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Old 12th November 2021, 13:27   #541
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re: The Cryptocurrency & NFT Thread

Quote:
Originally Posted by alpha1 View Post
Anyone here "invested" or exploring Non Fungible Tokens? (Powered by blockchain technology of course)
Not "invested", but explored NFTs so I thought I will put down what I know.

This is a summary I had written elsewhere, so the text may not be web friendly. Please excuse the conversation style language.


Quote:
The funny thing about scams, swindles and Ponzi schemes is that they are all unique and alike at the same time.
Why unique ? Duh, most people wouldnt fall in the same trap twice.
Why alike ? The story is always about running the scheme for as long as more people come in. The moment more people go out than come in, it's gone.

So there's nft. When all the normal laundering is done, they had to design unique stuff, enter NFT.
Think ISBNs. If you write a book and publish it there would be a unique ISBN.
Usually one publisher holds the rights.
The book can be uniquely identified with ISBN.
You can transfer rights to publish by transferring right of ISBN.

Now think there is an ISBN like code for any art. You make a painting and you get a code. You record a song, you get a code.
Essentially the token works like this.

Let's add layer by layer.
The token is tradeable in some exchanges. Pretty much like you log on to an exchange and can bid for rights to publish Harry Potter. Or bid for the rights to Guernica or Mona Lisa. Or bid for the rights to Stairway to Heaven.

Wait, that's got to be good, right ? Wrong.
Because actual art doesn't get traded like that. Because of this little thing called legal right to enforce a contract.

I'll make it simple.
You can hold the right to We will rock you, but what stops me from reproducing and selling it ? It's a song after all, it's digitally reproducible, and it's a seller.
It's this thing called enforcing your propriety. If I reproduce without your permission, you can sue me.

Herein starts the shady layer.
This code that's supposed to represent your right to that art, who maintains that ?

Right, it's that other solution for which the problem is still being discovered. Yes, the block chain. So your art ISBN is a hash code stored in the block chain. As of now in the Ethereum chain.

Now, let's do the scenario.
If your art is being reproduced, what can you do ?
Nothing. Because at the end of the day, holding a hash key in the Ethereum database doesn't mean anything.
If you ask an NFT dude about let's say a JPEG of a cat or something, they ll clearly explain this.
They don't care. That's not the intent. The intent is to own the art. And transfer the ownership thru the block chain.
And trade that ownership on the exchange.

But, whats the point of this art if the owner can't enforce rights of reproduction ? Isn't that open source and free to use ?
Yes and yes.
So the kind of ownership NFT gives to owning let's say a song, can't stop anybody from using the song for profit, nor will it earn royalty.
It just enforces tradeable ownership in that little crypto world known as Ethereum.

So what exactly is the real world use ?
There are 2.
1. Money laundering and such shady stuff.
Let's say I want to make a transaction to D company. Just get D's henchman to draw a JPEG of the sunset, or sing Twinkle Twinkle and make an NFT out of it.
Then I can pay a million to buy it.
D can encash his Ether into Tether or USD or Kroner

2. Scams. If you search about scam artists, there are some really creative people. My personal favourite is that case of Star naming. Yes, an actual star. International star registry. So they collected money in exchange of naming stars as John, Jack etc. Once they made money, a lot of copies came up who did the same thing. These registers exist even now, and the scam artists are enjoying retirement.
The same way, NFTs can sell you ownership of Guernica which you can never enforce. Or the ownership of Dancing girl, even though you'll never get a penny because nobody cares if you own it.

That's it. That's all there is in the concept of NFTs. If you must have a go at it, take a stab. But know your ground, know what you are getting into, and for heavens sake don't invest lunch money
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Old 15th November 2021, 13:50   #542
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re: The Cryptocurrency & NFT Thread

Quote:
Originally Posted by ashokrajagopal View Post
So, the system takes a set of information, does its set of hashes and then creates a block.
This is the supposed "immutable" stuff in block chain.

The crypto transaction pool gets all the transactions pouring in.
The validating nodes pick up X number of transactions.
They validate the transactions and prepare a block.

But there are so many nodes doing the same thing. Who gets to create the block?
They run a lottery.


There is an arbitrarily chosen Difficulty value for the system.
The nodes generate a dummy value.
The nodes hash the dummy value + the block.
If the generated hash is LESS than the Difficulty value, they get the block.
If the generated hash is MORE than the Difficulty value, the nodes get back to generating the next dummy number.
Few more questions:
Q1: Do you mean to say that this single block will contain details of ALL user till this moment and ALL transactions made till this moment right from the inception?

