12 ms·

The biggest promise of crypto is that it is immune to government censorship / control. It can free us from the hidden taxation of inflation, and government coer

The biggest promise of crypto is that it is immune to government censorship / control. It can free us from the hidden taxation of inflation, and government coercion. I for one don't want government to be able to regulate / control / trace transactions.

vkou 6y ago
The hidden taxation of inflation is a feature. It creates an incentive for people to invest, instead of, like dragons, uselessly sitting on a pile of money.
- qertoip 6y ago
  The opposite is true: inflation takes away the hard earned value that could otherwise be invested.
  - smorephism 6y ago
    Yes, that's the idea: the price of sitting on a dragon's hoard of cash that's not doing anything is that its value decreases over time, so you are incentivized to actually do something with it.
    - megous 6y ago
      Your economics are weird. Making a stupid analogy doesn't help it. There are no dragons, just individual people making decisions about how much to save and for what purpose, and when to spend it, based on their individual circumstances. Holding on to savings is neither positive nor negative, and should be a personal decision based on individual's circumstances (that's where the most detailed information are available about what's good for the individual), not something forced/influenced from the top by blunt whole market manipulation via forced depreciation of value of money, by some committee. All you've achieved by forced depreciation is forcing people to make needless risks, just to keep value of their savings, while they're trying to save up for something (like starting a business, or buying a flat, or safety of mind). Whole class of brokers, and traders, and lenders, who pray on this situation benefit, of course.
      - deleted 6y ago
        [deleted]
  - arcticbull 6y ago
    No, lol, the opposite is not true. At an inflation rate of 2% per annum, if your wages keep pace with in inflation as they historically have, it's not stealing anything from anyone. You take the money as you receive it, and you invest it. It's a forcing function. You can invest it in something as simple as a savings account if you believe that's the right approach. Even in a savings account it's collateralizing loans. The only place your actual cash is at real risk from inflation is under your mattress. That's the point.
    - andrewjl 6y ago
      The real yield for USD Treasury is currently negative across all maturities, this means that your cash has a negative real return in a savings account at a bank. [1] [1] https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...
    - nybble41 6y ago
      > …if your wages keep pace with in inflation as they historically have… If we're speaking historically, under inflation the prices of consumer goods have tended to rise faster than wages. Under deflation the opposite has been true. Of course lately we have massive improvements in technology to thank for boosting productivity in almost every field, which somewhat masks the negative effects of the inflation. If it weren't for that there probably wouldn't be much of an economy left by this point. Cash has no utility on its own. It's just a placeholder. Take some out of circulation and the purchasing power of the remaining cash will automatically adjust to match the value of everything available for trade. Stuffing cash in your mattress hurts no one. Inexpertly dumping it into the market to avoid inflation, on the other hand, might well bring down the average rate of return. The natural rate of inflation or deflation is a key economic indicator which reflects the expected average rate of return. Only ventures with expected returns above this rate (the deflation rate) are economically productive. Messing with the money supply distorts this signal and, though excess inflation, encourages investment in less ventures which divert resources away from the more productive ones. Of course artificial deflation is no better; the ideal is not forced deflation but rather a currency whose supply is not subject to manipulation.
- sthnblllII 6y ago
  Consumers spend almost every dollar as soon as they get it. The ones hoarding capital are the banks. The fed can never seem to get interest rates low enough to get the banks to loan to businesses. So why do big banks get to keep the money the fed prints instead of the government, thereby lowering taxes and increasing consumer spending? Because then banks wouldn't get unlimited cheap capital and wouldnt be able to continue the leveraged buyout of American industry. Entrepreneurs would control the economy like they used to instead of financiers, and we cant have that now can we?
  - notahacker 6y ago
    > The ones hoarding capital are the banks...get to keep the money the fed prints instead of the government Banks lend more dollars than they borrow from the Fed (or depositors). They don't 'get to keep' money they borrow from the Fed, they repay it at the base interest rate.
    - sthnblllII 6y ago
