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The basic premise of this headline represents a complete failure to grasp the point of a cryptocurrency, which is to take the power of money issuance away from

by SI_Rob 8y ago

The basic premise of this headline represents a complete failure to grasp the point of a cryptocurrency, which is to take the power of money issuance away from incumbent authorities who can back it with physical force (that is, states), and devolve it into a first order power available to any social group. The paradoxical claim that a centralized bank could ever issue currency based on the presumption of decentralized support is epitome of misapprehension, or at least misappropriation of jargon. The Fed already has "FedCoin" for all intents and purposes, and does not need the cooperative casino incentive system known as a blockchain in order to compel rules-compliant participation from its users.

kchoudhu 8y ago
We tried the "anyone can issue money" model in the 1800s, all it led to was bank runs and scams. The current system exists for a reason. If the blockchain crowd wants to relearn those lessons, they are welcome to, as long as they keep their shenanigans out of the real economy and away from people who don't want anything to do with the experiment.
- mozumder 8y ago
  ... while minimizing the wasteful environmental impact of blockchains due to the power requirements of each transaction. This is probably the one "feature" of blockchains that will kill it, since they're based on proof-of-lots=of-work, and work needs power.
  - bitreality 8y ago
    Blockchain as it exists today is a proof of concept. It shows that people can use code to create a monetary system. The system does not need to be backed by any government or physical good guaranteeing its value. This proof of concept can now manifest itself in a variety of formats. Many of which we cannot fathom today, because they haven't yet been invented. There are many intelligent people now working on this problem and improving the way a blockchain works, or even pulling from that proof of concept and rethinking the solution without traditional blockchain. People are too heavily focused on what the technology is capable of right now. That is irrelevant. The industry is in its infancy. Up until 5 years ago, the only blockchains that still exist today in any meaningful format are Bitcoin and Litecoin. Litecoin is just a Bitcoin clone. Just wait and see how this space will develop over the next 10, 20, 30 years. The proof of concept is that people will assign value to digital assets without any authority backing them. That's the most important development.
    - MorbidCuriosity 8y ago
      No cryptocurrency is a monetary system, they aren't even a functioning currency. For that to happen they would need to fulfill three functions that currently none do. Namely: A means of exchange A unit of account A store of value They satisfy the first but not the other two. I cannot know for sure what value my coins have on any given day, let alone what they are likely to be valued at by next year. Thus they do not act as a store of value nor a unit of account. If it takes the electricity consumption of Denmark to secure less than $10bn in transactions, how much will it take to replace the $6tn daily Forex volumes? Honestly I wish people would realise how utterly pointless crypto is as a currency. Maybe then I'll get a cheap graphics card.
      - bitreality 8y ago
        Definitely one issue with crypto-currencies today is that they have volatile pricing which makes them difficult to use in commerce. There are several projects working to use smart contracts in order to peg the value of the coin to currencies like USD, EUR, etc. As liquidity increases in decentralized exchange formats, such as atomic swaps and DEX applications, there will be enough volume to properly manage these smart contracts to peg coins to fiat currencies. A unit of account from my understanding simply means that other people are willing to price their goods/services in your currency. This is a by-product of people participating and using the token, and it being stable enough. So once there is a "stablecoin" that gains traction, this will surely follow.
        0x445442 8y ago
