They have an underlying value/utility. People have a real, tangible need _outside of the use of those products_ to get them fixed. Can you say the same for a cryptocurrency?
Zero.
Edit: any crypto-currency you can exploit gives you option to print yourself money.
It’s more like being able to write two checks for your whole bank balance and having them both clear.
So very relevant are:
- whatever goods you bought with the checks need to be impossible to recall. So, like you need to find (two) someone’s who will effectively cash your check. You can’t buy a house because the police will come take the house back.
- you need to do it fast. The second you make are the first transaction you need fork and start mining hard. 51% gives you a speed advantage, but it’s very small. It still takes time to get the network to follow you.
Double spend is a very specific heist. Even if someone did it, it wouldn’t mean Bitcoin is valueless, it would just mean a certain class of heist is somewhat more probably and people need to adjust their security practices accordingly.
Tricks like waiting for extra confirmations, requiring identification before accepting payment, etc, are easy remediations.
First of all, the value of a currency that could be printer on any printer might not actually be even 0.
Secondly, cryptocurrencies do not operate in vacuum. Its not as simple as "printing yourself money".
Second, if I went to a store spent 199 dollars and those 199 dollars magically reappeared in my hand, didn't I create money out of nothing and reduce dollar value? Yes I did. Even if I never cloned any money I reduce the expectations of future stores that their money won't magically disappear.
And yes, I am aware banks do this, but they are regulated and when they abuse it, you get a financial crisis.
Also, all systems that pay taxes are negative sum as well! Utility is not measured in money.
You're also wrong about taxes. Consider my local taqueria. They buy raw materials and create value by making ready-to-eat food just when people are hungry. They receive cash in exchange, a portion of which they pay in taxes to fund the infrastructure their business depends upon.
That is positive sum for all participants. It has to be. If taxes tipped it into the negative sum category, they'd eventually close down.
If you buy 50 dollars of taco materials, then taco materials seller makes likes than 50 dollars ,because the state will charge a tax on him. If he didnt sell 50 dollars worth of raw materials, he would have 50 dollars of raw materials to consume, instead of less than 50 dollars.
On the other side, making the taco, you have the same issue: if you sell 100 dollars of tacos, and someone pays you 100 dollars for them, you then pay taxes.
You earn less than 100 dollars, and someone else lost 100 dollars. Repeat the proces ad-infinitum and your holdings go to 0. (assuming for simplification, any rate of positive taxation on income).
Most economic activity is positive sum. When I'm hungry and on the go, a taco is more valuable to me than raw taco materials, so I pay more for it. Value has been created. The taqueria owner takes money in, pays their expenses, and is left with a profit. Taxes are paid out of that profit, and you could just as well model it as another kind of expense, a societal infrastructure fee.
Many countries use value creation as an explicit taxation model: https://en.wikipedia.org/wiki/Value-added_tax
Those are still positive-sum interactions in the economic sense: https://www.tutor2u.net/economics/blog/qa-what-is-a-positive...
But not dollars, which is what you are using to classify gambling as negative-sum.
> Many countries use value creation as an explicit taxation model: https://en.wikipedia.org/wiki/Value-added_tax
If the gobernment collected that tax but didnt spend or issued money, even VAT ends up capturing all the money supply.
This is an unnecessary long argumentation. Gambling is not negative sum because they provider entertainment that has utility.
I understand you are claiming the entertainment value outweighs the harm of exploitation and addiction. I strongly disagree.
If you buy 50 dollars of taco materials, then taco materials seller makes likes than 50 dollars ,because the state will charge a tax on him. If he didnt sell 50 dollars worth of raw materials, he would have 50 dollars of raw materials to consume, instead of less than 50 dollars.
On the other side, making the taco, you have the same issue: if you sell 100 dollars of tacos, and someone pays you 100 dollars for them, you then pay taxes.
You earn less than 100 dollars, and someone else lost 100 dollars. Repeat the proces ad-infinitum and your holdings go to 0.
Expected value is not the only thing to consider. Higher moments matter.
Insurance typically has negative expected value but it’s rational to buy it (in conjunction with owning the insured object) to reduce one’s variance.
Gambling will increase the variance of one’s portfolio at the cost of expected value, which can be rational depending on one’s situation.
Apart from weird edge cases where an actor needs to double their money overnight to return to solvency in order to have a chance of benefiting from an income stream in future, there aren't many cases where it makes sense from a portfolio allocation basis given the existence of non-negative expectation bets in other markets with a wide range of possible variances. The insurance and investment management industries are built on the principle that economic rationality works in exactly the opposite way to gambling: that inherent value exists in reducing risk.
It's a useful currency.
Amazon alone probably handles more transactions over the course of a couple of weeks.
[1] https://www.quora.com/How-many-credit-and-debit-card-transac...
Even prominent Bitcoin advocates agree it's not effective as a currency: http://avc.com/2017/08/store-of-value-vs-payment-system/
I have a shift card, bought tacobell with bitcoin.
And that's not even considering the transactions fees it costs to get the Bitcoin to your account.
Then there are the transaction fees for using the card, which coinbase says is free "for now".
Sure, transactions are intermediated through some consensus denomination for exchange. So?
He still lost bitcoin and gained tacos. Just as someone else might lose a portion of a credit balance and gain tacos. You get just as full either way.
If you insist that the guy paid his beer with USD, it is going to be very difficult to discuss about anything as the meanings of the concepts are so twisted.
It is quite obvious that using a credit card that then accepts BTCfrom you does not mean that you use BTC to pay for anything but your credit card bill.
Credit and debit cards are just a way of shifting dollars around. Bitcoin is more a commodity than a currency. Yes, you can convert gold or oil to dollars and buy things, but you can't walk into a store and give them some gold flake or a quart of Texas crude in exchange for a candy bar.
A credit card is shifting a line of credit, an intangible promise to pay, a form of trust, that happens to be denominated in dollars.
We can pretend it's just a balance of dollars, even though it technically isn't, because it makes conversations easier, and in practical fact that's how it appears to work. But that's just a shorthand.
We can use the same shorthand to say someone bought something with bitcoin.
There's no reason to demand perfect technical precision with bitcoin and no similar pedantic precision with lines of credit.
> you can't walk into a store and give them some gold flake or a quart of Texas crude in exchange for a candy bar
I think this is the best test. Here the guy has done that. He walked in with bitcoin and walked out with tacos. When you say that's not really what happened, it feels like a no true scotsman response.
Bitcoin is not a currency. Plenty of other things are true currencies, so there's no fallacy here.
Also, consider ghash.io or the odd OKPAY double spends.
If a bank is critically hit so bad funds become impossible to correctly attribute to people (Fight Club type unrealistic scenario), at least in the US FDIC would probably come in to play. The bank might even have to be treated as a failed bank.
People wouldn't stop using banks, but they would stop using that bank.
I'd really like to live in a world where that's true, but I don't see Equifax going anywhere. PayPal does a form of this as well, except it's the central system and not a rogue actor that locks your money away. Well informed users avoid PayPal, but there appear to be many more uninformed users.
A major hack against Visa would absolutely tank the value of Visa the company however, and if people who believed they were paid weren't made whole somehow then it would also tank the acceptance of Visa.
And it would be an ongoing devaluation without Visa being able to show they'd fixed the underlying flaw - which you can't with a 51% attack.