Is there any downside to this? Seems to me this is a positive outcome if it encourages speculators to leave the cryptocurrency space.
Crypto was never intended to be used (and abused) in such a way, and is a considerable deviation from Satoshi's original vision regarding Bitcoin. Perhaps it's time to get back to basics.
I appreciate the feeling, but the problem is that Bitcoin just isn't very useful for the original vision, "a purely peer-to-peer version of electronic cash". [1] It's fine for a little light crime, where people are willing to put up with slow transactions, high costs, inconvenience, and significant risks to e.g., buy some mail-order LSD. But when you compare it with things like debit cards, Venmo, and M-Pesa, it's just not competitive.
I think Bitcoin was a really interesting idea in the pre-iPhone era, but for a variety of reasons it just didn't pan out. Which is why the space was so readily colonized by scammers, grifters, criminals, fraudsters, speculators, and loons.
It was supposed to be cash without the burden of nation state oversight. Instead, it turned into a giant casino ecosystem of unregulated securities involving more and more layers of abstraction (exchanges, stable-coins, NFTs, bundled transactions, hedges, subchains, ...)
> It was supposed to be cash without the burden of nation state oversight
While convenience remains the core point under contention, the secondary point of debate with crypto is the one you raise here: why is this a good thing?
Why would I want an unregulated currency, free of consumer protections or government oversight? If someone steals my credit card I call the bank and reverse the charges. When a bank gets robbed or collapses, the FDIC ensures consumers are unaffected.
Governments aren't a power independent of their communities, they're not aliens from outer space interfering with natural human ways of life. Government is how we the community organize ourselves to ensure our collective protection. They're, obviously, deeply imperfect, but a system completely severing itself from those organizing principles is fated to replicate them with even greater imperfection.
> Why would I want an unregulated currency, free of consumer protections or government oversight
And why would I believe that it has value compared to gold, or a cow? And while the value of a dollar is an abstract of those physical trades, at least it has the backing of the nation’s resources, its people, and its military ability to plunder. Bitcoin has all the backing of …
Your last paragraph is spot on. The right know that government intervention is what holds them back from consolidating power over the less fortunate in society, so it has been a central plank of their strategy to present the government as indeed being 'aliens from outer space', and so to neuter its reach.
If you read about the history of nation-state oversight of finance, you can learn that going "without the burden of nation state oversight" is approximately equivalent to "a giant casino ecosystem". Not always, of course, but often enough. E.g., the South Seas bubble, the wildcat banking era, and the US stock market leading up to Black Tuesday. An awful lot of financial regulation comes into being because financiers working in some unregulated area create such a giant disaster that there's enough popular anger to override government's normal tendency to suck up to people with money.
> I think Bitcoin was a really interesting idea in the pre-iPhone era, but for a variety of reasons it just didn't pan out.
It’s panning out just fine. Everyone who thinks Bitcoin is old news presupposes that you can do something like Bitcoin, but better. There’s no evidence of this in any non-Bitcoin cryptocurrency.
This also ignores that Bitcoin is improving every year. Tools like Liquid and Lightning are incredibly sophisticated, first principles based approaches to real problems in finance, banking, and fungibility. That fly by night securities called "cryptocurrencies" with shallow liquidity claim that they can do better, but always fail to deliver, hasn't undermined anything about Bitcoin.
I agree with the parent post. This is great for crypto. Maybe all the web developers who think they can do cryptography better than cryptographers can go do something else now.
> Everyone who thinks Bitcoin is old news presupposes that you can do something like Bitcoin, but better.
For most people's everyday purposes, all those things the parent mentioned are doing something like Bitcoin, but better.
The one technical problem that cryptocurrency unquestionably handles better than any other technology is solve a problem that is only experienced by people who choose to use cryptocurrency.
I was an early adopter of bitcoin (2012) and I'm pretty over it at this point.
It hasn't managed to do much more than be fancy digital gold. I don't find gold very interesting. It isn't a productive asset. It's just a shiny rock that people lock up in a vault. It doesn't benefit society.
And as financial instruments, both bitcoin and gold are deflationary, which seems quite bad.
I still have a bit of hope for some actually useful stuff to come out of the defi / smart-contract space. But I'm still fairly skeptical. There is a lot of noise and little signal.
This is patently false, many crypto currencies have done what Bitcoin has done much better, Fantom, Monero, Ethereum to name a few off the top of my head
Sure, but that was really the beginning of the smartphone era. In 2009, the iPhone had ~15% market share for smartphones. [1] Counting 2007 and 2008, Apple sold ~15 million units, about half of those in the last quarter of 2008. So when the Bitcoin paper was first published, Apple had sold something under 10m units. And that paper was of course based on earlier work.
