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> Centralized institutions are unfair and can be in-equal, but they are actually really great. When the financial becomes unstable, these institutions intervene

> Centralized institutions are unfair and can be in-equal, but they are actually really great. When the financial becomes unstable, these institutions intervene and settle things down (see the Great Depression). Interestingly, there is a well respected school of thought in economics that pins the blame for the boom/bust cycle on artificially manipulating interest rates via that exact centralization. > When someone steals from my credit card, I just call up my bank and they fix it. I'm not really sure how that is an example of "centralization." A private lender with whom you've entered into a loan agreement does not control the supply of the currency. They could just as easily be lending you gold or bread. I'm no cyrpto fanboy ... couldn't really care less about it ... but in theory there is no reason that a bank couldn't lend you Bitcoins or something. If there is a problem with the currency that's going to bite you regardless of what the currency is. I think the strongest case for crypto was using it as a hedge against inflation. Inflation being an increase in the supply of fiat currency. Something that, whether you subscribe to the "Mises school" of economics or not, is irrefutably caused by the central bank creating new currency out of thin air, thus diluting the purchasing power of the existing money in circulation. I propose that that is "irrefutable" because, in order to debunk it, you would have to demonstrate that the law of supply and demand is false and/or that currency is not a commodity subject to the same "rules" as every other.

thrashh 4y ago
I don’t disagree that the boom/bust cycle could be created by centralization, but I also don’t care I suppose. I mean, there’s no perfect solution out there so a boom/bust is a reasonably mild price. A large reason why crypto, at least in the current implementations, can provide decentralization is by removing discretion from any authority and making transactions permanent. That’s in contrast to our current money system, because it’s merely numbers that ultimately can be manipulated by central authorities and accessible by law enforcement, that ultimately means that transactions are not truly permanent and that allows us to repair mistakes after the fact, a feature not really afforded by crypto. It’s a very helpful feature. I also consider a consistent amount of inflation an important feature of any successful economy. Without inflation, I would be incentivized to hold my money whenever I expect deflation, which is terrible because it’s basically me hoarding value from society. Runaway inflation is absolutely disastrous and I don’t see how crypto could have been considered a hedge against it if its entire value is backed purely by speculative demand. Contrast that to the USD or other currency where that is backed by the full faith and credit of a government. Obviously that is meaningless of we’re talking about, say, Argentina but the US has successfully been the same, largely dependable, and boring government for 245 years and through earning a reputation with time that the USD can be treated as a reserve currency.
- Nevermark 4y ago
  I don't think crypto, as most chains implement it, is at all vulnerable to runaway inflation. A functional crypto can go downhill for a lot of reasons. Technical failures. Association with scams. But I am not sure how a tightly controlled supply over time, or asymptotically fixed supply, coin can have runaway inflation - if everyone starts demanding more of the coin for goods and services, there just isn't more of the coin for that.

thrashh 4y ago

I don’t disagree that the boom/bust cycle could be created by centralization, but I also don’t care I suppose. I mean, there’s no perfect solution out there so a boom/bust is a reasonably mild price. A large reason why crypto, at least in the current implementations, can provide decentralization is by removing discretion from any authority and making transactions permanent. That’s in contrast to our current money system, because it’s merely numbers that ultimately can be manipulated by central authorities and accessible by law enforcement, that ultimately means that transactions are not truly permanent and that allows us to repair mistakes after the fact, a feature not really afforded by crypto. It’s a very helpful feature. I also consider a consistent amount of inflation an important feature of any successful economy. Without inflation, I would be incentivized to hold my money whenever I expect deflation, which is terrible because it’s basically me hoarding value from society. Runaway inflation is absolutely disastrous and I don’t see how crypto could have been considered a hedge against it if its entire value is backed purely by speculative demand. Contrast that to the USD or other currency where that is backed by the full faith and credit of a government. Obviously that is meaningless of we’re talking about, say, Argentina but the US has successfully been the same, largely dependable, and boring government for 245 years and through earning a reputation with time that the USD can be treated as a reserve currency.

Nevermark 4y ago
I don't think crypto, as most chains implement it, is at all vulnerable to runaway inflation. A functional crypto can go downhill for a lot of reasons. Technical failures. Association with scams. But I am not sure how a tightly controlled supply over time, or asymptotically fixed supply, coin can have runaway inflation - if everyone starts demanding more of the coin for goods and services, there just isn't more of the coin for that.