Questions about cryptocurrency

[onebigindian]

Hi,

I'm totally new to this entire world, and I'm learning about it, and I had some questions about cryptocurrency. Here goes:

1) If am a PHYSICAL business in India, what are the steps I need to take in order to accept cryptocurrency at my establishment? (say a coffee shop or ice cream parlour). I'm assuming there'll be a smartphone app, just like we have PayTM, where you scan the other guy's QR code to make the payment, just, instead of rupees and paise, it'll be Bitcoin or Ethereum or something, am I correct? Which app do I use? I'm assuming that same app will work ALL OVER THE WORLD without any "modifications" or whatever, right?

2) What is the DIFFERENCE between Bitcoin and Ethereum? What exactly IS a "smart contract"? Is it like this, that if I say buy an ice cream with Ethereum, and I don't like the TASTE of the ice cream, then the money for that ice cream can come directly back to me, without the owner of the ice cream shop being able to DO anything about it?? Is THAT what it is? What's to prevent me from just saying  the ice cream was crap in order to get the refund, when in fact there was nothing wrong with it??!!

3) If 1 kg of potatoes or tomatoes costs 1 Bitcoin or 1 Ethereum in America, will it also cost 1 Bitcoin in India? What's the ECONOMICS of it all?

 

That's all for now, I'm sure I'll have more questions to dump on you guys as time goes on, let me chew on these for the time being! :)

[buzzkillb]

You can install a mobile wallet on your tablet/phone and accept Bitcoin on there using QR codes. Be really careful about installing random appstore wallets though. An easy one to try out is Coinomi, which has more than Bitcoin on it.

Bitcoin is like a currency. Ethereum is acting more like a smart contract computer platform. I am sure you could get a smart contract created for your Ice Cream like/dislike example. The oracle idea sort of works like this. Say a company guarantees 99% uptime and the oracles will ping that service, if it ever gets less than 99%, then the user gets a refund or something like that. Currently uniswap is the platform getting a lot of attention to swap tokens in a gaming like manner.

Typically places are pricing things in the country's currency against Bitcoin price. So $1 item in the United States will be priced at whatever the equivalent is in $1 of Bitcoin. Here some places have a discount when paying with cryptocurrency to try to raise adoption.

One noticeable thing is and you can search this out, is that a country's currency falling against USD and you had BTC through that, you are now hedged against your country's falling fiat and did very well. Almost the entire time since Bitcoin has existed unless you bought the top of late 2017 early 2018. Besides that brief period, its done very well against fiat paper money.

[onebigindian]

4 hours ago, buzzkillb said:

Currently uniswap is the platform getting a lot of attention to swap tokens in a gaming like manner.

 

What's a "token"? To repeat,  what's to prevent me from just saying  the ice cream was crap in order to get the refund, when in fact there was nothing wrong with it? What MORE can a smart contract do? The money just....moves around by itself? I find that kind of...Mind Boggling! 

I didn't understand the last point - what's "hedging"? I'm not really that interested in "trading", ie. buying cryptocurrency, waiting for the price to go up IN RUPEES, and then selling it to make a profit - no, I'm (much) more interested in shifting to the new system altogether!

 

Is it possible to hook up "Coinomi" with IoT-type of stuff, so for example, if I've paid for the Metro with Ethereum, I can place my phone on top of the smart gate for the train, and it opens if the payment authenticates?

 

Thanks a lot for your help

Edited October 15, 2020 by onebigindian

[buzzkillb]

A token is a smart contract generally on Ethereum blockchain. In a way mining on ETH is what secures the token contracts. I don't know how you prevent fake attempts at refunds, but you would create some mechanism for maybe ratings based on user feedback or something. This space is very brand new and a lot of the mumbo jumbo people are putting out is making finding real information tough.

The word hedging isn't important, but you did ask what creates the price of something in Bitcoin in relation to multiple countries. Take Venezuela for example. Their currency got hit hard, but people who had Bitcoin through the downfall now can afford a lot more food than someone that didn't have Bitcoin. That's your economics part.

