Bitcoin

Simon-in-Suffolk posted:

Kevin, its interesting to muse here what the relationship between LTC and BTC will be when Lightning Network is activated on the Bitcoin network... as that of course brings atomic transactions the LN transaction cost will almost certainly be cheaper via LTC than BTC which may well push the value up of LTC coins...

Also you can really see how big business can start to use this with the arrival of SegWin and LN and create their own block chains for their businesses and consumers - a bit like a 21st century store card that can extend easily to associate partners and provide so much more  - sort of like a combined private currency/social network .... [it looks like Bugger King are toying around with something similar to this in Russia]. You can see how cryptos could become the new currencies of the future where traditional centralised currencies from national banks are effectively privatised and decentralised and perhaps only used for state transactions like taxes, benefits, state assets and government contracts. I am sure the regulator will try and impede this and control this as with regular web technology - and so will be a case of catchup for them - but also they will be under pressure not too stifle innovation - as players here could be great at creating new tech business revenue streams and potentially provide great commercial advantage - and more resultant taxable wealth...

So SegWit and LN really do introduce the feasability  of real electronic privatised currencies without transactions needing to use nationalised currencies as intermediaries. Interesting times. In ten years if I find this post/thread it will be interesting to refer back - a time capsule if you like... 

Yes! This is why i refer to Crypto as Internet 4.0.

LTC is really trying to become the future "transactional currency" for every day use. I generally use LTC for fast\cheap movement from USD --> exchanges where I can trade into my current basket of coins. I also hold it long-term as it has tremendous potential. [There is a rumor that some big companies will start accepting LTC as payment.]

There is a coin [OMG] which recently struck a deal with McDonalds in Thailand. McDonalds will start to accept payments in OMG. Could this spread to McDonalds in other markets? Take a look at it as many people are extremely bullish on its future.

One this is certain, Asia is signaling strong belief in the long-term prospects for Crypto currencies.

i think you may mean Web 4.0.. internet is simply the network connectivity protocols and is governed by IPv4 and IPv6, not the apps. However Web 4.0 is the mobile web apps space and Web 5.0 is classed by some as the 'Open, Linked and Intelligent web' and I think one can see how Cryptos using LN fit into that. I agree about Asia.. they do seem to be embracing Crpto currencies in quite an interesting way...perhaps they will steal a march over the US and Europe?

Huge posted:

OK, I'm leaving... I've just had enough of this draconic / Ferengi (take your pick) approach and smugness.

I had to google Ferengi. I do not understand why you view my posts so negatively. I am not trying to sell you anything. I am just hoping to share some of my excitement, knowledge, and views related to Bitcoin\Crypto currencies. The reality is that Cryptos may completely transform the world over the next 20 years and knowledge is power. Many people are "sticking their heads in the sand" and this may create a significant lost opportunity.

As for the smugness... My recent posts were on price action this week and liquidity crisis. One where BTC hit a fresh all time high. One where the entire market tanked by 12%. The last post I just tried to give some idea why a 2008 level liquidity crisis would likely increase BTC price.

Simon-in-Suffolk posted:

i think you may mean Web 4.0.. internet is simply the network connectivity protocols and is governed by IPv4 and IPv6, not the apps. However Web 4.0 is the mobile web apps space and Web 5.0 is classed by some as the 'Open, Linked and Intelligent web' and I think one can see how Cryptos using LN fit into that. I agree about Asia.. they do seem to be embracing Crpto currencies in quite an interesting way...perhaps they will steal a march over the US and Europe?

In fact I really do mean Internet 4.0. My view is that the protocols created to form the distributed networks supporting Crypto create a new layer as impactful as the WWW.

Ok, the FOMO finally got to me, and I've made a modest investment in crypto currencies. Took the path of least resistance and opened a Coinbase account.  My initial plunge is 50% Bitcoin, 36% Ethereum and 14% Litecoin.

If nothing else, I am hoping that these turn out to be an effective hedge. In the past, diversification between equities and bonds was all that was needed. But global markets are now so aligned with central bank actions, what’s negative for equities is usually negative for bonds as well (and vice versa).

Must also admit to being moved by a combination of both Kevin and S-i-S's logic.  On the one hand, I could setup a small recurring buy (i.e., do cost averaging) and then just forget about it.  If it all goes to zero, I will miss the money, but it won't seriously hurt Mrs. Hook and me. But as with Kevin, it may be chance to pass on something significant on to my heirs.  On the other hard, I could join S-i-S and get lucky in the shorter term, sell them all for dollars in a few years, and buy a NAP 500, a full SL loom, a new high-end turntable, and so on...

