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Introduction To Cryptocurrencies Vs Fiat Money Plus A Warning About Being Stupid

Warning: In the cryptocurrency platform, there is no safety feature built in for those who are being stupid by not paying attention, or who just aren't quite sure of what they are doing. I know, because I just learned a relatively expensive lesson. I will explain what I did to make money disappear like evil magic, and what you should do to help ensure that never happens to you, a bit later in this article.

If you are not intimately familiar with the term, cryptocurrency, you may still have heard about it. Perhaps you've overheard conversations about bitcoin? It gets mentioned in the news fairly often, and it has actually spawned, probably hundreds, of other cryptocurrencies.

To date, most people who have only heard of bitcoin in passing, are probably aware that is has something to do with some kind of new, online money, but they couldn't tell you much more than that. In case that is where you are at, let me give you a very brief introduction, (and while I'm at it, I will also briefly compare it to “normal” money.)

It is true to say that cryptocurrency is a virtual (aka digital) currency, but it isn't true to say that virtual currency is cryptocurrency. That's because virtual currency is the larger category, of which cryptocurrencies are a part of. (Think of it in musical terms: Drum & bass music is a form of electronic music, but not all electronic music is drum & bass music.)

There have been a number of virtual (online, digital) types of alternative money – for instance, eGold,1) which was basically shut down by the US government after several years of success. The government will tell you another story, but the real reason they went after eGold is that is was competing with banks. It was vulnerable to a government attack because it was centralized, owned by a company.

Ironically, the owners of the company that created eGold were charged with money laundering. The reason that is ironic is that banks are routinely charged with knowingly laundering billions of dollars in drug money, yet the government never closes them down, or even makes a single arrest.

Cryptocurrencies, unlike eGold, are not controlled by anyone. They are decentralized. eGold was basically like what PayPal would later become, an online payment processor, but unlike PayPal, the funds were backed in gold.

Cryptocurrencies have the potential to be online payment processors (like PayPal), or money transfer services (like Western Union), but at only a tiny fraction of the cost to the user. Indeed, even now, people who hold the same crypto coins, often trade in goods or services using those coins. Yet, cryptocurrencies take it a step further.

They actually create the coins that are then brought into the world. Of course, they are not physical coins – which is one reason why they can be easily lost if you're stupid like I was – but they have real value, nonetheless.

The federal reserve notes we use as money in the United States have value mainly from the faith that the users have in them. They are known as fiat currency, since they are no longer backed in gold or silver. Decades ago, you could trade them in for precious metal, but now they are only backed by the fact that people still perceive them as valuable.

The Federal Reserve2) board, an amalgam of several huge private banks, controls the printing of money and the setting of interest rates in the United States. They are not part of the government, but they are more powerful, in many respects than the government.

So, they are not really “federal,” and they have no, “reserve,” for we the people. By printing money, creating it from thin air, and lending it to the people with interest, they create debt that the people and the government owes to them.

The way they do it, it's like a game of musical chairs that no one can win. The debt becomes literally unpayable, and the bankers end up owning all the assets of the government and the people.3) There are global banks that are tied in with the Federal Reserve, that have been playing this game for a long time. We now stand at a point in history where nations are virtually owned by the banks, and the banks control the workings of the governments, including their military.

When you're done reading this, you should watch this video and hear the confessions of John Perkins, one of the economic hit men for the globalist bankers, who shows you exactly how he helped to rob third world countries of their assets. You should realize, though, that the central globalist bankers are now doing this to the United States, and it's only a matter of time before the economy collapses.

No doubt, that is why Thomas Jefferson said, “A private central bank issuing the public currency is a greater menace to the liberties of the people than a standing army. We must not let our rulers load us with perpetual debt.”

Amsel Bauer Mayer Rothschild, said in 1838: “Let me issue and control a Nation's money and I care not who makes its laws”.

By printing unimaginable sums of money (and doing some other chicanery including manipulating interest rates, in conjunction with when they make money available for loans and when they tighten it up; as well as the mind-screw known as, derivatives) the Federal Reserve is making its reserve notes (what we call money, or dollars) worth less and less. We may one day, in the not too distant future, find that the fiat money we use is indeed, basically worthless.

