• TalkBass has been independent since 1998. Add your voice.
    Create a free account to reply to discussions, view embedded media, and browse with fewer display ads.
    Join free Log in
    Want zero display ads or expanded classifieds tools? Compare plans.

Bitcoin / Litecoin / Ethereum / alts discussion

What are you in?

  • Bitcoin

    Votes: 5 12.2%

  • Litecoin

    Votes: 5 12.2%

  • Ethereum

    Votes: 6 14.6%

  • Alts

    Votes: 2 4.9%

  • Nothing

    Votes: 19 46.3%

  • Carrots

    Votes: 15 36.6%
  • Total voters
    41
#41
Alkali Ike said:
Someone please explain what the $10,000 cryptocurrency computing machine linked to previously "makes" and why it has value. It's like someone trying to sell me a sophisticated printing press to print my own $20 bills.
Click to expand...
Disclaimer: I don't think this stuff can be fully understood without understanding the math, which I don't. I've been through descriptions of the math several times and still don't completely get it.

Digital currency is based on creating a sequence of numbers. Your money is represented by a number. Likewise, transactions, where bitcoins change hands, are represented by a sequence of numbers. To prevent people from creating fake coins or fake transactions, they are related to one another by a complicated math formula. Verifying the integrity of the transactions requires solving a hard math problem that takes a lot of computation. That's "mining." To give people an incentive to mine, successfully verifying a set of transactions earns you a certain amount of the currency.

So it's like a way to pay people to guard the vault, by letting them have some of the contents of the vault if they keep it safe for everybody.
 
  • Like
Reactions: Skerrvydog, mattsk42, LiquidMidnight and 1 other person
#42
Now here's my view about currencies in general. Money is a technology. It was invented by humans, not by the gods. A technology is designed to serve a purpose. Different money systems can be designed to serve different purposes.

At present, the money system of countries like the US is designed to serve a number of purposes:

1. Medium of exchange.

2. Short term store of value.

3. Tool of national monetary policy.

Our monetary policy has been for money to be stable in the short term, but with a gradual decline in value aka inflation. In my opinion, money is a great invention of humanity, and the modern money system is a continually improving technology. The countries with the best money technology are also the most prosperous. I don't think this is a coincidence.

The creators of Bitcoin envisioned a different purpose: To provide a medium of exchange that cannot be influenced by governmental monetary policy. So far I think they have succeeded in this regard. The drawback of cryptocurrency is that for any practical use, it depends on some kind of "bank," and the banks have experienced a series of security failures resulting in people getting their money stolen. A second drawback is that the banks require transaction fees that rival or exceed those of conventional banks.

Were I inclined towards cynicism, I'd suspect that an additional purpose for Bitcoins is to extract fees from suckers.
 
  • Like
Reactions: Son of Wobble, bolophonic and OldDog52
#43
fdeck said:
Disclaimer: I don't think this stuff can be fully understood without understanding the math, which I don't. I've been through descriptions of the math several times and still don't completely get it.

Digital currency is based on creating a sequence of numbers. Your money is represented by a number. Likewise, transactions, where bitcoins change hands, are represented by a sequence of numbers. To prevent people from creating fake coins or fake transactions, they are related to one another by a complicated math formula. Verifying the integrity of the transactions requires solving a hard math problem that takes a lot of computation. That's "mining." To give people an incentive to mine, successfully verifying a set of transactions earns you a certain amount of the currency.

So it's like a way to pay people to guard the vault, by letting them have some of the contents of the vault if they keep it safe for everybody.
Click to expand...
:eyebrow:
 
#44
I don't understand it either. I consider myself very 'cyber smart' but this baffles me.

I know computers. I know gaming. I recently decided to upgrade my video card and have been researching what the latest and greatest video cards are. I keep seeing reviews that say 'this video card is great for crypto currency mining' and I feel dumb as a pile of dirt.
 
  • Like
Reactions: OldDog52
#45
I was taught "Never invest in something you don't like or understand". I don't understand this, and I'm not sure it's an investment. Therefore I don't like it. Three strikes! ;)

I plan to continue trying to learn about it though.

mmbongo said:
I keep seeing reviews that say 'this video card is great for crypto currency mining' and I feel dumb as a pile of dirt.
Click to expand...

Now this is just more bafflement to me. If the magic cryptocurrency miner machine is a powerful number cruncher, why would it need a high-end video card?
 
  • Like
Reactions: BuffaloBass
#46
Alkali Ike said:
Now this is just more bafflement to me. If the magic cryptocurrency miner machine is a powerful number cruncher, why would it need a high-end video card?
Click to expand...
The video card is what's doing the number crunching. A few years ago some people came to the realization that the amount of computing power in the video card was going to surpass that of the CPU, in a personal computer. They started using the GPU (graphics processing unit) for computation. This, in turn, led to demand for GPU's with more general purpose computation features. Today, you can build a "personal supercomputer" by filling the slots of a PC with graphics cards and writing software that exploits this hardware.
 
