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Bitcoin and Other Cryptocurrencies Are Useless, The Economist Says (economist.com)
With few uses to anchor their value, and little in the way of regulation, cryptocurrencies have instead become a focus for speculation, The Economist magazine said this week. From the story, which may be paywalled: Some people have made fortunes as cryptocurrency prices have zoomed and dived; many early punters have cashed out. Others have lost money. It seems unlikely that this latest boom-bust cycle will be the last. Economists define a currency as something that can be at once a medium of exchange, a store of value and a unit of account. Lack of adoption and loads of volatility mean that cryptocurrencies satisfy none of those criteria. That does not mean they are going to go away (though scrutiny from regulators concerned about the fraud and sharp practice that is rife in the industry may dampen excitement in future). But as things stand there is little reason to think that cryptocurrencies will remain more than an overcomplicated, untrustworthy casino.
Can blockchains -- the underlying technology that powers cryptocurrencies -- do better? These are best thought of as an idiosyncratic form of database, in which records are copied among all the system's users rather than maintained by a central authority, and where entries cannot be altered once written. Proponents believe these features can help solve all sorts of problems, from streamlining bank payments and guaranteeing the provenance of medicines to securing property rights and providing unforgeable identity documents for refugees. Those are big claims. Many are made by cryptocurrency speculators, who hope that stoking excitement around blockchains will boost the value of their related cryptocurrency holdings.
Can blockchains -- the underlying technology that powers cryptocurrencies -- do better? These are best thought of as an idiosyncratic form of database, in which records are copied among all the system's users rather than maintained by a central authority, and where entries cannot be altered once written. Proponents believe these features can help solve all sorts of problems, from streamlining bank payments and guaranteeing the provenance of medicines to securing property rights and providing unforgeable identity documents for refugees. Those are big claims. Many are made by cryptocurrency speculators, who hope that stoking excitement around blockchains will boost the value of their related cryptocurrency holdings.
I bet they'll say my Magic cards & Beanie Babies are useless as well!
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
'The Economist' might not see evading capital controls as useful, but they are wrong.
Not an investment vehicle, but for 'in and out' in a day, good enough.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
"All art is quite useless." - Oscar Wilde
It's not their best headline writing, but TFA makes the point clear: cryptocurrencies are not currencies, let alone useful currencies. Their only "use" is speculation, and to an economist, that doesn't count as "useful".
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You forgot their greatest two benefits: money laundering and international transfers of an interloping currency state.
Yes, it's currency, bizarre as that might seem. Consider the state of the Turkish Lira. Or the fates of Iran, Zimbabwe, Venezuela, and a dozen more nations where there are either controls in place for international transfers, or worse, hyper-inflation.
The world's alternate currency used to be the US Dollar, Swiss Francs, the Euro, and pounds sterling. Even the yuan has caved to the whims of "the west". If you wanted an alternate currency to say: Fuck You, or change out that truck load of dope, crypto currency has its attractions.
Just like the Internet has pseudoanonymity, so does BTC. For now, no one knows you're a dog.
---- Teach Peace. It's Cheaper Than War.
All cryptocurrencies are underpinned by the belief that people will trade something of value for them. That usually means currency, but it could also be material goods or intellectual property.
On top of that value, you have speculation based on other factors; in this case, scarcity and demand. The more the perceived mania continues, the more volatility there will be.
What is different here is that a number of early adopters held onto the currency, and others bought in late. That distorted people's perception of the cryptocurrency where they thought they could all make money fast. Well, lo and behold, the currency crashed since its peak, and seems to be teetering currently.
That there are systemic problems with exchanges and blockchain goes without saying. This is unlike traditional currency because the transaction costs are increasing exponentially and putting additional pressure that a normal paper currency managed by a sovereign central bank doesn't have. That reduces monetary velocity through the system and impedes cryptocurrency use for fine-grained transactions. I won't get into the back door idea or breaking the cryptography, although those might become factors in the future. These translate to additional volatility and uncertainty that hurt the value.
The other big difference between an independent cryptocurrency and a regular currency is who and what backs it. That's probably the greatest concern for The Economist and for those who favor classic economics. This is uncharted territory, and uncertainty will always be punished by the market by participatory withdrawal and diminished value. Only time will tell, but something tells me that Bitcoin and the like may be a game of musical chairs.
I honestly believe the single biggest impediment to the public accepting crypto as an alternative currency were all the hacks and corrupt coin exchanges that took people's funds and vanished.
