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Bitcoin 101

Agavegirl1

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I really didn't understand it although I have to account for it on tax returns so I thought this might help others besides me. Most of my clients invest in bitcoin through Robin Hood investments (the few that do at all). Article linked below.

Why Does Bitcoin Have Value? – AIER
 
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Densus

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I think there is only 21 million Bitcoins that will ever be in existence.
 
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<SLV>

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Why does a Bitcoin have value?
 

Agavegirl1

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"The value of money traces backward in time to its value as a bartered commodity. Mises said that this is the only way money can have value.
The theory of the value of money as such can trace back the objective exchange value of money only to that point where it ceases to be the value of money and becomes merely the value of a commodity…. If in this way we continually go farther and farther back we must eventually arrive at a point where we no longer find any component in the objective exchange value of money that arises from valuations based on the function of money as a common medium of exchange; where the value of money is nothing other than the value of an object that is useful in some other way than as money…. Before it was usual to acquire goods in the market, not for personal consumption, but simply in order to exchange them again for the goods that were really wanted, each individual commodity was only accredited with that value given by the subjective valuations based on its direct utility." From the article.​
 

gnome

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At present, bitcoin really doesn't do much as a medium of exchange - not a lot of people buying and selling goods or services with bitcoin.
The amount of energy required to perform transactions is...a lot. 1% of world's electricity supply already goes to bitcoin and that's with most of it just being passively stashed. If bitcoin were actually used for daily transactions, the energy usage would be monumental.

As a store of value, well, it's a matter of perception, isn't it?
Bulls see it going to $100k or higher - but that's speculation.
It can't be diluted by any person or organization, so it's a hedge on inflation.
And I think the portability and security of bitcoin has value.

I'm not sold on it.
 

solarion

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If bitcoin were actually used for daily transactions, the energy usage would be monumental.
Bitcoin miners are processing transactions while mining new blocks, so not sure where you get the bit about energy usage going monumental.

True though that it's a deflationary currency, so people are naturally hesitant to use it as a currency...particularly while it's appreciating rapidly relative to fiat crap.
 

GOLDBRIX

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Bitcoin miners are processing transactions while mining new blocks, so not sure where you get the bit about energy usage going monumental.
I understand that Bitcoin halves the production every so often to where the last Bitcoin will be mined in 2143. ( I might be of on that projection.
Pretty sure a mining operation does not run on one 110v outlet:
1607034669748.png

Here is Max talking about the Turks and Gold. 2nd half Guest is a fiduciary does not understand Bitcoin:
 
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GOLDBRIX

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Bitcoin miners are processing transactions while mining new blocks, so not sure where you get the bit about energy usage going monumental.
"...The bitcoin mining process rewards miners with a chunk of bitcoin upon successful verification of a block. This process adapts over time. When bitcoin first launched, the reward was 50 bitcoin. In 2012, it halved to 25 bitcoin. In 2016, it halved again to 12.5 bitcoin. On May 11 2020, the reward halved again to 6.25 bitcoin. "...
1607035658697.png


More Here: https://www.investopedia.com/tech/w... the final bitcoin,until around the year 2140.
 

solarion

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I'm unclear what your posts have to do with what I said. Did you intend to quote me twice? While miners are indeed mining to find a nonce(a number used only once) to "win" as a reward a bitcoin block, it doesn't change the fact that they're responsible for processing bitcoin transactions. The blocks of new bitcoin are simply their reward for maintaining the network.

It's a fundamental misunderstanding of the technology to expect power consumption to rise dramatically merely due to increased transactions on the blockchain. One can monitor that traffic in real time with any number of tools.
 

chieftain

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It's a fundamental misunderstanding of the technology to expect power consumption to rise dramatically merely due to increased transactions on the blockchain. One can monitor that traffic in real time with any number of tools.

Correct. The power consumption comes from the fact that so many people are engaged in "mining". I've recently sold a dozen Nvidia RTX 3080's for the sole purpose of mining. That's 3.6kW right there if they're being run flat knacker.
 

Mujahideen

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I'm not sold on it.

I’m not sold on it either. I will never buy it unless I intend on laundering money.

To me, that seems like the only place where it has a significant advantage; you can make it very difficult or impossible to be traced with it if you move correctly.
 

solarion

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Correct. The power consumption comes from the fact that so many people are engaged in "mining". I've recently sold a dozen Nvidia RTX 3080's for the sole purpose of mining. That's 3.6kW right there if they're being run flat knacker.
Graphics cards? That sounds very inefficient. The network moved to almost exclusively custom chips(ASICs) years ago. The point I was trying to make however, is that the mining aspect is secondary to the processing of transactions, and exists to incentive the growth of the network.
 

solarion

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I will never buy it unless I intend on laundering money.
Money laundering? lol Is that a synonym for keeping it from being stolen by the goobermint? Bitcorn is currently $19.5k ish, so there's significant risk currently given the huge recent run up vs the USD. If say you could obtain BTC at a few hundred bucks each, would you still be fundamentally opposed?

I find bitcoin, and cryptos in general fascinating, in that they help protect financial freedom. Much like physical PMs do. I don't see a bunch of people here complaining about people "laundering money" via gold purchases for instance.
 

Mujahideen

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lol Is that a synonym for keeping it from being stolen by the goobermint?

Yes, it is 100% a synonym for keeping it from being stolen by the government. I didn’t mean for it to sound so shady when the government is the one that is the thief here.

