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Discussion => Newbie discussion => Topic started by: kittenfluff on January 29, 2013, 04:16 pm

Title: What do you think of Bitcoins?
Post by: kittenfluff on January 29, 2013, 04:16 pm
A noob to SR and still getting my head around it all. But for me, the biggest arse-ache is the Bitcoins system. Don't get me wrong, I think BTCs are a great idea in theory, but I'm a little unsure about it in practice....

My first problem is how unstable the exchange rate is - I know that all currencies fluctuate reletive to each other, and every now and then change dramatically (e.g the GBP > EUR rate around 2008 caused some very costly problems for my company since we import/export to Europe alot), but when I first found out about SR back in Oct/Nov sometime the rate was around £7.5/BTC, when  friend of mine bought some stuff at xmas it was £9.5/BTC and ATM the exchange is around £12/BTC, up from £11/BTC a couple of days ago! I have been wondering at why it would be so unstable; maybe a small[ish] pool of users means that supply/demand effects are amplified? Maybe it has more to do with meat-space currencies fluctuating (I imagine that alot of fluctuations have to do with $ fluctuations?)? But then I read this:

http://nerdr.com/bitcoin-exchange-scam-bitcoins-are-worthless/

And started wondering if the inflation of the value of BTC compared to other currencies was more to do with greedy fucking BTC exchanges looking to make quick profits.

Anyone else have an opinion? Anyone have any ideas as to how to stabilise the exchange rate? The only solution I can think of is to start buying into BTC without simply using it as an intermediary for illicit commerce (that is, buy & sell in BTC, not simply exchange £ or $ for BTC then spend it, or sell for BTC then exchange for £ or $ straight away...), but the problem with this is that I don't think I could get paid for my job in BTC, or pay my rent in BTCs.... so fucking frustrating...

Other thing I'm thinking of is simply building a BTC mining rig and just improving it as and when I can offord to with meat-space money - convert cash to BTC that way....
Title: Re: What do you think of Bitcoins?
Post by: thejgte on January 29, 2013, 04:44 pm
That article is pretty startling but I have to question its validity. It's certainly sensationalistic, at least.

I guess we need some rich Robin Hood motherfucker to come buy out BTC. Alas.
Title: Re: What do you think of Bitcoins?
Post by: acider on January 29, 2013, 05:24 pm
The link is BS.
He says he changes the value and people buy at a higher value. This can be done but it would benefit the owners of the coins, not the site. People who use the site would see the increase of the value of btc , so they would expect to see an increase on their funds when they sell the coins.
Right?

The bitcoin market does get manipulated by people who sell/buy coins whether it's intended or not. That's how the value is decided, how much money people want to buy and how much they want to sell. It's probably never going to be stable but If I had to make a guess long term the price will keep inflating.
Read this forum especially if you re planning to get involved in mining : https://bitcointalk.org/

Title: Re: What do you think of Bitcoins?
Post by: whythehell on January 29, 2013, 05:41 pm
I think they are too damn expensive.
Title: Re: What do you think of Bitcoins?
Post by: kittenfluff on January 30, 2013, 09:34 am
The link is BS.
He says he changes the value and people buy at a higher value. This can be done but it would benefit the owners of the coins, not the site. People who use the site would see the increase of the value of btc , so they would expect to see an increase on their funds when they sell the coins.
Right?

The bitcoin market does get manipulated by people who sell/buy coins whether it's intended or not. That's how the value is decided, how much money people want to buy and how much they want to sell. It's probably never going to be stable but If I had to make a guess long term the price will keep inflating.
Read this forum especially if you re planning to get involved in mining : https://bitcointalk.org/

Thanks for that, point taken about the article I linked to. I am still worried about the swiftness of inflation. Been thinking a little, and been wondering if it has more to do with a discrepancy between the rate at which new BTCs are mined and the rate at which demand is increasing (either because more people are using them, or because existing users are using higher numbers of BTC). All money's a complete con and thinking about it too hard a) makes my brain ache and b) scares the shit out of me since even meat-space money is mostly only numbers in a computer. In a way BTC are MORE secure than $ or £ since they're based on debt, where as BTC are based on CPU time, exist locked into encrypted block-chains, and cannot simply be created in vast qntys as with 'quantitative easing' or any of that bullshit. Now I've said that, I'm wondering if it's not so much BTC inflating at an alarming rate, but the meat-space currency is devaluing by the same.... scary idea...

