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Let's be enormously speculative and consider what might happen if cryptocurrencies do not collapse. The implications of this are interesting. They would end up

Let's be enormously speculative and consider what might happen if cryptocurrencies do not collapse. The implications of this are interesting. They would end up being a worldwide asset that hedges against pretty much everything except worldwide economic collapse. That's sounding like the makings of the next reserve currency. What would be the implications of this for nations that currently benefit from the current world reserve currency? What would be the implications of economic vessels like national bonds and other treasuries that nations rely on to borrow money? It would also all but entirely nullify a major chunk of government power and control. If a nation is unhappy with the economic direction of their country they can inflate or deflate the monetary supply, manipulate national holding rates, and more. Or take 'offensive economics.' If a nation wants to attack an individual, group, or even another country assets can often be frozen. And we haven't even gotten into the implications this would have on the international banking system. It's funny in a way. You just don't know if you're on the doorstep of a complete shift of era in economics, or if you're just watching another boom bust cycle. One's certainly much more likely than the other, but if I had a major vested interest in one outcome over the other - I'd certainly be looking to take proactive action to try to ensure it.

Agebor 9y ago
It's not that speculative on the long term IMO. In the 80s and 90s, we found a way of connecting many computers together and here we are. Now we found a way to create programmable: trust, value, scarcity and incentives. If that's not going to change the society over the next 20-30 years, I don't know what will. Only land ownership could remain in the space of interest of governments then (being immovable).
- pedrocr 9y ago
  >Now we found a way to create programmable: trust, value, scarcity and incentives. I've seen variations of this argument repeated often. It sounds sexy but then when you probe it's hard to nail down something big enough we can't currently do that becomes possible. Financial markets are already very sophisticated and if anything retail investors are still not using the great products out there as much as they should (index funds are huge and yet most people still prepare very poorly for retirement). Maybe it's just a case of we still not knowing the actual killer app of crypto currencies and contracts and this is just like connected networks in the 70s. Or maybe this is like the segway and smart people are convinced it will revolutionize things but in the end it's just handwaving.
  - Agebor 9y ago
    > index funds are huge and yet most people still prepare very poorly for retirement Retail financial products are only just now entering the internet era. At least in UK, before 2017 we did not have Vanguard, Monzo, Revolut. Nutmeg was less known. Older banks and investment accounts are still relatively hard to use via the internet (e.g. requiring ancient identity verification methods) and understand for unexperienced. Cryptocurrencies have a chance to bring much faster improvements to this space. I think the biggest question right now is whether crypto can become self-regulated in practice and avoid being regulated by traditional centralised means. If we can protect average Joe from scams and help him navigate the finance space cheaper and simpler, we don't need old government for this. It's pretty much inevitable IMO, given enough time, because removing intermediaries reduces cost and friction of the flow of value. In the future, the average Joe might: - create his personal wealth account with a portfolio, after evaluating his character and beliefs (similar to how robo-advisers work) - instead of keeping any wealth in cash money, a small chunk of his portfolio will be spent for each transaction he makes (while being converted on the fly to a chunk of seller's portfolio, with value expressed in a stable-coin) I think the goal should be to stop using any form of cash as a store of value, which is just a part of pre-internet history now. With cryptocurrencies available now for anyone to invest, make mistakes and learn, we have a pretty good start.
    - pedrocr 9y ago
      >I think the goal should be to stop using any form of cash as a store of value No one should use any currency as a store of value, use actual productive assets. And your argument that we should make financial products enter the Internet era is completely true. I just don't see where the cryptocurrencies help.
      - hyprCoin 9y ago
        Have you looked? There are better savings accounts with proof of stake systems. There are programmable components with ETH, EOS, Lisk, various others. There are bank/savings accounts that can be signed up for with a web browser (smartcash). The list is endless.
RobertoG 9y ago
National currencies are not really in risk. Suppose that bitcoin or similar are used as currency in practice (that it's very far of happening, by the way). Even if you are able to do all your operations in a cryptocurrency, you will need to pay taxes. Governments only accept their own currency, so, you need to get it to pay taxes, so, demand of national currency is going to exist always. >> "economic vessels like national bonds and other treasuries that nations rely on to borrow money?" This is only an institutional arrangement. Nations with their currency don't really need markets to get money. For instance, in the case of USA, the FED can produce so much money as they think is appropriate (1). I think that cryptocurrency fans suffer from that old illusion that economy can be separated from politics. (1).- Video of Greenspan explaining it: https://www.youtube.com/watch?v=DNCZHAQnfGU https://www.youtube.com/watch?v=DNCZHAQnfGU
- mewwts 9y ago
  But wouldn’t that have a profound impact on the value of a currency? If all demand for it dissappeared except taxes what would happen to it’s value relative to other currencies? What would happen to trade?
  - RobertoG 9y ago
    Maybe demand wouldn't be impacted. Taxes affect every spending in the economy. If you need to pay your taxes where that currency will come from? You are going to need to win it somehow. Instead of exchange currencies in order to be able to pay taxes, why not accepting payment in the government currency in the first place?
    - nybble41 9y ago
      > Instead of exchange currencies in order to be able to pay taxes, why not accepting payment in the government currency in the first place? You don't need to exchange all your currency to pay taxes, and in the hypothetical scenario we're discussing you would want the rest to remain in cryptocurrencies because that is what you need to pay all your other expenses. Beyond the network effect, exchanging only the amount you need for taxes would improve security and limit your exposure to currency manipulation.
freeflight 9y ago
> It would also all but entirely nullify a major chunk of government power and control. At the danger of being somewhat off-topic: The tv show Mr Robot explores a scenario comparable to that in a very interesting and well-made way.

