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People generally know how dollars work. They don’t know much about the monetary system from a macro standpoint, but a dollar is a dollar. There’s no wallet cod

People generally know how dollars work. They don’t know much about the monetary system from a macro standpoint, but a dollar is a dollar. There’s no wallet code on a flash drive that you can lose. There’s no weird pseudo-bank. There’s no mining (which adds huge transaction costs to the network). If a new VC-backed company called Mt. Zox said “keep your cryptos with us, we have the latest in crypto security. Here are all the virtually incomprehensible protections we have. Trust us, we’re better than the Other Guys” how can you fully evaluate them? Even if they have great standards on paper, how do you know that they will be upheld in practice? How do you know that there’s no backdoor for hackers or company founders to use? Even if you do all your research before investing, you’re still a sitting duck with the tail risk of capricious losses. My point isn’t that full understanding is a prerequisite for widespread crypto adoption. However, there is a “tangibility-trust” axis with currencies. The less tangible the currency is, the more trust is required in the issuing institution. Gold is more tangible than dollars. Physical dollars are more tangible than digital dollars. Digital dollars are more tangible than cryptos. Bitcoin took a step down in both intangibility and institutional trust. It is, essentially, a currency backed by full faith in speculation, illicit activity, asset hiding, and under the radar transactions. Side note: I changed “trust something” to “trust a currency” in my OP to be more specific.

baby 7y ago
People understand dollar bills, but they don’t understand their credit card and the visa/mastercard network. You’re making the error of talking about cryptocurrency from the network perspective instead of the ecosystem perspective. You can compare a cryptocurrency with a financial backbone. A bank/credit card/any financial service can be sitting in front of both a cryptocurrency network or the current financial network and users wouldn’t see a difference (well except lower fees)
- keenmaster 7y ago
  Theoretically, what’s going on behind the scenes shouldn’t matter. However, you could only trust the system to properly implement this extremely intangible technology if you fundamentally trust the organizations involved. Again, how do you know that their representations regarding the currency are true? How do you know that the amount of crypto withheld for the founding organization is fair or won’t overly dilute the network? How do you know there are no backdoors? If the crypto is pegged to another currency/commodity/crypto, how do you know that the peg will work in practice (this is very hard)? How do you know that the organization is actually holding the pegged currency in reserve, like they said they would? Even if the currency is perfect, how do you know that your wallet provider is safe/not inadvertently malicious? What recourse will you have if you get hacked? (none, and if someone says “that’s not fair, Chase can be hacked too” - sure, but that’s less likely, and the U.S. will step in to help, which gets back to my point about institutional backing) Some of these concerns exist with large established banks, but we don’t really care because 1. They have a great history of keeping your assets safe 2. They have the backing of the government. 3. The Federal Reserve is in charge of our monetary system, and whatever beef one may have with them, they are far, far better than a small group of friends who wrote a white paper somewhere. Don’t forget the massive cost to compensate miners for all the time, electricity, and computing power that they use. If you amortize those costs, they far surpass even Amex’s credit card fees. Also, what’s with the whole >50% control condition? So now I have to worry about a top secret Russian organization with dozens of 160 IQ scientists racing to create a quantum computer that can overwhelm some/all cryptos and bring wealth to the motherland? I’m half-joking, but that’s the kind of technological weirdness that I’m not comfortable with, much less the average person.

baby 7y ago

People understand dollar bills, but they don’t understand their credit card and the visa/mastercard network. You’re making the error of talking about cryptocurrency from the network perspective instead of the ecosystem perspective. You can compare a cryptocurrency with a financial backbone. A bank/credit card/any financial service can be sitting in front of both a cryptocurrency network or the current financial network and users wouldn’t see a difference (well except lower fees)

keenmaster 7y ago
Theoretically, what’s going on behind the scenes shouldn’t matter. However, you could only trust the system to properly implement this extremely intangible technology if you fundamentally trust the organizations involved. Again, how do you know that their representations regarding the currency are true? How do you know that the amount of crypto withheld for the founding organization is fair or won’t overly dilute the network? How do you know there are no backdoors? If the crypto is pegged to another currency/commodity/crypto, how do you know that the peg will work in practice (this is very hard)? How do you know that the organization is actually holding the pegged currency in reserve, like they said they would? Even if the currency is perfect, how do you know that your wallet provider is safe/not inadvertently malicious? What recourse will you have if you get hacked? (none, and if someone says “that’s not fair, Chase can be hacked too” - sure, but that’s less likely, and the U.S. will step in to help, which gets back to my point about institutional backing) Some of these concerns exist with large established banks, but we don’t really care because 1. They have a great history of keeping your assets safe 2. They have the backing of the government. 3. The Federal Reserve is in charge of our monetary system, and whatever beef one may have with them, they are far, far better than a small group of friends who wrote a white paper somewhere. Don’t forget the massive cost to compensate miners for all the time, electricity, and computing power that they use. If you amortize those costs, they far surpass even Amex’s credit card fees. Also, what’s with the whole >50% control condition? So now I have to worry about a top secret Russian organization with dozens of 160 IQ scientists racing to create a quantum computer that can overwhelm some/all cryptos and bring wealth to the motherland? I’m half-joking, but that’s the kind of technological weirdness that I’m not comfortable with, much less the average person.