Crypto currencies, meh

[Lowlow]

I'm meh for most of the crypto currencies out there, and here's why ...

To me, the push for people to get involved in crypto currencies is a mixture of a lot of different concepts, motivations, etc, into one giant orgasmic event and a lot is getting lost in the discussion.

Crypto currencies themselves are nothing more than a system of transferring value between computers.  They have a lot of technological advantages, the ability to be distributed (decentralized), anonymous, etc, and these are systems that we have needed (and people have been working on) for a long time, well before bitcoin and block-chain became a thing.  I remember discussion about this as far back as the late 1980's.

That said .. it is JUST a system of transferring value, and even more generally "uniqueness" from computer to computer (or maybe it's better to say keeping a decentralized database), and that's all it is.

In addition to that there are a lot of OTHER things that are getting mixed into it .. everything from beliefs about politics, to what types of value are going to be transferred, how the rules will work, how tokens will be traded, there's a LOT going on in these discussions, and a lot of it is being mixed up into larger concepts and I really think that's where the problem is.

Crypto currencies are TOKENS.  And those tokens can be made by anybody, and there will no doubt be advancements in the future that will make the current systems obsolete.

But the issue in my mind is that in the rush to embrace this new technology, people are ignoring a lot of serious issues.  To use an analogy, it's like back in the day when the telephone was first invented, no doubt there were financial institutions and others who used the fact that they could do transactions via telephone as a marketing gimmick, taking advantage of the fact that telephones were a new gee-whiz technology that was fascinating the public, but ... they were still financial institutions, with financial products, and the fact that transfers were taking place over the telephone instead of in person or by mail was interesting, but it didn't change the underlying fundamentals of the financial products they were selling.  If they were low value products before the telephone, they weren't any better after.  Also, over time, the fact that the telephone was being used became less interesting as the technology was adopted by more businesses, and eventually everybody had it.

I'm old enough to remember when this happened with the Internet too, when people were setting up the first stores on the Internet, there was a time when that was brand new and early adopters were out there trying to make a name for themselves, but once the Internet became widely adopted the newness of it wore off and, in the end, it was basically the same businesses you were doing business with before, but now you could make orders on the computer by looking at their catalog online instead of calling them to get a printed catalog and calling them on the telephone to place orders, which is they way it was done when I was growing up.  I remember when I was a child sitting and reading through the JC Penny and Sears catalogs looking for what I wanted to put on my list for Santa, and the Internet, though convenient, is really just a kind of optimization of that process ... but toys are still toys, and clothes are clothes, and it isn't like the companies suddenly became more financially viable just because of the Internet - a number or very high profile business failures in 2008 and 2009 should be proof enough of that.

So my issue is that, yes, these tokens systems are going to change the way people do business, eventually even YOU may be minting your own tokens, maybe as coupons to purchase things at a discount at your business, or maybe there will be a new kind of checking account at your bank that allows you to make tokens that can be drawn against your account.  But at this moment, there are only a few financial institutions and technology firms minting the tokens, and it's in a very gee-whiz kind of phase ... but that has NOTHING to do with whether the underlying fundamentals of the businesses who are minting these tokens are sound, or that they are even going to be around 10 years from now.

And, yes, I understand that bitcoin isn't backed by any financial institution or specific person, and that it is essentially tokens created out of thin air that everyone is going to agree have value ... but you know what ?  That sounds a LOT like something we in silver and gold complain about all the time.  I don't understand why I should be super excited about a fiat currency that isn't just minted out of thin air by a government ... but now minted out of thin air by absolutely NOBODY lol.

Related, bitcoin and others in the future have mechanisms built in to stop inflation, but only within their own currency.  There's NOTHING to stop people from making COMPETING currency and inflating the entire range of currencies available, and we're already seeing that.  What does it matter if bitcoin can be inflated if there can be 1000 competing currencies to bitcoin ?  I'm amazed, honestly, that some of these currencies have retained value for as long as they can with the fast speed with which new currencies are coming online, how many new currencies were created just in the last year ?  How many new ones will be around 5 years from now, 10 years ?  Ultimately, as I said above, I would expect that EVERYONE would have the opportunity to create their own tokens ... so you might be creating tokens that can be redeemed for a cup of lemonade at your corner lemonade stand, so what will make bitcoin interesting after that ?  It's a currency, not a religious experience.

