Author Topic: Is it too late [bitcoin]?  (Read 100617 times)

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #250 on: December 07, 2017, 05:55:59 PM »
Quote
I'd argue exchange rate vs market price is a distinction without a difference. The whether you say market price or exchange rate, you need variable numbers of dollars to buy a given amount of euros, RMB, bitcoin, gold, or porkbellies. In all four cases that price is determined by how many people are willing to buy (and at what prices) and how many are willing to sell (and at what prices).

But I remain open to being proven wrong though. How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity, because that would just become circular reasoning).

I said I wasn't going to debate whether bitcoin is a currency, and I'm going to hold to that.

But I think I can convince you of the difference in those terms simply by using the dictionary.

ex·change rate
noun
noun: exchange rate; plural noun: exchange rates; noun: rate of exchange; plural noun: rates of exchange

    the value of one currency for the purpose of conversion to another.

cur·ren·cy
ˈkərənsē/
noun
noun: currency; plural noun: currencies

    1.
    a system of money in general use in a particular country.
    "the dollar was a strong currency"
    synonyms:   money, legal tender, cash, banknotes, bills, notes, coins, coinage, specie
    "foreign currency"
    2.
    the fact or quality of being generally accepted or in use.
    "the term gained currency during the second half of the 20th century"
    synonyms:   prevalence, circulation, exposure; More
    acceptance, popularity
    "a term that has gained new currency"
        the time during which something is in use or operation.

Bitcoin fails the test on both counts.

USD, Euros, and RMB all pass with flying colors.

Now, I'm not saying that bitcoin isn't a currency.  But that doesn't mean that I agree that it's a currency, either.  I'm simply saying that by definition, it doesn't have an exchange rate, while it very clearly does have a market price.

I concede the point about hiding it under a mattress.  Well played. ;)

If I follow the reasoning from your two definitions, your argument is:

(A) the difference between an exchange rate and a market price is that an exchange rate is defined as the rate at which two currencies can be converted from one to the other, and a market price is is the rate at which one currency and one commodity can be converted from one to the other
(B) if bitcoin is not a currency, USD and bitcoin, by definition, cannot have an exchange rate.

I don't actually disagree with either A or B. But I will say that the logically consequence of accepting those two statements is that stating "[I think] Bitcoin doesn't have an "exchange rate" any more than gold does.  Both have a market price." is simply another way of restating "[I think] Bitcoin is not a currency."

Which is a perfectly reasonably view to hold. But saying bitcoin has a market price rather than an exchange rate is not a form of evidence that bitcoin isn't a currency, it's a somewhat less direct way of informing the reader that your view is that bitcoin is not a currency.

I'll repeat (since you probably didn't see my edit) that I'm merely stating what should be an obvious fact, that by definition, bitcoin doesn't have an exchange rate.  I don't need to agree or disagree with that in order to cite definitions from the dictionary, or use words properly from the dictionary in a sentence.

While you probably can deduce what my real opinion is, I don't need or want to join in on a debate that I don't  personally think has any merit in being argued.  The distinction between exchange rate and market price should be self-evident to anyone who wants to use those terms.

When I correspond with other people, I make every effort to choose words having semantics that don't need to be debated.
« Last Edit: December 07, 2017, 06:11:11 PM by ILikeDividends »

maizeman

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Re: Is it too late [bitcoin]?
« Reply #251 on: December 07, 2017, 06:12:41 PM »
You're certainly welcome to state that bitcoin does not satisfy your own definition of the word currency. But I still don't see what the exchange rate/market price distinction adds to the discussion other than being a more complicated way of indicating the same view about whether bitcoin is or isn't a currency.

The reason I think you're trying to back away from that debate is that the same word will have different meanings to different people, and be defined differently in different dictionaries. For example, I'm not sure where you found you set of dictionary definitions. I looked currency up on dictionary.com (http://www.dictionary.com/browse/currency) and this is what I found there.

Quote
currency
[kur-uh n-see, kuhr-]

noun, plural currencies.
1. something that is used as a medium of exchange; money.
2. general acceptance; prevalence; vogue.
3. a time or period during which something is widely accepted and circulated.

So I'm happy to put aside the debate about whether bitcoin is or is not a currency. Arguing with people about the meanings of word (rather than the concepts behind those words) isn't particularly satisfying. My point is simply that once we do put the currency/not-currency debate aside, there is no remaining distinction between the idea represented by the words "exchange rate" and the idea represented by the words "market price."

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #252 on: December 07, 2017, 06:34:26 PM »
A dollar is going to be worth a 100 cents regardless of whether its exchange rate rises or falls against the Euro.  You will only notice that difference if you're trying to buy an asset or commodity (bread, for instance) with USD which is priced in Euros, because you have to then exchange your dollars for Euros at the going rate in order to purchase that bread.

I won't get into a debate about whether gold or bitcoins are currencies.  Regardless of where you stand on that, it is inarguable that both are assets that react to the forces of supply and demand.  And that is why both gold and bitcoins go up or down in price at any given time.  They are both assets that are subject to market forces, priced in whatever currency you happen to be buying or selling them in at the time.

If you want to "spend" a part of your bitcoin on a loaf of bread, you have to sell enough of it to pay for the bread, and pay capital gains tax (if any) first, at the market price, before you can do that.  You could probably spend your bitcoin directly to get access restored to your hacked computer, but I kind of consider that to be an outlier scenario at the moment.

It seems like either ILikeDividends is in the mood to argue semantics or I'm just having a hard time understanding the point trying to be made and how we got to discussing what is being discussed. This was your original post that started the discussion in Reply #265. If your 6 posts were to simply say that you don't think that Bitcoin is a currency (which is a very roundabout way of doing so), why not be forthright and just say that and discuss that as opposed to arguing semantics about something completely unrelated?

For the sake of being even more forthright, since this was your original post and it seems like all 6 of your posts were simply an attempt to explain why bitcoin is not a currency, then can you answer this question? Given your above quoted reply, if Bitcoin were being used widely to be spent directly on goods (just like in your outlier scenario above), then wouldn't that qualify bitcoin as a currency to you? I'm not sure how you could answer 'no' to that without leading to some irrationality at somepoint along the way.

I say this because in Japan you can easily use Bitcoin as a currency to purchase goods directly in many local shops and it is recognized as legal tender there. So if Bitcoin is recognized as a currency in at least one nation, then wouldn't that classify it as currency? Most national fiat currencies are only recognized as legal tender in their respective nation, that doesn't disqualify their classification as being recognized as currencies regardless of your origin.

I know you said that you didn't want to debate that, but it seems like after 6 posts of strange circular replies from you, you've been doing that all along anyway.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #253 on: December 07, 2017, 06:47:41 PM »
You're certainly welcome to state that bitcoin does not satisfy your own definition of the word currency. But I still don't see what the exchange rate/market price distinction adds to the discussion other than being a more complicated way of indicating the same view about whether bitcoin is or isn't a currency.

The reason I think you're trying to back away from that debate is that the same word will have different meanings to different people, and be defined differently in different dictionaries. For example, I'm not sure where you found you set of dictionary definitions. I looked currency up on dictionary.com (http://www.dictionary.com/browse/currency) and this is what I found there.

Quote
currency
[kur-uh n-see, kuhr-]

noun, plural currencies.
1. something that is used as a medium of exchange; money.
2. general acceptance; prevalence; vogue.
3. a time or period during which something is widely accepted and circulated.

So I'm happy to put aside the debate about whether bitcoin is or is not a currency. Arguing with people about the meanings of word (rather than the concepts behind those words) isn't particularly satisfying. My point is simply that once we do put the currency/not-currency debate aside, there is no remaining distinction between the idea represented by the words "exchange rate" and the idea represented by the words "market price."

