Cryptocurrency

agrabes

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Bitcoin doesn't meet the traditional definition of a commodity. However, we are now in the digital age. Some people would expand the definition to include digital commodities. Why are you unwilling to do so?
I'm not willing to do it until/unless a digital item exists that has properties similar to regular commodities. For example - copper. If I buy copper, I might be buying it as a commodities trader hoping to make a profit and then sell the contract, never receiving the physical copper. That's what bitcoin can do right now.

I also might be buying copper because I want to have a nice roll of sheet copper to use for wallpaper in my house, or maybe to look at because I think it's pretty. Maybe it proves my wealth that I can have a big old roll of copper sitting around. Maybe I would resell it some day if I need cash or the price is right. That's what NFTs and other types of digital items can do.

I also might be buying copper because I want to take that copper and process it and use it in manufacturing to produce a useful product. NFTs or any digital item can't do this currently.

Another thing that digital items cannot do is be used for general purpose. I can't think of anything digital which can be used for multiple uses in the way that a commodity can. Cryptocurrency is used for finance/investment. Gold is the commodity most similar to crypto in that it is primarily used for finance and investment, but even it is used for other purposes such as jewelry and industry. Cryptocurrency can't be used for anything other than financial transactions. NFT's are used to indicate ownership of a digital asset. We don't consider cash to be a commodity, neither is a bond or other contract that is used to secure payment. We don't consider art or certificates of authenticity for collectors items to be commodities. The things that crypto and NFTs can do don't lend themselves toward being commodities, unless you know of other things that can be done that I don't.

Someday, if the "Metaverse" becomes real and widely used and you can get a digital item with widespread uses that carries over throughout the whole "Metaverse", then and only then (imo) could there be such a thing as a digital commodity.
 

Ames

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Another thing that digital items cannot do is be used for general purpose. I can't think of anything digital which can be used for multiple uses in the way that a commodity can. Cryptocurrency is used for finance/investment. Gold is the commodity most similar to crypto in that it is primarily used for finance and investment, but even it is used for other purposes such as jewelry and industry. Cryptocurrency can't be used for anything other than financial transactions. NFT's are used to indicate ownership of a digital asset. We don't consider cash to be a commodity, neither is a bond or other contract that is used to secure payment. We don't consider art or certificates of authenticity for collectors items to be commodities. The things that crypto and NFTs can do don't lend themselves toward being commodities, unless you know of other things that can be done that I don't.
I own NFTs that are entirely on chain. They don't just indicate ownership. It's stored in the blockchain and rendered out of the blockchain. It's literally the art's canvas, frame, paint, or whatever you consider the art on chain.
 

agrabes

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I own NFTs that are entirely on chain. They don't just indicate ownership. It's stored in the blockchain and rendered out of the blockchain. It's literally the art's canvas, frame, paint, or whatever you consider the art on chain.
I'm always curious as to how something like this would actually work. So what you're saying is - the code required to render the art (image, video, whatever it might be) is written into the blockchain? My understanding is (and correct me if I'm wrong here) that blockchain is simply a ledger - a spreadsheet or database. So to be on the blockchain, something would have to be able to be represented in the format of a database, right?

Either way, that doesn't change the fact that art (physical art) isn't a commodity. Whether you own the likeness of the Mona Lisa which would allow you to make and sell prints of it, or whether you own the physical canvas, frame, etc, it may be considered an investment grade asset but it's still not a commodity.
 

Ames

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I'm always curious as to how something like this would actually work. So what you're saying is - the code required to render the art (image, video, whatever it might be) is written into the blockchain? My understanding is (and correct me if I'm wrong here) that blockchain is simply a ledger - a spreadsheet or database. So to be on the blockchain, something would have to be able to be represented in the format of a database, right?

Either way, that doesn't change the fact that art (physical art) isn't a commodity. Whether you own the likeness of the Mona Lisa which would allow you to make and sell prints of it, or whether you own the physical canvas, frame, etc, it may be considered an investment grade asset but it's still not a commodity.
So you mint an NFT. You pay the miners to run some code. That code generates say an SVG image. The miners take that image and put it in the blockchain.

If you mint an NFT for example not all code is the same. So the code requires the miners to do more work to run the code and produce whatever output they are going to it takes more gas. You are literally paying for remote work and storage with the gas. A lot of NFTs don't store everything on chain because it's expensive to have the miners do that.

There are blockchains that are really just distributed graphics rendering networks. Ones that are distributed cloud; like AWS or Azure. Ones that are identity validation. So these cryptocurrencies only have value in that you are paying to get some service out of them.

This is really all blockchain. It just gets called cryptocurrency. Blockchain tech does a lot of things that have nothing to do with currency.

