In fact, the fact that bitcoin has no on-chain notion of credit is a major limitation that relegates it to being digital gold, not a digital dollar.
Defi, you say. Show me a defi project that lets people borrow more money than what they have in the first place. Show me a defi project where I actually take the credit risk for the borrowers when lending the money to them. (Show me those and I show you an emerging fractional reserve bank and uncontrolled money creation by the said bank...)
Governmental budgets are one of the most obvious ways in which political decisions manifest themselves and become relevant for everyday life.
Do I get this right? You think that governmental budgets would look absolutely no different in such a bitcoinized world compared to how they look in the current centralbank issued money world?
You don't think the fact that central banks mostly support governmental debt shapes these budgets in a non trivial way?
Precisely that was the OPs point why it is a good alternative to the debt-based financial system we have.
In this phrase I was just pointing out that, given fractional reserve banking is here to stay, with or without bitcoin, it would have been better if bitcoin had embraced it and actually made it possible to put the real transactions on chain, so that at least you could in principle have a BTC bank that is transparent about the kinds of reserves it actually holds, without being forced to hold a full reserve while competing with banks with fractional reserves.
Also, I don't see a way to make fractional Bitcoin reserve banking work in practice. You can't simply issue Bitcoin you don't have.
At no point does this bitcoin have to live in the BTC wallet of you, your bank, your friend's bank, or your friend. In fact, this BTC can be entirely fictional. As long as your bank has enough BTC in their actual wallet that they are at no serious risk of running out if a realistic proportion of their customers wanted to withdraw their BTC, as determined by the Fed or other national entity, then all is well.
This is anyway the only realistic possible use of BTC itself, as the blockchain is far, far too slow to use for day to day transactions even in a large village/small town. I can also promise you that this is exactly what day to day use of BTC in El Salvador will look like, more or less, if they do go through with it.
Edit to add: the dollar was once based on gold. We've moved on from that after realizing that doesn't work. Today's dollar is very much not tied to gold, and it is used in ways gold is not.
> the dollar was once based on gold. We've moved on from that after realizing that doesn't work.
Citation needed.
My understanding is that governments moved off the gold standard because they couldn’t debase the gold-backed currency without getting caught. Moving off the gold standard was devastating for citizen’s savings and the constant debasement was used to pay for endless wars.
WWI was only made possible becauuse countries were debasing their currencies instead of raising taxes.
All of a sudden, it became clear that well functioning economies could reliably promise money that would become available tomorrow, and use it to start getting there today. This is a major boon to any country, and having to save up resources until you can start huge infrastructure projects would be a return to terrible times.
Later edit: As for the claim that El Salvador would use the Lightning Network, I highly doubt that the citizens of El Salvador will each have a bitcoin wallet and lightning channel connected to it. Much more likely, some citizens will have some account with a bank (exchange) that will facilitate payments through the LN or whatever other mechanism they chose to use internally, that no one will really care about.
Of course, with bitcoin as volatile as it is, no one in their right mind would pick up a credit in BTC, so the greatest need for fractional reserve banking will be far away. Even so, if people start buying heavily into bitcoin, I wouldn't be surprised to see banks/exchanges start to offer BTC that they don't yet own.
For dishonest governments who wish to spend without limit but don't want to raise taxes, fiat currencies allow debasement which benefits dishonest politicians. It does not benefit the people - ever.
Also, do you have some strong historical evidence fractional reserve banking is good economically over long periods (100+ years)?
True, and I don't claim it's fact (discussed in sibling comments) - just something to consider. But there's also a difference between floating the idea, and amassing enough gold to actually pull it off, and he was acquiring quite the stack from what I hear.
>Your suggested link between Ghaddafi's killing and "debt based fiat systems" is a conspiracy theory promoted by Russian propaganda channels like RT, but not backed up by facts.
There's that phrase again. Not everything RT says is a lie. I don't make the claim to know the inner workings of the global political elite. I just like to see which of my friends only get their propaganda from MSNBC/CNN/Fox, and which like to sprinkle in a little zerohedge and RT
https://en.m.wikipedia.org/wiki/Alleged_Libyan_financing_in_...