      They spend it before the inflationary effect occurs, so yes, it is a transfer of wealth from holders of dollars to banks. The hoarding obviously isn't in cash, just look at their financial reports to know what they do with the money, and it largely isn't lending to businesses for expanding production. Since deregulation, much of the new money has gone to buying stocks. Not exactly helping the economy. As long as the stock market appreciates faster than the prime rate, it makes sense to borrow money from the fed to buy stocks. Especially if the fed is buying stocks too, keeping the market in perpetual inflation driven growth.
  - gamblor956 6y ago
    Banks are not allowed to hoard capital, and financially speaking, keeping cash in reserve means they're not making money from it. Indeed, the regulations require the opposite of what you suggest: banks are are required to maintain a certain level of capital reserves to avoid collapse even though they would prefer to spend all of it on investments or making loans.
- deleted 6y ago
  [deleted]
kd913 6y ago
Yea I don't think that is worth the ridiculous amount of energy being consumed by crypto. Almost the equivalent of the entirety of Denmark.
- mkolodny 6y ago
  There are promising alternatives to energy intensive proof-of-work crypto algorithms. Specifically proof-of-stake (Ethereum, etc)[0], and ledger-backed services[1]. [0] https://blockgeeks.com/guides/ethereum-casper/ https://blockgeeks.com/guides/ethereum-casper/ [1] https://pfrazee.github.io/blog/secure-ledgers-dont-require-proof-of-work https://pfrazee.github.io/blog/secure-ledgers-dont-require-p...
  - kd913 6y ago
    There have been better coins, better protocols for years now, but the most popular cryptocurrency still remains to be bitcoin. Bitcoin alone has a terrible energy footprint. The environmental damage caused by all this nonsense is not worth it at all.
- young_unixer 6y ago
  The total amount of money stolen by governments worldwide each year is much bugger than Denmark's GDP.
Rapzid 6y ago
I disagree. So much crime and corruption is uncovered through tracing financial transactions.. A world where a few mega power brokers who are untraceable, unaccountable, and untouchable by "the people" sounds super dystopian to me.
- SirensOfTitan 6y ago
  Tons of crime flows through completely auditable sources: https://www.buzzfeednews.com/article/jasonleopold/fincen-files-financial-scandal-criminal-networks https://www.buzzfeednews.com/article/jasonleopold/fincen-fil... Right now, what's happening is a few mega power brokers are traceable, unaccountable, and untouchable by the people. Pretending that crypto somehow creates or enables crime when its sitting right under our noses (as our governments refuse to do anything about it), is frankly ridiculous.
  - arcticbull 6y ago
    - Bitcoin is auditable. - Traditional sources actually at least try and stop it from happening.
    - ethanwillis 6y ago
      Traditional sources only try to stop it from happening if the scale is small enough. Basically traditional sources just incentivize organized crime that's less accountable to the justice system until they piss off the wrong people. Look at Deutsche bank.
      - arcticbull 6y ago
        Isn't it better to at least try and stop it instead of throwing in the towel? Can we agree that if something is bad, someone trying to stop it is better than not trying to stop it at all?
    - lawn 6y ago
      Banks are complicit and profit immensely from helping criminals launder huge amounts of money. They helped Mexican drug gangs launder $378 billions for example: https://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs https://www.theguardian.com/world/2011/apr/03/us-bank-mexico... And they just get slapped with a small fee, then continue with the same behavior.
arcticbull 6y ago
Counter-points, since it's worth sharing the whole picture. (1) The ability for the government to censor transactions to terrorists, rogue states and oppressive governments is a good thing. Evidenced not least by the fact Bitcoin was likely created by an international narcotics and arms trafficking racist bond villain who at one point tried to keep Rhodesian farmland in the hands of the whites and nearly started a cocaine plantation in Somalia [0, 3] (2a) Inflation isn't some magical evil conspiracy, money is an intentionally lossy store of value. Inflation incentivizes investment and allocation of capital towards the most productive enterprises. This is intentional. Inflation doesn't affect people who own assets, including real estate and equities, so long as wages keep pace with inflation. They have. (2b) Deflation is bad, as it decreases the velocity of money and economic productivity. Why would you spend money today when it would be worth more tomorrow? Hundreds of BTC are lost every few days due to the user-hostile nature of cryptocurrencies. (2c) Deflation also concentrates wealth with existing holders, hurting the next generation of market participants, and entrenching the current BTC wealth distribution. This is worse than any