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.

[quote Hereward1332]@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.[/quote]
I mentioned that, Property is only worth rhe rebuild and Labour costs, however, it sells at a lot more due to the demand of a finite product.

Fine art is ony worth what someone is willing to pay for it. The base cost of a Picasso and a paiting on the same sized canvas from the same era with the same medium, is worth an awful lot less, even though they are the same things intrinsicly.

People see value in many things, and I can't see why people are not able to see value in a new style of digital currency without it being called a Ponzi scheme.

I agree the NFT's are a push, but again, if there is a demand, it has value, how long that will last is anyones guess.

@fromdownwest house prices are influenced by interest rates and mortgage criteria. For example, an average person's salary in London is £40k so an average couple earning a combined salary of £80k would be able to borrow 4.5 times combined income which makes up £360k. thats a 90% mortgage for my 2 bed flat which is worth 400k. The average first time buyer property in london is around £431k so not massively more than that and 25% of first time buyers get an 'advance inheritance' . Interest rates are also very low which attracts people with significant savings to put their money in property as an investment.

London property is massively inflated (11 times an average londoner's salary- which is why most people who buy in london are now couples), but at least you can kinda work out how people can afford it. With crypto, i can't work out whats the reason

Some coins like shiba inu are supposedly looking to build their own version of a meta verse, where the coins are used as currency.

Whether all that takes off, I haven’t a clue.

Argo Blockchain is one of the BTC miners moving to green mining. Elon Musk has hinted at powering mining using some of his crazy battery things.

I like others have a few quid invested/gambled in this area. Anyone who bets the farm is a fool.

@Ratonastick that's a great blog. I totally agree with this dude. I also agree with him that Blockchain is massively over hyped. I'm a software developer and run a tech company and for years I've been asked if we use Blockchain or if we'll be transitioning to Blockchain. The answer is still no because I can't see any sensible reason for us to use it.

@onlychildhamster I think you're right.

Originally it was marketed as a medium of exchange with the supposed advantage of anonymity (which might be thought of as a bit odd given the permanent transaction record in the blockchain and given paper cash has anonymity too). Over time, people have realised it's an exceptionally unsatisfactory currency or medium of exchange hence it's now marketed as a digital asset though still massively clunky with an enormous electricity cost from the constant calculations necessary to validate transactions and maintain the blockchain. Short term speculators don't really care if there is any fundamental value provided there's a 'bigger idiot' willing to buy hence there is a lot of fanboys and extreme reactions to anyone suggesting the emperor has no clothes. Someone with money and influence can make money by buying then suggesting the product can be used for fashionable real-world payments then sell and suggesting the environmental consequences are too high. Long-term investors presumably think it will have some value given the theoretical maximum number of coins built into the concept (though I'm unsure who will bother spending processing electricity and processing power if there are no new coins to be mined as a reward in the end game). Some argue the fiat currencies issued by nation states with large deficits are unsustainable so this is a better alternative though PRC recently exerted the power of a nation state by banning mining and use in a large economy.

As you might suspect, I'm sceptical (and also sceptical about the long term value of NFTs) though recognise lucky people can get out before the crash in any bubble (Dr Wellcome made millions from the South Sea bubble) though most will lose their pants if it is a bubble.

I do have some concern about how easily it allows criminal organisations to move assets about without being detected. I know there are ways with banks and through companies but this is as I understand it far quicker and easier than that.

It appears that North Korea like it though According to the article they've hacked about $1.7 billon and see it as as long term investment

I don't really understand it. It seems quite volatile and so far as I can tell has now inherent or tangible value so it's not for me

I understand the end product and they do have a tangible purpose. Imagine you could freely manufacture a $1,000 bill with your own unique serial number - that is the best analogy of what Bitcoin becomes. It has value because that unique digital number is able to form part of a chain so that complex transactions can happen in the real world. But it is yours.

As to the true value of Bitcoin, that is difficult to asses. At the moment it is what someone believed it is worth. That is what the market will pay. If Bitcoin is to replace existing currencies, then we are all going to need it. It will have to become more available. The market will have to be purposefully flooded. That suggests the price will have to come down. But who regulates it? The Federal Reserve or The UK Treasury etc? That could bring major problems for investors.

I very much doubt it will get to that. The energy involved would be substantial, we would need huge solar, wind or hydro projects to create sufficient crypto currency and it will take a long time. At a time when all land is competing already for various needs such as housing, leisure, transport, energy, rewilding, let alone food production there is a real risk that crypto currencies may run their course and fizzle very early.

We no longer needs to carry paper money, nor little bits of gold in any event. But talk it up, because of the fear of missing out, why not.

It's not for me. There are plenty of opportunities to make money.

This is SO interesting and helpful, thank you @sheroku and @DGRossetti and other knowledgeable people.

I have long been wanting to understand more but the most I have understood from reading crypto Reddit is that no one knows wtf is going on! It’s all just fuck warren and Charlie, ramen and hodl to the moooooooooooon!

@MorningStarling

Ok. Thicko alert here ... how is crypto "mined"?

Each transaction requires computer power to process securely. People provide the processing power and are rewarded with "mined" crypto-currency.

Generally its a very power-intensive process. Highly-spec'd machines are needed to compete and the rewards are low. And you've got a massive energy bill to consider too.

Oh! I see. o my home computer becomes a 'bit' in the data chain; my electricity bill includes a portion 'for the world'#

Even more daft than I thought!

@Gardeniafleur

This is SO interesting and helpful, thank you *@sheroku and @DGRossetti* and other knowledgeable people.

I have long been wanting to understand more but the most I have understood from reading crypto Reddit is that no one knows wtf is going on! It’s all just fuck warren and Charlie, ramen and hodl to the moooooooooooon!

