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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

#41

Post by dnautics »

koheripbal wrote: post #29

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 fact that having a deflationary money supply is bad.

Your "fact" encodes a lot of presumptions. Bad for whom?

Moreover, post-civil-war US (deflationary) is a good counterexample, not entirely clear that that era was "bad", hell, a good chunk of the population was emancipated from slavery amidst deflation.

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

#42

Post by jMyles »

jcranmer wrote: post #37
mech422 wrote: 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…

> 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…

I think the former is a perfectly reasonable consideration, while the latter is short-shrift.

Am I wrong?

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

#43

Post by mech422 »

jcranmer wrote: post #37
mech422 wrote: 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…

> 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…

>>Certainly anyone who seriously argues "but you forgot to account for the energy cost of nuclear carriers in propping up fiat currency"

I honestly don't think I've seen anything like that here - but once the crypto threads get too long I stop reading cuz all the cranks come out.

But even if we stipulate that as true, is it fair to paint the whole crypto community with that brush? I see cranks in everything from cancer treatment to prepping to stock investing. Everyone seems to realize those fringes don't represent the majority views..So why is it when its crypto, the fringes suddenly represent the majority? It's a bit annoying, like we're all out there mortgaging our houses on this stuff...

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

#44

Post by beervirus »

arberx wrote: post #5
B4CKlash wrote: 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.

Good luck getting unbiased news at any price.

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

#45

Post by mech422 »

jMyles wrote: post #42
jcranmer wrote: post #37

Earlier quoted context omitted.

> 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…

I think the former is a perfectly reasonable consideration, while the latter is short-shrift. Am I wrong?

sorry - I lost track of the former and the latter... Guess I need more coffee :-) What are they referring to?

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

#46

Post by danaris »

JumpCrisscross wrote: post #34
koheripbal wrote: post #29

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…

It may not be what informed observers want it to be, but it's still what every single person I've seen trumpeting the virtues of cryptocurrency here on HN has been shooting for.

The argument is invariably "the value of cryptocurrency is giving us a currency that's not controlled by central banks". Never have I seen someone saying cryptocurrency should be used because it's highly volatile and great for speculating.

So there seems to be a significant divide between the people who use cryptocurrency (but don't attach a moral value to it) and the people who believe in cryptocurrency (but ignore what it's actually used for).

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

#47

Post by jonstaab »

Both things are well understood by the bitcoin community, at least. Bitcoin's utility doesn't depend solely on inflation or replacing the dollar as the global reserve currency, though that's a popular topic, since the collapse of the dollar would prove Bitcoin's place. For the second point, HODLing seems like it's forever, but it's only for the next decade or two; the expected growth comes from getting in early - just like if you bought an Warhol painting while he was still active.

So I agree, but the author of the article is using these arguments to strawman the crypto community, which is full of really smart people as well as idiots.

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

#48

Post by dasudasu »

djbebs wrote: post #39
koheripbal wrote: post #29

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.

It is, after all bitcoins are eventually mined, because some private keys get irretrievably lost and those coins can therefore never be recovered.

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

#49

Post by yawaworht1978 »

koheripbal wrote: post #29

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.

Well, they do not really want a stable unit. From the very founders all the way down, everyone wants a limited supply, deflationary and as much as possible of it in their own wallet. And they want to cash out in the inflationary fiat currencies.

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

#50

Post by reidjs »

One thing I like about crypto is you can simulate economics experiments with funny money online. Ponzi Scheme? There are plenty of these going on. Want to investigate Harberger's triangle/deadweight tax loss? Create a small game. Prediction markets? See auger.

As long as you approach it from the perspective of 'this money is probably worthless' it's all just a fun learning experience about economic theory.

The only problem is some people "invest" more than they are comfortable losing. And that causes some tragedy.

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