@whythehell - I do not care that they are 'expensive' as it's all relative. If 1BTC is worth $10 then I'll be able to buy $10 worth of goods on SR. If 1BTC is worth $100 then I'll be able to buy $100 worth of goods. What worries me is that I could buy BTCs at, say, $10ea, but by the time all the funds have been transferred and the BTCs are in my wallet they have devalued so that what I am buy costs more one day relative to only a day or two before.... wait a minute, I just realised it's the other way around, the BTCs would probably have increased in 'value' relative to meat-space currency, so buying as many as possible ASAP would be a better idea (unless of course acider and myself are wrong and they devalue drastically for some reason. Probably SR shutting down would kill the BTC market....).

Again, makes my brain hurt...
Title: Re: What do you think of Bitcoins?
Post by: galacticnomad on January 30, 2013, 09:35 am
I want prices to crash again so I can stock up for the future.
Title: Re: What do you think of Bitcoins?
Post by: kittenfluff on January 30, 2013, 10:37 am
I want prices to crash again so I can stock up for the future.

Nice idea, but say it 'crashes' from the current price of $19 (Mt.GOX) to $10, you then buy loads, but a week later it 'crashes' again to $5...? I don't want it to crash or inflate at all, I want it to remain *fairly* stable....
Title: Re: What do you think of Bitcoins?
Post by: BBr33xi on January 30, 2013, 11:02 am
well i can only figure bitcoin is a currency dependent on commodities like any other currency, so the more things you can exchange the currency for (goods and services), the more stable it will become. Either more and more individuals will end up adopting btc and more things will become available to exchange it for, or it will remain a rather minor carrier of value.however, i tend to think as long as SR exists and supports this currency, bitcoins will at least remain relatively valued to many people, as illicit things are risky to deal with, and btc allows the safest way to deal in those those things where regular money is just too dangerous. as long as people need those things, btc shouldn't plummet or devalue too much, but it may always just cover a small range of commodities.i think btc is a good idea and is badly needed for those of us who fear governments who persecute people for dabbling with things they deem unacceptable and shouldn't exist.

i also hope in the future more and more of these types of non-government controlled monetary systems are put in place and utilised for a range of things, as a means to secure resources from the world banks that currently own almost everything the world is made of.
Title: Re: What do you think of Bitcoins?
Post by: irreverant and irrelevant on January 31, 2013, 10:16 am
Could some knowledgeable person give me a brief description of what bit mining is?  I understand it as creating new currency, like how the fed prints new money, and adding to the available number of bitcoins.  How does this work, and how does it affect the value of bitcoins overall? 
Title: Re: What do you think of Bitcoins?
Post by: Dropbear on January 31, 2013, 10:27 am
I am no economist, but I think the inflation we are seeing now is the result of the reward for mining having been halved back in early november.
There may have been a two month buffer due to the stockpiled coins that miners would have had, and sold slowly so as to not overflow the market and drive the price down (thus cheating themselves of profit).
As the stockpiles deplete, the supply lessens and the price increases.
Title: Re: What do you think of Bitcoins?
Post by: EarlyCuylerTOR on January 31, 2013, 10:41 am
BTC is awesome and amazing.  I love how once it hits 21,000,000 (give or take) it locks and can't create new BTC.  I trust BTC more than I trust the dollar.  BTC is backed by cryptography and math, the dollar is backed by politicians and the fed who rape and pillage every opportunity they get.
Title: Re: What do you think of Bitcoins?
Post by: Dropbear on January 31, 2013, 10:48 am
But when people lose their wallet file or forget their password etc, those coins are simply lost from circulation!
There should be a rule where all lost wallets come to ME!
Title: Re: What do you think of Bitcoins?
Post by: macdknife on January 31, 2013, 11:11 am
I thought about starting to trade them for profit as the prices seem to be constantly on the rise. I'm not sure though, the whole thing is a little too uncertain for me at the minute. As someone said, this site going down would most likely spell the end of bitcoins. They are troublesome to attain, but I am very glad that they allow me to come on here and exchange them for all drugs my curious mind can imagine.
Title: Re: What do you think of Bitcoins?
Post by: NickNack on January 31, 2013, 12:10 pm
Imho the article is a pure hit-piece.  Who is "nerdr.com" anyhow?  (I'll be sure to avoid that place in the future)

