Because when you make money, someone is paying you for a product or service. When someone chooses to pay you for your product or service, they are expressing a preference for that product or service over the money, and vice versa (you express a preference for the money over the product/service). Which means, that when money is exchanged for a product or service, both parties benefit. Value is created. The utility points of the universe increase.
What you're leaving out, is that "voluntary" transactions have effects on third parties who do not consent, and also true consent of those directly involved requires that they accurately and equally understand the consequences of their actions, which is often not true in real life.
I feel like there is a third issue that I have difficulty articulating, relating to the fact that people are bound to round small probabilities to zero, which means that there is an economy of scale to exploitative behavior.
Sure, those are called externalities. I was simply explaining where the idea that trade generates value comes from. So, given that, generally we presume that trade is beneficial, unless/until someone points out an externality. Which, I certainly wouldn't make the case that there aren't any here, there are. But the way you argue against this activity is by pointing to specific externalities.
> I feel like there is a third issue that I have difficulty articulating, relating to the fact that people are bound to round small probabilities to zero, which means that there is an economy of scale to exploitative behavior.
I don't think what you're getting at has so much to do with probability rounding as it does with 'coordination problems' (http://www.oxfordreference.com/view/10.1093/oi/authority.201...)
If you can come up with a logically consistent definition under which the creation of public property does not itself cause harm - I will be surprised.
Rather than use their equipment for work that's useful to humanity like Folding@Home or BOINC these mining operations are running what amounts to a foundry of space heaters trying to compute a lottery number in return for poker chips at a speculative casino.
That's reaching. Just because some people use it for that doesn't mean that's what it's designed for.
Stalin was also quite sure he knew what was useful for humanity.
You could argue that having currency transactions based on distributed trust is useful to humanity.
> You could, but no one ever seems to do a good job of [making such an argument].
Bad job by a bunch of idiots. Some of them get paid by the system, most are high calibre and can milk the teat of corporate inquisitions. They absolutely know their subject material, so it comes down to opinion....
or
Bad specs from a bunch of profiteering idiots?
Why would anyone who was ahead of the curve ever give this stuff away? The path for Bitcoin and all other cryptos actually lies far away from the 'internet money" crossover dilemnas we have today. Big blocks of silicon heating snowdrifts is already out of date
Linking a currency to wasted energy isn’t great, but what solution would you put forward? A few countries out there have tried to go back to gold or use their oil but it doesn’t end well for them
Which is why USD backed up by the worlds strongest economy are used for vastly more international transactions than all cripto coins combined. Coins have nothing but belief in their value backing them up and are thus extremely unstable.
At the end of the day people need to pay taxes and debts and that’s what gives nation states currency value. As long as the nation does not go on a long term printing spree things stabilize.
In what sense do you believe USD to be 'backed' by the US economy?
Indirectly, messing with your currency risks economic harm creating a huge incentive for governments not to do that while things are going well.
That is absolutely correct. But nowhere does it demand that you conduct these transactions in USD. USD ends up getting used because it's convenient, which is because people have to pay their tax debts at the end of the year. However, that is a problem that can be trivially solved by software now, especially as society becomes more and more cashless.
As long as the US government accepts payment for taxes in USD, there will always be some demand for it. However, there is nothing actually stopping people from using other currencies for their normal transactions, which would substantially decrease demand for USD, and thereby reduce its value.
There is no sense in which the US government 'backs' dollars, except insofar as they are incentivized not to do anything to actively destroy them.
So, if by ‘some’ you mean multiple trillions of dollars of demand every year then ok. But, that’s rather trivializes what a trillion dollars means.
Which is why I am saying the economy backs the USD not the government.
True, though that's simple enough to hedge.
> So, if by ‘some’ you mean multiple trillions of dollars of demand every year then ok. But, that’s rather trivializes what a trillion dollars means.
Absolute numbers don't matter, relative ones do. The demand may go to trillions, but that would be down from tens of trillions.
Even record setting sustained inflation of say 2% per month in the middle of some horrific economic issues would still be a bastion of stability relative to many currency’s throughout history. So, as long as the economy stays steady and the USG does not do something monumentally stupid the US economy really does back the USD.
But nowhere does it demand that you conduct these
transactions in USD.
USD ends up getting used because it's
convenient
Why would anyone bother taking their money, going through all the steps to convert it into the foreign currency or software tokens that they need to buy from someone else (who's siphoning wealth from you) just to find out merchants don't even accept it due to the volatility. And what happens when the merchant turns out to be a fraud? No customer protection by design.
[1] https://steamcommunity.com/games/593110/announcements/detail...
I'm arguing that USD is not backed by the USG in any meaningful sense. Not that Bitcoin is a good alternative. Just that the "Bitcoin isn't backed by anything, but USD is" argument is unsound.
> Why would anyone bother taking their money, going through all the steps to convert it into the foreign currency or software tokens that they need to buy from someone else (who's siphoning wealth from you) just to find out merchants don't even accept it due to the volatility. And what happens when the merchant turns out to be a fraud? No customer protection by design.
Are you arguing that volatility is an inherent property of cryptocurrencies? Because if you're not, then I don't see why your point here is relevant. If you are, then i'd like to hear that argument spelled out.
Govt can be terribly naive.
On the micro level the issue often stems from municipal power contracts. Some towns pre purchse their expected power needs collectively to lower cumulative costs. Bitcoin miners can upset this balance and drive up costs per kWh across the whole town, making them unpopular locally.
Why should an enterprise that requires only about 500 people to run it be able to drive up the operating costs of a company that employed about 2,000? and other such logic from "the only justified subsidy is my subsidy" camp.
>The concerns are part of a broader battle over the enormous carbon footprint of Bitcoin mining, which on a global scale uses as much energy as a medium-sized country.
>But the iconic American corporations that abandoned plants in Massena left behind the precious resource that drew them here in the first place: abundant, cheap electricity flowing from a dam in the St. Lawrence River.
So the source of the power a hydroelectric dam. That's about as low of GHG per kWh as you're going to get. "Ce qu'on voit et ce qu'on ne voit pas". If they ban these miners, like was done in some Canadian provinces, they'll potentially move to an area with higher GHG per kWh. Since mining is more location agnostic than other production services, it's natural that it be located in economically remote but low-GHG, power/energy rich locations.