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It's not obvious at all. Cryptos provide no value to the world at least today, and consume tremendous amounts of energy, it's probably a net negative. Amazon

by jariel 5y ago

It's not obvious at all. Cryptos provide no value to the world at least today, and consume tremendous amounts of energy, it's probably a net negative. Amazon has clearly some externalities, but it's obviouos that people 'want stuff' and they dominated on the industry shift to e-commerce. Amazon will probably be around for a while, selling useful stuff to people. If Crypto dissipated tomorrow, or by the stroke of a pen were made 'illegal' - the world wouldn't skip a beat. Nothing would change. A bunch of people who invested in 'Digital Baseball Cards' had them burned up in a fire but who cares. Nothing material to the economy has changed - other than some money changed hands for said 'Digital Baseball Cards'. So Coinbase is not obvious in hindsight, and the kinds of valuation and leverage going on are not obvious either. I suspect that 'Financial Populism' will remain and Coinbase will be around in one way or another, but they are in a different territory than most other new companies. "common sense is right most of the times." <- there is basically no 'common sense' in crypto, or rather 'common sense' would imply that the value of crypto is still 'potential'. Since we don't actually use crypto for anything, but it is really cool and 'could be used', then 'common sense' would indicate we value it for it's potential and not much more. Valuing things that have no material value in the order of 100's of billions is the opposite of common sense, I think future historians will probably wonder what we were thinking.

ObserverNeutral 5y ago
The same arguments you make against Crypto can be made against Central Banks and I'd say governments in general. There are institutions which only exist because humans project themselves into the future and imagine the consequences that they'd suffer because of adverse events and they create institutions to protect them against such events. People are scared as hell of inflation and that's why the Fed was created. The "stable prices" thing is an elegant way to say "prevent inflation". Now people are really upset that the Fed won't allow deflation and is pretty much encouraging inflation. They see this as a betrayal to the public and the reason why the Fed was created in the first place. There is a misalignment between the Fed inflation preference of 2% and the public inflation preference which is 0% or even -2% Enter crypto: what draws people to crypto is deflation. People love deflation, they gravitate towards crypto because deflation is hard built in protocol and it brings about financial nirvana for the saver: that is being able to increase one's net worth without doing any tangible work, manual or intellectual. You can try to remove it but efforts will fail and it will take a whole lot of effort just to prevent it from getting bigger. The government pretty much gave up on removing drugs, cash, tax evasion.. Crypto is the same thing, great for the individual, but very bad for society. Tragedy of the commons can't be solved , so the work is to contain because they can't extinguish it. Better yet it can be extinguished but it would require government to do the one thing it can't possibly do: A similarly deflationary dollar
- CPLX 5y ago
  > The same arguments you make against Crypto can be made against Central Banks and I'd say governments in general. Governments have millions of extremely well organized heavily armed people who can kill you if you don't accept the medium of exchange they're proposing.
  - jariel 5y ago
    Observer was incorrect in his 'observations', but you're getting ridiculously conspiratorial here. Governments and Central Banks create immense value, they serve many purposes. They can do things we don't always agree with but that's inevitable. If government disappeared civilization would halt. If Central Banks disappeared, basically the same - everything would stop. Most of the important things that the Central Banks do are published, you can watch it happen. Aside from their obvious value, the very concept of a 'common medium of exchange' is also immensely useful for society. Despite your claim, you're free to use 'Santa Claus Dollars' to do what you want, but that would server no purpose. And you also don't have to hold currency - we live in an era of computers, you can immediately exchange any USD you have for any zillion other kinds of store of value or currencies. You like Swiss Frans - go ahead - buy as many as you want. Crypto serves no real purpose as a currency or a store of value - if BTC and every crypto went to $0 tommorrow, the only thing that would change is we'd stop wasting energy on factoring prime numbers. Obsevers comments about 'governments extinguishing BTC' are nonsensica: nobody is trying to stop crypto, and frankly, as of today they don't care. If the US and EU decided together to ban crypto you can be assured that it would probably be worthless very quickly - there are very few people who want to put vast sums in an asset that could land them in jail. Finally: "Better yet it can be extinguished but it would require government to do the one thing it can't possibly do: A similarly deflationary dollar" Is also missing the point because nobody wants hyper strong currency but a few people who misunderstand currency. It would be nice to have dollars that increased in value over time, but that feature of currency would be very costly and having damaging effects on the economy. What we want is a currency that maintains it's value but very slightly depreciates over time. Just a tiny bit. That's ideal. That way you don't have to worry about your current accounts falling in value, and if you want a better store of value you can do that. If there is an issue with the Central Banks then we should address it because we need 'good money' a lot more than we need to collectively imagine that 'special long numbers' have some kind of value.
eric_cc 5y ago
> Cryptos provide no value to the world at least today You really need to educate yourself if you truly believe this. Things are moving quickly in the space. I think you'd be shocked.

