Are Crypto Currencies just Geeks engaging in Quantitative Easing
-
Friends,
It seems to be that there is more demand for money than there has ever been in human history.
There is more money in existence than there has ever been.
And yet so many people cannot reach their goals, so many people do not have the personal level of security they feel they need before they can really achieve their potential.
I take it as my assumption we are in an inflationary phase of crypto currencies and that until the utility increases 98% of the prices we are paying are speculative.
So who owns the future now that there is competition between currencies the same way as there is in products and services? Does the future belong to those with the vital insight, who are able to recognise the that currency/currencies that best fit the definition of what money should be?
There are so many smart people in this forum, I look forward to hearing from you all.
-
Hi Chris,
An interesting question. I’ve been pondering a similar though slightly different point the past week or so.
But first, a couple of clear facts:
[list]
[*]obviously alt-coins are in an “inflationary” phase because none of them have distributed all their currency supply to their projected maximum, so all alt-coins are currently increasing their supply
[*]demand for these coins is also increasing apace
[/list]It’s really hard to quantify whether supply is outpacing demand or vice versa. Indeed the wildly fluctuating exchange rates of most coins is indicative of a constant disequilibrium which is being rapidly reset as price discovery is constantly readjusting as new information / new participants in the market / new currency supply acts upon the market. My bet is over the mid to long term, demand for alt-coins will increase substantially due to the inflationary policies of the central banks and debt-driven policies of governments. When national currencies become less stable and reliable, the alt-coins will come into their own.
However, the key irony of alt-coins right now is that most of them are projected to have a fixed ceiling of money supply - yet there is a proliferation of alt-coins. This supply ceiling was intended as a means of ensuring that no human authority (eg: central banks, governments) can tamper with the supply thereby debasing it. So by limiting the currency supply, value is retained, or so the theory goes. But I don’t think Satoshi Nakamoto anticipated that there would be so many alt-coins. Taken collectively, this proliferation of coins is a de facto guarantee of “quantative easing” into the future, unless most of them die off permanently, and soon. I think it most likely that there will always be at least a few alt-coins in play. Lack of regulation means none of them are likely to become a monopoly standard.
So despite most coins having an a clear ceiling, the addition of new coins will guarantee increased money supply for the foreseeable future at least. I don’t think this really matters because it’s such early days for alt-coins and the potential market for alt-coins is vastly greater than the existing market currently is, so I think demand will generally outstrip supply for some time to come, meaning the long-term trend is going to be positive movements in exchange value for many/most alt-coins for some time.
-
More money in existence means the money we currently hold is worth less and less. As the rate at which I accumulate fiat isn’t changing rapidly enough to counteract this change in value, I have found myself searching for alternative wealth. Enter Cryptocurrencies; an investment for the future…
So many thoughts about the virtual economy being a ‘wild west’ at the moment. This is a good thing, as it facilitates natural selection. All we have to do, is back the right horse.
What will be really interesting is how government policy shapes the future of cryptocurrencies, as this will show their true colours. Are we really a democracy? Are we slaves to the banks and corporations? What will happen if merchants in the real world are prohibited from taking it as currency for goods? Will we protest, or continue on the sly? What does history tell us?
So many interesting questions…one thing is for certain, it can’t hurt to get in early - and I for one am in! :)
-
Altcoins MUST free themselves from BTC …
Read around the forums … people USE altcoins potencial - in the end they transfer theyr gains they made with coim xyz to btc or fiat.
BTC is on the right way by implementing the currency in the real life wherever they can - FTC MUST follow - REAL LIFE ACCEPTANCE & Propagation is the key.
Followed by USER-FRIENDLY system all around the coin.
Then easier the use for noobs, then more will come … -
Sorry, I’m too far [b]below you[/b] to comment.
“Character is how you treat people who can do nothing for you.”
lulz
-
This will be a period of Crypto Darwinism.
-
[quote name=“Tuck Fheman” post=“24669” timestamp=“1375799856”]
Sorry, I’m too far [b]below you[/b] to comment.“Character is how you treat people who can do nothing for you.”
lulz
[/quote]That isn’t what I meant.
