BitCoin

[phuckphace]

ITT we discuss blockchain currency, its future and most importantly how retarded it is.

blockchain currencies like BTC are some neckbeard's basement project that took off into a global phenomenon. Tacitus wrote of "feminine credulity", but I attribute most of BTC's growth to something I like to call "nerd credulity" - that is, neckbearded nerds more than anyone believe fervently in novel tech and will line up to be the very first to adopt it, absorbing unknown externalities and risks like crash-test dummies.

blockchain currency works the way it does because some nerd programmed it thus. that's to say that the number of BitCoins in existence is fixed by design. economists might find this problematic from a money supply standpoint (or whatever) but I mention it only to point out how tying your money into BTC is already staggeringly risky given its inherent design.

but it gets worse. say you're a proficient programmer or "hacker" as the movies like to put it, and you knew that hundreds of thousands of nerds keep their BTC wallets stored on their hard drives behind only their Windows login password - how easy would it be to program a Trojan that spreads across computers connected to the Internet, scans for BTC wallets, steals such info and delivers it to you? it really is that easy. about a year and a half ago I removed a virus from my friend's girlfriend's laptop that was using her system to mine for BitCoin - I noticed it because the CPU usage was maxed out on all cores and was running hot as a waffle iron. if and when the security of your PC is compromised, your "money" is gone forever without recourse and Rand Paul will win in a landslide sooner than you'll ever see it again.

there's little to be said in BTC's favor as a replacement for electronic/plastic transactions, as the latter are insured by the government up to a certain amount and anonymity is not a paramount concern in the area of benign purchases of shoes or vidyagames from a retailer such as Amazon.com. despite anarcho-nerd protests to the contrary, the only reason this would be a concern is if the "retailer" were accessed through several proxies and the merchandise in question were benzos or child porn from the Ukraine. it's like trying to claim you only jailbreak your iPhone for the custom themes and not the millions of pirated apps.

I'm sure Vlerchan-senpai will be able to expand more on BitCoin's specific awfulness as it relates to monetary economics, but in the meantime I hope we can agree that BTC should not be touched with a 10-foot pole.

[sqishy]

Because I know little about this 'currency', how did it come about?

With my little knowledge of it, I can say that my first impressions have been of wariness and wondering why units of bitcoin are worth so much compared to other currency units.

[dxcxdzv]

Bitcoins are well-known for their crazy volatility and their deflationary trend.
It for sure isn't a good way to use as money (i.e regular transactions) and today it's mainly used for transactions that... well that you don't want banks or any other centralized institution to know about.

This is due to the fact that the bitcoin can't be "created", there was an initial amount at the beginning and it's still the same today and - of course - the fact that its value is purely fixed by the forces of demand and supply.

[Vlerchan]

economists might find this problematic from a money supply standpoint (or whatever) but I mention it only to point out how tying your money into BTC is already staggeringly risky given its inherent design.
Not really. The fact that supply is bounded means that earlier adopters stood to gains massive yields as demand increased (price rises as demand exceeds supply). That's one of the big reasons behind it taking off.

It's only dangerous now because it's beholden to pretty significant speculation. So, yeah, now it's a piece of crap, though I'm sure a lot of people got rich at the start.

it really is that easy.
That's the reason digital wallet services emerged. These allowed users to store their bitcoin wallets on a dedicated server that some firm hosts.

With some firms you keep your key private and then you're the only one who can access it - Even if the server is compromised. With others they also have access to your key which is more dangerous for a host of obvious reasons. Nonetheless, the problem has been approached and novel solutions provided.

I'm sure @Vlerchan-senpai will be able to expand more on BitCoin's specific awfulness as it relates to monetary economics, but in the meantime I hope we can agree that BTC should not be touched with a 10-foot pole.
Unless someone wants to argue otherwise, I'll just leave it at 'pretty damn awful'.

[dxcxdzv]

It's only dangerous now because it's beholden to pretty significant speculation. So, yeah, now it's a piece of crap

https://upload.wikimedia.org/wikipedia/en/thumb/d/d5/Bitcoin_price_and_volatility.svg/567px-Bitcoin_price_and_volatility.svg.png

Piece of crap piece of crap... yes and no I'd say.
I specified that bitcoins are not good for transactions, although its particularities concerning savings are kinda interesting.

As we see on the graphic above (Wikipedia) the bitcoin follows a general positive trend. I won't consider it as a good long-run placement due to one its age and two its volatility (which even though has decreased over the time still remains very high).

It's still a very interesting case to study, mainly due to its decentralized characteristic.

But I'll rejoin you and the others on the fact well... it's mainly speculative crap.

[phuckphace]

Paraxiom - BTC was invented by literally one nerd who then shared it with his nerd friends and the rest is history.

the inflated value of BTC is based solely on perception of value, and is thus a bubble fueled only by hype. any kind of disturbance will set off a volatile plunge in value such as the 2013(?) shock caused by the closure of MtGox and the theft of all wallets stored therein, made worse by the fact that nerds were using it as a store of value. this habit of putting blind faith in new untested tech is the reason BTC is called "Dunning-Krugerrands" (lol) by those who know better.

