Cryptocurrency -- Is anyone on-board?

[Marco]

A cryptocurrency will succeed when someone figures out a way to make the value relatively stable. People won't be making much money from trading the currency itself at that point but it will be potentially useful as a method of transferring value, which is what a currency is designed to be.

That's not that hard. the concept Tether regardless of all the shenanigans can work just fine. The real problem is that governments at some point will simply come down on it like a ton of bricks, even if you try to do it with say gold instead of the dollar.

[Halcyon]

As for cryptocurrency itself. It'll rebound but without bitcoin. Look forward to a brand thats a little bit more institutionally backed/invested in the 2nd phase as ironic as that sounds.

I've been saying this for months. When I talk about Crypto, people immediately mention "Bitcoin" which I follow up with "I'm not touching it with a barge pole". This is the adjustment many were predicting and many others said "wouldn't" happen. Sadly, I think Bitcoin is here to stay, at least as a "brand", but there have been many, MANY losers from the Bitcoin crash and they are unlikely to recover anytime soon (if ever).

Many of those who invested in the "smarter" currencies have still come out on top (for the most part). Now that the masses have realised Bitcoin was a terrible idea in recent times, they'll start to look elsewhere. Do you homework, try to ignore the white noise and look at alternatives such as Ethereum, Ripple and Iota (among others).

HELPFUL WORD OF ADVICE FOR ANYONE JUST STARTING OUT IN CRYPTO: Forget Bitcoin, even if you're thinking of mining it (unless decent equipment, power etc... are completely free for you).

[Marco]

Do you homework, try to ignore the white noise and look at alternatives such as Ethereum, Ripple and Iota (among others).

I don't do homework, I do common sense. Here's a few facts about cryptocurrencies :

- The moment the remaining wire-transfer and credit card connections between cryptocurrencies and real currencies are removed by first world nations, cryptocurrencies are dead. It can not sustain itself on face to face currency exchange and wire transfer in off shore nations (who would be quickly be brought to heel, or be themselves cut off from international wire transfers).

- There are no legal use cases for cryptocurrencies which couldn't be more efficiently served by a centralized entity, if it wasn't for balkanized financial regulations and their overhead. Yes cryptocurrencies "avoid" those regulations, but they can do that only as long as the first world abides it (see above). They provide nothing E-Gold didn't, with the same criminal consequences, just this time without a central party to sue into oblivion. Just like E-Gold, governments will get fed up with it at some point.

Cryptocurrency is coasting on a phantom of respectability created by the lies of people to get rich, among which many highly educated people. You might get rich by people believing those lies but you shouldn't believe them yourself. Go into it with both eyes open.

[hendorog]

Do you homework, try to ignore the white noise and look at alternatives such as Ethereum, Ripple and Iota (among others).

I don't do homework, I do common sense. Here's a few facts about cryptocurrencies :

- The moment the remaining wire-transfer and credit card connections between cryptocurrencies and real currencies are removed by first world nations, cryptocurrencies are dead. It can not sustain itself on face to face currency exchange and wire transfer in off shore nations (who would be quickly be brought to heel, or be themselves cut off from international wire transfers).

There is no need to 'remove' the connections, they just need to adhere to the same standards and rules as everyone else. This is done using regulation.

The same thing exists (here) for all other types of 'exchanges' to real currency, e.g. insurance payouts, so it is common sense that the same should also be done for crypto exchanges.

For example, from the local regulations for AML/CFT for financial institutions:

* Require customer due diligence to be carried out on anonymous accounts
...
* Prescribe annual reporting requirements.

[Marco]

There is no need to 'remove' the connections, they just need to adhere to the same standards and rules as everyone else.

The exchanges can and do know their customer and all that other crap, they are localised (something like coinbase only operates in a limited set of nations for instance). The blockchain however knows bugger all about its customers. Sure, it's not a legal person and it's distributed so it has a good excuse. Governments don't have to listen to even good excuses though. I don't think they should either, cryptocurrencies are a hive of scum and villainy. Cut them off at the knees, the electronic connections to real currencies.

[hendorog]

There is no need to 'remove' the connections, they just need to adhere to the same standards and rules as everyone else.

The exchanges can and do know their customer and all that other crap, they are localised (something like coinbase only operates in a limited set of nations for instance). The blockchain however knows bugger all about its customers. Sure, it's not a legal person and it's distributed so it has a good excuse. Governments don't have to listen to even good excuses though. I don't think they should either, cryptocurrencies are a hive of scum and villainy. Cut them off at the knees, the electronic connections to real currencies.

Yes exactly - so regulation is no problem as it is just a case of reporting what they already know. Although they will need to meet a certain standard of confirming identity which may or may not be a change.

As long as the conversions to/from real currency are tracked then the blockchain is not important.

However due to its nature, blockchain provides the ability to follow a transaction from source to destination, as it is a public ledger and cannot be altered. This is not the case for other types of transaction so the blockchain is _more_ traceable than other methods of exchanging money.

