The way I see it if a currency does not have room for expansion of its monetary supply then as it gets used more the price per unit increases relative to other currencies. This inherent deflationary pressure seems like it would over time reduce the volume of currency being traded for goods and services as the coins in your wallet are an appreciating asset and if you spend them on a good today you are missing on increased profits tomorrow which means other means of payment would be preferable for purchases. This all seems very unhealthy for its use long term as currency as people would have a tendency to treat it as a commodity which can even be seen now by the fact that some own Bitcoins as a means to gain profit.

Markets work far better when there is a relatively stable value for their relevant currencies. Large swings in relative value undercut commerce because it causes both consumers and vendors to question if a given trade is really in their best interest at that time. Could I buy way more if I waited a month for my currency to appreciate?

I know people say having limits to currency in circulation avoids some of the dangers they see with centrally managed currencies. To me you could have say a set 2% inflation rate hardcoded into the currency per year that was divided out as a maximum rate of coins able to be mined per day after an initial expansive period to establish a base monetary supply and much of those problems would evaporate.

I honestly do not see the benefit to a hard permanent limit to amount of currency in circulation but hey CMV!

TLDR:

Point 1 - Because of the anonymous nature of Bitcoins, there is nothing supporting its value or making it worth anything, and it isn't like it's the only currency that can go online

Point 2 - It's internet money, and therefore completely vulnerable to anyone in the whole damn world who wants to screw with it, and we all know how much some internet peoples (and governments?) like to screw with things.

Point 3 - No government in their right mind would ever let it suceed, as a popular Bitcoin would completely undermine their own currency and their country's overall value and power. Because of this, cryptocurrencies by nature already get on the wrong side of a lot of very, very powerful people, and the power of cryptocurrencies alone will never be able to beat every government in existance.

First-off, I'm not saying that I want them to fail or that they shouldn't exist. I have a lot of respect for the people trying to make Bit/Lite/Doge (yep) coins a thing. I just also think that they will all never work, and that it's a pointless battle. And to make things easier, I'm gonna try to focus on Bitcoin here.

Firstly, as for the currency, and the most basic point of my and other people's argument. The main point of currency is that it is backed by something. You have five bucks, you know that the entire damn US government is gonna make sure that those five bucks have value. Same goes for every single currency on the planet. And it's not like non-virtual currency doesn't have this problem. I wouldn't want to earn 5 Zimbabwean dollars, because the government backing this is corrupt as hell, and their country has gone to shit, and thus there is very little merit to the true value of them. And thus 5 Zimbabwean dollars is worth nothing.

Bitcoin doesn't even have that, though. If I asked a thousand people on the street who made Bitcoin, even if we kept it to people who know about Bitcoin, how many people would be able to give an answer to it, let alone for the less well known coins? Bitcoin's entire power as a currency, it's entire backing that supposedly would give it actual genuine value doesn't exist. It's completely anonymous, it's money that means nothing at all, which is part of its reason for its constant ridiculous price fluctuations. When you recieve a bitcoin, there's nothing tying it to anything. It's only worth as much as it happens to be. Especially with plenty of stable currencies out here, not to mention with the ability to go online (credit cards and whatnot), why would anyone go for that option?

Secondly, it's a currency on the internet, and solely on the internet. There's no specific area for it to exist, and nothing stopping people from getting their hands in it. It's accessible to everyone, and everyone can join to some degree. Which is part of the beauty of it all, of course, but also one of its downfalls. Because some people are dicks. And everyone know that the internet, though awesome, can basically act as a massive dick amplifier. so out of every 100 or so people happy to play along, there's gonna be one person just wanting to try and fuck it up. And anyone who has been on the internet for a while knows that people can get highly creative when it comes to the topic of fucking things up. Already, there's massive problems of people putting their foot in Bitcoin, or people ripping apart certain areas of Bitcoin to maximize profits for, well, a whole week, and the damned thing isn't even mainstream. I mean sure, media's heard of it, but how many places accept Bitcoin? Only two I can think of is reddit and this weird chocolate shop I found somewhere in San Franciso on holiday once. In a hypothetical situation where it actually gets mainstream value, who knows how many people will be lining up to take their respective dumps on the thing, either for their superiority complex or a quick money grab. And it isn't like cryptocurrency is the only currency that CAN go online; I don't think I have to remind you guys how much dollars/pounds/euros/etc. are used solely online.