It would be a disaster for US, because US enjoys benefits of printing as much money as it needs to purchase anything from abroad exchanging zeros and ones that cost nothing for real natural resources and goods from other countries.
Just about any country leader that announced plans to stop using USD for trade, was killed in some way.
Or, if USA isn't brave enough to openly attack the country, they declare it "hostile" and try to suffocate using sanctions (e.g. Iran).
Second largest economy in the world
Second-fourth largest industrial country in the world
...
costs nothing
Costs nothing!
But yeah, sure. The dollar is a worthless piece of paper that has nothing behind it except the military.
Industry output percent in the USA GDP is small and becoming smaller with every year, while US consumes about order of magnitude more energy per capita than even EU countries.
This is why US needs most expensive army in the world and the need to rig elections, organize coups and revolutions in almost every other country.
But yeah, sure. Get all defensive about someone agreeing with you. :)
I don't think a mere thing like what currency you use stops the FBI from assuming everything in the world is their jurisdiction.
And it seems they even used time travel to do it.
But the real smart people who have the special knowledge know that it was obviously <<insert conspiracy theory here>>.
The thing is, geopolitics is messy and there are quite a number of 'factors' many of them true to some extent. The Gulf tribal leaders absolutely hated him and they (i.e. Qatar) lent their special forces more or less as 'personal vendetta' than anything.
There are definitely arguments about Oil and related contracts - but Gaddaffi through the diplomacy of his son was well on his way to 'public reconciliation' to the point where there was a lot of money being made there, and it's entirely doubtful that some new, unknown clan would make it any easier for Westerners to make money.
If there were an obvious and very popular contender for power who was on the precipice of uniting the nation and he was already tacit 'backed by the west' - then you could make the argument that the intervention was on the style of the overthrow of Mossadegh in Iran, but this really wasn't that situation.
The question says more about the person asking it than the answer.
The real question to ask someone when they are talking about 'Bitcoin' is how much Bitcoin (or other crypto) do you own? Because I find it's like talking to people in Amway or Scientology.
If a country that doesn't have vast amounts of oil "declares imminent genocide", would US or EU intervene? Of course, no.
Also we all know that Iraq had "weapons of mass destruction".
Yes, exactly. It's not that I know I am right, or that there's one answer. But it is interesting only one of the discussions is allowed, and one very plausible explanation is universally labeled as a "conspiracy theory".
>The real question to ask someone when they are talking about 'Bitcoin' is how much Bitcoin (or other crypto) do you own? Because I find it's like talking to people in Amway or Scientology.
FWIW, basically none. Might have an old wallet on the computer in my closet with ~.1 left on it, from back when I used to buy drugs off the silk road. But I'm not a crypto fanatic, though I do find it interesting.
Is someone stopping you?
Having people not be convinced is not the same as preventing discussion.
Most of this thread stemming from my comment has been around "conspiracy theories" and such, which I find disappointing, because there is a healthy level of skepticism and distrust that should be applied to these institutions.
It's not covered by mainstream news, because it's not really a news item.
It's also reasonable to suggest that this will catch the ire of the US and their diplomatic corps, but it's really not an important thing.
It's 'conspiratorial' to suggest that this was in any way a primary reason for killing Gaddafi.
Gaddafi was already getting increased investment from many Western firms, and the US was literally looking to pass his public image to the extent that he provided reparations for Lockerbee and stopped acting crazy. Everyone was keen on 'being normal and making money'.
But the Arab Spring happened, and he made public statements that went to far, people feared the worst and that was the straw that broke the camels back.
The decision to intervene was barely a consensus, nobody really wanted to do it, Obama was super reluctant.
If Gaddafi were to have made a different public statement about his intentions, and were to have signalled in some way that he was unwilling to commit to blood or something ... he would have suppressed the insurrection and probably be still ruler today.
Qatari special forces that ended up killing him were only able to act because of the various forms of American cover and intel. support and of course the chaos of the war with him on the run.
The petrodollar is an important part of American foreign policy and they will get 'really mad' if people try to move away from it, but that's a far cry from the conspiracy stories.
Also, BTC is a giant distraction from reality, it serves to fuel hype and headlines as much as anything.
