Bitcoin crash coming?

[Steve Viegas]

Originally Posted by Crowbob

Can somebody explain to me in second grade English, first grade math and primary school computer what cryptomining, or whatever it is, is?

I want to take on this challenge...

People invented money because barter was too difficult. It was challenging to find milk, cookies, hamburger, etc. and when you did, you then had to figure out what each one was worth...with the advent of money, people could put a price on something, and it was easier to sell things so the idea of a diverse market place became a reality.

Gold was originally used because it was pretty and rare. Gold does not lend itself to easy taxation though, so governments decided that tender backed by gold reserves.

In the US, the gold reserves ended up giving way to silver reserves and eventually that gave way to the full faith in the US government. Now, that is not necessarily a bad bet. The US government has proven strong.

There are some people who do not like having to have faith in the US government, they do not like the fact that the world relies on the US government to police everything (read economic sanctions imposed by the US that affect everyone because most things are based on the US dollar) and they decided to create an alternative.

if the US could get rid of the gold and silver backing of their money, and people are willing to operate simply on the faith that they have in the government, why can't we give them something else to have faith in?

Cryptocurrency is no different than a paper dollar, EXCEPT that is it not backed by the US government...it is backed by? No one, simply the faith that people will assume it has value.

Bitcoin is an interesting animal because there are only 21MM of them...or there will be when they are done mining. That is a little misleading, because they allow bitcoins to be broken down into smaller units ( I currently own 0.01 bitcoin, but you can get it is as small as 0.0000001 I think)...think of it like pennies.

The mining is asking a computer to do a sophisticated math problem. Originally this problem was pretty easy to solve, and therefore creating coins was easy...solve the problem, get a coin. The problem has gotten harder to solve because each coin requires a lot of verification from the other systems that are working on this problem (block chain technology) and therefore it takes more computer resources to verify/solve. These computers that are being used to solve it today are burning A LOT of electricity.

Anyway, other cryptocurrencies, of which there are many (thousands) may do things differently. Shibu Inu as an example, simply decided to make something like 250 trillion. Like printing your own money. No mining necessary!

So, what is the difference between this and when little kids simply write $100 on a piece of paper? Not much, except marketing. If that kid can get the neighborhood kids to agree that that piece of paper is worth $100 he wins...if not, not much lost.

Now, this cryptocurrency uses a technology called blockchain. Blockchain is interesting, and very useful. It allows for verification, or validation. It allows for tracking. It is great for electronic documentation. Apparently, it is good for minting money too!

So, will cryptocurrency be around for a while? I think so. Do governments really want to crush it? I don't think so. Digital currently (crypto) will make tracking money very easy for them. Will the crypto currency that we end up using in the future look like the stuff that is around today? I do not think so. Is this market very volatile and therefore a potential place to make money playing off market swings? I think so.

How did I do?

[Crowbob]

Thank you Stijl!

Maybe I wasn’t clear.

Pretend like you’re explaining spacetime to a toddler.

What math question are they trying to solve? And why do you get ‘coins’ for doing it? What is a coin?

I have learned one thing in my life; if I can’t understand it, it’s a scam. Much like magnets and women.

[svandamme]

the math they solve is the encryption of all the transactions

let's say you and me have an understanding, I give you and I Owe U for 100 bucks
well, that's easy , piece of paper, I , Stijn, owe U 100 bucks

But it has no meaning or relevance or reliability to anybody else.


Crypto sorts all that out, by having a system of fully encrypted and reliable transactions

Encryption is high end math, it's not 1+1
it's

32343434 x 34343434 to th 256h power and then some

That's the math part of it.. it's beyond human ability to process
So they need a metric ton worth of computers, crunching numbers 24/7


he who invests in the computers and energy to run em, gets rewarded by some crypto coins for his effort. But that only makes sense for as long as teh coins he gets go up in value. (they won't)

[svandamme]

Originally Posted by Steve Viegas

How did I do?

meh

[Crowbob]

FAIL! Abysmally, Steve!

But let me have a crack at your crack at it.

Somebody says instead of a dollar, I’ll give you .000000001bitcoin. Which has some kind of value because there are only so many bitcoins.

Now let’s say I want to buy an obscenely over-engineered status symbol that costs a lot. Like a Porsche say.

Can I go to a Porsche dealer in Miami and say, ‘Here, Diego, I have .0001 of a bitcoin. I’ll take that new 911 Turbo S but in Cabriolet. Make that two, if you could please. In red. Here’s my...bitcoin?’

I mean somehow sitting at my keyboard watching Yellowstone gives me two cars?

I’m old. Has ‘Show me the money!’ Gone extinct?

[Steve Viegas]

Originally Posted by Crowbob

FAIL! Abysmally, Steve!

But let me have a crack at your crack at it.

Somebody says instead of a dollar, I’ll give you .000000001bitcoin. Which has some kind of value because there are only so many bitcoins.

