Blockchain, Bitcoin, and other cryptocurrencies

[kmoney]

I've casually followed Bitcoin but recently I've tried to learn more about it. The current issue of Scientific American has a piece on it with some good information and decided to start a thread.

I have no desire to invest in Bitcoin at the moment because it's so unstable but it sounds like blockchain tech could have a major impact on the future of currency. One article I read said that MIT is working on a blockchain-based currency called Tradecoin. One key difference between it and Bitcoin is that it will be tied to real-world things which makes its value more stable. They envision it could be used by alliances of small countries, businesses, farmers, etc. I wonder if nations will begin converting their currency into crytpo-versions. Tunisia did it but they may be the only one so far. Governments are using blockchain tech for other purposes. Other governments are fighting against it, like China. They banned cryptocurrencies a few years ago and shut down all exchanges. It says the US is moving to regulate exchanges and initial offerings like they would a stock but I don't remembering hearing about that in the news.

A couple benefits are transparency and analysis. One author made the argument that a blockchain system would have allowed us to see early warnings signs much easier preceding the mortgage crisis a decade ago.

One concern is how opening identity is tied to the transactions. Right now cash is a way to still get some anonymity but an easy connection between your identity and your transactions could make you vulnerable.

Another thing I had never heard is that Bitcoin has a fixed supply. 21 million coins. I'd like to know more about that. How did it come to be fixed at that amount? Will it ever change?


So, what are your thoughts on this stuff? Do you own any Bitcoin? Are you considering investing? :greedy:

Is this the future of money?

 

[kmoney]

There are also some technological concerns. Obviously hacking, though Bitcoin has not been a victim to that yet.
Another concern is growing size. The way blockchain works requires each transaction to carry with it a copy of all that preceded it. Bitcoin is currently 130gbs. The idea behind blockchain is a distributed network but if the size becomes unmanageable then only supercomputers would be able to handle it. Some blockchains are doing a different method of validation that requires less computing power.

 

[rexlunae]

I've made a fair amount of money in crypto-currencies in the past year, and I think I can explain it pretty simply by the use of a simple game. So, here is the bucket game.

You and some friends stand around a bucket filled with tokens. You use cash to bid for the tokens, highest bid wins, and when you buy tokens, the money goes in the bucket. At any given moment, the tokens are all worth nominally the same amount. Each time someone buys a token, it creates a scarcity, which causes the price to rise, and each time someone sells a token, it causes a surplus, so the price falls, but the value being traded is limited to the cash in the bucket. You can buy, sell, and trade your tokens at any time, but no one really wants to trade for anything but money. The game has no object but to come out ahead, whether that means walking away with the most money, or just storing value that you can tap into later.

Bitcoin is the online version of that game. Oh, and it also requires you to run a few dozen nuclear power plant equivalents just to keep the system online, but that's purely a side effect. Otherwise, it's just a zero-sum speculative game driven by hysteria, hype, and bad economics.

It's fine to say that you're going to tie the value of a currency to a commodity, like a new gold standard, but then you've really just invented a ledger to trade that commodity. And if you haven't actually worked out how you're going to settle balances, a fraudulent ledger.

All the libertarian ideology about transparency, that's a lot of hot air. There's some transparency in the fact that all the ledgers are globally published. But you typically don't know who is on the other end of any transaction.

As far as the technical question goes, Bitcoins are handed out to miners at a fixed rate. Miners run algorithms that are difficult, but ultimately useless beyond the needs of clearing transactions on the network, and in exchange get a share of the reward proportional to their contribution. But, the rewards are small compared to the energy consumed, and they are diminishing in size, so the cheapest way to get Bitcoins is to buy them. And the number given out is fixed per unit of time, so the more people are mining, the less the reward in terms of the number of bitcoins. Thus, the total supply follows a predefined logarithmic graph, as dictated by libertarian economic ideology (read "error"). You could change this only by changing the algorithm for giving out new Bitcoins, which would cause what is called a "hard fork".

