Bitcoin - do you understand it

BillN_33 said:
But if I run my computer for hours and hours, it just wastes electricity, it does not create wealth …….. if anything it destroys wealth as it uses up resources without any output

If I run a machine to dig for coal or minerals …… the value I get from what I mine is greater than the cost of mining it, hopefully, so value has been added

I reckon that it is popular only because it can be used as a medium of exchange for what would otherwise be illegal transactions ….. so one day the circle will have to stop

But I do not know much about economics and these guys who are making money from it are far clever than I will ever be …. as was Ponzi until he got caught
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You seem to be working on the basis that something has to be tangible to have value, or that currency used as a means of exchange has to be fiat.

Information is not tangible, but can have value. Anything can be used as a means of exchange if enough people agree it has value. Governments would like us to use fiat currency, because it allows them control of the supply and consequently to set monetary policy.
 
onomatopoeia said:
You seem to be working on the basis that something has to be tangible to have value, or that currency used as a means of exchange has to be fiat.

Information is not tangible, but can have value. Anything can be used as a means of exchange if enough people agree it has value. Governments would like us to use fiat currency, because it allows them control of the supply and consequently to set monetary policy.
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as I said I just cannot understand it ……….it's 50 years since I did A Level Economics ( if that would help)
 
Been reading this subject myself, and trying to figure how it works. Has the feeling of some sort of very big sting, were a lot of people could lose fortunes. While some highly intelligent people may pocket those fortunes. Just can't see how this can sustain itself!
 
jonbeeza said:
Has the feeling of some sort of very big sting, were a lot of people could lose fortunes.
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Like the whole MtGox fiasco earlier in the year where £70m worth of bitcoin which they were holding for users 'just vanished' - but because the whole system is designed to be anonymous they're not going to get found!
 
TopBanana said:
Like the whole MtGox fiasco earlier in the year where £70m worth of bitcoin which they were holding for users 'just vanished' - but because the whole system is designed to be anonymous they're not going to get found!
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They then allegedly "found" 200,000 bitcoins in a "digital wallet" which had not been used since 2011.
An anonymous system without regulation - what could possibly go wrong?
 
BillN_33 said:
But if I run my computer for hours and hours, it just wastes electricity, it does not create wealth …….. if anything it destroys wealth as it uses up resources without any output
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The banking industry uses massive amounts of resources, and extracts vast sums of money from people for the privilege, the debate about the 'value' they provide is another matter. The point of Bitcoin is that it is not run by corporation to extract profit, it's run on consensus, by everyone that uses it, that's the point.

Contrary to popular belief, Bitcoin is not anonymous, every single user of Bitcoin has a record of every single Bitcoin transaction ever made, freely available to inspect.
 
mid_gen said:
Contrary to popular belief, Bitcoin is not anonymous, every single user of Bitcoin has a record of every single Bitcoin transaction ever made, freely available to inspect.
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I thought it was anonymous in that although everyone may be able to see the transactions there is no way of knowing any details about the specific user - hence its uptake for buying illegal things on the darknet? (see other darknet thread, lol)
 
I stumbled across my wallet.dat file from early 2014 when I was doing some GPU mining with my computer. I had a fairly high end ATI graphics card which I had overclocked right up to the point where it was generating errors then backed off a fraction, and ran it like that for best part of five months, until it blew up :naughty:. I stopped then as scrypt mining was getting too difficult for the electricity cost vs Litecoin value (it was falling relative to BTC), returned the card for a partial refund and worked out I'd spent about £300 (electricity + card), which was also about what I had mined was worth at the time, so a cost neutral experiment. I didn't need the cash so I forgot about the BTC in the wallet.

Checked the wallet. 0.75 BTC :eek: . I can't get it out as the blockchain is still downloading, but :eek::eek::eek:
 
1 Bitcoin is now worth £12700 should have jumped on early :)
 
onomatopoeia said:
I stumbled across my wallet.dat file from early 2014 when I was doing some GPU mining with my computer. I had a fairly high end ATI graphics card which I had overclocked right up to the point where it was generating errors then backed off a fraction, and ran it like that for best part of five months, until it blew up :naughty:. I stopped then as scrypt mining was getting too difficult for the electricity cost vs Litecoin value (it was falling relative to BTC), returned the card for a partial refund and worked out I'd spent about £300 (electricity + card), which was also about what I had mined was worth at the time, so a cost neutral experiment. I didn't need the cash so I forgot about the BTC in the wallet.

