Author Topic: Cryptocurrency  (Read 26933 times)

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Offline arthwollipot

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Cryptocurrency
« on: May 21, 2017, 10:34:04 PM »
Does anyone here know a lot about cryptocurrency? A couple of friends and I are starting up an Ethereum mining operation, but the learning curve is pretty steep.

Anyone done any mining before? Have any simple tutorials they can share? Thoughts, opinions?
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Offline daniel1948

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Re: Cryptocurrency
« Reply #1 on: May 22, 2017, 09:49:32 AM »
I have opinions: The weakness of cryptocurrencies is the thing people like about them: The lack of any sort of central control means you get privacy and governments cannot manipulate them. But this also means they are unstable. The gold standard was abandoned because a modern industrial economy needs a regulated money supply. The unregulated nature of cryptocurrencies means that their value is erratic and can change drastically between the time you receive a "coin" and the time you spend it. And the diminishing returns of "mining" limits the quantity in circulation. A growing economy needs a growing money supply. A fixed money supply in a growing economy leads to inflation.

Of course, if you can mount a successful "mining" operation you can make money. So I wish you the best of luck. Unfortunately, I know nothing about "mining" cryptocurrencies, so I have no help to offer there.
Daniel
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Offline moj

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Re: Cryptocurrency
« Reply #2 on: May 22, 2017, 01:12:01 PM »
Not really my thing, it solves none of the problems I have with money and not sure what advantages it offers the average person. If I want an investment I buy index funds, if I want a secure purchase I use a credit card. I'm not in the market for super secret transactions so may not be the ideal customer. I've heard about bit coin and block chains on tech podcast but from a day to day practical sense, don't see the need? The only time a friend ever used bitcoin was when the app she buys pot from switched to bit coin. But then the value of coin had changed from the time she bought it to the time she tried to get pot that it wasn't enough and she had to buy more. I believe the app is back on dollars now for exactly that reason.

Online 2397

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Re: Cryptocurrency
« Reply #3 on: May 22, 2017, 01:31:22 PM »
The main attraction of Bitcoin seems to be how unstable it is.

Offline daniel1948

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Re: Cryptocurrency
« Reply #4 on: May 22, 2017, 01:38:25 PM »
The main attraction of Bitcoin seems to be how unstable it is.

I'm pretty sure that's not right. I think its main attraction is being untraceable. It's instability is its drawback, and why most people don't use it.

However, I gather that the blockchain concept may have uses in legitimate banking and perhaps other fields.
Daniel
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Offline teethering

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Re: Cryptocurrency
« Reply #5 on: May 22, 2017, 01:39:36 PM »
I would strongly discourage anyone from getting involved in trying to make money from cryptocurrencies.

As was mentioned it is an unregulated market.  You'll always be at a disadvantage compared to other players in the market who have better scaling, cheaper resources like electricity or who aren't averse to breaking the law.  It's a wild west.

In any business venture your first thought has to be "what advantage does my product have that no one else involved in the market has?" and if you don't have a clear and solid answer, you should not waste your money and time, you will lose.

Offline Gazeley

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Re: Cryptocurrency
« Reply #6 on: June 23, 2017, 09:50:03 PM »
I believe the technology has real potential. BitCoin isn't perfect, but the idea of taking currencies out of the hands of banks and governments and putting into the hands of game-theory, mathematics, and cryptography is a world-changing idea with the potential to do a lot of good.

Think of all of the countries with unstable currencies, or corrupt governments, or poor migrants who Western Union most of their money home at the cost of huge fees. Or the amount of time it takes for a bank transfer to clear.

The blockchain removes trust from the equation. You don't have to trust a third party, be it a government, bank, company, or individual. That is a powerful thing.

Offline daniel1948

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Re: Cryptocurrency
« Reply #7 on: June 24, 2017, 09:20:33 AM »
I believe the technology has real potential. BitCoin isn't perfect, but the idea of taking currencies out of the hands of banks and governments and putting into the hands of game-theory, mathematics, and cryptography is a world-changing idea with the potential to do a lot of good.

