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And they wonder why we want to replace the traditional banking system. Here’s a hint: it’s not got anything to do with either “metaverse” bs nor with silly “NF

And they wonder why we want to replace the traditional banking system. Here’s a hint: it’s not got anything to do with either “metaverse” bs nor with silly “NFT” JPEGs. Read the original Bitcoin whitepaper. https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf

justinzollars 4y ago
The competing system is BRICS + Saudi Arabia, Egypt, Iran, Turkey and Pakistan. They will probably transact in gold - certainly not bitcoin. In the West, if there is a collapse of our system, they will make bitcoin illegal. I just don't see it as anything other than a short term speculation.
- georgeplusplus 4y ago
  The problems with the gold standard is we had one and everyone lied about how much gold they had, Causing the lost decade in the 70s/80s. Maybe BRICS will propose a solution that uses Blockchain to verify gold ledgers.
  - adhesive_wombat 4y ago
    The ledger is verified but how do you know the gold is really there?
    - georgeplusplus 4y ago
      You ask for the counterparty to send it. Historically, the dollar was the ledger and redeemable in gold. Which the USA printed a lot more than it said it did. A ledger would stop this kind of abuse.
      - notahacker 4y ago
        The ledger wouldn't stop the abuse at all. USDT is a ledger. The ledger didn't change at all when Binance's public position moved from "every USDT is backed with an actual dollar" to "well we have a reserve of dollars and some... er ... other assets", and nothing about the ledger tells you if Binance ever had the dollars in the first place.
      - adhesive_wombat 4y ago
        That would only prove that there's enough gold in a pile to send you some. It doesn't prove the entire ledger is accurate. If you're dealing with physical goods, there's always an analogue hole unless there's a (usually centralised) authority standing by to penalise attempts to subvert the system. One can conceive of "for-now-unforgeable" NFT-isation of physical items, perhaps based on random physical phenomena like metal grain patterns, with the fingerprints stored in the blockchain. But this would be expensive and is a disadvantage compared to the "gold in a pile at least as big as we told you" system. And it's still open to kinds of abuse: e.g. you can secretly melt some coins down and recast them into new ones, as long as you can avoid anyone asking to see the "burned" ones, and you can also file fake fingerprints for coins that don't exist, that no one really owns, in the ledger so they won't need to be proven, but they inflate your ledger's value.
  - Yoric 4y ago
    How could blockchain verify anything physical?
    - HashBasher 4y ago
      It can't.
    - georgeplusplus 4y ago
      I'm not talking about physical verification but the idea that having a public ledger of each countries gold would add transparency. Whenever gold is moved it would be reflected on the ledger for all other central banks to see. The problem with the gold standard era was countries, particularly the USA, claiming it had a lot more gold than it did and you just had to take them at their word. It wasn't until Charles de Gaulle called them out and demanded the physical transfer.
      - Yoric 4y ago
        Not sure what a ledger would change to the problem.
      - CapstanRoller 4y ago
        Ledgers do not necessarily add transparency, because it's easy to document all sorts of fictitious transactions. What you really want are audits.
- junofan 4y ago
  In the West, if there is a risk of collapse, it will be illegal to take your money out.
  - csomar 4y ago
    Can the exit tax, then, be considered as a partial collapse (or a hint of it)?
- csomar 4y ago
  They'll transact with Bitcoin given two conditions: 1. They know that resistance is futile. You can't stop it (or at least one party acting alone can't stop it) and 2. Crypto is liquid enough across many markets. People (and government) will use the path of least resistance. Crypto is pretty liquid in many parts of the world now. You can P2P from crypto to your bank account and $10K is pretty feasible. However, $1Bn is not (outside the US and maybe EU). Once the liquidity is high enough, point 2 becomes possible. Point 1 always was.
tuyguntn 4y ago
issues are coming up mostly because of interest based economy and multitude of instruments built on top of it. IMHO, even if whole banking system will be replaced with bitcoin, interest based economy will be built on top of it and same instruments will be built with similar level of issues
- pfannkuchen 4y ago
  The difference is that a central authority doesn’t control the size of the bitcoin supply. It wouldn’t be a utopia, it would only fix a certain class of problems we have today.
  - r_hoods_ghost 4y ago
    A central authority doesn't control the size of the money supply in our current economy either, as the vast majority of money is created by private banks and other institutions issuing loans.
    - lowkey 4y ago
      Those “private banks” are at least in theory heavily regulated by the central bank. The central bank controls interest rates and thereby the cost of money. They control the amount of base money in the system and they control the reserve ratio of “private banks” thereby controlling the amount of leverage banks can apply to deposits. A central bank most certainly controls every aspect of the money supply.
      - lowkey 4y ago
        Notably, the Fed set the reserve ratio for banks to zero percent in 2020 which absolutely contributed to this latest banking crisis. I am a bit surprised this hasn’t been mentioned as a contributing risk in the media, well not that surprised. [0] [0] https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm
  - ClumsyPilot 4y ago
qwytw 4y ago
Using an ultra deflationary token like bitcoin as a global currency would literally be the most stupid thing that ever happened in human history. Basically people who held significant amounts of bitcoin from early on would become billionaires (if not trillionaires...) by having provided zero value to the economy. As awful and unfair what we have currently is it's still several magnitudes superior in almost any conceivable way than a global financial system based on bitcoin. I can imagine some sort of a crypto currency possible becoming dominant in the future. But Bitcoin itself is pretty much the worst option I can imagine.
- DethNinja 4y ago
  How do you know they provide negative value to economy? Perhaps they would invest their bitcoins far better than the current status quo and create a star-trek style post scarcity economy.
  - anothernewdude 4y ago
    Perhaps I'll start shitting out gold and we can go back to the gold standard.
  - qwytw 4y ago
    > How do you know they provide negative value to economy? Very basic understanding of modern economics and monetary systems would be more than enough to figure that out. > post scarcity economy In fact it would maximize scarcity (imagine the Fed hiking interest rates to + 20% while inflation becomes negative, say - 20%. What do you think would happen?)
- yevpats 4y ago
  I don't have a side in the whole crypto vs fiat war but I do wonder why HN is so anti-crypto (maybe it's just classic position speak). Re the "people who held significant amounts of bitcoin from early on would become billionaires by having provided zero value" - isn't that true to people who held Google stock very early on? what was their value? Also, I would say inflationary token vs deflationary token is not clear what is better because it is actually highly depends on the time in history. lot's of things changed in the last 100 years and we might be entering a world where there is no need for inflationary token - For example let's say the earth is over-populated and there is going to be a decline in birth and total population - this on it's can mean we don't necessarily need an inflationary token as we don't need to build more infrastructure, buy more things and so on....
rossdavidh 4y ago
I don't think anyone (that I ever talked to about it) wondered why one would be dissatisfied with the traditional banking system. The skepticism about Bitcoin is that it might be even worse. Events of the past year in the cryptocurrency space have not been all that reassuring.

