(Topic ID: 200502)

Somebody explain Bitcoin to me


By Pinballlew

2 years ago



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    There are 1709 posts in this topic. You are on page 2 of 35.
    #51 2 years ago
    Quoted from pezpunk:

    it can't be hacked or stolen because of the distributed nature of its accounting.

    Not entirely accurate....see Mt Gox...resulting in a 'fork in the road'

    Anyhow, I've been toying with doing some bitcoin via Kraken. Talk about security! You would not believe all you have to do to be able to wire USD to seed your account. Anyhow, one of the main concerns is the liquidity issue. Having a fair amount of experience trading stocks, options, commodities, etc. the volatility of Bitcoin make it an excellent candidate for manipulation (see Hunt Brothers and silver). My advice on Bitcoin is to either 1) mine it for fun, as a hobby 2) buy as a purely speculative transaction with money you are fine with losing (think of it as gambling) You may get rich or you may lose it all or 3) day or swing trade it if you are savvy in that arena.

    -1
    #52 2 years 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?

    They reside wherever electricity is cheap to power the computers that "mine" the bitcoins or the crypto currency du jour. That's also where the "rarity" argument falls apart. Every Joe, Jane and Harry can make up their own crypto currency if they have sufficient mathematical and programming knowledge. I for example are heavily invested in crypto tulip bulbs.

    #53 2 years ago

    While the blockchain algorithm is solid, holding a crypto currency is just not a good idea:
    - other entities will create their own crypto currency which invalidates the rarity. And yes, my crypto currency is better than yours.
    - exchanges get closed, hacked or looted by the operator
    - the government knows when you transact crypto currency and they might not like it and/or tax you.
    - if the power or internet goes out so does your crypto currency. In Miami we had a little bit of wind and the power went out for an entire week.
    As I said, crypto tulip bulbs.

    #54 2 years ago
    Quoted from Yoski:

    and they might not like it and/or tax you.

    The IRS wants theirs. You're definitely subject to taxes when profiting off of bitcoin or other crypto-currencies.

    #55 2 years ago
    Quoted from Tomahawkjim:

    The IRS wants theirs. You're definitely subject to taxes when profiting off of bitcoin or other crypto-currencies.

    and that's different from dollars how?

    #56 2 years ago
    Quoted from Luckydogg420:

    You might not like the idea of Bitcoin, but the technology used to create and control them will change the future

    Agreed. Blockchain has applications in many industries, where tracking history, sharing complex information, and security is important.

    If someone could figure out how to use it to secure credit history and identity it would truly be a breakthrough.

    Unfortunately, use as a common currency in its current form is unlikely for a variety of reasons:

    scale - mining gets exponentially more involved as the items age. Do you really want to track a coins entire history to buy a piece of gum or other end-user purchase?

    backing - I don't trust the government, do you think I'm going to trust a corporate entity to back my money?

    the nature of purchases - the volume, rate, and size of most purchases & currency transactions don't need the properties that make blockchain unique: tracking history, sharing complex information, and security

    Blockchain is at the peak of the hype cycle right now. If you want to invest, look at companies that are developing real world solutions based on blockchain.

    Buying Bitcoin today is equivalent to investing in Pets.com in 1999.

    #57 2 years ago
    Quoted from Black_Knight:

    backing - I don't trust the government, do you think I'm going to trust a corporate entity to back my money?

    Explain

    #58 2 years 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.

    Hmmm, something we have in common. How about that.

    You can't tell the Bitcoin fanatics anything. They will have to experience the pain first hand when it hits. People better heed the warnings of people like Dimon.

    I won't let my legal, cpa and financial licensing get in the way though.

    #59 2 years ago
    Quoted from pezpunk:

    ...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..

    The USD is backed by the guaranteed probability that the economy will generate enough GDP to guarantee the amount of tax revenue that the US Government needs to collect. And that the Government is not constricted by a "rare" backing method to be able to grow and shrink the money supply to ensure the economy generates that revenue. It's why US Bonds are considered the safest investment in the world, the fact that guaranteed tax revenue will be used to pay off that debt. "Fiat" is a term bitcoiners or cryptos focus on to mean that the actual money is worthless and can be replaced by something, bitcoin or crypto currency, that truly is worthless. It's a completely naive belief. Running $1 trillion deficits is another story.....some day the amount of debt re-payment will be unsustainable if this continues.

    The US proved in 1933 that basing money's value on a commodity's "rareness" is a ticket to economic disaster and the variables (money supply/interest rates) need to be more controllable to steer a huge economy.

