> Without bitcoin, you collect the ransom in gold with a dead drop.
Where the perpetrator needs to:
1. Be in the general area.
2. Only ask for enough currency that's easy to physically move (an actual real limitation in many countries)
3. Be sure the bills aren't marked (practically impossible). Because of this:
3(1). Be sure to not deposit the currency, ever.
3(2). Be sure not to use the currency with anyone who knows you who will every deposit the currency ever.
3(3). Allow the victim only enough time to procure a large amount of currency (likely days), but not enough time to procure a large amount of marked currency (this is an inherent conflict).
Obviously kidnapping is possibly via use of physical currency, but the practical limitations of cash over anonymous digital currency with regards to kidnapping are massive.
Your concerns with hyperinflation are alleviated by investing in any commodity, and trading on a black market. The fact that the commodity is a blockchain asset is effectively moot. The days of states not forcing individuals to be up front with capital gains on blockchain assets are over.
Cash is just a paper IOU for some other thing. With 100 dollar bill, that thing is 100 USD.
You could also issue paper for gold backed IOU, or gold itself, or bitcoin.
Counterfeiting paper is a problem, so you need force against this, and this is why the government is generally involved. But what kind of paper counterfeiting is enforced against, is just a legality. Currently the wost thing to counterfeit is 100 dollar bills. Law could be changed to make it equally bad to counterfeit gold bills, or bitcoin bills.
Saying bitcoin is less private than cash is a category error.
It would be extremely hard to issue cash as non government assuming the government doesn't want cash to exist, it would basically require a centralized entity that could be trivially shut down by the government.
I'm more of an Ethereum/PoS guy but what is for sure a fact, now that we're talking of decentralized issuance, is that you need PoW, at least for bootstrapping a cryptocurrency that has an even remotely fair distribution of tokens (instead of almost all being in the hands of the people that were there from the beginning).
Even then, almost all PoW are tuned in a way to pump the value and enrich the early people, not fairly distribute tokens or make the crypto functional as a currency.
The victim is described, sure. But their memory? Not so much - they get a line maybe. Then a dozen stanzas about the murderer. These ballads are dated, tone-deaf and disturbing.
It's rather inappropriate that we don't change names of victims when they are no longer relevant to active investigation. I would rather die in a slip and fall accident than become famous and have details of my life explored by becoming notable for being the victim of an asshat, thank you very much.
"The Gold Standard is, indeed, a great source of insight into how dangerously primitive Bitcoin maximalist thinking is. Suppose Bitcoin were to take over from fiat currencies. What would banks do? They would lend in Bitcoin, of course. This means that overdraft facilities would emerge allowing lenders to buy goods and services with Bitcoins that do not yet exist. What would governments do? At moments of stress, they would have to issue units of account linked to Bitcoin (as they did under the Gold Exchange Standard during the interwar period)."
The reason governments could do this with gold is that gold is easy to counterfeit, hard to store securely, and expensive to transact with at a distance. So it makes sense to keep it all in a giant vault (a bank, or central bank) and trust the vaultkeeper to issue ious and transact in those.
No, the reason governments can do this is because people trust their IOUs. That’s why they can do the same thing with or without any underlying asset with any characteristics.
The characteristics of the underlying asset would probably modulate the degree of trust people can put in a government’s IOUs, but considering e.g. the extent of people’s trust in the US (with no underlying), I think it’s fair to say if Bitcoin became this currency, governments would have no problem issuing IOUs for it that people would trust.
Governments certainly will attempt to issue IOUs backed by bitcoin. And some people will accept them.
If you are willing to trust your bitcoin to an exchange, as many people are, you should certainly be willing to trust your government.
But a lot of people hold their bitcoin offline, in hardware wallets, in cold storage. It's not that hard.
Another feature that bitcoin has, that gold does not, is proof of reserves. Barely any exchanges do this, but this will change with time.
Proof of reserves pretty much makes bitcoin IOUs for the government useless. You can't cheat by printing more.
I think far fewer people will trust their government with bitcoin under a bitcoin standard, than trusted their government with gold under a gold standard.
