The Sceptics thread.

Dades wrote: »

I don't buy the email analogy, personally. Email revolutionised a slow, expensive, environmentally unfriendly process - paper mail.

Hmm...I think there's a misunderstanding to some degree as to why I used the email analogy. I used it - as I did previously with the example of the development of the internet/www - as it shows that it takes time for technology to mature.

The point that you are making is that there's no substance in blockchain. To that point, i think it would be more useful if you were to quote the use cases and applications I outlined in that post and critique them (if you don't believe there's any substance to them).

The most talked about aspect of blockchain is the 'money' (transactional/store of value) angle. However, as per my post, there are many other areas where it has implications.

That said, money is a form of communication central to the activities of people since the year dot. If we were to agree that it's going digital by way of blockchain- and that it's now just a case of looking at centralised versus decentralised, I think it's a pretty seismic shift for civilisation and how we organise ourselves. How that doesn't compare with the development of email, I really don't understand....

Bob24 wrote: »

Question though was if it is an oxymoron to associate “store of value” and “speculative asset”. I think these exemples show it isn’t necessarily the case.

In my mind a "store of value" is something that maintains value.

A speculative store of value is more apt description (not to get too much into semantics here)

makeorbrake wrote: »

That said, money is a form of communication central to the activities of people since the year dot. If we were to agree that it's going digital by way of blockchain- and that it's now just a case of looking at centralised versus decentralised, I think it's a pretty seismic shift for civilisation and how we organise ourselves. How that doesn't compare with the development of email, I really don't understand....

Email changed the way everybody communicates in the real world, because it replaced what was an archaic analog task practiced by everyone.

Even if the entire financial system changed in the background to something decentralised etc., how would that be seismic for the average person? Nobody cares how it works in the background as long as it does. Tap your card... Click "One click purchase"... what's actually going to change?

Other potential applications of blockchain involve different ways of storing and securing data... again... of little interest to the vast majority of punters.

Blockchain might possibly be a game-changer in finance and tech, but as far as touching the lives of average people in same way email or the internet has - I'm just not buying that.

Dades wrote: »

Email changed the way everybody communicates in the real world, because it replaced what was an archaic analog task practiced by everyone.........Blockchain might possibly be a game-changer in finance and tech, but as far as touching the lives of average people in same way email or the internet has - I'm just not buying that.

Once again, you are not heeding the primary reason that I used those examples - see my previous post. Also, bear in mind that Finance and Tech are major deals that impact every person on the planet.

Dades wrote: »

Even if the entire financial system changed in the background to something decentralised etc., how would that be seismic for the average person? Nobody cares how it works in the background as long as it does. Tap your card... Click "One click purchase"... what's actually going to change?

Who said it would be restricted to 'the background'?

Dades wrote: »

Other potential applications of blockchain involve different ways of storing and securing data... again... of little interest to the vast majority of punters.

I don't buy that backend technologies don't touch the lives of average people. It remains to be seen - as it depends on what applications emerge through to real world use. As regards whats tangible in terms of the ordinary persons experience, what if they actually are the bank - how is that not fundamental?

Dohnjoe wrote: »

In my mind a "store of value" is something that maintains value.

A speculative store of value is more apt description (not to get too much into semantics here)

Maybe what you call "store of value" is what I would call "safe heaven". For me the Venezuelian Bolivar - like any currency - is a store of value. It is a very poor one though, and certainly not one I would use. I suspect you wouldn't call it a store of value?

Also don't take "maintains value" too literally. You could buy gold today and have lost half of its value against the euro next year because in the short/medium term it can be a very volatile (hence speculative) asset. If you look at it that way it is not maintaining its value for you. Yet in the long term it is considered by most to be an excellent store of value and a safe heaven because almost everyone trusts that on average and in the long run it will be redeemable for something of reasonably similar value as the value of what that gold was purchased with (as opposed to stocks which can be worth literally 0 in 30 years if the company goes out of business).

Bob24 wrote: »

Maybe what you call "store of value" is what I would call "safe heaven". For me the Venezuelian Bolivar - like any currency - is a store of value. It is a very poor one though, and certainly not one I would use. I suspect you wouldn't call it a store of value?

I'd put hyper-inflating world currencies and hyper-inflating/deflating cryptos into roughly the same category. Cryptos are higher risk because most are unregulated, and have little backing beyond their artificial max supply or simple existence. Hyper-inflating currencies can be revalued/redenominated

Dohnjoe wrote: »

I'd put hyper-inflating world currencies and hyper-inflating/deflating cryptos into roughly the same category. Cryptos are higher risk because most are unregulated, and have little backing beyond their artificial max supply or simple existence. Hyper-inflating currencies can be revalued/redenominated

Hmm...I'll leave the two of you to thrash it out. However, one point I would make is that whilst neither is optimal, there are a fair few people in countries affected that would have been well happy if someone had introduced them to bitcoin, etc. - as it may well have saved their life savings.

