BITCOINERS, please help me to understand.

[swissie]

I truly want to understand "crypto currencies". "Experts to the forefront".

I understand, that "fiat currencies" are becoming more suspicious. For thousands of years Gold and Real Estate were a refuge when "Currency De-Basement" were on the agenda of Kings an other rulers, when they ran short of Gold (the only money, back then).

As I understand it, while buying Bitcoins I get a combination of numbers that my baker around the corner will not accept as currency and give me no  loaf of bread for a part of my numerical combination.
Outside of a numerical combination I can not see the value of anything outside of the value of a numerical combination. Backed up by nothing else than a numerical combination, hoping that another fellow will consider a purely numerical combination is some sort of  "currency". Backed by nothing but a combination of numbers.

- In my younger days, I traded all kinds of volatile commodites (CBOT, CME) mainly "Pork-Bellies", knowing that the worst thing that could happen, is having delivered 40'000 Lbs of "Pork Bellies" at my doorstep. A big loss, but still an "asset", because people like to eat bacon. How do you eat Bitcoin?

Unlike "Pork-Bellies", a combination of numbers is not an "asset". Both highly speculative. I still prefere "commodities", with a tangible value, instead of a numerical combination, called "assets". My baker across the street does not believe in "numerical assets". He believes in "cash" and won't sell any of his bread for some part of a Bitcoin.

Any currency (fiat or not), reflects the state of the "health of a nation", politically, economically, sociaally. Not looking too good, I agree.

To replace this by something backed by absolutely nothing tangible must fail. As the Central Banks will not abandon the privilege of controlling "the money supply", not tolerating alternative "dream-currencies", bare of any tangible "assets". Nor having the power of "Taxation". Knowing that the greatest "ponzi-scheme" is in the making. China has already forbidden "crypto currencies" unless approved by the "Governement".

So truly, I need to know, why would anyone buy a number of other numbers for 30'000 $ and call it finally an "asset".

 Back on Toipic I would simply like to know why some people prefer to invest in something that only exists as a mathematical complicated password, basically. Hoping that the next fool  will buy the "complicated password* for 1 Dollar more.
-----------------------
My perception on things. Opposing views to enlighten me are very welcome. Especially if it comes to lend credibility of the greatest "Ponzi-Scheme" there ever was.

[save the frogs]

 

17 minutes ago, swissie said:

China has already forbidden "crypto currencies" unless approved by the "Governement".

I'm not a bitcoiner, but ...

 

that may be because china will be the first country to issue a govt-backed digitial currency. 

so they don't want competition?

and when other govts launch their own digital currencies, i think they will do the same as china.

 

https://www.economist.com/finance-and-economics/2020/04/23/china-aims-to-launch-the-worlds-first-official-digital-currency

 

[EdrigoSalvadore]

Read the bitcoin white paper, by bitcoin founder. Pretty easy to understand the basics.

https://bitcoin.org/bitcoin.pdf

[eisfeld]

Very simple. Any asset is worth what other people are willing to buy it for. Nothing is directly backing Bitcoin in terms of physical assets. This is also the case for the Baht, Dollar, Euro or pretty much any other fiat currency since the backing with gold was abandoned. Physical assets in most cases will have some positive value left in the worst case (though in the extreme some might even have negative value i.e. you'll have to pay to get rid of it). As you might have noticed in the recent past, the value of a Dollar can vary quite a bit. Why? Because people changed their mind in terms of how much they value it.

 

Swissie you are calling Bitcoin just a "combination of numbers". This is a misleading way of thinking. Any information that is represented digitally is exactly that. The US nuclear launch codes are just a combination of numbers. How much do you think some evil powers would be willing to pay for them? Or how about the password to your bank account? It's all just a few bits. But there can be some real value assigned to these bits. And the value is exactly what the highest bidder might pay for it.

 

You should know because you said you traded commodities. Wait, halt. You actually didn't trade physical pork bellies. You speculated on digital derivative contracts that might then result in physical delivery or not. Actually on virtually all brokers they'll just force sell/buy the contracts on delivery date because their users don't actually want to receive or deliver these physical goods.

 

Anyone who says Bitcoin was a Ponzi Scheme does not know what the definition of a Ponzi Scheme is. It might be a terrible investment and you might lose all your money but that does not make it a Ponzi. One could argue it being a mania.

 

Now, what most people don't realize is that Bitcoin has some indirect backing. There are billions of dollars in mining hardware deployed. This creates an incentive for invested parties to keep the price as high as possible. Ironically this also represents a danger to Bitcoin because the Proof of Work mining mechanism is just incredibly wasteful in terms of energy. Bitcoin has also seen incredibly little development compared to other cryptocurrencies. Again this is a two sided sword. It made it more stable and safe but creates risk of being left behind eventually.

