Bitcoin Q&A October 2015

BitCoin can turn sour in a split second, where is the tangibility…? (link)

The tangibility is in the physical goods you can buy with it, or converting it to your local currency. Sites like btcjam where you can do worldwide micro loans. Many lenders chip in a small amount in bitcoin, borrowers cash out to their local currency. Or bitpesa that Africans are using to send money over seas. Basically what I’m saying is holding bitcoin as an asset seems silly to me right now. Unless you plan on holding it for decades, I think it’s too volatile for that. The benefit of bitcoin is using it like money orders. No fees in bitcoin vs 9% fees in Western Union. Convert USD to bitcoin to USD, or USD to bitcoin to GBP. It’s a great transport mechanism.

If you do want to get tangible though, cold storage paper wallets are great. More secure than a software wallet, because hackers can’t hack paper. bitcoinpaperwallet.com is a great resource for paper wallets.

 

With so many options available, can you recommend reliable places to buy & store bitcoins? (link)

What I do is I buy from coinbase (lowest fee I’ve found, 1%). Then I store the bitcoin on my phone. If its a big amount, I store it on paper wallets, following the directions to the letter on bitcoinpaperwallet.com. Basically what I’m getting at is there is no reliable place to store bitcoin other than in your own possession. Coinbase or any other hosted wallet can go under, and unlike a bank, your bitcoin is not FDIC insured and could be lost. Sold off by the cloud wallet company, perhaps.

A paper wallet in a safe is the most secure method. Or if you want the convenience of a digital wallet, a Trezor the one the experts seem to love.

 

With the price of bitcoins constantly going up and down, how is any business supposed to set a price for something in bitcoins? Is it possible to make the bitcoins price of something fluctuate with the rising and falling prices of bitcoins themselves, so the prices for things in bitcoins always stay at the same value in dollars? (link)
Basically businesses can use services like bitcoinaverage, bitpay, or coinbase, and map the bitcoin cost of a product to their local currency. So when someone goes to check out at a store that takes bitcoin, the local currency equivalent in bitcoin is calculated, and valid for 15 minutes or so. If they take longer to check out, the price is just calculated again to match the current market price. A good example of this is the website https://steambitshop.com/ which sells video games for bitcoin.

 

um… i would lov to use bitcoins but i can’ get gas, foods, starbuck coffee in the states with bitcoins! (link)

Actually you can. There are people in the US living 100% on bitcoin. Some websites that enable this are purse.io, gyft.com, getmagicnow.com, coffee.foldapp.com. There are others but those are the only ones I have experience with. Brawker used to be a good one but they shut down (I bought a pizza!) I’m using bitcoin for about 50% of my purchases right now. I actually save quite a bit because of the incentives that purse has.

 

what’s the back up of bit coin? like cash is the back up to credit. (link)

Isn’t credit just an allowance of cash, that you have to pay back? I don’t think there is a parallel in bitcoin to credit. Bitcoin is just like cash. You have it or you don’t. You can spend it if you have it, you can’t spend it if you don’t have it.

Are you curious about what backs bitcoin, as in what backs the US dollar? Well, at one time it was Gold that backed the dollar. If you had a dollar, it was just a note saying that that dollar is bound to some gold somewhere. Spending a dollar is just like spending the value of the bound gold.

Bitcoin isn’t backed by a physical asset like the dollar used to be. Bitcoin is backed by what’s called Proof of Work. It’s math that says, for 1 bitcoin to exist, some amount of work must be done by a computer. The computer can’t cheat, either. Using Proof of Work algorithms, the computer must actually prove that it did work to mine bitcoin. So basically math is the backing. Or maybe it’s electricity that backs bitcoin… Hmm good thought.

Anyway, bitcoin is an abstraction of money like nothing ever before. It’s simply a mark of value. It gets it’s value because of what people perceive it’s value to be, not by what a government says it’s worth.