Anything is possible with the wallets, but coinomi is just an easy mobile wallet example for simple transactions between people. I would try that out before getting into complex custom payment systems that are basically run by governments. Though some are creating versions of credit cards that tie into your crypto wallet. Depends a lot on which countries have working solutions like that, not sure the US has any right now. My thinking is that using a credit card already exists, I don't see the purpose of spending Bitcoin or Ethereum in that way.

[onebigindian]

If I use "Coinomi", is my cryptocash stored right ON the phone? ie. if I buy Bitcoin/Ethereum and store it on this wallet, and someone steals my phone,....am I screwed? If that's true, is there any way around this? (storing the cryptocash "on the cloud" etc.)

Let me get this straight - I can swap SMART CONTRACTS THEMSELVES on Uniswap? You mean the code for them?? Does one pay Money for them or something? What is the point of this??

Is it possible for "AI" to take a look at the actual financial transactions that are happening on Bitcoin/Ethereum blockchains, and take certain "steps", depending on circumstances (ie. when there's been shady dealings)? If a government is trying to fund a new bomb, can the cryptocurrency system "take a look" and cancel the transaction? Who writes the rules for all this? Can that rule be changed later? The govt can't simply REWRITE THE RULES according to what bomb it wants built (ie. the smart contract), can it? (that would make it Useless!)

What are the differences between ALL the cryptocurrencies? Why are there so MANY of them?? (Is there any point to that?)

Edited October 16, 2020 by onebigindian

[onebigindian]

I've heard that you can put ART on the Blockchain - if I want to put a painting I've made (ie. a .jpg file), or a book I've written (ie. a .pdf file) out there, so that people round the world can download it, and they have to pay me 1 Bitcoin for it - what do I do? What are the solutions available NOW? How do I prevent the .jpg or the .pdf from being Pirated AFTER that?? Once again, like the ice cream example above, if they don't LIKE the book, can they somehow "return" the book to me (ie. DELETE the PDF file - verifiably and securely!) and Ethereum will refund them the money? The file MUST be deleted at their end, they mustn't be able to like, upload it to a torrent site or something, needless to say.....

That, if it CAN be done, needless to say, changes the Rules of the Game ENTIRELY......!!

Edited October 16, 2020 by onebigindian

[onebigindian]

Also, how do exchanges work where I can change rupees into Bitcoin or Ethereum? When I buy some, what happens exactly? And how is the RATE decided - how much Bitcoin for how many rupees?

Thanks.

 

[onebigindian]

Hello? Are you there?

[buzzkillb]

On 10/15/2020 at 7:40 PM, onebigindian said:

If I use "Coinomi", is my cryptocash stored right ON the phone? ie. if I buy Bitcoin/Ethereum and store it on this wallet, and someone steals my phone,....am I screwed? If that's true, is there any way around this? (storing the cryptocash "on the cloud" etc.)

Let me get this straight - I can swap SMART CONTRACTS THEMSELVES on Uniswap? You mean the code for them?? Does one pay Money for them or something? What is the point of this??

Is it possible for "AI" to take a look at the actual financial transactions that are happening on Bitcoin/Ethereum blockchains, and take certain "steps", depending on circumstances (ie. when there's been shady dealings)? If a government is trying to fund a new bomb, can the cryptocurrency system "take a look" and cancel the transaction? Who writes the rules for all this? Can that rule be changed later? The govt can't simply REWRITE THE RULES according to what bomb it wants built (ie. the smart contract), can it? (that would make it Useless!)

What are the differences between ALL the cryptocurrencies? Why are there so MANY of them?? (Is there any point to that?)

