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Bitcoin - Part 2

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xjx388 said:
I think one point that many in the “I can do the same thing with my bank account” camp are missing is the idea that crypto is an alternative to the banking system and fiat currency in general. I do agree that people in developed nations with stable currencies don’t get much use out of crypto right now (except for shady transactions, maybe) but the real potential is for people in places with unstable banks and currencies.
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Maybe. Right now it doesn't seem very stable, either.
 
xjx388 said:
I think one point that many in the “I can do the same thing with my bank account” camp are missing is the idea that crypto is an alternative to the banking system and fiat currency in general. I do agree that people in developed nations with stable currencies don’t get much use out of crypto right now (except for shady transactions, maybe) but the real potential is for people in places with unstable banks and currencies.
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But would a crypto backed by responsible banks and governments be of similar use to them as one that is totally unregulated? Like how cash dollars become the most useful currency in many places with the same situation? Being backed by the Full Faith and Credit of the US certainly is useful even outside of the US.

And calling currency fiat currency compared to crypto currency is kind of funny, at least fiat currency is backed by something, namely the issuing government. Crypto you don't even have that.
 
Can someone humour me for a moment? I get the investment angle of bitcoin, like stocks or gold. But considering the extreme-volatility is there anyone serious about using it for actual monetary-transactions? I'd like to know the cup of coffee I bought this morning was worth 2$ and will remain so until inflation creeps up. I don't want to see a 25$ cup tomorrow, and the vendor doesn't want to see a .$25 cup.
 
Mycroft said:
If you didn't know, the supply of bitcoin is limited by its need to be "mined". It's produced by programs running on servers and it requires a lot of time and energy.

For a while many people were producing bitcoin in Venezuela, as they could turn a profit because electricity is subsidized by the government. I'm not sure how that works now.
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Except that Bitcoin has been forked three times already, doubling the number of coins each time. I could do it again tomorrow. The only differentiator for the original Bitcoin is brand recognition.
 
Mycroft said:
If you didn't know, the supply of bitcoin is limited by its need to be "mined". It's produced by programs running on servers and it requires a lot of time and energy.

For a while many people were producing bitcoin in Venezuela, as they could turn a profit because electricity is subsidized by the government. I'm not sure how that works now.
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They mine in desolate crap-towns near hydroelectric dams and are pushing into the arctic for natural-cooling.
 
ponderingturtle said:
But would a crypto backed by responsible banks and governments be of similar use to them as one that is totally unregulated? Like how cash dollars become the most useful currency in many places with the same situation? Being backed by the Full Faith and Credit of the US certainly is useful even outside of the US.

And calling currency fiat currency compared to crypto currency is kind of funny, at least fiat currency is backed by something, namely the issuing government. Crypto you don't even have that.
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(Highlighting mine)


Yes this. Zimbabwe has not had its own currency since around 2009 and has used USD Rand, GBP, AUD and in fact any stable currency since then. Here is the reason why (I have one of these in my wallet as a talking piece)



Zimbabwe100Trillionbanknote-1.jpg



But would countries like this, even a combination of them, be sufficient to support a world wide cryptocurrency network for day to day transactions which presently costs $1,000's per coin to mine (many cups of coffee and hamburgers worth of money)? If you reduce this cost to next to nothing, and make the crypto completely stable, where is the incentive for private sector miners to keep mining, unless the crypto keeps increasing in value through speculation, and/or they get new money for nothing which in itself may be inflationary?



Norm
 
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fromdownunder said:
(Highlighting mine)


Yes this. Zimbabwe has not had its own currency since around 2009 and has used USD Rand, GBP, AUD and in fact any stable currency since then. Here is the reason why (I have one of these in my wallet as a talking piece)



[qimg]http://www.stampboards.com/images/ozstamps/EIGHT/Zimbabwe100Trillionbanknote-1.jpg[/qimg]


But would countries like this, even a combination of them, be sufficient to support a world wide cryptocurrency network for day to day transactions which presently costs $1,000's per coin to mine (many cups of coffee and hamburgers worth of money)? If you reduce this cost to next to nothing, and make the crypto completely stable, where is the incentive for private sector miners to keep mining, unless the crypto keeps increasing in value through speculation, and/or they get new money for nothing which in itself may be inflationary?



Norm
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I am not sure all cryptos are as energy intensive as bitcoin, and the high transaction fees will limit its use. Others might do better but again they would likely do best if backed by some organization who was focused on keeping its value stabil and was trusted.
 
Mycroft said:
I'm certainly against the Bitcoin cheerleaders who want to present it as something magical that will reward every investor so long as they have enough faith, but I'm not against Bitcoin itself. It could quite possibly stabalize into something people find useful as a currency.

Can you explain the basis of your misgivings further?
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The fact that we even bother to talk about the price of bitcoin tells you that it’s irrelevant. For real currency you never discuss its price outside the context of international trade and exchange rates. Rather, you discuss is the price of goods/services. IOW we would not be discussing a “sharp decline in bitcoin price” we’d be talking about hyper-inflation. When if it ever goes up in value again we would not be talking about hyper-deflation. Is bouts of hyper-inflation and hyper-deflation really what you want from a currency?




The most basic problem with bitcoin is that it set out to “solve” all the wrong problems. Modern currencies work because they can rapidly adapt to the demand for currency, whatever that demand may be. This creates stability and predictability for value of the currency which is a much better environment for creating long term prosperity.
 
