Bitcoins

[magisme]

Seriously, what the fuck is a bitcoin already? How is this a thing?

[bacardimayne]

Didn't the CEO get assassinated?

[magisme]

Not sure what you're talking about.

[magisme]

Seriously, what the fuck is a bitcoin already? How is this a thing?

a debt is not a "thing" either but thats what money represents

Yeah, but governments that issue currencies say it is a thing, and they have big guns and stuff.

[Ace Nova]

Very volatile "cyber" currency that became famous because it's extremely difficult to trace....and was used on the (now) semi-defunct silk road marketplace. Years ago I was thinking about trying to "mine" or buy them....but never did....way too daunting of a task....to do either, imo. To each his own.

[OmarBradley]

Didn't the CEO get assassinated?

Not yet. A few people have killed themselves though as a result of his actions, I would not be surprised if an attack on Karpeles occurred.

Bitcoins are digital currency, simply put. I owned a bit of BTC on mt.gox (the exchange that recently filed for bankruptcy). Luckily, I didn't have that much on GOX, but some individuals lost thousands, to hundreds of thousands, to millions of dollars (in BTC).

Bitcoins (and most crypto-currencies) are found by having computer hardware (CPU, or GFX card) work with a script software to mine them. Coins are released in blocks of a specific amount of coins, and the difficulty to mine increases as more blocks are mined. The blocks are mined via script based programs which solve complicated math problems to unlock the block. Most mining takes place via mining pools, where hundreds or more individuals share their computing power to solve blocks together - this is generally the most effective method for mining with a normal computer. Custom mining rigs exist, but they are very expensive.

I don't have a 100% full understanding of how it works, but that's essentially the basics. Saber could probably be more elaborative.

Very volatile "cyber" currency that became famous because it's extremely difficult to trace....and was used on the (now) semi-defunct silk road marketplace. Years ago I was thinking about trying to "mine" or buy them....but never did....way too daunting of a task....to do either, imo. To each his own.

It's really daunting in the beginning, but once you get the hang of how the community/coins work, its pretty fun. Right now I'm mining/messing about with Dogecoin, could be valuable someday - or it could flop and be worthless. Cryptocurrencies are very unreliable; though BTC seems to have cemented itself around the $600 mark per coin.

[mrandyk]

What advantages does Bitcoin have over real money? That's the thing I haven't been able to figure out. I like the idea of a universal currency, but there is nothing backing this currency. There is no economy backing it like all currency issued by governments, there are no tangible assets giving it value, and it certainly isn't stock in the Bitcoin corporation.

Why not just use Paypal? It sounds like using Bitcoins is a huge pain in the ass anyways.

[OmarBradley]

What advantages does Bitcoin have over real money? That's the thing I haven't been able to figure out. I like the idea of a universal currency, but there is nothing backing this currency. There is no economy backing it like all currency issued by governments, there are no tangible assets giving it value, and it certainly isn't stock in the Bitcoin corporation.

Why not just use Paypal? It sounds like using Bitcoins is a huge pain in the ass anyways.

If I'm remembering correctly, Bitcoin was initially developed to be the "currency of the internet." A number of cryptocurrencies now use that phrase as their objective. It's a good question though, what's the purpose of cryptocurrency? The world is not yet completely convinced of it's necessity. Part of the answer lies in looking towards the future of money in general as technology improves over time. Right now, it may not be 100% necessary to have cryptocurrency, but in 100 years, who knows? Another reason for using cryptocurrencies is that they can be excellent investment opportunities. For example, I bought a few Bitcoins in 2011 for about $40 per coin........ right now they're worth over $600 per coin, and last December they were worth double that. I didn't end up making that much on the investment, because I used the coins instead of hoarding them for investing purposes. But plenty of people bought hundreds of Bitcoins in 2009 for ridiculously low prices, and literally made thousands to hundreds of thousands of dollars on that investment, when they probably only bought in for a few hundred dollars (or less).

My understanding of economics is basic, but I believe what gives BTC and other crypto's their value, is based on supply/demand (this is probably the most simple way of saying it, maybe even too simple to the point that it's slightly erroneous). There are roughly 12 million BTC in circulation right now, and there's X number of people who have them, and Y number of people who want them. As Y increases, the value increases because they become a more sought after commodity which there is less of to go around. Not all crypto-currencies are likely to follow this pattern though. For example, Dogecoin currently has around 60 billion coins in circulation, with at least 40 billion more on the way. So for a currency that big, it's unlikely it will ever reach BTC-level value. Though some surmise $1/Dogecoin is possible.

Like you said, there's nothing backing these currencies, which is exactly why so many people literally lost all of (or a lot of) their holdings when MT.GOX went bust. This event has caused most major governments of the world to discuss the cryptocurrency issue; regulation has been discussed, but is being met with resistance by the community, and some economists.

