Buying and Spending Bitcoin

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grayfox
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Buying and Spending Bitcoin

Post by grayfox » Thu Nov 16, 2017 4:22 am

Elsewhere, I wrote that bitcoin has slow transactions and high fees, making bitcoin practically useless for buying stuff. In other words, not a good medium of exchange. But how do I know this is actually true and not just a bunch of exaggeration? The fact is, I only know this second hand from other people saying it. So I decided to find out for myself and actually buy some bitcoin.

There is a building nearby with some kind of cryptocurrency group uses for meetings. They have several conference rooms that they rent out by the hour or day, plus a coffee shop downstairs. The key is, you can only buy coffee and cake using bitcoin or Litecoin. They also have an ATM machine where you can buy bitcoin.

So I headed to the coffee shop and tried to figure out how to buy bitcoin from the machine. I couldn't figure it out. There was a sign on the wall giving directions. You needed to have a wallet on your smart phone, and it said for bitcoin use Mycelium for iOS users. I went back home and and tried to figure out how to get Mycelium. I could not find it in the Apple App Store on my computer. I gave up an went to bed.

Obviously I will starve when cryptocurrency takes over.
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GoldenFinch
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Re: Buying and Spending Bitcoin

Post by GoldenFinch » Thu Nov 16, 2017 4:37 am

Interesting! Your description draws a mental picture of a potentially complicated future. Some people will be left behind (probably me).

Things are changing quickly. My husband has Apple Pay on his Apple Watch and I watched him pay for groceries the other day by getting his arm scanned.

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Re: Buying and Spending Bitcoin

Post by Longtermgrowth » Thu Nov 16, 2017 4:47 am

I just looked up Mycelium on my phone, and the first app coming up is "Mycelium Bitcoin Wallet". I noticed in comments that miner fees are getting outrageous, and saw a comment about fees being listed as 3usd, but turning out to be 18usd. No clue what type of transactions they were doing though...

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Re: Buying and Spending Bitcoin

Post by roy11 » Thu Nov 16, 2017 4:49 am

Last day my son was talking about Bitcoin and Litecoin. He is a kind of tech guy. He was trying to make me understand how this thing works. But he failed terribly in making me understand. I guess it's just not me who doesn't understand the future.

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grayfox
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Re: Buying and Spending Bitcoin

Post by grayfox » Thu Nov 16, 2017 4:50 am

I had not heard of Apple Pay.
Apple Pay is a mobile payment and digital wallet service by Apple Inc. that lets users make payments using an iPhone, Apple Watch, iPad or Mac.
Maybe Apple doesn't want people using other electronic payment methods like bitcoin so they make it hard to get a different Wallet App like Mycelium.
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grayfox
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Re: Buying and Spending Bitcoin

Post by grayfox » Thu Nov 16, 2017 5:05 am

OK, every other App that I installed on my iPhone, I installed from iTunes. I would google for the App name. There would be an Apple page with a button GET NOW or something like that, which would download it. Then I would connect the iPhone to the Mac and install the App in iTunes.

Now when I google "Mycelium wallet for iOS" on my Computer. There's a page on iTunes Preview. but it says: This app is only available on the App Store for iOS devices. So I open App Store on the Mac and Mycelium can not be found.

Finally, I opened App Store on the iPhone and searched for "Mycelium" and Mycelium Bitcoin Wallet shows up.

This is the first App that I had to download and install directly onto the iPhone. Every other App I ever installed, I downloaded to my computer first and then installed through iTunes. That's the procedure I always used and it always worked. Until this App.

This sounds like a conspiracy.
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Kenkat
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Re: Buying and Spending Bitcoin

Post by Kenkat » Thu Nov 16, 2017 8:30 am

It may then shock you to find out that there are many iOS users who never use iTunes and always download apps from the App Store directly to their devices. I haven’t connected my iPad to iTunes in about 4 years and my Android phone has never been connected to a PC or similar device.

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Re: Buying and Spending Bitcoin

Post by Fox » Thu Nov 16, 2017 10:03 am

Before anyone starts buying bitcoin or cryptocurrency, you need to be prepared where to store it, since you essentially become your own bank. Most people will buy bitcoin, litecoin, etc from an online exchange rather than an ATM. Coinbase is a very popular US based exchange.

You can store bitcoin on mobile wallets, desktop wallets, hardware wallets, paper wallets and on exchanges.

Currently, bitcoin seems to be better used as a store of value rather than currency. There is work being done by the developers to scale the bitcoin network to increase transaction speed and reduce fees.

If you keep any bitcoin or other cryptocurrency on your smartphone, make sure you store your private key or recovery phrase that the app prompts you to create so you will still be able to recover your funds if you phone it lost or damaged.

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Re: Buying and Spending Bitcoin

Post by grayfox » Thu Nov 16, 2017 10:43 am

I think I know what happened.

When I opened App Store on my Mac, it said Updates Available. I looked at the Updates and there was a new Security Update. So I did the update. It looks like it also updated Safari 11.0.1 and iTunes 12.7.1.

Now when I connect my iPhone to the computer, and open iTunes, I do not see the iPhone Apps. That page was where I would Install/Uninstall Apps, move them around, back them up, etc. That page is gone. :o

Changes in the new iTunes
The new iTunes focuses on music, movies, TV shows, podcasts, and audiobooks. Apps for iPhone, iPad, and iPod touch are now exclusively available in the new App Store for iOS.
So Apple removed that functionality from iTunes.

Lesson: Never update your Mac or IPhone software.
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grayfox
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Re: Buying and Spending Bitcoin

Post by grayfox » Thu Nov 16, 2017 12:04 pm

RECAP: I want to buy and spend some bitcoin to see how well bitcoin works as a medium of exchange. A neary coffee shop that only takes bitcoin and Litecoin has a bitcoin ATM. So I will change some cash into bitcoin and buy coffee and cake. Sounds pretty simple.

So it turns out that iPhone Apps can only be found on the App Store and now must be downloaded directly on your iPhone. You can't download iPhone Apps on on your computer. OK. You open up the App Store on your iPhone, search for Mycelium Wallet and install it. The latest version is v14.

When you open Mycelium, you can either use an old backup or create a new backup. I create a new backup. It gives you 12 words that you write down on a piece of high-tech paper with a high-tech pen or pencil. This is the Master Seed Key. There are plenty of YouTube videos that show how to install and setup Mycelium and how it works. This process is fairly simple and only took me about an hour, including watching Youtubes and searching the internet for instructions and tips.

Then I headed back to the coffee shop that has the bitcoin ATM. The ATM is a 2-way ATM, meaning that you can buy or sell bitcoin or Litecoin. Instructions on the wall tell how to proceed.
It says that there is a 3% fee. (Remember this for later.)
The machine has the current exchange rate scrolling at the bottom. I wrote this down: 1 BTC = 6149.10 Euro. (Remember this for later.)