 

Also the only way for bitcoin to lose value is by people losing "faith" in it. Some kind of panic. Now, Bitcoin itself can't have something like a bank run because your coins can't just disappear like in a bank unless you keep them in an exchange (just don't). What could tank the value possibly is if governments were to ban it. There is also the eventually deflationary aspect to it that guarantees that over long timeframes the price has to go up as it becomes more scarce. This is the core reason why many think it's value will go up, and that in turn brings in all the other "investors" that don't understand much but don't want to miss out either.

[2baht]

It's like horse racing, sometimes your horse wins, sometimes it loses!

[sammieuk1]

Many have ended up with bits of coin where their nest egg once rested is all I know????

[OneMoreFarang]

 

[piston broke]

Warren Buffet and Charlie Munger have ZERO Crypto .....

 

That's good enough for me ....

[fdsa]

 

Expectation:

 

8 hours ago, swissie said:

China has already forbidden "crypto currencies" unless approved by the "Governement".

Reality:

 

everyone and their mom use crypto, including small businesses getting paid from abroad because Chinese government does not care about crypto income but make receiving dollar/euro transactions a huge unbearable pain in the ass.

[fdsa]

6 hours ago, piston broke said:

Warren Buffet and Charlie Munger have ZERO Crypto .....

 

That's good enough for me ....

if I was Warren Buffet or Charlie Munger I would have lied to goyim too.

[2009]

6 hours ago, piston broke said:

Warren Buffet and Charlie Munger have ZERO Crypto .....

 

That's good enough for me ....

Exactly, the tortoise beats the hare.

[Seppius]

6 hours ago, piston broke said:

Warren Buffet and Charlie Munger have ZERO Crypto .....

 

That's good enough for me ....

https://seekingalpha.com/article/4561719-warren-buffett-has-exposure-to-bitcoin-so-should-you

 

As of February of this last year, it is known that Warren Buffett invested $1 billion in Nubank (NU), which was labelled as a crypto-friendly bank. After recent events, calling Nubank crypto-friendly might be an understatement.

 

However, Buffett must see some potential in at least some new financial technologies since he sold "traditional" financial companies in favour of Nubank.

[1FinickyOne]

9 hours ago, swissie said:

How do you eat Bitcoin?

With your imaginary hands - 

[1FinickyOne]

8 hours ago, 2baht said:

It's like horse racing, sometimes your horse wins, sometimes it loses!

all night long I dreamed of the number 5... I woke in the morning and it was 5:55 - - sure, it was May 5th as well... so, I went to the racetrack and waited for the fifth race - I bet $555 to win on the number five horse...

 

He finished 5th... 

[1FinickyOne]

8 hours ago, eisfeld said:

And the value is exactly what the highest bidder might pay for it.

I had a pet rock like that... and my Beanie Baby collection is falling like a stone... but maybe I can still sell it for imaginary money

[2baht]

1 hour ago, fdsa said:

if I was Warren Buffet or Charlie Munger I would have lied to goyim too.

Come on, let us in on the secret, what the hell is goyim???

[ozimoron]

 Bitcoin is more immutable than pork bellies. Pork bellies can rot if not consumed quickly. Bitcoin will be around forever and can't be destroyed and nor can 21 million ever be produced. This sets it apart even from gold. This is why people invest in it although part of the reason they choose bitcoin is that it was first.

 

Bitcoin isn't going away but it's value can. Why can an oil painting be worth so much? Because people believe it will appreciate in value in the future. This is exactly the same motivation which drives bitcoin. The huge mistake people think about bitcoin is that if they can't see it or touch it then it can evaporate. That simply isn't the case.

[ed strong]

Everyone understands bitcoin at the right time and not before, juts look into it now again and at some point you will have the eureka moment. No ones should have to be able to convince you to buy bitcoin

[ed strong]

Bitcoins don't actually move or get sent anywhere. Ownership is assigned and maintained through a shared public ledger.

 

By owning bitcoin what you have access to a digital signature that allows you to sign transactions that you can claim ownership of or anything that its assigned to.

 

At this moment in time it represents a dollar value and you can track ownership on the public ledger to see and search every single owner and transactions that occured.

 

'Sending' bitcoins basically means giving up the rights over units on the ledger by signing them to another user. You can sell or transfer the rights to these asset(s) by digitally signing a transaction to someone else therefore they become the owner of those assets.

 

Essentially soon, any transaction of value relating to any asset could be transfered over the bitcoin network.

[eisfeld]

1 hour ago, 1FinickyOne said:

I had a pet rock like that... and my Beanie Baby collection is falling like a stone... but maybe I can still sell it for imaginary money

I think you might have missed the point. If no-one is willing to buy your collection then it has no value on the market. And that's totally fine. Bitcoin obviously has value because people are buying it. This is the trivial demand and supply that defines pretty much all markets.

