About Bitcoin

[traderwald]

Hi Guys

I do not understand the value of any currency that is not either backed by a credible entity (like a govt.) or something which does not have barter value (like exchanging a grain for fruit or DVD for USB or something like that).

I would think that block-chain based currency i.e. the technology basis has value, but any such currency in existence as bitcoin I am not sure has credibility when it is not backed by govt.

Hence, I do not understand the bitcoins value

- who is giving it value and why ?
- who guarantees / underwrites this value ?
- Is it possible to have a currency without some govt. that is enforcing and regulating it ?


And, if they are regulated by institutions, then they are similar to existing currencies, just better technology rather than the advantages of being unregulated that they are touted for.

What do you guys think ?

 

[maxinger]

Bitcoin is one of the worst and most hopeless instruments for trading.
Its day range has been shrinking to record low of 150 points on 22 oct 18.

well. Let's see if the day range will improve when price breaks the 6000 support level
decisively.

 

[MrMuppet]

Hi Guys

I do not understand the value of any currency that is not either backed by a credible entity (like a govt.) or something which does not have barter value (like exchanging a grain for fruit or DVD for USB or something like that).

I would think that block-chain based currency i.e. the technology basis has value, but any such currency in existence as bitcoin I am not sure has credibility when it is not backed by govt.

Hence, I do not understand the bitcoins value

- who is giving it value and why ?
- who guarantees / underwrites this value ?
- Is it possible to have a currency without some govt. that is enforcing and regulating it ?


And, if they are regulated by institutions, then they are similar to existing currencies, just better technology rather than the advantages of being unregulated that they are touted for.

What do you guys think ?

The value of bitcoin is created by the demand to use it.

In short:

- If you want to make a transaction in bitcoin, you need to buy it. When people buy it to make transactions, price goes up.

- When you do a transaction, it needs to get verified by the network. Miners build your transaction into blocks for a small fee. The more transactions, more fees generated, more miners, faster transactions, reduced transaction costs. Miners are selling their BTC for USD to pay costs.

- It's not regulated and there is no government enforcement. There are no instutitions, its peer to peer without any middle men. And exactly this is why it has value to many over government backed fiat money.



The last point might be uncomfortable to many, especially in the US were people have a lot of faith in their government. But think about how many Bitcoin users are profiting from this infrastructure in countries with oppressive governments and money regulations.

You cannot confiscate Bitcoin as long as you don't confiscate the private key, as it is not physical and there is no bank handing out your assets to the feds.

You can do transactions without a bank account, all you need is a smartphone and internet.


Thing is, people in the western world are either crypto maniacs who dream of a better world or crypto bears who thing it's useless because nobody is pampering their asses when it comes to safety of use.

But when you do a search on google trends, you will find that the majority of searches comes from countries with either lack of government or lack of infrastructure like in Africa, Eastern Europe, lot of island states like Bonaire or Faroe Islands. In fact, the US isn't even in the top 30.
So it doesn't necessarily mean that crypto is used to trade drugs or to launder money, although it is a part of it. There are countries were it's prohibited to buy or hold USD (Venezuela) and that's were BTC opens up the world to you.

It also does when your governments' fiat has tripple digit inflation per year, which is also the reason why BTC has such a huge premium in Zimbabwe. People rather pay up 20% than losing 99% of their net worth by the end of the year....and when you do not have a bank account and don't get one in order to get into USD, you just buy BTC from someone via smartphone....any very many people did.


TL;DR:

- If you want to know how it exactly works, read: https://bitcoin.org/bitcoin.pdf
- Users are natural buyers/demand (paper)
- Miners are natural sellers/supply (commercials)
- Just because it's useless to you doesn't mean it's useless to everyone.

 

[RedDuke]

The value of bitcoin is created by the demand to use it.

In short:

- If you want to make a transaction in bitcoin, you need to buy it. When people buy it to make transactions, price goes up.

- When you do a transaction, it needs to get verified by the network. Miners build your transaction into blocks for a small fee. The more transactions, more fees generated, more miners, faster transactions, reduced transaction costs. Miners are selling their BTC for USD to pay costs.

- It's not regulated and there is no government enforcement. There are no instutitions, its peer to peer without any middle men. And exactly this is why it has value to many over government backed fiat money.



The last point might be uncomfortable to many, especially in the US were people have a lot of faith in their government. But think about how many Bitcoin users are profiting from this infrastructure in countries with oppressive governments and money regulations.

You cannot confiscate Bitcoin as long as you don't confiscate the private key, as it is not physical and there is no bank handing out your assets to the feds.

You can do transactions without a bank account, all you need is a smartphone and internet.


