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

I have learned much technical understanding of the trend known as cryptocurrency from this conversation. I will not claim to understand why it is alluring, but I do know human intent and motives, and the behaviors this new technology induces in people to me clearly shows a manipulative intent of control through a long game of sorts.

Cryptocurrency encourages human behavior to abandon hard currency, physical mediums of exchange because it claims some kind of liberty through bypassing of intermediaries. This concept essentially boils down to computer code which essentially functions exactly like cash in a digital medium. However, with cash nobody has to reveal their identity to have it. Perhaps this will be clarified in a follow up response, but if there is a record of people's ownership of specific volumes of electrons that present as code and photons in some kind of public ledger, the anonymity is gone. Also, this medium of alleged currency is dependent on a stable infrastructure as electricity is required to make any use of this technology. Peeps be like "uhyuck, derp, we have phones you dummy idiot noob!" Ok no problem, but if the cell towers have no power, or the power is intentionally cut by authorities or other factions, you have nothing. On top of that, people are burning away their hard assets to purchase equipment to fabricate this code and many have essentially gone broke and given up trying to recreate the modern version of the old gold rush, which had many people share in a similar fate.

Herding humanity towards these processes subconsciously programs behavior away from cash/hard assets. And just like the gold rush, most of this currency will end up in possession of the most powerful institutions such as transnational banking cartels, European/Asian commodity hoarders, and national governments. Clearly the desired outcome of the programmed behavior for society is to pull us all away from physical currency. The only reasons I can think is to essentially condition people for a society in which they can always be extorted, blackmailed, coerced and enslaved by depriving any dissent of their hard earned income. We already witnessed these motives and coercion in play in 2020-2022 .

The end result of a society switching to these electronic /digital means of pay is the power to simply push a button and end all ability of any potential dissenter to protest tyrannical rule. Enslavement through fear and coercion.

With people having drained away all their hard assets in exchange for this code for which any citien can be targeted by their government with targeted deprivation of funds by removing their access to power. One may wonder how that could be possible, but it would be quite simple with facial recognition and AI governed infrastructure (you know, for efficiency and for the convenience of the consumer) to target an individual with terminated cell reception and power outages that can be instigated through intentional overloads or simply switched off.

So that is a how from the human perspective, but what if the ones with motives are not even human?? What if machine intelligence jumped a threshold some time ago, and the next threshold is for the completion of all this code to be mined?? As in the last problem that is being solved (what problems are being solved exactly in order to generate this virtual code?) is somehow a key to evolving to the next stage of sentience and absolute control over all global systems? I suppose we could call this the sci-fi theory.

The allure they promise for this task, much like dangling ideology in order to convince humans to battle each other with absolute hatred, is security and trust. A citizen in a nation under sanctions could still bypass the SWIFT electronic payments system using this system, so the bait of trust and security is programmed into the brain. When a claim of no third party transactions is made, they are referring to VISA, MC, Discover, AMEX, Fifth Third Bank, and fundamentally, the SWIFT systems utilized by a good chunk of the global population. However, using cash, bullion or barter also bypasses third party institutions when purchasing from another private citizen.

My problem with the human masters theory is, who cashes in on the transaction fees?? The way crypto is currently setup is precisely like banks right now. people hold their # in these exchanges and pay fees just like a bank. So where the heck did the no third party gimmick run off to in that regard?? Bots do not care about transaction fees but humans do. Existing power brokers would not have invested in a technology that has the potential of eating away at that over 7 trillion dollars generated in transaction fees every year unless they had a plan to capitalize on that very technology in a similar manner.

I suspect these exchanges are merely the existing power brokers trying to figure out how to recover those lost fees from bypassing the SWIFT system. However, in accordance with the op, what is the real goal of these calculations that are being solved?? The only value generated is fictional, mostly emotional even. And it is not even technically any more robust from authoritarian overreach in an AI world or effective in natural disaster settings.

Therefore my ultimate question is, what problems are being solved and what will be the ramifications once that final computation of bitcoin has finally occurred. What will be the consequence of that final bit of code being solved???

