[humyum]

Since my mama started investing in Bitcoins and other crypto currencies in july last year when bitcoin was around 2500 and his investments were in lakhs which right now have multiplied by X 5, I thought, let me try, with the news of it being banned in South Korea had come out some days back and Bitcoin fell by a huge margin, I took my chance and sneaked in a couple of 10 thousands as a trial.

Used Zebpay, brought bitcoins, registered with binance, got the bitcoins deposited there ,got a coin called Vin which is slated to grow by many X in a couple of months, already sitting on a couple of hundred dollars of profit, seems like a good deal eh?

To be honest, yes did sound risky at the start, heck even depositing money in Zebpay sounded like I am making a fool of myself but now I am totally comfortable with the idea of such an ecosystem and when money is to be made, why not?

[SmartCat]

Originally Posted by V.Narayan

A most interesting article on Cryptos & Bitties. Reflects my views.

Hey, one Chinese central bank official seems to agree with you -

There is a lot left for me to learn in life. after all I am only 70% of the way through (I think!).

Invest 25% of your networth on "Banana Coin", and you will learn everything there is to learn about life in a short period of time.

https://bananacoin.io/



Reminds me of teak plantation farm scams of your generation.

[ragh_bhushan]

Originally Posted by vamsi.kona

Last year, around November, Bitcoin network used eletricity equivalent to the one used by entire Ireland. Now it has surpassed that and is on the way to takeover New Zealand and Hungary

You are right and here's why this is good thing. This ginormous energy consumption is because of the "Proof of Work" consensus algorithm that validates the Bitcoin transactions and stores them in the Blockchain. Proof of work is not a new concept in human civilisation and we have seen these "proofs of work" throughout the human history. Some of them are:

1. Pyramids
2. Notredame Cathedral
3. Great Wall of China

These are all exceptional proof of work which consumed resources on planetary scale to accomplish one thing - Immutability. For no individual or society can replicate them without having to put in equal amount of work. Work of ginormous proportions. It is a statement by the societies that built them. A very bold statement that we did this! We had the capability to do this and if you want to replicate then you cannot do it without putting equal amount of work.

I believe Bitcoin (Only Bitcoin and Not other altcoins / scamcoins) is even bigger monument than any of the above "Proof of Work". It is a monument of trust. Monument of security. Monument of digital immutability. In fact bitcoin changes the scale of immutability itself!

One needs to understand the interactions of game theory, human motivation, incentives and markets to realise how deep and complex this system is.

Bitcoin is not just tamper evident but it much more than that. It is tamper proof!

A digital asset that is immutable. Take a minute and think about that. In the age where everything is becoming digital, how do you make one thing that societies depend on for its survival - "Trust" among unknown individuals and organisations. Trust to engage in commerce and societal interactions. We have for centuries depended on third parties for delegating trust. How do you digitise trust? Bitcoin is an answer to that. Is it perfect answer. Absolutely not. But it is evolving.

Proof of work guarantees not only that the digital record that is kept in Bitcoin is tamper evident - meaning it can be easily identified if the records have been altered but much more than that. We are creating tamper proof security. Something that cannot be changed! That it is thermodynamically impossible on epic proportions to change even a single entry on that digital record. This proof of work consumes the energy on epic proportions.

The scale of immutability is so massive that we have not seen anything as immutable as Bitcoin in the entire human history! If Bitcoin continues to work the way it has been working for the past decade then we are creating a form of digital history that is forever!

Of course as is with all technologies including automobiles, aviation, industrialisation or more recently internet, there will be challenges that needs to be overcome. Right now energy consumption is a challenge but remember every challenge is an opportunity in the hiding which I am sure will be overcome sooner rather than later!

My 2 Satoshis.

[ashokrajagopal]

Originally Posted by ragh_bhushan

You are right and here's why this is good thing. This ginormous energy consumption is because of the "Proof of Work" consensus algorithm that validates the Bitcoin transactions and stores them in the Blockchain. Proof of work is not a new concept in human civilisation and we have seen these "proofs of work" throughout the human history. Some of them are:

1. Pyramids
2. Notredame Cathedral
3. Great Wall of China

These are all exceptional proof of work which consumed resources on planetary scale to accomplish one thing - Immutability. For no individual or society can replicate them without having to put in equal amount of work. Work of ginormous proportions. It is a statement by the societies that built them. A very bold statement that we did this! We had the capability to do this and if you want to replicate then you cannot do it without putting equal amount of work.

