Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

interfluidity.com

Post reply on HN
Print view View original

151–160 of 275 posts

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

#151

Post by baursak »

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…

I think that understanding Modern Monetary Theory (MMT) and viewing bitcoin through that lens helps a lot. Here's a good article from the MMT perspective: http://neweconomicperspectives.org/2013/12/fair-price-bitcoi...

It also helps to understand the history of money and how it came to be in the first place, and how fundamentally currencies and states go hand in hand. David Graeber's "Debt" is good in that sense.

And in case that's not enough, here's JPM's Jamie Dimon's take on it: https://www.bloomberg.com/news/articles/2017-10-13/jamie-dim...

It's also weird how bankers, anarchists, and MMT economists come to agree on this.

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

#152

Post by moduspol »

subroutine wrote: post #148
moduspol wrote: post #117

Earlier quoted context omitted.

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.

Yep. I certainly wouldn't want to go to war asking for donations if the other side can use a pen to put half the value of his country's money toward fighting me.

It's definitely a benefit--it just also has the potential to be abused.

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

#153

Post by dsacco »

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…

> - widespread privacy loss through corporations (Equifax, Verizon)

Bitcoin does not offer a compelling solution for privacy concerns.

Intrinsically, the blockchain is antithetical to this: it stores a record of every transaction. It was not designed to achieve privacy, full stop (unlike, say, Zcash).

Extrinsically, you can use things like tumblers or anonymous wallets, but in practice this relies on trusted third parties (just not orthodox ones) and the reliability of your own personal opsec in the face of centralized parties "bolted on" to the blockchain to hide your activity. Moreover, the easiest way to buy and sell Bitcoin is through companies with extensive KYC requirements, essentially all of whom can and will participate with law enforcement.

Finally, there are already companies crawling the blockchain continuously to develop creditworthiness models they can sell to financial institutions. They are extremely good at uniquely fingerprinting wallets, or wallet activity, to social media profiles elsewhere.

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

#154

Post by dsacco »

tptacek wrote: post #144
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…

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.

I'd like to see a lawyer chime in on the legality of using civil forfeiture laws to compel someone to give up their private key or password. My intuition is that law enforcement would seize literally everything peripherally related to, or capable of transacting in, Bitcoin.

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

#155

Post by subroutine »

placeybordeaux wrote: post #146
pja wrote: post #115

Earlier quoted context omitted.

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 th…

Can you explain something to me- say I wanted to transfer the equvalent of $5 USD to someone using bitcoin. How do I transfer that amount when one coin is worth $5000? If it requires having coin on an exchange is that not a 3rd party? And would it be impossible for them to freeze coins in that wallet?

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

#156

Post by moduspol »

pvg wrote: post #145
moduspol wrote: post #117

Earlier quoted context omitted.

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…

But they had to exercise those powers, which themselves had significant political costs since they were explicitly seen and felt by the population.

Now compare that to the wars in Iraq and Afghanistan, or Syria. The difference is clear.

Besides, cryptocurrencies have a property gold doesn't: They take up no physical space and even huge quantities can be hidden easily and/or lost forever. If your government became oppressive, you couldn't take your life's savings in gold and leave the country. They could feasibly confiscate your gold [1] in a way they can't with crypto.

They can still point guns at you, conscript you, or imprison you, but their options are lot more limited with crypto.

[1] https://en.wikipedia.org/wiki/Executive_Order_6102

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

#157

Post by pvg »

moduspol wrote: post #156
pvg wrote: post #145

Earlier quoted context omitted.

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…

But they had to exercise those powers, which themselves had significant political costs since they were explicitly seen and felt by the population. Now compare that to the wars in Iraq and Afghanistan, or Syria. The difference is clear. Besides, cryptocurrencies have a property gold doesn't: They take up no physical space and even huge quantities can be hidden easily and/or lost forever. If your government became opp…

I don't see the difference or understand what the difference is supposed to be or the rest of your argument at all, really. First you said something inaccurate about the gold standard on the basis of a comic book movie. Now you're saying what exactly?

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

#158

Post by emiliobumachar »

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…

Cryptocurrencies would indeed preclude printing money.

>that money might simply be borrowed

...but I don't think any cryptocurrency would have any effect on any government's hability to borrow money. What would stop a lender from trading 1 BTC from a note saying "I.O.U. 1 BTC"?

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

#159

Post by cryptodogemoon »

zeroxfe wrote: post #103
cryptodogemoon wrote: post #50

Earlier quoted context omitted.

Volitilty will be inherent with bitcoin, and any blockchain database where the supply has been distributed for low computational/energy/capital input to the small pool of users who aquire majority stake in the total supply, thus devaluing any long term inherent store of value. additionally, bitcoin and the exchanges can rapidly plummit to zero if and when there's a run to get out as the value requires demand from ano…

> Volatilty will be inherent with bitcoin... majority stake... You're making a strong claim here -- and I think this applies to any scarce resource. Why is bitcoin different from, say, gold? > additionally, bitcoin and the exchanges can rapidly plummit to zero if and when Here too -- how is that different from any other traded instrument?

The production curve Satoshi designed was to produce the largest supply of Bitcoins for the least amount of effort/resource input to the smallest group of users running the software. Half of the supply was produced this way in the first few months.

Blockchain and Bitcoin is different than physical resources because it's so easily produced.

Crypto tokens are different from other traded instruments because of the exchanges they're traded on are unregulated exchanges which can easily manipulate prices, fake orders, front run, or entirely falsify their deposits until there's run on the withdraws.

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

#160

Post by emiliobumachar »

DennisP wrote: post #141

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 th…

I think that feature could be summed up as:

With criptocurrencies, if your software and opsec are good, you're a lot less vulnerable to identity theft and overcharges.

Post reply on HN