Vlerchan - some economists are calling BTC the ultimate refutation of the efficient-market theory. I'm inclined to agree. thoughts?

[Uniquemind]

It's a bit of a mystery.


The most success I've seen with it, is that people mine it, and convert a fraction of their stockpile of BTC into other forms of currency that are backed by government.


It's definitely not something I advise putting all of one's eggs into.

I do think it's value is in it's contrast to what traditional currencies are backed by which is usually a nation's credit.

It offers an avenue to keep "value" in a constant state of flow, and that I think helps consumers if they know what their doing.


The downside is that it is the currency of choice for very illegal transactions among shady people (think anything morbid, and sadistic that could be bought as a product or service).

[lliam]

I am very haptic imprinted and even I buy my stuff mostly online paying with my debid card I don't trust virtual currencies such as BitCoin, Litecoin, Ripple etc.

[Stronk Serb]

You should use BTC if:
a: you obtained the money illegally so you convert it to BTC from an 'no questions asked' account, not really the best way, I prefer a stable, backed currency
b: you are buying something illegal so you need the difficulty of tracing, still, there is a better way to do it
c: you are an adept-expert-master level in Information technologies and decide to steal online wallets, the only thing that makes some sense, but still, there is a better way to get rich both legally and illegally involving said expertise

I prefer my Dinars and Euromonies, or any currency that has money bills. even the Dinars and Forints from the nineties sound more fun that BitCoin. Fun fact, my parents used to spend millions (of Dinars) on cigarettes. The paper the money was printed on was worth more than the monetary value of the money bill itself.

[sqishy]

Paraxiom - BTC was invented by literally one nerd who then shared it with his nerd friends and the rest is history.

the inflated value of BTC is based solely on perception of value, and is thus a bubble fueled only by hype. any kind of disturbance will set off a volatile plunge in value such as the 2013(?) shock caused by the closure of MtGox and the theft of all wallets stored therein, made worse by the fact that nerds were using it as a store of value. this habit of putting blind faith in new untested tech is the reason BTC is called "Dunning-Krugerrands" (lol) by those who know better.

Sounds much too unstable and 'self-serving' in its nature to trust then.

[Vlerchan]

thoughts?
There's an obvious intrinsic value to bitcoin: anonymity and it's decentralisation, so I'm certain it's no pure bubble.

I honestly don't know enough about the factors determining the value of bitcoin to really comment on the price-trend deviating from what EMT predicts.

Reise is a finance major (so, unlike me, his knowledge isn't just derivative), so he might have a better contribution on this point.

I won't consider it as a good long-run placement due to one its age and two its volatility (which even though has decreased over the time still remains very high).

I presume volatility is being measured on the Left-Y axis? Would you mind explaining what it actually measures, and the significance of the difference between jumps (0.10 to 1.00 to 10.00 etc.).

It also seems that unless you have an algorithm that can predict the short-run fluctuations, it's not a great investment. The upward trend ended in 2013. Least that's the impression I have with zero investing experience.

It's still a very interesting case to study, mainly due to its decentralized characteristic.
Yeah. Though I wonder how much published research is contaminated by ideological-nonsense. It's one of those issues where you know there's an extreme wing that will be publishing a severely disproportionate amount of the research.

[Flapjack]

I think bitcoin was founded with good intentions and the process of 'mining' can be very valuable for scientists however the currency is unstable, mining without proper hardware is pointless and the currency is used for crime.

If they could find a way to track coins, not only would this stop the crime it will also help those who have lost hardrives and so lost their money. However I recon the value of the bitcoin would drop significantly if this happened.

[dxcxdzv]

I presume volatility is being measured on the Left-Y axis? Would you mind explaining what it actually measures, and the significance of the difference between jumps (0.10 to 1.00 to 10.00 etc.).
Right-Y axis. The volatility is a percentage measuring the amplitude between two extreme values at a given time period.
I agree the way the value of the bitcoin has been indicated on this graphic is kind of disturbing.
The volatility at a period t is: 100*[Highest value(t) - Lowest value(t)]/average value(t).
You can see its variations follow the peaks of the bitcoin's price.

It also seems that unless you have an algorithm that can predict the short-run fluctuations, it's not a great investment. The upward trend ended in 2013.
Short-run fluctuations are assumed to be unpredictable (time lags and information story etc.).
The trend I was referring to is more "global" I'd say, due to its nature (limited money supply) it wouldn't be surprising at all to see the bitcoin's value globally increase over the years, of course if you take a 2-3 years period it's a complete mess.

[Porpoise101]

I like bitcoin because it is an avenue for freedom and opportunity in the digital world. It allows people to commit crimes and do things in secret which is cool if you are a criminal.