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I'm living in an EU-member country. Our currency has lost half of its value compared to the USD since 2008. How? 'Slowly and steadily.'

scandox 6y ago
I think they mean mathematically how could it lose more than 100%.
- lazide 6y ago
  My guess is they meant their equivalent of the $4 cappuccino is now $10 (or more) in their local currency, which while not mathematically correct is probably the most intuitive way to understand it (as compared to losing 60% which would more than double prices). Not the poster though.
  - vbezhenar 6y ago
    You're right. 1 USD = 155 KZT in 2014, 1 USD = 425 KZT right now.
    - buran77 6y ago
      In all honesty though if you started using BTC as your main currency*, replacing your national currency, one day you'd have your money in BTC, the next day their value would be wiped out. We're not talking about a slow and steady decline, halving of the value in a decade. We're talking "no money to buy food for the next few months". Many people in countries with unstable currencies are particularly vulnerable to this kind of fluctuations because in general they have nothing to absorb the shock, no assets, no savings, etc. Unlike traders these people can't just wait for the rebound, by that time they're bankrupt. BTC is useful for exactly the scenarios it's almost exclusively used in now: speculative transactions (buy low, sell high), or transactions for less than legal stuff and the overwhelming majority of proponents are in these 2 camps. There's a much smaller group of proponents made up of people who don't understand currencies in general (besides the basics, like spending them), or cryptocurrencies in particular. I'm sure some form of electronic tender would fill this role you're describing but it's not BTC and probably none of the major cryptocurrencies on the market now. * (putting aside the network capacity, number of transactions/sec, the cost of producing a BTC and of a transaction, etc. which make it completely unsuitable for the purpose of using the currency instead of just storing and trading it, which is probably the only significant purpose of BTC today)
      - lazide 6y ago
        I don’t think you’re wrong. You might be missing a bigger game though. BTC is fundamentally deflationary in nature - let’s ignore the price volatility and the like for now, I’ll cover that later. It has also so far proven incredibly resistant to attack, both inside and outside the community and despite easy billion dollar payouts if an attack would be successful. There are also efforts making good progress (lightning network among others), addressing structural issues, and large scale semi regulated brokers with good track records (coinbase, kraken). The price volatility is speculative, and while some is get rich quick (well, a lot), some is also what happens in a deflationary spiral. If we speculate that Bitcoin will end up being a ‘not able to be broken by a greedy gov’t like all the other currencies’ means of exchange, the current price is cheap. Every large institution will need some to clear central bank type transactions (the part that may be what ends up on the blockchain), and 14 million ish isn’t enough at current prices. If we speculate that will never happen; the current price is ridiculous and it’s all just a giant Ponzi scheme. Frankly, neither of these options it is fair to rule out, and the volatility is because of uncertainty and the wide variability in value for Bitcoin between these options. We’re entering a stage where global attitudes are shifting to one of distrust, especially between countries and citizens and their gov’ts, and some means of exchange that doesn’t require a distrusted entity to play nice has value, even if it isn’t 50k per.
        buran77 6y ago
        > There are also efforts making good progress I agree but in the grand scheme of currencies and payment infrastructures they barely got out the door. I believe today and for the foreseeable future BTC will be adequate almost exclusively for speculative traders and people who need legal deniability. Most people throw around narrow interpretations for why BTC would be good and they're all good explanations if you look just at selected arguments. Take the "BTC is great as a currency in countries with steady high inflation" stance which might hold if you consider only a really narrow set of set of BTC criteria. I'm not ruling out anything for some future really. As a personal opinion I believe there's room for e-coins (I'll stay away from the "crypto" nomenclature as they may not rely on a blockchain or crypto per se) but BTC in particular has no real room in a CB for more than a fad (also speculative). Think at the central mandate of a CB: price stability and inflation. Controlling these is quintessentially antithetical to BTC as a main currency, or as a currency. BTC as a decentralized currency takes central banking out of the equation. Or conversely central banks take decentralized currencies out of the equation. So even if you think of it pragmatically, no government or central bank (since they should be as independent from each other as it gets) would allow replacing the country's currency with BTC both for "selfish" reasons - they'd lose control. But maybe even more importantly for national security reasons. No country wants a coin which can be sent spinning just because some CEO (or worse, your enemy) decided to pull a shady maneuver for personal gain. The kind of control currencies need to be fit for the purpose of a general, national currency for your citizens simply precludes using BTC at that scale. Should BTC ever become as "big" as a real national currency I'm certain it would show many of the same cracks. Except the small players (average Joe) would have nobody to turn to when things go sour. No central authority, no central responsibility. You see this whenever there's a new hack or financial maneuver that parts people from their hard earned cryptomoney how they suddenly lose that blind faith in "the coin that governments can't control" and start asking for regulation. You can only regulate when you have control.
u678u 6y ago
This is pretty misleading though, 2008 the USD tanked. GBPUSD and EURUSD were crazy high and currencies like RON, PLN had bigger swings, but if you look 20 years you can't say things have changed that much, esp with all the other changes in the world.
forty 6y ago
Interestingly we have the opposite problem, our customers mostly pay in USD and many of our employees are paid in EUR, which is pretty high vs USD lately, and that difference costs us quite a lot.