Come to think of it, I don't really like any of my heirs all that much. 

One thing I don't understand and hope Kevin or someone else can sketch out for me is, where a currency is backed by either physical gold, whole or partial, or at the least, the "full faith" of the issuing government, for whatever that's worth, what backs crypto? During times of panic or crisis, what liquidity would crypto have when it is wholly dependent on a purchaser for conversion to a currency that can be used to purchase goods and services? In such times, everyone is looking to sell, not buy. How will it sell into a transactional currency without a dramatic drop in price to lure someone willing to gamble that it will come back? With a stock, you at least have partial ownership of an entity, whether that entity can survive or not. There is some underlying value that will keep if from freefall in all but the most dangerous economic climates. You will find a buyer eventually if they like the odds of the entities survival and dividends may make it worth the wait for recovery. With crypto you need to find a buyer for conversion and why would anyone else take any risk to buy your bitcoin with transactional cash they themselves may need for goods and services? I really like the development of Bitcoin Cash that, with larger acceptance, would go a long way to establishing a conversion mechanism to ensure that your bitcoins can be traded for goods and services, thereby establishing the underpinning required for true confidence in crypto as a currency. Or am I completely misunderstanding all this as a system?

I love the idea of crypto. It can be enormously disruptive, even in the central banking and credit arenas.

Kevin Richardson posted:

In fact I really do mean Internet 4.0. My view is that the protocols created to form the distributed networks supporting Crypto create a new layer as impactful as the WWW.

The Apps on in the internet are often considered as using Web version architectures... The internet protocols themselves are largely routing and switching protocols and are for the most independent of the apps, although that is changing with SDN, where the routing and switching are controlled more by applications themselves... but is in my opinion a world away from Cryptos which are way above all that.. well and truly in the application layer ... or Web app layer... and interestingly there is nothing I see in Cryptos that requires the use of the internet at all... each crypto currency is effectively an asynchronous distributed programming language... you could run a block chain on your local machine or private network for example... and some of the big software players are indeed doing this... In your analogy out of interest what would you refer to Internet 1,2 and 3?

The Chinese news caused a bit of correction today... that I suspect will continue for a few days yet..perhaps a good buying opportunity...

Hook I don't know when you bought, but if you bought LTC at about $60 you should do well leading up to Christmas... it's going to be a turbulent few weeks yet though...

Clemenza posted:

One thing I don't understand and hope Kevin or someone else can sketch out for me is, where a currency is backed by either physical gold, whole or partial, or at the least, the "full faith" of the issuing government, for whatever that's worth, what backs crypto?

No one organisation specifically  backs most commonly used Cryptos which in a way is the whole point... it's a community of users or stake holders who create entries on its block chain and perceive and/or experience value in acquiring its units or 'coins' or processing them that underpin it. Many Cryptos such as Bitcoin and Litecoin are capped so they can only create a finite number of coins in that currency , and also many have declared algorithms for controlling inflation, i.e. the crypto version on quantative asking. There are other Cryptos like Ethereum that have no upper limit of units. (As far as I understand it). Yes most Crypto have founding bodies that steer  and oversee development and wellbeing of the Crypto, but most Cryptos are effectively Opensource so anyone using it can see what it doing or learn or explore how to use that Crpto to meet a particular need. Some time there community of users/founding bodies hugely disagree, and the currency can split.... Ethereum and Ethereum Classic is an example of this...

Yes it has been a bloodbath today. My beloved NEO has been hardest hit by the "Chinese rumor" [down 50% this week] I calmly placed a few buy orders to get some coins "on sale" but the downward trend could continue. This is the game: extreme volatility, high reward potential, high short-term risk.

I've experienced this so many times I should be numb to it but it still stings.

Hook-

Welcome to one of the greatest emerging markets in human history. Hope you got in after the dip but either way hold strong. If you aren't a trader, try to avoid looking up the prices.

I picked a bad day to start drinking......

Simon-in-Suffolk posted:

 

Kevin Richardson posted:

In fact I really do mean Internet 4.0. My view is that the protocols created to form the distributed networks supporting Crypto create a new layer as impactful as the WWW.

analogy out of interest what would you refer to Internet 1,2 and 3?

