Cryptobollocks

[Replies From View]

The confusing thing about the term "mining" is it suggests the resource has been there for ages, waiting to be discovered.

[Zero Gravitas]

The old ones are the best.



Honestly, knowing what a merkle tree is is only going to reduce your overall quality of life.

[Jasha]

I can't even imagine what "mining" for Bitcoins would look like because I am too stupid - I just picture a tiny cartoon man like the one from the Pink Panther cartoons and he's in a little digger and descending deeper and deeper into a labyrinth pit made up of arbitrary numbers.

[Dayraven]

I can't even imagine what "mining" for Bitcoins would look like because I am too stupid - I just picture a tiny cartoon man like the one from the Pink Panther cartoons and he's in a little digger and descending deeper and deeper into a labyrinth pit made up of arbitrary numbers.

As far as I understand it, 'mining' is really the work of maintaining the blockchain which supports bitcoin, and you win some coins if the work you do happens to find a particular useful result. So it's something like a lottery.

Or we could go with your tiny cartoon man, that's close enough too.

[pigamus]

As for the rest of the libertarian fuckers involved in this shite

Oh those sneaky booklending bastards, I knew it

[Vitamin C]

So is this all over now? What makes people so sure it won't bounce back?

[Poobum]

Terra has gone back up by 1300%! Now worth, erm, half a penny! Hold.

[JaDanketies]

So is this all over now? What makes people so sure it won't bounce back?

I'm pretty confident that my Monero isn't going to drop any more dramatically and I've still not really lost anything significant on it yet. Pretty sure that the drug dealers and hackers on the internet are still asking for Monero or Bitcoin.

I suppose the obvious point is that a lot of these coins that collapsed had no real use other than as speculative investments. But there's still a use for crypto and thus there'll still be people trading it, and still profit to be made.

I'm kinda hedging that Monero will end up like Apple stocks, i.e. that it will still have a utility in the medium-term. I'm not sure if people who bought Shiba Inu coins ever thought they would be used for anything at any scale, ever. I kinda understand that Ethereum has a use, although I don't understand what the use is, BTC and Monero also have a use and some kind of market saturation.

[JamesTC]

So is this all over now? What makes people so sure it won't bounce back?

As I understand it, the amount of Luna was increased to try to protect Terra (they have a sort of symbiotic relationship) which means there is now significantly more Luna than before. It means that if Luna were to go back to the old price, it would be the biggest market share of any cryptocurrency.


That being said, I did redownload Coinbase, logged in and switched the free coins that the site gives you for doing a quiz into Luna. It went from around £8 to nearly £60 now. I just like the idea of having the amount that was worth £1.5m a week ago.

[JaDanketies]

I guess people who are buying Luna now are doing so in the hope that the line goes up a fraction and they can sell at the right time, and not because they think it's gonna regain any importance. So exactly like the Greater Fool Theory

[JesusAndYourBush]

As far as I understand it, 'mining' is really the work of maintaining the blockchain which supports bitcoin, and you win some coins if the work you do happens to find a particular useful result. So it's something like a lottery.

Some years ago it was explained to me that "mining" was like calculating the values of pi, or prime numbers, but with a more complicated algorithm.  So in the same way as you could calculate more values of pi than had ever been calculated before, you could "mine" a new bitcoin that had not existed before.  And just like pi or prime numbers it takes longer to calculate them the further you get. But unlike pi or prime numbers the number of bitcoins you can "mine" is finite so eventually there'll be no more new ones.  Of course I'm ready to be told that's bollocks.  Every time I think I understand something about bitcoin and ask for clarification I'm always left more confused than I was before I asked.

[Consignia]

As far as I remember, the proof of work for mining has nothing to do with the number of potential numbers of coins in the market. That's just a limit set by the creator.

The actual proof of work problem is a reverse hash(at least for Bitcoin, other may use other problems). Hashing is a way of mapping a value to another (the hash), where the operation is mathematically hard. A simple hash may involve adding all the digits in a number together (e.g. 12 => 3 (1+2 =3) 403 => 7 (4+0+7)), so the original value is hard to get (although this example has a high number of collisions so would be a bad hash algorithm). Reverse hashing is when you are given hashed value, and finding the value that would have produced it. The hash algorithm pretty much has to be brute forced to find the value that matches the hash. So it's bascially searching for it doing the computations until it finds the value. The a location of coins is awarded by the chain to the first person who finds it. It's easy to verify the answer but hard to find.

The long of short is the blockchain is maintained by people doing pointless calculations, and getting a pat on the head in the form of coins. The calculation has nothing to with the coins, mining is such a misnomer. The result of the problem has no practical use (maybe helping create rainbow tables?), certainly nothing towards the blockchain or the currency. The problem is also made harder my making the ask increasingly difficult based on how quickly the last problem was solved. So that's why we have increased energy use as more people "mine". They need beefier computers to try and get the answer faster than others.

