The current picture in crypto-currency
September 17, 2017 7:27 AM   Subscribe

 
I feel really uninformed as I've never heard of "Etherium" up until this post. I feel like most of this stuff is waaaaay over my head. It seems very cool and very complicated and I'm never sure of how much stuff like this actually impacts my day to day life.

Cool infographic though.
posted by Fizz at 7:32 AM on September 17, 2017 [1 favorite]


Thanks for the post! The infographic and summaries are useful, I think. If nothing else, they confuse me.
posted by Don.Kinsayder at 7:40 AM on September 17, 2017 [1 favorite]


reddit.com/r/buttcoin highly recommended
it's comedy gold!
posted by hleehowon at 7:41 AM on September 17, 2017 [3 favorites]




It did not add any sense of security to my day to read that banks are "experimenting with Ripple".
posted by Wolfdog at 7:45 AM on September 17, 2017 [8 favorites]


Getting involved? Be sure you're very comfortable with the concepts of volatility and fraud.
posted by sammyo at 7:47 AM on September 17, 2017 [8 favorites]


Wolfdog: Those are just PR puff pieces by manipulators, in most cases. They "are experimenting", which means some asshat associate is reading some whitepapers, making a report, the report says something on the lines of "lol buttcoin" and they quit. Happened a few times before
posted by hleehowon at 7:47 AM on September 17, 2017 [1 favorite]


Still seems weird that the "solution" to the "problem" of central banks creating money backed by nothing...is for random nerds to all create their own money also backed by nothing.
posted by T.D. Strange at 7:57 AM on September 17, 2017 [30 favorites]


Ethereum is on my shitlist right now. In order to stop a few ASIC miners from controlling the mining pool they decided to rely on large working sets and memory bandwidth for their hashing algorithms. What works well with large working sets and have large amounts of memory bandwidth? GPUs.

So now us builders are having to fight speculators who are watching the ETH rocket go up and up and up for cards. Then later on, once the bubble subsided, the speculators returned the cards causing massive losses among AIB vendors also wreaking havoc on us.

Fuck ETH. Why didn't they lean on branch prediction in the algorithm? Just have it run on CPUs instead of GPUs. The CPU market has way more stock to absorb the speculators.
posted by Talez at 7:59 AM on September 17, 2017 [6 favorites]


Cool is the word. Dazzling. Amazing. Illegible, like a Star Trek display, to a terran civilian. The glossary of product lines available for sale is informative, though. And it's odd that the editor(s) does't call out initial coin offering (ICO) marketing in the USA, EU, and China or how that affects asset class valuations (price). It's kinda important, because trading is migrating from "decentralized" P2P to state-sanctioned securities exchanges with the complete understanding by all parties concerned that cryptocurrency is "backed" by legal tender.

Always read the footnotes
posted by marycatherine at 8:03 AM on September 17, 2017 [5 favorites]


I've been planning to buy bitcoins for months (think I got one many years ago, now lost) but the price is so volitile that I don't have the damn nerves. Also, everything about cryptos just seems to paranoid and insecure, from random hackers stealing your shit to entire exchanges folding.
posted by Foci for Analysis at 8:07 AM on September 17, 2017 [2 favorites]


Central bank money isn't backed by nothing. U.S. citizens need dollars to pay their taxes, and that provides sort of a floor for the value of a dollar. If you have piles of gold, chickens, or whatever, you have to trade some of it for U.S. dollars every April to settle up with Uncle Sam.

Similarly, people use cryptocurrency to buy and sell drugs on the Internet. As long as you can buy and sell drugs with it, there will be a floor on the value of bitcoin.
posted by chrchr at 8:12 AM on September 17, 2017 [12 favorites]


Don't call them cryptos. There is not much cryptography in most crypto-currencies, with zcash being the exception that proves the rule.

We should probably call them consensus currencies instead because the important part is the consensus algorithm. If you want a name that shortens, then you could call them cyber-currencies, as that name actually makes sense.

Also, I'd love seeing headlines like "Agent Wray arrested buying underage cyber with cyber stolen from cyber investigations, so they'll need a new head of cyber warmongering."
posted by jeffburdges at 8:17 AM on September 17, 2017 [3 favorites]


Central bank money isn't backed by nothing: true, full faith and all that. Pick your scrip.
Swiss Town to Accept Tax Payments in Bitcoin. The implication I'm reaching for is, the subaltern culture of cryptocurrency production and value is rapidly evaporating. It's been co-opted. M&A complete.
posted by marycatherine at 8:23 AM on September 17, 2017 [1 favorite]


Ethereum is on my shitlist right now.

