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Thread: Why is Crypto so . . . Cryptic?

  1. #1

    Exclamation Why is Crypto so . . . Cryptic?

    Why is Crypto so . . . Cryptic?

    https://www.ericpetersautos.com/2022...to-so-cryptic/

    By eric - March 21, 2022

    There’s one simple – inarguable – fact about Bitcoin and crypto in general that ought to give everyone a moment’s pause. It is that no one can explain it intelligibly in less than 10 minutes – if at all.

    Anything opaque that ought to be readily understandable is inherently suspect. Not necessarily bad – but suspect. Cryptic contracts filled with legalese which even intelligent people who can read and understand Shakespeare cannot understand, for instance. Time-share spiels. There are many such examples.

    Money ought not to be among them.

    Everyone understands that money is a medium of exchange because everyone understands that you can exchange money for something that isn’t money. That money has value precisely because other people are willing to accept it – whatever its form – in exchange for that which is not money.

    In this sense, Bitcoin and crypto generally qualify as money since people are willing to accept them in exchange for things – goods and services – that are not money.

    So far, so good.

    People also accept Federal Reserve Notes in exchange for goods and services. They do so because they believe they are receiving money – which has value to them because they, in turn, can exchange it for goods and services as well.

    Neither of these forms of money has any intrinsic value, however. Absent the willingness of people to accept Federal Reserve Notes in exchange for goods and services, all you’ve got are pieces of paper that have next to no value at all, in and of themselves.

    With crypto, you haven’t even got that.

    The problem – the danger – with both of these forms of money, then, seems to be that they only have value to the extent people are willing to accept them in exchange for things that do have intrinsic value; i.e., goods and services or any other tangible thing (such as land).

    Both crypto and Federal Reserve Notes have another – dangerous – commonality that relates to their having no intrinsic value, as such. Both being created things of no intrinsic value of which a potentially limitless amount can be easily created – presto! – by those in a position to create them.

    The Federal Reserve has a legal monopoly on the creation of Federal Reserve Notes – those pieces of paper that have no intrinsic value in and of themselves. And it has the ability to create as many as it likes.

    The more of these “notes” the Fed creates – “issues” is the term the Fed prefers to use, to imply there is a fixed amount and that the “notes” are merely being . . . issued – the less the value of the “notes” already in circulation, since more of them are chasing fewer goods and services that do have intrinsic value, both because they are intrinsically valuable for whatever they are and because it is not possible to simply “print” more goods and services. The limited supply of goods and services imposes a kind of floor on the devaluation of these things whereas “notes” can be devalued to worthlessness via the simple act of making more of them, presto-style.

    There is no legal monopoly on the issuance of crypto – but it does seem to be under the control of cryptic entities; enter the difficulty explaining where crypto comes from and who controls it.

    Then there is this business of “mining” it – which is as understandable as quantum mechanics. How does one “mine” something that has no physicality? Who, exactly, is “mining” it – and how do we know that whatever-it-is that’s allegedly being “mined” actually is – or even exists, at all?

    We go on say-so. So long as people say they are willing to accept crypto as money, then it functions as money.

    But it is not at all clear how crypto is a sounder form of money than Federal Reserve Notes because it appears to be just as subject to devaluation by dint of printing (or “mining”) more of it. Some proponents say there is a set limit to the quantity of crypto that can be issued that correlates to the “mining” of it. But if you understand – or can explain – this, you are a smarter man than I am.

    Perhaps the most worrisome thing about crypto, though, is precisely related to the thing which has made it so attractive to so many.

    It is – so it is said – “decentralized” (i.e., not under the control of some centralized government-corporate nexus, such as the “Fed”) and thus represents a return of control to the average person over his financial affairs – as well as anonymity. Again, so it is said.

    But it is, it actually?

    Crypto is issued by . . . whom, exactly? Due diligence prompts the wanting of – the needing of – an understandable answer to this simple question. And anonymity?

    Really?

    Cash – even if fiat – is inherently anonymous because of its physicality. A dollar bill is one of trillions – literally – and not tied to any specific individual. So long as the individual can exchange a dollar bill for goods and services without having to also produce identification and have the exchange recorded, the exchange is completely anonymous. No one else knows you fed a dollar bill into a soda machine in exchange for a can of Coke.

    And if you receive dollars in exchange for your goods and services – or as compensation for work – no one else knows the exchange has been transacted, absent any requirement that it be recorded and the parties to it identified.

    Cash also has the intrinsic value of being the support of a black market in goods and services as well as the exchange of labor, etc. Put another way, physical cash is an effective way to keep the government out of your financial business – and the push to eliminate it in favor of some form of digital money speaks volumes about the government’s motives in that respect. If money becomes digital, it is no longer physical and so no longer anonymous. The Internet will know you bought a can of Coke – the moment you bought it. It will know everything about every exchange you and everyone else makes.

    How, then, will the government not also know of it?

    Which circles us back to crypto, which is necessarily digital. Which ought to give everyone a moment’s pause. Are we quite sure we want to trust in the assurance that it is “decentralized” and “anonymous.” That we want to buy into a medium of exchange that is inherently suited to eliminate anonymity?

    Perhaps not. “Blockchains” and “wallets” and such. But I wish someone could explain how, exactly, this works – and in a way that anyone of average intelligence could easily understand.