There are all sorts of "exchanges"...  just like there are all sorts of people willing to take your USD in exchange for something else.  Maybe this guy's exchange is a fixed rate exchange and he is scamming people... but his exchange isn't the entire market.  (I'm sure some BTC guru could easily look at the transaction records)

Currency markets are complex, I'm by no means an expert... but I do know many things factor into price fluctuations.  (besides direct manipulation)

BTC gaining value vs the USD/EUR/GBP is not inflation... those currencies are.   Currencies lose purchasing power when inflating  (think: need a wheelbarrow full of $100 bills to buy a loaf of bread).  Atm the world is in a currency war, MSM is now even mentioning it in regards to Japan firing the first blows (they're not).... it's basically a race to the bottom, who can devalue (print) the fastest.   A shitstorm is on its way imo... most people just don't see it. 

Since we use BTC to buy commodities, the exchange rate should adjust itself with the rest of reality.   But overall imho BTC should steadily gain value as the central banks flood the world with valueless paper... yet at the same time, the prices for things should also adjust relative to BTC.   Like if you were selling a 1/4 oz for 5BTC when the rate was 15$/BTC...  if that exchange rate moves to $60/BTC, you still shouldn't be selling it at 5 BTC.  That quarter will be much cheaper gotten on the street.

Think about open markets like localbitcoins.com... people are personally willing to sell or buy at prices they determine acceptable.   No one exchange can control that (well without getting hypothetical/conspiratorial).  If a BTC is too expensive for me, I'm not going to buy it...

Believe me, I'm not like some BTC fanboy or something... me not being a programmer, I do question the code etc... but I most certainly do not share this authors perception.  BTC if completely legit, has some major enemies... and I'm sure they wont go down without a dirty fight. 

Apologies for my ramblings...
Title: Re: What do you think of Bitcoins?
Post by: kittenfluff on January 31, 2013, 12:14 pm
Could some knowledgeable person give me a brief description of what bit mining is?  I understand it as creating new currency, like how the fed prints new money, and adding to the available number of bitcoins.  How does this work, and how does it affect the value of bitcoins overall?

I'm only just looking into this, but I am studying for a Math degree so I think I understand the basics (though I'm actually having a hard time finding a good description of the specifics), but it goes like this:

Bitcoins are all encrypted into 'blocks' in the 'block-chain'. 'Blocks' are (as far as I can tell) simply blocks of data recording transactions, keeping tabs on which coins are in which wallets. The 'blocks' are actually encrypted using an algorithm who's mathematical properties are infinitely easier to perform forwards than backwards (like PGP and RSA).
Now, adding a new 'block' to the 'block-chain' is mathematically difficult (and the difficulty can be adjusted by dictating certain requirements) and has to satisfy certain mathematical properties, so a processor is required to perform algorithms over and over again (millions, if not billions, or times) before a valid 'block' is 'mined'. As far as I can tell there is no way to 'cheat' in creating blocks, so 'blocks', and hence bitcoins themselves, are underwritten by energy/processor time...

