
Black Swan author urges: “Use cryptocurrencies ” - HipGeeks
https://decrypt.co/25933/black-swan-author-urges-use-cryptocurrencies
======
duxup
In theory someone in a country where their currency value is dropping goes and
buys some cryptocurrency and stabilizes the value they own.

But crypto currency isn't some stable value right? Wouldn't the result be that
that person who is already in a bad situation now has put their eggs in a sort
of cryptocurrency speculation market?

Let alone all the security / liquidity questions.

Is that something vulnerable folks really need / should do?

~~~
nostrademons
The wildly speculative price of crypto is a feature of the transition period,
not an innate feature of cryptocurrencies.

There are two steady-states of money, both described by the money supply
equation PQ = MV from macroecon-101. If everybody uses dollars, Bitcoin is
worth nothing and the value of dollars (1/P) = real GDP (Q) / MV, real GDP
rises at ~1-3%, velocity of money is roughly constant, and so price levels go
up at the ratio of money supply growth / real GDP growth. The same goes for
crypto - if everyone uses Bitcoin, the dollar is worth nothing and prices of
goods go up based on real GDP / Bitcoin money supply growth, with the value of
Bitcoin (in goods, because nobody would be using dollars) as the reciprocal of
that. Cryptocurrency inflation is actually a lot more stable than dollar
inflation, because the supply of a cryptocurrency is algorithmically baked
into the software itself at the time the crypto is launched. Short of forks
and competing adoption, you can predict exactly how many Bitcoin there will be
(21 million) when the last Bitcoin is mined (2140).

The wild price swings happen because you have two interacting user
populations. If say 0.1% of the population uses Bitcoin and then a bunch of
news stories come out about crypto that raise awareness to 1%, then you have
10x as many people fighting over the same supply of crypto. That'll drive the
price up 10x (actually more, because people tend to hoard rather than sell
when the price is growing up). Similarly, if half those people give up and go
back to dollars, the price will fall by 50% (actually more, again because of
the presence of Bitcoin hoarders).

In the end state, where everybody uses cryptocurrency, the price of crypto in
dollars becomes meaningless, because nobody uses dollars anyway. That makes
cryptocurrency a funny investment where its true fundamental value is either
zero or infinite, and the price you're getting in the spot market at any given
time is a reflection of _how likely_ the public at large thinks these two
outcomes are.

~~~
urthen
Unless Cryptocurrency is as easy and safe to get & spend as traditional
currency, "everybody uses cryptocurrency" ain't gonna happen. If someone
steals from my online bank, I'm insured against loss. If someone steals from
my online crypto wallet account, I'm out of luck (and a ton of money).

(insert "it's your fault for trusting other companies with your wallet!"
comment from the crypto kiddies here)

Keeping your crypto wallet in off-network storage and having to dig it out to
spend money or whatever is the digital equivalent of keeping stacks of cash
under your mattress. Does it work for some people? Sure. But don't pretend
it's what the average person wants to do.

------
HipGeeks
His entreaty was in response to a post about the Bank of Lebanon ordering
foreign currency remittances to paid out in the local currency.

~~~
HipGeeks
The Lebanese pound has lost half of its value since October after capital
inflows dried up and protests erupted

~~~
anonu
Not officially. It's still pegged 1USD to 1500LBP. But on the blackmarket its
4000 or 5000LBP due to pretty strict capital controls

------
verdverm
For what? The are nearly unusable and definitely not currency by common
understanding and usage

~~~
jrumbut
As a means of electronic transfer to avoid capital controls, presumably it is
then immediately converted to LBP at the natural exchange rate rather than
getting the small amount of LBP that the government has decided is the
official exchange rate.

