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View Diary: The Problem with Crypto-Currencies and Why SolarCoin is Different (124 comments)

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  •  Some people need to take that leap (1+ / 0-)
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    Satya1

    Not everyone.  The people that are in a position to accept it are the ones that will eventually, I think/hope, take that leap.

    Once 20% of the businesses in my area are accepting SolarCoin, then why wouldn't I be willing to BELIEVE that SLR has real value?

    I think the "leap" thing is appropriate.  There is evidence that if might work (Bitcoin) and there are lots of other coins that tell us that they can't all succeed and that they might all (including Bitcoin) eventually fail.  The potential is what had me hooked.

    I am taking that leap in a small way.  I am spending, by my standards, a modest amount of money, and buying SolarCoin.  Do I stand to get very wealthy from it? No!!  Even if it exceeded my wildest dreams it would not make it so that I could instantly retire.  Will I be broke if it fails: Absolutely not!  Most of my investments are elsewhere.

    We are working on that elevator story.

    Ted Cruz: The second coming of Christ, but not Reagan (yet).

    by nuketeacher on Mon Apr 14, 2014 at 04:49:00 PM PDT

    [ Parent ]

    •  Oh, "leap" is OK (1+ / 0-)
      Recommended by:
      nuketeacher

      but certainly not in the kierkegaardian sense.

      99% of the language you're using is about believing in unspecified events all lining up somehow in the future.  I disagree with the assumptions upon which you appear to be basing your advocacy of this.  A rhetorical question like this:

      Once 20% of the businesses in my area are accepting SolarCoin, then why wouldn't I be willing to BELIEVE that SLR has real value?
      doesn't mean anything.  It shows that you're a "believer" but it doesn't convey anything meaningful to an independent minded unbeliever.

      What would mean something are current numbers of businesses accepting the currency as payment for goods, how those numbers are growing over time, what future plans for growing those numbers will include and what projections for multiple years forward will be.

      As it happens, I am also a veteran IT dude and have had a good deal of my career (9+) working in some very forward looking, advanced software companies.  I took a look at what is readily available for SolarCoin, and I think there are insurmountable hurdles that inevitably will cause failure.  I'm not saying that to be mean.  It's just my working opinion based on what I've seen so far.

      I truly hope no one is hurt badly if this goes awry.

      I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

      by Satya1 on Mon Apr 14, 2014 at 05:33:16 PM PDT

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      •  Please share your thoughts on the major hurdles. (1+ / 0-)
        Recommended by:
        nuketeacher

        I would be very interested to know what you think the insurmountable hurdles are that will inevitably cause failure, especially from the tech perspective. I would be very appreciative if you could share your perspective on that. Thanks!

        The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

        by Eric Stetson on Mon Apr 14, 2014 at 06:06:39 PM PDT

        [ Parent ]

        •  I would love to continue this conversation (1+ / 0-)
          Recommended by:
          Eric Stetson

          but I need a breather later today and a bit of tomorrow for my "day jobs" and getting my tax returns in.  But it's the claims process that looks fraught with difficulties to me.  I'll throw in some more detail later, but meanwhile...

          For SolarCoin to be a legitimate currency the claims process is every bit as important to it as the Bureau of Engraving and Printing is to US currency.  The Bureau takes extraordinary measures to protect against the fraud of counterfeiters.  Multiple inks, paper, ribbons, microprinting, etc.  What does SolarCoin do?

          I'm not saying SolarCoin has to be as safe as the dollar, but the dollar is the standard.  I'm just saying that the claims process is the key to its legitimacy against fraud.  The pilot process is time consuming and messy and the "future process" is undefined.

          Comparing the BEP to SolarCoin is actually kind of instructive since similar functions need to be performed.  The BEP has to devise protections and periodically change them.  But once they do, in order to "verify" each X units of currency, they just repeat their chosen protections.

          The SolarCoin on the other hand has at least 3 pieces that need to be verified:  the claimant, generator and the usage.  That verification has to happen for multiple claims in multiple countries.  In other words there is a "custom solution" for many different contexts.

          The expense and time of verification per unit of currency is going to be prohibitive, IMO.  And it may still not be effective enough against fraud.

          Auditing needs to be done on previously granted SolarCoins to check for potential patterns of fraud.  That too costs time and money.

          So that is the general scope of the first hurdle that comes to mind and I can add more later...

          I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

          by Satya1 on Tue Apr 15, 2014 at 12:49:39 PM PDT

          [ Parent ]

          •  Thank you. (0+ / 0-)

            I agree that the claims process is the most difficult aspect. The SolarCoin Foundation's goal is to develop methods for it to be fully automated. Admittedly, that will be a challenge -- a major challenge.

            I don't know enough about the technical aspects of solar energy generator verification to have an informed opinion about how likely it is that it can be fully automated.

            Apparently the founders/leaders of SolarCoin think it can be. One of them is David Khasidy, CEO of SunRay Power.

            I hope they are right. If not, then you're probably right that SolarCoin wouldn't succeed in the long term. We'll see.

            If you have a chance to share any further thoughts on why you're skeptical that SolarCoin can succeed, I'd be interested to hear more whenever you can. Thanks again.

            The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

            by Eric Stetson on Tue Apr 15, 2014 at 03:32:44 PM PDT

            [ Parent ]

            •  I am actually quite ignorant (1+ / 0-)
              Recommended by:
              Eric Stetson

              about the existing standards and technologies related to solar generation and metered grid connections.  However, it's not hard to see that there are many possible points of failure.  And this is just on the topic of how you implement it.

