Dave at X22 Report has been speaking about how cryptocurrency will also be used to "being down the Fed.". He says " everyone understands digital currency. "
Let me be the first to dispute with my bold statement that I do not understand digital currency.
I understand barter, where one guy needs some bread, and a baker says I'll give you bread if you'll wash dishes for me for an hour per loaf. Labor exchanged for bread.
I understand how the "coincidence of need and provision," makes barter difficult such that a common currency of exchange is needed.
I understand that historically, we had a currency in the US that was at first backed by the gold standard, then changed to be a fiat backed by a promise or trustworthy government. Paper was issued so that people would know how much each person had and could reasonably make agreements of exchange of goods and services.
I understand that there is a limited supply of gold and paper money, and that this amount is measured and tracked...though not audited.
Here's what I don't understand about digital currency:
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How much of it is there in the universe right now?
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Who is responsible for creating and destroying it?
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Who sets its value?
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How is this value protected against fraudulent use?
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How are the uneducated and uninformed protected from those who would prey on their ignorance with regard to digital currency?
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Will the digital currency accounts all be audited and reconciled?
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Is it sufficient to have digital currency, or as with digital ballots, are paper back ups required?
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Who resolves disputes regarding errors in understanding of digital currency "balances"?
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What happens if one's access to his digital currency is prevented by the digital currency controller, as like what has happened on digital social media?
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What happens if weather causes power outages like what is happening now in some sections of the US? Will digital currency adapt? How?
I've got more questions that quite clearly illustrate that I don't understand digital currency.
Therefore, respectfully, Dave X22Report guy, because I really enjoy listening to your viewpoints, I think your statement that "everyone understands digital currency" is wrong.
Ps. I don't recall Q mentioning cryptocurrency bringing down the Fed.
I'm no expert, but I'll try a few of these...hopefully it can give you some threads to pull on or someone else can build on/correct this....
It depends on the coin. Bitcoin for instance has a finite amount and more will only be created slowly until it reaches that cap. Others have so much in circulation it really is worthless except out of it's engineered use. Think creating a crypto for a singular purpose...good example is video games creating their own currency to buy vanity items from their store. It has no value outside of that specific store. I'm not sure I see value in this...but it's there.
I don't know the process of getting it recognized, but anyone with the programming understanding can create a new currency. Within that currency, as far as I know, the currency is earned by "mining" which is providing the computational power needed to validate the record on the chain. It gets more complicated here depending on the currency and what systems/programming they use to validate the record.
This is the essence of digital currency. It's claimed to be immutable and CAN be anonymous. Each node on the blockchain network contains a complete ledger of the currency. I imagine this is like a map of every account and "coin". The point of the decentralized nature of blockchain is that it is protected from fraud and error because the computation have to validated in more than one place. Supposedly the only way to influence it is to take over the majority of nodes responsible for the computations (It can be designed in a central way as well, but I think the intent of the tech was decentralization).
The few crypto I've looked into can be carried in multiple ways. You can havbe an online account as you probably do now. You can download them into a hardware wallet (think USB drive), or you can create paper with the addresses of the coin and account it resides. Its worth mentioning that you don't just have a human readable "account number" as you would a bank. It's more of an address.
This is built into the blockchain tech. The system self regulates, but obviously if you start to talk people's life savings and not some meme coin there should be more assurances and understanding here.
If the crypto is centralized, like a Facebook coin, that would be a concern. True decentralization would give power back to people, but it may also be a pipe dream.
In this regard I feel our currency is already digital. If the store can't process payment we use cash. Ultimately if our infrastructure fails we'll be trading in goats either way right?
Thank you so much for your responses!
A follow up for you, if you are willing...
Would you define what is meant by "mining"?
Is blockchain solely controlled by IBM?
Is blockchain a middleman or value-added service?
Mining might have multiple forms, and I only know about it a conceptual level. Basically though, the computational power needed to validate to the ledger is notable. When you "sign up" to add your resources to the project of verifying transactions and whatnot your reward would generally be currency which you are benefiting. Energy into Profit essentially. Think of what they did with the Folding at Home project.
I don't believe so. I think its just a model for structuring a program. I'm really not familiar with its core makeup. I only just understand this bit lol.
I think it potentially cuts out the middle man if designed properly. In it's purest decentralized form it would be wholly owned by all. You wouldn't need a bank to clear transactions because your peer nodes clear and verify by the nature of the system. This is a utopian design tho IMO.
Excellent helpful responses. Thank you. Pointed to something for me to dig further on, Folding at Home.