Forums / Miscellaneous Discussions / Understanding Crypto
| Understanding Crypto | ||||
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In this age of internet and computerisation, everything online, I feel like I am falling behind in this crypto world that is clearly coming. My daughter asked me about it, and I noticed I really have almost no information about it. I really have no clue what it is even. Could someone explain crypto currency to me, but the most basic one, like you're talking to a 10 year old. Like she was talking about bitcoins, and I have no idea what that is at all. Like online currency, but how does that work? I have seen people say crypto is the currency of the future? Then I noticed it written somewhere that Etherium (don't even know what that is) has grew in value because people were spending money on gas fees for NFT. I have no idea what is NFT either. Someone explain? | ||||
I'll explain Blockchain. Jan 2022- 20 Trillion The Problem is when production in the Supply Side does not match the creation of currency on the Demand Side, you have an increase in the price, or intersection of those lines. If you wanted to know where those dollars above could be found, no one could give you a straight answer. No one can readily identify all of the accounts or wallets or staches of cache and actually account for it if push came to shove and if all debts were called. Blockchain (Bitcoin, the biggest and main crypto, uses this tech)_essentially starts with an assumption that there is a set amount of a currency, in this case 21,000,000 BTC. Each BTC is split further into 100 million Satoshi. So you can deal with quantities as small as 0.00000001 BTC whereas with dollars you are limited to 0.01. Whereas the M1 is ever increasing, the supply of BTC is fixed. Every 10 minutes, every transaction on the network is submitted to the a data file called a block. The block is verified by a network of millions of computers and then published as the newest block. You can track every single transaction on the block chain and every old and new address as they originate since 2008 until today. We know there has been no counterfeit BTC because we can track the original supply of BTC, where it ended up, and all released BTC since the start. Every 10 minutes, one computer and associated wallet address essentially wins a lottery award called the Block Reward. This is the incentive for people to pay electricty to verify the system. In 2009, the reward every 10 minutes was 50 BTC being released. In 2012, the reward was halfed to where only 25 BTC was released. In 2016, the reward was halfed to 12.5 BTC being released each block. In 2020, the it was halved again to 6.25. At the beginning, there was a given amount started with, and the supply is slowly approaching the 21 million circulating supply. Everyone knows the number of the accounts and how much is in each one and how much is sent between. No one knows who owns which address unless they reveal it. Thats a basic overview. | ||||
> Imagine i tell a classroom full of people I'll give a baseball/Pokémon card to anyone who gives me a whole, 24-digit number that's divisible by both 13 and 23 to put up on the board, and nobody else has claimed already. Everyone grabs a pen and paper, and starts trying to come up with numbers and winning cards. After a few minutes, all the "simple" ones are taken and people really have to start thinking hard to come up with more of them. There's a finite number of them, but still a very large number. Once you get most of them, finding more becomes way harder. In this case the math work is the mining, the baseball/Pokémon cards are the crypto coins, and the black board is the ledger. | ||||
Ok but how is that actual money? Why would anyone sell a card for 24 digit numbers? Why does 24 digit number have value? And regarding Blackchain, so all these money supply increases Why does that become money in terms of Blackchain? Who owns that, like people have have the money supply can sell blackchains? Why buy blackchain and not actual money? Why did that become a currency? | ||||
The easy answer is it's not money; it has no intrinsic value... It's only value is what someone else is willing to pay for it. The blockchain itself is just a method of tracking transactions; the 'crypto' is the algorithm protecting the blockchain from corruption, and the 'currency' is what people use it for. As to the why... It's a decentralised system, not controlled by governments or corporations. The only way to make more 'bitcoins' is to mine them. So work is required to create them, and as there is a limited amount, their worth isn't diminished by the increase in circulating coins. Compare this to the USD... The only way to make more USD is for the government to print more/add a zero to their balance books; this devalues your holdings. In the good old days the USD was backed by gold, but not any more. | ||||
Could you explain the "mining" process? What does that mean? Energy cost of carrying out the calculating, what are we actually mining? And why is there limited amount of mining possible? So if one person (lets say E Musk) does all the possible mining Does that person hold monopole then? | ||||
