Topic: Litecoin implementing confidential transactions (Read 3430 times)

So what ?  Money has nothing to do with gold.  Even M0 money is not related to gold.  M0 money is just as fictional as bitcoin is: just a number of tokens, with that difference that the central bank can mine as many of these tokens as she likes (not entirely, there have to be given a kind of debt IOU).  There is NO "basis value" in the fiat system, not more than there is in bitcoin.  And that's a good thing.  Money is imaginary.


Of course.  Fractional banking was invented with gold already.  There's no difficulty doing fractional banking on top of bitcoin, not more than on top of gold, or on top of M0 imaginary central bank tokens.

So *there's no point* in using bitcoin as "base money" because you can build a very similar fiat system on top of it as ours.  
You could do like in the 1930ies: forbid people to do "exchange token withdrawals".  You can still transmit "bitcoin" from exchange to exchange, but it is forbidden to withdraw them.  In the 1930ies, the US forbade people to exchange their dollars for real gold, although dollars were supposed to be backed by gold at that time.

In fact, you could just require much higher "withdrawal fees" (say, 50% of the value) than "exchange transmission fees" (only 0.5% of the value, when on chain bitcoin transactions will be, because of block size limitations, already 10% of the transaction value of an average user transaction).  Then, most people will use MOSTLY exchange IOU "bitcoins", and exchanges can do fractional bitcoin banking with a ratio of 20 - 1.
Exchanges can do this, because they do only a few settlements per day as they have direct lightning-like micropayment channels between them.

Geez, you really do have time. ^ This is wrong in so many levels. Long story short. USA has how much gold? Like $500 - $600 billion, but the M2 money in circulation are like $12 - $13 trillion. These "money" includes (very often) imaginary assets. You can't say:
- Give me $1 trillion. I have 25 million BTC in assets.
- Bite me! There are not more than 21 million.

Period.

This of course can change in the future. But that is why I am not ruling everything out, it would be stupid. The number of outcomes is big.

I think you have some misconception about the fiat system, and about "power".  Carl in Somalia will always work for $0.1 per hour.  With, or without crypto.  That's in the nature of power.  The Egyptians didn't have sophisticated monetary systems, but Carl did work for peanuts too, and the Pharaoh was rich, and his aristocracy too.  This is in the nature of human hierarchical organization. It is not the result of the financial system, but the result of hierarchical power.
The financial system, of any nature, ends up serving the purposes of hierarchical power, but the financial system is not the CAUSE of that power, nor of that wealth.  It is just one of the means.

Strange as it seems, our financial fiat system doesn't work so badly.  What makes rich, is not so much the financial system in itself, but rather two classes of unfair property rights: intellectual property rights, and the rights to natural resources.  These are the two lever arms that make big fortunes.  Think Bill Gates, think oil.  Think Virgin, think Monsanto.  The evil is in these concepts of ownership: the right to forbid people from thinking and imitating (which is the nature of our species) and punish them if they do, and the right to own part of nature, on which we depend.  This is today's lever of power and wealth.  It is guaranteed by hierarchical power, itself framed on military violence and propaganda. 

The villain in the fiat system is the seigniorage.  But here, the good old US of A did a master job in handling the world's resources in their currency, and making their currency the "reserve currency" (a totally fake idea that finds its roots in the gold bugs, not understanding the abstract nature of money).  Having one's money as a world reserve currency actually means that you're the only one able to buy the world with a printer.  That's what the USA did, and their "external debt" is in fact nothing else but the measure of how much they bought the world with reserve paper.  As moreover natural resources such as petrol are denominated also in $$, they can also buy up all the resources of the world with a printer.
No other issuer of fiat can do this, because the printer would cause inflation.  But not if what you print, is stored abroad as "reserve currency".  This was an utmost brilliant move after WWII, to buy up the whole world.  This is why the US of A will do anything, including bombing the shit out of you, if ever you try to make another currency the world reserve currency.  The ironic part is that if you get their bombs on your head, most probably you were the one making them to sell them to them, or you have been giving them other resources to do so.

