4 ms·

I disagree entirely with what your current top response is. If they're "deeply flawed as a currency" I'd love to hear an explanation as to how, especially comp

I disagree entirely with what your current top response is. If they're "deeply flawed as a currency" I'd love to hear an explanation as to how, especially compared to traditional currencies that are manipulated by commissars? That's not a political assertion, it's a mathematical fact demonstrated in developing nations more acutely if other examples are needed. With that said, you can copy the entire cryptocurrency stack that makes up Bitcoin and just rename it. Many of these new coins are just that, clones for pump-and-dump schemes. And many actually offer legitimately new and intriguing concepts that may have good use cases. It seems like you already understand it? Is you're question whether they're all flawed or all functional and useful?

zanny 9y ago
They are all deeply flawed as currencies because they are scientific in nature rather than economic. It actually doesn't take far for the cart to keel over. Just as far as saying your money supply has a finite limit and / or it has an absolute number of coins minted means it cannot function as a currency. This has been demonstrated by how the bitcoin economy operates in two states - either its going to the moon, or its slowly dying off. Nobody can use it as a regular money because the incentives are entirely built around hoarding it rather than transacting with it, and they were built that way on purpose... It is a chicken and egg problem. You won't get adoption or take off unless you can entice people with promises of fortune. If you don't give first mover advantage in the cryptocurrency market people will just flat ignore you. But if you do, you sabotage whatever idea you had to just be a ponzie scheme, because it means you have to start out with huge inflation and reduce it over time to keep your adherents happy. I do think there is absolutely room in the world for an actually usable cryptocurrency to replace traditional fiat. It would be really beneficial to have one, to dethrone the currency manipulators that profiteer off of the influence they yield. But you need a money that can actually fit into the global economy as a means of transaction and not a store of value to accomplish that, and it would require structural considerations counter to what makes any cryptocurrency currently take off.
- LMYahooTFY 9y ago
  >They are all deeply flawed as currencies because they are scientific in nature rather than economic. I don't think I disagree with what you mean, I think I disagree with the notions that these are mutually exclusive. To echo Margaret Thatcher's (I know) final words in office, there is no such thing as apolitical money. I don't believe there can be a world in which economics is divorced from politics in any way, I think society must occasionally make political decisions about economics. I agree with your points pragmatically though, which perhaps is where you're grounding everything? Do you mean that having a forced deflation with cryptographic mathematics is a flaw? I don't really understand why a finite amount of currency would be an issue if the number of units scales beyond what the entire world's traditional currencies contain combined. It's just a cryptographically enforced trust network to not print money when you decide you want to print money.
  - zanny 9y ago
    > these are mutually exclusive. I wouldn't say they are, better wording would have been that they were developed for scientific purposes first, caring of the technical, before concern for the economic ramifications set in. > a finite amount of currency It is a matter of incentives. Right now, anyone holding most fiats in the world is incentivized by their controlled inflation to spend the money - and if they don't, it has negative economic ramifications because money that stops circulating (also known as a drop in monetary velocity) is effectively lost productivity until it reenters circulation. Traditionally, no millionaire just stuffed their mattress with Benjamins, but we are now seeing corporations effectively do this by sitting on hundreds of billions in cash offshore. The economic impact, however, is the same - money stops moving, and slows the economy because its not being spent. As money slows down, it increases scarcity, and you can quickly have a runaway deflationary spiral where the money keeps getting scarcer and scarcer thus incentivizing people to hoard it more and more while the economy stalls out. I should disclaim this is independent of how bitcoin (and ether, doge, ltc, etc) naturally deflates through market adoption. All those currencies either have decreasing or static minting of coinage, which means that every new entrant to the market by definition increases scarcity of the coin and drives prices up. This, again, has a runaway effect evidenced by how almost everyone uses bitcoin - as a store of value, not as a means of exchange. Because simultaneously fees are high and transactions are slow, and the money is appreciating over time as more and more people start using it. Your point relates back to my premise - technically, a finite money is fine as long as its highly divisible, like bitcoin is. The theory is that as the price goes up people just deal in smaller coin denominations. The problem is that doesn't address the economic incentives structure around appreciating currencies, which disincentivizes spending them. > It's just a cryptographically enforced trust network to not print money when you decide you want to print money. It isn't about one person having minting powers. The whole point is trustlessness. But you can still have all the promising aspects of cryptocurrencies (public ledger, trustless transactions, theoretically low response time with low fees, pseudonymity) while also having the coinage algorithm adapt to money velocity in the economy to attempt to push incentives towards spending rather than investing when they need to be so pushed.