Yeah, I was gonna say this needs some sort of graph showing how much cheaper graphics cards would be if these bozos weren't hoarding them. And maybe estimate the carbon footprint of each currency.
posted by straight at 8:23 AM on September 17, 2017 [14 favorites]


It's killing me how popular ICOs are right now. Most are transparent frauds and the very concept is clearly squirrely as all hell. But some quasi-legit US tech companies like Kix and Brave have now raised money with magic crypto beans and even the WSJ is starting to take it seriously. Gonna take another year or two for one of the frauds to blow up. Or else another crippling bug in the underlying contract code decimates everything.
posted by Nelson at 8:36 AM on September 17, 2017 [5 favorites]


I have heard commentary of Bitcoin on Bloomberg TV and other business channels voiced in a mater of fact tone, just as if it was another "instrument". Just another thing to invest in. The financial folks are certainly wary but have methods to manage volatility and edgy cases.

I would suggest that any of the current software "crypto" currencies will have a relatively short term existence (decades not centuries) but a portfolio of math based financial transactions is the wave of the future. But right now none could possibly handle a significant portion of the volume or need for incredibly fast transaction speed. And the near future need to build out a full scale nuke plant entirely to mine the next "coin"?

I hope that crypto financial folks are including "micropayments" as a critical bullet point. The requirement of infinitesimal transaction cost seems to have pushed this idea into the "get to later bin".
posted by sammyo at 8:44 AM on September 17, 2017 [1 favorite]


I read these cyber currency stories with the same detached befuddlement I read those Eve Online catastrophe stories. I'm convinced I should enact measures to correct my confusion -- and soon! Fortunately, my follow through is terrible.
posted by notyou at 8:53 AM on September 17, 2017 [9 favorites]


I dunno blowing up. LOL. Gold bugs are bullet-proof. Why not bit bugs?
posted by marycatherine at 8:53 AM on September 17, 2017


Wow! Such money. The two dollars worth of dogecoin I mined a couple years ago is now worth $7 or something. I'd be well on the way to buying a pizza with it, if only the online "bank" I stashed it in still existed.
posted by sfenders at 8:54 AM on September 17, 2017 [13 favorites]


Still seems weird that the "solution" to the "problem" of central banks creating money backed by nothing...is for random nerds to all create their own money also backed by nothing.

State currencies are backed by the requirement that taxes must be paid in the mandated currency. This creates a fundamental demand for a token which only the state can produce, making the currency essentially an abstraction over state political power, expressed through the state budget. The credibility of a state currency comes from the state's legitimacy with its taxable citizens, and its ability to forcibly collect taxes from unwilling citizens via its law enforcement and military services.

If I really thought it could work, I'd much rather have a currency based on "nothing" than a system based on violence. If cryptocurrencies become economically significant they'll probably just lead to some new system of domination, but in the meantime I've been glad for a way to make part of my living via a means which is completely disconnected from state violence.

N.B: I regard taxation as legitimate, and pay my taxes enthusiastically, including taxes on any cryptocurrency gains. There is no denying, though, that the taxation system works through violence, at least at the boundaries.
posted by Coventry at 9:00 AM on September 17, 2017 [9 favorites]


> Still seems weird that the "solution" to the "problem" of central banks creating money backed by nothing...is for random nerds to all create their own money also backed by nothing.

nah, they're not backed by nothing. they're backed by a huge waste of energy.

This makes them basically the perfect currencies for late capitalism's ongoing decline into surreal self-parody: they're driven by opaque algorithms, they're nearly useless as anything but a medium of speculation, and they're pointlessly environmentally destructive.
posted by You Can't Tip a Buick at 9:19 AM on September 17, 2017 [61 favorites]


notyou, I have been have been thinking the exact same thing over my morning coffee! The difference is that I read EVE online stories with a mixture of awe, horror and delight, while I read bitcoin stories with unadulterated schadenfreude.
posted by ActingTheGoat at 9:23 AM on September 17, 2017 [3 favorites]


It's fascinating that a specific litecoin clone, dogecoin, was successful enough to make multiple people millionaires, but isn't significant enough(?) to be included in this chart. Or is its legacy embarrassing to people who want to evangelize for coins?
posted by idiopath at 9:24 AM on September 17, 2017 [5 favorites]


I can't stand bitcoin and crypto-currencies. I have coworkers that talk about it. The summer intern ran out of money for a month or two because she put like $10k into bitcoin. I'm old enough to remember when people went nuts for Beanie Babies and Pets.com. All of this is tulip mania with the targets being computer nerds, libertarians, and young folks who are new to large amounts of money.

Bitcoin boosters call it "the currency of the future" and it enables you to "be your own bank!"

