Criticisms of Zcash
#2579·Benjamin Davies revised 20 days agoIt is one thing to explain why a particular god spread more than others in the past, but it is another thing to claim that your specific god of choice will spread more than others in the future.
Your claim is that Zcash is the next money, which is analogous to claiming your niche god of choice is under-appreciated and will be the next big one.
Yes. But again, because it solves certain problems with existing money. There could similarly be good and bad explanations why certain religions would spread in the future.
#2574·Benjamin Davies, 20 days agoMoney needs to be a medium of exchange, a unit of account, and a store of value.
Features that support a price floor create the conditions where one can expect that their wealth won’t completely evaporate for one reason or another. Something that has no features supporting a price floor is not good money.
If gold no longer has features supporting a price floor at some point in the future (as you claim might happen), then gold would also not be good money in that future.
Zcash has nothing going for it that makes it a store of value. To the degree that it is ‘worth’ anything in the future, it is because of the dynamics I refer to in #2497.
I agree that it would be optimal if Zcash and Bitcoin had such price floors. But couldn't it still be the best alternative in certain jurisdictions, e.g. where it's impossible/impractical to own gold, and the local currency gets inflated away?
removed incorrect use of “retroactively, and added emphasis
It is one thing to retroactively explain why a particular god spread more than others in the past, but it is another thing to claim that your specific god of choice will spread more than others in the future.
Your claim is that Zcash is the next money, which is analogous to claiming your niche god of choice is under-appreciated and will be the next big one.
It is one thing to explain why a particular god spread more than others in the past, but it is another thing to claim that your specific god of choice will spread more than others in the future.
Your claim is that Zcash is the next money, which is analogous to claiming your niche god of choice is under-appreciated and will be the next big one.
typo
It is one thing to retroactively explain why a particular good spread more than others in the past, but it is another thing to claim that your specific god of choice will spread more than others in the future.
Your claim is that Zcash is the next money, which is analogous to claiming your niche god of choice is under-appreciated and will be the next big one.
It is one thing to retroactively explain why a particular god spread more than others in the past, but it is another thing to claim that your specific god of choice will spread more than others in the future.
Your claim is that Zcash is the next money, which is analogous to claiming your niche god of choice is under-appreciated and will be the next big one.
#2568·Erik OrrjeOP, 20 days agoIt is the same as arguing for a specific god because the god you like has specific features. The god itself is still easy to vary.
I could still see someone with knowledge of psychology and theology provide a good explanation as to why certain gods and religions have spread in favour of others. All ideas are solutions to some problem.
It is one thing to retroactively explain why a particular good spread more than others in the past, but it is another thing to claim that your specific god of choice will spread more than others in the future.
Your claim is that Zcash is the next money, which is analogous to claiming your niche god of choice is under-appreciated and will be the next big one.
#2567·Erik OrrjeOP, 20 days agoThe part that is easy to vary is that an arbitrary amount of different cryptos can be made with the same features.
There's never an arbitrary amount of solutions to a specific problem. In this case, the problems are the centralisation and the lack of privacy of our current money. They may not be problems for you specifically (e.g. if you live in a high-trust jurisdiction), but I'd like to hear arguments as to why nobody in the world would consider them problems.
I don’t deny that Zcash might be decentralised and private.
For Zcash to become the next money, it is not sufficient for it to just be durable, fungible, private, decentralised, etc.
As long as it doesn’t have any underlying value, it will not be suitable as money.
You are using secondary attributes of good money as positive justifications for Zcash as good money, but you are failing to answer the criticism that Zcash has no underlying value.
#2566·Erik OrrjeOP, 20 days agoValue comes from solving a problem.
Money solves (among other things) the problem of barter by being a medium of exchange. Different media solve this problem better than others. That determines its value.
I still don't see why there has to be a price floor set by the commodity's utility (for other things than being money)? Also, the value could still go to zero if that utility was no longer needed: Gold isn't guaranteed to be valued in industry or jewellry in the future.
Money needs to be a medium of exchange, a unit of account, and a store of value.
Features that support a price floor create the conditions where one can expect that their wealth won’t completely evaporate for one reason or another. Something that has no features supporting a price floor is not good money.
If gold no longer has features supporting a price floor at some point in the future (as you claim might happen), then gold would also not be good money in that future.
Zcash has nothing going for it that makes it a store of value. To the degree that it is ‘worth’ anything in the future, it is because of the dynamics I refer to in #2497.
#2496·Benjamin Davies, 24 days agoThe part that is easy to vary is that an arbitrary amount of different cryptos can be made with the same features.
