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 226195 times)

Offline yos9694

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Re: BitCoin Master Thread
« Reply #1520 on: February 23, 2021, 09:46:45 AM »
Why buy btc now if you can just wait for it to be 5k and buy then

Dream on. The lowest it will get if it goes into full hibernation mode will be 13k or maybe 10k. Less than that and Bitcoin will not make a comeback (i.e. its being shut down or another coin has taken its place).

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Re: BitCoin Master Thread
« Reply #1521 on: February 23, 2021, 10:03:53 AM »
Dream on. The lowest it will get if it goes into full hibernation mode will be 13k or maybe 10k. Less than that and Bitcoin will not make a comeback (i.e. its being shut down or another coin has taken its place).

Id be more keen to buy BTC at 10-13k, or even at 20k, than at the current price.

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Re: BitCoin Master Thread
« Reply #1522 on: February 23, 2021, 10:04:53 AM »
Id be more keen to buy BTC at 10-13k, or even at 20k, than at the current price.

The only reason to buy at the current price is for short term gains, not long term holding.
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Re: BitCoin Master Thread
« Reply #1523 on: February 23, 2021, 10:06:19 AM »
The only reason to buy at the current price is for short term gains, not long term holding.

Or someone who thinks BTC is going to $100k anytime soon. Not me.

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Re: BitCoin Master Thread
« Reply #1524 on: February 23, 2021, 10:11:59 AM »
Or someone who thinks BTC is going to $100k anytime soon. Not me.

If a few more institutions announce holdings a la Tesla, I wouldn't rule it out. I don't think it will stay there for long if it does get there, but to say it won't happen... BTC has done a lot of things people said wouldn't happen.
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Re: BitCoin Master Thread
« Reply #1525 on: February 23, 2021, 10:40:21 AM »
If a few more institutions announce holdings a la Tesla, I wouldn't rule it out. I don't think it will stay there for long if it does get there, but to say it won't happen... BTC has done a lot of things people said wouldn't happen.

Mass mutual announced holding bitcoins before they switched over to gamestop

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Re: BitCoin Master Thread
« Reply #1526 on: February 23, 2021, 10:49:10 AM »
Mass mutual announced holding bitcoins before they switched over to gamestop

I'm thinking companies like Apple.
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Re: BitCoin Master Thread
« Reply #1527 on: February 23, 2021, 01:31:24 PM »
The only reason to buy at the current price is for short term gains, not long term holding.
And your go to platform for quick ins and outs would be?
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Re: BitCoin Master Thread
« Reply #1528 on: February 23, 2021, 01:47:34 PM »
And your go to platform for quick ins and outs would be?

I currently use Bitstamp, but there are limited options for altcoins on there. I've heard good things about Binance and am considering moving most of my trading there for greater exposure. But I'm not a very big player, so others may have better insight.
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Re: BitCoin Master Thread
« Reply #1529 on: February 23, 2021, 02:20:50 PM »
The only reason to buy at the current price is for short term gains, not long term holding.

Yes and no. While it is true that there is a high  probability of the bitcoin dropping another 25-50%, it is very difficult to time bottoms and wait for an exact entry into a position. If your plan is to hold bitcoin long term the best way to to do it is to scale into a position. Trying to find a perfect entry in order to gain an extra 10% over a few years is not worth it imo. Also, once the price starts dumping like crazy people tend to lower their entry target. If you believe Bitcoin will be worth hundreds of thousands of dollars then you have to start building a position because we dont know how far it will drop and in what time frame.

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Re: BitCoin Master Thread
« Reply #1530 on: February 23, 2021, 02:30:09 PM »
I like your perspective. But do you see any reason why Bitcoin should be a store of value as opposed to Ethereum (or others)? I hear a lot of people saying bitcoin is a store of value but they started saying it louder only after it became impossible to believe bitcoin would be a transactional currency (tx fees, 10 minute blocks, lack of scalability, etc). This is all thinking behind the curve- meaning that we are giving a hindsight explanation to justify the current price level. In my opinion, bitcoin doesn't store value any better than the many other coins that operate on their own network, and it is only its massive size (>60% of crypto market) that slows it from steering off course. Institutional investors do not yet fully comprehend the crypto market but once they do I believe a lot more support will go to alt coins. A new contender will also be touted as a "store of value". Give it 5 more years and BTC might be down to 1/3 market dominance or less.

This is the classic argument to bet on altcoins. However, historically those altcoins end up tanking after being touted as a bitcoin replacement. It is true that a more efficient and scalable version of bitcoin would hurt the value of Bitcoin as a spending instrument, but its place as a secure, finite, and decentralized currency would still be intact. IMO, worst case is that it slowly eats away at Gold's market cap and gains value that way.

