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Do Cryptocurrencies Provide ANY() Real-Economic Value at All?

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Re: Do Cryptocurrencies Provide ANY() Real-Economic Value at All?

#51

Post by anonymoushn »

acdha wrote: post #11
jonathan_oberg wrote: post #4

Consider an NFT with smart contract which apportions a percent of each future purchase to the original seller. Now consider a stock issued by a company as the NFT. With traditional stocks, the issuing company only obtains funds one time. All future value gains are captured by traders. Finally, consider issuing stock that as NFT with the contract above. In this model, as a stock rises in value, both the company and tr…

Is anyone doing this for real? It doesn’t seem like it adds any value over a real contract since it’s still relying on the courts for enforcement, and it seems unproven that there’s much demand. Adding a blockchain also adds a number of complexities which would lower the value: you need to hedge against bugs in the smart contract (the Ethereum folks probably won’t rewrite history again for you), there’s a complex and…

People really are writing tokens with custom transfer functions that do this sort of thing. The main use case seems to be allowing artists to collect fees on non-first sales of an NFT. This whole genre of program is a bit suspect to me though, because if you had a trusted counterparty or an escrow you could just sell them the private key for the account containing the NFT, and they could conduct a "sale" for $1 to their own wallet.

Re: Do Cryptocurrencies Provide ANY() Real-Economic Value at All?

#52

Post by analog31 »

Reading a variety of comments over the years, the value seems to be in a negative sense, i.e., it lacks features of regular money that some people don't like, or that are too inconvenient or expensive.

Regular government money has a clear purpose because it is manipulated to make certain purposes obvious (in the way that a bicycle or scissors have a purpose), in turn making their value relative to how well they serve those purposes, such as:

* Temporary store of value * Medium of exchange * Tool of government monetary policy

Crypto is just too small potatoes to necessarily have any two people using it for the same thing, so in that sense, it is still at the stage of its value being whatever you want it to be. It could be a way of extracting value from subsidized electricity.

The value could be in the experiment. We're learning how crypto and blockchain technologies work and don't work. As a scientist, I get paid to do failed experiments. ;-)

Re: Do Cryptocurrencies Provide ANY() Real-Economic Value at All?

#53

Post by mindcandy »

All of your arguments assume that all parties are in good standing of well-functioning governments with well-functioning financial systems that all get along. But, then politics, corruption, bad monetary policy, bureaucracy, etc get involved and sometimes things aren’t as simple for people who aren’t middle class Americans.

Bitcoin is basically a giant IOU distributed throughout the world without the involvement of any country or company. The tiniest bits of that trillion dollar IOU can be transferred and traded between the lowliest individuals around the world without restriction, without involvement from any bank, without interference from any government. A homeless man in LA can perform international trade with a programmer in Russia and an artist in Cuba completely by themselves without requiring the blessings or assistance of Citibank, Western Union, Biden, Putin and Díaz-Canel. And, with smart contracts, this extends out from payments to loans, collateral, corporations and all kinds of financial instruments. All without borders or lawyers. Basically any rules you can imagine based on money, time and signalling consent.

It’s turning out that Bitcoin and Ethereum aren’t great on their own for buying lattes. But, they are turning out great as a foundational layer for a whole new financial system. Rather than basing a macro-scale credit system on the federal reserve or stock/real estate derivatives, we can now use tiny or huge chunks of BTC and ETH as collateral, as a loan basis, as a settlement layer, etc and build up from there.

Re: Do Cryptocurrencies Provide ANY() Real-Economic Value at All?

#54

Post by WnZ39p0Dgydaz1 »

maxerickson wrote: post #48
WnZ39p0Dgydaz1 wrote: post #45

Earlier quoted context omitted.

Actually, it's some rules in a spreadsheet. You get tenants out of your rental because someone is getting paid to do it - their salary is in some spreadsheet - and then their work is verified by someone else who is also getting paid to do that. These complex systems of incentives are currently managed by humans. You could setup a similar incentive system as smart contracts. If your tenant does not pay, you could get…

In your description, you used the word 'enforcer' for the entity that does the important bit. That entity isn't the contract.

What do you mean by "That entity isn't the contract"?

Yes, the enforcer is not (necessarily) part of the contract. But if the right incentive system is in place and there is consensus that physical enforcement should happen - anyone approved could take that job/risk and be the enforcer.

With such a system you may not even need a physical enforcer since the risk of not getting the tenant out could be tradeable (like an insurance) and the owner would get his rent even if the tenant cannot be evicted immediately. In case of the tenant, there would be huge negative financial incentives to stay.

Re: Do Cryptocurrencies Provide ANY() Real-Economic Value at All?

#55

Post by acdha »

FloresHernandez wrote: post #44
acdha wrote: post #30

Earlier quoted context omitted.

> Yes, it shields you against your own government by giving an alternative they can't stop or ban. How? If your government decides to take your stuff, they’re not going to say “some nerds in another country said no, guess we have to let them keep it” - they’re just going to fine, jail, or abuse you until you turn over the keys (better hope you can convince them you didn’t have anything more which you aren’t still con…

Yes, of course. The problem here is the repressive government. But as everything, they have tools. Crypto takes one of the tools for them (Debasing the currency and strict control over local banks). Any tool we can take from them is good. Even a not-really-hostile-goverment-but-more-like-incompetent can do a lot of damage by debasing the currency. Now the citizens have tools to fight their incompetence. If only for t…

> Crypto takes one of the tools for them (Debasing the currency and strict control over local banks).

