Cryptocurrency

[CycloneSpinning]

CNN

You might be over complicating it. There are only 21m bitcoin, but each bitcoin is composed of 100m sats, and as far as I know it cannot be divided any further than that. Just like a dollar has 100 cents in it.

I was thinking about this and your video, and I’m convinced the limited number of bitcoin is going to contribute to its demise. It limits the economy’s ability to grow due to higher productivity…or requires the economy to go outside of bitcoin to find additional currency.

I of course don’t like that the founder has become rich (off nothing really) and the cumbersome transaction issues as previously noted as well.

In my opinion, the best way to get a cryptocurrency to take hold would be for Walmart to design one and start paying their employees with it. They’re the largest employer in the US, they’re in urban and rural areas, they’re at very low risk of collapsing, and they sell almost everything a person needs…to the point where anyone not working for Walmart would gladly accept payment in their currency. That’s how you start a boring, non-government driven currency (if you care to do such a thing).

 

[melt]

That's called company scrip, which has a long history of being used by companies to oppress their workers. It's also illegal in the US sine 1938.

 

[cyfanbr]

CNN

I was thinking about this and your video, and I’m convinced the limited number of bitcoin is going to contribute to its demise. It limits the economy’s ability to grow due to higher productivity…or requires the economy to go outside of bitcoin to find additional currency.

I of course don’t like that the founder has become rich (off nothing really) and the cumbersome transaction issues as previously noted as well.

In my opinion, the best way to get a cryptocurrency to take hold would be for Walmart to design one and start paying their employees with it. They’re the largest employer in the US, they’re in urban and rural areas, they’re at very low risk of collapsing, and they sell almost everything a person needs…to the point where anyone not working for Walmart would gladly accept payment in their currency. That’s how you start a boring, non-government driven currency (if you care to do such a thing).

Good morning @CycloneSpinning.

I’m intrigued by your first paragraph. Could elaborate some more on it? Why would economies require additional currencies?

I get your feeling about founders getting rich, but bitcoin has actually been as fair it might be possible. The founder(s) didn’t do any pre-mining. They publicly published the protocol before any mining took place, but of course early adopters had an advantage. This is way different than other crypto currencies where owners and venture funds receive pre-mined coins before it goes to public. The inventor of bitcoin stayed anonymous and disappeared. The coin mined by this person or group have never been used/moved.

Either today or tomorrow there are 44 countries that will be meeting in El Savador to discuss financial inclusion and the roll out of BTC as legal tender in El Savador.

 

[agrabes]

The largest airline in the middle east accounted


Permissionless meaning no kyc, no credit check, just a wallet with funds to deposit. I have used curve before. The apy is dynamic depending several variables. At one point I received more yield to borrow Matic then I paid in interest. It all depends on supply and demand of particular assets, and also any incentives available.

Actually your comparison to an unregulated bank is about right. Basically, the smart contract is the bank. As such, participants earn the yield as opposed to a bank or to support the infrastructure of a credit union.

Right - so it seems that if I made a private loan to you person to person where we sat down and agreed on terms between the two of us and wrote it down on a piece of paper, it would be permissionless provided that I didn't require you to have a credit check, etc.

Don't get me wrong, I think that the fact that Curve exists is interesting. I just don't think it's something with mass appeal or that it's better than existing things we already have today.

Without diving into the DeSci thing too deeply - it sounds like it's just applying the usual empty crypto buzzwords to scientific research. Reading the site's FAQ it even admits as much - a college professor saying that Web3 is a solution in search of a problem and that maybe if he links up Web3 enthusiasts with research scientists they'll be able to discover a problem that needs Web3 to solve it. I would be interested if they do even up finding a good application though.

 

[JustAnotherTimeline]

Right - so it seems that if I made a private loan to you person to person where we sat down and agreed on terms between the two of us and wrote it down on a piece of paper, it would be permissionless provided that I didn't require you to have a credit check, etc.

Don't get me wrong, I think that the fact that Curve exists is interesting. I just don't think it's something with mass appeal or that it's better than existing things we already have today.

Without diving into the DeSci thing too deeply - it sounds like it's just applying the usual empty crypto buzzwords to scientific research. Reading the site's FAQ it even admits as much - a college professor saying that Web3 is a solution in search of a problem and that maybe if he links up Web3 enthusiasts with research scientists they'll be able to discover a problem that needs Web3 to solve it. I would be interested if they do even up finding a good application though.

