Explain Crypto, please! I freely admit it that I'm behind the times. When I started my CPA career, the men had just..

[surfered]

...quit wearing hats. We had paper spread sheets and used pencils, granted mechanical ones as this wasn't the Dark Ages after all. The weekly updates of tax law came in the US mail and they were sorted and placed in binders. The University of Texas had one IBM System 360 in the basement of the Business Economics Building, surrounded by an air conditioned glass room with armed guards, where we submitted punch cards for our programs. The Texas Instruments hand calculator wouldn't come till much later.....

So, will someone please explain the business model of Crypto to this dinosaur. How do they make money mining it? How is the quantity of bit coin controlled, if it is?

Note: I have a short attention span and my mind tends to wander, so make it as succinct as you can.

I thank you.

[Basso8vb]

1. Unregulated scams.

[elleng]

2. Pretend

[XanaDUer2]

3. I don't understand it

I was stunned its made and using up resources. I want no part of it

[peregrinus]

4. The thing that gets me

Is that nobody really knows who came up with the concept.

[MineralMan]

5. There Is No Explanation for Crypto That Won't Make You Run Away

It's a Ponzi scheme of the worst kind. The higher the price of BitCoin, the harder it will crash. There is nothing backing any cryptocurrency. All can go away instantly at any given time.

[surfered]

6. Well, so far, all of you have been succinct. Thank you.

[brush]

8. Crashes often happens. Someone makes off with billions and aren't caught.

Sam Bankman-Fried being the exception as he's doing time.

It's a crap shoot. Sooner or later there will be a crash/theft.

You can win of lose quicker in Las Vegas.

[usonian]

7. The simplest explanation I found so far. (Bankrate)

https://www.bankrate.com/investing/what-is-cryptocurrency/#what-are-the-risks-of-crypto

Cryptocurrency: What it is and how it works

My notes: (optional)
https://www.democraticunderground.com/100219797764#post25

Crypto is an asset, not a currency. That is the main deal. To me, as an outside observer, a few things stand out.

• Its value fluctuates wildly, since it's used by speculators. It has no peg. Hence, it's not currency.

• It really is hard to convert into legal tender, and fraught with fraud.

• It takes enormous assets to create -- "mine" -- and has a giant environmental impact due to power and cooling demand ( and then came "AI", which dwarfs the damage. )

• Most, Bitcoin mainly, limit the number of tokens. For bitcoin, 21 million. Impact? I don't know, but it's like holding a closed-end fund, if you're comfortable with that.

• Despite its fluctuating value, people use it to make transactions. It seems anonymous, so all sorts of evil people use it as currency/ransom. But it has to be converted at some point, and is commonly uncovered by law enforcement.

• And, it is used to make transactions outside the regulated banking system, ( a.k.a. "Deep State" ) as in money laundering, the name of the game for Orange Caligula and his owners, Musk and Putin, and North Korea, whose economy is largely funded by bitcoin theft ) and who just happen to be big fanbois of it.

• One more thing. It's as secure as your password. People are held up or even killed to get the wallet password. Protection? Zero, nada, zilch, zero.

[surfered]

10. Thank you for that.

The article says the number is limited, but how is that controlled. With all the sophisticated hacking, it seems only a manner of time bitcoin suffers a breach. My bank guarantees against unauthorized withdrawals, and the FDIC guarantees accounts up to $250,000.

Since I'm not selling drugs, kidnapping for ransom, or money laundering, the only benefit left is speculation.

Thanks again.

[usonian]

12. A crypto token is a number, basically a complex checksum. By design, they can be limited. (Please don't ask me how)

Bitcoins are stolen all the time. They exist only online ( on a "blockchain" ) and your access is to your online "wallet", protected by your password.

No guarantees. It's the wild west. I think that the SEC wants to regulate things somehow, but the cowboys want no regulation. That is why "crypto bros" poured vast amounts of money into you-know-who's campaign.

https://www.democraticunderground.com/100219800628

Musk created (?) some crypto called dogecoin, hence his love of the term DOGE, also the name of the ruler of Venice, doge, or I am pretty certain duke, or Duce, exemplified by Benito Mussolini "Il Duce". The guy is a Bond Villain, for sure.

You can use as currency, but it's more like bartering an asset (IMO).

FWIW (I say this a lot) AG Garland has been very active protecting billionaires against bitcoin theft, and also somehow extracting bitcoin etc. from online criminals, of which there are very many. The government has loads of bitcoin assets through seizure, and now and then auctions them off.

State sponsored and other gangs are heavily involved in hacking/theft.

But other than what I read, I can't really wrap my head around this matter.

You can ignore them and live well, unless you-know-who tries to make it the US currency, which is totally absurd, impractical and disastrous, but that's how some people think, under the influence of E-Looney.

[Eugene]

9. non-expert observer's take...

Sorry if this is simplistic, as crypto is messy.

