O-Trap
Chief Shenanigans Officer
O-Trap
Chief Shenanigans Officer
posted by gutTypo - Bitcoin is not a monopoly. I thought that would have been pretty clear - it's a pretty simple definition.
But, actually, sovereign currencies ARE a local monopoly, REAL demand for which is created by requiring taxes to be paid in that local currency. And there's also the fact that, if they are ever so inclined, governments can completely squash crypto. If you punish investment gains in crypto, or even make holding it illegal, then that chases out the speculators propping up the price. When it's worth less than $200, that chases out most of the rest of the HOLDR and retail crowd.
Sovereign currency is indeed a monopoly, thereby undercutting any competition that allows those using it to determine which is most ideal.
However, while governments might make crypto illegal, but that would be functionally unenforceable. Frankly, they'd be better off creating a competing one. Banning crypto would be akin to banning saving '.gif' files, which could be stored locally or remotely and for which there isn't an identity linked to any trail (or, rather, it's fairly easy to prevent one).
It would probably dissuade the HODLers, and it would certainly ward off the pumpers, but if anything, I think that would be better for its long-term sustainability anyway. Actually, I'd even argue that driving it underground would prompt more long-term tenability, because it would essentially force crypto to be use as intended. Investment gains in crypto that are subsequently spent as crypto would be harder to punish, because there'd be no official paper trail linking them to a person. Just a transaction number and a couple anonymous wallets.
Holding would be even harder to punish.
posted by gutNo, I meant it's literally a commodity, one that would have value if it were rare or limited or had some physical quality (like art) or productive value that might give it value. Every company in the world could come out with their own crypto if they wanted to. And, in a way, many already have (it's called credit).
Dirt - actual dirt - has more intrinsic value than crypto. Blockchain has value, but your holding of Bitcoin confers absolutely no claim on that technology, The problem is you don't need to buy or own Bitcoin to get that technology. That's what it means to have no intrinsic value. The brand theoretically has value, but that assumes it could be sold or bought out, which isn't remotely practical.
Credit isn't remotely the same thing. It's advances of USD with an agreement to pay back (usually with interest).
You'd be closer by comparing it to on-site or in-game tokens, which often do have an exchange rate, though the difference is that they're typically not able to be transferred or used off-site/out-of-game.
As for whether or not every company in the world could come out with their own crypto ... well, yeah. They could. And?
Your description of the requirements for something to have value seem to be that it either has to have mass (like dirt), or it has to be privately owned (and thus can be sold or bought out). Are those indeed the exclusive parameters of value to which you adhere? Do you not believe anything digital and decentralized can have value, whether intrinsic or perceived?
posted by gutAnyway, explain to me why crypto pegged to gold or, ideally, backed by gold isn't vastly superior to Bitcoin?
It would probably have to be pegged, otherwise as it gets more popular that nominal gold backing becomes relatively worthless. Ones that charge a transaction fee to invest in additional gold are probably the solution to most of the inherent issues with crypto. But that would be a difficult thing to execute and be transparent about.
Well, Bitcoin backed by gold would be redundant. A fixed quantity backed by another nearly fixed quantity seems silly. The value of a backed currency is to link the theoretically unlimited centralized quantity to a commodity with a limited quantity, limiting inflation. Cryptocurrencies like BTC (and like most of the more popular ones) are finite in volume from the outset, so it becomes unnecessary for it to be backed.
For cryptocurrency in any form to work, two things ultimately have to happen:
(a) People have to have a reason to want to use it as a currency, and
(b) people have to trust that they can spend it.
(b) isn't going to happen without (a), and there's still a bottleneck at (a). Despite the added anonymity along the same lines as cash, not being charged interest for using it, and the near-immediate updates to accounts/wallets, people continue to view them as investments.
If your issue with them having value is in regard to them being used as a substantial investment strategy, I agree with you more than you might expect. I don't think crypto makes for a sound, predictable investment strategy at all. Not that it might not turn out to be good if you get in and out at the right times (like tulips or Beanie Babies), but that the behavior that seeks a predictable profit off it is the very behavior that keeps it so volatile. Cryptocurrencies lack the mass of physical commodities, like water, corn, and oil. Meanwhile, they also lack the historical precedent of the sovereign currencies on the ForEx market.
But as an actual currency, I think the decentralized, largely anonymous nature of them, without needing to sacrifice ease, gives them a certain utility as a currency, provided enough people actually decide to use them that way, which then prompts more places to accept them.