If I paid for things with it then every transaction would require calculating capital gains/losses. And it's far worse than conventional assets like stocks because at least the brokers track that stuff for you.
Visa: get card from wallet, type in number, type in CSC code.
Cryptocurrency: pull out phone, scan QR code.
In the US you can get a 2% rebate on what you spend with a credit card. In effect, you are credited back most of the merchant fees baked into transactions.
In which case cash or crypto requires a >2% discount to break even.
I completely agree that the instances of use as currency is vanishingly small.
1. Park your ETH/WBTC/BAT (a whole bunch of other tokens) on a smart contract as collateral so that you can withdraw a token that is pegged to the USD, or just go to a regular exchange to buy the stablecoin.
2. Use this token to make transactions online.
Tax advantages: you are not selling your volatile crypto, so you don't have to declare any sales or profits. On the other hand, if the crypto you place loses so much in value to the point where the smart contract liquidates you, you don't need to return the stable token and you can get a tax write-off.
It uses the same “trick” billionaire CEOs use when they borrow against their shares to fund spending, instead of selling some shares and calling it “income”.
With something as volatile as cryptocurrency it's not exactly a crazy idea that you'd buy at say $30k, take a loan at $60k and get liquidated at $50k and get stuck with a big tax bill
And if you peg your money to fiat, aren't you just ending up back where you started?
What you're describing sounds essentially like being my own brokerage back office to provide cash services to myself. That's nice for people who enjoy that sort of thing, I guess.
Not if you are talking about the idea that only crypto allows you to transact without a middleman and without the risk of having your funds seized or your account canceled.
But if you are simply talking about crypto as an way to invest: I can tell where I can park USDC and DAI and get 2% returns per month - and have gotten that consistently for the last 8 months. Can you tell me any traditional bank that can offer this good of a deal?
The problem is compounded by the fact that people have every incentive to astro turf this technology to promote a get rich quick bubble. So the people claiming these accounts are safe may be lying. I would go so far as to say only a pyramid scheme can offer 2% monthly returns on a technology asset that produces nothing and has no inherent value.
First: I am sure you understand the difference between saying something has returned 2%/month on a given period and saying that something can offer "2% monthly returns". At no point I claimed guaranteed performance, all I did say is that I did get these returns on a very low-risk protocol and only used stable tokens to do it.
Second: the reason that I managed to get this type of return is because I provide liquidity to pools that have a better utilization rate (compound pool on Curve) than others that have more "popular" tokens. Effectively this means that if more people join the pool, its profitability will actually go down.
Third: the "profit" (mostly) comes from selling the tokens minted from the protocol that you are using (e.g, I am using Curve, so they mint their own CRV token as a reward for liquidity providers ) and not "in kind". The amount that you receive "in kind" is much smaller (to the order of 0.05%) and corresponds to some "transaction fee", so it's not compounded. It is physically impossible for these protocols to create more tokens out of thin air and therefore pyramid schemes (strictu sensu) are impossible to happen on the blockchain.
Am I "promoting a get rich bubble"? Quite the opposite: if you ever find me on these DeFi subreddits, you will find me clearly recommending people against buying these governance tokens. People buying them are speculating without any clue of the fundamentals of the protocols or how a competitor can come and destroy any kind of claimed competitive advantage. I lost count of how many threads I got on /r/uniswap telling them that any sensible person would never buy UNI, yet the token went up more than 10x in price in 6 months. For them, I am the conservative one because I am selling these tokens as early as possible, but I am more than happy to take their money.
Is this going to last for a long time? Quite unlikely, but my strategy is as low-risk as it can possibly be in the space, it keeps me liquid (I can withdraw my funds anytime), and has virtually no downside. Even if the profitability went down to 2%/year, it would be a better deal then leaving the money in a savings account.
To sum up: I'm all for healthy skepticism and informed criticism, but your comment provides neither.
If it was not your intention to imply your crypto scheme was as safe as a bank account or a traditional bank product like a CD, you did a bad job of communication what you were trying to say.
If you communicate (however unintentionally it might have been, I'll grant you the benefit of the doubt) like a sucker roped into ponzi scheme, it's only rational to assume you are one.
I didn't care about the details of your speculative business, I cared about the giant red flag you raised when you compared what you were doing to a bank offering.
In no point I am saying that what I am doing is "just as safe as a bank". And when @kobasa pointed out that it is indeed possible to have above-average returns given the information asymmetry, you doubled-down on your assumption and implication that I either (1) don't know what I am talking about or (2) am somehow being dishonest.
