15 ms·

Transaction Costs and Tethers: Why I’m a Crypto Skeptic

44 points by zonotope 8y ago

dalbasal 8y ago
This is kind of a disingenuous story. Coins were not particularly burdensome, relative to paper. Gold is light. Anyway, people always used credit mostly. A phoenician ship at a minoan harbor didn't need to buy gold in order to trade purple dyes for bronze ingots and olive oil. They used hardor-credit or something. It was probably "gold backed" too, in the sense that it was denominated in gold or silver even if no metals were present. Money and credit are intertwined. We can always make money by loaning it to eachother. I think both the crypto-libertarian sm and Krugman's veiled response to it miss that point. Also, neither have much to do with cryptocurrency's success or lack thereof.
394549 8y ago
I'm not a crypto skeptic: things like encryption, one-way hashing, etc. are extremely important, fundamental technologies with loads of math and experience behind them. They work, and should be used widely. Crypto-currencies are a totally different story. For one, many of them are scammy rich quick schemes that have used greed to influence the technically unsaavy to corrupt the English language.
21 8y ago
Obligatory quote from the same author made in 1998: > The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ — which states that the number of potential connections in a network is proportional to the square of the number of participants — becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s EDIT: Really? Downvoted for stating a true context fact?
- CPLX 8y ago
  I dunno. I think it's fair to say he had a point about people running out of things to say to each other. His main mistake seems to have been not to realize that people would carry on doing it anyways.
  - 21 8y ago
    > I think it's fair to say he had a point about people running out of things to say to each other Reddit, Facebook, Snapchat, Instagram, Whatsapp even HN disagree.
- arcbyte 8y ago
  I've always felt a little apprehensive about things Krugman has said, but I'm not an economist and he seems to be held in pretty high regard generally so I've tried to struggle to listen to his viewpoint. This quote pretty much seals the deal that I was right all along and he's not worth paying attention to.
  - bittcto 8y ago
    He’s not held in high regard by economicists or even economics. He has been proven wrong repeatedly. He’s held in high regard by socialists because he white washes the death and destruction their socialism causes. That’s his purpose. That and virtue signaling. Your instincts are right. Go to Mises.org for real economics.
    - maneesh 8y ago
      Err...he won a nobel prize in economics
- tcbawo 8y ago
  That's the problem with making bold predictions. You're sometimes wrong. He's also made some very prescient predictions. Another thing people pull out is his dire predictions on the eve of Trump's election. He was quick to point out his error (I think the next day, maybe). He does seem to admit when he's wrong and adapt his views.
  - bittcto 8y ago
    5 years ago he claimed bitcoin was evil. He hadn’t adapted. He can’t adapt. He’s just a fraud.
- cwkoss 8y ago
  He also previously wrote "Bitcoin is Evil" in 2013 https://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil/ https://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil...
- bokonon12 8y ago
  Probably because the argument "but he was wrong about other stuff" doesn't invalidate this article at all and doesn't add anything to the discussion. If you disagree him on Bitcoin then state why
- kybernetikos 8y ago
  > Downvoted for stating a true context fact? You did not provide the context at all, and I'm surprised that you would imply you did. The context is that he said that as part of an article about why economists make incorrect predictions. In context, it was clearly (in my opinion) intended to be a provocative possibility, rather than taken as something the author thought would definitely happen.
- bittcto 8y ago
  HN leftists can’t abide any facts that put Krugman in a bad light. I pointed out he advocated a housing bubble I’m getting downvoted too. HN is a farm for socialist sheep and explicitly anti-intellectual.
  - dragonwriter 8y ago
