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Why I’m Cryptophobic

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Re: Why I’m Cryptophobic

#131

Post by IncRnd »

thesausageking wrote: post #104
IncRnd wrote: post #87

> The world has never seen an economic phenomenon like crypto. There is no historical analogous technology trend or investment craze that comes close to capturing the sustained and frenzied momentum of crypto that has engulfed so many and that will continue to do. Never say never. Greed and speculation have a long and robust history. This crypto speculation and greed reminds of of the price of tulips. [1] During that…

"Tulip Mania" wasn't real. The "bubble" was a very small group of speculators and it did not have any larger affect on the industry. The stories about it were made up and come from propaganda pamphlets published by Dutch Calvinists who were worried that consumerism was causing societal decay: https://www.smithsonianmag.com/history/there-never-was-real-...

According to your link it was real. "That’s not to say that everything about the story is wrong; merchants really did engage in a frantic tulip trade, and they paid incredibly high prices for some bulbs. And when a number of buyers announced they couldn’t pay the high price previously agreed upon, the market did fall apart and cause a small crisis—but only because it undermined social expectations."

In the link I posted is this gem: "Peter Garber in the 1980s published an academic article on the Tulipmania. First, he notes that tulips are not alone in their meteoric rise: 'a small quantity of ... lily bulbs recently was sold for 1 million guilders ($480,000 at 1987 exchange rates),' demonstrating that even in the modern world, flowers can command extremely high prices."

I wasn't making a point about the degree of societal collapse from tulip mania. I made the point that there is a long history of greed and speculation.

Re: Why I’m Cryptophobic

#132

Post by hans1729 »

DrBazza wrote: post #119
mjburgess wrote: post #4

There needs to be some basic economics here.. Money has value because of the value of the economic transactions in which its conducted. Government-backed currencies are forced to have value in the sense they force people to use it for their taxes. The US, additionally, forces the world to use it for oil trades. Value is in those economic transactions. A currency is just a "liquifying" of that value, to make it easier…

> For BTC (or any coin) to have any value, it needs actual economic transactions to be conducted in it. If there aren't any, its value is smoke-and-mirrors; its not real. Not quite - if someone, anyone, wants something that someone else has, they're prepared to buy it. That's the price. You might say tulips are valueless, but that wasn't the case when people wanted them - https://en.wikipedia.org/wiki/Tulip_mania I'm…

>people want to buy it, and people also want to sell it. That means there's a market and therefore a value to it for those people.

People don't want to sell it, they have to, in order to pay the electricity bills for the mining (in their countries normal currency, for that matter).

There is no inherent value - you can only sell if the exchanges find someone who is willing to buy.

The value to the seller is the Dollar/Euro they get at the exchange. The value for the buyer is speculation on the price, which someone else then has to pay at the exchange in normal currency. There is exactly zero value in crypto itself.

Re: Why I’m Cryptophobic

#133

Post by Ologn »

benreesman wrote: post #45

Both the rabid pro-crypto and rabid anti-crypto people seem to be missing that the prices move on the monetary policy of the United Stated Federal Reserve: more visibly the FOMC target guidance, the underwater part of the iceberg is the balance sheet. Global finance is a big deal, to put it mildly. Crypto is a flea on the ass of the foreign exchange market (which it superficially resembles), which is a bacterium on t…

> It’s. Just. Not. That big of a deal.

There are trailing indicators and leading indicators. The fact that something like Dogecoin can be invented as a joke (according to its investors) and be said to have a market cap of over $8 billion is an indicator - that's 8 "unicorns". Bitcoin's market cap is over $350 billion. You are right that it has to be seen in the context of global finance, but other parts of global finance were bubbly at the end of last year, and if there's confusion over that, Dogecoin's 8 billion dollar market cap is an indicator, even if eight billion dollar is not that much in the context of global finance.

Re: Why I’m Cryptophobic

#134

Post by reledi »

627467 wrote: post #78

> too high maintenance to be a store of value like gold Really? because the price/value flutuates too much? How is storing 1B dollars in gold lower maintenance than storing 1B dollars in BTC or other high-liquidity crypto?

Harvesting and storage of a naturally occurring element is lower maintenance in theory. It is easily stored a thousand years ago and a thousand years from now, even if some global catastrophic event occurred that renders modern technology useless.

Re: Why I’m Cryptophobic

#135

Post by whatisweb3 »

wpietri wrote: post #114
whatisweb3 wrote: post #70

Earlier quoted context omitted.