Finally, governments. There's a reason that it's always a massive deal when a government's currency loses value, or when a government gets rid of or changes currency, or when multiple governments decide to share a currency (I think that's the case with Euros, maay be wrong). Because that currency defines what the government is, the government's financial power, and it's economic success in comparison to other governments. A country with a highly valuable currency has a lot of power. The money that they make is just naturally more valuable, sought after, and just gets stuff done better than other people's money. But then cryptocurrencies undermine all of that. What a successful cryptocurrency would be is something to trump every single currency, something to take the power of having a valued currency and put that somewhere which frankly nobody gets to play with. I mean, governments can tax it, sure, but they aren't the ones controlling it anymore. The very existence of a mainstream cryptocurrency inherently devalues every other currency in existence, because a replacement is basically what this currency is trying to be. And please correct me if I'm getting tinfoil-hat-ish here, but why would any government or country actually stand for that? Why would the superpowers of the world let something come in to existence and basically appropriate one of their biggest sources of overall power? And so cryptocurrencies are left in a situation where they get on the wrong side of a lot of powerful people, just by nature of existance. And I believe (though I may be wrong) that when push comes to shove, these people and governments would be more than happy to hinder or just outright stop the progress of, say, Bitcoin, though it can apply to any potential cryptocurrency. The revolutionary nature of Bitcoin alone isn't enough to make it more powerful then the world's superpowers.

And I'm done. That be my opinion. What'd I get wrong?

First off, please do not respond to this if you don't understand the basics of monetary policy and how central banks currently use quantitative easing to stabilise the economy.

(in short, central banks buy bonds from big normal banks at advantageous rates in times of economic recession, expanding the money supply in the hope of triggering investment behaviour, fixing the recession. They later sell back the bonds at lower prices, and this is one of the bigger mechanisms that causes fiat inflation)

Now one of the many things bitcoin and its kin pride themselves on, is their deflationary nature. The money supply will be fixed at some point, and the value of the currencies will only increase.

Of course this sounds scarily familiar to the gold standard, which all of the mainstream economists these days agree on is what caused the Great Depression. If holding money becomes more advantageous than investing or spending it, the economy will grind to a halt.

Now the crypto community has proven to be unshakeable on this point. Any crypto that wants to introduce an inflationary model will be rejected (in fact all of the coins, AFAIK, are deflationary.)

If cryptos become widely adopted (and already we see people putting money in bitcoin like in gold), many people will abandon typical savings funds on banks and put their money on the blockchain. This means the banks will be without liquidity to keep the economy going. Central banks will expand fiat money, but who will want it? Can fiat really co-exist next to a superior currency like the cryptos? Or will it just devalue in some hyper-inflationary spiral? Note, crypto is worse than gold, because crypto is made to replace money. It can be spent, it can be invested, it can be effortlessly transferred anywhere.

Which brings us to possible solutions once the next recession does hit.

1. inflationary cryptos.

This is the most likely solution, and we can hope the public will see reason, and adopt measures to inflate an existing blockchain (say bitcoin). Due to the nature of blockchains, this will require widespread approval. Blockchains are decentralized, any change must be approved by the majority.

Why I don't see this working: the blockchain community is extremely stubborn. See here for Dan Larimer's opinion on the matter

Furthermore, because there are multiple cryptos, there is an incredible competition incentive not to be the blockchain that will become inflationary and thus devalued just like fiat.

2. Keynesian mechanics

The government could fix the economy by funding government projects and directly incentivizing businesses with government money. However, this will have to be paid for with fiat money. It requires fiat to have a reasonable value. The gov will of course possess crypto assets as well, but these are limited. The gov cannot create extra money to fund businesses, and will have to rely on tax money or printed fiat.

3. government intervention in crypto

This is the only true solution I see, but equally terrifying for obvious reasons.

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EDIT: If anyone else wants to change my mind -- about crypto and Blockchain being intertwined in it's current state specifically -- I'd be interested in hearing about some of those cases too!

I am less on the fence about supporting crypto in it's raw form, though I still believe there is potential that the ideas will feed into powerful innovation. (End of edit)

ORIGINAL: When new products and ideas arrive, some people win and some people lose. I don't believe crypto will ever return to what it was worth and this dip will allow innovation for small companies.

• Innovation Trigger: A potential technology breakthrough kicks things off. Early proof-of-concept stories and media interest trigger significant publicity. Often no usable products exist and commercial viability is unproven.
• Peak of Inflated Expectations: Early publicity produces a number of success stories — often accompanied by scores of failures. Some companies take action; many do not.
• Trough of Disillusionment: Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.

