What is Bitcoin?

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objectivefunction
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Re: What is Bitcoin?

Post by objectivefunction » Wed Sep 13, 2017 5:06 am

mnaspbh wrote:
Tue Sep 12, 2017 7:43 pm
No cryptocurrency is required to make use of blockchain technology
That's not true of Ethereum (it has a native ether currency) and I don't believe it is true of blockchain in general. I don't believe blockchain divorced from a native currency will ever work. The whole reason Bitcoin works is because miners have an incentive to extend the blockchain---an incentive paid in bitcoin. That incentive compensates miners for the real cost they expend and makes miners part of the ecosystem.

I think that financial institutions will attempt to divorce the blockchain from bitcoin, but either end up making something that is centralized and unnecessarily uses blockchain when some other technology would have worked better or make something that differs from bitcoin in name only (i.e. CitiCoin).

I'm not the only one who believes this:

"Nothing is more indicative of a change in sentiment, however, than a sudden rise in scrutiny. Simon Scorer, from the Bank of England’s digital currencies team, noted in a blog post last week that there is scope to make DLT systems more compatible with centralised environments. The problem is 'by adapting DLT in this way, you move further away from the principles for which it was originally designed'."

"Growing scepticism challenges the blockchain hype" https://www.ft.com/content/b5b1a5f2-503 ... 7009366969

Here's an opinion piece from CoinDesk: "With Blockchain, Where There's Smoke, There's Usually More Smoke" https://www.coindesk.com/blockchain-tec ... ore-smoke/

mnaspbh
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Re: What is Bitcoin?

Post by mnaspbh » Wed Sep 13, 2017 4:13 pm

objectivefunction wrote:
Wed Sep 13, 2017 5:06 am
mnaspbh wrote:
Tue Sep 12, 2017 7:43 pm
No cryptocurrency is required to make use of blockchain technology
That's not true of Ethereum (it has a native ether currency) and I don't believe it is true of blockchain in general. I don't believe blockchain divorced from a native currency will ever work. The whole reason Bitcoin works is because miners have an incentive to extend the blockchain---an incentive paid in bitcoin. That incentive compensates miners for the real cost they expend and makes miners part of the ecosystem.

I think that financial institutions will attempt to divorce the blockchain from bitcoin, but either end up making something that is centralized and unnecessarily uses blockchain when some other technology would have worked better or make something that differs from bitcoin in name only (i.e. CitiCoin).
There are already private Ethereum blockchains that don't use Ether at all (gas prices of zero, or valueless tokens)--they just need willing miners. There are forum posts where Ether "investors" are crushed to learn that businesses can benefit from Ethereum-style blockchain- and smart-contract technology without having to drive up the price of Ether. A blockchain is just a series of cryptographically-linked entities (the "immutable ledger"). It may be advantageous to make the blockchain public, or to encourage decentralization, but those are not requirements. Bitcoin uses a cryptocurrency to try to encourage decentralization and encourage participation, but that's not required. I can start a new blockchain without any cryptocurrency, while still gaining the advantages of a blockchain. Here's one right now:

742 This paragraph is a blockchain. Each "block" (line)
584 has a hash based on previous blocks. To compute the
385 hash of a new line, add up the values of each character
871 in the line, where 1 is 1, 2 is 2, a is 10, b is 11,
730 and so on. Ignore punctuation. Then add the hash from
586 the previous line or the "genesis" value of 42 for the
452 first line. If the sum is greater than 1000, just use the
392 last three digits. Anyone can check the blockchain entries
294 by computing the hash values themselves. Of course,
236 this is not a very useful blockchain. The hash function
190 is very weak, as it is pretty easy to find some kinds of
059 changes that still have the same hash. There should be a
015 clear process for how new lines get added to the paragraph,
930 like a voting scheme. The contents of the blocks are not
868 useful, but instead of rambling they could be lines that
766 represent transactions like "Alice owes Bob 7 dollars",
319 "Alice sends 10 dollars to Bob" and then
926 "Bob sends 3 dollars back to Alice as change".
719 This paragraph is still a blockchain, and there is
718 no cryptocurrency involved. But anyone who sees this
632 post and trusts in this blockchain can tell that Alice
082 and Bob had a debt and settled it.

The banks, governments, and businesses interested in blockchain are not interested in creating new cryptocurrencies, and generally not interested in using existing ones. They want the advantages that a blockchain can provide--an immutable and auditable record of transactions. Are these forms of blockchains more useful than non-blockchain technology? In a lot of cases, I think so--a lot of companies are riding the hype wave, and even some governments are doing so too trying to show they're "with it" and are "modern". But most people hear "bitcoin" when someone says "blockchain" without understanding the distinction (or deliberately ignore it to try to promote their favorite cryptocurrency).

