Crypto Conversation

[thedukeman]

Was bored last night and watched this 2014 documentary on bitcoin. It is kind of a trip to watch. If you're bored and into crypto I highly recommend it was very entertaining.

https://www.youtube.com/watch?v=qk4gZrBR9CU

[thedukeman]

Was bored last night and watched this 2014 documentary on bitcoin. It is kind of a trip to watch. If you're bored and into crypto I highly recommend it was very entertaining.

https://www.youtube.com/watch?v=qk4gZrBR9CU

Sorry I meant to mention, Vitalik is in the documentary when he was just a writer for Bitcoin magazine before he co-founded Ethereum. Additionally, Coinbase co-founder and Duke alumnus Fred Ehrsam is in the documentary from the very early days of Coinbase.

[Wheat/"/"/"]

More detail on using the Bitcoin Lightning network as a payment system….

[Kdogg]

More detail on using the Bitcoin Lightning network as a payment system….

Thank you for the link. He provides a lot of broad outlines (and buzz words) but few specifics like who pays to open and close the channels. Who pays the node operator. Yes it's very cheap but not free. Every transaction has costs including electricity, computing hardware costs, general overhead and some profit motive.

Also he doesn't know how current merchant services work. The money that merchants get comes from the merchant processor's account. The IOU is between the merchant processor and the credit card company (and does take about 30 days to settle.) The merchant doesn't "bare the cost of the debt." If Chase stiffs First Data it is not the merchant's problem. And if, as a merchant, you are waiting for 30 days to get your money get a better processor. It should take a business day at the most.

The graphic mid video lists "Zero reversals & No Chargebacks" under Cash Finality. That's exactly why I would never use it as a consumer. There are no protections. Admittedly, it great for the merchant.

Also I take back my statement about the Strike announcement last week not being douche. After watching the full stream it most certainty was. And it seems unnecessary for him to be all "bro" for it when he obliviously can be professional (chick comment aside.)

[Wheat/"/"/"]

Thank you for the link. He provides a lot of broad outlines (and buzz words) but few specifics like who pays to open and close the channels. Who pays the node operator. Yes it's very cheap but not free. Every transaction has costs including electricity, computing hardware costs, general overhead and some profit motive.

Also he doesn't know how current merchant services work. The money that merchants get comes from the merchant processor's account. The IOU is between the merchant processor and the credit card company (and does take about 30 days to settle.) The merchant doesn't "bare the cost of the debt." If Chase stiffs First Data it is not the merchant's problem. And if, as a merchant, you are waiting for 30 days to get your money get a better processor. It should take a business day at the most.

The graphic mid video lists "Zero reversals & No Chargebacks" under Cash Finality. That's exactly why I would never use it as a consumer. There are no protections. Admittedly, it great for the merchant.

Also I take back my statement about the Strike announcement last week not being douche. After watching the full stream it most certainty was. And it seems unnecessary for him to be all "bro" for it when he obliviously can be professional (chick comment aside.)

This kid might be a little brash, but I think he fully understands how the merchant network works and he’s helping to develop a faster, vastly cheaper, instant settlement payment network for merchants..
All using Bitcoin as the base layer and disrupting the current payments system.

You and many others, including myself, may very well not want to gravitate to this new payment system for some purchases, but I’m very confident that merchants like myself will accept this new Lightning payment network.

I’m likely to continue taking Visa/Mastercard etc. at my retail business along side of Lightning network payments for the foreseeable future if customers want to continue to use the legacy system.

But, as LN mass adoption takes hold, and Lightning payment becomes widely available to merchants, you or me as the customer can then pay the 3% fee for our Visa MC perks if we like, or we can save the 3% by using the Lightning Network payment system for our purchases and use whatever currency we like, it will be our choice.

Either way, I can’t see merchants continuing to pay the 3% to the current system much longer with this new network available..

