Author Topic: Cryptocurrency  (Read 15706 times)

0 Members and 1 Guest are viewing this topic.

Offline John Albert

  • Stopped Going Outside
  • *******
  • Posts: 4153
Re: Cryptocurrency
« Reply #195 on: January 12, 2018, 12:18:29 AM »
"I don't understand it so it won't work," with a liberal dose of "all cryptocurrencies are Bitcoin," is what I'm hearing now.

I didn't say that all cryptocurrencies are Bitcoin.

If you know of a cryptocurrency that has taken steps toward solving all those problems, I'd really like to hear about it. Or better yet, I'd like to read a white paper about it. The world's most astute economists can't even agree on the best strategy for controlling inflation, even when given all the regulatory powers of government. Yet you assume that those issues can be solved by a computer program alone?

What I'm wondering is why you're so keen to commit your faith to this technology that has thus far proven useful for nothing more than a sophisticated financial racket.
« Last Edit: January 12, 2018, 04:15:56 AM by John Albert »

Offline daniel1948

  • Hasn't
  • Too Much Spare Time
  • ********
  • Posts: 6858
  • Cat Lovers Against the Bomb
Re: Cryptocurrency
« Reply #196 on: January 12, 2018, 09:15:10 AM »
"I don't understand it so it won't work," with a liberal dose of "all cryptocurrencies are Bitcoin," is what I'm hearing now.

I hate to keep recommending an hour-long talking head lecture on YouTube, but the video by Phillip Hallam-Baker above really does answer your question. All cryptocurrencies really do suffer from the same basic flaws as Bitcoin, even though there are differences in minor details and some of them are subject to different flaws than Bitcoin.

Cryptocurrencies are as different from one another as the different species of venomous snakes, but all are venomous, all are useless as actual currency and good only for speculation and the conduct of illegal or nefarious trade. And since the exchanges on which you buy and sell them are unlicensed, all are illegal. And none of them are capable of operating at the scale or the cost required of a currency by an industrial economy.
Daniel
----------------
"Anyone who has ever looked into the glazed eyes of a soldier dying on the battlefield will think long and hard before starting a war."
-- Otto von Bismarck

Offline Shibboleth

  • Reef Tank Owner
  • *********
  • Posts: 8359
Re: Cryptocurrency
« Reply #197 on: January 12, 2018, 01:21:52 PM »
What about beanie babies as currency?
common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools.

Offline brilligtove

  • Stopped Going Outside
  • *******
  • Posts: 5480
  • Ignorance can be cured. Stupidity, you deal with.
Re: Cryptocurrency
« Reply #198 on: January 12, 2018, 01:24:58 PM »
"I don't understand it so it won't work," with a liberal dose of "all cryptocurrencies are Bitcoin," is what I'm hearing now.

I hate to keep recommending an hour-long talking head lecture on YouTube, but the video by Phillip Hallam-Baker above really does answer your question. All cryptocurrencies really do suffer from the same basic flaws as Bitcoin, even though there are differences in minor details and some of them are subject to different flaws than Bitcoin.

Cryptocurrencies are as different from one another as the different species of venomous snakes, but all are venomous, all are useless as actual currency and good only for speculation and the conduct of illegal or nefarious trade. And since the exchanges on which you buy and sell them are unlicensed, all are illegal. And none of them are capable of operating at the scale or the cost required of a currency by an industrial economy.

I watched it last week. I agree with basically all the points he made - at least when they were backed by evidence, and especially as they relate to bitcoin. The technology has changed a bit since he did the video, so a few of his points were a little stale. His points about regulation and speculation were mostly reasonable, and also apply to stocks. After watching, his ultimate argument seems to be that "this can't work because it's never been done" though, and that's just silly.

Your analogy is terrible, Daniel. Bitcoin is shit as a currency. Newer technologies and associated infrastructure address many of the concerns you raise (see below),

"I don't understand it so it won't work," with a liberal dose of "all cryptocurrencies are Bitcoin," is what I'm hearing now.

I didn't say that all cryptocurrencies are Bitcoin.

If you know of a cryptocurrency that has taken steps toward solving all those problems, I'd really like to hear about it. Or better yet, I'd like to read a white paper about it. The world's most astute economists can't even agree on the best strategy for controlling inflation, even when given all the regulatory powers of government. Yet you assume that those issues can be solved by a computer program alone?

What I'm wondering is why you're so keen to commit your faith to this technology that has thus far proven useful for nothing more than a sophisticated financial racket.

