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  1. #1
    in dreamland Tellenbach's Avatar
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    Default What the heck is Bitcoin?

    I've been following the stock market for about a week now and there have been 2 major stories: the ascension of Tesla to the S&P 500 and the ridiculous increase in value in Bitcoin. In January 2019, it was worth $3500. Now it's worth over $18,000. In the past month alone, its value has skyrocketed. I have no idea what cryptocurrency is all about and I'm not sure where the value comes from or who decides what a bitcoin is worth. Let's discuss cryptocurrency so we can all better understand what it's all about. Is this the beginning of a paradigm shift in currency and will Bitcoin hit $100,000 in 2021? As a libertarian, I support efforts at decentralizing currency and taking power away from the Federal Reserve, but this is one mysterious subject.

    Questions I have:

    1) How the heck you do spend Bitcoin? Suppose I want a cup of coffee and I have a Bitcoin in my wallet. How does that work?
    2) If we buy Bitcoin using US Dollars and the US Dollar is being devalued by the Federal Reserve, how would this affect the value of a bitcoin? Would Bitcoin be similarly affected by inflation?
    3) Shouldn't Bitcoin be tied to some precious metal like Gold or Palladium?
    I feel like the protagonist in an M. Night Shyamalan movie and everyone else is weird and creepy.

  2. #2
    The Unwieldy Clawed One Falcarius's Avatar
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    Falcarius has like wondered the same thing and came to the conclusion they are essentially bonds ran by criminals to launder money. It is almost like that they are IOU which are bought to make illegitimate money look legitimate, and a small number of other holders who are just speculators and so piggybacking on it. Falcarius doubts anyone really uses Bitcoins to actually by things.

    There is most likely more correlation between Bitcoins with the price of illicit drugs, human trafficking, counterfeiting, illegal arms sales, and illegal sales of natural resources than the value of the dollar. The inflation and government policy around illegal drugs and the sex industry has more impact than the value of dollar on Bitcoins. For example, Falcarius suspects if the government legalised those sort of things then only paranoid people would buy Bitcoins.
    Quote Originally Posted by Thalassa View Post
    Oh our 3rd person reference to ourselves denotes nothing more than we realize we are epic characters on the forum.

    Narcissism, plain and simple.
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  3. #3
    撰文 Dareyth's Avatar
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    Bitcoin is blockchain technology, and the value exists outside of all other currency. You can use it just like money and PayPal (if a service accepts them). You can also "mine" it like gold, but it requires a specialized computer set up. That set up can create "new" bitcoins. But the more bitcoins created, the longer it takes to produce a new coin because it generates a new key each time.

    The downside is the value can drop insanely fast, as there is no stability. Bitcoins can also be heisted, just like gold. All and all, don't invest too much, and treat them like a stock. I wish I would have bought some when they were 15$.

    Its entire purpose is to be currency without backing and free of government. The ultimate Libertarian money.
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  4. #4
    Klingon Warrior Princess Patches's Avatar
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    I think Bitcoin is a good long-term investment, personally... I think 20 years from now the value will be huge. But right now in this moment I would not invest. Bitcoin has a habit of "popping" and dropping dramatically. (Historically, there have been several suicides in the wake of Bitcoin crashes.) It swings up and down like a goddamn EKG. There is no rhyme or reason to the Bitcoin market, and word on the street is that it's very much a market that is manipulated by the top Chinese holders of Bitcoin. There were 2 Chinese companies that were mining ~90% of the Bitcoin in the world last I checked. The volatility is real.

    The anonymity and privacy is why investors are telling people that this stuff is going to end up at 250,000-300,000 eventually. In a world with ever-increasing surveillance and data gathering... The only way to pay for something online without having your data harvested is with Bitcoin. It is the no-paper-trail cash of the internet. It got it's start on the darkweb as a means of paying for child pornography and illegal drugs, because it's relatively untraceable. You can track that it's moving between wallets, but you can't see who it's from or who it's to.

