The crypto thread

[warpus]

@warpus It's fine to be enamored with the technology but so far I've yet to see anyone champion any practical applications

Then you have not made a point to read through this thread with a bit more attention to detail and have likely not spent any amount of time doing any research on this subject at all.

 

[Broken_Erika]

Mr Goxx, the cryptocurrency-trading hamster, dies

The cryptocurrency-trading hamster Mr Goxx has died.

https://www.bbc.com/news/technology-59432659

 

[stinkubus]

• I am not denying that deflation can be part of the causal chain when bad things happen, but I see no reason to believe it is at the start of any causal chain. So is deflation bad, or does it co occur with bad things? An analogy would be fever, it commonly occurs when you are sick, and is an indication of you being sick, and it can cause problems, but if it did not happen we would die more easily from bacterial infection. Is fever bad? What about if we changed the "system" such that it caused us to "run hot" and lose weight, with no downside?
• If deflation is caused by people not having enough money to buy stuff, and being afraid that if they spend money on stuff today they may starve tomorrow that is bad, but surely it is the economic conditions that cause it that are bad not the deflation itself.
• If during great depression had been accompanied by a crop failure and a breakdown in the manufacturing supply chain, or by the government buying excess supply, such that prices did not drop with people ability to pay that would have been worse.
• If deflation was caused by an increase in the the production of food and manufactured goods (say replicators for all) then that would be a good thing, right?
• If money was denominated by working hours, rather than gold or nothing, then it would be obvious that deflation is good, right?
• It is frequently postulated that deflation increases the propensity for people to save, and reduces their propensity to buy consumer goods. This is presented as an inherently bad thing, but it seems like it is what we all should be doing more of to conserve the earth's resources.
• I am not arguing that we should adopt an inherently deflationary currency such as gold or bitcoin, but that if we are to move towards a low consumption economy where we spend less time in paid employment and in fossil fuel powered transport then we should expect deflation in any meaningful measure, and this should be seen as a good.

Buying drugs on the internet is the worst kind of criminal activity? Even if it is, it is still a practical application.

On the casual link between deflation and recession or depressed growth.

(PDF) Deflation and recession: Finding the empirical link (researchgate.net)

Inflation and deflation are monetary phenomena. The quantity of money in circulation, in and of itself, is an economic condition. This is so because the quantity of money in circulation directly impacts the availability of credit and the use of leverage increases return on investment. Interest rates can be thought of, quite literally, as the cost of money.

The Great Depression caused many farm failures. This wasn't because people suddenly wanted to stop eating. By policy, such as the Homestead Act, we had created a nation chock full of small plot farmers. Such farmers were universally debtors and deflation will destroy their business model. The cost of debt service does not decrease just because the prices one can fetch for their product are declining. The American Populist Party of the late 1800s arose specifically because of the desire of farmers to undo deflationary policy that favored their creditors.

People's Party (United States) - Wikipedia

An increase in productivity within a single industry can only cause deflation if that industry dominates the national economy. If we are talking about an agrarian society then I would concede that such deflationary pressure can have a positive effect as it would free capital to invest in industrialization. This has no relevance to large, diversified economies in the modern era.

I am not certain what you mean by money being denominated by working hours. This sounds indistinguishable from wages. In the event you are talking about giving workers commodities directly in exchange for their labor then inflation and deflation are not concerns because this is a barter economy, and inflation and deflation can only occur in economies which use money as a medium of exchange.

I agree that lowering consumption would be good for the environment, but this is a task that cannot be undertaken so long as exploitative market relations dominate the global economy unless you want to do so by drastically increasing poverty. Decommodifying necessities like food, clothing, shelter, medicine, transportation, etc. would be a necessary first step. Stringent regulation of our toys would also be necessary.

If you are on board with that then welcome to the revolution, comrade.

 

[uppi]

The innards of an IBM quantum computer show the tangle of cables used to control and read out its qubits. Kind of a pretty computer really. I wonder if that was a design consideration.

I am pretty sure the only design consideration was: We need to cool this to 20 mK.