I think the internet is the better comparison to blockchain. The internet isn't the thing it's what's done on it. The blockchain isn't the thing it's what done on top of it. And at some point it gets abstracted out and consumers will use the blockchain without knowing or thinking about it.
 

JustAnotherTimeline

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I'm not willing to do it until/unless a digital item exists that has properties similar to regular commodities. For example - copper. If I buy copper, I might be buying it as a commodities trader hoping to make a profit and then sell the contract, never receiving the physical copper. That's what bitcoin can do right now.

I also might be buying copper because I want to have a nice roll of sheet copper to use for wallpaper in my house, or maybe to look at because I think it's pretty. Maybe it proves my wealth that I can have a big old roll of copper sitting around. Maybe I would resell it some day if I need cash or the price is right. That's what NFTs and other types of digital items can do.

I also might be buying copper because I want to take that copper and process it and use it in manufacturing to produce a useful product. NFTs or any digital item can't do this currently.

Another thing that digital items cannot do is be used for general purpose. I can't think of anything digital which can be used for multiple uses in the way that a commodity can. Cryptocurrency is used for finance/investment. Gold is the commodity most similar to crypto in that it is primarily used for finance and investment, but even it is used for other purposes such as jewelry and industry. Cryptocurrency can't be used for anything other than financial transactions. NFT's are used to indicate ownership of a digital asset. We don't consider cash to be a commodity, neither is a bond or other contract that is used to secure payment. We don't consider art or certificates of authenticity for collectors items to be commodities. The things that crypto and NFTs can do don't lend themselves toward being commodities, unless you know of other things that can be done that I don't.

Someday, if the "Metaverse" becomes real and widely used and you can get a digital item with widespread uses that carries over throughout the whole "Metaverse", then and only then (imo) could there be such a thing as a digital commodity.

The most valuable commodity in the world is data. I don't believe it meets your criteria.

Also, here is an academic paper providing rationale for Bitcoin being considered a digital commodity. I realize there is no consensus on the matter. But I think it's important to understand there is economic theory that supports this idea.

I am no economist so admittedly some of this is outside my understanding. In short, it seems you can use the new interpretation of the labor theory of value to support the assertion.

 

JustAnotherTimeline

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It's a ledger. Ledgers have been around and used to keep score in finance since at least the knights templar during the crusades. The validation protocol doesn't impart value nor the energy input. Whether it's proof of work, proof of stake, or federated byzantine agreement, it has nothing to do with token value. If a digital ledger with a settlement function ends up gaining worldwide adoption, it will be because the native token is pegged to a commodity or basket of commodities, not unlike how currencies were formally exchangeable for gold/silver. The token is just the score keeping device on the cryptographically secured ledger.

Bitcoin was first. It's no where near the most feature rich or speedy ledger now. The only thing its has is fanboys who have no idea what they're talking about pimpin it on social media.

Isn't part of what makes the legacy banking system valuable and profitable the service of keeping the ledger? Is there no value in that?
 

Donqluione

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Not to be nit picky, but I have merely been arguing that Bitcoin IS money. Whether you think it is GOOD money is up for debate and for you to decide.
This thread has been amazingly civil for its duration and length, and you've contributed a lot to those achievements. Nothing short of miraculous for a free forum discussion on a somewhat controversial subject. Congratulations.
 
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nocsious3

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Isn't part of what makes the legacy banking system valuable and profitable the service of keeping the ledger? Is there no value in that?
No. The cost to maintain the ledger essentially approached zero with the invention of the internet and spreadsheet software, but the bankers continue to charge excessive fees in what has been a near complete monopoly.

Bitcoin is a step backwards in this regard, and not a real threat to banks at all. The fixed energy costs and transfer fees make it no worry to the banks. Remember, they can just print money at will and charge fees without the fixed costs associated with Bitcoin. That's one reason they're embracing it for sales and derivatives trading as it's no threat as a currency. The banks are the market makers in these types of markets and can manufacture profits. Just ask the recently convicted JP Morgan metals traders.
 

JustAnotherTimeline

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No. The cost to maintain the ledger essentially approached zero with the invention of the internet and spreadsheet software, but the bankers continue to charge excessive fees in what has been a near complete monopoly.

Bitcoin is a step backwards in this regard, and not a real threat to banks at all. The fixed energy costs and transfer fees make it no worry to the banks. Remember, they can just print money at will and charge fees without the fixed costs associated with Bitcoin. That's one reason they're embracing it for sales and derivatives trading as it's no threat as a currency. The banks are the market makers in these types of markets and can manufacture profits. Just ask the recently convicted JP Morgan metals traders.

