Crypto currency: What are your thoughts?

[Johnny10]

I imagine they figure a 50% loss on any ransom payments they get. Just as diamonds may sell for 20% of retail at a fence shop.

That's what I am looking for... a place to store my wealth that fluctuates 20 - 40% on a monthly basis.

[nctnico]

Ultimately, the whole thing is an excellent illustration of how it's all based on *trust*. You apparently happen to have full trust. I'm just evoking other possible views and scenarios if you happen to be a bit less trustful.

No, I'm pragmatic instead of being paranoid. The reality is that the real linkage is not trust but mutual dependancies.

[Algoma]

I recall first looking into bitcoin when it was only $0.40 / Bitcoin.  Did a bit of pooled mining and tradeing until I had over 0.68 bitcoin.. Before the exchange I was using, BTC-E was seized by the US.. It was gone.

I retain a bitter view of Crypto as an IT Professinal, it been the primary driver behind the constant goldrush to compromize even the smallest system.

Setup a honeypot network and crack the door with the slightest intential flaw, it only takes seconds before some RAT is uploaded for either Ransomware or Additional Crypto mining...

[David Hess]

The "problem" with "cryptocurrencies", as they are decentralized, is that not only can't it really be controlled by governments, but no country is going to use its army to defend it because of that. Large organizations ready to fight for something they can't control? Let's see...

I agree with all of your points.

It is a problem for the government which would prefer a currency that they can control and devalue as needed to finance whatever they like without the bad publicity of increasing taxes.  Germany did exactly this to finance World War 1.  All governments did it to finance World War 2.

The US uses its currency to devalue its massive debt by effectively taxing its lenders.  That would be impossible with money, or a cryptocurrency like Bitcoin.

Proponents and opponents essentially share the same understanding - at least when they understand what a currency is and how it works. They just don't share the same view of the world. Which is more right is basically a political debate.

Most people, even those who should know better (1) and many posters in this discussion, confuse money and currency.  The US Constitution authorizes the government to regulate and mint *money*.  It does not authorize currency.

Congress shall have Power…to coin Money, regulate the Value thereof, and of foreign Coin.

No state…shall make any Thing but gold and silver Coin a Tender in Payment of Debts.

It is almost as if the authors of the Constitution knew the difference between money and currency.   The dollar as it exists now, is not money.  It has not been money for about 100 years.

"real money" is a store of value....

No it isn't. It is a store of PERCEIVED value, often by minority interests. Real value is something different altogether. Cryptocurrency is like the tulip bubble in Holland from in 1634 to 1637. Its foundation is greed, and it will ultimately fail. My guess is within a few years.

But the same thing could be said about any currency, like dollars now, and at least cryptocurrencies, like Bitcoin but not all possible cryptocurrencies, are bounded like money is.  Money is not just a store of perceived value, but is tied to a tangible thing.

A persons worth is often based on a how much money or property they have. Bezos net "worth" is over $200 BILLION, with much of it made out of underpaying and exploiting vulnerable workers. A person's worth should be more akin to people like this judge and the priest. The $1000 gift will have a more value in it than the obscenely rich would realise....

Then Bezos net "worth" is $200 billion of currency, not money.  When the government inflates the "money" supply, which is really currency, his net worth measured in currency increases.  Meanwhile those vulnerable workers have their wages decrease and costs increase.  Who are you supporting here by confusing currency with money?

(1) TIK recently posted a video which discussed the difference between money and currency in connection with what happened with the Weimar Hyperinflation leading to World War 1, https://youtu.be/YygQ0Wq0wDA

[SiliconWizard]

Ultimately, the whole thing is an excellent illustration of how it's all based on *trust*. You apparently happen to have full trust. I'm just evoking other possible views and scenarios if you happen to be a bit less trustful.

No, I'm pragmatic instead of being paranoid. The reality is that the real linkage is not trust but mutual dependancies.

Not being fully trusting it not the same as being paranoid. Strawman argument. =)
And there are some objective facts that can alter trust a little bit. See David Hess's post. But anything that has been happening at least for the past two decades should be enough to make you question full trust a little bit.

As to mutual dependency... yeah. Are you sure the forces at stake are really all balanced?

[SiliconWizard]

Then Bezos net "worth" is $200 billion of currency, not money.  When the government inflates the "money" supply, which is really currency, his net worth measured in currency increases.  Meanwhile those vulnerable workers have their wages decrease and costs increase.  Who are you supporting here by confusing currency with money?

