cryptocurrency

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Jean
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Re: cryptocurrency

Post by Jean »

Ok, from now on, i'll stop trying to convince unknown people that bitcoin is awesome, because the latter you all realize it, the bigger the share of Bitcoin i'll be able to buy.

sky
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Re: cryptocurrency

Post by sky »

There is a lot of utility in a bitcoin type cryptocurrency. The fact that humans have speculated in the currency and driven the value up (and down) is not necessarily related to crypto's quality as a medium of exchange. People overpaying for crypto is market behavior.

I think the weakness of the current cryptocurrency concept is that new coins can be created, in competition with current coins. Bitcoin may be king but there are many challengers.

bostonimproper
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Re: cryptocurrency

Post by bostonimproper »

For what it’s worth, I think talking about “cryptocurrency” as a whole is also pretty silly. Each token is represented by its own protocol or app, and different types of tokens/contracts have very different functions.

Some act like what a lot of people think of for traditional currencies (stablecoins)
Some act like collectibles (NFT art)
Some act like equities (many protocols which charge fees, and give token holders governance and algorithmic issuance and token buyback mechanisms)
Some act like commodities (Bitcoin)
Etc

Literally any type of asset in the traditional finance world can be represented on the blockchain— it’s just a type of ledger. Very few traditional assets today are currencies or equivalents.

jacob
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Re: cryptocurrency

Post by jacob »

https://www.marketwatch.com/articles/cr ... 1652461061
article wrote: The crypto universe, for all its hype, is too puny to handle anything like Russia’s import/export volume. All of the crypto in the world is worth maybe $1.5 trillion, and falling. Russia’s two-way trade last year came to $785 billion. “There’s no way you have enough liquidity to turn a G-20 economy to crypto overnight,” Mosier says.
... which is not a problem unless you're "large country"-sized or act in a way with others that are "large country"-sized in the aggregate. In comparison, world GDP is about 100T and US GDP is about 20T.

El Salvador, which gets a lots of attention is tiny. They [the government] own something like 2500 BTC ... so 7500e5 or 7.5e8 or 0.75B or 1/2000th of the world's capitalization. That is doable.

Disclaimer: All based on finger math covering orders of magnitude. Please verify.

chenda
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Re: cryptocurrency

Post by chenda »

7Wannabe5 wrote:
Fri May 13, 2022 6:15 am
The fifth graders I am teaching can't identify U.S. coins or their value.
So they're 10/11 years old, I guess too young for debit cards? If cash goes they'll have to be something in lieu of pocket money...

For those of us who remember the importance of carrying loose change for phone boxes: https://www.theguardian.com/books/2019/ ... ssy-review

7Wannabe5
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Re: cryptocurrency

Post by 7Wannabe5 »

jacob wrote: do these fifth graders have credit cards or do they just never pay for anything themselves?
chenda wrote:So they're 10/11 years old, I guess too young for debit cards? If cash goes they'll have to be something in lieu of pocket money...
Actually, now that I ponder the matter a bit, I think their lack of knowledge about coins might be in good part due to the fact that there is very little they could buy for less than a dollar. They definitely understand $5 on a gift card vs. $10 on a McDonalds gift card*. So, from their perspective all coins are like pennies to a 1970s kid.

Also, analog clocks for these kids = Roman numerals for 1970s kids.

*They understand that $10 is more than $5, but not necessarily that it is twice as much. Yet, they have complex social lives and wide range of general pre-adult human competencies. Kind of makes you realize that the foundation upon which those of us who think of ourselves as "rational" base our philosophies is maybe a bit narrow shelf.

chenda
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Re: cryptocurrency

Post by chenda »

7Wannabe5 wrote:
Sat May 14, 2022 7:12 am
They understand that $10 is more than $5, but not necessarily that it is twice as much. Yet, they have complex social lives and wide range of general pre-adult human competencies.
I understand from what you have mentioned elsewhere that they are from very deprived backgrounds. I imagine that incentives the development of other skills at the expense of numeracy and literacy.

clark
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Joined: Fri Mar 25, 2022 6:30 pm

Re: cryptocurrency

Post by clark »

If I may clarify my comments earlier in the thread, I think that an untraceable, unblockable currency pegged to the dollar would be of immense value to dissidents in totalitarian countries, and I think I would support such a project, though it would also bring other risks. So it really rankles me when so many people use blockchain technology as an attempt to get “1000x crypto gains” instead of genuinely trying to support the greater social good, and making these coins so volatile and risky so as to be unusable by the people who really need them.

Perhaps there could be a non-profit cryptocurrency developed in the future designed specifically against profiteering? Or maybe something is in the works that I don’t know about. I’m just so turned off by the general crypto culture that I haven’t looked into it more.

bostonimproper
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Joined: Sun Jul 01, 2018 11:45 am

Re: cryptocurrency

Post by bostonimproper »

@clark What you are describing are called stablecoins.

Some have more controls and are more bank-like (like Circle’s USDC) and others are dollar pegged but over-collateralized using other assets (like Maker’s DAI and Reflexer’s RAI). Other examples that are more suspect are Tether’s USDT (similar to USDC but hold more volatile assets in their treasury) and Luna’s UST which this past week lost its peg (under-collaterlized, bad design) and has spiraled toward $0.

For what it’s worth, there is a decently sized population of ex-US people banking with stablecoins already, because they are more trusted than local banks.

All these coins’ transactions are traceable but I believe only USDC is censorable (individual addresses can be blacklisted). Once zk-chains and zk-rollups become more realized/used, private transactions will be a lot more common.

Michael_00005
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Location: East coast USA

Re: cryptocurrency

Post by Michael_00005 »

clark wrote:
Fri May 13, 2022 2:43 am
each of those currencies would still be far less volatile than Bitcoin, because they’re backed by governments that actually know what the hell they’re doing.
Not that I'm taking sides, but - governments know what they’re doing? :?

clark
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Joined: Fri Mar 25, 2022 6:30 pm

Re: cryptocurrency

Post by clark »

I don’t want to get into a political discussion here, but I believe the fact that inflation has been kept at a roughly 2% rate for decades (before this year) shows a certain level of competence. At the very least, the economists running the Fed are highly trained in their fields. There’s no one at the helm with Bitcoin that can keep it that stable for so long. Perhaps one of these stablecoins will have a highly competent manager that can keep its value steady, but I remain a bit skeptical.

bostonimproper
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Re: cryptocurrency

Post by bostonimproper »

So the thing that keeps the value of stablecoins tied to their peg is a combination of the market and redemption paths to fiat.

Centralized stablecoins (USDC, USDT, BUSD, GUSD) usually come with a redemption mechanism where in exchange for one coin the entity guarantees to give you back one dollar. This comes from their reserves, which are audited and published on a roughly quarterly basis. Each centralized entity has a different mix of cash, equivalents, and commercial paper, so their individual risks of having insufficient collateral in a “bank run” vary widely.

Theoretically the trading value of any of these coins can vary on the open market (e.g. one USDT worth 0.97 dollars), especially if the market is scared, but they tend to stay close to peg because of trading arbitrage.

Over-collateralized algorithmic stablecoins (e.g. DAI), automatically liquidate the holdings in their treasury to buy back their stablecoin if the treasury would drop below its target collateralization (in the case of Maker’s DAI that’s 1.5x). In this way they are similar to centralized stablecoins (i.e. you as a user are supposed to feel good about the coin because there is more than enough assets in their vault to back it). Also, at least in the case of DAI, you can redeem one DAI at any point to USDC, they keep as one collateral in their reserve, which in turn effectively makes it dollar redeemable.

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