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Oompa Loompa

Bitcoin - someone explain it to me

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52 minutes ago, Oompa Loompa said:

Someone explain it to me. 

 

I just sold out at 4,800 as I thought it had peaked - but it's still climbing - got to over $5,500 this evening - Darn?! Doesn't explain bitcoin, but, like Kenny says, you gotta know when to hold'em know when to fold'em. :(

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To give you an idea of the volatility of the market - bitcoin went just shy of $6,000 yesterday but dropped to $5,070 overnight and is now siting up around $5,500.  I had a buy order in at 5,000 so I missed the dip by seventy bucks - Doh!!!

This is much more fun than sports bet!!  lol

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On 8/16/2017 at 6:52 PM, Niseko said:

My tip: BTC heading down to USD $3,000 in next 2 weeks, before bouncing back to $4,500.

 

Kind of -  it hovered down around USD 3800 (~5000AUD) for a while but now on the move - around 4400 (5600AUD ) and climbing. Must be a big demand on wannacry ransom payments :) 

I think I will put in a sell order just shy of 6,000 AUD and hope to catch it with a buy order when it comes down the other side.  Who knows? $500 dollar day trader today, tomorrow the Wolf of Wall Street....!

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On 9/3/2017 at 0:36 AM, Mike Honcho said:

having $5000 worth of bitcoin is not the same as having $5000. Selling them isn't as simple as it sounds. 

I converted my bitcoin* into cash on a market trade within 10 or 15 seconds. The transaction verified withing the hour and I transferred the AUD result into my bank account via direct debit within 48 hours.  Easier than a share transaction.  I made the princely sum of $250 profit on my modest $460 investment over a period of only 2 or 3 months.  That equates to something like a 200% annual return - try and get that from a term deposit!! LOL

 

*bitcoin - technically not exactly bitcoin as the exchange held it for me in an account as opposed to setting up my own bitcoin wallet which I have still yet to do (for no other reason than to learn how).  Even so, I think the exchange accepts direct transfers of bitcoin so I would think it would still be a fairly straightforward process. 

Edited by Pete

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So, everybody is happy to have a bet or share a bitcoin tip, but no one cares to explain what the frack it's all about! 

 

Typical Australians. You probably all work on the futures exchange and make billon dollar 'investments' based on a gut feeling. ...

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18 minutes ago, XCOM! said:

It's a digital asset - more analogous to commodity trading than currency trading.

Ah. An imaginary friend. Like having a personal relationship with Jesus, or riding a unicorn 🦄  to work. 

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9 hours ago, Andrew #1 said:

Ah. An imaginary friend. Like having a personal relationship with Jesus, or riding a unicorn 🦄  to work. 

Or voting for an honest politician.

 

Oh, sorry, that was another thread. :)

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11 hours ago, Andrew #1 said:

Ah. An imaginary friend. Like having a personal relationship with Jesus, or riding a unicorn 🦄  to work. 

It's 'intrinsic' value is based on the Bitcoin network and blockchain processing. As more applications are found and implemented for the technology and require increased decentralized transaction processing ('mining') then the intrinsic value of bitcoin will increase, so it's not all mindless gambling - although there is a hefty slice of that in the market.

Edited by XCOM!

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13 hours ago, Andrew #1 said:

So, everybody is happy to have a bet or share a bitcoin tip, but no one cares to explain what the frack it's all about! 

 

 

 

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To put it (probably badly) another way, there are 2 basic components to the price (vs. value) of bitcoin.

- The underlying intrinsic value created by the Bitcoin network-protocol and mining.
- The speculative market value based on traditional trading - i.e. greed.

Bitcoin's blockchain technology uses distributed processing, for which people need to invest in computers, power, network, time, etc etc, and are paid for doing that work in... bitcoin.

When processing bitcoin transactions was the only application for the Bitcoin network, then the value of bitcoin was obviously highly speculative and volatile. But as the technology is becoming more widely accepted and more applications are being implemented for it, the intrinsic value of bitcoin is increasing and becoming more stable. If the technology becomes more established and harder to replace, then the intrinsic value of bitcoin will become harder to dismiss, but the market value will likely not be what it is now.

