[desine]

They cite environmental and transparency concerns, but somehow I believe it's more about control and ensuring the continuation of the debt based fiat systems.

I have a litmus test I use when discussing global financial politics with friends - "What were the main factors you think lead to Ghaddafi's killing?"

[tsimionescu]

The debt based system will not go away if we ever move the entire economy to bitcoin (laughable as that idea is). You'll have fractional bitcoin reserve banking with absolutely no difference compared to today.

In fact, the fact that bitcoin has no on-chain notion of credit is a major limitation that relegates it to being digital gold, not a digital dollar.

[beefield]

This. So much this. The disruption in finance was moving from things as money to debt as money. And somehow the people who think current crop of crypto could work as money are so delusional that they fail to understand they are trying to turn the clock backwards, not forward. The thought that bitcoin would somehow limit the amount of money (as currently defined, I am talking about M0, M1 etc) in circulation is simply nothing short of delusional. Bitcoin will not stop people wanting to borrow and loan money and it will not stop people using other entities debt as a mean to pay other people (money, that is.)

Defi, you say. Show me a defi project that lets people borrow more money than what they have in the first place. Show me a defi project where I actually take the credit risk for the borrowers when lending the money to them. (Show me those and I show you an emerging fractional reserve bank and uncontrolled money creation by the said bank...)

[ephbit]

Let's say we had a situation where everything was backed by bitcoin (as a reserve currency).

Governmental budgets are one of the most obvious ways in which political decisions manifest themselves and become relevant for everyday life.

Do I get this right? You think that governmental budgets would look absolutely no different in such a bitcoinized world compared to how they look in the current centralbank issued money world?

You don't think the fact that central banks mostly support governmental debt shapes these budgets in a non trivial way?

[jhoechtl]

> In fact, the fact that bitcoin has no on-chain notion of credit

Precisely that was the OPs point why it is a good alternative to the debt-based financial system we have.

[tsimionescu]

I first addressed GP's point by observing that, were the global economy to adopt bitcoin as a store of value, they would likely still continue to use fractional reserve banking and continue the debt based economy, jjust dde nominating debt in BTC instead of dollars or other currencies. They are unrelated, especially as long as the BTC block chain isn't even close to fast enough to be used as a medium of exchange for a small town, nevermind the global economy.

In this phrase I was just pointing out that, given fractional reserve banking is here to stay, with or without bitcoin, it would have been better if bitcoin had embraced it and actually made it possible to put the real transactions on chain, so that at least you could in principle have a BTC bank that is transparent about the kinds of reserves it actually holds, without being forced to hold a full reserve while competing with banks with fractional reserves.

[errantmind]

The dollar was once backed by gold, so not the best comparison.

Also, I don't see a way to make fractional Bitcoin reserve banking work in practice. You can't simply issue Bitcoin you don't have.

[tsimionescu]

It's very simple: you have a banking app that shows you an amount in bitcoin. If you want to send someone else money, you get their own bank account number, and ask your bank to wire that person 1 bitcoin. Your bank talks to their bank and tells them that they are now owed 1 bitcoin.

At no point does this bitcoin have to live in the BTC wallet of you, your bank, your friend's bank, or your friend. In fact, this BTC can be entirely fictional. As long as your bank has enough BTC in their actual wallet that they are at no serious risk of running out if a realistic proportion of their customers wanted to withdraw their BTC, as determined by the Fed or other national entity, then all is well.

This is anyway the only realistic possible use of BTC itself, as the blockchain is far, far too slow to use for day to day transactions even in a large village/small town. I can also promise you that this is exactly what day to day use of BTC in El Salvador will look like, more or less, if they do go through with it.

Edit to add: the dollar was once based on gold. We've moved on from that after realizing that doesn't work. Today's dollar is very much not tied to gold, and it is used in ways gold is not.

[lowkey]

El Salvador is using Lightning Network on top of Bitcoin for virtually free, instant payments without fractional reserves. Instead of using debt or fractional reserves, Lightning allows 100% reserve asset-backed exchanges.

> the dollar was once based on gold. We've moved on from that after realizing that doesn't work.

Citation needed.

My understanding is that governments moved off the gold standard because they couldn’t debase the gold-backed currency without getting caught. Moving off the gold standard was devastating for citizen’s savings and the constant debasement was used to pay for endless wars.

WWI was only made possible becauuse countries were debasing their currencies instead of raising taxes.

[tsimionescu]

The world moved on from the gold standard briefly at the start of WWI, but then returned. Then, during the Great Depression, the need to better control their currency and do large financial transactions for which they simply didn't have enough gold spurred most countries to move away definitively from it. This spurred recovery from the Great Depression and allowed huge investments in needed work.

