[Godzilla]

I see a lot of people are new to crypto and have all sorts of opinions. The space of crypto is a world in itself. There are scams and then there are credible opportunities as well. I am talking about coins with real usecases, these are definitely sensible investments IMO.

Nature only rewards who takes risk. Crypto is not for snowflakes or people who are simple minded. One should be willing to understand a lot of technology, do a lot of analysis and invest pragmatically to see results. There are many people who just follow the trends (May be 80% of crypto investors) and gamble and it pays off sometimes (Read Shiba Inu).

However, there are significant number of people who have deep understanding and appreciation of what this technology (blockchain) means to the future world. It is the future, Imagine talking to people about the internet applications whatsapp and google pay in the 1960s no one would have understood anything and 99% of the people would have dismissed it as a scam.

I would atleast ask people if they dont know, just accept you dont fully understand instead of calling it a scam. There are scams in the crypto world, but there are scams in the current banking world as well, how many people lose their money in crazy chit schemes etc., scammers are everywhere including the crypto space.

For those who have open mindset, start learning about blockchain and it is practical use cases. Obviously, one doesnt need to invest their hard earned money to learn a new tech.

What is a blockchain?

https://www.youtube.com/watch?v=kHybf1aC-jE

https://bernardmarr.com/35-amazing-r...ing-our-world/

What is a smart contract?

https://www.youtube.com/watch?v=pyaIppMhuic

What is Defi?

https://www.youtube.com/watch?v=17QRFlml4pA

Why Defi is the future?

https://www.youtube.com/watch?v=7CBS2hvvkOk

What is a Dapp?

https://www.youtube.com/watch?v=oPIupbsVimc

Proof of stake.

https://www.youtube.com/watch?v=x83EVUZ_EWo&t=13s

Interesting Crypto statistics.
https://techjury.net/blog/cryptocurr...atistics/#gref

India has the largest number of crypto users, see image below

https://triple-a.io/crypto-ownership/

Top 10 Tech Giants are Diving into Blockchain

https://medium.com/aelfblockchain/to...n-a2e7d9b44697


There are many negatives with any new technology. Some negatives here, the amount of energy used for mining, transaction volume, speed, security etc.. All of these are getting resolved using better tech such as 'Proof of Stake'. Cardano is a promising 3rd gen block chain tech.

The point here, there are so many number of engineers, scientists, organisations trying to improve the tech, which will eventually be used as building blocks of future.

Web 3.0 will be powered by Blockchain tech. With this tech, We (people) have an opportunity to become owners of future tech giants instead of Mark Zuckerberg and Jeff Bezos.


https://medium.com/hackernoon/web-3-...k-626ce3f828c7

How to file Tax returns for Crypto?

https://www.youtube.com/watch?v=icaoTRXGDdI

Fundamental analysis of Crypto coin.

https://www.youtube.com/watch?v=GMR63Jv5jY8

Attached the World Economic forum pdf on blockchain tech.

[Bhargav7]

Originally Posted by Godzilla

What is Defi?
https://www.Youtube.com/watch?v=17QRFlml4pA

This was quite informational on how defi would work in the future. And I must say that this pitch has done nothing to convince me that defi is going to be a real deal at all. It seems like the entire premise of defi originates from the belief that banks and governments are inherently bad and restrictive; which is not the case.

In fact, the narrator correctly highlighted the role of banks and governments from around 5:20 and sort of implies that defi, in its current state, cannot really come close to the traditional financial system, let alone replace it. Also, the fundamental feature of blockchain is anonymity - the exact opposite of what is required by banks to lend money in general. To circumvent this problem, a solution is proposed at 7:15 where it mentions that you pledge a cryptocurrency worth $1000 to avail a loan of $800. Assuming cryptocurrency is a currency, as it suggests; we are essentially pledging one currency and taking another currency for a fee or an interest payment. In common parlance, this is called a currency swap or a currency hedge (in case of a future exercise date) and not lending.