[touchingcloth]

The long of short is the blockchain is maintained by people doing pointless calculations, and getting a pat on the head in the form of coins. The calculation has nothing to with the coins, mining is such a misnomer. The result of the problem has no practical use (maybe helping create rainbow tables?), certainly nothing towards the blockchain or the currency. The problem is also made harder my making the ask increasingly difficult based on how quickly the last problem was solved. So that's why we have increased energy use as more people "mine". They need beefier computers to try and get the answer faster than others.

The "work" in "Proof of Work" is really "energy consumption". The functions are known to take a certain amount of computer cycles to solve with current hardware, and because computers run on electricity you can draw a straight line between solving the problems and how many units of electricity were required to do that.

The mining analogy is terrible, where in actual mining the difficulty of getting to the stuff you're trying to get out of the ground has no effect on its value - you can dig a mile to find a cache of gold, but no one is going to pay you more per ounce for it than if you happened to stub your toe on a big rock of the stuff in a field.

It's quite mad that "work" has been deemed as something equivalent to "authority". Fiat currencies are trusted in proportion to how much the government issuing them is trusted, essentially because people rely on them not to adjust the supply of currency willy-nilly. In a libertarian bid to escape any level of government influence yet still cognizant of the fact that supply being created willy-nilly is undesirable, the Bitcoin creators hit on the idea of making the supply of new currency computationally difficult so that people can't arbitrarily create as much as they like without scaling up the amount of processors they are using.

It's nuts. You'd have to be a psycho to create something the express purpose of which is to use up energy - even the airline industry and Formula 1 don't do this.

[Sebastian Cobb]

The mining analogy is terrible, where in actual mining the difficulty of getting to the stuff you're trying to get out of the ground has no effect on its value - you can dig a mile to find a cache of gold, but no one is going to pay you more per ounce for it than if you happened to stub your toe on a big rock of the stuff in a field.

I don't think it's that bad as a general concept, notionally there's a finite amount of gold (or oil, or other precious metals) in and out of the ground and over time the amount of effort, and cost increases as it's taken out. The stubbing-toe thing isn't what normally happens, entire prospecting/mining companies are founded just looking for the stuff with the acceptance that they may never find anything worth mining. And at the beginning people were sieving the stuff out of streams, which is analogous to the early days of crypto where people could use spare cycles on their mediocre workhorse computers they already had.

[touchingcloth]

I don't think it's that bad as a general concept, notionally there's a finite amount of gold (or oil, or other precious metals) in and out of the ground and over time the amount of effort, and cost increases as it's taken out. The stubbing-toe thing isn't what normally happens, entire prospecting/mining companies are founded just looking for the stuff with the acceptance that they may never find anything worth mining. And at the beginning people were sieving the stuff out of streams, which is analogous to the early days of crypto where people could use spare cycles on their mediocre workhorse computers they already had.

The difference is that the difficulty of access to gold is a bug, not a feature.

[Sebastian Cobb]

It's not a bug or a feature, it's a general truth when it comes to extracting non-abundant resources.

And of course difficulty of access comes into play, do you honestly think people would've backed their currencies to gold if they thought someone could successfully make more through alchemy?

[JesusAndYourBush]

The actual proof of work problem is a reverse hash(at least for Bitcoin, other may use other problems). Hashing is a way of mapping a value to another (the hash), where the operation is mathematically hard. A simple hash may involve adding all the digits in a number together (e.g. 12 => 3 (1+2 =3) 403 => 7 (4+0+7)), so the original value is hard to get (although this example has a high number of collisions so would be a bad hash algorithm). Reverse hashing is when you are given hashed value, and finding the value that would have produced it. The hash algorithm pretty much has to be brute forced to find the value that matches the hash. So it's bascially searching for it doing the computations until it finds the value. The a location of coins is awarded by the chain to the first person who finds it. It's easy to verify the answer but hard to find.

See, every time I ask something I understand a little less.
I understand very little of that... but... doesn't someone else already own the coin?

As I understand it - Person A owns some bitcoins and is paying them to person B.  The 'miners' then are the middlemen doing a bunch of calculations for some reason I don't understand.  And for doing them they get paid a small amount of coin which they don't own because the belong to person A, soon to belong to person B once the transaction is complete.

[Sebastian Cobb]

As I understand it - Person A owns some bitcoins and is paying them to person B.  The 'miners' then are the middlemen doing a bunch of calculations for some reason I don't understand.  And for doing them they get paid a small amount of coin which they don't own because the belong to person A, soon to belong to person B once the transaction is complete.

They get both at the moment - new coins from mining and rewarded with transaction fees as well for underpinning the whole thing. Once the limit of coins has been reached then all they stand to get are transaction fees.
https://www.investopedia.com/tech/what-happens-bitcoin-after-21-million-mined/

[Replies From View]

See, every time I ask something I understand a little less.
I understand very little of that... but... doesn't someone else already own the coin?

