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Not sure how you can use an asset whose price is fluctuating so wildly (and is correlated/anti-correlated to indicators and trends having little to do with your

Not sure how you can use an asset whose price is fluctuating so wildly (and is correlated/anti-correlated to indicators and trends having little to do with your local government) as an effective hedge against incompetent/corrupt government. I can certainly see its value for overcoming transaction barriers, whether they exist due to incompetence/corruption/backwardness of the financial system involved, or due to rule of law and anti-fraud legislation. When it comes to storing wealth, it seems to me that it's either speculative or illicit, and not much else. Illicit users find it attractive because its anonymity and "transaction smoothness" benefits outweigh the potential losses, much like losing 30% when laundering money is just cost of doing business.

ceeplusplus 5y ago
Gold fluctuates +/- 20% vs. the dollar in any given year which I would consider quite "wild" and it's used globally as the currency of last resort. And the current demand for gold as a commodity in e.g. semiconductors hardly justify its lofty price. So I'd say gold is just as speculative as bitcoin in that sense, but perhaps less volatile. The value of bitcoin is predicated on the belief there is a limited supply, just like gold. The difference is that in one case the mechanism for limited supply is the Earth and the other is proof of work (which is more fallible than Earth obviously). In any case I don't think BTC is meant to be _used_ as a daily transaction medium (just like gold is not), no matter how much BTC bulls would have you believe it should be. But as a long term store of wealth holding BTC is like a riskier version of holding gold, with the same fundamentals driving the price.
- lottin 5y ago
  Gold isn't a currency of last resort. It hasn't been used as currency for almost a century. It isn't a good investment, either. [1] It's "value" (you mean price?) is determined by supply and demand, like everything else. Limited supply doesn't imply anything about price. [1] https://cdn2.vox-cdn.com/assets/4718370/siegel_returns.png https://cdn2.vox-cdn.com/assets/4718370/siegel_returns.png
iskander 5y ago
>Not sure how you can use an asset whose price is fluctuating so wildly (and is correlated/anti-correlated to indicators and trends having little to do with your local government) as an effective hedge against incompetent/corrupt government. The few legit / non-speculative uses of crypto are denominated in pegged stable coins like USDC, USDT, and some lower volume options denominated in EUR and other currencies. You can deposit these into crypto banks for a ~3-8% APY. A few of these options are even FDIC insured (e.g. Gemini's GUSD). (this is unrelated to Bitcoin, which is more or less a volatile meme asset)
- Hjfrf 5y ago
  GUSD isn't FDIC insured, unless their homepage has it wrong. It's the dollar accounts in Gemini's name that are FDIC insured. So if there's an exploit where GUSD can be stolen/duplicated, or if Gemini defaults the insurance is meaningless. What it means is that if a bank where Gemini holds an account defaults, the government will pay Gemini up to $250k.
  - iskander 5y ago
    Sorry for the somewhat sloppy phrasing. GUSD is 1:1 backed by USD, the bank accounts holding that USD are FDIC insured, and this arrangement has regulatory oversight: https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-dollar#section-superior-regulatory-requirements-how-gusd-is-regulated https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-do... You're right that if you store your GUSD off Gemini and it gets stolen, then you're out of luck. I am not sure what happens if Gemini closes but my impression is that since they are a NYS trust they would have to their customers the 1:1 backing (rather than paying creditors with that money).
throwawaygh 5y ago
> Not sure how you can use an asset whose price is fluctuating so wildly (and is correlated/anti-correlated to indicators and trends having little to do with your local government) as an effective hedge against incompetent/corrupt government. If you don't plan on leaving your country, useful land is a much better hedge. Other than that, the thought is that you can always flee your country with a digital wallet. IMO crypto is a terrible "societal collapse"/"dollar collapse"/"fleeing authoritarianism" for Americans. A much better hedge is a set of skills that allow you to easily emigrate, a globally distributed personal+professional network, and a portion of your portfolio held as hard assets outside the reach of your country (eg a new life startup fund held as physical currency in another country outside their banking system -- or a personal network that has the same effect). But that's a very difficult set of things to cultivate for most people.
- Proudmuslim 5y ago
  Crypto isn't supposed to replace the hedges you mentioned- it's supposed to complement them.
  - mcguire 5y ago
    Crypto is "supposed" to do 27 different, contradictory things. What it does do is provide a speculative bubble with no backing assets.
  - throwawaygh 5y ago
    I don't need to complement them, and I don't sink hard earned money into hedges I don't need. You enjoy your tulips, I'll enjoy my hilltops an friends.
    - rdtwo 5y ago
      I don’t think you understand how hard it is to protect your savings when all you have access to is 3rd world banks. I’d rather have 10k in eth then say Russian roubles or whatever shit local currency
fullstop 5y ago
> Not sure how you can use an asset whose price is fluctuating so wildly (and is correlated/anti-correlated to indicators and trends having little to do with your local government) as an effective hedge against incompetent/corrupt government. The informal market rate for the Lebanese Pound is even more absurd, though: https://lirarate.org/#pills-graph-market https://lirarate.org/#pills-graph-market

