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There's plenty of valid criticisms against crypto, I feel like they've picked some of the weakest ones. > cryptocurrencies are used because people think they w

There's plenty of valid criticisms against crypto, I feel like they've picked some of the weakest ones. > cryptocurrencies are used because people think they will one day replace traditional money Maybe a tiny minority, sounds like a strawman. > a contagious story in which people believe because other people believe in it Isn't fiat the same? Money only has value because people believe it has value / will have value in the future / trust whoever prints it.

zeepzeep 5y ago
> Maybe a tiny minority, sounds like a strawman. I don't think so, i believe many people think that a private and decentralized solution will replace traditional money. That just isn't an argument against it. If anything, it's an argument FOR cryptocurrencies. > Isn't fiat the same? haha yes.
- NicoJuicy 5y ago
  No, fiat is backed by economies. In case of the USD, it's the biggest economy there is.
mortehu 5y ago
Fiat is slightly different in that the government can guarantee a certain level of demand for it by requiring taxes to be paid in it. If you you don't like jail and have a tax liability in US, you can't think dollars are worthless.
- rootsandstones 5y ago
  FYI I can pay my taxes in crypto in Switzerland.
  - bpt3 5y ago
    Are your taxes calculated in Swiss Francs or Bitcoin?
  - acdha 5y ago
    Does the state accept them directly or does a third-party do a currency conversion so the state is receiving the value in Swiss francs? That's a key difference because it's only in the latter case that taxation creates demand.
- demosito666 5y ago
  This guarantee surely helped quite a bit in Zimbabwe, Venezuela and hundreds more similar cases. /s
- bko 5y ago
  > Fiat is slightly different in that the government can guarantee a certain level of demand for it by requiring taxes to be paid in it Until they switch currencies. For instance Brazil did this > The cruzeiro (Portuguese pronunciation: [kɾuˈzejɾu]) was the currency of Brazil from 1942 to 1986 (two distinct currencies) and again between 1990 and 1993. In August 1993 it was replaced by the short-lived Cruzeiro Real, itself replaced less than a year aftwards by the Real. India also demonitized a certain denomination of their currency > On 8 November 2016, the Government of India announced the demonetisation of all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series. It also announced the issuance of new ₹500 and ₹2,000 banknotes in exchange for the demonetised banknotes.
  - gus_massa 5y ago
    [Hi from Argentina!] I'm not sure about the details of the transitions in Brazil, but each time there is a change of money here the bank accounts are transformed instantly to the new denomination and the bills and coin coexist for some time, like 3 or 6 months. It's more a cosmetic change, to make the numbers no overflow in the bank system. It also has a psychological effect, because with the change the government pinky promise not to take stupid economic decisions and reduce the inflation.
  - rswail 5y ago
    Declaring certain currency notes to be valueless doesn't change the demand for currency. It reduces supply. But people still need it to pay taxes and the government will only pay for services with it. In most developed nations, the government is responsible for 20%+ of the total GDP, so that's an inbuilt "floor" to the value of its currency. So yes, the government can change the currency and the notes, but they control the supply and demand of whatever they deem to be the currency.
    - bko 5y ago
      Right, but it doesn't really help me as someone holding the currency. I can have X dollars in my bank account, government can then declare these dollars are worthless or you have to change it to this new currency at some rate that is set by the state. Neither of these things are good for me and I would hardly call that the government "backing" the currency that I hold.
- hippich 5y ago
  If you owe taxes and don't have dollars, but have property, IRS will gladly take that. And I doubt they will look at what type of property it is - a house, a stock, a crypto. Except in the last case, if you use your own keys, you have a choice of either going to jail and keeping the money, or giving it away in exchange for your freedom. In all other cases the only option to hold on to the property - is successfully physically fight with law enforcement to defend your rights to the property (which is quite futile for the most of us).
nroets 5y ago
Fiat is valuable because of a never ending torrent of positive exposure https://Bitcoin.isNot.Money/ https://Bitcoin.isNot.Money/
yunohn 5y ago
> Maybe a tiny minority Wait, what? That’s like the main reason people give when pumping it - “Bitcoin will replace fiat and it’s a good hedge against normal money.”
- mech422 5y ago
