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February 18 2019 10.20am

Bitcoins

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View BudgiesBeak's Profile BudgiesBeak Flag London 27 Dec 17 11.29pm Send a Private Message to BudgiesBeak Add BudgiesBeak as a friend

OK - so can someone please explain why bitcoin is worth ANYTHING? The only reason that bitcoin is worth money is because other people think it's worth money. As far as I'm concerned, it's as wise an investment as tulips in the 17th century and the South Sea company in the 18th century. Sure, some people will get rich out of bitcoin, but many more will get their fingers burnt in a pretty big way.

 

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View .TUX.'s Profile .TUX. Flag 28 Dec 17 6.20am Send a Private Message to .TUX. Add .TUX. as a friend

Originally posted by BudgiesBeak

OK - so can someone please explain why bitcoin is worth ANYTHING? The only reason that bitcoin is worth money is because other people think it's worth money.
Correct, making it no different to the fiat-currency (printed from thin-air) that your bank issues. Both rely on confidence.

As far as I'm concerned, it's as wise an investment as tulips in the 17th century and the South Sea company in the 18th century.
I wondered how long it would be before someone mentioned the mainstream comparison between Tulips and Bitcoin (ignore 'mainstream'). At it's peak, 1 Tulip bulb cost around 40 times the annual income of the average Dutch person so with Bitcoin currently worth around k.........it (as with many other crypto's) still has a very very long way to go.

Sure, some people will get rich out of bitcoin, but many more will get their fingers burnt in a pretty big way.
Crypto's exist due to the Central Banking system that has been forced upon us all. A system designed purely to continually rob us all. Open your eyes.

Millions upon millions more will get on board this year. Be one of them.


Edited by .TUX. (28 Dec 2017 6.21am)

 


Buy Litecoin.

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View Lyons550's Profile Lyons550 Flag Shirley 28 Dec 17 10.14am Send a Private Message to Lyons550 Add Lyons550 as a friend

Originally posted by BudgiesBeak

OK - so can someone please explain why bitcoin is worth ANYTHING? The only reason that bitcoin is worth money is because other people think it's worth money. As far as I'm concerned, it's as wise an investment as tulips in the 17th century and the South Sea company in the 18th century. Sure, some people will get rich out of bitcoin, but many more will get their fingers burnt in a pretty big way.

Isnt that the same with other currencies and commodities such as Gold? i.e. that its only worth what people are willing to value it at.

 


The Voice of Reason In An Otherwise Mediocre World

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View Badger11's Profile Badger11 Flag Beckenham 28 Dec 17 10.57am Send a Private Message to Badger11 Add Badger11 as a friend

Originally posted by Lyons550

Isnt that the same with other currencies and commodities such as Gold? i.e. that its only worth what people are willing to value it at.

Correct. Currency does not have an intrinsic value but it is backed by the economy of that currency. Strong economy strong currency. Central banks have a vital role in defending their currency through interest rates and other economic measures. The other strength of a currency is its convertible to other currencies.

Who will defend Bitcoins? If there is a run on Bitcoins how quickly could you sell up into GBP? I have no idea if Bitcoins will become a "proper" currency but until it does it is a gamble not an investment.

 


One more point

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ZIGnZAG Flag Stoke 28 Dec 17 11.38am

Had a quick look into all these "virtual currencies" the other day and it all seems a bit complicated (or maybe I'm just thick!)
It seems to be well known, and an almost accepted fact that people will try and steal your pot of gold. So there is a lot of information on protecting it, by paper wallets you can create yourself, or even by purchasing special devices to store it on.
Not sure if that's a bit of a con to spend more money on another device.
Or... just making you worry more about some virtual currency than your actual bank account information your passing over to receive it.
There a so many different sites, or possible things to invest/purchase, how do you know your not just willingly sending your bank details to the wrong person?