Coinomi stores your funds using a seed. This seed ties your funds to Coinomi, all the coins you can add. When starting Coinomi you want to write that seed down somewhere safe. Notebook with a pen type of thing. Also you will create a password on your phone, which that password will be asked for when you try to send funds to somewhere. An address, lets say Bitcoin address, is a private key. Every wallet running Bitcoin generally holds the blockchain. You can then use this private key on any Bitcoin node and move your funds. This is why its important to guard your private keys. On Coinomi the seed is generating addresses using an algorithm. So say you have 100 BTC addresses on Coinomi because this is now your favorite wallet to use. There are 100 private keys behind all of that. Its possible to convert your Coinomi seed and pull all of the private keys and put those on a full Bitcoin QT. The seed generation also will work with all the other coins listed on Coinomi. In a way its already in the "cloud", but its basically impossible at the moment for someone to find an address with a balance, and crack your private key.

Yes there is chain analysis by many different govts and private entities that try to tie everything together, but a transaction I don't think can be flat out stopped. The mining pools on Bitcoin might have a mechanism to blacklist addresses, not sure.

Bitcoin is slow to transact with, but its also the most famous cryptocurrency. Denarius transacts much faster and cheaper, but is little known. Different cryptocurrencies are doing different things. For instance Blocknet is currently working on a DEX with atomic swaps where a user can exchange their coins without dealing with a centralized exchange and no ID requirements. So Block is solving a problem with exchanging lots of different cryptos between people. Monero is another one focused on privacy. Personally, 1000 different cryptos doing different things in different ways can be supported through the world.

Ethereum and Tokens are a whole other thing and world in conjunction with this.

[buzzkillb]

On 10/15/2020 at 7:51 PM, onebigindian said:

I've heard that you can put ART on the Blockchain - if I want to put a painting I've made (ie. a .jpg file), or a book I've written (ie. a .pdf file) out there, so that people round the world can download it, and they have to pay me 1 Bitcoin for it - what do I do? What are the solutions available NOW? How do I prevent the .jpg or the .pdf from being Pirated AFTER that?? Once again, like the ice cream example above, if they don't LIKE the book, can they somehow "return" the book to me (ie. DELETE the PDF file - verifiably and securely!) and Ethereum will refund them the money? The file MUST be deleted at their end, they mustn't be able to like, upload it to a torrent site or something, needless to say.....

That, if it CAN be done, needless to say, changes the Rules of the Game ENTIRELY......!!

Rarible I think is the most popular platform right now for art tokens, better known as NFT's. Like everything else digital there is no way to stop someone from saving the image/pdf to somewhere else, but the NFT is basically an authentication of the owner. People can easily pirate games and music, but not everyone pirates games and music. Refunds I have no idea, these platforms are still very new, and would take more people working on solutions to how typical physical trade works. Maybe it could be an activation code to view the item and if that activation code goes away on the blockchain, then the user can't view the item anymore. Sort of like Activating Windows.

Developer of Denarius is working on the ARI token, https://ari.finance/, and has a lot of blockchain experience and has been creating new stuff in the blockchain world. Maybe he reads this to get a sense of what people want to see and use. First I would say all of this is so new that just following cryptos right now is like watching a complete world get built digitally. Second there aren't that many people in the scheme of things who understand any of this. Third bring in you have to know coding to build a lot of this out, which again all new means its going to take time. When people say someone is early in cryptocurrencies, they aren't joking. It moves faster than anything I have seen over the last 30+ years I have been sitting at a computer.

[buzzkillb]

On 10/15/2020 at 8:52 PM, onebigindian said:

Also, how do exchanges work where I can change rupees into Bitcoin or Ethereum? When I buy some, what happens exactly? And how is the RATE decided - how much Bitcoin for how many rupees?

Thanks.