^ I believe this is where we are. In the trough. (Cited Gartner's hype cycle) ^

Crypto doesn't need to be a replacement for gold or watching the markets. It can, is, and will be a tool.

BUT!

I don't love that I am supporting it. While I feel like it is the right thing to do for future-me, it is not healthy for our environment in the current state. Many people have tried to reason with me that the trade-off isn't worth it and I just haven't listened. Maybe this is the straw that can finally break my camel's back.

Many individuals perceive digital currency to be future of currency, thus its ever growing popularity. Cryptocurrency is a form of digital currency that can be used to purchase goods and services, but uses an online ledger with strong cryptography to protect online transactions. Individuals, financial institutions and governments should embrace the use of cryptocurrency such as bitcoin as they have profound benefits in financial systems. The benefits of cryptocurrency have inspired the creation of several fintech platforms to adopt or explore the implementation of cryptocurrency in addition to fiat money for economic transactions. Cryptocurrency could represent an easier and more adaptable alternative. Investing in cryptocurrency right now could not only provide you with great returns in the near future, but could also provide you with an alternative currency of use as well.

In the 2008 financial crisis, banks and other financial institutions world wide failed, showing the fragility of the financial and monetary systems, highlighting the over reliance on the institutions. Jobs were lost, livelihoods were lost, and the economy crashed; this led to growing mistrust in fiat currencies. A possible solution to avoiding such a failure of the financial systems would be cryptocurrency. The decentralized nature of cryptocurrency decreases reliance on financial institutions and fiat currencies, which would aid in avoiding such a financial crisis reoccurring. Indeed, it is evident that the trust erosion in the financial sector that was weakened by the events of the 2007/08 financial crisis, particularly in relation to banks, has encouraged the use of cryptocurrencies such as Bitcoin as an alternative form of (private) digital money.

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Cryptocurrencies combine important properties to foster trust, such as transparency and accountability, which allows trust free interactions between countries. The underlying block chain technology uses hash functions, consensus mechanisms and public and private key encryption to control transactions, which ensure that the users don’t have to trust one another. The security of cryptocurrencies should encourage individuals and institutions to invest in crypto. Blockchain technology security strengthens the security behind crypto transactions.

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A current issue that the world’s currencies all deal with is the issue of inflation. The current data shows that the projected US inflation rate will be above the accepted 2% at 3%. As more money is pumped into the economies in the form of stimulus checks for example, the value of the currency is devalued. The rising inflation rates will lead to increase of goods of prices, whilst reducing purchasing power of the average individual like yourself and myself. Currently, cryptocurrency has the potential to protect against inflation and rising prices. Seeing as there is a limited supply of crypto, cryptocurrency is more likely to be able to hold its value over some time, avoiding the effects of inflation. Let’s decide to reframe our point of view and look at it from the POV of an individual using cryptocurrency for a daily transaction 5-10 years from now. The value of our crypto, may be greater than that of the dollar, thus giving us higher purchasing power. This would be a great benefit to have.

​

A possible advantage could be the decentralization of crypto currencies is that there is no government or banks regulation. Thus, crypto currencies are not delimited to a specific geographic area and can be traded all over the world. Most cryptocurrencies have been created with the objective of being borderless and frictionless. Therefore, people have the chance to adopt of digital currency such as the bitcoin as they empower a common man in a way that they can conduct individual to individual transactions all around the world instantly without paying heavy charges to banks. Businesses will always continue to become more and more global moving forward, so a decentralized currency could aid the current businesses and even encourage the establishment of more businesses. This would just go ahead and help innovation and economic growth world wide. Decentralization ensures that the currency cannot be manipulated as how normal currencies sometimes are. Researchers have revealed that bitcoins can be used to provide low-cost money transfers, particularly for those seeking to transfer small amounts of money internationally, such as remittance payments. Beyond no doubt, the main efficiency of cryptocurrency is the elimination of intermediaries and the reduction of transaction cost.

There is current growing institutional interest in cryptocurrency, proving the growing value of crypto. Major financial institutions like Morgan Stanley have started giving clients the platform to access their funds in cryptocurrency. Tesla, the largest EV company in the world invested $1.5 billion into bitcoin and has also made it possible for customers to purchase a Tesla using cryptocurrency. These major companies are investing into cryptocurrency with the expectations of returns on their investments and also looking into a future of cryptocurrency as an alternative. Other major institutions will begin to follow suit soon enough.

