I'm a bright, college-educated anon (educated before the postsecondary schools were indoctrination camps) but I have to admit - I don't understand cryptocurrency. So because I don't understand it, I tend to not trust it.
Is there a good, eighth-grade level primer that will help me learn the basics of what it is and the pros and cons of using it?
Thanks anons.
like most all modern systems of money it is fake and gay because the value of it grew not by mining but by people slowly buying billions and billions of cryptocoins using worthless fiat that is literally debt with zero intrinsic value so basically it is a scam that will stay propped up as long as people remain too stupid to understand how money actually works
The value is not in any one currency, but the control and transparency created by the distributed ledger known as blockchain. I'm sure there are primers out there, but a lot of them are made to sell you a given currency more thank to educate you. But if you research blockchain it's a good start and you'll get a good sense of the value.
Good video worth watching: XRP, XLM & SHX Are the Hidden Reset https://www.youtube.com/watch?v=GnoklfhlSwg
I'm living proof that people are not only spending crypto, but have basically retired because of crypto. Don't get me wrong, I have fiat and precious metals too. Is crypto perfect? No. But show me any kind of money that is completely infallable. Fiat, those little illuminati all-seeing-eye pyramid bills we've been using all our lives, that are constantly losing value? Gold, silver... can be stolen. Your house...can burn down. And the Internet? It was designed by DARPA to be resilient enough to withstand nuclear war. Is it perfect? No. Could it go down? Sure. Is anything perfect? And SHTF? Sure, get prepared for what might happen, but probably 99.999% chance your entire life will NOT be during SHTF, so just get prepared, use what's available, and enjoy existence. Because ultimately nothing will last, including ourselves.
Some, the lucky ones bought early and cheaply then cashed in (sold) all or part at an astonishing profit then spent the profit on land, homes, metals, etc. These BITCOIN MILLIONAIRES cannot be persuaded that Bitcoin has no value. They took profit from the ponzi nature of crypto currency and probably most of us secretly wish we had done the same.
"actual money" has never existed in your lifetime
True that.
I remember listening to an interview of John McAfee, the founder of McAfee Anti-virus software, before he was "killed" in a Spanish prison. This is the same guy who purportedly put a "back door" in his software, sending all the bad guys' stuff to himself, ergo, the need for his "death". Whether he was taken into Protective Custody by the WHs or was killed by the BHs, no one knows except those involved.
He was talking about cryptocurrency in this interview, specifically Bitcoin. He said that they can TRADE Bitcoin all they want but no one actually USES Bitcoin. He went on to describe all the privacy dangers from using Bitcoin given the way it was set up and it wasn't used by many as a result.
I know precious little about crypto and I don't want to. It all smacks of "digital currency" and "digital ID" to me and I want no part of any such schemes. Having said that, a ton of people with good timing have made a fortune with crypto. So did a lot of people in the "dot com" era, until the crash. I'm short Bitcoin (on paper). I know a bubble when I see one. If I'm wrong, they'll squeeze my gonads. That's where the term "short squeeze" comes from. Believe me, I've felt the pressure with real trades before. You feel like you're going to projectile vomit,
John McAfee knows more about Bitcoin than I do so I'm going to trust his judgment. I do see all the hallmarks of a bubble though. Die-hards will rebuke me with claims that it's "going to the moon" but that's because they have already placed their bets,
For a young man like you, I would spend my spare time on acquiring useful skills in demand in the real world. Your rate of return will be greater and so will your life satisfaction.
I would spend my spare time on acquiring useful skills in demand in the real world. Your rate of return will be greater and so will your life satisfaction.**
Lol - just so you know, I'm not young and I'm not a man. All that aside though, I tend toward your way of thinking when it comes to crypto. But then why is President Trump so bullish on it? I keep thinking there has to be something I'm not seeing.
One rumor that I have read is that he's going to move the national debt over to crypto and then let crypto burn. I hope it's true. Burn baby burn,
Sorry about the misgendering.
I'm a stacker and have stocks backed by crypto... trying to spread my bets. I also own land... I try to not have too much cash... we know it's value is not backed the way it used to be.