I believe Bitcoin (Only Bitcoin and Not other altcoins / scamcoins) is even bigger monument than any of the above "Proof of Work". It is a monument of trust. Monument of security. Monument of digital immutability. In fact bitcoin changes the scale of immutability itself!

One needs to understand the interactions of game theory, human motivation, incentives and markets to realise how deep and complex this system is.

Bitcoin is not just tamper evident but it much more than that. It is tamper proof!

A digital asset that is immutable. Take a minute and think about that. In the age where everything is becoming digital, how do you make one thing that societies depend on for its survival - "Trust" among unknown individuals and organisations. Trust to engage in commerce and societal interactions. We have for centuries depended on third parties for delegating trust. How do you digitise trust? Bitcoin is an answer to that. Is it perfect answer. Absolutely not. But it is evolving.

Proof of work guarantees not only that the digital record that is kept in Bitcoin is tamper evident - meaning it can be easily identified if the records have been altered but much more than that. We are creating tamper proof security. Something that cannot be changed! That it is thermodynamically impossible on epic proportions to change even a single entry on that digital record. This proof of work consumes the energy on epic proportions.

The scale of immutability is so massive that we have not seen anything as immutable as Bitcoin in the entire human history! If Bitcoin continues to work the way it has been working for the past decade then we are creating a form of digital history that is forever!

Of course as is with all technologies including automobiles, aviation, industrialisation or more recently internet, there will be challenges that needs to be overcome. Right now energy consumption is a challenge but remember every challenge is an opportunity in the hiding which I am sure will be overcome sooner rather than later!

My 2 Satoshis.

You know what else is immutable ? A football field sized hole from one side of the earth to the other.
There is a reason meaningless edicts to drain resources of a society are no longer seen in this century -- we are now in democracies generally.
While the pyramids, cathedral and the great wall are really great, creating such stuff is useless for today's world and today's people. I guess people generally all around know that very well, and hence no more pyramids, or such stuff.

Wasting energy just to build something up just for the sake of it, that is one piece of argument economists will never get.
I am not one, but neither do I.

[Samurai]

Originally Posted by ragh_bhushan

Proof of work is not a new concept in human civilisation and we have seen these "proofs of work" throughout the human history. Some of them are:

1. Pyramids
2. Notredame Cathedral
3. Great Wall of China

What was the problem they were trying to solve with these proof work? BTW, great wall didn't really work as intended.

Originally Posted by ragh_bhushan

The scale of immutability is so massive that we have not seen anything as immutable as Bitcoin in the entire human history! If Bitcoin continues to work the way it has been working for the past decade then we are creating a form of digital history that is forever!

Great! So Bitcoin is yet another proof of work that is in search of a problem.

Blockchain solves the immutability problem by itself, without being a currency. I am yet to understand what bitcoin or cryptocurrency is solving.

[ragh_bhushan]

Originally Posted by ashokrajagopal

Wasting energy just to build something up just for the sake of it, that is one piece of argument economists will never get.
I am not one, but neither do I.

Originally Posted by Samurai

What was the problem they were trying to solve with these proof work?
Great! So Bitcoin is yet another proof of work that is in search of a problem.

Nobody knows for sure why they were built but the point is that they were built and people in those societies built them because it was that important enough for them.

Blockchain solves the immutability problem by itself, without being a currency. I am yet to understand what bitcoin or cryptocurrency is solving.

This is incorrect. Blockchain in itself does not solve the problem of immutability. Blockchains just have the property of "tamper evident" meaning it is easy to identify if the blocks have been tampered with but that does not mean they are immutable or that they cannot be changed. Once they are tampered, how do you know which blocks to trust? Proof of work makes sure that this does not happen.

The problem that bitcoin is solving is a very simple one. Rules without rulers. Building trustworthy systems without the need of middle men or third party institutions.

I do not believe that bitcoin is an investment instrument or that it is a get rich quick scheme. I rather believe in get rich "slow" schemes which for me is investing in learning and education about this wonderful technology. I am a blockchain enthusiast and sincerely believe that all cryptocurrencies except Bitcoin are doomed because anything that they claim to do can be done on Bitcoin blockchain as well. It is the most decentralised and distributed system we have right now. Everything else is just opportunists riding the Bitcoin wave.

Bitcoin is the internet and altcoins / ICOs are the dot com bubble in the making that is bound to burst. Most of these companies will go bust like they did in 1999 but Bitcoin will most likely survive. Like the internet did.

[Samurai]

Originally Posted by ragh_bhushan

The problem that bitcoin is solving is a very simple one. Rules without rulers. Building trustworthy systems without the need of middle men or third party institutions.

