The State of Cryptocurrency

[trog100]

the word control and the word manipulation mean pretty much the same thing.. the only thing of importance here is who is doing the controlling and why..

central banks and government manipulate we can take that for granted.. fiat money is manipulated.. gold is manipulated.. stocks and shares are manipulated.. trade prices are manipulated .. in fact everything that can be manipulated is manipulated..

trog

 

[Papahyooie]

The entire U.S. federal reserve system is manipulation. And if you're going to be angry at some people for stripping out the US dollar backing from Tether, and using that for market manipulation, you should also be angry at the US government for the same thing when they got rid of the gold standard. It's functionally the same thing.

To note, I'm not saying you *shouldn't* be mad at people doing this. I'm saying you should be mad at both.

 

[FordGT90Concept]

The Federal Reserve regulates (1a : to govern or direct according to rule), not manipulates (2b : to control or play upon by artful, unfair, or insidious means especially to one's own advantage). When they decide to change interest rates, it's a public affair because people with a stake need to know.


Have some history: Why We Left The Gold Standard

"Most economists now agree 90% of the reason why the U.S. got out of the Great Depression was the break with gold," Ahamed says.

Going off the gold standard gave the government new tools to steer the economy. If you're not tied to gold, you can adjust the amount of money in the economy if you need to. You can adjust interest rates.

Almost all economists agree, the system we have today is better than the gold standard. Not perfect, but much better.

Imagine if the USD was based on graphics cards (instead of gold...any commodity really). Ethereum would have tanked the entire US economy. Because it isn't, cryptocurrencies barely registered on USD's RADAR.

Recessions don't become depressions anymore because of fiat.

 

[Papahyooie]

Using different words doesn't change reality. Neither does the justification. It's literally the same thing. The only difference is you see the government as legitimate actor authorized to do the manipulating, and the fact that the manipulation (sometimes) turns out with good results.

Manipulate comes from the same root word as manual: the latin "Man" meaning hand. Manipulate literally means only to handle something (the connotation being to "put one's hands on.") The emphasis on it being insidious or unfair is purely contextual. And that context is subjective.

Your article supports my statement, so I'm not really sure what you're getting at there...

"Gave the government new tools to steer the economy. If you're not tied to gold, you can adjust the amount of money in the economy if you need to."

... so... manipulation...

 

[FordGT90Concept]

Now you're arguing semantics, not merit. Let's play some Q and A:

1) Did the US/UK suffer from depressions while on the gold standard?

2) Did the US/UK suffer from depressions while off the gold standard?

3) Considering your answers to the above questions, is the gold standard the best monetary platform to build an economy off of?

Facts:
a) The Federal Reserve predates fiat monetary policy in the USA.
b) List of recessions in UK.
c) List of recessions in US.
d) Bitcoin is a commodity.
e) Gold is a commodity.


You're basically advocating for more economic depressions.

 

[Papahyooie]

Now you're arguing semantics, not merit. Let's play some Q and A:

1) Did the US/UK suffer from depressions while on the gold standard?

2) Did the US/UK suffer from depressions while off the gold standard?

3) Considering your answers to the above questions, is the gold standard the best monetary platform to build an economy off of?

Facts:
a) The Federal Reserve predates fiat monetary policy in the USA.
b) List of recessions in UK.
c) List of recessions in US.
d) Bitcoin is a commodity.
e) Gold is a commodity.

Whoa, hold on. You're the one who made the distinction. You're playing at semantics, not me. You purposefully chose the definitions which suited your purposes, while ignoring the first definition cited in your own link. Don't talk to me about playing semantics.

1) Yes.
2) Not yet.
3) Not really, but it's better than monopoly money, which fiat is. At least some crypto is inflation-proof. And I'd have no problem with fiat either, if there was actually a finite supply of it. Gold is semi-finite (as in, we don't know where the end is, but at most times there is a steady influx of real supply.) The fact that the fed controls the supply of the dollar is purely, abjectly, manipulation. You can argue whether their manipulation is good or bad, but it IS manipulation. There is no denying that.

The fact that people were pulling their gold out of the reserve only threatened those in power. Those who owned the gold pulled their gold out because they had lost faith. They had every right to do so. By pulling the gold standard, those in power are saying "You do not own the value of your property." I have a huge problem with that.

