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The Bitcoin thread

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Here she is! This is the thread about everything Bitcoin! 

 

Introduction to Bitcoin

 

Forget most things you've heard.  People discover Bitcoin in a variety of ways, but usually pick up some sort of misconception like "Bitcoin gives free money to people with computers" or "in order to use Bitcoin I have to use a program that wastes electricity for nothing" along the way.  Here is a good summary to help you understand Bitcoin in general, by focusing on what Bitcoin is and what problem it solves.  These two things are not typically well explained on most websites, and it is difficult to appreciate just how effective a technology Bitcoin is until they are understood.

 

What Bitcoin is:  An agreement amongst a community of people to use 21 million secure mathematical tokens--"bitcoins"--as money, like traditional African and Asian societies used the money cowry.  Unlike the money cowry:

  • there will never be more bitcoins
  • they are impossible to counterfeit
  • they can be divided into as small of pieces as you want and they can be transferred instantly across great distances via a digital connection such as the internet.

This is accomplished by the use of powerful cryptography many times stronger than that used by banks.  Instead of simply being "sent" coins have to be cryptographically signed over from one entity to another, essentially putting a lock and key on each token so that bitcoins can be securely backed up in multiple places, and so that copying doesn't increase the amount you owe.

 

Because bitcoins are given their value by the community, they don't need to be accepted by anyone else or backed by any authority to succeed.  They are like a local currency except much, much more effective and local to the whole world.  As an example of how effective the community is at "backing" the bitcoin: on April 4th 2011 30,000 bitcoins were abruptly sold on the largest Bitcoin exchange, consuming nearly all "buy" offers on the order book and dropping the price by nearly 1/3.  But within a couple of days, the price on the exchange had fully rebounded and bitcoins were again trading at good volumes, with large "buy" offers slowly replacing the ones consumed by the trades.  The ability of such a small economy (there were only 5 million out of the total 21 million bitcoins circulating then, or about 3.75 million USD worth at then-current exchange rates) to absorb such a large sell-off without crashing shows that bitcoins were already working beautifully.

 

What problem Bitcoin solves:  Mathematically, the specific implementation of the bitcoin protocol solves the problem of "how to do all of the above without trusting anyone".  If that sounds amazing, it should!  Normally a local currency has to trust all kinds of people for it to be able to work.  So does a national currency.  And in both cases, that trust is often abused.  But with Bitcoin, there's no one person who can abuse the system.  Nobody can print more money, nobody can re-use the coins simply by making a copy, and nobody can use anyone else's coins without having direct access to their keys.  People who break its mathematical "rules" simply end up creating a whole different system incompatible with the first.  As long as these rules are followed by someone, the only way Bitcoin can fail is for everyone to stop using it.

 

This marvelous quality of not having to trust anyone is achieved in two ways.  First, through the use of cutting-edge cryptography.  Cryptography ensures that only the owner of the bitcoins has the authority to spend them.  The cryptography used in Bitcoin is so strong that all the world's online banking would be compromised before Bitcoin would be, and it can even be upgraded if that were to start to happen.  It's like if each banknote in your pocket had a 100-digit combination lock on it that couldn't be removed without destroying the bill itself.  Bitcoin is that secure.

 

But the second way of securing the system, called the blockchain, is where the real magic happens.  The blockchain is a single, authoritative record of confirmed transactions which is stored on the peer to peer Bitcoin network.  Even with top-notch digital encryption, if there was no central registry to show that certain bitcoins had already been "paid" to someone else, you could sign over the same coins to multiple people in what's called a double-spend attack, like writing cheques for more money than you have in your account. Normally this is prevented by a central authority, the bank, who keeps track of all the cheques you write and makes sure they don't exceed the amount of money you have.  Even so, most people won't accept a cheque from you unless they really trust you, and the bank has to spend a lot of money physically protecting those central records, whether they are kept in a physical or digital form.  Not to mention, sometimes a bank employee can abuse their position of trust.  And, in traditional banking, the bank itself doesn't have to follow the rules you do--it can lend out more money than it actually has.