Frankly, you are being quite offensive and reading only whatever confirms your worldview. This is not the way to keep a conversation.
Well banks offer lower rates of interest, but they're FDIC insured, they have nice (ish) apps, they have regulations to protect consumers, etc.
I can tell you PLENTY of places i've parked my money (for the last 8 months) that have gotten much more than 2% return - but they don't have FDIC insurance (just like crypto).
What if you deposit your cash in a regular brokerage account and every week sell an equal amount (that is, one contract for every 100 shares you can afford to buy) of at-the-money puts on GLD? This is literally digital gold.
If the probability of gold going to zero (or GLD) is essentially nothing, and inflation is inevitably going to pick up, then this feels plausibly "risk free". The worst that can happen is you are assigned some shares, which you can sell or sell calls on. In any case, people are apparently willing to pay a surprising amount for short term volatility on it.
Even better, you can buy the cheapest longest dated out-of-the-money put to lay off some risk at minimal cost.
You may be able to do this on Robinhood, I haven't tried.
Just an idea...of course analyzing how this could hide large risks would be interesting.
Can you really imagine selling insurance against gold cratering in the near term being disastrous, barring leverage which can always ruin you?
I think it's probably important, for managing risk, to have the self control to only hold as many short contracts as you have cash for assignment, and also not to get greedy when the price moves in your favor, but wait until the end of the week to swap them for a different strike.
The downside scenario is gold dropping 50%, or 100%, which just seems implausible, maybe more implausible than in living memory.
Smart contracts are somewhat Lindy: the longer they are in place, the more of an indication they are secure. I wouldn't recommend putting your money on any new contract, but Curve is around for long enough that I don't believe that it will get hacked in the next years. Sure, it is not as "secure" as a FDIC-insured savings account, but it is not degen-type of investment either.
Do you buy $5 items internationally? Because the bulk of my international orders are low value items. If I have to spend more on a transaction fee than the item costs, I'm not gonna buy the item. Oh, lightning you say? You really think I should trust that more than pay pal?
Relying on a small handful of centralized private service providers for critical infrastructure is a bad idea. My situation is not unique or strange. I could most likely illegally submit false information or register new accounts, with the risk of having payments frozen or even held at any point. Some online vendors only use PayPal, which has lifetime banned me as a person, so by extension I can not purchase from these vendors.
I do trust Lightning more than any of these. I actually regularly use for payments for stuff like you mentioned. Last time a $11 purchase yesterday, which even including amortized channel opening cost was most certainly less fees than PayPal would have been.
——
You’re happy with PayPal now, because it works fine for you, but the increasing power they have over individuals and the economy is real, concerning and dangerous.
But I think for most people using lightning means getting an account with a wallet provider. Couldn't they suspend your account for violating ToS? I guess some people could setup their own channel but I don't think that's what most people do.
Proof of Stake just means the biggest entities will have control. That doesn't sound stable to me but good luck.
I someone can, someone else will for you.... that's the thing. I can't make a Paypal alternative for myself, so I can't do it for anything, but if I can build an alternative on the lightning network... well... someone else can do it and take care of people that can't.
The buy guys only care about the big numbers... but open the door to the smaller guys, and you'll see, they'll take care of the smaller numbers too.
There are significant international transaction fees. There are also merchant fees involved for sellers. Much like the ubiquitous credit card fees, you may not see it line-itemized on your bill, but the costs are absolutely part of the price you see at checkout.
Literally everything I buy with crypto, the crypto network fees are less than what I would have paid otherwise.
Or don't do all that and intuit from it that the likely result is that in some cases crypto wins (when the purchase is large, when the crypto was acquired at closet to zero cost), and in others it doesn't (when the cost is small, or possibly even moderate and when you have to convert to crypto first).
With crypto, it depends. Which coin? Which wallet? Which seller or marketplace? I'm curious if you care to share more about your transactions, that cost less using crypto. Now, if you're saying that you bought at $100 and it's at $1000, and you "paid less" that way, that's just this stage of the ponzi scheme's doing, not an inherent feature of the network that lowers costs.
Regarding which coins I use, it's mostly Bitcoin Cash or Doge. No funny accounting or anything. The network transaction fees are readily available:
https://bitinfocharts.com/comparison/dogecoin-transactionfee...
https://bitinfocharts.com/comparison/bitcoin%20cash-transact...