Again, for most other transactions, my cash back credit cards or my cash back debit card works just fine.

Maybe I could send money to someone cheaper with bitcoin than say a WesternUnion, I haven’t looked that up.
 

solarion

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Sure credit cards work great. I regularly fund one with bitcoin for every day transactions, but it's a rechargeable debit and the portion that's bankster credit is kept to a bare minimum. The balance is stored as crypto.

Nobody is saying bankster credit isn't convenient, the trouble is it's about as stable as quicksand.
 

spinalcracker

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Sure credit cards work great. I regularly fund one with bitcoin for every day transactions, but it's a rechargeable debit and the portion that's bankster credit is kept to a bare minimum. The balance is stored as crypto.

Nobody is saying bankster credit isn't convenient, the trouble is it's about as stable as quicksand.

same here , I convert small amounts of BC to cash , the transaction usually takes less than 24 hours for the cash to show up in my banks checking account , and pay my monthly bills

i am sure more people would buy Bitcoin if it was between $500-1000 today , in retrospect

of course the same thing can be said about silver and gold , I sure as hell wish I would have bought more when gold was under $300 and silver was under $5





On Jan. 3, 2009, the blockchain was launched when the first block, called the genesis block, was mined. The first test transaction took place about one week later.

"For the first few months of its existence, it was obtainable only by miners validating the Bitcoin blockchain," Chawla says.

At this point, Bitcoin had no real monetary value, says Mark Grabowski, an associate professor at Adelphi University who teaches a course on Bitcoin and author of "Cryptocurrencies: A Primer on Digital Money." Miners – computers that solve complex math problems to uncover new bitcoins and verify previous bitcoin transactions are legitimate and accurate – would trade Bitcoin back and forth just for fun.

It would take more than a year for the first economic transaction to take place, when a Florida man negotiated to have two Papa John's pizzas, valued at $25, delivered for 10,000 bitcoins on May 22, 2010. "That transaction essentially established the initial real-world price or value of bitcoin at 4 bitcoins per penny," Grabowski says.

Fast forward to today, and that same transaction "would have a value of $114 million," says Peter C. Earle, economist and research fellow at the American Institute for Economic Research. In honor of this pivotal moment, cryptocurrency fans and supporters call May 22 Pizza Day.

"In the early days, the first transactions with Bitcoin were 'negotiated' on internet forums with people bartering for goods and services in exchange for bitcoin," says Garrette Furo, partner at Wilshire Phoenix, a New York-based investment management firm. "The value of bitcoin was originally arbitrary."
 

<SLV>

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"If you don't hold it, you don't own it."

(R.I.P. Ponce... probably rolling over in his grave thinking about Bitcoin... or the toilet paper hoarding.)
 

<SLV>

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"If you don't hold it, you don't own it."

(R.I.P. Ponce... probably rolling over in his grave thinking about Bitcoin... or the toilet paper hoarding.)
1607694541335.png
 

tigerwillow1

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Charlie Munger says:

"Of course, I hate the Bitcoin success. And I don't welcome a currency that's so useful to kidnappers and extortionists and so forth. Nor do I like just shuffling out a few extra billions and billions and billions of dollars to somebody who just invented a new financial product out of thin air. So I think I should say, modestly, that I think the whole damn development is disgusting and contrary to the interests of civilization."
(I made the bold print)

My hypocrisy meter is off the scale! How many wall street "out of thin air" products has Berkshire Hathaway profited from, and now all of a sudden they're bad? Criminals use Bitcoin? What about all the criminals who create and profit from the wall street out of thin air products?

Charlie Munger on crypto: ’the whole development is disgusting’
 

BeefJerky

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Charlie Munger says:

"Of course, I hate the Bitcoin success. And I don't welcome a currency that's so useful to kidnappers and extortionists and so forth. Nor do I like just shuffling out a few extra billions and billions and billions of dollars to somebody who just invented a new financial product out of thin air. So I think I should say, modestly, that I think the whole damn development is disgusting and contrary to the interests of civilization."
(I made the bold print)

My hypocrisy meter is off the scale! How many wall street "out of thin air" products has Berkshire Hathaway profited from, and now all of a sudden they're bad? Criminals use Bitcoin? What about all the criminals who create and profit from the wall street out of thin air products?

Charlie Munger on crypto: ’the whole development is disgusting’

Those comments almost made me want to buy some....lol

I just can't bring myself to buy someone else's Monopoly set money though.
 

Voodoo

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It has built in scarcity so therefore it's valuable (or so the argument often goes). But there is only one me so what in the heck is my value?

Also, what happens in 2040 when the last new coin has been mined? My prediction is that that miners pack up shop (move to something else) and therefore Bitcoin has a final value of 0. Somewhere in the middle may be it's peak.
 

Mujahideen

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Sampson

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I think Bitcoin and the whole defi movement has done a lot to help the younger generation open their eyes to the (corrupt, evil,slave) world of fiat. I love that almost all of the crypto trading apps list government issued currency as fiat and most long term crypto users sneer when they say the word as if it is dirty and vile.

While BTC, ETH, and the other alt coins mostly derive their value from what anyone else thinks they are worth, (much like fiat without the government thug backing) I really like their decentralized creation and more commonplace acceptance.

It has really changed the way a lot of people look at government issued, debt backed, fiat currency.
 

Scorpio

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nice to see you Sampson,

hope all is well