Crypto-coins had the promise of being extremely secure and anonymous, but we quickly saw that unravel as folks learned how to trace transactions back through blockchains and as all of the web site compromises and coin-stealing malware arrived.
It's still too complicated for the average person to take a payment or spend crypto-currency. The unique wallet ID, alone, is a big, long, messy string of characters that nobody can remember. So they have to pretty much launch their wallet app and copy/paste the thing any time they want to instruct someone else to pay them. So that's another big problem. But really, a lot of this stuff can be coded into a more user-friendly UI, if someone is motivated to do it. (I think that's one of the promises of the new project out there to let independent musicians get paid directly for use of their music, without needing a middle man.)
But we're far from seeing the whole thing get stable enough so folks have a good handle on just what a given crypto-coin is worth. Everyone I know hanging onto any of them does so with a hope of reselling them at a profit at some later point in time. They're not keeping them like folks collect spare change in jars at home.
The fact it's existence depends on other actual currency means it is worthless on its own. Everyone who owns bitcoin is hoping to cash out for real money.
The scale and scope of crypto is going to take a long time to work out because its such a large, world changing idea. Crypto maximalists know this fully, its not a feeling of 'if' its a feeling of 'when' no matter who talks shit
And then you pay something in Dogecoins and your cover is blown.
#DeleteFacebook
... from when 1 BTC value was a fraction of a dollar.
What the Powers That Be don't like is gold. Keynes called it a "barbarous relic" and Warren Buffett derided it. But, central banks have bought a lot of it. Some countries have tried to limit its private ownership, now and in the past.
Currencies started out as mutually valued, divisible objects. Wampum, cowry shells, etc. For whatever reasons, everyone valued gold. It was divisible, didn't tarnish, didn't burn - essentially indestructible. It had all the qualities of an excellent means of exchange and a store of value, over the millennia.
Then people started putting gold into storage and using slips of paper which represented that gold. They could get gold for their slips of paper at any time. The system grew. Fractional-reserve banking was discovered (you can lend out more than you have in your vault because everyone is not going to try and withdraw at once). Emergent properties appeared. People stopped using gold to transact altogether. In 1971, the US "gold window" was closed - cash could not be redeemed for gold. The system continued to function (though the price of gold skyrocketed, and around that time is the mark is the stagnation of the wages of the lower wealth percentiles of society. Coincidence? Maybe, maybe not. Side note: it seems to me to be much easier to skim paper you're printing, and to distribute it to your favored partners than it is to skim gold. But that's another topic).
Fast forward to today, and people are moving away from even using the slips of paper, going to cashless systems where only the balances of an account are tracked. "Purchasing power" is now totally virtual. Some countries and economists are pushing "cashless societies" (Note: most economists missed the oncoming 2008 Financial Crisis).
The digital accounts represent cash. Cash used to represent gold. Now it just represents "purchasing power". What does bitcoin represent that is mutually valued?
"vote back to you" - no it doesn't. it gives the vote to the existing whales, which for the hoi poloi entering the field, means "not you". it's like people trumpeting how the right to bear arms keeps them safe from "tyranny", when they have no chance to fight against an entity that can field APCs and drones.
The problem is so long as it realistically must be exchanged for something more stable to mitigate risk for it to work as an exchange when it is too rough to be an investment vehicle, it becomes easier and easier to trace. Bitcoin transactions are transparent, though anonymous (everyone can see X BTC moved from wallets A,B,C to X,Y,Z, but those stable value alternatives are tracked and correlations are easy).
Further the act of moving BTC from some wallets to another requires relatively huge amounts of energy (and for there to be adequate interest for miners to operate to allow movement to happen..>) If you instead move some indirect representation of BTC correlated to partial ownership of a wallet, well that would address the energy issue but then it could be any made up number.
XML is like violence. If it doesn't solve the problem, use more.
Are you saying imaginary internet money was a poor investment on my part?
You company held bitcoins to pay salaries?
Yes. Salaries are low in Karachi, we pay her about $5000 USD per year. So we bought enough bitcoin to cover that for a few years so we wouldn't have to do a lot of small transactions. We weren't really expecting the surge in value, but now we have enough to cover her salary for a few centuries.
However it may be the case that there's a fundamental limit to the number of qubits that can be entangled at once. Also traditional online banking and wire transfers would be screwed as well.
Some of the nerds are pretty naive about real world matters. They know a lot about 6V6 Audio power output tubes, tantalum capacitors, and the comparative differences between a 74LS04 and a 74HC04 hex inverter chip, but are easily taken advantage of when amateur libertarian hucksters show up to ramble about 'fiat currency.'
