Help me get a basic education in cryptocurrency

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BeaglesRule
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Help me get a basic education in cryptocurrency

Post by BeaglesRule »

I’ve been reading about Bitcoin for a while now and am still clueless. I’ve read the Bogleheads forum comments on the current topic “For those adding crypto as an asset class to their AA” and checked out the links within and am still in the dark. To give you an idea on how lost I am - Coinbase was listed on Nasdaq this past week - is Coinbase cryptocurrency or a holding company/bank that holds the currency?
Can someone recommend articles, a blog, an author, or a website that will help me to understand what it’s all about, how it’s bought and sold, wallets, etc. I have no idea yet if I will eventually buy some but I’d like to at least understand enough to not embarrass myself when people are discussing the subject.
decapod10
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Re: Help me get a basic education in cryptocurrency

Post by decapod10 »

Coinbase is an exchange, mostly used to exchange fiat (USD, EURO, etc) to cryptocurrencies. Coinbase is most analgous to Fidelity/Schwab/Vanguard, etc where you can exchange USD for stocks. Competitors to Coinbase include Gemini, Kraken, etc.

You can either keep your cryptocurrency on your Coinbase exchange account, or you can transfer it to your personal wallet.

There are other ways to buy cryptocurrency, such as Paypal, Robinhood, etc, but those types of places have heavy restrictions on how you can use/move your cryptocurrency.

The biggest Cryptocurrencies are Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), but there are thousands of different cryptocurrencies that have different uses.

If there's a specific thing you would like to know about crypto we could probably explain depending on what you are looking to do.
health teacher
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Re: Help me get a basic education in cryptocurrency

Post by health teacher »

Check youtube. There is a lecture from a college professor from a few years ago and I'm sure there are other good sources of info. Just be weary as the YouTube video that shows up first or has the most views might not be the "best". Basic author, purpose, target audience, analysis can help you determine if the video is credible.

I think the epiphany for me was when I realized a dollar is just a piece of paper. Also, thinking about how skeptical some people were about the internet in the 90's. I don't have any deep info on or complete understanding of crypto, but I do believe it's legitimacy is increasing, obviously financial institutions agree.

I think of it as kind of like the craft beer market from 10 years ago. There are so many options right now and it's booming, but eventually big money will find a way to control this market.
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JoMoney
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Re: Help me get a basic education in cryptocurrency

Post by JoMoney »

BeaglesRule wrote: Sat Apr 17, 2021 9:28 pm... I’d like to at least understand enough to not embarrass myself when people are discussing the subject.
It's the crypto hucksters that should be embarrassed.
If you don't have any natural need or use of the product, and it's only "growth" in value is from convincing more people (and their money) into the pyramid scheme, it's not something you should feel compelled to get involved in. Would you be embarrassed for not selling some catalog product or diet bars/drinks that require you to enlist new sales people?
Crypto is the The Emperors New Clothes.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Normchad
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Re: Help me get a basic education in cryptocurrency

Post by Normchad »

It’s like gold, except it has no industrial uses, or ornamental uses. It’s a scam, that some people are getting rich from.
Williams57
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Re: Help me get a basic education in cryptocurrency

Post by Williams57 »

I have listened to an audiobook called "The Age Cryptocurrency" by Casey and Vigna. It's actually pretty old at this point (5-6 years old), but gives you a good historic overview. And because it's old it's probably available at your local library app immediately.
alluringreality
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Re: Help me get a basic education in cryptocurrency

Post by alluringreality »

health teacher wrote: Sun Apr 18, 2021 9:19 am I think the epiphany for me was when I realized a dollar is just a piece of paper.
This simplification effectively ignores how physical dollars are marked "Federal Reserve Note" and "legal tender for all debts, public and private". As a United States citizen, unfortunately all pulp does not carry those additional terms. My understanding is that the United States treats cryptocurrency as taxable assets or property, rather than currency.
Last edited by alluringreality on Sun Apr 18, 2021 11:21 am, edited 1 time in total.
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starfury
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Re: Help me get a basic education in cryptocurrency

Post by starfury »

Anyone interested in investing in bitcoin, etc. probably should read Bruce Schneier's take on crytocurrency, to better understand potential (perhaps inevitable?) worst case scenarios.
Bitcoin’s Greatest Feature Is Also Its Existential Threat

The cryptocurrency depends on the integrity of the blockchain. But China’s censors, the FBI, or powerful corporations could fragment it into oblivion.

(...)

The philosophy behind Bitcoin traces to the earliest days of the open internet. Articulated in John Perry Barlow's 1996 Declaration of the Independence of Cyberspace, it was and is the ethos of tech startups: Code is more trustworthy than institutions. Information is meant to be free, and nobody has the right—and should not have the ability—to control it.

But information must reside somewhere. Code is written by and for people, stored on computers located within countries, and embedded within the institutions and societies we have created. To trust information is to trust its chain of custody and the social context it comes from. Neither code nor information is value-neutral, nor ever free of human context.

Today, Barlow’s vision is a mere shadow; every society controls the information its people can access. Some of this control is through overt censorship, as China controls information about Taiwan, Tiananmen Square, and the Uyghurs. Some of this is through civil laws designed by the powerful for their benefit, as with Disney and US copyright law, or UK libel law.

Bitcoin and blockchains like it are on a collision course with these laws. What happens when the interests of the powerful, with the law on their side, are pitted against an open blockchain? Let’s imagine how our various scenarios might play out.

(...)

Bitcoin attracted a following for its openness and immunity from government control. Its goal is to create a world that replaces cultural power with cryptographic power: verification in code, not trust in people. But there is no such world. And today, that feature is a vulnerability. We really don’t know what will happen when the human systems of trust come into conflict with the trustless verification that makes blockchain currencies unique. Just last week we saw this exact attack on smaller blockchains—not Bitcoin yet. We are watching a public socio-technical experiment in the making, and we will witness its success or failure in the not-too-distant future.
https://www.wired.com/story/opinion-bit ... al-threat/
Gadget
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Re: Help me get a basic education in cryptocurrency

Post by Gadget »

You'll get a healthy dose of skepticism from bogleheads when discussing crypto.

If you want to learn about it without the negative slant, you probably need to read on reddit. I'd start with https://www.reddit.com/r/BitcoinBeginners/ and move to https://www.reddit.com/r/CryptoCurrency/.

It's hard to answer such broad questions though. If you have more specific ones, that'd be easier to answer.
SlowMovingInvestor
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Re: Help me get a basic education in cryptocurrency

Post by SlowMovingInvestor »

health teacher wrote: Sun Apr 18, 2021 9:19 am Also, thinking about how skeptical some people were about the internet in the 90's
People were skeptical about Internet valuations (and they were mostly right as the bust showed). There were not many people (a few exceptions, but not too many) who were skeptical of the technology and it's applications.

Netscape went public with a big valuation in 1995, barely a year after the Internet became somewhat mainstream, and 2 after Mosaic was released. Microsoft released IE3 a year after that.

Schwab created it's first web site with trading in 1996. Things moved very fast, with real world applications exploding (crypto is way, way behind on real world applications -- almost all applications are for speculation or internal use in the crypto world. Ripple is one of the few real exceptions).
Last edited by SlowMovingInvestor on Sun Apr 18, 2021 6:55 pm, edited 3 times in total.
SlowMovingInvestor
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Re: Help me get a basic education in cryptocurrency

Post by SlowMovingInvestor »

starfury wrote: Sun Apr 18, 2021 11:19 am Anyone interested in investing in bitcoin, etc. probably should read Bruce Schneier's take on crytocurrency, to better understand potential (perhaps inevitable?) worst case scenarios.

Bitcoin’s Greatest Feature Is Also Its Existential Threat

https://www.wired.com/story/opinion-bit ... al-threat/
Schneier is a smart guy with a long history in cryptology . But I think he's being hyperbolic here, both in terms of 'trustless verification' overriding human systems of trust, and in how governments might react to it.
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Watty
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Re: Help me get a basic education in cryptocurrency

Post by Watty »

BeaglesRule wrote: Sat Apr 17, 2021 9:28 pm I’ve been reading about Bitcoin for a while now and am still clueless.
One key thing is to try to figure out just what bitcoin is actually good for. That might be;

1) A store of value. (Not really, it is way too volatile for that even in less developed countries that do not have a good banking system.)

2) A better medium of exchange. (Nope, each transaction costs too much and is very slow to make it very useful for anything except for dubious dark web purchases.)

3) A speculative bet that it will go higher. (Bingo. People have done very well when they got in at the right time but the same thing can be said for people that bought lottery tickets.)

4) Other ?????

In investing there is what is called "The Greater Fool Theory" where a financial bubble will go up as long as there are bigger fools who will buy it from you at an even higher price. When the supply of fools ends the bubble collapses.

https://www.investopedia.com/terms/g/gr ... theory.asp

You descriped yourself as clueless. The big question is how many more people there are that are more clueless than you, and how much money they have.
philpill
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Re: Help me get a basic education in cryptocurrency

Post by philpill »

if you buy cyptocurrency you are like a person walking thru a dynamite factory carrying a lighted candle. you may get thru, but you'e still an idiot!
Pdxnative
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Re: Help me get a basic education in cryptocurrency

Post by Pdxnative »

You could start with some of the video lectures and readings in the MIT course taught by the prof. who now chairs the SEC:

https://ocw.mit.edu/courses/sloan-schoo ... /index.htm
Topic Author
BeaglesRule
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Re: Help me get a basic education in cryptocurrency

Post by BeaglesRule »

Thanks for the links to research, the explanations, and the sage advice along with a few chuckles. At this point as one of you mentioned it would be like me buying a lottery ticket. I plan to get up to speed on the subject and hope to avoid being "The Greater Fool”, thanks Watty. I also wonder how many clueless people are invested in crypto. I’m sure this isn’t original but my dad was fond of saying there are bears, there are bulls, and there are piggies re the market.
hyperon
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Re: Help me get a basic education in cryptocurrency

Post by hyperon »

OP,

It sounds like you're approaching Bitcoin and cryptocurrency with a very healthy dose of skepticism, and in my opinion that is the way to go. It is pretty hard to find relatively unbiased crypto content these days. I have done a fair amount of reading and listening to podcasts, and I honestly wouldn't "recommend" any of it. I am a fan of Lyn Alden (lynalden.com), and she has a few good free articles (Bitcoin, Ethereum) on her website. Though she's bullish on Bitcoin, she seems to maintain a decent amount of skepticism. This is a good place to start: https://www.lynalden.com/misconceptions-about-bitcoin/.

EDIT: I think Mike Green is a great Bitcoin skeptic to listen to (just Google him). He was recently on a Real Vision Network Podcast "battling" with Anthony (Pomp) Pompliano, one of the Bitcoin bulls that people listen to for reasons I really don't understand (https://www.realvision.com/shows/the-in ... on-bitcoin).

My advice: ignore anyone that says anything with certainty. There are, yet again, a number of posts already in this small thread from individuals that are certain of one thing or another, yet they make statements that are false and demonstrate that they have made little real effort to understand. On this site, nobody knows nothing, that is until you bring up crypto, and then everyone is an expert, and everyone "knows" it's a scam. They might be right, but they don't "know" they are.

I'd like to say that we'll see in 10 years or so, but maybe not, because maybe it'll just be a 20 trillion dollar market cap scam then.
Last edited by hyperon on Mon Apr 19, 2021 12:55 am, edited 1 time in total.
fwellimort
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Re: Help me get a basic education in cryptocurrency

Post by fwellimort »

I think of bitcoins now like I see rare baseball cards.

