/ Bitcoin again

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ablackett - on 31 Oct 2017
I couldn't find a thread about bitcoin since 2013, and a few people back then said it wasn't worth the gamble. Turns out it has gone up more than 100x since 2013. Did anyone on here buy a significant amount back then? If so have you managed to hang onto it until now?

I have been kicking myself for not getting round to buying any since about 2012, so have finally got round to buying a bit. The way I see it the value will continue to increase while the user base is still growing, and estimates are that the user base has doubled over the last 12 months. A lot of people i know are interested in getting some, but haven't got round to it, suggesting to me that there is still a lot of room for growth.

It surprised me, when I did get round to it, how easy it was to sign up to a website, stick in my credit card and then feel a bit sick as I wondered who the hell I had just sent my money to, but it seems legit and has gone up over 50% in the last month so i'm happy at the moment. It has risen over 7x this year, another 3 years of that and a £200 investment will be worth close to £70k.

Anyone else on here taking a punt at the moment, or anyone willing to put it on record that it's not worth the punt at the risk of looking silly in 3 years time?!
Bjartur i Sumarhus on 31 Oct 2017
In reply to ablackett:

I take it you want us all to join you so your investment goes up ;-)

Pretty sure there is a saying that goes something like this...the time to sell is when you hear of climbers on UKC are piling in....

in all seriousness, hope it works out well for you
rossowen - on 31 Oct 2017
In reply to ablackett:

Looks like Chicargo merchandile exchange are about to introduce Bitcoin futures contracts, which could introduce some institutional cash to the market and could give it another big boost.

I don't have any Bitcoin myself but have some of the other cryptos like ether, ripple, ltc etc.. will just hold on to them for 20 years and see what happens
In reply to ablackett:

Been looking at this stuff myself. The problem I have is that I don't really get it, and I am reluctant to invest in something that I don't really get.

I can just about grasp the rudiments of the blockchain, but what no-one seems to be able to explain in terms which I can understand is how 'cryptocurrency mining' works. All the idiot's guides I have read just kind of gloss over this point. The real-world applications are not obvious.

Has anyone got any 'super idiot's guide' links?

Alan
ablackett - on 31 Oct 2017
In reply to Alan James - UKC and UKH:

I have tried to understand mining, I thought it was all about finding solution to "hard maths problems" and so creating new bitcoin, I have read a couple of things recently that suggest that mining is also about looking after the blockchain and helping to manage the transactions, if so i don't understand why people would do that 'helping out' bit when all the bitcoins run out in a year or so.

I decided if I was willing to loose all the money I stick in, it doesn't really matter if I understand it or not.
ablackett - on 31 Oct 2017
In reply to Bjartur i Sumarhus:

> I take it you want us all to join you so your investment goes up ;-)

Yes. A fella at work is really into this, he tells anyone who will listen about all the crypto currency dealings he has. He has got a couple of others interested, and they are not telling everyone who will listen.

The whole thing is a massive pyramid scheme, it will keep going up for a while, then either stagnate or crash. It's going to be fun finding out how high it goes though!
Shani - on 31 Oct 2017
In reply to ablackett:

>...mining is also about looking after the blockchain and helping to manage the transactions, if so i don't understand why people would do that 'helping out' bit when all the bitcoins run out in a year or so.

That's the security feature implicit in the blockchain. It's what stops counterfeit Bitcoin being generated. Think of it as a digital watermark that ensures the scarcity of Bitcoin and imbues each Bitcoin with a 'trust value' in its authenticity.
dread-i - on 31 Oct 2017
In reply to rossowen:

>Looks like Chicargo merchandile exchange are about to introduce Bitcoin futures contracts, which could introduce some institutional cash to the market and could give it another big boost.

I get the impression that the big institutions want to bypass bitcoin, and run their own. They have dipped their toes in, because of the massive profits in bitcoin.

There are a number of other more useful crypto currencies and block chain technologies out there. Smart contracts, for example, look to replace entire eco systems of parasitic middle men. This is good if you're a consumer, not so great if you're a facilitator and make money from other peoples transactions (think: estate agents, share brokers etc). However, if you own the platform, then you can still have a finger in the pie.

Bitcoin on its own is a rather volatile store of value. There have been a number of well publicized hacks against exchanges. Once the big banks get up to speed and start using their own brand currencies to settle transactions, the rest of the world will quickly follow. Why use technology backed by drug dealers, when you can use one backed by your bank? That's when it will really take off.
RomTheBear on 31 Oct 2017
In reply to ablackett:
> I couldn't find a thread about bitcoin since 2013, and a few people back then said it wasn't worth the gamble. Turns out it has gone up more than 100x since 2013. Did anyone on here buy a significant amount back then? If so have you managed to hang onto it until now?

I bought hundreds of them for a few quids when the whole thing started and they were worth pennies...
Sold them later on for a few thousand pounds, thinking It wouldn’t got any higher and would crash and burn.

Had I waited a few years, I’d have 2 millions in the bank now, but never mind ;-)
Post edited at 21:12
RomTheBear on 31 Oct 2017
In reply to ablackett:
> I have tried to understand mining, I thought it was all about finding solution to "hard maths problems" and so creating new bitcoin, I have read a couple of things recently that suggest that mining is also about looking after the blockchain and helping to manage the transactions, if so i don't understand why people would do that 'helping out' bit when all the bitcoins run out in a year or so.

Yes, essentially for a new block to be accepted in the network, a computational problem has to be solved, and when that problem is solved, new bitcoins are added to that block for the one who solves it, but they also get a share of transaction fees.

Once all the bitcoins are mined miners will be rewarded only through transactions fees.
Post edited at 21:17
balmybaldwin - on 31 Oct 2017
In reply to ablackett:

I'm interested, but there's also a chance of a bubble burst...

https://www.theguardian.com/technology/2017/oct/08/cryptocurrencies-bitcoin-ethereum-bubble

May "throw away" £100 and see where it goes
tom_in_edinburgh - on 01 Nov 2017
In reply to dread-i:

> Bitcoin on its own is a rather volatile store of value. There have been a number of well publicized hacks against exchanges. Once the big banks get up to speed and start using their own brand currencies to settle transactions, the rest of the world will quickly follow. Why use technology backed by drug dealers, when you can use one backed by your bank? That's when it will really take off.

Why buy stuff on the web from Amazon when you could buy it from John Lewis or Tesco?

Banks can play with blockchain the same way as bricks and mortar retailers can play with internet sales but fundamentally the benefit of blockchain is you don't need a trusted third party like a bank and the fundamental benefit of internet retail is you don't need bricks and mortar shops.


A Longleat Boulderer - on 01 Nov 2017
In reply to ablackett:

I bought a couple in 2012. Sold them in 2013. Made some half decent cash and was happy with the risk of losing the comparatively small initial investment.

Yes... it may well still keep climbing. But it may well also pop. Now is not the time to buy unless you're happy to lose a lot of money.
Ben_Climber - on 01 Nov 2017
In reply to ablackett:

Owned some for about a year now. They have gone up in value nicely in that time.

I did look into the prospect of mining. After of plenty of research it seems that mining on a small amateur basis just is not that profitable. You need a warehouse full of hardware to make it worth it.

The Lemming - on 01 Nov 2017
In reply to Ben_Climber:

> You need a warehouse full of hardware to make it worth it.

Could government states, with access to some serious computing power mine for money too?

Shani - on 01 Nov 2017
In reply to The Lemming:

> Could government states, with access to some serious computing power mine for money too?

Yes. But the cost of mining, makes it economically unfeasible.
dread-i - on 01 Nov 2017
In reply to The Lemming:

> Could government states, with access to some serious computing power mine for money too?

The gov has access to serious man power. Could they not open a mine and dig for gold? Same argument.

If you start your own currency, then you can mine the first units quicker than with an established currency. It takes longer to mine, the more units are out there. This is why there are a lot of ICO's. People want to get in on the ground floor.

What is showing up more now, is that some web sites will run a coin miner of some sort in your browser when you visit. This takes the place of adverts to generate money for the site, at the expense of your cpu time.
The Lemming - on 01 Nov 2017
In reply to dread-i:


> What is showing up more now, is that some web sites will run a coin miner of some sort in your browser when you visit. This takes the place of adverts to generate money for the site, at the expense of your cpu time.


The Pirate Bay tried this and the user base got most upset which is a bit rich of them considering they use the site to acquire stuff.

How about a masive botnet mining quietly in the background?

Rather than infecting millions of computers with ransomeware, which revel's its presence with a big sign saying that your computer is encrypted with tough luck signs demanding money, those computers could quietly mine for virtual gold. Those botnets could run for years quietly mining unobserved.

The internet could become one global mining tool which becomes so successful that it makes money as readily available as leaves on the world's trees. You could have images of Marvin the paranoid android on the coins.

If google, facebook and amazon can make money from advertising then why not turn the entire internet into a money making machine by mining for digital coins?

Within a short space of time the concept of money could become irrelevant and we end up in a Star Treck eutopia/dystopia where money is irradiated.

What if a nation state instructed all its citizens to install tiny mining programs in their web browsers, for the greater good of their nation?
trouserburp - on 01 Nov 2017
In reply to ablackett:

Had a £100 punt in 2014 and watched it stagnate for a couple of years - too much effort to sell it but guess my laziness paid off! (if I sell it before a complete crash, which I probably won't). Got £10 litecoin as well which looks like did even better

So long as you see it as a gamble not an investment and can take the loss - still a good punt I think

Focuses the mind on the fickleness of wealth
tom_in_edinburgh - on 01 Nov 2017
In reply to The Lemming:

> What if a nation state instructed all its citizens to install tiny mining programs in their web browsers, for the greater good of their nation?

It's not going to happen with Bitcoin because PCs even PCs with graphics cards are crap at mining Bitcoin compared with special purpose ASIC chips. Can't remember the actual numbers offhand but its an extreme difference like more than 1,000 x less efficient. The difficulty in Bitcoin mining is so high that anyone who isn't using ASICs will pay far more for the electricity than the value of the Bitcoin.

Even a botnet where someone else pays for the electricity would be a waste of time because there are better things to do with the botnet than mine Bitcoin, what you'd actually do is mine one of the other coins, maybe Ethereum which is designed to be mined on PCs.

Chris the Tall - on 01 Nov 2017
In reply to ablackett:

At the risk of being boring, I would question whether it was an ethical thing to invest in

The more I read about it, the more it sounds like a bubble which will inevitably burst at some point, but the question is when. And I fully appreciate I don't understand the details. Apparently bitcoin mining can be very power hungry. And there is the issue of the complicity with the dark web and all manner of dubious dealings.

But then again, gold and diamond mining isn't very ethical either. We have a huge financial sector which focuses almost entirely on the accumulation of wealth rather than the fair exchange of goods and services. Money, Shares and investments ought to be used to lubricate the wheels of industry, but has become an industry itself, yet produces nothing.

If you have money to invest, do you want to invest it in something you believe in ? Or something you don't understand but which has high returns ?
Ben_Climber - on 01 Nov 2017
In reply to The Lemming:

Yes, i see no reason why they couldn't. That said I honestly think the profitability of mining has declined to a point where anyone that isn't already set up on a big scale is wasting their time. You need good kit and very cheap electricity rates!
If Bitcoin gets bigger and there are millions more transactions happening then it may be worth reconsidering.

Like others have said you have to see it as a gamble and be willing to lose the money. That said if you look at how its value has been rising in recent years then it seems like a safer bet than going to the casino!



Ben_Climber - on 01 Nov 2017
In reply to Chris the Tall:

> If you have money to invest, do you want to invest it in something you believe in ? Or something you don't understand but which has high returns ?

An interesting point. Do you think that the investment opportunities that are likely to yield the most money are always going to be ethical? If you dig around enough i'm sure you can find something questionable or unethical in most larger companies. The flip side is you find an opportunity that is smaller and transparent and you believe in, but will this be a worthwhile financial investment. I doubt it.
I have a feeling that the majority of people would choose the higher returns and less understanding option.
I may be completely wrong though!


Chris the Tall - on 01 Nov 2017
In reply to Ben_Climber:

> Do you think that the investment opportunities that are likely to yield the most money are always going to be ethical?

Quite the opposite ! I seem to remember a character in an Iain Banks novel who talked about setting up an unethical fund - just investing in those companies the ethical funds avoid - and reaping the rewards. I think it may have been Complicity, but can't remember if he was the guy who ended up in the butcher's window.

> If you dig around enough i'm sure you can find something questionable or unethical in most larger companies.

Probably not much digging required. I only own shares directly in one company - HSBC - because I used to work for them and haven't needed to cash them in. Hardly the purest, although I would point out that most of the recent scandals have involved banks that they have acquired, so it isn't as simple as some would have you believe. Then again all the bad publicity they have received doesn't get reflected in the share price, which is an indication that profits wins over ethics.

> The flip side is you find an opportunity that is smaller and transparent and you believe in, but will this be a worthwhile financial investment. I doubt it.

> I have a feeling that the majority of people would choose the higher returns and less understanding option.

> I may be completely wrong though!

I think you are right, but ethics are important to some people. I've just opened a Triodos ISA - I'm not expecting huge returns but I'm happy that my money is being invested in projects such as renewable energy. No doubt someone will be along to tell me that it's all greenwash and I'm just a deluded guardian reading tree-hugging libtard snowflake.