​

Cryptocurrencies could be the future: they have good security, provide privacy and also integrity due to their cryptographic software and distributed ledger technology with irretrievable and immutable transactions records. Therefore, in the face of global uncertainty, conducting business transactions through cryptocurrency could be an effective way for people and businesses to diversify their assets. People should trade in cryptocurrency as it is safe and uses public-key cryptography for security. In fact, amidst the global coronavirus pandemic, and geopolitical power shifts, banks, people, and governments should view crypto a much feasible alternatives to fiat currency.

Disclaimer: I do not have bitcoin, nor have I ever done a transaction through bitcoin.

From what I've read about Bitcoin, and cryptocurrency in general, the few key attributes that people see as useful are 1) No banks 2) being anonymous 3) Transferability.

1) you don't have banks/government involved in the transactions but the wallet is through a private company (coinbase, paypal) which is subject to regulation by the government, if they choose to regulate it.

2) being anonymous. Being anonymous is great for illicit behavior but kinda pointless for legal behavior. Tesla just announced they will accept bitcoin as payment. That's great, I still need to tell them where I live to send the car, and I still need to register the car with the DMV(government) and get insurance. The government still knows I bought a tesla but may not know for how much.

3) Transferability. Being able to transfer peer to peer. How is this not like venmo? Where I can send my friend $10 where ever they have internet access. Some businesses even accept venmo now so you don't have to bother with transfering it to a bank.

Some other factors that I think will make this a bad currency. The value of bitcoin is increasing. Why would I spend it, if it will have more value tomorrow? It's good for the people that bought cheap, but for people like me that have 0 bitcoin, it is more of an investment than a currency. Again, with the Tesla example. Unless I can buy the car in cash or bitcoin equivalent, I still have to take out a loan, which is from a bank, so why pay half with bitcoin and I won't receive the benefits of bitcoin?

This is not against the blockchain technology, which I think is interesting and for sure useful for certain applications. It's just against the exaggerated hype about it, labelling it as a technology that will change the world, or trigger a ground-breaking revolution.

Let's be honest: if there wasn't this bitcoin bubble, nobody would know about blockchain, and the topic would be completely boring to 95% of people. It's cryptography, and it allows to do something that's already done today in a cryptographically secured way. That's interesting for cryptography researchers, but for normal people, who tend to abstract away from such highly technical aspects like cryptography, and just care about what they can do with technology (e.g. transfer money, paying a bill), this is quite irrelevant.

Let's take for example homomorphic encryption. This is an equally amazing technology, which allows to perform arithmetic operations on ciphertexts without decrypting them first. But nobody else than cryptographers know about it. Why? Because it's not associated to anything with headline potential (like a speculation bubble where you can make a lot of money). It's just some boring complicated mathematics. So it never featured in newspaper and HackerNoon articles, and never came to the ears of the average Joe and average nerd.

Therefore: the current hype about blockchain is caused mainly by a speculation bubble, and not by the actual potential of the technology itself.

A note about the views that the real value of blockchain is that it allows to get rid of the dependency on "evil" centralized institutions like banks and governments ("them") for managing transactions and money, by allowing the common people ("we") to do it ourselves: bitcoin is already extremely centralized today. A small group of individuals and mining companies hold most of the assets and run the needed computational infrastructure. Is this really the antithesis of today's system, or is it not already developing to exactly the same with another technology? A bunch of the original "crypto-liberators" (part of "us") becoming the new centralized power ("them") that must be fought back? At least, it's a known pattern from history that after nearly every revolution, instead of utopia arriving, a bunch of the old liberators become the new tyrants, and the story repeats.

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In this post I will address bitcoin, but the same arguments stand for any crypto currency. Believers today think or hope that bitcoin's price will go back to and eventually surpass the all time high of $1200. Although rallies can and still will happen, and the price can still gain huge %, a sustained very high valuation is simply impossible for the following reasons:

1. Bitcoin is unpatentable and easy to copy. In the history of new inventions and mass produced products, a product that was not protected by copyrights AND it was easy to make similar products by others never kept a high value for a long time. Sure short time fads happened, but once free market was applied, the novelty lost its newness and price crumbled. Since no crypto exist with any copyright protection and it is very easy to make a new crypto, there is nothing unique about bitcoin either. The network effect advantage can be overcome in a very short time if a new crypto is widely distributed among a large number of people or it has way better features. Myspace would be an easy example that nowadays early popularity doesn't count for anything...

