[csomar]

The discussions around crypto here kind of proves that you cannot use popular opinion in HN to predict the future. People were very negative (and still are) about crypto. Market cap kept proving them wrong year after year and we are here with around $2.6 Trillion and yet people here still think crypto is going to die.

It's interesting because in startups, you learn from the first day that you should listen to customers and follow the demand. The demand is very high and some people were puzzled how other people where depositing money in "shady" exchanges. Yet, that's a perfect example of "demand" that needs instruments to be satisfied.

Reality check: Most of the world suffers from hyper-inflation at worst and inflation at best. Not everyone lives in the USA/Europe and has access to good banking and investment options. Not everyone cares about their governments like in a developed first-world country.

Crypto is here to stay and it is going to play a significant role in global finance. Somebody here should read what the bureaucrats at the IMF thinks, or look at the roads in New Delhi. Gov. blocking crypto, yeah, right.

[scottcodie]

Inflation isn't bad. Most of the world doesn't suffer from hyper-inflation. Decentralized finance doesn't provide a tremendous benefit over a trusted third party. High volatility and high transaction cost makes it a poor choice for a currency. Most of the worlds economy already runs on digital transactions without the need for crypto. There are plenty of reasons why crypto doesn't make sense and it is perfectly rational to distance your financial market from crypto.

[rfd4sgmk8u]

Inflation is bad. Hyperinflation is worse. Reported CPI does not reflect actual inflation. One just needs to look at asset prices, stock prices, etc to see what is happening. You and everyone else is being robbed, every day, and it gets worse...

I strongly suggest you look into why people would want "censorship resistant, decentralized, non-state, peer to peer currencies". The existing financial system doesn't make sense. Stores of value outside the reach of the state is highly desirable. The ability to transmit value, trustlessly, anywhere on the planet via a communication channel is a breakthrough technology.

Who wants inflating, dirty, war promoting, state based fiat, when they can have deflating, clean, peace promoting, non-state based cryptocurrency?

[m-p-3]

Actually a low and predictable rate of inflation is good for the economy.

https://www.bankofcanada.ca/2020/08/understanding-inflation/

[inter_netuser]

What else would you expect a bank with an inflation mandate to say?

"sorry we are criminals, but it's for the best"?

You could try to pick a source that's at least not entirely biased.

[jazzyjackson]

Inflation is a pressure to spend, people with something to sell enjoy this benefit, everything in moderation.

[scottcodie]

I'll take inflation over wild volatility any day

[scottcodie]

I want a stable currency that is easy and cheap to transact. All that other stuff is just idealism.

[inter_netuser]

Do you have any investments in bonds?

[scottcodie]

Yes

[rfd4sgmk8u]

This is not financial advice, but get out of bonds. They are bleeding value. The coupon is not even meeting inflation. Its a bad asset. I feel very sorry for folks that are relying on this for income, retirees, etc.

The next thing you read about will be the $100T in the bond market trying to find exits to something that has any kind of return to outpace inflation.

Maybe that will be Bitcoin, an asset that has grown >100% per year for the last 10 years.

[whb07]

Tell that to the retiree living on a fixed sum for life.

Of course inflation is bad you should see what $100 over 10 years at 2% inflation is.

Now try it for 6%+.

It’s the reverse compounding for savings people should strive for.

Who did you learn your basic economics from?

[scottcodie]

To your example, imagine what would happen if every retiree hoarded their money under their mattress instead of allowing capital to be reinvested. Inflation is an incentive to keep money moving. Generally, we can't keep prices at a perfect equilibrium with economic growth & deflation is much more dangerous than inflation (think about holding debt and expectation of capital returns). Also, social security in the US adjusts for inflation so a retiree will see more money as time goes on.

[whb07]

Deflation is good, you want prices to fall. See electronics for a quick counter example.

If everyone stashed money in mattresses (as if), then all the banks would be forced to start enticing would be depositors with “store your money with us we will pay N% interest!”. This would bring out the savings from mattresses to be used.

Social Security is just one form of retiree income, to which I’ll tell you because they are the ones that pay and the gov dictates the “official” CPI, they are heavily incentivized to downplay inflation.

For an example of this, see how many times they have changed the CPI formula. Just recently the FED put out a tweet essentially saying:

“ Thanksgiving dinner serving of poultry costs $1.42. A soybean-based dinner serving with the same amount of calories costs 66 cents and provides almost twice as much protein”

This tells you how they think and how they fudge with the numbers.

Last but most importantly, not any single group of humans or much less gov bureaucrats can set and perfectly dictate a market. Its too complicated. Every time they or someone meddles, they make it worse.

[rsj_hn]

> If everyone stashed money in mattresses (as if), then all the banks would be forced to start enticing would be depositors with “store your money with us we will pay N% interest!”. This would bring out the savings from mattresses to be used.

No, banks would not be forced to do that. First, banks don't need deposits and some big banks - investment banks - refuse to even accept deposits. Banks make money by borrowing from money markets at one rate and then lending at a higher rate. Their value is credit analysis and credit intermediation.