banana republic. Unless you're one of the whales, you're a peasant fighting scraps, and your kids will practically be serfs. (3) I want my currency to be subject to "government coercion" when the courts say so. If you don't trust your government or the courts, the "coercion" of the government is literally the least of your problems. (4) I for one do want the government to be able too regulate, control and trace transactions. Which is something they can easily and explicitly do with a shared public ledger. (5a) Massive waste, each proof-of-waste BTC transaction produces 100g of e-waste and consumes as much electricity as it takes to drive a Tesla from SF to NY. [1] All to operate a network that you could replace with a single DynamoDB table and likely one man on a stationary bike powering it. (5b) At market rates for electricity alone a crypto transaction costs about $80, which is socialized across the block reward. When this stops, people will have to pay the whole cost of a transaction, which in turn they will not do, which will shut down miners, which will kill the security aspects of the network. [0] https://www.wired.com/story/was-bitcoin-created-by-this-international-drug-dealer-maybe/ https://www.wired.com/story/was-bitcoin-created-by-this-inte... [1] https://digiconomist.net/bitcoin-energy-consumption https://digiconomist.net/bitcoin-energy-consumption [3] https://en.wikipedia.org/wiki/Paul_Le_Roux https://en.wikipedia.org/wiki/Paul_Le_Roux
- sneak 6y ago
karmasimida 6y ago
> I for one don't want government to be able to regulate / control / trace transactions. If they can regulate it, they will. So crypto isn't the magic money that can skip governmental influence, and that problem will be cryto's own problem.
ckastner 6y ago
> for one don't want government to be able to regulate / control / trace transactions. This comes up every single time with cryptocurrencies. Generally speaking: yes, you do. Most of the regulations surrounding financial transactions are there to protect you, and other market participants. I wish crypto people had the chance to spend one day in a bank, working on regulatory issues. The vast majority of them are all about either protecting the clients, or the market, or society in general. Edit: to expand a bit, most of that regulation is there to ensure that a bank doesn't screw you, or to enforce transparency for you, or to ensure that illicit money doesn't enter the system (which is also in your interest), etc.
- glasss 6y ago
  Could you elaborate a bit more on this? I see your edit where you highlight that the bank doesn't screw you and you have more transparency, but to my knowledge the nature of a decentralized cryptocurrency should have that same effect.
  - raesene9 6y ago
    regulation (in the UK at least) means that in many cases, if someone steals money from my bank account, I get it back. Compare that with what's happened to many cryptocurrency exchanges where they have losses (e.g. quadriga) and the consumers who used them are largely out of the money. If the bank overcharges me, I have some form of redress (e.g. the PPI scandal). It's not perfect by any means, but for many consumers it's likely better than a world where, once the money's gone, it's gone.
    - qertoip 6y ago
      Exchanges are not cryptocurrency.
      - raesene9 6y ago
        From a financial exchange and price setting perspective, they are absolutely key to how the current cryptocurrency market works. if Binance, Kraken, Bitfinex, Coinbase et al shut down tomorrow, what do you think would happen to the price of BTC and the rest...
chunky1994 6y ago
No, the biggest promise of crypto is that you don't need to trust a third party (wether, govt., bank or your neighbour) to verify a transaction between two parties as valid and that somebody didn't just give you counterfeit digital coins (i.e it solves the double spending problem). That's pretty much it. Everything else in a crypto economy is built on top of that as an analogous structure to regular physical currency/digital currency verified by a third party (i.e fiat) economy. Not needing a third party to verify the authenticity of digital transactions does not automatically make you immune to regulation. In very specific situations (i.e failed states undergoing civil war), if you lose the trust in your entire govt. you can now reliably still trade digital currency without it necessarily being backed by a third party, however everyone you are transacting with must buy into three things: 1) This new digital currency is now the dominant currency. 2) Everyone trades goods and services based off of this new currency 3) People outside your country respect that everyone inside the country values this at some specific value and honours trade in that currency. It is extremely unlikely you can convince anybody outside a country of (3) without some intervening international body, so the "crypto economy" replacing currency to fight an authoritarian regime is practically never going to happen. With regards to the article. Ultimately, if you trust your government to in general protect you, this is a good thing. If you don't trust your govt. to do so, this framework is a bad thing.
