What are your thoughts on BitCoin?

[Moriarte]

How about cryptos which already develop quantum resistance? Will they all fail?

 

[Borachio]

Golly.

I've a rule: I don't usually put my money in something I don't understand.

Bitcoin, altcoin, blockchains, mining, digital wallets, quantum resistance. Nope. Don't understand them.

 

[innonimatu]

I am not as certain. Just yesterday I hopped few thousands worth of zcash through 4 wallets located in different parts of our world. Took roughly a minute for each transaction to complete and cost less than $0.01 total to do so. Total. What does conventional banking has on offer to counter that?

An estabelished system with well known rules and methods to adress disputes.

Who actually controls those wallets? You have them parked online on some "exchange", do you now? How does the corporation (or individual) who provides you that service make money from it? What recourse will you have the day it goes bust or seizes your "coins"?
If is funny how, in a world where information stored on shared hardware has just been shown to be hopelessly insecure, people keep trusting this new "cryptocurrency establishment".

That's what the financial establishment wants. They want the crypto currencies to just go back to being this little thing that people use to buy illegal goods. Allowing it to be anything more than that is a threat to their business model, which is why they are starting to come out aggressively against it now.

The reason why the financial establishment, for which I have no sympathy whatsoever, can shut down these cryptofrauds whenever it wishes is that they depend entirely on the infrastructure of the financial establishment. None of the properties of "cryptocurrencies" is actually suitable for a currency, there is no practical way to trade in them, they are traded on top of the financial infrastructure.

 

[Lexicus]

The reason why the financial establishment, for which I have no sympathy whatsoever,

Remember, the problem with it isn't that it exists, the problem is that it's run for the private profit of a relative handful of individuals.

 

[Moriarte]

An estabelished system with well known rules and methods to adress disputes.

Who actually controls those wallets? You have them parked online on some "exchange", do you now? How does the corporation (or individual) who provides you that service make money from it? What recourse will you have the day it goes bust or seizes your "coins"?
If is funny how, in a world where information stored on shared hardware has just been shown to be hopelessly insecure, people keep trusting this new "cryptocurrency establishment".

That's a lot of questions, most - in the wrong direction.

The person who uses the wallet normally controlls it. Or he may delegate some of that control.

I keep some of my stuff locked on my PC only. I could use exchange wallets, yes. Sometimes I do. Or various other wallet-specific online services. I can also use printed paper wallet - very secure option, properly encrypted and probably hidden someplace. I can store it on web wallet, in mobile phone, tattoed under the shoulder. I can use ledger nano hardware wallet. Plenty of considerations - plenty of options.

As per your next question - what exactly goes bust? My shoulder? My paper wallet? Cryptocurrency network? World economy? My mobile phone? My PC?

The answer will vary in each case.

 

[innonimatu]

You can put a wallet on a rocket and send it to space. You can bury it within a lead safe. Very secure. Entirely useless also.

The idea that a more complex system can somehow devolve more control to individuals is absolutely wrong. It cannot, never will. It creates dependencies on intermediaries who will be necessary for the system to actually be usable.

 

[Moriarte]

Personally I would call the system intuitive. But suit yourself

 

[uppi]

How about cryptos which already develop quantum resistance? Will they all fail?

The cyphers that aren't easily broken with a quantum computer require the key size a thousand times larger than currently, which would also increase transaction size by roughly the same factor. The coin networks are struggling to get transactions processed, even now. A thousandfold increase would make even the minor activity that is happening now pretty much impossible.

The decentralization has always the disadvantage that everything has to be duplicated very often and will always be more inefficient than a centralized system. If transactions have to be more complex, because of advances in computing power, the centralized system will have even more of an advantage.

 

[yung.carl.jung]

Who actually controls those wallets? You have them parked online on some "exchange", do you now?

No one "controls" wallets, that is the entire point of this system. Why even come into a thread like this when you're not familiar with the most basic concepts? The idea behind a wallet is that you can store your currency decentralized, you and only you are responsible for its security. Even the site admins do not have any access to your wallet, nor can they store any data on it. If you lose your (physically stored on a paper, hopefully) keys than they cannot restore it. You cannot change "passwords", you cannot "retrieve" passwords.

