Sure, but what real-world problem does a trustless solve? I thought this was all very interesting years ago but now that we’ve had blockchain for years it seems it’s only good for illegal or morally questionable transactions.
See I think more nuanced takes like this are good. I’m not familiar with the Chinese banking issue that you are describing, but it sounds like deposit insurance (like the FDIC) might be a better solution than cryptocurrency, and it’s definitely better understood. Since the real world value of cryptocurrencies are so volatile they are a questionable store of value, and taking a risk on a poorly regulated bank might be better than taking a risk on storing your money in a volatile and unregulated security like cryptocurrency. Honestly it’s hard to know which is the better risk. So it could be better or it could be worse.
I agree with your point about transferring money internationally, and even within the US transferring money used to be a real pain. So I’m still interested to see if cryptocurrency can be a better medium of exchange or medium of transfer than traditional ways, or at least give traditional systems incentive to improve. But again the volatility is a concern so for most people the best move is probably to get in and out of the crypto market as quickly as possible or else risk getting a vastly different amount of money out of it than you put in. Admittedly it could appreciate, but when I’m transferring money to someone I don’t want that to simultaneously be an investment. The few times I have used Bitcoin to purchase something the whole process has taken hours, and there’s no guarantee there won’t be price swings — a lot could happen in those hours.
I appreciate the brutal honesty about cryptocurrency not being for the average Joe. It’s not that long since many cryptocurrency boosters were hoping it would replace fiat currency, but now that I think about it I haven’t heard as much about that recently. In its current state it is really not for the average Joe.
Legal money transfers are not a use case. Crypto is simply much more expensive to maintain. All these mining rigs and all that electricity must be paid for.
If it seemed cheaper, then either:
the banks were charging inflated fees. That can be fixed only once. (And it should have been fixed by government). ETA: Doesn’t work, after all. It can only be the other 2.
It was masked by price fluctuations. Eventually, someone else must pick up the tab. Can’t work long-term.
Costly regulations/taxes were dodged.
Under the spoiler is something I wrote recently to explain how crypto is not like stocks.
spoiler
Let’s look at how stocks get their value.
A company sells shares to get funding. Say, you want to make microwave dinners. You need to hire people, an industrial kitchen, packaging and packaging machines, ingredients, and probably a whole lot more. The company takes in revenue from selling the dinners, which pay for the running costs. Anything above that may be reinvested or turns into profit. The profit is paid to the stock-owners to pay them for their investment.
Now the question is: What is the value of a stock?
Imagine you take out a loan. That gives you money right now, in the present. You pay back the loan with the money that you get from your stocks; your share in the profit. Now imagine that the company goes out of business (and the value of the stock becomes $0) right as you are done paying back the loan + interest. Then that loan was the present value of the stock.
In theory, the value of a share is the present value of the future money that you get paid. Of course, one cannot know how much that is, so this is useless for actual investing. Still, the market price of a share should be the best guess of people with money. If the stock is trading higher than someone’s guess, they sell. If it’s lower, they buy. So the market cap should reflect the future profits.
But what’s the value of a crypto-coin like bitcoin?
Let’s start by thinking only about a coin being used to transfer money. And to make it easier, let’s say that coins are only exchanged for money once a day.
Say people want to transfer 10 million USD each day. The senders buy coins for 10 million USD. They don’t care how many coins that gets them, only that the coins represent 10 million USD. If there are 2 million coins being sold on the market, then each coin must transport 5 USD and that will be the market value.
New coins are constantly being “mined” to pay for the upkeep of the system. Let’s say that’s 100,000 coins per day.
The intended receivers of the 10 million USD sell their coins to get the money. The miners also sell their coins to pay their bills. So the next day you have 2 million + 100,000 coins on the market. The senders again want to transport 10 million USD, so they buy the 2,100,000 coins on the market. The market value of a coin is now ~4.76 USD. Adding more coins lowered the value of the coins. That is inflation. The “missing” money goes to the miners to keep the system running. That’s not a problem for senders and receivers. Transferring money costs money, however you do it. (That crypto is an extremely expensive way to do this, is one underlying reason why it has no adoption as a payment system in the normal economy.)
