Has Anyone Bought Bitcoin?

[am1]

Did you buy in? Sometimes you learn more money by losing then making money.

I prefer to invest in hard assets that offer a return and capital gain or just a capital gain.

 

[md8287]

In all seriousness this all does sound interesting but confusing as you dig in.
I've read some research lately and it seems there are two paths. The path of buying the established bitcoin (still very speculative) or buying "the next bitcoin" (extremely speculative).
I like investing a small amount in speculative (and I like betting on long shots) and so far my gains have outweighed my losses. Fingers crossed that continues and I don't .

 

[WalnutBaron]

Bitcoin is one wild ride. Just this week, the value peaked last Wednesday at $7,722, collapsed to $5,617 on Sunday, and has recovered somewhat to close at $6,607 on Tuesday. Wayyyyy too speculative, volatile, and lacking fundamental underpinning for my blood. I'll stick with my long-held positions in Apple, Amazon, and Nvidia. High multiples on Nvidia and Amazon, but at least I can articulate why I'm an investor and how each company generates earnings.

 

["Roger"]

Sometimes discussions about various investments come up on TUG with no follow ups to see how things are going.

Bitcoin hit a peak near $20,000 the week before Christmas. Since then it has fallen to just below $8,000. It could recover and zoom through the $20,000 mark. Then again, maybe $8,000 will turn out to be too low.In any case, a fall investment would not have done well to date. (For the record, I have no investment in Bitcoin.)

 

[VacationForever]

Bitcoin is created by programmers, and it uses tremendous power/utility to run the algorithm. The units that are sold the very first time go to the pockets of the programmers. Thereafter it is all speculation and see who can make money out of others. There is no asset value behind Bitcoin. On the contrary, it is a parasite that uses power to run.

The true value of Bitcoin is 0.

This is Bitcoin 101.

 

[ace2000]

I sure would like to know more about how the "mining" process works. There's a computer hack that's a major threat right now, where they attack servers (even PCs) and hijack them for mining. How can the foundation of a currency be built on a process like that?

 

[artringwald]

I sure would like to know more about how the "mining" process works. There's a computer hack that's a major threat right now, where they attack servers (even PCs) and hijack them for mining. How can the foundation of a currency be built on a process like that?

You can find out much more than you probably wanted to know by taking a free course on Coursera: https://www.coursera.org/learn/cryptocurrency/home/welcome

I took enough of the course to understand it enough to try and explain it to others. It was created by mathematicians not programmers. All transactions are recorded in "blocks" which are all linked together, are stored on multiple servers, and can be publicly accessed. Keys to each block are pseudo random numbers that are easy to verify but very difficult to generate. Miners are rewarded with bitcoins when they create keys for new blocks to store transactions. Miners have to try over several quintillion numbers to find one that meets the criteria for a block key. Because of the tremendous processing power required, miners consume a great amount of electricity. The clever design of the way blocks are linked together with encrypted keys (a blockchain) with duplicate copies stored on trusted servers, makes it extremely improbable that anyone could create counterfeit transactions. Owners of bitcoins can not exchange them without private keys to access the blocks they own. If they lose the private keys, their bitcoins are gone forever. Although all the transactions are public, nobody can tell who owns the bitcoins.

 

[ace2000]

You can find out much more than you probably wanted to know by taking a free course on Coursera: https://www.coursera.org/learn/cryptocurrency/home/welcome

I took enough of the course to understand it enough to try and explain it to others. It was created by mathematicians not programmers. All transactions are recorded in "blocks" which are all linked together, are stored on multiple servers, and can be publicly accessed. Keys to each block are pseudo random numbers that are easy to verify but very difficult to generate. Miners are rewarded with bitcoins when they create keys for new blocks to store transactions. Miners have to try over several quintillion numbers to find one that meets the criteria for a block key. Because of the tremendous processing power required, miners consume a great amount of electricity. The clever design of the way blocks are linked together with encrypted keys (a blockchain) with duplicate copies stored on trusted servers, makes it extremely improbable that anyone could create counterfeit transactions. Owners of bitcoins can not exchange them without private keys to access the blocks they own. If they lose the private keys, their bitcoins are gone forever. Although all the transactions are public, nobody can tell who owns the bitcoins.

