Can someone 'splain me like I'm 5. Blockchain?

a reply to: Flyingclaydisk

Okay, so I'm kind of starting to gather that in order to accept cryptocurrency and its underlying blockchain accounting mechanisms I first have to accept a value exists where no tangible thing of value exists.

What makes Visa or Mastercard worth money as companies?

a reply to: TzarChasm

Bingo! This is my challenge also.

Fundamentally, it doesn't make sense. Every place you try to research it quickly delves into the whole blockchain mathematics and it's like..WAIT!...you first need to explain why I should trust this concept...before you get into explaining a bunch of complex math on the accounting side. The accounting is easy...the 'trust' and 'value', on the other hand, is far more difficult to grasp.

But, I guess it's like that age old movie..."Pay no attention to that man behind the curtain! (roar!)(flash! flash!)"

I don't know anyone big into crypto, but I do know a few into it small time. None of them can explain these answers, and all of them go off the rails talking about government control and other NWO stuff, but never explain how it works, like really explain it. Truth is...they don't understand it either, other than the cool factor.

One thing I do know, is not a quarter goes by where we don't hear about some dude going to jail for embezzling millions after creating their own crypto and ripping thousands of people off...kinda like Bernie Madoff style. I really wonder how anyone sorts out a credible crypto vs. a scam crypto...and candidly, I'm not sure anyone can.

"Trust" is an important part of economics. It's HUGE actually, and people in the crypto world need to explain why people should have this 'trust' far better than they have to date IF they ever expect crypto to take off in a meaningful way.

a reply to: CriticalStinker

What makes Visa or Mastercard worth money as companies?

Great question! Absolutely NOTHING! All they are is "clearing houses". Has nothing to do with value!

I look at all companies like VISA and Mastercard as 'negative value'. They represent nothing more than debt (to most people). Otherwise, they are just a common point of sale (POS) clearing house for transferring money from one user to another merchant via a common credential.

Completely different than crypto!

a reply to: Flyingclaydisk

Completely different than crypto!

I wouldn’t say that.

The utility is in the network that’s been built to be able to process the transactions, and do so quickly, and in some cases with much lower fees than cards.

The truth is there are a lot of scams, there are high fee cryptocurrencies, there are chains that shouldn’t be trusted, and there is centralization popping up in crypto.

It’s the Wild West. And you’re only as safe as you are competent in the space. It’s not for everyone, and you shouldn’t blindly trust it.

There is small amounts of utility if you know how to find it, and at times there is more transparency than any other traditional form of finance.

You can’t go to the bank and ask to see their books, and every transaction they’ve ever made. You can however see how a coin is coded, and see every transaction to validate coins didn’t come out of thin air.

originally posted by: TzarChasm
a reply to: Flyingclaydisk

It does sound fake, like a computer game where the in-game fictional currency somehow translates to real world currency, but in order to obtain that currency you have to spend real world currency on tangible materials and tools which translates to 50 literal cents spent for every fictional dollar earned. Doesn't add up to me.

Many people have said similar things over the last ten years. I would say that they all have a lack of knowledge and understanding in common.

By real world currency, do you mean fiat currency?

originally posted by: Ravenwatcher

originally posted by: TzarChasm
a reply to: Flyingclaydisk

It does sound fake, like a computer game where the in-game fictional currency somehow translates to real world currency, but in order to obtain that currency you have to spend real world currency on tangible materials and tools which translates to 50 literal cents spent for every fictional dollar earned. Doesn't add up to me.

That sounds like when I was playing World of Warcraft, I would buy gold illegally against game rules with real money only to be able to use the gold in game. So that digital gold actually had a monetary worth even though I was breaking the rules and paying the farmers who farmed the gold .

That digital gold has monetary worth in a very specific market, it's not like you can exchange it at your local bank and get your money back.

originally posted by: CriticalStinker
a reply to: TzarChasm

It has utility though. You can send money to anyone in the world without any restriction in seconds.

You can’t wire someone money without restriction. You can’t send gold quickly.

People were skeptical of credit cards and online shopping when it first came out.

It's not the same thing. Credit cards and online shopping are simulations of a physical relationship involving physical money. 1's and 0's are abstract expressions substituting for the cash but at the end of the day, there's a vault stacked full of liquid asset. There's no liquidity in crypto unless you can find a buyer willing to dump thousands on the chance they will turn around and bump into somebody prepared to trade millions for what they bought from you. It's like having a priceless collection of something dumb and weird (like Funko pops) that nobody will buy from you because it cost millions and the applications for it (besides bragging rights) are scarce to non existent. There will never be any retailer or vendor or proprietor who demands exclusively crypto and will take no other tender as payment.

originally posted by: IndieA

originally posted by: TzarChasm
a reply to: Flyingclaydisk

It does sound fake, like a computer game where the in-game fictional currency somehow translates to real world currency, but in order to obtain that currency you have to spend real world currency on tangible materials and tools which translates to 50 literal cents spent for every fictional dollar earned. Doesn't add up to me.

