Explain Bitcoin Please

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August West

Trad climber
Where the wind blows strange
Nov 26, 2018 - 05:19pm PT
The problem is that the increasing value of bitcoin is attributable to nothing tangible. Really it only has psychological value.

Would you prefer something tangible that has mostly psychological value?

The world has spent centuries digging up gold. Most of that is now stored in underground vaults.

Gold has some residual value as a useful metal but based on supply and the amount used, it probably isn't worth more than copper.

The vast amount of its value is psychological.
Reilly

Mountain climber
The Other Monrovia- CA
Nov 27, 2018 - 09:47am PT
LA Times today:

Bitcoin plunges again. Now the only currency worse than bitcoin is Venezuela’s

If nothing else, bitcoin was supposed to protect people from governments that were destroying their own currencies -- governments such as Venezuela's, where inflation is said to be somewhere around 49,000% right now.
Lately, though, bitcoin hasn't fulfilled that mission. Not unless you think being down about 80%, as bitcoin has been since last December, counts as "protecting" you from the 99.6% losses you would have taken on your Venezuelan bolivar during that time. (The virtual currency slid as much as 17% Monday, to $3,523.)

The fact of the matter is that bitcoin has been around for 10 years now, but we still haven't found one use for it. At its most grandiose, it was supposed to replace the U.S. dollar as the way people did business around the world. But at its most realistic, it was at least supposed to replace, say, the Zimbabwean dollar as the way people did business in places where inflation had spiraled out of control.
Why has bitcoin stumbled over even this lowest of bars? Because there's a paradox that lies at its heart.

The easiest way to think about this is that bitcoin wants to make it so that you don't have to trust banks to move your money, or governments to keep your currency from losing its value. Bitcoin does the first part by setting up a system where, instead of paying a middleman you know to process a transaction, the network pays a group of middlemen you don't know to do so. That's what bitcoin "mining" is. People race to be the first one to update the public ledger of all bitcoin transactions — cutting out the need for a bank to verify things — to try to win the new bitcoin that is given out to whoever hits that mark.
Which brings us to the second part, aimed at retaining the cryptocurrency's value: The total number of bitcoins that will ever be created has been strictly limited in advance to preclude any possibility of their value being inflated away.

But there's a problem. The reason bitcoin miners are willing to do the very real work of processing transactions is that they think the bitcoin they're getting paid with will keep rising in value. And what would make them do that? Well, the finite supply certainly helps, but at some point there has to be more demand for them too. Which means that people have to actually start using them.

But why would people use their bitcoins when, as we just said, they think their price is only going to go up? They wouldn't. They'd just hold onto their bitcoin as an investment and use their dollars for day-to-day purchases — which, of course, is more or less what has happened. Indeed, the total number of bitcoin transactions hasn't increased at all in the last two years.

So people mine bitcoin because they think mainstream adoption will make the price go up a lot more, but the fact that it's going up as much as it is means that it's not going to get adopted by anyone but the most fervent believers. It's getting hoarded instead. This, in turn, creates a natural boom-bust cycle that's been amplified by what a few academics say looks like repeated price manipulation.

The result is that, since the end of last year, bitcoin has been massively outperformed by the euro, despite the fact that Europe's central bank has been printing money that whole time; badly outperformed by the Turkish lira, despite the fact that the country's central bank has been forced to keep interest rates inappropriately low by the regime; and has only modestly outperformed the Venezuelan bolivar, despite the fact that Venezuela's central bank has been irresponsible on the kind of world-historical level we haven't seen since Yugoslavia in the 1990s or Zimbabwe in the early 2000s.

Now, losing a little less value than the worthless currency of a bankrupt government run by an economically illiterate drug cartel has — Venezuela's ruling class has also gotten into the cocaine trade — might not seem like much of an accomplishment. That's because it isn't. It's something that everyone, even countries like Turkey that are undergoing currency crises of their own, have managed to do. And at the very least bitcoin has too.
So maybe some sort of congratulations are in order: Bitcoin is a better store of value than the worst store of value there is.

https://www.latimes.com/business/la-fi-bitcoin-venezuela-20181126-story.html

Hope this isn’t too obtuse.
IMHO it is cogent and well explained, if wanting a side of KoolAid.

_ _ _ _ _ _ _ _ _

Page 2:

NEW YORK (Reuters) - When cryptocurrency issuers want positive coverage for their virtual coins, they buy it.

Self-proclaimed social media personalities charge thousands of dollars for video reviews. Research houses accept payments in the cryptocurrencies they are analyzing. Rating “experts” will grade anything positively, for a price.

All this is common, according to more than two dozen people in the cryptocurrency market and documents reviewed by Reuters.

Earlier this year, Ukrainian start-up Hacken was looking to promote its new coin after raising $3 million online in late 2017. Chief Executive Dmytro Budorin and his team identified a list of almost 200 cryptocurrency social media personalities they thought could help them, he said.

Hacken paid $7,500 for Christopher Greene, host of Alternative Media Television - a YouTube channel with more than 500,000 subscribers - to review its coin in a video, Budorin told Reuters. In the 25-minute video, published on June 22, Greene raved about Hacken’s coin and business, describing it as a “huge market opportunity” with “potential 1,000x returns.”
Banks

Trad climber
Santa Monica, CA
Nov 27, 2018 - 02:07pm PT
Hope this isn’t too obtuse.
IMHO it is cogent and well explained, if wanting a side of KoolAid.

Matt O'Brien has been writing Bitcoin attack pieces for years. How convenient that he cherry picks data from the latest bear market while ignoring the full history of Bitcoin in order to try to make his point. And he even managed to make a tangential drug connection. Nothing new.