Thanks for the info, and that is also how I understand it. The part I don't understand is why they would have a currency built on this kind of logic, and why one can make money just by mining - in the manner you describe. It just doesn't add up to me.

Anyway, I work as a DBA (database admin) and this mining thing has created a lot of havoc for me personally over the last few weeks.

 

[kukenan]

Bitcoin is created by programmers, and it uses tremendous power/utility to run the algorithm. The units that are sold the very first time go to the pockets of the programmers. Thereafter it is all speculation and see who can make money out of others. There is no asset value behind Bitcoin. On the contrary, it is a parasite that uses power to run.

The true value of Bitcoin is 0.

This is Bitcoin 101.

I work actively importing goods from China to the Caribbean, Bitcoin has been a blessing for me, the regular Banking industry got obsolete, several times I'd wait 3, 4 days, even a week after sending a Swift Wire to my providers in Hong Kong , then they transfer / convert to yuan in China mainland, SEVERAL times the wire gets reversed because providers didn't send the information to the Bank (they handled hundreds of clients).

With Bitcoin, I bought from local currency to bitcoin in around 15 minutes, send the bitcoin to China, the provider gets it in 15 minutes, convert back to yuan in 15 minutes. So, in 45 minutes my money is in China mainland and my order is ready to ship the next business day.

That's valuable.

The cons, price fluctuate, it's too volatile. But I'm a week ahead using Bitcoin, no mess with Bank Wires, wire justification (My own bank (business account)) ask me every time what I'm buying, why I'm buying, why I'm buying again, who is the Chinese Company, why Hong Kong, why China, like forever) it's my money, but feels like it isn't mine. And I'm small, when you are big enough to work with Letters of Credit, you are close to the hell, it's a nightmare, 30 to 60 days to settle, when the bank wants. You can send millions of $ in bitcoin in the same one hour time, in a very secure way that both parties trust.

So, I think the use case is there, I think it's valuable.

 

[VacationForever]

I work actively importing goods from China to the Caribbean, Bitcoin has been a blessing for me, the regular Banking industry got obsolete, several times I'd wait 3, 4 days, even a week after sending a Swift Wire to my providers in Hong Kong , then they transfer / convert to yuan in China mainland, SEVERAL times the wire gets reversed because providers didn't send the information to the Bank (they handled hundreds of clients).

With Bitcoin, I bought from local currency to bitcoin in around 15 minutes, send the bitcoin to China, the provider gets it in 15 minutes, convert back to yuan in 15 minutes. So, in 45 minutes my money is in China mainland and my order is ready to ship the next business day.

That's valuable.

The cons, price fluctuate, it's too volatile. But I'm a week ahead using Bitcoin, no mess with Bank Wires, wire justification (My own bank (business account)) ask me every time what I'm buying, why I'm buying, why I'm buying again, who is the Chinese Company, why Hong Kong, why China, like forever) it's my money, but feels like it isn't mine. And I'm small, when you are big enough to work with Letters of Credit, you are close to the hell, it's a nightmare, 30 to 60 days to settle, when the bank wants. You can send millions of $ in bitcoin in the same one hour time, in a very secure way that both parties trust.

So, I think the use case is there, I think it's valuable.

With the volatility of Bitcoin, when value drops 10% to 20% between the start and completion of the transaction, does the seller then ask the buyer to cough up the difference or does that go to operating expenses as part of doing business?

 

[slip]

With the volatility of Bitcoin, when value drops 10% to 20% between the start and completion of the transaction, does the seller then ask the buyer to cough up the difference or does that go to operating expenses as part of doing business?