Many people have said similar things over the last ten years. I would say that they all have a lack of knowledge and understanding in common.

By real world currency, do you mean fiat currency?

Then explain it better instead of being "that guy". You know, a finance bro who likes to patronize the less informed. Don't do that.

originally posted by: CriticalStinker
a reply to: Flyingclaydisk

Completely different than crypto!

I wouldn’t say that.

The utility is in the network that’s been built to be able to process the transactions, and do so quickly, and in some cases with much lower fees than cards.

What 'value' does that network, or anything else, provide to me as the guy with the money to invest? I already have the 'expectation' that anything I invest in is going to be secure, so there's no value add to telling me this is "more" secure. I already assume it's secure, so you'll have to prove higher than this, and that's not possible.

The truth is there are a lot of scams, there are high fee cryptocurrencies, there are chains that shouldn’t be trusted, and there is centralization popping up in crypto.

It’s the Wild West. And you’re only as safe as you are competent in the space. It’s not for everyone, and you shouldn’t blindly trust it.

Precisely why it will be a long while before I invest even a dollar...which should be of concern to the crypto market. Blind trust is rare...very rare.

There is small amounts of utility if you know how to find it, and at times there is more transparency than any other traditional form of finance.[/quote]

Okay, would you mind citing some specific examples of where to find it? I would think, if this was credible, then everyone in the market space would be screaming from every rooftop for people to invest, and more importantly WHY they should invest.

You can’t go to the bank and ask to see their books, and every transaction they’ve ever made. You can however see how a coin is coded, and see every transaction to validate coins didn’t come out of thin air.

Oh, on the contrary, I absolutely CAN go into a bank and request their records. Their records are a matter of public information and disclosure. Now, I can't just walk in and get a report, but I absolutely can get their records if I follow the correct request procedures. This is all part of how the Federal Deposit Insurance Corporation (or FDIC) works. Banks aren't advertising this full disclosure, but if you know how to get it, they are compelled by law to disclose it.

a reply to: TzarChasm

Fractional reserve banking means any bank only has to have 10% liquid assets vs outstanding liabilities.

They are far from liquid. That’s why a lot of the banks crashed in 08’.

That said, a lot of cryptos have liquidity pools with various other assets. So you’re not trading u2u, but rather with the pool. If it’s a small pool, you tank the price when you sell. If it’s a big pool, you barely make a dent in the pool.

a reply to: Flyingclaydisk

That’s the beauty, crypto is optional. You don’t have to interact with it, and I would go so far as to say you shouldn’t until you fully understand it and want to.

But you can’t pull out 10k without an explanation. Your money isn’t protected against inflation. So there are different layers of security.

I might have 25% of liquid assets in crypto, so I’m far from a crypto maximalist. It’s a financial instrument, just like stocks, 401k. They have specific use cases and utility.

originally posted by: Flyingclaydisk
a reply to: IndieA

How is this not just a big ponzi scheme? He seemingly followed the rules with his 'mining' operation, but produced no value. I also followed the rules by investing/depositing $100 in hard currency. Who wins? Is my hard currency only worth $50 dollars now? I say he created no value, because he created no value to me.

That exactly what happens when private central bankers create new money out of thin air, it causes the value of everyone else's money to decrease and we call it inflation.

A miner is at least creating a digital value that can be bought, sold, or transferred, and they invest in the operation just as a farmer invest in theirs.

Sometimes things can have value and may not seem like it, like a poem, song, or a hug.

originally posted by: CriticalStinker
a reply to: TzarChasm

Fractional reserve banking means any bank only has to have 10% liquid assets vs outstanding liabilities.

They are far from liquid. That’s why a lot of the banks crashed in 08’.

That said, a lot of cryptos have liquidity pools with various other assets. So you’re not trading u2u, but rather with the pool. If it’s a small pool, you tank the price when you sell. If it’s a big pool, you barely make a dent in the pool.

Federal reserve terminated the fractional reserve mandate years ago. And what does that 10% liquidity look like? Let's say the bank has on average 50 million USD deposited every month. What form does that 5 million take? Let's then compare that picture with 5 million worth of Dogecoin.

a reply to: TzarChasm

It's more like, if a bank has $50 million in deposits, they can make $500 million in loans.

a reply to: IndieA

And you're telling me every bank in America has zero dollars in their vaults?

originally posted by: TzarChasm
a reply to: IndieA

And you're telling me every bank in America has zero dollars in their vaults?

Banks can keep cash in the vaults while being in the red on the books.