As KK noted, it's an incredibly alien and complex subject - but if it intrigues you, it's worth doing the research to figure out exactly what it is, and how it all works. The Wikipedia entry for cryptocurrency does a pretty good job summarizing and explaining, for those who are interested: http://en.wikipedia.org/wiki/Cryptocurrency.

[GivenToFly]

What advantages does Bitcoin have over real money? That's the thing I haven't been able to figure out. I like the idea of a universal currency, but there is nothing backing this currency. There is no economy backing it like all currency issued by governments, there are no tangible assets giving it value, and it certainly isn't stock in the Bitcoin corporation.

Why not just use Paypal? It sounds like using Bitcoins is a huge pain in the ass anyways.

Only advantages I can think of are that transfers are very quick and easy and untraceable. The disadvantages are many.

Another reason for using cryptocurrencies is that they can be excellent investment opportunities. For example, I bought a few Bitcoins in 2011 for about $40 per coin........ right now they're worth over $600 per coin, and last December they were worth double that. I didn't end up making that much on the investment, because I used the coins instead of hoarding them for investing purposes. But plenty of people bought hundreds of Bitcoins in 2009 for ridiculously low prices, and literally made thousands to hundreds of thousands of dollars on that investment, when they probably only bought in for a few hundred dollars (or less).

That is major problem. The asset needs to be either an investment asset or a currency. It cannot be both. Currencies need to be as stable and liquid as possible. With a deflationary currency (in this case extremely deflationary) you just give owners a strong incentive to hold on to what they've got.

If I'm remembering correctly, Bitcoin was initially developed to be the "currency of the internet." A number of cryptocurrencies now use that phrase as their objective. It's a good question though, what's the purpose of cryptocurrency? The world is not yet completely convinced of it's necessity. Part of the answer lies in looking towards the future of money in general as technology improves over time. Right now, it may not be 100% necessary to have cryptocurrency, but in 100 years, who knows? Another reason for using cryptocurrencies is that they can be excellent investment opportunities. For example, I bought a few Bitcoins in 2011 for about $40 per coin........ right now they're worth over $600 per coin, and last December they were worth double that. I didn't end up making that much on the investment, because I used the coins instead of hoarding them for investing purposes. But plenty of people bought hundreds of Bitcoins in 2009 for ridiculously low prices, and literally made thousands to hundreds of thousands of dollars on that investment, when they probably only bought in for a few hundred dollars (or less).

I remember reading about a guy who bought some bitcoins for a few euro when they first appeared, forgot about them, remembered them last year or two years ago when the price hit its peak, sold them and bought himself an apartment in central Oslo.

My understanding of economics is basic, but I believe what gives BTC and other crypto's their value, is based on supply/demand (this is probably the most simple way of saying it, maybe even too simple to the point that it's slightly erroneous). There are roughly 12 million BTC in circulation right now, and there's X number of people who have them, and Y number of people who want them. As Y increases, the value increases because they become a more sought after commodity which there is less of to go around. Not all crypto-currencies are likely to follow this pattern though. For example, Dogecoin currently has around 60 billion coins in circulation, with at least 40 billion more on the way. So for a currency that big, it's unlikely it will ever reach BTC-level value. Though some surmise $1/Dogecoin is possible.

Like you said, there's nothing backing these currencies, which is exactly why so many people literally lost all of (or a lot of) their holdings when MT.GOX went bust. This event has caused most major governments of the world to discuss the cryptocurrency issue; regulation has been discussed, but is being met with resistance by the community, and some economists.

As KK noted, it's an incredibly alien and complex subject - but if it intrigues you, it's worth doing the research to figure out exactly what it is, and how it all works. The Wikipedia entry for cryptocurrency does a pretty good job summarizing and explaining, for those who are interested: http://en.wikipedia.org/wiki/Cryptocurrency.

It's a financial bubble, pure and simple.

And dogecoin is essentially a parody of it, isn't it? It's made by people mocking the bitcoin enthusiasts as far as I know.

[GivenToFly]

I like the idea of a universal currency, but there is nothing backing this currency.

Global currency wouldn't work. An economy needs to be very homogenous and labour and capital need to be very mobile over it in order to sustain a single currency covering it. Otherwise you get crises like the Eurozone had in 2011.

There is no economy backing it like all currency issued by governments, there are no tangible assets giving it value, and it certainly isn't stock in the Bitcoin corporation.

A currency doesn't need to be backed by anything. Fiat only has value because people who use it agree that it has value. As long as there is a competent central issuing authority that adjusts the money supply such that it tracks the volume of transactions in the economy as closely as possible a currency will work. And this is why I don't see a global decentralized currency dominating the world economy any time soon. Maybe in the far future when we have superpowerful computers tracking global data streams.

[magisme]

I'm all for alternative currencies, but I don't trust this for a second.

[Ace Nova]

I'm all for alternative currencies, but I don't trust this for a second.

A lot of people don't. The one thing Bitcoin has going for it, by design, there will be an eventual limit to the amount produced/mined. Once that limit is reached, there will never be another Bitcoin produced or mined.

