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 347341 times)

Offline yuneeq

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Re: BitCoin Master Thread
« Reply #720 on: January 18, 2018, 10:23:52 AM »
a grain of sand from my front yard is also not useless.

Because you can grow tulips!

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Offline yuneeq

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Re: BitCoin Master Thread
« Reply #721 on: January 18, 2018, 10:25:51 AM »
a grain of sand from my front yard is also not useless.

How many online shops accept grains of sand as form of payment?
https://www.inverse.com/article/38953-the-22-major-stores-online-that-accept-bitcoin
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Offline aygart

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Re: BitCoin Master Thread
« Reply #722 on: January 18, 2018, 10:27:19 AM »
How many online shops accept grains of sand as form of payment?
https://www.inverse.com/article/38953-the-22-major-stores-online-that-accept-bitcoin
People and companies trade for cleanfill daily.
Feelings don't care about your facts

Offline yuneeq

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Re: BitCoin Master Thread
« Reply #723 on: January 18, 2018, 10:28:06 AM »
People and companies trade for cleanfill daily.

Are you willing to go out on a limb and call these people and companies scammers?
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Offline Redbull3

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Re: BitCoin Master Thread
« Reply #724 on: January 18, 2018, 10:30:57 AM »
My stupid views on crypto:
1. Block chain tech behind bitcoin is fascinating and maybe there are some cool uses to come.
2. Cryptocurrency is a cool idea that makes sense and maybe it'll take off, but I'm not sure because currency needs regulation
3. As far as investing in it now, I always stick to index funds and always think long haul so this is something I would never consider. But even if you don't always do that, you gotta admit the bull market is kicking butt right so maybe just be conservative and ride this wave a little while vs gambling on such a highly volatile dice roll. But specific to crypto that I can't get passed is this crazy rise (before this crazy crash) has been due to people investing rather than purchasing for use. So like anything else, when people only buy because others are buying and it's going up, that's a problem that leads to a bubble and we are seeing it burst. In fact, the insane volatility probably keeps true users away. For example who would want to buy bitcoin to use on newegg or overstock in a few days, if they may need double the bitcoin by the time they need it because of this volatility? Anytime people just invest because others are investing and nothing to do with the valuation of the underlying security, you should run, imo.

Offline ChaimMoskowitz

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Re: BitCoin Master Thread
« Reply #725 on: January 18, 2018, 10:31:23 AM »
The experts entitled to their opinions. As are the experts that disagree with your experts.
But respectfully, you are not an expert, and probably not even a beginner yet, so it's kinda foolish when you take sides or quote articles from people that haven't even read the Bitcoin whitepaper.
At least you said respectfully.  :)
I never claimed to be an expert and that is why I listen to those that are. This old man knows one thing. That you and others will learn the hard way and that is FOMO. A bears best friend!!!
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Re: BitCoin Master Thread
« Reply #726 on: January 18, 2018, 10:37:59 AM »
My stupid views on crypto:
1. Block chain tech behind bitcoin is fascinating and maybe there are some cool uses to come.
2. Cryptocurrency is a cool idea that makes sense and maybe it'll take off, but I'm not sure because currency needs regulation
3. As far as investing in it now, I always stick to index funds and always think long haul so this is something I would never consider. But even if you don't always do that, you gotta admit the bull market is kicking butt right so maybe just be conservative and ride this wave a little while vs gambling on such a highly volatile dice roll. But specific to crypto that I can't get passed is this crazy rise (before this crazy crash) has been due to people investing rather than purchasing for use. So like anything else, when people only buy because others are buying and it's going up, that's a problem that leads to a bubble and we are seeing it burst. In fact, the insane volatility probably keeps true users away. For example who would want to buy bitcoin to use on newegg or overstock in a few days, if they may need double the bitcoin by the time they need it because of this volatility? Anytime people just invest because others are investing and nothing to do with the valuation of the underlying security, you should run, imo.

There definitely is a safe way of playing the crypto and doing very well. For example If someone bought yesterday and then got out today, theyd be up 30-40%. IMO that was pretty safe bet it would at least temporarily go back up. Yes, if you are in it for the long haul there are way more risks and much of the value is due to the craze but it could also gain more value as more places except it as payment.

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Re: BitCoin Master Thread
« Reply #727 on: January 18, 2018, 10:39:13 AM »
Are you willing to go out on a limb and call these people and companies scammers?
No because they are not trying to get anyone to think it is worth more than a grain of sand. What is the value of a yuneeqly encrypted bit of information? It has some value, but most of the value is in the system and algorithm used to create it as intellectual property. The number itself has the value of the resources used to create it.
Feelings don't care about your facts

Offline ChaimMoskowitz

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Re: BitCoin Master Thread
« Reply #728 on: January 18, 2018, 10:41:07 AM »
There definitely is a safe way of playing the crypto and doing very well. For example If someone bought yesterday and then got out today, theyd be up 30-40%. IMO that was pretty safe bet it would at least temporarily go back up.
You have to be kidding me? It is down from 19k+ and you think it is a safe bet it will go back up? Wouldn't the safe bet be to sell every spike?
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Re: BitCoin Master Thread
« Reply #729 on: January 18, 2018, 10:42:27 AM »
There definitely is a safe way of playing the crypto and doing very well. For example If someone bought yesterday and then got out today, theyd be up 30-40%. IMO that was pretty safe bet it would at least temporarily go back up. Yes, if you are in it for the long haul there are way more risks and much of the value is due to the craze but it could also gain more value as more places except it as payment.
If its value is only due to the craze then why is it a safe bet it would go back up? Maybe the craze is ending? If your answer is because it won't go straight down, you still don't know that it won't lose another xx% before having the bounce.