But if you want to see a rather well working fiat system, look at the Euro.  It is a private money, owned by a banking consortium, that has been adopted as state money by several EU states.  It kills them, because states never had the discipline to do correct bookkeeping. 

Crypto would not work much in a different way than the Euro.  Of course, crypto is not a debt-based system and doesn't have the same elasticity, but grossly, states adopting a crypto would be somewhat similar to the introduction of the Euro in several EU countries: the state loses its privilege to create money.  That doesn't stop states from squeezing out taxes out of every little bit of value you produce or hold.

You are right that M2 money are numbers in a computer.  But so is M1 money.  M1 money is numbers in the central bank computer ; M2 is numbers in a commercial bank computer.  They have parity in value, because commercial banks arrange that if you want to, you can always exchange limited amounts of M2 into M1.  And they use M1 amongst them to do their accountancy, because of course bank B2 doesn't accept bank B1's money, but only M1 money.  So if a customer Joe of B1 sends M2 money from B1 to Jack, customer of B2, what actually happens, is that B1 must send the same amount of M1 money from B1 to B2.  At that point, B1 destroys the equivalent amount of M2 money in Joe's account is destroyed by B1, and B2 creates the same amount of B2 money in Jack's account.

This is like on an exchange:
If you've sent 10 bitcoin to Coinbase, then Coinbase has now 10 bitcoin, and creates, out of nothing, 10 "bitcoin IOU" on its website for you.

There could be a system that you send those "10 bitcoin IOU" on Coinbase to Jack, who is on Kraken.  This function doesn't exist, but it could very well exist one day.  What would happen is that if you do an order of 10 bitcoin from your "coinbase account" to Jack's Kraken account, coinbase destroys your IOU on its website, and sends 10 real bitcoin to Kraken.  Kraken now gives 10 website bitcoin IOU in Jack's Kraken account. 

This is how the fiat system more or less works.

The fiat system has more to it.  If you go to a bank, and you want to borrow money to buy a house, then:
- the bank INVENTS NEW bank money for you, and gives you bank money IOU (a bank account)
- takes your guaranteed promise to pay back, with the mortgage on newly bought your house

The new bank money will go somewhere else when you buy your house with the borrowed money.  So the bank will have to transfer M1 money to the other bank.  However, in as much as the other bank also has a customer that borrowed money, and sent that money to your bank, both banks are "in equilibrium".

So Coinbase and Kraken could do the same.  You could go and borrow bitcoin IOU at coinbase.  Against your mortgage, coinbase could INVENT NEW bitcoin IOU in your account.  If you transfer them to the guy form whom you buy the house, and who has a Kraken account, you would send your bitcoin IOU from your borrowing, to his Kraken account.  Coinbase would have to send real bitcoin doing so.  But maybe a Kraken customer did the same, and bought a house from a Coinbase customer.  So in the end, Coinbase and Kraken have been handling "website bitcoin IOU" like banks handle bank account money.

They can permit to have much more bitcoin IOU than there are bitcoin on the chain.  Like banks having about 20 times more bank money than there is central bank money.

It would be very similar.  And the system doesn't work so badly.

Uh.  Of course I can buy that house with a bank account.  That's how most houses are bought.  And no, $ 300 000 in a bank account "ain't worth shit", get real.  Of course it is worth a lot.  You can buy a lot of goods and services with it.   I suppose you're thinking of "if ever the state decides, they can whipe it out".  True, but they can also bomb your house.  In reality, today, and here, $300 000 on a bank account can buy a lot of valuable stuff.  And that's the only thing that measures value, together with the direct usage value of the thing.


But my whole question is: why on earth would average Joe want to use crypto, and not his bank account ?  What PURPOSE does this crypto serve ?  You run around that question, but you never answer it.  It seems that your goal is "crypto adoption".  But to obtain what ?



