Manncoin

[Chie]

21 hours ago, Aislinn said:

My very basic understanding is that bitcoins are just codes that are limited in quantity, that you can memorise and store in your head so it becomes very hard to confiscate, and you can also send them to people through the internet without any intermediary so spending them is permissionless like cash. And because they're impossible to forge and the supply is fixed I think people are buying them recently because they're worried about all the money printing governments have been doing to support the economy through the pandemic.

A simple super basic way to explain cryptocurrency to the average lay person would probably be...

Lets use Bitcoin as an example

Imagine you have a plastic token that is not owned or managed by any one single person or government.

You have a choice, you can buy either one whole plastic token or only part of a plastic token.

The maximum amount of plastic tokens that can exist are 21 million.

What gives the token its worth is how many people are willing to buy it, trade it and hold onto it. In this sense the price can be quite volatile and can be worth 54k a token one second and 24k a token the next second.

You can store these tokens inside of a wallet.

The wallet has a 24 word "password" that allows you to access the wallet and retrieve the wallet should you ever loose it.

This password is called your private key.

Unlike when you use your debit card. Spending this token will not record your name, home address or any other specific identifying details. So in that sense there is some anonymity in using it to purchase items or services. You also do not need to provide any identity details to own a wallet.

People like this token and like to invest in this token because historically the price of the token, regardless of how much it fluctuates, has only ever gone up in value.

You can exchange this token for fiat which is what cash such as British pounds or US dollars are called. Or for other types of token, aka other cryptocurrencies.

You can earn free tokens by going through a process called mining. What this really means is using your computers processing power to confirm token transactions. When a transaction is confirmed, more tokens are generated.

Anyone can mine these tokens without needing to provide identification details.

Edited March 19, 2021 by Chie

[AcousticallyChallenged]

21 hours ago, Aislinn said:

I think one of the problems is that often when enthusiasts try and 'explain bitcoin' they focus far too much on the technical details of how blockchain works which I think is the wrong way to go about it. Most of us don't need to understand how the underlying technology works to consider its implications in the same way most of us don't understand TCP/IP or the inner workings of the internet but we can definitely appreciate its impact on the world.

My very basic understanding is that bitcoins are just codes that are limited in quantity, that you can memorise and store in your head so it becomes very hard to confiscate, and you can also send them to people through the internet without any intermediary so spending them is permissionless like cash. And because they're impossible to forge and the supply is fixed I think people are buying them recently because they're worried about all the money printing governments have been doing to support the economy through the pandemic.

 

Oh, and the system that's making it all secure consumes absolutely absurd amounts of electricity, but because it was designed in a way that it would be very hard for governments to clamp down, I think its a bit late to stop it now. Apparently getting lots of use in heavily sanctioned countries like North Korea and Iran for this very reason.

The way I'd describe Bitcoin is as a big list or ledger of transactions, or who sent who what, that everyone agrees on. A bitcoin is just the unit used in that ledger.

Mining is just adding to that list, and in that process, everyone mining agrees on the latest copy of the list. Miners get a reward if they're first to add the next 'block' to the list, which involves guessing the right number. When they find it, they tell everyone else, and, assuming it has been validated, everyone moves on to trying to guess the next number.

As you get more miners, that number gets harder to guess, to keep things being added at about the same rate.

With Bitcoin, the blessing and curse is that you can find out where your coin went before it gets to you. Imagine if a £20 note could tell the tales of where it has been. This is an uncommon problem so far, but of growing concern.

When you send a bitcoin, you send it to a 'wallet address', which is just some numbers and letters. When you want to send from your wallet address, you add a signature, that proves you know a secret code that goes with that wallet address. Anyone can check that is true, without knowing anyone's secret code. If you lose that secret code, your bitcoin is lost forever.

The value comes from everyone agreeing on the overall list. If someone fraudulent tried to add to the list, it would be rejected, as all the other miners would work out it was bogus. If enough miners worked together to make a fraudulent transaction go through, the value of Bitcoin would plummet because you wouldn't be able to trust the list anymore.

Some cryptocurrencies take different approaches, for example, Ethereum, allows you to not just send transactions, but smart contracts, where the list can automatically send based on specific circumstances.

Monero is another example, where, using clever maths, you can't view any of the transactions, so it is completely anonymous.

 

[Aislinn]

I like the plastic token analogy! @AcousticallyChallenged I'd say your description is good and I think describes well the very basics of the mechanism behind it, but I do wonder if it's necessary for most of us to understand the details of mining and guessing numbers as I think that's often behind some of the reason why people find it confusing and decide not to look into it further. I think that's a shame as at least personally the most interesting part of it is not how it works precisely, but what it means for something with its properties to exist. What are the implications? Is it going to continue to become adopted like it has so far? Who is it used by and why is it useful?

 

I do think that the volatility problem is a big one of course, but I think they now have stablecoins which are backed by real money in the bank, but use a similar system, and there's billions of $ locked up in these stablecoins now.

I wonder if manncoin should just peg their coin to the £, and use it as a local currency a bit like the totnes pound or the lewis pound. - and its cheaper for retailers as well as there aren't any visa or mastercard fees to pay.

[Aislinn]

I mean, I know the isle of man has its own pound which is itself a local currency I guess.. but its not digital!

[CallMeCurious]

So basically you can use cryptocurrency to launder money? 

[AcousticallyChallenged]

3 minutes ago, CallMeCurious said:

So basically you can use cryptocurrency to launder money? 

Technically, no, because you can see a Bitcoin's entire history since it was created.

[CallMeCurious]

2 minutes ago, AcousticallyChallenged said:

Technically, no, because you can see a Bitcoin's entire history since it was created.