The world is never short of examples. Here's the latest. ...with interest rates to increase to 60% (that's not a typo) and the Peso losing 50% against the USD.

The difference is that whilst there is volatility with crypto, it can just as easily go up the way. That's not the case in these basket case economies during periods of financial turmoil.

[Deleted User]

A lot of people lost a lot of their life's savings on bitcoin not long ago..

Deleted User wrote: »

A lot of people lost a lot of their life's savings on bitcoin not long ago..

If you're picking up on me referring to 'life savings', then have a look at the example and apply context. ;-)

Otherwise, EVERYONE accepts that crypto is volatile right now....so anyone who would place their 'life savings' in crypto would need to re-evaluate. I'm not aware of anyone here suggesting that under normal circumstances they're suggesting that crypto should be used for your complete life savings. That excludes Venezuelans, Argentinians and all those that find themselves exposed to a state currency that's all over the shop.

makeorbrake wrote: »

That excludes Venezuelans, Argentinians and all those that find themselves exposed to a state currency that's all over the shop.

Well even them should avoid putting all there life savings in bitcoin and find other ways to store their wealth to be fair (and while probably challenging I am sure they have ways of doing it) ... but yeah if the alternative was as simple as bolivar or bitcoin I’d go all in with bitcoin!

Bob24 wrote: »

... but yeah if the alternative was as simple as bolivar or bitcoin I’d go all in with bitcoin!

That's often the situation - well, if they're lucky, they might be able to find a crypto solution. In those circumstances. I'd certainly go all in - if that was the only other option.

makeorbrake wrote: »

Hmm...I'll leave the two of you to thrash it out. However, one point I would make is that whilst neither is optimal, there are a fair few people in countries affected that would have been well happy if someone had introduced them to bitcoin, etc. - as it may well have saved their life savings.

Indeed but it's worth bearing in mind that BTC lost 70% of it's value, there are plenty of other less risky assets; gold, bluechip shares, US dollars, bonds, etc. Yes I am aware of accessibility - but we are talking developing and third world countries here

People are falling into the trap of taking the worst example of an imploding economy (Venezuela) and saying "hey, well at least it's not as bad as that". That's really not a good sale for BTC when that's the standard if you know what I mean. It's a bit like a holiday brochure boasting that their camp sites are better than Chernobyl

I'm on the crypto side here, and I agree with a lot of the defense made of crypto (some is excellent, including use cases) but it is literally about the dodgiest asset you could have in a portfolio of everything else

makeorbrake wrote: »

That's often the situation - well, if they're lucky, they might be able to find a crypto solution. In those circumstances. I'd certainly go all in - if that was the only other option.

I’m not sure what type of capital control measures are in place, but I’d say if someone there has a way to transfer their bolivars to an exchange to buy bitcoins, they can probably use the same method to buy dollars, euros, gold, stocks, etc. And even assuming that for some reason that method only worked to buy bitcoins, once they have bitcoins there is nothing preventing them from immediately selling those for euros or dollars.
So it’s unlikely that for anyone the only alternative is bolivar or cryptcurrency.

@both: It boils down to a question of accessibility. If they have other options, then that's different. In terms of doggiest asset, sure it's high risk but I don't think it's irresponsible to suggest having 5-10% of portfolio in crypto. It should act as a good hedge against a conventional market fall.

sexmag

Dohnjoe wrote: »

Indeed but it's worth bearing in mind that BTC lost 70% of it's value, there are plenty of other less risky assets; gold, bluechip shares, US dollars, bonds, etc. Yes I am aware of accessibility - but we are talking developing and third world countries here

To be fair it lost 70% of its all time high which was down to a freak influx of people with FOMO and trying to get rich quick

sexmag wrote: »

To be fair it lost 70% of its all time high which was down to a freak influx of people with FOMO and trying to get rich quick

Oh yeah I agree, but it's never a "safe" bet in terms of value, it's always a super high risk investment

"Don't put in more than you can afford to lose" is crypto mantra for a reason

makeorbrake wrote: »

@both: It boils down to a question of accessibility. If they have other options, then that's different. In terms of doggiest asset, sure it's high risk but I don't think it's irresponsible to suggest having 5-10% of portfolio in crypto. It should act as a good hedge against a conventional market fall.

In terms of accessibility, I guess what I’m saying is that if someone is stuck with an hyperinflating currency and capital control measures, their problem is not really to find an easily accessible asset but rather to simply gain access to their funds in the first place regardless of what they want to use them for. If they can overcome that problem, crypto is probably not significantly more accessible to them than other asset classes (yes we see an increase of activity from these countries on crypto platforms, but it is not massive either and I would bet the same or larger surges are visible on forex platforms and so on). So crypto is just one escape path amongst others and in my view there is nothing unique about it in this type of scenario which would make it stand out as the only option.

