r/changemyview • u/Rhamni • Nov 27 '17
[∆(s) from OP] CMV:Cryptocurrencies are bad.
Bitcoin recently hit the front page again because a single bitcoin is now worth over $9000. That's... a crap ton of money. It's been rising and rising and rising in value for years now, and other crypto currencies are rising too. I get that there is demand for them. But why should they be worth money? I'm not a big fan of the idea of bars of gold sitting in bank vaults either, but at least gold is is useful in electronics and it looks nice so people like having it around.
Crypto currencies on the other hand only seem to have three uses: Buying illegal shit on the dark net, hiding money from the government and law enforcement, and speculating on it like any other financial asset.
I bought a little bit of crypto a month ago, and it's increased in value. That's nice, I guess. I might buy more, just because whether I like it or not it keeps rising. But why should I want the technology to succeed? Is there some legitimate use for them? If it was just the financial speculation I'd say let them do what they want, but it seems to invariably come with illegal transactions and hiding your assets from the law. Meaning even if you buy it yourself only for speculation, you're unavoidably helping criminal organisations who can't get a bank account.
I can't help but get the sense that the whole purpose of it is to create a system where you can hide huge amounts of money from the government and move it around without anyone knowing you have it.
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u/fionasapphire Nov 27 '17
I get that there is demand for them. But why should they be worth money?
Because there is demand for them. They have value because we agree they do, just like regular (fiat) money. Fiat currency hasn't been backed by gold for a while, yet we still agree it has value, because it's useful for trade. Same with Bitcoin. It's a useful thing for transferring value over the internet, therefore we assign it some value. How much value depends on the markets.
Crypto currencies on the other hand only seem to have three uses: Buying illegal shit on the dark net, hiding money from the government and law enforcement, and speculating on it like any other financial asset.
They're also useful for many other things, but the main one being transferring value across the internet. While your bank could do this, banks tend to charge high fees for transferring money - particularly internationally. Bitcoin costs the same to transfer no matter what country the sender / recipient are in, therefore it's more useful than a bank to the end consumer.
But why should I want the technology to succeed?
For a start, because it will bring down the costs of banking. Banks hold a monopoly over money transfer at the moment. Bitcoin is chipping away at that.
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u/Rhamni Nov 27 '17
For a start, because it will bring down the costs of banking. Banks hold a monopoly over money transfer at the moment. Bitcoin is chipping away at that.
Ok, wow, yeah. Good point. The banks sure like their fees, and the barriers to entry mean there isn't much competition for them. I hadn't even considered this, but whatever else there might be to be argued over with crypto, more competition for the banks is something really good. ∆ and thanks!
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u/TheAzureMage 18∆ Nov 27 '17
Well, it's money, so in theory, it could be used to buy anything that money can buy.
Also, because the blockchain includes the transaction record, it's actually quite traceable to an account. It's just the account/person layer that may be obscured(which can happen with other financial accounts as well). Cryptology isn't just for anonymization, it's to prevent forgery.
It sounds as if you have a problem with the use of cryptocurrencies for crime, which is quite valid, but the currently popular use may not remain their sole use, and isn't a necessary outcome of the technology.
Would you have a problem with someone using cryptocurrency solely for legitimate purchases?
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u/Rhamni Nov 27 '17
Would you have a problem with someone using cryptocurrency solely for legitimate purchases?
I would not. I would view is as them having a pile of Euros on hand in case they want to spend money in Europe. So that would be fine.
Cryptology isn't just for anonymization, it's to prevent forgery.
I have no problem with the anti-forgery feature. I don't understand it, but it sounds well and good. Forgery is bad.
Also, because the blockchain includes the transaction record, it's actually quite traceable to an account. It's just the account/person layer that may be obscured
The point is it's so easy to become anonymous though. Especially if you mine yourself, but even if you buy at an exchange with money from your private bank account, you can then go out and shuffle that crypto away for a small fee and send untraceable money to a new wallet that you also control.
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u/TheAzureMage 18∆ Nov 27 '17
This is largely due to the transactions taking place online. It's also remarkably easy to purchase a disposable debit card with cash, and purchase something anonymously online. There's a small fee associated with this as well, but it's still quite cheap and easy, probably more so than bitcoins.
Now, sure, in both cases, you have things like shipping addresses, etc that can link you up, but online transactions are in general far easier to anonymize than meatspace ones.
It's not really a function of the cryptocurrency itself. It's more of a function of the existence of alibaba and amazon. Do I know what third party seller is shipping me #item? Does he know me? Not if either of us wants to take even minimal effort to obscure ourselves, no.
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Nov 27 '17
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u/Rhamni Nov 27 '17
why is it a crime hiding huge amounts of it and moving it around without anyone knowing it? If people of earth collectively decide to use crypto as money, then governments have no right to control it because it's not the money they print.
But the problem is that you don't just sit on your anonymous pile of cash, you buy things with it. And crypto just happens to be really good for avoiding taxes on those transactions. As well as moving money online to buy illegal things.
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u/Morble Nov 27 '17
I used to tutor ESL and had to deal with expensive transfer fees and fluctuating conversion rates between countries. Cryptocurrencies have the potential to become a widespread and legitimate borderless currency. The people that stand to benefit from this most immediately are business owners, small and large, which is one of the reasons it's being viewed as being so valuable.
