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Cryptocurrency continues to gain more ground but I still have my reservations about it being the currency of the future.

If by design, cryptocurrency has a finite volume of transferrable currency, do early adopters have an unfair advantage that could potentially make the currency unusable? I don’t see how it could possibly be fair when earlier mining yielded currency more quickly.




Fiat currencies will probably always exist.

Digital crypto assets like Bitcoin or Ethereum will exist alongside them. Bitcoin can be an asset like gold, of which users keep a portion of their networth to protect from economic uncertainty.

Its deflationary policy may make it less usable as a currency, but at least crypto gives people choice.


I was having this discussion with a friend recently, arguing over what the actual use cases are for crypto, and I came to a similar conclusion.

In terms of facilitating payments, cryptocurrencies are worse in almost every way I can think of compared to existing systems. They are (currently) slow, have high transaction fees, but most importantly the non-refundability of crypto transactions is a bug, not the feature crypto proponents suggest.

However, as a store of value (e.g. "digital gold"), I think crypto has real potential. There is a reason crypto is very popular in places with hyper-inflationary monetary systems like Venezuela and Iran. And compared to actual, physical gold, crypto is almost better in every way: it is much more easily transferred and stored, and the ledger means establishing "provenance" is not an issue. Yes, it's obviously currently extremely volatile, but it's not hard to imagine that volatility lessening over time.


> Yes, is obviously currently extremely volatile, but it's not hard to imagine that volatility lessening over time.

I feel like I’ve heard this every year since 2015. I think it’s going to be hard to shake the majority perspective that it’s a speculative asset.


I think this is one of those things where people overestimated how much things would change in the short-term, but will grossly underestimate how much they will change in the longterm.

5 years is a pretty short window in the grand scheme of things when talking about the adoption of technologies.


Gold has been in use for hundreds of years and yet it's still very volatile. If Bitcoin is digital gold that doesn't really solve the volatility problem.


I don't think people are arguing bitcoin will be less volatile than gold, but BTC is currently still an order of magnitude more volatile than gold.

Point being that even with gold's volatility it is still seen by pretty much everyone as a viable store of value, and I think BTC will be similar.


An interesting thing you might do in an overinflationary state, however, is buy a large portion of something like the USDC, the USD Coin, which maps to exactly US$1 all the time. While you are tied to another country's fiat whims, you still have the value add of crypto mentioned above: provenance and distance from the hyperinflated currency of your home state.


What if a bunch of countries peg their currency to crypto like Bitcoin and it becomes so valuable that one day jobs return to America due labor being cheaper in the US because we were to stubborn to chain our policy? Lol is that a thing that could happen?


>They are (currently) slow, have high transaction fees

This is only true for bitcoin and ethereum.


Which ones are fast, with low transaction fees?


LTC comes to mind, as well as sidechain technology like the Lighting Network.


> Digital crypto assets like Bitcoin or Ethereum will exist alongside them. Bitcoin can be an asset like gold, of which users keep a portion of their networth to protect from economic uncertainty.

Seems improbable, as it is far less stable than Gold. From what I see, it is almost never used as a currency, and almost always as a speculative asset. The main indicator for me is that Bitcoin is always measured in Dollars (or some other fiat currency), instead of having some value that it taken to be it's own. Have you ever heard someone say "This bike cost me 0.63 Bitcoin"?


How much gold only exists on paper? Once people realize there is more in paper than in vaults that stability may evaporate. The Germans move their physical gold out of the US for a reason


The issue is apparently way worse with silver


Gold is also almost never used as a currency. BTC's product market fit is store of value, not medium of exchange


Gold was a currency. It evolved from rocks in the dirt, to gold coinage, to paper coupons, to whatever the hell instrument it is today.

You stored your gold in a bank, and the bank gave you paper coupons to redeem it. People traded the coupons because it was easier than trading the gold. This is the birth of modern day banking.


How is gold stable? Have you seen it in the last year? The last ten? Hardly stable IMO.


And how do you measure the value of gold?


You're not protecting from uncertainty with a currency whose value fluctuates against the dollar by 10% daily on a regular basis.


