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by errantmind 1798 days ago
I've wasted enough time on this site explaining my position. Too few care about overcoming their own bias. However, one more time:

* Yes, cryptocurrency is overvalued with respect to its current adoption. That doesn't make it a ponzi scheme, tulip mania, etc.

* Yes, a LOT of people are more interested in getting rich from crypto than they are in the real benefits of decentralized finance. That doesn't mean there is absolutely no underlying utility

* Yes, current volatility impairs its value as a 'currency' for most people, however this will stabilize over time as adoption increases.

My nuanced opinion as to the value of (some) cryptocurrencies: Forced, un-directed inflationary monetary policy leads to wasteful spending and low standards with regards to investments. This is meant to preserve economic growth at all costs, but people refuse to consider the idea that economic growth at all costs may not always be beneficial for society over longer timelines. It somewhat makes sense in a vacuum, but not when you need to consider issues like climate change and institutional corruption.

If you believe this like I do, you don't want your money to be continually devalued to prop up failing financial institutions, nor to feed multi-sector speculative bubbles, nor to prop up (by way of low interest rates) poor investments. However, the FED cannot be trusted not to devalue money to preserve short-term economic stability. In fact, people in general cannot be trusted with this.

That is the value of cryptocurrency, to me anyway. It cannot be unilaterally tampered with. That is enough of a value proposition for me to prefer it over fiat.

2 comments

If you want to hedge against devaluation of your currency, then buy land, grow olive trees, not bits.
I'm arguing I shouldn't have to hedge against the devaluing of my currency (although I do), instead my currency shouldn't be continually devalued. Why is it a given that I have to buy stuff to retain value?
hard to pay for a apartment in paris in land or olives in Argentina - but I can use bitcoin.

Meanwhile it is almost impossible to send out Argentine money without government approval. This is the case for most non OECD countries....

> It cannot be unilaterally tampered with.

Perhaps the tokens on the blockchain can't be tampered with but their real value is manipulated by small groups of people all the time. Bitcoin lost around 40% of its value in the 10 days after Elon Musk sent out a negative tweet about it in May. In less extreme examples, the daily price changes are subject to the action of small groups of wealthy traders. This is everything but decentralised; it's happening regardless of how many nodes are validating the network and I don't know why you're assuming that it will change over time.

> you don't want your money to ... feed multi-sector speculative bubbles, nor to prop up (by way of low interest rates) poor investments.

I really don't think that cryptocurrencies are saving us from speculative bubbles and poor investments.

> Perhaps the tokens on the blockchain can't be tampered with but their real value is manipulated by small groups of people all the time

One of the only reasons people focus on its exchange rate against the dollar is the dollar has disproportionately more adoption. As adoption of cryptocurrency increases, its volatility against other currencies will decrease

> I really don't think that cryptocurrencies are saving us from speculative bubbles and poor investments

People messing around with defi get-rich-quick schemes don't fundamentally affect my ability to buy a house. The FED keeping interest rates near zero, along with QE, does. It is driving up the prices of houses and other assets, which effectively punishes people who prefer to save as opposed to taking on debt.

This is hard for some people to wrap their head around, but not everyone wants to take on loans to buy stuff. Contrived example: if a house sells for $300k with interest rates at 2.5%, but $600k with interest rates at 0.1%, I'm in a worse position in the latter situation if I want to pay cash for the house from my savings.

We could have a whole separate discussion on the usefulness of debt financing, and ways to profit off investing money in assets that appreciate faster than debt interest rates.. another time.