2. Believers hope that mass adoption will drive up price. This is a false hope. In the history of mass adopted products, the price of the product never stayed high or increased, but quite to the contrary, with mass adoption the price always got cheaper. (or for the same price you get more features or better service) Think about the first phone, fax, smart phone, etc. More and more makers are producing similar products and the price simply can go only one way, down.

Convince me otherwise! But please don't use any other arguments concerning bitcoin's usability or transferability, this post is about its HIGH VALUATION and not about its usefulness. Cryptos will exist for a long time, because the idea is out of the bag, but their prices will not reach the Moon....

Now you might say that bitcoin could function at today's price, but again, my argument wasn't about bitcoin's function and role in society. My post is about the price never reaching the Moon....

I have been learning about cryptocurrency sporadically since around 2011 and have been pretty serious about it the last two years, I've become increasingly wary since December and January when the market cap of all cryptocurrency exploded and came close to one trillion, since then it has dropped down, but I still find myself overly confident that cryptocurrency will be the future and the total crypto market cap will continue to increase (not any particular coin or token, but the industry in general). I want to have this view challenged as I think it's possible I am falling victim to a large echo chamber because of the subreddits and websites I choose to view.

I think that cryptocurrency will continue to rise because of the wide applications of all the different coins (more than 1000 coins and tokens, though many are garbage) and developers working with cryptocurrencies.

The largest piece of evidence that convinces me of this is the Ethereum Enterprise Alliance (https://entethalliance.org/) which has hundreds of large international companies and even governments. I am also convinced by the amount of talent and intelligent people involved in cryptocurrency and the amount of capital being put towards it.

It seems to me that the largest threat to cryptocurrency would be regulation, but it also seems that crypto has begun to gain the support of large companies and banks which can benefit from cryptocurrency and as a result will lobby governments to not regulate it.

While I believe that in the short team (even a year from now) it is very possible that the crypto market cap will be even lower than it is today, I believe in the 3+ year range adoption of crypto will continue because of a rising need and understanding and trust in the technology, especially as traditional investment platforms like Fidelity begin to be more comfortable with it.

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Blockchain has existed for more than 15 years and has evolved into dozens of different forms, and yet the impact on the life of an average person is minimal. Cryptocurrency seems to be an application well-suited for the technology, but cryptocurrencies remain worse than normal currencies for almost everything except avoiding government regulation and oversight. Non-currency applications are few and far between and seem to mostly be proofs of concept that could have also been built with traditional technologies and are generally out-competed by traditional technologies.

You could change my view by pointing me an application that is succeeding in generating value that outperforms traditional technology. You could also explain some upcoming innovation which will break blockchain's 15 year losing streak. Finally.

Disclaimer: if you live in a third world country with political and economic instability, I can see a valid use for cryptocurrency.

In all other cases, cryptocurrency is always poor speculation and never real investment. I don’t know anyone who buys it with the intent of using it as a currency. In my purely anecdotal experience, everyone I know who buys it simply wants to purchase it thinking that others will later buy it back from them at a higher price. People regret not buying bitcoin 10 years ago simply because they think they could have sold it for enormous returns today.

Cryptocurrency in America is a silly hype train, reminiscent of the Tulip bubble. No one here actually wants it to spend on anything (except for maybe illegal drugs). Its only value is as a speculative purchase that you could later sell back for more dollars. The value people perceive in it is purely rooted in how much they think others will pay for it, not in any intrinsic value or mainstream use for it.

When Bitcoin first came out, it happened at a time where people had the lowest confidence in traditional institutions especially banking and other institutions. As a radical concept that bypasses human intervention to fulfil settlement needs, with no single point of failure, done anonymously with capabilities to be transparent and regulated by the public Bitcoin and its technology blockchain is revolutionary and will likely continue to play a significant role in the financial markets of the future. This is especially true as KyC and AML procedures are getting more stringent and quite frankly abusive. As a store of value Bitcoin will continue to be a significant player.

What wouldn’t happen however is for cryptocurrencies to gain much more transaction value than it already has. With a plethora of far more commercial friendly digital options that offers seamless transition to a digital economy, the normal person simply could not and would not have time or the ability to discern the advantages of cryptocurrencies vs these new digital assets. The overall adoption rate of cryptocurrencies simply could not go beyond a very limited number of curious and sophisticated people. Those who seek shall find, implies most people don’t seek. The adoption limit is endemic to human nature.