People want bitcoins currently hence they have value.
Bitcoins have finite cap of 21 million (some cryptos have no cap). A lot of people refer bitcoin as the original 'currency of the Internet'.
I would think of bitcoin as more of a 'collectible' of that just like those rare baseball cards.
Something of a 'I was part of the original Internet crypto-coin' token.
Something that you could show off to your grand-kids one day? "Look, I have a piece of the original currency of the World".

At end of day, the entire crypto sphere is a non-productive asset.
It's all speculations. Pump and dumps, ponzi schemes, pyramid schemes, etc. You name it.
Everything that is possible in speculations is in the crypto market in a very extreme form.

If cryptocurrency doesn't make much sense, then don't fret too much.
My cryptography professor back when I was in college also could not understand bitcoins.
And after taking a few courses with her on blockchain and all.. I can say with confidence..
I still have no idea what cryptocurrencies are trying to achieve.

All I know is. It goes up. And it goes down. Some people make a lot of money. Some people lost (and will lose) a lot of money.
One of my college friend's family made a realized gain of half a billion dollars from Ethereum.
Just typing it.. I'm confused if I'm in a dream or not. But I guess that's life. Shrugs. I'm just a fool for not listening to him at the time.

The cryptocurrency market as a whole could be the next tulip bubble. Maybe it isn't (bubbles don't need to pop after all).
I personally don't have a penny on cryptocurrencies and I'm fine with it. I know 3 people who made money from it: two made like a thousand dollars each while the third made half a billion (just ...).

Money at end day is supply/demand. No money is being 'created'. Cryptocurrency is just a form of wealth transfer with extra steps.
Person A giving money to Person B (and vice versa).
As for the technologies behind many cryptocurrencies, those might be interesting. I don't know. It's a topic most people (including me) don't understand. As for my stance on the field, I'm neutral-ish but not a fan of holding myself.
Last edited by fwellimort on Mon Apr 19, 2021 12:48 am, edited 5 times in total.
txhill
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Re: Help me get a basic education in cryptocurrency

Post by txhill »

I think Lyn Alden and Raoul Pal are some of the brightest thinkers about Bitcoin. They’re both macro investors and they approach it that way— not like day traders. I’d recommend the Real Vision YouTube videos, generally very good on that front.

You shouldn’t listen to anything said by people with laser eyes on their Twitter feed. Some might be smart but many approach Bitcoin as a religion and will not provide useful info.

You also should ignore anyone who hates it without understanding what it is and what it could be. Knee jerk reactions also are not useful. This will include lots of people here, many of whom are successful and disciplined investors, but also many of whom missed the boat with Nasdaq and the internet economy. Anyone who ever said, for example, that Facebook has no moat, should be ignored.
dru808
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Re: Help me get a basic education in cryptocurrency

Post by dru808 »

Tell em you don’t mess with $h@t coins, you only buy Bitcoin, maybe some ether and don’t mess with the rest.
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Prahasaurus
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Re: Help me get a basic education in cryptocurrency

Post by Prahasaurus »

JoMoney wrote: Sun Apr 18, 2021 9:42 am
BeaglesRule wrote: Sat Apr 17, 2021 9:28 pm... I’d like to at least understand enough to not embarrass myself when people are discussing the subject.
It's the crypto hucksters that should be embarrassed.
If you don't have any natural need or use of the product, and it's only "growth" in value is from convincing more people (and their money) into the pyramid scheme, it's not something you should feel compelled to get involved in. Would you be embarrassed for not selling some catalog product or diet bars/drinks that require you to enlist new sales people?
Crypto is the The Emperors New Clothes.
One of the issues in trying to learn more about crypto is you will be bombarded with extremist opinions presented as fact. This more or less describes every crypto thread on Bogleheads, sadly, and it's why I no longer engage in any debates about the efficacy, or lack thereof, of crypto. Calling people who believe crypto has great potential "hucksters" who are participating in a "pyramid scheme" is just not helpful, and does nothing to provide actionable info about crypto.

Wanting to learn more is absolutely the way to go. Educate yourself as best you can! YouTube is a great resource, but you do need to be selective about what you watch. To simplify things, I would focus on two projects at the start: Bitcoin and Ethereum. These are completely different projects, and learning about those differences is key. Avoid price discussions, that is just noise. Focus on how the protocols work, mining, Proof of Work (Bitcoin) versus Proof of Stake (Ethereum soon, as it's in transition). Learn about a few of the major projects that run on Ethereum, and why they are not operating on Bitcoin.

Also, once you have the basics, try to participate! You will quickly learn that most crypto detractors have never used crypto, or their experience is extremely superficial (perhaps sending money from one wallet to another, or purchasing crypto on a centralized exchange and leaving it there, etc.). To grasp the potential of crypto, to gain benefits today, you really need to use protocols like Aave, Synthetix, Uniswap, etc. (all of which, by the way, run on Ethereum). But that is probably months away. You first need to understand the basics.

Don't let people dissuade you for learning and trying! That is the key. I'm reminded of how intimidating the internet was at first to many, now it's simple second nature. The same will happen with crypto, and it's smart to get ahead of the curve.

Final warning: one of the main reasons you need to start small is you will make mistakes. There are few safety nets in crypto, so it's imperative you really know what you're doing. Crypto is easy and more convenient than traditional finance, but mistakes can be costly. Go slow, build confidence, you'll be fine. Also, learn about hardware wallets, and purchase one if you plan to participate in crypto with amounts over 10k USD or so. At first, you may not need a hardware wallet, especially if you are just playing with small amounts. But after a certain point, it's reckless to be active in crypto without a hardware wallet. But again, that is probably a few months away.

