Any Thoughts On Bitcoin ?

Discussion in 'Bullion Investing' started by goldcollector, Feb 21, 2017.

  1. InfleXion

    InfleXion Wealth Preserver

    When the "net worth" you think you have turns into dust because it doesn't have any actual value maybe then will you see the folly in your thought process. I'll never understand why some people prefer to learn the hard way.

    Y2K was 17 years ago, so you don't have to wait 1,000 years. Again you have cherry picked a particular timeframe to make a short sighted point in a vacuum. You don't seem to be registering the fact that every single timeframe except for 1980 and 2012 proves my point, so you're out of cherries to pick now.

    You also don't seem to understand that what we use as currency does not meet the legal definition of money. So you shouldn't call it money. It is debt based fiat currency with no intrinsic value, and that is all you would be giving up in order to acquire real money, gold and silver. It is a measuring stick based on a lie to begin with, and it will only last as long as the government is able to offload its debt to a new sucker. If that's what someone want to denominate your wealth in, they should be aware of the risks involved.
    Last edited: Feb 24, 2017
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  3. Prime Mover

    Prime Mover Active Member

    I will post some more eye candy shortly.

    Based upon what you've stated, you probably are best not attempting to invest in it, as it does not seem you understand it as well as you may think.

    This, is patently untrue.

    BitCoin's value is NOT derived from being simply a currency service, its value is given because of everything else surrounding it being used as a currency service.. It is all those extras of security, relative anonymity, transactional speed, low transaction fees, lack of governmental control, etc that make Bitcoin an attractive alternative means of monetary transfer. Without the technology behind Bitcoin, it is no more valuable than sea shells, salt, rocks and beads, or anything else in history that has been used as a "currency".

    Not understanding the utility of a physical representation of Bitcoin equates to not understanding Bitcoin.

    A physical bitcoin ENHANCES the utility of Bitcoin, by giving it options that allows it to be used outside the constraints of the digital world, furthering its ability to be used as a more acceptable form of currency, not less.

    A physical Bitcoin cannot be hacked by an outside party, providing penultimate security for your holdings.

    Since a Bitcoin can be split into up to 1,000,000 single bits, you can load up a physical bitcoin with as many bits as you want. I could put 0.1 Bitcoin onto a physical round, walk into a store, and if something cost 0.1BTC, I could hand over my physical bitcoin to the cashier and walk out, letting them have the option later to either redeem that 0.1BTC to their account, or to give that 0.1BTC to someone as change, and they can then take it elsewhere and further the process. I don't have to go all geek with electronics, and no one has to be waiting for the first block confirmations to make sure the payment would be valid.

    Please tell me where you can walk into a retailer and plunk down a chunk of silver, or gold, and walk out with goods? Or, walk in with your digital device and ask for someone's bitcoin address and a live conversion rate for BTC -> Fiat, pay them, tell them the TX id, wait 10 minutes or so for the first chain confirmation, and then leave? Bitcoin can easily be transacted online in many places as it was designed for that, but there are so few B&M retailers that accept it, it has zero current practicality as a mainstream currency.

    Bitcoin currently has more in line with PM's as a store of wealth than any realistic use as an everyday instrument of commerce.

    No one should invest in any one thing over any other one thing. As with everything else, investments should be diversified so you're cushioned against any severe losses in any single area. Investing 101.

    Not an entirely true statement.

    As you admonished another user - "Does it really make since to pick an anomalitic high point as your baseline?"

    Bitcoin has been around for a short ~8 years, with no real monetary value until roughly 2013. It took a meteoric rise to a high of over $1k within 12 months, then the aforementioned Silk Road and Mt. Gox fiascos brought it crashing down, seeing lows of the mid-$100's in 2015, and a slow recover to where it is now over the past 2 years. I would say that it has seen its anomalitic high point once, when it was still in its absolute infancy, adjusted/corrected, and now has found stability. We will see, only time will tell, but either way I do not think you can form any real conclusion on what its real trends are because there has not been enough time in its existence to prove anything.

