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What would explain why he completely overlooked a key primary function of money, something that decentralized crypto cannot, by design, satisfy : money is trans

What would explain why he completely overlooked a key primary function of money, something that decentralized crypto cannot, by design, satisfy : money is transferable debt. Crypto currency view of money is that money is a store of value. Money is far more subtle and interesting than that. Money is has always has been a system of control. Those that can issue money, wield incredible power of the economy, and have done so since monies inception.

eru 7y ago
In such a system, bitcoin would be the equivalent of gold coins in the gold standard (ie a pure asset, no debt). But you could issue transferable denominated in bitcoin or gold. That's what private banknotes used to be in eg Canada or Scotland before they were outlawed. Add a transfer feature to some bitcoin-exchange balances, and you are getting close. Have different bitcoin exchanges agree to accept each others balances, and you are getting even further. (It's in a bitcoin-exchanges profitable interest to accept a transfer from another bitcoin exchange: they can demand real bitcoin from the competing exchange, and just have to give their receiving customer an entry on their own balance sheet for the time being.)
- ur-whale 7y ago
  > But you could issue transferable denominated in bitcoin or gold. Correct. As a matter of fact, this already exists: some Swiss Bank has started issuing certificates of ownership where the underlying is BTC.
  - eru 7y ago
    Interesting. Do you have a link? I guess they are operating a 100% reserve system? My prediction: bitcoin will become successful iff it evolves a fractional reserve ecosystem. Where successful means something like it's being used not just for speculation, but routinely for eg making every-day transactions. (Originally, I was only going to predict fractional reserve as a necessary condition for success. But thinking about it, I realized that no-one would bother with the legal complexities in the non-success case.)
    - DennisP 7y ago
      If it turns into a fractional reserve system, it'll be just another system of control, run on centralized databases with as much surveillance as today. The only way to achieve the level of freedom Antonopoulos is talking about is with real scaling, so people can directly use cryptocurrency in everyday transactions.
      - aserafini 7y ago
        I’m not sure about this. The fractional reserve we have today is based on a system where the underlying monetary base can be created out of thin air. A Bitcoin based fractional reserve would be based on something which fundamentally can’t be created at the whim of any single government at the base monetary level. So yes, you could still over promise Bitcoin but the difference is you cannot be bailed out on a whim. This is an important distinction that would lead to (IMO) healthy outcomes like banks genuinely going bankrupt if they can’t get a ‘real’ bail out of hard Bitcoin instead of bail out socialised by future tax payers’ money and inflation.
        DennisP 7y ago
        But what the article talks about isn't money printing for bailouts. It's about the government's ability to monitor transactions, freeze accounts and confiscate funds.
    - ur-whale 7y ago
      > Interesting. Do you have a link? I guess they are operating a 100% reserve system? https://structuredproducts-ch.leonteq.com/valor/36663487 https://structuredproducts-ch.leonteq.com/valor/36663487 They claim that the underlying is 100% in custody, yes, but as with all paper, who's to really know in the end... They certainly don't provide any sort of crypto verification mechanism so the bearer can verify that the underlying actually exist and is uniquely bound to the paper. [edit]: nevermind. now that I actually look at it, it's cash-settled.
hndamien 7y ago
Money can also be transferable equity.
trickstra 7y ago
> Those that can issue money, wield incredible power Only if they can issue the money at will. If the issuance of money is controlled by a distributed transparent cryptographic algorithm, then the power from issuing the money is not in the hands of the issuers (miners, in the case of cryptocurrencies). And that's a good thing.
- geekpowa 7y ago
  And this is at the heart of what crypto currency advocates fail to understand what money is. Money is a social construct. It isn't a thing, mined out of the ground or a cryptographic nonce that satisfies a a constraint on a hashing algorithm. Money is a social agreement that expresses credit worthiness as assessed by people regarded as reliable assessors credit worthiness. Crypto, which repudiates centralised control, cannot be money. Not until someone figures out a way to guarantee that credit worthiness can somehow be reliably encoded into a trustless p2p algorithm. Given that crypto currency can barely scrape through with a solution to the double spend problem, extending to a solution to assessing credit in a decentralized, anonymous way might as well be on the other side of the galaxy. It is impossibly inaccessible.
  - SuoDuanDao 7y ago
    It is simply a wicked problem, and not the one Crypto is intended to solve. Crypto is intended to automate the role of the trusted third party. Bitcoin's ledger is much less intelligent than even the dullest central banker, but it has no self-interest. In cases where the trusted third party to a transaction has a reason to abuse their power - see e.g. 2008 bank bailouts - having a transparent algorithm handle that role is a massive savings. The problem of assigning creditworthiness remains, it's just that there is one less party whose trustworthiness needs to be assessed (and compensated). It's not that it solves the creditworthiness problem, but it makes the problem easier for others to solve.
sifar 7y ago
