Disclaimer: The contents of this thread are known to the state of California to cause cancer. (As they always seem to know more than the rest of us)
Crypto currency is just a product that can be bought, sold, sent, received. Just like any other good.IRQVET wrote: ↑Fri Apr 30, 2021 8:36 pm Don't even understand the basics of crypto, but I've thinking about doing some research to educate myself if someone has a worthwhile video to send me. Something they felt was worthwhile and to the point. I can't stand self gradificating long winded videos, just a SITREP and get to the point!
It runs on the block chain. That's what sets it apart from most goods.
The block chain takes the place of a traditional ledger. Instead of your bank recording a transaction, the block chain records it.
What is the block chain, exactly? Put simply, it is insanely complicated math. Thousands of computers spread across the globe are constantly working on solving complicated mathematical "blocks". Recording transactions is part of this solving process.
This takes a considerable amount of energy. Why would people dedicate their computer and electrical resources to solving blocks on the block chain? Because for every block they solve, they get rewarded. By solving a block they create a new unit of the currency (for example, they create one new bitcoin). And that unit has value. So they get paid for solving the blocks.
Now, upsides and downsides.
1. The block chain is also known as the "distributed ledger". Once a transaction is on the block chain, it can never be changed or deleted. It is there forever, reinforced by being recorded on thousands of computers. In this way, the block chain cannot be tampered with. A bank, by contrast, has records that can be tampered with.
2. The block chain is government independent. The value is determined by the free market. Also, your "address" is not tied to you. It is simply a long random string of numbers.
3. It can be quite fast. Bitcoin is slow. Ethereum is a bit faster. Many new coins, however, are much faster. It is fast enough to send large sums of money across the globe in a minute or two, without involving a bank.
1. There is no going back. Transactions cannot be undone or reversed, as they often are in the banking world. Imagine paying for goods and then deciding later that you did not get your money's worth. You have NO recourse. The transaction is permanent. You would have to politely ask whoever you paid to send the money back. And if they say no, then tough luck.
2. Even though the block chain cannot be hacked, the interfaces can be hacked. In order to convert your USD to crypto currency, you have to use an exchange. Their app, website, and their servers are all theoretically vulnerable to hacking and corruption. If you have the ability to send crypto on your phone, and your phone gets hacked, then you can bet you will lose your money. Then see step 1.
3. It is extremely energy inefficient. It takes a considerable amount of electricity to run block chain calculations. It is like 100x or 1000x less energy efficient than the US Dollar digital banking systems. The significant cost of running the block chain is in theory one of the aspects that give crypto currency it's value. If it costs $1500 to mine one bitcoin, then in theory the market would be willing to pay at least $1500 for one bitcoin. However, if the price of the coin ever DOES fall below the cost to run the block chain, that could in theory be the death of that coin.
4. There is no backup. If you lose your "secret key" for your address, then that money is lost forever. Those coins are still yours but you will never be able to send them anywhere without the secret key. There is absolutely zero way to recover it. Unless you have your coins stored at an exchange, like Coinbase. But then you put your trust in Coinbase to not get hacked and not steal your money.
5. It's regulation proof. This is either good or bad depending on how you look at it. The government can and does regulate the exchanges. But they have no way to regulate the block chain itself. They can't regulate transactions.