I am not sure it is stealing, as there is nothing more inherently legal about mining compared to finding a private key, but yes it allows you to create transactions in the same way as the person who created the wallet. It does allow you to crack other forms of encryption that rely on similar maths, but with say PGP you can always increase your key length. With bitcoin you are stuck with the current size unless everyone (or 51% or something) agrees to change.

It is worth noting that messages previously encrypted with lower length keys will be vulnerable. If you want to keep data secure it would be worth using a long key now. 4096 is pretty common these days, and does not take long on any computer made in the last decade.

If you are worried about quantum computers, you should be switching to other algorithms rather than increasing the key length. Once there is a quantum computer able to crack 1024 bit keys, it will take a few years at most until 4096 bit keys can be cracked as well.

I wonder how you would go about changing the encryption for bitcoin addresses. I suppose the software would need to support the old and the new standard and then everybody would need to make a transaction from their old address to a new-style address. All addresses not converted in such a way would be up for grabs by quantum computers. And you would have to do that before it has been demonstrated that the encryption can be cracked.

 

[Samson]

On the casual link between deflation and recession or depressed growth.

(PDF) Deflation and recession: Finding the empirical link (researchgate.net)

Inflation and deflation are monetary phenomena. The quantity of money in circulation, in and of itself, is an economic condition. This is so because the quantity of money in circulation directly impacts the availability of credit and the use of leverage increases return on investment. Interest rates can be thought of, quite literally, as the cost of money.

The Great Depression caused many farm failures. This wasn't because people suddenly wanted to stop eating. By policy, such as the Homestead Act, we had created a nation chock full of small plot farmers. Such farmers were universally debtors and deflation will destroy their business model. The cost of debt service does not decrease just because the prices one can fetch for their product are declining. The American Populist Party of the late 1800s arose specifically because of the desire of farmers to undo deflationary policy that favored their creditors.

People's Party (United States) - Wikipedia

It seems to me the primary problem here is an economic system built around the primary producers being eternally indebted, when they own outright the core asset required, the land. I cannot talk much of agriculture in 1920's USA, but from my experience of late 1900's agriculture in the UK the move towards leasing rather than purchasing of farm machinery and the nationalisation of biological IP that I advocate as a solution to high medical costs seem like a solution to this problem, rather than relying on perpetually increasing prices.

An increase in productivity within a single industry can only cause deflation if that industry dominates the national economy. If we are talking about an agrarian society then I would concede that such deflationary pressure can have a positive effect as it would free capital to invest in industrialization. This has no relevance to large, diversified economies in the modern era.

I am not certain what you mean by money being denominated by working hours. This sounds indistinguishable from wages. In the event you are talking about giving workers commodities directly in exchange for their labor then inflation and deflation are not concerns because this is a barter economy, and inflation and deflation can only occur in economies which use money as a medium of exchange.

I am talking about time-based currency such as the Ithaca HOUR.

I agree that lowering consumption would be good for the environment, but this is a task that cannot be undertaken so long as exploitative market relations dominate the global economy unless you want to do so by drastically increasing poverty. Decommodifying necessities like food, clothing, shelter, medicine, transportation, etc. would be a necessary first step. Stringent regulation of our toys would also be necessary.

If you are on board with that then welcome to the revolution, comrade.

I do think decommodifying necessities should happen, and would be an enormous move towards a sensible economic system. However I do not see that a reduction in the price of goods, particularly necessities, should cause poverty. At the most basic level, if incomes are protected, or at least kept at or above a minimum (eg. by UBI) then people will be able to buy more stuff if prices drop.

I am pretty sure the only design consideration was: We need to cool this to 20 mK.

I am not convinced. There is enough hype around this that the big bods of IBM could well have said we need it to look good in press releases. Even if just determined the choice of colours of the components.

If you are worried about quantum computers, you should be switching to other algorithms rather than increasing the key length. Once there is a quantum computer able to crack 1024 bit keys, it will take a few years at most until 4096 bit keys can be cracked as well.

Any recommendations? The UK state are not willing to recommend anything.