Don’t forget…. “Wen lambo”.

@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.

@sheroku

YANBU. I think it was Warren Buffet who said "Investment must be rational - if you can't understand it, don't do it.". Anyone "investing" in bitcoin is basically just gambling.

Also bitcoin is terrible for the environment.

I don't really get Bitcoin but why is it bad for the environment?

The world would be a better place if people invested their hard earned cash into job creating businesses that are actually good for the future of the planet rather than environmentally destructive pyramid schemes. That's my (entirely biased) view anyway.

I think crypto has some interesting ideas, but a lot of the "alt coins" are pure scams.

I think in order to be taken seriously:

-they need to actually get bitcoin or another crypto to be adopted on a noticeable scale as money, which was the original idea

-get rid of all the scams and scammers

-make it more user friendly for the average person

Why is it an environmental nightmare?

@Magnited I sound like a luddite but what transactions can it serve a tangible purpose for, significantly better than real world paper records. I've seen Land Registry, investment shares, insurance and other contracts discussed but have never seen a compelling example where the benefits outweigh the risks. You said "It has value because that unique digital number is able to form part of a chain so that complex transactions can happen in the real world. But it is yours." but have you seen any that blockchain facilitate better than fiat currency financial investments mediated through non-blockchain platforms cannot facilitate?

[quote sheroku]@Ratonastick that's a great blog. I totally agree with this dude. I also agree with him that Blockchain is massively over hyped. I'm a software developer and run a tech company and for years I've been asked if we use Blockchain or if we'll be transitioning to Blockchain. The answer is still no because I can't see any sensible reason for us to use it.[/quote]
Henry Ford famously ignored "the market" when setting up to make cars. When asked he noted that if he'd listened to his customers, he would have made "faster horses".

There are a plethora of incredibly bad crystal ball gazing instances in tech. The world maybe needing 5 computers in total. No one needing more than 640K of RAM.

The key to blockchain is decentralisation and sharing of trust. Unless you need (or want) that, it's of no interest to you.

A lot of the power of the state comes from it's control of the money supply. That and people with guns, with the former facilitating the latter. Once you accept that a decentralised infrastructure can remove the state from your plans you can see ways forward.

@sleepyhoglet because when people talk about the blockchain or mining, they are talking about millions? of bespoke computers/processors consuming electricity to perform calculations. The hardware tends to be bespoke and scrapped after a very short period of time (1.3 years) and the aggregate electricity exceeds that of a nation state (which state changes as more bit coins are mined - Argentina in February 2021). All for arguably nugatory benefit.

Who are these Kazakhstan volcano miners? Pictures or it didn't happen.

From CNBC:
69% of under-40 traders investing in cryptocurrencies incorrectly believe they’re regulated, according to the U.K. Financial Conduct Authority.
68% of younger traders compared investing in cryptocurrencies and other high-risk products to gambling, the regulator said.
The FCA previously warned a “new, younger, more diverse group of consumers” was getting involved in higher risk investments

This is worrying.

Kazakhstan was mining 25% of bit coin until the government stopped it. Arguably not a great look for a utility. I think the volcano was El Salvador www.dw.com/en/el-salvador-plans-to-build-bitcoin-city-at-the-base-of-a-volcano/av-59915674

The volcano might suit a Bond villain though.

@housemaus hopefully not the same! But I recommend hot nerds as husbands. Excellent choice all around.

[quote Zilla1]@Magnited I sound like a luddite but what transactions can it serve a tangible purpose for, significantly better than real world paper records. I've seen Land Registry, investment shares, insurance and other contracts discussed but have never seen a compelling example where the benefits outweigh the risks. You said "It has value because that unique digital number is able to form part of a chain so that complex transactions can happen in the real world. But it is yours." but have you seen any that blockchain facilitate better than fiat currency financial investments mediated through non-blockchain platforms cannot facilitate?[/quote]
You might want to ask the dwindling number of Windrush survivors about trusting the state with paper records and then come back.

We return to what I wrote upthread about decentralisation and trust.

If you are happy to trust a single entity - be it your bank or the government - to never make a mistake or act in a way counter to policy, law, or contract then really this discussion is moot. You trust them. They can't do any wrong. End of story.

However if for some or whatever reason you don't have 100% trust in them, then moving the data out of their sticky fingers and into a public and decentralised ledger suddenly looks like an idea.

Add to that the power of cryptography - where transactions are locked to a unique uncrackable* key, and you can start to deliver some services without needing a central authority, Just throw it on the blockchain and (since the blockchain is a state machine) let it process it onwards for you.

Uses so far are around provenance and contracts - hence the world of the law sniffing around.

*Just to head off the quantum-crackers, we'll note that quantum computing can also deliver unbreakable and uninterceptable codes as well as cracking conventional ones. Although my feeling is like nuclear fusion this is forever going to be "in the near future" for 50 years ....

Although my feeling is like nuclear fusion this is forever going to be "in the near future" for 50 years ....

I think you're probably right here. When I studied quantum computing at university I was told it was literally about to change everything. That was 15 years ago.

@DGRossetti I'm aware everything has costs and benefits and I'm aware of some the issues both regarding records and fiat currency too. I don't think paper records are perfect though have not seen any compelling value proposition for blockchain which is why I asked. If your standard is perfection as in the Windrush records then how many Bitcoin owners relying on the blockchain have lost access due to the loss of HDD/ memory sticks, hacking of wallet providers and so on?

I also understand what happens when I try and access old optical media. I recall the BBC Domesday Book had problems with the optical media storage which wasn't a great look given the analogue records it emulated have lasted for over 1000 years. The blockchain is decentralised but by its novel nature has no certainty about stability.