>> money is transferable debt >> Crypto currency view of money is that money is a store of value. Money is far more subtle and interesting than that. I would say, modern money is debt, transferable or not. It is interesting in a sly way as the true nature is hidden from the populace at large so that money as a system of control remains effective. I think the major problems we face w.r.t money are due to this dual nature of money. You cannot simultaneously satisfy both the creditors and the debtors.
lawn 7y ago
The view that money is just a store of value is only held by BTC maximalists, because BTC is too unreliable expensive to be a good medium of exchange. When they say store of value what they really mean is investment vehicle.
- hndamien 7y ago
  Expensive?
  - lawn 7y ago
    I meant that transaction fees are unreliable, sometimes they can be extremely expensive (in 2017 they reached as high as $50 per transaction!). Currently the next block fee is $1.36[0], which is very expensive compared to alternative payment networks. [0]: https://bitcoinfees.cash/ https://bitcoinfees.cash/
    - hndamien 7y ago
      Fair.
- lambertsimnel 7y ago
  Can anything store value without having another use, even if its supply is fixed? Would the demand for precious metals and precious metal money as a store of value disappear without the industrial, cosmetic and artistic demand for precious metals?
  - corodra 7y ago
    That's kind of what value means, being useful. Random hash algorithms are not inherently useful, thus, have no value. At least I could wipe my ass with a dollar bill or use the bill as kindling for a fire. I'm all for a currency system based on beans or corn. Especially corn. Corn has loads of value in multiple ways. Food. Fuel. Fertilizer. But oh, it decays, thus, you better use it before it goes bad and is useless. Not in the case for gold. The reason gold was used so much has a long term storage was due to it's stability. Gold doesn't decay in generational lifetimes. Doesn't really rust and reacts with very few chemicals. Silver was actually used as an everyday currency more than gold. But gold was the main body. The use of precious metals as a form of currency was not an accident. Yea, it has value largely based on "faith". Any currency will. No cryptocoin is immune from that. You have to have faith that it has value. I find it weird that people just say "crypto has inherent value unlike fiat currency". Yea, what value? If you want to argue "Well, gold has no real value, so bitcoin is no different from that. They both lack real value. Why can't bitcoin be a currency?" Good question! That's a good point! We're getting somewhere! It peeves me when people take a shit on thousands of years worth of social trial and error and dismiss it all because they watch a youtube cartoon about "the truth behind money".
QuesnayJr 7y ago
The article makes a much more interesting point, which is that now that money is mostly electronic it is an incredible tool for control by governments, particularly the US government. The US government can squeeze Iran now, for example, because it controls SWIFT. It's a very down-to-earth point. Your point is something much vaguer, and not really true. Commodity money, like Spanish pieces-of-eight, has an intrinsic value. Commodity-backed and fiat money are debts of the government, but for you they are assets. If you held a US gold certificate, the government owed you gold. With fiat money, the government basically doesn't owe you anything, but it's still a debt for the government and an asset for you in accounting terms. Before electronic money, the government had very little control over what purposes that money was put to, so it wasn't much of a power.
- littlestymaar 7y ago
  > With fiat money, the government basically doesn't owe you anything, but it's still a debt for the government and an asset for you in accounting terms. You don't understand how money works. “Money is created by the government” is a myth. In western countries (and most of the world, including China!), money is created by private banks and the money on your bank account is a debt from some guy somewhere (likely a mortgage, a student loan or some corporate debt).
  - QuesnayJr 7y ago
    There are multiple definitions of money. You are using what the Fed calls the "M2" definition. I have in mind the "monetary base" definition. Why are bank accounts denominated in units of currency? It's because demand deposits are an extremely close substitutes of actual currency. Anyway, they work the same way. Money in the bank is an asset to you, and a liability to the bank.
    - littlestymaar 7y ago
      > I have in mind the "monetary base" definition. This is incompatible with your previous statement: > it's still a debt for the government and an asset for you in accounting terms. You don't own a single dollar of reserve money as an asset. And the monetary base is a tiny fraction of money. The vast majority of which is debt.
ur-whale 7y ago
Crypto can perfectly be used as transferable debt. As a matter of fact, smart contracts can handle this use case much better than traditional money can.
Legogris 7y ago
You're talking about Bitcoin specifically here. Look at the decentralized finance space currently emerging around Ethereum where smart contracts are used to construct similar debt-based constructs that we have in the traditional economy. People will still lock up cryptocurrencies like BTC on the Bitcoin chain and wrap that in debt-tokens on chains that enable this, for example Ethereum. Bitcoin maximalists who don't agree with debt-based economy are obviously not happy about this. To better understand that point of view, The Bitcoin Standard by Saifedean Ammous is a great read, whether you will agree with it or not.
- TomMarius 7y ago
  You can also build similar constructs on the Bitcoin blockchain.
  - Legogris 7y ago
    If you mean with similar on-chain guarantees, do you have a source? Haven't seen anything like it.
    - TomMarius 7y ago
      I am talking about Colored (RGB) coins