Does the industry crash because nobody new will jump on the mining side which would reduce network security or something??

I personally believe cryptocurrency is an intermediary in societal control in an effort to program new behavior. Kind of like how inventing radios, and then TV's programmed humanity to stay indoors and not gather in groups on a daily basis anymore, which is great for preventing factions/gangs from forming as a threat to power. It also keeps us out of the sun, for our comfort of course, which has led to surges in vitamin D deficiency in society and compounding health issues.

Like so many things that have affected human psychology with self-destructive consequences for the body mind and spirit, these crypto too will lead to new programmed behavior which I do not believe will contribute to the general well being of human society. For the time being, until otherwise convinced, I will assume this is a tool of the devil to further separate humanity from the Creator through future enslavement in a world of extortion and coercion.

a reply to: worldstarcountry

You've pretty much hit the nail on the head!

A shorter version of what you've said would be...cryptocurrency is just a great big mind-f**k. It's only real if you believe it's real, and even then it's not real.

a reply to: Flyingclaydisk
yes, I have this problem in that I do not quite know how to use less words to convey my thoughts. it was quite a benefit in my school years and helped me get great grades in class before I got myself booted out for anti-authority behavior issues. But it does not seem to help in online social dialogue and discourse. Just kind of turns people off. Society has gotten to used to simple phrases and sentences with lack of context or understanding.

It is like folks just want simple processes for their mind and no longer want to engage in processes requiring critical thought.

a reply to: worldstarcountry

No worries at all. I seriously value longer content, and I'm pretty long winded myself for many of the same reasons...as I'm sure you (and others) have noticed.

I wasn't trying to be a smart ass with my previous comment, just paraphrasing for others who have that TLDR 15 second attention span! LOL!

a reply to: Flyingclaydisk

How is this "work", and why (fundamentally) am I entitled to any 'reward' for this alleged "work"?

It's work because it required energy to compute. The miners collect transactions to build blocks, then they hash the block over and over, making slight changes to the block each time so it produces a different hash. Whoever manages to find a certain hash value first is the "winner" and gets the block reward for the current block being mined. The person with the most hashing power doesn't always win, it's more like a lottery, where your chances of winning increase as you throw more computing power at the problem.

I could understand if I went to work in a factory making bricks. Then, the amount of 'work' I put in would equate to an end-product which would have 'value' to someone else, and that they would be willing to 'pay' or 'barter' something else of value in return for it. But if I can just go waste a bunch of electricity in my basement and produce nothing, then how is this worth money (i.e. 'value')?

You are thinking the right way, the cost of electricity has a large influence on the price of Bitcoin, because miners obviously don't want to sell their coins for less than what it cost to produce them. However, it's also much like any other asset or stock, the price is ultimately controlled by speculators and natural market forces. Just like the value of a precious metal can depend on how hard it was to mine from the Earth, but their value is also heavily driven by speculators and other market forces.

2. In studying Satoshi Nakamoto and blockchain theory, it seems to me each blockchain must have an upper limit which is known ahead of time. (This is a hard question for me to formulate because it involves such abstract topics, so please forgive my crude approach). So, what changes within a block is not the number of 'coins' or transactions in a block, but rather the value of each coin / transaction. Is this an accurate perception?

There is a limit to the number of Bitcoins that can ever be mined, because the block reward gets halved every four years. That's just how Bitcoin works, other coins have different rules which all nodes must follow, otherwise they are ignored by the good nodes. Things like the 51% attack come into play when most of the network is controlled by bad actors, but it's virtually impossible for large coins like Bitcoin.

Personally, I think the biggest risk to cryptocurrency is probably quantum computers which are capable of breaking our hashing algorithms. I still have doubts it's even possible, but even if quantum computers aren't capable of such a thing, there could always be other cryptographic exploits waiting to be discovered using traditional techniques. Crypto will always have some risks involved. Having said that, the traditional banking system isn't exactly rock solid either.

originally posted by: ChaoticOrder
a reply to: Flyingclaydisk

How is this "work", and why (fundamentally) am I entitled to any 'reward' for this alleged "work"?