I actually have already stated my opinion about whether bitcoin is a currency upthread.  I'm not actually trying to hide my opinion.  I just don't want to engage in a debate over it.

If I mistakenly saw other nuances to the question asked by the post I responded to, which weren't actually valid, it wouldn't be the first time I've committed such an offense.  I apologize to any who were offended, without reservation.

However, there is no debate to back away from.  Hey, I'm ok using the dictionary of your choice.  If your argument is founded on that first definition, then bitcoin fails that, too.

Your dictionary defines medium of exchange as follows:
noun
1. anything generally accepted as representing a standard of value and exchangeable for goods or services.

Again, we weren't having a debate about whether bitcoin is a currency; at least I wasn't.  But that doesn't mean I'm willing to dismiss the meaning of words, and make up new unconventional semantics that other people won't understand, either, and then use them in correspondence.

« Last Edit: December 07, 2017, 07:05:52 PM by ILikeDividends »

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #254 on: December 07, 2017, 06:53:02 PM »
A dollar is going to be worth a 100 cents regardless of whether its exchange rate rises or falls against the Euro.  You will only notice that difference if you're trying to buy an asset or commodity (bread, for instance) with USD which is priced in Euros, because you have to then exchange your dollars for Euros at the going rate in order to purchase that bread.

I won't get into a debate about whether gold or bitcoins are currencies.  Regardless of where you stand on that, it is inarguable that both are assets that react to the forces of supply and demand.  And that is why both gold and bitcoins go up or down in price at any given time.  They are both assets that are subject to market forces, priced in whatever currency you happen to be buying or selling them in at the time.

If you want to "spend" a part of your bitcoin on a loaf of bread, you have to sell enough of it to pay for the bread, and pay capital gains tax (if any) first, at the market price, before you can do that.  You could probably spend your bitcoin directly to get access restored to your hacked computer, but I kind of consider that to be an outlier scenario at the moment.

It seems like either ILikeDividends is in the mood to argue semantics or I'm just having a hard time understanding the point trying to be made and how we got to discussing what is being discussed. This was your original post that started the discussion in Reply #265. If your 6 posts were to simply say that you don't think that Bitcoin is a currency (which is a very roundabout way of doing so), why not be forthright and just say that and discuss that as opposed to arguing semantics about something completely unrelated?

For the sake of being even more forthright, since this was your original post and it seems like all 6 of your posts were simply an attempt to explain why bitcoin is not a currency, then can you answer this question? Given your above quoted reply, if Bitcoin were being used widely to be spent directly on goods (just like in your outlier scenario above), then wouldn't that qualify bitcoin as a currency to you? I'm not sure how you could answer 'no' to that without leading to some irrationality at somepoint along the way.

As I've stated numerous times, I'm not going to be drawn into a debate that has no merit.  I would derive no satisfaction in convincing you one way or another on whether bitcoin is a currency or not.

That would be akin to engaging in a religious debate with you.  That would also be a complete waste of time.

Quote
I say this because in Japan you can easily use Bitcoin as a currency to purchase goods directly in many local shops and it is recognized as legal tender there. So if Bitcoin is recognized as a currency in at least one nation, then wouldn't that classify it as currency? Most national fiat currencies are only recognized as legal tender in their respective nation, that doesn't disqualify their classification as being recognized as currencies regardless of your origin.

I know you said that you didn't want to debate that, but it seems like after 6 posts of strange circular replies from you, you've been doing that all along anyway.
You have an uncanny knack for seeing arguments where there are none.  I'm not arguing semantics, I'm simply showing them to you without opining one way or another.

If you want to argue against either of those dictionary's definitions, then have at it.  I won't join in that debate either.

If you want to continue redefining words with your own "secret" meaning, have fun with that, too.  Just don't be too shocked if nobody has a clue what you're talking about.
« Last Edit: December 07, 2017, 07:09:59 PM by ILikeDividends »

maizeman

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Re: Is it too late [bitcoin]?
« Reply #255 on: December 07, 2017, 07:09:30 PM »
In my original post I stated that, unless one is debating whether something is or isn't a currency, I was aware of no other difference between an exchange rate and a market price.

After several rounds of discussion back and forth with you, I remain unaware of any other differences between an exchange rate and a market price.

But that doesn't mean I'm willing to dismiss the meaning of words, and make up new unconventional semantics that other people won't understand, either, and then use them in correspondence.

Please point to the post where I proposed unconventional semantics?

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #256 on: December 07, 2017, 07:17:04 PM »
In my original post I stated that, unless one is debating whether something is or isn't a currency, I was aware of no other difference between an exchange rate and a market price.

The difference between exchange rate and market price does not depend on whether we are debating anything, or on whether you are aware of that difference.

Quote
After several rounds of discussion back and forth with you, I remain unaware of any other differences between an exchange rate and a market price.

But that doesn't mean I'm willing to dismiss the meaning of words, and make up new unconventional semantics that other people won't understand, either, and then use them in correspondence.

Please point to the post where I proposed unconventional semantics?
That was an assumption on my part.  As far as I know, you have not explicitly redefined the meaning of the term, "currency."  However, if my assumption was incorrect, then I can't for the life of me figure out why we keep going around and around on this.

This is getting interesting now.  Are you now offering an opinion that bitcoin is not a currency?  Just curious.  Personally, I don't care one way or another.

If you do think it's a currency, then I don't need a quote from you to justify my assumption that you don't agree with the conventional semantics.

You can prove my assumption correct or incorrect in your next post, if you care to.  I won't try to change your mind in either case.
« Last Edit: December 08, 2017, 09:47:21 AM by ILikeDividends »

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #257 on: December 07, 2017, 07:29:01 PM »
As I've stated numerous times, I'm not going to be drawn into a debate that has no merit.  I would derive no satisfaction in convincing you one way or another on whether bitcoin is a currency or not.

That would be akin to engaging in a religious debate with you.  That would also be a complete waste of time.

Likewise, but then I find it puzzling that you just spent 7 posts having that very exact debate in an extremely indirect way. For someone who is against wasting time, I find it even more odd considering the fact that yours was the post that originally even brought up the question as the whether or not bitcoin was a currency or not (no one else here was putting that into question at all).

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You have an uncanny knack for seeing arguments where there are none.  I'm not arguing semantics, I'm simply showing them to you without opining one way or another.

Actually I'm just baffled at trying to understand the difference between that...

Quote
If you want to continue redefining words with your own "secret" meaning, have fun with that, too.  Just don't be too shocked if nobody has a clue what you're talking about.

I wasn't defining any words at all in any of my posts. Care to quote me where I defined any words with secret meaning?

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #258 on: December 07, 2017, 07:31:07 PM »
As I've stated numerous times, I'm not going to be drawn into a debate that has no merit.  I would derive no satisfaction in convincing you one way or another on whether bitcoin is a currency or not.

That would be akin to engaging in a religious debate with you.  That would also be a complete waste of time.

Likewise, but then I find it puzzling that you just spent 7 posts having that very exact debate in an extremely indirect way. For someone who is against wasting time, I find it even more on considering the fact that yours was the post that originally even brought up the question as the whether or not bitcoin was a currency or not (no one else here was putting that into question at all).

I don't consider having fun a waste of time.  I find the intensity of your apparent desperation to draw me into a debate that will never occur fascinating and thoroughly entertaining.

Quote
Quote
You have an uncanny knack for seeing arguments where there are none.  I'm not arguing semantics, I'm simply showing them to you without opining one way or another.

Actually I'm just baffled at trying to understand the difference between that...

Acknowledged.

Quote
Quote
If you want to continue redefining words with your own "secret" meaning, have fun with that, too.  Just don't be too shocked if nobody has a clue what you're talking about.

I wasn't defining any words at all in any of my posts. Care to quote me where I defined any words with secret meaning?