 

The blockchain fixes all these problems by creating a single master registry of the already-cryptographically-secured bitcoin transfers, verifying them and locking them down in a highly competitive market called mining.  In return for this critical role, the Bitcoin community rewards miners with a set amount of bitcoins per block, taken from the original limited quantity on a pre-agreed schedule.  As that original amount gradually runs out, this reward will be replaced by fees paid to prioritise one transaction over another--again in a highly competitive market to ensure the lowest possible cost.  The transactions are verified and locked in by the computational work of mining in a very special way so that no one else can change the official record of transactions without doing more computational work than the cumulative work of all miners across the whole network.

 

In conclusion:  All this mathematical technology may be a bit of a mouthful, but what it means in practice is that Bitcoin works just like cash.  Bitcoin transactions are intentionally irreversible--unlike credit cards or PayPal where chargebacks can invalidate a payment that has already been made.  And there are no middlemen.  Transactions are completed directly between the sender and the receiver via the peer to peer network.

 

Because of Bitcoin's intricate design, the network remains secure no matter where or how you process Bitcoin transactions.  Which is incredible--no one else has ever tried to create a system that worked this way!  All previous monetary systems have relied on trusting somebody, whether it was the king, town hall, the federal reserve, or banks.  Bitcoin doesn't.  It's guaranteed instead by the laws of mathematics, and that's why it has everyone from technologists to economists very excited.  

 

I'm sure you have lots more questions, so lets use this thread for that.

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I have not considered it as an investment just yet, let me rephrase that; I have been buying bitcoin little by little since 2014 just in case we have a doomsday scenario in South Africa and I need to get out of this country quick. Looking at our current political climate and the downgrade in December I am certainly glad I took this decision 2 years ago.

 

I use Bitx.co to buy my bitcoins it is a South African company partly owned by Naspers I think in case anyone is wondering how to get some bitcoins.

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Okay. Thanks. Curious question, did the value of your bitcoins grow over the 2 years?

 

Another question,with all the security that bitcoin have, how have you provided in your will what will happen with your bitcoins when you pass away?

 

Sent from my SM-A700F using Tapatalk

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Okay. Thanks. Curious question, did the value of your bitcoins grow over the 2 years?

 

Another question,with all the security that bitcoin have, how have you provided in your will what will happen with your bitcoins when you pass away?

 

Sent from my SM-A700F using Tapatalk

 

When I first bought my bitcoins it was R6 300 per bitcoin, 2015 has been a heavenly year since I was able to pick up a lot of bitcoins between R2 600 and R3 900 a bit coin is worth right now R8 875, just last week it was over R9 000 when our ZAR was out of whack. Since I earn in ZAR I now try to buy bitcoin when it goes below R7 000 because my intend is to have a lot of bitcoin and then go aboard since if our currency tank then my bitcoins will not save me in this country due to the currency being worth none, but 10 bitcoins should in my mind be worth more in value overseas than what it would be worth here I think.  

 

As for my will.... Never thought of that, I don't even have one, something I should probably give some thought sometime.

 

2016-09-24_21-22-40.png.b0b04fe25c5fe0481351f388b3159f0b.png

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Wow, it grew alot... might be worth while as an additional 'type' of long term investment.

 

We do a lot of estate planning at work, and I'm always curious how stuff is handled in the will - was the only reason for my question. :)

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Come to think of it that might be a good thread to start, Your Will and Testament, concidering if anyone is like me, this thought has not cross my mind until just now I guess I am still at that age where I feel indestructible, but I will now need to think about this not so much who gets it, but more how does a will work in this modern society where everything is password protected.

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Wow, I did not actually know bitcoin is this integrated. I will definitely be looking into this as another form of keeping my money, it appears quite volatile in the short term?

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Been getting comfortable with bitx slowly. Playing with a few rands on the exchange and all the rest. I just absolutely hate how long it takes for an EFT to reflect. Wanted to buy when it was around R8500 but by the time my money came throng it was at around R8900 again. Not looked at it since due to time.

 

Served by a Droid

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Been getting comfortable with bitx slowly. Playing with a few rands on the exchange and all the rest. I just absolutely hate how long it takes for an EFT to reflect. Wanted to buy when it was around R8500 but by the time my money came throng it was at around R8900 again. Not looked at it since due to time.

 

Served by a Droid

 

Do they only accept EFT ?

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Yesterday I made a few rands on Bitcoin. I saw (only a bit late) that the value of Bitcoin have a steady climb... I bought R500 worth of Bitcoin through the BitX platform.

 

About 4 hours I saw its coming down again, I then sold it quickly. I got R579 out again. So for that few hours, I made R79 which is not to bad. About 14%.