Fungibility has a very precise definition.  You can look up wiki if you want.  It is not "acceptability" or "liquidity".  These are different concepts.

My whole point is that, apart from a ripping-off zero sum game, crypto has ONLY a meaning as a free currency, to do those trades that cannot easily be done with fiat.  I can't see any other useful meaning in crypto.


I have essentially unlimited state-funded resources to waste my time here.  Unfair competition, I know

There is a difference between holding $300k in a bank account and owning a house worth $300k. First ain't worth shit and second is a property. But that doesn't change the fact that you can't buy that house with your bank account. Simplicity is what matters, lets try not to dig that deeply. The average Joe (I will always use that as example, because it is what cryptos needs in order to get better adoption) doesn't know how a bank is operating. All he cares is to deposit/withdraw/use the money. Cryptocurrencies must stick to that! Why the hell I need to listen/watch countless of hours of explanations on how Bitcoin works? Or Litecoin for that matter? There are "geeks" who are taking care off. I am Joe and I don't care!

Currently our discussion is pointless, because I'm not trying to convince you that cryptocurrencies are money. Same applies for fungibility. We both have our own opinions, but here's the thing... our opinion doesn't really matter.

That's it... I now need to open (and try to repear) a smartphone and a laptop. Then I must do the dishes.

Cheers,

EDIT: Couldn't help it...

You don't go to a hillbilly (Joe) to explain 2 hours what is Litecoin. You go to a hillbilly with:
- Hey, do you want to buy some beers and watch Nascar with 10% discount? You get 1 cow for free.

Then later on, Adam (Joe's friend) asked him what he did:
- I had few beers and watched NASCAR with 10% discount using Litecoin.
- What is Litecoin?
- Uhm.... I don't know.

After that it is the LTC's devs responsibility to keep the guy's money safe.

And that's the simple truth. Majority of the people don't know that the money are just numbers in someone's computer. US M2 money are like a $12 trillion... if not more. It is how countries with less than 600k population has a $3.6 trillion external debt (Luxembourg). That's because over a 150 different banks are operating there. Of course, at the end, Carl in Somalia works for $0.10/hour instead for $1, but that's okay if the top 1% (actually, a lot less) is fine by that.

You can't do that with crypto. Not if supply is strictly fixed.

No, that's not it.  Of course there is a difference.  Like there is a difference between $300 000 on a bank account, and owning a house worth $300 000.  This is a fundamental economic concept: liquidity.


"investing" in crypto is a zero-sum game.  USING crypto to exchange goods and services, isn't.  "investing" in crypto simply means "trying to buy crypto low, and holding it, to sell it high".  Now, I hope you agree with me, that, given that crypto in itself is a monetary asset, and hence of no intrinsic value (you cannot eat it, you cannot fuck it, you cannot enjoy it in any other way but to transact it), and *doesn't finance any means of production*, that it are tokens that do the accountancy of a zero-sum game.  At the end of the day, when the cryptocurrency is dead, and worth nothing any more (say, 3 years from now, or 1 million years from now), the only thing that has happened, is that the total value that people put into it, came also out of it.  The ONLY thing you do by "investing" in crypto, is to hope that you will be on the side of people who got more out of it, and that must of course be compensated by exactly the same amount other people got LESS out of it than they put in.  Zero-sum.

It is different if you use crypto as an intermediate store of value between selling goods/services against, say, bitcoin, to use bitcoin somewhat later, to buy other goods and services of ABOUT THE SAME VALUE.  Here, crypto had some actual USE, namely to introduce liquidity in an operation that was going to be difficult otherwise.

