Blockchain update

[touchring]

Re: Blockchain update

In the long term, it is possible that there will be demand for a crypto currency that does not pay interest or dividends.


Also, I do not believe it is fair to call crypto currencies Ponzi schemes or pyramid schemes since crypto currencies are not 100% predicated on fraud as Ponzis and pyramids are. Mind you, I am no champion or defender of crypto currencies and I still believe that what's going on with crypto currencies is utter madness (which I blame almost entirely on the central banks for their decades of gross incompetence and corruption.) Whenever this latest bubble ends, the vast majority of crypto coin "investors" are going to be blown out.

Of course, I'm not an expert in crypto so I can't determine if cryptos are pyramids or ponzis in mechanism although they do share similarities. Besides there are so many types of cryptos and I've only read up on Bitcoin. As for the legal aspect, it's really up to governments to determine.

But that doesn't mean Bitcoin or any other crypto currencies cannot have value in the future.

Agree, but probably not Bitcoin but some other crypto or whatever name they will call it in the future. Google isn't the first search engine. They were not even 2nd or 3rd. Just as FB isn't the first social media site.

[jk]

Re: Blockchain update

Hypothetical examples:

Crypto A: offers a 5% dividend every year in perpetuity

Crypto B: offers 5% network participant, transaction #, and transaction $ growth monthly in perpetuity.

Token A is an interest bearing token no different than a traditional bank CD.

Token B is an economic ecosystem platform built on Metcalfe’s Law of network effect.

All else being equal at the start, which token will create the most long term economic value?

i think these examples show the emptiness of cryptos.

"token A offers a 5% dividend every year in perpetuity." in what currency is this dividend paid, and based on what value of the token? and how is the dividend generated? and who pays it? is it just the case that each coin will be redefined as 1.05 coins on january 1? if so, so what?

token B "offers 5% network participant, transaction #, and transaction $ growth monthly in perpetuity." can't be in perpetuity- you run out of people, you swamp the transaction processing system and eventually your tokens are worth more than all the real assets in the world.

eventually the pyramid runs out of greater fools.

[lakedaemonian]

Re: Blockchain update

i think these examples show the emptiness of cryptos.

"token A offers a 5% dividend every year in perpetuity." in what currency is this dividend paid, and based on what value of the token? and how is the dividend generated? and who pays it? is it just the case that each coin will be redefined as 1.05 coins on january 1? if so, so what?

token B "offers 5% network participant, transaction #, and transaction $ growth monthly in perpetuity." can't be in perpetuity- you run out of people, you swamp the transaction processing system and eventually your tokens are worth more than all the real assets in the world.

eventually the pyramid runs out of greater fools.

It was an simplistic example of a binary choice to simply convey the Metcalfe’s Law aspect of crypto currency/Blockchain use.

Of course “token B” would eventually run out of people.

And of course growth of the longer term crypto winners will slow over time.

As far as “token A” goes the idea of a token having to be interest/dividend bearing to be successful is Touchring’s, I’m not aware of any real world examples.

I was simply using his statement as a basis for comparison with “token B” which I believe will be closer to what we will see for an extended period of growth for a few significant major winners over the long term.

The problem I see with crypto currencies being used for both a store of value AND ubiquitous transaction value is price stability.

A rapidly and erratically rising crypto currency is less likely to be used for frequent and small transaction purchases if consensus opinion is that prices will continue to rise rapidly.

Equally, it would be less likely to achieve ubiquity with sellers if the rapidly rising crypto price is excessively erratic in its rise.

If I had to guess, I suspect one or more of the bigger crypto players in 10-20 years time after the dust settles will possess characteristics that will include retaining purchasing power value with price stability.

DAO was an interesting failed experiment that fell to malignant actors.

Maybe future crypto currencies will include a robust DAO with algorithmic monetary policy that will allow for retaining purchasing power of network participants while enhancing price stability.

