What? Nothing on the arrest of SBF? The silence is deafening!

Pete. (l33t FS) said:

Crypto has massive DEflation which is megabad.

Sort of.  Inflation is generally related to the supply side of the equation -- the govt prints more money => supply of money goes up => value of money falls relative to other goods.  The massive increase in BTC prices is related to increases in demand, not to a reduction in supply.  They're different phenomena with different causes, and IMHO using the same root word for them implies more of a connection than is actually true.

So yes, BTC had a ton of "deflation", but that's because it was new.  It started out as a small scale, cult, nerd thing and the huge increase in value came about as more people became aware of it and started to use it.  If you imagine a hypothetical world where such currency was a normal thing, widely used by everyone, the demand should be fairly stable.  So I would argue that "deflation" is not inherent to this kind of the currency, unlike fiat currencies where government printing and inflation happen every single time to a greater or lesser degree.

To be clear, I'm not really a fan of cryptocurrencies.  I don't own any, never have, and have no plans to acquire any in the forseeable future.  I just think the economic arguments and discussion are interesting. :)

edit:  Another pet peeve of mine is the abuse of the term "crypto" to mean cryptocurrencies.  "Crypto" is short for "cryptography", which refers to a branch of mathematics.  Calling bitcoins simply "crypto" is like calling EVs simply "electrics".

But as the market grows, you need to make more "moneys" to suit.  I thought the whole reason cryptocurrencies "worked" was that they could not be easily created.  Otherwise, a little copy and paste and I'm rich.

I worked with a guy who was buying into Dogecoin when those guys on Reddit where inflating the stock price to crush a bunch of investors who shorted Dogecoin. It didn't make any sense so I looked up Blockchain. It's impossible to understand but the most important fact is this: Wikipedia: Blockchain

"In 2021, a study by Cambridge University determined that Bitcoin (at 121 terawatt-hours per year) used more electricity than Argentina (at 121TWh) and the Netherlands (109TWh)."

Beer Baron said:

My understanding of blockchain is that it is literally the OPPOSITE of what you're describing. You seem to just be describing a multi-node networked registry.

One of the major issues with blockchain is its tendency to fork and the inability to claw-back mistakes.

A blockchain node does not have to check with any other nodes before re-writing what is on the chain and sending it out. It changes its code, then sends it back out to update everyone else as soon as it's able. 

One of the features of blockchain is that you can only *add* to the chain. You can not delete from it. Once it's on there, it's there. Sure, the other nodes could look and say, "That's not right..." but the new entry still can not be deleted.

This is also where blockchain is actually *more* susceptable to fraud and theft. Digital money fraud isn't usually a man-in-the-middle attack. It's someone getting your personal information and illegally using your credit card number of making a transfer out of your bank account.

With current systems, when someone rings up $1000 in Amazon gift cards using your Visa, they call you up right away, verify that wasn't you, and reverse the charges. With blockchain you literally can not reverse any charges.

Your understanding of a blockchain isn't wrong but you misunderstand how those features relate to functions. A blockchain can be forked, but that doesn't allow a minority party to hijack it and it requires access to the source code - neither would be a problem for a notary service. Anyone can add to a blockchain but only if a majority agrees on what's deemed to be important content - it's not a free-for-all, far from it, that's why I can't add a commit to the Bitcoin blockchain giving me ownership of all of the bitcoins right now. Individual nodes may be free to add some content that doesn't need to be agreed upon such as comments however. You're absolutely right that it can only be added to and mistakes can't be undone (except perhaps with a fork that the majority of nodes decide to switch to) - they exist forever and can only be amended with a later entry at most. For a notary service this would be a great feature.

These are mainly meant as lighthearted jokes but I have seen a couple posts talking about some of the negatives of crypto....but the same applies to USD

Opti said:

These are mainly meant as lighthearted jokes but I have seen a couple posts talking about some of the negatives of crypto....but the same applies to USD

The USD is a functional currency. It works. Despite being imperfect and having many things that seem like they'd theoretically be problems, it works. It works so well, that it is widely recognized by pretty much everywhere else in the world.