 

I am sure you are correct from a technical POV. I am describing the internet from a functional and user acceptance perspective.

Internet 1.0 = E-mail, ftp, forums.  

Internet 2.0 = Shopping, "the Web", chatting

Internet 3.0 = Social Media

Internet 4.0 = IoT, "Smart Economy", decentralized everything

It is just my internal representation of the major steps the internet has made since 1991. Each took time for mass adoption. [Do you remember browsing the WWW before DNS?  I used to have the ip address for Yahoo memorized] The societal changes going to Internet 4.0 from 3.0 should be >>> Internet 1.0 -> 3.0.

Clemenza posted:

One thing I don't understand and hope Kevin or someone else can sketch out for me is, where a currency is backed by either physical gold, whole or partial, or at the least, the "full faith" of the issuing government, for whatever that's worth, what backs crypto? During times of panic or crisis, what liquidity would crypto have when it is wholly dependent on a purchaser for conversion to a currency that can be used to purchase goods and services? In such times, everyone is looking to sell, not buy. How will it sell into a transactional currency without a dramatic drop in price to lure someone willing to gamble that it will come back? With a stock, you at least have partial ownership of an entity, whether that entity can survive or not. There is some underlying value that will keep if from freefall in all but the most dangerous economic climates. You will find a buyer eventually if they like the odds of the entities survival and dividends may make it worth the wait for recovery. With crypto you need to find a buyer for conversion and why would anyone else take any risk to buy your bitcoin with transactional cash they themselves may need for goods and services? I really like the development of Bitcoin Cash that, with larger acceptance, would go a long way to establishing a conversion mechanism to ensure that your bitcoins can be traded for goods and services, thereby establishing the underpinning required for true confidence in crypto as a currency. Or am I completely misunderstanding all this as a system?

I love the idea of crypto. It can be enormously disruptive, even in the central banking and credit arenas.

Bitcoin is backed by the computing power of the worlds most powerful single purpose super computer. This distributed network of compute nodes protects the ledger [blockchain] ensuring that nobody can ever change a transaction once it is processed. Also, the nodes make sure all the rules of the currency are followed. [Nobody can change the rate of inflation] That might not sound overly comforting considering a bit of gold is at least "nice to look at".

There is literally nothing to prevent Bitcoin from falling to 0 except the millions of people believing in the long-term viability of Bitcoin. We are still in the early days. There will be significant volatility in the markets until the distribution of the bitcoins gets spread out from 1% -> n% of the worlds population. [I have no idea what n might =] This is the same problem faced by government issued currencies. The governments have just had a 100 year head start.

Currently liquidity in Bitcoin is a significant issue. The good thing is every day we see more businesses accepting BTC/LTC as payment. This adoption should continue to accelerate over time. My understanding is that in Japan, Bitcoin is a now a legal payment method and 10's of 1,000's of businesses already accept it. [Asian markets are way ahead of the West] At some point in the future, most people will not need to liquidate Bitcoin for local fiat. [I have no idea how long that will take but it will happen unless Bitcoin fails miserably] The current game is to buy Bitcoin only to hold for the long-term. If you have to sell during a "market panic" like today, you'll likely take a haircut.

For "day-to-day" transactions, there are already companies in Europe that have Visa cards that allow customers to load Crypto currencies to use instead of a credit line or bank deposit. Litecoin [LTC] is trying to become the transactional coin for these types of purchases. [So many people have said this that it is worth repeating: Bitcoin wants to be "gold", Litecoin "silver"]

Litecoin is more efficient and less expensive per transaction than Bitcoin, but overall is smaller, and that in itself can create a value for Litecoin that is symbiotic with Bitcoin ... and I think this may start to take shape when Lightning Network is introduced onto Bitcoin and I believe this may be happening later this year. If I understand it correctly LN would then allow atomic transactions between the Litecoin and Bitcoin without having to go through lossy and expensive exchanges and would be far quicker. So for smaller transactions you would potentially use Litecoin and larger transactions you would perhaps use Bitcoin, but if I understand correctly you would only need one wallet such as Bitcoin... kind of like the Crypto equivalent of when abroad you can chose an exchange rate for your credit or debit  card... local currency or account holder's currency which ever is cheaper...

