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Bitcoin for Big Dummies: Why The Digital Currency Is Spiking & Why It's Not A Bubble
2014 is set to be a banner year for BoomBustBlog. As you may have noticed, positings have slowed down to almost nothing. This due to another battle with hackers on the server. As we bounce back, we will take the global macro world by storm. This includes the digital currencies and how they will affect the world as we know it.
I have recorded a brief simple video to explain my perspective on digital currencies. Let it be known to all who don't normally follow me: I'm not a gold bug, I'm not crypto-currency bug, I'm a risk-adjusted return bug! I attempt to see things as they truly are and will call it as I see it. Those of you who instanteously dismiss Bitoin as a bubble or Ponzi scheme are likely doing so without taking the time to fully understand it (it is quite different, I must admit), or read the disruptive change that it's capable of bringing into play - a disruptive change at the level of the Internet and World Wide Web during the the early to late 90's. For an example of this broad based, yet widely followed misunderstanding, reference The "Anti-Economist" Calls Bitcoin the A…
Now, there's no doubt that Bitcoin has been on a tear as of late, after all...
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The vast majority of that 6 digit (that's right, "Six" digit) return has occurred within the last year.
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The most likely reason stems from media exposure. Please note that I don't think it's due to media exposure, it stems from it. You see, as explained in the short video below, Bitcoin's primary value stems from its inherent ability to truly and absolutely circumvent the gate keepers of monetary value today - the Central and Money Center Banks of the world.
Basically, the gatekeepers of money can now have the locks on their gates picked. The tertiary value is that this new money is "programmable," but more on that later. The more people who realize the value of this new, finite, cryptographic money, the higher the demand pushes the value of the money.
Do I have a point? Well, look at it from obscurity in 2010 to media darling in 2013 - Yes! All 391,288% worth of appreciation!
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Stay tuned for more on my take on smart money in the very near future.
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Keep an open mind folks. 99.9999 % of the people on the planet thought the earth was flat until....
one didn't think that way anymore, and that guy didn't give the gift to the people of this planet like Satoshi did...
Reggie is blind to off-grid risk.
Well, I guess with his love for Google & Google Glass, I should not be surprised. You play your way, I'll play mine.
Bitcoin is a sign of hyperinflation, a proxy for Gold & Silver, & a scam to make people think an inherently worthless "money" has value.
Who invented Bitcoin? Who benefits? It has to be the banksters/gov't who want to deflect the QE hyperinflation from Gold & Silver.
A virtual currency like Bitcoin cannot be created out of thin air because somebody benefits unfairly - much like the fractional reserve banking scam.
Cyber-currencies have to start with something real so nobody unfairly benefits.
Every reason bitcoin pumpers give you are all the same tricks pink sheet stock pushers tell you.
I have had great respect for Reggie's analysis in the past. His growing obsession with his own wonderfulness is definitely disturbing, however. Regardless, I find it extremely difficult to watch the above video, with it's absurd analogies, and not think Reggie has lost his mind completely. "If the internet wasn't a bubble then bitcoin isn't a bubble. Bitcoin is to finance what the internet was to communications." WTF? Pretty unbelievable, and quite sad as well.
The inherent problem with Bitcoin is the Blockchain. It grows with every transaction.
As Bitcoin becomes more popular and transactions grow exponentially so will the Blockchain grow exponentially.
Can you imagine the Download time for a 4 Gigabyte Blockchain?
It is unsustainable. The growth in Downlink and Uplink speeds will not match the exponential growth of the Bitcoin Blockchain.
Just how long does it take WilliamBanzai7's pages to load with a fast DSL line? Can you imagine how long it takes to download 4GB by just doubling your Downlink speed?
Interesting steveo77, but has nothing to do with Bitcoin.
Perhaps post this on one of G.W.'s posts about Fukushima?
What happens when all the coins are "mined"?
They double the number of coins and cut the value in half?
What will happen to the value when there is no more money to be made "mining"?
I'm all for defeating central banks and bankers; Bitcoin, however, appears to be a dangerous distraction.
