Bitcoin currency (merged topics)

[FrugalFannie]

Depends on what wallet system your BTC were in prior to August 1.

I use an app called Block Chain.

[FreeLancer]

Assuming that's the Blockchain.info wallet, you could use their 12 word pass phrase to convert them into a bitcoin cash wallet run by BTC.com. They just released this functionality a few days ago and state that it is stable and working for Blockchain.info and Mycelium wallets backed up with a 12 word pass phrase.

I literally just learned about it last night, still not sure I trust it enough to try it, especially since the site is owned by a Chinese mining pool. One must be wary of sites offering to process your preforked BTC into BCH because many are undoubtably scams designed to steal your $4000 bitcoins and leave you with nothing.

Coinbase has already promised to convert all their customers automatically sometime later this year. Blockchain.info hasn't yet indicated it would offer a similar service.

[FreeLancer]

Turns out, being your own bank is a big responsibility.  If you use weak passwords, reuse the same password for multiple accounts, aren't familiar with 2FA, and don't understand PGP encryption practices for verifying downloaded files, you should really rectify those deficiencies before jumping into the cryptocurrency space.  Even then you could still lose everything.  Plenty of super smart people have outsmarted themselves and lost control of their private keys, so it can happen to anyone.

I just found Crypto Dad's YouTube channel:  https://www.youtube.com/channel/UC68x_TIzqCtF69fYl2_kl3w/feed

This guy's got the right mix of smarts and paranoia when it comes to cryptocurrency, yet also a willingness to explain these complex topics to the rest of us.  I've watched three of his videos and there's valuable info for all levels here.  These are the critical skills we must become proficient in to survive and thrive in the era of digital asset ownership. 

[FreeLancer]

Blockchain.info will support Bitcoin Cash. 

August 22 blog post:

Within the next 8 weeks, we’ll be rolling out limited support for BCH via the settings panel in your Blockchain Wallet. Users with balances of bitcoin in their Blockchain Wallet on August 1st will be able to access an equal balance, as of August 1st, of bitcoin cash.

While no immediate action is necessary, rest assured that your funds are secure. Blockchain wallets are non-custodial and you hold the private keys, meaning you always have full, exclusive access to your funds — which are always accessible with your recovery phrase.

[David in MN]

I have to confess... I'm 100% out of Bitcoin and have been since earlier this year. I support the technology and decoupling money from government is a great thing but there are some problems.

Bitcoin is suffering from long lag times. That means those of us who are trying to use it as money can't. If we can't the core users are speculators driving up the price rather than (my term) forexers looking for a new currency.

I'll also add that if Bitcoin was a stock it would be hammered from all sides for losing MARKET SHARE to the numerous upstart coins. As Etherium, Dash, Ripple, and others gain ground the water is getting muddy.

I'm long the tech, especially long term but in the here and now I definitely smell tulips.

[bigbear]

I have to confess... I'm 100% out of Bitcoin and have been since earlier this year. I support the technology and decoupling money from government is a great thing but there are some problems.

Bitcoin is suffering from long lag times. That means those of us who are trying to use it as money can't. If we can't the core users are speculators driving up the price rather than (my term) forexers looking for a new currency.

I'll also add that if Bitcoin was a stock it would be hammered from all sides for losing MARKET SHARE to the numerous upstart coins. As Etherium, Dash, Ripple, and others gain ground the water is getting muddy.

I'm long the tech, especially long term but in the here and now I definitely smell tulips.

Thanks for stopping by.  I guess this is my biggest fear.  Love the theory and idea, but in practice it seems a tech race so the foundation shifts. 

[FreeLancer]

Pretty good overview on cryptocurrency from today's PBS NewsHour:  Major companies try Bitcoin technology

I'm long the tech, especially long term but in the here and now I definitely smell tulips.

What will you need to see before you're willing to jump back into crypto?

[David in MN]

What will you need to see before you're willing to jump back into crypto?

Actual use as currency. Processing times and costs are creeping up which was the original claim to fame. New coins are popping up daily. Virtually all exchanges are for cash, not real transactions. It's speculation. By definition it is not working as designed in the original white paper. And I believe a lot of Bitcoin speculators are actually the people who historically buy gold. It's a buy-hold-hope forex fund, not a currency.

Would you take your salary in Bitcoin? Your mortgage? Auto loan? Bitcoin (cryptos generally) just don't have the long term stability of a dollar, pound, Euro, yuan, etc. When I see that stuff, it will be stable. But the ability for speculation will have been leveraged out.

Also please bear in mind I am differentiating between Coins and Blockchain technology which I believe will usher in massive new opportunities.

[FreeLancer]

But when was cryptocurrency ever not highly speculative?  Insane volatility and risk have been the only certainties in this space from the very beginning. 