The use-case mentioned in the end for insurance is even more pointless as insurance premium is generally determined by the underwriters after a thorough analysis of the risk coverage and other criteria. And the settlements happen after the appraiser estimates the loss - both the activities require real humans and can't be done by software. The maximum a blockchain can do is to give the insurance companies historic data based on which the premiums can be estimated better. But that data is already available with the insurance companies - so why do they need blockchain?

As it appears, we are struggling hard to find a problem, for which the solution is invented ten years ago.

[Gansan]

^^ The example for insurance in the video "If farmer John pays $2000 premium, and the temperature is xx degrees continuously for four days, pay $100000 to farmer John" is silly. Insurance doesn't work that way. Even if the temperature was exactly that for four days, farmer John still will have to claim crop (or whatever) loss because of that, which must be physically verified by people from the insurance company.

Setting monetary policy, issue of currency and regulating supply of it and collecting taxes are prerogatives of any central government, through a central bank. If Defi people think governments are going to let them walk away with it, they are dreaming. The moment governments feel a threshold is crossed, the cryptocurrency will be toast. Like what happened in China. The governments will decide the ideas are sound, digital currency is good, but they themselves will issue the digital currency. Such as digital Yuan.

In the meantime, we can try our luck with cryptocurrency and make some gains, by putting in an amount which may cause heartburn if lost, but will not seriously hurt us. Like one bets in a horse race. Basing our entire or major investments on crypto will not be a good idea.

I read Tesla recently showed Bitcoin as asset in their balance sheet and their stock immediately nose dived because big investors dumped the stock. They will be stalwarts and not simple minded, surely!

[Samurai]

Originally Posted by Godzilla

I would atleast ask people if they dont know, just accept you dont fully understand instead of calling it a scam.

Do you realise this is a 7 year old thread? There have been dozens of crypto believers like you who have entered this thread with similar statements.

Crypto has value because whole of people believe it has value. That's it. It can be barely used as currency, and is almost entirely used as an asset.

Paul Krugman said it best here.

[Gansan]

^^No payments can be made with it. Because crypto is legal in India - as of now. But it is not legal tender.

[msdivy]

Originally Posted by Godzilla

It is the future, Imagine talking to people about the internet applications whatsapp and google pay in the 1960s no one would have understood anything and 99% of the people would have dismissed it as a scam.

Talking about WhatApp, Google Pay 60 years back? But Crypto coins are here today, which is the point of the current discussion. Not sure about the tech scene after 60 years.

I would atleast ask people if they dont know, just accept you dont fully understand instead of calling it a scam.

As a technology, blockchain might find an use. But crypto-currency? What economic value do they bring in? Gullible folks are paying $$ for bits of mathematical hashes with one & only hope of finding more gullible folks who will pay even more $$$ for the same math hashes. It might have big current market value, but there is no intrinsic value attached to these math numbers.

All of these 3.0 stuff listed are crypto wallets that offer additional functions like chat, storage. For instance, Brave might be a good browser but it has a minuscule market share. Except it offers crypto transactions natively, it doesn't offer anything else. It cannot be called the future. BTW, there is no definition for Web 3.0.

India has the largest number of crypto users, see image below
https://triple-a.io/crypto-ownership/

10 cr crypto coin traders in India? This has to be taken with a bucket full of salt. In fact clarified here.

Originally Posted by Gansan

^^No payments can be made with it. Because crypto is legal in India - as of now. But it is not legal tender.

You can buy a Tesla today with 1 bitcoin. Or you can wait for a year and buy 2 Teslas with the same bitcoin. I think most people would write a cheque for Tesla and keep the bitcoin in their wallet . There goes the virtual currency transaction dream.

Originally Posted by Gansan

I can't honestly understand crypto "currency". The more I read about it, the more I am reminded of Ponzi schemes / MLM business.

Earlier schemes were limited to a city, state, or within a set of folks. Now the difference is the scheme is open for the entire world.

Originally Posted by hothatchaway

This will be power hungry and you will have to spend a bomb on electricity also.

Yes, you can't mine with Indian DISCOM tariffs. You will need free power. 21st-century 'miners' tap into surplus electricity from the grid, which otherwise is dumped.