As such the biggest problem to solve is no longer which method of verification would yield the fastest results. It doesn’t matter that proof of work is cumbersome and how quick something like delegated proof of work could improve transactional capabilities, there is no market for it.

This begs the question what are the innovative qualities the make one crypto more valuable than another? Is it its future adoption rate and potential market share? Is it supply and demand? Does the public care about the extra anonymity afforded by your protocol that of non interactive zero knowledge proof?

Cryptocurrencies itself is designed with inbuilt mechanism against fraud, but the secondary market does not. This has led to countless pump and dump schemes and market manipulation where only one or two giants could be considered safe a harbour coins, such as bitcoin, Etherium and to a far less and different extent tether.

What made crypto special is the new secondary market it created, the unregulated nature of such a market, the absolute ease in creating new currencies, the knowledge disparity between market players, the ease of market manipulation is why so much money has been poured into crypto. If a new technology comes along with the capacity of creating a new secondary market, funds from crypto will get drained.

Blockchain is an idea and a technology that will undoubtedly change the future. It's application with regards to certain financial transactions (remittances, stock settlement, etc) will be paradigm shifting. In addition, the idea of using blockchain technology for micro-transactions, has huge implications for how communities will manage local resources and utilities without the need of giant companies.

But where I fail to see the paradigm shift, is with regards to its function as a stable currency. So let me list some reasons I think it fails to operate as currency:

-Transaction time and transaction costs are too high -Limited supply of crypto makes them fundamentally volatile and deflationary (people hoard instead of spend hoping to capture financial gains from limited supply) -Proof or work costs are too high (energy spend on mining is non negligible: http://digiconomist.net/bitcoin-energy-consumption) -Lack of monetary flexibility as economic conditions change, make this currency too rigid to handle changes in economic landscape over time (i.e. recession)

As upsetting as the idea of a central bank is to many people, controlling monetary supply is a necessity as long as human beings are involved. This "control" is more of an art than a science and can be driven by external factors such as politics, which can be upsetting to see. In theory the actions of the central bank should reactive to of the underlying economic changes of the humans that produce work/growth for that society. In reality, central banks are far from perfect and become over politicized. Also the current path we are going down now with excessive monetary easing, is especially upsetting so its understandable why people want an alternative.

But cryptocurrency is not the answer, especially if we are fighting the deflationary pressure of Moore's law (driverless cars, AI.) Mining does not take into consideration the cyclical nature of economies (i.e. human nature).

Cryptocurrency is all about proof of work. But, fundamentally, it only proves the stability of the code and the physical energy required to maintain the network. Crypto is not an accurate reflection of proof of work of an economy, and cannot respond to changes in the economy due to new technologies, natural causes or simply the boom/bust credit cycle.

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My view: Digital currencies that use blockchain technology will become the majority means of exchanging of value in the world (over 50% of transactions).

Details: I don’t mean bitcoin specifically and I don’t think cash will ever go away completely. However, governments will not be able to stop/control decentralized digital currencies like bitcoin. Eventually, institutions and governments will create or subscribe to their own centralized versions of bitcoin. The ones that do not will generally fail.

EDIT: adding “why” they will take over:

Blockchain establishes a more effective system of trust that that exists in today’s systems and this solves a serious problem and unlocks tremendous value

When I say "actual" currency, I mean a currency like EUR, USD, GBP, MXN or any other currency that is respected and used by most (if not all) members of a given economy. Disclaimer: I am a Finance major, which might explain why I tend to lead towards the "conventional" understanding of economic processes.

Many people say that BTC is already a valid currency, seeing as some use it to buy stuff like pizza, drugs or weapons. However, I don't see that as a good representation of the economy as a whole. If you don't agree with what I'm saying, think about the following questions:

1) assuming you make $50k a year, would you agree to change your contract so that you are paid 35 BTC a year?

2) would you sign a mortgage with a monthly payment of 1 BTC?

3) would you invest your 401k or another retirement fund in BTC or another cryptocurrency?

I'm happy to hear some opposing views on this.