The ability to trade and be profitable is independent of whether or not it is a scam. People profit off of scams all the time.
Feelings don't care about your facts

Offline yuneeq

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Re: BitCoin Master Thread
« Reply #730 on: January 18, 2018, 10:42:34 AM »
At least you said respectfully.  :)
I never claimed to be an expert and that is why I listen to those that are. This old man knows one thing. That you and others will learn the hard way and that is FOMO. A bears best friend!!!

We are on 2 different pages.
Crypto as technology and crypto as an investment.

While the tech is revolutionary, I believe we are in the equivalent of mainframe computing days. The tech is not built out yet for worldwide use like a PC, but it will get there in a number of years (let's say 10) as it's features and adoption grows.

Crypto as an investment is very high because people believe it will be as widespread as a PC eventually, or they simply like to gamble. Overall the market as whole is ahead of itself and overvalued, but as time goes on, and adoption spreads, it's utility and value will be much greater than today.
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Offline Yitzshpitz

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Re: BitCoin Master Thread
« Reply #731 on: January 18, 2018, 10:47:52 AM »
You have to be kidding me? It is down from 19k+ and you think it is a safe bet it will go back up? Wouldn't the safe bet be to sell every spike?

Correct short term its down but has consistently over a larger sample size gone wayyyy up, so a bad day (short sample size) shouldnt faze someone who can look at basic trends.

Offline yuneeq

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Re: BitCoin Master Thread
« Reply #732 on: January 18, 2018, 10:48:51 AM »
No because they are not trying to get anyone to think it is worth more than a grain of sand. What is the value of a yuneeqly encrypted bit of information? It has some value, but most of the value is in the system and algorithm used to create it as intellectual property. The number itself has the value of the resources used to create it.

That value is that millions of people and companies accept it as currency.
It's also limited in supply and therefore deflationary.

Personally, I can't wait to send money to China using crypto, I will do it the day my supplier accepts it.
We spend $80 ($40 for each side) to wire money, I have to fill out endless forms and make sure I didn't make any mistakes, and it takes 2 days to arrive. I don't think that use will happen for me anytime soon but when it does, it will have loads of value to me.
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Offline ChaimMoskowitz

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Re: BitCoin Master Thread
« Reply #733 on: January 18, 2018, 10:50:09 AM »
We are on 2 different pages.
Crypto as technology and crypto as an investment.
I am only looking at the investment side.
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Offline yuneeq

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Re: BitCoin Master Thread
« Reply #734 on: January 18, 2018, 10:50:52 AM »
Correct short term its down but has consistently over a larger sample size gone wayyyy up, so a bad day (short sample size) shouldnt faze someone who can look at basic trends.

Not a great argument.
Ever hear of the dot com bubble?
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Offline ChaimMoskowitz

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Re: BitCoin Master Thread
« Reply #735 on: January 18, 2018, 10:52:24 AM »
Correct short term its down but has consistently over a larger sample size gone wayyyy up, so a bad day (short sample size) shouldnt faze someone who can look at basic trends.
So what do the charts say currently? I can't believe I am asking about charts.  :)
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Re: BitCoin Master Thread
« Reply #736 on: January 18, 2018, 10:53:14 AM »
If its value is only due to the craze then why is it a safe bet it would go back up? Maybe the craze is ending? If your answer is because it won't go straight down, you still don't know that it won't lose another xx% before having the bounce.

The ability to trade and be profitable is independent of whether or not it is a scam. People profit off of scams all the time.

I didnt say the value is only because of a craze. Partially? Yes. The other side is that the reason it went so far down was an inverse effect of the craze which also would correct itself.But again, the market long term has trended way up so even if it didnt go up as much, it was likely to rebound a good amount

Offline Yitzshpitz

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Re: BitCoin Master Thread
« Reply #737 on: January 18, 2018, 10:57:03 AM »
Not a great argument.
Ever hear of the dot com bubble?

Yes, its the argument people us against crypto but its not a great comparison imo because big companies and countries are investing in the crypto technology/ trying to make their own

Offline henche

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Re: BitCoin Master Thread
« Reply #738 on: January 18, 2018, 10:57:59 AM »
Nobody uses bit coin as currency.  You can also use potato futures contracts for barter, and is a much better idea because their value is much more stable.

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Re: BitCoin Master Thread
« Reply #739 on: January 18, 2018, 10:58:04 AM »
1. That value is that millions of people and companies accept it as currency.
2. It's also limited in supply and therefore deflationary.

3. Personally, I can't wait to send money to China using crypto, I will do it the day my supplier accepts it.
We spend $80 ($40 for each side) to wire money, I have to fill out endless forms and make sure I didn't make any mistakes, and it takes 2 days to arrive. I don't think that use will happen for me anytime soon but when it does, it will have loads of value to me.
1. #fakenews to get to 22 "major" stores the article you posted above needed to resort to companies like Bitcoin Travel and stores where independent payment providers are willing to accept bitcoin to pay them in dollars. People were also willing to trade dotcom stocks and tulip bulbs. Until they weren't.
2. #fakenews Anything number based is by definition infinite. The limited number of encryptions that this algorithm can create only means that if found to be profitable to do so a better algorithm with more available encryptions will replace it and render it valueless.
3. How would you deal with the volatility which can cost much more than the cost of wiring something stable. The trading interest in it prevents it from becoming viable as a currency.
Feelings don't care about your facts