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Central control of money supply is a good thing. It helps avoid counterfeiters. It also helps make sure that we are broadly using the same means of exchange. C

Central control of money supply is a good thing. It helps avoid counterfeiters. It also helps make sure that we are broadly using the same means of exchange. Crypto moves control from the state to whoever runs the tech stack or has cheap enough power to mine crypto. Which in many places is still … checks notes … the state! Had Russia kept its reserves in Bitcoin or any other crypto, I am skeptical that the clever finance ministries of Europe and America would be unable to reach them. Moreover, the holders of these reserves haven’t sold them. They’re holding them to secure other financing for Ukraine. Which is honestly what anyone does with money they hold - they use it to invest and generate revenue. An integrated financial world makes armed conflict more costly by threatening a belligerent’s access to markets. That is a good thing and why blockades (i.e sanctions) can be effective in shortening or ending a conflict.

kragen 2y ago
your argument about 'central control of money supply' is exactly backwards. the problem with 'counterfeiters', if we look only at the facts and avoid the question-begging derogatory term, is that they can print money while providing nothing in return; that's exactly what a mint printing paper money does, as do other entities with central control of the money supply. so, far from avoiding counterfeiters, it officially licenses them. you could as well say that stand-your-ground laws help avoid murder because the killings they permit are not murder, since the law permits them most states are unwilling to allow a foreign power to print unlimited amounts of the money they use, because this would represent a major concession of sovereignty. this ensures that almost no two countries use the same means of exchange your argument about who has control has more merit. but you're overlooking structural differences; it's like saying that democracy moves control from the king to whoever is popular enough to get votes, or that freedom of speech moves control from the ministry of truth to whoever has enough money to run a printing press. the structural differences prevent cryptocurrency miners and exchanges like coinbase from simply inflating bitcoin into worthlessness the way my local currency has been inflated over the last year. the most extreme event we've seen along those lines was ethereum's controversial unwinding of the dao theft; nothing similar has ever happened in bitcoin, and probably nothing similar will happen in the future in ethereum or zcash it is definitely true that russia could not have kept its reserves in bitcoin or any other cryptocurrency, because the market capitalization of bitcoin was far too small to provide 300 billion dollars of liquidity if it had to sell off those reserves. that is probably still true and may possibly remain true forever. but you can bet your life that every head of state who saw that confiscation is formulating a strategy to ensure it won't happen to them; that will have the opposite effect on financial integration from the one you want i'm skeptical about your integration thesis, though, partly because it was very popular in 01914, and partly because of the limited repercussions from the usa's completely unprovoked invasion of iraq in 02003. (arguably the invasion of the ukraine is one of those repercussions, but that hardly seems like a major disincentive to future us presidents who find tempting countries to invade!)
- tadpole172 2y ago
  https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether https://www.bloomberg.com/news/features/2021-10-07/crypto-my... They're not counterfeiting Bitcoin, just the means to prop up it's value. The big difference is the printing of Dollars is open and auditable.
  - kragen 2y ago
    I'm skeptical that Bitcoin's value is strongly related in any way to Tether. The larger meta-Bitcoin point, though, is that although nobody can print Bitcoin at will (because it's open and auditable, unlike the printing of dollars) anybody can create their own cryptocurrency and print that. On the other hand, everybody knows that, so Bitcoin's so-called "market cap" is several times bigger than that of all the other cryptocurrencies put together.
xorcist 2y ago
Whatever assets you keep with custodians abroad while invading a neighboring country might not be safe, irrespective if that asset is paper cash, gold, bitcoins, luxury yachts or anything else. That tells us nothing about the assets themselves, and only a little bit about how international law is practiced.
- kragen 2y ago
  well, the specific reason bitcoin is better than gold for this purpose is that you don't have to keep it with custodians abroad in order to sell it easily. right now a more important reason that it's worse—unusably bad, in fact—is that its so-called market capitalization is too small, and the markets backing it too thinly traded, for the reserves of any country but a fairly small or poor one that might change, but for the time being, central banks of the world are somewhat adrift in the wake of this unprecedented action
  - xorcist 2y ago
    How is that different from gold? I believe central banks keeps that around for precisely that reason. Or, for that matter, the difference from paper cash or luxury yachts? All you need is to find a buyer. Which might not be easy for yachts, and maybe not for bitcoins for the reasons you mention, but shouldn't be too hard for gold or cash. For central banks, bitcoins should be pretty similar to other assets. (This made me curious, but I couldn't find any reference to whether any central banks are known to own it.)
    - kragen 2y ago
      generally to sell gold you either need to ship it to somebody, which poses the risk of it being stolen, lost in transit, or interdicted when crossing a border, or you need to have previously deposited it in a warehouse approved by the commodities exchange that you are trading it on, which involved shipping it to the warehouse. lme has 465 of them https://www.lme.com/Sustainability-and-Physical-Markets/Warehousing/Approved-warehouses https://www.lme.com/Sustainability-and-Physical-Markets/Ware... commodity metals like gold can change hands many times before ever leaving the warehouse, and so some fraction of the metals purportedly in those warehouses don't actually exist, having been stolen years earlier—an eventuality normally handled by insurance consequently a very large fraction of the world's non-british central bank gold reserves are actually physically located in london what's not covered by insurance is having your assets frozen by a foreign court that has jurisdiction over the warehouse 'your' metals happen to be in; historically this was not considered a plausible scenario in reliable countries, but then it happened, and now, as i understand it, nobody knows what to do. keeping your reserves in warehouses under your own jurisdiction doesn't solve the problem; it just transfers the risk to whoever you're trading with with bitcoin, no shipping or warehousing is needed, so these risks are replaced with subtler risks related to information security in this imf note from january https://www.imf.org/-/media/Files/Publications/IMF-Notes/2024/English/INSEA2024001.ashx https://www.imf.org/-/media/Files/Publications/IMF-Notes/202... the possibility of adopting cryptocurrencies as a new class of international reserve assets is discussed, though that's not really the main point of the note. in general central bankers are extremely skeptical of cryptocurrencies, especially decentralized ones. the world bank helpfully issued a communiqué on its blog last week, entitled, 'crypto-assets: unfit for central bank reserves today' https://blogs.worldbank.org/en/allaboutfinance/crypto-assets--unfit-for-central-bank-reserves-today https://blogs.worldbank.org/en/allaboutfinance/crypto-assets... which mostly echoes what i've said earlier in this thread so i would be surprised if there was any adoption of cryptocurencies as international reserve assets yet

