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Dogecoin's inventor looks to the past for insight into the future

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Re: Dogecoin's inventor looks to the past for insight into the future

#211

Post by wuliwong »

un_montagnard wrote: post #63
wuliwong wrote: post #50

Earlier quoted context omitted.

I disagree, I think that the federal reserve's artificially low interest rates and essentially unlimited supply of money for the banks to loan out at these interest rates were at the heart of the most recent financial crisis in the US. A decentralized currency would certainly mitigate that.

No. The heart of the crisis is people believing they can easily make money by investing in a product they don't understand. I can sell a CDO on CDS in Bitcoin, and make a lot of money while the buyers are all getting screwed. And they will be even more screwed as nobody will print cash to cover or limit their losses.

What you are describing is a moral hazard. A situation where people will take risks they wouldn't normally take because they know they will be bailed out if they lose money.

Re: Dogecoin's inventor looks to the past for insight into the future

#212

Post by beokop »

statoshi wrote: post #170
Tommah wrote: post #168

At this point, if you put Dogecoin and Bitcoin next to each other, Bitcoin looks like the joke. It's slow, the fees are too high, and its developers won't address these problems.

Sounds like you're looking at the wrong metrics. Dogecoin had 0 commits to its main repository in 2017. Compare that to 3,277 commits to Bitcoin Core alone. Bitcoin has scaling issues that developers are addressing with second layer networks because tons of people are using Bitcoin. Dogecoin doesn't because it has so few users that the demand for block space is well below the available supply.

How is the “new world currency” being updated ~10 times a day reassuring at all? All it takes is one serious bug to wipe out $240bn of wealth.

Re: Dogecoin's inventor looks to the past for insight into the future

#213

Post by wuliwong »

abakker wrote: post #22
mkirklions wrote: post #9

Earlier quoted context omitted.

>The USD is pretty decentralized already People are insane. Fiat currency is the definition of centralized currency

Please define what you mean by Centralized and Decentralized. I believe you and the OP are talking at cross purposes. the USD is decentralized in that P2P transactions are accepted with almost anyone in the world without needing a centralized intermediary.

I believe the standard definition of centralized vs. decentralized currency has to do with the governing of the supply of that currency.

Re: Dogecoin's inventor looks to the past for insight into the future

#214

Post by peterjlee »

openasocket wrote: post #201
noddy1 wrote: post #200

Earlier quoted context omitted.

They printed $4+ trillion in the aftermath and gave it to banks.

No, they gave them credit for the money on their accounts, they didn't physically print any more money than they did normally.

Isn't it already a common knowledge when someone says "the Fed prints money", they're flipping digits in their computers and not actually printing paper bills?

The Fed doesn't print the paper bills anyways. The Treasury does it.

Re: Dogecoin's inventor looks to the past for insight into the future

#215

Post by wuliwong »

throwawayjava wrote: post #146
UncleEntity wrote: post #138

Earlier quoted context omitted.

> Deflation is a serious threat, as it pushed people to hold onto their currency (as the real value automatically rises) instead of spending or investing it. Why would people not invest (or spend for that matter)? It's not like people wouldn't take deflation into account the same way they do with inflation today. If you loan out a dollar today and at the end of the loan its worth $1.03 then you simply adjust the inte…

> Why would people not invest (or spend for that matter)? People will still invest, but risk tolerance goes way down and ROI expectations go way up. Concretely, your business plan has to compete with "I can get an x% return by putting my money under my pillow", and x becomes very large in a highly deflationary economy. Place yourself in the shoes of a person seeking investment in a productive business, and the proble…

Wouldn't the deflationary economy only discourage investment in the least value-producing economic activity?

Re: Dogecoin's inventor looks to the past for insight into the future

#216

Post by UncleEntity »

throwawayjava wrote: post #146
UncleEntity wrote: post #138

Earlier quoted context omitted.

> Deflation is a serious threat, as it pushed people to hold onto their currency (as the real value automatically rises) instead of spending or investing it. Why would people not invest (or spend for that matter)? It's not like people wouldn't take deflation into account the same way they do with inflation today. If you loan out a dollar today and at the end of the loan its worth $1.03 then you simply adjust the inte…

> Why would people not invest (or spend for that matter)? People will still invest, but risk tolerance goes way down and ROI expectations go way up. Concretely, your business plan has to compete with "I can get an x% return by putting my money under my pillow", and x becomes very large in a highly deflationary economy. Place yourself in the shoes of a person seeking investment in a productive business, and the proble…

> That's not quite fair. There are people motivated by truth and there are also people motivated by ideology.

I wasn't singling out anyone in particular just the whole 'deflation is the debil' theory.

