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The Handwavy Technobabble Nothingburger of Crypto

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Re: The Handwavy Technobabble Nothingburger of Crypto

#491

Post by ineptech »

JuliusBranson wrote: post #384
ineptech wrote: post #176

Earlier quoted context omitted.

Right, but it's not. The idea that inflation "dilutes" wealth and is therefore bad for rich people is not true.

Correct. Inflation is when the dollar gets weaker for the masses because the elite are printing themselves dollars. Deflation is when the dollar gets stronger for the masses because the elite's proportion of the national currency is decreasing. We have pro-inflation, anti-deflation economic ideology because the elite fund the economists' "research."

Stronger/weaker refer to the value of a dollar compared to other currencies; inflation/deflation refer to the value of a dollar compared to goods and services. Neither is related to the "elite's proportion of the national currency". Again, I can only suggest reading some articles about this stuff.

> We have pro-inflation, anti-deflation economic ideology because the elite fund the economists' "research."

Suppose USD deflated; what would happen? Some people would move some money from other assets (stocks/bonds/etc) into currency and hold it for risk-free returns. What would that do? Reduce the amount of money in circulation. What does that do? Deflate the currency even more. What does that do? Incentivize even more people to move money into currency, which makes the currency deflate even more.

The whole point of a currency is that people spend it or invest it in something useful. If it's going up in value, they're incentivized not to do that, and it stops being used as a currency. This is an unambiguously bad outcome. I don't believe shadow elites are trying to convince economists of this, because they're already convinced.

Re: The Handwavy Technobabble Nothingburger of Crypto

#492

Post by EVa5I7bHFq9mnYK »

That's a lot of smart words, but I just paid $7 in bitcoin to top up my Egyptian sim card (wi fi in the hotels is not existent over there, so you must use mobile internet), using bitrefill and lightning. It took a few seconds to complete, I paid zero fees, I didnt have to divulge any information about myself nor to the vendor, nor to any bank or goverment. No registration, no validation, nothing. Vendor did not have to worry about my transaction being fraudulent or that it might be charged back for any reason.

As to the volatility, I topped up my payment wallet with $100 some time ago, used it to pay for many things, and now it shows a balance equivalent of $800. I welcome such volatility.

To me, this clearly shows the superiority of this form of money over previous forms.

Re: The Handwavy Technobabble Nothingburger of Crypto

#493

Post by worik »

tux1968 wrote: post #291
moolcool wrote: post #224

Earlier quoted context omitted.

(not an economist) If most bitcoins are bought with USD, all else remaining equal, wouldn't this automatically happen?

I'm not an economist either... but the buying power of your bitcoin goes down if people demand more of it for a given product. If USD prices rise, the bitcoin price will rise too, meaning your bitcoin wealth is affected by inflation, and you're not protected from the Fed printing money.

But the price of bitcoin is unrelated, it seems, to any real world thing.

Pure speculation.

Re: The Handwavy Technobabble Nothingburger of Crypto

#494

Post by MrMan »

rawtxapp wrote: post #152
mym1990 wrote: post #138

Earlier quoted context omitted.

Just because the future is uncertain doesn't mean you can't do research to make a reasonable forecast. Typically speculation is specifically buying/selling without any reasoning other than 'I think someone will pay higher for this in the future'. Many assets don't even have to appreciate. A car is an asset if I have paid it off. I don't expect someone to pay me more than I paid for it unless it is a collectible or I…

Then I can say that I've done my research and I think it's reasonable that USD won't remain global reserve currency forever and that it's replacement won't be a governmental currency, but a decentralized one and Bitcoin would be the only reasonable candidate. Does this mean that I'm not speculating all of a sudden because I've done research and came up with a reasonable forecast?

People won't invest in a reserve currency, they will use it for trade. Anything people are buying and holding is by definition not a reserve currency. You are describing "treasure".

Re: The Handwavy Technobabble Nothingburger of Crypto

#495

Post by sjtindell »

breuleux wrote: post #464
sjtindell wrote: post #354

Earlier quoted context omitted.

HN’s attitude is very surprising to me. I would think that they could get very excited about flash loans, decentralized exchanges (automated market makers), daos, and other concrete innovations coming out of crypto asset projects. I think it’s mostly jealousy and a feeling that they missed the boat, so they want to see it sink. I think that because I’ve had the feeling many times. They may not realize these are early…

> I think it’s mostly jealousy and a feeling that they missed the boat, so they want to see it sink. If crypto and defi live up to their promise, no one is going to "miss the boat". People at large will start getting paid in cryptocurrencies and they will start using them in transactions. If there are only a limited number of boats for this thing, that means it's a bubble and it's going to pop. Personally, I struggle…

I commented this further down and am interested in your thoughts. One thing I’ve come to appreciate more when we talk about the “real value” being produced is that these are essentially just money games. Lots of established Wall Street firms play money games for a (very, very good) living.

I’ve come to accept more that what people on Wall Street do is real. Games are real. I don’t personally buy into the “new world currency”, “real world use case, I’m gonna own my house on a blockchain” lines of thinking. The use case is still being fleshed out but in my opinion it’s much more likely to produce lots of Citadels than lots of Amazons or Googles if that makes sense. Whereas I think that HN believes it will just go away because it’s all a scam.

For better or worse, there is huge pent up demand for money games. The average person doesn’t know it yet, but they want to own a swap on an option to buy a percent of the interest of a bond deal that they can then stake for percent ownership in an nft. It sounds insane to you and me right now. But I think they’re going to evolve to the use case of crypto, not the other way around.