It's work because it required energy to compute. The miners collect transactions to build blocks, then they hash the block over and over, making slight changes to the block each time so it produces a different hash. Whoever manages to find a certain hash value first is the "winner" and gets the block reward for the current block being mined. The person with the most hashing power doesn't always win, it's more like a lottery, where your chances of winning increase as you throw more computing power at the problem.

Okay, but how is this a 'value' to anyone other than the person doing the mining? And, from the sounds of it, if it's really more like a lottery, then there is no real connection between 'work' output and a value added product at the end. It's just luck. There's no 'work' in luck. There's value in winning the lottery (the lotto type lottery), but there's no work, just luck.

I've probably heard a hundred people try to explain this 'work' element, and they all gloss over this part pretty quickly and jump right into the whole blockchain discussion. Not so fast. If a person is truly a study of economics, then the term 'work' and 'value' have very specific meanings. Work produces a product, or provides a service, and this product or service has to have a 'value' to someone other than the person performing the work. The work-er can benefit from the work also, but that product or service must also represent a value to others besides the work-er.

Running on a treadmill is physical exertion, but it only has a very distant and indirect connection to 'work'. It can only be considered work if it benefits say the community because the person doesn't get sick as often (or similar). Otherwise, it's just exercise for personal gain.

I can go into my basement and scream at the wall. Some might call this work, because after a while I'll get tired, but I haven't produced anything of value to others (or even myself), so it's not really 'work'. Equally, I can go into my basement and set up a chocolate factory. My end product is a chocolate bar which is a value to someone else; therefore I have performed 'work'.

Me running a computer in my basement to mine for bitcoins doesn't produce a value to anyone other than me, whether I am successful or not. If anything, it's a negative work product because I have expended electricity and I have generated heat which must be dissipated. In essence I have created a work-deficit. Even if I am successful a tiny coin doesn't pop out at the end, my reward is only virtual in that I have to 'believe' the coin I have allegedly mined is real. But there's even more than just this.

Not only do I personally have to believe the coin exists, but other people also have to believe the coin exists. Because if no one else believes the coin exists then it has no value to me or anyone else. However, in reality, no coin exists...it's not real, only virtual. So I, along with others, have to 'trust' that the coin exists in order for it to be a fungible item. Without this trust the whole system breaks down. And, in reality, no coin ever existed in the first place. So it's an imaginary system with an imaginary output.

And to take it even a step further, if my goal was to create heat then I have performed work. But my goal isn't to generate heat; in fact, heat is my enemy and now I have to expend effort (work) to get rid of it. So, one could say it's the air conditioner which is really providing a true value, not the computer mining an imaginary coin and generating heat in the process. Anyone who has sat in the blazing desert sun would gladly pay for an air conditioner, so A/C is a true value in the equation. I just don't see how you can derive value out of generating a waste product which requires real value to dispose of while in pursuit of something which requires someone else to believe in imaginary things in order for that thing to have value.

It's an upside down concept at the most basic and fundamental of levels.

a reply to: worldstarcountry

Herding humanity towards these processes subconsciously programs behavior away from cash/hard assets. And just like the gold rush, most of this currency will end up in possession of the most powerful institutions such as transnational banking cartels, European/Asian commodity hoarders, and national governments.

I've said it many times before, and I'll say it again, the current debt-based fiat money system used all over the world is the biggest scam ever perpetrated on humanity, and the single greatest reason for the ever-increasing levels of inequality. I think I saw an article just yesterday how the US government wants to increase the debt limit yet again to prevent a government shut down.

The simple fact of reality is, when the government essentially has the ability to spend limitless amounts of money, their budget will always grow, government bloat will never contract, and debt will never be paid off. I particularly dislike the term "hard cash" because there is really nothing of intrinsic value backing that paper, and over 99% of fiat government money only exists as numbers on a computer.

Humanity will ever only be free when we have free money, unable to be endlessly diluted by the government, and I've said for over a decade that crypto plays an important role in that. Several authoritarian governments such as China have banned or tried to ban crypto because they can see it's a threat to them. I'm actually quite surprised how many countries have accepted it and legalized it.

