Parity calamity! Wallet code bug destroys $280m in Ethereum There's a lot of hair-pulling among Ethereum alt-coin hoarders today – after a programming blunder in Parity's wallet software let one person bin $280m of the digital currency belonging to scores of strangers, probably permanently. Parity, which was set up by Ethereum core developer Gavin Woods, admitted today that a user …
The following devices in my house have received software updates:
1. My computer, my phone, my tablet, my router: these, I accept. They are obviously computers.
2. My TV, a pair of speakers: now this starting to get a bit silly.
3. My wall socket timers, my thermostat: really? Has the nature of time and temperature drastically changed?
4. My drum kit: ok, it's far more talented than I am, and doesn't actually need me to play: but still... complex...
But now... to top it all... money needs a software update. Money. Jesus Christ! I'm sorry, but either we're all fucked, or I'm too old. I hope the latter, but suspect the former.
Yep, remember when they first came out - a whole 5MB. Replaced one of the two 8" floppy drives in the SuperBrain microcomputers (running CPM and CIS COBOL apps); made the world of difference to program response times (COBOL code overlays). Still needed one floppy for data comms back-up* when the acoustic-coupler modems wouldn't work**. My first distributed system :)
* - stiff envelope and in the mail
** - had to write my own transmission checking and error correcting code; even with that sometimes the lines were just too noisy.
Whippersnapper.
I remember coding forms.
Much later we had access to punched cards and only computer support staff handled the 1/2" tape reels. The 8" floppy was later, for reloading microcode on a cold boot. So were Winchesters.
You jest.
This is the first personal computer I used (at South Bank Poly):-
http://www.z80.eu/images/intellec8.jpg
Admittedly you only had to program in a JMP instruction to get it to run a PROM routine to accept input from a paper tape reader... which could then be used to load the Intel Assembler.
I tried to find an image of the computer we had at school in the early 70s and failed. It was red, IBM and resembled one of their supermarket tills. It was programmed in numbers - none of yer high level languages. But it could do stuff, and we could write and debug programmes there and then. Otherwise we had to use special pencils on cards that were sent off in a pack to the university's computing centre and which came back with a result ( or more often an error) a week or two later..
That's quantities of money; this is actual currency. Different.
How different? The majority of money is numbers in a ledger (which has been electronic for the last 40+ years), cash is only a fraction of all money that exists: MB + M0 - M3 + MZM).
https://en.wikipedia.org/wiki/Money_supply
Value is more likely to be preserved if a currency has :
(1) Reliable ledgers.
(2) An entire nation / economy of workers who are contractually paid with that currency. (Who is obliged to accept bitcoin?)
(3) The issue of new currency (lending) is restricted to new assets that devalue slowly (not worthless used computer processing).
(4) New currency can be created according to demand. If supply of a currency is artificially restricted (like Bitcoin) or is tied to a rare asset (like gold), this can restrict lending and economic growth, causing people to switch to alternatives.
Except all cryptocurrencies are primarily anonymisation systems. They often are Ponzi schemes, speculative and aid criminal activities more than €500 notes.
They have a poor and elitist method to generate more "virtual coins".
Any connection to actual money is tenuous as they are more used as an anonymous alternative to IBAN or PayPal, or by speculators.
I'm tempted to do a Nelson impersonation. Ha! Ha!
Mines the one with a leather wallet containing EU physical tokens to replace barter and plastic cards for terminal or web based Electronic funds transfer.
The ONLY problem cryptocurrencies address is ANONYMOUS REMOTE funds transfer. The technology creates new problems (not scaleable, poor coin supply control, speculation like Tulips).
Mage, most are not anonymous, as every transaction is recorded in the blockchain and known exchanges can be subpoenaed to obtain transaction records. As opposed to the many banks that laundered money for drug cartels and destroyed records becore being investigated.
The problem they solve is having all your money in the hands of the 1%, making them rich, and paying an arm and a leg for the privilege.
