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This post said nothing about fiat other than that people trust it. Fiat is not the L2 in this system. It is the L1 state issued currency. Bitcoin is analogous

This post said nothing about fiat other than that people trust it. Fiat is not the L2 in this system. It is the L1 state issued currency. Bitcoin is analogous to fiat in the crypto world and the exchanges/custodial wallets the L2

igorkraw 4y ago
But in the real world, bitcoin and indeed all of crypto is a/are token/s without an army behind it or any form of legal promises except those conferred to them by $L1. Unless you want to go to El Salvador or that one other nation that made it legal tender, Bitcoin is L2 (and a shitty one at that looking at stability, fees and speed)
- TreeRingCounter 4y ago
  Bitcoin doesn't need petrodollar warfare like the dollar does.
  - ben_w 4y ago
    It has as much need for it as the dollar, which is either "both need it" if you're focusing on the warfare part and using "petrodollar" as rhetorical emphasis, or "neither needs it" if you're focusing on literally the support of petroleum and using "warfare" as rhetorical emphasis. "Both" is because guns beat bits. Or, to put it another way, if the USA had used Bitcoin instead of dollars in 1960, the Soviet Union would've been just as much a threat, and similarly the forced nationalisation in Cuba after the revolution would've happened no matter who recorded what on any blockchain. "Neither" is because petroleum is just one of the major energy sources of the last century, vital for the industrial strength of the US economy and its capacity to actually make things worth buying (in addition to uselessly trinkets), but not the power source of the next century.
    - TreeRingCounter 4y ago
      No, there is an asymmetry you are missing. The "well the dollar has an army behind it" is only extremely narrowly relevant to anything, in that the US can force dollar settlement with the military. This is only necessary because people either don't trust the issuer or don't want to pay seigniorage fees to the US. Neither of these is relevant for btc.
somethoughts 4y ago
I'd throw out that if attempting to make analogies to crypto - as I understand it - the standard US bank has pretty specific rules, reporting and audits w.r.t. how high the ratio of L2 to L1 can go and to whom/how/what uses the L2 money can be the loaned out. The crypto exchanges do not have any such rules, reporting or auditing requirements and can self-report as L2 but in fact be some custom self-defined push the boundaries of acceptability Layer (a la FTX advertised as L2 but loaning the customer balances to its Alameda Research "hedge fund" partner).

igorkraw 4y ago

But in the real world, bitcoin and indeed all of crypto is a/are token/s without an army behind it or any form of legal promises except those conferred to them by $L1. Unless you want to go to El Salvador or that one other nation that made it legal tender, Bitcoin is L2 (and a shitty one at that looking at stability, fees and speed)

TreeRingCounter 4y ago
Bitcoin doesn't need petrodollar warfare like the dollar does.
- ben_w 4y ago
  It has as much need for it as the dollar, which is either "both need it" if you're focusing on the warfare part and using "petrodollar" as rhetorical emphasis, or "neither needs it" if you're focusing on literally the support of petroleum and using "warfare" as rhetorical emphasis. "Both" is because guns beat bits. Or, to put it another way, if the USA had used Bitcoin instead of dollars in 1960, the Soviet Union would've been just as much a threat, and similarly the forced nationalisation in Cuba after the revolution would've happened no matter who recorded what on any blockchain. "Neither" is because petroleum is just one of the major energy sources of the last century, vital for the industrial strength of the US economy and its capacity to actually make things worth buying (in addition to uselessly trinkets), but not the power source of the next century.
  - TreeRingCounter 4y ago
    No, there is an asymmetry you are missing. The "well the dollar has an army behind it" is only extremely narrowly relevant to anything, in that the US can force dollar settlement with the military. This is only necessary because people either don't trust the issuer or don't want to pay seigniorage fees to the US. Neither of these is relevant for btc.

somethoughts 4y ago

I'd throw out that if attempting to make analogies to crypto - as I understand it - the standard US bank has pretty specific rules, reporting and audits w.r.t. how high the ratio of L2 to L1 can go and to whom/how/what uses the L2 money can be the loaned out. The crypto exchanges do not have any such rules, reporting or auditing requirements and can self-report as L2 but in fact be some custom self-defined push the boundaries of acceptability Layer (a la FTX advertised as L2 but loaning the customer balances to its Alameda Research "hedge fund" partner).