[astoor]

The irony is that Bitcoin was created in direct response to the perceived shortcomings of the traditional financial system (see the message in the genesis block), but since then the traditional financial system has cleaned itself up enormously, while cryptocurrency has had the exact opposite trajectory and is now nothing more than a magnet for actual or latent fraudsters.

[pjc50]

Bitcoin addressed at most one issue in finance, without properly tying it to the financial crisis, and since then has reinvented all the others in a massive Chesterton's Fence speedrun. It's been nothing but "oh, so that's why the rules are that way" since then.

[freeAgent]

I’d say that Bitcoin itself has been operating pretty well, minus the stupid decision to keep the block size cap in the single-digit MBs that has created tx congestion and excessive fee competition (BCH fixed that, thankfully). The problem with cryptocurrency is simply that it’s attracting to frauds, and is dominated by fraud and get-rich-quick gambling/speculation.

It’s attractive to fraud for the same reasons why it’s attractive to people who take issue with legacy finance. Your “account” (wallet) can’t really be shut down or frozen, you can transact quickly and easily with only an internet connection and a phone regardless of borders or capital controls, and the currency itself can be audited and resists inflation. All those things continue to be true, but unfortunately the current largest, visible use case is fraud.

The original use case for Bitcoin was right in the title of the white paper: P2P electronic cash. Unfortunately, that hasn’t taken off, and some governments like the US have done their best to kill it. See the IRS guidance for Bitcoin taxes from 2013 which made it practically impossible to use as cash in a legally compliant way. That was the first, and clearest, regulation of cryptocurrency I’m aware of. All other currencies are treated differently. Only Bitcoin/cryptocurrency was singled out for particularly onerous tax treatment.

[tsimionescu]

> All other currencies are treated differently. Only Bitcoin/cryptocurrency was singled out for particularly onerous tax treatment.

Well, that's because Bitcoin is not a currency, by many reasonable definitions.

[freeAgent]

How is it not a currency? It is a medium of exchange, right? That is what its intention was, as laid out in the white paper.

[mrguyorama]

You can barter with anything you want, that doesn't make it a currency. In fact, bitcoin has a way harder path to being recognized as a currency explicitly because there is no army to enforce it as a currency. That means it can only really be a currency by consensus, and if walmart and kroger don't take it, good luck making people agree to it being a currency.

Bitcoin does not meet the desires laid out in the whitepaper, not even close. Bitcoin isn't even a currency by it's own standards.

[freeAgent]

Barter goods also serve a purpose other than as a medium of exchange. And Bitcoin is legal tender in El Salvador (not that I like El Salvador or their Bitcoin law), so it actually is a currency.

[tsimionescu]

Gold and precious stones can also be mediums of exchange. That doesn't make them currency.

A currency has to be widely accepted as a medium of exchange, and it has to have a relatively stable value. Bitcoin fails bitterly at both of these. And experiments with bitcoin payments in the mainstream quickly failed (Steam, Tesla).

[freeAgent]

Your definition of a currency is incorrect. Many fiat currencies have experienced rapid devaluations (hyperinflation) while still being recognized as currencies. El Salvador has recognized Bitcoin as legal tender, so it also has at least some recognition as a currency. The IRS has not updated its guidance.

[sph]

> the traditional financial system has cleaned itself up enormously

I beg your pardon? Because we haven't heard of any Madoff or subprime loans lately, you are willing to say that with a straight face?

[worrycue]

Is anything stopping someone from running a Madoff-like ponzi scheme with crypto?

[gillesjacobs]

CeFi is not a cryptocurrency technology and thus is cannot solve shortcomings of the traditional financial system because it is the traditional financial system.

Noone who is ideologically consistent with the crypto ethos would expect that ideology overrides greed.

[psychlops]

What do you believe tradfi has done to clean itself up? Please address how the astonishing amounts of global inflation (which I assume will be in your answer) are a good thing for everyone.

[JumpCrisscross]

> how the astonishing amounts of global inflation

Bitcoin yo-yo’s between hyperinflation and hyperdeflation. Unchecked inflation is a problem. But a currency as volatile as Bitcoin is obviously not the solution.

[psychlops]

Bitcoin has neither hyperinflation or hyperdeflation. It does have volatility[0], but has gotten better. It is about as volatile as the British Pound[1].

[0] https://buybitcoinworldwide.com/volatility-index/

[1] https://www.bloomberg.com/news/articles/2022-10-20/uk-pound-...

[JumpCrisscross]

> Bitcoin has neither hyperinflation or hyperdeflation

Measured against a basket of goods, Bitcoin’s value soars and free falls.

Using a 17th-century definition of inflation, which in modern parlance is called money supply, Bitcoin is simply inflationary, but that definition swap concedes that it is a curiosity, not a currency.

[psychlops]

You are confusing inflation with volatility. Prices may rise and fall without changes in a money supply. Bitcoin's supply is well documented.

[JumpCrisscross]

> You are confusing inflation with volatility. Prices may rise and fall without changes in a money supply.

You are confusing inflation and debasement. When price levels rise, it's inflation. Even if the money supply shrinks.

This difference is meaningful because for a currency user, stability in value is more important than stability in the number of imaginary things. In 2008, U.S. dollar broad money supply crashed while central bank money surged. That is less meaningful to a currency user, or even financial market participant, than the amount of goods and services each dollar today buys compared with yesterday and tomorrow.