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>"To deliver a peer-to-peer alternative to cash that, through decentralization, did away with the need for trust in financial institutions, which the 2008 crisi

>"To deliver a peer-to-peer alternative to cash that, through decentralization, did away with the need for trust in financial institutions, which the 2008 crisis showed to be unscrupulous, and often corrupt." The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. Decentralization would not do away with the need for financial institutions (or the toxic incentives that can drive them and the ecosystem in which they exist). The USD is pretty decentralized already. Sure the money supply itself is centralized, but the USD is a functioning currency because all people who accept and deal in dollars accept the fact that the dollar is a currency. We're all decentralized nodes in the Fiat network.

ummjackson 9y ago
(author here) I agree! I was calling out Bitcoin's initial goals in the article but don't 100% align with them myself. Financial institutions came to exist for a reason and I'm really not on board with everyone "being their own bank" as I feel it'd be a step backwards from what we have today. What I do agree with is the need for more audit-able, accountable systems so the institutions we trust are less susceptible to corruption.
- lumberjack 9y ago
  Are you sure that was Bitcoin's initial goal? Or just speculation from early adopters? In the actual white paper, Satoshi does not mention any of this, although like you, I do remember these motivations being used very early on. I don't know their origin, but Satoshi simply talks about non reversible transactions, in the context of payments over the Internet.
  - SippinLean 9y ago
    Satoshi did mention it elsewhere: >The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible. http://satoshi.nakamotoinstitute.org/posts/p2pfoundation/1/#selection-33.0-33.538 http://satoshi.nakamotoinstitute.org/posts/p2pfoundation/1/#... Even the whitepaper has a bit about the weaknesses in financial institutions in the intro: https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
    - ummjackson 9y ago
      + the genesis block included the text "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" (Source: https://en.bitcoin.it/wiki/Genesis_block https://en.bitcoin.it/wiki/Genesis_block)
    - Robotbeat 9y ago
      What's really fantastic, though, is that cryptocurrencies are currently in a large bubble themselves. Privacy of the exchanges is no better as you literally have to send them a picture of your ID. And several exchanges have been hacked with the money stolen. So far, I'd say cryptocurrencies (for the average joe/jane) are WORSE than regular banks. And, on the last point about micropayments, well Bitcoin now has such massive transaction fees and massive overhead that micropayments are even more impossible (without adding more layers). The ideological/theoretical purity of cryptocurrencies is completely negated by using exchanges and by the perverse incentives of proof of work leading to enormous returns to scale for those who have developed custom ASICs. Decentralization requires more effort than centralization, but something that requires effort doesn't generally grow very fast... And so we've centralized cryptocurrencies in a haphazard way, making them a lot easier for people to use--thus enabling cryptocurrencies to grow very fast--but also negating all the theoretical benefits. Something useful will eventually come out of the current mess (and there are various initiatives that help address many of these flaws), but probably not before the Zeitgeist becomes disillusioned with cryptocurrencies.
      - chrisco255 9y ago
        If we went back, like 100 years...banks were not these secure, Federally-insured institutions with complex regulations, etc. Banks were robbed. There were runs on banks. They went out of business, people lost their deposits or their accounts. Just look at "It's a Wonderful Life" for a fictional example. Everyone criticizing the current state of crypto as being worse than banks is missing the forest for the trees. These systems are early tech. Ethereum is barely 2 years old. It was easy to criticize dial-up internet, too. I'm sure Barnes & Nobles scoffed at Amazon at one point. Easy to do this, and assume this "dot-com" thing is just a bubble that's going away at some point. Decentralization is ONE feature of crypto currency. One of several. It's not decentralization alone, but the combination of features that brings value to crypto, including programmable economic incentives (a powerful concept we're just learning the implications of). To answer some of your other points: even exchanges are being built on the blockchain now. We have 0x, EtherDelta, etc, which allow you to trade tokens without revealing your identity. So, that problem is starting to resolve itself. We have Proof-of-Stake coins like Qtum, which avoid the Proof-of-Work issues (Ethereum will be moving to PoS soon). Still not sold on the idea that proof-of-work is inherently bad though. I consider that system very secure, as Bitcoin has proven. The blockchain itself has proven quite resilient to hackers, DDoS attacks, government intervention, etc.
  - temp-dude-87844 9y ago
    As others are saying, Satoshi made some political-sounding statements about financial systems around the time of release, but the paper only refers to facets of traditional financial institutions in measured, objective terms. Then again, given that Satoshi's true identity is unknown, a lot of this is necessarily speculation by interpreting a small set of clues.
    - cornyNetHandle 9y ago
      Satoshi worked online with a group of developers for more than a year while keeping perfect operational security. Developed a solution to the byzantine generals problem, but has no published maths papers, otherwise something would have come up through text analysis. Designed bitcoin as a financial instrument, indicating inside knowledge of the banking industry. Has mined enough bitcoin to be on the list of the world's 100 richest people, but hasn't shifted them. Satoshi is a team employed by something very rich, probably a government.
      - chrisco255 9y ago
        What incentives would a government have to undermine their own monetary system?
        cornyNetHandle 9y ago
        Governments undermining their own monetary systems is hardly novel, both for stupid reasons and occasionally for clever ones. Governments often implement new economic systems or currencies, with fairly mixed results.
      - AgentME 9y ago
        >Designed bitcoin as a financial instrument, indicating inside knowledge of the banking industry. what Bitcoin is just the clever but natural progression from previous cryptographic cash systems like b-money. The cypherpunks mailing list had long been interested in making more decentralized cryptographic cash systems along those lines. The fact that one of them finally combined the right cryptographic primitives in the right way to make such a system is hardly a sign of any insider knowledge or outside influence. The creation of Bitcoin was by someone who had been following the cypherpunks' progress in the area for a long time, and finally noticed a clever way to combine standard tools to get the job done. There's certainly nothing superhuman about it. It hardly looks like a problem that was solved by a government throwing money and a team of pros from out of nowhere at it.
  - igorgue 9y ago
    It's in the intro of the white paper.
- meri_dian 9y ago
  Hey! I definitely agree that accountability is important. How do we improve accountability though? I'm skeptical about bitcoin or any other cryptocurrency doing so. From what I know about the financial crisis, it wasn't the nature of fiat currencies that led to the crisis, but rather the complexity of financial instruments obscuring the weakness of underlying mortgage assets combined with incentives driving industry players that turned out to be toxic in the long term. It doesn't seem to me that a distributed currency will eliminate financial complexity or perverse incentives. But as an aside, I remember laughing about Dogecoin with friends back in 2014 when we first discovered it. It must feel awesome to have created something people around the world know about.