[David in MN]

But when was cryptocurrency ever not highly speculative?  Insane volatility and risk have been the only certainties in this space from the very beginning. 

True. But "currency" implies stability. How can you spend and save without knowing the underlying value? If an apple cost $1 today and $0.10 tomorrow the dollar has problems. The meteoric rise of Bitcoin and lack of using it means speculative holding. And with no actual underlying value to protect it such as gold or a massive global military force.

Joe Kennedy once wisely opined that he knew to pull out of the stock market in 1929 after his shoe shine boy asked for investment advice. When I look around now I see people who couldn't explain basic stock lingo dumping money into Bitcion to strike it rich I feel the same.

Investment bubble, not currency. Once it has a crash I'll look in again.

[David in MN]

I'll also add that from an Austrian economic perspective the speculative bubble of Crypto has emerged during a historically low interest rate. Those of us who prefer the Austrian School believe this is the time of the greatest mistakes. Tighter purse strings (higher interest rates) will deter this kind of speculation. Or pop the bubble.

Bitcoin has seen a big bump due to the velocity of money. A recession and high interest rate could see a lot of users exit. Remember, my argument is that it is a speculative forex trade, not a currency.

Then again, I've been wrong before....

[FreeLancer]

And with no actual underlying value to protect it such as gold or a massive global military force.

I'm not convinced of that.  Bitcoin's ultimate value is the decentralized immutability of the transaction information recorded in the blockchain ledger.  That process cumulatively represents the enormous amount of time and energy required to mine each individual block of transactions.  No physical placeholder, centralized governing authority, and/or threat of physical violence is required to enforce the transaction rules.  That's a totally novel concept in the history of civilization. 

The real genius behind bitcoin is its proof-of-work consensus algorithm (ie. the competitive mining process used for transaction accounting) outlined in Satoshi's white paper.  The fact that Satoshi referred to it as "coin" or "currency" probably has the least relevancy to what bitcoin actually represents.  It's far weirder and more powerful than either of those traditional terms imply.

Of course that doesn't rule out future bubbles.  We've been through several already in less than a decade, and I'm sure there will be more.

[Mr. Bill]

Joe Kennedy once wisely opined that he knew to pull out of the stock market in 1929 after his shoe shine boy asked for investment advice. When I look around now I see people who couldn't explain basic stock lingo dumping money into Bitcion to strike it rich I feel the same.

1980, gold hit its high.  I remember it well, because my wife and I were shopping for wedding rings.

The jewelry counters at department stores were teeming with... well, people who appeared to be very unsophisitcated financially, and the stores didn't even have price tags on the jewelry.  They just had letter or color codes, and the prices were shown on a chart and adjusted as gold's price went up and down (or mostly up and up for much of the year).  All jewelry, even the junkiest workmanship, was selling at a substantial multiple of its melt price.

We saw the same thing just before the dotcom stock crash, and just before the housing market crash.

A few days ago I saw some guy on Facebook asking how to buy bitcoin, and it was clear he didn't even know what it is, but he got a little advice from random people and bought some within a few hours.

I can't guarantee there's going to be a crash soon (or ever), but this does have the feel of a bubble, and the main function of a bubble is to suck wealth from the wallets of the uninformed masses.

[David in MN]

Why does "mining" Bitcoin have any value? Solving complex computer algorithms is actually a meaningless event. If you mine bauxite, you actually have bauxite. Mining Bitcoin you have... nothing.

A currency only works because something is behind it. That could be a commodity like gold or a vast military force. If there was a competition to solve calculus problems I'd do really well. I'd fail if it was based on baseball trivia. Why would we assign currency value to it?

I like crypto in the long term but if you bet on a stock that had no underlying value, lost market share continually, and had no cost to entry to competitors you'd be a fool. I'll let it stabilize before I get back in.

I love the Bitcoin chart. If you google image search tulip mania it looks kinda similar.

I could be wrong......... I've been buying gold mining stocks of late.

[Alan Georges]

Why does "mining" Bitcoin have any value? Solving complex computer algorithms is actually a meaningless event. If you mine bauxite, you actually have bauxite. Mining Bitcoin you have... nothing.

With bitcoin, what you have is proof that you burned compute cycles.  Yeah, I know, that's kind of weird.  It's like if you mined, I dunno, dark matter and put it in a bottle.  Nobody can see it, but yeah, it's there alright, and I can prove that my dark matter mining machine went through the proper mining procedures to gather this much dark matter.  Or at least, somebody's dark matter mining machine did the work and I later traded them something of value for that jar of dark matter.  Like I said, weird.  But it's not precisely nothing.

Bitcoin (and similar schemes) has another thing going for it that no preceding electronic money system ever had, its developer(s) solved the scarcity problem.  No previous e-curency scheme has had this one locked down.  Even when it comes to "real" money, dollars and euros can be waved into existence without limit, but in an analogy to physical mining, there'll only ever be a certain amount of bitcoin.

