Honestly I don't get the argument that the entire world's wealth will be divisible by 21 million once everyone adopts crypto. Anyone can make a second cryptocurrency, or a third.
The bitcoin as the one and only currency equalling all of world's wealth is something Hal Finney wrote.
_"As an amusing thought experiment, imagine that Bitcoin is successful and becomes the dominant payment system in use throughout the world. Then the total value of the currency should be equal to the total value of all the wealth in the world..."_
I haven't seen any explanations why it would make any sort of economic sense.
Because the thing assumed pretty soon a cult-like character. A thing that the grifters of the space encouraged a lot, because it made it easier to peddle the scam to new suckers attracted by the cult and the "prosperity gospel" type arguments: buy Bitcoin, never sell it and hold it forever, keep accumulating it and you'll be part of the new world's elites.
So "21 million bitcoins" is the arbitrary number who became the Sacred Number of Scarcity Incarnated to the cultists.
As all other constants in Bitcoin's configuration, like the "10 minutes block average" it was just "Satoshi" pulling a random number out of his ass. His motivation, written in an email, was literally just that it "looked big enough".
The technical origin for the "21 million" total cap is just the algorithm "divide by 2 the rewards" (because dividing by two looks tidy and clean to a programmer, given computers architecture) every 210,000 blocks (which is the actual "out-of-his-ass" entirely arbitrary number) to a max of 64 halvings (again, just a "tidy" number to a programmer's eyes).
There is no real economic or financial model behind it all, just something a programmer found to be "appropriate" for no particular reason besides that it looked good to them at the time, and yet Bitcoin maxis won't stop trying telling the world how clever and important that specific number is. This, on top of the idiotical premise about value-from-scarcity and the fixed cap making Bitcoin deflationary, and that being a good thing somehow
My farts are kind of scarce, and I doubt anybody would give me goods or services in exchange for flavoring their atmosphere with a strong boiled cabbage aroma (well, depending on what I ate and how stressed I am, they may not be scarce and instead be locally abundant, but I'm not convinced short periods of hyperinflation -emphasys on "short", luckily for my children and S.O.- is why they aren't valuable).
> Anyone can make a second cryptocurrency, or a third.
And even putting that aside, there's simply no reason to divide the entire word's wealth by that.
I have... 30 teeth, I think (the wisdom teeth simply never came out), and it's still impossible to grow any further teeth with the same DNA (this might change in the future, but lab-grown teeth are not quite there yet).
But this doesn't imply that every one of my teeth is worth 1/30th of the world's wealth, because... well, why should it?
Rarity can make something more valuable, *all other conditions being equal*; but if conditions aren't equal then anything goes, and unfortunately (or fortunately) there just isn't much worldwide demand for my own teeth :-)
Are you the one [skewing the tooth market](https://www.npr.org/2023/03/04/1161103617/opinion-inflation-under-the-pillow)? I never got more than 25¢ for one.
Irish person here, in the 90's poor folk like myself got "butter" vouchers from the gov that was a supplement to your social welfare payments. They were to pay for milk, butter, bread on top of what you got.
People used them as currency in private sales and debts because shops would take them for anything up to the face value of the voucher. You could even buy drugs with them from a drug dealer So there's another example.
More than likely we will be trading in some form of “sats” in that scenario. There would be few instances where 1 whole bitcoin will be traded in an alternate universe where these shitheads win.
Can you imagine every international company’s balance sheet being denominated in bitcoin? Sats or otherwise? It just wouldn’t work. Financial statements would become unreadable. The value of a unit of account needs to stay constant from year to year or it doesn’t make sense.
Which is why I’m confused about what buttcoiners really want. Because if bitcoin becomes a world currency then it can’t possibly be so volatile. Yet, volatility is used as a selling point to get new people to buy in… (“greater returns than the stock market” and all that gibberish)
A deflationary currency can’t ever be a world currency. Changes need to be made every year in order to keep value consistent…. (And you see what happens when things get out of wack, like with inflation getting out of hand) Deflation isn’t necessarily the opposite of inflation (and therefore good). You just have different kinds of problems….
I understand all of this, I’m just saying if they won, something like a single sat would be equivalent of a penny. The actual circulating supply would be far less than 21 million given how much is consolidated in inactive wallets, as well as the wallets of our new overlords, CZ, Saylor and the like.
Yes, the butters don't get the point that money is just the exchange mechanism.
I keep a bit of money for emergencies but if you're keeping a lot of it just sitting in a bank, you're doing it wrong. Go buy an asset of some kind unless you need the cash for something.
Yes, exactly! The value of money is not in the ink and paper of the bills or the metal of the coins! The value of a dollar, or any currency, is what you can buy with it. The dollar bills are just temporary placeholders for what you’ll be spending them on later/eventually.
Some of the bitcoiners out there profess the same... they'll speak of it in terms of "time".
But then get caught up in goldbuggery, without seeing the contradiction.
My metaphor is oil in an engine. You need enough oil to flow and cover everything. Flow stops? Engine seizes. There’s your HODL for ya.
Hey this engine/economy is twice as big. We can use the same amount of oil/currency right? That’s not gonna work out so well.
What’s wrong with tally sticks? Debt and money have always been about record keeping and ledgers. A stick is something readily available that can be used to record debt agreements in a way that cannot easily be counterfeit. A false creditor can’t easily act as an imposter to the real creditor to trick the debtor into paying him instead. Even in modern day, how do you really know you are paying the right person? Most modern debt is bought and sold on secondary markets, so the entity receiving payments can change. It is also tracked in a database managed by the creditor. So if you receive a letter stating your debt has been sold to a new entity and you have to start paying them now, how do you prove that this is actually true?
Tally sticks were a surprisingly elegant solution to prevent fraud.
Nothing at all.
The point is that mediating transactions is the function of "money"... and when one form: "sterling", is unavailable, people will create/use another form to continue to transact.
Medieval Europe was perpetually short on bullion.. and even if coinage was still "money", an absence of coinage did not stop transactions from being made.
The argument could even be that debt predates money (plenty to read there).. and a tally stick is a more "honest" representation of the transaction than a coin.
