions. I disagree that fiat is better is every way except for decentralization.

Fiat money is great as a medium of exchange in your local jurisdiction. Start moving across borders and you have problems. Save long-term in your bank account, and inflation will eat its value away. Have political or religious views that run counter to an oppressive regime, and you will find your accounts seized or frozen. Live through a war or serious economic downturn, and you may find that all your previous cash and savings are completely worthless.

Bitcoin doesn't have take-backs if you mess up: a bit of lax security and a hacker can get all your money. Insufficient backup solution also loses all your coins. Using on-chain transactions for daily point-of-sale purchases is slow due to the block times. Speculative pressures drive wild swings in prices due to illiquid markets for crypto.

There are plenty of reasons to avoid each type of currency, and each has its own advantages.

Re: The Cryptocurrency Singularity

#24

Post by CryptoPunk »

root_axis wrote: post #18
sagitariusrex wrote: post #6

Whenever I read articles like this I'm reminded of this quote by Richard Buckminster Fuller "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." IMHO this is what Bitcoin is all about. Not a get-rich-quick scheme or whatever insults some people throw at it, but a sound, arguably better alternative to fiat currencies. Aside: If you h…

Bitcoin is not "better" than fiat currencies, it's worse in every way except for the fact that it is not operated by a central authority. In terms of convenience, security, and ease of use it is clearly worse. The world does need a "back channel" currency, and bitcoin is a perfect fit for this, but it will never move beyond that because there's simply no reason for the masses to use it.

It's much easier to invest in tokens/securities using ether than using the banking system. The actual trade of ether for tokens happens automatically, and with no barriers of geography or identity. So I think cryptocurrency can definitely be better money than fiat currency. It's programmable, with all control at the edges.

Re: The Cryptocurrency Singularity

#25

Post by millettjon »

Rmilb wrote: post #17
gbaygon wrote: post #10

Earlier quoted context omitted.

I thought the same thing, the core idea of this article is in direct opposition of its conclusion. Bitcoin is going up in value, and according to the market predictions it will go way higher, so it's deflationary. Bitcoin holders will prefer to spend cash money to bitcoins anytime in speculation of future gains. I see bitcoin more of a speculative investment at the moment, than a type of currency. Only the ones that…

I think its unfair to dismiss the currency aspect of bitcoin. The use case for the developed world is 95% speculation 5% buying contraband online however, for people in Venezuela[1], girls learning to code in Afghanistan[2], or women in Saudi Arabi who can't legally open a bank account, Bitcoin is solving problems that under banked people have now. Of course the ecosystem needs to mature so grandma can use it safely,…

I think it has high utility anywhere outside of the US and EU. There are billions of people that don't have access to stable currencies or reasonable banking.

Re: The Cryptocurrency Singularity

#26

Post by montecarl »

eosophos wrote: post #22

Once Bitcoin gets linked up with Litecoin, lightning network, and atomic swaps, seems like it will become more viable as a payment channel. It still beats me, however, as to why anyone would by anything with it if it might be worth twice as much in 6 months. Of course, it could also be worth half as much.

When I buy things with Bitcoin, I typically convert more fiat currency to BTC to keep my BTC balance constant.

Re: The Cryptocurrency Singularity

#27

Post by millettjon »

jms18 wrote: post #7

> Will governments around the world begin to make their currency deflationary in order to make it attractive? rofl If you want people to use currency more, you make it inflate faster. This guy does not understand macroeconomics.

Old joke from engineering school: How did the economist cross the river? He assumed a boat.

Re: The Cryptocurrency Singularity

#28

Post by millettjon »

kylnew wrote: post #9

I think there's a critical discussion about inflation vs deflation missing from this article. Inflation is bad, but so is deflation because it encourages saving your money which, in turn, hurts liquidity in the marketplace (i.e. the amount of cash freely flowing around). Liquidity is essential to keep the economy moving. Isn't what we want really a currency with just a little bit of inflation that keeps people spendi…

If you live under the influence of a failing government, the liquidity of bitcoin may well be higher that the local failin currency as you can move value to/from the outside world.

Re: The Cryptocurrency Singularity

#29

Post by panarky »

root_axis wrote: post #18
sagitariusrex wrote: post #6

Whenever I read articles like this I'm reminded of this quote by Richard Buckminster Fuller "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." IMHO this is what Bitcoin is all about. Not a get-rich-quick scheme or whatever insults some people throw at it, but a sound, arguably better alternative to fiat currencies. Aside: If you h…

Bitcoin is not "better" than fiat currencies, it's worse in every way except for the fact that it is not operated by a central authority. In terms of convenience, security, and ease of use it is clearly worse. The world does need a "back channel" currency, and bitcoin is a perfect fit for this, but it will never move beyond that because there's simply no reason for the masses to use it.

> it's worse in every way except for the fact that it is not operated by a central authority

National currencies are better for buying a cup of coffee and paying your taxes.

But over the last 9 years, Bitcoin has proven to be a far superior store of value.

Maybe Bitcoin's role will be as a reserve currency, the "gold standard" of both national currencies and cryptocurrencies.

Bitcoin is slow, stable, secure and reliable. So save in Bitcoin. Move large quantities across borders in Bitcoin.

But do routine transactions in whatever is most convenient for each transaction.

Ubiquitous usage by "the masses" to buy coffee isn't what makes Bitcoin valuable, since that's not its role.

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