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 347370 times)

Offline hachover

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Re: BitCoin Master Thread
« Reply #440 on: December 09, 2017, 10:55:17 PM »
Now I bought $100 of bitcoin a week ago, and if I withdraw now, I have $150.
What does that tell you?

That you are very small potatoes indeed ;)
I'm an optimist; but only because life isn't going to give me any other good choices.

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Re: BitCoin Master Thread
« Reply #441 on: December 09, 2017, 10:55:26 PM »
It isn't the same. There is no them. If you own bitcoin you don't own a thing. All it means is that an accounting ledger says that coin xyz was created in Block 238 and transferred to User5987 in Block 1809 and transferred to User341 in Block 2142 and transferred.... all the way until it gets to the block with your name. It's very nice and all to say how its the future of currency, but it won't be until it is actually used to create value.
If course it isn't exactly the same thing. I meant to point out that as long as ppl will want them it will be worth something.

Offline aygart

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Re: BitCoin Master Thread
« Reply #442 on: December 09, 2017, 11:35:22 PM »
Now I bought $100 of bitcoin a week ago, and if I withdraw now, I have $150.
What does that tell you?
That the bigger fool (investing term) showed up.
Feelings don't care about your facts

Offline henche

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Re: BitCoin Master Thread
« Reply #443 on: December 10, 2017, 01:07:00 AM »
Same here. As long as ppl will want them it will be worth something

That isn't the same as a commodity.

A commodity fluctuates in value based on how much of it there is, how much ppl want to use,  and speculation over how much supply and demand there will be in the future. 

Sonetimes, a commodity can also go up just on speculation about a bigger fool paying more. In that way it's the same as bitcoin assuming it never becomes a currency

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Re: BitCoin Master Thread
« Reply #444 on: December 10, 2017, 01:31:21 AM »


That isn't the same as a commodity.

A commodity fluctuates in value based on how much of it there is, how much ppl want to use,  and speculation over how much supply and demand there will be in the future. 

Sonetimes, a commodity can also go up just on speculation about a bigger fool paying more. In that way it's the same as bitcoin assuming it never becomes a currency



If course it isn't exactly the same thing. I meant to point out that as long as ppl will want them it will be worth something.


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Re: BitCoin Master Thread
« Reply #446 on: December 10, 2017, 01:32:49 AM »
If course it isn't exactly the same thing. I meant to point out that as long as ppl will want them it will be worth something.

Well, yes, but that's a tautology. 

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Re: BitCoin Master Thread
« Reply #447 on: December 10, 2017, 01:41:22 PM »
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

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Re: BitCoin Master Thread
« Reply #449 on: December 11, 2017, 08:06:00 AM »
How many people are invested in bitcoin that it should cause a global disaster?
It has a $400 Billion market cap. There is a lot of equity out there in it
Life isn't about checking the boxes. Nobody cares.

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Re: BitCoin Master Thread
« Reply #450 on: December 11, 2017, 09:00:50 AM »
It has a $400 Billion market cap. There is a lot of equity out there in it

Sure, but most of that value is ppl sitting on huge amounts of phantom profit

Offline Ergel

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Re: BitCoin Master Thread
« Reply #451 on: December 11, 2017, 09:03:31 AM »
Sure, but most of that value is ppl sitting on huge amounts of phantom profit
That's true.
Life isn't about checking the boxes. Nobody cares.

Offline aygart

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Re: BitCoin Master Thread
« Reply #452 on: December 11, 2017, 09:15:16 AM »
Sure, but most of that value is ppl sitting on huge amounts of phantom profit
And they even know that it is almost impossible for them to realize the gain since selling would in itself bring the market down.
Feelings don't care about your facts

Offline aygart

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Re: BitCoin Master Thread
« Reply #453 on: December 11, 2017, 09:25:34 AM »


Cartoons like these make it look like there is still room to run.
Feelings don't care about your facts

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Re: BitCoin Master Thread
« Reply #454 on: December 11, 2017, 10:12:47 AM »
It has a $400 Billion market cap. There is a lot of equity out there in it
Almost the size of Lehman's Brother's..(600 Billion )
Sure, but most of that value is ppl sitting on huge amounts of phantom profit
The base $$ is real though

Offline aygart

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Re: BitCoin Master Thread
« Reply #455 on: December 11, 2017, 10:37:09 AM »


The base $$ is real though

How much is that?

Feelings don't care about your facts

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Re: BitCoin Master Thread
« Reply #456 on: December 11, 2017, 11:02:32 AM »

Offline aygart

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Re: BitCoin Master Thread
« Reply #457 on: December 11, 2017, 11:02:55 AM »
Feelings don't care about your facts

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Re: BitCoin Master Thread
« Reply #458 on: December 11, 2017, 11:04:27 AM »
Maybe it is 0?
How can that be? Everyone put in an initial amount.

Additionally growth to an investment even digitaly can't be considered air.( Unless it busts )

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Re: BitCoin Master Thread
« Reply #459 on: December 11, 2017, 11:08:06 AM »
How can that be? Everyone put in an initial amount.

Additionally growth to an investment even digitaly can't be considered air.( Unless it busts )
So what? Hai shtara chaspa bialma
Feelings don't care about your facts