    Are you continuing the falsities on purpose, or are you truly that misinformed? Gold has many industrial uses well beyond financial and jewelry uses - Electronics usage is paramount (10:1 ratio of silver:gold usage across all electronics, which is not by any means a small quantity), but many other areas also have significant use. I would suggest a little more research on that topic.

    And, here's where you finally lost me about how you claim to understand Bitcoin. Let me address your points.

    A general user, one who only maintains a wallet, has ZERO part in any of the Bitcoin validation system. They are consumers, only, who consume the information contained within the blockchain for their transaction information and general ledger.

    It is the MINERS who control all the validation. Those who mine are not only attempting to generate new Bitcoins, but they are also serving as the computational validation part of the whole chain. Each miner, with it's shares, is in essence voting on which shares and transactions are valid and should be included in the blockchain.

    A miner may also be a user, or they may simply mine coins and dump them for immediate cash, thus providing no real usefulness. However, it is an extremely important distinction on who controls or has cause and effect on what, and why semantics matters in this conversation.

    What you are describing is what is called a "51%" attack. Going back to my previous statement above, no regular clients can affect this. It is the miners, again, who have the power, and why within the community there has always been an attempt at a "gentlemans agreement" that any mining pool would not surpass 40% of the available miners.

    The days of CPU power being able to mine Bitcoin have been done since 2013. There is no physical possibility of any trojan virus or malware having the ability to do this. The specialized hardware (ASICs) used today are more powerful than any number of regular computers (personal or server-class) could ever be.

    I will disagree with the ease of ability to pump and dump with Bitcoin.

    The "alt"coins, as they are called, are ripe for pump and dump, and a good majority of them are just that. Crypto-coins, in their infancy, are a perfect scenario for this, with a large number of "coins" able to be generated very quickly at the start for the first wave of users who discover that particular new coin. Very easy to mine a whole lot of coins, then dump them quickly to the poor sod who is late to the party and doesn't do their homework, or is looking to do the same to another user, but gets caught at the wrong time.

    Bitcoin is well established enough at this point, has enough diversification of the coins amongst the users, and is at a high enough monetary basis level that it would be difficult to pump and dump it. With an over $1k price tag per coin, you'd be in the billions before you could acquire enough coins to affect the larger population. The only people with enough coins to do this currently (the "whales" as we call them) would be stupid to do such a thing, as they would only be seriously hurting the value of their own holdings.

    The only real thing to worry about, which is a significant worry for sure, is not whether someone will pump and dump, but if there is a fundamental flaw with the system which could wipe it all out. And that is a sobering thought, for sure, and one which should give pause to most on whether they should jump in or not.
  4. InfleXion

    InfleXion Wealth Preserver

    If it wasn't a currency service it wouldn't be what it is. All the complementary features you are describing contribute to its value as a service. I think we see eye to eye on this. I'm not saying the only value it has is as a currency service. I'm saying that without its utility as a currency service it has no value. Those other things expand its value.

    But you can't spend that physical BitCoin in the digital world, which means it doesn't function like all the digital BitCoins. It's no different than a lump of silver at that point. It's not an enhancement, it's a constraint. It doesn't function for global real-time transactions any more when it enters the physical realm.

    Again, just a lump of silver, not a functional BitCoin. Don't get me wrong. I love to see people stacking, but not for $1000/oz silver.
  5. InfleXion

    InfleXion Wealth Preserver

    I don't think you understand the concept of an internet worm or how it works. It infects millions of computers with some zero day exploit and can literally control them all independently or in a coordinated manner. So you can have one person controlling millions of clients OR miners as long as there is an account to be associated with every hacked client controlled by the worm, and that can easily be automated by anyone with coding savvy. Anybody can be a miner, and the fact that there are less miners than users only makes it that much easier to outnumber them.
  6. medoraman

    medoraman Supporter! Supporter

    While I understand how those who do not trust the government may like that aspect of bitcoins, almost everyone here who does not trust the government also do not trust in something that does not have a tangible, real world value.