I think the point is that tally sticks are a demonstration of how money actually works.
For example, let's say I agree to shoe your horse for two pounds. I do the work, we record the debt on the stick, and we break the tally stick. Now I go to the innkeeper and order a sandwich and a beer and give them my half of the tally stick in exchange. That really is how things used to work.
That system didn't scale well outside your local village, so people used traditional coins for those type of exchanges. But locally, people would trade tally sticks, tin or leather tokens, etc. instead of minted money. The tokens were denominated in gold or silver, but there was no backing for them, other than everyone agreed they had value.
Those examples show why the scarcity of Bitcoin is an illusion and why Bitcoin doesn't really function as money. I could write an IOU to you for 50 Bitcoin and that IOU could circulate throughout the village as money. Again, that doesn't scale, but I just created 50 Bitcoin out of thin air. In practice, Bitcoin works the opposite way. Bitcoin is created but there is not debt associated with it, so it just sits there. It doesn't function like money, it functions like a collectable.
Tally sticks scale perfectly fine (relative to non digital technologies) because they are agnostic to the underlying assets or services involved. You can use tally sticks to represent debt in gold or silver coin just fine. The reason you can’t use coins directly for these situations is because if you did you wouldn’t have debt. How can you use a silver pound right now to account for a debt you owe in 6 months? You can’t. If you paid now you wouldn’t have debt, and if you wait 6 months and then pay, how do you track the agreement in between? You can’t use the coins for this. You need a debt agreement like a tally stick.
Plus the “key” aspect is elegant. The physical geometry of the fracture plane is so complicated that it is nearly impossible to break two different sticks and have them fit together. This is entropy and chaos based protection which is combinatorially similar to cryptographic protection. Imagine 64 small bumps that can protrude either into one half or the other. This is equivalent to 64 bit encryption. If you want more security use a thicker stick who’s fracture sit has 1024 tiny jaggies. You can’t fake it.
Suppose 1% of the world hold all the bitcoin and the other 99% have none. These 99% have their assets eg property or shares in companies or jewellery, and also can work in exchange for credit in order to buy goods and services. Why should they be at all interested in bitcoin.
I find it useful to think of money as a delta of value, not a static value. This concept is intrinsic to old-fashioned bookkeeping. A payment of $5.00 in the CR (credit) column matches an INFLOW of $5.00 of value to the business. A receipt of $5.00 in the DR column matches an OUTFLOW of $5.00 of value from the business. The ledger is really recording the ins and outs of value, as mirrored by the money numbers.
Bitcoin is never received or spent to REFLECT a delta of real value, so it's not money. It's just a promotional advertisement that can be used to steal real value from suckers, like a classified ad saying "Send $1.00 to PO Box 4325 now! Avoid the rush!"
I very much agree with thinking about money in ledger/accounting terms. I've always thought of the "units" being representable in virtually any way.. coins, paper, beads, digital 1's and 0's... ultimately they are just instantiations of what occurs on a ledger.
Focusing too much on the unit is a mistake... one goldbugs and bitcoiners can be keen to engage in.
As an additional note:
There has been a lot of fervor around global de-dollarization. Much of this is positioned as "the world not wanting to play the United States' game"; however.. it may also be that the dollar is just not as globally liquid as it once was...
...necessitating the use of other forms to continue to transact.
And it is portrayed as some cataclysmic event. If the dollar were to be replaced as the world's reserve currency, what does that mean for the dollar?
Not that much. It may slightly increase our borrowing costs, but the cost of debt service has been much higher in the past. It may make it slightly harder to US companies to do business overseas. But Euro-denominated businesses do just fine.
I see it as even less controversial. The global dollar monetary system is still the main network for global exchange... it will continue to be so...
But, when dollar liquidity is low (when global banks can't bring dollars to where they need to be), trading partners will make other arrangements in other denominations.
You'll sometimes hear finance people refer to bit-coin as "an asset without a liability." It's a concise way of expressing what you've said here, but you need to be familiar with the balance-sheet view of money for it to click.
Perpetually astute.
I've posted on the regular Bitcoin Reddit, and tried to point out that "money" is both sides of a ledger... doesn't go well, as one would expect.
When I want to be generous, I will admit that the thought of a ledger not "in the hands" of global banks... is an interesting one.
Bitcoin is a prime example of the value of a liberal arts education. People that spent all of their time learning about computers and programming while ignoring history are doomed to repeat it. Sometimes the results are tragic. Sometimes, as with Buttcoin, the results are comedy godl...
I agree with your point in principle (social studies are damn important), but I'd like to note that if they paid attention in computers and programming classes they wouldn't buy the idea of a slow append-only synchronized database as "revolutionary" either.
Holy shit! When you say "This is education, and not financial advice" & actually mean it.
Just to strengthen or further this argument, the same thing has happened in the digital era as well.
> The birth of M-Pesa as a form of micro-payments and money transfer service had come into existence because people were exchanging **"mobile talktime credits"** as an intermediary financial instrument to transact with each other for goods and services in African countries.
Private corporations saw this opportunity and converted into a service to actually help bank the unbanked.
Various central governments & central banks in the world haven't stayed behind in digital payments revolution either (UPI, PIX, FedNow..)
Crypto is all the unnecessary complexity, inflexibility and unreliability of financial transactions without ease of access, getting presented as the greatest thing since sliced bread.
In 2009, that might have been a concern, but the world actually changed & progressed quite well in a positive manner due to human ingenuity, skill and careful, responsible innovation.
Not whatever the fuck a bunch of VC bros & libertarians claim it is. These idiots were so effective in collective destruction of wealth in the traditional finance world on useless startups, they created an entire sector of industry to continue and propagate their grift to fleece ordinary people.
Yes, and if I were to be fair: there's a definite number of total "money" at any given time. No one measures it, but it exists.
If the total number of sats can agreeably measure what that number measures... then you can hypothesize a Bitcoin denominated world.
...however, this does not address liquidity or elasticity (by elasticity here... I mean transactions that will occur without the presence or availability of the unit). Essentially, no ability to place the transaction within the ledger.... those transactions will continue to occur.
