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The political case for a blanket cryptocurrency ban

stephendiehl.com

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Re: The political case for a blanket cryptocurrency ban

#351

Post by samatman »

lmilcin wrote: post #241
DickingAround wrote: post #53

This article seems to intentionally ignore the core reason for cryptocurrencies; escaping inflation and control. The article then proposes to use the law to bring those people back within the control of fiat and government oversight. I no longer think the environmental argument is really plausible here. Clearly crypto mining is emitting using a lot of power and some of that is CO2. But the competition is fiat; backed…

> Clearly crypto mining is emitting using a lot of power and some of that is CO2. All of it is CO2. Let me explain. When you burn energy for bitcoin mining, you don't just use capacity of your local energy producer, you are delaying removal of legacy power producers. Before a particular power producer (for example burning coal) can be turned off, the capacity must be created from other sources (for example renewable)…

This is the lump of labor fallacy applied to energy, let's call it the lump of energy fallacy.

Increased demand for energy brings more energy supply into the market. New energy is mostly renewable energy.

Old plants are shut down when they are unprofitable. That can be because they're inherently too expensive to run, because the carbon inputs are being taxed too heavily (I think this is a good one), or because the governing body controlling the physical location of the power plant has declared them illegal (since you can't profitably sell something you're forbidden from selling).

I'm not making the "Bitcoin is good because it drives renewable energy investment" argument, which is too handwavey for my taste. I'm saying your argument is incoherent.

Reducing carbon emissions from power plants is mainly about pricing the externality they generate. Cryptocurrencies, in fact, any application for that generated power, neither harm nor help achieve that outcome. It's irrelevant special pleading, and it's a distraction from this urgent goal.

Re: The political case for a blanket cryptocurrency ban

#352

Post by samatman »

2421n wrote: post #260
smeej wrote: post #158

Earlier quoted context omitted.

This is such an underappreciated point. U.S. dollars are backed by violence. Bitcoin is backed by math. I don't know what you want backing your money in the world you hope to leave for future generations, but I know what I want backing mine.

And if I force you to give me your decryption keys or make a transfer at gunpoint, will the math still protect you?

Prevention of domestic crime and violent projection of power in international affairs are unrelated uses of the sovereign monopoly on force.

It is reasonable to object to USA's use of the latter while enjoying the benefits of the former. Indeed I do so.

Re: The political case for a blanket cryptocurrency ban

#353

Post by notahacker »

seibelj wrote: post #325
notahacker wrote: post #266

Earlier quoted context omitted.

Deflation by definition implies means that stuff will be worth less in future than it is now. This is bad for investors and producers spending money now in the hope of earning more money in future. On the other hand, simply holding onto cash is risk free, and that cash will have increased purchasing power in future (at the expense of the producers forced into offering lower prices to get money circulating again) An e…

On the contrary, inflation forces you to buy products and invest in things you don't necessarily need, in order to escape the intentional destruction of your wealth. In a world where we are trying to avoid mindless consumption, inflation encourages that. Deflation doesn't discourage investment and consumption. You still need to eat, have shelter, and pursue happiness. It increases the bar at which you will part with…

> Deflation doesn't discourage investment and consumption...it increases the bar at which you will part with your money

Euphemistically rephrasing something is not a refutation. Inflation does not make investment decisions "mindless", but deflation does make the average risk adjusted return on an investment negative.

> It increases the bar at which you will part with your money, as merely holding it has a high level of return. This is a superior system to me.

The "high level of return" is at the expense of people who are not freeloading, who are forced to create this return for others by making more stuff for less money. Why is it superior for the monetary system to be designed to reward those who put in no effort and take no risks at the expense of those who do?

Re: The political case for a blanket cryptocurrency ban

#354

Post by biolurker1 »

lmilcin wrote: post #287
DickingAround wrote: post #53

This article seems to intentionally ignore the core reason for cryptocurrencies; escaping inflation and control. The article then proposes to use the law to bring those people back within the control of fiat and government oversight. I no longer think the environmental argument is really plausible here. Clearly crypto mining is emitting using a lot of power and some of that is CO2. But the competition is fiat; backed…

There is no "core" reason for cryptocurrencies. This is romantic bullshit perpetuated by people invested in it. The reality is, as I have predicted long ago, if bitcoin becomes large portion of worlds financial flow it will just be taken over by financial institutions and perverted for their use. These guys have much more experience at this (ie subverting financial systems) than you can imagine. Bitcoin is not going…

Have you ever taken a step back and realizing how much hate is there in your speech and why is it so?

Re: The political case for a blanket cryptocurrency ban

#355

Post by alkonaut »

keiferski wrote: post #125

The hullabaloo over Bitcoin’s environmental cost is a classic example of people focusing on things that are easily visible and being totally oblivious to ones that are unseen or not obvious. What is the energy cost of the current currency system and the political structure that keeps it in use? I’m going to guess that it is significantly higher than Bitcoin. That’s not even mentioning Proof of Stake, which will essen…

Even making that comparison suggests that there is a situation in which cryptocurrency is effectively and widely used as currency side by side with fiat.

I don’t see that ever happening. I don’t think governments can (or should!) give up that much control over the financial system.

And this argument actually reaches back to prove itself: since crypto will always be used for speculation and not fill a useful role in transactions, all the energy used is effectively wasted!