The features themselves can be as specific as you like but the overall argument is still extremely easy to vary, because it is an argument for a specific cryptocurrency.
It is the same as arguing for a specific god because the god you like has specific features. The god itself is still easy to vary.
It is the same as arguing for a specific god because the god you like has specific features. The god itself is still easy to vary.
I could still see someone with knowledge of psychology and theology provide a good explanation as to why certain gods and religions have spread in favour of others. All ideas are solutions to some problem.
#2496·Benjamin Davies, 24 days agoThe part that is easy to vary is that an arbitrary amount of different cryptos can be made with the same features.
The features themselves can be as specific as you like but the overall argument is still extremely easy to vary, because it is an argument for a specific cryptocurrency.
It is the same as arguing for a specific god because the god you like has specific features. The god itself is still easy to vary.
The part that is easy to vary is that an arbitrary amount of different cryptos can be made with the same features.
There's never an arbitrary amount of solutions to a specific problem. In this case, the problems are the centralisation and the lack of privacy of our current money. They may not be problems for you specifically (e.g. if you live in a high-trust jurisdiction), but I'd like to hear arguments as to why nobody in the world would consider them problems.
#2497·Benjamin Davies, 24 days agoDurability, Portability, Divisibility, Fungibility, and Stability
These are all secondary values.
The durability of something is irrelevant if the thing itself is useless.
The portability of something is irrelevant if the thing itself is useless.
The divisibility of something is irrelevant if the thing itself is useless.
Etcetera, etcetera.The only demand for something like this comes from either a mistaken understanding of what ‘value’ is/means (e.g. believing that the ‘durability’ of something otherwise useless makes it valuable), or from the Keynesian Beauty Contest linked above.
This dynamic makes cryptos wonderful as instruments of speculation, but they will never be money unless they are backed by some independently useful commodity (which IIRC some actually are), or are made legal tender by some government (which defeats the point).
Value comes from solving a problem.
Money solves (among other things) the problem of barter by being a medium of exchange. Different media solve this problem better than others. That determines its value.
I still don't see why there has to be a price floor set by the commodity's utility (for other things than being money)? Also, the value could still go to zero if that utility was no longer needed: Gold isn't guaranteed to be valued in industry or jewellry in the future.
#2509·Dennis Hackethal, 24 days agoNew arguments may not belong at the bottom of the criticism chain. Depending on context, it may need to be either a new sibling at the top of the chain or a completely new standalone idea.
I didn’t check this exchange in detail to say for sure. But I recommend checking, so I’m marking this as a criticism. If you think the new argument can remain as is, leave a counter-criticism to neutralize my criticism.
#2494·Erik OrrjeOP, 24 days agoThanks for the criticism. New argument: Utility (besides usefulness as money) is not strictly necessary, although it may be nice to have. The value of a currency is set by supply and demand.
Supply: A limited supply (scarcity) may increase the value.
Demand: Demand is set determined by how well people percieve the currency's features as a store of value, medium of exchange and unit of account. Important factors include: Durability, Portability, Divisibility, Fungibility, and Stability. Gold has had most of these features (importantly scarcity, only 2% inflation from mining). However, it severely lacks in portability due to being a metal, compared to hard digital assets.
So the value of a currency is mostly determined by its perceived usefulness as money, not its utility for other things.
New arguments may not belong at the bottom of the criticism chain. Depending on context, it may need to be either a new sibling at the top of the chain or a completely new standalone idea.
I didn’t check this exchange in detail to say for sure. But I recommend checking, so I’m marking this as a criticism. If you think the new argument can remain as is, leave a counter-criticism to neutralize my criticism.
#2494·Erik OrrjeOP, 24 days agoThanks for the criticism. New argument: Utility (besides usefulness as money) is not strictly necessary, although it may be nice to have. The value of a currency is set by supply and demand.
Supply: A limited supply (scarcity) may increase the value.
Demand: Demand is set determined by how well people percieve the currency's features as a store of value, medium of exchange and unit of account. Important factors include: Durability, Portability, Divisibility, Fungibility, and Stability. Gold has had most of these features (importantly scarcity, only 2% inflation from mining). However, it severely lacks in portability due to being a metal, compared to hard digital assets.
So the value of a currency is mostly determined by its perceived usefulness as money, not its utility for other things.
Supply: A limited supply (scarcity) may increase the value.
The scarcity of a useless thing doesn’t make it less useless.
#2494·Erik OrrjeOP, 24 days agoThanks for the criticism. New argument: Utility (besides usefulness as money) is not strictly necessary, although it may be nice to have. The value of a currency is set by supply and demand.
Supply: A limited supply (scarcity) may increase the value.