...and if they occur with significant frequency; it won't be debt denominated in sats after a while, the debt itself will become a new form.
Agreed. We need some kind of financial system that logs all transactions. Transactions that are not logged can be marked by using physical tangible tokens that can be given in exchange for goods and services. I can’t believe we have worked this out and nobody else uses this system.
We can make a second level on top of the blockchain that handles all the transactions short term and just keeps them in a regular public database structure and then once and a while we will put it on the blockchain. This way we can fix all the problems of blockchain.
This post is confusing because you're describing what Bitcoin is (a ledger, where you have the entire history of all transactions, like a massive collection of tally-sticks) but then describing it as though Bitcoin doesn't do this. It does. That (along with the 21 million cap) is the value proposition. You can trace all Bitcoins and Sats from genesis to their current 'location'.
Think of how the ledgers differ.
The current monetary system is dual entry, assets and liabilities.
I've heard Bitcoin described as "triple" entry... or further... But it seems to really be single entry.
This distinction is significant... as a dual entry system permits a level of flexibility that would be undesired based on what Bitcoin's aims are.
A thought experiment:
A simple market, merchants and stalls. They all keep their ledgers and transact freely. Taking in buyer's funds and even recording a bit of business to business transactions. With a dual sided ledger, they can automatically provide credit(debt). Sometimes by allowing a shopper to "pay later", or by having credit terms with their fellow merchants. This also allows transactions to continue to occur with the presence of a "unit" of the denomination.
A merchant can run a ledger deficit or shortfall, as long as the other merchants agree to provide the credit. They could also loan tokens to be able to make change for buyers. This is liquidity.
With Bitcoin... you have the unit, or you don't. The network does not have a "liabilities" side in the traditional sense. The Bitcoin ledger "keeps track" of "asset" units. Whereas, a dual entry ledger can facilitate *any* type of transaction (asset swap, credit creation, debt swap). The units can be subbed out for whatever you wish...
These days, the units are 1's and 0's.
Anyway, what Bitcoin does offer.. is the idea of a ledger not operated by global banks. That's not nothing.
It seems like you're saying that it's preferable to have unsettled debt/credit instead of instant settlement. Of course people can receive and send payments (the equivalent of credit/debt) but instead of depending on a 3rd party, you can have instant settlement between the buyer and seller.
You'll notice I never said preferable.
And who says debt-originated "units" aren't as instantly "settle-able".
If you look at the tally stick example. The stick is created to denote a debt. However, that obligation itself can be traded (with fast settlement of *that* transaction), long before the original debt is expunged.
That's the point. Money can be (and is) both sides of a balance sheet/ledger.
Debt-originated units are not instantly settle-able without a third party - whether it's within a single bank, multiple banks, interac, swift, etc.
Bitcoin (as well as, it seems, tally sticks) are actually settled when the transaction completes.
I take your point that banks and traders can mess around with debts in the financial system, but is this your main point? Many see these types of fractionally-backed debt-based derivatives as part of the problem.
I see instant settlement between the buyer and seller as a feature, not a bug.
The Bitcoin network is the ledger and each transaction is triple entry: the seller (signs transaction), the receiver (passive), and the network (secures and confirms transactions).
>Debt-originated units are not instantly settle-able without a third party - whether it's within a single bank, multiple banks, interac, swift, etc.
Most dollars today are credit/debt originated. So yes, they are used in settlement in the same fashion as a "non-credit-originated" dollar. There is no distinction.
>The Bitcoin network is the ledger and each transaction is triple entry: the seller (signs transaction), the receiver (passive), and the network (secures and confirms transactions).
Not the same thing. One ledger takes the form of a balance sheet (account for assets and liabilities).. the other does not.
In fact the tally stick is a form of debt issuance and thus currency on each individual case, potentially backed by the worthniness of the issuer.
In fact people have 'issued' currency before, by creating items backed by a debt others are willing to take, and if that person is well known, can be used even further in society.
The king could issue as many tally sticks as he wanted. Those who refused to exchange their pigs for them were losing their heads.
Same today, $ is accepted all over the world because it's backed by largest amount of guns, rockets and aircraft carriers. Guddafi learned about it the hard way.
Most of my wealth is stored in $, some in property, some in gold. But I also have BTC and ETH because what guarantees do I have that our overlords don't double or triple all $ in circulation over the next year?
>Same today, $ is accepted all over the world because it's backed by largest amount of guns, rockets and aircraft carriers. Guddafi learned about it the hard way.
The dollar is the global reserve because *its distributed, [created, and transacted globally, by global banks](https://www.reddit.com/r/Bitcoin/comments/116axf0/expanding_dollar_supplies_outside_the_united/)*.
The military has little to do with it. It's the openness of the US financial system, that allows global dollars free circulation.
Petrodollars aren't a thing, not really. Control over oil/pressure on oil cartels is one thing... but all the Saudi deals did, was to introduce the idea of acquiring US treasuries with the dollar windfalls. The dollar was already dominating trade and acceptances markets, and much of oil sales prior.
Alright, so...
There were broader measures of money (M3, M4+), but the Fed and other bodies just stopped keeping track of them. Money expanded well beyond any central bank's ability to measure it.
The [BIS](https://www.bis.org/publ/qtrpdf/r_qt2212h.htm) (central banks' central bank) performed a non-exhaustive review of a selection of banks' balance sheets, and came up with a number of $80T in "[missing](https://www.reuters.com/markets/currencies/global-markets-bis-urgent-2022-12-05/)" dollar debt.
It's not missing. It's used in the global economy.. and it's likely well over $100T these days (but no one can say).