Mining is the confirmation process carried out by the network. Essentially every computer does the math to verify all wallets have the right amount of coin each block. Blocks are 10 minutes for BTC. Every transaction within those ten minutes are recorded and notes are compared, so to speak. Once all the computers agree, the algorithm randomly selects one miner for the reward. If the reward is 6.25 then every ten minutes one person (or in the case of mining pools, group of people) get the whole reward. There is also the bonus reward of all of the combined transaction fees bundled together. So you can play the lottery and have your machines running 24/7 in that you may hit that multi BTC jackpot every ten minutes, or you join millions of others, hit it periodically, and split it. | ||||
Or you invest into 1 of the supersh1tcoins and go to the moon. | ||||
I'll explain NFTs. Your 10 year old friend have painted a shitty picture of the monkey with Microsoft Paint. He somehow convinced you to buy it from him, because you're a bit on the spectrum side, so he sent you a copy of that picture and gave you a handwritten note (NFT) saying that it belongs to you. He then uploaded that picture on the internet and some other friend is now using it as his TikTok profile picture. You throw a tantrum that he can't do it, because the picture belongs to you, but to your surprise - he doesn't care. You call your mom (the law), and she just laughs at you, because the note is actually meaningless. You've been scammed. | ||||
So NFTs are a scam and nothing else? | ||||
I feel like its difficult to dumb this down for me
So every computer in the world does this? Mine as well? How would I get crypto from my computer? NFT is like a handwritten note of owning something? Or you were just giving an example of what it can be. It can be many different things, but usually a scam? | ||||
And yes, NFT is basically a digital note that says you own something that is almost impossible to counterfeit, but that's it. It's not a new idea or anything. In addition to that, although I can't counterfeit a red stick note where your friend wrote that you own that stupid monkey picture, but I can create a blue note where it says it belongs to Billy. So now there's a dilemma - do we use red notes or the blue ones to distinguish who owns what? And at least today - your mom (the actual law) doesn't care about either. NFTs aren't scam in theory, but it's just not that well thought out idea that got WAYYY out of hand because it's simply based on a blockchain (same thing crypto is based on) hype. It's basically beanie babies hype 2.0 that was inflated by scammers, naive crypto autists, retarded children of rich families and even more mentally challenged poor kids that got loans to buy their ticket into the blockchain hype train, thinking they'll get rich quick the same way some lucky ones got when Bitcoin just kicked off. | ||||
Yo guys PDC sold me this NFT for $10,069. Who is jealous? He said I'm part of the Bored Knight club now! Are you guys mad that I have an exclusive NFT that belongs only to me or what? | ||||
So like it was mentioned here, good thing about crypto currency is that government does not control it, they are not the ones who make more of it. But regular people can't either, only rich companies. So instead of government its rich people. That is the difference? Basically I have no use in this, and will probably not need any of it in my lifetime? Do you guys expect this to be main monetary currency sometime in the future? NFT also seems something stupid from what I see here. No surprise I did not know anything about it, because it has no value to actually give an effort to learn about it. | ||||
Mining is based on effectively a lottery system; so even if you contribute a small amount, you can still win big. Either way, rich people will always gravitate money towards themselves, and try to manipulate the market. Rich people control most of the fiat currency as well. If you're not interested in the area, and aren't interested in high risk investments, I'd avoid Crypto like the plague. Personally I've made more money (and lost more money) than I would have ever made in the stock or housing markets from my initial investment. NFT's is early on in it's adoption phase, so most uses are completely trivial. However, in the future, it could be used for things like Land and Houses, instead of a piece of paper in a draw somewhere proving you own it, you have an NFT. It would make your assets more liquid; easier to buy, sell or swap, with less overheads. | ||||
High risk investment? Yeah I am not up for that... thats not for me for sure. Selling houses using NFT. You buy a house and get a note you bought it. Another family moves in same time because they also have an NFT. Its more fluid that way? Easier to buy and sell, but also a scammers paradise? | ||||
High risk, high reward... | ||||
Not sure if anyone mentioned this yet, but governments and banks are trying -really- hard to regulate crypto exchange. That shit ain't good for business (for them)! Without regulation, crypto markets are much more volatile than the stock market and that's part of the reason why you have a lot of big winners and big losers in the crypto game. Personally, unless you have some insider knowledge about a specific coin, I'd stick to what they call a "stablecoin". Stablecoins are basically pegged to an asset kind of like how the dollar was pegged to gold prior to the 70's. Stablecoins are much less volatile compared to unpegged cryptocurrency. | ||||