Demand: Demand is set determined by how well people percieve the currency's features as a store of value, medium of exchange and unit of account. Important factors include: Durability, Portability, Divisibility, Fungibility, and Stability. Gold has had most of these features (importantly scarcity, only 2% inflation from mining). However, it severely lacks in portability due to being a metal, compared to hard digital assets.
So the value of a currency is mostly determined by its perceived usefulness as money, not its utility for other things.
Durability, Portability, Divisibility, Fungibility, and Stability
These are all secondary values.
The durability of something is irrelevant if the thing itself is useless.
The portability of something is irrelevant if the thing itself is useless.
The divisibility of something is irrelevant if the thing itself is useless.
Etcetera, etcetera.
The only demand for something like this comes from either a mistaken understanding of what ‘value’ is/means (e.g. believing that the ‘durability’ of something otherwise useless makes it valuable), or from the Keynesian Beauty Contest linked above.
This dynamic makes cryptos wonderful as instruments of speculation, but they will never be money unless they are backed by some independently useful commodity (which IIRC some actually are), or are made legal tender by some government (which defeats the point).
#2495·Erik OrrjeOP, 24 days agoIs "it contains bitcoin's solutions to fiat, and also solves bitcoin's lack of privacy" easy to vary? Could be made harder to vary by explaining the technicals of zero-knowledge proofs as well (though I'm not konwledgeable enough to do that here).
The part that is easy to vary is that an arbitrary amount of different cryptos can be made with the same features.
The features themselves can be as specific as you like but the overall argument is still extremely easy to vary, because it is an argument for a specific cryptocurrency.
It is the same as arguing for a specific god because the god you like has specific features. The god itself is still easy to vary.
#2427·Benjamin Davies revised 26 days agoWhy not some other cryptocurrency that also has those features?
For example, why not an existing or future fork of Zcash?“[Insert favoured cryptocurrency] will become the next money” is an extremely easy to vary statement.
Is "it contains bitcoin's solutions to fiat, and also solves bitcoin's lack of privacy" easy to vary? Could be made harder to vary by explaining the technicals of zero-knowledge proofs as well (though I'm not konwledgeable enough to do that here).
#2425·Benjamin Davies, 26 days agoUtility is not a necessary aspect of money.
Money without other use cases only holds value to the degree it can continuously win a Keynesian Beauty Contest in the market.
In other words, it has no underlying value.
Thanks for the criticism. New argument: Utility (besides usefulness as money) is not strictly necessary, although it may be nice to have. The value of a currency is set by supply and demand.
Supply: A limited supply (scarcity) may increase the value.
Demand: Demand is set determined by how well people percieve the currency's features as a store of value, medium of exchange and unit of account. Important factors include: Durability, Portability, Divisibility, Fungibility, and Stability. Gold has had most of these features (importantly scarcity, only 2% inflation from mining). However, it severely lacks in portability due to being a metal, compared to hard digital assets.
So the value of a currency is mostly determined by its perceived usefulness as money, not its utility for other things.
Why not some other cryptocurrency that also has those features?
For example, why not an existing or future fork of Zcash?
Why not some other cryptocurrency that also has those features?
For example, why not an existing or future fork of Zcash?
“[Insert favoured cryptocurrency] will become the next money” is an extremely easy to vary statement.
#2362·Erik OrrjeOP, 28 days agoZcash will become the next money. That's because it contains bitcoin's solutions to fiat, and also solves bitcoin's lack of privacy.
Why not some other cryptocurrency that also has those features?
For example, why not an existing or future fork of Zcash?
#2418·Erik OrrjeOP revised 26 days agoThe reason to back a currency with gold or some other commodity is that the commodity has other utility aside from being used as money. This sets a floor on the price, making it a store of value.
Utility is not a necessary aspect of money. Only 5-10% of gold's value is tied to its industrial use (https://www.statista.com/statistics/299609/gold-demand-by-industry-sectorshare/#:~:text=The%20jewelry%20industry%20accounted%20for,China%2C%20Russia%2C%20and%20Australia). Another 40% is used for jewellery.
This floor is not so reassuring if the asset were to plummet 50%. Other commodities, such as silver, have a greater industrial utility. That makes it less suitable as money since its value becomes tied to commodity cycles.
The reason to back a currency with gold or some other commodity is mainly due to its scarcity, which puts a limit on money creation (done through fractional reserve banking).
Utility is not a necessary aspect of money.
Money without other use cases only holds value to the degree it can continuously win a Keynesian Beauty Contest in the market.
In other words, it has no underlying value.
