We gonna talk about BitCoin?

F01LA said:
OK, but where do you store your key, if not on hardware? That's what I don't get. And while not storing it on the exchanges makes sense, it also seems to remove some flexibility. I could store all my (dollar) money at home, but it's a lot more convenient and safe in the bank. And the bank doesn't lose it like the Bitcoin exchanges do.
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You can store it on hardware if you want, but you open yourself up to being hacked if that hardware is connected to the web, or you can print out a paper wallet, essentially a piece of paper with the key on it, if you lose that piece of paper you lose your money, much like cash.


You don't need to store your bitcoin at exchanges, that is what most people have are hard time with, storing it at exchanges greatly increases your risk and is what is getting the bad press.

Here's another article on how coins are 'mined' and how the integrity of the transactions are maintained. I am by no means an expert on this but know enough to be dangerous. Check out the link.

http://www.coindesk.com/information/how-bitcoin-mining-works/
 
weilke said:
Given that bitcoin is property and not money, doesn't seem like this was necesary.
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I don't think the legal status of Bitcoin is all that settled at this point. If you click on the "Bill Analysis" tab on the Web page I linked, the Senate Floor Analysis contains this explanation of why the repeal was thought to be necessary:

Although it appears that no state department or agency has ever initiated an enforcement action for a violation of CORP Section 107, this bill’s author is concerned that CORP Section 107 may restrict the development and use of alternate currencies. Alternative currencies include virtual currencies (Bitcoin, Ripple, Peercoin, Primecoin, and others) and community currencies (Davis Dollars, Sonoma County Community Cash, Bay Bucks, and others).​

I think they came to the conclusion that the Feds can enforce the U.S. Constitution as they see fit, but the State of California should not be in the business of stifling innovation.
 
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PaulS said:
You can store it on hardware if you want, but you open yourself up to being hacked if that hardware is connected to the web, or you can print out a paper wallet, essentially a piece of paper with the key on it, if you lose that piece of paper you lose your money, much like cash.


You don't need to store your bitcoin at exchanges, that is what most people have are hard time with, storing it at exchanges greatly increases your risk and is what is getting the bad press.
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Thanks, that helps. Putting it back in dollar terms, essentially you can't store your money in the "bank" because there's a high likelihood it will get stolen. You have to store it in the proverbial mattress or coffee can, where it is vulnerable to theft, loss, and fire. That certainly lessens the appeal of this "digital" currency.
 
I certainly know less than you about it, but I am pretty sure by avoiding the use of Bitcoin, I can worry about my other worries. :D

PaulS said:
You can store it on hardware if you want, but you open yourself up to being hacked if that hardware is connected to the web, or you can print out a paper wallet, essentially a piece of paper with the key on it, if you lose that piece of paper you lose your money, much like cash.


You don't need to store your bitcoin at exchanges, that is what most people have are hard time with, storing it at exchanges greatly increases your risk and is what is getting the bad press.

Here's another article on how coins are 'mined' and how the integrity of the transactions are maintained. I am by no means an expert on this but know enough to be dangerous. Check out the link.

http://www.coindesk.com/information/how-bitcoin-mining-works/
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F01LA said:
Thanks, that helps. Putting it back in dollar terms, essentially you can't store your money in the "bank" because there's a high likelihood it will get stolen. You have to store it in the proverbial mattress or coffee can, where it is vulnerable to theft, loss, and fire. That certainly lessens the appeal of this "digital" currency.
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Actually no. You don't need the bank, that's the beauty of it. It's not really stored anywhere the way a dollar would be stored, which, when used as intended, makes it nearly impossible to steal.

Again, I'm a little weak in the exact mechanics, but it goes something like this. Let's say I have 100 bit coins in my wallet (they are not really there, there are no physical bitcoins, think of it more as a unit of measure) and I want to buy something for 1 bitcoin, which is worth about $300. I use my key to create a transaction to the seller for one bitcoin. The bitcoin is transacted into his wallet...... but not really. The transaction is actually recorded and mined into the blockchain, which is where the data is stored, but can't be accessed or used without the key. So the transactions are stored in this block chain, which is constructed using a very complex algorithm, that gets corrupted if someone tries to mess with it. It really is fascinating and pretty well thought out and simple to use, there is no need for a middleman(bank), but people being creatures of habit.........

