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I had a big insight on bitcoin: * "Sound money" groups have one set of wishes of what will happen to the US Dollar * Some parts of the population want money p

I had a big insight on bitcoin: * "Sound money" groups have one set of wishes of what will happen to the US Dollar * Some parts of the population want money printing to pay for services. * WallStreet likes money printing US Dollars to bail them out. * Everyone has an agenda for US Dollars. Here is what happens to bitcoin: * Bitcoin (and Ethereum) were given a historic strategic value by the US Gov because they get grand fathered in that they are not required to have KYC & AML. Future crypto tokens will, and they will be held back. * Bitcoin is where citizens can turn to, when money printing doesn't match their agenda. What is amazing, is that they don't need to get approval from the full citizen base. This is great for citizens that are hurt by money printing. Right now, it is for speculation for investors. But the investors are investing towards more usage as a currency in the future.

api 7y ago
Why would you spend or invest a currency that magically goes up whenever there is demand for it? The hard money aspect of Bitcoin and most other cryptocurrencies guarantees that they will be speculation devices that will behave like iterative Ponzi-like games of chance (even if they were not explicitly intended as such). Any increase in their use as currencies will drive their value up which will paradoxically discourage their use as a currency, leading to boom-bust cycles. These will be quite extreme as Bitcoin and its ilk are much more deflationary than precious metals or other traditional commodity monies. They are not only absolutely finite but are subject to breakage (permanent loss) due to lost secret keys. This is why the entire world rejected hard asset money and fiat money pegged to hard assets. It's bad for the actual economy where actual economy is defined as actually doing things in the real world. Money is a means to an end not an end in itself.
- whb07 7y ago
  Because what you're saying is some dreamland example everyone always repeats like a scratched disc. Why would you buy a CPU today when you know next year it will be at least 1/2 price or twice more performant? Why buy a new phone today when tomorrow it will be cheaper? Why marry a woman/guy today when you know tomorrow there will be a younger and better looking person out there? Thats what you're saying. It doesn't hold true. I want something TODAY, not tomorrow, or next week. So if i had some gold or bitcoin, i would exchange some of it for the thing i want. Lastly, some of the bitcoin-USD payment processors saw the largest volumes DURING the bubble of Dec 2017. What that means is as people got richer they started buying goods with their highly appreciated bitcoin.
  - api 7y ago
    I used to subscribe to the pop Austrian hard money ideology. Watching cryptocurrency devolve into a HODL cult and gambling casino is one of the things that changed my mind. I saw by watching the evolution of Bitcoin that Keynes was right, at least about that particular topic. Everything Keynesian and modern monetary theorists said would happen happened, and for easy to understand reasons. In science we call that a correct prediction. What I saw in 2017 was a giant bubble driven by the greater fool theory followed by a complete abandonment of cryptocurrency as a payment method. This abandonment actually coincides with the bubble as this boom-bust cycle made it very inconvenient to use as a currency. All this accomplished was to make early adopters rich at the expense of later adopters, like any Ponzi. (Again I don't think it was an intentional scam, but unfolded as a Ponzi for structural reasons.) Today I am hard pressed to find anyone who accepts Bitcoin for anything but drugs and black/grey market stuff, and those people have a special need that overcomes the currency's downsides as such. Today the cryptocurrency world seems like nothing but scams and even those are fading away. Most articles I see about it are scammy. Bitcoin is very unlike gold. Gold costs little to nothing to maintain while BTC has a huge electricity cost. That must be slowly consuming the actual value in the ecosystem. Eventually nothing will be left but Tethers and other fictional tokens. When those collapse the music will be over.
    - whb07 7y ago
      That's got nothing to do with your initial comment nor my response.
  - millstone 7y ago
    But those are real effects! People really do delay purchases in anticipation of the next phone or car or laptop! And if prices are falling, they delay harder. My family has not purchased solar panels because the price keeps dropping!
