The Bitcoin/Crypto Thread
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@xenon said in The Bitcoin/Crypto Thread:
@89th Proof of stake allows the network to run more efficiently, but concentrates validation power in the hands of fewer, large entities.
Basically the trade-off is more centralization of power for efficiency.
It's the reason Bitcoin will never be a transaction network in its current form. Proof of work requires too much computation and doesn't scale well.
I think that's not quite accurate.
Proof of stake doesn't make the network more efficient. It makes block validators consume (way) less energy. But it doesn't change, for instance, how many transactions can be processed per second. PoS also doesn't necessarily put validation power in the hands of fewer entities. It puts more power into the hands of those who are willing to stake more money.
Scalability doesn't have a lot to do with PoW vs PoS.
The technologies that can make blockchains scale are "layer 2" approaches such as, for Bitcoin, the "Lightning network". Their idea is to have transactions that are "peer to peer" and immediate and do not cost (relevant) fees and are not stored on the blockchain. All you need on the blockchain is a so-called "funding transaction" (you can think of this as going to an ATM to get some cash), which you can then spend on the layer 2 network using a gazillion transactions that are never stored on the blockchain.
There's a lot of misinformation about this being spread, such as this article, which, however, seems to suffer from the common "the author doesn't understand what he's writing about" problem.
You can increase the number of transactions per second stored "on chain" by smaller block times or bigger block sizes. But you could do either with both PoW or PoS. The main argument against bigger blocks or smaller block times is that the storage requirements for nodes quickly become such that "normal people" could no longer install nodes and nodes would be confined to big data centers.
There are many other scalability ideas, such as "sharding", which basically means that you split the blockchain into parts and nodes only store a subset of the full chain. PoS provides an indirect benefit here because the "51%" attack would be easier to carry out in a PoW sharding architecture.
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@lufins-dad said in The Bitcoin/Crypto Thread:
Just reached my first $1.00… 1% in 6 hours….
Three weeks later and I’m finally in the black again. Not much, but a little. Solana took a nosedive price-wise when I first invested, and tanked even more the second week, but I stuck with my pick and my 3rd and 4th buys were at much lower prices. Now that it’s come back up, I am about 3% up. I’ll be curious to see where I am next week…
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@klaus Helpful. I admit my understand of the technical details of crypto is not super deep - but I do try to grasp the basic factors at play. I should have been more clear when I mentioned "efficiency" - I was talking about computational (and therefore energy) efficiency.
Here's a very biased link - but it has some good examples of the changing narrative on layer 2 technologies.
It seems no one really knows for sure if L2 tech like lightning will work - and the only working solutions right now are custodial centralized nodes, which defeat the purpose of trustless/DeFi systems.
https://github.com/davidshares/Lightning-Network
This thread is (again) biased but enertaining:
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I think it was a liquidity issue. Bitcoin is fascinating (much moreso than the other coins, imo).
I think there is a real chance it replaces the role of gold in the economy. I've always been a gold-skeptic (just don't see the point long-term, I get the historical use) - so I've been disposed to being anti-Bitcoin.
Gold still has a $10T market cap though - so it doesn't matter what I think.
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Heard someone call crypto “Mary Kay for young men”.
It’s always something.
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@jon-nyc said in The Bitcoin/Crypto Thread:
Heard someone call crypto “Mary Kay for young men”.
I don't see the similarity. There's no "pyramid scheme" in crypto.
Crypto has value if we decide that it has value. We will decide that it has value if it's useful, or at least more useful than alternatives. The final jury is still out on that.
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Education is extremely important.
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@horace said in The Bitcoin/Crypto Thread:
They're having a sale on bitcoin. Marked down from 67k to 47k. The perfect stocking stuffer for the TNCR posters in your life!
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So, it seems to me that bitcoin, and all alt coins only have value based on folks buying them with hard currency. So the crypto companies are just selling their exchange tokens for cash -- fiat currencies. The only reason they have value is that people trade cash for them, and the only way you extract value from them is to pay for goods and services which you can simply do with cash, or you sell them for cash. And the prices bounce around volatilely as people move hard money in and out of the crypto markets.
In short, the people with massive amounts of money have put out a product that they are selling for cash to get people to give them more cash under by advertising that cryptos are better than cash and the future for transactions. But the total market capitalization of any crypto is only achievable if people buy it to that amount with cash.
Is this accurate?
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@ivorythumper said in The Bitcoin/Crypto Thread:
Is this accurate?
Yes, basically it's digital gold. Worthless as a paperweight, but valuable to sell.
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@ivorythumper said in The Bitcoin/Crypto Thread:
So the crypto companies are just selling their exchange tokens for cash -- fiat currencies.
That's not quite accurate. For Bitcoin, for instance, there is no "company". It is the nature of a decentralized system that there is no "center" (duh). It is not the case that a company creates a bunch of coins and then sells them. The initial coin distribution is rather controlled by things like mining. That is, initially nobody has any money. As time goes by, more and more crypto money is created and it the money goes to those who contribute to the system (in the Bitcoin case, the miners).
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@klaus said in The Bitcoin/Crypto Thread:
@ivorythumper said in The Bitcoin/Crypto Thread:
So the crypto companies are just selling their exchange tokens for cash -- fiat currencies.
That's not quite accurate. For Bitcoin, for instance, there is no "company". It is the nature of a decentralized system that there is no "center" (duh). It is not the case that a company creates a bunch of coins and then sells them. The initial coin distribution is rather controlled by things like mining. That is, initially nobody has any money. As time goes by, more and more crypto money is created and it the money goes to those who contribute to the system (in the Bitcoin case, the miners).
Well, then any mining operation is basically the business that sells them for fiat currencies, correct? It's still an exchange in hard currency on some level that is considered "value", no? Even if I buy one crypto with another, the only wealth is based on its foundation in dollars or euros or such... right?
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@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.
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@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?
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at some point the conversation becomes fundamentals of economics involving humans exchanging things they find to be of value. Fiat currency is a good placeholder for that basic idea. Ultimately fiat currency is backed by the threat of violence employed by governments, who have a monopoly on legal violence.
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@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.
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@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?