    #60 2 years ago
    Quoted from KozMckPinball:

    The USD is backed by the guaranteed probability that the economy will generate enough GDP to guarantee the amount of tax revenue that the US Government needs to collect. And that the Government is not constricted by a "rare" backing method to be able to grow and shrink the money supply to ensure the economy generates that revenue. It's why US Bonds are considered the safest investment in the world, the fact that guaranteed tax revenue will be used to pay off that debt. "Fiat" is a term bitcoiners or cryptos focus on to mean that the actual money is worthless and can be replaced by something, bitcoin or crypto currency, that truly is worthless. It's a completely naive belief. Running $1 trillion deficits is another story.....some day the amount of debt re-payment will be unsustainable if this continues.
    The US proved in 1933 that basing money's value on a commodity's "rareness" is a ticket to economic disaster and the variables (money supply/interest rates) need to be more controllable to steer a huge economy.

    I don't think anyone is saying Bitcoin will replace fiat currency. It will likely be just another form of currency (somewhat like gold on that front). Even though there can only be 21 million Bitcoins ever (the rarity argument) that doesn't make it a "ticket to disaster". Even if Bitcoin's value went to $1,000,000 per coin (highly unlikely) it would still be divisible down to one Satoshi with a value of one cent.

    #61 2 years ago

    Which part, that a company might manipulate its product to make a buck at my expense, or that the government manipulates its levers, like interest rates, the printing press, or deficits that impact the value of my assets and earnings?

    The government plays lots of games that I don't like, but it is always visible to the public. There is no guarantee of transparency or stability from any of these cryptocurrencies or the promises they make to ensure its value.

    Quoted from Astropin:

    (somewhat like gold on that front)

    It's not like gold in anyway. Gold has intrinsic value. It is used in tech manufacturing, jewelry and other items that need gold. Nothing needs Bitcoin, it has virtual value only.

    #62 2 years ago
    Quoted from KozMckPinball:

    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.

    Yup and how's that going for everyone?

    I'm not a bitcoin fanatic, but I have been buying Bitcoin and started mining Ether a few months ago. Just like the USD, the only thing Bitcoin needs is faith in its value. Unlike the USD, Bitcoin isn't controlled by anyone. You can't print / create more or manipulate its value. Well, unless you can control 51% of the hashing power, but that's basically impossible.

    I've been buying it as an alternative to my normal stock purchases. The entire planet has been moving into the digital age, why not currency?

    The only underlying issue I see with Bitcoin is that other than being a currency, it doesn't have any other benefits. Unlike ERC-20 Tokens that can actually have a function, like smart contract execution, decentralized storage, etc. Things are still in their infancy, but with backing from heavy hitters like Intel, Microsoft, MasterCard, JPMorgan, BP, etc., it has to have some merit.

    Those companies don't have a habit of throwing money at things they think are worthless, or a fad.

    On a side not, I've been interested in Ripple lately. Definitely looks interesting as an alternative to the insane amount of work / time it takes for central banks to complete transactions. Maybe I'll sell some of my Bitcoin Cash and grab a few coins....

    #63 2 years ago

    We have a Bitcoin ATM in London now in a convenience store, and Toronto has some Litecoin ATMs I believe. Some shops around the world only accept Bitcoin as payment. Some people are payed their salary in Bitcoin, and you can buy products with Bitcoin certainly.

    This could crash for the reasons mentioned, but it has all the markings of a snowball rolling downhill. Seems reasonable to have 10% of your portfolio in crypto.

    #64 2 years ago
    Quoted from Tomahawkjim:

    The IRS wants theirs. You're definitely subject to taxes when profiting off of bitcoin or other crypto-currencies.

    Substitute the word Bitcoin, for any other word in the dictionary and the statement still holds true. Irrelevent. The IRS wants theirs whether one makes a billion dollars selling cocaine, or profiting from bitcoin.

    Quoted from vicjw66:

    I have multiple degrees in finance and accounting. Worked for years in corporate finance. Passed cpa exam.

    Quoted from iceman44:

    I won't let my legal, cpa and financial licensing get in the way though.

    All of that education, and all of those degrees still doesn't allow you the ability to predict the future.

    It's funny. Guys that won't hesitate to "speculate" on a new, unfinished, pinball machine for $10,000-$12,000 cash, are telling the rest of us that we're throwing our money away by speculating a few hundred, or a few thousand bucks on a basket of crypto-currencies. Fucking hilarious.

