2 ms·

We shouldn’t conflate money with payment systems. Like 90% of my daily expenses are through a credit card. The unit of account for these transactions is my loca

We shouldn’t conflate money with payment systems. Like 90% of my daily expenses are through a credit card. The unit of account for these transactions is my local currency (happens to be JPY) but yen is not being exchanged. What happens is that I give an IOU to the bank and the bank gives an IOU to the merchant. These IOUs are settled on a recurring basis, at which point actual money might be involved. In the strict sense only physical banknotes, coins, and reserves at the Fed are money. Everything else involves a counterparty and some level of trusted intermediation. If there is ever a significant amount of economic activity that is priced and settled in Bitcoin, we can be sure that most of it will be through trusted intermediaries just like every other currency.

mcv 4y ago
So as a new type of money is introduced, at first, the money itself is the payment system (you take coins and banknotes from your pocket and give them to the marchant), and as economic activity and technology grow, the payment system gets taken over by bank transactions and stuff like that. And in a way we currently see that already for bitcoin: lots of people keep their money not in their own wallet, but in that of an exchange, so it can be more easily traded. The downside of that is that you don't control your money anymore, and there's no legal framework to protect your ownership of that money, so people have been losing a lot of money to fraudulent and incompetent exchanges. But that change also kinda defeats the original purpose of bitcoin.
- PretzelPirate 4y ago
  > But that change also kinda defeats the original purpose of bitcoin. The original purpose of Bitcoin was to take power away from governments who could artificially devalue your money, not to protect you from fraud or ignorance. Along with that also came the choice - how much do you want to trust someone else with your funds? You can go full "zero trust" and build your own Bitcoin client from scratch, rely on your node to see what transactions are included in chain, and self-custody your own funds. You can have some trust and only self-custody your funds/use a multi-sign wallet with your family so you lower your personal responsibility to not lose funds, or you can allow someone else to hold funds for you if you fully trust them. You can also make any choice in between. Having that freedom to choose the level of trust you want to have is one of the major values crypto offers, though most people will go with the "full trust" model since it's the easiest and they don't care about decentralization enough to worry about self-custody.

mcv 4y ago

So as a new type of money is introduced, at first, the money itself is the payment system (you take coins and banknotes from your pocket and give them to the marchant), and as economic activity and technology grow, the payment system gets taken over by bank transactions and stuff like that. And in a way we currently see that already for bitcoin: lots of people keep their money not in their own wallet, but in that of an exchange, so it can be more easily traded. The downside of that is that you don't control your money anymore, and there's no legal framework to protect your ownership of that money, so people have been losing a lot of money to fraudulent and incompetent exchanges. But that change also kinda defeats the original purpose of bitcoin.

PretzelPirate 4y ago
> But that change also kinda defeats the original purpose of bitcoin. The original purpose of Bitcoin was to take power away from governments who could artificially devalue your money, not to protect you from fraud or ignorance. Along with that also came the choice - how much do you want to trust someone else with your funds? You can go full "zero trust" and build your own Bitcoin client from scratch, rely on your node to see what transactions are included in chain, and self-custody your own funds. You can have some trust and only self-custody your funds/use a multi-sign wallet with your family so you lower your personal responsibility to not lose funds, or you can allow someone else to hold funds for you if you fully trust them. You can also make any choice in between. Having that freedom to choose the level of trust you want to have is one of the major values crypto offers, though most people will go with the "full trust" model since it's the easiest and they don't care about decentralization enough to worry about self-custody.