#2418·Erik OrrjeOP revised 26 days agoThe reason to back a currency with gold or some other commodity is that the commodity has other utility aside from being used as money. This sets a floor on the price, making it a store of value.
Utility is not a necessary aspect of money. Only 5-10% of gold's value is tied to its industrial use (https://www.statista.com/statistics/299609/gold-demand-by-industry-sectorshare/#:~:text=The%20jewelry%20industry%20accounted%20for,China%2C%20Russia%2C%20and%20Australia). Another 40% is used for jewellery.
This floor is not so reassuring if the asset were to plummet 50%. Other commodities, such as silver, have a greater industrial utility. That makes it less suitable as money since its value becomes tied to commodity cycles.
The reason to back a currency with gold or some other commodity is mainly due to its scarcity, which puts a limit on money creation (done through fractional reserve banking).
The price of a commodity and the quantity of it in use don’t strictly correlate in the way you suggest here. 50% of gold being tied up in industry, jewellery, etc. does not mean the price floor is at 50% of the current price.
#2418·Erik OrrjeOP revised 26 days agoThe reason to back a currency with gold or some other commodity is that the commodity has other utility aside from being used as money. This sets a floor on the price, making it a store of value.
Utility is not a necessary aspect of money. Only 5-10% of gold's value is tied to its industrial use (https://www.statista.com/statistics/299609/gold-demand-by-industry-sectorshare/#:~:text=The%20jewelry%20industry%20accounted%20for,China%2C%20Russia%2C%20and%20Australia). Another 40% is used for jewellery.
This floor is not so reassuring if the asset were to plummet 50%. Other commodities, such as silver, have a greater industrial utility. That makes it less suitable as money since its value becomes tied to commodity cycles.
The reason to back a currency with gold or some other commodity is mainly due to its scarcity, which puts a limit on money creation (done through fractional reserve banking).
By the standard you have set here, you have implicitly disqualified Bitcoin and Zcash. If gold is not good enough because it could fall to its price floor (your claim being 50%), then Bitcoin and Zcash are even worse because they have no floor at all. It might be more precise to say the floor is zero.
Thanks Dennis
The reason to back a currency with gold or some other commodity is that the commodity has other utility aside from being used as money. This sets a floor on the price, making it a store of value.
- Utility is not a necessary aspect of money. Only 5-10% of gold's value is tied to its industrial use (per chatgpt). This floor is not so reassuring then if the asset would plummet 90-95%. Other commodities, such as silver, have a greater industrial utility. That makes it less suitable as money since its value becomes tied to commodity cycles.
The reason to back a currency with gold or some other commodity is mainly due to its scarcity, which puts a limit on money creation (done through fractional reserve bankning).
The reason to back a currency with gold or some other commodity is that the commodity has other utility aside from being used as money. This sets a floor on the price, making it a store of value.
Utility is not a necessary aspect of money. Only 5-10% of gold's value is tied to its industrial use (https://www.statista.com/statistics/299609/gold-demand-by-industry-sectorshare/#:~:text=The%20jewelry%20industry%20accounted%20for,China%2C%20Russia%2C%20and%20Australia). Another 40% is used for jewellery.
This floor is not so reassuring if the asset were to plummet 50%. Other commodities, such as silver, have a greater industrial utility. That makes it less suitable as money since its value becomes tied to commodity cycles.
The reason to back a currency with gold or some other commodity is mainly due to its scarcity, which puts a limit on money creation (done through fractional reserve banking).
#2412·Erik OrrjeOP, 26 days agoThe reason to back a currency with gold or some other commodity is that the commodity has other utility aside from being used as money. This sets a floor on the price, making it a store of value.
- Utility is not a necessary aspect of money. Only 5-10% of gold's value is tied to its industrial use (per chatgpt). This floor is not so reassuring then if the asset would plummet 90-95%. Other commodities, such as silver, have a greater industrial utility. That makes it less suitable as money since its value becomes tied to commodity cycles.
The reason to back a currency with gold or some other commodity is mainly due to its scarcity, which puts a limit on money creation (done through fractional reserve bankning).
Only 5-10% of gold's value is tied to its industrial use (per chatgpt).
ChatGPT is notoriously unreliable and known for making stuff up. I recommend using a different, human-made source. Should be easy to find one using your search engine of choice.
In a gold standard society, gold doesn't need to be backed by anything. The same would be true for Bitcoin and Zcash.
In a gold standard society, gold doesn't need to be backed by anything. The same would be true for Bitcoin and Zcash. The US Federal Reserve Notes used to be backed by gold to prevent excessive money creation, gold itself, Bitcoin and ZCash won't need to be backed by anything due to their inherent scarcity.