Q2: But since this information is hashed we can not track the flow of money? (We can't reproduce X from Y)

PRE-EVENT: So lets say you have 5 bitcoins and I have 10 Bitcoins with me
EVENT: I buy stuff from you for 1 Bitcoin, thereby transferring this coin from my account to your account
POST-EVENT: At the end of this transaction you will have 6 bitcoin and I will hold 9 bitcoins.

Q3: Is there any means of tampering this transaction record in the block, so that it appears in the ledger that I continue having 10 bitcoins, and you continue having 5 bitcoins. I presume this can be done only before entry into the block and consequently hashing takes place.

Q4: If I understood the process explained by you correctly, transactions are made between two parties and published/reported at ____ (exchanges?).

Q5: The "miners" run authenticity check of this transaction by doing _____? Consequently this transaction is validated and entered into the "block" and accepted as truth by everyone.
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Old 15th November 2021, 14:48   #543
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re: The Cryptocurrency & NFT Thread

Quote:
Originally Posted by alpha1 View Post
Few more questions:
I am not sure I can explain all of these without writing code excerpts, but let me give a try.


Exchanges etc are just front faces, similar to what the payment networks like Visa/Master card. They just communicate to the bitcoin network.


A block only holds a specific number of transactions along with a header hash. They are chained using the header hash. Current block needs to hold the previous block's hash.
A simple way of thinking about this is

X2 = f(X1)
X3 = f(X2)
X4 = f(X3)
.
.
.
X1000= f(X999)

If a chain is created like above, it would be impossible to tamper X512 without tampering all the 511 blocks before that. And all the blocks after that.

The reason hashing is very important here is because even the information held in the block like your private key is a hash code. Technically, it should be impossible to find the user from the hashkey.
Lets say you get a 512 bit code. You only know it is a hash of 10 values. Lets call this Code A.
If you get another 10 values, you can hash it and get another 512 bit code. Lets call this Code B.
You can compare the codes and verify if the 10 values are equal.
But if they are not equal, you can never derive the values from Code A.




Coming to BlockChain it is a structure that holds all the transactions ever done.
Your account balance and such is not really on the Block chain, but on a wallet.

This wallet is pretty much like any other account, except that the Wallet needs to link to the block that can trace that transaction.
Lets say I hold 5 coins.
My wallet should hold the information to that block within the gazillion
blocks in the block chain that has the transaction which credited these 5 coins to my account.


There are the aspects to this whole network in terms of transactions.

1. How are new bitcoins created and who gets the new coins ?

This is where Mining comes up. New bitcoins are created thru the euphemism called mining. Those who run the mining rigs get new bitcoins.

2. What is mining in reality ?

Mining is the process of validating transactions to add new entries to the block chain. If you have successfully validated transactions
and claims the block as per the lottery, you get X bitcoins.


So essentially, the aspects of transactions is
a) those who get new bitcoins into existance -- these are miners.
b) those who buy the bitcoins from miners or exchanges or other users -- these are users
c) those who transact with each other thru their wallets -- these are users.



With this information, one can arrive at the various things a validating procedure has to do

Check the balance of the issuer
Validate the transactions to ensure this is indeed correct balance
Transfer the required number of coins to the reciever
etc.

This is basic accounting. Bitcoin dudes may say this is such a big deal, but it takes about 5 lines of code, and is one of the most basic
routines in programming to move an amount from one account to another.
The validating procedure needs to be confirmed by the network as well, which simply means at the bare minimum more than one mining nodes will verify whether your validation is correct.


Once this validation is done for X number of transactions, the mining node is ready with a block and you get into the lottery to claim a block and get your bitcoins in return.



Now, think about the questions here

Is it possible to fake a block ? No. Because the chain is created out of blocks, the previous block's header hash is included in current block. So, if a block is created into the chain, it cannot be tampered with.

Is it possible to hold fake balance ? Not on the actual network. Because every transaction should be traceable into the block right to the address. At the end of the day, a bitcoin is a unique hash code. It is traceable.
If I know your private keys and your wallet etc, I can trace your transaction to the hilt.
If we bust a drug racket, say, you can get the transaction down to the private key that paid that racket, but thats about it.