 

So if one have the right timing, then you can make a few bucks with bitcoin.

 

So it helps if the USA make news and negativly influence the value of SA Rand. ;)

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I will be buying some more if the price reaches R9000 ever again.

 

Right now I am buying Ethereum, not a lot, but enough in order for it to be worth something if it gets the same traction.

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https://techcrunch.com/2016/12/28/the-price-of-bitcoin-is-creeping-back-toward-its-3-year-high-of-1000

 

This time it’s soaring. Bitcoin is up about 30% over the last month, and about 50% over the last 3 months. The current price is hovering right around $950. The last time it traded this close to $1,000 was in January 2014 when the price hit $1,023 – right before the giant Mt. Gox-related crash.

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The knee-jerk approach of governments around the world towards Bitcoin and Blockchain leave room for a lot of questions. The actions of the regulatory agencies as it concerns this disruptive technology shows an element of panic and confusion.

 

Just recently, the governor of the Central Bank of the UAE reversed an earlier statement by the government which contained “all virtual currencies and transactions thereof are prohibited.”

 

There is no ban on Bitcoin

 

In a statement to Gulf News clarifying the regulation, Mubarak Rashid Khamis Al Mansouri, Governor of the Central Bank, said:

 

 

“These regulations do not cover ‘virtual currency’, which is defined as any type of digital unit used as a medium of exchange, a unit of account or a form of stored value. In this context, these regulations do not apply to Bitcoin or other cryptocurrencies, currency exchanges or underlying technology such as Blockchain.”

 

 

The UAE is not an isolated situation because we have seen similar developments in Nigeria, where the Central Bank, after advising the public against investing in digital currencies returned a few days later with a circular requesting banks to produce nominees into a committee that will produce the policies and guidelines that will guide Blockchain regulation in Nigeria.

 

A number of reasons have been identified for the perceived ‘back and forth’ behavior of government towards Bitcoin and Blockchain.

 

Bitcoin price will skyrocket

 

Michael Vogel, CEO of Netcoins sees the inadequate understanding of Bitcoin by the lawmakers as one of the major reasons for the sporadic reversals in government position on Bitcoin.

 

 

“If all cryptocurrenies are banned, then does that mean that businesses wouldn't be allowed to use Blockchain-based ledgers and databases?” asks Vogel. “What about smart contracts or digital assets tied to the Bitcoin Blockchain?”

 

 

Perhaps from the government’s perspective, it is easier to ban than regulate or perhaps they realize after the fact that a ban would be difficult or impossible to enforce.

 

Vogel points out that regulation or lack thereof continues to be a delicate matter and a strain for those looking to use Bitcoin legitimately. He says that in some ways, a wait-and-see approach to regulation is good because over-regulation can stifle innovation. However, a lack of legal clarity can also make it difficult for Bitcoin businesses to operate.

 

Vogel concludes:

 

 

“There have been predictions about Bitcoin actually becoming a government world reserve currency by 2020. This would skyrocket Bitcoin price, although by 2020 who knows how high the price will already be.”

 

 

The government is afraid

 

Simon Dixon, CEO of BnkToTheFuture.com describes the actions of government as a ‘dilemma.’

 

Dixon says that the initial reaction of governments usually reveals some level of emotional response in the form of fear and panic. Therefore, their initial reaction is most often knee-jerk.

 

He also explains that what usually follows is that these governments then dig deeper only to realize that their banks want to explore Blockchain technology- a code word for Bitcoin. Then their central banks realize that digital currency can help them rage war on cash. In the end, they flip-flop their announcements realizing that Bitcoin may be something they have to put up with to achieve their goals of creating a worse version of Bitcoin and supporting their banks with their 'Blockchain' buzz-word.

 

However, Dixon notes that this development is not new in the ecosystem as it has been a pattern across the globe.

 

He says:

 

 

“It is a fun game to watch. It happened first in the US, followed by China and now it is the turn of Africa and the Middle-East.”

 

Source: https://cointelegraph.com/news/bitcoin-price-will-skyrocket-if-it-becomes-worlds-reserve-currency-by-2020

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After falling $100 on Tuesday morning, bitcoin’s price continued its decline on Wednesday. The price, which peaked at $1,285 on Monday according to the exchange Bitstamp, dropped 1.5 percent the next morning. Within thirty minutes of this decrease, the digital currency had fallen to $1,160. The price then climbed to $1,229 before taking another downturn.