I think it’s the counter move to CBDC (Central Bank Digital Currency). If that is true, then it’s evidence that the plan has been in action since at least 2009.
that doesn't make sense as cbdc is a resulting possibility of crypto/blockchain tech now if this post were about gold and silver on the other hand
I would recommend these videos on the fundamentals of sound money and the problems with banks and money printing as a basis for why Crypto is the best solution.
https://www.youtube.com/watch?v=iFDe5kUUyT0
https://www.youtube.com/watch?v=mII9NZ8MMVM
https://www.youtube.com/watch?v=-nZkP2b-4vo
If you're already familiar with the central banking scam, and how inflation robs everyone by lowering wages, then it becomes easy to see how Crypto solves most problems and why gold failed.
Gold was good, but physical coins have problems, for example if someone tries to pay you with a gold coin, you'd be hesitant to accept it if it had loads of scratches or some chunks missing, so it's not as fungible as paper money. No one cares if paper money or physical (but worthless) metal coins are slightly torn or scratched, because all banks will accept them and because they know the central bank will replace them for free. So that's what fungible means, my crisp dollar is worth the same as your tatty dollar.
The 2nd problem with gold is divisibility. Tiny gold coins are too valuable for smaller payments, so people used silver as well, but silver can tarnish.
The 3rd major problem: In the modern world, you can't use physcial gold for online payments, or send it around the world quickly. But paper money can because it can go through a bank and be digital.
This leads to the biggest weakness of gold, everyone starts using paper money backed by gold because it's far more convenient. Allowing governments to take control of it and break the promise of it being gold-backed like they did in 1933 and 1971.
We need sound money that combines all the conveniences of cash and banks, but with the immutable properties that make gold a great store of value.
So onto your main question about Crypto. How does it work? How do we know it can be kept out of the hands of government control, just like how they can't print gold.
It all comes down to how mining makes it decentralized. Any corporation can run a block chain or database to keep track of people's balances like Paypal, but then you have to fully trust them. If Paypal had their own token/currency, you would have to trust them not to inflate it, and trust them not to alter your balance, or censor you from sending money to people they disapprove of.
Mining is what allows the Bitcoin network to be like a decentralized bank, keeping track of your balance and facilitating payments like Visa, but without any government or corp controlling it.
The blockchain is also a clever mechanism, which is what helps everyone agree on a shared history of transactions/your current balance.
Roughly every 10 minutes, a new bitcoin block is mined. This is the beating heart of Bitcoin. A block contains all the new transactions people have sent, and basically confirms them. Every block is cryptographically linked to the previous block, so it's impossible to change any information in previous blocks without breaking that link, because the whole community/network will detect and reject it. (there is a consensus called "first seen first saved" that allows you to trust a transaction will be confirmed after a few seconds, and a shopkeeper doesn't have to make you wait 10 minutes for the block to be mined to trust you won't undo the transaction you just sent to them, but i don't want to over complicate things). And every miner keeps a copy of the entire blockchain history.
Miners are competing to solve a math puzzle which involves finding a hash with certain properties. BBC explains it really well here. https://youtu.be/SzAuB2FG79A
A hash is like a fingerprint to a file. Imagine you took a book, and hashed it, it would create a special number, and if you rehashed the same book, the hash would always be the same, but if you change even 1 single letter out of the whole book, the entire hash will change. This is how the blocks are linked to each other, each block is hashed and the hash is included in the next block. So the hash itself becomes part of all the information that is then hashed again for the next block and so on. Here's a hash website to play around with, just type a random word, then type it again, then change 1 thing. https://emn178.github.io/online-tools/sha256.html
Imagine you have the word "Dog" and convert the letters to numbers. D = 4 so it's "4-15-7" you then add the numbers together and it's 26. So we could say 26 is like the signature/fingerprint of the word Dog, if we do the same process on that same word, it will always be 26. A hash is like that but a more complicated algorithm. The numbers are so big, it's unlikely 2 different things will ever generate the same hash, not impossible but good enough.