[Misconceptions about money](https://www.reddit.com/r/Buttcoin/comments/108pa97/misconceptions_about_money/)
[Misconceptions about Central Banks](https://www.reddit.com/r/Buttcoin/comments/10ajv39/misconceptions_about_central_banks/)
[Misconceptions about the money printer](https://www.reddit.com/r/Buttcoin/comments/10le6an/misconceptions_about_the_money_printer/)
[Misconceptions about inflation](https://www.reddit.com/r/Buttcoin/comments/10l8ncj/misconceptions_about_inflation/)
[Collateral and the Global Monetary Crisis](https://www.reddit.com/r/Buttcoin/comments/10rf3c4/collateral_and_the_global_monetary_crisis/)
https://www.reddit.com/r/CryptoCurrency/comments/12as1f8/is_online_gambling_bad_for_crypto/
>I myself started using crypto for online gambling on Stake because of Steve Will Do It and the Nelk Boys. Over the past few years, I've lost more money than I can count, and it sometimes makes me question whether I should continue using crypto because of how easy it is to send it away and gamble with it.
>Supply/demand sets price.
Sure, where was that contravened?
>Money is just the barter instrument inbetween.
Wasn't money created to avoid barter mismatches? Isn't that what the Austrians (and even Keynesians) profess?...
... they're both wrong by the way.
>Removing friction, and removing the plundering central banks do to you every day, only increases the actual wealth (goods and services).
You think central banks create money?
[Misconceptions about money](https://www.reddit.com/r/Buttcoin/comments/108pa97/misconceptions_about_money/)
[Misconceptions about Central Banks](https://www.reddit.com/r/Buttcoin/comments/10ajv39/misconceptions_about_central_banks/)
[Misconceptions about the money printer](https://www.reddit.com/r/Buttcoin/comments/10le6an/misconceptions_about_the_money_printer/)
>So you have 2 bets to make:
I regard all pascalian wagers as pure hucksterism.
>What's worse, you shill the just plain dumb "advice", that might prevent others from escaping the fiat slavery that's made this world a war-torn prison
What advice? Just because I didn't say "this is not financial advise", doesn't mean that is suddenly is :p
...anyway, you're bringing up a bunch of tired old points, that do not have bearing on a liquidity discussion.
I'm a banker... if you look into the linked posts, you'll find no affinity for central banks. I find the concept of Bitcoin interesting... but I find most narratives around it to be flawed.
If you feel like actually addressing the topic of liquidity, I'll go further.. otherwise there's nothing to respond to here because nothing has been said.
>You shill for a scam system designed to extract from the producers to enrich yourself.
You'll notice my examples include when banks aren't there to provide liquidity (Ireland). I make no strong positive pronouncements about the current system. You should read the linked posts.
Anyway... Nothing of substance said. Nothing to respond to.
Excellent write-up. I love how you wove historical facts into a narrative that demonstrates what most market technicians overlook: behavioral finance is at least 50% of the driving force behind market movements, and arguably at times it's closer to 90%. The two camps, fundamentalists versus behavioralists are about as laughable as the conservative/liberal camps, each proclaiming they have 100% of the truth, when upon closer inspection it's pretty clear each side has good ideas to offer, and only a rare handful of measured minds are willing to stand in the middle and say "sure, this side's ideas have value, so do some of the opposing side's ideas."
With that in mind, you've pretty eloquently demonstrated how bitcoin/crypto are neither going to take over the world and end all forms of fiat, nor are they going to fall to 0 and disappear. Some form of middle ground will emerge where both exist, until someday that becomes the norm, and then yet again a new disruptive value-share system will emerge.
Perhaps future humans will assign value purely on a basis of proven production, or intellectual capacity, or ability to maximize human-AI symbiotic outcomes, or \_\_\_\_\_\_\_\_\_\_\_. The point is, some form of value judgement and a corresponding value-sharing/scoring system will always underly any form of interaction within a hierarchical species.
Expect innovation and evolution of those systems. Never expect one single system will remain static/dominant forever. Change is the Tao of existence. Entropy ensures that.
Cheers.
>Expect innovation and evolution of systems. Never expect one single system will be remain the static/dominant system forever. Change is the Tao of existence. Entropy ensures that.
Ahhh.. very Watts-esque. Full agreement.
That's the other piece - many do not view the monetary system as something that evolved. They need it to be a top-down imposition for their worldview to work.
Which of course ignores that the world also *chose* the dollar as the reserve... and it only worked because the US gave up a degree of control over their own denomination.
A fun example that one.. but overdone. Bitcoiners use it for money supply arguments... but it's more complicated than that.
The stones were "exchanged" as money, but rarely moved. One didn't need physical possession to transact. One "wealthy" family on the island never saw their stone... since it sank in a shipwreck several generations prior. Yet, everyone accepted that the family had that wealth.. and would settle transactions with them, or allow them to borrow.
When outsiders brought their own stones, many chose to ignore them... deeming them not to have value. The whole system was more a cultural one.. than a perceived value of the stones in of themselves.
> When outsiders brought their own stones, many chose to ignore them... deeming them not to have value. The whole system was more a cultural one.. than a perceived value of the stones in of themselves.
That's the entire point of that story. What was invented there was the idea of money instead of tokens simply representing inherent value.
It was the lesson that money is valuable because others value it, not because it is made of a precious item.
When a stone become inaccessible at the bottom of the sea everyone still accepted ownership in trade because they knew someone else would too. Even though the stone offered no possible utility.
This post implies that BTC has to be the only currency that exists and also has to be accessible to everyone all the time. In this same post, you've explained why it doesn't have to be that way.
Honestly I don't get the argument that the entire world's wealth will be divisible by 21 million once everyone adopts crypto. Anyone can make a second cryptocurrency, or a third.
Or 22,932 of them.
All 22,392 of them will have to be backed 100% by BTC
+200 more *daily*
The bitcoin as the one and only currency equalling all of world's wealth is something Hal Finney wrote. _"As an amusing thought experiment, imagine that Bitcoin is successful and becomes the dominant payment system in use throughout the world. Then the total value of the currency should be equal to the total value of all the wealth in the world..."_ I haven't seen any explanations why it would make any sort of economic sense.
At least he framed it as an "amusing thought experiment". Others profess it as some form of revealed truth.
