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

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

#91

Post by DennisP »

namelost wrote: post #76
soniman wrote: post #66

Earlier quoted context omitted.

You're right, I have no idea when the top is going to be. My point is that bear markets have a very different feel and can be emotionally devastating if you're in the middle of one and bitcoin has not been through that and made it to the other side. Are the bitcoin boys ready for that? Because it's coming, sooner or later.

The exact sequence of events you are describing happened between 2013-2016 when Bitcoin fell from a hype induced >$1000 to (at its lowest) $200, and didn't rise above $1000 until this year. It clearly did not kill Bitcoin, and Bitcoin won't die if the same thing happens again.

And before that, it hit a high of $31 and crashed to $2, and slowly recovered to $13 over the next year.

Ethereum crashed from $21 to $7 last year after the DAO theft. A couple months ago it went from $420 to $130.

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

#92

Post by ahakki »

littlestymaar wrote: post #5

For anyone interested in understanding what money is, and the downside of commodity money without a central bank, Allyn Young wrote this[1] in 1924[2]. It talks about the gold standard, bi-metalism and decentralized banking that was taking place in the US in the XIXth century. [1] https://fr.scribd.com/document/251483136/The-Mystery-of-Mone... [2] it's just 11 years after the creation of the Fed. He had a good unders…

I can’t read the whole story without paying money. Is there a link to a free version?

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

#93

Post by dullgiulio »

sp4ke wrote: post #77
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…

Patrick McKenzie is fortunate enough to not be born in a country that is currently suffering from hyper-inflation neither is he living under a dictatorship that is putting capital controls and deciding how he should use his hard earned money .... yet :) In other words, "the rest of us" of Patrick's folks do not represent the people for whom crypto is a necessity and not a luxury. So if money is already working for yo…

Yeah but when that happens you probably look for weapons, not GPUs :)

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

#94

Post by wyager »

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…

The USD is probably the most well-behaved fiat currency of the last century, so that’s basically the least interesting example, but:

USD is inflationary. Ceteris paribus, a rational actor would generally prefer to hold something deflationary. The (epsilon-) no-arbitrage argument suggests that the frequently raised “but then no one will ever invest in things” objection doesn’t actually make any sense.

USD is highly controlled (but not by you). This is a technical and legal issue, not a fundamental problem with fiat currencies in general, but it’s impossible to ignore. Bitcoin sidesteps it entirely. What actually drove me to try Bitcoin is when a paperwork error by the state comptroller led to them withdrawing several thousand dollars from my bank account with no warning. I eventually got it back when they realized they made a mistake, but Wells Fargo still charged me “legal fees” and the realization that I really didn’t have control over my money was uncomfortable. With bitcoin I can use my money however I want, whenever I want, and no one else can. No paperwork, no ACH/fed clearing, no delays, no surprise fees, no one stealing money out of my account with impunity. That’s only the tip of the iceberg for how much the legacy financial system sucks, and most of it can’t be fixed with a software upgrade.

Fiat could theoretically work as well as bitcoin in terms of convenience and reliability, but it never does in practice and there’s no way to avoid governments instituting worse policies later on.

I also don’t think most Bitcoin supporters want the government to get rid of USD. It’s about adding choice, not forcing everyone to do something different.

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

#95

Post by mbrock »

DennisP wrote: post #86
mbrock wrote: post #59

Earlier quoted context omitted.

I would rather bear the greater volatility of holding the underlying cryptocurrency, and get to enjoy the upside potential, than hold a stable value coin that has no potential to appreciate and a greater than zero probability of going to zero. That's about what kind of risks and rewards you want for your investments or savings. If you consider the unit of account for a debt, it seems unlikely that you'll have the sam…

What's the best introduction to the Maker system? Something that explains clearly how the current design works.

A pretty good introduction would be the three videos linked on https://makerdao.com/ (overview, how dai works, and how MKR works).

The current revision of the white paper should lay out the motivation and mechanics of the system without being too verbose:

https://github.com/makerdao/docs/blob/master/Dai.md

If there's something about it that doesn't make sense to you or seems poorly explained, let me know, or you can join the chat/subreddit to discuss.