Cryptocurrency tokens or coins are arbitrary electronically generated software keys
intended to be a store of wealth. New coins are "mined" or "minted" by solving
designated math problems or cryptographically validating purchases that use the coins.
Money from buyers of the coin is stored as liquidity.

Some coins like Bitcoin and Ethereum are meant to be useful for buying thing (utility).
Most other coins are greater fool assets. Coins based on memes are notorious for this.
Dogecoin, for example, was created as a literal joke, but it got pumped by Eloon the Mollusc.

Bitcoin is meant to replicate gold (rare and hard to counterfeit), and U.S. regulators
call it a commodity while calling most of the other cryptocurrencies securities.

Cryptocurrency ownership is recorded on "immutable" electronic ledgers called a blockchains.
Blockchains are decentralized with no central bank, but are governed by a consensus of
the holders. Watch out here for "whales," super-holders who control outsized shares
of outstanding tokens. Coins/keys are stored in pseudonymous digital "wallets."
Unmasking the owner is doable, but it takes sleuthing. All of this makes crypto attractive
to libertarians, anarcho-capitalists, money launderers, scam artists, Nazis and terrorists.

Crypto is a lightly-regulated wild west. Pump-and-dump schemes (rug pulls) are rampant.
Crypto operates through "smart contracts," software that is maintained and modified
by consensus of the stakeholders. As "code is law," bad actors can use malicious code
or hacked systems to take over projects of steal liquidity.

[surfered]

14. Thank you. That helps.

[Jim__]

11. Probably more detail than you want, but if you have the time and the interest ...

The bitcoin system is explained in a 9 page pdf: Bitcoin: A Peer-to-Peer Electronic Cash System

There is a relatively short summary of the paper referenced above: The Bitcoin Whitepaper Summary.

Here is an excerpt from the summary:

The purpose of the Bitcoin network was to essentially eliminate the trust-based model of digital transactions by creating a digital representation of hard cash. Whether shopping for clothes online or using credit cards in stores, the payment standard until then was always done through financial institutions that approve and execute each transaction. By creating an electronic cash system, it eliminates the need for trust in third-party providers. The goal was accomplished by creating an asset, bitcoin, that allows peer-to-peer transactions that are immutable and encrypted through cryptography to protect users from fraud.

...

For the system to work, what is now called the “Blockchain” was created. The transactions occur in a cooperative network that is kept active by sharing the transactional tasks with all computing systems that use it. When someone wants to transfer bitcoin to another user of the blockchain, the network verifies when the sender first received that amount (previous block) and confirms the amount they are now transferring to the receiver (future block). That way, the network asserts that the amount will no longer be in the sender’s funds, with an irreversible transfer to the receiver, and so on.

...

For double-spending to be avoided, every transaction in the blockchain is verified by all existing nodes, running programs that host and synchronise copies of the whole blockchain. Most computers available today can become a node, which helps the blockchain in validating transactions and blocks. Since every transaction is publicly announced, verified by nodes and sender/receiver, the chance of double-spending is significantly reduced the more nodes the network has.

...

To prove that the transactions are functioning correctly, a Proof of Work (PoW) system was implemented. The PoW works by attributing each transaction to a random number that’s attached to a small puzzle. To conclude the transaction, the sender’s system must solve the mathematical puzzle and send it through to the receiver’s, which checks it into the chain. Once proven correct, the transaction is executed. The process of puzzle-solving locks each transaction history into blocks of the network that are piled up and grow in size as more transactions are concluded. Reversing transactions would require immense computational power; 51% of bitcoin’s entire hashpower to reverse a single hour of transactions, for instance. To ensure proper PoW, those running the operations are compensated in bitcoin according to the number of validated transactions. That’s called bitcoin mining.

more ...

[surfered]

15. Thank you

[Festivito]

13. A misused money transfer system retaining its history. As I understand it:

Started as a way to transfer money. You put in $100. Minutes later someone pulls out $99.
You put it in via a credit card into a crypto wallet. Someone gets it out into their crypto wallet, then to their card.

When you put money in, it is logged, and you get a code.
Then someone somewhere else gets that code from you and uses the code and pulls some rational number of crypto coin out of CRYPTO.
There is a 1% charge that goes to someone without a bad background who runs the computer that keeps the log.
The log method is called block chain. Copies are kept by many individuals that keep machines.
The money is generally held in actual banks.

IMNSHO it grows in value because pot is partly legal. Pot sellers make a lot of money and cannot put it in banks because pot is illegal nationally and banks are rule by the nation instead of the state. So, they anonymously put it into Crypto and that makes the value of each coin (or part of a coin) worth more and more.

...until the sellout. Which has happened a few times.
Hope that's simple enough.

[Meowmee]

16. Crypto is a scam and so is nft art

Which I believe is associated with crypto/ bitcoin I’m not sure which. Criminals are the people who are involved with crypto even worse than the ones in government probably lol