What they're getting massively wrong is that with money, the pieces of currency themselves aren't supposed to be the thing of value. (Because then people hoard the currency rather than spending it, altering the value of the currency.) The value of the currency is in what you can buy with it. The value of a dollar is you can go into any store in the US (the world's largest and highly diverse economy) at anytime and buy pretty much any amount of anything. For the same amount of dollars you can buy pretty much the same stuff today as you bought last month and can buy tomorrow, next week, a month from now, and a year from now. You can go around the world and people nearly everywhere will sell you stuff for dollars and Euros and yen and GBP. Currencies also need to be stable, and currencies have the support of central banks and governments to ensure that.

Bitcoin is not and cannot be a currency. The transaction speed is limited to less than 10 per second globally. Bitcoin is at best an asset like gold or silver. Except with gold at the end of the day you actually have a chunk of metal that at worst jewelers, carburetor makers, and monster cable manufacturers will give you some money to take off your hands.

Not only that, right now boosters are going around trying to get people into bitcoin. With more buying interest than selling, that means dollars and money are pouring into bitcoin driving the price up but people haven't realized it's a struggle to get any money out of it. Because everyone holding it is expecting it to be worth vastly more in the future, they aren't spending it for anything (currencies have to be spent and exchanged after all to be currencies). This is causing it to be locked in a deflationary spiral. And there's no central bank controlling inflation and interest rates or government that can make policies to get it going in the right direction again.

Lately there have been articles about how $100 million in sham 'tethers' have been created in the last few months and injected into exchanges where it buys bitcoins, massively puffing up the price, among other ways some larger traders who appear to be closely connected to exchanges have been manipulating the price of bitcoins.

The other thing with it being an asset is that if you wanted to make transactions but not use currencies on principal, you could already send people shares of stock or bonds in place of money. The stock market is way more stable than bitcoin. The other thing is the stock market and things listed on them are highly regulated. Nearly all the ways humans have come up with to screw people over via the stock market have been made illegal and eliminated over the last century. Crypto currencies are like the stock market but with zero regulation and oversight. You get to play act out being your own bank except it's the Wild West and full of bandits! Cunning people with deep pockets have all sorts of ways available to manipulate the exchanges and fleece regular folks and there's absolutely nothing to stop them.

On top of that, you guys care about the environment. Bitcoin is a huge waste of energy. The last time I looked it up when we got into it at work is that the bitcoin network uses 500-1000 MW of electricity--that's multiple power plants' worth of electricity, whole wind farms are nominally on the order of 100-250 MW. 1 MW of electricity is about how much electricity 650 American homes use when the air conditioning isn't running. The networks the credit card companies like Visa run to do billions of transactions each day use practically no electricity per transaction in comparison.

The other stuff of course is how crypto currencies are used by the dark web to do transactions for drugs, human trafficking, terrorism, money laundering, prostitution, other criminal acts, and tax evasion. Crypto currencies are the natural outlets for all the bad stuff that normal countries outlaw. I wouldn't be surprised if North Korea is big into bitcoin. If you're into bitcoin, you're helping to enable that sort of stuff.
posted by Blue Tsunami at 9:25 AM on September 17, 2017 [54 favorites]


What's the currency that pays you for the extra storage space on your harddrive?

I'm not super up on the latest crypto news but I thought ethereum developers were still trying to work out how to split up a processing problem to multiple CPUs (or GPUs?) efficiently, whereas splitting up then reassembling a file is a much simpler problem to solve and doesn't require so much specialized equipment.

The ethereum miner I know does not pay for eletricity (landlord does not monitor usage), and moves the CPUs to his bedroom in the winter so he doesn't pay for heat.
posted by subdee at 9:29 AM on September 17, 2017 [1 favorite]


they're not backed by nothing. they're backed by a huge waste of energy.

Not even chump change compared to the resources spent on the military and law enforcement services which keep the USD functioning as a useful currency.
posted by Coventry at 9:30 AM on September 17, 2017 [3 favorites]


What's the currency that pays you for the extra storage space on your harddrive?

Burst, Siacoin and Filecoin come to mind.
posted by Coventry at 9:32 AM on September 17, 2017 [2 favorites]


okay I'm just going to type three words and let everyone else be horrified by the potential implications.

javascript. bitcoin. miner.
posted by You Can't Tip a Buick at 9:38 AM on September 17, 2017 [5 favorites]


I have heard commentary of Bitcoin on Bloomberg TV and other business channels voiced in a mater of fact tone, just as if it was another "instrument". Just another thing to invest in. The financial folks are certainly wary but have methods to manage volatility and edgy cases.