Generally no. It’s the value at the time of the transaction.

 

[VacationForever]

I read that online gaming sites are accepting Bitcoins but since the house always wins, it does not matter as to what the bitcoins are worth one moment to the next. When selling products with real costs to produce, I don't see how Bitcoin can ever be a viable currency.

 

[slip]

There are many businesses that accept Bitcoin. Not totally in the mainstream but it is being used. The Blockchain technology that it is based on is a very viable platform.

 

[kukenan]

With the volatility of Bitcoin, when value drops 10% to 20% between the start and completion of the transaction, does the seller then ask the buyer to cough up the difference or does that go to operating expenses as part of doing business?

Due to demand and ban in China, they get better prices when converting bitcoin to Yuan, so no problem for them. The whole process can be completed in 30 - 45 minutes. 10% to 20% drops usually takes 24h. I'll be happy with a less volatile bitcoin, because I'm using it, not "investing" in it.

I also think the Blockchain technology is a revolution, it'll be everywhere in 3 to 5 years.

The Blockchain is like a public distributed database that everyone can trust, it's based on cryptography and peer to peer. It's very difficult or expensive, almost impossible to attack (modify) the Bitcoin Blockchain.

So you have the Blockchain technology on one side and cryptocurrencies on the other.

There is a rumor that Swift is developing his own Blockchain to offer one hour (or less) international wires over the world.

If you can send text, audio and video in seconds over the world, why not money?

So my point is that it's not all about Bitcoin, or investing, there is revolutionary technology behind all this cryptocurrencies fever. I don't see it like a big ponzi scheme to take everyone's money. There are infinite use cases of the Blockchain, Insurance, Travel, transportation, medicine, government, all kinds of public records, charity... Smart contracts of Ethereum are amazing technology too.

 

[ace2000]

So my point is that it's not all about Bitcoin, or investing, there is revolutionary technology behind all this cryptocurrencies fever. I don't see it like a big ponzi scheme to take everyone's money. There are infinite use cases of the Blockchain, Insurance, Travel, transportation, medicine, government, all kinds of public records, charity... Smart contracts of Ethereum are amazing technology too.

I guess the only problem I see is nobody really understands the complexity of what they're dealing with - at least that's what I gather from this thread. I'll ask again, why are people able to make money on the "mining" process? How can you have a currency based on a process like that? Please don't send a link, just explain it in a way that shows you understand it.

 

[kukenan]

I guess the only problem I see is nobody really understands the complexity of what they're dealing with - at least that's what I gather from this thread. I'll ask again, why are people able to make money on the "mining" process? How can you have a currency based on a process like that? Please don't send a link, just explain it in a way that shows you understand it.

The mining process is the way to secure the transactions on the Blockchain, encrypt and verify transactions, the process used in Bitcoin is called proof of work. The more miners (computing power) in the network, the more secure is the network, 9 years ago when bitcoin started nobody knew about it, how do you get more people to join and secure the network? Give them rewards for their computer power.

Right now I think (and everyone) that the way (proof of work) of securing the network is outdated, and there are new ways of doing it, Ethereum is going to a system called Proof of Stake, where no miners are needed. Other cryptocurrencies doesn't need miners.

No miners means less energy used, less hashing power.

So even Bitcoin is a little aged and outdated, but it can be updated and keep evolving.

 

[WinniWoman]

Did you buy in? Sometimes you learn more money by losing then making money.

I prefer to invest in hard assets that offer a return and capital gain or just a capital gain.

I didn't do it.

 

[ace2000]

The mining process is the way to secure the transactions on the Blockchain, encrypt and verify transactions, the process used in Bitcoin is called proof of work. The more miners (computing power) in the network, the more secure is the network, 9 years ago when bitcoin started nobody knew about it, how do you get more people to join and secure the network? Give them rewards for their computer power.

