Bitcoin sell-off

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I never really 'got' the bitcoin - bit of a Luddite perhaps - but it did seem to be gaining momentum and then...

http://www.bbc.co.uk/news/technology-22105322

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Otispunkmeyer said:

I understand bitcoins are "mined" by crunching huge numbers looking for a finite number of specific sequences, but surely its all a con?

Well that's the thing - I really don't 'understand'.

Otispunkmeyer said:

It's not even money for old rope. It's just money for nothing.

Quite. For whom is this number-crunching remotely useful?

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RealSquirrels said:

yeah but euros are made just by printing some squiggles on a bit of paper... what are they even for?

I understand the drawbacks of fiat money, but at the end of the day, no one can argue that, at least whilst confidence remains, it is highly liquid and widely accepted.

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crazy about cars said:

sc0tt said:

You can use Bit coin to pay for things on the Deep Net.

You need an onion browser and don't do it at work.

Do I need to put on my tin foil hat too?

This is a whole different world. You know that tech character on The Girl with the Dragon Tattoo? It's his world.

I too fond of fresh air and food to go down that path.

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hornet said:

Be interesting to know who is behind the attacks on Bitcoin - Government action to destroy confidence or organised crime engineering bubbles and dips to cash in? Certain people in the alternative media and blogosphere and been crowing about Bitcoin lately, so I wonder if this is a reaction to that?

I guess it is possible that some government or central bank somewhere might take exception to the bicoin and attempt sabotage. The same claims have been made about gold too - namely via derrivative trades, did the establishment allow a devaluation mechanism?

Certainly Greece being forced to sell gold is a current issue. Given the surety of value, I wonder why the troika insisted on this, rather than simply using it as collateral?

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Oakey said:

Just purchasing Bitcoins goes against everything you've ever learned you shouldn't do the internet.

I think I'm a bit like Buffet - if I don't understand it, I'm not going to put any of my capital into it. I probably miss at least as many opportunities (I'm not that bright, so there's plenty that perplexes me) that way as I do disasters, but I'm happy with that compromise for now.

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There was an article in the Economist's weekly roundup last night: http://www.economist.com/news/finance-and-economic...

The Economist said:

New Bitcoins have to be “mined”, meaning users can acquire them by having their computers compete to solve complex mathematical problems (the winners get the virtual cash).

Now I'm still none the wiser. Do all bitcoins get 'mined' first, before you can use them, or can you accept a bitcoin 'payment' from someone and then you go and 'mine' that?

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jammy_basturd said:

So am I right in thinking that I could go on holiday for two weeks, leave my laptop 'mining' for bitcoins, and then when I get back, convert all the bitcoins it had found to real money?

^This, is really fking with my head.

How are they actually worth anything if all you have to do is, effectively, 'download' them? Do you pay for the mining & wallet software?

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DonnyMac said:

jammy_basturd said:

Be interesting to see if their is something that can run on the PS3... I have one of those sat idle next to me and electricity is included in my rent. I wouldn't mind having it on for a week or two as a speculative effort should the bitcoin raise in value in the future.

I guess the value of the bitcoin isn't yet sufficient to warrant renting a huge AWS network to try and mine them quicker?!

People are buying rigs for $30-70,000 to mine them, the more that get found the harder it is to find the next, your PS3 may pop

I think I'll stick with tulip bulbs - it's nice to have 'investments' you can dig up and check on. I suppose you could add gold to that too category too.

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DonnyMac said:

You'll never find one with a standard PC, that time has passed as the computing power required increases the more that are in circulation.

I believe the way the algorithm works is that for the currency to work the platform needs computing power (as every transaction ever made is shared on every computer on the network (this also means that you cannot fake a BitCoin)) so there is, or was, a benefit to allow your graphics card to compute in the background for the benefit of the network - the up side being that every once in a while your graphics card would find a BitCoin to add to your wallet, a thank you for allowing your hardware to be part of the network.

Aha! Someone - you - has actually brought the idea to life for me. Somewhere in the dark recesses of what constitutes my brain, a very dim (environmentally friendly) light bulb has been illuminated. Thank you.

DonnyMac said:

This sort of went out the window when geeks started building rigs from floor to ceiling with dedicated aircon units to mine bit coins from the network - the network benefited tremendously (speed of transaction) but the casual BitCoin owner then had only a minuscule percentage of the network and this a minuscule chance of 'finding' a BitCoin.

And you also explain why I no longer need to concern myself with mining. Double thanks.

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jshell said:

Digga said:

I guess it is possible that some government or central bank somewhere might take exception to the bicoin and attempt sabotage. The same claims have been made about gold too - namely via derrivative trades, did the establishment allow a devaluation mechanism?

Certainly Greece being forced to sell gold is a current issue. Given the surety of value, I wonder why the troika insisted on this, rather than simply using it as collateral?

Gold physically exists and so always has some intrisic value. Without gold, a country's finances should be easier for external manipulation, I would think. The troika ain't daft, they want total control over EU members finances. Surely physical gold is anathema to that.

Kind of my thoughts - they're kicking Cyprus whilst they're down to ensure they can't get back onto their own feet again.

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CommanderJameson said:

Here's a good article about the end of Silk Road:

http://arstechnica.com/tech-policy/2013/10/feds-si...

Batst crazy isn't it?

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hairykrishna said:

So it turns out DPR was a fking idiot and he was still managing to collect $25k a day in commission. I bet people are taking notice and the next Silk Road will be a lot less amateurish.

All of which, IMHO, goes to prove - the contracts and all that - that allowing a black market to exist for these goods provides criminals with the means to commit or commission other crimes.

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0000 said:

Doesn't any market do that?

Not really. In (most) free markets, competition will tend to reduce margins.

Then you have the issue that by creating a market 'zone' for any contraband, the unintended consequence (see Al Capone) is that only criminals will enter it and they, by their definition, tend not to spend their earning on 'nice' stuff. They also have to launder earnings, which then creates other conflicts and secondary damage to unwitting, legal competitors.

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Tonsko said:

stongle said:

It's not the value in the cryptocurrencies; but making distributed ledger tech work. It will totally revolutionise the financial world in the next 10yrs, the first systems will start to come on line in the next 2-5yrs. Although Bitcoin may have anarcho-libertarian and slightly shady beginnings, the distributed ledger tech has massive investment.

Not just the financial industry either. It has applications right across society. It's actually quite exciting.

I have a mate who's been working for a firm for the last few years in this area of the tech. As you say, it could be transformative, especially in undeveloped economies and for people without access to normal banking.