The Bitcoin/Crypto Thread
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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?
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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?
Well, you have to give the person who owns Bitcoin something. It's a medium of exchange. The most common and convenient item of value would be to use fiat currency, but it could just as well be a bread or a sexual service (Aqua's sister does accept Bitcoin these days).
The computers and energy have to be paid, of course. This usually involves fiat money. But if you'd be a citizen of El Salvador, you could pay those with Bitcoin, too.
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@horace said in The Bitcoin/Crypto Thread:
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.
I agree with all that. Money is a medium of exchange for time, which is really all we have and all we ultimately value. I think on a deep, and deeply human level, all wealth and all exchange is reducible to time. This is a necessary condition of human existence as living in time, space, and relationship. IOW, all other exchanges of value (goods and services) can be understood principally as related to time : quality of time, duration of time, efficiencies of time -- and all wealth is accrued on a time related basis.
Fiat currencies provide stability and justice in these transactions, which is why the government is properly entrusted with force in order to secure the common good necessary for human flourishing. A government that cannot or will not secure the common good is not a legitimate government.
I'm still working out how this applies to the question of crypto currency.
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@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?
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@mark 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?Do different cryptos have different scripts?
Why can't they be reverse engineered if everyone knows the end product?
I'm stupid about coding, so please use small words.
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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.
