Crypto currency: What are your thoughts?

[SiliconWizard]

government regulating crypto currency making it harder to be used as a currency to exchange value.

This is why most cryptos cannot be used as "currency"... It is just too volatile. Using something like Bitcoin would be like living with 5-20% inflation one week and then 5-20% deflation the next. Markets would freeze up if our currency was that volatile.

Of course. But they are volatile against regular currencies, not inherently. And they are volatile precisely because there's a lot of exchange between cryptos and regular currencies, and the net exchange is almost never close to zero. This is what drives the volatility. If you take a closer look, most exchanges that have an impact on value for cryptos do not come from small investors whatsoever. They usually mainly come from very big investors, some being big companies, some even being institutional organizations, that can regularly buy or sell for hundreds of millions of dollars per day. So much for the greedy chap speculating a couple grands in his room.

[eti]

Yet, I have to confess that I suddenly feel like being part of the "old generation": my younger coleagues at work (former students of mine), in their late 20ies, early 30ies, all use some form of crypto currency. They have credit cards linked to their crypto wallet, they invest some of their money in Bitcoin, Dodgecoin, Ethereal, etc. They talk about their portfolios and basically consider all of that normal.

Don't be sucked in by the psychology.  The world is a big place, there are lots of people that treat things as "normal" that you probably want to avoid. 

Pyramid schemes AKA multi-level marketing
Investing and controlling money of other family members
Lots of credit card debt across multiple cards
etc

Be wary of "fear of missing out" and "everyone else is doing it, I want to jump on the bandwagon".  These are strong motivators used by many companies to get people to do what they want and spend money where they want them to spend money.

To be brutally honest: if I wanted to get money quick, I'd target someone who identifies themselves "as part of the old generation" with an investment scam.  I'd show them growth rates, talk about how many other people my age are investing; if I tried enough targets it would probably eventually work (and would pay better than my current jobs).

3) It sounds all so easy, yet so complicated and obfuscated: it is hard to really understand what is behind it, even if the currency is based on "open source".
4) I roughly understand what a blockchain is, but then, do I really? Does the broad public investing in crypto currencies really know what a blockchain is?

Yes all the details matter.

In a perfect world markets don't have any hidden gotchas.  Things go up, things go down, you can put money in and take it out whenever.

In reality all "markets" have their own weird limitations that can trap you.

The bitcoin blockchain is very large, so most people trading it in don't directly run blockchain software on their own computer and instead get someone else to do it for them.  You give money to a company, they hold the coins for you, then they pay you back when you choose to sell the coins again.  Good luck suing/chasing them if they choose to misbehave. 

Bitcoin trading or holding companies do not even have to intentionally misbehave, bitcoins are a lot harder to "hold onto" than physical assets like gold because theft requires only a few small packets of data (micro-seconds of internet time) versus trucks, minis and explosives.  Some of the biggest bitcoin exchanges have collapsed because of hacks and others still lose large amounts of the coins they hold.  I'm not trying to spruik gold here; but it's worth understanding how "small" and "lightweight" bitcoin ownership information is.

If you want to invest/gamble then go right ahead; all markets have risk.  Alas I'm particularly uncomfortable with all "new" markets, including blockchain/crypto ones.  Best of luck.

Yep. The whole “but everyone does it, sooo…” simpleton logic, makes me despair at times. I’m one of those who subconsciously tends to avoid (most) things, tv shows, fads et cetera, not because I’m aloof or “better” than anyone, of course I’m not, but I feel that if the masses (and a great deficit of critical thought) are all doing something, and then next month they’ve forgotten all about that fad and dropped it like a child bored of a toy… well, erm, yeah, nah you’re alright thanks, I enjoy my little bubble where I do as I please.

[eti]

I have a bridge to sell you - no please, wait, hear me out before you run off - it’s no ordinary one, it’s made of blockchains and magic dust.

If you can “source” a copy, the fantastic documentary “Inside the Bank of England” shows you a very rare, very hands-on insider view of the institution, complete with stacks and stacks of MILLION POUND (and higher) NOTES, yes they actually exist, and I think they have one hundred million pound notes also.

https://www.bbc.co.uk/news/magazine-21145103

The point of a banknote is that the issuing bank promises to make good on that legal tender. Where’s that same promise with fairytalecoin?

[langwadt]

isn't it Musks private money printing machine?, all he has to do to make a few tens of millions is a few tweets about some crypto currency, while investing in same

[Halcyon]

The savings in my bank account are.

