Cryptocurrencies – An Assessment by Reserve Bank of India
m.rbi.org.in
m.rbi.org.in
This won't ever happen because pretty much nobody who matters wants this. BTC today is firmly a "store of value", where "value" is measured in USD, and the only point of it is to buy it low, and sell high, for USD.
You won't find many today who think buying pizza in BTC is a good idea.
BTC is also completely unsuitable for using as a currency given the block size limit.
Now: we use the Crypto.Com Visa™ credit card with a Bitcoin sticker on it.
Because the more you think about Bitcoin and the more you learn about how fiat works the more broken the world seems and Bitcoin becomes all that matters.
Despite being just numbers it's the only value in the world that real and you can truly own. You can't even truly own a house in most of the world.
You can transact with your bitcoins *today* without being affected by the blocksize: just use the Lightning network.
It's a solved problem, so it's stupid to bring it up again and again nowadays.
Until the point that nobody wants to be the USD bag holder.
Plenty of boomers still don’t think of saving USD as a terrible idea because they were trained their whole life to have faith in it. They are being robbed in plain sight, sadly. But younger generations won’t put up with it.
Most people already don't "save" USD. They save equities and then trade them back into USD when it's time to retire. I don't see how BTC changes this other than adding another equity to the list of stuff you can invest in.
With sound money, people could work and save without needing to constantly gamble just to maintain buying power.
They'll see it as this thing that the old people are all hoarding, and they'll have none of it... Why sign on for an uphill battle for BTC over any other token?
Seems to me that crypto projects should have tangible side effects, so that future generations can value them (or not) based on whether they want to see more of those effects. Compared to that, a fat BTC wallet in cold storage looks like somebody who sucked value out of their community rather than reinvesting it to make positive changes. Why reward such a person by valuing their tokens?
If bitcoin replaces fiat, bitcoin becomes the main representation of value. It no longer goes up against a trading pair of fiat. I speculate that its buying power would stabilize and become fairly static.
> Let’s assume BTC replaces fiat (USD)
If BTC replaces fiat, I don't believe it would increase in buying power at a rapid rate. I think it would gradually increase in buying power over time only because the total supply will gradually shrink due to lost coins / dust /etc.
Apparently yes, a bunch of people are buying cars now at temporarily inflated prices when prices are expected to tank
https://autos.yahoo.com/analysts-warn-possible-used-car-1510...
That's exactly what happens with computers and, last I heard, computers are still being purchased.
If you mean to say it's not deflationary because there's a limited amount of it that doesn't technically decrease, that doesn't help.
First, Bitcoin does lose coins over time. When wallet keys are lost, or "dust" happens, that means that money can't ever be spent again. This is independent of the USD value.
Second, the economy can grow. Eg, if the population grows, or a factory starts producing more goods, then there's now more stuff per unit of currency. That's still deflation.
I'm not sure whether you're opposed to the USD compared to other currencies, or cash in general opposed to stocks/bonds etc. For the former point, the US military's strength* ensures that the dollar is likely to stay the strongest of currencies even in a medium-term environment (say 50-100 years in my estimate), with only the Euro coming close.
For the latter, I don't think that was what the earlier posters were talking about.
* I'm not saying spending so much on the military is necessarily a good idea, neither am I a US citizen
wow, I don't know what kind of hope this is, and I avoid commenting on any crypto currency[0]. Since the comment appears to be genuine, I've felt compelled.
[0]: calling it them "crypto" is an insult to the rest of the cryptography, though
We're operating under this illusion that all value is the same because we use USD as a unit of account, but it causes a lot problems. To give just one example, look at US policy in Latin America in the 80s: We would give weapons to terrorists, and the bargain was that once they had overthrown their governments, the new ones would respect our money. Then, having made ourselves into aristocrats, we'd come in and make off with their natural resources (e.g. Chilean copper).
Better would be that if you want to influence people in a community that you aren't a member of, you have to contribute types of value that actually align with the values of those people.
Of course having only two types, as GP suggests: fiat-value and crypto-value--that's a pretty impoverished type system. I'd rather have carbon-footprint-value and space-exploration-value and infrastrucure-maintenance-value... so that the allocation of types of value in my wallet are sort of an expression of my political will. This way, poison-the-well-and-sell-bottled-water-value can be rejected by pretty much everybody (as it should), while other sectors remain untarnished.
How would you represent/express space exploration value?
By holding a token and using it as money, I give power to whoever controls its issuance. I'd like more choices about who that is.
Because the money we use is not specific about its intent, people have to accept or reject it all together. It's too big to fail. You can't decline to do business in slavery-money because you have no way of knowing which money is slavery-money. It's all just money-money.
In a typed-value system, you can notice that a certain kind of value is associated with economic activity that hurts people, and you can respond by setting it to 0% in your wallet. This will prevent you from accidentally contributing to its continuation. If all of the good guys do this, then the only people left for the bad guys to do business with will be other bad guys--which will make it more expensive for them to operate.
Sure, factions will emerge, but rather than being delusional about their own efficacy and a drag on the entire system, unsustainable or otherwise objectionable economies will eventually find that nobody accepts their money, and they'll have to change their ways.
You shouldn't be able to retire on wealth made at future generations' expense. Instead, saving for retirement should involve contributing to endeavors that future generations will be happy about.
> If I have gold and you have space coloration there will always be a trade that makes it worth while.
By keeping gold to yourself (and out of the electronics that are useful for making space ships) you're holding back the projects that I think are important. So there's one reason for me to not value your gold, what reason do I have to value it?
Do you mentally compare USD to other random obscure currencies? Of course not. And in a future when USD has been replaced, nobody will care to mentally determine USD prices.
Another way to consider it: when you go to the grocery store, you don’t think about how many sats something costs. Because USD is still king.
