Bitcoin Update

[JoeWras]

Dropping heavily this week. Down to $236.

It will be interesting to see where this experiment stabilizes.

 

[Fermion]

Dropping heavily this week. Down to $236.

It will be interesting to see where this experiment stabilizes.

My guess is somewhere near where it started (ie, 10,000 Bitcoins to buy a pizza)

 

[dtbach]

I'm going with the Warren Buffet rule, "if I don't understand it, I won't invest in it". This is truly a roll the dice casino investment, i.e. "not an investment" but a true gamble.

 

[gcgang]

"Bitcoin is on its way to being relegated to the ash heap of digital currencies." - Jeffrey Gundlach in his what's ahead in 2015 address.


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[inquisitive]

I understand it, but I still won't invest in it. There has been too much fraud. I suspect these issues will be fixed and the valuation will be astronomically higher in 5-20 years but I can't get over my repulsion at how many hundreds of millions of dollars have been stolen, and by investing in it I am sort of giving credibility to bitcoin, and as an extension, all the criminal warlord masterminds. If a new digital currency came out with some inbuilt protections against fraud, I would invest in it.

 

[JoeWras]

Wow! Since my post yesterday, down 20%. Now at $178! This is a crash.

I understand it too but don't support it due to it being used by so many fraudulent elements. The extortionists who locked down PCs is the example that got me.

It is also not very environmentally friendly. Gold mining may just have less impact to the environment dollar for dollar, ironically.

 

[flyingaway]

Math. Really, really hard math.

Each bitcoin represents a solution to a really difficult computation. New bitcoins are created only by performing this computation, called 'mining', and adding each 'block' of bitcoins so discovered to a public ledger, the 'block chain', with a cryptographic hash of the previous block in the chain, the block itself, and a cryptographic nonce, or single-use authentication number. The size of the nonce increases over time, such that the computation time needed for the bitcoin network to produce a new nonce is always about 10 minutes. The number of bitcoins associated with each new block will decrease over time, until circa 2140, where the limit of 21 million bitcoins will be reached. There are currently about 13.5 million bitcoins in circulation.

Someone trying to pad their account with zeros will find that their bitcoins don't match any block in the block chain, and are not valid. Vendors being paid in these counterfeit bitcoins will automatically reject them, as the open source transaction processing software finds no block chain entries for the coins.

A successful transaction updates the block chain for the bitcoins, preventing 'double spending', or trying to use the same bitcoin with two different sellers. A sane vendor will not transfer merchandise until the bitcoin payment appears in the block chain.

The 'core program' is open source.

This is just a honor system. When no one wants to honor them, bitcoins have no value. The government can guarantee its currency, nobody guarantees bitcoins. People "investing" in bitcoins are just manipulated by certain people.

 

[flyingaway]

Years ago, someone was selling the land on moon and there were people buying it.

 

[audreyh1]

Didn't the Dutch already experiment with bitcoins?

Wait, that was tulips......

 

[Bestwifeever]

Didn't the Dutch already experiment with bitcoins?

Wait, that was tulips......

They were prettier than bitcoins, too, and still crashed.

 

[yakers]

I just want to know about using bitcoins. Where do I go to get them and to spend them? Say I want to buy 200 bitcoins and buy a book on Amazon or anywhere else for 2 bitcoins, how do I do it? I am not interested in speculation only in using it like a currency. Does it work for anyone for that purpose?

 

[samclem]

This is just a honor system. When no one wants to honor them, bitcoins have no value.

But that would be the same for the US dollar, the euro, etc. They also are only worth what someone else is willing to pay for them. If peopel don't want to honor them, they have no value.

The government can guarantee its currency, nobody guarantees bitcoins.

How does the US government "guarantee" its currency? It fights counterfeiting, but it doesn't recompense those who accept fraudulent currency by mistake. And as far as the >value< of its currency, the government has a >policy< of deliberately assuring its currency is worth less each year (i.e. inflation targets of about 2-3% per year)

 

[MRG]

Here's a nice link to legitimate businesses accepting them Microsoft, DISH and some other big names.

http://www.coindesk.com/information/what-can-you-buy-with-bitcoins/

Of course it's used on TOR. Don't know the ratio of regular Internet purchases to TOR payments. Don't know I could find that data.

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[gcgang]

According to Barrons, in the last year oil is down 58%, the Russian rouble 70%, and Bitcoin down 76%. Crash indeed.


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[Hamlet]

Moderate, relatively stable inflation is not a bad feature in a currency. It's easily dealt with by everyone charging interest to lend it out over substantial periods of time.

An important required feature for a currency is that its value be stable enough in the short term to allow transactions to occur without its fluctuations disrupting them.

Bitcoin is almost useless as a currency in that regard. It bounces around so much day-to-day that no one but a criminal or a technophile is going to use it for normal financial transactions. Bitcoin is not really a currency at this point. It's primarily a vehicle for speculation.

How does the US government "guarantee" its currency? It fights counterfeiting, but it doesn't recompense those who accept fraudulent currency by mistake. And as far as the >value< of its currency, the government has a >policy< of deliberately assuring its currency is worth less each year (i.e. inflation targets of about 2-3% per year)