So... Defend cryptocurrency.

Explain the practical utility of cryptocurrency. Not theoretically why it might have features that could potentially be useful. Give me actual situations where people use cryptocurrency for practical applications because it is superior to any alternative systems. Committing crime or pure speculative trading don't count.

GameboyRMH said:

Your understanding of a blockchain isn't wrong but you misunderstand how those features relate to functions. A blockchain can be forked, but that doesn't allow a minority party to hijack it and it requires access to the source code - neither would be a problem for a notary service. Anyone can add to a blockchain but only if a majority agrees on what's deemed to be important content - it's not a free-for-all, far from it, that's why I can't add a commit to the Bitcoin blockchain giving me ownership of all of the bitcoins right now. Individual nodes may be free to add some content that doesn't need to be agreed upon such as comments however. You're absolutely right that it can only be added to and mistakes can't be undone (except perhaps with a fork that the majority of nodes decide to switch to) - they exist forever and can only be amended with a later entry at most. For a notary service this would be a great feature.

But the issue with fraud and theft is that they occur at the weakest link, and that's almost always the people, not the technology.

The concern isn't that someone is going to hack the code and add something illegitimately.

The concer is that someone will get personal log in information to access an account and make a change. They'll get someone's personal information to gain access to an account in a way that looks to a system like it's totally legitimate and do a trade that the computers see as, "John Smith is transferring funds to Jane Doe."

The technical systems aren't being broken or exploited. It's the human weakness being exploited.

How do you undo a fraudulent transfer that results from a human exploit?

codrus (Forum Supporter) said:

Pete. (l33t FS) said:

Crypto has massive DEflation which is megabad.

Sort of.  Inflation is generally related to the supply side of the equation -- the govt prints more money => supply of money goes up => value of money falls relative to other goods.  The massive increase in BTC prices is related to increases in demand, not to a reduction in supply.  They're different phenomena with different causes, and IMHO using the same root word for them implies more of a connection than is actually true.

Inflation is where goods and service cost increasingly more money. Deflation is where goods and services cost *less*.

People "investing" in cryptocurrency want to see it shoot "to the moon". They want it to become more and more valuable.

Let's say I invest in GRMBucks. You make supercharger kits for Miatas. You sell your supercharge kit for 100-GRMBucks.

Because GRMBucks are the latest hot thing and everyone wants to "invest" in them. My GRMBucks are now worth DOUBLE.

That means, I can buy your supercharger kit for only 50-GRMBucks. Your materials and labor are only worth half of what they used to be. Deflation.

But what's the big deal? The relative value is still the same. Right? Wrong. Because you got a loan valued at 10,000-GRMBucks. Due to deflation, it's going to take you TWICE as much work to pay that off.

If cryptocurrencies gain in value like proponents want it to, that means it is better to be holding cryptocurrency and sitting on them, than it is to use them to invest in creating a company that provides goods or services to an economy.

This is the cryptocurrency deflation problem.

In reply to Opti :

One HUGE difference between virtual money and currency is who is putting it out.  Some random company deciding that ChallengeCoin is worth something and you should buy it and use it as a monetary exchange is not even close to the same as a government doing that when other worldwide government agree to that.  

Ever since bitcoin started, how many new "currencies" have come out?  And when will they ever stop?  Let alone, which one is decent one to set a standard against?

Until there's real regulation that all governments agree to WRT virtual currency, I have no trust at all in it- as this whole pyramid scheme has nicely pointed out.

VolvoHeretic said:

I worked with a guy who was buying into Dogecoin when those guys on Reddit where inflating the stock price to crush a bunch of investors who shorted Dogecoin. It didn't make any sense so I looked up Blockchain. It's impossible to understand but the most important fact is this: Wikipedia: Blockchain

"In 2021, a study by Cambridge University determined that Bitcoin (at 121 terawatt-hours per year) used more electricity than Argentina (at 121TWh) and the Netherlands (109TWh)."

I put the number of people who can follow that wiki at less than 1% of the human population.The simplest term is "distributed ledger" and unless you happen to be an accountant, those two words are meaningless.