    Krugman is both an intellectual and neither a leftist nor a socialist (he's somewhere, economically, between centrist and center-right), so even if HN was a leftist camp of socialist anti-intellectuals, that wouldn't explain a fondness for Krugman.
douglaswlance 8y ago
Crypto skeptics always discount the value of the network. >If speculators were to have a collective moment of doubt, suddenly fearing that Bitcoins were worthless, well, Bitcoins would become worthless. It wouldn't though. The bitcoin network itself has a non-zero value.
- afrisch 8y ago
  What's the value of the bitcoin network itself (its computing power?), and how does the holding of bitcoins give any right on this value?
  - pitaj 8y ago
    Value is subjective. But you could say that the Bitcoin network has a price: the sum of the price of the miner hardware and electricity usage.
    - afrisch 8y ago
      Yes, well, I can imagine that under the assumption that people loose "faith" in Bitcoin, it's still possible to assign a "value" to the Bitcoin network, e.g. the hardware that makes it (miners and nodes) -- I wouldn't count the electricity usage as part of its value, though. But the point is that holding units of Bitcoin, i.e. knowing the secrets that allow spending them, does not give any rights on those hardware assets, so the value of the network cannot provide a lower bound to the value of Bitcoin units, in the same way that industrial or jewelry usages of gold does give it a lower valuation bound.
  - douglaswlance 8y ago
    That's like asking, "what's the value of TCP/IP?" Well, the value isn't really TCP/IP, it's the network (i.e. the internet). Bitcoin isn't the valuable bit. It's the network of millions of nodes that has value.
- pmwhite 8y ago
  That is not so clear. The Bitcoin network can easily be devoured by another cryptocurrency, if that other currency provides greater returns for a unit of work. The larger network within the crypto ecosystem may well have value, while affording zero tethering to any particular currency.
pdonis 8y ago
Of course Krugman can't see what problem cryptocurrencies are supposed to solve. That's because the problem they are supposed to solve--government manipulation of money--is not something he sees as a problem.
- tcbawo 8y ago
  It's fine for currencies with responsible governance. In some countries like Venezuela, cryptocoins would be useful. But oppressive regimes with currency controls are also likely to control access to the internet and/or block chain networks. So, in practice does it make up for an irresponsible central bank? Hard to say.
  - aeternus 8y ago
    Short of cutting off all access to the internet, it is very difficult to block access. Someone could always set up some kind of tunnel via an allowed site / channel.
  - pdonis 8y ago
    > It's fine for currencies with responsible governance. I'm not sure there are any. Certainly not if "responsible governance" means "not printing money whenever the central bank feels like it".
    - jfz 8y ago
      As long as the central bank is full of thoughtful economists, I trust them to print money when they "feel like it" will be good for the economy.
      - stickfigure 8y ago
        How do you ensure that the central bank stays full of thoughtful economists, across spans of decades or centuries? While a few countries seem to be doing ok, the overall track record of central banks around the world seems to be pretty poor.
johndevor 8y ago
>But if you want to argue that I’m wrong, please answer the question, what problem does cryptocurrency solve? Don’t just try to shout down the skeptics with a mixture of technobabble and libertarian derp. "Technobabble" and "libertarian derp" are pejoratives clearly designed to shut down the conversation in certain places. He can use those terms to disregard basically any argument, as Bitcoin is both technical and libertarian in nature.
darawk 8y ago
