Current Events > How will crypto be used as currency when it's so volatile?

(+) Yeah! (+)

I'm actually wondering, not saying it will or won't

Are we expecting btc and eth and whatever to become very stable one day? Who wants to trade away a currency that could double in value later that year?

There are some places where people bought donuts with BTC.

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The way it's been behaving so far, actually using it as currency seems pretty silly.

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It won't and it can't. It's a commodity, not a currency, and a rather environmentally devastating one at that.

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BTC will never be used as money. However, blockchain tech will inevitably be adopted. A country will adopt their own currency through their own valleys. No crypto out right now will be adopted by the masses. People like to believe BTC/ETH will, but the truth is, it will not. Will venders accept it as a form of payment? Yeah, the same way they will accept quarters or penny's.

If the US came out with its own crypto token, BTC will be severely severed and only the people that actually believe in satoshi's vision will keep it alive.

It's certainly doable since there is a lot of ideas that don't use collasal amount of energy to produce or even no energy at all.

The day you start to see big heads in the space come together and work on a single project again like ETH was back in the day is the day to look for. Only then will you know something is up with the government wanting to get in.

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There really isn't a reason any nation-state would want to adopt a crypto as otficial currency. The supposed "benefits" of crypto exist for the client only. A nation-state wants trackable currency, and you should too. There is an incredible amount of financial crime out there, and one of the only way to prove it is through transaction data. It's one of the biggest ways as to how we stop crime. Furthermore, cryptos are FAR more energy intensive, and that energy usage only scales up with transactions. The block-chain calculations would be tremendously wasteful on a national scale. Just absurdly wasteful. The only thing I'm not positive about is inflation control if operated by a Nation-State, but that is already not exactly a problem short of financial system collapse.

As well, banks want non-crypto currencies. With peer-to-peer cryptos, there's no way for transaction fees to be assessed. As well, though, if you get scammed or hacked a bank has no way to prove you were defrauded. The money just disappears in a puff of digital smoke. So banks would just simply not trade in cryptos--If you wanted loans, or investments, or most anything that is required of complex financial transactions, cryptos would not be used. They'll be plenty of naive people running with cryptos in their hand to excuse these problems, but they're the stone-cold truth. Cryptos have no real benefit to Nation-States or International Banks, and truthfully, they have no real benefit to society. People laud the personal benefits of "privacy" without extrapolating the larger implications of incredible amounts of wire-fraud and destablized currency.

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Stellar Lumens (XLM) is joked on for having a steady price point.

How will crypto be used as currency when it's so volatile?

that was a valid question last cycle when the technology was far more immature, but these days there are stablecoins pegged to real-world currencies like the us dollar which just use more volatile cryptocurrencies as backing/collateral

e.g., dai

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Pogo_Marimo posted...

Furthermore, cryptos are FAR more energy intensive, and that energy usage only scales up with transactions. The block-chain calculations would be tremendously wasteful on a national scale. Just absurdly wasteful.

Bitcoin / Ethereum, yes. A lot of others are working on ways around that. (Cardano being the first example to come to mind, but that's probably because it's one that I have a lot of - it isn't the only one addressing these problems.)

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Can someone explain it to me like I've never heard of these things before-

What prevents someone from hacking a fake crypto balance? Like suddenly add a balance of 10 bitcoin or something similar. I really can't understand how it works.

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TheMikh posted...

that was a valid question last cycle when the technology was far more immature, but these days there are stablecoins pegged to real-world currencies like the us dollar which just use more volatile cryptocurrencies as backing/collateral

e.g., dai

So the most viable ones aren't the ones that go to the moon? It's almost like the rising prices and scarcity is completely counter to its value as a currency....

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Relient_K posted...