  • Like
Reactions: Son of Wobble, mmbongo, LiquidMidnight and 1 other person
#47
mmbongo said:
I keep seeing reviews that say 'this video card is great for crypto currency mining' and I feel dumb as a pile of dirt.
Click to expand...
fdeck said:
The video card is what's doing the number crunching. A few years ago some people came to the realization that the amount of computing power in the video card was going to surpass that of the CPU, in a personal computer. They started using the GPU (graphics processing unit) for computation. This, in turn, led to demand for GPU's with more general purpose computation features. Today, you can build a "personal supercomputer" by filling the slots of a PC with graphics cards and writing software that exploits this hardware.
Click to expand...

That actually makes sense. It would explain why the hardware needs a 1200W power supply if there's a bank of multiple graphics cards in it. Thanks.
 
  • Like
Reactions: fdeck
#48
mmbongo said:
I don't understand it either. I consider myself very 'cyber smart' but this baffles me.
Click to expand...
I'm in the same boat. I consider myself to be knowledgeable about both math and computers. Heck, I was a math major in college, and my day job is in a heavily computation intensive field.

I think a problem is that there are two levels of understanding. There's a level that can be reached by reading popular articles that were written by people who read popular articles written for laypeople. That's pretty much where I'm at. Then there's a level where you're actually capable of working through the math or distinguishing between sense and nonsense in the field.

There's a similar problem in any technical field, where there are "haves" and "have-nots" depending on whether you can actually work through the math and theory.

A person could be a user of cryptocurrency without understanding that math. That's where I suspect most people are at, who hold bitcoins. They're happy to play it, and hope that someone else has worked it out well enough to make it last for a while. I'm that way with jazz theory. ;)

Now for a further speculation. I said the same thing about precious metal hoarding: The main purpose of cryptocurrency is to extract transaction fees from people.
 
  • Like
Reactions: petrus61
#49
The facilitators of cryptocurrency transactions are providing a service for which they get a cut, just like PayPal or Visa & MasterCard. They're a new disruptive business trying to convince us that bitcoin is superior, so we'll use their payment services.

This discussion prompted me to think of derivatives, which nobody really understood but lots of investors traded. Well guess what, there are now bitcoin derivatives. And they refer to it as an investment, not currency exchange.

Options Exchange CBOE to Launch Cryptocurrency Derivatives in 2017 - CoinDesk
 
  • Like
Reactions: BuffaloBass
#55
BuffaloBass said:
define please, which jurisdiction and which controls you speak of then, as it isnt simple..I'm no international lawyer, my SIMPLE point was, Bit replaces HEAVY STUFF that has been traditionally used for black market transactions. Yet, if you;d like to debate international currency controls roll on.....
Click to expand...

Your point was a currency without government control. Then you mention gold. Yet the vast majority of gold is owned by world governments. He who owns the gold.....
 
#56
Indeed, that's a good point to raise about crypto: Lack of government control. Money is a technology, and can be designed for specific purposes. The money system in the US and Europe is designed to serve a handful of purposes: 1) Medium of exchange. 2) Short term store of value. 3) Instrument of monetary policy.

Cryptocurrency is designed to function as a money system without government control, as you mentioned. The value of bitcoins is supposed to be based solely on crowd psychology. That's supposed to be a good thing.

I believe it's no accident that the countries with the best money systems are also the most prosperous. People will choose the money technology that they find to be the most useful for what they want to do. But people are free to experiment with alternatives. And governments can manipulate any of them. One reason is that no money has "inherent" value. Its value is always relative to the value of what you want to buy with it. All that matters is the relative price of money and goods. And governments can manipulate access to both money and goods.
 
#58
In my mind.... The monies I "invest" are funds I will use for old age (next week I fear).... investing simply for the sake of circumventing government or banks seems akin to driving your car hoping the gas tank will magically fill because I understand how my carburetor functions..... A means to "get there from here"... How does a bitcoin investment do that?..... Or in real terms is this just a different and sophisticated level of gaming really?
 
Last edited:
  • Like
Reactions: LiquidMidnight and OldDog52
#59
Stewie26 said:
As much as I try to get my brain around it, I still can't understand how bitcoin works. How does one mine something off the net and turn it into a tangible valued item? It not like mining gold or silver where you have an end product you can touch and feel. Can anyone explain this to me and make it more clear?
Click to expand...
This video seems to answer my question.

 
  • Like
Reactions: svtb15 and mattsk42
#60
Tom Bomb said:
Invalid Link Removed. This is probably relevant. Not that it concerns me. I prefer Invalid Link Removed.
Click to expand...
Ancient news, really. Miners and traders knew this was coming about 6 weeks ago. When it finally hit, the market sank a bit, but is still up overall. In fact, I made quite a few more bucks yesterday when there was a bit of a spike in values for BTC and LTC.
 
  • Like
Reactions: Tom Bomb

Latest posts

Top Bottom
Back