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I can't really understand this point of view. Digital scarcity is finally invented, but people feel like it will have no use-cases? Automated finance bots (sm

by ericb 8y ago

I can't really understand this point of view. Digital scarcity is finally invented, but people feel like it will have no use-cases? Automated finance bots (smart contracts) that work without keeping a server up has no use-cases? All fiat currencies are deflated continuously, but you believe 100% of people will prefer this? The ability to embed money into a digital good has no value? How can it ever go to zero if there's someone out there who thinks it might be worth accumulating just for the remote chance that one of these ideas works out? The idea of it going to "zero" seems irrational to me.

root_axis 8y ago
> Digital scarcity is finally invented, Totally untrue. Cryptocurrencies are artificially scarce, not actually scarce; this is most obvious when two chains hard-fork and the sum of their combined value exceeds the total value of the parent chain. You can't "fork" a scarce resource. Even without a fork, the scarcity is still an illusion because the consensus protocol can be modified to create an infinite number of tokens if that is the prerogative of the developers or community. > Automated finance bots (smart contracts) that work without keeping a server up has no use-cases Of course an automated finance bot needs a server, it's just a distributed and computationally expensive one instead of a centralized one that costs pennies to operate (and I say this as someone who has written profitable trading bots) > All fiat currencies are deflated continuously, but you believe 100% of people will prefer this The reason people prefer fiat money is because fiat money can be used buy goods and services and cryptocurrencies generally cannot without jumping through a bunch of hoops that offer no clear benefits in return. The OpSec that goes into "being your own bank" is not worth the cost to the overwhelming majority of people. > How can it ever go to zero I do agree that it is unlikely to ever go to zero simply because the limited utility cryptocurrencies do provide (irreversible pseudonymous online payments) will always have a niche use case that will keep the price above zero.
- ericb 8y ago
  > You can't "fork" a scarce resource. A fork gets you nothing on the original chain, just like inventing "new dollars" gets you nothing except what the market decides "new dollars" are worth. Digital scarcity is still there. If I have an item on that blockchain, you can't take it from me by forking. The only way to "move" that asset would be to get my private key. Forks are an anomaly the market is still figuring out. > Of course an automated finance bot needs a server, it's just a distributed and computationally expensive one instead of a centralized one that costs pennies to operate This misses the point. If I want to make a trading bot, I have to find a host, initiate a business relationship with them, and keep it running and highly available. If I make an ethereum smart contract, I set and forget. If I want people to interact with my bot and know it's source code, I can do that on ethereum. Is there another way you can think of to do this and have the bot be transparent--in other words a guarantee that the source code you looked at is actually the source code you're interacting with? > The OpSec that goes into "being your own bank" is not worth the cost to the overwhelming majority of people. This is only true until people notice the deflation. The ability to convert electricity to money that doesn't automatically shrink (even if it is not ready-cash) is very valuable in places where it is shrinking quickly.
  - lavrov 8y ago
    Forks aren't as simple as you might think - who gets to determine what the "original chain" is in the event of a fork? Suppose that ETH forked and one version changed some consensus rules to increase the supply of currency, and Vitalik, the Ethereum Foundation, all of the miners/stakers, and users moved to that chain - wouldn't that be ETH? But it would violate the principle of fixed digital scarcity. Confiscation of assets is obviously possible via forks as well, but the fact that someone can't take your money without your private key doesn't relate to scarcity.
  - bordercases 8y ago
    > digitally scarcity As long as crypto is pegged to a fiat currency like USD then the scarcity effect is going to be destroyed by speculative valuations. USD isn't going to stop being fiat because it's too useful for it to be fiat when doing market regulation. USD might stop being standard currency, but I expect other countries are going to maintain fiat standards because being able to vary the nominal amount of money supply is a better policy tool than merely controlling gold, because it opens up another theater of war beyond maintaining hard power.
Barrin92 8y ago
>All fiat currencies are deflated continuously, but you believe 100% of people will prefer this? I have no idea if 100% of people will prefer it, certainly, some who hold immense amounts of a currency will not, but it was one of the smartest ideas mankind ever had, because it introduced the ability to control the money supply and made currency a very important tool in ensuring stability and made it an effective means of exchange. Cryptocurrencies are not a means of exchange. They're basically a pile of gold that people imagine themselves sitting on and that increases in value without them doing anything. Which is good if you're one of the few people who have much of it, but it is absolutely detrimental to society at large, which is uninteresting to the libertarianism on steroids that underpins the crypto-craze.
- ericb 8y ago
  > it is absolutely detrimental to society at large This may or may not be the case, but regardless, individual decisions are usually made based on an individual's self-interest rather than the warm fuzzy feelings about helping society. > Cryptocurrencies are not a means of exchange. It is not necessarily true that that will remain the case. Either way, that doesn't matter if society coalesces around one of them as the "WorldWide Ledger" because individuals are incentivized to avoid inflation.
  - Barrin92 8y ago
    There is no incentive for any average citizen to engage in crypto-currency activity if it is a shoddy means of exchange and favours individuals who own a large pile of it. Most individuals are debtors, not creditors, and for them, inflation is a boon because it benefits them and erodes debt burden over time at expense of creditors. It is in the interest of someone who uses money as a means of exchange and not as a store of value (which is the overwhelming majority of individuals) to reject crypto-currencies in favour of fiat currency. Your average citizen gains nothing from adopting a currency that is highly volatile, concentrated in the hands of a few, and awful at completing everyday transactions.
    - ericb 8y ago

