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10 years of whatever this has been (apenwarr.ca)
480 points by zdw 67 days ago | hide | past | favorite | 704 comments



Everyone's got 2c on bitcoin but here's mine: I don't consider the price of crypto when looking to see progress / success.

Could you explain to somebody why Bitcoin is successful without mentioning that the price goes up, by talking only about the technology, product, and adoption? What if that person was unimpressed by Bitcoin 5 years ago, could you explain what changed in the last 5 years (again, not mentioning change in price) to change their opinion of bitcoin?

AFAICT the main changes in Bitcoin in the past 5 years have been some incremental evolution of the technology that I'm not aware of changing the fundamental usage of the product in any way (SegWit, LN, and most recently Taproot).

A note on blockchain proliferation: The author considers it a bad sign that there's an explosion in new blockchains. While I also consider it a bad sign for Bitcoin, I think it's a good thing for the ecosystem. My hope is that some day we'll have ubiquitous inter-chain protocols so, rather than obsessively hyping the coin/chain we're invested in, we can move all our digital assets and contracts to whatever blockchain offers the best technology, the best performance, and the lowest fees. This will allow for increased competition and evolution in the blockchain space. You can see the beginnings of this movement in some places, but it has a long way to go.


> What if that person was unimpressed by Bitcoin 5 years ago, could you explain what changed in the last 5 years (again, not mentioning change in price) to change their opinion of bitcoin?

More liquidity allows people to get their money of their home currency and evade capital controls. In places like Argentina you're forced to use and hold a currency that's depreciating 50% a year. You get one exchange rate, while foreigners get another. And to top it off you're not allowed to hold USD or another stable currency.

Sure it would be great if they got rid of capital controls but that's not the reality and people in these countries have to live with it.

This was telling from the article:

>> Citizens moving money out of authoritarian regimes. This is, by definition, illegal, but is it a net benefit to society? I don’t know. Maybe sometimes.

I don't know where the author is from but I am almost certain he doesn't live in an authoritarian regime with capital controls. To be so flippant about basic rights that people in developed countries have access to is really off-putting.


> In places like Argentina you're forced to use and hold a currency that's depreciating 50% a year.

Can we please stop banging on with this trope that BTC is somehow the magic savior of poor people in oppressive regimes? This has been beaten to death already and is just bs. Please try to look out of your western high-earner bubble and see that the majority of poor people in countries like Argentina, Afganistan, Zimbabwe, Venezuela, Cuba, etc. that suffer from that rampant inflation have not enough money and assets to buy into the bitcoin ecosystem and make it work on a daily basis.

Again, in those countries, only the corrupt rich benefit form this new digital money laundering, tax evasion feature of BTC, as the average Joe there can't afford the $26(??) transaction fee every step of the way when that's the cost of their family groceries for a month.

Everyone in those countries with failed currencies use stable fiat like USD or EUR to fend off inflation, not BTC. BTC hasn't democratized wealth, but concentrated in the hands who already owned lots of fiat/assets or those who have access to free energy for their mining enterprises. Poor people in poor countries have not benefited form BTC.

I'm not saying that there aren't poor people in Argentina who put all they had in BTC when it was low and sold high and got out of poverty, but that's more akin to playing the lottery than an actual sane financial strategy for staying solvent.

>I don't know where the author is from but I am almost certain he doesn't live in an authoritarian regime with capital controls

But do YOU live in an authoritarian regime? Or are you blowing smoke based on how you imagine life is in those countries from your cushy western perspective and stuff you read on reddit? Because I spent my childhood in a broke totalitarian regime.


As the CTO of a local exchange in Iran, I can confirm that many average people here are using cryptocurrencies for many reasons including countering inflation. We even have farmers and other low-tech workers using our platform. Buying USD is not that easy here and many people simply use an exchange to buy and save crypto, without needing to do any on-chain transaction at all. Many use crypto when local stock market is not doing good for having profit on their normal savings. Even a non-trivial percent of our users identify themselves as full-time traders. Additionally because of US sanctions many are using crypto to transfer funds to their relatives over the borders, buy games/VPS/VPN/etc, receive remote salaries, or even accept donations for completing GitHub issues.

The local or the US government may oppose some of these actions and consider it illegal, but many normal people just use crypto to have a better life regardless, using their hard-earned money, for normal savings or completely ethical personal financial purposes. Those who want to launder money or evade taxes already had access to more efficient ways and presumably are still using them.


> Buying USD is not that easy here and many people simply use an exchange to buy and save crypto, without needing to do any on-chain transaction at all.

So people are using IRR to buy “crypto” on an Iranian exchange, without any on-chain transaction? Does the said exchange even have real crypto backing these accounts? If so, how did they buy it, since there's probably no-one out of Iran that would offer bitcoin or anything against rial.

On a side note, because the majority of today's use of crypto is intermediated by exchanges (which are banks, really) I'd really love to know how “leveraged”[1] they are: that is, how much of the crypto there customers have on their bank account they actually own on-chain. It could still be 1/1 at this point, but it would be surprising given they have no regulatory requirements and it's such an easy way to make money.

[1]: yes, I know, this isn't the proper term, but I just can't recall it right now.


The parent mentioned high transaction fees, that for some people may equal their whole savings. For these people, the best option is just to trust the exchange. But people with even moderate sums can and do transfer their cryptos to their own wallets. We support multiple networks and withdraw methods and transfer fees can be as low as less than a dollar. In fact our daily deposit and withdraw rates are usually comparable.

Is the crypto real and backed? As far as our exchange (the biggest in the local market) is concerned, totally yes. Aside from matching local request and demand and local mining, there are big providers that can provide USDT/USD inside or outside Iran. Then you can exchange them on many international exchanges ignoring all limitations. As I said above, there are many traditional ways of bypassing laws/sanctions and big players actively use them. The cryptocurrencies and exchanges are just creating platforms for ordinary people to have access to it.

There are inevitably “banks” and large holders/miners/etc, but the best thing about crypto is that anyone can be their own bank and trust no other person, or even mine their own money. Just as you can setup your own blog as well as using big platforms.

The regulation is in its early stages, but even here exchanges use KYC to prevent really bad actions like laundering stolen money. The trust is also more reputation based than regulation based. If an exchange is operating for a long time with known founders, and was able to satisfy all withdraw requests even in low markets when everybody was getting their money out, people tend to trust it. Our users usually do not even tolerate a minute of downtime. But of course good regulation (if there is such a thing and governments are agile enough to provide it) can help to prevent frauds that may happen in any market, including crypto. But probably making everyone more knowledgeable, with a light supporting regulation, is a better approach to preventing fraud.


> As I said above, there are many traditional ways of bypassing laws/sanctions and big players actively use them. The cryptocurrencies and exchanges are just creating platforms for ordinary people to have access to it.

I love how casually you're bragging about “delivering money laundering and corruption to the masses”. I sincerely hope you end up in jail some day.


It is just normal consumers doing things that are already accepted, even if not explicitly declared. For taking any substantial amount of money out of a bank anywhere in the world, there are tight controls and nobody can sell oil or deliver large stolen money trough crypto. But how it is different that a person can directly buy an Xbox game with crypto instead of buying it from a reseller? The reseller already did the same thing - somehow move USD to another country, buy the game and sell it inside the country. I'm saying that the crypto is just removing some proxies and traditional processes and is not providing any new way of doing bad things that were not possible before crypto.

It's like saying that Uber is causing global warming. If you really care about global warming, just regulate using cars and force EV. If for whatever reason no one cares about regulating cars and everybody already uses them, disallowing an electronic method of renting cars does not fix any real problems.

If you think anyone cares about these use cases, why a company like Apple does not simply block Iranian network providers on iPhones to prevent any illegal selling of iPhones here? There are a many many people in Iran that are using iPhones and other products that are not supposed to be used here, all of which are imported using the same methods that I said exists and are being used. Does allowing use of such products "money laundering and corruption" and you are hoping for Apple managers to end up in jail? The services I said are being used are all of the the same kind, normal services used by normal people. That's not even considering the debate that does a country like USA has the right to define what is a crime in another country or not.


There's a pretty big difference between “not actively policing your market to avoid money laundering” and “creating a business dedicated to money laundering”. We can argue that the first is irresponsible (because most of the times, the company is aware of what's happening) but the second one is in another league.

And I don't really know why you bring the USA here, this isn't harming them in any ways (Otherwise, you can be sure that iPhones would be bricked there for instance), this is harming Iran.


I don't know why the false assumption that Bitcoin fees are expensive keep propagating. Just last December $166 million was transferred for $1.25. In general I've never had to pay more than $5 for a transaction fee. Also, I don't know if living in a totalitarian regime a long time ago makes you all that much more an expert than OP.


> Can we please stop banging on with this trope that BTC is somehow the magic savior of poor people in oppressive regimes?

I never said it would be a magic savior. I said its a good option for people that aren't legally allowed to hold a currency outside of their own country's depreciating currency.

> Please try to look out of your western high-earner bubble and see that the majority of poor people in countries like Argentina, Afganistan, Zimbabwe, Venezuela, Cuba, etc. that suffer from that rampant inflation have not enough money and assets to buy into the bitcoin ecosystem and make it work on a daily basis.

No one is forcing them to use crypto. I would like it to remain an option, even if they have to buy locally. You're the one that's in a high-earner bubble thinking they can just go down the street and open up a US denominated free checking account.

> Again, in those countries, only the corrupt rich benefit form this new digital money laundering, tax evasion feature of BTC, as the average Joe there can't afford the $26(??) transaction fee every step of the way when that's the cost of their family groceries for a month.

There are cheaper ways to acquire crypto and there are also stable coins. But it doesn't sound like you're interested in that. If it really costs $26 then obviously that might be too expensive, or maybe not considering sending money through Western Union is often times more expensive.

> Everyone in those countries with failed currencies use stable fiat like USD or EUR to fend off inflation, not BTC.

In Zimbabwe and Argentina and many other countries with capital controls, it's illegal to hold USD or other foreign currencies.

> But do YOU live in an authoritarian regime? Or are you blowing smoke based on how you imagine life is in those countries from your cushy western perspective and stuff you read on reddit? Because I spent my childhood in a broke totalitarian regime.

No I don't. But I'm not the one that wants to restrict what people in poor countries can or can't do with their money. That's you.

[0] https://www.aljazeera.com/economy/2019/6/25/zimbabwe-outlaws...


>But I'm not the one that wants to restrict what people in poor countries can or can't do with their money. That's you.

Sorry, but if you're gonna make false accusations about me and put words in my mouth, i will end the conversation here and never reply to you again. Good day sir.


> I don't know where the author is from but I am almost certain he doesn't live in an authoritarian regime with capital controls. To be so flippant about basic rights that people in developed countries have access to is really off-putting.

Argentina isn't an authoritarian regime, and from what I learned when my wife lived there 9 years ago, one of the biggest challenge faced by the country actually comes from the wealthy people turning all pesos they could into USD (which drives the peso down, leading to bigger inflation because it raises import costs a lot). Capital control was actually set to avoid this issue (with pretty much no success) and if you really cared about Argentina, you should wish for a more effective way to counteract money evaporation instead of something that makes it easier.


> What if that person was unimpressed by Bitcoin 5 years ago, could you explain what changed in the last 5 years (again, not mentioning change in price) to change their opinion of bitcoin?

WOW, all these walls of text replying.