It's probably not unlike any new discovery-technology where speculative investors stampede into the market to make a killing, and then many lose their shirts as the reality sets in on what it is and how it can be used.

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Got this in a newsletter today, RS might be able to calendarise the anniversary and remind us all

 

A random fact...

The first ever transaction in Bitcoin was made on 22 May 2010.

Laszlo Hanyecz bought 2 pizzas for 10,000 Bitcoin (~$31 AUD).

Today those 10,000 Bitcoin would be worth $47.8m AUD.

That day is now known as "Bitcoin Pizza Day".

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With apologies to  Darryl Kerrigan  "How's the volatility?" :) 

24mdl08.jpg

Note that this is not over 10 years, 5 years or even 1 year - this is the movement over 6 months! Note the scale, no funny business here - half the height means half the price! There's some money to be made on them thar hills...!

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You gotta love these type of PR Interviews.

John, are you fantastic or awesome?

Good question Jade, I like to think that I’m awesome, but I’m ok if people think I’m just fantastic.

Seriously, it doesn't take a genius to know that the price of bitcoins is gambling, and any super-fund stupid enough to invest in them should be sued by its members.

BitCoin was a way to establish and secure market-share for the block-chain technology, but obviously there will come a 'emperor has no clothes' day for the currency.

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22 hours ago, XCOM! said:

You gotta love these type of PR Interviews.

John, are you fantastic or awesome?

Good question Jade, I like to think that I’m awesome, but I’m ok if people think I’m just fantastic.

Seriously, it doesn't take a genius to know that the price of bitcoins is gambling, and any super-fund stupid enough to invest in them should be sued by its members.

BitCoin was a way to establish and secure market-share for the block-chain technology, but obviously there will come a 'emperor has no clothes' day for the currency.

Yup.  So the story is, get in early, sell at the peak, and enjoy.  My BIL reckons he has a small fortune in bitcoin, but he's not selling. It will end in tears for him.

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trouble with investing is setting a realistic profit goal and sticking to it. Take profits regularly and reinvest if you believe the trend will continue. A profit isn't a profit until you cash out. Bitcoin is a good example. My cousin was banging on about some bitcoin farming conglomerate he was a part of and did I want in. Did some looking into it and it is a pyramid scam. Not only a pyramid but you buy in with bitcoin value. He got in a few weeks before the peak so not only is he going to get stung with the scam but if he does not, the three bit coins he might end up with if he makes the next tier will be worth about 1.5 of his initial purchase. The scam is called Ultim8 Bitcoin if you get bored and want a laugh. 

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Check out the price graph - No matter what price you bought at there is not a single quarter in the last 2 years that you would not have made a profit on. The trend since the beginning has always been up.  The unpoppable bubble?

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FYI bitcoin now at AUD $15,900 - rocketing away from its start of the year price of around $1,000. Time to mortgage your house for bitcoin as it rises towards $1 million in 2020 as predicted by eclectic personality John McAfee or simply sit back and wait for the bubble to burst......

(I bought my first bitcoin for around $300 - i wish I still had it!! :))

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Story today about the twins who claimed FB was stolen from them. They got a 65mill payout and invested 14mill in Bitcoin. Apparently now the first Bitcoin billionaires.

Edited by goughy

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1 hour ago, goughy said:

Sorry today about the twins who claimed FB was stolen from them. They got a 65mill payout and invested 14mill in Bitcoin. Apparently now the first Bitcoin billionaires.

Smart folk.

I'm not in that league but a decent amount of my spare GBP is going into BC at the moment. With the way the UK is going I'm pretty sure I know which currency is going to do better over the next couple of years!

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18 hours ago, goughy said:

Story today about the twins who claimed FB was stolen from them. They got a 65mill payout and invested 14mill in Bitcoin. Apparently now the first Bitcoin billionaires.

