Can I buy a pizza with it or pay my bills with it? Can my employer pay me in it? Or is it just an “emperor’s new clothes” thing? I just don’t see the tangible value in it. Rhetorical questions, BTW, I know you can’t buy a pizza with it, at least outside of some edge cases that I’m not aware of.
I thought what made money money was everyone agreed it was valuable and was willing to exchange it for goods and services directly. I don’t see that with crypto.
I found crypto earlier than some. (not everyone – if I had more I wouldnt have to work anymore, haha!)
IMHO, the main value proposition of crypto is permissionless peer-to-peer payments. If we both have crypto wallets, and you send me an address to make a payment to, I can send that without needing anyone’s approval first. I don’t need any bank to agree to have me as a customer first, or any government to approve why the transaction is taking place. All I need is a functioning payment network, and the original Bitcoin white paper solved how to provide that and preserve anonymity. (Really Pseudo-anonymity, but only the nerds and Monero shills care about the difference)
As an academic experiment regarding permissionless payments, it is a resounding success. But, it turns out, Governments have laws regarding who can pay who, and about scamming people, regardless of the medium. So, just because Bitcoin enables permissionless payments doesn’t mean you can pay whomever you want, or makes scams somehow permissible.
Furthermore, the rapid increase in crypto prices really doomed any chance at all for useful adoption. Because people don’t want to spend crypto anymore. They view it as a Store of Value, and who can blame them, given how it has risen from nothing to a > $2T market cap, even after the recent downturn? You used to be able to use crypto in regular transactions, but not anymore.
So it is digital cash without the backing of a government and no stability.
You mean the same governments that manipulate their currency’s value?
Or in the case of the USA, a government that is spending so much that they’re basically insolvent?
Correct response
You’re not wrong, but why is not having the backing of a government a bad thing?
Because a currency without a stable backing is completely volatile. Sure the value of normal currencies fluctuate, but apart from a few hyperinflation edge cases that’s at most a few percent each month.
Small cryptocurrencies fluctuate sometimes hundreds of percent each month and even the big coins can swing ±20% every few weeks. The only somewhat stable coins are the ones directly tied to real world currencies.
Having a currency that fluctuates this heavily in value creates the exact same problems as the ever changing US tarrifs did. There simply is no wax to reliably price goods and services for more than a few days. You essentially have to barter each trade.
A currency backed by a government has a very high chance of being able to be used at any time with a mostly stable value. Sure, if the government collapses it can become worthless, but on a worldwide scale that is far, far less likely and you will most likely know if it is headed that way ahead of time.
Governments add a bit of stability for currency used as currency and not as speculation.
Tether is an interesting experiment here. They are traded as smart contract tokens on top of various blockchains. They don’t really have any intrinsic value, other than Tether LTD saying “every Tether is 100% backed by currency reserves”, and releasing unsatisfactory “audits” now and then. It’s main utility is that it provides foreign exchanges with a way to trade in something that is like Dollars without opening them up to the regulation that comes with trading actual dollars. It’s market cap is currently in excess of $180 B.
But, USDT has been around, in one form or another, since 2015. And while other “innovative” crypto products have crashed and burned, Tether has been able to keep its peg and has never failed to meet redemptions. Furthermore, it doesn’t need to be a scam. It’s whole point is to always be worth one currency unit, so all they have to do is invest that currency in safe conventional investments and they can literally make billions of dollars with very little overhead. The most obvious answer is that they are not a scam.
I still don’t really trust them, but I have used them on exchanges, always making sure to trade through Tether to something I can redeem on a US exchange for actual dollars. But, I have to acknowledge they have lasted longer than most crypto entities. I wish they would get a complete audit together, but at some point their reputation for having lasted so long needs to be worth something?
Madoff’s scheme lasted for 30 years or more, surely that means it’s worth something?
He managed to keep it up until all of a sudden he couldn’t. Madoff was undone when he had to produce 440 million that he didn’t have.
Meanwhile, Tether was able to meet billions on withdrawals, several times. After Terra collapsed, I seem to recall they saw $15B in redemptions, but I can’t find any reputable links on that. If Tether was a scam, shouldn’t it have failed a long time ago?
People outside of crypto don’t realize how massive Tether is, and how much money it has under management. As much as the crypto bros dislike Central Banks, Tether has turned into one. If Tether were to ever implode, it would take most Crypto businesses with it.
There’s a bunch of different cryptocurrencies and a bunch of different government-backed fiat currencies, all with different ranges of stability. Even stuff like gold isn’t actually “stable”, the price varies. Pick whichever range of stability suits your needs. You could use a stabletoken that’s pegged to something else - US dollars are popular.
I was on a forum in 2009-2010 when another member posted asking whether they should get into bitcoin. I found a video pitching it, can’t remember if the poster linked it or I googled bitcoin after reading their post. I said it sounded sketchy and advised against it.
To be fair there’s a lot of crypto currency that was/still is a scam. Also I’d argue that BTC, and crypto in general, still is being treated as a security that’s backed by thin air. Ie: it’s a speculative asset that doesn’t actually have any value.
There’s nothing really stopping BTC from crashing hard. It’s so wild to me how people treat it.
I could have bought bitcoin too when it was worth pennies but there was no way to know which crypto the whales were going to bet on for the pump and dump. It’s a missed opportunity but rest assured there’s plenty of universes where Bitcoin amounted to nothing.
Oh I’m not losing sleep over it. It’s basically gambling anyway.
And BTC went from approximately zero to approximately $100K over that time. What else are you advising against at this time? To be honest, I had read an article on cryptocurrency somewhere around '09, and thought, “wow, this is where currency is headed!” I asked a friend who was a nerdy computer programmer type, and he said it was like tulip mania in The Netherlands, so I didn’t invest. Sigh.
From Investopedia: (https://www.investopedia.com/what-can-you-buy-with-bitcoin-5179592) - since I don’t know everything, and nobody else has said this…
*Bitcoin launched in 2009, enabling transactions via crypto debit cards linked to Mastercard and Visa
*Bitcoin can purchase products like electronics, luxury watches, and cars.
*The SEC approved the first U.S. spot Bitcoin ETFs in January 2024.
*PayPal lets users buy, sell, and hold cryptocurrency in their accounts.
*Cryptocurrency debit cards offer an easy way to use Bitcoin for purchases.
He’s not wrong.