> And these costs aren’t incidental, something that can be innovated away. As Brunnermeier and Abadi point out, the high costs — making it expensive to create a new Bitcoin, or transfer an existing one — are essential to the project of creating confidence in a decentralized system. No they aren't. See: Proof of stake, Lightning network. > Bitcoin is real without knowing who issued it, so you need the digital equivalent of biting a gold coin to be sure it’s the real deal, and the costs of producing something that satisfies that test have to be high enough to discourage fraud. This is a pretty wildly inaccurate analogy of why the Bitcoin network uses mining. > Bear in mind that conventional money generally does its job quite well. Transaction costs are low. To pay in cash, yes. To pay digitally? You're paying high credit card fees. So, no, not really. > The purchasing power of a dollar a year from now is highly predictable – orders of magnitude more predictable than that of a Bitcoin. Disingenuous argument. If the US dollar were invented 10 years ago, it'd be highly volatile today too. The fact that Bitcoin is volatile today is only relevant if you are going to argue that that volatility is inherent to cryptocurrencies. An argument which may be valid, but that Paul fails to make. > Using a bank account means trusting a bank, but by and large banks justify that trust, far more so than the firms that hold cryptocurrency tokens. Because using a cryptocurrency does not require trusting anyone. > But gold does have real-world uses, both for jewelry and for things like filling teeth, that provide a weak but real tether to the real economy. You mean the way darknet markets provide a weak but real tether to the real economy? You literally just enumerated Bitcoin's tether's to the real economy. Also, the idea that the gold market is in any way meaningfully tethered to its industrial usage is a complete joke. There are really great arguments against Bitcoin and crypto-currencies. All of which Paul Krugman completely fails to make in this piece. The best of which he's positioned to make, too! Bitcoin is a deflationary asset - that's a real problem for anything trying to be a currency. That's a great case against it, and one close to Krugman's heart. This article is seriously disappointing.
- paulgb 8y ago
  > No they aren't. See: Proof of stake, Lightning network. LN doesn't really solve the energy problem because the incentive for miners to compete is still dominated by the mining reward rather than transaction costs. As long as there is competitive mining, the resources used for mining will approach the block reward. Proof of stake is interesting but I don't think it's been used at scale yet has it?
api 8y ago
There are good reasons to be skeptical of some things in the cryptocurrency world, but whenever I see people high in the existing financial system talking this way about it I can't help but think of RIAA executives in the late 1990s arguing that the Internet should be shut down.
safgasCVS 8y ago
In science if a theory doesn't work in practice then the theory is wrong. In economics if reality does not conform to theory then it's reality thats at fault No I'm not saying bitcoin is the future but millions of users are freely choosing to use this system seems to count for nothing against some theoretical failings in Krugman's eyes.
- skookum 8y ago
  There aren't millions of users freely choosing to use this system. There are millions of speculators hoping that some day billions of users will freely choose to use this system and that <insert giant leap of logic> these particular instances of this system won't be replicated ad infinitum and somehow all economic activity on the planet will settle on these initial implementations.
  - topmonk 8y ago
    > <insert giant leap of logic> The justification is first mover advantage
  - safgasCVS 8y ago
    I won't speak for all users but I've used it to accept payment for selling used stuff on gumtree (very handy for this). It's also very useful for sending money overseas which I've also done. I don't think I'm a special case which is why I wouldn't miss the forest for the speculators and dismiss the motivations of millions. I also live in a country that wants to pursue land expropriation without compensation based on skin colour. Having a bank account that no one but me can access is quite appealing right now. So I'm not using it to spite your worldview - it's been genuinely useful
UncleEntity 8y ago
> If you like, fiat currencies have underlying value because men with guns say they do. And this means that their value isn’t a bubble that can collapse if people lose faith. Until the value does collapse that is, just look at <how many?> examples of hyperinflation in my lifetime.
- kybernetikos 8y ago
  Depending on your age and what exactly you count, probably around 5ish.
  - PhantomGremlin 8y ago