I'm already seeing "No True Scotsman" arguments popping up from bitcoin advocates. It's not a *real* blockchain unless it has a publicly-spendable cryptocurrency attached. It's not a *real* blockchain unless there are no big backers. It's not a *real* blockchain unless the whole thing is always public. And so on.

incognito_man
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Re: What is Bitcoin?

Post by incognito_man » Wed Sep 13, 2017 5:40 pm

https://www.coindesk.com/blockchain-tec ... ore-smoke/

I think this is a good read on what blockchain (and bitcoin) are and are not.

Wolinsky's (founder of the Genesis project) advice at the end:
One – investors need to differentiate between the few projects that unleash the Bitcoin-style disruption into new markets from the many so-called "blockchain" (use-case) projects that merely repackage common protocols that empower existing participants; and, two – if the blockchain technology industry persists in pretending to build blockchain technology, then the investment community should "pretend" to invest money.

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abuss368
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Re: What is Bitcoin?

Post by abuss368 » Wed Sep 13, 2017 10:57 pm

There is an interview on CNBC today with Jamie Dimon, JP Morgan CEO. He noted that Bitcoin will collapse and it will end very badly.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

incognito_man
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Re: What is Bitcoin?

Post by incognito_man » Wed Sep 13, 2017 11:36 pm

abuss368 wrote:
Wed Sep 13, 2017 10:57 pm
There is an interview on CNBC today with Jamie Dimon, JP Morgan CEO. He noted that Bitcoin will collapse and it will end very badly.
Dimon is not exactly an authority on the subject. Plus JP Morgan is a partner of the Enterprise Ethereum Alliance which is notably NOT a cryptocurrency in and of itself, but is based on ethereum which is, loosely, a competitor to Bitcoin.

Dimon has almost made statements years ago that Bitcoin would collapse (and it hasn't yet).

That being said, the crypto market did falter briefly after his comments.

objectivefunction
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Re: What is Bitcoin?

Post by objectivefunction » Thu Sep 14, 2017 6:12 am

mnaspbh wrote:
Wed Sep 13, 2017 4:13 pm
I can start a new blockchain without any cryptocurrency, while still gaining the advantages of a blockchain.
What you're missing here is defining what "advantages of a blockchain" means. My contention is that what you think are advantages of a blockchain are actually advantages of the *bitcoin system*, that blockchain is not bitcoin's innovation (it pre-existed bitcoin), and blockchain is a terribly complicated and inefficient database for a centralized system.

From the other things you are saying I would guess you think that the advantages of blockchain are that it is immutable and auditable. Auditability has nothing to do with technology. It has everything to do with access. Whatever the database you need access to get auditability.

The story to how bitcoin gets immutability is a little more complicated. There's nothing magical about the bits that are written to make the blockchain. They're just like any other piece of data: they can be changed. "Series of cryptographically-linked entities" existed before blockchain in source control systems like git, bazaar, and bitkeeper, and in the Merkle Tree (invented in 1980). You can easily rewrite history and rehash everything in those existing technologies, but the rules of bitcoin make the blockchain immutable.

If someone wanted to change a block in bitcoin's blockchain they would have assemble some new set of transactions and then pick a nonce so that that new set of transactions matches the hash for the old block. In addition, to get all the thousands of bitcoin nodes to accept their new block they'd have to present it as part of a longer chain than the old one (bitcoin's software implicitly trusts the longest chain of blocks). The task of choosing a nonce that produces exactly the same hash as the old block is much, much harder than extending the existing chain, so this attacker is going to waste unfathomable amounts of computing power. Meanwhile all the other miners are extending the existing chain so the task of the attacker is getting harder as time goes by.

A much easier task would be to rehash the block you want to change, and all the blocks on top of it. Who cares if they get different hashes as long as your chain is longest no one will care. The best case scenario would be changing the block at the tip of the blockchain since there are no other blocks on top of it. But to do even that you have to race against other miners who are adding new blocks, so you have to essentially do twice the amount of work of any other miner. The blockchain doesn't inherently have immutability, it is imbued with immutability by longest chain+enormous computational cost+an arms race between miners, and this arms race between miners is fueled by winning bitcoins for completing their task. And the mining arms race, the proof-of-work, the ditributed nodes, and everything else that makes up bitcoin is aimed at producing a system that removes counter-party risk without a central authority, which is the exact opposite of what banks and financial institutions want out of "blockchain."