    True, bitcoins are no more made up that currency with one major exception. Theoretically something like US currency is backed by every asset in the US. The Federal government has unlimited power to tax. Therefore, that is the backing of a USD. What backing, other than mass brainwashing that a tiny bit of code somehow has a "value" does bitcoins have?

    Anyone else remember South Sea company, dutch tulip bulb hysteria, or anything else similar? Sure, people who get in early into frenzies can make money, a lot of money, IF they convert their profit into a real form of long term value.

    To me, money is a temporary medium of exchange. I get paid in something, (be it USD, sea shells, or bitcoins), only to USE them to buy a REAL asset. I use USD to buy gold, I never consider gold to be a currency, it is an asset. I would be fine using bitcoins in the future if we went with that as a currency to use to to buy a REAL asset, (be it gold, land, equity, etc), but would never believe a bitcoin itself is an asset. A bitcoin is nothing really, (some would say the same regarding a USD). But just like I believe its really dumb to hoard USD in a mattress, I believe it would be equally, (or more so), dumb to hoard bitcoins long term. Not saying you cannot play the "greater fool" game and hold it short term hoping someone else will pay you more for it, but talking long term.

    Economic history is littered with alternative monetary "solutions". Those who wish to hold bitcoins long term should read about how they have fared IMHO.
    Prime Mover likes this.
  7. baseball21

    baseball21 Well-Known Member

    Also a countries military power. This is a very good point you make for those who try and say currency is backed by nothing
  8. baseball21

    baseball21 Well-Known Member

    It actually disproves you point countless times with long periods of loss over the last 100 years and a couple periods of gain which them come back down. There certainly are periods of time where people could make a lot of money on it, but the idea that you just buy it and your wealth is safe is just marketing.

    Gold and silver aren't money as someone else mentioned. Currency is money, metals are an asset and/or luxury
  9. Prime Mover

    Prime Mover Active Member

    I only quoted this part, but your whole post hits the nail on the head.

    "money" is a concept. It's a representation of some sort of intrinsic value put on either a possession, or a fruit of labor. Anything can be used as money - hey, can you come fix my brakes and I'll buy you beer and pizza? Yep, "money". When no one wants/needs what you have to sell anymore, it ceases to have value of any sort.

    To be completely honest, I started mining bitcoins to see if I could eventually turn that into acquiring PM's without needing to spend my US Fiat on them... then I could turn around and sell my PM's as/if needed for whatever funds I required at the time, or pass on to my kids if they need it. I achieved my initial goals already, and now I can sit on some, get my popcorn, and see what happens.

    The old stocks addage is correct - you only gain or lose when you liquidate something, it's only a number on paper until then.
  10. Prime Mover

    Prime Mover Active Member

    I understand very well the concept of a Trojan, thank you very much. I've been in IT for over 20 years, I started my career by launching a dialup ISP / webhosting provider back in the mid-90's, and am currently working in IT in the Healthcare space, whose daily job is to research current trends and threats, and protect my users against them. I've written my share of code.

    Also, by your statement, you do not seem to understand how an ASIC-based miner is built and controlled under the hood, nor how the mining ecosystem functions as a whole, otherwise you would not be making these suggestions. Miners are keenly aware of what their rigs are doing all day, every day, and would immediately notice any change in the environment.

    But, just to back up my baseless claims with actual, real numbers (and now we're getting REALLY off-tangent, I apologize and will get back on track after this):

    The average mining hashrate of a current server with 4 Intel Xeon CPUs is 60 Megahashes per second (18Mh/s).

    The average mining hashrate of the current best shipping ASIC-based miner is 14 Terahashes per second (14Th/s).

    The largest mining pool, at just below 17% of the overall hashrate is currently around 340 Petahashed per second (340Ph/s).

