Crypto-currencies

[Dave2]

The (well, "a") problem with crypto-currencies is that their value will go to $0 as soon as someone figures out how to hack them (if you say "it's hack-proof", well, that's what they say about everything until someone figures out how to hack it).

[parabelum]

I was going to do little write up why I would stay away from bitcoin (as an example), for so many reasons, but here is the most comprehensive take on it:

“Disadvantages
Like any currency, there are disadvantages associated with using Bitcoin:

Bitcoins Are Not Widely Accepted
Bitcoins are still only accepted by a very small group of online merchants. This makes it unfeasible to completely rely on Bitcoins as a currency. There is also a possibility that governments might force merchants to not use Bitcoins to ensure that users’ transactions can be tracked.

Wallets Can Be Lost
If a hard drive crashes, or a virus corrupts data , and the wallet file is corrupted, Bitcoins have essentially been “lost”. There is nothing that can done to recover it. These coins will be forever orphaned in the system. This can bankrupt a wealthy Bitcoin investor within seconds with no way form of recovery. The coins the investor owned will also be permanently orphaned.

Bitcoin Valuation Fluctuates
The value of Bitcoins is constantly fluctuating according to demand. As of June 2nd 2011, one Bitcoins was valued at $9.9 on a popular bitcoin exchange site. It was valued to be less than $1 just 6 months ago. This constant fluctuation will cause Bitcoin accepting sites to continually change prices. It will also cause a lot of confusion if a refund for a product is being made. For example, if a t shirt was initially bought for 1.5 BTC, and returned a week later, should 1.5 BTC be returned, even though the valuation has gone up, or should the new amount (calculated according to current valuation) be sent? Which currency should BTC tied to when comparing valuation? These are still important questions that the Bitcoin community still has no consensus over.

No Buyer Protection
When goods are bought using Bitcoins, and the seller doesn’t send the promised goods, nothing can be done to reverse the transaction. This problem can be solved using a third party escrow service like ClearCoin, but then, escrow services would assume the role of banks, which would cause Bitcoins to be similar to a more traditional currency.

Risk of Unknown Technical Flaws
The Bitcoin system could contain unexploited flaws. As this is a fairly new system, if Bitcoins were adopted widely, and a flaw was found, it could give tremendous wealth to the exploiter at the expense of destroying the Bitcoin economy.

Built in Deflation
Since the total number of bitcoins is capped at 21 million, it will cause deflation. Each bitcoin will be worth more and more as the total number of Bitcoins maxes out. This system is designed to reward early adopters. Since each bitcoin will be valued higher with each passing day, the question of when to spend becomes important. This might cause spending surges which will cause the Bitcoin economy to fluctuate very rapidly, and unpredictably.

No Physical Form
Since Bitcoins do not have a physical form, it cannot be used in physical stores. It would always have to be converted to other currencies. Cards with Bitcoin wallet information stored in them have been proposed, but there is no consensus on a particular system. Since there would be multiple competing systems, merchants would find it unfeasible to support all Bitcoin cards, and therefore users would be forced to convert Bitcoins anyway, unless a universal system is proposed and implemented.

No Valuation Guarantee
Since there is no central authority governing Bitcoins, no one can guarantee its minimum valuation. If a large group of merchants decide to “dump” Bitcoins and leave the system, its valuation will decrease greatly which will immensely hurt users who have a large amount of wealth invested in Bitcoins. The decentralized nature of bitcoin is both a curse and blessing.”

http://cs.stanford.edu/people/eroberts/ ... index.html

[The Annoyed Man]

The (well, "a") problem with crypto-currencies is that their value will go to $0 as soon as someone figures out how to hack them (if you say "it's hack-proof", well, that's what they say about everything until someone figures out how to hack it).

Just like with your bank account.....and it doesn’t matter if you have online banking or not, their servers can be hacked. I don’t worry about the risk of hacking with crypto-currencies as a general thing.....and if you read up on blockchains, you’ll see why. Here is a quick article covering some of the myths and facts about blockchains, which are the underpinning of crypto-currencies: https://www.techrepublic.com/article/fi ... lockchain/.

AndyC was over to my house the other day, and showed me how it works. I’m by no means an expert, but I was convinced enough by (A) the security factor, and (B) by the phenomenal rate of growth (ROI) AndyC himself experienced to decide to check it out for myself. He “showed me the books”, so to speak. My plan is to put in maybe $500-$1,000 and just play with it. If I can successfully grow it, then great. If I lose every penny I put in, I won’t lose my shirt. Now that I’m retired, I have time on my hands; and due to an injury last spring, I’m not about to take up running or hoops. So it might be fun to do a little bit of day-trading every day and see how I do.

