Topic Wiki

Editorís note: I know enough about this topic to be dangerous, but Iím 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.

Iím just a simple DDFer and not an accountant + cryptographer + hacker all at the same time. Can you make this a little simpler to understand?
Letís 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 Ė called ďEQPĒ and ďHTĒ. 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, letís 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 ďGreater Fool InvestingĒ).

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? Shouldnít we wait for Schmitcoin and its cousins to come out?
You could, but you donít 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. Itís 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 itís 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.

Letís 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 letís 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 itís 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 ďsmart contractsĒ 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 164229 times)

Offline myi

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Re: BitCoin Master Thread
« Reply #1300 on: January 05, 2021, 02:54:58 PM »
Gezuntaheit! Interesting read from amongst you two.
   Though I'm not sure how much I understood.
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Offline AsherO

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Re: BitCoin Master Thread
« Reply #1301 on: January 05, 2021, 02:58:52 PM »
Gezuntaheit! Interesting read from amongst you two.
   Though I'm not sure how much I understood.

Not sure how I ended up in this conversation. I don't understand macroeconomics/finance or bitcoin, but I do feel/fear strongly that BTC is a farce that'll collapse.

Offline myi

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Re: BitCoin Master Thread
« Reply #1302 on: January 05, 2021, 03:18:27 PM »
Not sure how I ended up in this conversation. I don't understand macroeconomics/finance or bitcoin, but I do feel/fear strongly that BTC is a farce that'll collapse.
So are you saying you would not invest in this type of currency?
  Or for long-term you would not invest?
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Offline ExGingi

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Re: BitCoin Master Thread
« Reply #1303 on: January 05, 2021, 03:28:29 PM »
Not sure how I ended up in this conversation.

By choice. There was no government or bully forcing you to do so.  ;D
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline myi

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Re: BitCoin Master Thread
« Reply #1304 on: January 05, 2021, 03:31:09 PM »
Not sure how I ended up in this conversation. I don't understand macroeconomics/finance or bitcoin, but I do feel/fear strongly that BTC is a farce that'll collapse.

 With it's crazy prices and it's pattern of ups and downs.

 It's a game changer for quick cash.
   So far over the past few days Everytime it tanked below 30-31k it went back up to 33-34.

 So with a few hours you got a few K. And you can pull out right away.

 What other market jumps as much as this.
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Offline yuneeq

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Re: BitCoin Master Thread
« Reply #1305 on: January 05, 2021, 03:31:32 PM »
BTC is expensive and complicated to transfer, compared to cash or gold.

It's easier to transfer $1b worth of bitcoins across the world than it is to transfer a single gold bar down the block.

Offline myi

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Re: BitCoin Master Thread
« Reply #1306 on: January 05, 2021, 03:40:53 PM »
It's easier to transfer $1b worth of bitcoins across the world than it is to transfer a single gold bar down the block.
Lol.
Don't try to be someone else , be who you are because everyone else is taken.

Offline AsherO

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Re: BitCoin Master Thread
« Reply #1307 on: January 05, 2021, 03:55:35 PM »
It's easier to transfer $1b worth of bitcoins across the world than it is to transfer a single gold bar down the block.

Had a neighbor who was doing work marketing crypto BS, tried to convince me that 10 digit bank wires are impossible and take many days to clear, I donít buy it. Should be as easy as crypto, after all, transactions of such amounts (e.g. real estate, major financial institutions etc) happen all the time.

Offline ExGingi

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Re: BitCoin Master Thread
« Reply #1308 on: January 05, 2021, 03:59:38 PM »
Had a neighbor who was doing work marketing crypto BS, tried to convince me that 10 digit bank wires are impossible and take many days to clear, I donít buy it. Should be as easy as crypto, after all, transactions of such amounts (e.g. real estate, major financial institutions etc) happen all the time.

10 digit bank wires are not a bar of gold, so you haven't responded to what @yuneeq pointed out.

Even smaller bank wires can get held up for approval etc. if they are not usual for the account. I don't know about BTC, but I suspect that once one is properly set up, the amount of transfer isn't limited or examined (for good and for bad).
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline lubaby

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Re: BitCoin Master Thread
« Reply #1309 on: January 05, 2021, 04:17:23 PM »
It's easier to transfer $1b worth of bitcoins across the world than it is to transfer a single gold bar down the block.
The problem is, in the time it takes the $1b Bitcoin to travel across the world (10 minutes - 1 hour+), it can be worth half (or double) of the value sent.

Offline yos9694

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Re: BitCoin Master Thread
« Reply #1310 on: January 05, 2021, 04:22:41 PM »
I don't see Bitcoin replacing the USD (or any other currency) for transactions just like you can't really use gold for daily transactions. As a store of value, once the technology is proven and adoption becomes mainstream or widespread, I see no reason why this wouldn't be considered the digital version of gold (long-term store of value, with periods of high volatility). It seems to me like BTC is in the process of maturing into mainstream adoption (albeit with the mainstream just now tiptoeing into it).

You could absolutely use Bitcoin for daily transactions, unlike gold, and your comment perfectly demonstrates my point that until there is widespread understanding it is unlikely to go mainstream. If the payor and payee both have wallets, they can verify the payor's available funds instantly and sign a transaction in seconds. But most people right now can't manage to handle their end of the transaction, so it's just not practical today (except in some places).

