CNBC: Bitcoin Bonanza

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Bitcoin
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Your argument boils down to "Well, it could crash to nothing, but it could also track the value of a commodity with 2500... (more)

BobM73 (Apr. 01, 2013 @ 7:38a) |

My argument in this case was no worse than comparing Bitcoin to Disco records.

Your arguments here from the beginning hav... (more)

TechTrooper (Apr. 02, 2013 @ 8:46p) |

Ah, a return to the Iraqi Dinar era flame wars.

BEEFjerKAY (Apr. 02, 2013 @ 11:18p) |

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So its settled then, bitcoins are officially in a bubble.

And what stops the issuer of bitcoins to just create more of them at the stroke of a few keys?

Do they keep all of the cash they receive in exchange for bitcoins in reserve? Do they take some of it as profit? Do they invest some or all of it? If they keep it in cash and bitcoins appreciate in value then the issuer of bitcoins might not have enough dollars to exchange it back for. Or is it only possible to get your money out of bitcoins by selling to someone else? If that is the case the issuer of bitcoins made a $hit ton of money selling something they created out of thin air and keeping the cash received from that for themselves. If true pretty good swindle if you ask me.

2x post

dshibb said:   And what stops the issuer of bitcoins to just create more of them at the stroke of a few keys?

Do they keep all of the cash they receive in exchange for bitcoins in reserve? Do they take some of it as profit? Do they invest some or all of it? If they keep it in cash and bitcoins appreciate in value then the issuer of bitcoins might not have enough dollars to exchange it back for. Or is it only possible to get your money out of bitcoins by selling to someone else? If that is the case the issuer of bitcoins made a $hit ton of money selling something they created out of thin air and keeping the cash received from that for themselves. If true pretty good swindle if you ask me.


Its been hardcoded into the algorithms. Also, the inventor of bitcoins has mysteriously vanished.

It is regulated by computing speed, not some entity. The transactions are all P2P.

Go read the other bitcoin threads if you want to learn whats going on with them.

dshibb said:   And what stops the issuer of bitcoins to just create more of them at the stroke of a few keys?

Do they keep all of the cash they receive in exchange for bitcoins in reserve? Do they take some of it as profit? Do they invest some or all of it? If they keep it in cash and bitcoins appreciate in value then the issuer of bitcoins might not have enough dollars to exchange it back for. Or is it only possible to get your money out of bitcoins by selling to someone else? If that is the case the issuer of bitcoins made a $hit ton of money selling something they created out of thin air and keeping the cash received from that for themselves. If true pretty good swindle if you ask me.


Bitcoins aren't backed by any currency. There is no "issuer" of bitcoins.

jd2010 said:   dshibb said:   And what stops the issuer of bitcoins to just create more of them at the stroke of a few keys?

Do they keep all of the cash they receive in exchange for bitcoins in reserve? Do they take some of it as profit? Do they invest some or all of it? If they keep it in cash and bitcoins appreciate in value then the issuer of bitcoins might not have enough dollars to exchange it back for. Or is it only possible to get your money out of bitcoins by selling to someone else? If that is the case the issuer of bitcoins made a $hit ton of money selling something they created out of thin air and keeping the cash received from that for themselves. If true pretty good swindle if you ask me.


Its been hardcoded into the algorithms. Also, the inventor of bitcoins has mysteriously vanished.

It is regulated by computing speed, not some entity. The transactions are all P2P.

Go read the other bitcoin threads if you want to learn whats going on with them.


How do bitcoins get created then?

dshibb said:   jd2010 said:   dshibb said:   And what stops the issuer of bitcoins to just create more of them at the stroke of a few keys?

Do they keep all of the cash they receive in exchange for bitcoins in reserve? Do they take some of it as profit? Do they invest some or all of it? If they keep it in cash and bitcoins appreciate in value then the issuer of bitcoins might not have enough dollars to exchange it back for. Or is it only possible to get your money out of bitcoins by selling to someone else? If that is the case the issuer of bitcoins made a $hit ton of money selling something they created out of thin air and keeping the cash received from that for themselves. If true pretty good swindle if you ask me.


