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 89175 times)

Offline Yitzshpitz

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Re: BitCoin Master Thread
« Reply #1200 on: July 19, 2019, 01:20:41 PM »
Yah yah. Hilarious if you did that last year when it had a low at $16k.  All you need to do is wait...

The main issue with a volatile asset like bitcoin is that most people dont know when or how to sell to realize profits. They get greedy and end up panic selling at a loss. For that reason, unless one is proficient at averaging in and out of positions at profits (and minimizing losses) you are better off holding for a while or having predetermined times to buy and sell so that emotions dont get the best of you.

Offline ludmila

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Re: BitCoin Master Thread
« Reply #1201 on: July 19, 2019, 06:18:51 PM »
Need to buy and sell on support and resistance points, with a small stop loss, to just buy and wait for it or any other trade to run is real dangerous. E.g BTC was at $20000 it drops to $15000 and you think it is down $5000 and is a good buy, if no stop is used, well it went down to $3000 !!
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Offline henche

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Re: BitCoin Master Thread
« Reply #1202 on: July 20, 2019, 10:01:29 PM »
Need to buy and sell on support and resistance points, with a small stop loss, to just buy and wait for it or any other trade to run is real dangerous. E.g BTC was at $20000 it drops to $15000 and you think it is down $5000 and is a good buy, if no stop is used, well it went down to $3000 !!

Only morons bought at $15k.  Me and you shorted it heavy and made bank!

Offline henche

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Re: BitCoin Master Thread
« Reply #1203 on: July 20, 2019, 10:01:54 PM »
Now I'm just waiting for it go to back down to $3k so I can cover my short....

Offline yos9694

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Re: BitCoin Master Thread
« Reply #1204 on: July 22, 2019, 02:28:38 PM »
Me and you shorted it heavy and made bank!

Impossible! except in the futures market

Offline myi

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Re: BitCoin Master Thread
« Reply #1205 on: August 05, 2019, 02:33:57 AM »
Need to buy and sell on support and resistance points, with a small stop loss, to just buy and wait for it or any other trade to run is real dangerous. E.g BTC was at $20000 it drops to $15000 and you think it is down $5000 and is a good buy, if no stop is used, well it went down to $3000 !!
So being that it's been creeping down for the past bit downwards and now in the past few days back up, I or you would pull out now with my small profit versus waiting another day or two for it to continue to creep up and take a gamble?
   Is the market supposed to be played as a Gamble and hope for the best? Or by playing by the rules and when you make a small profit your pull back/out?
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Offline jj1000

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Re: BitCoin Master Thread
« Reply #1207 on: October 08, 2019, 10:00:14 AM »
https://www.coindesk.com/crypto-traders-lawsuit-claims-bitfinex-tether-cost-market-over-1-trillion

I love two parts about this.

1. The plaintiffs' names.

2. Oh, you mean securities laws are a good thing lol

Offline Lou Bob

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Re: BitCoin Master Thread
« Reply #1208 on: November 24, 2019, 11:23:24 PM »
Hot! You can now buy bitcoin for 30% less than it was just a few weeks ago!
same exact sale is back this year.
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Re: BitCoin Master Thread
« Reply #1209 on: November 24, 2019, 11:28:19 PM »
You're so far up Trump's a** you can see Giuliani's feet.  HT Baruch

Offline bg26892

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Re: BitCoin Master Thread
« Reply #1210 on: November 29, 2019, 08:17:47 PM »
has anyone gotten into stablecoins (eg DAI/USDC) and lent them via compound finance? 

https://app.compound.finance/

historical rates (doubtful they will be as high as this summer again)
https://mattsolomon.dev/compound-rates