Ultimately, I think the most successful cryptocurrencies will possess a few key characteristics:

high trust(ultimately it’s a lack of trust in traditional sovereign currencies and associated fiscal/monetary/government policy that is leading to the rise of crytpo currencies....sovereign currencies are losing customers)

high velocity(both in aggregate transaction volume and individual transaction speed)

high ubiquity(self explanatory, doesn’t the US Dollar have a Metcalfe’s Law like aspect to it?)

low friction(transaction costs and low/no barriers to use)

[jk]

Re: Blockchain update

i think the crypto-currencies [distinguished from the blockchain technology used to create them] are digital beanie babies, the product of a social network effect based on your token b's characteristics: increasing public interest, increasing prices, increasing transactions. this is the case during the parabolic phase of every pyramid scheme. i don't think crypto's are "the new gold." i think 'the old gold", physical gold, the same kind of gold being accumulated by the pboc and other chinese buyers, as well as by the russian central bank, the same kind of gold which via a turkish intermediary greased the movement of oil from iran to china, that gold will also be "the new gold."

[shiny!]

Re: Blockchain update

i think the crypto-currencies [distinguished from the blockchain technology used to create them] are digital beanie babies, the product of a social network effect based on your token b's characteristics: increasing public interest, increasing prices, increasing transactions. this is the case during the parabolic phase of every pyramid scheme. i don't think crypto's are "the new gold." i think 'the old gold", physical gold, the same kind of gold being accumulated by the pboc and other chinese buyers, as well as by the russian central bank, the same kind of gold which via a turkish intermediary greased the movement of oil from iran to china, that gold will also be "the new gold."

I sincerely hope you're right.

[touchring]

Re: Blockchain update

"in no time, the mafia will be into the game."
They already are
Goldman Sachs launching trading desk for bitcoin, report says

First case of mafia kidnapping an exchange owner to get the private keys?

https://cryptovest.com/news/head-of-major-ukranian-cryptocurrency-exchange-presumably-kidnapped/

As I said, crypto is good business for the mafia, better than drugs. Less dangerous (the loot can't be traced), and much cleaner.

[seobook]

Re: Blockchain update

First case of mafia kidnapping an exchange owner to get the private keys?

As I said, crypto is good business for the mafia, better than drugs. Less dangerous (the loot can't be traced), and much cleaner.

Doesn't the blockchain guarantee everything can eventually be traced? If not, then doesn't the blockchain (and all of the cryptocoins) serve little purpose?

So long as the coins are primarily speculative instruments & not something that can be broadly spent into the economy, isn't there a bottleneck at some point?

[dcarrigg]

Re: Blockchain update

i think these examples show the emptiness of cryptos. "token A offers a 5% dividend every year in perpetuity." in what currency is this dividend paid, and based on what value of the token? and how is the dividend generated? and who pays it? is it just the case that each coin will be redefined as 1.05 coins on january 1? if so, so what?token B "offers 5% network participant, transaction #, and transaction $ growth monthly in perpetuity." can't be in perpetuity- you run out of people, you swamp the transaction processing system and eventually your tokens are worth more than all the real assets in the world. eventually the pyramid runs out of greater fools.

The underlying concern I think is of greater importance here.The fundamental premise behind the value of the blockchain, insofar as I can tell, is rarity. It is a clever way to reverse engineer scarcity into a system where there is nearly none. Ones and zeroes can be copied and shipped at almost no cost. So you make a special system in which they are limited, logged, tracked, and segregated and claim that the scarcity makes value.The only problem? The scarcity isn't actual scarcity. It only exists in the brand. It's not like real gold. Sure, there are and only will be so many Bitcoins. But we could make a trillion Itcoins tomorrow. Or a quadrillion Gritcoins. Or a quintinillion Shitcoins. The scarcity only exists within the brand. It's not real scarcity. The second you stop caring about brand names, the volume of cryptocurrency increases to infinity, and the value instantly dissipates to zero.In theory, one could create infinite countries and do the same thing to regular national fiat too...if it wasn't for land, which is actually the real thing that undergirds all fiat currency, and is the huge reason why the US federal government still sits on $130 trillion + of federal land that backs the most stable security on the planet.And don't take me to go too far here. I don't doubt that there is some use for blockchains. I don't doubt that there might even be a digital currency that is widely used in a normal way one day. But I doubt hard that it will be bitcoin. And libertarian idealists need to realize that deflation might be a feature for ponzi schemes, but it's a bad bug for currency.

