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Old 02-10-2013, 12:02 AM   #1
Anenome
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Bitcoin

Do you guys not know about Bitcoin?



It's a crypto-currency started in 2009 by a mysterious figure called 'Satoshi Nakamoto.' To this day no one knows his true identity. He released a white-paper describing bitcoin in full, in all its cutting-edge mathematical glory.

By saying it's 'crypto' I mean each coin is cryptographically unique, and it is this cryptography which prevents them from being copied ad infinitum like other digital items.

Because they're unique and unduplicateable, they are scarce, and that means they can be used to facilitate trade--as money.

In fact, bitcoin is currently the cheapest and quickest way to send money overseas. You can send thousands of dollars, or more, for the costs of a few pennies. Entire businesses have sprung up to make it easy.

But perhaps the best thing about bitcoin is that, unlike gold, it is a digital native. You cannot email gold, so you're stuck with cash. Cash can be transferred digitally, but a cash handoff between institutions later follows. Bitcoin circumvents that need entirely.

Bitcoin relies on a distributed network of computers called 'miners.' What miners do is process the bitcoin transactions generated by people who have bitcoin.

Let's say you wanted to buy some bitcoin. You'd search out a reputable place to do so, something like Coinbase, Mt. Gox, or BitInstant.

First you'd need to have a place for them to send your bitcoin too. This is done by generating a wallet. A bitcoin wallet is a simple file called wallet.dat that contains a randomly generated address that anyone can send bitcoin to. But to get money out of the wallet they'd need the private keys, which exist only in your wallet, and that's why wallets are encrypted for security. Some people use a high-tech site like Blockchain.info which uses client-side javascript to create and encrypt wallets so they never have access to your funds.

With wallet in hand you'd send money, using various means, to a person with bitcoin (using Coinbase or other 3rd partner agents), whom would then send the bitcoin into your wallet.

This is done by broadcasting the transaction to all the miners in the bitcoin network. They add this transaction to the blockchain--a file that's maintained by the entire network as a record of valid transactions. Once enough miner-nodes have verified the transaction mathematically, it is irreversible and the coins are sent. Takes less than 15 minutes on average.

The miners are called miners because they are literally mining new coins. The mathematic procedure to verify transactions forces them to solve a difficult problem such that only a few nodes will be able to solve this problem, randomly, every 10 minutes. The ones lucky enough to do so are awarded new bitcoins by the protocol. It's done in such a way that this cannot be faked.

The new coins are verified cryptographically just like a new transaction and the blockchain continues being processed.

Why is this important?

Because currency is something you use every day of your life, and it has a huge cumulative impact on you. For instance, the government inflates the US dollar between 3 - 11% a year right now.

If they inflate 10% of the dollar's value away, that's money stolen from everyone's paycheck and savings accounts.

In short, governments are abusing their control of their nation's currencies to enrich themselves and their allies.

Whenever you hear the term "quantitative easing" in the news, that means they're going to inflate, because they believe it will help the economy.

They think this because inflating--or devaluing--your currency causes your exports to look cheaper to other countries whom then benefit by the exchange rate. Thus, the first country to devalue will see a large inflow of currency from other nations.

Did you know that Venezuela devalued their currency by 46% a day ago? It's the first nuke in what's being called the coming global currency war. Japan is expected to lob the next round--they've just announced unlimited quantitative easing. Our own government announced unlimited QE a few months ago, and officials have even tralked of minting a trillion dollar coin to pay off our debts.

In short, the governments of the world are getting ready to fight each other to see who can inflate the best. And the losers will be the citizens of those countries.

When Greece and Spain began having major fiscal problems, the citizens of these countries realized inflation was coming and began looking for a value-hedge. Many of them chose bitcoin, but not enough knew about it even then.

Many in Argentina have been trying to buy bitcoin, now that the government there won't allow their citizens to buy dollars on the free market for fear that the citizens would abandon their national currency. But they can't stop bitcoin unless they turn off the internet, which they cannot do.

Where is bitcoin now? Two years ago or so one bitcoin was worth mere pennies. In fact there's a famous story about an early miner who had 10,000 bitcoins and offered that sum to anyone who would bring him a pizza.

That number of bitcoins would be worth $230,000 today!
You read that right. One bitcoin today is worth ~$23, with an overall market cap of $220 million. Still fairly low! But a significant sum.

How I wish I had been involved two yeas ago! Recently I bought bitcoin for the first time, on Coinbase, at ~$19. I've made a nice sum already.

But I'm not going to sell. I'm convinced that this idea is only slightly ahead of it's time. What I'm telling you is that you may not be in on the ground floor--neither was I--but this is the 2nd floor of a skyscraper.

We may see digital currencies supplant national ones within our lifetime. If the whole world eventually moved over to using bitcoin then the numbers become unbelievable. In fact, if only one economy switched to bitcoin, the price of one bitcoin would multiply practically overnight.

Let's say everyone in the world switched to bitcoin. That would mean that 7 billion people each want bitcoin, but the number of bitcoin is cryptographically limited to only 21 million, ever. Which means we would have to divide them. They are near infinitely divisible.

