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  #21  
Old 26.05.2017, 00:25
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Re: Ethereum

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...The unique property of bitcoin is supposed to be limited supply...
I think there are some more properties to cryptocurrencies:
  • No single entity, not even whoever created them, can control them. The algorithm is "set"; that's the way they work.
  • No-one can seize bitcoins. Not a state, not the police, no-one.
  • They can be transferred, world wide, without any additional costs. No-one could even stop them from being transferred to NorthKorea. Embargos just don't work with Bitcoin (one could also say that it's a perfect way to circumvent embargos).
  • So any entity handles their Bitcoins accordingly, they can move value around the world, without any checks.
  • While there are lots of potentially illegal usages, all third-world workers who send money home via established, expensive channels right now (Indian worker from SaudiArabia to India using WesternUnion) might soon prefer to send money home using a cryptocurrency (cheaper, less fees, no trouble with banks).
I guess there are more, just thought of the above.
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  #22  
Old 26.05.2017, 01:06
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Re: Ethereum

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Good point. The unique property of bitcoin is supposed to be limited supply, which makes it similar to gold. But you can produce countless bitcoin clones, and how are they not a bitcoin alternative? IMO gold, bitcoin, ethereum, ripple are fighting for the same money.

BTW gold is also not a productive asset. Your arguments could be as well used against investing in gold. Just saying
Just because something is rare, doesn't make it valuable. My poo is rare, it's unlike anyone else's poo. That doesn't make it worth sh*t (hah!). Scarcity is not the reason why bitcoin has value, it is an experimental (in the economic sense) property to avoid potential exponential explosion of money supply in case of a strong expansion in the mining capacity. The behavior of pretty much every cryptocurrency is showing the classical signs of bubbles (or pump and dump schemes). By the time retail money starts piling in, it is usually on the brink of collapse.

On the topic of gold, people often claim that bitcoin and gold are similar - unfortunately this ignores a whole load of detail. The usual argument is that they are both rare and therefore can be used as a reserve currency or for safekeeping of value. There are some feasible arguments for holding gold in case society and the infrastructure collapses for some reason. You'll probably be able to barter gold for favors, food, weapons etc... As it stands, cryptocurrencies have no such value. For the real edge case conditions, physical assets always beat virtual ones. Physical gold does not require the immense infrastructure that keeps the internet and all our devices functional. Without that infrastructure, all the virtual money is worthless. Anyone hoarding bitcoin for the same reasons that one would hoard gold is ignorant of the real world.
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  #23  
Old 26.05.2017, 06:55
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Re: Ethereum

Anybody want to invest in the Slammer? A great new currency, very, very valuable. You can get a one Slammer credit for 1000 of your measly Franks and one Grand Slam (it´s da bomb) is worth 10.000 Swiss franks. PM me for details where you can exchange your Franks in the deal of a lifetime.
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  #24  
Old 26.05.2017, 08:44
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Re: Ethereum

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I think there are some more properties to cryptocurrencies:
These are good points, I know about them, I just didn't want to write a whole essay.

But still, let me address these points:
1. no one can control bitcoin - maybe, but why is it unclear who created the algorithm? what if some hacker finds a way to crack it? are you sure it's bulletproof?
2. no one can seize bitcoin - if you memorize the private key, then maybe. but if not, then they can seize your account, laptop, phone, shutdown the servers.
3-4-5. that's true, and that is a real advantage over gold.

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Just because something is rare, doesn't make it valuable. My poo is rare, it's unlike anyone else's poo.
Are you serious with this argument? I was just shorting down my post, did not want to write the whole theory of what makes a good currency. It has to be permanent, hard to counterfeit, divisible and openly accepted. I don't think your poo meets the criteria. People invest like crazy in rare and unique things which cannot be replaced, because they believe that these things will keep value. Works of art, old cars, etc.
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  #25  
Old 26.05.2017, 10:00
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Re: Ethereum

The perceived value of cryptocoins is in the blockchain. This can be thought of as a global, tamper-proof database of transactions between agents. What this gives you is the ability to make a deal with another party without having to use a third-party to provide trust.

So you don't have to think of this just in terms of currency - you can make any kind of deal on a blockchain (Ethereum is particularly designed for this). So what this is about is a way to provide services without a 'middle-man'; i.e. we're cost cutting. This is pretty similar to what the whole internet has done to business. Many companies are looking to use a public blockchain for this reason.

We're in a situation now which is analogous to the fin de siècle internet boom; money is is just piling in to everything hoping to select a winner (the network effect will ensure that just a few coins win in the end). We haven't quite reached pets.com yet, but when we do it will be spectacular. Out of these ashes, blockchains will still survive and be an essential part of the modern internet.
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  #26  
Old 26.05.2017, 16:34
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Re: Ethereum

Wealthy Chinese are using Bitcoin as a method to circumvent state capital outflow rules and move money overseas. A high volume of Bitcoin transactions originate in China. If the Chinese government work out how to stop this then the price of all crypto currencies will collapse.

As for blockchain this too influences the value of crypto currencies but in my opinion there are too many obstacles facing blockchain for it to be rolled out as a financial instrument. Someone will find a use at some point but it will probably become some sort of data tool.

