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 52377 times)

Offline outsider

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Re: Whats the story with BitCoins ?
« Reply #15 on: February 19, 2013, 10:55:40 PM »
theyve been to used to bypass sanctions with Iran
correct we spoke about this earlier
It's what is on the outside that matters

Offline SuperFlyer

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Re: Whats the story with BitCoins ?
« Reply #16 on: March 10, 2013, 08:54:47 AM »
Thanks for the updates.

Offline churnbabychurn

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Re: Whats the story with BitCoins ?
« Reply #17 on: April 04, 2013, 11:34:05 AM »
Update:
Since Cyprus threatened to steal Bank customers money under the direction of Germany and the EU and subsequently imposed capital controls in Cyprus, bitcoins value has risen over 600% since February...
LIKE

Offline churnbabychurn

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Re: Whats the story with BitCoins ?
« Reply #18 on: April 04, 2013, 11:39:39 AM »
I love the idea of bitcoins. Though I am a bit scared of it not catching on, and having valueless bitcoins. I am also scared of the volatility in the prices- it seems that the prices (last time I checked) are set solely on hype and skepticism.

To those claiming pyramid scheme- you would have to define any fiat currency in same manner- including the US's.
Or real economic conditions and concerns?

Offline jaywhy

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Re: Whats the story with BitCoins ?
« Reply #19 on: April 04, 2013, 11:41:26 AM »
Update:
Since Cyprus threatened to steal Bank customers money under the direction of Germany and the EU and subsequently imposed capital controls in Cyprus, bitcoins value has risen over 600% since February...
LIKE
I was thinking.... If you can buy Bitcoins with a CC, that could be like the new Mint :)
The problem is that nobody offers that option because they are worried about a chargeback or dispute. Being that it is a P2P currency, there can be no clawback of the Bitcoins or other resolution to a chargeback....
I've heard that there are a number of companies working on this though. Something to keep an eye on...

Offline yuneeq

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Re: Whats the story with BitCoins ?
« Reply #20 on: April 04, 2013, 11:52:15 AM »
it seems that the prices (last time I checked) are set solely on hype and skepticism.

Or real economic conditions and concerns?

I love the idea of bitcoins. Though I am a bit scared of it not catching on, and having valueless bitcoins. I am also scared of the volatility in the prices- it seems that the prices (last time I checked) are set solely on hype and skepticism.

To those claiming pyramid scheme- you would have to define any fiat currency in same manner- including the US's.

Things have changed...
Live forever or die trying.

Offline churnbabychurn

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Re: Whats the story with BitCoins ?
« Reply #21 on: April 04, 2013, 12:11:26 PM »
You shoulda bought  :P 

Offline yuneeq

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Re: Whats the story with BitCoins ?
« Reply #22 on: April 04, 2013, 12:13:04 PM »
You shoulda bought  :P

True, but I don't buy speculatively.
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Offline churnbabychurn

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Re: Whats the story with BitCoins ?
« Reply #23 on: April 04, 2013, 04:28:32 PM »
I was thinking.... If you can buy Bitcoins with a CC, that could be like the new Mint :)
The problem is that nobody offers that option because they are worried about a chargeback or dispute. Being that it is a P2P currency, there can be no clawback of the Bitcoins or other resolution to a chargeback....
I've heard that there are a number of companies working on this though. Something to keep an eye on...
Read this arlcle: http://nymag.com/daily/intelligencer/2013/04/i-bought-a-bitcoin.html

skip to where he describes how he bought BTC's, at the CVS stage, dosnt moneygram take CC?

Offline jaywhy

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Re: Whats the story with BitCoins ?
« Reply #24 on: April 04, 2013, 05:06:27 PM »
Read this arlcle: http://nymag.com/daily/intelligencer/2013/04/i-bought-a-bitcoin.html

skip to where he describes how he bought BTC's, at the CVS stage, dosnt moneygram take CC?
Alot of fees and hassle involved. I would wait until you can buy with a CC directly.

Offline MarkS

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Offline churnbabychurn

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Re: Whats the story with BitCoins ?
« Reply #26 on: April 05, 2013, 08:14:30 AM »
http://money.cnn.com/2013/04/04/technology/bitcoin-cyber-attacks/index.html
wasn't as big a deal as they make it, it happens to all major financial institutions

Offline yuneeq

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Re: Whats the story with BitCoins ?
« Reply #27 on: April 05, 2013, 08:16:43 AM »
wasn't as big a deal as they make it, it happens to all major financial institutions

+1
Wake me up when the US government-sponsored hackers start attacking
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Offline MisterHock

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Re: Whats the story with BitCoins ?
« Reply #28 on: April 08, 2013, 11:38:20 PM »

Offline MarkS

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