Why would people accept bitcoin IOUs when the real thing is more interoperable, saleable, private etc.etc. and of course doesn't require trust in the issuer. The answer is force [0]
The same reason people accept IOUs for literally anything else: credit. It is actually extremely useful to be able to borrow productivity from the future and use it today.
In this case stealth rather than force but same principle. It's also a lot harder to do stealth with a non-inflating currency that has proof of reserves.
Lending in Bitcoin can happen in two ways: the first is through imaginary Bitcoin (“borrowed from future installments”) in a layer 2, which is what he was describing, although I agree that, unless the government mandates accepting money from that layer, it is hard to make it systemically used.
The second one is to only lend coins that you have. In a deflationary monetary policy, lending is strongly disincentivized, as it would need to beat both the rate you would gain from the value of your coins increasing, and the default risk.
Much of monetary policy is about finding a balance where financial institutions will be incentivized to lend despite the risk (which is already a hard sell even under inflation!) without nudging prices.
It is plausible that a Bitcoin economy in stablestate (once coinbase transactions are no longer) would have very little lending. Is it outside of the realm of possibilities that, in such a world, innovation may decrease, and legacy becomes a more relevant factor for wealth?
I think a bitcoin economy in stablestate would have about the same amount of lending as a gold economy under the gold standard. There is enough history during gold standard periods to have some idea how this would be.
In short there would be less lending than under fiat with MMT, but certainly not zero lending. On the plus side, much more stability, and no hyperinflations, ever.
> [Bitcoin will have] much more stability [than fiat]
Why would it reach more stability?
Historically, cryptocurrencies have been significantly more volatile, not less.
Arguments were made back in 2013[0] that:
> this volatility will decrease as Bitcoin markets and the technology matures
But volatility has remained consistent over the past 10 years[1], seemingly uncorrelated to its adoption, market cap, and coin supply. In the same period, USD was an order of magnitude better[2].
The IOUs would be more private since your transactions aren't public. Likely faster with better user experiences too, per Moxie's argument for why blockchain systems already look more like that.
This was clearly a due process violation by the same man who set up concentration camps for Japanese Americans. He packed the Supreme Court so he could get away with it.
In the hypothetical future world where Bitcoin has replaced other currency, trust in the central bank is probably gone already (due to hyperinflation or devaluation most likely).
Ok. So you're a nation whose official currency is backed by Bitcoin. Suppose that years of economic depression have left your country's Bitcoin reserves relatively sparse. Suddenly, your neighboring country Fiatland is starting to mobilize for war thanks to their freshly printed money. Meanwhile, your nation is only able to raise Bitcoin bonds that must be paid with interest from your already tight Bitcoin reserves. Due to the uncertainty caused by the looming threat of war, Bitcoin interest rates skyrocket, so you're even further limited by the how much you're able to finance. The very obvious solution to this problem is to switch to fiat currency, so you're no longer constrained by some arbitrary limit defined in 2008.
Except the extent of the taxing and borrowing is not constrained because you can just mint new cryptocurrencies. The world you're talking about is wholly imaginary. The only way this works is if you ban all other cryptocurrencies and enforce some kind of capital controls...
You can mint new fiat currencies. You can mint new cryptocurrencies. You can issue gold coins diluted with base metals.
But only one cryptocurrency can have the greatest proof of work. Unlike with counterfeit gold, this is easy and cheap to verify. And the cryptocurrency with the greatest proof of work is most secure (against 51% attack) from those who would seek to weaken, control, or destroy it. By its definition, proof of work crypto is a winner-take-almost-all market.
Capital controls are not necessary for a bitcoin dominated world.
No, your comment is completely wrong in basically every aspect. The difficulty of proof of work (for the most part) only determines the profit margins of the miners and the volume of transactions on the network, and is also not set in stone and can be changed at any time. It's literally just another form of capital control. Also by dramatically increasing the difficulty you actually make the network much more susceptible to takeovers because that leads to consolidation amongst the miners.