 

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View chris123's Profile chris123 Online Flag hove actually 28 Dec 17 11.48am Send a Private Message to chris123 Add chris123 as a friend

Originally posted by ZIGnZAG

Had a quick look into all these "virtual currencies" the other day and it all seems a bit complicated (or maybe I'm just thick!)
It seems to be well known, and an almost accepted fact that people will try and steal your pot of gold. So there is a lot of information on protecting it, by paper wallets you can create yourself, or even by purchasing special devices to store it on.
Not sure if that's a bit of a con to spend more money on another device.
Or... just making you worry more about some virtual currency than your actual bank account information your passing over to receive it.
There a so many different sites, or possible things to invest/purchase, how do you know your not just willingly sending your bank details to the wrong person?

Never invest in something you don't understand - and I don't understand why a bitcoin isn't worth zero as it is backed by zero, has no intrinsic value and as the guy on Bloomberg said you can't buy a McDonalds coffee with a bitcoin.

 

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View Ketteridge's Profile Ketteridge Flag Brighton 28 Dec 17 12.25pm Send a Private Message to Ketteridge Add Ketteridge as a friend

Originally posted by Ray in Houston

Answers - as best as I can give - are as follows:


Q: Am I right in saying there are no products or assets you can exclusively buy with bitcoin. I get there are some products that it is easier to buy with bitcoin but you can still buy these in pounds or dollars.

A: Correct. Bitcoin is a currency like any other currency, except that the value of it is guaranteed by the block chain process that ensures the record-keeping of who (anonymously) owns what. Just like a fiver is proof that you own five quid, block chain allows you to prove that you own 0.0004411 Bitcoin (at current exchange rates).


Q: This is important because the value of bitcoin and assets purchased in bitcoin must still by tied to the value of goods in the traditional currencies.

A: Bitcoin has a floating value vs. other currencies just like other currencies have against each other. So when you convert Pounds to Euros to go on your hols, you get the current rate of exchange just the same as if you were converting Bitcoin to Euros.


Q: I'm assuming as the price of a bitcoin has risen the purchasing power of a bit coin has fallen. If in 2010 one bitcoin is worth one dollar and the price of my kilo of coke is ,000 then you need 50,000 bitcoins. If by 2017 bit coins are worth a £1,000 each then then my coke is still worth ,000 but now should be worth only 5,000 bitcoins.

Again this to me is important, it is essentially an alternative investment rather than a currency, if I have 100k to spare I might want to invest in bitcoin so I can buy a 200k house if my bitcoin rise in value. However my decision to buy bitcoins is as an investment rather than as the only place I could do the trade in dollars but as I hop to get more for my hard earned if I use bitcoin.

A: Yes, you can buy Bitcoin as an investment, just like people buy currencies as an investment. And, just like currencies, or stocks or bonds, the value can fall as well as rise. As we have seen. Treat Bitcoin like Pounds, Euros, Yen, Rubles etc. etc. Invest as you deem appropriate for your risk appetites.


Q: OK so i get those that want to sell illegal goods and services will want to trade in bitcoins but as bitcoin grow further surely this will be legislated against even more thoroughly. The illegal activity will become a stick to beat bitcoin with and what illegal trade bitcoin facilitates will move on.

What do people use now to purchase illegal goods? Cash! Bitcoin is another form of currency, so it's not a flaw of Bitcoin that criminals use it to settle up after doing bad deeds.


Q: It is the technology that makes it interesting, and that will move on. Already there are other crypto currencies and it won't be long before the technology becomes main stream. Bitcoin technology will be use in the future, if I had a spare few quid it might be worth a punt, but not sure I would to put my pension pot in bitcoin specifically.

A: Exactly! If you want to engage in trade where secure payments are required and you have high enough volume that the bank charges will kill your margins, then Bitcoin is a great tool. If you want to invest in it, that's great too - but it's just like any other investment, so caveat emptor!