eru 7y ago

In such a system, bitcoin would be the equivalent of gold coins in the gold standard (ie a pure asset, no debt). But you could issue transferable denominated in bitcoin or gold. That's what private banknotes used to be in eg Canada or Scotland before they were outlawed. Add a transfer feature to some bitcoin-exchange balances, and you are getting close. Have different bitcoin exchanges agree to accept each others balances, and you are getting even further. (It's in a bitcoin-exchanges profitable interest to accept a transfer from another bitcoin exchange: they can demand real bitcoin from the competing exchange, and just have to give their receiving customer an entry on their own balance sheet for the time being.)

ur-whale 7y ago
> But you could issue transferable denominated in bitcoin or gold. Correct. As a matter of fact, this already exists: some Swiss Bank has started issuing certificates of ownership where the underlying is BTC.
- eru 7y ago
  Interesting. Do you have a link? I guess they are operating a 100% reserve system? My prediction: bitcoin will become successful iff it evolves a fractional reserve ecosystem. Where successful means something like it's being used not just for speculation, but routinely for eg making every-day transactions. (Originally, I was only going to predict fractional reserve as a necessary condition for success. But thinking about it, I realized that no-one would bother with the legal complexities in the non-success case.)
  - DennisP 7y ago
    If it turns into a fractional reserve system, it'll be just another system of control, run on centralized databases with as much surveillance as today. The only way to achieve the level of freedom Antonopoulos is talking about is with real scaling, so people can directly use cryptocurrency in everyday transactions.
    - aserafini 7y ago
      I’m not sure about this. The fractional reserve we have today is based on a system where the underlying monetary base can be created out of thin air. A Bitcoin based fractional reserve would be based on something which fundamentally can’t be created at the whim of any single government at the base monetary level. So yes, you could still over promise Bitcoin but the difference is you cannot be bailed out on a whim. This is an important distinction that would lead to (IMO) healthy outcomes like banks genuinely going bankrupt if they can’t get a ‘real’ bail out of hard Bitcoin instead of bail out socialised by future tax payers’ money and inflation.
      - DennisP 7y ago
        But what the article talks about isn't money printing for bailouts. It's about the government's ability to monitor transactions, freeze accounts and confiscate funds.
  - ur-whale 7y ago
    > Interesting. Do you have a link? I guess they are operating a 100% reserve system? https://structuredproducts-ch.leonteq.com/valor/36663487 https://structuredproducts-ch.leonteq.com/valor/36663487 They claim that the underlying is 100% in custody, yes, but as with all paper, who's to really know in the end... They certainly don't provide any sort of crypto verification mechanism so the bearer can verify that the underlying actually exist and is uniquely bound to the paper. [edit]: nevermind. now that I actually look at it, it's cash-settled.

hndamien 7y ago

Money can also be transferable equity.

trickstra 7y ago

> Those that can issue money, wield incredible power Only if they can issue the money at will. If the issuance of money is controlled by a distributed transparent cryptographic algorithm, then the power from issuing the money is not in the hands of the issuers (miners, in the case of cryptocurrencies). And that's a good thing.

geekpowa 7y ago
And this is at the heart of what crypto currency advocates fail to understand what money is. Money is a social construct. It isn't a thing, mined out of the ground or a cryptographic nonce that satisfies a a constraint on a hashing algorithm. Money is a social agreement that expresses credit worthiness as assessed by people regarded as reliable assessors credit worthiness. Crypto, which repudiates centralised control, cannot be money. Not until someone figures out a way to guarantee that credit worthiness can somehow be reliably encoded into a trustless p2p algorithm. Given that crypto currency can barely scrape through with a solution to the double spend problem, extending to a solution to assessing credit in a decentralized, anonymous way might as well be on the other side of the galaxy. It is impossibly inaccessible.
- SuoDuanDao 7y ago
  It is simply a wicked problem, and not the one Crypto is intended to solve. Crypto is intended to automate the role of the trusted third party. Bitcoin's ledger is much less intelligent than even the dullest central banker, but it has no self-interest. In cases where the trusted third party to a transaction has a reason to abuse their power - see e.g. 2008 bank bailouts - having a transparent algorithm handle that role is a massive savings. The problem of assigning creditworthiness remains, it's just that there is one less party whose trustworthiness needs to be assessed (and compensated). It's not that it solves the creditworthiness problem, but it makes the problem easier for others to solve.