So just basically replacing a contract with another contract that is the same but has s different name, only difference its not under bank or government? Jesus Left Toe: | ||||
The main thing is that it's transparant everyone can see the history of the item. If there's 1 system for housing, there's only 1 unique item. And if someone tries to duplicate it, there's the strength of the blockchain as it needs to be validated by a lot of computers at the same time. So you'd have to break the encryption not just once. Basically telling all those computers that House A (block) came from user Y and now transfered to user X. But this needs to happen to atleast 51% of all the validations (might be different % per chain, but as an example) for it to count and actually create the next block. The transparency is also 1 of the reasons it's currently hard to see it being used by banks. If you get someone's wallett address, you can basically see all their transactions and that's not what most people would want to see. So there's new solutions now, compared to the original blockchain where they have multiple layers, and work with a different type of encryption. And there's more and more developing, also trying to reduce and perfect the cost it takes to validate, and to tighten its security. The real revolution is that you could become the owner of your own data being used. And when requested some data, you could send a party a specific block of data (contact information, or your general interests), and they could reward you with a currency for sharing your data or you could think of more private use cases where you share your medical file. But when quantum computers aren't a thing of the future anymore, some of the existing encryption will be way easier to crack. | ||||
Imagine the block as a spreadsheet. In this spreadsheet, every transaction is recorded, and when totalled up, equals the amount of coins available at that moment in time. That spreadsheet is then made available for everyone to see, and computers around the world confirm every line is correct, and that user 1 has 5.001 coins, and user 2 has 23 coins. That ledger then sits online for all to see at all times, instead of the government who dont know that you have 100m stuffed under your bed. | ||||
I’m been thinking and I thought of another analogy of what blockchain is and where it stands with cryptocurrency. Let’s say you are 4 friends: Stan, Kyle, Eric and Kenny. You play Monopoly and for whatever reason you decided not to use the paper money, so Kyle said he can write down all transactions and balances on his notebook. For his effort you agreed to give him small portion of the extra money that goes around. Kyle is an internet bank system using single, centralised database - his notebook. But Eric starts not to trust Kyle. Eric says Kyle might be cheating, creating money out of thin air. Says it’s the sole reason why property prices are rising. So Stan comes up with a great idea. Instead of Kyle - everyone who wants can write down these transactions on their notebooks. It becomes decentralised system (blockchain). Mostly its used to write down money transactions (cryptocurrency), but could also be used for writing down property ownerships (NFT). Stan, Kyle and Eric choses to participate in this, but Kenny is too poor and doesn’t have large enough notebook so he doesn’t. So the 3 of those writes down every transaction and calculates the balances. They compare the notes. If 2/3 of them write down everything identically - they roll a dice and one of them gets an extra monetary reward. That's pretty much crypto mining. Now instead of one possible cheater that has all the power in managing money, you have to have more than 50% that agrees to cheat the system. | ||||
I just saw a video of that guy Logan Paul selling NFTs, and he's actually selling polaroid photos of himself. He's selling those as NFT and each has a different perks. One polaroid owner gets to be a guest in his podcast, one photo owner get life long supply of some drink. And they get 1% of revenue of Logans next fight. I can see the value now, but I do not understand what is the "scam" here, as you guys mentioned as NFTs are mostly scams? I mean for me buying a photo for 10k Dollars is a joke, that is a scam. But when you get something else, like 1% of the treasury like they say and it said if Logan does well the buyers also do better. That makes sense to me, so its not the photo that holds value, its the added perks. Did I understand that well? | ||||
How it would be different if he sold those photos with given perks without NFTs? He could have just sold physical polaroid photos and invited them to a podcast, given 1% of revenue, or made a lifetime subscription to a drink. NFT does nothing here, besides acquiring additional crypto-bros hype for marketing. | ||||
So whats your point? He's calling them NFTs and they are not? | ||||
Well he sold them as NFT so they are also NFTs. Again, like simple postnote saying it belongs to them. But what additional value does such note (NFT) actually give? My opinion is that absolutely none. | ||||
So he says I will sell you this photo. And that is not an NFT Then he says I will sell you this photo as NFT Than it becomes NFT? Isn't the process the same? | ||||
Exactly. | ||||
The NFT gives traceability; so if he sold you the photo and it had come from a Columbian drug lord. You'd know. | ||||
What do you mean? NFTs are complete bullsh1t What kind of traceability?
