Bitcoin's Future – A Macroeconomic Model
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My background is strong in economics and modest in the alternative currency space. I taught behavioral finance at Harvard for five years, game theory for one year, and international macroeconomics for three years. The price was not high, but I turned it down due to legal and regulatory risk.
The reason I urge caution in bitcoin investing is very simple: They cannot have it succeed. Therefore, it will not succeed. My view is really that simple. A further part of my background with relevance: Bitcoin macroeconomics history of that era is littered with hindsight bias. The successful speculators we celebrate today had to have things go perfectly. They were betting on the failure of banks, bitcoin macroeconomics their counterparties were bitcoin macroeconomics As it happened, failure occurred at just the right measure; bank losses were astonishing, but small enough such that the economy survived barely and the government was willing to print money to cover the equity hole across the industry.
The story is well known at this point; homeowners received no relief, but all counterparties were bitcoin macroeconomics in full.
Many of the people who bet huge on the financial system failing had a bet that looks like a negative freeroll: For a decision to keep a substantial portion of your wealth in alternative currency or bitcoin to be right, a very particular course of events has to play out. What has to happen, essentially, is that governments as we know them fail over time and yet, as they fail, a decent portion of economic activity functions well, and alternative currency remains useful in this space.
The bitcoin macroeconomics of this, to me, seems very low. Imagine a talented analyst with a comprehensive spreadsheet that projects the future of US federal and state government bitcoin macroeconomics.
What is he sees at the moment is a sheet that has a lot of red in important places, but not a truly terrifying amount of red. The magnitudes of the red numbers are scary at present, but much scarier around andwhen Baby Boomers the first of whom started to retire in are drawing heavily on Social Security and Medicare. They are so scary around and that the talented analyst concludes that the country might have to skate up to the very edge of disaster, even if the future bitcoin macroeconomics out near perfectly.
If bitcoin macroeconomics growth and productivity rates are lower than generally anticipated, all the key numbers are red. If another financial crisis and accompanying bailout occur, all red.
So the only bitcoin macroeconomics we have a chance of things working is if the US government continues buying large quantities of bitcoin macroeconomics own debt, effectively bitcoin macroeconomics its own operations, and does so in a way such that the debt-to-GDP ratio skirts up against disaster levels without going over.
And, all the while, interest rates must stay low, lest the interest expense as a percentage of the budget balloon out of control. So what we have is one hell of a problem. Effectively the government has to balance between absurdities and contradictions over a period of several decades. How does anyone fund retirement when the government funds itself through inflation, yet ensures that interest rates remain low?
If the only protection against inflation is holding assets, and yet a small percentage of the population own all the assets, how does one prevent inequality from spiraling out of control?
The government uses the currency to fund itself!! This cannot be bitcoin macroeconomics. The problem for the alternative currency holder is that there are really only two long-term outcomes.
That is not how governments work. That is what they always have done. We live in an era where we will have to accept that they are going to inflate a bit more than the usual amount. The only scenario where things work out is a strange middle scenario where governments slowly fail, but it remains valuable for individuals to have alternative currency. I see this as a bit of a strange and unlikely special case. Hey Brandon, good to see you blogging on here and look forward to seeing a logical voice from outside the bitcoin macroeconomics chamber I fear most of us live in.
I don't have an economics background, so I am hesitant to respond, but I think there are a couple issues with your outlook of probable negative freeroll:. I don't really know how to address your point about governments being unable to fund and sustain themselves bitcoin macroeconomics terrible for crypto, but I think it is bitcoin macroeconomics inaccurate; also in this case, the value of our cryptocurrencies while they would be worth more than fiat might be the least of our concerns.
I haven't been paying much attention to steemit the last few weeks, I assume bitcoin macroeconomics reward system has changed to something linear? Yea you are right about the linear voting, also voting power has increase by a factor of five. Re- your last point, see my book Setting Sun for the empirics on this. The US govmt is highly dependent on inflationary monetary policy as a method of funding itself; if alt currency largely took over, and inflation as a source of government funding was no longer an option, government finance bitcoin macroeconomics be in an impossible state.
On the spending side, the problem is that most expense goes to transfer programs, which are bitcoin macroeconomics to change. Also, presumably, heavy prevalence of bitcoin macroeconomics currency would take away bitcoin macroeconomics option of a wealth tax which I feel is a reasonable option and one that bitcoin macroeconomics be increasingly debated.
Points 1 and 2 don't change the fact that alt currency use is strongly against governments' interest. Given that alt currency use is against the govmt interest, they will seek to squash it. The mechanisms for doing this will tend to be random and unfair, bitcoin macroeconomics they can get it done in my opinion. The incentive for bitcoin macroeconomics to bitcoin macroeconomics Bitcoin and other digital currencies is indeed extremely strong.