A screen said that money-laundering laws of the country require them to collect information:
For less than 50 Euros, you didn't need anything
For 50 to less than 100 Euro, Mobile phone number
For more than 100 Euro, picture ID and maybe a thumbprint

I decided to buy 20 Euro worth of bitcoin. I got to the point of feeding the banknotes in. It spit out the 20 Euro note and said "The first note must be a 50 Euro note." The machine doesn't give change; that's how it tells you that the minimum is 50 Euro.

So choose 50 to 100 Euro. It asks for your Mobil Phone Number. When you enter you phone number, they send you and SMS message with a 5-digit code which you must enter to continue. Then on Mycelium on your iPhone, you hit "Receive" which brings up a screen with the QR Code that has a Public Bitcoin Address, which is 34 letters and numbers. Hold the QR Code up to a camera. Then I fed in a 50 Euro note and hit the button. The screen said:

Code: Select all

Congratulations!

You have just purchased
0.006531 BTC         Tranaction ID
for                     XXXXXX
50.00 EUR

  DONE            PRINT RECEIPT
Yay! :sharebeer I touched "Print Receipt" and the machine spit out a paper receipt.

I checked the MyCelium app. (There was Wi-Fi in the coffee shop.) The screen said "Receiving 0.006531 BTC". The bitcoin was on its way but had not yet arrived.

----------------
1. Here's a Youtube from the Manufacturer showing how the 2-way Bitcoin ATM is used:BATM3Preview
2. Article: How to buy bitcoins at a bitcoin ATM
Last edited by grayfox on Thu Nov 16, 2017 12:58 pm, edited 3 times in total.
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linenfort
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Re: Buying and Spending Bitcoin

Post by linenfort » Thu Nov 16, 2017 12:08 pm

Excellent thread! Thanks for posting your experiences.
The problem is not that bitcoin is a sham. The problem is that people are nuts.

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Re: Buying and Spending Bitcoin

Post by nisiprius » Thu Nov 16, 2017 12:30 pm

linenfort wrote:
Thu Nov 16, 2017 12:08 pm
Excellent thread! Thanks for posting your experiences.
Ditto.

What happens if you lose the "master seed key?" Do you end up with a big wheel of bitcoin at the bottom of the sea... still there, "safe," can't be stolen by anybody else, just inaccessible to you?

This page says that the Subway sandwich chain accepts bitcoin: Who accepts Bitcoins[sic] As Payment? List of Companies because it is one of the few places on their list that I genuinely use already.

After you buy your coffee, if you have the time and the inclination, I'd be very curious to see whether you can actually buy a sandwich at Subway with bitcoin. I just actually went to a Subway website (figuring they would be more likely to accept it as an online order than in person at the store), placed an order, and this is what the payment screen looked like for me:

Image

I see PayPal. I don't see any bitcoin option, do you?
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Re: Buying and Spending Bitcoin

Post by HerbRight » Thu Nov 16, 2017 1:14 pm

wow , in the future we wont need money at all... thats creepy!

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Re: Buying and Spending Bitcoin

Post by Valuethinker » Thu Nov 16, 2017 1:25 pm

HerbRight wrote:
Thu Nov 16, 2017 1:14 pm
wow , in the future we wont need money at all... thats creepy!
Bitcoin isn't money?

Or did you mean simply no cash, just plastic?

Not sure where USA is on this, but in the UK "touch and pay" chip credit and debit cards are big. And having sworn I'd never use it, I use it (credit card) that way all the time. For very small purchases.

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grayfox
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Re: Buying and Spending Bitcoin

Post by grayfox » Thu Nov 16, 2017 2:27 pm

Once finished buying bitcoin from the ATM, I hung around the coffee shop for a while, checking the Mycelium App every few minutes to see if the transaction had completed. My Balance still showed 0 BTC, and still said "Receiving 0.06531 BTC". I couldn't send any Bitcoin to buy coffee or cake until the Bitcoin was in the Mycelium Wallet.

After about 20 minutes I left and went home. When I got home I looked more closely at the Paper Receipt. Here is what it had printed on it.

__________________________________
BUY CRYTPO RECEIPT

Transcation ID: XXXXXX
Time: 15/11/2017 12:34:14
Price: 50.00 EUR
Crypto: 0.006531 BTC
Rate: 1 BTC = 7655.795437 EUR
Destination:
(34-letter/number public key address)

Keep this receipt for your record of
the transaction

Operator: Name, Address. etc. (It literally said this. The owner must have never changed the default.)
____________________________________

I didn't notice at first, but then I saw the exhange rate:
1 BTC = 7655.795437 EUR :!:

Remember the exchange rate when I was making the transaction?
It was 1 BTC = 6149.10 Euro
Remember the sign said there was a 3% fee?

I looked on the iPhone which said "Receiving 0.006531 BTC"
I changed it to Euro and it was 39 Euro and change.

I had lost about 20 percent converting Euro to bitcoin! :x
No wonder the Operator did not put in the name and address.

:arrow: So there you go, For this exchange, 20% of the money was eaten up in fees to convert from Euros to BTC.
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Re: Buying and Spending Bitcoin

Post by Fox » Thu Nov 16, 2017 3:07 pm

Depending on the time it took to confirm the transaction, the price of bitcoin itself could have changed several hundred dollars too!

If you want to acquire bitcoin without any fees, then you can register on Coinbase, wire transfer from a checking account for free (takes 7 days), then move USD to GDAX.com (Coinbase's trading site), buy bitcoin, then send to a wallet. There are youtube video's on this.

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Oicuryy
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Re: Buying and Spending Bitcoin

Post by Oicuryy » Thu Nov 16, 2017 3:09 pm

How much coffee can you buy with 0.006531 BTC? How many euros would it take to buy that amount of coffee at a regular coffee shop?

Ron
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Re: Buying and Spending Bitcoin

Post by J_Markov » Thu Nov 16, 2017 3:33 pm

Forgive my ignorance on monetary policy, but can the Federal Reserve come up with a cryptocurrency? In other words, can they decide one day that they will substitute the dollar for their own cryptocurrency? In Europe many countries were switched to the Euro in the not so distant past, could they do the same in the future with a cryptocurrency?

I guess the point I'm getting is that it seems like a true possibility that the central banks can come up with their cryptocurrencies (or even they can agree on having a global currency). At that point the national currencies as we know it may disappear altogether. The central banks would still be in control though. Thoughts?

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Re: Buying and Spending Bitcoin

Post by nova1968 » Thu Nov 16, 2017 3:34 pm

Some people place more emphasis on being tech savvy vs saving money. Taking $2 out of your wallet or a credit card may be an easier way to buy a cup of coffee, but then again I've always been a late adaptor.

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Re: Buying and Spending Bitcoin

Post by Valuethinker » Thu Nov 16, 2017 5:27 pm

J_Markov wrote:
Thu Nov 16, 2017 3:33 pm
Forgive my ignorance on monetary policy, but can the Federal Reserve come up with a cryptocurrency? In other words, can they decide one day that they will substitute the dollar for their own cryptocurrency? In Europe many countries were switched to the Euro in the not so distant past, could they do the same in the future with a cryptocurrency?

