Views on BitCoin?

Discussion in 'Off Topic Discussion' started by JBMedia, Jul 10, 2011.

  1. JBMedia

    JBMedia
    uix_expand uix_collapse
    Member

    Joined:
    Jun 14, 2009
    Messages:
    462
    Likes Received:
    88
    I just recently heard about this new P2P "Currency" called BitCoin. Does anyone know any detailed information on this? Is it worth anything? What's everyone's views on it.
     
  2. Fergal

    Fergal
    uix_expand uix_collapse
    Premium Member
    Premium Member

    Joined:
    Nov 18, 2007
    Messages:
    10,575
    Likes Received:
    1,165
    BitCoin was discussed a little bit here on BAF in recent times. I've never used it myself and would be interested in hearing from any of our members who have used it.
     
  3. danytodany

    danytodany
    uix_expand uix_collapse
    New Member

    Joined:
    Jul 9, 2011
    Messages:
    19
    Likes Received:
    2
    Bitcoin is a peer-to-peer currency. Peer-to-peer means that no central authority issues new money or tracks transactions. These tasks are managed collectively by the network.
     
  4. GekiDan

    GekiDan
    uix_expand uix_collapse
    Active Member

    Joined:
    Jun 11, 2009
    Messages:
    2,594
    Likes Received:
    218
    What's the use of it?
     
  5. Word

    Word
    uix_expand uix_collapse
    Member

    Joined:
    Mar 28, 2010
    Messages:
    46
    Likes Received:
    11
    The same as any money.

    Think of it like the internet money they create in online gaming.

    BUT - Bitcoins is a cryptographic geek dream-come-true as well.

    It is dispersed over the internet in a way that probably can not be shut down so it will be untouchable by authorities, AND best of all there is an intrinsic limit to the number of bitcoins that can ever be in existence - unlike every other digital currency out there.

    With governments printing paper notes and their electronic equivalents to the moon, something finite like gold, silver, goldmoney and now Bitcoins, provides a sensible alternative.

    Be warned however... Bit coins is Wild West. One of the biggest vendors got hacked, the tax implications are untested, the players are mostly amateurs and the volality is stomach churning. But IMO you are seeing the future evolving.

    I posted about Bitcoins on my blog - http://www.carefulcash.com/bitcoin-commentaries-that-surprised-me/ - and Fergal suggested I put in my 2c.

    Oh, and what are Bitcoins good for? Tipping me in my Tip Box on my www.CarefulCash.com site for one :)
     
    • Like Like x 1
  6. JBMedia

    JBMedia
    uix_expand uix_collapse
    Member

    Joined:
    Jun 14, 2009
    Messages:
    462
    Likes Received:
    88
    Funny part is, I actually read your article before this when your site was site of the week. Here's what I'm confused about. Anyone can generate these coins? And if so, how? Also, if anyone could generate these coins, how can you put an actual value on the coin itself if anyone with a computer can generate it? How would the value ever even be determined? Would this only happen if a mass majority of people would accept it as a payment method?
     
    • Like Like x 1
  7. JBMedia

    JBMedia
    uix_expand uix_collapse
    Member

    Joined:
    Jun 14, 2009
    Messages:
    462
    Likes Received:
    88
    Another question. Is it true that you spend way more money having your PC running at full capabilities while "mining" bitcoins then you actually get in return with bitcoins?
     
  8. danytodany

    danytodany
    uix_expand uix_collapse
    New Member

    Joined:
    Jul 9, 2011
    Messages:
    19
    Likes Received:
    2
    it's less expensive to secure bitcoins than precious metals
     
  9. Fergal

    Fergal
    uix_expand uix_collapse
    Premium Member
    Premium Member

    Joined:
    Nov 18, 2007
    Messages:
    10,575
    Likes Received:
    1,165
    Thanks a lot for your detailed reply Word, I read your blog post and it is very interesting. Have you purchased anything with BitCoin? If so would you mind telling us what kind of products or services you actually purchased?

    People can generate these coins through a process known as mining. However, they can only generate a small quantity of coins and there is a limit of 21 million set for the total number of BitCoins that can be created. Unlike other forms of money, e.g. US Dollars, where there is no limit and the government can keep printing it, known as qualitative easing.
     
  10. Word

    Word
    uix_expand uix_collapse
    Member

    Joined:
    Mar 28, 2010
    Messages:
    46
    Likes Received:
    11
    You can generate bitcoins with a computer aka Bitcoin 'mining' by using computer processing power to crack a puzzle of some sort (I'm not geek enough to understand this bit), but the days of easily making your own bitcoins are long gone.