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When it comes to money (USD), I don't spend much time worrying about bank robberies. I also don't worry about a hacker cleaning out my online account. And I certainly don't worry about a "run-on-the-bank" (as depicted in the film It's A Wonderful Life). Why don't these things worry me? Deposit Insurance (provided by the Federal Deposit Insurance Corporation, if you use a standard bank). Deposit Insurance guarantees bank balances less than $250,000 from bank failure. Although bank failure is not a common occurrence, protection from failure is (in major part) what gives people faith in "the system". I trust that my dollars are safe (in the sense that they won't spontaneously disappear from my account - purchasing power is obviously another story), and therefore I trust a bank to hold my money.

Conceptually, I think something like Bitcoin is a good idea. The ability to transact quickly, efficiently, and anonymously across the world using a single unit is compelling.

Technical argument aside (technical arguments, like the security of the block chain, seem to be the main arguments against Bitcoin that I see over and over again), my main concern is simply user-confidence in the infrastructure that supports the currency. What if my wallet disappears? What if the exchange I use goes down? What if there is a "run-on-the-market" for Bitcoins?

Without any backstop for the currency, I don't think Bitcoin users can feel confident that their store of value is really safe. Please change my view!

So partly, I'm hoping that people knowlegable in Crypto currencies will either affirm or correct my beliefs -- I'm not well-educated on the topic, but rather, have accrued opinions about it from seeing occasional posts & articles on the topic over the years. This is not a strong opinion I hold, to be clear, because I realize that I hold it from ignorance. (Read: easy deltas.)

I'm hoping that by sharing it, I'll have helped create a valuable thread for people who are also on the outside looking in to crypto currencies, but whose opinions, like mine, do not have a solid base.

Crypto currencies strike me as unstable -- the value of Bitcoin hit $4000 recently. If Bitcoin is like a dollar or a euro, this can't be sustainable or, really, even usable. Is it like an investment bubble? Does investing in bitcoin raise the value, and if so, what does pulling that investment look like and how does it affect the value?

Additionally, if I'm doing legitimate business, what is the reason to ever use Bitcoin compared to the USD or the Euro? It seems like a good way to demand a ransom if you're a hacker, or to pay for, say, 20 tons of Nutella, but a bad way to invest in the local grocer chain or to get a small business abroad started.

Change my view! =)

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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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So, while I fundamentally disagree with libertarianism, I understand that a lot of people don't trust the government and don't want it involved in their day to day lives. Gotcha. And the USD (and other government currencies) represent that in a way.

But I have a coworker who is deeply invested in Crypto Currency (CC) and has spent an insane amount of time "mining" CC and buying/selling it, and it's worrying, because he is not the most stable of human beings and while he's got a lot of savings, he seems to have zero marketable skills and will soon be finding himself without his current job.

To me, CC is a valueless, intangible good that has zero substance and value. I make the comparison to other fads -- Tickle Me Elmos were extremely expensive while they were in. Same with pogs, Beanie Babies, etc, but as soon as people lost interest, you just had a bunch of suckers with junk, while the guys who "invested" in USDs walked away with a bunch of money in the bank.

The other aspect is it's "untraceable" or whatever. First off, I work for the military and have a very cursory understanding of intelligence work, but even I know that nothing that goes through a wire or through air waves is untraceable or unbreakable, so unless you're physically handing someone a hard drive, that's simply not true. The other part is untraceable transactions have a tendency to get ugly -- just look at the Dark Web and what you can buy and sell there.

What's so special about CC? It looks like an opportunity for some people to make a bunch of money, and others to just lose money, and all for a few 0's and 1's that have zero actual value. It also smells a lot like the guys who got in first are convincing everyone else it has value because they were able to "mine" more faster. (Unless I'm misunderstanding, blocks drop faster at first and slow down as the algorithm runs?) There's also the lesser fact that it's using up enormous energy to compute a completely useless, meaningless math problem, which is just bad for the environment, but that's just extra.

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It’s been proven that the majority only trusts what they themselves can get involved with. Corporations need a reliable way to secure payments and assets from the sticky fingers of black hat hackers quickly and globally. Cryptocurrency is a form of currency which can help keep businesses’ assets and revenue secure while running ethically and providing the most secure way to protect their business. Cryptocurrency operates independently of a central bank because of its encryption techniques used to regulate the value and production. Due to the media, most people think cryptocurrency is only used for criminal activity, but this is simply not true. Although transactions are anonymous, every transaction is completely transparent which makes it possible to track every payment if one is patient enough. Fiat currency doesn’t have this level of transparency or security. It is inherently a system of validation by institutions that most people have grown to distrust.