Re: The Handwavy Technobabble Nothingburger of Crypto

#496

Post by ethanbond »

SubiculumCode wrote: post #110
ethanbond wrote: post #34

Earlier quoted context omitted.

There are significant negative externalities created by your toys.

and also by the production of Legos and Xboxes, and all the other toys.

Yep and if someone wants to criticize those things, it doesn’t mean that they just hate fun.

Re: The Handwavy Technobabble Nothingburger of Crypto

#497

Post by pcthrowaway »

horsawlarway wrote: post #253
CTDOCodebases wrote: post #148

Earlier quoted context omitted.

“I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).” Possession is ownership on the Bitcoin network. Not ownership in the sense of it is written down in some legal document somewhere but ownership in the sense that you have the power to perform a transaction with what you say you own. You were trusting a central party all along. If you didn’t you wouldn’t…

But the alternative here is that you have to place all your trust in an unknown and untrusted 3rd party to ever actually make an exchange. Even the silk-road used an escrow service that required that the seller trust the buyer, and both parties trust the silk-road. (a buyer places coins in escrow with the silk-road, the silk-road confirms it has the coins to the seller, the seller ships the product, the buyer unlocks…

You're overlooking defi, this is the thing being revolutionized right now; you can make all the transactions you can afford to pay transaction fees for, trade hundreds of assets, swap tokenized USD for tokenized EUR, all without an intermediary.

To be candid, you are generally trusting the contracts you're interacting with to be bug free, but you are able to audit the code just as easily as anyone else, and verify that the contracts are as advertised. Unlike dealing with a bank portal, all the logic running on the blockchain is visible and verifiable.

Re: The Handwavy Technobabble Nothingburger of Crypto

#498

Post by mypalmike »

bradwood wrote: post #369
PantaloonFlames wrote: post #339

Earlier quoted context omitted.

The issue is not whether a person can make money in a Ponzi scheme. We know it is possible. The issue is, is it a good idea?

And how is fiat not a Ponzi scheme?

With a well managed fiat, money supply growth tracks the growth of economic activity. In a Ponzi scheme... It is otherwise.

Re: The Handwavy Technobabble Nothingburger of Crypto

#499

Post by MrMan »

mountainb wrote: post #296
toomuchtodo wrote: post #198

Earlier quoted context omitted.

A crypto system that pays yields on monopoly money is just a glorified collection of ledgers moving fake money around, no? What are yields a product of with crypto? If not productivity of underlying assets, it must be speculation, which isn't sustainable. You eventually run out of greater fools.

There are hundreds of fake monies used all over the world, including many countries with dual currency systems in which they use one fake money internally and one fake money externally. Bitcoin and frankly many other random altcoins are more credible than many of those hundreds of moneys. The history of banking is replete with unsustainable arrangements involving the quest for yields deriving from speculative assets.…

The reason yields are low has nothing to do with the denomination of the currency but with the macro economy. Like gravity you can't fight it.

Re: The Handwavy Technobabble Nothingburger of Crypto

#500

Post by TomSwirly »

sjtindell wrote: post #425
Imnimo wrote: post #407

Earlier quoted context omitted.

>go read the UniswapV2 contract. If you don’t think that’s a cool innovation, please come back and let me know, I’m interested. I feel like the coolness of Uniswap requires putting the cart before the horse. If I'm not convinced of the real utility of these tokens, why would I be impressed with the ability to move them around in various clever ways? I need to see a valuable external use case before I can see the valu…

I guess to me it’s more about progression. From Bitcoin, to Ethereum, to Uniswap, there is a strong development of the early ideas and technology. This doesn’t seem like it will just stop to me. It indicates a very bright future in my opinion. Also, although I get disillusioned, I personally have come to appreciate more that the value being produced is financial. There is clearly massive pent up demand for financial…

> From Bitcoin, to Ethereum, to Uniswap, there is a strong development of the early ideas and technology.

To do what useful thing, that isn't crime?

> From what I can tell massive segments of finance are just money games. This is a form of that, which is a real and tremendous market.

For what, except speculation and crime? What application? It's been twelve years. Crypto is almost as old as the smartphone.

> A natural progression that people who say “high frequency trading provides no value” or “banks shouldn’t be allowed to deal in derivatives” will hate.

Derivatives have obvious economic value. I can go into a room and write an economic model for them and it will agree with everyone else's because there's an objective theory that can be applied to get answers (and I have successfully done this in the past).

Any economic model for the value of cryptocurrency gives it a zero value.

More, crypto people don't have any competing valuation model or theory or explanation or anything. The values for all these coins simply come from nowhere.

> It seems nonsensical, until you go learn what all these quants are getting paid millions per year to do for hedge funds and you think to yourself “oh, it’s a similar thing. There is demand for this.”

You are wrong. I did this for a living for years.

All you are doing is adding the present value of future cash flows together to get the value. The tricky part is dealing with volatility, for which there's an "arbitrage-free" (no magic cash) model called Black-Scholes - and then there are a zillion details.

But cryptocurrencies _have no cash flows._ No cryptocoin produces or destroys fiat currency. The _only_ way you make $1 out of your crypto is if some Greater Fool buys your cryptocoin for more than you paid for it.

Eventually, there won't be a Greater Fool, then everyone will be left with a crappy and expensive payment system with huge transaction costs and nothing else. Everyone will rush for the doors, but there's no liquidation value and no fundamental value and no market makers.

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