I wonder how you would go about changing the encryption for bitcoin addresses. I suppose the software would need to support the old and the new standard and then everybody would need to make a transaction from their old address to a new-style address. All addresses not converted in such a way would be up for grabs by quantum computers. And you would have to do that before it has been demonstrated that the encryption can be cracked.

It seems there is likely to be quite a bit of inertia to moving bitcoin, so at best it will be a split. Why anyone would give value to a sub optimum solution that is mostly designed to allow transition of an existing asset rather than a wholly new technology built from the ground up to be quantum computing safe I cannot work out.

 

[stinkubus]

Ithaca Hours are not money. Scrip that is accepted by a handful of merchants does NOT a currency make. Bitcoins or whatever else have this same problem. That you would even offer something like that up as an example is a bit of a joke. You might as well advocate for the return of company stores.

In a market system persistent, declining prices will cause poverty because industry must consolidate to combat them. Industrial consolidation inevitably leads to job losses. Cartels and monopolies maximize profits by selling at relatively higher prices (i.e. in a deflationary environment they can mitigate the rate at which prices decline) to a smaller pool of consumers.

UBI on its own cannot solve this problem on its own because the people who need it most will just end up handing it over to landlords. You've got to do the socialism first.

 

[Samson]

Ithaca Hours are not money. Scrip that is accepted by a handful of merchants does NOT a currency make. Bitcoins or whatever else have this same problem. That you would even offer something like that up as an example is a bit of a joke. You might as well advocate for the return of company stores.

When I mentioned time based currency I am just trying to point out that depreciation in hours worked per calorie/QALY worth of medicine/square foot living space/cycle of computing capacity or whatever is an inherently good thing, and has been happening pretty constantly since the agricultural revolution in the 1600's. I may find a better graph, but this is the sort of thing I mean:

In a market system

persistent, declining prices will cause poverty because industry must consolidate to combat them. Industrial consolidation inevitably leads to job losses. Cartels and monopolies maximize profits by selling at relatively higher prices (i.e. in a deflationary environment they can mitigate the rate at which prices decline) to a smaller pool of consumers.

But the current system drives this even in the presence of inflation. Again it comes down to the reason for deflation. If there is deflation because people have no money then that is a bad thing, but the core bad thing is people not having money. If deflation is happening because the cost of production is dropping, then are these pressures any greater than if prices are stable or increasing?

UBI on its own cannot solve this problem on its own because the people who need it most will just end up handing it over to landlords. You've got to do the socialism first.

Deflation of wages and increase in housing costs is a bad thing, but that is not inherent. I think transfer of the means of production to the workers would be a good thing, but I think it is defeatist to say that we cannot build a better world without it. If you take the Bernie Sanders definition of socialism, ie. capitalism with a bit more bread and circuses, then yeah, this is part of that I guess.

 

[uppi]

I am not convinced. There is enough hype around this that the big bods of IBM could well have said we need it to look good in press releases. Even if just determined the choice of colours of the components.

You don't choose colors for this. You choose the material with the best properties for the job (maybe also considering the price) and you get whatever color that material has. Any coating of paint would likely decrease the performance and anybody suggesting a specific color for the photo before the whole thing goes into the fridge is going to be chased out of the room. Also: The color scheme is exactly what I would expect from such a device.

Any recommendations? The UK state are not willing to recommend anything.

Unfortunately not. I don't know enough about these algorithms to recommend anything. There is also the tradeoff between a potential future attack with a quantum computer against potential attacks against new algorithms, because all the technicalities have not been figured out.

It seems there is likely to be quite a bit of inertia to moving bitcoin, so at best it will be a split. Why anyone would give value to a sub optimum solution that is mostly designed to allow transition of an existing asset rather than a wholly new technology built from the ground up to be quantum computing safe I cannot work out.

Because the value is built entirely on hype. Bitcoin already is a technologically inferior platform compared to other cryptocoins, yet it is still the most valuable. There would certainly be efforts to make a quantum-resistant fork of it, just to keep the brand name. At the same time, there certainly would be thousands of attempts at making new blockchains from the ground up, but it would take time until one (or a a few) victor emerges from that brawl.

 

[warpus]

Bitcoin already is a technologically inferior platform compared to other cryptocoins, yet it is still the most valuable.

