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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 347423 times)

Offline myi

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Re: BitCoin Master Thread
« Reply #1480 on: February 21, 2021, 04:00:41 PM »
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Re: BitCoin Master Thread
« Reply #1481 on: February 21, 2021, 04:03:41 PM »
435k Views is better than a full room?  ;)

437k Viewes (and counting) in 2021. Empty room in 2013.
I've been waiting over 5 years with bated breath for someone to say that!
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Re: BitCoin Master Thread
« Reply #1482 on: February 21, 2021, 05:39:56 PM »
Visibly Jewish

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Re: BitCoin Master Thread
« Reply #1483 on: February 22, 2021, 09:19:44 AM »
Wow, today morning is not a good day for crypto! Down the hill they all go.

 Is it worth pulling out from all the cryptocurrencies and reinvest when at a lower price? With the assumption they're going to drop even more?

 Wonder If one would have bought when it fell to 46k at 9:17am, any chance the order would execute to that minute? Or will only process minutes later?
« Last Edit: February 22, 2021, 09:41:58 AM by myi »
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Re: BitCoin Master Thread
« Reply #1484 on: February 22, 2021, 09:40:47 AM »
Wow, today morning is not a good day for crypto! Down the hill they all go.

 Is it worth pulling out from all the cryptocurrencies and reinvest when at a lower price? With the assumption they're going to drop even more?

That's a very dangerous assumption.
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Re: BitCoin Master Thread
« Reply #1485 on: February 22, 2021, 09:41:00 AM »
Wow, today morning is not a good day for crypto! Down the hill they all go.

 Is it worth pulling out from all the cryptocurrencies and reinvest when at a lower price? With the assumption they're going to drop even more?
That’s always the idea, but you never know where it’s gonna end up.

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Re: BitCoin Master Thread
« Reply #1486 on: February 22, 2021, 09:43:44 AM »
That's a very dangerous assumption.
True, But i would pull out when there is gains, and secure my gains(meaning I made a profit now trying to maximize my profit hence the reason why I want to reinvest at a lower price)as I would pull out and hope to reinvest when it drops even more.

That’s always the idea, but you never know where it’s gonna end up.
Wonder If one would have bought when it fell to 46k at 9:17am, any chance the order would execute to that minute? Or will only process minutes later?
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Re: BitCoin Master Thread
« Reply #1487 on: February 22, 2021, 09:51:16 AM »

Wonder If one would have bought when it fell to 46k at 9:17am, any chance the order would execute to that minute? Or will only process minutes later?
If you are using an exchange with good liquidity and a robust order engine, it would execute. Or if If your order was already in the order book...

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Re: BitCoin Master Thread
« Reply #1488 on: February 22, 2021, 09:55:45 AM »
If you are using an exchange with good liquidity and a robust order engine, it would execute. Or if If your order was already in the order book...
Using robinhood, unless for such purchases at 50,000 there's better platforms?

  But to kind of answer my question found this on robinhoods website.

Quote
Market Orders
To help against dramatic price moves, we adjust market orders to limit orders collared up to 1% for buys, and 5% for sells. Collars are based off the last trade price. This means that your order won’t execute if the price of the cryptocurrency moves more than 5% lower than its price at the time you placed a market sell order, or more than 1% higher than its price when you placed a market buy order, until it comes back within the collar.

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Re: BitCoin Master Thread
« Reply #1489 on: February 22, 2021, 10:00:25 AM »
If you are using an exchange with good liquidity and a robust order engine, it would execute. Or if If your order was already in the order book...
Just did a practice purchase of $200 of LTC, off by a few cents, but order was executed within 20 Seconds or so.
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Re: BitCoin Master Thread
« Reply #1490 on: February 22, 2021, 10:07:13 AM »
Personal opinion: if you're looking to actually hold the coins, or if you're looking for reliably quick trading, don't use RH. Use a proper exchange.
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Re: BitCoin Master Thread
« Reply #1491 on: February 22, 2021, 10:08:53 AM »
Personal opinion: if you're looking to actually hold the coins, or if you're looking for reliably quick trading, don't use RH. Use a proper exchange.
+1 RH doesn't even allow you to withdraw your coins. You are basically just buying an IOU from them. And the bid/ask spreads are big enough to drive a truck through.