 

A centralized exchange has multiple wallets running. The larger exchanges that accept Fiat also run sort of like a bank, but they generally aren't banks. I put some Denarius on an exchange to sell. A user goes onto an exchange and they buy. So I open my Denarius wallet and send into SouthXchange and put a sell order for a given price in Bitcoin as that's the main trading pair. Then you find an exchange that will take rupees and buy Bitcoin with that. You send Bitcoin to SouthXchange and marketbuy my Denarius. Then you withdraw your newly bought Denarius to your own wallet for safe keeping. In that process SouthXchange is running Bitcoin and Denarius wallet daemons, command line only, and those are tied into their database that sends and receives. Lets say I deposit Denarius into SouthXchange for this example. When I make an account there my username has a created Denarius address inside their Denarius wallet daemon. This address is then linked to my username in their database. When I do the deposit, their wallet sees my address got funds and updates their database with that amount (balance). When we trade BTC and Denarius on the centralized exchange, the database is being updated, think of it like an access database or excel spreadsheet. When you finally want to take your Bitcoin or Denarius back out, then the database gets changed as now the wallet daemon will withdraw to you. So all the trading in between is happening on the exchanges database, and the wallet daemons (blockchain) only gets touched on a deposit or withdraw.

[onebigindian]

It'll take me a bit of time, and plenty of rereadings to understand all of that, so bear with me :) In the meantime, a question - what if 2 smart contracts are in CONFLICT? In my Ice Cream example above, what if the ice cream seller simply writes a smart contract which simply returns the money BACK to him, after it comes to me?? Does the Ethereum system prevent this situation in some way, ie. there is some "artbitration" or "mitigation" done AUTO, by the software??!!

[buzzkillb]

41 minutes ago, onebigindian said:

It'll take me a bit of time, and plenty of rereadings to understand all of that, so bear with me In the meantime, a question - what if 2 smart contracts are in CONFLICT? In my Ice Cream example above, what if the ice cream seller simply writes a smart contract which simply returns the money BACK to him, after it comes to me?? Does the Ethereum system prevent this situation in some way, ie. there is some "artbitration" or "mitigation" done AUTO, by the software??!!

You are either trusting the smart contracts you are using there is nothing malicious or glitchy, or you are creating the smart contract and cross fingers no glitches. If you are curious about this I would suggest looking up Solidity and Remix IDE tutorials. Search for simple ERC20 tokens to get started.

[onebigindian]

I have a question about MIDDLEMEN: the Net was supposed to get rid of middlemen, and with Blockchain that claim has been RE-ITERATED, from what I understand. A site like - www.openbazaar.org , if I buy something there, does my ENTIRE MONEY go to the MAKER of that product, instead of the site taking a percentage? So how does the site maker make money then? Why do they do it? (why'd they make OpenBazaar?)

[buzzkillb]

53 minutes ago, onebigindian said:

I have a question about MIDDLEMEN: the Net was supposed to get rid of middlemen, and with Blockchain that claim has been RE-ITERATED, from what I understand. A site like - www.openbazaar.org , if I buy something there, does my ENTIRE MONEY go to the MAKER of that product, instead of the site taking a percentage? So how does the site maker make money then? Why do they do it? (why'd they make OpenBazaar?)

The internet did get rid of middlemen until everyone flocked right back to things that sell at a loss and are backed by huge money. In a way blockchain is at that early stage where things can stay decentralized or go right back to centralization. Bitcoin and Paypal kind of remind me of this, in the way the product is being introduced. Never used openbazaar so not sure how that works. But a site should take a small percentage to help continue development of the platform. For anything to let developers need to get paid. Why would someone create that? Because a decentralized exchange for goods is the pinnacle of services. Maybe the devs wanted notoriety, or introduce something amazing to the world to change things, or had a later idea how to charge for the service once it became larger. Early paypal gave $10 for new signups. Now paypal blocks users who use the platform. 2 very different things over 20 years of being around.

[onebigindian]

Can you please quantify the statement "until everyone flocked right back to things that sell at a loss and are backed by huge money" - do you mean like, Amazon, sells stuff at BELOW cost price? Which they are funding out of their OWN pockets? How can that work?!!

 

I thought the very DEFINITION of blockchain was "decentralised"....?

[buzzkillb]

1 hour ago, onebigindian said:

Can you please quantify the statement "until everyone flocked right back to things that sell at a loss and are backed by huge money" - do you mean like, Amazon, sells stuff at BELOW cost price? Which they are funding out of their OWN pockets? How can that work?!!