Do you think volatility will be the same 10 years from now? 20 years?

If so, why? I think volatility will down as volume and scale increase.


i think there's a high chance it will be worse ie. some competitor tech crushing bitcoin's value entirely in 10 years


I think the fact that no one controls Bitcoin is actually a major downside. The Fed does a lot of work to keep USD stable (alongside being part of a a stable government). I trust the USD as long as I trust in the institution.


Everyone trusts their government when things are going good.

When you stop trusting the USD/central bank, what will you turn to?


I don't think there are good reasons to use bitcoin, and I think much of the existing interest is a demand for volatility, in the same way as people are piling into GameStop.


Deflationary policy makes it more usable as a currency. It means that you don't have to spend the money instantly, but you can save it for later.


Deflationary policy means that if you spend it today you lose out on future gains, so preferably you just don't spend it, ever.


Fiat currencies will still be replaced by stablecoins like USDC or USDT


Isn't that true of everything? If you were an early adopter of America you could get free land that today could be worth hundreds of millions.


That's a valid analogy but also on a much longer time frame. Bitcoin increased in value orders of magnitude quicker than the value of land in the US. If somebody who bought a house 5 years ago was selling it for 100 times today, you bet your ass people would be mad.


Do they have any greater claim to being mad though? It makes you see it more clearly but I do not think it makes it worse. Besides, for most people they just were not alive when it was possible to claim land and nobody left them any. You could have seen crypto you just didn't, in most cases. I think that makes people more mad but once again I do not think it makes it more unjust, just the opposite.


Like Tesla stock? In the past year Tesla has gone parabolic, which looks very much similar to Bitcoin. How are they different?


That's a great analogy


Thanks :)


I mean I don’t disagree with you but it still makes my stomach turn a bit.


> If by design, cryptocurrency has a finite volume of transferrable currency, do early adopters have an unfair advantage that could potentially make the currency unusable?

> I don’t see how it could possibly be fair when earlier mining yielded currency more quickly.

If by design, fiat currency has an infinite volume of transferrable currency, do governments have an unfair advantage that could potentially make the currency unstable?

I don't see how it could possibly be fair when just printing it yielded currency more quickly than properly earning it.


That doesn't even make sense. For a start governments don't earn money. Secondly, a managed currency controlled by a central bank under the control of a democratic government is a good thing.


> For a start governments don't earn money.

Build infrastructure = provide a service.

Get paid taxes for usage of said infrastructure = earn money for properly providing a service.

> Secondly, a managed currency controlled by a central bank under the control of a democratic government is a good thing.

That is a tautology, you merely rephrased the claim without providing any argument.


Currency supply to the economy and the amount of services a government supplies are orthoganal issues.

I didn't provide a reason, but it's not a tautology. I would accept "bland assertion".


> Get paid taxes for usage of said infrastructure = earn money for properly providing a service.

Taxes and provision of services are completely separated. Citizen did not get their money back when schools closed because of the pandemic.


Not necessarily. Dogecoin has no fixed cap on the amount of Đ in existence. Rather, it expands at a rate of Đ5billion/yr, much to the chagrin of several currency pumpers.

https://github.com/dogecoin/dogecoin/issues/1674


I did not know this. Thanks for the information. So do this make a currency like Doge more attractive as a long term solution? Will BitCoin be a one hit wonder per se?


Looking at Doge's price-history, it's relatively stable, and its inflationary nature prevents it from becoming an asset to invest in. The enduring popular meme also gives it some intrinsic value that other Cryptos don't have.

I'd like the coin to take off as an actual currency, and of the coins I've looked at, I think it has the most potential for adoption in that respect.

But I don't think it's got the ecosystem to support that right now. A metamask-style doge wallet would do wonders for this.

Also, knowing little to nothing about the backend (or other crypto backends, tbh), other than that it's derived from Bitcoin - I have concerns about scalability wrt transaction settlement times, power consumption, and ease-of-entry with self-hosted wallets.


Isn't this kinda inherent in all currencies in a way? Those born in rich families "yielded currency much more quickly".


