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 70542 times)

Offline Dan

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Re: BitCoin Master Thread
« Reply #405 on: December 07, 2017, 11:13:17 AM »
Finally.
Do I hear Chai?
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline henche

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Re: BitCoin Master Thread
« Reply #406 on: December 07, 2017, 11:14:39 AM »
I wish I'd put 100k in two weeks ago. But only if I would have pulled it out today.

Offline rivkao

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Re: BitCoin Master Thread
« Reply #407 on: December 07, 2017, 11:15:44 AM »

Offline hachover

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Re: BitCoin Master Thread
« Reply #408 on: December 07, 2017, 11:17:54 AM »
because the best way to use currency is to keep it under your mattress ::)

You can roll your eyes, and that makes sense, because you are not a subscriber to the religion (neither am I). But that also means you can't understand or predict the actions of the people who belong to it. If you also thought that BTC is destined to replace USD and EUR, then you wouldn't let it go for the current price either.
I'm an optimist; but only because life isn't going to give me any other good choices.

Offline hachover

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Re: BitCoin Master Thread
« Reply #409 on: December 07, 2017, 11:18:14 AM »
Finally.
Do I hear Chai?

Chai? I want to see 20k before I go to bed
I'm an optimist; but only because life isn't going to give me any other good choices.

Offline rivkao

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Re: BitCoin Master Thread
« Reply #410 on: December 07, 2017, 11:19:10 AM »
Coinbase crashed!

Offline hachover

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Re: BitCoin Master Thread
« Reply #411 on: December 07, 2017, 11:19:25 AM »
I wish I'd put 100k in two weeks ago. But only if I would have pulled it out today.

I wish I'd kept my coins in 2013 instead of panicking over Mt. Gox. Of course, I would have sold them well before the price hit 5k.
I'm an optimist; but only because life isn't going to give me any other good choices.

Offline rivkao

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Re: BitCoin Master Thread
« Reply #412 on: December 07, 2017, 11:30:36 AM »
and... 19k!

Offline Mikeoracle

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Re: BitCoin Master Thread
« Reply #413 on: December 07, 2017, 11:32:43 AM »
and... 19k!
I blinked and missed Chai...

Offline David Smith

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Re: BitCoin Master Thread
« Reply #414 on: December 07, 2017, 11:35:18 AM »
I have no regrets for not getting into this. I didn't and still don't understand it. I can trade pharmaceuticals and other fake stock movements on waves, because there are patterns there I can try to predict. This I can't.
Who do you think you are fooling? You think you are going to pull a quick one on your Creator? Good luck with that.
JTZ

Offline ludmila

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Re: BitCoin Master Thread
« Reply #415 on: December 07, 2017, 12:37:25 PM »
The reason it is going up is that people are adopting it as their currency and are trading in their worthless dollars.  So it isn't going to go down,  just keep going up.
That is what gold is for, the only true currency for thousands of years :)
I was the Best,still the Best, and will always be the Best.
Pele Good,Maradona Better, George Best.

Offline chaim0m

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Re: BitCoin Master Thread
« Reply #416 on: December 07, 2017, 02:16:06 PM »
Ripe for a crash.
Crashes happen largely when there is discrepancy between real value and perceived value. In this case there is no 'real " value the only determining factor is the demand which keeps on coming...
travelcm

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Re: BitCoin Master Thread
« Reply #417 on: December 07, 2017, 03:15:56 PM »
Crashes happen largely when there is discrepancy between real value and perceived value. In this case there is no 'real " value the only determining factor is the demand which keeps on coming...
In other words, the real value is zero and its entire value is discrepancy.
You have the right to remain silent. Anything you say can and will be used to start a religious discussion.

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Re: BitCoin Master Thread
« Reply #418 on: December 07, 2017, 03:16:58 PM »
You can roll your eyes, and that makes sense, because you are not a subscriber to the religion (neither am I). But that also means you can't understand or predict the actions of the people who belong to it. If you also thought that BTC is destined to replace USD and EUR, then you wouldn't let it go for the current price either.
Please tell how holding it will help make it the world currency
You have the right to remain silent. Anything you say can and will be used to start a religious discussion.

Offline ExGingi

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Re: BitCoin Master Thread
« Reply #419 on: December 07, 2017, 04:30:53 PM »
Finally.
Do I hear Chai?
Don't talk to me until we are in Yechi territory.  ;)
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan