Re:The Endgame for Cryptocurrency
by imtringued on Saturday August 21, 2021 @09:35AM
(#28256898)
The underdog thing never made any sense. Bitcoin is just another USD clone but with some stupid rules about money issuance that makes the USD's construction flaws appear pathetically small.
USD and Bitcoin are "slow money" or "scarce money" depending on what you want to call them. The velocity of money keeps going down or the supply doesn't go up to counteract the slow down in velocity, which is something that is incompatible with a real economy. It's especially incompatible with positive interest rates. So what happens is that people stop working.
The only difference with Bitcoin and USD is how the money is created. With USD banks grant credit (bank money). With BTC miners literally just print money out of thin air and pay themselves, but note, there is a BTC economy and 99% of it consists of printing money ahem mining. Bitcoin itself proves that creating money isn't necessarily a bad thing. However, what it gets wrong is that the flaws aren't about how money is created, it's what is done with the money after it is created. People hoard USD on bank accounts or as cash with a guaranteed risk free 0% return even when the real economy has declined. So now the dollar is competing with the real economy for capital. People abandon the real world in favor financial games. Does that sound familiar? It's the exact same thing with Bitcoin. Bitcoin's value goes up faster than the real economy can catch up, so people will accumulate Bitcoin to get those "above real economy" returns, while abandoning the real economy.
Really, the biggest difference is that the USD is legal tender. In practice people wouldn't accept such extortion from the remaining holders of USD and issue their own "fast money" with a constant velocity of money built into it. That money isn't Bitcoin. There are hundreds of regional currencies around the world.
USD and Bitcoin are "slow money" or "scarce money" depending on what you want to call them. The velocity of money keeps going down or the supply doesn't go up to counteract the slow down in velocity, which is something that is incompatible with a real economy. It's especially incompatible with positive interest rates. So what happens is that people stop working.
The only difference with Bitcoin and USD is how the money is created. With USD banks grant credit (bank money). With BTC miners literally just print money out of thin air and pay themselves, but note, there is a BTC economy and 99% of it consists of printing money ahem mining. Bitcoin itself proves that creating money isn't necessarily a bad thing. However, what it gets wrong is that the flaws aren't about how money is created, it's what is done with the money after it is created. People hoard USD on bank accounts or as cash with a guaranteed risk free 0% return even when the real economy has declined. So now the dollar is competing with the real economy for capital. People abandon the real world in favor financial games. Does that sound familiar? It's the exact same thing with Bitcoin. Bitcoin's value goes up faster than the real economy can catch up, so people will accumulate Bitcoin to get those "above real economy" returns, while abandoning the real economy.
Really, the biggest difference is that the USD is legal tender. In practice people wouldn't accept such extortion from the remaining holders of USD and issue their own "fast money" with a constant velocity of money built into it. That money isn't Bitcoin. There are hundreds of regional currencies around the world.