Bjartur i Sumarhus on 01 Nov 2017
In reply to Chris the Tall:
"No doubt someone will be along to tell me that it's all greenwash and I'm just a deluded guardian reading tree-hugging libtard snowflake."

No need, you made it quite clear all on your own
aln - on 01 Nov 2017
In reply to Chris the Tall:

Thanks, I still hate you and I hate the haters too! And I love everyone. I love you.
krikoman - on 01 Nov 2017
In reply to Ben_Climber:
> I have a feeling that the majority of people would choose the higher returns and less understanding option.

> I may be completely wrong though!

Not everyone, I wouldn't invest in tobacco, arms or gambling, to name a few.

I've done a bit on money lending which is not too bad and helps people steer away from Wonga etc.

I don't really follow the stock and it's only a little bit of money, I don't have the time to be a real investor. But I don't think I'll ever be rich from my investments

Bitcoin, is a massive boost for gangsters, drugs and arms dealers, I don't think I'l be putting my money in for those reasons.
Post edited at 19:53
Paulos - on 02 Nov 2017
In reply to Bjartur i Sumarhus:

Couldn't agree more. I thought it looked like a bubble back in 2013 and have recently been tempted to have a punt but then I thought, as you say, everyone has heard about it now.
galpinos on 02 Nov 2017
In reply to Ben_Climber:

> I have a feeling that the majority of people would choose the higher returns and less understanding option.

In the same way people will complain about Amazon's tax arrangements, but still buy from them "because it's just so cheap and easy". Doesn't mean they are not a total hypocrite.

I personally DO make the effort to spend money and invest (very little) in companies that i believe in but I'm under no illusion that if I dug into my company pension there'd be a few undesirables lurking in there. It's not all about a quick buck and undercutting the high street for a bargain.

JLS on 02 Nov 2017
In reply to ablackett:

So, if one were going to take a £100 punt, where exactly would one go to make such a purchase?

Anyone got a link to reputably retailer of Bitcoin?
Ben_Climber - on 02 Nov 2017
In reply to JLS:

I use an app called Blockchain. Do it all from my iPhone.
It seems secure and very easy to use.

Bitcoin is doing very well this week
JLS on 02 Nov 2017
In reply to Ben_Climber:

>"Bitcoin is doing very well this week"
Damn,i should have bought last week.
Bjartur i Sumarhus on 02 Nov 2017
In reply to Ben_Climber: Unsurprisingly, the powers that be don't like it...

Bitcoin Is `Very Definition' of a Bubble, Credit Suisse CEO Says
By Jan-Henrik Förster
(Bloomberg) -- The speculation around bitcoin is the “very definition of a bubble,” Credit Suisse Group AG Chief Executive Officer Tidjane Thiam said as the currency exceeded $7,000 for the first time.
Bankers are steering clear of bitcoin out of concern that criminals could use its anonymity to hide their activities, he said Thursday at a news conference in Zurich.

“Most banks in the current state of regulation have little or no appetite to get involved in a currency which has such anti-money laundering challenges,” he said. “From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble.”
Other bankers have also expressed skepticism about the currency. JPMorgan Chase & Co Chief Executive Officer Jamie Dimon has called bitcoin “a fraud” that will eventually blow up.UBS Group AG Chairman Axel Weber said last month that bitcoin has no “intrinsic value” because it’s not secured by underlying assets.
GreatApe - on 02 Nov 2017
In reply to JLS:

I've used localbitcoins

I bought a few for £1000 a few years back, and sold them for a total of £6k
Ben_Climber - on 02 Nov 2017
In reply to Bjartur i Sumarhus:

Everyone keeps telling me it is a bubble that will burst and I will lose everything.
I am prepared to lose what I put in as I understand the risks.

However I am skeptical of the naysayers, everyone that seems to criticise it works in an industry that Bitcoin threatens/ has an effect on. It feels like scaremongering.

Since it was introduced it has been steadily gaining in value and had a huge rise in the last 2 years. This isn't something new and has shown positive growth for 8 years now.

If you use the statistics in front of you it seems like a worthwhile investment. I have made some ok money and paid for a holiday this year with it so I don't listen to the negative comments.

That said, it will probably crash tomorrow and I will be eating my words!
tom_in_edinburgh - on 02 Nov 2017
In reply to JLS:

I'd go to the US put money into Coinbase and then buy on the associated GDAX exchange. I probably wouldn't buy today if the plan is to buy and forget about it, maybe not for a couple of weeks until after the fork plays out. There is massive volatility at the moment, if you buy you will quite likely be up or down 25% within a day or two and quite likely sometimes up 25% and sometimes down 25%. Also you might want to split between Bitcoin and Ethereum to hedge a bit.

Not localbitcoins.

Maybe use Paypal in between your credit card/bank account and the Bitcoin exchange. There are repeated stories of banks terminating accounts from people they think are buying/selling Bitcoin, its getting more mainstream now so maybe less of a concern now but even so.
Bjartur i Sumarhus on 02 Nov 2017
In reply to Ben_Climber:

I agree, I think it makes a sensible part of a portfolio. Jamie Dimon saying he would sack any employees he found that had bought some was ridiculous. Does seem like some wagon circling going on at the banks
JLS on 02 Nov 2017
In reply to Bjartur i Sumarhus:

Still, even if you accept it's a bubble it might currently still be worth a punt with an insignificant stake.
It would seem like I could gamble my £100 with some reasonable hope that I could double my money within four months, take back my initial stake, then let the balance roll... Anything I got out of it after that would be free money.

I'm now wondering what would be a good on going draw-down strategy that provides a good return and an ever increasing balance while acknowledging at some point the bubble will burst...
Shani - on 02 Nov 2017
In reply to Ben_Climber:

> Everyone keeps telling me it is a bubble that will burst and I will lose everything.

Why would it crash? It's volatile because it's new, but it has strengths other currencies lack (it cannot be devalued by the equivalent of printing money, nor can it be forged, nor can it be politically influenced by interest rate changes).

There is 'nothing' behind it, but then there is no gold standard or equivalent behind any currency. All money is premised on faith. Most new money in our economy is electronic and simply spun up out of thin air by commercial banks.

The reason banks deride Bitcoin is because it removes their middleman influence. Bankers do VERY little of benefit to the modern economy - they're not producers of real things - just gamblers on a debt model of money creation. Bitcoin bypasses their parasitic ways.
ablackett - on 02 Nov 2017
In reply to Ben_Climber:

I use blockchain.info also, it seems legit but even so I had a sick feeling in the pit of my stomach when I sent off the money and had no idea what I had got for it.

Also worth pointing out that none of the online wallets have password reset options, so if you forget your password you are knackered, unless you have backed it up with your 12 word phrase written down and stored under your floorboards!

Up 70% for the month, at this rate we will all be millionaires in a couple of years!
MG - on 02 Nov 2017
JLS on 02 Nov 2017
In reply to ablackett:

>"Up 70% for the month, at this rate we will all be millionaires in a couple of years!"

Yeah, I had great fun this afternoon looking at spread sheets which showed my proposed £100 would be £32,000,000 in three years despite taking a 15% "dividend" every month to ensure I was making some money on of the scheme, in the event that the bubble burst before I was a millionaire.
Ben_Climber - on 03 Nov 2017
In reply to JLS:

Solid maths! I like it
elsewhere on 03 Nov 2017
In reply to Shani:

> Why would it crash?

Faith is required but can be lost.

Plausible & implausible reasons for loss of faith might include: power cut, network failure, discovery of a cryptographic weakness, made illegal so it becomes mostly unusable, a keystroke logger that targets bitcoin wallets, denial of service attack, fraud/hacking of bitcoin exchanges , a competing blockchain perceived to be better or lack of adoption because people don't understand it.

It is very clever and very innovative though.



Shani - on 03 Nov 2017
In reply to elsewhere:

> Faith is required but can be lost.

> Plausible & implausible reasons for loss of faith might include: power cut, network failure, discovery of a cryptographic weakness, made illegal so it becomes mostly unusable, a keystroke logger that targets bitcoin wallets, denial of service attack, fraud/hacking of bitcoin exchanges , a competing blockchain perceived to be better or lack of adoption because people don't understand it.

> It is very clever and very innovative though.

Bitcoin is distributed, so powercuts, legality and most other of those problems cannot affect it. Cryptographic weakness is significant on the back of AI and quantum computing - but then that would render the whole of electronic financial transactions unsecure, so there would be bigger fish to fry. The making of it illegal is also interesting - but as it is beyond the reach of governments, and as governments cannot control electronic borders, again, there is nothing they can do to stop people valuing Bitcoin, using Bitcoin, and being willing to trade in it.

Keystroke logging and wallet vulnerabilities (mobile wallets are not as secure as website wallets), is simple theft - and would undermine confidence. So yes, that is a weakness - there is no fall back authority to appeal to. Same if you forget your passwords in a 'brain wallet'. Once lost, Bitcoins are gone forever.
remus - on 03 Nov 2017
In reply to Shani:

> it is beyond the reach of governments, and as governments cannot control electronic borders, again, there is nothing they can do to stop people valuing Bitcoin, using Bitcoin, and being willing to trade in it.

That's the theory, but the reality is that most suitably organised governments can do a lot to make using bitcoin a real pain in the ass, to the extent that most people won't bother using it. Money that most people won't use isn't very valuable.
elsewhere on 03 Nov 2017
In reply to Shani:
"nothing they can do to stop people valuing Bitcoin, using Bitcoin, and being willing to trade in it."

That might be true for a geek in a democracy but would the general public dare bypass the Great Firewall of China if they banned bitcoin?

Your faith is strong.


elsewhere on 03 Nov 2017
In reply to remus:

> That's the theory, but the reality is that most suitably organised governments can do a lot to make using bitcoin a real pain in the ass, to the extent that most people won't bother using it. Money that most people won't use isn't very valuable.

That's it. They can't stop people valuing heroin, using heroin, and being willing to trade heroin but they have stopped it being an everyday investment or currency for the general public.
Shani - on 03 Nov 2017
In reply to elsewhere:

That might be true for a geek in a democracy but would the general public dare bypass the Great Firewall of China if they banned bitcoin?

It is quite easy to bypass network controls through spoofing, obfuscation and encryption. You can spend Bitcon via QR codes. As such, it cannot be stopped.

> That's it. They can't stop people valuing heroin, using heroin, and being willing to trade heroin but they have stopped it being an everyday investment or currency for the general public.

But you can't trade heroin in the blink of an eye to the other side of the world. In fact you can use a 'brain wallet' and there is NOTHING material for the authorities to actually control.

Bitcoin has incredible utility. Hence my faith!
elsewhere on 03 Nov 2017
In reply to Shani:
> It is quite easy to bypass network controls through spoofing, obfuscation and encryption. You can spend Bitcon via QR codes. As such, it cannot be stopped.

The general public would have trust a tool the don't really understand to do that and cross their fingers that the tool hadn't been cracked assuming the download wasn't blocked.
Post edited at 10:41
daWalt on 03 Nov 2017
In reply to Shani:

> [Bitcoin] do[es] VERY little of benefit to the modern economy - [they are] not producers of real things - [Bitcoin investors are] just gamblers on a debt model of money creation.

that's better
Martin McKenna - UKC - on 03 Nov 2017
In reply to ablackett:

The problem I have with Bitcoin is it's just to damn good to be true. It looks like an absolutely massive bubble and at some point it's all going to come crashing down, the value of bitcoin will be almost worthless and lots of people are going to lose a lot of money.

I think crypo-currency does have a future, but it's in it's infancy and I feel like it's playing out right now like the .com bubble.

I've watched a few documentaries on the technology behind mining, the types of math problems miners are crunching away at and how bitcoins are generated - it's totally fascinating.

I'd consider taking a punt on Bitcoin or another crypto-currency with a small investment, but if I did I would mentally acknowledge prepare myself for losing it all. I think if you can't afford to lose it all, investing in bitcoin or something else is very risky!
Shani - on 03 Nov 2017
In reply to Martin McKenna - UKC:
Don't let the 'bubble' around it cloud your judgement of its value. There are bubbles around many assets at the moment - fomented by our current model of money creation by commercial banks - hence the stock market and property bubble (in fact our weak financial conduct laws are seeing a wash of dirty money through London property. It can't last for ever). Property and stock market crashes are testament to the bubble effect.

Bitcoin is here to stay. I can't say whether it is worth its current value, but it is in MANY ways superior to conventional money, although it is not without risk and is certainly volatile.
Post edited at 11:36
Martin McKenna - UKC - on 03 Nov 2017
In reply to Shani:

> Don't let the 'bubble' around it cloud your judgement of its value. There are bubbles around many assets at the moment - fomented by our current model of money creation by commercial banks - hence the stock market and property bubble (in fact our weak financial conduct laws are seeing a wash of dirty money through London property. It can't last for ever). Property and stock market crashes are testament to the bubble effect.

You see, that philosophy grinds with me though. Lots of people acknowledge there is a bubble and when the whole thing comes crashing down there will be winners and losers. Stuff like this just leads to turmoil, instability and I think it promotes imbalance of wealth.

On a more general note, I just have issues with the whole economic system where people seem to be making money from money in vast quantities on stuff like the stock market and currency trading. I've always thought it was odd that people find it perfectly acceptable that no one can explain how parts of this system work.