Systems like Bitcoin Cash are fast and scalable. Personally, I still appreciate real cash as well for true anonymity, though I suspect it will be harder and harder to make it counterfeit-resistant.
in 1998 i had a Compaq monitor. A monitor! not a computer ! that needed a software update.
One morning we found that all blue was gone. Only the red and green channels worked. this was old school picture tube analog VGA 640x480. We unplugged the vga cable checking for a bent pin and replugged it. Nope. Blue was gone. Did some joker turn down the blue using the menu ?
Pulling up the on screen menu froze the monitor completely. The computers screen disappeared and the menu box was all garbled pixels.
Power cycle the monitor : all back to normal.
The little 8K cpu responsible for the control menu had locked up and turned down the blue gain. Trying to pull up the menu froze it completely. a cold start and we were back in business.
Seriously? It's already bad our computers can lock up. now we have to deal with crashing firmware in screens ?
"Encrypt Once Read Never- because something broke and now you can't!"
ah ah. I remember a bloke, in a scientific computing lab, who was used to edit all his marvelous programs in Fortran with "vi -x", back on Unicos from Cray.
Turned up, with the first crypto wars, and the US forbidding shipping any crypto outside US, the function eventually got removed from Unicos.
He never got access back to his sources. Good riddance.
"I feel a snigger coming on. Imagine the Bitcoin price will halve tomorrow. Risk and all that."
So despite this having exactly nothing to do with bitcoin, or any bitcoin wallets, or anything other than a particular multi sig wallets for ETH, it's apparently going to cause a massive crash. Even ETH had only a minor bump from this, while BTC seems to have not even been affected.
Now, as for silly buggers trusting wallet software that has already been compromised and had funds stolen (with an integer overflow attack) is a fair point. And I'm not quite sure how they managed this latest clusterfuck, but I expect it'll be another "coding for dummys" level error.
Oh, and there are plenty of ways to trade BTC. including the usual derivatives. If you're so sure that the price is going to tank, short it and make a killing. If you're sure enough to post you should be sure enough to trade.
If your physical wallet got blown overboard into the sea, would you be happy if someone within earshot laughed and expressed the wish that all your capitalist vapour-paper be snuffed and permanently inaccessible?
Not sure why you accrued a couple of downvotes, I'd like to point out it wasn't me!
Anyway, I wouldn't, but I don't think you can fairly compare the loss of physical cash with speculative blockchain currencies, with essentially fictitious values until (and if ever) converted into a real currency or other store of value, and I don't think that people can expect sympathy when playing with what are clearly unregulated investments, in volatile markets, with an unproven technology platform - all of which were true and obvious for all blockchain currencies before this latest snafu. This is nothing new - go back three and a half years to the Mt Gox disaster, when about $400m of bitcoins were stolen through a flawed exchange platform, with no comeback for the people who thought they were the rightful owners.
So, harsh and unsympathetic I may be, but I still laugh, and given the nature of blockchain currency investors, I don't think that any widows or orphans will be the losers from this latest blockchain screwup. And I would guess it won't be the last. There's at least five large blockchain currencies now, and over 700 others. Given that most of those will be crappy, me-too efforts, most will curl up and die, probably taking a lot of supposed value with them. I don't mind if people wish to speculate in those currencies, but it is very high risk, and they still won't get my sympathy when their millions turn to smoke.
I don't suppose you'll now join me in having a good laugh?
Real currencies are guaranteed by governments. Who through good governance try and keep the value of them fairly predictable. Governments do things like insure your savings so if your bank goes bust you don't lose your money.
If a government starts to guarantee virtual currencies then problems like this story won't be a big issue.
"Real currencies are guaranteed by governments. Who through good governance try and keep the value of them fairly predictable. "
You owe me a new keyboard.
It's a specific policy of the government (through the central banks) to constantly make your currency worth less every year, it's called the inflation target which is 2% for the BoE. Not 0%, which would be nice and stable, but 2%. That's assuming they are honest in their measure of inflation, and which of the three versions of inflation they use as the measure (RPI/CPI and the GDP deflator).
Though I suppose that does match your statement that it makes them predictable - predictably bad.
