In reality, non-deflationary cryptocurrencies have been tried on various occasions. Surprise! None of them have taken off because "number doesn't go up".
a product that does anything at all?
A token like this would jettison its pyramidal character. If it took off, it might convince me that there is value beyond scamming late adopters.
I haven't seen any gaining much traction however.
Isn't this one of the most basic properties of supply and demand, though?
I mean,what do you expect to happen if your supply is artificially capped and early adopters start to pump up demand for the stuff they own?
In fact, isn't that the whole point of these schemes? I mean,do you know anyone who decided to waste their own money subsidizing anything related to crypto? Each and every single evangelist and proponent of crypto is invested in getting in cheap and pumping it up to get out with the maximum possible markup.
The most basic property of supply and demand is that price is determined by the interaction of supply and demand, so a fixing the supply alone determines nothing at all about its value, which is why the incessant pumping is necessary. The cryptoproponent's argument that cryptocurrencies must increase in value because there are hard limits on their growth rate is a cargo cult version of the law of supply and demand made to serve the pump
And? The demand for an asset is tied to its utility. You can't just assume that the demand will continue to increase forever, but that's exactly what the notion of "deflationary asset" implies.
I am curious to see what will happen when the everything bubble pops
If people don’t react in an angry way that’s the clear signal from society that it wants a certain % of ponzi and scams to be allowed and tolerated
Much like it tolerates gambling , lottery and games of chance which are all zero sum games
… the market is flooded with cheap video cards and we finally have a feast. Unless I die waiting, which is what will probably happen. Please, God, Jesus, Allah, Rama, whoever; I've been waiting far too long already.
edit: keep downvoting me morons. what is microtransactions? literally the same bullshit you bitch about like NFTs and IPOs.
and the video game industry is not just scum for that, but for the terrible code they write and how they drag down the entire computing industry with pervasive poor engineering
what is steam? origin? epic store? literally webshit like a cryptocurrency wallet + vendor lock in + a bunch of mutually incompatible software deliberately made that way in the interests of the vendors instead of using open standards
What are you talking about? Random shit-coins that have deflationary economics?
https://btcpro.com/2021/09/05/eth-becomes-deflationary-burn/
I suspect any coin attempting price-stability (minimum requirement for a useful currency) would need some kind of central bank to control and guarantee the supply. (We have that already too! It's called Tether and it ain't great.)
was being widely used for tipping when the lightning network was just a twinkle in btc's eye
seems to have declined for that purposed, but was the reason i have a small bag still. maybe missed my chance to sell at $0.70 but my original $70 bag i got to tip an openra server ended up doing quite nice ;)
someday my doge will hit $1
That's why it shares the inflationary model.
The reason bitcoin is often described as deflationary is that many coins are lost, and the inflation is somewhat priced-in.
Where is this assumption coming from? I have never heard this before.
> that doesn't mean that the supply of bitcoins in a particular economic area will be fixed. It most certainly won't, unless international trade stops.
Putting non-competing sectors of the economy in competition against each other for a slice of a fixed monetary supply is another basic and sufficient precondition for deflation. There’s a very good reason we don’t do that currently.
The global supply of bitcoins is fixed if and only if financial institutions are not allowed to hold fractional reserves against deposits.
I don’t know of any exchange that offers a deposit account that’s dollar-denominated but backed by cryptocurrency. I can think of lots of reasons for that, FDIC regulations being the least of them. But again, even that wouldn’t make the number of bitcoins in circulation increase: it would be an unstable (and illegal) financial fiction.
And again, this is before we get to the problem of “the government lets you do this.”
Cryptocurrencies are currently considered securities under US law. You can't just pop unrealized securities into existence when a prospective investor asks you for them: it's akin to naked shorting. That's why the stock market has "market makers," i.e. firms that provide low-latency settlement of securities in exchange for a small part of the spread.
I can't find any evidence online that any reputable exchange is using its underlying reserves to cover multiple in-kind balances. If you have links to exchanges actually doing this, both I and the SEC would love to see them.
Edit: I'm struggling to even find links to people discussing this hypothetically online. I found this one on a wiki[1], where it's discussed in the abstract. And I found another thought piece from the Atlanta Fed[2]. But no indicator that any current above-board reserve is currently doing this.