As I understand it - Person A owns some bitcoins and is paying them to person B.  The 'miners' then are the middlemen doing a bunch of calculations for some reason I don't understand.  And for doing them they get paid a small amount of coin which they don't own because the belong to person A, soon to belong to person B once the transaction is complete.

Well I understand that there's a stage before that where the money had to be found inside a bin first.  Person A would have found it in there, Person B would have been kicking his arse up in fits over this because he wanted to find it, and so Person A says ok what will you do for my thing I found in the bin, and Person B's first response - doesn't even think about it for a second - is to offer to suck him off.

And just as this is well underway their mum comes in to say tea is ready and blockbusters has started up on the television.

It's called "mining" because she puts bits of all coal on their pizza and they have to eat all of it or they aren't allowed out of the cellar.

[touchingcloth]

And of course difficulty of access comes into play, do you honestly think people would've backed their currencies to gold if they thought someone could successfully make more through alchemy?

Well no, but I was mainly commenting on the term "mining" be a nonsense when applied to cryptocurrencies because it's not really the same thing - the work performed isn't aimed at accessing something with intrinsic value, like how people started to mine coal because they could use it to power things, or started to mine gold because it's shiny.

I dunno, it's almost like the word was cynically chosen to make Bitcoins seem more tangible, and that there's a point to digging them up because they're useful in some way in their own right.

[Sebastian Cobb]

Well I guess it's subjective but gold's most useful purpose is as an electrical conductor and secondly as decoration but those aren't what it's used for most of the time - it has next to no utility at all sitting in vaults so the value ascribed to it in that sense is pretty much existing in peoples heads and given how we use money may as well be just as much a virtual object as bitcoin, in fact it's basically just been made up numbers in computers for decades anyway, the physical gold doesn't really need to be there unless you're personally using it as a wealth store and are likely to sell if you need to, but I doubt most of us are doing that.

[Ferris]

I wrote a paper on this very concept: what gives something value (in reference to the gold standard).

Back in the day, every currency was backed by a physical bit of gold - if you wanted to do some government spending with newly issued currency, you had to get some shovels and go down a mine first.

These days countries have gold reserves for a few percent of their total currency so if there was a run, they'd be fucked. Except... what run would happen? You'd swap currency for gold, which... so what? Gold doesn't have any more innate value than the currency you just swapped it for.

I also did some reading on Fort Knox which is a fascinating place. It used to house a strategic reserve of diamorphine into the '90s, something like 200 tons of the stuff if memory serves. It doesn't any more, and won't tell anyone where all that gear went.

Funny old world.

[JesusAndYourBush]

They get both at the moment - new coins from mining and rewarded with transaction fees as well for underpinning the whole thing

Where do the new coins come from?

[Replies From View]

Where do the new coins come from?

Take two existing bitcoins and rub their head and tails together.

[touchingcloth]

Well I guess it's subjective but gold's most useful purpose is as an electrical conductor and secondly as decoration but those aren't what it's used for most of the time - it has next to no utility at all sitting in vaults so the value ascribed to it in that sense is pretty much existing in peoples heads and given how we use money may as well be just as much a virtual object as bitcoin, in fact it's basically just been made up numbers in computers for decades anyway, the physical gold doesn't really need to be there unless you're personally using it as a wealth store and are likely to sell if you need to, but I doubt most of us are doing that.

I'm not helping things here cos I'm confusing things by making sweeping statements about gold in all its guises over the years without being specific. It's been used as a jewellery which is also easily tradable as a currency (like seashells), then as backing for bank notes, then central bank notes, and then - like you say - having little actual utility beyond its earliest use as jewellery plus the newfound use in electronics and NASA missions.

I think Bitcoin is trying to fit into the second and a bit of the third of those niches - a finite resource used for banking, but with no intrinsic value. I'm not sure what the plan is when the limitations of using something with a strictly limited supply as the basis of a currency starts to rear its head.

Are we far enough away from the gold standard now that someone finding a brand new cave absolutely filled with the stuff wouldn't shock economies? It would have done 500 years ago, and presumably if someone quietly discovered quantum computing and went and mined all of the remaining Bitcoins in half a second that would fuck it.

[touchingcloth]

Where do the new coins come from?

Nonces.

[JamesTC]

Nonces.

Wasn't there actually a crypto called Nonce Coin or something like that?

[imitationleather]

Wasn't there actually a crypto called Nonce Coin or something like that?

Think this forum HODLs about 90% of the entire amount in circulation.

[MojoJojo]

Where do the new coins come from?

One gets added to the node that successfully worked out the hash of the new block.

[Sebastian Cobb]

Wasn't there actually a crypto called Nonce Coin or something like that?

Probably, 'nonce' (number once) is a part of cryptography, essentially a one-time code you send along with your message to prevent replay attacks.