    I'll tell you what.... You geniuses sit on the sidelines, while us idiots dip our toes into the water.

    BTW - bubbles have a base, and a top. The base in bitcoin has not yet been set, therefore, theories of a bubble are completely unsubstantiated. As an example, oil used to trade regularly at $50bbl. But in 2008 or so, oil skyrocketed to $150bbl in a short period of time. Then crashed back down to near it's normal base. The same thing happened with the housing market. Those are bubbles kids.

    Crytpo-currencies are in their infancy. If you want to see what a real bubble looks like, and feels like, toss some money into the stock market right now. Because everybody knows that a 9 year bull market never....pops.

    #65 2 years ago
    Quoted from Black_Knight:

    Which part, that a company might manipulate its product to make a buck at my expense

    This part. What "company" controls Bitcoin?

    #66 2 years ago

    Bitcoin is how you order narcotics on thee olde dark web, which then allow you to get very very very excited about Bitcoin.

    #67 2 years ago

    "Past performance is not indicative of future results"

    Except for tulip mania

    #68 2 years ago
    Quoted from cait001:

    Bitcoin is how you order narcotics on thee olde dark web, which then allow you to get very very very excited about Bitcoin.

    Not anymore. You're thinking Monero.

    10
    #69 2 years ago

    It is certainly true that if you can teach something to someone else, you truly understand it. I got my undergrad degrees in math and physics and could effectively use equations, complete problems and get A's on tests but it was tutoring these things during that time that forced me to understand them better. When you have to explain them on a fundamental level to someone whom may be missing some basics or have more difficulty understanding complex things, you must truly understand it at all levels yourself.

    So far, I have not been impressed by the level of understanding of Bitcoin by anyone in this thread or anyone else I have talked to in person. This is because I still don't understand it despite the attempts to "explain" it to me. I am wondering how many people really do understand it. I am thinking it must be very few. What type of equations are being solved? What does solving them really mean? Do the solutions have any use? How were the equations created? Who created them? How do we know there is only a finite amount? How is that amount set? Is there truly no way to alter that amount? What stops another digital currency from overtaking Bitcoin as the accepted de facto digital currency? I would have to know and understand the answers to all of these questions (and the others that would undoubtedly arise in the process) before I would ever consider investing in Bitcoin; and even then I probably wouldn't.

    I do understand a few things about Bitcoin. Those saying that Bitcoin is not a bubble are correct. It is worse. In a bubble there is a baseline value to something and it becomes overvalued (the bubble) and eventually corrects to some degree to a more appropriate value (the bubble bursts). For Bitcoin, this appropriate value is nothing.

    Bitcoin is not comparable to gold, diamonds, pinball machines or anything else that has real intrinsic value. Almost everything has a consensus value. Basically there is some inflation of the real intrinsic value of most things because enough people agree that it has value and are willing to purchase it for this artificially increased value. Gold and diamonds have real utility and then their beauty and consensus value increase the value from there. Pinball machines have physical parts that have intrinsic value and then the time and skill involved in making them and their entertainment value increase their baseline value along with consensus value. Even something like Magic the Gathering cards have entertainment value beyond their cardboard composition and consensus among collectors increases value from there. The more the value of something relies on consensus value, the less safe it is. Bitcoin's value is 100% consensus value. However, long term maintenance of this value can make something more "safe". An example is art. The real intrinsic value of high dollar art is minimal compared to the consensus value. However, art has maintained its value for a very long time and is more secure. Could the same happen to Bitcoin? Possibly, but it also isn't tangible in any way. It is more comparable to a website. They can go from being worth billions to being worth nothing essentially overnight. But again, they are better than Bitcoin as they provide a service and/or entertainment; neither of which Bitcoin provides.

    I just don't see it. Maybe I'll miss out on a huge opportunity with Bitcoin but I think I (and anyone else who didn't get in years ago and isn't mining it) already did. Bitcoin needs more investors to increase in value so I think that those invested in it will say anything to get the rest of us to maintain the pyramid/ponzi scheme that is Bitcoin.

    #70 2 years ago

    I distinctly remember saying "Digital currency? That's the dumbest thing I've ever heard" back when bitcoins were pennies for an entire coin.