[Forsaken]

Transparent currency for online buying. IE: Though the deepweb on Tor with websites like Silkroad. Untraceable money.

It works, trust me.

[Dazey]

Basically you can order drugs, guns, hitmen and all sorts of shit online and it's extremely difficult for anybody to trace the transactions.

[Bumble's Bridge Pickup]

^ Yeah that's kind of questionable.

I know a dude who made like 100€ with a single bitcoin. He held it for less than a year.

[Ace Nova]

^ Yeah that's kind of questionable.

I know a dude who made like 100€ with a single bitcoin. He held it for less than a year.

When I started looking into them, they were less than $10 per coin....I would have made a 5000% profit by now....ugh.....

[Forsaken]

Years ago the market for bitcoins were like 3-4 dollars per bitcoin, the currency has inflated.

[Tater Totts]

But it has also crashed horrifically in that time as well, over the course of a few weeks it fluctuated from around $200 per coin to upwards of $1000 and back down to around $400.

People have invested their entire life savings into it and then lost everything when it crashed the next day.

[OmarBradley]

That is major problem. The asset needs to be either an investment asset or a currency. It cannot be both. Currencies need to be as stable and liquid as possible. With a deflationary currency (in this case extremely deflationary) you just give owners a strong incentive to hold on to what they've got.

It's a financial bubble, pure and simple.

And dogecoin is essentially a parody of it, isn't it? It's made by people mocking the bitcoin enthusiasts as far as I know.

BTC does encourage hoarding of coins. The point of Dogecoin is the exact opposite. Dogecoin was originally made as a parody yes, but it took off way faster than the creators could have imagined. So they are taking a different direction than BTC, Dogecoins are supposed to be used, not hoarded, that's why Dogecoin's transaction volume is huge for a coin that's only 4 months old. There's a tipping culture within the Doge community, millions of Dogecoins move between addresses every single day. In the five years that BTC has existed, they've acquired something like 100,000 subscribers to the Reddit Bitcoin page, in the 4 months Dogecoin has existed, they've acquired 70,000 subscribers. There's more Dogecoin to go around, so it looks like more people are getting involved with it, gradually of course.

I like cryptocurrencies, and whether anyone agrees with their purpose, or doesn't agree, they are here to stay. Right now it's not completely necessary to be involved with it, but I really think you're doing a disservice to yourself by brushing it off as a fad. Yes they can be incredibly unreliable, but that hasn't stopped hundreds of thousands of people from using them. Not just techies, businessmen, lawyers, doctors, retail, etc. are all involved in the use of and the acceptance of cryptocurrency.

And KK, the last BTC is scheduled to be mined in the year 2140 I think, though even at the point we're at right now, only 25 BTC per block are rewarded, so it's basically reached it's cap.

[GivenToFly]

I like cryptocurrencies, and whether anyone agrees with their purpose, or doesn't agree, they are here to stay. Right now it's not completely necessary to be involved with it, but I really think you're doing a disservice to yourself by brushing it off as a fad.

That's not how I see it. It is in fact a natural and expected step in the evolution of finance. I just don't see the concept as being very functional in the way bitcoin does it. More importantly I have an issue with how many people tout them as the future of currency, when I don't see them becoming anything more than a small niche in my lifetime.

[Powerage5]

Dogecoins are truly the currency of the future.

[Ace Nova]

I think the downside is that its so easy to make another one.

Really? How?

[OmarBradley]

I think the downside is that its so easy to make another one.

Really? How?

I think he means it's easy to make another cryptocurrency. Most programmers would be able to do it, I think. There's actually hundreds of cryptocurrencies, very few are popular though. So while it is relatively easy for a computer scientist to make a new one, it's unlikely that new currencies would do as well as current ones.

[Ace Nova]

I think he means it's easy to make another cryptocurrency. Most programmers would be able to do it, I think. There's actually hundreds of cryptocurrencies, very few are popular though. So while it is relatively easy for a computer scientist to make a new one, it's unlikely that new currencies would do as well as current ones.

Gotcha.

Out of curiosity, who "gets" the information/problems that are solved while mining Bitcoins? And what is it used for?

[OmarBradley]

I think he means it's easy to make another cryptocurrency. Most programmers would be able to do it, I think. There's actually hundreds of cryptocurrencies, very few are popular though. So while it is relatively easy for a computer scientist to make a new one, it's unlikely that new currencies would do as well as current ones.

Gotcha.

Out of curiosity, who "gets" the information/problems that are solved while mining Bitcoins? And what is it used for?

No person gets the the problems. A mining program "gets" them, and the program solves the problems, when the problem (might be multiple problems per block, I'm not sure) is solved, the miner(s) are rewarded with a block of coins.

Just to reiterate to those reading my posts here: I'm not an expert, I'm just a standard user of cryptocurrency, how it all works is very very complicated. Some computer scientists even claim that they're unsure of how it exactly works.