3 ms·

To bring $1 worth of US currency into existence, it only costs a fraction of that amount. But to bring $1 worth of bitcoin into existence, it costs $1. So, it

To bring $1 worth of US currency into existence, it only costs a fraction of that amount. But to bring $1 worth of bitcoin into existence, it costs $1. So, it seems obvious to me hash based currency is a virus that is many orders of magnitude less efficient, but many people seem impossible to convince of this.

jimmydorry 6y ago
Nobody would be mining any crypto if their cost was exactly equal to their revenue. This fundamental misconception might be the reason why you can't convince anyone that crypto currency is a "virus".
- perl4ever 6y ago
  In any efficient market, profits approach zero. I don't see the relevance of saying "well, actually, there is some profit". That profit is the mechanism that drives the mining cost to match the value of the currency, isn't it? Please explain more about what you think I am missing, because it sounds like you are just referencing the mechanism that causes the problem.
- jayd16 6y ago
  Speculation is a thing. Not only could users be mining for zero profit, they could be mining at a loss but expecting speculative gains in the future. It just takes some funding to do this. Its not out of the question.
thaumasiotes 6y ago
> To bring $1 worth of US currency into existence, it only costs a fraction of that amount. > But to bring $1 worth of bitcoin into existence, it costs $1. But this just says the seigniorage value of creating bitcoins is 0. It doesn't say the total value of creating bitcoins is 0 -- they might continue to produce value after being created! For example, the situation you describe applies in full to actual physical currencies. The Somali shilling trades at the (quite low) cost of printing the paper note. But the existence of the shilling still has value; it enables commerce in Somalia. Economies operating on a basis of metal currency, or cowry shell currency, also have this feature - pretty much by definition, the trade value of the currency is mostly just the cost of producing it. (For coins, the trade value is usually slightly higher.) But every time a trade occurs, gains from trade are produced, so the currency constantly generates additional value just by being in use.
- perl4ever 6y ago
  I wasn't confident enough to declare bitcoin is equivalent to, say, gold. But it sounds like you are, so maybe that is correct - bitcoin is just as bad as gold, or conversely, gold is just as bad as bitcoin. We observe that fiat currency has mostly driven out metal currency, and I'm inclined to think that is because it is more efficient in using resources. As you say, currency constantly generates value. It is useful. But -100% of the face value is a large burden to start with. How large, relatively speaking? Well, I don't know exactly what to compare it to, but intuitively the value of currency would be related to interest rates, which have been really low for quite a while in the developed world.
wmf 6y ago
You're probably using mainstream economics while coiners are using crackpot Austrian economics. Of course you can't convince them.
deleted 6y ago
[deleted]

jimmydorry 6y ago

Nobody would be mining any crypto if their cost was exactly equal to their revenue. This fundamental misconception might be the reason why you can't convince anyone that crypto currency is a "virus".

perl4ever 6y ago
In any efficient market, profits approach zero. I don't see the relevance of saying "well, actually, there is some profit". That profit is the mechanism that drives the mining cost to match the value of the currency, isn't it? Please explain more about what you think I am missing, because it sounds like you are just referencing the mechanism that causes the problem.
jayd16 6y ago
Speculation is a thing. Not only could users be mining for zero profit, they could be mining at a loss but expecting speculative gains in the future. It just takes some funding to do this. Its not out of the question.

thaumasiotes 6y ago

> To bring $1 worth of US currency into existence, it only costs a fraction of that amount. > But to bring $1 worth of bitcoin into existence, it costs $1. But this just says the seigniorage value of creating bitcoins is 0. It doesn't say the total value of creating bitcoins is 0 -- they might continue to produce value after being created! For example, the situation you describe applies in full to actual physical currencies. The Somali shilling trades at the (quite low) cost of printing the paper note. But the existence of the shilling still has value; it enables commerce in Somalia. Economies operating on a basis of metal currency, or cowry shell currency, also have this feature - pretty much by definition, the trade value of the currency is mostly just the cost of producing it. (For coins, the trade value is usually slightly higher.) But every time a trade occurs, gains from trade are produced, so the currency constantly generates additional value just by being in use.

perl4ever 6y ago
I wasn't confident enough to declare bitcoin is equivalent to, say, gold. But it sounds like you are, so maybe that is correct - bitcoin is just as bad as gold, or conversely, gold is just as bad as bitcoin. We observe that fiat currency has mostly driven out metal currency, and I'm inclined to think that is because it is more efficient in using resources. As you say, currency constantly generates value. It is useful. But -100% of the face value is a large burden to start with. How large, relatively speaking? Well, I don't know exactly what to compare it to, but intuitively the value of currency would be related to interest rates, which have been really low for quite a while in the developed world.

wmf 6y ago

You're probably using mainstream economics while coiners are using crackpot Austrian economics. Of course you can't convince them.

deleted 6y ago

[deleted]