kragen 2y ago

your argument about 'central control of money supply' is exactly backwards. the problem with 'counterfeiters', if we look only at the facts and avoid the question-begging derogatory term, is that they can print money while providing nothing in return; that's exactly what a mint printing paper money does, as do other entities with central control of the money supply. so, far from avoiding counterfeiters, it officially licenses them. you could as well say that stand-your-ground laws help avoid murder because the killings they permit are not murder, since the law permits them most states are unwilling to allow a foreign power to print unlimited amounts of the money they use, because this would represent a major concession of sovereignty. this ensures that almost no two countries use the same means of exchange your argument about who has control has more merit. but you're overlooking structural differences; it's like saying that democracy moves control from the king to whoever is popular enough to get votes, or that freedom of speech moves control from the ministry of truth to whoever has enough money to run a printing press. the structural differences prevent cryptocurrency miners and exchanges like coinbase from simply inflating bitcoin into worthlessness the way my local currency has been inflated over the last year. the most extreme event we've seen along those lines was ethereum's controversial unwinding of the dao theft; nothing similar has ever happened in bitcoin, and probably nothing similar will happen in the future in ethereum or zcash it is definitely true that russia could not have kept its reserves in bitcoin or any other cryptocurrency, because the market capitalization of bitcoin was far too small to provide 300 billion dollars of liquidity if it had to sell off those reserves. that is probably still true and may possibly remain true forever. but you can bet your life that every head of state who saw that confiscation is formulating a strategy to ensure it won't happen to them; that will have the opposite effect on financial integration from the one you want i'm skeptical about your integration thesis, though, partly because it was very popular in 01914, and partly because of the limited repercussions from the usa's completely unprovoked invasion of iraq in 02003. (arguably the invasion of the ukraine is one of those repercussions, but that hardly seems like a major disincentive to future us presidents who find tempting countries to invade!)