There is certainly money to be made but it’s a high risk/ high return investment, the value is over USD 180 today so your teacher has doubled his money. Such a return would be incredible on conventional stock markets. So my question would be why hasn’t he cashed out already?
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  #27  
Old 26.05.2017, 17:13
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Re: Ethereum

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Are you serious with this argument? I was just shorting down my post, did not want to write the whole theory of what makes a good currency. It has to be permanent, hard to counterfeit, divisible and openly accepted. I don't think your poo meets the criteria. People invest like crazy in rare and unique things which cannot be replaced, because they believe that these things will keep value. Works of art, old cars, etc.
Ehh, the comment was a bit flippant, but it is beside the core point of my post. In any case, you specifically wrote that the unique (!) property of bitcoin is that it is rare, which makes it comparable to gold. That's it. Had you mentioned (at least in passing) anything else, there would have been no reason for my post. I'm sorry mate, but either be precise or at least mention that you are leaving out other considerations.

My argument stands about gold vs bitcoin, irrespective of the flippant poo comment.
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  #28  
Old 26.05.2017, 17:18
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Re: Ethereum

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So you don't have to think of this just in terms of currency - you can make any kind of deal on a blockchain (Ethereum is particularly designed for this). So what this is about is a way to provide services without a 'middle-man'; i.e. we're cost cutting. This is pretty similar to what the whole internet has done to business. Many companies are looking to use a public blockchain for this reason.
This is actually a very good point and I believe this is the one unique property of the blockchain that makes it valuable outside of being yet another currency. Programmable contracts are a very interesting concept. There are hurdles to overcome, but a whole load of banking and finance can be neatly implemented this way. I'm interested to find out what sort of things people will come up with.
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  #29  
Old 26.05.2017, 18:38
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Re: Ethereum

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you specifically wrote that the unique (!) property of bitcoin is that it is rare
Sorry, I read my comment again and I put in wrong words.

Regarding blockchain: one company I know is playing with the idea of blockchain being used for OTC transactions (over the counter, without stock exchange). Still, I don't know why the usefulness of the blockchain technology should resonate on bitcoin price. I guess what is the real bitcoin strength at the moment is the infrastructure that is already available: the miners, the countless servers around the world that keep the copy of the ledger.
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  #30  
Old 26.05.2017, 19:29
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Re: Ethereum

Bitcoin valuation is based on speculation continuing. It is unlikely that it will ever be used for high value trade finance transactions.

The Winklevoss twins attempted to create a Bitcoin trading environment on BATS exchange. This would have been a milestone but it was rejected a few months ago by The SEC. Supply chain finance is heavily insured (credit insurance, fx hedging etc.) and this will not be granted against crypto currencies.
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  #31  
Old 27.05.2017, 07:29
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Re: Ethereum

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I think there are some more properties to cryptocurrencies:
  • No single entity, not even whoever created them, can control them. The algorithm is "set"; that's the way they work.
  • No-one can seize bitcoins. Not a state, not the police, no-one.
  • They can be transferred, world wide, without any additional costs. No-one could even stop them from being transferred to NorthKorea. Embargos just don't work with Bitcoin (one could also say that it's a perfect way to circumvent embargos).
  • So any entity handles their Bitcoins accordingly, they can move value around the world, without any checks.
  • While there are lots of potentially illegal usages, all third-world workers who send money home via established, expensive channels right now (Indian worker from SaudiArabia to India using WesternUnion) might soon prefer to send money home using a cryptocurrency (cheaper, less fees, no trouble with banks).
I guess there are more, just thought of the above.
Uh, what? How about the most famous case, then?

https://www.theguardian.com/technolo...d-how-to-seize

Cryptocoins are not magic. They are a digital asset with a whole lot of risks already explained by Xynth, and in many ways are actually easier to seize / steal than physical assets (look at the various exchange compromises over the past years).
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  #32  
Old 27.05.2017, 08:42
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Re: Ethereum

The article you quote sais how those were "seized": authorities needed the codes, and only managed to get them by accessing the computer in question.

What I mean by cannot be seized": if the private key is handled properly (out of reach of authorities, or indeed anyone else) they cannot be seized.

In other words: the Bitcoin address can be publicly mentioned/published, everybody can openly see how coins move into this account (www.blockchain.info) yet they can't be taken out EXCEPT by the holder of the private key.

Same goes for the exchanges which were hacked: what hackers managed to do is, compromise servers and steal the private keys.

The equation is easy: no private key = no seizing, no stealing!

It all comes down to this (only)

Do you use internet banking? The encryption used for Internetbanking uses the same public/private key strategy. If you believe this strategy is insecure in itself (it isn't), you should stop using Internetbanking today!
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  #33  
Old 28.05.2017, 07:51
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Re: Ethereum

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The article you quote sais how those were "seized": authorities needed the codes, and only managed to get them by accessing the computer in question.

What I mean by cannot be seized": if the private key is handled properly (out of reach of authorities, or indeed anyone else) they cannot be seized.

In other words: the Bitcoin address can be publicly mentioned/published, everybody can openly see how coins move into this account (www.blockchain.info) yet they can't be taken out EXCEPT by the holder of the private key.

