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Fiat is Effective: fiat for the crypto crowd [pdf]

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Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#81

Post by Nursie »

urza wrote: post #19

So the argument basically comes down to that crypto is too volatile and not usable as unit of account? 1. Crypto is still in its initial stage, where capital is flowing into it. Once it is there, it will be less volatile. You can already see this in Bitcoin[1], where relative volatility is dropping every year. 2. There are projects coming that will enable decentralized trustless peg of fiat currencies into blockchian…

In the last two or three weeks BTC has been down to around 3k USD and is now approaching 6k. It's still massively volatile.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#82

Post by littlestymaar »

pseud0r wrote: post #74
littlestymaar wrote: post #53

Earlier quoted context omitted.

For bigmac it's not a big deal, but for investment it is. Imagine your company have 10 millions in cash, you could invest on a new machine to produce more (or better quality, or cheaper). But if you knew that the machine was going to cost you only 9 millions in 3 months. Will you buy it now even though you know it's only going to make you earn 300k in 3 months ? Of course not, you'll wait those 3 months. This is the…

That would be an argument against stock market and interest rate as well. If a significant number of companies waited those 3 months to invest, there would be no deflation. The deflation will be the same as the increase in a stock market index.

> If a significant number of companies waited those 3 months to invest, there would be no deflation.

And little economic activities in the meantime (because all those investment deals wouldn't occur).

At the equilibrium, you'll have zero deflation and a growth which is way below its potential (it could even be a recession, slowly converging toward zero growth). That sounds fantastic doesn't it ?

I didn't understand you two other points though.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#83

Post by littlestymaar »

paulgb wrote: post #71
littlestymaar wrote: post #53

Earlier quoted context omitted.

For bigmac it's not a big deal, but for investment it is. Imagine your company have 10 millions in cash, you could invest on a new machine to produce more (or better quality, or cheaper). But if you knew that the machine was going to cost you only 9 millions in 3 months. Will you buy it now even though you know it's only going to make you earn 300k in 3 months ? Of course not, you'll wait those 3 months. This is the…

The Capitol Hill Babysitting Co-op is sometimes cited as an example of this. https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op

Never heard of that, thank you !

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#84

Post by whataretensors »

soniman wrote: post #48

Bitcoin is now at the peak of the hype cycle. A lot of the 23 year old traders don't know anything but a bull market. When it inevitably goes through a bear market, like every other asset, when there is $50 billion of sellers higher ready to sell on every uptick, what brings bitcoin back? Stocks very rarely come back from 70-80% declines, unless the stock is Amazon or similar. All the hodlers are going to turn into b…

Another perspective - this might be a new bank run. We haven't seen one in the last century.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#85

Post by jbrun »

urza wrote: post #19

So the argument basically comes down to that crypto is too volatile and not usable as unit of account? 1. Crypto is still in its initial stage, where capital is flowing into it. Once it is there, it will be less volatile. You can already see this in Bitcoin[1], where relative volatility is dropping every year. 2. There are projects coming that will enable decentralized trustless peg of fiat currencies into blockchian…

No, that is not at all the argument. The argument is that you cannot have an economy run on a deflationary currency, which bitcoin is. An effective economy requires a bit of inflation and the ability to issue new money when necessary for socio-political reasons. Crypto currencies are a cult, though the underlying tech is interesting.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#86

Post by DennisP »

mbrock wrote: post #59
CryptoPunk wrote: post #40

Earlier quoted context omitted.

I'm a big advocate of cryptocurrency but am unconvinced that stable value coins can work. The Sai was recently released: https://blog.makerdao.com/2017/06/05/introducing-sai/ and BitUSD has been out for years: https://bitshares.org/technology/price-stable-cryptocurrenci... but neither have a significant amount of value riding on them and I personally wouldn't trust them with significant value. The problem with any st…

I would rather bear the greater volatility of holding the underlying cryptocurrency, and get to enjoy the upside potential, than hold a stable value coin that has no potential to appreciate and a greater than zero probability of going to zero. That's about what kind of risks and rewards you want for your investments or savings. If you consider the unit of account for a debt, it seems unlikely that you'll have the sam…

What's the best introduction to the Maker system? Something that explains clearly how the current design works.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#87

Post by vidarh »

soniman wrote: post #66
sp4ke wrote: post #55

Earlier quoted context omitted.

1- Bitcoin is not stock so comparing with stock has no weight in your argument 2- It has already been on a very long bear market (2013-2015) where everyone said pretty much the same thing (fad, tulip, the experiment failed .... ). So yeah the new holders will go through rough times but your argument that it reached the peak of the hype cycle has no logical facts to support it since you could have said the same in the…

You're right, I have no idea when the top is going to be. My point is that bear markets have a very different feel and can be emotionally devastating if you're in the middle of one and bitcoin has not been through that and made it to the other side. Are the bitcoin boys ready for that? Because it's coming, sooner or later.

Many of the "bitcoin boys" won't be ready for that. But that doesn't mean Bitcoin will fail. It does mean that many people investing in it are set for massive pain, though.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#88

Post by mijikai »

DeerSpotter wrote: post #78
littlestymaar wrote: post #68

Earlier quoted context omitted.

I don't think cryptocurrencies are a solution to anything, but saying that the current system is «working» is dubious to say the least: the Fed has been controlling the money supply by targeting low inflation but the money supply grew much quicker than growth nonetheless (probably linked with the decline in money velocity, probably caused by the concentration of wealth. Disclaimer, this is a personal interpretation,…

Ahhh, the Feds.... There is one Variable nobody is talking about. Where are the bitcoins that were seized from the silk road and other drug dealers, etc... As soon as the USA floods those bitcoins back into the markets prices of bitcoin will drop.

They were already sold off 2 years ago.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#89

Post by mijikai »

mijikai wrote: post #88
DeerSpotter wrote: post #78

Earlier quoted context omitted.

Ahhh, the Feds.... There is one Variable nobody is talking about. Where are the bitcoins that were seized from the silk road and other drug dealers, etc... As soon as the USA floods those bitcoins back into the markets prices of bitcoin will drop.

They were already sold off 2 years ago.

https://www.coindesk.com/four-winners-44000-bitcoins-final-s...

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#90

Post by KGIII »

mbrock wrote: post #65
KGIII wrote: post #35

Earlier quoted context omitted.

I think one of the problems is that there are now, what, a few thousand cryptocurrencies? The optics of the multitudes of ICOs? Those aren't good. No, no they are not. A part of me wonders if this popularity boom might actually be the reason it dies out. How many hacks, thefts, and scams have there been? Sure, those happen with real money but real money isn't the one needing to work on its optics. We already accept r…

Maybe it's like the internet. There used to be a lot of different websites, and a lot of them were scams. Now there's just a handful of websites, so it's easier for people to understand what to do... And of course there's still a long tail of weird niche sites with new experiments. The UN recognizes 180 different currencies, by the way. That's 180 different units of accounts, but the amount of forms of money is much…

Your first paragraph, kind of. For many people, the net is just a few social media and streaming sites. The net has much of its wealth consolidated in just a few companies.

We shall see.

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