How come? The same network effects that work for social networks work here, as more people and businesses use crypto, it's value proposition raises quadratically.
Nobody's using crypto for its intended purpose - its value proposition when it comes to payments is just as dubious as it ever was. The vast majority of the attention for crypto has been for its speculative aspect.
There are tons of people using it for its apolitical and censorship resistant nature. Afghanistan/Ukraine/Lebanon/Argentina/Venezuela/Nigeria/Turkey/Belarus/Mexico to name a few countries where it is very relevant and useful
Its really hard to get a good gauge on that. There is a lot of data but its all very piecemeal and hard to aggregate. Could spend a week trying to get an idea of it and still not be sure. Here is my couple minute version though.
For 2020 in Mexico alone from Bitso: "Frida Vargas, head of business sevelopment at Bitso, told CoinDesk the company processed about $1.2 billion in remittances between the U.S. to Mexico in 2020. “Our main users are remittance companies, who use crypto technology to improve and make the remittance sending and collecting process easier,” she said."[1]
In Argentina: "Cryptocurrency penetration was at 12% in
Argentina, vs. 29% credit card penetration,
indicating impressive crypto uptake in that
country"[2]
"There is high interest in receiving crypto
remittances in various LatAm markets, such
as Peru (33%), Argentina (19%), Mexico (15%),
and Brazil (8%)"[2]
>There are tons of people using it for its apolitical and censorship resistant nature.
bahahaha. the story never changes but bitcoin is always the proletariat fighting against the powers that be. Don't worry, El Salvador is accepting it as legal tender!
Also if the "purpose" of something is payments and that thing is an investment for you, then you're betting on a deflationary future which means that thing will be less useful as a payment.
I use it to receive money from another country and exchange for USD in a local exchange point.
It may sound like a boring case, but if you find yourself in a foreign country without working bank cards, it might save your ass
The main value proposition is to sell to the next person for more than you paid. Everything else about banking the unbanked or other vague goals about being better than fiat are to convince the next bag holder.
> The main value proposition is to sell to the next person for more than you paid.
I agree. But I genuinely believe "bagholders" will be better off compared to saving in their own national currency - provided they manage their risk correctly.
This is because national currencies keep inflating, so even a decreasing demand might maintain the same price, given the supply inflation difference.
Since the pandemic, BTC has acted like the S&P500 with 4x leverage, but no margin calls (loss limited to what you invested).
So what you're saying with that example is that even with the backing of many governments that have a vested interest in doing anything to stop the bubble from bursting (something Bitcoin doesn't have), the greater fool theory ultimately was correct in that eventually the bubble burst? (I don't agree that the USD-Gold peg was an example of greater fool theory, just an example of how pegging your currency to gold as a sovereign government with a central bank is not a reasonable way of doing monetary policy. The gold standard is an outlier in the human history of monetary policy, the only reason it's so notable to us today is because it was in use during the development of modern economics.)
Cryptocurrencies do not produce anything and any actual transactions done using them (as opposed to speculative trading) are a rounding error even after more than a decade. There is no mechanism for them to be anything other than a complicated greater fool scam because ultimately the only way you can make money from them is if you can sell them to someone else for more money than you bought them for -- which is what a greater fool scam is.
>This is because national currencies keep inflating
Now consider the (dominating) 2nd order effect that the price of the "bag" was inflated by leverage and speculation.
Definitely worse than most national currencies outside of select countries.
The inflation rate in bitcoin over the last 6 months has eclipsed the inflation of $USD. Anyone who got paid in $BTC these past few months lost more than 50% of their earnings. Nobody is interested in that.
The added value you're referring to accrues almost entirely to the exchanges.
People and businesses are not buying crypto to spend on things. They are buying it to trade it back and forth. No value is being created except for the fees exchanges can charge for processing transactions, which is a markup on the fees already charged by miners.
A large percentage of Americans were onboarded to investing via brokerages in the 70s-00s. Did that make day trading any less zero-sum than before?
And that makes it a horrible currency. It makes it highly deflationary which absolutely stunts the working of an economy because no one wants to spend anymore.
Good currencies are not stores of value. They are means of exchange. And crypto is a horrible means of exchange.
It may have some use as a store of value (i.e. digital gold), but it's not clear to me why I would store my value in digital gold, which will require people to altruistically spend money on energy after 2040 or so when no more Bitcoins are generated for miners (in practice much earlier as each mined BTC gets increasingly expensive), to maintain the blockchain, as opposed to investing in real gold, which can literally sit under my mattress and not require a network of planet burning computers for it to not vanish.
It's funny that you believe the nation states' excuses for de-basing their currency. People just use fiat because it is dominant and has a legal system attached. They de-base because they can.
The fact that they thought M2 and its equivalents across the world could rise faster than inflation in perpetuity is just silly in retrospect. They're the same thing in the long run. It was used to get around the lack of ability to enact fiscal policy and to make old people rich, and you bought it, hook line and sinker.
Computing prices have been going down in the past half-century. Yet it's full of computers around us now. And the biggest companies are computing-related. I wonder why.
Gains from trading are zero sum - whatever anyone takes out (when selling), someone must put in (by buying). More specifically, it is a negative sum game, since exchanges and miners want their cut.
So, the assertion that crypto as a whole is zero sum hinges on the assumption that for the vast majority of people, the utility of crypto comes from capital gains (buying and selling for a higher price), rather than, say, the utility of buying drugs or paying off ransomware.
No. If I buy Monero on an exchange, I pay only the marginal buyer’s price. The ability to transact privately may, however, be worth much more to me than that price.
Monero and its ability to transact privately is only valuable if you're participating in criminal activity, which is not the vast majority of people.
You may say that, no, hypothetically you are a privacy-enthusiast and like monero as a hobby money, but in reality most rational actors on Monero as evading taxes and using DNMs.
(I would also argue that Monero is the only crypto that is more currency than any other crypto today bc of this, but it's not a selling point IMO)
A simple example: you go to a store and buy something with BTC. All good so far.
But the store owner can see on the public blockchain that the wallet you paid with contains a lot of Bitcoin, and that you were in fact a crypto multi-millionaire. And he and his buddies will now target you in a nightly visit where they'll torture you and your family until you give them your coins.
Or another example: you're the business owner but the customer pays with tainted bitcoins, coming from child trafficking. Now your Coinbase account will be frozen if you send the coins there, or you'll be unable to use them in other ways because they're tainted.
The ability to transact privately is for your personal safety and to be able to transact with other people without being branded a terrorist or pedophile and have to deal with those false accusations.
>You may say that, no, hypothetically you are a privacy-enthusiast and like monero as a hobby money, but in reality most rational actors on Monero as evading taxes and using DNMs.
Again, your hypotheticals diverge from the reality.
How come? The same network effects that work for social networks work here, as more people and businesses use crypto, it's value proposition raises quadratically.