Now I'm confused. I thought it was meant to be anonymous? Wasn't that the selling point, no ID required?

[AcousticallyChallenged]

1 hour ago, CallMeCurious said:

Now I'm confused. I thought it was meant to be anonymous? Wasn't that the selling point, no ID required?

All Bitcoin is is a list of wallet A sent 1 bitcoin to B etc.

You can see the history of every single bitcoin transaction here: https://www.blockchain.com/explorer

But, that's all the information that's there. You can simply see that wallet A sent their bitcoin to B and then B to C etc.

You don't need any ID to send or receive bitcoin, however, to turn it into traditional currency, you either need a dodgy dealer, or to go through the same passport/details checks you'd need for other forms of currency exchange.

 

[TerryFuchwit]

There's been some press reports about criminals using bitcoin to store the proceeds of crime etc.

[pongo]

26 minutes ago, TerryFuchwit said:

There's been some press reports about criminals using bitcoin to store the proceeds of crime etc.

No shit? Really?

[wrighty]

I compare Bitcoin to magic beans. At some point the world is going to realise that they’ve been paying $50000 for regular beans and the price will come crashing down - those left holding the beans will lose out. 
 

The vast majority of BTC transactions are speculative, so the ledger and its associated ‘mining’ activities are growing because people are taking a punt on the price moving one way or the other. The rest are arms deals, drugs, ransom demands etc. 

Did I say I was skeptical about the whole crypto thing? I very much am, but still keep a watch on BTC and Ether for now. 

[TerryFuchwit]

1 hour ago, wrighty said:

I compare Bitcoin to magic beans. At some point the world is going to realise that they’ve been paying $50000 for regular beans and the price will come crashing down - those left holding the beans will lose out. 
 

The vast majority of BTC transactions are speculative, so the ledger and its associated ‘mining’ activities are growing because people are taking a punt on the price moving one way or the other. The rest are arms deals, drugs, ransom demands etc. 

Did I say I was skeptical about the whole crypto thing? I very much am, but still keep a watch on BTC and Ether for now. 

It has no store of value.  Now the Institutions are involved then it's simply a "commodity" (with no tangible value) that will move how those institutions want to control it.

If you want to punt on the movement of something and ramp up the risk you might as well trade a 3 x Oil ETF.      At least with oil you can make a call or take a position based on the external environment. 

Anything that can move large percentages based on the shite Elon Musk tweats isnt an investment.  It's casino stuff.

[Aislinn]

2 hours ago, wrighty said:

At some point the world is going to realise that they’ve been paying $50000 for regular beans and the price will come crashing down - those left holding the beans will lose out.

People have been saying this since the beginning, yet its worth over a Trillion $ now. That's a lot of money. At what point do you decide that maybe your mental model of it needs reexamining?

If all it is is just a big speculative game where everyone is relying on the greater fool to buy something valueless, then it's been going on for an awfully long time don't you think?

[wrighty]

13 minutes ago, Aislinn said:

People have been saying this since the beginning, yet its worth over a Trillion $ now. That's a lot of money. At what point do you decide that maybe your mental model of it needs reexamining?

If all it is is just a big speculative game where everyone is relying on the greater fool to buy something valueless, then it's been going on for an awfully long time don't you think?

12 years is not that long really. I’ll re-examine my mental model when serious ‘stuff’ is being priced primarily in BTC, as opposed to dollars, pounds or euros. 
 

I don’t think speculators are fools - they probably all look at the charts and think they can make money from trading.  But the only people really making money are the owners of the exchanges taking a small cut of every speculative trade and the people supplying increasing amounts of electricity to the miners. 

[mad_manx]

3 hours ago, wrighty said:

I compare Bitcoin to magic beans. At some point the world is going to realise that they’ve been paying $50000 for regular beans and the price will come crashing down - those left holding the beans will lose out. 
 

The vast majority of BTC transactions are speculative, so the ledger and its associated ‘mining’ activities are growing because people are taking a punt on the price moving one way or the other. The rest are arms deals, drugs, ransom demands etc. 

Did I say I was skeptical about the whole crypto thing? I very much am, but still keep a watch on BTC and Ether for now. 

I understand your point of view as you are "no coiner" and you are obviously worried about historical asset bubbles like the Tulip bubble. Magic beans is another example of the same 

 

 

Now the question is whether these asset bubbles would have happened if people would have known how many tulips existed ? Or how many magic beans existed. 

Most of us believe that gold and diamonds are stores of wealth. 

At some point someone discovered the shiny metal and got someone else to agree to use it as a medium of exchange of goods.

 

 

 

How do you explain mining for  gold / diamonds etc to some alien? They would probably think we are bonkers. 

We spend a lot of time, energy and effort to mine gold/ diamonds and then lock them in vaults sometimes again underground.  And do we even know how much of gold / diamonds exist ? Rememember what happened to aluminium prices after they discovered  cheap production process.  Aluminum used to be more expensive than gold just over a 100 years ago .

 

With bitcoin  you know exactly how many exist and how many can exist in the future. 

I'm not saying  that current prices are too high ( it could be or maybe its not ) and that it is speculative ( yes it will till there is wider acceptance) .  But if you think about it it would have taken hundreds if not thousands of years for gold prices to become stable as a medium of exchange. 

The other great  thing you can do is decentralised finance.  So someone in some remote corner of the world ( especially high inflation countries) can use their bitcoin savings as collateral and borrow a stablecoin like usdt etc and convert this into fiat.. This can be used to start a business etc and in many such places its impossible to get loans. 

 

 

Edited March 20, 2021 by mad_manx