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CEPS Bitcoin Mechanics Primer

thujone

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This is a short guide on getting familiar with Bitcoin and how to use it effectively. First of all, this guide doesn't cover purchasing or selling since those topics are really region-specific. Second, don't post about any Tor or darknet-specific stuff. Don't PM me about that stuff either, I don't use them so I literally cannot help you in that, even if I wanted to. That is just one use for Bitcoin, the same way that buying drugs is just one use for cash. What this guide will cover is how to actually use Bitcoin (aka BTC, XBT) to prevent any oh-shit situations caused by lack of knowledge. There is a fair bit to know and it is pretty complicated in contrast to cash money, but once you've got your head wrapped around the basics it should be (nearly) as easy to use as cash.

First of all, you need a wallet to use Bitcoin. There are wallet applications that you should use for transactions, but a wallet is not an application. A wallet, in practical terms, is nothing more than a pair of keys (sequence of numbers and letters, case-sensitive). One of these is named the public key. The public key is like your e-mail address, except it receives Bitcoin instead of e-mails. As the name suggests, this is the key you can share with anyone you wish to receive Bitcoin from. You could share it with a person, or you could even share it with a machine.*

*Pro-tip: Bitcoin-dispensing machines are also known as BTMs, and there are a number of different models that either accept or dispense fiat currency in exchange for XBT. Most often, fiat->XBT machines require no identifying information, while XBT->fiat or two-way machines may ask for ID.
The other key, which is paired with a public key, is the private key. The private key is what gives you authority to spend the coins associated with the wallet, so do not share that with anyone. It's important to remember that a wallet equals a pair of keys, and here's why: Bitcoin is a network-dependent currency. To spend Bitcoin, you must have internet access in order to broadcast your transaction to nodes in the network and get that transaction verified before it is considered valid. However, you can deterministically generate wallets (keypairs) offline and receive coin to these wallets without ever being online. These wallets are known as paper wallets*, because they are offline (as if though they exist only on paper). They are the most secure and anonymous way to store Bitcoin and should be the first resort for long-term storage needs.

*Pro-tip: A wallet is recommended for single-time use only. Once you hand your public key out to people who you are expecting Bitcoin from, store the corresponding private key and you can forget the public key altogether. As long as you have the private key, you can access the wallet to broadcast transactions whenever you're ready to.
To recap, a wallet is just a keypair and as long as you know your public (receiving) key and corresponding private (sending) key, you can use Bitcoin. To receive Bitcoin, you can be offline, but to send it, you must be online. The online component requires a wallet application, and I'm going to focus on Electrum as that is the best common wallet application in terms of ease-of-use and anonymity. Electrum is easy to use because it has a small file size (as opposed to clients like Bitcoin Core, which require downloading the entire blockchain), has all the must-have features and is updated frequently. It's anonymous because your own IP address is once removed from the nodes that serve as the backbone of the network. Instead of connecting directly to those, Electrum connects to Electrum servers that store blockchain information so you don't have to. The result is you can quickly get wallet status updates (transaction information) without too much fuss.

Current versions of Electrum are >=2.8.0. On first run, Electrum will walk you through creating a wallet file with an associated seed phrase. Store that seed phrase carefully, if you ever lose your wallet file you can restore it fully with that phrase alone. When you've finished with that, go to Tools->Preferences and check “Enable Replace-By-Fee”. What this means is for every transaction you broadcast, you will retain the option to replace that fee after the broadcast has been made. The reason you want this option is because fees are subject to change. See, the way this whole thing works is when you broadcast a transaction it must be included in the blockchain to become valid. Transactions become included in the blockchain when miners (the nodes that create the coins) affix your transaction details to the freshest block mined. In order to have that happen, you need to incentivize the miners by sacrificing a small amount of Bitcoin to them in the form of fees. Fees are typically approximated per byte of the transaction. An average transaction size is 225 bytes, but as the inputs and outputs of a transaction grow, so does the byte-size. I'll get to that soon. For now, just know that your fee per byte* is what determines how quickly (or slowly) your transaction will be validated by nodes. For a successful transaction, the consensus is that 6 confirmations are required. The network will pick up on your transaction requests as soon as you broadcast them, but in general they may not be considered truly valid until at least six nodes have confirmed they have received and acknowledged it.

