Comment: Answers

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Answers

Question: Those 'controlled release' restrictions, aren't they just self imposed? Couldn't they be changed if that's what was desired by whatever body makes the decision?

Yes, but the body that makes the decision is all the users, merchants and miners using the currency. You need a supermajority of all those to agree for any such change.

Suppose competing cryptocurrencies were the dominant form of currency by 2140. Wouldn't the same pressures of for expanding supply exist, i.e., standard macroeconomic arguments about the proper rate and role of inflation and all the political pressures that currently apply to banking, law, academia, and government?

You could reply that competing cryptocurrencies would be like an open market where private individuals could mint gold (the cryptocurrency) into coins freely (competing cryptocurrencies), and that the supply of each would expand and contract according to the wishes of its open source community, with the public acting as the consumer and being the arbiter of the specific X-coin's market value.

You could also argue that market share would accrue to whichever X-coin was best managed as demand would increase it's market value and take market share without adding supply, just by gaining value from demand.

Correct, you've answered your own question.

But the problem with these arguments is that gold and silver were never permitted to be freely made into currency in the market, nor were financial institutions allowed to freely issue promissory notes without regulation (free banking).

Well, the Constitution says only congress can actually mint gold/silver coins. States can't do that. Private individuals/institutions are able to I believe (I may be wrong), but it can't be money confused with the federally minted money. Private coins would also be subject to shaving/filling etc. which has often been a problem with gold/silver as physical currency.

What happened was that the law imposed limits on the minting of currency and regulation on the activity of financial institutions, all of which would apply no less to cryptocurrencies were they to become widely used, as long as the political environment is what it is.

As I say above that had to do with minting gold/silver coins. There was no restriction (that I know of) on issuing private money. That's even done today. People use frequent flyer miles, store gift certificates, LETS barter system points and more as money to some limited extent.

If cryptocurrencies were the dominant medium if exchange in 2113, why wouldn't the state simply legally make itself the only legal issuer, and replace physical currency counterfeiting prevention with cryptographic counterfeiting prevention, and then allow licensed financial institutions to act as brokers and lenders of the base cryptocurrency in a regulated way?

Because that would be tantamount to the state openly saying it was operating as a totalitarian dictatorship. Think of it another way. Say the state said it was to be the supreme issuer of email communication. All email must pass through and be approved by it. See how far they would get with that.

Or wouldn't political pressure simply mount so that the law compelled a supply increase, in exactly the same way gold holders were forced to accept paper in 1933.

No, because Bitcoin is a global currency. Political happenings in the U.S. probably wouldn't persuade users, merchants, and miners in the rest of the world to raise the limit.

Other questions

Isn't it true that BTC has very few 'end uses' and 'end users'?

No. It has by now very many end users and growing end uses.

The enforcement of taxes and regulation apply equally to CCs as to gold or paper money. If it ever became widely used enough to really interest governments or threaten them they could act politically and legally (force is the final word, sadly) to make its status 100% illicit, underground, black market and socially stigmatized.

You forget again that Bitcoin is global, but government jurisdiction is limited. Many governments have already been quite welcoming of Bitcoin. The U.S. has so far been the strictest, but that's only because it's trying to force Bitcoin into its existing money regulation box. It hasn't been so bold as to try making essentially digital information illegal. They would look silly to do so while other nations embraced it.

How would CCs be viable if the government chose to ban, tax or confiscate them?

Well banning it would be as effective as banning drugs/alcohol etc. Taxing it is welcome. Confiscating it is difficult for feds if they are stored correctly.

In a free market of any sort, BTC promissory notes and fractional reserves could be maintained.

True, not a problem. The free market will sort that out.

Then why would you expect bitcoin to make any real difference?

I don't know that it will. It's an experiment. However, I think one with lots of potential. You could make the same argument about Ron Paul from 1975-2005. How would you expect him to make any real difference?