tag:blogger.com,1999:blog-5908830827135060852.post5163487450838619676..comments2024-03-29T02:54:56.523-04:00Comments on Bond Economics: Crypto And The Real EconomyBrian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5908830827135060852.post-32784087692789696962022-07-03T10:47:02.178-04:002022-07-03T10:47:02.178-04:00You showed up on my website spouting vatnik propag...You showed up on my website spouting vatnik propaganda lines, so you got the flippant response that you deserved. I admit that I forgot that there are countries stupid enough to hold BTC as "reserves," and yeah, that's working out real well for El Salvador.<br /><br />Banks have no choice but to hold a variety of assets. Guess what happens when a borrower defaults? They seize the assets. Given that crypto people are defaulting because their ponzi schemes are melting down, crypto might somehow make its way on bank balance sheets.<br /><br />Anyway, I see no debate here. You are just repeating a point that I made in my article: crypto can be used in payments. The rest of my article explains why that is not enough for it to become a "currency." None of those points I listed are being addressed, and given the people behind crypto, will never be addressed.<br />Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-75214534109777822072022-07-03T06:13:31.758-04:002022-07-03T06:13:31.758-04:00Dear Dr Romanchuk, I am very willing to engage in ...Dear Dr Romanchuk, I am very willing to engage in any discussion about the role of crypto, but a bad faith argument doesn't go anywhere. Your response doesn't entertain any of my points. It seems a plain dismissal. I will try once more. <br /><br />When you trade with bitcoin, no central bank has to hold any reserve, so two parties can interact without any intervention of a third party holding reserves. In any case, it seems the bank of international settlements, the financial institution of reference for most emerging economies, has just announced that account holders can keep 1% of their assets in BTC (https://finbold.com/bank-for-international-settlements-to-allow-banks-to-keep-1-of-reserves-in-bitcoin/). Not bad for a currency invented ~10 years ago. So again, I acknowledge that BTC is currently too volatile, but this will slowly decrease as more participants join the protocol. By the way, the fact that volatility is falling is a mathematical fact so far. <br />Now, let's engage with your second argument, "no country is stupid enough to hold their reserves in it", which is one-sided based on white countries. We all know the case of El Salvador, but there are more:<br /><br />https://www.france24.com/en/africa/20220427-central-african-republic-adopts-bitcoin-as-legal-currency<br /><br />https://internationalfinance.com/kenya-plans-switch-base-currency-bitcoin/<br /><br />https://cointelegraph.com/news/ugandan-central-bank-u-turns-on-crypto-welcoming-firms-to-regulatory-sandbox<br /><br />https://www.coindesk.com/business/2022/04/28/dubai-real-estate-developer-to-accept-crypto-payments-amid-uae-push-for-crypto-hub-status/#:~:text=Dubai%2C%20United%20Arab%20Emirates%2Dbased,in%20a%20Wednesday%20press%20release.<br /><br />https://economictimes.indiatimes.com/markets/cryptocurrency/russias-central-bank-sees-space-for-crypto-in-international-trade/articleshow/91923700.cms#:~:text=Russia's%20central%20bank%20is%20open,its%20opposition%20to%20digital%20currencies.<br /><br />Please, take notice of the Central African Republic, as it's the boldest of all the cases. So now, I would like to ask you a couple of questions:<br /><br />Why should Russians trade Oil/Gas in USD?<br /><br />Why should Argentinian, Venezuelan, or Turkish savers hold USD?<br /><br />If money is whatever the government says, as Rohan Grays (head of the MMT foundation put it, see https://rohangrey.net/files/infinite.pdf), what is the "money between countries"?<br /><br />As a final remark, I would like to emphasize that BTC is not ready today. It might not even become. My message is the current system based on USD is untenable, and the designers of BTC were proposing a viable alternative in the long term.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-814741474289932632022-07-01T11:14:31.545-04:002022-07-01T11:14:31.545-04:00Countries hold reserves so that they can cover imp...Countries hold reserves so that they can cover imports and financial obligations. You can’t buy almost anything in the legal economy with Bitcoin. Which is exactly why no country is stupid enough to hold their reserves in it.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-68540020435499108582022-07-01T09:16:57.711-04:002022-07-01T09:16:57.711-04:00Call me naive, but I think this post is a bit one-...Call me naive, but I think this post is a bit one-sided from the perspective of the Developed Economies which currently dominate the economic landscape. There are many errors here, but I would like to focus on the "uses of cryptocurrency". Quote:<br />The three main use cases of crypto so far have been the following.<br /><br />Online gambling. Video games and online gambling are large industries, and the gambling component of crypto is just another video game. Admittedly, I would estimate that at least 99% of "traditional" securities market activity is similarly gambling. However, the 1% residual of traditional finance that serves other economic purposes keeps the other 99% going.<br /><br />Evading laws. Crypto was a godsend for the ransomware industry.<br /><br />Payment system. Given that I can already send Canadian dollars to other Canadians by email or text message via my bank, I am not seeing a huge opportunity set here.<br /><br />No matter how useful the above are, they are useful for the peasants. Let's look at this from the perspective of capitalists.<br /><br />It seems you were sleeping all this 2022 and did not notice that the national reserves of the Bank of Russia were frozen in what they call the "biggest theft in history". Something similar happened to the gold reserves of Venezuela or the National Bank of Afghanistan. I am sure the author entirely agrees with the legalities of these actions (as I said, the author writes only from the point of view of the Holy Alliance of Western Countries), but I would argue that all the respective countries will be happier if they retained their wealth. That would have happened if traded was done through Bitcoin because it allows trade without counterparty risk. Interestingly, now the European countries are the ones at risk of holding Russian currency that could be frozen. International trade in dollars (or any other national currency) can only be sustained if an army is willing to defend it. An "international" policeman, if you will. History is very clear, showing that no political organisation last forever. One could say, "This time is different", as jokingly said Reinhart and Rogoff in their book. <br /><br /> Is Bitcoin too volatile to perform such a role today? Of course, it is. Can Bitcoin go to zero? Yes, of course. Will Bitcoin be the final mean of exchange for the future? Not necessarily, but it has many of the required properties. I will gladly engage in any of the arguments of why bitcoin or any other cryptocurrency could go wrong. However, a plain dismissal of the possibility is just folly.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-26942749293661583172022-06-23T13:51:19.367-04:002022-06-23T13:51:19.367-04:00This inspired me to write a post
https://macrotime...This inspired me to write a post<br />https://macrotime.substack.com/p/much-ado-about-crypto<br /><br />I think that legitimate commercial applications of "crypto", or rather some of the ideas, like public ledgers(but not necessarily decentralized), censorship resistance, and micropayments, can take hold.<br /><br />But these applications will revolve around what Joel Spolsky called "commodifying the complement".<br /><br />Crypto can persist indefinitely as a religion. To most outsiders, religions appear irrational, and yet the often offer something to there adherents either that or they exercise misinformation and control. Most of crypto has and will followed this path, with very narrow and specific legitimate commercial applications(notably for social media and video games)Derek McDanielhttps://twitter.com/InterestMathnoreply@blogger.com