Yes, this is what's been happening particularly "violently" for the past two years. Net result is the richest people have never been that rich in modern history. And many small businesses have shut down. Middle class is increasingly becoming dependent and vulnerable. How much trust in the system does that really instill?

[nctnico]

Ultimately, the whole thing is an excellent illustration of how it's all based on *trust*. You apparently happen to have full trust. I'm just evoking other possible views and scenarios if you happen to be a bit less trustful.

No, I'm pragmatic instead of being paranoid. The reality is that the real linkage is not trust but mutual dependancies.

Not being fully trusting it not the same as being paranoid. Strawman argument. =)
And there are some objective facts that can alter trust a little bit. See David Hess's post.

Quoting far outdated texts and complaining about governments printing money. No, I'm not convinced. If all it shows a deep lack of knowledge how the monetary system works and what money actually represents. Money doesn't represent gold or silver, at the very basic level it represents an amount of labour. Why is your boss paying you? What do you give in return?

[Johnny10]

Money is a commodity accepted by general consent as a medium of economic exchange. It is the medium in which prices and values are expressed. It circulates from person to person and country to country, facilitating trade, and it is the principal measure of wealth.

Its an agreed upon barter system.
Gold, Silver, Shells, Beads, Beany Babies, Bitcoin doesn't really matter as long as we can agree upon an exchange rate.

The benefit of it being backed by governments is that it can be have an enforced value, protection from counterfeiting. Accepted as payment of all bills and taxes.

[nctnico]

Money is a commodity accepted by general consent as a medium of economic exchange. It is the medium in which prices and values are expressed. It circulates from person to person and country to country, facilitating trade, and it is the principal measure of wealth.

Its an agreed upon barter system.
Gold, Silver, Shells, Beads, Beany Babies, Bitcoin doesn't really matter as long as we can agree upon an exchange rate.

Not quite. Whatever is used as money needs to be produced at will by the body that governs it without being limited by resources. This precludes anything that is a scarse resource one way or another. Otherwise it will hinder economic growth. In the end there has to be enough money to carry all the transactions within the economy.

[Johnny10]

Yes, one of the reasons we went off the gold standard.
Simply not enough gold to cover all the transactions.

I collected Large size Gold and Silver certificates.
Which could be exchanged for actual coins.

[NiHaoMike]

Well, curecoin has a market cap of 1.5MUSD, Foldingcoin 0.3MUSD. So about 0.8ppm of the total market cap (2.2TUSD). So, yay I guess?

We need to expand on the concept. I remember in 2008, there was a program you could run on your PC to legally get free music, as an alternative to piracy. It used your PC for computation which companies would pay for. It didn't take off since was little demand for mass computation that didn't need the data to be secured. Had it been introduced just a few years later, things might turn out very different!

[madires]

'Critical' Polygon bug put $24 billion in tokens at risk until recent hard fork (https://www.theblockcrypto.com/post/128784/polygon-critical-bug-24-billion-matic-tokens-at-risk-hard-fork)

[Rick Law]

...
The crypto-currency volatility doesn't make it unsuitable as currency; it just made crypto-currency unsuitable as fiscal value-storage medium.
...

As someone else alluded prior to this thread, anyone that lived through the hell of inflation years in the 80's in the peripheral economies knows that by heart - by then, US Dollars were the anchor of the economy, not the local fiat currency. The difference back then is that, due to the lack of internet and electronically automated pricing mechanisms, the devaluation of the local currencies were done in human speed, not multi-GHz speed. In other words, price tags on supermarkets were manually updated at the speed of the operator of the tag machine, not in a database where a UPC barcode could enable a price change between picking up the product in the shelf and paying at the cashier (despite this, it was not uncommon to see four, five price tags piled on top of each other as the days went by with unsold products).
...
...

I too lived the hellish inflation of the 80's, but that started not in the 80's but in 1976.  1980 was the change in policy (from Carter to Reagan) and it took a long while to recover.  During the Carter years, a new "pain index" was invented: unemployment rate plus inflation rate.  It was awful time, high unemployment, high inflation.

I agree with the "US Dollars were the anchor of the economy" part but I disagree with "not the local fiat currency."  It was a fiat currency, but used by other locality (nations) because of USA's then very good fiscal reputation.  US Dollar start to deviate from the Gold Standard in 1933.  Per US Federal Reserve, the care-taker of US Dollar, in 1971, USA official abandoned the Gold Standard^[1]  thus making US Dollar is a fiat currency.