Simply put, Bitcoin's strengths:

1) resilience

2) that jack shit has changed, and it's still A-OK at storing funds.

It is a slow-moving dinosaur of a blockchain, and that's how you should want your permanent store of value.

"Slow" (still pretty fast compared to ACH!) protocol updates and careful, conservative governance = safety of your funds.


Its is like during the gold rush .... Founders/owners of these coins and DAOs are the ones selling shovels to normal people and making money.

edited - for clarity



What a terrible chart. It has no Y-axis labeling and one of the trendlines they've drawn has the number of bitcoin users exceeding world population in a little over 5 years.


It's interesting, the original article is one giant Appeal to Consequences fallacy. The arguments are structured like "If Bitcoin succeeds, X will happen, and X is bad, therefore Bitcoin will fail" or alternatively "Bitcoin undoes policy Y, policy Y was a good thing, therefore Bitcoin is bad and will fail." And then the epilogue here finally acknowledges that yup, all the bad stuff did happen, and yet Bitcoin still succeeded, and the future will probably involve more bad stuff but that's the way it goes.

I feel like one marker of maturity is understanding that not everything true is going to be good, and not everything that we want is something we're going to get. So many timely debates take the form of an Appeal to Consequences fallacy. "Hyperinflation would be bad for everyone, therefore the government will not allow hyperinflation to happen" - ignoring that the government may not have the mechanisms to stop it once it begins. "If it's too late to do anything about global warming, we're all fucked anyway, so let's proceed on the assumption that it's not too late" - ignoring that "we're all fucked anyway" may mean many different things and some of them might be significantly more pleasant than others. "America is a great country, so it can't possibly collapse", ignoring that many once-great countries have collapsed before.

I found my predictions got significantly more accurate, though significantly less comforting, when I realized that good doesn't always win out in the end.


There's a missing step in both directions: what is the policy response going to be?

Bitcoin maximalists assume they can take over without firing a shot, seemingly ignoring what happened to both the online poker world and Liberty Reserve. Whereas the likely outcomes are "registered bitcoin" (you're obliged to tie all your transactions to KYC identities) or "offshore bitcoin" (you're obliged to firewall against US customers).


I think the backdrop that's allowing cryptocurrency to flourish is rising state failure, globally, even in nations that we previously considered relatively stable & developed. People have a gut sense that the state can't protect them from the challenges that the next decade will bring, whether climate change, mass migrations, terrorism & extremism, inflation, a demographic bulge of young adults. They're looking for solutions that they personally can do in case the state either dissolves or becomes a hostile entity.

I think it's very likely that governments will outlaw cryptocurrency. But I also think it's likely that an increasingly larger portion of the global population is going to exist outside the law and outside the state. The government will say "Cryptocurrency is against the law", and a large fraction of people will say (quietly, unless they're stupid) "We don't care, because the alternatives you provide us are not working." Cryptocurrency is invaluable in that context, in providing a financial layer that does not require the state's power to enforce contracts.


And what exactly are you going to do with your illegal currency then? Apart from paying your drug dealer, I don't really see the use case.

It's already hard enough to launder cash, and that is the official currency! In addition money laundering regulations get tougher every day, so I'm afraid as an individual you'll just be able to send money to your friends, and potentially use it in holidays abroad (careful not to take any picture or let anybody know, more than one money laundering got caught by displaying vacations way above their declared income).


You use it to buy food, fix your house, pay off your protection racket that keeps the mob and/or police from killing you, get some car parts, pay that guy who loves cars to figure out why your transmission is busted, get antibiotics from the family that thought to loot the pharmacy, and of course convert into cash to pay the electric/Internet/phone companies so you can keep using Bitcoin, assuming they continue to exist (not a guarantee, and IMHO the weakest point in the "Bitcoin as a hedge against state failure" thesis). Plenty of people in failed states do this already.

I think most people in the developed world take for granted how much we get from a stable currency, rule of law, and public institutions that at least make an attempt to serve the public. All 3 of these are under threat right now.

Your assumption is that you can go to the grocery store, put your credit card into the self-checkout machine, and buy anything with money you earned several months ago. What happens when that money is worth less than half what it was last month? And grocers are like "Sorry, I don't take dollars, because they'll be worthless by the time I get my next delivery."

People in conditions like these survive by black markets. They pick something that can't be forged by a central bank - cigarettes, liquor, gold, seashells, whatever - and trade for goods with that. Cryptocurrency has the advantage of being worldwide (you can still get chips from Taiwan and electronic components from China), but the disadvantage of requiring electricity and the Internet to operate. Whether this is a winning combination depends on how deep the crisis is.


I don't have anything to add to this conversation but your idea of what the future holds for us is rather grim.


Don't share your predictions in the real world, then. Normal people want to hear good news, even if they are false. Or bad news they find outrageous or catastrophic and that they feel empowered to fight.


If you look at the front page of any newspaper there's quite a bit of doom and gloom and bad stuff. I'm not sure upbeat sells.


«it’s now obvious that use of bitcoin (and related blockchains) for payments is almost entirely scams and illegal stuff»

It is neither obvious, nor is there any data that suggests that is the case for Bitcoin. I suspect people who hold this opinion form it passively while reading the occasional flashy news headlines "Drug lord used Bitcoin!" and don't actually do any research. After all, news reporters write about what drives readership, and "Grocery merchant used Bitcoin" just doesn't quite get the same engagement.

There are very few research papers that conclude a large percentage of Bitcoin's transaction is tied to illegal activity, for example [1] claims 46%. However they are fatally flawed: they fail to consider the amplifying effect of mixers/tumblers that, by design, create thousands of automated mixing transactions per original transaction. So 1 illegal transaction will look like 1000 transactions in their analysis... facepalm

[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3102645


If only demanding evidence of crimes would magically materialize said evidence. It is hidden by design, that's why it's used for illegal stuff on the first place, and why it wasn't banned yet (who needs to hide money more than politicians?).

It's pretty obvious by the lack of legitimate activity. Nobody's buying pizzas for bitcoins. It's all about speculation and hiding your money from taxes.


>Nobody's buying pizzas for bitcoins.

Couldn't I buy a pizza with Bitcoin in El Salvador?

https://seekingalpha.com/news/3738724-mcdonalds-starbucks-pi...


The Goverment is no longer promoting Chivo. The platform is allegedly cold now. People who originally installed it for the $30 sign up bonus (which is hefty) retired.

Your link is from September.

I am not going into the problems with the platform as I am not physically there. But this iteration of the project didn't take off. The government still invests in Bitcoin, which is another issue.


Interesting, I hadn't heard Chivo was no longer active. I can't seem to find any reference to it being cold, though like you say it's difficult to get perspective not being boots on the ground. The most recent article I can find is this one from last week that seems to indicate it's still active, though it could be out of date.

https://www.inverse.com/innovation/bitcoin-el-salvador-prote...


Chivo is active. What I wanted to say is the Goverment had cooled down the promotion of the platform. Advertising in private and public spaces, that is. My opinion is Nayib Bukele will keep chivo as a business partner.

This article from a week ago states that the goverment is paying a cashback of a $0.30 per gallon of gasoline if you pay with Chivo.

https://m-elsalvador-com.translate.goog/noticias/negocios/ch...


Wasn't the first bitcoin transaction actually for a pizza?


Between Something Awful forum members where most of us went “huh, novel, whatever” and didn’t get wrapped up in it.


one of the first public purchases of legal real world things, yes.


Honest queation:

Why a bitcoin user would want to use a mixer/tumbler, if not for some reasons there is the need to make less traceable the bitcoins?

Or if you prefer, what is the purpose of mixers/tumblers and why some people use them?


Privacy. You probably don't want every person who you send a transaction to, to know how much money you have on your "account".


You've created a straw man. Author said use of bitcoins for "payments" while you've broadened that to all "transactions" on the blockchain. These are not the same thing.


It isn't entirely a straw man as the argument applies equally well for all transactions and payments alone.

Where is the evidence that BTC payments are mostly scams or otherwise illegal?


I broadly agree with the author on Bitcoin, but I do not agree on what was said about the gold standard being bad.

On August 15, 1971, Nixon removed the gold standard from the US dollar. Using unilateral government power, he managed to stop the system from completely imploding from shock.

But...then what were the long-term effects? One of my favorite websites (except for language) is "What the ** Happened in 1971?" [1] It's a series of charts showing how until 1971, economic growth for everyone was about the same, including the poorest of society. After 1971, only the richest were seeing gains.

So what happened? I'll tell you what happened: our currency was changed from the gold standard to a free-floating currency. The rich were able to invest in other things, like land and capital, but the rest of us had our savings wiped out. We also did not continue see the income gains that we had been getting up to that point.

[1]: https://wtfhappenedin1971.com/

Edit: Added a mention about income gains that I forgot.


I'm not saying you're wrong. The way new money is distributed (via banks) definitely favors the rich, as does inflation assuming there is not sufficient upward pressure on wages for them to keep up. But I also always have to point out that a lot of things happened in the early 1970s:

- We opened a lot of avenues for labor outsourcing and starting importing more finished goods.

- Factory and office automation started ramping up as the information revolution really began.

- The 1970s saw the beginning of the trend toward "neoliberal" style economics with lower taxes on the rich and less investment in social and infrastructure programs.

- The Kennedy assassination, many other somewhat suspicious assassinations, the Vietnam war, etc. all started a process of erosion of public trust in US institutions.

- Women joined the work force in droves. I completely support womens' right to do this, but I also have to point out the completely amoral mathematical supply and demand implications for the cost of labor. More minorities joining the workforce also counts. You could say that prior to this era racism and sexism created a white male labor cartel and that this cartel was broken.

- Unions really started to get broken in the 1970s and have never really come back.

I could keep going...

IMHO most large scale social and economic movements have more than one cause. Back to inflation though, it's possible that inflationary economics became more harmful to the middle class when combined with the things above as many of the factors I listed made it hard for wages to keep up with inflation.


> - The 1970s saw the beginning of the trend toward "neoliberal" style economics with lower taxes on the rich and less investment in social and infrastructure programs.

Federal, state and local expenditures and tax receipts as a percentage of GDP has increased since 1970s [0]

Public infrastructure spending is roughly flat as percentage of GDP [1]

[0] https://en.wikipedia.org/wiki/Government_spending_in_the_Uni...

[1] https://www.hamiltonproject.org/charts/public_infrastructure...


I do broadly agree with you.

However, all of those things are things that happen over time (except assasination, and Kennedy's assassination happened 8 years before), which does not explain the obvious inflection point in those graphs.

I honestly think that some of those things may have been caused by the removal of the gold standard, especially neoliberal economics. (Obviously, things like minorities and women's rights probably not so much; those things were already happening.)

So yes, you are right that those things also changed, but what caused what?


Thing is in a closed system that is steady in other ways, wages should keep up with inflation.

It would be interesting to graph inflation adjusted wages per capita ignoring employment rates to test whether increased women or minority participation in the workforce explains the lag of wages behind inflation.

Once again I have to point out that supply and demand economics are as amoral and apolitical as physics. Don't read any opinion commentary into that.

There is talk of labor shortages now and employers are being forced to increase wages. If workforce equality is a major explanation then maybe the change in employment demographics has played itself out and now wages will start keeping up a little better. Maybe. Or maybe more jobs will get replaced by robots and industry in other countries.

Any remaining gap is probably attributable to outsourcing.

