Bitcoin and cryptocurrency prices have fallen sharply over the last few days • Hacker News Board

Re: Bitcoin and cryptocurrency prices have fallen sharply over the last few days

#111

Post by lawn » Thu, Mar 12, 2020, 7:08 PM UTC

Barrin92 wrote: post #109

lawn wrote: post #104

Earlier quoted context omitted.

No, that's not the definition of a currency. Money has different functions, where store of value, unit of account and medium of exchange are the popular ones. And they have different properties, such as acceptable, fungible, durable and divisible and others (properties also differ.) The big point is that these are subjective, and exists on a scale, and they vary from community to community. Cigarettes can be consider…

>so my statement still holds. No, it doesn't because not every form of belief is equally justified. If you believe your currency has value because the Aztec god of fertility has bestowed value upon it then you'll have a problem when you figure it that not everyone agrees. The American government and the American economy underpinning the dollar however represent vital goods and services as well as security provided an…

Well, as long as everyone else in the community also believes in the Aztec God, the money will hold value.

That there are different confidence levels in our beliefs doesn't refute my point that it's fundamentally about collective beliefs.

I do agree that the chance that the dollar loses all it's value is about nil.

Re: Bitcoin and cryptocurrency prices have fallen sharply over the last few days

#112

Post by unhashable » Thu, Mar 12, 2020, 7:12 PM UTC

glofish wrote: post #94

unhashable wrote: post #72

Earlier quoted context omitted.

I see: you’re concerned with a future where the concept of an internet ceases to exist? I’m afraid money will be the least of our problems then.

for me, it not so unthinkable that you could have intermittent access to the internet (out days at a time), or that some parts of the internet would not be accessible for extended periods of time for you it seems that must equate the end of the world where it doesn't matter anyway.

This is an interesting scenario worth thinking through.

If Bitcoin is forced to go split-brain temporarily, the network could coordinate to rejoin after the fact. Or, it could stay split in two.

Regardless, infighting over which network was “the real Bitcoin” would ensue. See Bitcoin Cash and friends.

Re: Bitcoin and cryptocurrency prices have fallen sharply over the last few days

#113

Post by dragonwriter » Thu, Mar 12, 2020, 7:15 PM UTC

unhashable wrote: post #75

dragonwriter wrote: post #69

Earlier quoted context omitted.

> You will not be able to spend your USD offline. USD is based on a network of centralized banks. You cannot spend your fiat without a computer asking permission from these centralized systems. Yes, I can, as long as I have it as physical currency, and regularly do. Admittedly, this relies on confidence of all participants that eventually systems (banking, etc.) which are as you describe will work or be replaced/reto…

Physical cash is not long for this world. We are rapidly moving towards always-online and fully-digital ledgers controlled by governments and central banks. You will not be able to get a hair cut unless you are an outstanding citizen and have your governments blessing. I wish this were a joke.

> Physical cash is not long for this world.

Maybe, especially in some places, but even if that is the direction of digital financial transformation, the US is decades behind on most levels of that transformation and has cultural issues that that even if it was caught up on other aspects would make retirement of physical currency harder than it might be in other places.

Re: Bitcoin and cryptocurrency prices have fallen sharply over the last few days

#114

Post by mardifoufs » Thu, Mar 12, 2020, 7:16 PM UTC

Infinitesimus wrote: post #97

im3w1l wrote: post #86

Earlier quoted context omitted.

Why is there a liquidity crisis?

Watch the Fed's actions: (eg: https://www.cnbc.com/2020/03/12/fed-to-pump-more-than-500-bi... ) The Fed has been very active in repo markets since last fall and has aggressively ramped up operations. As an armchair fake-economist, that sort of thing signals that banks are reducing loans between themselves because they don't want to be low on cash when stuff hits the fan. Reducing in available loans -> pretty high int…

Repos aren't exactly bond buybacks, they are more like temporarily loaning cash in return of a treasury bond. It has a neutral effect on the Fed's balance sheet. So overall, the money supply stays the same. It does help keep liquidity available since few banks/Institutional investors keep any significant cash reserve which is usually okay, but can be dangerous if there is a sudden run for cash.

And if anything, the Fed interventionist policies are a good sign. You could argue that it is bad for the Fed to intervene in the economy during bull markets and periods of economic growth, but for situations like these the Fed can be a huge factor in avoiding a collapse of credit and liquidity. If credit stays available there is little reason to believe the economy will be affected by anything more than what the virus directly causes. So structural collapse of the financial system/job market like that of 2008 is unlikely as long as credit is readily available to corporations and banks.

Re: Bitcoin and cryptocurrency prices have fallen sharply over the last few days

#115

Post by unhashable » Thu, Mar 12, 2020, 7:16 PM UTC

duskwuff wrote: post #84

dragonwriter wrote: post #69

Earlier quoted context omitted.

> You will not be able to spend your USD offline. USD is based on a network of centralized banks. You cannot spend your fiat without a computer asking permission from these centralized systems. Yes, I can, as long as I have it as physical currency, and regularly do. Admittedly, this relies on confidence of all participants that eventually systems (banking, etc.) which are as you describe will work or be replaced/reto…

Moreover, even if centralized banking stops functioning, individual banks can continue operations. This isn't true of Bitcoin -- if the network is partitioned, there is no mechanism for it to be resynchronized without massive rollbacks.