Sure, like "junk bonds" or subprime mortgages, there's a risk of default (or fraud, or outright theft). They don't need it to be foolproof, they need to accurately predict the risk, and figure out a way to get more back. Buy a selection of each bitcoin knockoff, then sell it as a package for cash now? It's an interesting idea, even if the underlying thing isn't really a viable "currency".
posted by ctmf at 9:43 AM on September 17, 2017


dunning-krugerrand is still by far the best name for cryptocurrency
posted by Dr. Twist at 9:44 AM on September 17, 2017 [31 favorites]




Burst, Siacoin and Filecoin come to mind.

Worth noting, though, that Burst requires you to store random junk, Siacoin simply uses a POW token to economically regulate storage, and filecoin is vaporware which I'm fairly skeptical of. None currently solve the problem of "do something flexible and useful with economic commitments used to secure the ledger consensus," though that is Filecoin's ambition.
posted by Coventry at 9:50 AM on September 17, 2017


Gonna take another year or two for one of the frauds to blow up.

Aside from the usual carnies and hucksters, I think that a lot of the market is driven by capital flight. In large part, that's likely China first, followed by other countries with either internal embargoes on exporting money or those under external sanction, Russia probably being the biggest right now. Like the largely unregulated real estate markets in places like Canada, bitcoin provides a way for quasi-legal cash to be laundered and stored with minimal devaluation. The crypto markets are still tiny compared to things like real estate, but even those fractions of a percent of the grey capital markets are pretty big numbers. So as long as those conditions prevail, as long as corrupt industrialists need to export capital out of their home countries, I think we'll continue to see the crypto markets thrive.
posted by bonehead at 10:05 AM on September 17, 2017 [6 favorites]


We should probably call them consensus currencies instead


All currencies are consensus currencies.
posted by TheWhiteSkull at 10:15 AM on September 17, 2017 [4 favorites]


I think we'll continue to see the crypto markets thrive.

I think they'll thrive until governments decide to crack down on them. Last I checked, you could doublespend the bitcoin ledger (which would completely discredit it) for under a billion USD, which is, like, 3 days in Iraq at the height of the war? And that's not even getting into regulatory suppression.
posted by Coventry at 10:16 AM on September 17, 2017 [1 favorite]


Thanks for that succinct explanation, Blue Tsunami. That's exactly right. The point of currency is to keep it in circulation. Unfortunately, financial literacy and critical thinking is in such a poor state, ignorant politicians and business leaders have framed what money really is for the public in a completely destructive and economically dangerous way as an object you own rather than a system for encouraging and facilitating real world economic activity that creates and distributes real valuable services and assets fairly. The ideas Americans have about what money is and why we tax income are all based on completely misguided and incorrect monetary and economic theory that reduces the complex reality of what money is down to something to be acquired and hoarded like points in a video game, as if money itself is something we own when in fact it's the medium whereby ownership is transferred and not something anyone actually owns but only a symbolic representation of how much value you've contributed through labor or otherwise to the broader economy. Money really isn't something anyone is supposed to own for themselves. It's a public asset that represents a share of the Commonwealth you're presumed to have earned by increasing the Commonwealth through your work and other fairly compensated contributions to society.

Without understanding it that way, none of the rest of the system works or makes coherent sense.
posted by saulgoodman at 10:21 AM on September 17, 2017 [8 favorites]


Wolfdog: Those are just PR puff pieces by manipulators, in most cases. They "are experimenting", which means some asshat associate is reading some whitepapers, making a report, the report says something on the lines of "lol buttcoin" and they quit. Happened a few times before

In theory banks can use non-currency blockchains for electrically transferring money from one institution to another, and this would be better then the current method (which I guess uses ledgers or something).
posted by sebastienbailard at 10:25 AM on September 17, 2017 [1 favorite]


The ideas Americans have about what money is and why we tax income are all based on completely misguided and incorrect monetary and economic theory that reduces the complex reality of what money is down to something to be acquired and hoarded like points in a video game, as if money itself is something we own when in fact it's the medium whereby ownership is transferred and not something anyone actually owns but only a symbolic representation of how much value you've contributed through labor or otherwise to the broader economy.



You are like, this close to the Commodity Fetish.
posted by TheWhiteSkull at 10:25 AM on September 17, 2017 [2 favorites]


better then the current method (which I guess uses ledgers or something)
It involves ftp of files once per day, I've heard.
posted by joeyh at 10:29 AM on September 17, 2017 [3 favorites]


You are like, this close to the Commodity Fetish.

Basically Dogecoin.
posted by sammyo at 10:29 AM on September 17, 2017 [1 favorite]


javascript. bitcoin. miner.
posted by sammyo at 10:31 AM on September 17, 2017 [2 favorites]


Those three words are horrifying.

