Well, I consider that the "bad" aspects of banking are state-induced.  Of course, banks are on one hand private entities that want to make money, and as such, they want to get your money.   But in as much as they would be private entities in fair competition, a market would emerge for every service provided and the greedy ones would be out of competition wrt.  less greedy ones, as is the case in every free market.

However, banks have become, despite themselves, parts of the financial control of states.  Some regulation in the banking sector can be seen as customer protection, but most of it, especially KYC / AML is nothing else but forcing banks to be part of law enforcement.  That banks take fees and that this is some friction is one thing (but crypto also has this kind of friction).  The REAL problem is that banks have to comply to a regulation that is for 90% state interest, and only for 10% consumer protection (the funny games that led to the crisis of 2008 were not against regulation but against consumer interest - the Swiss bank privacy has always been a consumer interest, but has been broken because every bank in the world is now turned into some fiscal law enforcement agency of the USA.  The fact that you cannot freely deal with people through bank accounts is not because banks are playing it rough on their customers, but rather because they have to comply to state regulation, not in the interest of their customers, but in the interest of states.

This is why, even though bankers are a greedy lot, I consider that the main problem with banking comes from their compulsory compliance with states.  Banks are in a certain way enslaved by states to do their dirty oppressive stealing jobs.


I agree with you that the current price of an asset is the market's best guess of the future price, taking into account that it might make a mistake.  That is, if the market gives it a 5% chance that bitcoin will be $ 10 000 in "the future", the market price now will be $ 500.

However, and that is where our opinions differ, the market may very well estimate that *speculators* will have driven the price to $ 10 000 with a probability of 5% in the future.  In other words, the use of bitcoin as a currency may very well be estimated at essentially zero, as long as speculators now speculate that there will be speculators buying it for $10 000, they will pay $ 500 for it now.  Compare it to a random work of art.  If you think that with 5% probability, some people will estimate it at $ 10 000 in the future, you may very well be willing to pay $ 500 for it now.  Even though that work of art will never be a currency and is right now, nothing else but some coloured lines on a piece of canvas.

The current price is the expectation value of what one thinks future people will pay for it, but these too, may have their reasons which is not "currency".


This is a very valid remark.  But this finiteness of transaction volume might actually suit bitcoin in becoming a "store of value".  It is not suited to become a currency, that is true.  The finite transaction volume on the chain implies that one can only afford doing BIG transactions, with BIG fees.  This fits with the "speculative asset" aspect that bitcoin is having, over the "currency" aspect.

But as such, to me, bitcoin has lost its roots.  Very big amounts of value will be transacted on its chain.  Now, very big amount of value will of course always be scrutinized much more closely by states.  An open block chain, strict regulation, and an institutionalized aspect is, I think, the fate of bitcoin.  Not a thing with which you will be able to pay someone freely and escape state interference.

Bitcoin will be too expensive to be used as a currency.

That said, in the long run, block chain technology has a fundamental problem with large transaction rates per second in any case.  Monero too.  Even though the system allows it in principle, it is not practical to have a block chain with terabytes of data to be added every month.

I think the Lightning network is on something, but it is, like bitcoin, not mature enough to solve all issues.  Once you have a block chain, you can use it to guarantee off-chain payments, because you have some value at stake on the chain.  The way the Lightning network is set up is IMO not right, but there are good ideas in it.  I think we should look at how it evolves on bitcoin, to learn from it, and build something better afterwards.

I fully agree that the finite amount of money (a "sound money" purity) is more problematic than anything else, and that tail emission is a very good idea.

To me, a crypto currency is a means of doing something, of empowering your freedom of action, in this case, as a free means of exchange with no meddling in.  The freedom to produce value for others, and obtain value produced by others, without getting ripped off, hindered, or obliged to ask for permission to a set of thugs that call themselves the state or any other maffia.  The freedom to give that power to whoever you like, for the reasons that are yours, and yours only.

The need for a means of exchange is so essential in all economic relationships, that you can compare it to the bloodstream in a living being.  If you have control over the blood stream, you control the essence of the living being.  The state understood this.  So it takes full control of all economic exchange, by controlling, verifying, tapping 50% or so from, each and every little blood stream in the living body which is our society, and goes after everyone trying to have a drop of blood exchanged without its prying eyes and sticky fingers on it ; then the state goes on and labels these victims "fraudsters", "tax evaders", "illegal traders", etc... and turns them into criminals.