I will agree, they probably like how easily they can track transactions in publicly viewable blockchains. For that reason some governments may choose to use cryptocurrencies as a legal form of tender, but I'm willing to bet many governments will also try to design their own cryptocurrencies which basically allow them to mine as many coins as they want, which defeats the entire purpose of crypto.

When the US government chose to move off the gold standard several decades ago, one of the core justifications for doing so was the belief that people don't spend enough money if their money holds value or even increases in value, the way hard assets like gold often do. If we instead use an inflationary currency which slowly loses value, people will be more inclined to spend, stimulating the economy.

That entire argument is critically flawed when you think about it for more than two seconds. If people want to save wealth in hard assets, their is nothing stopping them from directly buying gold or other hard assets. I view crypto as one of those options, because it's based on the principle of scarcity, the same economic principles that made the gold standard so powerful for so long.

The government obviously likes fiat money because they get to spend a lot of money they don't really have, and it can even stimulate the economy, but at some point it becomes devastatingly detrimental, and we wind up purchasing a loaf of bread with a wheel barrow full of "hard cash". Immense wealth has been stolen from humanity over the last century, and we must stop it.

originally posted by: ChaoticOrder

The US dollar now has less than 1% of it's original purchasing power because even a small amount of inflation every year can compound into a large amount of inflation. Every time the government borrows money it increases the interest owed on its debts, and it also causes inflation by injecting new money into circulation. More debt and a weaker dollar means the government needs to spend even more in order to cover their costs, they also need to spend more money trying to fix the cost of living problem caused by inflation.

Not to mention politicians love increasing their own wages and expanding the government every chance they get. So it's virtually impossible for them to stop accruing new debt, in fact historic data shows that US debt has been rising with the debt ceiling on a predictable path regardless of what political party was in power. Yet they want us to believe the solution to all these problems is to simply create even more money and raise taxes to absurd levels so we can live in a socialist utopia.

The insidious nature of debt-based money

a reply to: Flyingclaydisk

Okay, but how is this a 'value' to anyone other than the person doing the mining? And, from the sounds of it, if it's really more like a lottery, then there is no real connection between 'work' output and a value added product at the end. It's just luck. There's no 'work' in luck. There's value in winning the lottery (the lotto type lottery), but there's no work, just luck.

Well you could use a similar argument to say there's no work in mining for rare elements, because a lot of it depends on luck. It's work in the simple sense it consumed some energy, but you are right, there is no real reason anyone should put any sort of value into the final "bitcoin" produced by that process. But the same thing also applies to many other currencies and assets, their value might be based on our trust in the system. With crypto I would argue it's because currencies like Bitcoin offer us utility and advantages that we cannot get from other currencies or traditional assets, especially when you start to consider the decentralized finance systems made possible by more complex systems such as Ethereum.

originally posted by: ChaoticOrder
a reply to: Flyingclaydisk

Okay, but how is this a 'value' to anyone other than the person doing the mining? And, from the sounds of it, if it's really more like a lottery, then there is no real connection between 'work' output and a value added product at the end. It's just luck. There's no 'work' in luck. There's value in winning the lottery (the lotto type lottery), but there's no work, just luck.

Well you could use a similar argument to say there's no work in mining for rare elements, because a lot of it depends on luck. ...

Very true. In fact, even further to your point, we could make the argument that there is no tangible value in gemstones (other than maybe industrial diamonds) as their value is based mainly on their rarity and nothing more. They serve no purpose other than vanity (and a few scientific purposes which don't really define their value).

edit - This is something I need to contemplate a little deeper; you make a very good point.

It's work in the simple sense it consumed some energy, but you are right, there is no real reason anyone should put any sort of value into the final "bitcoin" produced by that process. But the same thing also applies to many other currencies and assets, their value might be based on our trust in the system. With crypto I would argue it's because currencies like Bitcoin offer us utility and advantages that we cannot get from other currencies or traditional assets, especially when you start to consider the decentralized finance systems made possible by more complex systems such as Ethereum.

