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Message
Bit coins... I want the general definition
Posted on 11/18/13 at 9:31 pm
Posted on 11/18/13 at 9:31 pm
What does one bitcoin equal in one US dollar?
1
Posted on 11/18/13 at 9:50 pm to Jax007
$690
Posted on 11/18/13 at 9:55 pm to Ace Midnight
Well then how does it actually work?
Posted on 11/18/13 at 10:17 pm to Jax007
Posted on 11/19/13 at 1:21 am to RebelOP
The simplest analogy to bitcoin, although dumbed down and technically incorrect, is that it's an investment like a stock.
It's value fluctuates based on supply and demand and perceived value, like stocks. There are very few places where bitcoin can be exchanged for products and services, but quite a few ways to convert dollars to bitcoin and vice versa.
Bitcoins are produced out of thin air on a fixed schedule, by an open network of people who own specialized computers that validate transactions. Similar to a credit card, when a transaction of bitcoins happens, the transaction is authorized and verified, but unlike a credit card, this verification is not done by a bank's computers, but buy these privately owned computers in a very large network. These participants are rewarded by receiving bitcoins or fractions thereof for their participation. Without this reward, people would not invest thousands and millions into these computers and electricity to run them. These people and their machines are "bitcoin miners."
Besides this premise that makes bitcoin work, the appeal of bitcoin is that it's like a virtual gold. There is a fixed number of bitcoins that will be awarded to these miners, like the fixed amount of gold on this planet, some of which has not been mined yet, just like bitcoins. Bitcoins are not tied to a currency like the dollar.
Since the supply of bitcoins is predetermined, there is no agenda that can affect the inflation or deflation of bitcoins, unlike traditional currency created by government. The US govt. is printing money at a record pace, and more money is released than is being destroyed. The notion that our dollars will buy less and less because we print more and more money is pretty well understood.
It now requires immense computing power to "mine" bitcoins. As more people buy more advanced equipment to "mine" bitcoins, the costs to mine bitcoins are going up immensely, along with the increasing popularity of BTC (bitcoin) which is driving up the value of the coins exponentially.
It's value fluctuates based on supply and demand and perceived value, like stocks. There are very few places where bitcoin can be exchanged for products and services, but quite a few ways to convert dollars to bitcoin and vice versa.
Bitcoins are produced out of thin air on a fixed schedule, by an open network of people who own specialized computers that validate transactions. Similar to a credit card, when a transaction of bitcoins happens, the transaction is authorized and verified, but unlike a credit card, this verification is not done by a bank's computers, but buy these privately owned computers in a very large network. These participants are rewarded by receiving bitcoins or fractions thereof for their participation. Without this reward, people would not invest thousands and millions into these computers and electricity to run them. These people and their machines are "bitcoin miners."
Besides this premise that makes bitcoin work, the appeal of bitcoin is that it's like a virtual gold. There is a fixed number of bitcoins that will be awarded to these miners, like the fixed amount of gold on this planet, some of which has not been mined yet, just like bitcoins. Bitcoins are not tied to a currency like the dollar.
Since the supply of bitcoins is predetermined, there is no agenda that can affect the inflation or deflation of bitcoins, unlike traditional currency created by government. The US govt. is printing money at a record pace, and more money is released than is being destroyed. The notion that our dollars will buy less and less because we print more and more money is pretty well understood.
It now requires immense computing power to "mine" bitcoins. As more people buy more advanced equipment to "mine" bitcoins, the costs to mine bitcoins are going up immensely, along with the increasing popularity of BTC (bitcoin) which is driving up the value of the coins exponentially.
This post was edited on 11/19/13 at 1:32 am
Posted on 11/19/13 at 1:36 am to rocketc
If you're aware of the bitcoin situation, the difficulty to mine these coins will continue to increase rapidly over the next few months, maybe the next year. I strongly believe that the value will also increase to over a thousand dollars per BTC, possibly before year end.
I would advise anyone with the means to purchase them to do so now, as the value will increase as the market continues to grow. There are over 8 trillion USD worth of bitcoins in existence. I purchased several bitcoins in august and september from between $90-$125 each. And I'm holding them. In the next year or so I expect the technology advances in mining to slow down, causing the price to level off and grow more slowly, but there is still significant meat on the bone for new short term investors.