There have existed physical goods that were good means of "blood" that helped people exchange value: gold and cash.  But them being physical goods, they carry with them all the limitations and risks of physical goods.

Crypto is the first time a means of exchange has been invented that is as handy as cash (or almost so), and has not these problems of physical goods.  Bitcoin was a brilliant invention.
But bitcoin is mainly NOT used to do that.  Bitcoin is mainly used by people speculating on it, thinking they can get value from its increase in price as an early adopter (hodlers), or by trading on its volatility.  Most of its market cap is made of this, and not by being used as the tool in economic exchange without state meddling or state theft.  Bitcoin is mainly NOT used as the blood in the veins of free exchange, but as a gamblers (sorry, "investors") token in the big financial casino.

And bitcoin has a serious flaw in it, its traceability, if you want to use it to enjoy your freedom of exchanging value with other people, or giving value to people you like for whatever reason.

The part of the value of bitcoin that comes from "being blood in the veins of free exchange" is pretty small as compared to its market cap.

If you use a means of exchange SIMPLY as a means of exchange, it acquires a price, by Fisher's formula: P x Q = M x V, because you keep the finite amount of tokens during a finite time between two exchanges.  If I work today, I earn X value, stored in that means of exchange, which I spend next week for about X value in consumed goods and services.  This "X value" and this "one week" is what gives the means of exchange a finite price.
I will for the moment assume that dollars are a good indicator of market value (it is, in the short term).  There are 15 million bitcoin.  Imagine that on average, every bitcoin is held one week between acquiring it for some goods or services, and spending it on other goods and services.  Say, people work to acquire bitcoin, and spend that amount of bitcoin on average 1 week later.  So every week, 15 million bitcoin are acquired by working, and 15 million bitcoin are spend in this example.  Suppose that in a whole year, people earn and spend for 15 billion dollar that way.  That's quite huge, isn't it.  Bitcoin is NOT used that way, is it.
Well, if that were the case, then the dollar price of a single bitcoin would be 1 000 / 52 = $19.
Of course, if people would on average wait one month between earning a bitcoin, and spending it, if 15 billion dollar a year is earned and spend with bitcoin, its price would be about $80.

I'm pretty sure that is NOT the case, and if it is, the only place where that can be the case is dark markets.

This is why I say that the actual "currency" part of the bitcoin market cap is way, way below the actual market cap and price, which is mainly speculation, and not "earning them and spending them", the blood in the veins of free exchange.

The problem is that the state doesn't like that free flowing blood, and that you put yourself at serious risk doing so, and bitcoin is simply cryptographically not protecting you ; on the contrary.   The traceability of its open ledger is a privacy nightmare.

This is why I say that for an actual usage, as "blood in the veins of free exchange" you do not need the market cap of bitcoin.  You need a certain market cap, but it doesn't need to be as high as the 10 billion of bitcoin.  And to "replace bitcoin" in the veins of free exchange is probably not such a huge task either, because my impression is that bitcoin is not used much for that.  It was probably more used for that in the old days (on dark markets) than now when people realized that they are graving their transactions in the open for eternity.

You need of course distributed anonymous exchanges themselves, where you can exchange for instance monero for bitcoin.  On fiat exchanges, you only have bitcoin. 

How are they going to prove it ?  You only need to know a seed, and use a wallet on something like tails.  No traces.

The market cap is not the essence of a crypto currency.  There needs to be a market cap, but the height is irrelevant from the moment it is high enough to be able to "carry" all transactions you would like to.  It looks like bitcoin is more of a speculative tool (the hope of moon one day and Hodling on one hand, and trader's volatility joy on the other) rather than a useful currency to buy stuff with.   The part of the market cap of bitcoin that is actually used to buy stuff with must be really small (i'm talking about what Fisher's formula would give you, if you know the total amount of goods and services bought with bitcoin - apart from other crypto or cash of course - and the velocity by which a coin earned that way is spend again on goods and services).  A wild guess is that a single bitcoin would probably only be of the order of $10 or less if that was the only driver of its market cap, although I don't know.