If you'll scroll up one post, I think my last reply should pretty much apply to your question as well.  And the invitation to resolve the question is extended to you, too.
« Last Edit: December 07, 2017, 07:52:11 PM by ILikeDividends »

maizeman

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Re: Is it too late [bitcoin]?
« Reply #259 on: December 07, 2017, 07:45:13 PM »
In my original post I stated that, unless one is debating whether something is or isn't a currency, I was aware of no other difference between an exchange rate and a market price.

The difference between exchange rate and market price does not depend on whether we are debating anything, or on whether you are aware of that difference.

You are correct that there could still be another difference in the ideas represented by these terms which I'm unaware of. But since you've yet to propose any additional differences we are left with three possibilities:

1) there are no additional differences between the two terms
2) there is some additional technical difference neither of us aware of (but there is no functional difference between this and #1 for the purposes of our discussion)
3) there is a difference you're aware of, that I'm not aware of, and for some reason you don't want to state what it is (which seems unlikely but if so would make further discussion with you seem particularly fruitless).

But that doesn't mean I'm willing to dismiss the meaning of words, and make up new unconventional semantics that other people won't understand, either, and then use them in correspondence.

Please point to the post where I proposed unconventional semantics?
That was an assumption on my part.  As far as I know, you have not explicitly redefined the meaning of the term, "currency."  However, if my assumption was incorrect, then I can't for the life of figure out why we keep going around and around on this.

This is getting interesting now.  Are you now offering an opinion that bitcoin is not a currency?  Just curious.  Personally, I don't care one way or another.

If you do think it's a currency, then my assumption doesn't need a quote from you to justify my assumption that you don't agree with the conventional semantics.

I've found the best way to avoid debates I'm not interested in (and I'm really not interested in having this debate, with either side) is to genuinely not have a position, rather than stating or implying "I believe X, but I don't want to discuss or debate it."

All I'm trying to get across at this point* is that -- unless option #3 above is correct -- a discussion of whether bitcoin has an exchange rate with the US dollar or a market price in US dollars is the exact same discussion as whether bitcoin is or isn't a currency. There's no additional information content.

*Originally I was trying to figure out if you were trying to convey some additional idea with the exchange rate vs. market price distinction.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #260 on: December 07, 2017, 07:57:35 PM »
In my original post I stated that, unless one is debating whether something is or isn't a currency, I was aware of no other difference between an exchange rate and a market price.

The difference between exchange rate and market price does not depend on whether we are debating anything, or on whether you are aware of that difference.

You are correct that there could still be another difference in the ideas represented by these terms which I'm unaware of. But since you've yet to propose any additional differences we are left with three possibilities:

1) there are no additional differences between the two terms
2) there is some additional technical difference neither of us aware of (but there is no functional difference between this and #1 for the purposes of our discussion)
3) there is a difference you're aware of, that I'm not aware of, and for some reason you don't want to state what it is (which seems unlikely but if so would make further discussion with you seem particularly fruitless).


But that doesn't mean I'm willing to dismiss the meaning of words, and make up new unconventional semantics that other people won't understand, either, and then use them in correspondence.

Please point to the post where I proposed unconventional semantics?
That was an assumption on my part.  As far as I know, you have not explicitly redefined the meaning of the term, "currency."  However, if my assumption was incorrect, then I can't for the life of figure out why we keep going around and around on this.

This is getting interesting now.  Are you now offering an opinion that bitcoin is not a currency?  Just curious.  Personally, I don't care one way or another.

If you do think it's a currency, then my assumption doesn't need a quote from you to justify my assumption that you don't agree with the conventional semantics.

I've found the best way to avoid debates I'm not interested in (and I'm really not interested in having this debate, with either side) is to genuinely not have a position, rather than stating or implying "I believe X, but I don't want to discuss or debate it."

All I'm trying to get across at this point* is that -- unless option #3 above is correct -- a discussion of whether bitcoin has an exchange rate with the US dollar or a market price in US dollars is the exact same discussion as whether bitcoin is or isn't a currency. There's no additional information content.

*Originally I was trying to figure out if you were trying to convey some additional idea with the exchange rate vs. market price distinction.
This isn't a multiple choice question.  The only thing I ever asserted, apart from actually using that term properly in a sentence, is that, by definition, bitcoin doesn't have an exchange rate.

If you don't agree with that, then I propose that we agree to disagree.

You can agree, disagree, agree to disagree, continue posting, or withdraw.  Those are really the only multiple choices available.

It seems that the only thing we are debating is whether we are actually having a debate or not about bitcoin as a currency.  And I'm quite happy to debate that.  I never said I wouldn't debate anything.  I just said I wouldn't debate whether bitcoin is a currency or not.  And I won't.
« Last Edit: December 07, 2017, 08:10:15 PM by ILikeDividends »

maizeman

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Re: Is it too late [bitcoin]?
« Reply #261 on: December 07, 2017, 08:14:05 PM »
So in summation, after rounds and rounds of discussion in response to the very simple question "How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity)?" the answer is there are no other differences between the two terms you would care to name.

You really could have saved us both a lot of time (and everyone else following this thread a lot of extremely boring posts) if you'd just said that at the beginning.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #262 on: December 07, 2017, 08:35:22 PM »
So in summation, after rounds and rounds of discussion in response to the very simple question "How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity)?" the answer is there are no other differences between the two terms you would care to name.

You really could have saved us both a lot of time (and everyone else following this thread a lot of extremely boring posts) if you'd just said that at the beginning.

You said flatly, without qualification, that you'd argue there was no distinguishable difference between the two terms.

I'd argue exchange rate vs market price is a distinction without a difference.

Then you said this:

Quote
But I remain open to being proven wrong though. How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity, because that would just become circular reasoning).
I proved you wrong on my very first reply, and then you were the one who flooded the thread with redundant posts after that.

I didn't agree (or fully even understand) how currency vs commodity amounts to circular reasoning, but I didn't want to debate that point.  That point was neither resolved or conceded without comment from me; i.e., we never debated it.  I merely withdrew from that point.

Based on your articulation of the point you said you were willing to argue, it quite understandably wasn't obvious that your acceptable proof was contingent on anything more than what you said you'd argue for.
« Last Edit: December 07, 2017, 09:22:22 PM by ILikeDividends »

waltworks

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Re: Is it too late [bitcoin]?
« Reply #263 on: December 07, 2017, 08:56:25 PM »
Indeed, this is a dumb argument.

I am more interested in the conundrum that something that had the promise to make money flow more easily and cheaply between normal people has been hijacked by nutty speculators such that it's practically useless for it's intended (ok, who knows what the intent really was, but still) purpose. The coming (who knows when) crash will give the whole industry a black eye and probably tie us to the stupid credit card processors and their vampire fees for another decade.

-W

maizeman

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Re: Is it too late [bitcoin]?
« Reply #264 on: December 07, 2017, 09:36:05 PM »
New summary: you are not interested in answering my original question: "How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity)?" and apparently have been trying to have an unrelated argument.

I don't know how I could have been clearer about the question I was asking than I was in my original post. However, it's clear you feel very strongly about whatever separate discussion you've been having the whole time.

I apologize for taking so long to realize we have been apparently been having completely unrelated conversations, thank you for clarifying.


ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #265 on: December 07, 2017, 10:03:38 PM »
New summary: you are not interested in answering my original question: "How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity)?" and apparently have been trying to have an unrelated argument.

I don't know how I could have been clearer about the question I was asking than I was in my original post. However, it's clear you feel very strongly about whatever separate discussion you've been having the whole time.

I apologize for taking so long to realize we have been apparently been having completely unrelated conversations, thank you for clarifying.



