BITCOIN? Cryptocurrency..The future??Scam..??

[WalterB]

I hear about all that stuff a lot, but have no idea what it even is. My brain just doesn't convert non-money to money, lol.

[lance_s]

People keep telling me to set up to accept Crypto for the websites.. to me it sounds like a ton of work! I would have to convince each model to accept crypto also and pay her in crypto? Or exchange it for cash and pay her? I don't know if it's worth all the headache! Plus I think the government would look at us closer too? More likely to get audited? I like to keep everything super clean and simple!

Right now, I don't think I'd recommend crypto for most mainstream businesses. And yes, the IRS is setting up tools and procedures to audit crypto transactions. At the moment. the hoop about crypto is due to speculator interest, not market uptake.

On the other hand, governments are looking at digital currencies. Not sure how the blockchain currencies will hold out when they start getting rolled out. Once blockchain transactions have to interact with government managed digital currencies, the blockchain transactions will lose a lot of their opacity.

[George B]

People keep telling me to set up to accept Crypto for the websites.. to me it sounds like a ton of work! I would have to convince each model to accept crypto also and pay her in crypto? Or exchange it for cash and pay her? I don't know if it's worth all the headache! Plus I think the government would look at us closer too? More likely to get audited? I like to keep everything super clean and simple!

You'd potentially be exposing yourself to even more scrutiny as they begin to develop regulations. I wouldn't want to go down this avenue with a business unless absolutely necessary. This is likely to change over time, but for now you're better off dealing with traditional payment processors.

[George B]

I was talking with friend about Dogecoin about 10 days ago when it was going for around $0.50. I told him that he should take profits (he bought in at like $0.06 and it had already gone to $0.74 the previous weeks). He was insistent that Tesla would start taking it as payment. I told him that it's far too volatile and that they would not chance it.

Doge is trading at $0.34 today.

As someone who has been actively trading over the past 4 years, there is a lot of dumb money out there. Some people get lucky, but I've seen plenty of peoples fortunes disappear overnight. Speculate responsibly.

[WalterB]

What money? Stupid old fart just don't get it.

So there's something out there called, let's say, "Mycoin." So, I buy a hundred Mycoin for $0.50/coin. So is it just speculation? If It goes up to $1.00/coin, I double my money? If it drops to $0.25, I lose 50%? But who gets my money when I buy in? Who pays me when I win? lol.

But I still don't understand. I guess I could read up on it. No, I'm not an investor, but I can't even figure out where the money comes from. Who is behind all this? Doesn't there have to be a "clearing house" of some sort somewhere to keep track of all the bitcoins and dollar bills?

Well, Thank goodness I"m not a stupid old fart from yesteryear trying to make sense of a modern world,

[George B]

What money? Stupid old fart just don't get it.

So there's something out there called, let's say, "Mycoin." So, I buy a hundred Mycoin for $0.50/coin. So is it just speculation? If It goes up to $1.00/coin, I double my money? If it drops to $0.25, I lose 50%? But who gets my money when I buy in? Who pays me when I win? lol.

But I still don't understand. I guess I could read up on it. No, I'm not an investor, but I can't even figure out where the money comes from. Who is behind all this? Doesn't there have to be a "clearing house" of some sort somewhere to keep track of all the bitcoins and dollar bills?

Well, Thank goodness I"m not a stupid old fart from yesteryear trying to make sense of a modern world,

These digital assets are traded on exchanges in a similar fashion to stocks or foreign currency. Over the past few years we have seen more regulatory guidance in the US, however it is still very much in its infancy.

The people you are buying from are typically market makers, who run algorithmic high frequency trading systems which facilitate trades on the exchanges. The market makers are able to make money by charging a spread on the buy and sell price, allowing them to transact on both sides of the market. The exchanges take a cut of every sale as well.

Bitcoin and several other of these assets are "mined" by people that operate specialized equipment that runs the Bitcoin software that keeps the Bitcoin network operating. Miners are rewarded an amount of Bitcoin whenever their hardware solves the complex computational math problems, which is the basis of the bitcoin network. This mined bitcoin is then either sold off to cover their mining expenses or held as inventory if pricing is not favorable.

It's actually quite a remarkable system, if you want to get a more technical presentation check out this video. https://www.tastytrade.com/shows/the-sk ... 03-12-2021

[WalterB]

Haha, thank you, George. If I don't understand this, I'll never get "more technical," But I'll take a look. I'm not interested in getting into it in all. I'm just not a financial wizard. I can barely save 2 nickels at once. I was mainly interested because I hear so much about it all these days. But I just don't understand it, for some reason. I see there are two parts to this particular video. Once I get out to my son's, I'll watch both parts.

Is this a way to trade in something to mainly try to make money? I mean, kind of like the Stock Market? You buy something and hope it goes up in value?