I guess the point I'm getting is that it seems like a true possibility that the central banks can come up with their cryptocurrencies (or even they can agree on having a global currency). At that point the national currencies as we know it may disappear altogether. The central banks would still be in control though. Thoughts?
On CBs and Crypto Bank of England blog has had a couple of posts and links to papers they have produced. Yes, it could be used for settlement between CBs.

SDRs are a money created by the IMF that CBs use in this fashion. Not crypto, but an artificial currency.

Given the experiences of the Euro and Greece, and the confirmation of Robert Mundell's Optimal Currency Area theory, I doubt the world will be in a hurry to give up national currencies. Too many issues. Countries normally do it either for political reasons (the Euro) or to cure hyperinflation (Central American countries that dollarized etc.).

Tbf, the Eurozone says that it is the absence of fiscal integration and banking integration that is the issue, rather than a failure of labour markets (which is where Mundell's theory would point you).

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Re: Buying and Spending Bitcoin

Post by Redstorm » Thu Nov 16, 2017 6:41 pm

Valuethinker wrote:
Thu Nov 16, 2017 1:25 pm
HerbRight wrote:
Thu Nov 16, 2017 1:14 pm
wow , in the future we wont need money at all... thats creepy!
Bitcoin isn't money?

Or did you mean simply no cash, just plastic?

Not sure where USA is on this, but in the UK "touch and pay" chip credit and debit cards are big. And having sworn I'd never use it, I use it (credit card) that way all the time. For very small purchases.
Apparently big in the UK, Australia & Canada, SE Asia, and parts of Europe ; the US not so much

From Visa (applies to MasterCard, American Express etc also)

Australia is leading the world in its adoption of contactless payments

 There are over 127 million Visa payWave transactions made each month
 75 per cent of face to face Visa transactions are contactless
 There are hundreds of thousands of contactless terminals in place across the
country – providing the acceptance footprint for Visa Mobile payWave.

PayWave is Visa’s contactless payment technology that enables consumers to make “wave and go” payments at the shop counter using their payment cards, without a PIN for purchases under $100 or with a PIN for purchases over $100.

Consumers in Australia are now able to make the same contactless payments using a growing range of mobile phones or wearable technology – by waving their device in front of a contactless terminal.

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grayfox
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Re: Buying and Spending Bitcoin

Post by grayfox » Fri Nov 17, 2017 1:41 am

Oicuryy wrote:
Thu Nov 16, 2017 3:09 pm
How much coffee can you buy with 0.006531 BTC? How many euros would it take to buy that amount of coffee at a regular coffee shop?

Ron
Coffe and cake is about 4 Euros.
At the current exchange rate, 4 Euros would be something like 0.00063200 BTC (0.63200 mBTC)
But I will have pay a miner's fee on top of that. I'll find out how much when I go there.
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Re: Buying and Spending Bitcoin

Post by grayfox » Fri Nov 17, 2017 1:43 am

nova1968 wrote:
Thu Nov 16, 2017 3:34 pm
Some people place more emphasis on being tech savvy vs saving money. Taking $2 out of your wallet or a credit card may be an easier way to buy a cup of coffee, but then again I've always been a late adaptor.
Impossible. They only take bitcoin or Litecoin.
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Re: Buying and Spending Bitcoin

Post by grayfox » Fri Nov 17, 2017 2:14 am

RECAP: I bought 0.006531 BTC, or 6.531 mBTCm for 50 Euros from a Bitcoin ATM in a Coffee Shop. I was waiting for the transaction to complete. I didn't seem like it would happen instantly, so I went home.

I checked iPhone periodically. I just kept the Mycelium App open and pushed a refresh button every once in a while. It still said 0 EUR. The iPhone turns off after a few minutes. Eventually I checked every half hour or so.

In the meantime, it turns out that you can look up your transaction on Block Explorer. Just enter the Destination on the printed Receipt into the Search Box. Here is the receipt again:
__________________________________
BUY CRYTPO RECEIPT

Transcation ID: XXXXXX
Time: 15/11/2017 12:34:14
Price: 50.00 EUR
Crypto: 0.006531 BTC
Rate: 1 BTC = 7655.795437 EUR
Destination:
1zTh7dhxAnJrYC9x7dBHyiqLgder3HwDn

Keep this receipt for your record of
the transaction

Operator: Name, Address. etc.
____________________________________

Block Explorer showed the one transaction. Clicking on the transaction ID brings up information about the transaction.

This page showed the transaction as UNCONFIRMED. It also showed other details about the transaction:

Summary
Size 336 (bytes)
Weight 1344
Received Time 2017-11-15 11:33:55
Included In Blocks
Confirmations 0
Visualize View Tree Chart

Inputs and Outputs
Total Input 3.34774756 BTC
Total Output 3.34694484 BTC
Fees 0.00080272 BTC
Fee per byte 238.905 sat/B
Fee per weight unit 59.726 sat/WU
Estimated BTC Transacted 0.006531 BTC
Scripts Show scripts & coinable

So the minor's fee was 0.00080272 BTC (0.80272 mBTC). This is about 4.94 EUR at the exchange rate at the time of the transaction. I broke it all down:

Code: Select all

1 BTC = 6,1491.10 Euro
50 Euro would equal 0.008132712 BTC

         BTC            EURO   Percent
TOTAL    0.0081312712   50.00 100.00%
RCVD     0.006531       40.16  80.32%
MINORS   0.00080272      4.94   9.88%
ATM FEE  0.0007975512    4.90   9.80%

It looks like the ATM operator just decides to take about the same amount as the Minor's Fee, which is about 0.8 mBTC, almost 10% of the amount. Remember the sign on the wall says there is a 3% fee. The total fees were almost 20%.
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Re: Buying and Spending Bitcoin

Post by grayfox » Fri Nov 17, 2017 2:30 am

At about a quarter to eight in the evening, I check the iPhone for about the millionth time.
0.006531 BTC
Success! :sharebeer

The transaction was confirmed. I looked on Block Explorer and it had 1 confirmation.
Actually, it is never really complete. If you are selling something, they recommend that you wait until 3 or 6 Confirmations before you ship the item. Here is what the current information shows on Block Explorer:

Summary
Size 336 (bytes)
Weight 1344
Received Time 2017-11-15 11:33:55
Included In Blocks 494500 ( 2017-11-15 18:43:20 + 429 minutes )
Confirmations 243 Confirmations
Visualize View Tree Chart

As time goes on, you get more and more confirmations. Right now as I type this it is up to 243 confirmations.

The transaction was included in Block 494500 at 18:43:20. I think that is UTC.

And that is a really cool Block number. 494500 8-) Maybe I will get a vanity license plate with that number. Here is the block Information for Block 494500

Summary
Number Of Transactions 2543
Output Total 16,806.147834 BTC
Estimated Transaction Volume 1,009.66814472 BTC
Transaction Fees 3.24311612 BTC
Height 494500 (Main Chain)
Timestamp 2017-11-15 18:43:20
Received Time 2017-11-15 18:43:20
Relayed By F2Pool
Difficulty 1,364,422,081,125.15
Bits 402705995
Size 1080.159 kB
Weight 3998.082 kWU
Version 0x20000000
Nonce 1749989050
Block Reward 12.5 BTC

The transaction was started at 12:34:14 local time and was included in a block at 19:43:20.
That's a little over 7 hours (429 minutes), with a mining fee of about 5 Euros (4.94 EUR = $5.83).

