How Does Bitcoin Really Work?

[CynicusRex]

This podcast with Berkeley professor Nicholas Weaver contains arguments on why everything blockchain is complete hogwash.

 

[russ_watters]

That's the idea, i.e. that local stores accept cryptocurrencies

But they don't, right? Do they even accept Visa? Would the Cuban government even allow such a thing?

It's hard for me to see how this idea could be realized.

 

[russ_watters]

Anarchy is a society being freely constituted without authorities or a governing body. Zimbabwe does have a governing body and It has very repressive laws. It is the complete opposite of anarchy; It's what you have in the "free world" (restrictions & obligations) elevated to the power of ten.

Any government is what is is if you can keep it. To me, anarchy is just the vacuum that exists before the guy with the most guns takes over. But most such countries are an odd dichotomy because while the power is absolute in depth it is limited in breadth. So it's a dictatorship and anarchy

Anyway, I'm being flip, but my main point with this is the general annoyance I feel about how easy it is to complain about how burdensome working within "systems" is when that system is democracy/capitalism. The complaints of bitcoin advocates seem to me to be idealistic counterculture that lacks real substance.

Speculating isn't investing, it's gambling. You can gamble about anything. Investing is putting money into what has an actual value (assets or revenues).

We have similar definitions there, there is just sometimes a debate about that, so I wasn't sure what you are after. Yeah, I generally put a threshold of a year (per the IRS capital gains threshold) to separate "investing" from "gambling" or "trading".

But I wasn't sure if this was a "investment" vs "currency" statement. A currency is just anything that by popular convention people trade for goods and services. It can be beads, strips of paper or a few bytes in a file.

If you send US dollars to a Cuban, what would he do with it? He would trade it (even if it is not the country's official currency). He would do the same with bitcoins.

Not of nobody is accepting it for trade.

What @fluidistic is saying is that you cannot send easily US dollars to Cuba because banks (and others) cannot process the transactions by law. Or maybe a bad government could intercept the transaction and keep it for itself. Sending Bitcoins from US to Cuba is probably illegal too, but because anyone can do it with an Internet connection, it is easy to do without all the paperwork.

In other words it is better for black market trading than dollars. Maybe, if enough people have access to computers to trade it and it becomes widespread enough to be useful...but not widespread enough that the Cuban government gets wind of it and cracks down on it.

So again, we're just back to it being better for doing illegal things with it. I don't disagree with that, I just disagree that that makes it a useful thing(currency) for the general public.

It's all about if you think the law is fair or not. And if you think the law is necessary, maybe it causes unwanted collateral damages to innocent victims. Cryptocurrencies could theoretically help.

I'm pretty sure I've never done a financial transaction where I had to wonder if what I was doing were illegal, much less specifically plan for evading government oversight of my known illegal activities. Yup, I agree that cryptocurrency is good for that. Nope, I don't think that's overall a virtue even if the limited case of illegally supporting people living under oppressive governments could be viable. Which I don't think it is anyway.

My basic opinion of Bitcoin as a currency is that it makes for a terrible currency, but it's secrecy attribute makes it useful enough for illegal commerce that the overall "terrible currency" issue is overlooked/worked around...by mimicking the institutions/currencies that it is supposed to be a counter to. The irony of that is just eye-popping to me.

 

[sysprog]

I have no idea what bitcoin is or what it's for. Is there any purpose in my learning about it or am I better off in my current state of ignorance?

https://www.bankofengland.co.uk/-/m...2014/money-creation-in-the-modern-economy.pdf

 

[fluidistic]

But they don't, right? Do they even accept Visa? Would the Cuban government even allow such a thing?

It's hard for me to see how this idea could be realized.

As far as I know, right, they don't currently in Argentina, although from what I read, they have a few options to convert cryptos to pesos, but I don't know what it's worth.

Regarding Cuba, I don't know yet, but I think local stores will accept several kind of cryptocurrencies.

Regarding your comment about tax evasion, this is sad. Platforms like coinbase try to teach people interested in trading cryptocurrencies how to compute their taxes (which differ according to the country). There are several youtube videos of suggestions on howbto do it. I have seen nice programs on github for that purpose, too.
When you use these trading platforms, you agreebto share your personal info to several entities like government requests (they sureley ask for all the possible data and run machibe laernibg progrsms to find fraudulant accounts). Not much to be hidden. With BTC nothing is hidden (unlike paying by cash in a private room), your wallet is open to anyone curious enough. That's why I don't really understsnd why it's eye popingly obvious that it fsvors illegal commerce. With monero or other anonynous cryptocurrency I would agree, for sure, but BTC? I have yet to be convinced. And if there's a way to be hidden with BTC, it's certsinly not an easy task a random hacker could do by finding onlibe tutorials, at this point, this would rewuire professiobal mastery of the matter. In the end, harder thsn doing illegal buying with cash, I believe.