  Personally, I don't know anyone that believes that.. I mostly see it as an adjunct - like credit cards. Another option..
  - yunohn 5y ago
    I find it hard to believe that you spend time on HN and possibly other crypto-focused websites, but have never seen this sentiment?
    - mech422 5y ago
      I've seen it...I just don't personally know anyone that subscribes to it. Just like I don't know anyone that plans to retire off lotto winnings? Most of the people I know, might dream a bit about 'hitting it big' - but none are expecting cash/fiat to go away.
      - mech422 5y ago
        I should probably mention, no one I know is taking out second mortgages, risking their homes, or anything else like that.
  - graeme 5y ago
    What the heck does that mean? Credit cards in the US are a dollar based instrument, and they extend credit to consumers and simplify payments for merchants and consumers both. Crypto isn’t credit. Or much of a payment means at present. So what specifically do you mean by “other option”? This seems like a dodge. The common meme is that crypto will be valuable because it will be the money of the future and appreciate along the way.
belter 5y ago
You also have to keep in mind the context here. The Netherlands is a country that keeps its citizens under a tax slavery, that will make sure 80 to 85 % of all income you earn over the course of your lifetime will be taken away. Taken away in progressive income taxes, property taxes, inheritance taxes, pension taxes etc... Despite the massive levels of taxation citizen benefits are nowhere near the levels of Nordic countries like Denmark, Sweden or Finland. Medical insurance has been privatized and its one of the more expensive in the world. Most Dutch residents will even boast their medical insurance bills are only in the 250 to 350 EUR range has they have been led to believe. They forget to check the percentage that is taken from their salary contributions, what makes it for the middle class at the same high levels of insurance as in the US. With the exception of a family of 5 persons, who by law, does not have to pay taxes, this has a massive effect of quickly dividing the population into two very distinctive camps: A camp that has to be very politically docile, as this large amount of population, are completely dependent on governments handouts around social housing, child subsidies, the famous and numerous "Uitkering's", etc.... The other part of population , a large middle class, is quickly made to understand any additional working efforts, that could produce any additional income will be quickly taken away by very aggressive levels of taxation. So you better go home at 4 PM or work just 4 days per week, as it is common in the country. This is sometimes touted by political spin doctors as an example of the middle class "high quality of life". It does have it advantages, but its simply not the core reason. This makes for a very stable and homogeneous society. All those common rows of all equal houses that see in these Dutch pictures or google maps... Makes you come out of your house, look at the house of neighbor and think, neither is doing much better than me and neither I am doing that bad :-)) The country also has much smaller levels of income disparity compared to what is seen in many other European countries. It is common to see in a Dutch company, just 4 to 6 different salary levels including the CEOs. Some European countries like Spain or Italy ( lets not even talk the US), have income level between regular workers and company administrators can have a 40x to 50x difference. So, although crypto at the moment, has serious issues around its climate impact and scalability of transaction settlement, that is the last thing in this gentleman mind. He is thinking, control and nothing else. The reason why he considers it "urgent" is the lack of societal control it will imply. Depending on your social values and priorities, you might see this statement from a Central Bank head as: - The biggest argument against crypto. or - The biggest endorsement of the advantages of crypto currency as touted by many of its believers. The future of crypto as a concept will probably not be Bitcoin, Ethereum but something else. Still, we should not forget what is also at play here is political control of citizens. The last thing on the mind of this central bank is investors protection. You just have to see the historical record of this specific central bank, and their 100% incompetence in protecting these same investors, they so much talk about now, against the past bankruptcy of large Dutch financial institutions. The Netherlands is currently a healthy democracy, but you just have to look around. The more repressive societies are the most interested in abolishing crypto or forcing citizens to adopt a "specific" digital currency: https://www.wsj.com/articles/china-creates-its-own-digital-currency-a-first-for-major-economy-11617634118 https://www.wsj.com/articles/china-creates-its-own-digital-c...