zanny 9y ago

They are all deeply flawed as currencies because they are scientific in nature rather than economic. It actually doesn't take far for the cart to keel over. Just as far as saying your money supply has a finite limit and / or it has an absolute number of coins minted means it cannot function as a currency. This has been demonstrated by how the bitcoin economy operates in two states - either its going to the moon, or its slowly dying off. Nobody can use it as a regular money because the incentives are entirely built around hoarding it rather than transacting with it, and they were built that way on purpose... It is a chicken and egg problem. You won't get adoption or take off unless you can entice people with promises of fortune. If you don't give first mover advantage in the cryptocurrency market people will just flat ignore you. But if you do, you sabotage whatever idea you had to just be a ponzie scheme, because it means you have to start out with huge inflation and reduce it over time to keep your adherents happy. I do think there is absolutely room in the world for an actually usable cryptocurrency to replace traditional fiat. It would be really beneficial to have one, to dethrone the currency manipulators that profiteer off of the influence they yield. But you need a money that can actually fit into the global economy as a means of transaction and not a store of value to accomplish that, and it would require structural considerations counter to what makes any cryptocurrency currently take off.

LMYahooTFY 9y ago
>They are all deeply flawed as currencies because they are scientific in nature rather than economic. I don't think I disagree with what you mean, I think I disagree with the notions that these are mutually exclusive. To echo Margaret Thatcher's (I know) final words in office, there is no such thing as apolitical money. I don't believe there can be a world in which economics is divorced from politics in any way, I think society must occasionally make political decisions about economics. I agree with your points pragmatically though, which perhaps is where you're grounding everything? Do you mean that having a forced deflation with cryptographic mathematics is a flaw? I don't really understand why a finite amount of currency would be an issue if the number of units scales beyond what the entire world's traditional currencies contain combined. It's just a cryptographically enforced trust network to not print money when you decide you want to print money.
- zanny 9y ago
  > these are mutually exclusive. I wouldn't say they are, better wording would have been that they were developed for scientific purposes first, caring of the technical, before concern for the economic ramifications set in. > a finite amount of currency It is a matter of incentives. Right now, anyone holding most fiats in the world is incentivized by their controlled inflation to spend the money - and if they don't, it has negative economic ramifications because money that stops circulating (also known as a drop in monetary velocity) is effectively lost productivity until it reenters circulation. Traditionally, no millionaire just stuffed their mattress with Benjamins, but we are now seeing corporations effectively do this by sitting on hundreds of billions in cash offshore. The economic impact, however, is the same - money stops moving, and slows the economy because its not being spent. As money slows down, it increases scarcity, and you can quickly have a runaway deflationary spiral where the money keeps getting scarcer and scarcer thus incentivizing people to hoard it more and more while the economy stalls out. I should disclaim this is independent of how bitcoin (and ether, doge, ltc, etc) naturally deflates through market adoption. All those currencies either have decreasing or static minting of coinage, which means that every new entrant to the market by definition increases scarcity of the coin and drives prices up. This, again, has a runaway effect evidenced by how almost everyone uses bitcoin - as a store of value, not as a means of exchange. Because simultaneously fees are high and transactions are slow, and the money is appreciating over time as more and more people start using it. Your point relates back to my premise - technically, a finite money is fine as long as its highly divisible, like bitcoin is. The theory is that as the price goes up people just deal in smaller coin denominations. The problem is that doesn't address the economic incentives structure around appreciating currencies, which disincentivizes spending them. > It's just a cryptographically enforced trust network to not print money when you decide you want to print money. It isn't about one person having minting powers. The whole point is trustlessness. But you can still have all the promising aspects of cryptocurrencies (public ledger, trustless transactions, theoretically low response time with low fees, pseudonymity) while also having the coinage algorithm adapt to money velocity in the economy to attempt to push incentives towards spending rather than investing when they need to be so pushed.