While it became a fiat currency, USA regained its credibility and the green-back continued to be accepted as a world wide currency solely on the USA's reputation.  Reputation must be earned, and can be lost.  We are introducing a lot of measures that is inflationary in the last couple of decades.  Hard to imagine, gold was merely $35 an ounce when we came off the gold standard.  When I first posted gold price two days ago (Dec 29), it was $1805 an ounce.  Today (Dec 31), two days later, now is USD is $1831/ounce.  This is a 1.4% drop in value for the USD in two days.

One can speculate in anything: stocks, paper currencies, live-stocks, and even crypto-currencies.  One can also make money whether the instrument of speculation go up or go down.

Crypto-currency speculation is in it's infancy.  Stock on the other hand very developed as a speculative tool making it far more suitable for speculation.  Gold would have been a good "value storage medium" but of course governments will do everything possible to make it difficult to invest in Gold.  In the now defunct Obama Care (socialized medical care plan that Obama said he didn't mind it being called Obama Care), one must report Gold purchase > $600^[2].  Why would that be a medical issue is anyone's guess.  I suppose  the more people invest in Gold, fiat money's value decrease is more visible, and he would need to inflate the dollar supply quite a bit to made his plan work.

Reference:
[1]  Federal Reserve History: "Nixon Ends Convertibility of U.S. Dollars to Gold and Announces Wage/Price Controls"
^{https://www.federalreservehistory.org/essays/gold-convertibility-ends}
[2] New Max magazine: "New Tax on Gold Is Hidden in Obamacare"
^{https://www.newsmax.com/Finance/StreetTalk/New-Tax-Gold-Hidden-Obamacare-healthcare/2010/07/21/id/365283/}

[Rick Law]

The value just has to hold for the duration from my offer to your acceptance/shipment and ends with my payment.

I disagree.. If the value of crypto $X was rapidly going down, I would wait as long as possible before offering my services in trade for $X. Likewise you would want to do the deal ASAP, but would be hard pressed to find anyone willing to take your $X.. The inability of both of us being able to place a fixed value on the deal using $X, makes the transaction so much more difficult to negotiate.
Just look at what happens in economies when there is hyperinflation or hyperdeflation. It's a mess.

crypto-dollar eqv of XX milligram of gold

Then we are not actually using crypto for the exchange but the value of gold instead.

Yeah, it is a mess.  But you are using crypto as the instrument of payment, just not as the instrument of valuation.  The valuation is based gold on since I said equivalent crypto dollars for X milligrams of Gold at the time of the transaction.

As to delaying or moving up the transaction time, that is something that could be done with paper currencies too.  Everyday, when you look at currency exchange rates, you will find the rates different.  Relying on movement of currency value is speculating on the currency.  You may win, or loose -- depending on the clarity of your crystal ball.

[tszaboo]

My thoughts are:
1) I almost made more money with them this year, than at work, with much less effort.
2) Banks are obsolete, and they are clueless about it. It will take them like the post office, when they got wiped out by email.
3) Bitcoin is technological dinosaur, best would be to shutdown it's mining, and move them tokenized to a PoS network. ETH as well.
4) I have a lot more thing to say about it, but then I decided to make a youtube channel out of it, about ~6K subscribers now.

[eti]

My thoughts are:
1) I almost made more money with them this year, than at work, with much less effort.
2) Banks are obsolete, and they are clueless about it. It will take them like the post office, when they got wiped out by email.
3) Bitcoin is technological dinosaur, best would be to shutdown it's mining, and move them tokenized to a PoS network. ETH as well.
4) I have a lot more thing to say about it, but then I decided to make a youtube channel out of it, about ~6K subscribers now.

Banks are “obsolete”?

Okkkk. I’ll put this down to you maybe having had too much New Years Eve booze.

[Bud]

You may not know that nowadays you can get a loan for your crypto as a collateral. Yes you get actual dollars that you can use. Return the loan and take your crypto back once you are done.
I would not say banks are in danger at this time but crypto is expanding into financial services so they do have to worry.

[David Hess]

Quoting far outdated texts and complaining about governments printing money. No, I'm not convinced. If all it shows a deep lack of knowledge how the monetary system works and what money actually represents. Money doesn't represent gold or silver, at the very basic level it represents an amount of labour. Why is your boss paying you? What do you give in return?

So it shows a deep lack of knowledge about how the monetary system works and what money represents, while you confuse money with currency?  They are very distinct.

Which texts are you relying on that confuse money and currency?  TIK, in that link I provided, makes this very point.  Even older otherwise excellent texts are not always careful about this which leads to much confusion about definitions.  In some texts the confusion is deliberate to undermine thought.