    To mount a successful 51% attack you'd need to maintain at least ~2.3Exahashes/s

    So to put that in simple math:
    You would need 233,334 servers to top the hashrate of one ASIC miner.
    You would need 5,666,666,666,667 servers to top the hashrate of the largest current mining pool.
    You would need 38,333,333,333,333 servers to surpass the 51% attack mark.

    Not gonna happen.
    micbraun and -jeffB like this.
  11. Prime Mover

    Prime Mover Active Member

    So, here's another batch of rounds.

    These are what are called "Silver Wallets". They are all 1oz silver rounds, some with gold highlighting. The obverse designs on the first two series are intricate, and one of them depicts part of the actual mathematical algorithm for the Bitcoin Core software.

    These are unfunded rounds, made to be self-funded by the buyer at any time during their possession, and can be re-used as many times as needed to store Bitcoin (or technically any crypto currency).

    On the reverse of one, you can see a square indentation minted into the round. The idea is that you take as much bitcoin as you want to, print it to a "paper wallet", then fold up, put in divet, and cover with a tamper-evident hologram.

    If you need to take out the bitcoin at a later date, you peel the holo, and import the printed private key into your online wallet, and bingo, Bitcoin restored.

    IMG_4279.JPG IMG_4280.JPG IMG_4282.JPG IMG_4281.JPG
    JJK78 likes this.
  12. InfleXion

    InfleXion Wealth Preserver

    Please stop using the word trojan. Trojans aren't even part of the conversation. Trojans, viruses, worms, and exploits are all completely different things. The fact you keep saying the word trojan tells me your qualifications are questionable. I've been in IT since 1999 myself. A trojan is something you have to execute on a computer to initiate an exploit, but exploits do not require the use of a trojan if there is some other means of attack such as a SQL injection or JavaScript or Flash vulnerability. Worms use the latter method of exploit, not a trojan, to compromise every single computer online in the world using a particular OS or software patch version that is vulernable to the exploit.

    Your data however, is more interesting, and I appreciate you adding that level of detail, but your post is not nearly specific enough to make any quantifiable determation for the following reasons.

    For starters, you can't presume to know the processing power of a computer or server that a worm controls. It could very well be one of your ASIC miners for all we know, depending on security. That is not something that can be determined. So in a hypothetical scenario we can divide all your numbers by 233,334 since it's not impossible that every computer controlled by a worm is every bit as powerful as an ASIC miner. It's nearly impossible, but not impossible.

    In that scenario, a worm would only have to control 164,285,244 devices. Considering that Java runs billions of devices, this is again not impossible.

    The last consideration has to do with photonic microprocessors which use electrons for the circuitry instead of electricity, and process 35 DVDs worth of data per CPU heartbeat, not to mention have a base 4 system instead of a base 2 binary system because you can spin electrons in 4 different directions. Not only is the BUS faster by an order of (speed of light over fiber cable) divided by (speed of electricity over copper wire), but having a base 4 system instead of a base 2 system is exponentially faster from that standpoint as well. A base 2 system only has 2 potential values, zero or one. A base 4 system can be zero, one, two, or three. So with 8 digits in base 2 for example you can only represent 8^2 (64-bit) numbers, but in a base 4 system those same 8 digits represent 8^4 (4,096-bit). So you can transmit 2 orders of magnitude more data on the same BUS size, and that makes the actual ratio [(speed of light)/(speed of electricity)] squared. Granted these are very expensive and probably not connected to the internet, but that's OK.

    Because all I have to do is show that a 51% attack is not impossible, and it most certainly is not impossible. Supremely improbable, sure. If existing photonic microprocessors were put to that use, they could feasibly overwhelm all BitCoin miners' processing power in the public domain even without an internet worm.