I don't want to sound too pessimistic here, but I think you're a bit deluded with this one.
I don't know exactly how things work over there, but in most countries, savings are backed up to a certain amount only, and this maximum tends to get lower and lower as time goes by.
Oh, and even getting this minimum guaranteed is if everything else goes well... in case of a major bank failure. If the crisis is severe, I don't know what the government will back exactly. =)

I'm speaking from my seat here in Australia. Money in various types of accounts is guaranteed to $250,000 per account holder, per institution. Just about every major bank or credit union in Australia are covered under the scheme. If a bank covered under the scheme fails, processes are automatically triggered and the Australian Prudential Regulation Authority will act to electronically transfer funds to an alternate bank account. If you have multiple accounts across two different banks, then you're covered for an additional $250k with that other institution as well.

This scheme doesn't just protect consumer money in savings or term deposit accounts either, it applies to things like mortgage offset accounts and superannuation as well.

You can read a general overview of how it works at: https://www.apra.gov.au/financial-claims-scheme-0

[Kim Christensen]

But they are volatile against regular currencies, not inherently. And they are volatile precisely because there's a lot of exchange between cryptos and regular currencies,

Global FOREX dwarfs crypto trading, yet most currencies are far less volatile than crypto... I'd say it's got more to do with the speculative nature of cryptos rather than anything else.
ie: Crypto isn't really used for anything other than speculation. Regular currencies, while there are FOREX speculators, are mostly used to buy and sell goods and are kept relatively stable by central banks.

[langwadt]

invest in Champagne instead, https://www.reuters.com/markets/europe/asset-bubbles-champagne-outfizzes-big-tech-bitcoin-2021-2021-12-24/

[Rick Law]

government regulating crypto currency making it harder to be used as a currency to exchange value.

This is why most cryptos cannot be used as "currency"... It is just too volatile. Using something like Bitcoin would be like living with 5-20% inflation one week and then 5-20% deflation the next. Markets would freeze up if our currency was that volatile.

The crypto-currency volatility doesn't make it unsuitable as currency; it just made crypto-currency unsuitable as fiscal value-storage medium.

If I agree with you that I will send you $X in crypto for you to do YY and email it to me.  The value just has to hold for the duration from my offer to your acceptance/shipment and ends with my payment.

So, upon agreement of $X, I can exchange my commodity backed money (my fiscal value storage) to $X crypto, after you received the payment, you can exchange your $x to your commodity backed money (your fiscal value storage).

In fact, one can go one step further.  We can make the agreement that instead of $X, we will do the exchange upon completion at say XX milligram of gold.  At agreed-upon payment time, we check the current gold price for that specific crypto we are using, do the math and transfer the crypto-dollar eqv of XX milligram of gold.

[Kim Christensen]

The value just has to hold for the duration from my offer to your acceptance/shipment and ends with my payment.

I disagree.. If the value of crypto $X was rapidly going down, I would wait as long as possible before offering my services in trade for $X. Likewise you would want to do the deal ASAP, but would be hard pressed to find anyone willing to take your $X.. The inability of both of us being able to place a fixed value on the deal using $X, makes the transaction so much more difficult to negotiate.
Just look at what happens in economies when there is hyperinflation or hyperdeflation. It's a mess.

crypto-dollar eqv of XX milligram of gold

Then we are not actually using crypto for the exchange but the value of gold instead.

[eti]

[Bud]

isn't it Musks private money printing machine?, all he has to do to make a few tens of millions is a few tweets about some crypto currency, while investing in same

It is not Musk, it is his idiot followers.

[daqq]

There are altcoins like Curecoin/Foldingcoin that do useful work (biomedical simulations) for mining. A side effect is that because GPUs are almost optimal for that simulation work, there's basically no advantage to developing an ASIC for that.

Well, curecoin has a market cap of 1.5MUSD, Foldingcoin 0.3MUSD. So about 0.8ppm of the total market cap (2.2TUSD). So, yay I guess?

[Johnny10]

This is a lively conversation.

A conversation that I suppose government lawmakers are making right now given that Crypto has a notational value of 2.2 Trillion dollars.

If you will notice, in the US, the Federal Reserve, the SEC, and Congress are all in conversation about regulating crypto.

[rsjsouza]

government regulating crypto currency making it harder to be used as a currency to exchange value.

This is why most cryptos cannot be used as "currency"... It is just too volatile. Using something like Bitcoin would be like living with 5-20% inflation one week and then 5-20% deflation the next. Markets would freeze up if our currency was that volatile.

The crypto-currency volatility doesn't make it unsuitable as currency; it just made crypto-currency unsuitable as fiscal value-storage medium.

If I agree with you that I will send you $X in crypto for you to do YY and email it to me.  The value just has to hold for the duration from my offer to your acceptance/shipment and ends with my payment.

So, upon agreement of $X, I can exchange my commodity backed money (my fiscal value storage) to $X crypto, after you received the payment, you can exchange your $x to your commodity backed money (your fiscal value storage).