I can assure you they aren't.  The guy that created it is worth about 20 billion.  And there are heaps more.

I really wish I started mining them when I wanted to about 8 years ago. oh well.  Missed that boat.

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On 05/09/2017 at 9:02 AM, XCOM! said:

To put it (probably badly) another way, there are 2 basic components to the price (vs. value) of bitcoin.

- The underlying intrinsic value created by the Bitcoin network-protocol and mining.
- The speculative market value based on traditional trading - i.e. greed.

Bitcoin's blockchain technology uses distributed processing, for which people need to invest in computers, power, network, time, etc etc, and are paid for doing that work in... bitcoin.

When processing bitcoin transactions was the only application for the Bitcoin network, then the value of bitcoin was obviously highly speculative and volatile. But as the technology is becoming more widely accepted and more applications are being implemented for it, the intrinsic value of bitcoin is increasing and becoming more stable. If the technology becomes more established and harder to replace, then the intrinsic value of bitcoin will become harder to dismiss, but the market value will likely not be what it is now.

It's probably not unlike any new discovery-technology where speculative investors stampede into the market to make a killing, and then many lose their shirts as the reality sets in on what it is and how it can be used.

That sounds like a Ponzi. Except the commodity is an autologous waste of electricity in order to create nothing. 

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I can explain it here .... https://en.wikipedia.org/wiki/Tulip_mania

I can't see this lasting for a number of reasons. For a currency to have universal application it must have some core elements, namely Scarcity, Backing, Reference, Portability, Tradability and Stability. This is year 9 economics.

1. Scarcity - Bitcoins can be replicated as long as you have access to the code that defines the "value". If you can replicate the code to create additional Bitcoins (which you can), then the currency reduces in value. The code that creates the currency is available to a select few who have replaced the regulators and can act as a QE intermediary.

2. Backing - currency has to have some inherent backing of a central authority to ensure its value. For example, a $20 note is a promissory exchange note which is underpinned by the Reserve Bank of Australia, the £20 by the Bank of England.... etc etc. If things go a bit wrong with the economy and the currency crashes, theoretically, the underpinning authority should give you $20 or £20 worth of equivalent value for that promissory note. Bitcoin doesn't have this - it relies on trust of those that have them to exchange them for things of equal (or greater) value. But, what happens if there is a crash in Bitcoin value and all that is left are some hard drives with 101010000111001010101010001010.... on it? Simply, there is nothing underpinning the currency.

3. Reference - the currency has to be referable against a point of value, most usually gold in most Western economies. This is to ensure that the currency has referable value. Theoretically, you could take the same $20 or £20 and exchange this with the central bank for an amount of gold to the value of $20 or £20. Bitcoin has no backing.

4. Portability - the currency must be portable. It doesn't need to be in cash, but can be in the form of a cheque, or an exchange of virtual cash through cash machines / POS devices. I don't know much about the portability of Bitcoins - and I would say that this is the most easily overcome limitation - but there are not too many people readily accepting Bitcoin at the moment.

5. Tradability - refer to comments about portability above. A few coffee shops and the occasional trader doesn't make a universal currency. However, traders have set up a mechanism for trade, but I believe that is praying on the inherent vulnerability of the bitcoin as a currency. Refer below for more...

6. Stability - Anything with this sort of lack of stability is a concern. Traders are getting in on this as they see the value rise and will milk it for all its worth, then dump it when the preceding 5 points become apparent. That is what they are doing now - calculating when to dump it and run without being burned.

I'd like to say there was an alternative, global, safe and secure currency system and get all tree-hugger hippy about it, but regulation exists for a reason; to ensure the stability of the society and the way in which it is funded. Bitcoin is a nice idea, but the lack of control, opportunity for speculation and openness to abuse is scary.

I wouldn't invest in Bitcoin if I was investing at the moment.

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As I said earlier, so long as the BlockChain technology is superior, demand for processing those transactions continues to increase (e.g. ASX is moving to BlockChain) and payment for processing of the transactions (mining) continues to be token-based made in Bitcoin, and the number of Bitcoins in 'circulation' is fixed, then the intrinsic value of Bitcoin will increase.