    Ignoring the 51% attack scenario for a moment, BitCoin only has value because people choose to pay for it, the same reason as anything has value like gold and silver. The difference is that you can't create gold and silver with a computer, and you can't substitute gold or silver with anything except for gold or silver since they have immutable and unique intrinsic properties. There are many BitCoin clones that could take its market share if the userbase/miners deems them superior and jumps ship to the next cryptocurrency, and BitCoin could be out in the cold as it gets its market share supplanted by superior protocols. The only thing unique about BitCoin is that it was the first of its kind.

    My point should be clear. It's a speculative market and it has inherent risks, regardless of how improbable they may be. I trust it to do what it was designed to to, but I certainly don't trust it to be infallable or to have any guaranteed value like gold and silver do.
    Last edited: Feb 24, 2017
  13. InfleXion

    InfleXion Wealth Preserver

    Funny, because I never said gold and silver make your wealth safe. I said they are safe from inflation. As I stated before, that doesn't make it safe from the market. I'm beginning to think your reading skills need work.

    And regardless of what you or anyone else thinks, we have a legal definition of a "dollar" according to the US Coinage Acts, and the only legal money is gold and silver. The Federal Reserve Act did not make any attempts to redefine the definition of the dollar according to US law. So what we use as currency is not a dollar. Federal Reserve Notes are not dollars. And Federal Reserve Notes also do not meet the general definition of money, because they do not meet all requirements of the definition of money: divisible, durable, portable, fungible, and a store of wealth. They are not durable enough to be a longterm store of wealth. They are strictly currency, and not a legal one at that. Ignore facts at your own risk.
  14. -jeffB

    -jeffB Greshams LEO Supporter

    <blows whistle, throws flag>

    Sorry, but you've been had.

    I was able to track down the work you're referring to, published in the noted computer-engineering journal ZeroHedge. The post in question hints darkly at the computing power that They (you know, Them) use in Their efforts to track and analyze our every post, every word, every thought.

    The problem is that it's still science fiction. This is NOT a technology that exists yet, even in the NSA or other three-letter Powers That Be. Sure, the spooks have vast computing power, and I'm sure they've got some experimental stuff that's beyond the published state of the art -- but there are about a dozen major breakthroughs between us and fully-optical processors. The best we've got at the moment is probably some really fast optical routers, to go with those optical transceivers -- but the speed gain from a beam of light over a good transmission line is only a third or so. The big savings would come from power and geometry, letting us pack stuff more tightly. But like I said, lots of breakthroughs to go.

    My background: yeah, I'm "in IT", but no, I'm not a spook. But I spent a very long time in academia, and I still follow the frontiers a bit -- enough to know that we're still quite a long way from "optical microprocessors".

    On the other hand, I'd be really excited to find out I'm wrong, so please feel free to link some reports making me look silly.
  15. Michael K

    Michael K Well-Known Member

  16. InfleXion

    InfleXion Wealth Preserver

    I first read about this as an Intel whitepaper in 2005. I don't care for that other site you mentioned.

    This is coming from Intel which is transparent about how they incrementalize chip upgrades to maximize market exposure, and was thankfully spurred on by AMD to move faster.

    Apparently Google is getting into the arena now too, and it is well known they work for one of those 3-letters you mentioned. But they're only doing a base 2 system, not a base 4. Can't let the real power out of the bag.

    And there was an episode of PBS NOVA I saw back in 2011 too that had a real one in use.
  17. InfleXion

    InfleXion Wealth Preserver

    This quote is from the PBS link. The official story as of over 5 years ago. Our computers are called classical computers, too funny.

    How real are quantum computers? Wow, depends on your notion of reality. I'm a professor of mechanical engineering. I don't mess with questions about the nature of reality. On the other hand, we actually have lots of quantum computers sitting around the MIT campus.