Its been hardcoded into the algorithms. Also, the inventor of bitcoins has mysteriously vanished.

It is regulated by computing speed, not some entity. The transactions are all P2P.

Go read the other bitcoin threads if you want to learn whats going on with them.


How do bitcoins get created then?


Im not techie enough to totally understand it but your computer solves a super complex encryption key and figures out what the bitcoin code is. They are programmed to get more and more complex as more of them are solved so that the total money supply is 29 million(?). This yields a relatively consistent supply curve that tapers off as total supply approaches that #. In the early days people would make huge render/server/whatever farms to solve bitcoins.

jd2010 said:   dshibb said:   jd2010 said:   dshibb said:   And what stops the issuer of bitcoins to just create more of them at the stroke of a few keys?

Do they keep all of the cash they receive in exchange for bitcoins in reserve? Do they take some of it as profit? Do they invest some or all of it? If they keep it in cash and bitcoins appreciate in value then the issuer of bitcoins might not have enough dollars to exchange it back for. Or is it only possible to get your money out of bitcoins by selling to someone else? If that is the case the issuer of bitcoins made a $hit ton of money selling something they created out of thin air and keeping the cash received from that for themselves. If true pretty good swindle if you ask me.


Its been hardcoded into the algorithms. Also, the inventor of bitcoins has mysteriously vanished.

It is regulated by computing speed, not some entity. The transactions are all P2P.

Go read the other bitcoin threads if you want to learn whats going on with them.


How do bitcoins get created then?


Im not techie enough to totally understand it but your computer solves a super complex encryption key and figures out what the bitcoin code is. They are programmed to get more and more complex as more of them are solved so that the total money supply is 29 million(?). This yields a relatively consistent supply curve that tapers off as total supply approaches that #. In the early days people would make huge render/server/whatever farms to solve bitcoins.


So the guy who's computer solves that algorithm is the guy that gets to create a bitcoin out of this air and sell it someone else? If he doesn't get it where does the money go to once it's created. After it's been in the system for a while I get that you buy a bitcoin from someone else he gets cash and you get a bitcoin and that no new bitcoins are created. But the guy that gets to create a bitcoin is the one that has created a currency out of thin air and receive cash for something that cost him zero.

The electricity for the computers to mine the bit coins costs almost as much as the bit coins they create

I remember beanie baby package deals selling for $1k+ on late night TV --- this went on for a couple years

SUCKISSTAPLES said:   The electricity for the computers to mine the bit coins costs almost as much as the bit coins they create

Okay fair enough, but isn't that just wasteful of capital?

dshibb said:   SUCKISSTAPLES said:   The electricity for the computers to mine the bit coins costs almost as much as the bit coins they create

Okay fair enough, but isn't that just wasteful of capital?


It is, but what "investors" of Bitcoin do is purchase them when their value is low and then sell them when their value increases.

dshibb said:   Okay fair enough, but isn't that just wasteful of capital?I'm not an expert on Bitcoin, but from what I've read, mining is not a waste of capital since mining supports the Bitcoin network by validating ongoing transactions and providing a "honest" Bitcoin node to defend against malicious attacks. A mined Bitcoin is a reward for contributing to the Bitcoin network.

The amount of work needed to mine a Bitcoin is adjusted by the Bitcoin network according to how many new Bitcoins others mine. The more that are mined, the harder it gets. That's why it maxed out at about the point where electricity costs make it unprofitable.

I don't own or use Bitcoins, but it does interest me.

Probably another bubble. The Cyprus thing will fade.

Anyway, I could never figure out this Bitcoin thing and how they're "mined," let alone figure out where to spend them. Don't bother me until I can use them at McDonald's.

True, Bitcoin is probably in bubble (prices are crashing from about 90 to 80 USD as I write this). But it demonstrates how Bitcoin was designed to work - the higher prices of Bitcoin makes a window of time that mining is profitable again. The higher prices stimulate more mining to meet the demand, until a new equilibrium between supply and demand is met. The Bitcoin network benefits from more mining computers since there is no central authority or master computer - Bitcoin exists as the sum of all the computers connected to it.

dshibb said:   SUCKISSTAPLES said:   The electricity for the computers to mine the bit coins costs almost as much as the bit coins they create

Okay fair enough, but isn't that just wasteful of capital?