I would advise anyone with the means to purchase them to do so now, as the value will increase as the market continues to grow. There are over 8 trillion USD worth of bitcoins in existence. I purchased several bitcoins in august and september from between $90-$125 each. And I'm holding them. In the next year or so I expect the technology advances in mining to slow down, causing the price to level off and grow more slowly, but there is still significant meat on the bone for new short term investors.
Posted on 11/19/13 at 6:36 am to rocketc
Difficulty goes up every 4 years I believe. It just went up last year significantly.
This post was edited on 11/19/13 at 6:37 am
Posted on 11/19/13 at 7:30 am to rocketc
quote:
The simplest analogy to bitcoin, although dumbed down and technically incorrect, is that it's an investment like a stock.
Wow...
Posted on 11/19/13 at 8:21 am to RebelOP
quote:
Difficulty goes up every 4 years I believe. It just went up last year significantly.
difficulty adjusts every 2016 blocks, which is approximately every 2 weeks.
the inflation rate halves every 52500 blocks, which is approximately every 4 years
Posted on 11/19/13 at 8:22 am to rocketc
quote:Your decimal is in the wrong place.
There are over 8 trillion USD worth of bitcoins in existence.
You're only incorrect by a factor of 1,000X. But for a bitcoinista, that's pretty close, I suppose.
Posted on 11/19/13 at 8:23 am to rocketc
quote:I disagree. A Bitcoin is the solution to a discrete mathematical equation assigned a specific identifier, think of it as a file name. Ownership of each Bitcoin is tracked via the specific identifier. So Bitcoins are in essence information. Information does not have trade value unless it is exclusive. (Kind of ironic that Wiki opposes intellectual property, but he touts the value of the exclusive knowledge of certain information.)
The simplest analogy to bitcoin, although dumbed down and technically incorrect, is that it's an investment like a stock.
Exclusivity of the information is maintained using high level encryption. The owner of the Bitcoin is the person who has the key to open the file containing the solution to the equation.
The value of a Bitcoin is determined solely by how much a buyer is willing to pay for it. So the value comes from someone else being willing to purchase the Bitcoin for equal or greater price at some point in the future. That is unlike a share of stock since the price a buyer will pay for the share is dependent on the historic operating results of the company, the expected future operating results and the ability to pay dividends.
Posted on 11/19/13 at 9:14 pm to Poodlebrain
Try explaining btc to your mom by starting with "it's a discrete mathematical equation assigned a specific identifier"
I was trying to give a simple analogy, not the most technically complex wording of the exact definition.
And yeah I miscounted my zeros by a lot. It was 3 AM I think, and I was tired.
I was trying to give a simple analogy, not the most technically complex wording of the exact definition.
And yeah I miscounted my zeros by a lot. It was 3 AM I think, and I was tired.
Posted on 11/19/13 at 10:18 pm to Poodlebrain
quote:
The value of a Bitcoin is determined solely by how much a buyer is willing to pay for it. So the value comes from someone else being willing to purchase the Bitcoin for equal or greater price at some point in the future. That is unlike a share of stock since the price a buyer will pay for the share is dependent on the historic operating results of the company, the expected future operating results and the ability to pay dividends.
How is this unlike a stock in the market? There are many reasons an individual will purchase a stock, and that will influence the price. The value/price is not a direct correlation to performance.
Posted on 11/19/13 at 10:57 pm to LSUtigerME
quote:The historic operating results establish a book value for the company. As such there is an intrinsic value of the company's assets available for liquidation. The expected future operating results will either increase or decrease the company's assets. The ability to pay dividends may provide the owner current cash flows from the investment as opposed to nothing but appreciation in value that cannot be spent. These are investor reasons for buying stock. They do not exist for Bitcoins. Some may buy stock for purely speculative purposes, but the investment features are there nonetheless.
How is this unlike a stock in the market? There are many reasons an individual will purchase a stock, and that will influence the price. The value/price is not a direct correlation to performance.
Posted on 11/20/13 at 1:29 am to Poodlebrain
quote:
The historic operating results establish a book value for the company.
Very similar to bitcoin. When bitcoin had no track record the value of BTC was near zero.
quote:
As such there is an intrinsic value of the company's assets available for liquidation.
Not with common stock. Unless you are able to purchase preferred shares of a corporation, no liquidation of a company's assets in bankruptcy will be returned to common stock shareholders. Preferred shareholders might get something, but it's not likely.
quote:
The expected future operating results will either increase or decrease the company's assets.
Useless to the shareholders of common stock.
quote:
The ability to pay dividends may [or may not] provide the owner current cash flows from the investment as opposed to nothing but appreciation in value that cannot be spent.