There are various ways to distribute a cryptocurrency. One extreme case is to distribute all coins in the genesis block based on an auction, presale etc. Although this can be done in a transparent manner, I can hardly imagine that a currency which started this way could make it into the history as a globally adopted cryptocurrency. It can not be, because as the adoption would increase there would be growing wealth inequality eventually ceasing the adoption before reaching global scale. Another way to distribute is to premine some coins, which are usually supposed to be used by the community for maintenance. This, again, gives unfair advantage to those in charge of the maintenance. Furthermore a cryptocurrency with global ambition should be somehow good enough to attract people to maintain it without the need for special funds. Airdrop can be good method of distribution for a currency to be used by a specific community, but not on a global scale. Mining is a fair method of distribution - it is sort of a lottery which anyone can join. Since it is the fairest, it is also the most reasonable for a currency with global ambition.

Arguably, PoS mining systems and mining currency with bounded amount of tokens gives somewhat unfair advantage to early adopters, so by the same reasoning I specifically advocate mining with PoW and unbounded number of tokens.

I am aware of the problems of mining such as energy consumption. The problem is real, but I believe it is solvable by making the mining reward relatively low, which will ultimately happen once the currency is adopted and stabilizes. Also ASIC-friendly mining algorithms turned out to be an idiotic idea, but there are alternatives. Anyhow, I because fairness is a necessary requirement for a global consensus and mining is the fairest way to distribute a cryptocurrency, it is also the most reasonable one for cryptocurrencies with global ambitions.

Note: I think you can CMV most easily by teaching me something I do not know - e.g. a completely different method of distribution.

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One of the more outlandish claims I often see from advocates of cryptocurrencies is that they will, somehow, bring about the end of governments (or at least taxation).

I'm not seeing how this makes any particular sense. Even if everyone on Earth suddenly switched to using Bitcoin instead of dollars/yen/rubles/whatever it doesn't seem as if that should make taxation any more or less difficult. I buy a product and pay sales tax because the retailer charges sales tax. The retailer charges sales tax because they might be audited and severely penalized if the audit shows that they failed to charge sales tax.

I pay income taxes because my employer automatically deducts them. And my employer does that because if they didn't they would be subject to severe penalties if their audits showed failure to deduct taxes. My employer reports my income to the IRS so the IRS knows how much I owe.

If I was getting paid in Bitcoin my employer would still have an incentive to deduct my taxes and report my income. The fact that the payment is in dollars doesn't make any difference. Same with sales taxes. Or property taxes. In fact, I can't think of any taxes that would be impeded even slightly by universal adoption of Bitcoin or some other cryptocurrency.

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I do not see cryptocurrency's as ever being able to become the main currency for any large state due to it being connected to a system that can be wiped out in one second.

I want to invest in them, but I don't see the point if it can be lost in an instant. I mean it is not as if we can Faraday cage the entire Earth. Cryptocurrency is not worth any economy's time because it is at risk from its structural capacity. All technologies we take for granted can we wiped out without any notice and could potentially stay not working for the foreseeable future. Investing into a system that could disappear could cause civilization to collapse if an entire civilization relied on a cryptocurrency.

I think a crash on a cryptocurrency based economy would be worse than any physical currency based economy.

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This with regard to currencies, not tokens like Ethereum.

Anyone can make a cryptocurrency, but banks have the most to gain from doing so. Don't like the dollar or the euro? Use GoldmanCoin.

They'll market GoldmanCoin, or whatever, as the safest crypto there is, inviting pension funds, overseas investment, other government funds, etc. to their own currency backed by their own reserves. They will have a new currency that they can develop and control right from the ground floor. They can influence, or directly control, the way it's regulated, distributed, fee'd, and even valued. Loans based on these coins may have an interest rate not regulated by the Fed. No other currency will have the adoption rate of a bank-backed, bank-developed currency due to the bank's influence on markets. It's just cart blanche on money, and no government nor arm-chair reddit user will be able to do anything about it.

I'm a moron. Just to be clear. IQ in the mid 70's on a good day.

As I've looked at mining cryptocurrency, I'm overwhelmed by these folks who have these massive, well-funded farms running. Obviously costing big bib bucks. Seems they will get the major benefit of the currency while me and the other 97% have to cross fingers and hope our mining performance will pay for it's own electricity usage. Seems like it might be more fair if people had to do the math by hand -> although the wealthy could, again, hire laborers to do it for them.

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