- glitchc 7y ago
  > This is why the entire world rejected hard asset money and fiat money pegged to hard assets. The world did not reject it, governments did. Consumers overwhelmingly prefer money backed by hard assets. The switch made it possible to exert more control over monetary policy. The Bitcoin experiment is more about consumers wresting that control back from government.
  - api 7y ago
    As a consumer, I for one hope the value of the dollar falls (slowly of course). Housing is grotesquely overpriced. There is no way to reduce the cost of assets like real estate in nominal terms without mountains of pain. Housing can't go down without leaving recent purchasers underwater and triggering a banking crisis. The most orderly way for house prices to be made sane again would be for the value of the dollar to fall until a $500k starter home is "reasonable" in real value terms. Everyone gets a 1.5X-2X raise, a loaf of bread is $10, gas is $12/gallon, and now magically $500k for a starter house/condo is reasonable. Inflation is an ugly solution to an even uglier set of problems that revolve around the inelasticity of pricing and the blind spots of human psychology. It's almost impossible for the price of assets or wages to fall in an orderly fashion. The resistance is both structural and psychological. Market pricing mechanisms can't work if prices can't move in both directions. Inflation allows prices to fall and debt to be written down in a more silent less painful way. It's a hack to allow prices of all things to move in both directions and thus for market pricing signals to work. We may not need this hack if we were perfectly rational. A perfectly rational employee would understand if you cut their wages in nominal terms but explained that the value of the currency had increased. A perfectly rational bank would write down the value of underwater home loans to avoid a debt crisis. People do not behave like this. Banks will refuse to write down loan values unless other banks do (game theory), guaranteeing a disorderly debt crisis rather than an orderly haircut. People will always feel like they got a pay cut if number go down regardless of purchasing power. I pick on real estate, wages, and loans because they are probably the least elastic in terms of nominal price. For those number must always go up (or at least stay the same) or really bad things happen. Other things are still at least somewhat subject to the same forces to varying degrees.
- HashThis 7y ago
  The US Dollar money supply increased 500% in 5 years ($800b in 2008 to $3.6 Trillion in 2013) [Monetary base]. That is a lot of "money printing" (including digitally expanding the money supply). There will come a time when the fact that Bitcoin won't EVER "print money" or expand the money supply is a HUGE value. You say the currency supply "fluctuates". In the future, with 500% increases in US Dollar, the US Dollar can greatly drop in value. Over time, the fact that people know bitcoin can't expand the money supply is VERY VERY powerful.
  - tromp 7y ago
    > There will come a time when the fact that Bitcoin won't EVER "print money" or expand the money supply is a HUGE value. The huge value is simply in Bitcoin being disinflationary. That is, yearly inflation converging to 0. Whether it's 0% or 0.01% or 0.1% doesn't matter that much. What matters is that, unlike fiat, it goes down predictably.
paulgb 7y ago
> Bitcoin (and Ethereum) were given a historic strategic value by the US Gov because they get grand fathered in that they are not required to have KYC & AML. Could you elaborate on this (e.g. what law or decision are you referring to?) I tried searching for more info and only found another comment of yours[1] 1:https://news.ycombinator.com/item?id=21032259 https://news.ycombinator.com/item?id=21032259
- HashThis 7y ago
  When people launch tokens (new cryptocurrencies) today, they need to be KYC and AML compatible. KYC and AML add so much friction, it destroys usage. It blocks it from working on some parts of the planet. (Small third world countries don't all of the FinCen-like organizations that exist across the US and Europe)
  - paulgb 7y ago
    What's the law or legal precedent that grandfathers Bitcoin and Etherium?
    - HashThis 7y ago
      The SEC sues people who launch tokens without KYC and AML these days. The SEC is having a hard time finding Satoshi. Here is where SEC has grandfathered in ETH and BTC specifically: > The SEC has declared that Ethereum and its digital coin ether, are not securities today, during the Yahoo Finance summit. https://www.cnbc.com/2018/06/14/bitcoin-and-ethereum-are-not-securities-but-some-cryptocurrencies-may-be-sec-official-says.html https://www.cnbc.com/2018/06/14/bitcoin-and-ethereum-are-not...

