You also can't make loans with BTC because debt needs to be enforceable. There must be violence behind debt. In the past that meant someone turns you into a slave or breaks your legs. Today the violence has been reduced (you get bad credit score and debt collectors keep calling), but it's still there. States have to have a monopoly on violence to enforce debt.
I don't really agree with where this guy is going, because the entire way loans are used to generate fiat currency isn't really sustainable. David Graeber has talked a lot about every great civilization has needed some form of debt relief at some point, either when a new leader comes in or when the civilization collapses.
People in the ancient world knew the empires they lived under would eventually end. Today in many high income countries, most people cannot see the end.
At least each BTC represents a certain amount of work (in the form of electricity expended) that's already been performed.
Debt is great as long as there is enough work to be performed to square the accounts.
1) a system with a lot of (risky) debt
2) a system in which debt is impossible
Then have competition between these 2 options. There is no doubt about the outcome. System 1 will devastate system 2 (in that the total economy size of system 1 will be a LOT larger than system 2).
Therefore the Nash equilibrium is a debt based system.
Nobody's claiming there aren't any advantages to a system where debt is not a possibility. I guess people are just claiming that not having debt is too expensive, in terms of missed opportunities.
The strength of bitcoin is the inflexibility and general incompetence of government based money systems. It wouldn't be too hard, I think, for a government to make a money system that would trounce bitcoin. Of course, they'd have to be prepared to trounce banks and most of the financial sector to do this.
If you try to keep your stuff and resist them, they will blow your brains out.
So what matters is the technical side, things that are actively being developed, such as the Lightning network, and that at least some entrepreneurs understand this technical side sufficiently enough to build services that translate its fundamental value into things that people can more easily understand and appreciate. Much like the internet in early days.
Someone could go back 20 years and say "where are all these revolutionary things we keep reading about that would be possible? Wild speculations, Internet has failed."
Of course Bitcoin might fail, but I believe something like Bitcoin will succeed -and Bitcoin itself seems like the best candidate at the moment.
This system is fully automated and I've gotten some interesting rates on btc that would otherwise just have been idle.
You have $3m of BTC?
There are more mature cryptocurrencies emerging that are based on 'loans' as the author describes. The Maker Project's stable coin 'Dai' is an example, which is only created by collateralized debt positions. However, the debt position is currently based on ETH, which is 'backed' by speculation.
Currencies used to represent the gold stored by each government. These days currency represent the trust that the system that uses the currency, will trade goods for it. However we had to go through the gold equivalent to get here.
Bitcoin doesn’t represent anything and has nothing to back it up.
These costs include electricity, mining equipment, personnel, and warehousing.
As with normal equity valuation, these costs would be transparent, allowing for valuation to take place.
Since Bitcoin is decentralized and its "employees", or miners, are disparate; costs are not known.
This information asymmetry is one cause of Bitcoin's unbounded price discovery.
That's wrong. Bitcoin isn't worth $X because miners are expending $X resources to obtain it. Miners are expending $X because people are buying bitcoin for $X.
Imagine a lottery where the reward is an ounce of gold which is worth $1200. A ticket costs $10. There is a guaranteed winner at the end of the lottery. When the lottery ends a random ticket will be selected and the owner gets the gold. Buying more tickets increases your chance of winning. Therefore participants will try to buy slightly less than $1200 worth of tickets. If the price of gold rises to $2400 people will buy twice as many tickets.
The block reward for mining is decreasing on a regular basis. Resources spent on mining will decrease because of lack of profitablity. If bitcoins value is dependent on mining then why isn't it decreasing with every year?