I am literally thrilled to finally find some common ground with you on this.  If the distinction between currency versus commodity is deemed irrelevant, then the distinction between exchange rate and market price is equally meaningless.

I propose we jointly declare this debate resolved.
« Last Edit: December 07, 2017, 10:09:55 PM by ILikeDividends »

maizeman

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Re: Is it too late [bitcoin]?
« Reply #266 on: December 07, 2017, 10:07:51 PM »
I am literally thrilled to finally find some common ground with you on this.  If the distinction between currency versus commodity is deemed irrelevant, then the distinction between exchange rate and market price is equally meaningless.

I propose we declare this debate resolved.

Exactly! Yes, if we can agree on that point then we are, in fact, in agreement.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #267 on: December 07, 2017, 10:11:53 PM »
I am literally thrilled to finally find some common ground with you on this.  If the distinction between currency versus commodity is deemed irrelevant, then the distinction between exchange rate and market price is equally meaningless.

I propose we declare this debate resolved.

Exactly! Yes, if we can agree on that point then we are, in fact, in agreement.

<Gavel slams with a loud whack.>  The resolution is adopted.
« Last Edit: December 08, 2017, 07:36:51 AM by ILikeDividends »

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #268 on: December 08, 2017, 08:03:06 AM »
Thats it????  That's your rebuttal??

I guess there wasn't much you disagreed with then...


And yeah, this is a forum for people who are seeking financial independence, not a crypto fan-club.  So, assuming the mods will still have me, I'll continue to giving advice I think will help advance people towards the goal of FI.  This includes not speculating on cryptos.  I do weigh in on other topics as well. Sometimes I agree with the consensus, sometimes not.

You know, for being on a financial independence forum, you certainly spend a lot of time hanging around these parts talking nothing but cryptos.

That was my rebuttal because that has already be discussed with you and it has been explained several times here and in the other Bitcoin threads which you were a part of why Bitcoin's blockchain is so secure.

You even had a post you created yourself here where you questioned this very topic of security with a clear misunderstand of how it all works:

https://forum.mrmoneymustache.com/investor-alley/things-i-don't-understand-about-bitcoin/

Here you said:

"3.) It's secure... But for how long?  Taking into account the ever increasing computing power, at what point will it be simple to brute-force into bitcoin wallets.  The blockchain is a public ledger so I assume someone could download the whole thing and set a stable of computers against determining the private key for high value bitcoin wallets until they are cracked.  With the exponential advance of computing power, i.e. Moore's Law, how far away are we really?"

In another post, you said:

"I believe that the block-chain is growing exponentially such that at a certain point the power/energy required to continue to validate the blocks in the block chain will be impossibly large.  At that point the network will collapse under its own weight and no new transactions will be validated."

It seems like you have a misunderstanding on how the blockchain works and why it is so secure. As someone who works in Information Security, I will take to time to explain a few things for you.

Bitcoin's security comes from several specific areas and I'll list out the three of the most important ones:

1) Decentralization: Bitcoin's main security protection comes from the fact that it is a decentralized network. There are currently tens of thousands of bitcoin nodes around the world that each store their own copy of the entire blockchain and that validate and propagate blocks across the network to ensure they are valid blocks that meet all the rules of the network. This makes it theoretically impossible to hack the entire network. If there were a remote code execution vulnerability in the bitcoin core software, you'd be able to compromise and run code on that individual node itself, but the blockchain is public information, so there is no confidential data to steal. You could compromise the keys that are stored on that individual's node and potential steal bitcoin from one user, but that isn't a compromise that threatens the entire network. Contrast this to traditional centralized institutions that store massive amounts of confidential consumer information. Many of the data breaches that take place go unnoticed for months or even years, meanwhile millions of dollars are lost due to unauthorized transaction fraud because of these breaches. These damages are completely lost and unrecoverable, not unlike lost bitcoin are today. Most large companies that handle payment information now have cyber-security insurance to help pay for damages in the event of a breach to protect the consumers. This same protection can be applied to centralized bitcoin organizations. Insurance payouts can be used to return the stolen amounts of bitcoin back to consumers that lost it for those people that had bitcoin stored with centralized institutions. Breaches against central authorities that result in financial loss for consumers is not a critique against bitcoin, it is a critique against centralization. However, the Bitcoin network has a solution for this. It allows for users to take security into their own hands by giving them the power to own their private keys. This eliminates the central single point of failure inherent in our institutions today and makes it much more difficult for attackers to steal large amounts of funds from massive stockpiles of information.


2) Proof-of-work: Proof of work is what is used to include transactions onto the blockchain so that they're immutable and permanently stored as part of the transaction history for the public ledger. SHA256 is a hashing algorithm. Hashing algorithms are considered one-way encryption. That means that there is data loss involved in the process and the output can never be transformed back to the input that created it. That means the only viable method of retrieving the input from the output is to simply brute-force all possible combinations. For a primer on how secure 256-bit hashing is, here is a good video to watch:

https://www.youtube.com/watch?v=S9JGmA5_unY

Also, here is a snippet of text regarding the thermodynamics required of today's computing technology in order to break 256-bit security:

"We cannot even imagine a world where 256-bit brute force searches are possible. It requires some fundamental breakthroughs in physics and our understanding of the universe.

One of the consequences of the second law of thermodynamics is that a certain amount of energy is necessary to represent information. To record a single bit by changing the state of a system requires an amount of energy no less than kT, where T is the absolute temperature of the system and k is the Boltzman constant. (Stick with me; the physics lesson is almost over.)

Given that k = 1.38 × 10−16 erg/K, and that the ambient temperature of the universe is 3.2 Kelvin, an ideal computer running at 3.2 K would consume 4.4 × 10−16 ergs every time it set or cleared a bit. To run a computer any colder than the cosmic background radiation would require extra energy to run a heat pump.

Now, the annual energy output of our sun is about 1.21 × 1041 ergs. This is enough to power about 2.7 × 1056 single bit changes on our ideal computer; enough state changes to put a 187-bit counter through all its values. If we built a Dyson sphere around the sun and captured all its energy for 32 years, without any loss, we could power a computer to count up to 2192. Of course, it wouldn't have the energy left over to perform any useful calculations with this counter.

But that's just one star, and a measly one at that. A typical supernova releases something like 1051 ergs. (About a hundred times as much energy would be released in the form of neutrinos, but let them go for now.) If all of this energy could be channeled into a single orgy of computation, a 219-bit counter could be cycled through all of its states.

These numbers have nothing to do with the technology of the devices; they are the maximums that thermodynamics will allow. And they strongly imply that brute-force attacks against 256-bit keys will be infeasible until computers are built from something other than matter and occupy something other than space."



Another unique property to hashing is that every unique input has a completely unique output. Currently, there are no known collisions for the SHA256 algorithm that bitcoin uses. This means that for all the infinite possible inputs, we have currently not found any two inputs that yield the same output. This is critical for the next security feature. For each new block that is added to the blockchain, the hash of the previous block is included and hashed into the new block. This is what creates the immutable blockchain. This means that if any prior block were to be altered, the entire proof of work that went into all blocks there afterward would need to be rehashed in order for the blockchain to stay valid.

Currently, the bitcoin network consists of the most computing power in any one single network in the world. There is more computing power on the bitcoin network that the total of the world's 600 top supercomputers combined. This is an immense amount of computing power that provides bitcoin its security and is completely unique to bitcoin's blockchain. I am not sure exactly the current number as it is constantly changing, but in order for the entire bitcoin blockchain to be reworked, the current bitcoin network would need to calculate for something like 200 days straight. This means that for any other entity that wanted to alter the transaction history of the bitcoin blockchain, not only would you need to have more computing power than the rest of the bitcoin network, but you'd need to put it to work for a very long time which would quickly become cost prohibitive (as if having that much computing power wouldn't be cost prohibitive for one single entity in the first place). The further any given block is buried in the blockchain, the more secure it becomes. Estimates are something around the vicinity of $60 billion dollars to attempt to "counterfeit" one single bitcoin which means economically it just makes sense to purchase bitcoin on the market as opposed to trying to cheat the system. That cost will only continue to rise as more computing power is added to the network.