My point is that conceptually, the peer-to-peer, proof-of-work thing was much more suited to the desktop era, a sort of SETI@Home for money. It wasn't until a few years later that we truly began to see what the mobile era would look like (e.g., Venmo was August 2009, Uber was May 2010). The peer-to-peer aspect is basically a failure, as the rise of mining pools and centralized exchanges demonstrate. As do the relatively small transaction volumes for Bitcoin compared to things that are actual modern cash substitutes. If somebody were inventing cryptocurrency today, it would not look like Bitcoin.
Exactly. I'm not a big fan of Apple, but in the same way they defined the user experience for desktops via the Mac, they defined the user experience for mobile computing with the iPhone. So much so that most people don't even remember that there were plenty of smartphones previous to the iPhone.
I think its one saving grace will be that it is used for non-recreational drugs that will soon become illegal or functionally unobtainable, for example Plan B and HRT.
I think there's some % chance that this collapse will hit outside the crypto world. I'm not going to be shocked when we find out through some stupid chain pensions were invested and the like.
Could wind up with major governmental oversight moving forward, basically making damn sure it's barely ever adopted. Everyone always talks about "satoshi's vision" and what not, but crypto isn't going to be worth shit if you are forced to make trades in black market scenarios because it shit the bed so bad it took down serious stuff with it.
Granted this is probably worst case which i'd put at very low odds.
> Could wind up with major governmental oversight moving forward, basically making damn sure it's barely ever adopted.
I'm basically of two minds about this.
One is that as long as people understand they're buying nothing of real value, it's fine if they want to "gamble". It's like a lottery ticket in this regard.
The other is if or perhaps when taxpayers will need to bail out crypto companies. At this point, I'll be extremely angry, and want the strictest government regulation possible.
I think it's best to let people make their own decisions wherever possible. Of course with pensions the people with exposure aren't the same ones making investing choices.
I would be fine with regulation that just bans those sorts of vehicles from investing in crypto. That way individuals can speculate with their money, while being guarded against more systemic and indirect risks.
> I think it's best to let people make their own decisions wherever possible. Of course with pensions the people with exposure aren't the same ones making investing choices.
If pensions were involved the people who decided that pensions should be invested in crypto should be prosecuted.
> I would be fine with regulation that just bans those sorts of vehicles from investing in crypto.
I would be fine with regulation that banned people from investing in something that has no value.
It doesn't seem like the linkage between traditional finance and crypto finance is that strong yet.
If it ever got to that point I think we'd more likely see prudential authorities restrict traditional finance actors from investing in crypto rather than governments banning crypto outright.
The original vision has some questionable assumptions. Being deflationary by design practically guarantees speculation and undermines any utility as a currency.
If broad adoption was an actual goal, cryptocurrencies wouldn't be fundamentally structured like ponzi schemes.
The problem is that the people at the bottom of the pyramid have no idea how crypto works or the risks involved. Seems to me that defining crypto as an Unregulated Security would be a good first step, allowing only "Accredited Investors" to participate in crypto trading directly.
Homomorphic encryption without financialization will be the final form of cryptocurrency, and only for things like escrow and transfers between banks (probably replacing commercial paper). It'll take a decade and people will probably never see anything but their native currency in their banks. Part of the slow adoption will probably be due to it making Olde-Timey forms of corruption no longer possible. (But I'm sure new kinds will arise.) It was never meant to be an investment, just like you said.
There are going to be some great discounts when correlated assets bid down during these liquidations, and some nice block space available
Just pick the right asset if you want to speculate, there is always some that move
pre-2017 crypto was not a beneficiary of quantitative easing, the hedge funds didnt exist (barring like 3 with low AUM) and the LPs had no vehicle to purchase crypto
its more closely a return to that environment, except with waaaay better infrastructure
There is still over $200bn in stablecoins ready to move into any crypto asset at any moment 24/7, the redemptions to fiat aren’t really happening
There's a non zero amount of people who put their life saving into crypto because it was going to go "to the moon." Everything was coming up Milhouse... until it wasn't.
So those people are probably going to rely upon taxpayers for help. And so when homeless hodlers appear on the streets looking for the government handout, that's gonna piss off liberals and conservatives alike.
Crypto was never intended to be used (and abused) in such a way, and is a considerable deviation from Satoshi's original vision regarding Bitcoin. Perhaps it's time to get back to basics.