To think a huge crypto bitcoin bloodbath is on the cards.

[Viviennemary]

I have thought this for quite a while. But surely it's any day now. How this crypto market is sustainable is a mystery. A lot of it is backed up by Tether a so called stable coin meant to be worth 1$ but it is suspected Tether isnt backed by anything. Its just printed tokens backed by nothing.

It's important to separate the blockchain technology from the cryptocurrencies it enables.

What I don't get is what calculations are being worked on the mine and why are these calculations required and by whom?

My understanding is that in general conventional currencies work because they at least loosley related to the value of tangible assets and in the final analysis backed by governments with the ability to levy taxes to support the economy. Crypto- curencies are backed by nothing more than sentiment.

What I don't get is what calculations are being worked on the mine and why are these calculations required and by whom?

In short, the security process around logging bitcoin transactions involves solving extremely complicated equations. You need lots of computers making lots and lots of informed guesses at the solution. If you get it right then it validates the transaction and you get rewarded with bitcoin for doing it. Anyone can set up their own "mining rig" (essentially expensive computer equipment) and start doing this but you need a lot of gear and it consumes a huge amount of electricity.

@MrsTerryPratchett

DH is a nerd and says that quantum computers will render bitcoin blockchain and NFTs as useless as tulips.

Seriously, it's good job he is really hot.

Haha, mine is a hot nerd who keeps banging on about quantum computing and crypto too... if DH wasn't home all bloody day working (on nerd stuff) I'd think he had a secret second wife

I always think it seems like a pyramid scheme to me. I can't see where the "value" is.

It's entirely a pyramid scheme. It's less than a zero-sum game - one person's profits must come from another's loss, minus the cost of mining. There is no inherent value. It's all built on confidence - that a willing buyer can be found when you want to sell. Without that confidence, it will crash.

Not all crypto currencies are mined, for a start. They can be issued and used as tokens to propagate the blockchain in the same way you pay banking fees.

My interest (having made a few hundred in bitcoin when I was doing strategy research) is much more in the blockchain and how it can be programmed to deliver smart contracts and other secure transactions across a distributed ledger.

The wide boys have started to move in here (you will see a lot of "Web 3.0" popping up for the gullible) but there is a paradigm shift in the wings.

However we are now straying from technology to politics. And that's probably above my pay grade.

@TrophyWinner it is apparently quite useful for well off afghanis as their economy has collapsed otherwise. It has limited utility in most circumstances.

Bitcoin is mined in a volcano in kazakhstan?? The more I hear about the more I think it is fictional!

@sheroku

What I don't get is what calculations are being worked on the mine and why are these calculations required and by whom?

In short, the security process around logging bitcoin transactions involves solving extremely complicated equations. You need lots of computers making lots and lots of informed guesses at the solution. If you get it right then it validates the transaction and you get rewarded with bitcoin for doing it. Anyone can set up their own "mining rig" (essentially expensive computer equipment) and start doing this but you need a lot of gear and it consumes a huge amount of electricity.

But who is rewarding you with bitcoin when you get it right and what do they get out of it themselves?

Does anyone else just fundamentally not understand crypto, and NFTs? I'm by no means uneducated but I cannot get my head around it.

Two separate issues.

The block chain tech and style is excellent.

The crypto no

@Viviennemary

I have thought this for quite a while. But surely it's any day now. How this crypto market is sustainable is a mystery. A lot of it is backed up by Tether a so called stable coin meant to be worth 1$ but it is suspected Tether isnt backed by anything. Its just printed tokens backed by nothing.

'Its just printed tokens backed by nothing.'

Do you genuienly believe that every Dollar, Pound and Yen in circulation has the underlying asset in repository? Money in circulation is a promise to pay, so FIAT in itself is backed by nothing other than a goernments ability to repay their debt and associated interest.

Being bad for the environment - this is a misleading statement.Crypto mines are actually seeking out alternative cheaper methods of power, such as alternatives and heat energy recycling, they actively seek out alternative power sources, such as tidal and geo thermal. It also uses much less than even the global Gold mining in Gigajoules, so if one is attacking crypto, they should direct the same to global precious metal mining.