  - ric2b 9y ago
    > From what I know about the financial crisis, it wasn't the nature of fiat currencies that led to the crisis, but rather the complexity of financial instruments obscuring the weakness of underlying mortgage assets combined with incentives driving industry players that turned out to be toxic in the long term. Bitcoin wouldn't prevent the mortgage fraud, it would prevent the immoral bailouts that happened after that and that told the industry "don't worry, you're too big to fail, feel free to try harder next time".
- otakucode 9y ago
  They did come to exist for a reason: geography. Primarily, they served as a way to deposit money in one physical location and withdraw it at a different one at a different time. In the modern era, more and more of the economy as a whole flows through these institutions who do nothing more than shuffle numbers down a network link - and yet they charge a percentage cut of the transaction. It costs no more to transmit a larger number, yet they see fit to take more and more depending upon its size. Payment processors are taxing bodies. Mostly unregulated and entirely non-governmental bodies that have as much, if not more, control over the supply of money in the economy than the Federal Reserve. If the Federal Reserve sought to increase the supply of money in the economy, but the payment processors disagreed, who would (or even could) stop them from raising their rates for payment processing to directly counteract the actions of the Fed? No one. They could do it, and they will do it eventually. How anyone could be comfortable with middlemen who provide nothing of significant value sitting in on almost every single transaction which occurs in the entire economy and skimming off the top I have no idea.
  - semanticist 9y ago
    > who would The financial services regulator in the appropriate country. In the UK that's mostly the FCA, in the US it's apparently the guys listed here: https://en.wikipedia.org/wiki/List_of_financial_regulatory_authorities_by_country#U-Z https://en.wikipedia.org/wiki/List_of_financial_regulatory_a... > (or even could) stop them from raising their rates for payment processing Using financial services regulation. It's not like they're immune to laws. Your argument is for more regulation, not a deregulated cryptocurrency.
  - Jesus_Jones 9y ago
    But also those large bodies provide a certain amount of safety when transferring money, so you can see where it went or if a transfer got lost. That's not true with crypto always, people are on their own. There are endless stories of big banks screwing customers over, often because of uncaring bureaucracy, but I do believe a giant bank will set things right, even if I had to complain - I've never had a problem really, but I have heard of people who do, and don't forget Wells Fargo.
- cornyNetHandle 9y ago
  What I never understood with the blockchain is the idea that it would change the politics of finance in favour of the little guy. As far as I can tell, financial institutions are exceedingly well practiced at co-opting new monetary systems, as they have been doing exactly that for a very long time, so I never thought that a new model of ledger was ever going to really faze them.
  - Certhas 9y ago
    It should be a bonanza for them. Unregulated market. Every trade/contract they want.
    - deleted 9y ago
      [deleted]
    - Demiurge 9y ago
      I don't think anyone wants unregulated markets for everyone, just like no one really wants anarchy. There are criminal, or rebellious elements in every group, but co-beneficial arbitrage is what we've evolved to.
      - cornyNetHandle 9y ago
        Do you mean anomie? I know a few Kropotkin fans who are fairly certain that they want anarchy.
  - ummjackson 9y ago
    Absolutely, and that's what is happening right now. I honestly don't have a solution for this problem... other than trying to make it as least appealing to these institutions are possible.
    - cornyNetHandle 9y ago
      The only 'solution' I can see to this problem, is to develop an alternative to the floating monetary unit, of solving the calculation of exchanging goods and labour. Money is useful, because it solves for the 'n' of a given trade by using all the pricing of transactions as a form of parallel computation, so the fact that it may often give sub-optimal results is outweighed by the fact that it has such a low overhead, compared to the traditional alternatives, such as planned resource based economies, which have historically been plagued by both sub-optimal results and a very high overhead. The revolutionary work in economics isn't being done on the blockchain, or in any other new currencies for that matter. It is being done in the world of AI and big-data, when applied to logistics. If you really want to revolutionise money, you have to try and make it obsolete. edit: Also, seeking sources of funding may be problematic for such an enterprise - "Please can you invest in this plan to destroy capitalism." - being a particularly difficult sell. Perhaps if it can be reframed as - "Please can you invest in this plan to destroy capitalism that also has excellent quarterly returns." - then it might get somewhere.
- frik 9y ago
  Related to joke DogeCoin: One of the US crypto exchanges "Kraken" went dodo. It has been offline for more than 30 hours without prior notice. Maybe another joke, or MtGox -.- https://news.ycombinator.com/item?id=16131750 https://news.ycombinator.com/item?id=16131750 ***MAINTENANCE ANNOUNCEMENT*** Kraken is presently offline for maintenance. While maintenance is underway, the website and API will not be reachable, and orders will not be able to be placed or canceled. The Kraken Team https://www.kraken.com https://www.kraken.com - a former(?) major US crypto exchange
- wellboy 9y ago
  Also in yhe case of the dozens of countries with incredible inflation, Venezuela, African countries?
mkirklions 9y ago
>The USD is pretty decentralized already People are insane. Fiat currency is the definition of centralized currency
- lukasm 9y ago
  It really depends what you mean by that. If you compare it to currency in a game which can be removed with a bug that sets a few bits then USD it's quite decentralized in some respects.
- abakker 9y ago
  Please define what you mean by Centralized and Decentralized. I believe you and the OP are talking at cross purposes. the USD is decentralized in that P2P transactions are accepted with almost anyone in the world without needing a centralized intermediary.
  - meri_dian 9y ago
    Exactly. I'm realizing now that we need to be much more precise when we talk about centralization of currencies to have meaningful discussion.
  - JumpCrisscross 9y ago
    > P2P transactions are accepted with almost anyone in the world For a startling Exhibit A, consider that North Korea [1] and Iran [2] hold and transact with large quantities of U.S. dollars (in physical cash) despite American sanctions. [1] http://www.cnn.com/2017/10/16/asia/hong-kong-north-korea/index.html http://www.cnn.com/2017/10/16/asia/hong-kong-north-korea/ind... [2] https://www.wsj.com/articles/a-tally-of-iran-sanctions-relief-includes-more-than-10-billion-in-cash-gold-1483112751 https://www.wsj.com/articles/a-tally-of-iran-sanctions-relie...
  - komali2 9y ago
    Is it centralized in the sense that a single organism can exert more control than anyone else on the real value of the USD by printing more?
jzoch 9y ago
The USD is one of the most centralized currencies in the world. Just because everyone has some does not mean its decentralized. It is still minted and distributed through centralized silos owned by the government, and policy enacted by the government ON the currency is still effective.
- md2be 9y ago
  And it’s the reason why we have such an incredible economy.
- macawfish 9y ago
  That comment was a reference to the fact that money itself operates on belief systems and motivations that are distributed and decentralized
- JumpCrisscross 9y ago
  > it is still minted and distributed through centralized silos owned by the government Money can be created by privately-owned banks, which adds a significant decentralized element to the mix. Cash settlement is also, if done physically, a totally de-centralised transaction mode.
