Topic Wiki

Editor’s note: I know enough about this topic to be dangerous, but I’m not a true expert so please feel free to add to or edit anything in this wiki that will improve it. The FAQs contain many oversimplifications but that is intentional to make the information relatable to the audience. Thanks!

Frequently Asked Questions

What are blockchains and bitcoins and what is the difference?
A blockchain is the fundamental element in a crypto currency system. A blockchain is an accounting ledger. Each block contains a bunch of journal entries (i.e. a chronological record of transactions) that gets encrypted (by miners) but can be downloaded and read by anyone on the network. Why the blockchain ledger is secure and how we can vouch for its integrity is a slightly more advanced topic.

An accounting ledger typically keeps track of money, and a blockchain is no different. But the only type of money that it can accurately track is digital money that lives on the blockchain network. So dollars, euros, etc are out. The digital money that lives on the blockchain is called a crypto currency, and the most well-known one at this time is Bitcoin.

Currently there are a few major blockchain networks: the Bitcoin Network, the Ethereum Network, and the Litecoin Network. Each one has its own currency, which are Bitcoin, Ether, and Litecoin, respectively.

I’m just a simple DDFer and not an accountant + cryptographer + hacker all at the same time. Can you make this a little simpler to understand?
Let’s try an analogy. There is a certain website called Dansdeals.com and it has quite a following. Some of the followers are just users/readers but others are more active and produce value for the website. When they provide value, they earn currency for their work – called “EQP” and “HT”. So we have something we will call the Dansdeals Blockchain Network that is simply a record keeper of various ongoing deals and it issues a native currency that is fractionable (10,000 EQP = 1 HT). This is similar to the Blockchain network recording financial transactions and issuing bitcoins. The ones who work for the network (miners) earn bitcoins and everyone else needs to buy it to participate.

The analogy improves if you imagine that the Dansdeals website visitors have to pay a small amount, let’s say 5 EQP, in order to access a deal or a code that is recorded on the network. If the website has 30,000 followers who love deals, but only 1,000 active members who earn EQP, then you can see that there is a need for a marketplace to be created where you can buy EQP for later use.

Of course, websites are not networks, and this analogy is far from perfect. But useful.

How much is a Bitcoin worth
No one knows. A few people are speculating its worth based on the potential that Bitcoin will one day become a major world currency that people use in their daily lives. Most people though are speculating its worth based on what the next new investor will pay them for it (google “Greater Fool Investing”).

Even if a crypto currency becomes dominant, who says it will be Bitcoin? Maybe it will be Schmitcoin?
This is completely possible. Bitcoin and Ether are the most likely at this point, but their long term survival is not at all guaranteed.

So why all the fuss about Bitcoin? Shouldn’t we wait for Schmitcoin and its cousins to come out?
You could, but you don’t want to ignore how hard it is to start up a network from scratch. It may be that as little as one person can create rival code to compete with the existing digital currencies and blockchains, but one person is not a network. You need a lot of highly technical and motivated people to join you and also to invest their time, energy, and money in making that network run. It’s a highly specialized group of people, and most of the people who would fit that profile are already tied up with an existing network. So it’s not impossible, especially in the long-term, but even if it does happen it would be unlikely to pop up overnight and so Vegas odds for Bitcoin are way shorter.

Let’s go back to the Dansdeals analogy. Imagine that Dansdeals is not the only such website, and there are other websites in existence that provide similar services. For the sake of the analogy let’s call them MMS and OMAAT. They too have big enough followings to survive independently, and even though each one offers a slightly different flavor that differentiates them, anyone on one of the networks could also get their most important needs met on one of the other networks. In this analogy, do you think it’s worth collecting EQP/HT or not? After all, Schmansdeals.com could open up one day and all the business could move there.

The argument for the difficulty of starting up a rival blockchain network is much stronger than in the analogy (especially if we start to include “smart contracts” in the discussion), but the basic idea that you need a critical mass of follows to be successful and compete with existing rivals is the same.

« Last edited by yuneeq on December 25, 2017, 01:05:21 AM »

Author Topic: BitCoin Master Thread  (Read 33473 times)

Offline SuperFlyer

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BitCoin Master Thread
« on: February 19, 2013, 04:52:14 PM »
http://www.bitcoins.com

Please not the usual pyramid etc rants.