Think of a huge vat of soup and a kitchen that distributes that soup to people waiting in line. Now, imagine that someone keeps pouring water into the soup. At first there might now be a discernible difference in the taste, but as more of the soup is given out, and as more water keeps going into the vat, it will soon get to the point where it is obviously watered down, and by a lot.

That is where we are today in regard to our dollars, due to all the printing of other dollars that get put into the money supply. It dilutes the value of the original supply of money, just as the water dilutes the soup. At some point, there will only be water, and no soup, and at some point, the people will notice their dollars are incredibly diluted in buying power, and nobody will want to have anything to do with the fiat American dollar.

That is the classical explanation of inflation. The reason it costs more money to buy, not even the same amount of a product, but even a smaller amount of a product, is because of all the diluted dollars that have watered down the value of the dollars. Since cryptocurrencies are not centralized, and they follow a set of rules that were agreed upon at the creation of the currency and nobody can change that, they can not be manipulated. They also have an intrinsic value, beyond the perceived value.

The value is that it takes work to create the coins. They are mined with computers. They come into existence when computers solve encryption puzzles that get increasingly difficult. Anyone with the computing power can mine the coins.

Most coins get to the point where the problems are so tough, special computer rigs are built that are specifically able to handle the encryption requirements. Also, miners need to work together in teams, sharing in the coins, because a single rig can't really get the job done.

(This is especially true with bitcoin. At the time of this writing, there are some newer crypto coins that can be mined on a regular computer, and without a team.) There is a lot of volatility in crypto coins, so it is possible that having $20 worth of a coin, could turn into thousands at some point in the future. That certainly happened to bitcoin. A lot of people got rich.

While a government would have a hard time totally enforcing a national ban of these global currencies, the Internal Revenue Service of the USA made a ruling that took the wind out of the sails of cryptocurrencies, at least on one level. They ruled that bitcoin and other such currencies are property, not currency, and as such, complicated records are required for each and every bitcoin transaction. That would even include if you were using it to buy a cup of coffee.4)

If you buy a coin at one price and either sell it at a higher price (or simply use it to buy something after the value went up from the price you bought it at), you now have to report it as a capital gain, paying a larger than normal rate of tax. Just the paperwork alone puts a real damper on it. The IRS' goal was to stop bitcoin, or any of the coins, from becoming the main online payment processor and alternative money system it has the potential to be.

Many people are saying that since it's anonymous, it will be virtually impossible to enforce the rules the IRS placed on it, as long as more and more places of business actively accept bitcoin (or other coins) as ways to purchase their wares. In other words, as long as you are not selling your crypto money for US dollars, the government probably won't be able to track you, especially if you're not dealing in really huge sums of currency.

Say you own a roofing company and you take payment in one or some of those coins. As long as there are other businesses that have things you want that also deal in the same coins, you can trade all day and night until the proverbial cows come home. There is no banking record, like there would be if you were using bank cards.

If enough people don't report their cryptocurrency activity as a protest to the IRS trying to do an end run around this new exciting, independent economic system, they might be motivated to be more fair about it and change their rules. Then it would be up to those who are in this crypto economy to take them up on their new fair offer.

The thing you have to watch out for if you decide to enter this new, exciting realm, is the fact that you can lose everything you own in cryptocurrency at the touch of keystroke. As I alluded to at the beginning of this piece, I made a stupid mistake. I lost 1.3 million of a coin in trying to move my asset from one account to another. In terms of dollars, it was less than $150, but that, unfortunately, to me, almost might as well of been $1.3 US dollars.

I had totally forgotten that I was supposed to sell the million plus coins I had, for a percentage of a single bitcoin at the account I had it in. Then I was supposed to send that partial bitcoin to that other account, where I could sell it for fiat federal reserves (US dollars).

But instead of turning my coins into bitcoin, I just sent the 1.3 million to that account which is at a website that does not support that kind of coin, so it simply got lost in cyberspace. So please be sure to triple check everything you do, and make sure the place you are sending your coinage to truly supports that kind of coin.

The scary part is someone with millions of actual dollars worth in crypto coins, can make the same mistake and irretrievably lose her millions, the second she clicks the keyword.

YIKES

Cryptocurrency


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