Somebody explain Bitcoin to me

(Topic ID: 200502)

Somebody explain Bitcoin to me


By Pinballlew

9 months ago



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    #1 9 months ago

    Ok I am not all to hip on Bitcoin. Can someone explain it to me in layman's terms? Is Bitcoin a good investment? How does the government feel about Bitcoin? Is it legal?

    #2 9 months ago

    IMHO. Bitcoin is an example of valuing something based on it's rarity, for bartering purposes, like Gold. That's why it is convertible to USD. Bitcoin has no intrinsic value as a manufacturing metal like silver has, gold has some but not much value in this manner either, so gold is a decent comparison to bitcoin. Bitcoin's rarity is based on limiting "mining" licenses, to people who can create new bitcoins. None of this, the rarity portion of it, is regulated, so it's rarity is based on your belief that that's what is happening. If bitcoin falters, like China shutdown some exchanges in the past, or someone suddenly "discovers" a large cache of bitcoins, there's no one to complain to. There's a leap of faith here.

    Anyway, digital currency carries a code list with it describing the transaction details everytime it is used. At this time, most transaction are just a change in ownership rather then actually buying something, as those opportunities, buying stuff is still limited. The code behind the bitcoin has some value going forward, but buying a bitcoin does not get you ownership in that technology.

    Almost everybody buys bitcoin hoping to unload it to someone else by converting it to an established government backed currency, USD or otherwise. The ability to liquidate your position, and ease of doing that, are what's making bitcoin move price-wise, IMHO, like it has recently. Illiquidity would make the value crash, so you are just a few bitcoin exchange closings away from a value crash.

    Gold historically gained value in times of inflation, because gold's rarity does not change over time, and fiat currency rarity does change. In the past, USD were backed by gold to limit inflation, and also limited economic growth, which become unacceptable during downturns in the economy as the government could not issue more fiat to bring us out of it. Since 1968, USD are no longer backed by gold but gold has a history of trust as an investment, which means eventually convertible to USD. That's the important part, everyone eventually wants USD conversion, same with Bitcoin.

    #3 9 months ago

    I am officially "old", and have earned my name.
    Im still lost, and glad!

    Thanks for explaining.

    #4 9 months ago

    Most of the post above is not very accurate. Bitcoin is defined as one of many "decentralized crypto-currencies".

    It's essentially the time that is estimated to take to solve a very complex computer algoryrthm. The more complex the algoryrthm, the more valuable the crypto currency or coin. The value of any crypto currency is actually predetermined because the time that it will take to solve it's algorithm is known long before anyone tries to solve such problems.

    As people "mine" bitcoin or solve those algorythims, they become more valueave because there is a predetermined number of solutions. So, as time goes on, fewer and fewer coins will be available to "mine".

    It's the value vs. OTHER centralized currencies like the US dollar that changes quite a bit. The relative value of all other crypto-currencies are almost always compared against bitcoin and that in turn is compared to the USD and all other currency exchange rates.

    That's the basics but you can simply look at the Wikipedia page to get the gist of its origins and the professor that came up with the idea. It's quite interesting to me but I'm a computer nerd so you may not really find it that fascinating if you are not working in that industry.

    #5 9 months ago
    Quoted from snyper2099:

    Most of the post above is not very accurate. Butcoin is defined as one of many "decentralized crypto-currencies". It's essentially the time that is estimated to take to solve a very complex computer algoryrthm. The more complex the algoryrthm, more valuable the crypto currency or coin. The value of any crypto currency is actually predetermined because the time that it will take to solve it's algorithm is know long before anyone tries to solve such problems.
    It's the value vs. OTHER centralized currencies like the US dollar that changes quite a bit. The relative value of all other crypto-currencies are almost always compared against bitcoin and that in turn is compared to the USD and all other currency exchange rates.

    Take it with a grain of salt then. It's comparison to gold is a good one, and gold has a history. A "limited production" currency, like bitcoin or gold or any other crypto currency does not have a lasting value for economic exchange, as it captures it's value based on rarity. maybe bitcoin morphs into something other than a currency. It's value as a currency is smoke and mirrors. It's value as a transaction verifiable based currency is a good one however, so really the originators of bitcoin should have sold stock in that technology instead of trying it as a currency in itself. i would have bought that stock if there was a patent behind it. There's actual value in that case.

    #6 9 months ago
    Quoted from KozMckPinball:

    It's value as a currency is smoke and mirrors.

