Bitcoins

You should have done it anyway!

Can't even remotely relate bitcoins to stocks. I mean, stocks represent something tangible, defined, and regulated, like say a tiny percentage of the market cap of General Electric, a 100+ year old company that has consistently made profits. Bitcoins represent a "currency" that a vast majority of merchants won't accept, whose value fluctuates wildly on a whim, that is not backed by anything considered valuable, that is still growing in supply daily by random ppl willing to burn up gabs of electricity with overworked computers, that you could lose if your hard drive crashes.

this is a dumb question - but how is a bitcoin created? is there like a company that makes a bitcoin and puts it into circulation? or is the total number of bitcoins regulated?

its decentralized, theres a formula that controls their creation (they call the process mining lol), basically you run the mining program and then after a while u get some coins, you are m/l spending computer cycles on bitcoins, the more that are mined the more computer power it takes to mine new ones until eventually no more can be mined

the formula was written by an anonymous creator(s) and released into the wild now its just computers talking to computers

I thought the whole point of bitcoins was to be able to buy drugs on the silk road

if only

this is a dumb question - but how is a bitcoin created? is there like a company that makes a bitcoin and puts it into circulation? or is the total number of bitcoins regulated?

http://upload.wikimedia.org/wikipedia/en/5/50/NES_Super_Mario_Bros.png

Yes, the total number is predetermined though -- not "regulated" but built into the design

They come in a can, we're put there by a man, in a factory downtown

es, the total number is predetermined though -- not "regulated" but built into the design

― james franco tur(oll)ing test (Hurting 2), Friday, February 28, 2014 10:06 PM (1 hour ago) Bookmark Flag Post Permalink

It's this aspect that makes the whole thing feel like a giant pyramid scheme to me. Those who first developed bitcoins or got in early could load up on the things for cheap, as the computer processing power and time to mine one was relatively small in the beginning. But anyone who wants bitcoins now must either pay a fortune on a real-money exchange or mine a new one, which now takes a roomful of powerful computers, air conditioning, and heat sinks.

In any case I'll start calling bitcoins "currency" only when the local grocery store, my dentist, the insurance company et al. atart accepting them as payment. Until then bitcoins are an overhyped (very) speculative investment, valuable only because lots of people currently value them. I suppose most of the Bitcoin crowd are too young to remember tulip leaves or beanie babies....

I don't really think tulips or beanie babies are a good analogy for whatever bitcoin is. Tulips and Beanie Babies never had any theory behind them beyond "this will be worth more tomorrow than it is today." Bitcoin is a really elaborate and clever, if highly flawed, experiment in virtual money. Yes, it's also being bought as a speculative item, but not everything speculated on is automatically the equivalent of Beanie Babies, which literally served no conceivable purpose.

I also don't really understand how "pyramid scheme" works as a metaphor.

the originators stand to make the most money (top of pyramid), and the suckers at the end (bottom of pyramid)

I'm a little surprised more noise isn't being made about the unsustainable nature of storing every transaction.

why is that unsustainable?

you can embed information in each transaction, turning the blockchain into a "permanent" distributed database. this has already caused a certain amount of problems by the kind of content people have stored, but it's not hard to anticipate a level of activity that esssentially outstrips the rate of however fast storage costs go down. I can pass fractions of bitcoins between two accounts a ton of times to encode an mp3, for example, abusing the system to be a wildly inefficient music library, forcing everyone to eat that cost.

I don't really think tulips or beanie babies are a good analogy for whatever bitcoin is. Tulips and Beanie Babies never had any theory behind them beyond "this will be worth more tomorrow than it is today." Bitcoin is a really elaborate and clever, if highly flawed, experiment in virtual money. Yes, it's also being bought as a speculative item, but not everything speculated on is automatically the equivalent of Beanie Babies, which literally served no conceivable purpose.

― james franco tur(oll)ing test (Hurting 2), Saturday, March 1, 2014 12:14 AM (2 hours ago) Bookmark Flag Post Permalink

But a digital blockchain has a *purpose*? Yeah, I know all about how part of the virtual-currency push is "let's stop money from being controlled by governments or banks", but the same could be said for tree leaves or stuffed animals if much of civilization deemed them highly valuable and worthy of being used as payment for goods or services.

Shitcoins

the originators stand to make the most money (top of pyramid), and the suckers at the end (bottom of pyramid)

a pyramid scheme requires more than just that in to qualify as a pyramid scheme

call it a pyramid-shaped scheme

lol

http://image.shutterstock.com/display_pic_with_logo/513334/141029668/stock-photo-pyramid-on-one-us-dollar-bill-banknote-detail-macro-shot-141029668.jpg

Krinkle8 ‏@Krinkle8 20h
Imagine a system where a man gives you a chuck-e-cheese token every hour you let your car idle. Realize that system exists and it's bitcoin

lol

the originators stand to make the most money (top of pyramid), and the suckers at the end (bottom of pyramid)
a pyramid scheme requires more than just that in to qualify as a pyramid scheme

― °ㅇ๐ْ ° (gr8080), Saturday, March 1, 2014 11:58 AM Bookmark Flag Post Permalink

call it a pyramid-shaped scheme

― lag∞n, Saturday, March 1, 2014 1:22 PM Bookmark Flag Post Permalink

That just describes any bubble -- it's called "find a bigger fool." People who buy and sell before the thing pops make money, people who get left holding the bag lose.

bubbles are round fyi

http://m6.i.pbase.com/u34/ctfchallenge/upload/41293426.IMG_9501.jpg

http://www.gocheapvegas.com/images/The-New-Craps-Game-Las-Vegas-Full-Machine.jpg

The reason i think Bitcoin qualifies as a pyramid scheme and not a mere bubble is that the design of bitcoins intrinsically made them easy and cheap to mine when they were first developed (i.e., when they were new and almost nobody knew about them, though <ahem> the creator and his friends obviously did and likely kept many for themselves), but those who get in late (i.e., now) need to burn up a huge amount of electricity or pay hundreds in a real currency to obtain a bitcoin as the blockchain becomes ever larger.