Also add Storj to the file storage coin list. Not sure what to make of it
posted by thebotanyofsouls at 10:37 AM on September 17, 2017




I can't recommend David Gerard's book enough; it's a strong introduction to what cryptocurrencies are and why they're intrinsically terrible.
posted by Pope Guilty at 10:47 AM on September 17, 2017 [6 favorites]


Also add Storj to the file storage coin list. Not sure what to make of it

I like Burst in principle (not to own, so much) because it demands an upfront economic commitment of mostly static storage, so its ongoing energy demands are potentially far lower than for a POW blockchain. I'm skeptical of Storj, Siacoin and Filecoin because the benefits from decentralized economic organization of storage aren't clear to me, and they need to be quite large to outweigh the downsides of high latency and system complexity/unpredictability.
posted by Coventry at 11:01 AM on September 17, 2017


Also, skeptical of Filecoin because its proposed use of homomorphic encryption to validate that participants are storing the files they committed to store looks extremely expensive.
posted by Coventry at 11:03 AM on September 17, 2017


Blockchains are old school.

The cool kids are storing files by steganographically encoding them to look like cryptocurrency whitepapers.
posted by sebastienbailard at 11:06 AM on September 17, 2017 [15 favorites]


> Don't call them cryptos. There is not much cryptography in most crypto-currencies

I think of the crypto there as akin to the one in cryptozoology.

But really, I agree that "Dunning-Krugerrand" is the best term for these things.
posted by cardioid at 11:06 AM on September 17, 2017 [3 favorites]


The cool kids are storing files by steganographically encoding them to look like cryptocurrency whitepapers.

I stopped trading coins entirely early last spring. I just trade ICO whitepapers now.
posted by loquacious at 11:11 AM on September 17, 2017


loquacious, you missed out on the biggest run-up!
posted by Coventry at 11:12 AM on September 17, 2017


Be a late adopter. There are bugs. There will be more.

One key bit of advice from the security community is DO NOT write your own cryptographic software or try to invent a new algorithm. Lot's o' reasons. ICO's (initial coin offering, basically any variety other than bitcoin) is participating in a breakable experiment. Play, learn, invest a few pennies, be very very careful.
posted by sammyo at 11:12 AM on September 17, 2017 [2 favorites]


Be a late adopter. There are bugs. There will be more.

It's quite likely there will also be a few more 1,000-fold returns for early adopters of innovative cryptocurrencies.
posted by Coventry at 11:20 AM on September 17, 2017 [1 favorite]


In theory banks can use non-currency blockchains for electrically transferring money from one institution to another

ATM networking between clearing houses. Sounds like a plan.
posted by marycatherine at 11:21 AM on September 17, 2017


What if I say I've written my own cryptographic software, but no one to know what it is?
posted by TheWhiteSkull at 11:23 AM on September 17, 2017 [1 favorite]


DO NOT write your own cryptographic software or try to invent a new algorithm.

This account of the recent security vulnerability in IOTA was pretty interesting. They decided to write their own 10-line one-way hash function, on trinary data. The IOTA developer's claim that he deliberately put the vulnerability in there as "copy protection" was hilarious. (He also claimed that for vulnerabilities in his earlier cryptocurrency, NXT.)
posted by Coventry at 11:25 AM on September 17, 2017


nah, they're not backed by nothing. they're backed by a huge waste of energy.

i'm under the impression that some of the newer currencies try to fix this? The energy-wasting proof-of-work part is important to Bitcoin though, so you gotta find something robust to replace it with.
posted by atoxyl at 11:40 AM on September 17, 2017 [1 favorite]


Burst tried to fix it with proof-of-storage. Proof-of-share, where the economic commitment securing the ledger consensus is in terms of the cryptocurrency itself, does fix the energy-usage problem, but it leads to potential consensus issues similar to what the US is now facing with its electoral system: the more money you have, the more you can corrupt the system, allowing you to accrue more ill gotten gains, and pervert the system in your favor even more.
posted by Coventry at 11:45 AM on September 17, 2017 [1 favorite]


It's false that crypto-currencies are backed by the mining. All the mining achieves is protecting the blockchain from various attacks, like a security guard, except a security guard who ultimately gets to charge a percentage of net worth. You might argue that crypto-currencies are backed by their market position, like stocks where the corporation owns no assets and has no employees.
posted by jeffburdges at 12:52 PM on September 17, 2017


I'm convinced that Scamtoken is the future of electronic currency. Read their whitepaper, it's pretty persuasive.
posted by Zonker at 1:04 PM on September 17, 2017 [5 favorites]


