status: idea

Uncommon Senses

Topics discussed in this chapter are generally agreed but rarely spelled out.

Reasoning with Balances

How are money stored on a blockchain?

People use physical money in daily life. Even with the prolification of digital payments. People might still reason a financial transfer as I give a physical thingy to other person.

I was once asked that if there are some atoms or substances stored in the blockchain. But that is not the case. Everythings stored on the blockchain or any computer system is just data. And even experts could forget about this fact. because in their mind they still reason the transfer with physical stuff.

Exchanges and fiats

• Your 1 ETH in the crypto exchange page means they owe you 1 ETH. But they might not have 1 ETH right now until you ask for it.
• The blockchain is agnostic to fiats. Exchanges keep a balance of crypto and a balance of fiat so that you can turn your fiat with crypto or otherway around. In equilibrium, crypto get a price denominated in fiat.
• OTC. It's dangerous

Values of cryptocurrency and arbitrage

• price of cryptocurrency in two different countries should differ not too much. People arbitrage to maintain the parity.