It is supposedly so infallible (because it uses math) and yet so intangible (on the Interwebs as binary data) that I fear at some point tangible fallibility will catch up to it.
Transaction fees are what will happen (and are happening).
"Bitcoin for Big Dummies"
I think that pretty much says it all.
Bitcoin is the only 'money' that disappears when the power goes out. One good Solar Flare and the Bitcoiners are begging in the streets.
Do you think your bank account is anything other than 1's and 0's?
Mine's a bunch of gold & silver atoms. What, yours isn't?
I think Bitcoin isnt really the answer but this simply isn't true. A solar flare would at worst take down half the worlds internet. What about the other half? As long as at least a few clients keep the blockchain alive all information is still available and you haven't "lost anything". Bitcoin is just as valid if not more than Federal reserve notes. Neither is a real solution.
Can I use btc at 7-11? Can I use btc at McD's? Can I use btc at the grocery store? the gas station? at Home Depot? at amazon.com? Get back to me when I can. Till then.......bullshit.
Seems like ages since I've read a Reggie article, and whether I agree with the summary or not, it is a welcome sight and well appreciated. Thanks mate for your efforts.
While a fan of the concept of cryptocurrencies, I've been an outspoken critic of BTC on two points: It may be hampered by manipulation and technical limitations. I've said all that can be said on these.
You are not wrong. The value of anything is directly related to its popularity, and BTC has risen on that tide this year. Whether that is a consequence of faddish behaviour which can collapse it overnight, or whether it is truly on the verge of ubiquity as the electronic currency of choice is the question, and so far I have refrained from agreeing with the latter. The reasons are many - one need only to look at the btc headlines during the year to see that outright bans (as a medium of exchange), shutdowns, seizures, govt controls, are merely a legislative signature away. As a store of value, it is small potatoes compared to the central banks, but if it ever begins to challenge them, the end of btc as we know it is a foregone conclusion. Then there are the choices - btc is essentially no different than a dozen other cryptocurrencies in existence today. It offers nothing more, and anyone can create one using the open source codes available, so there is no logical reason why a btc should be worth more than another equivalent cryptocurrency other than having a recognised brand name.
You may also consider the following when you rationalise BTC's meteoric rise this year. It coincides with the scheduled halving of the rate of its production. The BTC mining algorithm is designed to halve the rate of btcs produced every 4 yrs, which to me smacks of deliberately manipulating the value by halving the supply at the exact same moment it is popularised in the press. DeBeers diamond price manipulation comes to mind when I see a system suppressing the supply of a commodity to inflate prices.
These observations make me wary of BTC, but as I have said on occasion, sillier ideas have survived many years of popularity - Fiat money being a good example. If BTC survives, I expect another leap of its value in 2017, but before then, I doubt we'll see another such meteoric rise in btc soon. (Famous last words! ).
Cheers & hoping you'll have a prosperous New Year!
YHC
Tulips, tulips for sale!
Hey Reggie
You are so totally right on this one from my perspective.
I was one of the very first ISP's in Canada in 1995 ( BBS's back to the late 70's ), setting up a free Interent co-operative in Toronto, and I have been using micro computers since you no longer had to build your own in 1977..
I also stopped Bell Canada from taking over the canadian system back then, by contacting every member of parliment directly, to explian what this new internet meant to the world and Canada...That worked...
Bitcoin, to me, is as big, or bigger then the internet, in terms of what it can mean for freedom for every person on the entire planet..
So ... I bow down to you sir!!! KEEP UP THE GREAT work..
Bob Cecil
I'm sympathetic to the idea bcecil, but Toolshed is right.
Besides, Bitcoin can't be bigger than the Internet because it requires the Internet.
Remember that the Internet was started by the Military (read N.S.A.) and is still controlled by them.
If you don't think they can shut it down and/or control nodes and transactions at will you're fooling yourself.
OR,
you're a computer scientist that knows how the whole thing is built.
The NSA does not code the software I use.
It doesn't make the hardware.
It doesn't own the transmission lines.
It has SOME hardware, SOME software and SOME transmission lines & servers but I'm not forced to use them & we can keep building more without them.