I loosely agree with you but am a little more optimistic. I see centralized lenders and services like Celsius and 3AC collapsing and running off with money, or blocking withdrawals - this would not occur had the loans been made on-chain through smart contracts, and DeFi platforms like Aave are holding up just fine during this downturn. This is an example of a shift of power away from incumbents and toward the people…

To me this is fundamentally contradictory: > the people en masse, should they choose to actually understand and use the decentralized blockchain I used to work for financial traders. Our company was essentially the same as the companies of professional gamblers. We knew we were playing zero-sum games. Our goal was to create asymmetries in information and skill such that we got the money that other people were putting…

> So the hustlers are always going to be one step ahead from regular folk.

I don’t disagree. This is always going to be the case in any global market with information asymmetries - grandma’s investments are not going to do as well as a hedge fund with a team of 50.*

The difference is: the people entering CeFi are having access to their funds revoked, and a counterparty failing to repay debts while fleeing to Dubai. while the people entering DeFi have not had access to their funds affected, and are not worrying about counterparty risk.

This is why it is a shift in power - the users retain control of their funds and leveraged positions, as opposed to placing that power entirely in the hands of tradfi and CeFi companies.

* ironically a lot of big players like 3AC are getting wiped out too, so it isn’t always true

Re: Why I’m Cryptophobic

#136

Post by Geee »

I don't think that Bitcoin is extremely anarchist / libertarian. It would be similar to gold standard. There would be no unlimited funding for governments through central banks. It would limit government spending, but also ensure that politicians are wise and responsible. In my opinion, democracy needs hard money standard to function properly.

Re: Why I’m Cryptophobic

#137

Post by BenoitEssiambre »

That is kind of a scary article. I tend to dislike crypto arguments that make it political. There are pure economic arguments against it, from free market laissez-faire Friedmanian perspective, from centrist perspective and more obviously from the left wing perspective, that show crypto as dangerous for society. No need to make it another wedge issue (I tried to be somewhat politically neutral here: https://benoitessiambre.com/specter.html ).

This article makes a fairly strong case that authoritarian politics could readily mix with the economics feeding on each other in an unstoppable vicious circle that eventually leads to financial and societal cataclysm.

Re: Why I’m Cryptophobic

#138

Post by daniel-cussen »

aabhay wrote: post #100
dcolkitt wrote: post #58

Earlier quoted context omitted.

The continued existence of gold as a store of value (and to a lesser extent silver) contradicts this model. Very few economic transactions are denominated in gold, either as a medium of exchange or a unit of account. There is a small amount of industrial demand, but this is far too tiny to justify gold's gigantic market capitalization. Valued on industrial demand alone gold would maybe worth $100/oz, yet today it tra…

Gold is the world's best physical commodity to use as a store of value -- it doesn't degrade or tarnish, is easily molded into coins or other symbols, melts easily, has a highly fixed supply (synthesizing it is prohibitively expensive), and (now) increasingly is not tied to an industrial output so can weather GDP fluctuations. So in a battle Royale of all commodities, gold wins. That said, all commodities are affecte…

Gold and bitcoin are practically identical.

Re: Why I’m Cryptophobic

#139

Post by throwaway413 »

ETH_start wrote: post #127
aabhay wrote: post #109

Earlier quoted context omitted.

Why not? What's to prevent two parties from creating a digital smart contract denominated in dollars? Don't we already do this with things like credit card pre-auth? And the best part is that the transaction is backed by a predictable rule of law as long as the transaction takes place within a country.

The traditional financial system and the political system it rests on are too unstable. Witness Moscow commuters not being able to enter their metro as Apple Pay cuts them off. Witness the AML surveillance regime shutting out entire countries: https://www.coindesk.com/policy/2020/10/23/money-reimagined-...

If a geopolitical climate is too volatile for fiat to provide value, what good is it that crypto can isolate its stability (it can’t) if the humans who would use it have bigger problems than how to pay with money they already have in some form? Supply chains, physical force/warfare, climate, etc. If fiat is breaking down, there are surely bigger problems at play. How does solving the ability to transfer money solve the overall stability of the situation?

Per your example, ok Apple Pay got cut off. Is the transit system going to support crypto? Will they be able to run their business and make that transition with regulators? It’s a drastic measure that cuts one off from the structures that they physically exist in, and unless those structures are overall crypto-supportive, they would just be putting themselves further between a rock and hard place (which as we’ve seen by the lack of serious business adoption, companies and orgs are not really willing to take that risk in any meaningful way)

Edit: I agree with your use of the term “regime” and am not arguing against the sentiment of your point. Just that I don’t think crypto actually has the backbone to solve it, there’s not enough physical-world tie in yet for it to have the leverage it needs to truly overcome the global financial regimes that are neck-deep in fiat and physical assets that actually impact everyday peoples’ lives.

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