Bitcoin itself cannot be manipulated. It has a 100% finite supply. Its price relative to other things can fluctuate obviously, as can anything else. But it speaks volumes that the very way that people are manipulating bitcoin prices is by using a currency that didn't have the backing it claimed to have. It took manipulation of *other* currencies in order to manipulate Bitcoin's price relative to *another* currency. The fact that tether had a quasi "gold standard" in the US dollar, then abandoned that secretly gave way to Bitcoin prices being manipulated. And that wasn't Bitcoin itself being manipulated. It is only Bitcoin's interaction with other currencies that was manipulated.

Bottom line is, there are immutable laws of economics. You can build whatever house you wish on top of those laws, whether of bricks or cards. But it doesn't change the laws. And a house that takes gravity into account will always stand longer than one that doesn't.

 

[FordGT90Concept]

Cryptocurrency suffers from severe deflation (like gold). Inflation inline with economic growth leads to purchasing power stability (a very good thing that monetary policy aims to achieve).

Remember what the Great Depression was: 25-33% people were out of work and poverty was everywhere. The Great Depression spared no one; even the wealthy found their pockets pinched.

Bitcoin itself cannot be manipulated.

That's hilarious. That document I just linked above literally says "Virtual currencies: Carry speculative risk plus fraud and manipulation risks." Bitcoin was "played upon by artful, unfair, or insidious means especially to one's own advantage." The instruments used to manipulate matter not: the end justifies the means to the manipulator.


Name one time that the Federal Reserve "manipulated" the USD for its own advantage.


Very important quote from that deflation link (and a reason why cryptocurrencies aren't currencies at all): "Economists generally believe that deflation is a problem in a modern economy because it increases the real value of debt, especially if the deflation is unexpected." Currencies are used to settle debts. Commodities are straight up trades, no debts.

Imagine if you owed 1 BTC to someone before the bubble...about $2,500 USD. A month later, that debt ballooned to $15,000 USD for no reason other than the deflation of BTC. You would now owe six times the real value agreed upon a month prior. See the problem?

Only cryptocurrency evangelists prophesize cryptocurrency replacing fiat: a belief that's rooted in gross ignorance. In order for blockchain to function as a currency, it would require oversight by an organization like the Federal Reserve to control inflation and deflation. Evangelists won't allow that so, cryptocurrency replacing fiat is a nonstarter.

 

[Papahyooie]

I think you're mistaking speculatory gains for deflation, but that's a whole other conversation. Purchasing power stability is simply a mathematical trick. An accounting tool. It does not address any actual natural economic function. Your hypothetical about owing someone a debt of 1 BTC is true... but it is 100% dependent on the fact that 1 USD has no real value, because it has no valuable backing. Since BTC is "backed" by the USD and the USD/BTC price pair is driven by speculation, the situation you describe arises. While this makes BTC a good speculative tool to create shadow value, it does not in any way translate to real value. Your answer is to destroy crypto. My answer is to use crypto as a currency tied to real value, which a market is fully capable of doing on its own, given adoption. Crypto can never be the "future" unless it's adopted for use as a currency. That I agree. If/once it does become widely adopted, it becomes valued based on market principles, not the USD/BTC pair. "How many apples can I buy with a bitcoin" replaces the question of "How many dollars can I buy with a bitcoin." In order for something to deflate, the real values must be compared.

This is the problem with Keynesian economics... the idea completely eschews *actual* economic laws of real value in exchange for mathematical tricks.

To address your post edit that I'm advocating for more depression: You're saying that because removing the gold standard (sort of) helped get the economy out of the great depression (arguable) that having a gold standard causes depressions. I shouldn't have to point out the logical fallacy there. Bad speculation caused the depression. Stocks in general are a horrible idea. It can't be stopped really, but the consequences of speculating badly are losing your money.

You're mistaking what I'm saying about Bitcoin being unable to be manipulated. The manipulation risks of Bitcoin are predicated on the interaction between it and other value stores. If those value stores are manipulated, and Bitcoin traded against those manipulated values, then yes, the result is going to be manipulation of Bitcoin's price relative to other value stores. Bitcoin's *real* value, if it were to have such a thing (it doesn't at the moment, due to its lack of usage as an actual tendered currency) cannot be manipulated. Speculation risk and manipulation is completely different. Pump and dumps do exist in crypto. I'm not denying that sort of manipulation does happen, but that is a completely different topic. Moreover, it falls right back to the fact that it is the dollar/BTC conversion that is being manipulated, not Bitcoin itself.