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Mycroft said:
The "evidence" you keep citing doesn't support a conclusion that you will always make money on bitcoin. No matter how much you want it to be true, past performance does not predict future performance.
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Investment vs speculation
You can make money or lose money on either, but this doesn’t make them identical. A casino can make money or lose money of any individual bet, but because the bets are weighed in their favor they make money overall. This is more or less how investments work, they trend above inflation.

This differs from gold, in that over the long term gold prices tracks with inflation. For you to have a return greater than they rate of inflation someone else would have to make less. Business, and therefor the broader stock market, however trend above inflation. This means they can give a typical return above the rate of inflation and you can have a personal return above the rate of inflation even if no one else losses.

At best, bitcoin would be expected to track with inflation, but given it’s high overhead if it were adopted for the really long term it would probably track below inflation.
 
xjx388 said:
I think one point that many in the “I can do the same thing with my bank account” camp are missing is the idea that crypto is an alternative to the banking system and fiat currency in general. I do agree that people in developed nations with stable currencies don’t get much use out of crypto right now (except for shady transactions, maybe) but the real potential is for people in places with unstable banks and currencies.
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Fundamental flawed reasoning. Modern “fiat” currencies are MUCH more stable than crypto-currencies. While mismanagement can create volatility problem for a regular currency, a currency like bitcoin will in effect ALWAYS be mismanaged (because it was designed so that no management is possible) and volatile.
 
lomiller said:
Fundamental flawed reasoning. Modern “fiat” currencies are MUCH more stable than crypto-currencies.
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Tell that to Zimbabwe, Mexico, Venezuela, Somalia, Iraq....
While mismanagement can create volatility problem for a regular currency, a currency like bitcoin will in effect ALWAYS be mismanaged (because it was designed so that no management is possible) and volatile.
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But it may not always be so. PAX is extremely stable, being backed by the NY Department of Financial Services. If you limit your vision to Bitcoin and its copycats, you are severely limiting your vision. These kinds blockchain currencies are tethered to and backed by fiat money but have all the advantages of crypto.

There are technologies that are being developed that are designed to be more stable than the current generation.

And you are forgetting one big group of people who can and are benefitting: the unbanked.




Sent from my iPhone using Tapatalk
 
xjx388 said:
And you are forgetting one big group of people who can and are benefitting: the unbanked.
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That's just what impoverished people need, a opaque, complicated financial system that leaves them totally responsible for not getting ripped off by scammers and hackers. Caveat emptor, baby!

Cryptocurrencies has been a bonanza for scammers. All the old scams that have been rendered nearly obsolete by government regulations can be dusted off and put to work in the lawless world of crypto. My favorite was the bitconnect ponzi scheme, but pump and dump ICO's seem more common.
 
Belz... said:
Did he say that they were always perfectly stable, or just more stable than cryptos?
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It’s certainly more stable than the Zimbabwean currency. Look, I understand the point but like I said, crypto may not always be so unstable. I think it’s shortsighted to make a judgement based on today’s reality when tomorrow may bring a stable coin. That’s kinda what the whole Stablecoin thing is about. I’m optimistic that something will come along at some point and the first to benefit will be those unbanked people and those people in countries with unstable
currencies. We people from developed countries may not care so much right away.


Sent from my iPhone using Tapatalk
 
xjx388 said:
Tell that to Zimbabwe, Mexico, Venezuela, Somalia, Iraq....
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Every country that used bitcoin as it’s currency would face similar instability but with modern fiat currencies this only happens with gross mismanagement.
xjx388 said:
But it may not always be so. PAX is extremely stable, being backed by the NY Department of Financial Services. If you limit your vision to Bitcoin and its copycats, you are severely limiting your vision. These kinds blockchain currencies are tethered to and backed by fiat money but have all the advantages of crypto.
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What makes a currency stable vs unstable is matching the money supply to fit economic needs, and this requires the money supply have some level of active management. If a currency can be managed it can be mismanaged meaning, it’s still susceptible to the problems of contrives like Venezuela.

xjx388 said:
There are technologies that are being developed that are designed to be more stable than the current generation.
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It’s not a technology problem, so there will not be a technology solution nor is one really needed. The common link in the countries that have money supply issues is that monetary policy was subjected to meddling by politicians for short term political gain and this isn’t something that can be fixed with technology.
 
xjx388 said:
It’s certainly more stable than the Zimbabwean currency.
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Inflation and even hyper-inflation can be factored into economic transactions. Rapid unpredictable increases/decrease cannot be factored in, so as bad as hyper-inflation is, it’s still better than what we see with crypto-currencies.

xjx388 said:
That’s kinda what the whole Stablecoin thing is about.
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Pegging a crypto-currency to your regular fiat currency doesn’t solve any of the issues you are complaining about, if you get hyperinflation because the fiat currency is mismanaged the crypto-currency will suffer from it too. If you peg it to the price of a commodity, then you get all the same problems you would with commodity based currencies (which modern economies moved away from for very good reasons).

xjx388 said:
I’m optimistic that something will come along at some point and the first to benefit will be those unbanked people and those people in countries with unstable
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We already have this, it’s called cash…
 
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Something tangentally related to bitcoin and cryptocurrencies (Was going to start a new thread but probably not worth it.)

From: https://www.aol.com/article/finance...d-charged-by-sec-for-pumping-crypto/23604881/
The U.S. Securities and Exchange Commission is making an example out of boxer Floyd Mayweather and rapper DJ Khaled. The SEC announced on Thursday it has settled charges against both celebrities for “unlawfully touting” initial coin offerings (ICOs).

Which brings me to my big question...

If you're dealing with bitcoin or other cryptocurrencies, how exactly does a rapper "make it rain"? They can't throw around paper currency.... doe they toss around iPads?
 
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