- erispoe 9y ago
  In modern systems money can be created by banks lending money. That's an interesting property as money creation is tied to the course of the economy. However, this can lead to inflation if the amount of money created actually exceeds the growth in economic activity. In the gold standard model where the amount of money is completely uncorrelated with economic activity, you have inherent deflation. Deflation is a serious threat, as it pushed people to hold onto their currency (as the real value automatically rises) instead of spending or investing it. Bitcoin is really a digital gold standard. There is no way that a gold standard currency can support a growing economy efficiently.
  - throwawayjava 9y ago
    > completely uncorrelated with economic activity It's always surprising to me when (not-already-on-the-top-f-the-world) software types see virtue in gold standards. The fact that our work -- moving bits around -- produces so much economic value is an epitome of everything that's wrong with a gold standard.
tribune 9y ago
The point of cryptocurrencies is to rediscover everything we already know about money, the hard way
- abakker 9y ago
  That is certainly Matt Levine's take, as well. It is kind of funny, actually. Engineers rediscovering by doing, and wall street having these existential self-doubts about whether there is some hidden sophistication which is entirely absent.
- Mtinie 9y ago
  On the surface that can be a beneficial exercise. 400+ years of financial dogma and cruft has accumulated in the world's financial system(s). If the sole eventuality of this period of cryptocurrency development is that some of the "sacred cows" stood up in the four centuries since are torn down, and outdated models are discovered and updated to better serve people of today, I consider it worthwhile progress.
  - Sangermaine 9y ago
    Except that's not what's happening. What's happening is that some people are relearning the hard way why those "sacred cows" are so sacred. We've become so used to having them that some people take them for granted and forget why they exist, like the "raw water" people forgetting why municipal water systems exist. e.g. "Why do we need all these regulations anyway? It's just statist slavery!" later "Ah right, the fraud and the scams."
nerdponx 9y ago
FWIW, there's a plausible argument to be made that the 2008 crisis was aided (although not fundamentally caused) by excessively loose monetary policy in the mid/early-2000s, followed by sharp tightening. That isn't to say the mortgage industry wasn't propped up on fraud, etc. But it wasn't irrelevant.
- UncleEntity 9y ago
  Well, Austrian Business Cycle Theory claims that it was indeed fundamentally caused by excessively loose monetary policy. As to plausibility, I guess that depends on your personal views.
creeble 9y ago
>”The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency.” Indeed, the ‘sort of activity’ which led to crisi is simply called greed. As far as I can tell, crypto currencies have simply become new fuel for greed thus far, and the result will likely be the same. A cure for centralized currency != a cure for greed.
andrewla 9y ago
> The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. I can't speak for every ideological bitcoin supporter, but you and I may differ on what constituted the "crisis". I agree that it would not deal with the activity which led to the financial crisis. But to many, the crisis was not that the banks all failed, but that they were not allowed to fail, and were bailed out instead. The genesis block doesn't say anything about addressing irresponsible behavior on the part of the banks. It says "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" People can do stupid and irresponsible things, and they can do stupid things with other people's money, but they have to bear the consequences.
- stanleydrew 9y ago
  I'm not sure what your point is. If all banks switched from dollars to Bitcoin, they could still be bailed out.
  - andrewla 9y ago
    Sure, if the government in question has the funds on hand or can borrow them. But they can't just literally increase the number of Bitcoin by a factor of 5 [1] in order to give trillions of dollars to people who have demonstrated their incompetence at handling that money. [1] https://fred.stlouisfed.org/series/BASE https://fred.stlouisfed.org/series/BASE
    - paulmd 9y ago
      > But they can't just literally increase the number of Bitcoin by a factor of 5 [1] in order to give trillions of dollars to people who have demonstrated their incompetence at handling that money. Sure you can. It's code, why wouldn't you be able to change it? There is no reason that cryptocurrency has to be inherently deflationary, rewards can easily be issued at a constant rate or any other rate. You are mixing up Bitcoin, the libertarian implementation, with the abstract cryptocurrency in general. This is an implementation detail. In fact, there is actually already a rather storied history of centralized interventions to bail out failing institutions. See: the DAO hack and the subsequent rollback... Could Vitalik just as easily have said "JP Morgan now has +5 million Eth?" Absolutely. Nobody else necessarily needs to accept that version of the blockchain (see: Ethereum Classic) but there is a network effect here: if everyone else agrees to accept that version of history then sucks to be you, everyone wants to deal with Eth not PaulCoins. And people tend not to be willing to accept calamity when offered an alternative. Ethereum Classic is the version of history which best upholds those high-minded libertarian ideals, but it's also the version of history where a single attacker has 15% of all the ether.
wuliwong 9y ago
I disagree, I think that the federal reserve's artificially low interest rates and essentially unlimited supply of money for the banks to loan out at these interest rates were at the heart of the most recent financial crisis in the US. A decentralized currency would certainly mitigate that.
- soVeryTired 9y ago
  What exactly do you mean by 'artificially low'? All short term rates are just a function of central bank policy. The bank will raise or lower rates in an attempt to control inflation (and any other mandate). 'Abnormal' I'd grant you, but not artificial.
  - joyeuse6701 9y ago
    artificial as in not 'natural' and natural as in set by market forces, which a central bank setting a short term rate is not a 'natural' market force.
    - soVeryTired 9y ago
      It's been a long time since short rates were set by market forces. And the financial system wasn't particularly stable then either.
- un_montagnard 9y ago
  No. The heart of the crisis is people believing they can easily make money by investing in a product they don't understand. I can sell a CDO on CDS in Bitcoin, and make a lot of money while the buyers are all getting screwed. And they will be even more screwed as nobody will print cash to cover or limit their losses.
  - stale2002 9y ago
    The people who invested in CDOs SHOULD get screwed. The rest of us who weren't stupid enough to do that shouldn't be forced to cover their losses. That's the point.
xorcist 9y ago
> The USD is pretty decentralized already. The decentralized aspect of using dollars in cash form(!), is something I would rather call permissionless. And that is exactly what Bitcoin set out to approximate for the Internet age. (Indeed the "cash" reference in the whitepaper title refers to fungibility and permissionlessness, not tangibility or pictures of old presidents. This idea is much older than Bitcoin.)
trevelyan 9y ago
> The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. It actually would deal with the issue that led to the GFC. Remember --- the problem wasn't that there were fraudulent mortgages -- it is that these mortgages were packaged and repackaged in ways that deliberately obscured the risk involved so that people were buying stuff that had no underlying value. The lack of transparency is what encouraged the fraud and created the incentives for it, which is why the behaviour only stopped when there was a 65% fall in the value of pretty much all mortgage-backed-securities. A mortgage CDO built on something like Ethereum would be programmatically transparent and anyone could look in real-time to see the value of their tranche. It would be trivial to distinguish between good and bad investments. And while there's still the potential for people to purchase things that do not have value, it becomes pretty much impossible for 2008 to happen again in a financial system run on crypto fintech -- intermediaries in the financial system would simply not be able to deliberately obscure transparency into which assets were owned and covered by which securities: if you wanted to check repayment rates you could script something to do the work in real-time by simply monitoring the blockchain.