Beer Baron said:

But the issue with fraud and theft is that they occur at the weakest link, and that's almost always the people, not the technology.

The concern isn't that someone is going to hack the code and add something illegitimately.

The concer is that someone will get personal log in information to access an account and make a change. They'll get someone's personal information to gain access to an account in a way that looks to a system like it's totally legitimate and do a trade that the computers see as, "John Smith is transferring funds to Jane Doe."

The technical systems aren't being broken or exploited. It's the human weakness being exploited.

How do you undo a fraudulent transfer that results from a human exploit?

That's correct and it's a serious issue for cryptocurrencies (moreso the exchanges and some of the more "creative" wallet access systems, as the basic wallet system is pretty secure...if you secure your wallet file properly) or anything that has random people logging into it from random places. For a notary service it would hardly be an issue as they may only allow logins for a few of their staff via a VPN with a strong password and a Yubikey.

In reply to Beer Baron :

I dont know much about cryptocurrency but I know a little about one of em so here's a quick little primer on etherium. It is I think the only real crypto with an actual use case. 

https://www.gemini.com/cryptopedia/ethereum-smart-contracts-tokens-use-cases

Nike is picking up about 180million/yr of just lying-on-the-table dough with https://www.swoosh.nike/, it runs on the ether blockchain. There are several other multinationals with similar projects. Visa is building a payment network on it. A lot of people strongly expect it to replace the SWIFT network, or perhaps more likely, that SWIFT will merge with it instead of going obsolete, either of which which would be one *hell* of a big deal (something like 150 trillionUS moves through swift every year). Who knows if this trend will continue, but as of right now, it is being used a whole lot.. 

Meanwhile I wanna see everyone at ftx, not just poor lil ol Sam, in jail doin hard time... 

In reply to Jay_W :

"Lots of people are putting money into it," is not the same thing as having fundamental utility or inherent value.

That looks like just a major multinational company wanting to get in on the game of charging people exorbitant prices for imaginary objects. This looks like a Bored Swoosh Yacht Club.

Edit: Uhh... "The first collection is coming soon and that’s just the beginning. We’re building new ways for you to use, flex, and enjoy your virtual creations." If they're taking people's money, they haven't given them anything for it yet and aren't saying what that will be or when.

GameboyRMH said:

Beer Baron said:

But the issue with fraud and theft is that they occur at the weakest link, and that's almost always the people, not the technology.

The concern isn't that someone is going to hack the code and add something illegitimately.

The concer is that someone will get personal log in information to access an account and make a change. They'll get someone's personal information to gain access to an account in a way that looks to a system like it's totally legitimate and do a trade that the computers see as, "John Smith is transferring funds to Jane Doe."

The technical systems aren't being broken or exploited. It's the human weakness being exploited.

How do you undo a fraudulent transfer that results from a human exploit?

That's correct and it's a serious issue for cryptocurrencies (moreso the exchanges and some of the more "creative" wallet access systems, as the basic wallet system is pretty secure...if you secure your wallet file properly) or anything that has random people logging into it from random places. For a notary service it would hardly be an issue as they may only allow logins for a few of their staff via a VPN with a strong password and a Yubikey.

Okay. I think I follow what you're suggesting now. You're using blockchain as a ledger tool within what is effectively a controlled, private network. The public does not ever interact with the blockchain ledger directly. It is purely an internal tool, so if something bad *were* to happen to it, it would be reviewed by another system. People would be able to challenge and say, "That's not right." Then you can look back at the indelible record and find out where things went wrong.

I was IN the Bahamas when they arrested him. 
 

I feel like I somehow missed an opportunity...

In reply to Beer Baron :

Standard Disclaimer: This is not financial advice, do your own research

USD is backed by the petro dollar and our military. I was fine pretty fine with USD until recently. Now you have countries like China wanting to replace USD as the global currency (their global economic power is rising quickly) and members of BRICS trading oil in other currencies. That COULD put the fate of the dollar on shakey ground. That doesnt even take into account the massive inflation we've seen in the last couple years. All the hard work ive done is put at risk if I leave it in US dollars. People have been overpaying for assets for the last few years to make sure they werent holding USD. Pretty much the only thing functional about USD now is its wide use, which is great but there is a lot more to a GOOD currency.