This is definitely not the future of money, at least in its current form. For one thing, the fixed algorithm for creating new coins increases the difficulty. Within two years, at current rates of growth, just the mining, which is needed to maintain the network and clear transactions, would demand as much electricity as humanity currently uses. And really, the high price is not a sign of its success. People are paying good money for a thing that is, at best, zero sum, but really it's negative sum, because they hope to be able to sell it later for more. They are doing this because of the bubble behavior of the network, which is designed in. But it's actually a disincentive to produce anything. Because it gains in value from holding it, and costs value by selling or using it, it comes with a strong disincentive to spend, which means that using Bitcoin could drag the economy down. Why work if you can just sit at home and watch the value of your balance sheet grow? Even if we did figure out how to power the network through the next few years, it's actually a speculative bubble so large that it could potentially crash the world economy worse than any in history.

Money is not wealth. It's a medium of transfer of wealth, where the wealth comes from the economic activity that the transfer creates. Bitcoin isn't money. It's almost the opposite of money. It's a way to grow your balance sheet without producing anything of value. People are excited about it because they see the outlandish prices that people are paying for it, and some people have become very wealthy by trading it, and even better, it's something that anyone can do, but there's nothing but the greed and selfishness (guilty) of human nature that makes it worth anything at all. No person has ever been fed, clothed, or comforted by it without someone else having given up even more for that to happen, and it never will, and if we all adopt it, we'll all die of starvation in the dark when the power goes out.

 

[rexlunae]

There are also some technological concerns. Obviously hacking, though Bitcoin has not been a victim to that yet.

Oh yes it has. Lots. No one has fundamentally broken it yet, but there have been a lot of cases where Bitcoin has been stolen due to hack, which leaves absolutely no recourse when it does happen.

 

[kmoney]

Oh yes it has. Lots. No one has fundamentally broken it yet, but there have been a lot of cases where Bitcoin has been stolen due to hack, which leaves absolutely no recourse when it does happen.

My understanding is that the exchanges were, not the actual blockchain. Maybe I missed something though.

 

[kmoney]

I've made a fair amount of money in crypto-currencies in the past year, and I think I can explain it pretty simply by the use of a simple game. So, here is the bucket game.

You and some friends stand around a bucket filled with tokens. You use cash to bid for the tokens, highest bid wins, and when you buy tokens, the money goes in the bucket. At any given moment, the tokens are all worth nominally the same amount. Each time someone buys a token, it creates a scarcity, which causes the price to rise, and each time someone sells a token, it causes a surplus, so the price falls, but the value being traded is limited to the cash in the bucket. You can buy, sell, and trade your tokens at any time, but no one really wants to trade for anything but money. The game has no object but to come out ahead, whether that means walking away with the most money, or just storing value that you can tap into later.

Bitcoin is the online version of that game. Oh, and it also requires you to run a few dozen nuclear power plant equivalents just to keep the system online, but that's purely a side effect. Otherwise, it's just a zero-sum speculative game driven by hysteria, hype, and bad economics.

It's fine to say that you're going to tie the value of a currency to a commodity, like a new gold standard, but then you've really just invented a ledger to trade that commodity. And if you haven't actually worked out how you're going to settle balances, a fraudulent ledger.

All the libertarian ideology about transparency, that's a lot of hot air. There's some transparency in the fact that all the ledgers are globally published. But you typically don't know who is on the other end of any transaction.

As far as the technical question goes, Bitcoins are handed out to miners at a fixed rate. Miners run algorithms that are difficult, but ultimately useless beyond the needs of clearing transactions on the network, and in exchange get a share of the reward proportional to their contribution. But, the rewards are small compared to the energy consumed, and they are diminishing in size, so the cheapest way to get Bitcoins is to buy them. And the number given out is fixed per unit of time, so the more people are mining, the less the reward in terms of the number of bitcoins. Thus, the total supply follows a predefined logarithmic graph, as dictated by libertarian economic ideology (read "error"). You could change this only by changing the algorithm for giving out new Bitcoins, which would cause what is called a "hard fork".