So far, you wouldn’t expect anyone to store or “hodl” coins. The value is just going down. But obviously, this is only true as long as the amount of USD to be transferred stays constant. If the system is more widely adopted and more money is transferred (outpacing the inflationary effect of the newly mined coins), then each coin has to transport more USD and the “value” goes up.
Now, if you believe that adoption continues to grow, it becomes a reasonable strategy to stash some coins to sell them later at a higher “value”. Maybe the problem is already obvious, but let’s continue to take it slow.
So, let’s say, it’s a bit later. There are 15 million coins and they are to transfer 100 million USD. The market price of a coin is now $6.67. (Let’s also say that there are no more coins being mined and the upkeep is paid some other way.) Now we bring in some venture capitalists. One day, they buy coins for an additional $50 million. Now the coins trade at $10 per coin. 15 million coins bought for $100 million + $50 million, right?
The VCs now have 5 million coins. But note where the money went. It went to the transfer receivers when they sold the 15 million coins for $10 each. They got a windfall profit. That’s how it goes in crypto. All the money that people “invested” by buying coins is gone. It was either used to pay miners/for the system upkeep, or early adopters took it and ran. It’s all gone. That’s the big difference to shares.
If the VCs sell their coins again, they lose. Because when there is only 100 million USD in the market for 15 million coins, they would only get 6.67 USD per coin. The money that they spent is gone. If they want to make a profit, new money has to come from somewhere. There are only 2 ways to achieve this.
One is continuing adoption. If more money were to be transferred, with the same number of coins, the price goes up. They can siphon off some of that money by selling into that market. But that lowers the price again, so that only yields a profit if adoption increases enough.
The other is that someone else also removes coins from the market. If there are fewer coins for the same (or a decreasing!) amount of money being transferred, then the market price will also go up. (In this scenario, too, they would be siphoning off money that other people are trying to transfer. The cost of transferring money would be increased for no very good reason; not a great feature in a payment system.) But note that this, too, lowers the price again. That only yields a profit, if “hodlers” sequester the coins sold by the VCs for a higher price than the VCs paid.
I’m not saying this is a Ponzi scheme because everyone has heard that already.
So that’s it. If you want to know the effect of 50k bitcoin on price, you need to look at the trading volume (minus wash trades): How many bitcoin are actually “in use”? You also need to know how many of these coins will be promptly removed from the market by “hodlers”.
Legal money transfers are not a use case. Crypto is simply much more expensive to maintain. All these mining rigs and all that electricity must be paid for.
Various currencies are moving away from the proof-of-work model, FWIW. Ethereum was mentioned in this comment chain as one of them.
Which doesn’t solve the economic problem. (Good for the environment, though)
Ethereum has proof of stake. That means someone has to deposit Ethereum, tying it up. It could be exchanged for money and invested in stocks or bonds, yielding a return. This is only economically feasible if the stake yields the same return as a comparable investment. This profit has to come from the users.
A competing payment system, based on sensible, modern technology also needs computers and the internet but not a stake. It must be cheaper.
The stake is supposed to keep people honest, because it can be taken if fraud is detected. Normally, fraud is dealt with by putting the perpetrators in jail. Being known by name is proof of stake.
Users have to pay extra just so that some kingpins in the back can remain anonymous. Do you want to for that?
It also doesn’t solve the other deal-breaker (in the spoiler). Whenever you transfer money through crypto, you risk that some “investor” siphons off some of it.
There’s a case to be made for a currency that facilitates illegal transactions, or transactions that corporations object to. Just because something is legal in your country doesn’t mean it might not be unjustly restricted. Or could just be unjustly illegal in your country or another country. The problem of course is that distributed currency also facilitates things that should be illegal.
But WikiLeaks is a good example - their legacy is a little mixed now, but when they first came on the scene they were doing work which was a valuable service to the public. If you wanted to donate money to support wikileaks you couldn’t because the credit card processors shut them off. Blockchain lets you get around that.
Likewise it’s the combination of distance and direct - I can give $5 in cash to my local leaking consortium, but I can’t give $5 to the leaking consortium on the other side of the world without relying on the knowledge and consent of third parties.