    Depending on your age and what exactly you count, probably around 5ish. Maybe he's from Brazil? Maybe he's 76+ years old? If so, then I think there were 5 "ish" 1000x devaluations in that single country in his lifetime. I never lived in Brazil but knew people who did. Some quick checking Wiki for dates, I probably missed some devaluations?: 1942 cruzeiro replaces real at 1000x 1967 new cruzeiro replaces old at 1000x 1986 cruzado replaces second cruzeiro at 1000x 1989 cruzado novo replaces cruzado at 1000x 1993 cruzeiro real replaces cruzado at 1000x Pick another random country in Latin America and you probably see the same thing.
bittcto 8y ago
Krugman, in a real way, is why Bitcoin exists. He literally advocated a housing bubble. (Broken Window fallacy) The housing bubble collapsed causing bailouts of banks. Bitcoin is a direct response to this nationalization of private losses. Not to mention the century of financial corruption that preceded it. Satoshi was not coy. The genesis block contains the text: “Chancellor on brink of second bailout for banks”. Of course Krugman is a “skeptic”. Bitcoin repudiates his entire career, ideology and work, and is having a significant positive impact in the world. Unlike Krugman. Every year bitcoin continues it gets stronger, it rewards supporters and forces the corrupt banking system Krugman endorses into the light a bit more. Krugman and other nocoiners hate bitcoin? Bitcoin don’t care. This is what you have to understand about bitcoin: Bitcoin doesn’t have to care. It’s the first real tool of individual financial sovereignty.
montalbano 8y ago
Nick Szabo, who some people thought might be Satoshi, wrote an interesting essay/paper on "micropayments and mental transaction costs" for those interested: https://nakamotoinstitute.org/static/docs/micropayments-and-mental-transaction-costs.pdf https://nakamotoinstitute.org/static/docs/micropayments-and-...
keymone 8y ago
> So that’s why I’m a crypto skeptic. Could I be wrong? Of course. But if you want to argue that I’m wrong, please answer the question, what problem does cryptocurrency solve? Secure, trustless, decentralized consensus. Or in practical terms - a ledger database that everyone can write into without having to trust third parties to maintain correctness. It’s strange author doesn’t seem to attribute any value to solution to that problem. It’s also strange author doesn’t know it has very strong link to reality - security of the system is proportional to hasrate. Seems like just another case of a guy arguing without having understanding on the topic?
- gthaman 8y ago
  > Seems like just another case of a guy arguing without having understanding on the topic? At best he is ignorant, at worst he is perpetuating the current monetary system(s) which is in a macroprudential[1] policy mode - not good - as many of us can see around us daily. Aside from the truth of there being more money owed with interest (as a debt) than current money in circulation with which to pay that debt off (results in either #1 forced defaults on loans at some time in the future or #2 a feedback cycle with bursts of new loans created to pay off the previous debts without the forced defaults of #1) the current dollar system and all modern currencies are directly harmful to the population and indirectly harmful in a number of ways. I cant stay on here all night but seek elucidation elsewhere if you are interested. Macro voices the podcast does a pretty good job. I don't think all the kings horses and all the kings men will be able to stop bitcoin from success or the dollar from failure but what always astonishes me are the endless arguments for inflation being good for the economy when its basically how the government pays off its outrageous debt by stealing from the elderly, disabled and anyone with a fixed income. And its not just the benefactors of the system, there are volunteer robot numskulls repeating this hypothetical garbage every day on the internet about inflation when really it just allows the government to sustain itself by getting senior citizens to eat dog food. People need to stop letting themselves be tricked into exchanging their time, youth, skills and labor for tokens that are guaranteed to be devalued, its been over 100 years now and none of us know anything different. :( [1] https://en.wikipedia.org/wiki/Macroprudential_regulation https://en.wikipedia.org/wiki/Macroprudential_regulation