In fact, one can go one step further.  We can make the agreement that instead of $X, we will do the exchange upon completion at say XX milligram of gold.  At agreed-upon payment time, we check the current gold price for that specific crypto we are using, do the math and transfer the crypto-dollar eqv of XX milligram of gold.

As someone else alluded prior to this thread, anyone that lived through the hell of inflation years in the 80's in the peripheral economies knows that by heart - by then, US Dollars were the anchor of the economy, not the local fiat currency. The difference back then is that, due to the lack of internet and electronically automated pricing mechanisms, the devaluation of the local currencies were done in human speed, not multi-GHz speed. In other words, price tags on supermarkets were manually updated at the speed of the operator of the tag machine, not in a database where a UPC barcode could enable a price change between picking up the product in the shelf and paying at the cashier (despite this, it was not uncommon to see four, five price tags piled on top of each other as the days went by with unsold products).

A similar idea happened during the housing crisis that started in 2008. To me it was a complete sense of déja-vu to see the perceived value of property crumble - operative word is perceived. Back in the 80's with high inflation, you purchased a house/apartment at a given value with a previously agreed monthly payments with a specific rate and some level of monthly readjustment (typically based on inflation). However, the government also added a readjustment of the principal also based on inflation - basically turning the property value into an almost unpayable moving target since, at the end of the twelve years mortgage period, it wasn't uncommon for someone to still owe 150% to 200% of the initial principal.

During these years there were all sorts of crooks and pyramid schemes, to where my dad taught us all an important lesson: only go for high volatility or risky investments with play money and never with your core savings. That saved a few of his friends from ruin. And that is how I would suggest facing such crypto investments: only use with something you can afford to lose.

[nctnico]

The savings in my bank account are.

I don't want to sound too pessimistic here, but I think you're a bit deluded with this one.
I don't know exactly how things work over there, but in most countries, savings are backed up to a certain amount only, and this maximum tends to get lower and lower as time goes by.
Oh, and even getting this minimum guaranteed is if everything else goes well... in case of a major bank failure. If the crisis is severe, I don't know what the government will back exactly. =)

I'm speaking from my seat here in Australia. Money in various types of accounts is guaranteed to $250,000 per account holder, per institution. Just about every major bank or credit union in Australia are covered under the scheme. If a bank covered under the scheme fails, processes are automatically triggered and the Australian Prudential Regulation Authority will act to electronically transfer funds to an alternate bank account. If you have multiple accounts across two different banks, then you're covered for an additional $250k with that other institution as well.

This scheme doesn't just protect consumer money in savings or term deposit accounts either, it applies to things like mortgage offset accounts and superannuation as well.

Most countries in the EU have a similar consumer protection system.

[Johnny10]

If you want to know how you really feel about crypto.

January 1st 2022
Your company calls you in and says from today forward you will be paid in bitcoin.
And your 401K will be invested in a Bitcoin ETF.

[Bicurico]

So far all replies share my current opinion, which means that those who believe in crypto currency are all quiet and those of us posting here are old generation or I don't know where the people adding to the hype are.

I was expecting to have pros and cons arguments instead of only cons.

Truth is that I know people who live their day to day life with the interest profits of their crypto currency. And they do that for a few years now.

And I wonder is at least some of the crypto currencies are not far beyond the point of disappearing again.

While I do have my serious doubts, I start to believe that crypto currency has opened doors to a disruptive technology that eventually will end up shaping the future.

As with Monopoly, where the game is done as soon as one player owns all the hotels, our western economy is at a point where younger generations will never be able to afford ownership of real estate.

My fear is that the future generations deception of what they can expect compared to previous generations might lead to a war.

Perhaps crypto currency will be able to counter the current economic imbalance where money is produced in unimaginable amounts, without ever reaching the common people.

Please go on discussing, perhaps some interesting points will appear!

[emece67]

.

[nctnico]

So far all replies share my current opinion, which means that those who believe in crypto currency are all quiet and those of us posting here are old generation or I don't know where the people adding to the hype are.

I was expecting to have pros and cons arguments instead of only cons.

Truth is that I know people who live their day to day life with the interest profits of their crypto currency. And they do that for a few years now.

But the same is true for people buying & selling shares. But the thing is: those people only brag about their wins, not about their losses. Before the dot-com bubble bursted (2001) you'd be bombarded (thru advertising) with share trading platforms allowing people to easely buy & sell shares. After the dot-com bubble that went silent; most people lost their money (*). Nowadays you get bombarded with crypto currency trading platforms. I hope you spot the trend.

If you are really interested in crypto then buy some (say for 300 euro or so) and start doing day trading. Be prepared to lose all your money though.

* Including professional stock traders. I recall a conversation where one had a whole bunch of shares in a telecom company which he bought at 18 euro per share. The share price of that telecom company went up to 1/3 of that price in peaks during the past 20 years.