Just because there is a small note with it saying its NFT It will be worth money and can be traced? To me this whole NFT thing seems like complete bs... | ||||
Because it is. | ||||
It is, but the ownership is registered on chain, as the photo is kept by someone in their wallet. That's why it's an NFT. Its only made x times. You're the only 1 with that specific photo ID. In the real world you could print 500 of the same photo, but nobody could prove that they originally owned it. Value only comes from people thinking it's worth money. Not much different to the real world, but in the real world the thing you own usually isn't just digital. They could make skins, sound packs or custom items or lootboxes into NFTs, but the game that uses them would have to be on the blockchain. And most games on the blockchain are complete money grabs. If they focus on the tech, and the use cases, and remove the dollar signs from their eyes, it could still be the future. | ||||
Nft is just starting for now. It is now just some pictures of monkeys or something. But the idea is that it you can put it up on the blockchain so you have some kind of prove that you own it. As they said above: everything/ every transaction is noted and remembered on the blockchain. This opens doors for some kind of registration of things inside blockchain technology. For exemple business transactions Now is just the beginning. The ape gifs are scam for sure. But if i make like a song and i want to make sure nobody uses my song or steals the beats i can put it on blockchain ( maybe in the future). So i own my own process, cutting out the middle man: record labels … So in the future it would be possible to just buy your house and put a paper on the blockchain that i own that house now. Thats a huge thing i think because a lot of developing countries don’t have a system for buying land. Where i live i need to pay 15% of the price of the hole to a legal person to make 1 word document saying i own the house. So with blockchain technology that would be free and we can always prove i own it because everything is remembered. Again cutting out the middle man. The nft ape pictures : people think like: if i own the mona lisa, i pay lots of money for it and it is not worth as much as a copy of the real piece… i don’t believe that in the case of the nft. But i could be wrong | ||||
Few questions: Someone prints out 40 copies of same picture, sells them as NFTs to 40 different people. Are all these pictures 40 different NFTs? Another question: You buy a house from someone through government and they refuse to leave, you call police and they kick out people because house is legally yours. You buy house from someone using NFT method, they refuse to leave. How do you kick them out if you can’t involve government/police? | ||||
First question - They have to be minted, basically created into 40 blocks on the chain. They each have a unique block id, but could contain the same picture. But there will only ever be 40 of that serie. Second question - The government or your local municipality will never not be involved in ownership of land. But if they start using blockchain, they can cut out the middle man. And if it somehow happens that they're privately owned, outside of goverment regulations, then it's going to be a shoot out. And then you declare as an independent state/country. | ||||
Essentially NFTs are an attempt to create the equivalent of copyright or patents. But in this case without involvement of an authority that puts in place procedures and registers who has the copyright. In this case that’s done through blockchain. In my eyes the problem with NFTs is that where you have rules for enforcement of copyright and patents (you can take someone to court and have the police enforce a judgement), there doesn’t seem to be a similar process in the case of NFTs. So you can own the NFT for a cat image. But everyone can use that cat image free of charge. Let’s say you made a photograph, and you think it is worth something because media or publishers want to use it. You could register an NFT for it but that doesn’t really give you any additional ownership, media could still use your photo as they see fit. But copyright laws allow you to claim money since you’re the author of the picture. Seems to me it could get interesting when NFTs are combined with some kind of enforcement system. Just like digital coins will start to get really interesting once the official ones will be launched. Essentially then you’re just integrating blockchain technology to optimize the security of these processes. | ||||