[mpj96]

Interesting video, but if you hold bitcoin your value is subject to extreme volatility. If on the other hand you hold dollars and simply use bitcoin as an intermediary in the exchange (rails under the hood?) how do you get that money out of your bank and into another for free? That's not the way the banks I know work.

[Wheat/"/"/"]

Interesting video, but if you hold bitcoin your value is subject to extreme volatility. If on the other hand you hold dollars and simply use bitcoin as an intermediary in the exchange (rails under the hood?) how do you get that money out of your bank and into another for free? That's not the way the banks I know work.

Here’s a good article explaining the workings of the Lightning network. As you read it and you see terms you are not familiar with, Google is your friend. After you start to understand new terms better, re-read. That’s basically how I’ve tried to educate myself on all this, along with watching tons of YouTube videos, some better that others.

I’ll try to lay it out as I understand it in a generalized way…anyone should feel free to correct any misunderstanding I may have, I don’t claim to be an expert on all this.

The Lightning Network uses Bitcoin as the reserve collateral asset.

Sort of the way the US used gold as the reserve asset to back dollars prior to 1971.

Bitcoin owners, “loan” their Bitcoin to the network, for tiny transaction fees, by creating nodes which are used the channel currency through the network.

As the currency goes from Point A to Point B, each node settles the value of the currency by converting that currency into Bitcoin before passing that value along to the final destination, minus those tiny fees for the node operator.

As more and more channels are opened on the network by Bitcoin node operators, value transfer will scale and will be exchanged at the speed of a text, without anyone even knowing that the exchange was facilitated by Bitcoin. It’s happening now everyday, to the tune of over 1.3 Billion dollars of Bitcoin locked into the Lightning Network and growing exponentially.

Regarding your question about moving money between banks for free, you’re right, nothing is for free.

A typical transaction fee on the LN might be 7 satoshi’s. Remember there are 100 million satoshi’s in a single Bitcoin. Transaction fees are almost imperceptible.

I believe Banks will move towards this network for settlements and embrace Bitcoin as the pristine collateral asset. They will own Bitcoin and create nodes as well.

All this in due time. Regulations worldwide are not in place yet allowing these highly regulated banking systems to own Bitcoin and scale just yet.

Banks are slowly waking up to how to use Bitcoin. Products like this mortgage will be coming to all banks, imo. Those that are awake are being held back by regulators, and outdated accounting procedures.

It’s all so early and why I believe Bitcoin is still cheap, so I keep dollar cost averaging in….it’s coming, and faster than we think.

[PackMan97]

Banks are slowly waking up to how to use Bitcoin. Products like this mortgage will be coming to all banks, imo. Those that are awake are being held back by regulators, and outdated accounting procedures.

I don't get it...the crypto mortgage. I read their site and still don't get it. Could you please translate?

[Kdogg]

I don't get it...the crypto mortgage. I read their site and still don't get it. Could you please translate?

It’s just putting up collateral to secure a loan. It looks like it’s similar to what rich people do with stock. Guys like Bezos, Elon etc…are extremely rich on paper because of their stocks and options. Neither wants to sell actual stock to fund a home purchase (or even day to day expenses) because the stocks are appreciating at a good rate. So they go to a bank and borrow x millions (billions?) and put the stock as collateral. Then they spend the money from the bank instead of selling the stock. In a year or ten that stock might double, triple, etc. They are only paying whatever the interest rate is. At the end of the term, they either roll it over or settle by selling a fraction of stock to cover it. Just replace stock with Bitcoin.

[PackMan97]

It’s just putting up collateral to secure a loan. It looks like it’s similar to what rich people do with stock. Guys like Bezos, Elon etc…are extremely rich on paper because of their stocks and options. Neither wants to sell actual stock to fund a home purchase (or even day to day expenses) because the stocks are appreciating at a good rate. So they go to a bank and borrow x millions (billions?) and put the stock as collateral. Then they spend the money from the bank instead of selling the stock. In a year or ten that stock might double, triple, etc. They are only paying whatever the interest rate is. At the end of the term, they either roll it over or settle by selling a fraction of stock to cover it. Just replace stock with Bitcoin.

