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Exactly, if you have complete faith and trust in conventional FIAT currencies and the systems they use to transact the use cases for crypto also seem far less c

Exactly, if you have complete faith and trust in conventional FIAT currencies and the systems they use to transact the use cases for crypto also seem far less compelling. As an example, the appeal of deflationary Bitcoin is much more salient to a citizen of Argentina than to a citizen of the USA (although recent inflation might make the appeal more obvious). Or on the even more extreme end, the citizen of Zimbabwe would much rather have decentralised solid crypto of one sort or another than their local currency.

lottin 4y ago
No one has complete faith in anything. The institutional system in liberal democracies is such that no single institution has all the power, precisely because we don't completely trust the government. The answer to dysfunctional governments is not get rid of the government. This is just dumb. We need well-functioning governments to enforce human rights, and law and order.
- ephbit 4y ago
  > The answer to dysfunctional governments is not get rid of the government. As you're probably aware, central banks are usually intended to operate somewhat indepentently from governments. (One could argue to which degree it's actually the case, though.) Which means that monetary systems are supposed to be somewhat indepentent from governments. Assuming that Bitcoin were to be adopted as some kind of reserve currency (held by central banks) and also used by states and citizens, where exactly is the "getting rid of the government" happening there? Exactly, nowhere. > We need well-functioning governments to enforce human rights, and law and order. Agree. But this doesn't rule out the possibility of indeed using Bitcoin.
  - lottin 4y ago
    Central banks are public institutions in charge of conducting monetary policy, they have a public mandate and are accountable to the legislative branch. They're therefore part of the government, even if they have some degree of independence. Bitcoin undermines governments. For example, bitcoin adoption would seriously limit the government's ability to manage the economy via monetary policy. It would also affect its ability to prevent unrestricted movement of capitals in and out of the country, and within its borders. Financial regulations would be harder to enforce, and a larger chunk of the economy would go underground. So, clearly, it would weaken governments. I don't know that anyone disputes this.
    - ephbit 4y ago
      > Bitcoin undermines governments. Bitcoin undermines certain possibilities of governments, yes. As most western governments have been successfully hijacked by big corporations so that politics are skewed heavily in favor of the corporations' interests, it has become a tough decision IMO between: - A: letting governments continue to be the executive branch of the Exxons, Apples, Googles, Facebooks, Amazons, ... and letting the latter continue with making few people richer and letting Gini coefficient converge to 1 - B: taking away governments' favorite (because in the beginning it's so nicely subtle that people won't object) instrument (more debt) to enact politics and thus forcing them to make uncomfortable choices instead The current system appears to be instable (at least to me). Instability hurts more than continuity, everything else being equal. Bitcoin could become either an effective threat to discipline governments to not let their spending get out of hand or the very foundation to build a new stable monetary system. We'll see. If it turns out to be more stable, people/institutions will in the long term converge to it. > ... and a larger chunk of the economy would go underground. Which is exactly what needs to happen (ideally not in a crash but in a soft transition) in order to get humanity's ecological foot print to a sustainable size in the short time that's left. As soon as the economy has transitioned to sustainable processes, it may of course grow again, but right now, what we need is gentle shrinkage or "degrowth".
