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 84346 times)

Offline shmebeble

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Re: BitCoin Master Thread
« Reply #360 on: December 05, 2017, 08:07:36 AM »
Is coinbase safe to be trusted with personal info and ID?
Gemini is worth checking out also, and you will need a bittrex account if you want to trade something other than the big 2

Offline Joe4007

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Re: BitCoin Master Thread
« Reply #361 on: December 05, 2017, 08:15:33 AM »
Is coinbase safe to be trusted with personal info and ID?
Coinbase as a company, yes, but there are other issues.

https://www.google.com/amp/amp.timeinc.net/fortune/2017/08/22/bitcoin-coinbase-hack

Offline This is who I am

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Re: BitCoin Master Thread
« Reply #362 on: December 05, 2017, 08:49:18 AM »
11841.88!!
“Sometimes the questions are complicated and the answers are simple.”

Offline henche

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Re: BitCoin Master Thread
« Reply #363 on: December 05, 2017, 09:48:52 AM »
Is coinbase safe to be trusted with personal info and ID?

this point needs some focus.  After all the super secure block chain that's impossible to fake,  you need to trust some sleazy website with zero regulation.

Offline SuperFlyer

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Re: BitCoin Master Thread
« Reply #364 on: December 05, 2017, 09:50:12 AM »
this point needs some focus.  After all the super secure block chain that's impossible to fake,  you need to trust some sleazy website with zero regulation.
Coinbase is sleezy?

Offline henche

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Re: BitCoin Master Thread
« Reply #365 on: December 05, 2017, 09:51:07 AM »

Offline shlonx

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Re: BitCoin Master Thread
« Reply #366 on: December 05, 2017, 09:53:17 AM »
Is coinbase safe to be trusted with personal info and ID?

Gemini is worth checking out also, and you will need a bittrex account if you want to trade something other than the big 2

I would definitely go for Gemini over Coinbase. In Coinbase it takes aaaaages until they up your buying limits, with Gemini you could buy much more, much faster. Thanks again @Emkay for that tip.
Brevity may be the soul of wit, but floridity is its spirit.

Offline Emkay

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Re: BitCoin Master Thread
« Reply #367 on: December 05, 2017, 09:59:05 AM »
this point needs some focus.  After all the super secure block chain that's impossible to fake,  you need to trust some sleazy website with zero regulation.
They are certainly the most secure out of all the options. They are actually FDIC insured. And they have a crap-ton of regulation. But let's not get facts in the way over here.

Offline henche

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Re: BitCoin Master Thread
« Reply #368 on: December 05, 2017, 10:10:46 AM »
They are certainly the most secure out of all the options. They are actually FDIC insured. And they have a crap-ton of regulation. But let's not get facts in the way over here.

Fdic insured on your dollars,  right?



Offline Emkay

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Re: BitCoin Master Thread
« Reply #369 on: December 05, 2017, 10:14:48 AM »
Fdic insured on your dollars,  right?
They have insurance on both although different coverage.

Offline henche

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Re: BitCoin Master Thread
« Reply #370 on: December 05, 2017, 10:17:23 AM »
They have insurance on both although different coverage.

Iow, corect

Offline hachover

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Re: BitCoin Master Thread
« Reply #371 on: December 05, 2017, 10:54:36 AM »
Don't keep your coins on the exchange until shortly before you plan to trade them. Keep them in your own offline wallet and there's almost no chance of theft. Same can go for cash, though Gemini has FDIC so if you keep proof of your account balance you shouldn't have to worry too much.
I'm an optimist; but only because life isn't going to give me any other good choices.

Offline lubaby

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Re: BitCoin Master Thread
« Reply #372 on: December 05, 2017, 11:10:30 AM »
Don't keep your coins on the exchange until shortly before you plan to trade them. Keep them in your own offline wallet and there's almost no chance of theft.
Just don't lose the decryption key to your wallet like this guy..
Once the game is over, the king and the pawn go back in the same box.

Offline hachover

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Re: BitCoin Master Thread
« Reply #373 on: December 05, 2017, 11:16:34 AM »
Just don't lose the decryption key to your wallet like this guy..

I remember when that story broke 4 years ago and it was worth $7.5 million. I wonder how often it will continue to make the news as BTC value rises further. There is no recovering those coins anymore; they are out of circulation forever.

There was also a guy on reddit a year or so ago who claimed he mortgaged his house and everything to sink all the money in BTC as a deathbed gamble... wondered if that story was true, and if it was, where is the follow up article today?
I'm an optimist; but only because life isn't going to give me any other good choices.

Offline 12HRS

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Re: BitCoin Master Thread
« Reply #374 on: December 05, 2017, 03:41:13 PM »
There was also a guy on reddit a year or so ago who claimed he mortgaged his house and everything to sink all the money in BTC as a deathbed gamble... wondered if that story was true, and if it was, where is the follow up article today?

story shows up on reddit regarding apple earnings as well...