- idolaspecus 6y ago
  > It is extremely unlikely you can convince anybody outside a country of (3) without some intervening international body, so the "crypto economy" replacing currency to fight an authoritarian regime is practically never going to happen. Could anti-authoritarian outsiders use (3) to effectively support anti-authoritarian insiders?
  - judge2020 6y ago
    The "people" in (3) refers less to the working class than it does to people in power that control and contribute to large percentages (>0.5%) of a country's GDP/wealth (unless nearly all of the working class within a country recognizes it).
ColanR 6y ago
> trace transactions Right now, the business of transaction tracing is booming.
r3trohack3r 6y ago
> I for one don't want government to be able to regulate / control / trace transactions. This is why I don’t understand “darkweb” crypto marketplaces. When “doing crime”, I’m really not interested in committing the transaction to a permanent public ledger.
- spurdoman77 6y ago
  Doing crimes involves making many risky actions which the criminal isnt really into. It might just be that making the crime using cryptocurrency might be seen less risky as doing it with some other tool.
- nybble41 6y ago
  > When “doing crime”, I’m really not interested in committing the transaction to a permanent public ledger. As the recipient of the funds you need everyone else to agree that the funds are actually under your control. That requires a public ledger associating unspent funds with access credentials. The payer needs the same thing so that the recipient will accept the payment. ("Permanent" goes without saying; even if old transactions can be pruned from the database there is nothing to prevent someone from keeping a copy of the full history.) What you want to avoid is having your real-world identity associated with the funds, which is where privacy-focused coins like Monero come in. Even if you handle payments offline with briefcases full of unmarked bills you're still leaving a trace an investigator could follow, possibly even more easily than they could follow a trail of transactions through a suitably resilient cryptocurrency.
slg 6y ago
>It can free us from the hidden taxation of inflation It doesn't free you from inflation, it simply abdicates control over inflation. Sometimes that works out well for who already have money and the value of the currency rises. Sometimes it works to the disadvantage of the people with money and the value of the currency decreases. Either way, stability and predictability of the value of a currency are much more important for the long term healthy of an economy and those are areas in which the worlds biggest fiat currencies generally come out ahead of cryptocurrencies.
- ric2b 6y ago
  > Either way, stability and predictability of the value of a currency are much more important for the long term I think Bitcoin has the long-term edge here, as the issuance rate is 99.9% predictable and known (unless the community decides to change it, which seems unlikely) and the price volatility would decrease massively if adoption increased.
  - slg 6y ago
    Bitcoin has a chicken and egg problem. You claim it will have that stability once its adoption has increased but its lack of price stability is a major hindrance to people adopting it as a store of value. Right now, pick any window of time from 24 hours to a century. I am much more confident that any of us could predict the value of USD, EUR, or GBP than Bitcoin. That is a big problem and it more important than any "but the inflation" arguments.
heavyset_go 6y ago
> The biggest promise of crypto is that it is immune to government censorship / control. It can free us from the hidden taxation of inflation, and government coercion. I don't buy it. Exchanges are centralized, and they will respond to court orders. Some networks can be centralized and are vulnerable to majority attacks.
bdcravens 6y ago
Not really. The Bitcoin white paper focuses on financial institutions, never even mentioning the government.
- orthecreedence 6y ago
  In the US, there's really no difference.
colinmhayes 6y ago
Inflation is a feature of macroeconomics, not a bug. Our economy truly would collapse without inflation, it's how you end up being Japan in the 90's. Luckily the people running the Fed are much smarter than you.
- logicchains 6y ago
  This is pseudoscientific crap. America had some long periods of deflation prior to the creation of the Fed (e.g. 1870s/1880s) and still experienced higher rates of growth than it does now. There's basically no empirical evidence that central banking leads to higher economic growth or greater stability, just some simplified pseudo-mathematical models that ignore a bunch of factors.
  - colinmhayes 6y ago
    I just want everyone to know that the vast majority of economists(99%+) believe that inflation is an integral part of our economy. You can disagree with all of them, but everyone should know that the experts disagree with you.

