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Need help with questions for a comparison of bitcoin and local currencies
1292 sats \ 8 comments \ @duvel 24 Oct 2023 bitcoin
I'm currently in a community where they're working on solutions to opt out of the current system regarding to health, education, money and more. They want to organize a money evening to compare different monetary systems: Bitcoin and 2 local currencies.
Someone is going to moderate and ask the same questions to every person that will answer the questions that is representing the currency. I'll be answering the questions for Bitcoin. We can decide on which questions to ask.
Because Bitcoin differs so much from the alternatives, I think asking the standard questions about money will fall short to see the long-term potential for Bitcoin in so many ways. Can you help me set up a good set of questions?
I find it difficult to setup questions, because they're mostly focused on:
  • Bitcoin being speculative
  • Bringing inequality because it's beneficial to those who have lots of Bitcoin and unfavourable for those who don't have Bitcoin
  • Fraudulent pump and dump schemes.
  • As a sidenote, they want to decouple from the euro eventually.
Questions I have so far as a draft:
  • Can you save?
  • How can it protect itself from debasement?
  • What are the disadvantages?
  • What is the high level overview of the infrastructure and who controls it?
  • Is there a possibility that people or the system can be corrupted?
  • With every introduction of a CBDC other (crypto)currencies are attacked by their government with extreme regulation. How will it protect itself from government attacks?
Some info about the local currencies:
  • They operate as a foundaton and you can pay for it with a paper form or online.
  • They claim that by making interest-free credit available, they create an additional cash flow (besides the Euro) that facilitates trade. This provides entrepreneurs with additional liquidity. The coin also continues to circulate within the network, instead of leaking away to banks (in the form of interest).
  • It's mainly to encourage trade, so it's not for savings.
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130 sats \ 0 replies \ @om 25 Oct 2023
Who can print money? How is monetary policy decided? Who gets newly printed money? (Government's answer: the poor. Absolutely wrong! Look at inequality level charts that include pre-1971 data and everything will be clear. https://wtfhappenedin1971.com/ is a great collection.) Who can take your money away? Who can prevent you from paying to whomever you like?
interest-free credit
So they are trying to mimic central banks' zero interest rate policy, huh. And what does that lead to? (Correct answer: inflation.) Yes, they might say, but we had ZIRP for quite some time without significant inflation, so we'll just do that! But the government has a very important tool to provide deflationary pressure: taxation (which is of course robbery but that's a different story). ZIRP and no tax will result in hyperinflation in no time.
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110 sats \ 0 replies \ @Signal312 25 Oct 2023
I think your questions so far are good. And I love this article - https://vijayboyapati.medium.com/the-bullish-case-for-bitcoin-6ecc8bdecc1 - as a starter, before you recommend books to them.
That whole "encourage trade, not for saving" idea sounds fishy. A relation of mine was involved with one of these "community currency" deals. He gave much of his time, earning this community currency. It turns out that not many people ended up using it, and so he had a lot of it left, when it faded out. I remember one of the last things he could buy with it was a haircut, but only at a very low traffic time, like Tuesday morning or something. I think most of these efforts - because they can be printed endlessly - are even worse then fiat.
Consider checking out the history of previous efforts like this. I'd be surprised if ANY of them succeeded.
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110 sats \ 3 replies \ @Bitman 25 Oct 2023
Usually local currencies (LCs) are backed one-to-one by the national currency (in this case the Euro).
So one argument against LCs the Euro gets debased, by printing more money, the spending power of the users goes down just like the holder of the Euro.
This could never happen if people use Bitcoin. If the community adopts Bitcoin instead, this could get really interesting.
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110 sats \ 1 reply \ @Bitman 25 Oct 2023
BTW when I say LCs are usually 'backed one-to-one by the national currency' this means they usually hold one dollar/Euro in a bank for one local currency dollar/Euro. This is similar as currencies holding gold prior to becoming fiat currencies.
Do you know if this is the model that this LC will work?
Also, what do the LC proposers mean by,
making interest-free credit available, they create an additional cash flow (besides the Euro) that facilitates trade. This provides entrepreneurs with additional liquidity.
Do you know how they propose to do this? The 'besides the Euro' bit confuses me - but that's sometimes easily done with me these days...
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10 sats \ 0 replies \ @duvel OP 25 Oct 2023
They will give interest-free credit to businesses they select. This local currency will coexist with the Euro and preferable with other currencies as they see it. Also if you want to buy a large amount they won't allow it. They don't want you to speculate with it or save it. It's for spending in the local community and preferable the whole country.
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10 sats \ 0 replies \ @duvel OP 25 Oct 2023
Yes, it's one-to-one with the Euro, but they're saying they're going to decouple at some point. I wonder what kind of system you have at that point. If you keep value circulating in a local community I guess that would benefit the community. Would it matter if it's a self made local currency (ignoring government attacks and inflating too much)?
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100 sats \ 0 replies \ @SatsCats 25 Oct 2023
I always ask why we need to pay taxes if the government can print infinite money. Most people can't explain the pros or cons, highlighting the need to better understand fiat money.
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10 sats \ 0 replies \ @duvel OP 25 Oct 2023
Unfortunately there are currently more businesses accepting the local currency than they are accepting Bitcoin.
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