justinzollars 4y ago

The competing system is BRICS + Saudi Arabia, Egypt, Iran, Turkey and Pakistan. They will probably transact in gold - certainly not bitcoin. In the West, if there is a collapse of our system, they will make bitcoin illegal. I just don't see it as anything other than a short term speculation.

georgeplusplus 4y ago
The problems with the gold standard is we had one and everyone lied about how much gold they had, Causing the lost decade in the 70s/80s. Maybe BRICS will propose a solution that uses Blockchain to verify gold ledgers.
- adhesive_wombat 4y ago
  The ledger is verified but how do you know the gold is really there?
  - georgeplusplus 4y ago
    You ask for the counterparty to send it. Historically, the dollar was the ledger and redeemable in gold. Which the USA printed a lot more than it said it did. A ledger would stop this kind of abuse.
    - notahacker 4y ago
      The ledger wouldn't stop the abuse at all. USDT is a ledger. The ledger didn't change at all when Binance's public position moved from "every USDT is backed with an actual dollar" to "well we have a reserve of dollars and some... er ... other assets", and nothing about the ledger tells you if Binance ever had the dollars in the first place.
    - adhesive_wombat 4y ago
      That would only prove that there's enough gold in a pile to send you some. It doesn't prove the entire ledger is accurate. If you're dealing with physical goods, there's always an analogue hole unless there's a (usually centralised) authority standing by to penalise attempts to subvert the system. One can conceive of "for-now-unforgeable" NFT-isation of physical items, perhaps based on random physical phenomena like metal grain patterns, with the fingerprints stored in the blockchain. But this would be expensive and is a disadvantage compared to the "gold in a pile at least as big as we told you" system. And it's still open to kinds of abuse: e.g. you can secretly melt some coins down and recast them into new ones, as long as you can avoid anyone asking to see the "burned" ones, and you can also file fake fingerprints for coins that don't exist, that no one really owns, in the ledger so they won't need to be proven, but they inflate your ledger's value.
- Yoric 4y ago
  How could blockchain verify anything physical?
  - HashBasher 4y ago
    It can't.
  - georgeplusplus 4y ago
    I'm not talking about physical verification but the idea that having a public ledger of each countries gold would add transparency. Whenever gold is moved it would be reflected on the ledger for all other central banks to see. The problem with the gold standard era was countries, particularly the USA, claiming it had a lot more gold than it did and you just had to take them at their word. It wasn't until Charles de Gaulle called them out and demanded the physical transfer.
    - Yoric 4y ago
      Not sure what a ledger would change to the problem.
    - CapstanRoller 4y ago
      Ledgers do not necessarily add transparency, because it's easy to document all sorts of fictitious transactions. What you really want are audits.
junofan 4y ago
In the West, if there is a risk of collapse, it will be illegal to take your money out.
- csomar 4y ago
  Can the exit tax, then, be considered as a partial collapse (or a hint of it)?
csomar 4y ago
They'll transact with Bitcoin given two conditions: 1. They know that resistance is futile. You can't stop it (or at least one party acting alone can't stop it) and 2. Crypto is liquid enough across many markets. People (and government) will use the path of least resistance. Crypto is pretty liquid in many parts of the world now. You can P2P from crypto to your bank account and $10K is pretty feasible. However, $1Bn is not (outside the US and maybe EU). Once the liquidity is high enough, point 2 becomes possible. Point 1 always was.

