Page 1 of 125 1231151101 ... LastLast
Results 1 to 20 of 2481
  1. #1
    Join Date
    Sep 2007
    Location
    Undisclosed

    Crypto Conversation

    http://money.cnn.com/2013/11/26/tech...day/index.html

    Someone has to help me understand Bitcoins.

    I understand (I think) that since we went off the gold standard, our U.S. currency (like many others) is basically a fiat currency that depends on the belief of its value. It is, to some extent, a virtual currency -- but it is backed by the full faith and credit of the government, with a history of repayment and with a regulated producer of the currency. (PLEASE NOTE this question/post is an economic inquiry, not an invitation for political commentary which will lurch us into verboten PPB issues).

    So, how do Bitcoins have any marketable value? What prevents the market from being flooded (i.e. a devaluation) by whoever "produces" them? How does one even obtain them, let alone assure that they are not counterfeit?

    Here is a chart of their "value" from today:

    http://money.cnn.com/2013/11/27/inve...000/index.html

    How is this different than tulips in Holland, back in the day?

    Signed, confused with modern economics.
    Last edited by OldPhiKap; 11-27-2013 at 06:09 PM.

  2. #2
    Join Date
    Mar 2007
    Location
    Back in Vegas... again.
    Quote Originally Posted by OldPhiKap View Post

    Someone has to help me understand Bitcoins.
    You and me both. I just don't get it.

  3. #3
    Quote Originally Posted by OldPhiKap View Post
    [url]
    So, how do Bitcoins have any marketable value? What prevents the market from being flooded (i.e. a devaluation) by whoever "produces" them? How does one even obtain them, let alone assure that they are not counterfeit?

    Here is a chart of their "value" from today:

    http://money.cnn.com/2013/11/27/inve...000/index.html

    How is this different than tulips in Holland, back in the day?

    Signed, confused with modern economics.
    I am by no means an expert, and can't really give you specifics, but here is my, possibly flawed, understanding based on bits and pieces I've picked up along the way. Bitcoins represent, individually unique numerical entities (the specifics of which i haven't looked into). Think of them like prime numbers. Anyone can 'produce' a new prime number (mathematicians are constantly looking) by finding it, but the pool is limited enough and new examples hard enough to find, that it is unlikely the market will be flooded.

    This uniqueness, combined with the public (if anonymous) recording of all bitcoin transactions, makes it theoretically impossible to duplicate or counterfeit them. If wallet X has bitcoin 7, nobody else can spend bitcoin 7.

    As for their value? Like anything, it has value because people think it can be used to obtain other things they value. Why do casino chips have value? Whether they will continue to have value, I have no idea.

  4. #4
    Join Date
    Sep 2007
    Location
    Undisclosed
    Quote Originally Posted by dukebluelemur View Post
    I am by no means an expert, and can't really give you specifics, but here is my, possibly flawed, understanding based on bits and pieces I've picked up along the way. Bitcoins represent, individually unique numerical entities (the specifics of which i haven't looked into). Think of them like prime numbers. Anyone can 'produce' a new prime number (mathematicians are constantly looking) by finding it, but the pool is limited enough and new examples hard enough to find, that it is unlikely the market will be flooded.

    This uniqueness, combined with the public (if anonymous) recording of all bitcoin transactions, makes it theoretically impossible to duplicate or counterfeit them. If wallet X has bitcoin 7, nobody else can spend bitcoin 7.

    As for their value? Like anything, it has value because people think it can be used to obtain other things they value. Why do casino chips have value? Whether they will continue to have value, I have no idea.
    Appreciate the response. This raises the following questions in my mind, though:

    1. Assume I find a prime number that had not somehow been registered. How do I turn it into a bitcoin?
    2. Why would I accept that as a substitute for cash?
    3. You raise the situation of a casino chip. If I take $100 and buy a chip, they will redeem that chip for $100. It is a tangible object, without a trade market. One step removed, I can take a tangible object with a market (stocks, commodities, baseball cards, art, a home, etc.) and both buy and liquidate that asset in an established bid market. I still do not understand how a bitcoin -- made from nothing, regulated by no one, without tangible form -- has an accepted market. And I still don't know how I get one, let alone spend one. Or who/what sets the market value.

    Again, I appreciate the response -- that is more than I knew when I posted, and helps add to what I am trying to grasp.

