The steel-man argument is that the monetary policy of central banks can cause hyper-inflation of a fiat currency, and holding onto an asset that is immune to that, and potentially even being able to transact with that asset is a reliable way to break free from the monetary policy of the central bank. The fact that one may place this transferable asset into a centralized institution that we may call a (lower case b) "bank" isn't at odds with the aforementioned principle.
Put another way, the dollar doesn't depreciate because of my credit union, it depreciates because of the Fed.
The whole reason we have a strong central bank is because we tried the alternative before and it worked terribly: https://en.wikipedia.org/wiki/Wildcat_banking
> The whole reason we have a strong central bank is because we tried the alternative before and it worked terribly
I think there's a strong argument to be made (derived from history) that having a purely gold-backed currency be the sole and legal tender is bad. That said, there's a third option: "porque no los dos?". Do we know for certain that there's anything inherently disastrous about a society that has BOTH fiat-backed legal tender as a hedge against "Wildcat banking" alongside "digital gold" backed currency as a hedge against fiat-backed legal tender?
I think the answer is "probably not". I'd even go so far as to argue that we've already been doing that for the last 70-odd years; people still use gold as a hedge against the USD. Bitcoin is just digital gold that derives value because it's easier to trade Bitcoin for bread than gold bars (in theory).
Personally, I think the burden of proof goes the other way. Especially when after 12 years of Bitcoin innovation in practice it's so far mainly useful for scams, ransomware, market manipulation, money laundering, and other kinds of light financial crime. (Plus speculation of course, but there were plenty of options for that before.) If hobbyists want to speedrun reinventing financial regulation that's ok by me, but I'd rather they do it without the collateral damage.
That's especially obvious in contrast with actual digital money efforts like MPesa, which have real user bases, scale perfectly well, and aren't ongoing ecological disasters.
> Personally, I think the burden of proof goes the other way.
Well, it's not exactly a brand new experiment, we already know what happens when you have a deflationary store of value alongside fiat currency, and we see that in Gold today. The concept isn't strictly unheard of. I think what's debatable is if the last 70 or so years of gold alongside fiat currencies is sufficient enough information for us to conclude that having things like gold and gold-like assets won't be disastrous to a financial system.
> so far mainly useful for scams, ransomware, market manipulation, money laundering, and other kinds of light financial crime. (Plus speculation of course, but there were plenty of options for that before.)
This is true of paper cash, too. There’s a common saying that if cash were invented today, it would be illegal, since it’s hard for the government to track and they wouldn’t like it, which I find amusingly true. The preponderance of bad people using a tool doesn't immediately render the tool itself bad.
Bitcoin (and crypto) has been around for only 12 years now. Is it perfect? No absolutely not, there are a ton of kinks that need to be ironed out. Costs and speed need to be improved (probably through L2 protocols), we need to find ways to reduce energy consumption and use green energy as much as possible, we need to make sure that the money flowing into schemes like Tether is legitimate. I think the proponents all know that there is still lots of work to be done, and it feels like the detractors think that the adherents don't know that.
What's especially entertaining to me, personally, is that I have no horse in this race; I don't work with or for any crypto institutions and I hold a tiny amount of play BTC/ETH just for curiosity's sake. I am neither a proponent nor a detractor. But the sheer amount of misinformation and strawmen arguments leveled against BTC has has pushed me to seek out the strongest possible arguments in favor of BTC, so thanks for that.
The dollar depreciates / appreciates due to various economic factors, not just because of actions by the Federal Reserve.
https://www.investopedia.com/articles/forex/051115/top-econo...
The argument is that (2) is an inevitability of the market, whereas (1) is political. Crypto adherents aim to solve for (1) and accept the inevitability of (2). And deciding to use Coinbase to store (and exchange) your crypto is not at odds with that philosophy.
To be clear, I live my entire life on fiat, and most of my savings are in traditional financial instruments. What I take issue with is the misrepresentation of the case for crypto; when it comes to assets like Bitcoin, Coinbase is not equivalent to a central bank nor will it ever be.
The market is influenced by politics more than you might expect, and, conversely, the Fed’s actions are less political that you think.
Controlling one means losing the control of the other and modern central banks control the interest rate, not the quantity of money.
So, the causality is like this: when the economy gets hot, more credits are asked by business and households, because of that, the interest rate go up. In order to keep the interest rate in their choose target, central banks will add more money to the system. The Fed doesn't decide the quantity of money, the economy does it.
In contrast, there is no way you can do this with (most) cryptocurrencies. The monetary policy of Bitcoin is dictated by the physical bounds of the proof-of-work algorithm. There is absolutely nothing that Coinbase can do to "create" more Bitcoin outside of just mining it like everyone else.
Coinbase, as a marketplace, engages in the exchange of (potentially) bad tokens like USDT, as well as tokens like BTC that are provably finite. All of this is orthogonal to the fact that there is nothing hypocritical or internally inconsistent about holding and using Bitcoin or Ethereum and using Coinbase.
You wouldn't own the bitcoin, just as now you don't own the real fiat. There would just be a number on your bank account that says how many bitcoin you own, but it's multiplied the same way as they do now.
It all comes down to the % of reserve they need to hold.
