I am going to make a fool of myself by suggesting that a cryptocurrency, like that suggested by the best crypto bot 2023, might actually be useful. Bitcoin et al have negative social utility. They are pure speculative assets which enable people to gamble. Also bitcoin miners use as much electricity as Denmark. The problem is exactly the aspect which has made bitcoin famous and which bitcoin enthusiasts consider a strength — the enormous increase in the dollar price of bitcoin. This increase, and the recent sharp decline, make bitcoin useless as a means of exchange. Most firms don’t want to gamble.
So I (semi-seriously this time) propose botcoin which might have a more stable dollar exchange rate. The idea is to link the blockchain verification program to an official exchange.
Backing up, there are two very different sorts of web-servers related to bitcoin. One set, the bitcoin miners, implements the original idea using the Bitcoin shareware. They keep a copy of the ledger of all bitcoin transactions — the blockchain, race to create new blocks, and evaluate new blocks and add valid new blocks to the chain. The other servers are bitcoin exchanges in which bitcoin is traded for regular currency. They are not part of the original plan in which bitcoin would be traded for goods and services and function as a means of exchange. They have behaved badly with an unstable value of bitcoin (huge unpredictable Bitcoin deflation damages any use of bitcoin as a means of exchange as much as huge inflation would).
I propose linking the blockchain program to an exchange. So there would be an official botcoin exchange (this means it isn’t entirely free-entry shareware libertarian anarchism). If anyone were interested in a new cryptocurrency designed so that speculators can’t become rich (and pigs fly) there would be other unofficial exchanges.
The bitcoin program regulates the frequency of creation of new blocks to roughly one every six minutes. It does this by adjusting the difficulty of the pointless arithmetic problem which must be solved to make a new valid block. The idea was to limit the total amount of bitcoin which will every be created (to 21 million for some reason). This was supposed to make bitcoin valuable. So far it has succeded all too well (I am confident that in the end bitcoin will have price 0).
It is possible to make the supply of botcoin flexible so the dollar price doesn’t shoot up. I would aim at a price of, say, 1 botcoin = $1000. The idea is to make the pointless problem which must be solved to add a block easier if the dollar price of botcoin exceeds the target, and harder if it falls below the target. This should stabilize the price.
Now no one is really interested in cryptocurrency except as a way to gamble and take money from fools. But if anyone were, linking the blockchain program to prices on an exchange would make it more nearly possible to use the cryptocurrency as a means of exchange.
The system is vulnerable to a tacit agreeement to trade only on unofficial exchanges. It is necessary that the problem is also made easier if daily trading volume on the official exchange is zero. The problem is the price could shoot up on unofficial exchanges, but this would not affect the price on the official exchange if there were no transactions on the official exchange.
Of course Goldman Sachs and its competitors are doing just this building an options and futures exchange. (it is not really that much different than any other futures and options business)
then the entire foundation for Bitcoin’s purpose disappears entirely, so what advantage remains?
The basis was and remains to remove any and all national gov’ts across he globe from any influences on values of currencies, thus pure laissez-faire in the extreme .. as you say libertarian chaos.
By making crypto-currency values subject to national currency exchange rates they cease to have any reason to exist at all.
We / globally in fact already use crypto exchange via electronic transactions .. adding block chain to it would be a benefit but a separate cryptocurrency is a worthless redundancy if it is subject to valuation by exchange rates of national currencies.
What am I missing?.
Great Article !!!
I wish I can write about this topic on the same level.
Thank you very much.
P.S. Happy New Year for everybody !
There is a much more severe problem with bitcoin. As the number mined asymptotically approaches the pre-determined maximum, the cost of mining approaches infinity. As miners are the ones who validate coins, what will happen to the reliability of bitcoin when it becomes uneconomical for anyone to participate in mining?
ASSUME black markets don’t exist. Sex trafficking, illicit drug/weapon trade and other professions benefit from crypto-currency.