Please just explain to me in simple terms how a currency can be built off of this mining process, and why others can make more Bitcoin (or any of the other digital currencies), off of that process? Wouldn't that be the same as someone buying their own printing press to print $100 bills? Except with Bitcoin, you're talking about a much larger scale.

 

[AnnaS]

Some experts say bitcoin is a pyramid scheme. If so, when the price is right, many will take their money out then re-buy when bitcoin tanks. I have seen estimates of over $20,000 per bitcoin by February 2018 and predictions of a crash about to occur. Many would say because of the block chain and limited number of bitcoin that can be produced, that bitcoin isn't a pyramid. Others like Howard Marks and Jamie Diamond say it is a pyrimad.

The status change from currency to asset by the IRS could be another problem for bitcoin. It does seem over valued but it could go either way. My bet is the guys at JP Morgan are right and its about to pop.

Bill

Funny, I thought the same thing.

While out to dinner with friends recently, our friend told us his son introduced him to bitcoin. The son made a few dollars so the dad did the same. I actually felt a little weird about how the whole conversation came up - maybe because it's the "new thing". He has never spoken about his investments. Hubby and I tried to understand. After dinner, I actually said to my husband, it almost sounds like a pyramid scheme. It will be around for a while, grab people to buy in - eventually though somewhere down the road, someone is going to end up paying for it. I have since been hearing about it more and more so who knows, maybe it's all good and will be around for a long time.

 

[AnnaS]

There's an old adage provided by one of the best investors in modern history, Peter Lynch: "Invest in what you know. If you can't explain what your investment is and the fundamental story behind it, you should not be putting your hard-earned dollars into it."

For me, at least, cryptocurrencies like Bitcoin are a mystery. Other than the fact that it's partly fueled by a desire to create a currency that will compete with the dollar for international liquidity, I know nothing about it.

I feel the same way. It's all a mystery/confused and I don't gamble

 

[Brett]

I feel the same way. It's all a mystery/confused and I don't gamble

the Washington Post today had a good article on people that are buying bitcoins

www.washingtonpost.com

 

[artringwald]

Please just explain to me in simple terms how a currency can be built off of this mining process, and why others can make more Bitcoin (or any of the other digital currencies), off of that process? Wouldn't that be the same as someone buying their own printing press to print $100 bills? Except with Bitcoin, you're talking about a much larger scale.

The bitcoin technology has a mechanism built into it that controls how faster new bitcoins can be generated. If only a few miners are generating bitcoins, it takes less computing power to generate them. If there's a large number of miners, it takes more computing power.

 

[ace2000]

The bitcoin technology has a mechanism built into it that controls how faster new bitcoins can be generated. If only a few miners are generating bitcoins, it takes less computing power to generate them. If there's a large number of miners, it takes more computing power.

So, instead of people buying their own printing press to print dollar bills, now they just need computing power to make their own bitcoins? Seriously? This whole deal seems completely crazy, and yes, it does sound like a pyramid scheme that's ready to crack.

 

[VacationForever]

So, instead of people buying their own printing press to print dollar bills, now they just need computing power to make thier own bitcoins? Seriously? This whole deal seems completely crazy, and yes, it does sound like a pyramid scheme that's ready to crack.

Pretty much...

 

[kukenan]

So, instead of people buying their own printing press to print dollar bills, now they just need computing power to make thier own bitcoins? Seriously? This whole deal seems completely crazy, and yes, it does sound like a pyramid scheme that's ready to crack.

It's a matter of trust, the same way you trust your $100 dollar bill, that is printed by the Federal Reserve, and that is not backed by anything (just the trust in the US economy). Now, that's a real bubble that nobody talks about, billions of dollars printed every year to keep the economy alive and it's printed based on debt.

As I said, there is technology, there is development, there are coins, and there are use cases where the technology is needed.

When your bank starts to offer services based on Blockchain, knew it all came from Bitcoin.

Can Bitcoin be a pyramid scheme? Yes.
Can Bitcoin and the Blockchain technology be just a pyramid scheme? No.