If banks and financial institutions want an efficient, centralized system, they can get that right now without blockchain, they just need to set up an Oracle database. The inefficiencies, delays, and duplications in the financial system are not because of technological challenges, but human challenges. Getting banks to work together to connect their systems, to define standard representations for digitized assets (like stocks and bonds and currency) and rules for how they are exchanged, this is not a technical challenge, it's a challenge of collaboration. Blockchain is not some magic talisman that will make everyone work together.

How would a centrally controlled blockchain work? The only successful example is bitcoin. You could try to exactly duplicate bitcoin but wall it off so that only certain nodes and miners could participate. You could decree that each miner can only have X amount of hash power. Is that a secure, immutable blockchain? What if a miner secretly uses 2X or 100X hash power to change the record? How would the miners be compensated for the real cost of the electricity and capital investments in computing power? You can say that it would use proof-of-stake or some other method for extending the blockchain, but those are only theoretical, and I don't even know that the theory makes sense. The only proven method (with an 8 year track record) is proof-of-work. I'm very skeptical that some unproved technology could work.

What happens when the central authority wants to reverse some transaction? Do all the miners stop and wait for the central authority to rehash everything? Do all the miners work together to rehash everything? How often would that happen? How does that affect transaction throughput? What if there's bug fix or some new feature to roll out? How does the central authority ensure everyone upgrades? By threat of fines and prison?

Then there's the transaction throughput. Bitcoin is struggling with a way forward on that. You're suggesting we take a system with a throughput that is way too low for the use case, change its rules and potentially it's proof-of-work algorithm to something that is unproved and untested, and centralize it when all of its features are aimed at the single purpose of decentralization?

To be clear I'm not saying that that can't work. I'm saying that I'm extremely skeptical that it could work, and if it did it would take an enormous amount of effort, when you could just setup an Oracle database instead.

"Blockchain" is a bubble that will pop, and it may have already, because people have stopped using the term "blockchain" and replaced it with the term "distributed ledger technology."

I would suggest that you (or anyone else who is interested in understanding bitcoin) read the bitcoin whitepaper http://bitcoin.org/bitcoin.pdf.

laohan
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Re: What is Bitcoin?

Post by laohan » Thu Sep 14, 2017 7:53 am

objectivefunction wrote:
Thu Sep 14, 2017 6:12 am
The inefficiencies, delays, and duplications in the financial system are not because of technological challenges, but human challenges. Getting banks to work together to connect their systems, to define standard representations for digitized assets (like stocks and bonds and currency) and rules for how they are exchanged, this is not a technical challenge, it's a challenge of collaboration. Blockchain is not some magic talisman that will make everyone work together.
This is a very accurate description, and applies across the board to tons of problems.

Another important part of reality is that one person's inefficiencies is another person's profits.

Jeff Albertson
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Re: What is Bitcoin?

Post by Jeff Albertson » Sun Sep 17, 2017 11:49 am

jadd806 wrote:
Thu Aug 24, 2017 8:22 am
How many cryptos should you hold to get your slice of the market? Consider that "Dogecoin" a totally rubbish product based on little other than an Internet meme is the #35 cryptocurrency by market capitalization. Which makes me question whether the index fund approach is truly the way to go here.
Is There a Cryptocurrency Bubble? Just Ask Doge.
https://www.nytimes.com/2017/09/15/busi ... -doge.html
Mr. Palmer, the creator of Dogecoin, was an early fan of cryptocurrency, a form of encrypted digital money that is traded from person to person. He saw investors talking about Bitcoin, the oldest and best-known cryptocurrency, and wanted to find a way to poke fun at the hype surrounding the emerging technology.

So in 2013, he built his own cryptocurrency, a satirical mash-up that combined Bitcoin with the Doge meme he’d seen on social media. Mr. Palmer hoped to use Dogecoin to show the absurdity of wagering huge sums of money on unstable ventures.

But investors didn’t get the joke and bought Dogecoin anyway, bringing its market value as high as $400 million. Along the way, the currency became a magnet for greed and attracted a group of scammers and hackers who defrauded investors, hyped fake products, and left many of the currency’s original backers empty-handed.
...
Its market value by midday Friday was about $100 million.

Tanelorn
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Re: What is Bitcoin?

Post by Tanelorn » Mon Sep 18, 2017 7:09 pm

This was a good blog post on the high level aspects of bitcoin.

https://valueandopportunity.com/2017/09 ... ke-myself/

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oldcomputerguy
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Re: What is Bitcoin?