vkou 6y ago

The hidden taxation of inflation is a feature. It creates an incentive for people to invest, instead of, like dragons, uselessly sitting on a pile of money.

qertoip 6y ago
The opposite is true: inflation takes away the hard earned value that could otherwise be invested.
- smorephism 6y ago
  Yes, that's the idea: the price of sitting on a dragon's hoard of cash that's not doing anything is that its value decreases over time, so you are incentivized to actually do something with it.
  - megous 6y ago
    Your economics are weird. Making a stupid analogy doesn't help it. There are no dragons, just individual people making decisions about how much to save and for what purpose, and when to spend it, based on their individual circumstances. Holding on to savings is neither positive nor negative, and should be a personal decision based on individual's circumstances (that's where the most detailed information are available about what's good for the individual), not something forced/influenced from the top by blunt whole market manipulation via forced depreciation of value of money, by some committee. All you've achieved by forced depreciation is forcing people to make needless risks, just to keep value of their savings, while they're trying to save up for something (like starting a business, or buying a flat, or safety of mind). Whole class of brokers, and traders, and lenders, who pray on this situation benefit, of course.
    - deleted 6y ago
      [deleted]
- arcticbull 6y ago
  No, lol, the opposite is not true. At an inflation rate of 2% per annum, if your wages keep pace with in inflation as they historically have, it's not stealing anything from anyone. You take the money as you receive it, and you invest it. It's a forcing function. You can invest it in something as simple as a savings account if you believe that's the right approach. Even in a savings account it's collateralizing loans. The only place your actual cash is at real risk from inflation is under your mattress. That's the point.
  - andrewjl 6y ago
    The real yield for USD Treasury is currently negative across all maturities, this means that your cash has a negative real return in a savings account at a bank. [1] [1] https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...
  - nybble41 6y ago
    > …if your wages keep pace with in inflation as they historically have… If we're speaking historically, under inflation the prices of consumer goods have tended to rise faster than wages. Under deflation the opposite has been true. Of course lately we have massive improvements in technology to thank for boosting productivity in almost every field, which somewhat masks the negative effects of the inflation. If it weren't for that there probably wouldn't be much of an economy left by this point. Cash has no utility on its own. It's just a placeholder. Take some out of circulation and the purchasing power of the remaining cash will automatically adjust to match the value of everything available for trade. Stuffing cash in your mattress hurts no one. Inexpertly dumping it into the market to avoid inflation, on the other hand, might well bring down the average rate of return. The natural rate of inflation or deflation is a key economic indicator which reflects the expected average rate of return. Only ventures with expected returns above this rate (the deflation rate) are economically productive. Messing with the money supply distorts this signal and, though excess inflation, encourages investment in less ventures which divert resources away from the more productive ones. Of course artificial deflation is no better; the ideal is not forced deflation but rather a currency whose supply is not subject to manipulation.
sthnblllII 6y ago
Consumers spend almost every dollar as soon as they get it. The ones hoarding capital are the banks. The fed can never seem to get interest rates low enough to get the banks to loan to businesses. So why do big banks get to keep the money the fed prints instead of the government, thereby lowering taxes and increasing consumer spending? Because then banks wouldn't get unlimited cheap capital and wouldnt be able to continue the leveraged buyout of American industry. Entrepreneurs would control the economy like they used to instead of financiers, and we cant have that now can we?
- notahacker 6y ago
  > The ones hoarding capital are the banks...get to keep the money the fed prints instead of the government Banks lend more dollars than they borrow from the Fed (or depositors). They don't 'get to keep' money they borrow from the Fed, they repay it at the base interest rate.
  - sthnblllII 6y ago
    They spend it before the inflationary effect occurs, so yes, it is a transfer of wealth from holders of dollars to banks. The hoarding obviously isn't in cash, just look at their financial reports to know what they do with the money, and it largely isn't lending to businesses for expanding production. Since deregulation, much of the new money has gone to buying stocks. Not exactly helping the economy. As long as the stock market appreciates faster than the prime rate, it makes sense to borrow money from the fed to buy stocks. Especially if the fed is buying stocks too, keeping the market in perpetual inflation driven growth.
- gamblor956 6y ago
  Banks are not allowed to hoard capital, and financially speaking, keeping cash in reserve means they're not making money from it. Indeed, the regulations require the opposite of what you suggest: banks are are required to maintain a certain level of capital reserves to avoid collapse even though they would prefer to spend all of it on investments or making loans.
deleted 6y ago
[deleted]

