What Is Bitcoin? A Step-By-Step Guide for Beginners
blockgeeks.com
blockgeeks.com
Article is new, but it seems the content is based on old info.
Yeah, I feel so confident about the rest of the links now.
It seems to be designed to just fail eventually and be replaced, which I cannot reconcile against the elegance of the rest of the design.
To clarify: bitcoins can go away forever. About 6 years ago and had a wallet with a couple bitcoins in it. I have lost the key to that bitcoin wallet and if I can't find it, and noone else can find it, those bitcoins should be gone forever and irreversibly, right? If it were possible to recover the key to a wallet you dont own and spend coins that are not yours none of it would work.
So, once there are no more new coins, eventually all the coins will be lost. Am I missing something?
Additionally, the software could be forked to allow division of BTC to a more granular amount than 0.00000001, meaning if all but 1 BTC were lost the entire world could still transact with that last singular BTC by dividing it up into smaller units.
A little bit like how a 'Calorie' is actually a kilo-calorie.
It could be that all those lost bitcoins are just sitting in someone's harddrive, waiting for moment to crash the market
The system for trading ownership of bitcoins does not care for the value of that ownership.
The value we, outside of the system used for logistics of trade, place on the bitcoins is then affected by their scarcity.
To the system, it doesn't matter if the scarcity is caused by loss or by hoarding. But this can affect our valuations.
I think the idea is that new bitcoins will be mined at a rate that will outstrip those lost. A LOT of the early coins were lost because they basically had no value. That was when mining was easy. Now, bitcoins have value and people are less likely to lose it. And mining is now harder.
Similarly, we migrated from people keeping their wallets in a text file (money in a mattress) toward lots of sites like coinbase that basically give this Totally Free And Unregulated currency a system of banks. That further decreases the likelihood of money disappearing, especially if said banks start offering interest in exchange for being allowed to do loans. That resolves issues of people like me having some in a wallet that they are unlikely to ever collect/convert to fiat (not worth the hassle).
So while bitcoin is likely to fail for MANY reasons, I don't think lost currency will be it (unless it is more stuff like that Japanese bitcoin bank that just went dark).
The yearly loss is some small percentage, maybe between 1% and 3%. The yearly bitcoin mining production dips under 1% in another 3 halvings, or roughly in the year 2028.
The big things that are in our face right now is block size, total blockchain size and control of core development. I think the latter is the biggest issue facing bitcoin today.
OTOH the designer was enamoured of a deflationary currency so perhaps he liked the idea of not only a cap but a slowly dwindling supply.
And it is okay of coins are lost forever. If there are fewer Bitcoin available the price goes up. Simple supply and demand. Theoretically Bitcoin can be divided as small as needed to accommodate raising prices.
Mining can only produce new bitcoins. To recover lost ones, you'd need to break elliptic curve signatures (and possibly RIPEMD160/SHA256 to recover a full public key from a non-spent address).
The US taxation system is based on taxes on self-reported income. Individuals/businesses are responsible for reporting their income accurately and honestly. Some forms of income are also reported on informational returns, which makes tax evasion regarding them more difficult. Bitcoiners appear to believe that "Bitcoin doesn't structurally generate informational returns so jackpot, no taxes ever" but there are any number of things which don't generate informational returns. You're still responsible for paying taxes; the government's main remedy if you don't is still auditing a very small percentage of returns and coming down hard on people who abusively underreported income.
Not a lawyer, but my understanding is that it is handled as a capital gains tax. So you buy some bitcoin, it fluctuates wildly over the course of a week, and you convert back to fiat. You then pay taxes on any earnings from that.
So if you bought 1 flubbercoin for 900 USD and sold it a week later for 1200 USD, you are liable for that 300 USD in gained capital.
Here is a marginally more technical description https://en.wikipedia.org/wiki/Capital_gains_tax
In terms of making sure you report those gains: What we see right now. Getting involved in the infrastructure to cut down on black money/money laundering.
But don't worry. I am sure The Followers of Satoshi will find a way to keep that currency volatile.
But what if you never have to translate it to a "real currency"?
Granted - bitcoin isn't anon - but let's suppose it was (or there existed a e-currency that was). If every transaction in the entire supply chain was carried out using such a currency, how would any government ever know (without inserting a MITM into the supply chain)?