I appreciate the varying views on it, however, to dismiss it as a Ponzi schheme is naive. The Blockchain has many uses and is a really exciting are of exploration if you have time to read up on it.

If you don't understand it don't invest in it - How many people are invested in a Vanguard fund? How many of them understand the Sharpe Ratio of their Investments, the Dividend Yield of their stocks, the Alpha and Beta of their portfolio? I understand that an overview of understanding is required, but to only invest in what you fully understand is an un realisitic expecations.

I hold Crypto as part of my overall portfolio.
I see NFT's and sh*t coins as gambling, and stay well away.

I also see Crypto as forming a part of the global economy in then next decade, how much us up for debate, I foress 10% of all financial transactions being Crytpo based.

@DGRossetti

Yes Id like to invest in the block chain side of the things. Have you seen any companies that cover this?

@Hereward1332

It's entirely a pyramid scheme. It's less than a zero-sum game - one person's profits must come from another's loss, minus the cost of mining. There is no inherent value. It's all built on confidence - that a willing buyer can be found when you want to sell. Without that confidence, it will crash.

Does that not define the whole global economy? The property market?

If people bough houses for what they were 'worth;' then they would be 90% cheaper.

Same as Gold, all Gold is, is a coloured metal, that mankind has deemed valuable due to its appearance and applciations.

I hope so. It’s MLM for men, with an idiotic carbon footprint.

But who is rewarding you with bitcoin when you get it right and what do they get out of it themselves?

Ok sorry if I wasn't clear. There isn't a person or organisation rewarding you with bitcoin. No one is in charge of bitcoin. The whole mining process and creation of new bitcoins is just part of the technology. It's just computers running code and communicating with each other.

I have a bit of a professional interest in this and, in my view, Crypto is a Ponzi (some coins are exceptions). For most people it is basically just an unregulated investment product. It is going to pop at some point and the techbros will be long gone leaving the “apes” they lured in to take the losses.

This blog is interesting and I agree with a lot of it. The writer hasn’t exactly got clean hands as he is a software developer in an adjacent tech space, but a lot of his analysis is solid.

www.stephendiehl.com/blog/against-crypto.html

Having said that I do think the defi architecture that a lot of it is built on is going to change the world and asset management as we currently know it is going to die. Timing is interesting because quantum computing could overtake (I am as as much if a nerd as a PP DH) but between now and then it will grow like topsy.

I bought just before the crash and I’m holding for now see what happens I think it will work out but it may not

Yanbu. It's a giant pyramid scheme.

@EishetChayil

Does anyone else just fundamentally not understand crypto, and NFTs? I'm by no means uneducated but I cannot get my head around it.

Me. Exactly this! But then again, the first time I saw a MP3 player I thought my head would explode! 🤣

@fromdownwest

er no, it doesn't describe the whole global economy. The property market is backed by ... property. There is no intrinsic value in a line of code beyond what someone else will pay for it. Property has some inherent value plus the cost of labour and parts to replace it. It also has a yield if you hold it.

Cryptos value is solely confidence.

@orinocosfavoritecake

I hope so. It’s MLM for men, with an idiotic carbon footprint.

That is like saying Diamonds are an MLM for women with an idiotic Carbon blood soaked footprint!

[quote JanuaryBluehoo]@DGRossetti

Yes Id like to invest in the block chain side of the things. Have you seen any companies that cover this?[/quote]
That's rather the point ... you just use the blockchain. Same way you "use" money.

Yes, you can invest in money if you like - that's what interest and bonds really are. But we come then to the network of trust (or otherwise) needed to sustain that infrastructure. And that's all done centrally.

If you think certain crypto currencies/tokens have more going for them than others, then you might take a punt on them. But the whole market is generally full of scam artists (see upthread).

I did develop a proof of concept travel insurance dapp back in 2016 when I worked in strategy. The idea was you put a smart contract on the (Ethereum) blockchain for an insurance event, and if it occured, the contract automatically paid out.

If you want a pointer, the people most interested in blockchain after scammers and tech nerds were lawyers. I went to a few conferences and there were a lot there.

I also met some nice folk from the UK Land Registry. Who had an obvious interest in smart contracts.