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Generative AI hype is ending – and now the technology might actually become useful
(theconversation.com)
this post was submitted on 20 Aug 2024
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Actually it does solve some problems of traditional currency, problems for which there are few if any other solutions. It's both much harder to counterfeit and it can be designed to be more traceable. It just also has its own problems like the stupidly high energy consumption, though this is gradually being fixed. The reason big governments don't want in is probably because they can't control it to the same degree they can with government backed fiat.
Generally though money has tons of problems both in concept and specific implementations. As I keep saying maybe we should come up with a better system.
I wouldn't say that it's harder to counterfeit so much as that the methodology is radically different due to the untrusted, peer to peer nature of crypto. Because of the way that that works, in order to fake a transaction you need to convince the majority of ledgers that the transaction occurred (even if the wallet that is buying something doesn't have anything in it). Because the ledger is ultimately decided by majority vote. You can trace the transaction, but wallets are often anonymous, so the trail ends at the wallet. Especially since somebody would use a burner wallet to do such a thing. It's basically buying something with a hotel keycard with a stolen RFID on it.
I think governments don't want anything to do with it because its nature causes it to be too unstable in its value. It would be like tying the value of your country's currency to the value of day trade stocks. One day, your money is worthless; a week later, it's skyrocketing in value.
At the end of the day, currencies are a system of abstraction to simplify the process of trade - whether between people or countries. We agree that the magic paper is worth the same amount because it's easier than arguing that the magic rock that gave your wife cancer is worth at least 2 goats, not one. It's always going to be a flawed system in some way. Crypto's flaws just make it an ideal system for black market dealings compared to traditional fiat currency in its current setup, on top of the energy and computing costs.
You're kind of right but also very wrong. You can't convince the other ledgers that there is money in an empty wallet because all of the money in the whole system is known about. In Bitcoin every single transaction is known, every time a new coin is known. Not just by one or two people, but by every other full bitcoin instance in the entire system.
What you can actually do is something called a 51% attack. This allows you to spend money you do indeed have multiple times over. It's called a 51% attack because you need at least 51% of the processing power of the entire network under your direct control. So basically it's like cheating people by buying 51% of a bank and using that control to do dirty dealing. Actually getting to that point is incredibly hard unless you're a very rich state actor or something. At that point you might as well not bother and just mine like crazy instead of cheating the system and risk getting caught. Someone who has 51% of the processing power of the system would also get the majority of coins mined for themselves. I've seen attempts at a 51% attack but they only really work on small cryptos and even then it's very unlikely to succeed and go unnoticed for long.