Cryptocurrency

[trailrunner]

I had to explain blockchain to my organization this week. As the name says, it's a chain of blocks that depend on the other blocks in a mathematical way. Somebody can't just add a block (i.e. ) in the chain because it won't be mathematically correct. This prevents an unauthorized person from altering the information (ledger), and it also makes the record-keeping public.

This method, along with the internet connecting everyone, is what makes digital currency possible. This allows anyone to invent, develop, market, and use any currency of their choosing, and go worldwide with it. Before the internet, someone could have done the same thing by printing paper notes and calling it their currency, and if enough people use it, then it becomes a viable way of doing business. The value of this currency is arbitrary and what the market is willing to value it at.

30 years ago, before the internet, if a bunch of people started hustling something called Bob's Currency (BC for short), I would have said no thanks. But wait - there is a limited number of BC because the serial numbers will be prime numbers, so you better get in now! And smart people that build planes and rockets like BC!! No thanks. There's always the chance it could catch on and become legitimate and stable, but in the meantime, I won't have FOMO. Remember, for every buyer there is a seller.

[TGS]

True story. My bank account was hacked for 25K. Small bank with not a lot of security measures. Good thing for FDIC, I got it all back. I had to fill out a deposition basically attesting to the fact that I had no involvement with it. That tells me they had no idea how or who could do that and thought I was evolved somehow.

Nah. That's just a standard check in the box.

[jh9]

Somebody can't just add a block (i.e. ) in the chain because it won't be mathematically correct. This prevents an unauthorized person from altering the information (ledger),

Hash collisions are a thing, though.

[Borderland]

Nah. That's just a standard check in the box.

No doubt. They never got back to me. Probably happens everyday.

[Borderland]

A hardware (or “cold”) wallet is a physical item that isn’t connected to a network.

How do you do an electronic transfer if it isn't connected to a network? Do you connect your wallet with another wallet? If you lose your wallet do you lose all of your "money" with it? I know nothing about how it works.

[Borderland]

How do you do an electronic transfer if it isn't connected to a network? Do you connect your wallet with another wallet? If you lose your wallet do you lose all of your "money" with it? I know nothing about how it works.

Never mind. I see how it works now.

[Darth_Uno]

What throws a lot of people off is that "wallet" is a bad analogy. Your digital currency is not stored in the physical wallet, like you'd have cash in a leather wallet. The wallet is basically a password manager that allows access to and from your assets (which again, are not stored offline). If your wallet is offline, nobody can use your keys to access your funds.

[Borderland]

What throws a lot of people off is that "wallet" is a bad analogy. Your digital currency is not stored in the physical wallet, like you'd have cash in a leather wallet. The wallet is basically a password manager that allows access to and from your assets (which again, are not stored offline). If your wallet is offline, nobody can use your keys to access your funds.

I'm just trying to understand the advantages of crypto currency so bare with me.

I don't think your money is physically in the bank either. My understanding is it's in play via loans. If everyone goes to the bank and wants cash for their electronic balance the cash won't be there.

Theoretically nobody can access my bank account without the proper information like passwords and device signatures. I'm constantly getting calls, alert texts and emails about transactions. I said in a previous post that my bank account was hacked for 25K. That was before I monitored my account daily and set up the alerts.

People can hack your bank account. Why would it not be possible to hack crypto currency? It's just a computer algorithm the same that banks use to safeguard your accounts. I know for a fact they can't lock up your accounts from hackers. They rely on you to monitor your transactions. Lots of holes there in their security. My guess is if you, as a bank IT person, gets it wrong, the bank loses millions. Then the fed steps in and makes everyone satisfied like it never happened.

[TGS]

I'm just trying to understand the advantages of crypto currency so bare with me.

I don't think your money is physically in the bank either. My understanding is it's in play via loans. If everyone goes to the bank and wants cash for their electronic balance the cash won't be there.

Theoretically nobody can access my bank account without the proper information like passwords and device signatures. I'm constantly getting calls, alert texts and emails about transactions. I said in a previous post that my bank account was hacked for 25K. That was before I monitored my account daily and set up the alerts.

People can hack your bank account. Why would it not be possible to hack crypto currency? It's just a computer algorithm the same that banks use to safeguard your accounts. I know for a fact they can't lock up your accounts from hackers. They rely on you to monitor your transactions. Lots of holes there in their security. My guess is if you, as a bank IT person, gets it wrong, the bank loses millions. then the fed steps in and makes everyone satisfied like it never happened.

It's possible. A "heist" worth ~$600 million USD in crypto was recently committed: https://www.bbc.com/news/business-58163917

The advantage is "fuck the man". Quite literally, and from what I can tell the only advantage besides the runaway value increase over the last 5 years which, as @jh9 has pointed out is something that isn't unique to crypto...it was just one of an assortment of runaway investments throughout history, and from what I can tell the majority of crypto is pretty lame in returns compared to just dumping your money into an S&P500 ETF.

I think people are getting distracted by the runaway value thinking crypto is something it isn't, as if we're all going to adopt crypto and all of us will become rich, which obviously isn't the way things work. Early risk takers were rewarded...everyone else can get in line for a new form of financial slavery. Crypto allows anonymous transactions but IMO will not be any sort of world-changing liberation that some people are imagining when in fact they're just falling for some utopian dream. They think they're unchained from the constraints of society, whereas in reality they're just a cog in someone else's machine.

"Meet the new boss, same as the old boss" applies, IMO.

In addition, good luck dispersing any accumulated wealth of crypto to your loved ones upon an unexpected death....unless you like everyone on your beneficiary list keeping a copy of your key, which isn't likely to happen. Or, good luck if you lose your key....with your bank, you can reset your online password or if shit really hits the fan you can show up with your identity documents and prove you own the account to regain access. Have $60k worth of crypto that you were looking to use for a house remodel and lose your key? You're fucked. It's gone.

[Borderland]

It's possible. A "heist" worth ~$600 million USD in crypto was recently committed: https://www.bbc.com/news/business-58163917

The advantage is "fuck the man". Quite literally, and from what I can tell the only advantage besides the runaway value increase over the last 5 years which, as @jh9 has pointed out is something that isn't unique to crypto...it was just one of an assortment of runaway investments throughout history, and from what I can tell the majority of crypto is pretty lame in returns compared to just dumping your money into an S&P500 ETF.

I think people are getting distracted by the runaway value thinking crypto is something it isn't, as if we're all going to adopt crypto and all of us will become rich, which obviously isn't the way things work. Early risk takers were rewarded...everyone else can get in line for a new form of financial slavery. Crypto allows anonymous transactions but IMO will not be any sort of world-changing liberation that some people are imagining when in fact they're just falling for some utopian dream. They think they're unchained from the constraints of society, whereas in reality they're just a cog in someone else's machine.

"Meet the new boss, same as the old boss" applies, IMO.

In addition, good luck dispersing any accumulated wealth of crypto to your loved ones upon an unexpected death....unless you like everyone on your beneficiary list keeping a copy of your key, which isn't likely to happen. Or, good luck if you lose your key....with your bank, you can reset your online password or if shit really hits the fan you can show up with your identity documents and prove you own the account to regain access. Have $60k worth of crypto that you were looking to use for a house remodel and lose your key? You're fucked. It's gone.

Some good points. My bank wasn't out the 25K. Deposits are insured. Is the fed going to cover a crypto lose through a hack? My guess is they're going to say if it isn't FDIC you're SOL.