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Digital coins may be on the verge of going mainstream

nytimes.com

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Re: Digital coins may be on the verge of going mainstream

#131

Post by malikNF »

rubatuga wrote: post #105

I believe that crypto currencies will not affect most people’s lives (<10%), and therefore it will never go “mainstream”. The applications for BTC are quite limited, and are mostly edge cases such as evading detection, and easy international transfers. The value of a BTC is currently based on the price of mining one BTC, plus mass speculation. If you consider the immense inefficiency and resources required to mine a…

Lets start with the whole, "crypto-concurrency mining is wasting money" argument. This link https://www.federalreserve.gov/faqs/currency_12771.htm shows how much it costs to print a currency note just in the US. This shows how many notes are in circulation in the us https://www.federalreserve.gov/paymentsystems/coin_currcircv...

Then there's the cost in securing the money, transferring it, and keeping track of it add the cost of fake notes, lost and damaged notes and you should see where I am going with this argument.

Then lets talk about "application of btc for edge cases" moving money internationally is not an edge case, it is something that makes the world go round and disruption in that area is no trivial thing. Its not an edge case. As for crypto being used by people to avoid detection, well, you can do the same things with fiat currencies. Why do you think there are organisation like the FBI hiring highly skilled people to track and trace what people do with their money. In a crypto world there is a better chance for law enforcement to catch criminals.

The best thing about the blockchain is it helps us solve the problem of trust, ofcourse I agree there are problems with this model right now, for example how mining pools can technically launch a 51% attack on the major block-chains and the wole tx/s problem. But what you need to realize is these problems are being acknowledged by the community and are being solved little by little, the technology is progressing there's billions of dollars worth of money tied up in this project. One more point, the block chain is not just about currencies, there's so many more areas where they can be useful. Take a look at the Ethereum project.

Therefore I am someone who really believe that block-chains are here to stay and they are going to effect every single one of us.

Re: Digital coins may be on the verge of going mainstream

#132

Post by stephen_g »

wingerlang wrote: post #119
zAy0LfpBZLC8mAC wrote: post #116

Earlier quoted context omitted.

Which primarily shows that you don't understand the banking system? Banks generally don't invest (with the exception of investment banks, but that does not have anything to do with the money in your account). They don't hold your money at all, rather they are in debt to you the moment you put money into your account. Also, there are way more functions and processes at a bank than "putting money into your account" and…

So where do the $2000 go when I hand the bills over? Surely they keep it somewhere. And when I want to take it out, they give it back to me (obviously not the same bills). But yeah, I don't really know how banks work and what they do. But for the average jo (me included) is is all extremely simple to use - which is my point, that Bitcoins are not.

Cash is an asset to the bank. If you give $2000 to the bank, they have an asset ($2000 cash) and a matching liability (they owe you $2000).

They either keep that cash to use for a withdraw or can swap it at the central bank (the Fed in the US) for central bank reserves.

Each bank has an account at the central bank, which they use for settling transfers. There are various ways for banks to send instructions to a clearing house (like ACH, Swift, etc.) but at the end of the day they settle the difference by transferring central bank reserves between their accounts at the central bank.

Here's the important part - since banks are transferring both ways between each-other, generally the amount of reserves transferred between them is some fraction of the total amount being credited to each account. For example, if bank A needs to give bank B $100 million, and bank B needs to give bank A $99 million, then only $1 million actually moves at the end of the day. So banks don't need to hold anywhere near the full amount of deposits in reserves. If they don't have enough to make good, they borrow if from another bank, or the lender of last resort (the central bank itself). For this, the CB charges them the official interest rate.

Anyway, that's how banks are able to create money to lend. Since money lent becomes a deposit, lending from existing deposits doesn't work if you want to follow the laws of double entry accounting. Instead, the bank creates an asset (the signed loan contract with you) and then deposits your account (creating the matching liability), creating new bank credit (which is considered money by people and the Government, even if taxes can only be settled in cash or reserves) as well as debt.

Re: Digital coins may be on the verge of going mainstream

#133

Post by stephen_g »

malikNF wrote: post #131
rubatuga wrote: post #105

I believe that crypto currencies will not affect most people’s lives (<10%), and therefore it will never go “mainstream”. The applications for BTC are quite limited, and are mostly edge cases such as evading detection, and easy international transfers. The value of a BTC is currently based on the price of mining one BTC, plus mass speculation. If you consider the immense inefficiency and resources required to mine a…

Lets start with the whole, "crypto-concurrency mining is wasting money" argument. This link https://www.federalreserve.gov/faqs/currency_12771.htm shows how much it costs to print a currency note just in the US. This shows how many notes are in circulation in the us https://www.federalreserve.gov/paymentsystems/coin_currcircv... Then there's the cost in securing the money, transferring it, and keeping track of it add…

It's worth noting that in most countries, notes are a low-single digit percentage of actual money supply. Most money exists either as central bank reserves or bank credit.