This is definitely not the future of money, at least in its current form. For one thing, the fixed algorithm for creating new coins increases the difficulty. Within two years, at current rates of growth, just the mining, which is needed to maintain the network and clear transactions, would demand as much electricity as humanity currently uses. And really, the high price is not a sign of its success. People are paying good money for a thing that is, at best, zero sum, but really it's negative sum, because they hope to be able to sell it later for more. They are doing this because of the bubble behavior of the network, which is designed in. But it's actually a disincentive to produce anything. Because it gains in value from holding it, and costs value by selling or using it, it comes with a strong disincentive to spend, which means that using Bitcoin could drag the economy down. Why work if you can just sit at home and watch the value of your balance sheet grow? Even if we did figure out how to power the network through the next few years, it's actually a speculative bubble so large that it could potentially crash the world economy worse than any in history.

Money is not wealth. It's a medium of transfer of wealth, where the wealth comes from the economic activity that the transfer creates. Bitcoin isn't money. It's almost the opposite of money. It's a way to grow your balance sheet without producing anything of value. People are excited about it because they see the outlandish prices that people are paying for it, and some people have become very wealthy by trading it, and even better, it's something that anyone can do, but there's nothing but the greed and selfishness (guilty) of human nature that makes it worth anything at all. No person has ever been fed, clothed, or comforted by it without someone else having given up even more for that to happen, and it never will, and if we all adopt it, we'll all die of starvation in the dark when the power goes out.

Thanks for the thoughts and info. I agree that Bitcoin, or probably any current currency, would not be the future. Perhaps a modified version.

I'm assuming the part in bold is in response to what I said about MIT/Tradecoin. I probably am not explaining it well. I don't think they meant it to be nothing more as a way to trade a given commodity or would create something that is ultimately fraudulent. :idunno: I tried a quick internet search and could not find anything. There is this http://blockchain.mit.edu but it's not mentioning Tradecoin.

Regarding transparency, I think the idea is less about who is doing it and more about what's happening, whether or not even that makes sense.

 

[kmoney]

Blockchain is being used in the field of journalism as well.

https://joincivil.com https://blog.joincivil.com What if the news were run by the people? The Fourth Estate as we know it is vanishing. Advertising dollars, fake news and powerful agendas are manipulating what we see and what we think we know. Our freedom, justice and even democracy are at risk. We've never been more divided. At Civil, we believe the certainty and transparency of blockchain technology can offer a radical new way forward. With open governance and cryptoeconomics, we can create a sustainable place for local, policy and investigative journalism while achieving a high standard for accuracy and trustworthiness. Let's begin.

 

[rexlunae]

Blockchain is being used in the field of journalism as well.

https://joincivil.com https://blog.joincivil.com What if the news were run by the people? The Fourth Estate as we know it is vanishing. Advertising dollars, fake news and powerful agendas are manipulating what we see and what we think we know. Our freedom, justice and even democracy are at risk. We've never been more divided. At Civil, we believe the certainty and transparency of blockchain technology can offer a radical new way forward. With open governance and cryptoeconomics, we can create a sustainable place for local, policy and investigative journalism while achieving a high standard for accuracy and trustworthiness. Let's begin.

Sounds like mostly hype and silliness driven by the hysteria of a fad. More or less saying "I see a problem, lets solve it with algorithms!" I doubt it's going to prove to be a solution, although, I am certainly curious to see if anyone can come up with an actual application for the tech. Check this one out:

https://www.thestar.com/news/gta/20...ong-blockchain-amid-cryptocurrency-craze.html

Meanwhile, I'm keeping my Washington Post subscription current. We'll see if a blockchain ever breaks a major story.

 

[rexlunae]

Thanks for the thoughts and info. I agree that Bitcoin, or probably any current currency, would not be the future. Perhaps a modified version.

The problem they're going to have is that the bad economics leading to the meteoric are an integral part of the meteoric rise in price. What they need is a system that facilitates exchange, which could stimulate economic growth. And for that, it would need to be inflationary. But it's hard to build in a reasonable amount of inflation into an algorithm. One solution could be some sort of governance model that still has a central bank that can issue currency by fiat, but perhaps democratize it. Call it a confiant currency. But I'm not sure the value proposition is enough for people to join up if they don't still get money for nothing, since it's already pretty easy to buy stuff with money.