One thing.... if you bank with a smaller community bank like I do (LegacyTexas Bank, formerly known as Viewpoint Bank), there is a possibility that they will not let you link your bank account to your crypto-currency exchange account. Yesterday, I made several attempts to connect my CoinBase account to my LegacyTexas account, and the bank rejected the connection attempt each time. CoinBase offers you an alternative of using a credit/debit card to make the purchase, although it limits the size of the transaction to $750. Well, I wasn’t going to buy with a credit card, and pay interest to offset any profits I might make, but that amount was in the ballpark of what I was thinking - so I went ahead and tried to buy $500 worth of Etherium using my LegacyTexas debit card. Not only did LegacyTexas reject that transaction, but it locked up my Bankcard, which I found out today much to my regret as I was paying for groceries at my local Costco.

So, since I really do want to try this out, I’m going to open a separate bank account at Chase or BofA - both of which do allow a connection to CoinBase - and that way it will completely sequester any of that activity from my other banking. So even if it somehow got hacked, and the hackers were able to drain my account, they’d only be draining that small account. And if I collect any profits and deposit them as dollars in that checking account, I can then pay myself a check and deposit that into my LegacyTexas accounts. So, in a way, my crypto-currency activities will be “air-gapped” so to speak from my other banking activities.

I think it is worth a shot. And if it doesn’t gain me much, at least I had fun playing with it.

[The Annoyed Man]

Crypto just like the dollar nothing behind it I will save silver, gold, bullets & bacon.

I was talking about this with my financial adviser at Merril Lynch yesterday, and comparing crypto-currency to the dollar, and how the value of both is dependent on trust.....in the case of the dollar, the “full faith and credit of the United States of America”.....and I laughed. I said, ultimately, the value depends entirely on whether or not the holder believes it has value. It’s worth “X” because the govt says it’s worth “X”, and people believe it. He laughed too, and said, no, the dollar’s value is dependent on TWO things: (1) belief/faith in its value; and (2) an Army. See, an individual like George Soros.....who trades in currencies, by the way......can get away with ruining Great Britain’s economy because the Brits aren’t going to sic their Army on him. But if Russia (for instance) tries to devalue the British Pound, that’s a causus belli, an act of war, and a reason to go to war. In other words, people have faith in a currency because the gov’t which issues it has the ability to rain nukes down on any country that deliberately tries to destroy that currency’s value. Now, whether or not the aggrieved country would actually go to war over that is another issue, but that’s the point.

Consider that one of Osama Ben Laden’s goals was to collapse the American economy by destroying the core of its economic AND military centers (World Trade Towers/Wallstreet and the Pentagon), and consider what actually did happen to the economy in the wake of 9/11. He came close to success. And, for better or for worse, he also caused The Great Satan to spend over $2.1 Trillion on the War on Terror.....at a time when our national debt is north of $20 Trillion. But what would have happened to faith in the dollar if we did not have an Army?

So I understand my advisor’s point. But crypto-currency is global, and it has the same value regardless of whether the individuals who transact in it live in nations that are enemies to one another. That value is based on a global trust, and on the encouragement of competition, rather than the crushing regulation of it. I like gold and silver too - although I have none of the former and some of the latter - but I can’t go to a precious metals merchant and say, “here, I have $52; please give me exactly $52 worth of gold”, because gold isn’t sold that way. It’s sold by the ounce, and by specific tenths of an ounce..... but not by .0683259 ounce. Conversely, I can buy exactly $52 worth of BitCoin, which right this minute seems to be equal to 0.00530077 Bitcoin. Try to buy that fraction of Gold, and see where it gets you.

[Liberty]

I've saved a little and invested in more traditional venues, Today I live off these investments and am retired. This is investing wisely conservatively and diversified.

I look at these cyber currencies as having a little bit of fun and maybe even make a little money. I only bought a fractional coin. Its one of the few things I've done in life just for fun that has made me money. things that grow at 7% are good investments, and can grow enough to provide an income. It's not very exciting though. The cybercurrencies could very well be gone tomorrow, or it could make enough to buy a new gun.

[TexasJohnBoy]

Well, he could be correct - it *is* a finite resource after all, with only 21 million going to be created (and 4 million of those are estimated to be already lost, so 17 million at best).

http://fortune.com/2017/11/25/lost-bitcoins/

Yeah, I have a few of those somewhere. When it was new and I was just playing around, I didn’t care that I lost them.

I kick myself daily now.

[CleverNickname]

There's other problems with Bitcoin:
1. It takes a long time to verify transactions. It used to be minutes, but now the average verification time is about an hour. I guess that might still be acceptable if you're using Bitcoin as a Paypal replacement, but if people want to make Bitcoin a common method of financial transaction in stores, then that would need to drop to seconds.
2. The number of transactions the Bitcoin network can process per second is very low compared to credit cards. http://www.altcointoday.com/bitcoin-eth ... er-second/

[Dave2]

The (well, "a") problem with crypto-currencies is that their value will go to $0 as soon as someone figures out how to hack them (if you say "it's hack-proof", well, that's what they say about everything until someone figures out how to hack it).