Costs the US mint 2 cents to make a penny. Gotta spend money to make money!

jd2010 said:   dshibb said:   And what stops the issuer of bitcoins to just create more of them at the stroke of a few keys?

Do they keep all of the cash they receive in exchange for bitcoins in reserve? Do they take some of it as profit? Do they invest some or all of it? If they keep it in cash and bitcoins appreciate in value then the issuer of bitcoins might not have enough dollars to exchange it back for. Or is it only possible to get your money out of bitcoins by selling to someone else? If that is the case the issuer of bitcoins made a $hit ton of money selling something they created out of thin air and keeping the cash received from that for themselves. If true pretty good swindle if you ask me.


Its been hardcoded into the algorithms. Also, the inventor of bitcoins has mysteriously vanished.

It is regulated by computing speed, not some entity. The transactions are all P2P.

if the amount of bitcoins is regulated, then something needs to regulate them.

jd2010 said:   Go read the other bitcoin threads if you want to learn whats going on with them.
That could take days/weeks/months

mapen said:   True, Bitcoin is probably in bubble (prices are crashing from about 90 to 80 USD as I write this). But it demonstrates how Bitcoin was designed to work - the higher prices of Bitcoin makes a window of time that mining is profitable again. The higher prices stimulate more mining to meet the demand, until a new equilibrium between supply and demand is met. The Bitcoin network benefits from more mining computers since there is no central authority or master computer - Bitcoin exists as the sum of all the computers connected to it.
You should read about "how Bitcoin was designed to work" rather than explain it wrong for the nth time here; the fiat exchange rate doesn't influence the supply and demand; it's built into the mining software to adjust the difficulty every couple of thousand blocks to keep the supply at about 6 blocks per hour.

It dropped against USD 27% and went back up again, but only at Gox. Other exchanges didn't sink that low, and 27% is not unusual for gox, because that's where the pump and dumpers and other manipulators do their thing.

I mined myself one Bitcoin a year ago. Time to cash in!

If I didn't stop mining I would have around 170 Bitcoins now. That is around $15,000 worth as of today. Oh well.

I'm just saying the inventor looks like a crack addict.

SUCKISSTAPLES said:   The electricity for the computers to mine the bit coins costs almost as much as the bit coins they create

Can't we just use Amazon web services to mine them for us?

TechTrooper said:   You should read about "how Bitcoin was designed to work" rather than explain it wrong for the nth time here; the fiat exchange rate doesn't influence the supply and demand; it's built into the mining software to adjust the difficulty every couple of thousand blocks to keep the supply at about 6 blocks per hour.Are you confusing me with someone else? I've not posted much about Bitcoin.

And you're wrong about what I said. "Fiat exchange rates" indirectly influence the mining since fiat price controls how profitable it is to mine. You are technically correct that there is no direct influence since the algorithm doesn't care what the fiat price is.

You are talking a mathematical algorithm level, and I'm talking on a bigger picture real-world level.

SUCKISSTAPLES said:   The electricity for the computers to mine the bit coins costs almost as much as the bit coins they create

There is now dedicated hardware that works in an entirely different way that can solve it fairly cheaply. Unfortunately, the hardware itself is extremely expensive. The people who buy these devices are doing it as a speculative investment, hoping the currency will have staying power. The margins aren't that large now, so it's a risk. In the old days, anyone with a spare PC could mine competitively. Personally, I think it's here to stay. There are some pretty big backers out there (Al Gore for one). It's no more illegitimate than US Dollars. In fact, I'd argue a lot more legit since the total amount in circulation is already set.

There is also a competing E-Currency called LiteCoin. It's similar, but uses memory hard problems as the basis for the algorithms. That makes hardware arrays useless and levels the playing field for miners. The average Joe can still mine LiteCoin the way you used to be able to mine BitCoin.

elektronic said:   SUCKISSTAPLES said:   The electricity for the computers to mine the bit coins costs almost as much as the bit coins they create

Can't we just use Amazon web services to mine them for us?