*Pro-tip: Check out http://bitcoinfees.21.co/ for information on unconfirmed transactions pending on the network and to estimate what the lowest fee-per-byte you will need to get your transaction confirmed fastest. Transactions broadcast without a fee may never confirm, while transactions with the best fee-per-byte may be validated in under 30 minutes. If you accidentally broadcast a transaction with too low a fee, you can use the Replace-By-Fee mechanism to dislodge it from the infinite queue. If you forgot to enable Replace-By-Fee, there is another transaction trick called Child-Pays-For-Parent that can also work
Under Tools->Preferences in Electrum, you can also set a baseline transaction fee per kilobyte. Remember that you may need to do the conversion from fee-per-byte to fee-per-kilobyte, though Electrum will warn you if you attempt to broadcast a transaction with a fee that it deems excessive. The next setting you should check on is Tools->Network. You need a network connection to know current wallet status and broadcast transactions. For a list of servers and their status, check here: https://1209k.com/bitcoin-eye/ele.php. “Use SSL” should always be checked. Proxy settings are relevant if you are attempting to connect via Tor to a hidden [.onion] Electrum server, it's best to check Tor-related documentation on how to make an Electrum connection over the Tor network.

Ok, it's time now to cover the last bit of must-know errata, which is inputs and outputs. As you know by now, wallets are simply keypairs. When transactions appear on the blockchain, they are identified by the wallet's public key. But Bitcoin doesn't work like a normal cash wallet, from which you can pull a five-dollar note and still have a bunch of notes left in the wallet for future use. When you broadcast a transaction from a Bitcoin wallet, if you don't send the full amount in the wallet to the intended receiver (not counting the fee), the remainder will be counted as a second input and sent to a “change wallet” created for you by the Electrum client. The keys for the new wallet will automatically be added to your wallet file, so manually consolidating all your change is not necessary. This input/output mechanism can affect your fees by increasing the byte size of transactions. If, for example, you have received 1 Bitcoin to a single public key from a number of different addresses, then transactions you send from that wallet will record on the blockchain each originating address of the total of those funds*.

*Pro-tip: Blockchain is a public ledger. For improving anonymity, third-party services known as Bitcoin mixers exist. When using one of these services, taint analysis should be performed on the output address via https://blockchain.info. Taint occurs when your origin address appears as part of the inputs to your output address. A reliable mixer should produce taint-free output, but be aware when you use a mixer that you have no idea where your input coins could end up, or where your output coins came from.
That should cover all the basics you need to know in order to easily, reliably use Bitcoin. For buying and selling, I only recommend using the resources linked below as they are reliable and generally anonymous. There are a lot of shady happenings in the Bitcoin world so do your due dilligence before trying new services!

Resources:

https://en.bitcoin.it/wiki/Main_Page - Bitcoin Wiki (good for a deep dive on specific concepts)
https://blockchain.info – Transaction info, current exchange prices, taint analysis and more
http://bitcoinfees.21.co/ - Bitcoin fee status
http://coinmarketcap.com/ - Market capitalization by cryptocurrency
https://bitcointalk.org/ - General discussions about Bitcoin and related services
https://www.reddit.com/r/Bitcoin/ - Current events in the Bitcoin world
https://coinatmradar.com/ - Global cryptocurrency ATM locations map
https://localbitcoins.com/ - An exchange for local Bitcoin sales
https://www.reddit.com/r/Bitcoin/comments/670zhy - Read this before using paper wallets
 
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thujone

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cheers, it's a bit of a tome and not really proper for advanced users but it's a forgiving path for newbs who need an easy-to-understand wallet that is also suitable for anonymous usage.
 