    Clearly you are referencing US Gov fiat paper, correct?

    Fact: In the last 2 years, the value of U.S. fiat paper has decreased about 4%. U.S. fiat paper is regularly counterfeited. Finally, there is NO LIMIT to the amount of U.S. fiat currency being produced, therefore its value MUST decrease under the laws of supply & demand.

    Fact: In the last 2 years, the value of Bitcoin has increased roughly 7,000%. Bitcoin cannot be counterfeited. There is a finite limit to the total number of Bitcoins which can be mined. That number is 21,000,000 coins. Additionally: Unlike stocks, bitcoin can be traded in fractions. No, you cannot buy 1/100 of a share of Berkshire-Hathaway. But, you CAN buy 1/100 of a bitcoin, currently costing you about $57.63.

    Note: I own, and actively trade, Bitcoin, Ethereum & Litecoin. These are the 3 most popular of the dozens of crypto-currencies. I also use Bitcoin as a method of payment for goods & services.

    In my opinion, crypo-currencies are the future. Currently, there is a TREMENDOUS amount of short, and possibly long term upside in owning/trading cryptos.

    Again, in my opinion, stocks & fiat currencies are far too easily and frequently manipulated. Therefore, I currently have no faith in either of these financial products.

    Quoted from KozMckPinball:

    That's the important part, everyone eventually wants USD conversion, same with Bitcoin.

    Unfortunately this is incorrect. Bitcoin is a worldwide currency. The U.S. makes up a very tiny portion of the global crypto-coin market. It is unlikely that the entire world eventually wants a USD conversion. In fact, one of the largest trading platforms, Bitfinex, is ceasing all U.S. related trades and closing all U.S. accounts on Nov 9. In the global Bitcoin market, the U.S. is completely irrelevant. So, the reality is quite the opposite. People all over the world are trading in their fiat currencies for Bitcoin, etc. And the more businesses that accept bitcoin, and the more governments that accept bitcoin, the higher it goes.

    Supply and demand at its finest.

    #7 9 months ago
    Quoted from ExtremePinball:

    Clearly you are referencing US Gov fiat paper, correct?
    Fact: In the last 2 years, the value of U.S. fiat paper has decreased about 4%. U.S. fiat paper is regularly counterfeited. Finally, there is NO LIMIT to the amount of U.S. fiat currency being produced, therefore its value MUST decrease under the laws of supply & demand.
    Fact: In the last 2 years, the value of Bitcoin has increased roughly 7,000%. Bitcoin cannot be counterfeited. There is a finite limit to the total number of Bitcoins which can be mined. That number is 21,000,000 coins. Additionally: Unlike stocks, bitcoin can be traded in fractions. No, you cannot buy 1/100 of a share of Berkshire-Hathaway. But, you CAN buy 1/100 of a bitcoin, currently costing you about $57.63.
    Note: I own, and actively trade, Bitcoin, Ethereum & Litecoin. These are the 3 most popular of the dozens of crypto-currencies. I also use Bitcoin as a method of payment for goods & services.
    In my opinion, crypo-currencies are the future. Currently, there is a TREMENDOUS amount of short, and possibly long term upside in owning/trading cryptos.
    Again, in my opinion, stocks & fiat currencies are far too easily and frequently manipulated. Therefore, I currently have no faith in either of these financial products.

    Unfortunately this is incorrect. Bitcoin is a worldwide currency. The U.S. makes up a very tiny portion of the global crypto-coin market. It is unlikely that the entire world eventually wants a USD conversion. In fact, one of the largest trading platforms, Bitfinex, is ceasing all U.S. related trades and closing all U.S. accounts on Nov 9. In the global Bitcoin market, the U.S. is completely irrelevant. So, the reality is quite the opposite. People all over the world are trading in their fiat currencies for Bitcoin, etc. And the more businesses that accept bitcoin, and the more governments that accept bitcoin, the higher it goes.
    Supply and demand at its finest.

    Hopefully tax payers won't have to bail you bitcoin "investors" out. Bitcoin has a total value less than $100 billion. Counterfeiting is of no concern to 99.9% of us. What exactly IS the "TREMENDOUS amount of...upside in owning/trading cryptos? Nice statement but no facts. Competing crypto currencies actually makes your case even less plausible. Fiat currency is backed by the trusted ability of the government to grow the economy and collect income taxes to pay off its debts (including US bonds) and not to be constricted by the rarity of the backing means. This has been proven with gold as I've said. You are fooling yourself with technical mumbo jumbo and "investing" in something you can't even explain.