Same goes for the exchanges which were hacked: what hackers managed to do is, compromise servers and steal the private keys.

The equation is easy: no private key = no seizing, no stealing!

It all comes down to this (only)

Do you use internet banking? The encryption used for Internetbanking uses the same public/private key strategy. If you believe this strategy is insecure in itself (it isn't), you should stop using Internetbanking today!
Right, got it. So if you store your cash, gold, whatever properly (I.e. Out of reach of authorities, or indeed anyone) then it can't be seized either.

That was useful.
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  #34  
Old 28.05.2017, 09:45
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Re: Ethereum

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Right, got it. So if you store your cash, gold, whatever properly (I.e. Out of reach of authorities, or indeed anyone) then it can't be seized either.

That was useful.
That's essentially correct. The one difference with bitcoins (or most crypto) is that it's possible to store it securely just by remembering a password or passphrase - you don't need to store anything physical.
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Old 28.05.2017, 10:43
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Re: Ethereum

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That's essentially correct. The one difference with bitcoins (or most crypto) is that it's possible to store it securely just by remembering a password or passphrase - you don't need to store anything physical.
And where do you intend to use that password? I presume in some application that will keep your private key encrypted. So if they seize your laptop or smartphone, they seize your bitcoin. You could also just remember the private key, for example: 5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9K F. I mean, it's not impossible

Anyway, the most of you seem to agree that bitcoin is overvalued, but it can still gain in value for some time because of the bubble.

I was thinking, how would it work if a small country (e.g. Iceland) decided to switch to a cryptocurrency, basically saying: this is all money there is, we will never print more, so if the economy grows, the value of money in your wallet grows. Would they have to develop their own, with their own server? What if then another country wanted to join, they could not simply adopt the same currency without increasing its supply.
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  #36  
Old 28.05.2017, 11:00
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Re: Ethereum

I just memorise the key and do all the transaction calculations in my head. Much safer than using a computer and keeps your brain sharp 😛😁
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  #37  
Old 28.05.2017, 11:10
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Re: Ethereum

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I just memorise the key and do all the transaction calculations in my head. Much safer than using a computer and keeps your brain sharp 😛😁
Just avoid having a stroke or getting other brain related issues.
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  #38  
Old 28.05.2017, 11:14
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Re: Ethereum

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And where do you intend to use that password? I presume in some application that will keep your private key encrypted. So if they seize your laptop or smartphone, they seize your bitcoin. You could also just remember the private key, for example: 5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9K F. I mean, it's not impossible

Anyway, the most of you seem to agree that bitcoin is overvalued, but it can still gain in value for some time because of the bubble.

I was thinking, how would it work if a small country (e.g. Iceland) decided to switch to a cryptocurrency, basically saying: this is all money there is, we will never print more, so if the economy grows, the value of money in your wallet grows. Would they have to develop their own, with their own server? What if then another country wanted to join, they could not simply adopt the same currency without increasing its supply.
You have a misunderstanding about how bitcoin works. Your bitcoins are not stored on the the laptop or PC where your wallet is located, your bitcoins are stored (wrapped up in an asymmetric key) in the blockchain which is a global distributed ledger stored on thousands of computers all over the world. Your wallet is a key mangement program which can unlock your value on the blockchain.

The standard bitcoin wallet makes a list of key pairs which are used in subsequent transactions - this needs to be backed-up somewhere to access your bitcoins (and backup-up again if you're making regular transactions), but you can also use what is called a 'paper' or 'deterministic' wallet (also hardware wallets which are very popular) where a password or passphrase is used as a seed to a cryptographic pseudo-random number generator. Each cycle of the generator is a new key pair.

This allows you to do as many transactions as you want from any computer anywhere in the world as long as you know the initial password seed (and, of course, the password has sufficient entropy so somebody else can't guess it).

As to your second point, I don't really see countries using bitcoin as a national currency because it can't be inflated (which is a very useful function for a national currency). Countries are looking at blockchains for other uses, e.g. local services like land registries (Dubai is hot for this).

I sometimes think that the arguments against bitcoin and cryptos are like people railing against the introduction of the motor car because there's nowhere to store your buggy whip. There will be new ways to use blockchains that aren't just digital versions of what already exists.
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  #39  
Old 28.05.2017, 11:25
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Re: Ethereum

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Just avoid having a stroke or getting other brain related issues.
You can protect accounts with multiple keys as well; e.g. you could have three people with keys, any two of which can unlock the stored value.
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Old 28.05.2017, 11:52
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Re: Ethereum

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Right, got it. So if you store your cash, gold, whatever properly (I.e. Out of reach of authorities, or indeed anyone) then it can't be seized either.

That was useful.
The difference that I'm referring to is, that a Bitcoin Public Key can be (as the name sais) made public, yet no-one can seize the bitcoins anyway, in spite of the number being known.

Try that with a regular bank account: If you do any illegal move on any account, even if only suspected, and the account number in known, your assets are frozen. And faster than you can read this post

While my friend Kim from Pyongjang can continue to buy his Whiskey, in spite of his accounts being known.
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