What I do wonder is whether the decoupling of the dollar from gold and consequent monetary inflation masked the effects of all the other things I mentioned enough that we could impoverish the middle class without people rioting in the streets. If we'd stayed on gold people would have seen their paychecks decline in both nominal and real terms.


> I broadly agree with the author on Bitcoin, but I do not agree on what was said about the gold standard being bad.

The gold standard is/was bad. It could help turn economic downturns in things like the Great Depression:

* https://www.nber.org/books-and-chapters/financial-markets-an...

And it does little/nothing to help economic stability, as measured by things like the CPI:

* https://www.theatlantic.com/business/archive/2012/08/why-the...

* https://archive.md/FWKcL

And when it's not doing much for stability, shortages can actually stunt economic growth:

* https://en.wikipedia.org/wiki/Great_Bullion_Famine

Further, adherence to the gold standard also tends to lend itself to austerity which leads to economic suffering (e.g., deflation) which has often people to more extreme politics:

* https://www.nber.org/papers/w24106

* https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Da...

For all of its problems, the current credit-based monetary system is better than past systems. For a (popular) history of money through the ages:

* https://bookshop.org/books/money-the-true-story-of-a-made-up...


I want to offer an, hopefully intuitive enough, alternative to this line of reasoning. To me the aspects that make cryptocoins behave a bit like a gold standards is what makes them scary and dangerous:

https://benoitessiambre.com/specter.html

https://medium.com/@b.essiambre/the-world-deserves-a-pay-rai...


The gold standard was really abandoned by Rosevelt. He untethered the dollars value to a fix mass of gold.


That set of charts refers to income (a flow) not savings (a stock).


I forgot to also mention income, but the last charts I looked at were about inflation, which wipes out savings.


The fact that blockchains are used by criminals is definitive proof that it improves upon traditional financial infrastructure also in legitimate use cases where trust is an issue. I.e., blockchains are an indisputable success from a technological point of view.

The fact that criminals use tools, such as bolt cutters, cars and computers, doesn't mean that the tools are evil. Criminals are evil! Punish criminals for engaging in criminal activities, don't punish morally upstanding citizens for enjoying the liberty afforded them by virtue of their humanity.

There, two simple points that 99% of bitcoin "critiques" fail to address.


Trust isn't the reason that criminals use blockchains. They would happily transfer money the same way normal businesses do. They use blockchain cause they are locked out of the normal banking infrastructure.

For the same reason normal people don't use blockchain to transfer money. They are able to use the banking system or Venmo or whatever. Using a blockchain is more complicated and usually more expensive than the alternatives.


What enables the exclusions of actors from the traditional banking system if not a different trust model?

Instead of having a 'trusted' 3rd party mediate your transactions, you use a blockchain. Difference being that the trust is now distributed over a large set of actors that are directly financially invested in maintaining the integrity of your transaction.

We can talk about cost and convenience if you want, but they were never at the core of blockchain/BTCs value proposition as far as I am concerned. In well-functioning societies anyways.


Nano has 0 fees and instant transactions. It's hard for any other alternative to do better.


bitcoin does it better by not being a pre-mine scam and still having 0 fees and instant transactions on lightning.


Distribution of Nano was more fair than bitcoin. Just saying.

And lightning transactions have fees. Also just saying.


> Distribution of Nano was more fair than bitcoin

yes, that's what all pre-miners say.

lightning network fees are negligible, you should try it one day.


Neglectible is not 0.

And I'm not a pre-miner


negligible is basically 0.

you're not a pre-miner (though maybe you are, how do i know?), nano "founders" are pre-mining scammers.


Nano is green, Bitcoin an environmental hazard :D.

But I'm sure we're not coming to an agreement :D.


No environmental hazard, it's a myth.

PoS is no greener than PoW, they are equally expensive. PoS is expensive in political plane (just like current financial system with all the corruption and wars) while Bitcoin is expensive purely in terms of energy. I know which one i prefer.


Why should an average user care that founders are premining "scammers"? An average user won't be a miner and an average user doesn't have an investment in any platform.

Someone saying x-crypto is a premining scam is somebody who invests in another platform and is advertising.


Because in PoS holders of large amount of assets are also political elite that gets to make the rules.


The fees of bitcoin are paid in the damage to the environment done by mining. It is vastly more expensive than traditional banking. The only difference is that it's not paid by the user directly, but by the whole of humanity.


bitcoin doesn't damage environment by mining, that's just a dumb thing people like to repeat without spending a second to think about it.

first - damage is done by producers of energy, not consumers

second - yes, consumers create the demand for energy, which drives producers to do harm, but harm is still producer's responsibility

third - if we want to reduce environmental harm, it is much more sensible to regulate producers in how they produce rather than regulating consumers in what they consume for

fourth - even if you somehow want to blame consumers - bitcoin mining actually drives development of green energy, increasing capacity, making green producers more profitable, allowing more development and r&d in that segment of energy production industry, so even by that ridiculous standard bitcoin mining is the last energy-consuming industry you want to be going after


I guess I'll just leave a firehose blowing water out my window because it's not me who's literally sourcing tap water, it's the utilities, and if they do that by overusing and destroying some watershed it's not my fault since I'm not literally the one doing it. It's too bad my plan is not nearly as profitable as mining bitcoin though...


Free markets are beautiful.


everyone hates Nano now, mostly due to the shills showing up everywhere un-asked for.


> The fact that blockchains are used by criminals is definitive proof that it improves upon traditional financial infrastructure

Reminds me of how some people were making a big story about why Toyotas are popular with ISIS. I saw it as a big testimony to their reliability :P


Maybe we should centralize authority to stop criminal actors from using these tools


Sir, do you have a licence for the computer you used to type that comment?


Is this sarcasm? I can't tell.


"We’ve seen forked chains, theft, mysteriously reversed transactions, 51% attacks."

Citations? Forks are not actually a bug. Theft because of "cryptographic weakness" has not happened so far, afaik? Neither have reversed transactions, and I am not aware of successful 51% attacks on Bitcoin?

I'm sorry but I don't think that author has a good understanding of Bitcoin.

He has a point about government attacks. We don't really know yet what will happen if governments simply try to stomp out crypto. For sure market prices would take a hit at first, as they did when China tried to curb crypto.


> He has a point about government attacks. We don't really know yet what will happen if governments simply try to stomp out crypto. For sure market prices would take a hit at first, as they did when China tried to curb crypto.

We've just seen what happens when China banned it as you mention. The price took a dip and then recovered.

It game theory. Classic Prisoners Dilemma. Everyone else just gets a higher incentive to use it when some part of the world is not allowed, because everyone else gets a higher advantage.

Especially Americans will jump all over it if the communist ban it. That just completely legitimizes it for anti communist Americans.


>>> Especially Americans will jump all over it if the communist ban it. That just completely legitimizes it for anti communist Americans.

That may lead to an even worse outcome. The CCP may be able to do a 51% attack on BTC since a majority of the mining ops were in china.


I think this article kind of misses the point.

The best thing that came out of Bitcoin isn't Bitcoin itself, it's that it's the progenitor and catalyst to more useful and interesting things like DeFi, smart contracts, distributed governance, and all sorts of ideas and future tech.

Simply saying that Bitcoin is garbage and should fail is a bit like looking back at the tree of life at some goopy half fish, half land creature, and saying "look at this crappy thing, I hope it fails".


You could apply very similar analysis to DeFi, smart contracts, etc. In practice they appear to be second-order gambling systems for people who find L1 gambling not exciting enough.


What's L1?


L1 = Layer 1.

Example of how I understand it with gold: L1 is gold itself. L2 would be currencies with gold backing. L3 would be bank / credit card services based on that currency.

Bitcoin: L1 is Bitcoin itself. L2 are certain technologies, like the Lightning Network, that allow for bundling of transactions. L3 would be service providers who use L1 and L2 Bitcoin technologies in the background.

Someone correct me if I'm wrong.


>> The whole technological basis is flawed.

>> The weak link is not SHA256, it’s the rest of the cryptosystem.

> Yes, in multitudes.

> We’ve seen forked chains, theft, mysteriously reversed transactions, 51% attacks.

Really? This feels overstated. The core software has been remarkably (some might say unreasonably and implausibly) solid. The software is supposed to be a pile of amateur C++! It would be so easy for something like a trivial buffer overflow bug to break block validation and unravel the whole system. But it hasn’t happened after ten years and a multi-billion-dollar bug bounty available. Why is it so good?


Because of said $$$ bug bounty. There have been countless mitigations since launch. The biggest one for me is they nerfed (locked down) Bitcoin script for security reasons, which reduced it's utility for anything but transferring BTC.

Granted, it's inability to scale would have made that true anyway, but the resulting inability to have smart contracts on Bitcoin might be one reason arguments for scaling it with bigger blocks have failed to win: if all it does is move a coin, why bother changing the block size etc when you have Lightning etc.


From the 2010 article:

> The current financial system is slow, and tedious, and old, and in many ways actually broken or flawed. But one thing we know is that it's resilient. One single mathematical error will not send the whole thing into a tailspin. With bitcoin, it will.

9 months later, this article was released, titled "The mathematical equation that caused the banks to crash".

https://www.theguardian.com/science/2012/feb/12/black-schole...

Lol!


> That’s because I forgot one essential reason bitcoin has survived:

> Because people really, really, really want it to.

My impression is that Bitcoin (and crypto) is now a religion. It's tied to a lot of people's identities. That's to say, a group of people think of themselves as crypto people and are proud of it, just as someone might be a Christian and proud of it or a Golden State Warriors fan and proud of it.

While I've personally used crypto and found it useful, it doesn't really matter what the environmental impacts are or how useful it is to a large swath of those interested in crypto. As long as there's a plausible argument for why crypto is good, it's enough for the believers to continue believing.

Not only that, crypto is and will continue to be cool and rich. As long as people like Tom Brady and Fortune 500 companies are talking about buying and selling crypto, it's a religion that will continue growing.

By acknowledging this, I realized that I should move past dismissing the religion, but rather think about how I should engage with it. Imagine I've never watched American football but a lot of people I know are really into it. I then need to think:

Is it a cool community that I should join? Is it something that's not for me but that I should try to understand? Or is it something that's so bad that I should try to stigmatize it? I think the right response for me is closest to the second option, but I'm not sure yet.

[edited to remove some earlier, more divisive comments that I didn't intend to make]


“It’s a religion/identity” is true of just about everything these days (sports, political movements, subreddits, whatever). It’s not specific to crypto.

It’s a symptom of the lack of meaningful identities for people to adopt, and the social media push toward outlier-ism (nobody follows a boring father of 2 with a reliable job and a stable marriage) - so they choose trivial things like crypto or wokeness or Q to identify with and be extreme about.


+1

It's striking that although there's a lack of meaningful identities to adopt, the number of shallow identities to choose from is mushrooming. Pursuits that used to be "interests" or "hobbies" (gaming, fandoms, sexual preferences) are converting into identities. What's concerning is that people will aggressively defend identities and turn them into causes, not something we need more of right now.


I saw some lark call it the toaster fu*er problem once and it’s stuck with me.

40 years ago if you fetishised having it off with a toaster and told your mates they made fun of you and/or you got help. Today you tel your mates; they make fun of you, you double down, find the toaster fu*er community online, feel vindicated in your newfound sense of meaning, purpose and belonging and get about defiling kitchen implements


Love it haha, gonna borrow this sometime!


You’d be surprised how many boring/conventional influencers there are out there with huge followings. People who literally are just doing up a house or something incredibly benign.