Thanks, that makes sense.

[Wheat/"/"/"]

Note that the company offering these crypto backed mortgages is not a U.S. regulated company.

But this is the sort of financial service that US Banks want to offer, as soon as regulators catch up.

Edit to add: the company is based in Miami, so it must be regulated somehow in the US.

[Kdogg]

Note that the company offering these crypto backed mortgages is not a U.S. regulated company.

But this is the sort of financial service that US Banks want to offer, as soon as regulators catch up.

Edit to add: the company is based in Miami, so it must be regulated somehow in the US.

They might be totally legit and on the up and up. I don’t know but at this point, they are probably regulated as much as a payday lender. More concerning is that they require 100% collateral. I’m sure they put it in escrow but who has the keys….probably them. I don’t care to investigate but wonder if the loan is denominated in crypto or dollars? It would give them an perverse incentive for a default if it’s done in crypto and it appreciates. The CEO is American, the VP is Venezuelan, the Director Pakistani and the Lead Q&A is Ukrainian. No biographical information (not even a Linkin) and no last names. It’s as sketchy as Chapel Hell.

[Wheat/"/"/"]

They might be totally legit and on the up and up. I don’t know but at this point, they are probably regulated as much as a payday lender. More concerning is that they require 100% collateral. I’m sure they put it in escrow but who has the keys….probably them. I don’t care to investigate but wonder if the loan is denominated in crypto or dollars? It would give them an perverse incentive for a default if it’s done in crypto and it appreciates. The CEO is American, the VP is Venezuelan, the Director Pakistani and the Lead Q&A is Ukrainian. No biographical information (not even a Linkin) and no last names. It’s as sketchy as Chapel Hell.

I think I saw on their site that they used Gemini and Coinbase for custody services.

But yea, the terms don’t look all that great to me.

I’ll wait for the US regulated banks to enter before looking at these financial services.

[mpj96]

Thanks for the detailed response, including links. I read them but am still confused.

You piqued my interest by saying you don't see merchants continuing to pay 3% in fees when the LN exists.

Then when I questioned whether dollars would really go to btc and back to dollars without incurring bank fees you replied "you're right, nothing is for free".

Are you suggesting:

(1) merchants will hold btc instead of dollars and accept btc's volatility to save 3%?, or

(2) there is a mechanism other than banks which is available to merchants for performing the functions banks perform that is willing to permit this exchange of $ to btc and btc to $ in and out of something like a bank account without charging fees that banks charge?, or

(3) something else?

I think you said you take LN at your shop. Do you avoid fees because you hold btc natively and do not mind volatility? Or have you found a means of making this a lower cost mechanism for dollar exchange that I am missing?

[Wheat/"/"/"]

Thanks for the detailed response, including links. I read them but am still confused.

My apologies for not being more clear. I think I misunderstood your question on bank fees…

You piqued my interest by saying you don't see merchants continuing to pay 3% in fees when the LN exists.

The Lightning Network already exists and is doing millions of transactions daily with basically no fees. But, that’s a tiny amount worldwide. It’s all still so very early in this reset of the transaction settlement system that has been previously controlled by banks.
That’s changing, slowly, to an open source network, (Lightning), using Bitcoin as the reserve asset, (collateral), for settlement.

The recent deal between Strike and point of sale computer giant NCR is huge, but it’s a baby step towards the coming mass adoption for retailers to accept payments, and customers to have and understand how to use Lightning wallets over the LN basically for free, no Visa/MC fees, etc…
Again we are still very early in this whole financial reset process…


Then when I questioned whether dollars would really go to btc and back to dollars without incurring bank fees you replied "you're right, nothing is for free".

Are you suggesting:

(1) merchants will hold btc instead of dollars and accept btc's volatility to save 3%?, or

Merchants do not need to hold BTC, and the volatility of BTC does not matter to the transfer of value over the Lightning Network.

