Quote:
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?
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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?