I am Canadian and I remember when we would send peacekeepers to stabilize a country under the name of the UN. In this case the UN authorized a nofly zone. Western powers took that as their opportunity to bomb Libya into the stone age and before the NATO-backed rebels were even in power they immediately established a central bank linked to the bank of international settlements [1].
Instead of installing peacekeepers to stabilize the region, once the “dictator” was disemboweled (instead of facing a fair trial) NATO powers left the country to it’s own devices. Shortly after the country devolved to the point where open air slave markets are a thing in the 21st century. Thanks NATO! [2] I would argue if a group of nations violently overthrow a government, then they are responsible for the consequences.
As such the US, Canada, France, UK, and Italy all have the blood of slaves on their hands in Libya. Curious how the mainstream news so rarely connects the dots on that one.
[1] https://www.cnbc.com/2011/03/28/libyan-rebels-form-their-own...
You've offered no evidence of 'false pretenses' and not illustrated any rational benefit for Western powers. Just the opposite - SNC Lavalin (Montreal) and others lost lucrative contracts.
And this "As such the US, Canada, France, UK, and Italy all have the blood of slaves on their hands in Libya" - is completely ridiculous. It's reddit-rhetoric, essentially to blame one 3rd party for incidental actions in some other area, at the same time not holding primary antagonists accountable for their actions. Like blaming the US for bombing Japan ... after Japan spent 35 years invading, mass murdering, mass raping, looting, firebombing, all sorts of countries, 100's of millions of people displaced or killed in SE Asia ... and then attacked the US.
Gaddifi, a known antagonist who blew up a civilian airliner, publicly stated he was going to commit mass murder in E. Libya. That's a legitimate pretense.
Did the Western powers stretch their mandate by continuing to support forces in E. Libya after NATO destroyed advancing columns? Yes, but that's completely within the boundaries or rational action.
Libyans did most of their own fighting, NATO provided air cover and Intel, and other ME forces (i.e. Qatar etc.) chose to work on the ground. Their choice.
That some rebels, who were temporarily victorious were able to set up bank accounts for clearing payments is not suspicious. That would be the #1 thing they, and we, would want them to do. To the extent that they seem like 'the best choice out of bad options, good enough to lead the country', then it's reasonable that other countries recognize the new leadership. It's each countries choice to do that.
"Instead of installing peacekeepers" ... this is not what peacekeepers do.
I'm also Canadian, and was in the Armed Forces, and am deeply acquainted with this type of mission.
The notion of 'peacekeeping' is misunderstood by the general public to the point of dangerous naivete.
'Blue Helmet' style peacekeepers can generally only work in situation where most parties have agreed to end hostilities, and usually where the forces aren't very powerful or advanced. They are observers, and generally unable to project force in a manner that would keep the situation under wraps. Literally they observe, make notes and generally don't have the established rules of engagement (or force) to be able to do anything material.
Only 'vastly more powerful application of force' can forcibly 'keep the peace' between antagonizing powers. The US occupation of Iraq, for example, would be truly what we think of as a 'peace keeping operation'. The chaos and tumult and even low-grade violence that was common there is normal and expected. That's what 'actual peacekeeping' looks like.
Because of the reluctance of Western powers to put any physical presence (i.e. 'boots on the ground') they opted to support a group that could somehow, possibly form enough of a coalition to keep the situation intact.
... but because of how Gaddafi adeptly managed to keep the tribes fragmented, at each other's throats, disunited and feckless ... there was nothing reproaching a legitimate political opposition or even coalition that could provide leadership.
And so you have what you have today, which is probably worse than what you have in Iraq.
Paradoxically - Libya would have been much easier to occupy than Iraq. They don't share a border with powerful antagonists (Syria, Iran), they don't have individually powerful groups, they don't have deep infiltration of more radical elements (Al Queda, ISIS etc. - although that could happen) and there's no way for them to be supplied. Algeria, Tunisia and Egypt are not going to allow shenanigans across their borders. The desert route is too long and the areas to the south are hostile.