Another problem with USD is who controls its flow. A few entities can control your access and the liquidity of your USD. Make the wrong people mad, the bank drops you, paypal, zelle, cahs app, CC companies drop you, then the fact that USD is widely used doesnt matter that much to you, because you dont have access to the normal platforms to spend it and trade it. Plenty of places wont even accept cash. This applies to the practical application you asked about. Lets say you were a trucker that was upset and went to protest your government in our nice neighbor to the north (yes i understand this is not USD but it applies). The banks froze your assets, and the online crowdfunding platforms banned you, all the sudden that widely adopted FIAT currency is useless to you. People turned to crypto currency to get funds to these people to support their cause.

A lot of the argument about crypto comes from its supposed replacement of FIAT currency. This is stuff you hear from crypto bros. I highly doubt crypto is going to actually replace FIAT, but it is a useful tool in addition to FIAT

This may sound very alarmist and "conspiracy"-y, which is fine if you believe that, but Im not a crazy guy, I try to look at things objectively. I think a lot of people have normalcy bias and think "Ive always been able to get and trade USD and its always been the global currency, and massive global shake ups almost never happen." but if you zoom out in history a little, the world and its economies are a pretty tumultuous place, so to "think because it has, so it shall be" is a wild thing. I dont think its crazy to try and position yourself best incase something changes, especially in a world changing as quickly as this one.

In theory it could have awesome practical applications, the fact that it hasnt realized all of them is a pretty terrible reason to write it off completely. Everything that is widely adopted today was E36 M3 at its inception including cars, computers, the internet, housing, online forums, ecommerce, and alternative energy sources.

I treat it like an asset, investment, and currency. In my trading at its worst, crypto has worked as an excellent hedge against inflation, at its best its massively outperformed my other assets. Some is just speculation, some is because I believe in its utility (ethereum), some is because its easily transferable and I can cheaply and quickly send money to someone.

We trade plenty of non tangible assets that are highly volatile and driven by speculation, I dont know why crypto gets such a bad rap. Yes its in its infancy so its pretty risky, like everything new, but recognize that and treat it as such. Most of its E36 M3, but not all of it.

How about how this poor sap feels?

New York Times: Man Who Lost His Bitcoin Password

In reply to Opti :

Don't worry about BRICS. It's not a thing. It was merely a way for The Economist to describe up-and-coming economies back in 2000, and right now:

• Brazil is Brazil, with serious splits in quality of living depending on state.
• Russia started a war and has been sanctioned to all hell.
• India is an ally of the west that is regularly fighting with...
• China. Which is China.
• South Africa, which seems to be close to ripping itself apart.

Apropos inflation now being on the downward trend, the other thing that keeps China from overtaking the Dollar is the simple fact there's not enough Yuan to do so. For every bill in the world, some 75-80% of them are US Dollars, 20% are Euros, and the final few percent are Yuan before everyone else. You need your currency to be everywhere to have the use rate of the USD, and to get that you need tons of them printed... 

But I do agree there's a lot of teething problems with crypto that we're going through, and that we might get something out of it. That's one particular reason it took some time to go snag FTX- the Fed had to decide if they were gonna charge him as if Crypto is a commodity or if it's a currency, knowing that this case will make precedent on one side and that could have long-reaching implications since it gets used as both. The case will be easy; what this case CAUSES will be hard.

Opti said:

In reply to Beer Baron :

In theory it could have awesome practical applications, the fact that it hasnt realized all of them is a pretty terrible reason to write it off completely. Everything that is widely adopted today was E36 M3 at its inception including cars, computers, the internet, housing, online forums, ecommerce, and alternative energy sources.

That's not what I asked.

I asked what actual practical applications and functions it *does* have for legal activity. What are they?

Those things you listed had teething issues, but they still had practical utility. Early computers had limitations and were crude.  Turing could only predict what things they might be used for as they advanced. But Turing still used the technology of his day to crack Enigma.

