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> The difference is, if a cryptocurrency is mismanaged, people can sell their holdings and buy a better-managed currency, decreasing the value for those who hav

> The difference is, if a cryptocurrency is mismanaged, people can sell their holdings and buy a better-managed currency, decreasing the value for those who have the most to lose. Selling requires buyers. If everyone decides to dump the currency, who do they sell it to? Maybe someone is willing to take the risk on it, but if so, likely at a small fraction of what many paid to buy in. That doesn’t sound like a safety mechanic to me.

dane-pgp 5y ago
> who do they sell it to? Aquaman?[0] No, fair point, I didn't think that through. I suppose I thought that the whales would try to prop up the price (and increase their control) by buying out those who had lost confidence, but you're right that this isn't guaranteed, and nor is a return on investment for those leaving. > That doesn’t sound like a safety mechanic to me. Even if the doubters aren't able to exit without taking a loss, the risks of the cryptocurrency losing value should still provide a strong incentive for good management by those who hold a lot of it. [0] https://www.youtube.com/watch?v=0-w-pdqwiBw https://www.youtube.com/watch?v=0-w-pdqwiBw
- Qwertious 5y ago
  >Even if the doubters aren't able to exit without taking a loss, the risks of the cryptocurrency losing value should still provide a strong incentive for good management by those who hold a lot of it. Note that the same argument can be used to demonstrate that monarchy works - i.e. kings have no incentive to mismanage their country, as they'd be crippling their own finances.
  - dane-pgp 5y ago
    I think that the switching costs between a monarchy and a republic are much higher than the switching costs between Bitcoin and Ethereum. Monarchs and currency regulators and social networks and operating systems tend to get away with as much mismanagement as their monopolies allow.

dane-pgp 5y ago

> who do they sell it to? Aquaman?[0] No, fair point, I didn't think that through. I suppose I thought that the whales would try to prop up the price (and increase their control) by buying out those who had lost confidence, but you're right that this isn't guaranteed, and nor is a return on investment for those leaving. > That doesn’t sound like a safety mechanic to me. Even if the doubters aren't able to exit without taking a loss, the risks of the cryptocurrency losing value should still provide a strong incentive for good management by those who hold a lot of it. [0] https://www.youtube.com/watch?v=0-w-pdqwiBw https://www.youtube.com/watch?v=0-w-pdqwiBw

Qwertious 5y ago
>Even if the doubters aren't able to exit without taking a loss, the risks of the cryptocurrency losing value should still provide a strong incentive for good management by those who hold a lot of it. Note that the same argument can be used to demonstrate that monarchy works - i.e. kings have no incentive to mismanage their country, as they'd be crippling their own finances.
- dane-pgp 5y ago
  I think that the switching costs between a monarchy and a republic are much higher than the switching costs between Bitcoin and Ethereum. Monarchs and currency regulators and social networks and operating systems tend to get away with as much mismanagement as their monopolies allow.