6 ms·

Where did you acquire this point of view? You sound very certain, but I think you've got it completely backwards: You say bitcoin cannot be a currency because i

by vzcx 5y ago

Where did you acquire this point of view? You sound very certain, but I think you've got it completely backwards: You say bitcoin cannot be a currency because it is highly volatile, but I'd argue that it's just as true that Bitcoin has high volatility because it isn't in widespread use as a currency. I suppose they can both be true: it's a network bootstrapping problem. This is the future bitcoin long-term buyers are speculating on, that the network will succeed and become more widespread. And though the network is small, people spend bitcoin all the time. You say this is irrational, and maybe it is in some very static model of economic action, but as we know, the real world is dynamic. That is, it has a time component, the future is unknowable and there are very few guarantees. It turns out, that at some point people tend to decide they would rather have something now than wait for later and potentially get it more cheaply. A man's gotta eat, and sometimes he wants to enjoy a few luxuries as well. People didn't stop trading things when there were "massively deflationary" commodity monies in the past, and I don't see why that would be different today. In fact, the whole "deflation" bugaboo is only indirectly about price. The real core of the matter is credit: "deflation" acts like a higher interest rate, which makes life difficult for debtors. We can already create debt products linked to inflation, and I see no reason why that term can't have a negative sign next to it. This changes one's view of what investments look wise or not, but that is not necessarily a bad thing at all.

mjburgess 5y ago
My issue isnt it's volatility, which is dramatic and a barrier to adoption. But it's inherently deflationary -- we know how deflationary currency works, and it's a nightmare. The only people able to spend on luxuries are those who have so much wealth that holding it has lower marginal utility than the luxuries they want. Everyone else spends only when they absolutely have to on necessities, as everything else is irrational. It's just better to hold the currency. This is the poverty trap of human history. Crypto will never be a currency because it is designed as a speculative asset which transfers wealth to early adopters, in the manner of a bigger-fool scam. The early buyers paid $10/coin, and the fools paying $100k/coin will be the ones funding the cash-out by providing that USD liquidity just before the collapse. If it collapses to $1k/coin, the early adopters will make their 10,000% return, second phase 100%, and the vast majority of people will be running at -100000%+ You could not design a worse system to be used as actual currency. It is incredibly slow, incredibly inefficient, a handful of early adopters hold all the power, etc. etc.
- vzcx 5y ago
  I recently sent a low-fee, nearly instantaneous payment over the lightning network with exactly zero trusted intermediaries. LN may or may not be ready for wider-scale adoption, but it was incredibly cool. It gave me that same feeling of power and possibilities as when I first learned to program a computer. I'm not sure if I can convince you but there is actually some there there. If, as I predict, volatility goes down as the network grows and bitcoin becomes used for more things, so does average return. In other words, the "deflation" rate reaches some small but steady level. The days of number go up will be over, bitcoin would be something boring that goes up only slowly over decades. Like the foreign exchange of a virtual country, its market price vs other currencies would be determined more by balance of trade than by currency speculation. Of course, that future is far from certain. Buying bitcoin now is like buying an option that pays out if that future comes to pass. The price of an option is very volatile, but it is never zero until it expires. Bitcoin might wax or wane in popularity, but it will never expire. This is all that the words "speculative asset" entail: they are risks that work out in some possible futures and don't in others. So it doesn't bother me that some people bought bitcoin and $10 and are now sitting on a nice stack. That bitcoin could have easily gone to 0.01 today. They took that risk. Why shouldn't they reap that reward? Without those early market participants in bitcoin, wouldn't be even more highly concentrated? My advice to such whales would be to spend their bitcoin on business investments that help spread the coins and bootstrap the network. Bitcoin-related businesses that pay employees in bitcoin. There are still bold people out there who want to live in an alternate future and try to make it real. Of course, I don't think everyone should get into speculation... It's got a pretty high attrition rate even among the professionals. But you know, oddly enough, it's when inflation rates are higher that the more people are forced to be speculators just to stay in place. Being on the cutting edge means that most of the time, what you are doing just doesn't work. I've been listening to old timers tell stories about working at MOS technology back in the 70s. MOS was rather vertically integrated, with chip design and fabrication feeding all the way to consumer products. So chip designers dealt with buggy manufacturing processes, board engineers got buggy new chips hot off the wafer, and software guys got buggy dev boards. A lot of time was spent trying to go back and fix bugs at the lower layers, sometimes all the way down to manufacturing defects. It might sound crazy today, but for a time they could do things that very few other companies could. "It's slow", "it's buggy", "it's inefficient"... all of these are ways of saying "I can't, I won't". Expressions of fatigue. They don't lead anywhere. "I'll make it fast," "I'll make it work," "I'll make it efficient"... all are expressions of will. This is the attitude that the builds the future.