Just remember, think of Bitcoin as being like any currency, because that's all it is. The only difference being that it exists without the need for a central bank to guarantee the underlying value because the proof of your funds isn't a piece of paper redeemable at a bank, it's in a block chain that's constantly verified ("mined" on the web so that no one can access your stash without your authorization.

Thanks Ray
I do think it is a bit spurious to batter Bitcoin with illegal activity as you are right cash has always been used for illegal activity so the problem is not specific to Bitcoin. However Bitcoin does allow for large anonymous transaction electronically something you cannot do as easily with cash which it makes it easy to legislate against . I donít know the extent that Bitcoin is used for legal activity and if this is disproportionate to traditional currencies, but Bitcoin will have this hanging over it.
My concerns for it as an investment is that if Bitcoin is for investment only then this will slow the development in growth of Bitcoin as a currency. Will people hold on to their Bitcoins to see them grow in value rather than spending them then. That in itself is not a problem but Bitcoin then becomes an alternative to buying gold and the tech behind it becomes superfluous.
Alright Iím drawing extreme conclusion here for the sake of it , I would assume the vast majority trades are carried out legitimately on bitcoin but realistically there is nothing to stop the Bank of England or others using block chain tech. In a free and open market place banks that use the tech to reduce the cost of trade will benefit while those that donít adapt will fail.
I donít get why bitcoin is worth investing, other than for short term gain, as the currency can be separated from the tech which is replicable.
Actually got 'Crypto Currencies the future of money' by Vigara and Casey for christmas so hopefully will be able to answer my own question soon.

 


One supporter of hacking argued that without it "you will do away with the courage and pluck of the game, and I will be bound to bring over a lot of Frenchmen who would beat you with a week's practice -Blackheath secretary at first meeting of the F.A

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View Ray in Houston's Profile Ray in Houston Flag Houston 28 Dec 17 3.24pm Send a Private Message to Ray in Houston Add Ray in Houston as a friend

Originally posted by Ketteridge

Thanks Ray
I do think it is a bit spurious to batter Bitcoin with illegal activity as you are right cash has always been used for illegal activity so the problem is not specific to Bitcoin. However Bitcoin does allow for large anonymous transaction electronically something you cannot do as easily with cash which it makes it easy to legislate against . I donít know the extent that Bitcoin is used for legal activity and if this is disproportionate to traditional currencies, but Bitcoin will have this hanging over it.
My concerns for it as an investment is that if Bitcoin is for investment only then this will slow the development in growth of Bitcoin as a currency. Will people hold on to their Bitcoins to see them grow in value rather than spending them then. That in itself is not a problem but Bitcoin then becomes an alternative to buying gold and the tech behind it becomes superfluous.
Alright Iím drawing extreme conclusion here for the sake of it , I would assume the vast majority trades are carried out legitimately on bitcoin but realistically there is nothing to stop the Bank of England or others using block chain tech. In a free and open market place banks that use the tech to reduce the cost of trade will benefit while those that donít adapt will fail.
I donít get why bitcoin is worth investing, other than for short term gain, as the currency can be separated from the tech which is replicable.
Actually got 'Crypto Currencies the future of money' by Vigara and Casey for christmas so hopefully will be able to answer my own question soon.


I totally understand - and I share - your concerns about the underlying value of Bitcoin (which is why I don't own any...yet). But if you put that aside (difficult, I know) and just think of Bitcoin as a way of recording who owns what, then it becomes just like any other currency.

For example, countries used to issue currency based on the value of its gold reserves - the gold standard - so that the piece of paper (cloth, actually) that you have was actually an IOU for that much gold from the central bank's reserve. That was abandoned years ago and, now, countries issue currency on the basis that "they're good for it". So how does this differ from Bitcoin?

One notable difference is that Bitcoin has a limited supply: 21 million pieces. There will never be any more, so the worth of each coin will increase once that 21 million is entirely in circulation. Conversely, the Bank of England could mint a few hundred million more pound coins, devaluing what you've got in your wallet and bank in the process.

