Can you back this up? From what I can tell, governments can ban mining, shut down exchanges and co-erce developers. If the handful of devs that have commit access to Bitcoin were working for the CIA, would we know? What kind of damage could they do? Eg. Could they introduce consensus bugs without anyone noticing?
> Today, people can transfer their wealth as bitcoin across international borders.
Again, citation needed. How many Chinese people are doing this? The exchanges are banned, right? So how could your family buy Bitcoin in China? OTC? What's the spread on the OTC market in China versus US market? Is it actually worth it?
Cutting off exchanges from financial institutions will likely be the primary way the government attacks cryptocurrencies. Just look at what happened to online gambling 10 years ago. Online poker and sports gambling were booming. What the US did was prevent banking companies from doing business from gambling companies or intermediaries (e.g. Neteller). Basically overnight, online gambling became a shell of what it was previously. Sure there are still ways around it, but it's enough of a hassle that only the most die-hard players are going to find it worth it.
It doesn't take a huge stretch of the imagination to apply the same strategies to crypto. If financial institutions are prevented from doing business with Bitcoin, et al., it's basically game over, as long as its utility is dependent on buying with fiat currency.
And not a moment too soon. Gambling games are designed to be addictive, to bypass the judgment and decision-making centres in people's brains, and take their money. Providing places to go and gamble is one thing; people who walk in there ought to know they will probably lose every bean they walk in there with, so there's informed consent. Putting gambling games that accept real money on the web is effectively like putting coin-operated pokie machine in every living room (and these days every pocket) with a net connection. It's profoundly exploitative and totally deserved to be starved of financial oxygen IMHO.
probably not, unless they're comically incompetent
>What kind of damage could they do? Eg. Could they introduce consensus bugs without anyone noticing?
not much, considering there are independent implementations, there's no auto-update for clients, and consensus code changes are heavily scrutinized. I'm sure they can ram a PR through if they really wanted, but it's going to be very obvious what's happening.
The money supply setup for Bitcoin is meant to make the currency deflationary by design. Whether that is successful or not remains to be determined.
Can you describe any mechanism that actually causes the price to stabilize and speculation to disappear? (Please, if possible, also define at least somewhat quantitatively what you mean by stable, and then discuss how successful this mechanism you first described has been stabilizing gold price during the last couple of thousand years when gold has been used as moneylike instrument and store of value.)
Wishful thinking does not count. I know no law of nature nor economics that says that demand of money is stable. And if you allow fractional reserve bitcoin banking without regulation[1], money supply would be completely chaotic.
[1] I guess the question is how would you prohibit fractional reserve bitcoin banking? It's not like there exists any regulatory authority that could do that...
It is a supply and demand curve. Where they meet is the equilibrium. https://en.wikipedia.org/wiki/Supply_and_demand
Fractional reserve banking doesn't work with Bitcoin, unless you somehow trust a centralized party to always honor your withdrawal, or the coins never leave that internal system. Many exchanges could theoretically be running fractional reserve operations. But they are just risking themselves because once a rumour gets out, a bank run will occur and they will be exposed. Once you withdraw your coins from this trusted system, it is accounted for on the blockchain.
Academic economists like Steve Keen have totally demolished the classic supply/demand curve: https://unlearningeconomics.wordpress.com/2012/06/25/debunki...
Here's a suitably scornful graphical version: https://www.youtube.com/watch?v=Y3wUqcapSU4
You're not answering the question, just tautologically rephrasing it.
Should "liquid" (easy to spend and trusted to be exchangeable for goods or services) be on that list? I wonder if it's generally left off because it's assumed, but BTC is not currently what I would consider "liquid;" the average time to confirm a transaction ranges from 30 minutes to (sometimes) over 16 hours [source: https://coincentral.com/how-long-do-bitcoin-transfers-take/]. So it's not a money I can spend on a pack of gum.
Contrast that with cash, checks, or credit cards, which generally clear in under a minute (checks being the notable exception, and indeed, the exception that makes them not always equivalently useful to the other two).
If the answer is no one, then this doesn’t seem like an interesting point of comparison for liquidity.
If you're comparing the stability of the major currencies to Bitcoin you really need to look at the price charts for any digital currency.
> Buffet always holds billions in cash which is constantly depreciating in value.
Buffett is always ready to use that cash to make deals. True, they have a lot of cash, but it's not like he doesn't constantly use it to make investments.
Just because BTC is electronically transacted doesn't exempt it from rules of supply and demand, speculation, value stabilization, &c.
Big problem for crypto. It's a spec market currently and shows no signs of settling down. Add that to the fact that transactions are a nightmare and... I just don't see this happening any time remotely soon. Also, if you think the powers that be are going to allow their currencies to be supplanted... well, they won't.
Lots of crypto supporters will talk about inflation like it's bad. Hyperinflation is bad. Typical monetary inflation is a feature not a bug. This is because of people's expectation of wage increases over time. This results in increased demand and spending on goods and services.
Bitcoin by its very nature is deflationary. This reduces demand and increases hoarding. The currency then acts less and less like a currency (sound familiar?). In a deflationary environment, wages would go down over time and workers do not accept reduced wages vs increased wages even if their purchasing power remains the same in both cases.
Small amounts of inflation is a psychological trick that actually helps keep the economy moving along. Outside of hyperinflation the inflationary argument for cryptocurrency is one not rooted in the reality of economics.
I would say that fiat currencies are quite predictable. The last thing the Fed, for instance, wants to do is to come out of left field and change things. That would be disastrous for markets.
He waited until 2016 before investing, not exactly an early adopter.
Bitcoin will resist inflation and is somewhat out of control of governments or any central authority. People in countries where the govt has screwed up the currency can use it to get money out of the country or as a stable store even if dollars or other physical currency is in scarce supply. My family fled china carrying their wealth as gold and bank checks. Today, people can transfer their wealth as bitcoin across international borders.
The fundamental properties of money are:
<<Fungibility: its individual units must be capable of mutual substitution (i.e., interchangeability). Durability: able to withstand repeated use. Portability: easily carried and transported. Cognizability: its value must be easily identified. Stability of value: its value should not fluctuate.>>
It is not unreasonable to argue that fiat currencies around the world are not stable because of inflationary monetary policies. Buffet always holds billions in cash which is constantly depreciating in value.