There are no "passwords" in the traditional sense. There are no backups of your personal data in their database. Your date could be stored in 15 different countries by 50 different people who also have no control over the data they are "hosting". If you want to get even more safe, you can have a hardware wallet. Quite literally like storing money under your bed, you can put it on a USB stick and store it under your pillow. Even hacker attacks can do nothing then.

Exchanges are an entirely different story, they are more akin to online banking than anything

It creates dependencies on intermediaries who will be necessary for the system to actually be usable.

it does exactly the opposite, why are you so eager on showcasing your ignorance?
.

 

[Narz]

"Give me a working, safe & stable currency and I might consider going in". Fair enough, you're not alone in thinking that way. I, on the other hand, am willing to take risks of early adopter with money I can afford to lose.

People who wait for safety and stability don't deserve to prosper.

 

[Narz]

Golly.

I've a rule: I don't usually put my money in something I don't understand.

Bitcoin, altcoin, blockchains, mining, digital wallets, quantum resistance. Nope. Don't understand them.

I don't fully understand banking nor very much about automobiles yet I use both of it. And damned if I know how electricty or the Internet work

 

[shadowplay]

I don't fully understand banking nor very much about automobiles yet I use both of it. And damned if I know how electricty or the Internet work

Don't forget magnets.

 

[Archbob]

I don't fully understand banking nor very much about automobiles yet I use both of it. And damned if I know how electricty or the Internet work

I don't know how gravity works but it hasn't failed me yet.

 

[innonimatu]

No one "controls" wallets, that is the entire point of this system. Why even come into a thread like this when you're not familiar with the most basic concepts? The idea behind a wallet is that you can store your currency decentralized, you and only you are responsible for its security. Even the site admins do not have any access to your wallet, nor can they store any data on it. If you lose your (physically stored on a paper, hopefully) keys than they cannot restore it. You cannot change "passwords", you cannot "retrieve" passwords.

There are no "passwords" in the traditional sense. There are no backups of your personal data in their database. Your date could be stored in 15 different countries by 50 different people who also have no control over the data they are "hosting". If you want to get even more safe, you can have a hardware wallet. Quite literally like storing money under your bed, you can put it on a USB stick and store it under your pillow. Even hacker attacks can do nothing then.

Exchanges are an entirely different story, they are more akin to online banking than anything

Dude, I have been familiar with the ideas about bitcoin since the time it was discussed on a single forum. I was familiar with cyphers already at that time. The concept of a ledger was not even new then, the idea of creating a currency upon that technology was the new thing. "blockchain" is a new name for old technology.

The problem is not the technology. It's the human use of it. Or rather, the inability to use it as idealized.

As you have been rude, let me showcase your ignorance: your wallet is safe so long as you control the keys and the channels through which the keys are transmitted. That was what I means by controlling wallets, where are they stored and where are they operated on. In case you have not noticed the personal computed" has nearly been declared obsolete, to be replaced with "the cloud" , into which people happily upload all their data. Which I kind of understand because the personal computed has become so versatile and so complex that in order to use it as expected you cannot maintain it safe (just check the recently disclosed bugs, and consider that these things keep coming and coming).
If you merely use storage over the network and operate on the data on a system that you control, fine. The moment you place the wallet on someone else's system (though it may even be a virtual system running on some "cloud") there are others with access to the operations you perform there, who can get your keys. You say that there are no passwords, but there are keys. Some kilobytes instead of some bytes, its the same thing: whomever controls that small piece of data will control the wallet. And what legal recourse do you have if your cryptotoys are taken from you? What laws and what jurisprudence can you fall back upon? Which law enforcement agencies are adept at tracking it? How do you roll back on the lerder a transaction that was found to be a fraud? You don't, by design - bad design for this purpose!

