Bring crypto back to currency

The fundamental point with crypto is that you can design your own with any criteria you want to fit all of your needs, but the problem of adoption still remains. If you make it behave like a currency, speculators will lose interest and it won't get adopted. If you find a government willing to impose it for transaction you will nullify the reason for crypto to exist.

I suspect you'd be very interested in this paper:

https://docs.google.com/document/d/1iUscaSy6HHLVz2e2rjQfQtx5...

There are some good reasons why global-consensus cryptocurrencies can't generally be used as money:

https://perry.kundert.ca/range/finance/holochain-consistency...

> Algorithmically, it is possible to control how much it costs to mine crypto at any point by modulating network fees (PoS)/block difficultly (PoW). This would in turn have an effect of the supply of the currency because if it becomes cheaper (in USD) to mine than more people will mine it (as it becomes more profitable to do so).

If it's cheaper to mine, it won't be more profitable. See dogecoin. It'll create more token and at a decreased value.

I can't believe people are still falling for this ponzi scheme

The last paragraph is absolutely peak "let cryptocurrency run long enough and they invent every institution they tried to get rid of".

What the author is describing here, a trusted group of institutions that buy and sell currency to maintain an inflation target is called a 'central bank'. Or in this case, a bunch of central banks. In fact even the proposal to automate and do this algorithmically goes back to Friedman.

> The ideal currency has a constant, predictable 2-4% inflation to promote the velocity of money and prevent stagnation.

I always liked this idea, and I a few cryptocurrencies/blockchains tried to do something like it, including Stellar Lumens[1]. Just looked it up to post this and they abandoned it back in 2019.

    Unlike the tokens of other blockchains, lumens aren’t mined or awarded by the protocol over time. Instead, 100 billion lumens were created when the Stellar network went live, and for the first 5 or so years of Stellar’s existence, the supply of lumens also increased by 1% annually, by design.
     
    That inflation mechanism was ended by community vote in October 2019. And in November 2019, the overall lumen supply was reduced. Now there are about 50 billion lumens, total, in existence, and no more lumens will be created.

[1] https://stellar.org/learn/lumens

I love the idea of using Silk Road prices as an inflation oracle.

> The ideal currency has a constant, predictable 2-4% inflation to promote the velocity of money and prevent stagnation.

This fundamentally misunderstands the point of Bitcoin's creation (and currency). The ideal currency does not inflate at all, which makes it inimical to government spending and debt. As modern fiat is inherently based upon debt, this makes it non-ideal from the perspective of governments, but ideal for everyone else.

Inflation to drive monetary velocity is a ridiculous concept, as is inflation. Inflation is scarcity of goods purchased in the present relative to money supply: fewer goods and services at the expense of more currency. People want goods and services, not currency.

During multiple periods of US history—including much of the 1789-1913 era—the US paid out no interest on US bonds, as the value was in its safety, and the value of the dollar was worth more at its redemption. More goods and services relative to the comparatively smaller increase in currency made savers wealthy without investment. Outside of wars, pre-modern US had a deflationary currency in its run up to becoming the pre-eminent power on the planet.

To be a currency, you need inflation. Otherwise you have an asset. We can see this from European history: before 1492 it was common to hoard gold as if it was gems, rubies, sapphires. It had limited use as a currency, and only at the highest levels of the economy, never at local levels -- it was traded among the very wealthy, the same as assets might be traded among the very wealthy. Only after 1492, when gold and silver started to pour in from the New World, did gold and silver become useful as everyday currencies. The French historian, Fernand Braudel, spoke of the "the price revolution of the 1500s" because inflation managed to average 1% a year for the whole century, which was likely the longest and largest sustained inflation in history up till that time. It was that inflation that gave birth to the modern world, and gave us a world of currencies and wage-work. Because crypto lacks inflation, it cannot be used as a currency. It will remain an asset.

> The ideal currency has a constant, predictable 2-4% inflation to promote the velocity of money and prevent stagnation.

While a constant 1-2% inflation may be ideal for fiat currency, I think a cryptocurrency should have the simplest and fairest possible emission model of a fixed yearly supply. This gives an inflation rate after n years of 1/n, making the currency disinflationary. While it takes 50 years to get inflation down to 2% this avoids the wealth concentration seen in nearly all existing cryptocurrencies that vastly tip the emission to the first few years.

Weird that such an obviously not well researched take gets this high here?

Like it or not, there are already a TON of experiments that are far smarter than this one in operation now, on e.g. Ethereum.

