Cryptocurrencies

posted by justincredible

I know what they mean, dingus. I'm asking you to explain why that matters.

I thought I already did, multiple times.

When big bank, or Facebook, comes out with their own crypto the others go to zero.  Explain to me why you think otherwise.

posted by justincredible

I'm curious how deep of a dive you've actually given bitcoin, gut? Have you read the white paper or any books on the protocol? 

I understand Bitcoin perfectly.

I'm curious as to why you still think it's something special, despite literally dozens of of other crypto.  That, by the way, is the definition of non-monopoly and also evidence of an indefensible position.

No intrinsic value.  And no protection.  Bitcoin will either be bought for the value of its brand name, or it will be worthless.  There is not a good argument otherwise.

posted by justincredible

And again, you're acting like I'm betting my entire future on this. I'm not going to get burned if it all comes crashing down.

I didn't say that.  If it busts tomorrow would that cause problems for your marriage?  If so, then you're being reckless.

You can LITERALLY create your own crypto.  How in the world is that good for Bitcoin long-term?!?

posted by gut

I didn't say that.  If it busts tomorrow would that cause problems for your marriage?  If so, then you're being reckless.

LOL, no, it would not impact my marriage at all.

posted by gut

I understand Bitcoin perfectly.

I'm curious as to why you still think it's something special, despite literally dozens of of other crypto.  That, by the way, is the definition of non-monopoly and also evidence of an indefensible position.

No intrinsic value.  And no protection.  Bitcoin will either be bought for the value of its brand name, or it will be worthless.  There is not a good argument otherwise.

It must be draining knowing everything about everything. 

posted by gut

I understand Bitcoin perfectly.

I'm curious as to why you still think it's something special, despite literally dozens of of other crypto.  That, by the way, is the definition of non-monopoly and also evidence of an indefensible position.

No intrinsic value.  And no protection.  Bitcoin will either be bought for the value of its brand name, or it will be worthless.  There is not a good argument otherwise.

Protection from what? 

posted by gut

I understand Bitcoin perfectly.

I'm curious as to why you still think it's something special, despite literally dozens of of other crypto.  That, by the way, is the definition of non-monopoly and also evidence of an indefensible position.

No intrinsic value.  And no protection.  Bitcoin will either be bought for the value of its brand name, or it will be worthless.  There is not a good argument otherwise.

Wait, now it's not a monopoly?

As to your curiosity regarding why BTC is "something special" as opposed to the rest, I technically think Monero has more anonymity use, but to answer the question of why BTC is the most popular, whether to Justin or most others, I'd say it's probably a combination of the fact that (a) it was the first one that was widely available, (b) it's the most talked-about and for a time became synonymous with cryptocurrency (think people saying "Kleenex" when they mean tissue), and (c) it's the most widely accepted of all of the cryptocurrencies.  It's the current winner among competing cryptocurrencies.
 

posted by gut

Really?  If you're actually asking me to explain how crypto isn't a monopoly then I've been talking over your head this entire time.

I'll make it really simple - if it wasn't a monopoly or if it was defensible, then Bitcoin would still be the only game in town.  Blockchain is a commodity at this point.  It has value, but it's a commodity.  Pour your money into it, but don't get caught holding the bag when the music stops.

Ah, now it is one again.

How does one say that BTC would be the only game in town IFF if wasn't a monopoly?  Isn't a monopoly being the only game in town?
 

posted by gut

I understand Bitcoin perfectly.

I'm curious as to why you still think it's something special, despite literally dozens of of other crypto.  That, by the way, is the definition of non-monopoly and also evidence of an indefensible position.

No intrinsic value.  And no protection.  Bitcoin will either be bought for the value of its brand name, or it will be worthless.  There is not a good argument otherwise.

The whole "no intrinsic value" and "no protection" isn't substantively different from most accepted currencies.  It's based largely on public trust.  As for the "protection" element, I'm not sure how that differs that much from a nation's currency, as we've seen plenty of them drop to near zero amidst economic crises.  I'd be hard-pressed to look at Zimbabwe or Venezuela currencies and see intrinsic value and/or protection at the bottom of their respective freefalls.

Conversely, the algorithm for mining something like BTC is fixed.  The number that can ever be in circulation is capped.  The creation and exchange of it is verified through the blockchain lookup.  And there's no central head (which kind of throws a wrench in the whole Ponzi scheme comparison).  And none of this can be unilaterally changed.

I'm not really debating that it has intrinsic value or protection.  I'm merely suggesting that nationally currencies don't necessarily either, beyond public trust, and it does possess some of the qualities that would, in theory, make it more stable long-term than a currency without a cap or the ability to future-proof against counterfeit, never mind the fact that it blends the upsides of easy digital transaction and a proverbial "money trail" that still allows for anonymity.  Could it go to functional zero?  Of course.  The tulips did.  So did the third Zimbabwe dollar, as last I heard, the exchange rate was 1 USD to something like 10 quadrillion Zimbabwe dollars (before being replaced, as it's now obviously obsolete).

