Why Bitcoin is ultimately doomed to fail (not today or tomorrow)

[deisik]

So the word money itself serves as a specifier here. I think the use of other specifiers is redundant here (though not prohibited)...

Interesting. I've definitely noticed that Russian speakers tend to frequently drop articles ("in Soviet Russia, car drives you"), but I've never before heard an explanation for why.

In any event, in English, articles are used to specify whether the noun is definite or indefinite. The word "money" doesn't do this.

Lol, but the word money itself is primarily used without any specifier (save for very specific cases indeed)...

When "money" is used as a noun, it is usually plural, in which case you don't need an article. But in this case "money" is being used as an adjective, and the noun, "multiplier", is singular.

You probably meant to say singular, right? For example, money is scarce. When we talk about moneys (or use an indefinite article with the word, i.e. a money), we actually mean currencies or money systems...

Hmm, maybe. "Money" is generally used as an uncountable noun (as in "I have a lot of money"). There's no such word as "moneys" (though the word "monies" is sometimes used in certain situations).

You are just flat-out wrong here, period. And this perfectly well shows your level of the English language knowledge, lol...

Stop being ridiculous (and now I'm serious)

[deisik]

When "money" is used as a noun, it is usually plural, in which case you don't need an article. But in this case "money" is being used as an adjective, and the noun, "multiplier", is singular.

You probably meant to say singular, right? For example, money is scarce. When we talk about moneys (or use an indefinite article with the word, i.e. a money), we actually mean currencies or money systems...

Hmm, maybe. "Money" is generally used as an uncountable noun (as in "I have a lot of money"). There's no such word as "moneys" (though the word "monies" is sometimes used in certain situations).

You are just flat-out wrong here, period. And this perfectly well shows your level of the English language knowledge, lol...

Stop being ridiculous (and now I'm serious)

What am I wrong about? Your link confirms what I said. "[noncount]" means it is an uncountable noun.

"plural monies or moneys", The first form (monies) I almost never see in the economics literature. The second form (moneys) I see in anything dedicated to money systems...

[deisik]

When "money" is used as a noun, it is usually plural, in which case you don't need an article. But in this case "money" is being used as an adjective, and the noun, "multiplier", is singular.

You probably meant to say singular, right? For example, money is scarce. When we talk about moneys (or use an indefinite article with the word, i.e. a money), we actually mean currencies or money systems...

Hmm, maybe. "Money" is generally used as an uncountable noun (as in "I have a lot of money"). There's no such word as "moneys" (though the word "monies" is sometimes used in certain situations).

You are just flat-out wrong here, period. And this perfectly well shows your level of the English language knowledge, lol...

Stop being ridiculous (and now I'm serious)

What am I wrong about? Your link confirms what I said. "[noncount]" means it is an uncountable noun.

"plural monies or moneys"

Oh, that. Fair enough. I guess some people use the word "moneys".

No, this plural form is often used in the economics literature in regard to money systems or currencies. And as I said above, I see the first form (monies) very rarely there...

[deisik]

No, this plural form is often used in the economics literature in regard to money systems or currencies...

That doesn't change the fact that the use as an uncountable noun is by far the more common one. Even in your linked dictionary the plural form "moneys"/"monies" is listed as the third of three definitions.

I never claimed anything to the contrary. I just showed that your alleged mastery of the English language is far from being perfect, that's all. So who are you to teach me the language (and economics, lol)?

I think it's time to wind up...

[deisik]

So who are you to teach me the language (and economics, lol)?

A native speaker, lol.

Gee, today this tactic won't work anymore. Sometimes those "native speakers" can't even agree between themselves, and none turns out to be right (or correct) in the end, lol...

Read from here

[practicaldreamer]

I've just read all 24 pages of this thread as it touches on issues that I'm interested in myself.

deisik - you seem to be saying that BTC is doomed to fail because there is nothing to stop banks using derivatives of BTC to create future credit/debt in pretty much the same way that they do today using fiat and the multiplier effect (or some have called it FRB - I'm not really interested in the distinction between the two personally).

   On page 11 of this thread I read this -

And I guess my argument really just boils down to: "Banks need to 'price' paper derivatives against mass averages of things that actually exist, rather than magic money printed from thin air by the government.  Things that actually exist include equities representing worth/revenue streams of corporations and physical commodities."

   I have also seen Andreas Antonopoulos talking about such an outcome/solution to the problem that deisik has articulated. Could tacotime perhaps, or anyone else that has an understanding of this, just explain it to me/everyone a little further please ?
    Why could the banks not follow that path right now (with fiat) (under regulation)  ? In what way would BTC faciltate this backing of derivatives with "tangible" assets such as that represented by the FTSE 100 for eg. ?

