Digital 'bitcoin' currency surpasses 20 national currencies in value

reply to post by wemustbreakyou


I already explained what determines the price, read my last few posts. As for what backs it, you could say its the energy which goes into creating them (if you have poor hardware it will cost more in electricity than what the mined bitcoins are worth). But that's not quite true because it's obviously impossible to convert your bitcoins back into electricity. In reality nothing backs them except trust in the system, if the system is hacked or something and it collapses there would be nothing tangible left at the end. A common saying in the bitcoin community is "in cryptography we trust". It's the same cryptography used all throughout the banking system and if it's broken we'll have a lot more problems to deal with than bitcoin collapsing.


reply to post by theruthlessone


Your questions were answered in my previous posts.

And for those who wish to dig much deeper into this topic of how and what gives bitcoin value, I recently created two very in-depth threads concerning the nature of money and how bitcoin fits into the picture:

True Money: Part I
True Money: Part II

To be honest I wonder how this nonsense is even legal.

Why the hell should someone be able to just create a new currency? Can I do that? No. Who said these bitcoin people could? Who is behind this criminalistic scam anyway?

And you can 'mine' the bitcoins? What the heck? Thats absurd.

All I read is that criminals are using bitcoin to launder money. Great.

This bitcoin nonsense is bad news. I can feel it.

Thanks for adding some truth to the thread chaotic. I have been watching bitcoins since i first read about it on ATS and its gone from 12$ to 90$ a coin since i have been watching it. The trends are predictable from what i have seen over the 2 or so years i have been watching it.

reply to post by wemustbreakyou

Why the hell should someone be able to just create a new currency? Can I do that? No. Who said these bitcoin people could?

Did the founding fathers have permission to break away from the British Empire? No they took initiative on their own because they wanted freedom. It's not illegal because it's unlike any other money system which has ever existed and they currently have no way to classify it. It's just sending bits of information between computers, do you think there's any easy way to make that illegal?

Who is behind this criminalistic scam anyway?

An unknown individual who uses the pseudonym Satoshi Nakamoto. He disappeared shortly after releasing bitcoin to the world.

And you can 'mine' the bitcoins? What the heck? Thats absurd.

No it's not absurd, it's ingenious.

All I read is that criminals are using bitcoin to launder money. Great.

HSBC charged $1.9B for laundering billions of dollars

Originally posted by ChaoticOrder
reply to post by wemustbreakyou

 

I already explained what determines the price, read my last few posts. As for what backs it, you could say its the energy which goes into creating them (if you have poor hardware it will cost more in electricity than what the mined bitcoins are worth). But that's not quite true because it's obviously impossible to convert your bitcoins back into electricity. In reality nothing backs them except trust in the system, if the system is hacked or something and it collapses there would be nothing tangible left at the end. A common saying in the bitcoin community is "in cryptography we trust". It's the same cryptography used all throughout the banking system and if it's broken we'll have a lot more problems to deal with than bitcoin collapsing.


reply to post by theruthlessone

 

Your questions were answered in my previous posts.

edit on 30/3/2013 by ChaoticOrder because: (no reason given)

I dont understand how it is legal. I would also like to know who is behind it all.

And if you are telling me that people that are good with computers are able to 'mine' the currency then I hate the idea. Why should someone be able to 'mine' currency? Thats value? I might design a currency that you earn by completing levels in a video game. Same thing right? If he gamecoin is created you know the work of completing the level has been done...

Lets all create digital currencies since its legal. Dibs on "gamecoin".

Originally posted by superman2012
One fake currency is enough, do we need another that we can't even touch!? What happens if TSHTF? Sorry, it may just be my ignorance of bitcoin speaking..anyone care to weigh in?

Edit: Are they still based on US dollars then? $90 USD for one bitcoin? What happens if the dollar tanks?

edit on 30-3-2013 by superman2012 because: (no reason given)

Fully agree,.
Just another step toward complete taxable control of your money
and a sure solid way to track your income and spending

reply to post by wemustbreakyou

I might design a currency that you earn by completing levels in a video game. Same thing right? If he gamecoin is created you know the work of completing the level has been done...