Clemenza posted:

I really like the development of Bitcoin Cash that, with larger acceptance, would go a long way to establishing a conversion mechanism to ensure that your bitcoins can be traded for goods and services, thereby establishing the underpinning required for true confidence in crypto as a currency. Or am I completely misunderstanding all this as a system?

Bitcoin Cash [BCH] is a misnomer as it is neither Bitcoin nor Cash. BCH is likely a scam. It is the result of a hard-fork from Bitcoin but has added 8MB block size [vs the 1MB in Bitcoin]. The idea was to scale the max transactions/second "tps" by allowing larger blocks. Sounds good right? Well... nobody wanted this except a few larger Chinese miners. They appear to be motivated by greed. These players have a significant advantage in mining due to their advanced ASIC designs. The generally accepted path for scaling Bitcoins includes a thing called Segregated Witness. SegWit removes the advantage these Chinese miners currently have over the rest of the world. [As you can imagine they do not like that one bit!] Ok... So I'll give you the 2 minute overview of scaling in Bitcoin [one of the most divisive and complicated issues that needs to be addressed before mass adoption. Different groups spent years debating the issues.]

There are three proposals for scaling: SegWit, SegWit2x, BigBlocks

SegWit = Segregated witness. This allows more tps by redefining a block and compacting some data [google for a real def]

SegWit2x = SegWit + changing the block size to 2 MB [Nobody really wanted this and it was just to appease the big blockers]

BigBlocks = Scaling max block size to meet current demand

Each approach has its own pros and cons. Google them for a detailed explanation as I am not really an authority on this... The vast majority of the community is behind SegWit. [This is now implemented on Bitcoin] This will allow for integration with Lightning Network to massively scale tps by allowing "off chain transactions", "Atomic Swaps between chains", and other advancements. The result -> lower fees, instant transactions, increased use cases.

SegWit2x is almost dead as the additional 1MB block size does not solve any problems.

BCH may survive.... IDK.... There are 100's of coins that are actively traded that have no real-wold use case. The good thing is that for every BTC you owned before August 1, 2017, you now have 1 BCH. [This is why I often refer to "pre fork" and "post fork" Bitcoin]

IMO, Litecoin "LTC" will eventually surpass BCH market cap and will become the "cash" of the future. LTC is the original Alt coin and the first fork from Bitcoin. It has a large community that has grown organically parallel to Bitcoin. Community & organic growth are, IMO, necessary for long-term growth/adoption. BCH looks like a "cash grab".

Kevin Richardson posted:

It is just my internal representation of the major steps the internet has made since 1991. Each took time for mass adoption. [Do you remember browsing the WWW before DNS?  I used to have the ip address for Yahoo memorized] The societal changes going to Internet 4.0 from 3.0 should be >>> Internet 1.0 -> 3.0.

Yes I can see what you are thinking of ..  in my mind I think there are possibly three steps... pre web, web enabled technologies and post web... I don't think we are at the third step yet... but post web could be linked with autonomous systems and AI. 

I do remember the pre web internet.. it was a very inhospitable place... if you didn't know where to go you were completely lost and isolated..and basically the main tool you generally had before the Web was Gopher... a command line interface search, query and retrieve.... the internet at that point was about email and connecting and accessing information archives .

Do I remember pre DNS enabled WWW? No, I always remember DNS, but you were reliant on how reliably your DNS  server updated itself , as it was kind of implicit in the hypertext language for Web and gopher URLs... but I do remember pre mainstream search engines... although WebCrawler and equivalents appeared very early. The first sites relied on Gopher for directory access

A typical early web site circa 1993.

Hook posted:

Ok, the FOMO finally got to me, and I've made a modest investment in crypto currencies. Took the path of least resistance and opened a Coinbase account.  My initial plunge is 50% Bitcoin, 36% Ethereum and 14% Litecoin.

If nothing else, I am hoping that these turn out to be an effective hedge. In the past, diversification between equities and bonds was all that was needed. But global markets are now so aligned with central bank actions, what’s negative for equities is usually negative for bonds as well (and vice versa).

Must also admit to being moved by a combination of both Kevin and S-i-S's logic.  On the one hand, I could setup a small recurring buy (i.e., do cost averaging) and then just forget about it.  If it all goes to zero, I will miss the money, but it won't seriously hurt Mrs. Hook and me. But as with Kevin, it may be chance to pass on something significant on to my heirs.  On the other hard, I could join S-i-S and get lucky in the shorter term, sell them all for dollars in a few years, and buy a NAP 500, a full SL loom, a new high-end turntable, and so on...