Many of your complaints about cryptocurrencies are specific to Bitcoin, so I say you're conflating them. The Telegram offer has technical solutions for several problems with earlier types of blockchain currencies, but you've dismissed them as technobabble. (They have picked silly names, as many tech people do.) They also have organizational/structural plans to control inflation and volatility, among other problems with BTC:

Quote
There will be a planned 200 million “grams” in circulation. Four percent will be held by the development team, a further 52 percent will be held by Telegram to avoid speculative trading, and the final 44 percent distributed in a private and public sale.
- https://www.inverse.com/article/40001-telegram-cryptocurrency-bitcoin-alternative

So in the example here, they can manage the money supply. Given the 106 transactions per second, supply management should be pretty quick. They use proof-of-stake, not proof-of-work, too, so there is not mining or insane energy cost like BTC. THeir business libation is a secure, low-cost, frictionless payment system for the many millions of users. They already have credit card based payments in their network, using many currencies.

One of the consumer benefits to this kind of thing is the ability to cross borders with your money. Governments don't like that, often with good reason. Individuals who have a hard time moving money across borders at a low cost are a lot more interested, though, and not to avoid paying taxes. Sending money 'back home' is a common use case. In places with local currencies that are unreliable or at risk for devaluation, a stable transnational currency would be an amazing benefit.

I haven't found a copy of the big white paper from Telegram yet, but I will peruse it when I do.

evidence trumps experience | performance over perfection | responsibility – authority = scapegoat | emotions motivate; data doesn't

Offline brilligtove

  • Stopped Going Outside
  • *******
  • Posts: 5480
  • Ignorance can be cured. Stupidity, you deal with.
Re: Cryptocurrency
« Reply #199 on: January 12, 2018, 01:29:24 PM »
evidence trumps experience | performance over perfection | responsibility – authority = scapegoat | emotions motivate; data doesn't

Offline brilligtove

  • Stopped Going Outside
  • *******
  • Posts: 5480
  • Ignorance can be cured. Stupidity, you deal with.
Re: Cryptocurrency
« Reply #200 on: January 12, 2018, 01:46:07 PM »
Inflation is intended to stay at 2%.
evidence trumps experience | performance over perfection | responsibility – authority = scapegoat | emotions motivate; data doesn't

Offline CarbShark

  • Reef Tank Owner
  • *********
  • Posts: 8289
Re: Cryptocurrency
« Reply #201 on: January 12, 2018, 02:43:01 PM »
Why would it need a mechanism to track the rate of inflation? Why would it need inflation? Inflation is an anomaly built into use of currencies. It has more to do with money supply and faith in currency than any real-world supply and demand forces.

Inflation is not an anomaly. It is a feature that drives the economy by encouraging spending instead of hoarding.

A deflationary currency (one that gains value over time), negates its own usefulness as a medium of commerce because holding onto the money is almost always a better option than spending it.

For example, say you're looking at buying a car and you have $5000 to put down today. But you also know that the current deflation rate will make your $5000 look more like $7000 in 5 years, it's a better option to hold off on buying the car for as long as possible.

When people are reluctant to buy things, demand dries up, which causes the suppliers to cut back production and lay off workers. Even though the money has more purchasing power, unemployment goes up and wages go down, which causes a vicious feedback loop leading to economic crisis. It makes everybody tighter with their money, including investors that provide the capital for new enterprises and innovations. That situation may be momentarily great for the wealthy few who've managed to maintain enough liquidity to continue making big-ticket purchases, but everybody else who relies on the economy for their livelihood gets forced into an uphill battle against poverty.

On the other hand, too much inflation makes prices soar beyond the reach of consumers, causing a different kind of economic crisis.

That's why economists recommend a moderate, steady, low single-digit rate of inflation to encourage economic growth. Keeping the economy on an even keel requires constant, careful management. If somebody ever designs an effective way to automate the process of regulating a complex, post-industrial economy, there would be no need for alternate currencies (except for the aforementioned illegal and embarrassing purchases, money laundering, tax evasion, conspiracist kookery, investment games and financial scams).

Money has no intrinsic value. It's value (even when based on something like a gold standard) is entirely built on a common perception of the value of the currency.

Inflation/deflation is a side effect of the use of currency. If perception of the value of the currency is not static you have either inflation or deflation.

