Cryptocurrencies

[Jinx]

The idea of a cryptocurrency is probably insane for most members of this forum. A currency that has no governing body and that is purely online, especially for a group of people that for many, technology is confusing enough already (http://www.sharetrader.co.nz/showthr...e-of-investors) As a source for this statement

But cryptocurrencies in some form or another, will be the future. Whether it will take 1 year, 10 years or 50 years, eventually the idea that money will decentralized from governments and borders eventually is hard to deny.

There have been a huge number of overnight millionaires with things like Bitcoin (The 'orginial cryptocurrency) where we saw a price rise from 0.06c each to $1000 (USD) each, 16,500% increase.(http://www.coindesk.com/price/) This was not a one off, or a scam or anything else of the like, this was a technology that started off small and cheap that then people realized was the future.
As there becomes more and more interest in this type of technology, more cryptocurrencies and uses for them, will continue to be developed many of which will fail but some will succeed.

How these currencies work is complicated and personal research will need to be done in order to scratch the surface of how they work. But a new cryptocurrency is beginning its journey, one that I can see creating a huge amount of wealth for those invested as well as becoming a new stream line payment system of the future.
http://coinmarketcap.com/currencies/ethereum/

Ethereum is a technology that allows for people to create code that deals with money (Named a smart contract) which is highly complex and in-depth. But simply put allows almost any industry to reduce fees by not needing a third party to deal with money. The code is smart, the code can think and transfer money from one party to another.

It's complicated to explain, complicated to purchase, complicated to predict. But considering this is a investment forum I figured it would at least be interesting!
Current price per Eth is $11.5 usd and unless something drastic happens I can see very little downside and huge upside for investment (DISC: Holding a small amount of Ethereum, but am in no way affiliated with Ethereum or its development other then investing)

[Lewylewylewy]

...But cryptocurrencies in some form or another, will be the future. Whether it will take 1 year, 10 years or 50 years, eventually the idea that money will decentralized from governments and borders eventually is hard to deny...

Very insightful. I think there's a distinct possibility that as govt's get rid of cash in order to prevent tax fraud, there's always the possibility that a govt can upset the people and turn them to something like cryptocurrency. Personally, I prefer the idea that in the future we will rid of tax altogether and almost completely get rid of government as people end up being given a basic income for doing nothing to live in a mostly automated world where jobs are only done as hobbies to get extra cash. That's my dream

What I expect to happen is at some point people will feel oppressed by a government (or invaders of some type) and will take to alternate currencies. I'm not sure how successful this will be.

[Snow Leopard]

...But cryptocurrencies in some form or another, will be the future. Whether it will take 1 year, 10 years or 50 years, eventually the idea that money will decentralized from governments and borders eventually is hard to deny...

I deny that.

See - That was easy as .

These things come and go, like any speculative 'investment'. Maybe this one has legs and probably it does not.

Best Wishes
Paper Tiger

[unhuman]

Almost every one of these has come across to me as a pump-and-dump for people who feel like they missed out on bitcoin gravy train.

However I do feel that the tech is interesting and will hopefully grow into something more useful as a currency rather than being held as capital appreciation.

[Jinx]

I deny that.

See - That was easy as .

These things come and go, like any speculative 'investment'. Maybe this one has legs and probably it does not.

Best Wishes
Paper Tiger

I would argue if you are willing to flat out deny it then you aren't/dont want to be up to date on the technology.
Although these are certainly a speculative investment they have found partnership in Microsoft, Goldman Sachs, Every crypto exchange, so obvouisly a lot of people are willing to speculate about what could be a game changer in 5 years or so.

Almost every one of these has come across to me as a pump-and-dump for people who feel like they missed out on bitcoin gravy train.

However I do feel that the tech is interesting and will hopefully grow into something more useful as a currency rather than being held as capital appreciation.

I agree that pretty much every altcoin except Bitcoin has been a pump an dumb, but pretty much all of these pump and dumps have been of currencies that change nothing, bring nothing to the table. I wouldn't be surprised if the Eth price dropped to $1 but as long as more and more positive news continues to surface about the technology I'll be happy to hold - The same as investing in shares

[GTM 3442]

These things are simply a store of value, with the benefit of being able to be used as a medium of exchange in a limited range of circumstances.