tadpole172 2y ago
https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether https://www.bloomberg.com/news/features/2021-10-07/crypto-my... They're not counterfeiting Bitcoin, just the means to prop up it's value. The big difference is the printing of Dollars is open and auditable.
- kragen 2y ago
  I'm skeptical that Bitcoin's value is strongly related in any way to Tether. The larger meta-Bitcoin point, though, is that although nobody can print Bitcoin at will (because it's open and auditable, unlike the printing of dollars) anybody can create their own cryptocurrency and print that. On the other hand, everybody knows that, so Bitcoin's so-called "market cap" is several times bigger than that of all the other cryptocurrencies put together.

xorcist 2y ago

Whatever assets you keep with custodians abroad while invading a neighboring country might not be safe, irrespective if that asset is paper cash, gold, bitcoins, luxury yachts or anything else. That tells us nothing about the assets themselves, and only a little bit about how international law is practiced.

kragen 2y ago
well, the specific reason bitcoin is better than gold for this purpose is that you don't have to keep it with custodians abroad in order to sell it easily. right now a more important reason that it's worse—unusably bad, in fact—is that its so-called market capitalization is too small, and the markets backing it too thinly traded, for the reserves of any country but a fairly small or poor one that might change, but for the time being, central banks of the world are somewhat adrift in the wake of this unprecedented action
- xorcist 2y ago
  How is that different from gold? I believe central banks keeps that around for precisely that reason. Or, for that matter, the difference from paper cash or luxury yachts? All you need is to find a buyer. Which might not be easy for yachts, and maybe not for bitcoins for the reasons you mention, but shouldn't be too hard for gold or cash. For central banks, bitcoins should be pretty similar to other assets. (This made me curious, but I couldn't find any reference to whether any central banks are known to own it.)
  - kragen 2y ago
    generally to sell gold you either need to ship it to somebody, which poses the risk of it being stolen, lost in transit, or interdicted when crossing a border, or you need to have previously deposited it in a warehouse approved by the commodities exchange that you are trading it on, which involved shipping it to the warehouse. lme has 465 of them https://www.lme.com/Sustainability-and-Physical-Markets/Warehousing/Approved-warehouses https://www.lme.com/Sustainability-and-Physical-Markets/Ware... commodity metals like gold can change hands many times before ever leaving the warehouse, and so some fraction of the metals purportedly in those warehouses don't actually exist, having been stolen years earlier—an eventuality normally handled by insurance consequently a very large fraction of the world's non-british central bank gold reserves are actually physically located in london what's not covered by insurance is having your assets frozen by a foreign court that has jurisdiction over the warehouse 'your' metals happen to be in; historically this was not considered a plausible scenario in reliable countries, but then it happened, and now, as i understand it, nobody knows what to do. keeping your reserves in warehouses under your own jurisdiction doesn't solve the problem; it just transfers the risk to whoever you're trading with with bitcoin, no shipping or warehousing is needed, so these risks are replaced with subtler risks related to information security in this imf note from january https://www.imf.org/-/media/Files/Publications/IMF-Notes/2024/English/INSEA2024001.ashx https://www.imf.org/-/media/Files/Publications/IMF-Notes/202... the possibility of adopting cryptocurrencies as a new class of international reserve assets is discussed, though that's not really the main point of the note. in general central bankers are extremely skeptical of cryptocurrencies, especially decentralized ones. the world bank helpfully issued a communiqué on its blog last week, entitled, 'crypto-assets: unfit for central bank reserves today' https://blogs.worldbank.org/en/allaboutfinance/crypto-assets--unfit-for-central-bank-reserves-today https://blogs.worldbank.org/en/allaboutfinance/crypto-assets... which mostly echoes what i've said earlier in this thread so i would be surprised if there was any adoption of cryptocurencies as international reserve assets yet