Imagine the Titles available on VU. All the customs titles etc. They could be NFTs. Only my account could hold Dragon Prophet. Don't someone else to use it's and thus far me not to use it, the transaction is tied to the traceable notes known as the Blockchain to see who I passed on my title to. | ||||
Someone else can pay to be Dragon Prophet as well. So there can be two or more of that same title. They have to be minted, basically created into 40 blocks on the chain. They each have a unique block id, but could contain the same picture. But there will only ever be 40 of that serie. I have no idea what this means actually lol I can say I understand Crypto less than when I started the thread :D So if there are 40 Dragon Prophets they create 40 blocks of the chain. And they all have unique block id. But still have the same title in the game. So the block id is just there for show, everyone has the same title no matter the block id is different. | ||||
All it means is the specific Dragon Prophet is owned by one person, but nothing prevents others from also using Dragon Prophet in this hypothetical, just means the original Dragon Prophet (or a specific Dragon Prophet) can be found using the ID. Literally no different than a unique ID assigned to each title entity tied to a user ID to show which player is using it, only the blockchain would keep the history of users of it rather than just the current and grant a means to “transfer ownership” of that particular ID. In terms of practical application, there really isn’t a difference, only how it’s treated in the backend. For that reason, I view blockchain as a cool tech, but it hasn’t found a meaningful life outside of “cool tech”. I’m sure there will eventually be valid uses for blockchain technology, but I have yet to see one practical use that isn’t being pushed just for the sake of it. Crypto as a whole is only valued because people keep driving the value. If people suddenly decided it wasn’t the “current fad”, value would decline rapidly. Same is even truer for NFTs, and is why despite the same base backend, NFTs are known to be scams as a whole. May as well buy what the NFT claims to grant you rather than the NFT itself, as it in and of itself doesn’t do anything currently. This is in stark contract to stocks, as companies themselves hold an intrinsic value. Crypto has no intrinsic value other than what people claim. That’s why the crypto market is so volatile and is easily influenced by popular opinion (Elon Musk and Doge, for example). | ||||
It’s not about the use of the picture as it is of the worth. I own the real mona lisa, but 1 million pictures and copies and memes are made with mona lisa. But if someone wants to buy the real mona lisa and become owner of the original one, he will still pay 500 million dollars for it and he can only buy it from me. If metaverse would become a thing. You could come visit my house in metaverse and see my original mona lisa just hanging on my virtual wall, and you should be impressed. It seems crazy, but if rich people go to other rich peoples real houses and they see that kind of a painting, they would also be impressed or want to but it from me for a lot of money irl. So… it’s just question and demand. From the owning a house thing, i really never think about the fact that if someone doesn’t want to leave. That’s why they still call it smart contracts propably. I do however have the prove of paying for the house. So i could go to court, but don’t know what a judge would say about it. In my last post i was talking about the potential of nft’s and blockchain. So don’t go selling your house just yet! It could however in the future go like this, cutting out the middle man. I think in smart contracts it is possible to put in the documents in which one declares he sold his house to you. I want to downgrade it so everybody understands, but it is not that easy. Haha If you like podcasts you should listen to tim ferris podcast episode with balaji srinivasan on the future of bitcoin and ethereum. That was very informative for me. | ||||