Also, you cannot solve crypto-currency scalability problem with proof-of-whatever because just replicating the blockchain among the miners breaks your scalability. You need blind signature based systems like Taler if you want to do consumer transactions at scale, like Visa speeds, but keep them private. You could always run a Taler exchange that operated in BTC, but as BTC transactions increase in cost from $3 to $30 and beyond, then you must do increasing aggregation before the exchange pays out.
posted by jeffburdges at 1:04 PM on September 17, 2017 [2 favorites]


You might argue that crypto-currencies are backed by their market position, like stocks where the corporation owns no assets and has no employees.

or beanie babies, or tulips
posted by idiopath at 1:08 PM on September 17, 2017


I had more than a bitcoin, once upon a time, and lost it to MtGox. I remember all the people saying it was a bubble, back when it was $200 or so... they were right, it is a bubble... but unfortunately, so are all other currencies, in the meta.

There is no stable way to preserve purchasing power of labor or goods.
posted by MikeWarot at 1:13 PM on September 17, 2017


...the corporation owns no assets and has no employees.

The corporation in that analogy does have a novel business process, though. Long term, that's not much of an investment proposition (no moat), but it could lead to new forms of decentralized economic activity which aren't feasible given the overhead of economic commitments denominated in a state currency. I don't know what that's going to look like, but the kind of thing I have in mind is the way the internet enabled wikipedia. Not much investment opportunity there, but incredible economic value.
posted by Coventry at 1:22 PM on September 17, 2017 [1 favorite]


Does anyone else think the graphic for the "interesting fact" about Dash in the infographic is misleading? It shows a cube representing the mined block with a smaller cube being taken out representing the 10% reward that goes to the Dash treasury. But that little cube is way too small to be 10%; it looks like each face of the cube is 1/3 of the larger cube which would be 3.7% of the volume of the larger cube. The smaller cube should have sides just under half as long (~46.4%) of the larger cube's sides to equal 10% of the larger cube's volume.

I've never heard of Dash before and I think it's funny that my introduction to it includes such a (probably intentionally) misleading representation. Are cryptocurrency people always grifting or bad at math?
posted by peeedro at 2:19 PM on September 17, 2017


Oh, are we still claiming Bitcoin is fast and anonymous? Next you'll be telling me that it's fungible and energy-efficient.
posted by ckape at 5:07 PM on September 17, 2017 [1 favorite]


And a viable fiat!
posted by clavdivs at 7:25 PM on September 17, 2017


and they're pointlessly environmentally destructive.

Bitcoin is pretty much rolling coal for nerds.
posted by straight at 7:55 PM on September 17, 2017 [8 favorites]


Serious question: If I'd bought like $100 in BC like 7 years ago, I'd be rich now, right?
If I wanted to bet now on an up and coming cryptocurrency, say risk $1000, what would you recommend?
posted by signal at 8:30 PM on September 17, 2017


I'd recommend putting it under your mattress.
posted by storybored at 8:44 PM on September 17, 2017


I own tezos, augur, gnosis, and zcash.

Tezos has an on-chain governance model I find ideologically appealing, and raised a huge amount of cash so there's a good chance it it will have strong momentum.

Augur and gnosis are prediction markets.

In zcash there's a way to transmit funds where only the sender and receiver know the transaction endpoints, so it's effectively a private transaction, even though as with all blockchains the transactions are all published (it's just that in this case the send and receive addresses are encrypted, and the transaction is validated using a homomorphic encryption algorithm.)
posted by Coventry at 8:47 PM on September 17, 2017 [2 favorites]


Well, if you'd owned Bitcoin over the last seven years, didn't keep it in Mt. Gox, Bitcoinica, or Bitfinex, didn't get infected with ransomware or a keylogger, avoided getting scammed out of it in some other way, and managed to sell at the right time, you'd have a lot of money.

Even so, that doesn't make it a good idea to buy now. To me, it feels like buying tech stocks in 1999 or flipping houses in 2008 -- the people who got in at the start have already gotten a lot of the upside, and there's a lot of media hype and shady companies. So, if you do buy cryptos, only risk what you can afford to lose.

I also want to second Pope Guilty's recommendation of David Gerard's book and blog. It's a terrific book; well worth your time if you're interested in cryptocurrency.
posted by ectabo at 9:26 PM on September 17, 2017 [5 favorites]


There is no stable way to preserve purchasing power of labor or goods

? Labor is generally stable in purchasing power, as price inflation is largely driven by rising wages pushing up the cost of goods this wage-labor creates.

https://fred.stlouisfed.org/graph/?g=f633 shows the average real wage (2017 dollars) wage 50 years ago was $16 and now is $22, so real wages are up 40% by this broad measure (but housing, education, and healthcare rent-seeking has taken all of these gains; OTOH food, clothing, and tech crap is a LOT cheaper now vs. the 1960s).