    Of course it is the case that we would desire that banks "stop dabbling in so much fractional reserve gambling" - but in a free market where the banks are in competition with one another, and moreover there is a demand for cheap credit and competitive business loans to facilitate growth/expansion/enterprise - how would the introduction of BTC on its own stop the dabbling ?

    It has been said in this thread that it is greed which drives the demand for borrowing - this might be so in many cases - but you could also say that people are driven to it by way of necessity. It just depends on how you view it.

With Bitcoin, we won't need lending to provide liquidity. People now have a choice.

Also , if its not too much to ask, could someone explain why this would be the case ? ie. that we won't need lending to provide liquidity with BTC ? I'm not sure I fully understand.

  BTC is what it is - its not in itself a revolution (in the traditional sense at least) - it still exists, and will exist within a free market economy. It will be BTC that adapts to the market, and not vice versa.

    I guess what I'm saying is that I'm worried that what initially to me seemed to be a technological advance that might provide an alternative, will be instead, in the end, co- opted/comandeered to the service of capital.

   Someone please tell me it isn't so  

I guess we'll get what we deserve. (or will we get what we are led to believe (for ideological reasons) we deserve ?)

[deisik]

I've just read all 24 pages of this thread as it touches on issues that I'm interested in myself.

deisik - you seem to be saying that BTC is doomed to fail because there is nothing to stop banks using derivatives of BTC to create future credit/debt in pretty much the same way that they do today using fiat and the multiplier effect (or some have called it FRB - I'm not really interested in the distinction between the two personally).

Yes, and it seems that we have just that coming up recently. I'm speaking about Winkelvoss Twins’ Bitcoin ETF which is now being approved by the Securities and Exchange Commission. Not strictly banks but to the same effect as I see and understand it...

[anth0ny]

   Why could the banks not follow that path right now (with fiat) (under regulation)  ?

Bitcoin can be reliably transferred over the Internet in less than an hour. Dollar bills can't. You don't need a bank to transfer your dollar bills across the country.

Bitcoin can be kept secure with a split key, so that it requires two pieces of information to access the BTC. Half of that key can be kept by the individual and half can be kept by the financial institution. This way you can ensure that it's impossible for the financial institution to lend out your BTC without your permission. You can't do that with dollar bills.

Bitcoin can be made safer to carry in your pocket than dollar bills. You can carry it encrypted.

Bitcoin is easier to divide than dollar bills. You don't need a bank to split your two hundred dollar bills into five ones, five fives, five tens, six twenties, and two fifties. You don't need a bank to count your coins.

Most importantly, Bitcoin is decentralized. The feds can't print unlimited amounts of it. The only reason the US banking system hasn't collapsed already is that the monetary base did this:



The Bitcoin monetary base can't do that. (If you're comparing Bitcoin to gold rather than US dollars then gold too is "decentralized". What happened to gold to keep the US banking system afloat was that the US government confiscated it. It's unlikely the US government would succeed in confiscating bitcoin, among other reasons because it's so easy to transfer across national borders.)

Could banks offer to take people's bitcoin and lend it out, using 10-1 or more leverage, and paying little to nothing in interest? They could offer it, but who's going to fall for that?

   Of course it is the case that we would desire that banks "stop dabbling in so much fractional reserve gambling" - but in a free market where the banks are in competition with one another, and moreover there is a demand for cheap credit and competitive business loans to facilitate growth/expansion/enterprise - how would the introduction of BTC on its own stop the dabbling ?

A free market would in itself end fractional reserve banking. If it weren't for the bailouts, the banking system already would have collapsed.

   It has been said in this thread that it is greed which drives the demand for borrowing - this might be so in many cases - but you could also say that people are driven to it by way of necessity. It just depends on how you view it.

I'd say there's not much difference between greed and necessity. They both make the world go 'round. (Note to deisik: That's a metaphor. Greed doesn't literally make the world spin on its axis. It just makes it possible for so many of us to live on this spinning planet.)

   I guess what I'm saying is that I'm worried that what initially to me seemed to be a technological advance that might provide an alternative, will be instead, in the end, co- opted/comandeered to the service of capital.

   Someone please tell me it isn't so  

What exactly do you mean by that? Was Bitcoin built for the service of capital?

[Erdogan]

Deisik, about this greed thing, you should check out the function of self interest in the economy, from some free market inspired source. It is practically the same as freedom. The opposite is not altruism, it is self sacrifice, dwindling prosperity, society collapse, and death.

[deisik]

Deisik, about this greed thing, you should check out the function of self interest in the economy, from some free market inspired source. It is practically the same as freedom. The opposite is not altruism, it is self sacrifice, dwindling prosperity, society collapse, and death.

Yeah, probably not the right word (from the economics point of you view, lol). I see what you mean and agree with that. Let's call it self interest, so that we get rid of possible negative connotations (to anth0ny: greed was a metaphor). I can even add that this self interest (bitcoin or no bitcoin) allows banks to fulfill their primary role in the economy (remember, accumulation and redistribution)..

