Fiat is Effective: fiat for the crypto crowd [pdf] • Hacker News Board

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#141

Post by DennisP » Mon, Oct 16, 2017, 2:59 PM UTC

Some of these arguments assume a single fixed-supply cryptocurrency, instead of the ecosystem of cryptocurrencies we actually have, which is more like Hayek's proposal for competing privately-issued currencies. He thought it would be stable without the need for active management.

As a payment system I think cryptocurrency is vastly better; the more I use my hardware wallet, the more I'm horrified by legacy systems that work by giving vendors the ability to withdraw as much as they want. It's a fundamentally insecure system, made sort of workable by layers of hacky mitigations.

In theory, fiat payment could use a hardware wallet that gives vendors the ability to withdraw only as much as specified in a signed transaction. I doubt that'll happen unless crypto is successful enough to drag fiat providers kicking and screaming; in the meantime we could use fiat-backed tokens on a blockchain if governments didn't make that near-impossible with AML/KYC laws.

Reversibility could also be implemented in a token smart contract, if the market really does value that enough to put a central admin in control. So far that doesn't appear to be the case, but maybe just because that market segment hasn't been reached yet.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#142

Post by naveen99 » Mon, Oct 16, 2017, 3:01 PM UTC

neilwilson wrote: post #119

bjarneh wrote: post #45

> Fiat currencies are not “backed by nothing”. They are backed by the labor and assets of all the humans who have obligations to pay in fiat So when we "print" more money, we print more labour?

When you create more money, which banks do every time they issue a loan, you are accommodating more saving in that currency. If you're saving, you're not spending and if you're not spending you are denying other people an income. The alternative is to confiscate savings, or ban them. The bit the mainstream metallists miss is that deposits are a result of loans, not the other way around.

and most loans depend on some collateral as a deposit, some income producing property possibly with a personal guarantee.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#143

Post by ThirdEye » Mon, Oct 16, 2017, 3:02 PM UTC

subroutine wrote: post #64

In the words of Patrick McKenzie's tweet linking to this pdf‏, "Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working". For those singing the praises of cryptocurrency I pose this question: Say the United States decides to allow decentralized cryptocurrencies to become the dominant medium of exchange in the US; say it even gets rid of the $USD. What prob…

It solves the problem of having the US gov print money out of thin air for example.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#144

Post by tptacek » Mon, Oct 16, 2017, 3:02 PM UTC

apo wrote: post #105

subroutine wrote: post #64

In the words of Patrick McKenzie's tweet linking to this pdf‏, "Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working". For those singing the praises of cryptocurrency I pose this question: Say the United States decides to allow decentralized cryptocurrencies to become the dominant medium of exchange in the US; say it even gets rid of the $USD. What prob…

Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working. Most knowledgeable cryto enthusiasts I know already know that fiat currencies work well enough for many people. Folks like McKenzie will see no value in Bitcoin and other cryptos because their money needs are already satisfied. Good for them, but their narrow perspective excludes many valid use cases…

Civil asset forfeiture isn't necessarily, or even usually, dollar denominated. The same mechanism that allows the police to confiscate the $10,000 you kept in a briefcase in the trunk of your care can be, and more often than not is, used to confiscate the car itself.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#145

Post by pvg » Mon, Oct 16, 2017, 3:04 PM UTC

moduspol wrote: post #117

subroutine wrote: post #64

In the words of Patrick McKenzie's tweet linking to this pdf‏, "Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working". For those singing the praises of cryptocurrency I pose this question: Say the United States decides to allow decentralized cryptocurrencies to become the dominant medium of exchange in the US; say it even gets rid of the $USD. What prob…

Well, whether or not it's a problem depends on who you're asking, but: Remember in the first Captain America movie when his first role in the military was on a tour raising money for the war? That was actually a thing at that point in time. You had to actually convince people to invest or give money to fund a war. The USD was tied to gold in the real world and they couldn't just create more. Nowadays, we don't have t…

The US currency was effectively not tied to gold by the time of the second world war:

https://www.federalreservehistory.org/essays/roosevelts_gold...

You only need to take a look at the many other highly intrusive powers the federal government was able to exercise at the time (everything from directing economic production, resource and price control, conscripting large chunks of the population into the war effort to internment of some of its own citizens) to recognize the idea a cryptocurrency would somehow act as a check is far fetched to put it very mildly.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#146

Post by placeybordeaux » Mon, Oct 16, 2017, 3:06 PM UTC

pja wrote: post #115

apo wrote: post #105

Earlier quoted context omitted.

Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working. Most knowledgeable cryto enthusiasts I know already know that fiat currencies work well enough for many people. Folks like McKenzie will see no value in Bitcoin and other cryptos because their money needs are already satisfied. Good for them, but their narrow perspective excludes many valid use cases…

So essentially what you’re saying is that the unique value proposition of BitCoin is that it allows you to make payments that break the law in your jurisdiction. I mean, I agree with you entirely: that is BitCoin’s unique value proposition. It’s just good to see it out on the table.

Yeah as a proponent of bitcoin and cryptocurrencies I think it's important to recognize how they first established value. The only people that really had a self interested reason to use cryptocurrencies are people that were poorly served by the current situation.

