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> Cryptocurrency is backed by the same thing as any other currency: popularity and consumer confidence. I don't think currency is just a confidence game. The m

> Cryptocurrency is backed by the same thing as any other currency: popularity and consumer confidence. I don't think currency is just a confidence game. The most important thing is that the currency is actually used to make transactions that are meaningful to human life. A currency that isn't used to exchange goods is just a collectible. There is no such thing as an abstract "store of value" that has no actual utility other than as a store of value. Crypto will fail when people tire of owning the collectible and want to exchange it for something useful.

civilized 5y ago
I suppose I should mention a data point that might go against my own thesis: the performance of gold. While gold has some legitimate uses in jewelry and technology, its price in recent years seems to be driven mostly by financial speculation, the same "store of value" theory that drives crypto. I think this theory is nonsense but it's true that if enough people believe it, it can become sort-of-true for a while, until it's not anymore.
- imtringued 5y ago
  It's nonsense because if you sell your potatoes for gold, why would you be able to get those potatoes back 30 years later? The sad answer is population growth. The optimistic answer is that the person ate the potatoes which gave him the strength to harvest potatoes in 30 years. The realistic answer is that you should have no expectation that you ever get any potatoes back as the potatoes have spoiled and nobody is exerting additional energy to counteract the loss.
StanislavPetrov 5y ago
>The most important thing is that the currency is actually used to make transactions that are meaningful to human life. Millions of people use cryptocurrency on a daily basis to make transactions that are not only meaningful, but absolutely critical to human life. Here in New York I personally know more than a dozen people who regularly send cryptocurrency to their families in other countries. It is cheaper, easier and faster than using banks and legacy money transfer vehicles like Moneygram or Western Union and it has the added bonus of not being saddled with the red tape or regulatory requirements that go along with these institutions. Here's one personal anecdote. Several years ago I attempted to send a small amount of money ($50) to a friend in Ecuador via Moneygram. When my friend went to pick up the money, it wasn't there, so I called Moneygram. They proceeded to ask me a series of questions about why I sent the money, who I was sending it to, and a variety of other intrusive questions that (in my opinion) they have absolutely no right to ask. If I had sent that money in crypto, I would have paid less of a fee and had confidence it would arrive without going through the third degree by a middle man. I find that wealthy people, those with deep ties to traditional banking systems and those who don't value their privacy are the ones who have the biggest problem understanding the value in cryptocurrency. They don't see the need to operate outside of a system that works very well for them. For many, the system doesn't work well, or efficiently, and crypto offers a valuable alternative.
- civilized 5y ago
  > It is cheaper, easier and faster than using banks and legacy money transfer vehicles like Moneygram or Western Union and it has the added bonus of not being saddled with the red tape or regulatory requirements that go along with these institutions. This situation feels unsustainable. Traditional institutions don't ask questions because they love getting into your business, they ask because of AML and KYC regulations. If crypto eats the lunch of these traditional institutions because it doesn't have to follow the rules they do, things are going to come to a head sooner or later.
  - harambae 5y ago
    >If crypto eats the lunch of these traditional institutions because it doesn't have to follow the rules they do, things are going to come to a head sooner or later. Yeah people have been saying this about bittorrent for about 15 years too: since it's illegal it'll have to a stop because the government will end it. And yet take a guess how I just watched HBO's Succession? I could believe that having someone else hold your bitcoins and allow an easy webpage interface to break the law will end.

civilized 5y ago

I suppose I should mention a data point that might go against my own thesis: the performance of gold. While gold has some legitimate uses in jewelry and technology, its price in recent years seems to be driven mostly by financial speculation, the same "store of value" theory that drives crypto. I think this theory is nonsense but it's true that if enough people believe it, it can become sort-of-true for a while, until it's not anymore.

imtringued 5y ago
It's nonsense because if you sell your potatoes for gold, why would you be able to get those potatoes back 30 years later? The sad answer is population growth. The optimistic answer is that the person ate the potatoes which gave him the strength to harvest potatoes in 30 years. The realistic answer is that you should have no expectation that you ever get any potatoes back as the potatoes have spoiled and nobody is exerting additional energy to counteract the loss.

StanislavPetrov 5y ago

>The most important thing is that the currency is actually used to make transactions that are meaningful to human life. Millions of people use cryptocurrency on a daily basis to make transactions that are not only meaningful, but absolutely critical to human life. Here in New York I personally know more than a dozen people who regularly send cryptocurrency to their families in other countries. It is cheaper, easier and faster than using banks and legacy money transfer vehicles like Moneygram or Western Union and it has the added bonus of not being saddled with the red tape or regulatory requirements that go along with these institutions. Here's one personal anecdote. Several years ago I attempted to send a small amount of money ($50) to a friend in Ecuador via Moneygram. When my friend went to pick up the money, it wasn't there, so I called Moneygram. They proceeded to ask me a series of questions about why I sent the money, who I was sending it to, and a variety of other intrusive questions that (in my opinion) they have absolutely no right to ask. If I had sent that money in crypto, I would have paid less of a fee and had confidence it would arrive without going through the third degree by a middle man. I find that wealthy people, those with deep ties to traditional banking systems and those who don't value their privacy are the ones who have the biggest problem understanding the value in cryptocurrency. They don't see the need to operate outside of a system that works very well for them. For many, the system doesn't work well, or efficiently, and crypto offers a valuable alternative.

civilized 5y ago
> It is cheaper, easier and faster than using banks and legacy money transfer vehicles like Moneygram or Western Union and it has the added bonus of not being saddled with the red tape or regulatory requirements that go along with these institutions. This situation feels unsustainable. Traditional institutions don't ask questions because they love getting into your business, they ask because of AML and KYC regulations. If crypto eats the lunch of these traditional institutions because it doesn't have to follow the rules they do, things are going to come to a head sooner or later.
- harambae 5y ago
  >If crypto eats the lunch of these traditional institutions because it doesn't have to follow the rules they do, things are going to come to a head sooner or later. Yeah people have been saying this about bittorrent for about 15 years too: since it's illegal it'll have to a stop because the government will end it. And yet take a guess how I just watched HBO's Succession? I could believe that having someone else hold your bitcoins and allow an easy webpage interface to break the law will end.