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 82836 times)

Offline ushdadude

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Re: BitCoin Master Thread
« Reply #345 on: November 30, 2017, 11:01:06 AM »
My patient invested in NVidia when all this was starting out.
If you see something that is 50% off but don't need it, walk away and save yourself 100%

Offline henche

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Re: BitCoin Master Thread
« Reply #346 on: November 30, 2017, 11:36:35 AM »
@hachover nice writeup

Worth noting that the current boom of bitcoin is actually contrary to its viability as a currency.  Perhaps the most important element in a currency is that its value remains relatively stable.

Offline Mikeoracle

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Re: BitCoin Master Thread
« Reply #347 on: November 30, 2017, 12:51:59 PM »

Offline henche

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Re: BitCoin Master Thread
« Reply #348 on: November 30, 2017, 01:14:38 PM »
.

Offline shlonx

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Re: BitCoin Master Thread
« Reply #349 on: November 30, 2017, 03:08:57 PM »
Great Wiki, very clear. Thanks! @hachover !!
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Offline SuperFlyer

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Re: BitCoin Master Thread
« Reply #350 on: November 30, 2017, 05:21:09 PM »

Offline This is who I am

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Re: BitCoin Master Thread
« Reply #351 on: November 30, 2017, 09:18:14 PM »
watch this weeks big bang theory
“Sometimes the questions are complicated and the answers are simple.”

Offline hachover

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Re: BitCoin Master Thread
« Reply #353 on: December 02, 2017, 01:37:51 PM »

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Offline aygart

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Re: BitCoin Master Thread
« Reply #355 on: December 03, 2017, 12:53:01 PM »
http://contrarianedge.com/2017/12/01/bitcoin-millennials-fake-gold/
His point at the beginning is mostly this

1. You are confusing bitcoin and blockchain. Only one of the 4 cases there have anything to do with it being used as something with intrinsic value.
2. Its potential uses can give the technology owners value but does not in and of itself give the bitcoin itself high value.
No I am quite clear on the matter. I've explained it here several times already. Btc is native to that blockchain network and you cant transact on it in foreign currency
So what. The technology can be adapted to almost anything and the technology is not intrinsically connected to its current use as a currency. If Bitcoin totally disappears the blockchain technology can still be made good use of.
You have the right to remain silent. Anything you say can and will be used to start a religious discussion.

Offline aygart

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Re: BitCoin Master Thread
« Reply #356 on: December 03, 2017, 12:56:15 PM »
I think this thread deserves a link to this one.
Re: Prison
You have the right to remain silent. Anything you say can and will be used to start a religious discussion.

Offline ah giten

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Re: BitCoin Master Thread
« Reply #357 on: December 04, 2017, 03:19:11 AM »
anybody here with knowledge on new ICO's that are to succeed in the market?
if yes, why mind posting

Offline User6669

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Re: BitCoin Master Thread
« Reply #358 on: December 05, 2017, 05:32:30 AM »
Is coinbase safe to be trusted with personal info and ID?
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Offline Emkay

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Re: BitCoin Master Thread
« Reply #359 on: December 05, 2017, 07:53:31 AM »
Is coinbase safe to be trusted with personal info and ID?
14 million users think so. They have less than non existent CS though.