I agree with that. However, what gives the banking system it's value is not just maintenance of the ledger it's that it solves for trust. That gives Bitcoin objective value imo.

It costs pennies to send Bitcoin on lightning.
 

BCClone

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Bitcoin is backed by digital energy. Miners require energy inputs to produce new coins. Companies like Vespene can take methane from landfills run it through a generator and can literally turn waste into an appreciating asset via a carbon negative process. That seems to be one very useful example to me...

And if time can be considered a commodity, then surely Bitcoin can be. Both the CFTC and Gary Gensler also seem to share this view.
WTF?? So all miners use methane to fuel their mining systems? I think not.
 

nocsious3

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I agree with that. However, what gives the banking system it's value is not just maintenance of the ledger it's that it solves for trust. That gives Bitcoin objective value imo.

It costs pennies to send Bitcoin on lightning.
The engineers working on lighting even admit it doesn't scale, transactions just fail with no warning, it has design flaws that prevent large payments, and the network has inherent structural limitations that trend towards centralization. Did you listen to
I agree with that. However, what gives the banking system it's value is not just maintenance of the ledger it's that it solves for trust. That gives Bitcoin objective value imo.

It costs pennies to send Bitcoin on lightning.

Your wet dream lightning network is dead on arrival.

Listen to the actual developers talk about it. Transactions randomly fail with no notification to the users. It looks like it can't scale, can't handle large transfers, security issues that seem systematic, not to mention the structure inherently trends to more centralization. It's like you believe a Ford model T is going to compete in Formula One. When a Blockchain takes over international payments in mass, it's going to be purpose built ledger, designed for the task. It's going to support ISO 20022 standard that, btw starts to go live in November. It's going to have audit functionality tools built in for Ofac checks, money laundering, and accounting.

I'm just going to quit responding until you say something remotely interesting. . .

Listen to lightning developers for yourself instead of fanboys.

 

nocsious3

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Here's a fact, when a real business wants to send money into Africa, and they don't want to get raped by the banks on Swift fees, what do they use? They don't use Bitcoin, Lightning network, or Ethereum.

They use Stellar. It settles in 3 seconds, and costs sub-penny in fees. In the history of Stellar, I think the network has been down once for a few hours. FYI, MoneyGram uses Stellar too for cross border payments. As much as I dislike Jed McCaleb, I think it's telling that this early Bitcoin entrepreneur and developer, instead built open-coin and then stellar.

Carbon Capture Shield does this right now. They do agricultural land reclamation projects and send funds to Africa will regularity.
 
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JustAnotherTimeline

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The engineers working on lighting even admit it doesn't scale, transactions just fail with no warning, it has design flaws that prevent large payments, and the network has inherent structural limitations that trend towards centralization. Did you listen to


Your wet dream lightning network is dead on arrival.

Listen to the actual developers talk about it. Transactions randomly fail with no notification to the users. It looks like it can't scale, can't handle large transfers, security issues that seem systematic, not to mention the structure inherently trends to more centralization. It's like you believe a Ford model T is going to compete in Formula One. When a Blockchain takes over international payments in mass, it's going to be purpose built ledger, designed for the task. It's going to support ISO 20022 standard that, btw starts to go live in November. It's going to have audit functionality tools built in for Ofac checks, money laundering, and accounting.

I'm just going to quit responding until you say something remotely interesting. . .

Listen to lightning developers for yourself instead of fanboys.


I will listen to this when I have some more time. It's a long one! I was already aware of the issues you refer to. Where I disagree with you is that it is not DOA imo. Scaling solutions like lightning aren't a flip of a switch. They take time to build the network. Here is a good article that takes a cautious bullish position on btc scaling.

That is my position. Cautiously bullish. I am not ignorant to the fact I could be wrong.

After reading the Bitcoin Standard I learned about a different approach to economic theory. It's the reason I find the Bitcoin experiment so interesting. No, it's not from you tube videos. The author holds a minority opinion. But he is a Columbia Phd so probably not an idiot.

You can be dismissive of me all you want. But your overconfident arrogance makes you sound like and old man yelling at the wind.

 

clonehome

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ARPANET started in 1969. You said by 2003 everyone was using the internet. So let's round down and just call it 30 years to mass adoption. So by your own measure crypto has a long time to sort things out.
The difference is that for the first roughly 25 years of that timeframe, until around the mid-90s, very few people had a way to access ARPANET and then the public Internet. Whereas with cryptocurrencies almost everyone has had access to them since near the beginning yet they still have not proven to have long-term value or viability. It appears that they’re not going away but right now it’s still a crapshoot. So you really can’t compare adoption rates. I think cryptos need to show some purpose other than speculation in the next couple years otherwise they will remain a volatile novelty long-term, or cease to exist.
 

