Current Events > I still don't understand cryptocurrency or why it's supposed to have any value

(+) Yeah! (+)

What the fuck is this shit that's been around for 15 goddamn years

I still don't know how it has value myself.

But the short version is crypto is basically just gambling.

It's valuable the same way a Pokemon card is valuable. People will pay money for it because there's hype around it, not because it will actually do anything for you.

It is a neat tech idea that people took seriously and turned it into the newest tulip craze in their obsession with turning "making money" into a video game. It adds nothing to the currency scene and is largely just an easy grift because children will flood any new crypto with money in hopes that it isn't a rug pull (it always is). At best it is a highlight as to why Libertarians are not able to have a functioning society.

It's the digital era. The value of things is determined by how much you can sucker someone in to paying for it and nothing else.

It is completely speculative with no inherent value except what people are willing to exchange fiat for it. In a way it can be considered commentary on fiat currencies too but I've never "made" any money on crypto investments nor have I ever been able to actually use it as a currency in exchange for goods or to pay my bills.

iso20022 coins have value especially long term. It's the block chain technology that's valuable.

just fucking wait bro, viewcoin's gonna explode, and like, places are going to start accepting it as valid currency really really soon.

like really soon. it's an investment, bro

remember ehrgeiz? did you ever do the wine trading in that?

Until you can buy groceries or order from restaurants with it, it's like owning any other stock, but more complicated.

Bitcoin (released 2009)- the first demonstration of digital currency and a separate payment network that anyone can use without needing to go to some authority to receive access. At a bank you need to submit relevant paperwork, with Bitcoin you just download the software for a wallet and you're good to go for a network scoping the entire world. This is powerful as not everyone has access to a bank in their area.

Nowadays, people in 3rd world countries use the Ethereum network and get paid in USDT, USD Tether, a stablecoin pegged to the dollar (1 USDT== 1 USD). But the bitcoin pioneered the technology.

Ethereum (white paper released 2014)- Early bitcoin maximalists, diehard bitcoin fans, had grand dreams for the bitcoin network. You had a financial network that has effectively 100% up time. Bonafide digital assets in the bitcoin (you can't copy/paste a bitcoin like you can copy/paste MP3 files; move 1 BTC from wallet A to wallet B and it will no longer be at Wallet A), so what else can you do with the network? People wanted to put programs on the bitcoin network; accessible to everyone with 100% up time. Turns out you couldn't program shit on the bitcoin network. So disgruntled and frustrated maximalists moved on and created new projects to achieve their vision. Ethereum was among them and with the most exciting vision of becoming the world's decentralized computer as a generalized blockchain platform to host all these programs and protocols people dreamt of.

Ethereum has since grown considerably as the defacto platform for blockchain development. They've recreated a number of traditional financial services with such effectiveness to the point of catching traditional finances attention and have them wanting in.

Unified Golden Record (2023-present) - But here's the problem with Ethereum, first; because of how security is prioritized, the transaction processing speed is too slow. VISA handles something like 40K transactions per second (don't recall the exact number, but it doesn't matter). Ethereum handles 12 per second (this problem has been solved to an extent with layer 2 blockchains that inherit Ethereum's security). Then there's an even bigger issue of it turning out that the libertarian cryptopunks heading the core development of Ethereum, once they have a taste of power, they're not letting that shit go. And so they supported what's called Miner Extractable Value, or MEV. Simply put, for every transaction you make in purchasing a token, a miner will see the transaction you're making and essentially buy it before you to sell to you at a higher price. It's basically theft.

So Banks' response to this is to fork Ethereum and use their own version. However, each bank has their own blockchain. Hundreds of banks means hundreds of private blockchains. More importantly, the NFT craze everyone laughed at? That also caught the eye of banks. AND they have the technology to link an NFT to a real world asset so that NFTs properly represent the RWA as tokens on the blockchain. So right now for banks, the focus is on deploying out these "tokenized RWAs" for trade and use in the industry. It's a financial revolution.

The current direction for public and permissionless blockchains, like Ethereum, waiting for the next craze, ideally real projects that provide real value, but it'd likely be new applications that are designed to be used on multiple blockchains simultaneously and connected seamlessly. Cross decentralized applications or Xapps, the evolution of dapps.

I speedran the history and painted the future somewhat grim with the dominance of bank chains. But the industry is super exciting. It's the next evolution of the internet. The key to understanding the value of blockchains is to understand the power of smart contracts (...which not once did I talk about this). I think that's the hardest thing to wrap your head around. But if you can understand the potential of it then you can understand why so many developers are committing their lives to the industry and be able to filter out those who are merely in it for a quick buck.

It's because everyone else believes that it has value.
Same as any form of currency, with I guess one of the biggest differences being that crypto usually doesn't have any physical aspects to it.

At one point I had a basic understanding of how the blockchain worked, but I can't be bothered to remember any of it now.

ellis123 posted...