These discussions are a social service to the nerd community.
It's been in continuous publication since the 1830s. Businessmen gladly pay a $130 annual subscription for it because it has journalistic integrity greater than just about any other journal in print.
But dinks on Slashdot know better. I bet Alex Jones has an entire rap he can rattle off about how uncreditble The Economist is.
Oh for Fs sake don't make the tin foil fool +insightful. Just because people don't understand HFT doesn't mean it is useless or bad.
If the "big boys" had it their way they would go back to the good old days when your physical proximity to the trading floor determined the extra percentage you got on your trades. When a "chair" was mostly a high value ROI than a prestige. When people had to select which exchange they were going to trade in. Back when all the fat cats could cash out and be home counting their dollars while the corner paper boy was yelling the "fresh off the presses, your life savings just tanked". Or how all trades happened on 1/8 of a dollar (another way of saying a company didn't have to tell you how bad they were doing until it passed a big threshold). How about all the value (indirect tax) that aristocrats took from currency triage? Or the lost value from pump and dumps or insider trading (regs were over worked and couldn't catch them all; still high regs mean higher cut of your profits). Or how about high transaction fees for low value trades. Or having stock information delayed by a few hours. Or not having automated triggers?
ALL that was basically killed by HFTing. Other than the intitial FDIC, there hasn't been anything as beneficial for the "little man" as HFT. The only people that have really suffered under HFT is fat cats, exchanges, hedge funds, and other HFTs.
No... just.. no
You tree huggers.. For fuck's sake....
A person can have a home that is 100% solar. They CAN use their own electricity to generate those coins.. They don't have to back feed into the grid... Sometimes they don't even have the option to dump excess into the grid.. So take your holier-than-thou and cram it.
You people hate everything that makes our society what it is.. Life wasn't better before technology. It was WAY FUCKING WORSE. You dropped dead at 45.. Every cut or scrape was a potential death sentence. And every animal in nature is 1 of 2 things.. It's food or you are it's food.
Take off the rose colored glasses.
Environmental crime.... Go fuck off.
You could look at the price of gold in the same time, and you will see a much larger fluctuation. If you take the value of the dollar from 1918, and you calculate the Federal Interest Rate into it from year to year, the dollar is amazingly stable. The interest rate for gold is nil. No one will pay you gold for being able to hold onto your gold coins for some time. Instead, they will charge you a deposit fee.
That would be the same military with APCs and drones that can't beat a bunch of savages armed with assault rifles? Even after 17 years and trillions of dollars spent?
That's because those savages with assault rifles aren't facing tyranny.
They're facing a military that is (by and large) operating under rules and trying to (whether the plan would work or not, that's the ultimate goal, yes?) establish order such that a democracy can form.
(also, the main threat isn't the assault rifles, but IEDs and other booby traps that a military trying to maintain order is vulnerable to)
If you're facing true tyranny, having assault rifles won't help. If you're not facing true tyranny, you don't need them.
No, you don't. That is the vallue today. If the price goes to 0.000001 you won't have enough to pay her an hour.
You do not have that money at this moment., Only when you sell do you have that money.
This is how many people get "rich". They think that shares they have are the money they have.
When you bought 100 Bitcoins when they where 100 USD, the moment they where 20.000, you did not have 2.000.000 USD, you had 100 Bitcoins. If you have them now, you still have no USD, you have bitcoins.
OTOH if it goes to 0.5, you do not suddenly have 50 USD, you still have 100 bitcoins.
So when you say that you have enough for a few centuries, you must add 'if the value stays the same'
And unless you are a bank, it might be better, as a company, to invest that money into the bank by paying back loans or, if having loans is financially interesting, get better loans and pay less interest.
Because a few centuries is, say, 3 centuries, times 5.000 1.5MM at least. (as 3 is the lowest when looking at several)
Having that on a USB key and not doing anything with it, is not the wisest financial decision. As this is pure profit, it is very easily to look at the ROI when looking at doing several different transactions over a period of several years and find ways to pay her in a different way.
And I am sure there are ways to do payments via a banktransfer to a bank in Pakistan.With all the monies you made, taking the cost of those transfers should be a non-issue (and those costs should have been calculated beforehand anyway)
And if you are too dumb to figure that out Her is another way
The thing is that you are a willing participant in creating black money and try to figure out a way to talk yourself out of it. You should never have gone with payment in Bitcoin in the first place.
Don't fight for your country, if your country does not fight for you.