You cannot prove things in the real world by running a computer program. Traditional financial systems have trust, belief, demand all factored in. They are constantly prodded and tweaked by powerful entities, with cultural, legal and military might to keep things running. However it turns out these are all features, and in the speed run to invent finance 2.0, deluded tech bros forgot that reality exists, or they were complicit in implementing a pyramid scheme.
Algorithmic stablecoins are provably impossible without continuous funding
111–120 of 264 posts
Re: Algorithmic stablecoins are provably impossible without continuous funding
#112Earlier quoted context omitted.
> The only thing that maintains the value of any asset (or currency) is the collective belief in that asset or currency. Put another way: there is an inescapable component of trust in every asset Most non currency assets are cash flow generating financial instruments. If analysts don't believe a company is worth a dime, it can show them wrong by being profitable and paying dividends. Edit: I think my point is - even…
I cannot remember where I read this, but it was a view that basically the mere concept of a "company" is a collective fiction that we all believe in. As are nations, laws, etc etc. The idea that "tesla" is an entity one can interact with. That this "tesla" thing has value in and of itself. They're derived from beliefs in a system. Which could evapourate and render the idea of value meaningless. I don't think this is…
It's interesting but not very useful. What's also interesting is that almost everything (actually everything?) is concepts that we collectively believe in.
This is my takeaway from the book The Case Against Reality.
Re: Algorithmic stablecoins are provably impossible without continuous funding
#113Earlier quoted context omitted.
> Not a crypto fan but I'm beginning to see that our entire economy is proving impossible without continuous manipulation by the fed Just like driving a car proves impossible without continuous manipulation by its driver.
The driver is the one controlling the car. Without one, the car can only roll downhill. Is that really a position you want a non-democratically elected agency to have? Society at the behest of Jerome Powell?
1. The chairman of the Fed may not be a directly elected position but is still indirectly elected, because they are appointed by the president and must be confirmed by the senate. Saying they're not democratically elected is about as true as saying the secretary of defense is not democratically elected. Technically true, but mostly irrelevant.
2. You vastly overstate the power of the chairman of the Fed. It's not like Powell can have a bad day and decide to nuke the world. He's more powerful than most people, but society hardly depends on him.
Re: Algorithmic stablecoins are provably impossible without continuous funding
#114Earlier quoted context omitted.
> Not a crypto fan but I'm beginning to see that our entire economy is proving impossible without continuous manipulation by the fed Just like driving a car proves impossible without continuous manipulation by its driver.
The driver is the one controlling the car. Without one, the car can only roll downhill. Is that really a position you want a non-democratically elected agency to have? Society at the behest of Jerome Powell?
Every time we have seen a government take control over the money printing press, it ended spectacularly bad. There is a reason why most governments have agreed that the central banks need to be as impartial and independent as possible - and countries like Turkey are proving it at the moment.
Just imagine someone like the 45th being able to order the Fed around in a way similar to Erdogan. Complete, utter horror.
Re: Algorithmic stablecoins are provably impossible without continuous funding
#115Earlier quoted context omitted.
Well duh, that is the whole point of the fed - tweaking the dials to smooth out the peaks and troughs. Sometimes that doesn’t work, or works only after the fact, but the last 70 years or so has been fairly smooth sailing compared to what came before.
The worst is when it works to smoothen out the peaks but the cost is silently screwing over poor people. So everyone at the top can pat themselves on the back, and people in the middle start blaming capitalism.
It's hard to believe the poor were really better off before the 1920s than they are today.
Re: Algorithmic stablecoins are provably impossible without continuous funding
#116This doesn't go far enough. The only thing that maintains the value of any asset (or currency) is the collective belief in that asset or currency. Put another way: there is an inescapable component of trust in every asset. Crypto in any form doesn't solve the trust problem other than a very narrow slice because as soon as you interact with anything outside of the blockchain, you're adding trust. Even on the blockchai…
My house is valuable to me even if there isn't a collective belief in it. Most financial assets are backed to some extent by real assets. I'm happy enough to put value in USD or imaginary-coin if I can swap my holdings in them for a nice house/car/jet. You don't really need "economic, military and even cultural might" - just for the currency to be accepted somewhere where you can buy real assets and for the supply to…
>My house is valuable to me even if there isn't a collective belief in it.
That's because it also has use value (and land use value), etc. Crypto coins don't have any.
>Most financial assets are backed to some extent by real assets.
Negligibly so in modern economy.
Re: Algorithmic stablecoins are provably impossible without continuous funding
#117This doesn't go far enough. The only thing that maintains the value of any asset (or currency) is the collective belief in that asset or currency. Put another way: there is an inescapable component of trust in every asset. Crypto in any form doesn't solve the trust problem other than a very narrow slice because as soon as you interact with anything outside of the blockchain, you're adding trust. Even on the blockchai…
My house is valuable to me even if there isn't a collective belief in it. Most financial assets are backed to some extent by real assets. I'm happy enough to put value in USD or imaginary-coin if I can swap my holdings in them for a nice house/car/jet. You don't really need "economic, military and even cultural might" - just for the currency to be accepted somewhere where you can buy real assets and for the supply to…
House is only valuable as long as the US military has enough $ to defend from Russia/China (taken to extreme, but not if you were in Ukraine).
Re: Algorithmic stablecoins are provably impossible without continuous funding
#118This doesn't go far enough. The only thing that maintains the value of any asset (or currency) is the collective belief in that asset or currency. Put another way: there is an inescapable component of trust in every asset. Crypto in any form doesn't solve the trust problem other than a very narrow slice because as soon as you interact with anything outside of the blockchain, you're adding trust. Even on the blockchai…
My house is valuable to me even if there isn't a collective belief in it. Most financial assets are backed to some extent by real assets. I'm happy enough to put value in USD or imaginary-coin if I can swap my holdings in them for a nice house/car/jet. You don't really need "economic, military and even cultural might" - just for the currency to be accepted somewhere where you can buy real assets and for the supply to…
The collective belief that you own your home is a crucial part of its value. If you come home and find a bunch of people partying in your kitchen, you can tell them to leave, or call the police and they'll drag them out. That's all due to the collective belief that you own your house.
Without that collective belief, owning anything is a huge effort to defend it against whoever else it might appeal to.
Re: Algorithmic stablecoins are provably impossible without continuous funding
#119Is this true of any currency pegged to an exchange rate, such as yuan, ruble, and riyal?
Re: Algorithmic stablecoins are provably impossible without continuous funding
#120This doesn't go far enough. The only thing that maintains the value of any asset (or currency) is the collective belief in that asset or currency. Put another way: there is an inescapable component of trust in every asset. Crypto in any form doesn't solve the trust problem other than a very narrow slice because as soon as you interact with anything outside of the blockchain, you're adding trust. Even on the blockchai…
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