Bitcoin splits

[Twed]

So as a currency, if I 'have' some I use it buy stuff. I did this the other day; the process is that the merchant gives me their public address, and using some software that I've given my private key to I can send it to the merchant. I guess that can sound crazy because it's not a physical thing, but it's a thing that can be traded and has value due to scarcity, so it does the same job as a real coin.

Mining is weird. You don't need to understand it much beyond "difficult calculations are required to make the Bitcoin network work, and people are rewarded with Bitcoin for doing those calculations".

[Funcrusher]

Shouldn't that say 'China is rewarded with Bitcoin for doing those calculations?'

[Replies From View]

So as a currency, if I 'have' some I use it buy stuff. I did this the other day; the process is that the merchant gives me their public address, and using some software that I've given my private key to I can send it to the merchant. I guess that can sound crazy because it's not a physical thing, but it's a thing that can be traded and has value due to scarcity, so it does the same job as a real coin.

Mining is weird. You don't need to understand it much beyond "difficult calculations are required to make the Bitcoin network work, and people are rewarded with Bitcoin for doing those calculations".

Are the "difficult calculations" difficult on purpose, to keep Bitcoin scarce?  Is there a danger that for a small number of clever folks the calculations will stop being so difficult?

[Funcrusher]

Are the "difficult calculations" difficult on purpose, to keep Bitcoin scarce?  Is there a danger that for a small number of clever folks the calculations will stop being so difficult?

I think the danger is that entities with a fuckton of computing power end up dominating, which as I understand it currently means China. Or alternatively it ushers in a libertarian utopia in which Biggy and Ron Paul are mobbed in the streets everywhere they go.

[Twed]

Are the "difficult calculations" difficult on purpose, to keep Bitcoin scarce?  Is there a danger that for a small number of clever folks the calculations will stop being so difficult?

Yeah, you're exactly right about the scarcity/difficulty. They are artificially difficult, and the difficulty is intentionally increased as more Bitcoins are generated.

The problem is designed so that the difficulty is purely computational difficulty. It's not difficult in the sense that it requires cleverness, but difficult in that it requires a huge number of numerical operations to solve. If anybody did find some clever shortcut to avoid having to spend the computational power then Bitcoin would be useless, but that wouldn't matter because society itself depends on these calculations and absolutely everything would be fucked.

[Replies From View]

When somebody pays real money for Bitcoins, to whom does that money go?


Edit:  never mind.  Obviously whoever mined it or whoever's selling previous Bitcoins.


It really underlines how imaginary money is, this.

[Twed]

Yeah, it's all completely abstract. But you can trade between Bitcoin and other currencies. If you have one Bitcoin, you could give it to an exchange and get around $2700 for it (because other people are prepared to buy it for that much). If you want a Bitcoin, that's how much it's going to cost you (you can buy less than a whole Bitcoin, fortunately).

[colacentral]

It's interesting (to me) to note that Bitcoin and Etherium have gone up in value a huge amount since Trump was elected. With personal debt at around the same levels as 2008, there's likely to be another global crash at some point in the near future, and you'd think that as traditional currencies go down, Bitcoin, Etherium, and anything else related will increase in value substantially again.

I'm eager to hear opinions on Etherium from anyone here who might know more about it. It looks like quite an attractive prospect seeing as it's relatively new and affordable still.

[Replies From View]

Etherium??!


*faints*


*sits back up*


The very name is rubbing it in.  "Into nothingness it shall go, in the end."

[Twed]

It's interesting (to me) to note that Bitcoin and Etherium have gone up in value a huge amount since Trump was elected. With personal debt at around the same levels as 2008, there's likely to be another global crash at some point in the near future, and you'd think that as traditional currencies go down, Bitcoin, Etherium, and anything else related will increase in value substantially again.

If you think about it, if USD goes downwards then a Bitcoin is automatically worth more of them. So that's always part of it.

I'm eager to hear opinions on Etherium from anyone here who might know more about it. It looks like quite an attractive prospect seeing as it's relatively new and affordable still.

Technically it's probably the one that actually WOULD be a workable currency for everyday use. It has a lot of really cool stuff to facilitate things like smart contracts. It's a good investment too, I think. I bought around 10 Ether at $50 each and they've quadrupled in value since then.

[momatt]

You did a good job.

Yes thanks for this Twed.  I've read a fair few explanations and yours is probably the best.  But it is a bloody weird abstract thing to get your head around.
Luckily you don't really need to understand how they work to use them.

So are the mining computations too difficult to do with a really good home computer?

Technically it's probably the one that actually WOULD be a workable currency for everyday use.

There's a food market near where I work where some of the stalls accept bitcoins as payment.  You show them a QR barcode is exchange for your roast pork sandwiches.
One of the most ridiculously sci-fi things I've seen!

[katzenjammer]

So the BTC price that I see on coinbase now represents what after the split?