    #71 2 years ago
    Quoted from TRAMD:

    It is certainly true that if you can teach something to someone else, you truly understand it. I got my undergrad degrees in math and physics and could effectively use equations, complete problems and get A's on tests but it was tutoring these things during that time that forced me to understand them better. When you have to explain them on a fundamental level to someone whom may be missing some basics or have more difficulty understanding complex things, you must truly understand it at all levels yourself.
    So far, I have not been impressed by the level of understanding of Bitcoin by anyone in this thread or anyone else I have talked to in person. This is because I still don't understand it despite the attempts to "explain" it to me. I am wondering how many people really do understand it. I am thinking it must be very few. What type of equations are being solved? What does solving them really mean? Do the solutions have any use? How were the equations created? Who created them? How do we know there is only a finite amount? How is that amount set? Is there truly no way to alter that amount? What stops another digital currency from overtaking Bitcoin as the accepted de facto digital currency? I would have to know and understand the answers to all of these questions (and the others that would undoubtedly arise in the process) before I would ever consider investing in Bitcoin; and even then I probably wouldn't.
    I do understand a few things about Bitcoin. Those saying that Bitcoin is not a bubble are correct. It is worse. In a bubble there is a baseline value to something and it becomes overvalued (the bubble) and eventually corrects to some degree to a more appropriate value (the bubble bursts). For Bitcoin, this appropriate value is nothing.
    Bitcoin is not comparable to gold, diamonds, pinball machines or anything else that has real intrinsic value. Almost everything has a consensus value. Basically there is some inflation of the real intrinsic value of most things because enough people agree that it has value and are willing to purchase it for this artificially increased value. Gold and diamonds have real utility and then their beauty and consensus value increase the value from there. Pinball machines have physical parts that have intrinsic value and then the time and skill involved in making them and their entertainment value increase their baseline value along with consensus value. Even something like Magic the Gathering cards have entertainment value beyond their cardboard composition and consensus among collectors increases value from there. The more the value of something relies on consensus value, the less safe it is. However, long term maintenance of this value can make something more "safe". An example is art. The real intrinsic value of high dollar art is minimal compared to the consensus value. However, art has maintained its value for a very long time and is more secure. Could the same happen to Bitcoin? Possibly, but it also isn't tangible in any way. It is more comparable to a website. They can go from being worth billions to being worth nothing essentially overnight. But again, they are better than Bitcoin as they provide a service and/or entertainment; neither of which Bitcoin provides.
    I just don't see it. Maybe I'll miss out on a huge opportunity with Bitcoin but I think I (and anyone else who didn't get in years ago and isn't mining it) already did. Bitcoin needs more investors to increase in value so I think that those invested in it will say anything to get the rest of us to maintain the pyramid/ponzi scheme that is Bitcoin.

    This was my basic feeling yet didn't have the time or energy to write out a long and thought out response. I will say that there is another part that's even worse about bitcoin. The waste of resources it takes in "mining" Bitcoin requires investment in expensive computer hardware to perform what exactly? It seems analogous to buying a bunch of shovels to dig holes out in the desert, and then filling them back in?

    #72 2 years ago

    So I DID type out a huge response and the length of it annoyed even me.

    The short version: Bitcoin transactions are stored in things called "blocks". Every transaction is in a block, somewhere. All blocks are stored sequentially in a never-ending list called a "blockchain". Blocks can be thought of as receipts that are printed every 10 minutes, and the blockchain can be thought of as a chronologically sorted stack of these receipts.

    Bitcoin mining involves solving a cryptographic hashing equation (every 10 minutes to a SHA-256 standard) that tracks every transaction made since the last block. This solution is called a "hash". In addition to figuring out how to uniquely store those transactions, the previous block's hash is added in, as is a single-use number called a nonce.

    The actual equation is sha256(sha256(data+nonce)) < difficulty

    Parts of the solution being solved by mining:
    * "Data" is made up of New Transactions and the Old Transactions Hash.
    * New Transactions - these are important for obvious reasons. You need to know what has been spent, where the coins are, and this helps ensure the same coins aren't spent twice.
    * Old Hash - these being included is double security to ensure that people aren't spending the same bitcoin twice.
    * Nonce - a unique number, in this case a bunch of leading zeroes before the hash, that will relate to the overall hash. Because it is added to the hash it functions as verifiable proof that both the equation was solved and that work was done to solve it.
    * Difficulty - this is an adjustable variable used to ensure these equations take ten minutes to solve.
    * SHA-256 - a function used to cryptographically store any message. Examples: http://www.movable-type.co.uk/scripts/sha256.html

    So yes, mining is important. It also needs to be incredibly difficult, because each solved hash must be unique but also complex enough to ensure that nobody can fake a block chain. If it takes 100,000 super powerful computers 10 minutes to solve the hash for a block, you can ensure that no single person is making a fake blockchain. The difficulty factor of the equation above also helps verify which blockchain is real in the event a fake blockchain ever happened to appear.

