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5huggy

Crypto firm boss dies with the only password to £145,000,000

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Gold is good money. Fiat is a good means of exchange.

Crypto was trying to take those concepts and put them together, but has failed at both. Fiat is still best for trade. Gold is still the best money. Crypto is poor as an exchange mechanism and poor at being money. This article is just one example why; too reliant on third party infrastructure, too reliant on the competence and honesty of other people and far too fragile.

Reminds me of this; 

 

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There are two lessons here.

Don't leave your crypto on an exchange, own your private keys (that's always been rule number 1 since the Mt Gox).

The second is that exchanges that choose to hold client funds need to be properly regulated.

There is a bright side to this mess, at least for other holders as it's essentially a $92 million coin burn.

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1 hour ago, HelpingHands said:

Only if you leave it in the hands of a third party.

That's like depositing £100 on a poker site who go bust and then saying pounds are no good.

You need a third party to do anything with crypto. You need equipment to store, different equipment to trade, electricity supply, internet connection. Even peer to peer you want two sets of equipment, internet and power supply. You need to verify the transaction. Too much reliance on third party infrastructure, too many people involved in the chain for such a simple transaction of value for value. Same said as to the store of value. It tries to do both and does so badly.

Take gold. Its an element that exists independently of man. Take a gold coin and put it in someone elses hand. Value has been transferred. It is as decentralised as possible. Why do we need all of these people involved, expending energy to create a 'store value' in the form of crypto? We have one already. We add layers to the trading of gold to help facilitate its exchange, not to facilitate its existence.

If we want to facilitate trade of goods, fiat does the job best. It is fast and easy, most have relatively stable perceived value compared to crypto and metals. Physical fiat requires no electronic infrastructure to use and can facilitate trade anywhere. So long as it can be exchanged freely it will do the job better. Crypto decentralisation is redundant while Fiat trades freely. The inconveniences of crypto outweigh this digital benefit for now. Perhaps rather than benefit, it is more accurately called an ideal, as we know that it can never truly be decentralised. Too many third parties! 

Crypto was sold as the best of money and currency. It is not what it pretends to be. It is something else, a strange form of speculative branding? Gold coins with a B marked on them, yet physical bitcoin is an impossibility. It preys on the confusion over the idea of money, the idea of value, it sells these ideas and delivers a largely redundant, inefficient, expensive, "decentralised" means of exchange. It has become primarily a mechanism for the transfer of wealth via a market fuelled by 99% speculation and perhaps 1% demand for its utility, (and that is being generous). 

I am talking about non backed crypto here rather than crypto backed by metals. Crypto gold is in effect, gold with layers added to facilitate its trade. It is of course more than that, but again, fiat and physical still do what it is trying to do better, so long as both are traded freely. Physical gold is best at what humanity has decided to use it for, and Fiat is still best at what it was designed to do.

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Have to note @Kdave that unless one is mining and minting/hammering our own coins, gold or silver still relies on a third party. 

Crypto has certainly become a vehicle for speculation, however the origin of Bitcoin is to provide a reference implementation that solves a important problem, proving something digital hasn't been copied, double-spent, resold, hypothecated without knowledge.  That has value.  That implementation is flawed but it at least proved the concept to be valid.  Is there a great deal of use?  I believe so, though not nearly as much as 2000 projects think. 

Edited by Martlet

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Mining bitcoin is to enable the verification of transactions and to access more bitcoin. The bitcoin miner is intended to facilitate trade first and is rewarded for the expenditure of energy with more bitcoin, systematically speaking. Personal interest (more coins) drives him to do it, but that is the role he plays in the system. 

Gold exists regardless of who is mining it. Personal interest drives the mining of gold too, but it does not facilitate the trade of gold. If no one mines gold ever again, the coins you have will still exist, you can trade them with whoever you like, no third party required. The same does not apply to bitcoin. Bitcoin and the rest require the constant existence of infrastructure and the input of energy to support them. Mining must happen for exchange to happen. Crypto does not function without the third party, be it the miner, the power grid, the internet service provider. Gold just exists. 

Agreed that crypto has value in what it can do, it is a second rate gold and a second rate fiat. What is the going rate for that sliver of utility, the market will not tell you. The market is a combination of all the things mentioned - branding, speculation, idealism ("decentralisation"), other less polite concepts. Somewhere at the bottom of the pile is the people who value crypto in terms of its utility, or failing that, their understanding or belief - their perception of its utility. Impossible to measure that tiny bit of the market imo. Would you want any at all knowing that you can get gold as a better store of value, or fiat as a better and cheaper exchange mechanism? Why would you want any bitcoin knowing better alternatives exists?