    Right now, we have small, general-purpose quantum computers that can basically do anything you ask them to, if you ask nicely. Then we have large, special-purpose quantum computers that can solve specific problems better than classical computers can. What we don't have is a large, general-purpose quantum computer of the sort that would be needed to break codes, strike fear ...
  18. baseball21

    baseball21 Well-Known Member

    Something has to gain value over time to be safe from inflation.....
  19. InfleXion

    InfleXion Wealth Preserver

    Thankfully that's exactly what it has done throughout the vast majority of inflationary environments. Has there been deflation since 2012? Maybe that explains why the price went down... the real question here is, did the price go down because of deflation, or did the price going down cause the deflation? The answer is neither. The price is a metric for inflation or deflation generally, except when people need it to escape their normal currency like in India right now.

    That's what BitCoin is good for, alternative currency, not an investment. Although it's not better than precious metals because it requires electricity and an internet connection and a functioning computer to turn it into something meaningful.
    Last edited: Feb 24, 2017
  20. InfleXion

    InfleXion Wealth Preserver

    I said it can function as currency, not that it is functioning as currency right now. Context matters. It has been currency before, and that is where the similarity with BitCoin ends which was my point, that they are not the same thing at all. People seem to think BitCoin and precious metals are two peas in a pod. They are currency alternatives, and that is all they share and why they are over-correllated.

    We're not talking about one anomalitic high. We're talking more like 10 times BitCoin has lost half of its value since it was a few bucks. And many of those drops were in a matter of days or weeks. If once is an anomaly, twice is a coincidence, three times is a pattern, what do you call ten times? BitCoin apparently. No doubt fortunes were made, that's the dump part of a pump and dump. Just because they can't use HFT algos doesn't mean the concept doesn't apply. I'm not even sure why I need to defend this. It's an unregulated market with a few key bottlenecks.

    It's not false that the high price of gold is not due to industrial demand. Otherwise it would be 10 times cheaper than silver then wouldn't it? So my point stands that industrial demand is small enough that it doesn't matter for the price of gold. It is a bellweather for (inflation or deflation) plus or minus (faith in fiat currency).
    Last edited: Feb 24, 2017
  21. InfleXion

    InfleXion Wealth Preserver

    I apologize for not having better post restraint, but this PBS link literally admits that MIT is using quauntum computers to crack PGP keys. If they can do that, is BitCoin really so bulletproof?

    The normal way of doing public key cryptography was developed by [Ron] Rivest, [Adi] Shamir, and [Len] Adleman here at MIT. The idea is that you have a very long number, hundreds of digits long, and this number is the product of two smaller numbers. The long number is the public key, and the numbers that make up the product are the private key. So in order to get the private key from the public key, you have to figure out what the two smaller numbers are. This is called factoring, right? Like the factors of 15 are three and five. Well, factoring 15 ain't too hard, but factoring a number that's 500 digits long is hard. Quantum computers can factor large numbers easily, and this is what Peter Shore told us.

    A conventional, classical digital computer could, indeed, factor a 500-digit number, but the only known methods are basically, well, let's try these two numbers and multiply them together and see if it's this big number. Let's try these other two numbers. The problem is that there are gagillions—that's a technical term—there are gagillions of numbers that could be multiplied together, and to explore all those numbers would essentially take the age of the universe on a conventional digital computer, even the biggest supercomputers.

    On a quantum computer, you can actually factor these numbers very, very rapidly. The way it works is, well, it's very sneaky and tricky, but it boils down to the following:

    In this factoring problem, there's a kind of a hidden periodicity. So you can rephrase the factoring problem as, oh, I've got this wave, and it wiggles up and down over some very long time. Intuitively, quantum mechanics is about waves. And zero and one have a wave that's associated with them, and this gigantic number that's hundreds and hundreds of digits long also has waves associated with it. Now, waves are famously, you know, wavy, and quantum computers are darn good at figuring out how fast waves wiggle up and down.

    Peter Shore showed that you can set up this factoring problem so that if you're given the wave for this 500-digit number, then you can find the hidden waves for the two 250-digit numbers which, when multiplied together, give you the 500-digit number. It's very sneaky, and it involves more stuff than that, but at its quantum heart, the guts of the quantum problem, that's what it is, finding out the periodicity of waves.
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