3) Quantum computing protection: Now the idea of computers being made of something other than matter and occuying something other than space (as noted in the quote above) alludes to the idea of quantum computers. Quantum computers use qubits instead of bits consisting of 1's and 0's. Qubits can be a 1 or a 0 and essentially any superposition of those two states. Using specific algorithms (like Shor's algo), quantum computers can take an integer and finds its prime factors extremely quickly because of the fact that it can solve for many states at the same and solve the equation in polynomial time.

In otherwords, given a public key (which is based on two very large prime numbers), you can find the original prime used numbers which is essentially the private key. Bitcoin uses public and private keys for digital signatures for securing bitcoins for their owners. However, bitcoin uses clever techniques to protect against the threat of quantum computing. Whenever a transaction is signed to send money to another address, its public key is added to the signed transaction so that the network and recipient can verify that the signer was indeed the owner of the bitcoin's being sent. Because addresses are hashes of the public key, this means that the only time that the actual public key is exposed is when the bitcoin address is actually being emptied and sent to the recipient. This is why it is important to never use the same bitcoin address twice. By the time a quantum computer receives the public key in order to attempt to decipher the private key from it, the address will have already been emptied of bitcoin and be worthless. Since quantum computers are not efficient at solving hashing equations, this protects bitcoin from the threat of quantum computers. Should there be a need to change encryption algorithms or increase the key size, this can be done through an upgrade and due to the decentralized nature of the network, the threat of this type of issue in the future is a much bigger threat to existing traditional centralized institutions that depend on these same encryption algorithms for security and rely on single points of failure to protect massive amounts of confidential data.


This is just a small sample of some of the more major components of the security that bitcoin provides and I hope I explained it in a way that is easy to understand.

L.A.S., I gave you the rebuttal I did because it is clear from your posts that after information like this is provided for you, you still continue to post FUD information about bitcoin such as an article about a data breach that is not unique to bitcoin, but is commonplace among every industry out there. The fact that the bitcoin that were stolen cannot be recovered is no different from the billions of USD that are stolen every year before even the data breaches that were the root cause were even discovered. At least when bitcoin is stolen, it is apparent immediately that they are gone compared to the covert fraud that takes place from compromised payment information every single day before it becomes clear there was a breach somewhere.

You're free to post on any topic you'd like, but don't mistake what you're posting as advice to anyone when it is clear from your post history that you have a clear bias against this technology and a lack of understanding of it as well. I welcome any open dialog and debate and if you'd like to engage in that, I'd be more than happy to.
« Last Edit: December 08, 2017, 08:07:03 AM by lifeanon269 »

GuitarStv

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Re: Is it too late [bitcoin]?
« Reply #269 on: December 08, 2017, 10:20:34 AM »
L.A.S., I gave you the rebuttal I did because it is clear from your posts that after information like this is provided for you, you still continue to post FUD information about bitcoin such as an article about a data breach that is not unique to bitcoin, but is commonplace among every industry out there. The fact that the bitcoin that were stolen cannot be recovered is no different from the billions of USD that are stolen every year before even the data breaches that were the root cause were even discovered. At least when bitcoin is stolen, it is apparent immediately that they are gone compared to the covert fraud that takes place from compromised payment information every single day before it becomes clear there was a breach somewhere.

The difference with bitcoin is that there is no consumer protection at all.  Once money has been stolen it's gone.  I mean, if there's a data breach at my bank at a billion dollars are lost . . . I don't care because it doesn't impact me.  If my credit card is stolen and there are fraudulent charges, they don't impact me.  When there's a data breach at a place holding bitcoin for people, each of those people will lose their funds.  There also currently exists no real way to trace the missing money.

While I agree with you that there's a lot of cool security technology involved with crypto-currencies, your continual refusal to acknowledge the poor (non-existent) level of consumer protection that comes from using them is a bit odd.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #270 on: December 08, 2017, 10:29:51 AM »
L.A.S., I gave you the rebuttal I did because it is clear from your posts that after information like this is provided for you, you still continue to post FUD information about bitcoin such as an article about a data breach that is not unique to bitcoin, but is commonplace among every industry out there. The fact that the bitcoin that were stolen cannot be recovered is no different from the billions of USD that are stolen every year before even the data breaches that were the root cause were even discovered. At least when bitcoin is stolen, it is apparent immediately that they are gone compared to the covert fraud that takes place from compromised payment information every single day before it becomes clear there was a breach somewhere.

The difference with bitcoin is that there is no consumer protection at all.  Once money has been stolen it's gone.  I mean, if there's a data breach at my bank at a billion dollars are lost . . . I don't care because it doesn't impact me.  If my credit card is stolen and there are fraudulent charges, they don't impact me.  When there's a data breach at a place holding bitcoin for people, each of those people will lose their funds.  There also currently exists no real way to trace the missing money.

While I agree with you that there's a lot of cool security technology involved with crypto-currencies, your continual refusal to acknowledge the poor (non-existent) level of consumer protection that comes from using them is a bit odd.

Shall I assume that you don't agree that bitcoin is suitable for wide adoption and a general acceptance as a standard of value and a medium of exchange?

I have no noteworthy disagreements with your post.  Just curious. ;)
« Last Edit: December 08, 2017, 10:44:17 AM by ILikeDividends »

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #271 on: December 08, 2017, 10:45:51 AM »
The difference with bitcoin is that there is no consumer protection at all.  Once money has been stolen it's gone.  I mean, if there's a data breach at my bank at a billion dollars are lost . . . I don't care because it doesn't impact me.  If my credit card is stolen and there are fraudulent charges, they don't impact me.  When there's a data breach at a place holding bitcoin for people, each of those people will lose their funds.  There also currently exists no real way to trace the missing money.

That's not really a difference. If there is a data breach at a company, there will likely be millions of dollars that were permanently stolen that can never be returned. The company covers those costs for the consumer. Why can't that same thing be true for centralized companies that handle bitcoin? It isn't the currency that is providing the protection in either case. Most data breaches that occur go unnoticed for months all the while millions of dollars are being stolen. The protections that are in place that protect the consumer are not protections provided by the currency, they're just simply protections provided by the companies because they'd like to stay in business. The customers are protected not because they were able to retrieve the stolen funds (that's almost never the case), but simply because they're protecting their business...the customers...by not putting the loss on them. Cyber-security insurance is a massive industry now for this very reason. Coinbase undoubtedly has as massive insurance policy to protect their customers in the same way that many other companies that handle confidential information do.

If we're talking about individuals holding their own private keys, then the comparison there is no different to anyone holding cash. Once its stolen, its likely gone forever unless you can find who stole it. The same is true for bitcoin.

GuitarStv

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Re: Is it too late [bitcoin]?
« Reply #272 on: December 08, 2017, 10:50:02 AM »
L.A.S., I gave you the rebuttal I did because it is clear from your posts that after information like this is provided for you, you still continue to post FUD information about bitcoin such as an article about a data breach that is not unique to bitcoin, but is commonplace among every industry out there. The fact that the bitcoin that were stolen cannot be recovered is no different from the billions of USD that are stolen every year before even the data breaches that were the root cause were even discovered. At least when bitcoin is stolen, it is apparent immediately that they are gone compared to the covert fraud that takes place from compromised payment information every single day before it becomes clear there was a breach somewhere.