[1]: https://en.bitcoin.it/wiki/Fractional_Reserve_Banking_and_Bi...
[2]: https://www.atlantafed.org/cenfis/publications/notesfromthev...
I used the US as an example; what you're describing is illegal on every single major international exchange[1]. And as far as banking licenses go: the FDIC won't touch Gemini's actual non-third-party-custodial depository products with a ten foot pole, and they're about as clean as a cryptocurrency firm can be.
If you want cryptocurrencies to "succeed" in some nebulous sense, it would be good to get a start on the "not just good for crime" part of the equation. This isn't it.
[1]: https://en.wikipedia.org/wiki/Naked_short_selling#Regulation...
But again: this doesn’t change the fact that Bitcoin is deflationary. It’s a fixed supply of coins on a ledger that every current stakeholder has a strong deflationary interest in. The fact that there might be inflationary forces internal to Bitcoin’s economy doesn’t change that.
If you measure current ownership as a percentage of final issued coins rather than current issued coins, then you've already priced in the inflation.
In other words: like the US economy, Bitcoin can have both inflationary and deflationary forces internally. But the overall economic picture of Bitcoin is intrinsically deflationary.
“If the stock community wants to demonstrate that it isn't a giant Ponzi scheme, why not come up with a non-deflationary stock, which will not massively reward 'early adopters' at the expense of everyone else, in perpetuity?”
Eve though you framed your challenge as a "no true Scotsman" argument, history is packed with IPOs that tanked after the companies went public.
https://money.howstuffworks.com/10-biggest-ipo-flops.htm
Last year Uber dropped considerably when it's IPO got out of the gate.
The main mistake of your argument is trying to compare something with tangible value with schemes driven by speculation and fear of missing out.
Some exchanges or other cryptocurrency businesses fizzle out.
Bitcoin price gets hit on world stability news.
> The main mistake of your argument is trying to compare something with tangible value with schemes driven by speculation and fear of missing out.
People have no idea what TSLA is planning on doing besides "cool car", and ape into the stock because of FOMO. Address this?
Everybody investing in the stock market is not a Reddit day trader.
I don’t see why stocks have tangible value and tokens used to interact with a network don’t. A stock is a vacuous unverifiable virtual piece of paper. At least if you have a Bitcoin or Ether you can prove what you have and know how many there are.
https://www.bloomberg.com/opinion/articles/2017-02-17/dole-f...
Most stocks don’t even have dividends any more so what else is a stock for other than selling to the next greater fool?
Crypto represents nothing and is backed by nothing other than sunk-cost.
A company might be destined to make twice their profits, yet if nobody believes they could, nobody will buy their stocks, leaving stock price the same. One might think, the stock price would certainly increase when the company realizes the profits, but it’s not the case either. The market could think that it was a one off event and the company wouldn’t continue growing. Therefore, nobody buys the stock.
Maybe sometimes. However, if a token is used to pay for blockchain services (such as shared-compute and -data services), the value of the token is at least in part based on the value of those services.
This is one of the big lies.
That's true if companies are evaluated on their fundamentals.
If you start to deal with stocks as if they were meme coins, with no concern of cash flows or business models or profitability, and you add a decade of quantitative easing, then you get stocks like Tesla, and a stock market that's driven by the need to park free cash no matter how risky and absurd the investment is.
I’m disheartened by how small the FTC and SEC actually are upon review.
And if you look at the price graphs it's not always going up. It's a synthetic currency with no real backing economy (and the transaction costs are insane). Pretty straightforward.
Literal tens of billions of dollars are using these systems to great success. The numbers are refuting your arguments, and will continue to.
When we are all carrying counterfactual wallets, able to hold any number of cryptocurrency, or NFT ownership tokens (of the deed or lease to your house, social club entry etc), with social recovery from your closest family/friends when you smash your iPhone, then what will your argument against technology be, I wonder?
The traditional systems that are apparently inscrutable to you move, in SWIFT’s case, $5 trillion (with a T) per day. These generally settle in a few minutes.
P.S. Transparently resorting to straw men like “if you doubt crypto then you just don’t like technology” is the sort of stuff that prevents people from taking this movement seriously.
Not open to you.
That's not the same as forking something to do a pump and dump scheme.
