Linux Inventor Says He Doesn’t Believe in Crypto
Linux Inventor Says He Doesn’t Believe in Crypto
Linus Torvalds has said that cryptocurrencies are simply "a great vehicle for scams"
- Linus Torvalds, creator of Linux, does not believe in cryptocurrencies, calling them a vehicle for scams and a Ponzi scheme.
- Torvalds was once rumored to be Bitcoin creator Satoshi Nakamoto, but he clarified it was a joke and denied owning a Bitcoin fortune.
- Torvalds also dismissed the idea of technological singularity as a bedtime story for children, saying continuous exponential growth does not make sense.
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Cryptocurrency is a useful technology that has some real-world use cases - for example, living in Russia, I use it to circumvent sanctions to donate to some of the crypto-friendly creators, pay for a VPS abroad, and I keep calm knowing I can transfer money to my relatives abroad.
However, it is obviously not the answer to how we should build the financial system. The problem is not environment, actually - many Proof-of-Stake blockchains allow to transfer crypto with minimal environmental impact - but the poor on-chain regulation (including taxation, too) and potentially excessive infrastructure, as well as little protections against malicious and fraudulent actors.
Besides, inability to control emission, while helping maintain the value of the currency over the long run, also means that many interventions that can save economy in a crisis are simply not available. And a deflationary nature is known to cause bubbles.
Exactly! My usecase is exactly the same as yours.
While massively flawed, for now it is the most viable alternative financial system we have.
Russians working abroad might find cryptocurrency useful.
And a deflationary nature is known to cause bubbles.
I mean centuries of inflationary monetary policy also caused bubbles, sooo...
Yes, but that was caused by other factors, while deflationary policy directly leads to them as it punishes spending, but rewards accumulation. As a result, everyone sits on a pile of cash, and they either don't spend it, like, ever, grinding economy to a halt, or start buying, strongly depreciating the currency and forming a death spiral.
I am aware of the basic arguments behind inflation/deflation, and neither is good in excess.
Typically central banks targets inflation of 2% these days, but we all know the real inflation for necessities is far higher (>4%). Inflation disproportionately affects the poorer - rich people have the fast majority of their wealth "stored" in stocks or real estate, which rise in valuation as people rush into these markets to protect the little they have. I'd argue that inflation rates are artificially pushed far higher then is sustainable, simply because those who decide are the same people who benefit the most.
I consider a low but predictable inflation rate about 1% ideal (0-2% is acceptable short term variation) for the following reasons:
- No one has to worry about debasing/devaluing your currency by injecting more supply.
- Nobody "passively" gains wealth by sitting on it.
- If you want to keep your wealth, you have to take some risk and use it.
- Inflation rate is not so high, that you need super high risk investments to keep up, making it more accessible to small players.
- Large player can not as easily game the market by skimming of value from the lower to upper middle class.
Yes, this idea is not without risks. But the way I see it the forced "we have to improve value by 2% every year" exponential grow can only go on so long before we (humanity) hit the finite limits of this planet.
Absolutely! Inflation has to be lower, that's for sure. I'd even argue that the need for inflation is more of a feature of a capitalist economy.
Having to force spending/investment is only important as long as the very economy is built around overconsumption and private investment.
We can absolutely live with a more or less stable currency if we focus on sustainability and put the people first. Money should return to be the means to just get what we need, and we should stop building the economy around creating artificial demand.