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Thread: What is Bitcoin?

  1. #1

    What is Bitcoin?

    Answers on a postcard..

  2. #2
    A Ponzi scheme mostly run by Russian and Chinese "entities" where people assign an imaginary monetary value to made up numbers.

    (edit) Funniest thing, even Youtube agrees:


  3. #3
    Ponzi schemes require intent to defraud. This does not apply to Bitcoin.

    There are a fair number of cryptocurrencies that were built as scams, and a fair number of scams that use BTC as a medium of exchange, but that applies much more readily to any of the top fiat currencies.

    Anyway, Bitcoin is the first cryptocurrency and first significant use of blockchain technology. Basically, it's a distributed ledger used to record and secure the transaction of value tokens on a peer-to-peer network. The effort required for this to happen is incentivised by a proof-of-work algorithm that allows miners to compete against each other for a chance at winning, or the a share of, the value tokens unlocked when each block of transactions is processed.

    Technical merit wise, BTC is behind the times. It also never came close to living up to it's intended purpose of a decentralized form of cash. Instead, it's become a highly centralized store of value and reserve currency for other crypto assets. It's still around because it was first and is currently most popular, which is a self-propagating situation. It also happens to have a large degree of active development keeping it marginally usable as a medium of exchange and it will be around for the foreseeable future.

  4. #4
    It's basically a way to make money from burning energy. Trouble is it is very in-efficient at that and requires crazy amounts of CO2 emissions before it is economically viable. I see it as an immoral act of environmental vandalism, when we need it least

  5. #5
    Originally Posted by Zak Gordon View Post (Source)
    It's basically a way to make money from burning energy. Trouble is it is very in-efficient at that and requires crazy amounts of CO2 emissions before it is economically viable. I see it as an immoral act of environmental vandalism, when we need it least
    It's a medium of exchange. Wealth isn't actually created.

    Also, the overwhelming majority of Bitcoin users are not, have never been, and will never be, miners. Mining is relegated to a handful of very large entities and consumer mining ASICs absolutely are a ponzi scheme, with groups like Bitmain having a near monopoly on them, building them cheaply through vertical integration and good economies of scale, mining on them themselves until they fall below a certain profitability threshold, then selling heavily used, nearly outdated parts to 3rd parties to recoup manufacturing costs.

    As for the efficiency of mining, that's hard to gauge. Bitcoin is hard to attack precisely because of the massive energy and hardware requirements necessary to do so. The power behind the blockchain is directly related to it's security. There are other means of securing blockchains (look up proof of work vs. proof of stake for the two main paths to this) that can theoretically provide similar security with a much lower energy requirement, but proof of work (mining) still has some unique advantages. If you are talking about energy spent vs. market capitalization, that's more straight forward in it's inefficiency, but also provides a tangible price floor and helps limit volatility.

  6. #6
    A decentralised anonymous currency for criminals that has been given way too much credibility due to paranoia about central banks after the 2008 financial crash.

  7. #7
    Many used on the Darknet

  8. #8
    Originally Posted by Gortron View Post (Source)
    A decentralised anonymous currency for criminals that has been given way too much credibility due to paranoia about central banks after the 2008 financial crash.
    Not especially decentralized, definitely not anonymous, and the majority of uses are not illicit.

  9. #9
    A (environmentally unethical) risk.

    'Almost $500,000 in Ethereum Classic coin stolen by forking its blockchain':

    https://arstechnica.com/information-...ts-blockchain/

  10. #10
    Originally Posted by Zak Gordon View Post (Source)
    A (environmentally unethical) risk.
    A rather contradictory statement in the context of the ETC attack.

    Risk of a 51% attack is inversely proportional to the environmental impact of a blockchain's PoW network.

    BTC for example (by far the largest network with far and away the most hardware, infrastructure, and electricity spent on supporting it's PoW algorithm) is immune to these attacks because the cost to own more than half the hashing power on the network is prohibitive, and even if one could afford it, there isn't enough hashing power for rent in the world to stage such an attack. An attacker would need to build/buy one's own hardware, which increases lead time (giving much warning) and costs exponentially.

  11. #11
    Bitcoin is something that has helped quite a few people finally ask a fundamental question; what is money?

  12. #12
    'Another thing you may not know about Bitcoin: it's killing the planet':

    https://www.theguardian.com/commenti...ronment-energy

    I make Bitcoin, and in a previous life, I covered the oil industry as a journalist. Increasingly, I’m realizing the two worlds are alike. Bitcoin is oil.

    And one day, Bitcoin will become big oil, and all who dabble in it will be reborn as enemies of the environmental movement, seen as plunderers of the planet and the bad guys in the fight against climate change – just like oil.

    Bitcoin’s environmental footprint will haunt it. Nobody has pointed this out, but it is painfully clear: if we can at all predict an industry’s growth by that of a different one, then oil is Bitcoin’s crystal ball.
    Not a lot of detailed info in that article, but it comes from the 'horse's mouth' so might be worth a read for those that do not know the full extent of the negative aspect due to energy demands that any 'bitcoin' requires.

  13. #13
    Originally Posted by Zak Gordon View Post (Source)
    Not a lot of detailed info in that article, but it comes from the 'horse's mouth' so might be worth a read for those that do not know the full extent of the negative aspect due to energy demands that any 'bitcoin' requires.
    Comparing the environmental impact of the Bitcoin industry to big oil is shaky at best, even if cryptocurrency is eventually the larger market. If proof-of-work remains predominant (a highly uncertain proposition) in mature currencies, mining is self-limiting. In the case of Bitcoin, there is an equilibrium between price and block reward, beyond which mining is no longer profitable. You can pump more oil as demand increases, but you cannot create BTC faster.

    For example, by 2021 the BTC block reward will be reduced to 6.25 and the annual rate of BTC increase will have fallen to ~1.8% (89% of all BTC that can exist will have been mined at that point). The market value of ~1.8% of the BTC in existence will thus be the absolute cap on the resources spent on mining during 2021. Even if the BTC market cap is a trillion dollars at that point (which is unlikely), there won't be more than 18 billion spent on mining in that year, because that would all that miners could expect to gross.

    The author of the article uses peak oil in his comparison, but omits that peak BTC was, by design, immediately after it was introduced and has been falling since. Every year, the fraction of BTC mined vs. what's been mined decreases. By the time of peak oil, BTC would have to be worth more than the global GDP for there to be dramatically more spent on mining it than their is today. That's not going to happen.

    Anyway, if you are using "any 'bitcoin" to mean cryptocurrency, then your assertion is even more false. Proof-of-work is not the only consensus mechanism, and becomes less appealing as a cryptocurrency becomes more established. Alternatives like proof-of-stake, which many cryptos use or will eventually transition to, have negligible energy requirements.

    Regardless of the eventual fate of Bitcoin, blockchain tech and cryptocurrencies are here to stay.

  14. #14
    Originally Posted by Morbad View Post (Source)
    Regardless of the eventual fate of Bitcoin, blockchain tech and cryptocurrencies are here to stay.
    Unless they become uneconomical to run. And as the author pointed out, many countries are starting to draw the line in the sand.

  15. #15
    Originally Posted by EUS View Post (Source)
    Bitcoin is something that has helped quite a few people finally ask a fundamental question; what is money?
    Best answer so far ... I love that!

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