I've been following the Herbalife case a bit and there are some weird (and it seems to me, arbitrary) numeric precedents over what legally constitutes a pyramid scheme and it has something to do with a percentage of actual goods/services sold vs kickbacks.

slim thug was big into herbalife and he just got his own day in houston

The reason I don't think bitcoin is a pure pyramid scheme is that I think the technology really will find more valuable uses in the near future. It's perfectly possible that it will be a copy of or improvement on bitcoin instead of bitcoin itself. Smart coder people I know say the coding behind bitcoin is very impressive and not something easy to copy, but I'm just taking their word for it, and it does seem like if enough money backs the project of doing so, it can be done. But I do think bitcoins are an interesting new thing and not meaningless techno-baubles. I don't know whether that translates to bitcoins being worth $1 or $1000 or $100000 each. But I think anyone who claims to be certain it's a "bubble" at a given price is just blustering, and so is anyone who's sure it isn't, because there are too many variables and unknowns as to what bitcoin winds up being, if anything. With something like the housing bubble or the tech bubble you could look at a set of underlying historical norms, fundamentals, etc. With something like Beanie Babies it's easy enough to see, where there's literally no value to the thing other than the potential to become worth more one day. With a pyramid scheme or a ponzi scheme you can look at the structure of the thing and see that it can't be perpetuated indefinitely by nature. I don't think bitcoin is that simple a call.

So even though it's fun to laugh at techno-utopian paultards and the like, and even though I partake in that often, I say the jury is out on bitcoin.

btw this is a better explanation of its potential use in money transfers than I was able to muster:

http://nymag.com/daily/intelligencer/2013/11/how-bitcoin-can-mainstream-in-one-easy-step.html

potential use in money transfers and also why today's computerized money transfers are still big and unwieldy and expensive and not just a matter of clicking money from A to B

I'm pretty certain something using protocols inspired or copied from bitcoin will do many of the things that bitcoin was touted to do, but for bitcoin itself, yes, the very structure of it looks designed to be unsustainable and pyramidy from the getgo.

I really really despise the use of 'fiat money' to describe circulating currencies. It really says everything that is wrong with the mindset of goldbugs, libertarians and the like. I'd hate it to enter common usage.

what a wonderful world it would be if we were paying for everything like this

http://s.petrolicious.com/market/fiat/fiat-124-spider-5.jpg

In any case I'll start calling bitcoins "currency" only when the local grocery store, my dentist, the insurance company et al. atart accepting them as payment.

I want to say I've seen bitcoin popping up here and there as a payment option ...

As goes Overstock.com, so goes the nation

this site detailing the various crypto currencies is amazing
http://www.coinwarz.com/cryptocurrency

all in on Noirbits

if someone could explain these things to me simply, it'd be a big help. most of it is down to my dim/abstract understanding of how bitcoin even works

1. i don't understand the mt. gox heist. there was some sort of bug that allowed transactions to be spoofed or double-counted or something -- but isn't each 'coin' essentially a block of alphanumeric characters making everything traceable? i guess i don't get how that meshes with anonymity -- if there's an infinite paper trail, don't they know exactly who has the stolen loot? or at least, exactly where it went?

2. if the nature of the heist was that transactions were faked/doubled -- i thought that the whole point of this thing (how it mimicked gold) is that each chunk of BTC was irreproduceable, only "mineable" via computing the originating algorithm. IS that they heist? they made people think they'd received their goods when the "real" string went somewhere else?

3. what did the losing depositors at mt. gox actually lose, their BTC, or the USD they put in in exchange?

idk i'd like to be able to make fun of this accurately w/o doing a lot more homework.

I can't belive dogecoin is a real thing

I know someone who has sunk close to a thousand on Bitcoin stuff. Coins, mining boxes, etc. I'm pretty fiscally conservative so I think he's nuts, but it's interesting to watch. I guess nobody bought into MtGox that was paying any attention. It's a little heartbreaking to see him spend a lot of 'real money' to get this 'virtual money' but who knows maybe in 5 years he will be a millionaire.

My understanding of the Mt. Gox scandal is that they screwed up in the same way a disinterested cashier at a big box store gives refunds to people who return playstation boxes with bricks inside them with a fake receipt.

I do think the people who started mining early may have made out okay (although the 'best' way to get $$$ out would be to buy drugs, then sell the drugs for cash). mining is insanely unprofitable right now and I cannot see BTC holding much value five years from now.

ah, i see, thx philip

there was a service called "brainwallet" which allowed you to store your private key with a password, and some bot was able to hack into a bunch of these with a dictionary attack that included various Ayn Rand quotes and XKCD references. point is lolbitcoiners

a dictionary attack that included various Ayn Rand quotes and XKCD references

this is the greatest thing ever