Absentsixth

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May 30, 2017
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That is a great write-up, well done. I've not used Electrum but have heard it is a popular choice. Is it still included in the Tails distro?

If I may, for those who are looking for another suggestion of an Android mobile wallet that is also about user security and privacy keep an eye on Samourai Bitcoin Wallet. It's still in Alpha at the moment and is perhaps better suited if you are a bit more familiar with bitcoin and how it works. But thujone's awesome write up on Electrum would apply overall to most wallets I would think.

Not trying to advertise but I have followed their progress in the space and they really seem to have the users privacy at the heart of what they are making.

Check them out if you are so inclined. And with a little luck we will all see much lower fee's with the network this year. Happy segwit and BIP148 to everyone!
 

tantric

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i've been trying to learn about bitcoins, and it seems as if a fairly basic question isn't being asked. suppose SWIM buys a hefty amount of Btc and moves them to an encrypted paper wallet. in this case, the encrypted keys are actually on a usb drive in a small box. SWIM gives the box to the executor of his will and the password to SWIM's child. when he dies, the lawyer/executor, who has no idea what's in the box, gives it to the kid. the kid decrypts the usb key and now has the Btc.

does this not completely circumvent inheritance tax and other money transfer taxes? i understand that SWIM would be a tax evader and public enemy #1, but it would work, right? could you not make payments to people this way, letting the employee have a secret password while the boss keeps the encrypted keys until the job is finished?
 

VerikMS

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I am looking at Bitcoin as a set & forget mini investment. Do you have any market or wallet recommendations for an older lady in NZ? What do you guys use?
 

thujone

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That is a great write-up, well done. I've not used Electrum but have heard it is a popular choice. Is it still included in the Tails distro?

If I may, for those who are looking for another suggestion of an Android mobile wallet that is also about user security and privacy keep an eye on Samourai Bitcoin Wallet. It's still in Alpha at the moment and is perhaps better suited if you are a bit more familiar with bitcoin and how it works. But thujone's awesome write up on Electrum would apply overall to most wallets I would think.

Not trying to advertise but I have followed their progress in the space and they really seem to have the users privacy at the heart of what they are making.

Check them out if you are so inclined. And with a little luck we will all see much lower fee's with the network this year. Happy segwit and BIP148 to everyone!
Thanks, I'm not sure if Electrum is included in Tails. Samourai wallet looks interesting, though if it's true that each transaction does a few hops through the network then the fees must be killer for larger transactions!

i've been trying to learn about bitcoins, and it seems as if a fairly basic question isn't being asked. suppose SWIM buys a hefty amount of Btc and moves them to an encrypted paper wallet. in this case, the encrypted keys are actually on a usb drive in a small box. SWIM gives the box to the executor of his will and the password to SWIM's child. when he dies, the lawyer/executor, who has no idea what's in the box, gives it to the kid. the kid decrypts the usb key and now has the Btc.

does this not completely circumvent inheritance tax and other money transfer taxes? i understand that SWIM would be a tax evader and public enemy #1, but it would work, right? could you not make payments to people this way, letting the employee have a secret password while the boss keeps the encrypted keys until the job is finished?
It would work in theory but when the time comes to convert sums back to fiat, it may trigger a tax audit requiring the recipient to explain where all the Bitcoin came from initially. Some work is paid for in Bitcoin already, usually a third-party escrow is used to hold and release the funds, it's great for freelance work but not so practical for paying full-time employees.

I am looking at Bitcoin as a set & forget mini investment. Do you have any market or wallet recommendations for an older lady in NZ? What do you guys use?
Hi! Have you heard others discussing Bitcoin in NZ? I'm not sure how the market is there, if there are no available BTMs in your area, the next best option would be to check on localbitcoins.com to see if there are any locals selling for NZD. Electrum is generally the easiest wallet application to obtain and use, I would suggest getting a grasp of the transaction process by moving small amounts first (in case of accidents) before transferring larger sums.