Now let’s say I want to buy an obscenely over-engineered status symbol that costs a lot. Like a Porsche say.

Can I go to a Porsche dealer in Miami and say, ‘Here, Diego, I have .0001 of a bitcoin. I’ll take that new 911 Turbo S but in Cabriolet. Make that two, if you could please. In red. Here’s my...bitcoin?’

I mean somehow sitting at my keyboard watching Yellowstone gives me two cars?

I’m old. Has ‘Show me the money!’ Gone extinct?

Tell me how you really feel!

[Crowbob]

Originally Posted by Steve Viegas

Tell me how you really feel!

HA!

I’ve always wanted to say this instead of getting it told to me:

It’s not you. It’s me.

Seriously. The best concert of all time for me was Tull at Cobo at the beginning of Thick As a Brick tour.

I could relate!

[svandamme]

Originally Posted by Crowbob

FAIL! Abysmally, Steve!

But let me have a crack at your crack at it.

Somebody says instead of a dollar, I’ll give you .000000001bitcoin. Which has some kind of value because there are only so many bitcoins.

Now let’s say I want to buy an obscenely over-engineered status symbol that costs a lot. Like a Porsche say.

Can I go to a Porsche dealer in Miami and say, ‘Here, Diego, I have .0001 of a bitcoin. I’ll take that new 911 Turbo S but in Cabriolet. Make that two, if you could please. In red. Here’s my...bitcoin?’

I mean somehow sitting at my keyboard watching Yellowstone gives me two cars?

I’m old. Has ‘Show me the money!’ Gone extinct?

none of that explains the mining aspect of it.
Which was the real question that was asked.

[stevej37]

I've never bought Bitcoin...but I have traded at Coinstar.
Never made any profit.

[Wayne 962]

Originally Posted by Crowbob

Can somebody explain to me in second grade English, first grade math and primary school computer what cryptomining, or whatever it is, is?

The best analogy is gold, and the computer techniques are designed a bit around mining gold. That is why it's called "mining". So, gold is difficult to mine. It's not common, you have to take a lot of dirt out of the ground in order to get a small amount of gold. It's the same thing with "mining" crypto. The designers of the system made it difficult to mine so that earning "coins" would take some serious effort (and electricity), and would make the system non-inflationary. I.E. if gold mining was easy, there would be lots of gold, and due to supply/demand relationships, its value would go down.

In addition to the mining aspect of this system, there is also something called the blockchain, which is nothing more than a record of all transactions from the beginning of time. So when Bob sends some Bitcoin to Joe to pay for a pizza, the transaction is recorded in this ledger (blockchain), and then replicated all over the world to all of the computers currently mining and processing bitcoin. This is a little bit like the setup of how Napster worked in the old days - and stuff working on BitTorrent - where a large movie or music album file is broken up and distributed amongst a large number of computers (pirates). No one person controls the file, and it's all decentralized.

Miners and processors are paid in Bitcoin to maintain the network and keep copies of the blockchain ledger.

This system was all designed by someone or some group called Satoshi Nakamoto. This person or group posted the whitepaper and code for Bitcoin a long time ago, but has since disappeared. It's pretty much undisputed by *anyone* (friend or foe of Bitcoin), that this whitepaper and resulting system is one of the greatest innovations of our time. Again, even the Bitcoin haters respect the concept and the genius of the original idea.

Having said that, it is my opinion that Bitcoin is simply version 1.0.0 of this brilliant idea, and like nearly every brilliant initial idea, it has it's major flaws, and needs to be improved upon. The system is relatively closed and highly deflationary - meaning that it doesn't adjust well to new funds and new demand coming in (or going out), and thus becomes insanely volatile, as we have seen just today. Another major flaw, and perhaps it's largest, is that it's proof-of-work foundation (the actual process of mining), is difficult for computers and takes a lot of energy. LOTS of energy. Thus, it has a built-in flaw that will prevent it from being adopted by anyone outside of the "fringe financial markets". Again, just my opinion - there are many who agree, and many who disagree with this assessment.

Just to repeat, I believe the technology and innovation is amazing in concept, but Bitcoin, again, is version 1.0.0 and will go down in history with its place right next to Netscape Navigator, AOL, and MySpace (all of which were absolutely stunning innovations at the time). The true thing to watch for will be version 3.0 of crypto (version 2.0 is Ethereum, which has an expanded feature set when compared to Bitcoin, but still suffers from the volatility and energy usage problems).

If I were to take a wild guess, I would think that Cardano ADA would be the 3.0 version that everyone is looking for: https://www.investopedia.com/cardano-definition-4683961

Hope this helps. Feel free to correct my facts (not my opinions) if I got something incorrect!

-Wayne

[Wayne 962]

Originally Posted by stevej37

I've never bought Bitcoin...but I have traded at Coinstar.
Never made any profit.

