1. The Real Jdbye

    The Real Jdbye Always Remember 30/07/08
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    Every cryptocurrency has a limited supply and coins can only be generated so fast (usually limited by the raw processing power of all the hardware miners at any given time)
    The value is very closely tied to the current difficulty of mining (for the coins that employ "proof of work") and the remaining supply of unmined coins, and the difficulty goes up with every successful mine.
    It also varies widely based on public (and private) interest.

    If you choose the right time to invest, you can make big earnings, far bigger than you usually see with more traditional investments (i.e. stocks) simply because of the higher volatility of it, due to it not being backed by the success or monetary value of a business.
    That also means that conversely, you can easily lose everything if you invest at the wrong time.

    Now seems to be a good time to invest, with the current boom and even PayPal now supporting cryptocurrency directly on their website (but earlier would've been even better), and the rise in value doesn't show any signs of stopping soon.
     
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  2. notimp

    notimp Well-Known Member
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    Says every person already invested. ;)

    For the rest of your posting - thumbs up. :)
     
  3. The Real Jdbye

    The Real Jdbye Always Remember 30/07/08
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    I didn't have the spare money laying around to invest this time around but a friend invested big right before all of this started. I've made a decent (2.5x) return on Bitcoin earlier this year though.

    But yeah, you are right, most people interested in cryptocurrency have already invested, and the best time to invest has already passed. Personally I don't see it stopping before it's reached at least 30K based on past trends (and that's a rather conservative estimate, comparing to what some other people are saying), but I'm no expert nor do I claim to be one.
     
    Last edited by The Real Jdbye, Nov 30, 2020
  4. notimp

    notimp Well-Known Member
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    I mean structurally.

    'Paypal now invested!!11!' Just means the same as 'China now invested!' the same as 'Big banks now invested, because they simply cant ignore it any longer!'.

    Nothing changed fundamentally. Transactions (buy in) have become more easy for more people. Which means the promise of more suckers soon! Which means, value will rise! Get in, while its hot.

    Also the promise of 'at one point, if enough people have bought in, it will stabilize exchange rates (currently driven by pump and dump schemes), because more people have interest in value stability over making a quick buck).

    But nothing changed fundamentally - all the problems are still the same. (But I guess, they also are with gold. For centuries. Its just, that there arent 100 golds out there that are used for pretty much nothing but speculation and value storage in case your country just goes through hyper currency devaluation. But now with the advent of digital, there are. :) )

    The thing is, if you make it 'mo easy' and find more suckers, even the suckers can become heroes - if more people buy in.

    And with interest rates currently at 0% for most people in western economies, this sounds more and more enticing to more people. And I cant prevent them from 'going out to find their luck' - because, you risk some, you loose some - but hey, maybe you get lucky - one more time. Vallue still doubled from 'one point this year' to 'another point this year'.
     
    Last edited by notimp, Nov 30, 2020
  5. Silent_Gunner

    OP Silent_Gunner The Edge of the Soul
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    Wait, so cryptocurrency coinage is made by the hardware miners themselves? Like, it literally generates a new coin or set of coins from coins the investors already got into? Kind of like dividends? Because the big thing I never quite understood is that, OK, so Bitcoin, Ethereum, XRP, Dogecoin, etc. all are created by the hardware miners themselves?

    If I'm to envision cryptocurrency mining to be like the gold rush in the 19th century in the US, in that gold buried underneath the ground was dug up, discovered, and was held in high regard in society back then, where did these cryptocurrencies come from and who or what made them? That's the part that I've always found to be difficult to wrap my head around.

    I know the question sounds of like something out of a creationism vs. evolution or something like abiogenesis debate, but cryptocurrency has a bit more of an immediate impact on the world you and I live in today, and is a bit more relevant IMHO.
     
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  6. The Real Jdbye

    The Real Jdbye Always Remember 30/07/08
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    Bitcoin, the original cryptocurrency, was created by some Satoshi Nakamoto (not their actual name), being decentralized it's effectively hosted by all the miners and the people running the wallet client, and indeed, all the currency is generated by the miners. The original creator has no control over the cryptocurrency once it's deployed (unless they put in a backdoor, but it's all open source and you shouldn't trust any cryptocurrency that's not, there are a lot of scam "get rich quick" schemes out there)
    Most cryptocurrencies operate under this same principle, but some, rather than "proof of work" (relying on raw computing power to generate coins) use "proof of stake" (where coins are generated by people holding at least a minimum amount of the currency in a wallet on their PC and they receive dividends based on that, in addition to the price fluctuation), there are probably other types I'm forgetting but those are the most common.
     