Here is one tweet:


This is from the top financial investigative journalist, who has investigated Harshad Mehta scam, the Enron scam, the IDBI scam, the Ketan Parekh scam - Crypto Currencies Spread Like MLM Schemes while Government Watches in Silence

[SmartCat]

Originally Posted by msdivy

But crypto-currency? What economic value do they bring in? Gullible folks are paying $$ for bits of mathematical hashes with one & only hope of finding more gullible folks who will pay even more $$$ for the same math hashes. It might have big current market value, but there is no intrinsic value attached to these math numbers.

This is not 100% correct. Economic value of cryptos comes from its ability to:

- Store wealth (there is ready infrastructure in the form of crypto exchanges)
- Transfer money from one person to another instantly, especially across the border
- Relative anonymity when compared to traditional financial products.
- After mainstreaming in recent times, it even offers diversification (Eg: if there is a China/US war, we know for sure that global stocks, real estate, bonds etc will crash. But investors "assume" that cryptocurrencies will be insulated)

The right question to ask is how much is this "economic value addition" worth to you? To me, it is worth close to zero. I don't need anonymity and I have other means of transferring/storing wealth and also protection against disastrous global events. But to hardcore crypto fans, the above unique characteristics has "value".

[Gansan]

Originally Posted by msdivy

You can buy a Tesla today with 1 bitcoin. Or you can wait for a year and buy 2 Teslas with the same bitcoin. I think most people would write a cheque for Tesla and keep the bitcoin in their wallet . There goes the virtual currency transaction dream.

In India we can't. It is not allowed. But supposing it is, and I were the owner of one bitcoin, I will rather have that Tesla today! Because next year the coin may be worth two teslas, or.....who knows!

[ashokrajagopal]

Originally Posted by SmartCat

This is not 100% correct. Economic value of cryptos comes from its ability to:

- Store wealth (there is ready infrastructure in the form of crypto exchanges)
- Transfer money from one person to another instantly, especially across the border
- Relative anonymity when compared to traditional financial products.
- After mainstreaming in recent times, it even offers diversification (Eg: if there is a China/US war, we know for sure that global stocks, real estate, bonds etc will crash. But investors "assume" that cryptocurrencies will be insulated)

Smartcat, there is a basic foundational problem here though.
With anything you can store as wealth, the bare minimum requirement is the owners ability to sue based on it.

A currency note, is basically a contract backed by RBI governor covering for you.
A govt/corp bond is a contract underwritten to transfer value to you.
Similarly, a stock, deposit, land deed all of these things are at the end of the day a contract that respects the owner.

With crypto, unless it is end to end regulated, there is no contract that enables the owner to sue.

In a typical bull market phase ( for crypto) naturally, the exchanges will go out of their way to cover any theft, swindles etc.
Once it reverses even moderately ( and it will, eventually) nobody is going to respect ownerships.

Tomorrow WazirX can disappear and there is pretty much nothing can be done.
Earlier this year there was a hack on one of the DeFi platforms. The panic around that time clearly showed that the consumers basically cannot do anything.


Right now, crypto fans usually throw up the "decentralization". But about 80% mining happens in pools, which basically throws away decentralization.
Lets say a user smells a forgery or swindle on this, there is nothing he can do here.

[SmartCat]

Originally Posted by ashokrajagopal

Smartcat, there is a basic foundational problem here though. With anything you can store as wealth, the bare minimum requirement is the owners ability to sue based on it.

That is not a foundational problem at all. Indians store their wealth in Gold and if you are robbed, its gone. It is your responsibility to insure the Gold you own, even if it stored in a bank locker.

A govt/corp bond is a contract underwritten to transfer value to you.
Similarly, a stock, deposit, land deed all of these things are at the end of the day a contract that respects the owner.

That's because third parties are involved in this transaction (Eg: bank for FDs, brokerage/depository for stock investing and private company raising funds for bond investing). But there are no third parties involved when you hold Gold or cryptos.

With crypto, unless it is end to end regulated, there is no contract that enables the owner to sue. In a typical bull market phase ( for crypto) naturally, the exchanges will go out of their way to cover any theft, swindles etc. Tomorrow WazirX can disappear and there is pretty much nothing can be done.