I can't speak to the investment potential of Bitcoin but I consider it fairly risky. As cryptocurrencies become more popular, so do the ones that have been laying in wait while Bitcoin has surged. This chart shows how Bitcoin is losing marketshare to alternatives:



Having said that, much of the existing cryptocurrency infrastructure (services) are still based primarily around Bitcoin so there's a fair bit of money invested in keeping Bitcoin the defacto cryptocurrency of choice. Although Bitcoin is losing marketshare to altcoins, the velocity of Bitcoin is holding steady which is generally a good indicator of solid short-term performance.

More about velocity here: http://charts.woobull.com/bitcoin-velocity/

Either way, tread with caution if you plan to invest four-to-five-figure sums.

Also, https://www.reddit.com/r/BitcoinBeginners/ is a good resource for having questions about any specifics answered promptly
 

subotai

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Ethereum really came on strong huh?

I haven't really been following crypto stuff for a while but I used to mine coins back when cgminer was around version 2.9. Mainly Litecoins since btc difficulty was shit by then.

There was a website called BitInstant that used to sell BTC via a Moneygram order but I think the govt indicted the owner.

Then I used localbitcoins for a while, and I'm pretty sure that is still around.

No real desire to mine coins or invest anymore, but it is a cool thing to know how to use I guess.
 

subotai

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how the hell are Novacoins still around? Ultimate proof of the blatant "feels like a scam" nature of cryptocoins.

the creators pre-mined a bunch of coins (prove it! you cant! arent cryptocoins FUN LOL!), bribed BTC-E with the coins they literally just premined to put it on their front page, and you cant even really buy shit with them. They basically exist to be turned into other coins.

that's when I knew Cryptomining as a whole was all bullshit. It was originally about creating a way to avoid centralized currency for maybe a year, AT BEST.

it wasn't about making as much dollars or euros or rubles as possible at the expense of market stability. It was about making Bitcoin viable in the eyes of the mainstream users, and something that could actually find its way into society.

Who the fuck is going to invest money in something that they don't know anything about, probably wouldn't understand if you told them anyway, and couldn't find out anything about if they WANTED to?

Hey! I just made 100 dollars off bitcoins I bought yesterday! This is awesome!

*5 hours later*

HEY! I just lost 150 dollars off the same coins I bought yesterday! Now I actually lost 50 dollars. What is this shit. Sell! Sell! Sell!

and its just a revolving door of people who think they know what they're talking about investing petty bitch tit amounts of money into it

and the people who really do silently making millions by manipulating the price of coins. I guarantee you that 1% of BTC owners control how the markets trend.

You know, just like how real world economics work.

Way to go BTC, way to go!

You've become the very thing you were created to oppose. Only its even worse because it is almost completely anonymous. You know that little amount of accountability rich people have in real life? GREAT NEWS! There's even LESS in cryptocoins! #lit

motherfucking sweet dude
 
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thujone

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Who the fuck is going to invest money in something that they don't know anything about, probably wouldn't understand if you told them anyway, and couldn't find out anything about if they WANTED to?
what do you mean? there is r/bitcoin and other outlets for news about the ecosystem, the bitcoin ledger is public so anyone can see anything about any transaction ever made, and you can literally read the source code of the bitcoin software on github. it isn't like software is any more inscrutable than the machinations behind many financial instruments are in general, i mean most average people have their retirement tied up in some pension fund they know absolutely fuck-all about.

Hey! I just made 100 dollars off bitcoins I bought yesterday! This is awesome!

*5 hours later*

HEY! I just lost 150 dollars off the same coins I bought yesterday! Now I actually lost 50 dollars. What is this shit. Sell! Sell! Sell!
there's similar volatility in FX trading, which cryptocurrency trading is modeled after. think of it this way, if you bought 1 bitcoin and the price drops U$150, you didn't really lose anything *unless* you liquidate the bitcoin at a lower price than you paid for it.