This is what I call solving a problem that doesn't exist. I need the bank to park my money. I don't want to store money at my home in a digital wallet and never leave home in fear that someone will steal it.

Why would I want to go back to the medieval era where I have to store my money under a rock and have to guard it physically? I want the ability to pay stores using credit card, and then dispute it when it is misused.

I need the third parties because they provide valuable services.

[ragh_bhushan]

Originally Posted by Samurai

This is what I call solving a problem that doesn't exist. I need the bank to park my money. I don't want to store money at my home in a digital wallet and never leave home in fear that someone will steal it.

Why would I want to go back to the medieval era where I have to store my money under a rock and have to guard it physically? I want the ability to pay stores using credit card, and then dispute it when it is misused.

I need the third parties because they provide valuable services.

What about countries affected by hyperinflation? Like Zimbabwe, Venezuela, Greece, Vietnam? What option do people in these countries have?

What if I want to donate to Julian Assagne or some organisation in which I believe but my government or bank decides to freeze up my account just because they feel my account activities are suspicious? They have way too much control and power over not just the value of my money but also where I get to spend my hard earned money. I am not very comfortable with this idea.

[Samurai]

Originally Posted by ragh_bhushan

What about countries affected by hyperinflation? Like Zimbabwe, Venezuela, Greece, Vietnam? What option do people in these countries have?

That's a monetary policy issue. It is the responsibility of the central bank of that country to fix it. It is really a stretch to think individual citizens can fix it by switching to bitcoin. Hyperinflation also means severe shortage of goods, how is bitcoin going to fix it?

This is like the argument by supporters of US 2nd amendment, who claim they buy need guns to defend against government tyranny. Like they can actually fight the might of US military with their automatic rifles.

Originally Posted by ragh_bhushan

What if I want to donate to Julian Assagne or some organisation in which I believe but my government or bank decides to freeze up my account just because they feel my account activities are suspicious?

So you want to do things that are illegal in the country you live in? Is this the purpose of Bitcoin? To circumvent the financial laws created by the duly elected government?

[ragh_bhushan]

Originally Posted by Samurai

That's a monetary policy issue. It is the responsibility of the central bank of that country to fix it. It is really a stretch to think individual citizens can fix it by switching to bitcoin. Hyperinflation also means severe shortage of goods, how is bitcoin going to fix it?

My knowledge in the field of economics is very limited for me to comment on causes of hyperinflation. However, do you mean to say that as a citizen my only option is to trust that my monetary policy makers will keep my best interest in mind but in case they screw up, I should just play along and let my money deteriorate?

What about more than 50% of the world population who do not have access to banks or other financial systems? Banks have been around for centuries and yet we don't even have 50% of the world population with bank accounts!

This is like the argument by supporters of US 2nd amendment, who claim they buy need guns to defend against government tyranny. Like they can actually fight the might of US military with their automatic rifles.

I don't see bitcoin as anything short of revolution. It is indeed a weapon of mass destruction in the hands of masses!

So you want to do things that are illegal in the country you live in? Is this the purpose of Bitcoin? To circumvent the financial laws created by the duly elected government?

If supporting a whistleblower who exposes corrupt regimes and governments is illegal because my government is threatened to be exposed by them then yes I would not mind doing that.

[SmartCat]

Originally Posted by ragh_bhushan

What about countries affected by hyperinflation? Like Zimbabwe, Venezuela, Greece, Vietnam? What option do people in these countries have?

Originally Posted by ragh_bhushan

My knowledge in the field of economics is very limited for me to comment on causes of hyperinflation. However, do you mean to say that as a citizen my only option is to trust that my monetary policy makers will keep my best interest in mind but in case they screw up, I should just play along and let my money deteriorate?

We already have two solutions for hyperinflation -

1) Stocks
2) Gold

During hyperinflation, as soon as one gets their hands on currency, they spend it on goods that they need. Any surplus goes into stocks and Gold. No fixed deposits because interest rates will always be lower than hyperinflation rate. Investment in Gold will be restricted because imports will be banned (to save on foreign exchange).

But your stock exchange will remain open and you can park your worthless currency in stocks. Equities will beat inflation, high inflation and hyperinflation.

Here is the Venezuelan stock index graph:

[ragh_bhushan]

Originally Posted by smartcat

We already have two solutions for hyperinflation -

1) Stocks
2) Gold

You are talking about investment opportunities for people who don't even have bank accounts? Even for those who do have access to financial systems, parking money in stocks or gold doesn't help for day to day expenses like groceries, medicines, rent etc. Here's a quote from Dec 2, 2017, NY Times.

