6 ms·

Caveat, national currencies are secured with economic power, a system of law, culture, military power, etc etc. It is a bit different. They aren't perfect eithe

by bwb 5y ago

Caveat, national currencies are secured with economic power, a system of law, culture, military power, etc etc. It is a bit different. They aren't perfect either but there is more supporting what people "think" they are worth here. Bitcoin has it own culture and history, but it is still a baby. I do think bitcoin is a bit more like Gold, although Gold has real uses so that is still a bit of a rough comparison.

hoseja 5y ago
All of those are memes too.
rjbwork 5y ago
Don't forget that whole pesky "have to pay taxes to the state in their chosen currency under threat of the state monopoly on violence" thing. It is somewhat touched on in your first sentence, but at the end of the day, if you want to engage in productive economic activity in a particular jurisdiction, you must render what is Caesar's unto Caesar - and Caesar demands his preferred fiat.
- md_ 5y ago
  Known as https://en.wikipedia.org/wiki/Chartalism https://en.wikipedia.org/wiki/Chartalism, by the way. :) While these risks clearly _do_ apply to traditional currencies, I do think, as an investor, it's worth considering market cap (as a proxy for "social belief in") and history of stability. Bitcoin's market cap is probably (factoring in permanently lost coins) something like $750B, which makes it a bit smaller than, say, the Swiss franc, and its history of stability is much, much shorter.
  - rjbwork 5y ago
    Chartalism is more of an absolute. I don't claim that money has value only due to this reason, just that it is a significant component of the mass delusion.
    - md_ 5y ago
      Agreed, chartalism as the only explanation for assigned value is clearly empirically false. But as one mechanism, or perhaps one of the stable or reliable mechanisms, is somewhat convincing to me.
  - donatj 5y ago
    Is there a term for something between Metallism and Chartalism for the value of currency coming neither from innate value nor state backing, but rather our belief in it? That's where I land I guess. Magicism?
- bwb 5y ago
  Taxes are good, they pay for civilization and the platform we all operate within :) I know people hate hearing that, but it is the truth. I am frustrated with how high they are on some things, bad spending, etc. But at the end of the day look around at what we have built as a civilization. That is from the collective pooling of money to build the entire system.
  - rjbwork 5y ago
    I tend to agree. I sometimes fantasize that it were otherwise, but I don't think it's really possible to maintain a society of any size or sophistication without a state to do a lot of the fundamental things that keep things moving.
  - lousyd 5y ago
    Perhaps there are people who don't want the civilisation and platform we operate in to be paid for.
    - bwb 5y ago
      For sure! No platform is perfect, and our current one needs a TON of improvements.
    - danaris 5y ago
      Then maybe they should go try to find another place to be together, rather than trying to wreck the civilization the rest of us think is pretty important and helpful.
  - donatj 5y ago
    I feel like you're undervaluing the role individuals and private enterprise have on civilization. If there were just a bunch of roads and power lines without homes and businesses it wouldn't be much of a civilization.
    - bwb 5y ago
      I value individuals and capitalism a great deal. But without civilization and a platform that shapes their energy they are just more ants in the ant farm. The platform is what gives them the ability to change the world. That is built in a symbiotic relationship but it seems like we forget the taxes/civilization part and worship individuals to often.
- kergonath 5y ago
  Not only taxes. In a lot of countries private businesses are required to accept the local official currency as well.
- usrusr 5y ago
  At first glance ransomware might seem like a perfectly sufficient reimplemention of the taxes/violence thing. But that breaks down completely when you realize how willingly that particular Caesar would be taking whatever form of payment offered. I suppose it fully reverts to the theoretical grounding on taxes/violence of fiat once that ecosystem of shell consultancies set up for embargos and tax deductability comes into play.
croon 5y ago
> I do think bitcoin is a bit more like Gold, although Gold has real uses so that is still a bit of a rough comparison. I agree with everything except that last part is understated. Bitcoin is like gold with the only difference that gold has functional uses, whereas Bitcoin is entirely replaceable and can be forked and duplicated.
- jack_pp 5y ago
  That's like saying the $ or any other currency is entirely replaceable. What bitcoin has over any other cryptocurrency is the massive mining power behind it, making it the most secure. https://braiins.com/blog/how-much-would-it-cost-to-51-attack-bitcoin https://braiins.com/blog/how-much-would-it-cost-to-51-attack... So if you create another cryptocurrency which could use the same ASICS as bitcoin and you convince a lot of miners to switch then maybe.. it could be replaced but that is a tall ask.
  - croon 5y ago
    > That's like saying the $ or any other currency is entirely replaceable. No it's not. That's just another reduction missing the point. If the dollar was to be replaced, a new currency would be issued, there would be a period of trade-in for old currency, all systems of governance, regulation, etc would recognize it and issues could be handled. Gold would still be used for everything from electronics to satellite coating to who-knows-what. In the case of Bitcoin it would just disappear. You're arguing it's hard to replace because of its participants, which may be true, but is far less likely than the participants in the dollar. Some businesses dependent on it and a lot of individual participants would lose their value in their wallets, and that's it. Believing in Bitcoin is betting on that being enough to prop it up. Gamble accordingly.
    - jack_pp 5y ago
      Any property you hold is gambling to a certain degree, if you buy a house you gamble that the society you bought it in will provide security for it and based on the laws of that society you will be able to keep it. You gamble your property tax won't jump 50% or that police will stop rioters from stealing from it. I admit it is a much smaller gamble than bitcoin but it is still a gamble. Holding your savings in $ is a bigger gamble than buying a house and some would argue it is a bigger gamble than holding bitcoin.
wnkrshm 5y ago
Bitcoin does not support monetary policy though. If you read the Wikipedia article on the Gold standard, historians and economists seem to agree that the inflexibility to increase currency supply to stimulate the economy made the great depression much worse than it could have been without it.
- bwb 5y ago
  Great point, I think bitcoin might end up serving a role more like a weird bond. I don't think it will ever serve as a currency with the high fees and lack of usability for 99% of the population.
donatj 5y ago
What would you propose the actual mechanism is for these giving fiat its value? Simply these things giving people more faith in fiat? Minimum wage laws, target interest rates and federal reserve shenanigans? I think if anything all that give me less faith overall than something maintained by people who operate a currency for the love of it. The value of my past work being tied to the success of something I have no control over, a machine that murders innocent people in drone strikes across the world? That's not something I want to have faith in.
- kergonath 5y ago
  > Simply these things giving people more faith in fiat? Yes, it rests largely on the trust and faith you have in the currency. At a basic level, you at least need to trust that your money won’t lose half its value overnight. Otherwise, you’d just use another currency; there are a couple of examples in recent history. Now, whether your faith is justified or not is another question. Then you can look at the size of the economy or the power of whatever is backing the currency. > The value of my past work being tied to the success of something I have no control over, a machine that murders innocent people in drone strikes across the world? Such is the world we live in, whether we like it or not. As a side note, a lot of the drone murdering is done more or less transparently for economic reasons. Yes, a government powerful enough to project power on the other side of the planet to secure a good supply of cheap oil or to ensure some form of hegemony does inspire confidence in its currency. I wish it weren’t so, but here we are.