- whatok 9y ago
  Real-time (compared to equities) pricing as you know it does not exist in mortgages and would not be enabled by what you're describing. Transparency in something like this also does not help in the case of massive gaps downward in price which happened with a lot of these instruments and in fact would probably accelerate sell-offs. Transparency of the underlying was not the issue. Anyone investing in this stuff could have figured it out if they wanted to.
  - Certhas 9y ago
    In fact I believe the rating agencies that mis-rated the risk of these CDOs had full access to all this information anyways.
    - trevelyan 9y ago
      You're right that it was possible for people to consult the original (think, paper-based prospecti) in at least some cases, but most people relied on the ratings agencies and they claim to have essentially greenlit their ratings on what the Black–Scholes equation told them, using assumptions that were convenient but untrue (i.e. Gaussian cupola -- that defaults would not be correlated).
Certhas 9y ago
Bitcoin - Because the problem with global finance is too much regulation. It baffles me how seemingly capable people have had the idea that a cryptocurrency would counter 2008 style stuff. It seems like a reasoning short circuit: Big institutions failed us, so something without big institutions must be immune. The big institutions failed us exactly by allowing each other to do too much. By not regulating (which is by definition centrally imposed).
- splintercell 9y ago
  > It baffles me how seemingly capable people have had the idea that a cryptocurrency would counter 2008 style stuff. It seems like a reasoning short circuit: Big institutions failed us, so something without big institutions must be immune. I think you misunderstood what people mean by saying "counter 2008 style stuff". The aim isn't to prevent 2008 from happening again, but if 2008 were to happen again, then be in a safe situation. Also you're taking the input from your opponents, but plugging that input into your own model, without realizing that bitcoin proponents do not share your model. Your model is: "Lack of regulation caused 2008 to happen", but not everybody agrees with that model. There are multiple models, but the most common model is that central bank inflating the money supply, and manipulating interest rates caused 2003-2007 to happen. 2008 was merely the well desired correction. Same model applied to today, it means that we are currently in a major bubble and this bubble will pop in the coming years. Alternate financial systems such as bitcoin and smart contracts, are 'customizable' enough (For lack of a better term) that they give people a fighting chance. 1. Capital controls can't be imposed 2. Bank accounts can't be confiscated 3. If regulations have to be bypassed to make trade happen, then they should be more easily bypassed (for instance minimum wage laws). So when the next crises happens, people are able to flee nations with their capital, their bank accounts will not be able to confiscated, and they will side step any regulation which screws people over. This is the aim of cryptocurrency proponents, irrespective of what is being said.
  - ska 9y ago
    There are multiple models, but the most common model is that central bank inflating the money supply, and manipulating interest rates caused 2003-2007 to happen. 2008 was merely the well desired correction Regardless of it's truth value, that is not clearly the most common model.
peterjlee 9y ago
It wasn't "The sort of activity which led to the financial crisis" that inspired bitcoin. After the crisis happened the US government funded the massive bailout by printing more money. It turned out to be a "good" decision since it prevented a catastrophic economic failure but it did cause more inflation and some people weren't happy that a government can just print more money on a whim. So that's how the bitcoin came about to make a currency where there are no central governing body that can just print more whenever it wants.
- noddy1 9y ago
  The banks seem to have won the propaganda war about bailouts preventing economic collapse pretty well. I guess once the government makes the bailout and the banks accept the bailout, both parties are pretty committed to ensuring the public thinks that the bailouts were required. What we really got was a tacit approval for bankers that they could make highly leveraged bets in the 7 years that the markets were going up, make shitloads of money, feel like geniuses, and then when it all inevitably explodes the government would bail them out and then QE like crazy to pick up the pieces. The QE would be given not to citizens, but to banks to inflate equity markets, and start the whole cycle again. Now we have a whole new generation of financial "geniuses" overhyping every asset class, making shitloads of money off it all, thinking they are geniuses, and when it all collapses again they think the same thing will happen. It may do, but this time I don't have to be involved in that bullshit. My money is now unprintable. They can devalue the USD shitcoin all they want, but there are still only 21 million possible bitcoins and that's all I care about.
- openasocket 9y ago
  The government didn't actually print any money, the central banks just acted as a "lender of last resort," which works just as well in Bitcoin as it does in cash.
  - deleted 9y ago
    [deleted]
  - noddy1 9y ago
    They printed $4+ trillion in the aftermath and gave it to banks.
buckthundaz 9y ago
You are correct that the activity that led to all financial crises will not be mitigated in the domain of national currencies. It will be avoided in decentralized money that is uncorrelated, like gold. Your concept of decentralization is off. The purpose of it is this: How many points of failure are there? How many of these points can break before the cards all fall? If this happens, who pays for it? This illustrates that the USD is not decentralized. Cryptocurrency is an exit from this, much like gold or real estate or other investment vehicles. Cryptocurrency is available to anyone with a phone and internet access -- that cannot be said for any other investment vehicle. This will take the wind out of the sails of financial institutions as there is another option for people.
- shawn 9y ago
  Possibly, but the space requirements for crypto shouldn't be underestimated. I think Satoshi kept 1MB blocks because he realized it would quickly become untenable for most people to run full nodes. ETH has similar problems. What does the end game for this situation look like? Will people just create Bitcoin Zero, which is identical to Bitcoin but preallocates the existing coins starting from the genesis block? (A manual GC, as it were.) Otherwise it seems like crypto will be around 100 years from now, but probably not BTC. At least not in a form where non-miners can participate.
- jhwang5 9y ago
  Switching to cryptocurrency actually makes the problems worse, because instead of regulated entities calling the shots, we have an oligarchy of ASIC-armed miners calling the shots. Between the two evils, any sane person would rather trust a regulated business than some folks who prefer to hide in the shadows.
roadbeats 9y ago
Bullshit. Have you ever done wire transfer ? Every SWIFT transaction goes through US. Let’s say you want to transfer USD from one Vietnamase bank to another Vietnamase bank; even local USD transfers has to go through US and people get charged a lot for that. Just for transferring 25k USD between two local banks, I got charged $150. It’s ridiculous to claim “USD is decentralized” in a world where developing countries can not even trade with eachother without paying US a cut.