Checked the wallet. 0.75 BTC :eek: . I can't get it out as the blockchain is still downloading, but :eek::eek::eek:
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So £9,500. Will you see any of that money?
 
The company I used to work at used fairly high end PC's with 4 very high end graphics cards in them. Out of hours a couple of enterprising engineers used them to mine bit coins. It was fairly easy in it's infancy, then got harder and slower to mine them. At that time they were about $30 and the 8 PC's were turning over about $500 a month, which was stopped when senior management found out. I had a lesser spec PC that could mine one every week about 4 years ago, but bitcoins were around $250 then, but it started rapidly being a diminishing return so stopped.

The old server is in the garage - I might fire it up to see if there's any odds left in the wallet...
 
Craigus said:
So £9,500. Will you see any of that money?
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Easy to sell and get the pound sterling money transfered to your bank account nowadays, so if I sold then yes, I'd see that money. If it goes up much further I'll be looking at a CGT liability when I sell. If it collapses to zero value, I've lost £300 I'd already written off.

I had quite a shock last night when I realised as I'd basically forgotten about it. I only did the mining as an experiment as the idea of a distributed ledger (blockchain) fascinates me and tweaking the mining software to get the highest hash rate per hour was an interesting technical challenge.
 
TopBanana said:
You can now use bitcoins in exchange for services (I'm sure I read about a newagent who now accepts them!).
But in terms of mining you shouldn't equate it exchanging money for a service, it is likened to mining for gold - you put in effort to find something of which there is a limited amount.
It's the fact there is a limited amount which gives it some sort of value but it did require someone in the first place to decide that it had any value at all - and this can be taken away at any point by everyone deciding that its a stupid idea and shouldn't have a value. Because you don't have anything physical to show for it you could be left very much empty handed!
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The emperor's new clothes springs to mind.
 
Stuck £50 in litecoin about 3 months ago, now worth £240.

Tempted to pull out my original £50 so I have lost nothing and see what the rest does.

Matters none if it crashes then.
 
Oh for a time machine and go back to 2010 when Bitcoin was less than $0.50 each, i'd have every camera that's ever been made now, doubt it would cure my GAS though :)
 
Have a listen to this, it’s actually a good synopsis and only 15 minutes.

http://www.bbc.co.uk/programmes/b0952svj

I find it helps to think about it as two things.

Bitcoin itself isn’t really a currency but more like a commodity of limited resource, there is a limited amount of it which will drive the price. The odd thing about it is that as a concept it was just invented by a smart/crazy Japanese guy.

The other side is block chain which is essentially a crowd sourced and transparent authentication process (this is where the mining comes in). This bit is the clever technology the Japanese chap figured out.
 
Nawty said:
Have a listen to this, it’s actually a good synopsis and only 15 minutes.

http://www.bbc.co.uk/programmes/b0952svj

I find it helps to think about it as two things.

Bitcoin itself isn’t really a currency but more like a commodity of limited resource, there is a limited amount of it which will drive the price. The odd thing about it is that as a concept it was just invented by a smart/crazy Japanese guy.

The other side is block chain which is essentially a crowd sourced and transparent authentication process (this is where the mining comes in). This bit is the clever technology the Japanese chap figured out.
Click to expand...

What is the link between the mining and the authentication process?
 
I signed up to bit coin at the very start can't remember were or who or what I think I got 8 bitcoins I wouldn't mind retrieving them now but how
 
Ladybird12345 said:
I signed up to bit coin at the very start can't remember were or who or what I think I got 8 bitcoins I wouldn't mind retrieving them now but how
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8 Bitcoins today is worth £103,465.44 you are in the money :)
 
Ladybird12345 said:
I signed up to bit coin at the very start can't remember were or who or what I think I got 8 bitcoins I wouldn't mind retrieving them now but how
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If you ran the official bitcoin wallet software (bitcoin-qt / bitcoin core) and still have your wallet.dat file, you can still get to them.

