Who can look me in the eye with a straight face and say bitcoin protects against volatility? That bitcoin "protects exactly" against mismanaged economy and corrupt government?
It's become my mantra but I swear people on HN don't understand how crappy life can get, how oppressive governments can get, how many rights and things we take for granted can be taken away by thugs, and believe a super high tech complicated software stack can magically fix it. sorry if that sounds harsh, but you know what, it is also harsh to listen to hungry angry oppressed people and constantly claim "bitcoin can fix that for ya".
In 5y, 1 USD went from 3.44 Turkish Lira to 17.94; Sri Lankan Rupee collapsed overnight from ~200 to ~360 per USD. Argentine Peso went from 17 to 134 per USD in 5 years.
I can easily look you in the eye and say that for countries with shitty governance and poorly managed economies, Bitcoin is a far better bet than their local currencies. So far, a common alternative was USD but after it was demonstrated that even a nuclear armed country like Russia can lose its USD reserves overnight, I think a lot of countries would be looking for alternatives. Bitcoin and Gold are credibly neutral alternatives.
I agree. People living in USA or Eurozone may not see the need for BTC since they have good stable governments with well-managed currencies[1]. People outside of those pockets, however, need some option to escape from their governments' corruption and tyranny. BTC is a neutral, and hence better, option. Because if your country falls out of favor of USG, your savings just became a collateral damage when USG imposes sanctions n all.
[1] this sentence might come as a shock to some since news media constantly paints apocalyptic picture. But US and Eurozone is a really good area of the world to live in.
I guess you have not lived in a third world country. I have, for multiple decades. And I have seen first hand how black market or under-the-table transactions work. There is a huge economic activity in corrupt countries which happens out of government taxation reach. Bitcoin is a perfect instrument for that. Bitcoin or USD or Gold are great options for preserving value of your savings in such countries. For ordinary transactions, Bitcoin or USD are much better since Gold is harder to exchange in exact quantities needed for the transaction.
Depending on your place of residence, USD may have a high tail risk if your country decides to cross USG's plans. For those places, better to have a non-USD non-EUR alternative. Only Gold and BTC come to my mind.
> [...]but after it was demonstrated that even a nuclear armed country like Russia can lose its USD reserves overnight,
That's purely due to sanctions, which can affect cryptocurrency as well due to the entire ledger being public.
Woah boy, that's a lot to unpack. I guess you heard some news about recent sanctions to TornadoCash... and then you thought that cryptocurrency can be confiscated/frozen as what happened with Russian's USD reserves?
What has happened so far: some arrest of at least one developer, some freezing of some (centralized-)stablecoin accounts, some closure of github accounts, etc. But pure (as in, not centralized stablecoin) cryptocurrency stored in cold wallets cannot be frozen at all; and that's the whole point of cryptocurrency.
Cryptocurrency is vulnerable to this as well because, even if you have a cold wallet and run your own node, your transactions are still public and taint every wallet that receives your coins. Vendors might not want to trade with you so that they don’t get the same treatment, exchanges might not want to risk their entire liquidity to cash your BTC out, etc.
And how many Turkish people can hold something that is not Turkish Lira as easily as bitcoin?
Can you really say with a strait face that you think BTC's volatility is worse than literally losing your bank account with all it's content?!
People who live in places like the US forget that the average fiat currency has a lifespan of roughly half your life expectancy (37yr irrc).
Ask Luna holders for their opinion on this matter, it seems they experienced pretty much the same thing (or holders of any other crashed cryptocoin). Bitcoin itself might not be down 100%, but it also lost a serious amount of value in the last half year. Plus, there are a lot of ways to completely loose your bitcoin, be it hardware failure or scams.
So yes, I can say with a pretty straight face that Bitcoin is not a great protection against volatility, which is what the original comment claimed.
The problem about crypto is that all the scam coins and get-rich-quick schemes gave a bad name to that famous piece of technology.
No. But BTC is worse— it comes with all of the volatility and the risk of losing your account with all it’s content.
Imagine a pool. If you fill it with a lot of water rapidly, there's going to be a lot of turbulence. Doesn't mean that in the long run, as it gets filled, it won't settle down.
The volatility argument doesn't consider the fact that it's gone from zero to something big players and states invest in in 13 years. And that frankly it was not good enough to be digital cash but it's getting there. That's bound to cause a lot of turbulence.
Hang on tight
Buy more coin
It will stabilize some day
But economically and mathematically speaking, a deflationary currency tends to be less volatile than an inflationary one.
Do whatever you want with your money.
While Bitcoin might be a deflationary currency (i.e. max supply), cryptocurrency more generally has infinite supply (anyone can start a currency).
Just like our products, fiat currencies have planned obsolescence and limited lifespans, this is because permanent money is a fantasy that cannot exist in the real world. Almost nothing in the real economy is permanent, not even humans.
If you want a currency that lasts forever it will have to not only have children, it will also have to be able to die like humans.
You are conflating volatility and corruption
Bitcoin won't protect you against the former (and neither did the lebanese pound), but it does offer protection against the latter.
I can do so. As volatile as crypto is, it is still much less volatile than a national currency in a collapsing country.
People in the west and in 1st world countries are much too privileged to see this though.
I have no idea why you'd think so, thank you very much.
https://en.wikipedia.org/wiki/Economy_of_the_Socialist_Feder...
https://en.wikipedia.org/wiki/Hyperinflation_in_the_Federal_...
You have no idea why Id think the average person living in the west right now is dealing with significantly less problems than people living in a country that is experiencing full scale economic collapse?
Really? I think it is pretty self evident that most people living in the west are dealing with much smaller problems than people living in places like Lebanon right now.
If someone is unable to see this pretty basic fact, that their lives are likely much better than the people experiencing full scale economic collapse, then I guess that privilege is stronger than I expected.
You have now edited it, which fair enough, but therefore I think your "really? You can't imagine why I'd say this [...]" Is unwarranted and I cannot meaningfully address it anymore.
I am not sure why you are speaking in hypotheticals. The economy of lebanon did collapse. And if you were holding bitcoin, you'd be much better off than holding that local currency.
Economies collapse all the time, around the world. And because the coin is a global market, it is insolated from local collapse.
> it really doesn't matter what sort of currency you use
But it did matter! Just look at the current situation, in Lebanon right now. If you were holding the local currency, you'd be screwed. If you were holding a global currency, you'd be much better off.
Good luck finding a way to convert your bitcoin into some sort of locally fungible currency while that economy is in a state of collapse and the crypto brokers are on a similar path.
Think about the existing right now situation. Imagine if someone, in lebanon, had 50k USD equivalent, in a lebanon bank.
Now, imagine the same person, who had 50k equivalent value, in not the lebanon bank.
Who's better off? Clearly the person who had the global currency.
> You can say "buy from the global market" but that requires having money
Oh, you mean like the money that now wasn't confiscated or inflated away to being worthless? That money?
Yes, that is what you would use the money for. The money that now wasn't taken away, or was not made worthless, is what you would use to buy things.
Situation A: you have no money. Or you have 10 thousand percent inflated money.
Situation B: you do have money, in a global currency. And yes that money can be used to buys things from the international market.
Situation B is better. Much better.
Of course there are many reasons, probably the most prominent being that you need to download a 400GB blockchain on your device to actually be secure. No wonder all these Bitcoin people want their technology to have as few transactions as possible, because popularity will ruin it's decentralized nature.
This means you will need a custodial solution like lightning which merely uses game theory to create rewards and incentives for following the rules in a decentralized way but ultimately it is still custodial and knowing and trusting the counterparty is still superior.
This gets to the crux of the problem. Due to the custodial nature of scaling Bitcoin transactions, you will have a centralised organization that can be shut down by the government. The local Bitcoin bank or PayPal equivalent will have the exact same problem as any other bank.
If you argue that this entity can exist outside of the borders of the collapsing country, so do USD banks. Despite its flaws even the USD is a better medium of exchange than Bitcoin.
Farmers do not accept payment in any currency on their farm. They sell futures on the commodity market before the growing season begins to lock in a price and hedge against volatility.
> you need to download a 400GB blockchain on your device
You can use light wallets such as Electrum without trusting a third party, and with no loss of security (though it potentially sacrifices privacy).