The 2 major factors that will determine the ultimate fate of bitcoin will be: 1. government oversight, restrictions, or adoption.  2. Inflation

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Re: BitCoin Master Thread
« Reply #1531 on: February 23, 2021, 03:08:48 PM »
Check back tomorrow and tell me if it was good
Wow, your good!
 Can I get some training under you? Up for hire?
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Re: BitCoin Master Thread
« Reply #1532 on: February 23, 2021, 03:11:02 PM »
This is the classic argument to bet on altcoins. However, historically those altcoins end up tanking after being touted as a bitcoin replacement. It is true that a more efficient and scalable version of bitcoin would hurt the value of Bitcoin as a spending instrument, but its place as a secure, finite, and decentralized currency would still be intact. IMO, worst case is that it slowly eats away at Gold's market cap and gains value that way.

The 2 major factors that will determine the ultimate fate of bitcoin will be: 1. government oversight, restrictions, or adoption.  2. Inflation

What do you mean historically?!  Alt coins didn't exist until Ether created DeFi. You have exactly one cycle of "history" to look at and no coin has had as much time to sink their anchors yet as bitcoin.

Bitcoin is not at all secure in any way. It is already not a spending instrument due to fee level and slow confirmations. It is highly at risk of losing its decentralized status due to the  extremely high barrier to entry for new miners. It currently enjoys the best name recognition in the business, which is worth a lot, but a very time limited asset. And as the complexity of hashing continues to grow the cost to produce blocks becomes more and more prohibitively expensive (especially for small mining pools who infrequently get rewards). I don't know what odds to give bitcoin - but they're not good unless the price support doubles every 4 years.

In summary, pros are name recognition and sheer accumulated size, cons are implosion from its own design. Government oversight is almost a fringe issue at this point.

Almost every altcoin is more efficient and scalable than bitcoin. But adoption and accumulation are too low so far for any to compete with bitcoin. They mostly compete with each other to their collective detriment.

Another fun fact is that if not for ICOs and DeFi in general, Ethereum could have blown up in 2017/2018 and edged out bitcoin. My belief is that once a coin with its own network gets some strong roots it will become a rallying point for the sophisticated crypto investors, who will be followed in by professional investors from outside crypto, who will be followed by copycats, followed by pumpers and shills and bottom feeders, and finally followed by FOMO retailers. The rest of the alt coin market will start to wither as concentration grows. And then you'll have a competitor who will edge out bitcoin.

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Re: BitCoin Master Thread
« Reply #1533 on: February 23, 2021, 03:25:58 PM »
Another fun fact is that if not for ICOs and DeFi in general, Ethereum could have blown up in 2017/2018 and edged out bitcoin. My belief is that once a coin with its own network gets some strong roots it will become a rallying point for the sophisticated crypto investors, who will be followed in by professional investors from outside crypto, who will be followed by copycats, followed by pumpers and shills and bottom feeders, and finally followed by FOMO retailers. The rest of the alt coin market will start to wither as concentration grows. And then you'll have a competitor who will edge out bitcoin.

Actually saw an interesting analysis showing ETH to be on BTC's path of growth, just x years behind. ETH2 may give it the push to eventually replace BTC as the gold standard by the next cycle.
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Re: BitCoin Master Thread
« Reply #1534 on: February 23, 2021, 03:44:13 PM »
By historically, I mean that if you look at the top 20 coins by marketshare the last 10 years  you will see very little stability from year to year besides for bitcoin.

By secure, i mean has not been subject to attacks or from hackers etc (and many have tried and failed)

Ethereum gas prices are also insane and any time their blockchains are busy they are also slow and inefficient. As far as the other alts, they are centralized and run by exchanges or individuals which might be valuable from a digital currency perspective, but still is not decentralized and can therefore be manipulated. Time will tell if Ethereums L2 protocol will eventually be efficient enough to be a useful platform for future defi projects.

The fact there is high barrier to entry for bitcoin (although you could have also bought it when it was cheap), does not take away from the decentralization aspect to it. And yes, the fact that it had a big head start does help it retain its value and with a million of others altcoins trying to gain marketshare, I dont see how any coin will rival bitcoin dominance. I agree that due to the thousands of new altcoins popping up by the day, actually makes it less likely that bitcoin will be replaced. Also, as institutional money continues to pour in, it gives credence to its store of value.

Your whole premise that bitcoin would not be valuable if another coin replaces it is also not necessarily true. I don't know of other coins that has its supply is finite like bitcoin. Even if other cryptos do rise above bitcoin I dont think bitcoin it will go worthless. Obviously, things can happen that will lessen its value but it has now been going up for over 10 years and has room to grow considering gold's market cap and incoming inflation.


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Re: BitCoin Master Thread
« Reply #1535 on: February 23, 2021, 04:23:46 PM »
Nobody currently uses any of them to store value. You donít store value in volatile assets. Certainly nobody uses them as currency.

They have speculative value that one day they will be a storer of value. But more accurately, they have speculative value that theyíll keep going up as a result of speculation. 

In large part, maybe thats what many stocks are, so not necessarily to knock it.

