That being said, if governments used cryptocurrency it opens a lot of interesting avenues for them. Tax fraud might be a thing of the past, people could be forced to register their wallets publicly, better protections for lost wallets. Inflation could be exchanged for variably adding/removing coins from the market.
Overall governments need to be able to manipulate currency, or all their citizens are totally exposed to the global market. Imagine if you had to check your savings account multiple times per day to watch it fluctuate thousands of "dollars" in value.
That is quite the exaggeration.
Even the deflationary markets, such as electronics, don't see any problems selling their products.
If the currency is stagnant or close to stagnant, the incentive to invest is that you end up with more wealth overall.
I'm not sure it's possible for deflation to be both predictable and higher than the market rate of return, because people today would immediately speculate and bid up the price of the currency to reflect its future expected value.
Of course inflation is an added incentive to invest money, or at least to store your wealth in assets other than money.
It's just paper. What's wrong with it sitting in someone's safe? We certainly don't want actual productive capital assets to be idle, but dollar bills don't produce anything. If they're sitting in a safe, the value of the ones that aren't in the safe goes up slightly.
* In 2017, traditional currencies work pretty well for global business.
* Without reversible transactions, you get to bear the full, unamortized cost of any and all fraud. Good luck issuing a chargeback against a bad vendor with cryptocoins. You also can't do many useful things without delegating to third parties, at which point you expose yourself to the same counterparty risk you wanted to avoid. Oh, I suppose you could deal with that problem by writing Ethereum contracts (In which case, you now have n+1 problems, for an unbounded value of n.)
* Most non-credit card transaction fees for USD are a few cents, or close to zero. If you're wiring money to Uganda five times a day, this may not be the case for you, but most of us aren't. (And BTC transaction fees are no longer close to zero.)
[1] I don't actually believe this to be the case, but it seems to be an argument that advocates of wild west capitalism use to extol the virtues of that economic system.
* Yes, fiat is still dominant, I fully agree. But it is slowly changing. It will take a few decades.
* If you want reversible transactions, there are escrows. I recently made a bank transfer to what turned out to be a fraudster who just didn't send the product I paid for. It was even to the same bank. I have the police report. I gave all the information to the bank - they don't give a shit, they say it's my fault. The police says it will take them up to 2 years to investigate. I have zero hopes that transaction will get reversed.
* What are these magical "non-credit card" transactions that you do five times a day that have zero fees? Are you talking about cash?
Most people with money would. Most people with debts wouldn't.
The problem is that most people don't have money, but they do have a mountain of debt. (And even among people who are above water - they have assets that exceed their debts, not dollars.)
Actually, while we're on the topic of what most people want, that would be a debt jubilee. And, while we're at it, a redistribution of wealth.
Again, what part of the argument do you not buy? Billions of people have been lifted out of poverty, by entering the debt economy. Aside from communism, there has been no example in living history of an increase in standard of living without a debt economy. A debt economy is only possible in an inflationary system.
* It doesn't matter if its still dominant, and whether or not it will be overtaken. The point is that in 2017, I can do international business with traditional currencies just fine. Saying that you can use crypto-currencies to do international business is quite literally, a non-solution to a problem that I don't have.
* If you have escrows, you've just re-invented the financial system, with all its non-blockchain ledgers, arbitrary judgements, and middle-men.
You've given an example of the least reversible fiat monetary transaction (Non-erronous wire transfer - second only to Western Union in its capacity for fraud) - where you get exactly the same protection as you do with crytocurrencies (None).
If you used a credit card, you could have charged back. If you used any one of the pseudo-escrow services, like PayPal, you could have disputed the purchase. If you wired money to the wrong account, you could have have it reversed. Yes, fiat currencies have some sharp edges. In contrast, cryptocurrencies are like trying to hug Edward Scissorhands.
I can supply an anecdote where I once gave fifty bucks to a guy in exchange for a bike, and he laughed at me and rode off. For some reason, though, there aren't very many anecdotes where a lapse in OPSEC results in someone withdrawing five billion dollars from the Bank of America's systems into a Bahaman slush fund. In the crypto-coin world, this happens every other month.
* You misread that part of my post.
Inflation is a tool of countries. I think it is a useful tool. In this topic one should compare Bitcoin to gold - no inflation [* insert caveats here about mining both physical and computational].
> In 2017, traditional currencies work pretty well for global business
I agree.
> Without reversible transactions...
Ultimately, removing the overhead of mediation will make transactions cheaper. It is possible to add mediation in another layer and I hope it would not be more expensive or risky than our current system.
Imagine a small business where charge-back fraud can really hurt. Cryptocurrency gives the ability to accept payments risk-free. This topic is really a double-edged sword.
Some optimistic things to think about:
- people who do not have access to banks but do or will have access to the internet and smartphones
- "streaming money" / micropayments
- smart contracts
What? I was able to clear a transaction last night for less than 0.0001 BTC/KB, which works out to less than $0.25 for a typical transaction. Granted, it probably wasn't included in the next block, but it was confirmed by this morning. Based on the mempool chart (https://jochen-hoenicke.de/queue/#24h), it looks like most transactions with fees above 0.0001BTC/KB are included in the next block.
• Most of them are not prone to inflation, let alone hyperinflation.
• They work globally. Technically you don't even need the internet to operate - there are SMS gateways for Bitcoin, for example.
• If you control your private keys, no shitty government can't stop you from using your own money (not directly at least), no shitty payment system can freeze your money on ridiculous charges.
• The transmission fees for most of them are a few cents or zero.
Cryptocurrencies are going to win over the traditional fiat ones only because they are a better store of value, the rest of the benefits are extra that will only accelerate this process.