All of a sudden, it became clear that well functioning economies could reliably promise money that would become available tomorrow, and use it to start getting there today. This is a major boon to any country, and having to save up resources until you can start huge infrastructure projects would be a return to terrible times.

Later edit: As for the claim that El Salvador would use the Lightning Network, I highly doubt that the citizens of El Salvador will each have a bitcoin wallet and lightning channel connected to it. Much more likely, some citizens will have some account with a bank (exchange) that will facilitate payments through the LN or whatever other mechanism they chose to use internally, that no one will really care about.

Of course, with bitcoin as volatile as it is, no one in their right mind would pick up a credit in BTC, so the greatest need for fractional reserve banking will be far away. Even so, if people start buying heavily into bitcoin, I wouldn't be surprised to see banks/exchanges start to offer BTC that they don't yet own.

[lowkey]

My understanding is that the only defect of a gold standard for countries was that they couldn't easily debase their currencies, which historically has been the easiest way to fund wars. Currency debasement hurts the citizens, particularly savers so the individuals never benefit from currency debasement.

For dishonest governments who wish to spend without limit but don't want to raise taxes, fiat currencies allow debasement which benefits dishonest politicians. It does not benefit the people - ever.

[errantmind]

This only works if people don't insist on custody of their bitcoin. Also, as was already mentioned, lightning network solves scaling problems while preserving users' custody

[beefield]

You do not need to issue any new bitcoin. What you need is a trustworthy entity that borrows your bitcoin and gives you an IOU slip, which you can then use as a means to pay other people. That slip, stating that whoever owns the slip is entitled to one bitcoin from the trustworthy entity, is from economical point of view as good as bitcoin. And if people want to increase the amount of those slips, there is nothing in bitcoin that stops it. Ergo, in bitcoin economy money supply is not restricted.

[errantmind]

As I mentioned elsewhere, this only works if people don't insist on custody of their bitcoin, and a lot of people (although not a majority) would.

Also, do you have some strong historical evidence fractional reserve banking is good economically over long periods (100+ years)?

[Centrino]

Gaddafi had launched the idea of a pan-African gold dinar at least since 2002. He was killed in 2011. The driving force for military action against Lybia in 2011 was not the US, but France. Obama and Hillary Clinton only reluctantly went along with Sarkozy's initiative for military action. Your suggested link between Ghaddafi's killing and "debt based fiat systems" is a conspiracy theory promoted by Russian propaganda channels like RT, but not backed up by facts.

[desine]

>Gaddafi had launched the idea of a pan-African gold dinar at least since 2002. He was killed in 2011.

True, and I don't claim it's fact (discussed in sibling comments) - just something to consider. But there's also a difference between floating the idea, and amassing enough gold to actually pull it off, and he was acquiring quite the stack from what I hear.

>Your suggested link between Ghaddafi's killing and "debt based fiat systems" is a conspiracy theory promoted by Russian propaganda channels like RT, but not backed up by facts.

There's that phrase again. Not everything RT says is a lie. I don't make the claim to know the inner workings of the global political elite. I just like to see which of my friends only get their propaganda from MSNBC/CNN/Fox, and which like to sprinkle in a little zerohedge and RT

[sofixa]

And there's a nice angle that Sarkozy's election campaign was maybe financed by Lybian money ( the court case is ongoing as of now)

https://en.m.wikipedia.org/wiki/Alleged_Libyan_financing_in_...

[grahamlee]

Oh, is it that he refused to give up the key to his crypto wallet?

[2muchcoffeeman]

It can be both. There is no control, or transparency AND we might mess up the environment more? Pass.

[cassepipe]

It may be but what is your litmus test about? Can you elaborate on it?

[anticodon]

Ghaddafi planned to stop selling oil for dollars and sell it for gold.

It would be a disaster for US, because US enjoys benefits of printing as much money as it needs to purchase anything from abroad exchanging zeros and ones that cost nothing for real natural resources and goods from other countries.

Just about any country leader that announced plans to stop using USD for trade, was killed in some way.

Or, if USA isn't brave enough to openly attack the country, they declare it "hostile" and try to suffocate using sanctions (e.g. Iran).

[dmitriid]

> ones that cost nothing

Second largest economy in the world

Second-fourth largest industrial country in the world

...

costs nothing

[akiselev]

More military spending than the rest of the world's superpowers and their vassal states combined...

Costs nothing!

[dmitriid]

1.5 trillion in trade with EU, China and Japan alone.

But yeah, sure. The dollar is a worthless piece of paper that has nothing behind it except the military.