Cryptocurrencies create a minimum coverage of ability to conduct financial operations, they are assets that a third party can not freeze, they are assets that a third party can not invalidate. Of course the first use cases will be illegal ones.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#147

Post by golangnews » Mon, Oct 16, 2017, 3:07 PM UTC

apo wrote: post #105

subroutine wrote: post #64

In the words of Patrick McKenzie's tweet linking to this pdf‏, "Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working". For those singing the praises of cryptocurrency I pose this question: Say the United States decides to allow decentralized cryptocurrencies to become the dominant medium of exchange in the US; say it even gets rid of the $USD. What prob…

Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working. Most knowledgeable cryto enthusiasts I know already know that fiat currencies work well enough for many people. Folks like McKenzie will see no value in Bitcoin and other cryptos because their money needs are already satisfied. Good for them, but their narrow perspective excludes many valid use cases…

civil asset forfeiture, capital controls

Bitcoin offers no special protection against this. Your problems would arrive in the real world with guns. See shutdown of exchanges in China.

Black market trading

If your opsec is perfect, maybe. See Ross Ulbricht.

intense privacy invasion by governments

Bitcoin keeps a public record of every transaction, forever. That is trivial to tie to your real world activity, in retrospect. It has not been important enough to do yet, but the data is there and data is already collected on other selectors linked to all online activity.

widespread privacy loss through corporations (Equifax, Verizon)

Bitcoin solves this how? Companies checking credit record will require your real world identity and past records. Why would they want to participate in your crypto-anarchist future?

Pseudo-anonymity is not anonymity, and most of the features you have listed as desirable, people simply don’t want, even if bitcoin could deliver them in a meaningful way for non technical people. For better or worse, they are revolutionary ideas which require a change of laws and government, not a change of tech.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#148

Post by subroutine » Mon, Oct 16, 2017, 3:12 PM UTC

moduspol wrote: post #117

subroutine wrote: post #64

In the words of Patrick McKenzie's tweet linking to this pdf‏, "Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working". For those singing the praises of cryptocurrency I pose this question: Say the United States decides to allow decentralized cryptocurrencies to become the dominant medium of exchange in the US; say it even gets rid of the $USD. What prob…

Well, whether or not it's a problem depends on who you're asking, but: Remember in the first Captain America movie when his first role in the military was on a tour raising money for the war? That was actually a thing at that point in time. You had to actually convince people to invest or give money to fund a war. The USD was tied to gold in the real world and they couldn't just create more. Nowadays, we don't have t…

Seems like a horribly inefficient national defense strategy. A country is on the brink of having a war levied against them by a belligerent, and plead for funds... some are scared for their life and donate their entire savings, others give nothing because they think/know their neighbors will.

Anyway, this is not a primary reason for having fiat money, but it is a reason.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#149

Post by andrewla » Mon, Oct 16, 2017, 3:14 PM UTC

subroutine wrote: post #64

In the words of Patrick McKenzie's tweet linking to this pdf‏, "Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working". For those singing the praises of cryptocurrency I pose this question: Say the United States decides to allow decentralized cryptocurrencies to become the dominant medium of exchange in the US; say it even gets rid of the $USD. What prob…

> Say the United States decides to allow decentralized cryptocurrencies to become the dominant medium of exchange in the US; say it even gets rid of the $USD. What problem do you think this would solve? (assuming the US gov desires to continue all other operations in exactly the same manner as it does currently).

I don't think the second condition "assuming the US gov ..." is compatible with the first. My objections to fiat and my fondness for cryptocurrencies is much more in line with what the slide's authors seem to be saying -- specifically, I feel that it gains in ethics, rather than effectiveness.

The problem that would be solved is that the US government would no longer be able to continue operations in exactly the same manner. Bailouts for failed companies are no longer a given -- the money has to come from somewhere, and if the government comes to your door and says "give me 10 bitcoins so that I can give them to these idiots who lost billions of bitcoins making bets on the real estate market, but they also get to keep the billions they made while those bets were winning", you're going to do your best to vote those people out on their ear. Similarly when it comes to financing a state of perma-war against the very concept of being afraid.

Re: Fiat is Effective: fiat for the crypto crowd [pdf]

#150

Post by subroutine » Mon, Oct 16, 2017, 3:15 PM UTC

jezclaremurugan wrote: post #136

subroutine wrote: post #64

In the words of Patrick McKenzie's tweet linking to this pdf‏, "Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working". For those singing the praises of cryptocurrency I pose this question: Say the United States decides to allow decentralized cryptocurrencies to become the dominant medium of exchange in the US; say it even gets rid of the $USD. What prob…

Its more of a global currency than a US specific one. Speaking from my experience - moving large amounts of money as a student or as someone who wants to send money back home across international borders when one starts earning becomes a pain when it comes to transaction charges, and international payment charges on credit cards etc. Cryptocurrencies can replace USD as a global currency when it gains enough users acr…

Can you not avoid fees by using paypal or venmo for example? I transfer money to my friends and family all the time with no fee using these existing services.