[tom66]

Crypto makes some sense, but the current pricing of BTC/ETH is pure speculation and not reasonable. 

It's a bit like how TSLA is priced at like 400x PE, it's not reasonable.  But who knows how long it'll last?  Enjoy the ride while it lasts.

ETH is going from proof of work to proof of stake, which makes it much more energy efficient, one of my big bugbears with BTC is how it consumes something like the entirety of Czech Republic's electricity, but processes 1/1000th the transactions per second that Visa does.

[madires]

Crypto currency is simply a bet, a speculation bubble, or we could call it also lottery 3.0. If you're lucky you can make some money. Most are simply too volatile to be considered a currency while a few are trying to be stable. However, they all share several issues. Blockchains aren't very scalable and many require significant number crunching. Next problem is that crypto money is criminal's best friend, great for money laundering. Law makers will take care about that - just a matter of time. So (pseudo) anonymity could become a thing of the past, maybe crypto money will become illegal, or we'll have some official crypto currencies regulated like our classic money. It's easy to steal crypto money, e.g. by SIM-swapping or direct attack of crypto exchanges. Several security issues with 'smart contracts' are also exploited already. It's a mess!

[Algoma]

For every win, there is a loss. Complete Gold rush, with late buyers being parted of their money to the few that were there early.

The only real driver is the cost of mining.. Only real use is to pay ransoms. Its the power companies and Hardware manufactures that are claiming all the final profit, if there is any. Nvidia is doing great thanks to everyone buyuing into the whole pyramid scheme that is bitcoin.

While the Blockchain as a concept is a good idea, the implimentation isn't yet ready for a true crypto currency.

[SiliconWizard]

The savings in my bank account are.

I don't want to sound too pessimistic here, but I think you're a bit deluded with this one.
I don't know exactly how things work over there, but in most countries, savings are backed up to a certain amount only, and this maximum tends to get lower and lower as time goes by.
Oh, and even getting this minimum guaranteed is if everything else goes well... in case of a major bank failure. If the crisis is severe, I don't know what the government will back exactly. =)

I'm speaking from my seat here in Australia. Money in various types of accounts is guaranteed to $250,000 per account holder, per institution. Just about every major bank or credit union in Australia are covered under the scheme. If a bank covered under the scheme fails, processes are automatically triggered and the Australian Prudential Regulation Authority will act to electronically transfer funds to an alternate bank account. If you have multiple accounts across two different banks, then you're covered for an additional $250k with that other institution as well.

This scheme doesn't just protect consumer money in savings or term deposit accounts either, it applies to things like mortgage offset accounts and superannuation as well.

Most countries in the EU have a similar consumer protection system.

Which is exactly what I said. (Except for the specific part about mortgages, which is a scheme that we do not have over here, at least not in the same form.)

My points were:
1/ They guarantee only up to a certain amount - which depends on each country - so it may or may not be all of your savings. Of course you may reply that if you ever have more than this, you can split it across different banks. Yes. Now you seem to be slightly better off in Australia with 250k AUD. Over here, it's 100k EUR. 250k AUD is approx. 160k EUR. (But maybe  the cost of living is higher in Australia too, not sure about this, or if the maximum guaranteed would have anything to do with it.)
2/ In case you want to secure more than this amount, yes you can split across several banks - but make sure those are not related in any way. These days, many banks are part of the same groups, and they keep fusing faster than light. (Almost  ) So, keep an eye on it on a regular basis. You may object that having more than $250k in savings is a concern for only a minority of people. Probably. Or that if you have more, you better invest it in things rather than keep it in a bank. Which may be a good idea anyway, even if you have less...
3/ This guarantee holds, as I said, if everything goes "well". So yeah, your bank happens to fail, but it's an isolated case. The guarantee works. You're all happy. Now if there were a major systemic bank failure, things might be different. You're protected by law until said law is broken as part of an exception. It's not like it never happens. Especially lately.
4/ I suggested the guaranteed amount is likely to get lower over time, by law, if things start to go sour. It's not at all unlikely IMHO. If it never happens over there in Australia, good thing. =)

Ultimately, the whole thing is an excellent illustration of how it's all based on *trust*. You apparently happen to have full trust. I'm just evoking other possible views and scenarios if you happen to be a bit less trustful.

[Bud]

Only real use is to pay ransoms.

This is a very dull statement. And what all those crooks do with the coins they get as ransom payout if the coins are so useless?

Until recently Tesla accepted bitcoin as payments for cars. Bet you did not know that.

[SiliconWizard]

Bitcoin payments are accepted by many more companies that some seem to think.
https://99bitcoins.com/bitcoin/who-accepts/

And, it's so useless that: https://www.bloomberg.com/news/articles/2021-12-14/morgan-stanley-backed-bitcoin-firm-nydig-raises-1-billion