You must drink a lot of vodka to make it through the day...

-Wayne

Tabs I cant tell if you are for or against, Drunkenmiller seems to be coming around, as he thinks a cryptocurrency is what could take the throne as global reserve currency if the USD loses it.

I dont think this is true. Do you have anything to back up your internal reconcile claim?

https://www.fxstreet.com/cryptocurrencies/news/elon-musk-advocates-a-carbon-tax-praises-dogecoin-pans-bitcoin-202105140321

I'm not sure if you asked specifically about PayPal or Coinbase? For PayPal, this is how foreign exchange transfer houses actually work. They have accounts with dollars in them, and they have accounts with Euros in them, and if someone needs to trade into something else, they swap and reconcile internally. Then they charge a fat exchange rate for this privilege. If someone actually needs to "withdraw" from them, then they either pull from their actual reserves, or buy on the open market. If one Buyer has dollars and wants to sell to another Buyer who wants Euros, the system reconciles it automatically internally. This is why PayPal is a somewhat risky place to put large account balances - they are not considered to be a bank and are not regulated. Also interesting to note, this is how large brokerage houses work too - they reconcile most trades internally (when one customer of theirs wants to sell Amazon, and another customer of theirs wants to buy Amazon, they hook those two up internally if they can. You have to be quite large to make that work somewhat smoothly though. This is how some companies perform trades when the market is closed.

It's similar with Coinbase or the other "wallets" for crypto. That is one of the reasons why when Mt. Gox got hacked, the hackers ran away with the reserve accounts that were "allocated" to the account holders. Mt. Gox simply wiped out those balances and "readjusted" everyone's account internally. What a screw! That's called bank fraud here in the US, but apparently not everywhere else...

https://www.reuters.com/investigates/special-report/bitcoin-gox/

Coinbase has a relatively vague press release about how they "perform transactions" and then reconcile the blockchain in a batched process after the fact:
https://blog.coinbase.com/coinbase-rolls-out-bitcoin-transaction-batching-5f6d09b8b045

-Wayne

Are U talking to ME?

I find the more stupid a person is the less intelligent they think I am. .

“If you can't explain it to a six year old, you don't understand it yourself.” Albert Einstein

Everything is a process, a mechanism an equation to me. I distill it down to the essential core. That takes being able to construct and deconstruct until it becomes a second nature.

And finally, "There are more things in heaven and earth, Horatio,
Than are dreamt of in your philosophy." - Hamlet (1.5.167-8), Hamlet to Horatio

I have been "woke" since I had an epiphany on the the road to Damascus when I was 20 years old.

The odd thing about him dropping bitcoin as payment is he just started accepting it back on March 24...has the energy use increased that much in 2 months, or did he just not care about it 2 months ago?

You missed on this one. I'll 'distill' it down for you. I meant, you must drink a lot of vodka because you have such a depressing outlook on the future.

-Wayne

I had this conversation with someone about this the other day. Elon's just a regular human like the rest of us, except he's involved with running SpaceX and Tesla, and a host of other things too. I'd be willing to bet he had no real concept of the amount of energy that Bitcoin mining takes up until he read some recent articles. I only realized this about six months ago. I thought when they said "it takes up a lot of energy", I thought it meant in your house on your electric bill. I had no idea that China had installed all of these mining operations and were using more energy than Sweden! I'm guessing that Elon didn't either.

-Wayne

The reason China is doing it is related to cheap energy costs. When you don’t care about polluting the earth, you can produce power at 1/12th the rate of anywhere else.

US? $0.12 per KWh. China? $0.01 per KWh.

Again, the issue isn’t Bitcoin. It’s speculators driving the price up. It’s the willingness of countries like China to allow for cheap dirty power production. They make it profitable? Want to fix the issue? Don’t ban Bitcoin, address the underlying issues.

(I wonder what percentage of the whole..or if sold back to themselves to encourage selling..)

https://www.rt.com/business/523669-bitcoin-plunge-market-cap-wipeoff/
The world’s biggest digital asset, bitcoin, has seen a huge price plunge that resulted in $365 billion being washed out of the cryptocurrency market.

Bitcoin dropped as low as $45,700 on Wednesday – its lowest since March 1. The token had recovered to above $50,000 at the time of writing, but is still trading at around 11% lower.

This type of reporting bugs me, as it's just not true. Appraisal theory needs to rely on the supply / demand curve, and the time factor too. If something is thinly traded, then the market value is not a good indicator of value. I believe that Bitcoin is relatively thinly traded (Google says only 19% is traded). It's like having a neighborhood with 100 houses and one house sells for $1M, then they would say that the neighborhood is now worth $100M. It's just not accurate. If everyone put their house on the market the next day, the price would plummet. If no one sold *ever*, then the price would go up. Appraisal theory just doesn't work on thinly traded assets...