[deisik]

to anth0ny: greed was a metaphor

A metaphor?

Should I post a link what the word means?

[practicaldreamer]

The Bitcoin monetary base can't do that....

Could banks offer to take people's bitcoin and lend it out, using 10-1 or more leverage, and paying little to nothing in interest? They could offer it, but who's going to fall for that?

So is the crux of it, for you anthony, that people will be nowhere near as ready to deposit BTC with banks in the first place - thus undermining banks ability to lend ?



I guess what I'm asking is, is it assumed that for example, in a BTC economy all lending/borrowing will be done in this fashion -https://btcjam.com/ ?

Its just that, to me, where the customer is looking for credit they are going to be looking for the cheapest credit. That being the case could it not give opportunity for big business to enter the fray and create credit built on the back of BTC - as has already been discussed - as some kind of derivative/promissory note ? They would then be able to offer credit cheaper than the P2P site above I expect - and because for some people cheap credit is nessesary, and being motivated by self interest, they take this route and not that of the p2p site.
   The banks would only need nominal/minimal deposits anyhow - as has already been said, any immediate crisis emanating from deposit demand could be met by inter bank lending - all the large institutions would need after all would be a small advantage over the above p2p site, for eg., and it'd be pretty much business as usual wouldn't it ?
  

A free market would in itself end fractional reserve banking. If it weren't for the bailouts, the banking system already would have collapsed.

Yes - I take your point - and I guess that a lot of us have the same hope with regards the end of FRB.

  I'm not putting these points because I want someone to tell me that I'm right - I would much rather someone clarify to me why I'm wrong.

I'm particularly interested in the BTC being backed by assets idea - I don't really understand it   but I've a feeling there could be something in it. Is the idea that we all agree that the value of BTC is pinned to certain asset values - thus doing away with FRB ?
    If so, would it be acceptable en masse ? There may be the potential in the structure of BTC (scripts) to achieve this - but it seems at least possible that it would go way above and beyond that which would be acceptable to society (read private finance) at large ? BTC as an alternative to Paypal ? Yes. But this ? I don't know.

  I'm just giving my tuppeneth worth (two Kopeks worth, deisek) - I'm interested, but I'm no economist (as if I needed to tell you that  )

[deisik]

to anth0ny: greed was a metaphor

A metaphor?

Should I post a link what the word means?

No, I know what the word means.

Yeah, a sort of...

[anth0ny]

The Bitcoin monetary base can't do that....

Could banks offer to take people's bitcoin and lend it out, using 10-1 or more leverage, and paying little to nothing in interest? They could offer it, but who's going to fall for that?

So is the crux of it, for you anthony, that people will be nowhere near as ready to deposit BTC with banks in the first place - thus undermining banks ability to lend ?

I agree with the first half ("people will be nowhere near as ready to deposit BTC with banks in the first place"), to the extent that "deposit" means demand deposits (checking accounts) and those deposits aren't backed with 100% (or maybe nearly 100%) reserves.

If by "deposit" you mean non-FDIC insured time deposits, then I think those will still occur. They'll be investments more than deposits, though. You'll have to choose which bank to invest your money in.

I guess what I'm asking is, is it assumed that for example, in a BTC economy all lending/borrowing will be done in this fashion -https://btcjam.com/ ?

Not all of it, and how much really depends on how governments decide to regulate peer-to-peer bitcoin lending.

Its just that, to me, where the customer is looking for credit they are going to be looking for the cheapest credit. That being the case could it not give opportunity for big business to enter the fray and create credit built on the back of BTC - as has already been discussed - as some kind of derivative/promissory note ? They would then be able to offer credit cheaper than the P2P site above I expect - and because for some people cheap credit is nessesary, and being motivated by self interest, they take this route.
   The banks would only need nominal/minimal deposits anyhow - as has already been said, any immediate crisis emanating from deposit demand could be met by inter bank lending - all the large institutions would need after all would be a small advantage over the above p2p site, for eg., and it'd be pretty much business as usual wouldn't it ?

No. As soon as there was a hint of a recession all the banks would get hit with runs on the bank all at once. Without the ability of the federal reserve to put newly created bitcoins into circulation the way it puts newly created dollar bills into circulation, the banks all come crashing down.
  

I'm particularly interested in the BTC being backed by assets idea - I don't really understand it  

If the idea was that BTC was going to be backed by assets, then I don't understand it either.

but I've a feeling there could be something in it. Is the idea that we all agree that the value of BTC is pinned to certain asset values - thus doing away with FRB ?

If you did that, it wouldn't be BTC any more. It'd be some centralized currency run by those who agree to exchange BTC for those assets.

It's not a very new idea, and the main problem with it is that governments would probably prosecute those who run it, just like they've shut down pretty much every other attempt at a competing centralized currency.