              An aside:  In my IT experience, I've seen some really challenging technical problems.  But none of them came close to the challenges required to simply understand messy human business behavior and find a profitable way of emulating it via software.  It's the human side where the real challenges are.

              If you've seen some comments by techies about their appraisal of the ACA rollout failure, you've seen a lot of people who mostly weren't focused on the root causes.  I guarantee the failure of the rollout was way in the beginning and the lack of solid hiring  of managers knowledgeable about insurance, healthcare, project planning and how to manage consultants.  Technical problems are trivial by comparison.

              A bigger challenge is how does SolarCoin convince the world that the many methods for verifying claims in each context all work?  How do they demonstrate that fraud is 99,999% eliminated?  In the end it isn't the technical distinctions of the many inks used in the printing process of 100s that counts at the BEM.  In the end it won't be whatever processes are used at BitCoin to verify claims.  What counts is confidence.  

              As we saw in 2008 when questionable bundling of high risk assets with safer assets occurred, and the ratings agencies gave that their blessing, all it took was for a couple of major organizations to bungle their job and pretty soon even the dollar starts to look a lot more like "funny money".

              So there has to be a number of regulators involved, auditors, disinterested and credible third parties to overlook and approve portions of the process.  There have to be watchdogs watching the regulators.  All that is cumbersome and expensive and as far as I can tell, it isn't even on the map at SolarCoin yet.

              So those are my first two categories of concern:

              1) implementing tight verification solutions for multiple contexts that don't cost more than the currency is worth.

              2) obtaining the necessary confidence from the world at large with regulation showing that #1 is sufficiently able to contain fraud.

              And my third hurdle in mind is the challenge of getting from under that "bitcoin curse".  I've already listed a few observations about bitcoin and was pleased to read from you and nuketeacher an honest acknowledgement about the scams that many of these crypto-currencies (and possibly bitcoin) are turning out to be.

              It will be an uphill battle for SolarCoin to escape this taint.  For anyone with basic investing knowledge what comes to mind with this "class of investment" is not currency trading but tulips or the greater fool theory.

              Another piece of bad news for SolarCoin is that time is running out for them on this.  Thanks to all the scammers, at some point crypto-currency has the potential to develop a bad name from which it cannot soon recover.

              I should probably stop there.  I think there are going to be some unanticipated costs to keep SolarCoin going related to all these three areas

              I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

              by Satya1 on Wed Apr 16, 2014 at 09:34:03 AM PDT

              [ Parent ]

              •  Thanks again. One quick reply: (0+ / 0-)

                Regarding the "bitcoin taint," yes, this is a problem, but I've noticed that it's mostly an issue among liberals. I've seen quite a bit of outright prejudice by liberals against cryptocurrencies because of the fact that they are mostly supported by libertarians so far -- a hostility towards bitcoin/altcoins that I haven't much seen among people of other political persuasions.

                As I've said before, bitcoin definitely has some major flaws and there are good reasons to oppose it. But I honestly think that much of the liberal reactions to bitcoin seem fueled more by anger, even jealousy at the wild success of a libertarian moneymaking venture, rather than by an objective assessment of bitcoin's strengths and weaknesses and an interest in how the technology could be used in ways that would support progressive values.

                I think the liberal opposition will gradually change as alternative currencies gradually become more mainstream and less of a libertarian thing. Plenty of mainstream technology-oriented VCs and angel investors are getting into the cryptocurrency space and they don't care about libertarian ideology, they just care about supporting technologies with a high potential to succeed and make money. These multimillionaire and billionaire investors don't see the cryptocurrency space as a "dutch tulip" phenomenon; they have moved way beyond that kind of characterization, and instead they tend to see it as "the web 2.0," the next big thing in the IT sector. Clearly, though, as the diarist points out, MOST cryptocurrencies will fail, and should fail, because they are pump and dumps. But the smart investors are trying to separate the wheat from the chaff and picking out the ones that offer something of real long-term value.

                You may be right about the specific technological and fraud-prevention challenges associated with SolarCoin. And I very much appreciate your input on that. Thank you for your lengthy replies. I will be passing along some of your comments to the SLR founders because I'd like to hear their reaction to these concerns.

                The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

                by Eric Stetson on Wed Apr 16, 2014 at 10:59:36 AM PDT

                [ Parent ]

                •  Uff Da (0+ / 0-)

                  This is actually a little disturbing, lol:

                  I will be passing along some of your comments to the SLR founders because I'd like to hear their reaction to these concerns.
                  About the "bitcoin curse" there are also other dimensions I had in mind but didn't have time to elaborate.  Bitcoin not only sucks up the attention in this space, thus quite possibly, eventually crowding out interest in newer cryptocurrencies, but as you said earlier, one can't buy a Solarcoin without buying bitcoin first.  That can't be good for a group that is trying to take hold of their own future with their own cryptocurrency.  Whatever gyrations hit solarcoin prices, another level of price instability will also be added by bitcoin.

                  But in the end, I think the main problem is that the implementation, regulation and marketing of SolarCoin will be so expensive due to some of the reasons I indicated, that it will no longer be able to meet its intended purpose of rewarding solar generation.  There are other, more efficient ways of encouraging solar power generation.  

                  There is one way out and that would be if SolarCoins could only be claimed in very large blocks so that the cost of verifying each claim is a smaller percentage of the reward.  But then SolarCoin will be a B2B currency and not one for average people.

                  good luck.

                  I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

                  by Satya1 on Thu Apr 17, 2014 at 09:07:45 AM PDT

                  [ Parent ]

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