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Re: BitCoin Master Thread
« Reply #1492 on: February 22, 2021, 10:10:13 AM »
Personal opinion: if you're looking to actually hold the coins, or if you're looking for reliably quick trading, don't use RH. Use a proper exchange.
A little of both.
 They're So many platforms and brokers out there.
 No clue which is the ideal one to go with.
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Re: BitCoin Master Thread
« Reply #1493 on: February 22, 2021, 10:11:22 AM »
+1 RH doesn't even allow you to withdraw your coins. You are basically just buying an IOU from them. And the bid/ask spreads are big enough to drive a truck through.
Lol on your comparison!
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Re: BitCoin Master Thread
« Reply #1494 on: February 22, 2021, 10:12:43 AM »
A little of both.
 They're So many platforms and brokers out there.
 No clue which is the ideal one to go with.

Depends on what you need it to do. Different exchanges have different strengths. I'd personally stay away from the smaller ones for security reasons, but I'm somewhat risk averse that way.
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Re: BitCoin Master Thread
« Reply #1495 on: February 22, 2021, 10:23:20 AM »
True, But i would pull out when there is gains, and secure my gains(meaning I made a profit now trying to maximize my profit hence the reason why I want to reinvest at a lower price)as I would pull out and hope to reinvest when it drops even more.

I understand what you're trying to do. But asking the question at the low point of a 20% flash drop, with the assumption it will go lower instead of bouncing back from the overcorrection, is a very dangerous assumption. You have to be ok with the gains you've already made, and ok with your next entry point being much higher than it was originally.
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Re: BitCoin Master Thread
« Reply #1496 on: February 22, 2021, 10:40:34 AM »
I understand what you're trying to do. But asking the question at the low point of a 20% flash drop, with the assumption it will go lower instead of bouncing back from the overcorrection, is a very dangerous assumption. You have to be ok with the gains you've already made, and ok with your next entry point being much higher than it was originally.
I hear you. Just the idea when all of the sudden all of all crypto drops, not just one coin but all of them together, bitcoin dropping to $47k today morning from $53-54k, doggy coin, ltc, Erthm, all the numbers coming down. So it's a quick sell and hopefully a steeper drop to come and reinvest at that point.
  Basically playing the market on the flip side pulling out at it's high and putting when it's low, ( Though it's a little different here being that you're pulling out when the price starts to decrease).

   It seems you guys are concerned that the risk out weights any possible gains.
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Re: BitCoin Master Thread
« Reply #1497 on: February 22, 2021, 10:48:05 AM »
It seems you guys are concerned that the risk out weights any possible gains.

Not at all, but you have to time it right. Selling when things are already in freefall is a far cry from selling at a peak and buying the dip. When you sell in the midst of the dip, you risk selling at the bottom and having to buy back in at a higher price. Trading on RH makes it even riskier, because of the bid/ask gaps like @jaywhy said, and because of slower processing times.
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Re: BitCoin Master Thread
« Reply #1498 on: February 22, 2021, 10:50:15 AM »
I hear you. Just the idea when all of the sudden all of all crypto drops, not just one coin but all of them together, bitcoin dropping to $47k today morning from $53-54k, doggy coin, ltc, Erthm, all the numbers coming down. So it's a quick sell and hopefully a steeper drop to come and reinvest at that point.
  Basically playing the market on the flip side pulling out at it's high and putting when it's low, ( Though it's a little different here being that you're pulling out when the price starts to decrease).

   It seems you guys are concerned that the risk out weights any possible gains.
Unless you are really really good at it, trying to time the market like that is a losing game.

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Re: BitCoin Master Thread
« Reply #1499 on: February 22, 2021, 10:51:40 AM »
Not at all, but you have to time it right. Selling when things are already in freefall is a far cry from selling at a peak and buying the dip. When you sell in the midst of the dip, you risk selling at the bottom and having to buy back in at a higher price. Trading on RH makes it even riskier, because of the bid/ask gaps like @jaywhy said, and because of slower processing times.
Well said, I agree with you.
  Though in the spur of the moment one is really tempted to sell.
    And then again to know the peak takes talent, meaning to know it's going to dip shortly after the fact vs the stock rising and you loosing out.
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