It may be the case that some inflation is good for growth and too much is bad for growth and deflation causes problems, but that does not make inflation any less or any more than a side effect of perception of value of money, which has no intrinsic value.


But, the question remains unanswered, why should any currency (bitcoin; Euros; pesos; kwatloos) need a mechanism to track its value with inflation/deflation of another currency (Dollars)?
and Donald Trump is President of the United States.

I'm not a doctor, I'm just a guy who has done a ton of research into diet and nutrition.

Offline John Albert

  • Stopped Going Outside
  • *******
  • Posts: 4153
Re: Cryptocurrency
« Reply #202 on: January 12, 2018, 05:36:20 PM »
Money has no intrinsic value. It's value (even when based on something like a gold standard) is entirely built on a common perception of the value of the currency.

I never said anything about value. Currency may or may not have intrinsic value. It depends on the nature of the token used as currency.

For some reason cryptocurrency enthusiasts often say things like, "value is entirely subjective," and "nothing has intrinsic value." Which is not really true from an objective view. Economists have come up with a number of theories and methods for quantifying and calculating value.

For example, commodities like gold have a utility value because they're actually used as raw materials to make other stuff that also has value. That's a separate component from their scarcity value, the value imparted by virtue of the demand outstripping the available supply. Even if everybody in the world lost all faith in gold and decided it's a gaudy, ugly metal that imparts no prestige whatsoever, the metal itself would still have significant value because of its scarcity and usefulness in industry. Even though the Spanish "doubloons" of the 19th Century are no longer legal tender as currency, the gold in one of those coins is worth somewhere between $290-360 depending on its specific weight.

Another obvious example is copper. That metal used to be so cheap and abundant that the US Department of the Treasury chose it to mint our lowest denomination coinage. Nowadays our pennies are mostly zinc, and we have crackheads breaking into abandoned buildings and stripping out the plumbing and wiring to get at the copper. Every penny that the US Mint turns out actually costs 1.5 cents to produce, mostly because of the rising intrinsic value of copper and zinc. You can claim that intrinsic value doesn't matter in your own subjective opinion, but that's simply not the case from an economic perspective.


Inflation/deflation is a side effect of the use of currency. If perception of the value of the currency is not static you have either inflation or deflation.

What does this have to do with the effect of inflation or deflation on the economy? Inflation and deflation have numerous causes, including the banking industry's regulations on the money supply. 


It may be the case that some inflation is good for growth and too much is bad for growth and deflation causes problems, but that does not make inflation any less or any more than a side effect of perception of value of money, which has no intrinsic value.

Inflation or deflation isn't just a side-effect. The rates of inflation of most modern currencies are actively managed by their issuing governments or banking systems.

Before you attempt to reply again on this subject, please read this: https://www.thebalance.com/inflation-and-deflation-definition-causes-effects-3306106


But, the question remains unanswered, why should any currency (bitcoin; Euros; pesos; kwatloos) need a mechanism to track its value with inflation/deflation of another currency (Dollars)?

I already told you. Lacking such a mechanism, there is no way to regulate the inflation or deflation of the currency to ensure that it maintains a stable store of value that is useful as a commercial medium.

Most governments that issue currencies already have such a mechanism built into their banking system. If they lack those safeguards, or if the government abuses its regulatory power, that has a negative effect on the functionality of its currency. When that happens in the case of a government-issued currency, the citizenry tend to resort to alternate forms of currency or the barter system. If that failure happens with an unofficial funny money -type operation like Bitcoin, people will simply eschew it as a mode of commerce (which is exactly what we're seeing with Bitcoin).
« Last Edit: January 12, 2018, 08:11:55 PM by John Albert »

Offline Jeremy's Sea

  • Kintsukuroi, baby.
  • Stopped Going Outside
  • *******
  • Posts: 4637
  • 667 - Neighbor of the beast.
Re: Cryptocurrency
« Reply #203 on: January 12, 2018, 05:59:15 PM »
Knowledge is power. France is bacon.

Offline daniel1948

  • Hasn't
  • Too Much Spare Time
  • ********
  • Posts: 6858
  • Cat Lovers Against the Bomb
Re: Cryptocurrency
« Reply #204 on: January 12, 2018, 06:18:38 PM »
... Your analogy is terrible, Daniel. Bitcoin is shit as a currency. Newer technologies and associated infrastructure address many of the concerns you raise <...snip...>

Let me know when any of them manages to achieve a stable exchange rate and more than a tiny handful of merchants accept it and price their goods in the cryptocurrency rather than pricing their goods in dollars and adjusting the cryptocoin price according to the exchange rate of the moment.