It's a specific policy of the government (through the central banks) to constantly make your currency worth less every year, it's called the inflation target which is 2% for the BoE. Not 0%, which would be nice and stable
TheTick,
Just because you are ignorant of economics does mean that all the world's central banks are. Deflation is a much bigger risk to society than inflation. Which is why there is serious economic debate about whether those inflation targets should be raised to around 3%, because undershooting 2% and being around 1% is uncomfortably close to disaster (as the Eurozone has been flirting with for 6 years now).
As a nice example for you, Weimar Germany survived the inflation crisis of 1923, and managed to get the economy back on track. That's apparently the great German folk-memory, of people hauling cash round in wheelbarrows and the evils of inflation.
But it was the banking crisis and deflation after 1930 that triggered the rise of Hitler. Which is what most people seem to forget.
Excessive inflation creates friction and uncertainty and so can damage growth. Deflation makes borrowing almost impossible, which discourages investment and also makes banking dangerously fragile, as well as destroying any business or person carrying pre-existing debts. This creates a vicious cycle of falling growth and investment, failing businesses, unemployment, bank failure and political instability.
So low predictable inflation is a good thing. The only downside is that money is a less good store of value over the long term. But this can be counter-acted by investing that money - either in banks to mostly stave off inflation, or at slightly higher risk to beat it. Both of which investments then make otherwise idle money available for investment, thus further growing the economy.
This is basic economics.
Weimar Germany survived the inflation crisis of 1923, and managed to get the economy back on track
When clearing out M.I.L's house, we found a million-Mark note from that period, with a short letter from someone in Germany to one of her deceased relatives.
Excitedly, I asked my then colleage in Gernamy how much it was worth.. Turns out that the short letter that accompanied it was worth about 10 times as much and that was worth about £20..
CrazyOldCatMan,
One thing I hadn't realised until seeing a repeat of an old BBC documentary this year was that the Nazis had pulled off a propoganda coup. They got hold of loads of old million Weimar Reichsmark notes and printed election pamphlets on them - which was a brilliantly subtle way of saying the old Weimar democracy is rubbish, why not try our system instead?
I wonder how they got hold of them in quanitity? You'd have thought the central bank would have destroyed them.
Notwithstanding your apparent grievance with one another, you're both making some good points, most of which stand. If I might throw another dog or two on the fire, low inflation may be a good thing, negative real interest rates are most certainly not, added to which the question arises whether the measures of inflation are consistent or realistic (probably not as a time series, when they aren't taking account of disposable incomes, and when the government try and cheat the figures).
One other thought is that we've had deflation in tech and some manufactured goods prices for decades, and it has been treated as a good thing, despite being caused by FX and flawed trade and industrial policies. So to contend that deflation is some type of economic doomaggedon is exaggerated other than in the excess case (just like inflation). And one final point about using idle money - it never is idle, even if you think it is. But the cause of the great financial crisis was BECAUSE of investment - specifically mal-investment, in projects which couldn't pay back, and thus destroyed value, such as all the half built property still despoiling Spain. Investment only grows the economy if it actually delivers benefits greater than alternative uses of the money, and those benefits are a positive number.
If I might throw another dog or two on the fire, low inflation may be a good thing, negative real interest rates are most certainly not
Mr Anon,
You're a bit hard on the poor old doggies there...
As a general rule you are correct. Negative real interest rates are bad (i.e. interest rates below inflation). This is probably the main cause of the Euro crisis - when French and German inflation and growth were both down around 1-2% in the early 2000s, ECB interest rates were way too low for countries like Ireland and Spain. Causing runaway housing booms - which now means they need lower interest rates than say Germany.