kd913 6y ago

Yea I don't think that is worth the ridiculous amount of energy being consumed by crypto. Almost the equivalent of the entirety of Denmark.

mkolodny 6y ago
There are promising alternatives to energy intensive proof-of-work crypto algorithms. Specifically proof-of-stake (Ethereum, etc)[0], and ledger-backed services[1]. [0] https://blockgeeks.com/guides/ethereum-casper/ https://blockgeeks.com/guides/ethereum-casper/ [1] https://pfrazee.github.io/blog/secure-ledgers-dont-require-proof-of-work https://pfrazee.github.io/blog/secure-ledgers-dont-require-p...
- kd913 6y ago
  There have been better coins, better protocols for years now, but the most popular cryptocurrency still remains to be bitcoin. Bitcoin alone has a terrible energy footprint. The environmental damage caused by all this nonsense is not worth it at all.
young_unixer 6y ago
The total amount of money stolen by governments worldwide each year is much bugger than Denmark's GDP.

Rapzid 6y ago

I disagree. So much crime and corruption is uncovered through tracing financial transactions.. A world where a few mega power brokers who are untraceable, unaccountable, and untouchable by "the people" sounds super dystopian to me.

SirensOfTitan 6y ago
Tons of crime flows through completely auditable sources: https://www.buzzfeednews.com/article/jasonleopold/fincen-files-financial-scandal-criminal-networks https://www.buzzfeednews.com/article/jasonleopold/fincen-fil... Right now, what's happening is a few mega power brokers are traceable, unaccountable, and untouchable by the people. Pretending that crypto somehow creates or enables crime when its sitting right under our noses (as our governments refuse to do anything about it), is frankly ridiculous.
- arcticbull 6y ago
  - Bitcoin is auditable. - Traditional sources actually at least try and stop it from happening.
  - ethanwillis 6y ago
    Traditional sources only try to stop it from happening if the scale is small enough. Basically traditional sources just incentivize organized crime that's less accountable to the justice system until they piss off the wrong people. Look at Deutsche bank.
    - arcticbull 6y ago
      Isn't it better to at least try and stop it instead of throwing in the towel? Can we agree that if something is bad, someone trying to stop it is better than not trying to stop it at all?
  - lawn 6y ago
    Banks are complicit and profit immensely from helping criminals launder huge amounts of money. They helped Mexican drug gangs launder $378 billions for example: https://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs https://www.theguardian.com/world/2011/apr/03/us-bank-mexico... And they just get slapped with a small fee, then continue with the same behavior.