>>> by dramatically increasing the difficulty you actually make the network much more susceptible to takeovers because that leads to consolidation amongst the miners.
I understand why gold got centralized into USA during WW2 (physical security, costly to assay). Why does increasing BTC difficulty lead to miner centralization?
Mining difficulty roughly maps to a financial incentive for a miner to operate. As that line rises, the number of miners who can afford to mine in any significant amount would naturally decrease, right?
Unless there's some other angle to convince miners to continue mining unprofitably, which feels like defeats the whole purpose of a crypto-maximal economy to me.
Two generations from now when new generations fight for scraps of deflationary money, those who amassed wealth early in the crypto cycle will definitely finance wars.
Aren’t you basically repeating the same thing as the person you’re replying to? If the nation with a Bitcoin economy is threatened by the nation with a fiat economy and in the process of armament, what should they do?
But if it enables war for fiat countries and constrains it for BTC countries, doesn't they imply a significant likelihood that the fiat countries will conquer the others?
Since you cite N N Taleb, you might be interested in his assessment of Bitcoin:
> its current version, in spite of the hype, bitcoin
failed to satisfy the notion of "currency without govern-
ment" (it proved to not even be a currency at all), can be
neither a short nor long term store of value (its expected
value is no higher than 0), cannot operate as a reliable
inflation hedge, and, worst of all, does not constitute,
not even remotely, a safe haven for one’s investments,
a shield against government tyranny, or a tail protection
vehicle for catastrophic episodes.
If you read the full answer, you would see that his position is that doing that is better than not doing it. If you are correct that it is even more difficult to do so, then his position is that bitcoin is even worse than gold in this regard.
> When ‘Bitcoin maximalists’, as you call them, wax lyrical about the inability to print money (and celebrate this inability as Bitcoin’s feature, rather than its bug), they are being terribly unoriginal – banal, I dare say. Capitalism nearly died in 1929, and tens of millions did die in the war that ensued, because of this toxic fallacy that underpinned the Gold Standard then and Bitcoin now. Which fallacy? The fallacy of composition, as John Maynard Keynes called it.
Regarding your specific points on the differences between gold and Bitcoin:
* easy to counterfeit - Point to Bitcoin
* hard to store securely - I'd class this as a point for Gold.
* expensive to transact with at a distance - As opposed to Bitcoin, which is just expensive to transact; and gets more expensive the more people use it, as there is a finite amount of transactions per unit time.
In practice, most people dealing with Bitcoin are dealing with it through ~banks~ exchanges which gave them a Bitcoin denominated IOU; and which may or may not be engaging in fractional reserve banking.
"In practice, most people dealing with Bitcoin are dealing with it through ~banks~ exchanges which gave them a Bitcoin denominated IOU; and which may or may not be engaging in fractional reserve banking."
You're not wrong. Most people do it with IOUs, ie exchanges. But most people, don't have most of the bitcoin.
"Crypto Exchanges Hold 6.6% of Bitcoin Supply – One of the Lowest in History"
I'd like this number to be even lower. And as more exchanges (and governments) default, I expect it will be.
"* hard to store securely - I'd class this as a point for Gold."
fair to debate, a lot does get lost because people lose paper backups. but is this really harder than gold? I think it's largely unfamiliarity that will improve with time.
"* expensive to transact with at a distance - As opposed to Bitcoin, which is just expensive to transact; and gets more expensive the more people use it, as there is a finite amount of transactions per unit time."
if you don't understand how lightning works, of course you will believe this. lots of fud right now. encourage you to kick the tires here, and actually install a lightning wallet and see. as a retail guy, you can start selling slurpees via lightning, today.
"If you read the full answer, you would see that his position is that doing that is better than not doing it. If you are correct that it is even more difficult to do so, then his position is that bitcoin is even worse than gold in this regard."
Yes, I did read the full answer. And yes, (according to him) it is.
Yanis is a marxist, as others in this thread point out. Point 10 in communist manifesto, calling for a state central bank, is incompatible with both gold and bitcoin, and pretty much any other form of personal money beyond maybe some petty cash.
