Bitcoin Forum

EDIT: Guess I asked hard questions :P

Very basic, I know, and I appreciate the answer is probably out there, but I might not be asking the right questions to the google-machine.

So my understanding is this...

In the beginning (TM), we had tally-sticks for transactions, which sucked because wood+termites=debt.

Then we had double-entry book-keeping, which is better, but prone to abuse and mistakes.

Now we have blockchain, whereby the ledger is visible, and miners validate it by in effect eliminating mistakes, and only putting the "correct" transaction into the chain.

What I can't quite grasp is how the altcoins work. I kinda get that Bitcoin itself was a proof of concept, but let's say that someone floats an ICO for "ArseCoin", where all arses, everywhere, will be validated through the blockchain that they establish.

Does this mean that all arse-owners need to buy in? And that if they don't, they are at risk of being classified as arse-less?

Or to be a bit less facetious about it...

Ripple. So this is apparently revolutionising the banking system. I picked this purely as an example, as it's the one I am closest to understanding (I think!), and it's known. Could be anything. Citation: ArseCoin.

Am I correct in understanding that the concept and the miners who bought in created a blockchain and support structure for the bank system to use, and that now the banks need to adopt this up-and-running "thing" to maintain the value of the unit?

What happens if they don't?
Who's selling it to the banks?
What's stopping the banks hiring some hotshot who gets this stuff and making their own?

And most importantly (in my head!)...

How does a bank, for example, take a "thing" that someone says is awesome ("Blockchain man, woo!"), and incorporate this into existing systems and procedures? Wouldn't this be a total rewrite of their internal accounting? Wouldn't this be a hard sell, in that some institutions are still using the same practices they used when they were swapping slaves for spice?

I have a mental gap, and it bothers me greatly. It's one of the crucial links I need to decide how to invest.

Discuss! :)

A coin exists only in its block chain. You can't have a euro block chain, for example, because euros would exist outside of the block chain.

Hi Odol,

Yes, I know that. My question is how certain blockchains (coins) can gain value by being turned to RL purposes.

Again, how could a bank (for example, and again referencing XRP) use an existing blockchain for the transactions they are already carrying out in a particular way.

If I could mentally bridge the gap between the idea of the tech, and how it's actually implemented by adopters, I could apply this knowledge to researching coins/applications that I would support.

Keeping the question out there!

H.

Depends on the altcoin. Some run on a proof of work blockchain blockchain just like Bitcoin. Some run on a blockchain of their own that is protected by a different consensus scheme such as proof of stake. Some don't have their own blockchain but are issued on an already existing blockchain (eg. ICOs running on Ethereum, USDT running on top of OMNI running on top of BTC). Some don't have a blockchain at all and follow a wholly different approach.



I'm not sure I understand your question.

Tokens and coins are issued in various ways... through mining, airdrops, ICOs, token sales, etc.

They gain their value in fiat terms by being traded on one of the many exchanges.



I don't quite get what you are asking.



"some institutions are still using the same practices they used when they were swapping slaves for spice"

lol... Gotta remember that one.

Cryptocurrencies provide interfaces to which other software can talk (eg. to check or send transactions). Their internal accounting will likely be able to talk to such an interface, otherwise it would not be able to send bank transactions either.

Some banks already conducted research in terms of how they could benefit from blockchain-like systems (eg. European Central Bank with Japan), conclusion being mostly: Not viable. Which comes to little surprise because they of course want to run their own, private, permissioned blockchain which leads the concept of cryptocurrencies kind of ad absurdum.

So if by banks integrating blockchains you refer to banks using blockchains for inter-bank settlement -- no, I don't see this happening any time soon. Especially not on public blockchains. Using cryptocurrencies to interface with their clients -- sure. That has basically been the case with Fidor bank for at least 5 years by now.

Other than markets discovering a price through supply and demand, a coin gets its value from promises -- Chase promises that they will give you $1 for each "Chase-USD" ripple token. Tether promises to you give you $1 for every USDT. Oh sorry, Tether makes no such promise, so i have no idea how they get away with it.