Come to think of it, I don't really like any of my heirs all that much. 

If you are looking for an inexpensive, super secure, and easy to use wallet to store your coins for the long-term then look at the Trezor. It is a completely transparent hardware wallet. [Meaning the source code is available for inspection.] I got one for about $103 USD and am quite happy with it. Much better than having to store huge blockchains locally. The nice thing is if you can memorize the 24+ word "seed", you can recreate your private keys anywhere in the world at any time.

Kevin Richardson posted:

Clemenza posted:

I really like the development of Bitcoin Cash that, with larger acceptance, would go a long way to establishing a conversion mechanism to ensure that your bitcoins can be traded for goods and services, thereby establishing the underpinning required for true confidence in crypto as a currency. Or am I completely misunderstanding all this as a system?

Bitcoin Cash [BCH] is a misnomer as it is neither Bitcoin nor Cash. BCH is likely a scam. It is the result of a hard-fork from Bitcoin but has added 8MB block size [vs the 1MB in Bitcoin]. The idea was to scale the max transactions/second "tps" by allowing larger blocks. Sounds good right? Well... nobody wanted this except a few larger Chinese miners. They appear to be motivated by greed. These players have a significant advantage in mining due to their advanced ASIC designs. The generally accepted path for scaling Bitcoins includes a thing called Segregated Witness. SegWit removes the advantage these Chinese miners currently have over the rest of the world. [As you can imagine they do not like that one bit!] Ok... So I'll give you the 2 minute overview of scaling in Bitcoin [one of the most divisive and complicated issues that needs to be addressed before mass adoption. Different groups spent years debating the issues.]

There are three proposals for scaling: SegWit, SegWit2x, BigBlocks

SegWit = Segregated witness. This allows more tps by redefining a block and compacting some data [google for a real def]

SegWit2x = SegWit + changing the block size to 2 MB [Nobody really wanted this and it was just to appease the big blockers]

BigBlocks = Scaling max block size to meet current demand

Each approach has its own pros and cons. Google them for a detailed explanation as I am not really an authority on this... The vast majority of the community is behind SegWit. [This is now implemented on Bitcoin] This will allow for integration with Lightning Network to massively scale tps by allowing "off chain transactions", "Atomic Swaps between chains", and other advancements. The result -> lower fees, instant transactions, increased use cases.

SegWit2x is almost dead as the additional 1MB block size does not solve any problems.

BCH may survive.... IDK.... There are 100's of coins that are actively traded that have no real-wold use case. The good thing is that for every BTC you owned before August 1, 2017, you now have 1 BCH. [This is why I often refer to "pre fork" and "post fork" Bitcoin]

IMO, Litecoin "LTC" will eventually surpass BCH market cap and will become the "cash" of the future. LTC is the original Alt coin and the first fork from Bitcoin. It has a large community that has grown organically parallel to Bitcoin. Community & organic growth are, IMO, necessary for long-term growth/adoption. BCH looks like a "cash grab".

You do know this will all turn out to be total bollox?

If it makes you happy who am I to quibble? 

A quibbler. 

You know, many of these replies remind me of this...

Adam Meredith posted:

Kevin Richardson posted:

Clemenza posted:

I really like the development of Bitcoin Cash that, with larger acceptance, would go a long way to establishing a conversion mechanism to ensure that your bitcoins can be traded for goods and services, thereby establishing the underpinning required for true confidence in crypto as a currency. Or am I completely misunderstanding all this as a system?

Bitcoin Cash [BCH] is a misnomer as it is neither Bitcoin nor Cash. BCH is likely a scam. It is the result of a hard-fork from Bitcoin but has added 8MB block size [vs the 1MB in Bitcoin]. The idea was to scale the max transactions/second "tps" by allowing larger blocks. Sounds good right? Well... nobody wanted this except a few larger Chinese miners. They appear to be motivated by greed. These players have a significant advantage in mining due to their advanced ASIC designs. The generally accepted path for scaling Bitcoins includes a thing called Segregated Witness. SegWit removes the advantage these Chinese miners currently have over the rest of the world. [As you can imagine they do not like that one bit!] Ok... So I'll give you the 2 minute overview of scaling in Bitcoin [one of the most divisive and complicated issues that needs to be addressed before mass adoption. Different groups spent years debating the issues.]

