Bitcoin: What is it, in Plain English

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
raddle
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Location: West TN

Re: Bitcoin: What is it, in Plain English

Post by raddle » Sun Dec 08, 2013 2:02 pm

infecto wrote:
Alex Frakt wrote:A ponzi scheme for internet libertarians or a way for criminals to launder money. Or both.


Not that btc is the next big thing buts thats a bit of an ignorant statement. First, its crude to call those that use btc are internet libertarians or criminals. Its also a difficult comparison to say its a ponzi scheme. I am not here trying to sell the idea of btc or to even say its a good idea but calling it a ponzi scheme would be the last thing I would call it. Lastly, using the the normal definition of money laundering, I am not even sure how btc could make it much easier. Yes the transactions are near impossible to trace but so is cash and thats why btc does nothing to make laundering easier. Now if by btc you mean strip club, I understand how it can be used to launder.


Another great blast from the past...

infecto: 1
Alex Frakt: 0

If everyone who posted in this thread had been able to keep an open mind, they all could have been early adopters.

ourbrooks
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Re: Bitcoin: What is it, in Plain English

Post by ourbrooks » Sun Dec 08, 2013 3:45 pm

All is not lost. There are still Namecoins, Litecoins, PPcoins, all of which are considered as major cryptocurrencies by the founders of Bitcoins. Then, there are the new comers: Terracoin, Liquidcoin, Phenixcoin; the list goes on and on and there are more every day. Actually, depending on how original you want to be, it can be as little as half an hours work to come up with a new one. The argument that these are all next to worthless now doesn't hold; Bitcoins were next to worthless when they came out as well.

Actually, I do know a surefire way to make money in cryptocurrencies: Start a high priced newsletter about them. It'd have to come out daily or hourly to keep up, though.

fatlever
Posts: 75
Joined: Sat Apr 16, 2011 8:37 am

Re: Bitcoin: What is it, in Plain English

Post by fatlever » Mon Jun 05, 2017 1:57 pm

raddle wrote:
infecto wrote:
Alex Frakt wrote: A ponzi scheme for internet libertarians or a way for criminals to launder money. Or both.
Not that btc is the next big thing buts thats a bit of an ignorant statement. First, its crude to call those that use btc are internet libertarians or criminals. Its also a difficult comparison to say its a ponzi scheme. I am not here trying to sell the idea of btc or to even say its a good idea but calling it a ponzi scheme would be the last thing I would call it. Lastly, using the the normal definition of money laundering, I am not even sure how btc could make it much easier. Yes the transactions are near impossible to trace but so is cash and thats why btc does nothing to make laundering easier. Now if by btc you mean strip club, I understand how it can be used to launder.
Another great blast from the past...

infecto: 1
Alex Frakt: 0

If everyone who posted in this thread had been able to keep an open mind, they all could have been early adopters.
Lol,

infecto: 2600
Alex Frakt: 0 and :oops:

The sad part is over the years, without really researching any of this a lot of bogleheads have labeled bitcoin was a modern tulip frenzy or ponzi scheme or at best a digital currency that is in a bubble.

It’s crazy how closed minded or risk averse most of us (including me) are. I read this when I joined in 2011 and a small amount would be a fortune right now. Every year you think you missed the boat and every year the value of cryptos explode. A lot of people still think we are only in the early adopter phase right now.

Maybe this could be a big speculation frenzy that may last a decade OR it could be that these blockchains and digital tokens are the future platforms for the movement and exchange of value that allow the building of contracts between people, companies, devices and even act a decentralized ledgers of various data.

fatlever
Posts: 75
Joined: Sat Apr 16, 2011 8:37 am

Re:

Post by fatlever » Thu Oct 12, 2017 6:22 am

Alex Frakt wrote:
Sun Sep 04, 2011 2:31 pm
LadyGeek wrote:It looks like the exchange rate is around 8 USD. Mt. Gox (USD/dwolla/SEPA)
So down around 50% since the thread was started.
Bitcoin at $8 was a tulip. Now $5150 . :oops:

investor4life
Posts: 64
Joined: Fri Oct 08, 2010 9:45 am

Re: Bitcoin: What is it, in Plain English

Post by investor4life » Thu Oct 12, 2017 5:37 pm

Here are a bunch of relatively easy-to-understand articles on Bitcoins and blockchain technology that, taken together, make for some fascinating reading.

https://spectrum.ieee.org/static/specia ... hain-world


Enjoy!