:idea: Less than 6 Bucks for 7 hours of excitement! That's cheaper than a movie. (Still haven't bought any coffee yet.)
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Re: Buying and Spending Bitcoin

Post by Valuethinker » Fri Nov 17, 2017 6:04 am

grayfox wrote:
Fri Nov 17, 2017 2:30 am
At about a quarter to eight in the evening, I check the iPhone for about the millionth time.
0.006531 BTC
Success! :sharebeer

The transaction was confirmed. I looked on Block Explorer and it had 1 confirmation.
Actually, it is never really complete. If you are selling something, they recommend that you wait until 3 or 6 Confirmations before you ship the item. Here is what the current information shows on Block Explorer:

Summary
Size 336 (bytes)
Weight 1344
Received Time 2017-11-15 11:33:55
Included In Blocks 494500 ( 2017-11-15 18:43:20 + 429 minutes )
Confirmations 243 Confirmations
Visualize View Tree Chart

As time goes on, you get more and more confirmations. Right now as I type this it is up to 243 confirmations.

The transaction was included in Block 494500 at 18:43:20. I think that is UTC.

And that is a really cool Block number. 494500 8-) Maybe I will get a vanity license plate with that number. Here is the block Information for Block 494500

Summary
Number Of Transactions 2543
Output Total 16,806.147834 BTC
Estimated Transaction Volume 1,009.66814472 BTC
Transaction Fees 3.24311612 BTC
Height 494500 (Main Chain)
Timestamp 2017-11-15 18:43:20
Received Time 2017-11-15 18:43:20
Relayed By F2Pool
Difficulty 1,364,422,081,125.15
Bits 402705995
Size 1080.159 kB
Weight 3998.082 kWU
Version 0x20000000
Nonce 1749989050
Block Reward 12.5 BTC

The transaction was started at 12:34:14 local time and was included in a block at 19:43:20.
That's a little over 7 hours (429 minutes), with a mining fee of about 5 Euros (4.94 EUR = $5.83).

:idea: Less than 6 Bucks for 7 hours of excitement! That's cheaper than a movie. (Still haven't bought any coffee yet.)
I just wanted to say how much I appreciated your dedication to empirical research.

You will laugh, but some of the best Analyst pieces from Wall Street or the City of London began in just this way. The analyst covering a product set out to buy & use that product.

I knew someone once who got to fly in the Airbus 380 before it was commercially launched (NOT the Quantas one where the Rolls Royce engine exploded). And also the Boeing Dreamliner. Can you think of a better job? ;-). :happy :happy

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Re: Buying and Spending Bitcoin

Post by Duckie » Fri Nov 17, 2017 5:33 pm

nisiprius wrote:What happens if you lose the "master seed key?" Do you end up with a big wheel of bitcoin at the bottom of the sea... still there, "safe," can't be stolen by anybody else, just inaccessible to you?
I forgot my PIN: an epic tale of losing $30,000 in Bitcoin.
This article is by a guy who lost his master seed key words and forgot his PIN. It details what he went through.

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Re: Buying and Spending Bitcoin

Post by grayfox » Sat Nov 18, 2017 3:55 am

OK, I was out and about yesterday. One thing I did was check out a couple of other locations that had Bitcoin ATMs. You can find a Bitcoin ATM near you on the Bitcoin ATM Map.

I saw that there was Bitcoin ATM about a 15 minute walk at a big Electronics store. I stopped by, and they had the same kind of machine as the first one I used, but Buy Only. I pushed some of the buttons, and it appeared that the limits were different. It seemed like you could buy something like 700 Euro worth of bitcoin without giving your information. That ATM would be better for money laundering! I didn't try it, so can't be sure.

The electronics store also had a coffee shop, that's where the Bitcoin ATM was located. I asked if they took bitcoin. Nope. :!:

A found yet another Bitcoin ATM in the lobby of a small cinema. Different hardware, but it appeared to have been converted to the same software as the other machines. Also Buy Only.

So I decided to head home. I took a streetcar and got off one stop before my normal stop. I walked around the corner towards the Bitcoin Coffee Shop. I had 6.531 mBTC on my mobile phone. When I first bought the bitcoin it was worth about 40 EUR. But since buying it, the price of Bitcoin had gone up and it was now worth about 43 EUR.

Should I spend some of it? Or should I hold it and watch it climb higher? I thought about just holding it until my bitcoin was worth 50 EUR. Then I would be back to even. At the last second, I went into the coffee shop. This was supposed to be an experiment to Buy&Spend bitcoin, not Buy&Hold bitcoin. On with the experiment...
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Re: Buying and Spending Bitcoin

Post by grayfox » Sat Nov 18, 2017 4:29 am

Inside the coffee shop. I asked the barrister if I could pay with bitcoin. "Of course."

I ordered an Americano and huge piece of Banana Bread cake.
The prices are in local fiat currency, not bitcoin. The total bill was 3.51 Euro.

The barrister entered into an iPad or something which showed the amount 3.51 EUR, which was 0.0012269 BTC (1.2269 mBTC)
There was also a QR Code with all the necessary info code into it.

On my iPhone, I opened Mycelium and pressed Send. A camera screen opens with a square camera frame.
Point the iPhone camera at the QR Code not the iPad. It immediately takes it.
The next screens shows what you are paying in EUR and the Miner fee.

Mycelium gives you four choices for the Miner Fee:
Low Priority
Economy
Normal
Priority


The barrister said to use Low Priority for the cheapest transaction.
For Low Priority, the fee was 4.69 EUR
The total to send was 8.20 EUR.
I hit Send and that was it. The Barrister looked on the iPad and said Yes, 3.51 EUR was being received.
Then she gave me the cake and started making the coffee.

:arrow: That answered one question I had. This transaction had not been confirmed yet. If transaction times are long, do you have to wait until the transaction is confirmed before getting your coffee? From my experience buying bitcoin, it could take 7 hours! That would be a long wait for coffee. But if they gave me the coffee immediately, they had to trust that I wasn't double spending. But I guess for small amount like 3.51 EUR, they just take the chance.

So that's it.

Code: Select all

              EUR    mBTC
Coffee + Cake 3.51   0.52533
Miner's Fee   4.69   0.70157
Total         8.20   1.2269
So it cost about $5.50 in fees to spend about $4 on coffee and cake. I asked the barrister if many people paid with bitcoin. "No, everyone uses Litecoin. Lower fees." :!:

Remember that the fee depends only on the size of the transaction in bytes, not on the amount of the transaction. So I could have spent $40 or $400 or $4,000 and the fee would only depend in the number of bytes.
Gott mit uns.

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Re: Buying and Spending Bitcoin

Post by AstroJohn » Sat Nov 18, 2017 7:08 am

Fascinating discussion, but my understanding is that in the US the IRS considers bitcoin to be an asset not a currency. So, when you buy bitcoin you acquire an asset and must record the cost in US dollars. When you then buy something, say a sandwich at Subway, you are selling the asset and must record the value of the sale in US dollars. The gain or loss in the two transactions then needs to appear on your tax returns.

