Author Topic: The End of Money  (Read 45 times)

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Offline MH

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The End of Money
« on: April 09, 2018, 06:34:56 am »
https://www.theglobeandmail.com/business/small-business/money/article-popular-trading-platform-bunz-launches-its-own-cryptocurrency/

Bunz is launching its own currency.  I am starting to think that we are seeing the end of money as we know it, or the start of that.  If these kinds of currencies eventually stabilize and come into use, "old" money will be discounted against it .... for various reasons that align with the "tax the rich" sentiment.

The banks are worried about these things.  Rich folks (and by that I mean very wealthy with at least tens or hundreds of millions in assets) should also start thinking about them.

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Offline kimmy

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Re: The End of Money
« Reply #1 on: April 09, 2018, 09:17:20 am »
I remain skeptical about the part where I get to exchange my imaginary internet coins for real-world goods and services.

If I'm creating something, whether it be handcrafted duck-shaped ornaments or Snapchat nudes or whatever it is that the young folks are selling on the internet these days, and I'm selling it for "Bunz Trade Zone" dollars, how do I get to the point where I can pay my bills with it?  If the answer is "you can't, but you can buy other peoples' Snapchat nudes and handcrafted duck-shaped ornaments", then ultimately it's not a replacement for cash.   Maybe somebody out there is willing to trade real money to get BTZ dollars, but it seems to me like that broker would be in the position to set the exchange rate.  If you're getting paid in BTZ dollars and need to pay your bills in real world currency, aren't you at the mercy of some small number of brokers who can set the exchange rate to be as low as they wish?

 -k
Masked for your safety.

Offline MH

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Re: The End of Money
« Reply #2 on: April 09, 2018, 09:27:23 am »
I remain skeptical about the part where I get to exchange my imaginary internet coins for real-world goods and services.

That's NOTHING.  Imagine how the first people to use money must have felt !
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If I'm creating something, whether it be handcrafted duck-shaped ornaments

No.
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or Snapchat nudes

YES.

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or whatever it is that the young folks are selling on the internet these days, and I'm selling it for "Bunz Trade Zone" dollars, how do I get to the point where I can pay my bills with it?  If the answer is "you can't, but you can buy other peoples' Snapchat nudes and handcrafted duck-shaped ornaments", then ultimately it's not a replacement for cash. 

And one can imagine the exact same situation happening in Mesopotamia... or maybe bitcoin today.  Nobody bets their mortgage money on bitcoin but lots of people have enough extra to risk it. 

The way "in" may just be the sex trade if I were to hazard a guess.

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Maybe somebody out there is willing to trade real money to get BTZ dollars, but it seems to me like that broker would be in the position to set the exchange rate.

It's a market.

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  If you're getting paid in BTZ dollars and need to pay your bills in real world currency, aren't you at the mercy of some small number of brokers who can set the exchange rate to be as low as they wish?

 -k

There are probably already too many brokers set up to manipulate the market.

Here's an interesting exercise: what is the order at which these will be adopted ?

Strawman:

1. trinket sellers
2. sex trade
3. day labour
4. local merchants
5. low wage, long term labour
6. medium sized businesses
7. ???
8. large businesses

Offline TimG

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Re: The End of Money
« Reply #3 on: April 09, 2018, 09:27:38 am »
Bunz is launching its own currency.  I am starting to think that we are seeing the end of money as we know it, or the start of that.  If these kinds of currencies eventually stabilize and come into use, "old" money will be discounted against it .... for various reasons that align with the "tax the rich" sentiment.
Extremely unlikely. Technically speaking crypto currencies do not scale well and waste a lot of computing resources. A payment system like Visa can process more transactions per second for a lot less. On top of this the lack of any central authority to restrict access to bad actors means that crypto currency transactions will be the exclusively used by scammers and criminals. People will learn that if they want to benefit from any consumer protection laws they will have use national currencies.

The banks are worried about these things.  Rich folks (and by that I mean very wealthy with at least tens or hundreds of millions in assets) should also start thinking about them.
Cryptocurrencies are the latest fad that allow well connected rich people to manipulate the market and make money at the expense of uninformed small investors jumping on a bandwagon. Banks have nothing to worry about. 

Offline MH

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Re: The End of Money
« Reply #4 on: April 09, 2018, 09:28:33 am »
Extremely unlikely. Technically speaking crypto currencies do not scale well and waste a lot of computing resources.

Is that generally true or just a bitcoin thing ?

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Cryptocurrencies are the latest fad that allow well connected rich people to manipulate the market and make money at the expense of small investors jumping on a bandwagon. Banks have nothing to worry about.

Kind of a sweeping statement but ok.

Offline TimG

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Re: The End of Money
« Reply #5 on: April 09, 2018, 09:37:25 am »
Is that generally true or just a bitcoin thing ?
Every cryptocurrency needs a 'proof of work' which is a computationally intensive action done for no reason but to make it difficult for the work to be duplicated. Different currencies can have different mechanisms that use resources other than CPU but they still require the consumption of resources for no purpose other than slowing down the calculation time.

On top of this the public ledger has to be duplicated by every node. BitCoin is >100GB and increasing rapidly and BitCoin is just a toy. If it was a real currency system the ledger would be in the ~100TB. This is a huge amount redundant storage that consumes a lot of resources.
« Last Edit: April 09, 2018, 09:59:23 am by TimG »

Offline MH

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Re: The End of Money
« Reply #6 on: April 10, 2018, 06:08:29 am »
From an expert I know:

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We are still in the early days of blockchain.  Proof of work is the current consensus model.  People are also looking at things like proof of stake and something called gossip about gossip as ways to reduce the computational power to run a ledger.  The size of the ledger is not a big deal.  In a few years we will all have 100TB on our notebook computers.  I don't know about you but I currently have about 15TB and I'm usually behind on newer and larger storage.  Also not everyone has to keep a complete copy of the blockchain, just the most recent blocks.  Also as it does not change, look for a new class of permanent storage that will be used for lthings like immutable blockchains.   I was at an event tongiht and someone said, think of the blockchain as a 1950's computer.  It is slow and the storage is expensive.  As we put more time and thought into this we will probably reach something like a 70s computer in a year or two.

Offline TimG

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Re: The End of Money
« Reply #7 on: April 10, 2018, 08:11:21 am »
From an expert I know:
I am very familiar with the hype.

1) Proof of Stake is no panacea: https://en.bitcoin.it/wiki/Proof_of_Stake; The point is distributed trust is a hard problem that comes with tradeoffs. For many applications centralized trust is "good enough" and will offer a more cost effective solution.

2) We are moving away from big PCs with surplus resources to small devices where battery life, size, and cost are more important. So the suggestion that the size of blockchains will become irrelevant is naive.

IMO, Blockchains will have niche applications and you will see major financial institutions incorporate dollar/euro/yen denominated blockchains into their operations. However, the chances of a cryptocurrency becoming a generic alternative to government backed currencies is remote.