As far as MassMutual investing in BTC goes, the $100M+ that they dumped into the asset is chump change in their $300B+ asset portfolio. It's nothing more than a nod to the asset class and a media opportunity. Does not by any means indicate BTC heading towards becoming an investment grade asset class

Offline yos9694

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Re: BitCoin Master Thread
« Reply #1311 on: January 05, 2021, 04:25:53 PM »
Had a neighbor who was doing work marketing crypto BS, tried to convince me that 10 digit bank wires are impossible and take many days to clear, I donít buy it. Should be as easy as crypto, after all, transactions of such amounts (e.g. real estate, major financial institutions etc) happen all the time.

This was Ripple's marketing line- that banks will use their cryptocurrency for transferring assets internationally because wire transfers are not as good. As with any marketing spiel, there's some truth to it but mostly nonsense. Ripple did get a number of banks to announce that they'd do trials, which was great for the pumpers, but there's really nothing unique about Ripple in that regard (every cryptocurrency can be transferred across borders irrevocably).

Offline yuneeq

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Re: BitCoin Master Thread
« Reply #1312 on: January 05, 2021, 05:22:57 PM »
Had a neighbor who was doing work marketing crypto BS, tried to convince me that 10 digit bank wires are impossible and take many days to clear, I donít buy it. Should be as easy as crypto, after all, transactions of such amounts (e.g. real estate, major financial institutions etc) happen all the time.

I use wires all the times, and it definitely can take a few days to clear, especially international wires. And that's for 5 digit wires.

Offline Yitzshpitz

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Re: BitCoin Master Thread
« Reply #1313 on: January 05, 2021, 07:30:45 PM »
This was Ripple's marketing line- that banks will use their cryptocurrency for transferring assets internationally because wire transfers are not as good. As with any marketing spiel, there's some truth to it but mostly nonsense. Ripple did get a number of banks to announce that they'd do trials, which was great for the pumpers, but there's really nothing unique about Ripple in that regard (every cryptocurrency can be transferred across borders irrevocably).

Stablecoins (which use blockchains and other crypto related technologies) will be the future for banks as a fast way to transfer money quickly. Bitcoin will never be able to be completely regulated by governments hence will never be ubiquitously accepted by governments. See article below about a major decision that ruled about stablecoins.

https://www.forbes.com/sites/haileylennon/2021/01/04/occ-regulator-implements-groundbreaking-cryptocurrency-guidance-for-banks-and-the-future-of-payments/?sh=5bd9764627e9

Offline PlatinumGuy

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Re: BitCoin Master Thread
« Reply #1314 on: January 05, 2021, 08:54:48 PM »
Had a neighbor who was doing work marketing crypto BS, tried to convince me that 10 digit bank wires are impossible and take many days to clear, I donít buy it. Should be as easy as crypto, after all, transactions of such amounts (e.g. real estate, major financial institutions etc) happen all the time.
Wires like that very often won't go through at all without submitting supporting documentation to bankers on both sides. I just had a US-Israel 4 digit wire take 12 days to clear.
״וזה כלל גדול: שישנא אדם כל דבר שקר. וכל מה שיוסיף שנאה לדרכי השקר Ė יוסיף אהבה לתורה.״ - אורחות צדיקים

Offline ya

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Re: BitCoin Master Thread
« Reply #1315 on: January 05, 2021, 09:19:29 PM »
[quote author=yuneeq link=topic=25592.msg2383998#msg2383998 date=1609885377
This is by design. Banks can have wire clear within minutes or less 6-7 digits for sure. They don't because security featues holds it back.
I use wires all the times, and it definitely can take a few days to clear, especially international wires. And that's for 5 digit wires.
[/quote]

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Re: BitCoin Master Thread
« Reply #1316 on: January 05, 2021, 09:23:25 PM »
I use wires all the times, and it definitely can take a few days to clear, especially international wires. And that's for 5 digit wires.
This is by design. Banks can have wire clear within minutes or less 6-7 digits for sure. They don't because security featues holds it back.
FTFY

Anybody using Gemini?

Offline PlatinumGuy

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Re: BitCoin Master Thread
« Reply #1317 on: January 05, 2021, 09:45:11 PM »
Wires like that very often won't go through at all without submitting supporting documentation to bankers on both sides. I just had a US-Israel 4 digit wire take 12 days to clear.
Nor will BTC help, youíll have even more scrutiny when trying to convert the BTC into real money to buy anything tangible
״וזה כלל גדול: שישנא אדם כל דבר שקר. וכל מה שיוסיף שנאה לדרכי השקר Ė יוסיף אהבה לתורה.״ - אורחות צדיקים

Offline Yo ssi

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Re: BitCoin Master Thread
« Reply #1318 on: January 05, 2021, 11:32:52 PM »
I can't, but at least they're backed by governments/reserve banks (that control monetary policy/interest rates, whilst BTC by definition lacks that and is believed to be manipulated by mysterious movers/shakers.
Is that a personal belief?
IINM BTC should be more traceable then an other currency.

Offline PlatinumGuy

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Re: BitCoin Master Thread
« Reply #1319 on: January 06, 2021, 12:29:43 AM »
Is that a personal belief?
IINM BTC should be more traceable then an other currency.
It's pretty well known. It's traceable in theory, but you need subpoenas etc. Though ultimately it is going up because there are a lot of buyers, not because of manipulation.
״וזה כלל גדול: שישנא אדם כל דבר שקר. וכל מה שיוסיף שנאה לדרכי השקר Ė יוסיף אהבה לתורה.״ - אורחות צדיקים