Even if that weren't true, a 512GB drive costs $10 these days. That shouldn't be a barrier for anyone.
> This means you will need a custodial solution like lightning
Lightning is not custodial. You do not need to trust any counterparty.
etc.
This entire comment is very misinformed.
Could be the reply added to most of HN comments about Bitcoin/crypto.
Thanks for replying.
Situation 1: Person has no money, or worthless money.
Situation 2: Person has 50k USD worth of global currency.
Situation 2 is obviously better. Massively. It is absurd to pretend like situation 2 isn't clearly, obviously, and massively better.
Yes there are some issue with global trade, or whatever. But it is clearly, and obviously better, to have 50k USD in an offshore account, or 50k worth of currency somewhere else.
Think about this situation, specifically. No, it is not just "you can keep your Netflix subscription".
That is a bad argument. It is worth more than that.
> Various regulations and logistical impediments
No. You would be wrong to just say "regulations" means that having 50k worth of USD money somewhere is now worthless. I can promise you, that anyone at all, living basically anywhere in the world would be better if if they had 50k USD in an offshore account.
You cannot seriously, with a straight face say "yep! Having 50k in an offshore account is worthless!"
Good job I didn't say it seriously then, or at all, for that matter.
I was writing in context of a thread about a guy who "robbed" a bank to get back his own money to pay for essentials. I still don't see how owning crypto or any sort of global currency would have helped him (or the millions of other Lebanese currently in the same boat) very much at all.
Awesome! So then you agree that having 50k$ of equivalent value, outside of the lebanon bank would not be worthless, and would instead be worth a lot! Glad you agree with me.
> I still don't see how owning crypto or any sort of global currency would have helped him
Well, it would be because now they have 50k$ of equivalent value, in a place that is not the Lebanon bank. Therefore the Lebanon bank can't take it from them.
That is how it would have helped. Having that money, outside of a local collapsing banking system, would mean that any of those people would now have 50k$ of value, in a place that the Lebanon bank can't take it.
And you agree with me on this, because you are not saying "yep! Having 50k in an offshore account is worthless!".
You aren't saying that. Which means that you agree with me completely, that it would not be worthless to have that money, or equivalent value of that money, in an offshore account.
You can try to get out of your country with your wealth intact.
It doesn’t magically solve all your issues, but it’s definitely better to have some access to your wealth than having it confiscated.
Sure, but how scalable is that? I'm not really interested in solutions that are only going to work for a tiny % of the population.
People in countries like Venezuela and occupied Ukraine have managed to make it work.
Yeah - my take on this is if the government has failed the people to this extent then the people have the right to exit and the government should not be able to hold them and their wealth hostage. Naturally if the government can, it probably will, which is why the capability of self custody provided by bitcoin (and other cryptocurrency) is such a powerful thing.
Sure you could get this by hoarding cash or gold in theory, but in practice that's way harder and it's way harder to safely move it, especially across a border.
With BTC you memorize 12 seed words and you're good, can go anywhere and recreate access to your wealth on the other side safely.
You're basically making the same argument as 'just swap all your money for a different currency.'
It's interesting, I seem to always see these comments on behalf of people who might find crypto useful to avoid local currency issues, not people actually doing it.
Bitcoin believers always say - "not your keys, not your coins". I am sure you have heard it a million times by now since you also seem to be keeping tabs on which crypto exchanges are collapsing.
You're basically making the same argument as 'just swap all your money for a different currency.'
No, that is incorrect, the Lebanese pound did not lose it’s value through volatility. It lost it’s value through debasement, a fractional reserve and outright theft by the central bank of Lebanon.
Here is an article that explains the process [1].
Successive governments used bank savings as a piggy bank beginning after the 1975-1990 civil war. Things accelerated in 2016 when the banks started paying unsustainable interest rates on savings to entice savers in a grand government-sponsored Ponzi scheme that ended in 2019 when banks could no longer pay back savers and froze accounts.
Had the savings been held in Bitcoin, on-chain, no government or central bank could have stolen the savings. 1 BTC=1 BTC on-chain and there can be no debasement, no freezing of funds, and no ponzinomics. Despite Bitcoin’s short-term volatility, as a self-custody asset, it would have been the ideal store of value for Lebanese savers. Remember, the Lebanese pound has been debased by 10x, even if you can access those funds. Bitcoin truly does fix this.