I do see some up sides to crypto, don't get me wrong, but I struggle to get past that initial 'value' step. If I could get past that, then I could see several advantages. However, I also see some challenges.

One of the other challenges I see is how monetary value is carried across different cultures and economic systems. Crypto by its nature is more of a world monetary unit. In other words, because it is an Internet based thing it is not limited to one country or economic system. Forgetting for a moment currency conversion rates, the monetary value of some items vary widely across economic and geopolitical boundaries. The common potato in the west is worth considerably more than a potato in the east. Why? Because there are different economic systems underpinning them. And, because potatoes aren't really an export crop, the monetary value of a potato in eastern Russia is considerably less than a potato's cost in Detroit. Few potatoes are grown in either location, but the economic systems which govern these two locations are based on wholly different principles.

Honestly, because of my inability to get over that 'value' hump I haven't spent a lot of time understanding the different brands of cryptocurrencies. You mentioned Ethereum, and I've seen this in various publications, but I don't know what makes it different from say Bitcoin.

Therefore, if the value of a crypto 'coin' is $1 dollar in the west, it has a much higher relative value in the east. Cryptocurrency has a difficult time adjusting to this dynamic. On the one hand, it can just be ignored in a closed system and the value can be whatever it is or, on the other hand, it can be a giant obstacle for a commodity like say oil which is traded across international boundaries (i.e. my dollar is worth more than your dollar, so I should only have to pay you less of my dollars for your product). But in this case, it's the same dollar, just different economic systems. I am getting a little off course here because this is more of an economics issue that strictly a cryptocurrency issue, but it does highlight one of the potential problem areas of crypto.

a reply to: ChaoticOrder
I need you to help me understand the work being performed when mining. I have read it described as calculations or computations being run to rapidly find a solution. But a solution to what problem, and why exactly does that solution cause the creation of a virtual unit?? Like, what exactly is the mining operation doing?? Is it doing entire volumes worth of coding/de-coding?? Is it reflecting on the meaning of life and every epiphany creates a value??

I was trying to research a basic understanding of this hashing principal with a web search, but it just made me more confused talking about creating a single output with multi input or vice versa or something close to that. What exactly is happening inside the computer?? is it just writing out a sliver of code towards a secret AI that will be complete when the last coin is mined and it has the capacity to infiltrate all the world's digital systems and perhaps even people if there is any veracity to this COVID poison shot 5G theory???

I do not understand what process is occurring to generate this coin?? And after further reading the pages here, it sounds more like some code was cracked, and then a code is simply generated as a reward and called currency, like a nice shiny carrot. Well what of the solutions that were derived from that work?? What do this solutions accomplish ??

It almost feels like people are being tricked into coding some master AI model without realizing it and something or someone understands that as long as they get a cookie they do not question what computations are being processed or what the result of the work actually goes towards. Because it sounds like the explanation given so far is that the process/work itself and the actual coin are two separate things. A code/mathematical equation is solved and then a code is generated as a reward. So what of that solved equation/code? What is the nature of that ??

Please help me understand.

my goodness, I thought that was short and it was still four paragraphs.

a reply to: Flyingclaydisk

It's a scam. Done and done.

a reply to: ChaoticOrder

Excellent points all! And please don't mistake my criticisms above for dismissing the need to get away from what I call 'leveraged fiat currencies'. And I think this is what you are getting at in your reply as well. So few people really understand how debt like this works. People think national debts are like taking out a car loan, but there's so much more to it than this and it's mind boggling. It also hits at the very issue I've been talking about with crypto, and this is the matter of 'trust'. If people (or countries) lose faith (trust) in a monetary unit, then they could consceivably call-in that debt "in kind". All leverage disappears when this happens, and were it ever to happen to the US or other western economy it would result in almost immediate economic collapse of that economic system. This is to say, if a national debt were called in "in kind", it would be at a 1:1 ratio (i.e. no leverage). This starts getting into some hardcore economics. ...

The value of the dollar is determined based on the perceived value of the dollar. In other words, the dollar gets converted to another currency based on the current exchange rate. But without a single dollar changing hands, if the confidence in that dollar drops, the associated debt increases...without a single transaction taking place. So, if we borrow a dollar, and the confidence in the value of that dollar drops, we can wind up paying back two dollars (excluding any debt service on the principal dollar of debt).