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LadyGeek
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Re: Bitcoin: What is it, in Plain English

Post by LadyGeek » Thu Oct 12, 2017 7:29 pm

Thanks! I added the article to the wiki: Bitcoin ("External links")
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

user9532
Posts: 5
Joined: Sun Dec 18, 2016 10:08 pm

Re: Bitcoin: What is it, in Plain English

Post by user9532 » Thu Oct 12, 2017 10:22 pm

The general understanding about bitcoin is that the bitcoin algorithm is robust. But are there holes in the algorithm?

Let’s consider two assumptions in bitcoin (1) the assumption that the total number of bitcoins that will be generated is fixed to 21 million, and (2) bitcoin encryption is unbreakable.

Let’s look at the first assumption in a little detail and look at the algorithm.

A bitcoin miner gets newly generated bitcoins as a reward for successfully validating a bitcoin block (i.e. finding the hash that meets the target difficulty). During the initial days of bitcoin, the reward was 50 bitcoins for every block validated. When the number of blocks validated reached 210,000, the reward became half, i.e. 25 bitcoins. This process continues, and for each 210,000 blocks validated, the reward becomes half (it takes several years to reach 210,000 blocks). At the 33rd such occurrence, the reward becomes (near) zero. If you do the math you will see the total bitcoins that will ever be generated will be 21 million (you can create a spreadsheet to see this – use only 8 decimals).

Pretty solid logic. Right?

But where did the 210,000 come from?

The 210,000 is just a number hard-coded within the software code. The code is publicly available and you can change that number. The only condition is that a majority of the bitcoin mining community should agree to such a change. What if a group of people or a nation acquires 50% of mining power? They can change that number to whatever they want. If you change that number to a million, how many bitcoins will that result? How will that affect bitcoin value? There is no guarantee this won’t happen.

Now, let’s look at bitcoin encryption. Bitcoin is an implementation of blockchain technology. Blockchain is created using three technologies: (1) peer-to-peer networking using TCP/IP, (2) hashing using SHA-256 algorithm, and (3) asymmetric encryption using ECDSA (elliptic curve digital signature algorithm). Hashing and encryption are cryptographic techniques. These cryptographic techniques work because, using today’s computing technology, it will take hundreds or even thousands of years to break the math behind them.

But that is going to change. A new form of computing called quantum computing is in the works. Although it is mainly in the concept stages now, many experts believe it will become a reality in the next 5-10 years. Quantum computing will come with enormous computing power rendering today’s cryptography useless.

Check out these links to get a better understanding.

https://motherboard.vice.com/en_us/arti ... apocalypse
https://motherboard.vice.com/en_us/arti ... uting-now-
https://motherboard.vice.com/en_us/arti ... ter-is-now

In order for bitcoin to survive in an era of quantum computing, you need to recreate the wheel and come up with new cryptographic techniques that will survive the power of quantum computing. But what will happen to the bitcoins you already own? The private key evidencing your bitcoin ownership will suddenly become just 64 worthless random characters. Think about that.

hilink73
Posts: 81
Joined: Tue Sep 20, 2016 3:29 pm

Re: Bitcoin: What is it, in Plain English

Post by hilink73 » Fri Oct 13, 2017 12:13 am

user9532 wrote:
Thu Oct 12, 2017 10:22 pm

The 210,000 is just a number hard-coded within the software code. The code is publicly available and you can change that number. The only condition is that a majority of the bitcoin mining community should agree to such a change. What if a group of people or a nation acquires 50% of mining power? They can change that number to whatever they want.
"Could" is the magic word here.
The Bitcoin "community" as a whole isn't even able to go through with a much needed hardfork to reduce transaction speeds and costs.
Which shows that the 50% mark is a mere dream at least today.

Btw. BTC reached almost $6000 (on Bitfinex that is).
Exciting times.



Thanks for the links.
Probably that best way forward would be implementing quantum computing safe algorithms from now on...
Not sure if anybody got the message just yet.

jb1
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Re: Bitcoin: What is it, in Plain English

Post by jb1 » Fri Oct 13, 2017 6:48 am

Imagine if someone bought $100 worth when this thread started

Nate79
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Location: Portland, OR

Re: Bitcoin: What is it, in Plain English

Post by Nate79 » Fri Oct 13, 2017 10:15 am

jb1 wrote:
Fri Oct 13, 2017 6:48 am
Imagine if someone bought $100 worth when this thread started
Yes, hindsight is 20/20.

fipt2030
Posts: 28
Joined: Tue Oct 03, 2017 8:09 am

Re: Bitcoin: What is it, in Plain English

Post by fipt2030 » Fri Oct 13, 2017 11:06 am

It's more likely he 10-20M now

How about investing in similar currencies which are cheap to acquire with increasing values and market share like Xplay

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