Good luck!
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Prahasaurus
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Re: Help me get a basic education in cryptocurrency

Post by Prahasaurus »

BeaglesRule wrote: Sun Apr 18, 2021 10:03 pm Thanks for the links to research, the explanations, and the sage advice along with a few chuckles. At this point as one of you mentioned it would be like me buying a lottery ticket. I plan to get up to speed on the subject and hope to avoid being "The Greater Fool”, thanks Watty. I also wonder how many clueless people are invested in crypto. I’m sure this isn’t original but my dad was fond of saying there are bears, there are bulls, and there are piggies re the market.
If you view crypto as simply an investment, as something to buy that will hopefully go up, as a "lottery ticket" on big gains, you are fundamentally missing what crypto is all about. With Ethereum, developers are building a decentralized world computer on top of which other decentralized projects operate. The implications are enormous.

To give one example, Coinbase, a 10-year old company, has over 4 billion USD in daily trading volume with 1000+ employees. Uniswap, a decentralized trading platform built on top of Ethereum with similar functionality to Coinbase, currently has half that daily volume, but with 12 developers in total! And Uniswap is just over 1 year old!

That is such a long way from Bitcoin or Dogecoin, I don't even know where to start. This is why I wrote you must use proper protocols like Aave or Synthetix to see what is happening today, and why it's so revolutionary. Just like you needed to use email or internet banking to start to grasp the significance of the internet in the early 90's.

But before you can play around with crypto protocols, you need to learn the fundamentals about Bitcion and Ethereum. It's very complex at the start, and many detractors simply hide their ignorance by being dismissive out of hand. Education is key.
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occambogle
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Re: Help me get a basic education in cryptocurrency

Post by occambogle »

Probably not at the beginner-level of things, but I like this website for interesting cryptocurrency news, without the "to the moon" component you sometimes find on Reddit: https://decrypt.co/
dsasdg
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Re: Help me get a basic education in cryptocurrency

Post by dsasdg »

A better approach would be to allocate 1%-5% to bitcoin and then make high-interest deposits with stablecoins on BSC.
GrowthSeeker
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Re: Help me get a basic education in cryptocurrency

Post by GrowthSeeker »

I appreciate this discussion, since I have wondered the same thing as the OP (and probably many others). One response was to ask if there was a specific question about cryptocurrency. So I thought: what is the greatest reason I haven't bought any Bitcoin?

Q: How do I resolve my crypto-reluctance related to the belief that I would be 'x' away from losing the entire value of my investment?
... where 'x' can be:
a) a forgotton password
b) a faulty thumb drive
c) a hacker
d) a Presidential Executive Order
--------
another question
Q: Can you define the word 'protocol' as it relates to cryptocurrency?
Prahasaurus wrote: Mon Apr 19, 2021 2:02 am This is why I wrote you must use proper protocols like Aave or Synthetix to see what is happening today, and why it's so revolutionary.
I understand that http is Hypertext Transfer Protocol, I know what it looks like, I know a few of the tags, and I can see some of it if I right click and select "inspect element". And I have a vague concept that IPv4 is a protocol that has to do with internet addresses.
But I don't understand what it means for a Bitcoin to have a protocol
Just because you're paranoid doesn't mean they're NOT out to get you.
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JoMoney
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Re: Help me get a basic education in cryptocurrency

Post by JoMoney »

Prahasaurus wrote: Mon Apr 19, 2021 1:49 am
JoMoney wrote: Sun Apr 18, 2021 9:42 am
BeaglesRule wrote: Sat Apr 17, 2021 9:28 pm... I’d like to at least understand enough to not embarrass myself when people are discussing the subject.
It's the crypto hucksters that should be embarrassed.
If you don't have any natural need or use of the product, and it's only "growth" in value is from convincing more people (and their money) into the pyramid scheme, it's not something you should feel compelled to get involved in. Would you be embarrassed for not selling some catalog product or diet bars/drinks that require you to enlist new sales people?
Crypto is the The Emperors New Clothes.
One of the issues in trying to learn more about crypto is you will be bombarded with extremist opinions presented as fact. This more or less describes every crypto thread on Bogleheads, sadly, and it's why I no longer engage in any debates about the efficacy, or lack thereof, of crypto. Calling people who believe crypto has great potential "hucksters" who are participating in a "pyramid scheme" is just not helpful, and does nothing to provide actionable info about crypto.
...
Maybe if people provided examples of legitimate uses for crypto, something people actually need, that better alternatives aren't available for, it could look like a legitimate product. If the only selling point is an expectation of selling it for more money (which can only happen by enlisting others to sink more money into it).... Then it is what it is. The hucksters can complain that it's "not helpful" for their sales pitch, but I think they either need a better story or a better product.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
health teacher
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Re: Help me get a basic education in cryptocurrency

Post by health teacher »

alluringreality wrote: Sun Apr 18, 2021 11:16 am
health teacher wrote: Sun Apr 18, 2021 9:19 am I think the epiphany for me was when I realized a dollar is just a piece of paper.
This simplification effectively ignores how physical dollars are marked "Federal Reserve Note" and "legal tender for all debts, public and private". As a United States citizen, unfortunately all pulp does not carry those additional terms. My understanding is that the United States treats cryptocurrency as taxable assets or property, rather than currency.
What I really mean is, when I first tried wrapping my head around bitcoin basically being created out of thin air it was hard for me to comprehend it's legitimacy. Then I started thinking about the dollar and how it's just paper with a value used to trade goods, services, etc. I guess it just helped me realize that bitcoin (or some other crypto) "could" become mainstream as currency in the US.
health teacher
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Re: Help me get a basic education in cryptocurrency

Post by health teacher »

SlowMovingInvestor wrote: Sun Apr 18, 2021 6:42 pm
health teacher wrote: Sun Apr 18, 2021 9:19 am Also, thinking about how skeptical some people were about the internet in the 90's
People were skeptical about Internet valuations (and they were mostly right as the bust showed).
I was too young to really experience the economics of the internet when it came around so thanks for the insight.

