My problems with cryptocurrency
I am just an old guy who likes many of the “old ways” that were used in the “good old days.” That is one of the reasons that I don’t use cryptocurrency all that much. However, it is also the least influential of the reasons. Personally, I love new things. I love learning about them and trying to find a place in my life for what I learned. Cryptocurrency is one that I am having a difficult time finding a place for; this is because of the questions that I have and problems that I see.
One of the most difficult questions that I had is where does the value come from? The answer to that has been fairly simple, it comes from the people who use it. As an American, I don’t understand how the US dollar gets its value since we came off the gold standard in 1933. Even though I wasn’t alive when that happened I still understood the value of the dollar was based on the value of gold. The value of cryptocurrency is based on what those who have say it is worth. Thousands of years ago, this was how “money” worked. Ancient Joe wanted something that Ancient Bob had, so he offered up something Ancient Bob wanted. The ancient barter system put a value on common items and those developed into common items for trade. Cryptocurrency is the same way, if I have some and someone else wants it, we agree on a price and then trade. This happens every day by thousands and thousands of transactions. Why does the price go up? If I have some and Sally will give more than Jane will, I am going to sell to Sally. Or vice Versa. So that is how I understand the value of cryptocurrency.
Another problem that I have with cryptocurrency is some of the newer wallets don’t work well for small amounts. I currently have a Mycelium wallet that has about $0.96 worth of coin in it. I cannot perform a transaction because I do not have enough funds to cover the transaction fee. This causes the problem that to spend my coin I have to pay more that something I may want to buy. As someone who hopes to spend a good deal of his upcoming retirement gardening, I cannot ask someone at a farmers market to buy my tomatoes with cryptocurrency because it may cost much more than the value of the tomato. This problem led me to altcoins, but that leads to the next post.
Here are questions that I have and need help with:
- In HD wallets there are multiple addresses per account, a new one is generated for each transaction. Does this mean that there are multiple transactions made (one from each address) to send coin from that account, therefore driving up the fee?
- Do single address wallets i.e. Freewallet.org prevent this?
- Does cryptocurrency have a future for small businesses? Is anyone going to buy my tomato with cryptocurrency?
First of all, where is the value coming from? Well that's simple, that's the value that you're talking about. The value that is in the normal currencies like in the USD, Euro, Yen.. And people are changing those currencies for the online ones. Which leads to a lower demand for the normal ones and a higher demand for cryptos. This change in demand will drop the value of the physical currencies and raise the one of crypto currencies. So basically, if you're not investing in crypto's you're not only missing out on some great gains, you're also losing purchasing power.
As for the problem of the small amounts, there are crytocurrencies that have a 0,0000% fee like IOTA for example.
I hope this ansers atleast some of your questions.
interesting. I notice when I apply the same questions to normal currencies like the dollars, the answers are even less satisfying than the cryptocurrency. The fact is we have been taught not to question the value of the US dollar or Euro when in fact we should be doing just that.
That is totally true, because if the central banks decide to start printing massive amounts of bills, we will lose purchasing power (because of the inflation that is caused by printing extra cash). So the value that we give to these established currencies is derived from the trust we put in central banks.
And exactly that is the reason that people are moving to crypto's, because for example for bitcoin, there is a specific amount of bitcoin that will ever be created through mining (21million). No one can change that not even satoshi (the developer of bitcoin). So here instead of just having to trust the central banks, we have a guarantee that there won't be created extra bitcoins after the 21million.
Thank you for the tip about IOTA. I am going to check it out.
I also never thought about the relationship between fiats and crypto in that way before. When my wife complains about me spending to much time on the computer tonight it will because I am not researching this idea.
I have to warn you that IOTA is still a very new coin, so it can be very volatile!
Great questions there, I dont know the answers to 1 or 2 because I dont really use those type of wallets.
Question 3 I think its very good for small businesses to use crypto, you should definately advertise your tomatos for crypto, Id buy them. Advantage to you is the security of not dealing cash, and no card fees. Perhaps you could start educating your fellow farmers market stalls. Creating a micro economy in crypto at your market would be very interesting.
The security issue is what started me looking in to crypto more seriously in recent months. I also find a great value in the idea of an international currency.
Agreed, no exchange fees is what we are looking for, for international travel and trade. Its just going to take time to get people onboard. Good luck @theoldguy.
One concept you might be interested in as a farmer/seller is the block-chain in supply chain; just as currency can be represented in a transaction, so in theory can your tomatos be. Imagine if at your market your customers could scan a QR code at your stall and see proof your tomatos were really from your farm, and see if your organic credentials are up to date (or whatever) and then link to your steemit account where you have some nice ideas for tomato soups. There is a company working on it https://www.provenance.org/
Forgot to add, I'm not a fan of the wallets either. Perhaps it's just too new to me.