[yunohn]

> If you were to decide to write your data onto a gold ingot

Why do crypto enthusiasts feel the need to use gold as a strawman? The vast majority of non-crypto people use digital money (in local currencies), and have never touched gold in their lives. Digital money works great, and doesn’t need a blockchain.

[poetaster]

Trade unions beat inflation by helping negotiate higher wages.

[hackingforfun]

> Why do crypto enthusiasts feel the need to use gold as a strawman?

Well, at least the US, the government treats crypto as property, at least tax-wise (actually it's taxed just like real estate or gold). It's just that crypto is much more easily transferable than real estate or gold.

> The vast majority of non-crypto people use digital money (in local currencies), and have never touched gold in their lives. Digital money works great, and doesn’t need a blockchain.

I understand this argument. The traditional financial system is quite mature, and works pretty well. I do have a few concerns with it though:

•Negative interest rates in some parts of the world

•Ever increasing sovereign debt throughout the world, with no intent of ever paying it back

•Lack of ability for 24/7 payments, or even instant payments (at least in the US, however, this fortunately seems to be changing with things like FedNow)

•No APIs for banks which make things like screen scraping necessary for data aggregation, i.e. Mint, or verification tools, i.e. Plaid (and I know this opens a can of worms because banking data should be regulated and private, but still, I've seen this API complaint on HN before, and crypto is a more open system, that could also have layers of permission added to it)

This leads me to another point, which is actually a question. How do people here beat inflation? Stocks? Sure, I have some stocks, too. But crypto yields are some of the highest right now, and it isn't all just some manipulation or leverage or something. Take a look at proof of stake coins, you can stake say, Polkadot, on Kraken, for 12% APR [1]. You can also stake Polkadot, directly, without using an exchange as an intermediary, it just requires more technical skill. The staking return on proof of stake coins is a reward for helping secure the proof of stake network.

I've heard Charles Hoskinson, the creator of Cardano and co-founder of Ethereum, say in one of his videos that we need a new asset class in order to make up for this inflationary environment. And also, I would add, that we need that to accommodate for what I consider to be a war on cash. I'd be happy to keep fiat in a savings account, and I did for many years, until the rates on savings accounts went to basically zero. Now people are basically forced to hold riskier things like stocks, or if they have an even higher appetite for risk, crypto.

In short, I don't think everything in digital fiat is going perfectly well. If it was, I don't think I'd find crypto as attractive.

[1] https://www.kraken.com/en-us/features/staking-coins

[yunohn]

> government treats crypto as property, at least tax-wise

This is because the crypto community by and large also uses it like an investment asset, and not a currency.

> Negative interest rates in some parts of the world

This is to boost spending into the economy, and not as a result of currency being fiat.

> Ever increasing sovereign debt throughout the world, with no intent of ever paying it back

Sovereign debt is a problem, but it’s not solved by using an supply-limited cryptocoin. Governments exist for the people (corruption and inefficiency notwithstanding) and will create/spend money to build infra and promote the economy for its people.

> Lack of ability for 24/7 payments, or even instant payments

It’s good that you acknowledge a lot of these are USA-specific problems, because indeed, it’s possible to do 24/7 instant digital payments in most of Europe and Asia.

> No APIs for banks

Again, this is solved in EU (PSD2) and Asia (UPI in India). There are lots of apps that use these APIs and have created a burgeoning FinTech landscape.

> How do people here beat inflation

This is a social policy issue, and does need to be solved (not by currency changes though). The only people who worry about money vs inflation are wealthy people. Everyone else is trying to survive, and couldn’t care less about hodling crypto.

> proof of stake coins

These put early adopters and wealthier owners at an unfair advantage. Thus furthering wealth disparity. Even with fiat, the wealthy class can make good returns and avoid inflation, like you mentioned. The returns vary, but but so will crypto once adopted widely.

> reward for helping secure the proof of stake network

This is really wasteful. I’d much rather investments that support real-life industries, local entrepreneurship, or even just plain index funds that support the entire market.

> war on cash

I fully agree that the ruling class has been screwing over the average person, by devaluing their labor and greedily extracting profits.

But again, it’s a social problem, not one that tech like crypto will ever solve.

[hackingforfun]

I appreciate your response and I think you make a lot of sense. However, it sounds to me like you trust governments a lot more than I do. I think the first priority of politicians and governments is to stay in power, and everything else, including social good, is an afterthought. I'm not an anarchist, and I do think that having some government is good, but I appreciate that there is now some (potential) competition to sovereign currencies because I think governments are not managing their currencies well and that affects their people.

I have an issue being an American and USD being able to be printed almost endlessly. Also, hopefully The Fed will eventually raise rates again, but we won't know until that actually happens, and until then, high inflation, good stock performance, and basically zero interest on savings accounts (which I think is a problem).

I also think that crypto pushes those slow to change to innovate to keep up. But, as you point out, other parts of the world are ahead of traditional banking vs the US, so that has the same effect, but I think coming at it from all sides, forcing static industries to change, is a good thing.

I think it's also worth taking note of how the US changed it's tune on creating a CBDC, I assume because China is way ahead in that regard. Again, innovation is forcing those slower to change, to change. Speaking of that, do you think if China's CBDC takes off, that traditional finance will have a chance competing? Something like that could become the new world reserve currency and other countries have to keep up their innovation so that they can compete with that.

Some other specific responses:

> This is because the crypto community by and large also uses it like an investment asset, and not a currency.

I don't have an issue with this, but anyway, I think it's because the government wants a tax cut. They could make it a currency / legal tender. Some countries have (El Salvador). It looks like more South American countries are soon to follow (Panama could be next [1]). I think this is also an example of how this technology is not going away anytime soon.

> This is to boost spending into the economy, and not as a result of currency being fiat.

This is still an example that the existing system has some problems.

> The only people who worry about money vs inflation are wealthy people.

Well, I'm curious to know how folks on HN (some of whom are wealthy, startup founders, etc.), are thinking about problems like this.

> This is really wasteful. I’d much rather investments that support real-life industries, local entrepreneurship, or even just plain index funds that support the entire market.

Crypto does support entrepreneurship and it creates jobs (locally and globally). New platforms are being created on it. I don't think everything should always stay the same and I don't think traditional financial systems should be the only option. Let's iterate and innovate.

> But again, it’s a social problem, not one that tech like crypto will ever solve.

Again, I don't trust that governments actually care enough or will actually do that much to change existing structures. Something like crypto has the potential to force them to change. Also, there will at least be a wealth distribution to crypto investors, and the barrier to entry is much lower than traditional markets (in part because it's new, but also in part because it's a global technology that is not tied to any government).

[1] https://www.cnet.com/personal-finance/panama-unveils-bill-to...