Hokay. Strap in.

Fuckin' A. Now note the quote above and how it relates to the quote below:

Yes and mostly no. So there are regulations when it comes to the exchange of cryptocurrency for fiat currency (where "fiat" is "every currency you understand"), such as Washington's SB 5031 or New York's BitLicenses. But the whole point of cryptocurrency is the security of the currency - the very value it provides as a marker for the exchange of goods and services - is not in the backing of a central government with rules and regulations and reserves and mints. It's in the cryptographic strength of the algorithm that stores the transactions made with that currency ("crypto" "currency").

Fundamentally, "money" is a balance sheet whereby everyone knows what everyone else has. The simplest way this works is if everyone has chits and markers that indicate value (cash). If you're a bank, you write down on your ledger how much cash people have given you. The government can inspect your books (your ledger) and if things don't balance out, you're probably guilty of embezzlement. But the sanctity of that ledger is fundamentally up to the bank, backed by whoever insures that bank (the FDIC in the US), backed by whoever stands behind that insurance (the US Government).

With cryptocurrency, the verification of the balance sheet is provided by the algorithm. Everyone with a copy of the blockchain - the "distributed ledger" - has a record of every transaction made. Every node on the network has a record of every transaction, which they update via a distributed protocol similar to BitTorrent ("bit" "coin" - get it?). This has two fundamentally seismic impacts:

(1) governments can no longer govern, control or influence value, transactions, currency flows, interest rates or any other aspect of commerce and the exchange of value

(2) governments can no longer insure, protect, stabilize or defend value, transactions, currency flows, interest rates or any other aspect of commerce and the exchange of value.

So. On the one hand, you have people speculating in cryptocurrency because you put money in and it's grown bigger when it comes back out. And on the other hand, you have people speculating in cryptocurrency because HOLY FUCKING SHIT it's the biggest innovation in economics since the invention of fiat money in 1000AD.

When they set off Trinity at Alamogordo, there were scientists who thought there was an outside chance it could ignite the atmosphere and kill every living thing on earth in a giant planetary fireball. They figured it was an outside chance, but they simply had no data as to what a runaway fission reaction in atmosphere would do.

Cryptocurrency is the economic equivalent of nuclear power. It is more than an inflection point, it is a discontinuity in the equation. Good idea? Bad idea? Not the way to look at it. Regulated? Unregulated? The whole point is cryptocurrency is beyond regulation. There will be regulations where cryptocurrency touches "normal" money - and there should be - but once it's on the blockchain, it's in the hands of the ones and zeroes.

on post: Bitcoin Cash starts today
by kleinbl00 262 days ago   ·   link