Cryptocurrencies: looking beyond the hype • Hacker News Board

Re: Cryptocurrencies: looking beyond the hype

#11

Post by vinceguidry » Mon, Jun 18, 2018, 4:16 PM UTC

DmenshunlAnlsis wrote: post #9

CrazyInNewYork wrote: post #2

it is hard to identify a specific economic problem which they currently solve Receiving, owning and spending money anonymously. Remember when extortionists had to be paid with a suitcase full of banknotes? Receiving money without being exposed to the danger of fraud. Receiving money via Credit Card is surprisingly risky for the merchant. Transferring money internationally without additional costs. Portfolio optimizat…

Receiving, owning and spending money anonymously. Remember when extortionists had to be paid with a suitcase full of banknotes? Most cryptocurrency isnt anonymous, and certainly Bitcoin isn’t. In fact it’s arguable that the public ledger nature makes it far less anonymous than almost anything else. What it is, is easier to launder, hence the extortionist wet dreams. Why is it a feature of a currency to have the most…

> Receiving money via Credit Card is surprisingly risky for the merchant.

> It really isn’t.

Nerdwallet article outlining the fraud risk:

https://www.nerdwallet.com/blog/credit-cards/merchants-victi...

Re: Cryptocurrencies: looking beyond the hype

#12

Post by scardine » Mon, Jun 18, 2018, 4:19 PM UTC

CrazyInNewYork wrote: post #2

it is hard to identify a specific economic problem which they currently solve Receiving, owning and spending money anonymously. Remember when extortionists had to be paid with a suitcase full of banknotes? Receiving money without being exposed to the danger of fraud. Receiving money via Credit Card is surprisingly risky for the merchant. Transferring money internationally without additional costs. Portfolio optimizat…

> Receiving money via Credit Card is surprisingly risky for the merchant.

In this aspect cryptocurrencies are surprisingly dangerous for the customer because there is no easy way to revert a transaction done by mistake or fraud (lets say someone cracked your wallet).

With credit cards in the worst case you just screw the merchant and I guess this is what marketplaces will end up doing instead of setting up their own escrow systems in order to protect both sides because handling disputes is hard work.

Re: Cryptocurrencies: looking beyond the hype

#13

Post by viach » Mon, Jun 18, 2018, 4:24 PM UTC

> it is hard to identify a specific economic problem which they currently solve

It is hard to identify such a problem till you believe you can withdraw your money from a bank anytime. Visiting a bank and getting an answer "please come tomorrow" for several weeks changes a person's view on cryptocurrencies and problems they could solve, imo.

Re: Cryptocurrencies: looking beyond the hype

#14

Post by cliffy » Mon, Jun 18, 2018, 4:37 PM UTC

viach wrote: post #13

> it is hard to identify a specific economic problem which they currently solve It is hard to identify such a problem till you believe you can withdraw your money from a bank anytime. Visiting a bank and getting an answer "please come tomorrow" for several weeks changes a person's view on cryptocurrencies and problems they could solve, imo.

Let's imagine a scenario where you're not able to withdraw from a bank due to insolvency. If you're in the US your deposits (principal + interest) are insured up to $250,000 by the federal government. [0] If the federal government is insolvent your cryptocurrency will be useless because you won't have reliable Internet access and thus you won't have access to the resources needed to make or verify transactions on your block-chain of choice.

If anything, people will revert to cash or tangible assets if the federal government fails. No way crypto or technology in general is going to fill that gap.

Now tell me, what institution is going to make a holder of cryptocurrency 'whole' again if something goes wrong with their wallet or the block-chain itself?

[0] https://www.fdic.gov/deposit/deposits/faq.html

Re: Cryptocurrencies: looking beyond the hype

#15

Post by hendzen » Mon, Jun 18, 2018, 4:39 PM UTC

brokensegue wrote: post #7

CrazyInNewYork wrote: post #2

it is hard to identify a specific economic problem which they currently solve Receiving, owning and spending money anonymously. Remember when extortionists had to be paid with a suitcase full of banknotes? Receiving money without being exposed to the danger of fraud. Receiving money via Credit Card is surprisingly risky for the merchant. Transferring money internationally without additional costs. Portfolio optimizat…

> Transferring money internationally without additional costs. nope > Portfolio optimization nope. i still await an explanation using MPT that shows why someone should hold non-zero cryptoassets. It's like saying I should hold euros because it stabilizes my portfolio. Euros are not a productive asset dude.