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Re: Buying and Spending Bitcoin

Post by jhfenton » Sat Nov 18, 2017 9:19 am

AstroJohn wrote:
Sat Nov 18, 2017 7:08 am
Fascinating discussion, but my understanding is that in the US the IRS considers bitcoin to be an asset not a currency. So, when you buy bitcoin you acquire an asset and must record the cost in US dollars. When you then buy something, say a sandwich at Subway, you are selling the asset and must record the value of the sale in US dollars. The gain or loss in the two transactions then needs to appear on your tax returns.
I think it's safe to say that grayfox lost money on his coffee purchase. :sharebeer It gives new meaning to complaints about small lots. Not to mention the wash sale questions!

Thanks again, grayfox, for your hard work.

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Re: Buying and Spending Bitcoin

Post by GoldenFinch » Sat Nov 18, 2017 2:41 pm

Grayfox this is an extremely impressive documentation of your investigation into using bitcoin. I imagined it was a bit complex, but wow! Thanks!

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Re: Buying and Spending Bitcoin

Post by nisiprius » Sat Nov 18, 2017 4:29 pm

AstroJohn wrote:
Sat Nov 18, 2017 7:08 am
Fascinating discussion, but my understanding is that in the US the IRS considers bitcoin to be an asset not a currency. So, when you buy bitcoin you acquire an asset and must record the cost in US dollars. When you then buy something, say a sandwich at Subway, you are selling the asset and must record the value of the sale in US dollars. The gain or loss in the two transactions then needs to appear on your tax returns.
And can you buy a sandwich at Subway with bitcoin? I still want to know. Has anyone done it and what, exactly is the procedure? I don't buy things at Subway oftener than once a month but I'll make a point of asking next time. I guess Grayfox isn't in the U.S. and can't easily try the experiment.
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Re: Buying and Spending Bitcoin

Post by therub » Sat Nov 18, 2017 5:02 pm

I really appreciate your approach here :)

A few thoughts that might help clarify things if you want to actually have a good experience with using crypto currencies day-to-day.

Bitcoin is full of drama - the folks who maintain it would prefer it stays easy to run a "node", so that there are many of them available, and therefore are reluctant to raise the number of transactions that the network can handle (because then it may become more expensive to run a node). They want to see solutions outside of bitcoin handle the day-to-day transactions. As a result, fees are skyrocketing and Bitcoin is no longer at this time suitable for small transactions. For those of us who have watched this for a while, this is disappointing. Somewhat officially, Bitcoin is now for "storing value", not for performing transactions.

To get an idea of the number of bitcoin transactions pending, look at the mempool. These are all the transactions which are waiting to be confirmed. As it rises, delays increase, and higher fees result. This chart is color coded by fee amounts: https://jochen-hoenicke.de/queue/#2w. Miners, obviously, process higher fee transactions first (they get the fees). Also, fees aren't related the the dollar amount of the transaction, it's related to the size, in bytes, of the transaction. That means that you could theoretically transfer 100 bitcoin for less than .1 bitcoin; it just depends on how many inputs and outputs in the transaction.

Bitcoin wasn't always like this. The way the 'blocks' work is they are 1MB, and they are mined about every 10 minutes. So the capacity of the network is 1MB worth of transactions per 10 minutes. Back when there were fewer transactions than capacity, fees were optional, and your transaction would usually be in the next block available (10 minute wait or less). Now that every block is full, it can take some time and/or some expense to get a confirmation.

This is where Litecoin and other alternatives come in.

Litecoin is similar to bitcoin except its fees are low and it finds a block every 2.5 minutes. Its price has been quite stable over time compared to bitcoin (relative to crypto currency standards). If you had gone with litecoin instead of bitcoin, I dare say your experience would have been quite a bit more pleasant.

The other one I'll coin I'll mention that you may start seeing is "Bitcoin Cash". This was 'forked' from Bitcoin a few months ago by people who disagreed with how Bitcoin is being managed. They have increased the block size and to some extent restored the original vision of Bitcoin. Its price has not been stable, but it is gaining in popularity.
Fees are the rub.

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Re: Buying and Spending Bitcoin

Post by invest0 » Sat Nov 18, 2017 7:12 pm

Well, you're not wrong that there are high fees and it's a bit slow yet. But two points.

1. It's still better than gold. What are people going to pay to ship their rocks to Amazon when they lose faith in fiat currency?

2. It's a protocol and protocols can be improved upon. Sort of like looking at a 1960s computer and saying that you'll stick with your abacus, because it's cheaper and you like that you can put one in your pocket.

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Re: Buying and Spending Bitcoin

Post by Nate79 » Sat Nov 18, 2017 7:17 pm

Technology solving a problem that doesn't exist. I really enjoy using Samsung Pay and good cash back credit card. Bitcoin is really a joke.

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Re: Buying and Spending Bitcoin

Post by invest0 » Sat Nov 18, 2017 7:21 pm

nisiprius wrote:
Sat Nov 18, 2017 4:29 pm
And can you buy a sandwich at Subway with bitcoin? I still want to know. Has anyone done it and what, exactly is the procedure? I don't buy things at Subway oftener than once a month but I'll make a point of asking next time. I guess Grayfox isn't in the U.S. and can't easily try the experiment.
Same as any bitcoin transaction, I imagine. They give you a QR square to scan on your phone if you have a phone wallet.

Actually, one of the earliest bitcoin transactions was a 10,000-bitcoin pizza in 2010. Almost $80,000,000 today.

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Re: Buying and Spending Bitcoin

Post by invest0 » Sat Nov 18, 2017 7:31 pm

Nate79 wrote:
Sat Nov 18, 2017 7:17 pm
Technology solving a problem that doesn't exist. I really enjoy using Samsung Pay and good cash back credit card. Bitcoin is really a joke.
It solves plenty of problems. It sounds like they're just not yours right now.

* Making it difficult for your government to track you (illegal activities, dodging taxes, privacy concerns).
* Making it difficult for other governments to track you (like how the United Nations has recently been sending aid in Bitcoin to subvert political interference).
* As a hedge for when faith is lost in national currencies (like gold. maybe not happening in developed countries soon, but is relevant plenty of places).

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Re: Buying and Spending Bitcoin

Post by Nate79 » Sat Nov 18, 2017 7:58 pm

invest0 wrote:
Sat Nov 18, 2017 7:31 pm
Nate79 wrote:
Sat Nov 18, 2017 7:17 pm
Technology solving a problem that doesn't exist. I really enjoy using Samsung Pay and good cash back credit card. Bitcoin is really a joke.
It solves plenty of problems. It sounds like they're just not yours right now.

* Making it difficult for your government to track you (illegal activities, dodging taxes, privacy concerns).
* Making it difficult for other governments to track you (like how the United Nations has recently been sending aid in Bitcoin to subvert political interference).
* As a hedge for when faith is lost in national currencies (like gold. maybe not happening in developed countries soon, but is relevant plenty of places).
Of those 3 reasons what makes you use bitcoin in your day to day activities? I mean you do use bitcoin in all of your spending right?