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

#96

Post by pjc50 »

wyager wrote: post #94
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…

The USD is probably the most well-behaved fiat currency of the last century, so that’s basically the least interesting example, but: USD is inflationary. Ceteris paribus, a rational actor would generally prefer to hold something deflationary. The (epsilon-) no-arbitrage argument suggests that the frequently raised “but then no one will ever invest in things” objection doesn’t actually make any sense. USD is highly co…

> paperwork error by the state comptroller led to them withdrawing several thousand dollars from my bank account with no warning

It's a good job that the computer you store your bitcoin on never has any security issues.

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

#97

Post by TeMPOraL »

dullgiulio wrote: post #93
sp4ke wrote: post #77

Earlier quoted context omitted.

Patrick McKenzie is fortunate enough to not be born in a country that is currently suffering from hyper-inflation neither is he living under a dictatorship that is putting capital controls and deciding how he should use his hard earned money .... yet :) In other words, "the rest of us" of Patrick's folks do not represent the people for whom crypto is a necessity and not a luxury. So if money is already working for yo…

Yeah but when that happens you probably look for weapons, not GPUs :)

Civil war of the future: everyone already having GPUs for cryptocoins, the resistance will offer "Freedom Coins" in exchange for lending compute via mesh networks for purpose of guiding DIY drones and missiles.

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

#98

Post by littlestymaar »

ahakki wrote: post #92
littlestymaar wrote: post #5

For anyone interested in understanding what money is, and the downside of commodity money without a central bank, Allyn Young wrote this[1] in 1924[2]. It talks about the gold standard, bi-metalism and decentralized banking that was taking place in the US in the XIXth century. [1] https://fr.scribd.com/document/251483136/The-Mystery-of-Mone... [2] it's just 11 years after the creation of the Fed. He had a good unders…

I can’t read the whole story without paying money. Is there a link to a free version?

Oh really ? I just googled it up quickly and found this link.

I uploaded a PDF containing the full version here https://framadrop.org/r/Awpt0Pvlax#17V8BZqBeYZgyzW5F0WOXwDop... (will only live for 60 days though).

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

#99

Post by psandersen »

thisisit wrote: post #10

On page 4/5 this presentation says: >this might not be true of a sufficiently credible Tether-like stablecoin whose value is pegged to a fiat currency, but there the crypto is piggybacking on the effectiveness of the fiat. I was intrigued by this Tether thing and ended up on the site: https://tether.to/ It says: > Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always…

Just checked the page, does Tether really have $437,346,130.08 USD? Site just doesn't look like what you'd expect from something that big, doesn't feel right.

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

#100

Post by irln »

subroutine wrote: post #70
littlestymaar wrote: post #68

Earlier quoted context omitted.

I don't think cryptocurrencies are a solution to anything, but saying that the current system is «working» is dubious to say the least: the Fed has been controlling the money supply by targeting low inflation but the money supply grew much quicker than growth nonetheless (probably linked with the decline in money velocity, probably caused by the concentration of wealth. Disclaimer, this is a personal interpretation,…

What do you think the Fed was attempting to do? Or let me put it another way - it sounds like you are advocating there be no way for an agency of a democratic government to dynamically adjust money supply (or interest rates). Say we went all-in on crypto and 10-years-in for whatever reason the crypto supply generation rate we set a decade ago wasnt working (the US economy was crumbling). What then? This is an honest…

Not advocating for or against the fed or advocating for or against crypto currency but instead attempting to answer your three main questions.

> What do you think the Fed was attempting to do? The Fed was attempting to save a system from complete collapse.

> it sounds like you are advocating there be no way for an agency of a democratic government to dynamically adjust money supply (or interest rates)

This is the crux of the problem. Modern societies need currency and yet the management of the supply of that currency that is equitable to all participants remains illusive.

> Say north korea suddenly waged total was on US, or a massive natural disaster happens, but the government didnt have huge reserves of money to pay for defense or aid?

The government would use its existing resources, any reserves they put aside for this type of contingency or they could borrow (e.g. bonds) the necessary funds.

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