When being more red on the books, means more interest revenue, it's the profitable thing to do, and there's no risk so long as there isn't a nation wide bank run, which you really don't have to worry about when the media is under control. Is this making sense yet?

And for anyone who needs to be brought up to speed, bitcoin was created and released to the public mostly in response to the private central banking fiat currency scheme and fractional reserve banking, but also because spending and debt were getting out of hand, while big banks were being bailed out by taxpayers after failing.

a reply to: IndieA

So what I'm saying is, put 50 million worth of crypto on a table next to 50 million USD, 50 million USD worth of rubles or yeni or francs or pesos. What does that look like? Is there a computer with a NFT file valued at 50 million and a massive stack of cash or bullion next to it? That's what I'm picturing and it doesn't inspire confidence because there's no actual reason for a set amount of crypto to be worth a set amount of USD purely because somebody said so, and certainly no reason to trade money I can spend anywhere for money I can only spend in a very specific venue specializing in crypto trade.

Keeping in mind, in this scenario I'm still 5 years old and arguing vehemently against exchanging thousands of dollars for crypto assets. Never mind how I got the money with no job and no bank account.

originally posted by: TzarChasm

originally posted by: CriticalStinker
a reply to: TzarChasm

Fractional reserve banking means any bank only has to have 10% liquid assets vs outstanding liabilities.

They are far from liquid. That’s why a lot of the banks crashed in 08’.

That said, a lot of cryptos have liquidity pools with various other assets. So you’re not trading u2u, but rather with the pool. If it’s a small pool, you tank the price when you sell. If it’s a big pool, you barely make a dent in the pool.

Federal reserve terminated the fractional reserve mandate years ago. And what does that 10% liquidity look like? Let's say the bank has on average 50 million USD deposited every month. What form does that 5 million take? Let's then compare that picture with 5 million worth of Dogecoin.

The fractional reserve mandate was created a few decades ago and still exists today.

I'm not even arguing that crypto is "better", rather that it's different.

Doge is a meme coin, so it's not really a thought of mine while I've been commenting on the thread. I was careful to use positive language about crypto by saying "some" earlier. As I said, its the wild west, and there are scams, sh$% coins, meme coins, and things that will just flop. There are also utility coins that are pragmatic, and likely the minority.

I wouldn't suggest anyone interact with crypto unless they fully understood it, and obviously believed in it to some degree.

It's a financial instrument, it has a specific use case. Just like it wouldn't be smart to put all your money into bonds, CD's, or even the stock market. All of those things individually are great financial instruments. But people often get confused in finance/investments and see something as all or nothing.

I can remember 12 words, and that gives me access to as much money as I have and want to put away on a crypto wallet. I can connect to that using 12 words on any device I trust with an internet connection. That's pretty incredible IMO.

a reply to: TzarChasm

The dollar used to be back by gold. It's now backed by faith.

The dollar in your bank account never had a physical dollar associated with it. In fact, when a bank loans more money than it has in it's vault/accounts, it is created that money into supply.

Bitcoin can only ever have 21 million coins, no other coins can be made over that. A political party could get into office, set the interest rates to 0 and print trillions of dollars.

Again, most of my liquid assets are in USD in some way shape or form.

I have savings, high interest yield savings, ETF's, Stocks, 401k, Roth IRA, Bonds, a checking account, property, and crypto. They all have a purpose, one isn't necessarily better than the other. All carry their own risks, the fact I have diversity offsets risk.

a reply to: TzarChasm

Picture piles all worth the same value, cash, stocks, crypto, gold, silver, food, physical tools.

Some are paper, some are metal, some have actual physical uses, and some are perishable. All stores of value come with pros and cons.

Something doesn't have to be tangible to have value, it doesn't even need to be physical. Things like health, love, compassion, Integrity, kindness, trust, loyalty, friendship, knowledge, and many other things hold value.

Maybe, you just don't like getting involved in a volitile commodity, I get that. The crypto realm has stable coins to offer you. Digital tokens pegged at a dollar, so you investment holds the same value, or earns interest if you have the right ones.

a reply to: pCriticalStinker

That’s the beauty, crypto is optional. You don’t have to interact with it, and I would go so far as to say you shouldn’t until you fully understand it and want to.

Well said. I would suggest that the same rule be applied to any powerful tool.

a reply to: IndieA

Okay, this whole thing is starting to make sense to me now.

So, to use your analogy...imagine me with a pile of fruit I spent the time to plant, fertilize and grow, and I'm at the market selling this fruit. Along comes some other guy who sat in his basement and got his computer white hot mining for bit coins. We're sitting side by side in a market.

Shortly afterwards some starving people show up. They have a choice. They can either pay me money for some of the fruit and vegetables I've grown, OR they can pay this other guy for some bitcoins he's mined...which he promises are worth something.

Which should these people choose?