Feel free. It will cost you many times more to use Amazon then the coins you mine are actually worth. It takes GPU's to mine or dedicated hardware arrays. Standard servers won't work and will cost you a fortune to try.

SUCKISSTAPLES said:   The electricity for the computers to mine the bit coins costs almost as much as the bit coins they create

Depends on the exchange rate and what hardware is used to mine.

Used to do it back in 2011 and spent about $200 worth of electricity to generate about 100 of them, currently valued at $9100.
I kept them for the hell of it to see what is going to happen in the future and it's getting interesting.

If it crashes... too bad... if it keeps on rising... we will see.

Either way the amount of attention that is given to it does nothing but pushes it a little bit higher and higher, so lets keep it going

riznick said:   
if the amount of bitcoins is regulated, then something needs to regulate them.


That's the beauty. Something but not someone. No central authority regulates Bitcoin. Nothing regulates it besides the consensus of the network. You could claim to everybody that you made more bitcoins, but for the network (and anyone else) to actually accept them, you would have to obtain them through legitimate mining, which can only be done for a finite number of bitcoins (due to a geometric decay curve). Sure, you and Bob can agree not to follow the protocol, but nobody would accept your fake coins.

Does anyone have that clip of the internet Bitcoin show where the host breaks down and cries after he admits that he lost all of his and his entire family's money screwing around with Bitcoins?

Crazytree said:   Does anyone have that clip of the internet Bitcoin show where the host breaks down and cries after he admits that he lost all of his and his entire family's money screwing around with Bitcoins?

That's Bruce Wagner of "The Bitcoin Show" on http://onlyonetv.com/

You really don't want to go down that rabbit hole!

Key question is whether I can get H&B using bitcoin?

It' been answered plenty of times - Silk Road ( http://en.wikipedia.org/wiki/Silk_Road_(marketplace) )

TechTrooper said:   mapen said:   True, Bitcoin is probably in bubble (prices are crashing from about 90 to 80 USD as I write this). But it demonstrates how Bitcoin was designed to work - the higher prices of Bitcoin makes a window of time that mining is profitable again. The higher prices stimulate more mining to meet the demand, until a new equilibrium between supply and demand is met. The Bitcoin network benefits from more mining computers since there is no central authority or master computer - Bitcoin exists as the sum of all the computers connected to it.
You should read about "how Bitcoin was designed to work" rather than explain it wrong for the nth time here; the fiat exchange rate doesn't influence the supply and demand; it's built into the mining software to adjust the difficulty every couple of thousand blocks to keep the supply at about 6 blocks per hour.

It dropped against USD 27% and went back up again, but only at Gox. Other exchanges didn't sink that low, and 27% is not unusual for gox, because that's where the pump and dumpers and other manipulators do their thing.


Wow, Bitcoin exchange subject to manipulation? Isn't that saying that Bitcoin is useless?

Here is what real currencies have that Bitcoin does not:

(1) Sovereign entity backing it,
(2) A national economy producing exportable goods and services which creates a natural need for many parties to buy and sell the currency as a hedge,
(3) A central reserve bank standing by to support the currency against short term liquidity swings,
(4) Other peer central banks standing by to support the currency against legitimate macroeconomic shocks in times of crisis,
(5) Well functioning network of capital markets which ensure that there is functional price discovery and no-arbitrage conditions. E.g., you can't have EURUSD have different price in Chicago, New York, London, and Tokyo for extended periods of time (read: milliseconds), because such condition will disappear very very quickly,

Bitcoin is, basically, a joke. It is a cool, nerdy idea full of very nice properties which have no empirical grounding from economic point of view. To some, it is a great empirical experiment to test ideas. To others, it is a great way to hide behind their computer screens.

To everyone here supporting Bitcoin. Do you use Bitcoin as a currency or investment? If you primarily use it as an investment, then Bitcoin has already failed.

tolamapS said:   
(3) A central reserve bank standing by to support the currency against short term liquidity swings,
(4) Other peer central banks standing by to support the currency against legitimate macroeconomic shocks in times of crisis,


These are the problems with fiat currency... not benefits... the liquidity you are talking about results in a loss of purchasing power (USD has lost 96% of its value over last 100 years).