No, permissionless is the ability to participate in lending/borrowing without providing identifying information. Your p2p loan example would be the opposite of permissionsless (I assume you would need my name for the loan papers). Also, as the lender on curve you do not incur credit risk because people can only borrow against what they have deposited. People are liquidated before that becomes an issue. Anyone can deposit funds and borrow against them and earn the yield banks would normally receive by using Curve.

I can totally understand you not finding it appealing. Personally, I like to dabble in these protocols and have received solid yields I wouldn't normally have received from my bank. However, I do take on contract risk by doing so and don't blame anyone if that doesn't appeal to them.

I am putting my chips in on people like MIT faculty and Turing Award winner (and Algorand founder) Silvio Micali. I don't love his take on BTC, but he says this about defi. I honestly don't understand why people wouldn't be excited about work in this area. But, to each their own!

Macali stressed that he is most passionate about democratizing finance. "DeFi means democratization of finance. I want to give to the people on the street the same sophisticated tool at a fraction of the cost today. But right now, it's only available to a very few elites," Micali added.​

Turing Award-winning Scientist on achieving the impossible: Solving the 'Blockchain Trilemma' - Algorand Founder Silvio Micali

www.kitco.com

 

[CycloneSpinning]

Good morning @CycloneSpinning.

I’m intrigued by your first paragraph. Could elaborate some more on it? Why would economies require additional currencies?

I get your feeling about founders getting rich, but bitcoin has actually been as fair it might be possible. The founder(s) didn’t do any pre-mining. They publicly published the protocol before any mining took place, but of course early adopters had an advantage. This is way different than other crypto currencies where owners and venture funds receive pre-mined coins before it goes to public. The inventor of bitcoin stayed anonymous and disappeared. The coin mined by this person or group have never been used/moved.

Either today or tomorrow there are 44 countries that will be meeting in El Savador to discuss financial inclusion and the roll out of BTC as legal tender in El Savador.

If you think of a basic economy based off the exchange of goods, it’s probably easiest to understand. If you have start with two people - one hunts and the other grows plants. They can trade to both have what they need. Let’s say they trade 3 rabbits per week for 3 baskets of fruit and vegetables. If they have children, they will need more food…and they will produce more food. They also need clothes, material to build houses, etc. They also might want to trade with other people outside of their village/region. They could keep trading rabbits and vegetables, but currency makes it easier. But the amount of currency can’t stay the same. We’ve gone from producing 3 rabbits and 3 baskets of produce in one week to obviously much much more. If you only focus on meat and vegetables and say that each rabbit is worth $1 and each basket of produce is worth $1, and we now have 200 people instead of two…assuming our community/economy is generating 3 baskets of produce and 3 rabbits per week for each person (and each of those is worth $1), we’ve gone from an economy that generates $6/wk to one that generates $600/wk. Now what if we only have $600 (that’s all we could print)? But our village grows to 400? We either can’t feed 200 people or we’ve changed the value of the currency. Not feeding people doesn’t make sense. They can still produce vegetables and meat for themselves and others. So they could still trade that with others. It’s our currency that isn’t working…because there isn’t enough.

And your bitcoin creator is still a problem. Regardless of whether he has used the money or not is irrelevant. He could at any time…which would flood the market with currency and devalue everyone else’s. I’m not going to go through the whole thing, but think about your little economy that is trading with $600, and one guy moves to town and brings $2,000.

 

[agrabes]

No, permissionless is the ability to participate in lending/borrowing without providing identifying information. Your p2p loan example would be the opposite of permissionsless (I assume you would need my name for the loan papers). Also, as the lender on curve you do not incur credit risk because people can only borrow against what they have deposited. People are liquidated before that becomes an issue. Anyone can deposit funds and borrow against them and earn the yield banks would normally receive by using Curve.

I can totally understand you not finding it appealing. Personally, I like to dabble in these protocols and have received solid yields I wouldn't normally have received from my bank. However, I do take on contract risk by doing so and don't blame anyone if that doesn't appeal to them.

I am putting my chips in on people like MIT faculty and Turing Award winner (and Algorand founder) Silvio Micali. I don't love his take on BTC, but he says this about defi. I honestly don't understand why people wouldn't be excited about work in this area. But, to each their own!