    Until then, I remain on guard – and prefer money I can hold in my hand and (ideally) which has intrinsic value, such as that based on (or which actually is) silver and gold, actually mined – and which cannot be mined in unlimited quantities by cryptic centralized “issuers” thereof.
    "Truly, whoever can make you believe absurdities can make you commit atrocities." - Voltaire



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  3. #2
    There’s one simple – inarguable – fact about Bitcoin and crypto in general that ought to give everyone a moment’s pause. It is that no one can explain it intelligibly in less than 10 minutes – if at all.
    Shrug. It's really not that complicated.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Trump Jr 2024!!!!

    My pronouns are he/him/his

  4. #3
    Then there is this business of “mining” it – which is as understandable as quantum mechanics. How does one “mine” something that has no physicality? Who, exactly, is “mining” it – and how do we know that whatever-it-is that’s allegedly being “mined” actually is – or even exists, at all?
    Mining uses a function:

    f(x) = y

    given "f" and "x" it is very quick and easy to find "y".

    it is however basically impossible to find "x" if you are only given "f" and "y".

    "mining" is the activity of searching random values of "x" to find specific values of "y".

    it takes a great deal of computing power & electricity to find specific values of "y", which happens in Bitcoin approximately every 10 minutes.

    every time someone finds the specified "y", they take the list of pending transactions, and add it to the end of the ledger.

    this is called a "confirmation"

    every confirmation is proof that energy was expended ("proof of work")

    the more "confirmations" a ledger has, the more trust is placed in it that the transactions within that confirmation, will not be overturned.

    after 2-3 confirmations, it's reasonably assured that the transaction is secure, because at that point, a great deal of proven energy was expended to confirm the prior transactions.

    as a reward for expending that energy, the miner is rewarded with some amount of bitcoin. but the purpose of mining is to confirm transactions, and provide trust in the ledger by adding to the amount of energy that has been expended into securing it.
    Last edited by TheTexan; 03-23-2022 at 06:45 AM.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Trump Jr 2024!!!!

    My pronouns are he/him/his

  5. #4
    Quote Originally Posted by TheTexan View Post
    Shrug. It's really not that complicated.
    Quote Originally Posted by TheTexan View Post
    Mining uses a function:

    f(x) = y

    given "f" and "x" it is very quick and easy to find "y".

    it is however basically impossible to find "x" if you are only given "f" and "y".

    "mining" is the activity of searching random values of "x" to find specific values of "y".

    it takes a great deal of computing power & electricity to find specific values of "y", which happens in Bitcoin approximately every 10 minutes.

    every time someone finds the specified "y", they take the list of pending transactions, and add it to the end of the ledger.

    this is called a "confirmation"

    every confirmation is proof that energy was expended ("proof of work")

    the more "confirmations" a ledger has, the more trust is placed in it that the transactions within that confirmation, will not be overturned.

    after 2-3 confirmations, it's reasonably assured that the transaction is secure, because at that point, a great deal of proven energy was expended to confirm the prior transactions.

    as a reward for expending that energy, the miner is rewarded with some amount of bitcoin. but the purpose of mining is to confirm transactions, and provide trust in the ledger by adding to the amount of energy that has been expended into securing it.
    Uh

    Thanks for simplifying that??
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

  6. #5
    Quote Originally Posted by CaptUSA View Post
    Uh

    Thanks for simplifying that??
    Happy to help
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Trump Jr 2024!!!!

    My pronouns are he/him/his

  7. #6
    Here are my major concerns with crypto...

    1. It's confusing
    2. It seems to track with tech stocks and not a converse relationship to the dollar
    3. Where does the value go if I lose my wallet?
    4. Who controls my wallet?
    5. What happens to that wealth in a SHTF scenario?
    6. It's confusing
    Last edited by CaptUSA; 03-23-2022 at 07:13 AM.
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

  8. #7
    For the mathematically challenged:

    bitcoin mining is like making chicken nuggets. its very easy to turn a chicken into chicken nuggies. but very hard to turn nuggies back into chicken.

    "mining" is basically the mass slaughter of trillions of chickens, to get the perfect chicken nugget.

    the bitcoin "ledger" is a growing list of perfect chicken nuggies. a chicken nuggie "hall of fame" if you will. and this chicken nuggie hall of fame also keeps track of all chicken nuggies that have been bought or traded.

    you trust this chicken nuggie hall of fame because it has so many perfect chicken nuggies.

    you would not trust a chicken nuggie hall of fame that only has a few perfect chicken nuggies. not very impressive hall of fame.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Trump Jr 2024!!!!

    My pronouns are he/him/his

  9. #8
    Quote Originally Posted by CaptUSA View Post
    [*]Where does the value go if I lose my wallet?
    Poof

    Who controls my wallet?
    You

    What happens to that wealth in a SHTF scenario?
    Depends if internet is still a thing or not.

    It's confusing
    So is the Fed, people don't seem to care about its intricate details.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Trump Jr 2024!!!!

    My pronouns are he/him/his



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  11. #9
    Quote Originally Posted by TheTexan View Post
    For the mathematically challenged:

    bitcoin mining is like making chicken nuggets. its very easy to turn a chicken into chicken nuggies. but very hard to turn nuggies back into chicken.