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Re: BitCoin Master Thread
« Reply #1536 on: February 23, 2021, 04:47:45 PM »
By historically, I mean that if you look at the top 20 coins by marketshare the last 10 years  you will see very little stability from year to year besides for bitcoin.

By secure, i mean has not been subject to attacks or from hackers etc (and many have tried and failed)

Ethereum gas prices are also insane and any time their blockchains are busy they are also slow and inefficient. As far as the other alts, they are centralized and run by exchanges or individuals which might be valuable from a digital currency perspective, but still is not decentralized and can therefore be manipulated. Time will tell if Ethereums L2 protocol will eventually be efficient enough to be a useful platform for future defi projects.

The fact there is high barrier to entry for bitcoin (although you could have also bought it when it was cheap), does not take away from the decentralization aspect to it. And yes, the fact that it had a big head start does help it retain its value and with a million of others altcoins trying to gain marketshare, I dont see how any coin will rival bitcoin dominance. I agree that due to the thousands of new altcoins popping up by the day, actually makes it less likely that bitcoin will be replaced. Also, as institutional money continues to pour in, it gives credence to its store of value.

Your whole premise that bitcoin would not be valuable if another coin replaces it is also not necessarily true. I don't know of other coins that has its supply is finite like bitcoin. Even if other cryptos do rise above bitcoin I dont think bitcoin it will go worthless. Obviously, things can happen that will lessen its value but it has now been going up for over 10 years and has room to grow considering gold's market cap and incoming inflation.

I try not to contradict and get into disputes but there's a lot of inaccurate information in your post and I hope you don't mind if I point that out. If we're all good after that I'd love to get on with talking more about "stability" and "security", where we clearly still have differences of opinion.

1) Many or even most alt coins are NOT centralized. You might be referring to tokens native to exchanges like BNB (a centralized but good asset, with competitors like KCS and OneCoin) and XRP (centralized and a bad bad baby). But Cardano is most definitely not centralized. Neither is Tezos, EOS, Stellar, Nano, and many  more. Then you have in between ones like VET.

2) Barrier to entry for bitcoin doesn't mean the current price to buy on the market. It means the type of equipment that is required to produce it (i.e. mine blocks) and the amount of energy consumed collectively by all the working nodes. Originally you could mine bitcoin in the background on your regular home PC, but now it takes dedicated gear that is quite expensive, and the aggregate electricity cost is enormous. This prevents new miners from getting started and encourages enlargement of pools, which increases centralization.

3) I never said that Bitcoin will become worthless (but we can get into that separately)

4) Many many many other coins have a finite supply. Very few have unlimited supply. Dogecoin is not the template for all altcoins. You can read the whitepaper of any altcoin at random and find the cap.

5) Bitcoin's so-called limited supply is a bit of a misnomer. Every bitcoin is comprised of 100,000,000 satoshis (in fact, if you look at blockchain transactions they are always recorded in satoshis). 5 years ago no one bothered to count more than 1-2 decimal places. Now the 4th decimal place is worth ~$4.20. As its supply becomes more "limited" we automatically apply a 10x multiplier to the "currency" in order to create meaningful units. Meanwhile, new bitcoins are created every 10 minutes and will continue to be until the year 2140. So between now and then we have a predetermined inflation factor because of the increasing supply. After that I don't care.

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Re: BitCoin Master Thread
« Reply #1537 on: February 23, 2021, 05:12:22 PM »
Well, one thing is for sure... @henche is definitely consistent

Nobody currently uses any of them to store value. You donít store value in volatile assets. Certainly nobody uses them as currency.

They have speculative value that one day they will be a storer of value. But more accurately, they have speculative value that theyíll keep going up as a result of speculation. 

In large part, maybe thats what many stocks are, so not necessarily to knock it.

That isn't the same as a commodity.

A commodity fluctuates in value based on how much of it there is, how much ppl want to use,  and speculation over how much supply and demand there will be in the future. 

Sonetimes, a commodity can also go up just on speculation about a bigger fool paying more. In that way it's the same as bitcoin assuming it never becomes a currency
If it doesn't become a currency, why would it have any value?
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.
Tl dr; crypto stinks. But if the price goes up, it will be good again
.
.
.
And so am I :)

What I'm interested in most is the BTC dominance. It's been in the 40%-60% range for the last 2 years and just broke above. Personally I think that BTC interest is a leading indicator for alt coins because it has the name recognition, but ultimately no other advantages. Meaning that it could be a good time to load up a basket of alt coins.

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Re: BitCoin Master Thread
« Reply #1538 on: February 23, 2021, 06:22:49 PM »
Lol at least Iím consistent.

I personally use potato futures as currency

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Re: BitCoin Master Thread
« Reply #1539 on: February 23, 2021, 09:33:47 PM »
Lol at least Iím consistent.

I personally use potato futures as currency

Opening multiple browser windows to appropriately MBM-like this post might consume more energy that mining a single Satoshi!
I've been waiting over 5 years with bated breath for someone to say that!
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