      - lottin 4y ago
        You seem confused about a couple of points. Monetary policy is not a tool to finance government spending. Sure, it might be used for this purpose, but this is not the point of it, and in fact, debt monetisation is illegal in most countries, afaik. Second, the underground economy has nothing to do with ecological sustainability or economic degrowth. It's simply a part of the economy that is hidden from the state, for the purposes of circumventing laws and regulations.
        ephbit 4y ago
        > You seem confused about a couple of points. Well, I think I misunderstood what you meant by "underground", confused, I wouldn't say I am. > Monetary policy is not a tool to finance government spending. Ok, it is not officially intended to be, sure. > Sure, it might be used for this purpose, but this is not the point of it, ... Here's the problem. In reality, monetary policy is indeed doing exactly that. ECB is currently planning to stop buying up government bonds. Whatever technical term you use for this buying of bonds is irrelevant. Effectively this ECB policy has been supporting the growing national debt of Euro zone states. IMO the actual situation matters more than the theoretical/proclaimed purposes/goals of policies. Yes, the ECB can state "our goal is 2 % inflation". But that statement ought to be a lot less relevant to someone who wants to judge the current state of affairs and make decisions for the future than for example the actual number (inflation). > Second, the underground economy has nothing to do with ecological sustainability or economic degrowth. I read "underground" here as "shrinkage" of the economy. That was a misunderstanding on my part then. To get to your take on this. The claim that Bitcoin would make the "inofficial" sector of the economy grow bigger/worse than it is under the current monetary system is IMO only that, a claim. Sure, some cryptocurrencies provide working privacy. Bitcoin isn't really one of those. I'd be confident that - were Bitcoin to become relevant as some kind of reserve currency - there would be effective measures taken, to make anonymous transactions really difficult if not impossible.
- TapWaterBandit 4y ago
  Who said anything about getting rid of governments? I certainly am not interested in this. I don't even think it would be a good idea to get rid of fiat (or at least state-backed currencies). At the same time having the option of holding currency that is not directly accountable to one of the 200ish current sovereign states in the world is deeply appealing to me (and many others) for a number of reasons.
kareemsabri 4y ago
How is bitcoin deflationary when the price has fallen 50% or so in the past year, and appears to be highly correlated with tech growth stocks?
- olalonde 4y ago
  Bitcoin critics: A deflationary money is bad because people will not spend it. Also Bitcoin critics: Bitcoin is not deflationary.
  - usrn 4y ago
    I'm not convinced deflation is worse than inflation anyway. With deflation people hoard currency and with inflation they hoard assets.
    - ephbit 4y ago
      I'd go even further: inflation is setting the incentive for full throttle in the economy. When you're seeing one extreme weather event after the other and a climate catastrophe is imminent, is it a reasonable choice to run the world economy at full throttle, considering that this economy is still based on ~ 80 % fossil energy? It's like when your car is speeding towards a concrete wall ... and you keep your foot on the gas ... because you "want to make a really fast turn to the side to avoid the wall".
  - kareemsabri 4y ago
    This is a strawman. I would certainly see the value in a deflationary asset. Is your claim Bitcoin is deflationary, and if so how do you define deflationary?