I kind of wonder if this was what it was like when the printing press was first created, suddenly some important authors could create multiple copies of important works and everyone was amazed, now your family could literally have it's own copy of the Bible!  Something that up until that point was basically unheard of since the Bible had to be copied by hand.  I'm sure it was a great novelty and that there were some key players who used the printing press to their advantage when it first came out and only a few people had one ... and today you probably have relatives that have written books, YOU could write a book and make a million copies of it if you wanted to.  In the United States an estimated 300,000 new books were published in 2013 (the only stats I can find easily online).

I'd ask this question if someone is trying to get you interested in a crypto currency ... if there was no such thing as a crypto currency, and they were doing the exact same transactions with beautifully printed pieces of paper that had holograms on them to eliminate counterfeiting ... would you still be interested in their tokens ?  When there are 100 other similar tokens out there, are yours still going to have the same interest ?  If another BETTER token technology comes along, what is going to happen to the tokens you already have ?  If the people putting the token together fail, what happens to the value of your tokens ?  Is there counter-party risk ?  What if legislation changes ?

I also think there is a strange kind of mythology that is surrounding the use of these tokens, people making claims that may be factually accurate, but practically crazy talk.  As an example ... tokens can be transferred and they are outside of the ordinary financial system, so regulators won't be able to control them.  Well ... yeah .. in theory.  But the same could be said of cash, regular old paper cash.  You can carry that to a shop, give it to them, and they give you a product, and nobody need ever know the transaction happened ... except ... IT IS ILLEGAL for the shop to make those transactions without paying taxes on the money they made.  Do you think that just because you can trade tokens online that it'll be any different ?  Yeah, you might trade a few tokens with a friend, etc, but do you think the large businesses that have the products and services that you're actually going to be interested in are going to make anonymous transactions with you, avoid paying taxes, etc, just because these token systems technically allow that to happen ?  Do you think they'd take your cash without reporting the transaction ?

Anyway, this post is really long and I'm bored with writing about the subject, but that just scratches the surface of my feelings about these token systems.  I DO think these are important technologies, and I believe future technologies that do similar things and are implemented more efficiently will be even MORE important ... but it will not take very long at all for this to be democratized in the same way that the printing press, Internet, telephone, fax machines, and all of the other technologies we use in our daily life have been democratized.  It won't be that far in the future that we're all looking back thinking ... yeah, tokens, so what ... because your cousin will be minting tokens that are used by her party guests to open the door to the room she rented at the movie theater for her kid's birthday party, it'll be such an everyday common technology that nobody will give any more thought to it than they do about making telephone calls or printing something on a printer.

[sixgun]

The blockchain is a new idea and there is a lot of buzz about it. Many of those getting involved don't really understand what they are involved in. i too remember the late 1990's when less than half baked ideas were raising capital and expected to fly to the Moon b/c there were going to be on the internet. They were half baked ideas and failed like most half baked ideas.

i am involved in the blockchain but i do not follow the crypto space very closely. The blockchain is a decentralised ledger system. So information can be recorded in a decentralised way and transmitted. If that information is tokens then the tokens are recorded and transmitted in a decentralised way.

As you say it is what is behind the tokens that matters not the tokens. These tokens are being used as shares in companies trying to get off the ground. The tokens will have value if the companies do well - and no value if they fail. An ICO - ITO is a cheap way to raise capital. It avoids many of the parasites who take the lion's share of the money raised. As such it is a good thing but it does mean every Tom, Dick and Harry can issue tokens but not every token offering has a good idea and capable people to carry it through. The tokens are share certificates and should be seen like any other share offering.

Some tokens are title of ownership over something. There is a sand token in Russia it seems - you own a token and you own some sand in Russia. The Kinesis coins will be title of ownership over gold or silver. Title of ownership recorded on the blockchain.