[anticodon]

USA has a huge and constantly increasing trade deficit, meaning that it buy more goods and resources than it produces itself. It's an unequal trade that greatly benefits US and makes all the other world poorer with each batch of printed money.

Industry output percent in the USA GDP is small and becoming smaller with every year, while US consumes about order of magnitude more energy per capita than even EU countries.

This is why US needs most expensive army in the world and the need to rig elections, organize coups and revolutions in almost every other country.

[akiselev]

I used the same ironic "Costs nothing" phrase as you did.

But yeah, sure. Get all defensive about someone agreeing with you. :)

[astrange]

Conspiracy theory about moving off the petrodollar, presumably.

[desine]

It's not a conspiracy theory that he wanted to create a gold backed Pan-African currency. He openly promoted it. It's not a conspiracy theory that this would have very possibly undermined the petrodollar and all Western currencies. It's not a conspiracy theory that the United States and its allies have supported coups, rebellions, and the like to maintain their power in the past.

[astrange]

The people who believe this think we have constant secret inflation in the US, except they also think we don't have inflation because the "petrodollar" forces everyone else to absorb USD, except they also don't explain why other countries like Japan printing JPY doesn't cause inflation.

I don't think a mere thing like what currency you use stops the FBI from assuming everything in the world is their jurisdiction.

[desine]

One other thing - I hate the term "conspiracy theory". It was literally coined by the CIA to discredit discussion of actual conspiracies. But that's just another crazy conspiracy theory for another HN thread.

[sgift]

> The Oxford English Dictionary defines conspiracy theory as "the theory that an event or phenomenon occurs as a result of a conspiracy between interested parties; spec. a belief that some covert but influential agency (typically political in motivation and oppressive in intent) is responsible for an unexplained event". It cites a 1909 article in The American Historical Review as the earliest usage example,[37][38] although it also appeared in print as early as April 1870.[39]

And it seems they even used time travel to do it.

[desine]

Sorry, popularized would have been more accurate. Or perhaps weaponized. The term did exist before then, but the usage wasn't prevalent, and more directed at actual "conspiracies" - multiple entities, such as businesses or political rivals, working together illicitly

[jollybean]

The public justification for killing Gaddafi is 'stopping the imminent genocide', which by the way, he literally declared he was about to commit.

But the real smart people who have the special knowledge know that it was obviously <<insert conspiracy theory here>>.

The thing is, geopolitics is messy and there are quite a number of 'factors' many of them true to some extent. The Gulf tribal leaders absolutely hated him and they (i.e. Qatar) lent their special forces more or less as 'personal vendetta' than anything.

There are definitely arguments about Oil and related contracts - but Gaddaffi through the diplomacy of his son was well on his way to 'public reconciliation' to the point where there was a lot of money being made there, and it's entirely doubtful that some new, unknown clan would make it any easier for Westerners to make money.

If there were an obvious and very popular contender for power who was on the precipice of uniting the nation and he was already tacit 'backed by the west' - then you could make the argument that the intervention was on the style of the overthrow of Mossadegh in Iran, but this really wasn't that situation.

The question says more about the person asking it than the answer.

The real question to ask someone when they are talking about 'Bitcoin' is how much Bitcoin (or other crypto) do you own? Because I find it's like talking to people in Amway or Scientology.

[anticodon]

The public justification for killing Gaddafi is 'stopping the imminent genocide', which by the way, he literally declared he was about to commit.

If a country that doesn't have vast amounts of oil "declares imminent genocide", would US or EU intervene? Of course, no.

Also we all know that Iraq had "weapons of mass destruction".

[desine]

>The public justification for killing Gaddafi is 'stopping the imminent genocide', which by the way, he literally declared he was about to commit. >The thing is, geopolitics is messy and there are quite a number of 'factors' many of them true to some extent.

Yes, exactly. It's not that I know I am right, or that there's one answer. But it is interesting only one of the discussions is allowed, and one very plausible explanation is universally labeled as a "conspiracy theory".

>The real question to ask someone when they are talking about 'Bitcoin' is how much Bitcoin (or other crypto) do you own? Because I find it's like talking to people in Amway or Scientology.

FWIW, basically none. Might have an old wallet on the computer in my closet with ~.1 left on it, from back when I used to buy drugs off the silk road. But I'm not a crypto fanatic, though I do find it interesting.

[bawolff]

> But it is interesting only one of the discussions is allowed

Is someone stopping you?

Having people not be convinced is not the same as preventing discussion.

[desine]

The rhetoric used stops me from bringing it up, in certain circles. I really only can bring it up with close friends/family, or anonymously on the web. I've been called anti-semitic, racist, alt-right, my intelligence insulted. Again, related to another comment in this thread, it's seen as a "conspiracy theory". The mainstream news media didn't cover it, but certain less tasteful websites did.