Bitcoin would work similarly, but with far less trust in centralized institutions.

Today, central banks acts as a final settlement later upon which the rest of the financial system is built (banks, credit, etc). This makes it impossible for the financial system to “shut off”.

In a Bitcoin world, the main ledger would act as a final settlement layer, and local lightning networks act as the layers on top providing payments, loans, and credit. All transactions would be batched and only get settled so often (once an hour, globally, for example).

This gives you similar local-affinity that today’s financial system offers without relying on governments to award permission to engage in commerce.

Re: Bitcoin and cryptocurrency prices have fallen sharply over the last few days

#116

Post by [deleted] » Thu, Mar 12, 2020, 7:20 PM UTC

unhashable wrote: post #115

duskwuff wrote: post #84

Earlier quoted context omitted.

Moreover, even if centralized banking stops functioning, individual banks can continue operations. This isn't true of Bitcoin -- if the network is partitioned, there is no mechanism for it to be resynchronized without massive rollbacks.

Bitcoin would work similarly, but with far less trust in centralized institutions. Today, central banks acts as a final settlement later upon which the rest of the financial system is built (banks, credit, etc). This makes it impossible for the financial system to “shut off”. In a Bitcoin world, the main ledger would act as a final settlement layer, and local lightning networks act as the layers on top providing paym…

[deleted]

Re: Bitcoin and cryptocurrency prices have fallen sharply over the last few days

#117

Post by dragonwriter » Thu, Mar 12, 2020, 7:20 PM UTC

unhashable wrote: post #115

duskwuff wrote: post #84

Earlier quoted context omitted.

Moreover, even if centralized banking stops functioning, individual banks can continue operations. This isn't true of Bitcoin -- if the network is partitioned, there is no mechanism for it to be resynchronized without massive rollbacks.

Bitcoin would work similarly, but with far less trust in centralized institutions. Today, central banks acts as a final settlement later upon which the rest of the financial system is built (banks, credit, etc). This makes it impossible for the financial system to “shut off”. In a Bitcoin world, the main ledger would act as a final settlement layer, and local lightning networks act as the layers on top providing paym…

> Bitcoin would work similarly, but with far less trust in centralized institutions.

And far more trust in anonymous, unaccountable actors, largely foreign from the perspective of any given trusting party.

Those centralized actors have, in the case of major states, have well established trust and accountability systems that maintain that trust. Bitcoin not only doesn't have that, it is fundamentally premised on preventing it.

There is a certain ideological phyle to which this is appealing, but I'm not convinced that generally it hard an advantage over centralized institutions in establishing user confidence.

Re: Bitcoin and cryptocurrency prices have fallen sharply over the last few days

#118

Post by soperj » Thu, Mar 12, 2020, 7:25 PM UTC

unhashable wrote: post #92

bb88 wrote: post #91

Earlier quoted context omitted.

This is another misconception: >Bitcoin let’s you store $1T USD of dollars in your head, transport it anywhere in the world, and there’s not a single thing anyone else can do about it. It's amazing how easy gray matter cryptography can be broken using a cheap $5 wrench.

Love that meme: https://www.xkcd.com/538/ So true too. At the end of the day, digital security must be reinforced with physical security and good opsec.

To be fair, it's quite easy to find that wrench used for 5 bucks. Also they'd likely just steal it.

Re: Bitcoin and cryptocurrency prices have fallen sharply over the last few days

#119

Post by SuperFerret » Thu, Mar 12, 2020, 7:27 PM UTC

kaikai wrote: post #50

unhashable wrote: post #33

Earlier quoted context omitted.

This is another misconception. Gold can be held, yes. It also is expensive to verify, transport, and protect. This has proved problematic for holders of the past. A paper system had to be built on top of Gold, which severely diluted the value proposition as gold was confiscated and stockpiled centrally. Practically speaking, very few individuals hold gold and the utility of doing so is limited when you consider how l…

You don't have to transport a heavy metal, instead all you have to do is ensure an electrical grid, fully functional internet access, and a distributed network of other people! I'm not sure that's any easier than carry around metal :P

And on top of all of that, you can't use crypto for anything except to hold. Good luck selling any large sums.

Re: Bitcoin and cryptocurrency prices have fallen sharply over the last few days

#120

Post by pas » Thu, Mar 12, 2020, 7:32 PM UTC

unhashable wrote: post #10

It's a common misconception that Bitcoin is a safe haven. It's not. Not even Gold is a safe haven during a liquidity crisis. In sharp downturns, cash is king. Think of Bitcoin and Gold as call options on the entire global monetary system. If Govs become insolvent, Bitcoin and Gold is there. If the masses lose faith in central banks, Bitcoin and Gold is there. If central banks debase currencies too quickly, Bitcoin an…

> That is the staying power of scarcity via well known stock to flow ratios.

Could you please explain this sentence? What is a stock to flow ratio? How/why is the well-knownness of it matters? How scarcity builds on top of this?