The hash itself is super easy to compute and can be done in a fraction of a second. Even with giant files like 1 megabyte bitcoin blocks. Now go back to the hash website and keep randomly changing one of the letters in your word until you find a hash that begins with a letter instead of a number. But now imagine you have to keep changing letters until you find a hash that begins with 2 numbers, or 3 numbers, or it has to begin with 5 zeroes. That is exponentially more difficult.
That is essentially what Bitcoin miners are competing for. They put all the new unprocessed transactions into a block, this block includes other information like the current timestamp and version of software they're using. And they can optionally put their own name of the mining pool or group that mined it.
But importantly, it includes a Nonce (Number only used once) which is just junk data they keep changing until you happen to find a hash with so many leading zeroes.
Once someone finds a hash with that criteria, Everyone agrees to accept that block + hash into the block chain, The miner that found the hash is rewarded with newly created bitcoin + all the transaction fees. Then everyone starts mining the next block with the next batch of new transactions. Eventually the mining reward keeps decreasing, and new bitcoins stop being created and miners will only be paid with transaction fees so it's a fixed supply, even more rarer than gold, because we still discover new gold deposits, and asteroids with gold can hit earth.
The hash challenge is arbitrary and the mining competition does seem a bit silly, and very wasteful of electricity and hardware, it kind of is, but this is the best solution we can come up with to enforce artificial scarcity in a digital world.
The 2 most important things are how the fixed supply limit is enforced, and how the network is kept secure to stop governments taking over and deciding what transactions are allowed in a block.
The 21 million fixed supply limit is enforced by the community collectively deciding to support the version of bitcoin that programs in the decreasing mining reward. Everyone votes with their wallet. If someone decided to run different software which altered the bitcoin mining reward, everyone else would just ignore them and any blocks they mined would be invalid. However if a significant chunk of the community wanted to change the block reward to have permanent inflation, then the network would split. (This has happened in the past like when Bitcoin split into Bitcoin and Bitcoin Cash over disagreements about how many transactions could be in a block because the fees were getting ridiculously high and you couldn't use bitcoin for everyday transactions).
So let's imagine part of the community wanted to split the network to try and take over and increase the mining reward. Let's call the original network BTC1 and the new network BTC2. If you owned bitcoin prior to the split, you would then own tokens on both networks, because the split still includes the shared transaction history/balances up to that point. So if you had 5 Bitcoin, you would now have 5 coins on the BTC1 network, and same on the BTC2 network. The majority would side with the BTC1 network because it continued on the original promise of the fixed supply, and you can just sell your 5 BTC2 coins, and buy more BTC1 coins. If the majority sided with BTC1, they will keep the original Bitcoin name, and the BTC2 network would have to call itself something else, but they would continue to exist. And if the the majority sided with the bad version, you can just side with the new forked network, and continue on as normal. (I personally sided with Bitcoin Cash because the expensive fees were crippling the network and making it unusable as a currency which was the entire point of Bitcoin, to be useful money, not just a slow expensive store of value like gold)
The other most important aspect is security. The problem with decentralization is we need a more structured approach to make sure our shared history of the network/block chain is up to date. Because all the mining nodes just randomly connect to each other. So when you want to send Alice 5 bitcoin, your bitcoin wallet signs your transaction, like entering your bank card pin, and then sends the transaction to as many random mining nodes that it is connected to. These nodes then check that you really do own that bitcoin wallet/address, and that those same coins haven't already been spent. Then they accept the transaction and broadcast it to all the other random miners they are connected to. Eventually your transaction has reached most miners, and which ever one mines the block, will include your transaction in it. If not, the next mining winner will likely include it in theirs. However it is not guaranteed to reach all mining nodes. Think of it like news spreading on social media. You can post something viral on twitter but i'm still not guaranteed to see it, but i likely will. Obviously the bitcoin network is much better and there's probably a 99.99% chance your transaction reached every miner, but because it's not guaranteed, that's why we need blocks spread out over time and the mining competition to ensure only one miner is chosen to be the authoritative source of the next block, and say Ok, here are all the new transactions included, now everyone update their history and balances to this. Because what if Bob tried to cheat the network, and send 5 Btc to Alice, and the same 5 to John at the same time while connected to different mining nodes. Half the network would recieve the Alice transaction, and half the John one. Both are valid by themselves, but not together, so let's say one of the miners who received the Alice transaction solved the hash puzzle, they then announce that block which everyone acceptes. Then miners see the John transaction is now invalid because the Alice one has been confirmed, so the John transaction is rejected.
u/summerstormAK The mining competition is when we are all trying to solve the hash puzzle of the current block, then someone wins, and we all accept their published version of the block, ensuring we all have the same history, then move on to solving the next block.
