I think a lot people are overhyping that bitcoin could become the "reserve currency". I don't think that, and I don't think that was the original design intention. It's not a currency, it's a value store. It was always meant to be something exactly like gold, which we build on top of. Everything about bitcoin's mechanics to it's vocabulary is meant to emulate gold, which we have and the current monetary systems exist on top of that just fine.Freedom_2018 wrote: ↑Thu Feb 11, 2021 2:28 pmAdmittedly I don't understand a whole lot about cryptocurrency and bitcoin.
However the part I struggle with is considering potential implications of a cryptocurrency like bitcoin on the Monetary and indirectly the Fiscal policy powers of the Central Bank and Governments respectively.
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Cryptocurrency would also mean that money is completely immune to human intervention and our finances will live under the ecosystem provided by the crypto software. Won't we need human intervention occasionally via Fiscal and Monetary policy at least to provide the needs of society (loosening or tightening credit etc as the case may be, or providing handouts to homeowners, jobless, child bearers and rearers etc?
A government should still have their own currency citizens pay taxes in and they can devalue that against gold / bitcoin / oil / whatever to stop deflationary pressures as needed. If they want to decrease inflation they can raise taxes and or increase rates.
A lot of people dismiss this. I think to some degree it is should be dismissed because it's open source code and the miners give the network strength from attacks and many people have been thinking about this for a long time making sure the network can have longevity.Freedom_2018 wrote: ↑Thu Feb 11, 2021 2:28 pm
Also what if someone hacks (supposedly virtually unhackable due to crypotology on huge numbers) and then spreads through the network like Mr Smith in the Matrix movie and rewrites the blockchain. Couldn't that bring down the integrity of the entire network with Global consequences versus perhaps in the current system where damage might be more local/country level ?
These are some of the things that make me a bit hesitant to hand over money management to cryptography software.
But nevertheless it seems like a real risk that if bitcoin became worth trillions of dollars and all of sudden it broke and became worthless overnight while a large percentage of wealth was stored on the network it could cause an incredible deflationary depression. A reverse wealth-effect.
There was a famous even example of this. A ship called the SS Central America was carrying a large quantity of gold and it crashed in September of 1857 setting of the "Panic of 1857". https://en.wikipedia.org/wiki/SS_Central_America
According to wikipedia "American banks did not recover until after the civil war".