    "mining" is basically the mass slaughter of trillions of chickens, to get the perfect chicken nugget.

    the bitcoin "ledger" is a growing list of perfect chicken nuggies. a chicken nuggie "hall of fame" if you will. and this chicken nuggie hall of fame also keeps track of all chicken nuggies that have been bought or traded.

    you trust this chicken nuggie hall of fame because it has so many perfect chicken nuggies.

    you would not trust a chicken nuggie hall of fame that only has a few perfect chicken nuggies. not very impressive hall of fame.
    Ok - now, not only do I not want crypto, I'm getting nauseated thinking of chicken nuggets.
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

  12. #10
    Quote Originally Posted by TheTexan View Post
    So is the Fed, people don't seem to care about its intricate details.
    I keep converting my FRN's into real assets. I've been stacking PM's, ammo, hardware (nails, screws, bolts, etc.), tools and land in case I need to liquidate. Other than that, I try to put as much as I can towards improving the value of my properties.

    It may not make me a millionaire, but feels like the best way to store the value I've created with the lowest risk. Maybe I'm just old school.
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

  13. #11
    Quote Originally Posted by CaptUSA View Post
    I keep converting my FRN's into real assets. I've been stacking PM's, ammo, hardware (nails, screws, bolts, etc.), tools and land in case I need to liquidate. Other than that, I try to put as much as I can towards improving the value of my properties.

    It may not make me a millionaire, but feels like the best way to store the value I've created with the lowest risk. Maybe I'm just old school.
    I'm not a fan of crypto in its current state either.

    It has the promise of being anonymous and easy to use, but neither of those things are true currently.

    From a pure technology perspective, it has the capability of destroying government's control of money.

    It could even destroy the concept of the state.

    It is however obviously very far from achieving that goal currently.

    But it has within its capacity, the power to do so, once the technology has matured, and a proper ecosystem has been built around it.

    Crypto in its current state however, is basically garbage. I wouldn't encourage anyone to invest in it outside of pure speculation purposes.

    It may be worthwhile however to have a very small portion of your wealth in crypto, as it can be accessed from anywhere, regardless of what "domestic terrorist" status you may or may not have at the time.
    Last edited by TheTexan; 03-23-2022 at 07:45 AM.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Trump Jr 2024!!!!

    My pronouns are he/him/his

  14. #12
    Quote Originally Posted by CaptUSA View Post
    Here are my major concerns with crypto...

    It's confusing
    It is a new tool. When the PC was first introduced, it was a mystery to most users. It was mainly only a few nerds -- armed with the user manual and pocket-protectors, typing cryptic strings of letters into a blank screen with golden glowing letters -- who could figure the damn things out. And when they did figure it out, they could do truly amazing stuff, like desktop printing. Does anyone even go to the printer anymore, nowadays??

    It seems to track with tech stocks and not a converse relationship to the dollar
    Most cryptos are sh!tcoins. So, it's no surprise they track with the tech sh!t-stocks.

    Where does the value go if I lose my wallet?
    Who controls my wallet?
    If you truly lose your wallet, it's gone, just like cash. That is a feature, not a bug. The funds are absolutely unrecoverable, by design. This feature is what is driving so much interest in crypto.

    You should control your own wallet. It's slightly oversimplified, but your wallet is basically the password itself. If you can memorize a (long) password, then you can store your wallet in your brain and only type it into a computer if you ever needed to access it. THis is called a brain-wallet. There are also cold-wallets, hardware wallets and software wallets (and wallet apps should be mentioned separately, as well).

    What happens to that wealth in a SHTF scenario?
    It depends on how SHTF. If it's an apocalyptic CME that wipes out 90% of earth's electronics, then yes, crypto will probably become useless/worthless. But aside from a scenario that extreme, crypto will probably work just fine during SHTF.

    It's confusing
    It can be made a lot more confusing than it actually is.

    The long-and-short of it is that Bitcoin permits you to become your own bank. That's kind of cool if you stop stressing over the implementation details for a minute, and really think about it. If it Bitcoin really was such a broken and flawed system, wouldn't somebody have pointed it out already? I understand Bitcoin. Your concerns seem reasonable but you will find, upon further investigation, that they are not well-founded. Bitcoin really works.


  15. #13
    Quote Originally Posted by ClaytonB View Post
    If you truly lose your wallet, it's gone, just like cash. That is a feature, not a bug. The funds are absolutely unrecoverable, by design. This feature is what is driving so much interest in crypto.
    Ok, talk to me in terms I can understand... where does that value go? Does it sit in limbo forever? How many cryptocoins are currently in this limbo state? Is there ever a clearinghouse?

    Quote Originally Posted by ClaytonB View Post
    You should control your own wallet. It's slightly oversimplified, but your wallet is basically the password itself. If you can memorize a (long) password, then you can store your wallet in your brain and only type it into a computer if you ever needed to access it. THis is called a brain-wallet. There are also cold-wallets, hardware wallets and software wallets (and wallet apps should be mentioned separately, as well).
    Obviously, I'm not using the right terminology. I understand I have access to the wallet via the password. But can I give that password to my heirs? And there seem to be crypto exchange platforms to put more FRN's into crypto or turn crypto into FRN's for use - and those platforms cost value and seem to be vulnerable to restrictions.