Thing is, people in the western world are either crypto maniacs who dream of a better world or crypto bears who thing it's useless because nobody is pampering their asses when it comes to safety of use.

But when you do a search on google trends, you will find that the majority of searches comes from countries with either lack of government or lack of infrastructure like in Africa, Eastern Europe, lot of island states like Bonaire or Faroe Islands. In fact, the US isn't even in the top 30.
So it doesn't necessarily mean that crypto is used to trade drugs or to launder money, although it is a part of it. There are countries were it's prohibited to buy or hold USD (Venezuela) and that's were BTC opens up the world to you.

It also does when your governments' fiat has tripple digit inflation per year, which is also the reason why BTC has such a huge premium in Zimbabwe. People rather pay up 20% than losing 99% of their net worth by the end of the year....and when you do not have a bank account and don't get one in order to get into USD, you just buy BTC from someone via smartphone....any very many people did.


TL;DR:

- If you want to know how it exactly works, read: https://bitcoin.org/bitcoin.pdf
- Users are natural buyers/demand (paper)
- Miners are natural sellers/supply (commercials)
- Just because it's useless to you doesn't mean it's useless to everyone.

Nothing about supply/demand or buying/selling in Bitcoin or most cryptos. Look up USDT (usd tethers), how they being created out of thin air to support Bitcoin. Had it not been for USDT, Bitcoin would have been below 1K or less now. If you look at the chart, the support looks anything but natural.

 

[traderwald]

The value of bitcoin is created by the demand to use it.

In short:

- If you want to make a transaction in bitcoin, you need to buy it. When people buy it to make transactions, price goes up.

- When you do a transaction, it needs to get verified by the network. Miners build your transaction into blocks for a small fee. The more transactions, more fees generated, more miners, faster transactions, reduced transaction costs. Miners are selling their BTC for USD to pay costs.

- It's not regulated and there is no government enforcement. There are no instutitions, its peer to peer without any middle men. And exactly this is why it has value to many over government backed fiat money.



The last point might be uncomfortable to many, especially in the US were people have a lot of faith in their government. But think about how many Bitcoin users are profiting from this infrastructure in countries with oppressive governments and money regulations.

You cannot confiscate Bitcoin as long as you don't confiscate the private key, as it is not physical and there is no bank handing out your assets to the feds.

You can do transactions without a bank account, all you need is a smartphone and internet.


Thing is, people in the western world are either crypto maniacs who dream of a better world or crypto bears who thing it's useless because nobody is pampering their asses when it comes to safety of use.

But when you do a search on google trends, you will find that the majority of searches comes from countries with either lack of government or lack of infrastructure like in Africa, Eastern Europe, lot of island states like Bonaire or Faroe Islands. In fact, the US isn't even in the top 30.
So it doesn't necessarily mean that crypto is used to trade drugs or to launder money, although it is a part of it. There are countries were it's prohibited to buy or hold USD (Venezuela) and that's were BTC opens up the world to you.

It also does when your governments' fiat has tripple digit inflation per year, which is also the reason why BTC has such a huge premium in Zimbabwe. People rather pay up 20% than losing 99% of their net worth by the end of the year....and when you do not have a bank account and don't get one in order to get into USD, you just buy BTC from someone via smartphone....any very many people did.


TL;DR:

- If you want to know how it exactly works, read: https://bitcoin.org/bitcoin.pdf
- Users are natural buyers/demand (paper)
- Miners are natural sellers/supply (commercials)
- Just because it's useless to you doesn't mean it's useless to everyone.

Aside the factors pertaining to enforcement and underwriting,

Do you not need an account with some provider / website like coinbase or something to buy bitcoins ? These websites can be regulated correct ?

Where do you store your bitcoins ? Ultimately, the whole concept is in the internet. Most people do not know the technical side of the internet.

- what if the private key is hacked by someone ? Is it certain that is technically impenetrable as touted ? i.e. can someone not simply alter the bitcoin completely ? I know they say you need a private key, but is it really impenetrable as they say ?

- How do the bit coins get circulated ?

- If someone gets the key alters a few hundred / or few thousand copies of the bit coin block chain, which one is then considered the correct transaction ?

I mean, it looks like the exception scenarios for all the assumptions about the sophistication of bitcoin / block-chain have not been considered (or maybe they have and I m not aware). Instead theories are spouted and people just agree with it - such as bitcoin cannot be hacked. It is de-centralised so it is not regulated. But is it really so, can a sophisticated technical entity not close off all bitcoins ?

 

[MrMuppet]

Nothing about supply/demand or buying/selling in Bitcoin or most cryptos. Look up USDT (usd tethers), how they being created out of thin air to support Bitcoin. Had it not been for USDT, Bitcoin would have been below 1K or less now. If you look at the chart, the support looks anything but natural.