I don't care about #1. I do not participate in illegal activity and if this is the purpose of bitcoin it has a bleak future.

#2 could be shut down if a govt wanted to.

#3 call me extremely skeptical that if we get in that position that bitcoin will remain stable enough to put food on the table.

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Re: Buying and Spending Bitcoin

Post by invest0 » Sat Nov 18, 2017 8:32 pm

Nate79 wrote:
Sat Nov 18, 2017 7:58 pm
Of those 3 reasons what makes you use bitcoin in your day to day activities? I mean you do use bitcoin in all of your spending right?
I don't. But Bitcoin doesn't need to make USD obsolete to matter.
Nate79 wrote:
Sat Nov 18, 2017 7:58 pm
I don't care about #1. I do not participate in illegal activity and if this is the purpose of bitcoin it has a bleak future.

#2 could be shut down if a govt wanted to.
You don't participate in the government analyzing your every transaction and companies buying/selling your spending data? I disagree, we move gradually closer to an Orwellian society every day. Just very slowly. Privacy might not matter to you, but it matters to a lot of people right now. Maybe you're already in retirement. But for the rest of us, it will only matter more if we keep on the path we're on.

While I'm sure that both of these things are true otherwise, the market is bigger than just you.
Nate79 wrote:
Sat Nov 18, 2017 7:58 pm
#3 call me extremely skeptical that if we get in that position that bitcoin will remain stable enough to put food on the table.
Well, again, the market is bigger than you. This has already happened. Remember the financial crisis in Greece? I'm no economist, but I can see a heck of a lot of political appeal to a truly decentralized currency. Not much sense in every country supporting USD as a reserve currency if interests aren't aligned. But nobody (well, everybody) owns Bitcoin.

It's not replacing a good points card in 2017 or 2018. But it's certainly not a joke.

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Re: Buying and Spending Bitcoin

Post by Swelfie » Sat Nov 18, 2017 8:54 pm

Nate79 wrote:
Sat Nov 18, 2017 7:58 pm
invest0 wrote:
Sat Nov 18, 2017 7:31 pm
Nate79 wrote:
Sat Nov 18, 2017 7:17 pm
Technology solving a problem that doesn't exist. I really enjoy using Samsung Pay and good cash back credit card. Bitcoin is really a joke.
It solves plenty of problems. It sounds like they're just not yours right now.

* Making it difficult for your government to track you (illegal activities, dodging taxes, privacy concerns).
* Making it difficult for other governments to track you (like how the United Nations has recently been sending aid in Bitcoin to subvert political interference).
* As a hedge for when faith is lost in national currencies (like gold. maybe not happening in developed countries soon, but is relevant plenty of places).
Of those 3 reasons what makes you use bitcoin in your day to day activities? I mean you do use bitcoin in all of your spending right?

I don't care about #1. I do not participate in illegal activity and if this is the purpose of bitcoin it has a bleak future.

#2 could be shut down if a govt wanted to.

#3 call me extremely skeptical that if we get in that position that bitcoin will remain stable enough to put food on the table.
#1 does not imply criminal intent. Say for instance I am selling a $50k car. You want to buy that car with your well earned $50k. Neither of us are criminals. With an open ledger it may come to light that a few transactions ago that $50k you gave me was involved in a major illegal drug transaction. That money may be confiscated from me and I'm out a car when neither of us did anything wrong. A unit of trade that is only traceable in the single trade at hand is inherently more valuable than an open ledger asset because it is truly fungible.

#2 cannot be shut down. That is one of the strengths of the protocol. The entire force of the US Gov could certainly destroy the entire asset with an attack and make all Bitcoin or other crypto currency worthless, but it cannot selectively stop transactions. This leaves them with only a scorched Earth retaliation option which would have massive collateral damage so it's unlikely it would be used unless their back was really against a wall.

#3 has been happening in developing countries with failing currencies. Whether it would happen in a developed nation is unknown and heavy scepticism is wise.

And no one is using solely Bitcoin for their daily activities right now. Bitcoin is broken at the moment and nigh unusable. In the developed world with trusted currency there is a lack of vendors for any crypto currency and what there are are tooled for Bitcoin and as I said, it's broken. In developing countries with failing currencies they are more likely to use coins that aren't broken such as Litecoin, Dash, Bitcoin Cash, Ethereum and Monero. The black markets are rapidly moving towards Monero because it is much more fungible than anything else. For play money spending amongst geeks, Litecoin is probably the most popular right now with Ethereum right behind.

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Re: Buying and Spending Bitcoin

Post by nisiprius » Sat Nov 18, 2017 8:56 pm

therub wrote:
Sat Nov 18, 2017 5:02 pm
...Somewhat officially, Bitcoin is now for "storing value", not for performing transactions...
Which is a significant abandonment and retraction of claims formerly made for it, "somewhat officially." It is also a significant devaluing of its usefulness, because it isn't very good as a store of value (and was obviously not ever designed to be one). The point of a store of value is to be relatively stable, which bitcoin isn't, and nothing in its design even attempts to stabilize it. Bitcoin advocates make the same argument gold advocates do, which is "who cares if it's stable as long as I'm making money on it?" And the answer is that there are lots of volatile things, and just because they are going up doesn't make them a good place to store value.

A few years ago, the argument was "OK, we will grant that bitcoin is not a stable store of value, but that not important, because the real value of bitcoin is low transaction costs. They are far lower than for credit cards, and that is going to lead quickly to widespread adoption by merchants everywhere." That's not a straw man.

Why I Invest Almost 20% of my Net Worth in Cryptocurrency
Image

Claims of speed, "microscopic" transaction costs, and suitability for micropayments have now been thoroughly falsified. The only valid statement there is "if it scales effectively."

A proposed "solution" proves the existence of a problem, and bitcoin cash and Lightning Network prove the existence of a serious problem in bitcoin. The later is only a proposal that hasn't been implemented, and its pros and cons are controversial. And there's already been a$13 million bitcoin cash troublesome-event-not-unlike-a-loss, which of course isn't really the fault of bitcoin cash, just as the $130 million troublesome-event-not-unlike-a-loss in Ethereum wasn't really Ethereum's fault, and Mt. Gox wasn't really bitcoin's fault, etc. etc.
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Re: Buying and Spending Bitcoin

Post by grayfox » Sun Nov 19, 2017 3:20 am

RECAP: I wanted to BUY&SPEND bitcoin to see if it might have any usefulness for a normal person like me. First, I had to download and install Mycelium Bitcoin Wallet on my iPhone, so that was the first day. Then I bought 50 Euro worth of bitcoin at a Bitcoin ATM. It took 7 hours before the transaction was confirmed and I could spend bitcoin. That was the second day. The fees were about 20% so I had about 40 Euro worth bitcoin on my iPhone. On the third day I went to the Bitcoin Coffee Shop and bought coffee and cake. Bill was 3.51 EUR and miner's fee was 4.69 EUR.