Macali stressed that he is most passionate about democratizing finance. "DeFi means democratization of finance. I want to give to the people on the street the same sophisticated tool at a fraction of the cost today. But right now, it's only available to a very few elites," Micali added.​

Turing Award-winning Scientist on achieving the impossible: Solving the 'Blockchain Trilemma' - Algorand Founder Silvio Micali

www.kitco.com

Permissionless is the ability to lend/borrow without providing identifying information - that seems like a poorly descriptive title then. That seems more like "anonymous". That seems extremely unappealing - loaning money to someone who you don't know and have no guarantees or means of ever getting the money back? I don't think there's a market for that. If I'm understanding it correctly, Curve is not really a loan though - Curve is a bank, like you said. So, of course you don't have credit risk on Curve because you aren't really lending. You don't consider money deposited in a savings bank to be a loan, though in some respects it is a loan. Curve is depositing your money into a risky savings bank in a country with a volatile currency. The only difference is that more people have the ability to try to put that money to work to earn the return rather than just a single bank manager.

I've heard of the Algorand coin. I would say this though - I don't take the word of a computer programmer as gospel when it comes to how the world should work. This guy Micali has the credentials of an amazing programmer and I'm sure that means that his code is highly functional. He might have the best technical blockchain code out there. It doesn't mean it's useful or valuable. I think people aren't excited about DeFi because it's essentially taking away the only thing people like about the banking/finance industry - security and peace of mind. People don't deposit money in a bank because they want to earn money - they put money in a bank because they want to know that it's safe and they will not lose it. They invest their money in the stock market and other investment opportunities if they want to earn a return - knowing they are taking on some element of risk. DeFi is about saying we'll give you more opportunity for returns and less reliance on centralized authority in return for a loss of security. There just doesn't seem to be a market for it - it's not going to be as profitable as a regular investment and it's going to be much riskier than a regular bank.

 

[Sigmapolis]

There is a great irony in the center of the crypto and other novel asset markets.

People buy crypto as a hedge against central banks manipulating the supply of money. This looks sound in theory because nobody can manipulate the supply of digital tokens, right?

The problem is that crypto and similar markets are a "sponge" for excess liquidity. The Fed prints, the money has to go somewhere, and besides more traditional liquidity sponges (mostly real estate and equities, etc. ) now they can go into crypto markets, too. Therefore, crypto isn't actually a way to hedge against central bank and monetary policy profligacy, but rather leaves you *more* exposed to it than before.

I think the situation now and the past two years is bearing this situation out.

 

[JustAnotherTimeline]

If you think of a basic economy based off the exchange of goods, it’s probably easiest to understand. If you have start with two people - one hunts and the other grows plants. They can trade to both have what they need. Let’s say they trade 3 rabbits per week for 3 baskets of fruit and vegetables. If they have children, they will need more food…and they will produce more food. They also need clothes, material to build houses, etc. They also might want to trade with other people outside of their village/region. They could keep trading rabbits and vegetables, but currency makes it easier. But the amount of currency can’t stay the same. We’ve gone from producing 3 rabbits and 3 baskets of produce in one week to obviously much much more. If you only focus on meat and vegetables and say that each rabbit is worth $1 and each basket of produce is worth $1, and we now have 200 people instead of two…assuming our community/economy is generating 3 baskets of produce and 3 rabbits per week for each person (and each of those is worth $1), we’ve gone from an economy that generates $6/wk to one that generates $600/wk. Now what if we only have $600 (that’s all we could print)? But our village grows to 400? We either can’t feed 200 people or we’ve changed the value of the currency. Not feeding people doesn’t make sense. They can still produce vegetables and meat for themselves and others. So they could still trade that with others. It’s our currency that isn’t working…because there isn’t enough.

And your bitcoin creator is still a problem. Regardless of whether he has used the money or not is irrelevant. He could at any time…which would flood the market with currency and devalue everyone else’s. I’m not going to go through the whole thing, but think about your little economy that is trading with $600, and one guy moves to town and brings $2,000.

I'm no economist but I believe in your example demand for the currency would increase and since supply is static the price for the currency would increase. Therefore, it would lead to deflation. More mainstream economic theory is a afraid of the deflationary boogieman. As such, we tend to try to control aggregate demand via government spending and a 2% inflation target. However, Austrian economic theorists do not see a problem with deflation as it is the proper side effect of technology and innovation.