Agebor 9y ago

It's not that speculative on the long term IMO. In the 80s and 90s, we found a way of connecting many computers together and here we are. Now we found a way to create programmable: trust, value, scarcity and incentives. If that's not going to change the society over the next 20-30 years, I don't know what will. Only land ownership could remain in the space of interest of governments then (being immovable).

pedrocr 9y ago
>Now we found a way to create programmable: trust, value, scarcity and incentives. I've seen variations of this argument repeated often. It sounds sexy but then when you probe it's hard to nail down something big enough we can't currently do that becomes possible. Financial markets are already very sophisticated and if anything retail investors are still not using the great products out there as much as they should (index funds are huge and yet most people still prepare very poorly for retirement). Maybe it's just a case of we still not knowing the actual killer app of crypto currencies and contracts and this is just like connected networks in the 70s. Or maybe this is like the segway and smart people are convinced it will revolutionize things but in the end it's just handwaving.
- Agebor 9y ago
  > index funds are huge and yet most people still prepare very poorly for retirement Retail financial products are only just now entering the internet era. At least in UK, before 2017 we did not have Vanguard, Monzo, Revolut. Nutmeg was less known. Older banks and investment accounts are still relatively hard to use via the internet (e.g. requiring ancient identity verification methods) and understand for unexperienced. Cryptocurrencies have a chance to bring much faster improvements to this space. I think the biggest question right now is whether crypto can become self-regulated in practice and avoid being regulated by traditional centralised means. If we can protect average Joe from scams and help him navigate the finance space cheaper and simpler, we don't need old government for this. It's pretty much inevitable IMO, given enough time, because removing intermediaries reduces cost and friction of the flow of value. In the future, the average Joe might: - create his personal wealth account with a portfolio, after evaluating his character and beliefs (similar to how robo-advisers work) - instead of keeping any wealth in cash money, a small chunk of his portfolio will be spent for each transaction he makes (while being converted on the fly to a chunk of seller's portfolio, with value expressed in a stable-coin) I think the goal should be to stop using any form of cash as a store of value, which is just a part of pre-internet history now. With cryptocurrencies available now for anyone to invest, make mistakes and learn, we have a pretty good start.
  - pedrocr 9y ago
    >I think the goal should be to stop using any form of cash as a store of value No one should use any currency as a store of value, use actual productive assets. And your argument that we should make financial products enter the Internet era is completely true. I just don't see where the cryptocurrencies help.
    - hyprCoin 9y ago
      Have you looked? There are better savings accounts with proof of stake systems. There are programmable components with ETH, EOS, Lisk, various others. There are bank/savings accounts that can be signed up for with a web browser (smartcash). The list is endless.

RobertoG 9y ago

National currencies are not really in risk. Suppose that bitcoin or similar are used as currency in practice (that it's very far of happening, by the way). Even if you are able to do all your operations in a cryptocurrency, you will need to pay taxes. Governments only accept their own currency, so, you need to get it to pay taxes, so, demand of national currency is going to exist always. >> "economic vessels like national bonds and other treasuries that nations rely on to borrow money?" This is only an institutional arrangement. Nations with their currency don't really need markets to get money. For instance, in the case of USA, the FED can produce so much money as they think is appropriate (1). I think that cryptocurrency fans suffer from that old illusion that economy can be separated from politics. (1).- Video of Greenspan explaining it: https://www.youtube.com/watch?v=DNCZHAQnfGU https://www.youtube.com/watch?v=DNCZHAQnfGU

mewwts 9y ago
But wouldn’t that have a profound impact on the value of a currency? If all demand for it dissappeared except taxes what would happen to it’s value relative to other currencies? What would happen to trade?
- RobertoG 9y ago
  Maybe demand wouldn't be impacted. Taxes affect every spending in the economy. If you need to pay your taxes where that currency will come from? You are going to need to win it somehow. Instead of exchange currencies in order to be able to pay taxes, why not accepting payment in the government currency in the first place?
  - nybble41 9y ago
    > Instead of exchange currencies in order to be able to pay taxes, why not accepting payment in the government currency in the first place? You don't need to exchange all your currency to pay taxes, and in the hypothetical scenario we're discussing you would want the rest to remain in cryptocurrencies because that is what you need to pay all your other expenses. Beyond the network effect, exchanging only the amount you need for taxes would improve security and limit your exposure to currency manipulation.

freeflight 9y ago

> It would also all but entirely nullify a major chunk of government power and control. At the danger of being somewhat off-topic: The tv show Mr Robot explores a scenario comparable to that in a very interesting and well-made way.