I was enjoying coffee and cake in the Bitcoin cafe. Nice place, it has big tables, fast Wi-Fi, and you can bring your laptop in and surf the internet or do work. I only had my iPhone, no laptop. The MyCelium App open. I checked the transaction a couple of times. To my great surprise, after about 10 minutes, the transaction showed 2 confirmations!

Here is the transaction on Block Explorer:
eee99d87b45a6e40c9631aa2861fc08f222800d030eadf35afac6f702776a272

Summary
Size 225 (bytes)
Weight 900
Received Time 2017-11-17 12:27:01
Included In Blocks 494782 ( 2017-11-17 12:33:32 + 7 minutes )
Confirmations 272 Confirmations
Visualize View Tree Chart

Inputs and Outputs
Total Input 0.006531 BTC
Total Output 0.00582943 BTC
Fees 0.00070157 BTC
Fee per byte 311.809 sat/B
Fee per weight unit 77.952 sat/WU
Estimated BTC Transacted 0.00052533 BTC
Scripts Hide scripts & coinbase

You can see that the transaction was included in Block 494782 at 12:33:32.
It only took 7 minutes for confirmation. AS I type this, it has 272 confirmations.

Size was 225 bytes and the fee rate was 311.809 satoshi/Byte. (1 satoshi = 1 / 100,000,000 BTC)
I had minimal control over this and could only choose Low Priority, Economy, Normal, Priority. I chose Low Priority.
When I bought the bitcoin, the ATM operator had set the fee rate at only 238.905 sat/B
(Remember the sender sets and pays the fee. The fee can be set at whatever you want or nothing. I t depends on the wallet software which options you have regarding miner's fee.)

So my wallet set a higher fee rate than the ATM. But the difference was my Send transaction was 7 minutes vs. 7 hours. 60x faster.
Apparently, it's not always slow. In fact, my transaction got into the very next block! (Block every 10 minutes, on average.)
NOTE: There may have been an odd anomaly that allowed the transaction to go through so fast. I also may have overpaid the miner's fee by 10x-15x. I will explain that in a subsequent post.

So there you go:
High transaction fees. Check.
Slow transactions. Sometimes. One was confirmed in 7 hours and one in only 7 minutes.
Gott mit uns.

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Re: Buying and Spending Bitcoin

Post by grayfox » Sun Nov 19, 2017 4:55 am

:?: How Did my bitcoin transaction go so fast? :?:

Everyone's complaining of slow bitcoin transactions. The very first time I spent bitcoin, the transaction was confirmed within 7 minutes, and was included in the very next block. On the other hand, when I bought bit coin from the ATM, the transaction took 7 hours to receive the first confirmation. So what gives? Are transactions fast or slow?

I don't really understand all this, but I will explain my understanding of things.

Background
There was an agreement called the New York Agreement (NYA) which was to hard fork bitcoin to something called SegWit2x. This was scheduled for some time in November, specifically at Block 484784. They could only estimate the time, but they had a SegWit2x Countdown Timer and it was coming up on November 17, 2017.

But a few days before, the hard fork was called off. So it looked like it wasn't going to happen.

Suddenly, at the last minute, a group of miners (or someone) said the fork is back on.
I watched some YouTubes and apparently, with this, some of the Cryptocurrency Exchanges sent out email to their customers that said they were suspending bitcoin transactions until after the hard fork.

The hard fork was started, but then a software bug brought the hard fork block chain to a screeching halt. Because of the bug, miners could not mine blocks. and they were stuck on Block 494782.

My Spend Transaction
What does that have to do with me? Well look at the block number: 494782. That's the exact block my transaction is in. :shock: By sheer coincidence, I did my bitcoin spend transaction just at the time of the hard fork!

Now if the exchanges halted bitcoin transactions, that would mean that there were fewer transactions in the Mempool. That would mean plenty of room in Blocks for transactions.

Furthermore, I was listening to another YouTube and the guy said that he did a transaction at the same time and included a fee rate of 20 satoshis/Byte. His transaction got into the next block and took only 10 minutes. I paid 311.809 sat/B and and also got into the next block. Look at that chart: I paid a higher fee than practically everyone! 15x more than that Youtube guy!

I probably could also have paid only 20 sat/b and gotten into the next block. But MyCelium Wallet does not allow such control over the fee, so I didn't have that option. I could could only choose "Low Priority" which MyCelium decided was 311.809 sat/B.

Hypothesis
So I'm guessing that the fast transaction I actually experienced, or low-fee possibility that I missed, was probably an anomaly due to timing at the time of the hard fork. An odd coincidence. If I did this transaction at the same 311 sat/B fee on a normal day, I'm guessing it would take much longer. But who knows?

UPDATE: I was watching another YouTube that was streamed 4 hours ago. He was looking at the 2D Mempool charts. According to him, 5-10 sat/B in the Mempool were getting confirmed. 20-30 sat/B would almost guarantee getting confirmed quickly. That would knock my 4.69 EUR free down to only 30-45 cents.

Maybe you can get cheaper transactions if you check the charts and time it right. But I would need a different wallet that allowed setting the fee by hand. Mycelium on my iPhone does not have that function.

Another chart of bitcoin fees: https://bitcoinfees.earn.com/
Gott mit uns.

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Re: Buying and Spending Bitcoin

Post by nisiprius » Sun Nov 19, 2017 12:23 pm

So can we agree that, based on news accounts and on greyfox's experience, that, as of November 2017,

1) bitcoin is not a practical medium for ordinary consumers to use in everyday transactions with most well-known national retailers? bitcoin transactions are still a novelty and a hobby for early adopters?

2) bitcoin itself has not reached and probably will not reach even the acceptance of PayPal... or Apple Pay, Samsung Pay, Venmo, Google Wallet, etc.

3) The only things that can are completely new systems, some still in development, which might share the bitcoin "brand" and use bitcoin internally in some way... but to all intents and purposes are still completely new systems, with completely new spectrums of risks and vulnerabilities, starting fresh now with a current market penetration of zero?
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Re: Buying and Spending Bitcoin

Post by Swelfie » Sun Nov 19, 2017 2:33 pm

nisiprius wrote:
Sun Nov 19, 2017 12:23 pm
So can we agree that, based on news accounts and on greyfox's experience, that, as of November 2017,

1) bitcoin is not a practical medium for ordinary consumers to use in everyday transactions with most well-known national retailers? bitcoin transactions are still a novelty and a hobby for early adopters?

2) bitcoin itself has not reached and probably will not reach even the acceptance of PayPal... or Apple Pay, Samsung Pay, Venmo, Google Wallet, etc.

3) The only things that can are completely new systems, some still in development, which might share the bitcoin "brand" and use bitcoin internally in some way... but to all intents and purposes are still completely new systems, with completely new spectrums of risks and vulnerabilities, starting fresh now with a current market penetration of zero?
#1 partially agree. It's certainly not consumer level tech at the moment due to complexity and high fees. High fees I'll address in #3. Complexity may never be simple enough for consumers. The lack of middleman can be a hindrance here. The concept that a "password reset" is impossible and that this electronic money is just like cash may never catch on because consumers may be unwilling to accept that they can lose all of f their money by misplacing their password or hardware failure causing it to be inaccessible. Consumers are not in the habit of airgapping their systems against malware attacks either. Chargebacks being impossible is another issue for them. Consumer level may just not be the right market. On the other hand, it's gone beyond hobbiest and novelty adoption. We are seeing CME launching futures against it and it is very useful for international transactions. As a reconciliation tech it's ready now aside from volatility.