jokethrowaway 5y ago
Fiat is backed by weapons. The same weapons that defend your house from other countries and force you to give up half your salary. My main criticism to cryptocurrencies is that they're mostly unbacked. The ones that are backed by Fiat have similar problems to Fiat currency (why would I need that?), the ones that are backed by physical assets are much more interesting - but they don't seem to be the mainstream ones, probably because you can't speculate on it. This makes me think cryptocurrencies are mainly about speculation more than rebelling against governments and central banks.
- qez 5y ago
  > My main criticism to cryptocurrencies is that they're mostly unbacked. The fact of a currency being "backed" by something went away in 1933. No currency is "backed". > This makes me think cryptocurrencies are mainly about speculation more than rebelling against governments and central banks. Yeah, they are about speculation. Whether investing in crypto rather than some other financial asset constitutes "rebelling" is subjective.
  - caoilte 5y ago
    Fiat currencies are mostly "backed" by the necessity to pay taxes and other government fees using them. The US Dollar has the additional advantage of being the currency through which most large financial trade transactions are required to be paid. Ultimately, however, this backing is mostly possible through the unexpressed coercive threat of legal action and ultimately force.
- nipponese 5y ago
  And not just any weapons but thousands of strategic and tactical nuclear weapons.
- michaelscott 5y ago
  > Fiat is backed by weapons. The same weapons that defend your house from other countries and force you to give up half your salary This is a very American view of fiat (and governmental role in general). It's a logic that only works if you're talking about the strongest military and associated country out of all alternatives, and at this point it falls apart. How do weapons protect the value of the Angolan kwanza or the Singaporean dollar? Neither of these countries could do anything militarily if a sizeable number of countries did not support their value.
koheripbal 5y ago
The argument used in the article is "citing fraud, criminal use, and financial instability"
- Blikkentrekker 5y ago
  Fiat currency of course never being used in those. Cryptocurrencies are an object of value due to scarcity alone. In that sense, it is no different from various rare materials. The difference with fiat is that governments mandate that it be legal tender, that al who do business must accept it but I am left to wonder, what if I were to open a store and accept bitcoins and euros, as I must operating in an area where euros are legal tender, — what if I simply make the price in euros so much higher than that in bitcoins that no one would ever pay in euros over bitcoins. Is this legal? can the government tell me how to set my own prices for different currencies?
  - shkkmo 5y ago
    You are not actually required to accept legal tender for anything besides debts. If the transaction is simultaneous, you are not required to accept legal tender (at least in the US.) This is why stores don't have to accept cash and be card only. Edit: I am speaking about the US, unsure how this generalizes everywhere.
  - koheripbal 5y ago
    > Fiat currency of course never being used in those. The difference is being able to do it instantly across global distances, thereby circumventing regulators/border checks/banks/etc... > Cryptocurrencies are an object of value due to scarcity alone. This is sort of a silly assertion. Many things are scarce, yet have no value. If I create a new crypto coin, it would have zero value. > it is no different from various rare materials. Raw materials have uses outside their tradability. > if I were to open a store and accept bitcoins You would likely go bankrupt by the volatility. Most shops make <10% margin on all goods. You cannot accept payment in a coin that might be worth less than the value of the goods you need to restock for tomorrow.
    - 5y ago
throwaway6734 5y ago
These two aspects are some of my least favorite of the crypto community. Hyping up this future techno utopia without banks, while the real end goal is to increase the amount of real currency in their possession. This doesn't describe the whole community, but a large portion of those on different crypto forums. I have respect for those truly interested in the tech side of things and those looking to make money on a speculative asset, but people who mix those two drive me crazy because it seems so inauthentic
- yawaworht1978 5y ago
  Indeed, i would like to see how long Buterin would work on eth without funding, savings and rent to pay around the corner.
  - Sargos 5y ago
    Vitalik worked on a Bitcoin newsletter and coded blockchains and worked on Ethereum for little to no money for years. He didn't care about money and is as much of a pure tech guy as there is.

