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That's never going to happen. Currencies are enforced and controlled by central, powerful authorities (the state). Institutions like central banks (or the FED)

by atmosx 9y ago

That's never going to happen. Currencies are enforced and controlled by central, powerful authorities (the state). Institutions like central banks (or the FED) try to control inflation and/or deflation. In a time of prospering, the obvious goal for a central banker should be to have a mildly deflationary currency. That is because central bankers want consumers to spend their money today and not wait for tomorrow (hoarding). Now bitcoin has built-in a hard limit. Which makes the currency, inherently inflationary. I have no evidence, but I believe that this was a strategic choice by Satoshi. Why would you buy a currency made out of cpu cycles, with no backing if not for it's future value? Without being a state (e.g. selling trust) or having huge amounts of gold to back up a new currency, the only reason someone would wanna buy it, is indeed, the future value that could hold. Hence, Bitcoin or any cryptocurrency can work as an asset but not as a currency given the current design. Y. Varoufakis, spoke of a centralised digital currency in his solution for the Greek crisis. That could be a digital currency, that anyone can use. But was a fully controlled digital currency issued in the form of IOUs by the state. NOTE: Talking about adoption of a decentralised currency a-la bitcoin, by a state or group of states to replace entities like the FED or the ECB shows a poor understanding of the most basic principles of the financial systems.

zwily 9y ago
Don't you mean mildly inflationary? I believe the US fed aims for 1-2% inflation. Or did I misunderstand? Similarly, bitcoin is deflationary because of the fixed supply.
- atmosx 9y ago
  Yes tha is correct. I meant deflationary for bitcoin and inflationary for the USD
networkguy 9y ago
Deflationary is what you meant.
deleted 9y ago
[deleted]
kaleidic 9y ago
Money has three functions : unit of account, store if value, medium of exchange. Cryptocurrency isn't great at the first two, but if we presume the scaling problems will be solved then it is pretty good at the latter because it doesn't require you to trust the banking system. So there is an unbundling of the functions of money described by Eugene Fama originally and then tidied up and better articulated by Tyler Cowen and Randall Kroszner in their book on the New Monetary Economics in about 1992. Its completely irrelevant what the price of Bitcoin is for its usefulness as a medium of exchange. This medium of exchange aspect is very important because it makes banks no longer special since its possible in time to make payments without a banking system. Thus the role of the state in regulating banks can disappear eventually - no deposit insurance, no bailouts and no too big to fail. Credit can be provided by funds because the information asymmetry of banks no longer applies when you can port your banking records via API.
- taysic 9y ago
  I think its a much better store of value (because of the lack of influence from banks) than a medium of exchange. It's very slow, has high fees (currently) and to buy the vast majority of goods you will eventually need to change it back into your own country's currency which will require your bank anyway. Unless I'm missing something... "This medium of exchange aspect is very important because it makes banks no longer special since its possible in time to make payments without a banking system." Most people don't want to have the whole of their wealth reliant on a hash they could lose though. They want to be able to talk to "customer service" if they need to.
arisAlexis 9y ago
You should make some research on Varoyfakis, his lies and failures before quoting him. His disastrous game charged my country 100billions more and banks are still closed.
- foobarchu 9y ago
  I don't think OP was supporting the actions one way or another, but objectively stating information that is relevant to OP's question. It's relevant because it's a case of cryptocurrency working it's way into the 'real world'. It was never implemented, so the only important thing here is that someone who a lot of people listen to actually proposed using cryptocurrency, politics don't factor into it.
  - arisAlexis 9y ago
    I get your point I am just saying that he is a known political clown and that would never be implemented so it's just as good as you and me devising a plan like that.
MarkMc 9y ago
> Without being a state (e.g. selling trust) or having huge amounts of gold to back up a new currency, the only reason someone would wanna buy it, is indeed, the future value that could hold Are you saying that gold can be a currency but Bitcoin cannot? > Bitcoin or any cryptocurrency can work as an asset but not as a currency given the current design. Why can't it be both? If I expect my Bitcoin to appreciate 5% per year I might be willing to spend it to buy my weekly groceries.
- atmosx 9y ago
  > Are you saying that gold can be a currency but Bitcoin cannot? No. > Why can't it be both? If I expect my Bitcoin to appreciate 5% per year I might be willing to spend it to buy my weekly groceries. You might be or might not be. I assure you, the majority will not be willing to buy groceries using a deflationary currency. They'll switch to an inflationary currency instead.
  - MarkMc 9y ago
    >> Are you saying that gold can be a currency but Bitcoin cannot? > No. Hmm... so gold cannot be a currency?
    - atmosx 9y ago
      We'd have a succinct conversation if you'd take the time to express what's on your mind instead of playing around with questions. I feel you're trying to make a point but I can't tell what it is :-) I'll bite the bullet though: > Hmm... so gold cannot be a currency? Everything can be a currency. Ascorbic acid could be a currency in the future if the humankind moves to planets where Citreae are hard to find. If I'm not mistaken, the topic was about the effectiveness of bitcoin as a currency.
      - MarkMc 9y ago
        My point is that gold has similar properties to Bitcoin. That is, there is limited supply, very limited government control and many people treat it as a store of value. You said earlier that "Currencies are enforced and controlled by central, powerful authorities". There is no central authority for gold yet it has been a currency for thousands of years. You seem to accept the special status of gold by implying that a cryptocurrency could be effective as a currency if it was backed by gold. So my question is what makes gold so special? Why can't the current design of cryptocurrencies be just like gold, only more convenient?

