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[av2k]

Hello fellow Gaffers! Welcome to the very first Bitcoin community topic! This thread is for discussing Bitcoin and Bitcoin news.

Bitcoin FAQ

What is Bitcoin?

Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence.

Who created Bitcoin?

Bitcoin is the first implementation of a concept called "cryptocurrency", which was first described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions, rather than a central authority. The first Bitcoin specification and proof of concept was published in 2009 in a cryptography mailing list by Satoshi Nakamoto. Satoshi left the project in late 2010 without revealing much about himself. The community has since grown exponentially with many developers working on Bitcoin.

Satoshi's anonymity often raised unjustified concerns, many of which are linked to misunderstanding of the open-source nature of Bitcoin. The Bitcoin protocol and software are published openly and any developer around the world can review the code or make their own modified version of the Bitcoin software. Just like current developers, Satoshi's influence was limited to the changes he made being adopted by others and therefore he did not control Bitcoin. As such, the identity of Bitcoin's inventor is probably as relevant today as the identity of the person who invented paper.

Who controls the Bitcoin network?

Nobody owns the Bitcoin network much like no one owns the technology behind email. Bitcoin is controlled by all Bitcoin users around the world. While developers are improving the software, they can't force a change in the Bitcoin protocol because all users are free to choose what software and version they use. In order to stay compatible with each other, all users need to use software complying with the same rules. Bitcoin can only work correctly with a complete consensus among all users. Therefore, all users and developers have a strong incentive to protect this consensus.

How does Bitcoin work?

From a user perspective, Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and allows a user to send and receive bitcoins with them. This is how Bitcoin works for most users.

Behind the scenes, the Bitcoin network is sharing a public ledger called the "block chain". This ledger contains every transaction ever processed, allowing a user's computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending bitcoins from their own Bitcoin addresses. In addition, anyone can process transactions using the computing power of specialized hardware and earn a reward in bitcoins for this service. This is often called "mining". To learn more about Bitcoin, you can consult the dedicated page and the original paper.

Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto

Bitcoin exchanges and wallet websites

Blockchain wallet

Coinbase

Gemini

Purse

Bitcoin news sites:

Coindesk.com

Business Insider

Bitcoin.com news

Bitcoin Magazine

Bloomberg

The Cointelegraph

January 2016 Bitcoin news:

Bitcoin Unaffected by China's Stock Market Woes

Sneak peak at Bitcoin's new killer app.. Open Bazaar

Mike Tyson unveils new Bitcoin ATM

Forbes: Want To Own Bitcoin? Here's How To Buy, Invest In And Store It

Nasdaq: "This Time Bitcoin's Price Increase is Both Logical and Sustainable"

BitPay has just released a fork of Bitcoin Core which implements an adaptive block size

 

[av2k]

So to kick off with a discussion, do you own or are interested in Bitcoins and how well do you think Bitcoin will do in 2016?

 

[Jaladinozozo]

Nice OT.

I think people should read the original Bitcoin paper for both a fundamental and technical understanding, might want to put it in with one of your links.

https://bitcoin.org/bitcoin.pdf

Also some links to popular wallets and exchanges like Coinbase, Circle, Blockchain.info would be useful.

 

[av2k]

Nice OT.

I think people should read the original Bitcoin paper both a fundamental and technical understanding, might want to put it in with one of your links.

https://bitcoin.org/bitcoin.pdf

Also some links to popular wallets and exchanges like Coinbase, Circle, Blockchain.info would be usefull.

Sounds good! I'll edit that in.

 

[Deleted member 231381]

Why would I buy an inherently deflationary 'currency' that has next to no liquidity?

 

[mvtn]

 

[Jaladinozozo]

Why would I buy an inherently deflationary 'currency' that has next to no liquidity?

I see plenty of liquidity -

https://exchange.coinbase.com/trade/BTC-USD

And you would buy it for the same reason you would put your money into any other investment.

You believe it has value, other people believe it has value, the value will continue to increase and you will be able to exchange your investment for its perceived (or actual) value and or goods/services instead.

Besides that as a technology it has the utility of being able to transmit that value to any other person anywhere in the world from almost any device without going through any middlemen or paying any fees. No bank statements to fill out, no credit checks, no personal information and social security #s to divulge, no two utility bills to bring with you as well as drivers license, passport or other ID, etc. etc. all while being able to rest assured that each and every transaction is trustless, secure, verifiable autonomously by the entire network and permanent.