ummjackson 9y ago

(author here) I agree! I was calling out Bitcoin's initial goals in the article but don't 100% align with them myself. Financial institutions came to exist for a reason and I'm really not on board with everyone "being their own bank" as I feel it'd be a step backwards from what we have today. What I do agree with is the need for more audit-able, accountable systems so the institutions we trust are less susceptible to corruption.

lumberjack 9y ago
Are you sure that was Bitcoin's initial goal? Or just speculation from early adopters? In the actual white paper, Satoshi does not mention any of this, although like you, I do remember these motivations being used very early on. I don't know their origin, but Satoshi simply talks about non reversible transactions, in the context of payments over the Internet.
- SippinLean 9y ago
  Satoshi did mention it elsewhere: >The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible. http://satoshi.nakamotoinstitute.org/posts/p2pfoundation/1/#selection-33.0-33.538 http://satoshi.nakamotoinstitute.org/posts/p2pfoundation/1/#... Even the whitepaper has a bit about the weaknesses in financial institutions in the intro: https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
  - ummjackson 9y ago
    + the genesis block included the text "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" (Source: https://en.bitcoin.it/wiki/Genesis_block https://en.bitcoin.it/wiki/Genesis_block)
  - Robotbeat 9y ago
    What's really fantastic, though, is that cryptocurrencies are currently in a large bubble themselves. Privacy of the exchanges is no better as you literally have to send them a picture of your ID. And several exchanges have been hacked with the money stolen. So far, I'd say cryptocurrencies (for the average joe/jane) are WORSE than regular banks. And, on the last point about micropayments, well Bitcoin now has such massive transaction fees and massive overhead that micropayments are even more impossible (without adding more layers). The ideological/theoretical purity of cryptocurrencies is completely negated by using exchanges and by the perverse incentives of proof of work leading to enormous returns to scale for those who have developed custom ASICs. Decentralization requires more effort than centralization, but something that requires effort doesn't generally grow very fast... And so we've centralized cryptocurrencies in a haphazard way, making them a lot easier for people to use--thus enabling cryptocurrencies to grow very fast--but also negating all the theoretical benefits. Something useful will eventually come out of the current mess (and there are various initiatives that help address many of these flaws), but probably not before the Zeitgeist becomes disillusioned with cryptocurrencies.
    - chrisco255 9y ago
      If we went back, like 100 years...banks were not these secure, Federally-insured institutions with complex regulations, etc. Banks were robbed. There were runs on banks. They went out of business, people lost their deposits or their accounts. Just look at "It's a Wonderful Life" for a fictional example. Everyone criticizing the current state of crypto as being worse than banks is missing the forest for the trees. These systems are early tech. Ethereum is barely 2 years old. It was easy to criticize dial-up internet, too. I'm sure Barnes & Nobles scoffed at Amazon at one point. Easy to do this, and assume this "dot-com" thing is just a bubble that's going away at some point. Decentralization is ONE feature of crypto currency. One of several. It's not decentralization alone, but the combination of features that brings value to crypto, including programmable economic incentives (a powerful concept we're just learning the implications of). To answer some of your other points: even exchanges are being built on the blockchain now. We have 0x, EtherDelta, etc, which allow you to trade tokens without revealing your identity. So, that problem is starting to resolve itself. We have Proof-of-Stake coins like Qtum, which avoid the Proof-of-Work issues (Ethereum will be moving to PoS soon). Still not sold on the idea that proof-of-work is inherently bad though. I consider that system very secure, as Bitcoin has proven. The blockchain itself has proven quite resilient to hackers, DDoS attacks, government intervention, etc.
- temp-dude-87844 9y ago
  As others are saying, Satoshi made some political-sounding statements about financial systems around the time of release, but the paper only refers to facets of traditional financial institutions in measured, objective terms. Then again, given that Satoshi's true identity is unknown, a lot of this is necessarily speculation by interpreting a small set of clues.
  - cornyNetHandle 9y ago
    Satoshi worked online with a group of developers for more than a year while keeping perfect operational security. Developed a solution to the byzantine generals problem, but has no published maths papers, otherwise something would have come up through text analysis. Designed bitcoin as a financial instrument, indicating inside knowledge of the banking industry. Has mined enough bitcoin to be on the list of the world's 100 richest people, but hasn't shifted them. Satoshi is a team employed by something very rich, probably a government.
    - chrisco255 9y ago
      What incentives would a government have to undermine their own monetary system?
      - cornyNetHandle 9y ago
        Governments undermining their own monetary systems is hardly novel, both for stupid reasons and occasionally for clever ones. Governments often implement new economic systems or currencies, with fairly mixed results.
    - AgentME 9y ago
      >Designed bitcoin as a financial instrument, indicating inside knowledge of the banking industry. what Bitcoin is just the clever but natural progression from previous cryptographic cash systems like b-money. The cypherpunks mailing list had long been interested in making more decentralized cryptographic cash systems along those lines. The fact that one of them finally combined the right cryptographic primitives in the right way to make such a system is hardly a sign of any insider knowledge or outside influence. The creation of Bitcoin was by someone who had been following the cypherpunks' progress in the area for a long time, and finally noticed a clever way to combine standard tools to get the job done. There's certainly nothing superhuman about it. It hardly looks like a problem that was solved by a government throwing money and a team of pros from out of nowhere at it.
- igorgue 9y ago
  It's in the intro of the white paper.
meri_dian 9y ago
Hey! I definitely agree that accountability is important. How do we improve accountability though? I'm skeptical about bitcoin or any other cryptocurrency doing so. From what I know about the financial crisis, it wasn't the nature of fiat currencies that led to the crisis, but rather the complexity of financial instruments obscuring the weakness of underlying mortgage assets combined with incentives driving industry players that turned out to be toxic in the long term. It doesn't seem to me that a distributed currency will eliminate financial complexity or perverse incentives. But as an aside, I remember laughing about Dogecoin with friends back in 2014 when we first discovered it. It must feel awesome to have created something people around the world know about.
- ric2b 9y ago
  > From what I know about the financial crisis, it wasn't the nature of fiat currencies that led to the crisis, but rather the complexity of financial instruments obscuring the weakness of underlying mortgage assets combined with incentives driving industry players that turned out to be toxic in the long term. Bitcoin wouldn't prevent the mortgage fraud, it would prevent the immoral bailouts that happened after that and that told the industry "don't worry, you're too big to fail, feel free to try harder next time".
otakucode 9y ago
They did come to exist for a reason: geography. Primarily, they served as a way to deposit money in one physical location and withdraw it at a different one at a different time. In the modern era, more and more of the economy as a whole flows through these institutions who do nothing more than shuffle numbers down a network link - and yet they charge a percentage cut of the transaction. It costs no more to transmit a larger number, yet they see fit to take more and more depending upon its size. Payment processors are taxing bodies. Mostly unregulated and entirely non-governmental bodies that have as much, if not more, control over the supply of money in the economy than the Federal Reserve. If the Federal Reserve sought to increase the supply of money in the economy, but the payment processors disagreed, who would (or even could) stop them from raising their rates for payment processing to directly counteract the actions of the Fed? No one. They could do it, and they will do it eventually. How anyone could be comfortable with middlemen who provide nothing of significant value sitting in on almost every single transaction which occurs in the entire economy and skimming off the top I have no idea.
- semanticist 9y ago
  > who would The financial services regulator in the appropriate country. In the UK that's mostly the FCA, in the US it's apparently the guys listed here: https://en.wikipedia.org/wiki/List_of_financial_regulatory_authorities_by_country#U-Z https://en.wikipedia.org/wiki/List_of_financial_regulatory_a... > (or even could) stop them from raising their rates for payment processing Using financial services regulation. It's not like they're immune to laws. Your argument is for more regulation, not a deregulated cryptocurrency.
- Jesus_Jones 9y ago
  But also those large bodies provide a certain amount of safety when transferring money, so you can see where it went or if a transfer got lost. That's not true with crypto always, people are on their own. There are endless stories of big banks screwing customers over, often because of uncaring bureaucracy, but I do believe a giant bank will set things right, even if I had to complain - I've never had a problem really, but I have heard of people who do, and don't forget Wells Fargo.
cornyNetHandle 9y ago
What I never understood with the blockchain is the idea that it would change the politics of finance in favour of the little guy. As far as I can tell, financial institutions are exceedingly well practiced at co-opting new monetary systems, as they have been doing exactly that for a very long time, so I never thought that a new model of ledger was ever going to really faze them.
- Certhas 9y ago
  It should be a bonanza for them. Unregulated market. Every trade/contract they want.
  - deleted 9y ago
    [deleted]
  - Demiurge 9y ago
    I don't think anyone wants unregulated markets for everyone, just like no one really wants anarchy. There are criminal, or rebellious elements in every group, but co-beneficial arbitrage is what we've evolved to.
    - cornyNetHandle 9y ago
      Do you mean anomie? I know a few Kropotkin fans who are fairly certain that they want anarchy.
- ummjackson 9y ago
  Absolutely, and that's what is happening right now. I honestly don't have a solution for this problem... other than trying to make it as least appealing to these institutions are possible.
  - cornyNetHandle 9y ago
    The only 'solution' I can see to this problem, is to develop an alternative to the floating monetary unit, of solving the calculation of exchanging goods and labour. Money is useful, because it solves for the 'n' of a given trade by using all the pricing of transactions as a form of parallel computation, so the fact that it may often give sub-optimal results is outweighed by the fact that it has such a low overhead, compared to the traditional alternatives, such as planned resource based economies, which have historically been plagued by both sub-optimal results and a very high overhead. The revolutionary work in economics isn't being done on the blockchain, or in any other new currencies for that matter. It is being done in the world of AI and big-data, when applied to logistics. If you really want to revolutionise money, you have to try and make it obsolete. edit: Also, seeking sources of funding may be problematic for such an enterprise - "Please can you invest in this plan to destroy capitalism." - being a particularly difficult sell. Perhaps if it can be reframed as - "Please can you invest in this plan to destroy capitalism that also has excellent quarterly returns." - then it might get somewhere.
frik 9y ago
Related to joke DogeCoin: One of the US crypto exchanges "Kraken" went dodo. It has been offline for more than 30 hours without prior notice. Maybe another joke, or MtGox -.- https://news.ycombinator.com/item?id=16131750 https://news.ycombinator.com/item?id=16131750 ***MAINTENANCE ANNOUNCEMENT*** Kraken is presently offline for maintenance. While maintenance is underway, the website and API will not be reachable, and orders will not be able to be placed or canceled. The Kraken Team https://www.kraken.com https://www.kraken.com - a former(?) major US crypto exchange
wellboy 9y ago
Also in yhe case of the dozens of countries with incredible inflation, Venezuela, African countries?