Ultimately, it is a moot point imo. Most crypto enthusiasts envision crypto as an optional system not a full replacement so there will always probably be a Fed to print more dollars to address your concern. And even in the event bitcoin were the worlds currency (which I don't think will happen) banks would self custody btc and proceed to fractional reserve banking so there would be a lot more then 2,600 satoshis available for each member of the worlds population.

 

[JustAnotherTimeline]

Permissionless is the ability to lend/borrow without providing identifying information - that seems like a poorly descriptive title then. That seems more like "anonymous". That seems extremely unappealing - loaning money to someone who you don't know and have no guarantees or means of ever getting the money back? I don't think there's a market for that. If I'm understanding it correctly, Curve is not really a loan though - Curve is a bank, like you said. So, of course you don't have credit risk on Curve because you aren't really lending. You don't consider money deposited in a savings bank to be a loan, though in some respects it is a loan. Curve is depositing your money into a risky savings bank in a country with a volatile currency. The only difference is that more people have the ability to try to put that money to work to earn the return rather than just a single bank manager.

I've heard of the Algorand coin. I would say this though - I don't take the word of a computer programmer as gospel when it comes to how the world should work. This guy Micali has the credentials of an amazing programmer and I'm sure that means that his code is highly functional. He might have the best technical blockchain code out there. It doesn't mean it's useful or valuable. I think people aren't excited about DeFi because it's essentially taking away the only thing people like about the banking/finance industry - security and peace of mind. People don't deposit money in a bank because they want to earn money - they put money in a bank because they want to know that it's safe and they will not lose it. They invest their money in the stock market and other investment opportunities if they want to earn a return - knowing they are taking on some element of risk. DeFi is about saying we'll give you more opportunity for returns and less reliance on centralized authority in return for a loss of security. There just doesn't seem to be a market for it - it's not going to be as profitable as a regular investment and it's going to be much riskier than a regular bank.

Yeah, that is true about Curve. I should have given a better example such as Aave, Maker, or Compound for loans. As I thought about it my example I gave before with MATIC was on Aave, not curve. I have used them all, but confused them in my example Sorry about that!

No, the contract ensures you get your money back. People can only borrow a certain LTV of their deposits. They are liquidated far before your capital is at risk. defi has yet to solve for borrowing on credit.

Good point on the security and peace of mind quality of legacy banking. That is certainly a major hurdle and the main reason I don't personally recommend using it to my friends and family.

Thanks for the fun back and forth on this. I maintain that while the majority of people may not yet be interested in using it yet, defi is an innovative product. Probably just agree to disagree!

 

[JustAnotherTimeline]

There is a great irony in the center of the crypto and other novel asset markets.

People buy crypto as a hedge against central banks manipulating the supply of money. This looks sound in theory because nobody can manipulate the supply of digital tokens, right?

The problem is that crypto and similar markets are a "sponge" for excess liquidity. The Fed prints, the money has to go somewhere, and besides more traditional liquidity sponges (mostly real estate and equities, etc. ) now they can go into crypto markets, too. Therefore, crypto isn't actually a way to hedge against central bank and monetary policy profligacy, but rather leaves you *more* exposed to it than before.

I think the situation now and the past two years is bearing this situation out.

Good point and actually a fear of mine. Bitcoin has never been tested during a time of tight monetary policy. Been pretty easy sledding since 2009.

 

[CycloneSpinning]

I'm no economist but I believe in your example demand for the currency would increase and since supply is static the price for the currency would increase. Therefore, it would lead to deflation. More mainstream economic theory is a afraid of the deflationary boogieman. As such, we tend to try to control aggregate demand via government spending and a 2% inflation target. However, Austrian economic theorists do not see a problem with deflation as it is the proper side effect of technology and innovation.

Ultimately, it is a moot point imo. Most crypto enthusiasts envision crypto as an optional system not a full replacement so there will always probably be a Fed to print more dollars to address your concern. And even in the event bitcoin were the worlds currency (which I don't think will happen) banks would self custody btc and proceed to fractional reserve banking so there would be a lot more then 2,600 satoshis available for each member of the worlds population.