 

[av2k]

2016 starts off with a blood bath for all stocks except of course..

Things are looking up for 2016 from what I see but again, anything can happen.. I was actually surprised to learn today that my home town was the first place to open up a BTC ATM(Houston TX).

 

[Furyous]

Bitcoin is too expensive for me but my Doge investment is past the moon. No one saw it reaching the heights it reached outside of a few people so all of us were caught off guard and now look on sadly as we missed out on millions of dollars.

Imagine if you got your hands on 40,000 coins, secured them, then watched them hit $500+ per coin during the 2013s onward.

 

[Deleted member 231381]

I see plenty of liquidity -

https://exchange.coinbase.com/trade/BTC-USD

That's only liquidity in terms of other currencies. I can't actually use Bitcoins to buy anything except other currencies; there are effectively no physical goods transactionable for Bitcoin. Given that I already own non-Bitcoin currencies which can be used for all of the transactions Bitcoin can and more, what is the point of acquiring Bitcoins as a currency and not as a commodity?

And you would buy it for the same reason you would put your money into any other investment.

You believe it has value, other people believe it has value, the value will continue to increase and you will be able to exchange your investment for its perceived (or actual) value and or goods/services instead.

Okay, but I see absolutely no reason to believe any of these. Bitcoin is not a currency given that you can't actually buy anything with it except other currencies. It is a commodity. But it isn't a commodity that can be used for either the production of other forms of capital or for consumption. There is no derived demand. The only reason it varies in value is speculation, and that's because a large number of people buying Bitcoins are, bluntly put, morons who expect unrealistic things of it. The only reason I would buy into Bitcoin is in the hope that more and more morons enter the system and drive the speculative value higher so I can sell before they realize how useless the coin is.

Besides that as a technology it has the utility of being able to transmit that value to any other person anywhere in the world from almost any device without going through any middlemen or paying any fees. No bank statements to fill out, no credit checks, no personal information and social security #s to divulge, no two utility bills to bring with you as well as drivers license, passport or other ID, etc. all while being able to rest assured that each and every transaction is trustless, secure and permanent.

The technological concept behind Bitcoins is very unique and certainly has future applications. I don't deny that. I suspect that eventually future cryptocurrencies derived from the technology involved in Bitcoins will become widespread, although not Bitcoin itself. However, all this security is essentially useless given the sum total of people who are actually willing to accept Bitcoins is 5 redditors and their doge.

 

[Jaladinozozo]

The technological concept behind Bitcoins is very unique and certainly has future applications. I don't deny that. I suspect that eventually future cryptocurrencies derived from the technology involved in Bitcoins will become widespread, although not Bitcoin itself. However, all this security is essentially useless given the sum total of people who are actually willing to accept Bitcoins is 5 redditors and their doge.

I can't get into detailed responses to all of your points now but at least for this one, this is not true anymore. Major companies are using and accepting Bitcoin. Some companies like Overstock have paid out employees in Bitcoin. Paypal is jumping on board, Newegg, Shopify, Bitpay and services like Gyft which essentially let you use and convert your coins for anything from almost any site. Amazon is rumored to be jumping on board as well with codes/lines showing the initial start of BTC acceptance on their European Seller Central platform.

Websites like https://shapeshift.io/ let you accept BTC and instantly convert it to any other cryptocurrency, back and forth as much as you like.

Almost any site that exists can easily implement an API from someone like Bitpay or Shapeshift to accept BTC just as easily as they do any other payment method and the BTC will even instantly convert to USD at the moment of the transaction if you would like it to.

Besides that even major financial institutions and companies are jumping on board from Nasdaq to Forbes with over 2 billion in venture capital funding raised for BTC companies and startups in 2015.

 

[Deleted member 231381]

Just to pick a random one your examples, I'll quote from the Bitcoin wiki;

PayPal
You can't directly buy Bitcoins using PayPal, because it is risky for the seller, and therefore few sellers will offer this. There are basically 3 reasons for that:

• The buyer of bitcoins can always perform a chargeback and there is no way for the seller to contest that
• There are many hacked accounts and when PayPal realizes that such an account has been fraudulently used, they will also perform a chargeback
• PayPal doesn't like bitcoin, as the bitcoin network is in direct competition to it. They will ban accounts that have anything to do with Bitcoins, and freeze their balance.