IMO this is mainly because most of the alternatives have only been around for a fraction of the time and/or have not been embraced nearly as much. Out of all the new coins and blockchain tech out there, a lot of end up crashing, burning, and dying off. So first mover advantage is still huge here, as this market is still so young and only Ethereum is really anywhere near Bitcoin in terms of investor confidence. So when an investor looks at the big picture, they will see a whole bunch of better tech in place, but the projects are tiny and relatively new compared to the big two. So they invest in the safer options by far, first.

That's how I see it anyway. Investors see Bitcoin as something that will survive as long as this technology survives, at least when compared to everything else. If they are investing in this space, they will probably turn to bitcoin first, since they expect it to survive. Maybe in 10 years time some projects will see higher adoption and survive for a decade and prove their worth a bit more to investors. For now though it's still such a young marketplace, first mover advantage is king.

 

[innonimatu]

This should be required reading for everyone speculating in "crypto".
No bailout for any of them when it blows.

 

[Kyriakos]

Saw this on twitter:

There go my dreams of becoming a magnate in Beneath a Steel Sky.

 

[warpus]

From what I read over $1 billion of positions were liquidated due to this drop. This is because a lot of people have longs and shorts set up. When stuff like this happens they get liquidated i.e. all the money they put up is goooone

I swear I'm never getting into longs/shorts. Seems super risky, especially in such a volatile space like this

 

[Narz]

Ripple is worth 21 million rn??

My ex-gf called me and told me she's trying to sell.

I used to have about 2,000 of them.

 

[warpus]

Lol there was some sort of screwup @ one of the popular portfolio tracking websites that reported outrageous prices for some coins, such as shia ibu going up to $0.0001 or whatever

But yeah, some people's portfolio shot up into the millions overnight. Don't worry, it's not true

 

[Samson]

Web 3.0 = social media on the blockchain?

I have only just found out about this concept, and I do not really understand it. Here is an image that someone uses to describe the architecture:

There seem to be a lot of trusted 3rd parties in that setup, more even than the old school client/server model of the internet. I like the idea of the interplanetry file system, and generally like the idea of the decentralised web particularly for social media, but what exactly the blockchain adds to this, other than a replacement for paypal, I do not really get.

Links:

El Reg, my intro to the idea
Etheriums sales page
A negative view that makes some technical points

The best line in the article has nothing to do with that though:

Robert Synnott:

Bitcoin; a system designed to teach libertarians that financial regulation is actually a good thing.​

 

[warpus]

Web 1.0 - Look at this picture of a cat! (read-only)
Web 2.0 - Let's write a comment about a cat (read and write)
Web 3.0 - A decentralized solution for some aspects of the web that uses p2p networks rather than centralized servers

 

[Birdjaguar]

Bitcoin’s Ultra-Elite Dominate Its Wealth

BY PAUL VIGNA, WSJ

It’s good to be the bitcoin 1%. The top bitcoin holders control a greater share of the cryptocurrency than the most affluent American households control in dollars, according to a study by the National Bureau of Economic Research. The study showed that the top 10,000 bitcoin accounts hold 5 million bitcoins, the equivalent of approximately $232 billion. With an estimated 114 million people globally holding the cryptocurrency, according to crypto.com, that means that approximately 0.01% of bitcoin holders control 27% of the 19 million bitcoin in circulation.

By comparison, in the U.S., where wealth inequality is at its most extreme in decades, the top 1% of households hold about one-third of all wealth, according to the Federal Reserve. The study, conducted by finance professors Antoinette Schoar at MIT Sloan School of Management and Igor Makarov at the London School of Economics, for the first time mapped and analyzed every transaction in bitcoin’s more-than 13-year history. The ramifications of that centralization are mainly twofold, the paper argues. First, it makes the entire bitcoin network more susceptible to systemic risk. Second, it means the majority of the gains from the rising price and increased adoption go to a disproportionately small group of investors.