Another link for you to check out. http://www.coindesk.com/information/how-do-bitcoin-transactions-work/
 
PaulS said:
Actually no. You don't need the bank, that's the beauty of it. It's not really stored anywhere the way a dollar would be stored, which, when used as intended, makes it nearly impossible to steal.
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I've read some about the blockchain and transaction process, and it is pretty fascinating. Additionally, I understand that everyone who wants to use Bitcoin has to download the entire blockchain, which now exceeds 20GB!

The kicker, though, comes back to the private key. That has to reside on some kind of physical medium. Lose that, or get it stolen physically or digitally, and say goodbye to your bitcoins. That may be "beauty" for you, but I'll take dollars in the bank.
 
Henning said:
Not if the currency is based in a real commodity that is crucial to life.
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Lemme guess? Hydrogen?

The single most abundant thing in the universe is a ****-poor idea for a medium of exchange.
 
F01LA said:
I've read some about the blockchain and transaction process, and it is pretty fascinating. Additionally, I understand that everyone who wants to use Bitcoin has to download the entire blockchain, which now exceeds 20GB!

The kicker, though, comes back to the private key. That has to reside on some kind of physical medium. Lose that, or get it stolen physically or digitally, and say goodbye to your bitcoins. That may be "beauty" for you, but I'll take dollars in the bank.
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You don't have to download the entire blockchain to use Bitcoin. Pretty much all the decent Bitcoin wallets only download the parts they need.
 
F01LA said:
I've read some about the blockchain and transaction process, and it is pretty fascinating. Additionally, I understand that everyone who wants to use Bitcoin has to download the entire blockchain, which now exceeds 20GB!

The kicker, though, comes back to the private key. That has to reside on some kind of physical medium. Lose that, or get it stolen physically or digitally, and say goodbye to your bitcoins. That may be "beauty" for you, but I'll take dollars in the bank.
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A user doesn't need to download the blockchain. As far as losing the key, it's the same risk as owning dollars, you mitigate the risk with dollars by having a bank store them for you, if it were not for FDIC, you might be a little more concerned about your risk, which is pretty real even with a bank.

I'm still ambivalent about the whole thing, I think the technology is pretty sound and the concept is great. I think also think it will have staying power, although it's form may change. I really like that it eliminates banks from the equation, a huge plus for me. But I'm still on the sidelines, in no rush to jump in. I had the same Ponzi scheme reaction when I first heard about it, but the more I learn, the more I like it.
 
PaulS said:
A user doesn't need to download the blockchain. As far as losing the key, it's the same risk as owning dollars, you mitigate the risk with dollars by having a bank store them for you, if it were not for FDIC, you might be a little more concerned about your risk, which is pretty real even with a bank.
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Thanks for the blockchain clarification. How do you mitigate risk with Bitcoins?

I would say I'm "ambivalent" too for the most part. It's an interesting asset, but the hassles and security risks will likely keep me out for the near future. And the volatility makes it look like more of a speculation game than a currency. Unlike you, I've become less convinced to buy in, not more.
 
F01LA said:
Thanks for the blockchain clarification. How do you mitigate risk with Bitcoins?

I would say I'm "ambivalent" too for the most part. It's an interesting asset, but the hassles and security risks will likely keep me out for the near future. And the volatility makes it look like more of a speculation game than a currency. Unlike you, I've become less convinced to buy in, not more.
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It depends on which risks you are talking about. Physically losing the key can be mitigated by printing the paper wallet, then copying it and putting the copy into a safe spot. Personally I would not put my life savings into it, although some have and are wealthy now. There are many companies and much venture capital going into making it more user friendly, if they are successful it could become mainstream quickly.

