Originally posted by Chrawnus
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Digital Currency for Dummies
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Originally posted by Truthseeker View PostYes; I am trying to explain why we use money so often."The man from the yacht thought he was the first to find England; I thought I was the first to find Europe. I did try to found a heresy of my own; and when I had put the last touches to it, I discovered that it was orthodoxy."
GK Chesterton; Orthodoxy
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Originally posted by Raphael View PostThat wasn't the question. Teal was wanting to know about cryptocurrencies (which she called digital currency). having lived on this planet for a reasonable length of time, she already knows what money is and why we use it so often.
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Originally posted by Truthseeker View PostSo, you do know what money is? Define it, please. There is a debate going on (at least, recently) that digital money is not really money. Should I ignore it?
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Originally posted by Teallaura View PostI don't think I get this - anyone care to explain the basics or just post a link that does? I'd appreciate the help!"I wonder about the trees. / Why do we wish to bear / Forever the noise of these / More than another noise / Robert Frost, "The Sound of Trees"
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Originally posted by Sam View PostThe fundamental draws, from my understanding is:
1) Inflation — crypto-currency like Bitcoin is theoretically immune to inflation (like digital gold or something). Whether or not this is a draw depends on whether you think inflation is necessarily a bad thing. I believe that the vast majority of economists do not regard inflation as necessarily bad (most think it's a necessary good).
2) Decentralization/Free — since the "ledger" of Bitcoin, at least, is computed democratically (transaction verification happens on a bunch of computers "mining" at the same time), there's no bank to extract a fee. So if a crypto-currency was stable, you could avoid paying that 3%-5% transaction fee when you send a payment through Visa, Mastercard, Paypal, etc. In developing countries and international transfers, where transaction fees can be significant, I believe this has made Bitcoin more practical (and more popular) than in the USA.
3) Obscure Transactions — Even though crypto-currency transactions can be traced by interested parties (like governments), it's a harder than just getting a warrant for your Visa bill. Sites like Silk Road used Bitcoin to make it harder for the government to trace sales of contraband and illegal services.
I think I read a couple more features of crypto-currencies that advocates use for support but they are eluding me now. How crypto-currency works, in terms of function, is pretty simple:
Crypto-currency, as a currency, is probably doomed to failure. But the technology behind the currency is probably very important for future financial systems in a globalized economy.
—Sam"It's evolution; every time you invent something fool-proof, the world invents a better fool."
-Unknown
"Preach the gospel, and if necessary use words." - Most likely St.Francis
I find that evolution is the best proof of God.
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Originally posted by Irate Canadian View PostThe idea of having digital money on the internet has floated around for around a good 10 years before it got a proper implementation. This first implementation was called Bitcoin. It was developed by an anyonymous person who took the name Satoshi Nakamoto. He developed the main software for trading and creating this currency. Cryptocurriences are created through a process called Mining. Mining is a process that involves your computer calculating hard equations. The difficulty level of these questions scaled as more miners joined. All transactions are recorded in a public ledger called the Blockchain. Instead of having a account system, you have an address system. Want to transfer money without someone looking at your main address, just make a new one. When you make a transaction, a small amount is subtracted out to make it a legitimate transfer. Due to its anonymity level being quite high, many criminals started using it, which hurt Bitcoin's reputation quite a bit. However, more and more sites begin to accept these currencies as valid, and IIRC the U.S goverment has made it a taxable "investment". Since the Bitcoin source code is open source, it has allowed other coins to join the crypocurrency movement. Some of these make the code more secure, or make the mining process easier for computers. Some (other) popular coins are : Dogecoin( named after a meme), Litecoin, and Feathercoin.Originally posted by Raphael View Postadding to the fact that at the current exchange rate, mining for bit coins isn't really economically viable right now (i.e. the electricity used to do the mining costs more than the bitcoins are worth)
Um, the mining is the part that makes no sense to me. What is it, exactly and why does it create currency or value?"He is no fool who gives what he cannot keep to gain that which he cannot lose." - Jim Elliot
"Forgiveness is the way of love." Gary Chapman
My Personal Blog
My Novella blog (Current Novella Begins on 7/25/14)
Quill Sword
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Originally posted by Sam View PostThe fundamental draws, from my understanding is:
1) Inflation — crypto-currency like Bitcoin is theoretically immune to inflation (like digital gold or something). Whether or not this is a draw depends on whether you think inflation is necessarily a bad thing. I believe that the vast majority of economists do not regard inflation as necessarily bad (most think it's a necessary good).
2) Decentralization/Free — since the "ledger" of Bitcoin, at least, is computed democratically (transaction verification happens on a bunch of computers "mining" at the same time), there's no bank to extract a fee. So if a crypto-currency was stable, you could avoid paying that 3%-5% transaction fee when you send a payment through Visa, Mastercard, Paypal, etc. In developing countries and international transfers, where transaction fees can be significant, I believe this has made Bitcoin more practical (and more popular) than in the USA.