The difference with bitcoin is that there is no consumer protection at all.  Once money has been stolen it's gone.  I mean, if there's a data breach at my bank at a billion dollars are lost . . . I don't care because it doesn't impact me.  If my credit card is stolen and there are fraudulent charges, they don't impact me.  When there's a data breach at a place holding bitcoin for people, each of those people will lose their funds.  There also currently exists no real way to trace the missing money.

While I agree with you that there's a lot of cool security technology involved with crypto-currencies, your continual refusal to acknowledge the poor (non-existent) level of consumer protection that comes from using them is a bit odd.

Shall I assume that you don't agree that bitcoin is suitable for wide adoption and a general acceptance as a standard of value and a medium of exchange?

I have no noteworthy disagreements with your post.  Just curious. ;)

I think that the potential exists, but this is one of several bugs that needs to be worked out for that to happen.

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #273 on: December 08, 2017, 10:52:21 AM »
I think that the potential exists, but this is one of several bugs that needs to be worked out for that to happen.

Then we have nothing to argue about.  Apologies for the intrusion. ;)
« Last Edit: December 08, 2017, 10:57:51 AM by ILikeDividends »

simonsez

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Re: Is it too late [bitcoin]?
« Reply #274 on: December 08, 2017, 11:11:14 AM »
If we're talking about individuals holding their own private keys, then the comparison there is no different to anyone holding cash. Once its stolen, its likely gone forever unless you can find who stole it. The same is true for bitcoin.
Wait, Bitcoin has something similar to FDIC?  If someone robs my bank, I'm still good to go.

Or do you mean if someone robs me on the street and takes the cash I carry with me that is the same as people's Bitcoin private keys being stolen?  The former is likely to be $20.  I'm not sure what the average value of Bitcoin private keys is but I suspect the order of magnitude is different.

maizeman

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Re: Is it too late [bitcoin]?
« Reply #275 on: December 08, 2017, 11:17:03 AM »
If we're talking about individuals holding their own private keys, then the comparison there is no different to anyone holding cash. Once its stolen, its likely gone forever unless you can find who stole it. The same is true for bitcoin.

I think cash is actually a very good analogy.*

Many of the concerns people have about using bitcoin as a store of wealth (as apposed to a method of facilitating transactions) are the exact same concerns which would arise with using cash as a store of wealth. In both cases, transactions are irreversible, which both decreases transaction costs and increases wealth.

The lack of consumer protections against either theft of fraudulent protections really isn't a big concern for me in either case as long as the overall sums of money are small. (If someone steals my wallet with a few hundred bucks in it, I'm out that money in just the same unrecoverable fashion as if someone steals the private key to my bitcoin wallet.) I've never used the chargeback functions on credit cards, so for me they don't provide a lot of extra value over using cash/bitcoin for day to day transactions.

In contrast, if I had a significant fraction of my total net worth tied up in either a bitcoin wallet or a big pile of 100 dollar bills in my apartment, I suspect I would be much more stressed, and sleep less well at night, than I am with most of my total net worth tied up in index funds, bank accounts, and real estate.

*For a sense of the logistical and security problems faced by using physical cash as a store of wealth, reading up on the marijuana industry in the USA, where many states have legalized the trade, but the federal government prevents these business from opening bank accounts, is a great resource.

GuitarStv

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Re: Is it too late [bitcoin]?
« Reply #276 on: December 08, 2017, 11:23:13 AM »
If we're talking about individuals holding their own private keys, then the comparison there is no different to anyone holding cash. Once its stolen, its likely gone forever unless you can find who stole it. The same is true for bitcoin.

I think cash is actually a very good analogy.*

Many of the concerns people have about using bitcoin as a store of wealth (as apposed to a method of facilitating transactions) are the exact same concerns which would arise with using cash as a store of wealth. In both cases, transactions are irreversible, which both decreases transaction costs and increases wealth.

The lack of consumer protections against either theft of fraudulent protections really isn't a big concern for me in either case as long as the overall sums of money are small. (If someone steals my wallet with a few hundred bucks in it, I'm out that money in just the same unrecoverable fashion as if someone steals the private key to my bitcoin wallet.) I've never used the chargeback functions on credit cards, so for me they don't provide a lot of extra value over using cash/bitcoin for day to day transactions.

In contrast, if I had a significant fraction of my total net worth tied up in either a bitcoin wallet or a big pile of 100 dollar bills in my apartment, I suspect I would be much more stressed, and sleep less well at night, than I am with most of my total net worth tied up in index funds, bank accounts, and real estate.

*For a sense of the logistical and security problems faced by using physical cash as a store of wealth, reading up on the marijuana industry in the USA, where many states have legalized the trade, but the federal government prevents these business from opening bank accounts, is a great resource.

Forgive me if I'm wrong, but isn't that the complete opposite scenario of most bitcoin investors at the moment?  Few people have only a couple hundred dollars of bitcoin, most appear to be hoarding large sums with the intent to use as an investment rather than for any transactions that can be carried out.

maizeman

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Re: Is it too late [bitcoin]?
« Reply #277 on: December 08, 2017, 11:27:59 AM »
Well, to clarify, I'm not an (intentional) bitcoin investor. So don't take any of my posts as representing the "buy bitcoin" worldview.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #278 on: December 08, 2017, 11:44:07 AM »
Again, to reiterate though, the critique about protection from breaches is not a critique against bitcoin itself, it is just a critique against centralized organizations that don't provide adequate protections for their consumers. It is only a matter of time where it is common place to have larger bitcoin institutions (like Coinbase) that provide the same consumer protections against data breaches that today's traditional institutions provide.

The benefit that bitcoin does provide the individual is that if they choose not to trust that central authority (which many around the world don't and shouldn't), then you can choose to take security into your own hands.

I do this myself and I am fully confident in my ability to store a large amounts of bitcoin securely. I have a seed stamped on to steel that I used Shamir39 to generate a 2 of 3 seed. Those three copies are stored in geographically diverse locations from each other. I only need 2 of the 3 different seeds to restore my bitcoin. My seed was also generated off-line using 12 rolls of 4 dice and a quarter and it has never touched an online computer before. Obviously, taking security this seriously is not something that everyone will do our have the know how to do, but the technologies are there (hardware wallets, etc) to allow for adequate security for the individual. Additional technologies that will continue to increase ease of use will no doubt be developed. In my opinion, this gives a much greater degree of security when compared to straight cash.

Also, further technologies for institutional protections will continue to be developed. Coinbase has already implemented some such features such as their Vault accounts. Multi-signature online custodial accounts provide a mix of both worlds that allows the end-user to own a portion of the private key along with another party and a combination of the keys are needed for withdrawals. Withdrawals with Coinbase's Vault accounts take 2 days to go through which allow for adequate reaction time in the event of an unauthorized withdrawal. Again, these are technologies and system designs that can be layered on top of bitcoin. Critiquing bitcoin for a failure in centralized institutions to provide adequate protections to their consumers only validates the main concept behind bitcoin's decentralized design in the first place.

GuitarStv

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Re: Is it too late [bitcoin]?
« Reply #279 on: December 08, 2017, 11:52:13 AM »
Again, to reiterate though, the critique about protection from breaches is not a critique against bitcoin itself, it is just a critique against centralized organizations that don't provide adequate protections for their consumers. It is only a matter of time where it is common place to have larger bitcoin institutions (like Coinbase) that provide the same consumer protections against data breaches that today's traditional institutions provide.