But it's been six years, now, since using crypto has been a genuine net benefit for me, and this is completely outside of any kind of monetary speculation. That's not nothing. Is it a useful comparison, one guy that works in tech vs. the world's financial systems?
If using crypto helps me, it can help other people, too. That's enough for a real start, all on its own.
I do think that coins with more reasonable transaction fees are actually used as normal, boring currency a lot more than crypto-naysayers think.
I also think the rampant speculation going on over coins like Doge is nuts, but it's worthwhile keeping in mind that if you're just using crypto as an exchange of value, with the purchase of the coin and its use at the same time, it doesn't really matter what the spot price is.
Where by constrained you mean it's a crime, right? Obviously you can argue that in this specific instance making it easier for criminals to evade law enforcement is a morally good thing, but cryptocurrency does the same thing for any profitable crime in any country, which is why I see it as such a negative thing overall.
Not in the way you mean it, no. Otherwise industrial-scale bitcoin miners, situated near power plants, wouldn't be able to operate in the open at all, yet they do. Without making any moral judgement one way or the other, China works differently than is generally understood by the West.
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I don't want to downplay criminal use of crypto- its use in cryptolocker-type malware is a real problem, for example.
I do think it is important to recognise that criminals already use existing monetary systems quite well, and that fully-public blockchains have an audit trail that investigators could only dream of compared to plain cash.
Well, the western understanding is that it's a corrupt country where the powerful and well-connected can openly flout the law for some time - until they misread a shift in power dynamics and it becomes convenient to prosecute them. I'm sure that's not the only paradigm through which these things can be understood, but it doesn't seem inaccurate either.
> I do think it is important to recognise that criminals already use existing monetary systems quite well, and that fully-public blockchains have an audit trail that investigators could only dream of compared to plain cash.
Well it's not like cash is particularly clean - if someone wants to pay or be paid in cash only, I would see that as a sign that things were probably not entirely on the level. Presumably criminals continue to use cash in parallel only use cryptocurrencies where they gain an advantage from doing so - but there are plenty of cases where cryptocurrency does offer big advantages for crime (and all of the reasons people give for using cryptocurrency - sending money internationally, avoiding reporting requirements - seem like crime-friendly things). Even the traceability you mention seems to be seen as more of a bug than a feature by crypto advocates.
(They reached a settlement where they paid money and made an apology statement rather than going to court, as would most entities in their position).
> the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores – CNBV) which, across more than 20 volumes and some 10,000 pages, established how HSBC Mexico’s top management committed serious mistakes, such as:
> - Deliberately failing to report suspicious transactions.
> - Permitting the exponential growth of bulk dollar shipments on armored trucks bound for the US.
> - Deliberately delaying the issuance of client reports with unusual and suspicious transactions.
> - Maintaining business relationships, until the last possible moment, with people, businesses and currency exchange houses used by drug traffickers to acquire aircraft.
HSBC may not have been killing people themselves, but they unquestionably facilitated and profited from it. I'm a little surprised that someone would downplay their involvement given its scope TBH.
https://insightcrime.org/news/analysis/hsbc-dirty-money-whit...
And compare this to Bitcoin where there is no judgement call, no KYC at all, anyone can move money anywhere. I suppose it's harder to gather 10,000 pages about how poor the judgement calls were in hindsight when no-one's making those judgements, but I would hope that HN of all places would look past the sound and fury and pay attention to the actual outcomes.
Or do you genuinely fail to realise thay there is a difference between you and small number of other people relative to the global population using cryptocurrency as money as compared to everyone on the planet doing so?
There's facing statistical facts, and then there's just being flat-out negative.
It's how I learned about crypto in the first place- back ~2015, I ordered legitimate, had-a-prescription medication for my father from overseas using bitcoin, as it was the only way I could get it, as the even-with-insurance price in the states was beyond our means. Wound up doing so for several years, and it was much easier than dealing with the 'normal' ways of payment. A lot of the things I order from overseas in general I pay for in crypto, simply because it's cheaper & easier than doing regular currency conversions. I'm talking about regular things, like specialty foods, or everyday items I can't find in the states. Nothing even close to grey market or sketchy. Just regular financial transactions, using crypto.
I'm sure by numbers my <$100-equivalent purchases are small potatoes, but how is that not also true for regular money? There are billions of dollars of capital sloshing around in the markets, but that doesn't make my personal-level spending not useful.