Forums Chit Chat Bitcoin: does anyone get it??
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  • #206
    jaz
    18 Posts

    Just wondering if ANYONE understands bitcoin and what it actually does??

    Tis all gibberish to me!

  • #207
    amyway
    9 Posts

    Nope. I even read an article explaining it and I’m still mystified

  • #208
    nab
    15 Posts

    All I know is its virtual currency, and its used to pay for things on the dark web ☹
    And its untraceable.

  • #209
    dave
    10 Posts

    It’s really quite straightforward – here’s some background – https://en.wikipedia.org/wiki/Bitcoin My personal take on it is – treat it like any other financial bubble that can burst at any moment ( usually just after you’ve committed your life savings!) don’t go anywhere near it if you don’t have a clear picture in your head of what you’re letting yourself in for.

    After saying that, I know some people who have already made a decent killing out of it, taken a profit then reinvested only to do the same thing over. But beware!!! This kind of gambling ( for that it what it is ) can be very, very addictive and can give you a serious bite in the posterior, or wherever else you keep your wallet.

    For 99.999999% of people I’d advise forgetting everything you’ve heard – buy a house or land – they aren’t making any more.

  • #210
    donna
    8 Posts

    Nope. Don’t get it. Don’t trust it. All i see is some mental IT person sitting back laughing his head off that all these people are putting billions into his account, thinking they are investing.

    • #211
      dave
      10 Posts

      Well that’s a healthy attitude to take on this but one the otherhand you could say the same about ordinary money. I can remember when petrol was one old shilling and nine old pennies a gallon and a large loaf of bread was six old pence – petrol is now £1.22 per ltr ( roughly £6 per gallon) and proper bread is £2 or near – that’s 80 times more expensive and about 64 times for the petrol. An ounze of gold today ( yes, it’s still traded in old fashioned ounzes which is illegal for anything else!) is £958.60 – in 1960 it was about $36.50 @ 2.8 dollars to the £ ( those were the days!) so that makes 1960’s gold just over £13 an ounze – that’s nearly 74 times cheaper than today!

      Of course, earnings have gone up too but nowhere near enough to compensate for this outrageous inflation – anyone who kept their assets in cash lost hugely – but it you were lucky enough to get on the property ladder before any of the booms – you’re laughing today. It’s all smoke and mirrors!

    • #212
      donna
      8 Posts

      yeah but they are tangible. Bitcoin is all online. Its only a matter of time before some other wizz cracks the code, gets ALL the bitcoins and blablabala. Happens all the time with banks now, cause of the digital money..but you cant physically remove a house or a field.

    • #220
      keith
      8 Posts

      yeah but they are tangible. Bitcoin is all online. Its only a matter of time before some other wizz cracks the code, gets ALL the bitcoins and blablabala. Happens all the time with banks now, cause of the digital money..but you cant physically remove a house or a field.

      If somebody did manage to steal the whole stash of Bitcoin, who would he trade with? Nobody would want to accept Bitcoin from somebody capable of stealing it straight back again. So nobody would take Bitcoin in exchange for online goods or services, and no exchange would take Bitcoin in exchange for meatspace currencies.

      And although you can’t physically remove a field (though you can physically remove any structure built on it, with enough time and effort), you can use various means to take the title to that land, effectively stealing it. You don’t take the patch of land somewhere else, but you become the owner of it, and then you can prevent the previous owner from making use of it.

  • #213
    pakpak
    10 Posts

    They cost a lot to mine they usually work in syndicates. Very high processing power and electricity. A guy at work has a qusrter of one he mined through this way. Mining them in the first place is a complicated process.

  • #214
    keith
    8 Posts

    Just skip to the end, if you don’t have time for this long post.

    Bitcoin is often called a “cryptocurrency”, but in that word, the “crypto” bit doesn’t mean that it’s anonymous or hidden. Bitcoin transactions can be tracked and traced more easily than usual cash transactions, but less easily than traditional bank transactions.

    In one way, Bitcoin is no different to any other fiat currency (including the Pound Sterling, the Euro, the US Dollar, and just about every other currency in the developed world). The money is worth whatever people are prepared to agree on it being worth. In another way, it is like a fiat currency in that new Bitcoin is being created, just as more Pounds Sterling, Euros, and US Dollars are being created.

    Bitcoin is different, in that it is not issued by any central bank, and there are no physical tokens such as metal coins and paper notes to represent it.

    It’s created by using a computer, or a specially designed computing device, to do some particularly time-consuming calculations involving prime numbers with a lot of digits

    I’ll not try to explain exactly how new Bitcoin is created, because

    I don’t exactly understand all the maths behind it
    it’s not really that important to know how it works unless you’re prepared to put in the time and money to build such a device

    For all intents and purposes, you can think of Bitcoin as being just another currency, but one that has a very volatile exchange rate compared to bank-issued currency.