Traditional currencies are widely accepted, and rest on the issuing government's power to tax. Physical assets like gold or land have a value largely determined by supply and demand.

Traditional currencies and physical assets have a greater degree of transparency. I can see the 5kg of silver that I use as a doorstop, I can stand on my land, and there is an entire global industry devoted to keeping my shoebox of US dollars on the straight and narrow.

I am, however, somewhat less sanguine about Bitcoin et al

[Jinx]

Traditional currencies and physical assets have a greater degree of transparency.

Do you realise that the blockchain (the technology behind bitcoin and Ethereum) is completely transparent and that's one of the main appeals? I feel this was poor wording and not in regards to transparency at all.

Secondly I agree with the silver and land examples but where you state that the US dollar has value because of a global industry what makes you assume this isn't true for bitcoin currently, to a lesser degree of course but can certainly continue to grow?

[GTM 3442]

Do you realise that the blockchain (the technology behind bitcoin and Ethereum) is completely transparent and that's one of the main appeals? I feel this was poor wording and not in regards to transparency at all.

Secondly I agree with the silver and land examples but where you state that the US dollar has value because of a global industry what makes you assume this isn't true for bitcoin currently, to a lesser degree of course but can certainly continue to grow?

I can use a dollar coin without having to know anything about its ancestry or its "audit trail" ( for want of a better phrase). The physical artifact is sufficient in itself.

To use a Bitcoin, I must interrogate a database to establish its authenticity. So must any other party who uses that particular Bitcoin. Possession of a Bitcoin is not sufficient to establish authenticity.

As an idle query, how long will it take before the world's supply of disk space is taken up by the block chain history of all the squazzabazillions on bitcoins out there? ;-)

[Jinx]

I can use a dollar coin without having to know anything about its ancestry or its "audit trail" ( for want of a better phrase). The physical artifact is sufficient in itself.

To use a Bitcoin, I must interrogate a database to establish its authenticity. So must any other party who uses that particular Bitcoin. Possession of a Bitcoin is not sufficient to establish authenticity.

As an idle query, how long will it take before the world's supply of disk space is taken up by the block chain history of all the squazzabazillions on bitcoins out there? ;-)

And you can use a bitcoin without having to know anything about its ancestry, you don't need to download or "interrogate" the entire blockchain to buy/hold bitcoins. Make any online wallet, transfer money to https://coined.co.nz/ or any other exchange, get them to deposit the bitcoins to your address. You now hold or use a bitcoin with knowing any ancestry or integration

Just for fun, currently the blockchain is 64GB with ~a million users to be generous to your point.
So for the entire world to be using it we need to times the current size by 71,00 (to get the world population on-board)
So we end up with around 4,544TB of size (4.5Peta Bytes) on the blockchain.
"Facebook claimed they had over 100 PetaBytes of pictures"
(http://paulwallbank.com/2012/08/23/h...n-their-sites/)

So currently even if the entire world started using Bitcoin even Facebook could host all of the blockchain history 22 times ;-)

Short answer: The blockchain history is tiny, google are esitmated to have close to 1 Exobyte of information = hosting the entire block chain with the entire population of the world using it 222 times

[GTM 3442]

If the block chain is not necessary, why is it there?

You haven't convinced me, I continue to regard crypto-currencies as speculation outside my comfort zone.

I'll stick to my doorstop for a while yet, I think.

But I am reassured about the disk space issue

[Jinx]

If the block chain is not necessary, why is it there?

It's completely necessary, that doesn't mean the average user needs to care/worry about it.

I agree it's all completely speculative, but so was the concept of a home computer

[Snow Leopard]

...Just for fun, currently the blockchain is 64GB with ~a million users to be generous to your point.
So for the entire world to be using it we need to times the current size by 71,00 (to get the world population on-board)...

It has nothing to do with the number of users.

Your complete blockchain of 64GB is the history of all transactions conducted and will grow at a rate related to the rate of new transaction being conducted:
currently about 108MB/day based on about 200,000 transactions/day.

The current bitcoin blockchain process would not be able to handle a ten fold increase in the rate of transactions.

