Except that it's much harder to transfer large sums of cash across borders.

This is the drug business hardest problem, getting the drugs into the country is easier than getting earnings out.

That's why the €500 note was taken out of circulation: https://www.nytimes.com/2016/05/05/business/international/ec... .

Cash is also harder to collect and manage. It has a scaling problem that cryptocurrencies do not.

Also cash is issued by the government at will. And nobody else can create cash. It's diametrically opposite to bitcoin's decentralized approach.

I hope I don't come off as too glib but:

"Also bitcoin is issued by the consensus algorithm at will. And nobody else can create bitcoin."

The superficial syntactic similarity of those statements is all they have in common. The mechanisms are, as one might expect, almost completely opposite.

Oh, everyon can create their own cash. The problem is not printing some form of currency. The problem is getting other people to believe in the value of your money.

What I don't understand is how little this argument has changed over the past seven years.

Once policy makers understand crypto-contracts and cryptocurrencies for what they are they'll either regulate them to the point of where libertarians rue the day they were invented or they'll ban possession with jail-time as a punishment for knowingly holding them.

This isn't a novel insight. It's what I've said for the past seven years. It didn't stop me from buying Bitcoin in 2011 because I could see the medium term upside, but if anyone seriously thinks that these will become the backbone of our economy in their present form is delusional. Governments are not going to allow such a shift in power.

Governments are anwerable to the people. There are many actions that would allow governments to better enforce a whole suit of laws, including banning public use of strong cryptography and banning cash, but they don't do because we don't live in a tyranny where governments have a free hand to impose any restrictions they want to increase their relative power.

I've never understood this deification of governments, as if people are their subjects. Governments are created by the people to further their interests. Government power is not a public end on to itself, and the polity is suspicious of and to a large extant restrains government power.

Depends on the country, but the west uses the financial system to enforce law internationally. I do not think that then end of law enforcement is a good thing. It's not the deification of the state; merely pointing out that it will not suffer the loss of this power and, in my view, we shouldn't hope that it does.

So it's about what you think we in the West should hope for, not about what you think the government will tolerate. You support the current gateeeping of the financial system, and think the West would be harmed by the circumvention/disarming of laws that make it possible.

I don't agree that ending the financial surveillance state means the end of law enforcement. The surveillance state is a relatively new phenomenon, and I believe it has only one destination: extreme concentration of power, erosion of private property rights, and enablement of tyranny. There are many more means of gathering evidence of crimes besides warrantless surveillance.

As an alternative future, the one I want to dee and am actively working torwards. Cryptocurrency platforms offer a way forward to begin again with how we design governments. I'm particularly excited about joining many different types of governance systems that are borderless and for the most part, resistant to attack by the legacy power structures. As these new types of governments grow and accumulate power we should see a diminished requirement for traditional border control and military might accumulation. It's a long shot, but it's the future I want.

> "In terms of providing stability and market integrity, both cash and cryptocurrencies have mechanisms to prevent counterfeiting - for cash, it is by incorporating features that are hard to duplicate, and for cryptocurrencies, it is through the use of digital signatures and proof of work schemes."

Anti-counterfeiting schemes only solve the inflation problem, but not the deflation problem.

If you have a deflation problem in a cash based economy you just print more cash (or lower the central bank's interest rate and let the commercial banks lend out more cash, with the central bank acting as the lender of last resort as a guarantee). If you have a deflationary problem with most cryptocurrencies, well ... too fucking bad.

The deflation problem is easily solved by creating more cryptocurrencies. A crypto world isn't like a new gold standard, it's more like the system of competing private currencies advocated by Hayek, who claimed it would naturally lead to stability.

And who determines which new cryptocurrencies can be created and accepted? Because that risks runaway inflation again if anyone can do it and everyone has equal acceptance.

Whether "everyone has equal acceptance" is the issue; if there's no shortage of currency then there's probably no demand for a new one. People won't just automatically accept any new currency that comes along.