Name one time that the Federal Reserve "manipulated" the USD for its own advantage.

https://www.federalreserve.gov/monetarypolicy.htm


Once again, we're back to name-calling. (Although I'm guilty of that, especially with you Ford, so I don't take it nearly as harshly coming from you...) But you saying someone, or their beliefs are grossly ignorant does not make it so. Claims about "most economists" usually refers to "most economists who agree with my viewpoint." Keynesian economists tend to be against crypto. Classical economists tend to be pro. And since Keynesian economists are the ones that support the current system, they tend to get all the press.

There is nothing about currency that requires oversight and control by an organization outside of its users. That claim simply is not true. If Bill and I agree that one rock equals two apples, we have a currency. It's a terrible currency, because rocks are everywhere, and you can always get more... but that's basically the Federal Reserve, now isn't it?

 

[FordGT90Concept]

Bad speculation caused the depression.

No, that caused the recession which caused a run on the banks which caused the depression. Every depression I can think of has the "run on the banks" feature (liquidity gone). The Great Recession didn't become a depression because of TARP which restored liquidity quickly.

Stocks in general are a horrible idea. It can't be stopped really, but the consequences of speculating badly are losing your money.

You literally just said "cryptocurrency in general are a horrible idea." A share represents a stake in a company; a Bitcoin represents a stake in the Bitcoin commodity.

 

[Papahyooie]

No, that caused the recession which caused a run on the banks which caused the depression. Every depression I can think of has the "run on the banks" feature (liquidity gone). The Great Recession didn't become a depression because of TARP which restored liquidity quickly.


You literally just said "cryptocurrency in general are a horrible idea." A share represents a stake in a company; a Bitcoin represents a stake in the Bitcoin commodity.

Then the banks should die. Loss of liquidity does not hurt the individual who owns the value. It only hurts those who want to maintain control over the value owned by others. Once again, this goes against my core belief that a person owns his property. We don't agree on this point, so as I said in the other thread, we will never agree on anything that derives from our core beliefs. But you're at least fun to argue with...

Using crypto as a speculative commodity is a horrible idea overall yes, ideologically speaking. I'm still going to use it to make money, because to be honest, I don't have much faith in the current crypto ecosystem becoming an actual currency and not a speculative commodity. I have no delusion that BTC is anything but that. I've never made any claim otherwise. And I have no moral qualms with making money off of it until the ship sinks. But I also have no illusion that what I'm doing is anything more than playing a mathematical game to my own advantage. That's the difference... I know what I'm doing here with the BTC/USD pair is a farce that I'm taking advantage of. You wholeheartedly believe that the same game being played by the Fed board members benefits you. And it does. It is responsible for a modicum of stability. I don't disagree. But stability in exchange for the game masters sapping *real* value from your coffers into theirs, and in exchange for not owning your own property. It's an ideological difference, sure. And I don't expect you to change your views on that. But what I won't abide is, like I said in the other thread, people who want to come into my playground and tell me what to do with my toys. You can decry crypto all you like... I don't really care. It's when you want to regulate it that it makes me angry. The point of crypto is to own the value of your own property. As a speculative commodity, yes... it's useless for that purpose. I've not been shy about admitting that.

 

[FordGT90Concept]

Loss of liquidity does not hurt the individual who owns the value.

Yes, it does. Without liquidity, trade stops. Without trade, the economy stops. Without the economy, the basics (food, clothing, shelter) start vanishing. Like I said: it's the chain of events that precipitated most (if not all) depressions. An influx of cash where the liquidity is gone is what gets the economy moving again. In 2008, it came in the form of both fiscal policy (TARP) and monetary policy ("Quantative Easing"). The result: recession did not turn into depression. #ThanksFed

But stability in exchange for the game masters sapping *real* value from your coffers into theirs, and in exchange for not owning your own property.

I do own my property. It is tangible. It has real value. I can trade it for anything a buyer is willing to exchange for it. The Federal Reserve really has nothing to do with that.

It's when you want to regulate it that it makes me angry.

Oh? So you like manipulation and fraud? No one should have punished Mt. Gox and Bitfinex for what they did?

 

[Papahyooie]

Your second paragraph belies your first. If your goods are tangible, and can be traded, then a loss of liquidity does not hurt you (or more accurately, doesn't exist beyond the framework of currency.) The two are mutually exclusive. Both cannot be true.