This doesn't give them any intrinsic value though, so they are only 'worth' what people are willing to pay for them. This isn't really any different to a gold-standard though - gold has no intrinsic value and is only 'worth' what people believe it is; worth lots on Wall St or LSX, worth nothing on a sinking ship or a desert island!

It is NOTHING like the currency created by the Federal Reserve of the Bank of England, or any other central bank though! I cannot stress this enough - meat-space currency is based on nothing and is even more illusory, the vast majority of which remain as numbers on computers (something like 90% of all currency remains electronic, only about 10% is issued as notes & coins). The money is created by debt, when someone borrows money (for a business, a mortgage or a personal loan) the money is created out of thin air and the loan agreement becomes an 'asset' on the banks books, it does not come from currency reserves (typically a bank can lend 10x it's reserves, then you owe it money and it owes the central bank money, which can only be paid for by the currency that has been lent out by others) This is somewhat simplified, but any added complexity is all smoke & mirrors to prop up the illusion. These videos are good starting points to understand:

http://youtu.be/YTRDeLGOKjk
http://youtu.be/Z9xgtTRS-EQ
http://youtu.be/_doYllBk5No
http://youtu.be/QU0XiklHPMc

In contrast, it is IMPOSSIBLE to simply create bitcoins from nowhere...
Title: Re: What do you think of Bitcoins?
Post by: Dropbear on January 31, 2013, 12:34 pm
Quote
gold has no intrinsic value and is only 'worth' what people believe it is
That's true to a point, gold has some practical uses though, and has been used as a fallback when fiat currencies failed for centuries - bitcoins are (for the most part) not even physically in existence.
Title: Re: What do you think of Bitcoins?
Post by: kittenfluff on January 31, 2013, 01:09 pm
Quote
gold has no intrinsic value and is only 'worth' what people believe it is
That's true to a point, gold has some practical uses though, and has been used as a fallback when fiat currencies failed for centuries - bitcoins are (for the most part) not even physically in existence.

Sure, not a perfect analogy. Two points though; 1) while gold IS useful (particularly in the construction of electronics), any gold used to underwrite currency is useless and sitting as gold bullion in a vault somewhere. The moment any gold is used the amount of currency in circulation deflates, or it's value in gold deflates... and 2) (and this is the most salient point) if you want to increase the amount of gold-standard currency you have to increase the amount of gold, you need to mine it (you can devalue the currency in comparison to the gold, creating more currency, but then you're only playing with numbers). Similarly, if you want to increase the number of bitcoins they need to be 'mined'. This is in contrast to current meat-space fiat currency which is in fact created out of thin air, in limitless amounts, simply because someone wants to borrow it....
Title: Re: What do you think of Bitcoins?
Post by: kittenfluff on February 01, 2013, 12:18 pm
/bump
Title: Re: What do you think of Bitcoins?
Post by: kittenfluff on February 01, 2013, 12:43 pm
/bump
Title: Re: What do you think of Bitcoins?
Post by: NorthernStar on February 01, 2013, 08:48 pm
OP, That's the point, because of all the newbs, and Daily Mail having a stake in BTC) They must have because they have done nothing but plug it month after month. Like in the yanks case with Gawker. My point, Things become inclement, and more people buy they price rises less buy price falls simple economics yes? Well everyone is buying them they're up to nearly £20 1BTC when i came it was £9 which is ridiculous, It defeats the whole point. Why pay double  the money for something you can get on the street for half the price? convenience?  for the hillbilly stuck out in the sticks. yes  , for the city boy/girl who is paying for something  that's g in abundance right  under their nose. It's a brilliant concept, but for me I cant be paying double bubble it goes against my street instincts. And until the price falls again ( which wont be anytime soon ) I'm going  give it a miss. I might set up a vendor selling top quality cured Moby Dick, Amnesia, And good old cheese. Coming soon the best dank seen on the road.Yes iI will take advantage of the complete newbs who are obviously straight from school/freshman year dude.
Title: Re: What do you think of Bitcoins?
Post by: Sidhe on February 02, 2013, 02:14 pm
I think the anonymity of it is awesome, but if you live outside the US (or EU) it's such a PAIN IN THE ASS to obtain BTC. You can't just go to bitinstant, then walk into a Walmart and use moneygram and voila, the BTC is in your wallet. Where I live we don't have any physical locations we can go to. I have to deal with bank transfers and crap. Really hope that this bitcoin thing becomes popular so that every country can have super easy access to BTC...
Title: Re: What do you think of Bitcoins?
Post by: EastCoastCollective on February 02, 2013, 02:33 pm
good thread i cant give an opinion on bitcoin yet being a noob
Title: Re: What do you think of Bitcoins?
Post by: medicalcannibas420 on February 02, 2013, 04:49 pm
right there with you
Title: Re: What do you think of Bitcoins?
Post by: medicalcannibas420 on February 02, 2013, 06:08 pm
I am a noob also.....and here is my question.......lets talk round numbers........so when a vender lists a product on SR .....with the website..prior to getting posted....do they do it in bit coins?.....or dollars...euros or what?.....my assumption is that....and then the website converts it to bitcoins at the current rate of exchange the day listed.....so lets say the have a product for 100 us dollars...that is converted into bitcoins + the 5% fees for a total listing price of XXXX......?......then the customer wants the product and uses what ever currency they have and converts it into bitcoins at the current rate and purchases the item........I am not sure if this is the way it works or not.....so the customer get their product and the venders get the bitcoins at whatever rate they can then be converted back into what ever currency they want to use......is that correct?