tuyguntn 4y ago

issues are coming up mostly because of interest based economy and multitude of instruments built on top of it. IMHO, even if whole banking system will be replaced with bitcoin, interest based economy will be built on top of it and same instruments will be built with similar level of issues

pfannkuchen 4y ago
The difference is that a central authority doesn’t control the size of the bitcoin supply. It wouldn’t be a utopia, it would only fix a certain class of problems we have today.
- r_hoods_ghost 4y ago
  A central authority doesn't control the size of the money supply in our current economy either, as the vast majority of money is created by private banks and other institutions issuing loans.
  - lowkey 4y ago
    Those “private banks” are at least in theory heavily regulated by the central bank. The central bank controls interest rates and thereby the cost of money. They control the amount of base money in the system and they control the reserve ratio of “private banks” thereby controlling the amount of leverage banks can apply to deposits. A central bank most certainly controls every aspect of the money supply.
    - lowkey 4y ago
      Notably, the Fed set the reserve ratio for banks to zero percent in 2020 which absolutely contributed to this latest banking crisis. I am a bit surprised this hasn’t been mentioned as a contributing risk in the media, well not that surprised. [0] [0] https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm
- ClumsyPilot 4y ago

qwytw 4y ago

Using an ultra deflationary token like bitcoin as a global currency would literally be the most stupid thing that ever happened in human history. Basically people who held significant amounts of bitcoin from early on would become billionaires (if not trillionaires...) by having provided zero value to the economy. As awful and unfair what we have currently is it's still several magnitudes superior in almost any conceivable way than a global financial system based on bitcoin. I can imagine some sort of a crypto currency possible becoming dominant in the future. But Bitcoin itself is pretty much the worst option I can imagine.

DethNinja 4y ago
How do you know they provide negative value to economy? Perhaps they would invest their bitcoins far better than the current status quo and create a star-trek style post scarcity economy.
- anothernewdude 4y ago
  Perhaps I'll start shitting out gold and we can go back to the gold standard.
- qwytw 4y ago
  > How do you know they provide negative value to economy? Very basic understanding of modern economics and monetary systems would be more than enough to figure that out. > post scarcity economy In fact it would maximize scarcity (imagine the Fed hiking interest rates to + 20% while inflation becomes negative, say - 20%. What do you think would happen?)
yevpats 4y ago
I don't have a side in the whole crypto vs fiat war but I do wonder why HN is so anti-crypto (maybe it's just classic position speak). Re the "people who held significant amounts of bitcoin from early on would become billionaires by having provided zero value" - isn't that true to people who held Google stock very early on? what was their value? Also, I would say inflationary token vs deflationary token is not clear what is better because it is actually highly depends on the time in history. lot's of things changed in the last 100 years and we might be entering a world where there is no need for inflationary token - For example let's say the earth is over-populated and there is going to be a decline in birth and total population - this on it's can mean we don't necessarily need an inflationary token as we don't need to build more infrastructure, buy more things and so on....

rossdavidh 4y ago

I don't think anyone (that I ever talked to about it) wondered why one would be dissatisfied with the traditional banking system. The skepticism about Bitcoin is that it might be even worse. Events of the past year in the cryptocurrency space have not been all that reassuring.