Fake transactions can be made if all the participating nodes agree on a transaction.
Such things are called 50% attacks and these have happened in the past to Ethereum etc.
Basically more than half of the mining nodes agree on a spurious transaction.
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Old 16th November 2021, 14:44   #544
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re: The Cryptocurrency & NFT Thread

https://www.republicworld.com/india-...be-banned.html

So what happens to the crypto exchanges in India? What happens to all the crypto holdings of Indian residents?
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Old 16th November 2021, 17:01   #545
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re: The Cryptocurrency & NFT Thread

Quote:
Originally Posted by Samurai View Post
https://www.republicworld.com/india-...be-banned.html

So what happens to the crypto exchanges in India? What happens to all the crypto holdings of Indian residents?
I'd take that with a pinch of salt because of the legitimacy of the source. They have a tendency of mostly making bogus claims and news.

Although there is not much to be positive about crypto regulation in the country yet but given the ruckus caused by the masses last time it was banned, which led to the Supreme Court intervention, it could be expected again this time.

As per claims made online by several sources, Indians have approx 6 lakh crores invested into cryptos (the current RBI governor refutes these claims though, doubting the veracity).

Having said that, although it is unlikely but it will not be surprising if the govt goes ahead and completely bans all exchanges, websites etc related to the field.
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Old 17th November 2021, 11:44   #546
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re: The Cryptocurrency & NFT Thread

Looks like the government will be treating cryptos as an asset in the new crypto bill and make it illegal to use it as a means of payment. Quite understandable, since as a form of payment ( such as salaries, online shopping etc ), cryptos will challenge the hegemony of the government.

The taxation part will be to get a slice of the money, but I'm quite sure there will no investor protection offered. There's likely to be some form of digital currency issued by the government in the future that can be used in transactions but I suppose that the govt will maintain full control over it - including creation and destruction, so it will be no different from fiat money.

Last edited by sdp1975 : 17th November 2021 at 11:47.
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Old 17th November 2021, 12:15   #547
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re: The Cryptocurrency & NFT Thread

Quote:
Originally Posted by ashokrajagopal View Post
.
Thanks.
Any transaction that we make, needs to be validated (by the miners) and only then it can be a part of the "block chain".

How long does this verification process take place? Suppose I express my desire to transact bitcoin with you today at 1 pm, after how long does this transaction gets recorded for eternity as genuine?

Does this period change with the increasing age of bitcoin? (comparing 2015 to 2025)
Does this period change with the increasing number of transactions? (comparing a bitcoin world of 1 million transactions per day vs bitcoin world of 1 trillion transaction per day)

Quote:
The crypto transaction pool gets all the transactions pouring in.
The validating nodes pick up X number of transactions.
They validate the transactions and prepare a block.

But there are so many nodes doing the same thing. Who gets to create the block?
They run a lottery.

There is an arbitrarily chosen Difficulty value for the system.
The nodes generate a dummy value.
The nodes hash the dummy value + the block.
If the generated hash is LESS than the Difficulty value, they get the block.
If the generated hash is MORE than the Difficulty value, the nodes get back to generating the next dummy number.
From what I read around, this difficulty value keeps increasing with time. Thus less economically viable to "mine coins" and render the social service of validation of transaction and entry into the block.
Won't the system (authenticity check of balances, transactions etc.) fail if there are no "miners" left in the system.
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Old 17th November 2021, 12:21   #548
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re: The Cryptocurrency & NFT Thread

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Originally Posted by sdp1975 View Post
Looks like the government will be treating cryptos as an asset in the new crypto bill and make it illegal to use it as a means of payment. Quite understandable, since as a form of payment ( such as salaries, online shopping etc ), cryptos will challenge the hegemony of the government.

The taxation part will be to get a slice of the money, but I'm quite sure there will no investor protection offered. There's likely to be some form of digital currency issued by the government in the future that can be used in transactions but I suppose that the govt will maintain full control over it - including creation and destruction, so it will be no different from fiat money.
Either my understanding or of the government's is wrong about crypto currency.

The whole point of crypto currency is blockchain or the immutable transaction records and not the actual value in itself apart from the fact that the supply of a certain currency can't be increased as and when somebody feels the need to.

