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 34261 times)

Offline mrprez27

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Re: BitCoin Master Thread
« Reply #240 on: November 05, 2017, 12:47:47 AM »
so who here bought bitcoins when it was worth almost nothing ;)

Offline chevron

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Re: BitCoin Master Thread
« Reply #241 on: November 07, 2017, 03:14:43 PM »
Anarchy scares me less than tyranny.

Offline henche

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Re: BitCoin Master Thread
« Reply #242 on: November 07, 2017, 04:59:51 PM »
Anarchy scares me less than tyranny.

Yet, time and time again, society has chosen tyranny when given the choice.

Offline Mikeoracle

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Re: BitCoin Master Thread
« Reply #244 on: November 14, 2017, 10:46:18 AM »
Then I have nothing to say.
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Offline henche

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Re: BitCoin Master Thread
« Reply #245 on: November 14, 2017, 11:30:55 AM »
https://thehustle.co/mt-gox-mark-karpeles-bitcoin?utm_source=daily&utm_medium=email&utm_campaign=11%2F13%20-%20musically&utm_content=bitcoin

Crazy Story

It's fair.  He also took the risk that the bitcoins would go down in value. And if the creditors wanted to own bitcoin, they could have gone and bought different bitcoins.

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Re: BitCoin Master Thread
« Reply #246 on: November 14, 2017, 01:28:47 PM »
It's fair.  He also took the risk that the bitcoins would go down in value. And if the creditors wanted to own bitcoin, they could have gone and bought different bitcoins.

I almost posted that myself. But the problem with that argument is that if the coins had gone down in value he would have declared bankruptcy and avoided paying more than the depressed value of the coins. And the creditors couldn't go out and buy different bitcoins because they'd have to lay out capital that might never be returned.
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Offline shopfdder

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Re: BitCoin Master Thread
« Reply #247 on: November 16, 2017, 04:14:43 PM »
Anyone looking into doing this with their IRA?

Offline hachover

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Re: BitCoin Master Thread
« Reply #248 on: November 17, 2017, 07:35:21 AM »
Anyone looking into doing this with their IRA?

Teach me how. And dont say an ETF
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Offline shopfdder

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Re: BitCoin Master Thread
« Reply #249 on: November 17, 2017, 10:54:23 AM »
Teach me how. And dont say an ETF

Lol, no GBTC...no ETFs for metal, no public REITS, all real stuff :)

If you have existing retirement funds you just need the proper custodian or you can create an account from scratch. But only good if you've bought before so you know how it works normally.

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Re: BitCoin Master Thread
« Reply #250 on: November 17, 2017, 11:14:45 AM »
Lol, no GBTC...no ETFs for metal, no public REITS, all real stuff :)

If you have existing retirement funds you just need the proper custodian or you can create an account from scratch. But only good if you've bought before so you know how it works normally.

Which IRA custodian can hold my private keys?
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Offline shopfdder

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Re: BitCoin Master Thread
« Reply #251 on: November 17, 2017, 12:03:40 PM »
Which IRA custodian can hold my private keys?

First and foremost you need a self-directed custodian (brokerage firms don't invest outside of their paper realm). Secondly, there are 2 ways to establish such an account; one where the custodian holds your wallet and your keys (similar to what you have now for Wall Street stuff) and there's a Checkbook Control model where you can buy from an exchange(s) of your choice, hold your own wallet and hold your own keys.

Offline shlonx

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Re: BitCoin Master Thread
« Reply #252 on: November 19, 2017, 01:13:13 PM »
It hit $8000!!
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Re: BitCoin Master Thread
« Reply #253 on: November 19, 2017, 09:05:18 PM »
any to short bitcoin?

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Re: BitCoin Master Thread
« Reply #254 on: November 19, 2017, 09:19:14 PM »
any to short bitcoin?

You mean GBTC?