Post by oldcomputerguy » Mon Oct 16, 2017 5:42 am

Anybody know why there's a 20-pound frozen turkey up in the light grid?

lazyday
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Re: What is Bitcoin?

Post by lazyday » Mon Oct 16, 2017 5:57 am

Initial Margin 3.33%
Maintenance Margin 1.67%
Leverage 1:30
https://www.plus500.com/Instruments/BTCUSD

lazyday
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Re: What is Bitcoin?

Post by lazyday » Wed Oct 18, 2017 9:51 am

The Dutch family of five is in the process of selling pretty much everything they own — from their 2,500-square-foot house, to their shoes – and trading it in for the popular cryptocurrency. They have moved to a campsite in the Netherlands, where they're waiting for bitcoin to really take off. .... "Yeah, we can lose all the material stuff. Yeah, we can lose all our money. Yeah, we don't have three cars anymore. We don't have the motorcycle anymore. But in the end, I think we, as a family, will still be happy and just enjoying life."
https://www.cnbc.com/2017/10/17/this-fa ... tcoin.html

Wakefield1
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Re: What is Bitcoin?

Post by Wakefield1 » Wed Oct 18, 2017 6:32 pm

If I buy Bitcoin am I potentially transferring my money to someone who is selling Bitcoin?
If I sell Bitcoin am I getting money away from someone who is buying or has bought Bitcoin?

hilink73
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Re: What is Bitcoin?

Post by hilink73 » Wed Oct 18, 2017 9:19 pm

Wakefield1 wrote:
Wed Oct 18, 2017 6:32 pm
If I buy Bitcoin am I potentially transferring my money to someone who is selling Bitcoin?
If I sell Bitcoin am I getting money away from someone who is buying or has bought Bitcoin?
Hold on, you are onto something here ...
You are describing what could be called a "market" or an "exchange".

fatlever
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Re: What is Bitcoin?

Post by fatlever » Thu Oct 19, 2017 10:05 am

abuss368 wrote:
Wed Sep 13, 2017 10:57 pm
There is an interview on CNBC today with Jamie Dimon, JP Morgan CEO. He noted that Bitcoin will collapse and it will end very badly.
Image
"Stay away from it (Bitcoin). It's a mirage, basically" - Warren Buffet 2014
The thing about Bitcoin and crypto is general is nobody really knows where this is headed.

Image

Nate79
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Re: What is Bitcoin?

Post by Nate79 » Thu Oct 19, 2017 5:13 pm

Does anyone have the bad feeling that people are joining this site and others simply to pump up Bitcoin similar to penny stocks? The level of not only troll activity but extreme fanboyism is so far out there it remind me of the dot com run up.

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bertilak
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Re: What is Bitcoin?

Post by bertilak » Thu Oct 19, 2017 5:19 pm

Nate79 wrote:
Thu Oct 19, 2017 5:13 pm
Does anyone have the bad feeling that people are joining this site and others simply to pump up Bitcoin similar to penny stocks? The level of not only troll activity but extreme fanboyism is so far out there it remind me of the dot com run up.
I have not read the FIVE PAGES of responses to this simple question. Apparently there isn't a simple answer!

I'm wondering if that alone is enough to steer one away!
Listen very carefully. I shall say this only once. (There! I've said it.)

fatlever
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Re: What is Bitcoin?

Post by fatlever » Thu Oct 19, 2017 5:39 pm

Nate79 wrote:
Thu Oct 19, 2017 5:13 pm
Does anyone have the bad feeling that people are joining this site and others simply to pump up Bitcoin similar to penny stocks? The level of not only troll activity but extreme fanboyism is so far out there it remind me of the dot com run up.
I joined 5 years before you :mrgreen:

Bogleheads get excited about $100 bonus on opening checking accounts that you have to jump through hoops for, there are regular threads about about 2% Cash Back Credit Cards and if IBonds were to hit 3% rate you'd have 5 pages of excitement about it. Is it so strange to have people excited about something that is returning 600% on investment? :shock:

Nate79
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Re: What is Bitcoin?

Post by Nate79 » Thu Oct 19, 2017 5:49 pm

fatlever wrote:
Thu Oct 19, 2017 5:39 pm
Nate79 wrote:
Thu Oct 19, 2017 5:13 pm
Does anyone have the bad feeling that people are joining this site and others simply to pump up Bitcoin similar to penny stocks? The level of not only troll activity but extreme fanboyism is so far out there it remind me of the dot com run up.
I joined 5 years before you :mrgreen:

Bogleheads get excited about $100 bonus on opening checking accounts that you have to jump through hoops for, there are regular threads about about 2% Cash Back Credit Cards and if IBonds were to hit 3% rate you'd have 5 pages of excitement about it. Is it so strange to have people excited about something that is returning 600% on investment? :shock:
Sorry, I can get that type of opinion on the penny stock websites and pyramid scheme threads on the myriad of websites full of shady fly by night pumpers. When there is a new thread every day on should I buy bitcoin written by someone who sounds like they can barely type, 5 page threads that are kept alive by someone posting some latest news article about bitcoin, and someone hyping 600% return get rich quick, yes I find it strange.

