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What the Crypto Crowd Doesn’t Understand About Economics

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Re: What the Crypto Crowd Doesn’t Understand About Economics

#31
post #12

Earlier quoted context omitted.

Anyone who thinks crypto prices will continue to rise forever is not 'the crypto crowd'. 'The crypto crowd' has seen bitcoin go up and down countless times. The problem is, everyone seems to equate noobs getting suckered by Musk with the 'crypto crowd'. I feel bad for them, but it's like saying /r/wallstreetbets are 'investors'. P.S. - And where do they keep getting this 'fiat is going away' bull from? I honestly don…

>is that now what the bar is? "I saw it on youtube" ? In todays society? Sadly, yes.

I suppose...the world today seems to be driven by FOMO and FUD..

It's like the yin-and-yang of our brave new world :-(

Re: What the Crypto Crowd Doesn’t Understand About Economics

#32
I still don't see how you get to a cryptocurrency that's broadly useful as a currency without enough price stability for it to be a unit of account in some sense. Tesla may have accepted BTC for payment, and it might do so again, but is it really going to commit to pricing its next model at (say) 1 BTC and just let the dollar-denominated price swing wildly? Probably not - its competitors price in dollars, so if BTC goes up it would become less attractive, and its suppliers price in dollars and other fiat currencies, so if BTC goes down its marginal revenue could fall below its marginal cost.

On top of that, BTC-denominated debt is potentially toxic for the holder. Imagine if you bought a house for, say, 1000 BTC in 2016 and your mortgage was denominated in BTC. Gradual devaluation of debt is one reason that central bank inflation targets in developed countries tend to be small positive numbers. Monetary policy is hard, and despite (totally valid) criticisms of central banks' monetary policy decisions in recent years, I'm still skeptical that anyone can do it purely algorithmically and have better results than the Fed.

I still think Libra was the only token (besides explicitly fiat-denominated stablecoins) I've seen that had a real shot at being broadly used as a currency, though I'm glad that FB won't be the ones to "own" a global currency. The "problem" is that any token that's stable enough to use as a currency is inherently too stable to have potential for large speculative gains (except if you lever it to the hilt as FX traders do today) - and IMO demand in the crypto space is still predominantly driven by speculative potential.

Re: What the Crypto Crowd Doesn’t Understand About Economics

#33
post #9

Earlier quoted context omitted.

Cool-doesn't mean it's right.

You realize Tyler Cowen posted three quarters of this piece on his website: https://marginalrevolution.com/marginalrevolution/2021/06/wh... I will happily pay for quality content - Bloomberg is not one of those sources. You're defending a company that will happily use it's monopolistic edge to charge 24,000 a year for an API. Get off your high horse.

You're still increasing demand by reading the article, posting links to it, discussing it, upvoting the post, etc.

Don't consume and promote the content. You don't want to compromise the ethical stance you've taken against their monopoly do you?!

Re: What the Crypto Crowd Doesn’t Understand About Economics

#34

The fact that having a deflationary money supply is bad, is even debated in cryptocurrency forums is the clearest indication that they have no idea how economics works. ...also, the point of a currency is to act as a STABLE unit of exchange, not some speculative moon-shot. Once these money supply and stability issues are ironed out, and once the scalability problem is solved, I think we might really have something.

> the point of a currency is to act as a STABLE unit of exchange

Very few informed observers seriously expect crypto to become a general-use currency. That's a role it detached from years ago, first in practice and then in rhetoric.

The closest analog to what crypto seems to want to become in our financial markets is in risk-free assets. Universal collateral. This used to be gold. Now it's Treasuries and Bunds. None of those markets are terrifically efficient or universalized. And neither requires long-term price stability; just predictability.

(Note: it does not follow that crypto will be as valuable as e.g. the Treasury market. Treasuries serve as a safe asset. They also finance the U.S. government. Figuring out the worth of the former detached from the latter is difficult.)

Re: What the Crypto Crowd Doesn’t Understand About Economics

#35

This is about cryptocurrency, NOT crypto. The article name, at least, should have "sic" to indicate that it's a copy of something which is incorrect.

For what it is worth “[sic]” does not mean that something is incorrect, just indicates it is a direct copy of another source. Could be an error or typo, could just be idiosyncratic, archaic, or potentially confusing.

In your case it would not be appropriate, because like it or not the quote usage has become normal usage. I understand why that annoys people, but it’s done.

Re: What the Crypto Crowd Doesn’t Understand About Economics

#36
post #5
post #2

Is there a workaround for this paywall?

Pay for a subscription. Good luck getting unbiased non-clickbait news when journalists only source of revenue is directly tied to advertisment in an article.

I would be super interested in truly unbiased news and I am willing to pay quite a fortune for it -- through I am quite sure it wouldn't, philosophically, be possible to find.

Re: What the Crypto Crowd Doesn’t Understand About Economics

#37
post #12
post #7

Given the somewhat clickbaity headline, this piece is straight to the point and surprisingly sober. I found this to be the central thesis: > If anything, crypto is more likely to hurt the currencies of countries that are doing very poorly, such as Venezuela. Fiat currency won’t just go away, so over the long run crypto could actually boost the value of the dollar by stifling the rise of potential competitors. ...and…

Anyone who thinks crypto prices will continue to rise forever is not 'the crypto crowd'. 'The crypto crowd' has seen bitcoin go up and down countless times. The problem is, everyone seems to equate noobs getting suckered by Musk with the 'crypto crowd'. I feel bad for them, but it's like saying /r/wallstreetbets are 'investors'. P.S. - And where do they keep getting this 'fiat is going away' bull from? I honestly don…

> P.S. - And where do they keep getting this 'fiat is going away' bull from? I honestly don't know anyone in crypto that thinks this? Yes, I see crap on youtube pumping stuff like this - is that now what the bar is? "I saw it on youtube" ?

I've seen several comments here on Hacker News that has this WTF-level of cryptoboosterism. Certainly anyone who seriously argues "but you forgot to account for the energy cost of nuclear carriers in propping up fiat currency" gives off the same vibes as "fiat is going to crash once we realize it's all funny money."

Re: What the Crypto Crowd Doesn’t Understand About Economics

#39

The fact that having a deflationary money supply is bad, is even debated in cryptocurrency forums is the clearest indication that they have no idea how economics works. ...also, the point of a currency is to act as a STABLE unit of exchange, not some speculative moon-shot. Once these money supply and stability issues are ironed out, and once the scalability problem is solved, I think we might really have something.

Bitcoin is not inherently deflationary.

And the inflationary consensus in mainstream economics is not one born out of reason, evidence or good faith. The truth is, inflationary monetary policy is mainstream because of political reasons, not economic ones.

Re: What the Crypto Crowd Doesn’t Understand About Economics

#40

I still don't see how you get to a cryptocurrency that's broadly useful as a currency without enough price stability for it to be a unit of account in some sense. Tesla may have accepted BTC for payment, and it might do so again, but is it really going to commit to pricing its next model at (say) 1 BTC and just let the dollar-denominated price swing wildly? Probably not - its competitors price in dollars, so if BTC g…

Doing a stablecoin to replace something like the USD is an extremely difficult problem. Reserve.org is one company which understands the gravity of the issue and is committed to producing a stablecoin for anyone, worthy enough to replace the USD.
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