[nctnico]

Quoting far outdated texts and complaining about governments printing money. No, I'm not convinced. If all it shows a deep lack of knowledge how the monetary system works and what money actually represents. Money doesn't represent gold or silver, at the very basic level it represents an amount of labour. Why is your boss paying you? What do you give in return?

So it shows a deep lack of knowledge about how the monetary system works and what money represents, while you confuse money with currency?  They are very distinct.

Which texts are you relying on that confuse money and currency?  TIK, in that link I provided, makes this very point.

Nahh, he is jabbering on about intrinsic value of money / currency. Just another random youtube video using an example of the past (and likely quoting people out of context) to make a poor point. The values & availability of the big currencies like dollar, euro, yuan and pound are very carefully controlled and strongly interconnected. In the past 20 years there have been 3 large economic crisis and the system has dealt with those just fine.

Ofcourse you can turn this into a semantical discussion but the general public uses the words currency and money for the same: what is in their wallet and bank account. Nobody says they have currency in the bank; everyone says they have money in the bank. It is also very debatable whether currency has no intrinsic value; you can use it to buy a commodity called work.

Wanting to go back to some kind of 'gold standard' just isn't going to work. All the gold mined up to today is worth about 8 times less than the size of the world's economy. Heck, it isn't even enough to cover the US' economy. Gold is also a commodity used for many other purposes as well (think about gold plated PCBs and so on). How are you going to buy gold and then use it in an industrial process to make a product? With a gold standard in place, you are basically destroying money that way.

Also, in the past several countries have resorted to prohibiting people owning gold in order to make it available to back money because there wasn't enough gold in the government's hand to sustain the size of the economy. Often at prices set by the government (=artificially inflating / deflating the price of gold); how is that any different compared to fiat currency? This also means that people would not be able to convert their money into gold if they wanted to; so what is having a gold standard actually worth then? You have money that is backed by gold but you can't get (legally own) the gold the money represents.

And the very bottom line is that gold is just stuff found in the earth and people like how it shines pretty in the sunlight. You can't eat it; it is pretty much useless to sustain your life in any way. Like paper money gold is just stuff that has some imaginary (commonly agreed upon) value assigned to it. To paraphrase TIK: you have been tricked into thinking gold is special in some way.

[David Hess]

Nahh, he is jabbering on about intrinsic value of money / currency. Just another random youtube video using an example of the past (and likely quoting people out of context) to make a poor point. The values & availability of the big currencies like dollar, euro, yuan and pound are very carefully controlled and strongly interconnected. In the past 20 years there have been 3 large economic crisis and the system has dealt with those just fine.

The Great Depression happened *after* money, but not all of it, was replaced with fiat currency, so the cause and effect are backwards from what advocates of fiat currency would have you believe.  So what exactly was the cause of those 3 large economic crisis?

Of course you can turn this into a semantical discussion but the general public uses the words currency and money for the same: what is in their wallet and bank account. Nobody says they have currency in the bank; everyone says they have money in the bank. It is also very debatable whether currency has no intrinsic value; you can use it to buy a commodity called work.

But the value of a currency can be changed at whim.  Money is based on an objective standard.

You have demonstrated the general confusion between the terms money and currency which goes back decades, and is deliberate.  One way to prevent knowledge and discussion in the epistemological sense is to corrupt definitions.  Both Rand and Orwell had a lot to say about that.

Wanting to go back to some kind of 'gold standard' just isn't going to work. All the gold mined up to today is worth about 8 times less than the size of the world's economy. Heck, it isn't even enough to cover the US' economy. Gold is also a commodity used for many other purposes as well (think about gold plated PCBs and so on). How are you going to buy gold and then use it in an industrial process to make a product? With a gold standard in place, you are basically destroying money that way.

But money can be based on other objective things.  It does not have to be gold.

Also, in the past several countries have resorted to prohibiting people owning gold in order to make it available to back money because there wasn't enough gold in the government's hand to sustain the size of the economy. Often at prices set by the government (=artificially inflating / deflating the price of gold); how is that any different compared to fiat currency? This also means that people would not be able to convert their money into gold if they wanted to; so what is having a gold standard actually worth then? You have money that is backed by gold but you can't get (legally own) the gold the money represents.

That is the common and necessary pattern when governments replace money with currency.  And it leads to a discussion of why price controls result in shortages and my new favorite aphorism that politics consists of denying economics.