Bitcoin stinks of pyramid scheme and pumping and feels exactly like the dot com run up where stock tips were being given out by people with no clue everywhere you turned.

fatlever
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Re: What is Bitcoin?

Post by fatlever » Fri Oct 20, 2017 10:29 am

Nate79 wrote:
Thu Oct 19, 2017 5:49 pm
fatlever wrote:
Thu Oct 19, 2017 5:39 pm
Nate79 wrote:
Thu Oct 19, 2017 5:13 pm
Does anyone have the bad feeling that people are joining this site and others simply to pump up Bitcoin similar to penny stocks? The level of not only troll activity but extreme fanboyism is so far out there it remind me of the dot com run up.
I joined 5 years before you :mrgreen:

Bogleheads get excited about $100 bonus on opening checking accounts that you have to jump through hoops for, there are regular threads about about 2% Cash Back Credit Cards and if IBonds were to hit 3% rate you'd have 5 pages of excitement about it. Is it so strange to have people excited about something that is returning 600% on investment? :shock:
Sorry, I can get that type of opinion on the penny stock websites and pyramid scheme threads on the myriad of websites full of shady fly by night pumpers. When there is a new thread every day on should I buy bitcoin written by someone who sounds like they can barely type, 5 page threads that are kept alive by someone posting some latest news article about bitcoin, and someone hyping 600% return get rich quick, yes I find it strange.

Bitcoin stinks of pyramid scheme and pumping and feels exactly like the dot com run up where stock tips were being given out by people with no clue everywhere you turned.
So much smugness in your post. Billionaire Mark Cuban also was adamant that Bitcoin was a bubble until this June and he warned he recognized bubbles since he made his money off the dot com one. Now he's changed his tune and is saying if you're adventurous you could go up to 10% of your portfolio with Bitcoin to take some risk for some huge returns. Our own Bogleheads Bitcoin thread from 2011 is full of comedy gold with posters saying it Bitcoin was a bubble and comparable to tulips and beanie babies when it was priced $8.

viewtopic.php?f=10&t=76868

Bitcoin potentially could be revolutionary and risking 5% does not make me an idiot. Index investing is a religion here I on the other hand have been
more than happy to re-balance several times a year when my 5% balloons to 10-12% :sharebeer

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rmelvey
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Re: What is Bitcoin?

Post by rmelvey » Fri Oct 20, 2017 10:37 am

Nate79 wrote:
Thu Oct 19, 2017 5:13 pm
Does anyone have the bad feeling that people are joining this site and others simply to pump up Bitcoin similar to penny stocks? The level of not only troll activity but extreme fanboyism is so far out there it remind me of the dot com run up.
I don't think that's a fair characterization. I've been a Boglehead for over over 7 years and am excited about Bitcoin and post about it. It's revolutionary technology. I actually try to actively refrain from talking about it with friends and family because I don't want to be obnoxious. So rather than trying to spread the word I try to have a bias towards staying hush

David Scubadiver
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Re: What is Bitcoin?

Post by David Scubadiver » Fri Oct 20, 2017 1:42 pm

I am going to say something radical and probably stupid. But, say it I will.

Bitcoin and Dollars and Gold are nothing like each other.
A dollar is backed by the full faith and credit of the United States, and is legal tender for all debts public and private. It says so write on it.
Gold is primarily used to make jewelry. Women and men pay for that sort of thing, often with dollars.
A bitcoin is not backed by the full faith and credit of anybody. And, it is not legal tender for anything.

A bitcoin and a dollar may both be considered a medium of exchange. But a bitcoin's value is not pegged to its usefulness as a medium of exchange. If it were, it would be worth exactly what one values the ability to engage in a pseudoanonymous transaction with a very limited number of others who are willing to enter an exchange of goods and services for the bitcoin. No, bitcoin gets its value exclusively from speculation -- the hope and prayer that someone will pay more for it than you did -- not because it earns money; not because you can do anything with it that you can't due easier with cash or credit; but because of speculation and speculation alone.

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bertilak
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Re: What is Bitcoin?

