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What Is Cryptocurrency: Everything You Need to Know

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Re: What Is Cryptocurrency: Everything You Need to Know

#11

Post by aethertron »

mirimir wrote: post #6
aethertron wrote: post #4

Seems like a decent overview of the technical aspects. But doesn't it miss something important: whence cometh the value? Why would I, or anyone, actually want to own Bitcoins?

Value is determined by what others will pay, as in any market. But additionally, the hard-coded long-term decreasing rate of production imposes deflationary bias. That manifests as underlying exponential price increase, with various speculative bubbles superimposed.

>Value is determined by what others will pay

Yes, assuming that others will pay for it. And perhaps an increasing number of productive individuals will. But that just pushes the question back one step. Why do those other people want to own Bitcoins? You see the infinite regress problem here?

(With fiat currency, there's a finite regress. It terminates with specific facts like historical government actions, gold, taxes.)

Re: What Is Cryptocurrency: Everything You Need to Know

#12

Post by kylebenzle »

Xophmeister wrote: post #3

I wish it went into more details about a number of things I'm still not really clear on: 1. Why is it becoming harder to mine new Bitcoins? Is this an artificial constraint imposed by the eventual finite supply (i.e., it's controlled by the Bitcoin client software), or is it just a natural consequence of that? 2. If it's simply to do with the client, why couldn't one fork it with different parameters, but while still…

[Removed for being a dick (apparently)]

Re: What Is Cryptocurrency: Everything You Need to Know

#13

Post by aakilfernandes »

kylebenzle wrote: post #12
Xophmeister wrote: post #3

I wish it went into more details about a number of things I'm still not really clear on: 1. Why is it becoming harder to mine new Bitcoins? Is this an artificial constraint imposed by the eventual finite supply (i.e., it's controlled by the Bitcoin client software), or is it just a natural consequence of that? 2. If it's simply to do with the client, why couldn't one fork it with different parameters, but while still…

[Removed for being a dick (apparently)]

xkcd: Ten Thousand

https://xkcd.com/1053/

Re: What Is Cryptocurrency: Everything You Need to Know

#14

Post by mirimir »

aethertron wrote: post #11
mirimir wrote: post #6

Earlier quoted context omitted.

Value is determined by what others will pay, as in any market. But additionally, the hard-coded long-term decreasing rate of production imposes deflationary bias. That manifests as underlying exponential price increase, with various speculative bubbles superimposed.

>Value is determined by what others will pay Yes, assuming that others will pay for it. And perhaps an increasing number of productive individuals will. But that just pushes the question back one step. Why do those other people want to own Bitcoins? You see the infinite regress problem here? (With fiat currency, there's a finite regress. It terminates with specific facts like historical government actions, gold, taxe…

As far as I know, there are no hard limits for Bitcoin value, in either direction. But with a large enough user base, regression to the mean guarantees some stability. Also, many traders have hard-coded buy/sell targets, and I gather that damps out large fluctuations.

I don't speculate in Bitcoin. I just use it.

Re: What Is Cryptocurrency: Everything You Need to Know

#15

Post by aethertron »

lumberjack wrote: post #7
aethertron wrote: post #4

Seems like a decent overview of the technical aspects. But doesn't it miss something important: whence cometh the value? Why would I, or anyone, actually want to own Bitcoins?

I was also having this problem. But I think one must just do away with the self imposed condition that the use of Bitcoin must abide by the law. Bitcoin is useful against capital controls. One then wonders if that was the real motivation behind Bitcoin. It's maybe not a coincidence that it has widespread use in China. I don't want to speculate any further. Just having this thought right now.

>Bitcoin is useful against capital controls.

True if any only if, and the degree to which, possession of BTC is considered desirable. If it's a sought-after 'commodity'. Otherwise it's just a decentralised simulation of money, no matter how many desirable qualities it simulates. MMO games have simulated internet money, and various transfer features too.

People who got into BTC early, did so because they wanted it to fulfil its potential as a better sort of modern money. They knew nobody else would accept it as payment at the time. They hoped it would become valuable in the future... and it has. The early adopters essentially gave it its initial kick start by role-playing as if it was money. I don't know if this basis of playing pretend can be a solid foundation for an invented money's value.

It seems too ephemeral. It's based on belief in belief, ultimately based on pretending.

Maybe it would be beneficial, for the sake of stability, to invent a powerful mythological origin story for BTC. Maybe that's what they are trying to do with this still-mysterious Satoshi avatar.

Re: What Is Cryptocurrency: Everything You Need to Know

#16

Post by aethertron »

mirimir wrote: post #14
aethertron wrote: post #11

Earlier quoted context omitted.

>Value is determined by what others will pay Yes, assuming that others will pay for it. And perhaps an increasing number of productive individuals will. But that just pushes the question back one step. Why do those other people want to own Bitcoins? You see the infinite regress problem here? (With fiat currency, there's a finite regress. It terminates with specific facts like historical government actions, gold, taxe…

As far as I know, there are no hard limits for Bitcoin value, in either direction. But with a large enough user base, regression to the mean guarantees some stability. Also, many traders have hard-coded buy/sell targets, and I gather that damps out large fluctuations. I don't speculate in Bitcoin. I just use it.

I don't see why the value couldn't just drop and keep dropping to zero, as users lose confidence.

(I will investigate 'regression to the mean')

Re: What Is Cryptocurrency: Everything You Need to Know

#17

Post by aethertron »

mirimir wrote: post #5

> In the nineties, there have been many attempts to create digital cash, but they all failed. Centralization enabled government take-down :(

I wonder, why wouldn't a law-abiding centralised digital money system work?

Obviously it wouldn't be anonymous. It might not be able to be international. But liberal Western governments want their citizens to be able to interact economically with each other easily (but taxed), don't they?

I recall some messaging from the EU about their interest in establishing ways for ecommerce to work over the continent, without relying on foreign credit card companies.

I guess I should read up on the history of failed microtransaction systems.

Re: What Is Cryptocurrency: Everything You Need to Know

#19

Post by statoshi »

aethertron wrote: post #4

Seems like a decent overview of the technical aspects. But doesn't it miss something important: whence cometh the value? Why would I, or anyone, actually want to own Bitcoins?

The original use case with Bitcoin is to protect your financial sovereignty. Over the years more people have discovered that the features inherent to cryptocurrency can disintermediate many economic interactions and we're seeing more and more use cases built upon the technology. I catalogued a few use cases here: https://medium.com/@lopp/the-multifaceted-nature-of-bitcoin-...

Re: What Is Cryptocurrency: Everything You Need to Know

#20

Post by ianai »

mirimir wrote: post #9
Xophmeister wrote: post #3

I wish it went into more details about a number of things I'm still not really clear on: 1. Why is it becoming harder to mine new Bitcoins? Is this an artificial constraint imposed by the eventual finite supply (i.e., it's controlled by the Bitcoin client software), or is it just a natural consequence of that? 2. If it's simply to do with the client, why couldn't one fork it with different parameters, but while still…

#1 and #7: The difficulty of finding blocks is adjusted periodically (at two-week intervals) so that each block takes ten minutes. As more miners with more efficient hardware have competed to find blocks, difficulty has increased accordingly. If there were less competition among miners, difficulty would be reduced. #2: It's not just a client parameter. #3: The supply cap and underlying deflationary bias were consciou…

...and you would never want to have a precious metal be a currency.
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