So, each person on the planet could hold only 0.0003 bitcoin, three millibits. But here's the rub, that would have to equal their yearly pay! Which is about $10,000 on average. If that happened, then 0.0000003 btc, or three ten-millionth bits would equal one of today's dollar >_>

Okay, crazy numbers, sounds impossible, plus it's ME telling this to you, I have all sorts of crazy ideas, right? Sure. Why don't you read the FBI's report on Bitcoin, designed to introduce politicians to the currency.

If you're done there, here's a few more to peruse:

http://www.reddit.com/r/Bitcoin/

http://www.weusecoins.com/

https://coinbase.com/

And remember this day! If you blow this off now, at least remember that you were told. One day when Bitcoin starts making headlines and the price is in the four-digits and above, remember that when I told you about bitcoin, the price was only $23!

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Old 02-10-2013, 12:32 AM   #2
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Interesting. 1 Bitcoin from Coinbase is around $24, and after checking this site that sells PC game codes for Bitcoins, http://gamerkeys.net, it seems that it would be cheaper to use bitcoins than regular money. But only by a few cents.
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Old 02-10-2013, 12:59 AM   #3
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That's cool, I like how you can change all the pricing into bitcoin at the top
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Old 02-10-2013, 01:18 AM   #4
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The FBI report is very interesting. I never knew about the existence of this "dark web" or Silk Road. Bitcoins on there can buy everything from drugs to weapons to contract killers.



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Old 02-10-2013, 03:13 AM   #5
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The FBI report is very interesting. I never knew about the existence of this "dark web" or Silk Road. Bitcoins on there can buy everything from drugs to weapons to contract killers.
Yes, the less shady activities fall under the label of 'agorism.' Crypto will, in the long run, make such exchanges impossible to prevent, absent absolutely tyrannical measures. Crime will have to be stopped at the point of action rather than point of purchase in the future.

As for drugs, buying them shouldn't be crime, there's no victim to their use, so Silk Road simply facilitates exchanges between willing partners. Otoh, while they're illegal I refuse to give my money to murderous cartels making life worse in other parts of the world, thus I don't buy illegal drugs either.

Bitcoin is also allowing a comeback in online gambling as well. Satoshidice made $500,000 in the last few months using the block-chain to run basically bitcoin roulette with near 50/50 odds. Lots of people trying the doubling-your-bet strategy :P
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Old 02-10-2013, 12:58 PM   #6
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Sounds shady as fuck.
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Old 02-10-2013, 01:36 PM   #7
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Sounds shady as fuck.
That's like saying .jpgs are "shady as fuck" because someone use them to take "shady/awful" pictures.

Tech is inherently morally neutral, it's in how you use it. Is a marker evil? No, it can be used for good or evil, like anything else. It can make great art, or horrid graffiti.
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Old 02-10-2013, 01:49 PM   #8
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.jpgs are just pics. They aren't illegal digital coins that devalue money and are used in the "underworld" to buy illegal things or murder people.
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Old 02-10-2013, 02:34 PM   #9
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This is all old news now and Bitcoins are dying and have been for around a year. Getting into it now is a waste of time and money. Silkroad was good for a while if you needed some obscure shit but now it's a honeypot. Anenome is getting in late on a high tech pyramid scheme.
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Old 02-10-2013, 02:38 PM   #10
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Where would you suggest to buy them from and where are they stored? These are not real coins they are just digital coins? Sorry at work now and can't study until later tonight, but colour me interested. It's worth a few quid gamble anyway.
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Old 02-10-2013, 03:52 PM   #11
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Bitcoin is like SecondLife. You thought it was going no where but those crazy euros kept it alive long enough to gain a footing.
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Old 02-10-2013, 05:37 PM   #12
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Its gay, and anyone that uses it takes big black cocks up the ass. Just sayin.
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Old 02-10-2013, 06:22 PM   #13
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Its gay, and anyone that uses it takes big black cocks up the ass. Just sayin.
Good thing I love black women instead.

@Anenome - How many bitcoins did you get?
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Old 02-10-2013, 08:30 PM   #14
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Where would you suggest to buy them from and where are they stored? These are not real coins they are just digital coins? Sorry at work now and can't study until later tonight, but colour me interested. It's worth a few quid gamble anyway.
People can "mine" for bitcoins. They use high-end GPU's to convert processing power into coins. And correct, these are not real coins.

The idea is that they are scarce, and are therefore valuable.
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Old 02-10-2013, 09:17 PM   #15
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This is all old news now and Bitcoins are dying and have been for around a year. Getting into it now is a waste of time and money. Silkroad was good for a while if you needed some obscure shit but now it's a honeypot. Anenome is getting in late on a high tech pyramid scheme.
Lol, how much do you know about economics? I claim some skill in the discipline.

That's fine though, just remember your words one day when 1 btc is $1,000 or more Deflation is a bitch. A rich bitch.
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Old 02-10-2013, 09:23 PM   #16
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Where would you suggest to buy them from
I'd suggest first timers buy from Coinbase.com. They are a new Y-combinator startup with a legit business-model and professional oversight, and also received $500k in investor funding recently. They're doing $1m a month in business right now selling coins, handling probably about 30% of all mined coins right now.