    There is a mathematical limit built in to the system of 21 million bit coins that can ever be 'mined' so the value comes from the scarcity and the difficult in getting more of them (just like gold and silver - but unlike fiat currencies aka "fake Monopoly Money")

    Value - which is just what it can be exchanged for in good, services, commodities, other currencies etc is up to the 'free market'.

    And yes as more people accept it as payment then presumably the 'value' goes up. This has lead to rampant speculation in bitcoins that drove the first spike up to US$30 per Bitcoin from about $1 a couple of months before. I, of course, bought my first lot at the peak, and I bought it on the exchange that got into the news by being hacked (MtGox)
     
  11. Word

    Word
    uix_expand uix_collapse
    Member

    Joined:
    Mar 28, 2010
    Messages:
    46
    Likes Received:
    11
    (Side note: I really should read the whole thread before posting replies - sorry all.)

    JBMedia: A standard PC is certainly a waste of time for mining. Soon enough the cost of electricity will be a limiting factor in mining for more coins.

    danytodany: Well when bitcoins are worth say, $1mill each, people will just use fractions of a bitcoin, like fractional ounces of gold or silver.

    Right now it is more the conversion costs and the hassle of getting them exchanged from dollars. The PayPal options got largely stopped because of extensive fraud AND Paypal not allowing payment for virtual currencies.

    Fergal: Haven't purchased anything with Bitcoins yet.

    Firstly I only heard about them and got some recently - and then had my account frozen as MtGox has been working through it's problems.

    Second there is little market right now for the things I want to buy (I don't need more socks, even nice Alpaca ones), but for example check out...
    http://www.bitcoinclassifieds.net/ad/776/

    Third, I'm not in a hurry to spend them, because I am more interested in buying and holding in this market, and encouraging it's overall wider acceptance.

    I don't actually buy much online anyway - my website is www.CarefulCash.com after all :)
     
    • Like Like x 1
  12. JBMedia

    JBMedia
    uix_expand uix_collapse
    Member

    Joined:
    Jun 14, 2009
    Messages:
    462
    Likes Received:
    88
    I really liked the last part. :) So here's one more question then. Pretty much if I wanted to get bitcoins, I'd need to mine them (which sounds like it's a waste of time now), and/or buy them and pray the "stock/value" does not go down? It's pretty much a gamble right now in other words.
     
  13. Fergal

    Fergal
    uix_expand uix_collapse
    Premium Member
    Premium Member

    Joined:
    Nov 18, 2007
    Messages:
    10,575
    Likes Received:
    1,165
    The value of any currency can fall, but you are correct, the value of BitCoins does appear to be much more volatile and it is not backed up by any Government.
     
  14. GekiDan

    GekiDan
    uix_expand uix_collapse
    Active Member

    Joined:
    Jun 11, 2009
    Messages:
    2,594
    Likes Received:
    218
    Can bitcoins be hacked and such?
     
  15. Word

    Word
    uix_expand uix_collapse
    Member

    Joined:
    Mar 28, 2010
    Messages:
    46
    Likes Received:
    11
    "Not backed by any Government" - that is a compliment, isn't it?

    Seen the volatility of silver lately?

    My Aust$ went from US60c to US$1.10 in about 3 years, so I can understand wild rides, but all fiat currencies are guaranteed to go down. It's already baked into the system.

    Bitcoins are diversification (like not having all your online transactions in PayPal in case they shut down your account as they have done to a number of internet marketers recently.)

    I'm no techie, but basically no. The Bitcoins and the bitcoin network is reportedly unhackable. It is written as open source software so if there were any holes then a geek would probably have found it by now. But this is still unknown territory so who really knows.

    HOWEVER the hacking problem still looms large.

    The exchanges can be hacked - that's what happened to MtGox.

    Your own computer can be hacked. Your electronic Bitcoin 'wallet' can be hacked. And heck, they WILL be. Given enough incentive hackers will find a way, and when bitcoins went from being worth cents to being worth $30 each it gave a hacker a LOT of incentive to go after MtGox.

    Just like Visa, Mastercard etc, it will be an ongoing escalation of hackers v security systems.

    BTW - BitCoin's Wiki is useful here, including info like this: https://en.bitcoin.it/wiki/Securing_your_wallet
     
    • Like Like x 1

Share This Page