My employer can't pay me in crypto because they only have USD flowing in to their business in exchange for their products and services.
What you describe would require basically the entire economy to somehow abandon its fiat currency and switch to crypto - - - I think if this scenario is supposed to be taken remotely seriously, you have to explain how that scenario is supposed to develop - something more than hope that in the future...
Maybe you should try to look further than yourself. Miners are getting paid in crypto, crypto exchanges are getting paid in crypto. It just has to start somewhere. Investors with crypto staking are getting paid in crypto, or hodlers see their assets increase in value.
Diamonds are getting bought with crypto: https://www.cnbc.com/2022/02/10/billion-year-old-black-diamo...
Houses in Dubai are getting bought with crypto.
I would say crypto is already kickstarted, let's just see how far it can take us.
For example, miners are getting paid in crypto. OK, but what are they using to buy the computers they use and to pay electric bills and the like? I'm guessing is is hard currency...
It will take us only up to the point where we can no longer convert crypto into actual currency (you know, "money"). After that whoever has crypto will be left "holding the bag", and all the boiler-room operators will have long-ago cashed out.
I wish we could just have digital currency that is traceable, secure, and stable without all the insane hyper-libertarian social-Darwinist scammer stuff.
What is actual currency and why does it have value? And do you feel "actual currency" is perfect as-is with no room for any improvement?
Of course if you are asking as a rhetorical question - there is room for improvement. BUT - there have been millennia of variations on the concept, experiments, and many failures. As recent history, why don't you read about the United States prior to the Federal Reserve Act. Each state (or even smaller jurisdictions or communities) could produce their own currencies. Company towns operated on their own scrip (analogous to their own chains). How was that? Imagine taking a trip from Town A to Town B and discovering that your money is not accepted at the Town B tavern and inn. Or, is accepted but at a 50% discount to Town B's currency. Which is not accepted for purchase in town A. That was reality in the US and in other places too.
Actual modern fiat currency is still imperfect, as is every cryptocurrency, every computer, and every other thing devised by humans. But. Somehow we have around $90 trillion (equivalent) of economic activity on our humble and imperfect planet, operating on fiat currency systems.
So, I'd ask back, (1) what are the shortcomings of this amazingly successful world economy that operates on fiat currencies and (2) how, precisely, does cryptocurrency improve upon these shortcomings, WITHOUT creating negative externalities that negate proposed benefit?
But if we're going to talk about "room for improvement" crypto is much farther from being perfect than the US dollar, Euro, Yen and virtually any other fiat currency that seem to have so many issues according to the crypto enthusiasts.
In fact, crypto currency can't even function as a currency at this point. Not even close.
Gradually, then Suddenly
Unfortunately I believe we get there via chaos, winners, and losers. I don’t believe the transition will be equitable and clean because I don’t see any way that would be possible. And yet, it’ll be worth it in order to have sound money.
One, flight to safety. When markets crash, risk assets sell off in favour of dollars. (Yes, crypto still behaves like a risk asset.) If the rupee is selling off in favour of Bitcoin and that prompts a crisis, the rupee will enter a death spiral.
Two, more potently, the world’s financial rails run on dollars. Hell, most of crypto runs on dollars. For a capital controlled economy like India’s, Bitcoin is an off ramp for converting INR into USD.
I guess letting a Bank judge his own competitor is an even worse offence?
You might not agree with the principles of Bitcoin, or the valuation, but it’s certainly transparent.
Those inner workings are analogous to the SWIFT protocol. Memorising its messenger codes won’t teach you much about banking.
Where it matters—who owns what, controls what and to what end—both are opaque.
These systems have evolved over a very long period, with that comes mostly good but definitely some inefficiency which is periodically cleaned out when stimulus reach a breaking point.
I wouldn't be so quick to dismiss the current system, it's on balance been a good system - doesn't mean it can't be improved of course but I think improvement should be the name of the game rather than wholesale rejection just because you don't understand why it is the way it is.
> Unknown to you maybe, not unknown by bankers or bureaucrats.
The difference is that I, as someone who is not a banker or a bureaucrat, do not have access to the information. With Bitcoin the code and developer communities are completely public.
Central banks are no more licensed than your local ICO. Some are better than others. Given the issues India has had with its currency, they might not want to throw stones...
Pray, enlighten us.
https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis...
Which would be more appropriate to your quote, i believe.
Ps. Heb alvast die uitdrukking nog nooit gehoord in België ( Never heard that expression in Belgium)
https://hoezegjeinhetengels.nl/slager-keurt-zijn-eigen-vlees...
Over het algemeen gebruikt als de producent een oordeel geeft over zijn product.
als in "Wij van WC eend ..."
Isn't that what Bitcoin is about? Getting rid of these often political decisions?
It's not "about" anything, it's a piece of tech. There is a bunch of cryptobro culture around it that varies depending on which part of the web you frequent, some of which slants heavily libertarian that would espouse the sort of things you are talking about.
Ultimately Bitcoin is still a solution looking for a problem. Banks aren't the problem because they happen to work quite well already.
One thing is sure - there are people who don't agree with that.
For example: people whose money was confiscated during https://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_fina...
> All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India.
And so they may, for probably 4th or 5th time. Cryptocurrency on- and off-ramps can be somewhat controlled, but overall it's a pretty difficult thing to ban in practice.
That applies to just about everything. We have laws against tax evasion, fraud, murder... but people can (and do) still do these things. Just because a law doesn't or can't physically stop people doing things doesn't mean we shouldn't have the law.
The point is, if it is banned then you will severely constraint the ecosystem. On-off ramps and other intermediators will have to shut down, institutional participants will be forced to withdraw etc etc. Sure no doubt a handful of participants will flaunt the rules and continue to participate, trying to keep the dream alive, but for all practical purposes it'll be dead in the water.