44 points by zonotope 8y ago

This is kind of a disingenuous story. Coins were not particularly burdensome, relative to paper. Gold is light. Anyway, people always used credit mostly. A phoenician ship at a minoan harbor didn't need to buy gold in order to trade purple dyes for bronze ingots and olive oil. They used hardor-credit or something. It was probably "gold backed" too, in the sense that it was denominated in gold or silver even if no metals were present. Money and credit are intertwined. We can always make money by loaning it to eachother. I think both the crypto-libertarian sm and Krugman's veiled response to it miss that point. Also, neither have much to do with cryptocurrency's success or lack thereof.

394549 8y ago

I'm not a crypto skeptic: things like encryption, one-way hashing, etc. are extremely important, fundamental technologies with loads of math and experience behind them. They work, and should be used widely. Crypto-currencies are a totally different story. For one, many of them are scammy rich quick schemes that have used greed to influence the technically unsaavy to corrupt the English language.

21 8y ago

Obligatory quote from the same author made in 1998: > The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ — which states that the number of potential connections in a network is proportional to the square of the number of participants — becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s EDIT: Really? Downvoted for stating a true context fact?

CPLX 8y ago
I dunno. I think it's fair to say he had a point about people running out of things to say to each other. His main mistake seems to have been not to realize that people would carry on doing it anyways.
- 21 8y ago
  > I think it's fair to say he had a point about people running out of things to say to each other Reddit, Facebook, Snapchat, Instagram, Whatsapp even HN disagree.
arcbyte 8y ago
I've always felt a little apprehensive about things Krugman has said, but I'm not an economist and he seems to be held in pretty high regard generally so I've tried to struggle to listen to his viewpoint. This quote pretty much seals the deal that I was right all along and he's not worth paying attention to.
- bittcto 8y ago
  He’s not held in high regard by economicists or even economics. He has been proven wrong repeatedly. He’s held in high regard by socialists because he white washes the death and destruction their socialism causes. That’s his purpose. That and virtue signaling. Your instincts are right. Go to Mises.org for real economics.
  - maneesh 8y ago
    Err...he won a nobel prize in economics
tcbawo 8y ago
That's the problem with making bold predictions. You're sometimes wrong. He's also made some very prescient predictions. Another thing people pull out is his dire predictions on the eve of Trump's election. He was quick to point out his error (I think the next day, maybe). He does seem to admit when he's wrong and adapt his views.
- bittcto 8y ago
  5 years ago he claimed bitcoin was evil. He hadn’t adapted. He can’t adapt. He’s just a fraud.
cwkoss 8y ago
He also previously wrote "Bitcoin is Evil" in 2013 https://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil/ https://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil...
bokonon12 8y ago
Probably because the argument "but he was wrong about other stuff" doesn't invalidate this article at all and doesn't add anything to the discussion. If you disagree him on Bitcoin then state why
kybernetikos 8y ago
> Downvoted for stating a true context fact? You did not provide the context at all, and I'm surprised that you would imply you did. The context is that he said that as part of an article about why economists make incorrect predictions. In context, it was clearly (in my opinion) intended to be a provocative possibility, rather than taken as something the author thought would definitely happen.
bittcto 8y ago
HN leftists can’t abide any facts that put Krugman in a bad light. I pointed out he advocated a housing bubble I’m getting downvoted too. HN is a farm for socialist sheep and explicitly anti-intellectual.
- dragonwriter 8y ago
  Krugman is both an intellectual and neither a leftist nor a socialist (he's somewhere, economically, between centrist and center-right), so even if HN was a leftist camp of socialist anti-intellectuals, that wouldn't explain a fondness for Krugman.

douglaswlance 8y ago

Crypto skeptics always discount the value of the network. >If speculators were to have a collective moment of doubt, suddenly fearing that Bitcoins were worthless, well, Bitcoins would become worthless. It wouldn't though. The bitcoin network itself has a non-zero value.

afrisch 8y ago
What's the value of the bitcoin network itself (its computing power?), and how does the holding of bitcoins give any right on this value?
- pitaj 8y ago
  Value is subjective. But you could say that the Bitcoin network has a price: the sum of the price of the miner hardware and electricity usage.
  - afrisch 8y ago
    Yes, well, I can imagine that under the assumption that people loose "faith" in Bitcoin, it's still possible to assign a "value" to the Bitcoin network, e.g. the hardware that makes it (miners and nodes) -- I wouldn't count the electricity usage as part of its value, though. But the point is that holding units of Bitcoin, i.e. knowing the secrets that allow spending them, does not give any rights on those hardware assets, so the value of the network cannot provide a lower bound to the value of Bitcoin units, in the same way that industrial or jewelry usages of gold does give it a lower valuation bound.
- douglaswlance 8y ago
  That's like asking, "what's the value of TCP/IP?" Well, the value isn't really TCP/IP, it's the network (i.e. the internet). Bitcoin isn't the valuable bit. It's the network of millions of nodes that has value.
pmwhite 8y ago
That is not so clear. The Bitcoin network can easily be devoured by another cryptocurrency, if that other currency provides greater returns for a unit of work. The larger network within the crypto ecosystem may well have value, while affording zero tethering to any particular currency.

pdonis 8y ago

Of course Krugman can't see what problem cryptocurrencies are supposed to solve. That's because the problem they are supposed to solve--government manipulation of money--is not something he sees as a problem.

tcbawo 8y ago
It's fine for currencies with responsible governance. In some countries like Venezuela, cryptocoins would be useful. But oppressive regimes with currency controls are also likely to control access to the internet and/or block chain networks. So, in practice does it make up for an irresponsible central bank? Hard to say.
- aeternus 8y ago
  Short of cutting off all access to the internet, it is very difficult to block access. Someone could always set up some kind of tunnel via an allowed site / channel.
- pdonis 8y ago
  > It's fine for currencies with responsible governance. I'm not sure there are any. Certainly not if "responsible governance" means "not printing money whenever the central bank feels like it".
  - jfz 8y ago
    As long as the central bank is full of thoughtful economists, I trust them to print money when they "feel like it" will be good for the economy.
    - stickfigure 8y ago
      How do you ensure that the central bank stays full of thoughtful economists, across spans of decades or centuries? While a few countries seem to be doing ok, the overall track record of central banks around the world seems to be pretty poor.