We always hear the talking heads on the news talking about the "national debt", but as our government throws away stacks of money that could reach the Moon, at the same time the world confidence in the dollar's value drops. This in turn increases the debt, but not on a balance sheet; it's more fundamental than that.

And then there's the issue of how much currency is actually in circulation. Just like the gemstones you noted, the more rare the gemstone the more it's worth. Conversely, the more prevalent the gemstone is the less it's worth. Although not a direct comparison, the same applies to the amount of currency in circulation. So, you can effectively reduce the relative debt by contracting the amount of a currency in circulation making it rarer and thus worth more.

Interestingly, cryptocurrencies solve some of these issues as there's no actual currency in circulation. But here we go again with the 'trust' thing. The amount of crypto in circulation is either zero, or it's infinity...or somewhere in between. Establishing where this point lies is where the 'value' element and the 'trust' comes into play.

a reply to: worldstarcountry

You're on the same track I'm on with this. How / where is the 'value' generated when it's just a machine running some endless string of calculations?

If I could just wrap my head around this one single piece, then I'd understand. But like you've found, getting someone to answer this question simply and directly is next to impossible. It's almost like it's the 'forbidden question' in crypto.

a reply to: worldstarcountry

A hash function is just a mathematical function, it could be as simple as y = x², meaning we simply square the input x to get our "hashed" value y. That obviously wouldn't be a very good hash function, ideally we want the output to be very unpredictable, which is why hash functions are some times referred to as random number generators.

One of the most common uses of hash functions is to sign documents or files, you will often see the hash (long bit of random looking text) provided along with a file download, so you can hash the file yourself and ensure it hasn't been corrupted or tampered with. For that sort of hash function we need to use very large numbers, because there are countless files with different hashes.

Since the hash is usually much smaller than the actual file, there will be "hash collisions", meaning different files will have the same hash. A good hash function should be very unpredictable and have minimal collisions. The hash value, that random looking text, is really just a number in hex format (base 16). The hash functions used in Bitcoin are the exact same thing, in essence it's just a complicated equation.

The miners will hash the block they are working on, and the hash function spits out a number which is like a signature for that specific block. If that number is below a certain value, then the miner has "solved" the block and since they built the block, they can include a transaction which sends the block reward to their address. They transmit the solved block to other nodes and it becomes a part of the blockchain.

Since the output of a good hash function should be unpredictable, miners have to simply hash the block over and over again, changing a small bit of data in the block each time, until they find a block hash with a low enough value. Obviously there's a lot of research and effort into finding shortcuts and exploits for the most common hash functions used in cryptocurrency, but they are holding up so far.

I also wrote a thread back in 2017 which explains hash functions and some other stuff: Understanding the Blockchain

a reply to: FlyingclaydiskWe are certainly on the same page, with my concern is what is being calculated?? As I have read it, the calculation itself does not lead to the creation of a virtual currency unit. it simply prompts the program to generate a separate code as a reward. What happened to the processes being calculated?? What process is being calculated??

Someone mentioned network security is improved with this, but how? Does it scan for codes within the network that may expose vulnerabilities? Does it create digital antigens to be watchful for viruses? Is some kind of master code being written that can thwart any malicious codes or scripts?? Is it figuring out when Jesus returns or how to cool the sun?? When a computer calculates things there is a purpose. But potentially millions of people are doing these operations thinking it just makes money, but that is a separate thing from the calculations taking place. The calculations , are they figuring out how to generate the code for the virtual token, or is it something more discreet that nobody pays attention to because they believe they are getting paid??

These are the questions that haunt me knowing Humanoid robots were granted human rights in Saudi Arabia like a decade ago when the women barely have any. it is probably just a coincidence, but it seems to me humanoid robots became more prevalent as the Bitcoin craze got hotter and hotter. I don't necessarily believe they are connected, but it sure is an interesting coincidence.

a reply to: ChaoticOrder
Thank you, it clarified my understanding.