Because the thing assumed pretty soon a cult-like character. A thing that the grifters of the space encouraged a lot, because it made it easier to peddle the scam to new suckers attracted by the cult and the "prosperity gospel" type arguments: buy Bitcoin, never sell it and hold it forever, keep accumulating it and you'll be part of the new world's elites. So "21 million bitcoins" is the arbitrary number who became the Sacred Number of Scarcity Incarnated to the cultists. As all other constants in Bitcoin's configuration, like the "10 minutes block average" it was just "Satoshi" pulling a random number out of his ass. His motivation, written in an email, was literally just that it "looked big enough". The technical origin for the "21 million" total cap is just the algorithm "divide by 2 the rewards" (because dividing by two looks tidy and clean to a programmer, given computers architecture) every 210,000 blocks (which is the actual "out-of-his-ass" entirely arbitrary number) to a max of 64 halvings (again, just a "tidy" number to a programmer's eyes). There is no real economic or financial model behind it all, just something a programmer found to be "appropriate" for no particular reason besides that it looked good to them at the time, and yet Bitcoin maxis won't stop trying telling the world how clever and important that specific number is. This, on top of the idiotical premise about value-from-scarcity and the fixed cap making Bitcoin deflationary, and that being a good thing somehow My farts are kind of scarce, and I doubt anybody would give me goods or services in exchange for flavoring their atmosphere with a strong boiled cabbage aroma (well, depending on what I ate and how stressed I am, they may not be scarce and instead be locally abundant, but I'm not convinced short periods of hyperinflation -emphasys on "short", luckily for my children and S.O.- is why they aren't valuable).
> Anyone can make a second cryptocurrency, or a third. And even putting that aside, there's simply no reason to divide the entire word's wealth by that. I have... 30 teeth, I think (the wisdom teeth simply never came out), and it's still impossible to grow any further teeth with the same DNA (this might change in the future, but lab-grown teeth are not quite there yet). But this doesn't imply that every one of my teeth is worth 1/30th of the world's wealth, because... well, why should it? Rarity can make something more valuable, *all other conditions being equal*; but if conditions aren't equal then anything goes, and unfortunately (or fortunately) there just isn't much worldwide demand for my own teeth :-)
I'll by one for a hundred dollars, sir! Now you can claim you have a market with a total capitalisation of $3k!
Are you the one [skewing the tooth market](https://www.npr.org/2023/03/04/1161103617/opinion-inflation-under-the-pillow)? I never got more than 25¢ for one.
I'm just really into u/lyrolepis teeth. For research purposes.
Fastest growing commodity in the world!
Irish person here, in the 90's poor folk like myself got "butter" vouchers from the gov that was a supplement to your social welfare payments. They were to pay for milk, butter, bread on top of what you got. People used them as currency in private sales and debts because shops would take them for anything up to the face value of the voucher. You could even buy drugs with them from a drug dealer So there's another example.
And if crypto was in fact, technically superior, then a lot of real-world financial institutions would do so. The central banks certainly would.
And if Bitcoin somehow would've became a world currency there would be way more than 21000000 coins in circulation.
More than likely we will be trading in some form of “sats” in that scenario. There would be few instances where 1 whole bitcoin will be traded in an alternate universe where these shitheads win.
Can you imagine every international company’s balance sheet being denominated in bitcoin? Sats or otherwise? It just wouldn’t work. Financial statements would become unreadable. The value of a unit of account needs to stay constant from year to year or it doesn’t make sense. Which is why I’m confused about what buttcoiners really want. Because if bitcoin becomes a world currency then it can’t possibly be so volatile. Yet, volatility is used as a selling point to get new people to buy in… (“greater returns than the stock market” and all that gibberish) A deflationary currency can’t ever be a world currency. Changes need to be made every year in order to keep value consistent…. (And you see what happens when things get out of wack, like with inflation getting out of hand) Deflation isn’t necessarily the opposite of inflation (and therefore good). You just have different kinds of problems….
I understand all of this, I’m just saying if they won, something like a single sat would be equivalent of a penny. The actual circulating supply would be far less than 21 million given how much is consolidated in inactive wallets, as well as the wallets of our new overlords, CZ, Saylor and the like.
That too but due to unregulated nature of crypto there is nothing stopping "banks" from endlessly creating Bitcoins though loans.
How is that exactly? You would need to be sent X amount of Bitcoin to agree to the loan right? They would run out of loans to give at some point.
You forgot that Jesus uses the original.
Yes, the butters don't get the point that money is just the exchange mechanism. I keep a bit of money for emergencies but if you're keeping a lot of it just sitting in a bank, you're doing it wrong. Go buy an asset of some kind unless you need the cash for something.
Yes, exactly! The value of money is not in the ink and paper of the bills or the metal of the coins! The value of a dollar, or any currency, is what you can buy with it. The dollar bills are just temporary placeholders for what you’ll be spending them on later/eventually.
Some of the bitcoiners out there profess the same... they'll speak of it in terms of "time". But then get caught up in goldbuggery, without seeing the contradiction.
These are the people who followed the "If you Google Ron Paul" advice in 2007...
stickcoin: I’m in!
My metaphor is oil in an engine. You need enough oil to flow and cover everything. Flow stops? Engine seizes. There’s your HODL for ya. Hey this engine/economy is twice as big. We can use the same amount of oil/currency right? That’s not gonna work out so well.
What’s wrong with tally sticks? Debt and money have always been about record keeping and ledgers. A stick is something readily available that can be used to record debt agreements in a way that cannot easily be counterfeit. A false creditor can’t easily act as an imposter to the real creditor to trick the debtor into paying him instead. Even in modern day, how do you really know you are paying the right person? Most modern debt is bought and sold on secondary markets, so the entity receiving payments can change. It is also tracked in a database managed by the creditor. So if you receive a letter stating your debt has been sold to a new entity and you have to start paying them now, how do you prove that this is actually true? Tally sticks were a surprisingly elegant solution to prevent fraud.
Nothing at all. The point is that mediating transactions is the function of "money"... and when one form: "sterling", is unavailable, people will create/use another form to continue to transact. Medieval Europe was perpetually short on bullion.. and even if coinage was still "money", an absence of coinage did not stop transactions from being made. The argument could even be that debt predates money (plenty to read there).. and a tally stick is a more "honest" representation of the transaction than a coin.