Exchanges became necessary because the technology for updating the ledger could not keep up with the number of transactions. Again it was bad design from the start, and it was pointed out long ago: you cannot have a distributed system where everybody holds all the data that will scale to be a worldwide transaction network for payments. Can't be done, there are physical limits. Thus people started trading in exchanges. Which requires that people hand over the actual bitcoins to the exchange. If they don do this they can't trade effectively on a market that has proven extremely volatile.
Exchanges are not akin to online banking. They are necessary for any trade to happen. I don't need any bank to carry out a transaction with cash with another party. In fact I don't even need any computer. But if you want to do a transaction with bitcoin you need:
- a computer network reliably connecting the two parties (that is by no means assured, see what happened after hurricanes hit)
- compatible software (granted, is a given if both are accepting that means of payment that they already incurred the cost of setting this up) and the hardware to run it on (which won't be trivial with an ever-growing ledger).
- willingness to wait until the transaction clears
- willingness to pay a variable fee for clearing the transaction

If you want to avoid these problems you need a third party to act the role of payment processor, guaranteeing the usual things that the current payment systems do. But because no company acting as a payment processor wants to incur in the very same problems with you the bitcoin-using customer, they will demand that you "bank" your coins to guarantee that they are actually available. Enter the exchanges which are indeed acting like banks. And exit the alleged safety and independence in holding bitcoins in your wallet. If you want to actually use them, you have to give up on what was the original selling point of the system! These things developed as I expected, as they have been developing even since a site dedicated to trading game cards decided to trade in cryptotoys instead to plug the obvious hole. That such entities cannot be trusted has also been shown time and again.

Some "cryptocurrencies" did away with the decentralized ledger, and last I checked there were plans of doing away with it also for bitcoin, it is such an obvious limitation. But it was also the main selling point for the whole thing. The sole one.

What is left after handling all the practical problems of the originally deployed technology? A "store of wealth" based on nothing but the expectation that it will continue to be regarded as valuable because it had been promised that it will be maintained artificially scarce. One that unlike cash you can't use without technical hassles. I wasn't sold on the idea then and I won't be ever.

 

[yung.carl.jung]

If you merely use storage over the network and operate on the data on a system that you control, fine. The moment you place the wallet on someone else's system (though it may even be a virtual system running on some "cloud") there are others with access to the operations you perform there, who can get your keys. You say that there are no passwords, but there are keys. Some kilobytes instead of some bytes, its the same thing: whomever controls that small piece of data will control the wallet.

How exactly do those people get access to the data? Can you be more specific?

And what legal recourse do you have if your cryptotoys are taken from you? What laws and what jurisprudence can you fall back upon? Which law enforcement agencies are adept at tracking it? How do you roll back on the lerder a transaction that was found to be a fraud? You don't, by design - bad design for this purpose!

That's pretty much exactly what I said in my post above. Agree on all accounts.

Exchanges became necessary because the technology for updating the ledger could not keep up with the number of transactions. Again it was bad design from the start, and it was pointed out long ago: you cannot have a distributed system where everybody holds all the data that will scale to be a worldwide transaction network for payments. Can't be done, there are physical limits. Thus people started trading in exchanges. Which requires that people hand over the actual bitcoins to the exchange. If they don do this they can't trade effectively on a market that has proven extremely volatile.
Exchanges are not akin to online banking. They are necessary for any trade to happen. I don't need any bank to carry out a transaction with cash with another party. In fact I don't even need any computer. But if you want to do a transaction with bitcoin you need:
- a computer network reliably connecting the two parties (that is by no means assured, see what happened after hurricanes hit)
- compatible software (granted, is a given if both are accepting that means of payment that they already incurred the cost of setting this up) and the hardware to run it on (which won't be trivial with an ever-growing ledger).
- willingness to wait until the transaction clears
- willingness to pay a variable fee for clearing the transaction

I mean this is all very much correct and I definitely agree on the differences you point out between online banking and crypto exchanges, but where is this going? The last two points you mention are also pretty void.. As Moriarte has demonstrated "willingnes to wait until the transaction clears" is often less than the fraction of a second. That is, if anything, one of the advantages of say LTC. And yes, while exchanges do have fees they are absolutely negligible. Binance is probably the best example here, they have a 0.05% fee for every transaction. Even when you make a transaction worth a thousand USD that's 50 cents. Of course fees differ, but it's not the end of the world.

If you want to avoid these problems you need a third party to act the role of payment processor, guaranteeing the usual things that the current payment systems do. But because no company acting as a payment processor wants to incur in the very same problems with you the bitcoin-using customer, they will demand that you "bank" your coins to guarantee that they are actually available. Enter the exchanges which are indeed acting like banks. And exit the alleged safety and independence in holding bitcoins in your wallet. If you want to actually use them, you have to give up on what was the original selling point of the system! These things developed as I expected, as they have been developing even since a site dedicated to trading game cards decided to trade in cryptotoys instead to plug the obvious hole. That such entities cannot be trusted has also been shown time and again.