No it's completely different. There are ways to complete a video game without actually expending the energy expected to complete it. Plus there may be people who control the game who have back-door access. These things don't apply to bitcoin because the proof of work process is based in finding a particular hash from a "block" of transactions and it's understood to be mathematically impossible to get around this. Since it's decentralized we know there's no one entity who controls it and we can be 100% certain there are no back doors because the code is completely open source and the hashing process is relatively simple, there's no way to slot in a back door without it being noticed.

reply to post by Lil Drummerboy

Just another step toward complete taxable control of your money
and a sure solid way to track your income and spending

It's almost the exact opposite actually. Bitcoin is already relatively anonymous and it can be highly anonymous if you put effort into covering your tracks. Plus you don't need a bank, your bitcoin "wallet" can be stored directly on your harddrive. You could even encrypt the wallet and store it on a flash drive and then hide the flash drive. If the drive was stolen or confiscated it would be virtually impossible to access your money without knowing the decryption key.

Originally posted by ChaoticOrder
reply to post by wemustbreakyou

 

I might design a currency that you earn by completing levels in a video game. Same thing right? If he gamecoin is created you know the work of completing the level has been done...

No it's completely different. There are ways to complete a video game without actually expending the energy expected to complete it. Plus there may be people who control the game who have back-door access. These things don't apply to bitcoin because the proof of work process is based in finding a particular hash from a "block" of transactions and it's understood to be mathematically impossible to get around this. Since it's decentralized we know there's no one entity who controls it and we can be 100% certain there are no back doors because the code is completely open source and the hashing process is relatively simple, there's no way to slot in a back door without it being noticed.

Its not fair at all.

You can mine it but I dont have the skills.

I was just reading a bit about it. Its not exactly a currency. It is not legal tender. It is a tool of barter. To call it an online currency is dishonest in my opinion.

The biggest problem I have with bitcoin is that it seems to be American. The American Government could and should make it illegal but they have not.

Like I could see this messing with forex markets and causing all kinds of problems.

Bitcoin is evil. How can you have a 'currency' that is not linked to any nation? I hate the idea and I dont see why or how it is legal. We need new laws making digital 'currency' illegal.
arstechnica.com...

Originally posted by ChaoticOrder
reply to post by Lil Drummerboy

 

Just another step toward complete taxable control of your money
and a sure solid way to track your income and spending

It's almost the exact opposite actually. Bitcoin is already relatively anonymous and it can be highly anonymous if you put effort into covering your tracks. Plus you don't need a bank, your bitcoin "wallet" can be stored directly on your harddrive. You could even encrypt the wallet and store it on a flash drive and then hide the flash drive. If the drive was stolen or confiscated it would be impossible to access your money without knowing the decryption key.

Well,. I guess we will see,.
the federal reserve created the money mafia,. don't think they will just roll over and loose currency without foolproofing a system to ensure their profits,. Currently cash deals are the only way to get away with it and
you've gotta know that pisses them off..

reply to post by wemustbreakyou

Its not fair at all.

You can mine it but I dont have the skills.

It doesn't take much "skill" when all you need to do is download some mining software and run it, and the software is not hard to find if you spend a few minutes looking. These days you can get mining software with very simple point-and-click GUI's.

The biggest problem I have with bitcoin is that it seems to be American. The American Government could and should make it illegal but they have not.

It's a global currency usable anywhere with an internet connection (although there are ways to create "physical bitcoins"). Most of the users are probably American but that's about the only thing which might make it American in any way.

Like I could see this messing with forex markets and causing all kinds of problems.

Hahaha... the centralized corrupt currency markets we have will eventually collapse all on their own without any help from bitcoin. History shows us that there is a single Government fiat currency which has ever been successful, there are thousands upon thousands which have failed.