Lastly, the Bitcoin ledger is maintained in multiple locations on the web and verified constantly by the miners who independently verify Bitcoin changing hands and then validate that with other miners so as to render Bitcoin fraud as impossible. Time will tell on that front, but 2008 taught us all that a bank can go bust and take your money with it which is something not possible with Bitcoin's system that bypasses banks and central governments who can devalue or destroy the value of your money.

Of course, if the North Koreans take down the internet, then your Bitcoin is f***ed along with your actual coin!

Edited by Ray in Houston (28 Dec 2017 3.34pm)

 


We don't do possession; we do defense and attack. Everything else is just wa**ing with a football.

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View Ray in Houston's Profile Ray in Houston Flag Houston 28 Dec 17 3.30pm Send a Private Message to Ray in Houston Add Ray in Houston as a friend

Originally posted by ZIGnZAG

Had a quick look into all these "virtual currencies" the other day and it all seems a bit complicated (or maybe I'm just thick!)
It seems to be well known, and an almost accepted fact that people will try and steal your pot of gold. So there is a lot of information on protecting it, by paper wallets you can create yourself, or even by purchasing special devices to store it on.
Not sure if that's a bit of a con to spend more money on another device.
Or... just making you worry more about some virtual currency than your actual bank account information your passing over to receive it.
There a so many different sites, or possible things to invest/purchase, how do you know your not just willingly sending your bank details to the wrong person?


All valid concerns, all of which apply to any other investment opportunity. Just look at the number of supposedly smart people (or, at least, people who should have known better) who lost all their money in Bernie Madoff's schemes.

Meanwhile:

- If you put your money in a bank, that bank could go under or someone could hack that bank and steal your money.

- If you invest in stocks, bonds, currencies or horses, you can lose your shirt if those investments go south.

- If you keep your money in cash under the mattress, someone could steal it or it could catch fire. Failing that, it's still devaluing every moment it's lying dormant.


Bitcoin is money, plain and simple.

 


We don't do possession; we do defense and attack. Everything else is just wa**ing with a football.

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View Ray in Houston's Profile Ray in Houston Flag Houston 28 Dec 17 3.32pm Send a Private Message to Ray in Houston Add Ray in Houston as a friend

Originally posted by chris123

Never invest in something you don't understand - and I don't understand why a bitcoin isn't worth zero as it is backed by zero, has no intrinsic value and as the guy on Bloomberg said you can't buy a McDonalds coffee with a bitcoin.

You can buy a McDonald's coffee with a debit card linked to your Bitcoin account. Is that very different from how most people buy a coffee now?

 


We don't do possession; we do defense and attack. Everything else is just wa**ing with a football.

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View chris123's Profile chris123 Online Flag hove actually 28 Dec 17 3.40pm Send a Private Message to chris123 Add chris123 as a friend

Originally posted by Ray in Houston

You can buy a McDonald's coffee with a debit card linked to your Bitcoin account. Is that very different from how most people buy a coffee now?

I was quoting Ira Epstein on Bloomers earlier today.

 

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View Ray in Houston's Profile Ray in Houston Flag Houston 28 Dec 17 4.17pm Send a Private Message to Ray in Houston Add Ray in Houston as a friend

Originally posted by chris123

I was quoting Ira Epstein on Bloomers earlier today.


Understood, and I get the point. Bitcoin isn't an actual coin that you can jangle in your pocket and toss across the counter at McD's.

But then actual coin is just chunks of metal that have less value than what's stamped on the face. It's just a way of recording the exchange of funds. Meanwhile, a swipe of your debit card is just one computer confirming the exchange of a sum of money to another computer in exchange for real-world goods...which is exactly like Bitcoin.

Just trying to make the mysterious world of Bitcoin a little less mysterious.

 


We don't do possession; we do defense and attack. Everything else is just wa**ing with a football.

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