zeepzeep 5y ago

> Maybe a tiny minority, sounds like a strawman. I don't think so, i believe many people think that a private and decentralized solution will replace traditional money. That just isn't an argument against it. If anything, it's an argument FOR cryptocurrencies. > Isn't fiat the same? haha yes.

NicoJuicy 5y ago
No, fiat is backed by economies. In case of the USD, it's the biggest economy there is.

mortehu 5y ago

Fiat is slightly different in that the government can guarantee a certain level of demand for it by requiring taxes to be paid in it. If you you don't like jail and have a tax liability in US, you can't think dollars are worthless.

rootsandstones 5y ago
FYI I can pay my taxes in crypto in Switzerland.
- bpt3 5y ago
  Are your taxes calculated in Swiss Francs or Bitcoin?
- acdha 5y ago
  Does the state accept them directly or does a third-party do a currency conversion so the state is receiving the value in Swiss francs? That's a key difference because it's only in the latter case that taxation creates demand.
demosito666 5y ago
This guarantee surely helped quite a bit in Zimbabwe, Venezuela and hundreds more similar cases. /s
bko 5y ago
> Fiat is slightly different in that the government can guarantee a certain level of demand for it by requiring taxes to be paid in it Until they switch currencies. For instance Brazil did this > The cruzeiro (Portuguese pronunciation: [kɾuˈzejɾu]) was the currency of Brazil from 1942 to 1986 (two distinct currencies) and again between 1990 and 1993. In August 1993 it was replaced by the short-lived Cruzeiro Real, itself replaced less than a year aftwards by the Real. India also demonitized a certain denomination of their currency > On 8 November 2016, the Government of India announced the demonetisation of all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series. It also announced the issuance of new ₹500 and ₹2,000 banknotes in exchange for the demonetised banknotes.
- gus_massa 5y ago
  [Hi from Argentina!] I'm not sure about the details of the transitions in Brazil, but each time there is a change of money here the bank accounts are transformed instantly to the new denomination and the bills and coin coexist for some time, like 3 or 6 months. It's more a cosmetic change, to make the numbers no overflow in the bank system. It also has a psychological effect, because with the change the government pinky promise not to take stupid economic decisions and reduce the inflation.
- rswail 5y ago
  Declaring certain currency notes to be valueless doesn't change the demand for currency. It reduces supply. But people still need it to pay taxes and the government will only pay for services with it. In most developed nations, the government is responsible for 20%+ of the total GDP, so that's an inbuilt "floor" to the value of its currency. So yes, the government can change the currency and the notes, but they control the supply and demand of whatever they deem to be the currency.
  - bko 5y ago
    Right, but it doesn't really help me as someone holding the currency. I can have X dollars in my bank account, government can then declare these dollars are worthless or you have to change it to this new currency at some rate that is set by the state. Neither of these things are good for me and I would hardly call that the government "backing" the currency that I hold.
hippich 5y ago
If you owe taxes and don't have dollars, but have property, IRS will gladly take that. And I doubt they will look at what type of property it is - a house, a stock, a crypto. Except in the last case, if you use your own keys, you have a choice of either going to jail and keeping the money, or giving it away in exchange for your freedom. In all other cases the only option to hold on to the property - is successfully physically fight with law enforcement to defend your rights to the property (which is quite futile for the most of us).

nroets 5y ago

Fiat is valuable because of a never ending torrent of positive exposure https://Bitcoin.isNot.Money/ https://Bitcoin.isNot.Money/

yunohn 5y ago

> Maybe a tiny minority Wait, what? That’s like the main reason people give when pumping it - “Bitcoin will replace fiat and it’s a good hedge against normal money.”