However after the last recession we needed to generate inflation. Yes we needed to generate growth, to get out of recession. But was also needed to generate inflation itself. The reason for this often offends purveyors of the morality-play that Germany has deployed in the Euro-crisis, "poor savers must be protected from inflating away the debts of the feckless". There may even be some justice in that - however it's economically disastrous. As Keynes pointed out. If you have no inflation, then people with debts go bust, and they take the economy with them. That's the disaster of deflation. So the savers (owners of that debt) may complain that they're not getting their full pound of flesh, but what they don't realise is they face a stark choice. Debts that can't be paid, won't be paid. So they're better to accept a bit of inflation eating away at the principal and still getting interest plus repayments - because the alternative is the debtor going bust, and them getting nothing. Once that happens at a national scale, you get a 1930s style depression. So by generating inflation and stopping all the banks going bust, what our central banks did was to pass a bit of pain to the savers so that the borrowers didn't go broke and send the economy into a death-spiral.
Look how it took the Japanese central bank 3 years of insanely massive money-printing and government spending (Abenomics) in order to force their economy to start generating inflation again. Plus all the shorter and less extreme programs of government spending and QE they've done over the last 20 years that failed.
Your second point about deflation in the tech industry seems to be a misunderstanding / confusion of terms.
Deflation in the macro-economic sense means a rising in the value of money. Just as inflation is a fall in the value of money. And it truly is doom-ageddon. Once triggered it generates its own expectations, which cause it to continue. And the way to beat it is economically irrational, so the market can't easily get out of it without massive government intervention.
When you talk about deflation in the computer industry, you're actually talking about productivity rises. Society being able to produce more stuff with the same input of resources, due to new technology, automation and economies of scale. That's the best kind of economic growth.
If that happens in enough industries at once, it might cause deflation in the overall economy - such as in the 1870s - which if vague memories of my 19th C economic history serves, was down to globalisation (in food in particular) causing a long period of wage stagnation lack of investment. Deflation is the enemy of investment, and investment is what tends to fund productivity growth - which is what makes us better off by getting us more stuff for less effort.
Deflation is bad, but so is inflation. There is no inherent reason that 0% is problematic in the economic sense (one can argue that predictable deflation or inflation is equally non-problematic, except for the transient time when debt is mangled by people gambling on the future and not getting it right. Oh, and waiting to replace the car because tomorrow's deflated car will be cheaper is bogus, since eventually one has to replace the jalopy regardless of the future lower cost. In the limit, you die and your heirs and assigns buy the cheaper car).
The thing not mentioned by central bankers is that a low predictable inflation permits all sort of de facto things, like deflating the wages of workers in an industry that is on the way out, and making the GDP look rosy through fictitious growth. Businesses love low inflation because they can raise prices by more than inflation and can blame "inflation" for the rise, and show real growth in their profits. They can keep workers happy by giving out raises, more for meritorious workers and less for others and the lessors seem to rarely realize the subtle shafting. The list goes on. What I don't like, is that central bankers issue mumbo jumbo about the glories of low inflation when it is all a card game-- they should just admit the arbitrariness and move on.
What is generally damaging is rapid change in any direction. If the bond is for 20 years at a fixed interest rate, you sure hope that the inflation rate is stable over that time (or at least that you can call the bond if you are on the short end!). You hope that deflation doesn't set in because the idiot lawyers did not account for less than 0% inflation in a variable rate bond contract.
Deflation can be handled by giving out negative pay raises... but one still has to handle idiocy like pensions that never go down (again, because of idiots writing the rules) and a host of other side effects such as hoarding of specie. The problem isn't deflation but the inability of our growth centric system to handle anything but numbers going ever upwards.
"
Real currencies are guaranteed by governments.
"
Guaranteed to steadily decline in value perhaps. Ask any Venezuelan how much such a guarantee is worth.
Meanwhile the Bitcoin I bought almost 12 months ago has increased in value by 1000% while the "guaranteed" currency in my bank account has diminished in value by about 3% in the same time period.
Interestingly I have had several conversations recently with coworkers about "someone they know" who is making a motza on cryptocoin dealing, ICOs and other such punting. Numbers quoted on one seem to be in the hundreds of thousands - earlier miner in BTC who has been using that basis to trade in and out of other coins.
My point was that such people would do well to exchange their coins for hard currency, take the hit on marginal rate taxation and be free to enjoy things now - better house, more comfortable lifestyle, whatever. However, these individuals have not cashed out in any way shape or form. Not even a percentage. Why would they? I mean, this stuff is rising like crazy so why should they forgo all of those juicy future gains with BTC @ 10k etc?