Think of all of the countries with unstable currencies, or corrupt governments, or poor migrants who Western Union most of their money home at the cost of huge fees. Or the amount of time it takes for a bank transfer to clear.

The blockchain removes trust from the equation. You don't have to trust a third party, be it a government, bank, company, or individual. That is a powerful thing.

The problem with this is that an unregulated money supply cannot do the job that money needs to do. With an unregulated money supply there will be too much money in circulation, or not enough. The value of money will fluctuate wildly. People will not save and invest, which is necessary for an economy to function, and people's wages will lose value so fast they cannot buy the things they need, or will gain value so fast they will not invest savings.

A poorly-regulated money supply is a disaster, but the solution is not an unregulated money supply.

Block-chain is a technology with many useful applications. But cryptocurrency is useful only for people who want to keep their transactions secret, and want that badly enough to accept extreme instability in the value of their money. There's a reason why ransomware always demands payment in bitcoin.
Daniel
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Offline Gazeley

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Re: Cryptocurrency
« Reply #8 on: June 24, 2017, 12:10:23 PM »
Quote
The problem with this is that an unregulated money supply cannot do the job that money needs to do.

Just because they aren't currently regulated by a government doesn't mean they can't be regulated. Blockchain technology, by default, makes things more transparent and a lot easier to regulate than cash. A government could easily create their own regulated coin, or work with developers of existing crypto-currencies to regulate them. (See: India - https://cointelegraph.com/news/suddenly-bitcoin-to-be-officially-legal-in-india)

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With an unregulated money supply there will be too much money in circulation, or not enough.

These are easy variables to change in the code. Some coins have infinite potential supplies, others like Bitcoin have relatively low caps on the total possible supply. Some, like Decred & PivX, allow the people who own the currency to vote on how the code "evolves". This makes the crypto-currency a kind of democracy where, theoretically, they could raise or lower the cap, or take other measures to control inflation/deflation/supply.

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The value of money will fluctuate wildly.

The largest currency, Bitcoin, has a market-cap that is lower than the net-worth of the richest individuals on the planet (and dwarfed by large companies). If the US dollar only had $40 billion in circulation it would be relatively unstable too. But as Bitcoin's market cap has grown it has stabilized significantly, it seems reasonable to think that it will continue to stabilize as the market cap grows and it becomes more established.

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People will not save and invest, which is necessary for an economy to function, and people's wages will lose value so fast they cannot buy the things they need, or will gain value so fast they will not invest savings.

People absolutely save and invest in crypto-currency. Myself and many, many, others have been investing and saving our Bitcoin for years (and it has paid off). Freelance contractors in this space prefer to be paid in Bitcoin.

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A poorly-regulated money supply is a disaster, but the solution is not an unregulated money supply.

Again, the blockchain isn't inherently impossible to regulate. Many governments are researching blockchain technology, India has already announced they will begin regulating their local Bitcoin markets. Many crypto-currencies are "regulated" by their developers, miners, or users. In the case of coins regulated by their users through voting on the block-chain, well they are more transparent than any existing fiat currencies. The same measures used to regulate and control fiat could be applied to crypto-currencies through multiple vectors.
 
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cryptocurrency is useful only for people who want to keep their transactions secret, and want that badly enough to accept extreme instability in the value of their money.

This is a fundamental misunderstanding of the blockchain. The blockchain is not inherently anonymous. On the contrary every transaction is open for anyone to view. Some coins like Monero and PivX are built to be anonymous, and they are actually far more stable than the rest of the market because they have a consistent user-base that aren't using the coins for speculation.

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There's a reason why ransomware always demands payment in bitcoin.