Bitcoin is evil. How can you have a 'currency' that is not linked to any nation? I hate the idea and I dont see why or how it is legal. We need new laws making digital 'currency' illegal.

lol why are you even on ATS? May I recommend joining a forum for Government lackeys and central bankers? You may fit in better there.

reply to post by ChaoticOrder


Thanks for all the info Chaotic.
It is something I have been aware of but haven't really delved into much but I do understand the concepts behind it.
Can you elaborate on how Bitcoins are created and how the energy required to create the Bitcoins give them a relative value? I just want to see if that energy can be reduced and thus lowering the value of the currency.

reply to post by mclarenmp4

I just want to see if that energy can be reduced and thus lowering the value of the currency.

The "difficulty" of mining new bitcoins is adjusted every few weeks to ensure bitcoins are always created at a predictable rate so that every 10 minutes a block is solved. The more miners there are the more energy it takes because the difficulty will increase as the total hashing power of the network increases. It started off much easier when there were less miners. But there's no real way to reduce the energy cost because it's done like that to ensure the rate at which new bitcoins are created is steady.

edit: btw I should mention that the "reward" for solving a block halves every now and then. So the rate at which they are created is halved after a certain amount of time, to mimic the way precious metals are mined, in that we dig up less and less until there's none left to mine.

Originally posted by ChaoticOrder
The "difficulty" of mining new bitcoins is adjusted every few weeks to ensure bitcoins are always created at a predictable rate so that every 10 minutes a block is solved. The more miners there are the more energy it takes because the difficulty will increase as the total hashing power of the network increases. It started off much easier when there were less miners. But there's no real way to reduce the energy cost because it's done like that to ensure the rate at which new bitcoins are created is steady.

edit on 30/3/2013 by ChaoticOrder because: (no reason given)

So the cost to the miner is through electricity costs because of the required processing power to mine the coins. The more processing power you give to the mining of bitcoins the more money you make. Is that correct?

reply to post by mclarenmp4

The more processing power you give to the mining of bitcoins the more money you make. Is that correct?

Yes, that's why professional miners spend lots of money to build custom mining machines with tailor made mining hardware. Some people may say this is one of the most unfair aspects of bitcoin, but when you consider the highly monopolized precious metal mining industry it's not that bad. There is a variant of bitcoin called litecoin which attempts to reduce this problem.

It differs from its parent Bitcoin in that can be efficiently mined with consumer-grade hardware. Litecoin provides faster confirmations (targeted at every 2.5 minutes on average) and uses memory-hard, scrypt-based mining to target the CPUs and GPUs most people already have.

litecoin.org...

Originally posted by wemustbreakyou
To be honest I wonder how this nonsense is even legal.

Why the hell should someone be able to just create a new currency? Can I do that?

Yes, for certain values of "currency." Under one definition, if you create something and convince people it's a worthwhile medium of exchange, you've created a currency. You'll run into problems if it's too similar to government issued currency, but otherwise it can be done. Bitcoin is pretty silly and mostly used as a middleman in what would otherwise be straight dollars-for-drugs transactions, but I guess it is still technically currency within a specific subculture.

There is nothing that makes bitcoin better than any other currency besides the artificial value it is given. It is, like the others, a FIAT currency, backed by nothing.

If anything, if is even more dangerous. It is a currency that can be destroyed through hacking and server malfunctions. Any minor SHTF scenario would completely destroy the bitcoin market. People make the claim that when the dollar and the other physical currencies tank, that bitcoin will stand strong - but it is far from the truth. The only thing that would cause the other currencies to tank on such a level IS a SHTF scenario which would effectively wipe out bitcoin completely.

If there were something of physical nature to hold onto and it were backed by SOMETHING, then perhaps I would give it more credit - but it is a FIAT currency plain and simply. They are all doomed to fail whether they are on bills or digitized.

Originally posted by ChaoticOrder
So much ignorance in this thread it gives me a headache. Superman, bitcoin is not anchored to the US dollar in any way. The more worthless the US dollar becomes, the more US dollars each bitcoin will be worth.

By the way OP I already posted this article in a thread I started a few hours ago:
MSM Reporting on Cyprus Driven Bitcoin Boom

That's why I asked for clarification... ...I wasn't sure what was actually backing this new form of "currency". Instead of griping about your headache, why don't you explain in this thread?