mkirklions 9y ago

>The USD is pretty decentralized already People are insane. Fiat currency is the definition of centralized currency

lukasm 9y ago
It really depends what you mean by that. If you compare it to currency in a game which can be removed with a bug that sets a few bits then USD it's quite decentralized in some respects.
abakker 9y ago
Please define what you mean by Centralized and Decentralized. I believe you and the OP are talking at cross purposes. the USD is decentralized in that P2P transactions are accepted with almost anyone in the world without needing a centralized intermediary.
- meri_dian 9y ago
  Exactly. I'm realizing now that we need to be much more precise when we talk about centralization of currencies to have meaningful discussion.
- JumpCrisscross 9y ago
  > P2P transactions are accepted with almost anyone in the world For a startling Exhibit A, consider that North Korea [1] and Iran [2] hold and transact with large quantities of U.S. dollars (in physical cash) despite American sanctions. [1] http://www.cnn.com/2017/10/16/asia/hong-kong-north-korea/index.html http://www.cnn.com/2017/10/16/asia/hong-kong-north-korea/ind... [2] https://www.wsj.com/articles/a-tally-of-iran-sanctions-relief-includes-more-than-10-billion-in-cash-gold-1483112751 https://www.wsj.com/articles/a-tally-of-iran-sanctions-relie...
- komali2 9y ago
  Is it centralized in the sense that a single organism can exert more control than anyone else on the real value of the USD by printing more?

jzoch 9y ago

The USD is one of the most centralized currencies in the world. Just because everyone has some does not mean its decentralized. It is still minted and distributed through centralized silos owned by the government, and policy enacted by the government ON the currency is still effective.