The dollar bill is a strong anarchist weapon, like gold was.  One is fighting the dollar bill exactly for that reason. But the dollar bill has the problem of being a physical object, which leaves physical traces, and cannot be transported invisibly to a random person or group or entity somewhere else in the world.  You need physical contact to transfer it.  You need to store it somewhere you can reach it.  It can be found.  It can easily be stolen.  If you take an air plane, and you take $ 1000 000 in dollar bills, there's a risk to be found.  If you have a monero address somewhere on an encrypted device, or even as a brain wallet, there's no trace.   Nobody can know you have it.  Of course, you can chose to reveal it.  But one cannot force you.  You may die with your secret, transmit it to relatives, no-one will ever know.

I call an anarchist weapon, something the state cannot steal, cannot block, cannot use against you when you use it to enjoy your freedom.

today: ETC: $1.45 ; ETH: $11.24

sum: $ 12.69

I think that a potential anarchist weapon should be tested real world in the criminal sphere (in the same way that states test their weapons in warfare).  Bitcoin has gone the institutional side, Winkelvoss type, and is somewhat lost as anarchist weapon, and has become of late more a trap for people looking for freedom rather than a tool in their endeavour. 

The goal of a crypto currency is not to have the biggest market cap.   The market cap should be big enough such that individual trades are small enough compared to it not to "crash the market", so there is some need of market cap.  But if a bigger market cap only comes through regulation and institutionalisation, it is useless.   The economy using it (for real, as a means of exchange) should be diverse and large enough for it to be a genuine useful means of exchange.  But that's it.  Bitcoin has not a very large use as a means of exchange: it is mainly a speculation tool, and a "store of value".  In fact, cryptos only serious use as a means of exchange has been in darknets.  It is now somewhat used as a means of payment for software services (VPS, VPN...). 

From the moment that distributed crypto exchanges exist (and that's easier to do than distributed FIAT/crypto exchanges), in fact, all crypto is the same market.  You can then easily change from bitcoin to monero to whatever coin in a hopefully anonymous and unstoppable way, and all these markets unite, in the same way as most fiat markets are united by FX exchanges.

So there is no need for monero to replace bitcoin.  It is very well that monero's resistance to state warfare is tested in the real world instead of in flame wars on forums, to see what the technology really has to offer.

Because centralized exchanges are an aberration if you look for anonymity.   That's like using Tor to post on your facebook account.
 

Today: ETC: $1.35  ETH: $11.25

sum: $12.60

I'm convinced of this for years, and it is what is holding me somewhat back on bitcoin.  However, I didn't realize that people were going to realize it.  I thought they would continue to "facebook" on crypto.

The point is that every population should be "classist" because every population is ultimately limited by resources, and in every population, a fraction has to die of what we call "poverty" (starvation and other ways that naturally limit numbers).

As such, there is always a 'class' that has to die of poverty, and it is best if there is a kind of natural selection that makes the best ones survive, and the least preforming ones die quickly.   In the most natural way, there should also be a line of heritage where the best ones can make their children have more chances and the poor ones shouldn't have much surviving children.  It is the way nature keeps populations limited, and species performing.

As such, if performing subgroups find ways to leverage their performance and their advantage, there's nothing wrong with it, on the contrary.  That's how nature works.  There shouldn't be any "public correction mechanisms" such as states and other parasitic re-distributors of merit that cheat on how nature is keeping species performing.

Things are not always what they appear on first sight.  Drug selling is a actually doing good, because a response to a demand.  Humanitarian "help" is usually about building a lucrative business marketing the misery of others and playing on the need to buy good conscience of many, with the explicit or implicit goal to certainly not relieve people suffering from their problems permanently, as this would kill this lucrative affair.  As such, the essential effect of humanitarian help is to lock in the people's misery indefinitely in their slightly relieved misery for good, avoiding at all price that these people start finding solutions on their own.

Ethereum is indeed very important, mainly as an illustration of what one shouldn't do, and the forking experiment of ethereum is of extremely important value to be studied.  Many implicitly assumed mechanisms of block chain behaviour are proven wrong and that's a good thing (to find that out).

I can only second to that.

Especially "consensus".   The technical "consensus" of a block chain is in fact the opposite of what socio-democrats think it is: it is not "a majority of feable-minded who can decide on anything", but rather the funny principle that the ONLY thing one is capable to find a majority agreement on, is the immutable protocol.
In other words, "block chain consensus" is the inverse of socio-democratic majority rule: it is the INABILITY to come to any other consensus than the original, immutable "white paper" protocol.

I have to say that I like this (totally flawed) argument   because it seems to be convincing at first.  

However, it is flawed for two reasons: one economical, and one of principle.