Obviously investing money is a good thing to do, and it's required to promote growth in economies and get things done, but whenever a system is so complex that no one can really understand why it is valued at such a price, I get very uneasy. I'd rather not get involved, stick to my principles and be a little worse off (potentially). Sorry, a bit off topic, it just annoys me slightly!!!
tom_in_edinburgh - on 03 Nov 2017
In reply to Martin McKenna - UKC:

> I think crypo-currency does have a future, but it's in it's infancy and I feel like it's playing out right now like the .com bubble.

It is, because it is exactly the same kind of thing. Blockchain is a fundamental technology which can and will disrupt massive industries. Any financial industry which is built on being a trusted third party which maintains a ledger is vulnerable because blockchain takes away their fundamental value just like internet services attack the fundamental value of bricks-and-mortar shops.

The question is what stage of the blockchain 'bubble' are we at. My view is we are at a relatively early stage, the amount of money in crypto currency is still tiny compared with that in fiat currencies and financial markets so there are years, probably a decade of rapid growth left. In that time there will be multiple bubbles but in the end, just as with .com the value of the sector will be massively larger and there will be some huge, non-bubble, businesses/currencies.

Will Bitcoin be the AltaVista, the Yahoo or the Facebook of blockchain? It's too early to tell, it's certainly the leader in market cap by a long way now, although arguably not the leader in technology and it does have some real issues. Putting in small amounts of money regularly (dollar cost averaging), splitting it between Bitcoin and Ethereum and keeping an eye on it in case BitCoin turns out to be AltaVista rather than Facebook would seem like a reasonable strategy.



Shani - on 03 Nov 2017
In reply to Martin McKenna - UKC:

> You see, that philosophy grinds with me though. Lots of people acknowledge there is a bubble and when the whole thing comes crashing down there will be winners and losers. Stuff like this just leads to turmoil, instability and I think it promotes imbalance of wealth.

> On a more general note, I just have issues with the whole economic system where people seem to be making money from money in vast quantities on stuff like the stock market and currency trading. I've always thought it was odd that people find it perfectly acceptable that no one can explain how parts of this system work.

> Obviously investing money is a good thing to do, and it's required to promote growth in economies and get things done, but whenever a system is so complex that no one can really understand why it is valued at such a price, I get very uneasy. I'd rather not get involved, stick to my principles and be a little worse off (potentially). Sorry, a bit off topic, it just annoys me slightly!!!

I agree. I mean what is behind the GBP? What is behind our current 'recovery'? It is all just money being sloshed around and very little substantive.

Money is created out of thin air. Somehting like 97% of money is created by commercial banks (not the BoE or the government as many people assume! That money is loaned out by banks - but they can either risk loaning out to small business or for mortgages. If they loan to a small business there is a big risk, and if the gamble fails, then there is just a load of second hand computers and some tools to flog, in a bid to recoup costs. Now if banks loan for mortgages, if the borrower defaults, there is a large asset there for sale. So mortgages are a much safer bet.

This approach is why we have seen a housing bubble brewing. Banks chose the safer option of mortgage lending. But the problem is, although house prices rise, it does nothing for GDP. The amount of 'stuff' we produce is not impacted by rising house prices. Thus we have stagnation. And as commercial banks direct lending, we have a lack of investment in both infrastructure and 'real' things. that create jobs and wealth through innovation.

So we are trapped in a model where salaries are stagnating and house prices are rising. Thus the poor are forced to rent, and are unlikely to own a home or to ever buy. Not just the poor, but our young people/our children.

And with cyclical crashes, the poorest indebted homeowners are cleared out of homeownership and more wealth is consequently concentrated towards the wealthy who can weather the storm and cash in on the price drop.

It is a destructive debt model which I see us trapped in for decades. it won't change because the government has already shown itself willing to mutualise commercial bank debts upon the taxpayer.
dommc on 03 Nov 2017
An interesting point made regarding Bitcoin:
https://twitter.com/OddLetters/status/926098919859281925

"F--- your imaginary techno utopia built out of my burning world", in response to the fact that one Bitcoin transaction now allegedly uses as much energy as your house in a week.
tom_in_edinburgh - on 03 Nov 2017
In reply to dommc:

> "F--- your imaginary techno utopia built out of my burning world", in response to the fact that one Bitcoin transaction now allegedly uses as much energy as your house in a week.

As an argument against Blockchain in general this doesn't fly. Yes, Bitcoin currently has a stupid Proof of Work algorithm but technology evolves. Ethereum is swapping from Proof of Work to Proof of Stake: in proof of stake the guarantee is made by people putting coins at risk rather than doing difficult computations so there's no energy consumption issue. Bitcoin will evolve or die like every other technology. If you look at what people called WiFi or Ethernet 10 years ago it was a lot less efficient than what we call WiFi or Ethernet today. Same will happen with Bitcoin and most people won't even notice, if Bitcoin doesn't evolve one of the many other crypto coins will kill it.

Shani - on 03 Nov 2017
In reply to tom_in_edinburgh:

> As an argument against Blockchain in general this doesn't fly. Yes, Bitcoin currently has a stupid Proof of Work algorithm but technology evolves. Ethereum is swapping from Proof of Work to Proof of Stake: in proof of stake the guarantee is made by people putting coins at risk rather than doing difficult computations so there's no energy consumption issue. Bitcoin will evolve or die like every other technology. If you look at what people called WiFi or Ethernet 10 years ago it was a lot less efficient than what we call WiFi or Ethernet today. Same will happen with Bitcoin and most people won't even notice, if Bitcoin doesn't evolve one of the many other crypto coins will kill it.

The computations undertaken are fundamental to the distributed bookeeping which underpins Bitcoin. So even with one very smart computer - or several, over 50% of the bookeeping clients need to agree on the blockchain, the transaction for which neeeds to be accepted which takes time to cordinate and distribute. Also, Bitcoins are finite - so there is a floor to Bitcoins value.

Satoshi really has thought of everything!
tom_in_edinburgh - on 03 Nov 2017
In reply to Shani:

> Satoshi really has thought of everything!

Not really, I don't buy into the Satoshi hero worship. He wasn't the first to propose a crypto currency, his contribution was to come up with a workable one at a time the market was ready. SHA256 was not a great choice for a PoW algorithm. There are lots of coins with better PoW, for example Ethereum's current PoW is far better because it is very difficult to implement on ASIC. Because Satoshi went with SHA Bitcoin mining is getting centralised in China by a company which designs its own ASICs, builds mining hardware out of them and then has warehouses full of miners in a remote area with very cheap electricity. Too much centralisation of mining in theory undermines the security guarantee (although in practice I don't see an organisation with tens of millions invested in mining equipment p*ssing on the goose that laid the golden egg by trying to replay transactions).

Like most technology Bitcoin is a flawed system but it doesn't matter as long as it can adapt fast enough. If it doesn't either some other coin will kill it or it will occupy a niche where its deficiencies are less of a problem.

Coel Hellier - on 03 Nov 2017
In reply to Martin McKenna - UKC:

> I've always thought it was odd that people find it perfectly acceptable that no one can explain how parts of this system work.

It's not that no-one can explain how parts work, for every part *someone* can explain how that part works.

You might be right that no one person can explain every part, but that's normal. No one person has enough knowledge to build an iPhone on their own.
Phil Payne - on 04 Nov 2017
In reply to ablackett:

Because of that 2013 thread on UKC about bitcoin I didn't invest back then and still kick myself every day because of it. Based on the amount I was thinking of investing and the current market price I would be a multimillionaire now.

I'm currently sitting on a load of XRP and Ethereum hoping that they might at some point be worth a lot more, but I'm going to wait a couple more years to see how they go before cashing out.
David Martin - on 04 Nov 2017
In reply to Phil Payne:

If it makes you feel better, chances are you wouldn't have stayed invested until now. There have been plenty of opportunities to get scared or cold feet and sell your holding in the intervening year (still at a good profit most likely). I doubt there are many long term holders - it has just been too volatile in the past.
ian caton on 05 Nov 2017
In reply to ablackett:
I will go with "silly".

Seems to me it's tricky to go short bitcoin without Chicago stepping in to supply the means. Can you borrow bitcoin to sell? Not sure but probably not in scale.

I guess there will be big money looking to sell bitcoin down when futures come on stream.
Post edited at 10:50
tom_in_edinburgh - on 05 Nov 2017
In reply to ian caton:

> I will go with "silly".

> Seems to me it's tricky to go short bitcoin without Chicago stepping in to supply the means. Can you borrow bitcoin to sell? Not sure but probably not in scale.

It's very easy to short Bitcoin or trade Bitcoin futures.

Also very easy to get rekt shorting Bitcoin.

ian caton on 05 Nov 2017
In reply to tom_in_edinburgh:

A miniscule amount of research shows you to be correct.

However the very existence of this thread is evidence of bubble territory.

Sell comrade, sell!
tom_in_edinburgh - on 05 Nov 2017
In reply to ian caton:
> Sell comrade, sell!

Already did, not that my hundred dollar short makes a difference.
Post edited at 18:57
Toerag - on 06 Nov 2017
In reply to ablackett:

So how much bigger can the bubble get? What happens when all the possible bitcoins have been mined and are 'live'?
Shani - on 06 Nov 2017
In reply to Toerag:
> So how much bigger can the bubble get? What happens when all the possible bitcoins have been mined and are 'live'?

The max will be hit around 2040, After that there are no more to mine. But miners also get money from transactions (maintaining the leger that is the blockchain). So there is still money to be made from being a 'node' in the blockchain.


As for the size of the bubble? Well, how much is art worth? How much are stamps worth? How much is property worth? Depends how much people are prepared to pay. But there is a floor to Bitcoin because it is secure (so is imbued with a trust value), scarce, and has utility (you are your own banker).
Post edited at 14:14
Steff - on 06 Nov 2017
In reply to Shani:
> The max will be hit around 2040, After that there are no more to mine. But miners also get money from transactions (maintaining the leger that is the blockchain). So there is still money to be made from being a 'node' in the blockchain.

2140. ;-)

Apart from this obvious typo I agree with everything you have said on this thread.
Post edited at 15:02
nufkin - on 06 Nov 2017
In reply to Steff:

> 2140

Probably not worth my holding on that long
Shani - on 06 Nov 2017
In reply to Steff:
> 2140. ;-)

Danke Steff. Ich habe dicke finger!
Post edited at 15:35
tom_in_edinburgh - on 06 Nov 2017
In reply to Toerag:

> So how much bigger can the bubble get? What happens when all the possible bitcoins have been mined and are 'live'?

Apparently the market cap of gold is about $7 trillion and the total crypto currency market cap is about $200 billion, of which Bitcoin is a bit over half.

So there's plenty of scope for growth in crypto currency, even more in blockchain in general. I think it's important to appreciate that Bitcoin is not the same as crypto-currency just like US $ is not all money.

Bitcoin has also been splitting off new coins every few months. The upcoming split is worse than usual because it's not a 'soft' fork where a new coin like Bitcoin Cash or Bitcoin Gold splits off the main chain but a hard fork which will create two competing 'main' chains which will fight it out for support from miners and almost certainly one will die off. If there's no clear winner there will be a sh*tstorm.
Steff - on 06 Nov 2017
In reply to tom_in_edinburgh:


> Bitcoin has also been splitting off new coins every few months. The upcoming split is worse than usual because it's not a 'soft' fork where a new coin like Bitcoin Cash or Bitcoin Gold splits off the main chain but a hard fork which will create two competing 'main' chains which will fight it out for support from miners and almost certainly one will die off. If there's no clear winner there will be a sh*tstorm.

This is wrong. There is a lot of confusion about forking. Forking is a poorly chosen name for updating software in a distributed environment (it means something else in open source repository lingo).

Hard forks are updates without backward compability and are very common. Hard forks are a problem when they are contentious, i.e. people don't agree on whether the update is a good idea. This is often due to political or ideological reasons, but also for economic reasons (e.g. miners have other interests than end users).

Both Bitcoin Cash and Bitcoin Gold were contentious hard forks. There was nothing soft about them. However, in retrospect they were less serious, becuase those that did not agree were happy to essentially create a new currency witha different name. The upcoming fork has the potential to be more serious because a large percentage of miners have a very different idea than the core developer team and it is far from clear which chain will dominate after the inevitable split.
Shani - on 06 Nov 2017
In reply to Steff:
Yep you are right. Developers build in voting mechanism and so the fork kicks in when 75% of the miners vote 'yes' to the change (there is a version setting in each block so updated nodes ignore old blocks after this version point).

In a hard fork, the old blocks will never be accepted in to the blockchain (so the work of any nodes wallets and services running on the old software are performing redundant work on a minority fork). There can be no fight between competing chains.

Soft forks are software/rule changes that prodcue blocks and trasactions the old software still accepts.
Post edited at 17:06
Steff - on 06 Nov 2017
In reply to Shani:

One thing that annoys me a lot about distributed ledger technology is that it is fairly difficult to explain (I do that as part of my job sometimes) and it is getting to a point where the people that dominate decision making on adoption and technology selection (legislators and investors basically) simply don't know enough.

This is not helped by some of the terminology used by the creators of these concepts. Terms like fork, ICO, tokens, mining, staking, etc. do not help at all and the analogies are misleading. Also, even the developers don't make a effort to distinguish terms for protocols, application layer currencies, data structure, etc.
MG - on 06 Nov 2017
In reply to Shani:
What!! I don’t understand a word of that. Why should I choose bitcoin over cash, which is simple and straightforward?
Shani - on 06 Nov 2017
In reply to Steff:
You're probably well ahead of me in understanding it. I understand blockchains more than the detail of Bitcoin - although I've got a reasonable grasp. I've an MS licence so am playing with Ethereum/DAPPS on Azure.
Post edited at 19:51
Shani - on 06 Nov 2017
In reply to MG:
> What!! I don’t understand a word of that. Why should I choose bitcoin over cash, which is simple and straightforward?

