
Cryptos Fear Credit - Suncho
http://www.perrymehrling.com/2017/09/cryptos-fear-credit/
======
sova
>Once everyone else realizes the superiority of cryptocurrency, they will all
want to switch over, and the value of fiat currency will collapse.

You really think so? Cryptocurrency requires a massive infrastructure (the
internet) and inaccessible physical locations will always have a need for
physical cash. It's like saying every country will go digital with money, I
don't think that's the case now or in the future. The hand-to-hand gesture is
just too fundamental to being human to be circumvented by some clever logic
boards.

Credit in crypto? I don't mean to come off as rude, but do you understand that
proof-of-stake in crypto is an emerging issue, and that proving that you own a
particular bitcoin or that you are even the owner/controller of a particular
address on the blockchain, is not an easy task. Credit is built on a secondary
or even tertiary idea of "how reliable is this individual to eventually bring
the balance back to zero or near zero" and cryptocurrencies don't play in this
nether-region, because it is already an amazing innovation that we can have a
distributed ledger at all.

To say that credit is the next logical step in the evolution of crypto... I
don't think you have really condensed or absorbed the very paramount
differences between normal money and cryptocoin. One is a physical IOU, the
other is an indication of where transactions have moved. Cryptocurrency is not
fundamentally an IOU any more than a bar of Gold is an IOU. Credit is possible
with IOUs, but it is not possible if the boolean value is "yes I have one
satoshi of gold" or "no I don't"

Thoughts?

~~~
Suncho
_> >Once everyone else realizes the superiority of cryptocurrency, they will
all want to switch over, and the value of fiat currency will collapse._

 _> You really think so?_

I didn't write the blog post, but I think it's pretty clear that he's saying
is that this is what many crypto fans believe. I don't think he's claiming to
believe it himself.

 _> Cryptocurrency is not fundamentally an IOU any more than a bar of Gold is
an IOU._

Correct. Bitcoin is digital gold. But a bar of gold _is_ an IOU. Because gold
gets most of its value from its ability to be traded for other stuff, it's
basically a form of credit. You can think of gold as a general purpose IOU
from the economy to the person holding the gold. If the economy collapses, the
gold isn't worth much. Bitcoin is the same.

Unfortunately, neither bitcoin nor gold can be currency. Currency must have a
reliable stable value. As far as I know, the only way to ensure stable value
of a currency is through centralized monetary policy.

------
Suncho
This is part of why cryptocurrencies like Bitcoin and Ethereum can never
become true currencies. They pretend that credit does not exist. I'm skeptical
that a decentralized monetary system is even possible.