        I've enjoyed your posts in this thread but I have a question. How are the projects you allude to fundamentally different than PayPal, iPay, GooglePay, Venmo or just strait up Visa or MC?
        bitreality 8y ago
        Crypto-currency is different in the sense that it is decentralized. Paypal and other payment systems can and do freeze people's balances at will. Many countries have features disabled. Some countries are flat out discluded. At the end of the day, there is no button that can be pressed to remove your access to the system.
- ObeyTheGuts 8y ago
  this is stupid statement, equivalent to saying everyone can make their facebook, yes, so? social site like money needs mass adoption to be functional, not anyone can release cryptocurrency that will be mass adopted instantly..
- bitreality 8y ago
  Well, ultimately a decentralized blockchain tackles the issue in a much different way. In the 1800s, if you were a money issuer, you could print any amount you wanted. In a truly decentralized blockchain, there are defined rules for how new currency enters the system. You cannot just print new money. The amount that exists is fully visible by anyone. Transparency is everything. This also explains why a currency like XRP is not a real blockchain. Beware these pseudo-blockchain projects, because they are much more similar to your example from the 1800s.
  - gmueckl 8y ago
    As the proliferation of newly created digital currencies should tell you, printing new bills at will has been replaced by creating new currencies at will. So a series of new bills in the old system is now equivalent to a new blockchain. While we have thus the well perpetuated illusion of an ever fixed amount of currency, the system moves towards massive inflation due to an incentive to create new currencies.
    - bitreality 8y ago
      The incentive to create new currencies has really only taken major effect over the past year. Up until then, the term "ICO" hardly even existed. Since that time we've seen a goldrush to launch separate blockchains and sell ICO's. But that's just a natural by-product of crypto currency's evolution. The amounts being raised in ICO's has been steadily decreasing. In summer 2017, you could raise $100M on a half decent project. Today, you're lucky to raise $10M. Investors are also demanding more transparency and deliverables from the projects. This trend will continue as the market matures. Fundraising will continuously become more difficult once investors get burned a few times. This is all very new, people have no idea what they're doing. Eventually the fools will go broke and the smart money will remain. The reality is that with so many scams / useless projects being launched every day, investors need to do more and more research to get positive ROI.
    - DennisP 8y ago
      It remains to be seen how that will work out. If your equivalency were correct, we'd expect the issuance of new currencies to reduce the value of old ones, and so far we're not seeing much evidence of that. Hayek wrote a book arguing that a system of competing privately-issued currencies would ultimately result in currencies with stable value. Of course we haven't yet seen evidence for that either.
- whataretensors 8y ago
  > We tried the "anyone can issue money" model in the 1800s, all it led to was bank runs and scams. And now it's back with technology behind it. A lot of people call ICOs scams. What's the equivalent bank run? Perhaps a panic flee from fiat reserves?
  - pjc50 8y ago
    The equivalent is exit scams and flash crashes; a lot of people keep pointing out that Tether is a non backed token pretending to be a backed one.
  - paulgb 8y ago
    > What's the equivalent bank run? Bitconnect is sure to be one of the first of many examples. https://en.wikipedia.org/wiki/Bitconnect https://en.wikipedia.org/wiki/Bitconnect
    - whataretensors 8y ago
      I'm more curious how the sporadic economy and capital flight will hit our existing centralized structures. They haven't been load tested against hyper-liquidity of cryptocurrency with mass adoption.
21 8y ago
Bitcoin is also backed by the same physical force of the state. Otherwise armed groups would seize the miners or break into the exchanges and use physical force to steal the bitcoin.