There are three proposals for scaling: SegWit, SegWit2x, BigBlocks

SegWit = Segregated witness. This allows more tps by redefining a block and compacting some data [google for a real def]

SegWit2x = SegWit + changing the block size to 2 MB [Nobody really wanted this and it was just to appease the big blockers]

BigBlocks = Scaling max block size to meet current demand

Each approach has its own pros and cons. Google them for a detailed explanation as I am not really an authority on this... The vast majority of the community is behind SegWit. [This is now implemented on Bitcoin] This will allow for integration with Lightning Network to massively scale tps by allowing "off chain transactions", "Atomic Swaps between chains", and other advancements. The result -> lower fees, instant transactions, increased use cases.

SegWit2x is almost dead as the additional 1MB block size does not solve any problems.

BCH may survive.... IDK.... There are 100's of coins that are actively traded that have no real-wold use case. The good thing is that for every BTC you owned before August 1, 2017, you now have 1 BCH. [This is why I often refer to "pre fork" and "post fork" Bitcoin]

IMO, Litecoin "LTC" will eventually surpass BCH market cap and will become the "cash" of the future. LTC is the original Alt coin and the first fork from Bitcoin. It has a large community that has grown organically parallel to Bitcoin. Community & organic growth are, IMO, necessary for long-term growth/adoption. BCH looks like a "cash grab".

You do know this will all turn out to be total bollox?

If it makes you happy who am I to quibble? 

A quibbler. 

I have no idea what your post is supposed to mean.

Adam Meredith posted:

You do know this will all turn out to be total bollox?

If it makes you happy who am I to quibble? 

A quibbler. 

Indeed. The only thing of value that can even potentially be created is a low-overhead mechanism for transactions. There are plenty of those already. And anyway, that doesn't seem to be the main driver for most people getting involved. The idea that "value" can be stored in digital coins is patently ludicrous. They will only ever be "worth" as much as what they are agreed to be "worth" by the community. That "worth" will always be denominated by other things. Like USD or GBP. Just because they are costly to make, doesn't make them valuable. It is extremely costly to put a penny on Pluto, but that penny doesn't become inherently more valuable as a consequence of that effort. The whole things smacks of a bubble. It is kind-of like if two owners of each half of a duplex agreed to buy each others' homes for $10Bn, swapped houses, and then sat back to enjoy their newly-found billionaire status. The folly of their ways would become painfully evident when they tried to realise some of the "value" they had created. Traders don't create value. They can become rich with their fat commissions, but it is a zero-sum game at best. Someone else loses.

Fellow Quibbler

Of course Cryptos are not all about money investments or currencies, they can be  technically useful for managing ecosystems of participating systems/sensors/devices... professionally looking at this for future city management and smart city automation (IoT).. really exciting technologies.. (I am thinking Ethereum based contact based systems)

its funny how some people get fixated on negative cynicism about something... thank God we have real engineers looking at what this can bring to improve all our lives and having open minds about using these new technologies to innovate... I guess that is what being an engineer is all about... it is for me anyway.. perhaps otherwise we would still be daubing paint in caves

winkyincanada posted:

Adam Meredith posted:

You do know this will all turn out to be total bollox?

If it makes you happy who am I to quibble? 

A quibbler. 

Indeed. The only thing of value that can even potentially be created is a low-overhead mechanism for transactions. There are plenty of those already. And anyway, that doesn't seem to be the main driver for most people getting involved. The idea that "value" can be stored in digital coins is patently ludicrous. They will only ever be "worth" as much as what they are agreed to be "worth" by the community. That "worth" will always be denominated by other things. Like USD or GBP. Just because they are costly to make, doesn't make them valuable. It is extremely costly to put a penny on Pluto, but that penny doesn't become inherently more valuable as a consequence of that effort. The whole things smacks of a bubble. It is kind-of like if two owners of each half of a duplex agreed to buy each others' homes for $10Bn, swapped houses, and then sat back to enjoy their newly-found billionaire status. The folly of their ways would become painfully evident when they tried to realise some of the "value" they had created. Traders don't create value. They can become rich with their fat commissions, but it is a zero-sum game at best. Someone else loses.

Fellow Quibbler

Sorry but if you put a penny on Pluto and brought it back to Earth... Collectors would pay a fortune for that penny.

winkyincanada posted:

Adam Meredith posted:

You do know this will all turn out to be total bollox?