The problem is the vast disparity between the intrinsic work-payment value of Bitcoin and it's speculative market value. 'Investing' in Bitcoin based on its speculative value, is gambling - there will be winners and losers.

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I remember when the US dollar was backed by gold. 

Then he Usa just kept printing money with nothing backing it. 

Now they are in debt well. Such an amount they will never get near paying it off. 

Anway bitcoin mining work. 

So my understanding is you get a 

server

install bitcoin core

get a wallet 

then what? 

 

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5 hours ago, Peter said:

 

Anway bitcoin mining work. 

So my understanding is you get a 

server

install bitcoin core

get a wallet 

then what? 

 

It's cost prohibitive in Australia due to high electricity costs. 
You need: high end computer, cheap electricity, time, and a hope that what you mine will go up in value. 

Better just to buy bitcoin if that's what you want at the end.

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42 minutes ago, Aidan said:

It's cost prohibitive in Australia due to high electricity costs. 
You need: high end computer, cheap electricity, time, and a hope that what you mine will go up in value. 

Better just to buy bitcoin if that's what you want at the end.

Servers. Power. Not an issue. 

I just don't know what to do beyond my previous post. 

How does it link and begin work and attribute it to my servers and wallet

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2 hours ago, XCOM! said:

As a one-out miner with a regular server, it's likely less profitable than placing adsense on a webpage.

I have 100 servers doing noting in a Comms room. 

 

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26 minutes ago, Peter said:

I have 100 servers doing noting in a Comms room. 

You need to do your research and find out the level of computing power required to compete against the cloud-pools.

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21 hours ago, XCOM! said:

As I said earlier, so long as the BlockChain technology is superior, demand for processing those transactions continues to increase (e.g. ASX is moving to BlockChain) and payment for processing of the transactions (mining) continues to be token-based made in Bitcoin, and the number of Bitcoins in 'circulation' is fixed, then the intrinsic value of Bitcoin will increase.

The problem is the vast disparity between the intrinsic work-payment value of Bitcoin and it's speculative market value. 'Investing' in Bitcoin based on its speculative value, is gambling - there will be winners and losers.

That's not quite right... you can set up your own Blockchain independently of the Bitcoin network. Bitcoin is just one Blockchain, the ASX will have their own version which is more likely to be based on Ethereum which works in the way that you describe where the cost of executing smart contracts is paid for through tokens or their might set up their own chain completely which is processed internally.

Also, the number of Bitcoin in circulation isn't fixed... what is fixed is the reward for mining new bitcoins the difficulty of which is dynamically adjusted every 2016 blocks (approx every 14 days) depending on the total amount of mining capacity on the network. So the increase in supply is fixed hence whilst demand is rising the price will increase.

The reward halves every 210,000 blocks and so when we reach 21million blocks the reward will be 0. So the limit is effectively 21m but we're a long way from that. 

Peter, for mining my advice would be to leave Bitcoin alone, 100 servers won't touch the sides. if you have that capacity then I suggest getting in on either Ether or Litecoin.

There are guides all over Google. See here for example: https://rumorscity.com/2013/12/02/how-to-mine-litecoin-cpu-mining/

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8 hours ago, XCOM! said:

You need to do your research and find out the level of computing power required to compete against the cloud-pools.

 

This article from Mother Jones might give some idea of the magnitude of power (electrical and computing) required to mine bitcoin these days - so much it's become an environmental worry....

"...No one may be using Bitcoin, but we’re all paying for them. Bitcoin analyst Alex de Vries, otherwise known as the Digiconomist, reports that the coin’s surge caused its estimated annual energy consumption to increase from 25 terawatt hours in early November to 30 TWh last week—a figure, wrote Vox’s Umair Irfan, “on par with the energy use of the entire country of Morocco, more than 19 European countries, and roughly 0.7 percent of total energy demand in the United States, equal to 2.8 million U.S. households.” (As of Monday, the figure had reached nearly 32 KWh.) Just one transaction can use as much energy as an entire household does in a week, and there are about 300,000 transactions every day. That energy demand is more often than not met through fossil fuel energy sources, which, along with polluting air and water, emit greenhouse gases that cause climate change.

