Crypto Currencies?

[Matty]

I don't think I'll ever understand what the difference is between a government printing more money and a cryptocurrency being incremented in a database as a result of rather meaningless electrical power expenditure.

[Matty]

[RemiD]

I don't think I'll ever understand what the difference is between a government printing more money and a cryptocurrency being incremented in a database as a result of rather meaningless electrical power expenditure.

ok let me try :
until recently (bitcoin was accessible after 2009), if you had some savings, you could either let it in your bank account, or buy some stocks, or buy some gold,, or buy some real estate (if you have a lot of money)

if you let your money in a bank, since the governments / central banks are always creating more magic money (from nothing) and distibute this money arbitrarily (=to their friends and to their electors), if you don't have some of this money distributed to you, you are loosing buying power. (because the money will end up in the real economy, especially in real estate, and provoke a rise in prices / rents).
also if you participate in activities / groups that the governments don't like, they can freeze your bank account and seize your money... and if a bank fails, you loose your money...

stocks have an arbitrary value, the market is highly speculative, and some of the companies are overevaluated. and there is the problem of zombie companies (companies which can function only because the government is helping them with subsidies)

gold has an arbitray value (the price does not reflect the demand of the material for technical reasons but more because of speculation), and there is the problem of being sure of the purity of gold / not counterfeit gold, and the problem of storing it safely, the problem of transporting it safely, (not being stealed by burglars or seized by the governments / douanes), the problem of buying / selling / paying in small amounts.

bitcoin answer all these needs, the number of coins is limited (so its price will rise to compensate the magic money, similar to gold), the ledger (accounts and history of transactions) is decentralised and can't be stopped or blocked by governments, anybody can create an account, anybody can buy / sell coins, anybody can send / receive coins worldwide (with a smartphone + a "wallet" app), anybody can participate in the "mining" (creation) of new coins or in the verification / storing of transactions. the governements can't seize your money to pay the debt created by their insanity with helps / subsidies.

that's my understanding...

[Matty]

All well and good but where is its actual worth?

A number in a database has effectively no physical tangible aspect. 

I want to buy an orange or a banana.  How many digits in my database do you want for it - I used up a lot of electrical power to generate these numbers?  So I'll transfer these bytes of data to your account - that have no tangible equivalent and you'll give me an orange?  Oh, look in the last hour the value has gone up by 10%, so can I also now get some grapes as well?  Sorry sir, the value has just plummeted 50% - I can no longer sell you the orange or the grapes.

Excuse me sir, I'd like to refund this vacuum cleaner, it's stopped working but can we wait five minutes the value will be 20% higher then.

[Derron]

you think in "value" ... in the sense of "a bitcoin is worth x dollars".

But think of "a bitcoin is worth x apples".

Or do you buy your orange and say... "no no, I cannot buy the orange anymore, exchange curse from AUD to EUR just decreased by 5%".

As long as you always substitute "X bitcoins" with "equals to X AUD" you are falling into the old habbit.


Regarding values:
A bank account: where is your money there? Do you have a kilogram of "money" at home? would it be less worth if it was just a pound (not a US pound ... talking about 500g, 0.5 kilograms) ?
There is a old saying: Things are worth what others are willed to pay for.

If people buy your 1 AUD for 10 Euro, then this is their individual exchange rate (maybe they want only 1 AUD - and this NOW, so they pay more than "usual").
If people want your 0.01 bitcoin for 1 dollar and you sell it for this price then this is your exchange rate.

What is the price of information ? Think of bounties for criminals ... who defines this value? What if they offer you 1 million USD .. you help, they arrest - and suddenly the exchange course "USD - AUD" collapses and your 1 million USD is only worth 1 AUD. Happy? your can no longer buy a car with your 1 million USD.


Crypto currencies try to be some kind of "money without government" so it cannot be "shallowed" that easily - yet their markets are so small that some players can easily manipulate the market. But even bigger markets (just think about the "virtual" value of Apple, ABC, Tesla...). Tesla eg has a bigger value according to the dow jones - than other car vendors. They could "easily" buy Volkswagen or other "big players". The value is there because people find other people buying their virtual papers. There is no tangible asset of the value these companies have. Not to talk about how "tangible" IPs are.


You can find a lot of videos and articles about the theory of money - with advantages and disadvantages.


bye
Ron

[Matty]

I suppose it comes down to Marxism,  there are those who own the means of production, and those who are the means of production - and those with power like to keep their group static in composition.

[RemiD]

Crypto currencies try to be some kind of "money without government" so it cannot be "shallowed" that easily

only a few are truly decentralised in the creation of the protocol / coins / management of transactions...

[RemiD]

@Matty>>the issue of volatility is because bitcoin is still in price discovery, compare the buying power of 1usd 50 years ago and now, and you will realise that your example to use a fiat currency to buy things without price fluctuations does not stand.
also the prices appear to be stable because of governments regulations and taxes and helps / subsidies...

also take a look at this :




of course bitcoin "value" is unsure at the moment, and less stable than fiat, but be patient, it is still the begining...