That right there is the definition of a wild speculative bubble. These people are about to learn that history doesn't repeat itself but it often rhymes.
Two charts, BTC vs USD and BTC vs Gold, the traditional inflation hedge. The one against physical Gold should ring alarm bells. If shit hits the fan people will trade for Gold, I doubt they'll wait for your BTC transaction to process.
Definitely a comedy.
But I am undoubtedly alone in smirking and hoping that the locked down wallets have been made permanently inaccessible. Please, please let all that vapour-cash be snuffed! Please.
That's the thing, isn't it? The article says $280 M worth of ethereum. Well, I would say, if it's inaccessible, then it's really worth $0.
It would only be worth $280M if someone was willing to pay that for it, which is nobody now.
One Devops of indeterminate gender. When we don't know (or care) about gender we can use "they" instead of "he" or "she" to avoid guessing.
Rather silly convention if you ask me.
English has a perfectly usable gender pronoun, "it". In fact "they" is the plural of "it".
Seriously, what would be your reaction if you went to see your boss, and when his secretary told him there was someone to see him, he belches out, "Who is they?"
I have never knocked at a door, and heard, "Who is they?", it's just wrong!
Rather silly convention if you ask me.
English has a perfectly usable gender pronoun, "it". In fact "they" is the plural of "it".
English personal pronouns and their accompanying tenses are rather more complicated than you think. For instance, why is the 2nd person always plural in modern English?.
"You just have to concede this type of argument if you're up against someone named Dr Syntax."
I suspect the name refers to this Doctor Syntax, a comic character created by William Coombe and cartoonist Thomas Rowlandson in the early 19th Century.
And yes, I know I should get out more.
"I suspect the name refers to this Doctor Syntax, a comic character created by William Coombe and cartoonist Thomas Rowlandson in the early 19th Century."
Well done that man.
I always thought it would have been a good company name to use for IT contracting but in the end I went along with the more prosaic alternative of an off-the-shelf company.
"Not in N.I. or Scotland. Perhaps not in Northumberland and Yorkshire. Maybe for youse lot in London."
I'm in Yorkshire. And, sadly, what was in use (thee and thou) when I wor a lad has died out, nor did I hear it in NI when I lived there. AFAICS "youse" is a variant of "you". cf the French: "tu" versus "vous"
> For instance, why is the 2nd person always plural in modern English?
It isn't. It's just that the singular and plural forms are spelt and pronounced identically. As with so many other examples in the language, that doesn't mean they're the same word.
For instance, why is the 2nd person always plural in modern English
Because it's English and so expressly designed to confuse those damn foreigners? Not to mention a vast swathe of native speakers..
(And let's not go into the various simplified language-forks like American English or Pidgin..)
I have never knocked at a door, and heard, "Who is they?", it's just wrong!
Because that's a different case of pronoun. You might hear "Who is that?" But even if suffering an identity crisis you wont ask "Who am me?"
"They" for indeterminate or unspecified gender isn't much different from other languages using plural forms for formal address. A French speaker isn't going to think that there must be someone standing beside them because you've asked "comment vous appelez-vous?". And as language work on patterns, it takes the same form of the verb that the normal plural use would. Neither is it a new use, for those who seem to be taking umbrage that it must be some new politically correct conspiracy, and is much less obtrusive than whirling around he/she, (s)he or randomly selecting a gender for each new paragraph.
"
English has a perfectly usable gender pronoun, "it". In fact "they" is the plural of "it".
Seriously, what would be your reaction if you went to see your boss, and when his secretary told him there was someone to see him, he belches out, "Who is they?"
"
A better reaction than if my boss had replied, "Ask it to come in."
Here is the definitive way to handle gender pronouns at work:
1. Chain-read every single one of James White's Sector General novels in a single three day weekend (you may choose to skip The Galactic Gourmet) until you've internalized how they handle pronouns.