 

I thought the very DEFINITION of blockchain was "decentralised"....?

Amazon has been funded by investors since inception. Only a year or so ago did Amazon make money. Not funding out of their own pocket, funding out of investors pockets.

A lot of terms are thrown around in cryptocurrency space. I would view decentralized as having a marketplace that is tough to shutdown and no single entity controls it. An example, DEX (Decentralized Exchange) is thrown around a lot. But to follow that, it cannot be shutdown or have a middleman. Playing on BlockDX right now and the user can open 2 wallets and trade with no middle man. To keep incentive for the backend stuff that needs to run for this to go smoothly, BlockDX charges a transaction fee of Block per transaction. This fee spreads through the nodes running the backend to keep the whole thing running. The user pays a little fee, and now can atomic swap with other people and this cannot be stopped.

[onebigindian]

I have a question about the actual DATA: is WHAT I actually buy, say my ice cream (man, I'm getting sick of that example! :) ) open to whoever wants to know about it? I understand that *I*, ie. my NAME is anonymised, but the fact that I bought a "Cornetto, strawberry flavour" - is that data open to everyone? Even if they don't know who that guy actually IS? (every marketer's DREAM!)

[buzzkillb]

12 minutes ago, onebigindian said:

I have a question about the actual DATA: is WHAT I actually buy, say my ice cream (man, I'm getting sick of that example! ) open to whoever wants to know about it? I understand that *I*, ie. my NAME is anonymised, but the fact that I bought a "Cornetto, strawberry flavour" - is that data open to everyone? Even if they don't know who that guy actually IS? (every marketer's DREAM!)

I think everything is basically storing transactions on the blockchain. Maybe some chains are storing info, but no clue if any are storing sales information yet.

[onebigindian]

Can they do that (store item info)?

[buzzkillb]

3 minutes ago, onebigindian said:

Can they do that (store item info)?

They can in different ways. I would suggest trying some wallets out, even just downloading and syncing to see how the basic part of this works.

[onebigindian]

OK, thanks. The actual transactions though, the entire list, is just...open to everyone, right? That's what the Blockchain IS? 

 

Do you have to give national ID of some sort (such as a passport) to open a crypocurrency account? Is this ID linked TO your transactions in any way? (well, due to privacy I'd suppose not, but CAN it be??)

[onebigindian]

I have another question about the Ice Cream example :) - if I pay the ice cream man, and the ice cream is bad, what if he SPENDS that money (and has nothing left) before the smart contract has a chance to give me my refund??

[Ghost]

On 10/26/2020 at 9:09 PM, onebigindian said:

I have another question about the Ice Cream example - if I pay the ice cream man, and the ice cream is bad, what if he SPENDS that money (and has nothing left) before the smart contract has a chance to give me my refund??

Simply, if you send YOUR crypto to someone else or a smart contract or any other address, the crypto is no longer YOURS.

Crypto is a one way transfer typically.

 

On 10/24/2020 at 11:37 PM, onebigindian said:

OK, thanks. The actual transactions though, the entire list, is just...open to everyone, right? That's what the Blockchain IS? 

 

Do you have to give national ID of some sort (such as a passport) to open a crypocurrency account? Is this ID linked TO your transactions in any way? (well, due to privacy I'd suppose not, but CAN it be??)

Yes typically most blockchains are open ledgers as well so you can view transactions publicly. You do not need to give any sort of identification for cryptocurrency, the point of crypto is that you are your own bank, you own your own private keys and thus your funds, no one can tell you what you can and cannot do with your cryptocurrency. Typically a transaction is relayed into the network by some sort of node running that particular blockchain, if you are the one running that node and relay the transaction, then yes it can be traced back to you, if you are using some public node or 3rd party broadcasting service, than typically your transaction is still fairly private. Anonymity is fully possible with transactions with technologies like Ring Signatures and zkSnarks, etc.

[onebigindian]

When making a payment with Bitcoin etc, is there a concept of an OTP? ie. a random number that comes to your phone, that you have to key in, for Protection??