You hook them into your checking account and they do a bank transfer to pay for funds. Easy and secure. Takes about 5 days for a purchase to go through, since unfortunately bank transfers have a huge time-margin so they can detect and reverse fraudulent charges. After 5 days it's irreversible and you get your coins. But they buy them the instant you put your order in.

As an example, I bought 4 days ago at $21 and my purchase will complete tomorrow with bitcoin at $24. Not a bad 15% profit for a week, but I'll be holding.

If you want coins right now, you can use Bitinstant. Haven't tried them, but the process goes they have you print out a paper that you can take to a local market and have scanned for payment; they'll then email you coins by the time you get home.

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and where are they stored?
They're stored in a digital file called 'wallet.dat' which contains the public address and the private encryption keys that unlock the coins in that wallet and allow them to be spent.

Keeping the wallet secure is the main challenge. Last year a dude stored 25,000 bitcoins on his laptop in an unencrypted wallet and had them stolen, the price then was $20 per, so he lost $500,000! Ouch!

Blockchain.info is generally considered the best online wallet right now. But if you have a significant amount of money you should create a paper wallet, which is a written copy of your address and encrypted key and passwords and all that. And you should use a very good, and offline, password generator to maximize the randomness in such a wallet.

There's actually a few other ways to create wallets. There's offline generators that will make a new wallet at the push of a button. The address space for wallets is so large that there won't likely be a duped address in all of human history, 2^256 addresses possible.

There's also something called a brainwallet, where you can generate an address using a unique passphrase and that passphrase is used to generate both the address and the private keys, meaning that if you just remember the exact phrase you can always recover the wallet later by running it through SHA256 algorithm. Which means the bitcoins are literally stored in your memory!

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These are not real coins they are just digital coins?
Correct, there's no physical aspect to it. There are people trying to make literal tokens that double as wallets with the private key on the back covered by a scratch-off patch that people could buy at stores type of thing. Haven't seen them yet.

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Sorry at work now and can't study until later tonight, but colour me interested. It's worth a few quid gamble anyway.
Sure, sure. Enjoy
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Old 02-10-2013, 09:28 PM   #17
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Good thing I love black women instead.

@Anenome - How many bitcoins did you get?
I've got 20 right now. I bought at 19 and then again at 21. So, current price of $24, I'm up 80 bucks, or about 20%! fastest 20% I ever made in my life. Even my Google stock hasn't done that well, and it's done well since the new year.

Still, I think the price is rising too rapidly, that's unsustainable gains, so I'm saving some money in case the bubble pops again (the price spiked in '11 up to $33 then crashed down to $3! then steadily rose till now).

The first spike, all the original miners sold huge quantities, so many more people hold now and I don't expect a panic selloff like back then. I think any crash might bring the price down to about $16.

With this thing, either it's going to go big and people who get in early will be stupidly rewarded, or it will simply take longer. This idea of digital currency is not going away. The genie is out of the bottle. The pessimists among you will live to see things change I expect.
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Old 02-10-2013, 09:32 PM   #18
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This is all old news now and Bitcoins are dying and have been for around a year. Getting into it now is a waste of time and money. Silkroad was good for a while if you needed some obscure shit but now it's a honeypot. Anenome is getting in late on a high tech pyramid scheme.
Sounds like regular currency!
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Old 02-10-2013, 09:40 PM   #19
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The idea is that they are scarce, and are therefore valuable.
Scarcity is only one side of value. There also needs to be a use. In this case its value comes from its use as currency, which is almost a paradox. It's the cheapest and fastest way to exchange money in digital fashion. Thus, its value is primarily exchange value.

Because of that people are demanding it. There are already many companies and businesses that accept bitcoin. In fact, WordPress announced recently it would accept bitcoin.

The price changes because although bitcoin has fixed supply, its demand is not fixed. So supply and demand dictate it will continue to rise in price as demand improves.

With fiat currencies the government tries to keep the price the same or let it rise slowly. So if demand improves they soak up the rise in price there would have been by printing more dollars and thus adding supply.

But that actually robs everyone of the added value in their existing currency and gives it to the government to spend.

Just like gold, money would be naturally deflationary if not for government intervention. And deflation does not hurt an economy, we had deflation throughout the 19th century in america and that was a period of great development.
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Old 02-10-2013, 09:44 PM   #20
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This is all old news now and Bitcoins are dying and have been for around a year.
Explain what you mean by "bitcoin is dying" what metric are you using? It's up in price, way up in market capitalization, up in number of users, and ASICs are about to go online as well.

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Getting into it now is a waste of time and money.
How so? Are you saying the price is going to collapse for some reason? What reason?

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Silkroad was good for a while if you needed some obscure shit but now it's a honeypot.
I've never bought from SilkRoad and bitcoin doesn't need SilkRoad to survive and thrive.

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Anenome is getting in late on a high tech pyramid scheme.
In a pyramid scheme, the new money is used to pay the old money a %'age. That's not what's happening here.

Bitcoin is generating actual value through business transactions. Pyramid schemes don't have that.
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