Lol...I really do not want to vouch for that piece of crap USDT but in all honesty it's the same mechanism every central bank in the world uses to create fiat out of thin air...and I would not necessarily call them more intransparent than lets say the central bank of India for example.

And yes, even if USDT wasn't created we would still trade well above 5k IMO. The entire rage has been fuelled by the economic crisis in LatAm and Africa as many people used crypto as an alternative way to store value. And lots of people from Venezuela moved their entire net worth into crypto when the government restricted access to USD and inflation got worse.

As far as the chart goes...I don't care. And how on earth do you distinguish a "natural" support (whatever this is) from an "artificial" one. Buyers at 6k, that's all I need to know. I don't care if it's a whale or the retail crowd.


I really do not understand why everyone hates on that stuff so much or dooms it. Why don't you just shut up and trade it?? You guys missed the train to get involved, but that's ok. You missed the train when electronic trading was introduced but that doesn't stop you from dabbling with futures and stocks.
Just get into it, learn the infrastructure, figure out a way to mitigate counterparty risk and see if you can make a buck or two. You probably wont, but at least there's a probability that you'll fill one of my bids and offers.



@etrades:

No, you don't need an account with some provider. You can have one, but you don't need one. If you want me to send you 100$ in BTC, all I need from you is the 100$ via paypal and your public key were I send the BTC to. We agree upon a price and here you go. Just bought BTC.

For everything else, please read the Satoshi Whitepaper I provided a link to in my post above. It's all in there. I wonder why so many discuss BTC who never actually went through just 9!!!! pages of "how it all works". You can read that during your morning dump, folks...and the internet would not be littered with redundant questions.

TL;DR: At the moment there is no computer that is able to hack the blockchain. Could be different in a couple of hundred years.
The private key cannot be hacked untill you are stupid enough to either post it on the internet or get it stolen. Nobody is able to hack a code that was created by elliptic curve cryptography yet.(hence the name cryptocurrency).

To brute force a secp256k1 key pair is like hacking information with 128 bits of entropy. It costs about 100M$ in electricity at 5 cents per KWh using almost perfectly efficient quantum computers. If your enemy got both ingredients, he could possibly try to hack your 5000$ wallet.


How the bitcoins get circulated? Come on...read the damn white paper.

 

[RedDuke]

Lol...I really do not want to vouch for that piece of crap USDT but in all honesty it's the same mechanism every central bank in the world uses to create fiat out of thin air...and I would not necessarily call them more intransparent than lets say the central bank of India for example.

And yes, even if USDT wasn't created we would still trade well above 5k IMO. The entire rage has been fuelled by the economic crisis in LatAm and Africa as many people used crypto as an alternative way to store value. And lots of people from Venezuela moved their entire net worth into crypto when the government restricted access to USD and inflation got worse.

As far as the chart goes...I don't care. And how on earth do you distinguish a "natural" support (whatever this is) from an "artificial" one. Buyers at 6k, that's all I need to know. I don't care if it's a whale or the retail crowd.


I really do not understand why everyone hates on that stuff so much or dooms it. Why don't you just shut up and trade it?? You guys missed the train to get involved, but that's ok. You missed the train when electronic trading was introduced but that doesn't stop you from dabbling with futures and stocks.
Just get into it, learn the infrastructure, figure out a way to mitigate counterparty risk and see if you can make a buck or two. You probably wont, but at least there's a probability that you'll fill one of my bids and offers.

I do not hate it one bit, and no train was missed since I had 0 interest to invest/trade into something I could not understand.

I was shocked by its meteoric ascend, but thought it was natural. The picture became a lot clearer once I learned about USDT. In case you did not know Bitfinex fired their auditor with below language:

"We confirm that the relationship with Friedman is dissolved. Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame. As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success."

If this does not spell trouble for you, I do not know what will. They control USDT creation, and we need to take their word. Yeah right.

P.S. Based on your post, you seem a bit angry. Could it be your subconsciousness telling you something????

 

[MrMuppet]

P.S. Based on your post, you seem a bit angry. Could it be your subconsciousness telling you something????

It's my consciousnes and it tells me that there are a lot of people who don't know anything about crypto but still discussing it like they do. And that's just tilting me to be honest.

The funniest thing about it is the fact that people are hammering so called disadvantages were there are none, but do not see the biggest disadvantage of them all:

You. can. not. revert. mistakes.


You got your bitcoin stolen? Zero chance of getting it back. You typed in the wrong adress? Everything gone. You pasted your adress into the wrong browser window? Well, you're broke.


That's were the real problem is. Everything else is just peanuts that are so common in every day finance that nobody even talks about it.