mech422 5y ago
Personally, I don't know anyone that believes that.. I mostly see it as an adjunct - like credit cards. Another option..
- yunohn 5y ago
  I find it hard to believe that you spend time on HN and possibly other crypto-focused websites, but have never seen this sentiment?
  - mech422 5y ago
    I've seen it...I just don't personally know anyone that subscribes to it. Just like I don't know anyone that plans to retire off lotto winnings? Most of the people I know, might dream a bit about 'hitting it big' - but none are expecting cash/fiat to go away.
    - mech422 5y ago
      I should probably mention, no one I know is taking out second mortgages, risking their homes, or anything else like that.
- graeme 5y ago
  What the heck does that mean? Credit cards in the US are a dollar based instrument, and they extend credit to consumers and simplify payments for merchants and consumers both. Crypto isn’t credit. Or much of a payment means at present. So what specifically do you mean by “other option”? This seems like a dodge. The common meme is that crypto will be valuable because it will be the money of the future and appreciate along the way.

belter 5y ago

You also have to keep in mind the context here. The Netherlands is a country that keeps its citizens under a tax slavery, that will make sure 80 to 85 % of all income you earn over the course of your lifetime will be taken away. Taken away in progressive income taxes, property taxes, inheritance taxes, pension taxes etc... Despite the massive levels of taxation citizen benefits are nowhere near the levels of Nordic countries like Denmark, Sweden or Finland. Medical insurance has been privatized and its one of the more expensive in the world. Most Dutch residents will even boast their medical insurance bills are only in the 250 to 350 EUR range has they have been led to believe. They forget to check the percentage that is taken from their salary contributions, what makes it for the middle class at the same high levels of insurance as in the US. With the exception of a family of 5 persons, who by law, does not have to pay taxes, this has a massive effect of quickly dividing the population into two very distinctive camps: A camp that has to be very politically docile, as this large amount of population, are completely dependent on governments handouts around social housing, child subsidies, the famous and numerous "Uitkering's", etc.... The other part of population , a large middle class, is quickly made to understand any additional working efforts, that could produce any additional income will be quickly taken away by very aggressive levels of taxation. So you better go home at 4 PM or work just 4 days per week, as it is common in the country. This is sometimes touted by political spin doctors as an example of the middle class "high quality of life". It does have it advantages, but its simply not the core reason. This makes for a very stable and homogeneous society. All those common rows of all equal houses that see in these Dutch pictures or google maps... Makes you come out of your house, look at the house of neighbor and think, neither is doing much better than me and neither I am doing that bad :-)) The country also has much smaller levels of income disparity compared to what is seen in many other European countries. It is common to see in a Dutch company, just 4 to 6 different salary levels including the CEOs. Some European countries like Spain or Italy ( lets not even talk the US), have income level between regular workers and company administrators can have a 40x to 50x difference. So, although crypto at the moment, has serious issues around its climate impact and scalability of transaction settlement, that is the last thing in this gentleman mind. He is thinking, control and nothing else. The reason why he considers it "urgent" is the lack of societal control it will imply. Depending on your social values and priorities, you might see this statement from a Central Bank head as: - The biggest argument against crypto. or - The biggest endorsement of the advantages of crypto currency as touted by many of its believers. The future of crypto as a concept will probably not be Bitcoin, Ethereum but something else. Still, we should not forget what is also at play here is political control of citizens. The last thing on the mind of this central bank is investors protection. You just have to see the historical record of this specific central bank, and their 100% incompetence in protecting these same investors, they so much talk about now, against the past bankruptcy of large Dutch financial institutions. The Netherlands is currently a healthy democracy, but you just have to look around. The more repressive societies are the most interested in abolishing crypto or forcing citizens to adopt a "specific" digital currency: https://www.wsj.com/articles/china-creates-its-own-digital-currency-a-first-for-major-economy-11617634118 https://www.wsj.com/articles/china-creates-its-own-digital-c...