A NATO-led coalition occupation might have been 'the most ideal of a list of bad options', but it would have to have been on a large scale, there would have been low-grade violence on the news, and garrisons could be expected to be there for decades. Only the US has the ability to really do that, but neither they nor most other advanced nations have the appetite for it.
I would like to point out that you are now the one stating "conspiracy theories" without evidence. A government employee of Ghaddafi's blew up an airliner. I'm not aware of any evidence, one way or the other, that he was personally involved with the planning or execution of it.
I wouldn't doubt it. But you're demanding one set of standards of information while not adhering to it yourself.
[1] https://en.m.wikipedia.org/wiki/Jamahiriya_(disambiguation)
There's a longstanding tendency across financial systems historically to use the law to bar access to the "real" products for various reasons that happen to favor the incumbent elite. Instead, if you get any access, it's the version mediated by a middleman of some kind. There is often a rationalization in play, but the effective control over societal outcomes is the same.
Want to found a disruptive company in 16th century Europe? You had better have a royal charter.
Maybe it's the 19th century and you have a great invention: "Patent fees for England alone amounted to £100-£120 ($585) or approximately four times per capita income in 1860." [0]
You're a laborer in 1900, and you've pooled a little nest egg you want to use to trade stocks? You can't afford the real stuff, so you will have to play in a bucket shop.
You're a middle-class Black person in the 1950's US and you want to own a home or start a business? Redlining ensures that you won't get a good deal or your neighborhood of choice, neither will you get a loan from the major banks(at least, not one on reasonable terms).
And so I have to conclude that the whole basis of the debt system is always subject to some form of gatekeeping, at some point, and that's what has drawn people back to precious metal exchange over centuries, despite its limits. We've been through a long period where debt worked really well, because our economies experienced industrial growth patterns and could coexist within a stable framework(some world wars and interventions notwithstanding). That does not mean it's better or forever.
The same kind of framework is in the process of being enforced in cryptocurrency; cypherpunk-friendly privacy coins that have some adherence to Bitcoin's original spirit like Monero or ZCash have been delisted from most exchanges through regulatory pressure, while defanged "blockchain economy" tokens have stones-throw availability and heavy promotion. Meanwhile a substantial number of token exchange services will play games with your ability to withdraw to keys you own.
But I think that's going to be about as hopeless an endeavor as stopping music piracy was; it's abundantly clear that we're headed towards a long term trend of breakdown in "trust me" debt economies and their model of operation, even if some of the leaks get plugged in the near term in the way that Spotify "solved" piracy[1]; what "trust me" now results in at Internet scale is increasingly sophisticated ransomware hacking. So, while debt and lending itself could still exist and be a rewarding venture, tokens lacking credible mechanisms to back their fundamental value and consensus are going to wash out.
(I also think the El Salvador plan is a stunt - a way of marketing the country with a side of personal benefit - albeit one that could become consequential in surprising, unpredictable ways, in the way Bitcoin has been generally.)
[0] https://eh.net/encyclopedia/an-economic-history-of-patent-in... [1] https://www.digitalmusicnews.com/2018/03/22/music-piracy-spo...
And I switched from a mild crypto believer to a metal stacker a couple of years ago.
I think one of the next big avalanches will be some more issues with crypto exchanges. There's a lot of people in the crypto space without the technical knowledge to properly secure their assets. I was one of the people who got burned by Mt. Gox. It wasn't everything, I had multiple wallets under my own control, but it was enough to hurt. And that wasn't a one time event.
edit: but it's sad how little attention people pay. Ghaddafi predicted the mass-immigration problems that Europe now faces. Libya, for all it's faults, was the place to go for anyone born in Africa looking to pull themselves up by their bootstraps. Not just free education - salaried education. Free electricity. Free farmland and equipment. He did plenty of wrong in his life, but he also did some things right as a political leader.
Not that I want to disregard Gadaffis warning here, but the UN itself predicted that this will happen and asked the countries to please provide more money to help the people in the camps or they will move on to Europe. No one listened, people moved on. This was not some kind of secret knowledge, more a type of "it's not yet a problem, ignore it"
I have a litmus test I use when discussing global financial politics with friends - "What were the main factors you think lead to Ghaddafi's killing?"