Forgive the brevity - I'm typing on my phone.

"Why should I choose bitcoin over cash, which is simple and straightforward?"

Cash is just paper or metal. With the break in the gold standard the ONLY thing cash has going for it is "trust". You should have more trust in Bitcoin because it cannot be forged, devalued through printing, has greater utility, and inhabits the same electronic space where 97% of money is created.

You can spend Bitcoin like any other money - think of it like a credit card - but it is way more secure as you push an encrypted transaction (rather than a credit card pull), that contains no personal information (pseudo anonymous), with a one time transaction-key.

Is you were to tell early man (10k BC), about cash, they'd never believe you or trust it. It'd be treated with the same suspicion we once reserved for 'zero'. Google the history of Brazils Real - and how it got its name. Even now people don't trust cash - especially cash with a single point of failure (crooked govt like Zimbabwe). There is no such SPOF with Bitcoin as the leger/book keeping is undertaken by hundreds of computers which have to agree by majority what has gone on regarding transactions.

In fact, right now you can download the blockchain and see every transaction that has ever occured with Bitcoin!

Incredible eh?

HTH
Post edited at 19:52
Steff - on 06 Nov 2017
In reply to Shani:

> . I've an MS licence so am playing with Ethereum/DAPPS on Azure.

Ethereum is amazing technology. How does it work on Azure? Is there some .NET API or can you deploy Solidity directly?
MG - on 06 Nov 2017
In reply to Shani:
Well I do understand that, so thanks!

I’m still highly dubious of something that is so complex as medium of exchange - if it involves forks and mining and transaction keys and so on the scope, for something to go wrong seems large, to me. Cash is very simple, and I can see the risks (e.g losing my wallet) clearly.

Also, although it can’t be devalued by printing, it can be by simple loss of confidence. While in principle cash can too, in practice the trust depends on economies where it is fairly easy to judge whether to place trust or not. Even with Brexit type events, I am confident my cash in GBP will be worth the same to within 20% next year, and I know to avoid Zimbabwe dollars. By contrast I don’t know to within orders of magnitude what bitcoin will be worth next month!
elsewhere on 06 Nov 2017
In reply to MG:
> Also, although it can’t be devalued by printing,

It's worse than devaluation. Economies function with modest inflation. I'm not sure they function with huge deflation.

An appreciating currency doesn't work as a medium of exchange because people are reluctant to exchange it for goods & services. They'd rather hang onto it until next year when it will buy more.
Post edited at 21:04
tom_in_edinburgh - on 06 Nov 2017
In reply to MG:

> I’m still highly dubious of something that is so complex as medium of exchange - if it involves forks and mining and transaction keys and so on the scope, for something to go wrong seems large, to me. Cash is very simple, and I can see the risks (e.g losing my wallet) clearly.

Bitcoin (currently) isn't much use as a medium of exchange. It's become successful as a digital version of gold. The value is in the scarcity and the fact that a lot of people desire it, but unlike gold it doesn't take a vault to store it and you can send it electronically. As well as all the other reasons the fees involved in a block chain transaction with Bitcoin are far too high for small value transactions and they can take quite a while to commit.

There are other digital currencies that do a better job as a medium of exchange than Bitcoin.

Shani - on 06 Nov 2017
In reply to Steff:

> Ethereum is amazing technology. How does it work on Azure? Is there some .NET API or can you deploy Solidity directly?

Log on to Azure and you can spin jn up your own Ethereum instance from thd marketplace. There is a wizard type screen - just plug in your Consortium details etc... and it will create your genesis block!

You can download 'Visual Studio Code' and get the Solidity framework. You need Truffle etc... to build, deploy and test.
Shani - on 06 Nov 2017
In reply to MG:
> I’m still highly dubious of something that is so complex as medium of exchange - if it involves forks and mining and transaction keys and so on the scope, for something to go wrong seems large, to me. Cash is very simple, and I can see the risks (e.g losing my wallet) clearly.

Yeah - but you probably shop and bank online - quite possibly on your phone. Your phone is highly hackable and the government is trying to force a backdoor. Oh, and they're f*cking complicated! That's why they're built in a modular fashion (everything from hardware, OS, to software).

It's a the same with Bitcoin. The code is modular and so a team of developers can work on specialised parts (it's fundamental to OO coding). Any weakness in the maths or any coding module would have very wide reaching implications - many outside of Bitcoin itself.

But you don't need to worry about all that complexity. You just need to get used to an electronic wallet - the same way you got used to credit cards or Paypal.

> Also, although it can’t be devalued by printing, it can be by simple loss of confidence. While in principle cash can too, in practice the trust depends on economies where it is fairly easy to judge whether to place trust or not. Even with Brexit type events, I am confident my cash in GBP will be worth the same to within 20% next year, and I know to avoid Zimbabwe dollars. By contrast I don’t know to within orders of magnitude what bitcoin will be worth next month!

Well, Bitcoin is incredibly robust, mathematically and in its implementation (the blockchain is built upon every previous transaction, so every transaction has to be robust and consistent, and true). And it goes through cycles of continual improvement. Trust should be higher in blockchain based currencies than ALL other money - and 97% of our money IS electronic. Bitcoin really is immutable and immortal - you cannot screw up the blockchain and there is no central point of attack.

It is volatile and you have to be prepared for a wild ride, so we are in some agreement here.

However, as a betting man, and as Bitcoin is secure and finite, we have a world awash with money looking for quick and fast returns and robust investments; Bitcoin will always now be up there with gold and reserve currencies. As long as we have networked computers, they're going to hold value - a lot of value. If people can value a Penny Black (an old, thumbnail-sized bit of paper), trusted, robust e-money will definitely be valued.
Post edited at 22:00
MG - on 06 Nov 2017
In reply to Shani:
Well I'll leave bitcoin to you for now, thanks. But two points:

Yep my phone is complex and I don't understand it. But if I drop it in a puddle, I buy a new one. Not so easy to replace money.

How many times in history have codes been declared unbreakable?
Post edited at 22:03
Shani - on 06 Nov 2017
In reply to MG:
> Yep my phone is complex and I don't understand it. But if I drop it in a puddle, I buy a new one. Not so easy to replace money.

That's just it; with a brain walket (12 words), you cannot drop your bitcoin or lose it as there is nothing to lose. Or, with an online wallet - you're good to drop anything. Just log on via another PC.

> How many times in history have codes been declared unbreakable?

It is not just encryption. Hacked codes are centralised around a single, low entropy key. The block chain is encrypted and decentralised. The block chain itself contains every transaction ever so it is fully audited. If mining weren't hard enough, you'd have to hack hundreds of other computers/nodes, similtaneously to corrupt the blockchain. It is unimaginably difficult to do that. I'm not sure i can convince you without digging in to the details of the maths and how encryption works - but geeks with bad jumpers and very thick glasses have mathesed the shit out of all this. I find it hard to understand and explain it myself - but Steff might be able to explain it better than me.

However, i can tell you that every big bank is investing in blockchain as it is next-gen secure. Way better than what banks have now. In a decade you'll be a blockchain ninja! ;)
Post edited at 22:43
aln - on 07 Nov 2017
In reply to Shani:

> But you can't trade heroin in the blink of an eye to the other side of the world.

Yes you can.

aln - on 07 Nov 2017
In reply to Shani:

What's this got to do with lentils?
Shani - on 07 Nov 2017
In reply to aln:

> Yes you can.

You know what i meant!
Steff - on 07 Nov 2017
In reply to Shani:

> I'm not sure i can convince you without digging in to the details of the maths and how encryption works - but geeks with bad jumpers and very thick glasses have mathesed the shit out of all this. I find it hard to understand and explain it myself - but Steff might be able to explain it better than me.

I don't fully understand the math underlying encryption, but I doubt the creators of blockchain technology do. It's a building block used, that has been developed by mathematicians. That's what specialization is for, in the same way as an engineer building a bridge does not understand the chemical optimization processes involved for better galvanizing steel. He just knows the requirements for the steel he needs in his bridge.

What I do know though is that the digital signature and finger printing algorithms used are industry standard and are used in centralized computing as well. Traditional banks, financial institutions and other players use these algorithms for protecting their databases, web servers, communication lines as well. Therefore, if the underlying technology was to be cracked, everything would be messed up anyway.

What bitcoin does different, is that (apart from increasing the difficulty by combining the cryptographic building blocks in a clever way) it removes the weakest link in the chain: the human.
In cyber security terms, humans are the link in the chain which can likely be compromised. Most leaks and advanced attacks centre on human users (social engineering, disgruntled employees, etc.). All the encryption in the world is useless, if a bank employee's login details are discovered in a simple phishing attack and someone can simply change the numbers on your bank account.

As a side note, there are problems associate with the power the blockchain can provide to the end user though. Removing the trusted third party also has some disadvantages. Banks are so far doing a pretty good job of not loosing their clients money (accidentally at least) and most people are generally very bad at taking responsibility for their won affairs. Lawyers, solicitors and notary services can apply common sense in arbitration situations and resolve contract inconsistencies in a way that computer code cannot.



Shani - on 07 Nov 2017
In reply to Steff:

I work as a software developer and so have a reasonable grasp of hashing, cryptographic digital signatures/Public key encryption, AES, SHA256, Elliptical curve etc... and can work through simple examples of its use and implement that stuff in code, but the deeper maths (proofs etc....) are way beyond me! Simon Singh's code book is a good place to start.

Your point about humans as the weakest link is spot on. That is what I was getting at when I talked about a lack of a single point of failure. The cost of 'proof of work' really does stop a Sybil attack or other actions of a malicious individual.

There are some good tutorials on Pluralsight (free 6 month trial), that explain both Bitcoin and Blockchain technology. With the latter, there is a great example of how blockchain can be used in auditing and invetory work - well beyond the current focus on cryptocurrency. It is very imaginative stuff.

Cheers,
Steff - on 07 Nov 2017
In reply to Shani:

> I work as a software developer and so have a reasonable grasp of hashing, cryptographic digital signatures/Public key encryption, AES, SHA256, Elliptical curve etc...

Similar background to mine. I have been an academic researcher in distributed systems (mainly data replication and fault tolerance) and now work for a Cyber Security Company.
I happily leave the mathematics behind hashing etc. to the mathematicians. ;-)

> There are some good tutorials on Pluralsight (free 6 month trial), that explain both Bitcoin and Blockchain technology. With the latter, there is a great example of how blockchain can be used in auditing and invetory work - well beyond the current focus on cryptocurrency. It is very imaginative stuff.

Thanks for this! I have just had a look at Pluralsight which I have nnot known. Saldly the free trial seems to be only 10 days now.
aln - on 07 Nov 2017
In reply to Shani:

> You know what i meant!

Not really. Heroin IS traded in the blink of an eye, electronically, on the dark net, by email, by text etc. And very often probably paid with currencies such as bitcoin.
nufkin - on 07 Nov 2017
In reply to aln:

> Not really. Heroin IS traded in the blink of an eye, electronically, on the dark net, by email, by text etc. And very often probably paid with currencies such as bitcoin.

I think he was referring to the actual heroin itself, which requires time for packing, transportation and rinsing-off
Shani - on 07 Nov 2017
In reply to nufkin:

> I think he was referring to the actual heroin itself, which requires time for packing, transportation and rinsing-off

He knows that.

;)

aln - on 07 Nov 2017
In reply to Shani:

Of course
felt - on 08 Nov 2017
Shani - on 08 Nov 2017
In reply to felt:


Don't panic. A bitcoin wallet is just a keystore ('anyone' can create them), and a badly written piece of software is exactly that. A bug in a wallet is not the same as a compromise in Bitcoin or the blockchain itself. If your mate burns a stack of tenners in his back garden, it doesn't mean the bank is on fire.
Neil Williams - on 08 Nov 2017
In reply to Shani:

FWIW I must admit I find the blockchain concept almost impossible to get my head around - and IT is my thing. I've not yet found anything that explains it adequately.
felt - on 08 Nov 2017
In reply to Shani:

So no one has lost any dosh?

Shani - on 08 Nov 2017
In reply to felt:
> So no one has lost any dosh?

Yes they have. But no one else has gained it! Technically, the money is still there, but inaccessible because of encryption (the key has been lost, as I understand it)

As the article mentions, Ethereum was subject to the DAO attack a few years ago, where all the book-keepers agreed to roll back the blockchain and recreate it to correct it. This is no trivial matter as you need at least 51% of book-keepers to agree to do this. But the money can in effect be 'recreated'.

