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 347321 times)

Offline aygart

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Re: BitCoin Master Thread
« Reply #820 on: January 20, 2018, 10:57:56 PM »
Seems like there's more to it than just cool headed valuation.
Ya don't say...
Feelings don't care about your facts

Offline yuneeq

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Offline yuneeq

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Re: BitCoin Master Thread
« Reply #822 on: January 22, 2018, 11:52:01 PM »
https://www.bloomberg.com/news/articles/2018-01-19/as-bitcoin-sinks-crypto-bros-party-hard-on-a-blockchain-cruise

What does this say about the asset class, if anything?

As an outsider (no position one way or another), it scares me. Seems like there's more to it than just cool headed valuation.

Frankly it tells me nothing about the asset class.
Some individual investors that made big bucks are having a good time while discussing their passion.
What exactly scares you? That they don't get fazed by big drops? These millionaires got into crypto because of the tech, they made millions because making money wasn't the sole purpose of investing. There have seen bigger drops and they held on because they believed in the technology, so now that there's a drop while they're on a cruise they should change their philosophy?

If anything should scare you, it's the new dumb money that is flowing in by the billions.
« Last Edit: January 22, 2018, 11:57:25 PM by yuneeq »
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Offline yuneeq

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Re: BitCoin Master Thread
« Reply #823 on: January 22, 2018, 11:56:21 PM »
Currencies generally have something backing them up that gives it value. The USD used to be backed by gold, and while it's not backed by anything solid right now, it's backed by the US GDP (about $19T in 2017).

Can you show me some GDP? I'd like to see it.

Quote

Crypto is not backed by anything. Many view it as merely a trading token for other currencies. The notion that the currency has any intrinsic value is difficult back up. Monopoly is a wonderful game, and the trademark may be worth billions, but that doesn't necessarily give it's currency value. The skeptics may not understand blockchain, but many believers may also not understand currency.

(The USD and almost all currencies are also barter tools, but there is a GDP being bartered that it is assigned as legal tender to represent.)

Based on the contradictions here, I don't think you understand crypto, currency, or blockchains.
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Offline aygart

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Re: BitCoin Master Thread
« Reply #824 on: January 23, 2018, 12:00:04 AM »


Can you show me some GDP? I'd like to see it.
Easy. Go into the warehouse where you keep your child locks.
Feelings don't care about your facts

Offline yuneeq

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Re: BitCoin Master Thread
« Reply #825 on: January 23, 2018, 12:05:58 AM »
Easy. Go into the warehouse where you keep your child locks.

That's my goods, not the governments.
Now give an explanation how my locks gives the USD value that can't apply to crypto (at least theoretically)?
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Offline ExGingi

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Re: BitCoin Master Thread
« Reply #826 on: January 23, 2018, 09:16:41 AM »
That's my goods, not the governments.
Now give an explanation how my locks gives the USD value that can't apply to crypto (at least theoretically)?
As @aygart alluded to previously. The US government, which backs the USD with its full faith and credit, collects taxes at certain points on those locks. What power do the issuers of crypto have to back it up, other than itself.
I've been waiting over 5 years with bated breath for someone to say that!
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Offline aygart

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Re: BitCoin Master Thread
« Reply #828 on: January 23, 2018, 11:41:34 AM »
Bull and bears come and go, but "Donkeys live a long time. None of you has ever seen a dead donkey"
Feelings don't care about your facts

Offline yuneeq

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Re: BitCoin Master Thread
« Reply #829 on: January 23, 2018, 10:56:23 PM »
As @aygart alluded to previously. The US government, which backs the USD with its full faith and credit, collects taxes at certain points on those locks. What power do the issuers of crypto have to back it up, other than itself.

There are no issuers of decentralized crypto.
People trust the USD because it has the US standing behind it, which is very meaningful, of course. People trust crypto because it is designed and proven to be trustless. Your crypto is secured by the full power of the block chain.

I understand that you can only pay US taxes in USD. But if the US started accepting other currencies for taxes would that make the USD worthless overnight? You already know the answer, and the same applies to crypto at a smaller scale.
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Offline ludmila

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Re: BitCoin Master Thread
« Reply #830 on: January 23, 2018, 11:35:51 PM »
BTC  chart  ,     LTC,ETH,XRP Charts look the same

 downtrend continues if BTC breaks 9000 then  much lower fast


https://www.tradingview.com/x/NCOpfmqA/
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Offline henche

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Re: BitCoin Master Thread
« Reply #831 on: January 23, 2018, 11:37:26 PM »
People trust crypto because it is designed and proven to be trustless. Your crypto is secured by the full power of the block chain.