Except DWAC perhaps, but that's already under investigation by the SEC. Which has no alternative in crypto land.
Legitimate stocks are expected to be backed by the efficient creation of valuable products or services the company can sell at a profit. These profits are distributed to stock holders as dividends or reinvested in growing the profit potential. The value of a stock crucially stems from the rights to the future profits they give their holders. Legitimate stocks are not just about giving the money of late buyers of stocks to early buyers of stock.
[0] or, alternatively, dividend payouts, but that's a totally different story.
In my opinion the current challenge of the project as a whole is being able to monetize our products and return value to token/crucible holders but it has been less than a year of the project inception and we've done a lot of cool stuff.
It's the same as putting money into NASDAQ100 or SP500 and waiting for it to go up only. Is that a Ponzi scheme? No.
It's a volatile synthetic hedge against assets with real fundamentals.
And the whole "cryptobro culture" (which is the r/wallstreetbet culture, which is a nice essence of how fundamentally small markets are more about the humans who gamble/participate than about the economic properties of the products/stocks/currencies) is not simply bad/good either.
Modern monetary systems are not zero-sum. The central banks (and to a lesser degree the legislatures) can very effectively interact with the financial markets to achieve almost any desired outcome. Furthermore legislatures can and do tax whoever they want thanks to people with money having bank accounts.
The fact that now a lot of money is/was dumped into various blockchains doesn't mean much. It's just sitting here instead of sitting in a money market fund and doing nothing. Or instead of sitting in the central bank as required reserve.
The whole point of DNS is to normalize an easy to remember name to an address so that everyone can access that same address easily. That is almost the purest essence of centralization.
In practice if you want to share family photos with your family do you upload those photos to a third party like a social media site or a cloud provider for all your family to access? That is centralized: an agreed upon location for everyone to access.
In contrast decentralization means no third party. Grandma pushing the family photos directly onto the kids hard drive from across the network, for example.
The confusion here is most people confuse the web for the internet. The internet is a big decentralized network thanks to BGP. The web is an application riding that network thanks to HTTP.
The goal of the web, as it was invented. was to allow decentralized content access via hyperlinks. That vision is essentially dead. Content is now an index on a database behind a walled garden.
On the web content is king. In a true decentralized platform autonomy and availability are king while content is trivial.
Maybe I’m misunderstanding, but aren’t you making exactly that error above? DNS both predates and exposes networking infrastructure that isn’t the web.
And for what it’s worth, I would consider DNS decentralized: it’s a system of different servers that coordinate to share information. No one party owns the DNS network.
Confusing the fact that DNS’s information is authoritative for centralization would presumably ensnare every blockchain as well, since they entire point of a distributed ledger is to be authoritative.
But I figure that’s the least of blockchain’s problems, given that the underlying network topology of even the largest distributed ledgers tends to be around a dozen “big fish.” Not very decentralized in practice.
The root servers kind of do, along with central authorities like ICANN which gatekeep the TLDs
Confusing the TLD situation for ownership is making the same “distributed, authoritative” mistake.
As there are multiple places where the family photos can be posted (Facebook, 500px, Google, etc), that demonstrates that the web is decentralized.
What it may not be is distributed, where one can easily self-host:
* https://berty.tech/blog/decentralized-distributed-centralize...
The presence of choice only means there are multiple centralized systems not interconnecting.
This is why the web is highly centralized despite choice and why Web3 won’t work. Web3 is focused upon federated solutions. A federated solution is semi-autonomous, less centralized than the web but not fully decentralized.
Things exist on a spectrum. I have autonomy to choose where to (e.g.) host my family photos, and even self-host on a VPS or even perhaps at home (either with a static IP or dynamic DNS). While things may moved towards more centralization with Big Tech, does not mean it is centralized, just perhaps less decentralized / distributed.
> multiple centralized systems
This phrase approaches an oxymoron in my mind. (Bearing in mind de/centralization being on a spectrum.)
Autonomy is the ease with which people are free to move between those governments.
I suspect people view the web as decentralized because they cannot divorce their thinking from concepts like content is king and a client/server model.
But you wouldn't say that the governing of Earth in total is centralized (e.g., the UN (with their black helicopters/s)).
Going back to my link:
> As its name implies, decentralized systems don’t have one central owner. Instead, they use multiple central owners, each of which usually stores a copy of the resources users can access.