2. Go in to work, pretend you are at Sector General and all your coworkers are aliens, and just start referring to everyone as 'it'.
3. Try to explain step 1 and step 2 to a completely baffled HR rep.
"the target of criticism since the late 19th century"
That's the consequence of grammarians trying to force-fit the grammar of another language, Latin, onto English.
I suspect that underlying all these issues is a sense not of number but of the personal vs the impersonal. The "singular" is more personal than the "plural". Where a less personal form is needed we instinctively use the "plural", hence not only the singular they but also the royal we.
I wonder what the use of the impersonal "you" ways about us. Have we simply become too impersonal in our dealings with others or is the etiquette too complicated: I can thou thee but don't thee thou me was how to express it to a junior.
Imagine the entry hall to an apartment building that has 200 units. 200 post boxes on the wall. Behind 199 of them are shredders that destroy anything put into them (no one lives there). Don't get the address wrong on your letter!
(i.e. when you're sending crypto).
Now imagine the instructions on how the posty should decode addresses is in the first letter he delivers.
Multiply by a million. That's how safe this whole industry is.
I think you'd find if that devops guy tried to sell even 10% of his $290 million hoard, the real value is a fraction of that. Or worse, given the major blow this would undoubtedly give to the people's confidence that the money they think they have will be there tomorrow.
The devops guy didn't steal them. He accidentally nuked the code to decrypt them, which apparently can't be restored, so now they're just random bits in the wind.
It's as if some web server had exposed an initWallet() function that destroyed and recreated one, and an initWallets() that destroyed and recreated all of them. And they were both 100% public. The facepalm is strong with this company; the fact that he was involved with Etherium's founding is a strong knock against Etherium itself at this point.
I just cannot get over the feeling that Etherium is lacking in adult supervision. According to comments I've seen, the first big bug was due to integer overflow. In 2017. THIS bug has this tremendous impact because people continued to trust the _same_ dev team to the point that they did not audit the code. When big G gave us Stagefright I and II just a couple of years ago.
I can almost get that these mistakes might happen in the first place. I cannot get at all that people don't respond aggressively to fix the major malfunction when they do.
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The fact their main platform is written in Go says a lot too. You get the impression they're more interested in buzzword languages than they are in creating a serious platform.
And if, up until the point of collapse, you could make a paper fortune and fund your existence whilst dicking around with trendy shit wouldn't you give it a whirl? I'd argue it is highly attractive up until the point you lose everything. Locate anywhere, work whenever. It ticks the Gen-whatever boxes.
> Imagine this happening in a real bank with real money
You are absolutely correct. There is no way that a bank would stuff up big time and effectively vapourise some eye watering sum of money. And if they did, they'd hardly go cap in hand to Mr add Mrs Tax-Payer for a bailout I guess.
I guess you totally missed the point.
No one cares only about millions of disappeared cryptocoins, be it Ethereum, Mt Gox and so on.
Literally no one, even Ethereum developers, and why would they, they know it's not a real money.
You are absolutely correct. There is no way that a bank would stuff up big time and effectively vapourise some eye watering sum of money. And if they did, they'd hardly go cap in hand to Mr add Mrs Tax-Payer for a bailout I guess.
Adam 1,
But that's the point. There's a government to step in and save the day if the shit hits the fan.
If the banks fuck up like that with people's current accounts they can go cap in hand to government to get it sorted out. For a mere couple of hundred million, most banks can just lose it out of their Tier 1 capital and carry on as normal - possibly having to raise a bit of cash on the markets. But if they can't, then the government will step in, and nuke sufficient of their shareholders' and bondholders' equity until the issue is sorted out.
So even after the biggest financial crisis in 80 years, the UK government didn't have to give any money to the banks. The Bank of England lent them loads, truly insane amounts, which was all paid back within 2 years. Those banks in the deepest doodoo had to give the government shares, in exchange for more loans. All but the RBS shares have now been sold at a profit, as have the dead Northern Rock's assets. Now we're just left holding all those shares in RBS - which looks to have finally turned itself around - although I'm not holding my breath on that.
