# Opinions on cryptocurrencies

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It's not really related to gaming, but many games nowadays include an economy a la second life, with their own token/coin and downloadable contents. There even exists a token that has been designed just for games: enjin coin

I personally don't believe in this, I think we should have a unified currency that has so much volume that the value becomes stable. fragmenting currencies into 3000 coins like today creates volatility.
I thought there were so many problems in general with cryptocurrencies I had to write a long rant, I made a full fledged article about issues here:

So, 'd love to hear your thoughts about its content and if there are points you disagree and stuff.

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Ok for the value. And as for the "one unified" that won't work, that is a very sad observation. But I could tolerate the next best thing: The minimum number of different currencies.

Let's take the Euro crisis as an example of why a unified currency can't work, and let's establish the fact that we need some amount of elasticity in the value and the inflation rates of currencies based on local specificities, we still can attempt to minimize how many fragments are needed no ?

Your third point was usage in relation to goods. Yes, adoption is the main issue cryptocurrencies are facing.  But, will really buy/sell transactions for material goods, create a "peg" on the value of those objects ? didn't we see hyper inflation in period of war make the price of bread skyrocket to billions of Deutshmark in Germany ? It seems the value can still be volatile even when massively adopted. But inflation should be something controlled by the central banks, so in a system where the monetary base is fixed, there can be only deflation. And the speed at which it happens cannot spin out of control since the deflation is bound to the production volume of the whole economy, and not arbitrary loans, compensatory easing, or interest rates which are not controllable parameters in current cryptos. So the volatility diminution would have to come from an increase in liquidity only no ?

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Crypto, while the idea is neat, the application tends to have few problems:

• Taking too much for doing transactions (which is imho killing off Bitcoin now, on the other hand this gives opportunity for other crypto to take lead ~ although ETH increases in there)
• Global problem - supply & demand of hardware - ETH currently caused increased price for graphics cards, and supply failures for both major vendors - NVidia and AMD ... price went 30% - 100% up, and it will be going up in short term ~ will be solved by either new competitors in the same area, or just increased output of those two
• Global problem - power - mining now consume huge amount of energy, this adds to global ecology problems ... and as a matter of fact drives power price up ~ we can go extinct sooner than we think

As a currency they have extreme flaws:

• Volatility - compare crypto with something stable, like gold ... or even USD ... hell even Russian Ruble is a lot more stable than any crypto currently on the market
• Bitcoin, is not easily Transferable (sigh... the average percentage for transfer went way too high) and Durable (it is tied to network) ... yet as bitcoin fell down from December, Transferability increased (e.g. transfer cost decreased ... it's still way too high though - meaning that there are better alternatives)
• Anonymity - blockchain transaction leave traces, which may be a problem in future (especially for people avoiding taxes, selling or buying on black market, etc.)

In the end, cryptos are something new, and as being said - as long as people will be willing to exchange it for anything else in value - it's going to be there. It is going to stick around for long time.

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Crypto is a neat idea, but not one that IMHO is sustainable.

As others have pointed out, it's extremely volatile, which already is a major reason not to use crypto.

But something more I'd like to point out that I haven't pointed out (and I agree with all criticisms so far), but who is ultimately responsible for the currency? USD, for example, is backed by the US government. There is no onus of responsibility on anyone with crypto. This can be fixed, but it's an issue imho that hasn't been fixed yet.

Another thing to remember with something like USD is that we have institutions in place that can control the supply of money and manage it. The Federal Reserve, in case of the USD, dictates monetary supply policy to combat inflation, etc. Whose doing that with crypto? Without some sort of regulating authority, it's far too dangerous to use.

A unified currency can work, but we'd need to go quite far to get it to work. We'd really need to break down borders, and just look at how difficult that would be.

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42 minutes ago, deltaKshatriya said:

The Federal Reserve, in case of the USD, dictates monetary supply policy to combat inflation, etc. Whose doing that with crypto?

Well, that's kind of the whole point of a cryptocurrency. The supply is explicitly constrained by the mining algorithm, i.e. the longer you mine, the harder it gets, till eventually it is infeasible to mine any more. In theory at least, the steadily dwindling supply is supposed to cause continual deflation...

That doesn't do anything for the volatility, of course

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6 minutes ago, swiftcoder said:

Well, that's kind of the whole point of a cryptocurrency. The supply is explicitly constrained by the mining algorithm, i.e. the longer you mine, the harder it gets, till eventually it is infeasible to mine any more. In theory at least, the steadily dwindling supply is supposed to cause continual deflation...

That doesn't do anything for the volatility, of course

Well, that's what I mean is that there still needs to be a central authority like the Fed. There are other scenarios that can cause inflation or other issues.

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The main problem is that cryptocurrency isn't effective and that the best parts of it is already in used by existing government banks.

People say it's great because of no tax and fees. Yea that is what the miner fee is; it is tax and the worst kind. The more users use a cryptocurrency the more they would have to pay so that miners deal with there transaction first.

If the whole world used cryptocurrency and here is only power for 20% of the transactions, you could end up with a situation where you have to pay the miners $10 000 -$1 000 000 to deal with your transaction of a $1 000. So sooner or later a fixed tax system would have to be implemented, say 4% of the transaction value goes to the miner. Except that wouldn't work because your miners will want to deal with the largest transactions to get the most money. The simple fact is cryptocurrency is a self destructive system with no place for linear growth. To fix the linear growth problem you need to give it some one authority over it and they would have to police it. Then you just end up with a system less effective than the banking we already have. Honestly I think Bitcoin was made to see how long it takes to break the system. #### Share this post ##### Link to post ##### Share on other sites 55 minutes ago, Scouting Ninja said: If the whole world used cryptocurrency and here is only power for 20% of the transactions, you could end up with a situation where you have to pay the miners$10 000 - $1 000 000 to deal with your transaction of a$1 000.

That's a problem specific to cryptocurrencies based on proof-of-work consensus.

Efforts are already underway to detach existing coins from said algorithms, and several existing coins never used proof-of-work in the first place.

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12 minutes ago, swiftcoder said:

That's a problem specific to cryptocurrencies based on proof-of-work consensus.

True the bloating example is mostly to bit coin but peer coin has it's own list of flaws.

In the end the problem is that keeping the money secure requires work and work = money. The people using the system has to pay for it and often taking a cut from what they put in is the easiest and most fair way.

Cryptocurrencies will keep loosing value as they grow because there growth is what rises there costs. The system isn't even new it's just digitized.

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