I agree there’s something to be said for this — If you have a above-board business that credit card companies don’t want to service because they think it makes them look bad, that should not shut you out of electronic payments yet that’s basically where we are at least in the US.
This is a little hard to balance with the fact that the same things that let you circumvent gatekeepers like credit card companies also make it attractive for genuinely immoral things, but that’s a trade-off. Every currency can be used for immoral things and just because cryptocurrency might make it a little easier doesn’t mean it’s inherently immoral.
Mailing someone cash means you need to know their address, you have to wait however long for the mail to arrive, you can’t prove they received the cash, it’s possible the cash was stolen en route and anyone who might wish you harm like an adversary government can observe the transaction.
If we’re playing by area, I seem to have won. But also, when was the last prosecution for mailing cash (where it wasn’t part of a more significant crime?
I was hoping it would help me save on international transfer fees when I was an overseas postdoc, but it would have actually cost more between the exchange fees and my time setting up all the exchanges in various countries, meanwhile also introducing risk in me being robbed of said money and screwing something up and introducing myself to some sort of tax liability. Needless to say, I continued to just pay for the bank transfers
That’s really the thing, isn’t it? In my experience cryptocurrency fees are quite high. I bet there’s a way to find a lower fee but then I’d have to do a ton of research and hope it’s accurate. I’d rather just pay a bank that requires me to do no research.
It cannot be cheaper, other than by avoiding taxes and regulation.
Consider sending money from US Dollar to Euro:
Sane way: An intermediary (IE a bank) handles this. You give them USD and they give the receiver Euros. This involves some service costs and 2 bank transfers.
Because people exchange money in both ways, the banks need not run out of either Euro or USD. In the background there is the currency market, on which the proper exchange rate is haggled out, which takes care of imbalances in cash flow.
Crypto way: You give a crypto exchange (an intermediary) USD and they give you crypto. This already involves 2 transfers and service costs. One of those 2 transfers is a crypto transfer, which is much more expensive (IE uses more resources) than a bank transfer.
This is already more expensive and then you have to do the same thing again to cash out.
And then we are still not done. Say there is an imbalance in that more people transfer money from USD to Euro than vice versa. That means that crypto becomes more expensive in USD and cheaper in Euro. There’s more demand in terms of USD and more supply for Euro, right?.
That creates an arbitrage opportunity. You can exchange USD for Euro, and then buy crypto for Euro to sell for USD. This closes the circle and puts everything back to the initial state. But to do that, we still have to exchange the real currencies. So now the markets bake the cost of exchanging currency into the crypto prices. At a guess, for some currencies (probably not so much Euro/USD), that would have a significant effect. I’m thinking smaller, poorer countries that send many migrant workers, who send money back home. These workers would not only end up paying the insane overhead of the crypto system, but also, still, most of the normal, direct exchange costs (if they relied on crypto).
it’s only good for illegal or morally questionable transactions.
Good thing laws are always just and everyone agrees that following every law is the most important thing a human being can aspire to do in their lifetime.
^^/s
Seriously though, I’m someone that uses credit for 90% of my purchases, but I also enjoy consuming cannabis and I’m well aware how horrible it would be if it wasn’t possible to make “illegal or morally questionable transactions.”
Bingo. Capitalism has thus far rejected the blockchain, which is generally evidence that it doesn’t solve an important problem either efficiently, safely or cheaply.
To be fair, there are plenty of other reasons capitalism might have rejected blockchain: market failure, interference by government, etc.
I’m not saying that to defend cryptocurrency, by the way, but rather to point out that capitalism isn’t perfect at allocating resources in every situation.
I don’t know why this is surprising. Capitalism is an economic system where the goal is profit. So, why would capital do anything other than seek profit? Nearly all technological advances have occurred through government or institutional investments, then capital flocks to it when someone finds a way to profit from it.
Thinking block chain is a solution to anything is naive. It does nothing to change the underlying system, or the incentives that drive our economy. Like any system, the interconnections between the things that make up the system, and the goal of the system must change otherwise everything will just settle back to the status quo.
For example: media streaming is becoming cable tv again. Nothing fundamentally changed about the system of delivering media, or the goal of the system which is to drive profit. Thus, we are moving quickly back to the same model of paying for media (renting it really) and watching ads to increase the revenue of the provider
Bitcoin had its official ETF approved and started the other week and Ethereum is soon to follow. so I would say capitalism is very much not rejecting blockchain technology. Didn’t blackrock and other giants put a ton in?