 

Related: Don’t Miss the Fine Print on that Bitcoin ETF

 

There are numerous dynamics at play in the bitcoin market. The People’s Bank of China (PBOC) recently stated that the digital currency needs to be strictly regulated. Exchanges there announced last month that they would cease withdrawals until March, only to extend the wait further.

 

In the past year, according to Google Trends data, search interest for the term ‘buy bitcoin’ has steadily increased. In early February, it began a steep climb indicative of a future increase in buying interest.

 

buybitcoingoogletrends-640x207.png.ad30ad44064c8c40d252749899c688f4.png

 

The forthcoming SEC announcement about whether or not a Bitcoin ETF would be allowed could have also played a role in recent price movements. Some have suggested that the declines resulted from insider trading and speculators betting that the Bitcoin ETF would not be approved.

 

According to people “familiar with the matter”, and anonymous source Bitcoin.com has been in contact with, the ETF decision could come as early as Friday, and perhaps even earlier. Others say the decision might arrive on Monday.

 

The hedge fund Global Advisors Bitcoin Investment Fund (GABI), in a letter to subscribers, noted this week that it believes there is only a 25% chance the ETF will be approved.

 

Despite the recent lull in price and uncertainty over the Bitcoin ETF, many analysts remain optimistic about the future of the price of bitcoin.

 

Increased regulation from Chinese authorities, demonetization in India, recently passed legislation in Japan, as well as the general decline of the value of fiat currency, are all seen as impetuses to bitcoin’s price rise. Analysts share a wide range of future price predictions.

 

 

“I think you’ll see rapid growth in adoption”

 

“In terms of price this year, I think [bitcoin] will go up to $3,000. As it becomes more pervasive and more generally accepted, I think you’ll see rapid growth in adoption”, Adam Davies, a consultant at Altus Consulting, told CNBC in an interview on Tuesday. “People are unsure about what is going on in the world, and digital currencies unlike the U.K. pound sterling have been hit badly because of Brexit, so people are looking to divest into bitcoin. There is a definitely upward trend. So the drivers will be hedging against currency fluctuations and insecurity in the markets”.

 

Clif High, an analyst who some have called a modern-day Nostradamus, predicted that the recent price decrease is no more than a minute lull. “Bitcoin is gonna be $13,008 by February of next year”, predicts Mr. High. “Bitcoin is simply escalating. And bitcoin doesn’t explode [in price] until 2019”.

 

In a study of the effects of Bitcoin halvings on the bitcoin price, Bitcoin.com found that it would not be unreasonable to anticipate a more-than-$10,000 price per bitcoin in the period of time following the 2016 ‘Bitcoin halving’, in which Bitcoin miner rewards were reduced by one-half.

 

Bitcoin’s price increased 120 percent in 2016, making it the best performing currency the second year in a row. If last year is any indication, bitcoin’s price could reach $2,200 by the end of 2017.

 

What do you attribute the recent bitcoin’s price action to?

 

source: https://news.bitcoin.com/bitcoin-price-consolidates-on-etf-news/

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Those SEC dinosaurs are holding on tight to their paper currency, they don't want bitcoin to list that ETF and shine. I was hoping they'd allow it and i could join the bitcoin revolution through the ETF because i'm still trying to learn how to mine and everything . (GREAT THREAD)

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Those SEC dinosaurs are holding on tight to their paper currency, they don't want bitcoin to list that ETF and shine. I was hoping they'd allow it and i could join the bitcoin revolution through the ETF because i'm still trying to learn how to mine and everything . (GREAT THREAD)

 

Hey Groovy, don't mine it. You will not make money those days are long gone. Open up an Account with Luno.com (South African Company), eft money to the account and then buy/trade bitcoin. You can also look at bitfinex.com if you want a more professional trading platform for a wider range of crypto currencies. 

 

The average home miner will struggle to be profitable or recoup the cost of mining hardware and electricity.

 

Profitability is highly unlikely given the current circumstances. The situation may improve in future once ASIC mining hardware innovation reaches the point of diminishing returns. That, coupled with cheap, hopefully sustainable power solutions may once again make Bitcoin mining profitable to small individual miners around the world.

 

This would also greatly improve the decentralisation of the Bitcoin network, hardening it against legislative risk.

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