[lakedaemonian]

Re: Blockchain update

Doesn't the blockchain guarantee everything can eventually be traced? If not, then doesn't the blockchain (and all of the cryptocoins) serve little purpose?

So long as the coins are primarily speculative instruments & not something that can be broadly spent into the economy, isn't there a bottleneck at some point?

Law enforcement, tax authorities, and national intelligence services would much rather see bad guys using cryptocurrencies than human hawala networks, that’s for sure.

The idea that bitcoin and other cryptocurrencies are “untraceable” is complete BS.

There are certainly ways to make yourself less traceable or offset your transactions, but a financial crimes analyst would still rather you use crypto than hawala.

[lakedaemonian]

Re: Blockchain update

The underlying concern I think is of greater importance here.The fundamental premise behind the value of the blockchain, insofar as I can tell, is rarity. It is a clever way to reverse engineer scarcity into a system where there is nearly none. Ones and zeroes can be copied and shipped at almost no cost. So you make a special system in which they are limited, logged, tracked, and segregated and claim that the scarcity makes value.The only problem? The scarcity isn't actual scarcity. It only exists in the brand. It's not like real gold. Sure, there are and only will be so many Bitcoins. But we could make a trillion Itcoins tomorrow. Or a quadrillion Gritcoins. Or a quintinillion Shitcoins. The scarcity only exists within the brand. It's not real scarcity. The second you stop caring about brand names, the volume of cryptocurrency increases to infinity, and the value instantly dissipates to zero.In theory, one could create infinite countries and do the same thing to regular national fiat too...if it wasn't for land, which is actually the real thing that undergirds all fiat currency, and is the huge reason why the US federal government still sits on $130 trillion + of federal land that backs the most stable security on the planet.And don't take me to go too far here. I don't doubt that there is some use for blockchains. I don't doubt that there might even be a digital currency that is widely used in a normal way one day. But I doubt hard that it will be bitcoin. And libertarian idealists need to realize that deflation might be a feature for ponzi schemes, but it's a bad bug for currency.

How many trillions is Venezuela worth?

How’s that working for the Bolivar?

How’s that been working for holders of US Dollars for the last decade?

I’m also highly sceptical of bitcoin.

I think it will be the Excite/MySpace/CDNow/Webvan of Cryptocurrencies, before other(s) emerge

I’ve posted earlier about the value of trust and stability/consistency.

Certainly a big chunk of the speculative run up in crypto is due to a lack of trust in government fiscal/monetary policy. It’s clearly not all over enthusiastic Metcalfe’s Law(circa 1998) and speculative greed.

Personally, I think the future might consist of something like:

https://makerdao.com/

A “stable coin” backed by collateral to mimic an IMF currency basket to retain purchasing power via consensus(of coin holders) driven central bank, matched with a peer to peer platform such as OpenBazaar.

My guess is that the combo of both(or similar) represents a long-term competitive cross border threat to the likes of Alibaba and Amazon.

[seobook]

Re: Blockchain update

Many problems with a cryptocoin that is stable:

• no self-interest ponzi pumper zealots shouting from the rooftops marketing it to the greater fool
• no dopamine rush from valuation shifts. the variable reward circuitry of large & frequent value shifts is part of what helps drive addiction to crypto gambling.
• no cyclical valuation use to asset strip punters
• stability will still be need to measured against some reference, which would still be manipulated
• further, stability not only turns off the ponzi pumpers, but it also gives the media nothing to write about. if brand is the primary thing that gives the coins value, then a lack of frequent media coverage will also mean little to no brand awareness. Sometimes when viewing CNBC all but 2 of the top stories will be about Bitcoin. And on Bloomberg there will be a trending story about how Bitcoin fell below $14,000 while there is another trending story about how it is back up above $14,000.