Seems like crypto may have a similar bubble, but who knows. I have 0% invested in crypto, by the way.
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JoMoney
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Re: Help me get a basic education in cryptocurrency

Post by JoMoney »

health teacher wrote: Mon Apr 19, 2021 7:48 am
alluringreality wrote: Sun Apr 18, 2021 11:16 am
health teacher wrote: Sun Apr 18, 2021 9:19 am I think the epiphany for me was when I realized a dollar is just a piece of paper.
This simplification effectively ignores how physical dollars are marked "Federal Reserve Note" and "legal tender for all debts, public and private". As a United States citizen, unfortunately all pulp does not carry those additional terms. My understanding is that the United States treats cryptocurrency as taxable assets or property, rather than currency.
What I really mean is, when I first tried wrapping my head around bitcoin basically being created out of thin air it was hard for me to comprehend it's legitimacy. Then I started thinking about the dollar and how it's just paper with a value used to trade goods, services, etc. I guess it just helped me realize that bitcoin (or some other crypto) "could" become mainstream as currency in the US.
People need dollars, for taxes, for loans and contracts. I can borrow dollars to buy a car and need somehow to acquire dollars to pay it back. My monthly rent is stipulated in dollars. If I trade for a profit (even from trading 'crypto') I will have taxes owed in dollars and will need dollars for that. Dollars are accepted by fiat, they're required to be a unit of account by law -which doesn't mean people will socially accept the law, but it helps. Decentralized-Crypto lacks the basic structures for it to ever gain currency as a major "currency", and if it didn't have the backing of the socially accepted authority/government, it faces serious frictions. A government sanctioned crypto-dollar could become a thing, but that's not Bitcoin.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
health teacher
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Re: Help me get a basic education in cryptocurrency

Post by health teacher »

I agree with the government sanctioned crypto bit. I just can't quite understand why governments haven't full out banned certain cryptos at this point. Perhaps creating a government sanctioned crypto dollar is too complex or time consuming.
SlowMovingInvestor
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Re: Help me get a basic education in cryptocurrency

Post by SlowMovingInvestor »

Prahasaurus wrote: Mon Apr 19, 2021 2:02 am
To give one example, Coinbase, a 10-year old company, has over 4 billion USD in daily trading volume with 1000+ employees. Uniswap, a decentralized trading platform built on top of Ethereum with similar functionality to Coinbase,currently has half that daily volume, but with 12 developers in total! And Uniswap is just over 1 year old!

That is such a long way from Bitcoin or Dogecoin, I don't even know where to start. This is why I wrote you must use proper protocols like Aave or Synthetix to see what is happening today, and why it's so revolutionary. Just like you needed to use email or internet banking to start to grasp the significance of the internet in the early 90's.
Uniswap doesn't have fiat to crypto conversion. [ And it doesn't have several other features that Coinbase does]. Also, lots of widely used open source has just a few developers. That doesn't mean the open source platform by itself is worth tens of billions .

Oh, and there was no Internet banking in the early 90s. The best you could get was dialin directly to a company's servers over a modem.
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JoMoney
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Re: Help me get a basic education in cryptocurrency

Post by JoMoney »

health teacher wrote: Mon Apr 19, 2021 8:09 am I agree with the government sanctioned crypto bit. I just can't quite understand why governments haven't full out banned certain cryptos at this point. Perhaps creating a government sanctioned crypto dollar is too complex or time consuming.
My guess, is it's not a legitimate threat to the currency, and banning people from doing things they fully consent to that isn't hurting outsiders seems a bit egregious. Frankly, I agree with a lot of the liberty minded ethos of the "crypto community" I just think it's a lousy product. Despite being used for things like skirting sanctions and other illegal activities, much of that can be controlled because the government still controls the real underlying currency people want/need to redeem crypto for. All of the banking act rules apply to crypto-exchanges that wish to operate in the U.S., and if you start exchanging it for currency outside of the regulated exchanges, the government can enforce laws prohibiting operating an "unregulated money service business" (something people have already been indicted for).
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SlowMovingInvestor
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Re: Help me get a basic education in cryptocurrency

Post by SlowMovingInvestor »

Quick Comment:

Government backed cryptocurrency is a very different beast from BTC or other tokens. It may not even need a blockchain, just a conventional distributed database.

Or even if it used blockchain, it'd use a permissioned blockchain, with only a few participants, maybe just one (the central bank). Not a public blockchain. So it wouldn't need consensus mechanisms such as proof of work that you require in public blockchains. That would make it far more efficient.
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Re: Help me get a basic education in cryptocurrency

Post by Valuethinker »

health teacher wrote: Mon Apr 19, 2021 8:09 am I agree with the government sanctioned crypto bit. I just can't quite understand why governments haven't full out banned certain cryptos at this point. Perhaps creating a government sanctioned crypto dollar is too complex or time consuming.
And they have. In countries with foreign exchange controls. The Iranian electricity grid alledgedly due to bitcoin miners.