[0] https://www.merriam-webster.com/words-at-play/is-it-wrong-to...
Crypto isn't likely to go away and the whole situation resembles to a global prisoners dilemma, I think the best governments could do is to come up with a sensible regulation.
Crypto is only fun when it’s arbitrarily going up in value, which would seem to be somewhat curtailed but these bans.
Of course crypto can be used to obtain (illegal) drugs, but it’s not clear that “sorta hard way to sometimes buy certain kinds of also illegal things” is as inherently valuable..
- Crypto is fun for people who are in a repressive government (Canada).
- Crypto is fun for people who live in a country that is being mismanaged monetarily (Venezuela/Lebanon/Turkey).
- Crypto is fun for people who want to leave a country with capital controls (China)
- Crypto is fun for people who want their capital to not be debased unless they join a ponzi scheme (Stonks)
And how do the valuations of crypto currencies differ from a Ponzi scheme?
Banning crypto also creates a massive incentive to find alternate ways to sell to this market which is quite large given India's population. Only this time the government gets nothing.
If you treat it like a casino then that is true.
Ideally, it takes over fiat currencies altogether and takes away the government’s ability to Arbitrarily create money out of thin air whenever it benefits them.
I don’t understand how people can compare the austerity debacle and resulting outcomes in Greece with what the US was able to do (and turn a profit on) post financial crisis and decide that somehow the Greek way was better, countries shouldn’t be able to use monetary countermeasures, and these constraints will magically produce better politicians who will get it all right, because otherwise it would go wrong.
We’ll still get the incompetence, it will still go wrong, and the results are just worse all around.
Crypto fans obsessed with the handling of the financial crisis should brush up on the concept of Panglossian optimism.
From what I understand a huge use case for crypto is sending remittances. About 12 billion USD was sent to India from the USA in 2017 and the fees associated with a crypto transaction pale in comparison to that of Western Union.
The down side, of course, is the question of legality and market volatility.
This is not a use case that I personally have a use for, but I certainly understand the appeal of it.
Sending 1k USD to India via Wise costs 7.5 USD. The only reason remittance via crypto currencies seems cheaper is because pretty much every coin trades at a premium on Indian exchanges.
The earlier bans were indirect (RBI asking Banks asking Payment processors to close down exchange ramps) and didn't stand up to legal scrutiny. A direct ban via legislation ought to work in practice. Exchanges (and other companies offering crypto in India) have already de-risked against this by getting registered in Singapore.
A ban doesn't have to work perfectly, it just has to dissuade enough users.
That much it can probably accomplish, especially given the current level of censorship of the Internet.
The thing to keep in mind here is that India's bankers are giving their opinion on the current biggest competitor to their power and livelihoods. And the report says as much.
> The basic purpose of blockchain, or more generally the distributed ledger, the technology on which these crypto-products run, is to make financial intermediation, and therefore banks, redundant.
Imagine thinking any bureaucracy can give an honest assessment on the thing that makes them obsolete. Any opinion they give out should be evaluated through the lens of them losing their power and livelihoods. Any report from central bankers on crypto is the equivalent of McDonalds executives giving their opinion on Burger King.
However, a source can be completely biased and still be correct. Any counterarguments need to be based primarily on the provided evidence and conclusions, not the "trustworthiness" of the arguer.
This is an oxymoron. How can you mathematically enforce a purely social concept? Property rights aren't tangible things; they are creations purely of law and of the societies they inhabit. Can you mathematically enforce that no one build a house on the land I own? That no one picks an apple from my apple tree, except with my permission?
I just don't see how cryptocurrency helps the unbanked--what does it bring that M-PESA doesn't bring? Furthermore, how are those benefits worth the externalities of cryptocurrency, specifically the massive energy consumption that undoubtedly fuels the climate change that is slowly worsening the lives of many of the unbanked it's purporting to help?
Land or an apple tree aren't natively digital assets. So no, they cannot be cryptographically enforced. Bitcoin is natively digital. If I alone have access to a wallet (i.e. memorized a seed-phrase), my rights to that bitcoin are enforced cryptographically and defended by the power of the network. "Ownership" meaning I have exclusive rights to "spend" them.
"Social construct" still absolutely comes into play though. The social construct is money. Bitcoin being money is a manifestation of a social construct. Are you suggesting something being a social construct means that they are not "real"? Because that would be a MUCH larger debate.
> I just don't see how cryptocurrency helps the unbanked--what does it bring that M-PESA doesn't bring?
A trustless and self-sovereign way to store value? This becomes increasingly important the more corrupt your Government is. For example, if your government wanted to freeze your money because you participated in a protest they don't like.
> Furthermore, how are those benefits worth the externalities of cryptocurrency, specifically the massive energy consumption that undoubtedly fuels the climate change that is slowly worsening the lives of many of the unbanked it's purporting to help?
Electricity consumption, in and of itself, does not fuel climate change. CO2 emissions do. Also depends on the relative climate cost between one system and the system it looks to replace. For example, electric cars are bad for the environment if you look at them in a vacuum. But, they are better than ICE cars. So they are applauded.
You didn't address the difference between unilateral government-bank cooperative freezing of accounts en masse vs. what's required to strong-arm keys from a single person. Do you acknowledge they aren't even close to the same thing?
You are wrong or being dishonest. The government calling up the bank and saying "Hey, friend. Freeze these 5000 accounts. Thanks!" clearly has less friction than strong-arming 5000 people for their wallet keys.
> Good luck find someone trust worthy to trade into and out of any fiat currency with only your wallet and without using or involving a centralized exchange or program.
I literally do this exact thing pretty frequently. HodlHodl and Bisq both allow you to do this in a trustless and decentralized way. And things will only improve with projects like 'TBD' from Dorsey.