"Time interval is a strange and contradictory matter in the mind. It would be reasonable to suppose that a routine time or an eventless time would seem interminable. It should be so, but it is not. It is the dull eventless times that have no duration whatever. A time splashed with interest, wounded with tragedy, crevassed with joy – that’s the time that seems long in the memory. And this is right when you think about it. Eventlessness has no posts to drape duration on. From nothing to nothing is no time at all." - John Steinbeck's East of Eden quote via The Reformed Broker

[lakedaemonian]

Re: Blockchain update

Many problems with a cryptocoin that is stable:

• no self-interest ponzi pumper zealots shouting from the rooftops marketing it to the greater fool
• no dopamine rush from valuation shifts. the variable reward circuitry of large & frequent value shifts is part of what helps drive addiction to crypto gambling.
• no cyclical valuation use to asset strip punters
• stability will still be need to measured against some reference, which would still be manipulated
• further, stability not only turns off the ponzi pumpers, but it also gives the media nothing to write about. if brand is the primary thing that gives the coins value, then a lack of frequent media coverage will also mean little to no brand awareness. Sometimes when viewing CNBC all but 2 of the top stories will be about Bitcoin. And on Bloomberg there will be a trending story about how Bitcoin fell below $14,000 while there is another trending story about how it is back up above $14,000.

If I may counter:

• no self-interest ponzi pumper zealots shouting from the rooftops marketing it to the greater fool

The goal of any successful entity is not to throw a live hand grenade into a game of “hot potato”, or even play hot potato to begin with.

• no dopamine rush from valuation shifts. the variable reward circuitry of large & frequent value shifts is part of what helps drive addiction to crypto gambling.

The goal isn’t to build a gambling platform people are addicted to, but to build a platform people love.

• no cyclical valuation use to asset strip punters

Its not about stripping punters, but stability

• stability will still be need to measured against some reference, which would still be manipulated

Its harder to manipulate an entire fiat/crypto currency basket

• further, stability not only turns off the ponzi pumpers, but it also gives the media nothing to write about. if brand is the primary thing that gives the coins value, then a lack of frequent media coverage will also mean little to no brand awareness. Sometimes when viewing CNBC all but 2 of the top stories will be about Bitcoin. And on Bloomberg there will be a trending story about how Bitcoin fell below $14,000 while there is another trending story about how it is back up above $14,000.

The media will write about any Metcalfe’s Law example big enough to be impossible to ignore.

Build things people want/need/love.

Everything else is largely irrelevant.

I’ll repeat what I stated before.

I think Crypto is largely a repeat of the dot com bubble, but I think the lasting entities that rise from the ashes to dominate in 20 years time will be more easily observable in the developing world that have even less trust in government, fiscal/monetary policy and sovereign currency as us in the wealthy west.

[seobook]

Re: Blockchain update

The media will write about any Metcalfe’s Law example big enough to be impossible to ignore.

They usually drastically lag trends unless moves are rather sharp. Many new fields are not real, do not exist, or are sort of viewed as sell-a-dream scams & then by the time the mainstream media covers them with something other than disdain most of the profit has already been made. This was sort of how many webmaster related trends have been covered over the years, from domaining to SEO to affiliate marketing.

The other issue is if there is toxic fallout from ponzicoins then legitcoin might face significant regulatory headwinds.

Build things people want/need/love.

I think if the winning currencies come from this thesis they will be tied into companies that already operate other services people love.

The regulatory headwinds I was referring to in the prior part ... think about how MegaUpload was shut down & the owner's assets were seized. Then consider YouTube, which has far more piracy on it, but YouTube is fine (in spite of terrorism recruiters, hate preachers, pedos on it, exploitative autogenerated videos targeted at kids, etc etc etc) because it is tied in with a broader & stronger company which is highly profitable, influential & has a history of strong political connections.

