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The political case for a blanket cryptocurrency ban

stephendiehl.com

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Re: The political case for a blanket cryptocurrency ban

#261

Post by frockington1 »

hakesdev wrote: post #190

Bitcoin (like gold since the gold standard ended) is just a "check" on Fiat currencies and can act as insulation from central banks that issue too much money too quickly. Fiats will continue to exist alongside bitcoin/cryptos, they'll just eventually have to "compete" a bit more (i.e., not be printed so readily by gov'ts) or else they'll become significantly less relevant.

With $1.9 trillion freshly printed for 'covid relief' and another $4 trillion on the way in the form of 'infrastructure', fiat will likely face more competition by the end of the year

Re: The political case for a blanket cryptocurrency ban

#262

Post by caeril »

abakker wrote: post #195
DickingAround wrote: post #53

This article seems to intentionally ignore the core reason for cryptocurrencies; escaping inflation and control. The article then proposes to use the law to bring those people back within the control of fiat and government oversight. I no longer think the environmental argument is really plausible here. Clearly crypto mining is emitting using a lot of power and some of that is CO2. But the competition is fiat; backed…

I never understand the counter-inflation argument...most economists understand inflation is something to be managed, but it is far from proven that target inflation is bad. There are many useful economic properties of inflation. Meanwhile, Bitcoin has undergone such massive speculative appreciation that everything around it has deflated in comparison. As a result, bitcoin is spectacularly less useful than it would ha…

> it is far from proven that target inflation is bad

Target inflation is specifically intended to promote consumption. Consumption, particularly in the form of atoms, not bits, is approximately 90% correlated with greenhouse gas emissions, despite all our efforts to roll out renewables.

Setting the "inflation is good" argument alongside an article decrying the climate impact of inflation-resistant currencies is . . . well, it's an interesting take.

Unless and until we are manufacturing/growing and transporting consumptive goods via renewable and sustainable means, promoting inflation is most certainly contrary to climate stability.

Re: The political case for a blanket cryptocurrency ban

#263

Post by jasode »

samvher wrote: post #188
DickingAround wrote: post #53

This article seems to intentionally ignore the core reason for cryptocurrencies; escaping inflation and control. The article then proposes to use the law to bring those people back within the control of fiat and government oversight. I no longer think the environmental argument is really plausible here. Clearly crypto mining is emitting using a lot of power and some of that is CO2. But the competition is fiat; backed…

> But the competition is fiat; backed by fighter jets and nukes; literally. How is it that someone can't steal your money? The bank makes sure. How is it the bank can be sure? The cops protect them. How is it the cops aren't overwhelmed? The military protects them. At first glance, I find this an interesting take and it makes me rethink some things. But I don't think I find it very convincing, or at least it's too ex…

>But I don't think I find it very convincing, or at least it's too exaggerated. Fighter jets and nukes primarily protect physical property and institutions, not cash.

Typically, the concept of "military force" like fighter jets, aircraft carriers, etc in criticism about fiat currency (especially $USD) is about connecting the dots to explain the strength of that currency.

E.g., USA gets Saudi Arabia to sell oil denominated in $USD and in exchange, Saudi Arabia monarchy gets "protection" from invasion by enemies like Iraq. This is one concept of the "petrodollar". This military protection requires fighter jets, etc. This makes $USD valuable to acquire by other foreign countries that want to buy oil. In contrast, Bitcoin doesn't need the expense of the military to decree that it's valuable; people just voluntarily agree to exchange it for value. (E.g. exchange 10000 bitcoins for 2 large pizzas.[1])

The (wasted?) energy for defending the $USD is more diffused among different institutions so it's harder to measure -- and thus harder to criticize. In any case, energy usage also includes the Treasury Dept's Secret Service anti-counterfeiting force running around the world to stop fake currency. The Bureau of Engraving that prints the sheets of paper currency. US Mint stamping coins. All the above require enormous energy expenditure as well. Then you have the energy costs of the Fed Reserve, member banks, etc all doing settlement with each other and the associated security systems to protect from hacking. Bitcoin doesn't need any of that. Does bitcoin use more or less energy than the collective sum of energy to maintain integrity of $USD? I have no idea. What's the best complete accounting of the carbon footprint for $USD?

[1] https://bitcointalk.org/index.php?topic=137.0

Re: The political case for a blanket cryptocurrency ban

#264

Post by Kranar »

lvs wrote: post #189
Kranar wrote: post #162

Earlier quoted context omitted.

That makes real estate investments a good defense against inflation. A good defense against inflation are assets whose price increases at a rate higher than the rate of inflation. A bad defense would be an asset whose price increases at a rate lower than that of inflation.

I'm not sure anyone in this thread knows what inflation is. If the cost of housing rises, that is inflationary against all other fungible assets that could be used to purchase housing. That is, one requires a larger quantity of all assets -- dollars, crypto, stocks, bodily fluids, etc. -- to acquire a roof over one's head. Only if the cost to purchase housing is somehow lower by holding value in a particular asset co…

Inflation as it's being used in this conversation and in general is measured against a specific currency. I mean you could, I suppose, use the term to measure the cost of a specific asset against a basket of other assets, but that is not really standard and if you wish to use it that way you should qualify your usage as such to avoid confusion.