Having said that there is a workaround that can be done in order to use Paypal to buy Bitcoins but it holds within it higher transaction fees. Using the Virtual World Exchange you can buy Second Life Lindens (SLL) with Paypal and then convert your SLL to Bitcoins. This process will charge you transaction fees of around 6% but will let you purchase Bitcoins pretty quickly as opposed to a wire transfer. The reason this method works is because you do not buy Bitcoins with Paypal directly, you only buy SLL with Paypal (which is acceptable by Paypal's TOS) and then exchange your SLL to Bitcoin.

Note: If you only want to take advantage of Bitcoin's price volatility You can trade CFDs on Bitcoin via Paypal on sites like AvaTrade or Plus500. When trading online your capital may be at risk. Trading CFDs is suitable for more experienced traders.

This does not sound like PayPal "accepting" Bitcoin to me.

Being exchangeable for other currencies does not make something a viable currency, because currencies are supposed to exchangeable directly for all saleable things in a given market. What physical goods or services (e.g., not USD, GBP, EUR) can I buy with Bitcoins? What is cumulative transaction rate of the Bitcoin? Is the number of goods or services available for purchase expected to go up? Is the cumulative transaction rate expected to go up?

 

[av2k]

That's only liquidity in terms of other currencies. I can't actually use Bitcoins to buy anything except other currencies; there are effectively no physical goods transactionable for Bitcoin. Given that I already own non-Bitcoin currencies which can be used for all of the transactions Bitcoin can and more, what is the point of acquiring Bitcoins as a currency and not as a commodity?

http://www.dell.com/bitcoin
Amazon.de takes Bitcoins
http://www.overstock.com/bitcoin

Okay, but I see absolutely no reason to believe any of these. Bitcoin is not a currency given that you can't actually buy anything with it except other currencies. It is a commodity. But it isn't a commodity that can be used for either the production of other forms of capital or for consumption. There is no derived demand. The only reason it varies in value is speculation, and that's because a large number of people buying Bitcoins are, bluntly put, morons who expect unrealistic things of it. The only reason I would buy into Bitcoin is in the hope that more and more morons enter the system and drive the speculative value higher so I can sell before they realize how useless the coin is.

"2015 has turned blockchain into something the industry has to live with. It is no longer a choice anymore. Recent news speculating about the identity of its creator and the formalisation of virtual money as a commodity just makes it more real than ever before."

-Visa Europe

To me, it looks like even giant money institutions are believing in Bitcoin and it's blockchain technology. It has very real world use especially in countries that have unstable currency.

 

[Jaladinozozo]

The groundwork for Paypal is already there.

You mentioned "I suspect that eventually future cryptocurrencies derived from the technology involved in Bitcoins will become widespread, although not Bitcoin itself. "

and I would argue Bitcoin IS already widespread and there is no need to wait for future cryptocurrencies and technologies just like no one had to wait for something better than the TCP/IP protocol to make the internet better or work.

 

[Deleted member 231381]

http://www.dell.com/bitcoin
Amazon.de takes Bitcoins
http://www.overstock.com/bitcoin

Dell doesn't directly accept Bitcoin. They have a partnership with Coinbase whereby when you make a purchase with Bitcoin, those Bitcoins are then sent to Coinbase and then Coinbase sends Dell the amount in USD, minus a transaction fee - which incidentally is why the price of Dell goods is relatively higher in Bitcoin then USD, so you're literally losing money if you used the USD you were presumably paid with to then buy Bitcoins to then buy goods from Dell compared to just using that USD to buy from Dell.

amazon.de doesn't directly accept Bitcoin. Coinimal acts as an intermediary where again you send your Bitcoins to them and they send the correct amount to Euros to amazon.de. This is moderately better than Dell because Coinimal charges no transaction fee so you're not losing money, but you're not gaining any either - it's literally exactly the same as using Euros, so you can save yourself time by simply keeping Euros, unless you want to trade time for personal privacy.

Overstock has the same deal Dell does and thus you are losing money.