What this story really illustrates is robustness of blockchain. Again, don't lose sight of its strength on the back of a developer screwing up the writing of a password/key store (that sits outside the blockchain).
Post edited at 15:27
Shani - on 08 Nov 2017
In reply to Neil Williams:
> FWIW I must admit I find the blockchain concept almost impossible to get my head around - and IT is my thing. I've not yet found anything that explains it adequately.

if("Developer")
{
Neil - get on Pluralsight. There is a good introductory course to Bitcoin and a good course on Blockchain (Ethereum). They're very good.
}
elseif("Manager")
{
Neil - you are thick as f*ck. Seriously. But you will be banging on about blockchain in a few years just as you banged on about 'web' (back in the 1990s), 'mobile' (since 2005ish), 'cloud' (since 2013), and 'big data' (over the past year), without a f*cking clue as to what you are on about. Also, stop using 'ping' when you mean 'to contact by email/phone'.
}
else
{
Neil - I agree, it is a tough concept many areas of which I struggle to understand and to convey!
}


Post edited at 15:49
Bjartur i Sumarhus on 08 Nov 2017
In reply to Shani:

Whats to understand when your doubling your money every month?

Toerag - on 08 Nov 2017
In reply to Shani:

> Yes they have. But no one else has gained it! Technically, the money is still there, but inaccessible because of encryption (the key has been lost, as I understand it)

So would it be possible for someone to guess a lost key?

tom_in_edinburgh - on 08 Nov 2017
In reply to Shani:

> What this story really illustrates is robustness of blockchain. Again, don't lose sight of its strength on the back of a developer screwing up the writing of a password/key store (that sits outside the blockchain).

The interesting thing is what will happen next. The ICOs that have their money locked up in a dead contract are going to have to try to get it back. They really don't have any choice.

It is possible to get it back but the Ethereum devs would need to put a special case fix into their code to fix things. If they put this fix into a scheduled release with a lot of other features people are waiting for then there's not much chance of miners voting against it.

My guess is the Ethereum Foundation/Ethereum developers will decide that the money should get 'undeleted' because it's the best thing for investor confidence in the ICOs which drive the Ethereum economy and rewriting the code to fix things is what they did when the DAO lost a ton of money to hackers. If they don't then things could get really interesting because for $300 million people are quite likely to go to court and try and force the Ethereum Foundation to create code to reverse the transaction.



Shani - on 08 Nov 2017
In reply to Toerag:

Finding a SHA256 cryptographic hash (supplemented with a 'nonce') has a 2^256 chance of success. The top miners try a billion billion combinations a second.

The digital signatures are one-way (trap door), public key cryptography (over an elliptic curve).

UKC's resident mathematicians will be better able to explain all this, but in short, you are unlikely to every guess a key. If you try....well, you're gonna need a bigger keyboard.
Shani - on 08 Nov 2017
In reply to tom_in_edinburgh:

> My guess is the Ethereum Foundation/Ethereum developers will decide that the money should get 'undeleted' because it's the best thing for investor confidence in the ICOs which drive the Ethereum economy and rewriting the code to fix things is what they did when the DAO lost a ton of money to hackers. If they don't then things could get really interesting because for $300 million people are quite likely to go to court and try and force the Ethereum Foundation to create code to reverse the transaction.

Are all of the Ethereum bookeepers in the same jurisdiction? It is going to be VERY hard to control internationally distributed miners.
Steff - on 08 Nov 2017
In reply to Shani:

The way I understand it is that a bug in the smart contract of the wallet exposed a function which allowed to remove the required signatures from a multi sig adress, i.e. the equivilant of revoking access to all the holders of an account.

Some guy experimenting has called this several time. He actually came forward xplaining what he did. The money is still there but frozen. There is now some discussion on rolling back the bolckchain to restore access.
The problem with this however is that it's against the core idea of the inmutabilty. And where is the line? Do we roll back every time someone messes up? Or only if there is big money involved? Why are the 150 million dolars of big companies more important than the 10.000 dollars of a user that looses a key?

In any case it highlights the danger of smart contracts.



Steff - on 08 Nov 2017
In reply to Shani:
> Are all of the Ethereum bookeepers in the same jurisdiction? It is going to be VERY hard to control internationally distributed miners.

Exactly. An intent to do this would probably lead to a split inthe chain again. This already happened when the DAO was attacked and in my opinion was a severe setback. Ethereum has grown a lot since and the planned roadmap is already complicated enough without this setback.
Post edited at 16:23
tom_in_edinburgh - on 08 Nov 2017
In reply to Shani:

> Are all of the Ethereum bookeepers in the same jurisdiction? It is going to be VERY hard to control internationally distributed miners.

Don't have to control the miners just need to put the fix in the next official Ethereum hardfork. Miners won't give a toss as long as the price stays near $300/ETH.

Ethereum miners are so docile that there's no sign of them blocking the planned change from Proof of Work to Proof of Stake. Unlike Bitcoin where there is centralised mining and open warfare Ethereum is pretty much under control of the Ethereum foundation and the devs.
tom_in_edinburgh - on 08 Nov 2017
In reply to Shani:

> Finding a SHA256 cryptographic hash (supplemented with a 'nonce') has a 2^256 chance of success. The top miners try a billion billion combinations a second.

Ethereum doesn't use SHA256. It's got its own thing which is why it is mined with GPUs not SHA256 ASICs.

> UKC's resident mathematicians will be better able to explain all this, but in short, you are unlikely to every guess a key. If you try....well, you're gonna need a bigger keyboard.

Maybe, hopefully, probably. But you are betting on both the public key algorithm and the algorithm than generates the keys. Just a couple of weeks ago they discovered that a crypto library a lot of people were using was generating weak keys.

I think there's a danger in crypto that we make the mistake the nuclear industry made and make naive claims of absolute security when we should be arguing about security relative to banks and continually pointing out how crap the existing option is.


Steff - on 08 Nov 2017
In reply to tom_in_edinburgh:
> Ethereum doesn't use SHA256. It's got its own thing which is why it is mined with GPUs not SHA256 ASICs.

> Maybe, hopefully, probably. But you are betting on both the public key algorithm and the algorithm than generates the keys. Just a couple of weeks ago they discovered that a crypto library a lot of people were using was generating weak keys.

I mostly agree with this. The biggest risk is in vulnerabilities in the implementation, not in the actual algorithm. There have been several cases where secure algorithms were found to have been implemented wrongly, resulting in vulnerabilities.

> I think there's a danger in crypto that we make the mistake the nuclear industry made and make naive claims of absolute security when we should be arguing about security relative to banks and continually pointing out how crap the existing option is.

This is what I was trying to say earlier in the thread (at least I think we are referring to the same): Banks (and most other software) currently use the exact same encryption standards, so it's just as likely for a bank to be attacked. It's easier actually, as you have humans in the loop.

The good news today is that the controversial hard fork planned for next week has been canceled.
Post edited at 19:09
aln - on 11 Nov 2017
In reply to ablackett:

Can someone translate this thread into normal English for numpties like me who're finding it interesting but hard to understand?
deacondeacon - on 11 Nov 2017
In reply to aln:

https://www.reddit.com/r/Bitcoin/comments/6jlop4/rbitcoin_faq_newcomers_please_read/

Have a read through this, lots of useful information to have a look at.

Shani - on 11 Nov 2017
In reply to aln:
> Can someone translate this thread into normal English for numpties like me who're finding it interesting but hard to understand?

The best way to understand Bitcoin is to first understand what money actually is and how it is created. Worth investigating and surprisingly interesting and complex.

https://www.youtube.com/watch?v=WCsb1_wBzuQ

Once you understand this, you'll understand how a specially crafted string of characters can be of value when combined in a controlled leger. That character string may look worthless, but it is no more or less worthless than the specially crafted paper in your wallet!
Post edited at 13:01
neilh - on 11 Nov 2017
In reply to MG:

I am with you on this. Just looks like another bubble waiting to burst. Fine if you were an early stage buyer and have sold by now. But when everybody is talking about it,then it’s time to get out.
ClimberEd - on 11 Nov 2017
In reply to neilh:

Just looks like another bubble waiting to burst.

Down about 20%, give or take, in less than 4 days. That work for your bursting bubble?!

Shani - on 11 Nov 2017
In reply to neilh:
> I am with you on this. Just looks like another bubble waiting to burst. Fine if you were an early stage buyer and have sold by now. But when everybody is talking about it,then it’s time to get out.

The whole point of this thread is that your sentiments above are exactly what people were saying in 2013,

"I couldn't find a thread about bitcoin since 2013, and a few people back then said it wasn't worth the gamble. Turns out it has gone up more than 100x since 2013".

Let us be clear; you have no idea if Bitcoin has reached its peak value.
Post edited at 15:54
The Lemming - on 11 Nov 2017
In reply to Shani:


> "I couldn't find a thread about bitcoin since 2013,

Over the years I have asked questions about Bitcoins in the Down the Pub forum, and these questions bite the dust after a week of inactivity. Similar questions may have also been asked in the same forum, and could be a reason why you have not seen any questions since 2013.
neilh - on 11 Nov 2017
In reply to Shani:
All depends on when you buy and when you get out. It’s a gamblers paradise with nothing behind it. If you want to believe this is the future, fine by me. Your money /risk, not mine.

And I would expect you of all people to know your history, think the tulip bubble of 1637.

Post edited at 17:17
Shani - on 11 Nov 2017
In reply to neilh:

> All depends on when you buy and when you get out. It’s a gamblers paradise with nothing behind it. If you want to believe this is the future, fine by me.

Your first sentence is tautological. Your second sentence betrays an ignorance of how money is created.

> And I would expect you of all people to know your history, think the tulip bubble of 1637.

You don't understand Bitcoin. Unlike Bitcoin, anyone could grow tulips...
daWalt on 11 Nov 2017
In reply to Shani:

> anyone could grow tulips...

if they had tulip bulbs...
which don't grow on trees, to use a well worn expression ;-)
tom_in_edinburgh - on 11 Nov 2017
In reply to Shani:

> You don't understand Bitcoin. Unlike Bitcoin, anyone could grow tulips...

But anyone can fork Bitcoin and try and grow their own money tree . Far too many people are trying these days.

But I agree this is still early days for crypto currency and I don't think Bitcoin is anywhere near its potential yet.

https://howmuch.net/articles/worlds-money-in-perspective

Shani - on 11 Nov 2017
In reply to tom_in_edinburgh:

> But anyone can fork Bitcoin and try and grow their own money tree .

Anyone can create their own currency. Period.
tom_in_edinburgh - on 11 Nov 2017
In reply to Shani:

> Anyone can create their own currency. Period.

Are you following the BCT/BCH war?
Shani - on 11 Nov 2017
In reply to tom_in_edinburgh:

> Are you following the BCT/BCH war?

Not particularly closely. I'm more into cryptocurrency from a developer's perspective - as an implementation of blockchain technology.

As a clonecoin, i reckon on the Highlsnder principle; there can be only one. Cryptocurrencies are still feeling their way, but i reckon this will hold true.
Steff - on 12 Nov 2017
In reply to Shani:

> As a clonecoin, i reckon on the Highlsnder principle; there can be only one. Cryptocurrencies are still feeling their way, but i reckon this will hold true.

I think there will probably be different currencies for different purposes at some stage. Maybe one currency for storing value long term, one for daily payments, one for M2M micro payments and some other uses we don't even foresee now.
neilh - on 12 Nov 2017
In reply to Shani:

So let’s get this right. You can pop along to your local newspaper store and buy something with it and it’s recognisec as a currency on a day to day basis ?

Other than for buying guns, drugs and body parts on things like the Silk Road what else can you buy with it? Do Tesco take it?

It’s pseudo currency. I am amazed you are being hood winked.
Shani - on 12 Nov 2017
In reply to neilh:

> So let’s get this right. You can pop along to your local newspaper store and buy something with it and it’s recognisec as a currency on a day to day basis ?

FFS Neil, i can have problems spending a Scottish fiver in England...

> Other than for buying guns, drugs and body parts on things like the Silk Road what else can you buy with it? Do Tesco take it?

> It’s pseudo currency. I am amazed you are being hood winked.

Until you understand what money is - that link above is worth watching a few times, you'll continually fail to see what money can be.

97% of new money is electronic. Bitcoin is a particularly secure kind. Yes it's volatile, but that's to be expected.
neilh - on 12 Nov 2017
In reply to Shani:
Tulips = bitcoins .

£ = legally recognisable and tradeable money.

Please tell me have you put a load of money into bitcoins.
Shani - on 12 Nov 2017
In reply to neilh:

> Tulips = bitcoins
> £ = legally recognisable and tradeable money.

Bitcoin is legal in EU, G7 etc...

https://en.m.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory

As i recall, there is an increasing size of minimum trade (to do with the economics of mining - something Ethereum approaches differently). But yeah, it's not gone truly mainstream yet. It's a mechanism if choice on ghe Dark Net, apparently to be accepted by Amazon very soon, and, accepted by a variety of other commercial organisations:

http://uk.businessinsider.com/bitcoin-price-8-surprising-places-where-you-can-use-2017-10

> Please tell me have you put a load of money into bitcoins.

If i had back in 2013 (as per the OP), then I'd typing this from the Alps!
neilh - on 12 Nov 2017
In reply to Shani:
So a it’s legal for the likes of the Silk Road . Have you read up on that? Great the guy who set it up made billions but could not convert it into proper money otherwise he would have been arrested on the spot. Reality was he was poor and could not realise his gains. A waste of time .

There are always people who say “ if only I had bought xyz 2 years ago I would be rich”.last time it was dot com bubble, before that LTC, etc etc.

It’s worth a punt , but there is an old saying “ buyer beware”.
Post edited at 12:29
Shani - on 12 Nov 2017
In reply to neilh:

> So a it’s legal for the likes of the Silk Road . Have you read up on that? Great the guy who set it up made billions but could not convert it into proper money otherwise he would have been arrested on the spot. Reality was he was poor and could not realise his gains. A waste of time .