    Quote Originally Posted by ClaytonB View Post
    That's kind of cool if you stop stressing over the implementation details for a minute, and really think about it. If it Bitcoin really was such a broken and flawed system, wouldn't somebody have pointed it out already? I understand Bitcoin. Your concerns seem reasonable but you will find, upon further investigation, that they are not well-founded. Bitcoin really works.
    In theory, it's really cool. But it doesn't really seem to operate like that. It seems like a tech speculation mechanism. And the fluctuations support that premise. And one thing I know about speculation is that the bottom can fall out really fast if the climate of opinion changes. I'll watch the video, but I've seen many of them and they never seem to address the concerns. Just a bunch of tech-geek gobbledygook.
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

  16. #14
    Quote Originally Posted by CaptUSA View Post
    Ok, talk to me in terms I can understand... where does that value go? Does it sit in limbo forever? How many cryptocoins are currently in this limbo state? Is there ever a clearinghouse?
    There are other cryptos that handle this differently. Some of them are sh!tcoins, others have valid reasons. But in Bitcoin, the point is to be the digital equivalent of cash/gold. If you drop your gold into a deep channel in the middle of the ocean, it's gone. That is the use-model which Bitcoin was designed to replicate. If you delete your wallet (that is, throw away the password without a backup), the funds are completely and totally unrecoverable and there is no clearing-house or other recovery system. It is permanent, forever, gone.

    The coins do sit in a "limbo" which is just their most-recent blockchain entry. It can never be moved or changed by anyone, because they do not have the cryptographic keys (and you threw them away by throwing out the password, aka "seed phrase"). There is no way to be certain how many coins are in limbo but I've read some articles on it in the past. In terms of the viability of Bitcoin itself, these lost coins are no obstacle. They account for some tiny percentage of the activity on the Blockchain. Every holder of Bitcoin is maximally motivated to make sure their coins do not end up in this state for obvious reasons, so it's a "self-solving problem" in that regard.

    Obviously, I'm not using the right terminology. I understand I have access to the wallet via the password. But can I give that password to my heirs?
    Yes. Think of it like a Swiss numbered bank account. When you give them the number (the "seed phrase"), they now own that account. There is no other KYC or anything else attached to it as long as you have followed good digital/crypto hygiene (a separate topic to itself).

    And there seem to be crypto exchange platforms to put more FRN's into crypto or turn crypto into FRN's for use - and those platforms cost value and seem to be vulnerable to restrictions.
    If you think of Bitcoin as just a money-transmission/bank-wire service, then you're right, its value-proposition is arguable, and it doesn't help you escape any kind of KYC or other financial surveillance. However, if you think of Bitcoin as a money in its own right, then exchanges are just a bridge for leaving FRNs for good. Why would you ever want to put your money back into a devaluing currency?

    In theory, it's really cool. But it doesn't really seem to operate like that. It seems like a tech speculation mechanism. And the fluctuations support that premise.
    Bitcoin and other cryptos should be treated as completely separate entities. I haven't compared Bitcoin:Tech Stocks, so I'll do that if I get an opportunity. Last I checked (a couple years ago), Bitcoin was indeed fluctuating inversely with the dollar. Other cryptos will be different.

    And one thing I know about speculation is that the bottom can fall out really fast if the climate of opinion changes. I'll watch the video, but I've seen many of them and they never seem to address the concerns. Just a bunch of tech-geek gobbledygook.
    You're right to be wary. Bitcoin has shot up in price in just the last few years, and I don't know if that's a true plateau, or if it could drop back down. It's not going back to zero, but $40,000 is an awful lot of dough for something that was worth $5,000 just two years ago. That's the hard part with any kind of disruptive technology, it's really difficult to price it at first. If you ever do decide to invest, just be careful, ease in, use dollar-cost averaging, and don't risk money you can't afford to lose.
    Last edited by ClaytonB; 03-23-2022 at 10:26 AM.

  17. #15
    Quote Originally Posted by CaptUSA View Post
    Ok, talk to me in terms I can understand... where does that value go? Does it sit in limbo forever? How many cryptocoins are currently in this limbo state? Is there ever a clearinghouse?
    The value of crypto is the same as other money, it is based on supply and demand. If somebody loses access to their wallet, then the coins sit there indefinitely. That reduces the supply of bitcoin and increases the price.

    Quote Originally Posted by CaptUSA View Post
    Obviously, I'm not using the right terminology. I understand I have access to the wallet via the password. But can I give that password to my heirs? And there seem to be crypto exchange platforms to put more FRN's into crypto or turn crypto into FRN's for use - and those platforms cost value and seem to be vulnerable to restrictions.
    You can write down the whole password, or write down just a portion of it that you don't want to memorize, and put it in a safe. It is usually a 24 word randomly generated passphrase. You could put it in a safety deposit box. Or you can chisel it into a metal plate and bury it in your yard. You can get as creative as you want. You can gift it to your heirs, or anybody else.


    Quote Originally Posted by CaptUSA View Post
    In theory, it's really cool. But it doesn't really seem to operate like that. It seems like a tech speculation mechanism. And the fluctuations support that premise. And one thing I know about speculation is that the bottom can fall out really fast if the climate of opinion changes. I'll watch the video, but I've seen many of them and they never seem to address the concerns. Just a bunch of tech-geek gobbledygook.
    The speculation is that fiat money has a lot of flaws and having something solid in place to take over for that system when people do not trust it anymore will lead to eventual adoption. Having something solid in place to take over fiat will incentivize more people to ditch the current system sooner than they might otherwise.