by SI_Rob 8y ago

kchoudhu 8y ago

We tried the "anyone can issue money" model in the 1800s, all it led to was bank runs and scams. The current system exists for a reason. If the blockchain crowd wants to relearn those lessons, they are welcome to, as long as they keep their shenanigans out of the real economy and away from people who don't want anything to do with the experiment.

mozumder 8y ago
... while minimizing the wasteful environmental impact of blockchains due to the power requirements of each transaction. This is probably the one "feature" of blockchains that will kill it, since they're based on proof-of-lots=of-work, and work needs power.
- bitreality 8y ago
  Blockchain as it exists today is a proof of concept. It shows that people can use code to create a monetary system. The system does not need to be backed by any government or physical good guaranteeing its value. This proof of concept can now manifest itself in a variety of formats. Many of which we cannot fathom today, because they haven't yet been invented. There are many intelligent people now working on this problem and improving the way a blockchain works, or even pulling from that proof of concept and rethinking the solution without traditional blockchain. People are too heavily focused on what the technology is capable of right now. That is irrelevant. The industry is in its infancy. Up until 5 years ago, the only blockchains that still exist today in any meaningful format are Bitcoin and Litecoin. Litecoin is just a Bitcoin clone. Just wait and see how this space will develop over the next 10, 20, 30 years. The proof of concept is that people will assign value to digital assets without any authority backing them. That's the most important development.
  - MorbidCuriosity 8y ago
    No cryptocurrency is a monetary system, they aren't even a functioning currency. For that to happen they would need to fulfill three functions that currently none do. Namely: A means of exchange A unit of account A store of value They satisfy the first but not the other two. I cannot know for sure what value my coins have on any given day, let alone what they are likely to be valued at by next year. Thus they do not act as a store of value nor a unit of account. If it takes the electricity consumption of Denmark to secure less than $10bn in transactions, how much will it take to replace the $6tn daily Forex volumes? Honestly I wish people would realise how utterly pointless crypto is as a currency. Maybe then I'll get a cheap graphics card.
    - bitreality 8y ago
      Definitely one issue with crypto-currencies today is that they have volatile pricing which makes them difficult to use in commerce. There are several projects working to use smart contracts in order to peg the value of the coin to currencies like USD, EUR, etc. As liquidity increases in decentralized exchange formats, such as atomic swaps and DEX applications, there will be enough volume to properly manage these smart contracts to peg coins to fiat currencies. A unit of account from my understanding simply means that other people are willing to price their goods/services in your currency. This is a by-product of people participating and using the token, and it being stable enough. So once there is a "stablecoin" that gains traction, this will surely follow.
      - 0x445442 8y ago
        I've enjoyed your posts in this thread but I have a question. How are the projects you allude to fundamentally different than PayPal, iPay, GooglePay, Venmo or just strait up Visa or MC?
        bitreality 8y ago
        Crypto-currency is different in the sense that it is decentralized. Paypal and other payment systems can and do freeze people's balances at will. Many countries have features disabled. Some countries are flat out discluded. At the end of the day, there is no button that can be pressed to remove your access to the system.
ObeyTheGuts 8y ago
this is stupid statement, equivalent to saying everyone can make their facebook, yes, so? social site like money needs mass adoption to be functional, not anyone can release cryptocurrency that will be mass adopted instantly..
bitreality 8y ago
Well, ultimately a decentralized blockchain tackles the issue in a much different way. In the 1800s, if you were a money issuer, you could print any amount you wanted. In a truly decentralized blockchain, there are defined rules for how new currency enters the system. You cannot just print new money. The amount that exists is fully visible by anyone. Transparency is everything. This also explains why a currency like XRP is not a real blockchain. Beware these pseudo-blockchain projects, because they are much more similar to your example from the 1800s.
- gmueckl 8y ago
  As the proliferation of newly created digital currencies should tell you, printing new bills at will has been replaced by creating new currencies at will. So a series of new bills in the old system is now equivalent to a new blockchain. While we have thus the well perpetuated illusion of an ever fixed amount of currency, the system moves towards massive inflation due to an incentive to create new currencies.
  - bitreality 8y ago
    The incentive to create new currencies has really only taken major effect over the past year. Up until then, the term "ICO" hardly even existed. Since that time we've seen a goldrush to launch separate blockchains and sell ICO's. But that's just a natural by-product of crypto currency's evolution. The amounts being raised in ICO's has been steadily decreasing. In summer 2017, you could raise $100M on a half decent project. Today, you're lucky to raise $10M. Investors are also demanding more transparency and deliverables from the projects. This trend will continue as the market matures. Fundraising will continuously become more difficult once investors get burned a few times. This is all very new, people have no idea what they're doing. Eventually the fools will go broke and the smart money will remain. The reality is that with so many scams / useless projects being launched every day, investors need to do more and more research to get positive ROI.
  - DennisP 8y ago
    It remains to be seen how that will work out. If your equivalency were correct, we'd expect the issuance of new currencies to reduce the value of old ones, and so far we're not seeing much evidence of that. Hayek wrote a book arguing that a system of competing privately-issued currencies would ultimately result in currencies with stable value. Of course we haven't yet seen evidence for that either.
whataretensors 8y ago
> We tried the "anyone can issue money" model in the 1800s, all it led to was bank runs and scams. And now it's back with technology behind it. A lot of people call ICOs scams. What's the equivalent bank run? Perhaps a panic flee from fiat reserves?
- pjc50 8y ago
  The equivalent is exit scams and flash crashes; a lot of people keep pointing out that Tether is a non backed token pretending to be a backed one.
- paulgb 8y ago
  > What's the equivalent bank run? Bitconnect is sure to be one of the first of many examples. https://en.wikipedia.org/wiki/Bitconnect https://en.wikipedia.org/wiki/Bitconnect
  - whataretensors 8y ago
    I'm more curious how the sporadic economy and capital flight will hit our existing centralized structures. They haven't been load tested against hyper-liquidity of cryptocurrency with mass adoption.

21 8y ago

Bitcoin is also backed by the same physical force of the state. Otherwise armed groups would seize the miners or break into the exchanges and use physical force to steal the bitcoin.