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+--- Thread: bitcoins (/showthread.php?tid=148)
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RE: bitcoins - Lain - May 6th, 2020
you're right, but there's a couple more steps.
for instance, what happens when you give money to the bank to store in an account?
well the only thing that happens is that you GIVE your money. it's not your money once you deposit your money, but instead the bank essentially updates their 'debt' to you which is called your balance.
the problem with this model is that you don't have possession of any money, really, only a way to 'update your debts' by either withdrawing or depositing money from the bank. but with withdrawals, we already mentioned the problem with cash above, how it doesn't really have any actual value except for how much people THINK it's worth compared to what they buy/sell, or compared to other currencies.
and when markets collapse, banks are free to just cancel their 'debts' and claim all the money that people deposit. it's not anything new, it's happened before. when you deposit your money in a bank account, you're basically giving it up. of course there's a really high chance you can get it back, but especially in economic crisis (i.e. right now) that chance of getting it all taken away grows.
so crypto replaces the middleman in that regard. whoever controls their encryption key controls their money. you don't magically get more money like an interest rate, but the value of what you have can grow, often much faster than a 0.3% interest rate.
and yes, the state always wants to control the flow of money and monitor transactions, but crypto isn't really designed to stop that. it just kind of does, as a side effect. but only to a certain limit.
most people think bitcoin is anonymous. it really isn't. all transactions and addresses are publicly visible to anyone who wants to look them up, and you can trace/watch the flow of bitcoin from a certain address to another address. the only reason that it 'kind of' stops tracking is that there's no way to tie an address to a name, unless someone says that an address belongs to them. currencies like monero don't allow people to monitor transactions, so it's a little more closed off and that's used more for buying drugs and whatever (not that I would know, though
)crypto is still only valued by whoever is buying and selling it, but no other parties or entities. and yeah, when the government can't make any money off of it, they try to stop it.
but that's also why governments and large companies are building their own cryptocurrencies, like Facebook Libra, or China's DCEP. if they have full control over the system, then they CAN make money off of it, not only by watching all transactions, but also deciding their own values, and inflating the price of the currency by 'destroying' coins, or adding more in the system to deflate the price. it's basically like stocks, except they can decide when it's low, when it's high, when to buy and when to sell with other currencies, all to make money off of.
unfortunately, since everyone still uses cash and normal/traditional currencies, that's the only way we can actually 'value' bitcoin. but many other crypto projects grow in price when bitcoin price grows, and decline when bitcoin price goes down. in other words, they are valued in terms of bitcoin, then translated to normal currencies like USD, euro, etc.
maybe like ten years from now when the world collapses, crypto will get a different value and people will understand its impact. but until then, all I can do is invest for doomsday.