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Netherlands must ban cryptocurrencies immediately: CPB head

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Re: Netherlands must ban cryptocurrencies immediately: CPB head

#81
post #35

Earlier quoted context omitted.

I think the parent is talking about chartalism ( https://en.wikipedia.org/wiki/Chartalism ), which is essentially the idea that fiat currencies derive their value from the fact that taxes must be paid in them. A sort of "just so" story about this would go something like (with much credit to David Graeber): "Way back when, some Assyrian king got the great idea to, instead of giving their soldiers food and drink, give…

I think the value of a currency comes from the creditworthiness of the country issuing it. If someone nuked the USA and burn down the entire USA army and economy, the dollar wouldn't have much value. The USA army protects the states. Switzerland, as per parent's post, has defense agreements with other countries. The likelihood of Switzerland being attacked or destroyed is also very low. What would the international c…

I agree with your last part, but not the reasoning, exactly. :)

If you started your own currency it would be worthless because of the lack of demand for it.

Right now Bitcoin has a market cap of about 800bn USD, which (coincidentally) is about the same value as the CHF M1. (M2 is a little over a trillion USD.) These are crude indicators that there's substantial aggregate demand for both assets.

What's interesting is how Bitcoin got to that point. Quite a few years ago, it wasn't worth much at all, and you could only use it to pay people who were ideologically motivated to accept it—your crazy coworker who'd let you pay him back for beers in BTC, for example.

Then you add in the people who will use it for practical reasons (they're criminals, they are underbanked, they want payments under the table), the people who will use it for reasons of mass delusion (they think they'll get rich), and suddenly you have substantial aggregate demand—enough that you can reasonably assume a BTC will be worth something in the future (though highly unstable demand still).

This seems to be (to my knowledge) an uncharted path to creating a "recognized" currency.

But as to your point about fiat: if the US government were nuked, you'd have massive economic disruption for other reasons. But this isn't per se why the USD is valuable (anymore?).

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#82

It makes a lot of sense for a country that has significant portions of its territory below sea level. But, I wonder. For years I was absolutely baffled by how the world decided to ignore crypto environmental footprint. Then, out of the blue, a few months ago, it looks like EVERYBODY is talking about it. Then, the G-7 wants to impose the beginning of a global tax regime upon the developed nations (that's what it is ba…

He cites: "citing fraud, criminal use, and financial instability" - not environmentalism. Also, that argument only applies to PoW coins, not PoS coins.

PoW - proof of work (computationally intensive), https://en.m.wikipedia.org/wiki/Proof_of_work

PoS - proof of stake, https://en.m.wikipedia.org/wiki/Proof_of_stake

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#83

Bans are totally justified. They will achieve two major outcomes: 1. Tank the price, thus freeing up energy and advanced manufactured goods (which are in shortages right now) for proper productive use. 2. Significantly lessen the instances of Ransomware, since companies will have no legal mechanism to actually pay. Whether the coins continue to exist informally and are traded in some kind of primitive barter system i…

> 2. Significantly lessen the instances of Ransomware, since companies will have no legal mechanism to actually pay.

That sounds backwards. I'd rather have hospitals and companies learn some hard lesson in cybersecurity through the threat of cryptocurrency-enabled ransomware than banning a medium of exchange altogether. Finally people are starting to care about backups and best practices.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#84
> "Cryptocurrencies are essentially neither money nor a financial product, but an example of what Nobel laureate Robert Shiller calls a 'contagious narrative': a contagious story in which people believe because other people believe in it."

Which is exactly what money is, to begin with.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#85
post #77

Earlier quoted context omitted.

Fiat is backed by weapons. The same weapons that defend your house from other countries and force you to give up half your salary. My main criticism to cryptocurrencies is that they're mostly unbacked. The ones that are backed by Fiat have similar problems to Fiat currency (why would I need that?), the ones that are backed by physical assets are much more interesting - but they don't seem to be the mainstream ones, p…

> Fiat is backed by weapons. What does this mean? It's the currency of a country that has weapons. If someone steals my USD, will US use their weapons to get it back for me? If the value of their currency drops substantially, will they go to war with some unknown power that's causing this drop and reverse the change? Countries also change currencies, often during times of inflation. This is an effectively meaningless…

The answer to both your specific questions is yes. Although a war won't necessarily restore the value of a currency.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#86
post #6

There's plenty of valid criticisms against crypto, I feel like they've picked some of the weakest ones. > cryptocurrencies are used because people think they will one day replace traditional money Maybe a tiny minority, sounds like a strawman. > a contagious story in which people believe because other people believe in it Isn't fiat the same? Money only has value because people believe it has value / will have value…

These two aspects are some of my least favorite of the crypto community. Hyping up this future techno utopia without banks, while the real end goal is to increase the amount of real currency in their possession. This doesn't describe the whole community, but a large portion of those on different crypto forums. I have respect for those truly interested in the tech side of things and those looking to make money on a sp…

Indeed, i would like to see how long Buterin would work on eth without funding, savings and rent to pay around the corner.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#87
post #6

There's plenty of valid criticisms against crypto, I feel like they've picked some of the weakest ones. > cryptocurrencies are used because people think they will one day replace traditional money Maybe a tiny minority, sounds like a strawman. > a contagious story in which people believe because other people believe in it Isn't fiat the same? Money only has value because people believe it has value / will have value…

Fiat is backed by weapons. The same weapons that defend your house from other countries and force you to give up half your salary. My main criticism to cryptocurrencies is that they're mostly unbacked. The ones that are backed by Fiat have similar problems to Fiat currency (why would I need that?), the ones that are backed by physical assets are much more interesting - but they don't seem to be the mainstream ones, p…

> My main criticism to cryptocurrencies is that they're mostly unbacked.

The fact of a currency being "backed" by something went away in 1933. No currency is "backed".

> This makes me think cryptocurrencies are mainly about speculation more than rebelling against governments and central banks.

Yeah, they are about speculation. Whether investing in crypto rather than some other financial asset constitutes "rebelling" is subjective.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#88
post #61

Earlier quoted context omitted.

No, but someone from the police will show up if you don't pay your taxes in USD.

Also really important, police will show up if you are counterfeiting USD. One of the neat things about cryptocurrency is that the supply is not protected by threat of force unlike fiat.

Because if someone comes up with the ability to counterfeit crypto that's it for that crypto. There's no need for it to continue, unlike a nations currency.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#89
post #84

> "Cryptocurrencies are essentially neither money nor a financial product, but an example of what Nobel laureate Robert Shiller calls a 'contagious narrative': a contagious story in which people believe because other people believe in it." Which is exactly what money is, to begin with.

Like the stop sign bubble. Those stop signs dont actually stop cars, they just work because of the contagious narrative
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