4 ms·

I mean, you also lose your money if you lose paper bills. Makes it difficult to use as a store of value, but not as a medium of exchange.

by elil17 7y ago

arcticbull 7y ago
It's possible to store your paper somewhere that's not the case. It's not possible to do the same with crypto. There is no workaround for crypto -- intentionally so. Not to mention, mediums of exchange aren't supposed to fluctuate 10% in value in minutes, for reasons that should be immediately obvious, and it certainly shouldn't be priced in USDT / Tether Funbux.
- elil17 7y ago
  Anywhere you can store a dollar bill, I can store a piece of paper with my private key written on it. Yes, it absolutely is rendered less useful by the fluctuation of exchange rate.
  - arcticbull 7y ago
    Not in a real bank, which is insured by the FDIC so in the event it becomes insolvent I get my money back. Unlike an exchange where I get a big ol' SFYL.
    - mopsi 7y ago
      Banks have vaults and offer storage services for important documents, including encryption keys. Retrieval difficulties etc can be dealt with by having multiple copies stored in different places. Paper money is no different from keys. If you burn either of them, they're gone for good, but that doesn't stop them from being useful if you use reasonable precautions.
      - arcticbull 7y ago
        Paper money can be converted to digital, insured, replaceable currency by being deposited in a bank. Cryptocurrency cannot.
        mopsi 7y ago
        So can cryptocurrencies be converted. Each form of storage comes with its upsides and downsides. During the Cypriot banking crisis of 2012-13, 47.5% of savings over 100 000 EUR were seized by the government. A 200 000 EUR deposit became a 152 500 EUR deposit overnight.
        arcticbull 7y ago
        I think you're not following what I'm saying but I'll dive into the two aspects here: (1) You can convert cryptocurrencies but that doesn't change the fact your key remains a single point of failure, or your exchange's key remains a single point of failure. This is as designed. There is no remedy. It is intentional. It does not apply to an FDIC insured bank account. (2) During the MtGox crisis and the QuadrigaCX [1] crisis (among many, many, many others), 100% of deposits disappeared overnight with zero recourse (aka SFYL). While neither this nor the Cypriot banking crisis are ideal, I know which one I'd prefer to have gone through. Not to mention at the end QuadrigaCX sent $400,000 on crypto to their dead founder's wallet which is just thrown in with the rest of the pool of lost coins. [1] https://www.forbes.com/sites/dantedisparte/2019/02/05/quadrigacx-how-to-lose-140-million-in-an-instant/ https://www.forbes.com/sites/dantedisparte/2019/02/05/quadri...
        mopsi 7y ago
        > (1) You can convert cryptocurrencies but that doesn't change the fact your key remains a single point of failure, or your exchange's key remains a single point of failure. This is as designed. There is no remedy. It is intentional. It does not apply to an FDIC insured bank account. There can be unlimited number of copies of the same key. For more secure storage, a key can be split into parts that allow reconstruction only if, for example, any 3 of the original 5 parts are present. You can't have such backups with cash. There's no single point of failure, unless the whole system fails and keys have no value anymore. Speaking of which... > (2) During the MtGox crisis and the QuadrigaCX [1] crisis (among many, many, many others), 100% of deposits disappeared overnight with zero recourse (aka SFYL). While neither this nor the Cypriot banking crisis are ideal, I know which one I'd prefer to have gone through. I lived through the collapse of the Soviet Union when money became completely worthless. The photos of the Weimar Republic and baskets full of bills - I've seen that with my own eyes, and I'm not sure that was the last time for me to experience a complete financial collapse. Cash isn't as long-lasting as people seem to think, with a few notable exceptions like the USD. Most currencies that existed in Europe 30 years ago are gone. If you tear down a wall during home renovations and come across a hidden stash of 1997 French francs, they're worthless and can't be exchanged for the Euro anymore: https://europa.eu/european-union/about-eu/euro/exchanging-national-currency_en https://europa.eu/european-union/about-eu/euro/exchanging-na... As to the exchanges - they a are a mirror image of traditional bank accounts (deposit money and hope it doesn't vanish) and should be avoided as much as possible. One of the aims of cryptocurrencies is getting rid of such blind trust based relationships and replace them with cryptographically secured ones that are bound to well-established rules that cannot be arbitrarily changed.
    - elil17 7y ago
      The money in a bank is not paper currency. Your deposit is backed by as little as 3% cash reserves. My original point was that crypto is a medium of exchange, like cash, not that it is a store of value, like bank account deposits.
      - arcticbull 7y ago
        > The money in a bank is not paper currency. Your deposit is backed by as little as 3% cash reserves. Utterly irrelevant so long as it's backed by the FDIC. Nobody has lost a single penny since the Great Depression to a bank failure. Not during COVID. Not in 2008. Not ever. > Your deposit is backed by as little as 3% cash reserves. I'm not sure the Bank of Tether even has that much on hand, and it defines the pricing of all cryptocurrencies. > My original point was that crypto is a medium of exchange. It's not a useful medium of exchange due to its insane volatility and high implied and direct fees. > ...not that it is a store of value, like bank account deposits Cash and bank deposits are a medium of exchange and an intentionally lossy store of value. This is all pretty much ECON-101.

