I find it very ironic that Satoshi created Bitcoin with the objective to be more resilient than banks, with the famous genesis block containing "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks". A decade later, the bitcoin creation generated an entire industry of "crypto banks" that are opaque, played with customers money and went bankrupt.
It's a beautiful lesson in human behavior and greed. You're given a perfect form of money (Bitcoin) that you can safely hold with minimal effort and your shortsighted greed ("yield farming") forces you to lose it all to a conman.
The silver lining to all of this is that people might actually start listening to Bitcoin maxi's after this year.
Ha, wow. Yeah no, Bitcoin is not a perfect form of money at all. It-
- uses vast amounts of energy
- can only process a few TPS
- confirms slowly
- has limited quantities which warps economies
- is irreversible in cases of theft or fraud
- is lost forever if you lose your keys
And that's just off the top my head. I get what you're saying - "not your keys not your coins", but the idea that this system is somehow an optimum is just plain wrong.
For those of us who do not fetishize decentralisation, those negatives are unacceptable in any form of 'money'. Even if you do believe in decentralisation, it's clear that this is far from perfect.
Bank branches, ATMs, armored cars, computer systems for the banks, computer systems for card processors, credit rating firms, etc. Bitcoin replaces all of that and, comparatively, for significantly less energy. This is a surface-level argument intended for shortsighted thinkers.
- can only process a few TPS
- confirms slowly
On main net. Lightning network can outpace Visa.
- has limited quantities which warps economies
By warp, you actually mean makes them fair and natural. It encourages free trade, merit, and competition. Not fiendish scamming and Machiavellianism.
- is irreversible in cases of theft or fraud
Which is good. It increases the need for reliable actors in the world and creates a citizenry that's more discerning about whom they spend their money with (i.e., building strong, trustworthy relationships).
- is lost forever if you lose your keys
Which is good. It makes you value it. If I hold all of my money in cash and have a house fire, it's lost forever. No difference.
> For those of us who do not fetishize decentralisation
No, it doesn't, it doesn't offer 1% of the services those things you mentioned can offer.
> This is a surface-level argument intended for shortsighted thinkers.
Yes, that describes your argument perfectly.
> On main net. Lightning network can outpace Visa.
The fact the lightning network needs to exist shows flaws in bitcoin, or lightning wouldn't be required. Lightning also has massive flaws and is unlikely to be able to scale very far due to routing issues, and requiring the locking of funds. Its main utility seems to be for people to handwave away problems with bitcoin.
> By warp, you actually mean makes them fair and natural.
No, we have a lot of history to show us currency that is in limited amounts is a very poor idea, favouring and rewarding those who hold the tokens over those who actually produce.
> Which is good. It makes you value it. If I hold all of my money in cash and have a house fire, it's lost forever. No difference.
Wow. This is why people don't do that, and use banks, precisely to avoid that sort of catastrophic loss. Though you've just told us in previous comments that you shouldn't trust crypto custodial services either. You're basically saying "this is a huge risk and in my perfect system you just have to live with it, and there's no recourse if it goes wrong and it's your fault"
No thanks!
> Slaves?
Yeah, this is idealogical nonsense at this point, not any sort of reasoned debate.
But regardless of whether you agree with the points I raise, the idea that bitcoin is 'perfect' doesn't really hold up. The huge energy use is not a desirable feature for a monetary system, one that is 'perfect' would not have that. Perhaps we cannot create such a 'perfect' system, perhaps (and this is not my view, obviously) bitcoin is the absolute best we can ever do(!), it's still not 'perfect', because it encompasses a set of compromises.
Money must be backed by something. Bitcoin is backed by nothing. This makes it a ponzi, not money. It's very simple.
It can be used as a means of exchange, but due to being unbacked isn't and can't ever become a store of value, which in turns means it's completely useless as a unit of account due to eternal volatility.
The only way to get real wealth in exchange for bitcoin is to hope someone later decides to buy it. That's again a characteristic of something that isn't money. Americans are forced to sell wealth for us dollars, and without that force it would die. That's actual backing enforced by governmental force.
One of my favorite bond films is Goldfinger (1965), starring Sean Connery as James Bond and Gert Frobe as Auric Goldfinger. In the movie, Goldfinger hatches a plan (they always hatch a plan) to destroy the gold reserves at Fort Knox. This will make his own gold holdings much more valuable, but, Bond intones, it will also destroy the world's economy, since the gold in Fort Knox "backs" our money, and if it were to disappear, we'd have hyperinflation.
And I wondered about that a bit. Suppose a meteor filled with gold were to crash onto Federal Property, and they hook up some tractors and drag the thing into Fort Knox. Would this massive new pile of gold cause hyper-deflation?
Bottom line, I don't think money needs to be backed by anything. It just needs to be limited in its quantity. For example, if gold is money, then what is gold backed by? Anyway, Goldfinger is worth a watch -- great film.
Gold isn't money. It was when the US government (and other before) forced people to sell other wealth for it to pay taxes. It was an early implementation of money.
Gold has very weak utility today.
>I don't think money needs to be backed by anything.