#2 consumer level, very possibly will never attain heavy traction. However, between banks and large institutions it's possible it could even upset the USD as the world's reserve currency. It has some very attractive properties in that arena. (I'm speaking of crypto currency in general here, not Bitcoin per say. Bitcoin was just the first mover in this space and has the highest brand recognition but has fallen very behind in technology to the newer, more refined coins.)

#3 market penetration of the new coins is far from zero and they are not starting from scratch. Bitcoin is only about 50% of the market. Bitcoin can also change to adopt new technologies and it is doing so, so you can't discount Bitcoin altogether either. Bitcoin itself is vulnerable to many issues that have already been addressed by other coins and the high fees and slow transaction times are arguably a demonstration of this (Ethereum on average runs about 50% greater daily transaction volume than Bitcoin with no scaling issues in sight. It's quite a bit larger than Bitcoin in network, just not in market cap.)

Much of the problems we are seeing right now in Bitcoin is not inherent to the technology, rather it is market manipulation. The market is growing extremely rapidly, worth hundreds of billions of dollars today, and is completely unregulated. Activities that would have people thrown in prison in any other market are par for the course in crypto currency right now. Most of the information that trickles down to the layman is simply incorrect and designed to position the opinions of investors in favor of some cabal's investment.

As far as vulnerabilities in general go, the underlying tech has been rock solid in most applications. What we see are 1) vulnerability to psychological market manipulation which has new implications being that the tech itself is based on market game-theory making new meta-manipulation games possible that we have not witnessed in other markets. 2) platforms built on top of the tech have been vulnerable which have erroneously been attributed to the underlying tech. Most notably Ethereum has had multiple breaches publicized in the hundreds of millions of dollars loss range. These were not failures in Ethereum itself though, which has never been breached. These were vulnerabilities in applications built on top of the protocol. This is similar to saying the internet will never work because of the Equifax breach.

My thoughts at this time are:

1) The tech is useful and very promising and valuable and likely to increase in value in the long term. It does need to find it's niche though as it is immature. Like the invention of the internet though, this is a general tech with applicability to multiple markets.

2) as with any new market, which player to invest in is unknown as most will not survive the long term.

3) there are thieves everywhere, it's unregulated, investors have no recourse and the market has extreme volatility. This is an extremely high risk market and you should not invest anything unless you are very comfortable with 100% loss of your investment.

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Re: Buying and Spending Bitcoin

Post by invest0 » Sun Nov 19, 2017 3:36 pm

nisiprius wrote:
Sun Nov 19, 2017 12:23 pm
So can we agree that, based on news accounts and on greyfox's experience, that, as of November 2017,

1) bitcoin is not a practical medium for ordinary consumers to use in everyday transactions with most well-known national retailers? bitcoin transactions are still a novelty and a hobby for early adopters?
You'd be correct in saying that it's not practical for ordinary consumers right now. But I don't call the United Nations, the citizens of Greece, or basically every major financial institution at this moment, hobbiests, however.
nisiprius wrote:
Sun Nov 19, 2017 12:23 pm
2) bitcoin itself has not reached and probably will not reach even the acceptance of PayPal... or Apple Pay, Samsung Pay, Venmo, Google Wallet, etc.
Has not reached, sure. In the 1990s, were you on the Luddite train re: the web? Coincidentally, HTTP and Bitcoin have something in common: they're both protocols. Both can be iterated. HTTP already has and that seemed to work out pretty well? As for simple, anonymous, international transactions, it already shows promise in overtaking PayPal in a lot of ways. There are still loads of countries that PayPal doesn't touch and their track record of poor policing through dispute/resolution policies have been suspect at best (basically, any consumer can have a 100% success rate at getting refunds if they know how to work that system).
nisiprius wrote:
Sun Nov 19, 2017 12:23 pm
3) The only things that can are completely new systems, some still in development, which might share the bitcoin "brand" and use bitcoin internally in some way... but to all intents and purposes are still completely new systems, with completely new spectrums of risks and vulnerabilities, starting fresh now with a current market penetration of zero?
Not exactly. They'll be new in a manner not unlike how I really doubt you're surfing the web using HTTP 1.0 right now. Bitcoin is still being actively improved too (see: SegWit).

It *is* still possible that an altcoin overtakes Bitcoin at some point as well. That's been FUD'd into media profit so many times so far though and hasn't even come close to happening yet, despite performance advantages of Litecoin and others in the short-term. But that's not the only way that improvement can arise.

Swelfie
Posts: 181
Joined: Mon Mar 14, 2016 12:54 am

Re: Buying and Spending Bitcoin

Post by Swelfie » Sun Nov 19, 2017 5:46 pm

invest0 wrote:
Sun Nov 19, 2017 3:36 pm
It *is* still possible that an altcoin overtakes Bitcoin at some point as well. That's been FUD'd into media profit so many times so far though and hasn't even come close to happening yet, despite performance advantages of Litecoin and others in the short-term. But that's not the only way that improvement can arise.
It has come close. In June the Ethereum market cap was almost equal to Bitcoin. Some of the uncertainty resolution with their blocksize debate seems to have given them some breathing room, but that could change quickly again. Just 2 weeks ago the market cap of Bitcoin Cash spiked to about 60% of Bitcoin while Bitcoin was in free fall in the matter of a couple of hours.

furnace
Posts: 263
Joined: Tue Oct 20, 2015 3:38 pm

Re: Buying and Spending Bitcoin

Post by furnace » Sun Nov 19, 2017 8:36 pm

Bitcoin is a casino right now. The house is pumping up the price to suck in new players. Once they run out of players, they will cash out, which will trigger a stampede for the door. The feeding frenzy is like what happens with the Powerball Lottery. The higher the jackpot, the more casual players you pull in, and the bigger the jackpot grows.

As for cryptos displacing the USD long term, that is wishful thinking. The US government will drop a nuke on anything that will remotely threaten the USD's dominance. Moreover, the underlying blockchain tech may not be as disruptive as people believe. Blockchain is just a recording system with some cryptography overlaid on it (distributed ledger). We have databases that do that job quite well now.

GoldenFinch
Posts: 1390
Joined: Mon Nov 10, 2014 11:34 pm

Re: Buying and Spending Bitcoin

Post by GoldenFinch » Sun Nov 19, 2017 8:50 pm

nisiprius wrote:
Sun Nov 19, 2017 12:23 pm
So can we agree that, based on news accounts and on greyfox's experience, ...
I agree! And this has been one of the more interesting threads lately. Who do you know in real life that has used and understood bitcoin? I’m sure some of you have, but most people haven’t. I’ve learned a lot here. Thank you.

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