If it makes you happy who am I to quibble? 

A quibbler. 

Indeed. The only thing of value that can even potentially be created is a low-overhead mechanism for transactions. There are plenty of those already. And anyway, that doesn't seem to be the main driver for most people getting involved. The idea that "value" can be stored in digital coins is patently ludicrous. They will only ever be "worth" as much as what they are agreed to be "worth" by the community. That "worth" will always be denominated by other things. Like USD or GBP. Just because they are costly to make, doesn't make them valuable. It is extremely costly to put a penny on Pluto, but that penny doesn't become inherently more valuable as a consequence of that effort. The whole things smacks of a bubble. It is kind-of like if two owners of each half of a duplex agreed to buy each others' homes for $10Bn, swapped houses, and then sat back to enjoy their newly-found billionaire status. The folly of their ways would become painfully evident when they tried to realise some of the "value" they had created. Traders don't create value. They can become rich with their fat commissions, but it is a zero-sum game at best. Someone else loses.

Fellow Quibbler

Everything has "worth" based on supply and demand. The market participants create demand. Supply is limited. Why does Bitcoin need to break widely accepted economic theories to be on par with other commodities?

Anything can hold "value" if people decide the thing is better than other things [USD]

We will reach a point where conversion to USD is unnecessary. Merchant adoption is accelerating. Ten years from now I wouldn't be surprised if you can easily buy cars/boats/homes with Bitcoin. The fact people denominate prices in local fiat does not impair the growth potential of Cryptocurrency. Once the exponential price appreciation period ends [10 years?] volatility will decrease to the point pricing "big ticket" items in BTC may become much more common.

I'm not comfortable with the long-term prospects for USD. Gold should be a good hedge but Bitcoin offers potential for continued appreciation well beyond the "total US stock market index fund" typically held in 401k accounts. [Dont even get me started on the ticking time bomb known as fixed income] A mere 1% allocation to Bitcoin may greatly increase annual ROI over the next 10 years. 

Might be worth thinking about crypto currencies in a broader context like the history of money.

Why were shells or beads considered valuable? Because people thought they were pretty, and recognized that it took some work to find or make them. All of a sudden, they could be exchanged for more useful, everyday goods. Precious metals (and the coins they were made in to)? Because of the work involved in mining and minting. Notes? Because (up until about 60 years ago), our governments promised they were convertible into precious metals. Notes of today, including our electronic account balances? Not backed by anything other than our government's promise that they are legal tender, and can be exchanged for more useful, everyday goods.

In this context, are cryptos really all that different? Their value still lies in promises, just not those made by an individual government. First, there is the promise of the underlying technology - a theoretically tamper-proof decentralized ledger. How was this incredible network of computers built?  By new age "miners" who invested in compute farms. They were rewarded with the discovery of a new age precious metal: bitcoins. Second, there is the promise of retained value over time. From Wiki:

"...Decentralized cryptocurrency is produced by the entire cryptocurrency system collectively, at a rate which is defined when the system is created and which is publicly known. In centralized banking and economic systems such as the Federal Reserve System, corporate boards or governments control the supply of currency by printing units of fiat money or demanding additions to digital banking ledgers... "

So, in some ways, cryptos are quite unique. But in many ways, are they really so different from how societies have created money in the past? We just live in a very different world right now. In the same way the ages of shells and precious metals have passed, is it really that weird to think the age of notes issued by governments may pass to?

I do get it that many of these new created crypto currencies will fail, and perhaps the biggest and best have yet to be created. But to say that there is no value in a rapidly growing, $100B+ marketplace seems a bit blinkered IMHO.

Kevin Richardson posted:

Hook posted:

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If you are looking for an inexpensive, super secure, and easy to use wallet to store your coins for the long-term then look at the Trezor. It is a completely transparent hardware wallet. [Meaning the source code is available for inspection.] I got one for about $103 USD and am quite happy with it. Much better than having to store huge blockchains locally. The nice thing is if you can memorize the 24+ word "seed", you can recreate your private keys anywhere in the world at any time.

Thanks for this recommendation Kevin.  Will check out Trezor, and eventually move to a hardware wallet.

Thanks for the explanations fellas. It's fascinating stuff, but I think I'll follow Buffet's advice and stay out of anything I don't understand.