Mining does seem wasteful but it's the safest and fairest mechanism to choose who the winner will be to publish the next block. If instead, we were just nodes connected to each other, and chose winners based on a random IP address lottery, someone could easily just have more servers to own more IP addresses, or an Internet service provider could use all their IP's to have so many IP's they can become the majority of the network and take over.
So instead we use proof of work, a difficult hash puzzle that proves you needed hardware and electricity to solve it. The more computers you use, the more chances you have to solve the hash puzzle and claim the mining reward. So it's an arms race and everyone is incentivezed to build big mining farms and improve the efficiency of mining chips (People used to mine on CPUs, then GPUs were much better, but then they made custom chips specifically designed for mining bitcoin that were even better)
All miners are incentivized to play by the rules, because the bitcoin they mine only has value because everyone chooses to use it because the system works well.
Currently, there are about 3.8 million mining computers around the world, run by thousands of individual miners or mining groups (people team up and split the reward so you get paid more often). The current bitcoin mining reward is about $300k per block, so every 10 minutes, someone wins that. Collectively all those mining computers cost Tens of $Billions of dollars, plus the whole network is burning about $150k in electricity for each block.
If you wanted to attack the bitcoin network, you would need to control over 51% of the hashpower, then you could mine empty blocks by not accepting new transactions to freeze the network, other miners are forced to keep accepting your blocks because they are valid. But that's it, you can't steal anyone's bitcoin or create infinite bitcoin out of thin air, you can only temporarily pause the network, and this would cost you $150k every 10 minutes, ($21 Million every day), not to mention the Billions would need to spend on custom bitcoin mining chips, which then become worthless if you destroy bitcoin.
That's how the network stays secure. Everyone is incentivized to co-operate for rewards, and if a large miner goes rouge, all the good miners will out compete them. Like if the Chinese military became as powerful as America and attacked them. Every other country would team up against China, and collectively the rest of the world's military can overpower the rogue single Military.
u/summerstormAK I can only think of 2 down sides with crypto. Can't do payments without internet like you can with cash and gold. And also payments aren't as anonymous as cash. They are Pseudonymous. But other than that Crypto combines the best properties of gold with the convenience of cash and online money.
You can create a bitcoin address (like a bank account number) to receive bitcoin, without your name being tied to it. And you can keep creating new addresses for every transaction.
Because of the way bitcoin works, the "balance" in your bitcoin wallet is just the sum of all the BTC transactions you've received. Let's say Bob pays Alice 2 BTC, and Alice now wants to spend that and send John 0.5 BTC. Her wallet then creates a transaction to split that value by sending 0.5 BTC to John, and sending the change, 1.5 BTC back to her wallet again. So when you pay someone, you are creating 2 transaction. So if your employee pays you in bitcoin, they can see your address, and then see where you send money after that. But have a look at all the transactions in real time, how do you know who they belong to? it's still fairly private. https://www.blockchain.com/explorer/mempool/btc
For example let's say Trump has a public bitcoin address to receive donations. Your boss can see your address sent to another address that sent to another address, that then went to Trump's address. This is a slight privacy problem but not really a big deal. For example every time a shop asks you for payment, their wallet automatically creates a brand new address to receive your money, but again, that shop would eventually send that money to their main cold wallet/secure addresses. And can be publicly tracked. Most of the big wallets of Bitcoin exchanges are known. But that is a small price to pay for having a decentralized network, the only downside is that it has to be public. Also there are solutions like bitcoin mixers.