Bitcoin and Digital Currencies

This is all just reminding me that at my local grocery store there's one of those Starcoin machines where you can trade in your loose coins for dollars. The last time I was there it had a sign advertising that it also gives you bitcoin in exchange. Which, fucking hell, if more and more people accept it as legal tender, then by God it's going to end up being legal tender.

Bitcoin as a global currency has no chance at all. Zero. It's deflationary. It is designed to stop being produced after a certain time, but that just means that people will hoard it instead of spending it. It will only ever be a commodity, a speculative asset that attracts people who want to conceal their transactions from others or just hate governments. The amount of fraud on its exchanges is ample proof that it will never be stable enough to replace any national currency.

I'm not saying that all cryptocurrencies are doomed in the same way; they may have alternative "mining" systems that allow for inflation. Bitcoin, however, is a dead end.

Edited by Fighteer on Jun 20th 2019 at 8:52:40 AM

Considering how fraud is also something that any sane government hates, as much as tax havens, eventually they could be made illegal or simply rendered void by an agreement of all countries, and no matter how many people could throw a fit, if, say, the USA stated overnight that a bitcoin equals zero dollars, there's nothing they can do to budge that decision.

Edited by raziel365 on Jun 20th 2019 at 7:27:52 AM

It's hard for governments to ban currencies completely. Private transactions are still a thing, and will be forever. However, the FBI has gotten pretty good at tracing blockchain transactions, so some of the supposed security features of Bitcoin are turning out not to be as perfect as originally promised.

One reason I dislike crypto-mining is that it takes up a ridiculous amount of power to do it. It's a genuine environmental hazard at this point. And it's not even really doing anything productive.

Edited by M84 on Jun 20th 2019 at 10:26:47 PM

There's a reason we call them cryptocurrencies, and that's because without a central bank backing them or a legal entity to give legitimacy, these things are at a legal void at best.

You cannot forbid a currency without pissing some country off (or countries in the case of the European Union), but there's no body that will raise its voice if you ban a cryptocurrency.

I just though the moniker was just because the currency data was encrypted on the blockchain.

Regardless, I agree, crypto has a niche appeal and most of it is among criminals or people who hate goverment as pointed out earlier in the page. So banning a single cryptocurrency or even all of them (the environmental hazard already provides ample reason to) would yield outcry but not enough to warrant an appeal unless they flood the internet with bots.

Edited by MorningStar1337 on Jun 20th 2019 at 7:38:06 AM

I'm not saying governments wouldn't try to ban it, but if you and I both had some Bitcoins in our accounts, we could transmit them to each other in a way that no financial system could detect, at least without deliberately tracing the transaction. The problem comes when someone wants to exchange the Bitcoins for something in another currency. At that point, the other party could refuse the transaction, or it could be traced.

To ban a cryptocurrency, you'd have to make it unspendable: by stopping all uses of it to purchase products or exchange for other currencies. This is very hard. In this sense, it's like any other currency, just entirely online.

You are correct. "Crypto-" refers to the fact that all transactions are encrypted and online. It has nothing to do with the entity or entities that back or regulate it. The U.S. government could adopt blockchain technology for the dollar if it wanted to, and then the dollar would be a cryptocurrency.

The transaction mechanism for a currency is completely separate from its backing.

Edited by Fighteer on Jun 20th 2019 at 10:40:09 AM

Yes, but the prefix "crypto-" means hidden or secret. Applying it to the word "currency", cryptocurrency's strict meaning would be hidden or secret money, and you can't have a healthy economy with money that is not upfront.

Trying to apply a really basic etymological analysis like that as an actual criticism of cryptocurrencies is not exactly helpful. 'Cryptocurrency' is just a portmanteau of 'cryptography' and 'currency'. Cryptocurrencies use modern mathematical crypto to verify transactions and ownership. And as blockchain ledgers are public you can actively track which key fingerprints ("wallet addresses") are transferring to other key fingerprints. It'd technically be possible to create a cryptocurrency system where each key fingerprint is explicitly tied to a human-readable real name (à la mapping domain names to IP addresses) making every transaction out in the open. Nobody would use it, but nobody would use debit cards/credit cards/checks instead of cash if transaction ledgers were public to literally anyone either.

