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@justinmeiners
Last active June 16, 2019 04:07
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Cryptocurrency Notes

Security

Technology is never the root of system security. Technology is a tool to help people secure what they value. Security requires people to act.

The way to beat the $5 wrench attack is to bear arms. Either your own, or employ guards, or use a safety deposit box, or rely on the police forces and army; or whatever may be appropriate and proportionate in your situation. If someone physically overpowers you then no technology on Earth can save your bitcoins.

Myths Review

The value of bitcoins are based on how much electricity and computing power it takes to mine them This statement is an attempt to apply to Bitcoin the labor theory of value

Lol, getting some Karl Marx in there.

While it may be easy to transfer bitcoins pseudonymously, spending them on tangibles is just as hard as spending any other kind of money anonymously.

If you lose your coins, indirectly all other coins are worth more due to the reduced supply.

What an attacker can do once the network is taken over is quite limited. Under no circumstances could an attacker create counterfeit coins, fake transactions, or take anybody else's money. An attacker's capabilities are limited to taking back their own money that they very recently spent

The risk of quantum computers is also there for financial institutions, like banks, because they heavily rely on cryptography when doing transactions.

On Bitcoin being wasteful:

No more so than the wastefulness of mining gold out of the ground, melting it down and shaping it into bars, and then putting it back underground again. Not to mention the building of big fancy buildings, the waste of energy printing and minting all the various fiat currencies, the transportation thereof in armored cars by no less than two security guards for each who could probably be doing something more productive, etc.

Banks are probably some of the worst offenders when it comes to resources usage.

market forces are constantly pushing mining activity to places and times where the marginal price of electricity is low or zero. These electricity products are cheap for a reason. Often, it’s because the electricity is difficult (and wasteful) to transport, difficult to store

the purchasing power of a bitcoin will generally increase over time, as opposed to fiat currencies that are designed to lose value over time. This in turn will make people more willing to hold on to their bitcoins, rather than use them for consumption.

You could also deal with it by studying bitcoin's fundamentals deeply so that temporary price drops do not scare you into selling low. Investing with a dollar-cost-averaging strategy can also reduce the effects of volatility

Technical Design

Investment

Why is Bitcoin a better money?

Store of Value

  • Bitcoin as a Store of Value
  • they take no space. (unlike gold or silver.) and they take up minimal digital space as well.
  • nobody can take them from you. Not the government or the facilitator.
  • you can transfer them between borders. Nobody needs to approve the transaction.
  • there is a fixed supply. It isn't controlled by a central bank.

Medium of Exchange

  • Bitcoin as a Medium of Exchange
  • transactions cannot be reversed. You don't need to cover enforcement/protection costs.
  • easy to accept payments. You don't need special hardware or network fees.
  • Protection of identity. Credit cards can't track your spending habits.
  • no political pushback. You can't get shutdown for being unpopular.

Unit of Account

  • fixed supply.
  • no counterfits.

Why should a currency increase in value?

Why is Bitcoin the best Cryptocurrency?

Mining

Security/Crypto

The most private and secure way to use bitcoin is to send a brand new address to each person who pays you.

It has been argued that the phrase "bitcoin address" was a bad name for this object. A better name would be something like "bitcoin invoice".

Your landlord can see your salary, when he raises the rent he knows exactly how much to ask for.

Political/Social

Contracts

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