Best Wishes
Paper Tiger

[Jinx]

The current bitcoin blockchain process would not be able to handle a ten fold increase in the rate of transactions.

Number of users increasing = more transactions
But anyway how would the blockchain not be able to handle a ten fold increase in the number of transactions? I assume your not worried about space because even with a 100 fold increase in transactions there would be server space to host it.

[Snow Leopard]

Number of users increasing = more transactions

That is what we in the trade call 'sloppy thinking'.

But anyway how would the block-chain not be able to handle a ten fold increase in the number of transactions? I assume your not worried about space because even with a 100 fold increase in transactions there would be server space to host it.

This is specifically about the bitcoin block-chain, the protocol (I said process earlier, this is what we in the trade call 'sloppy writing') defines a maximum block size of 1 megabyte and an average block-rate of 600 seconds. That provides a hard limit on the rate at which transactions can be incorporated into the block-chain. It apparently sometimes temporarily hits that limit already.

But no worries heh?
You just increase either the size of the block or the block-rate or both. Easy?

No.

There is a debate raging about changing the block-size but no consensus and no authority to impose a solution in this online democracy.



Other block-chain based currencies have different parameters but you can scare any of them by sneaking up behind them and quietly whispering "Scalability" into their ear.
There are a few other magic words to apply to reduce them to gibbering wrecks.

Best Wishes
Paper Tiger

PS Most early home computer manufacturers disappeared into oblivion.

[Jinx]

"That is what we in the trade call 'sloppy thinking'."

Your right but it was 'sloopy thinking' that I did on my phone replying to a cheeky "idle question" with a ;-)
Wasn't really worried about the sloopy calculation because it was to prove a point, now to prove the point in greater detail since it's still not being accepted!

There is a debate raging about changing the block-size but no consensus and no authority to impose a solution in this online democracy.

This part is interesting, these blocksize increases and discussion is all interesting but firstly I'm not actually defending bitcoin I'm advocating for Ethereum which isn't having the same lack of consensus with a leadership team. Secondly the blocksize has increased before and will happily do it again without problem, unless ironically the hard fork in June will attract people to Ethereum where Eth would blow up!(My dream)

whispering "Scalability" into their ear

Bitcoin has been scaled before and was a concept developed by what we assume is one person that was quickly scaled to millions. What makes you think a development team and countless startups can't produce huge amounts of scalability?

PS Most early home computer manufacturers disappeared into oblivion.

And many millionaires we're made, plus it was developed into one of the most relied upon devices

[Jinx]

http://www.nbr.co.nz/article/OPINION...life-b-187434#

Looks like sharetrader readers got a heads up about the blockchain before Nbr readers

[GTM 3442]

http://www.nbr.co.nz/article/OPINION...life-b-187434#

Looks like sharetrader readers got a heads up about the blockchain before Nbr readers

From the NBR: "If we also agree to put those rules (a smart contract) on this immutable system that we both trust (The Blockchain) then we have created a transaction between two untrusted parties without a middleman. "

Isn't the middleman simply the 'immutable system'? So then the question becomes who controls the immutable system?

My money is on the central bank. Backed by the full force of contract, national, and international law.

A further step toward serfdom.

[Jinx]

From the NBR: "If we also agree to put those rules (a smart contract) on this immutable system that we both trust (The Blockchain) then we have created a transaction between two untrusted parties without a middleman. "

Isn't the middleman simply the 'immutable system'? So then the question becomes who controls the immutable system?

My money is on the central bank. Backed by the full force of contract, national, and international law.

A further step toward serfdom.

An immutable system is much more cost efficient then a entire branch of government, I'm not arguing that anything is going to change short-term. But long term blockchain will be implemented.

[GTM 3442]

I agree with you Jinx.

Blockchain is going to be implemented.

The question is who by. As I say, my money is on the central bank.

Out of curiosity, what information can I pull out of a block chain? Enough to make GCSB and GCHQ and NSA and SIS et al have wet dreams about a cashless society?

[Jinx]

Price update, when this was first posted the price per Eth was $11.5 usd.

Now its $14 usd
21% increase in two months isn't too bad
Pleased I trusted myself and diversified my portfolio into cyrptocurrenies.