Are you sure about that?  Most financial institutions do not actually hold large quantities of cash at any given time, it's digitally recorded debt that gets swapped back and forth all over the place.  It's not possible for someone to break into the bank and cart away all of the money.  It seems like any institution holding bitcoin would need to actually have the bitcoin, and therefore be vulnerable to this concern wouldn't it?

moof

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Re: Is it too late [bitcoin]?
« Reply #280 on: December 08, 2017, 11:55:11 AM »
Again, to reiterate though, the critique about protection from breaches is not a critique against bitcoin itself, it is just a critique against centralized organizations that don't provide adequate protections for their consumers. It is only a matter of time where it is common place to have larger bitcoin institutions (like Coinbase) that provide the same consumer protections against data breaches that today's traditional institutions provide.
...
Report back when I can get FDIC backed Bitcoin accounts to store my crap in.  None of the Bitcoin infrastructure has ever been tested against a bank run.  Well, actually Mt. Gox did and it failed miserably.

FI40

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Re: Is it too late [bitcoin]?
« Reply #281 on: December 08, 2017, 12:07:23 PM »
I do this myself and I am fully confident in my ability to store a large amounts of bitcoin securely. I have a seed stamped on to steel that I used Shamir39 to generate a 2 of 3 seed. Those three copies are stored in geographically diverse locations from each other. I only need 2 of the 3 different seeds to restore my bitcoin. My seed was also generated off-line using 12 rolls of 4 dice and a quarter and it has never touched an online computer before. Obviously, taking security this seriously is not something that everyone will do our have the know how to do, but the technologies are there (hardware wallets, etc) to allow for adequate security for the individual. Additional technologies that will continue to increase ease of use will no doubt be developed. In my opinion, this gives a much greater degree of security when compared to straight cash.

I'm just curious, when you have your seed stamped on steel (it's really weird to say that btw) in different geographic locations, can you still use your bitcoins easily, i.e. do you need to find 2 of your 3 seeds every time you want to buy something with your bitcoin, or buy more bitcoins? If so that is inconvenient. If not then please educate this ignoramus.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #282 on: December 08, 2017, 12:11:23 PM »
Are you sure about that?  Most financial institutions do not actually hold large quantities of cash at any given time, it's digitally recorded debt that gets swapped back and forth all over the place.  It's not possible for someone to break into the bank and cart away all of the money.  It seems like any institution holding bitcoin would need to actually have the bitcoin, and therefore be vulnerable to this concern wouldn't it?

Most data breaches do not consist of heist style robberies where millions of dollars are exfiltrated (as you noted). It is the payment information and PII that is exfiltrated. This often happens without the companies knowing. The fraud/theft then happens afterward in the form of unauthorized transactions. Yes, financial organizations holding bitcoin would need to store that bitcoin, but the positive trade off is that you don't have aftermarket fraud taking place in the form of unauthorized transactions. On top of that, if bitcoin is stolen, it is noticeable immediately after the funds are withdrawn as opposed to having a breach remain dormant for months or years on end while consumer data is being stolen.

Report back when I can get FDIC backed Bitcoin accounts to store my crap in.  None of the Bitcoin infrastructure has ever been tested against a bank run.  Well, actually Mt. Gox did and it failed miserably.

FDIC does not insure against fraud though (which is what the discussion was about). I agree that FDIC insurance would be valuable in the event of institutional insolvency. But, again, that is not a critique against bitcoin, that's a critique against the institutions around it. We may very well see a day where FDIC/NCUA type insurances are extended to bitcoin accounts as well.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #283 on: December 08, 2017, 12:15:54 PM »
I'm just curious, when you have your seed stamped on steel (it's really weird to say that btw) in different geographic locations, can you still use your bitcoins easily, i.e. do you need to find 2 of your 3 seeds every time you want to buy something with your bitcoin, or buy more bitcoins? If so that is inconvenient. If not then please educate this ignoramus.

That's my cold storage vault. That very secure wallet contains 99% of my bitcoin. I rarely ever withdraw from it (maybe once a month) and I can still send money to it any time without needing the seed. The seed is only needed for spending. I chose to stamp it on steel so that it is better protected against fire, corrosion, electricity, and water (compared to just storing it on paper in a fire safe, for example). For spending, I just use the online wallet through Coinbase where I keep small amounts of funds (<$1000) at any given time. I have a bitcoin debit card tied to that wallet that allows me to spend that bitcoin anywhere VISA is accepted without any transaction fees.

Hope that helps.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #284 on: December 08, 2017, 12:17:52 PM »
Yeah, what kind of steel did you use?  Steel, even many "stainless" steels varieties are still prone to rust, pitting, and corrosion over long durations and poor environmental  conditions...  Its why they don't use it for coins, at least not in the U.S.

100% stainless AISI 304 steel

GuitarStv

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Re: Is it too late [bitcoin]?
« Reply #285 on: December 08, 2017, 12:37:03 PM »
Are you sure about that?  Most financial institutions do not actually hold large quantities of cash at any given time, it's digitally recorded debt that gets swapped back and forth all over the place.  It's not possible for someone to break into the bank and cart away all of the money.  It seems like any institution holding bitcoin would need to actually have the bitcoin, and therefore be vulnerable to this concern wouldn't it?

Most data breaches do not consist of heist style robberies where millions of dollars are exfiltrated (as you noted). It is the payment information and PII that is exfiltrated. This often happens without the companies knowing. The fraud/theft then happens afterward in the form of unauthorized transactions. Yes, financial organizations holding bitcoin would need to store that bitcoin, but the positive trade off is that you don't have aftermarket fraud taking place in the form of unauthorized transactions. On top of that, if bitcoin is stolen, it is noticeable immediately after the funds are withdrawn as opposed to having a breach remain dormant for months or years on end while consumer data is being stolen.

Agreed mostly.

The difference is that data breaches do not really financially impact end users under our current banking system.  Data breaches will directly impact end users who have bitcoin held somewhere.  So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

lifeanon269

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Re: Is it too late [bitcoin]?
« Reply #286 on: December 08, 2017, 01:39:03 PM »
Agreed mostly.

The difference is that data breaches do not really financially impact end users under our current banking system.  Data breaches will directly impact end users who have bitcoin held somewhere.  So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

Again, that is a critique against the institutions providing services for costumers, not against bitcoin. Data breaches with most traditional financial institutions do not impact the end user because most of those institutions value their business and purchase insurance so that if a breach were to occur, it doesn't have to impact their customers.

Case in point, Coinbase is insured in this same way against data breaches as it states on their website:

"Digital Currency

All digital currency that Coinbase holds online is fully insured. This means that if Coinbase were to suffer a breach of its online storage, the insurance policy would pay out to cover any customer funds lost as a result.

The insurance policy covers any losses resulting from a breach of Coinbase’s physical security, cyber security, or by employee theft.

Coinbase holds less than 2% of customer funds online. The rest is held in offline storage."

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #287 on: December 08, 2017, 01:44:27 PM »
Agreed mostly.

The difference is that data breaches do not really financially impact end users under our current banking system.  Data breaches will directly impact end users who have bitcoin held somewhere.  So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

Again, that is a critique against the institutions providing services for costumers, not against bitcoin. Data breaches with most traditional financial institutions do not impact the end user because most of those institutions value their business and purchase insurance so that if a breach were to occur, it doesn't have to impact their customers.

Case in point, Coinbase is insured in this same way against data breaches as it states on their website:

"Digital Currency

All digital currency that Coinbase holds online is fully insured. This means that if Coinbase were to suffer a breach of its online storage, the insurance policy would pay out to cover any customer funds lost as a result.

The insurance policy covers any losses resulting from a breach of Coinbase’s physical security, cyber security, or by employee theft.

Coinbase holds less than 2% of customer funds online. The rest is held in offline storage."


No insurance covering acts of God? Destruction from acts of war?  Not trying to gin up a religious debate.  Just curious.  I'm trying to read that language the way the insurance adjuster might.