Post by bertilak » Fri Oct 20, 2017 2:04 pm

David Scubadiver wrote:
Fri Oct 20, 2017 1:42 pm
No, bitcoin gets its value exclusively from speculation -- the hope and prayer that someone will pay more for it than you did -- not because it earns money; not because you can do anything with it that you can't due easier with cash or credit; but because of speculation and speculation alone.
That's the way I see it, although I am willing to be educated to the point of becoming a believer in Bitcoin's value as an investment. So far nothing has done that for me. Until then, I remain in the "pure speculation" camp.

When "The Apocalypse" comes, Bitcoin will (if I understand it) become no more valuable than your favorite cat JPEGs saved away on your no-longer-accessible cloud storage. I had an in-passing conversation about saving for a Mad Max scenario and my position was bullets and toilet paper were your best bets! Bitcoin replaces neither of those but gold and, better yet, cash might.

EDIT: In disaster scenarios don't ATMs get emptied quickly? Does anyone foresee a Bitcoin ATM? The UAE has gold-bar ATMs.
Listen very carefully. I shall say this only once. (There! I've said it.)

David Scubadiver
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Re: What is Bitcoin?

Post by David Scubadiver » Fri Oct 20, 2017 2:12 pm

I do not worry about the apocalypse. When it comes, I read that soap will be worth more than gold. Frankly, I think people will be too afraid to bathe so I do not know if this is true and because I do not worry about the apocalypse I have hoarded neither soap nor gold.

I did look at expedia's policy on accepting bitcoin, which is what I would expect. You can pay in bitcoin but if you return you will get the dollar-based value of your trip returned to you (in bitcoin), and not the amount bitcoin you paid.

hilink73
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Re: What is Bitcoin?

Post by hilink73 » Fri Oct 20, 2017 2:15 pm

Nate79 wrote:
Thu Oct 19, 2017 5:49 pm

Bitcoin stinks of pyramid scheme and pumping and feels exactly like the dot com run up where stock tips were being given out by people with no clue everywhere you turned.
Feeling <> knowledge.

This is a very complex, technical matter. Much more complex than any pennystocks or whatever.
Be happy that there are people explaining things. That's what a forum is for.
Your comments show your lack of understanding. (Which is ok. We are here to learn. If we want, that is.)

Also, blockchain technology isn't new. Bitcoin has been around for years and shows that the technology is working, as do other blockchains.


And, investing is always a risk. That's what makes you money in the first place.
I'd never forgive myself not taking this specific risk, really. Maybe it's a few grand lost, so what? The potential reward is much more than anything else.
Decide for yourself.

If you are not interested, you do not need to read any Bitcoin related threads.

hilink73
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Re: What is Bitcoin?

Post by hilink73 » Fri Oct 20, 2017 2:17 pm

David Scubadiver wrote:
Fri Oct 20, 2017 1:42 pm
And, it is not legal tender for anything.
Well, it is in Japan, though.

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bertilak
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Re: What is Bitcoin?

Post by bertilak » Fri Oct 20, 2017 2:27 pm

hilink73 wrote:
Fri Oct 20, 2017 2:15 pm
This is a very complex, technical matter. Much more complex than any pennystocks or whatever.
If complexity is a sign of value there are PLENTY of things to invest in. Pratt and Whitney comes to mind. I own it in VTSAX which also has Procter and Gamble (toilet paper). That pretty much brackets the complexity spectrum.

Maybe Bitcoin is too complex for the average Joe (or Bertilak) to understand, but so are jet engines. Still, I am happy to invest in Pratt and Whitney but leery of Bitcoin.

I am willing to be educated, and curious enough to pay attention, but so far have not heard anything that even hints at why it is a good thing to invest in.
Listen very carefully. I shall say this only once. (There! I've said it.)

hilink73
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Re: What is Bitcoin?

Post by hilink73 » Fri Oct 20, 2017 2:47 pm

bertilak wrote:
Fri Oct 20, 2017 2:27 pm
hilink73 wrote:
Fri Oct 20, 2017 2:15 pm
This is a very complex, technical matter. Much more complex than any pennystocks or whatever.
If complexity is a sign of value there are PLENTY of things to invest in.
That's not what I said. I said it's a very complex, technical matter.
It seems people are mostly bashing Bitcoin here, because they do not understand what it is about.

Or maybe they are jealous not to have the balls to put a few grand in (when it was $8, $50, $200, $600, $1000, $5000)? Because, it has to be low cost index funds? Because everything else is not the true Bogleheads way?
Maybe they should just get a life and have some fun with a few % of their portfolio instead of nagging?
Maybe they are just afraid? Of whatever?

