Ask HN: What is the point of crypto currencies run by a company?

2 points by jacobpedd 7 years ago | 2 comments

After reading the 1,000th article about how a company (Facebook in this case) is creating its own crypto currency for X. I feel like I have a missunderstanding about the basic use of the terms crypto and blockchain.

I thought the purpose of a crpto currency was to decentralize the recording of transactions? Also in the case of Facebook's coin the value is backed by existing currencies. If the recording of transactions is done by a company like Facebook or a country like China, what is the purpose of blockchain versus a normal database? Where do miners fit into these coins if at all? I see the value in the removal of transaction fees, but again where does crypto come in versus just using a traditional db.

I have been trying to find answers to this but the internet is flooded with junk around these topics. Any response, resource are appreciated! I feel like this stuff is all over the news and nobody understands it.

qldrmfqldrm 7 years ago |

In fact it is not as easy as it seems. Bitcoin is in fact 'something' that is a by-product for performing the most appropriate Proof of Work for a given block of transactions. For this mining reward the miners burn the hell out of resources and because of the immutable history in the chain and such efforts put, Bitcoin has a value.

Ether in Ethereum follows a similar logic. But plus to just rewarding the miners, Ether is 'required' as a mean of payment for performing additional computing tasks for a smart contract to run as requested. That is so called GAS and it makes Ether somewhat called 'Utility Token'.

I think these are the basics how cryptos have values and how to have it properly with right proposition. Value comes from successful execution of certain task in a decentralized way for the currencies are created in such a manner. So called 'Tokenization' may have some advantages over traditional applications but currently, properly positioned tokenization projects are scarce in the industry.

For blockchain to be able to properly scale up and create value, still the infrastructure is in early stage development. But as a person who is working in the industry, I see the improvements are being made in both centralized and decentralized forms.

znpy 7 years ago |

1. Milk money off investors

2. stop