by atmosx 9y ago

zwily 9y ago

Don't you mean mildly inflationary? I believe the US fed aims for 1-2% inflation. Or did I misunderstand? Similarly, bitcoin is deflationary because of the fixed supply.

atmosx 9y ago
Yes tha is correct. I meant deflationary for bitcoin and inflationary for the USD

networkguy 9y ago

Deflationary is what you meant.

deleted 9y ago

[deleted]

kaleidic 9y ago

Money has three functions : unit of account, store if value, medium of exchange. Cryptocurrency isn't great at the first two, but if we presume the scaling problems will be solved then it is pretty good at the latter because it doesn't require you to trust the banking system. So there is an unbundling of the functions of money described by Eugene Fama originally and then tidied up and better articulated by Tyler Cowen and Randall Kroszner in their book on the New Monetary Economics in about 1992. Its completely irrelevant what the price of Bitcoin is for its usefulness as a medium of exchange. This medium of exchange aspect is very important because it makes banks no longer special since its possible in time to make payments without a banking system. Thus the role of the state in regulating banks can disappear eventually - no deposit insurance, no bailouts and no too big to fail. Credit can be provided by funds because the information asymmetry of banks no longer applies when you can port your banking records via API.

taysic 9y ago
I think its a much better store of value (because of the lack of influence from banks) than a medium of exchange. It's very slow, has high fees (currently) and to buy the vast majority of goods you will eventually need to change it back into your own country's currency which will require your bank anyway. Unless I'm missing something... "This medium of exchange aspect is very important because it makes banks no longer special since its possible in time to make payments without a banking system." Most people don't want to have the whole of their wealth reliant on a hash they could lose though. They want to be able to talk to "customer service" if they need to.

arisAlexis 9y ago

You should make some research on Varoyfakis, his lies and failures before quoting him. His disastrous game charged my country 100billions more and banks are still closed.

foobarchu 9y ago
I don't think OP was supporting the actions one way or another, but objectively stating information that is relevant to OP's question. It's relevant because it's a case of cryptocurrency working it's way into the 'real world'. It was never implemented, so the only important thing here is that someone who a lot of people listen to actually proposed using cryptocurrency, politics don't factor into it.
- arisAlexis 9y ago
  I get your point I am just saying that he is a known political clown and that would never be implemented so it's just as good as you and me devising a plan like that.

MarkMc 9y ago

> Without being a state (e.g. selling trust) or having huge amounts of gold to back up a new currency, the only reason someone would wanna buy it, is indeed, the future value that could hold Are you saying that gold can be a currency but Bitcoin cannot? > Bitcoin or any cryptocurrency can work as an asset but not as a currency given the current design. Why can't it be both? If I expect my Bitcoin to appreciate 5% per year I might be willing to spend it to buy my weekly groceries.

atmosx 9y ago
> Are you saying that gold can be a currency but Bitcoin cannot? No. > Why can't it be both? If I expect my Bitcoin to appreciate 5% per year I might be willing to spend it to buy my weekly groceries. You might be or might not be. I assure you, the majority will not be willing to buy groceries using a deflationary currency. They'll switch to an inflationary currency instead.
- MarkMc 9y ago
  >> Are you saying that gold can be a currency but Bitcoin cannot? > No. Hmm... so gold cannot be a currency?
  - atmosx 9y ago
    We'd have a succinct conversation if you'd take the time to express what's on your mind instead of playing around with questions. I feel you're trying to make a point but I can't tell what it is :-) I'll bite the bullet though: > Hmm... so gold cannot be a currency? Everything can be a currency. Ascorbic acid could be a currency in the future if the humankind moves to planets where Citreae are hard to find. If I'm not mistaken, the topic was about the effectiveness of bitcoin as a currency.
    - MarkMc 9y ago
      My point is that gold has similar properties to Bitcoin. That is, there is limited supply, very limited government control and many people treat it as a store of value. You said earlier that "Currencies are enforced and controlled by central, powerful authorities". There is no central authority for gold yet it has been a currency for thousands of years. You seem to accept the special status of gold by implying that a cryptocurrency could be effective as a currency if it was backed by gold. So my question is what makes gold so special? Why can't the current design of cryptocurrencies be just like gold, only more convenient?