Having everyone get their news, information & entertainment from Facebook/YouTube/Twitter/Instagram plays a huge part in this.

Algorithms that serve you the "most engaging" related content pushes a lot of people to extremes.

Oh you want to eat a little less meat do you? How about you FAST for 18 hours a day and go mega-VEGAN? Oh you want to read an article about Politics? How about you now watch this very well produced documentary on how the government is run by aliens.


I'd imagine that religion/politics are kinda fundamental to most people's meaning in life, and mostly always has been.


Politics wasn't fundamental to most people in identity sense for most of humanity's history, for the simple reason that most of them didn't have any political power to speak of, even notionally. Which, to be fair, is still true - but we've got better at pretending otherwise.


It's striking to me how all my friends in the USA talk about politics nonstop, but now that I moved to Japan practically nobody under the age of 40 seems to care.


"True of just about everything" If I had a dollar for every time I heard of this against an anti-crypto sentiment...

I would have at least 10 dollars


Religion + pyramind scheme. Most bitcoin evangelists are heavily invested in crypto, and stand to personally gain from their missionary work.


Only as long as more and more people buy in and price goes up so they can cash out, into fiat of course, their sworn enemy they seek to destroy.

If price goes down, just tell everyone to buy the dip.


I don't really think this everyone's goal anymore actually, It is shaping up to look more like 'purchase some now, such that it takes you a slight bit further in the future'.

People like paying each other with Paypal. Unless they don't, and they prefer Zelle. Unless they don't, and they prefer Venmo (which I think is crypto based now). Unless they don't, and they prefer Monero.

Its possible my perspective on this is too moderate, since I'm not a crypto-basher, but also not a huge crypto fan. However, I really don't get the vile hatred for crypto on this site. Some of the crypto currencies are quite good, with the support of privacy, smart contacts, app integrations, etc. For as many people here that enjoy the backup of simple static webpages, sharing of data, etc, I would think a project encouraging data sharing on e.g. ipfs, should be celebrated here.

Instead, if anyone here gets a quick whiff of the word 'crypto' they're quick to dismiss it without ant consideration.

It seems to me that people who don't like crypto are equally as guilty of assigning it to their identity in a religious way.


>It seems to me that people who don't like crypto are equally as guilty of assigning it to their identity in a religious way

And where did I do that? I've pointed out that the majority of BTC strength lies in the critical mass of people speculating on it increasing in value and attracting more people in when it does, further inflating the bubble. That's why everyone I know online and IRL bought in, the FOMO when they saw the crazy returns others made (by cashing out into fiat of course so they can actually spend their gains).

>People like paying each other with Paypal. Unless they don't, and they prefer Zelle. Unless they don't, and they prefer Venmo (which I think is crypto based now). Unless they don't, and they prefer Monero.

Please, Paypal and crypto payments are not the same. With Paypal you still pay and receive fiat at both ends of the transaction.

Back to my main point, people keep tooting that BTC is a payment method but I have seen no evidence of mass adoption for that uscase in most of the west and the number of users who actually use BTC for (legitimate) payments is minuscule, due to the high transaction fees and low adoption of it as a payment method, compared to the mass of big and small HODLers that's just using it for speculative gains a.k.a. gambling, gains which are turned back into fiat in order to be spent into the economy, further defeating the point that BTC is a viable currency.

The taxman does not, nor the car dealers, nor real estate agents in my area take BTC payments, only EUR. When that will change then I'll grant you that BTC is more than a FOMO driven speculative pyramid scheme.


>where did I do that?

It's mostly just the unwillingness to have a moderate view towards these currencies. Everyone on HN seems to have blind hatred steering the discussion, rather than admitting that it may fail, or may become the main transaction currency in the future, or (more likely) somewhere between - such as becoming the major way in which large banks and institutions transfer currency between countries.

It's strange to me that people are using the argument of what behavior of crypto see right now will be how crypto will continue to be used in the far future. Unfortunately it got misconstrued in recent years to be an 'asset' rather than currency, but it's still possible for it to return to being seen as more as currency.

It could remain the same or change - but I don't see why everyone is so hatefully polarized over it.


And where exactly did I show blind hatred or unwillingness towards a moderate view?

I gave you my arguments why BTC is now just a Ponzi scheme and not a currency or a good legal payment system, while you have not provided any kind arguments to support BTC as a payment system or as a currency and instead just complain that people have a blind hatred and what not.

So I'm all open for a moderated discussion but you need to bring some arguments to the table not just complaints on the participants.


This is literally how fiat currency works. Sure a government can pass a law saying so and so is the official currency but as you see in many minor countries they still use USD or Euros. Without buy in from the population fiat currency can also be left ignored.

The value of USD is also a pyramid scheme and entirely depends on demand from everyone to keep it's value. The federal reserve is only one small actor creating demand.


The value of USD is underpinned via demand manufactured through taxes. Crypto has no equivalent of taxes so it is almost entirely reliant upon perception. This is partly why HODLers are so aggressive in defending the perception. It's possible to literally "talk" their wealth into worthlessness.

There are countries that use USD but with the exception of ecuador (where you pay taxes in USD) i cant think of one that uses it exclusively.


You're comparing a single country market to the entire world market. They are inherently different.


I am? I don't really see how.


US taxes (as base demand) are only paid by those interacting in the US market. Bitcoin base demand is international.

Anyway they are totally different assets with their own trajectories and influences. We don't know what will happen in the future.

What I do know is Bitcoin is deflationary while USD is inflationary by their nature.


>US taxes (as base demand) are only paid by those interacting in the US market. Bitcoin base demand is international.

This is nonsensical. More USD is traded internationally than bitcoin.

The value of USD for somebody living in Paraguay stems from a demand for US goods and services A) supplied by people who pay US taxes or B) supplied by client states of the US (e.g. saudi oil) who kind of also pay USD taxes in a roundabout way


I think you're getting a little off topic here. Whatever demand exists for USD there's a ton of sources in the world to supply same said USD that isn't the united states because as we all know it's a world reserve currency... This helps the USA because it makes it possible to print a ton of money and the inflation gets absorbed by all world wide holders of USD instead of just Americans. This keeps inflation way down while they print more money. But even so $1 is worth less and less everyday. Bitcoin has no such problem. It's deflationary. As long as there's a floor to it's demand it will continue to go up in value. Nothing in the past 9 years has disproved this concept.


If you think demand is beside the point and inflation is everything then you'd probably consider exchanging every dollar you have for a deflationary shitcoin.

And many do.


The value of USD depends on trust in the US government and economy, that is not a pyramid scheme.


It is until it isn't. The base demand for USD comes from the federal reserve. Bitcoin has a similar base for it's legit uses (like international currency transfer) so both have a demand floor. After that it's all dependent on use and further down market demand.

I think when we all are dead future generations will see crypto as a basic value store like gold. No one will call it a pyramid scheme either cause it would have been around since before they were born.


I always internalized the base demand for USD as being the only accepted currency to pay your US income taxes in.


Yes, and some currencies do lose value because the government and economies backing them have lost trust.

The demand for USD comes from people wanting to do business with one of the biggest economies in the world. The demand for Bitcoin comes from people wanting to make money by hoarding Bitcoins.

It could be different, but right now it is not and I'm not sure if Bitcoin (or any other cryptocoin) would survive a transition to become a currency or something else less like a pyramid scheme.


You're kinda dismissing it without respecting that it's no different from gold as far as people wanting to hoard it. People also do use Bitcoin when convenient to move money. I personally used it to pay someone in Brazil for some mechanical keyboard services when PayPal failed to transfer the money. Totally legal and organic demand exists.


Have you compared the gold price with the Bitcoin price?

I'm not saying it Bitcoin could not be like gold, I'm saying right now it is not and everyone in it doesn't want it to be. And I'm not convinced it ever will be.


I'm thinking in the long long term of hundreds of years. Seems to me when we start exploring space moving around heavy chunks of metal won't be so useful anymore and we'll need to use a Blockchain to verify value transfer.


While I agree we will probably want something different from the current status-quo when light-lag gets big enough to matter for normal daily financial interaction, one potential solution could be to go back to local banks holding money locally, just as things were here on Earth before ATMs and cheap telephony.


We haven't been using heavy chunks of metal as currency for a while without a need for blockchains. I see mostly disadvantages compared to government backed currencies.


Yes and No.

To someone who doesn't live in the US, the value of USD mostly depends on trust in the US government and economy.

To someone who does, the value of USD mostly depends on whether or not the IRS will be asking for their due next April, whether or not their landlord/bank will be expecting a rent/mortgage payment next month, and whether or not the grocery is stocked with toilet paper.

It is true that if any of those three things don't happen, you have far more serious problems than 'what currency you use'.


>To someone who does, the value of USD mostly depends on whether or not the IRS will be asking for their due next April, whether or not their landlord/bank will be expecting a rent/mortgage payment next month, and whether or not the grocery is stocked with toilet paper.

Or in other words: trust in the US government and economy.


Why would you think money is not about belief?

If people stopped believing in fiat, there would be a major bank run.

So yes, the value of crypto, just as like the value of fiat, is based on belief.


The difference is that the local monopoly on violence forces demand for their fiat on the people and organizations within their sphere of influence, explicitly and implicitly.

It remains to be seen if an entirely voluntary money can be a major player in the modern world.

Then again, raw fiat is a very new experiment as well. It's only been about 50 years since the US broke the pretense of the dollar being constrained by gold reserves. So from that context, bitcoin's 13 years doesn't actually seem that radically young, especially if compared to gold's 5000 years.


If people (specifically, the police and soldiers) stopped believing in the local monopoly on violence, it wouldn't exist either. Historically, this is a thing that happens pretty often, every few decades.

Gold in coinage is only about 2700 years old, btw, not 5000, and that was really electrum. Gold, silver, or electrum by weight may go back significantly further.


Wasn't gold commonly used as money long before it was first struck as coins?

Coinage really just seems to be a technology improvement to make trade more efficient, because you can more quickly verify and count the units.


"Long before" and "commonly" is a matter of perspective. It was first struck as coins about 2700 years ago, and was definitely used as money in a few countries at least 300 years earlier, and possibly as much as 3000 years earlier. There is no evidence to suggest that it was in wide use as money until about 2200 years ago, only in a few places like the Mediterranean. Then again, maybe there wouldn't be, since not many places had writing.


> Historically, this is a thing that happens pretty often, every few decades

Historically, there have been civil wars that threaten government's monopoly on violence every few decades? :o

That surely isn't the experience in most stable countries or is it?


Well, by definition a stable country is one without a collapse every few decades!

It happens somewhere quite often, and the number of countries with 100-year uninterrupted continuity of government is shorter than you'd expect - basically the unoccupied Allies, Switzerland, and a few microstates.


I meant that it happens in a given country on average every few decades. I took a somewhat slapdash sample last year and the median time of last violent collapse of government was 01945, 76 years ago. On average it happens in a few countries every year.


Raw fiat is NOT a new experiment, the Yuan dynasty in China printed paper money in the 13th century, not backed by any precious metal or commodity. They printed too much and had inflation problems, so that's not a new problem either.


Ah, you are right. I knew that, but had forgotten. Thanks for the correction!


The difference is that the government will (implicitly) point a gun at you and demand a tax payment from you next April, and they'll want that payment in fiat. Everyone knows that everyone else will be coerced into coming up with some U.S. dollars in a few months, so they have a lot more to rely on than everyone else's mere belief in money.