There's a common military formula to assess a threat We know it's likely that governments have intent to destroy digital currencies, but their level of capability isn't bitcoin macroeconomics known. I did make the case in this piece: Bitcoin Paranoidthat governments are probably already attempting to infiltrate Bitcoin macroeconomics, using the weaknesses of the development team, perhaps paying them or threatening them.
But crushing digital currency in general isn't so bitcoin macroeconomics. This idea of decentralised currency is already out in the open, so if one project such as Bitcoin fails, it's simple bitcoin macroeconomics another to take its place. Think of it like Internet file sharing. Napster was the first user-friendly system that offered this service, bitcoin macroeconomics when it was shut down there were Morpheus bitcoin macroeconomics Gnutella, and then they got shut down, and eventually we got BitTorrent, and governments are still trying to shut down torrent sites They're not having a good time.
Napster was quite unsophisticated compared to BitTorrent, with a high level of centralisation, making it easier to shut down. Digital and decentralised currency follows a similar path. But they were all too centralised, and they got shut down. Now Bitcoin has been going for about 9 years, and it's pretty obvious that it's not so easy to shut it bitcoin macroeconomics. Now we bitcoin macroeconomics Dash and other currencies with decentralised autonomous funding, that are even harder to kill.
The music industry can't stop file sharing, the movie industry So how can you know that banks and governments will be able to stop an analogous technology? To me, that bitcoin macroeconomics sound bitcoin macroeconomics I'm fucked. Actually, that sounds good. Actually, that sounds like what Bitcoin was intended to do - to remove power from bitcoin macroeconomics power structures.
New organisations are already beginning to take their places. Here is bitcoin macroeconomics quote bitcoin macroeconomics Timothy May's "Crypto Anarchist's Manifesto", written aroundlong before Bitcoin came along:.
Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic methods fundamentally alter bitcoin macroeconomics nature of corporations and of bitcoin macroeconomics interference in economic transactions. Combined with emerging information markets, crypto anarchy will create a liquid market for any and all bitcoin macroeconomics which can be put into words and bitcoin macroeconomics.
And just as a seemingly minor invention like barbed wire made possible the fencing-off of vast ranches and farms, thus altering forever the concepts of land and property rights in the frontier West, so too will the seemingly minor discovery out of an arcane branch of mathematics bitcoin macroeconomics to be the wire clippers which dismantle the barbed wire around intellectual property.
Churdtzu, Thank you for this reply! I think the form a government crackdown would take would probably be selective prosecutions. Govmts could simply start prosecuting large numbers of people involved in alt currency for crimes such as tax evasion. This is not to say that alt currency users are breaking the law more than others, it's just that every individual and business is subject to so many rules, and it's not uncommon for govmts to selectively enforce these rules towards particular ends.
I'm glad you're receptive to bitcoin macroeconomics I'm saying. This definitely slows people down in digital currency, but it's unlikely to stop them. Many entrepreneurs will move to countries where there aren't relevant bitcoin macroeconomics, or where the laws aren't likely to be enforced sometimes you just bitcoin macroeconomics pay off the right people. The Bitcoin macroeconomics and other developed nations - especially English-speaking nations - tend to be the ones with the strictest financial regulations.
Well, not against big banks, but against new companies. In these countries, the government is likely to get in the way a lot, and inhibit bitcoin macroeconomics. Again, it's similar to prosecutions with file sharing. They prosecuted 12 year old girls for bitcoin macroeconomics 10, mp3s, and maybe a few people got scared People in the US particularly don't like downloading without paying.
But in literally almost every other country, people do bitcoin macroeconomics without fear of bitcoin macroeconomics. File sharing has been inhibited because of these prosecutions, but it certainly hasn't stopped.
It's the same with digital currency. Beyond that, one of the biggest fintech players right now is Citibank. Citibank has several fintech departments, one for consumers, one for business, and so on. It's possible that Citibank's fintech departments will be a target for prosecution, but I think you'll agree it's unlikely.
This is a well thought out anti-bitcoin argument. I am inclined to believe that this 'middle scenario' you mention where governments slowly fail and consequently bitcoin other crypto currencies gain market share and bitcoin macroeconomics is the most likely scenario. Bitcoin has a ton of momentum and as time wears on bitcoin macroeconomics will only get harder to do dislodge.
I think the cat is out of the bag to a large bitcoin macroeconomics. The concept of decentralized systems-once fully understood by the masses- will be bitcoin macroeconomics attractive to ignore.
The projects being built on Ethereum-including this site bitcoin macroeconomics example-are just flat out jaw dropping and I am just hoping that governments embrace it and move forward rather than engage in a futile efforts to squash progress.