    The world has changed since it got it's start though. The general public is becoming increasingly aware of the amount of data that is constantly being collected on them. VPNs, once something exclusively used by nerds, are becoming more mainstream to hide your information. Similarly... The general public is finding reasons to want/need Bitcoins. Want to buy some knockoff Louis Vuitton shit from some bullshit Chinese website but don't want them to have your credit card information? Bitcoin. A younger, more computer-savvy generation is up and coming, with more awareness of this need for privacy online. Bitcoin will only grow in commonplace usage.

    I tried bitcoin mining back in early 2013. It spiked from like 10$ to 100$ a coin back then, and started making some waves in the nerd communities. After like 2 weeks of mining, I came up with like .03 cents worth of Bitcoins. Figured I was spending more in electricity than I would ever make. Up and forgot about it for about 6 years until Bitcoin started making mainstream news because it was up to 4 figures. Dug through an old laptop and found my wallet - Which was now worth about 600$.

    I've been playing the exchange and trying to sell it high and re-buy it low ever since to grow my value. I refuse to invest any actual money into it - it's too volatile for that. But I have no qualms dicking around with the fraction of a bitcoin I mined in 2013. I unloaded my current amount when Bitcoin hit ~16,000, so I'm just waiting for the inevitable crash to re-buy.
    “Everybody has a secret world inside of them. All of the people of the world, I mean everybody. No matter how dull and boring they are on the outside, inside
    them they've all got unimaginable, magnificent, wonderful, stupid, amazing worlds. Not just one world. Hundreds of them. Thousands maybe.” -Neil Gaiman



  5. #5
    Host of NappingXM Radio Burner's Avatar
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    Bitcoin seems like astrology for libertarians. I'm partially joking.
    Ti mozes sve, al' jedno ne...

    Johari | Nohari


  6. #6
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    Quote Originally Posted by Tellenbach View Post
    3) Shouldn't Bitcoin be tied to some precious metal like Gold or Palladium?
    No. There may be a risk of liquidity if the exchange rate (Bitcoin v. Gold) can't be adjusted by the market, pretty much like if US Dollars were tied to Euros.

    But I think another cryptocurrency which is tied to Gold is known to exist. Don't remember its name.

    Just imagine what would happen if Bitcoin was tied to Gold and if someday we would be able to produce gold industrially.
    I didn't choose my way of thinking. My way of thinking chose me.

  7. #7
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    Quote Originally Posted by Dareyth View Post
    Its entire purpose is to be currency without backing and free of government. The ultimate Libertarian money.
    As an anarcho-capitalist, I do like the idea (which looks ultimate), but I'm afraid Bitcoin itself might not stay "ultimate" in the long term, because of quantum computing which threatens most of the current cryptography.

    Cryptography is not magical, it's essentially a bunch of algorithms whose the cost of execution is cheap and the cost of execution of their respective reciprocals is prohibitive.

    Cost of execution depends on the computing equipment which is used.
    I didn't choose my way of thinking. My way of thinking chose me.

  8. #8
    撰文 Dareyth's Avatar
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    Quote Originally Posted by tony_goth View Post
    As an anarcho-capitalist, I do like the idea (which looks ultimate), but I'm afraid Bitcoin itself might not stay "ultimate" in the long term, because of quantum computing which threatens most of the current cryptography.

    Cryptography is not magical, it's essentially a bunch of algorithms whose the cost of execution is cheap and the cost of execution of their respective reciprocals is prohibitive.

    Cost of execution depends on the computing equipment which is used.
    Still better than monopolistic capitalism who increases inflation because they refused to change.
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  9. #9
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    Quote Originally Posted by Dareyth View Post
    Still better than monopolistic capitalism who increases inflation because they refused to change.
    Unfortunately what I said above will probably cause Bitcoin's inflation much to the delight of monopolistic capitalism or even far-righters. I just don't know when, that's why I won't be bearish on (i.e. sell short) Bitcoin yet.
    I didn't choose my way of thinking. My way of thinking chose me.

  10. #10
    撰文 Dareyth's Avatar
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    Quote Originally Posted by tony_goth View Post
    Unfortunately what I said above will probably cause Bitcoin's inflation. I just don't know when, that's why I won't be bearish on (i.e. sell short) Bitcoin yet.
    Fair enough, but I am not really that invested "yet" to begin with. I have no doubt I would eventually take the plunge, especially after Bidet gets into office.
    一期一会

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