    It's actually not hard to figure out what mining is or why it matters: https://en.bitcoin.it/wiki/Block_hashing_algorithm

    12
    #73 2 years ago
    Quoted from pezpunk:

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

    If the shit hits the fan who cares about silver and gold? The "valuable" things will be food, clean water, guns, bullets and liquor. If someone would come and say I will trade you this gold necklace for food I would say hit the road.

    #74 2 years ago
    Quoted from Travish:

    The "valuable" things will be food, clean water, guns, bullets and liquor.

    Liquor?

    When you are scrounging for water food and shelter I think liquor falls right off the list.

    #75 2 years ago
    Quoted from TRAMD:

    So far, I have not been impressed by the level of understanding of Bitcoin by anyone in this thread or anyone else I have talked to in person.

    Followed by:

    Quoted from TRAMD:

    This is because I still don't understand it

    Followed by a diatribe about something you admit you don't understand.

    #76 2 years ago

    How many billion/trillion dollars is the liquor industry every year? Liquor will have value even if not used for drinking.

    #77 2 years ago

    223 Billion USD, about, in 2016

    #78 2 years ago
    Quoted from Travish:

    If the shit hits the fan who cares about silver and gold? The "valuable" things will be food, clean water, guns, bullets and liquor

    Lol!

    I can just imagine the discussion at your doorway during the apocalypse...

    "Travish, I have a bunch of Bitcoin, can I trade it for your Jack Daniels?"

    BOOOOM goes the shotgun!

    haha

    rd

    #79 2 years ago

    Can I use my kindle?

    #80 2 years ago
    Quoted from TRAMD:

    What type of equations are being solved? What does solving them really mean? Do the solutions have any use? How were the equations created? Who created them? How do we know there is only a finite amount? How is that amount set? Is there truly no way to alter that amount? What stops another digital currency from overtaking Bitcoin as the accepted de facto digital currency? I would have to know and understand the answers to all of these questions (and the others that would undoubtedly arise in the process) before I would ever consider investing in Bitcoin; and even then I probably wouldn't.

    With a degree in Math and Physics, you should have no problem understanding the math behind Bitcoin. It's actually built on an old hashcash system to prove work has been completed to provide a solution. It takes a good bit of work to find the solution, but is easily validated.

    Bitcoin uses the SHA256 hash function which was originally developed by the NSA. The hash function uses an algorithm to take an input and create an output. Keep in mind that I'm not a cryptographer, but in a nutshell, the miners collect the transactions and hash them. Once hashed they are organized into a hash tree, the root of which is combined with the hash of the previous block and what's called a nonce (used to change the difficulty of the calculation) to form the block identifier. Then the entire block is hashed.

    Once done, the resulting hash is evaluated to ensure it has the required number of leading zeros (I think it's 72 right now.) If it doesn't, then back to the beginning we go for another attempt. The first one to find the correct result containing the specified number of leading zeros wins and is awarded bitcoin for finding the result.

    When the result is found, it's validated by the rest of the network (which takes no time at all compared to solving the problem).

    I'll try and touch on some of your other questions tomorrow. It's time to go home from work now.

    #81 2 years ago
    Quoted from Astropin:

    Followed by:

    Followed by a diatribe about something you admit you don't understand.

    I don't understand the mining and some other aspects of Bitcoin and don't know the answers to the questions I posted. I do understand some things about investing, that Bitcoin has no intrinsic value and that if this type of digital currency can be created once, it can be done again, and again, and again. My "diatribe" related to those topics. I can tell if someone is a good teacher of something without being an expert myself because I learn easily from them. I can tell if they are a bad teacher because they can't explain it on a more basic level that I can understand. I consider myself to be intelligent (though doesn't everyone?) but I am no genius when it comes to computer programming.

    Maybe what I am most skeptical about is the defense/lauding of Bitcoin by people invested in it. If it is so great, be quiet, keep buying more, and let us fools that don't understand lose out on that fantastic investment.

    Quoted from GotAQuestion:

    So I DID type out a huge response and the length of it annoyed even me....

    Thank you for what you did post. I would be interested in the longer response if you happened to save it. I will check out that link too.

    #82 2 years ago
    Quoted from Travish:

    If the shit hits the fan who cares about silver and gold? The "valuable" things will be food, clean water, guns, bullets and liquor. If someone would come and say I will trade you this gold necklace for food I would say hit the road.

