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Cryptos Fear Credit

3 points by Suncho 9y ago

sova 9y ago
>Once everyone else realizes the superiority of cryptocurrency, they will all want to switch over, and the value of fiat currency will collapse. You really think so? Cryptocurrency requires a massive infrastructure (the internet) and inaccessible physical locations will always have a need for physical cash. It's like saying every country will go digital with money, I don't think that's the case now or in the future. The hand-to-hand gesture is just too fundamental to being human to be circumvented by some clever logic boards. Credit in crypto? I don't mean to come off as rude, but do you understand that proof-of-stake in crypto is an emerging issue, and that proving that you own a particular bitcoin or that you are even the owner/controller of a particular address on the blockchain, is not an easy task. Credit is built on a secondary or even tertiary idea of "how reliable is this individual to eventually bring the balance back to zero or near zero" and cryptocurrencies don't play in this nether-region, because it is already an amazing innovation that we can have a distributed ledger at all. To say that credit is the next logical step in the evolution of crypto... I don't think you have really condensed or absorbed the very paramount differences between normal money and cryptocoin. One is a physical IOU, the other is an indication of where transactions have moved. Cryptocurrency is not fundamentally an IOU any more than a bar of Gold is an IOU. Credit is possible with IOUs, but it is not possible if the boolean value is "yes I have one satoshi of gold" or "no I don't" Thoughts?
- Suncho 9y ago
  >>Once everyone else realizes the superiority of cryptocurrency, they will all want to switch over, and the value of fiat currency will collapse. >You really think so? I didn't write the blog post, but I think it's pretty clear that he's saying is that this is what many crypto fans believe. I don't think he's claiming to believe it himself. > Cryptocurrency is not fundamentally an IOU any more than a bar of Gold is an IOU. Correct. Bitcoin is digital gold. But a bar of gold is an IOU. Because gold gets most of its value from its ability to be traded for other stuff, it's basically a form of credit. You can think of gold as a general purpose IOU from the economy to the person holding the gold. If the economy collapses, the gold isn't worth much. Bitcoin is the same. Unfortunately, neither bitcoin nor gold can be currency. Currency must have a reliable stable value. As far as I know, the only way to ensure stable value of a currency is through centralized monetary policy.
Suncho 9y ago
This is part of why cryptocurrencies like Bitcoin and Ethereum can never become true currencies. They pretend that credit does not exist. I'm skeptical that a decentralized monetary system is even possible.

3 points by Suncho 9y ago

sova 9y ago

>Once everyone else realizes the superiority of cryptocurrency, they will all want to switch over, and the value of fiat currency will collapse. You really think so? Cryptocurrency requires a massive infrastructure (the internet) and inaccessible physical locations will always have a need for physical cash. It's like saying every country will go digital with money, I don't think that's the case now or in the future. The hand-to-hand gesture is just too fundamental to being human to be circumvented by some clever logic boards. Credit in crypto? I don't mean to come off as rude, but do you understand that proof-of-stake in crypto is an emerging issue, and that proving that you own a particular bitcoin or that you are even the owner/controller of a particular address on the blockchain, is not an easy task. Credit is built on a secondary or even tertiary idea of "how reliable is this individual to eventually bring the balance back to zero or near zero" and cryptocurrencies don't play in this nether-region, because it is already an amazing innovation that we can have a distributed ledger at all. To say that credit is the next logical step in the evolution of crypto... I don't think you have really condensed or absorbed the very paramount differences between normal money and cryptocoin. One is a physical IOU, the other is an indication of where transactions have moved. Cryptocurrency is not fundamentally an IOU any more than a bar of Gold is an IOU. Credit is possible with IOUs, but it is not possible if the boolean value is "yes I have one satoshi of gold" or "no I don't" Thoughts?

Suncho 9y ago
>>Once everyone else realizes the superiority of cryptocurrency, they will all want to switch over, and the value of fiat currency will collapse. >You really think so? I didn't write the blog post, but I think it's pretty clear that he's saying is that this is what many crypto fans believe. I don't think he's claiming to believe it himself. > Cryptocurrency is not fundamentally an IOU any more than a bar of Gold is an IOU. Correct. Bitcoin is digital gold. But a bar of gold is an IOU. Because gold gets most of its value from its ability to be traded for other stuff, it's basically a form of credit. You can think of gold as a general purpose IOU from the economy to the person holding the gold. If the economy collapses, the gold isn't worth much. Bitcoin is the same. Unfortunately, neither bitcoin nor gold can be currency. Currency must have a reliable stable value. As far as I know, the only way to ensure stable value of a currency is through centralized monetary policy.

Suncho 9y ago

This is part of why cryptocurrencies like Bitcoin and Ethereum can never become true currencies. They pretend that credit does not exist. I'm skeptical that a decentralized monetary system is even possible.