[Bud]

This is not generally correct. Tracing is only simple if source and final destination is 1 hop. As soon as you insert an intermediary who split the initial transaction in parts, things become complicated. The intermediary may transact with bunch of other nodes, so you won' know to who the source money went in the end and in how many pieces.
Also there are blockchains like Monero that were specifically designed to provide privacy of transactions, read: non traceability.

[hendorog]

This is not generally correct. Tracing is only simple if source and final destination is 1 hop. As soon as you insert an intermediary who split the initial transaction in parts, things become complicated. The intermediary may transact with bunch of other nodes, so you won' know to who the source money went in the end and in how many pieces.
Also there are blockchains like Monero that were specifically designed to provide privacy of transactions, read: non traceability.

Yes I agree. I wasn't very clear - I didn't mean that all transactions could be fully traced. I just meant that there is more traceability than is provided by other types of financial transaction.

[Marco]

Yes exactly - so regulation is no problem as it is just a case of reporting what they already know.

With something stable like Tether, ignoring the shenanigans, criminals can simply de-link from the exchanges for a while and deal only on the blockchain. Eventually they have to launder it, but in the mean time they have a currency with pseudonimity, which is far easier to transfer than cash. Especially across borders.

You can't just transfer a million dollars without payer/payee information on file and a risk assessment by the service providers if it's done with traditional currency and wire transfer. On the blockchain it's just another transaction. Or more likely, a couple thousand transactions ... no one to connect them all to a single person after all, not while things stay on the blockchain.

[hendorog]

Yes exactly - so regulation is no problem as it is just a case of reporting what they already know.

With something stable like Tether, ignoring the shenanigans, criminals can simply de-link from the exchanges for a while and deal only on the blockchain. Eventually they have to launder it, but in the mean time they have a currency with pseudonimity, which is far easier to transfer than cash. Especially across borders.

You can't just transfer a million dollars without payer/payee information on file and a risk assessment by the service providers if it's done with traditional currency and wire transfer. On the blockchain it's just another transaction. Or more likely, a couple thousand transactions ... no one to connect them all to a single person after all, not while things stay on the blockchain.

Yes you could send money which is already in crypto to a dodgy country with no oversight, and they could convert it out of crypto to cash using a local exchange.

However once the reporting starts you won't be able to convert local money to crypto, nor convert any crypto to local money back without getting caught in the net.

That's how the AML tracking works now IMHO - it monitors the 'endpoints' and not the transaction internals. I don't see how this is any different for crypto.

[julianhigginson]

I keep thinking I must be missing something about all this blockchain "coin" stuff.. I mean, I understand the basic idea, I just don't see how it's that valuable.

Now I'm thinking, maybe I should put a few hundred in to have a play and get a feel for what it's like to use? At least that's a learning experience I guess.

Good to see the discussion here, because yeah, I also feel Bitcoin's days are numbered. Guess I'll look into some of the others.

[suicidaleggroll]

Now I'm thinking, maybe I should put a few hundred in to have a play and get a feel for what it's like to use? At least that's a learning experience I guess.

Good to see the discussion here, because yeah, I also feel Bitcoin's days are numbered. Guess I'll look into some of the others.

Ethereum is poised to take over #1, an event called "the flippening", it will likely happen later this year.  Eth has very few of the drawbacks that bitcoin does, namely speed, fees, etc., and it's significantly more flexible.  It's what I've been focusing on (not with any "real" money though, started with $1k back in July when it was $200/ea), and it's been interesting.  We're currently pulling out of a big dip, yesterday would have been the time to buy, but if it keeps rising it won't matter too much.

[NiHaoMike]

- There are no legal use cases for cryptocurrencies which couldn't be more efficiently served by a centralized entity, if it wasn't for balkanized financial regulations and their overhead. Yes cryptocurrencies "avoid" those regulations, but they can do that only as long as the first world abides it (see above). They provide nothing E-Gold didn't, with the same criminal consequences, just this time without a central party to sue into oblivion. Just like E-Gold, governments will get fed up with it at some point.

What about where decentralization is the desired feature? One example is an in game "currency" that does not depend on any centralized service being online to work, yet is very resistant to cheating.

Cryptocurrencies also makes a great way for individuals to turn computing power into money. I remember some service that "borrowed" your computing resources in order to earn credits that can be used to buy music, with the goal of cutting down piracy, actually gave it a try back in the day (in a VM since I did not trust its security or lack of it), but it never caught on. Some cryptocurrencies like Curecoin/Foldingcoin and Gridcoin actually do useful work outside the cryptocurrency system itself.

[julianhigginson]

Ethereum is poised to take over #1, an event called "the flippening", it will likely happen later this year.

that sounds like fun!

[mariush]

Indeed.