[the GDP deflator I used to create this graph doesn't tell the whole story, obviously]

If you're looking for a store of value, gold doesn't seem to be in a bubble at the moment, nor does real estate for that matter.
posted by Heywood Mogroot III at 9:40 PM on September 17, 2017


Don't forget the existential risk of accidentally becoming an accessory to some sort of financial crime.

If you run your bitcoin through a tumbler or sell your otherwise legitimate DVD collection on whatever today's Silk Road is called, you might get tainted in that way. If you buy a cryptocurrency through a halfway decent exchange and do everything out in the open, you're extremely unlikely to. Zcash has two classes of transaction, public and private, and so it's perfectly possible to own it with a demonstrably legitimate provenance.
posted by Coventry at 9:44 PM on September 17, 2017 [1 favorite]


gold doesn't seem to be in a bubble at the moment, nor does real estate for that matter.

Can you outline why hot markets like Boston or Sydney don't seem to be bubbles to you?
posted by Coventry at 9:51 PM on September 17, 2017 [1 favorite]


>You are like, this close to the Commodity Fetish.

reading the wikipedia entry on that made me break my eyes due to all the eye-rolling at the opacity of the argument, if there was one

Here's my typical rant that I write on "wealth":

http://www.metafilter.com/155495/15C#6318156

blockchain-based trading networks, it goes without saying, do not constitute any form of wealth now or in the future that I am aware of.

At least tulips smell nice.
posted by Heywood Mogroot III at 9:51 PM on September 17, 2017


Can you outline why hot markets like Boston or Sydney don't seem to be bubbles to you?

The nicer a place is, the more it's gonna cost ya, because like I said, wealth is the state of being well, and where you live and work is an immense driver of well-being.

All the first world is in immense housing pinch at the moment, I don't pretend to understand what's going on with Canada, England, and Oz and NZ. Other than there's great demand for housing-as-money-stash (the USA's $8T NIIP coming home to roost??) and of course the supply in any given area is relatively fixed. Hello high prices!

as for Boston, it's cheap compared to the real "bubble" cities like BC.

https://fred.stlouisfed.org/graph/?g=f63A

shows that since 1990 prices are up ~200%, median household incomes are up 150%, and mortgage rates are down 60%. Stir that in a pot and you get today's market I guess.
posted by Heywood Mogroot III at 10:09 PM on September 17, 2017 [2 favorites]


my mortgage would cost me 50% more than I'm paying in rent

it was applying that exact reasoning why I didn't buy that $300,000 condo in Mountain View in 2002 when I was thinking about it. Ooops. 15 years later I'd have the damn thing paid off by now, thanks to the falling interest rate environment since then.

rents tend to go up (5-10% if you're lucky, yes?) each year while the ITI part of the PITI mortgage payment is pretty much constant over the 30 years (interest slowly goes to $0 while taxes, insurance, and maintenance goes up 2%+)

https://fred.stlouisfed.org/graph/?g=f63Z

is the relevant stats for Santa Clara County. Population, up 20% since 2001. Incomes, up 50%. Housing, up 75%.

Unemployment is under 4% in Santa Clara County. It's a great place to be. But it's gonna cost ya.
posted by Heywood Mogroot III at 10:30 PM on September 17, 2017 [3 favorites]


This analysis of the fraud/collapse of Mt Gox is amazing.
posted by Coventry at 10:47 PM on September 17, 2017 [1 favorite]


HARVEST is a work of critical engineering and computational climate art. It uses wind-energy to mine cryptocurrency, the earnings of which are used as a source of funding for climate-change research.
posted by notyou at 12:59 AM on September 18, 2017 [3 favorites]


My approach to blockchain and cryptocurrency is similar to the approach the grocery store owners took during the 1849- Gold Rush. Provide a supply and the tools for the fools trying to make their hand at gold. I'm half-deciding on wondering if I should learn blockchain technologies and become a developer, or at least add it to some kind of functionality with my front-end web development learning. It's a bit of a pipe dream though, I have a lot of other stuff to focus on first.

I have very small investments in ETH and Bitcoin out of curiosity, but it's money that I would probably use on coffee, and I'm thinking of selling it anyways on the next big upswing. The real value is the education of seeing people in multiple FB groups froth at the mouth and run around like nothing, and to find more and more information about how to really view it. It's a really fascinating education, to observe folks. I'm in some much calmer groups, but people are pretty befuddled as well.
posted by yueliang at 1:07 AM on September 18, 2017


This stuff is all fascinating, but I still should've bought some of those Radeons I was pricing out in 2010. I tried to calculate how much money I'd be able to cash out after a year vs. the hardware and electricity cost and then shrugged it off. It's kinda sickening to think about, tbh.
posted by snuffleupagus at 3:24 AM on September 18, 2017


If you buy a cryptocurrency through a halfway decent exchange and do everything out in the open, you're extremely unlikely to.

