A possible use-case is inter-bank settlement.
Currently FX trades between banks are settled by a bank-owned coop type system, CLS bank.
Crypto is an unproductive bubble
261–270 of 539 posts
Re: Crypto is an unproductive bubble
#262Earlier quoted context omitted.
> That's not how currency works, people have to want your coins for you to spend them. The year is 2011. Visa and Mastercard have denied everyone the ability to donate money to wikileaks, despite the fact that they were not charged with any crimes. And yet, back then, I could still send them bitcoin. So yes, actually, even though only a small subset of people actually used bitcoin (especially back then!), it provided…
People could send Bitcoin to Wikileaks in 2011 because there were mechanisms to turn that Bitcoin back into real money. A point that's been raised multiple times elsewhere on this page is that Bitcoin has no backup strategy for when exchanges start getting targeted. It's not a good anti-authoritarian tool because the ability for it to be converted into a usable form exists at the pleasure of governments, who are incr…
Transfer mechanism are all that any currencies are. All currencies are dependent on being spendable. Thats just a question of adaptation, as in somebody else accepting it in the expectation that it will hold value and be spendable in the future.
Involuntary adaptation historically leads to drastic inflation with the trust in the purchasing power degrading. If you are forced to accept it despite low trust, you are motivated to exchange it for any other store of value. And are reluctant to produce stuff for which you have to accept a degrading currency. Both of which harms the actual economy.
Re: Crypto is an unproductive bubble
#263Earlier quoted context omitted.
Stop equating crypto with stocks please. Stocks represent ownership so just by that virtue, it has intrinsic value.
Stocks "represent ownership", is such fiction I don't even know where to start. If you really believe this, I'd like to sell you 49% ownership in my next venture! I of course have 10x voting rights and can issue more shares whenever I'd like ('oh but why would you do that? Won't that depress the value of your stock too?' 1. Not really because of crazy structures of the banks that underwrite these issuances, and 2. Be…
Stocks have value because of dividends (or for stocks that don’t yet pay dividends, the likelihood that one day they will pay dividends).
But ultimately, it is a bet on actual cash transfers from the profits of the business to your own pockets. All share price appreciation comes from bets (maybe far removed in time) on future dividend payments.
Most crypto has no basis for value like this. Tokens based on proof of stake or utility tokens do, but Bitcoin is pure speculation on future speculation.
Re: Crypto is an unproductive bubble
#264Earlier quoted context omitted.
The irony in this is that the Citizens United ruling, at least in the US, affirmed that spending money is speech. It's actually one of the reasons why I'm an ardent supporter of postal banking. Since the USPS is an arm of the federal government, it must work within the confines of the First Amendment[0]. As it stands, I remain pretty unconvinced that cryptocurrencies writ large solve this kind of (at least, what I ca…
I want you to pay attention to this very carefully: https://www.openssh.com/releasenotes.html * ssh(1), sshd(8): add the sntrup761x25519-sha512@openssh.com hybrid ECDH/x25519 + Streamlined NTRU Prime post-quantum KEX to the default KEXAlgorithms list (after the ECDH methods but before the prime-group DH ones). The next release of OpenSSH is likely to make this key exchange the default method. There is a non-zero prob…
Doesn't quantum computing render most cryptographic security obsolete? I'm a cryptocurrency skeptic, but I've been under the impression that quantum computing is just as much a concern for traditional banking as for cryptocurrencies.
Re: Crypto is an unproductive bubble
#265Earlier quoted context omitted.
I feel like you live in an imaginary world where the data doesn’t fit reality: https://usdsat.com/ Fiat is going to ZERO. All fiat currencies. I’d you fail to see the utility now at year 13, I hope you will not let another 13y pass.
Zero what? Zero purchasing power? No, it is not.
Talk to any 70 year old, they'll say $100 was a lot of money in those days. At 7 pct inflation your pp will get cut in half in 10 years, but im being pedantic since this is obvious to everyone.
Re: Crypto is an unproductive bubble
#266How many times are we going to have this conversation? Yes crypto is an asset bubble, alongside equities, real estate, precious metals, you name it. Money printer go brrrr, more dollars are chasing the same amount of Apple sells iPhones. Crypto has no intrinsic value, it pays no dividend and doesn’t give you proxy rights, just like all the tech equities. Proof of work burns a lot of electricity, though this is compli…
Stop equating crypto with stocks please. Stocks represent ownership so just by that virtue, it has intrinsic value.
They're both assets.
Re: Crypto is an unproductive bubble
#267Earlier quoted context omitted.