Right?
Also, look at its price. It dipped, and came right back.
If anything, the financial consensus around this is exactly the opposite of what was being presented.
With all the information available at your fingertips being ignorant is a choice.
“this parallel financial system can also serve a tangible social good, offering an onramp to the financial system for people who would otherwise be left out. In countries where the vast majority of the population is unbanked, national currencies are no longer a safe store of value, remittances comprise a hefty portion of GDP, and international sanctions complicate connections to the global economy, a virtual currency that doesn’t require an intermediary to approve transactions can be a vital lifeline for survival”
This isn’t Reddit, you don’t have to turn every discussion into a fight. I’m genuinely interested in cryptocurrency for reasons such as the article you linked: there are areas where traditional finance genuinely has failed to meet people’s needs. Providing a medium of exchange for the unbanked is a great example of something it could possibly help with, and I think that’s a good thing if it happens. But we should also be able to talk about the problems with cryptocurrencies and the cases where it doesn’t work as well as traditional finance. And if this prediction doesn’t pan out and cryptocurrency doesn’t become a major way of banking the unbanked, we should be able to consider what could accomplish that goal. It might be a different cryptocurrency, or a new thing inspired by cryptocurrency, or something that has nothing to do with cryptocurrency. After all, cryptocurrency is not a goal in itself.
I’ve never been in Reddit so I can’t talk about it but I wouldn’t have been so harsh if you hadn’t already stated that it seems only useful for illegal and immoral activities when it’s so easy to find, if you are “genuinely interested”, that it’s not the case.
Sure, but what real-world problem does a trustless solve? I thought this was all very interesting years ago but now that we’ve had blockchain for years it seems it’s only good for illegal or morally questionable transactions.
deleted by creator
See I think more nuanced takes like this are good. I’m not familiar with the Chinese banking issue that you are describing, but it sounds like deposit insurance (like the FDIC) might be a better solution than cryptocurrency, and it’s definitely better understood. Since the real world value of cryptocurrencies are so volatile they are a questionable store of value, and taking a risk on a poorly regulated bank might be better than taking a risk on storing your money in a volatile and unregulated security like cryptocurrency. Honestly it’s hard to know which is the better risk. So it could be better or it could be worse.
I agree with your point about transferring money internationally, and even within the US transferring money used to be a real pain. So I’m still interested to see if cryptocurrency can be a better medium of exchange or medium of transfer than traditional ways, or at least give traditional systems incentive to improve. But again the volatility is a concern so for most people the best move is probably to get in and out of the crypto market as quickly as possible or else risk getting a vastly different amount of money out of it than you put in. Admittedly it could appreciate, but when I’m transferring money to someone I don’t want that to simultaneously be an investment. The few times I have used Bitcoin to purchase something the whole process has taken hours, and there’s no guarantee there won’t be price swings — a lot could happen in those hours.
I appreciate the brutal honesty about cryptocurrency not being for the average Joe. It’s not that long since many cryptocurrency boosters were hoping it would replace fiat currency, but now that I think about it I haven’t heard as much about that recently. In its current state it is really not for the average Joe.
Legal money transfers are not a use case. Crypto is simply much more expensive to maintain. All these mining rigs and all that electricity must be paid for.
If it seemed cheaper, then either:
the banks were charging inflated fees. That can be fixed only once. (And it should have been fixed by government).ETA: Doesn’t work, after all. It can only be the other 2.Under the spoiler is something I wrote recently to explain how crypto is not like stocks.
spoiler
Let’s look at how stocks get their value.
A company sells shares to get funding. Say, you want to make microwave dinners. You need to hire people, an industrial kitchen, packaging and packaging machines, ingredients, and probably a whole lot more. The company takes in revenue from selling the dinners, which pay for the running costs. Anything above that may be reinvested or turns into profit. The profit is paid to the stock-owners to pay them for their investment.
Now the question is: What is the value of a stock?
