0 sats \ 12 replies \ @nerd2ninja OP 12 Jul 2022 \ parent \ on: If You Aren't Trying to be Money, Why Do You Need a Coin? bitcoin
If you want to imagine a world without debt, look at Saudi Arabia. In the musilim religion (as well as the Christian and Jewish religions before culture changed) usury is still sinful.
An argument for debt, is effectively an argument for the current system in which case you should be very against sound money.
DeFi is the natural next-step in cryptocurrencies, be it good or bad.
There are two kinds of currency: hard-assets and debt-assets. One is money, the other is a form of currency, both are assets.
The reason fractional reserve is even possible is that people accept 'debt notes' as a more convenient medium of exchange than the supposedly underlying hard asset. Its through the acceptance of this fungible debt as a currency that the fractional-reserve funny-business is enabled.
We have hope that people will not accept 'bitcoin-backed' currency over bitcoin itself since there is little benefit to using the proxy-currency rather than the hard-money itself. This does not prevent banks from attempting to issue a 'bank note' rather than the bitcoin sats themselves when a person takes out a loan, but the frictionless of the hard-asset bitcoin makes this business model very unstable.
If a bank or defi can find a way to 'lock up' bitcoin in 'checking' accounts, this will enable them to lend out more sats than they have on deposit. This is possible if their clientele are willing to buy and sell within the captive bank accounts. Seekers of debt (lendees) may be willing to participate in this system due to this ability to get your hands on 'cheap bitcoin'. This places the long-term viability of bitcoin itself as a hard asset in question. All that's required in the end is (through the use of force) to disconnect the debt-asset from redeemability for bitcoin and make it only redeemable for more debt and this brings us right back to where we are today with dollars.
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That would be a nightmare scenerio and as such, I think its important to establish a culture that would reject such attempts to prevent it from happening in the first place. Things like "not your keys not your coins" have been good for this.
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Unfortunately that nightmare scenario is exactly where Dorothy's silver slippers on the 'yellow brick road' have lead us. People became ignorant, complacent and easily deceived (or maybe always were). It may have taken one or two generations and a few meat-grinder wars to pull it off, but here we are.
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Only if we accept it and as Bitcoin maxis, we don't accept it.
Here's a nice script another stacker news user created: https://github.com/j4imefoo/nokyc
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I agree, on principal I wouldn't accept captive bitcoin; Not my keys, not my coin. But I doubt the average dolt understands that he and his associates are destroying the world by doing so. The problem with fractional reserve banking is that it doesn't require the government to make it possible. It only needs the government to make it stable. The reason it exists at all is that it makes possible 'cheap' money with lower interest rates than are possible with full-reserve banking. We as bitcoiners hope to make bitcoin so simple that everyone will use it. That's the whole point of it, its a better deflationary alternative to the government issued debt-backed currency, but it only works if everyone understands why its valuable. Nothing works if it depends on everyone adopting a certain ideology. Christianity wouldn't be here today if the early Christians said their faith is only valid if everyone believes the same as them. Bitcoin, like Christianity, if its going to 'work' it needs to withstand diversity of thought.
As I said earlier, the 'out' we have from creating a new fractional reserve currency based on bank-issued bitcoin-backed debt notes is that bitcoin is 'easier' to hold, to store, and to transfer than a bank issued currency. Bitcoin likely will win out on its merits alone, but we should be standing ready to call it out with a full understanding of what they are trying to pull-off when something like this does finally emerge.
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An argument for debt, is effectively an argument for the current system in which case you should be very against sound money.
that's an interesting point. I am more for sound economy than sound money.
I don't see money as the only store of value, generating more value (which is not materialistic by nature) is more important than locking it into one particular thing.
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Damn. Like I get that productivity is the most important part of economics, but not at the cost of theft. Our debt based money is so bad, the rich are using houses as money. Thankfully, with Bitcoin, the average person can use Bitcoin as money instead. Based on current projections, I'm looking forward to taking the path where any debt based money is rejected due to being undesirable to alternatives being better stores of value.
I hope you understand my "Toxic Maximalism" from this point forward. I have to be vehemently against you simply to protect myself from savings theft, as such I will be rejecting DeFi and therefore will encourage others to do the same.
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I can understand people dislike for current system, especially given how out of tuned it is right now, but a system without debt could become far worse.
Afterall debt and credit is so ingrained into the general ledger system already.
Productivity is chasing more efficiency in order to be able to produce more so that the world can sustain more population.
Medical, technology, food, energy production, physical good, infrastructure, employment, education etc all are part of "growth"
Social/wealth inequality is unavoidable.
At its core, it is hard coded into our society, no matter what system or money we use, be it communism/capitalism.
We are creatures driven by desire and want, that's how humans have always progressed and will be so.
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If productivity is chasing efficiency, and not having debt would hurt that, (which by the way Saudi Arabia does not have debt its illegal there and usury should be a felony equivalent everywhere because of its societal harms) then how come our system is inefficient as hell because of debt propping up zombie companies and unprofitable companies being propped up by investor speculation (of which is also propped up by debt) and hey how come a housing bubble propped up by debt wrecked the way the entire world economy was set up.
I don't need a bailout to survive, thanks.
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We have never seen a global world without a debt system however. (I see official state says Saudi Arabia has 30% debt to GDP?) .
You will end up with more frequent crashes simply due to the market does not have perfect information and requires flexibility. eg agriculture industries that has a long production period and often vulnerable to pest/demand change/unpredictable supply, that also affects national security/stability.
There are also some industries that are high debt high capital by nature, aerospace for example, I would say bitcoin mining would eventually rank amongst the top as well.
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The fact that Saudi Arabia has debt is ironic https://www.islamweb.net/en/article/157155/riba-usury-in-islam
We have never seen a global world without a debt system In fact, we have never seen a global world before maybe call it World War I as the official start of globally intertwined economics.
In fact, we have never seen a global world in which money can be owned via memorization with no ability for confiscation expect via interrogation or torture and a money that can be sent world wide too.
In fact, we have never seen a global world interconnected through communication via the internet. We're doing a lot of firsts my guy!
As far as having more crashes....what? The Great Depression of 1929 was caused by credit card debt. I don't know maybe you'd point to smaller more easily survivable "crashes" of no where near the magnitude of a debt cycle crash.
Now, in regard to high cost things, the answer is to save money. You save money, you buy the high cost things, and maybe that means things get created a little slower in the short term, but it also means a lot of stuff that should not have been made in the first place doesn't get made and the entire world's economic system doesn't have to be restructured to adjust for a debt collapse and so it also means you build in a more stable manner and societal leeches never get a chance to establish a foothold aka "Too big to fail" status.
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I am plenty sure there will be more frequent crash. A creditless system is extremely brutal to any company or even anyone's financial, economy swings and good business would get wiped.
There are good debts that can facilitate important investment that otherwise would be impossible under a creditless system
there are good government subsidies and good debt. No system is perfect but credit system is here to stay 100%.
Classical Gold standard for example caused import heavy countries to export so much gold that arguably not even sustainable.
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