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

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

#251

Post by mcguire » Mon, Oct 16, 2017, 10:07 PM UTC

urza wrote: post #19

So the argument basically comes down to that crypto is too volatile and not usable as unit of account? 1. Crypto is still in its initial stage, where capital is flowing into it. Once it is there, it will be less volatile. You can already see this in Bitcoin[1], where relative volatility is dropping every year. 2. There are projects coming that will enable decentralized trustless peg of fiat currencies into blockchian…

"And as author admits fiat is terrible as "store of value" - so with this combination - fiat pegs in blockchain for accounting and native crypto as store of value (keep bitcoin for your grandchildern instead of dolar that looses 95% value over century), it might be the best combination of both worlds."

Why do you want a long-term "store of value"?

Buy your grandchildren a pleasant mixture of diversified stocks and bonds---they and the economy will be better off.

Or, buy your grandchildren gold; it's had a much longer track record as a store of value and is prettier to look at while it is value-storing.

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

#252

Post by mcguire » Mon, Oct 16, 2017, 10:08 PM UTC

matt4077 wrote: post #54

urza wrote: post #19

So the argument basically comes down to that crypto is too volatile and not usable as unit of account? 1. Crypto is still in its initial stage, where capital is flowing into it. Once it is there, it will be less volatile. You can already see this in Bitcoin[1], where relative volatility is dropping every year. 2. There are projects coming that will enable decentralized trustless peg of fiat currencies into blockchian…

> keep bitcoin for your grandchildern instead of dolar that looses 95% value over century Whereas bitcoin has a proven track record of almost a decade of... existence? Anyway, why would anybody preserve value in cash over those time scales? The alternative isn't bitcoin or US$ or gold, it's stocks or bonds or real estate or fuck them let's spend it on blow.

"The alternative isn't bitcoin or US$ or gold, it's stocks or bonds or real estate or fuck them let's spend it on blow."

This is the true question.

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

#253

Post by dragonwriter » Mon, Oct 16, 2017, 10:12 PM UTC

urza wrote: post #19

So the argument basically comes down to that crypto is too volatile and not usable as unit of account? 1. Crypto is still in its initial stage, where capital is flowing into it. Once it is there, it will be less volatile. You can already see this in Bitcoin[1], where relative volatility is dropping every year. 2. There are projects coming that will enable decentralized trustless peg of fiat currencies into blockchian…

Being a terrible store of value is a good thing in a currency, because the encourages investment in actual productive assets as a store of value.

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

#254

Post by dragonwriter » Mon, Oct 16, 2017, 10:16 PM UTC

quincunx wrote: post #101

jbrun wrote: post #85

Earlier quoted context omitted.

No, that is not at all the argument. The argument is that you cannot have an economy run on a deflationary currency, which bitcoin is. An effective economy requires a bit of inflation and the ability to issue new money when necessary for socio-political reasons. Crypto currencies are a cult, though the underlying tech is interesting.

While I understand the desire to have 2% inflation across the economy, wouldn't the individual parties prefer to hold their cash in a deflationary currency? Put differently and going fast forward; how can you have a mildly inflating currency (eg. EUR) when there's a deflationary currency (eg. BTC) as a viable alternative around? Would you propose we prohibit crypto currencies? (What would you propose?)

> wouldn't the individual parties prefer to hold their cash in a deflationary currency?

Net (currency-denominated) creditors would.

Net (currency-denominated) debtors would prefer inflation-adjusted currency.

Those whose significant assets and obligations are not currency-denominated (e.g., who own mines or are committed to deliver commodities) don't really care, directly.

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

#255

Post by mcguire » Mon, Oct 16, 2017, 10:20 PM UTC

ttoinou wrote: post #137

sek wrote: post #61

Earlier quoted context omitted.

It is believed to be the primary reason for the great depression. https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression Deflation or Hyperinflation on the other side is nothing compared to the crises we have today. They are both a path for disaster, this is the primary fear of economists. Good explanation: https://www.quora.com/Why-is-2-the-ideal-inflation-rate

I hoped for a logic rationale, not an interpretation of an historic fact :(

Let's suppose that today, a dollar will buy you a loaf of bread. Tommorrow, though, you have a very strong expectation that a dollar will buy you two loaves of bread, and it seems likely that next week a dollar will buy you a Lamborghini Countach.