And the very bottom line is that gold is just stuff found in the earth and people like how it shines pretty in the sunlight. You can't eat it; it is pretty much useless to sustain your life in any way. Like paper money gold is just stuff that has some imaginary (commonly agreed upon) value assigned to it. To paraphrase TIK: you have been tricked into thinking gold is special in some way.

Gold, any many other things, have an objective value.  It costs the same amount to print a 100 dollar bill instead of a 1 dollar bill, or to expand a bank's currency reserves by a billion dollars instead of 1 dollar.

[SiliconWizard]

Gold, any many other things, have an objective value.  It costs the same amount to print a 100 dollar bill instead of a 1 dollar bill, or to expand a bank's currency reserves by a billion dollars instead of 1 dollar.

Yes. Two of the main criterions is that it has a cost for extracting it, increasing with the amount extracted, and it's relatively scarce. Bitcoin has the two same properties.
Of course, gold has the benefit of requiring no maintenance once you own it, so it's infinitely more resilient, and it has also been a store of value for thousands of years, so it has like passed the test of time...

[nctnico]

Of course you can turn this into a semantical discussion but the general public uses the words currency and money for the same: what is in their wallet and bank account. Nobody says they have currency in the bank; everyone says they have money in the bank. It is also very debatable whether currency has no intrinsic value; you can use it to buy a commodity called work.

But the value of a currency can be changed at whim.  Money is based on an objective standard.

You have demonstrated the general confusion between the terms money and currency which goes back decades, and is deliberate.  One way to prevent knowledge and discussion in the epistemological sense is to corrupt definitions.  Both Rand and Orwell had a lot to say about that.

Sorry, but that is just conspiracy theorism. The majority of the countries are using fiat money/currency and each of these countries have economists who are in control of such a system. On top of that there are the IMF and EMF (for the EU). Argueing they are wrong is like being Don Quichot chasing windmills.

You really need to realise that the only commodity that really backs up any form of money/currency is work. Plain and simple.

Imagine the world goes to shit and we both show up at a farmer who has some food. You have a bar of gold and I brought my bag of tools. I'm 100% sure I'm going back home with the food after fixing something that is broken at the farm. OTOH a bar of gold is of no use to the farmer so you are left with nothing. And I can do the same thing the next day and the day after.

Ofcourse it is easier to have some uniform way of bartering but in the end whatever you use represents the exchange of work. In the past gold (and silver) was the best thing they could come up with because it was hard to come by and thus hard to forge. But lets not stay stuck in the past. In a way cryptocurrencies with built in scarcity have been obsolete from the start because they are based on old ideas.

[David Hess]

Sorry, but that is just conspiracy theorism. The majority of the countries are using fiat money/currency and each of these countries have economists who are in control of such a system. On top of that there are the IMF and EMF (for the EU). Argueing they are wrong is like being Don Quichot chasing windmills.

Whether they change the definition of the words money and currency is irrelevant to their true nature.  Things are classified by their similarities and differences, and they are not the same thing no matter what word is assigned or how the definition of that word is changed.  It is no conspiracy theory, by your definition, that men will confuse the issue to prevent discussion and knowledge.  Anybody could have seen it happen many times over the past couple of years if they were observant enough.

So if you want to discuss money, and want to discuss currency, pick some definitions and stick with them instead of obfuscating the subject for your own interests.  Of course if you do not, then we know what those interests are, so admit it.

[David Hess]

Gold, any many other things, have an objective value.  It costs the same amount to print a 100 dollar bill instead of a 1 dollar bill, or to expand a bank's currency reserves by a billion dollars instead of 1 dollar.

Yes. Two of the main criterions is that it has a cost for extracting it, increasing with the amount extracted, and it's relatively scarce. Bitcoin has the two same properties.
Of course, gold has the benefit of requiring no maintenance once you own it, so it's infinitely more resilient, and it has also been a store of value for thousands of years, so it has like passed the test of time...

Gold is also fungible.  Any gram of gold as as much "gold" as any other gram of gold, and it can be divided and combined as needed.

Update, this only occurred to me later:

You really need to realise that the only commodity that really backs up any form of money/currency is work. Plain and simple.

Work is not a commodity because it is not fungible.  The Soviet Union tried to do this.

[eti]

"Cryptocurrency" lemmings. Wow. How money distorts (un)common sense.
Do they not know that the people who ACTUALLY made lots of money from the gold rush, were the merchants, and people selling the panning equipment, etc? Had all these people "investing" (hah!!) in "BitCoin" had their brains turned on, they'd have invested REAL MONEY in Nvidia and graphics cards! DOH!