johndevor 8y ago

>But if you want to argue that I’m wrong, please answer the question, what problem does cryptocurrency solve? Don’t just try to shout down the skeptics with a mixture of technobabble and libertarian derp. "Technobabble" and "libertarian derp" are pejoratives clearly designed to shut down the conversation in certain places. He can use those terms to disregard basically any argument, as Bitcoin is both technical and libertarian in nature.

darawk 8y ago

> And these costs aren’t incidental, something that can be innovated away. As Brunnermeier and Abadi point out, the high costs — making it expensive to create a new Bitcoin, or transfer an existing one — are essential to the project of creating confidence in a decentralized system. No they aren't. See: Proof of stake, Lightning network. > Bitcoin is real without knowing who issued it, so you need the digital equivalent of biting a gold coin to be sure it’s the real deal, and the costs of producing something that satisfies that test have to be high enough to discourage fraud. This is a pretty wildly inaccurate analogy of why the Bitcoin network uses mining. > Bear in mind that conventional money generally does its job quite well. Transaction costs are low. To pay in cash, yes. To pay digitally? You're paying high credit card fees. So, no, not really. > The purchasing power of a dollar a year from now is highly predictable – orders of magnitude more predictable than that of a Bitcoin. Disingenuous argument. If the US dollar were invented 10 years ago, it'd be highly volatile today too. The fact that Bitcoin is volatile today is only relevant if you are going to argue that that volatility is inherent to cryptocurrencies. An argument which may be valid, but that Paul fails to make. > Using a bank account means trusting a bank, but by and large banks justify that trust, far more so than the firms that hold cryptocurrency tokens. Because using a cryptocurrency does not require trusting anyone. > But gold does have real-world uses, both for jewelry and for things like filling teeth, that provide a weak but real tether to the real economy. You mean the way darknet markets provide a weak but real tether to the real economy? You literally just enumerated Bitcoin's tether's to the real economy. Also, the idea that the gold market is in any way meaningfully tethered to its industrial usage is a complete joke. There are really great arguments against Bitcoin and crypto-currencies. All of which Paul Krugman completely fails to make in this piece. The best of which he's positioned to make, too! Bitcoin is a deflationary asset - that's a real problem for anything trying to be a currency. That's a great case against it, and one close to Krugman's heart. This article is seriously disappointing.

paulgb 8y ago
> No they aren't. See: Proof of stake, Lightning network. LN doesn't really solve the energy problem because the incentive for miners to compete is still dominated by the mining reward rather than transaction costs. As long as there is competitive mining, the resources used for mining will approach the block reward. Proof of stake is interesting but I don't think it's been used at scale yet has it?

api 8y ago

There are good reasons to be skeptical of some things in the cryptocurrency world, but whenever I see people high in the existing financial system talking this way about it I can't help but think of RIAA executives in the late 1990s arguing that the Internet should be shut down.

safgasCVS 8y ago

In science if a theory doesn't work in practice then the theory is wrong. In economics if reality does not conform to theory then it's reality thats at fault No I'm not saying bitcoin is the future but millions of users are freely choosing to use this system seems to count for nothing against some theoretical failings in Krugman's eyes.

skookum 8y ago
There aren't millions of users freely choosing to use this system. There are millions of speculators hoping that some day billions of users will freely choose to use this system and that <insert giant leap of logic> these particular instances of this system won't be replicated ad infinitum and somehow all economic activity on the planet will settle on these initial implementations.
- topmonk 8y ago
  > <insert giant leap of logic> The justification is first mover advantage
- safgasCVS 8y ago
  I won't speak for all users but I've used it to accept payment for selling used stuff on gumtree (very handy for this). It's also very useful for sending money overseas which I've also done. I don't think I'm a special case which is why I wouldn't miss the forest for the speculators and dismiss the motivations of millions. I also live in a country that wants to pursue land expropriation without compensation based on skin colour. Having a bank account that no one but me can access is quite appealing right now. So I'm not using it to spite your worldview - it's been genuinely useful