Some smart people have gone as far to say that by definition, bitcoin isn’t money. That concept breaks down the moment people start using bitcoin to buy goods or services, which plenty of people including myself are doing.

It’s programmable money. With it you can do crazy things, once only possible using banks or lawyers. Like put your retirement savings on the bitcoin network, and program it to be locked away from yourself so you don’t blow it all on pokemon cards and pizza (or whatever your weakness is :P). Then once you retire, just like a paycheck, your money unlocks a living wage sized chunk for you to spend on necessities.

You can do things like programmatic escrow for selling things. The buyer and seller agree on terms. Buyer puts money in a bitcoin escrow account (controlled by NO ONE). Buyer and seller transact physical goods. Once buyer and seller are satisfied with transaction, buyer and seller approve escrow and funds are released to the seller. Automatic time locks or defaults are set in advance during terms. This process used to require an escrow service, now the service is free and fits in your pocket.

With bitcoin, your digital money can empower you to be sovereign, free individual, without the need for big banks or money services.

 

doesn’t bit coin fall into the cashless full control of your life and food scam the corrupt elites wants? (link)
I don’t think so. Bitcoin gives you more features and control over your money than ever before. With bitcoin you don’t have to ask permission to buy/sell/transact. You don’t have to do a wire transfer through a bank to send money to the other side of the planet. You don’t have to pay a bank to hold money in a trust fund that automatically sends money to someone on a certain date. Bitcoin isn’t subject to federal reserve price manipulation like the dollar is.
You control your bitcoin, no one else. If you’re talking about bitcoin having it’s public ledger and how that’s trackable, yes that’s concerning to me, a bitcoin user. Other people feel the same way about it’s lack of privacy. I think that’s why the altcoin Dash was born. Unlike bitcoin, it’s ledger is anonymized. Bonus! it’s trivial to turn dash into bitcoin or bitcoin into dash using exchanges like shapeshift.

 

People gotta be really mentally screwed up to accept the bitcoin! Get your physical gold while you can and let the shitcoin to those who believe air is wealth. Rest assured, the value of the bitcoin will definitely skyrocket becoz they want everyone in, but once humanity signs up for the shitcoin, you will see your wealth evaporates! Follow the rich, folks! Is china hoarding bitcoins or Gold? (link)
Mentally screwed up person here. You need air to live, so it has value. It’s plentiful though, so it’s not worth much. I can’t buy food with air though, so I see what you’re saying. What would I do with gold? I don’t fabricate electronic components or jewelry, and I can’t carry much of it in my pocket. My local supermarket doesn’t accept gold either. Gold sounds pretty inconvenient to me. Bitcoin is an abstraction of money, yes, but it is money as long as I can buy goods or services with it (which I do regularly.)
There’s a fixed amount of bitcoin that can ever exist, so that handles the scarcity issue. Who is the rich you say, I don’t know? I’d say it is China because of how indebted the USA is to China. China might hoard bitcoin if the Chinese government didn’t ban corporations from holding bitcoin as assets. Lots of bitcoin is being mined in China though.
If you look at bitcoin as a get-rich-quick scheme, you’re bound to be disappointed. I don’t think bitcoin is good for replacing currencies. I think it’s a compliment to currencies. It’s a new tool. I think it’s a good replacement to credit cards. It’s digital, more secure, lower fees, has no possibility of fraudulent chargebacks. It’s a currency that’s easy to transact, without needing permission or special infrastructure, and it’s borderless.

 

IF it was easier to get and keep safe I would use it. (link)
ya thats kind of a pain, and one of the holdups for more widespread adoption. Bitcoin now is like E-mail in early 90s; Clunky and has a steep learning curve. Only enthusiasts use it. It’ll get better in time. Maybe 10 years from now it’ll be easy enough for your grandma to use.