> When goods and services aren’t able to be purchased in the crypto denomination...
But they are! Let's see... this week I've bought coffee with bitcoin, I've bought a new golf hat, I bought a magazine subscription, and a VPN subscription. This month I bought an iPad utilizing bitrefill. Early days? Sure. "Aren't available" is bullshit though.
> The only benefit would be if crypto went up in relation to fiat currency, but the ones getting rich are those earlier holders only.
What? You're just wrong... Bitcoin is up 250% in the last 2 years. I've been in for 1.5 years and it's literally out performed everything else I own.
I mean, this huge portion goes straight from "unbanked" to using a convoluted highly technical solution that has high volatility and no legal recourse whatsoever... stonks!
As far as high volatility goes, the question you should be asking is "volatility, relative to what"? The rate of Bitcoin "inflation" is known and transparent. Now compare that to the power of the virtual printing press and the effects of inflation on fiat currencies' buying power.
Now you're thinking! And you're starting to see why crypto is a much bigger deal that it first seems.
There are so many "Oh shit, if this then that" moments as you figure out where we're likely headed.
Some of crypto’s biggest backers are on Wall Street. For obvious reasons. Crypto is making Wall Street billions while letting them preach from beneath a populist veneer.
The crypto ecosystem is almost exactly the same as the massive wealth concentration in America, except worse. The narrative from those at the top, and the willingness of people to defend them, is the same.
People rabidly defending Elon Musk is equally strange. He’s trolling on the internet, not looking out for you.
And if you take inflation overhead, consumed by miners and other services to keep BTC or ETH running (5% to 10% annually), there is not much advantage over existing banking.
It doesn't, but Satoshi thought it would. See for example the Genesis block.
> There is a whole crypt banking sector that provides exchanges, custody, lending...
Back in the day, the idea was to make every citizen financially sovereign. It didn't work in practice because those services you mention are useful. (Just like crypto has trouble working as a payment infrastructure, because chargebacks are an useful and demanded service)
We’ve had plenty of alternatives and most of them have been tried and studied. Having strong central monetary policy has resulted in large societal benefits.
Gold, free banking…state-backed currency is the historical exception.
Please do more research on the ‘Free Banking Era’, private currency was common.
Crypto is global, inclusionary, no worry about counterfeits, highly liquid, etcetc
Source?
> You’re probably imagining yourself to be in that 1%
My dream is much simpler. I’d like more time with my wife and daughter.
- has given the banks the right to freeze bank accounts of suspected protesters without evidence and granted the banks full immunity. Even if the banks are mistaken or outright abuse this right, they can never be held liable in a court of law
- has suspended the rights of the accused to defend themselves in a court of law stripping them of all due process rights
- can now force two truck companies to carry out the government’s orders or face severe punishment. The tow truck companies haven’t even been accused of any crime but they have been stripped of their right to autonomy
Civil liberties, once lost, are difficult or impossible to recover. I don’t believe the government can resist using their new powers again, now that the genie is out of the bottle.
The right for dissidents to peacefully protest is essential to the functioning of a healthy democracy. With these latest moves, the Canadian people are decidedly less free. I don’t think the loss of freedoms was worth the price. This time the government targeted a movement that many Canadians disagree with, let’s hope for your sake they never target a minority you personally support, lest you suddenly find yourself unbanked.
> Civil liberties, once lost, are difficult or impossible to recover. I don’t believe the government can resist using their new powers again, now that the genie is out of the bottle.
It might be new in Canada but governments have been doing this (using similar emergency laws) during the pandemic for a while. An anti-authoritarian person may feel that's extremely scary, while someone else may ask what else should a government do to prevent millions from dying, given that there are no pandemic-specific laws.
I understand how frustrating this is for Canadians who don't agree with either the protesters message or their tactics, but the suspending civil liberties for all Canadians is a dangerous precedent. It should only be used as a last resort and I don't think the Canadian Gov has exercised all their existing legal options yet.
> What could the government do?
1. The leader of the Canadian government is the leader of all Canadians, even those he doesn't agree with. Rather than paint the entire protest movement as racist, misogynists with unacceptable views, one reasonable first tactic could have been to engage in dialogue with the protesters to hear out their grievances, perhaps with the aid of a mediator. Dialogue leads to de-escalation, marginalizing dissidents leads to escalation as we have seen here.
2. Before resorting to suspending civil liberties, access to the courts and due process, perhaps the government could have started by enforcing the laws already on the books. This is what they did at the Windsor-Detroit border and it appears they were able to end the blockade without violence from either side. It appears that in Ottawa, the police were reluctant to enforce the existing laws. This is a different problem and pretending the government had no choice but to employ draconian measures is disingenuous.
"Illegal" is whatever the government decides. In Canada, they have written broad laws to make most forms of protest illegal. I am annoyed by protests for things I don't care about (or even dislike), but I acknowledge that protest has an extremely important place in democracy. It has been the force for positive change throughout history. To acquiesce to the de facto position that protesting should be illegal - and that is the effective message here - underscores a profound lack of understanding of the importance of the deeply democratic act.
I can't recall the exact Monty Python line, but the sentiment seems appropriate now: "you may protest in the designated protesting square in the fenced section behind parliament. Just don't make any noise."
To quote the infamous American Congresswoman Alexandria Ocasio-Cortez, "the whole point of protesting is to make ppl uncomfortable."
If the answer is close enough to "no", then you know this is not a democracy.
It conflates two different, unrelated concepts: the tulips and the mania.
We have not banned tulips because of the Tulip mania.
Bitcoin and blockchain are genius technology, on par with the greatest achievements in mathematics and theoretical physics.
That some of this technology is misused and misinterpreted, incorrectly assessed, used for scams, has no bearing on the technology itself.
How one can say that with a straight face is beyond me.