Thanks
« Last Edit: July 06, 2015, 04:07:42 PM by jj1000 »

Offline rots5

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Re: Whats the story with BitCoins ?
« Reply #1 on: February 19, 2013, 05:01:25 PM »
http://www.bitcoins.com

Please not the usual pyramid etc rants.

Thanks
where'd you hear of this?
If you have any questions please search and then ask. PM me for detailed help.

Offline outsider

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Re: Whats the story with BitCoins ?
« Reply #2 on: February 19, 2013, 05:03:40 PM »
http://www.bitcoins.com

Please not the usual pyramid etc rants.

Thanks
great for shady underworld dealings and that is about it. It is not subject to monetary laws and therfore you are not breaking laws. you can gamble online with it. there have been some major security flaws and tons of bitcoins have been stolen.
It's what is on the outside that matters

Offline SuperFlyer

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Re: Whats the story with BitCoins ?
« Reply #3 on: February 19, 2013, 05:11:49 PM »
great for shady underworld dealings and that is about it. It is not subject to monetary laws and therfore you are not breaking laws. you can gamble online with it. there have been some major security flaws and tons of bitcoins have been stolen.

is this a result of a google search, or you've been following this ?

Offline outsider

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Re: Whats the story with BitCoins ?
« Reply #4 on: February 19, 2013, 05:20:51 PM »
is this a result of a google search, or you've been following this ?
not an avid follower but read the news reports on them from time to time. the bloomberg had some interesting pieces on it. of course the bloomberg I get for free. thank you! :) :)
It's what is on the outside that matters

Offline HelpMe

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Re: Whats the story with BitCoins ?
« Reply #5 on: February 19, 2013, 05:21:53 PM »
Please not the usual pyramid etc rants.
Then I have nothing to say.
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Re: Whats the story with BitCoins ?
« Reply #6 on: February 19, 2013, 05:22:35 PM »
not an avid follower but read the news reports on them from time to time. the bloomberg had some interesting pieces on it. of course the bloomberg I get for free. thank you! :) :)
http://www.npr.org/blogs/alltechconsidered/2013/02/06/171182974/is-online-gambling-legal-if-bitcoins-not-dollars-are-at-stake this is a basic article. I will try finding more articles.
It's what is on the outside that matters

Offline outsider

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It's what is on the outside that matters

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Re: Whats the story with BitCoins ?
« Reply #8 on: February 19, 2013, 05:25:20 PM »
Thanks. I got the impression its not the usual thing.

Offline yitzf

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Re: Whats the story with BitCoins ?
« Reply #9 on: February 19, 2013, 05:27:06 PM »
I read a report that supposedly Iran was using them to avoid the sanctions.
Don't ask me how.

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Re: Whats the story with BitCoins ?
« Reply #10 on: February 19, 2013, 05:49:58 PM »
I love the idea of bitcoins. Though I am a bit scared of it not catching on, and having valueless bitcoins. I am also scared of the volatility in the prices- it seems that the prices (last time I checked) are set solely on hype and skepticism.

To those claiming pyramid scheme- you would have to define any fiat currency in same manner- including the US's.
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Re: Whats the story with BitCoins ?
« Reply #11 on: February 19, 2013, 06:13:53 PM »
I read a report that supposedly Iran was using them to avoid the sanctions.
Don't ask me how.
seems to be simple, buy bitcoins with iran money and pay russia with bitcoins and they cash it out for ruble
It's what is on the outside that matters

Offline rots5

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Re: Whats the story with BitCoins ?
« Reply #12 on: February 19, 2013, 06:58:08 PM »
seems to be simple, buy bitcoins with iran money and pay russia with bitcoins and they cash it out for ruble
hit and run.
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Re: Whats the story with BitCoins ?
« Reply #13 on: February 19, 2013, 07:05:38 PM »
To those claiming pyramid scheme- you would have to define any fiat currency in same manner- including the US's.
That is why gold, GPS and a shovel come in handy.  :)
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Re: Whats the story with BitCoins ?
« Reply #14 on: February 19, 2013, 10:47:02 PM »
theyve been to used to bypass sanctions with Iran