by vzcx 5y ago

mjburgess 5y ago

My issue isnt it's volatility, which is dramatic and a barrier to adoption. But it's inherently deflationary -- we know how deflationary currency works, and it's a nightmare. The only people able to spend on luxuries are those who have so much wealth that holding it has lower marginal utility than the luxuries they want. Everyone else spends only when they absolutely have to on necessities, as everything else is irrational. It's just better to hold the currency. This is the poverty trap of human history. Crypto will never be a currency because it is designed as a speculative asset which transfers wealth to early adopters, in the manner of a bigger-fool scam. The early buyers paid $10/coin, and the fools paying $100k/coin will be the ones funding the cash-out by providing that USD liquidity just before the collapse. If it collapses to $1k/coin, the early adopters will make their 10,000% return, second phase 100%, and the vast majority of people will be running at -100000%+ You could not design a worse system to be used as actual currency. It is incredibly slow, incredibly inefficient, a handful of early adopters hold all the power, etc. etc.

vzcx 5y ago
I recently sent a low-fee, nearly instantaneous payment over the lightning network with exactly zero trusted intermediaries. LN may or may not be ready for wider-scale adoption, but it was incredibly cool. It gave me that same feeling of power and possibilities as when I first learned to program a computer. I'm not sure if I can convince you but there is actually some there there. If, as I predict, volatility goes down as the network grows and bitcoin becomes used for more things, so does average return. In other words, the "deflation" rate reaches some small but steady level. The days of number go up will be over, bitcoin would be something boring that goes up only slowly over decades. Like the foreign exchange of a virtual country, its market price vs other currencies would be determined more by balance of trade than by currency speculation. Of course, that future is far from certain. Buying bitcoin now is like buying an option that pays out if that future comes to pass. The price of an option is very volatile, but it is never zero until it expires. Bitcoin might wax or wane in popularity, but it will never expire. This is all that the words "speculative asset" entail: they are risks that work out in some possible futures and don't in others. So it doesn't bother me that some people bought bitcoin and $10 and are now sitting on a nice stack. That bitcoin could have easily gone to 0.01 today. They took that risk. Why shouldn't they reap that reward? Without those early market participants in bitcoin, wouldn't be even more highly concentrated? My advice to such whales would be to spend their bitcoin on business investments that help spread the coins and bootstrap the network. Bitcoin-related businesses that pay employees in bitcoin. There are still bold people out there who want to live in an alternate future and try to make it real. Of course, I don't think everyone should get into speculation... It's got a pretty high attrition rate even among the professionals. But you know, oddly enough, it's when inflation rates are higher that the more people are forced to be speculators just to stay in place. Being on the cutting edge means that most of the time, what you are doing just doesn't work. I've been listening to old timers tell stories about working at MOS technology back in the 70s. MOS was rather vertically integrated, with chip design and fabrication feeding all the way to consumer products. So chip designers dealt with buggy manufacturing processes, board engineers got buggy new chips hot off the wafer, and software guys got buggy dev boards. A lot of time was spent trying to go back and fix bugs at the lower layers, sometimes all the way down to manufacturing defects. It might sound crazy today, but for a time they could do things that very few other companies could. "It's slow", "it's buggy", "it's inefficient"... all of these are ways of saying "I can't, I won't". Expressions of fatigue. They don't lead anywhere. "I'll make it fast," "I'll make it work," "I'll make it efficient"... all are expressions of will. This is the attitude that the builds the future.