Bitcoin - I don't Understand

Hey, we can start a pair of currencies. I'd like to start iDONThaveANYmore%^:&÷'sTOgive@coin

I think we'd be incredibly successful, unless of course people respond with whoGIVESa?([&.

 

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Well, in 2013, a couple of engineers started dogecoin cryptocurrency as a joke. It became popular, and total value is the millions now. Crap or not, it's amazing what people will put real money into. Cal

Correction: Total market value of dogecoin is now in the billions!

 

I always wondered why they charge us penalties and interest but don't return the favor when they owe us??

 

Billy?

 

My late father-in-law had a large overpayment on his taxes. The IRS has been sending us stalling letters every six months or so. We finally paid a lawyer to chase them down on it. The result: a letter from the IRS that the issue is being transferred to a different department, and we should be hearing from them... in around six months.

Yes, they'll allegedly pay us interest on the amount. No, they won't go ahead and pay the estimated amount, as we're required to do when things are the other way around.

 

I fall into the 1st category but it seems to me if one were going to invest in BTC a funded token such as is the subject of the OP might be the best option.

My little bit and probably incorrect understanding of BTC is it is inherently dilutive. Every time a BTC changes hands a link is added to its chain. Therefore the subsequent holder in line will require a larger wallet to hold it and will require more resources to verify the coin when exchanged than the previous holder. An option such as this token can be transferred and exchanged without adding any links to the block chain.

 

The next holder won't need a larger wallet. However, it does increase the block chain. Mining consists of doing bookkeeping on the block chain and being rewarded with unmined bitcoin for doing a certain amount of work. As the block chain grows, the amount of work to be rewarded with unmined bitcoin grows. That's why mining now requires huge amounts of computing and electricity.

Exchanging or trading bitcoin requires very little computer time. Mining requires an enormous amount.

Cal

 

So you are saying a Satoshi in G-4 condition requires no more resources to store, verify and transfer than one lets say grading MS-70?

 

There are two issues here: physical bitcoins and bitcoin codes that allow access to trade. Physical bitcoins are often slabbed, but many still aren’t slabbed. They have a code that allows online access to trade. The code may still be concealed under a peel-off in which case the code is probably valid if the physical coin came from a trusted source. The trusted source did a trade that gave them the online access code. Then they created the physical coin with the code behind the peel-off. If the peel-off has been removed or the code has been otherwise exposed, assume the code has been used and the value transferred. In other words, at this point, the physical coin is simply a token that may or may not be of value to a collector. The storage of physical bitcoins is no different from any other coins.

The vast majority of bitcoin value is not associated with physical bitcoins. The bitcoin value is accessed online via codes that allow trading. The codes can be stored in someone’s head, on a Post-It, in a spreadsheet, etc. … or hidden behind a peel-off on a token. Lose the code or allow someone to access it, and your bitcoin value may be gone forever.

Cal

 

Cal, since the ultimately available bitcoins, after all mining is completed, is a fixed quantity, won't those tradable bitcoins continually shrink over time?

I know the widely publicized course of action is to protect and safely secure your bitcoin password. Since your wallet can potentially contain many millions of dollars, depending on the FMV of bitcoin that day, protecting your PW can be the deciding factor between great wealth and instant poverty.

All that being bitcoin reality, I believe many people would never share their PW with anyone. You'd think most people would find a contingency plan to get their PW to a surviving benefactor as their final good will gesture in their demise, however, a strong number of those who die suddenly and unexpectedly in an accident might not have considered what would happen to their fortune in that event. Now those bitcoins would be lost to the ether. Never to be accessed again. These occurrences probably happen more than gets told publicly.

Therefore, since there is a finite number of bitcoin to be mined, the only possible variable is the ever decreasing accessibility of bitcoin over time. However improbable this scenario is, it is plausible that with the law of diminishing returns, one day it's possible that all bitcoins have been mined yet no bitcoins are accessible.

 

I agree with you. Due to lost or forgotten passwords the amount of bitcoins will decrease with time ... approach zero asymptotically. Might take decades or centuries to become zero.

Hard to predict what will happen to bitcoin value in dollars as bitcoin disappears. With regard to physical bitcoins, which contain only a fraction of the total capitalization of bitcoin, they will be collectable but future value is also hard to predict. Physical bitcoins are a little like precious metal coins ... there is the numismatic value and the PM value. Main difference is PM coins will always have their PM. Physical bitcoins have only their "numismatic" value once the code is revealed and the bitcoin value associated with the code has been transferred.

Cal