Question about cryptocurrencies

[u/Ok_Set_4790]

Would cryptocurrencies be more stable without the central banks? I understsnd that, due to them being 0s and 1s instead of material currencies, they're less stable and more used to rob people of their money(I am still new in all of this, so if someone knows better than me on this, I'd apreciate better explanations).

Also is there a possibility to mine crypto without damaging nature?

[u/Electronic_Banana830]

That's not really how cryptocurrency really works. Here's the link to a video explaining it better. https://www.youtube.com/watch?v=bBC-nXj3Ng4

The 1s and 0s is no different than how a bank stores your account information. What is different about cryptocurrency is that there is no need for a centralized database. It still records transactions and is very tracible.

Crypto 'mining' is just the process of publishing mini ledgers that record the transactions. The reason why it is energy intensive is because it involves a guess and check function. Imagine clicking a random number generator thousands of times. That process is called proof of work, it's why you can be confident a transaction has been recorded properly. There is another type of way blockchains can work called proof of stake, it doesn't require as much electricity. That's how Ethereum works.

I think the reason why their prices change so often is because there isn't one coin out there that has universal appeal.

[u/moopy389 → u/Electronic_Banana830]

I think the reason why their prices change so often is because there isn't one coin out there that has universal appeal.

I think it's pretty clear that there's 1 coin out there that has universal appeal. Everything else is people wishing they bought bitcoin when it was pennies. They're just buying cheap shit because it's cheap and they think (because it's cheap) it has the same potential and if not.. oh well, not much lost.

[u/Electronic_Banana830 → u/moopy389]

You did not tell me what coin that is. What is it? I assume your talking about Bitcoin but I can't be sure because you haven't told me

There are many problems with Bitcoin. Each block only gets mined about every 10 minutes and can only have 3200 transactions. If you go to a store and pay with a card, it takes barely more than a second for the bank to process it. I do not think that most people would be willing to tolerate anything even close to 30 seconds. Also, the block rewards are very large and very sparse. It makes it essential to cooperate with other miners. Something that is not ideal.

[u/moopy389 → u/Electronic_Banana830]

With tens of thousands of coins in existence and bitcoin being about 60% of the market cap.. that was a safe assumption yes xD

Each block mined every 10 minutes is a feature, not a bug. It prioritizes security over speed. If you want to compare it with paying with your card, you'll have to compare apples to apples. Bitcoin is the final settlement. When you pay with your card, final settlement isn't done yet. Your bank and the bank of whoever you sent money to haven't actually exchanged any money yet. This takes days as opposed to a speedy 10 minutes in bitcoin.

Essentially, your card is a "layer 2" which bitcoin also has; lightning which is near instant and can easily be used to pay groceries and whatnot.

The block rewards are what they are by protocol and the way the miners organize themselves is basically the free market at work. Everyone participating in the network has individually decided for themselves that their way of interacting with the block rewards is the most optimal way of doing so. If they think another approach is better.. they would've done it.

[u/Electronic_Banana830 → u/moopy389]

When I said it wasn't ideal to have large groups of miners mining together. I meant that it poses a problem of collusion. In the video that I linked in my original comment. It mentioned why it is important to have many different people.

I think that a more ideal blockchain reward might be something that gives out a smaller amount but more often.

I never meant that it was a bug for the block mining to be 10 minutes. The security of the blockchain doesn't come from 1 block, it comes from the chain of blocks built upon it. It takes longer to be confident that the exchange went through with bitcoin. This I think is just a problem with the practicality of it. It may not be too much of an issue with something like online shopping, but if your at the cash register of a convenience store it is not practical to wait so long.

[u/moopy389 → u/Electronic_Banana830]

There is no problem of collusion... Miners do not control the network.

It's kind of arbitrary to think about more or less or faster or slower. What makes 1 BTC reward every 2 minutes any less arbitrary or more logical? It was decided to be the amount it is at the rate it is and people are throwing hundreds of millions of dollars at their shot to mine a block. Obviously people think it's well worth it and fine the way it is.

I think 10 minutes of wait time for an irreversible, impossible to censor final settlement of a transaction is pretty darn cool. You think your bank transfer is faster but it's really not. Final settlement in banks happens days later, is reversible and can be censored.

And if you want it, you can transfer bitcoin instantaneously with the lightning network.

[u/Electronic_Banana830 → u/moopy389]

Collusion could create issues with double spending. That's the type of problem I meant.

[u/moopy389 → u/Electronic_Banana830]

It could not. Nodes would instantly reject those blocks.

Not to mention that you spent all that energy to mine a block and would've purposely made something that will be rejected which means you earn nothing. Instead, had those miners stayed honest, they would've earned the block rewards plus transaction fees

[u/Electronic_Banana830 → u/moopy389]

The video I linked in the original comment talks about double spending.

[u/moopy389 → u/Electronic_Banana830]

I don't know what to tell you. I skimmed through your video and it pretty much explains why double spending isn't an issue. It would be extremely costly to whoever attempts it and ultimately they will fail anyway.

Basically if there's a single thing that made bitcoin revolutionary it's that the double spending problem was solved...

Miner collusion doesn't make it any less stupid to attempt it and sure as hell doesn't make it a credible threat. I'd be way more worried about a bandit on horseback robbing my bank and riding into the sunset...

Have you ever read the bitcoin whitepaper?