If you stored them in an online exchange, then you'll need to log in to that. If it was mtgox then they're gone.
 
Ladybird12345 said:
I signed up to bit coin at the very start can't remember were or who or what I think I got 8 bitcoins I wouldn't mind retrieving them now but how
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They'll be somewhere around the house, tucked in a drawer or under the bed.....(unless they have been hoovered up by mistake)
 
Some people are evidently are making a mint from re-selling bitcoin miners. Everything is sold out at manufacturer's site and they are all at 4X on ebay and amazon.

If you can manage to link it to the the plumbing as a heating device you are onto a winner really.

I'm getting tempted to get in the game somehow.
 
LongLensPhotography said:
If you can manage to link it to the the plumbing as a heating device you are onto a winner really.
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They are effectively fan heaters, so will reduce your gas bill for your central heating. However electricity is about three times the price of gas per kilowatt hour, so it's a minimal saving.

If you have solar panels, you can effecitvely mine for free during daylight.
 
Nawty said:
Have a listen to this, it’s actually a good synopsis and only 15 minutes.

http://www.bbc.co.uk/programmes/b0952svj

I find it helps to think about it as two things.

Bitcoin itself isn’t really a currency but more like a commodity of limited resource, there is a limited amount of it which will drive the price. The odd thing about it is that as a concept it was just invented by a smart/crazy Japanese guy.

The other side is block chain which is essentially a crowd sourced and transparent authentication process (this is where the mining comes in). This bit is the clever technology the Japanese chap figured out.
Click to expand...


A commodity is basically a mineral or basic agricultural item which is tangible and can be traded, for instance - gold, silver, copper, diamonds, coffee, black pepper, grain, oil, gas, coal.
What is a bitcoin, how is it valued, is it tangible (has a physical presence such as a £1 coin), who accepts it as payment, is ti regulated in a fully transparent way?
 
andy700 said:
What is a bitcoin, how is it valued, is it tangible (has a physical presence such as a £1 coin), who accepts it as payment, is ti regulated in a fully transparent way?
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A bitcoin is a unit of a cryptocurrency of that name.
It is valued like fine art. What people will pay for it.
It is not tangible, it is distributed information that is publicly available. Information has value (if it didn't, the Tesco clubcard would not exist)
Anyone may accept it for payment, but it is not legal tender so no-one is obliged to accept it.
There is no regulation, it is not issued by or tied to any state. Perhaps if you could explain what regulation you feel it needs?
 
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onomatopoeia said:
A bitcoin is a unit of a cryptocurrency of that name.
It is valued like fine art. What people will pay for it.
It is not tangible, it is distributed information that is publicly available. Information has value (if it didn't, the Tesco clubcard would not exist)
Anyone may accept it for payment, but it is not legal tender so no-one is obliged to accept it.
There is no regulation, it is not issued by or tied to any state. Perhaps if you could explain what regulation you feel it needs?
Click to expand...


Is it a piece of art like the emperors new clothes?
 
andy700 said:
Is it a piece of art like the emperors new clothes?
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It has minimal tangible value in material terms and is only expensive because people want to own it. The parallels with crypto-currencies should be plain.
 
I created another thread not knowing about this one. Here is that post.

I've only just gotten interested in it and have invested a small amount as a bit of fun. Haven't bought Bitcoin but another smaller (still top 5) coin called Litecoin. I've seen my investment more than double in 2 weeks. Now I'll admit I don't fully understand how these coin get their value, something to do with the limit amount available. Anyway Bitcoin, which you're more likely to have heard of, has gone to the moon in the last few weeks with a single coin being valued at £15,000 when it was £4000 back in October.
I'm also trying this cloud mining, could be a massive ponsie scheme as the returns are too good to be true. So I've already written off my tiny investment, but if they pay out ,Mr TAX man, will be happy with his Capital Gains Tax.

They are now pretty much legit and there are some big players in the game now. Here is a link to live trading https://www.gdax.com/trade/BTC-GBP
 
If a Bitcoin is really worth £20,000 as they said on the news this morning - how do you cash one in?
Where does the money come from?
 
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