And I say this as someone that find blockchain mechanisms/ideas very interesting.
how is that not genius?
I don't think your appreciation of blockchain is wrong. I think it is your appreciation for the greatest achievements in theoretical physics and mathematics that is.
yeah of course, but there are many other genius discoveries that had to go along with it
many mathematical concepts (most in fact) are abstract concepts in N dimensional spaces. It is theoretical physics when theory and reality have to match.
that is the genius of Bitcoin, a theory that actually works in practice
As far as I can tell the experiment failed, and we should shut it down before it does even more harm than it already has.
> Bitcoin and blockchain are genius technology, on par with the greatest achievements in mathematics and theoretical physics.
You're basically demonstrating the mania that you decry. I'd love to hear on what basis you can possibly argue that bitcoin/blockchain is somehow on the same level as the discovery of gravity, or the discovery of radioactivity, or the theory of relativity.
on a more serious note, for what is worth, discovering radioactivity was accidental, there was no premeditated thought process, so that does not count ;-)
now when it comes to relativity - that indeed required a radical idea, the constancy of speed of light. Which required a genius. Like bitcoin. I did not say bitcoin was better than the theory of relativity, I said on par.
The only genius about those technologies is cryptography. If that's enough to make technologies build on top of it on par with the greatest achievements then every single crypto trojan is one of humans greatest achievements.
the first person building a airplane is a genius,
the CEO of Spirit Airlines is not a genius
I think we can both agree that the Wright brothers were pretty genius. They no doubt accomplished something that can be described as a feat of engineering.
Now, the CEO of Spirit airlines clearly isn't a genius, but he doesn't build things anyways, so it's kind of an apple to oranges comparison. Let's instead use an example that's closer to the original cryptography to crypto currency comparison shall we?
Let's compare the Wright brothers to an engineer called Josh working at an airplane manufacturer of your choosing. I will go with Boeing but you choose whichever you would like.
Whenever Josh builds a new plane he uses knowledge passed down and refined by previous aviation engineers, knowledge that can eventually be traced back to the Wright brothers.
He builds on this knowledge and as such creates great plans. This makes him a pretty good engineer!
But does it make his plains "on par" with the greatest achievements of humanity? If so, at what point do they stop being on par? Will they ever? Is every plane one of humanities greatest achievements?
And if that's the case, is every tire on every car one of humanities greatest achievements?
I think we both agree that cryptography is a great achievement of mathematics. It's something that will see uses well into the future. But that's cryptography as a whole, not a specific algorithm.
Crypto currency and blockchains are not world altering inventions. They are simply products of engineering, build on mathematical knowledge.
And while you might be able to argue that they are good engineer, they definitely are not mathematical or theoretical physics achievements. They are simply a product using those achievement, just like databases, rockets and cars are.
True, but now we grow them as flowers, rather than hold them as a potential source of value or use them for exchange.
Are you saying that there is no business that transacts in tulip bulbs?
Are you saying there are no resellers of tulip bulbs? No tulip bulb traders?
> The average bulb grower in Holland sells almost $200,000 worth of bulbs every year,
It is also worth noting (though not directly relevant) that the "Tulip Mania" probably never happened, it is all a myth or greatly embellished story, told and retold countless of times, each time growing in claims.
Makes for a captivating story to audiences looking for validation.
>AEs have the political power to control the crypto companies. The recent instance >where the US recovered bitcoins from the hackers of the oil pipeline in US, is an >example that notwithstanding claims of non-traceability of cryptocurrencies, AE >Governments wield enough power to access the records. India or most other > countries would lack such advantages.
Uh, who's claiming that? Cryptocurrency transactions are _super_ traceable.
> AEs have the political power to control the crypto companies.
You won't find scammer's name on block explorer.
I don't know the details of the case well enough, but this is a usual type of comment on HN, and my a priori assumption would be it's probably oversimplifying reality and ignoring context as is also usual.
> Crypto messaging does not appear to be directed at the rational or sensible.
Don't ask the winery owner if their wine is good, as they say.
But anyway, it's very readable without almost any financial jargon, so anybody can read it and make his own mind on the topic.
* The RBI (Reserve Bank of India) Governor and Deputy Governor have, more than once, publicly expressed the view that all cryptocurrencies should be banned for all purposes. A few years ago the RBI even instructed banks not to work with cryptocurrency exchanges, but that was overruled by the Supreme Court two years later with the justification that there was no law to do that and that this action was disproportionate.
* The Prime Minister of India, Narendra Modi, has publicly made statements that cryptocurrency is “spoiling the youth” and that all countries should come together to control (which in his view is banning) them.
* In the recent annual budget announcements, the finance minister announced an unexpected 30% tax on all income from “virtual digital asset transfers” without allowing any set offs (except the base cost). Also added was a 1% TDS (tax deducted at source, or tax withholding) for every transaction calculated on the transaction amount!
Given these biases against cryptocurrencies and the strict need for capital and current account controls on Indian Rupee transfers that the RBI is addicted to manage (it actually prefers a steadily but continuously depreciating Rupee), it’s not a surprise that public utterances about macroeconomic stability would be published as a stance. The RBI and the Finance Ministry have been struggling to get a grip on the economic levers (with COVID making it worse), and believe that anything they cannot control easily is a threat to them, first and foremost.
The Indian government is more focused on protectionism and controls than on capitalizing on opportunities.
Crypto is an opportunity? Heck no, when you want to replace the existing system there must be some outstanding benefit which the new system should provide. Crypto has no such thing. In fact it would be trivial for the government to come out with some e-currency since UPI (https://en.wikipedia.org/wiki/Unified_Payments_Interface) is already in place.