don't panic when the price falls, sell some profit and diversify into altcoins when the price rises. take a look at litecoin. until recently it was limping along at $4 despite being just as sensible a cryptocoin as bitcoin, and now it's at $45. so bitcoin falls by $200, if you got in at $2000 that's still net profit, and if you traded some bitcoin for litecoin then you wouldn't even care about the drop in XBT/USD

oh right, speaking of the pension funds... https://www.washingtonpost.com/news/fact-checker/wp/2013/10/23/does-the-united-states-have-128-trillion-in-unfunded-liabilities/

there's a lot of people out there who are invested in literally nothing more than undeliverable promises
 

subotai

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what do you mean? there is r/bitcoin and other outlets for news about the ecosystem, the bitcoin ledger is public so anyone can see anything about any transaction ever made, and you can literally read the source code of the bitcoin software on github. it isn't like software is any more inscrutable than the machinations behind many financial instruments are in general, i mean most average people have their retirement tied up in some pension fund they know absolutely fuck-all about.
you can see any transaction but you cant see who made it. It's just a bunch of numbers and letters.
 

subotai

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right... so it is transparent in the sense that, yes, every transaction is recorded and able to be searched on the blockchain. But if you have no idea who the addresses it both was sent to and received from belong to, then it only gives you so much to work with.

idk, I just dont think it is really an accurate description of how the system works. The "transparency" part of it that is. It is touted by BTC believers as some super cool feature of using BTC, but in everyday usage it doesnt really make much of a difference. Especially with coin tumbling services. That throws a real monkey wrench in the whole transparency aspect.

then theres coins like Monero that arent even traceable

I just don't understand what the end-game for cryptocoins is supposed to be I guess. Originally, the idea was the implement them gradually into society as a form of decentralized currency that could be transferred from anywhere with internet to anywhere else with internet without any fees or additional costs.

People like to compare BTC to gold but its never going to be the same concept. Gold and other precious metals are real, physical things that can be used for real, physical objects. That alone gives it value. Throw in the scarcity of these metals and that makes the price go up. Supply, demand, you know. Not to mention, entire governments dating back thousands of years have used gold as a way to establish value on things.

What exactly can you do with a Bitcoin? It's a bunch of numbers and letters that were deciphered using a processor. There's nothing tangible about them. And certainly nothing stable about them. The only thing that will truly give Bitcoin value, LASTING value, is having things to spend them on. Things that arent being actively sought and destroyed by the FBI and other national intelligence agencies.

Until that happens (see: never), they will just be a giant bubble built on even less than most economic bubbles. Seriously, what is keeping Bitcoin rising right now? A bunch of new investors who jumped on the gravy train a bit too late compared to some. These people are what keep it going as groups in Russia, China, and former Soviet Blocs just funnel all of their illicit money into Bitcoins and make it come out clean somewhere.

Say what you want about Bitcoin's potential to decentralize currency and all that wishful thinking, I believe, and always will believe, that its all BULLSHIT!

the only reasons Bitcoin is worth what it is today are money laundering and darknet markets. Those are the two things that helped it build momentum through the early days, and two things that will never go away because Bitcoin is literally perfect at facilitating both of those.

but eventually, it will be replaced when the people who hold the majority of coins collectively decide to move onto the next coin. There's only so many BTC that can be made. Once that gravy train stops, I can see a mass crash in the price of BTC. A lot of people seem to think the opposite will happen

"well they cant make anymore so the value must go up!"

Right, sounds good, but remember, the only thing giving BTC value in the first place is the ability to spend them on real life objects. That are conveniently the same price as they would be in USD or Euros or w/e. If there is a concerted shift to use a coin besides BTC as the de fact cryptocoin, what are you left with in your wallet?

A bunch of numbers and letters. I guess you could spell out "1 million dollars" if you wanted to :D

used the expression "gravy train" twice in one post, a new record!