True, but under almost all scenarios dividends are reinvested in shares of stock at current prices. Dividends are shrinking compared to historical figures as profit margins are squeezed.
The so called "investment features" of stocks boil down to dividends, and future dividend yield is not guaranteed. The primary reason people purchase a particular stock and the reason people purchase bitcoins are the same. Expectation that future value > current value. With bitcoin, it's pure speculation, as with gold, along with the added value of portability, anonymity, and it's independence of government. With stock, the performance of the underlying company is most important. But to suggest stocks have anything on bitcoin beyond dividends is foolish.
Posted on 11/20/13 at 8:02 am to WikiTiger
WikiTiger, can you help me out witha few questions?
I want to speculate/gamble on bitcoins and have a few questions. It seems each exchange has a different set of issues.
* can I move bitcoins from one exchange to another (coinbase/btc-e/mtgox)?
* can I move bitcoins back and forth from a desktop wallet to an exchange?
* is there another exchange that you consider liquid and reliable (cryptxchange)?
I'm thinking the best way to go is get a desktop wallet and buy at btc-e due to coinbase & mtgox problems. I'm looking at blockchain and QT.
I want to speculate/gamble on bitcoins and have a few questions. It seems each exchange has a different set of issues.
* can I move bitcoins from one exchange to another (coinbase/btc-e/mtgox)?
* can I move bitcoins back and forth from a desktop wallet to an exchange?
* is there another exchange that you consider liquid and reliable (cryptxchange)?
I'm thinking the best way to go is get a desktop wallet and buy at btc-e due to coinbase & mtgox problems. I'm looking at blockchain and QT.
Posted on 11/20/13 at 8:27 am to rocketc
I can't believe you are serious.
quote:A share of stock will have some equity. The equity may be less than zero, but that will still be reflected in the price. A Bitcoin will never have equity. Why are you comparing historic market price of Bitcoins to historic operating results for a company? That is an apples to oranges comparison. Investors do consider the historic market price of stock, but it is a separate animal than historic operating results.
Very similar to bitcoin. When bitcoin had no track record the value of BTC was near zero.
quote:Investors do not typically buy stock of bankrupt companies, nor do they buy with the expectation that the company will go bankrupt. And while there are no guarantees that any stockholder will receive anything in a bankruptcy liquidation, it is possible that they could. And bankruptcy is not the only time companies liquidate. Mergers and acquisitions can result in the liquidation of a company with significant value distributed to the shareholders of the liquidated company. Mergers and acquisitions are much more likely for publicly traded companies than bankruptcy liquidations.
Not with common stock. Unless you are able to purchase preferred shares of a corporation, no liquidation of a company's assets in bankruptcy will be returned to common stock shareholders. Preferred shareholders might get something, but it's not likely.
quote:See above.
Useless to the shareholders of common stock.
quote:Dividends increased dramatically when they received preferential tax treatment to reduce the impact of double taxation. Any decision to reinvest dividends is a decision on how to spend money distributed by the company. Note the word used is reinvest, not respeculate. Even if dividends are shrinking they still have value, what does Bitcoin provide that is equivalent? A reduction in dividends also results in an increase in a company's total assets as it is cash the company retains. So a reduction in dividends represents an increase in equity discussed above. The value of increased equity may not, most likely will not, be as beneficial to the stock's market price as current dividends, but it still has value.
True, but under almost all scenarios dividends are reinvested in shares of stock at current prices. Dividends are shrinking compared to historical figures as profit margins are squeezed.
quote:Trillions of dollars of investor money disagree with you. Hell, more money is invested in Google stock, a corporation that has never paid, and has no plans to pay, dividends than is invested in Bitcoins. LINK
But to suggest stocks have anything on bitcoin beyond dividends is foolish.
Posted on 11/20/13 at 8:34 am to Ole War Skule
won't be around today to talk much, might be able to answer your questions tonight or tomorrow by the latest
Posted on 11/20/13 at 1:42 pm to WikiTiger
How much computing power is needed to mine bitcoins? What kind of production can you get with say 10 business class workstations at night? I have plenty of idle computer time available to me, but if it's only going to net me $20 per year it's not worth setting up.
Posted on 11/21/13 at 1:25 am to TigerinATL
TigerinATL, it would literally cost more in power than you'd make in bitcoin. If the power was free, it would still not be worth your time or effort or risk if you were using company resources.
This post was edited on 11/21/13 at 1:26 am
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