Sure, it's the same reason why kidnappers, drug-dealers, and most other criminals have always demanded payment in cash. The criminals using Bitcoin are relatively harmless compared to the criminals using cash. Cash is much more anonymous and difficult to track.
« Last Edit: June 24, 2017, 01:14:36 PM by Gazeley »

Offline Gazeley

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Re: Cryptocurrency
« Reply #9 on: June 24, 2017, 12:44:34 PM »
Does anyone here know a lot about cryptocurrency? A couple of friends and I are starting up an Ethereum mining operation, but the learning curve is pretty steep.

Anyone done any mining before? Have any simple tutorials they can share? Thoughts, opinions?

I know a lot about cryptocurrency and I'm not convinced that Ethereum isn't a glorified pyramid-scheme. It isn't immutable, it is centralized, they have already stepped in and manipulated their blockchain once (hence the Ethereum Classic fork) and the only practical use smart-contracts appear to have at the moment are these "Initial Coin Offerings" (ICO's) for new tokens to support pie-in-the-sky projects on the blockchain. ICO's are being used as a way for geeks with half-baked ideas or straight up scammers, to essentially steal millions of dollars from newbies who want to get rich quick.

The whole Ethereum community seems divorced from reality and convinced that all of this is fine.

I got sucked into the hype at first and bought when it was around $90, but I sold all of my holdings in Ethereum about a week ago (when it hit $395) because I have slowly realized that it feels a little too reminiscent of a multi-level-marketing scheme. I could be wrong though....

(Edit) This blog post does an excellent job covering the issues with Etherium that nobody is talking about: https://medium.com/startup-grind/i-was-wrong-about-ethereum-804c9a906d36
« Last Edit: June 24, 2017, 01:54:05 PM by Gazeley »

Offline John Albert

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Re: Cryptocurrency
« Reply #10 on: July 01, 2017, 02:48:25 PM »
I have opinions: The weakness of cryptocurrencies is the thing people like about them: The lack of any sort of central control means you get privacy and governments cannot manipulate them. But this also means they are unstable. The gold standard was abandoned because a modern industrial economy needs a regulated money supply. The unregulated nature of cryptocurrencies means that their value is erratic and can change drastically between the time you receive a "coin" and the time you spend it. And the diminishing returns of "mining" limits the quantity in circulation. A growing economy needs a growing money supply. A fixed money supply in a growing economy leads to inflation.

Of course, if you can mount a successful "mining" operation you can make money. So I wish you the best of luck. Unfortunately, I know nothing about "mining" cryptocurrencies, so I have no help to offer there.

What makes them so attractive as a speculative investment also hurts their usefulness as a currency.

They're also based on a misplaced faith in the technology. Cryptography is not unbreakable. Information security schemes are being broken all the time. Thus, every single one of these "currencies" is destined to fail at some point. When they do, they're going to take down whatever economy is built upon them because there's literally nothing insuring or backing them. But by the time that happens their creators will most likely have cashed out and been long gone.

They've always seemed like a thinly-veiled scam to me.
« Last Edit: July 01, 2017, 07:50:20 PM by John Albert »

Offline daniel1948

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Re: Cryptocurrency
« Reply #11 on: July 01, 2017, 04:38:40 PM »
I have opinions: The weakness of cryptocurrencies is the thing people like about them: The lack of any sort of central control means you get privacy and governments cannot manipulate them. But this also means they are unstable. The gold standard was abandoned because a modern industrial economy needs a regulated money supply. The unregulated nature of cryptocurrencies means that their value is erratic and can change drastically between the time you receive a "coin" and the time you spend it. And the diminishing returns of "mining" limits the quantity in circulation. A growing economy needs a growing money supply. A fixed money supply in a growing economy leads to inflation.

Of course, if you can mount a successful "mining" operation you can make money. So I wish you the best of luck. Unfortunately, I know nothing about "mining" cryptocurrencies, so I have no help to offer there.

What makes them viable as a speculative investment also hurts their value as a useful currency.