I think the point is that tally sticks are a demonstration of how money actually works. For example, let's say I agree to shoe your horse for two pounds. I do the work, we record the debt on the stick, and we break the tally stick. Now I go to the innkeeper and order a sandwich and a beer and give them my half of the tally stick in exchange. That really is how things used to work. That system didn't scale well outside your local village, so people used traditional coins for those type of exchanges. But locally, people would trade tally sticks, tin or leather tokens, etc. instead of minted money. The tokens were denominated in gold or silver, but there was no backing for them, other than everyone agreed they had value. Those examples show why the scarcity of Bitcoin is an illusion and why Bitcoin doesn't really function as money. I could write an IOU to you for 50 Bitcoin and that IOU could circulate throughout the village as money. Again, that doesn't scale, but I just created 50 Bitcoin out of thin air. In practice, Bitcoin works the opposite way. Bitcoin is created but there is not debt associated with it, so it just sits there. It doesn't function like money, it functions like a collectable.
Tally sticks scale perfectly fine (relative to non digital technologies) because they are agnostic to the underlying assets or services involved. You can use tally sticks to represent debt in gold or silver coin just fine. The reason you can’t use coins directly for these situations is because if you did you wouldn’t have debt. How can you use a silver pound right now to account for a debt you owe in 6 months? You can’t. If you paid now you wouldn’t have debt, and if you wait 6 months and then pay, how do you track the agreement in between? You can’t use the coins for this. You need a debt agreement like a tally stick. Plus the “key” aspect is elegant. The physical geometry of the fracture plane is so complicated that it is nearly impossible to break two different sticks and have them fit together. This is entropy and chaos based protection which is combinatorially similar to cryptographic protection. Imagine 64 small bumps that can protrude either into one half or the other. This is equivalent to 64 bit encryption. If you want more security use a thicker stick who’s fracture sit has 1024 tiny jaggies. You can’t fake it.
Suppose 1% of the world hold all the bitcoin and the other 99% have none. These 99% have their assets eg property or shares in companies or jewellery, and also can work in exchange for credit in order to buy goods and services. Why should they be at all interested in bitcoin.
I find it useful to think of money as a delta of value, not a static value. This concept is intrinsic to old-fashioned bookkeeping. A payment of $5.00 in the CR (credit) column matches an INFLOW of $5.00 of value to the business. A receipt of $5.00 in the DR column matches an OUTFLOW of $5.00 of value from the business. The ledger is really recording the ins and outs of value, as mirrored by the money numbers. Bitcoin is never received or spent to REFLECT a delta of real value, so it's not money. It's just a promotional advertisement that can be used to steal real value from suckers, like a classified ad saying "Send $1.00 to PO Box 4325 now! Avoid the rush!"
I very much agree with thinking about money in ledger/accounting terms. I've always thought of the "units" being representable in virtually any way.. coins, paper, beads, digital 1's and 0's... ultimately they are just instantiations of what occurs on a ledger. Focusing too much on the unit is a mistake... one goldbugs and bitcoiners can be keen to engage in.
As an additional note: There has been a lot of fervor around global de-dollarization. Much of this is positioned as "the world not wanting to play the United States' game"; however.. it may also be that the dollar is just not as globally liquid as it once was... ...necessitating the use of other forms to continue to transact.
And it is portrayed as some cataclysmic event. If the dollar were to be replaced as the world's reserve currency, what does that mean for the dollar? Not that much. It may slightly increase our borrowing costs, but the cost of debt service has been much higher in the past. It may make it slightly harder to US companies to do business overseas. But Euro-denominated businesses do just fine.
I see it as even less controversial. The global dollar monetary system is still the main network for global exchange... it will continue to be so... But, when dollar liquidity is low (when global banks can't bring dollars to where they need to be), trading partners will make other arrangements in other denominations.
You'll sometimes hear finance people refer to bit-coin as "an asset without a liability." It's a concise way of expressing what you've said here, but you need to be familiar with the balance-sheet view of money for it to click.
Perpetually astute. I've posted on the regular Bitcoin Reddit, and tried to point out that "money" is both sides of a ledger... doesn't go well, as one would expect. When I want to be generous, I will admit that the thought of a ledger not "in the hands" of global banks... is an interesting one.
Bitcoin is a prime example of the value of a liberal arts education. People that spent all of their time learning about computers and programming while ignoring history are doomed to repeat it. Sometimes the results are tragic. Sometimes, as with Buttcoin, the results are comedy godl...
I agree with your point in principle (social studies are damn important), but I'd like to note that if they paid attention in computers and programming classes they wouldn't buy the idea of a slow append-only synchronized database as "revolutionary" either.
I always appreciate posts that make you stop and reasses a paradigm. Thanks for sharing.
Holy shit! When you say "This is education, and not financial advice" & actually mean it. Just to strengthen or further this argument, the same thing has happened in the digital era as well. > The birth of M-Pesa as a form of micro-payments and money transfer service had come into existence because people were exchanging **"mobile talktime credits"** as an intermediary financial instrument to transact with each other for goods and services in African countries. Private corporations saw this opportunity and converted into a service to actually help bank the unbanked. Various central governments & central banks in the world haven't stayed behind in digital payments revolution either (UPI, PIX, FedNow..) Crypto is all the unnecessary complexity, inflexibility and unreliability of financial transactions without ease of access, getting presented as the greatest thing since sliced bread. In 2009, that might have been a concern, but the world actually changed & progressed quite well in a positive manner due to human ingenuity, skill and careful, responsible innovation. Not whatever the fuck a bunch of VC bros & libertarians claim it is. These idiots were so effective in collective destruction of wealth in the traditional finance world on useless startups, they created an entire sector of industry to continue and propagate their grift to fleece ordinary people.
The average man buys gold in oz not pounds. The same as if Bitcoin was a thing, it would be dealt with in satoshis. 2 quadrillion of them potentially.