    About sums it up perfectly! Especially the liquor

    #83 2 years ago
    Quoted from Travish:

    If someone would come and say I will trade you this gold necklace for food I would say hit the road.

    You can get it free, after they starve to death.

    LTG : )

    #84 2 years ago

    Actually gold is used for dental reasons, try filling a tooth with bitcoin.

    #85 2 years ago
    Quoted from TRAMD:

    I don't understand the mining and some other aspects of Bitcoin and don't know the answers to the questions I posted. I do understand some things about investing, that Bitcoin has no intrinsic value and that if this type of digital currency can be created once, it can be done again, and again, and again. My "diatribe" related to those topics. I can tell if someone is a good teacher of something without being an expert myself because I learn easily from them. I can tell if they are a bad teacher because they can't explain it on a more basic level that I can understand. I consider myself to be intelligent (though doesn't everyone?) but I am no genius when it comes to computer programming.
    Maybe what I am most skeptical about is the defense/lauding of Bitcoin by people invested in it. If it is so great, be quiet, keep buying more, and let us fools that don't understand lose out on that fantastic investment.

    Thank you for what you did post. I would be interested in the longer response if you happened to save it. I will check out that link too.

    The problem is people talking past each other. Using similar words, but focusing on different contexts.

    Bitcoin itself has no intrinsic value - Correct, like most forms of currency, it's only value is as a token of an agreed upon trade value with another party.
    The "value" in it is only as a form of exchange between two parties. The existence of Monetary exchanges where people are willing to buy and sell bitcoin with other forms of currency is establish a market value in a metric comparable to Government issued money we are used to. The "value" is set by what you can get by exchanging the bitcoin with someone else. Just like Gold has no value to me as an individual consumer, but someone is willing to trade me government backed paper money in exchange for it. Government backed paper I can then use to trade with other people.

    What value do the equations actually solve in mining? The math is self-serving to Bitcoin. The math being computed is math related to Bitcoin's transaction system. Unlike a SETI or other distributed compute systems... it is not a system that has people 'mine' to solve problems for the rest of the world. The compute isn't being applied to some other problem solution, it's being applied to the block system behind Bitcoin's integrity. The "value" of the compute work is that it's actually a decentralized way to validate and strengthen the Bitcoin eco-system. People are rewarded to contribute to the compute power needed to validate the transactions themselves.

    Bitcoin has integrity that is validated and strengthened by math and peer sharing rather than regulated record keeping by governments and "tamper proof" physical tokens.

    Like all token currencies, it's only value is because of an assumed worth in exchange. A government currency is backed by an entity willing to trade a value for that token. A digital currency like bitcoin is not backed by anyone - it's monetary value is established by what the peers set it to be through their willingness to trade for it.

    In that sense, the idea that pumping Bitcoin is a self-serving process, because driving demand for it, drives up the value of the token you may already be holding (Diamonds anyone???). And yes, another system could spring up and compete with it... the same way bitcoin just 'appeared' without any value backing it. But it's the attributes that make Bitcoin secure and independent... that make it desirable to use as a form of exchange. It's not completely arbitrary - it's just not backed by an exchange that one might considered 'guaranteed' to exist.. like a strong government entity.

    #86 2 years ago

    I don't pretend to understand cryptocurrencies, or all the explanations offered here. My question or caution would be this, normally when something is wanted or needed there is a long line of people clamoring for it. In the case of these cryptocurrencies, I see this long line on the supply side of the equation with people offering a solution in the form of cryptocurrencies, but where are all the people on the other side? I think if we see a like demand for this type of currency, say acceptance by mainstream retailers, it will be here to stay, otherwise it looks like simple speculation to me.

    #87 2 years ago
    Quoted from BrianBannon:

    I don't pretend to understand cryptocurrencies, or all the explanations offered here. My question or caution would be this, normally when something is wanted or needed there is a long line of people clamoring for it. In the case of these cryptocurrencies, I see this long line on the supply side of the equation with people offering a solution in the form of cryptocurrencies, but where are all the people on the other side? I think if we see a like demand for this type of currency, say acceptance by mainstream retailers, it will be here to stay, otherwise it looks like simple speculation to me.

    The demand is largely in the markets that wish to stay out of the way of government monitoring and intervention. They have tried to mainstream some of this, but reality is the STRENGTH of these systems all comes back to the truth of its something you can use, and trust, without having to trust or reveal yourself to the government.

    Mainstream retailers won't clamor for it unless it becomes a means to move or collect money cheaper.