 

Bitcoin won’t do that well in the long run. It’s too scare making it a magnet for speculators; the way newly created Bitcoins is distributed rewards people who have the most computing power and the ledger file size has increased exponentially over time and is going to be too large for most computers to store. (link)

 

The ledger is like 40GB right now. That’s 40GB in 5 years. I think any exponential growth will be just fine because storage cost goes down over time, and storage media become more dense over time. Just like internet speeds, people adapt these systems to scale when they need to scale.
Also, even right now, there isn’t a need for every device using bitcoin to hold the entire ledger. Only full nodes hold the entire ledger.

 

Where did Bitcoin come from? Why aren’t governments reacting more to it? I don’t believe they would just let something like this develop unobstructed. Something smells to me. (link)
The origin is a mystery. The inventor is some shadow person or persons named Satoshi Nakamoto, who has mostly disappeared from the internet. Now it’s run by a huge bunch of developers and miners coming to a consensus. A good analogy I’ve heard about governments not reacting more is that they see bitcoin as a lemonade stand vs. Wal-Mart. That is bitcoin’s scale vs. the dollar right now.
Governments ARE reacting though. New York created a restrictive “BitLicense” which has forced some bitcoin startups to relocate. In the US, the IRS classifies cryptocurrencies as commodity, and any profits you make are taxable. China has banned businesses from holding bitcoin as assets.

 

Don’t get Fooled. Bitcoin is controlled by the same people that control all  the Money. !!! (link)
I’ve been thinking that lately. Like how government invented the internet and TOR. Satoshi could totally be some three letter agency. Even if that’s the case, I think it’s going to be OK, because cryptocurrencies in general are a great invention, and their invention is going to bite them in the ass. DASH is a great altcoin to use instead of a fedcoin.

 

but theres a total limit that BC can be though and you dont make nothing of of mining BC these days! theyv made it so its harder to make anything of of it with every calculation! (link)

 

Right, you’d have to have a huge, very efficient operation to make any money mining bitcoin. If you’re thinking about making money with bitcoin, you’re missing the point though. The point is to use bitcoin in your daily life as a currency to buy and sell goods and services. Doing so takes away power from governments who use your dollars to wage war.

 

no there’s a max limit on total amount of btc in the world look into it! the currency wont and cant work forever and or for everyone cus of that limit its quite simple plus the fact it takes longer for users who make the system work to do processing it takes longer to make money cus of that so its not good for many ppl and will get worse and worse basically the cunt who made it will be the only beneficiary if its not stabilized as its all over the fucking place so i wouldn’t trust it with my life even if its decentralized! that’s why there’s more and more crypto currencies coming out every year but we all need to do away with all currencies and go back to bartering! (link)

 

Right, there’s a limit, 21 million bitcoin. Just because all the bitcoin is mined it doesn’t mean that’s the end of the currency. What happens then is people just divide the currency into smaller denominations. Instead of it costing 1 bitcoin for a bicycle, ten years from now it’ll cost 1 millibitcoin for a bicycle. Bitcoin is perfect for dividing into small chunks because it’s just a number. Unlike a physical form of currency such as gold, small amounts of bitcoin can easily be worked with. You can only split gold so small until it’s just molecules!
The whole reason bartering isn’t common is because if I want rice and you have rice, but you want a cow, we can’t trade because I don’t have a cow. Currency is one of the oldest forms of technology. It has been invented, and can’t be un-invented. Just like the gold standard evolved to just paper, I think currency will continue to evolve and become more abstracted. It’s simply a way to communicate value.
Bitcoin is an deflationary currency. Because of the limited number of coins, the value of the coins will go up over time because the coins become more scarce. Again, division into smaller denominations is part of the plan for the future. Satoshi will be the world’s first trillionare if bitcoin keeps growing!
Mining again, yes, it’s extremely competitive. Even when all the 21 million coins have been mined, miners are still required for the bitcoin network and still rewarded, because transactions need confirmations from miners.
I wouldn’t trust bitcoin with my life either. It’s just a baby technology. Very temperamental baby. We’ll see how it evolves in the coming years.

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