    Gold and silver are great, except that you need to physically guard it and it takes time and is difficult to transport with large security risks.

    Bitcoin can be transported from anywhere in the world to anywhere else in the world instantaneously, with the best digital security that exists. If it wasn't the best security, it would have been broken a long time ago.

    That is what gives bitcoin "value". It does something that no other type of money, fiat or otherwise, can do. It can be transferred anywhere instantly, without permission from governments or banking institutions and government and banking institutions cannot print their own and devalue yours.

    That said, don't put your life savings in it any one thing, no matter what it is.. You could stockpile ammo and next thing you know everybody is shooting cheap laser guns. Or you could be trading single bullets for 5 pounds of meat, who knows. Diversifying your investments intelligently is always a good thing. But it is a good hedge along with whatever else you have invested in.
    Last edited by dannno; 03-23-2022 at 10:48 AM.
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  18. #16
    Quote Originally Posted by dannno View Post
    Gold and silver are great, except that you need to physically guard it and it takes time and is difficult to transport with large security risks.
    All great points -- I want to add in respect to gold/silver that Bitcoin could lead to an explosion in the use of gold and silver in the event of a Fed/IMF/WB collapse. How? Because the way that you get around the problem of transport costs/risks when you have electronic systems, is you just transmit account transfers in a gold/silver vault. Bitcoin could be used as a secure digital backbone for such a system.

    Suppose I live on the other side of the US and I am sending you 100 silver coins. In your town there is Silver Transmitters, Inc. Instead of physically transporting you 100 silver coins, I transmit 1/10th of a Bitcoin to Silver Transmitters, Inc. and they segregate 100 silver coins to an account in your name. Now, you can go to your local Silver Transmitters branch at your convenience and withdraw your 100 coins. In fact, as long as you trust STI to be reliable, you don't even need to rush down to take physical delivery, you just need to see the transaction confirmation on the blockchain, and it's done.

    Right now, the main obstacle to this kind of business is all of the "money-transmitter"/"bank-wire"/KYC/AML laws which are really in place to protect the Fed-backed banking monopoly. We're just one collapse away from all of that crumbling into a heap of ash. It could all change overnight, and Bitcoin could play a pivotal role not only in bringing about that collapse, but in super-charging a post-collapse gold-and-silver-coin economy.

    Whether you "believe in Bitcoin" or not, Bitcoin is not the enemy of Liberty...



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  20. #17
    I don't have anything to say about cryptocurrency here - just a strenuous quibble.

    Eric repeatedly invokes and greatly relies upon the notion of "intrinsic value".

    This makes me twitch because "intrinsic value" is an oxymoron.

    Value is always subjective and never "intrinsic" (or "objective").

    Nothing ever has any value intrinsically. Not paper FRNs, not silver or gold, not land. Nothing.

    A thing has value only insofar as someone values it. Indeed, one may regard a thing as having value, not because one subjectively values it oneself, but only because others do. (For example, a Honus Wagner baseball card in excellent condition could be regarded as extremely valuable even to those who otherwise have no interest at all in baseball or baseball cards, merely because others subjectively regard it as highly valuable.)

    Neither of these forms of money has any intrinsic value [...]

    [...] they only have value to the extent people are willing to accept them in exchange for things that do have intrinsic value; i.e., goods and services or any other tangible thing (such as land).

    [...]

    The more [FRNs] the Fed creates [...] the less the value of the “notes” already in circulation, since more of them are chasing fewer goods and services that do have intrinsic value, both because they are intrinsically valuable for whatever they are and because it is not possible to simply “print” more goods and services. [...]

    [...]

    Until then, I remain on guard – and prefer money I can hold in my hand and (ideally) which has intrinsic value, such as that based on (or which actually is) silver and gold, actually mined – and which cannot be mined in unlimited quantities by cryptic centralized “issuers” thereof.
    None of the things Eric references (goods, services, tangibles such as land, etc.) have any intrinsic value. They are valuable only because Eric subjectively values them, and/or because he recognizes that other people subjectively value them (and would accept a trade for those things in exchange for something else that Eric does subjectively value). The fact that some of those things (such as gold or land) are subjectively regarded as being valuable by a great number of people does not in any way make their value "intrinsic" (or "objective"). It only means that a lot of people subjectively regard those things as being valuable.

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  21. #18
    Quote Originally Posted by Occam's Banana View Post
    I don't have anything to say about cryptocurrency here - just a strenuous quibble.

    Eric repeatedly invokes and greatly relies upon the notion of "intrinsic value".

    This makes me twitch because "intrinsic value" is an oxymoron.

    Value is always subjective and never "intrinsic" (or "objective").

    Nothing ever has any value intrinsically. Not paper FRNs, not silver or gold, not land. Nothing.

    A thing has value only insofar as someone values it. Indeed, one may regard a thing as having value, not because one subjectively values it oneself, but only because others do. (For example, a Honus Wagner baseball card in excellent condition could be regarded as extremely valuable even to those who otherwise have no interest at all in baseball or baseball cards, merely because others subjectively regard it as highly valuable.)