ceeplusplus 5y ago

Gold fluctuates +/- 20% vs. the dollar in any given year which I would consider quite "wild" and it's used globally as the currency of last resort. And the current demand for gold as a commodity in e.g. semiconductors hardly justify its lofty price. So I'd say gold is just as speculative as bitcoin in that sense, but perhaps less volatile. The value of bitcoin is predicated on the belief there is a limited supply, just like gold. The difference is that in one case the mechanism for limited supply is the Earth and the other is proof of work (which is more fallible than Earth obviously). In any case I don't think BTC is meant to be _used_ as a daily transaction medium (just like gold is not), no matter how much BTC bulls would have you believe it should be. But as a long term store of wealth holding BTC is like a riskier version of holding gold, with the same fundamentals driving the price.

lottin 5y ago
Gold isn't a currency of last resort. It hasn't been used as currency for almost a century. It isn't a good investment, either. [1] It's "value" (you mean price?) is determined by supply and demand, like everything else. Limited supply doesn't imply anything about price. [1] https://cdn2.vox-cdn.com/assets/4718370/siegel_returns.png https://cdn2.vox-cdn.com/assets/4718370/siegel_returns.png

iskander 5y ago

>Not sure how you can use an asset whose price is fluctuating so wildly (and is correlated/anti-correlated to indicators and trends having little to do with your local government) as an effective hedge against incompetent/corrupt government. The few legit / non-speculative uses of crypto are denominated in pegged stable coins like USDC, USDT, and some lower volume options denominated in EUR and other currencies. You can deposit these into crypto banks for a ~3-8% APY. A few of these options are even FDIC insured (e.g. Gemini's GUSD). (this is unrelated to Bitcoin, which is more or less a volatile meme asset)

Hjfrf 5y ago
GUSD isn't FDIC insured, unless their homepage has it wrong. It's the dollar accounts in Gemini's name that are FDIC insured. So if there's an exploit where GUSD can be stolen/duplicated, or if Gemini defaults the insurance is meaningless. What it means is that if a bank where Gemini holds an account defaults, the government will pay Gemini up to $250k.
- iskander 5y ago
  Sorry for the somewhat sloppy phrasing. GUSD is 1:1 backed by USD, the bank accounts holding that USD are FDIC insured, and this arrangement has regulatory oversight: https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-dollar#section-superior-regulatory-requirements-how-gusd-is-regulated https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-do... You're right that if you store your GUSD off Gemini and it gets stolen, then you're out of luck. I am not sure what happens if Gemini closes but my impression is that since they are a NYS trust they would have to their customers the 1:1 backing (rather than paying creditors with that money).

throwawaygh 5y ago

> Not sure how you can use an asset whose price is fluctuating so wildly (and is correlated/anti-correlated to indicators and trends having little to do with your local government) as an effective hedge against incompetent/corrupt government. If you don't plan on leaving your country, useful land is a much better hedge. Other than that, the thought is that you can always flee your country with a digital wallet. IMO crypto is a terrible "societal collapse"/"dollar collapse"/"fleeing authoritarianism" for Americans. A much better hedge is a set of skills that allow you to easily emigrate, a globally distributed personal+professional network, and a portion of your portfolio held as hard assets outside the reach of your country (eg a new life startup fund held as physical currency in another country outside their banking system -- or a personal network that has the same effect). But that's a very difficult set of things to cultivate for most people.

Proudmuslim 5y ago
Crypto isn't supposed to replace the hedges you mentioned- it's supposed to complement them.
- mcguire 5y ago
  Crypto is "supposed" to do 27 different, contradictory things. What it does do is provide a speculative bubble with no backing assets.
- throwawaygh 5y ago
  I don't need to complement them, and I don't sink hard earned money into hedges I don't need. You enjoy your tulips, I'll enjoy my hilltops an friends.
  - rdtwo 5y ago
    I don’t think you understand how hard it is to protect your savings when all you have access to is 3rd world banks. I’d rather have 10k in eth then say Russian roubles or whatever shit local currency

fullstop 5y ago

> Not sure how you can use an asset whose price is fluctuating so wildly (and is correlated/anti-correlated to indicators and trends having little to do with your local government) as an effective hedge against incompetent/corrupt government. The informal market rate for the Lebanese Pound is even more absurd, though: https://lirarate.org/#pills-graph-market https://lirarate.org/#pills-graph-market