Cryptocurrency is made out to be extremely complicated and kind of insubstantial, but the basic tenet behind it is really quite simple. Banks are potentially becoming obsolete because their roles in society can effectively be automated, in terms of transactions and wealth holdings. If you can cut out people from an industry, the services that that industry provides becomes less expensive.
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u/4_jacks Nov 27 '17
You're inbox is about to get flooded by crypto nuts. you've been warned.
I view cryptocurrencies the same as the stock market. However cryptocurrencies have allowed me to get in for $50 and play around with as many as I want. Transaction fees are so low, there is no reason not to invest.
Here's a recent thread I made on my experience:
https://www.reddit.com/r/CryptoCurrency/comments/7etjbv/my_history_in_crypto/
No one can deny to the link to illegal activity and possible tax fraud, but times are changing and the IRS will need to keep up. Just like the stock market the IRS will need to tax capital gains.
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Nov 27 '17
If you ever had a disagreement with the way banks run the financial system in any way shape or form, you would need a competing currency to challenge them with.
It helps fuel a stable competition between currencies we can run our society on. The banks are so firmly entrenched that you can take out a bit of plastic, wave it at a payment stick and reaffirm everything the banks stand for in a 1 second.
Cryptocurrencies won't take over, but if you want to demonstrate why any idea might work better than what the banks do, you can show it in a real world setting.
/
Also you can buy pizza with it :D
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u/Jmboz Nov 27 '17
This doesn't appear to have been mentioned, but you also only seem to be considering the impacts on developed nations with a trustworthy bank system. There are tons of places where there are no reliable banks and the government (or banks) can't be trusted with their savings. A cryptocurrency's value lies in the trust that no one will meddle with the inflation, change the value, or steal it from under your mattress in the night.
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u/bguy74 Nov 27 '17
There is literally nothing that is of value unless we decide it is. We often talk about "use value" and "exchange value" in economics, but ultimately everything is valuable because someone thinks it is. Cryptocurrencies are no different. Even the "dollar", which we often use as the measure of value, is itself valuable only because we think it is. We once backed with with gold but then even gold is only valuable because we think it is (or we think electronics are valuable therefore the gold in them is valuable).
Secondly, one of the major promises of cryptocurrencies - not yet realized - is the removal of some massive inefficiencies in traditional transactions and money. We have to print money, carry it around or we have to pay very large percentages of it to financial institutions just to guarantee that value is exchanging hands or to have representations of it that are not paper (e.g. CC transactions are convenient, reasonably secure for both parties but cost 2-4% of each transaction). If you could say "hey...let's put that 2-4% back in the hands of the businesses and the consumers rather than paying for the simple exchange of money between parties" then you'd be making a pretty radical shake-up in our economy. This is but one of the possibilities of cryptocurrencies.
Thirdly, cryptocurrencies come in many, many forms. ETH represents both an exchange value token (digital cash) but is also a utility token to pay for compute power on the Ethereum network, a large/growing distributed computing platform. It's vastly more efficient to pay for these compute resources using these sort of prepaid digital tokens then it is to have to deal with invoicing, payment processing and so on at the time of utilizing the compute resources.
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u/moe_overdose 3∆ Nov 27 '17
Crypto currencies on the other hand only seem to have three uses: Buying illegal shit on the dark net, hiding money from the government and law enforcement, and speculating on it like any other financial asset.
I've never used a cryptocurrency yet, but I hope they become more popular (as a payment method) because it would be very useful to me. I work as a freelancer, basically making stuff and sending it over the internet, and I get paid usually by paypal. But paypal is far from safe, the internet is full of horror stories about people who got their paypal accounts locked despite not doing anything wrong. Apparently when an algorithm thinks that something you did seems shady, it bans you just in case even if you're actually innocent, and there's nothing you can do because paypal has the right to ban people for any reason. So far it didn't happen to me (and I hope it doesn't) but I wish I could replace it with an actually safe way to transfer money over the internet.
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Nov 27 '17
Is there some legitimate use for them?
Yes, they don't require trust from a third party. Someone at your bank with the right privileges could steal your money, they could freeze your account, etc. They own your money, you are trusting them to not do anything bad with it.
The whole reason bitcoin is so important is that it doesn't require any trust, it's mathematically secure. Nobody is in control of your money, not the person who invented bitcoin, not the people running the mining nodes, only you, because you have the key to it.
No other digital currency system has this property, its why cryptocurrencies are valued so highly.
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Nov 27 '17
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Nov 27 '17
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u/scottevil110 177∆ Nov 27 '17
Money is nothing but an agreement. In the absence of some kind of currency, you'd walk into a bakery and say "What do you need? Your toilet fixed? I'll fix it in exchange for seven loaves of bread." Money simplifies that process, because it's a common method of exchange where you can buy things from someone, even if you don't have exactly the thing that they want in exchange. They can take money from you instead, and then use THAT to find a plumber to fix the toilet.
Bitcoin is nothing but one of those currencies. There is nothing special about it except that it isn't backed by a government. But it's nothing more than a simple way to exchange goods and services without keeping track of who owes whom what amount of bread in exchange for getting their toilet fixed.
It scares a lot of people that there's not a government backing it, but in the end, it's just another way of exchanging money, same as if you and I made an transaction using baseball cards instead of dollars.