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?
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".