Can someone explain it to me like I've never heard of these things before-

What prevents someone from hacking a fake crypto balance? Like suddenly add a balance of 10 bitcoin or something similar. I really can't understand how it works.

it's a distributed ledger - that is to say, the state of the different balances (and changes with respect to such) are being actively tracked and the miners or validators monitor for irregularities when updating the ledger.

the only real way to compromise this process is to control the overwhelming majority of the mining power in pow-based cryptos (but then there's an economic incentive to just outmine everyone and make money that way), or the majority of the currency in pos-based cryptos (but the monetary reward for just staking that much currency would be very significant)

basically, unless someone wants to deliberately sabotage the network, the more resources you have, the more economically viable it becomes to just participate

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Squall28 posted...

So the most viable ones aren't the ones that go to the moon? It's almost like the rising prices and scarcity is completely counter to its value as a currency....

in the case of dai and similar stablecoins, they're token classes within the ethereum network, and the logic (smart contracts) driving price stabilization depend on the network as well, never mind stablecoins being backed by ether.

so basically, even though dai has more real world utility than the comparatively more volatile ether, it still contributes to demand for ether and thus the value/price of ether behind the scenes.

think of it like the relationship between the dollar and gold during the bretton-woods era.

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Pogo_Marimo posted...

There really isn't a reason any nation-state would want to adopt a crypto as otficial currency. The supposed "benefits" of crypto exist for the client only. A nation-state wants trackable currency, and you should too.

There is an incredible amount of financial crime out there, and one of the only way to prove it is through transaction data. It's one of the biggest ways as to how we stop crime.

though nation state adoption of crypto is not of particular relevance to me, it's important to understand that most all crypto (save for purely anonymous crypto like monero) have trackable transaction histories.

bitcoin used to be "anonymous" because people could just mine it themselves, but in this day and age where most all bitcoin is bought and sold via exchanges that verify customer identities, this is no longer the case.

this is why organized crime has adopted monero in droves, while more mainstream crypto are easily tracked and regulated by government.

Furthermore, cryptos are FAR more energy intensive, and that energy usage only scales up with transactions. The block-chain calculations would be tremendously wasteful on a national scale. Just absurdly wasteful. The only thing I'm not positive about is inflation control if operated by a Nation-State, but that is already not exactly a problem short of financial system collapse.

most second generation crypto use proof-of-stake (or are moving in that direction), where mining is driven by ownership rather than hash computation. it has its own tradeoffs (rewarding based on ownership necessarily amplifies inequality in the long term), but it's way more energy efficient.

With peer-to-peer cryptos, there's no way for transaction fees to be assessed.

transaction fees are driven by bidding for priority with respect to transaction confirmation. if there's low activity, there's less bidding and lower fees; higher activity results in higher fees. when sending funds, exchanges can usually compute what the going rate for transaction fees are.

As well, though, if you get scammed or hacked a bank has no way to prove you were defrauded. The money just disappears in a puff of digital smoke.

on one hand, there's no way to prove fraud beyond the owner's word - but if there are multiple reports of fraud associated addresses that can be linked to a recipient attempting to cash out at an exchange that verifies customer identity, that could indeed prove fraud/theft and invoke liability.

some miners will refuse to confirm transactions involving coin that has been stolen or used for criminal activity, while some newer crypto (such as parsiq to my understanding) take more precautionary measures with respect to preventing attempts to steal funds outright.

So banks would just simply not trade in cryptos--If you wanted loans, or investments, or most anything that is required of complex financial transactions, cryptos would not be used. They'll be plenty of naive people running with cryptos in their hand to excuse these problems, but they're the stone-cold truth. Cryptos have no real benefit to Nation-States or International Banks, and truthfully, they have no real benefit to society. People laud the personal benefits of "privacy" without extrapolating the larger implications of incredible amounts of wire-fraud and destablized currency.

this i must dispute however - while countries that are at the top of the monetary food chain have no real incentive to adopt cryptocurrencies, smaller nation states which have been screwed by the international monetary matrix have been making inroads if not simply to avoid the neocolonial financial exploitation their participation has brought upon themselves.

i'd also argue that it has a benefit to society by offering a sound safe haven for wealth in an era of increasingly inflationary national currencies, zombie corporations with financially uncertain futures, diminishing faith in government-backed securities, and increasingly unaffordable (and furthermore, increasingly taxed) safe havens like real estate.

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