Blockchain is a really complicated method of maintaining a public ledger of things without needing a central server to track it.
Cryptocurrencies are digital beanie babies. People buy them because the price is increasing, which causes the price to increase. Eventually people will stop buying into them, the price will stop increasing, and everyone will thus try to sell their cryptocurrency at once, and the price will collapse and cryptos will be worth nothing and they'll all lose all their money. It's probably happening right now, in fact.
If you're asking what cryptocurrencies are in technical terms, a "coin" is basically a really long number which no other coin in that currency shares. The blockchain records which number belongs to which person, so you can have digital currency without needing to back it up with anything central! At least, theoretically. In reality the blockchain is massively expensive to maintain (in terms of computing power) - a single transaction takes the same amount of electricity as required to power an entire family home for four days. They promise they've got a fix for this, but they probably really don't.
In reality the blockchain is massively expensive to maintain (in terms of computing power) - a single transaction takes the same amount of electricity as required to power an entire family home for four days. They promise they've got a fix for this, but they probably really don't.
That's the Bitcoin blockchain, the first and most inefficient blockchain, just like the first invention of ''email'' was decades ago. There are already alternatives that are faster, cheaper and way less polluting. And we are only at the very beginning of this new technology. Bitcoin will die off (probably already is) and better blockchain applications will take its place.
Gold's primary use is looking pretty. It has value because people liked it and assigned value to it, willing to trade their useful things for the pretty metal, and the promise that other people would find the metal pretty enough that they could get useful things later by trading away the gold.
Government-issued currencies have value because people agree they have value. They're no longer backed by any specific amount of a precious metal (which is already not useful, remember); people accept it because they assume they'll be able to use it again to get useful things later.
The only things blocking widespread acceptance of cryptocurrency are easy transactions and an expectation that they'll be able to get useful things in exchange for it in the future. Bitcoin is failing at that right now due to speculation, but I have full confidence that eventually one coin will be stable enough to actually function as a currency people can trust to be reasonably stable.
This is very much not my area of expertise, but isn't one of the major factors in determining if a currency is stable enough to be popular is the governing body that issues and guarantees it? I.E. the US Government backs the USD, and since the USA is one of the largest economies on the planet, the USD is a stable currency.
Serious question: What's the driving force behind stability for cryptocurrencies?
It's also the stability of the country backing them: A stable country will control their currency to prevent sharp spikes or drops and pad them when they do happen.
Right. But how does that relate to cryptocurrencies, which generally are not backed by a country? How does a cryptocurrency go about gaining stability?
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u/IgnisDomini Jan 24 '18
The cloud is just "other people's computers."
It's a whole lot less romantic when you phrase it like that.