by ericb 8y ago

root_axis 8y ago

> Digital scarcity is finally invented, Totally untrue. Cryptocurrencies are artificially scarce, not actually scarce; this is most obvious when two chains hard-fork and the sum of their combined value exceeds the total value of the parent chain. You can't "fork" a scarce resource. Even without a fork, the scarcity is still an illusion because the consensus protocol can be modified to create an infinite number of tokens if that is the prerogative of the developers or community. > Automated finance bots (smart contracts) that work without keeping a server up has no use-cases Of course an automated finance bot needs a server, it's just a distributed and computationally expensive one instead of a centralized one that costs pennies to operate (and I say this as someone who has written profitable trading bots) > All fiat currencies are deflated continuously, but you believe 100% of people will prefer this The reason people prefer fiat money is because fiat money can be used buy goods and services and cryptocurrencies generally cannot without jumping through a bunch of hoops that offer no clear benefits in return. The OpSec that goes into "being your own bank" is not worth the cost to the overwhelming majority of people. > How can it ever go to zero I do agree that it is unlikely to ever go to zero simply because the limited utility cryptocurrencies do provide (irreversible pseudonymous online payments) will always have a niche use case that will keep the price above zero.

ericb 8y ago
> You can't "fork" a scarce resource. A fork gets you nothing on the original chain, just like inventing "new dollars" gets you nothing except what the market decides "new dollars" are worth. Digital scarcity is still there. If I have an item on that blockchain, you can't take it from me by forking. The only way to "move" that asset would be to get my private key. Forks are an anomaly the market is still figuring out. > Of course an automated finance bot needs a server, it's just a distributed and computationally expensive one instead of a centralized one that costs pennies to operate This misses the point. If I want to make a trading bot, I have to find a host, initiate a business relationship with them, and keep it running and highly available. If I make an ethereum smart contract, I set and forget. If I want people to interact with my bot and know it's source code, I can do that on ethereum. Is there another way you can think of to do this and have the bot be transparent--in other words a guarantee that the source code you looked at is actually the source code you're interacting with? > The OpSec that goes into "being your own bank" is not worth the cost to the overwhelming majority of people. This is only true until people notice the deflation. The ability to convert electricity to money that doesn't automatically shrink (even if it is not ready-cash) is very valuable in places where it is shrinking quickly.
- lavrov 8y ago
  Forks aren't as simple as you might think - who gets to determine what the "original chain" is in the event of a fork? Suppose that ETH forked and one version changed some consensus rules to increase the supply of currency, and Vitalik, the Ethereum Foundation, all of the miners/stakers, and users moved to that chain - wouldn't that be ETH? But it would violate the principle of fixed digital scarcity. Confiscation of assets is obviously possible via forks as well, but the fact that someone can't take your money without your private key doesn't relate to scarcity.
- bordercases 8y ago
  > digitally scarcity As long as crypto is pegged to a fiat currency like USD then the scarcity effect is going to be destroyed by speculative valuations. USD isn't going to stop being fiat because it's too useful for it to be fiat when doing market regulation. USD might stop being standard currency, but I expect other countries are going to maintain fiat standards because being able to vary the nominal amount of money supply is a better policy tool than merely controlling gold, because it opens up another theater of war beyond maintaining hard power.

Barrin92 8y ago

>All fiat currencies are deflated continuously, but you believe 100% of people will prefer this? I have no idea if 100% of people will prefer it, certainly, some who hold immense amounts of a currency will not, but it was one of the smartest ideas mankind ever had, because it introduced the ability to control the money supply and made currency a very important tool in ensuring stability and made it an effective means of exchange. Cryptocurrencies are not a means of exchange. They're basically a pile of gold that people imagine themselves sitting on and that increases in value without them doing anything. Which is good if you're one of the few people who have much of it, but it is absolutely detrimental to society at large, which is uninteresting to the libertarianism on steroids that underpins the crypto-craze.

ericb 8y ago
> it is absolutely detrimental to society at large This may or may not be the case, but regardless, individual decisions are usually made based on an individual's self-interest rather than the warm fuzzy feelings about helping society. > Cryptocurrencies are not a means of exchange. It is not necessarily true that that will remain the case. Either way, that doesn't matter if society coalesces around one of them as the "WorldWide Ledger" because individuals are incentivized to avoid inflation.
- Barrin92 8y ago
  There is no incentive for any average citizen to engage in crypto-currency activity if it is a shoddy means of exchange and favours individuals who own a large pile of it. Most individuals are debtors, not creditors, and for them, inflation is a boon because it benefits them and erodes debt burden over time at expense of creditors. It is in the interest of someone who uses money as a means of exchange and not as a store of value (which is the overwhelming majority of individuals) to reject crypto-currencies in favour of fiat currency. Your average citizen gains nothing from adopting a currency that is highly volatile, concentrated in the hands of a few, and awful at completing everyday transactions.
  - ericb 8y ago