What Use Is Unstable Crypto?
I'm still trying to figure this out.
Why is the value of crypto so volatile? Is it because the technology is so early?
Is the goal of Bitcoin, Litecoin, or Ethereum to ever be usable as an everyday currency? Then that would require a massive economic shift to strictly crypto. Because that instability compared to other currencies, while exciting to some, will likely be a huge turnoff for the majority of people (who are generally risk-averse).
I don't trust economists anymore to predict any sort of bubble (they usually get it wrong), so I have no idea when this Bitcoin bubble will pop. I mean going from 3k to 12k in a matter of months is INSANE.
But can it keep going? And why will it?
On a side note, I was talking to one of my engineering professors, John Carlsson the other day, and he mentioned a very interesting brain problem that may help us understand the power of anonymous payment that cryptocurrency is capable of. It's called the "dining cryptographer's problem".
So imagine there are 3 people at a dinner table. One person wants to pay for the whole meal, but doesn't want the other two to know that he paid it. So how does he pay for the meal, while also retaining his anonymity?
Think about it for a second.
The secret is by using a coin.
No, not a Bitcoin in this case, but just a normal coin that presents a binary option. So what the cryptographers do at the table is that they start off with the coin facing one way (let's say it's heads). Then they pass it around the table, and if the person who receives the coin paid for dinner, she would flip it over (moving it to tails).
So by the time the coin returns to the starting point, the group would know if someone had paid for the whole meal if it's different than when it started. If the coin returned as a heads (the original side), then it may be assumed that it was the NSA that paid for the meal, and not one of them.
Therein lies some nugget of wisdom for being able to transmit information (whether that's money, data, or message) while retaining near complete anonymity.
People could send money anonymously to organizations. How would anonymous payments affect our world?
I'll keep thinking about it.