When a dollar is sent over the LN by a customer, it is immediately converted to BTC and settled, (confirmed as a real dollar), then immediately converted back into a dollar and delivered to the merchant, at the speed of a text.
That’s basically how it works. Fast and much cheaper than the current banking network.

(2) there is a mechanism other than banks which is available to merchants for performing the functions banks perform that is willing to permit this exchange of $ to btc and btc to $ in and out of something like a bank account without charging fees that banks charge?, or

That’s what the Lightning Network is doing, from a Lightning enabled wallet on your phone. The fees are tiny, but there. We are just not at scale, yet.

(3) something else?

I think you said you take LN at your shop. Do you avoid fees because you hold btc natively and do not mind volatility? Or have you found a means of making this a lower cost mechanism for dollar exchange that I am missing?

I don’t take LN payments yet at my retail store, but will as soon as feasible. First, not many customers have LN wallets, and 2nd my accountants head is about to explode and we don’t even have crypto sales yet. 🙂

Hope this explanation helps.

[Jeffrey]

Voyager Digital….

https://www.nj.gov/oag/newsreleases2...pdf?mod=ANLink

https://www.njoag.gov/new-jersey-bur...ring-accounts/

"Acting Attorney General Matthew J. Platkin today announced that the New Jersey Bureau of Securities has issued a Summary Cease and Desist Order to stop a Jersey City-based financial services company from selling unregistered securities in the form of interest-earning cryptocurrency accounts that have raised at least $5 billion nationwide.

"Voyager Digital Ltd., Voyager Digital, LLC, and Voyager Digital Holdings, Inc. (Voyager) have allegedly been funding Voyager’s income generating activities—including lending operations, digital asset staking, and proprietary trading—at least in part through the sale of unregistered securities in the form of cryptocurrency interest-earning accounts in violation of the Securities Law, according to the Order the Bureau issued today."

[Jeffrey]

Coinbase…..

https://stocks.apple.com/ABIJJqMgqQ9Cs-Dedds_dmQ

Coinbase announced that crypto investors could now use the country's online retail payments system to transfer funds to the platform. This system is known as United Payments Interface or UPI, and it's a government-regulated payments system.

It's run by an entity, the National Payments Corporation of India that's part of the country's central bank.

But three days after the announcement, Coinbase suspended transfers of rupees, the local currency, to its trading app. The company did not give a reason for this abrupt stop but it could be that the reason is due to the fact that the authorities were not aware of Coinbase's projects.

[Jeffrey]

Coinbase…..

https://stocks.apple.com/ABIJJqMgqQ9Cs-Dedds_dmQ
[I]

Thank you -jk!

I should have quoted the articles title and lead paragraph…..

“Coinbase and Crypto Fans Suffer a Major Blow

The international expansion of the firm has just suffered a crushing defeat that also affects fans of digital currencies.”

[Wheat/"/"/"]

Coinbase…..

https://stocks.apple.com/ABIJJqMgqQ9Cs-Dedds_dmQ

Coinbase announced that crypto investors could now use the country's online retail payments system to transfer funds to the platform. This system is known as United Payments Interface or UPI, and it's a government-regulated payments system.

It's run by an entity, the National Payments Corporation of India that's part of the country's central bank.

But three days after the announcement, Coinbase suspended transfers of rupees, the local currency, to its trading app. The company did not give a reason for this abrupt stop but it could be that the reason is due to the fact that the authorities were not aware of Coinbase's projects.

Powerful bankers like NPC who profit greatly at the expense of the lower class won’t give up their control of the banking system easily. Neither will politicians. This is evidence of that.

But I believe in the end, a decentralized, free, open source payment system that can’t be manipulated these bankers and politicians will win out, at least in countries that value fairness and freedom.

[Jeffrey]

But I believe in the end, a decentralized, free, open source payment system that can’t be manipulated these bankers and politicians will win out, at least in countries that value fairness and freedom.

Please excuse my redundancy. This post addressed a few of the reasons I disagree….

https://forums.dukebasketballreport...13#post1479813