Argentina as a Bitcoin farmer

[toongeorges]

Regarding the security of the network, what about quantum computers? Can’t they, if created, or if already exist secretly, hack these cryptos?

I do not know about other cryptocurrencies, but the designer(s) of Bitcoin were paranoid that one of their encryption algorithms might be broken, so Bitcoin uses 3 different encryption algorithms on top of each other: a public private key algorithm and 2 cryptographic hashes.

Quantum computers can crack the public private key algorithm, but the execution time to decipher the 2 cryptographic hashes remains exponential (and thus practically unsolvable) for quantum computers.

If the public private key algorithm is broken (when quantum computers are powerfull enough), your Bitcoin wallet is safe for as long as you have not transferred money from it, since the public key of the wallet is only exposed when you make a payment from your wallet. If the algorithm is broken, someone can calculate the private key of the wallet from the public key and anyone who knows the private key of a wallet can make payments from it. If you have only received money on a wallet, the public key has never been exposed, only the hash of the hash of the public key. If you are afraid that the public private key algorithm will be broken, then every time you transfer money from a wallet, you have to transfer everything on the wallet: the money you want to pay to someone else's wallet and the rest of the money to another one of your wallets. Every time you make a payment, you have to create a new wallet and transfer all your remaining money to it.

If you follow this practice, Bitcoin can only be cracked if we have quantum computers and if the 2 cryptographic hash algorithms (SHA256 and RIPEMD160) can be cracked. The designer(s) of Bitcoin were afraid one of the 2 hashes could have a backdoor. (SHA256 was designed by the NSA and published as a standard by NIST. Much earlier, the NSA modified the DES algorithm before publishing it as a standard and it appeared later that the changes allowed the NSA to crack DES. Sometimes you should not trust encryption standards issued by the NSA.)

You are safe only if at least one of the 3 encryption algorithms cannot be cracked, but you can never know for sure that is the case.

 

[Brian_is_here]

If public key encryption is broken. It’s a brave new world. So much stuff is secured by that. Including financial world.

 

[toongeorges]

That’s interesting. I’d like to know more about Bitcoin’s energy consumption if it becomes more widely used.

But Bitcoin isn’t the only alternative, right? What about proof of stake cryptos? Aren’t they much more energy efficient?

Bitcoin was created in the aftermath of the 2008 financial crisis. The designers wanted a currency out of hands of central authorities. For this you need a decentralised algorithm to validate the blockchain. Bitcoin uses a Proof of Work algorithm. This algorithm scales not with the number of users, but with the number of miners. If there are a lot of miners, it consumes a lot of energy, but it is also impossible for China or the US or Europe to take control over the blockchain, because even the richest countries cannot afford to set up that much compute power. It is of course not environment friendly.

Another kind of decentralised algorithm is Proof of Stake. A Proof of Work algorithm solves a compute intensive problem. In Proof of Stake, the people who already own the crypto coins vote on who validates the transactions. The voting power is directly proportional to the amount of money you have. This is less compute intensive, but it also only works if the currency is well distributed among different people. Ethereum currently works with a Proof of Work algorithm, but is planning (for some time already) to switch to a Proof of Stake algorithm.

 

[toongeorges]

If public key encryption is broken. It’s a brave new world. So much stuff is secured by that. Including financial world.

And all the public private key algorithms basically come down to one of two algorithms:
- factoring prime numbers, which is equivalent to calculating square roots under modulo
- finding the discrete log under modulo

It is sufficient for someone to proof that taking roots and logarithms under modulo is not more complicated than under normal calculus. Under normal calculus there exist formulas that converge to the exact solution. It appears that under modulo, you cannot find converging formulas, the formulas keep going in cycles. Who knows, maybe someone sees something everyone else does not.

 

[Ries]

Gotta love how well E currencies are doing right now.
They are tracking tech stocks in losing money, and the stablecoins are decoupling so they, too, can lose you money.
When you invest in ideology, instead of underlying assets and trust, I guess you get what you pay for.
But, even if it was still at November prices, the amount of outright fraud and theft is truly staggering.

Web3 is Going Just Great

A timeline recording only some of the many disasters happening in crypto, decentralized finance, NFTs, and other blockchain-based projects.

web3isgoinggreat.com

 

[Brian_is_here]

as the old hands say... zoom out a bit more. those guys are still in the black.

 

[elhombresinnombre]

Gotta love how well E currencies are doing right now.
They are tracking tech stocks in losing money, and the stablecoins are decoupling so they, too, can lose you money.
When you invest in ideology, instead of underlying assets and trust, I guess you get what you pay for.
But, even if it was still at November prices, the amount of outright fraud and theft is truly staggering.

Web3 is Going Just Great

A timeline recording only some of the many disasters happening in crypto, decentralized finance, NFTs, and other blockchain-based projects.

web3isgoinggreat.com

We've been here before:
Tulip Mania in the 17th Century
The Mississippi and South Sea Bubbles in the 18th Century
The Roaring Twenties and the Wall Street Crash
Ah. But this time it's going to be different. Isn't it?????

 

[lunar]

Gotta love how well E currencies are doing right now.
They are tracking tech stocks in losing money

Paypal, Netflix, Moderna, Mercadolibre are not doing much better either.

 

[Ries]

Paypal, Netflix, Moderna, Mercadolibre are not doing much better either.

Exactly- crypto is just like speculative tech stocks- overhyped and volatile. Index funds are still far safer over time. And none of the boosters want to address the risk of theft and fraud which is so much higher with crypto and nfts, as my link shows.

 

[Quilombo]

Exactly- crypto is just like speculative tech stocks- overhyped and volatile. Index funds are still far safer over time. And none of the boosters want to address the risk of theft and fraud which is so much higher with crypto and nfts, as my link shows.

This may be a hot take, but crypto in general is just Mary Kay/Amway for dudebros who peaked in high school; it's good for money laundering and cheaper international remittances, but people seem to forget it's value is derived from it's ability to be liquified to fiat currencies on demand, as we've seen with LUNA this week.

Billions gone, people attempting/having committed suicide from going bankrupt because they thought this pyramid scheme was different. While random everyday people got rich off of Game Stop and some crypto, that's the exception, not the rule. Just like the fiat currencies these guys deride, crypto currencies do not have intrinsic value, and people seem to forget this. Bitcoin is only work 30K (or anything other than zero) in so much as people believe it is worth something and are willing to trade real money/securities for it.