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What a cock up. Hope the company doesn’t get a “visit” by some teed off  Chin....maf...err businessmen.....best case scenario, there is a lawyer somewhere about to get a big juicy lawsuit bit of business. Worst case, some “rich” people just got poor.

 

Liquidity problems for the British Columbia-based company began in January 2018 when Canadian bank CIBC froze C$25.7m linked to its payment processor after the bank had difficulty determining who were the owners of the money. 

https://www.bbc.com/news/world-us-canada-47123371

 

Died on a trip to India. Liquidity problems.....hmmmmmm

Edited by Oldun

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37 minutes ago, Martlet said:

Have to note @Kdave that unless one is mining and minting/hammering our own coins, gold or silver still relies on a third party. 

The point was that crypto is entirely reliant on third parties to exist and function. That is a dubious starting point for the 'store of value' concept and again for any immediate or future reliance on being a 'means of exchange'. 

Gold exists regardless of third parties. Pan the right river and you will find some. No one creates it. Mining it does not facilitate its trade. Minting coins does not facilitate its trade. The value assigned is ultimately between you and someone else. No third party required. 

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13 minutes ago, KDave said:

The point was that crypto is entirely reliant on third parties to exist and function.

The network makes sure that no individual third parties are relied upon.

If you are calling the entire network a third party then I can call the entire human species (or governments) as a single third party as we are relying on them to recognise that gold or fiat has the value it is expected to have.  

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@KDaveYes, accept the dependency on third party infrastructure for crypto, just highlighting that gold isn't without some dependency.  Where can you use/trade the gold panned in the stream?  Even in an economy based on commodity money, theres an assumption the commodity is standardised, i.e. a coin.  Then as we develop mature economies we have banks and other third parties to function.  The existence of the gold is not the whole of its value, specific form and systems to store and transfer it (as backed IOU) give it greater utility. 

BTW i agree the point about decentralised currency being redundant while we have existing fiat trade.  I believe a lot of the idealism around crypto overlooks many people already have free and actually instant transaction (and many of those that dont are lacking in third party infrastructure).  A year ago it was considerably more expensive slower and to move Bitcoin than £ between accounts (around £30 at one point and would still be half hour for confirmations to be accepted).  Its clear that the focus of crypto has shifted to store of value, and fund raising vehicle.  There is also an inherent contradiction i believe, in the concept of using them as currencies, as you increase the use there is a constant selling pressure.  This should lead to a stabilisation of value (good) but then no lambo moon (bad... right?).  Cryptocurrencies should be measured as along lines of of GDP, not market cap like companies, then perhaps we will value them correctly. 

Edited by Martlet

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14 minutes ago, Martlet said:

  This should lead to a stabilisation of value (good) but then no lambo moon (bad... right?). 

Depends when you get involved.   If you don't have any bitcoin before every online retailers accepts it then yes it's probably too late for speculative increases.

 

I think at some point anything of value could be tokenised.   eg. Instead of a mortgage a home could be tokenised and the remaining tokens that the resident doesn't own could be traded.  The resident could gradually buy from the market to increase their equity.

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26 minutes ago, HelpingHands said:

The network makes sure that no individual third parties are relied upon.

If you are calling the entire network a third party then I can call the entire human species (or governments) as a single third party as we are relying on them to recognise that gold or fiat has the value it is expected to have.  

The network ensures that many individuals are relied upon. All of them are weak links in your store of value. Gold has no reliance on other people. 

Yes that is the nature of value, it is perception. Without the comex how would you value gold. Without the dollar or the pound or bitcoin how would you measure it. Measure it in real stuff would you not? Why do you think crypto has value when it is no more real than fiat. What gives it value?

15 minutes ago, Martlet said:

@KDaveYes, accept the dependency on third party infrastructure for crypto, just highlighting that gold isn't without some dependency.  Where can you use/trade the gold panned in the stream?  

Anywhere you can find someone who wants a weight of gold in exchange for whatever you want to buy. People in Zimbabwe loved gold nuggets from the river back in 2008. They were not worth much, a loaf of bread if they were lucky. Is gold a good currency? No. Is Fiat good money? Nope. Is crypto good at either - no. 

 Yes agreed so long as crypto is measured in fiat, how can it ever overtake fiat as currency? 

Edited by KDave

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