When constrained to such a system however, the market value of your goods is decoupled from it's real value, obscured by a conversion system that necessarily is manipulated. The entire point of fiat currency IS literally to facilitate manipulation. That is the express admitted purpose. If you trust that the overlords doing the manipulation have your best interest in mind... Well, more power to you, you poor naive bastard. I'm sure the billionaires running the show aren't there to protect their hoardes.

No, I don't like manipulation and fraud. I'm not an anarchist. Fraud and theft are still crimes, but that's entirely irrelevant. I'm speaking of regulation as opposed to law. I know there isn't a real operative difference between the two, but we don't have words to make the difference... For my purposes here:
Laws govern natural crimes. Regulation governs facilitation.

Law: don't poison people.

Regulation: your lemonade stand must be tested monthly for poison, and must contain less than 0.00001% poison.


Laws punish crimes. Regulations punish those who haven't yet committed a crime.

 

[FordGT90Concept]

Your second paragraph belies your first. If your goods are tangible, and can be traded, then a loss of liquidity does not hurt you (or more accurately, doesn't exist beyond the framework of currency.) The two are mutually exclusive. Both cannot be true.

No liquidity = no buyers = no trade. Federal Reserve inspires liquidity enticing buyers to close on trades.

I'm speaking of regulation as opposed to law.

Regulation:
2a : an authoritative rule dealing with details or procedure
2b : a rule or order issued by an executive authority or regulatory agency of a government and having the force of law

Law:
a (1) : a binding custom or practice of a community : a rule of conduct or action prescribed (see prescribe 1a) or formally recognized as binding or enforced by a controlling authority (2) : the whole body of such customs, practices, or rules The courts exist to uphold, interpret, and apply the law. (3) : common law

Laws govern natural crimes. Regulation governs facilitation.

Um...?

Law: don't poison people.

Regulation: your lemonade stand must be tested monthly for poison, and must contain less than 0.00001% poison.

Law: The Commodities Exchange Act: "prohibits fraudulent conduct in the trading of futures contracts" and created the Commodity Futures Trading Commission with the stated purpose to "foster open, transparent, competitive, and financially sound markets, to avoid systemic risk, and to protect the market users and their funds, consumers, and the public from fraud, manipulation, and abusive practices related to derivatives and other products that are subject to the Commodity Exchange Act."

Regulation: CFTC interprets CEA to include cryptocurrencies; ergo, it applies it's directive and powers to effect the market.

In your example, you're talking about food safety compliance which has stopped, or severely lessened, the effect of bacterial outbreaks. Food safety compliance is a condition of getting and maintaining a license to process foods. Lemonade stands hardly qualify; however, the businesses that handle the lemons do. Regulation establishes trust that the products being purchased are safe for consumption.

Laws punish crimes. Regulations punish those who haven't yet committed a crime.

That's unconstitutional and a complete mischaracterization of what regulation means.

 

[R-T-B]

This is quite the tangent anyway.

Dude, this whole thread is a tangent then.

I see no way that wasn't entirely on topic, unless you only consider criticism of crypto as "relevant."

 

[Papahyooie]

/sigh...

Ford, I don't know how to discuss things with you if you can't even break free of the rigidity of a dictionary. You want to accuse me of playing semantics, but your argument against me is "that's not the definition of regulation" when I very clearly defined the word for my purposes of this conversation. I realise that the emphasis and distinction are my own... That's was my point, because we don't really have a word to make the distinction I want to make (or perhaps I simply don't know the word if it does exist.) But if you can't accept that distinction for the purposes of this conversation for lack of better terms, then I guess you win, if only in your own mind.

I'm not here to debate words, I'm here to discuss ideas. I provide an allegorical example of what I mean by the distinction using a lemonade stand, and your response is "but food regulation prevents disease."

I would say that's the very definition of missing the point, but you'd probably just link a dictionary web page containing the actual definition of missing the point...

You are synonymizing liquidity with the state's currency, ignoring the possibility of any other. Your operative usage and definition of liquidity *rely* on the system you are supporting with your argument. If you can't understand why that's logically problematic, then our conversation here has gone deeper than you're capable of going. I don't say that to insult you... it's just that I'm probably not eloquent enough to explain it to you, given your propensity for dictionary dot com.

But I'm not one to care for having the last word... I'm sure you'll consider my bowing out here a victory, but honestly this is tiresome. Congratulations wall. You've defeated my forehead. Carry on.