If bankers write stupid loans to housing speculators and end up needing a bailout or if central bankers decide they want to play god with the economy.. I don't want to be the one holding the bag to contribute to their liquidity needs. Their interests run counter to mine. That is why I don't own any US dollars except the bare minimum to handle my basic transactional needs to pay bills. But of course I'll be glad to borrow money in US dollars and pay creditors back in depreciated dollars in the future.

tolamapS said:   TechTrooper said:   
It dropped against USD 27% and went back up again, but only at Gox. Other exchanges didn't sink that low, and 27% is not unusual for gox, because that's where the pump and dumpers and other manipulators do their thing.

Wow, Bitcoin exchange subject to manipulation? Isn't that saying that Bitcoin is useless?

Here is what real currencies have that Bitcoin does not:
[THE REAL BIG JOKE]
Bitcoin is, basically, a joke. It is a cool, nerdy idea full of very nice properties which have no empirical grounding from economic point of view. To some, it is a great empirical experiment to test ideas. To others, it is a great way to hide behind their computer screens.
To everyone here supporting Bitcoin. Do you use Bitcoin as a currency or investment? If you primarily use it as an investment, then Bitcoin has already failed.

No, manipulation is not saying that Bitcoin is useless. There is plenty of manipulation on Wall-Street markets, the USD is manipulated by the Fed and other "real currencies" by other central banks. Doesn't mean those currencies and Wall-street markets are useless either.

Since Bitcoin hasn't already failed, I guess, it means that it's not primarily used as an investment.

We all know how well the "real currencies" have worked for those of us who are not the banking class: even not including the recent years of unbridled currency printing, over the past century the USD purchasing power has declined by >26 times.

That worked out great for the bankers and governments by taxing through currency inflation. They were also able to finance 2 world wars of the size impossible without "real currencies", and then cash in on financing the recoveries from them. So, the "real currencies" have been, basically, the real joke the bankers have played for a century on the other classes, and continue to do so.

Considering what's happening now in the sovereign currency wars, remains to be seen what's ultimately revealed to be "a joke" first - "real currencies" or crypto-currencies.

I guess the difference is that Bitcoin could potentially be 100% worthless within the year, while the dollar won't be. That's a level of risk most people are unwilling to take.

jhatka said:   Key question is whether I can get H&B using bitcoin?

Can We Interest You In Some Disney Dollars?

Rajjeq said:   I guess the difference is that Bitcoin could potentially be 100% worthless within the year, while the dollar won't be. That's a level of risk most people are unwilling to take.
That's one difference, and that's fine! No one is being forced to use Bitcoin the way they are forced to use the USD.

Or Bitcoin could potentially follow the trend of the current year, while the dollar won't, at least not in the same direction...


click for Disco
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TechTrooper said:   Rajjeq said:   I guess the difference is that Bitcoin could potentially be 100% worthless within the year, while the dollar won't be. That's a level of risk most people are unwilling to take.
That's one difference, and that's fine! No one is being forced to use Bitcoin the way they are forced to use the USD.

Or Bitcoin could potentially follow the trend of the current year, while the dollar won't, at least not in the same direction...

"Did you know that disco record sales were up 400% for the year ending 1976? If these trends continues... AAY!"

kamalktk said:   TechTrooper said:   >>>
Or Bitcoin could potentially follow the trend of the current year, while the dollar won't, at least not in the same direction...

"Did you know that disco record sales were up 400% for the year ending 1976? If these trends continues... AAY!"

I don't know about Disco records, but I do know that in 1976 gold was averaging about 150 USD?

Silver was about 5 USD.

Platinum was about 150 USD.

You know today's USD prices for those. However, you don't know any better than I, whether Bitcoin will trend in value like things it was designed to simulate, or like obsolete recording media for some antiquated dance.

Skipping 3 Messages...
Ah, a return to the Iraqi Dinar era flame wars.



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