    None of the things Eric references (goods, services, tangibles such as land, etc.) have any intrinsic value. They are valuable only because Eric subjectively values them, and/or because he recognizes that other people subjectively value them (and would accept a trade for those things in exchange for something else that Eric does subjectively value). The fact that some of those things (such as gold or land) are subjectively regarded as being valuable by a great number of people does not in any way make their value "intrinsic" (or "objective"). It only means that a lot of people subjectively regard those things as being valuable.
    Gold has some intrinsic value. It's used in electronics. Land also has intrinsic value for growing food and such.

    Paper FRNs are useful to some extent for wiping your ass.

    This is what intrinsic value is meant. It's how much value it has absent of "other people". If other people did not exist and you alone existed on this earth, you would still value gold, land, and FRN's, for the intrinsic value that they offer above.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
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    Donald Trump / Trump Jr 2024!!!!

    My pronouns are he/him/his

  22. #19
    Quote Originally Posted by Occam's Banana View Post
    This makes me twitch because "intrinsic value" is an oxymoron.
    Well, you're right, of course. That said, a gold eagle has intrinsic because there is something there, inside, which is valued. Whereas a ten dollar bill is a cross between a rag and a paper towel, and you wouldn't pay ten bucks for a whole roll of the stuff if it weren't currency.

    So, yes. But, you know, if there is stuff inside, and people do value that stuff, what the hell should we call that? "The prize in the Cracker Jack box" is kinda wordy.
    "Stupidity got us into this mess. Why can't it get us out?"--Will Rogers

    "All I know is what I read in the newspapers, and that's an alibi for my ignorance."--Will Rogers

  23. #20
    FRN's are also really good for starting fires.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Trump Jr 2024!!!!

    My pronouns are he/him/his

  24. #21
    Quote Originally Posted by Occam's Banana View Post
    This makes me twitch because "intrinsic value" is an oxymoron.
    Correct.

    You already dispelled the fallacy of "intrinsic value" because value does not inhere in goods (or services), rather, value is attributed to them by "valuers", that is, acting humans. Baseball cards are a great example. I know nothing about baseball cards but if I found a vintage-looking baseball card in a sealed flip just laying somewhere, abandoned, I'd probably snag it and check its value on the interwebz. Personally, I have no value/use for it, but I know that others do, or might. This is the essence of what the value of anything actually is.

    As for what people are trying to say by "gold/silver/whatever" have "inherent value", what they are usually talking about are alternative uses. A good that has many alternative uses is usually more marketable than a good with only a few uses. Fuel-grade Uranium is extremely expensive, but it is not very marketable, that is, it is not very liquid. Despite its extremely high value-density, it is not the slightest market threat to gold, as a money, even if it could retain all of its valuable applications without its harmful health effects. Why? Because it is highly regulated (since it can, in principle, be made into a weapon) and so it is extremely illiquid. The time-horizon on which a seller must hold a given weight of Uranium in hopes of finding a buyer who is paying a reasonably good price (relative to market prices) may be very long. I'm not familiar with the details of the market but I suppose it could take months or years, depending on how much red-tape is involved. So, "I own $1B of Uranium" is not nearly as impressive as "I own $1B of gold." In the former case, you hold $1B of something that could, over a potentially very long span of time, be turned into $1B worth of other goods and services. In the latter case, you hold $1B of something that can, more or less overnight, be turned into $1B worth of other goods and services.

    Marketability is the key to understanding how money came to be in the first place. One definition that can be given for money is that the monetary good is whatever is the most marketable good. The essential feature of money is that it has maximum liquidity. There is nothing you can get rid of faster -- at fair market value -- than money. You can probably sell your car for $10 in an hour or less. Even then, money still has your car beat... not only will you get a full $10 worth of goods and services in exchange for $10, you can do so virtually instantly.

    By "inherent value", people really mean that a good has (a) lots of alternative uses and (b) high liquidity. While paper cash, gold and silver are the very most liquid goods, there is a second-tier class of goods that are damn close, and those are the kinds of goods you will tend to find in pawn shops. Ironically, if the government went full-retard and "banned cash", what would really happen is that people would just start using pawn-shop goods as street cash. So, watches, jewelry, iPhones, phone cards, and so on and so forth, would become street-money. Because they already nearly are. This shows that goods -- even monetary goods -- exist in a hierarchy of "real marketability". When the government bans physical gold in order to establish a paper-money banking monopoly, gold itself doesn't disappear or even stop being money, it just "slides down the scale" of marketability and other goods take its place. People start using silver bars, commodity metals, jewels, and so on, as monies in place of the superior money which the government has gone to war against.

    If you really want to understand why Bitcoin can be money, then watch the following highly excellent lecture by Bob Murphy:


  25. #22
    Quote Originally Posted by ClaytonB View Post
    Correct.

    You already dispelled the fallacy of "intrinsic value" because value does not inhere in goods (or services), rather, value is attributed to them by "valuers", that is, acting humans. Baseball cards are a great example. I know nothing about baseball cards but if I found a vintage-looking baseball card in a sealed flip just laying somewhere, abandoned, I'd probably snag it and check its value on the interwebz. Personally, I have no value/use for it, but I know that others do, or might. This is the essence of what the value of anything actually is.