 

[FordGT90Concept]

...dictionary dot com.

merriam dash webster dot com

 

[trog100]

interesting how certain words are given negative meaning.. manipulation now equates with fraud.. anarchy gets the same treatment.. messing with the meaning of words is all part of the manipulation or control game.. he he..

as i said earlier everything is manipulated the only thing of interest is the who and the why.. as for the worlds fiscal and monetary policy again it all works until it dosnt..

trog

 

[FordGT90Concept]

Cryptocurrencies: looking beyond the hype

Cryptocurrencies promise to replace trusted institutions with distributed ledger technology. Yet, looking beyond the hype, it is hard to identify a specific economic problem which they currently solve. Transactions are slow and costly, prone to congestion, and cannot scale with demand. The decentralised consensus behind the technology is also fragile and consumes vast amounts of energy. Still, distributed ledger technology could have promise in other applications. Policy responses need to prevent abuses while allowing further experimentation.

Some really interesting stuff in there. For example, if USA's economy were to be committed to a cryptocurrency on July 1, 2018, the ledger would grow to 110 terabytes by the end of 2020 assuming each transaction is only 250 bytes. It is an understatement to say that peer-to-peer is inadequate for handling an economy the size of the USA.


Another gem:

It talks about how foreign exchange has exceeded $540 billion and blockchain may prove to be a solution for that problem but in the form of "cryptopayment" and not "cryptocurrency." It stresses that there's alternative solutions in the works so cryptopayment may not be the one that is settled on.

I think by cryptopayment, they mean something like Federal Reserve Notes. It is a legitimate, recognized currency but only accepted as an intermediary for foreign exchange.

 

[R-T-B]

It talks about how foreign exchange has exceeded $540 billion and blockchain may prove to be a solution for that problem but in the form of "cryptopayment" and not "cryptocurrency."

I honestly feel like those are the same thing, sorry.

Every example they use there assumes bitcoin. Bitcoin != all cryptocurrency.

 

[FordGT90Concept]

I honestly feel like those are the same thing, sorry.

The unit of account and ultimate means of payment in Building Blocks is sovereign currency, so it is a “cryptopayment” system but not a cryptocurrency.

USD, GBP, CAD, etc. is considered sovereign currency. I tried to dig into the specifics and coming up blank. All I know is that WPF gives people money (their local sovereign currency) and they buy food with it. "Crypto-" as in there's a blockchain involved and "-payment" as in local legal tender, not something specific to the blockchain.

Every example they use there assumes bitcoin. Bitcoin != all cryptocurrency.

"Cryptocurrency" blanket for all current cryptocurrencies. If they're talking about specifically Bitcoin, then they'll say Bitcoin by name (e.g. look at the graph in the post).

 

[Papahyooie]

it is hard to identify a specific economic problem which they currently solve. .

As I've said many times now, it's an ideological problem that they can solve. If you don't agree that it's a problem, or if you disagree on that solution... don't use crypto. It's really that simple.

I will never understand peoples' need to control every aspect of other peoples' lives.

Cryptocurrency vs cryptopayments is largely symbolic. Even in a cryptopayment system that facilitated payments in other currencies, the technology would still be identical to a cryptocurrency. You'd still be using a transaction hash as the item being transferred, you'd just exchanged that virtual item for a dollar (or whatever) at each end. Whether you consider the hash itself to be the currency itself is just details.

 

[moproblems99]

I will never understand peoples' need to control every aspect of other peoples' lives.

Amen.

 

[R-T-B]

If they're talking about specifically Bitcoin, then they'll say Bitcoin by name (e.g. look at the graph in the post).

Except they don't. They just assume all crypto consumes massive amounts of energy (ignoring the ones that don't, there ARE PoS coins out there), they use calculations assuming bitcoins (noncompressed) block size in their "running the USA" calculation without even naming Bitcoin (other coins would do much better at this, like exponentially).

I mean, they really don't other than that one graph.

 

[FordGT90Concept]

They graph Bitcoin power consumption versus Ether (which changed to Proof of Stakes). Ether is still extremely power consuming considering how little productive work is being accomplished.

 

[R-T-B]

They graph Bitcoin power consumption versus Ether (which changed to Proof of Stakes). Ether is still extremely power consuming considering how little productive work is being accomplished.

Ether still incorperates proof of work for a large portion of coin generation, making it a less than ideal example.

It's the big fish yes. That doesn't make it the right fish. Especially not for the point you are trying to make.