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In the future, with the lessons of history behind us, how can the Bitcoin community avoid another stablecoin debacle that we are seeing unfold in front of us in

In the future, with the lessons of history behind us, how can the Bitcoin community avoid another stablecoin debacle that we are seeing unfold in front of us in real time (namely Tether, and the faux liquidity it has been injection into the valuation of BTC).

davidgerard 5y ago
So firstly, they'd have to take account of the lessons of history. In my experience, the bitcoin subculture is really bad at doing the reading, and accepting any version of history that doesn't reinforce their assumptions that they're going to get rich for free. There's a history of extremist libertarian ideology in bitcoin, and that's still how the subculture talks about their common beliefs. But the subculture's behaviour is more accurately predicted if you assume their only interest is "number go up." So printing billions of "dollars" of questionably-backed digital wildcat banknotes is good news for bitcoin, if it keeps number going up. The noisy online cultist sort of bitcoiners will swear everything is fine with Tether, but the traders know damn well it's going to explode some time. The only bright side is that crypto is not systemic to the real economy, even the paper economy. So if Tether and/or a major exchange blew up - Binance is looking like a hot prospect, with the amount of regulatory heat it's been getting in just the past few weeks, and with multiple reports of people unable to get their money or even their cryptos out - and bitcoin crashes, then the rest of the financial world will barely be affected.
AndrewStephens 5y ago
Not the author but I think in general the ethos and technical design of Bitcoin is doomed to end up attracting scammers (bad exchanges, tether-like debacles, etc) no matter what. You just cannot have anonymous, irreversible value flowing in large amounts anywhere near humans. Bitcoin has exactly one real use - transferring money without pesky government oversight, effectively money laundering, which it doesn't even do that well. Everything else is either speculating on the value going up (it's not actually a Ponzi scheme as such but it could be called I-can't-belive-it's-not-a-Ponzi due to the way the exchanges pump the price) or some kind of idiotic banking-the-unbanked scheme that is doomed to failure. The price remains high due to Tether and the abundance of real money flowing around at the moment. But as soon as that money dries up Bitcoin will be the first investment class to be wiped out. Bitcoin will always be worth something - in 50 years there will still be some oddballs running nodes in their garden sheds. But the investors and scammers will have moved on to something else.

davidgerard 5y ago

So firstly, they'd have to take account of the lessons of history. In my experience, the bitcoin subculture is really bad at doing the reading, and accepting any version of history that doesn't reinforce their assumptions that they're going to get rich for free. There's a history of extremist libertarian ideology in bitcoin, and that's still how the subculture talks about their common beliefs. But the subculture's behaviour is more accurately predicted if you assume their only interest is "number go up." So printing billions of "dollars" of questionably-backed digital wildcat banknotes is good news for bitcoin, if it keeps number going up. The noisy online cultist sort of bitcoiners will swear everything is fine with Tether, but the traders know damn well it's going to explode some time. The only bright side is that crypto is not systemic to the real economy, even the paper economy. So if Tether and/or a major exchange blew up - Binance is looking like a hot prospect, with the amount of regulatory heat it's been getting in just the past few weeks, and with multiple reports of people unable to get their money or even their cryptos out - and bitcoin crashes, then the rest of the financial world will barely be affected.

AndrewStephens 5y ago

Not the author but I think in general the ethos and technical design of Bitcoin is doomed to end up attracting scammers (bad exchanges, tether-like debacles, etc) no matter what. You just cannot have anonymous, irreversible value flowing in large amounts anywhere near humans. Bitcoin has exactly one real use - transferring money without pesky government oversight, effectively money laundering, which it doesn't even do that well. Everything else is either speculating on the value going up (it's not actually a Ponzi scheme as such but it could be called I-can't-belive-it's-not-a-Ponzi due to the way the exchanges pump the price) or some kind of idiotic banking-the-unbanked scheme that is doomed to failure. The price remains high due to Tether and the abundance of real money flowing around at the moment. But as soon as that money dries up Bitcoin will be the first investment class to be wiped out. Bitcoin will always be worth something - in 50 years there will still be some oddballs running nodes in their garden sheds. But the investors and scammers will have moved on to something else.