That's pretty funny, and a bit of an advanced joke (Dennis Miller style!).

-Wayne

[Wayne 962]

Originally Posted by Crowbob

Thank you Stijl!

Maybe I wasn’t clear.

Pretend like you’re explaining spacetime to a toddler.

What math question are they trying to solve? And why do you get ‘coins’ for doing it? What is a coin?

I have learned one thing in my life; if I can’t understand it, it’s a scam. Much like magnets and women.

So, imagine that you want to leave Susie in your fifth grade class a secret note in her locker. But she has a combination lock on the front of it. So, you stand in front of the locker and try all the combinations out (40x39x39 = 60,840). When you finally hit the combo, you get a reward (open the locker). In this case of crypto, "coins" are the reward. Mining takes a lot of time, and is just trial-and-error, so it uses a lot of energy and takes a bunch of time.

Hope this helps,

Wayne

[RobFrost]

Originally Posted by Crowbob

Can somebody explain to me in second grade English, first grade math and primary school computer what cryptomining, or whatever it is, is?

Your email address can be "hashed". That means turning it into a unique encrypted code - a string of apparently random characters. Nobody with the code could ever work out what the original email address was, because of the way the hashing works, it takes a vast amount of computing power to do so.

But anyone with the email address could themselves hash it and VERIFY that the email is the same address, because they would get the matching code. This hashing can be microprocessor intensive work.

Well the whole transaction log of Bitcoin, which proves who owns how much Bitcoin, is like one massive hashed set of bank books. It's called Bitcoin's "blockchain". Mining for Bitcoin is basically doing all the immense amount of hashing work that records new transactions in the blockchain in a secure fashion. In the same way governments effectively tax those who hold money by printing more, Bitcoin miners receive Bitcoin in exchange for completing the hashing work.

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[Wayne 962]

Here's a good thread that explains a lot of the issues with Crypto today:

https://www.reddit.com/r/CryptoReality/comments/lq6xpq/the_defacto_list_of_cryptocurrencyblockchain/?utm_source=share&utm_medium=ios_app&utm_name=iossmf

-Wayne

[Alan A]

Originally Posted by svandamme

none of that explains the mining aspect of it.
Which was the real question that was asked.

I’ll simplify. A lot. Also it’s been a couple of years since I did any blockchain work so this might be a bit flaky - getting old, memory not what it was...

Transactions are recorded in a ledger. Copies of the ledger are written by others to be sure it stays legit. The ledger is divided into blocks.

The person that solves an arbitrarily complex math function gets the right to add the next block and determine what’s written to it. Blocks are created at a fixed rate - every 15 minutes iirc - so for 15 minutes the winner is in charge of the whole deal.

Hashing (the math problem) requires solving a problem millions of times until you get the right answer. It’s called mining because you are searching through lots of answers to find the one nugget of gold that lets you own the block.

The winner gets the right to write transactions to the block.
Which also means the right to pick the transactions that are recorded.

They get paid a certain number of bitcoins for winning. 6.25 iirc.
The transactions pay a fee to be recorded that the winner also gets to keep. When it’s busy the fee goes up, or you wait, so the amount can be significant.

So mining is the act of performing a calculation to get a known answer without knowing the inputs so you can get paid for being first with the right answer.

[Crowbob]

Aha!

A breakthrough!

Thank you, gentlemen (especially Wayne)!

I’m gonna reread all this, digest it for awhile. I’m honing in on Bitcoin being a synthetic currency. Simplisticly speaking, like paper currency replaced gold as the global medium of exchange, Bitcoin replaces paper and all of it is secured in a mathematical cybervault. Like mining gold, mining bitcoin is purposefully extremely difficult and extremely expensive. And since there is an arbitrarily finite number of bitcoins in existence, trading what is already owned is much more feasible than mining it.

So, if I’m even close to understanding it, banks and governments hate cryptocurrency because #1 they don’t own it, #2 they can’t print it, meaning #3 they can’t control it.

Wow!

[Wayne 962]

Very close indeed! Now check out Cardano ADA for version 3.0 of crypto...

-Wayne

[Crowbob]

Will do!

And thank you again!

[RobFrost]

The bit you will never find people within the crypto echo chamber bring into the explanation is that fiat currency is underpinned by police, courts of law, prisons and an army. As a result, crypto can become immediately worthless within any jurisdiction having working law and order, as a result of hostile legislation.

Allowing such currencies to thrive risks creating a class of people with a vested interest in the downfall of law and order.

Crypto only really becomes a danger to democracy once those who believe they are wealthy, upon finding out their "wealth" holds no sway against police and armies, start undermining the will of nation states. A lot of people take nation states for granted and don't realise that if you don't have one, you're basically living in Afghanistan and have to tolerate a whole lot more violent death.

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[sugarwood]

LOL, they are not thriving.
They are just a bunch of Ponzi schemes.