What Problem Does Cryptocurrency Solve?
Hey Jesstackers
All of us in Bitcoin and especially in crypto are here because we can earn extra money; that’s the bottom line. We’ve been forced to look for side hustles, and crypto is a great side hustle.
I think we’re all so fixated on the money we can make very few of us actually think about the problem it’s solving.
Some say it’s a more inclusive financial system allowing us all the opportunity to access financial services and own currency that would otherwise be hard to get through local means.
Other ideas I’ve heard is that it’s a better distribution model than fiat, which is often focused through the banking system, with only a select few getting access to it based on their income potential.
Some say it brings a sound store of value where people can save and be assured that their purchasing power is protected over time and accepted worldwide.
I do agree with all of those, and I think they are great solitons, but if this is truly going to reshape the world, it has to solve a bigger problem than that.
Can crypto solve wealth inequality?
If we look at proof of stake networks, I am not sure crypto solves the problem that fiat presents; it is only in the early stages of its wealth aggregation, so we can’t see the result, but we can see the trends, and I think crypto leads to centralized wealth.
Apart from Bitcoin, which requires proof of work you either, mine, buy, trade or earn it. Even with Bitcoin, it will take years to redistribute purchasing power to savers and reduce the effects of the years of future currency we’ve borrowed.
There are 10, 20, 30-year bonds; Argentina has 100-year bonds. Japan has 100-year mortgages; the borrowing has got out of hand, and unwinding this won’t come without considerable pain, even with Bitcoins help.
I think Bitcoin can push us towards an equity-based system, but with so many fighting against this change, I can’t imagine how long it will take people to accept a new system, even if it’s in their best interests.
Even if we accept a Bitcoin standard, how long would it be for coins to be distributed? And it may take even longer if it's done side by side with fiat.
The fact that a few people get wealthy from crypto doesn't exactly solve many problems.
Can crypto stop corruption?
I think it’s safe to say the amount of fraud and corruption in governments and corporations is a wealth tax we all have to pay. Having a more open and distributed system can help expose the misallocation of resources.
But you have to ask yourself what government or business is going to put their transactions on-chain? Even if they do move to a Bitcoin standard, they are such large entities it would be straightforward to cosy up to OTC desks and have your purchases done off-chain.
So while it may limit corruption, it won’t stop corruption completely. It may stop the printing of money without a penalty, but it can’t stop people from being criminals.
We talk about circular economies in cryptocurrency; what if there is one only for criminal activity? What if your coin is the coin of criminals? What do you do then?
Ownership
Some say cryptos solve for ownership, they can be used to keep track of things, like a tokenised stock or a deed to a home, but you CANNOT take something from the physical world and make it digital. There is and always will be counterparty risk and authority involved to make the connection between the token and the asset it represents.
Transferring a representation of ownership is one thing; transferring actual ownership via final settlement is another idea altogether.
So I think that it does bring a level of efficiency to transferring representation. Still, the idea of digital ownership has been bastardised, and applications have blown way out of proportion.
Holes in the idea
I see these tokens and the ideas behind them; I'm just struggling to understand how they will be enforced. Tokenisation and blockchain will have some application, but I don't people are really thinking through the limitations.
Bitcoins success has got too many thinking that they can replicate it with "better technology", but this is more than a tech play; this is a monetary play as well as a play that realises the constraints of the digital and physical world, and it cannot be overcome simply with better code and additional features.
Have your say
What do you good people of HIVE think?
So have at it, my Jessies! If you don't have something to comment, "I am a Jessie."