-
[quote name=“solasaurus” post=“24660” timestamp=“1375793090”]
It’s really hard to quantify whether supply is outpacing demand or vice versa. Indeed the wildly fluctuating exchange rates of most coins is indicative of a constant disequilibrium which is being rapidly reset as price discovery is constantly readjusting as new information / new participants in the market / new currency supply acts upon the market. My bet is over the mid to long term, demand for alt-coins will increase substantially due to the inflationary policies of the central banks and debt-driven policies of governments.
[/quote]That’s the thing isn’t it? Until the utility value of the coins goes up the demand is v low and therefore we exist in an inflationary period. But weirdly you have this anticipatory element whereby people are bringing the their future anticipation of a higher price in to the present. Look at how BTC managed to stay above $50 so well over the last month or 2. Buyers were putting in orders above $50 to make sure they got some cheap, they were predicting a future higher price.
But what if Bitcoin ends up being the Copper? What if we end up seeing something else leapfrog.
What I like about Feathercoin is that it gets how to communicate with ordinary people and with the Bitcoin blockchain unable to process even a fraction of the transactions of Visa system there is going to be plenty of room for another Blockchain to pick up smaller payments for example.
-
[quote name=“jeremiel” post=“24675” timestamp=“1375806087”]
This will be a period of Crypto Darwinism.
[/quote]Yeah, financial violence. One concern is that currency wars often result in actual wars.
-
[quote name=“T4rQu1N” post=“24662” timestamp=“1375795810”]
More money in existence means the money we currently hold is worth less and less. As the rate at which I accumulate fiat isn’t changing rapidly enough to counteract this change in value, I have found myself searching for alternative wealth. Enter Cryptocurrencies; an investment for the future…So many thoughts about the virtual economy being a ‘wild west’ at the moment. This is a good thing, as it facilitates natural selection. All we have to do, is back the right horse.
What will be really interesting is how government policy shapes the future of cryptocurrencies, as this will show their true colours. Are we really a democracy? Are we slaves to the banks and corporations? What will happen if merchants in the real world are prohibited from taking it as currency for goods? Will we protest, or continue on the sly? What does history tell us?
So many interesting questions…one thing is for certain, it can’t hurt to get in early - and I for one am in! :)
[/quote]If we do a better job than the banking system then the only thing that can stop this movement from growing is legislation. But I think having spoken to UK government that they are luke warm to the idea mainly because they see it as a way of reducing the trade deficit. The thing is if the US tries to regulate themselves out of existence other countries will see it as an opportunity. Ultimately currency choice means keeping those who print money honest.
And you’re right, you need to pick the right horse, so what does a good horse look like?
-
[quote name=“chrisj” post=“24708” timestamp=“1375828492”]
That’s the thing isn’t it? Until the utility value of the coins goes up the demand is v low and therefore we exist in an inflationary period. But weirdly you have this anticipatory element whereby people are bringing the their future anticipation of a higher price in to the present. Look at how BTC managed to stay above $50 so well over the last month or 2. Buyers were putting in orders above $50 to make sure they got some cheap, they were predicting a future higher price.
[/quote]
That’s a really good point Chris. I think you’re right about anticipation of the future influencing value. It reminds me of George Soros’ theory of disequilibrium of markets and how perception is constantly skewing value. His view - arguably deployed very successfully in real markets - is that the “herd” is subject to group behaviour based on reports about the future value of an asset. The key to making money is to understand the herd and act differently, but in ways that will make money out of the behaviour of the herd. I’m simplifying here, but you can always read his book if you want to know more.
On another, tangentially related matter, I just saw this brief interview extract of Friedrich Hayek speaking on monetary policy - https://www.youtube.com/watch?feature=player_embedded&v=fXqc-yyoVKg&t=165
I’m not necessarily a Hayek fanboy like many in the crypto community, but I think he makes some interesting points about how governments distort and ultimately debase fiat currencies and how a neat solution would be “competing currencies”. He also starts off by dissing macroeconomics, saying that this notion of being able to see the big picture (eg: knowing how the total supply of money influences value, etc), instead putting more importance upon the microeconomic, and how interactions at the “local” or micro level are the ultimate arbiters of value.