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  7. tabzer

    tabzer GBAtemp Advanced Maniac
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    I don't understand @notimp 's pov. It's hard to keep a speculative position as you see it is finally getting adoption by major banks and businesses.

    Bitcoin, or cryptocurrency, is a hedge against financial systems. The US dollar, or whatever fiat is bound to suffer inflation. If you hold onto a dollar, it will lose its value over time. If you have a long position with bitcoin, it is more likely that you will profit, but who is to say how long is long? Eventually, bitcoin will become more scarce and scattered, with fewer people having a lot of it; and as that time approaches it's easy to see it spiking again like it did when it first approached 20K.

    There is a set amount of bitcoin. The blockchain is its ledger. The machines on the P2P network (miners) all work in competition to solve a cryptography equation that has a difficulty determined by the network's strength (or how many computers are actively trying to solve the equaiton). It's not exactly that a miner mints a bitcoin. It's that a miner is the first to solve the cryptographic puzzle, and the rest of the network is able to verify that work and acknowledge the address of that miner with the reward, as determined by the protocol that every machine agrees with. If a bad actor tries to come in and tries to change the rules, the rest of the network will simply reject it due to not being consistent with what everyone else is saying.

    The only way a bad actor can really overrule the network, is if something called a %51 attack is done. That's where 51% or more of the network (miners) decides on new rules, and rejects the old protocol. The chances of that happening are really slim, as the cost is too great at this point, and the investment to cause fraud with the network would sink the price of the cryptocurrency making the point moot. People fear that governments might try to do something like that.

    I mentioned before that crypto can be a hedge against fiat, but it is also kind of a hedge/ante against state secrets. Bitcoin relies on sha-256 encryption. So the moment that is broken, it is time to flee into the jungle.

    — Posts automatically merged - Please don't double post! —

    People argue that bitcoin is a store of value, a lot. It's true. It's fun to trade with too. But that's very dangerous. These days, the lightning network and other 2nd layer solutions are making transactions possible via other means... so it is definitely scaling one way or another. Another point that @notimp doesn't seem to acknowledge.
     
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  8. notimp

    notimp Well-Known Member
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    Yes, so the thing you are selling is 'distributed ledger', thats the innovation. For that to happen, you need distributed computing power for transaction verification. So you say - people who verify transactions, 'can pay themselves' by generating currency.

    RATE of currency generation is FIXED by the algorithm. (So only disrupted by 'innovation' (so only offset by computing power getting cheaper f.e.). And fixed in a way, that you generate less and less coin as time goes on (presuming it also has become more valuable as more people bought in). But again, rate is fixed. (== No inflation spikes of amount of currency.)

    (Theoretical problem - mining may become not lucrative anymore, at which point you have no transaction verification. So at that point you do a 'stage illusion' like bitcoin already did - get a large amount of asset owners together, fork the protocol to make 'verification per cpu cycle' easier. Call the new thing bitcoin again - and most of the people are happy again.)

    How do you get the rate to be fixed? Only a small part of computation power is used for transaction verification, the much larger part of the power is used to solve a mathematical equation, with only one solution as 'proof of work' - whoever gets to the solution FIRST, gets to generate currency (and verify a bunch of transactions). Your algorithm baked into the currency makes sure the mathematical problem gets much harder over time.

    The algorithm is backed into the 'currency protocol' that is distributed, so it cant be changed. (Unless you fork currency.)

    Who makes sure people dont cheat? Basically a consensus of 'enough other people on the verification backend' which also ensures, that all transactions must be transparent.

    Also you change the people 'confirming transaction' all the time (ideally), so no single person has to be trusted.

    (So most of your innovation is: You standing on a stage shout: "Whats 14x7?" First person raising their hand gets to be the treasurer of your 'club' for 15 minutes. As they cant find out who the next treasurer will be - scheming how to collude to defraud people, becomes harder, also you might want to do a good job, because you get paid in currency. Which means, you dont need a central instance you can trust. In principal.

    In practice - computational cots dictate how many transactions per second you can 'pull'. So how useful your currency is as a currency. Also the ledger (sheet of paper with owes vs has of everyone to everyone ) becomes bigger. Also the more people group together in 'verification clubs' buying better hardware, the higher their probability is to actually get to deal with the next transaction in their hub, which allows for certain schemes. Also if you coordinate buying and selling and or generation of money you can drive pump and dump schemes.