3) Obscure Transactions — Even though crypto-currency transactions can be traced by interested parties (like governments), it's a harder than just getting a warrant for your Visa bill. Sites like Silk Road used Bitcoin to make it harder for the government to trace sales of contraband and illegal services.
I think I read a couple more features of crypto-currencies that advocates use for support but they are eluding me now. How crypto-currency works, in terms of function, is pretty simple:
Crypto-currency, as a currency, is probably doomed to failure. But the technology behind the currency is probably very important for future financial systems in a globalized economy.
—Sam
Had the same problem with Wiki. The graphic makes no sense to me at all.
I passed Econ 101!!!!
ETA:
Because it's a video... Never mind... I go watch it now..."He is no fool who gives what he cannot keep to gain that which he cannot lose." - Jim Elliot
"Forgiveness is the way of love." Gary Chapman
My Personal Blog
My Novella blog (Current Novella Begins on 7/25/14)
Quill Sword
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Originally posted by Irate Canadian View PostCan't really see this kind of stuff finacially used, however the blockchain could be used for much more useful things."I wonder about the trees. / Why do we wish to bear / Forever the noise of these / More than another noise / Robert Frost, "The Sound of Trees"
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Originally posted by Teallaura View PostI appreciate the effort but I still don't see what is going on here. I get transactions and what not after the fact but the 'what is it really' is eluding me.
Had the same problem with Wiki. The graphic makes no sense to me at all.
I passed Econ 101!!!!"I wonder about the trees. / Why do we wish to bear / Forever the noise of these / More than another noise / Robert Frost, "The Sound of Trees"
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Originally posted by Sam View PostThe fundamental draws, from my understanding is:
1) Inflation — crypto-currency like Bitcoin is theoretically immune to inflation (like digital gold or something). Whether or not this is a draw depends on whether you think inflation is necessarily a bad thing. I believe that the vast majority of economists do not regard inflation as necessarily bad (most think it's a necessary good).
2) Decentralization/Free — since the "ledger" of Bitcoin, at least, is computed democratically (transaction verification happens on a bunch of computers "mining" at the same time), there's no bank to extract a fee. So if a crypto-currency was stable, you could avoid paying that 3%-5% transaction fee when you send a payment through Visa, Mastercard, Paypal, etc. In developing countries and international transfers, where transaction fees can be significant, I believe this has made Bitcoin more practical (and more popular) than in the USA.
3) Obscure Transactions — Even though crypto-currency transactions can be traced by interested parties (like governments), it's a harder than just getting a warrant for your Visa bill. Sites like Silk Road used Bitcoin to make it harder for the government to trace sales of contraband and illegal services.
I think I read a couple more features of crypto-currencies that advocates use for support but they are eluding me now. How crypto-currency works, in terms of function, is pretty simple:
Crypto-currency, as a currency, is probably doomed to failure. But the technology behind the currency is probably very important for future financial systems in a globalized economy.
—Sam"He is no fool who gives what he cannot keep to gain that which he cannot lose." - Jim Elliot
"Forgiveness is the way of love." Gary Chapman
My Personal Blog
My Novella blog (Current Novella Begins on 7/25/14)
Quill Sword
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Originally posted by Sam View PostLike, what "is" a Bitcoin or some difficulty with the process?
Um, actually, it didn't say how that was done.... That's also from 'mining', right? Er... maybe I don't quite got it yet..."He is no fool who gives what he cannot keep to gain that which he cannot lose." - Jim Elliot
"Forgiveness is the way of love." Gary Chapman
My Personal Blog
My Novella blog (Current Novella Begins on 7/25/14)
Quill Sword
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Originally posted by Sam View Post
Crypto-currency, as a currency, is probably doomed to failure. But the technology behind the currency is probably very important for future financial systems in a globalized economy.
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Originally posted by Teallaura View PostNo, where the heck money entered the process. How does Alice have an initial balance to buy Bob's danged lawnmower in the first place?
Um, actually, it didn't say how that was done.... That's also from 'mining', right? Er... maybe I don't quite got it yet...
in the early days the calculations of the algorithm were easily solved. As is goes along the calculations get harder and harder (so uses more computing power for longer so uses more electricity) to the point now where with 65% (IIRC) of all possible bitcoins having been mined (the algorithm allows for a finite number) "mining" requires specialised computers (using multiple GPU's) to solve the algorithms.
Alice either mined the bitcoins or she purchased some at one of the exchanges.Be watchful, stand firm in the faith, act like men, be strong.
1 Corinthians 16:13
"...he [Doherty] is no historian and he is not even conversant with the historical discussions of the very matters he wants to pontificate on."
-Ben Witherington III
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