My understanding is that (one of) the point(s) of Bitcoin was to de-centralise the control of the currency so that "banks getting a bailout" isn't possible since the currency control of Bitcoin doesn't allow printing it out of thin air for handing out to the businesses that caused the crash that seemingly necessitated the bailout.
Secondly to that, I find it amusing that the cause of the GFC (amongst numerous other large-scale issues) is both poor regulation and ineffective enforcement of an industry that's over a century old. Proving, basically, that the regulation of cryptocurrency is a pure talk-fest (or that any US regulation is a pure talk-fest). It will result in the honest folks doing the right thing and getting screwed in the process whilst the dishonest still do the bad things because the US' will to enforce regulation is weak.
A few years later, the TheDAO hack happens, and Vitalik and friends pretty much force a fork on the network by spamming FUD and threatening to stop the entire thing because they're losing too much money and they're too big to fail.
Totally different from banks: it's no longer the government deciding to bail them out, it's straight up the bank printing the currency telling people to bail them out or their currency becomes worthless.
I wasn't paying a lot of attention back then, but from what I've read about it, it was far from the worst decision in the world despite the fact it went against the most basic ideology.
I give it a bit of a free pass because it was a new thing built on top of a new thing, so somewhat of a beta test, which failed, so roll back to a working state.
Not sure what would happen now, although there are regular hacks that no longer see rollbacks.
Also, Ethereum Classic still exists, so that path is still available to those who want to follow it.
" so that "banks getting a bailout" isn't possible since the currency control of Bitcoin doesn't allow printing it out of thin air for"
?
What part of 'the economy would crash and burn' do people not understand?
The banks would have gone down like dominoes and taken the entire system with it. This isn't 'fear mongering' it's basically just math, you can see how the system is connected and what will happen.
That's what happens when systems are tightly intertwined. We could entirely firewall them, but then they wouldn't be remotely as efficient.
The fallacy of 'Hard Currency' is that people think we can avoid these problems with some extant construct, like 'Gold' or 'Digital Proof' but that doesn't solve the problem at all.
Economies are integrated systems that have to be regulated as best we can there is just no way around it.
'Hard Currency' is an 'instinct' that develops into an ideology that just doesn't hold up.
Far from 'weakly enforced regulations' most Western nations have very well and strongly enforced regulatory regimes. There are rules upon rules about what is allowed and what is not.
Securities Regulation are maybe a bit iffy, particularly insider trading, but that's only one thing.
The only way to avoid the problems we saw in 2008 would be to have more effective regulation of the parts of that system that failed, crypto won't save us there.
Finally, the banks were bailed out mostly with loans which they paid back, not free money. If there was a big funny business bailout, it was the mortgages that the Fed accepted as collateral at face value, which was more or less a bailout of homeowners, related to the fact the issue was with homes, not so much currency.
> The banks would have gone down like dominoes and taken the entire system with it. This isn't 'fear mongering' it's basically just math, you can see how the system is connected and what will happen.
And the fact that the Fed could just QE a bailout is why there's no will to properly regulate or enforce.
It's a double edged sword.
I would have liked to see what would happen in a pandemic if Bitcoin were the world's reserve currency; if no QE were possible to help the suddenly unemployed etc. If / when Bitcoin fails in such a situation, we could see an increase in trust for fiat currencies and government monetary policy. It's a purely hypothetical situation though.
"I would have liked to see what would happen in a pandemic if Bitcoin were the world's reserve currency;"
We already know the answer to it: the economy would collapse in a hulking mass.
The 'advantage' of Bitcoin, which is 'integrity' (i.e. can't be debauched) becomes a big 'disadvantage' during a time of crisis, when reallocation has to happen.
It's like nailing your boat with a plank to the dock: string and reliable. But then the tide goes out and everything breaks: better in the long run to use ropes.
BTC is inflationary, people would rush to it during a crises and credit would evaporate, the dominos would all fall down.
Something 'unforeseen' will always happen, meaning we have to be able to change the rules sometimes.
Much like a pandemic situation, a lot of the normal rules for operating the economy go out the window. Vaccine production and distribution is fully socialised, not part of normal healthcare etc..
And yes, it's a giant double edged sword which is why there's no excuse for not having 'intelligent, comptetent and responsible leadership' at all times.
> Far from 'weakly enforced regulations' most Western nations have very well and strongly enforced regulatory regimes. There are rules upon rules about what is allowed and what is not.
They are as regulated as the system will allow. That is, companies dump lots of money into Congress to increase the chances of existing regulations being weakened and new ones neutered, and it works (see: Dodd-Frank [0]). And sadly, I don't see things changing anytime soon, as the American political landscape is basically divided into those who talk big on progress (but who, upon gaining control of Congress and the presidency, just barely uphold the status quo) and those who want to deregulate things even further.
> The fallacy of 'Hard Currency' is that people think we can avoid these problems with some extant construct, like 'Gold' or 'Digital Proof' but that doesn't solve the problem at all.
This is accurate. While cryptocurrencies might not allow for spending more than you have in your wallet, there are many ways you can trade on margin and "stable"coins which only have a fraction of their issued volume backed by any assets [1][2][3], including propping up an exchange with stablecoin funds [4]. I would not be surprised if someday there was a "bank run" on these unsecured stablecoins which caused huge knock-on effects.
I think that the fundamental problem is greed combined with people who might not be very greedy but who are desperate to improve their financial situation. And unlike traditional financial institutions, crypto is quite difficult to regulate or provide any consumer protections for.
Secondly to that, I find it amusing that the cause of the GFC (amongst numerous other large-scale issues) is both poor regulation and ineffective enforcement of an industry that's over a century old. Proving, basically, that the regulation of cryptocurrency is a pure talk-fest (or that any US regulation is a pure talk-fest). It will result in the honest folks doing the right thing and getting screwed in the process whilst the dishonest still do the bad things because the US' will to enforce regulation is weak.