The reason I ask this.....is as the conversion rate of the bitcoins vs currency's increases....it would cost the customer way more money......I.E. I have a listing for an item with a value of 5 bitcoins from November....still on SR.....the value of that item has increased a ton.....when in reality should be adjusted to what ever the exchange rate is daily......

IDK.......still learning here.......If I have a zone of cannibas and I want 400 for it....that would be about 20 bit coins.....but if the value of bitcoins rises from 20 to 40....my product is not worth 20 bit coins anymore it only worth 10 at the current exchange rate.......is that correct or am I missing the boat completely? 
Title: Re: What do you think of Bitcoins?
Post by: medicalcannibas420 on February 02, 2013, 06:16 pm
I am a noob also.....and here is my question.......lets talk round numbers........so when a vender lists a product on SR .....with the website..prior to getting posted....do they do it in bit coins?.....or dollars...euros or what?.....my assumption is that....and then the website converts it to bitcoins at the current rate of exchange the day listed.....so lets say the have a product for 100 us dollars...that is converted into bitcoins + the 5% fees for a total listing price of XXXX......?......then the customer wants the product and uses what ever currency they have and converts it into bitcoins at the current rate and purchases the item........I am not sure if this is the way it works or not.....so the customer get their product and the venders get the bitcoins at whatever rate they can then be converted back into what ever currency they want to use......is that correct?

The reason I ask this.....is as the conversion rate of the bitcoins vs currency's increases....it would cost the customer way more money......I.E. I have a listing for an item with a value of 5 bitcoins from November....still on SR.....the value of that item has increased a ton.....when in reality should be adjusted to what ever the exchange rate is daily......

IDK.......still learning here.......If I have a zone of cannibas and I want 400 for it....that would be about 20 bit coins.....but if the value of bitcoins rises from 20 to 40....my product is not worth 20 bit coins anymore it only worth 10 at the current exchange rate.......is that correct or am I missing the boat completely? 
Title: Re: What do you think of Bitcoins?
Post by: medicalcannibas420 on February 03, 2013, 03:50 am
sure was hoping someone would comment  ;D