Investing in crypto being a zero sum game, this is NOT COMPARABLE to investing in the stock market.  If you invest in the stock market, you permit the buying of capital production goods, that will PRODUCE CONSUMER GOODS, and hence augment economic wealth.  Products that can be enjoyed, didn't exist, and now exist because they have been produced.  There has been ADDED VALUE.  The gains you can make on the stock market are related to this dividend of ADDED VALUE, made possible because you invested in production capital.  This is NOT a ZERO SUM game.  The stock market takes part of the freshly created added value of newly created products, to reward those that bought the production capital.  In a certain way, "everybody can win" on the stock market.  There is an influx of fresh value.  Not so in crypto.  Nothing of value is made because you augment the market cap of a coin by buying and holding it ; contrary to you buying shares in a new company, that will buy production capital with it, making new products, and creating value (in principle).



No, the "early bitcoin adopter" A is exactly the same.  He didn't contribute ANYTHING with his buying 1000 coins for 10 dollars and hodling.  When he sells them for 600 000 dollars, he is ripping off the buyers (B).   This 600 000 dollars of worth did flow into bitcoin, to go in the pockets of the early adopter that only put 10 dollars in it, without there having been the slightest bit of value creation by the early adopter.

Of course, those putting $600 000 in it, still hope to be early adopters, to rip off those that will pay $ 6000 for a coin.  At that moment, these new buyers (C) will pay $ 6 000 000 for those same 1000 coins, and the B guys will pocket $ 5 400 000.  In other words, A and B got value for nothing from the C guys: the A guy got $ 600 000, and the B guys got $ 5 400 000 and the C guys put $ 6 000 000 in it.

When bitcoin will have lost all value at a still later date (in 3 years, or in 100 years or in 1 million years), A, B and if they got rid of it, C, will all have gotten value for nothing from the last guys.  This is "greater fool theory" at its best.


But the "early bitcoin investor and hodler" is exactly the same.  It is just different time scales.  It is nothing else but a "greater fool theory" system.

This is totally different if MOST of bitcoin were used as a currency.  Then you don't even mind bitcoins to lose value, and you don't want them to gain in value specially: the SERVICE of fluidity is a product that has value in itself, and for which you are willing to offer some value.  But the "investing" is nothing else but ripping off the greater fool.

Forget the wikipedia. Fungibility actually means that there is no distinction between $10 bill and $10 worth of Litecoin. This is the true (and of course, my humble opinion) meaning.

I can't agree with you about the "zero-sum" game claim, and I've noticed you used it number of times. It does not generally determine what cryptocurrencies are. Otherwise, we should just rule Forex (or any kind of) trading out and go back to the stone ages.

I agree that the cryptoworld is a "field" where there are groups of people (pumpers) reaping off the average Joe and a lot of scammers and I really hate that. These people are saying "Hey, the average Joe is stupid and he is the one to blame if he loses his $5" and they might be right, but personally if I had the chance, I would skull f*ck everyone doing such things. We must be better than this and if someone is naive enough that doesn't mean that you should rip him off.

These people have no dignity!


EDIT:


Oh, wow... Of course we must care about the average Joe. This is why cryptocurrencies must be explained using simplicity. Why so many people fails to understand that? Do you personally care that there are people in Bangladesh which are making a living by fishing? You probably don't even know a single guy from that country yet its population is 170 f*cking million. That is why there are so many discussions about fungibility. So cryptocurrencies to meet different needs.

Let's forget for a moment that currently gimmicks in cryptocurrencies are mainly because some people are looking for a way to get rich quick. But we are not 2014 anymore. This will not matter in few years (if cryptocurrencies survive... or at least their idea).  

 
 

We don't care about the average Joe.  We care about the people wanting to use a free money, to do the trades that they want to do.


Adoption only matters if it serves a purpose.  Otherwise it is just another thing to rip off people in a zero sum game.

Nope.  It means that there is no distinction between the different units of a single monetary asset.  That THIS dollar bill, or THAT dollar bill, are equivalent.

https://en.wikipedia.org/wiki/Fungibility


Transfer what kind of money? M2 money?