md2be 9y ago
And it’s the reason why we have such an incredible economy.
macawfish 9y ago
That comment was a reference to the fact that money itself operates on belief systems and motivations that are distributed and decentralized
JumpCrisscross 9y ago
> it is still minted and distributed through centralized silos owned by the government Money can be created by privately-owned banks, which adds a significant decentralized element to the mix. Cash settlement is also, if done physically, a totally de-centralised transaction mode.
erispoe 9y ago
In modern systems money can be created by banks lending money. That's an interesting property as money creation is tied to the course of the economy. However, this can lead to inflation if the amount of money created actually exceeds the growth in economic activity. In the gold standard model where the amount of money is completely uncorrelated with economic activity, you have inherent deflation. Deflation is a serious threat, as it pushed people to hold onto their currency (as the real value automatically rises) instead of spending or investing it. Bitcoin is really a digital gold standard. There is no way that a gold standard currency can support a growing economy efficiently.
- throwawayjava 9y ago
  > completely uncorrelated with economic activity It's always surprising to me when (not-already-on-the-top-f-the-world) software types see virtue in gold standards. The fact that our work -- moving bits around -- produces so much economic value is an epitome of everything that's wrong with a gold standard.

tribune 9y ago

The point of cryptocurrencies is to rediscover everything we already know about money, the hard way

abakker 9y ago
That is certainly Matt Levine's take, as well. It is kind of funny, actually. Engineers rediscovering by doing, and wall street having these existential self-doubts about whether there is some hidden sophistication which is entirely absent.
Mtinie 9y ago
On the surface that can be a beneficial exercise. 400+ years of financial dogma and cruft has accumulated in the world's financial system(s). If the sole eventuality of this period of cryptocurrency development is that some of the "sacred cows" stood up in the four centuries since are torn down, and outdated models are discovered and updated to better serve people of today, I consider it worthwhile progress.
- Sangermaine 9y ago
  Except that's not what's happening. What's happening is that some people are relearning the hard way why those "sacred cows" are so sacred. We've become so used to having them that some people take them for granted and forget why they exist, like the "raw water" people forgetting why municipal water systems exist. e.g. "Why do we need all these regulations anyway? It's just statist slavery!" later "Ah right, the fraud and the scams."

nerdponx 9y ago

FWIW, there's a plausible argument to be made that the 2008 crisis was aided (although not fundamentally caused) by excessively loose monetary policy in the mid/early-2000s, followed by sharp tightening. That isn't to say the mortgage industry wasn't propped up on fraud, etc. But it wasn't irrelevant.

UncleEntity 9y ago
Well, Austrian Business Cycle Theory claims that it was indeed fundamentally caused by excessively loose monetary policy. As to plausibility, I guess that depends on your personal views.

creeble 9y ago

>”The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency.” Indeed, the ‘sort of activity’ which led to crisi is simply called greed. As far as I can tell, crypto currencies have simply become new fuel for greed thus far, and the result will likely be the same. A cure for centralized currency != a cure for greed.

andrewla 9y ago

> The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. I can't speak for every ideological bitcoin supporter, but you and I may differ on what constituted the "crisis". I agree that it would not deal with the activity which led to the financial crisis. But to many, the crisis was not that the banks all failed, but that they were not allowed to fail, and were bailed out instead. The genesis block doesn't say anything about addressing irresponsible behavior on the part of the banks. It says "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" People can do stupid and irresponsible things, and they can do stupid things with other people's money, but they have to bear the consequences.

stanleydrew 9y ago
I'm not sure what your point is. If all banks switched from dollars to Bitcoin, they could still be bailed out.
- andrewla 9y ago
  Sure, if the government in question has the funds on hand or can borrow them. But they can't just literally increase the number of Bitcoin by a factor of 5 [1] in order to give trillions of dollars to people who have demonstrated their incompetence at handling that money. [1] https://fred.stlouisfed.org/series/BASE https://fred.stlouisfed.org/series/BASE
  - paulmd 9y ago
    > But they can't just literally increase the number of Bitcoin by a factor of 5 [1] in order to give trillions of dollars to people who have demonstrated their incompetence at handling that money. Sure you can. It's code, why wouldn't you be able to change it? There is no reason that cryptocurrency has to be inherently deflationary, rewards can easily be issued at a constant rate or any other rate. You are mixing up Bitcoin, the libertarian implementation, with the abstract cryptocurrency in general. This is an implementation detail. In fact, there is actually already a rather storied history of centralized interventions to bail out failing institutions. See: the DAO hack and the subsequent rollback... Could Vitalik just as easily have said "JP Morgan now has +5 million Eth?" Absolutely. Nobody else necessarily needs to accept that version of the blockchain (see: Ethereum Classic) but there is a network effect here: if everyone else agrees to accept that version of history then sucks to be you, everyone wants to deal with Eth not PaulCoins. And people tend not to be willing to accept calamity when offered an alternative. Ethereum Classic is the version of history which best upholds those high-minded libertarian ideals, but it's also the version of history where a single attacker has 15% of all the ether.

wuliwong 9y ago

I disagree, I think that the federal reserve's artificially low interest rates and essentially unlimited supply of money for the banks to loan out at these interest rates were at the heart of the most recent financial crisis in the US. A decentralized currency would certainly mitigate that.

soVeryTired 9y ago
What exactly do you mean by 'artificially low'? All short term rates are just a function of central bank policy. The bank will raise or lower rates in an attempt to control inflation (and any other mandate). 'Abnormal' I'd grant you, but not artificial.
- joyeuse6701 9y ago
  artificial as in not 'natural' and natural as in set by market forces, which a central bank setting a short term rate is not a 'natural' market force.
  - soVeryTired 9y ago
    It's been a long time since short rates were set by market forces. And the financial system wasn't particularly stable then either.
un_montagnard 9y ago
No. The heart of the crisis is people believing they can easily make money by investing in a product they don't understand. I can sell a CDO on CDS in Bitcoin, and make a lot of money while the buyers are all getting screwed. And they will be even more screwed as nobody will print cash to cover or limit their losses.
- stale2002 9y ago
  The people who invested in CDOs SHOULD get screwed. The rest of us who weren't stupid enough to do that shouldn't be forced to cover their losses. That's the point.

xorcist 9y ago

> The USD is pretty decentralized already. The decentralized aspect of using dollars in cash form(!), is something I would rather call permissionless. And that is exactly what Bitcoin set out to approximate for the Internet age. (Indeed the "cash" reference in the whitepaper title refers to fungibility and permissionlessness, not tangibility or pictures of old presidents. This idea is much older than Bitcoin.)