I'll also be interested to know when there's an exchange licensed to legally buy and sell cryptocurrencies (or any one cryptocurrency) and when any reputable and relatively solid institution will insure your cryptocurrency account. If my bank fails, the FDIC will reimburse me up to (IIRC) a quarter of a million dollars. And since the value of the dollar is relatively stable, I have confidence that my bank account is safe. Let me know when you can say the same for any cryptocurrency. (I don't think that will happen in my lifetime.)
Daniel
----------------
"Anyone who has ever looked into the glazed eyes of a soldier dying on the battlefield will think long and hard before starting a war."
-- Otto von Bismarck

Offline John Albert

  • Stopped Going Outside
  • *******
  • Posts: 4153
Re: Cryptocurrency
« Reply #205 on: January 12, 2018, 06:22:21 PM »
The technology has changed a bit since he did the video, so a few of his points were a little stale.

In what significant ways has the technology changed? Please be specific about how they've remedied the various problems he pointed out.


His points about regulation and speculation were mostly reasonable, and also apply to stocks.

Stocks are regulated by the SEC. Cryptocurrencies are not.


After watching, his ultimate argument seems to be that "this can't work because it's never been done" though, and that's just silly.

He actually makes quite a few arguments. One of which is that the method by which it's alleged to work does not actually work, which explains the failure that we're seeing now.


Newer technologies and associated infrastructure address many of the concerns you raise (see below)

Well that remains to be seen then, doesn't it? I'm not jumping on any bandwagons until I see some evidence that the significant technical obstacles have been successfully overcome. 


Many of your complaints about cryptocurrencies are specific to Bitcoin, so I say you're conflating them.

Not just Bitcoin, but all the other cryptocurrencies out there that are based on the Bitcoin model. (Which is the vast majority of them.)

If some new cryptocurrency technology turns out to be workable, then I'll judge that one separately on its own merits.


The Telegram offer has technical solutions for several problems with earlier types of blockchain currencies, but you've dismissed them as technobabble. (They have picked silly names, as many tech people do.)

Does it, though? I haven't seen any technical details that lead me to believe they've solved all those problems. That "white paper" you posted amounts to nothing more than an advertisement circular with zero information about how any of it's supposed to actually work.

And yeah, I'm just as skeptical of technobabble like "Infinite Sharding Paradigm" and "Instant Hypercube Routing" as I am when I hear Deepak invoke quantum mechanics. Most tech terms tend to be somewhat descriptive of the processes they represent. Those terms sound like pretentious buzzwords created by some marketing department. "Infinite Sharding Paradigm" means what, exactly? The blocks are dynamically divisible and aggregatable? How does that deliver superior performance? Seems like the kind of thing that (from an engineering perspective) would bog down the network with extraneous distributed processing. Does the "Proof-of-Stake" protocol offer enough efficiency to offset that extra workload? What does "Hypercube Routing" even mean? The description in that paper tells me nothing except that it's "smart," along with some vague promises about superior latency and scalability. They give us nothing substantial to evaluate. It's just cryptic techno marketing bullshit.

I'm frankly baffled as to why you'd just believe in this stuff without any evidence that it works, or even given any credible mechanism of operation.


They also have organizational/structural plans to control inflation and volatility, among other problems with BTC

Do they, really? How can you make that statement on so little information?


Quote
There will be a planned 200 million “grams” in circulation. Four percent will be held by the development team, a further 52 percent will be held by Telegram to avoid speculative trading, and the final 44 percent distributed in a private and public sale.
- https://www.inverse.com/article/40001-telegram-cryptocurrency-bitcoin-alternative

Holding onto significant percentages of the initial offering is the same thing that the Bitcoin creators appear to have done (judging by analysis of the blockchain).

This Telegram company is offering their currency for sale to encourage speculative investment, on the implication that its value will increase over time. When in fact, any increase in value that would make it a worthwhile investment product is contrary to the way a useful currency operates. So either they're intending to trick investors into investing in a high-risk yet marginally profitable (but potentially useful) currency, or else they're just putting a creative marketing spin on the same cryptocurrency M.O., using the pretense of a currency to create yet another cryptographic investment game to monetize their company. Either way, it looks pretty scammy at first glance.


So in the example here, they can manage the money supply.