You're (perhaps unintentionally) misrepresenting their case as saying "competes as a currency" being the main reason for the ban. They lay out the many reasons for it, including (and I'm giving their opinion here, not mine) its inherent lack of stability, the energy usage, control being in the hands of foreign companies/economies, and also that when people try to use it as a currency, it can lead to destabilization because it tilts the advantage in favour of currencies of A[dvanced]E[conomie]s. The last point is the one you mention, and even it isn't a concern about cryptocurrencies themselves being competition, just it opening doors for stronger and potentially destructive competition from already stronger currencies.
Do you mean the majority of the world’s population? The goal is make everyone except crypto-hodlers into fiat bag holders?
Edit: more inclusive
> crypto-bros
This makes me lose respect for your entire take. Name-calling a diverse group of people is always a display of ignorance and bigotry.
Future generations will benefit greatly once the transition is completed. And THAT is the goal. To create a world where sound money is the default. Where you can work for money, save it, and live your life without worrying about what bullshit the fed is up to.
Okay, but how massive? What is acceptable to you relative to the world population?
> But it’s NOT the goal.
Why is there so much marketing and messaging around “Don’t be left behind”, similar to how you phrased it earlier?
> Much like other chaotic events that resulted in increased freedom for regular citizens.
Maybe you could provide some examples that display a similar situation?
> live your life without worrying about what bullshit the fed is up to.
Monetary policy needs to influence wages etc, and lead to equitable outcomes vs inflation. Crypto won’t solve societal ills like this.
I can answer for myself. I speculate that a transition from fiat to crypto is inevitable unless a black swan event occurs. (Eg a new way to represent value is invented that is superior to fiat and crypto that is currently inconceivable today)
If the transition to crypto does occur, it clearly benefits early adopters. In late phases of the transition, there will be very few people willing to trade crypto for fiat.
Herein lies ammo for the crowd shouting “CRYPTO IS A PONZI”. But the truth is that all desirable possessions are this way. If you bought beach-front property in a great city decades ago, you’re going to be able to sell it to the next “sucker” for a huge profit. Likewise, Apple stock. Likewise, a baseball rookie card. Etcetc
> Okay, but how massive?
This is a difficult question. It depends on if the transition is a gradual, long term grind. Or if some event occurs that shocks the system and causes a mad rush to cryptocurrencies. I hope for the former and fear for the latter.
How many people are left without crypto? How do you envision this scenario playing out?
> In late phases of the transition, there will be very few people willing to trade crypto for fiat.
Given that supply is limited, how do people transition sustainably? If the supply is only hodlers, they obviously don’t want fiat. Why is anyone exchanging for fiat once the transition is certain?
> But the truth is that all desirable possessions are this way
But currency is a tool, not a “desirable possession”. It shouldn’t be limited to niches of the real world population. Not everybody needs beach front property, but they do need money.
> I hope for the former and fear for the latter.
As one prepares for this future, what is the expected usable value of the coin they are hodling? How do you know if you have enough for when fiat is worthless? Should one own a full Bitcoin? More? Less?
> But currency is a tool, not a “desirable possession”.
So people don't desire to possess $1,000,000? This is clearly not a truthful statement.
> People with life savings in fiat that refuse to transition will be the clear losers.
Who is forcing them to transition? Is it the government? Why did the government change currencies to crypto, without aiding their citizens?
> Sadly, I think it will be elderly that do not understand crypto
What about normal people? What price and coin do you suggest I buy, and in what quantity to prepare myself for this future?
> So people don't desire to possess $1,000,000?
While I don’t deny that people like large numbers on their bank statement, the goal of owning so much currency is to exchange it for products and services. They don’t care if it’s USD or BTC, as long as everyone else accepts the same. What they will care about is when you tell them that you have to exchange fiat for BTC/etc at a volatile price with built-in deflationary mechanisms. Again, you’ve ignored my question about supply and how to sustainably on-ramp the entire world populace into crypto.
I've enjoyed this thread but I can only provide it so much time and effort. Hopefully, you will find other sources to help answer your questions.
> Who is forcing them to transition? Is it the government? Why did the government change currencies to crypto, without aiding their citizens?
Free markets & will-toward-freedom forces the change. In theory, governments could accumulate crypto now and airdrop it to citizens later.
> Again, you’ve ignored my question about supply and how to sustainably on-ramp the entire world populace into crypto.
There is no such God-like control over this transition. I've clearly stated that I don't believe it will be pretty and equitable. It will be messy and chaotic.
Well duh. Way to prove the point that we need to evade government control. Zero self-awareness. No examination into why people may not trust their government. Just do what we say. This from the same government that already demonetized* the currency used by the same people they want to be trusted by.
People may not trust the government (and I say this from the UK, so I appreciate I'm still relatively lucky all things considered), but in terms of evading Government controls, I can't believe we won't see governments thinking about this if more people are choosing to find ways around obscuring their income and contributions to the things that keep society from completely falling apart.
FWIW - not arguing against cryptocurrency, just positing idea that the whole my-finances-are-secret bank-yourself crypto utopia might not be all that.
Also, banks being regulated, don't make me laugh.
If people kept it simple and bought crypto like bitcoin or ethereum, they’d be fine. They get lured into get-rich-quick scams because of poor education and decision making skills.
I don't understand whats the gameplan here.
So I don't like carrying the burdain of military adventures in the middle east, and the guy over there doesn't want him money to be wasted on space while we have problems down here/oversized military/given to poor people.
Suppose now we are all 100% successfull at thos tax evasion (which we won't be), whats next? Government collapse and anarchy? Like what's the gameplan?
As for what's next, collapse/anarchy etc, who can really say? As always it's up to the people. Bitcoin places sensible limits on government spending power (and therefore on government power more generally). Governments now have to compete and act sensibly with the tax money they're "responsible" for in the same way any of us are responsible for how we spend our money.
And replaces it with something _even_ worse.