I like the technology, I'm less sure about Bitcoin itself, but it has been around for many years now and is growing in use and acceptance. While there is speculation going on, it is not that easy for the government to manipulate and it is certainly an international currency. So I will sit on the sideline for now and see what happens.
 
JeffDG said:
Lemme guess? Hydrogen?

The single most abundant thing in the universe is a ****-poor idea for a medium of exchange.
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Nope, it's the greatest because it allows for natural economic expansion.
 
The technology of money is not the problem. Assigning resource status to something that doesn't exist, that is the problem.
 
Ah the financial pundits who believe they can find a reason for every swing (even in something as volatile as Bitcoin). They need to read Taleb.
 
Or maybe Mackay? Speculation in Tulips?
 
flyingron said:
Ah the financial pundits who believe they can find a reason for every swing (even in something as volatile as Bitcoin). They need to read Taleb.
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Yeah!

I read Black Swan 3 years ago and just finished Antifragile.

Eye opening stuff that reaches way beyond finance.


Sent from my iPad using Tapatalk HD
 
JeffDG said:
Nah, Henning wants to use the most abundant thing in the universe as a commodity...defeats the purpose of scarcity.
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Oh - sorry, didn't realize you read his posts. Was just thinking about things that are speculated.
 
jsstevens said:
Yeah!

I read Black Swan 3 years ago and just finished Antifragile.

Eye opening stuff that reaches way beyond finance.
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Fooled by Randomness was the one that I was thinking about.
 
jsstevens said:
Yeah!

I read Black Swan 3 years ago and just finished Antifragile.

Eye opening stuff that reaches way beyond finance.
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Fooled by Randomness was the one that I was thinking about.

Black Swan goes to point out a lot of the FAA paradigm fallacies though.
 
JeffDG said:
Nah, Henning wants to use the most abundant thing in the universe as a commodity...defeats the purpose of scarcity.
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EXACTLY!!! The last thing you want money to be is scarce, then it takes over the economy. Money should be the most common thing everyone needs.
 
Henning said:
EXACTLY!!! The last thing you want money to be is scarce, then it takes over the economy. Money should be the most common thing everyone needs.
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Bottled air here! Get your bottled air! Air here! Get yer air! Aaaaaiiiiirrrrr here!
 
Henning said:
EXACTLY!!! The last thing you want money to be is scarce, then it takes over the economy. Money should be the most common thing everyone needs.
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No, if you lack any kind of scarcity, then it has no value. It's the ultimate in fiat currencies, because there's an unlimited supply.

If you have an unlimited supply and a finite demand, value approaches zero very rapidly.
 
JeffDG said:
No, if you lack any kind of scarcity, then it has no value. It's the ultimate in fiat currencies, because there's an unlimited supply.

If you have an unlimited supply and a finite demand, value approaches zero very rapidly.
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Not necessarily, marketing perceptions can skew the value. Diamonds come to mind.
 
JeffDG said:
No, if you lack any kind of scarcity, then it has no value. It's the ultimate in fiat currencies, because there's an unlimited supply.

If you have an unlimited supply and a finite demand, value approaches zero very rapidly.
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If everybody needs it, it has ultimate value. Money is not supposed to have any value of its own, it's just meant to be a medium of exchange. Salt was used as currency for a long time quite well. A completely common substance.
 
Henning said:
If everybody needs it, it has ultimate value. Money is not supposed to have any value of its own, it's just meant to be a medium of exchange. Salt was used as currency for a long time quite well. A completely common substance.
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But it was not a commonly available substance when it was used for money.

I do agree that money has no value on its own. Money (as we currently use it) has value by agreement that I can trade it for avgas, airplane rentals, food , etc.

John
 
Henning said:
If everybody needs it, it has ultimate value. Money is not supposed to have any value of its own, it's just meant to be a medium of exchange. Salt was used as currency for a long time quite well. A completely common substance.
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Except people were jailed for letting ocean water evaporate.
 
jsstevens said:
But it was not a commonly available substance when it was used for money.