Hayek argued that the market would effectively govern such an economy and prevent both inflation and deflation. I don't know whether he was right; possibly we'll find out by experiment.

> People won't just automatically accept any new currency that comes along.

Eventually they will. You’ll have assets in billions of denominations, and you’ll be able to pay for coffee with a bunch of fractions of pennies and the markets will clear and consolidate value for you.

The future is not Bitcoin replacing the dollar. The future is the idea of a dollar replacing the dollar.

Anyone can do it. The resulting cryptocurrencies do not have equal acceptance. Neither of these circumstances seem likely to change.

Anyone can make a cryptocurrency. They surely have to deal with the very clear and necessary risks associated with creating what will likely be an unregistered security. Adoption is another story entirely. The cryptocurrency scene has now gone through its 3rd or 4th wave of sh#tcoins and scams, so it's highly unlikely that there will be adoption at a level to be concerned about, unless the token provides real value. Existing tokens had to set their capital controls in the Genesis event, and those tokens that print money haphazardly, won't last. Token economics are delicate, and difficult to get right. In the case of Bitcoin, new tokens can only be minted according to the existing rules, which shift towards deflationary over time.

>Existing tokens had to set their capital controls in the Genesis event, and those tokens that print money haphazardly, won't last.

For all the other discussion topics, this is one of the most interesting aspects of crypto-economics for me. We can bake in different economic models and see how they work without it being easy to manipulate them later.

It's sort of disappointing that most platforms I've seen are either going for a basic deflationary model (token emissions dwindle and stop) or a fairly flat inflationary one (every block produces 25 new MeatloafCoins forever).

There's a lot of research that could be done into "how much do we have to expand the token supply to correlate with increases in actual economic activity and attrition while keeping token values flat against real-world goods". Not by actually pegging the value with a backing fund or guaranteed redemption, but rather by a self-regulating algorithm.

There's an interesting rabbit hole there: Can we get a proxy value for "actual economic activity" by crunching the blockchain, or will we need externl information feeds? Can it be made resilient enough to reject trying to game the system?

And then, there's the matter of "does anyone want to botstrap a truly stable currency?" Would you get many early participants if you say "it's explicitly designed to discourage speculative HODL behaviour?"

And sometimes you need to break that deflationary spiral, if for example all wealth has accumulated among a few people who don't want to spend or invest. If we see breaking this as a public good this needs to be initiated in some way by people representing have-nots.

That's what economists like to call a "Market".

Yeah, and the stability of that market is what we're discussing. If this market is either unstoppably deflationary or unstoppably inflationary it become unstable.

There was a market for tulips and a lot of attention and money went there. Tulips have an intrinsic value, but it turned out to be small.

Analogies are good for teaching things you know to be true. But they are not logical grounds for an argument.

But up to now, crypto seems to have only led to chaos. Value changing by huge amount, pretty much constant stealing of massive sums by supposedly safe and large institutions. Even the relatively trusted coinbase has endless claims of poor treatment of their customers, losing funds.

I don’t think the thefts were by institutions considered safe or large. MtGox was always a tiny sketchy company (and I held coins there). I never kept more than half of my coins anywhere because I knew they could disappear at any moment. I don’t see how a conscientious person could have concluded otherwise.

Value has changed a lot, but that was expected too. There are stable broad trends. Seeing the stability is just a matter of seeing timescales.

I guess I don’t share your definition of chaos. Chaos means you can’t predict anything reliably. You can predict many things about Bitcoin.

Taken to the extreme, your comment seems to come from a “anything that’s not a US treasury bond is total chaos” viewpoint. But I know that’s not what you intended... perhaps you can clarify?

Why would I want to live in that world?

What would be wrong with such a world?

Multiple competing private currencies?

Exchange rates between them. Middlemen to pay to perform exchanges before you can actually use the currency to buy something. That doesn't immediately sound worse to you?

Instability is not a desirable trait in currency.

Instability is a necessary feature of literally every currency in history. You can’t change scales without instability.

Once these currencies hit their natural scale we will see some stabilize.