    As for what people are trying to say by "gold/silver/whatever" have "inherent value", what they are usually talking about are alternative uses. A good that has many alternative uses is usually more marketable than a good with only a few uses. Fuel-grade Uranium is extremely expensive, but it is not very marketable, that is, it is not very liquid. Despite its extremely high value-density, it is not the slightest market threat to gold, as a money, even if it could retain all of its valuable applications without its harmful health effects. Why? Because it is highly regulated (since it can, in principle, be made into a weapon) and so it is extremely illiquid. The time-horizon on which a seller must hold a given weight of Uranium in hopes of finding a buyer who is paying a reasonably good price (relative to market prices) may be very long. I'm not familiar with the details of the market but I suppose it could take months or years, depending on how much red-tape is involved. So, "I own $1B of Uranium" is not nearly as impressive as "I own $1B of gold." In the former case, you hold $1B of something that could, over a potentially very long span of time, be turned into $1B worth of other goods and services. In the latter case, you hold $1B of something that can, more or less overnight, be turned into $1B worth of other goods and services.

    Marketability is the key to understanding how money came to be in the first place. One definition that can be given for money is that the monetary good is whatever is the most marketable good. The essential feature of money is that it has maximum liquidity. There is nothing you can get rid of faster -- at fair market value -- than money. You can probably sell your car for $10 in an hour or less. Even then, money still has your car beat... not only will you get a full $10 worth of goods and services in exchange for $10, you can do so virtually instantly.

    By "inherent value", people really mean that a good has (a) lots of alternative uses and (b) high liquidity. While paper cash, gold and silver are the very most liquid goods, there is a second-tier class of goods that are damn close, and those are the kinds of goods you will tend to find in pawn shops. Ironically, if the government went full-retard and "banned cash", what would really happen is that people would just start using pawn-shop goods as street cash. So, watches, jewelry, iPhones, phone cards, and so on and so forth, would become street-money. Because they already nearly are. This shows that goods -- even monetary goods -- exist in a hierarchy of "real marketability". When the government bans physical gold in order to establish a paper-money banking monopoly, gold itself doesn't disappear or even stop being money, it just "slides down the scale" of marketability and other goods take its place. People start using silver bars, commodity metals, jewels, and so on, as monies in place of the superior money which the government has gone to war against.

    If you really want to understand why Bitcoin can be money, then watch the following highly excellent lecture by Bob Murphy:

    So, my life has value, only to the extent others exist to "value" me?

    Rude.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Trump Jr 2024!!!!

    My pronouns are he/him/his

  26. #23
    Quote Originally Posted by TheTexan View Post
    So, my life has value, only to the extent others exist to "value" me?

    Rude.


    Well, hopefully we have enough spiritual awareness to distinguish between the immortal soul -- which, coming from God, is of inestimable value -- and our earthly lives which do have some finite value. Some people assert that human life has infinite value but this is a more dangerous line of thinking than it seems, on the surface, and quickly descends into a broad array of absurdities like those you see in wokism. I mean, if one life is of infinite value, then the Fauci-ites are right, we should turn all of society and the entire community upside-down in the mad pursuit of stopping anyone from getting the common cold.... "even if one life is saved." So this line of thinking is actually quite dangerous. No life insurance company will give you an infinite-payout, no matter what premium you pay them. So, as grim a thought as it is, your actuarial value is not infinite...

  27. #24
    Quote Originally Posted by TheTexan View Post
    Mining uses a function:

    f(x) = y

    given "f" and "x" it is very quick and easy to find "y".

    it is however basically impossible to find "x" if you are only given "f" and "y".

    "mining" is the activity of searching random values of "x" to find specific values of "y".

    it takes a great deal of computing power & electricity to find specific values of "y", which happens in Bitcoin approximately every 10 minutes.

    every time someone finds the specified "y", they take the list of pending transactions, and add it to the end of the ledger.

    this is called a "confirmation"

    every confirmation is proof that energy was expended ("proof of work")

    the more "confirmations" a ledger has, the more trust is placed in it that the transactions within that confirmation, will not be overturned.

    after 2-3 confirmations, it's reasonably assured that the transaction is secure, because at that point, a great deal of proven energy was expended to confirm the prior transactions.

    as a reward for expending that energy, the miner is rewarded with some amount of bitcoin. but the purpose of mining is to confirm transactions, and provide trust in the ledger by adding to the amount of energy that has been expended into securing it.
    "Truly, whoever can make you believe absurdities can make you commit atrocities." - Voltaire



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  29. #25
    Quote Originally Posted by Occam's Banana View Post
    Nothing ever has any value intrinsically. Not paper FRNs, not silver or gold, not land. Nothing.

    A thing has value only insofar as someone values it. Indeed, one may regard a thing as having value, not because one subjectively values it oneself, but only because others do. (For example, a Honus Wagner baseball card in excellent condition could be regarded as extremely valuable even to those who otherwise have no interest at all in baseball or baseball cards, merely because others subjectively regard it as highly valuable.)
    Food, clothing, shelter.

    Those have"intrinsic" worth.

    Without them, you die.

    That which can be exchanged for those things, due to the fact that food spoils, clothing is different for each person and location, and shelter has limited liquidity or transportability, have "intrinsic worth".

    At least, that's how I see it...
    "Truly, whoever can make you believe absurdities can make you commit atrocities." - Voltaire

  30. #26
    Quote Originally Posted by ClaytonB View Post
    Ok, I watched this video. Once again, it didn't answer any questions. This is a good explanation of the theory of bitcoin. I understand how it proposes to operate in theory. But in practice, I'm not seeing it.