by jariel 5y ago

ObserverNeutral 5y ago

The same arguments you make against Crypto can be made against Central Banks and I'd say governments in general. There are institutions which only exist because humans project themselves into the future and imagine the consequences that they'd suffer because of adverse events and they create institutions to protect them against such events. People are scared as hell of inflation and that's why the Fed was created. The "stable prices" thing is an elegant way to say "prevent inflation". Now people are really upset that the Fed won't allow deflation and is pretty much encouraging inflation. They see this as a betrayal to the public and the reason why the Fed was created in the first place. There is a misalignment between the Fed inflation preference of 2% and the public inflation preference which is 0% or even -2% Enter crypto: what draws people to crypto is deflation. People love deflation, they gravitate towards crypto because deflation is hard built in protocol and it brings about financial nirvana for the saver: that is being able to increase one's net worth without doing any tangible work, manual or intellectual. You can try to remove it but efforts will fail and it will take a whole lot of effort just to prevent it from getting bigger. The government pretty much gave up on removing drugs, cash, tax evasion.. Crypto is the same thing, great for the individual, but very bad for society. Tragedy of the commons can't be solved , so the work is to contain because they can't extinguish it. Better yet it can be extinguished but it would require government to do the one thing it can't possibly do: A similarly deflationary dollar

CPLX 5y ago
> The same arguments you make against Crypto can be made against Central Banks and I'd say governments in general. Governments have millions of extremely well organized heavily armed people who can kill you if you don't accept the medium of exchange they're proposing.
- jariel 5y ago
  Observer was incorrect in his 'observations', but you're getting ridiculously conspiratorial here. Governments and Central Banks create immense value, they serve many purposes. They can do things we don't always agree with but that's inevitable. If government disappeared civilization would halt. If Central Banks disappeared, basically the same - everything would stop. Most of the important things that the Central Banks do are published, you can watch it happen. Aside from their obvious value, the very concept of a 'common medium of exchange' is also immensely useful for society. Despite your claim, you're free to use 'Santa Claus Dollars' to do what you want, but that would server no purpose. And you also don't have to hold currency - we live in an era of computers, you can immediately exchange any USD you have for any zillion other kinds of store of value or currencies. You like Swiss Frans - go ahead - buy as many as you want. Crypto serves no real purpose as a currency or a store of value - if BTC and every crypto went to $0 tommorrow, the only thing that would change is we'd stop wasting energy on factoring prime numbers. Obsevers comments about 'governments extinguishing BTC' are nonsensica: nobody is trying to stop crypto, and frankly, as of today they don't care. If the US and EU decided together to ban crypto you can be assured that it would probably be worthless very quickly - there are very few people who want to put vast sums in an asset that could land them in jail. Finally: "Better yet it can be extinguished but it would require government to do the one thing it can't possibly do: A similarly deflationary dollar" Is also missing the point because nobody wants hyper strong currency but a few people who misunderstand currency. It would be nice to have dollars that increased in value over time, but that feature of currency would be very costly and having damaging effects on the economy. What we want is a currency that maintains it's value but very slightly depreciates over time. Just a tiny bit. That's ideal. That way you don't have to worry about your current accounts falling in value, and if you want a better store of value you can do that. If there is an issue with the Central Banks then we should address it because we need 'good money' a lot more than we need to collectively imagine that 'special long numbers' have some kind of value.

eric_cc 5y ago

> Cryptos provide no value to the world at least today You really need to educate yourself if you truly believe this. Things are moving quickly in the space. I think you'd be shocked.