Post crypto as collateral -> get fiat loan at 2% -> die massively in debt, never paying taxes. That’s the way to win the fiat system.


Amen to that. Incidentally this is not just a crypto tax avoidance play. It's an asset-rich tax avoidance play. Do you think Bezos sells stock to buy the latest mega-yacht? Of course not. He'd realise a substantial capital gain. Instead he borrows against his stock. No capital gain = no CGT.


I really wish people would think systematically about these issues before jumping on their soapbox, as this strategy does not eliminate tax payment, it merely defers it, with some interest cost.

Consider the following scenario:

Say the interest rate for a wealthy individual like Bezos is 1% per period.

Case A: Bezos sells $100 of stock. He pays 20% and consumes $80. NPV of tax liability is $20.

Case B: Bezos borrow borrows $80 to spend in a period and then at the end of the period sells $101 of stock to pay back the loan and (and pay taxes on it). Thus his tax liability at the end of the period is .20*101, which in present value terms = .20*100 = $20. Exactly the same amount of taxes he would have paid if he didn't borrow.

Case C: Bezos sells only $80 of stock and then borrows $16 to pay his taxes, ending with a debt of $16.16 at the end of the period, and he will need to sell $20.2 in stock to extinguish his total liability ($16.16 due the bank and also the $4.04 in taxes on the sale), which in present value terms is the same payment as before, namely $20.

The real reason people like Bezos borrow to pay their taxes is because the interest rate charged to them by the bank is less the growth rate of their assets. Therefore they are acting like a bank, borrowing at one rate and investing at another rate, making money on the spread. Thus keeping the stock is worth more to Bezos than borrowing to pay the tax, which is effectively what is happening.

At least, this is what they believe. Of course this type of balance sheet expansion comes with risk - risk that they bear that if the stock price falls, they will end up paying much more than if they hadn't levered up and borrowed to pay their taxes. But that's a risk they are willing to take.

So you don't need to pull your hair out worrying that Bezos is not paying taxes. He is effectively borrowing to pay taxes so that he ends up with a bigger payment down the road, which in present value terms is the same tax liability as if he didn't borrow. The treasury will receive not only all the tax money as if Bezos never borrowed, but all the tax money with interest, namely whatever interest Bezos needs to pay. However Bezos is betting that the growth rate of his assets is even higher. So now you understand why everyone is borrowing to pay taxes -- because interests are so low. So thank the Fed that this type of arbitrage is possible. It's not tax arbitrage, it's interest rate arbitrage.


So I should rest assured that the rich people are all wrong, and fully plan on eventually paying more taxes? And I’m just supposed to believe that? They are purposely doing all of this to intentionally pay more taxes? And they’re just too dumb to realize it? You don’t think they haven’t thought this through? First, there’s the death loophole in capital gains taxes. Two, assets are reliably outpacing interest rates and inflation, so even if it’s simply deferred taxation, that’s a de facto reduction (and yes that’s a problem, ask Piketty). Three, I’d imagine the billionaire class recognizes the trend of their increased power and influence, and could even just be betting on re-writing the rules before their bill comes due, fueled by the outsized influence bought by their lifetime of not paying taxes. So excuse me if I’m not OK with an upper echelon of society simply excusing themselves from taxation via mechanisms that are not available to regular wage earners.


You should rest assured that it's not a good idea to invent grievances to justify personal hate.

It is just not true that because there is a carried interest loophole, for example, that you can just make up arbitrary other tax loopholes that don't exist and blame "the rich" for abusing them, and then when confronted with being wrong on the facts, cite the carried interest loophole as a justification. "Piketty" isn't some magic word you can use to waive away reality.


You forgot to mention that if Bezos holds shares until he dies, the people who inherit them will not pay capital gains tax on them even if they do cash out. And the treasury will not get anything in that scenario.


I didn't mention it because it's not true. I am amazed you think collateralized loans are just forgiven when someone dies. Remember that these are personal loans to Bezos. If they were loans to some business entity Bezos created, then whatever payment he received from that entity would be taxable income.

The debts will need to be paid to the banks as part of the settlement process of Bezos' personal assets, which will require asset sales, and these sales will incur a tax liability and all of the above calculations will take effect.


And don’t you think that the bankers and heirs wouldn’t simply agree to have the heirs pay the loans back after they inherit the assets? Why wouldn’t they? I’d even assume it’s written into the loan documents or maybe even through the individuals will or something. And why wouldn’t an heir agree to that? By paying the loan after inheriting the assets the heirs will get to keep the capital gains. “Hey Bezos Jr., do you want to inherit 20% more money, or 20% less? Because all we have to do is sign this stack of papers in a different order to avoid all capital gains.” Or even simpler still is just to pay the loans back with the assets directly. Or any other number of maneuvers to make sure the bankers are happy and simply call the debt settled. There’s myriad ways of doing this, and I’m absolutely 100% sure that the billionaires and their ‘family offices’ of likely dozens or hundreds of highly skilled accountants and attorneys haven’t figured out some way out of this.


> And don’t you think that the bankers and heirs wouldn’t simply agree to have the heirs pay the loans back after they inherit the assets?

OK, at this point you are just speculating wildly, right? You are inventing tax loopholes that don't exist, and when this is pointed out, more loopholes are invented which also don't exist. Point is, that's not how consumer lending, tax law, or inheritance law works. Those loans will be settled requiring asset sales at his death. If banks forgive a loan, that debt forgiveness is counted as income and is taxable.

Actually it is likely they will be wound down before his death as he will want to reduce his personal asset holdings and put them in a trust, because the inheritance taxes on all of his wealth are much stricter than any income taxes. But reducing his asset holdings will require de-leveraging because loans against equity require quite a bit of collateral.


> You are inventing tax loopholes that don't exist

Are you aware of "step-up in basis" [1] that is widely considered a loophole around CGT for inherited assets? Any gains on assets up to the point they are inherited will not be subject to CGT.

[1] https://www.investopedia.com/terms/s/stepupinbasis.asp#step-...


So now we are in the weeds about inheritance tax, but the idea is that you pay 40% on your inheritance which clears your tax obligations for that inheritance and resets all the cost basis calculations, and then after that you pay gains when you sell from the time you inherited.

That is not a tax loophole.

E.g. if someone buys stock for $10, then the share price grows to $100 and they die, so that a family member receives $100 of stock, and then the share price goes up to $110 and the inheritor sells, then in the current system, the inheritor pays:

$40 on receipt of shares at $100 (cost basis for him is zero)

$4 on sale of shares at $110 (cost basis is now 100)

for $44 in taxes paid on that stock.

RSUs also work in the same way -- you pay taxes the moment you get them, and then if you keep them, when you sell your cost basis is the price of the shares when you were given them. That is important to know if you like to hold onto your RSU shares for a while -- know that your cost basis is not zero, but whatever the price of the shares were when you paid taxes for receiving them as income.


> That is not a tax loophole.

In your opinion. However, some people clearly believe it _is_ a tax loophole, presumably including those you're discussing with upthread.

One of the talking points against inheritance tax is that it taxes the same money twice. If I'm a middle earner I pay taxes on my income, and I pay CGT when I dispose of assets to pay for my car or retirement or whatever. Taxes are then levied a second time on what's left when I die.

People above are pointing out that, in contrast, extremely wealthy people manage to avoid the income/CGT part by borrowing against their assets tax-free and repaying the loans once they die and after the assets can be stepped up. So yes, inheritance tax may still be paid, but a great deal of their day-to-day income while alive is untaxed. Inheritance tax should be _in addition to_ income/CGT rather than instead of it, and part of the perceived injustice is that the ultra-wealthy get to dodge this in ways "ordinary" people can't.

Based on that I personally would call it a loophole.


> In your opinion. However, some people clearly believe it _is_ a tax loophole

Only people who are not familiar with basic accounting or tax economics can believe this.

> One of the talking points against inheritance tax is that it taxes the same money twice. If I'm a middle earner I pay taxes on my income, and I pay CGT when I dispose of assets to pay for my car or retirement or whatever.

OK, you are mixing two different things here. One is the "double taxation"(1) on assets in the inheritance tax. First, don't worry, only a handful of families pay this tax. But ignoring that, the double taxation applies to income not spent. It is irrelevant to this discussion, in which Bezos borrows to spend. If he didn't borrow and sold assets to spend, then those sold assets still wouldn't be taxed as an inheritance tax. So that double taxation unfairness complaint is again just a confusion about what is happening and has nothing to do with whether borrowing to spend is somehow tax avoidance.

Now as to the second point: "If I'm a middle earner I pay taxes on my income, and I pay CGT when I dispose of assets to pay for my car or retirement or whatever."

No, you only pay taxes on the gains. Think back to what we were discussing before -- you get $100 of stock, then it goes up by $10 and you sell. So you have two taxable events in which income is recognized - the income of getting $100 and then the income of getting $10. When you sell for $110, your cost basis is $100, not 0, because you already paid taxes on the $100. Thus there is no double taxation for you or for Bezos(2).

No one is treated differently here. It is the exact same re-upping you were complaining Bezos being given -- that re-setting is available to everyone else for any other kind of asset they have for any reason.

So here, too, this is just complaining about things that aren't actually happening in order to get a justification for complaints about "injustice". It's a lot of very angry people applying who/whom logic rather than getting the details right about how much is paid.

Now, if you want to talk about real tax loopholes -- for example, carried interest, mortgage interest deduction, differences in tax rates on long term versus short term gains, charitable deductions - yes, by all means let's get rid of these loopholes. Bezos pays too little taxes, not because he borrows, but because the long term cap gains rate is so low. Let's not treat LTCG differently from wage income. But trying to infer the money borrowed should be taxed at the amount borrowed is just insane. Borrowed money is not income. Bezos is not doing this to evade paying taxes, he is doing it to take advantage of spreads.

(1) It's not really double taxation, because what is taxed is the income received by the inheritor, who never paid any taxes on it before.

(2) Yeah, inflation is a legit complaint for both


> But ignoring that, the double taxation applies to income not spent. It is irrelevant to this discussion, in which Bezos borrows to spend.

It's not irrelevant if Bezos spends his borrowed money on real estate and generally vacuuming up other assets that are likely to appreciate in value faster than his loans. It's not like he consumes all of it (or even most? I don't know, but I doubt it. How on Earth do you consume a billion dollars?).

> Thus there is no double taxation for you or for Bezos(2).

As I already explained there is for me if I don't consume all of my taxed gains before I die, or if I use it to purchase assets that outlive me.

> Bezos is not doing this to evade paying taxes, he is doing it to take advantage of spreads.

He's clearly doing it for both reasons. At least to avoid, not evade. I accept that he's legally not required to pay tax in this situation, but the whole point is I'm saying that should probably change!

> So here, too, this is just complaining about things that aren't actually happening in order to get a justification for complaints about "injustice". It's a lot of very angry people applying who/whom logic rather than getting the details right about how much is paid.

Dismissing this as "just complaining" is really missing the wider point. That is that "buy, borrow, die" is a well documented strategy that the ultra-wealthy use to avoid paying tax and that is widely considered a tax loophole (even by those familiar with basic accounting and tax economics). Whether it's a loophole or not isn't even really the point, rather that we should change things such that people who "buy, borrow, die" actually pay something like CGT.


The thing is, who freaking cares. He can literally go to his grave without paying taxes. That shouldn't happen.