Hacking accounts, fraud, ponzi schemes, market manipulations, fake accounting. And yes, it happens in the crypto space, too. But looking at these problems as crypto only issues and a reason not to trade it? Are you kidding me?

If anyone said "look, I don't feel good trading Crypto cause I'm not tech savvy and I'm scared of losing my entire net worth when I hit the wrong button" I can perfectly accept that.

But when you tell me that this market will go down in flames because it's all fake and you get hacked, the exchanges run away with your money, it's a bubble and stuff...and at the same time you trade CFD's, FX, buy canabis stocks, trade ebola microcaps or "invest" in Fitbit how can that not tilt me?

Back in the day when I started trading, Refco just blew up and I had money there. Then Man Financials blew up and I had money there.
I was first hand witness for the market manipulation of VW shareholders during the Porsche takeover attempt because I had VW calls. I've seen the fraudulent practises of FXCM and their fall during the CHF shock, Suretrader being setup as a FBI mousetrap for money launderers and tax evaders, Lehman going bust, LAKE trading at 24$ because they were selling a plastic HazMat suit on Amazon when one Texan died from Ebola....and now BTC is risky or manipulated or a bubble? Are you fucking kidding me???

The USDT "problem" is nothing close to the vicious cycle of corporate bonds and share buyback programs, but still people trade equities.

Thing is, if you know what you are doing, you can mitigate all of that risk by hedging. In short, my risk of ruin is basically zero no matter what happens, even when the market completly disappears tomorrow.

 

[RedDuke]

It's my consciousnes and it tells me that there are a lot of people who don't know anything about crypto but still discussing it like they do. And that's just tilting me to be honest.

The funniest thing about it is the fact that people are hammering so called disadvantages were there are none, but do not see the biggest disadvantage of them all:

You. can. not. revert. mistakes.


You got your bitcoin stolen? Zero chance of getting it back. You typed in the wrong adress? Everything gone. You pasted your adress into the wrong browser window? Well, you're broke.


That's were the real problem is. Everything else is just peanuts that are so common in every day finance that nobody even talks about it.

Hacking accounts, fraud, ponzi schemes, market manipulations, fake accounting. And yes, it happens in the crypto space, too. But looking at these problems as crypto only issues and a reason not to trade it? Are you kidding me?

If anyone said "look, I don't feel good trading Crypto cause I'm not tech savvy and I'm scared of losing my entire net worth when I hit the wrong button" I can perfectly accept that.

But when you tell me that this market will go down in flames because it's all fake and you get hacked, the exchanges run away with your money, it's a bubble and stuff...and at the same time you trade CFD's, FX, buy canabis stocks, trade ebola microcaps or "invest" in Fitbit how can that not tilt me?

Back in the day when I started trading, Refco just blew up and I had money there. Then Man Financials blew up and I had money there.
I was first hand witness for the market manipulation of VW shareholders during the Porsche takeover attempt because I had VW calls. I've seen the fraudulent practises of FXCM and their fall during the CHF shock, Suretrader being setup as a FBI mousetrap for money launderers and tax evaders, Lehman going bust, LAKE trading at 24$ because they were selling a plastic HazMat suit on Amazon when one Texan died from Ebola....and now BTC is risky or manipulated or a bubble? Are you fucking kidding me???

The USDT "problem" is nothing close to the vicious cycle of corporate bonds and share buyback programs, but still people trade equities.

Thing is, if you know what you are doing, you can mitigate all of that risk by hedging. In short, my risk of ruin is basically zero no matter what happens, even when the market completly disappears tomorrow.

Glad you were able to figure all of the above for cryptos. I have 0 interest and desire in them, and I am very tech savvy. I run fully automated algos that trade commodities, that makes me quite busy.

You do what you know, I do what I know.

Best of luck to you, and I hope you are right and I am wrong.

As far as comparisons of cryptos to Refco and Man blowup, it is like apples and oranges.

 

[MrMuppet]

Glad you were able to figure all of the above for cryptos. I have 0 interest and desire in them, and I am very tech savvy. I run fully automated algos that trade commodities, that makes me quite busy.

You do what you know, I do what I know.

Best of luck to you, and I hope you are right and I am wrong.

As far as comparisons of cryptos to Refco and Man blowup, it is like apples and oranges.

In terms of risk, Refco and Man blow up is exactly the same since crypto exchanges are broker, exchange and clearing at the same time. If one of the departments blows up, your money is gone. The only difference is that you cannot hedge your account since none of the crypto exchanges is public yet.

Besides that, I'm glad we can at least agree to disagree. It is a market for cowboy traders and I like that, since margins are super fat. If you can sail around all the other bullshit, it's a personal goldmine.