I think Bigfiled explains crypto currency well. I haven't looked into proof of ownership and tokens, but I think I can explain why they're useful. Today when you buy something like a piece of land, you not only have to contact one or more authorities and pay their fees, you also need to publish it in a news-paper (usually done by the authority). So in order to prove that you own land you can look in the records on the authorities, and also show the news-paper print. Without this we would have to defend our property with physical force. And the one with the strongest army can claim ownership - to this day, that still happens, one nation-state can simply take someone else's land by force. The system with paper records is more sophisticated then killing each other, but in today's digital world we can do better. and the so called "block chain" is a replacement for paper records and publishing in newspapers. But for it to work -people have to trust it, and you have to understand it. One Bitcoin is worth $$$ not because it has any value, but because many people agree it does. Just like with printed paper bills. | ||||
Allow me to help! BTC: Worth something if you hold onto it forever- it will crash with ETH but will rise again. ETH: Going to the Marianna Trench when fraudulent Tether unpegs (fairly open secret in the cryptocurrency space is that Tether, a stablecoin pegged at 1USD per coin, is most likely completely fraudulent. Every time there is a flash crash in bitcoin, billions of Tether are magically summoned into existence. This is most likely used to buy up bitcoin and other cryptocurrencies and prevent a chain reaction of liquidations which would implode bitcoin and the entire market. In my opinion, this is what’s happening with Tether and things like Tether: the cryptocurrency markets are purposely being inflated and secured in a fraudulent manner. Bitcoin is essentially being propped up and “cushioned” by imaginary money soas to prevent it from going through natural boom-bust cycles which would allow it to be fundamentally sound. Tether is being “baked in” to the cryptocurrency scene to a degree that is scary, as the more it is a cornerstone of cryptocurrency, the more the overall health of cryptocurrency is contingent on Tether not being fraudulent – which seems to be an increasingly absurd proposition.) ETH DERIVATIVE SHITCOINS: Huge moneymakers if you know the devs/rugpullers, absolutely retarded to invest in if you don't. As someone who knows MANY rugpullers and scammers just dont make yourself a victim, I've known most of you for over 15 years and I dont want to see you invest in ROPECOIN just because the financial future looks bleak. If you invest in any Crypto make it BTC and dont treat it as a serious investment- hold it in an offline cold storage wallet so you still own it when the bucket-shops go under in a liquidity crisis I hope that helps I assume you were all smart 10 year olds because we were all very smart teenagers here 15 years ago. | ||||
doublepost but avoid NFTs like the plague they are 100% full of BAD ACTORS and I say this as a person who is quite friendly with many NFT minters. The 'best actors' in this space aim to create a world of 'post-authorship' through underhanded means and for the wrong reasons. tl;dr hold BTC in offline cold storage and plan for it to crash horribly then become the only valid crypto again or just dont fuck around with crypto, which is probably a better option unless you have money you dont care about losing. Thank you for reading my walls of text. I know you missed them. I refuse to elaborate. | ||||
@matthew Were did you get that knowledge? It id the first time i hear about eth being that kind of a scam. I always tought it was the best crypto, and i have invested some money. So it could be useful info for me… | ||||
WELL KNOWN insider info from PT | ||||
Allow me to elaborate: | ||||
HUGE DISCOUNT ON ROPECOIN INCOMING | ||||
dont invest if ropecoin if you kill yourself for any reason before your Mother dies you go straight to Hell | ||||
Bitcoin was invented to fix the problems caused by fractional reserves
and essentially be similar to gold in that it has a fixed supply and has
inherent value. The main problem with this is that Satoshi Nakamoto
(the inventor of Bitcoin) did not realize that without changing human
nature, creating digital gold would not change the selection pressures
of currency which made the dollar move from being backed by gold to the
dollar not being backed by gold.
We left gold for a reason. We are leaving bitcoin for the same reason:
human greed. People don't want a fixed supply currency in analogue form,
thus they don't want fixed supply currency in digital form. tl;dr dont hold ropecoin in 2030 | ||||
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