    #8 9 months ago

    i'm still trying to figure out how and where you would "mine" these coins? How does that work?

    #9 9 months ago
    Quoted from CaptainNeo:

    i'm still trying to figure out how and where you would "mine" these coins? How does that work?

    Your best bet is to read up on it at other online sources, rather then read it as re-gurgitated here. At best bitcoin or other cryptos has a finite shelf life and it will end badly for some people left holding the bag with too much "invested". This will happen because of a lack of "demand" as others have described it for rationalizing the value. The lack of demand will happen becuse the exchanges will be closed down. It's another way for people to make money without actually doing anything to earn it. JJP, Stern, Spooky, maybe American Pinball, these people PRODUCE a product, something worthwhile. Bitcoin is a Netflix program in the making, "House of Cards".

    #10 9 months ago

    Simply, a bitcoin is a cryptocurrency. It has no physical form, you cannot hold it, and it's data and values are held within the confines of the computer world. Meaning, a bitcoin itself has no intrinsic value until other people give it a value--ie, it's not backed up by any standard like gold, silver, or anything else. The creators of bitcoin have placed a cap on the capacity of bitcoins that can be produced, and it's hardcapped. Meaning, once all of the bitcoins have been "mined," that's it. Done. No more. This is unlike, say, the federal reserve, which can print more money based on how well, or poorly the economy is doing, or to adjust inflation. None of that exists with bitcoin. What exists is all there is and all there ever will be.

    It was created as a means to anonymously make purchases without having to go through a bank to see withdraws or deposits. A single bitcoin is valued at around $5,000 I believe. Up <10x it's original value from just a couple years ago.

    Another factor in bitcoin is that it's value is subdivided into 8 decimal places--that is, you can have .0000001 bitcoin. (Regular currency only divided into 2 decimal places, so bitcoin is a far more specific currency).

    Quoted from CaptainNeo:

    i'm still trying to figure out how and where you would "mine" these coins? How does that work?

    It's mined by using a computer to solve a very complex equation. Even the most powerful computers have a difficult time solving the long formula to mine it. Once completed, you get a small fraction of a bitcoin. You receive it from a virtual "reserve" of bitcoin that is protected via the exact formula needed to retrieve them. I guess you can think if it as literally hacking the mine to retrieve the bitcoin, but the extreme nature of the way you have to get the bitcoin is how it's protected. Basically, it's mined from doing just brute force calculations. Nothing more. You'll find that in places like Singapore or Thailand, people are actually building bitcoin mines, which are literally just giant warehouses filled with ASIC chip based computers. These ASIC chips are designed from the ground up to very efficiently decode the very complex equation used to mine bitcoin. You can mine bitcoin right from your own computer, but it would never be a fruitful endeavor, and you'd be maxing out your computer.

    #11 9 months ago

    Think about this. You trade bitcoin and if you make money it gets taxed. In USD.

    #13 9 months ago
    Quoted from CaptainNeo:

    i'm still trying to figure out how and where you would "mine" these coins? How does that work?

    You can still do it with your computer, that’s how mining/Bitcoin started, but nowadays it takes dedicated hardware specifically designed to cruch the numbers in order to “mine” Bitcoin and actually get anything.

    I started mining bitcoin a few years ago when a computer with a decent video card could actually produce a decent amount of Bitcoin. As the dedicated hardware started to become available, I then re-invested what I had “mined” back in some of this equipment. I’m more of a hobbyist than a serious investor, as I may have a couple hundred bucks invested. Most of that would be in electricity to run the miners I have.

    A little over a year ago I purchased a new video card for my home computer (long retired from mining) and that’s about when the price of Bitcoin started climbing. That $350 video card I purchased (via Newegg.com) with Bitcoin then now cost over $2000 in what I used in Bitcoin. Kinda kicking myself over that one...

    I’m not suggesting anyone go out and bet their house on Bitcoin. It’s about like investing in stocks, except the risk/reward is a lot steeper. I’m just going to keep my little miners running and let them warm up my game room during the coming winter.

    #14 9 months ago
    Quoted from ExtremePinball:

    It is unlikely that the entire world eventually wants a USD conversion.

    USD is still the preferred reserve currency of the world so any meaningful conversion amount eventually involves dollars.