In other words, Bitcoins are contributing to the warming of the atmosphere without providing a significant public benefit in return. Some Bitcoin enthusiasts claim that it will eventually become a mainstream currency, and that the cryptogovernance system upon which it’s built could actually help the environment. But the Bitcoin market is volatile, its future murky. We only have 32 years left for carbon emissions to peak and then rapidly decrease, if our planet is to remain livable. We don’t have time or resources to waste on Bitcoin."

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On 09/12/2017 at 10:25 PM, Peter said:

I have 100 servers doing noting in a Comms room. 

 

You need GPUs not CPUs, so if they're loaded with GPU (Graphics Processing Unit), then you could be in luck.

I'll add my description  of what mining is, for context.

A bitcoin ledger consists of transactions. When a ledger is closed, the transactions are hashed to produce a checksum (a mathematical algorithm applied to the entire content, that produces a signature - known as the checksum - unique to that content and the order of that content - the content can never be recreated from the checksum). The checksum is generated and added to the next ledger. I.e. a ledger is hashed along with the checksum of the last ledger, which again produces a further unique checksum. And so the chain continues, creating a sequence of ledgers each linked, meaning if an entry in any ledger is changed the entire chain collapses as the checksum calculations do not match.

So, where does the "mining" part come in?

Bitcoin demands that the calculated checksum must be of a certain 'pattern', currently I think (and a quick search will confirm this) the pattern is that the checksum must start with a sequence of zeros. To achieve this, a nonce (a random sequence of characters) is added to the ledger-and-previous-checksum combination, and the hashing process (the mathematical algorithm) repeated. Mining is simply finding the nonce that produces a checksum that meets the pattern requirements.

The GPU is good at repetitive tasks, and mining bitcoin is a repetitive task, some pseudo code to explain:

does hashOf(last_checksum + ledger + aaaa) = checksum_starting_with_zeros?

--negative: does hashOf(last_checksum + ledger + aaab) = checksum_starting_with_zeros?

----negative: does hashOf(last_checksum + ledger + aaac) = checksum_starting_with_zeros?

------negative: ....

------positive: nonce = aaab

--positive: nonce = aaaa

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Yeah you are right.  it's a bust.

I wonder if bitcoin will go the same as dotcom fad.

Going to be interesting to see.

I know if I had even 4 bitcoins I'd sell them now and buy a new car.  Or go on an amazing holiday first class.

Mind you I would have sold out when they hit 5K. So who am i kidding

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On 12/9/2017 at 6:31 AM, Rimmer said:

I can explain it here .... https://en.wikipedia.org/wiki/Tulip_mania

......

I wouldn't invest in Bitcoin if I was investing at the moment.

See, therein lies the problem. One isn't investing in a currency per se, it is more like a commodity, more akin to gold than USDs.  And trying to define it by the old rules is not going to work either. If we ignore the "underlying value" and think that price is attributed to something based on how much people want (or need) to own it.   Then look at how much people want to own bitcoin and why - and the kinds of transactions that will ONLY accept bitcoin - ransomware payments, for example. Come on, what IT risk management plan wouldn't consider a handy 10k or so in bitcoin within easy reach?  

And as for not investing in Bitcoin on the 9th of December?  The average bitcoin price on that day was 20,500 (admittedly it had just fallen from 25,000 odd) and is now back to 24,500 at time of writing.  If someone HADN"T taken your advice and invested in bitcoin on that day they would have realised a 20% return on their investment in just 7 days which I think in round figures is annual rate of return of about 1,000%. Note that while there are some bumps here and there in the short to medium term (especially in the last few years) bitcoin has NEVER reduced in value.  My sadly missed $350 bitcoin in 2015, should I have hung on to it :(, would have now realised about 7,000 % return.

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