    I have a bank account in the US, in US Dollars, another in the UK in Pounds Sterling, and another here in France in Euros. Most of the time, I use the Euro account, because I live in France. But if I want to give $50 to one of my nephews in the US for a birthday present, I just go online to my US bank, make the transfer to his account with a little message “Happy Birthday”, and that’s it. It’s all virtual and online. With exchange rate variations, that might be the equivalent of a little more than €50 one year, a bit less than €50 another year.

    If both my nephew and I each had a Bitcoin wallet, which acts a bit like an online bank account, I could do the same: transfer a fraction of a Bitcoin to him. So really, you can think of Bitcoin as being the currency of a “Bitworld” that only exists online (or, to use a word that’s a bit out-of-fashion these days, in “cyberspace”).

    The problem of the exchange rate volatility comes into play when you try to convert Bitcoin into a traditional (or “meatspace”) currency. Here, you have to go through an exchange, a bit like the old days of rolling up to Thomas Cook’s currency exchange window to buy Pesetas or Drachmas before going on holiday to Spain or Greece. There were times when the exchange rate of those two currencies compared to the pound were quite volatile, so if you went each year, you’d notice the difference in what you got for a hundred quid.

    If you have a few tens of thousands of pounds spare, you could gamble on currency exchanges: you buy £20,000 worth of US Dollars when there are $2 to the pound, so you get $40,000, and you hope to sell those dollars for pounds when there is $1 to the pound, ending up with £40,000… In reality, though I’ve seen in my lifetime both $1 to the pound and $2 to the pound, it’s rare for a meatspace currency to fluctuate so much in such a short space of time that such trading is profitable… you need to start playing with much bigger sums for it to be worthwhile.

    Bitcoin, on the other hand, is in a what’s commonly termed a bubble. I think most of us are familiar with the term; there’s been a lot of discussion of property bubbles, especially housing bubbles, in Ireland, the UK and Spain, over the last decade. People buy anything and everything, convinced that the value will increase rapidly so as to be able to sell at a profit. This behaviour pushes up the price, which people read as a sign that prices will go up even further in the future: it becomes a feedback loop (or vicious cycle) where higher prices encourage the behaviour that leads to higher prices…

    I pointed out above, that to create new Bitcoin requires time and some special, costly gear. People are generally impatient and stingy, so they have been using meatspace currency to buy Bitcoin with the same mentality, with the same result: Bitcoin has been getting more and more expensive to buy.

    But just like any market, there will be, from time to time, some big investor who thinks “that’s it, I’ve my investment in that stuff has reached the target I set, I’m going to cash out now”… This has happened in meatspace currencies, too. So the big investor puts up for sale a big quantity of Bitcoin at a price around or slightly lower than the general rate, and some other investor buys it. And that signal that one big investor has cashed out can be read as other investors as a sign “ah, maybe he knows something I don’t, he’s cashed out, maybe it’s time for me to cash out, too”. And that becomes a negative feedback loop, as people see trades for lower and lower prices and there’s a risk that so, everybody is trying to dump Bitcoin while the price is falling. Everybody is thinking “I hope I manage to sell for more than I paid”.

    Next, there is another problem with Bitcoin exchanges, particularly with people not knowing how they work, who owns them, and there not being clear laws and regulations. Once again, technology has created a situation that the law is still trying to catch up with. Several big Bitcoin exchanges have either been the victims of attacks that have syphoned off the equivalent of millions of dollars’ worth of Bitcoin, or the exchanges have disappeared taking people’s Bitcoins with them. Mount Gox is a good example. If you can’t be confident that your exchange is going to honour its contract, and hand over your meatspace currency in exchange for Bitcoin, why risk buying any Bitcoin? And if you already have Bitcoin and you see an exchange go belly-up, you’re likely to want to cash out before the other exchanges do the same. This again destroys the impression of Bitcoin being a safe bet that’s bound to make a profit…

    Finally, there’s a problem linked to what I mentioned above, about law still trying to catch up with technology. Some countries have decided that Bitcoin is a Good Thing, and are trying to enact rules and regulations to govern exchanges and even to allow direct purchase of goods and services using Bitcoin rather than national currency. Other countries have decided that it is Evil and must be Banned. Others are still hesitating and in the absence of clear guidance, nobody knows what’s allowed and what’s forbidden, including judges and police…

    Wikipedia has a good summary of the situation around the world.

    In the end, though, you don’t need to know everything about how electrons flow through semiconductors in order to use your computer or listen to the radio. You don’t need to know everything about fuel injection, compression ratios and gearboxes to drive a car.

    The same is true for Bitcoin and other cryptocurrencies. You just need to know enough to not get your fingers burnt. And don’t gamble with money that you can’t afford to lose.

    tl;dr It’s like ordinary money, but different.

    • #216
      nab
      15 Posts

      that’s a brilliant explanation, I understand it much better now, thank you.

    • #217
      jaz
      18 Posts

      Excellent explanation!

      The only bit I don’t get is ‘the mining’… How? What? Etc etc etc. Do you have an idiot level explanation?

