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RE: 10 questions from the level up noob investor. Virgin Post
You weren’t kidding about the formatting! Here’s my attempt at some responses:
- Yes, those behavioural challenges will continue to remain the barriers to adoption for a while to come. While aesthetics response above is a theoretical possibility, such an event would occur when BTC is the leading medium for financial value exchange, replacing whatever local fiat exists at the moment. That for the moment looks unlikely. The attractiveness and growing interest in cryptos as a currency for the moment in my opinion have less to do with achieving a stable mode of financial exchange and more to do with the possibility of exponential returns from a financial investment, fuel for the blockchain’s functioning itself through consensus or anonymised fund transfers.
Fiat currencies initially garnered stable valuations from “pegging” their value against a physical asset like gold or the value of other stable currencies (like the Dirham against the Dollar or the Indian Rupee against a basket of currencies). Look up “USDT” as an example in attempts to get a stable peg for cryptos that is tradeable. Until that happens, only a fringe to moderate section of society will use cryptos to buy their groceries. After all you don’t want to be that guy who paid for his pizza with BTC when it was sub 100 bucks a coin. - By this do you mean authentication of identity of the participants on the block chain? If yes that’s achieved through the combination of your private & public keys that are immutable and hash encrypted for every transaction. Hence the requirement for the resource intensive “mining” exercise in POW to validate that the transaction is authentic, where the cryptographic puzzle to be solved is the hashing protocol itself.
- I think part of this question on the general feasibility of crypto as a regular use currency has been answered in part 1. Furthermore, the “fantastic benefits to using BTC to protect your wealth, shield yourself from a tyrannical gov't, cheaply send money to your foreign family members, gain access to a finance system you otherwise wouldn't have” apply equally to developed countries as well and a large volume of transactions serve those purposes (minus the tyrannical part). When it comes to ease of use, there are already a few physical devices or cards that can be used just as easily as a regular atm card in theory and they are working on gaining adoption. As for the transaction fees, we don’t notice them because merchants have already absorbed that as part of their fees, but a decentralised financial system also does away with the need for middle men like visa or amex and when it becomes main stream, you can start by demanding discounts for paying with crypto or even some day bring down prices altogether.
- My understanding is that the controllership of the dApp is by majority stake in consensus, whether it’s the majority ownership of tokens or majority ownership of mining capacity. So if a dApp has become mainstream, how much of it is controlled by a few individuals or a company depends on how many tokens they control through pre-mining or other built in mechanics. This changes from dApp to dApp. Theoretically BTC is classified as a dApp as well with ownership controlled by mining power. Not much of this applies though if its an ICO and the company is yet to really show a working version of the tech.
- My understanding is that you can’t change historical transactions on a blockchain once its committed, only affect the mechanics of future transactions. Also Golem is essentially computing infrastructure. So for someone to employ the computing resources of Golem to beat the network they would have to fund Golem enough to purchase resources necessary to beat the mining capabilities of the 51% majority on BTC. A) that is super expensive and B) when that happens if everyone just forks to a new chain it makes the value of coins on the old chain invalid hence making it a pointless exercise. Also this probably assumes a different nature if the chain transfers to POS as computing power alone wont help fork or control the network anymore. The participants on golem would also have to control a majority of tokens.
- My argument is no. Cuz the wallets don’t contain physical assets, only keys referencing transactions on a public blockchain. That’s akin to saying if you open your online banking account on your work computer do they own the contents of your account.
- 2 part question;
Not sure how recent this information is but block rewards halve every 4 years on btc. Some estimates say the last coin wont be mined till 2140.
• What happens when all the BTC are mined and the miners no longer have the strong financial incentive to mine? Who secures and verifies the network?
Some of this is similar to how the dollar was pegged to gold to begin with to give it its value. Then we started to create more complex financial instruments that don’t have a physical asset tag anymore. Also, miners will still be paid transaction fees which is incentive for securing the network, but there are some counter theories to this as well. - This depends on how much of the tokens are premined, do they want to make a fast buck or build a business etc. Hence why you need to do your due diligence on the developer team as much as you would put into a traditional IPO.
- Which is why it’s not recommended to use wallets that aren’t open source/ code exposed and visible for audit by the market. You wouldn’t buy a regular physical wallet that you aren’t allowed to inspect would you?
- The opposite, more people trade, to a point where the proportional control of a coin/ token by a whale is marginal compared to the total traded volume. It’s the same as regular fiat currency economics. Until then any small market is open to easy manipulation. Heck even large international markets are open to manipulation by corporations and governments so it’s not very different.