    Alternate forms of payment will grow demand by offering tools the prior method did not - but these do not displace the CURRENCY itself - just how it is moved.

    -1
    #88 2 years ago
    Quoted from BrianBannon:

    I don't pretend to understand cryptocurrencies, or all the explanations offered here. My question or caution would be this, normally when something is wanted or needed there is a long line of people clamoring for it. In the case of these cryptocurrencies, I see this long line on the supply side of the equation with people offering a solution in the form of cryptocurrencies, but where are all the people on the other side? I think if we see a like demand for this type of currency, say acceptance by mainstream retailers, it will be here to stay, otherwise it looks like simple speculation to me.

    These are the companies that currently accept payment via Bitcoin (as of Oct 13th):

    Bitcoin Companies.pdf

    #89 2 years ago
    Quoted from Astropin:

    These are the companies that currently accept payment via Bitcoin (as of Oct 13th):

    Why did you fax that to yourself seven times before posting it?

    #90 2 years ago
    Quoted from pezpunk:

    Why did you fax that to yourself seven times before posting it?

    lol...you have to click on it to see it clearly. It's a pdf file - three pages.

    -2
    #91 2 years ago

    I am going to have to drain this topic for myself. Reading this is like watching your kids make harmful mistakes after you've done everything to convince them not to do something. You crypto currency people as my Mom always says, "are in for a rude awakening". Why don't we make me doing jumping jacks a currency? There's only so many I can do and as I get older I can do even less of them. So it's scarce and getter rarer. A great foundation for a currency. Sayonara.

    #92 2 years ago

    Money, in whatever form, is a placeholder for a defined unit of power. You have a dollar, you can trade it to compel someone to do some amount of work, or give you something of value that they control. It only works if someone else values it. That goes for every form of currency, be it Bitcoin, a dollar, a piece of gold or a pile of coconuts.
    I'm not a Bitcoin investor, so I have zero horses in this race, but I don't see why cryptocurrency is any less secure than any other transaction just based on the idea that it COULD have zero value in $SITUATION_X. It's value may crash due to speculation. It may not. Seems to me that I could say that about any form of currency.

    #93 2 years ago

    Bitcoin relys on computers the internet networking data algorithms etc.. well technology, which always can be compromised. Only a matter of time before its hacked in some creative entrepreneurial way causing the third leg of the stool to break... just sayin

    #94 2 years ago
    Quoted from Astropin:

    These are the companies that currently accept payment via Bitcoin (as of Oct 13th):

    Quoted from Astropin:

    lol...you have to click on it to see it clearly. It's a pdf file - three pages.

    And it's not even close to being accurate as it omits many other entities including foreign governments. You might want to mention that.

    Quoted from BrianBannon:

    I think if we see a like demand for this type of currency, say acceptance by mainstream retailers, it will be here to stay, otherwise it looks like simple speculation to me.

    Acceptance by mainstream retailers.... like, The D Hotel & Casino, Microsoft, Subway, etc. Are those not mainstream enough?

    Again, Bitcoin, and all crypto currencies are a global game. And the U.S. market is but a tick on an elephant's ass.

    Understand, I'm not pushing cryptos. I'm not selling this stuff. I'm a buy & hold player in this market when I'm not trading for profit. If I lose my entire $15k investment. BFD. I've lost more, faster, in the U.S. stock market.

    If I were concerned, I could pull my original $15k and just ride my current profit the rest of the way. No Risk/All Reward. There is absolutely no loss, for me personally, in that situation. But I have no fear, so I think I'll let my entire investment ride a while longer.

    If the shebang goes in the crapper, you can all have a good laugh at my expense. Much in the same way I laugh at those who "invested" their money in a BM66.

    #95 2 years ago
    Quoted from ThatOneDude:

    Money, in whatever form, is a placeholder for a defined unit of power.

    Interesting perspective but a little off. You are not compelling someone with your dollar your are convincing them. You can't make anyone do anything because you have money. They are agreeing to do it because it is a fair exchange.

    #96 2 years ago
    Quoted from ExtremePinball:

    Again, Bitcoin, and all crypto currencies are a global game. And the U.S. market is but a tick on an elephant's ass.

    The US represents 20% of the world GDP and approximately 50% of the electronic payments value.

    Not exactly a tick, but a big challenge.

    #97 2 years ago
    Quoted from ExtremePinball:

    Understand, I'm not pushing cryptos. I'm not selling this stuff. I'm a buy & hold player in this market when I'm not trading for profit. If I lose my entire $15k investment. BFD.