That's right, you should only trust established exchanges like Mt Gox to safely and securely handle your cryptocurrency.
posted by Sangermaine at 6:24 AM on September 18, 2017


The only reason to deliberately keep cryptocurrency funds on an exchange for any length of time is ongoing price-action trading (daytrading or the like), which is not my style. Funds should spend most of their time under your own control: on the block chain for cryptocurrencies, or in the bank for USD. But if you buy a cryptocurrency on an exchange and then move the funds to the cryptocurrency's blockchain, you get a solidly legitimate provenance.

I suppose you might unwittingly taint yourself by trading with an exchange which is involved in some kind of financial crime. Since I use high-traffic exchanges where I am very small fry I think that's very unlikely to draw scrutiny on me specifically, but it could be a problem, I suppose.
posted by Coventry at 7:30 AM on September 18, 2017


I think zcash might be the only cyber-currency with real cryptographers involved, while amateur hour dominates the others, but zcash is also by far the most ambitious.

It's too bad the collision in IOTA's homebrew hash function was not discovered in public conversations on a mailing list or something. lol
posted by jeffburdges at 7:39 AM on September 18, 2017


IMO you shouldn't need deep cryptographic knowledge to implement a typical new coin at this stage -- the abstractions are pretty well developed. IOTA's mistake was that they messed with a cryptographic primitive. Zcash needs deep cryptographic knowledge because its main innovation is deep crypto.
posted by Coventry at 8:20 AM on September 18, 2017


Recently at a bitcoin/etherium meetup expecting deep crypto code discussion. The word I heard was "all you need to do is fork from github, easy to make an ICO. The hard part is marketing the new coin".
posted by sammyo at 8:33 AM on September 18, 2017


The word I heard was "all you need to do is fork from github, easy to make an ICO. The hard part is marketing the new coin".

OK, so how do we make sure no one introduces these people to the MLM cosmetics & supplements people?
posted by snuffleupagus at 9:37 AM on September 18, 2017 [1 favorite]




Still seems weird that the "solution" to the "problem" of central banks creating money backed by nothing...is for random nerds to all create their own money also backed by nothing.

Real nerds know that at best these nerds are psuedo-random and frankly are not even that.
posted by srboisvert at 10:32 AM on September 18, 2017 [4 favorites]


China Widens Bitcoin Crackdown Beyond Commercial Trading (reddit discussion of paywalled WSJ article.)
posted by Coventry at 11:24 AM on September 18, 2017 [1 favorite]


Central banks experimenting with cryptocurrencies. Skip ahead to the "Projects Jasper and Ubin" section.
posted by Coventry at 6:37 PM on September 18, 2017


Around scalability, Plasma sounded kinda interesting here, but presumably the schemes from Bryan Ford's group at EPFL like ByzCoin and OmniLedger beat them.
posted by jeffburdges at 1:50 AM on September 19, 2017 [1 favorite]


I have just had an info update pass through my email
This vessel is being offered for Bitcoin 3,846 what ever that means. That´s a first.
posted by adamvasco at 10:56 AM on September 19, 2017


China orders Bitcoin exchanges in capital city to close.

I think this is effectively regulatory suppression of all cryptocurrencies, since every exchange offers bitcoin trading pairs.
posted by Coventry at 11:45 AM on September 19, 2017


PBoC's mandate has always been FX price regulation. That means killing domestic inflation and capital flight wherever it is found. Bitcoin, cryptocurrency, is a sieve.
posted by marycatherine at 3:58 PM on September 19, 2017




If you were writing a sci-fi that mentioned the future of crypto-currency then the fun answer to the scaleability crisis would be that essentially price goes to infinity while liquidity goes to zero, due to enormous a total fungiblity failure and enormous transaction costs, exacerbated by rampant attacks precipitated by the zero-knowledge schemes meant to address fungiblity. It'd be like the holders get richer and richer but suddenly own nothing they can trade.
posted by jeffburdges at 5:55 AM on October 14, 2017 [2 favorites]


PNC Bank: Tell Us Why You Bought Bitcoin Or Face Account Closure

AML requires banks to investigate and report suspicious transactions, and cryptocurrencies are seen as particularly suspicious for obvious reasons. E.g. §1761, p. 456, though I don't know how much of that is based on statute or FinCEN regulations, but in any case I can see why a bank would want to scrutinize a customer buying cryptocurrency if they're raising other red flags.
posted by Coventry at 8:14 AM on October 14, 2017




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