    Bitcoin at best is highly speculative at worst a ponzi scheme.

    Some global currency/ crypto currency will likely evolve over time as we all get more connected. But to bet any real money on bitcoin today is silly.

    #15 9 months ago
    Quoted from ExtremePinball:

    No, you cannot buy 1/100 of a share of Berkshire-Hathaway.

    Did you know you can buy it in 1/1500th increments?

    #16 9 months ago

    but how do you know where these "mines" reside? I guess that's my initial question. Is there a specific website, how do you know you even have a mine found?

    #17 9 months ago

    For anyone stating that "investing" in bitcoin is like buying US stocks: Stock prices reflect the intrinsic value of the company, based on various factors, but the company is providing value by producing something, making pinball machines for example. The stock value rises and falls based on that intrinsic value and also demand for it's stock that's true, and the amount of stock is limited as well. Investing in bitcoin is like buying a stock in an idea that something is valuable because of its controlled scarcity. Like buying Apple stock because OMG there's only 5.17 billion shares, it's scarce! And if Apple was just a computer generating stock shares.

    #18 9 months ago

    Fake currency created by Skynet to spread itself.

    #19 9 months ago

    The computer power required to mine bitcoin (which, as mentioned above, involves performing an expensive computation) makes it environmentally unfriendly!

    https://digiconomist.net/bitcoin-energy-consumption

    #20 9 months ago
    Quoted from CaptainNeo:

    but how do you know where these "mines" reside? I guess that's my initial question. Is there a specific website, how do you know you even have a mine found?

    Most of the Bitcoin mines are located on the Moon, where lower gravity leads to higher yields. I know a guy who sells maps and surveying equipment, but it's going to cost you.

    #21 9 months ago
    Quoted from guyincognito:

    Most of the Bitcoin mines are located on the Moon, where lower gravity leads to higher yields. I know a guy who sells maps and surveying equipment, but it's going to cost you.

    this is about how I figured, but wanted to ask just to be sure I was on base.

    #22 9 months ago
    Quoted from CaptainNeo:

    but how do you know where these "mines" reside? I guess that's my initial question. Is there a specific website, how do you know you even have a mine found?

    Most “mine” in a pool group. I use Slushpool.com. There are several other mining pools, or you could mine solo, but you’d have better odds winning a Powerball lotto drawing.

    I point my mining equipment at their dedicated work servers, my miners get “work” from their servers, process it and send it back. I can log into the website to track my machine’s work and see when I’m about to get a payout in Bitcoin.

    It’s similar to distributed computing, where people let their computers do work when at idle. If you break up these complex equations into little chunks and then distribute those chunks out over hundreds or thousands of machines...

    So, simply, everyone races to “solve” an equation from the Bitcoin network. First one to do so gets awarded a Bitcoin. In a pool, several people team up to work on a tiny part of the equation. The more work you do, the bigger your part of the reward will be. And once a equation is solved and a Bitcoin is awarded, everyone starts over. And unless you are in the group that solved the equation, you get nothing. Luck is also a part of this...

    #23 9 months ago

    so it's sole purpose is completely useless. Why don't they use this kind of processing power for something useful. Like when NASA uses data collected for scanning the universe searching for communication transmissions. This is shared by 100's of 1000's of computers all processing the collected data together, since the amount of processing power it takes to process all that data is astronomical. Using that kind of processing firepower to process useful data and payout bitcoins could be 2 fold.

    Like the workout place in Korea. They have generators in all the excercize bikes and it powers batteries that the entire fitness club runs off of. Instead of just burning the energy for no cause.

    #24 9 months ago
    Quoted from ExtremePinball:

    Clearly you are referencing US Gov fiat paper, correct?
    Fact: In the last 2 years, the value of U.S. fiat paper has decreased about 4%. U.S. fiat paper is regularly counterfeited. Finally, there is NO LIMIT to the amount of U.S. fiat currency being produced, therefore its value MUST decrease under the laws of supply & demand.
    Fact: In the last 2 years, the value of Bitcoin has increased roughly 7,000%. Bitcoin cannot be counterfeited. There is a finite limit to the total number of Bitcoins which can be mined. That number is 21,000,000 coins. Additionally: Unlike stocks, bitcoin can be traded in fractions. No, you cannot buy 1/100 of a share of Berkshire-Hathaway. But, you CAN buy 1/100 of a bitcoin, currently costing you about $57.63.
    Note: I own, and actively trade, Bitcoin, Ethereum & Litecoin. These are the 3 most popular of the dozens of crypto-currencies. I also use Bitcoin as a method of payment for goods & services.
    In my opinion, crypo-currencies are the future. Currently, there is a TREMENDOUS amount of short, and possibly long term upside in owning/trading cryptos.
    Again, in my opinion, stocks & fiat currencies are far too easily and frequently manipulated. Therefore, I currently have no faith in either of these financial products.