scandox 6y ago

I think they mean mathematically how could it lose more than 100%.

lazide 6y ago
My guess is they meant their equivalent of the $4 cappuccino is now $10 (or more) in their local currency, which while not mathematically correct is probably the most intuitive way to understand it (as compared to losing 60% which would more than double prices). Not the poster though.
- vbezhenar 6y ago
  You're right. 1 USD = 155 KZT in 2014, 1 USD = 425 KZT right now.
  - buran77 6y ago
    In all honesty though if you started using BTC as your main currency*, replacing your national currency, one day you'd have your money in BTC, the next day their value would be wiped out. We're not talking about a slow and steady decline, halving of the value in a decade. We're talking "no money to buy food for the next few months". Many people in countries with unstable currencies are particularly vulnerable to this kind of fluctuations because in general they have nothing to absorb the shock, no assets, no savings, etc. Unlike traders these people can't just wait for the rebound, by that time they're bankrupt. BTC is useful for exactly the scenarios it's almost exclusively used in now: speculative transactions (buy low, sell high), or transactions for less than legal stuff and the overwhelming majority of proponents are in these 2 camps. There's a much smaller group of proponents made up of people who don't understand currencies in general (besides the basics, like spending them), or cryptocurrencies in particular. I'm sure some form of electronic tender would fill this role you're describing but it's not BTC and probably none of the major cryptocurrencies on the market now. * (putting aside the network capacity, number of transactions/sec, the cost of producing a BTC and of a transaction, etc. which make it completely unsuitable for the purpose of using the currency instead of just storing and trading it, which is probably the only significant purpose of BTC today)
    - lazide 6y ago
      I don’t think you’re wrong. You might be missing a bigger game though. BTC is fundamentally deflationary in nature - let’s ignore the price volatility and the like for now, I’ll cover that later. It has also so far proven incredibly resistant to attack, both inside and outside the community and despite easy billion dollar payouts if an attack would be successful. There are also efforts making good progress (lightning network among others), addressing structural issues, and large scale semi regulated brokers with good track records (coinbase, kraken). The price volatility is speculative, and while some is get rich quick (well, a lot), some is also what happens in a deflationary spiral. If we speculate that Bitcoin will end up being a ‘not able to be broken by a greedy gov’t like all the other currencies’ means of exchange, the current price is cheap. Every large institution will need some to clear central bank type transactions (the part that may be what ends up on the blockchain), and 14 million ish isn’t enough at current prices. If we speculate that will never happen; the current price is ridiculous and it’s all just a giant Ponzi scheme. Frankly, neither of these options it is fair to rule out, and the volatility is because of uncertainty and the wide variability in value for Bitcoin between these options. We’re entering a stage where global attitudes are shifting to one of distrust, especially between countries and citizens and their gov’ts, and some means of exchange that doesn’t require a distrusted entity to play nice has value, even if it isn’t 50k per.
      - buran77 6y ago
        > There are also efforts making good progress I agree but in the grand scheme of currencies and payment infrastructures they barely got out the door. I believe today and for the foreseeable future BTC will be adequate almost exclusively for speculative traders and people who need legal deniability. Most people throw around narrow interpretations for why BTC would be good and they're all good explanations if you look just at selected arguments. Take the "BTC is great as a currency in countries with steady high inflation" stance which might hold if you consider only a really narrow set of set of BTC criteria. I'm not ruling out anything for some future really. As a personal opinion I believe there's room for e-coins (I'll stay away from the "crypto" nomenclature as they may not rely on a blockchain or crypto per se) but BTC in particular has no real room in a CB for more than a fad (also speculative). Think at the central mandate of a CB: price stability and inflation. Controlling these is quintessentially antithetical to BTC as a main currency, or as a currency. BTC as a decentralized currency takes central banking out of the equation. Or conversely central banks take decentralized currencies out of the equation. So even if you think of it pragmatically, no government or central bank (since they should be as independent from each other as it gets) would allow replacing the country's currency with BTC both for "selfish" reasons - they'd lose control. But maybe even more importantly for national security reasons. No country wants a coin which can be sent spinning just because some CEO (or worse, your enemy) decided to pull a shady maneuver for personal gain. The kind of control currencies need to be fit for the purpose of a general, national currency for your citizens simply precludes using BTC at that scale. Should BTC ever become as "big" as a real national currency I'm certain it would show many of the same cracks. Except the small players (average Joe) would have nobody to turn to when things go sour. No central authority, no central responsibility. You see this whenever there's a new hack or financial maneuver that parts people from their hard earned cryptomoney how they suddenly lose that blind faith in "the coin that governments can't control" and start asking for regulation. You can only regulate when you have control.

u678u 6y ago

This is pretty misleading though, 2008 the USD tanked. GBPUSD and EURUSD were crazy high and currencies like RON, PLN had bigger swings, but if you look 20 years you can't say things have changed that much, esp with all the other changes in the world.

forty 6y ago

Interestingly we have the opposite problem, our customers mostly pay in USD and many of our employees are paid in EUR, which is pretty high vs USD lately, and that difference costs us quite a lot.