Which was empirically tested for the last 13 years. What happens is that people get bored of old ponzi schemes and stop buying them, instead preferring to be early in new ones. Which is why inflation-adjusted btc is at the very early Dec 2017 price. Nobody borrows in bitcoin (denominated in it - borrow x btc, pay back x+y btc) for unrelated investments which is one of the main use cases for money.
>It just needs to be limited in its quantity
Artificial scarcity is infinite. Claiming first artificial scarcity is token is somehow special is just a marketing spiel - one that's visibly losing its effectiveness. Which is why bitcoin dominance is dropping so fast.
> Money must be backed by something. Bitcoin is backed by nothing.
Yes, it is:
1. Incorruptible supply enforced via a halving algorithm that can't be messed with without creating a hard fork or receiving universal consensus on the network.
2. Proof of work. In order for the Bitcoin network to function (meaning, for new Bitcoin to be minted up to the cap and for transactions to be validated/added to the blockchain), energy must be expanded. There's no way to fake it.
3. Self-custody that's difficult (near impossible if done properly) to confiscate by force. If you control your keys, you control your money. Full stop. Metals, cash, etc. are all subject to confiscation via force. At worst, they can throw you in jail and torture you and still turn up empty handed if they can't get your private keys.
4. Transmittable to anyone, globally, without limitation/permission in a few seconds to ~ 1 hour.
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These intangible "backings" are identical to being backed by "the full faith and credit of the U.S." or "the U.S. military." Neither of those are impervious to failure. For example, if the U.S. continues to pile on debt or countries start to dismiss the petrodollar concept, as we're seeing (BRICS), that full faith and credit is meaningless. If they can't pay the military (or foolishly discharge them for ideological reasons) because their money isn't of value, the military won't care to enforce anything.
This is why, ironically, fiat is the ponzi scheme. It requires everyone involved to believe the lie that printing infinite amounts of money and burning it on investments with little-to-no return (e.g., socialistic entitlement programs, moonshot nonsense businesses, dragged out government projects) is some genius-tier strategy. When in reality, it's just one giant cult where everyone is pointing a gun at someone else under the table.
It will inevitably blow up and when it does, the very people who protected it will walk around with their hands in their pockets whistling.
I don't know how to say this clearly enough: It's a Ponzi because you can't buy anything except other currencies with it.
Like sure, you can't steal it from me, but you can sure as hell prevent me from acquiring goods/services with it (Governments all around the world have done an amazing job of that whether they tried to or not), so it's only worth something insomuch as you can turn it into fiat.
And it's only worth what it is in fiat because people believe that in the future it will be able to buy goods and services, despite no evidence that it will be able to do that.
>energy must be expanded. There's no way to fake it.
That's a negative, not a positive. It means bitcoin actively destroy wealth while giving nothing in return.
>3. Self-custody that's difficult (near impossible if done properly) to confiscate by force. If you control your keys, you control your money.
It's not money, so properly described: a ponzi scheme that's harder to shutdown than more traditional attempts.
>Neither of those are impervious to failure
How fragile or not the backing mechanism is a completely separate issue.
>This is why, ironically, fiat is the ponzi scheme
It isn't. Investors (???) into us dollars don't cash out on future investors that were mostly lied to about what the dollar is. It's a tax token and people are forced to buy it.
>It requires everyone involved to believe the lie
No, it doesn't. It requires the ability to physically enforce the law. Whether people like the dollar or not, is, in itself, of zero consequence as long as the enforcement mechanism works.
>If they can't pay the military
Yes, an incompetent government can kill the economy to the point that no amount of force will work, whether due to violent opposition or lack of any remaining wealth. What actually happens is that people switch to using other stuff for transactions. It can be fiat money that's enforced by another country, or something of inherent value, like coffee beans (happened in Venezuela), salt.
>When in reality, it's just one giant cult
It's not a cult, money is always and everywhere a tax extraction technology. It's going to exist in some form as long as it's possible to tax people under a credible threat of violence. One day in history some human ancestor figured out that collecting rare thing (like seashells) and then forcing people to buy them (with actual wealth) is a good way of living and that's how it goes.
>It will inevitably blow up and when it does
...it won't be replaced by bitcoin, but by some other form of fiat money. Below all the false marketing lies a simple truth: buying bitcoin is a one sided wealth transfer, giving away real wealth in exchange for a printed from thin air token. Some people will as long as they think they will be able to sell to a greater fool in the future.
The problem is that eventually the scheme gets old and it's becoming hard to see where they could come from. People that like ponzi schemes realize that it's better to start new ones and be early. Which is exactly what happened. Btc's returns in the last cycle were pitiful. Now it's bear market and it's extremely weak - both absolutely and relatively. It's an old 13 year old thing that failed in all its stated goals. On top of that it's getting hammered by massive inflation.
Next bull cycle it's going to under-perform even worse and that will be the last time general public will think about it.
Indeed, ironic. But this also laid the path for DeFi, which processes similar volumes per day as centralized exchanges, without the single counterparty risk.
But fundamentally and crucially, nobody is bailing these banks out. Bitcoin itself, and its holders (other than those who left their money in FTX) are untouched. It seems to be unironically working as intended, no?