Just like with your bank account.....and it doesn’t matter if you have online banking or not, their servers can be hacked. I don’t worry about the risk of hacking with crypto-currencies as a general thing.....and if you read up on blockchains, you’ll see why. Here is a quick article covering some of the myths and facts about blockchains, which are the underpinning of crypto-currencies: https://www.techrepublic.com/article/fi ... lockchain/.

AndyC was over to my house the other day, and showed me how it works. I’m by no means an expert, but I was convinced enough by (A) the security factor, and (B) by the phenomenal rate of growth (ROI) AndyC himself experienced to decide to check it out for myself. He “showed me the books”, so to speak. My plan is to put in maybe $500-$1,000 and just play with it. If I can successfully grow it, then great. If I lose every penny I put in, I won’t lose my shirt. Now that I’m retired, I have time on my hands; and due to an injury last spring, I’m not about to take up running or hoops. So it might be fun to do a little bit of day-trading every day and see how I do.

One thing.... if you bank with a smaller community bank like I do (LegacyTexas Bank, formerly known as Viewpoint Bank), there is a possibility that they will not let you link your bank account to your crypto-currency exchange account. Yesterday, I made several attempts to connect my CoinBase account to my LegacyTexas account, and the bank rejected the connection attempt each time. CoinBase offers you an alternative of using a credit/debit card to make the purchase, although it limits the size of the transaction to $750. Well, I wasn’t going to buy with a credit card, and pay interest to offset any profits I might make, but that amount was in the ballpark of what I was thinking - so I went ahead and tried to buy $500 worth of Etherium using my LegacyTexas debit card. Not only did LegacyTexas reject that transaction, but it locked up my Bankcard, which I found out today much to my regret as I was paying for groceries at my local Costco.

So, since I really do want to try this out, I’m going to open a separate bank account at Chase or BofA - both of which do allow a connection to CoinBase - and that way it will completely sequester any of that activity from my other banking. So even if it somehow got hacked, and the hackers were able to drain my account, they’d only be draining that small account. And if I collect any profits and deposit them as dollars in that checking account, I can then pay myself a check and deposit that into my LegacyTexas accounts. So, in a way, my crypto-currency activities will be “air-gapped” so to speak from my other banking activities.

I think it is worth a shot. And if it doesn’t gain me much, at least I had fun playing with it.

Oh, I was talking about the mining part.

I don’t necessarily disagree that it’s worth a shot, though. I just expect it to all come crashing down (and well before anything significant happens to the USD). It’s a matter of managing risk v reward, same as the stock market. If you can successfully predict/guess when the jig is up, it’s a fantastic opportunity (my personal “jigometer” is so broken that it gets worse the harder I try, so I have no plans to join in on the experiment, though).

[twomillenium]

There's nothing more behind gold and silver than there is behind any currency. People just agree to assign value to it. Or not. Bullets and bacon have some intrinsic use that can give them value.

Yeah...YOU CAN’T EAT GOLD, mannnnnnnnn......

Bullets, fuel, and non hybrid seeds will be the coin of the realm when the dead walk again (zombie apocalypse TWD style). Now who’s skull is Neegan gonna bash in next...

Fortunately, I am one of the people Neegan tries to keep track of so that he travels the other direction.

[sss prn]

How do you value bitcoin? If people decide to stop using bitcoin as a means of exchange or a store of value or a speculative instrument, then its value will be zero. Unlike gold, there is no intrinsic scrap value for a bitcoin. However, if bitcoin becomes the sole currency for all transactions in the world, you could plug in a gross world product of about $100 trillion, and get a value per bitcoin of about $500,000. Now all we have to do is to figure out the likelihood that everyone decides bitcoin is a fraud and stops using it, and the likelihood that bitcoin becomes the sole currency for commerce worldwide, and the distribution of all possibilities in between. Then we know what bitcoin is worth.

[spectre]

Free market - it has as much or little value as those who trade in it decide it's worth. Right now it's trading for just shy of $11,000.

https://en.wikipedia.org/wiki/Greater_fool_theory

[rotor]

Good news for all you investors, I will NOT buy any crypto-currencies because if I did the market would immediately collapse. I look at this like a large Ponzi scheme which will eventually collapse. I realize that there is a possibility of making money on this gamble but one may also lose all of one's investment. Timing is everything. Has anyone here actually used their bitcoin to purchase a product? Three bitcoins gets you a car but has anyone bought a car with bitcoin? Or are you just converting your bitcoins back to real money?

[ninjabread]

Bitcoin is real money. According to Bitcoin.