[George B]

Haha, thank you, George. If I don't understand this, I'll never get "more technical," But I'll take a look. I'm not interested in getting into it in all. I'm just not a financial wizard. I can barely save 2 nickels at once. I was mainly interested because I hear so much about it all these days. But I just don't understand it, for some reason.

Yeah as far as financial assets go, these things are extremely volatile and not for the faint of heart. It's a rude awakening for a lot of people when things take a turn for the worse. As quickly they go up in price, assuredly they can fall twice as fast.

[ErikB]

I agree with lance_s and George B. I wouldn't try to make Bitcoin or any other cryptocurrency a part of normal payments unless you were truly committed to the idea of cryptocurrencies themselves (like LBRY and its alternative-to-youtube video platform Odysee).

As a side note on cryptocurrencies, they are a big enough "thing" that they have interfered with the market for video cards, which drives the video gamers nuts. Mining for crypto is still profitable enough that the miners drive up the prices of the cards and the gamers either can't get them or pay through the nose. Mining alsoapparently sucks up a lot of electricity, leading to this meme:

I would look at Bitcoins as sort of similar to Rai stones, which is giant stone money. The following two short articles provide a good background on the island of Yap, which used these giant limestone rocks carved into wheels as money. They had to get the limestone from another, occupied location. So, they had to trade other physical goods to get the limestone. The NPR article makes an interesting comparison between the Rai stone that sank into the ocean but was still considered money, and paying bills electronically.

https://www.thevintagenews.com/2017/12/28/rai-stones/

https://www.npr.org/sections/money/2011 ... tone-money

With Bitcoin, the blockchain takes the place of the village oral history of who owns which stone wheel.

I think it was when Bitcoin first came out that I started to get curious about what makes something money, and how economies work.
I found this nifty article on a blog that talks about a few economic principles in terms of both Gilligan's Island and the U.S. invasion of Iraq.
It is a really understandable introduction to what factors can determine what a group of people will consider money.

https://mises.org/library/monetary-econ ... howell-iii

After reading that article, I wanted to know more. I ended up finding a really good book called "Economics for Real People". Fortunately,
that book has been made available in PDF form online for free:

https://mises.org/library/economics-real-people

The book explains economies and money by starting with Richard Hatch (from Survivor) being stranded on an island. Eventually he is joined by Helena Bonham Carter. The first chapter actually goes into details about the field of economics, which I had a hard time with. I would recommend starting with Chapter 2.


Finally, a review of a Twilight Zone episode I was always fond of, despite its flaws. I couldn't find the full episode, so this guy's commented version will have to do. It deals with the relative value of gold, vs water, vs transportation.

phpBB [media]

[lance_s]

Mining alsoapparently sucks up a lot of electricity, leading to this meme:


weed_vs_crypto.png

I read something in the news this weekend about a police force in Britain raiding a property that was sucking power illegally off the power grid. They were expecting a grow op but found a crypto mine instead. Crypto mining isn't illegal, but they still nailed them for stealing power.

[ErikB]

Mining alsoapparently sucks up a lot of electricity, leading to this meme:


weed_vs_crypto.png

I read something in the news this weekend about a police force in Britain raiding a property that was sucking power illegally off the power grid. They were expecting a grow op but found a crypto mine instead. Crypto mining isn't illegal, but they still nailed them for stealing power.

That's interesting! I never thought about that. As any particular cryptocurrency that has a limited number of "coins" to be found is mined, it might take longer and longer to discover the ones that remain. At some point, the electricity consumed might approach the value of the coin. The choice then would be one of quitting, switching to a less fully discovered crypto system (with lower profits because the value is also likely to still be low), or try to maintain the profit margin by stealing the electricity.

Or maybe they were just greedy. Either way, I am glad the cops got them.

[lance_s]

The more I think about it, the more I come to the conclusion that a purely decentralized currency system can't exist. Without an external reference, it is impossible to assign a value to decentralized digital currency.

[WalterB]

OK, Now I'm totally lost. Electricity? What is using electricity beyond your computer? And, electricity overload? That is a lot of electric current.

You guys don't need to try to explain it to me. I do appreciate your efforts. But I see cryptocurrency as standing on the ocean floor trying to understand The Eiffel Tower, lol. And yes, I will spend a little time reading. But, for me? I'll stick to my old dollar bills, lol.

I mean, I understand Crypto, having carried a secret security clearance for many years. I understand 'currency, too. But, put them together? You just lost me. Mining? I understand mining, too, except where it applies to cryptocurrency, lol.

Another one is "woke?" Woke is the past tense of "wake." "I usually wake up at 5. Yesterday I woke up at 6." But now someone tried to make it mean something that makes absolutely no sense at all.

DAMN, I hate being old in a young world,