jokethrowaway 5y ago

Fiat is backed by weapons. The same weapons that defend your house from other countries and force you to give up half your salary. My main criticism to cryptocurrencies is that they're mostly unbacked. The ones that are backed by Fiat have similar problems to Fiat currency (why would I need that?), the ones that are backed by physical assets are much more interesting - but they don't seem to be the mainstream ones, probably because you can't speculate on it. This makes me think cryptocurrencies are mainly about speculation more than rebelling against governments and central banks.

qez 5y ago
> My main criticism to cryptocurrencies is that they're mostly unbacked. The fact of a currency being "backed" by something went away in 1933. No currency is "backed". > This makes me think cryptocurrencies are mainly about speculation more than rebelling against governments and central banks. Yeah, they are about speculation. Whether investing in crypto rather than some other financial asset constitutes "rebelling" is subjective.
- caoilte 5y ago
  Fiat currencies are mostly "backed" by the necessity to pay taxes and other government fees using them. The US Dollar has the additional advantage of being the currency through which most large financial trade transactions are required to be paid. Ultimately, however, this backing is mostly possible through the unexpressed coercive threat of legal action and ultimately force.
nipponese 5y ago
And not just any weapons but thousands of strategic and tactical nuclear weapons.
michaelscott 5y ago
> Fiat is backed by weapons. The same weapons that defend your house from other countries and force you to give up half your salary This is a very American view of fiat (and governmental role in general). It's a logic that only works if you're talking about the strongest military and associated country out of all alternatives, and at this point it falls apart. How do weapons protect the value of the Angolan kwanza or the Singaporean dollar? Neither of these countries could do anything militarily if a sizeable number of countries did not support their value.

koheripbal 5y ago

The argument used in the article is "citing fraud, criminal use, and financial instability"

Blikkentrekker 5y ago
Fiat currency of course never being used in those. Cryptocurrencies are an object of value due to scarcity alone. In that sense, it is no different from various rare materials. The difference with fiat is that governments mandate that it be legal tender, that al who do business must accept it but I am left to wonder, what if I were to open a store and accept bitcoins and euros, as I must operating in an area where euros are legal tender, — what if I simply make the price in euros so much higher than that in bitcoins that no one would ever pay in euros over bitcoins. Is this legal? can the government tell me how to set my own prices for different currencies?
- shkkmo 5y ago
  You are not actually required to accept legal tender for anything besides debts. If the transaction is simultaneous, you are not required to accept legal tender (at least in the US.) This is why stores don't have to accept cash and be card only. Edit: I am speaking about the US, unsure how this generalizes everywhere.
- koheripbal 5y ago
  > Fiat currency of course never being used in those. The difference is being able to do it instantly across global distances, thereby circumventing regulators/border checks/banks/etc... > Cryptocurrencies are an object of value due to scarcity alone. This is sort of a silly assertion. Many things are scarce, yet have no value. If I create a new crypto coin, it would have zero value. > it is no different from various rare materials. Raw materials have uses outside their tradability. > if I were to open a store and accept bitcoins You would likely go bankrupt by the volatility. Most shops make <10% margin on all goods. You cannot accept payment in a coin that might be worth less than the value of the goods you need to restock for tomorrow.
  - 5y ago

throwaway6734 5y ago

These two aspects are some of my least favorite of the crypto community. Hyping up this future techno utopia without banks, while the real end goal is to increase the amount of real currency in their possession. This doesn't describe the whole community, but a large portion of those on different crypto forums. I have respect for those truly interested in the tech side of things and those looking to make money on a speculative asset, but people who mix those two drive me crazy because it seems so inauthentic

yawaworht1978 5y ago
Indeed, i would like to see how long Buterin would work on eth without funding, savings and rent to pay around the corner.
- Sargos 5y ago
  Vitalik worked on a Bitcoin newsletter and coded blockchains and worked on Ethereum for little to no money for years. He didn't care about money and is as much of a pure tech guy as there is.