lottin 4y ago

No one has complete faith in anything. The institutional system in liberal democracies is such that no single institution has all the power, precisely because we don't completely trust the government. The answer to dysfunctional governments is not get rid of the government. This is just dumb. We need well-functioning governments to enforce human rights, and law and order.

ephbit 4y ago
> The answer to dysfunctional governments is not get rid of the government. As you're probably aware, central banks are usually intended to operate somewhat indepentently from governments. (One could argue to which degree it's actually the case, though.) Which means that monetary systems are supposed to be somewhat indepentent from governments. Assuming that Bitcoin were to be adopted as some kind of reserve currency (held by central banks) and also used by states and citizens, where exactly is the "getting rid of the government" happening there? Exactly, nowhere. > We need well-functioning governments to enforce human rights, and law and order. Agree. But this doesn't rule out the possibility of indeed using Bitcoin.
- lottin 4y ago
  Central banks are public institutions in charge of conducting monetary policy, they have a public mandate and are accountable to the legislative branch. They're therefore part of the government, even if they have some degree of independence. Bitcoin undermines governments. For example, bitcoin adoption would seriously limit the government's ability to manage the economy via monetary policy. It would also affect its ability to prevent unrestricted movement of capitals in and out of the country, and within its borders. Financial regulations would be harder to enforce, and a larger chunk of the economy would go underground. So, clearly, it would weaken governments. I don't know that anyone disputes this.
  - ephbit 4y ago
    > Bitcoin undermines governments. Bitcoin undermines certain possibilities of governments, yes. As most western governments have been successfully hijacked by big corporations so that politics are skewed heavily in favor of the corporations' interests, it has become a tough decision IMO between: - A: letting governments continue to be the executive branch of the Exxons, Apples, Googles, Facebooks, Amazons, ... and letting the latter continue with making few people richer and letting Gini coefficient converge to 1 - B: taking away governments' favorite (because in the beginning it's so nicely subtle that people won't object) instrument (more debt) to enact politics and thus forcing them to make uncomfortable choices instead The current system appears to be instable (at least to me). Instability hurts more than continuity, everything else being equal. Bitcoin could become either an effective threat to discipline governments to not let their spending get out of hand or the very foundation to build a new stable monetary system. We'll see. If it turns out to be more stable, people/institutions will in the long term converge to it. > ... and a larger chunk of the economy would go underground. Which is exactly what needs to happen (ideally not in a crash but in a soft transition) in order to get humanity's ecological foot print to a sustainable size in the short time that's left. As soon as the economy has transitioned to sustainable processes, it may of course grow again, but right now, what we need is gentle shrinkage or "degrowth".
    - lottin 4y ago
      You seem confused about a couple of points. Monetary policy is not a tool to finance government spending. Sure, it might be used for this purpose, but this is not the point of it, and in fact, debt monetisation is illegal in most countries, afaik. Second, the underground economy has nothing to do with ecological sustainability or economic degrowth. It's simply a part of the economy that is hidden from the state, for the purposes of circumventing laws and regulations.
      - ephbit 4y ago
        > You seem confused about a couple of points. Well, I think I misunderstood what you meant by "underground", confused, I wouldn't say I am. > Monetary policy is not a tool to finance government spending. Ok, it is not officially intended to be, sure. > Sure, it might be used for this purpose, but this is not the point of it, ... Here's the problem. In reality, monetary policy is indeed doing exactly that. ECB is currently planning to stop buying up government bonds. Whatever technical term you use for this buying of bonds is irrelevant. Effectively this ECB policy has been supporting the growing national debt of Euro zone states. IMO the actual situation matters more than the theoretical/proclaimed purposes/goals of policies. Yes, the ECB can state "our goal is 2 % inflation". But that statement ought to be a lot less relevant to someone who wants to judge the current state of affairs and make decisions for the future than for example the actual number (inflation). > Second, the underground economy has nothing to do with ecological sustainability or economic degrowth. I read "underground" here as "shrinkage" of the economy. That was a misunderstanding on my part then. To get to your take on this. The claim that Bitcoin would make the "inofficial" sector of the economy grow bigger/worse than it is under the current monetary system is IMO only that, a claim. Sure, some cryptocurrencies provide working privacy. Bitcoin isn't really one of those. I'd be confident that - were Bitcoin to become relevant as some kind of reserve currency - there would be effective measures taken, to make anonymous transactions really difficult if not impossible.
TapWaterBandit 4y ago
Who said anything about getting rid of governments? I certainly am not interested in this. I don't even think it would be a good idea to get rid of fiat (or at least state-backed currencies). At the same time having the option of holding currency that is not directly accountable to one of the 200ish current sovereign states in the world is deeply appealing to me (and many others) for a number of reasons.

kareemsabri 4y ago

How is bitcoin deflationary when the price has fallen 50% or so in the past year, and appears to be highly correlated with tech growth stocks?

olalonde 4y ago
Bitcoin critics: A deflationary money is bad because people will not spend it. Also Bitcoin critics: Bitcoin is not deflationary.
- usrn 4y ago
  I'm not convinced deflation is worse than inflation anyway. With deflation people hoard currency and with inflation they hoard assets.
  - ephbit 4y ago
    I'd go even further: inflation is setting the incentive for full throttle in the economy. When you're seeing one extreme weather event after the other and a climate catastrophe is imminent, is it a reasonable choice to run the world economy at full throttle, considering that this economy is still based on ~ 80 % fossil energy? It's like when your car is speeding towards a concrete wall ... and you keep your foot on the gas ... because you "want to make a really fast turn to the side to avoid the wall".
- kareemsabri 4y ago
  This is a strawman. I would certainly see the value in a deflationary asset. Is your claim Bitcoin is deflationary, and if so how do you define deflationary?