As for the Reuters blurb, most industries have a dirty underside of pay to play. Nothing new here either, especially in the crypto world which I have repeatedly said is full of scammers and sh#t coins.

If Bitcoin is dead, then why is the NYSE opening a Bitcoin futures market and exchange in 2019? Why has Fidelity been mining Bitcoin for years and have opened Fidelity Digital Asset Services to offer trading and custody of Bitcoin for their customers? Why is Wall Street talent leaving for the crypto space? Seems like the "smart" money sees a future in Bitcoin.
Roots

Mountain climber
Redmond, Oregon
Nov 27, 2018 - 04:28pm PT
...or a future in crypto...it just might not be Bitcoin that survives.

Who knows!??
Reilly

Mountain climber
The Other Monrovia- CA
Dec 6, 2018 - 05:35pm PT
Where are the fanboiz after yesterday’s 5.9% drop to $3668? November saw its biggest monthly percentage drop in 7 years -+40%!

The SEC said y’all can fuggetabout a Bitchcoin ETF.

Can you say ‘toast’?
Banks

Trad climber
Santa Monica, CA
Dec 7, 2018 - 12:52pm PT
The SEC pushed back a decision on the VanEck ETF until the end of February. This was expected and is generally the norm. Far from the death knell you purport it to be. It would have been surprising if they actually announced a decision. It still may not get approved, but it is a much better product than previously proposed ETFs. And if this one doesn't get approval, one eventually will.
Reilly

Mountain climber
The Other Monrovia- CA
Dec 7, 2018 - 01:23pm PT
Yes, Banksy, I’m sure yer sources are better than Reuters and Kiplinger.

When’s yer next art auction/shredding?
Banks

Trad climber
Santa Monica, CA
Dec 7, 2018 - 01:28pm PT
Where does Reuters/Kiplinger say the ETF was denied?
Banks

Trad climber
Santa Monica, CA
Dec 10, 2018 - 01:46pm PT
So about those sources? Reilly? Bueller?
Jon Beck

Trad climber
Oceanside
Dec 11, 2018 - 08:10am PT
Only two machines are profitable when mining bit coin. The best machine will make you 58 cents a day. Not a good ROI for a 2k investment

https://www.google.com/amp/s/cointelegraph.com/news/just-two-asic-bitcoin-mining-rigs-remain-profitable-in-current-markets/amp

As the price of bit coin drops the miners have to cash more coin further depressing the price.

1.3 million machines turned off.

https://www.ccn.com/bitcoin-mining-industry-under-considerable-stress-1-3-million-devices-switched-off/amp/
Dingus Milktoast

Trad climber
Minister of Moderation, Fatcrackistan
Dec 11, 2018 - 10:52am PT


I say, welcome
welcome to the boom town
all that money makes such a
succulent sound

DMT
stevep

Boulder climber
Salt Lake, UT
Dec 11, 2018 - 12:40pm PT
Good riddance.
Blockchain may have actual uses in real world, but it's not clear to me that cryptocurrency is one.
As far as I can tell the only significant use was either people trying to hide dirty money from sketchy transactions, or people essentially just doing investment gambling.
And I'm fine if folks want to risk their own money on a modern tulip. But might be better for the global environment for that risk and activity was done using something that didn't require ungodly amounts of energy. Last I heard, something like the equivalent to all the electricity used in Denmark.

Bitcoin will never be successful as an actual widely used currency as long as transactional costs are high and processing is slow, as it is now.
NutAgain!

Trad climber
South Pasadena, CA
Dec 11, 2018 - 01:16pm PT
The problem with a currency not sanctioned by a government is that governments can declare them illegal and ultimately use military, police, cyber-force to shut them down or render them to the dark black market fringes.

Fighting for the success of bitcoin is akin to fighting against governments. Historically that is not a high probability winning position.
Rudder

Trad climber
Costa Mesa, CA
Dec 11, 2018 - 01:20pm PT
Explain Bitcoin Please

Over the last year Bitcoin has been a great place to get rid of all your excess cash. ;)
Banks

Trad climber
Santa Monica, CA
Dec 11, 2018 - 01:32pm PT
The problem with a currency not sanctioned by a government is that governments can declare them illegal and ultimately use military, police, cyber-force to shut them down or render them to the dark black market fringes.

This is one of the main reasons for the existence of Bitcoin. No government can seize it or shut it down. It is a benefit, not a problem.
Reilly

Mountain climber
The Other Monrovia- CA
Dec 11, 2018 - 01:34pm PT
No government can seize it or shut it down.

Do you believe in the Tooth Fairy too?
Dingus Milktoast

Trad climber
Minister of Moderation, Fatcrackistan
Dec 11, 2018 - 01:38pm PT
The problem with a currency not sanctioned by a government is that governments can declare them illegal and ultimately use military, police, cyber-force to shut them down or render them to the dark black market fringes.

The problem with unsanctioned currency is that potential fraud victims have no governing body to turn to for recompense.

Who you gonna call?

DMT
Dingus Milktoast

Trad climber
Minister of Moderation, Fatcrackistan
Dec 11, 2018 - 01:39pm PT
Fighting for the success of bitcoin is akin to fighting against governments.

To be blunt that is not a wise fight nor a desirable outcome. We have our governments, and currencies, for very good reasons.

Shadow currencies that circumvent those governments are by definition black markets.

DMT
Jon Beck

Trad climber
Oceanside
Dec 11, 2018 - 02:12pm PT
Banks, you seem to be pushing Bitcoin kinda hard, you holding?
Banks

Trad climber
Santa Monica, CA
Dec 11, 2018 - 02:39pm PT
Jon,
I've been holding for years. Just like when the media writes about climbing and we laugh and cringe at all the stuff they get wrong, Bitcoin is kind of the same. So I respond from time to time.
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