Crypto Thoughts

I don’t talk about my personal life often, because I instead use social media for impersonal things (No one online knows I broke up with someone a few weeks ago, for example), but I broke the silence when I returned from Porcfest to share a small tragedy that had befallen me: the laptop on which I kept my BTC, LTC, and ETH suffered an unknown catastrophic failure on the trip to Porcfest.

Total data loss.

No worries, right? I’m an I.T. chick–surely I had backups. In fact, I did, and do, but there is a small problem. In a truly worthy lesson about procrastination, I encrypt things. Pretty much everything. My entire hard drive is encrypted. My phone is encrypted; the removable storage in my phone is encrypted.

On that laptop was a text file that contained several broken series of strings of characters, encoded in a way I designed mentally. “Move the first 56 digits to the end, invert the entire thing,” that sort of thing. Someone who managed to get access to the file would still have unusable private keys, because of these changes I’d made to them. It was tedious sometimes, but secure. There was no fear of anyone, independent or state hacker, getting into my stuff.

In a separate text file was another key–one that was the private key to the encrypted backups. If you’re not familiar with encryption, then this is what I basically said: I created the perfect safe, and then locked the key inside of it. I kept telling myself, “I need to move that text file somewhere else.” But I only ever really used the laptop for work, so on those moments when it occurred to me, I wasn’t in a position to move it anywhere. Of course, my writings, music, and all that are backed up redundantly in other places, so there’s never a risk of losing those.

But each separate backup is a vulnerability point. When dealing with money, it’s not a great idea to throw the unencrypted private key on Google Drive.

So when the drive failed, I lost the crypto I had. Vanished forever into the ether. It was not a lot of money, then or now, but I could really have used access to it while I was at Porcfest.

C’est la vie.

The lesson was learned, and now that I’m rebuilding wallets and purchasing again, I’ve got better redundant methods to protect my investment. Take my warning: don’t leave your encryption keys inside of encrypted backups thinking “nothing will go wrong in the next few days, and I’ll move it later.”

Bitcoin, Ethereum, and Litecoin are my coins, primarily Ethereum. Probably for the same reason I prefer Pepsi to Coke, and the Rolling Stones to the Beatles. So let me get started this crypto discussion.

The Past and Future Coin

In olden days, people broke coins in half and quarters to make purchases. We’ve repeated this with modern crypto currencies, and this is part of Bitcoin’s problem: I don’t have a ton of money, and I have no desire to purchase 0.0003 of a coin. It feels like nothing. It feels like turning $40 into nothing. It’s true that it’s not “turning $40 into nothing,” but how it feels is an important consideration when we’re discussing investments.

This is why I prefer ETH and LTC. $40 in LTC gets you an entire coin (or very nearly). $40 in ETH gets you more than a tenth of a coin. It’s important that these coins can be broken into such small chunks, and BTC is probably the best investment of them, but that’s the other major thing worth thinking about.

Different Denominations

In practice, BTC, LTC, and ETH aren’t different currencies. Yes, they are, strictly speaking, and they have different philosophies, goals, and code. But for the average user, that isn’t important.

What’s important is that BTC is on its way to being the Ten Thousand Dollar Bill, ETH to being the $1,000 bill, and LTC to being the $100 bill. The future will see fiat state currencies wiped away, but it will take numerous cryptos to do it, and I’m not sure BTC will be the leading contender in the end. I strongly suspect BTC is in a bubble, and that when it bursts, people will move en masse to ETH and less so to LTC, and the crypto-currency market will begin to stabilize. BTC will recover, of course, but I don’t see it holding its place in the long run.

What we’ll see in forty years (or longer–I’ve not thought much about the timeframes) are purchases made for “Five ETH, three LTC, and one DASH.” I don’t think we’ll see “5.76352715 ETH is the price.” It’s simply not practical for denominations to be split, cut up, and tossed around like that. It will remain possible in theory, but I don’t see it happening indefinitely, and I don’t see a car being sold for “3.21234221 bitcoin”. It’s happening now, yes, but “3 BTC and 9 ETH” is a lot more succinct and easier to communicate.

We may even see the rise of a single crypto designed to do exactly this, to provide multiple denominations of a single currency. I think most ordinary people would flock to such a currency. On a higher level, it would really just be set fractioning of a single coin–like if we called eight bitcoins a “bytecoin” and half a bitcoin a “slipcoin.” But the ease and convenience of it would attract people, and people would gladly give up precision for convenience (just look how many people round pennies down).

I don’t think the crypto market is where it’s going to stay in the long run. I don’t think they’re ready to be taken as primary currencies, because “0.00031 BTC” is too sloppy of a price. “One ETH and one LTC” is far more attractive.

Time will tell, of course, but I was right about the August split, even as self-professed experts poured out to tell me that there would be no split, and that I didn’t know what I was talking about. Who knows? The future is going to be interesting.

But if you’re not buying crypto currencies, you should be.

3 thoughts on “Crypto Thoughts

  1. “I don’t see a car being sold for “3.21234221 bitcoin”. It’s happening now, yes, but “3 BTC and 9 ETH” is a lot more succinct and easier to communicate.”

    In what universe is communicating two different numbers over two different blockchain ledgers more succinct or easier than communicating one number over one blockchain ledger? That’s like making a single payment in a combination of dollars and yen, not a combination of dollars and cents.

    • Behind the scenes, it certainly isn’t, and is certainly more complicated. I wrote this article more from the perspective of the ordinary user, not people who know what a blockchain is. “Thirteen dollars and twelve cents” is easier to communicate than “Thirteen point twelve dollars,” even though the two are identical. In the same way “three point zero one two one nine four two eight seven bitcoins” is harder to communicate than “three bitcoins, and one ethereum.”

      Breaking a single BTC into multiple ETH is simpler for the end user than making a half-pence was in 15th century England–just a few clicks in most cases.

    • They have different code behind them, but I’m not sure that I’m seeing a hard distinction between multiple currencies and multiple denominations of a currency, especially when they’re extremely easy to move around and swoop around. They’re all digital currencies with different values, and exchanging one for another is much easier than taking a dollar bill to a cash register to get four quarters. Functionally, though, that’s the same process for the end user–taking one thing and swapping it for less valuable things. End users aren’t going to care about the coding or mechanics behind it, just like they don’t now. And many wallets already support the function. So whether it’s like paying in dollars and cents or dollars and yen isn’t really important, because both are just a few clicks away.

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