    Unfortunately this is incorrect. Bitcoin is a worldwide currency. The U.S. makes up a very tiny portion of the global crypto-coin market. It is unlikely that the entire world eventually wants a USD conversion. In fact, one of the largest trading platforms, Bitfinex, is ceasing all U.S. related trades and closing all U.S. accounts on Nov 9. In the global Bitcoin market, the U.S. is completely irrelevant. So, the reality is quite the opposite. People all over the world are trading in their fiat currencies for Bitcoin, etc. And the more businesses that accept bitcoin, and the more governments that accept bitcoin, the higher it goes.
    Supply and demand at its finest.

    Bingo!

    Jamie Dimon might as well wear a mask and carry a gun. He belongs in jail.

    #25 9 months ago

    Buy tangible assets.

    When the power goes out....you can still hold gold & silver in your hands. It's tangible....bitcoin is not.

    #26 9 months ago
    Quoted from KozMckPinball:

    Since 1968, USD are no longer backed by gold

    minor correction: 1933, not 1968.

    Quoted from CaptainNeo:

    but how do you know where these "mines" reside? I guess that's my initial question. Is there a specific website, how do you know you even have a mine found?

    in simplest terms ... you buy a powerful computer. you download a program which is your miner. this program downloads chunks of data and performs billions of calculations on it, known as "work". as your computer hashes through these billions of calculations, it effectively finds tiny fractions of bitcoin (or monero or etherium or whatever you're mining). most miners operate in a pool, which means they pool their resources together and get paid in proportion to the amount of work they contributed to that pool's bitcoins generated.

    i'm sure pedants will jump in eager to "correct" me by complicating things, but that's the simplest gist of it. if it sounds like the end user is just wasting tons of electricity to do pointless work to generate imaginary money ... you're not entirely wrong. but having said that, i do think cryptocurrency's importance in world markets will only grow in years to come.

    #27 9 months ago

    It's basically 1s and 0s in a computer that people put a value on.

    #28 9 months ago
    Quoted from TheHueManatee:

    Buy tangible assets.
    When the power goes out....you can still hold gold & silver in your hands. It's tangible....bitcoin is not.

    great plan ... so long as the apocalypse strikes in your lifetime. in which case ... congrats?

    #29 9 months ago

    Not completely useless, the mining is how all of the transactions on the Bitcoin network are verified and keep the network secure. They are factored into the equations.

    The weird thing is that they regulate how fast Bitcoins are mined. The system increases the difficulty as the overall processing power increases. Plus there is a set schedule that halves the amount of Bitcoin awarded for every equation solved.

    Bitcoin is also kinda popular due to the fact that transactions can be anonymous. In the early days there were websites that sold...legally questionable substances for Bitcoin. I think today the main driving factor is from places like China that people there want to use a currency outside of their government’s control.

    I don’t know what the future of Bitcoin is. Like I said earlier, it’s just a hobby for me. I’m not out anything at this point if it just falls apart tomorrow.

    #30 9 months ago
    Quoted from pezpunk:

    great plan ... so long as the apocalypse strikes in your lifetime. in which case ... congrats?

    Don't need an apocalypse for shit to go sideways....but I digress.

    -3
    #31 9 months ago

    Do not invest in Bitcoin or Ethereum or any of this. Unless you have a passion for it and truly understand the tech. It would be like buying Google and Apple today and expecting significant returns from the breakthru of the past.

    #32 9 months ago
    Quoted from TechnicalSteam:

    Do not invest in Bitcoin or Ethereum or any of this. Unless you have a passion for it and truly understand the tech. It would be like buying Google and Apple today and expecting significant returns from the breakthru of the past.

    i would definitely agree that one should know as much as possible about a thing before investing in it, and cryptocurrency is certainly fairly complicated and confusing. furthermore, anyone getting into it today has indeed missed their chance for a 10x ROI in a couple years or whatever, but that doesn't mean it can't be a good investment (that's not advice -- i have no idea what the crypto markets are going to do).