What is the inherent value or practical utility of cryptocurrency? What inherent value or functional utility does it have?

I'm not asking you to critique other things people invest in. I'm asking you to explain cryptocurrency.

Beer Baron said:

Opti said:

In reply to Beer Baron :

In theory it could have awesome practical applications, the fact that it hasnt realized all of them is a pretty terrible reason to write it off completely. Everything that is widely adopted today was E36 M3 at its inception including cars, computers, the internet, housing, online forums, ecommerce, and alternative energy sources.

That's not what I asked.

I asked what actual practical applications and functions it *does* have for legal activity. What are they?

Those things you listed had teething issues, but they still had practical utility. Early computers had limitations and were crude.  Turing could only predict what things they might be used for as they advanced. But Turing still used the technology of his day to crack Enigma.

What is the inherent value or practical utility of cryptocurrency? What inherent value or functional utility does it have?

I'm not asking you to critique other things people invest in. I'm asking you to explain cryptocurrency.

I gave you one, money transfers that bypass the standard institutions and privacy.

In reply to Opti :

What is the inherent value in transferring money in a manner that bypasses the standard institutions and privacy (assuming legal activity)?

Why does anyone need that?

I don't have a need to hide my money from the government. I pay my taxes, etc. And the downside (insecure locations without protections like the FDIC, where your money can vanish without warning) is so enormous it offsets any potential value to me. 
 

Is it JUST so we can be non-conformist?

Opti said:

I gave you one, money transfers that bypass the standard institutions and privacy.

I said for legal activity.

What practical function does it have for legal activity?

In reply to GIRTHQUAKE :

Iran has applied to join and last I heard Saudi Arabia, Egypt and Afghanistan were also looking to join. I understand that the USD is the current global currency, but prior to WWI there wasnt enough USD for it to be the global currency either. To think because it currently is means it always will be is wrong, look back through history and stuff changes a bunch, especially in times of conflict, and we are in the middle of a conflict that people seem pretty on board to escalate.

China is also trying to expand its reach and influence with the Belt and Road Initiative. Sure Russia is facing a lot of pressure because of the invasion, all the while our allies like Germany and India are relying on them to keep the lights on.

The only thing propping up the US dollar is the petrodollar and our military, the reason USD is everywhere is because all oil was traded in USD, now we have our adversaries (one who is soon to be able to rival us economically, and debatably militarily) trading oil in other currencies and opening calling for the replacement of USD, all happening at what could be (but hopefully isnt) a widespread conflict. Im not saying USD will be replaced, Im saying we have a series of events that could lead to its replacement.

The reserve currency used to be the pound. Im sure the contemporaries thought it wasnt going to be replaced either.

Currency speculation is gambling; always has been. It doesn't matter if it's Kroners, Denari, or Bitcoin. It's not investing. In this case, it's both speculation and outright fraud intertwined. 
 

Governments are not going out of the money business. They enjoy the power and tax revenue. It's just not going to happen. 
 

Ironically, stable government: diplomacy, trade agreements, regulations, law enforcement, etc... are required for a stable currency. It's a two way street.  Stable currency is required for a healthy economy. Otherwise, society defaults back to bartering in hard goods. 
 

Some of the technology in crypto currencies may go mainstream, but crypto currencies outside of government control will not be the next world currency. 
 

Honestly, I have serious doubts on the technology. What's to say a kid with a smartphone can't crack blockchain in a couple of years? Technology changes too fast for today's technology to be worth much in a decade. 

In reply to SV reX :

Your money can just disappear in FDIC insured institutions also. They only cover so much. I value my privacy especially in a world of increasing surveillance. I know not everyone does and thats fine, but privacy along has value to me. People immediately thing illegal when privacy is talked about. You can have private transactions and not be hiding anything illegal. The founding fathers thought privacy was pretty important, and including a couple things related to privacy in the bill of rights.

You dont have to be doing anything illegal to catch the ire of the institutions, plenty of people are getting shut down for LEGAL speech.