Could the US Dollar Be Crypto's Killer App?

https://www.buildblockchain.tech/newsletter/issues/no-90-could-the-us-dollar-be-cryptos-killer-app

by benmdi • 6 years ago

28 32 6 years ago

tw042• 6 years ago

No, it couldn't. Unless the rest of the western world is ready to roll the dice on whether China and Russia want to expand their empires - they aren't moving away from the dollar.

I have no doubt after the Trump administration they are all taking a long, hard look at building up their military power to be self-sufficient, but those timelines are measured in decades, not months. Anyone who thinks that moving away from the dollar is a simple matter of currency is naive, delusional, or both.

shadowgovt4• 6 years ago

The key point in the article is that crypto (not BTC, but stablecoins pegged against dollar, euro, and/or yen values) offers a way for people who normally have few ways to access dollars to get their hands on them. It's not about the dollar-using world moving to crypto---it's about the citizens in world that doesn't use a currency strong enough to print their way out of a market implosion moving to the dollar via crypto.

tw042• 6 years ago

But they aren't getting their hands on dollars, they're getting their hands on crypto claiming to be tied to the dollar. Tether did the same - until they didn't. You can't be tied to the dollar without backing your coin with dollars. You can't possibly back your coin with sufficient dollars without US government approval. You aren't getting approval without following the same regulations as any other bank, which is what made getting dollars difficult in the first place.

Which means the only alternative is attempting to supersede the dollar by pegging to it but not actually being backed by it. Which, again, will never happen.

SideburnsOfDoom• 6 years ago

At guess, "No"

https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...

after reading the article ... still "No".

georgyo• 6 years ago

Never heard of betteridge before, and was thinking the answer to headlines is normally yes...

The Wikipedia article you link to states a study of ~3000 articles where the most common answer is infact yes.

solotronics2• 6 years ago

I have been wondering why the US doesn't make a trial crypto dollar. If it doesn't work out what is the cost? Relatively nothing. If it does work out? it would strengthen the USD position as the global settlements layer and give the US control over a new monetary domain.

For examples of this see LIBOR/"Eurodollar"

shadowgovt4• 6 years ago

The US government is generally hyper-conservative in the financial space of what the Fed directly controls for myriad reasons. The bank of computers that reconcile transactions between banks still shuts down on the weekends because the law around its operation is based on the old law where human clerks were doing the reconciliation.

The cost if it doesn't work out is damage to the trust in the system and the stability of the dollar in general, which is the thing the Fed pathologically seeks to avoid.

And as the country that can mint the currency the IMF designates other countries' international debts in, the US doesn't generally see itself in need of further strengthening the USD's position in the world.

(Interestingly, when I lay it all out like that and add it up, the US monetary policy looks like a big business's bureaucratic system, the kind that'd be ripe for disruption by a startup. Of course, it's not quite so simple when we're talking nation-states and not Silicon Valley ventures).

npo9• 6 years ago

Interestingly, when I lay it all out like that and add it up, the US monetary policy looks like a big business's bureaucratic system, the kind that'd be ripe for disruption by a startup. Of course, it's not quite so simple when we're talking nation-states and not Silicon Valley ventures

That’s because governments have the privilege of establishing itself as a monopoly. They control the rules of the marketplace via regulations.

ashtonkem3• 6 years ago

Why? What extra functionality does creating a cryptocurrency enable?

lukifer2• 6 years ago

It's often forgotten that the only real benefit of blockchains is that they are distributed; one can implement all the same functionality using centralized databases.

What I find really surprising is that the government hasn't created a set of standardized APIs for financial transactions, flowing through traditional web/cloud/mobile tech. From a tax collection/enforcement perspective, it would seem to be in their interest to make "smart money" with convenient P2P digital transactions. Given the transparent corruption between Washington and banking institutions, I wonder if they don't want to risk being disinter-mediated, or if no politicians have even tried to pursue such a thing (the closest being Warren's plans to add banking services to USPS, which I think is a great idea).

solotronics2• 6 years ago

Someone in say Guatemala that has no bank account and never touches a USD might use a ubiquitous "dollarcrypto" on their phone. Lots of people around the world use cryptocurrency to hedge against inflation of their local currency. A US crypto would increase US influence.

coinward• 6 years ago

Arent stable coins just an appeal to central banks expansionary policy? Bitcoin was created as an alternative set of values and seems like cryptos killer app to me

Retric3• 6 years ago

Bitcoin was created to solve micro transactions. https://bitcoin.org/bitcoin.pdf

The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non- reversible services.

It’s the community that pivoted to something else.

PS: Two different non reversible transactions sets up the two generals problem which bitcoin does not solve. https://en.wikipedia.org/wiki/Two_Generals%27_Problem

3fe9a03ccd14ca52• 6 years ago

The average bitcoin transaction cost was over $1.50 last month, and it can only handle a maximum of about 7 transactions a second. Why would bitcoin be good for small transaction?

https://ycharts.com/indicators/bitcoin_average_transaction_f...

shadowgovt4• 6 years ago

The article is talking about cryptocurrencies in terms of adoption, not philosophy. By the metric of the article, if everyone adopts crypto because it makes it easier for them to trade in values pegged to fiat-backed dollars, that's still a win.

Compare and contrast open source's relative success vs. whether the Four Fundamental Freedoms / GPL model itself actually succeeded.

I haven't seen a metric by which BTC is considered a "killer app" (in any space other than "How can I buy things / conduct transactions my local government forbids or tightly regulates," and even that use case is falling by the wayside as the tools for LEO to datamine the blockchain for webs of criminal transaction activity have caught up...), and it's been around long enough that I think we can generally flag the BTC experiment specifically as "tried, found wanting." In this current global pandemic crisis, you'd think trust in central governments would be at an all-time low and people would be shifting their resources into BTC, and that doesn't appear to be happening at any grand scale.

luxuryballs• 6 years ago

Increasing the number of people using the dollar is at least a clear goal considering how often we inject it into countries and governments around the world. In 2020 you don’t conquer with guns, you conquer by economic dependence.

hef19898• 6 years ago

To be fair, it always was a combination of both. Economic depndence is much safer so.

0x8BADF00D• 6 years ago

The killer app was supposed to be DAOs, ICOs, and decentralized finance/web 3.0. Instead we got another asset bubble. This is why we can’t have nice things.

HashThis• 6 years ago

Back in the day of dial-up modems, people dreams of watching TV over the internet. Didn't work well with dial-up. As infrastructure spread, it happened (NetFlix).

Crypto going mainstream will happen. It will happen when debit cards to crypto accounts will pay merchants, and the merchants receive USD. AND when the rates are tiny.

Could the US Dollar Be Crypto's Killer App?

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