The thing with any crypto currency, even bitcoin, is that there IS NO FIRST TIER.  There are no "individual bitcoins as entities existing somewhere", there are only proofs that you ARE ENTITLED TO SPEND an amount of bitcoin.

After all, what happens is that "bitcoins" are UTXO of which you can "solve the puzzle" (of which you have the private key that can easily solve the puzzle).  When you have transacted an UTXO, that specific UTXO doesn't exist any more (it is not "unspend" any more).  You've created a NEW UTXO and you've destroyed an old one.  So each transaction is a "next tier" according to the logic you introduced.

In a certain limit, you may say that "real" bitcoins are the UTXO of the coinbase, when a miner makes a new block.  Now, when that miner transfers those coins to someone, he's in fact not transferring that UTXO (he could if he were to *transfer the secret key* but that would be silly to accept).  He's giving you a new UTXO, that proves that you are now entitled to spend those bitcoins, and he's not any more.  But no actual bitcoin, no actual "bike" has changed hand: a new document has been written, a new notarial act, that tells everybody that the "bike" is now your property.

However, in as much as new UTXO are of exactly the same form as the coinbase ones, you could even say that the coinbase UTXO is already a "tier 2" act of proof of possession, and that there are no bitcoins like there is your bike: there are only successive proofs of possession, which are the successive UTXO.

Next, we come to multiple-input-multiple-output transactions on bitcoin.  There too, your argument breaks down.  If bitcoin number 57 (what's that ?  That's the non-existent equivalent of your tier-1 bike) and bitcoin number 102 are both inputs to transaction 20370 on the chain, and there is an output of 1 bitcoin, and another output of 1 bitcoin, which one is which ?  Is the owner of the first output now the owner of bitcoin number 57 (the red bike) or is he now owner of bitcoin number 102 (the green bike) ?

So even on a public block chain there's no such thing as "tier-1 possession" because these objects don't exist: the only thing that exist is PROOF OF RIGHT TO SPEND (your "tier-2" kind of stuff).

And now we come to something essential which is the economic argument: in order for a monetary unit to be fungible, the ONLY thing that should be knowable is the proof of right to spend.  That's in fact exactly the same with fiat money in a bank account.  When you pay someone, the only thing that is verified is that you have the right to spend so many dollars, and not whether those dollars are representing the green or the red bike.  That's called "fungible units".

The only thing that is needed in a payment system is a proof of right to spend.  Public block chains fail at that, because they give out MORE information than just that.  Obfuscated block chains are a better approach to that ideal.

There is no "first tier" in a monetary unit.

That doesn't give value, that's a production cost.  It is not because I use expensive caviar to make an imitation of bull excrements, that this imitation of excrements has value.

You are right that value is different from price, but value is individual.  Value is the amount of satisfaction you individually get or believe you will get from something.  Price is the tension that illustrates the intensity of demand (by many who value something for their individual reasons) and the offer that is available.

The problem with something like a currency is that it has absolutely no direct value (you do not get any direct satisfaction out of holding a bitcoin or a dollar): all its value comes from the *projected* value that you believe/hope to obtain with it later.  Now, as you will not get any satisfaction from holding a bitcoin or a dollar in 50 years either, the only thing that you can project, is the future price of it.

That is different with a bottle of wine for instance.  You may project that if you put a good bottle of young wine aside, you will enjoy the old mature wine much more 5 years from now when you drink it.  So it has direct future value to you.  Whether that bottle will have a high or low price on the market doesn't matter, you keep it because you believe/hope that you will get a lot of satisfaction from it in 5 years.  An even better example is planting an apple tree.  Now, it takes effort and work, and you won't get anything from it.  But in 5 years, you hope/expect/believe that you will get apples from it.  Whatever the price of those apples for which you could sell them.

But with a currency or other intermediate asset, the only thing you can do ever to get satisfaction of it, and hence value, is to sell it at a market price.

So for this kind of thing, there IS an equivalence of price and value.  Because there's no other satisfaction to it.  Or very little: you may find satisfaction in seeing a technical system work well and "be part of it" or something.  But that's very secondary.

The value of a monetary asset is nothing else but the belief/hope of its future price.  The value of an apple tree or bottle of wine is not necessarily related to its future price because it can provide you directly with satisfaction, but a currency can't.

Amen.

Today: ETH: $11.04  ETC: $1.58

sum: $12.62