The nation is on the verge of, and by some measures already in, an extraordinary period of hyperinflation, with the inflation rate above 800 percent through October. Next year, consumer prices are forecast by the International Monetary Fund to soar more than 2,300 percent.

The Venezuelan currency, the bolívar, is in short supply, and finding a fistful of them has become one of the nightmares of daily life. People are compelled to endure long lines at cash machines to withdraw maximum amounts equivalent to about 10 cents — just enough to pay for several round trips on a public bus.

[Samurai]

Originally Posted by ragh_bhushan

My knowledge in the field of economics is very limited for me to comment on causes of hyperinflation.

If hyperinflation can be solved by holding non-local currency, you could keep all your funds in dollars and euros. But hyperinflation is not a simple matter of government printing money. It is primarily caused by shortage of goods, which can be triggered by loss of production within the country due to whatever reasons.

Originally Posted by ragh_bhushan

However, do you mean to say that as a citizen my only option is to trust that my monetary policy makers will keep my best interest in mind but in case they screw up, I should just play along and let my money deteriorate?

If you want to live in a civilized society, and depend on government to provide roads, law & order, regulate health care, education, defend the country, etc., yeah you have to trust the government. If you are unhappy with them, vote them out. That's what democracy is all about. You can move to a different country too.

Originally Posted by ragh_bhushan

What about more than 50% of the world population who do not have access to banks or other financial systems?

So the 50% of the world population that doesn't have access to banks can now start using Bitcoin? Is that the true demography of Bitcoin users?

Originally Posted by ragh_bhushan

Banks have been around for centuries and yet we don't even have 50% of the world population with bank accounts!

And these remaining 50% will become Bitcoin enabled in how much time?

[SmartCat]

Originally Posted by ragh_bhushan

You are talking about investment opportunities for people who don't even have bank accounts? Even for those who do have access to financial systems, parking money in stocks or gold doesn't help for day to day expenses like groceries, medicines, rent etc. Here's a quote from Dec 2, 2017, NY Times.

Bhushan, I'm not quite sure if you understand what exactly happens during hyperinflation. Putting money away in Gold or stocks during hyperinflation is not an "investment opportunity". It is hedge against hyperinflation.

And yes, if groceries and medicines are available, Gold and stocks will help you pay for it. You just need to convert gold/stocks back into hyperinflating currency when you are transacting.

Meanwhile, I don't get your "50% don't have bank accounts" argument in this context. How can bitcoin help?

[ragh_bhushan]

Originally Posted by Samurai

If hyperinflation can be solved by holding non-local currency, you could keep all your funds in dollars and euros.

Replacing one central controlled fiat currency with another may not be a solution. What is being proposed with Bitcoin here is a system free from any control of individual / institution. Nobody controls the value flowing in this system except for the participants themselves. A concept of a truly free market.

If you want to live in a civilized society, and depend on government to provide roads, law & order, regulate health care, education, defend the country, etc., yeah you have to trust the government. If you are unhappy with them, vote them out. That's what democracy is all about. You can move to a different country too.

I know this seems very far fetched right now but what if the governments and nations that we think of in the traditional sense becomes obsolete? History is witness that only thing constant is "Change" and we haven't changed how we create our governments and monetary systems for centuries.

So the 50% of the world population that doesn't have access to banks can now start using Bitcoin? Is that the true demography of Bitcoin users?

And these remaining 50% will become Bitcoin enabled in how much time?

Not now sir but eventually. Every technology has an S curve adoption and journey that we have started is incredibly complex and with a steep learning curve. It maybe decades before we have some sort of meaningful adoption. And in that journey Bitcoin may fail but it might just have shown us the way.
For now we are still in the innovator or early adopter phase.

Originally Posted by smartcat

And yes, if groceries and medicines are available, Gold and stocks will help you pay for it. You just need to convert gold/stocks back into hyperinflating currency when you are transacting.

How many people who earn daily wage in developing / third world countries are even aware about the concept of stocks or precious metals? For them money is just a means to buy basic necessities of life. Concept of hyperinflation or protecting their daily earnings would be a little far fetched for them.

Meanwhile, I don't get your "50% don't have bank accounts" argument in this context. How can bitcoin help?

Opening a Bitcoin account is as simple as installing an app and it has a potential to become even simpler. While opening a bank account is still considered a privilege in many backward countries. Also, most banks in many countries require you to maintain certain balance or they charge you maintenance fees which not everyone can afford.