The average Joe can't do that. The average Joe shouldn't do that.

Why should Bezos?

Why are you even defending him? Your position is morally untenable.


>The thing is, who freaking cares. He can literally go to his grave without paying taxes. That shouldn't happen.

So yes, you can borrow to pay taxes. And you can borrow to defer taxes. But that is limited by how many assets you have. Households across the country do something similar when they borrow to buy a house -- they do not pay taxes on the mortgage loan as if it was income. And, unlike Bezos, the mortgage interest paid by households is often tax deductible.

But Bezos' loan does not deprive the government of taxes, because the rate on government borrowing is always going to be lower than the rate charged to Bezos. So if Bezos defers by 10 years, with the debts accruing at some rate r, then the government makes up for that by deficit spending with its debt accruing at a lower rate. Thus when these are settled, the government will make a profit.

> Why are you even defending him? Your position is morally untenable.

I guess the first mistake here is to try to view public policy from a "moral" perspective first and "not caring" about the details of what is actually happening.

The second mistake is automatically decide who is good or evil based on some atavistic criteria and deciding the details don't matter if you are sufficiently outraged.

Because at that point you've already lost. I suggest it's better to actually care and run the math before deciding whether something is good or bad for the Treasury. And questions about what is good or bad for the Treasury should be the ones you ask when determining tax policy, not whether you are really angry at a public figure or not.

Bezos' motivation is not to pay fewer taxes across his lifetime, because he doesn't. It's that the interest rate he is charged is less than the rate of return on his stock. This has absolutely nothing to do with tax avoidance but exploiting spreads.


I find amusing that the same people (from my perspective) will argue that Roth savings vehicles are terrible because the government gets its $20 now and then all this growth happens untaxed and the government never gets its cut of that 40 years from now. “Uh, you did, back on the first day, remember?”


That is going to get clobbered eventually. Similar schemes have already been ruled illegal in the UK.


Example? I'm a UK taxpayer and as far as I know you can still do basically that. You can also avoid inheritance tax is you buy a farm to borrow against rather than crypto. See J Clarkson for example.

>He bought it mainly because you don’t pay death duties on land. “That’s the critical thing. So rather than just have money in the bank, and get a statement with numbers written on it that gives no one any pleasure at all, you could derive a great deal of pleasure and pass it on to your children.”


https://www.gov.uk/government/publications/loan-schemes-and-...

It seems that Clarkson is trying to take advantage of https://www.gov.uk/guidance/agricultural-relief-on-inheritan... which is a "family farm" exemption; you absolutely do pay inheritance tax on land in general.


The loans thing you linked to is a bit of a different thing I think - "People who use these schemes have their salary paid in loans, instead of being paid in the usual way."

Just borrowing against assets that have gone up is different and pretty normal.


It doesn't matter whether or not you believe fiat is valuable or not. I know that tomorrow, I can buy a Big Mac for $4, and McDonald's knows that the person who makes it will go to work for $10/hour. There are way too many transactions that take place for people to "believe" that fiat is worthless. The same cannot be said about cryptocurrency.


I agree with you.

But imagine that a secondary ecosystem emerges because of these crazy cryptocoiners, who start using crypto for everything (just out of principle) (see https://99bitcoins.com/bitcoin/who-accepts/ for viability).

They also insist on getting paid in crypto (not every country puts capital gains on crypto).

This basically means we could have a small parallel ecosystem.

Imagine this thing growing to a few % of all transactions.

Now the question comes to people holding fiat: are you sure your fractional reserve money will keep its value? Only a small percentage of fearful people could cause serious issues for that fiat system.

So I agree that you are right for now. But I wouldn't rule out the possibility of it taking a shift in the future.


> McDonald's knows that the person who makes it will go to work for $10/hour

vs

"A Florida McDonald's is paying people $50 just to show up for a job interview, and it's still struggling to find applicants" https://www.businessinsider.com/mcdonalds-pays-50-for-job-in...

Entry-level employees will be making $11 to $17 per hour,

https://www.cnbc.com/2021/05/13/mcdonalds-raises-hourly-wage...

(with apologies for the scammy links, these were the first google hits I found)


Yes, inflation is a thing. The numbers aren't important to my argument. My point is that the value of fiat is baked into virtually every transaction. As such, even if you don't believe in fiat, so long as you want to participate in the economy, you'll still use it all the same.


This is most likely one of the most unintelligent statements I have ever heard. Value is subjective, period. End of story. The US dollar literally only has value if people have confidence in it. Because we are still bartering and trading, the US dollar is simply a standardization of value. Again, value will always differ from person to person. In fact, I think commodity based tokens would be interesting. Cryptocurrency, as it is, has no value to me. The dollar bill is a standard that will certainly change. Hopefully we can have a utility/commodity based currency in the future. We used to have that when the Dollar was actually backed by bars of gold. LOL


There's an interesting contrast: the technical security of crypto relies on not trusting and not believing anyone or anything but the value relies on social belief.


You say, "the technical security of crypto relies on not trusting and not believing anyone or anything," but I don't think that's quite right. I think it's more accurate to say that the purpose of the technical security of crypto is to permit you to not trust anyone (or, in some sense, "anything").

However, by "anyone", we mean "any single person", in the same way that science or money permits you to not trust anyone. For example, fake ivermectin covid studies are eventually found to be fake, so in that sense we "don't trust anyone" to not fake their studies. But if everybody publishing ivermectin studies is actually in a grand conspiracy to promote ivermectin, this fails; at least some honest people have to run studies with ivermectin to find out that it doesn't cure covid. In fact, probably even a majority. This is still a great improvement over the medieval system where the Pope decided whose opinions could be published on whether the Earth moved or not.

Similarly, the great thing about money is that it gives you autonomy; if you have money, it doesn't matter that much that the Soup Nazi banned you from his restaurant, because you can just go buy soup elsewhere. You won't starve, the way a child abandoned by their parents often will.


But it isn’t. Fiat currency is tied to a _countries_. What tanks are going to line up to save an attack on crypto? What standing militaries defend crypto? Exactly.


If nobody believes in fiat anymore, which police and soldiers will be willing to fight for it?


The government, you know, that thing that has a million other uses, will always want control over the currency.

If the crypto point of view is that no one should control currency, first of all, that's super naive and secondly, that puts it on a collision course with governments.

My money's on governments winning.


Putting the central bank under direct government control is a very bad idea. That's why most major countries don't allow that.

That's pretty recent actually. So in some sense, government is already losing power over money.


I do not understand why one would fetch stacks of paper from the bank if one believes toilet paper is the more valuable type of paper you should hoard and maybe also trade with.

Seriously, why would the end of fiat cause a bank run? I would expect it would cause a switch back to trading physical goods directly, or the emergence of another currency-like thing or good (like cigarettes might have been in the past).


When bank runs were common it was normal for a bank to go out of business while nothing really happened to devalue the currency so you'd essentially be racing other customers to withdraw first. The Fed's guarantee to cover accounts in the event of a bank failing stopped bank runs entirely.


Because fiat is created in 2 ways: central bank and bank. Cash in hand means it's central bank money, numbers on your bank account are the multiplied variant. Both are part of the fiat system.


> My impression is that Bitcoin (and crypto) is now a religion.

Whilst this looks valid on the face of it, the best explanation I've seen is that crypto-currencies, DAOs, NFTs, what-have-you are counter-intuitive to most people, even the ones hodling it, because most of these decentralized products are just not the same thing and shouldn't be all lumped up in one giant straw-man. For one, I am really bullish about payment networks like Facebook's Diem, Celo.org, Coinbase/Circle's USDC, and Stellar. These absolutely should disrupt international payments.

There's a lack of coherent understanding but just as apenwarr pointed out, eventually something good will come of it, and then everyone that is/was on the blockchain train would claim, "I told you so".

At this point, there are so many smart people working on it, that I don't see it failing in my lifetime. The key, I guess, is to pay attention to whoever is out there toiling away to make the ecosystem better and listen to their whats, whys, and hows.


Isn't 'solving' international payments messing with the US govt? If you bypass the swift system then they can no longer track international transactions and more importantly enforce sanctions.


As someone who's not from the US, good.


You're probably working under the assumption that whatever replaces the US system is better.

You have no way of knowing that and most US geopolitical alternatives are awful. Except for maybe the EU if you include it.


> that whatever replaces the US system

I'm just generally opposed to a system being pushed by a single country. Don't care if that's the US, China, Russia or Nepal.

It's not because I don't like the US, I just wish that we all would get to say how that system is supposed to work, instead of the US thinking it knows what's best for "us". Similar to how it's for whatever reason okay that the US has it's military bases littered all over the world.

I've got nothing against y'all as people, but your government and military for sure grind my gears.


I'm a Brit so an outsider on that issue. I would imagine the only legal issue with international bitcoin transactions are related to tax. Unless of course the transfer is part of some other illegal activity, such as money laundering or drug trafficking.


> There's a lack of coherent understanding

This, plus the lack of simple explanations of the various parts of the ecosystem(s), is one of my main gripes (the environmental costs being the other). Hopefully it will change in the near future, but if it takes 1000 words (and potentially as many moon/rocket emoji) to explain the what/why/how of NFTs/cryptocurrencies, that doesn't seem like a sign of success to me.


Some sibling comments argue that the USA is a religion in the same sense, which is a nice thought experiment and a fair comparison.

However, I think it's incumbent on us compare bitcoin as a religion to the prevailing mode of social organization (or religion, as it were) where money is concerned:

  The Rule of Law
and it's missionary arm

  International Trade Relations
Except for this, whatever one realizes from bitcoin holdings (read: exchange ledger holdings for legal tender) is just numbers on paper.

I just don't see how bitcoin can fulfill any of it's purported roles (asset, currency, value-store) outside the rule of law, and yet flouting the established legal ways of settling transactions, asserting ownership and saving for the future were all part of the elevator pitch.

This begs the question: What effect will bitcoin have on the rule of law? I fear that, on net, it may serve to undermine our legal, liberal traditions by antagonizing proponents to the regular economy and pursuant democratic processes for improving its shortcomings.

More directly, the unregulated nature of the bitcoin economy leaves affected societies knee-capped in managing externalities and second order effects right where the incentives are the most perverse (on the ledger), forcing heavy-handed and perhaps illiberal responses from regulators. Success on it's own terms will spell bitcoins demise so long as belief in the rule of law remains stronger than in crypto-utopia (I will take that bet).


Not Religion, Pyramid Scheme.

The key point about BTC is money and the 'believers' area all holding at least some BTC and they promote it with zealotry for that reason.

It's the money and the dream of fabulous riches. Religion generally doesn't really go there in any serious way.

It's a really, really good example of bias, and how it works. Someone holds a few magic numbers and it really distorts their worldview.

Religion would be far more popular of people thought they could get rich by attending service.


I think it is also kind of a collectors' item. Like owning a piece of a rare set of baseball cards or cars.

There are definitely religious zealots out there but in terms of passive ownership -- it could be viewed as a scarce collectors item with theoretically infinite appreciation right?

For example, if a rare painting could not be effected by environmental degradation. Would it not appreciate forever until people stopped caring about paintings or suddenly rare paintings could be atomized into existence by a replicator?


Related article on the take that bitcoin is art, https://www.epsilontheory.com/in-praise-of-bitcoin/

I think it would be more accurate to compare it a monument or artifact, specifically because of the amount of real world energy that has gone into creating it.