The irony in this is that the Citizens United ruling, at least in the US, affirmed that spending money is speech. It's actually one of the reasons why I'm an ardent supporter of postal banking. Since the USPS is an arm of the federal government, it must work within the confines of the First Amendment[0]. As it stands, I remain pretty unconvinced that cryptocurrencies writ large solve this kind of (at least, what I ca…
I want you to pay attention to this very carefully: https://www.openssh.com/releasenotes.html * ssh(1), sshd(8): add the sntrup761x25519-sha512@openssh.com hybrid ECDH/x25519 + Streamlined NTRU Prime post-quantum KEX to the default KEXAlgorithms list (after the ECDH methods but before the prime-group DH ones). The next release of OpenSSH is likely to make this key exchange the default method. There is a non-zero prob…
This is further complicated with what is happening at NIST, with NTRU-Prime:
https://csrc.nist.gov/Projects/post-quantum-cryptography/rou...
"Formal complaint regarding 8 June 2021 incident - 2021.06.15, Daniel J. Bernstein
"Executive summary. A week ago Dr. Daniel Apon from NIST publicly accused me of professional misconduct. Specifically, he accused me of initiating private contact with NIST so as to provide false information to NIST regarding the timing of an upcoming announcement relevant to NIST’s ongoing decisions..."
Re: Crypto is an unproductive bubble
#268Earlier quoted context omitted.
Currencies dont really work at the "may the best one win" level, especially with so much political power behind it. You have a dominant one which stays dominant till it implodes. Then people fall back to the next best thing. You dont need to be attractive, it just has to work.
How global currencies work past, present, and future by Eichengreen has a good history of currencies (from a European perspective). There were a few times when there were multiple currencies being used, and the ones used were the ones related to the countries who had the largest trade networks / 'colonies'. Of course credit was used a lot as well over long distances so folks didn't have to lug things around ( Debt: t…
You start with an actual store of value that gets degraded over time through the people holding power over it (think mints). The coin starts with a high silver or gold content and with ever economic woe the ruler finds themselves in a new coin gets minted with some copper and tin added. Or just prints more.
Power comes into play as to dictating what currency people are forced to use. That the old coins had to be handed back in or dictating the adaptation. They implode when there is nothing backing it what so ever. At its core its Greshams law at work, with currencies or with other store of values.
If i am not mistaken Graeber has quite a few examples of this mechanism.
Re: Crypto is an unproductive bubble
#269Cryptocurrencies have a valid but very specific use-case: being able to transact in a hostile environment. It does so by making certain trade-offs such as an energy-intensive verification process. This is a very valid use-case when you need to transact against the will of a powerful adversary such as governments. It needs to be there and needs to be protected just like free speech needs to be protected. However, day-…
It needs to be there and needs to be protected just like free speech needs to be protected.
This doesn't mean anything. Lots of things "need to be there" and aren't. If it doesn't work, it won't work, even if you think it should work.
Re: Crypto is an unproductive bubble
#270Earlier quoted context omitted.
Seems like wishful thinking to me. Unless crypto becomes actually useful for real world transactions, it has to be converted to fiat currency for use, and all the exchanges or technologies that do that conversion are subject to the will of governments. There was literally a post on HN today in which a government proposed to curtail crypto transactions for entities it considers hostile: https://www.coindesk.com/policy…
I agree with everything you said except a couple of things. >Unless crypto becomes actually useful for real world transactions, it has to be converted to fiat currency for use, and all the exchanges or technologies that do that conversion are subject to the will of governments. This is true, except that in some places governments are too inefficient to even control those things. The IT people works for them for penni…
Crypto should never be an investment. That is one of its primary flaws.
Currency is not an investment.
Yes, people trade currency, but for very small margins and as a hedge. When a currency swings 10,000x as crypto has done, it typically only happens in countries whose economies are going belly-up, see: Zibabwe.
If crypto is an investment, that means it is fluctuating dramatically, and if it is fluctuating dramatically, it isn't a currency (or it is a currency of a failed economy).
Don't believe me? Then I would expect you to be investing in stablecoins. If you only invest in Bitcoin and Ether and not stablecoins, then you are playing the stock market, because stablecoins are kept stable the same way countries can float their currenct to avoid wild swings in valuation.
I believe crypto will have a use in the future, but only with stablecoins, similar to commercial paper. As it is today, it is a scam for gambling and illegal activity, and a few people who want penalize their impoverished foreign relatives by sending them tokens that might be worth much less the day after they are sent (the cost of sending >US$10,000 is peanuts compared to the loss of value due to BTC/ETH fluctuations).