by bwb 5y ago

hoseja 5y ago

All of those are memes too.

rjbwork 5y ago

Don't forget that whole pesky "have to pay taxes to the state in their chosen currency under threat of the state monopoly on violence" thing. It is somewhat touched on in your first sentence, but at the end of the day, if you want to engage in productive economic activity in a particular jurisdiction, you must render what is Caesar's unto Caesar - and Caesar demands his preferred fiat.

md_ 5y ago
Known as https://en.wikipedia.org/wiki/Chartalism https://en.wikipedia.org/wiki/Chartalism, by the way. :) While these risks clearly _do_ apply to traditional currencies, I do think, as an investor, it's worth considering market cap (as a proxy for "social belief in") and history of stability. Bitcoin's market cap is probably (factoring in permanently lost coins) something like $750B, which makes it a bit smaller than, say, the Swiss franc, and its history of stability is much, much shorter.
- rjbwork 5y ago
  Chartalism is more of an absolute. I don't claim that money has value only due to this reason, just that it is a significant component of the mass delusion.
  - md_ 5y ago
    Agreed, chartalism as the only explanation for assigned value is clearly empirically false. But as one mechanism, or perhaps one of the stable or reliable mechanisms, is somewhat convincing to me.
- donatj 5y ago
  Is there a term for something between Metallism and Chartalism for the value of currency coming neither from innate value nor state backing, but rather our belief in it? That's where I land I guess. Magicism?
bwb 5y ago
Taxes are good, they pay for civilization and the platform we all operate within :) I know people hate hearing that, but it is the truth. I am frustrated with how high they are on some things, bad spending, etc. But at the end of the day look around at what we have built as a civilization. That is from the collective pooling of money to build the entire system.
- rjbwork 5y ago
  I tend to agree. I sometimes fantasize that it were otherwise, but I don't think it's really possible to maintain a society of any size or sophistication without a state to do a lot of the fundamental things that keep things moving.
- lousyd 5y ago
  Perhaps there are people who don't want the civilisation and platform we operate in to be paid for.
  - bwb 5y ago
    For sure! No platform is perfect, and our current one needs a TON of improvements.
  - danaris 5y ago
    Then maybe they should go try to find another place to be together, rather than trying to wreck the civilization the rest of us think is pretty important and helpful.
- donatj 5y ago
  I feel like you're undervaluing the role individuals and private enterprise have on civilization. If there were just a bunch of roads and power lines without homes and businesses it wouldn't be much of a civilization.
  - bwb 5y ago
    I value individuals and capitalism a great deal. But without civilization and a platform that shapes their energy they are just more ants in the ant farm. The platform is what gives them the ability to change the world. That is built in a symbiotic relationship but it seems like we forget the taxes/civilization part and worship individuals to often.
kergonath 5y ago
Not only taxes. In a lot of countries private businesses are required to accept the local official currency as well.
usrusr 5y ago
At first glance ransomware might seem like a perfectly sufficient reimplemention of the taxes/violence thing. But that breaks down completely when you realize how willingly that particular Caesar would be taking whatever form of payment offered. I suppose it fully reverts to the theoretical grounding on taxes/violence of fiat once that ecosystem of shell consultancies set up for embargos and tax deductability comes into play.