That incarnation of The Silk Road was shut down 4 years ago. Nobody can dispute Bitcoin (and other cryptocurrencies), have come a long way since then.

You appear to have missed my link above detailing where you can spend Bitcoin (and the point that Amazon is preparing to accept it).
neilh - on 12 Nov 2017
In reply to Shani:
And replaced by lots of other sites doing the same thing.

Just read an excellent description of crypto currencies. They are Disney Dollars which can only be used in Disney parks
Rob Parsons on 12 Nov 2017
In reply to neilh:

> Other than for buying guns, drugs and body parts on things like the Silk Road what else can you buy with it? Do Tesco take it?

Microsoft takes it: https://support.microsoft.com/en-gb/help/13942/microsoft-account-add-money-with-bitcoin

sg - on 12 Nov 2017
In reply to Shani:
All very interesting. So I watched a couple of videos and I think I now understand a little bit about the basic idea of the blockchain and how bitcoin is related to it. And I understand all the 'why banks and governments are scared of them' idea and why bitcoin should be expected to have value.

However, for some time I've had the feeling that in 2 or 3 decades time we'll look back to an unregulated internet where awful things happened because criminal activity was uncontrolled and unmonitored from a position where, whether they liked it or not, ISPs were driven by mulitnational (political) agreements to regulate. It looks like the open, distributed nature of the bockchain might suffer with some of that regulation, perhaps for the same reasons? Is that fair?

I mean it's a hypothetical (that bitcoin trading and the blockchain enterprise should become regulated in some way) based on another hypothetical (that other parts of the internet will be regulated because the current level of non-regulation seems (to this barely technologically sentient observer, at least) to be unsustainable). Or maybe as a global society we will be happy to keep living in the Wild West forever (I'm talking about the internet generally there, not the blockchain).
Post edited at 15:58
neilh - on 12 Nov 2017
In reply to Rob Parsons:
Maybe worth you reading up on how electroneum -one of these crypto currencies was hacked by Russians.

Also looked at the link. Can you actually use bitcoins to buy anything worthwhile from Microsoft. There are so many excluded products it’s ridiculous.
Post edited at 17:31
Shani - on 12 Nov 2017
In reply to sg:

It's to your credit that you have looked in to the technology. New tech can seem unsettling - and i know plenty of people that held out against mobile phones until the reached critical mass, never mind those that held out against Facebook and Twitter. Eventually, simple utility & practicality wins out.

With regard to blochchains, they're here to stay. You can have public or private blockchains and i continues to fail to see how a decentralised & distributed implementation of a public blockchain can be regulated by a single country. Chuck in the Dark Web and i don't see how a government can stop an electronic currency that has innate trust value.

Tech has raised lots of questions; you can freely access thr Rolling Stones back catalogue in an instant, watch the latest movies or UFC pay-per view - ALL FOR FREE. Tech raises all sorts of commercial questions. People like neilh can shout all they want but the tech-genie is out of the bottle.
sg - on 12 Nov 2017
In reply to Shani:

I agree with everything you say. My point is, to what extent is 'the international community', in so far as such a thing exists, prepared to suffer in the iniquities which surely follow from an unregulated monetary transaction system, in the way that they currently suffer them in an unregulated communication and commerce system (the internet). By that I mean, will we all continue to shrug our shoulders at the existence of the dark web and the fact that criminal activity can thrive in the absence of international control and policing?

Clearly the blockchain can be exploited for criminal activity because money / value can be transacted by any parties, without borders or checks. The very points which the blockchain seek to eliminate - as 'money-grabbing' third party regulators - also act, up to a point (and in some ways very far from effectively, I grant you) as an important break between money and criminals.

As someone (a weak and feeble-minded socialist) who gets nervous at even the slightest idea of investment for personal gain (and can't help but equate it to exploitation, even though it's where my pension and mortgage get their value from yadayadayada), and is quite happy with regulation where it curbs the worst excesses of human behaviour the blockchain looks a lot like the internet as something that needs a lot of work to make it acceptable. To put it simply, I want governments to limit people's freedoms in many respects, in this as much as any other enterprise.
Shani - on 12 Nov 2017
In reply to sg:

Well, we're veering in to wider issues of finance. But the Panama and Paradise papers show that the rich are fully immersed in dodgy financial activity.

If anything, cryptocurrencies allow us go cut out the parasitic middlemen of finance. They allow us to seize a lot of power back from the Establishment.
sg - on 12 Nov 2017
In reply to Shani:

Totally understand what you mean. But, in theory, if all the protection mechanisms were to work and taxation was valued for what it gives to governments, those systems we already have can work for the good of all by means of state redistribution.

It's hard to see how the blockchain can do that. The question is, are the Establishment good for anything or not, I suppose?!

As you rightly say, the way things currently work vast sums flow away from central banks with the connivance of the Establishment. I'm not sure the blockchain will prevent that. Clever, rich people will just find it easier to add to their wealth.
Rob Parsons on 12 Nov 2017
In reply to neilh:

> Also looked at the link. Can you actually use bitcoins to buy anything worthwhile from Microsoft. There are so many excluded products it’s ridiculous.

Your replies are starting to sound like someone sticking his fingers in his ears and saying 'la la la.'

I don't understand the details well enough to make a judgement. But if Microsoft (which was just one counterexample to your claim of nobody, apart from illicit operators) are looking at this, and willing to accept it, then maybe - just maybe - something interesting is happening.

As I say: I can't judge yet. You seem very convinced (and slightly aggressive about it.) I guess we'll all eventually see.
Shani - on 12 Nov 2017
In reply to sg:

> Clever, rich people will just find it easier to add to their wealth.

There is no just 'one blockchain'. Once the technology matures we could have lots of crypto currencies operating at regional level with their own public blockchains - and they'd be robust forms of monetization (like the Bristol Pound). This could be a game changer.
neilh - on 12 Nov 2017
In reply to Shani:
You want to read a biography of the guy who set up the Silk Road. You would quickly change your views on this . He was basically a right wing liberterian who did not want to pay any taxes and viewed government as a waste of time . Hardly fits into your normal narrative of things.
neilh - on 12 Nov 2017
In reply to Rob Parsons:

Point taken. I just do not like seeing people hoodwinked by the so called next greatest thing which seems to generate wealth without actually doing anything. There are so many warnings out there on this stuff which people also seem to be ignoring. ...... just like other events in the past.

I would have changed my mind if you could have actually bought something worthwhile on the Microsoft site . It just appears to be playing to the gallery of techies out there.
Shani - on 12 Nov 2017
In reply to neilh:
> You want to read a biography of the guy who set up the Silk Road. You would quickly change your views on this . He was basically a right wing liberterian who did not want to pay any taxes and viewed government as a waste of time . Hardly fits into your normal narrative of things.

The keys to heaven open the gates to hell. You might want to base your opinion on more than one story. I know that if i did 'quickly change [my] views on this', I'd have done more than read a biography about one man - particularly as it'd involve rejecting a whole tranche of new technology. To be against this tech on the back of one story is borderline anti-intellectual.

Any system can be co-opted for nefarious purposes. You think the current financial system is anything other than a means to ensure the status quo of the rich and chain the rest of us to debt? Right wing libertarians are all over the current system.
Post edited at 19:32
MG - on 12 Nov 2017
In reply to Shani:

You seem rather defensive about all this.

If it is so great I am sure you are right, in time it will be widely adopted. Currently however the advantages are unclear, other than for speculation or criminal purposes, but the disadvantages very clear.
Shani - on 12 Nov 2017
In reply to MG:
> You seem rather defensive about all this.

Facts dear boy.

> If it is so great I am sure you are right, in time it will be widely adopted. Currently however the advantages are unclear, other than for speculation or criminal purposes, but the disadvantages very clear.

I've listed the advantages. The disadvantages are shared with existing monetary systems; Black Wednesday etc... show that currency speculation is rife.The crminals down your lical pub selling dope, coke and dodgy tobacco are all using Sterling!
Post edited at 19:51
MG - on 12 Nov 2017
In reply to Shani:

> I've listed the advantages. The disadvantages are shared with existing monetary systems; Black Wednesday etc... show that currency speculation is rife.

Yes but the changes in value are tiny in comparison. Bitcoin isn't a useful currency at present as a result

The crminals down your lical pub selling dope, coke and dodgy tobacco are all using Sterling!

And and are often caught due to the open nature of banking etc.

How would I benefit by using bitcoin instead of £ to buy anything normal?



Shani - on 12 Nov 2017
In reply to MG:

> ...the open nature of banking etc.

A joke, surely?
sg - on 12 Nov 2017
In reply to MG:

> The crminals down your lical pub selling dope, coke and dodgy tobacco are all using Sterling!

> And and are often caught due to the open nature of banking etc.

This seems to be the crux of the matter for me, so far. Not just anyone can open a bank account. Of course there are black markets in everything but trading IS made more difficult for criminals in the current system. Hence the lengths they have to go to to launder money.

The blockchain(s) may take money out of the greedy middlemen (who have managed to make themselves valuable since currency of any sort was around because some of us aren't smart enough to manage it for ourselves even when we do have the means to trade directly which each other). But it can't make it easier to catch criminals.

And to draw out the general 'disruptive technologies' theme a bit further, as far as I can see the rise of new forms of communication (AKA, the internet) have not yet really democratised many social or political functions in the way that was predicted maybe 10 years ago. They have not led to redistribution of wealth or power as much as they have enabled some very smart and rich people to find new ways to generate capital. For example, while crowdfunding has been used to raise money for individual good causes here and there, social media has had a far greater impact in generating new streams of income through advertising and e-commerce that are hardly carrying out functions with a societal benefit in mind.

I'm sure Shani is dead right that bitcoin is here to stay and I'm sure those of you who are so inclined would be wise to invest now but I'm not sure that, in itself, it will lead to capital flowing away from those who already have (enough of) it. I'm giving away my political prejudices but then (having enough to feel reasonably comfortable myself) I'm not a big fan of capital generation in itself!

sg - on 12 Nov 2017
In reply to Shani:

> A joke, surely?

You're right, it's not open or transparent at all, BUT, it should be carried out within a legal framework, governed by one or more state level jurisdictions...
Steff - on 12 Nov 2017
In reply to neilh:

> So let’s get this right. You can pop along to your local newspaper store and buy something with it and it’s recognisec as a currency on a day to day basis ?

I have a Bitcoin credit card. There is an account in Bitcoin where I store some money and I use this Visa card in the supermarket. Of course for the actual payment the money is converted to Euros in my case, but my Bitcoin account is debited. It's a great way to take "dividends" of my investment, so that I can make some use of it, in case it is a bubble that explodes.

There are some very real uses for crypto currencies in automated payment systems in machine to machine communication. Bitcoin is not necessarily the best currency for this, but it's a great first proof of concept which has turned into a store of value and investment tool.

The fear governments might have regarding crypto currencies and possible regulation designed by people that don't understand technology is one of the biggest risks for adoption IMO.

Nevertheless, whatever happens to Bitcoin, the underlying technology has many uses and will revolutionize several sectors, beyond what we can imagine now.
Shani - on 12 Nov 2017
In reply to Steff:

Interesting to hear such a real world use.

I've heard that families are using bitcoin to transfer funds to families in war torn parts of the middle east, and in hurricane hit parts of the Carribean.

It's much easier to transfer and trade in these circumstances with bitcoin because all you need is a mobile and a signal, and occasional power to charge your phone.

In contrast, to 'wire' money as was done traditionally, you need to take ID and other important documents as proof of ID, and pick up cash. All leave you susceptible to mugging, arrest & detention, or physical loss of these items. If you lose a phone, you shouldn't lose 'everything' in quite the same way.

Also, in an age where identity can be stolen, Bitcoin exchanges just require a public key with no connection to, or transfer of, your ID. Incredibly innovative in terms of transacting.
neilh - on 12 Nov 2017
In reply to Steff:

There are now 900 crypto currencies in “circulation”.

It will be interesting to see what happens.

And I see that bitcoin dropped in value on Saturday.
neilh - on 12 Nov 2017
In reply to Shani:

Well that is to prevent laundering and fraud . I assume then you are all in favour of crypto currencies having that as a plus.

Bit coin was set up to avoid censorship. Paying taxes etc etc .

Seems as though you have moved to the dark side
MG - on 12 Nov 2017
In reply to Shani:
Open not.quite the right.word but Google FACTA for an ( not very healthy) example of what I mean.
tom_in_edinburgh - on 12 Nov 2017
In reply to neilh:

> You want to read a biography of the guy who set up the Silk Road. You would quickly change your views on this . He was basically a right wing liberterian who did not want to pay any taxes and viewed government as a waste of time . Hardly fits into your normal narrative of things.

You want to forget about the Silk Road. It is completely irrelevant to crypto these days. Crime around 'banned items like drugs and sex has always been a signifincant early adopter of new technology but one that becomes irrelevant when larger markets are addressed. Porn was one of the first users of the internet but these days porn is a footnote in overall internet use. Three or four years ago the Silk Road was relevant to Bitcoin these days that kind of activity is a side note. The documents have been filed for a Bitcoin market on the Chicago Futures Exchange there will soon likely be Exchange Traded Funds in the US so Joe Public van have some Bitcoin in their pension portfolio. Crypto currency is already a $200 billion market cap and will almost certainly be in the low trillions within two or three years.
tom_in_edinburgh - on 12 Nov 2017
In reply to neilh:
> Bit coin was set up to avoid censorship. Paying taxes etc etc .