"2015 has turned blockchain into something the industry has to live with. It is no longer a choice anymore. Recent news speculating about the identity of its creator and the formalisation of virtual money as a commodity just makes it more real than ever before."

-Visa Europe

You're quoting a Bitcoin investment site quoting a blog which manages to miss that the second paragraph is literally about the challenges facing Bitcoin. Additionally, the blockchain is separable from the Bitcoin; I can accept blockchain technology will become prominent while remaining deeply dubious of the Bitcoin.

To me, it looks like even giant money institutions are believing in Bitcoin and it's blockchain technology. It has very real world use especially in countries that have unstable currency.

"It looks like giant money institutions that I haven't named or provided evidence of believe in the Bitcoin on the basis of a carefully excepted quotation of a fairly minor blog."

Most countries with unstable currencies can't even use the Bitcoin - the top ten countries in terms of inflation last year were Venezuela, Sudan, Argentina, Syria, Malawi, Ghana, Belarus, the Central African Republic, Eritrea and Ukraine. Barring Argentina and possibly Ukraine (although Ukraine's currency is unstable for rather different reasons), literally none of these countries could adopt Bitcoin. How many people in Malawi do you think even have internet access?

 

[Jaladinozozo]

"What physical goods or services (e.g., not USD, GBP, EUR) can I buy with Bitcoins? What is cumulative transaction rate of the Bitcoin? Is the number of goods or services available for purchase expected to go up? Is the cumulative transaction rate expected to go up?"

More and more websites are accepting BTC directly, without any exchange to USD, for goods and services. If you Google it 100s will come up, there are too many for me to list but Bestbuy, Newegg, Dell, Overstock and soon Amazon are onboard.

Services outside of technology are a little slower to catch up but I am seeing more and more Bitcoin ATMs and terminals pop up locally. I've seen hotels, airline tickets, flowers, concert tickets etc being sold and directly accepting BTC as payment method.

Instead of Seamless or Grubhub I use Foodler.com and pay with BTC I accumulated when it was single digit dollars worth so essentialy I am eating for almost free whenever I go through their service.

The other day in Clinton Hill Brooklyn, NY at Green Ave Market I paid for my groceries directly using Bitcoin as well.

And yes, the cumulative transaction rate is going exponentially up.

 

[Jaladinozozo]

" Additionally, the blockchain is separable from the Bitcoin; I can accept blockchain technology will become prominent while remaining deeply dubious of the Bitcoin."

This is a fundamental misunderstanding that people keep tripping up over and can not wrap their heads around.

Without the reward, which are the Bitcoins miners generate, there is no incentive to run and upkeep the blockchain. Any blockchain needs a reward system, which is why you have all these other cryptocurrencies. Bitcoin so far is the best and most popular one. Just like my example with TCP/IP, there is almost no need for any other protocol AKA cryptocurrency/sidechain (essential a separate blockchain)

The blockchain does not work without Bitcoin, they are INSEPARABLE. This is a fact.

You really need to read this paper https://bitcoin.org/bitcoin.pdf and get a basic understanding before jumping into this thread and saying things like blockchain technology will become prominent while Bitcoin will not.

Here it is directly from Nasdaq.com of all places too...

http://www.nasdaq.com/article/is-a-blockchain-without-bitcoin-possible-or-practical-cm482964

"Probably like most people, when I first heard that Wall Street was investing in the technology, I assumed that they would find some way of using it that would not involve using bitcoin or some other altcoin. The deeper I have gone into the question of whether that is possible, though, the more convinced I have become that it isn't. The only practical solution would be to keep Bitcoin or something similar as the payment for maintaining a distributed ledger, and in the long run that bodes well for the value of the existing currency."

 

[av2k]

Got some good and bad news for this week:

Fortune.com: PayPal Just Appointed This Bitcoin Startup Entrepreneur to Its Board

Cryptsy Employee: "Our site is [messed] up at the moment"

Chicago to get new Bitcoin ATM machines

 

[Jaladinozozo]

Hey av2k can you put this video in your OT?

https://www.youtube.com/watch?v=XaIxTjGjkBQ

I just remembered it because of another thread and thought its one of the best videos for explaining BTC and the Blockchain to new people.

5 min version - https://www.youtube.com/watch?v=l9jOJk30eQs