[Matty]

I wonder if we would still be having this conversation if bitcoin was still worth less than 1 usd not thousands of usd?

[Derron]

if a bitcoin equaled 1 usd -- then it would still be a very good reason for people in South America (and maybe Africa) to buy it. Their currencies are falling and falling (or did at least) without a chance to do something against it. Some regimes of course try to make it "difficult" to converse their currencies into USD, EUR ...

Also the "value" of a single unit of something is not what it is created for. you must not think of "1.50 bitcoin" for a bottle of beer. It might also be "0,00000009 BTC" (which equals to 9 so called "Satoshi" - the smallest unit BTC can have - a millionth of a BTC). With a rate of 38000$/BTC a single satoshi equals to around 0.0003847729 $. Means you need 27 Satoshi to be currently valued a single US Dollar cent (0,01$).

Means - you do not have to own 1 BTC or 2 ... you can also have just 0.05 (btw I bought 0.015 BTC last spring ... bought and sold some crypto currency and now it is valued 0.06 BTC --- maybe this "gambling" is what makes you think BTC is just there for this purpose and not real world problems).

The minimum BTC value (1 Satoshi) is something to think about when estimating potential "price ranges" (price development) when BTC could stabilize. There is no sense to have 1 Satoshi (a millionth of a BTC - just to repeat that) to be worth more 1 bottle of beer. What would be the price of a bun then? Would there be something like a "minimum price" with a bottle of beer being the same price than a single sold unit of bubble gum?

People of course thought about solutions already - I am sure.



Other crypto currencies (and the block chain) are of course used to allow for fast international money transfers - without the huge fees and delay of the banking system. Banking systems now need to adopt - and swooosh they offer same day and instant transfers. Their "services" become less and less "value rich" with the option to use alternatives.

And yes, there might be a kind of margin trading: people send something and the other one who receives it can sell it for a different exchange rate. This is either because his exchange offers it - or because of the "delay" between sending and receiving.
But - this is the same all the banking companies do too! They "automatically" trade with fiat currency / conversion rates.

But with fast transactions you could minimize the differences - user 1 sends and some milliseconds later user 2 could convert back into their currency. Of course the "plan" is to not have "convert back" stuff at all. People should stay in this very crypto currency economy -- like a kind of "one world currency".


Yet - to repeat myself again - crypto currency is so small yet, that governments just need to drop some bad news and the "value" of a currency drops. Yes, I know ... ripple (XRP) is a bad example as it is a company driven coin (company holds all coins and sells them to peope ... and burns/destroys them when buying them back in fixed time intervals). But this XRP coin was decided to be _possibly_ some kind of Stock/Share system by the US government. Some bigger and smaller coin exchanges decided to stop ability to trade it (as then the coin exchange needs to have some specific licences to trade shares)... the price of XRP dropped hugely (50%+). More and more people now calmed down - as they all only stopped trading for US people. And US <> world. But it has shown how huge the impact of governments can still be to crypto coins. They just say "you have to do with 'inofficial' cryptos? your company is no longer legal" and bam... whole system crashes.
But the more bigger companies invest in the system (paypal -> BTC) the more lobbyists will try to avoid stuff. People might get used to cryptos ... it just needs some kind of laws to have shallow "boundaries" in which the stuff could evolve. People fighted against so many things in the past - yet the better system had chances to win (womens right to vote, people equality, ...). If BTC and Co have advantages - their advantages will be used.

But stuff like "blockchain" is in use for many many years now - I talked to a developer some months ago. He works for the board of weights and measures and explained me that some scales do blockchain for a long while now already. So if on a fruit market someone weights your strawberries the value is stored - interchained with the previous one. If they now cheat, the previous and current do no longer "interchain" correctly. If they now fake the previous - the one before the previous does no longer fit ... and so on.
Same can be required for invoice systems in supermarkets etc.



bye
Ron

[RemiD]

bitcoin core (btc) is now positionned as "digital gold" (decentralized) so more for speculation / savings

if you are interested in a similar coin but for fast transactions at low cost (for frequent transactions and commerce), take a look at bitcoin cash (bch) which is positionned as "digital cash" (decentralized)

example of wallet use :


shops which accept bch worldwide :
http://map.bitcoin.com

you may better understand the usefulness of decentralized digital gold and decentralized digital cash, when Central Banks Digital Currencies will be forced to replace physical cash (coins and paper, which currently allow people to keep some privacy and freedom in exchange and commerce)...
or when the fiat currencies continue to loose a lot of buying power and the decentralized digital cash keep the buying power... (because governements / central banks continue to create more magic money)

the real question is :
which governements will forbid these alternative moneys, and how far these governments will be ready to go (against their citizens) to forbid their use...