I mean, you also lose your money if you lose paper bills. Makes it difficult to use as a store of value, but not as a medium of exchange.

by elil17 7y ago

I mean, you also lose your money if you lose paper bills. Makes it difficult to use as a store of value, but not as a medium of exchange.

arcticbull 7y ago

It's possible to store your paper somewhere that's not the case. It's not possible to do the same with crypto. There is no workaround for crypto -- intentionally so. Not to mention, mediums of exchange aren't supposed to fluctuate 10% in value in minutes, for reasons that should be immediately obvious, and it certainly shouldn't be priced in USDT / Tether Funbux.

elil17 7y ago
Anywhere you can store a dollar bill, I can store a piece of paper with my private key written on it. Yes, it absolutely is rendered less useful by the fluctuation of exchange rate.
- arcticbull 7y ago
  Not in a real bank, which is insured by the FDIC so in the event it becomes insolvent I get my money back. Unlike an exchange where I get a big ol' SFYL.
  - mopsi 7y ago
    Banks have vaults and offer storage services for important documents, including encryption keys. Retrieval difficulties etc can be dealt with by having multiple copies stored in different places. Paper money is no different from keys. If you burn either of them, they're gone for good, but that doesn't stop them from being useful if you use reasonable precautions.
    - arcticbull 7y ago
      Paper money can be converted to digital, insured, replaceable currency by being deposited in a bank. Cryptocurrency cannot.
      - mopsi 7y ago
        So can cryptocurrencies be converted. Each form of storage comes with its upsides and downsides. During the Cypriot banking crisis of 2012-13, 47.5% of savings over 100 000 EUR were seized by the government. A 200 000 EUR deposit became a 152 500 EUR deposit overnight.
        arcticbull 7y ago
        I think you're not following what I'm saying but I'll dive into the two aspects here: (1) You can convert cryptocurrencies but that doesn't change the fact your key remains a single point of failure, or your exchange's key remains a single point of failure. This is as designed. There is no remedy. It is intentional. It does not apply to an FDIC insured bank account. (2) During the MtGox crisis and the QuadrigaCX [1] crisis (among many, many, many others), 100% of deposits disappeared overnight with zero recourse (aka SFYL). While neither this nor the Cypriot banking crisis are ideal, I know which one I'd prefer to have gone through. Not to mention at the end QuadrigaCX sent $400,000 on crypto to their dead founder's wallet which is just thrown in with the rest of the pool of lost coins. [1] https://www.forbes.com/sites/dantedisparte/2019/02/05/quadrigacx-how-to-lose-140-million-in-an-instant/ https://www.forbes.com/sites/dantedisparte/2019/02/05/quadri...
        mopsi 7y ago
        > (1) You can convert cryptocurrencies but that doesn't change the fact your key remains a single point of failure, or your exchange's key remains a single point of failure. This is as designed. There is no remedy. It is intentional. It does not apply to an FDIC insured bank account. There can be unlimited number of copies of the same key. For more secure storage, a key can be split into parts that allow reconstruction only if, for example, any 3 of the original 5 parts are present. You can't have such backups with cash. There's no single point of failure, unless the whole system fails and keys have no value anymore. Speaking of which... > (2) During the MtGox crisis and the QuadrigaCX [1] crisis (among many, many, many others), 100% of deposits disappeared overnight with zero recourse (aka SFYL). While neither this nor the Cypriot banking crisis are ideal, I know which one I'd prefer to have gone through. I lived through the collapse of the Soviet Union when money became completely worthless. The photos of the Weimar Republic and baskets full of bills - I've seen that with my own eyes, and I'm not sure that was the last time for me to experience a complete financial collapse. Cash isn't as long-lasting as people seem to think, with a few notable exceptions like the USD. Most currencies that existed in Europe 30 years ago are gone. If you tear down a wall during home renovations and come across a hidden stash of 1997 French francs, they're worthless and can't be exchanged for the Euro anymore: https://europa.eu/european-union/about-eu/euro/exchanging-national-currency_en https://europa.eu/european-union/about-eu/euro/exchanging-na... As to the exchanges - they a are a mirror image of traditional bank accounts (deposit money and hope it doesn't vanish) and should be avoided as much as possible. One of the aims of cryptocurrencies is getting rid of such blind trust based relationships and replace them with cryptographically secured ones that are bound to well-established rules that cannot be arbitrarily changed.
  - elil17 7y ago
    The money in a bank is not paper currency. Your deposit is backed by as little as 3% cash reserves. My original point was that crypto is a medium of exchange, like cash, not that it is a store of value, like bank account deposits.
    - arcticbull 7y ago
      > The money in a bank is not paper currency. Your deposit is backed by as little as 3% cash reserves. Utterly irrelevant so long as it's backed by the FDIC. Nobody has lost a single penny since the Great Depression to a bank failure. Not during COVID. Not in 2008. Not ever. > Your deposit is backed by as little as 3% cash reserves. I'm not sure the Bank of Tether even has that much on hand, and it defines the pricing of all cryptocurrencies. > My original point was that crypto is a medium of exchange. It's not a useful medium of exchange due to its insane volatility and high implied and direct fees. > ...not that it is a store of value, like bank account deposits Cash and bank deposits are a medium of exchange and an intentionally lossy store of value. This is all pretty much ECON-101.