    Mining profits are a factor of supply and demand with only limited transaction capacity at a time (Fee is negotiable).

    edit: Miners are first motivated by 'mined coin mostly', and later more and more by transaction fees (less opportunity to get 'shares of the company'). Maybe. At least in theory. ;) Thats kind of how startups work in the tech sector.. ;)
     
    Last edited by notimp, Nov 30, 2020
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  9. tabzer

    tabzer GBAtemp Advanced Maniac
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    Oh yeah, if you are serious. Get a hardware wallet and learn all the ins and outs of it. Don't trust online wallet generators, as they are only so secure. (As is your computer).

    Whoever recommended www.bitcoinofficial.org is giving bad advice. It didn't exist before 2019 and it is a complete joke to get your private/public keys from something like that. I doubt they were into bitcoin and using it since 2012. Back then, people were using the main bitcoin official client as the wallet, mining with their cpus/fpgas, and using their bitcoin to play poker online.

    It's better to roll dice and generate your own keys with pen and paper than to trust any computer connected to the internet. Hardware wallets are more user friendly and still very secure.

    — Posts automatically merged - Please don't double post! —

    If Bitcoin's hashrate decreases, the network difficulty will reduce as well. I don't know what you are talking about "stage illusion". Bitcoin has forked before to fix errors, but the method of upgrade is how Bitcoin is supposed to function. The consensus never gets rejected and never suffers any downtime.
     
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  10. Bladexdsl

    Bladexdsl ZOMG my posts...it's over 9000!!!
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    your a fool if you do and your encouraging assholes miners PLUS jacking up video card prices
     
  11. notimp

    notimp Well-Known Member
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    Not if they are only playing 'gateway' (exchange/broker). Thats nothing. Thats 'I've made new app, it s so easy to get it now!'.

    There are structural limitations for it to be used in everyday transactions. (Would need several 100.000s+ of verified transactions a second. Have 10.000).

    There are structural necessities for pump and dump schemes to end. Players interested in it as a 'value storage' must own more bitcoin, than players owning coin, trying to coordinate to manipulate price. With what 75% of the currency being situated in asia and owned by a few major players (electricity cheap, custom silicon production advantage), I'm not sure I care so much if paypal now wants to play currency exchange. (Also making more money, if exchange rates are volatile.)
    If there are limits to transaction capacity, that already make it an issue currently, what indicates, that it will ever be a high volume business where people would have more interest in skimming transaction fees than running pump and dump schemes?

    "Banks are getting into it". Yes, but - the financial investment arms. :) The ones interested in volatility and speculation. :)

    But again, nothing of this is an issue - if there are still more suckers out there to be had. :) If value still doubles at one point over the year (and halves over another period). There is ample opportunity for many people to parttake. :)

    Also - the moment you decide to push it to 'a population' as 'digital currency' - likely as a state treasury. Or as facebook. You make sure, it has nothing to do with bitcoin. You just spool up your own currency. Out of thin air. Make sure its value is pegged to 'one ore a basket of' 'real currencies' (in demand, because people have to pay taxes in that currency - even if fiat) - and it has NOTHING to do with the bitcoin market.

    (By then it probably also wont be (edit: 'sufficiently' (as in players cant coordinate)) decentralized anymore. But again, that has little value to most 'stakeholders'. Imho. Unless I'm overlooking something. I'm not a 190 IQ mathwiz. ;) )
     
    Last edited by notimp, Nov 30, 2020
  12. tabzer

    tabzer GBAtemp Advanced Maniac
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    Which is a %180 from a couple years ago when Jamie Daimon was calling it a scam and said JPMorgan would never deal with Bitcoin.

    Sure they would be brokers, but that's also them becoming part of Bitcoin's structure. The social contracts. Of course, the only person who can possess a bitcoin is the person that has their own keys protected from prying eyes.

    Yes, using bitcoin directly to pay for goods is not economic, unless it's big. For things of that matter, I see no problem with using a banking service that manages that. Bitcoin is better used when moving large amounts at a time. Between the social contracts and the actual hard code of bitcoin's protocol, there is unlimited potential with various levels of trust of how bitcoin can be used and relied on.

    As it matures it becomes a lot less susceptible to pump and dumps and becomes more of a constant. The pumps and dumps it faces now is nothing compared when it was jumping between $5 and $250.

    You call everyone suckers, but that's also called an economy. People find value in a currency that separates itself from the value of a fiat--which relies on the integrity of a government and how much they are willing to decrease its vale via inflation with bailouts/grants/and whatever excuse there is to print more money.
     