“Despite having been around for 14 years and the hype it has ratcheted up, it’s still the case that it’s a very concentrated ecosystem,” Ms. Schoar said about bitcoin. Bitcoin was unveiled in 2008 as an open-source software project intended to be an electronic form of physical cash without gatekeepers. Anybody could download the software, become a “node” on the network, and “mine” for bitcoin. In practice, though, bitcoin has become highly centralized. Most people who trade do so through exchanges. The costs of mining have become so high that only a small group of enterprise- level firms can afford to do it.

The wealth of bitcoin miners and exchanges has skyrocketed over the past two years as the price of a single bitcoin jumped from $5,000 in March 2020 to as high as $68,990 last month. The number of people holding bitcoin more than doubled and now include a number of well-known investors, hedge-fund manager Paul Tudor Jones, entrepreneurs Elon Musk and Mark Cuban, and celebrities such as actress Maisie Williams. Yet the vast majority of bit-coin transactions, about 90%, are derived from two activities that have no actual economic function, the researchers said. The first activity is simply the way the network processes bitcoin transactions—think of it as the equivalent of making change for a $20 when you buy coffee. The second are transactions sent between wallets by the same user trying to obfuscate their identity, a common tactic for those seeking anonymity. Of the remaining 10% of volume, what the researchers call “real volume,” trading dominates. Transactions between exchanges and trading desks accounted for roughly 75% of total volume, they said. By comparison, scams, gambling sites and other illicit uses, which concern law enforcement and lawmakers, accounted for less than 3%.

This type of analysis is possible, more so than with physical cash, because bitcoin runs on a network that records every transaction in a publicly viewable ledger. While user identities aren’t tied to those transactions, it is still possible to track and analyze those transactions, determine their use and discern whether the accounts represent institutions or individuals.

 

[Samson]

Bitcoin 'inventor' will face forgery claims over his Satoshi Nakamoto proof, rules High Court

A man who claims to be the secret inventor of Bitcoin has failed in a legal bid to throw out a High Court lawsuit saying he's talking tosh – and will be accused of forging proof he is Satoshi Nakamoto.

"Since about 2016 the defendant has publicly claimed to be Satoshi Nakamoto. This claim has been brought in order to test those assertions," said His Honour Judge Paul Matthews, handing down his decision in late December.

COPA is an association started by Jack Dorsey's Square payment services firm (Square is now incomprehensibly known as Block). Among its members are Coinbase and about a dozen other cryptocurrency companies, according to COPA's website. Its mission consists of asking owners of blockchain patents never to enforce their IP. Founded in 2020, it filed suit against Wright in early 2021.

Part of COPA's case against Wright is something called the Sartre message, a 2016 incident where Wright told journalists he had the private key for Bitcoins "mined in Block 9 of the Bitcoin blockchain." He proved that by showing them a message he said was created with the same key. Judge Matthews summarised it by saying Wright had shown the press the message, "a hash of the message, and a signature of the hash in the form of the text of a speech by Jean-Paul Sartre."

The High Court trial will also rule whether a 2008 email Wright allegedly sent business partner Dave Kleiman is a genuine message or a forgery. COPA says the information-defense[.]com domain used in a copy of the email filed as evidence wasn't created until 2009. Wright says the message was migrated from one Exchange server to another, losing its original domain in the process.
​

 

[warpus]

Satoshi Nakamoto would never come out and say "I am Satoshi Nakamoto", so anybody doing that proooobably isn't him. I mean, I could be wrong, but it seems like the guy was anonymous for a reason and it makes no sense for him to suddenly show up trying to claim all the fame or whatever. From what I've read some people suspect that he's not even a person but rather a consortium or group of people, or something like that. So I'd be super suspicious of anybody claiming that they are him. It's 99.9999999% likely that it's just somebody looking to profit off this

I mean, if it's really him, why expose yourself now? Whoever is behind the real SN most likely has a bunch of bitcoin in a bunch of wallets and is living the good life somewhere and doesn't care about being any more rich.

 

[EnglishEdward]

Satoshi Nakamoto would never come out and say "I am Satoshi Nakamoto"

Sensible fellow. I am sure that he doesn't want to be hung from a lamp post or stoned to death
by the mobile phones of bankrupt investors when the whole system goes, dutch tulips style, belly up.