It's currently a half terabyte immutable linked list filled with a rich history of transactions and hidden messages/graffiti that can't be copied or changed without an commitment of energy and computation resources equal to the sum of what's gone into it for these 11 years.

That's something that starts to rival the Great Pyramids (pun intended).


I'm very glad we're all collectively killing the planet so that we can keep a massive ball of digital detritus alive.

Crypto has gone from "It's a currency!" to "It's a commodity!" to "It's a battery!" to "It's art!" in under 10 years.

Early days it was fun to watch. Now that it's destroying the environment, I'm ready for it to end.


Crypto is destroying the environment? Bollocks. The electricity of the worlds ATM,s bank branches, trading floors, etc dwarfs the electricity cost of bitcoin. And for a system that rewards those close to the money printers and fucks over the little man.

Everything has a cost. But is the cost worth paying is the question.


> The electricity of the worlds ATM,s bank branches, trading floors, etc dwarfs the electricity cost of bitcoin.

Even if Bitcoin actually became a valid means of transaction and bank branches, ATMs, etc became obsolete, it doesn’t replace the need for trading floors as an interface between finance and equities/commodities, so that’s a weird comparison.

But even so, I wouldn’t be so confident that the banking sector uses more, or will for long given the current investment spree into mining. Here’s one plant that will use nearly 4x the energy of downtown Dallas:

https://www.cnbc.com/2021/10/31/bitcoin-mining-giants-bitdee...

Mind you, the more the price of Bitcoin goes up, the more energy miners burn on mining, so if Bitcoin actually grew to the size of the fiat economy we’d be talking about substantially more energy use.


> Mind you, the more the price of Bitcoin goes up, the more energy miners burn on mining, so if Bitcoin actually grew to the size of the fiat economy we’d be talking about substantially more energy use.

You are not taking into account the diminishing block reward. More and more miners are chasing a dwindling supply of coin and will eventually only earn transaction fees and no block reward. This will put a natural dampener on more miners coming in (all other things being equal) and it will plateau.


Right, the energy use goes up with the value and (separately) down over time. They’re separate variables, but it’s fair to point out that they're not independent variables (the price is more likely to vary over a longer time horizon), which is I think the point you’re making?


This is a very surface-level understanding of the concept of the economy. We could all use river rocks instead of dollars and fundamentally the economy would be unchanged. We could all (try) to use Bitcoin tomorrow and the economy would be unchanged. It's about using a medium of exchange which works best for all parties, which today is the US Dollar.

Bitcoin is just additional, unnecessary carbon and e-waste on top of the existing economy. It's fatal flaw is that it's deflationary, which in a world of rational thinkers would have doomed it from the start, but instead it seems to have attracted those yearning for a system free of "money printers".

Inflation can make things bad for an economy. Deflation utterly destroys economies.


It attacted those who don't trust the people in charge of "money printers". Which, given the overall low level of trust in the government in many countries today, US included, is hardly surprising.

(Even more so in the third world, where quite a few people have personally lived through periods when government printed money like crazy, and saw first hand how it starts and how it ends.)


I hate it to break it to you, having lived in a country with hyperinflation, but crypto is not the answer to that.

Hyperinflation is just a symptom of other broken things in those places, and the real solution is to work on that brokeness.

You don't paper over lack of trust with a system that sort of works around lack of trust, you increase trust. Otherwise you'll be screwed in a million other ways that have nothing to do with money.


I have lived in a country which suffered rampant inflation as well (not quite to the degree where it'd be called hyperinflation, but rapid enough that it was a serious consideration in day-to-day life).

It's all well and good to talk about fixing brokenness, but it's not always politically viable. Furthermore, even when it is, people still have to go around living in the meantime. "It'll be solved eventually when everything is made perfect" is not a reasonable approach, and people are well aware of that. A very popular saying where I'm from goes, "the strictness of the law is mitigated by not having to follow it".


Laudable though this desire is, we live in the real world. How many politicians and unelected central bankers are trustworthy in any country?

What you want is a monetary system that is inherently trustless.

Let the policy makers deal with policy and legislation. But let's not let them mess about with our money any more. Anywhere.


> It's about using a medium of exchange which works best for all parties, which today is the US Dollar.

It's also about a store of value. Which is no fiat currency in the world today.


No.

Let's do a fucking carbon tax and actually solve the problem, rather than just scapegoating an easy target and wasting political capital on attacking something many people value that doesn't directly or necessarily contribute any more to the problem than anything else.


A carbon tax in the US just moves the miners somewhere else without a carbon tax. That carbon still ends up warming the same planet, thus not solving the problem in any meaningful way.


I agree. Any anti carbon solution needs to be global.

That's a a tricky problem since some countries, maybe Russia and Canada, could theoretically come to the conclusion that climate change will actually be a net benefit for them by way of opening up access to resources in their lands. And other countries might come to the conclusion that the benefits of burning lots of carbon fuels to develop and modernize their nations outweigh the risks of climate change.

Our ability to actually reverse the trend of atmospheric carbon seems grim to me.


The environmental impact is tiny compared to that of the banking industry.

Of course, we can always strive to reduce emissions in every facet of our lives. However, this argument applied to Cryptocurrencies didn't hold any water at all, once we make the proper comparisons.


The banking industry does a ton of things: holds salaries for billions of people, performs payments for billions of people, holds bank guarantees for millions of people, offers loans to millions of people, offers savings accounts (not amazing these days, but they're there). They also do the same for millions of businesses, with even more complex products.

Do you think that all of that can be waved away? What do you think will replace it with crypto? Nothing? Where will I get a loan? Heaven? The Moon?


Ha, what a great comparison. /s. And what percentage of the world economy runs on crypto, compared to the % that uses the banking industry?


The daily trading volume of nyse was similar to that of btc even back in 2017. Banks are throwing enormous amounts in now. But if your little quip was meant to ask how the mere mortals are using it in the streets, I think it depends on the country.

It may take some years before developed nations have old ladies paying each other for wine night with some crypto. Although, it seems that companies like Venmo may be crypto in the backend, with a usd mask for the user. So, perhaps more than you think.


I'm conflicted between telling you how clueless you are (and getting downvoted for being a dick) and walking away shaking my head because I don't feel like wasting my energy explaining shit to clueless people. "it seems [...] Venmo may be crypto"? Wow, yeah, you look like you know what you're talking about. /s

I guess I'm doing both. Good luck with your expert knowledge of economics!


The United States itself is also a kind of religion.

We have our gods (founding fathers, dead presidents) and demigods (American folk heros, war heros).

We have our sacred texts (Constitution, Declaration, etc) and our genesis story (War for Independence).

We have our temples (capitals, court houses).

We have our core beliefs (representative democracy is good, all men are created equal, the peaceful transition of power).

Citizens of this country worship at the alter of Americanism, and many of us work hard to make the religion successful and dominant throughout the world. Like other religions, we've even engaged in genocides and wars to spread our beliefs and convert or destroy the unbelievers.

The United States succeeds only because a critical mass of us choose to believe in this religion and really want it to succeed.

Is it really that much different from Bitcoin?


'The United States succeeds only because a critical mass of us choose to believe in this religion and really want it to succeed.'

Systems ought not require faith in order to be successful. An actor can believe in the good of a system without worshipping it; the kind of 'religion of America' you describe is the framework culpable for many of the worst atrocities the US has committed: Iraq, Vietnam, even Jim Crow or slavery can by tied to a reverence for some fundamental eidolon of 'Americanism'. Separating church and state is meaningless if you turn the state into a church: our systems should be meaningful without the crutch of the founding fathers, the constitution (as a historical object), or the piety of our public infrastructure.

There may be an element of the United States social project which resembles religion, an element that is likely very similar to crypto worship. However, this is not a defense of crypto's legitimacy, but a scathing critique of America's ontological basis.


Bitcoin "the system" doesn't require faith to work. It works by pure cryptographic rigor that is provably infeasible to cheat, along with an adaptive ruleset that responds to changes in external conditions to keep running as designed. It just works, and I don't need any faith to know that. I just need a solid understanding of math and computer science.

Bitcoin "the price" is fundamentally different from the system, and really just serves to operate as a signal for how much collective human attention and trust it is gathering. It's incredibly volatile because it's still so young and finding it's place.

I also don't think the religious element of bitcoin is likely to be a long term thing, but a kind of bootstrapping mechanism to both draw attention, and nurture a core foundation of devotees who are committed to working diligently to integrate "the system" more and more into the real world.


The price and the system are really inseparable from each other. If bitcoin was worth $0, there would be no computers running it and so it wouldn't exist as a system. So the system does require faith to work.


Fair enough.

It requires a bare minimum of 2 people to really work.

But that's literally true of any network protocol you can possibly imagine.


> We have our gods (founding fathers, dead presidents) and demigods (American folk heros, war heros).

Relevant: had they not removed it, this sculpture of George Washington would have greeted visitors to the US Capitol rotunda, handing them the hilt of a sword and pointing directly upward: https://en.wikipedia.org/wiki/George_Washington_(Greenough)

…to draw their eye to the mural on the rotunda dome where a deified Washington takes the sword back from them in death: https://en.wikipedia.org/wiki/The_Apotheosis_of_Washington#/...


> We have our gods (founding fathers, dead presidents) and demigods (American folk heros, war heros).

> We have our sacred texts (Constitution, Declaration, etc) and our genesis story (War for Independence).

> We have our temples (capitals, court houses).

> We have our core beliefs (representative democracy is good, all men are created equal).

I'd be willing to bet a month's worth of my income that a majority of the population doesn't view it this way. The only people I know who view things this way are very far to the right (and this group is not the majority on the far right by any means).

The only part I'd be willing to bet is shared by more than 50% of the population is that all men are created equal (in theory at least; there are plenty of people with disabilities who would disagree that they are viewed as equals in practice; you needn't think too far beyond who would be sacrificed on a deserted island first and without much conflict).


I don't think I agree.

The different political alignments are really just different sects of the nationalism/religion. Liberals simply idealize a different subset of the core tenants, and maybe are more tempered in their zealotry. But they are nationalist to their core nonetheless.

Having said that, there certainly are other groups that don't prescribe to Americanism, and are loyal to other 'religions' be it globalism or some other political ideology that's incompatible with American ideals.

I would even argue that Bitcoin is itself a flavor of globalism, albeit one that the establishment global elite aren't cool with, because they missed the boat on being early adopters and their power would be radically diminished if it wins.


If you artificially constrain yourself to an overton window that excludes e.g Bernie Sanders, sure. That's a false equivalence that's being pushed by one ideological cluster though, similar to the horse shoe theory or the idea that the center is reasonable. There are a lot of people who have problems with the idea of nations themselves. And there are people for whom politics is not part of their identity, but simply a part of negotiationing existence with the world. Again, specific clusters of the political landscape use and fulfill the patterns of religions much more than others (demonizing the other, dehumanising the other, creating a mythology of the ingroup that doesn't tie to material reality) and it's in their interest to push the idea that everyone does that, that the other side is equally religious in their politics and therefore it's not a case of one group wanting special treatment in a system that's meant to be equitable, it's everyone gunning for special treatment with some winners, some losers, politics as war between equally valid but inherently unchangeable ideologies that justifies the actions one takes.

I personally disagree with that politics as war perspective, as well as with the false equivalence


Yes, because bitcoin doesn't haven’t any of those things you mentioned, except for people who want more money.


> Because people really, really, really want it to.