 

thujone

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idk, I just dont think it is really an accurate description of how the system works. The "transparency" part of it that is. It is touted by BTC believers as some super cool feature of using BTC, but in everyday usage it doesnt really make much of a difference. Especially with coin tumbling services. That throws a real monkey wrench in the whole transparency aspect.
wait until Lightning (offchain) transactions get implemented then you'll really have no idea what's going on! really, the transparency isn't really meant as a way of comforting users and investors but more just so that the ledger is verifiable amongst peers. since the currency requires peering to function properly (and prevent fraudulent transactions) it has to be transparent enough to be audited by anyone.

then theres coins like Monero that arent even traceable
I'm kind of wary about Monero myself and don't know much about it, I'm only positive about Litecoin because it was the first promising Bitcoin fork and the lead developer seems like a reliable guy who values stability. He tweets as well: https://twitter.com/SatoshiLite

I just don't understand what the end-game for cryptocoins is supposed to be I guess. Originally, the idea was the implement them gradually into society as a form of decentralized currency that could be transferred from anywhere with internet to anywhere else with internet without any fees or additional costs.
You got it, that is the endgame.

What exactly can you do with a Bitcoin? It's a bunch of numbers and letters that were deciphered using a processor. There's nothing tangible about them. And certainly nothing stable about them. The only thing that will truly give Bitcoin value, LASTING value, is having things to spend them on. Things that arent being actively sought and destroyed by the FBI and other national intelligence agencies.
What exactly can you, personally, do with an ounce of gold? Unless you make jewellery or electronics, probably nothing except try and sell it for something you can spend more easily (cash or Bitcoin). Fungibility is what gives cryptocurrencies value. Bitcoin is commonly accepted for legal goods these days, most of the money I send outside the country for goods and services now is denominated in Bitcoin. How am I supposed to convince you of its value if you refuse to believe it's used for anything other than a proxy for cash between internet drug dealers?

but eventually, it will be replaced when the people who hold the majority of coins collectively decide to move onto the next coin. There's only so many BTC that can be made. Once that gravy train stops, I can see a mass crash in the price of BTC. A lot of people seem to think the opposite will happen
It's possible. Anything is possible. Hyperinflation destroyed Weimar Germany. Hyperinflation is destroying Venezuela *right now*. If you want stability just invest all your money in the consumer defensive sector, TP and toothpaste aren't going away anytime soon
 

subotai

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but the difference is that a jeweler or electronic maker will be specifically looking for gold, a material that doesn't really have an equal when it comes to either jewelry or electronic connections.

the only thing that makes Bitcoin not have an equal is simply that it has been around longer than other coins.

Some teenager in Latvia can create his own coin on a whim and if everyone got behind it, Bitcoin would nose dive

AFAIK, that same teenager can't just type a bunch of code into a computer and spit out gold bars (maybe in Estonia)

if the only thing that gives BtC value is how many people use it, but the people who have used it for longer periods of time have a large advantage when it comes to profit and financial gains, casual users will be turned off.

Theyll just keep using USD because that is what their whole life is tied to. Bitcoin will never be more than a fringe currency that tech savvy people use.
 

thujone

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the only thing that makes Bitcoin not have an equal is simply that it has been around longer than other coins.

Some teenager in Latvia can create his own coin on a whim and if everyone got behind it, Bitcoin would nose dive

AFAIK, that same teenager can't just type a bunch of code into a computer and spit out gold bars (maybe in Estonia)
yeah, this is fundamentally true. that's why I said it's the fungibility that gives Bitcoin its value. Gold has intrinsic value but it isn't convenient as a currency, Bitcoin is convenient as a currency and is pretty good for that in smaller amounts where the fees of other payment services take a bigger chunk out of sending money than a price drop and transaction fees. in larger amounts it's worth having alternatives on hand to hedge against volatility (including fiat).

as for Bitcoin nosediving... it took years for the ecosystem to develop to the point its at now (BTMs, exchanges, third-party services, etc.) so it has become pretty entrenched and harder to pivot away from.

if the only thing that gives BtC value is how many people use it, but the people who have used it for longer periods of time have a large advantage when it comes to profit and financial gains, casual users will be turned off.

