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View Diary: The Problem with Crypto-Currencies and Why SolarCoin is Different (124 comments)

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  •  I see your point here Eric. You are probably (2+ / 0-)
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    nuketeacher, Eric Stetson

    correct about the amount of the SLR grants, which I've not heard of before being small enough relative to the rest of the economy that they will not cause inflation.

    But, where does the guarantee of value come from? Is it essentially a volunteer donation by the owners of a business because they want to support solar energy?

    Or can you take them to a banks and convert them to dollars somewhere?

    Because unless it is the latter, is there not a danger than the people with the most generosity get stuck "holding the bag"  so to speak?

    Let's imagine a wonderful progressive pro-solar fellow who owns a special polarized sun glasses store on the board walk of a moderately wealthy community say on coast of California on Monteray, or someplace like that.

    He hears about it from some volunteers who come around and agree to participate in the program because he is a great kind of all around community fellow -- support the Little League, the Shrines burn center etc. So he put up the sticker in the window saying he accepts these solar coins.

    And, word get out around the community, so local homeowners who were going to install solar anyway, because it makes such good economy sense start bringing in their month $20 bonus solar coins and he accepts them for sun glasses.

    And, then he finds the dry cleaners guy at his monthly Kiwana club meeting decides to take them too. So he spends them there and the whole thing gets going well.

    20  to 50 local business are taking these things they look cool and the total number is building up.

    Can he pay his rent with them?

    Suppose he has accumulated a couple thousands dollars of them and realizes he's losing interest. Can he go to the bank and convert them to dollars so he can invest in the stock market or pay his inventory supplier in a crunch.

    Every currency known to man has had ups and downs. When the market price suddenly drops, and there is a run on the market like there was in bitcoins recently, who acts like the federal reserve did in the 2008 Stock market crash when it feel 500 points in one day.

    They tripped the circuit breakers shut the market absolutely flooded the banking system with liquidity, cash, bailed out the major stock market trading firms, which people around here are still grousing about. and the market came back.

    Otherwise it is fairly clear we would have had a global depression for probably 10 or more years a decline of global GDP of 20% or more and GNP much larger.

    When a currency does not have this kind of power, backing, and credibility, you get situations, like Bitcoin, Greece, Argtentina, post-war Germany.

    The only currency system in the world with this much power and credibility is the dollar back with the U.S. government, is it not?

    Which is why we crucify the right-wingers every time they diddle with it when the debt ceiling comes up. And, even though it nearly kills them to do so, even the damn grown ups in the GOP will come out and beat back their own Tea Baggers with a stick and tell them to chill out and not mess with the only stable global financial system the world has.

    The fact we can come as close as we have has scared the stew right out of a lot folks, including me.

    If the cryptocurrencies can offer us a way out of this mess, it will be great. But, as I said. I don't understand yet, how they can work as a whole system. Please be patient as I think about this some more.

    I like these tangible example you and nuketeacher offer, although, that name gives me the chills, he has been friendly so far. I have tremendous respect for you, and have known you for a long time so I have I haven't been disruptive. Please explain to your friends, that when I ask really  long questions it is a good thing as it means I find the conversation really interesting, and I know it can be annoying and apoligize. I've tried really hard but it seems to be incurable.

    If you think I'm annoying, my girl friend can take a five page comment i write an often rewrite the same thing better in three or four sentences, which impresses the heck out of me and makes up for a lot of other things that are barely tolerable.


    I have to go for tonight, though I will look back here in the morning for any responses.

    Thanks for this fascinating discussion. I've been troubled by these cryptocurrencies for some times now. It doesn't surprise me that I don't understand them, as there are a lot of things that I understand less and less there more I study them. Like quantum mechanics for one.

    We even have a whole new kind of tetra quark now, and I hadn't even figured out how the old quarks worked yet.

    No, that's not what bothers me. Its that It don't read people asking or explaining these really basic issues, about how these cryptocurrencies are supposed to interact with the rest of the macro-economic system. Not even in top magazines like The Economist.

    Whatever.  Good night.

    "Seriously, Folks, WTH?" - ("What the Heck? "h/t Joan McCarter, Seriously, Florida. WTF?)

    by HoundDog on Sun Apr 13, 2014 at 08:11:56 PM PDT

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    •  exchanging cryptocurrencies for dollars (1+ / 0-)
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      can you take them to a banks and convert them to dollars somewhere?
      As of right now, most cryptocurrencies including SolarCoin can only be exchanged for bitcoins (such as on the AllCrypt exchange or various other exchanges), but once you exchange them for bitcoins you can then exchange them for dollars on exchanges such as Coinbase.

      One of the goals of most cryptocurrencies is to become big and important enough to be traded directly into dollars, like bitcoin. Obviously one step is better than two steps to convert to and from dollars to SolarCoins or whatever else. If it catches on, then eventually it will be tradeable directly into dollars. It's not yet because it costs millions of dollars to launch a money exchange service, mostly legal and regulatory compliance costs. Coinbase is one of the few companies that has successfully done it, and they had to raise $6 million in venture capital from Silicon Valley VCs in order to do it.

      So, for now, you can trade SLR --> BTC --> US$. In the future, hopefully eliminate that middle step.

      The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

      by Eric Stetson on Mon Apr 14, 2014 at 09:32:29 AM PDT

      [ Parent ]

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