The reason currencies unpegged from gold in 70’s is because so many debts were accumulated that they could never be repaid without crushing the economy, the only way out was disconnecting from gold and money printing
The same happened to GBP which was the reserve currency before the USD; and every currency in existence before that - I found it fascinating reading Ray Dalio’s analysis of history
Usually controls have been put in place too (ban holding physical gold)
I can’t fathom how this would work if BTC is adopted- but supplies of gold aren’t even finite (as new sources are still found) so surely every impact would be multiplied with BTC?
I don’t understand this one. You would need to dumb it down for me. What negative long term effects would there be?
If you print too much money, you render some otherwise non-profitable business viable. Credit becomes cheap, so on paper it makes sense. Lending money comes at risk. The one you’re lending to might not be able to pay back. On the other side, running business also comes with risks. If you’re not profitable, you will go bankrupt and your invested capital is lost.
So should the solution be: let’s support non-profitable businesses so that they can continue, so that they can pay their debts, and everyone stays happy? It’s a short-sighted view, because printing money is stealing a bit from everybody.
I like what Chamath said once: it’s often demonized how bankruptcies look like. It’s as if factories are demolished, people lose jobs, clients are left without coverage of their claims etc. Where in reality, the bad business is partitioned and restructured, taken over by other, well managed businesses, which take over the staff and clients. Sure, they will let some people go, but it’s not like 100% will have to go.
My thought is that in a world where BTC becomes a reference currency widely used for transactions the possibility to print money seems to go away because the supply of BTC is finite. So in your example it is much more costly for governments to bail out weak businesses, because the money has to be repaid eventually as opposed to the debt being deferred for ever and devalued by money printing and inflation like happens today. Indeed as world population grows you probably have DEFLATION measured in BTC, not inflation.
Imagine signing a 30 year mortgage contract in USD, gold or BTC. In USD today you know the real value of your debt will decrease overtime because of inflation - the US government constantly spends more than it takes in taxes, and Fed is printing money.
Before 1970, USD was pegged to gold so you would assume the value of your debt would be more or less stable in real terms - although still not too onerous because gold wasstill being mined
Imagine if BTC becomes widely accepted - with a BTC mortgage -your debt stays constant. Indeed it would probably go up in real terms because average salaries nominated in BTC decrease
I am just imagining the discussions with trade unions too:you would need to agree by how many BTC to decrease pay by, due to world population growth!
Really difficult for the average person to get their head around…
Sounds like an absolute win to me. What you’re describing does not seem like worth keeping.
Real estate prices are inflated due to low interest rates. Only a portion of the money invested in it is with own money. If you had much higher interest to pay, fewer people would be eligible for a loan and prices would be lower. You would not need to take a sick 30y loan, you would earn to pay for it with own cash after a few years of work, as it used to be in the past.
Here’s the thing: You’re living in Switzerland. The governments don’t have much control over your savings and transactions. Neither do the banks (though do keep tabs on you for compliance purposes). You’re largely free to spend or save your money as you wish. You could even transfer a 100k to me tomorrow, even though we don’t know each other in person. It’s not like the government exerts much control you and your savings.
And without governments and banks, there is little if any remedy against errors or crime.
As for other, more repressive governments, they’ll outlaw using alternative currencies if necessary.
What I mean is: if we want to do business together legally, we need to pay VAT and income tax, and make sure we have a license and comply with all regulations. If I want to give you some money, there are gift and estate taxes in place. Even if I just want to keep the money, there is the wealth tax. And taking Switzerland as example is not fair: I’m not really complaining about my personal case. There are places where the trust in government is not as high.
And I’m also speaking theoretically about the potential future changes. If the state decides it needs to exert too much control over the economy, people could have an alternative to do business. In a highly organised and controlled state it could be hard to imagine, but in some more chaotic places, why not?
As they do now, no? Try not paying taxes. First comes a fine, then comes some court notice, then comes the police to take you to jail, if you ignore them long enough. But with crypto, they would not even know that you’re doing some business.
I’m not disagreeing with you. However this is the way the world has worked for centuries. Tearing it down would be revolutionary and I’m not sure if society would accept it
You don’t have to worry about that.
I, as the taxable person, am gladly going to pay that gift tax.
…law enforcement is usually lax. So criminals can still rob you of your wealth - with even less traces or hurdles to take. And even less risk of getting caught.
Not much different from today, yes.
Not much different from today. If you’re having a black market business. Or one abroad, if you’ve set up the correct structure or worked out how to get paid.
In the end, they’d force you to disclose.
Also, no one is going to protect your business in such world.
Unless you’re hiring your own bodyguards or mercenaries.
I know, it converges to a resemblance of a state with police etc etc. But I think crypto can provide an alternative and balance to the monopoly of the government bully.
Can’t say I’m surprised, neither by the fact they did, nor by the fact they thought they’d not get caught.
That’s just par for the course for the times we’re living, can’t wait for a less forgiving environment to funnel some healthy competition.
Edit: Han! They hadn’t agreed to any lock-up period so the whole thing is completely legal. Shows how much I know. Also shows how glad I am not to invest in these kinds of companies.
What is this website anyway? There is public record of trades with names? An IPO can also be a way to an exit strategy for existing investors, right? It probably doesn’t say anything good about the company if the crew is aborting the ship on the first day, but is that in itself illegal?
I’ve reacted too quickly: the whole thing is legal. There is no mandatory lock-up period unless the company puts it in its S-1 filling with the SEC, which Coinbase didn’t so, perfectly legal.
Some but not all.
Rather fractions of them (Armstrong had some 36 million shares or so, according to the filing).
Also, from what I (quickly googled) and understand, they didn’t raise capital but sold shareholder’s previously held stocks. Though they cashed out big time, seems they’re far from aborting ship.
I guess they just needed some money for these new villas, yachts and gulfstreams. Why keep on pushing once you’ve achieved your goal? You can keep a part of the shares, and sell the rest, maybe it’s naive to expect all shareholders will want to stay 100% invested.
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