8 votes

I described cryptocurrency as 'people trading secret numbers'. How accurate was this?

Title. I needed to explain to some family what it was, but struggled a bit since I don't know much about the details of it myself.

Also don't know whether this would have been better in ~finance.

5 comments

  1. [3]
    stu2b50
    Link
    Wouldn't say that, in particular the secret part. Blockchains are really just a particular datastructure with certain properties that some people find desirable. The idea of a hashchain to...

    Wouldn't say that, in particular the secret part. Blockchains are really just a particular datastructure with certain properties that some people find desirable. The idea of a hashchain to maintain a linear chronology isn't new. Git histories, for instances, are hashchains. The repeated hashing means that you can't change anything prior to the newest block. It makes it immutable, to some extent.

    Blockchains add in a way for everyone to agree given a minority of malicious actors (i.e Byzantine Fault Tolerance).

    And if you decide to record transactions, congrats you got a cryptocurrency. The solution to BFT is where they diverge; Bitcoin uses Proof of Work to make a malicious takeover extremely resource extensive, FB's libra just assumes certain parties are trustworthy, then you cause use the BFT algorithm, and so forth.

    4 votes
    1. thistle
      Link Parent
      Thank you, this was a very helpful explanation.

      Thank you, this was a very helpful explanation.

      1 vote
    2. pallas
      Link Parent
      It's relevant to point out the other consequence of this, which is that the operation of the Bitcoin network itself is extremely resource intensive, and it would likely be reasonable to consider...

      Bitcoin uses Proof of Work to make a malicious takeover extremely resource extensive,

      It's relevant to point out the other consequence of this, which is that the operation of the Bitcoin network itself is extremely resource intensive, and it would likely be reasonable to consider Bitcoin harmful to civilization.

      1 vote
  2. viridian
    Link
    I think it's pretty hard to accurately describe what most people call cryptocurrency without having a working definition of a blockchain database, and what it's goals are. If you don't care about...

    I think it's pretty hard to accurately describe what most people call cryptocurrency without having a working definition of a blockchain database, and what it's goals are. If you don't care about the things that make it different than say beenz.com though, you can just describe it as a digital currency where all transactions are publicly recorded and final.

    Most implementations of crypto aren't very secret at all, and are in fact far more transparent than small banking deposits w.r.t. total recorded ledger transactions. I also recognize that the "final" bit isn't true on some edge cases, but it's true for at least 99.99999% of transactions. Even for currencies like eth, where you have community leaders who are essentially deputized to make governance decisions, no transaction shy of tens of millions of dollars is ever getting reversed.

    3 votes
  3. skybrian
    Link
    Often the only secret number is your private key. This is essential for identifying you as the owner of an account, so you would definitely not want to trade that or you'd give all your money...

    Often the only secret number is your private key. This is essential for identifying you as the owner of an account, so you would definitely not want to trade that or you'd give all your money away.

    It's true that for many accounts, we don't know who the owner is, but that depends on the owner being careful to avoid getting doxed, and for many currencies, there is a lot of public evidence, like the transactions themselves.

    Some currencies try to enable anonymous transactions, but I don't know how successful they are.

    2 votes