 

[jack action]

@russ_watters :

The thing I dislike about the "system" is how it always gets heavier with time and I don't feel it solves that many problems; at least not without creating new ones.

When I was younger, I used to pay cash a lot, and I resisted using all forms of card payment (credit or debit) as much as I could. It was so simple. Withdrawing money from your bank account was free, even though you were served by a real person. Now we got machines doing it for us. We have to tell them what to do and it is our fault if we put the wrong input; It was never a problem with a real person. Machines were supposed to cost less to operate, but we now have monthly fees and lower interest rates on our bank account. How is that possible? Well, a lot of security, insurances, and services I didn't use to have but are now required. Not to mention that you have to constantly monitor which package best suits your spending habits, and these packages change often.

I want to buy a pack of gum, I need to share a piece of my identity, given to me by someone else (bank, credit card, etc.). I worry less about someone stealing my cash, but I now worry about people stealing my identity or following me everywhere I go for ... I'm not sure what reason. If I have good insurance from the provider against identity theft, I worry less, but that means that they reimburse every victim easily and/or set heavy security which means higher fees overall or it is more cumbersome to use the services. I can pay cash, but now every payment system or store uses some reward system that gives you back around 1% on everything you buy. If you don't use their systems, then you pay 1% more - plus the cost of managing the system - for everything you buy (included in the vendor's price) and you never get it back. These systems also change all the time.

We used to have 1000 $ bills in Canada. They removed it for reducing money laundering. The same goes for imposing limits on cash withdrawals without justifications Do the bad guys have really slowed down the money laundering operations since then? No, it just makes it more complicated for the common man to use cash.

I can say the same about paying sales taxes. It gets more and more complicated for the merchant, and the extra work must be reflected in the final price somehow. All of this is because the government doesn't want to send the big bill directly to the taxpayer or wants to exert control over what people do.

Is all of this giving us a fairer and more secure society? I don't really feel the difference. It is just annoying and creates useless bureaucracy, which is a waste of time & resources.

Cryptocurrency is (should be?) cash for the cyber era, with all the same advantages and disadvantages, and I would like to have the choice of using it if I wish to. And there is no way someone will make me believe that there were more crimes when everything was done with cash; that regulations have solved all of the injustices of the past, and this at no cost; and that deregulating will bring more chaos than we have right now (since not much have changed; the problems just move around).

But that is just my 2¢.

 

[CynicusRex]

Cryptocurrency is (should be?) cash for the cyber era

Crypto“currencies”, a.k.a. multi-level marketing pyramid Ponzi schemes should not be cash for the cyber era. The problems you address won't be fixed by technology because they're a systemic human problem. Human problems will only be fixed by education producing more virtuous people.

There is no money problem but a human problem. Harbouring vested interests let's the mind reason its way out of glaring flaws by any means necessary. Just as religion, bitcoin requires suppression of rational thought and adherence to dogma. This is why bitcoin corrupts, absolutely. No amount of wealth or technology will turn vice into virtue. So, change yourself to change the world (48). “But what about the assholes?” First, look into the mirror. Second, to remedy financial fraud we have to fine the culprits excessively and throw them in jail. Lest we want trial by pitchforks (49). Curbing greed will take time and collective effort. It is a symptom of a sick society in which “Fulfillment by Amazon” tries to replace fulfillment by vocation. Reduced to a number, many a look for a golden ticket. Therefore, GDP* needs to yield for UBI; the economy should serve humanity and nature, not the other way around. —https://www.cynicusrex.com/file/cryptocultscience.html

The only legitimate case I know of where cryptocurrency is not a misnomer is the euro on a blockchain, i.e., digital cash: https://www.delta.tudelft.nl/article/delft-cafe-premieres-eemcs-blockchain-euro.

a digital euro that is linked to the IBAN financial system and is completely open source, non-profit and transparent.

Whether blockchain is the most efficient way to do it is another question. I don't think so, but at least it's not a pyramid scheme.