Re: The political case for a blanket cryptocurrency ban

#356

Post by dia80 »

atwebb wrote: post #345
abakker wrote: post #195

Earlier quoted context omitted.

I never understand the counter-inflation argument...most economists understand inflation is something to be managed, but it is far from proven that target inflation is bad. There are many useful economic properties of inflation. Meanwhile, Bitcoin has undergone such massive speculative appreciation that everything around it has deflated in comparison. As a result, bitcoin is spectacularly less useful than it would ha…

Things brings up a side point I can't quite understand. How does the price of BTC, which is almost infinitely divisible, affect usage? I see comments like "We're early, price can still rise, etc". Outside of a store of value any usage / institutional use for transactions wouldn't matter right? The BTC is a proxy for the money / collateral on the sides. If I buy a hamburger with BTC: If it is settled in BTC then the b…

Deflation. The price of the burger in BTC has largely been falling. Why spend your appreciating* bitcoins when they will bu worth more tomorrow. If the price is stable this effect goes away and you might as well spend them.

* Who knows if this will continue

Re: The political case for a blanket cryptocurrency ban

#357

Post by saalweachter »

tome wrote: post #281
saalweachter wrote: post #265

Earlier quoted context omitted.

Looks like 0.8 tonnes / troy oz? https://www.spglobal.com/marketintelligence/en/news-insights... Given 3000 tons of gold mined per year, that should be roughly 70 megatons of CO2 / year. [I am pleased to report that this falls squarely in my previous estimate of 30-150 megatons / year that was based on the cost to mine gold, the cost of fuel, and the CO2 emitted by fuel.]

- Fossil CO2 Emissions (2016) 35,753 megatons globally - so gold mining is 0.2% of global CO2 emissions!? - Bitcoin mining energy use is at least 78TWh annually - 480-500g of carbon dioxide produced for every kWh consumed - So mining bitcoin produces 40 megatons of CO2 per year, which is the same order of magnitude of gold mining. - And mining bitcoin is 0.1% of global CO2 emissions (I would be grateful if someone wo…

> so gold mining is 0.2% of global CO2 emissions!?

Looks like iron & steel is 7.2%. Non-ferrous metals are listed at 0.7%, so gold is ~1/3 of the CO2 of non-ferrous metal production.

Paper ("and pulp") is 0.6%.

https://ourworldindata.org/emissions-by-sector

Re: The political case for a blanket cryptocurrency ban

#358

Post by anm89 »

This stuff really doesn't warrant a response. Simply say "good luck banning it".

There are a large complicated set of reasons why it isn't going to happen but the proof of this is that many governments have many reasons theyd love to ban crypto but they don't because in the end they perceive it to be either an economic or political loss and can't make it happen.

Anyway, this isn't keeping me up at night.

Re: The political case for a blanket cryptocurrency ban

#359

Post by andreilys »

DickingAround wrote: post #53

This article seems to intentionally ignore the core reason for cryptocurrencies; escaping inflation and control. The article then proposes to use the law to bring those people back within the control of fiat and government oversight. I no longer think the environmental argument is really plausible here. Clearly crypto mining is emitting using a lot of power and some of that is CO2. But the competition is fiat; backed…

And if you want to contest ownership there's no one to invade, no one to attack; the best you can do is make a fleet and try to mine

No one except for the owners of major BTC mining operations.

If a state actor, such as China, was motivated enough to identify, capture and coerce these miners it would be pretty easy to perform a 51% attack given that China accounts for around 65% of all bitcoin mining globally.

Re: The political case for a blanket cryptocurrency ban

#360

Post by samatman »

biztos wrote: post #251
thorwasdfasdf wrote: post #155

>> "Bitcoin is the textbook speculative mania for our time" This misses the point of bitcoin entirely. People need to understand Bitcoin solves a problem: a very big problem. This problem was caused by the gov and fed defaulting on it's obligation to maintain a stable currency. As a result, cash can no longer be used as a store of value. And by artificially suppressing interest rates, the fed/gov has eliminated yet a…

Sure, people are using Bitcoin as a store of value, but I think a lot of those people think it will just keep going up. Which is not a super rational thing to believe about an asset whose value has no relation to anything in the real world, and nothing to prop it up but the people who believe the same thing. Bitcoin is up something like 800% for the year. It might be up another 800% in six months! Or it might go down…

It's also not rational to believe that a sovereign currency which is backed only by government fiat cannot crash due to inflationary spirals.

After all, if it should happen to be the case for the currencies we all use right now, it would be the first time that this experiment, which has been tried often enough throughout history, hasn't ended in that particular way.

We've put all our eggs in that basket, and it's working... so far!

I'm glad there's a hedge against that outcome though. If the worst happened, and the debt balloon triggers ECB, the Fed, and their Asian cousins, to initiate hyperinflationary money printing, we'll all be grateful that there's an alternative to going back to shipping convoys protecting boats loaded up with gold and silver.

I don't even think the aforementioned hyperinflationary spiral is inevitable, or even more likely than not. But I repeat, it is irrational not to consider it a real risk, given history, and that outcome would lead to immeasurable human suffering, which cryptocurrencies cannot prevent, but can at least ameliorate.

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