It is a neat tech idea that people took seriously and turned it into the newest tulip craze in their obsession with turning "making money" into a video game. It adds nothing to the currency scene and is largely just an easy grift because children will flood any new crypto with money in hopes that it isn't a rug pull (it always is). At best it is a highlight as to why Libertarians are not able to have a functioning society.

The funny thing is it's not even a particularly neat tech idea. Crypto nerds always try to explain why blockchain is this invincible new groundbreaking idea that will be adopted by anything and everything. They'll go on and on explaining all of its many benefits, and then get surprised when they find out that they're mostly just describing qualities of distributed databases.

The only interesting thing about it, the main thing that the bitcoin creator Satoshi intended, was for it to be decentralized. Because he clearly had some sorta libertarian leanings in the immediate aftermath of the 2009 crisis when he created it. But - ironically - crypto as it's used today is completely antithetical to that idea and almost everyone uses centralized entities to interact on it. Defeating the whole purpose. It was also obviously supposed to be used to actually buy things and not for mindless speculation like how most people use it. But it turns out it's really bad at being used to buy things. So people just ignore that part.

UnholyMudcrab posted...

At one point I had a basic understanding of how the blockchain worked, but I can't be bothered to remember any of it now.

Basically this.

https://youtu.be/0obMRztklqU?si=IX9jGQJiYbH5L5CQ

R_Jackal posted...

It's the digital era. The value of things is determined by how much you can sucker someone in to paying for it and nothing else.

Pretty much spot on

Current Events informed me of Bitcoin 11 years ago. Very grateful for this place.

Well, how is a dollar worth anything?

Really overlooking the simple concept of currency value assignment being a tautology.

RetuenOfDevsman posted...

Well, how is a dollar worth anything?

Because the government backs it up and you can spend it anywhere in the US.

Squall28 posted...

Because the government backs it up and you can spend it anywhere in the US

You can spend it anywhere because people accept that it has value, thus giving it value. If no one recognized the government, that back up wouldn't matter.

Squall28 posted...

Because the government backs it up and you can spend it anywhere in the US.

How do they do that? Force people to accept it at gunpoint? They won't trade them for gold, if that's what you mean.

RetuenOfDevsman posted...

How do they do that? Force people to accept it at gunpoint?

Yes. The US dollar's status as a petro dollar is enforced by the US' military dominance.

Was it the crypto bros or the NFT bros that were begging for government regulation to step in when they lost their money. You know, the same regulation they rail against when it comes to why it is a great investment.

Its value is purely speculative and only amongst crypto bros mostly nowadays.

Irl it hasnt accomplished anything its stock gains to the moon would lead many to believe it would.

I don't get the difference between crypto and NFTs either

Aren't they both essentially worthless?

And crypto uses a TON of energy

Sad_Face posted...

Yes. The US dollar's status as a petro dollar is enforced by the US' military dominance.

So they're turning the military on their own citizens after all.

As someone that was a believer in Satoshis vision crypto is just a scam. Get money and get out. None of it is actually solving anything and blockchain can be used anywhere.

any currency not backed by gold has no value

FL81 posted...

any currency not backed by gold has no value

That's not strictly true either.

Pretty much all monetary value is arbitrary.

HylianFox posted...

I don't get the difference between crypto and NFTs either

Aren't they both essentially worthless?

And crypto uses a TON of energy

NFTs are just a subset of the things that exist on (some) blockchains.

I get why crypto has value, what Ive never been able to understand is what mining crypto is

How do I make my gaming PC farm bitcoin

Ill take the hit on the electric bill if it gets me something that doesnt exist that I can sell to some rich idiot for like 30k >_>

FL81 posted...

any currency not backed by gold has no value

Get this Ron Paul shit outta here

Have you tried reading Satoshis paper?

MICHALECOLE posted...

I get why crypto has value, what Ive never been able to understand is what mining crypto is

At a very basic level, everyone who is "mining" bitcoin is trying to come up with a value that when you plug it into a function has a sufficient number of 0s at the beginning of the output. This function is something where there isn't a "better" way of finding a value besides just brute force trying them.

By changing the number of 0s required, you change how many values people have to try on average before success and so you can control it so that roughly every 10 minutes someone in the world will find it.

Theoretically, distributed computing power such that one "coin" is some measurement of compute that you can then put towards some end (or exchange for actual money I guess)

In practice, it's Lucy with the football convincing people to pump in money and electricity with a "trust us dude it's worth it or will be worth it soon"

RetuenOfDevsman posted...

So they're turning the military on their own citizens after all.

I'd have to look up how we went from banks issuing their individual notes to a single currency used by the entire nation. I believe Lincoln did greenbacks? It escapes my memory. But I don't know how they convinced the populace to use the US dollar, but at the time it was backed by silver. Then we moved to be backed by gold in the 1940's, but then the US started printing more US dollars into circulation than gold they had in reserves and got called out on it in the 1960's or early 1960's and that's what caused the push to become the petrodollar, the currency used for oil trades.

But generally, US citizens benefit from a powerful dollar so there's not much of a need to use the military to force adoption. The military comes into play for persuading other countries, especially oil rich countries who don't want to use the US dollar as the currency for trade.