An alternative thought: If you conducted all aspects of your life cash-only, how would the g-man "get you"? I suppose Al Capone could be brought up as an explanation (whatever was the reasoning there) - but there were other factors involved (they wanted him for other reasons, but tax-evasion was the easiest way - at least, according to what we've been told).
But as long as you conducted your affairs completely off-the-books, and only worked with vetted (or anonymous) others who were doing the same (so you never transacted cash with a government official or someone working for them) - how would they know?
Another thought experiment: If you conducted everything using barter (let's suppose that were possible) - would you then owe the government so many chickens or pigs as "tax"?
As for how to avoid The Man: Take a look at India. They lived that dream and likely will again in a month or two.
The Bitcoin wiki article on this is incomplete, but informative[0].
[0]: https://en.bitcoin.it/wiki/Tax_compliance#Are_bitcoins_taxab...
Suppose I could harness the power of 1,000 or even 10,000 private computers distributed over the internet and all contributing resources. Could I profitably mine bitcoin?(This is not a theoretical question, I actually do have a way to do this) .
In the past: Yup. That is why many server admins for the big clusters learned what bitcoin was. Either to do that themselves or to yell at the people who were trying to.
But this is (arguably) a problem as certain geopolitical regions have a LOT of miners and resources which give them a significant advantage with respect to mining new coins. Think of it as increased probability rather than a guaranteed return. But, more importantly, it arguably gives them too much control over the system. Do some research on the subject, but I am sure that if I gave you two guesses you would get it.
In the beginning, people used general-purpose CPUs for this, but it's the sort of embarrassingly parallel problem that GPUs are great at, so GPU mining rapidly outstripped anything that a CPU could do. These days, even GPUs are outclassed by ASICs designed specifically for mining. The amount of bitcoin you'd get by mining with a CPU would be minute and, worse still, would actually be a net negative, once you factor in the power bill to keep that CPU running. The ASICs are just too power-efficient for anything else to compete.
No such thing. If it relies on a Proof of Work hash, it can be put into a chip, and specialist hardware for a simple function will always be more efficient (hashes per watt) than general hardware. The main barrier is not capability, but bothering to.
Proof of Stake would be different, but all examples are presently experimental.
That's not the only relevant measure, since specialist hardware must be designed and produced.
For a memory-latency bound PoW requiring hundreds of MB, it's far from certain that custom designed RAM can compete with commodity RAM.
For instance, SRAM is one order of magnitude faster than DRAM, but two orders of magnitude more expensive, making it much less suitable for mining.
There is such a thing as ASIC-resistant cryptocurrencies as evidenced by the fact that there are many cryptos in existence today that have been around for longer a year and have no ASIC mining yet. OP can mine on this today and not have to compete against ASICs.
Explain please?
What a crock of shit!
I really want to use bitcoin for my purchases.
2. I provided a citation against your claim.
3. You assert there's evidence ... somewhere.
Do you have anything to back your claim?
Also, what do you know of the offline blackmarket volume of cocaine, heroine, meth? How does it compare to the (self reported) volume on darknet markets? Is it even notable in comparison? Why do you think cartels don't run their own dark markets? Because they're idiots?
Back up this claim, because it sure looks like it was.
It's also really well written, and the cartoons are super cute. Love love love.
Here's a detailed testimonial on what a good exchange Cryptsy is. Sorry, was: http://www.coindesk.com/cryptsy-ceo-millions-digital-currenc...
1. You can hand over stupendous amounts of personal identification to an all-but-unregulated exchange. This is best analogised to keeping your money in a sock under someone else's mattress. Occasionally exchange owners disappear with everyone's socks, or get "hacked". This is very rare, and only happens once or twice a month. Our FAQ strongly recommends Cryptsy, they're a good one mate.
2. You can exchange cash directly with someone on LocalBitcoins for bitcoins, because business deals in parking lots are famous for working out well.
3. You can mine them yourself! Note that barriers to entry include designing your own ASICs and super-cheap or subsidised electricity (possibly buying your own hydroelectric plant).
* How do I buy and sell stuff with Bitcoins?