That's why governments are good. They are often annoying, and screw things up, but there are certain levels of protection that their existence can provide - which markets can't. And that's why libertarians are wrong. You can't have functioning markets without functioning governments - for emergency backstop, rule-of-law, protection of contracts and legislation on monopolies.
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So who are these actual companies that have lost hundreds of millions of $$$ - or at least the make-believe equivalent? I find it hard to believe they would be involved in legitimate, honest, above-board, business transactions.
On the assumption that at least one of them is a crime syndicate (or that at least one of them isn't), I would expect the developers to be getting seriously worried about the repercussions of "accidentally" losing a vengeful, violent, law-ignoring, gang a 7 or 8-figure sum.
Reminds me of Multiplicity. Devops1 was near perfect, but the facsimilies get worse and by Devops 250 they'll be licking windows.
Many more more appropriate Dilbert strips
Barry Dingle asks about blockchain
Latest of many recent ones on the subject.
How much money did those people actually put into this ethereum thing? Not $280m I suspect. However much that is, isn't that what they lost. All these posts here seem to talk about 'real' currency and ethereum. That's the whole point. It isn't real. It isn't really worth anything, except to the people who think it is. And there aren't that many of them.
Put it another way, if everyone decided to sell their bitcoins or etherea, what would they be worth then?
I don't profess to fully understand the whole thing, obviously, and I'm sure it shows, but that's the point too - it's a risky investment and I'd say pretty unstable.
That is not the same scenario because even though you point out (correctly) the lack of savings, you are also implicitly allowing for the fact that the average person continues to receive payment for their labour in that currency.
If Anthony rather asked what would happen if everyone spent what ethereum they got as they got it and accepted more of it every other week as compensation for their labour and/or goods they had to sell, I think we would all agree that it is functioning as any currency should. His picture was about what would happen if everyone tried to totally rid themselves of the currency at the same time. He then went on to imply that this is a reason it should be considered a fake currency. My simple argument is that all currencies fail at that test. A dollar bill or a euro note has almost no intrinsic value. Maybe you could use wads of it to insulate your ceiling or walls, but we don't accept payments in such currencies because of its ability to keep our houses warm.
No, we like to accumulate these because we believe that others will value it in the future and at that time we can get some desired good or service by offering some of this decorated paper or polymer. Part of the reason for that belief is, yes, regulations that seek to limit the rate that new decorated paper/polymer gets created. This means that it is less valuable for me to hoard decorative paper/polymer as its buying power decreases over time. This drives people with surplus decorative paper/polymer to invest it in enterprises that pay a dividend.
There are of course risks associated with crypto currencies. You can lose your whole portfolio to a hacker, software bug or hardware failure. It is vulnerable to regulators who may restrict it in certain markets (leading to a combination of fewer buyers and a glut of sellers cashing out). But it isn't vulnerable to the Robert Mugabe style hyperinflation either. Nor can it be manipulated by governments to suit their trade agendas. I'm not saying you should throw your lot on this or that crypto currency. It isn't a binary proposition (er, pun not intended).
"f Anthony rather asked what would happen if everyone spent what ethereum they got as they got it and accepted more of it every other week as compensation for their labour and/or goods they had to sell, I think we would all agree that it is functioning as any currency should."
Can you see why it isn't a real currency?
I think people are failing to note that the average bitcoin transaction price is $10 now. Or far more expensive than even a credit card unless you're buying a car.
Shocking, that money operations cost money. Except the crypto money doesn't have all the costs underlying "regular" money operations like regulations and reimbursement.
Except the crypto money doesn't have all the costs underlying "regular" money operations like regulations and reimbursement.
There is a hardware and power cost associated with processing transactions. The reason it is so high is likely "whatever the market can bear". After all, you have no oversight body to regulate costs as that was the choice you made.
And so the much touted total record of all transactions - the blockchain - doesn't enable the re-construction of who had what and when at all. So, for as much as blockchain is being touted as a usable record of all transactions in cryptocurrency <insertfakemoneynamehere>, it's actually not then?
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