What do you do?

1) Spend the least amount of money today that you can to continue living and put the rest under your mattress?

2) Anything else.

Being rational, you choose one. Now magnify this by every other rational actor in the area affected by deflation.

You can no longer buy bread because the grocer decided not to spend his money on new stocks. You no longer have a job because your employer would rather have your wages than your work. The widget factory expansion gets canceled because no one will loan the company money to pay for it.

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

#256

Post by [deleted] » Mon, Oct 16, 2017, 10:55 PM UTC

[deleted]

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

#257

Post by rphlx » Tue, Oct 17, 2017, 1:21 AM UTC

rothbardrand wrote: post #196

simias wrote: post #192

Earlier quoted context omitted.

>suppose we were starting from scratch "What-ifs" are always an interesting game but practically we're veeeery far from starting from scratch with the economy. But okay, I'll play. >user signs transactions that authorize transfers with specific recipients and amounts Great, but you've only secured one tiny part of the "earn money/spend money" loop. What if the service/goods you buy turns out to be a scam or something…

That's not the whole argument, by a long shot. The dollar has lost %99.99 of its value, and in my opinion has had %100 inflation in the past 10 years (not each year but over the decade) so is effectively half as valuable again. This is theft from the people. Even Keynes recognized this. Bitcoin is an exit from that system. It has lot of other features like the ability to send money across borders which is harder to s…

> dropping bombs on brown people. That's the vast majority of where the money goes.

Military spending is about 7% of the Federal budget. But roughly 50% is used for social transfer payments, which is - to keep your phrasing - a net transfer of money to brown people, including ones who are not even US citizens. Of course it's also a substantial transfer to relatively asset-rich, old, white people via social security and medicare. In any event the claim that US military adventurism is a primary or majority use of tax receipts is simply wrong.

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

#258

Post by rphlx » Tue, Oct 17, 2017, 1:34 AM UTC

jbrun wrote: post #170

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…

We had privately created money in Europe for centuries. It was a disaster.

I would strongly disagree with that characterization. The bank note system - the major form of private money - worked reasonably well for centuries in Europe, evolving into the check clearing systems that virtually every first-world nation has today.

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

#259

Post by [deleted] » Tue, Oct 17, 2017, 1:48 AM UTC

amyjess wrote: post #219

rothbardrand wrote: post #200

These arguments against bitcoin have been the same since 2010. They seem to ignore the point of bitcoin (it is impossible to counterfeit, unlike fiat which is counterfeited as a matter of course by the central bank to pay the federal government so it can buy bombs).... and all the features of bitcoin which are increased privacy, better control over your funds, better security, etc. At any rate, the past 7 years has s…

> it is impossible to counterfeit, unlike fiat which is counterfeited as a matter of course by the central bank to pay the federal government so it can buy bombs And it's inflammatory rhetoric filled with hyperbole and straight-up falsehoods like this that puts the bulk of the population off of Bitcoin. > and all the features of bitcoin which are increased privacy, better control over your funds, better security, etc…

[deleted]

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

#260

Post by rphlx » Tue, Oct 17, 2017, 2:31 AM UTC

pja wrote: post #116

Spivak wrote: post #111

Earlier quoted context omitted.

Current situation: Government takes your money and you must sue to get it back. Crypto: Government is incapable of taking your money and must prosecute in order to coerce you to turn it over. And you could still refuse and accept your jail time. Edit: People replying to me are missing the point. This is about the case where the government is wrongfully taking your money. Under the current system your money can be sei…

And you could still refuse and accept your jail time. In most jurisdictions (including the US) the sanction for contempt of court is potentially unlimited: the convicted individual may find that they are only freed when they comply with the court’s requirements. IOW, good luck with that.

My understanding is that in general under current law a US citizen cannot be held in contempt or put in prison indefinitely for failing to disclose a password. The 5th ammendment protection there is not entirely void, but it can be void under certain specific circumstances (such as the "foregone conclusion doctrine", where LE can prove that specific illicit content both exists, and can be decrypted, by the accused).