Imagine you take out a loan. That gives you money right now, in the present. You pay back the loan with the money that you get from your stocks; your share in the profit. Now imagine that the company goes out of business (and the value of the stock becomes $0) right as you are done paying back the loan + interest. Then that loan was the present value of the stock.
In theory, the value of a share is the present value of the future money that you get paid. Of course, one cannot know how much that is, so this is useless for actual investing. Still, the market price of a share should be the best guess of people with money. If the stock is trading higher than someone’s guess, they sell. If it’s lower, they buy. So the market cap should reflect the future profits.
But what’s the value of a crypto-coin like bitcoin?
Let’s start by thinking only about a coin being used to transfer money. And to make it easier, let’s say that coins are only exchanged for money once a day.
Say people want to transfer 10 million USD each day. The senders buy coins for 10 million USD. They don’t care how many coins that gets them, only that the coins represent 10 million USD. If there are 2 million coins being sold on the market, then each coin must transport 5 USD and that will be the market value.
New coins are constantly being “mined” to pay for the upkeep of the system. Let’s say that’s 100,000 coins per day.
The intended receivers of the 10 million USD sell their coins to get the money. The miners also sell their coins to pay their bills. So the next day you have 2 million + 100,000 coins on the market. The senders again want to transport 10 million USD, so they buy the 2,100,000 coins on the market. The market value of a coin is now ~4.76 USD. Adding more coins lowered the value of the coins. That is inflation. The “missing” money goes to the miners to keep the system running. That’s not a problem for senders and receivers. Transferring money costs money, however you do it. (That crypto is an extremely expensive way to do this, is one underlying reason why it has no adoption as a payment system in the normal economy.)
So far, you wouldn’t expect anyone to store or “hodl” coins. The value is just going down. But obviously, this is only true as long as the amount of USD to be transferred stays constant. If the system is more widely adopted and more money is transferred (outpacing the inflationary effect of the newly mined coins), then each coin has to transport more USD and the “value” goes up.
Now, if you believe that adoption continues to grow, it becomes a reasonable strategy to stash some coins to sell them later at a higher “value”. Maybe the problem is already obvious, but let’s continue to take it slow.
So, let’s say, it’s a bit later. There are 15 million coins and they are to transfer 100 million USD. The market price of a coin is now $6.67. (Let’s also say that there are no more coins being mined and the upkeep is paid some other way.) Now we bring in some venture capitalists. One day, they buy coins for an additional $50 million. Now the coins trade at $10 per coin. 15 million coins bought for $100 million + $50 million, right?
The VCs now have 5 million coins. But note where the money went. It went to the transfer receivers when they sold the 15 million coins for $10 each. They got a windfall profit. That’s how it goes in crypto. All the money that people “invested” by buying coins is gone. It was either used to pay miners/for the system upkeep, or early adopters took it and ran. It’s all gone. That’s the big difference to shares.
If the VCs sell their coins again, they lose. Because when there is only 100 million USD in the market for 15 million coins, they would only get 6.67 USD per coin. The money that they spent is gone. If they want to make a profit, new money has to come from somewhere. There are only 2 ways to achieve this.
One is continuing adoption. If more money were to be transferred, with the same number of coins, the price goes up. They can siphon off some of that money by selling into that market. But that lowers the price again, so that only yields a profit if adoption increases enough.
The other is that someone else also removes coins from the market. If there are fewer coins for the same (or a decreasing!) amount of money being transferred, then the market price will also go up. (In this scenario, too, they would be siphoning off money that other people are trying to transfer. The cost of transferring money would be increased for no very good reason; not a great feature in a payment system.) But note that this, too, lowers the price again. That only yields a profit, if “hodlers” sequester the coins sold by the VCs for a higher price than the VCs paid.
I’m not saying this is a Ponzi scheme because everyone has heard that already.
So that’s it. If you want to know the effect of 50k bitcoin on price, you need to look at the trading volume (minus wash trades): How many bitcoin are actually “in use”? You also need to know how many of these coins will be promptly removed from the market by “hodlers”.
Various currencies are moving away from the proof-of-work model, FWIW. Ethereum was mentioned in this comment chain as one of them.