[Replies From View]

Isn't a Bitcoin crash inevitable?  Probably because I know next to nothing about it, it feels like it must be.  There just has to be a point in the future where everyone is talking about "that Bitcoin madness" that lost people loads of money in the early 2020s.

[Sebastian Cobb]

Is the (ever-increasing) difficulty of the verification calculations the reason that it can take ages to now send a coin to someone (unless you pay to use a premium exchange)?

[TheManOne]

The calculations are limited to take roughly the same amount of time - it's a complicated puzzle involving hashing and getting zeros in a line.
What is actually slowing everything down is the number of people using Bitcoins.
The ledger has to be run through the hashing puzzle at the end of every transaction. If there were only two of you - it'd be simple. But more users means more transactions means more blocks.
The more people mining, the more multiple threads you get. It's only ever the longest thread which is taken as secure. So it's basically a whole load of people racing to complete each block - and then hoping the next block in that chain gets solved before another chain grows longer.
It's a geometric cluster fuck basically.

(I don't understand money - but I weirdly know about how the encryption behind bitcoin works)

[stunted]

If you create a wallet using a bootable operating system like Tails, is the wallet stored on your hardrive or the usb you're booting from? If it's the hard drive, why isn't it accessible through other operating systems on the computer?

Also once you have a seed, as I understand it, as long as you don't lose/forget your password/phrase it doesn't matter if you lose your wallet. So would you just be able to download the wallet again/buy another hardware wallet and enter your seed?

Is your private key pulled from your seed passphrase? Do you ever need to know your private key if you have your 12 words?

[Twed]

Yep, private key is derived from the seed. So keep the seed!

[Twed]

Isn't a Bitcoin crash inevitable?  Probably because I know next to nothing about it, it feels like it must be.  There just has to be a point in the future where everyone is talking about "that Bitcoin madness" that lost people loads of money in the early 2020s.

Bitcoin's value crashes all the time. Sometimes it magically soars too. That's half the fun if it, you can wake up and the value has changed by 500 dollars.

[Twed]

So the BTC price that I see on coinbase now represents what after the split?

The price of Bitcoin, as before. The split means some jokers have just made their own copy of the blockchain that operates separately after the split.

[Gurke and Hare]

I have two questions:

1) When I send a payment to someone using Electrum, there's an associated fee. I always assumed that fee was what went to the person whose computer did the calculations to confirm the payment (which would make sense, since the higher the fee the faster the transaction is confirmed), and that mining was a separate thing. What's the fee for?

2)Since the number of bitcoins is finite, what will happen when they are all issued? How will transactions be confirmed then?

[stunted]

So if I memorised my seed then destroyed all my hardware/software I could still access my currency? would that be the equivalent of having a paper wallet?

[Twed]

So if I memorised my seed then destroyed all my hardware/software I could still access my currency? would that be the equivalent of having a paper wallet?

Yep. Double check by doing a test restore first though 😀

[Twed]

I have two questions:

1) When I send a payment to someone using Electrum, there's an associated fee. I always assumed that fee was what went to the person whose computer did the calculations to confirm the payment (which would make sense, since the higher the fee the faster the transaction is confirmed), and that mining was a separate thing. What's the fee for?

I don't know to be honest. Ethereum it a little more complex and has concepts like "gas". The fee probably ends up going to a duck sanctuary or something mental.

2)Since the number of bitcoins is finite, what will happen when they are all issued? How will transactions be confirmed then?

They will only get the transaction fee as a reward. I don't know what that will do to the economy. Ethereum has no upper limit, I believe.

[stunted]

Thanks for the answers Twed. Good that these ultra-libertarians have essentially embedded a tax into their system in the form of these transaction fees.

[Gurke and Hare]

I think it's wrong to say that bitcoin is an "ultra-libertarian" thing. You don't have to be ultra-libertarian to think that privacy is a good thing.

[Twed]

Yeah. I hate libertarians. There's certainly more than a whiff of Libertarianism about Bitcoin though, but I think Bitcoin as a tool for change straddles a few ideologies, some of them fundamentally contradictory.

On the other hand I'm hoarding it like gold buried in my back yard and I feel dirty.

[Twed]

Bitcoin is worth about $500 more (when traded for USD) than it was last time this thread was active. I believe this trend will continue over the next few years until one coin is worth $10-25K. Now would be a good time to buy any amount you can afford if you have been wondering if you should get into it or not.

Yes, it's higher than ever. But it was higher than ever when I bought at $1500.
Yes, it could dip down to $2100 next week. But it will go up again. You will not have lost out.

[TheManOne]

And this is why capitalism fails.

[Dex Sawash]

Are prices set like other commodities/investment things? (I don't really know exactly how those things work but sort accept the concepts)

[Twed]

They're set by the literal numbers. If people are selling Bitcoin to people for USD at $3300 on average, then Bitcoin is worth $3300.