And obviously, people are seeing value in Bitcoin since a few years now, while penny stocks have their value written in their name (penny) already.
You do see the difference between penny and $6000?

But, I'm not here to argue. I'm leaving this here for now.

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Re: What is Bitcoin?

Post by Wakefield1 » Fri Oct 20, 2017 3:16 pm

Put $8. in,get out $5000. ?
Put $5000. in get out $8. ?

Market timing is a very complex,technical matter

Am I feeling lucky today? :D :?:

Using it to make payment on a transaction seems to me to not be the same thing as trying to trade or manipulate it in such a way as to be able to withdraw more than had been deposited
Last edited by Wakefield1 on Fri Oct 20, 2017 3:30 pm, edited 1 time in total.

fatlever
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Re: What is Bitcoin?

Post by fatlever » Fri Oct 20, 2017 3:28 pm

bertilak wrote:
Fri Oct 20, 2017 2:04 pm

EDIT: In disaster scenarios don't ATMs get emptied quickly? Does anyone foresee a Bitcoin ATM? The UAE has gold-bar ATMs.
There have been Bitcoin ATMs for a pretty long time now. Now they are all over the place - I have three pretty close to me. They tended to be in smoke/vape shops, I guess because people used it for buying things off darknet but now you see them in malls and airports. Also, they can't be emptied by thieves or the government because it's protected by .... math :mrgreen:

https://coinatmradar.com/bitcoin-atm-near-me/

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bertilak
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Re: What is Bitcoin?

Post by bertilak » Fri Oct 20, 2017 3:37 pm

fatlever wrote:
Fri Oct 20, 2017 3:28 pm
There have been Bitcoin ATMs for a pretty long time now. Now they are all over the place - I have three pretty close to me. They tended to be in smoke/vape shops, I guess because people used it for buying things off darknet but now you see them in malls and airports. Also, they can't be emptied by thieves or the government because it's protected by .... math :mrgreen:
Fascinating! How do they work? Do they spit out something physical? Do they use Bluetooth or SMS to send some coupon-like digital code or serial number to your smart phone? Can you lose it with some clumsy action?

I see there are Bitcoin apps. Are they required or just a convenience?
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bridge
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Re: What is Bitcoin?

Post by bridge » Sat Oct 21, 2017 2:53 am

bertilak wrote:
Fri Oct 20, 2017 3:37 pm
Fascinating! How do they work? Do they spit out something physical? Do they use Bluetooth or SMS to send some coupon-like digital code or serial number to your smart phone? Can you lose it with some clumsy action?

I see there are Bitcoin apps. Are they required or just a convenience?
The machine will transmit a signed transaction into the public bitcoin network, transferring the designated amount of bitcoin to the address you specify. The transaction will then be confirmed ("mined") in the normal way and incorporated into the public bitcoin ledger. In this way, control of the coins is transferred to you. No physical or wireless transmission to you is required.

(A bitcoin address looks something like this: 1PZ5ebvdt43dvRRgRNgBhsq2PwAKN4X6W and you can see a history of transactions to this particular address - an address used by a lifeboat charity to solicit donations - here: https://blockchain.info/address/1PZ5ebv ... 2PwAKN4X6W)

A bitcoin wallet app is a convenience but is not required. It is possible to hold bitcoin using a "wallet" printed on a piece of paper. This paper wallet will have a public address (which you tell to the machine) and a private key (a code which you keep SECRET! An example private key is: 5JPy8Zg7z4P7RSLsiqcqyeAF1935zjNUdMxcDeVrtU1oarrgnB7). All that is needed to authorise spending of the coins is the secret key, which is printed on the paper. But this would be cumbersome for day to day use, hence software wallets or apps are often used.

If is common for people with a large holding of bitcoin to keep a "cold balance" in a paper wallet for secure storage, and a smaller "hot balance" in a software wallet for daily use.

In answer to your question "Can you lose it with some clumsy action?" the answer is YES. If you lose possession of the secret keys to any of your addresses, the coins they hold are gone forever and can never be spent. Similarly if you expose the secret keys, your coins could be stolen.
Last edited by bridge on Sat Oct 21, 2017 3:32 am, edited 1 time in total.

bridge
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Re: What is Bitcoin?

Post by bridge » Sat Oct 21, 2017 3:24 am

bertilak wrote:
Fri Oct 20, 2017 2:27 pm
... Still, I am happy to invest in Pratt and Whitney but leery of Bitcoin.