E.g. if you are a household, then you would like to borrow for a mortgage. Well, the Smith Family does not have access to the bond markets. But Big Bank does. Big Bank makes loans to thousands of families like the Smith family, it does all the credit analysis checking their work history, etc, and then it either sells bonds to raise the money for the mortgages, keeping the mortgage on its own books, or it packages up the mortgages and sells them off as mortgage backed securities.

It is the fact that you can't borrow from the money markets but banks can that explain the existence and profitability of banks, as they sit between you and the capital markets. If you kept your money under a mattress, the banks would still sit between you and the capital markets. If everyone emptied their bank accounts overnight, the bank would need to sell some assets for reserves, and then buy paper money with the reserves, and then give you the paper money. The Central Bank would then purchase assets creating enough replacement reserves and the system would continue as before, just with a lot of money stuffed in mattresses. In fact this isn't even theoretical, as there is a lot of drug money in the form of cash hiding in Latin America. It's not in mattresses but it has left the U.S. economy and no one cares as we just print more.

Whether or not banks want to get into the deposit game is a function of whether they think the deposit fees and customer relationships created will be of sufficient value to offset the costs of providing those services. For many banks, getting depositors establishes a relationship in which you will turn to that bank when you need a loan, etc.

Moreover the interest charged to banks is not subject to manipulation by households that refuse to deposit their money in banks, first because banks don't lend deposits, but second because the bank's cost of funding is determined by the Central Bank's overnight interest rate plus a premium for the credit-worthiness of the bank itself. Whether the bank does or does not provide deposit services is irrelevant. Deposit services are purely sales channels and fee generation channels.

[mgh2]

Why should someone not producing receive income, unless their money is producing value for them?

[0xB31B1B]

marketcaps in crypto mean nothing. The universe is full of wash sales, there is not 2.6T of liquidity, a ton of volume is insanely leveraged and amplified through defi pools, and looking at a transaction volume adjusted view of the world, like 99.9% of transactions are valueless gambling OR money laundering. Lets see what happens after the run on tether happens, then we can talk about what the crypto world looks like.

[aeternum]

A more accurate statement would be that volume means nothing.

Market cap absolutely does. It's meaningful that of the 18.8mil btc out there, no one is willing to part with one for less than $56k.

Even the Tether concern is somewhat outdated. It now makes up only 4.5% of btc & eth's combined market cap. The mkt cap of btc and eth fluctuates about that much every few days, is it enough to really matter?

[csomar]

Even at 1/4 of that, it's $650bn. That's a tons of value.

> like 99.9% of transactions are valueless gambling OR money laundering.

You need to prove that. GBTC and CME options volumes/open value are in the billions. I don't think people are laundering money through these instruments.

[0xB31B1B]

You don't need to launder money through GBTC to get exposure to the assets that money launderers use (BTC) to launder money and reap the upside of a growth market in cryptocurrency based moneylaundering. its a smart play tbh, but the 99% off chain economic benefit from crypto today is money laundering, evading KYC protocols, tax evasion, ransomware related transfers.

[terafo]

> 99% off chain economic benefit from crypto today is money laundering, evading KYC protocols, tax evasion, ransomware related transfers

You still need to prove that though.

[0xB31B1B]

No, you need to prove the off chain economic use cases. The well known use cases are all illicit.

[daveed]

> Most of the world suffers from hyper-inflation at worst and inflation at best. Not everyone lives in the USA/Europe and has access to good banking and investment options.

Real question - you mention earlier to "follow the demand". Is there evidence that demand for crypto is coming from countries with unstable banking?

[inter_netuser]

Yes. Page 7 in the document.

https://think.ing.com/uploads/reports/IIS_New_Tech_Cryptocur...

The more unstable the country, or higher inflation - the higher penetration.

I'm surprised people still ask these questions. It this not painfully obvious?

[ac29]

Your referenced figure is an "index of positive attitudes" towards cryptocurrencies, not an actual measure of adoption such as amount held or trading volume.

[inter_netuser]

The only thing that matters is mindshare and if the opinion is positive or negative.

Read the rest of the report. The details you want also exist, but you'll have to pay for that education, only so much you get for free.

[dufferzafar]

Hi, I live in Delhi. New Delhi is one of 11 districts in Delhi.

Not sure if you meant "look at the roads in New Delhi" in a "derogatory" sense, but I'd just like to say that the roads in New Delhi are some of the best roads here.

[kamaal]

>>Not sure if you meant "look at the roads in New Delhi" in a "derogatory" sense

I live in Bangalore(Roads here are darn horrible) not Delhi, but instead of looking at this in an "derogatory sense", in all honesty what the person is actually right.

In the overwhelming number of issues facing India- Literacy rates, hunger, infrastructure, social crises, is crypto the biggest issue facing India?

[dufferzafar]

> in all honesty what the person is actually right

I agree. I was just nitpicking; that roads in New Delhi are actually pretty good. You should look at the roads in rest of the Delhi. The district that I live in (North East) has infrastructure in such stark contrast to New Delhi that it doesn't even feel like the same city tbh.

> is crypto the biggest issue facing India?

It absolutely isn't.

But somebody begs to differ: https://www.livemint.com/news/india/pm-modi-has-a-warning-fo...