Which doesn’t solve the economic problem. (Good for the environment, though)
Ethereum has proof of stake. That means someone has to deposit Ethereum, tying it up. It could be exchanged for money and invested in stocks or bonds, yielding a return. This is only economically feasible if the stake yields the same return as a comparable investment. This profit has to come from the users.
A competing payment system, based on sensible, modern technology also needs computers and the internet but not a stake. It must be cheaper.
The stake is supposed to keep people honest, because it can be taken if fraud is detected. Normally, fraud is dealt with by putting the perpetrators in jail. Being known by name is proof of stake.
Users have to pay extra just so that some kingpins in the back can remain anonymous. Do you want to for that?
It also doesn’t solve the other deal-breaker (in the spoiler). Whenever you transfer money through crypto, you risk that some “investor” siphons off some of it.
How would using blockchain fix the liquidity of a bank?
There’s a case to be made for a currency that facilitates illegal transactions, or transactions that corporations object to. Just because something is legal in your country doesn’t mean it might not be unjustly restricted. Or could just be unjustly illegal in your country or another country. The problem of course is that distributed currency also facilitates things that should be illegal.
But WikiLeaks is a good example - their legacy is a little mixed now, but when they first came on the scene they were doing work which was a valuable service to the public. If you wanted to donate money to support wikileaks you couldn’t because the credit card processors shut them off. Blockchain lets you get around that.
Likewise it’s the combination of distance and direct - I can give $5 in cash to my local leaking consortium, but I can’t give $5 to the leaking consortium on the other side of the world without relying on the knowledge and consent of third parties.
I agree there’s something to be said for this — If you have a above-board business that credit card companies don’t want to service because they think it makes them look bad, that should not shut you out of electronic payments yet that’s basically where we are at least in the US.
This is a little hard to balance with the fact that the same things that let you circumvent gatekeepers like credit card companies also make it attractive for genuinely immoral things, but that’s a trade-off. Every currency can be used for immoral things and just because cryptocurrency might make it a little easier doesn’t mean it’s inherently immoral.
You totally can give cash anywhere in the world. You post it as a letter
This was common before electronic transfer
Mailing someone cash means you need to know their address, you have to wait however long for the mail to arrive, you can’t prove they received the cash, it’s possible the cash was stolen en route and anyone who might wish you harm like an adversary government can observe the transaction.
deleted by creator
Maybe in your country
deleted by creator
On account of it being so in yours?
Australia Post says they reject any liability if you do
The UK says you should use their premium service to do so
India says you can’t. It at least quora says you can’t in India
Quora says you can in Canada
I wonder why the UK and Australian searches landed on the national postal carriers and the others landed on fora
deleted by creator
If we’re playing by area, I seem to have won. But also, when was the last prosecution for mailing cash (where it wasn’t part of a more significant crime?
Unenforced law isn’t very powerful
I was hoping it would help me save on international transfer fees when I was an overseas postdoc, but it would have actually cost more between the exchange fees and my time setting up all the exchanges in various countries, meanwhile also introducing risk in me being robbed of said money and screwing something up and introducing myself to some sort of tax liability. Needless to say, I continued to just pay for the bank transfers
That’s really the thing, isn’t it? In my experience cryptocurrency fees are quite high. I bet there’s a way to find a lower fee but then I’d have to do a ton of research and hope it’s accurate. I’d rather just pay a bank that requires me to do no research.
It cannot be cheaper, other than by avoiding taxes and regulation.
Consider sending money from US Dollar to Euro:
Sane way: An intermediary (IE a bank) handles this. You give them USD and they give the receiver Euros. This involves some service costs and 2 bank transfers.
Because people exchange money in both ways, the banks need not run out of either Euro or USD. In the background there is the currency market, on which the proper exchange rate is haggled out, which takes care of imbalances in cash flow.
Crypto way: You give a crypto exchange (an intermediary) USD and they give you crypto. This already involves 2 transfers and service costs. One of those 2 transfers is a crypto transfer, which is much more expensive (IE uses more resources) than a bank transfer.
This is already more expensive and then you have to do the same thing again to cash out.
And then we are still not done. Say there is an imbalance in that more people transfer money from USD to Euro than vice versa. That means that crypto becomes more expensive in USD and cheaper in Euro. There’s more demand in terms of USD and more supply for Euro, right?.