If we can't use crypto currency as actual currency, there is no point in it. Or I might be completely wrong.
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Old 17th November 2021, 13:16   #549
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re: The Cryptocurrency & NFT Thread

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Originally Posted by alpha1 View Post
How long does this verification process take place?
.
Does this period change with the increasing age of bitcoin? (comparing 2015 to 2025)
Does this period change with the increasing number of transactions? (comparing a bitcoin world of 1 million transactions per day vs bitcoin world of 1 trillion transaction per day)
It is a major design flaw which pretty much shows how well versed Satoshi Nakomoto et al. were about real world. The gist is

a) Verification process is a basic routine and must not take more than a few microseconds.

b) A block creation process is explained as verification process, but in reality it is verification+lottery to award the block. Needless to say, the lottery hogs time and resources.

c) The average number of transactions that can be cleared into the block chain, ie. completely authenticated as safe, is a pathetically low number of around 7.
Not a typo, its actually around 7 per second. And it is capped there.
The average Visa network can validate about 20k transactions per second.

d) The reason about crowding etc is because of this crazy limit of 21 million bitcoins in all.
Satoshi mined the first block and awarded himself 50 coins.
50 coins per block for 4 years.
Then 25 coins per block for 4 years.
Then 12.5 coins per block for 4 years.
Now it is 6.25 coins per block for 4 years.
It would go on.
By 2140, the last fractional coin would be minted. It would be something like 0.0000625 or something like that. Decimal precision lower than this cannot be handled by the software.

This is how the 21 million cap is built in.
This is also how they built real world deflation and Bitcoin inflation right into the design.

Nobody has any clue on what basis 21 million, the 50 coin on the first mining, why it halves every four years etc. People who have done any kind of hobby programming may relate to such arbitrary numbers being used without any reasoning.

e) The reason the number of transactions are capped there, is not because validation is a big deal. The validation can only be authenticated when a block is created. And a block can be created only once in 10 mins or so based on the pre existing rules.

Quote:


From what I read around, this difficulty value keeps increasing with time. Thus less economically viable to "mine coins" and render the social service of validation of transaction and entry into the block.
Won't the system (authenticity check of balances, transactions etc.) fail if there are no "miners" left in the system.
The difficulty value is arbitrarily set based on the time it takes to get the lottery.
If on average last X blocks got generated ( ie. each of them generated a number lower than the difficulty value) in less than 10 mins, they will increase the difficulty.
If on average last X blocks got generated ( ie. each of them generated a number lower than the difficulty value ) in more than 10 mins, they will decrease the difficulty.

And yes, the system will fail if there are no miners left in the system.
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Old 17th November 2021, 14:30   #550
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re: The Cryptocurrency & NFT Thread

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Originally Posted by Turbohead View Post
Either my understanding or of the government's is wrong about crypto currency.
Government is not wrong about cryptocurrency. But the original creators of cryptocurrency didn't know what they were doing. They thought quantitative easing/tightening was a bug in fiat currency, when it is actually a feature.

The latest exchange between ashokrajagopal and alpha1 shows why it is useless as a currency. So I won't elaborate on it.

But the creators of later cryptos know what they are doing. They are just creating virtual assets because there is a demand for it.

For detailed understanding, check this link which was shared long ago in this very thread by someone.
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Old 17th November 2021, 14:52   #551
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re: The Cryptocurrency & NFT Thread

I have a few questions about this as an alternate currency:

1. How cryptocurrency has a value in real world currency, if it is supposed to be an independent, parallel currency? I think this was the intention (I might be wrong), but today I can invest in crypto with real world money, not just "earn" them as a miner. This might lead to more people interested in short term gains, increasing the number of transactions faster than designed, and clogging the system.

2. There can always be a new cryptocurrency like say Husky, which is only restricted to miners, and it is not traded with outside money, right? That way it can be within that miners' group, and because there is no bridge with real world, is a completely isolated currency that can be below the radar? Like one sells a contraband and gets Husky coins in return, and buys the same from distributor with Husky again.