    #33 9 months ago
    Quoted from pezpunk:

    minor correction: 1933, not 1968.

    Actually it was 1972 that finalized the end of the gold standard. The price of gold was set at $35 until then and the price was allowed to fluctuate and private ownership was allowed after Nixon signed the paperwork. So there was no more reason for the US to hold gold reserves in Ft Knox and the US Mint started sell the reserves off at market values. FDR did take away the gold backing of a USD in 1933 because he needed to inflate us out of the Depression. You are correct about that.

    #34 9 months ago
    Quoted from dr_nybble:

    The computer power required to mine bitcoin (which, as mentioned above, involves performing an expensive computation) makes it environmentally unfriendly!
    https://digiconomist.net/bitcoin-energy-consumption

    Has anyone invested in any of the eco-friendly cryptocurrencies?

    https://cryptoinsider.com/eco-crypto-list-coins-focused-environment/

    12
    #35 9 months ago

    I like Minecraft.

    #36 9 months ago

    Ridiculous that this even exists. People need to google the whole tulip bulb crash that happened awhile back in Holland.

    #37 9 months ago
    Quoted from vicjw66:

    Ridiculous that this even exists. People need to google the whole tulip bulb crash that happened a hole back in Holland.

    Yeah...because it's exactly the same.

    #38 9 months ago
    Quoted from vicjw66:

    Ridiculous that this even exists. People need to google the whole tulip bulb crash that happened a hole back in Holland.

    everyone knows about that. this isn't an irrational craze for an arbitrary product. it's potentially a revolutionary form of currency that can't be counterfeited or manipulated by banks and governments due to its decentralized nature. that's the intent, at least.

    it's not nonsense -- but the question is still open whether it will be successful.

    #39 9 months ago

    It's nonsense. It's not backed by anything of value or a stable government.

    #40 9 months ago
    Quoted from vicjw66:

    It's nonsense. It's not backed by anything of value or a stable government.

    kinda seems like you don't know much about the subject.

    #41 9 months ago
    Quoted from pezpunk:

    kinda seems like you don't know much about the subject.

    I have multiple degrees in finance and accounting. Worked for years in corporate finance. Passed cpa exam. Still know some friends in the financial industry. But go ahead and show the usual arrogance that you are known for. Waste your time with bitcoin, and when it has all collapsed, I will not even bother with an "I told you so". Just remember this moment.

    #42 9 months ago
    Quoted from vicjw66:

    I have multiple degrees in finance and accounting. Worked for years in corporate finance. Passed cpa exam. Still know some friends in the financial industry. But go ahead and show the usual arrogance that you are known for. Waste your time with bitcoin, and when it has all collapsed, I will not even bother with an "I told you so". Just remember this moment.

    no need for insults. it's okay, lack of understanding of cryptocurrency is nothing to be embarrassed about.

    bitcoin is an attempt to improve on traditional fiat currencies by using cryptography to ensure the integrity of transactions. its decentralized nature prevents central banks or governments from being able to arbitrarily print additional units. also, bitcoin's blockchain is a ledger that is shared across multiple networks that is a permanent, accessable record of every transaction a bitcoin has undergone forever. it can't be hacked or stolen because of the distributed nature of its accounting.

    you say that bitcoin is not backed by anything. well, it's backed by decentralized proof of its provenance (blockchain), and the proof of work required to generate it. that puts it two steps ahead of the U.S. dollar. remember that all currency is fundamentally only backed by a society's mass acceptance that it has intrinsic value. you can't eat gold, after all.

    i don't know the future (and i don't have any money in bitcoin) but comparing it to the tulip mania fad is not accurate. there's certainly interesting underlying theories behind it.

    #43 9 months ago
    Quoted from pezpunk:

    i don't know the future (and i don't have any money in bitcoin) but comparing it to the tulip mania fad is not accurate. there's certainly interesting underlying theories behind it.

    Sorry, his comparison is a good one. The dramatic value increase in tulips and bitcoin value is/was driven more by speculation than the actual change in rarity or the demand for the underlying asset.