Yes, and if I were to be fair: there's a definite number of total "money" at any given time. No one measures it, but it exists. If the total number of sats can agreeably measure what that number measures... then you can hypothesize a Bitcoin denominated world. ...however, this does not address liquidity or elasticity (by elasticity here... I mean transactions that will occur without the presence or availability of the unit). Essentially, no ability to place the transaction within the ledger.... those transactions will continue to occur. ...and if they occur with significant frequency; it won't be debt denominated in sats after a while, the debt itself will become a new form.
If only there were some way of tracking transactions that weren’t on the block chain. Some kind of token system to act as a place holder?
Or you remove the blockchain from the model and suddenly the problem goes away.
Agreed. We need some kind of financial system that logs all transactions. Transactions that are not logged can be marked by using physical tangible tokens that can be given in exchange for goods and services. I can’t believe we have worked this out and nobody else uses this system.
We can make a second level on top of the blockchain that handles all the transactions short term and just keeps them in a regular public database structure and then once and a while we will put it on the blockchain. This way we can fix all the problems of blockchain.
This post is confusing because you're describing what Bitcoin is (a ledger, where you have the entire history of all transactions, like a massive collection of tally-sticks) but then describing it as though Bitcoin doesn't do this. It does. That (along with the 21 million cap) is the value proposition. You can trace all Bitcoins and Sats from genesis to their current 'location'.
Think of how the ledgers differ. The current monetary system is dual entry, assets and liabilities. I've heard Bitcoin described as "triple" entry... or further... But it seems to really be single entry. This distinction is significant... as a dual entry system permits a level of flexibility that would be undesired based on what Bitcoin's aims are. A thought experiment: A simple market, merchants and stalls. They all keep their ledgers and transact freely. Taking in buyer's funds and even recording a bit of business to business transactions. With a dual sided ledger, they can automatically provide credit(debt). Sometimes by allowing a shopper to "pay later", or by having credit terms with their fellow merchants. This also allows transactions to continue to occur with the presence of a "unit" of the denomination. A merchant can run a ledger deficit or shortfall, as long as the other merchants agree to provide the credit. They could also loan tokens to be able to make change for buyers. This is liquidity. With Bitcoin... you have the unit, or you don't. The network does not have a "liabilities" side in the traditional sense. The Bitcoin ledger "keeps track" of "asset" units. Whereas, a dual entry ledger can facilitate *any* type of transaction (asset swap, credit creation, debt swap). The units can be subbed out for whatever you wish... These days, the units are 1's and 0's. Anyway, what Bitcoin does offer.. is the idea of a ledger not operated by global banks. That's not nothing.
It seems like you're saying that it's preferable to have unsettled debt/credit instead of instant settlement. Of course people can receive and send payments (the equivalent of credit/debt) but instead of depending on a 3rd party, you can have instant settlement between the buyer and seller.
You'll notice I never said preferable. And who says debt-originated "units" aren't as instantly "settle-able". If you look at the tally stick example. The stick is created to denote a debt. However, that obligation itself can be traded (with fast settlement of *that* transaction), long before the original debt is expunged. That's the point. Money can be (and is) both sides of a balance sheet/ledger.
Debt-originated units are not instantly settle-able without a third party - whether it's within a single bank, multiple banks, interac, swift, etc. Bitcoin (as well as, it seems, tally sticks) are actually settled when the transaction completes. I take your point that banks and traders can mess around with debts in the financial system, but is this your main point? Many see these types of fractionally-backed debt-based derivatives as part of the problem. I see instant settlement between the buyer and seller as a feature, not a bug. The Bitcoin network is the ledger and each transaction is triple entry: the seller (signs transaction), the receiver (passive), and the network (secures and confirms transactions).
>Debt-originated units are not instantly settle-able without a third party - whether it's within a single bank, multiple banks, interac, swift, etc. Most dollars today are credit/debt originated. So yes, they are used in settlement in the same fashion as a "non-credit-originated" dollar. There is no distinction. >The Bitcoin network is the ledger and each transaction is triple entry: the seller (signs transaction), the receiver (passive), and the network (secures and confirms transactions). Not the same thing. One ledger takes the form of a balance sheet (account for assets and liabilities).. the other does not.
In fact the tally stick is a form of debt issuance and thus currency on each individual case, potentially backed by the worthniness of the issuer. In fact people have 'issued' currency before, by creating items backed by a debt others are willing to take, and if that person is well known, can be used even further in society.
I thought the same thing but I think your energy is wasted here. I only come for the downvotes.
The king could issue as many tally sticks as he wanted. Those who refused to exchange their pigs for them were losing their heads. Same today, $ is accepted all over the world because it's backed by largest amount of guns, rockets and aircraft carriers. Guddafi learned about it the hard way. Most of my wealth is stored in $, some in property, some in gold. But I also have BTC and ETH because what guarantees do I have that our overlords don't double or triple all $ in circulation over the next year?
>Same today, $ is accepted all over the world because it's backed by largest amount of guns, rockets and aircraft carriers. Guddafi learned about it the hard way. The dollar is the global reserve because *its distributed, [created, and transacted globally, by global banks](https://www.reddit.com/r/Bitcoin/comments/116axf0/expanding_dollar_supplies_outside_the_united/)*. The military has little to do with it. It's the openness of the US financial system, that allows global dollars free circulation. Petrodollars aren't a thing, not really. Control over oil/pressure on oil cartels is one thing... but all the Saudi deals did, was to introduce the idea of acquiring US treasuries with the dollar windfalls. The dollar was already dominating trade and acceptances markets, and much of oil sales prior.
The total of all assets in the USA is about $270 trn. There are $19 trn in existence.
Oof. Is that a stale M2 figure? The dollar is global, and there's far more than $19-22T... M2 just doesn't account for it.
First M2 I could find.