I do agree that money has no value on its own. Money (as we currently use it) has value by agreement that I can trade it for avgas, airplane rentals, food , etc.

John
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Sure it was, anybody could make salt by going to the sea shore and evaporating water in pans. Hydrogen anyone can make with a wind generator, solar panel, or whatever electricity, and some water. What it does is decentralizes both the energy and currency production producing actual competition in both markets at takes it out of the sole hands of the extremely wealthy. It provides a true free market which we currently do not have.
 
Henning said:
Sure it was, anybody could make salt by going to the sea shore and evaporating water in pans. Hydrogen anyone can make with a wind generator, solar panel, or whatever electricity, and some water. What it does is decentralizes both the energy and currency production producing actual competition in both markets at takes it out of the sole hands of the extremely wealthy. It provides a true free market which we currently do not have.
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I understand that you could, but people didn't. I visited the currency museum in Stockholm last Oct. Very interesting (and would have been more so if I read Swedish). Salt, spices, coffee, seashells, all sorts of things have been used for money but primarily because they were (or were perceived to be) scarce. Generally also beautiful or useful, but still. The problem with a currency that is everywhere is that its value is low and it takes huge amounts to buy anything This is less of a problem with electronic transfer because you don't need a wheelbarrow full of money to buy bread (as in post WWI Germany, for example). But it is unwieldy. I think having the currency backed by something (gold, maybe? No, that'd never catch on.) is better than arbitrary value based on faith. What's happening with the Euro and the Swiss Franc today is illustrative.

John
 
If you do things as you have always done, you will get the result you always have. We have a system of economy we believe in, however it is ****ing us big time. We believe things "must be" due to ill conceived logic based on false beliefs we have been trained must be true.

We can do this money thing the way it was meant to be done, or we can keep ****ing it up.
 
Henning said:
If you do things as you have always done, you will get the result you always have. We have a system of economy we believe in, however it is ****ing us big time. We believe things "must be" due to ill conceived logic based on false beliefs we have been trained must be true.

We can do this money thing the way it was meant to be done, or we can keep ****ing it up.
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Yeah, there's been a lot of different ways tried to do "this money thing". Most people don't know about them because they failed miserably and were relegated to the ashbin of history.

It turns out that "this money thing" as we currently know it isn't that illogical after all.

Planet Money said:
Out of all the elements on earth, why does gold hold such a privileged place in human history? Is it just a fluke, or is there something more fundamental going on?

Listen to the Podcast
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http://www.npr.org/blogs/money/2011/02/07/131363098/the-tuesday-podcast-why-gold

Incidentally, I do recommend this podcast series. They did some great work on the mortgage meltdown. Also, listening to NPR-ites talk with and about capitalists has this unmistakable Diane Fossey/Jane Goodall-like 'Capitalists in the Mist' quality to it. :lol:
 
Even if money is backed by a real thing (gold, hydrogen, silver or salt) it's value is STILL arbitrary and requires peoples belief that those things have value. All of those do have value to some but only because they want it. It's the belief by the masses that those 'some' are going to keep wanting it that gives it value.

In fact, at it's root 'value' is a belief held by one, a few, many or all. Point is, all currency requires a certain degree of belief to work.
 
Captain said:
Even if money is backed by a real thing (gold, hydrogen, silver or salt) it's value is STILL arbitrary and requires peoples belief that those things have value. All of those do have value to some but only because they want it. It's the belief by the masses that those 'some' are going to keep wanting it that gives it value.

In fact, at it's root 'value' is a belief held by one, a few, many or all. Point is, all currency requires a certain degree of belief to work.
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Not if you consider money merely as a store of value; a medium of exchange. In the barter world 3 deer pelts may be worth a side of pig among two people, and among two others a side of pig worth a jar of honey. But the guy with the pelts and the guy with the honey may have no interest in each other. If we assign those things a unit of value set according to millions of exemplary trades, its called money, and lots of different people can trade lots of different things.

So the core "belief" I have to have in the dollar, or a (real) pound sterling, is that someone else will accept it in exchange for something I want.
 
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