    Heck, with all the people here complaining about pinball prices and machines as investments, I'm surprised it hasn't been linked to our crazy mania.

    pasted_image (resized).png

    #44 9 months ago
    Quoted from Black_Knight:

    Sorry, his comparison is a good one. The dramatic value increase in tulips and bitcoin value is/was driven more by speculation than the actual change in rarity or the demand for the underlying asset.
    Heck, with all the people here complaining about pinball prices and machines as investments, I'm surprised it hasn't been linked to our crazy mania.

    rapid increase in valuation alone is not enough to justify the comparison. demand increased, and prices responded. that's how literally all markets work. some of them are bubbles, some are not.

    #45 9 months ago

    The rapid increase in valuation is being driven by speculation, not the for the intrinsic value it has or in actual change in rarity.

    That in and of itself defines it as a bubble (or mania), and is undeniable in this instance.

    #46 9 months ago
    Quoted from Niterider:

    Most “mine” in a pool group. I use Slushpool.com. There are several other mining pools, or you could mine solo, but you’d have better odds winning a Powerball lotto drawing.
    I point my mining equipment at their dedicated work servers, my miners get “work” from their servers, process it and send it back. I can log into the website to track my machine’s work and see when I’m about to get a payout in Bitcoin.
    It’s similar to distributed computing, where people let their computers do work when at idle. If you break up these complex equations into little chunks and then distribute those chunks out over hundreds or thousands of machines...
    So, simply, everyone races to “solve” an equation from the Bitcoin network. First one to do so gets awarded a Bitcoin. In a pool, several people team up to work on a tiny part of the equation. The more work you do, the bigger your part of the reward will be. And once a equation is solved and a Bitcoin is awarded, everyone starts over. And unless you are in the group that solved the equation, you get nothing. Luck is also a part of this...

    Is this actually what happens, or are you taking the piss? It sounds so ridiculous I can't tell if you're serious or not.

    At some stage, when there is some disaster and there is no power, let's see how far people go with invisible money.

    However, this stuff will probably get some supplies ...

    rd

    IMG_7148 (resized).JPG

    #47 9 months ago
    Quoted from Black_Knight:

    The rapid increase in valuation is being driven by speculation, not the for the intrinsic value it has or in actual change in rarity.
    That in and of itself defines it as a bubble (or mania), and is undeniable in this instance.

    And we (well, some of us anyway) can remember the last time people speculated wildly on something ....

    rd

    IMG_7154 (resized).JPG

    #48 9 months ago
    Quoted from Black_Knight:

    The rapid increase in valuation is being driven by speculation, not the for the intrinsic value it has or in actual change in rarity.
    That in and of itself defines it as a bubble (or mania), and is undeniable in this instance.

    it does your argument no good to propose your opinions and then declare them indisputable facts. of course it's deniable that bitcoin is a bubble or some kind of mania. the increased demand is due to increased awareness and liquidity through better online tools. i'm sure there are a number of people looking to get rich as with any market, but a great many advocates or buyers of bitcoin do so because they believe it to be on firmer ideological footing than currencies backed by a Federal Reserve. Do some research instead of committing to your first knee-jerk reaction. There may be more to it than you realize.

    #49 9 months ago

    Pez, speculation in bitcoin is undeniable, except by you.

    There are approximately 1 billion bitcoin transactions per day, or about $5 trillion in value at today's rate. This is equal to all other global currency transactions.

    Global GDP is $110 Trillion (as of 2015).

    At this rate, total bitcoin transaction values exceed the value of Global GDP in about a month.

    So, if all Global GDP was transacted with bitcoin at these rates, less than 10% of all bitcoin transactions would be for goods and services.

    Bitcoin used for real transactions is still a rounding error in global ecommerce, several decimal places deep.

    The inference is that well over 99.999% of all bitcoin transactions are investment related. So I'd say the speculation is likely more widespread in the market than you want to admit.

    #50 9 months ago

    You might not like the idea of Bitcoin, but the technology used to create and control them will change the future. The blockchain will become a very valuable tool. Blockchains are very secure they’re unhackable. You will begin to see smart contracts that use a blockchain to ensure that they are fulfilled. It’s really amazing stuff.

    To create (mine) a new bitcoin you have to solve an algorithm that encrypts all of the transactions that have happened in the last few minutes. Once solved it get locked into the previous chain and attached to the previous block of transactions, it’s then shared to all connected machines instantly. In order to hatck the chain you would have to hack thousands of computers simultaneously all around the world without anyone noticing the change.

    For some more info I suggest this Ted talk.

    How the blockchain is changing money and business
    https://www.ted.com/talks/don_tapscott_how_the_blockchain_is_changing_money_and_business

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