    • #218
      oldfogie
      3 Posts

      @jaz Think of mining as a code cracking ‘game’.

      A person whose identity is not known set up a software ‘game’ called a Bitcoin Mine.

      Its fiendishly complicated code, and it adjusts itself to how many coins are being successfully ‘mined’, so it only allows a certain number to be ‘mined’ in a given time. So as more people mine, it gets harder to get one. And it is, apparently, limited to 21,000,000. And will shut when that limit is reached.

      It now takes warehouses full of servers to provide the computing power necessary to run a mining operation, and these take so much energy to cool that people are putting them in the Arctic circle!

    • #219
      burton
      16 Posts

      Bitcoin is often called a “cryptocurrency”, but in that word, the “crypto” bit doesn’t mean that it’s anonymous or hidden. Bitcoin transactions can be tracked and traced more easily than usual cash transactions, but less easily than traditional bank transactions.

      A good but rather techie discussion of this issue here…

      Stolen Bitcoin Tracing – Computerphile

      When bitcoin is spent, remainders are re-encoded & combined – how do you separate out any ill-gotten gains from the legitimate hard-earned lucre? Outlining his team’s solution: Professor Ross Anderson of the Computer Laboratory, University of Cambridge.

      Also “How Bitcoin Works – Computerphile”: https://www.youtube.com/watch?v=JyxRH18YlpA

  • #215
    lea
    7 Posts

    I tried to understand how it functions, what blockchain is but I can’t lol

  • #221
    housemouse
    7 Posts

    To me it smacks of the Emperors New Clothes, doesn’t actually exist but everyone thinks its wonderful !

    • #222
      burton
      16 Posts

      I sometimes feel that way about money in general. It can only work while everyone trusts that it’s actually meaningful and that governments are going to protect the illusion.

    • #223
      guy
      4 Posts

      Got it in one! You have just described all forms of money.

      You might think that you can rely on the pounds in your pocket but they are make-believe too.

  • #224
    Meredith
    6 Posts

    I don’t understand bitcoin at all but I do know money might just as well be shirtbuttons.
    My parents home cost £1450 in the late 50’s, my first home cost £8400 in the early 70’s ( it was small ), our next £12000 and our present home cost £50000 in the early 80’s.
    It doesn’t really matter what it is worth now because all the prices are relative.

    • #225
      keith
      8 Posts

      Prices are relative, yes, but some are more relative than others. I’d like to see a comparison that takes the median income of a person every ten years from 1958 to 2018, and works out how many minutes’ worth of pay it takes to buy a pint of beer, a pint of milk, a bottle of Bordeaux wine, a bottle of Champagne, a litre or petrol, a kilo of potatoes and a kilo of bananas. I think we’d see that the time it takes to earn each of those things will have fallen substantially, but that the Bordeaux, the Champagne and the bananas will have fallen the most.

      I think that the rule of thumb used to be that a bank would lend three times the household’s income. Back in the 1950s, that probably meant just the man’s income, since a good many women stopped working when they got married.

      Nowadays, I see so many articles about how housing is unaffordable for so many “young people”, where young seems to bay anything up to the age of 35 or 40″.

    • #226
      Meredith
      6 Posts

      @ketih Mum and Dad saved for 7 years whilst living with my grandparents. I was born during this time. When they tried to get a mortgage the sum offered was about £8 ( old money ) too low. Mum’s earnings didn’t qualify even though she worked from school to retirement age! I think the amount offered was 2 1/2 x the husband’s wage. The insurance policy to guarantee this extra amount cost “an absolute xxxx fortune” according to my father so the money was borrowed from family. They were the first in my father’s family to buy a house. Mum still lives there.
      And Champagne, I expect they’d have heard of that, but Bordeaux, probably not.

    • #227
      burton
      16 Posts

      Prices are relative, yes, but some are more relative than others. I’d like to see a comparison that takes the median income of a person every ten years from 1958 to 2018, and works out how many minutes’ worth of pay it takes to buy a pint of beer, a pint of milk, a bottle of Bordeaux wine, a bottle of Champagne, a litre or petrol, a kilo of potatoes and a kilo of bananas. I think we’d see that the time it takes to earn each of those things will have fallen substantially, but that the Bordeaux, the Champagne and the bananas will have fallen the most.

      I’d like to see that too! The closest I could get after 10 minutes of googling was the following:

      http://webarchive.nationalarchives.gov.uk/20160108042644/http://www.ons.gov.uk/ons/rel/elmr/an-examination-of-falling-real-wages/2010-to-2013/art-an-examination-of-falling-real-wages.html?format=print

      If I’m reading Figure 1 correctly, when the blue area (average weekly earnings growth) is above the red line (Retail Price Index), cost of living relative to earnings was lower than when it was below it – a relatively nice and comfortable position to be in. Since the financial crash, the blue area is consistently lower than the red line, indicative of a growing divergence between earnings and cost of living – with things getting more expensive relative to wages.

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