Crypto Currency is fundamentally flawed because all people care about is its value in more useful and understandable fiat currency (dollars)

It's a broken argument to assume you need inflation for a reasonable money system. If a money system becomes popular then the price of goods becomes cheaper in that money as it is more scarce.

Goods would be less sats over time.

Inflation is bad for everyone apart for the people who print the money, hence the mess we're in.

Like my friend said, we need anonymous on/off ramps: https://x.com/LBRYcom/status/1628105970122358801

> The ideal currency has a constant, predictable 2-4%...

Is a ridiculously wrong assumption to make.

> Bitcoin was fundamentally flawed due to the built-in scarcity, so obviously the price would go up. The ideal currency has a constant, predictable 2-4% inflation to promote the velocity of money and prevent stagnation.

Bitcoin is open source, fork it with your preferred settings and convince others to join your network.

Bitcoin maximalists claim tail emission will never happen, but that’s just an opinion.

> If Adam Smith saw NFTs he would shoot himself.

The author has clearly never read Adam Smith.

It can’t be currency unless govt can control it

IMHO, The cryptocurrency "Hex" has the best inflationary mechanism.

First side note, Proof-of-work isn't dead, but it should be. Proof-of-stake is vastly superior (return isn't based on how much electricity you burn, but by putting up risked collateral and running that)

So, Hex. You stake/invest/lock up your coins for a fixed period of time, and the system gives you more back at the end of the term at a fixed percentage; like how so many financial products are supposed to work.

And even better, all "penalties" (e.g. you end stake too early or late) go back to the "on-time" stakers as a bonus.

(yeah, the founders a weirdo but what can you do)

The author misses the point about why cryptocurrency is stupid, which is that law is the ultimate arbitrator of ownership, not a piece of paper or a magical token. Anything that goes against that goes against the point of having a government and results in stupidity like funding the North Korean dictatorship and slavers running scams in South East Asia.

This adds another layer of stupidity on top, proposing that people buy a deflationary asset that they are not required to own.

My take is that crypto is a scam but fiat monetary system is a scam. The fiat proponents likely corrupted crypto intentionally, leveraging government agencies and financial institutions to prevent adoption and soil its reputation... Same thing as western corporate powers have been doing to developing countries in Africa and elsewhere; corrupting community and national leaders via an extreme punishment-in-one-hand, reward-in-the-other model, impoverishing the masses for the benefit of western conglomerates (read Confessions of an Economic Hitman)... Then fooling everyone into blaming citizens of those countries for their own poor 'voting decisions'.

Everything which is based on either fiat or crypto is also a scam by extension; stocks, bonds, derivatives, etc... Our entire financial system is built on an unsound, virulently corrupt foundation. Much energy is spent on keeping up appearances, but beneath every statistic hides a dark reality.

It probably comes down partly to the sheer number of white collar 'bs' jobs. There exist millions upon millions of 'knowledge workers' who distort narrow slices of the world's knowledge in the pursuit of narrow financial goals... But by the millions, their distortions add up to total surface-corruption of all knowledge. Everything is as rigged as it can possibly be, but looks only just as plausible as needed to continue existing.

IMO, the growing divide between appearance and reality explains the growing divide between the haves and the have-nots. Now we're at a stage that we ran out of people who are smart and corrupt enough to provide enticing justifications for all the contradictions so that's why the system now resorts to censorship and ad-hominem attacks; not addressing questions that are raised because no response exists which sounds coherent; even to the masses of midwits.

We're moving towards an Idiocracy wherein increasingly stupid, arrogant people who cannot see contradictions in increasingly weak official narratives are promoted to positions of power solely for the purpose of maintaining the system's domination by a small number of elites. Literally building a moat out of human stupidity.

A massive problem is that really stupid people, who (subconsciously) know that they're stupid, tend to trust authority figures and experts almost 100%... Because they know, deep down, that they cannot trust their own judgement about anything. These super-idiots actually think they're intelligent because they believe that one's intelligence is directly correlated to one's ability to trust the narratives fed to them by 'more knowledgeable' authority figures.

It's a self-serving view of intelligence, whereby stupid people see their inability to comprehend certain complex concepts as a form of intelligence in itself; they believe that their minds are hyper-efficient because they can reach their material goals without having to do all the tedious intellectual work; they go straight for the reward. Based on this definition, human polymaths with PhDs are idiots and cockroaches are geniuses but OK...

End rant.

Something something 15 competing standards

All these years of evolution and we're back to barter system.