Theyll just keep using USD because that is what their whole life is tied to. Bitcoin will never be more than a fringe currency that tech savvy people use.
it might be late to get into the Bitcoin game for speculation but there are some altcoins coming up in market cap where there's still opportunity, and they're worth holding for diversification anyway. some day the infrastructure that has been built up around Bitcoin transactions will extend to the successful altcoins too.

for many people Bitcoin is still fringe but that doesn't mean cryptocurrencies won't come into common usage down the line. progress moves fast. there are already hundreds of BTMs across the U.S. alone, and many more throughout the rest of the world. the userbase is still growing, but the ecosystem is also still growing so it still hasn't reached the level of stability and ease-of-use to draw in those that still find cash money more convenient.
 

subotai

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I'm just really, really salty that I didn't invest a large amount of money into Bitcoin and therefore I just want to see it crash and burn

I mined a few coins here and there but they would have been worth a lot more now. Especially Litecoins, back when I was running a mining computer they were worth $1 each and I could mine about 3 a day with sporadic times where I actually had to use the computer

and when they went up to 4 I just sold a bunch of them. Then I sold my computer because I had a pretty bad drug habit. And I just stopped following this stuff.

Now they're worth $43 dollars a piece. I could have easily had a thousand of them by now if I had kept mining

It's alright though, I enjoyed configuring the software anyway and I didn't even pay for electricity so it was mostly just for fun.

but yeah that got me pretty salty
 
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subotai

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Front page of the paper today



Gist of the story: guy claims to have over $50M in Bitcoins that he stole by developing malware that silently diverts BTC from unknowing senders into wallets under the guys control. (Not even sure if that's possible)

Claims he has access to a private jet yet lives with his parents with his 7 year old son.

All of this is over whether to declare him a flight risk for a theft charge he picked up after stealing a laptop and jewelry from his ex girlfriend.

IMO: he's a drug addict who might have had a decent amount of coins at one time but either lost the keys or blew them all and now he's just spouting nonsense due to drug use (apparently he was admittedly high on Oxy during his interrogation) but the LE doesn't know how to decipher BS from possible reality when it comes to this subject.

Welcome to Bitcoin, where people like this freeloader could actually be millionaires...

... Isn't it great!?
 

thujone

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I'm just really, really salty that I didn't invest a large amount of money into Bitcoin and therefore I just want to see it crash and burn

I mined a few coins here and there but they would have been worth a lot more now. Especially Litecoins, back when I was running a mining computer they were worth $1 each and I could mine about 3 a day with sporadic times where I actually had to use the computer

and when they went up to 4 I just sold a bunch of them. Then I sold my computer because I had a pretty bad drug habit. And I just stopped following this stuff.

Now they're worth $43 dollars a piece. I could have easily had a thousand of them by now if I had kept mining

It's alright though, I enjoyed configuring the software anyway and I didn't even pay for electricity so it was mostly just for fun.

but yeah that got me pretty salty
i missed the boat on mining LTC too and i got into BTC when it was already above $500, but there's no sense regretting it in hindsight because for all we could have known back then the price might have been $0 by now. but i bought bitcoin at $500+ because i saw the need for an effortless digital cash proxy and cryptocurrencies are excellent for that, especially bitcoin which has better fungibility than the altcoins. just by accumulating small amounts steadily while the price has been rising, i've ended up with a wallet worth so much more now than when i bought the coin that a lot of my purchases now are largely subsidized by the rising value.

at some point in the future bitcoin can crash to $0 and never recover, especially as other cryptocurrencies catch up and improved versions overtake it. so because of that possibility i could never be a bitcoin millionaire, because if i suddenly *were* then i would be furiously liquidating it for more reliable long-term stores of value.

but... just like i'm not trading the cash in my wallet for gold, bitcoin has value as a currency too so holding some amount of it is more useful now than other stores of value.

ultimately, currencies have always come and gone. there were a few currencies circulating in early modern America (https://en.wikipedia.org/wiki/Early_American_currency) that are worthless now. *trading* currencies is still a good way to make money, but *investing* in them... well... history suggests they've never been so reliable for that purpose.
 
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