""10. A state bank, whose paper issues are legal tender, shall replace all private banks. This measure will make it possible to regulate the credit system in the interest of the people as a whole, and will thus undermine the dominion of the big financial magnates. Further, by gradually substituting paper money for gold and silver coin, the universal means of exchange (that indispensable prerequisite of bourgeois trade and commerce) will be cheapened, and gold and silver will be set free for use in foreign trade. Finally, this measure is necessary in order to bind the interests of the conservative bourgeoisie to the Government."
Communist Manifesto, Demands of the Communist Party in Germany / 10 Demands
"Given all this, you may be puzzled to hear me call myself a Marxist. But, in truth, Karl Marx was responsible for framing my perspective of the world we live in, from my childhood to this day. This is not something that I often volunteer to talk about in “polite society” because the very mention of the M-word switches audiences off. But I never deny it either. After a few years of addressing audiences with whom I do not share an ideology, a need has crept up on me to talk about Marx’s imprint on my thinking. To explain why, while an unapologetic Marxist, I think it is important to resist him passionately in a variety of ways. To be, in other words, erratic in one’s Marxism."
> But basically, Varoufakis doesn't believe people should have personal financial freedom.
In his own words, he believes those who love personal freedom shouldn't tolerate capitalism, from first principles (from TFA). Later, he states that personal digital wallets would benefit individuals and increase freedom by cutting off banks and their rent-seeking using exclusive central bank accounts.
His position is that Bitcoin and the current state of cryptocurrency are incapable of defeating the ills of capitalism, contrary to pro-crypto boosters claims.
I don't think most bitcoin maxis would claim bitcoin can fix capitalism. Any more than gold could fix capitalism.
Hard money is the least bad option. The universe is still cruel, and life is unfair.
The irony is that communist states love gold, and bitcoin.
Venezuela, like usual for marxist states, confiscates valuables from individuals that manage to squirrel some. Bitcoin, bitcoin miners, whatever can be confiscated and operated to provide hard currency for the government.
Beware those who will help you, by denying you freedom.
I'm confident in my guess - both you & Yanis will be proven wrong in time. So far nobody in history has taken the complex heaving mass of the global economy and boiled it down to a simple forecast about what it will do when confronted with a new technology. We cannot foresee what is about to hit us. Roughly every possible outcome has been forecast by someone.
An untracable, unstoppable & untaxable cryptocurrency might be developed if we get lucky with the research into Zero-Knowledge proofs or a related field. That would be revolutionary in a profound sense.
>An untracable, unstoppable & untaxable cryptocurrency might be developed
No, this will never happen and it makes no sense to actually want this, not only is it physically impossible but it's a total misunderstanding of threat modeling. The main thing these comments always miss is that these transactions only exist to serve a purpose in the real world. You can come up with all the cryptographic solutions that you want to hide communications but it means very little when someone can walk into your basement and suddenly see the hundreds of mysterious suitcases that weren't there the day before.
The only way any of these things could realistically approach being "untraceable" is if not a single person using it ever cashed out and they only spent the money on NFTs and other non-tangible items, and additionally nobody ever conducted physical barter with the NFTs. So basically if it becomes a very restricted and useless and inefficient version of a video game economy, except without the video game.
Even if this untraceability / unstoppability was possible, it might not be as revolutionary as you'd think.
It's sort of the same problem as email with pgp. You not only have to secure your email, you also have to secure your counterparty and anyone he forwards your email to. Money is like that as well.
So even if monero wins, or bitcoin becomes like monero, there'd still be tax.
There was tax under gold. Bitcoin isn't about ending tax.
I think it's common for non-neurotypical folks to struggle with sarcasm and irony. Even for neurotypicals, it can go over your head because it's hard to tell tone from a text.
https://en.wikipedia.org/wiki/Dead_drop
"But the police can watch the dead drop."
True.
"No police or the victim dies."
Also true.
Bitcoin does make kidnapping a bit easier though. It is true.
It also makes hyperinflation by the state impossible. Hyperinflation does a lot more damage than kidnapping.