croon 5y ago

> I do think bitcoin is a bit more like Gold, although Gold has real uses so that is still a bit of a rough comparison. I agree with everything except that last part is understated. Bitcoin is like gold with the only difference that gold has functional uses, whereas Bitcoin is entirely replaceable and can be forked and duplicated.

jack_pp 5y ago
That's like saying the $ or any other currency is entirely replaceable. What bitcoin has over any other cryptocurrency is the massive mining power behind it, making it the most secure. https://braiins.com/blog/how-much-would-it-cost-to-51-attack-bitcoin https://braiins.com/blog/how-much-would-it-cost-to-51-attack... So if you create another cryptocurrency which could use the same ASICS as bitcoin and you convince a lot of miners to switch then maybe.. it could be replaced but that is a tall ask.
- croon 5y ago
  > That's like saying the $ or any other currency is entirely replaceable. No it's not. That's just another reduction missing the point. If the dollar was to be replaced, a new currency would be issued, there would be a period of trade-in for old currency, all systems of governance, regulation, etc would recognize it and issues could be handled. Gold would still be used for everything from electronics to satellite coating to who-knows-what. In the case of Bitcoin it would just disappear. You're arguing it's hard to replace because of its participants, which may be true, but is far less likely than the participants in the dollar. Some businesses dependent on it and a lot of individual participants would lose their value in their wallets, and that's it. Believing in Bitcoin is betting on that being enough to prop it up. Gamble accordingly.
  - jack_pp 5y ago
    Any property you hold is gambling to a certain degree, if you buy a house you gamble that the society you bought it in will provide security for it and based on the laws of that society you will be able to keep it. You gamble your property tax won't jump 50% or that police will stop rioters from stealing from it. I admit it is a much smaller gamble than bitcoin but it is still a gamble. Holding your savings in $ is a bigger gamble than buying a house and some would argue it is a bigger gamble than holding bitcoin.

wnkrshm 5y ago

Bitcoin does not support monetary policy though. If you read the Wikipedia article on the Gold standard, historians and economists seem to agree that the inflexibility to increase currency supply to stimulate the economy made the great depression much worse than it could have been without it.

bwb 5y ago
Great point, I think bitcoin might end up serving a role more like a weird bond. I don't think it will ever serve as a currency with the high fees and lack of usability for 99% of the population.

donatj 5y ago

What would you propose the actual mechanism is for these giving fiat its value? Simply these things giving people more faith in fiat? Minimum wage laws, target interest rates and federal reserve shenanigans? I think if anything all that give me less faith overall than something maintained by people who operate a currency for the love of it. The value of my past work being tied to the success of something I have no control over, a machine that murders innocent people in drone strikes across the world? That's not something I want to have faith in.

kergonath 5y ago
> Simply these things giving people more faith in fiat? Yes, it rests largely on the trust and faith you have in the currency. At a basic level, you at least need to trust that your money won’t lose half its value overnight. Otherwise, you’d just use another currency; there are a couple of examples in recent history. Now, whether your faith is justified or not is another question. Then you can look at the size of the economy or the power of whatever is backing the currency. > The value of my past work being tied to the success of something I have no control over, a machine that murders innocent people in drone strikes across the world? Such is the world we live in, whether we like it or not. As a side note, a lot of the drone murdering is done more or less transparently for economic reasons. Yes, a government powerful enough to project power on the other side of the planet to secure a good supply of cheap oil or to ensure some form of hegemony does inspire confidence in its currency. I wish it weren’t so, but here we are.