[1] https://www.reuters.com/world/middle-east/lebanons-financial...
Your criticism doesn’t sound harsh, just wrong.
It's because of fractional reserve and banks and governments colluding to print money out of thin air or just spend most of it.
Volatility is a different problem: I agree btc is not the solution, we need a political solution for that.
And maybe a currency backed by real things (not necessarily precious metals, common goods would represent the economy better). Either the bank has it and I can get it anytime or it's fraud.
Have you ever considered that the way money is currently structured requires ever more creative solutions that sound pointless and counterproductive yet are entirely necessary to keep it alive?
There have also been several instances in time where BTC has lost 80% of its value (and many more instances of 50%+), so it doesn't protect against the downside risk of needing money in an emergency.
Sell your BTC for cash, in person.
> There have also been several instances in time where BTC has lost 80% of its value (and many more instances of 50%+)
Better than the 90% inflation (or withdrawal "correction") in Lebanon.
This is totally absurd - you need to buy real goods, they are priced in USD, there is shortage of USD in the country. noone will trade with you
your only chance is to pay bitcoin to someone abroad who can exvhange them for USD there and ship goods to you that you can trade locally
There are P2P non custodial exchanges where you can sell your BTC in person (e.g. LocalCryptos), in case you need to stop hodling for some sudden expense, like the medical bills for your dad.
And the latter has no listings at all in Lebanon.
The entire reason he held up a bank is because NOBODY HAS CASH in Lebanon.
The hospital might not take it directly, but he’d still retain control of it and be able to find a way to exchange it for something the hospital does take.
In a country with a sound financial system, 6 months of expenses in a savings account might suffice. However in a country without a sound financial system you'd want 6 months of expenses in a savings account to protect against your own job loss, and maybe 6 months of expenses in bitcoin/offshore account to protect against a local financial system collapse.
Hoarding USD could also work, but it may be harder to get and it's definitely harder to protect/move in large amounts.
Clearly holding Lebanese currency in a bank may not be useful for holding emergency funds. But I do not believe that it's been shown that at point in time an asset which can drop 50% in value over two months, which is the type of acute timeline in which an emergency can occur, and requires transacting into LBP anyways in this scenario, is useful for holding emergency funds either.
A: his money would be on the blockchain where it's unable to be seized by the bank.
B: as Bitcoin is a world currency it's unlikely would face inflation to the level that the local currency has
C: if he was unable to change Bitcoin into the local currency to pay for the medical procedures, he could transact with someone like a money changer instead
This scenario is kind of the whole reason the Bitcoin exists
And inflation is also not so much a concern if the value of the asset itself drops 50% in two months.
This is Lebanon, not someplace like France. This could be a money changer with an AK at his side, a buyer with AK at his side, money and BTC changes hands and after the confirmations finish out on the BTC side they're on their way, simple as.
Somewhere your money has to go into the countries financial systems. Which makes sense. Money isn’t just for trade. It’s to exert soft power.
It's all very safe though. There is some guy standing around the corner with an ak behind a counter, and you can be sure 7.62mm size holes end up in the head of anyone who would try to rob the people doing the exchange. On one occasion the money trader made a very obvious calculation heavily in my favor, that he likely did not intend to make. I tried to walk away quickly with the money, and 3 men chased me down. I'm quite sure if I had stolen the money instead of merely gotten "lucky" they would have chopped an arm off instead of nicely asking to reverse the transaction (which I found wise to do).
The whole thing could be extended to BTC quite easily, and it's been awhile since I've been to the ME but it wouldn't surprise me if they've already added BTC to the mixup. From a western perspective it sounds insane to hear large sums of cash could potentially be traded easily and readily in a relatively "impoverished" nation on the street but for these people it's just regular business in the cash-economy world they live in.
If the banking system doesn't let people use their own money that they've deposited, I don't see what else he can do.
Whether you're talking USD or Lebanese Pounds, you could fit this into something much smaller (eg. an envelope, with reasonably large denominated bills).