  5. #5
    Quote Originally Posted by OldPhiKap View Post
    Appreciate the response. This raises the following questions in my mind, though:

    1. Assume I find a prime number that had not somehow been registered. How do I turn it into a bitcoin?
    2. Why would I accept that as a substitute for cash?
    3. You raise the situation of a casino chip. If I take $100 and buy a chip, they will redeem that chip for $100. It is a tangible object, without a trade market. One step removed, I can take a tangible object with a market (stocks, commodities, baseball cards, art, a home, etc.) and both buy and liquidate that asset in an established bid market. I still do not understand how a bitcoin -- made from nothing, regulated by no one, without tangible form -- has an accepted market. And I still don't know how I get one, let alone spend one. Or who/what sets the market value.

    Again, I appreciate the response -- that is more than I knew when I posted, and helps add to what I am trying to grasp.
    Again, I'm not much of an expert, but I can surmise.

    1. I know people 'mine' for bitcoins with excess cpu power. I can speculate that there is a verification process (perhaps automated?), much like mathematicians would verify a newly discovered prime number. Whether this verification happens as it enters the bitcoin system, or the first time you try and use it, or some other way, I'm not sure.

    2. Mostly? Because it can, at least so far, be converted back into cash, and it is very anonymous. Bitcoin is used for a lot of stuff people want kept private. Ordering cocaine with a traceable bank account would cause problems for both the buyer and seller. From my corner of the internet I see bitcoin appealing most strongly to nerds, people with something to hide, and conspiracy theorists who really don't trust governments and economic regulatory groups. Perhaps those are extreme examples, if it's going to survive it will need to be more mainstream than that. Bitcoin as an investment I really couldn't speak to.

    3. Maybe stock is a better example. Most stocks anymore are tracked digitally. You can buy them for what someone offers it for, and you can sell it later at whatever people are willing to pay. Market value for bitcoin is supply and demand. Supply I already touched on, demand... well, if you knew what the demand was going to be for stocks in advance, you'd be a pretty wealthy man. If you poured all your money into baseball cards in the mid nineties, you probably aren't. How much do you think people will want to use, and governments will tolerate, an anonymous, non-governmental, digital currency? Basically, its how much worth people give that functionality.
    Tangibility isn't a prerequisite for value. A number is unique. Say I write a book, and publish it online in e-book format. You can't go to the bookstore and buy a copy, it only exists in 1s and 0s. But it is still unique, allowing ownership and sale.
    As for getting one? I've never looked into it.
    Last edited by dukebluelemur; 11-27-2013 at 09:32 PM. Reason: clarity

  6. #6
    Join Date
    Mar 2008
    Location
    raleigh
    when i began looking into it, it seemed like a very well thought out scam. Now, i'm not so sure. If it gains "credibility" then i could be an alternate form of exchange. the problems i have are:

    they want too much access to your banking and personal info.


    i don't understand why the price fluctuates so much (who is controlling this? - it seems artificial)


    they are pushing heavily for you to ACCEPT bitcoin as payment…..

    I guess i'm just a paranoid person, but i'm prolly not smart enough about currency exchanges to understand it and my 21 yr old assistant will make a killing in it….

    "One POSSIBLE future. From your point of view... I don't know tech stuff.".... Kyle Reese

  7. #7
    Quote Originally Posted by moonpie23 View Post
    when i began looking into it, it seemed like a very well thought out scam. Now, i'm not so sure. If it gains "credibility" then i could be an alternate form of exchange. the problems i have are:

    they want too much access to your banking and personal info.


    i don't understand why the price fluctuates so much (who is controlling this? - it seems artificial)


    they are pushing heavily for you to ACCEPT bitcoin as payment…..

    I guess i'm just a paranoid person, but i'm prolly not smart enough about currency exchanges to understand it and my 21 yr old assistant will make a killing in it….

    As far as the price fluctuations: no one is "controlling it"; the price is entirely a function of the market. And when I say "market," you should be aware that the main Bitcoin "exchange" is MtGox, which stands for "Magic the Gathering Online Exchange", which should give you some idea of the level of financial institution involved. So some months ago, when someone gave away $10,000 in Bitcoins, people freaked out and started selling and the price plummeted. More recently, when people heard that the Secret Service made noises about treating Bitcoin as a currency, they got excited and started buying them and the price went up. Presumably, when people remember that the Secret Service's interest is based on their mandate to prevent counterfeiting and therefore having them treat your stuff as a currency is a actually a very bad thing, the price will drop again. Of course, this means that the entire thing is horribly vulnerable to speculation and bubbling. Honestly, it's probably more accurate to think of Bitcoins as a stock or a commodity than as actual money.