Bitcoin was set up out of disgust at what the banks were doing in the run up to the 2008 crash and what governments were doing after it.

The funny thing is that the original vision is gradually being lost as 2008 fades from people's minds and the big money of mainstream financial institutions comes in. Probably in a couple of years most people won't have their own private keys and deal with the blockchain: the financial institutions will buy futures contracts settled in US dollars to play the Bitcoin market and people will hold the asset like shares in accounts with mainstream brokers.
Post edited at 22:43
Steff - on 13 Nov 2017
In reply to tom_in_edinburgh:

> Bitcoin was set up out of disgust at what the banks were doing in the run up to the 2008 crash and what governments were doing after it.

This is an interesting (non-technical) book on the history of Bitcoin and the motivations behind it:

https://www.amazon.co.uk/Digital-Gold-Untold-Story-Bitcoin/dp/0241180996/

Reads a bit like a novel. Very entertaining.
neilh - on 13 Nov 2017
In reply to tom_in_edinburgh:

So far the regulators like the SEC etc say no.

The problem is traceability and laundering. The advantage with the US dollar and others is that its traceable etc etc.

Future contracts is just like another Tulip contract going back to the 1600's.So all this spohistication to go back to a con or well known bubble done 400 plus years ago. Sounds great.

Forgive me if I continue to have a healthy degree of scepticism.

I will leave it to my maths friends of mine who like playing with servers in their cellars and look at it as a bit of fun.
neilh - on 13 Nov 2017
In reply to Steff:

I will look up, thanks.
Shani - on 13 Nov 2017
In reply to neilh:

> The problem is traceability and laundering. The advantage with the US dollar and others is that its traceable etc etc.

Emphatically not. I could give you a £20 note now and you would have no idea of its lineage through the financial system. Depending on the quality, you might also struggle to identify if it was fake or not. Laundering is a question of scale.

Every transaction in Bitcoin is downloadable by you, right now.
MG - on 13 Nov 2017
In reply to Shani:

You are right cash is a pretty good way of being untraceable. But it has limits - no one, certainly no bank, will accept large quantities without a good explanation, for example. As soon as you move into the banking system traceability is pretty good, at least in principle, for any credible jurisdiction, and even in other cases as we have seen recently it is quite likely who does what with which money will become apparent. Bitcoin deliberately avoids all this. I don't see why that is a good thing. It seems like a gift to all criminals to me. Knowing every transaction ever isn't helpful on it's own.
tom_in_edinburgh - on 13 Nov 2017
In reply to MG:
> You are right cash is a pretty good way of being untraceable. But it has limits - no one, certainly no bank, will accept large quantities without a good explanation, for example.

Like HSBC making extra large openings in the counters in Mexico so people could deposit larger bags of cash? I think it is pretty obvious that the main currency for the drugs trade is the US dollar, not Bitcoin and the main agency for laundering the spoils are the 'mainstream' banks.

Bitcoin is actually fairly crap at privacy as Shani pointed out because the blockchain is public. Yes, the addresses are just random hex numbers so the blockchain doesn't give you names and addresses but there are companies that specialise in working that out and tracking back through bitcoin transaction history. As soon as a coin goes to an exchange where it can be converted to fiat money there will be KYC and AML checks and there will be a name and address against the hex number. That starts to put names at some points on the graph for algorithms to work back from.

If you actually wanted to do nefarious things with cryptocurrency you'd be better off using a coin like Monero which is designed with more privacy protections.
Post edited at 11:27
Shani - on 13 Nov 2017
In reply to MG:
"...certainly no bank, will accept large quantities without a good explanation...". Apologies for coming across as strident MG, but this statement is absurdly naive.

Laundering money is very easy - Tom has already beaten me to the HSBC example - https://www.theguardian.com/business/2012/jul/17/hsbc-executive-resigns-senate

It is not exclusively a drug or HSBC problem:
https://www.theguardian.com/world/2017/mar/20/british-banks-handled-vast-sums-of-laundered-russian-m...

The number of Russian property tycoons who have paid over the market rates for property from Trump's empire is worthy of further scrutiny.... http://www.tampabay.com/news/politics/why-did-russian-oligarch-pay-so-much-for-mansion-owned-by-trum...

@Tom - yep, Bitcoin is pseudo-anonymous. Total anonymity is being worked on (or may be being trialled) with various obfuscation tools.
nufkin - on 13 Nov 2017
In reply to Shani:

> I could give you a £20 note now and you would have no idea of its lineage through the financial system

Though one can certainly imagine, given that most notes - apparently - have traces of cocaine, semen and other surprising substances
Shani - on 13 Nov 2017
In reply to nufkin:

> Though one can certainly imagine, given that most notes - apparently - have traces of cocaine, semen and other surprising substances

Ew! I'm never giving you change for a larger note!
neilh - on 13 Nov 2017
In reply to Shani:

I think you only have to look at how the Fed catches people out like the bribery issues in FIFA and more recently the Mulleur investigation into Trump to appreciate the power of traceability with the US $.

I will keep going back to Silk Road and how that was set up with bitcoin payments to avoid government intrusion ( also a reason as to why bitcoin was set up). It illustrates beautifully the paradox of bitcoins , a disney currency which could only be used in a disney park.

You could buy body parts with no controls because bitcoin payments were invisible to outside control.Really clever that.
MG - on 13 Nov 2017
In reply to Shani:

> "...certainly no bank, will accept large quantities without a good explanation...". Apologies for coming across as strident MG, but this statement is absurdly naive.

So to show I am wrong, you give a list of examples showing how cash is indeed traceable and people do indeed get caught!

I've still not heard anything that makes me think Bitcoin (or similar) have any advantages for me, or anyone who doesn't have dubious ends)
Shani - on 13 Nov 2017
In reply to MG:

> So to show I am wrong, you give a list of examples showing how cash is indeed traceable and people do indeed get caught!

True. But it illustrates simplistic good/bad arguments about conventional money and bitcoin. People are willing to abuse systems that gate money.

> I've still not heard anything that makes me think Bitcoin (or similar) have any advantages for me, or anyone who doesn't have dubious ends)

I can't help you here.
Shani - on 13 Nov 2017
In reply to neilh:

> You could buy body parts with no controls because bitcoin payments were invisible to outside control.Really clever that.

Your line of argument reminds be of 'BBC Balance' where ludicrous extremes are pitted against one another in the interest of balance. You're a Bitcoin Lawson.
Rob Parsons on 13 Nov 2017
In reply to neilh:

> ... It illustrates beautifully the paradox of bitcoins , a disney currency which could only be used in a disney park ...

You've previously made the same comment, and I've been pondering it. What about gold, then? You can't 'spend' that in any shop I know of - but that has never stopped people trusting its value.

The price of gold goes up and down quite markedly in response to external events, of course - but still people seem quite happy to trust it.

Maybe there's some useful analogies to be drawn here: neither bitcoins nor gold have any intrinsic 'useful' value; both are both just hoarded, then traded in some way. But there is a limited existing supply of both; it is difficult and expensive to produce more of both; and both are permanent (i.e. they don't degrade if kept.)

Whatever the truth about all of this, pondering the existence of bitcoin has made me realise that I do not really understand what money is, or how it works.

SteveD - on 13 Nov 2017
In reply to Rob Parsons:

I once said to a financier that I didn't understand money, it seemed all 'Smoke and mirrors' to me. He replied that I understood it perfectly.

Steve
neilh - on 13 Nov 2017
In reply to Rob Parsons:

Gold you can have in your hands..it can be weighed and traded accordingly. And when all said and done govts have gold tucked away( and so can individuals).You can after all use gold in other products.Its price rises and falls.

I suppose bitcoin is just an extension of bartering but with no physical presence.

Put it this way I think most of us on here would be happy with a few gold bars tucked away...even Shani!
neilh - on 13 Nov 2017
In reply to Shani:

And you are a bitcoin Blair.

Merely pointing out what others are saying.......
Shani - on 13 Nov 2017
In reply to neilh:

> And you are a bitcoin Blair.

Touche!

Shani - on 13 Nov 2017
In reply to neilh:
> I suppose bitcoin is just an extension of bartering but with no physical presence.

97% of new money has NOTHING behind it. No gold. Nothing! There hasn't been since the break with the gold standard.

It bears repeating. 97% of new money since the early 70s only exists in electronic form, spun up out of nowhere.

Also, Wiki has this to say on the gold standard and bitcoin:

According to research produced by the Bank of Canada, the emerging Bitcoin economy has many similarities with the economy based on gold standard, in particular:
- limited and predictable supply of the anchor of the monetary system
- no central bank or monetary authority controls the supply
- low or non-existent inflation
- virtually no arbitrage costs for international transactions
- Governments have less control over their domestic economies
- Governments lose seigniorage revenues that they obtain from the ability to almost costlessly create money

( https://en.wikipedia.org/wiki/Gold_standard )
Post edited at 16:07
tom_in_edinburgh - on 13 Nov 2017
In reply to neilh:

> Put it this way I think most of us on here would be happy with a few gold bars tucked away...even Shani!

If push comes to shove and the banking system is falling apart like in 2008 or there's a despotic government or civil war and its time to get out of dodge then Bitcoin would be a hell of a lot more convenient than big and heavy bars of metal. You could keep your private keys on a tiny flash memory card or print them out on an easily hidden strip of paper. You can spend fractions of a bitcoin like normal money - no chipping bits off the side of a bar of gold.

Bitcoin and probably a couple of other crypto-currencies are on the cusp of going mainstream in the US, Korea and Japan. If you are wealthy or you are a fund manager they are an interesting asset class to have some exposure to, both because of the way the price is rising due to the built in deflation but also because they have different properties from other assets so they can balance risk in a portfolio.



paul__in_sheffield - on 13 Nov 2017
In reply to ablackett:

Just out of interest, is anyone out there actually mining bitcoin (using your own kit, not renting cloud resources). Just wondered whether it was worth a dabble with my blade servers and GPU banks?
tom_in_edinburgh - on 13 Nov 2017
In reply to paul__in_sheffield:

> Just out of interest, is anyone out there actually mining bitcoin (using your own kit, not renting cloud resources). Just wondered whether it was worth a dabble with my blade servers and GPU banks?

You've got no chance of mining Bitcoin with GPUs and servers, there are ASIC miners that will be multiple orders of magnitude more efficient and the electricity will cost more that any Bitcoin you can mine.

You can make money mining Ethereum with GPUs. Not a lot of money but significantly more than the electricity and if you've got a bunch of GPUs doing nothing a lot of the time then it's probably worthwhile. Look for Claymore miner on the web and mine Ethereum plus an altcoin like Sia coin. The Ethereum mining is limited by VRAM memory bandwidth but the Sia is almost all compute so you can mine it effectively for free using GPU capacity left over after the memory is saturated.

This advice only works if you already own the GPU servers: in about 6 months Ethereum is switching to Proof of Stake and at that point GPU mining is dead and there will be masses of GPU mining rigs looking for something to do. It's too late to buy GPU mining rigs and make enough Ethereum in time to pay for the hardware. Also, you want at least two or three GPU per CPU or really high end GPU so that most of the electricity you are paying for is actually making Ethereum.
paul__in_sheffield - on 13 Nov 2017
In reply to tom_in_edinburgh:

Tom, thanks for the info.
I’m not looking to make cash, just intrigued by some of the algorithms and porting to do it efficiently. Power isn’t an issue as it’s one of my overheads covered by my annual budget.
I run two Xeons with two Tesla K80s plus a Xeon Phi in each of my servers, plus I’ve a liquid cooled blade server which is all CPU, two Xeons plus 256GB ram on each blade, 9 blades in total.
If any of the mining rigs come on the market with K100s I’ll be looking to buy ;-)
tom_in_edinburgh - on 13 Nov 2017
In reply to paul__in_sheffield:

If you are interested in the algorithms the Bitcoin one is by far the simplest it is SHA256 with a whole bunch of simplifications which are specific to the Bitcoin use case. It's really an algorithm for pipelined hardware and, apart from being really easy to implement as a demo, is not of much interest from a software perspective. The Ethereum hash algorithm is much cleverer and more interesting, it was specifically designed to be memory intensive to prevent the ASIC miners dominating and centralising the Proof of Work. There are a ton of other Proof of Work algorithms used by the minor alt-coins some of which might be more interesting from an academic perspective but there's generally no money in mining them because the price of the coin is too low.

The standard Ethereum rig would be an open frame (for cooling, the hot air tends to get blown out the top of the GPUs) with a low end processor and as many x1 PCI slots as possible each of which has an RX480 or RX580 GPU plugged in via a riser cable. The AMD GPUs apparently work better than the NVidia ones for the Ethereum hash but there are miners using NVidia GPUs for ZCash. I don't think you will find many very high end GPUs in mining rigs - too expensive relative to hash capacity.
Coel Hellier - on 13 Nov 2017
In reply to tom_in_edinburgh:

I realise that this is a dumb question, but what is the point of the "mining" aspect of Bitcoin?

Afterall, Bitcoin can operate without mining, can't it? (And indeed will need to at some point, given that there are a fixed number of "coins" to mine.)
Shani - on 13 Nov 2017
In reply to Coel Hellier:

> I realise that this is a dumb question, but what is the point of the "mining" aspect of Bitcoin?