This last point relates to your original point about QE. Perhaps it doesn’t matter how much currency there is, but what really matters is the perceptions of the market participants?
Given that the value of many alt-coins is going up, including FTC, perhaps the reality is, despite increasing currency supply of FTC and other alts, we’re not in an inflationary period (if we were the value of the alts would be going down in relation to other assets).
Thanks for your post Chris. Very interesting to ponder.
-
Be honest. How many of you have put FTC towards an object or service and not towards fiat or BTC?
I mean, I’ll list our entire store on the marketplace, but only if I get the inkling that you guys will spend FTC on any of it, even if stuff listed is maybe 20% off market value in traditional marketplaces (Amazon, eBay, etc.). I can’t see you guys letting go of FTC quite yet and can’t blame you. We’ve seen massive cash outs or hoarding. That middle of the road is what’s going to keep the wheels greased.
-
[quote name=“chrisj” post=“24653” timestamp=“1375789889”]
There are so many smart people in this forum, I look forward to hearing from you all.
[/quote]Sorry to let you down, but personally, I feel you guys are thinking too hard.
The future belongs to the people who think like this …
[list type=decimal]
[*]Mine the new coins released each day.
[*]Sell the coin when price peaks.
[*]Rinse & Repeat
[/list];)
That’s pretty much all you need to think about to “reach your goals”. lel
I think ultimately there will be at least two clear victors in cryptocoins. One coin regulated and accepted by the mainstream because it’s government approved for the children’s protection. Then another coin that provides a layer of anonymity to transactions at the will of the user per transaction that is not regulated and remains decentralized.
Bitcoin is the most likely candidate, of course, for the first coin. I have no idea who will end up being the other coin (in my scenario), but I do hang out on this forum for a reason. ;)
-
[quote name=“HopeStillFlies” post=“24766” timestamp=“1375853255”]
Be honest. How many of you have put FTC towards an object or service and not towards fiat or BTC?
[/quote]I pay a contractor in FTC.
-
[quote name=“HopeStillFlies” post=“24766” timestamp=“1375853255”]
Be honest. How many of you have put FTC towards an object or service and not towards fiat or BTC?I mean, I’ll list our entire store on the marketplace, but only if I get the inkling that you guys will spend FTC on any of it, even if stuff listed is maybe 20% off market value in traditional marketplaces (Amazon, eBay, etc.). I can’t see you guys letting go of FTC quite yet and can’t blame you. We’ve seen massive cash outs or hoarding. That middle of the road is what’s going to keep the wheels greased.
[/quote]Yes, but no. FTC isn’t being used like a regular currency just yet, but it’s only been around since April. To put it in perspective, BTC is just starting to get widespread support amongst a section of online retailers. That’s 4 years after it’s launch. I think the initiatives underway related to making FTC easier to use for both merchants and consumers will see (hopefully!) FTC’s adoption be more rapid. But I don’t think it’ll be that much more rapid. So it’s early days yet.
-
[quote name=“chrisj” post=“24653” timestamp=“1375789889”]
Friends,It seems to be that there is more demand for money than there has ever been in human history.
There is more money in existence than there has ever been.
And yet so many people cannot reach their goals, so many people do not have the personal level of security they feel they need before they can really achieve their potential.[/quote]
Because the greater mass of fiat currency is tied in to the few. It doesn’t matter what amount of money is out there when the 1% of the population own 35% of the wealth, and the next 4% own 27% of wealth. Combined that is 5% of the population owning 62%. Based on US stats.
We have seen money taken from tax payers, usually from the very poor and watched as it was handed out to big players in that top 5% bracket.
There are motives for this behavior and it is about control. Thread for another day. But the point is still that the amount of money in a system doesn’t really mean much… it is more who controls that money.
[quote]I take it as my assumption we are in an inflationary phase of crypto currencies and that until the utility increases 98% of the prices we are paying are speculative.
So who owns the future now that there is competition between currencies the same way as there is in products and services? Does the future belong to those with the vital insight, who are able to recognise the that currency/currencies that best fit the definition of what money should be?
There are so many smart people in this forum, I look forward to hearing from you all.
[/quote]We discussed it in Oxford briefly Chris, perhaps too late in to the evening when our beers were starting to talk.
Owning the future… tough question. Will crypto coins play a role? I don’t think they will. I’d love nothing better to see a bunch fat cats toppled because of what we are doing as a collective but I don’t think it will happen.
Crypto coins need to find a new MO. I have issues with BTC and coins in general. We like to say they egalitarian. But are they really? Look at where BTC mining and wealth creation is going with ASICs. Is that any different to wealth creation in our socially corrupt fiat system?
The future in my opinion is a fight against apathy. The fight is between those in control and those who demand social equality on every level. This fight will be taken to the streets imho one day soon.
-
[quote name=“HopeStillFlies” post=“24766” timestamp=“1375853255”]
Be honest. How many of you have put FTC towards an object or service and not towards fiat or BTC?I mean, I’ll list our entire store on the marketplace, but only if I get the inkling that you guys will spend FTC on any of it, even if stuff listed is maybe 20% off market value in traditional marketplaces (Amazon, eBay, etc.). I can’t see you guys letting go of FTC quite yet and can’t blame you. We’ve seen massive cash outs or hoarding. That middle of the road is what’s going to keep the wheels greased.
[/quote]Bush gave away a substantial amount, 150k FTC?, at the beginning. Justabit has done a lot of giveaways. I have starting investing in UKMark’s SMS Address service by topping up the FTC Faucet feature, I sent some to Kevmif some FTC for compiling the Linux client and I spent some on beer at the meetup.
Everyone needs a safety net, everyone needs to feel comfortable before they can start taking risks and the level you place your safety net is very personal to you. What I encourage everyone to do is just adjust that safety net a little bit lower than you’re comfortable with. Take a chance on someone, send them some FTC if you believe they deserve it, surprise and delight them. At first you might feel a pang of regret, you might feel like you are behaving irrationally. But believe me they will pay it forward.
It takes faith and a believe in indirect reciprocity. Feathercoin is the strongest coin of them all outside of BTC because we have the most powerful feature: community.
-
[quote name=“chrisj” post=“24709” timestamp=“1375828659”]
[quote author=jeremiel link=topic=3208.msg24675#msg24675 date=1375806087]
This will be a period of Crypto Darwinism.
[/quote]Yeah, financial violence. One concern is that currency wars often result in actual wars.
[/quote]I can beat up some fastcoin people if need be. Though they seem like alright people to me. :)
-
[quote name=“chrisj” post=“24782” timestamp=“1375876795”]
[quote author=HopeStillFlies link=topic=3208.msg24766#msg24766 date=1375853255]
Be honest. How many of you have put FTC towards an object or service and not towards fiat or BTC?I mean, I’ll list our entire store on the marketplace, but only if I get the inkling that you guys will spend FTC on any of it, even if stuff listed is maybe 20% off market value in traditional marketplaces (Amazon, eBay, etc.). I can’t see you guys letting go of FTC quite yet and can’t blame you. We’ve seen massive cash outs or hoarding. That middle of the road is what’s going to keep the wheels greased.
[/quote]Bush gave away a substantial amount, 150k FTC?, at the beginning. Justabit has done a lot of giveaways. I have starting investing in UKMark’s SMS Address service by topping up the FTC Faucet feature, I sent some to Kevmif some FTC for compiling the Linux client and I spent some on beer at the meetup.
Everyone needs a safety net, everyone needs to feel comfortable before they can start taking risks and the level you place your safety net is very personal to you. What I encourage everyone to do is just adjust that safety net a little bit lower than you’re comfortable with. Take a chance on someone, send them some FTC if you believe they deserve it, surprise and delight them. At first you might feel a pang of regret, you might feel like you are behaving irrationally. But believe me they will pay it forward.
It takes faith and a believe in indirect reciprocity. Feathercoin is the strongest coin of them all outside of BTC because we have the most powerful feature: community.
[/quote]But I don’t mean to give coin away. At all. I feel that devalues it.
A transaction method be the exact same but even an off the record “got this for X FTC” enforces value, give solidarity to the price.
-
I agree, the multiple crypto currencies are inflationary, so storage of value is not their optimum use. I am only with Feathercoin as it was (supposed) to be trying to make a useful, normal use currency.