  8. #8
    Join Date
    Sep 2007
    Location
    Undisclosed

  9. #9
    Quote Originally Posted by OldPhiKap View Post
    So, as DukeBlueLemur alluded to above, each Bitcoin is encoded with cryptographic voodoo (which I won't even pretend to understand) that uniquely identifies the Bitcoin. That cryptographic voodoo has to be stored somewhere, commonly called a wallet. There is also some additional cryptographic voodoo that tracks every transaction involving every Bitcoin ever. This second type of cryptographic voodoo is not stored anywhere in particular; it's some sort of distributed network...thing. As a result, no one has the ability to "undo" the stored transaction record. That means if your "wallet" is lost (as here), or hacked, or you are defrauded, or whatever, it is not possible to get your Bitcoins back (unless the NSA has a either P=NP solution or a working quantum computer).

  10. #10
    Join Date
    Sep 2007
    Location
    Undisclosed
    Quote Originally Posted by Dukeface88 View Post
    So, as DukeBlueLemur alluded to above, each Bitcoin is encoded with cryptographic voodoo (which I won't even pretend to understand) that uniquely identifies the Bitcoin. That cryptographic voodoo has to be stored somewhere, commonly called a wallet. There is also some additional cryptographic voodoo that tracks every transaction involving every Bitcoin ever. This second type of cryptographic voodoo is not stored anywhere in particular; it's some sort of distributed network...thing. As a result, no one has the ability to "undo" the stored transaction record. That means if your "wallet" is lost (as here), or hacked, or you are defrauded, or whatever, it is not possible to get your Bitcoins back (unless the NSA has a either P=NP solution or a working quantum computer).
    Who? Where?

    Thanks for the response above, it is helpful.

  11. #11
    Join Date
    Feb 2007
    Location
    The City of Brotherly Love except when it's cold.
    Quote Originally Posted by OldPhiKap View Post
    Who? Where?

    Thanks for the response above, it is helpful.
    Doesn't answer your questions per se, but the linked Economist article is helpful. How about this quote:

    "The system is now straining at the seams. Its computational underpinnings have
    collectively reached 100 times the performance of the world’s top 500 supercomputers
    combined: more than 50,000 petaflops."

    http://www.economist.com/news/techno...lar-and-highly

  12. #12
    Quote Originally Posted by OldPhiKap View Post
    Who? Where?

    Thanks for the response above, it is helpful.
    There's something called a "blockchain" that is maintained by a network of Bitcoin users that somehow crosscheck each other to verify that people have the Bitcoins they claim to have. I don't really understand how it works beyond the consequence of "transactions are impossible to undo".

  13. #13
    Join Date
    Sep 2007
    Location
    Undisclosed
    Quote Originally Posted by 77devil View Post
    Doesn't answer your questions per se, but the linked Economist article is helpful. How about this quote:

    "The system is now straining at the seams. Its computational underpinnings have
    collectively reached 100 times the performance of the world’s top 500 supercomputers
    combined: more than 50,000 petaflops."

    http://www.economist.com/news/techno...lar-and-highly
    Very interesting article, thanks. Quite informative.

    I thank everyone for the responses.

  14. #14
    alteran is offline All-American, Honorable Mention
    Join Date
    Feb 2007
    Location
    Durham-- 2 miles from Cameron, baby!
    Quote Originally Posted by Dukeface88 View Post
    There's something called a "blockchain" that is maintained by a network of Bitcoin users that somehow crosscheck each other to verify that people have the Bitcoins they claim to have. I don't really understand how it works beyond the consequence of "transactions are impossible to undo".
    The blockchain is functionally a ledger of EVERY TRANSACTION that has ever occurred with bitcoins. My understanding is that the blockchain is the key innovation of bitcoin.

    Basically, when I want to send you some bitcoin, I put a transaction on the ledger. This transaction contains 1) my bitcoin address (think of it as a serial number for my bitcoin account), 2) my digital signature (verifiable against my public key), 3) your bitcoin address, and 4) how much bitcoin I want to send you.

    Using my public key, the various miners do 2 things: 1) they use my digital signature to validate that the bitcoin address is "mine," and 2) they check that sufficient funds for that bitcoin address exist in the ledger to cover what I'm sending you. If I pass both these tests, the funds go to your bitcoin address, and are yours to control.

    The process typically takes ten minutes.

    Transactions can only be done by the owner of the bitcoin address. No mechanism exists for reversing a transaction. And this is where we get into one of the weaknesses of bitcoin.

    Once someone knows 1) my bitcoin address, which is functionally public information, and 2) my PRIVATE KEY, that is absolutely everything needed to control all my bitcoin. Again, there is no recovery mechanism.

