The Bitcoin/Crypto Thread
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The people who find crypto valuable find it so because they trust the scarcity and ownership traceability, which are enforced by the logical validity of the algorithm. And they like the fact that nothing about that scarcity depends on the existence of any given government and its ability to impose violence. But it requires agreement between this group of people who deem it valuable. It's not beautiful or physically impressive like gold or diamonds, so that agreement might be on more shaky ground.
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@lufins-dad said in The Bitcoin/Crypto Thread:
@ivorythumper said in The Bitcoin/Crypto Thread:
@klaus said in The Bitcoin/Crypto Thread:
@ivorythumper no, you could have a Crypto currency and never exchange anything for Fiat money. Mining creates new crypto money. The process does not involve Fiat money.
Unless I mine it, how do I get it? I have to buy it, either with cash or crypto, right? And if I use crypto, then that's crypto someone else either mined or bought for cash, right? And the expense of that mining -- computers and energy and labor -- is all basically paid for with cash, no? How can it not involve fiat money?
Are you “buying” Euros when traveling or are you converting?
I think you're buying -- and banks or foreign exchanges are selling.
By the same token, you're converting your time into money (paycheck or commission) or more potential for more money (investment, education, gaining expertise and experience others find valuable, making marketable goods people might want to pay for); and your converting your money into something that improves your time -- food, shelter, security, relationships, stability, health, pleasure, entertainment, expediency and efficiency, perceptions of status, not dealing with unpleasant tasks or difficulties, etc.).
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@horace said in The Bitcoin/Crypto Thread:
The people who find crypto valuable find it so because they trust the scarcity and ownership traceability, which are enforced by the logical validity of the algorithm. And they like the fact that nothing about that scarcity depends on the existence of any given government and its ability to impose violence. But it requires agreement between this group of people who deem it valuable. It's not beautiful or physically impressive like gold or diamonds, so that agreement might be on more shaky ground.
Yes, I see that as a value add. I assume that the idea of crypto is that it cannot be devalued or diluted by inflation or printing more money (as governments seems to do irresponsibly) is part of the attraction?
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@ivorythumper said in The Bitcoin/Crypto Thread:
@horace said in The Bitcoin/Crypto Thread:
The people who find crypto valuable find it so because they trust the scarcity and ownership traceability, which are enforced by the logical validity of the algorithm. And they like the fact that nothing about that scarcity depends on the existence of any given government and its ability to impose violence. But it requires agreement between this group of people who deem it valuable. It's not beautiful or physically impressive like gold or diamonds, so that agreement might be on more shaky ground.
Yes, I see that as a value add. I assume that the idea of crypto is that it cannot be devalued or diluted by inflation or printing more money (as governments seems to do irresponsibly) is part of the attraction?
Yes, people appreciate the disconnect between its scarcity and a government enforcing that scarcity.
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@ivorythumper said in The Bitcoin/Crypto Thread:
What exactly are those machines doing?
Pissing me off, mostly.
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As a sidebar, a guy that was selling us a used Steinway two weeks ago wanted payment in Bitcoin…
Me/rry/Christmas
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@lufins-dad said in The Bitcoin/Crypto Thread:
As a sidebar, a guy that was selling us a used Steinway two weeks ago wanted payment in Bitcoin…
What incentive is there for you to do that? You'd want to track that for your taxes, right? How would that work?
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@ivorythumper said in The Bitcoin/Crypto Thread:
What exactly are those machines doing? Try to match algorithms to produce a crypto coin?
What's the formula or the script they are running?They are “validating blocks”. Blocks are the pages of the distributed ledger. The conceptual idea is called “proof of work”. These computers solve a mathematical puzzle with the property that it’s very simple to verify a solution but awfully hard to come up with it. Basically the person who invests the largest amount of (computational) work can mine the block and gets the “block reward” (which is new money out of thin air) and the transaction fees from all transactions in the block.
The difficulty of the puzzle is adapted all the time to the available computing power, such that it will always take around 10 min to solve the puzzle. That’s why there is a kind of arms race. Mining a single block gives the miner several 100,000 dollar worth of Bitcoin.
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I just want them to stop using video cards.
Apart from the environmental considerations, I've got important work to do with those!
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@ivorythumper said in The Bitcoin/Crypto Thread:
@axtremus said in The Bitcoin/Crypto Thread:
@ivorythumper said in The Bitcoin/Crypto Thread:
How can it not involve fiat money?
In theory, the computation to “mine” for cryptocurrency can also be done mentally or by hand (using, say, a stick and a patch of sand). Depending on the algorithm and some other parameters used to define the cryptocurrency, such computation may take you a very, very long time. But in theory it can be done.
But the product of the computation has to be somehow published and communicated with others to establish value. So I don't see how your creates any sort of a transmittable, exchangeable value even theoretically (and I appreciate that you're not concerned with the practicality here). Does that make sense?
The results of the computation can, for example, be recorded on stone/clay tablets, bamboo scrolls, or papyrus papers, or be recorded as knots on ropes, or made into songs (oral traditions), etc., that can be communicated. (Again, do-able in theory, not necessarily practical.)
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@ivorythumper said in The Bitcoin/Crypto Thread:
I assume that the idea of crypto is that it cannot be devalued or diluted by inflation or printing more money (as governments seems to do irresponsibly) is part of the attraction?
Yes. The money supply is completely predictable and cannot be changed, unless a majority of the users agree on a change (whereby "majority" can mean things like "majority of money" or "majority of computing power" or even simply "majority of nodes"). Sometimes this can lead to so-called "hard forks". For instance, Bitcoin Classic was the result of a Bitcoin hard fork.
That said, for some the real attraction lies in second and third generation blockchains which offer "smart contracts", which opens up a whole new world of financial possibilities that don't exist right now.
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@klaus said in The Bitcoin/Crypto Thread:
That said, for some the real attraction lies in second and third generation blockchains which offer "smart contracts", which opens up a whole new world of financial possibilities that don't exist right now.
I think Bitcoin "digital gold" is the primary use case. A store of value that doesn't depend on any government, is rules based and doesn't require trust in any institution. I find gold to be a bit irrational, and in the same vein bitcoin. But it's a proven model.
The rest of this stuff about smart contracts - I don't know if it works because there are really no digital assets that are interesting?
People think of home deeds being digital in the future - but there's no way to reliably link a physical asset like a home to a digital smart contract without some trusted party in between. Since you need a trusted 3rd party - there's no real use for blockchain (from my view).
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@xenon said in The Bitcoin/Crypto Thread:
Since you need a trusted 3rd party - there's no real use for blockchain
These third parties do already exist for "on chain" versions of US Dollar. Also, at least for information there's the idea of oracles as realized by Chainlink.
Let's take a simple example: Distributed exchanges. Let's say you want to buy AAPL and pay with US dollar. Even though you need some kind of trusted 3rd party for both, you could still make a direct trade with somebody else without an exchange involved and without any risk of the other party not sticking to their part of the deal. And of course you can make the contract arbitrarily complex ("if the weather on May 3rd is such and such and the price of orange juice is smaller than ..., then ...."), while still maintaining the guarantee that the contract will be executed no matter what.
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@klaus said in The Bitcoin/Crypto Thread:
@xenon said in The Bitcoin/Crypto Thread:
Since you need a trusted 3rd party - there's no real use for blockchain
These third parties do already exist for "on chain" versions of US Dollar. Also, at least for information there's the idea of oracles as realized by Chainlink.
Let's take a simple example: Distributed exchanges. Let's say you want to buy AAPL and pay with US dollar. Even though you need some kind of trusted 3rd party for both, you could still make a direct trade with somebody else without an exchange involved and without any risk of the other party not sticking to their part of the deal. And of course you can make the contract arbitrarily complex ("if the weather on May 3rd is such and such and the price of orange juice is smaller than ..., then ...."), while still maintaining the guarantee that the contract will be executed no matter what.
Interesting examples. But they’re still just aggregating digital data (weather reports, security prices, etc.) into a usable format on a blockchain. It has to be mass-verifiable information because the “average” response is used as truth.
Securities exchanges and commodity exchanges already track that sort of data. I’m not sure if trust is really an issue in those realms.
I’m not sure why I would want to trade aapl stock over a decentralized exchange. You’d also still need some sort of physical entity to register their ownership of the securities.
The security itself would have to be issued as a digital token for this to really work.
The harder use cases are verifying a unique and specific physical condition being met.
How do you solve the oracle problem for a home purchase or making sure a plumber fulfilled his end of the bargain?
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@xenon said in The Bitcoin/Crypto Thread:
I’m not sure why I would want to trade aapl stock over a decentralized exchange.
To save transaction costs. Or because a government closed down access to exchanges. Or because the situation in a country might be such that you can't trust an exchange.
When considering the relative advantages of crypto stuff, I think one has to have a global perspective and also consider environments and circumstances very different from that in the West.
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@xenon said in The Bitcoin/Crypto Thread:
How do you solve the oracle problem for a home purchase or making sure a plumber fulfilled his end of the bargain?
Yeah, it's hard. A home purchase might work, if there's a legal framework that supports it. The plumber is more difficult. You could theoretically have decentralized and independent judges provided as an oracle, but it would be difficult to implement this in an efficient way.
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@lufins-dad said in The Bitcoin/Crypto Thread:
et’s see if she is getting new EarPods, a diamond necklace, or a lovely card for Christmas…
So Karla really liked the card she got...
Seriously? The money I put into long-term holds that are supposed to be pretty secure. I had lost about 30% over the two months but am closing quickly towards being in the black again. Volatile is correct...
On the other side, two weeks ago I put in $10 to just have some fun poking around at the day trading end of it. Trying to time the dips and the swings of the currencies (especially the new ones). The idea is to try and gain 10% plus the transaction fee back from every trade. I'm not quite hitting that target because the transaction fees seem to be fairly high for the smaller amounts (Transferring $11.50 from BICO to POLY cost me $.40) I have to assume that there are minimum transaction fees that apply? At any rate, I've got that $10 up to $16.80 over the last two weeks, so that's kind of fun... Just 295 successful transactions to go...