I'm assuming the part in bold is in response to what I said about MIT/Tradecoin.

Yup.

I probably am not explaining it well. I don't think they meant it to be nothing more as a way to trade a given commodity or would create something that is ultimately fraudulent. :idunno: I tried a quick internet search and could not find anything. There is this http://blockchain.mit.edu but it's not mentioning Tradecoin.

That's kinda my extrapolation from what they might have been thinking.

Regarding transparency, I think the idea is less about who is doing it and more about what's happening, whether or not even that makes sense.

Sure. By looking here (https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html) I can see that there's a single wallet with just over 1% of all Bitcoin (!!!), or about $2.4 billion. I've got no idea who it is, though. And you can see all their transactions, mostly some large lots of thousands of bitcoins at a time (each one representing a multi-million-dollar transaction of some sort), but I have no idea what they are for.
And literally no one who isn't involved in the transactions, or who doesn't have access to more information
outside the network can tell either. In the US, if you place a transaction of $10,000, that gets reported to the government, and they can track where large amounts of money are going that way.

 

[kmoney]

Sounds like mostly hype and silliness driven by the hysteria of a fad. More or less saying "I see a problem, lets solve it with algorithms!" I doubt it's going to prove to be a solution, although, I am certainly curious to see if anyone can come up with an actual application for the tech. Check this one out:

https://www.thestar.com/news/gta/20...ong-blockchain-amid-cryptocurrency-craze.html

Meanwhile, I'm keeping my Washington Post subscription current. We'll see if a blockchain ever breaks a major story.

I agree it seems a bit fadish. I won't give up on traditional news yet either. I saw the Long Island Tea thing too. :chuckle:

Here are some uses the SciAm article mentioned:
DE and IL are using it for birth certificates.
Vermont allows it to be used for verifying legal docs.
One called Blockcert can be used to track academic credentials.
One called Everledger is used to track the provenance of valuable objects like stones, wine. art.
Imogen Heap is using one for data associated with creative arts.

We'll see what types of uses stick.

 

[rexlunae]

You might like this:

It's funny, and technically accurate.

 

[WatchmanOnTheWall]

You might like this:

It's funny, and technically accurate.

I loved that I finally understand bigcon, oops I mean bitcoin.

 

[MarcATL]

I've made a fair amount of money in crypto-currencies in the past year, and I think I can explain it pretty simply by the use of a simple game. So, here is the bucket game.

You and some friends stand around a bucket filled with tokens. You use cash to bid for the tokens, highest bid wins, and when you buy tokens, the money goes in the bucket. At any given moment, the tokens are all worth nominally the same amount. Each time someone buys a token, it creates a scarcity, which causes the price to rise, and each time someone sells a token, it causes a surplus, so the price falls, but the value being traded is limited to the cash in the bucket. You can buy, sell, and trade your tokens at any time, but no one really wants to trade for anything but money. The game has no object but to come out ahead, whether that means walking away with the most money, or just storing value that you can tap into later.

Bitcoin is the online version of that game. Oh, and it also requires you to run a few dozen nuclear power plant equivalents just to keep the system online, but that's purely a side effect. Otherwise, it's just a zero-sum speculative game driven by hysteria, hype, and bad economics.

It's fine to say that you're going to tie the value of a currency to a commodity, like a new gold standard, but then you've really just invented a ledger to trade that commodity. And if you haven't actually worked out how you're going to settle balances, a fraudulent ledger.

All the libertarian ideology about transparency, that's a lot of hot air. There's some transparency in the fact that all the ledgers are globally published. But you typically don't know who is on the other end of any transaction.

As far as the technical question goes, Bitcoins are handed out to miners at a fixed rate. Miners run algorithms that are difficult, but ultimately useless beyond the needs of clearing transactions on the network, and in exchange get a share of the reward proportional to their contribution. But, the rewards are small compared to the energy consumed, and they are diminishing in size, so the cheapest way to get Bitcoins is to buy them. And the number given out is fixed per unit of time, so the more people are mining, the less the reward in terms of the number of bitcoins. Thus, the total supply follows a predefined logarithmic graph, as dictated by libertarian economic ideology (read "error"). You could change this only by changing the algorithm for giving out new Bitcoins, which would cause what is called a "hard fork".