But also, what if crypto becomes the main currency on "the dark web"? How long would governments allow that to continue, given almost by definition we are talking drugs, pornography etc... ?
GregG3
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Re: Help me get a basic education in cryptocurrency

Post by GregG3 »

Interesting fact about Bitcoin, not widely discussed, is the ultra-concentration of ownership. Around 95% of all minted Bitcoins are owned by 2% of Bitcoin holders!! Perhaps this alone explains the wild volatility on any given day.
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Re: Help me get a basic education in cryptocurrency

Post by health teacher »

Valuethinker wrote: Mon Apr 19, 2021 8:34 am
But also, what if crypto becomes the main currency on "the dark web"?
What's the currency of choice on the dark web now?
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Re: Help me get a basic education in cryptocurrency

Post by Prahasaurus »

JoMoney wrote: Mon Apr 19, 2021 7:45 am
Prahasaurus wrote: Mon Apr 19, 2021 1:49 am
JoMoney wrote: Sun Apr 18, 2021 9:42 am
BeaglesRule wrote: Sat Apr 17, 2021 9:28 pm... I’d like to at least understand enough to not embarrass myself when people are discussing the subject.
It's the crypto hucksters that should be embarrassed.
If you don't have any natural need or use of the product, and it's only "growth" in value is from convincing more people (and their money) into the pyramid scheme, it's not something you should feel compelled to get involved in. Would you be embarrassed for not selling some catalog product or diet bars/drinks that require you to enlist new sales people?
Crypto is the The Emperors New Clothes.
One of the issues in trying to learn more about crypto is you will be bombarded with extremist opinions presented as fact. This more or less describes every crypto thread on Bogleheads, sadly, and it's why I no longer engage in any debates about the efficacy, or lack thereof, of crypto. Calling people who believe crypto has great potential "hucksters" who are participating in a "pyramid scheme" is just not helpful, and does nothing to provide actionable info about crypto.
...
Maybe if people provided examples of legitimate uses for crypto, something people actually need, that better alternatives aren't available for, it could look like a legitimate product. If the only selling point is an expectation of selling it for more money (which can only happen by enlisting others to sink more money into it).... Then it is what it is. The hucksters can complain that it's "not helpful" for their sales pitch, but I think they either need a better story or a better product.
I've given the example of Uniswap many times. Many times. Your thoughts on Uniswap? Your thoughts on how it compares to Coinbase or Kraken or any other centralized crypto exchange? Is decentralized trading - no KYC, trades are practically instantaneous, anyone can participate - a legitimate use of crypto? You can use Uniswap with anything that is tokenized. And the trading options there dwarf what you can trade on traditional exchanges. And while right now that means only crypto, that is going to change in the future. But even as it is now, it's a legitimate alternative to centralized exchanges. Now. It handles billions of dollars a day in transactions. Now. So why would people go there and pay fees -trading over a billion dollars a day - if Uniswap wasn't offering a valuable service? Thoughts on that specific protocol?

Aave, where you can deposit your USDC (or DAI, or ETH, etc.) and earn around 8-10% (on average, it varies significantly), paid by people who need access to USDC (or similar) short term and are willing to pay for that access? Over collateralized loans in which a decentralized platform sets borrowing and lending rates? Thoughts on that specific platform? Have you used it once? Do you think earning low risk returns of 8-10% from dollar stablecoins is a legitimate use case for crypto? I certainly do, which is why I have a lot of my cash at Aave earning 5-10x more than I could in a money market account. Is Aave adding value to me by providing 5-10x returns over what Vanguard Money Market funds provide? Again, thoughts on Aave? Aave has around 7 billion dollars locked in their smart contracts. And they are growing like crazy.

Barnbridge, which offers stable returns on deposits (not variable rates like Aave), similar to bonds in traditional finance? Alchemix, where you take out a loan in USD using crypto as collateral, and the loan is paid back by the protocol itself (generating yield on your collateral in the background), allowing Bitcoin or ETH holders to buy cars or homes with their crypto without ever spending anything from their collateral, just locking it into the Alchemix protocol until the collateral has earned enough to pay back the loan? Synthetix which provides derivatives trading on crypto, commodes like gold, global stock indices, and currency speculation? Again, fully decentralized, no KYC, no forms to fill out, etc. You can use Synthetix to make zero slippage currency exchange. Any value there to someone in the world? What do you think? Yearn Finance, which allows users to optimize their earnings on crypto assets through lending and trading services, basically an automated financial adviser designed to maximize yields with select tokens (used by Alchemix to generate yield to pay back loans)... I'll stop there, because there are so many new and fascinating protocols popping up daily. So much innovation it's just going to eat traditional finance for lunch.

Are you aware of any of these protocols? Have you used any of them? Thoughts on them at all? Dogecoin jokes are fun, but why don't we have a discussion about what is really happening in crypto? I've tried to explain this all on multiple occasions, most of the time my posts are simply ignored, and then the same people will claim in subsequent threads how crypto solves no problems, etc. So you see, it's all rather pointless to even discuss this here, sadly... I told myself I will not get dragged into another discussion on crypto's efficacy here at Bogleheads for that very reason. So I'll just leave it at that!
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Prahasaurus
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Re: Help me get a basic education in cryptocurrency

Post by Prahasaurus »

SlowMovingInvestor wrote: Mon Apr 19, 2021 8:17 am
Prahasaurus wrote: Mon Apr 19, 2021 2:02 am
To give one example, Coinbase, a 10-year old company, has over 4 billion USD in daily trading volume with 1000+ employees. Uniswap, a decentralized trading platform built on top of Ethereum with similar functionality to Coinbase,currently has half that daily volume, but with 12 developers in total! And Uniswap is just over 1 year old!

That is such a long way from Bitcoin or Dogecoin, I don't even know where to start. This is why I wrote you must use proper protocols like Aave or Synthetix to see what is happening today, and why it's so revolutionary. Just like you needed to use email or internet banking to start to grasp the significance of the internet in the early 90's.
Uniswap doesn't have fiat to crypto conversion. [ And it doesn't have several other features that Coinbase does]. Also, lots of widely used open source has just a few developers. That doesn't mean the open source platform by itself is worth tens of billions .

