It's already failed. It's gone from the currency of the future, to a store of a value, to just a pure speculative commodity. Nothing more or less. Use it to make money, and get out.
I've been putting up over 200 of my btc in various loans for over 15 months now. I do this on Bitfinex. It's a double blind loan and can only be used by the receiving party for margin trading. That party has to have maintain a certain reserve to be able to allow an automated stop-loss.
This system is fully automated and I've gotten some interesting rates on btc that would otherwise just have been idle.
You are talking about a short time horizon. Yes, bitcoin will possibly crash, but that is when a large part of the speculative play money will leave the eco system. Bitcoin could still gain value afterwards if there will be an increasing utility.
Good read.
There are more mature cryptocurrencies emerging that are based on 'loans' as the author describes. The Maker Project's stable coin 'Dai' is an example, which is only created by collateralized debt positions. However, the debt position is currently based on ETH, which is 'backed' by speculation.
In Poloniex you can lend money. Would that count as loans? There are pre-mined cryptocurrencies like Ripple and Stellar that doesn't need proof of work to solve the double spending problem, and thus doesn't need lots of electricity to work.
Has anyone tried to “peg” a cryptocurrency to USD? That seems like an ideal thing to have... Somehow change reward size based on exchange rate. That is increase supply when above 1:1 and decrease when below.
Bitcoin looks like a ponzi scheme to me as there is no value to a Bitcoin other than that of itself.
Currencies used to represent the gold stored by each government. These days currency represent the trust that the system that uses the currency, will trade goods for it. However we had to go through the gold equivalent to get here.
Bitcoin doesn’t represent anything and has nothing to back it up.
The thing about loans, that is borrowed capital that you use to try and create more capital, is that there isn't enough capital to go around. Capitalism does depend on a certain percentages of businesses failing, and that debt being written off.
You also can't make loans with BTC because debt needs to be enforceable. There must be violence behind debt. In the past that meant someone turns you into a slave or breaks your legs. Today the violence has been reduced (you get bad credit score and debt collectors keep calling), but it's still there. States have to have a monopoly on violence to enforce debt.
I don't really agree with where this guy is going, because the entire way loans are used to generate fiat currency isn't really sustainable. David Graeber has talked a lot about every great civilization has needed some form of debt relief at some point, either when a new leader comes in or when the civilization collapses.
People in the ancient world knew the empires they lived under would eventually end. Today in many high income countries, most people cannot see the end.