arcticbull 6y ago

Counter-points, since it's worth sharing the whole picture. (1) The ability for the government to censor transactions to terrorists, rogue states and oppressive governments is a good thing. Evidenced not least by the fact Bitcoin was likely created by an international narcotics and arms trafficking racist bond villain who at one point tried to keep Rhodesian farmland in the hands of the whites and nearly started a cocaine plantation in Somalia [0, 3] (2a) Inflation isn't some magical evil conspiracy, money is an intentionally lossy store of value. Inflation incentivizes investment and allocation of capital towards the most productive enterprises. This is intentional. Inflation doesn't affect people who own assets, including real estate and equities, so long as wages keep pace with inflation. They have. (2b) Deflation is bad, as it decreases the velocity of money and economic productivity. Why would you spend money today when it would be worth more tomorrow? Hundreds of BTC are lost every few days due to the user-hostile nature of cryptocurrencies. (2c) Deflation also concentrates wealth with existing holders, hurting the next generation of market participants, and entrenching the current BTC wealth distribution. This is worse than any banana republic. Unless you're one of the whales, you're a peasant fighting scraps, and your kids will practically be serfs. (3) I want my currency to be subject to "government coercion" when the courts say so. If you don't trust your government or the courts, the "coercion" of the government is literally the least of your problems. (4) I for one do want the government to be able too regulate, control and trace transactions. Which is something they can easily and explicitly do with a shared public ledger. (5a) Massive waste, each proof-of-waste BTC transaction produces 100g of e-waste and consumes as much electricity as it takes to drive a Tesla from SF to NY. [1] All to operate a network that you could replace with a single DynamoDB table and likely one man on a stationary bike powering it. (5b) At market rates for electricity alone a crypto transaction costs about $80, which is socialized across the block reward. When this stops, people will have to pay the whole cost of a transaction, which in turn they will not do, which will shut down miners, which will kill the security aspects of the network. [0] https://www.wired.com/story/was-bitcoin-created-by-this-international-drug-dealer-maybe/ https://www.wired.com/story/was-bitcoin-created-by-this-inte... [1] https://digiconomist.net/bitcoin-energy-consumption https://digiconomist.net/bitcoin-energy-consumption [3] https://en.wikipedia.org/wiki/Paul_Le_Roux https://en.wikipedia.org/wiki/Paul_Le_Roux

sneak 6y ago

karmasimida 6y ago

> I for one don't want government to be able to regulate / control / trace transactions. If they can regulate it, they will. So crypto isn't the magic money that can skip governmental influence, and that problem will be cryto's own problem.

ckastner 6y ago

> for one don't want government to be able to regulate / control / trace transactions. This comes up every single time with cryptocurrencies. Generally speaking: yes, you do. Most of the regulations surrounding financial transactions are there to protect you, and other market participants. I wish crypto people had the chance to spend one day in a bank, working on regulatory issues. The vast majority of them are all about either protecting the clients, or the market, or society in general. Edit: to expand a bit, most of that regulation is there to ensure that a bank doesn't screw you, or to enforce transparency for you, or to ensure that illicit money doesn't enter the system (which is also in your interest), etc.

glasss 6y ago
Could you elaborate a bit more on this? I see your edit where you highlight that the bank doesn't screw you and you have more transparency, but to my knowledge the nature of a decentralized cryptocurrency should have that same effect.
- raesene9 6y ago
  regulation (in the UK at least) means that in many cases, if someone steals money from my bank account, I get it back. Compare that with what's happened to many cryptocurrency exchanges where they have losses (e.g. quadriga) and the consumers who used them are largely out of the money. If the bank overcharges me, I have some form of redress (e.g. the PPI scandal). It's not perfect by any means, but for many consumers it's likely better than a world where, once the money's gone, it's gone.
  - qertoip 6y ago
    Exchanges are not cryptocurrency.
    - raesene9 6y ago
      From a financial exchange and price setting perspective, they are absolutely key to how the current cryptocurrency market works. if Binance, Kraken, Bitfinex, Coinbase et al shut down tomorrow, what do you think would happen to the price of BTC and the rest...

chunky1994 6y ago

No, the biggest promise of crypto is that you don't need to trust a third party (wether, govt., bank or your neighbour) to verify a transaction between two parties as valid and that somebody didn't just give you counterfeit digital coins (i.e it solves the double spending problem). That's pretty much it. Everything else in a crypto economy is built on top of that as an analogous structure to regular physical currency/digital currency verified by a third party (i.e fiat) economy. Not needing a third party to verify the authenticity of digital transactions does not automatically make you immune to regulation. In very specific situations (i.e failed states undergoing civil war), if you lose the trust in your entire govt. you can now reliably still trade digital currency without it necessarily being backed by a third party, however everyone you are transacting with must buy into three things: 1) This new digital currency is now the dominant currency. 2) Everyone trades goods and services based off of this new currency 3) People outside your country respect that everyone inside the country values this at some specific value and honours trade in that currency. It is extremely unlikely you can convince anybody outside a country of (3) without some intervening international body, so the "crypto economy" replacing currency to fight an authoritarian regime is practically never going to happen. With regards to the article. Ultimately, if you trust your government to in general protect you, this is a good thing. If you don't trust your govt. to do so, this framework is a bad thing.