They can? I haven't seen any  mechanism for them to do that. Merely holding onto the majority of units would not necessarily allow them to regulate the system. There would also have to be some cotrol mechanism in place. The paper you posted described no such functionality.


Given the 106 transactions per second, supply management should be pretty quick.

Assuming they can achieve that level of efficiency at market scale. But that's a big "if." If you recall, Bitcoin also promised free, almost instantaneous transactions. All of that went straight out the window once it became popular.


They use proof-of-stake, not proof-of-work, too, so there is not mining or insane energy cost like BTC.

OK, that seems like an improvement, depending on how it's implemented (about which we have zero information). But as with everything else in tech, the devil's in the details and the proof is in the pudding. Cryptocurrencies in general have a very bad track record for promising the moon and stars and delivering only scams. 


THeir business libation is a secure, low-cost, frictionless payment system for the many millions of users.

I don't know what a "business libation" is. From the context I'm inferring that it's something akin to a "brand promise," a marketing industry euphemism for advertising claims. Whether it pans out remains to be seen.


They already have credit card based payments in their network, using many currencies.

So do most Bitcoin exchanges.


One of the consumer benefits to this kind of thing is the ability to cross borders with your money. Governments don't like that, often with good reason. Individuals who have a hard time moving money across borders at a low cost are a lot more interested, though, and not to avoid paying taxes. Sending money 'back home' is a common use case. In places with local currencies that are unreliable or at risk for devaluation, a stable transnational currency would be an amazing benefit.

That gets into some more of the legal issues with cryptocurrencies. Governments have a lot of very good reasons for disliking anonymous, untraceable movements of money across their borders.


I haven't found a copy of the big white paper from Telegram yet, but I will peruse it when I do.

Please post it here, if and when you find it. I'd certainly like to get a look at it.
« Last Edit: January 15, 2018, 11:27:27 AM by John Albert »

Offline John Albert

  • Stopped Going Outside
  • *******
  • Posts: 4153
Re: Cryptocurrency
« Reply #206 on: January 12, 2018, 07:44:42 PM »
https://www.dpreview.com/news/6002001981/kodak-launches-kodakcoin-photo-centric-cryptocurrency-and-kodakone-platform
Kodak is now in on the cryptocurrency game.

It appears they intend to employ blockchain technology in a DRM scheme. I wonder how they're planning to do that.

Offline John Albert

  • Stopped Going Outside
  • *******
  • Posts: 4153
Re: Cryptocurrency
« Reply #207 on: January 12, 2018, 08:04:37 PM »
[...] rather than pricing their goods in dollars and adjusting the cryptocoin price according to the exchange rate of the moment.

This is a decent measure of whether said "currency" is a reasonable substitute for "the real thing." 
« Last Edit: January 13, 2018, 01:50:29 AM by John Albert »

Offline daniel1948

  • Hasn't
  • Too Much Spare Time
  • ********
  • Posts: 6858
  • Cat Lovers Against the Bomb
Re: Cryptocurrency
« Reply #208 on: January 13, 2018, 09:32:51 AM »
https://www.dpreview.com/news/6002001981/kodak-launches-kodakcoin-photo-centric-cryptocurrency-and-kodakone-platform
Kodak is now in on the cryptocurrency game.

It appears they intend to employ blockchain technology in a DRM scheme. I wonder how they're planning to do that.

According to their link, the block chain technology will register the rights, providing the documentation, and then Kodak will have a program that crawls the web looking for violations. The block chain technology will not prevent copying, the way DRM prevents copying of movies. It will just provide clear evidence of who owns the picture, or at least who first registered it. I imagine that anyone who posts pictures without registering them on Kodak's system, could find their pictures registered and claimed by someone else. And I predict that crooks will do just that, and then sue the original photographers.

So, you take pictures on your vacation, and put them on your web site or a photo site, and if you neglect to sign up for Kodak and register your pictures with them, someone else will grab them, register them, and then sue you.
Daniel
----------------
"Anyone who has ever looked into the glazed eyes of a soldier dying on the battlefield will think long and hard before starting a war."
-- Otto von Bismarck

Offline moj

  • beer snob
  • Reef Tank Owner
  • *********
  • Posts: 9657
Re: Cryptocurrency
« Reply #209 on: January 16, 2018, 01:11:30 PM »
Another bad day for cryptos, China is cracking down. For those pro crypto, what should we be buying today, ripple ?
« Last Edit: January 16, 2018, 01:21:01 PM by moj »