LOL.
Tether has entered the chat....
But you are not making them accountable, you are just making everyone poorer. They could still get away with collapsing the economy because of democratic deficit/partisanship/qualified immunity/shortcomings of the justice system/etc. These are the real causes.
> As for what's next, collapse/anarchy etc, who can really say?
If someone is advocating a change to the global financial system, I'd like a better answer than this. Communists sound like grand planners in comparison
I do not believe in endlessly kicking the debt spiral can, towards repression of future generations.
Bitcoin enforces fiscal soundness by virtue of not being debase-able, and providing much-needed competition to national currencies.
I like how the two options are pay insane taxes and inflation or anarchy.
Feel like I’m being held hostage.
>Everything else in the current system is fine
Do you really think anyone here believes that?
There are many others.
Which?
> Which?
Precious metals, commodities (which is a large enough category in itself).
Go ahead and pass the law. I'll wait.
It'll never happen. But let's say for the sake of argument it did. Another law could come along to change it again. Why trust laws and corrupt government officials? They are unnecessary soon-to-be antiquated relics of days when no better option existed.
In 1995, 1 USD = 32 INR.
In 2022, 1 USD = 75 INR.
Add to that the fact that USD is also losing value itself.
How much of this change is the fault of Indian government?
Same with "bypassing" the regulated financial system. It's an alternative, and the reason it's unregulated is because it's new and governments haven't pulled their finger out and fucking well regulated it - they were lazily hoping it would blow over, and now that it is big enough to be a threat they're blaming it for existing.
Exemplary politicking.
If I transacted in, say, cans of beans, would that also undermine sovereignty and control of the economy?
Sounds to me that the mentioned sovereignty and control are very fragile. Sovereignty should come through consent of citizens and voluntary participation, not tyranny.
And since the Rupee devalued 2.4 times against the USD in the past 27 years, I argue that such inflation control was abused, punishing savers and encouraging debt, essentially translating to financial repression.
From what I seen in my country's past the government will always get the blame and is asked to pay when people get scammed, then the goverment adds new laws to prevent future scams.
Say you borrow some money to buy a house and you use a foreign currency, and a year later that currency doubles, you get screwed. This actually happened and people asked the government to fix it. Sorry for poor details I don't like financial stuff so avoid it if possible
https://www.businessinsider.com/the-swiss-franc-surge-crushe...
https://en.wikipedia.org/wiki/Caritas_(Ponzi_scheme)
It's obvious that giving the power to crash your economy to a foreign group is losing sovereignty, what happens if some hackers or government crashes bitcoin? I suspect the government will be blamed as usual because it did not see it coming and prevent it.
As long as the government is not imposed by a foreign nation or some Illuminati then I would say the majority of the population should also take all the criticism not only the institution.
IMO if the population wants the government to protect them from scams and foreign financial group playing with their money then it is what it is, a weakness of democracy, where majority rules.
Also no country defines sovereignty through voluntary consent. Laws applies to you whether you agree or not.
Sure, laws apply to the ones disagreeing, but in theory, the government serves the people, not rules it.
Central banks however, have a large amount of control over everyone's financial life, yet the signal from voting is only very dimly forwarded to this institution, and there are limited checks and balances governing it.
However i am not very clear as to how the US (and some other countries) are regulating it? What are they doing differently?
1. Govts can (and should) regulate -exchanges- who are setting the exchange rate at the same time as offering to be the bank for poorly educated crypto holders, so they can use folks money to buy low and sell high.
2. Govts (already) make it a legal obligation to declare and pay tax, crypto is no different than dealing in cash.
People who break the laws of their country should be tried under those laws, ie: tax evasion.. this isn't new to crypto.
What the RBI are saying is they object to crypto removing their ability to.. (see point 1.) control the supply. When they talk about managing the economy, what they mean is 'their ability to print money'. Furthermore they argue their ability to make up the rules as they go is enshrined and justified by the notion that 'that's how it's always been done'.. well welcome to technological advancement? Crypto is FAR from perfect right now but it is based on a premise that a truly fair and un-cheatable system is possible, and that has govts terrified.
They don't print money to "cheat" or because they want more money, that would be stupid - the overall amount minted in most countries is barely above the replacement rate for currency lost/destroyed/missing. If they were doing it to profit, the amount printed is just a drop in the ocean comapred to the amount made through tax, so it would be a stupid idea.
Governments control the money supply specifically to control the inflation rate, which is a lever they can move to respond to market conditions, keeping it low when the economy is growing, and raising it during recessions to incentivise investment. When governments can't do that, recessions hit MUCH harder, see: greece, portugal, ireland, and many other countries in the eurozone who weren't able to use monetary policy and were hit by devastating recessions as a result.
In any case, you "work" for an open source currency? I presume some money is earmarked from the transaction cost to pay developers?
Hint: across all countries in europe, the average inflation rate was also well above target.
You may note this number is less than 4% of the 10 trillion earmarked for the stimulus, and was raised primarily to increase inflation intentionally during the coronavirus to stimulate investment in the economy. It's also less than it has been at many points in the past.
None of these numbers are unusual or unprecedented. In 2014, the fed printed $300 billion dollars worth of notes. In 2013, they printed 472 billion.
What is done with the money that is printed? It is not part of the federal government's spending. It is used to buy bonds and other securities from banks as part of quantitive easing. The federal reserve is not instructed by the government. Board members are appointed by congress yes, but keep their jobs for 14 years. Right now, the board consists of 3 republicans and 1 democrat. The chair is a republican.
You're welcome to take a look at the Federal reserve currency print order archive here: https://www.federalreserve.gov/paymentsystems/currency_print...
Seems like we came up with this solution after creating the problem.
Venezuela, for example?
This is like saying that all pilots are actually trying to crash airplanes because some airplanes have crashed in the past.