UncleEntity 8y ago

> If you like, fiat currencies have underlying value because men with guns say they do. And this means that their value isn’t a bubble that can collapse if people lose faith. Until the value does collapse that is, just look at <how many?> examples of hyperinflation in my lifetime.

kybernetikos 8y ago
Depending on your age and what exactly you count, probably around 5ish.
- PhantomGremlin 8y ago
  Depending on your age and what exactly you count, probably around 5ish. Maybe he's from Brazil? Maybe he's 76+ years old? If so, then I think there were 5 "ish" 1000x devaluations in that single country in his lifetime. I never lived in Brazil but knew people who did. Some quick checking Wiki for dates, I probably missed some devaluations?: 1942 cruzeiro replaces real at 1000x 1967 new cruzeiro replaces old at 1000x 1986 cruzado replaces second cruzeiro at 1000x 1989 cruzado novo replaces cruzado at 1000x 1993 cruzeiro real replaces cruzado at 1000x Pick another random country in Latin America and you probably see the same thing.

bittcto 8y ago

Krugman, in a real way, is why Bitcoin exists. He literally advocated a housing bubble. (Broken Window fallacy) The housing bubble collapsed causing bailouts of banks. Bitcoin is a direct response to this nationalization of private losses. Not to mention the century of financial corruption that preceded it. Satoshi was not coy. The genesis block contains the text: “Chancellor on brink of second bailout for banks”. Of course Krugman is a “skeptic”. Bitcoin repudiates his entire career, ideology and work, and is having a significant positive impact in the world. Unlike Krugman. Every year bitcoin continues it gets stronger, it rewards supporters and forces the corrupt banking system Krugman endorses into the light a bit more. Krugman and other nocoiners hate bitcoin? Bitcoin don’t care. This is what you have to understand about bitcoin: Bitcoin doesn’t have to care. It’s the first real tool of individual financial sovereignty.

montalbano 8y ago

Nick Szabo, who some people thought might be Satoshi, wrote an interesting essay/paper on "micropayments and mental transaction costs" for those interested: https://nakamotoinstitute.org/static/docs/micropayments-and-mental-transaction-costs.pdf https://nakamotoinstitute.org/static/docs/micropayments-and-...

keymone 8y ago

> So that’s why I’m a crypto skeptic. Could I be wrong? Of course. But if you want to argue that I’m wrong, please answer the question, what problem does cryptocurrency solve? Secure, trustless, decentralized consensus. Or in practical terms - a ledger database that everyone can write into without having to trust third parties to maintain correctness. It’s strange author doesn’t seem to attribute any value to solution to that problem. It’s also strange author doesn’t know it has very strong link to reality - security of the system is proportional to hasrate. Seems like just another case of a guy arguing without having understanding on the topic?

gthaman 8y ago
> Seems like just another case of a guy arguing without having understanding on the topic? At best he is ignorant, at worst he is perpetuating the current monetary system(s) which is in a macroprudential[1] policy mode - not good - as many of us can see around us daily. Aside from the truth of there being more money owed with interest (as a debt) than current money in circulation with which to pay that debt off (results in either #1 forced defaults on loans at some time in the future or #2 a feedback cycle with bursts of new loans created to pay off the previous debts without the forced defaults of #1) the current dollar system and all modern currencies are directly harmful to the population and indirectly harmful in a number of ways. I cant stay on here all night but seek elucidation elsewhere if you are interested. Macro voices the podcast does a pretty good job. I don't think all the kings horses and all the kings men will be able to stop bitcoin from success or the dollar from failure but what always astonishes me are the endless arguments for inflation being good for the economy when its basically how the government pays off its outrageous debt by stealing from the elderly, disabled and anyone with a fixed income. And its not just the benefactors of the system, there are volunteer robot numskulls repeating this hypothetical garbage every day on the internet about inflation when really it just allows the government to sustain itself by getting senior citizens to eat dog food. People need to stop letting themselves be tricked into exchanging their time, youth, skills and labor for tokens that are guaranteed to be devalued, its been over 100 years now and none of us know anything different. :( [1] https://en.wikipedia.org/wiki/Macroprudential_regulation https://en.wikipedia.org/wiki/Macroprudential_regulation