[Discussion] Cryptocurrency

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Cryptocurrency! Either it's going to disrupt everything and usher in a new era of artistic and consumer freedom, or it'll hasten the climate apocalypse while largely benefitting a tiny number of investors. Let's yell about it!

I think it is helpful and more accurate to think of the relationship between the image and the NFT as purely symbolic. The NFT itself is just a position on a database protected by the blockchain. Think of it as purchasing condos in an imaginary building.

The image is just something that represents that position. It is not a unique or protected image. It isn’t rights to the image. It may not even be an image that can be owned. The artist retains ownership of the image in most cases and often the artist isn’t even aware it is being used in this manner let alone compensated for its use.

The image or digital object you get for purchasing your position in this database is purely a doodle on a CVS receipt.

I have Right Clicked and Save As... so many NFTs! I'm saving up in case the dollar tanks after the nukes drop.

More like purchasing an electronic key card to the condo. But yeah.

Robear wrote:

More like purchasing an electronic key card to the condo. But yeah.

. In either case, the building only exists in the imagination and any “value” it might represent is backed up only by the hype of the organizers or “influencers”. The art itself is just a distraction. The only thing on sale is the position in the database.

The whole purpose of any of this is from the beginning, just a setup to a rug pull.

Yep. Ponzi schemes in digital clothing.

Of course

Ethereum cryptocurrency completes move to cut CO2 output by 99%

Ethereum, the second largest cryptocurrency, has completed a plan to reduce its carbon emissions by more than 99%.

The software upgrade, known as “the merge”, will change how transactions are managed on the ethereum blockchain, a public and decentralised ledger that underpins the cryptocurrency and generates ether tokens, the world’s most popular cryptocurrency after bitcoin.

Vitalik Buterin, ethereum’s inventor, announced the completion of the plan on Twitter on Thursday morning, tweeting “Happy merge all”.

The move means that ethereum will no longer be created by an energy intensive process known as “mining”, where banks of computers generate random numbers that validate transactions on the blockchain and generate new ether tokens as part of the process. The process, known as “proof of work” in the cryptocurrency world, will now move to a “proof of stake” system, where individuals and companies act as validators, pledging or “staking” their own ether as a form of guarantee, to win newly created tokens.

Ethereum mining used up as much electricity as Austria, according to the Digiconomist website, at 72 terawatt-hours a year. Alex de Vries, the economist behind the website, estimates that the merge will reduce the carbon emissions linked to ethereum by more than 99%.

De Vries added that the move could represent 0.2% of the world’s electricity consumption disappearing overnight. However, he said bitcoin remained the biggest single contributor to the crypto world’s carbon footprint.

“All eyes will be on bitcoin. It remains the largest polluter in the crypto space. Even today bitcoin is responsible for as much electricity consumption as Sweden. And we know that’s not going to change,” said De Vries.

The new "proof of stake" system will be powered by carbon-friendly child slavery.

So Ethereum seems to be down about 15% for the week vs USD, is this a sign of disapproval from the miner? Or is there some other explanation?

DoveBrown wrote:

So Ethereum seems to be down about 15% for the week vs USD, is this a sign of disapproval from the miner? Or is there some other explanation?

No. The crypto market as a whole declined over the week, largely on the same issues as stocks and bonds - poor economic performance around the world.

Thanks Aetius. Another question I had. I read ages ago that the SEC might consider a Proof of Stake crypto currency to be a security in their eyes in a way that they didn’t consider proof of work one. I think their logic is that once a crypto currency has an actual yield associated with it then it’s a claim on future profits which is one of their criteria for something being a security and this being something they regulate. Do you know if that holds for post merge Ethereum and if they Ethereum foundation has an official answer to that?

Bitcoin, last January, accounted for about 1/6 of the S&P 500's volatility, and it seemed to be affected by market sentiment to the same degree. This means it's less isolated from the the markets than gold, major currencies and high grade bonds. But it is also far riskier than any of those investments. This all means that Crypto is not really a good safe haven from market fluctuations.

This is just another step towards global regulation of Crypto, as countries and international financial organizations worry more and more about its effects on financial markets over time.

DoveBrown wrote:

Thanks Aetius. Another question I had. I read ages ago that the SEC might consider a Proof of Stake crypto currency to be a security in their eyes in a way that they didn’t consider proof of work one. I think their logic is that once a crypto currency has an actual yield associated with it then it’s a claim on future profits which is one of their criteria for something being a security and this being something they regulate. Do you know if that holds for post merge Ethereum and if they Ethereum foundation has an official answer to that?

It shouldn't hold for Ethereum. In the same ruling where they lay out that logic they also state that a sufficiently decentralised crypto currency would not be considered a security. To be a security they require that purchasers should "reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts".

This means that they can go after ponzis and scams that are centralised but engaging in 'decentralisation theatre' but will leave Ethereum and other legitimate projects alone.

Didn't a centralized authority undo a big chunk of the Ethereum block chain after all the managers of it lost money in a scam? Seems pretty centralized to me. It's a pretty thin veneer of decentralization if the people who made it can do that.

Mixolyde wrote:

Didn't a centralized authority undo a big chunk of the Ethereum block chain after all the managers of it lost money in a scam? Seems pretty centralized to me. It's a pretty thin veneer of decentralization if the people who made it can do that.

There was no centralised authority involved at all. The developers proposed a hard fork update, and the majority of nodes chose to apply it (the minority chain, Ethereum Classic still exists and is there to use for anyone who considers it more legitimate).

There are no 'managers' of Ethereum, there are informal leaders of course but as far as I know none of them had a huge stake in the hacked funds. The decision to revert the hack was justified because something like 10% of all Ethereum in existence would have been in the hands of the hacker, and that might have been fatal to the project, considering that Ethereum had only been up and running for a couple of months at that point.

Its worth noting that no rescue fork was implemented for the Parity stuck funds or any other hack that came along since. The Dao hack really was an exceptional event that only warranted a hard fork because it occurred so early in the lifetime of the project.

But the developers could hard fork it again if they really wanted and got some buy-in from the community. Still sounds like a group is performing managerial efforts.

Yes, but the developers can't enforce the change without the community approving, so in that sense the management is some amorphous, unsueable crowd. The developers really have more of an advisor role.

Besides the important thing is that the feds could charge Buterin, Dankrad and all the rest and lock them up, but the network would continue to operate with no problems. New developers would step up to take their place, hopefully with good anonymity or in a jurisdiction that the US can't reach.

By making the distinction in their ruling the SEC seems to understand this.

It's actually an improvement on the Proof of Work situation. Only 4 mining pools control over 70% of Bitcoin mining. Its also important to note that Lido (27% of stake) is a decentralised staking pool service, so it's not really fair to count it as a single entity.

Why? Lido issues its own tokens to users, right? So that's a bloc of Lido token holders combining their stakes and gaining added yield for their investments. It's not a bunch of unrelated investors each acting separately...

Robear wrote:

It's not a bunch of unrelated investors each acting separately...

It is a bunch of unrelated investors using a common platform. If the Lido platform was somehow coopted to censor transactions or engage in selfish mining, any stakers who disagreed with this (and hopefully there would be a lot of them) would choose to move their stake to another platform. Therefore gaining control of that stake would require coercing all the individual participants, not just the Lido platform itself, and it's simply not correct to suggest that only three organisations need to collude to control 50% of stake.

Not to say that having such a large amount of stake concentrated in one place is fine, it's definitely something that should be fixed. It's still early days for Proof of Stake on Ethereum so hopefully things will improve as more alternatives become available.

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