That's like saying TOR is centralized because you interact with a "centralized" peer.
the comment I responded to specified a "money changer". I don't know if you've used one before, but they quite literally are forex broker/dealers.
Even if we move the goalposts from the "money changer" which was specified, TOR is not really comparable to in-person exchange (not to mention an individual can certainly be considered a centralized entity). Anyways, sure, let's call it a counterparty if you wish, the semantics debate isn't really relevant to the point.
> Though the money supply did contract sharply, neither trade, commerce, nor industry came to a grinding halt.
> How? People created their own currencies, to substitute for the collapsing money supply. They kept using checks to pay one another, but then, people’s checks began trading within communities. Here’s how Antoin Murphy, one of the few scholars to have studied these strikes, which took place in the 1970s, describes it: “a highly personalized credit system without any definite time horizon for the eventual clearance of debits and credits substituted for the existing institutionalized banking system.”[0]
There is also a great chapter in Money, The Unauthorized Biography that covers it.
The only time I've used one and not a bank is when making land crossings between countries in Central America. The money changers are just a random assortment of dudes walking around the bus depot ready to swap between 2-4 different currencies. And I've only done it for a small amount of cash to have on hand in case of immediate need.
I imagine a cottage industry would pop up as a result of situations like Lebanon given the government enforced cash shortage. I remember reading an article a while back, which I'm failed to dig up, which described a similar system appearing in Venezuela as inflation was getting out of control. Money changers would come to you to swap bitcoin for other currencies.
But I understand your point and this would be a sketchy alternative for the amount of money discussed.
If Bitcoin drops in value substantially, that has the same effect to retail shoppers as inflation.
And with all of the bonkers things to happen in the last decade, seeing Bitcoin drop to a small fraction (like 1/10th) of its current value in the next 2-3 years seems unlikely but not entirely out of the question. And that's a pretty big downside when talking about ones' life savings or even ones' emergency fund.
The major problem with this is that these people have to use systems that’s full of scams and the value of their money is controlled by people in the first world with tons of cash to burn.
Yes, Bitcoin doesn't solve THE inflation problem, it solves one out of many.
Unless you use an exchange, which a lot of people do. You don't have to, of course, but you could also keep your savings in cash - which would not only avoid the above problem, but also rid you of the need to exchange it.
Which incidentally is the same problem of cryptocurrencies: you need to have good security practices to not lose money to malware or simply forgetting the password
When you choose a bank you also have risks, but a different set of risks. It's more like systemic risks, that everyone else would also be affected
Lebanon has problems with power availability so there is that. You need internet access to use it.
Also it protects you but it protects a robber or hacker if they get access to your keys.
It has price fluctuations that might make USD more attractive.
Also you need to convert from BTC to a regular currency to buy things. Well almost everything.
He's got strong opinions and a somewhat dour persona, but as Lebanese-Palestinese he's lived in a very different environment than what we're used to here in the West.
If you keep an open mind and understand where he's coming from, I think he's good some insightful ideas on Bitcoin and its role in economic upheaval.
FWIW this episode turned me from a "fuck any form of crypto" stance to an appreciation of BTC the technology. All the other scam coins and Ponzi schemes can't collapse to zero soon enough.
Anyways, to add some information to this: https://bitcoinmagazine.com/culture/bitcoin-should-be-the-sa...
The Lebanese lira might as well have been a cryptocoin and the Lebanese banks might as well have been exchanges. Anyone keeping their savings in their own home wouldn't need to rob banks to get their deposit out, just like anyone who keeps their Bitcoin in their own wallet doesn't run the risk of exchanges collapsing around them.
Are you going to print a paper key, put it into waterproof capsule and eat it?
Instead you could just open a bank account in a foreign bank, and they will always allow you access to your money
Even assuming the foreign bank would not “just” refuse you for not being a resident, or being a significant risk, or not accepting your identification, or whatever. Then your Lebanese bank would surely wire the money there without any issues, and your Lebanese employer would be happy to do so as well, and of course there are no laws stating that only liras are legal payment currency for services rendered in Lebanon.
I have a few friends who worked in China and the default is you immediately move any money out of the country as soon as you can. It's simple to bring it in, but getting it out can range from "here are 5 forms to fill out" to "sorry, we aren't processing transfers at this time".