> Afterall, Bitcoin can operate without mining, can't it? (And indeed will need to at some point, given that there are a fixed number of "coins" to mine.)

Maintaining the leger of all Bitcoin transactions is what the 'mining' is all about. It's a poor choice of word.
paul__in_sheffield - on 13 Nov 2017
In reply to tom_in_edinburgh:
Thanks.
I’ve a bunch of AMD Firepros which have only been used for driving 4K screens (6 per card).what a waste of a GPU on graphics ;-)
sg - on 13 Nov 2017
In reply to Shani:

> Maintaining the leger of all Bitcoin transactions is what the 'mining' is all about. It's a poor choice of word.

Isn't it that there needs to be an element of 'work' to add value to the currency? In the same way that mining gold or producing any commodity takes effort. If there were no energy or work needed the currency wouldn't sustain value. Or have I misunderstood completely? If blocks could be added to the chain with no significant processing power then any individual could simply add blocks at will.

Isn't it ledger?!
tom_in_edinburgh - on 13 Nov 2017
In reply to Coel Hellier:
> I realise that this is a dumb question, but what is the point of the "mining" aspect of Bitcoin?

The Proof of Work is there to make the blockchain act like a ledger, it makes it impossible to reverse transactions included in the block chain with a reasonable amount of computational effort. The transactions are 'chained' in that the last one to be added depends on the result of all the previous ones so the deeper the transaction is on the chain the larger the amount of work to reverse it.

> Afterall, Bitcoin can operate without mining, can't it? (And indeed will need to at some point, given that there are a fixed number of "coins" to mine.)

After there are no coins left to be mined the miners will need to be rewarded entirely from transaction fees as opposed to new coins being issued. I'm not sure how much of the miner rewards is already from fees.

This is heresy in the Bitcoin world but I wouldn't be surprised if the present Proof of Work system didn't last until there were no coins left to be mined. There's a civil war between a few shady characters that own the ASIC mining operations and the Bitcoin software development team and if it keeps escalating my guess is eventually the Bitcoin developers will change their code to use an ASIC resistant Proof of Work algorithm or go to Proof of Stake like Ethereum intends to do. This has the potential to save a huge amount of energy and run many times more transactions per second.
Post edited at 22:51
In reply to tom_in_edinburgh:

> This advice only works if you already own the GPU servers: in about 6 months Ethereum is switching to Proof of Stake and at that point GPU mining is dead and there will be masses of GPU mining rigs looking for something to do.

There's quite a few other coins that GPU mining works for after Eth switches to to Proof of Stake: https://whattomine.com/coins
tom_in_edinburgh - on 14 Nov 2017
In reply to Paul Phillips - UKC and UKH:

> There's quite a few other coins that GPU mining works for after Eth switches to to Proof of Stake: https://whattomine.com/coins

Yes, there are but Ethereum is where the money is and what the vast majority of the GPU hardware is doing. When that wave of hardware tries to mine smaller coins they will see the increased hashrate and turn up their difficulty to compensate, at that point mining them will not bring in more than the electricity costs for most rigs. There will likely be exciting times for miners and traders around about the time of the Ethereum fork which brings in Proof of Stake.
paul__in_sheffield - on 14 Nov 2017
In reply to tom_in_edinburgh:

FYI, I’ve a radiator in my lab in the blade server’s cooling circuit before it goes outside to the heat exchanger. I need some number crunching to keep warm now winter is coming
neilh - on 14 Nov 2017
In reply to tom_in_edinburgh:

Fascinating. Although I reckon all your subequent posts confirm to most people that bitcoins and others are for people with servers etc and space in their basements/cellars!

Techno babble is what springs to mind.

I wish you all success with your ventures.
neilh - on 14 Nov 2017
In reply to Shani:

Very familiar with the gold standard. As I had to study it in the past .

In reply to paul__in_sheffield:

Nice. I'm actually using my 6 GPU rig to keep the conservatory heated at the mo
tom_in_edinburgh - on 14 Nov 2017
In reply to neilh:

> Fascinating. Although I reckon all your subequent posts confirm to most people that bitcoins and others are for people with servers etc and space in their basements/cellars!

That's just me. I had a very small dabble in Ethereum mining over summer and now have a useful space heater in the spare bedroom. Last year it was a good space to play with a couple of servers, next year that will be over. I'll be lucky to get enough out to break even on the hardware before the Ethereum change to Proof of Stake kills GPU mining but if I'd bought Bitcoin or Ethereum and held it rather than trying to mine it I'd have doubled my money.

Bitcoin and Ethereum are growing up and becoming mainstream investments, the days where it was geeks with servers in the basement and Silk Road are pretty much over.
In reply to tom_in_edinburgh:
I suspect I beat you to the dabble by a few months as my £1,500 investment paid for itself in about 4 months. I bought all the GPUs 2nd hand off eBay tho.

In hindsight, I would have made a lot more money if I'd bought Bitcoin instead of the hardware but I'm a geek and enjoyed building it. Also, I saw it as a bit of a hedge, if it didn't work out then I could sell the hardware for at least 80% of what I paid.
Post edited at 09:39
Gerry Gradewell - on 15 Nov 2017
In reply to tom_in_edinburgh:

> If you are wealthy or you are a fund manager they are an interesting asset class to have some exposure to, both because of the way the price is rising due to the built in deflation but also because they have different properties from other assets so they can balance risk in a portfolio.

Could you expand on the notion of 'built in deflation'? The supply is gradually decreasing in its rate of increase, as far as zero, but is never negative (this ignores loss of coins on one side and forking on the other). Ever increasing adoption could be another input to deflation but this doesn't seem built in or a even a safe assertion. Am I missing something?

Coel's question regarding the necessity to introduce 'new value' rewarded to the miner on having a block accepted is an interesting one. In the flat state where there are no new bitcoins being introduced presumably there's enough incentive in transaction fees to keep the ledger stable. Perhaps the problem solved by mining is in how to 'initialise' value share.





tom_in_edinburgh - on 15 Nov 2017
In reply to Gerry Gradewell:

> Could you expand on the notion of 'built in deflation'? The supply is gradually decreasing in its rate of increase, as far as zero, but is never negative (this ignores loss of coins on one side and forking on the other). Ever increasing adoption could be another input to deflation but this doesn't seem built in or a even a safe assertion. Am I missing something?

This is a graph of how many Bitcoins have been mined so far, we have already had 16.5 million out of the total 21 million. It will take a while to get the last 4.5M because the difficulty of mining increases exponentially so it takes longer and longer to mine a coin. But the key fact is that 3/4 of the possible Bitcoin are already mined and the rest are going to come out slower and slower.

https://blockchain.info/charts/total-bitcoins?scale=1&timespan=all

At the same time the price and therefore market cap of Bitcoin is growing exponentially.

https://uk.tradingview.com/symbols/BTCUSD/

So, in effect we get deflation: over time a Bitcoin buys more US Dollars.

This isn't a mathematically safe assertion - Bitcoin could get banned tomorrow and crash - but it's a pretty reasonable real world statement.


> Coel's question regarding the necessity to introduce 'new value' rewarded to the miner on having a block accepted is an interesting one. In the flat state where there are no new bitcoins being introduced presumably there's enough incentive in transaction fees to keep the ledger stable. Perhaps the problem solved by mining is in how to 'initialise' value share.

Yes: the mining is needed to secure the ledger and tying the creation of new Bitcoin to mining limited the rate of creation of Bitcoin and tied it to the number of transactions being processed (mining happens when there is a new block of transactions to add to the ledger) to try and create scarcity.

I don't think Satoshi necessarily got it completely correct: he wanted to create a currency which could be used for purchases and produced something more like gold which is horded and has high transaction fees.


MarkM - on 19:47 Thu
In reply to ablackett:

Just caught up on this thread which has been a good read with the usual UKC deviations!

No I didn't invest in 2013 unfortunately but I dipped a toe into the bitcoin world 2 months or so back and from there have done a fair amount of reading and thinking about it since ... a fascinating parallel world out there of blockchain technology development and investment/speculation.
There are a whole host of other non-bitcoin cryptocoins (altcoins) and coins/tokens sold for blockchain related projects/companies via ICOs (Initial Coin Offerings) - some of these have been scams - others of have lost money - some have made major profits and presented a host of interesting applications (as well as investment opportunities - with some major profits to be made (I hope).
All relatively high risk but I have my appetite for risk is fairly high so will be waiting to see what happens in the next 12 months ahead with interest!
Shani - on 13:37 Fri
Bjartur i Sumarhus on 14:11 Fri
In reply to Shani:

I just bought £1000 of ethereum as a little punt earlier today
MarkM - on 19:00 Fri
In reply to Bjartur i Sumarhus:

Good luck with that!
If you (or anyone) is interested in going down the ICO route then there's a (to my mind) very interesting 'index fund' being launched that will invest in the top 20 cryptocurrencies, rebalancing weekly. Gives access to a significant portfolio without having to do all of that work yourself, which has a lot of appeal for me.
https://crypto20.com/en/
This is not financial advice and I am a very amateur cryptocurrency investor!
neilh - on 20:00 Fri
In reply to MarkM:
wow . Talk about an unregulated market.

Cowboys springs to mind.

An exempted company in the cayman islands!!! It gets better and better.

Please tell me you are not being hoodwinked into running with this.
Post edited at 20:04
tom_in_edinburgh - on 22:50 Fri
In reply to MarkM:
Bitcoin totally dominates the crypto market with Ethereum in second place and a long way behind. An indexing strategy based on market cap is going to put most of the money in Bitcoin and Ethereum so I'm not sure what you gain from a formal index fund. Most of the trading of altcoins is on pairs against Bitcoin (rather than US Dollars because a lot of the exchanges have regulatory issues with US dollars) . This means alt-coins tend to move together to respond to things happening to Bitcoin so you don't get as much diversification as you would in say the stock market by holding many different alt-coins.

ICOs need to be treated with caution, they look really good during the sale and pre-sale because they are spending a lot on marketing. Some of them are outright scams. Once they raise their funds the marketing budget gets cut right back and they don't look any different from all the other small time alt-coins. Most of the time you'd be cheaper ignoring the ICO and buying the coin on an exchange after it started to trade.

The standard advice for crypto is to buy Bitcoin (and maybe some Ethereum) and HODL.
Post edited at 22:51
Bjartur i Sumarhus on 07:18 Sat
In reply to tom_in_edinburgh:

HODL - deliberate miss-spelling or hold on for dear life? I can't find the true definition

Have to say buying Ether using blockchain app was a bit of a PITA. I had to buy bitcoin first, wait for that to settle, then switch that purchase into ether. On the face of it, not too much trouble but being hit with twice the fees was a bit annoying. Not sure why I couldn't just buy ether from the outset, unless i'm doing something wrong....?
In reply to Bjartur i Sumarhus: It might be better to use the Blockchain.info website instead. I think you can buy Ethereum directly there. I've used Kraken.com too, that's a even more long winded but you end up paying less fees. Plus you can convert £'s into any crypto currency you want.
Phil Payne - on 08:26 Sat
In reply to Bjartur i Sumarhus:

Try coinbase for bitcoin and ethereum
tom_in_edinburgh - on 19:09 Sat
In reply to Bjartur i Sumarhus:

> HODL - deliberate miss-spelling or hold on for dear life? I can't find the true definition

It's a Reddit meme which started from this guy's original 'I am HODLING' post

https://bitcointalk.org/index.php?topic=375643.0



MarkM - on 13:55 Mon
In reply to neilh:

Hi Neil. Thanks for your concern! Yes it is a new and currently fairly unregulated sector so scams are possible and have occurred. Regulation is I think on its way and the more serious ICOs are taking KYC/AML checks and other legal requirements seriously to prepare for this.
Yes there's of course a chance I've been 'hoodwinked' .... obviously I don't think so and have done as much research as possible to avoid this - we'll see!
Cheers Mark
MarkM - on 14:17 Mon
In reply to tom_in_edinburgh:

Hi Tom:
Thanks for the feedback.
Yes Bitcoin dominated the market - and may be the key player for some time to come. However though it's own value has increased significantly over the last 12 months, as a percentage of the total cryptocoin market it's gone from ~85% in January to ~ 55% now and there have been a number of other coins (other than just Ethereum) that have increased in value at a proportionally greater rate. The index fund I'm looking at has a weighted max of ~10% for the top few coins so they don't have a disproportionate influence on the fund as a whole. In fact they've just rebalanced the currently invested funds and you can now see that allocation on their website.
Yes I agree you can pick up many tokens cheaper post ICO but these ones haven't been sold at a huge discount pre-ICO and they will be intrinsically linked to the NAV of the underlying tokens so (unless there's an overall downward shift) there shouldn't be a much better opportunity compared to buying in later.
I've spent way too much time reading about bitcoin and cryptocurrencies and ICOs over the last 2 months so something that's a hands off diversified investment appeals.
I'll see and report back!
MarkM - on 14:22 Mon
In reply to Phil Payne:

> Try coinbase for bitcoin and ethereum

That's what I've used easily you can currently only pay in from UK via an international SEPA payment but it's been straightforward enough.
To save money (1 - 2% typically) on subsequent conversion fees (from EUR to BTC or ETH) you can do this via their fee-free sister trading site GDAX - lots of simple you tube videos out there to explain how and it's easy enough to play around with small amounts to get the feel for this.

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