Umm, you're doubtless aware that crypto has been especially susceptible to being hacked, as compared to ordinary banks.

Offline ChaimMoskowitz

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Re: BitCoin Master Thread
« Reply #832 on: January 23, 2018, 11:45:15 PM »
BTC  chart  ,     LTC,ETH,XRP Charts look the same

 downtrend continues if BTC breaks 9000 then  much lower fast


https://www.tradingview.com/x/NCOpfmqA/
Do you really think charts should even be used?
I just found a new supply of forks!

Offline yuneeq

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Re: BitCoin Master Thread
« Reply #833 on: January 23, 2018, 11:56:14 PM »
Umm, you're doubtless aware that crypto has been especially susceptible to being hacked, as compared to ordinary banks.

The block chain has been hacked?
News to me.

ETA: I’ll be nice and steer you in the right direction. Has someone ever stolen your wallet or steal your credit card numbers? That’s what current crypto hacking is equivalent to. The network has never been hacked.
« Last Edit: January 24, 2018, 12:01:36 AM by yuneeq »
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Offline henche

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Re: BitCoin Master Thread
« Reply #834 on: January 24, 2018, 12:36:57 AM »
The block chain has been hacked?
News to me.

ETA: I’ll be nice and steer you in the right direction. Has someone ever stolen your wallet or steal your credit card numbers? That’s what current crypto hacking is equivalent to. The network has never been hacked.

The difference being, that if someone steals your bank or cc info, you get the money back, and the bank usually flags it as fraud before the damage gets too bad anyway.

Ppl whose crypto gets hacked just lose it

Offline yuneeq

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Re: BitCoin Master Thread
« Reply #835 on: January 24, 2018, 01:27:57 AM »
The difference being, that if someone steals your bank or cc info, you get the money back, and the bank usually flags it as fraud before the damage gets too bad anyway.

Ppl whose crypto gets hacked just lose it

AFAIK There's no crypto equivalent of a bank or credit card. Exchanges aren't banks and shouldn't be treated as such. It is possible for someone to gain access and steal crypto from your wallet, just like USD.

But you missed my entire point as I wasn't talking about any of this.

Trustless doesn't mean your money can't be stolen. No one has ever hacked Bitcoin and IMHO never will. But someone can steal your private key and access your account. Decentralized and unregulated banking (especially in it's infancy) is not for everyone. You need to be aware of the security risks and don't be foolish. Don't leave money on exchanges. Don't leave an unencrypted wallet on your computer. And etc.
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Offline henche

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Re: BitCoin Master Thread
« Reply #836 on: January 24, 2018, 09:32:39 AM »
AFAIK There's no crypto equivalent of a bank or credit card. Exchanges aren't banks and shouldn't be treated as such. It is possible for someone to gain access and steal crypto from your wallet, just like USD.

But you missed my entire point as I wasn't talking about any of this.

Trustless doesn't mean your money can't be stolen. No one has ever hacked Bitcoin and IMHO never will. But someone can steal your private key and access your account. Decentralized and unregulated banking (especially in it's infancy) is not for everyone. You need to be aware of the security risks and don't be foolish. Don't leave money on exchanges. Don't leave an unencrypted wallet on your computer. And etc.

Yah, I appear to have missed your point, and our points are not really opposite.

Your point is that the system itself is completely independent, with the benefit that no central power can decide to dump additional cyrpto of the same kind on the market.
My point is that everyone's crypto is getting stolen.


Offline yuneeq

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Re: BitCoin Master Thread
« Reply #837 on: January 24, 2018, 01:31:32 PM »
Yah, I appear to have missed your point, and our points are not really opposite.

Your point is that the system itself is completely independent, with the benefit that no central power can decide to dump additional cyrpto of the same kind on the market.
My point is that everyone's crypto is getting stolen.

Agreed.
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Offline ChaimMoskowitz

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Re: BitCoin Master Thread
« Reply #838 on: January 24, 2018, 01:46:44 PM »
BTC has support at 10K?
I just found a new supply of forks!

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Re: BitCoin Master Thread
« Reply #839 on: January 24, 2018, 01:58:02 PM »
Is it still worth to invest in mining?