Ames

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The difference is that for the first roughly 25 years of that timeframe, until around the mid-90s, very few people had a way to access ARPANET and then the public Internet. Whereas with cryptocurrencies almost everyone has had access to them since near the beginning yet they still have not proven to have long-term value or viability. It appears that they’re not going away but right now it’s still a crapshoot. So you really can’t compare adoption rates. I think cryptos need to show some purpose other than speculation in the next couple years otherwise they will remain a volatile novelty long-term, or cease to exist.
I was actually just pointing out that someone else's comparison who said crypto was behind wasn't accurate. The internet is older than they said. But I'd actually argue it's a fine comparison. Anyone could have taken the technology the gov and edu was using on early internet and use it in the public space. They just didn't have a reason to and the tech hurdle was high. But someone could have a made a public internet. Things needed to be built on top of the internet to bring in the masses. That's exactly where crypto is also. It's getting easier to use and things are being built on top.
 

siklon

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WTF?? So all miners use methane to fuel their mining systems? I think not.
Never said all miners are using methane. Only using Vespene as an example of the innovation coming from the space. PoW is getting a lot FUD thrown its way recently and while it may seem counterintuitive, I think it can actually help address the climate issue.
 

JustAnotherTimeline

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The engineers working on lighting even admit it doesn't scale, transactions just fail with no warning, it has design flaws that prevent large payments, and the network has inherent structural limitations that trend towards centralization. Did you listen to


Your wet dream lightning network is dead on arrival.

Listen to the actual developers talk about it. Transactions randomly fail with no notification to the users. It looks like it can't scale, can't handle large transfers, security issues that seem systematic, not to mention the structure inherently trends to more centralization. It's like you believe a Ford model T is going to compete in Formula One. When a Blockchain takes over international payments in mass, it's going to be purpose built ledger, designed for the task. It's going to support ISO 20022 standard that, btw starts to go live in November. It's going to have audit functionality tools built in for Ofac checks, money laundering, and accounting.

I'm just going to quit responding until you say something remotely interesting. . .

Listen to lightning developers for yourself instead of fanboys.


I watched the video this morning. Thanks for sharing! I did learn a few nuggets about the current state lightning that I didn't know.

Having said that, I did not come away with your conclusion that it is DOA. It works quite well in the vast majority of cases. Does it have its limits right now, yes. The devs will continue to build, research, improve UX, etc. Or, maybe some new tech better than lightning will come along. Who knows. But if your expectation is that a solution must compete "out of the box" with the VISA/MASTERCARD rails then I understand your extremely bearish posture.

Also, your "purpose built" ledger prediction sounds like a branch of the legacy system. Not remotely interesting imo.
 
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agrabes

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The most valuable commodity in the world is data. I don't believe it meets your criteria.

Also, here is an academic paper providing rationale for Bitcoin being considered a digital commodity. I realize there is no consensus on the matter. But I think it's important to understand there is economic theory that supports this idea.

I am no economist so admittedly some of this is outside my understanding. In short, it seems you can use the new interpretation of the labor theory of value to support the assertion.


To be fair, there are a lot of conflicting economic theories out there. When I have time, I'll try to take a look at this one. I don't think it will convince me on the idea of bitcoin/crypto as digital commodity, at least in its current state. But, if things change in the future I'm open to changing my mind.

I'd be more willing to buy the idea of data - personal data - as a commodity than I would BTC or other cryptocurrencies. Much as it makes me feel gross to say it.. But, yeah it's something that's being bought and sold out there, and used transformatively. That makes it a commodity to me, just not one that's being openly traded on markets. I guess the folks in big data have that much sense of shame left at least...
 

JustAnotherTimeline

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To be fair, there are a lot of conflicting economic theories out there. When I have time, I'll try to take a look at this one. I don't think it will convince me on the idea of bitcoin/crypto as digital commodity, at least in its current state. But, if things change in the future I'm open to changing my mind.

I'd be more willing to buy the idea of data - personal data - as a commodity than I would BTC or other cryptocurrencies. Much as it makes me feel gross to say it.. But, yeah it's something that's being bought and sold out there, and used transformatively. That makes it a commodity to me, just not one that's being openly traded on markets. I guess the folks in big data have that much sense of shame left at least...

It's probably not worth the time, lol. Honestly, while it has been interesting to discuss WHAT exactly bitcoin is, it probably doesn't matter that much. If it's not a money or a commodity, it is a digital SOMETHING. Our label only really matters for regulation and tax treatment. SOMETHING will succeed or fail on its own merits no matter how we categorize. Now if someone could make small purchases using SOMETHING tax exempt from gains that would be really great.