-Wayne

I knew they did batch transactions but I think the coins still go to your individual wallet, but I guess no one knows for sure but coinbase.

Thinly traded and getting thinner, as more buy it up to hold long term.

You can do an experiment, I think to check? You can just check your individual wallet using a different method than Coinbase? I believe? Maybe?

-Wayne

You are right, you can just look up your wallet on the btc explorer. I just checked and you are right they only settle on outgoing and incoming txs. So they are like paypal in the inter account reconciled balance sense.

I'm pretty sure that's their business model - they perform the one withdrawal from your Bitcoin wallet, and then it goes into the Coinbase account (which is nothing more than digits in their computer system) and is reconciled from there. Then they charge fees on the inter-account transfers? As a risk factor, there is absolutely nothing preventing these coin trading platforms from just making up numbers and putting them into your account. I.E. they took the Bitcoin from you when you "added" amounts to your account. They can just run off with that Bitcoin to Bermuda if they wanted to.

The same risks exist with PayPal - it's not a bank and doesn't operate under any of the traditional banking rules. A "depositor" at PayPal would become a regular simple creditor if PayPal went bankrupt. This is what happened in the old days of banking - when miners (real miners like the ones in California in the 1800s) would deposit their gold at local banks. The banks would store the gold in their vaults and issue paper currency that would reflect that the miner had gold "on deposit" with the bank. The miner could then take that paper and use it in town to buy food, tools, equipment, etc, because the local supply store knew it could go to the bank with that bank's currency and collect the gold.

Well, what could go wrong with that? Lots, as history has told us. Reputable banks didn't have issues. But fly-by-night banks issued more "paper currency" than they had in the vault at the bank. Bank failures were somewhat common, and that is what was the impetus for the establishment of the Federal Reserve and the "nationalization" of the banking system. This was a good thing - it enabled people to have trust in the US currency instead of "Bob's Local Bank" notes. Yes, there are many additional problems with the Federal system, but insolvency (for now) is not really one of them. :)

My point is that PayPal and Coinbase, and the rest of the exchanges and "wallets" are like the wild west again, and there will be failures (as evidenced by Mt. Gox) in the future. Funny side note about Mt. Cox - it failed many years ago and is a Japanese company. Under Japanese law, the losses are capped at the current market value of the Bitcoin back in 2014 or so. So, people who lost their Bitcoin will possibly get reimbursed in the bankruptcy courts at the Bitcoin prices from then. Yet, in an interesting and frustrating quirk for account holders, the owners of Mt. Gox will have some Bitcoin returned directly to them - and it has appreciated tremendously since then. So, the account holders may be paid out at 2014 levels, and the owners may a big windfall (essentially after screwing up big time). Full story here, interesting reading:

https://www.reuters.com/investigates/special-report/bitcoin-gox/

Bottomline, as someone mentioned earlier on this thread - it seems best to keep your Bitcoin codes written down on a piece of paper and don't put it all at one exchange (only keep a partial amount on account at the exchange).

-Wayne

-Wayne

I keep 85% in cold wallet storage most of the time for this exact reason, even if the exchange really kept the coins in your wallet, it makes no difference as they are not your keys.

Drinking a lot of hooch to get through the day has a pejorative connotation that such a libation is required. .

It is your very optimism that is leading you to the cliff. as that optimism keeps you from changing the behaviors that are destructive. There is nothing to be optimistic about when your behavior is destructive and is inexorability leading to a historically predictable bad end.

Bitterly clinging to the past perception of being a rich nation after 1980 has incrementally led Americans to the denouement of 2008. Since 2008 the requiem for a former champion has been playing itself out.

You might think of it as...The alcoholic continuing to indulge in the perceptional hooch of being a rich nation after the Md has told him the stuff is going to kill him. The alkie being optimistic can not bring himself to believe what the Md is telling him is true as he continues to indulge in the destructive behavior..Continuing the destructive behavior only exacerbates the condition hastening the day of the bad ending.

Is the Krystal?

While I can't specifically say that I disagree with most of what you're saying, the one thing I've noticed is that it takes a *long* time for things to deteriorate. They don't really happen quickly. Even the "fall of the Roman Empire" took about 250 years. For Venezuela, it took at least 20 or so years. So, I'm not sure anything significant is going to happen in my lifetime, based upon past history?

-Wayne