sifar 7y ago

>> money is transferable debt >> Crypto currency view of money is that money is a store of value. Money is far more subtle and interesting than that. I would say, modern money is debt, transferable or not. It is interesting in a sly way as the true nature is hidden from the populace at large so that money as a system of control remains effective. I think the major problems we face w.r.t money are due to this dual nature of money. You cannot simultaneously satisfy both the creditors and the debtors.

lawn 7y ago

The view that money is just a store of value is only held by BTC maximalists, because BTC is too unreliable expensive to be a good medium of exchange. When they say store of value what they really mean is investment vehicle.

hndamien 7y ago
Expensive?
- lawn 7y ago
  I meant that transaction fees are unreliable, sometimes they can be extremely expensive (in 2017 they reached as high as $50 per transaction!). Currently the next block fee is $1.36[0], which is very expensive compared to alternative payment networks. [0]: https://bitcoinfees.cash/ https://bitcoinfees.cash/
  - hndamien 7y ago
    Fair.
lambertsimnel 7y ago
Can anything store value without having another use, even if its supply is fixed? Would the demand for precious metals and precious metal money as a store of value disappear without the industrial, cosmetic and artistic demand for precious metals?
- corodra 7y ago
  That's kind of what value means, being useful. Random hash algorithms are not inherently useful, thus, have no value. At least I could wipe my ass with a dollar bill or use the bill as kindling for a fire. I'm all for a currency system based on beans or corn. Especially corn. Corn has loads of value in multiple ways. Food. Fuel. Fertilizer. But oh, it decays, thus, you better use it before it goes bad and is useless. Not in the case for gold. The reason gold was used so much has a long term storage was due to it's stability. Gold doesn't decay in generational lifetimes. Doesn't really rust and reacts with very few chemicals. Silver was actually used as an everyday currency more than gold. But gold was the main body. The use of precious metals as a form of currency was not an accident. Yea, it has value largely based on "faith". Any currency will. No cryptocoin is immune from that. You have to have faith that it has value. I find it weird that people just say "crypto has inherent value unlike fiat currency". Yea, what value? If you want to argue "Well, gold has no real value, so bitcoin is no different from that. They both lack real value. Why can't bitcoin be a currency?" Good question! That's a good point! We're getting somewhere! It peeves me when people take a shit on thousands of years worth of social trial and error and dismiss it all because they watch a youtube cartoon about "the truth behind money".

QuesnayJr 7y ago

The article makes a much more interesting point, which is that now that money is mostly electronic it is an incredible tool for control by governments, particularly the US government. The US government can squeeze Iran now, for example, because it controls SWIFT. It's a very down-to-earth point. Your point is something much vaguer, and not really true. Commodity money, like Spanish pieces-of-eight, has an intrinsic value. Commodity-backed and fiat money are debts of the government, but for you they are assets. If you held a US gold certificate, the government owed you gold. With fiat money, the government basically doesn't owe you anything, but it's still a debt for the government and an asset for you in accounting terms. Before electronic money, the government had very little control over what purposes that money was put to, so it wasn't much of a power.

littlestymaar 7y ago
> With fiat money, the government basically doesn't owe you anything, but it's still a debt for the government and an asset for you in accounting terms. You don't understand how money works. “Money is created by the government” is a myth. In western countries (and most of the world, including China!), money is created by private banks and the money on your bank account is a debt from some guy somewhere (likely a mortgage, a student loan or some corporate debt).
- QuesnayJr 7y ago
  There are multiple definitions of money. You are using what the Fed calls the "M2" definition. I have in mind the "monetary base" definition. Why are bank accounts denominated in units of currency? It's because demand deposits are an extremely close substitutes of actual currency. Anyway, they work the same way. Money in the bank is an asset to you, and a liability to the bank.
  - littlestymaar 7y ago
    > I have in mind the "monetary base" definition. This is incompatible with your previous statement: > it's still a debt for the government and an asset for you in accounting terms. You don't own a single dollar of reserve money as an asset. And the monetary base is a tiny fraction of money. The vast majority of which is debt.

ur-whale 7y ago

Crypto can perfectly be used as transferable debt. As a matter of fact, smart contracts can handle this use case much better than traditional money can.

Legogris 7y ago

You're talking about Bitcoin specifically here. Look at the decentralized finance space currently emerging around Ethereum where smart contracts are used to construct similar debt-based constructs that we have in the traditional economy. People will still lock up cryptocurrencies like BTC on the Bitcoin chain and wrap that in debt-tokens on chains that enable this, for example Ethereum. Bitcoin maximalists who don't agree with debt-based economy are obviously not happy about this. To better understand that point of view, The Bitcoin Standard by Saifedean Ammous is a great read, whether you will agree with it or not.

TomMarius 7y ago
You can also build similar constructs on the Bitcoin blockchain.
- Legogris 7y ago
  If you mean with similar on-chain guarantees, do you have a source? Haven't seen anything like it.
  - TomMarius 7y ago
    I am talking about Colored (RGB) coins