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 26204 times)

Offline henche

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Re: Whats the story with BitCoins ?
« Reply #60 on: December 03, 2013, 01:29:22 PM »
So the ppl that believe in the concept of a bitcoin (ME:)) also lack any belief in a silly system such as the US govt and the federal reserve who, just by the way, owe china a sh$t load of money, and are in a tremendous amount of debt.

Sure. But what exactly are you believing in? That other people will continue to use Bitcoin as opposed to Shmitcoin? What is that belief based on?

BTW: Best line from the Posner article:
Quote
itcoin unites futuristic left-wing Internet anarchism—the fantasy that the Web can provide the conditions for a governmentless society—with the cave-dwelling right-wing libertarianism of goldbugs who think a stable money supply can be established without government involvement.

Online churnbabychurn

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Re: Whats the story with BitCoins ?
« Reply #61 on: December 03, 2013, 01:37:03 PM »
Sure. But what exactly are you believing in? That other people will continue to use Bitcoin as opposed to Shmitcoin? What is that belief based on?

BTW: Best line from the Posner article:
Once it catches on, it will become an established currency. The dollar is also not accepted everywhere in the world. As long as its accepted by a large amount of merchants it will be a currency. To paraphrase chazal "If its not accepted here it will surely be accepted elsewhere"

Offline henche

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Re: Whats the story with BitCoins ?
« Reply #62 on: December 03, 2013, 01:46:00 PM »
Once it catches on, it will become an established currency. The dollar is also not accepted everywhere in the world. As long as its accepted by a large amount of merchants it will be a currency. To paraphrase chazal "If its not accepted here it will surely be accepted elsewhere"

But why?

You think it is valuable, because you think other people will think it is valuable. But what is that all based on? What is the ultimate value? Nothing.

So if everyone decides on the same day that it is worthless, then it is worthless. Just like a regular currency on the day the state falls.

Offline Vosizderneias

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Re: Whats the story with BitCoins ?
« Reply #63 on: December 03, 2013, 02:33:17 PM »
But why?

You think it is valuable, because you think other people will think it is valuable. But what is that all based on? What is the ultimate value? Nothing.

So if everyone decides on the same day that it is worthless, then it is worthless. Just like a regular currency on the day the state falls.
supply and demand honey bunches, same system with the stock market (stocks worth based on its demand), same with real estate. welcome to the wonderful world of business.
obviously theres a certain element of risk, but what lacks risk? besides mileage ;) which is why i just love dansdeals

Offline henche

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Re: Whats the story with BitCoins ?
« Reply #64 on: December 03, 2013, 02:36:05 PM »
supply and demand honey bunches, same system with the stock market (stocks worth based on its demand), same with real estate. welcome to the wonderful world of business.
obviously theres a certain element of risk, but what lacks risk? besides mileage ;) which is why i just love dansdeals

Right. Supply and demand. But that demand is based on other people anticipating demand, which is in turn based on those people anticipating demand, which is ultimately based only on the anticipation of demand.

Which means that if everyone stopped imagining there would be further demand, then there is nothing left.

Offline Vosizderneias

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Re: Whats the story with BitCoins ?
« Reply #65 on: December 03, 2013, 02:44:28 PM »
Right. Supply and demand. But that demand is based on other people anticipating demand, which is in turn based on those people anticipating demand, which is ultimately based only on the anticipation of demand.

Which means that if everyone stopped imagining there would be further demand, then there is nothing left.
were not really getting anywhere here. i give up. big picture my friend

Online churnbabychurn

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Re: Whats the story with BitCoins ?
« Reply #66 on: December 03, 2013, 02:52:16 PM »
But why?

You think it is valuable, because you think other people will think it is valuable. But what is that all based on? What is the ultimate value? Nothing.

So if everyone decides on the same day that it is worthless, then it is worthless. Just like a regular currency on the day the state falls.
The only ingredient BC is missing is a state to regulate and control. For some this is a virtue, the state cant take your money either.
Your concern is that all of a sudden thousands of merchants will decide they are no longer taking BC. Its the same as saying "Im not signing up for a Amex card cuz maybe everyone will stop taking it.
Once BC is accepted by thousands of merchants, EG. amazon, etc. I see no reason for it not to take over the global economy. After all, its tax free ;)

Offline henche

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Re: Whats the story with BitCoins ?
« Reply #67 on: December 03, 2013, 02:52:55 PM »
were not really getting anywhere here. i give up. big picture my friend

HE GIVES UP!!!!!!!!!!!!!!!!!!!!!!!!!!! HENCHE WINNNNNNNNNNNNNNNNNNNNNSSSSSSSSSSSSSSSSSSSSSSS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

lol

(also, I really do want to buy some as an investment in ponzi scheme)

Offline henche

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Re: Whats the story with BitCoins ?
« Reply #68 on: December 03, 2013, 02:53:55 PM »
The only ingredient BC is missing is a state to regulate and control. For some this is a virtue, the state cant take your money either.
Your concern is that all of a sudden thousands of merchants will decide they are no longer taking BC. Its the same as saying "Im not signing up for a Amex card cuz maybe everyone will stop taking it.
Once BC is accepted by thousands of merchants, EG. amazon, etc. I see no reason for it not to take over the global economy. After all, its tax free ;)

Well yes, it would be the same as your AMEX example, if you had to give AMEX money upfront and there were no contractual protections for getting it back if people stopped accepting AMEX.

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Re: Whats the story with BitCoins ?
« Reply #69 on: December 03, 2013, 03:06:56 PM »
Well yes, it would be the same as your AMEX example, if you had to give AMEX money upfront and there were no contractual protections for getting it back if people stopped accepting AMEX.
If the USA economy collapses, you're not gonna get any gold ya know..

Offline henche

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Re: Whats the story with BitCoins ?
« Reply #70 on: December 03, 2013, 04:42:03 PM »
Right, thus I'm betting on the stability of the US.

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Offline PlatinumGuy

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Re: Whats the story with BitCoins ?
« Reply #72 on: December 04, 2013, 12:37:03 AM »
This is where things get really interesting!
http://www.businessinsider.com/a-thief-is-attempting-to-hide-100-million-in-stolen-bitcoins-and-you-can-watch-it-live-right-now-2013-12
Wow. That's how my grandmother must feel about the internet. I didn't understand a word.
Purpose > Pleasure

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Re: Whats the story with BitCoins ?
« Reply #73 on: December 04, 2013, 12:43:56 AM »
Wow. That's how my grandmother must feel about the internet. I didn't understand a word.
get up to speed, there's serious cash to be made!:D
http://www.businessinsider.com/someone-holding-bitcoin-sign-on-college-gameday-receives-over-22-bitcoins-2013-12

Offline MarkS

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Re: Whats the story with BitCoins ?
« Reply #74 on: December 04, 2013, 12:54:31 AM »
get up to speed, there's serious cash to be made!:D
http://www.businessinsider.com/someone-holding-bitcoin-sign-on-college-gameday-receives-over-22-bitcoins-2013-12
That article sounds fishy. Thousands of small donations I would believe. But 22 $1,100 donations?