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Bitcoin is just like anything else, it depends on how you use it. It's like someone can say broccoli is good, but if the person using it simply jams it in their ears instead of their mouth, it could be detrimental to their health. I'm sure crypto causes all sorts of problems, as well as offering a side hustle as you say. For every winner there is a loser too, isn't crypto a zero sum game? Lots of people are getting rekked now, everyone that bought the spike is getting worked by crypto. It's got it's good points, and it's bad points too. I can see a future where Bitcoin literally dips under one dollar coming up in 6 - 10 years. I just saw the quantum computer story by cnbc, they say the Chinese gov will be able to hack btc wallets within a decade. I dunno it it's gonna make it. It might, just saying it is very risky. I like fiat, it has FDIC insurance in case the quantum computers hack all the banks, there are some guarantees, but in the crypto Wild West there are no guarantees. It's a gamble, good for a side hustle, you're right about that! haha
Even if Bitcoin was under a dollar and all else being the same it's network it safety I'd still buy it because it's still better than mh own native currency so I don't see the point in price putting me off if the functionality is there
85% of the world lives under currency oppression and would happily switch to another one that can hold its value
Crypto is definately for the developed world where it's about trying to multiply yiur dollars
For me, I can only speak for myself Bitcoin does what it promises and I am happy with that
Oh did I say Broccoli, oh I meant Cauliflour. Haha watch that be the BTC broccoli Botton in on btc now - lol! I would buy it at under a dollar too because the risk / reward would be good again, and at that point in time the devs would finally get it together and release the quantum safety mechanisms. That scenario would be totally crazy, we'll see, Thanks!
From what I saw only non-Segwit addresses would be open to quantum attack so people with those wallets just need to move their funds
I think the quantum computing thing also depends on how big BTC is if it’s a big honey pot sure but I mean it’s easier for me to use that processing power to brute force fiat money, or literally any other crypto
Unless it’s a non-economic actor trying to take it down
It also break the challenges of carrying large bulk of cash from place to place.
That's actually a good use case yes, you can hold a bearer asset with affordable and easy storage.
I can't speak for the shitty wallets other tokens have but Bitcoin security is pretty solid and I can take it anywhere
Crypto solves the issue of me being POOR ! If BTC goes to 1mn xD.
More seriously, it gives us (people) the tools to solve a lot of the issues you listed. But we need to understand how to use it in positive and responsible ways.
Have a good Saturday
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Indeed like any tool it can only be used with education and practice, that's how you gain understanding. I just think crypto solves this or that narrative is Wildly overstated
Apart from some remittance disruption and store of value outside governments with Bitcoin I haven't seen much else that's really solving much
Smart contracts - most of its gambling no real application yet
Staking - centralisation of inflation we have that in fiat
Yield farming - rehypothication of inflation we have that in the derivatives market
Same same different name!
Well I would say it solves the scarcity mindset because we tend to have an abundance mindset here in crypto. But this may not apply to BTC and the abundance is more for the network effect of each network due to the increase users and tokens issues each day.
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I don't get what you mean, can you explain? I honestly don't see much value in having a representative asset per community short of trying to gamify value out of people
A lot of this could be done with Bitcoin without all the bullshit, now it's stake this, lock up that, influence this it's just trying to take a flawed governance concept and put it on a chain
The fact that we are essentially printing money as we wish. For example an upvote on HIVE is essentially printing money. Whereas in the current system, we are running Keynesian economics with scarcity. Things are more expensive because there just isn't enough of them. For example, not enough GPUs so prices go up.
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The crypto industry is still new and Ideas are still going to come up to solve the problems.
I also foresee centralization too as early adopters will be like the government in some blockchains.
Lets watch and see how things turn out. For now all we can do is hope and invest wisely
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Not all ideas are valuable, or have product market fit, and if there is a problem worth solving Entrepreneurs race into capture that wealth creating deflation and lack of margin so it's silly to think these "other" use cases and tokens have some infinite market cap
There's fundamental issues of physics you can't break between the digital and physical world yet and no amount of belief is going to change that
I think because it's a complex technology it's easier to bullshit the more fancy words I add on my project the less people I'll bother to uncover the bullshit
I think you've missed the major problem behind all the other problems you mention and that is the maturity of human beings themselves.
After seeing the Steemit community and economy develop and now Hive and all that is going on with market manipulation with regard Bitcoin the dream of equality through crypto seems a very long way off. Most human beings are not ready for it. We want it as long as it doesn't reduce our own particular piece of the pie.
Same with the idea of decentralisation. Firstly, it seems that most things that claim to be decentralised aren't and secondly, without mature selfless human beings it will open up the way for some nasty stuff that we're currently protected from by centralisation.
Having said that, change is coming, and hopefully it will be change for the better but cryptocurrency and decentralisation won't solve all the problems of the current system by a long way and it will create new ones.
No systems, currencies, technologies etc. will create a better world without human evolution alongside it. It's not that it's not happening it's just that the pace of the former far exceeds the pace of the latter.
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Very well said, I agree with you there and honestly I don't see much change in the opinions and ideas coming from people, it's all the same mindset just with a different set of jargon and a different set of people benefitting from the transfer of wealth.
I am just tired of the baseless claims made in crypto and very little critical thinking because everyone's so tied to the numbers on the screen that are by itself pretty meaningless
!LUV
Me too! 😍
!ENGAGE 20
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ENGAGEtokens.@gillianpearce, you were given LUV! About LUV: https://peakd.com/@luvshares
These are still the early days in crypto world. Apart for all the use cases you mentioned and listed by other people, I am sure that there will be more in the future. I agree with the ownership problem, Same with NFT, who will verify if this is original or fake ?
I am not a fan of the generic statements like oh it will have use cases in the future, maybe cheese will cure cancer who knows? it's such a nothing statement, you find solutions by solving one problem and then the next, crypto hasn't solved anything so who can it go on to solve the next problem.
Crypto currency solves lots of problem, depending on what we see it to be, however let's not forget this deal with investment and that means you make use of Fiat money to gain coin.
To the public ie middle class who these have given an alternate means of earning.
But what caught my attention is "Can crypto stop 🛑 corruption?
My say on it is NO because irrespective of our leaders Ego and what they what rather making use of crypto currency positively,they will rater use it to move money into their personal wallet.
What problems? Lets take Ethereum for example, if it died tomorrow would anyone miss it? What problem has it solved that people simply cannot live without and made their lives better?
I've thought of my friends who always argue with me that btc is a scam or for criminals, as if money is not used for criminal activities too (think Pablo Escobar who burned his money to keep his family warm lol).
People w/ insane lots money/crypto get more powerful. And power corrupts.
I think one thing that crypto solves for me is being able to bring money into another country. I used to have a nomadic life and lost lots of bank cards along the way (it was crazy not being able to get card replacements without returning to my home country). It's not allowed to bring stash of cash into another country (otherwise people will think I'm a criminal lol). So with crypto, the transfer of money from country to country would be easier. Then I have my virtual cards and mobile bank cash app I can use to convert it to fiat of that certain country - or do I make sense here ? 😄
Yes absolutely I get that it facilitates international remittance and it’s faster and cheaper to do and is for sure a use case but you don’t need smart contracts and all this other NFT stuff to do that or even stable coins
Bitcoin does that just fine! Bitcoin is handling all the functions of money but cryptocurrency tokens just seems like a project waiting to find a problem to solve
Like what has TRON solved that it’s worth billions?
tbh I still can't get my head wrapped around all these new crypto tech and terms. Just too many other coins right now, too many promises from other crypto projects, it gets confusing for me. It is as if we can't focus on making Bitcoin work or solve everyone's problem first.
I feel you 100% I’ve gone down the rabbit hole and bothered to go through all these projects and like you said all promise feel good sound nice stuff but it’s added very little for the valuations
focusing on Bitcoin works for me so that’s where I’ll stay, there’s already so much to learn in Bitcoin alone giving up mental capacity to learn things you never going to use what’s the point
!LUV
This is so true!
@diabolika, you were given LUV from @chekohler. About LUV: https://peakd.com/@luvshares