Here are 19 other countries with double-digit inflation right now:
https://www.statista.com/statistics/268225/countries-with-th...
My speculation is that, on a long enough timeframe, every country eventually becomes a loser when they are using government-controlled currencies. Corruption is inevitable..
This is absolute bullshit.
Literally your little bubble in your mind manages to get along just fine.
The economy
Exists.
It's right there - I can go to the store and buy things with my money. Don't be ridiculous.
https://www.statista.com/statistics/268225/countries-with-th...
Damn pesky facts. Always messing up the way you Feel!
Political views aside, many believe economic policy to be a key pillar of a government and anything threatening this power will be squashed at all costs in countries where this pillar exists.
Where this pillar exists being the key here, which is why we are seeing national adoption in countries that lack it. Despite this, an outright ban is indeed lazy and removes a country from the global Crypto economy.
Crypto (by design) bypasses all these controls. Even large crypto exchanges cannot abide by them: https://www.theblockcrypto.com/post/108178/india-law-enforce...
Very unsurprised at the skepticism, of course. There's a lot of to-be-expected fear over loss of power, but even as someone who believes crypto can be a good thing eventually, I appreciate this analysis.
That is incredibly useful for developing countries and the ecosystem of p2p allow in and out to fiat in a relatively smooth way
If you have a good non authoritarian government stable coins can be used to rollout a payment solution cheaply that works in any place an internet exist that could save you tons of money
You can use cryptocurrencies to get around currency restriction or failing currency which is mostly political problem and you use the crypto networks to help you in that
This is one of the weakest arguments in favour of crypto as it is not like you can't work with the current systems.
crypto currency network replaces swift which is a more cumbersome system with higher price and delay of days to send money between countries
The paper misses the context in which Bitcoin emerged. The "Global Financial Crisis" woke up a lot of people to the reality of "fiat" (dixitque Nixon fiat pecunia et facta est pecunia) and its implications. During this time in Germany Merkel coined the words "Bankenrettung" ("rescue of banks") and "alternativlos" ("no alternative"/"the only way"). This indeed did cause - at least in the western wolrd and in some parts of the middle class - a dislocation [...] [of] the legal, social and economic fabric of society.
Now, today, 15 years later the vast majority of the so called cryptocurrency-market does not even try to emancipate itself from the financial power that be, no, it has been effectively captured and tamed by "AE" and become one of their convenient tools they can use to "destabilize" EE's, playground for CBDC, another rigged enrichment game ...
The people who became "lambo" realized pretty fast how convenient the system is once you are rich. So they mostly don't really challenge the establishment except in "style", too "risky", ya know.
Why go through the effort of a ban?
Sounds like it will die off naturally.
> Writing in the New York Times Adrian Chen noted as far back as 2013 that Bitcoin is built on a weird mix of speculative greed bolstered by a utopian cyberlibertarian ideology and likened it to a digital gold rush. Indeed, hyperbole continues to characterise all aspects of the crypto world. Crypto messaging does not appear to be directed at the rational or sensible.
Adrian Chen's article... https://www.nytimes.com/2013/11/27/opinion/much-ado-about-bi...
Dan Olson's now epic "Line Goes Up" https://youtu.be/YQ_xWvX1n9g ... a masterful takedown of crypotcurrency and NFT's, it also demonstrates what a shit-show this has all become. Much MUCH worse than in Chen's 2013 article.
- Money you hold in a bank can't just evaporate if the bank collapses. It is insured in most countries like US, UK, EU upto an amount.
- Even on things we speculate, lik stock prices just because your broker collapses doesn't mean you lose the stocks you own. In case of crypto, your broker can go down with keys to your crypto.
How's giving the government more money going to solve anything?
currently there are more crypto currencies with intrinsic value than there is goverment crypto, as fiat by definition has no intrinsic value
The link is more like an opinion piece than an analysis.
Compare this with a fiat currency whose value is supported mostly only by a government forcing their citizens to pay taxes in this fiat currency, and forcefully taking down alternatives.
Which of the currencies has more intrinsic value? What happens when the government can't manage to ban the alternatives anymore?
Cryptocurrency is not intrinsically valuble in any sense aside from the value people place in it, which is not "intrinsic". In fact it is incidentally the same reason the dollar has any more value than its material cost. Also your argument that cryptocurrency is good because anyone can use it is strange, literally everyone is allowed to use the dollar, and pretty much everyone agrees that a dollar is worth a dollar, to the point that calling such a belief "faith" sounds ridiculous.
And to come back to the case of currency, the exclusive use of a single government-sanctioned currency is a recent phenomenon, not some deeply ingrained tradition. Local communities, governments and businesses frequently issued their own, and long distance trades were settled in commodities.
Government created currencies with broad uptake are very old, not sure where that idea comes from that it is something new. Ancient Rome didn't just settle in commodities across the republic and empire. Early coinage was a major contributor to the creation of commerce and it was often tied to government/rulers. Those coins might not have been totally exclusive but nevertheless kind of a lingua franca version of currency precisely because they had enforcement behind them (social as well as governmental).
Anyone can hold different views on what societies and governments should or should not do, mandate, etc. - but until you get the votes (or power) to enact your views it will be tough going if you want a different society.
If you plan to hold crypto long term manipulation might be bad in that it might damage the long-term prospects of crypto, but that's literally just a question of what time horizon your investment is vs what time horizon the manipulation happens. If Tether turns out to be a scam it only matters if it turns out to be a scam before you sell.
No, if crypto becomes the dominant medium of exchange. In this way it would be determined by factors of supply and demand same as money has always been for thousands of years.
The dollar is more susceptible to manipulation than crypto. If you cared about manipulation, you would be an advocate for literally anything rather than the petrodollar - crypto included.