Some of the tokens - are the cryptocurrencies - Bitcoin, Litecoin, Ripple. They aren't title over anything or shares in anything other than thin air. They have value only b/c people are prepared to pay something for them. This is why their prices are so volatile b/c intrinsically they have no value. Some people say a lot of energy goes into mining BTC - well it does but a lot of energy would go into moving a pile of dirt from one side of the yard to another but that doesn't mean there is any value to the process.

[RoughDog]

The blockchain is public.  No thanks.

[Mugiwara]

For most western nations at this moment it doesn't make sense to use cryptos at least as a payment method. 

For other 4-5 billion people, maybe a little different story. Most of those people don't have access to the banking system (VISA,credit cards, or any bank account for that matter, not to talk about opportunities to invest on global market).

I think global adoption of cryptos (at least some) will happen sooner or later, at that point prices will not fluctuate so much.

 

[Stu]

When does the macafee guy eat his own knob?😀

[Lowlow]

11 minutes ago, Stu said:

When does the macafee guy eat his own knob?😀

"The United States and Great Britain are two countries separated by a common language." George Bernard Shaw

Stu, I literally have no idea what the words you wrote mean.

Does knob mean penis ?  Who is Macafee ? LOL.

[Roy]

Mr McAfee taught me how to use a rubber.

Before then, I used to make an awful mess. 

Blow me....it wasn't that hard after all.

😎

[Martlet]

Thats a long essay, too many points of interest.  I'll comment that blockchain was an attempt to address a serious question in 2008, how do you create a system for monetary exchange outside the banking system, without trust, without controls?  Banks are essential for economy relying on non-personal transfers as they restrict the risk of double-spending, so to replace banks you need a system that removes "trust" because the a transfer is absolute, infallible and irreversible.

Bitcoin was really only a proof of concept, there are deep,  fundamental flaws that are still not addressed.  But it showed the concept was sound and once it took hold and started to gain some value, it somewhat snowballed from there.  Its only a shame the flawed beta version rather than an improved version 2 hasn't become dominant.  

The rest of the cryptosphere is a quagmire of me-too, good ideas, bad ideas and scams.  Many are just trying to improve the idea with different parameters to different degrees of credibility.  Some are useful applications of blockchain, where currency is secondary.  Some are interesting applications of blockchain but really could work without, and introduce central control going against the original principle.  A few are genuinely useful technologies built on good foundations, notably Ethereum with smart contracts, which could (has?) revolutionise how companies raise funds and interact with investors.  

Crypto's are here to stay now, there is too much interest and enough good technology, quite whether it will deliver on the original concept is open question.  It certainly doesn't deliver the dreams of may ideologues who jumped on, its certainly not any different to fiat when anyone with some coding skills can fork a repo and spawn a new coin and few million.  It will be interesting in the long run if it breaks the hegemony of government and central banks on fiat, with perhaps corporations issuing their own currency.  With Lighting Network, large retailers and service companies may become defacto banks, conduits between users. 

[Stu]

2 hours ago, Lowlow said:

"The United States and Great Britain are two countries separated by a common language." George Bernard Shaw

Stu, I literally have no idea what the words you wrote mean.

Does knob mean penis ?  Who is Macafee ? LOL.

Sorry I think I paraphrased mr makeafee. I'm sure you'll understand the article linked

https://www.theinquirer.net/inquirer/news/3022195/john-mcafee-will-eat-his-own-penis-if-bitcoin-doesnt-go-above-usd1m-by-2020

never conflate knob mit penis 

edit^^^^^ Incudentely, that's just the words my English teacher wrote on my high school report circa 1985

[Lowlow]

56 minutes ago, Stu said:

Sorry I think I paraphrased mr makeafee. I'm sure you'll understand the article linked

https://www.theinquirer.net/inquirer/news/3022195/john-mcafee-will-eat-his-own-penis-if-bitcoin-doesnt-go-above-usd1m-by-2020

never conflate knob mit penis 

edit^^^^^ Incudentely, that's just the words my English teacher wrote on my high school report circa 1985

LOL thank you Stu!  That was hysterical, I had not heard that bit about that guy.

Good luck to him HAHAHA