Oh, and there was no Internet banking in the early 90s. The best you could get was dialin directly to a company's servers over a modem.
Uniswap allows for stablecoin to crypto trades. Stablecoins are the equivalent to fiat. Of course Uniswap doesn't allow you to trade in fiat, it's like saying Amazon doesn't accept cash on-line, you must pay with a credit or debit card. Once the US issues its own digital currency, I'm sure it will be accepted by Uniswap. Until then, DAI, Tether, or USDC will have to do.
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Re: Help me get a basic education in cryptocurrency

Post by Prahasaurus »

GregG3 wrote: Mon Apr 19, 2021 8:50 am Interesting fact about Bitcoin, not widely discussed, is the ultra-concentration of ownership. Around 95% of all minted Bitcoins are owned by 2% of Bitcoin holders!! Perhaps this alone explains the wild volatility on any given day.
This is a misrepresentation of the data.

Every major crypto exchange, company, mining operation, entity, and yes, every person, has bitcoin in an address (or multiple addresses) on the Bitcoin blockchain. How do you know if that address is for Joe Smith, Coinbase, Deutsche Bank, or Tesla Motors? You don't. It's like counting Bank of America as one US dollar holder, the same as Joe Smith. Then saying the US dollar is way over-concentrated in the hands of a few based on counting Bank of America and Wells Fargo and the European Central Bank as "people," similar to Joe Smith.
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Valuethinker
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Re: Help me get a basic education in cryptocurrency

Post by Valuethinker »

health teacher wrote: Mon Apr 19, 2021 9:23 am
Valuethinker wrote: Mon Apr 19, 2021 8:34 am
But also, what if crypto becomes the main currency on "the dark web"?
What's the currency of choice on the dark web now?
If we have to ask ... we don't have to know ;-).
:? :?
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Re: Help me get a basic education in cryptocurrency

Post by Valuethinker »

JoMoney wrote: Mon Apr 19, 2021 8:22 am
health teacher wrote: Mon Apr 19, 2021 8:09 am I agree with the government sanctioned crypto bit. I just can't quite understand why governments haven't full out banned certain cryptos at this point. Perhaps creating a government sanctioned crypto dollar is too complex or time consuming.
My guess, is it's not a legitimate threat to the currency, and banning people from doing things they fully consent to that isn't hurting outsiders seems a bit egregious. Frankly, I agree with a lot of the liberty minded ethos of the "crypto community" I just think it's a lousy product. Despite being used for things like skirting sanctions and other illegal activities, much of that can be controlled because the government still controls the real underlying currency people want/need to redeem crypto for. All of the banking act rules apply to crypto-exchanges that wish to operate in the U.S., and if you start exchanging it for currency outside of the regulated exchanges, the government can enforce laws prohibiting operating an "unregulated money service business" (something people have already been indicted for).
In fact, Central Banks are well on the way to creating an electronic currency, a sort of Special Drawing Right, for use as a reserve currency in transactions between Central Banks.

In the old mafia logic, when the Feds get into a business, the good days are over ...
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Re: Help me get a basic education in cryptocurrency

Post by Valuethinker »

health teacher wrote: Mon Apr 19, 2021 8:09 am I agree with the government sanctioned crypto bit. I just can't quite understand why governments haven't full out banned certain cryptos at this point. Perhaps creating a government sanctioned crypto dollar is too complex or time consuming.
As per my other post the Central Banks have held conferences to discuss its creation.

There will be a cryptocurrency, perhaps, for countries to exchange reserves via (as they do now with gold, and with USD).
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Re: Help me get a basic education in cryptocurrency

Post by Jags4186 »

health teacher wrote: Sun Apr 18, 2021 9:19 am
I think the epiphany for me was when I realized a dollar is just a piece of paper.
A dollar is a special piece of paper where if you don’t give the correct amount of it to the government on a government designated schedule they can take all your stuff and potentially put you in prison.
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Re: Help me get a basic education in cryptocurrency

Post by health teacher »

Valuethinker wrote: Mon Apr 19, 2021 10:48 am
If we have to ask ... we don't have to know ;-).
:? :?
Oh man, maybe I shouldn't have given my bank info to that west african prince who said he would send me a million dollars.

:oops:
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OohLaLa
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Re: Help me get a basic education in cryptocurrency

Post by OohLaLa »

I'm surprised this thread is not being moderated...

1) BeaglesRule opened this thread to get resources for learning about cryptocurrency. Since then, this thread has devolved into a hodge-podge of crypto sub-topics. Very few people actually contributed to the original intent. There are plenty of other crypto threads on the forum.

2) Can people ease off with the smarta$$ one-liners adding zero to the discussion and basically shaming people willing to learn about a new subject? I completely understand the doubts about the investment quality of crypto, even as someone who just dove in recently, but we're veering into misdirected potshots here.

3) Thanks for that MIT link, Pdxnative! I am collecting sources here and there, to piece together a better understanding of the tech, as well as investment space. Structured, academic (probably unbiased, relatively) material is really effective for me, so it's much appreciated! :beer

4) Here are a couple links from exchange/ store platforms that give some very introductory info on a few cryptocurrencies and general concepts. I think it's good for complete newcomers:
https://www.coinbase.com/learn/crypto-basics
https://ndax.io/learn/what-is-bitcoin-btc (check other sub-sections of "Learn" for other currencies)
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Re: Help me get a basic education in cryptocurrency

Post by novolog »

One of the mistakes many skeptics make is comparing Bitcoin to visa. Visa can support an enormous amount of transactions and is extremely centralized, but visa payments are not final settlement. There is a reason you can call them and have them cancel the transaction...

Bitcoin is optimizing for security rather than scalability. It should be compared to something like fedwire instead of visa.

Bitcoin is not going to replace the USD, or any currency for that matter. Bitcoin and USD would coexist in the future, since they solve different problems. USD would be used to spend, Bitcoin would be used to save since it cannot be debased.