A currency only works because something is behind it. That could be a commodity like gold or a vast military force. If there was a competition to solve calculus problems I'd do really well. I'd fail if it was based on baseball trivia. Why would we assign currency value to it?

Because we can trust that somebody burned compute cycles on it, and that the market'll never be flooded with wheelbarrows of freshly-printed bitcoin notes. 

David, I know this sounds like I'm some kind of bitcoin proponent, and really I'm not.  I don't own any, and never have.  Frankly I don't understand it well enough to put any worthwhile amounts of money into it.  I just think that it's interesting that this shadowy person or group of people have put together something that's in many ways more open and honest than "respectable" central bank currency.

And yeah, it looks awfully bubble-ly to me too.  Gold mining stocks are probably less risky.  At least you have something you can point to and say "See, I own x% of that mine over there."

[mountainmoma]

I am not and have not bought any for a couple reasons, but the first reason was that I have no interest is paying the people who "mined" the original bitcoins ! This has no value to me. Yes, I understand they spent time on it. I spend time on alot of things too, and no-one throw money at me for it.  Second reason is it has fluctuating value and is treated by people as an investment. It seems like, if its value held still, that it could be an interesting way to move money over borders. Right now it definitely looks like an investment vehicle in bubble mode.

[Alan Georges]

... It seems like, if its value held still, that it could be an interesting way to move money over borders.

There was an episode about bitcoin last month on In The Rabbit Hole where the guest brought up this very thing.  Moving to Canada about seven years ago, it took a week-plus to transfer his bank accounts over, with $75 wire transfer fees at every turn.  He joked that he could've loaded gold bars into a conestoga wagon and gotten it there faster.  Then a couple of years ago when he moved back, he moved it through bitcoin and it was all done at internet speed.

[FreeLancer]

Alan Georges gets it.

It's like teleporting gold.

[David in MN]

I have owned Bitcoin. But not currently. I was a proponent early on but the problems are becoming evident.

I can prove that time and effort went into printing the dollars in my billfold. I mean they took the effort to serialize each one and they have shiny reflective numbers so there must be inherent value there, right?

Solving algorithms isn't providing any value. If I could prove I had dug a hole and then filled it in I'd be a fool to expect to be payed for my labor. Proof of labor is meaningless without value creation.

It's like teleporting gold.

I don't see how. Put it this way... For at least 100 years an ounce of gold has bought a fine suit for a man (sorry ladies but this is math I know). It's actually a cliche in wealthy circles. Gold has held stable among a basket of commodities. Are we really at a point where algorithms are commodities? A silver quarter from 1960 still buys a gallon of gas. Bitcoin could double or halve in an hour. The comparison to metals doesn't quite work for me.

Now I will concede that the blockchain does have massive value as a distributed ledger. And I'm sympathetic to decoupling currency from the government seeing how they have managed it. But I still see a speculative bubble.

[David in MN]

Put this into perspective...

There are as of right now 12 cryptocurriencies with over $1 billion in market cap. 97 have market caps over $1 million. The top 3, Bitcoin, Bitcoin Cash, and Etherium have a combined market cap of $110 billion.

Does Ripple deserve an $8 billion market cap? Are these coins really providing so much value that we need over 600 of them? Is Zcash really better than Monodo? Does it give you pause that even the programmers couldn't agree on how Bitcoin should run and it had to be forked? Same with Etherium? Bitcoin is really worth twice that of Ford Motor Company?

If you step back and start looking at the valuations here this looks like a bubble. I hope I'm wrong because a lot of good people will lose a lot of money if I'm right. But the math doesn't lie.

[FreeLancer]

There is a method to the apparent madness of the mindless hashing required by the proof-of-work algorithm.

The value in the proof-of-work algorithm comes from the prohibitively high cost in time, hashing power, and electricity that would have to be spent in order for a bad actor to attempt to change transactions already recorded in the blockchain.  Every ten minutes a new block of transactions is added to the chain and with that time pressure it makes more economic sense for a bad actor to spend his resources competing for the legitimate mining reward for finding the next block rather than trying to change the previously recorded transactions in the chain to his advantage.  This is how the traditional problems of double spending and counterfeiting is prevented.

That's the genius of using the blockchain's proof-of-work in a distributed network where nobody can ever really trust anyone else, and yet allows for the information and transactions recorded in it to be trusted without utilizing a central authority.  Since 2008 Bitcoin has used this method of adding blocks of transactions to the chain every 10 minutes without fail, despite the efforts of the world's best minds to break it.  The technology works and has value.  The question is how much value and how long before something better comes along? 