I mean, insurance companies aren't filthy rich because they pay out on every claim, right?
« Last Edit: December 08, 2017, 01:59:39 PM by ILikeDividends »

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #288 on: December 08, 2017, 01:55:14 PM »
I read it as meaning only 2% of the bitcoins held are insured.  Since it only refers to insurance for bitcoins held "online" and only 2% is held online.  So, I'm guessing the other 98% held offline is uninsured?
Good point.  Are you an insurance adjuster by any chance?  ;)

talltexan

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Re: Is it too late [bitcoin]?
« Reply #289 on: December 08, 2017, 02:11:14 PM »
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

ILikeDividends

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Re: Is it too late [bitcoin]?
« Reply #290 on: December 08, 2017, 02:19:08 PM »
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?
Heck, most of our money is already moved around digitally.  Why stop short of crypto?

Even the federal reserve (and other central banks) have kicked that idea around.  They don't speak highly of bitcoin, but in my mind, a federal reserve issued fiat-friendly crypto, eventually, is as near a certainty as the sun coming up tomorrow. Hello FDIC insurance.  Settle your tax bill with the IRS using crypto, anyone? ;)

Volatility and valuation will never be problems searching for solutions.  No price discovery needed.

Acceptance by merchants, at least in the USA, will not be optional.  Acceptance will be required by law, unless specifically exempted. Then again, maybe credit card companies will step up and solve that problem with existing partnerships and infrastructure.  Either way, problem solved. 

I don't seriously expect any central bank to embrace a "global" crypto currency, such as bitcoin.  That would cede too much authority over monetary policy, and I just can't imagine congress authorizing that.  I'll let the lawyer-inclined members debate whether a constitutional amendment would be needed for that.
« Last Edit: December 08, 2017, 03:39:18 PM by ILikeDividends »

dougules

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Re: Is it too late [bitcoin]?
« Reply #291 on: December 08, 2017, 02:36:09 PM »
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

Even if it is the future, you still have the two real questions of

- Will it be Bitcoin specifically?

- Is the current exchange rate justified right now?

I think the answers are "maybe" and "most likely no." 

waltworks

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Re: Is it too late [bitcoin]?
« Reply #292 on: December 08, 2017, 03:15:36 PM »
I could see Zelle taking over most of the money-transferring market. I've already had a number of customers use it, though I think there's a ~$2k daily transaction limit. Early days, of course.

-W

phil22

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Re: Is it too late [bitcoin]?
« Reply #293 on: December 08, 2017, 06:06:15 PM »

BattlaP

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Re: Is it too late [bitcoin]?
« Reply #294 on: December 09, 2017, 11:39:07 PM »
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

I think it will look very different to anything around now. The whole model whereby the inventors, their mates and early adopters end up owning a significant percentage of the total supply, is unnecessary, overtly scamish and detrimental to adoption efforts. I think if there turns out to be any benefits to any of the concepts over current banking solutions, they will be integrated into the backend of existing institutions and the frontend of interacting with day-to-day finances will not change at all for the individual. The average person doesn't know or care about cryptography, it will be managed behind the scenes. Any actually successful 'crypto currency' in terms of actual daily use will most likely be created 'above board' by existing banking institutions.

The notion that such a thing can only be invented/created through an evolutionary 'free market' free-for-all meme war that we are currently seeing is a naive libertarian belief/desire. I think there's a chance that it ends up going so badly that the whole notion will become something that culture will look upon in the same way as pyramid schemes, MLM, beanie babies, etc, which could really slow down or kill development/investment/interest/adoption of the ideas.

I've said it before and I'll say it again, I have yet to see any proof of the existing application of cryptocurrencies/blockchain (that haven't been bastardised into being basically databases anyway) that leads to an undeniable competitive advantage that means businesses need to adopt it or risk being left behind. The overwhelming bulk (if not literally all) of journalism you see reporting on 'adoption' are companies doing preliminary investigation, experimentation, or just signing up to lists (ethereum foundation) that are essentially them saying 'sure, we'll use your technology if it ever becomes practical and advantageous' (basically, hedging their bets). Or the name 'blockchain' being applied to things which are obviously not blockchain as it espoused by the crypto community (eg the recent ASX news).
« Last Edit: December 09, 2017, 11:41:40 PM by BattlaP »

chasesfish

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Re: Is it too late [bitcoin]?
« Reply #295 on: December 10, 2017, 04:48:29 AM »
I could see Zelle taking over most of the money-transferring market. I've already had a number of customers use it, though I think there's a ~$2k daily transaction limit. Early days, of course.

-W

Zelle's impact on Venmo, Paypal, ect will be interesting.  The banks are slow, but they own Zelle and it can be instantaneous vs. through an intermediary.

libertarian4321

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Re: Is it too late [bitcoin]?
« Reply #296 on: December 10, 2017, 06:02:58 AM »
Bitcoin.  A "currency" that no one uses to buy stuff with.  Backed by nothing but the faith of a small number of American millennials and a lot of rich Chinese trying to smuggle money out of their country.  It's all about smuggling and speculative "investing."

Reminds me more of a 1999 profitless ".com" than an investment (plus the smuggling).

It's in full mania mode now, so the end game (collapse) is likely near.

Though, as with all manias, a certain number of fools who had not heard of Bitcoin before a week ago, will pile on at the end ("Greater Fool" theory of investing) and lose nearly everything they invest.

YttriumNitrate

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Re: Is it too late [bitcoin]?
« Reply #297 on: December 10, 2017, 07:52:17 AM »
It's in full mania mode now, so the end game (collapse) is likely near.
Don't forget the old saying that the market can stay irrational longer than you can stay solvent.


My typical gauge for determining if a correction/collapse is coming is to watch and see if the particular investment is discussed on Christmas day at the gathering of my extended family.* If bitcoin is not discussed two weeks from now, then my prediction is that bitcoin is good until 2019.

**I purposefully won't be bringing up the topic to see if someone else does.
« Last Edit: December 10, 2017, 07:58:15 AM by YttriumNitrate »

theolympians

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Re: Is it too late [bitcoin]?
« Reply #298 on: December 10, 2017, 11:33:41 AM »
I have some thoughts on bitcoin. First it is a currency, but no one here that I have seen (just skimming through the posts, if I missed one) has used it as such. In the press, there hasn't been any discussion on what large numbers of people are purchasing with it. I am sure it has happened, "businesses accept it", though at what level I am not sure. As someone posted here, how would a business price something in bitcoin with such swings in volatility?

Secondly, why would anyone use bitcoin as opposed to dollars or any other currency? The plus is anonymity. That is a good thing only if you are trying to hide what you are doing. I bet the Norks, Chinese, and Russians love it. For the average person, is hiding what you are doing that important day-to-day?

Finally, "bitcoin is going up!" at a rocket rate. Reading the posts here, and reviewing the press, everyone seems to be trying to lasso the rocket to get rich quick (or even just to make a little extra). I believe that will work as long as people keep pumping money into the system buying into the dream. When that slows, or when the big players cash out......

It might be the way of the future, but at some point governments are going to get involved and heavily regulate it. There was post buried in here that less than 2% is insured by coinbase. There is no protection there, so if someone boosts your wallet they will be zero help.

In short, it just looks like a gambling frenzy to me; wrapped up in financial terms. That said if you bought bitcoin when it was 1$, you'd be sitting pretty. Now that is over $10000, it has to climb to even more super-highs to realize more modest gains.

Aggie1999

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Re: Is it too late [bitcoin]?
« Reply #299 on: December 10, 2017, 01:55:36 PM »
There was post buried in here that less than 2% is insured by coinbase. There is no protection there, so if someone boosts your wallet they will be zero help.

The 2% is the amount of crypto Coinbase says they keep in online storage. They say rest is kept in offline storage. They claim all crypto funds are fully insured from theft on their side. Who knows if it is or not. They specifically say no funds will be covered for someone hacking an individual account. I would not keep anything in Coinbase or any other exchange except that which is needed to trade.