Only speculators keep their cryptos with the exchanges. Hardcore crypto investors use the exchanges only for transactions. Their wealth is stored in 'cold wallets' and 'vaults'. This carries the same risk as storing physical Gold, but that is something that they are willing to accept.

Since large players have setup Crypto exchanges now, they offer insurance/vaulting/cold storage too:
https://robinhood.com/us/en/support/...ency-security/

[ashokrajagopal]

Originally Posted by SmartCat

That is not a foundational problem at all. Indians store their wealth in Gold and if you are robbed, its gone. It is your responsibility of insure Gold you own, even if it stored in a bank locker.

That is not the complete picture, is it ? If you hold physical gold and somebody steals it, you can file a complaint and system lets you get it back. Stealing gold is a crime.
If a crypto wallet is stolen, or worse case, tampered with by the vaults even ?

There is no legal contract backing any of these 3rd parties (exchanges, vaults etc).

[SmartCat]

Originally Posted by ashokrajagopal

That is not the complete picture, is it ? If you hold physical gold and somebody steals it, you can file a complaint and system lets you get it back. Stealing gold is a crime. If a crypto wallet is stolen, or worse case, tampered with by the vaults even ? There is no legal contract backing any of these 3rd parties (exchanges, vaults etc).

Interesting Q. I had to Google it, but it is apparently a crime to hack/steal cryptos in most countries.

And it looks like even insurers are smelling money in cryptos. Very soon, one might be able to buy an insurance policy for protection against theft of cryptos:
https://www.reuters.com/article/us-m...-idUSKBN1FL406

Originally Posted by mayukh42

I think most Indians keep gold in lockers and some may also insure it, i.e. involving 3rd party.

What? No way. If Indians really insure their Gold, then we would have seen atleast one advertisement for Gold/locker insurance on TV/Radio/Newspaper. Or atleast we would have seen this "service" listed on a general insurance company's website.

[mayukh42]

Originally Posted by SmartCat

Indians store their wealth in Gold and if you are robbed, its gone. It is your responsibility to insure the Gold you own, even if it stored in a bank locker.

I think most Indians keep gold in lockers and some may also insure it, i.e. involving 3rd party. Beyond a certain sum of money, it is always better to involve a 3rd party for validation (at least I would be more comfortable that way). That is why the contracts are important; it safeguards the asset.

If the transaction is in a currency not backed by any 3rd party, then the clever side might rob the gullible side, and most of us with extremely poor purchasing power in India do not have the risk appetite to digest it.

For others, it is exactly what appears to be, i.e, "my money, my gamble, I can do whatever i want with it"

[ashokrajagopal]

Originally Posted by SmartCat

Interesting Q. I had to Google it, but it is apparently a crime to hack/steal cryptos in most countries.

And it looks like even insurers are smelling money in cryptos. Very soon, one might be able to buy an inusrance policy for protection against theft of cryptos:

Apologies if I am being edgy on this, but you seem to explain only one side of it.

Stealing anything is a crime, if one can only define it as stolen.

If I hold BTC for 1000, and my exchange pulls out 200 from it, that pretty much can be clearly mentioned as theft and I may be able to file a suit. Its different discussion if local administration may be able to do anything.

But if I hold BTC for 1000, and when I redeem they give Tether worth 500 as the only option, what option would I have to sue the exchange/vault ?

The point is, Robinhood or whichever big exchange behaves one way during bull market and another way during bear market.

[m8002?]

Here we go on the plan to ban Crypto by GoI.

https://news.rediff.com/commentary/2...9a6a95bd469365

The government on Tuesday listed a new bill for the upcoming winter session of Parliament that seeks to ban all private cryptocurrencies in the country, while allowing an official digital currency to be issued by the Reserve Bank of India.

This bill on cryptocurrencies is among 26 bills listed for the session.

These also include a bill to repeal the three farm laws, a proposal for which is to be discussed by the Union Cabinet on Wednesday.

What happens to the cryptos that people already own? They cannot convert them to rupees?
Whats the future of the crypto exchanges/wallets that popped up and are at $1B valuation?