    Are you really seeing large quantities of people using bitcoin as money?? Or is it an investment - a place to store your money in the hopes that it will gain in value, or at least not lose value?

    This guy talks about the money-side of the concept, but isn't talking about the speculative side. If it were truly "money", it would have a converse relationship to the dollar. Because crypto wouldn't gain or lose value - it would just be a permanent measurement of value. In terms of dollars, it would look like it's gaining, but only because the dollar is losing value. In theory, one bitcoin would buy the same amount of goods in 2050 as it did in 2018. But that theory doesn't seem to be supported by the data. From what I can tell, it looks like a speculative increase similar to other tech stocks.

    So explain the volatility to me. Why does the value of crypto constantly change? And who wants "money" that constantly changes in value? That's the biggest concern with the FRN. And what percentage of people who use crypto use it for money versus the percentage that use it as a hedge?
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

  31. #27
    Quote Originally Posted by CaptUSA View Post
    Ok, I watched this video. Once again, it didn't answer any questions. This is a good explanation of the theory of bitcoin. I understand how it proposes to operate in theory. But in practice, I'm not seeing it.

    Are you really seeing large quantities of people using bitcoin as money?? Or is it an investment - a place to store your money in the hopes that it will gain in value, or at least not lose value?

    This guy talks about the money-side of the concept, but isn't talking about the speculative side. If it were truly "money", it would have a converse relationship to the dollar. Because crypto wouldn't gain or lose value - it would just be a permanent measurement of value. In terms of dollars, it would look like it's gaining, but only because the dollar is losing value. In theory, one bitcoin would buy the same amount of goods in 2050 as it did in 2018. But that theory doesn't seem to be supported by the data. From what I can tell, it looks like a speculative increase similar to other tech stocks.

    So explain the volatility to me. Why does the value of crypto constantly change? And who wants "money" that constantly changes in value? That's the biggest concern with the FRN. And what percentage of people who use crypto use it for money versus the percentage that use it as a hedge?
    Very few people are using it as money currently as its just not very useful as money in its current form. It's almost entirely purely speculative at this point.

    One valid use case that has been seen so far is Argentina, when their currency was collapsing, crypto offered a way to get their money out of pesos bypassing government restrictions.

    As for the volatility, there are many reasons for it. In 10 years the price will have likely settled down. In the meantime, there are digital coins like USDC and "stablecoins" that provide a relative stable way to store your money in crypto.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Trump Jr 2024!!!!

    My pronouns are he/him/his

  32. #28
    One reason the dollar has/had value, is that you could loan it out and earn interest based on the productive use of that dollar.

    There really is no way to do that in a meaningful way with crypto currently. Though there are certainly efforts in that direction.
    It's all about taking action and not being lazy. So you do the work, whether it's fitness or whatever. It's about getting up, motivating yourself and just doing it.
    - Kim Kardashian

    Donald Trump / Trump Jr 2024!!!!

    My pronouns are he/him/his

  33. #29
    Quote Originally Posted by Anti Federalist View Post
    Food, clothing, shelter.

    Those have"intrinsic" worth.

    Without them, you die.

    That which can be exchanged for those things, due to the fact that food spoils, clothing is different for each person and location, and shelter has limited liquidity or transportability, have "intrinsic worth".

    At least, that's how I see it...
    Many people think about it that way and, as long as you stay non-technical about it, it's serviceable. The problem is when you start trying to analyze human choice in exchange (economic theory), it starts to break down. Why is the intrinsic value of water very low, even though we cannot live without water, and the intrinsic value of diamonds is very high? "Diamonds are rare, water is abundant" doesn't work because dirt is also abundant, and some species of beetle are extremely rare, but these do not have the same value differential, despite the fact you don't need dirt to live, and beetles that are more rare than diamonds won't fetch millions on auction. The root of the problem is that value is not something that is inherent to any material object, it is something that is attributed or imputed to it.

    It's a little bit like answering the question "who is the king?" Sure, you can say, "Whoever is wearing the crown" but, not only is that a circular answer, it cannot cope with the problem of any random guy putting on a crown. Rather, the king is the man who is attributed to be the king, generally. It is not his crown that makes him king but, rather, the other way around. Neither he nor his crown have any inherent "kingness"... it is attributed or imputed to him by people, generally.

  34. #30
    Quote Originally Posted by TheTexan View Post
    Very few people are using it as money currently as its just not very useful as money in its current form. It's almost entirely purely speculative at this point.

    One valid use case that has been seen so far is Argentina, when their currency was collapsing, crypto offered a way to get their money out of pesos bypassing government restrictions.

    As for the volatility, there are many reasons for it. In 10 years the price will have likely settled down. In the meantime, there are digital coins like USDC and "stablecoins" that provide a relative stable way to store your money in crypto.
    We're probably being lied to / censored in respect to the popularity of Bitcoin. If they (the Clown-"elites") weren't censoring this, that would be the shock of all time. Try searching japan bitcoin economy and you get hardly any results, despite the fact that, until recently, you could find articles discussing the thriving Bitcoin sub-economy in Japan. Prior to El Salvador, Japan was the country with the highest and fastest uptake of Bitcoin in hand-to-hand use, see this 2017 article which hasn't been memory-holed yet for evidence along that line.

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