[David in MN]

I would not have expected to discover that Roger Ver agrees with many of my arguments. He is on the latest Vin Armani show and complained that Bitcoin has increased transaction cost and transaction time to the point that it may no longer be a viable currency. He predicts that the breakout success will not be Bitcoin adding that if it is prohibitive to use in a business it will rapidly fail as an investment.

[FreeLancer]

Well, Ver managed to hardfork Bitcoin Cash to increase transaction volume, so we'll see how his vision pans out. If you owned bitcoin prior to August you now also have an equal amount of Ver's nascent currency, too, so you can participate at no added cost.

I honestly never saw the use case of buying coffee with bitcoin as being especially compelling from a personal perspective.  It always seemed better suited to larger transactions where the added security of the bitcoin blockchain was worth the added time and hassle involved with the confirmation process.  Think situations where you would wire money between financial institutions or selling a kilo of gold with assay fees.  Bitcoin transactions create much less friction per dollar value transferred and is effectively instant compared to those traditional methods.

There will be other coins that are better suited to buying coffee. This was anticipated early on and was the impetus behind Litecoin, the first altcoin launch back in 2011, which has a 2.5 minute block creation time compared to bitcoin's 10.

But who knows, it could all disappear overnight. Crypto is an experiment, not an investment plan. Never risk more than you can afford to lose forever.  And don't bother if you're not willing to learn how to keep digital assets a secret. That's the biggest risk, in my opinion, losing control of the private keys that are the only way to prove you own the assets recorded on the blockchain. That's what keeps me up at night. Many days I think it would almost be better for my sanity if it all crashed to zero tomorrow and I could just go back to relying on the government backed banking system to keep my wealth safe and sound.

[David in MN]

Seems to be the motivation of the Bitcoin programmers. At $8 per transaction you're better off pulling out Visa until you get to the $300-$400 range (depends on the contract).

Perhaps the idea is to mirror gold. While we all recognize gold can be currency it's way too pricey for common use. I tend to side with Ver. If Bitcoin can't dominate market share and get costs down to marginal, what's the point? High cost long transactions have been handled by Western Union for years. And losing market share on purpose isn't usually a good strategy.

From what I've learned I'm more bullish on Etherium and Dash. But I'm a mediocre programmer at best and altcoins aren't a business I really understand. So I don't gamble in them. And I hate to be dismissive but Bitcoin and Bitcoin dollar has that same feel as "New Coke". If the development team can't agree what to do it's usually a red flag.

I hope I'm wrong. I'd love to see the dollar supplanted by a free market currency. I doubt we're there yet.

[FreeLancer]

Ver's not a developer, he's more of an activist investor who wound up in the minority on the block size debate so decided to go with Bitcoin Cash anyway.

Not that there's anything wrong with that, and it's almost expected in the anarchocapitalist world of cryptocurrency.  Nobody's ever had to figure out how to govern the software upgrades to the consensus algorithm of a distributed payment system that has no central leadership.  It behaves more like a biological system adapting to evolutionary pressure.  So it's brand new territory that doesn't correlate with what we've learned to expect from our existing financial systems. 

I rely on Andreas Antonopoulos for enlightenment in this space.  Everyone else winds up selling out at some point, their objectivity goes to hell, and they start pumping scam coins and spreading fud.  He has managed to avoid those enticements and really has dedicated himself to educating average people about crypto when he could easily be fleecing the flock like the majority of the talking heads out there.  He is adamant that none of these coins should be treated as an investment.

[David in MN]

Ver's not a developer, he's more of an activist investor who wound up in the minority on the block size debate so decided to go with Bitcoin Cash anyway.

Never said otherwise.

I actually follow Antonopoulos as well. As fate would have it he was security officer for a few years at Blockchain.info which was partially bankrolled in its infancy by Ver and (wrote it somewhere around here) my preferred Bitcoin exchange. It's Tor based and you keep your private keys. Not as user friendly as Coinbase but much more secure.

It's not that I don't understand the tech, I held Bitcoin for a while. I even did my best to use them. I'm just applying the metrics I would to any other investment or forex position.If the Yuan fluctuated 20% overnight I wouldn't buy it either.

[FreeLancer]

Yeah, I don't have any complaints about blockchain.info's web wallet, but it's always a bit disconcerting when Andreas recommends against using a web wallet, yet won't say a word either positive or negative about blockchain.info since he parted ways.

[Mr. Bill]

http://deadcoins.com/

"Curated list of cryptocurrencies forgotten by this world."  Currently contains 592 dead cryptocurrencies.

[Alan Georges]

http://deadcoins.com/

"Curated list of cryptocurrencies forgotten by this world."  Currently contains 592 dead cryptocurrencies.

What?!?!  Coinye is kaput?!?
I suspect Taylor Swift had a hand in this.   

And Cthulhucoin?  It's not dead; it's waiting, dreaming, in R'lyeh.

[FreeLancer]

And Crapcoin, too?  Say it ain't so.....