[bawolff]

I mean, you presented the theory with no evidence that it happened. Your argument is basically that the united states could have done it, had motive to do it, and has a history of doing underhanded things in the past. Even if for the sake of argument i grant all of those things, its still not any more plausible than the official story. If you don't want people to call it a conspiracy theory, get some actual evidence that they actually did do it. Saying they could have done it and might have wanted to isn't enough.

[lxdesk]

You don't even have to look to geopolitical analogies. It's an everyday thing, all the way down to basic "exclusive club" gatekeeping.

There's a longstanding tendency across financial systems historically to use the law to bar access to the "real" products for various reasons that happen to favor the incumbent elite. Instead, if you get any access, it's the version mediated by a middleman of some kind. There is often a rationalization in play, but the effective control over societal outcomes is the same.

Want to found a disruptive company in 16th century Europe? You had better have a royal charter.

Maybe it's the 19th century and you have a great invention: "Patent fees for England alone amounted to £100-£120 ($585) or approximately four times per capita income in 1860." [0]

You're a laborer in 1900, and you've pooled a little nest egg you want to use to trade stocks? You can't afford the real stuff, so you will have to play in a bucket shop.

You're a middle-class Black person in the 1950's US and you want to own a home or start a business? Redlining ensures that you won't get a good deal or your neighborhood of choice, neither will you get a loan from the major banks(at least, not one on reasonable terms).

And so I have to conclude that the whole basis of the debt system is always subject to some form of gatekeeping, at some point, and that's what has drawn people back to precious metal exchange over centuries, despite its limits. We've been through a long period where debt worked really well, because our economies experienced industrial growth patterns and could coexist within a stable framework(some world wars and interventions notwithstanding). That does not mean it's better or forever.

The same kind of framework is in the process of being enforced in cryptocurrency; cypherpunk-friendly privacy coins that have some adherence to Bitcoin's original spirit like Monero or ZCash have been delisted from most exchanges through regulatory pressure, while defanged "blockchain economy" tokens have stones-throw availability and heavy promotion. Meanwhile a substantial number of token exchange services will play games with your ability to withdraw to keys you own.

But I think that's going to be about as hopeless an endeavor as stopping music piracy was; it's abundantly clear that we're headed towards a long term trend of breakdown in "trust me" debt economies and their model of operation, even if some of the leaks get plugged in the near term in the way that Spotify "solved" piracy[1]; what "trust me" now results in at Internet scale is increasingly sophisticated ransomware hacking. So, while debt and lending itself could still exist and be a rewarding venture, tokens lacking credible mechanisms to back their fundamental value and consensus are going to wash out.

(I also think the El Salvador plan is a stunt - a way of marketing the country with a side of personal benefit - albeit one that could become consequential in surprising, unpredictable ways, in the way Bitcoin has been generally.)

[0] https://eh.net/encyclopedia/an-economic-history-of-patent-in... [1] https://www.digitalmusicnews.com/2018/03/22/music-piracy-spo...

[desine]

This is a great comment. Great examples of gatekeeping. I think you're right on the breakdown of "trust me" models. I also see a problem with fundamental value in the crypto space.

And I switched from a mild crypto believer to a metal stacker a couple of years ago.

I think one of the next big avalanches will be some more issues with crypto exchanges. There's a lot of people in the crypto space without the technical knowledge to properly secure their assets. I was one of the people who got burned by Mt. Gox. It wasn't everything, I had multiple wallets under my own control, but it was enough to hurt. And that wasn't a one time event.

[Kiro]

Who are your friends? Not even my most educated friends would be able to provide an answer at all.

[desine]

Mostly crazy people.

edit: but it's sad how little attention people pay. Ghaddafi predicted the mass-immigration problems that Europe now faces. Libya, for all it's faults, was the place to go for anyone born in Africa looking to pull themselves up by their bootstraps. Not just free education - salaried education. Free electricity. Free farmland and equipment. He did plenty of wrong in his life, but he also did some things right as a political leader.

[sgift]

> FWIW Ghaddafi predicted the mass-immigration problems that Europe now faces. Libya, for all it's faults, was the place to go for anyone born in Africa looking to pull themselves up by their bootstraps.

Not that I want to disregard Gadaffis warning here, but the UN itself predicted that this will happen and asked the countries to please provide more money to help the people in the camps or they will move on to Europe. No one listened, people moved on. This was not some kind of secret knowledge, more a type of "it's not yet a problem, ignore it"

[ajmadesc]

Was it along the lines of, trying to convince OPEC to stop accepting dollars?