[Jai Dee]

A reported troll post has been removed.

[eisfeld]

1 hour ago, ed strong said:

Essentially soon, any transaction of value relating to any asset could be transfered over the bitcoin network.

As long as there is a legal framework enforcing the rights to the assets - which doesn't exist right now. Because apart from the intrinsic digital security system in Bitcoin that assigns rights to a certain amount of Bitcoins, its blockchain can't enforce rights to other assets. That's why NFTs are such a joke. If you wanted to assign land ownership via a blockchain for example then that only would work as long as you can enforce it via the courts who will send armed men to hunt down violaters.

 

And since you need governments to play along there's about 0% chance of this going to happen for a multitude of reasons.

[ed strong]

Of course you cant just switch systems, however as you say the possibilities are there.

 

 

[1FinickyOne]

1 hour ago, eisfeld said:

I think you might have missed the point. If no-one is willing to buy your collection then it has no value on the market. And that's totally fine. Bitcoin obviously has value because people are buying it. This is the trivial demand and supply that defines pretty much all markets.

So, an antique dealer has a can of tuna fish - he sells it to another antique dealer for $1 and tells him he can sell it for $2 - which he does and tells the next guy he can sell it for $4 - and so until the can of tuna fish sells for $100 - and the guy who buys it for $100 says this must be great tuna fish and starts to open the tin - "What are you doing?" shouts the seller - "that tuna fish isn't for eating, it's for selling.."

 

You mean like that?

[eisfeld]

1 hour ago, 1FinickyOne said:

So, an antique dealer has a can of tuna fish - he sells it to another antique dealer for $1 and tells him he can sell it for $2 - which he does and tells the next guy he can sell it for $4 - and so until the can of tuna fish sells for $100 - and the guy who buys it for $100 says this must be great tuna fish and starts to open the tin - "What are you doing?" shouts the seller - "that tuna fish isn't for eating, it's for selling.."

 

You mean like that?

No not like that. The first seller says he's willing to sell the can for $1 and the second dealer agrees to that price. Along comes another dealer and says hey I'm looking for a can of tuna and am willing to pay $2 and the second dealer says sure buddy! Etc. pp. The seller doesn't tell the buyer the price they'll be able to sell it for. Also the price wouldn't go up to $100 if there are other dealers on the open market advertising their cans of tuna for $2. This is how the price for virtually every commodity is determined. Why would a painting by Davinci be worth millions? Because people at an auction are willing to pay that much for it.

[1FinickyOne]

42 minutes ago, eisfeld said:

No not like that. The first seller says he's willing to sell the can for $1 and the second dealer agrees to that price. Along comes another dealer and says hey I'm looking for a can of tuna and am willing to pay $2 and the second dealer says sure buddy! Etc. pp. The seller doesn't tell the buyer the price they'll be able to sell it for. Also the price wouldn't go up to $100 if there are other dealers on the open market advertising their cans of tuna for $2. This is how the price for virtually every commodity is determined. Why would a painting by Davinci be worth millions? Because people at an auction are willing to pay that much for it.

yeah, hey look, I was an antique dealer - that was an old antique dealer joke... 

 

So, a group of friends have been getting together for years... they have told the same jokes so many times that they have them numbered.. one guy says, "33" and everyone laughs.. the next guy says "47" and everyone laughs - the next guy says "17" but nobody laughs... one guy looks at another and says, "he could never tell a joke." 

[Adumbration]

It is comforting to see all you dinosaurs poohooing.  I am about to go balls deep into the crypto space and seeing your myopic comments makes me feel very satisified with my contrarian investment decision.

 

 

[dingdongrb]

I hate all bitcoin discussion and avoid it.......  why?

 

Because I am still kicking myself in the @$$....  I read about bitcoin in Investor magazine back in the mid 90s. One coin was going for $0.25 USD....  Yes, a friggin quarter!

 

At that time online trading wasn't occurring. I told myself to call my broker and buy $100 worth....  I never did!

 

I am sure if I had bought any I probably would have sold well before it hit the peak of $60k.

[eisfeld]

3 hours ago, dingdongrb said:

I hate all bitcoin discussion and avoid it.......  why?

Said he just before taking part in a bitcoin discussion.

 

3 hours ago, dingdongrb said:

I read about bitcoin in Investor magazine back in the mid 90s.

Impressive. You were ahead of the times given that the Bitcoin whitepaper was published in 2008.

 

[save the frogs]

10 hours ago, Adumbration said:

I am about to go balls deep into the crypto space

you're betting the farm?

you crypto pushers sound level-headed and not at all like sleazy used car salesmen and degenerate gamblers.