And yeah as long as people see it as a high risk and potentially high reward asset, it’s not crazy to hold a bit of it in a portfolio. The proof will have to be in the pudding but I indeed see a possibility (not garanteed) of a crypto currency playing some type of safe heaven role next time we have a large scale financial crisis. It really is too early to make a call though.

makeorbrake wrote: »

Once again, you are not heeding the primary reason that I used those examples - see my previous post.

I get that new tech and it's uses can explode in unforeseen ways. My only point is that email was very quickly an obvious game changer that would change human communication. I guess you were comparing, rather than equating.

makeorbrake wrote: »

Once again, you are not heeding the primary reason that I used those examples - see my previous post. Also, bear in mind that Finance and Tech are major deals that impact every person on the planet.

Who said it would be restricted to 'the background'?

I don't buy that backend technologies don't touch the lives of average people. It remains to be seen - as it depends on what applications emerge through to real world use. As regards whats tangible in terms of the ordinary persons experience, what if they actually are the bank - how is that not fundamental?

The best technology is invisible to the user. If Blockchain is going to be the best it's going to have to do it by providing the near seamless banking experience we have for most transactions.

People being the bank is an interesting concept, though. I'd be interested to know how that might work.

Dades wrote: »

The best technology is invisible to the user. If Blockchain is going to be the best it's going to have to do it by providing the near seamless banking experience we have for most transactions.

BC, smart contracts and DL tech are going to have a significant impact on banking.. but the impact will be mainly internal - streamlining, cost-cutting, process efficiency and so on. Think of it as speeding up the backend. Most major banks, financial institutions, FMI and exchanges are either developing their own BC and related tech projects, working/partnering with cryptos or both

Obviously not all of it is going to conform to a crypto purist view or decentralisation fundamentalists, but the financial industry wouldn't be investing so much time/money if they didn't already see the raw benefits the tech promises

smacl

Dades wrote: »

If Blockchain is going to be the best it's going to have to do it by providing the near seamless banking experience we have for most transactions.

I'd dispute that near seamless assertion. The bulk of my clients are outside of Ireland and we see a lot of wasted time having to go through the CHAPS versus BACS conversation, not to mention the cost of these systems. We still regularly get cheques where people can't get their head around international transfers.

smacl wrote: »

I'd dispute that near seamless assertion. The bulk of my clients are outside of Ireland and we see a lot of wasted time having to go through the CHAPS versus BACS conversation, not to mention the cost of these systems. We still regularly get cheques where people can't get their head around international transfers.

I clarified a bit earlier I meant seamless for consumers. For sure, third party and one off international payments have a way to go.

Dades wrote: »

I get that new tech and it's uses can explode in unforeseen ways. My only point is that email was very quickly an obvious game changer that would change human communication. I guess you were comparing, rather than equating.

The implications of blockchain/DLT are massive - so we'll have to see.
It's correct to say that the aim of my point was to demonstrate that tech takes time to mature. As regards equating, we will have to see - it's too early to say.

Dades wrote: »

The best technology is invisible to the user. If Blockchain is going to be the best it's going to have to do it by providing the near seamless banking experience we have for most transactions.

Without a shadow of a doubt - there's a shed load of work to do yet.

Dades wrote: »

People being the bank is an interesting concept, though. I'd be interested to know how that might work.

Ok, well if you were to transfer money digitally right now, how would you do it? It would involve a central authority, right? For all intents and purposes a bank or financial services agent (same deal).

Someone holds your funds....but there is ONE exception....

makeorbrake wrote: »

Ok, well if you were to transfer money digitally right now, how would you do it? It would involve a central authority, right? For all intents and purposes a bank or financial services agent (same deal).

Someone holds your funds....but there is ONE exception....

I can see the benefits for person to person transactions, where the blockchain acts as a type of 'current account'.

The question for me is whether people would be willing to let their entire wealth sit on the blockchain, rather than on the servers of a bank, possibly backed by gold or guaranteed by a government.

smacl

Dades wrote: »

The question for me is whether people would be willing to let their entire wealth sit on the blockchain, rather than on the servers of a bank, possibly backed by gold or guaranteed by a government.

At a guess, most people initially wouldn't, and you'd have something like one or more blockchain versions of PayPal in the short term being used as a payment gateway. If this worked and proved secure, convenient and cost-effective over time, no doubt trust would be built and people would use it more as a place to store wealth.

Where I'd see the bigger problem is how governments could levy taxes in this scenario. While I'm all for independence from the large private financial institutions, we still need to work within the rule of law. Similarly, we need to consider the balance between privacy, and the reasonable need to track wealth by organisations such as CAB. Having worked in the UAE in the past, I'm not convinced that a tax free society is a Utopia.