idolaspecus 6y ago
> It is extremely unlikely you can convince anybody outside a country of (3) without some intervening international body, so the "crypto economy" replacing currency to fight an authoritarian regime is practically never going to happen. Could anti-authoritarian outsiders use (3) to effectively support anti-authoritarian insiders?
- judge2020 6y ago
  The "people" in (3) refers less to the working class than it does to people in power that control and contribute to large percentages (>0.5%) of a country's GDP/wealth (unless nearly all of the working class within a country recognizes it).

ColanR 6y ago

> trace transactions Right now, the business of transaction tracing is booming.

r3trohack3r 6y ago

> I for one don't want government to be able to regulate / control / trace transactions. This is why I don’t understand “darkweb” crypto marketplaces. When “doing crime”, I’m really not interested in committing the transaction to a permanent public ledger.

spurdoman77 6y ago
Doing crimes involves making many risky actions which the criminal isnt really into. It might just be that making the crime using cryptocurrency might be seen less risky as doing it with some other tool.
nybble41 6y ago
> When “doing crime”, I’m really not interested in committing the transaction to a permanent public ledger. As the recipient of the funds you need everyone else to agree that the funds are actually under your control. That requires a public ledger associating unspent funds with access credentials. The payer needs the same thing so that the recipient will accept the payment. ("Permanent" goes without saying; even if old transactions can be pruned from the database there is nothing to prevent someone from keeping a copy of the full history.) What you want to avoid is having your real-world identity associated with the funds, which is where privacy-focused coins like Monero come in. Even if you handle payments offline with briefcases full of unmarked bills you're still leaving a trace an investigator could follow, possibly even more easily than they could follow a trail of transactions through a suitably resilient cryptocurrency.

slg 6y ago

>It can free us from the hidden taxation of inflation It doesn't free you from inflation, it simply abdicates control over inflation. Sometimes that works out well for who already have money and the value of the currency rises. Sometimes it works to the disadvantage of the people with money and the value of the currency decreases. Either way, stability and predictability of the value of a currency are much more important for the long term healthy of an economy and those are areas in which the worlds biggest fiat currencies generally come out ahead of cryptocurrencies.

ric2b 6y ago
> Either way, stability and predictability of the value of a currency are much more important for the long term I think Bitcoin has the long-term edge here, as the issuance rate is 99.9% predictable and known (unless the community decides to change it, which seems unlikely) and the price volatility would decrease massively if adoption increased.
- slg 6y ago
  Bitcoin has a chicken and egg problem. You claim it will have that stability once its adoption has increased but its lack of price stability is a major hindrance to people adopting it as a store of value. Right now, pick any window of time from 24 hours to a century. I am much more confident that any of us could predict the value of USD, EUR, or GBP than Bitcoin. That is a big problem and it more important than any "but the inflation" arguments.

heavyset_go 6y ago

> The biggest promise of crypto is that it is immune to government censorship / control. It can free us from the hidden taxation of inflation, and government coercion. I don't buy it. Exchanges are centralized, and they will respond to court orders. Some networks can be centralized and are vulnerable to majority attacks.

bdcravens 6y ago

Not really. The Bitcoin white paper focuses on financial institutions, never even mentioning the government.

orthecreedence 6y ago
In the US, there's really no difference.

colinmhayes 6y ago

Inflation is a feature of macroeconomics, not a bug. Our economy truly would collapse without inflation, it's how you end up being Japan in the 90's. Luckily the people running the Fed are much smarter than you.

logicchains 6y ago
This is pseudoscientific crap. America had some long periods of deflation prior to the creation of the Fed (e.g. 1870s/1880s) and still experienced higher rates of growth than it does now. There's basically no empirical evidence that central banking leads to higher economic growth or greater stability, just some simplified pseudo-mathematical models that ignore a bunch of factors.
- colinmhayes 6y ago
  I just want everyone to know that the vast majority of economists(99%+) believe that inflation is an integral part of our economy. You can disagree with all of them, but everyone should know that the experts disagree with you.