Even if you accept that they are uncorrelated textbook Markowitz would give you a very small allocation to crypto since the volatility is so high.

Re: Cryptocurrencies: looking beyond the hype

#16

Post by dintech » Mon, Jun 18, 2018, 4:42 PM UTC

"The Bank for International Settlements (BIS) is an international financial institution owned by central banks."

You can make your own mind up on whether this would make them biased or not.

Re: Cryptocurrencies: looking beyond the hype

#17

Post by CiPHPerCoder » Mon, Jun 18, 2018, 4:52 PM UTC

> Yet, looking beyond the hype, it is hard to identify a specific economic problem which they currently solve.

People seem to forget that cryptocurrencies emerged from a culture of cryptoanarchy, not from economists or governments.

Anarchists generally don't want to help the government solve problems, they view the government as the very problem to solve. (I'm speaking very broadly here.)

Re: Cryptocurrencies: looking beyond the hype

#18

Post by jeffreyrogers » Mon, Jun 18, 2018, 4:55 PM UTC

CrazyInNewYork wrote: post #2

it is hard to identify a specific economic problem which they currently solve Receiving, owning and spending money anonymously. Remember when extortionists had to be paid with a suitcase full of banknotes? Receiving money without being exposed to the danger of fraud. Receiving money via Credit Card is surprisingly risky for the merchant. Transferring money internationally without additional costs. Portfolio optimizat…

> Portfolio optimization. Crypto currencies are probably not perfectly correlated to other assets. So it stabilizes the portfolio to add some crypto.

Considering cryptocurrencies have only come to prominence during a bull market and unusual macroeconomic conditions I don't think you can conclude this. I would bet they're strongly correlated with the stock market. And because of lack of liquidity are likely to crash harder than other, more liquid assets.

Re: Cryptocurrencies: looking beyond the hype

#19

Post by kgwgk » Mon, Jun 18, 2018, 4:55 PM UTC

hendzen wrote: post #15

brokensegue wrote: post #7

Earlier quoted context omitted.

> Transferring money internationally without additional costs. nope > Portfolio optimization nope. i still await an explanation using MPT that shows why someone should hold non-zero cryptoassets. It's like saying I should hold euros because it stabilizes my portfolio. Euros are not a productive asset dude.

Even if you accept that they are uncorrelated textbook Markowitz would give you a very small allocation to crypto since the volatility is so high.

Only if the expected return is enough to make it optimal.

Re: Cryptocurrencies: looking beyond the hype

#20

Post by viach » Mon, Jun 18, 2018, 4:58 PM UTC

cliffy wrote: post #14

viach wrote: post #13

> it is hard to identify a specific economic problem which they currently solve It is hard to identify such a problem till you believe you can withdraw your money from a bank anytime. Visiting a bank and getting an answer "please come tomorrow" for several weeks changes a person's view on cryptocurrencies and problems they could solve, imo.

Let's imagine a scenario where you're not able to withdraw from a bank due to insolvency. If you're in the US your deposits (principal + interest) are insured up to $250,000 by the federal government. [0] If the federal government is insolvent your cryptocurrency will be useless because you won't have reliable Internet access and thus you won't have access to the resources needed to make or verify transactions on you…

> If you're in the US

This is a quite rare use case, talking worldwide scale.

> If the federal government is insolvent your cryptocurrency will be useless because you won't have reliable Internet access

There is an option you missed - when a bank is insolvent and the government doesn't care.

> people will revert to cash or tangible assets if the federal government fails

Why not get abroad and spend there dark ages, caching out your X-coins?

> what institution is going to make a holder of cryptocurrency 'whole' again if something goes wrong with their wallet or the block-chain itself?

Valid point. But sometimes these risks are smaller comparing to unavoidable perspective of being robbed by government which is trying to escape default.