I think Crypto is largely a repeat of the dot com bubble

It sure feels like it. I see the ads frequently across the web. There are even ads for "launch your own cryptocoin"

Last time I saw such an over-concentration of ads in a sector that expanded across the broader web it was the coupon related stuff with Groupon, LivingSocial & others. I think to this day Groupon is valued at less than the amount they raised & I believe they bought LivingSocial for "no consideration" in spite of LivingSocial raising about $1 billion.

The only people who won in that group coupon craze were the early Groupon insiders who cashed out and the people who had Google shares monetizing the misallocated VC funds spent on online ads.

The hard part about the cryptocoin ad stuff is perhaps some of the ads seem more overrepresented than they actually are due to more advanced ad retargeting options. An advertiser could target ads at anyone who had visited Coinmarketcap.com even as they browse other websites. There has also been at least one cryptocoin that has bought a Time Square billboard.

I think the lasting entities that rise from the ashes to dominate in 20 years time will be more easily observable in the developing world that have even less trust in government, fiscal/monetary policy and sovereign currency as us in the wealthy west.

Won't most of these largely be private for-profit bolt-on services tied to other widely used services from companies akin to Facebook/Google/Amazon?

• Kenya has M-Pesa
• China has Alipay and WeChat. These companies are even pushing to become official government IDs. And even with that tie in test as a government ID service beginning, Chinese consumers are still widely using them, because they have used them extensively and trust the companies. At the same time, the very same people opt out of using China's rewards points snitch-a-neighbor apps.
• Hong Kong's transit Octopus Card is also used in many vending machines, convenience stores, etc.
• India has Paytm & Oxigen
• etc.

I could see Apple, Google, Facebook or Amazon pushing hard into creating some sort of virtual currency which is tied to a first-world currency in value. Any of the companies which have a strong first-party connection to consumers will be able to offer lower transaction costs because they will be able to better cross monetize the data for media sales & ad targeting.

In the US major banks recently launched Zelle to compete against Paypal, Venmo, etc. ... I think they'll struggle to create something which gets wide usage because it is a collaborative effort between firms largely against innovation rather than a bottoms up service like Stripe which launched a few years back or like Paypal was when it began.

[dcarrigg]

Re: Blockchain update

It’s clearly not all over...speculative greed.

This is far from clear to me. In fact, that goes for many segments in the wider economy too. I simply cannot believe that $3,000 per month is a fair market rate for a 600sqft, 1-bed, roach-infested apartment in a 200 year old building neighborhood you'd be liable to be shot in 10 years ago with a median family income of $12,000 in any world where the real estate market is not all about speculative greed, for example. Yet here we are.

[seobook]

Re: Blockchain update

This is far from clear to me. In fact, that goes for many segments in the wider economy too. I simply cannot believe that $3,000 per month is a fair market rate for a 600sqft, 1-bed, roach-infested apartment in a 200 year old building neighborhood you'd be liable to be shot in 10 years ago with a median family income of $12,000 in any world where the real estate market is not all about speculative greed, for example. Yet here we are.

pretty sure you will love this quote Dcarrigg
https://twitter.com/matthewstoller/s...11274381484038

We've had massive trade deficits as a lubricant for 'global leadership' for decades. This model stopped working for the American middle class in 1971. Trump is a symptom of its failure. Nick Kaldor in 1971 said our trade model will change "a nation of creative producers into a community of rentiers increasingly living on others, seeking gratification in ever more useless consumption, with all the debilitating effects of the bread and circuses of Imperial Rome."

surely unrelated, but record residential rent payments this year across the US @ $486.5 billion.

luckily, there are roommates to share the load!
zillow.com/research/rising-rents-more-roommates-17618/

An increasingly popular way to cut costs is by adding a roommate. Nationally, 30 percent of working-age adults—aged 23 to 65—live in doubled-up households, up from a low of 21 percent in 2005 and 23 percent in 1990

another great recession or two and maybe the population will consider hot racking reasonable.