[Cryddit]

A free market would in itself end fractional reserve banking.

That's dumb.  Fractional reserve banking was created by the free market.

If it weren't for the bailouts, the banking system already would have collapsed.

Fractional reserve banking has, since its invention, continued after occasional collapses.  An economic collapse in no way presages the end of fractional reserve banking.  It existed before bailouts were a possibility, and will continue to exist with or without them. It existed before banks were regulated, and was originally illegal.  The laws were changed because it was shown to provide economic stimulus and social mobility that was lacking in its absence.  Also, because it is profitable,  it will continue to exist (in black market credit, aka loan sharking) even if it is banned.

   I guess what I'm saying is that I'm worried that what initially to me seemed to be a technological advance that might provide an alternative, will be instead, in the end, co- opted/comandeered to the service of capital.

   Someone please tell me it isn't so  

Sorry, no.  It is so.  Bitcoin is a limited asset considered to have value, and our institutions will treat it exactly the same way they treat limited assets considered to have value.  

The only significant differences are that things our financial institutions do with other limited assets considered to have value, are things that people can mostly do for themselves with Bitcoin.  So there is less in the way of "additional services" that can be offered in lieu of interest to induce people to trust the financial institutions to handle their Bitcoin for them.  The only improvement I see a rational hope for is that depositors of Bitcoin in financial institutions should be able to hope for better interest rates in the long run.

[deisik]

I'm particularly interested in the BTC being backed by assets idea - I don't really understand it  but I've a feeling there could be something in it. Is the idea that we all agree that the value of BTC is pinned to certain asset values - thus doing away with FRB ?

Neither do I. Being backed (in the strict sense of the phrase) means that you can redeem (exchange) it for a given quantity of some specific good (say, gold). But the first question that comes to mind is why should there be such a good, while the second is who will set the exchange rate (i.e. who will redeem bitcoins)?

[anth0ny]

A free market would in itself end fractional reserve banking.

That's dumb.  Fractional reserve banking was created by the free market.

Maybe at first, but it was kept alive by constant government interference. Gold confiscation, central banks, the FDIC, bank bailouts, heavy regulation, the criminalization of competition, etc.

The only reason most people don't use 100% reserve gold-backed currency today is that the government imprisons (or, in some cases, merely threatens to imprison) those who try to create such a currency. Remember e-gold? Remember liberty dollars?

Remember when Paypal was a way to avoid the banking system?

If it weren't for the bailouts, the banking system already would have collapsed.

Fractional reserve banking has, since its invention, continued after occasional collapses.

Because it has been propped up each time by government regulation. In a free market, it'd have died and stayed dead long ago.

[Cryddit]

Fractional reserve banking has, since its invention, continued after occasional collapses.

Because it has been propped up each time by government regulation. In a free market, it'd have died and stayed dead long ago.

It is clear that I do not believe what you believe.  Enjoy your stay on planet Earth.

[practicaldreamer]

No. As soon as there was a hint of a recession all the banks would get hit with runs on the bank all at once. Without the ability of the federal reserve to put newly created bitcoins into circulation the way it puts newly created dollar bills into circulation, the banks all come crashing down.
  

Yes - that makes sense to me.

Although it must be said that it probably wouldn't be all the banks that would come crashing down - just those who had been the more avaricious - the ones that remained would come out of it (probably) stronger than before (medium to long term)

That being said I think you make a good point - and one that shows the difference a BTC economy might be able to make.

So what you're saying is that perhaps technically a credit boom would be possible with a BTC economy (BTC derivatives etc) - but when the shit hits the fan there would be no way to sustain the banks that created the problem - because you wouldn't have the option of QE ? After all, they almost didn't manage to keep the banks afloat with QE 


And so FRB would not be something that would likely be undertaken to anything like the wild excesses that have occurred up to today, in a new BTC based economy, if at all ?

[Erdogan]

No. As soon as there was a hint of a recession all the banks would get hit with runs on the bank all at once. Without the ability of the federal reserve to put newly created bitcoins into circulation the way it puts newly created dollar bills into circulation, the banks all come crashing down.
  

Yes - that makes sense to me.

Although it must be said that it probably wouldn't be all the banks that would come crashing down - just those who had been the more avaricious - the ones that remained would come out of it (probably) stronger than before (medium to long term)

That being said I think you make a good point - and one that shows the difference a BTC economy might be able to make.

So what you're saying is that perhaps technically a credit boom would be possible with a BTC economy (BTC derivatives etc) - but when the shit hits the fan there would be no way to sustain the banks that created the problem - because you wouldn't have the option of QE ? After all, they almost didn't manage to keep the banks afloat with QE 


And so FRB would not be something that would likely be undertaken to anything like the wild excesses that have occurred up to today, in a new BTC based economy, if at all ?

You are absoulutely, totally correct.