The problem is that it is still treated, as you've aptly pointed out, like a commodity.  Functionally, for the time being at least, it's a commodity, which means people continue to look at it in relation to other currencies.  However, it does offer plenty of upside as an actual currency.  More than many official ones, I'd suggest.

As of now I see it best utilized as a long term savings vehicle. I also think it will continue to mainly operate as a commodity for at least another decade or so. But, I think, as adoption increases and the protocol matures, as additional layers are added (Lightning Network, etc), ease of spending your bitcoin will increase and it will start being used more as a currency. The fact that it has absolutely zero central authority is going to maintain demand, regardless of what facebook or central banks do.

And again, I just want to point out that this is all my opinion, which is obviously not worth a shit because gut disagrees. Also, I am not being reckless in my investments and my marriage will be just fine regardless of what bitcoin does. So don't you worry about me.

posted by justincredible

And again, I just want to point out that this is all my opinion, which is obviously not worth a shit because gut disagrees. Also, I am not being reckless in my investments and my marriage will be just fine regardless of what bitcoin does. So don't you worry about me.

How did your marriage get brought into this anyways?

posted by friendfromlowry

How did your marriage get brought into this anyways?

Not sure. Gut being gut, I guess. 
 

He disagrees with me on the topic, so clearly I’m dumb, so clearly I have to be being reckless, so clearly my wife is going to leave me when bitcoin 100% absolutely no doubt crashes to zero. 

If we’re being 100% my wife actually gives me an “allowance” to buy bitcoin. 

She does all of our budgeting and I get a specific account budgeted each week for it. 

posted by O-Trap

Wait, now it's not a monopoly?

I'm not really debating that it has intrinsic value or protection.  I'm merely suggesting that nationally currencies don't necessarily either, beyond public trust

Typo - 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.

posted by O-Trap

The problem is that it is still treated, as you've aptly pointed out, like a commodity. 

No, 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.

posted by gut

No, 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).

Bitcoin, specifically, is rare and limited. And every company in the world coming out with their own crypto would mean absolutely nothing in regards to bitcoin. Bitcoin will always have demand due to the monetary policy of the protocol.

Yes, always is a long time. As long as crypto is a thing, bitcoin will be the top dog.

posted by justincredible

As of now I see it best utilized as a long term savings vehicle...The fact that it has absolutely zero central authority is going to maintain demand, regardless of what facebook or central banks do.

So long as you don't lose the keys to that vehicle.  I know you won't, but that's a big hurdle to wider adoption.  I tend not to view something as a "savings vehicle" that has a real chance of being worth 99% less in 10 years.  Don't kid yourself - you're not saving you're speculating.

And I don't think you're being at all realistic about the massive hurdles to achieving what you think crypto will become.  Governments aren't going to sit on their thumbs while Bitcoin usurps their monopoly on currency.  And central banks would lose their ability to intervene in the economy to fight inflation and unemployment.  Make no mistake, Bitcoin will continue to exist only as long as the central banks allow it to.

I'm sure you have many good libertarian arguments for why that's wrong.  Except Bitcoin can't make laws, nor enforce them.  Short of an actual revolution, government crushes Bitcoin every time.

Anyway, 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.

You're right, I am speculating. I'm making a very small bet that liberty wins in the end.

If I'm wrong, big deal. It's money I would have spent on something stupid anyway. I want to reiterate that I'm putting a very small percentage of my income into this. With my wife's approval.

If I'm right, which, I know, is impossible, I'm going to be sitting pretty when it's time to retire. It might even give me the ability to retire early. I hope that's how it plays out. I think that's how it plays out. Call me an idealist, but I need something to look forward to to keep my sanity.

IMO, its floor is digital gold. Its ceiling is the moon, as they say.

I know you disagree with that. That's fine, I'm not trying to change your mind.

posted by gut

Anyway, 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.

Who is the central authority of this crypto pegged to gold? How, exactly, does one peg a crypto to physical gold? I'm genuinely curious. Can the monetary policy be changed by a centralized group?

We also know, within a small window, when the very last bitcoin will ever be mined, meaning no more bitcoin can ever exist. It'll be sometime in 2140. We're not running out of gold to mine within a few hundred years of that date, at least. I'd venture to guess it'll be thousands of years after that. And by 2032 more than 99.2% of all bitcoin to ever exist will have been mined already. So less than a percent of the final total bitcoin in circulation will be mined over those last 108 years. The monetary policy is the monetary policy.