api 7y ago

Why would you spend or invest a currency that magically goes up whenever there is demand for it? The hard money aspect of Bitcoin and most other cryptocurrencies guarantees that they will be speculation devices that will behave like iterative Ponzi-like games of chance (even if they were not explicitly intended as such). Any increase in their use as currencies will drive their value up which will paradoxically discourage their use as a currency, leading to boom-bust cycles. These will be quite extreme as Bitcoin and its ilk are much more deflationary than precious metals or other traditional commodity monies. They are not only absolutely finite but are subject to breakage (permanent loss) due to lost secret keys. This is why the entire world rejected hard asset money and fiat money pegged to hard assets. It's bad for the actual economy where actual economy is defined as actually doing things in the real world. Money is a means to an end not an end in itself.

whb07 7y ago
Because what you're saying is some dreamland example everyone always repeats like a scratched disc. Why would you buy a CPU today when you know next year it will be at least 1/2 price or twice more performant? Why buy a new phone today when tomorrow it will be cheaper? Why marry a woman/guy today when you know tomorrow there will be a younger and better looking person out there? Thats what you're saying. It doesn't hold true. I want something TODAY, not tomorrow, or next week. So if i had some gold or bitcoin, i would exchange some of it for the thing i want. Lastly, some of the bitcoin-USD payment processors saw the largest volumes DURING the bubble of Dec 2017. What that means is as people got richer they started buying goods with their highly appreciated bitcoin.
- api 7y ago
  I used to subscribe to the pop Austrian hard money ideology. Watching cryptocurrency devolve into a HODL cult and gambling casino is one of the things that changed my mind. I saw by watching the evolution of Bitcoin that Keynes was right, at least about that particular topic. Everything Keynesian and modern monetary theorists said would happen happened, and for easy to understand reasons. In science we call that a correct prediction. What I saw in 2017 was a giant bubble driven by the greater fool theory followed by a complete abandonment of cryptocurrency as a payment method. This abandonment actually coincides with the bubble as this boom-bust cycle made it very inconvenient to use as a currency. All this accomplished was to make early adopters rich at the expense of later adopters, like any Ponzi. (Again I don't think it was an intentional scam, but unfolded as a Ponzi for structural reasons.) Today I am hard pressed to find anyone who accepts Bitcoin for anything but drugs and black/grey market stuff, and those people have a special need that overcomes the currency's downsides as such. Today the cryptocurrency world seems like nothing but scams and even those are fading away. Most articles I see about it are scammy. Bitcoin is very unlike gold. Gold costs little to nothing to maintain while BTC has a huge electricity cost. That must be slowly consuming the actual value in the ecosystem. Eventually nothing will be left but Tethers and other fictional tokens. When those collapse the music will be over.
  - whb07 7y ago
    That's got nothing to do with your initial comment nor my response.
- millstone 7y ago
  But those are real effects! People really do delay purchases in anticipation of the next phone or car or laptop! And if prices are falling, they delay harder. My family has not purchased solar panels because the price keeps dropping!
glitchc 7y ago
> This is why the entire world rejected hard asset money and fiat money pegged to hard assets. The world did not reject it, governments did. Consumers overwhelmingly prefer money backed by hard assets. The switch made it possible to exert more control over monetary policy. The Bitcoin experiment is more about consumers wresting that control back from government.
- api 7y ago
  As a consumer, I for one hope the value of the dollar falls (slowly of course). Housing is grotesquely overpriced. There is no way to reduce the cost of assets like real estate in nominal terms without mountains of pain. Housing can't go down without leaving recent purchasers underwater and triggering a banking crisis. The most orderly way for house prices to be made sane again would be for the value of the dollar to fall until a $500k starter home is "reasonable" in real value terms. Everyone gets a 1.5X-2X raise, a loaf of bread is $10, gas is $12/gallon, and now magically $500k for a starter house/condo is reasonable. Inflation is an ugly solution to an even uglier set of problems that revolve around the inelasticity of pricing and the blind spots of human psychology. It's almost impossible for the price of assets or wages to fall in an orderly fashion. The resistance is both structural and psychological. Market pricing mechanisms can't work if prices can't move in both directions. Inflation allows prices to fall and debt to be written down in a more silent less painful way. It's a hack to allow prices of all things to move in both directions and thus for market pricing signals to work. We may not need this hack if we were perfectly rational. A perfectly rational employee would understand if you cut their wages in nominal terms but explained that the value of the currency had increased. A perfectly rational bank would write down the value of underwater home loans to avoid a debt crisis. People do not behave like this. Banks will refuse to write down loan values unless other banks do (game theory), guaranteeing a disorderly debt crisis rather than an orderly haircut. People will always feel like they got a pay cut if number go down regardless of purchasing power. I pick on real estate, wages, and loans because they are probably the least elastic in terms of nominal price. For those number must always go up (or at least stay the same) or really bad things happen. Other things are still at least somewhat subject to the same forces to varying degrees.
HashThis 7y ago
The US Dollar money supply increased 500% in 5 years ($800b in 2008 to $3.6 Trillion in 2013) [Monetary base]. That is a lot of "money printing" (including digitally expanding the money supply). There will come a time when the fact that Bitcoin won't EVER "print money" or expand the money supply is a HUGE value. You say the currency supply "fluctuates". In the future, with 500% increases in US Dollar, the US Dollar can greatly drop in value. Over time, the fact that people know bitcoin can't expand the money supply is VERY VERY powerful.
- tromp 7y ago
  > There will come a time when the fact that Bitcoin won't EVER "print money" or expand the money supply is a HUGE value. The huge value is simply in Bitcoin being disinflationary. That is, yearly inflation converging to 0. Whether it's 0% or 0.01% or 0.1% doesn't matter that much. What matters is that, unlike fiat, it goes down predictably.

paulgb 7y ago

> Bitcoin (and Ethereum) were given a historic strategic value by the US Gov because they get grand fathered in that they are not required to have KYC & AML. Could you elaborate on this (e.g. what law or decision are you referring to?) I tried searching for more info and only found another comment of yours[1] 1:https://news.ycombinator.com/item?id=21032259 https://news.ycombinator.com/item?id=21032259

HashThis 7y ago
When people launch tokens (new cryptocurrencies) today, they need to be KYC and AML compatible. KYC and AML add so much friction, it destroys usage. It blocks it from working on some parts of the planet. (Small third world countries don't all of the FinCen-like organizations that exist across the US and Europe)
- paulgb 7y ago
  What's the law or legal precedent that grandfathers Bitcoin and Etherium?
  - HashThis 7y ago
    The SEC sues people who launch tokens without KYC and AML these days. The SEC is having a hard time finding Satoshi. Here is where SEC has grandfathered in ETH and BTC specifically: > The SEC has declared that Ethereum and its digital coin ether, are not securities today, during the Yahoo Finance summit. https://www.cnbc.com/2018/06/14/bitcoin-and-ethereum-are-not-securities-but-some-cryptocurrencies-may-be-sec-official-says.html https://www.cnbc.com/2018/06/14/bitcoin-and-ethereum-are-not...