Re: Digital coins may be on the verge of going mainstream

#134

Post by ForHackernews »

honestlyreally wrote: post #80
wingerlang wrote: post #75

Earlier quoted context omitted.

It means they are holding $2000 of your money. And if you send it to another bank then it means they send it to them and now the other bank is holding your $2000. Nothing hard about that. Bitcoin might be easy if you're a techie and interested in it. I am not interested in it and I barely even know where to start. What does it mean to mine stuff? Blockchain? What.. There is no way my parents would remotely get starte…

If everyone wants to take their $2000 out at once, can they? In most countries that's highly unlikely, so is it really $2000? Or something entirely different?

> If everyone wants to take their $2000 out at once, can they?

They'd stand a better chance than everyone trying to withdraw their bitcoins from the various ~bucket shops~ er, bitcoin exchanges.

Re: Digital coins may be on the verge of going mainstream

#135

Post by stephen_g »

jondubois wrote: post #106

Money has been getting increasingly less tangible over the past few thousand years. Initially, the value of money was in the materials that made it up; e.g gold, silver coins. Then people started paying with paper backed by gold; so although the paper itself had no value, it could be used to redeem gold. ... People got used to paper. Then people started paying with paper fiat currencies not backed by anything. Then p…

It's worth reading "Debt: The First 5000 Years" by anthropologist David Graeber.

It's actually crazy how much of what most people think about money (such as the above) has actually no anthropological or historical evidence.

Re: Digital coins may be on the verge of going mainstream

#136

Post by dalbasal »

dcw303 wrote: post #7

We're a long way off mainstream. Take the Web as an example: When my university lab computer got trumpet winsock and Netscape installed, it wasn't mainstream. When Hotbot was launched and could actually search with some degree of efficiency it wasn't mainstream. When I learned html and javascript from reading Webmonkey posts it wasn't mainstream. When I switched to this new upstart called Google it wasn't mainstream.…

Some of this is (to an extent) semantics. What counts as mainstream. Is spotify mainstream if more people still use CDs or tapes than streaming services? Any definition will be at least partially arbitrary, even if some are better than others.

I think the relevant question is "are digital coins an important part of future money?"

I think it's telling that this article is mostly concerned with investment, fortunes risked, fortunes made. Salacious and dramatic. Not so relevant right now to that question.

Investment has a role en route to "mainstream" but this isn't the bottleneck in 2017. Use is - buying goods and services.

On that front, the article has little to say.

I'm skeptical that cryptocurrencies will last unless a lot more people start buying and selling things, paying bills, receiving salaries... Even if they do last as digital investment assets, I'm not sure it matters much.

Re: Digital coins may be on the verge of going mainstream

#137

Post by dalbasal »

dcw303 wrote: post #7

We're a long way off mainstream. Take the Web as an example: When my university lab computer got trumpet winsock and Netscape installed, it wasn't mainstream. When Hotbot was launched and could actually search with some degree of efficiency it wasn't mainstream. When I learned html and javascript from reading Webmonkey posts it wasn't mainstream. When I switched to this new upstart called Google it wasn't mainstream.…

Some of this is (to an extent) semantics. What counts as mainstream. Is spotify mainstream if more people still use CDs or tapes than streaming services? Any definition will be at least partially arbitrary, even if some are better than others. Argument for any definition will generally amount to a definition, even if there are good reasons for the choices.

I think the relevant question is "are digital coins an important part of future money?"

I think it's telling that this article is mostly concerned with investment, fortunes risked, fortunes made. Salacious and dramatic. Not so relevant right now to mainstreaming of cryptocurrency as currency.

Investment has a role en route to "mainstream" but this isn't the bottleneck in 2017. Use is - buying goods and services.

On that front, the article has little to say.

I'm skeptical that cryptocurrencies will last unless a lot more people start buying and selling things, paying bills, receiving salaries... Even if they do last as digital investment assets, I'm not sure it matters much.

Re: Digital coins may be on the verge of going mainstream

#138

Post by jondubois »

neilwilson wrote: post #114
jondubois wrote: post #106

Money has been getting increasingly less tangible over the past few thousand years. Initially, the value of money was in the materials that made it up; e.g gold, silver coins. Then people started paying with paper backed by gold; so although the paper itself had no value, it could be used to redeem gold. ... People got used to paper. Then people started paying with paper fiat currencies not backed by anything. Then p…

Money has never been tangible. It always has been a token for a debt owed by somebody. There is no difference between a paper bill, a coin and a cheque other than the account it references.

There is a huge difference between a coin and a paper bill.

Unlike the paper bill, the gold coin is both a currency and a commodity - It has many useful properties. It can be melted down and turned into jewellery, used in electronics, tooth fillings, glass-making, paint, etc...

Fiat money can be exchanged for other things but fiat money in itself cannot be converted into anything useful. Destroying fiat currency to sell the underlying material is illegal in most countries.

When gold coins were currency, people would shave slivers of gold from their coins to pay for small things. This emphasises that the value of the currency was entirely in its material.

The value of a gold coin as a currency was equal to its value as a commodity.

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