Bitcoin's high valuation has ruined it as a medium of exchange


#1

Originally published at: https://boingboing.net/2018/01/23/volatility-vs-usability.html


#2

I’m just waiting for folks to use something like Freicoin. It looks to be more interesting since it charges people who hold the coin for a significant length of time.


#3

Calling what goes on in the Bitcoin market “economic friction” would only understate how unwieldy it is as a medium of exchange.

That’s before we get to the fact that adding a block to the Bitcoin blockchain has a cost in energy to provide proof of work that often exceeds the value of the transaction being recorded.

That’s an interesting approach to combatting the effects of cryptocurrencies’ built-in deflationary aspect. Certainly better than the shady and potentially dangerous Tether, which (supposedly) pegs itself to the USD.


#4

I was wondering if the value of Bitcoin dropped if it would improve as a means of exchange, but it sounds like even that may not be enough.


#5

I wonder how long until the US issues its own cryptocurrency?

Finland was playing with this a while back:


#6

Nah the deflationary pressures are the selling point if you got in early then you can snooker someone else into buying it on the perception of it having inherent value/utility. No one has shown such a reason to buy one other than pure speculation. It’s why I didn’t get involved because it got too expensive and I told many folks that. If it’s too expensive then no one will use it. It needed to be cheap to get and even cheaper to deploy. It runs counter to both conditions and thus runs counter as a means to setup a commodities basket. It literally is just tulipmania made digital.


#7

My second option was to hire an accelerator. These are transaction miners who accept direct payment to speed up specific transactions. Fees started at $65 USD —on top of the fee I’d already submitted— but that wasn’t the problem. The most reputable ones I could find only accepted payment in Bitcoin or another cryptocoin, requiring me to make yet another transaction with money I didn’t have. And even if I was willing to post a cash-in-hand offer on Reddit or Craigslist, those forums were already clogged with dozens if not hundreds of requests from desperate traders offering as much as US$500 to anyone who could accelerate their transfers.

It just reads like fuckery all around.


#8

The central banks of nation-states like the idea a lot, but for a number of reasons (some of them technical, some of them having to do with the fact that it wouldn’t be invented and mostly used by paranoid zero-sum-oriented Libertarians) such a cryptocurrency wouldn’t necessarily need the blockchain as a ledger (append-only or otherwise).


#9

Bitcoin is just math whose results benefit no one, unless the math is being used to store value, a kind of circularity that seems risky to bet the future on.

Well, the underlying distributed ledger technology does have some interesting potential uses for publicly verifiable contracts and records, but those use cases don’t seem like they’re going to take off any time soon…


#10

The US government can’t even get people to use dollar coins.


#11

Economists disagree on a lot of things, but AFAIK there is near universal consensus that deflation is bad. The Bitcoin enthusiasts however… they just saw through that old conspiracy. They know better.


#12

I recall my buddy telling me about their program to get the coins in circulation. You could buy them from banks at no cost, and they would also ship at no cost (eating shipping cost to get them in circulation). People would get a high rewards credit card, buy $10k in coins, then use the coins to pay off the credit card bill. Rinse, repeat. Coins never saw circulation.


#13

For government-related applications the more transactionally expensive blockchain ledger makes more sense in cases where the state’s role as a trusted third party might be more easily compromised by bad actors: e.g. the courts, legislation, the police, voting systems, custodians of medical records. In those cases a distributed and unalterable ledger system that places ownership of the records in the hands of the citizenry as a whole or individuals makes sense.

It makes less sense for currency unless one believes that central banks are bad actors (hence, BitCoin and its cousins).


#14

Actually some people are making use of Ethereum, another cryptocurrency, to do just that: they call them “smart contracts”.


#15

Yet another reason for me to be irritated by the whole cryptocurrency phenomenon. Until now, my primary reason has been that the miners are buying up all the GPUs, meaning 3d artists such as myself can’t buy a high-end video card to use for its actual purpose for a reasonable price because of bullshit speculation. A GTX-1080 (not even especially high-end) that cost around $1000 in 2014 now costs… around $1000. After FOUR YEARS.


Deepfakes has democratized the creation of extremely realistic video faceswapping, especially in porn
#16

I have endless respect for people that figure out totally legit hacks like that. My eyes just glaze over, if you can figure out a way to stick it to the man like that then my hat is off to you.


#17

It depends on the kind of deflation. If say Microsoft figures out a way to make their Surface laptops cheaper while keeping the same features then they pass on the savings to consumers in a lower price then that’s a kind of deflation which is good even on the aggregate. It also means Microsoft can make more of them even if there’s an economic downturn. But this is different from say monetary deflation where the base is reduced but the demand is the same which drives all kinds of wonky behavior like debt deflation.


#18

Machine-learning researchers and entrepreneurs are also feeling the pinch from the GPU shortage caused by the miners of math Beanie Babies (with, make no mistake, the knowledge of and sometimes connivance of the manufacturers). It’s a result of the same messed-up societal priorities that sees so many mathematicians and physicists drawn away from their fields to work as Wall Street quants.


#19

It’s sad too because there’s been some contributions to functional programming via Jane Street but honestly these seem paltry compared to what could be done without the disruption by rent seekers.


#20

Even better, it’s tulipmania in service of money laundering, with the bonus of dumping MWh of energy into arbitrarily hard math. Revolution!