In currencies which are not subject to maximum limits, no.

Managed currencies tend to devalue over time. Rich families must invest and risk capital to keep growing their fortune, not just sit on it.


> cryptocurrency has a finite volume of transferrable currency

This is true of Bitcoin. Others, such as Ethereum, have a known inflation schedule, which would help alleviate the issue you mentioned as being a currency of the future. Furthermore, it is looking like the "currency of the future" may (at least in the short term), look more like a cryptocurrency that is worth $1 and is 1:1 backed by a dollar in a bank account. These are known as stablecoins and are an in-demand topic right now for central banks around the world.

Bitcoin has a property of having a known, fixed supply. This allows it to serve as a store of value. It can and is used for day-to-day transactions, but there may need to be more advancements to make these types of transactions viable long-term (such as the lightning network).


Ethereum doesn't have a known inflation schedule. It has an arbitrary inflation schedule that is decided by the Ethereum developers.

The idea of cryptocurrency is to replace fiat currencies, with an engineered system instead of a political system. There's no benefit in a cryptocurrency that's backed by a fiat currency. It's like building a stone house on a swamp.


Couldn’t a government just destroy a stable coin by seizing the currency backing it? Isn’t the point of a cryptocurrency supposed to be that it’s not controlled by any government?


I don’t know if a government today could just seize crypto, but the USA did so with gold in the past. Imagine owning a whole bunch of gold, and then waking up one morning & finding out it’d been replaced with US Dollars.

https://en.wikipedia.org/wiki/Executive_Order_6102


A stable coin doesn’t necessarily have to be backed by fiat, DAI is backed by crypto assets and those assets can fluctuate and sometimes need to be increased during volatility.

I think the point of fiat backed stable coins are more for getting around regulations (eg Tether) and a fiat on-ramp for getting into the ecosystem. Certainly if the government seized a large portion of Tethers assets then that could affect other assets, but this actually has already happened with (a small portion, not large) Tether and nothing catastrophic happened.


Hasn't panned out that way for Tether... So far...


Quite the opposite.

Bitcoin was the first fair currency, where everybody who had a computer could get it.

There wasn't any currency created a more fair way.

Even now everybody can look at it and evaluate how well its design resonates with his or her philosophy.


> Bitcoin was the first fair currency, where everybody who had a computer could get it.

Even if it was correct, that would be an extraordinarily bizarre definition of "fair".


Why? You could easily mine the currency on an average computer with no special hardware. Just because you didn't notice, doesn't mean it wasn't fair.


Sure, you're right, but the other option is to be a banker...there are much more people with computers than with banking license.


The original holders will die, and their heirs will sell. The original holdings will diffuse to the richest as with any asset, give it 100 years


Not all cryptocurrencies have finite volumes by design. Ethereum, for example, currently doesn't have one. It also uses a proof-of-stake instead of proof-of-work for consensus, so even early owners of hardware don't maintain an advantage.


Has ethereum actually switched to PoS? It was still in the pipeline last I heard.


ETH 2.0 is operational and is PoS but the main Ethereum is not Proof of Stake just yet. 2ish years (Vitalik time = Valve time, so probably 3+ years).


afaik still PoW


There is no reason that limited supply need be an inherent mechanism to a crypto currency.


Yeah, I'm sure people would be happy to transact in a crypto with 1000% inflation \s


Historically people have been willing to use currencies with inflation like the US Dollar. The point is that any government could build a out a crypto version of their currency if they so wished and have the same inflation policies they use with paper money. The crypto part doesn't imply a specific monetary policy. Crypto just means you can use it peer to peer over the Internet without an intermediary.


Not all coins have limited supply, e.g., Ethereum does not.


The initial distribution is not fair. This is a disadvantage but it doesn't matter much. It was similar with Gold. The more time passed, the better it became distributed.


And in the early days the cost of 1 Bitcoin was abysmal. The idea is that the harder it gets to mine the more expensive it becomes.


Is it? I mean it's certainly gaining value, but are people using it to pay for stuff?

In the earlier days of bitcoin there where ATMs near me, and bars that accepted bitcoin.




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