If you are interesting in learning more about bitcoin I suggest reading the Bitcoin Standard.

If you want something shorter - both of the following articles are great comprehensive reads:

https://unchained-capital.com/blog/bitc ... alization/

https://vijayboyapati.medium.com/the-bu ... ecc8bdecc1
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SlowMovingInvestor
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Re: Help me get a basic education in cryptocurrency

Post by SlowMovingInvestor »

Prahasaurus wrote: Mon Apr 19, 2021 10:39 am
SlowMovingInvestor wrote: Mon Apr 19, 2021 8:17 am
Prahasaurus wrote: Mon Apr 19, 2021 2:02 am
To give one example, Coinbase, a 10-year old company, has over 4 billion USD in daily trading volume with 1000+ employees. Uniswap, a decentralized trading platform built on top of Ethereum with similar functionality to Coinbase,currently has half that daily volume, but with 12 developers in total! And Uniswap is just over 1 year old!
Uniswap doesn't have fiat to crypto conversion. [ And it doesn't have several other features that Coinbase does]. Also, lots of widely used open source has just a few developers. That doesn't mean the open source platform by itself is worth tens of billions .
Uniswap allows for stablecoin to crypto trades. Stablecoins are the equivalent to fiat. Of course Uniswap doesn't allow you to trade in fiat, it's like saying Amazon doesn't accept cash on-line, you must pay with a credit or debit card. Once the US issues its own digital currency, I'm sure it will be accepted by Uniswap. Until then, DAI, Tether, or USDC will have to do.
You were saying it was equivalent to Coinbase. I'm pointing out that it's not, you still need conversion from $/Euro/whatever back and forth to stablecoins (or any digital token for that matter). That's where expenses such as KYC and AML come in (which the likes of Gemini, Coinbase and Circle are currently eating).

[Oh, and Amazon does accept COD in several markets, notably India]
Last edited by SlowMovingInvestor on Mon Apr 19, 2021 2:28 pm, edited 1 time in total.
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Re: Help me get a basic education in cryptocurrency

Post by SlowMovingInvestor »

novolog wrote: Mon Apr 19, 2021 1:55 pm One of the mistakes many skeptics make is comparing Bitcoin to visa. Visa can support an enormous amount of transactions and is extremely centralized, but visa payments are not final settlement. There is a reason you can call them and have them cancel the transaction...

Bitcoin is optimizing for security rather than scalability. It should be compared to something like fedwire instead of visa.
Even wires can be reversed, if caught in time. Or there are legal processes to recover them, although the courts may rule against you (cf Citi's blooper wiring funds to Revlon creditors recently). And wires are subject to verification or other KYC/AML rules.

Personally, I think reversibility (especially for credit transactions) should be seen as a desirable feature since humans make mistakes and programs have bugs.
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Re: Help me get a basic education in cryptocurrency

Post by arcticpineapplecorp. »

BeaglesRule wrote: Sun Apr 18, 2021 10:03 pm I’m sure this isn’t original but my dad was fond of saying there are bears, there are bulls, and there are piggies re the market.
bulls make money, bears make money and pigs get slaughtered.

https://www.google.com/search?client=fi ... laughtered.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
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Re: Help me get a basic education in cryptocurrency

Post by Prahasaurus »

SlowMovingInvestor wrote: Mon Apr 19, 2021 2:19 pm
Prahasaurus wrote: Mon Apr 19, 2021 10:39 am
SlowMovingInvestor wrote: Mon Apr 19, 2021 8:17 am
Prahasaurus wrote: Mon Apr 19, 2021 2:02 am
To give one example, Coinbase, a 10-year old company, has over 4 billion USD in daily trading volume with 1000+ employees. Uniswap, a decentralized trading platform built on top of Ethereum with similar functionality to Coinbase,currently has half that daily volume, but with 12 developers in total! And Uniswap is just over 1 year old!
Uniswap doesn't have fiat to crypto conversion. [ And it doesn't have several other features that Coinbase does]. Also, lots of widely used open source has just a few developers. That doesn't mean the open source platform by itself is worth tens of billions .
Uniswap allows for stablecoin to crypto trades. Stablecoins are the equivalent to fiat. Of course Uniswap doesn't allow you to trade in fiat, it's like saying Amazon doesn't accept cash on-line, you must pay with a credit or debit card. Once the US issues its own digital currency, I'm sure it will be accepted by Uniswap. Until then, DAI, Tether, or USDC will have to do.
You were saying it was equivalent to Coinbase. I'm pointing out that it's not, you still need conversion from $/Euro/whatever back and forth to stablecoins (or any digital token for that matter). That's where expenses such as KYC and AML and the like come in (which the likes of Gemini, Coinbase and Circle are currently eating).

Oh, and Amazon does accept COD in several markets, notably India]
Uniswap is equivalent to Coinbase, you are arguing silly details. It's like saying Coke is different from Pepsi because one is based in Atlanta while the other is not. I have no idea what you mean by Coinbase eating expenses.... And you realize converting from USD to USDC is a 1:1, one click conversion, right? Not an issue. When the US finally has its digital currency, the lines will be blurred further.

If I want to buy ETH, I can do it on Coinbase or Uniswap. The fact that for one I need to transfer USD and the other requires I have USDC (or DAI, or BTC, etc., etc.) is just meaningless.
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Re: Help me get a basic education in cryptocurrency

Post by ballons »

BeaglesRule wrote: Sun Apr 18, 2021 10:03 pm I also wonder how many clueless people are invested in crypto. I’m sure this isn’t original but my dad was fond of saying there are bears, there are bulls, and there are piggies re the market.
Imagine you times millions all experiencing FOMO. It seems the only use now is to buy and lend it out to other people so they can buy more. Leveraged fiat crypto--what could go wrong?

Those that own crypto need you to buy into it so they can cash out.
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