Ethereum used to be sitting at around less than a third of bitcoin's market share before the start of this year , now it's almost half the market share of bitcoin. We're talking $12 billion vs $5.5 billion for Ethereum.

Unlike Bitcoin, Ethereum is also transitioning to a mixed POW/POS system, where at the start (in a few months) part of the blockchain will still be mined, while a part (probably less than 20%) will use proof-of-stake to validate transactions, and this is  the building block for implementing sharding which will scale the number of transactions possible and make it possible to massively parallelize the creating of the blockchain (scale up transactions  per second, less bad blocks mined, etc).

Now I'm thinking, maybe I should put a few hundred in to have a play and get a feel for what it's like to use? At least that's a learning experience I guess.

Good to see the discussion here, because yeah, I also feel Bitcoin's days are numbered. Guess I'll look into some of the others.

Ethereum is poised to take over #1, an event called "the flippening", it will likely happen later this year.  Eth has very few of the drawbacks that bitcoin does, namely speed, fees, etc., and it's significantly more flexible.  It's what I've been focusing on (not with any "real" money though, started with $1k back in July when it was $200/ea), and it's been interesting.  We're currently pulling out of a big dip, yesterday would have been the time to buy, but if it keeps rising it won't matter too much.

[ramin110]

Hi, I just find a new Coin ICO and it's called pm7 and for start it's giving 20$ bonus!
http://pm7.pm/ico/50652de9
what is ICO? 

[suicidaleggroll]

Initial Coin Offering.

The first step in the process of separating a sucker from their money.

I actually agree with you there.  There are over 1000 cryptos out there, the vast majority have already or will fail.  Only invest in a project if you truly believe it's revolutionary, because those are the only ones that survive.  Pm7 looks like nothing more than an MLM/pyramid scheme.  I'd be amazed if it actually survives to the end of the year.

[NiHaoMike]

ICOs are so associated with scams that some cryptocurrencies (including one that I have been mining for over 2 years) specifically advertise "no ICO".

[amspire]

A great use of blockchains is to be able to store a hash of a document containing a concept or invention so that you can prove a date of your idea in the future. This way, you can keep your idea totally secret, but still have solid proof of the date of the document.

There is at least one coin, Namecoin, that lets you store a 520 character string record. Namecoin is a fork of Bitcoin from 2011. The problem is you have to pay 0.01 Namecoins for a record and it has to be renewed every 200 days or it expires. This fee goes to miners who are essentially storing your records in their blockchains. I have no idea if this coin becomes uneconomical just like Bitcoin if its value grows like Bitcoin. It would be useless if it starts to cost hundreds of dollars per idea every 200 days.

There is something called Loci Coin designed to "revolutionize the Patent industry", but the costs were way to high to be bothered.

Are there any current major coins that somehow let you store a small string of data? A 256 bit hash could be stored as hex in 64 bytes of data and you could reduce this more to 42 bytes.

[NiHaoMike]

Any reason for having the records expire? Once in the blockchain, it's there "forever".

[amspire]

Any reason for having the records expire? Once in the blockchain, it's there "forever".

I agree, but that was how Namecoin was designed. They do not expire the transactions - just the 520byte records.

[amspire]

I gather I wasn't quite right about Namecoin. You pay 0.01 Namecoins to register a name and that name can have multiple records. The maximum space has to be less then a block size which I think is 1MByte. The coin used to store records is blocked from being transferable so you cannot accidentally use it for cash.

They only changed about 400 bytes from the Bitcoin code in 2011, so it would appear to have all the Bitcoin problems. So if it reaches $100K per coin, I guess you will be paying $100 per transaction. I don't know if the 0.01  Namecoin is fixed, or if it decreases as the coin difficulty increases.

[NiHaoMike]

There used to be a cryptocurrency (Realbucks) designed so that if an account is abandoned for a long time (6 months?), the coins in it would be eligible to be "remined". They traded the problem of "lost" coins with the far worse idea that coins "expire". Not surprisingly, it didn't even last long enough for that rule to have any effect. I did make a decent amount mining it while it lasted, exchanging it often for obvious reasons.

[Marco]

Are there any current major coins that somehow let you store a small string of data? A 256 bit hash could be stored as hex in 64 bytes of data and you could reduce this more to 42 bytes.

All of them? The usual way to store the timestamps is to aggregate a whole bunch though.

Opentimestamp and Originstamp have servers to do this for free, Originstamp also publishes to twitter.

PS. I guess some don't keep a complete transaction ledger, like Nano, so they wouldn't work.

[hamster_nz]

Any reason for having the records expire? Once in the blockchain, it's there "forever".

Proving something mathematically almost certainly true, and proving something legally true is completely different.

IANAL, but I would think a copy of the design sent to a lawyer in a postmarked  letter is far.more legal proof than a hash of your design file stored in any block chain (if you ever were able to find your file with the matching hash!).

You will have a very hard time cutting lawyers out of the equation, as such.things are matters of law