Good point you raise here, I do agree that the current exchanges run contrary to the original spirit of BTC. However, you can still use BTC as you did in 2014.. To buy drugs, hitmen, anything really. As you say, "such entities" can't be trusted.. Yes, certainly right. I wouldn't be caught dead having thousands of dollars placed in an exchange.. Actually, I wouldn't be caught dead having thousands of dollars in one altcoin even if it was in a physical wallet, because they are, as has been said a million times, very volatile. However, a conservative investor can easily cash out his initial invest whenever he wants and transfer it back to his bank in the matter of minutes.

What is left after handling all the practical problems of the originally deployed technology? A "store of wealth" based on nothing but the expectation that it will continue to be regarded as valuable because it had been promised that it will be maintained artificially scarce. One that unlike cash you can't use without technical hassles. I wasn't sold on the idea then and I won't be ever.

I think the disconnect here is that your outlook is entirely different than mine.. Yes, of course it is ridiculous to have something that could be worth nothing tomorrow as an insurance or pension, but the people speculating on crypto aren't doing so because they're looking to hold 10 BTC in 20 years, they are doing so because they're looking to make 5x their initial investment in a few weeks and convert back or cash out.

 

[Cheetah]

they're looking to make 5x their initial investment in a few weeks and convert back or cash out.

And they can.

Until the music stops, lots of people lose way more money than they can handle, media screams about it, politicians find they have to do something about it, and all hell breaks loose.

 

[yung.carl.jung]

And they can.

Until the music stops, lots of people lose way more money than they can handle, media screams about it, politicians find they have to do something about it, and all hell breaks loose.

Traditionally, when your average joe loses all of his money no one gives a care. After the housing bubble popped, who got screwed the most? Yes, maybe if altcoin trading gets insanely popular and millions of people gamble their mortgages away, maybe then politicians will act. Even then, I highly doubt it. The only ones that were bailed out last time were the banks, taxpayers were just left with nothing. If that scenario you're describing was to occur, I think this would be exactly how it goes down. A small percentage of traders with insider knowledge will cash out first and the rest will be left with nothing. But maybe the outcome doesn't have to be quite as apocalyptic as your post suggests I can also see the big players adapting to blockchain technology (whether that is worth it or not is a different matter) and us having a relatively smooth transition.

 

[Borachio]

I don't fully understand banking nor very much about automobiles yet I use both of it. And damned if I know how electricty or the Internet work

This is all true. Is there anything in the world that anyone fully understands?

I don't put any faith (nor money if I had any) in financial vehicles like hedge funds, futures or junk bonds, because I don't understand what they're about.

On the other hand, I do understand (if understand is the right word) from past experience that if I put x amount of money in my bank account, I can usually draw x amount out again.

Similarly I understand this much about cars: if I put x amount of fuel in one, then I can usually drive y miles.

There's another feature of crypto-currencies I don't get, though. And that's just how much electricity they consume. Seems an extravagant waste, to me.

But of course, things like visa and other banking methods aren't by any means energy free either.

 

[uppi]

How exactly do those people get access to the data? Can you be more specific?

As soon as you do anything with your wallet, the private key(s) need to be somewhere in memory so that the system can do the cryptographic operations. That memory is readable for anyone with sufficient privileges on the system. That is definitely the administrator of the system, but might be also be someone who got access by nefarious means or anybody exploiting a bug in the system (hardware or software, cf. the recent processor bug disaster, which may have been there for more than 20 years). Such a person might get your keys, without you ever having a chance of discovery.

Good point you raise here, I do agree that the current exchanges run contrary to the original spirit of BTC. However, you can still use BTC as you did in 2014.. To buy drugs, hitmen, anything really.

Yes, if you are willing to pay 30$ per transaction. For big transactions that might be acceptable, but not for everyday transactions.

But of course, things like visa and other banking methods aren't by any means energy free either.

Yes, but the energy consumption is like more than 10 million times less per transaction than for Bitcoin.

 

[Mise]

It looks like it's going down right now. Is the boom over or will it go back up again?