3. Even with the global chip shortage and no stock of GPUs etc., and with crackdown on mining farms by some countries, raids on residential places using too much electricity etc., it still seems to go higher. Is this only because of the craze or is there any actual usage of crypto that is consistent with the growth? (I know some countries like Salvador have made it legal tender).
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Old 17th November 2021, 19:48   #552
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re: The Cryptocurrency & NFT Thread

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Originally Posted by mayukh42 View Post
I have a few questions about this as an alternate currency:

1. How cryptocurrency has a value in real world currency, if it is supposed to be an independent, parallel currency? I think this was the intention (I might be wrong), but today I can invest in crypto with real world money, not just "earn" them as a miner. This might lead to more people interested in short term gains, increasing the number of transactions faster than designed, and clogging the system.
The original whitepaper for Bitcoin written by Satoshi Nakomoto starts thus


Quote:
A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without going through a
financial institution. Digital signatures provide part of the solution, but the main
benefits are lost if a trusted third party is still required to prevent double-spending.
We propose a solution to the double-spending problem using a peer-to-peer network.
So, let there be no doubt. Bitcoin is not designed as asset, not as store of value, not as any kind of wealth mechanism.
It is designed as a purely online currency separated from governments, skeuomorphically built with characteristics of erstwhile metallic currencies.
Just like houses which are intended to live in has become "wealth", crypocurrencies have now assumed another feature.
Mining is just the inception phase. Just like gold, once mined these come into existance and henceforth may be transacted for other currencies or hoarded or speculated on.


Quote:

2. There can always be a new cryptocurrency like say Husky, which is only restricted to miners, and it is not traded with outside money, right? That way it can be within that miners' group, and because there is no bridge with real world, is a completely isolated currency that can be below the radar? Like one sells a contraband and gets Husky coins in return, and buys the same from distributor with Husky again.
Pretty much like cigarettes in prison. There was nothing stopping localized private objects used as currencies for transacting below the radar earlier.
Crypocurrencies designed like above are just the software version of this.
But then, when you just want to transact within your little group, why would you "mine" ? Wouldnt you just agree on something easier to do ?


Quote:
3. Even with the global chip shortage and no stock of GPUs etc., and with crackdown on mining farms by some countries, raids on residential places using too much electricity etc., it still seems to go higher. Is this only because of the craze or is there any actual usage of crypto that is consistent with the growth? (I know some countries like Salvador have made it legal tender).


Bitcoin mining started with PCs, then went into GPUs and now are processed using special ASIC chips mostly made by 1-2 companies.

Why it continues despite all odds ? There is only one story to it. The price is going up, more people are coming in than going out.
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Old 17th November 2021, 20:09   #553
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re: The Cryptocurrency & NFT Thread

Cryptocurrencies have started mimicking assets like deposits and stocks. Now Indian exchanges are offering 'deposit' schemes where you get interest in the form of coins. This concept is apparently called STAKING.
https://www.businessinsider.in/crypt...w/86413783.cms

The Cryptocurrency & NFT Thread-screenshot_1.jpg

From what I understand, if we deposit 100 bitcoins, we get 5 bitcoins are "interest". But if the value of bitcoin itself crashes 50% or 90%, then the interest earned is meaningless.

Anyway, does Proof of Stake mean mining is no longer required to validate transactions?
https://www.investopedia.com/terms/p...-stake-pos.asp
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Old 18th November 2021, 11:36   #554
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re: The Cryptocurrency & NFT Thread

Some great discussion here. Summarized and presented well.
I am a sceptic. Can the people who have "seen the light" in the Crypo tunnel, please explain?

1. Even if it was designed as a medium of payment/exchange, whats the initiative
to invent a new one to bypass the governments? How different is using an "app" to transfer X bitcoins to someone compared to using an app to transfer X $ to the same person?

2. Is there a chance of the artificial amd random limits put on total bitcoins be eased? And who is responsible for it?

3.With so many replica coins, whats the difference between them? How different are they from a piece of paper that I write "1 M USD" and give it to someone to avail those services?
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Old 18th November 2021, 12:51   #555
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re: The Cryptocurrency & NFT Thread

Quote:
Originally Posted by SmartCat View Post

Anyway, does Proof of Stake mean mining is no longer required to validate transactions?
https://www.investopedia.com/terms/p...-stake-pos.asp
Technically yes.
But Proof of stake simply means if an entity holds more Ether than another, it has more stake than the other.
And by extension will be eligible to get new coins.
Essentially, this just means private central banks.

A journalist friend told me many years ago about an ongoing joke in SM about how tech guys try to solve problems and reinvent already existing stuff.
Like a lot of transport startups always end up solving the traffic issue by coming up with some version of bus or metro.
Obviously he was mocking me, and I did not agree then.
Now, with all the tech solutions to solve the world around, I completely agree.
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