Reminds me of a dialogue from GoT: Power resides where men believe it resides.


It actually reminds me a bit of consumer credit. It’s bad in every conceivable way for society, but good luck explaining that to people who can now buy things they can’t afford because of it.

You can’t fight a hurricane, so I have a card I use for travel points. When in Rome, or this trash fire world we live in…


Consumer credit is good for society in some areas. Used properly, it allows someone to smooth their lifetime consumption and production.

When you’re first starting out, you have a vast well of future production capacity but also vast current, unmet needs.

Expecting people to “just save up” for things that they need is not optimal, especially if that thing they need to save up for is part of what they need to get/keep their first job.


> but also vast current, unmet needs.

Citation needed. Yes, people have needs. But vast unmet needs?


When the average person is starting out, unless their parents are rich and help them, they start from scratch from a material point of view.

That sounds like they're missing a lot :-)


If you think I am missing a lot, why am I happy?


Replace "you" in my previous comment with "the average person ".

Edited the comment for clarity.


I'm not really seeing the parallels. People having strongly held beliefs that they advocate for does not make something a 'religion'. This seems more like an ad-hominem non-argument.


-religion

/rɪˈlɪdʒ(ə)n/

noun

the belief in and worship of a superhuman controlling power, especially a personal God or gods.

Scratch the last bit, since it's a tautology. How many people in the crypto space proclaim that "decentralisation" or "smart contracts" or "hard" (i.e. deflationary) currency will fix everything and make bitcoin the new world currency and grant its loyal hodlers everlasting wealth? What percentage of them actually had a concrete idea on how that will happen?

We've had schisms (BTC), there's a mythological originator (Satoshi) and a possible historical counterpart (Hal Finney if I remember the name correctly?) as well as anointed saints and "first disciples". There's even new prophets (ethereum founder) proclaiming the last interpretation wasn't wrong but incomplete.

I've got to say, I see it rhyme. While I wouldn't say that everyone in the space treats crypto like a religion (probably), I'd wager for decent amount of people that description is a useful model


To be honest, I'm seeing parallels in the opposite direction.

There's a reason we don't have anti-golfers, or threads over and over again rehashing how dumb it is to have 18 holes, or about the number of senseless injuries sustained while golfing, or how it's too expensive to golf. It's because people who aren't interested in golf don't feel a need to prove to others how bad it is, or to force golfers into justifying how good it is.

People who don't golf just kind of focus on other things. But Bitcoin and cryptocurrency seem to be different.


> My impression is that Bitcoin (and crypto) is now a religion.

I don't agree with this characterization, but let's assume for a second that you're correct.

You need to look at the fact that every religion I'm aware of exists and thrives because it fulfills a human need.

You are therefore implying that Bitcoin does fulfill a human need, hence the current demand for it.

The fact that some people, much like with religion, will take it to extremes and/or gobble it up without questioning it and/or not believe a word of it yet use it to manipulate others to their own advantage does not seem to have any incidence on the fact that large swath of the planet's population are still religious.


everything on earth has a religion around it. Doesnt tesla or apple have religiously devoted investors? You only hear the loudest voices, not the millions of people who keep their coins somewhere and go about their lives.


Hn hates crypto so much the top comment just has to compare Tom Brady to Tom cruise and u get all the upvotes. So much salt from a sad community. Can we just ban crypto discussions from hn so the circus can finally close?


Sorry about that - I don't think that comparison made sense and it was also really inflammatory so I removed it


crypto is a techincal monetary system yet the most techical people does not like it.. something to think about.


Keep in mind that HN is also oriented towards VCs and finance people who see cryptocurrency as a rival.

Some evidence for this is that the environmental argument is easily dispatched with: Cryptocurrency is on the demand side and the climate change problem is on the supply side. We need to switch from fossil fuels to non-fossil fuels, which we need to do independent of whether or not cryptocurrency exists, and then people mining cryptocurrency powered by solar panels is not a real problem. Pass a carbon tax.

There are also cryptocurrencies that use proof of space (e.g. Chia) or proof of stake, which don't have the same energy footprint even on the demand side.

But people who say this are regularly downvoted here by people who presumably dislike cryptocurrency for other reasons and see the alleged environmental impact as a strong lever for getting undecided people against it.


The only reason we do not like it is because we missed out. As technical people we should have known but we didn't and that's humiliating.


Not really. I still just think it is a stupid pyramid scheme.


Sure but you're mostly mad that you missed out and so am I.


Why would I be mad? If my neighbour happens to win the lottery, I'm not going around being annoyed that I didn't play. Playing on bitcoin was stupid then and is even more stupid now. That it made some people very rich hasn't changed that fact.


You didn't miss out on anything by not playing the lottery. It's not like you would have also won if you just bought a ticket yourself.

It may be stupid and bad but the only reason we have strong feelings against it is because we missed out. You can convince yourself all you want but deep within we both know it's true.


First of all, I'm not the person you replied to but I want to answer:

I'm mad because there are people who lost their money, trusting that many "techies" know better than them, so they invested as well.

I had some bitcoins before it became a thing, I donated all of them to charity the moment I started suspecting it became (or always has been) a pyramid scheme (when it was like 10K each, yeah I'm a bit slow sometimes). I did once believe that it could be a gold replacement, but it wasn't becoming that too. Zero regrets.

"Oh I couldn't get into a scheme early enough which made many rich", may be what some feel, but there are also some who feel otherwise. If you are a bit smarter and/or technologically more savvy than the average person, there are many borderline legal ways to scam people. The faceless-victim aspect of bitcoin doesn't make it not a scam for me.

Also, I'm not judging you, I'm defending a position I believe in, which is important to me because there's not many things I actually believe.


It’s great for you that you think you know more about my inner states than I do myself. Just because you feel you missed out doesn’t mean that everyone else do. It just doesn’t bother me that some people are becoming rich while I’m just plodding along in my comfortable upper middle class life. The only reason I’m pissed at Bitcoin is because they are spewing out greenhouse gases for almost no use.


I've thought about this a lot because my less technical friends are often surprised when I tell them I am not "super into" BTC.

I wonder if it is because I am used to dealing with the fragility of digital systems (not to unfairly discount their strengths either) -- so then paper money almost feels like a relief to hold in my hand and just slap on the counter and smell that fresh legal tender.


It is easiest to trick people by saying "other people love this!". Engineers believe in crypto currency, so HODL! Or, the kids today view NFT's as hockey cards, they gonna soar like crazy! You might not see the value in this, but others do and that will make you rich!

Basically it is a way to make people turn off their sanity checker "Oh yeah, I don't see the value, I guess I just don't understand, but I still want in on this opportunity!".


Yeah makes sense. Basically just trigger peoples' FOMO response?


oh if we are on that kind of position then crypto is ok for anybody.. anyone can try to create value from nothing and make people believe... actually they did already ... someone created facebook make people believe that it worths billions... but if someone claims that this is a revolutionary monetary system then I'd become suspicious..


> someone created facebook make people believe that it worths billions

Facebook make billions on ads, you don't have to make people believe when you are making wads of cash. And even when Facebook was new the business model was proven to be valuable by Myspace and the many other similar sites making lots of money on ads.

So your post here just strengthens my argument, the fact that you don't see the difference between the two just proves that you have turned off your own sanity checker.

Edit: What we are seeing now is similar to the investment craze in IT before the dotcom bubble. No sanity there, people just invested without thinking. I'll believe in crypto when people starts to think before investing in it.


I think you didn't get the point .. making crypto the default banking system is paradigm shift and efficient paradigmal application. I gave the facebook example because the economic approach which offers that supply and demand is right tools to decide whats good for humanity is simply not accurate.


It’s also tied inextricably to Austro-libertarianism and I think that’s no accident. My wild conspiracy theory is that the founders of blockchain are cashed up libertarians who created it to promote libertarian economics (which overwhelmingly benefit the cashed up among us)


Yeah, one side effect of Bitcoin is that it created 1000x more believers in crackpot Austrian economics. This may end up legitimizing some bad economics.


Austrian economics aren't crackpot, they're just outdated. Their view of the world was the correct when human labor was the most valued thing in the world.

Austrian views on inflation have been proved several times over.

Austrian views on the value of labor are a disaster. They're entirely unable to imagine our current labor market where a substantial amount of the work is done by machines. Human Action was written in 1949. Imagine how different the world must have been back then. My iPhone can recognize the contents of pictures such that I can search them-- in 1949 that would have required an office building some storage cabinets, logistics, and a personal secretary or two. Now nobody,

not even Apple can tell you how that works.


Austrian economics is crackpot by definition because it's based on "praxeology", which explicitly rejects the scientific method.


How do you define "praxeology"? My recollection from reading Human Action is it was only defined as "The study of human action."-- which could be scientific or might not be.


More specifically, as Mises conceives it, it is the study of the UNIVERSAL aspects of human action.


As used by the Austrian school, at least, it explicitly rejects empiricism, and uses deduction instead (from premises that are essentially taken for granted).


I will accept that.

But, I don't think it proves anything.

The scientific method is not an exclusive means to seek truth. Science has only one job-- to make testable predictions. It does not inform us about anything else.

You're essentially arguing "Falsus in uno, falsus in omnibus" because of an inherently illogical belief that only science can arrive at truth.


Rejecting empiricism means rejecting the very notion that one can make testable predictions, though. If that is rejected, what is the point of economics, even?


Austrian economics is essentially a deductive theology; the purpose is to work out the more detailed/complex implications of the basic axioms (both descriptive and, more importantly, prescriptive) that it assumes.


> when human labor was the most valued thing in the world

Try hiring sofware developers with skills that aren't entirely copy-pastable from Stackoverflow and getting them motivated enough to not cash out after six months, and then tell me it isn't.


I'm not talking about that of course. Smart people will always be in demand.

I'm talking about ditches that need be dug. Floors that needs to be swept. Notes that need to be taken. Automation has eaten low end jobs since the industrial age began.


Have you seen the typical "data science" job applicant these days?

Looks pretty low-end to me.


How can I get in on this? :-)


I keep hearing from the futurists that massive job losses from automation are right around the corner. Yet any unskilled profession has no workers. If the automation was coming, wouldn’t we be in massive structural unemployment rather than massive unmet labor needs?

The true morons are the Marxists and their labor theory of value, as well ask MMT idiots. Crack pots are everywhere.


Which bits of MMT do you disagree with?


The homology of God and Mammon is long known. They are both, at least for a lot of people, transcendend and abstract forces dictating human life. Over which they have no influence.

And not just in our era [0] as Heinrich Heine did put it. [0] https://www.marxists.org/reference/archive/heine/lutece/ch31...

Both give hope of redemption from the burdens of life.

Have to revisit Georg Simmels, Philosophy of Money. [1] https://en.wikipedia.org/wiki/The_Philosophy_of_Money


Is this really so different from the rest of capitalism?


Nice example of American football, since players have brain injuries, should we ban it too?


While there is a legitimate argument to be made in favor of either restructuring or banning American football, it's clear that the moral culpability relating to these systems aren't comparable. A fundamentally very small population is vulnerable to the TBI risk of American football, and the vast majority of that population willfully decides to engage in that risk with knowledge of it. However, the environmental and economic (supply chain) externalities of Cryptocurrency are imposed upon those who don't opt into the system, and also operate entire orders of magnitude higher in scope.


Ideally, reform it.

We had gladiators for centuries because we were ok with some dying or getting injured for the entertainment of many others. That didn't make it right.


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