Using your approach you'd end up saying something like Apple is experiencing inflation because its price has gone up more against housing, oil, General Electric stock. Yeah, that could be done, but it's not the way the word is being used in this conversation. We're talking about inflation of US dollars against a basket of goods as measured by the CPI as opposed to talking about an increase in housing costs relative to Apple stock.

Re: The political case for a blanket cryptocurrency ban

#265

Post by saalweachter »

tome wrote: post #185
tachyonbeam wrote: post #118

Earlier quoted context omitted.

I don't like the way bitcoin mining wastes energy, but mining gold certainly has an environmental impact. Most of the machinery is currently powered by fossil fuels, and most of the gold isn't used for useful applications AFAIK. I'm glad some cryptos are moving to proof of stake, and I wonder if bitcoin will be able to make that transition too, or if the miners have too much to lose to let that happen?

> mining gold certainly has an environmental impact Can you quantify the environmental impact of gold mining? How does it compare to the CO2 output of a medium-sized country?

Looks like 0.8 tonnes / troy oz? https://www.spglobal.com/marketintelligence/en/news-insights...

Given 3000 tons of gold mined per year, that should be roughly 70 megatons of CO2 / year.

[I am pleased to report that this falls squarely in my previous estimate of 30-150 megatons / year that was based on the cost to mine gold, the cost of fuel, and the CO2 emitted by fuel.]

Re: The political case for a blanket cryptocurrency ban

#266

Post by notahacker »

seibelj wrote: post #201
abakker wrote: post #195

Earlier quoted context omitted.

I never understand the counter-inflation argument...most economists understand inflation is something to be managed, but it is far from proven that target inflation is bad. There are many useful economic properties of inflation. Meanwhile, Bitcoin has undergone such massive speculative appreciation that everything around it has deflated in comparison. As a result, bitcoin is spectacularly less useful than it would ha…

It has never been proven that deflation is bad - Keynesians claim this is the worst thing in the world, but I still have never had it explained to me coherently way deflation is inherently a bad thing.

Deflation by definition implies means that stuff will be worth less in future than it is now.

This is bad for investors and producers spending money now in the hope of earning more money in future.

On the other hand, simply holding onto cash is risk free, and that cash will have increased purchasing power in future (at the expense of the producers forced into offering lower prices to get money circulating again)

An economic system which deters investment, production and consumption but rewards inactivity is not a healthy one.

Re: The political case for a blanket cryptocurrency ban

#267

Post by frockington1 »

jlos wrote: post #35

>>> In social media era, everyday our adversaries are running very effective military-inspired psyops campaigns to sow division and polarization within the body politic. Am I the only one who thinks this is a 2 way street and our governments are actively doing the same to our adversaries?

They are likely doing it to their subjects as well

Re: The political case for a blanket cryptocurrency ban

#268

Post by thatguy0900 »

DickingAround wrote: post #53

This article seems to intentionally ignore the core reason for cryptocurrencies; escaping inflation and control. The article then proposes to use the law to bring those people back within the control of fiat and government oversight. I no longer think the environmental argument is really plausible here. Clearly crypto mining is emitting using a lot of power and some of that is CO2. But the competition is fiat; backed…

What's stopping a group of people from abducting you and beating you for your bitcoin or breaking into your house when your not home to find and take your wallet? Those same police. That argument doesn't really hold up, it's not like someone can't force you to give them your bitcoins

Re: The political case for a blanket cryptocurrency ban

#269

Post by biztos »

bitcoinmonger wrote: post #179

I have a solution to the energy consumption problem. Instead of banning Bitcoin completely, just make it illegal for individuals to run cryptocurrency nodes or perform mining operations. In it's place, each government can then run their own cluster of nodes for the general public to use as a cryptocurrency. This way, the general population has access to cryptocurrency, but government can monitor and control all of th…

If you're going to trust the government to validate the blockchain then you don't need any proof of work anymore. You just need proof of Government: depending on the government, that might be a trillion-dollar SQL database built by Palantir, or it might be a physical stamp in red ink on a dot-matrix printout of every newly verified block.

Re: The political case for a blanket cryptocurrency ban

#270

Post by salawat »

jtolds wrote: post #16
_nckn wrote: post #5

I think the main premise of this article is the fact that crypto's carbon emission is insane, especially Bitcoin, which I agree (I don't hold Bitcoin for this exact reason). But there are many other crypto that uses Proof of Stake, way way greener than Proof of Work, such as Cardano. Even Ethereum is transitioning to Proof of Stake. This article should be re-titled "The Political Case for a Blanket Proof of Work Ban"…

I came here to say this exact same thing. There is seriously interesting and useful real work being done under the umbrella term "decentralized finance" or DeFi. It is hard to cut through the noise of get rich quick schemes, but at the core, the DeFi stuff, built on top of green cryptocurrency (proof of stake), along with quickly improving zero-knowledge proof tech, is actually useful and groundbreaking. Bitcoin and…

Proof of Stake is not inherently decentralized, you realize that, right? It'll trend toward centalization over time as coins end up getting delegated to the asset class equivalents of banks and brokers. They will pop up. Once they do, They will be regulated. Then you're back to square one.
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