    Last edited by tabzer, Nov 30, 2020
  13. notimp

    notimp Well-Known Member
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    Yes, as long as more people come in, value increase works. :)

    As suckers also can be heroes if more suckers come in, dont focus so much on the suckers part. :) Many of them probably make more money than I do in a year. To me its just entirely uncertain, where this goes structurally.

    As for the 'social proof' part. Facebook is so much better positioned to scale there than 'neckbeard telling you about crypto..' ;)

    But that doesnt matter, if there is some usecase to be found (that isnt 'national' or 'worldwide currency'). Thats legitimate. And where lets say bitcoin, really, really makes sense. (Apart from being a speculation object. But maybe even thats enough. (Its certainly 'better' than owning a derivative of something, not knowing, if people will honor the contract. Until people dont honor bitcoin contracts anymore.. ;) )
    Question is, at what point does it become interesting for people for other purposes than speculation. And are those purposes likely/logical to be found from todays pov. And would they drive value to 'sustained new heights'.

    Just looking at a trend, saying to yourself 'this will continue' - not really knowing why (because reputation, and new PR and, ...), is a little thin.

    But then again - still ample opportunity for people to make (and lose) money - until we know.
     
    Last edited by notimp, Nov 30, 2020
  14. Ryccardo

    Ryccardo watching Thames TV from London
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    No such thing for bitcoin (as opposed to 3rd party wallet services) - find the private key of an address and you can spend it forever
     
  15. tabzer

    tabzer GBAtemp Advanced Maniac
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    That's pretty disingenuous. It very well could be the same people always increasing its value among themselves. I don't think that element can be removed, only transitioned, which is why it'll always be a portion of my portfolio. The adoption amplifies the effect by a lot, yes. But how is fiat very different? It only takes one bad deal with China for the US dollar to disintegrate with everyone running away from it. It's good to diversify and hedge your investments, but if you hold only fiat and not bitcoin, I think it is lost potential. I've been through several bear markets, but my investment strategy is consistent and mostly non-impulsive, so I end up recovering quite well with the market. It requires a lot of patience. I wouldn't put all your money into it. There are uncertainty elements, and the general consensus is that you shouldn't risk what you wouldn't be willing to lose. Investing always is a form of gambling.

    Using this as an opportunity to pump Libra, a controlled, centralized system and a distribution scheme that puts everyone at a disadvantage from boot? What they are making is pretty often compared to an antithesis of cryptocurrency. Among the worst. There are already other projects and upgrades that have improved scaling by 100x. They'll be more volatile, but they will also mature if they demonstrate unique use case and benefit cryptocurrencies capacity of liquidity.

    Lol with Libra, if facebook decides that you are doing something wrong, they can "delete" your account and take your funds for defying some TOS.

    I am not saying that Libra would be a poor investment option. I'm saying in terms of security, it's an appeal to political authority in the end, with majority of the token already belonging to deep corporate pockets. They already paid very little, while the consumer pays x100-x1000 for the same token.

    — Posts automatically merged - Please don't double post! —

    It was always interesting to me. The pumps and dumps are discouraging, but it's something worth getting desensitized to, imo. The liberation of being able to hold your own, and to send it anywhere in the world is very nice. It's a feeling that I cannot describe. Whether it is worth a lot to others, or a little (I've been on both sides multiple times), it is still mine and at my command in ways nothing else is.

    It will continue as long as the protocol isn't irrecoverably broken. It may suffer from a huge bear market never to reach current highs again in my lifetime. But I will still continue my strategy. I will still continue to appreciate it. I'm sure I'm not alone. If I end up being the sole inheritor of bitcoin due to everyone else's depreciation of it, I'd consider myself to be more lucky than unlucky.
     
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  16. smf

    smf GBAtemp Psycho!
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    It's kinda more complex than that. Bitcoin is just a signed ledger of transactions, every block of transactions is signed by miners and currently you get to keep some bitcoins if you are successful in that.

    The signing process is made intentionally harder to keep pace with the number of people mining, essentially the miners generate random numbers and sign the block until the signature has a particular property. In bitcoin you're looking for signatures with a specified number of zeros. The first person to find it gets the reward (or shares it if they are in a pool of miners).

    There is an upper limit of 21 million bitcoin (although this is believed to be around 100 years before this will be mined).

    When bitcoin started they were essentially free, there are a lot of those early bitcoins sitting in peoples wallets making them (on paper at least) very very rich.

