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> people do not want to be engaged in the process of running a bank or a government But casual users can choose to store their crypto assets with a bank/custod

> people do not want to be engaged in the process of running a bank or a government But casual users can choose to store their crypto assets with a bank/custodian/exchange. Granted, it defeats some of the benefits, but not all. E.g. most crypto has low inflation compared to USD. Even though CPI inflation is ~2%, the money supply inflates around ~10% per year, whereas most crypto will inflate <1% long term. > the utility of the network is trivial to compromise or destroy for a state level actor For smaller PoW currencies, absolutely -- a state level actor could acquire majority hash power, then build their own fork which contained no transactions. For Bitcoin, it'd take time and lots of money, but it's possible. But PoS currencies are more resilient. With something like Cardano, I don't see what governments could do, apart from banning its use within their own jurisdiction. Even if they purchased a 51% stake, once they start the malicious fork, the community would know which accounts were participating and could organize a hard fork to ban them. > most crypto is actually regressive from a privacy/personal liberty standpoint when compared with cash, or even the current banking system in many ways That's a fair criticism of Bitcoin etc., but future iterations of cryptocurrencies will surely include ZeroCash-style privacy at least as an optional feature, if not for every transaction. > The classic "remittances" use case makes no sense because you still have to change the crypto for real currency, which is where the cost is, (yes, only until the currency is meaningfully bootstrapped, let me know when that happens). Here's how bootstrapping could happen: - {Apple,Google,Samsung}Pay add support for various cryptocurrencies. Initially, most stores may not support crypto payments, either because the POS (often Verifone) doesn't support it, or because the merchant doesn't want to deal with it. - POS vendors start supporting crypto, starting with more agile companies like Square. For them, there's no downside apart from development costs. Online processors like Stripe and PayPal add support as well. - As processor support improves, gradually more and more merchants accept crypto payments, either for PR reasons, or for the low fees, quick settlement, lack of chargebacks, etc. Some offer discounts for crypto payments. - Payroll providers and and tax services eventually add support crypto payments. Again, no downside besides development costs. So people who want to can do everything in their favorite cryptocurrency, even though it's converted to and from fiat in the background. - After several generations, taxes are the one thing people still (indirectly) use fiat for. The government still makes money from inflation tax, but eventually they realize that it's essentially a wealth tax, with tons of fees going to exchanges. They replace it with an explicit wealth tax, or (optimistically) something that makes more economic sense, like land value tax. I'm not saying it's a sure thing at all, but it seems somewhat plausible, no?

wdewind 8y ago
> But casual users can choose to store their crypto assets with a bank/custodian/exchange. It's not clear to me that this is meaningfully different than our current financial system. > Granted, it defeats some of the benefits, but not all. E.g. most crypto has low inflation compared to USD. Even though CPI inflation is ~2%, the money supply inflates around ~10% per year, whereas most crypto will inflate <1% long term. It's really not clear to me that this is a benefit, and even if it is was, there is nothing stopping the Bitcoin network, for instance, from deciding it wants to inflate after it has mined all the coins. The fact that the vast majority of mining is controlled by a handful of Chinese companies and that this is seen as preferable to The Fed for deciding whether or not to inflate seems crazy to me. But it's possible, even probable, that the people who make real money selling bitcoins will vote to make more bitcoins after they run out of bitcoins to sell, ie: squeeze blood from the stone. > With something like Cardano, I don't see what governments could do, apart from banning its use within their own jurisdiction. You're talking about a government that reads literally every single piece of internet traffic and likely has backdoors into many encryption products. > That's a fair criticism of Bitcoin etc., but future iterations of cryptocurrencies will surely include ZeroCash-style privacy at least as an optional feature, if not for every transaction. No, because anyone who wants to make a serious business out of these will be required to become a Money Services Business, and have a Know Your Customer (KYC) process. As I mentioned in my previous posts: we've thought about this problem before, we don't want money floating around that isn't easily traceable, and so we already have laws governing this stuff. It's not a matter of "design the right mathematical system to create anonymity." The Dudes With the Guns do not want that so it will not happen. These systems cannot meaningfully exist outside of the current political system without a real, guns and explosions, revolution. > I'm not saying it's a sure thing at all, but it seems somewhat plausible, no? There is literally no upside for the vast majority of the actors in your proposal. If a currency is truly deflationary consumers wont want to spend it, if it's not it's not meaningfully different. Consumers also want a layer of protection, which credit cards offer them. Big vendors (Microsoft, Valve/Steam, Overstock etc.) who accepted crypto have already decided to stop, and transaction volume is plummeting so I think your proposed series of events is extremely unlikely. The market is surely irrational, and there are a ton of things that exist that shouldn't, so who knows. But this stuff is not a good idea, there isn't any "mystery" left to it. We understand what's being proposed, it's basically all been proposed before, and it's an idea filled with huge problems that have only begun to surface because it is a nascent system.

wdewind 8y ago

> But casual users can choose to store their crypto assets with a bank/custodian/exchange. It's not clear to me that this is meaningfully different than our current financial system. > Granted, it defeats some of the benefits, but not all. E.g. most crypto has low inflation compared to USD. Even though CPI inflation is ~2%, the money supply inflates around ~10% per year, whereas most crypto will inflate <1% long term. It's really not clear to me that this is a benefit, and even if it is was, there is nothing stopping the Bitcoin network, for instance, from deciding it wants to inflate after it has mined all the coins. The fact that the vast majority of mining is controlled by a handful of Chinese companies and that this is seen as preferable to The Fed for deciding whether or not to inflate seems crazy to me. But it's possible, even probable, that the people who make real money selling bitcoins will vote to make more bitcoins after they run out of bitcoins to sell, ie: squeeze blood from the stone. > With something like Cardano, I don't see what governments could do, apart from banning its use within their own jurisdiction. You're talking about a government that reads literally every single piece of internet traffic and likely has backdoors into many encryption products. > That's a fair criticism of Bitcoin etc., but future iterations of cryptocurrencies will surely include ZeroCash-style privacy at least as an optional feature, if not for every transaction. No, because anyone who wants to make a serious business out of these will be required to become a Money Services Business, and have a Know Your Customer (KYC) process. As I mentioned in my previous posts: we've thought about this problem before, we don't want money floating around that isn't easily traceable, and so we already have laws governing this stuff. It's not a matter of "design the right mathematical system to create anonymity." The Dudes With the Guns do not want that so it will not happen. These systems cannot meaningfully exist outside of the current political system without a real, guns and explosions, revolution. > I'm not saying it's a sure thing at all, but it seems somewhat plausible, no? There is literally no upside for the vast majority of the actors in your proposal. If a currency is truly deflationary consumers wont want to spend it, if it's not it's not meaningfully different. Consumers also want a layer of protection, which credit cards offer them. Big vendors (Microsoft, Valve/Steam, Overstock etc.) who accepted crypto have already decided to stop, and transaction volume is plummeting so I think your proposed series of events is extremely unlikely. The market is surely irrational, and there are a ton of things that exist that shouldn't, so who knows. But this stuff is not a good idea, there isn't any "mystery" left to it. We understand what's being proposed, it's basically all been proposed before, and it's an idea filled with huge problems that have only begun to surface because it is a nascent system.