    Exactly. No one is saying this isn't an extremely volatile market. Only throw at it what you are willing to lose. I'm with you...in for the long term (which could go to zero and I understand that risk). Blockchain is here to stay and Bitcoin itself...who knows. Looks like it's slowly getting more and more accepted as an alternate form of currency. I think it has a brite future...I could be dead wrong.

    #98 2 years ago
    Quoted from Black_Knight:

    Interesting perspective but a little off. You are not compelling someone with your dollar your are convincing them. You can't make anyone do anything because you have money. They are agreeing to do it because it is a fair exchange.

    Well, I know of plenty of people who do not find the exchange to be a fair trade(anyone who legitimately doesn't feel that they are paid enough but are forced by circumstance to take what money they can get), so I would argue that point. Perhaps a compromise would be to say that it can be either one.

    #99 2 years ago
    Quoted from ThatOneDude:

    Perhaps a compromise would be to say that it can be either one.

    I understand what you are trying to say, but it's not both.

    No one can compel you because they have money in their hand. You may feel compelled due to external circumstances, other obligations, or something as simple as hunger, but no one is compelling you to work for less than you think it's worth. You are making that decision.

    No one is compelling you to sell a pinball machine for less than you think it is worth, just because they threw money on the glass. Same principle.

    If we can agree on something, it's that your definition of compel is different than mine.

    #100 2 years ago
    Quoted from TRAMD:

    What type of equations are being solved?

    I addressed this one yesterday, so unless there still isn't something you understand, I'll skip it today.

    Quoted from TRAMD:

    What does solving them really mean?

    It means that the transaction(s) history has been guaranteed and the funds haven't been double spent.

    Quoted from TRAMD:

    Do the solutions have any use?

    See the previous answer.

    Quoted from TRAMD:

    How were the equations created? Who created them?

    The original hashcash function was conceived to combat email spam by requiring the sender to validate the email using processing power equal to $0.01 in electricity. The theory was that spammers would have to spend a lot in electricity to send out millions of spam messages everyday.

    The SHA256 hash algorithm was created by the NSA.

    Quoted from TRAMD:

    How do we know there is only a finite amount? How is that amount set?

    The rate of block creation is adjusted every 2016 blocks and is set to decrease by 50% every 210,000 blocks. It's set to 6 blocks per hour. So there is 24 hours in a day, 365 days in a year and 4 years per 50% halving cycle equals ~210,000. If you add up all the block reward cycles (which started at 50 and get cut in half every 4 years), you get (50 + 25 + 12.5 + ...) = 100.

    100 * 210,000 = 21,000,000

    Quoted from TRAMD:

    Is there truly no way to alter that amount?

    Not really. In order to change the bitcoin protocol, there has to be consensus by the economic majority. The economic majority is those who hold bitcoins. You'd be asking everyone that has a bitcoin to voluntarily devalue their coins. I don't see that happening.

    Quoted from TRAMD:

    What stops another digital currency from overtaking Bitcoin as the accepted de facto digital currency?

    Nothing. Just like nothing stops another company from exceeding Apple's market share and killing your stock value.

    Quoted from TRAMD:

    The more the value of something relies on consensus value, the less safe it is. Bitcoin's value is 100% consensus value.

    You mean like the USD or any other form of paper currency?

    Quoted from TRAMD:

    I just don't see it. Maybe I'll miss out on a huge opportunity with Bitcoin but I think I (and anyone else who didn't get in years ago and isn't mining it) already did. Bitcoin needs more investors to increase in value so I think that those invested in it will say anything to get the rest of us to maintain the pyramid/ponzi scheme that is Bitcoin.

    Quite the opposite. I'm a supporter of bitcoin, but other than answering your questions, I have yet to tell you to go buy any. It's like any other investment / gamble / whatever you want to call it. Sometimes you win and sometimes you lose.

    My personal opinion is that over my lifetime, I've seen the transition from cash to checks to EFTs. The logical next step is something completely digital. Sometimes I don't even think the younger generation knows that cash exists and everything is credit / debit cards and EFTs.

    It's possible that the government will step in, pitch a fit and make bitcoin illegal. Most likely to push their own cryptocurrency on everyone, but that's another argument. Or, they might jump on the wagon with Japan and recognize it as an official currency. Either way, there is risk and there is reward. I figure I'll throw some money at Bitcoin and Ether and see if it sticks. If not, no big deal. I'm not cashing out my 401K here or dumping my life savings on it. No worse that I've done on some stocks over the years.

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