That creates an arbitrage opportunity. You can exchange USD for Euro, and then buy crypto for Euro to sell for USD. This closes the circle and puts everything back to the initial state. But to do that, we still have to exchange the real currencies. So now the markets bake the cost of exchanging currency into the crypto prices. At a guess, for some currencies (probably not so much Euro/USD), that would have a significant effect. I’m thinking smaller, poorer countries that send many migrant workers, who send money back home. These workers would not only end up paying the insane overhead of the crypto system, but also, still, most of the normal, direct exchange costs (if they relied on crypto).
deleted by creator
Good thing laws are always just and everyone agrees that following every law is the most important thing a human being can aspire to do in their lifetime.
^^/s
Seriously though, I’m someone that uses credit for 90% of my purchases, but I also enjoy consuming cannabis and I’m well aware how horrible it would be if it wasn’t possible to make “illegal or morally questionable transactions.”
Bingo. Capitalism has thus far rejected the blockchain, which is generally evidence that it doesn’t solve an important problem either efficiently, safely or cheaply.
To be fair, there are plenty of other reasons capitalism might have rejected blockchain: market failure, interference by government, etc.
I’m not saying that to defend cryptocurrency, by the way, but rather to point out that capitalism isn’t perfect at allocating resources in every situation.
Isn’t one of its goals to be free from government influence? That’s not a valid excuse.
Blockchain is just a technology. It doesn’t have “goals.”
deleted by creator
They put money in Bitcoin, but not the tech behind it. To them it’s just stocks to be manipulated in order to get a profit.
I don’t know why this is surprising. Capitalism is an economic system where the goal is profit. So, why would capital do anything other than seek profit? Nearly all technological advances have occurred through government or institutional investments, then capital flocks to it when someone finds a way to profit from it.
Thinking block chain is a solution to anything is naive. It does nothing to change the underlying system, or the incentives that drive our economy. Like any system, the interconnections between the things that make up the system, and the goal of the system must change otherwise everything will just settle back to the status quo.
For example: media streaming is becoming cable tv again. Nothing fundamentally changed about the system of delivering media, or the goal of the system which is to drive profit. Thus, we are moving quickly back to the same model of paying for media (renting it really) and watching ads to increase the revenue of the provider
Right?
Also, look at its price. It dipped, and came right back.
If anything, the financial consensus around this is exactly the opposite of what was being presented.
Also, the unbanked.
Also, privacy and anonymity (to an extent).
Also, complete predictability in the system (its at least domain constrained).
There’s no privacy, it’s an open ledger, only anonymity
It’s a bad way of hiding money if you’re about to be investigated for crime
Monero seems to be holding up in terms of privacy.
Thanks for your input, dingdong.
With all the information available at your fingertips being ignorant is a choice.
“this parallel financial system can also serve a tangible social good, offering an onramp to the financial system for people who would otherwise be left out. In countries where the vast majority of the population is unbanked, national currencies are no longer a safe store of value, remittances comprise a hefty portion of GDP, and international sanctions complicate connections to the global economy, a virtual currency that doesn’t require an intermediary to approve transactions can be a vital lifeline for survival”
Bitcoin is poised to blow up Africa’s $86 billion banking system
This isn’t Reddit, you don’t have to turn every discussion into a fight. I’m genuinely interested in cryptocurrency for reasons such as the article you linked: there are areas where traditional finance genuinely has failed to meet people’s needs. Providing a medium of exchange for the unbanked is a great example of something it could possibly help with, and I think that’s a good thing if it happens. But we should also be able to talk about the problems with cryptocurrencies and the cases where it doesn’t work as well as traditional finance. And if this prediction doesn’t pan out and cryptocurrency doesn’t become a major way of banking the unbanked, we should be able to consider what could accomplish that goal. It might be a different cryptocurrency, or a new thing inspired by cryptocurrency, or something that has nothing to do with cryptocurrency. After all, cryptocurrency is not a goal in itself.
I’ve never been in Reddit so I can’t talk about it but I wouldn’t have been so harsh if you hadn’t already stated that it seems only useful for illegal and immoral activities when it’s so easy to find, if you are “genuinely interested”, that it’s not the case.