re: The Cryptocurrency & NFT Thread Quote:
Originally Posted by Samurai Thanks for this brilliant article. I love when people with sound understanding of economics take a poke at crypto concept.
His conclusion is too good, especially the highlighted part. |
Leave alone the technological aspects, one of the main arguments that I have heard or read from people who very strongly believe in Crypto currencies is that, crypto currencies help avoid the hegemony and regulation of governments and banks on their finances. They seem to be of the opinion that a world where there is no government control over currency and no regulation of central banks over financial transactions would be the ideal world. Majority of them seem to be laying the blame for the recent financial crisis at the feet of the governments and regulations. While the regulators are certainly to blame, what they are ignoring is that the reasons behind the crisis were not regulations, but rather lax regulations and in some cases wilfully altering the regulations. Therefore the financial crisis was in spite of regulations, not because of them.
It would be nice if we all can live in a just world where everyone self-regulates and behaves in a just way, but that is not the real world. It was never thus in entire history of human civilisations and would never be so, especially when it comes to finance. They seem to be living in a utopia.
Another major issue is they seem to conflate the technology with the product. Sure Blockchain technology might find uses in less demanding areas like land records where the number of transactions will not be as huge as currency markets etc, but it doesn't need to be Bitcoin. Blockchain is an open source technology so why would someone shell out money for something that is free. Without blockchain technology what is the value of Bitcoin? And what is so peculiar about Bitcoin that can't be replicated by anyone else using the same technology, which is already done as there are hundreds of crypto currencies. If one wan't to gamble on Bitcoin or other crypto currencies that is fine, if they know that they are just gambling. In fact I would have been a millionaire now had I gambled on it in 2013 when one of my friends asked about it. I didn't even bother about it when I heard that it is some digital currency without backing of any government or bank. Some times gambling isn't that bad Quote:
Originally Posted by smartcat So basically, Satoshi Nakamoto in his whitepaper assumes that presence of trusted third parties (Visa, Google, banks etc) is a problem because they unnecessarily increase cost of transactions. |
I doubt the transaction cost are lower for blockchain, especially Bitcoin. I read somewhere that it costs around $4 or $5 for a transaction worth $1000 or $2000, but not entirely sure. And that is with a delay of a few minutes. I am also not entirely sure if the cost of electricity consumed by all the miners is included, because for every transaction there would be many miners who would be trying to solve the algorithm but only one would be successful. I believe the transaction cost includes only the power consumed by the successful miner rather than all the miners trying to solve the same problem. |