BTC Increasingly Hedges Against Fiat

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  • Fri, Sep 25, 2020 - 09:03pm

    #21
    ao

    ao

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    VT Gothic, thanks for that detailed answer

You are a wealth of detailed knowledge and well considered thought.  Nevertheless, I wanted to bring up a few different points related to some points you mentioned.  Your response seems to suggest that a bank account has the same vulnerability as Bitcoin.  I would disagree with that.  Last I knew, Bitcoin didn’t have FDIC insurance (funding for that organization being a whole different matter).  Also, I have paper statements showing exactly how much is in my bank accounts each month.  I stick to paper for that very reason.  With regards to stock portfolios, a prudent person takes physical possession of their paper stock certificates to avoid potential problems with the DTCC, counter-party risk, etc.   A prudent person also holds the paper deed to their house and/or land.  No electronic finagling is going to take that deed out of your personal possession.  Furthermore, at this time, Bitcoin doesn’t have the same government and legal legitimacy as most of the more conventional financial instruments and I think the legal system is much less likely to provide pathways for recourse if something untoward happens with your Bitcoin holdings as compared to your bank account, stock portfolio, etc.

You brought up some interesting information I hadn’t considered.  Does Bitcoin itself have dedicated IT personnel who deal with security?  If so, how are they paid?  And if they are all volunteers, what’s to say that the level of volunteer activity will remain constant?  For example, during an economic decline, more of the volunteers may be laid off from their “day jobs” and may have to forego their volunteerism in a scramble to make up lost income.

Also, from what you tell me, the system is even more complex than I had thought.  I simply don’t understand how this incredible level of complexity lends itself to more security rather than less.  It just seems that there are so many more things that can go wrong.  As a result, I’m less inclined than ever to put my money into this venue.

As an aside, it’s funny that we commonly recognize that technology increases the speed of transactions.  But that’s not the case universally.  I can recall going into the bank as a kid and making a deposit, for example.  Everything was done with hand entries, pen on paper.  Yet the transaction was generally swiftly completed.  Now I go in and deposit a check and there’re key strokes, watching the screen, key strokes, watching the screen, more key strokes, more watching the screen, scanning the check in, watching the screen some more, some more key strokes, and finally the printing out of a receipt.  It’s simply amazing how long this takes sometimes in the age of computers.

I’m also reminded of the touch screen interfaces which are ubiquitous in cars nowadays.  It used to be, if you wanted to turn up the volume of a radio, you simply reached down and turned a knob.  No breaking of eye contact with the road was necessary.  It was quick, intuitive, and safe.  Then as manufacturers introduced touch screens (such as when BMW first introduced their iDrive screen), you had go through a lengthy process such as touching the screen to activate it, locating visually on the screen the entertainment section, touch that, then locate the FM section, touch that, then locate the volume section, touch that, then locate the slider and move that along with your finger.  Much more time to perform, much more time with your eyes off the road, much less safe, etc.  It was technology for its own sake and it was nuts.  At least some of the manufacturers have gone back to the good old volume knob.  It seems to me as if there are parallels to this situation in the crypto universe.

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