With respect it should not be a moot point if you are investing in a currency. If De Beers has a monopoly on diamonds, the market price is held high because of the scarcity of that item. Along comes lab grown diamonds. Exact same physical properties as a traditional diamond…but cheaper. For now the natural diamond price hasn’t cratered, but is there a risk there? You bet there is. Why wouldn’t people buy lab created diamonds? For now - tradition and advertising. If gold is less scarce, is an ounce as valuable? If dollars are less scarce, is one dollar as valuable? If this Satoshi sells a million bitcoin, what happens to the value of bitcoin? Regardless of whether that’s a fear or not, you acknowledge that other forms of currency would be required to supplement bitcoin because of its scarcity. That opens the door for other, better currencies to supplant it and eventually should displace bitcoin…or at least make it much less valuable.

You can cheer on cryptocurrencies and be excited about the overall direction things are going if you like, but if you are investing in them…I think you should be thinking about these things. My opinion of course.

 

[JustAnotherTimeline]

With respect it should not be a moot point if you are investing in a currency. If De Beers has a monopoly on diamonds, the market price is held high because of the scarcity of that item. Along comes lab grown diamonds. Exact same physical properties as a traditional diamond…but cheaper. For now the natural diamond price hasn’t cratered, but is there a risk there? You bet there is. Why wouldn’t people buy lab created diamonds? For now - tradition and advertising. If gold is less scarce, is an ounce as valuable? If dollars are less scarce, is one dollar as valuable? If this Satoshi sells a million bitcoin, what happens to the value of bitcoin? Regardless of whether that’s a fear or not, you acknowledge that other forms of currency would be required to supplement bitcoin because of its scarcity. That opens the door for other, better currencies to supplant it and eventually should displace bitcoin…or at least make it much less valuable.

You can cheer on cryptocurrencies and be excited about the overall direction things are going if you like, but if you are investing in them…I think you should be thinking about these things. My opinion of course.

Sorry, meant moot point regarding deflation. Because yes, I agree, think there will always be fiat currency as the main currency.

Your point about Satoshi is a concern I have. Just because those coins have never moved doesn't mean they won't. It would tank the price, but that doesn't mean it wouldn't recover once those coins are distributed. It's hard to say.

 

[CycloneSpinning]

Sorry, meant moot point regarding deflation. Because yes, I agree, think there will always be fiat currency as the main currency.

Your point about Satoshi is a concern I have. Just because those coins have never moved doesn't mean they won't. It would tank the price, but that doesn't mean it wouldn't recover once those coins are distributed. It's hard to say.

I agree, knowing the number of bitcoin is fixed should mean the price would rebound after the market was flooded with what could amount to a 5% increase in supply. My long-term/greater concern would be the limited supply.

The US has an excess supply at this point (which has lead to inflation/a devaluing of the currency, but if we were to go back to 1900 (or even earlier) and look at the currency supply, we would have $10 or less in circulation per person (with today’s population). You can say that each dollar would be worth much more, and in theory that’s true, but the currency would be less effective because the supply (or lack thereof) wouldn’t allow you to use it. You would have to trade outside of the US currency system…which would then actually make the dollar less valuable.

 

[nocsious3]

Another stable coin blowing up.... dominos falling.

There is no way to access risk in this space for 99% of projects, defi, stable coins.

 

[JustAnotherTimeline]

Another stable coin blowing up.... dominos falling.

There is no way to access risk in this space for 99% of projects, defi, stable coins.

Which one are you referring to? I am not aware of this.

 

[besserheimerphat]

...However, Austrian economic theorists do not see a problem with deflation as it is the proper side effect of technology and innovation...

But we already see this technology driven deflation. It used to cost thousands of dollars for a 36" color CRT TV. Now that TV, if you can even find one, is an order of magnitude cheaper. You can say the same for thousands of products. The "problem" is that as technological progress occurs, people expect to consume the benefits from that progress rather than the low prices of older tech. If we "locked in" technology at today's performance, we WOULD see deflation.

 

[Clark]

Which one are you referring to? I am not aware of this.

probably not a good sign that you have to ask which one lol.

but seriously, he should have mentioned the name of it so people knew what the hell he was talking about

 

[JustAnotherTimeline]

probably not a good sign that you have to ask which one lol.

but seriously, he should have mentioned the name of it so people knew what the hell he was talking about

yeah, what if i have some

 

[JustAnotherTimeline]

probably not a good sign that you have to ask which one lol.

but seriously, he should have mentioned the name of it so people knew what the hell he was talking about

The only stables that really matter are USDC, USDT, BUSD, and DAI....and previously UST. Nothing else matters or would move the market. But maybe nocious is in deeper in crypto then I would have guess