    Furthermore, if I lose my private key, that bitcoin disappears forever. If my harddrive fails, if my kid plays a magnet game near my harddrive, or if I spill a drink and short it out, all that money is lost. Permanently. It's most pertinent to me, but it has some pertinence to the bitcoin community at large because it tightens the already tight money supply.

  15. #15
    Join Date
    Jan 2012
    Location
    SoCal
    After glancing through, the one thing I didn't see mentioned was this (and it may be in the articles):

    There will be a limited number of Bitcoins. The value will remain relative because at a certain point, there will be no more produced. This is why people are mining like crazy. I believe the number was 21 million or something along those lines.

  16. #16
    Join Date
    Feb 2007
    Location
    Seattle, WA
    My husband, kind of interested to get into this speculation (commodity speculation is a great analogy), accepted a single bitcoin as payment for a used stove we were replacing. The coin, at the time, was worth $120. He "sold" the coin when it reached $340, and then bought back in on another drop. He's been playing the ups and downs for a couple months now.

    That was a very profitable stove.

  17. #17
    Join Date
    Sep 2007
    Location
    Undisclosed
    Because I can't sleep, and can't let it go:

    http://now.msn.com/kid-holding-send-...k-in-donations

  18. #18
    Join Date
    Feb 2007
    Location
    The City of Brotherly Love except when it's cold.

    Bitcoin: The Next Tulip Mania?

    Bitcoin dropped 20% in value over the weekend. It is not an alternative currency. People hold a currency because of relative stable value. Bitcoin's value has gone from $2 to $1,000. IMO it is a speculative commodity with no underlying economic value except for the greater fool theory.

    If the price to execute a transaction is the same, would I sell in bitcoin instead of dollars, euro or other home currency just to save a 2% transaction fee? No. It's because I might later monetize the bitcoins at a favorable exchange rate. But I could just as well lose value. That's speculation my friends which is fine. Just recognize it for what it is. And don't underestimate the negative consequences if regulators decide to get involved.

    Like all speculative bubbles and ponzi schemes, early entrants will make money and get out but eventually it will end very badly.
    Last edited by 77devil; 12-03-2013 at 08:21 AM.

  19. #19
    Join Date
    Sep 2007
    Location
    Undisclosed
    Quote Originally Posted by 77devil View Post
    Bitcoin dropped 20% in value over the weekend. It is not an alternative currency. People hold a currency because of relative stable value. Bitcoin's value has gone from $2 to $1,000. IMO it is a speculative commodity with no underlying economic value except for the greater fool theory.

    If the price to execute a transaction is the same, why would I use bitcoin instead of dollars, euro or other home currency? Because I might pay less if I monetize the bitcoins at a favorable exchange rate. But I could just as well lose value. That's speculation my friends which is fine. Just recognize it for what it is. And don't underestimate the negative consequences if regulators decide to get involved.

    Like all speculative bubbles and ponzi schemes, early entrants will make money and get out but eventually it will end very badly.
    I brought up tulips earlier, and wholly agree. Not sure how this ends well.

    On a related note, though, I have created a way to monetize DBR reputation points ("$porkz"). I will send anyone as many $porkz as I have, for a good market rate. Please PM your bids to me, individually or in lot. PayPal only, please.

  20. #20
    Join Date
    Feb 2007
    Location
    Ashburn, VA
    Quote Originally Posted by OldPhiKap View Post
    I brought up tulips earlier, and wholly agree. Not sure how this ends well.

    On a related note, though, I have created a way to monetize DBR reputation points ("$porkz"). I will send anyone as many $porkz as I have, for a good market rate. Please PM your bids to me, individually or in lot. PayPal only, please.
    Can I pay you in Schrute-bucks?

    (I ran out of Stanley nickels...)

Similar Threads

  1. DBR Podcast #107 - a conversation with Quinn Cook
    By JasonEvans in forum Elizabeth King Forum
    Replies: 1
    Last Post: 02-20-2018, 01:45 PM
  2. Dukies in the NBA - Offseason conversation
    By JasonEvans in forum Elizabeth King Forum
    Replies: 26
    Last Post: 06-02-2016, 03:41 PM
  3. Oscar conversation
    By JasonEvans in forum Off Topic
    Replies: 61
    Last Post: 02-08-2016, 03:14 AM
  4. Oscar conversation
    By JasonEvans in forum Off Topic
    Replies: 0
    Last Post: 11-19-2012, 12:38 PM
  5. Coach K to be Sunday Conversation on Sportscenter **nm
    By JBDuke in forum Elizabeth King Forum
    Replies: 1
    Last Post: 03-04-2007, 10:42 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •