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> "In terms of providing stability and market integrity, both cash and cryptocurrencies have mechanisms to prevent counterfeiting - for cash, it is by incorpora
by pimmen 8y ago
> "In terms of providing stability and market integrity, both cash and cryptocurrencies have mechanisms to prevent counterfeiting - for cash, it is by incorporating features that are hard to duplicate, and for cryptocurrencies, it is through the use of digital signatures and proof of work schemes."
Anti-counterfeiting schemes only solve the inflation problem, but not the deflation problem.
If you have a deflation problem in a cash based economy you just print more cash (or lower the central bank's interest rate and let the commercial banks lend out more cash, with the central bank acting as the lender of last resort as a guarantee).
If you have a deflationary problem with most cryptocurrencies, well ... too fucking bad.
- DennisP 8y agoThe deflation problem is easily solved by creating more cryptocurrencies. A crypto world isn't like a new gold standard, it's more like the system of competing private currencies advocated by Hayek, who claimed it would naturally lead to stability.
- Nursie 8y agoWhy would I want to live in that world?
- wierd0 8y agoWhat would be wrong with such a world?
- yjftsjthsd-h 8y agoInstability is not a desirable trait in currency.
- erikpukinskis 8y agoInstability is a necessary feature of literally every currency in history. You can’t change scales without instability. Once these currencies hit their natural scale we will see some stabilize.
- Nursie 8y agoMultiple competing private currencies? Exchange rates between them. Middlemen to pay to perform exchanges before you can actually use the currency to buy something. That doesn't immediately sound worse to you?
- pimmen 8y agoAnd who determines which new cryptocurrencies can be created and accepted? Because that risks runaway inflation again if anyone can do it and everyone has equal acceptance.
- imustbeevil 8y agoThat's what economists like to call a "Market".
- Latteland 8y agoThere was a market for tulips and a lot of attention and money went there. Tulips have an intrinsic value, but it turned out to be small.
- erikpukinskis 8y agoAnalogies are good for teaching things you know to be true. But they are not logical grounds for an argument.
- pimmen 8y agoYeah, and the stability of that market is what we're discussing. If this market is either unstoppably deflationary or unstoppably inflationary it become unstable.
- DennisP 8y agoWhether "everyone has equal acceptance" is the issue; if there's no shortage of currency then there's probably no demand for a new one. People won't just automatically accept any new currency that comes along. Hayek argued that the market would effectively govern such an economy and prevent both inflation and deflation. I don't know whether he was right; possibly we'll find out by experiment.
- erikpukinskis 8y ago> People won't just automatically accept any new currency that comes along. Eventually they will. You’ll have assets in billions of denominations, and you’ll be able to pay for coffee with a bunch of fractions of pennies and the markets will clear and consolidate value for you. The future is not Bitcoin replacing the dollar. The future is the idea of a dollar replacing the dollar.
- Latteland 8y agoBut up to now, crypto seems to have only led to chaos. Value changing by huge amount, pretty much constant stealing of massive sums by supposedly safe and large institutions. Even the relatively trusted coinbase has endless claims of poor treatment of their customers, losing funds.
- erikpukinskis 8y agoI don’t think the thefts were by institutions considered safe or large. MtGox was always a tiny sketchy company (and I held coins there). I never kept more than half of my coins anywhere because I knew they could disappear at any moment. I don’t see how a conscientious person could have concluded otherwise. Value has changed a lot, but that was expected too. There are stable broad trends. Seeing the stability is just a matter of seeing timescales. I guess I don’t share your definition of chaos. Chaos means you can’t predict anything reliably. You can predict many things about Bitcoin. Taken to the extreme, your comment seems to come from a “anything that’s not a US treasury bond is total chaos” viewpoint. But I know that’s not what you intended... perhaps you can clarify?