They're also based on a misplaced faith in the technology. Cryptography is not unbreakable. Information security schemes are being broken all the time. Thus, every single one of these "currencies" is destined to fail at some point. When they do, they're going to take down whatever economy is built upon them because there's literally nothing insuring or backing them. But by the time that happens their creators will most likely have cashed out and been long gone.

They've always seemed like a thinly-veiled scam to me.

I believe I misspoke in my quote above. A fixed money supply in a growing economy would lead to deflation, not inflation. This, however, can be just as damaging.

I tend to agree with the sentiment above, that cryptocurrencies seem like a bit of a scam. The founders and early entrants can make a bucketload of money, as with any pyramid scheme. And the people who are most drawn to use cryptocurrencies and metals in place of paper money are often those who have the least understanding of how money operates. Then of course there's the fact that you need access to the internet to use cryptocurrency, and the fact that the transaction is sometimes very slow. You may not be able to spend your bitcoin for some hours after the transaction to pass it to you was initiated.

I've often felt I'd like to own a Canadian Maple Leaf coin. Gold does have its appeal. (I don't want it badly enough to pay the going rate.) I've never once felt the urge to own a bitcoin.
Daniel
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Offline John Albert

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Re: Cryptocurrency
« Reply #12 on: July 01, 2017, 07:46:27 PM »
...the transaction is sometimes very slow. You may not be able to spend your bitcoin for some hours after the transaction to pass it to you was initiated.

And in a market as volatile as BTC, a few hours can mean the difference of several points of value. You can buy something this morning and by the time the transaction goes through in the afternoon you've paid far more than you'd agreed at the time of sale.

Offline gmalivuk

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Re: Cryptocurrency
« Reply #13 on: July 03, 2017, 01:19:46 PM »
I have opinions: The weakness of cryptocurrencies is the thing people like about them: The lack of any sort of central control means you get privacy and governments cannot manipulate them. But this also means they are unstable. The gold standard was abandoned because a modern industrial economy needs a regulated money supply. The unregulated nature of cryptocurrencies means that their value is erratic and can change drastically between the time you receive a "coin" and the time you spend it. And the diminishing returns of "mining" limits the quantity in circulation. A growing economy needs a growing money supply. A fixed money supply in a growing economy leads to inflation.

Of course, if you can mount a successful "mining" operation you can make money. So I wish you the best of luck. Unfortunately, I know nothing about "mining" cryptocurrencies, so I have no help to offer there.
What makes them so attractive as a speculative investment also hurts their usefulness as a currency.
Yeah, I'm definitely not unhappy with the fact that a bitcoin is now worth about 10 times what it was when I first bought some back in 2015, but that's definitely not what one hopes to see in a currency.
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Online Ah.hell

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Re: Cryptocurrency
« Reply #14 on: July 03, 2017, 02:23:28 PM »
I would strongly discourage anyone from getting involved in trying to make money from cryptocurrencies.

As was mentioned it is an unregulated market.  You'll always be at a disadvantage compared to other players in the market who have better scaling, cheaper resources like electricity or who aren't averse to breaking the law.  It's a wild west.

In any business venture your first thought has to be "what advantage does my product have that no one else involved in the market has?" and if you don't have a clear and solid answer, you should not waste your money and time, you will lose.
I largely agree with this but:
A.  if the buy in is low, then setting up a mining operation has little risk, especially if you are early in.  If the software has a significant cost or requires an significantly above average system, then its a bad idea.

Sure, you are at a disadvantage compare to the big players but, little to know buy in wouldn't require much reward to be worthwhile.

Anonymity and volatility are the primary attraction for different users.  Some folks want the untraceable transaction for obvious reasons, some folks are trying to make a buck from speculation.  The mining operations are the latter.

I think the technology has potential, we'll see where it goes.  Its not inconceivable that the future of currency is something like bit coin rather than the dollar or the euro, maybe we will finally get those credits we were promised by Sci-fi, that's what I'd call my crypto currency, or maybe cubits.
« Last Edit: July 03, 2017, 02:26:33 PM by Ah.hell »

 

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