Cryptocurrency

The Lounge General Discussion
#64

Nah. They can stop it any time they want to. But they won’t stop it until they have to … when and if it ever begins to truly complete with government controlled currencies in the real economy and banking system. At that point they can mega-tax transactions, shut exchanges, etc. But crypto currencies are still a blip in the real economy so they don’t need to do anything and rile up the crazies.

They’re true value is in money laundering. But FinCen is already all over it … bitcoins were being converted into gift cards, now those transactions are reportable to the government. For now speculators are just sucking up the other side of that money laundering trade with nowhere else to spend them in size, but that will end eventually too. Plus bitcoin seems to be pretty bad at anonymity after all!!

So I wish you all luck taking money from each other. But nobody should brag about bitcoin gains unless they’ve already converted back to an actual currency!

2 Likes
#65

when there was a chance South Korea would ban cryptocurrency this week
there was a 30% price drop…

I think it cannot be stopped
but legal policy may affect price

#66

Deposits are not money (despite the misleading labels like M1 that economists place on them). They are liabilities of a business. Borrowings. Why would a business say they owe you $100 if they didn’t receive it first? Money is paper currency and central bank reserves. That’s it. The reason why someone takes out a bank loan is to spend it. If that gets wired to a different bank, your lending bank better have central bank reserves to send through!

That’s said they can always pledge their assets to the central bank discount window to get cash which is a luxury non bank businesses don’t have. This it’s “closer to” money. But it’s not money. Fractional reserve banking means something very different than most people assume

1 Like
#67

This is all getting off-topic.
You’ve basically said nothing here. I was speaking colloquially. Credits/balances/liabilities/deposits/whatever. My points weren’t anything to do with the definition of money, or central banks’ role in settlements.

#68

I’m in the ‘bitcoin is stupid’ camp.
Fiat currencies only have value because they are backed by governments.
Governments have real powers – taxation, police, etc.
The bitcoin market is chaos – with a small number of anonymous libertarian cranks both controlling the exchanges and holding vast reserves.
I don’t trust those in charge of our banking systems, but seems like the lesser of two evils to me.

I’ll be pissed off if we end up being forced to accept bitcoin. Deflationary cash would be absolute carnage for the poor and make inequality even worse.

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#69

And here we are dipping our toes into a discussion on monetary policy. This place remains interesting and surprising. XD

@enryo Read up on Basel III if you aren’t familiar.
https://www.treasury-management.com/article/1/261/2201/making-the-most-of-your-cash-under-basel-iii.html

1 Like
#70

I wish I could give you more than one like for this.

#71

You said banks create money out of thin air. They don’t. If you knew that, I’m not clear what your point was colloquially or otherwise

#72

they do, that’s how fractional reserve lending works.

#73

That’s not what it was designed for at all. It’s a lumbering piece of trash

#74

PoS instead of PoW (look it up) or just a clever and better alternative

#75

Fractional reserve means that banks can lend out the majority of the cash they borrow as deposits. They don’t have to keep all of the cash idle in a vault or as central bank reserves, just a fraction of it. Banks can’t unilaterally create money. Ask any bank treasurer. Lots of flawed information out there, usually taking jargon labels as an incorrect starting point of fact

2 Likes
#76

but that’s how it has evolved. sorry if you don’t like it.

#77

It became slow and expensive so an obvious way to cover up it’s terribleness is to claim its like a digital gold because its unwieldy. It’s a pretty daft way to carry on honestly. Why would being slow, crap and repugnantly wasteful ever be a good thing regardless of how you spin It? Sorry if you don’t like it

#78

Man you are missing the point. it’s slow because there’s lots of demand and transactions. that’s why I say it’s become gold 2.0. Would you buy something with gold? no. you only hold it because it keeps its value. bitcoin is becoming similar. There’s nothing about bitcoin I could like or dislike, it’s just a “tool” like many others.

#79

It’s amusing to me how this has evolved since launch.

It began: BTC is anonymous, fast and decentralized.

It’s become: BTC isn’t anonymous, it’s slow and transactions are more expensive than a wire, and it turns out most of it is owned by about 100 addresses making it pretty well centralized after all.

5 Likes
#80

yes, exactly. banks lend out money they don’t have and that didn’t previously exist. when that money is redeposited, they lend out more money they don’t have and repeat that cycle based on the 1/R formula, where R is the reserve rate (normally 10% i believe). based on that, they create $10 for every $1 deposited. if that isn’t creating money out of thin air, i don’t know what is.

not sure i understand how is that flawed or jargon?

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#81

Guess it depends on your definition of “money”!

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#82

So if they implement changes to make it really quick what are you gonna do then? You can’t try and claim its like gold at all. It really is a way of spinning it’s deficiencies like they are beneficial. Other currencies have learned from the design flaws and have improved on them. Even newer currencies/protocols/whatever are learning from the mistakes of the second wave. You’re missing the point. Sorry if you don’t like it

#83

Sure does, note way back in the thread I made the comment about the importance of understanding the difference between money and credit. Banks aren’t creating money, and much of the credit that is issued is secured with high quality collateral.

1 Like