pull down to refresh
30 sats \ 3 replies \ @Undisciplined 8 Apr \ on: Bitcoin from First Principles - There is no Free Lunch so Ignore the Noise econ
This is part of infrastructure, but it's not exactly how most people think about infrastructure: The Lightning Network is directly productivity enhancing, because it reduces financial transactions costs.
That's how I tend to think about infrastructure. Economic infrastructure allows us to do more with less, because we loose less capital in each transaction. Not only does that make things a bit cheaper for customers and a bit more profitable for producers, it reduces deadweight loss and thus expands economic activity.
I agree 100%, and that's exactly I was trying to say. Bitcoin eventually to be more than a speculative commodity for many people...
Instead it's financial 'infrastructure' that's more efficient, with companies that makes peoples lives better and businesses more efficient.
That's why we send and receive sats - not because 'it's a lot' but because pay-2-post is a great spam filter and it's adds so much to the online experience.
reply
Yes LN enables swift low cost transactions but the importance of L1 is even greater in the context of the overall economy. L1 Bitcoin enables a very different model of capital accumulation and allocation. One that is a free market with all participants treated equally without fear of favour.
Unlike fiat where the government and banks operating under the central bank enjoy the privilege of issuance and seigniorage.
Private banks under fiat can issue new capital out of thin air. This gives them a significant advantage over other participants in fiat economies who must accumulate savings or apply for fiat debt finance from the banks.
Where for profit banks are allowed to issue fiat debt funding for non productive purposes, as they have been since neoliberal deregulation, they can profit easily at low risk by funding non productive investment in real estate- this is a safer investment than investment productive infrastructure or assets but it does not recompense for the debasement that occurs on every occasion fiat debt funding is issued.
This has led to declining productive infrastructure and assets and a rise in capital allocation to debt leveraged non productive assets.
A Bitcoin Standard does not create such perverse and counter productive capital allocation incentives- for any project to attract capital investment under a Bitcoin standard it needs to be presenting a convincing opportunity to earn a return greater than the general rate of increase in economic activity- ie outperform the risk free holding of Bitcoin as a liquid store of capital.
Without the considerable leverage of debt that fiat debt funding has provided non productive asset prices would fall to their utility value- there would be much less incentive to hold them as a hedge against inflation, as in the absence of fiat debt issuance monetary inflation is no longer present.
The over allocation of debt/capital to real estate would be curtailed and more capital would be held in liquid form as Bitcoin or allocated to productive purposes.
Capital allocation would be decided by those who accumulate savings, not those who have the power under fiat to issue new currency into circulation via the bankers privilege of fiat debt issuance.
reply
A Bitcoin Standard does not create such perverse and counter productive capital allocation incentives- for any project to attract capital investment under a Bitcoin standard it needs to be presenting a convincing opportunity to earn a return greater than the general rate of increase in economic activity- ie outperform the risk free holding of Bitcoin as a liquid store of capital.
100% agree.
The over allocation of debt/capital to real estate would be curtailed and more capital would be held in liquid form as Bitcoin or allocated to productive purposes.
100% agree. I've seen the 'real estate' game in person... and while I can understand why real estate is nice and 'people like it'... in many areas it has gotten ridiculous.
We need better energy-based stores of value other than people just buying houses.
With reference to the above and Lightning... I really want to see more lightning-based businesses, use cases, and websites or applications. Lightning doesn't necessarily have to 'pay for things' like you pay for your groceries. It could be a long time before that is 'commonplace' if it's ever really widespread.
But I do think we'll see it become common eventually on websites because it just makes websites and small businesses so much more interesting and high-quality. It adds so much 'depth' in my opinion.
Add some lightning to a forum or a Twitch or a Youtube or a whatever... and you greatly incentivize higher-quality content, anti-spam, and the truth and consequence that comes with sending and receiving Sats.
When the 'sats are down' even just a few people care they pay attention... and I think that's a better quality internet and everyone would want that eventually.
Plus you get rid of a lot of the bots and spam - I can't go on Twitter anymore because of all the spam and bots everywhere. With pay-to-post the bots couldn't afford it it cleans up an experience in my opinion
reply