> A decentralized system can be just as vulnerable to crashes as a centralized one. However, it is by design more tolerant to faults. That’s because when one or more central owners or servers fail, the others can continue to provide data access to users.
* https://berty.tech/blog/decentralized-distributed-centralize...
Or Baran (1964):
> For example, type (b) in Fig. 1 shows the hierarchical structure of a set of stars connected to the form of a larger star with an additional link forming a loop. Such a network is sometimes called a "decentralized" network, because complete reliance upon a single point is not always required.
* https://www.rand.org/content/dam/rand/pubs/research_memorand...
This is a hard truth that web3 will have to face: centralization happens naturally in decentralized systems.
As a recent web3 example, when twitter teased the idea of verified NFT avatars, half the comments were saying things like that they should piggyback on OpenSea verification so that people don’t just re-mint other people’s NFTs.
OpenSea has taken investment a $10b valuation, to me that implies that the people financially backing web3 think they’ll be able to extract rent by being a central player in it.
For pyramid schemes, the idea is that you have to pay to enter a network, and you make money by recruiting new members. The system breaks down once there a no people left to recruit, which happen quickly due to the exponential nature of the scheme. The core of a pyramid scheme is the filiation system, there is no such thing in, say, a NFT market. You can make a pyramid scheme with cryptocurrencies, but none of the popular trends are. Ponzi schemes are also not pyramid schemes.
Ponzi schemes involve a promise of unrealistic returns on investment, and they do get paid, at least in the early phase. The trick is that the returns come from new investors, and the system breaks down when people stop investing. A Ponzi scheme requires a secretive central authority that pays out the promised interests. And by nature, cryptocurrencies have no central authority and make no promise, so, not a Ponzi scheme.
Instead, crypto-schemes are simply based on speculation. And if it is a scam, it is a different kind of scam.
If we start calling anything a pyramid/Ponzi scheme, the very idea of trade and investment become a pyramid/Ponzi scheme. It will always be the case that early adopters will get more money if the (honest or not) thing takes off, this is a direct consequence of the risks involved.
> The web is decentralized
I know you just want to throw in the invalid "look at me I'm an old school hacker" definition that can't be argued with, but it isn't. To serve content, it has to be hosted somewhere, and that place must be a single entity, and it must have infinite money to replicate the content for infinite users. On freenet or torrent, this isn't the case. Then there are also the other 700 ways the web is centralized...
what?
imagine it blows up in popularity
do you get the problem now?
maybe the web per se, but in practical terms it depends on the DNS which is decidedly not decentralized.
You're just along for the ride.
Terminator 3
Home Alone 3
Jurassic Park 3
Police academy 3
Alien 3
The list is long...
Gnome 3
All these third iterations…
The client libraries for Ethereum are called “web3”, and have been for half a decade at least. Web3 has been a core concept promoted by the Ethereum team from the beginning.
Say what you will about Ethereum, it is not the “latest crypto pyramid scheme”.
In other words, the price of Eth is derived in part from real demand for the use of the services of the Ethereum network. If speculative interest in Eth were to completely collapse, its price would not go to zero, because demand for the use of the Ethereum network would sustain it.
I imagine that you would argue that demand for Ethereum network services is itself driven by pyramid schemes, and is therefore inflated. Perhaps. That does not mean, however, that Ethereum itself is a pyramid scheme. And certainly not all of the demand for Ethereum services is illegitimate.
A pyramid scheme requires that cashing out of one's investment depend on new investment money entering the scheme. It is not unreasonable, however, to purchase Ethereum with the hope that the price will go up because it will need to be purchased by users of the network, who will pay higher prices in the future when demand for the network's services goes up.
You can disagree with this proposition without calling Ethereum a pyramid scheme. Just because you think Eth is a bad investment does not necessarily mean that it is a pyramid scheme.
I don't think etherium is necessarily a bad investment if you have no moral or are not well informed. Many scams can be profitable.
I think you can only say this if you believe that the services provided by the Ethereum network are only valuable to individuals perusing illegitimate activities. Do you really think that there is not any legitimate use for Ethereum?