Of all the very many problems with Bitcoin, Litecoin, Ethereum, and other cryptocurrencies, too much secrecy isn't really one.

They are designed for secrecy from the beginning, yeah. What cryptos act as is "digital cash". You can exchange them between accounts without any knowledge of the identities of the parties involved, just as you can hand a $20 bill to someone without any personally identifiable record of the transaction. (Unless someone writes a receipt, the digital equivalent of which would be using a bitcoin wallet with my name on it.)

This is a valuable service and one that might be adopted by national currencies if they want to provide a way to conduct online transactions privately. Now, most don't want that, since being able to track the movement of money is a valuable tool to investigate crime (as well as spy on citizens, depending on how "nice" that government is).

The point is that the privacy of a currency is a completely separate issue from how it is backed.

Edited by Fighteer on Jun 21st 2019 at 7:27:45 AM

Heck, going digital cash for existing currencies would just be like having to capture and recycle old, tattered notes and bashed-up coins (as well as the fakes). It's just minting new, updated chains to replace the ones that are getting a little obnoxiously long in the tooth.

Except, this catch-and-release would actually still have a readable imprint of what each has gone through, with a little work to read it. Governments just like the easier life they've currently got.

Maybe they'll warm to it once they realise they can still read the trail if they really want to.

Edited by Euodiachloris on Jun 21st 2019 at 2:08:26 PM

Eh, large financial institutions and currency issuers are always the last to adopt radical technology changes, for good reason. It may happen sooner or later, but there will always be a market for raw cash.

Whatever a potential cryptocurrency future ends up looking like, it won't be bitcoin. Bitcoin is a scam based on libertarian affinity fraud.

Edited by Fighteer on Jun 21st 2019 at 9:01:17 AM

I always treated bitcoin as a stock. I bought and sold and bought and sold, making thousands of dollars in profit. Never did I believe it would somehow be the future of money. Especially not deflationary money.

Facebook's Libra cryptocurrency attacked at Senate hearing

Senators weren't shy about their criticism either. One called it delusional to think people would trust Facebook with their money like this. Another one flat out stated she didn't trust Facebook.

That's why they don't like crypto? Oh well, baby steps.

ikr? You'd think "dark-sider, scuzzy, bubbly pyramid scheme" would be the bigger issue...

So in January, John McAfee, king of the lolbertarians, was dumb enough to boast about not having filed a Tax Return in 8 years. Naturally, the IRS went after his ass for his Bitcoin tradings and he is now a fugitive. Oh, but he still wants to continue his presidential campaign from his exile.

And naturally, all the other lolbertarians hail him as a martyr and chant the old "Taxation is illegal/theft" nonsense.

What is this world coming to?

Well, as long as none of those idiots gets a major leadership position in government, we can sit back and laugh at them.

Well I would honestly love to know how he as a president would keep roads, schools, borders etc in order after abolishing taxes.

This isn't the "laugh at libertarians" topic. Suffice it to say that: (a) it would be a mess; (b) we don't have to worry about it. We've got plenty of other problems.

Obviously, he'd let the free market fairies take care of it.

Edited by Kayeka on Jul 30th 2019 at 9:33:34 PM

Right, sorry.

Anyways, this is actually happening en masse right now, the IRS is taking big steps to collect taxes from all the Bitcoin fraudsters

https://www.barrons.com/articles/bitcoin-holders-irs-taxes-51564412068

I hope it works.

Edited by Forenperser on Jul 30th 2019 at 9:36:27 PM

I look forward to that with immense schadenfreude.

Yessss. Let them take their unreported windfall earnings and choke on 'em.