This is definitely not the future of money, at least in its current form. For one thing, the fixed algorithm for creating new coins increases the difficulty. Within two years, at current rates of growth, just the mining, which is needed to maintain the network and clear transactions, would demand as much electricity as humanity currently uses. And really, the high price is not a sign of its success. People are paying good money for a thing that is, at best, zero sum, but really it's negative sum, because they hope to be able to sell it later for more. They are doing this because of the bubble behavior of the network, which is designed in. But it's actually a disincentive to produce anything. Because it gains in value from holding it, and costs value by selling or using it, it comes with a strong disincentive to spend, which means that using Bitcoin could drag the economy down. Why work if you can just sit at home and watch the value of your balance sheet grow? Even if we did figure out how to power the network through the next few years, it's actually a speculative bubble so large that it could potentially crash the world economy worse than any in history.

Money is not wealth. It's a medium of transfer of wealth, where the wealth comes from the economic activity that the transfer creates. Bitcoin isn't money. It's almost the opposite of money. It's a way to grow your balance sheet without producing anything of value. People are excited about it because they see the outlandish prices that people are paying for it, and some people have become very wealthy by trading it, and even better, it's something that anyone can do, but there's nothing but the greed and selfishness (guilty) of human nature that makes it worth anything at all. No person has ever been fed, clothed, or comforted by it without someone else having given up even more for that to happen, and it never will, and if we all adopt it, we'll all die of starvation in the dark when the power goes out.

Thank you for that. Makes me glad I didn't even bother to look into it.

Sent from my SM-T587P using Tapatalk

 

[kmoney]

You might like this:

It's funny, and technically accurate.

Thanks. :chuckle:

 

[Krsto]

I just signed up with Steemit, but probably won't invest any of my own money. I'm just going to post content, mainly because it's easier for me to come up with words than with cash. Steemit might have a chance of surviving the bubble burst because it is tied to something somewhat tangible.

 

[Krsto]

I've made a fair amount of money in crypto-currencies in the past year,

Can you define, "fair amount of money"?

 

[vbear]

There are some videos aboutBitcoin on Netflix

My girlfriend works for Homeland security and recently attended a block chain seminar and how it can be used in Government. Block chain technology is where the magic is. Block chain will change a lot of things, from the cloud to medical records.

I own many Crypto Currencies (CC). CC is volatile NOT unstable, just like any other currency in the foreign exchange market (FOREX) . You can invest as little as 30 USD in the FOREX on the PESO or EURO and it can go up to 120% value and the next minute you're money is gone. I have not lost any money in CC investments. I have in the FOREX.

It's a movement. Its a way to "stick it to the man." For me it's an investment opp.

 

[rexlunae]

My girlfriend works for Homeland security and recently attended a block chain seminar and how it can be used in Government. Block chain technology is where the magic is. Block chain will change a lot of things, from the cloud to medical records.

I'm not convinced blockchain is going to change anything either. We will see. So far, no one has actually identified an application for it.

I own many Crypto Currencies (CC). CC is volatile NOT unstable, just like any other currency in the foreign exchange market (FOREX) . You can invest as little as 30 USD in the FOREX on the PESO or EURO and it can go up to 120% value and the next minute you're money is gone. I have not lost any money in CC investments. I have in the FOREX.

I've had good luck with it so far. But it's pure insanity.

It's a movement. Its a way to "stick it to the man." For me it's an investment opp.

It is a way to stick it to the man, but as investments go, it's pretty unproductive. It's fun to stick it to the man, until you realize that it also sticks it to the entire economy.

 

[vbear]

Time will tell...

 

[morganaterms]

Bitcoin rate forecast 2022 will continue to get cheaper. According to the cryptocurrency exchange, Forex on bitcoin is worth $20.98 thousand.