Much simpler than just using your dollars!
1. Change your dollars into Bitcoins.
2. Find a vendor who advertises that they take Bitcoins.
3. See if they can find the staff member who still remembers how they take Bitcoins.
4. Buy your thing.
5. Wait six hours for your transaction to confirm.
6. When it's dropped on the floor, send it again with a larger fee. Make sure you didn't accidentally reverse the amount and fee fields, irreversible remember!
* Example of a Bitcoin transaction
Your mother calls you that her computer has been locked with ransomware demanding bitcoins within 48 hours. Proceed according to the first step.
* What do I need to know to protect my Bitcoins?
Fortunately, we have this super-simple guide to Bitcoin security! https://en.bitcoin.it/wiki/Securing_your_wallet Your mother will be completely up to speed next time.
* What are the disadvantages of Bitcoin?
It is most useful for speculation (95% of usage), drugs and ransomware in that order.
* Scams to watch out for
Fucking everything. The uses that aren't scams are buying drugs.
* Testimonials
Tyler Winklevoss, co-creator of Facebook, summed it up when he said:
"what was I thinking when I bought all these coins, will I get this ETF up before the bitcoin network collapses. DAMN YOU STOLFIIIIIIIII"
Rick Falkvinge, Founder of the Swedish Pirate party, predicted that:
"The Target Value For Bitcoin Is Not Some $50 Or $100. It Is $100,000 To $1,000,000."
Of course, that was a few months before the bubble popped, but never mind that!
According to John McAfee, Founder of McAfee,
"THEY PUT A RADIO IN MY HEAD YOU KNOW"
* Where do I go from here?
To a shop for armored knee pads, so the next time someone says "Bitcoin" or "Blockchain" to you you can kick them in the nuts and run.
it clearly challenges your beliefs/ideologies to a point that you spent the time to comment and try to frame bitcoin in a negative light.
Is it bitcoin (the software) scamming people? or is it humans?
and most importantly, what are your reasons for wanting bitcoin to fail?
No, here you go, actual reasons:
* Every cryptocurrency I’ve seen is a fractal scam at every level. When phrases along the lines of "a whole new form of money" and "the old rules don’t apply any more" start going around, people get gullible and the ethically-challenged get creative.
* Every cryptocurrency I’ve seen is a disastrous waste of resources and effort at every level – “proof of work” in particular is literally wasted to secure a distributed thing that should not be distributed, and which naturally recentralises anyway. (4 miners do 50% and 7 miners do 75% of Bitcoin, and 75% of hashing power is about to be in a single building.)
* Cryptocurrency advocates are frequently both strident and delusional about technology, economics, human nature and computer science itself.
* Bitcoin ideology is based on John Birch Society and Eustace Mullins conspiracy theories about central bankers, based on economic ideas which are most generously described as "not even wrong".
* Bitcoin advocates want a dot-com payday, where you get rich for free, only without even the step where you build an enterprise that does something that's useful to someone.
* Bitcoin advocates are almost universally either scammers, suckers or (best of all) suckers who think they're the scammer. Sorry, "early adopter". Pretty much everyone who got in after about 2012 is playing the role of "sucker" in the pump'n'dump. A "trustless" currency seems to attract people who absolutely cannot be trusted.
* Blockchains only approximately solve the problems they claim to (coordinating information amongst actors who distrust each other), and the approximation breaks down as they recentralise.
* Blockchains have no use cases outside cryptocurrencies, insofar as those count as a use case.
* Everything about cryptocurrencies is, in practice, a bad idea for pretty much anyone to be involved in, and warning people off it is a public service.
* I feel like it.
I've answered you. Now it's your turn to go back to my comment up there and point out which bits are factually inaccurate.
I bought in when HN perpetuated the market debasement the last two times, when it "crashed" at $450 and $600 CAD. Both times, there was substantial fear, uncertainty, and doubt surrounding bitcoin in the HN comments (look them up yourself if you doubt me!). I adopted the position that I should be doing the exact opposite of what HN was recommending.
I'm still sticking to that position. I'll probably diversify greatly at this point with other altcoins, so I avoid the drop, then I'll buy in at the lower price. in around 30 days, I'll post back to see if I was wrong or not.