Comment by imtringued | Hacker News Reader

Comment by imtringued | Hacker News Reader

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Let's write a microblog!

The case against crypto.

Crypto is credit money with zero obligations allowing all participants to walk away without notice.

Modern fiat currency is credit money created in accordance to promised obligations that bind participants over a time period.

Limited supply crypto is trying to be exclusive akin to feudalism, past economic power is strongly entrenched, families can pass their amassed wealth to their heirs while late comers are doomed to have very little economic power.

Unlimited supply fiat is trying to be non exclusive akin to democracy, past economic power means very little and is eroded through inflation, new comers can go to a bank and get newly created money if there isn't enough in the economy.

Fiat currencies are a tool of trade that serve their institutions/governments to increase the efficiency of their real world economy. Militaries protect themselves, the land and its people but not the currency.

Cryptocurrencies do not interact with the real world beyond expending energy, they are bounded by their underlying blockchain. The miners(supposedly equivalent to militaries) only protect the blockchain/currency, they don't even protect themselves let alone the land and its people.

If you want to gamble buy cryptocurrencies, they are better than the casino.

Most of these statements are the opposite of truth.

For example, creation of crypto has no or extremely little variability in obligations for many years. Statement about no obligations is false. There's at least an obligation to be able to transact.

Creation of fiat can be changed on a whim with a poorly formalized goals. Obligations change too.

When the percentage increase of the currency is slower(gold, most crypto) than the value of that currency increases over time, and as you say, it becomes entrenched.

When the percentage increase of the currency is faster(most fiat) than the value of the assets increases over time, and opposite of what you say, it(being assets) also becomes entrenched.

The only fair system is one in which is stable over the long-term, and where past value is equal to current value.

>When the percentage increase of the currency is faster(most fiat) than the value of the assets increases over time, and opposite of what you say, it(being assets) also becomes entrenched.

Productive assets don't entrench wealth because of inflation, they entrench wealth because they create returns to capital. The generationally wealthy would be just as wealthy relative to the rest of the population if fiat inflation had been zero for the last century. If you don't want wealth to beget more wealth you need to not only avoid deflation, but also eliminate interest, dividends, and other mechanisms by which holders of capital receive real returns to that capital.

I don't believe this to be true, but understand that the systems involved are fairly chaotic so I'm willing to change my mind. The reason that you think these things are the drivers of wealth is that they rely on the currency/asset imbalance and then simply leverage on top of it. Fix the underlying issue, the down-stream effects goes away.

I give Japan as an example of a country that just so happens to be balancing their money supply with their increase in assets. Their interest rates are flat and the only return you get on them is based on very real risk that can go the other way. Their stock markets are just about flat and is only recently hitting a new all time high after 30 years. Capital should give returns, yes, but increased productivity should be shared by all, so you should see slight wage increases.

You could replace Crypto with Gold to see your arguments make no sense. Including the energy required to mine. Also many cryptos aren't unlimited (like Ethereum).

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