I am willing to be educated, and curious enough to pay attention, but so far have not heard anything that even hints at why it is a good thing to invest in.
What's stopping you buying a small amount of bitcoin, say $100 worth? Enough to be an educational process for you to learn the mechanics and ins and outs of the system, but not putting any significant capital at risk.

I would say there is only so much you can learn about bitcoin by reading. Actually buying some, and using wallet software, making a few test transactions and seeing them appear up on the public ledger — very illuminating.

Hell, if you set up a wallet and post a receiving address up here, I'll send you $5 worth myself.

Johm221122
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Re: What is Bitcoin?

Post by Johm221122 » Sat Oct 21, 2017 3:57 am

bridge wrote
In answer to your question "Can you lose it with some clumsy action?" the answer is YES. If you lose possession of the secret keys to any of your addresses, the coins they hold are gone forever and can never be spent. Similarly if you expose the secret keys, your coins could be stolen.
What happens when all 21 million are lost?I believe there are only 21 million

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bertilak
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Re: What is Bitcoin?

Post by bertilak » Sat Oct 21, 2017 5:01 am

bridge wrote:
Sat Oct 21, 2017 3:24 am
bertilak wrote:
Fri Oct 20, 2017 2:27 pm
... Still, I am happy to invest in Pratt and Whitney but leery of Bitcoin.

I am willing to be educated, and curious enough to pay attention, but so far have not heard anything that even hints at why it is a good thing to invest in.
What's stopping you buying a small amount of bitcoin, say $100 worth? Enough to be an educational process for you to learn the mechanics and ins and outs of the system, but not putting any significant capital at risk.

I would say there is only so much you can learn about bitcoin by reading. Actually buying some, and using wallet software, making a few test transactions and seeing them appear up on the public ledger — very illuminating.

Hell, if you set up a wallet and post a receiving address up here, I'll send you $5 worth myself.
Perhaps I will!

Is this a good guide: http://www.investopedia.com/tech/how-to-buy-bitcoin/ ?
Listen very carefully. I shall say this only once. (There! I've said it.)

supaflix
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Re: What is Bitcoin?

Post by supaflix » Sat Oct 21, 2017 6:29 am

Nate79 wrote:
Thu Oct 19, 2017 5:13 pm
Does anyone have the bad feeling that people are joining this site and others simply to pump up Bitcoin similar to penny stocks? The level of not only troll activity but extreme fanboyism is so far out there it remind me of the dot com run up.
I think thats an unfair statement. The appeal of Bitcoin has many of the same appeals that drew me to Boglehead investing in index funds by reducing the middleman fees. I learned about the potential efficiency gains distributed ledger tech can offer other industries and I realized it was similar as to what index funds offered to investing in the market.

I love efficiency and I believe the market loves efficiency. Show me investments that reduce friction, reduce fees, and reduce middlemen and I will happily invest.

bridge
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Re: What is Bitcoin?

Post by bridge » Sat Oct 21, 2017 8:09 am

bertilak wrote:
Sat Oct 21, 2017 5:01 am
Perhaps I will!

Is this a good guide: http://www.investopedia.com/tech/how-to-buy-bitcoin/ ?
It's not a bad start at all. Another which goes into a wider range of options is https://bitcoin.org/en/getting-started

Getting trustwortty info can be part of the challenge. The choices can be overwhelming. My advice is to follow your curiosity and experiment. Best way to learn :)

fatlever
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Re: What is Bitcoin?

Post by fatlever » Sat Oct 21, 2017 9:19 am

bertilak wrote:
Fri Oct 20, 2017 2:27 pm
I am willing to be educated, and curious enough to pay attention, but so far have not heard anything that even hints at why it is a good thing to invest in.

This is a great talk about the potential revolution in money that Bitcoin would bring. It's long but really worth watching. It's not really about investing or speculation but a revolution in money.


The Stories We Tell About Money - Andreas M. Antonopoulos | bitcoin talk March 2017

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bertilak
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Re: What is Bitcoin?

Post by bertilak » Sat Oct 21, 2017 9:26 am

fatlever wrote:
Sat Oct 21, 2017 9:19 am
bertilak wrote:
Fri Oct 20, 2017 2:27 pm
I am willing to be educated, and curious enough to pay attention, but so far have not heard anything that even hints at why it is a good thing to invest in.

This is a great talk about the potential revolution in money that Bitcoin would bring. It's long but really worth watching. It's not really about investing or speculation but a revolution in money.


The Stories We Tell About Money - Andreas M. Antonopoulos | bitcoin talk March 2017
A 45 minute talk is more than I want to invest!
Listen very carefully. I shall say this only once. (There! I've said it.)

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