How? Nobody needs cryptocurrency to pay their bills and statistically nobody uses it - many, like Bitcoin, are designed to discourage regular usage – so all the government has to do is control exchange points in the local economy. Until you can pay taxes or rent, buy groceries, etc. that gives the government more control than they get with cash.

Since cryptocurrencies provide a full irrepudiable audit trail, that also makes it extremely risky to try to skirt local regulations since any attempt to do a transaction under the table has an inherent risk that the other party, willingly or not, is or ever will be giving data to to government. Since we’re talking about systems which have spent many years failing to be capable or desirable for routine use even in countries which don’t have strict rules limiting use, it seems unlikely that this would provide any significant protection in a more repressive regime.

The other thing you have to remember is that the quasi-religious desire for deflationary behavior from cryptocurrency proponents isn’t what most people want. Deflation causes economic contraction and favors rich asset holders who have reliable revenue streams – unless that’s you, the modest inflation targeted by most central banks is a much better deal.

Re: Do Cryptocurrencies Provide ANY() Real-Economic Value at All?

#56

Post by acdha »

anonymoushn wrote: post #51
acdha wrote: post #11

Earlier quoted context omitted.

Is anyone doing this for real? It doesn’t seem like it adds any value over a real contract since it’s still relying on the courts for enforcement, and it seems unproven that there’s much demand. Adding a blockchain also adds a number of complexities which would lower the value: you need to hedge against bugs in the smart contract (the Ethereum folks probably won’t rewrite history again for you), there’s a complex and…

People really are writing tokens with custom transfer functions that do this sort of thing. The main use case seems to be allowing artists to collect fees on non-first sales of an NFT. This whole genre of program is a bit suspect to me though, because if you had a trusted counterparty or an escrow you could just sell them the private key for the account containing the NFT, and they could conduct a "sale" for $1 to th…

That is what I meant by the value being enforced by the courts: the artist could cheat me by selling my “exclusive” purchase again or in different locations, I could cheat them by making copies elsewhere or hiding part of the transaction, etc. and in each case the remedy is a court case just as with a normal contract making the same claim — the difference is that I don’t need to pay to maintain an expensive IT operation as well.

Re: Do Cryptocurrencies Provide ANY() Real-Economic Value at All?

#57

Post by acdha »

comodore_ wrote: post #43

> "Smart contracts". All (democratic) countries have courts in place to settle legistlative disputes between two parties. The case for smart contracts is, you can't have disputes. No need for attorneys, that will bleed you dry. It does not add an additional layer, instead it removes them all and becomes the sole layer.

Who writes those contracts? Who debugs them? Who settles disputes if one the parties feels that the other isn’t honoring them?

This replaces attorneys by creating attorney-programmers who charge more and have less recourse when someone makes a mistake.

Re: Do Cryptocurrencies Provide ANY() Real-Economic Value at All?

#58

Post by mindcandy »

lottin wrote: post #41
quantum_mcts wrote: post #13

All your arguments has this implicit assumption of a central authority that you trust to do its job: - "SEPA is pan-European credit transfers". Emphasis in "European". Good luck _reliably_ sending money to China or across Atlantic _in_several_days_. Reliable 10s is a dream there. - "Every country already has its native currency." Emphasis on "country". With a central bank that manages the supply. - "All (democratic)…

How would a smart contract work in the case of, say, a residential tenancy agreement? How does the smart contract know if the terms of the agreement have been met or not? And how would the contract be enforced, for instance, if the tenant fails to pay rent?

I’m not a smart contract dev, but here’s my understanding.

You have three fundamental tools to worth with: money, time and signaling consent. The only way to enforce consequences without lawyers is collateral.

So, you could have a contract that requires two months rent as a deposit to start. From there you can have simple rules: if the contract expires, the tenant gets the deposit back. At the end of the contract, the landlord can take up to 1 month’s rent from the deposit to cover damages. If the contract is canceled, the tenant does not get the second month-worth of deposit back. The contract is canceled if the rent is not paid on time or if the landlord + some notary-like third party sign off on cancellation. Etc...

Re: Do Cryptocurrencies Provide ANY() Real-Economic Value at All?

#59

Post by mindcandy »

realce wrote: post #39
quantum_mcts wrote: post #37

Earlier quoted context omitted.

https://en.wikipedia.org/wiki/Smart_contract

Where in this article does it describe how I get tenants out of my rental when they don't pay into the smart contract? That's what enforcement is, not just some rules in a spreadsheet.

It would require a larger deposit to act as collateral. Maybe 3-4 months rent. If they stop paying rent, they don’t get the deposit back and you have 3-4 months to call the cops about the trespassers.

Re: Do Cryptocurrencies Provide ANY() Real-Economic Value at All?

#60

Post by pgesmm »

comodore_ wrote: post #43

> "Smart contracts". All (democratic) countries have courts in place to settle legistlative disputes between two parties. The case for smart contracts is, you can't have disputes. No need for attorneys, that will bleed you dry. It does not add an additional layer, instead it removes them all and becomes the sole layer.

Suppose we two make a "smart contract": I say I pay 100k, you say you sell me a functional car. Let's say you then deliver a broken car.

Now what? How can't we have disputes, we did a "smart contract"?

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