trevelyan 9y ago

> The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. It actually would deal with the issue that led to the GFC. Remember --- the problem wasn't that there were fraudulent mortgages -- it is that these mortgages were packaged and repackaged in ways that deliberately obscured the risk involved so that people were buying stuff that had no underlying value. The lack of transparency is what encouraged the fraud and created the incentives for it, which is why the behaviour only stopped when there was a 65% fall in the value of pretty much all mortgage-backed-securities. A mortgage CDO built on something like Ethereum would be programmatically transparent and anyone could look in real-time to see the value of their tranche. It would be trivial to distinguish between good and bad investments. And while there's still the potential for people to purchase things that do not have value, it becomes pretty much impossible for 2008 to happen again in a financial system run on crypto fintech -- intermediaries in the financial system would simply not be able to deliberately obscure transparency into which assets were owned and covered by which securities: if you wanted to check repayment rates you could script something to do the work in real-time by simply monitoring the blockchain.

whatok 9y ago
Real-time (compared to equities) pricing as you know it does not exist in mortgages and would not be enabled by what you're describing. Transparency in something like this also does not help in the case of massive gaps downward in price which happened with a lot of these instruments and in fact would probably accelerate sell-offs. Transparency of the underlying was not the issue. Anyone investing in this stuff could have figured it out if they wanted to.
- Certhas 9y ago
  In fact I believe the rating agencies that mis-rated the risk of these CDOs had full access to all this information anyways.
  - trevelyan 9y ago
    You're right that it was possible for people to consult the original (think, paper-based prospecti) in at least some cases, but most people relied on the ratings agencies and they claim to have essentially greenlit their ratings on what the Black–Scholes equation told them, using assumptions that were convenient but untrue (i.e. Gaussian cupola -- that defaults would not be correlated).

Certhas 9y ago

Bitcoin - Because the problem with global finance is too much regulation. It baffles me how seemingly capable people have had the idea that a cryptocurrency would counter 2008 style stuff. It seems like a reasoning short circuit: Big institutions failed us, so something without big institutions must be immune. The big institutions failed us exactly by allowing each other to do too much. By not regulating (which is by definition centrally imposed).

splintercell 9y ago
> It baffles me how seemingly capable people have had the idea that a cryptocurrency would counter 2008 style stuff. It seems like a reasoning short circuit: Big institutions failed us, so something without big institutions must be immune. I think you misunderstood what people mean by saying "counter 2008 style stuff". The aim isn't to prevent 2008 from happening again, but if 2008 were to happen again, then be in a safe situation. Also you're taking the input from your opponents, but plugging that input into your own model, without realizing that bitcoin proponents do not share your model. Your model is: "Lack of regulation caused 2008 to happen", but not everybody agrees with that model. There are multiple models, but the most common model is that central bank inflating the money supply, and manipulating interest rates caused 2003-2007 to happen. 2008 was merely the well desired correction. Same model applied to today, it means that we are currently in a major bubble and this bubble will pop in the coming years. Alternate financial systems such as bitcoin and smart contracts, are 'customizable' enough (For lack of a better term) that they give people a fighting chance. 1. Capital controls can't be imposed 2. Bank accounts can't be confiscated 3. If regulations have to be bypassed to make trade happen, then they should be more easily bypassed (for instance minimum wage laws). So when the next crises happens, people are able to flee nations with their capital, their bank accounts will not be able to confiscated, and they will side step any regulation which screws people over. This is the aim of cryptocurrency proponents, irrespective of what is being said.
- ska 9y ago
  There are multiple models, but the most common model is that central bank inflating the money supply, and manipulating interest rates caused 2003-2007 to happen. 2008 was merely the well desired correction Regardless of it's truth value, that is not clearly the most common model.

peterjlee 9y ago

It wasn't "The sort of activity which led to the financial crisis" that inspired bitcoin. After the crisis happened the US government funded the massive bailout by printing more money. It turned out to be a "good" decision since it prevented a catastrophic economic failure but it did cause more inflation and some people weren't happy that a government can just print more money on a whim. So that's how the bitcoin came about to make a currency where there are no central governing body that can just print more whenever it wants.

noddy1 9y ago
The banks seem to have won the propaganda war about bailouts preventing economic collapse pretty well. I guess once the government makes the bailout and the banks accept the bailout, both parties are pretty committed to ensuring the public thinks that the bailouts were required. What we really got was a tacit approval for bankers that they could make highly leveraged bets in the 7 years that the markets were going up, make shitloads of money, feel like geniuses, and then when it all inevitably explodes the government would bail them out and then QE like crazy to pick up the pieces. The QE would be given not to citizens, but to banks to inflate equity markets, and start the whole cycle again. Now we have a whole new generation of financial "geniuses" overhyping every asset class, making shitloads of money off it all, thinking they are geniuses, and when it all collapses again they think the same thing will happen. It may do, but this time I don't have to be involved in that bullshit. My money is now unprintable. They can devalue the USD shitcoin all they want, but there are still only 21 million possible bitcoins and that's all I care about.
openasocket 9y ago
The government didn't actually print any money, the central banks just acted as a "lender of last resort," which works just as well in Bitcoin as it does in cash.
- deleted 9y ago
  [deleted]
- noddy1 9y ago
  They printed $4+ trillion in the aftermath and gave it to banks.

buckthundaz 9y ago

You are correct that the activity that led to all financial crises will not be mitigated in the domain of national currencies. It will be avoided in decentralized money that is uncorrelated, like gold. Your concept of decentralization is off. The purpose of it is this: How many points of failure are there? How many of these points can break before the cards all fall? If this happens, who pays for it? This illustrates that the USD is not decentralized. Cryptocurrency is an exit from this, much like gold or real estate or other investment vehicles. Cryptocurrency is available to anyone with a phone and internet access -- that cannot be said for any other investment vehicle. This will take the wind out of the sails of financial institutions as there is another option for people.

shawn 9y ago
Possibly, but the space requirements for crypto shouldn't be underestimated. I think Satoshi kept 1MB blocks because he realized it would quickly become untenable for most people to run full nodes. ETH has similar problems. What does the end game for this situation look like? Will people just create Bitcoin Zero, which is identical to Bitcoin but preallocates the existing coins starting from the genesis block? (A manual GC, as it were.) Otherwise it seems like crypto will be around 100 years from now, but probably not BTC. At least not in a form where non-miners can participate.
jhwang5 9y ago
Switching to cryptocurrency actually makes the problems worse, because instead of regulated entities calling the shots, we have an oligarchy of ASIC-armed miners calling the shots. Between the two evils, any sane person would rather trust a regulated business than some folks who prefer to hide in the shadows.

roadbeats 9y ago

Bullshit. Have you ever done wire transfer ? Every SWIFT transaction goes through US. Let’s say you want to transfer USD from one Vietnamase bank to another Vietnamase bank; even local USD transfers has to go through US and people get charged a lot for that. Just for transferring 25k USD between two local banks, I got charged $150. It’s ridiculous to claim “USD is decentralized” in a world where developing countries can not even trade with eachother without paying US a cut.