Re: Dogecoin's inventor looks to the past for insight into the future

#217

Post by osrec »

chrisco255 wrote: post #208
Robotbeat wrote: post #136

Earlier quoted context omitted.

What's really fantastic, though, is that cryptocurrencies are currently in a large bubble themselves. Privacy of the exchanges is no better as you literally have to send them a picture of your ID. And several exchanges have been hacked with the money stolen. So far, I'd say cryptocurrencies (for the average joe/jane) are WORSE than regular banks. And, on the last point about micropayments, well Bitcoin now has such m…

If we went back, like 100 years...banks were not these secure, Federally-insured institutions with complex regulations, etc. Banks were robbed. There were runs on banks. They went out of business, people lost their deposits or their accounts. Just look at "It's a Wonderful Life" for a fictional example. Everyone criticizing the current state of crypto as being worse than banks is missing the forest for the trees. The…

I like your view as it's progressive. I think you're right to imply that the current state of crypto is a mere glimpse of better and more mainstream things to come.

Re: Dogecoin's inventor looks to the past for insight into the future

#218

Post by UncleEntity »

Jtsummers wrote: post #166
UncleEntity wrote: post #138

Earlier quoted context omitted.

> Deflation is a serious threat, as it pushed people to hold onto their currency (as the real value automatically rises) instead of spending or investing it. Why would people not invest (or spend for that matter)? It's not like people wouldn't take deflation into account the same way they do with inflation today. If you loan out a dollar today and at the end of the loan its worth $1.03 then you simply adjust the inte…

You buy the computer when you need the computer. No one buys (or no one with any sense) a computer today if they won't be turning it on for a year. In an inflationary economy you are motivated to spend the money early, rather than late. And as buyers predominantly drive the economy and not sellers, this keeps things moving at a reasonable tempo (barring extreme inflation). In a deflationary economy you are motivated…

> You buy the computer when you need the computer.

But this isn't a general rule for other goods and services so they have to devalue the currency to encourage people to not save? Because monetary inflation is basically a tax on savers.

> In a deflationary economy that $180k loan at 3% would have a real interest rate closer to 5%.

Which is why they would adjust the interest rate to take deflation into account.

I can see this argument in today's economy since inflation is built into everyone's calculations and borrowers would be hurt if they couldn't rely on inflationary pressure to adjust the interest rate downward but that doesn't prove that deflation is inherently bad, only that people are capable of long-term economic calculation.

Re: Dogecoin's inventor looks to the past for insight into the future

#219

Post by jhwang5 »

trevelyan wrote: post #161
whatok wrote: post #92

Earlier quoted context omitted.

Real-time (compared to equities) pricing as you know it does not exist in mortgages and would not be enabled by what you're describing. Transparency in something like this also does not help in the case of massive gaps downward in price which happened with a lot of these instruments and in fact would probably accelerate sell-offs. Transparency of the underlying was not the issue. Anyone investing in this stuff could…

Transparency was absolutely the underlying issue. Read "Too Big To Fail" or "The Great Short" or any of the other histories of the Financial Crisis. The way CDOs were bundled and tranched made it effectively impossible for purchasers or banks to know which properties were actually covered by any CDO. No-one knew what was in them -- the value was asserted by the ratings agencies and they were purchased based on expect…

I don't think you understand how CDOs are priced.

The fact that CDOs were trading 35cents on the dollar is largely a part of default EXPECTATIONS resetting up. Smart contracts cannot expedite this process of resetting expectations. Ethereum (which, by the way, is too slow to run CDO pricing models) can only broadcast what the latest market price is. Ethereum helps price dissemination no more than a Bloomberg terminal can.

Re: Dogecoin's inventor looks to the past for insight into the future

#220

Post by jhwang5 »

trevelyan wrote: post #185
Certhas wrote: post #114

Earlier quoted context omitted.

This seems to me to be naive at best. Risks were obscured due to the mathematical structure of CDOs, not by hiding money transactions. You could spend all day real time looking at the fact that few of the mortgages in your CDO are failing, and then when they fail systemically, you could watch in real time that a lot of assets that were thought to be pretty robust are not. Your argument seems to be simply that radical…

> Your argument seems to be simply that radically more data would enable better predictors. The point is that transparency enables markets to accurately price risk and prevents the sort of market paralysis that caused the liquidity crunch. Yes, it's true that people COULD have spent weeks figuring out the status of at least some of the CDOs on the market. But in reality no-one was reading 200 page long prospects that…

See, every CDO trader already knew where things were trading, and could already derive all implied default rates already.

Information dissemination / transparency wasn't the issue. It was people's wrong model assumptions that were the issue...

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