The Brave web browser

Posted Jun 17, 2017 4:17 UTC (Sat) by drag (guest, #31333)
In reply to: The Brave web browser by nix
Parent article: The Brave web browser

cryptocurrency makes sense. It really does.

The low transaction costs are key and are the value that the money has in itself. Even if people limit their use of cryptocurrency simply as a way to bypass electric money transfers (transfer dollars into cryptocurrency to send, and then back again when done) and services like paypal then it has inherent value and will end up as a success.

I always figured bitcoin was doomed for failure, though. Why? Because it's the first time people have been able to try this stuff on a large scale. As far as pyramid schemes go and risk.. It's not a real pyramid scam, but the risk is part of how speculation works. Risk is critical for discipline in the market.. if you make it safe and guaranteed then there is no limit to the amount that people will try to drive the market to excess and exploit issues.

It's going to take a while and quite a few people getting burned on these sorts of markets before people really figure it out.

For any sort of business model that depends on micropayments then trying to base it entirely on Euro or dollars or anything else is just never going to work.

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The Brave web browser

Posted Jun 17, 2017 12:08 UTC (Sat) by nix (subscriber, #2304) [Link] (2 responses)

cryptocurrency makes sense. It really does.
The low transaction costs are key

So presumably you're no longer considering Bitcoin cryptocurrency, since transaction delays are now so huge that schemes have sprung up where you pay people to get agglomerated into their transaction, driving transaction costs up to frankly ridiculous levels.

As far as pyramid schemes go and risk.. It's not a real pyramid scam, but the risk is part of how speculation works.

I'm not saying it's a pyramid scheme because it's risky. I'm saying it's a pyramid scheme because the exponentially declining mining rate is an obvious way to ensure that whatever value Bitcoin gets is predominantly funnelled to early users who mined or hung onto coins before it got popular. (Of course, this only works if the early bitcoins doesn't get stolen by someone else, which given the state of IT security means they more or less have to be kept offline and disconnected from any powered-on device. So perhaps we should say that it is a pyramid scheme that funnels value to early users and miners, and thieves who prey on those people.)

The Brave web browser

Posted Jun 19, 2017 17:01 UTC (Mon) by drag (guest, #31333) [Link] (1 responses)

> So presumably you're no longer considering Bitcoin cryptocurrency,

No longer _successful_ cryptocurrency. I never had high hopes for bitcoin.

> I'm saying it's a pyramid scheme because the exponentially declining mining rate is an obvious way to ensure that whatever value Bitcoin gets is predominantly funnelled to early users who mined or hung onto coins before it got popular.

That's not really anything that is unique to bitcoin. You are just describing that is commonly called deflation. When the supply of money doesn't rise to meet the demand then the value of the money tends to rise. People are then incentivized to hold onto the money, which then (when the money gains acceptance) tends to get used in the form of loans and whatnot.

The creation of alternative 'coins' is then a good thing because it's a way to inflate the supply beyond the built-in limitations of bitcoin, but is still going to be something that is predictable. It encourages technological development in cryptocurrencies and discourages people from hording 'alt-coins' as long term investment. If people manage to create a technologically excellent 'alt-coin' then they can be rewarded by being a early-in.

The Brave web browser

Posted Jun 29, 2017 10:14 UTC (Thu) by davidgerard (guest, #100304) [Link]

Ethereum is already showing transaction clogs - it's about 3 TPS average (capacity is presently 14 TPS), but the Bancor and Status ICOs both rendered the network unusable for several hours.

Ethereum is not going to cope with an even slightly popular dapp, and that particularly includes BAT on Brave if it gets any appreciable number of users.

You could postulate BAT hopping from crypto to crypto as they fill, I suppose ...

The Brave web browser

Posted Jun 18, 2017 22:18 UTC (Sun) by neilbrown (subscriber, #359) [Link] (8 responses)

> The low transaction costs are key and are the value that the money has in itself.

What an interesting claim...

I have wondered where the value of money comes from... once it was gold, but not for many years.
I read a suggestion that the value of "legal tender" currency is that the government accepts it to pay taxes, and that seems credible, at least.

But "low cost of transactions" being the value.... If that is true - and I do see sense in the idea - then it explains the instability. There seems to be a positive-feedback in the idea that "it is used because it is used", and positive feedback is bad for stability.

The Brave web browser

Posted Jun 19, 2017 7:11 UTC (Mon) by niner (guest, #26151) [Link] (5 responses)

I've always found it curious that people accept the value of gold but not the value of fiat money.

Why is gold valuable?

People think it's sorta pretty, but certainly not _that_ pretty. It's a reasonably good conductor, but there are better. As metals go it's relatively soft. A cool property is that gold leaf can be beaten extremely thin, but that's hardly enough to give it the value it has. Gold is one of the few noble metals and that is certainly worth something. But frankly, silver beats it in most applications.

No, really the factor that contributes most to gold's value is its limited availability. And that is something that is e.g. much more true for Bitcoin.

The Brave web browser

Posted Jun 19, 2017 9:13 UTC (Mon) by Sesse (subscriber, #53779) [Link] (1 responses)

You may have noticed that the world has moved away from the gold standard.

The Brave web browser

Posted Jun 19, 2017 10:53 UTC (Mon) by niner (guest, #26151) [Link]

You may have noticed that I even mentioned that fact by talking about fiat money.

FWIW I responded to this: "I have wondered where the value of money comes from... once it was gold", which assumes that gold has some inherent value.

The Brave web browser

Posted Jun 19, 2017 17:15 UTC (Mon) by drag (guest, #31333) [Link] (1 responses)

All money is is a commodity that becomes very widely accepted.

Lots of stuff has been money in the past... cows, goats, wheat, tobacco leaves, various stones, feathers, etc etc. Some of them, like tobacco, ended up being the basis of paper money will some fairly sophisticated schemes to allow trade and movement of tobacco and savings in tobacco without it going bad while in storage.

Metals, as you can imagine, has some advantages over those things. It's divisible... you can take a gold coin, cut it in half, and it's still worth the same as it was before. You can't do that with a cow.

It also doesn't rot, doesn't really tarnish. Gold and other precious metals don't tend to rust. Gold is extremely chemically stable. It's also convenient to store and move. You can have a lot of wealth in gold and still be able to lock it up or carry it around with you. Can't do that with, say, granite.

Prior to regulation typically you had multiple competing currencies, though. Silver was far more popular then Gold ever was for most the history of the USA.

Crypto currency and The Brave web browser

Posted Jun 20, 2017 1:30 UTC (Tue) by neilbrown (subscriber, #359) [Link]

> All money is is a commodity that becomes very widely accepted.

True, but that doesn't tell the full story of why it is considered to be valuable.
Begin easy to divide, easy to transport, easy to store, short in supply and hard to forge are necessary conditions, but they aren't sufficient.

I think that understanding the dynamics of value is important for understanding stability, and hence long term value. Some of the things you listed only worked as money in localised settings (local in both time and space). Others work more broadly.

I'm particularly interested in value from the perspective of stability - probably because I'm hoping for a comfortable retirement in a few years. I can see that while bitcoin clearly has value (to some people), it is no where near as stable as, e.g. the US or AU dollar.
I imagine that if a crypto currency was backed by a more solid currency, then the low transaction cost could be expected to raise its value a little above the underlying currency (2% discount if you pay in bitcoin), but as bitcoin is backed by nothing and the *only* value is in the low transaction cost .... I won't be using it for my retirement savings.

The Brave web browser

Posted Jun 21, 2017 15:59 UTC (Wed) by khim (subscriber, #9252) [Link]

And that is something that is e.g. much more true for Bitcoin.

Bitcoin is too scarce. Gold is hard to produce (by mining) but also very hard to destroy. It's high per-volume value pretty much guarantees that if it's stolen and/or lost it could be returned with some effort. Bitcoins... not so much.

The Brave web browser

Posted Jun 19, 2017 7:23 UTC (Mon) by cladisch (✭ supporter ✭, #50193) [Link] (1 responses)

> I have wondered where the value of money comes from

Money is a universal medium of exchange, i.e., its value is that everybody else accepts it. This usually requires that it is hard to counterfeit and easy to transport and exchange.

(Please note that "value" is a subjective measure. The price of something is what somebody actually pays for it, and this is objective; the value is what what some specific person is willing to pay for it, and in the general case, this cannot be measured without the transaction actually taking place.)

> I read a suggestion that the value of "legal tender" currency is that the government accepts it to pay taxes

"Legal tender is a medium of payment recognized by a legal system to be valid for meeting a financial obligation." (Wikipedia) So this applies not only for debts to the government, but to all other debts (because you would ultimately use the courts to enforce contracts).

The Brave web browser

Posted Jun 29, 2017 15:02 UTC (Thu) by Wol (subscriber, #4433) [Link]

"Legal Tender" as I understand it was introduced by us Brits when we moved from Gold Coin to Pound Notes.

There was a problem with lenders refusing to accept notes - despite them prominently containing a notice that the Bank Of England would swap them for gold on request - "I promise to pay the bearer on demand the sum of one pound".

So Parliament created legal tender. If a debtor proffered "legal tender" in settlement of a debt, the creditor *had* *to* take it - or forfeit their right to take the debt to a court.

I've actually used this to my advantage on one occasion - I ordered a load of goods mail order, and the supplier completely cocked up taking payment (I tried to pay by debit card). After a couple of requests for payment, which I tried to comply with, they sent the matter to their lawyer who sent me an email nastygram. I replied "I've tried to pay. Here's the details. I wouldn't see me in court if I were you - legal tender you know. You need to talk to your accounts department and tell them if they've got any sense they'll write the debt off." They did :-)

Cheers,
Wol