    People buying in now are just gambling. If you'd bought in 5 years ago it was just as much of a gamble, but it looks like it would have paid off. Whether a gamble today will do the same, is just guessing.
     
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  17. notimp

    notimp Well-Known Member
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    I'm not trying to convert you to Libra. :) (Me doesnt like the facebook. ;) ) I'm trying to say - that you have no 'unique selling proposition' and the first mover advantage, can easily be circumvented by regulation, or someone like facebook simply scaling faster in marketing.

    Here is how I think of it (for whatever reason).

    Where is the compound growth. So where is the steady, but lasting growth opportunity.

    'Speculating' makes sense, if you want to 'hit it big' (high risk, high reward), if you already have 'I'm ok with this' money, and want to grow even bigger (lets say bigger than the 'opportunity cap' of bitcoin), you look for compound interest.

    (Business opportunities, growing year over year (the things millennials arent allowed to have anymore, because climate change.. ;) ).)

    And all I see is pump and dump exchangerate spikes (which have decreased in frequency), but no sustained growth. Growth as far as I can tell is based on marketing opportunity. At which point you ask 'is this the right thing for the job?' at which point you end up at 'what job?'. And thats not good.. ;)
     
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  18. tabzer

    tabzer GBAtemp Advanced Maniac
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    I agree with you on all of those points except this:

    Sustained growth is a point of view. If you bought at $3,000, saw the spike to $20,000, and then it dropped back down to $4,000 and bounced around between $9,000 and $15,000... you are still looking at a sustained growth of a minimal of $1,000 from your buy in. It depends on your frame of reference. If you bought ONLY at $20,000 a year ago, you are still sitting at a loss. But if you kept a consistent investment strategy, all those times you bought at $11,000 and $7,000 would be paying off. Bitcoin seems to have a pattern of gigantic spikes when it hits a a new benchmark on social/political standings. It gets to crazy highs, and suffers major downfalls, but the overall mean seems to be a somewhat parabolic increase.

    The job of bitcoin is to be a censorship-resistant form of transferring and storing value. Volatile, and an experiment, but it is a project that I'm glad to be apart of. Libra will never replace this property of Bitcoin, so I see them co-existing. Bitcoin, being first, and the example, is the litmus test of cryptocurrency at large. The proof it is trying to approach is "can this be secure forever", and there will be no conclusion in terms of forever. The secondary option is, "at what point will it fail?". It's a gambler's epitome.
     
    Last edited by tabzer, Nov 30, 2020
  19. notimp

    notimp Well-Known Member
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    Thats very limited use. At around 1mio USD investment, banks are giving you the same services when it comes to transactions ("hide it from the gov" - except if the FBI is showing up at your door, because they tracked swift - roughly).

    If facebook is taking the 'volatile exchange rate market' (currently its unsure, because they play ball with local central banks and seem to bind themselves to individual currencies)), which is people wanting to convert money to USD fast, because their own currency devalues quite rapidly - taking into account the exchangerate costs -- whats left as a market seems 'hard to grow'.

    But then, lower opportunity costs 'because you can do it in your paypal account' might provoke a usage pattern, that scales unforseeably well and... One can dream.. ;)

    Last time I checked, every one was still hyped for no reason on writing papers on the prevention of international crypto based tax fraud, which has me immediately thinking "on how big of a market". None of the bigger players needs it.

    My internal reference model for bitcoin is Western Union x2 - maybe. ;) Without having ever looked at the numbers (amount of cash that is currently syphoned out of China f.e.) too closely.
     
  20. tabzer

    tabzer GBAtemp Advanced Maniac
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    Banks aren't censorship resistant, and their use is stapled to whatever currency that you are using; which is likely to be inflationary. Bitcoin is like non-inflationary asset you can "store under the mattress" that you can transfer far away on a whim. The service has no downtime and aren't prone to audits or legal hang-ups, for any reason. The only reason a transaction would hang is because the blocks are full and the fee that you offered wasn't competitive enough to push it to the front of the queue--an aspect that is constantly being addressed and worked on. I don't see banks going away because of bitcoin, but to say that banks offer the same thing as bitcoin is negligent.

    Again, with the Western Union prospect, you are still dealing with the same aspects I mentioned above. I'm not trying to argue that Bitcoin is needed by bigger players. I'm suggesting that it has its own unique appeal that is liberating to the individual and gives a sense of self-authority. I personally prefer it to gold for a variety of reasons if you are interested. It is something the smaller players will chase, and the bigger players will eventually be compelled to follow-as we are seeing at its current phase of adoption.
     
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