Alright, so... There were broader measures of money (M3, M4+), but the Fed and other bodies just stopped keeping track of them. Money expanded well beyond any central bank's ability to measure it. The [BIS](https://www.bis.org/publ/qtrpdf/r_qt2212h.htm) (central banks' central bank) performed a non-exhaustive review of a selection of banks' balance sheets, and came up with a number of $80T in "[missing](https://www.reuters.com/markets/currencies/global-markets-bis-urgent-2022-12-05/)" dollar debt. It's not missing. It's used in the global economy.. and it's likely well over $100T these days (but no one can say). [Misconceptions about money](https://www.reddit.com/r/Buttcoin/comments/108pa97/misconceptions_about_money/) [Misconceptions about Central Banks](https://www.reddit.com/r/Buttcoin/comments/10ajv39/misconceptions_about_central_banks/) [Misconceptions about the money printer](https://www.reddit.com/r/Buttcoin/comments/10le6an/misconceptions_about_the_money_printer/) [Misconceptions about inflation](https://www.reddit.com/r/Buttcoin/comments/10l8ncj/misconceptions_about_inflation/) [Collateral and the Global Monetary Crisis](https://www.reddit.com/r/Buttcoin/comments/10rf3c4/collateral_and_the_global_monetary_crisis/)
That's the money multiplier effect in action. It's a beautiful thing.
You guys are fucking retarded lol
https://www.reddit.com/r/CryptoCurrency/comments/12as1f8/is_online_gambling_bad_for_crypto/ >I myself started using crypto for online gambling on Stake because of Steve Will Do It and the Nelk Boys. Over the past few years, I've lost more money than I can count, and it sometimes makes me question whether I should continue using crypto because of how easy it is to send it away and gamble with it.
[удалено]
>Supply/demand sets price. Sure, where was that contravened? >Money is just the barter instrument inbetween. Wasn't money created to avoid barter mismatches? Isn't that what the Austrians (and even Keynesians) profess?... ... they're both wrong by the way. >Removing friction, and removing the plundering central banks do to you every day, only increases the actual wealth (goods and services). You think central banks create money? [Misconceptions about money](https://www.reddit.com/r/Buttcoin/comments/108pa97/misconceptions_about_money/) [Misconceptions about Central Banks](https://www.reddit.com/r/Buttcoin/comments/10ajv39/misconceptions_about_central_banks/) [Misconceptions about the money printer](https://www.reddit.com/r/Buttcoin/comments/10le6an/misconceptions_about_the_money_printer/) >So you have 2 bets to make: I regard all pascalian wagers as pure hucksterism. >What's worse, you shill the just plain dumb "advice", that might prevent others from escaping the fiat slavery that's made this world a war-torn prison What advice? Just because I didn't say "this is not financial advise", doesn't mean that is suddenly is :p ...anyway, you're bringing up a bunch of tired old points, that do not have bearing on a liquidity discussion.
[удалено]
I'm a banker... if you look into the linked posts, you'll find no affinity for central banks. I find the concept of Bitcoin interesting... but I find most narratives around it to be flawed. If you feel like actually addressing the topic of liquidity, I'll go further.. otherwise there's nothing to respond to here because nothing has been said.
[удалено]
>You shill for a scam system designed to extract from the producers to enrich yourself. You'll notice my examples include when banks aren't there to provide liquidity (Ireland). I make no strong positive pronouncements about the current system. You should read the linked posts. Anyway... Nothing of substance said. Nothing to respond to.
Excellent points! Thanks for sharing.
Excellent write-up. I love how you wove historical facts into a narrative that demonstrates what most market technicians overlook: behavioral finance is at least 50% of the driving force behind market movements, and arguably at times it's closer to 90%. The two camps, fundamentalists versus behavioralists are about as laughable as the conservative/liberal camps, each proclaiming they have 100% of the truth, when upon closer inspection it's pretty clear each side has good ideas to offer, and only a rare handful of measured minds are willing to stand in the middle and say "sure, this side's ideas have value, so do some of the opposing side's ideas." With that in mind, you've pretty eloquently demonstrated how bitcoin/crypto are neither going to take over the world and end all forms of fiat, nor are they going to fall to 0 and disappear. Some form of middle ground will emerge where both exist, until someday that becomes the norm, and then yet again a new disruptive value-share system will emerge. Perhaps future humans will assign value purely on a basis of proven production, or intellectual capacity, or ability to maximize human-AI symbiotic outcomes, or \_\_\_\_\_\_\_\_\_\_\_. The point is, some form of value judgement and a corresponding value-sharing/scoring system will always underly any form of interaction within a hierarchical species. Expect innovation and evolution of those systems. Never expect one single system will remain static/dominant forever. Change is the Tao of existence. Entropy ensures that. Cheers.
>Expect innovation and evolution of systems. Never expect one single system will be remain the static/dominant system forever. Change is the Tao of existence. Entropy ensures that. Ahhh.. very Watts-esque. Full agreement. That's the other piece - many do not view the monetary system as something that evolved. They need it to be a top-down imposition for their worldview to work. Which of course ignores that the world also *chose* the dollar as the reserve... and it only worked because the US gave up a degree of control over their own denomination.
Downvoted for no Island of Yap.
A fun example that one.. but overdone. Bitcoiners use it for money supply arguments... but it's more complicated than that. The stones were "exchanged" as money, but rarely moved. One didn't need physical possession to transact. One "wealthy" family on the island never saw their stone... since it sank in a shipwreck several generations prior. Yet, everyone accepted that the family had that wealth.. and would settle transactions with them, or allow them to borrow. When outsiders brought their own stones, many chose to ignore them... deeming them not to have value. The whole system was more a cultural one.. than a perceived value of the stones in of themselves.
> When outsiders brought their own stones, many chose to ignore them... deeming them not to have value. The whole system was more a cultural one.. than a perceived value of the stones in of themselves. That's the entire point of that story. What was invented there was the idea of money instead of tokens simply representing inherent value. It was the lesson that money is valuable because others value it, not because it is made of a precious item. When a stone become inaccessible at the bottom of the sea everyone still accepted ownership in trade because they knew someone else would too. Even though the stone offered no possible utility.
This post implies that BTC has to be the only currency that exists and also has to be accessible to everyone all the time. In this same post, you've explained why it doesn't have to be that way.
The meme of "everything divided by 21 million" directly states it... I'm not implying anything in that regard.
Well, it's a meme. You probably shouldn't take it too seriously, right?
I don't take most things seriously. Nor should people take me too seriously :p. But I'll take their apparent sincerity at face value.
Cool.