> I don't think etherium is necessarily a bad investment if you have no moral or are not well informed
Is it immoral to invest in Ethereum if you truly believe in the promise of the technology? Are you saying that anyone who believes in the promise of the technology is ill informed?
web2 – make it easier for people to create stuff, but it's all centralized (boo), which in turn makes the interop of the original web much less present. i.e. gatekeepers everywhere
web3 – allow the unfettered creativity of web2 with the benefits of decentralizing in web1. You can use one "account" to login to any web3 service, people can send money to that same account, etc, etc.
In other words, web3 allows you to do things that weren't present in web1 at all without all the web2 centralization/gatekeeping baggage.
For many things like reddit, digg, youtube etc there was only a web interface to these things. They were of and for the web
Web 1.0 evolved with user generated content and now more of the world's information is locked up behind a login screen than before.
What this has to do with what is being sold as "web 3.0" is not clear. Blockchains have their uses but it's not the web.
The only change that occured in the era marketed as "web2" is strong attacks against decentralization.
This, obviously, assumes that you believe users retaining ownership of the content they make is a real and necessary benefit. I'm not sure about that yet. I don't really see why people need to.
Unfortunately however, regardless of whether web3 content ownership is a good thing or not, the current cohort of web3 businesses and evangelists seem more interested in shilling their own coins and many-thousands-of-dollars coding courses instead.
Sure you can verify the hash and signature etc, but no one reading an article is going to bother verifying the signature apart from the real die-hards. Heck my mum can't even verify she typed in the right URI and ends up on all sorts of crazy scam sites (e.g. "I went to google and they said I had to call them about a virus and pay them £150 to fix it").
If someone posts something to reddit3, then someone copies it and reposts it again with a different hash and sig, what will happen? Nothing I expect.
The benefit of web3 is about users being able to control how their content is published by web3 websites. Reddit3 would not be able to claim ownership of user's creations. Like I said, I don't know if it's necessary or even that useful for users to have that control, but people definitely complain about it a bit. Maybe it would be.
So web3 is exactly like web2 then?
It is time to get rid of gatekeepers, toll collector and have control of our data & communities. Web 3 is a way do that and will take about a decade as the infra builds out. So it certainly is BS for big tech landlords and their retinue.
Crypto, is part of that plan for payments. Certainly there are scams but no different than scams today - where we are treated like lab rats subjected to data stimuli, our data stolen without permission or compensation.
Sure I will take the Internet of 90s any day over today’s web with its surveillance capitalism. But that boat passed long back, as will the current one. Web3 allows users to be in control of the network(s) or communities collectively. That certainly is good for most folks.
https://www.businessinsider.in/finance/news/amazon-has-a-spe...
Good products are usually driven by commercial entities. I would love to use something else besides Android or iOS that is not backed by a commercial giant, which WORKS, is not full of spyware and has a healthy ecosystem but nobody is making one, nobody is able to put 2 and 2 together there.
Are the products you buy online going to physically move differently when you use the "decentralised" internet? Are the small businesses going to revive because of that? AMZN did not kill them, the consumer did. It's the consumer that spends the dollar and dictates such outcomes - none of which are going to be fixed by Web 3. For me, the centralisation that amazon provides is a feature, not a bug. You will not kill AMZN until you understand why it works the way it does and start competing with them. Don't tell me it can't be done because AliExpress is giggling in the background.
I have a few friends doing a fortune on AMZN without even seeing the products they sell (FBA). Adapt or die, it's just nature.
Mailservers not running from your house is not really all that bad...for the rest of us. Imagine all the spammy software that your friends and relatives install on their computer being able to spin one and blast campaigns.
[1] https://github.com/docker-mailserver/docker-mailserver [2] https://mailu.io/1.8/
The fees aren't too crippling (around 15% of revenue) and FBA is an absolute Godsend for anyone based outside of the US trying to crack into that market (similar for Europe).
I could not thank Mr. Bezos more for the opportunities Amazon has given my family. The income from FBA was a major factor in my decision to quit my job back in 2020, and because of that my daughter can be with her daddy every single day.
You just don't hear about it much because it's a boring news story.
Call it what you want, but please don't sully the web with your plat du jour crypto antics.
Also for what it is worth, the web has been decentralised from the very start, I don't see what the fuss is about apart from just everyone getting rich selling the next hot coin/token/whatever.