There are no back doors - it's 100% open.
most of "the" Internet is open DESIGN. It's up to you to make cables, wireless transmission systems & software implementations that meet the standards.
The central banks will not allow competition. Period.
Controlled competition, yes.
i do wish people would stop pushing bitcoin...i have dollars issued by strip clubs all over the world and am part of an enthusaistic cabal of 90 million men (and more than a few women! no central wa...er bankers own them or want to control them...ok a few
www.chickenranchbucksandbulls.com
there is a limited supply, cos we have to keep updating it for the new tattoos used by big momma pump..
http://mankindunplugged.com/2010/11/16/tramp-stamps-what-were-these-chicks-thinking-30-photos/
for those not in the know about the drill bit encryption we have this manual
http://tattoo.about.com/od/tattoosgeneralinfo/a/tatmeanings.htm
down arrow if you clicked the first link ;>)
Hello, the internet was a bubble. Did it go away?
<Sigh>
Bitcoin is not tied to labor of any sort. It simply allows you.....the audience.....to play along at home and experience first hand what it is like to be a Central Banker.
And it's big club.....and you ain't in it. Once Bitcoin challenged the Central Banks and the sovereign <snicker> nations they control they wil either destroy it.....subsume it....or tax it.
And there goes your little dream of financial and currency freedom.
Bitcoin is not tied to labor of any sort. <- so wrong it hurts.
ASIC's that mine bitcoin are cutting edge technology that are constantly updated. Where do these machines/servers come from?
Massive mining requires large amounts of power. Where does this power come from?
No labor? FALSE.
ASIC miners are 100% obsolete when produced and can't be used for anything else.
You're lucky to get anything out of them before the exponentially increasing difficulty leaves you with a pile of power bills & useless equipment.
That's classic misallocation of wealth, a symptom of QE, and it not only wastes energy that can't be recovered but also silver going into the dump if it's not yet recoverable at market prices from within the circuits.
What a waste.
Your shackles are so heavy you can't even understand a liberating technology like bitcoin.
So sad.
Our founding fathers probably thought the same as you. Big brother is all powerful. Oh wait....
bitcoin would liberate me of all my money never to return.
No thanks.
Best of luck to them (the states of the world) on their journey to legitimize bitcoin.
sofaking
They can ban anything they want. The question is can they enforce it? I believe the answer is no. They can shut down brick and mortar locations but bitcoin is not brick and mortar. Bitcoin is an open source protocol network with no phisical location. There are so many people hooked up to the network that it is now the most powerful super comuting network in the world. Not even the USSA or China have anything close. Bitcoin has tracktion and is not going anywhere. The only way to stop bitcoin is to shut the entire world wide web down and that will not happen.
every physical location can be stopped at the same time using the same methods.
#1 emp
#2 cut the wires
#3 jam the airwaves
#4 use routers that filter out ANYTHING that might be bitcoin. 3% sure? Ban it. Right there & then. Every router.
#5 200 year sentences for assisting terrorism for NOT installing these routers.
Bitcoinz have hype, not traction. I refuse them at all times at all prices no matter what.
And no, the most powerful super-computing networks in the world are still inside NSA buildings.
They have the money & the technology to print 1,000,000 ASIC boards in the time it takes you to make ONE. AND they'll all be faster. AND they get first crack at optical VLSI. your boards are ELECTRIC, theirs are OPTICAL. you're fucked.
But if you insist, keep trying... http://eda360insider.files.wordpress.com/2012/03/altera-optical-fpga.jpg
http://eda360insider.wordpress.com/2012/03/07/3d-thursday-altera-adds-avago-micropod-optical-interconnects-to-fpga-package-to-handle-bidirectional-100gbps-ethernet/ - March 7, 2012
It would be neat if you could substantiate your claims.
I see your scary optical argument is special. You should have posted the actual link. But I guess that doesn't fit your narrative.
http://www.gigoptix.com/component/k2/item/313-optical-asic.html
"This low cost Optical ASIC can have multiple applications, such as: InfiniBand Ethernet, Fibre Channel, SAS, HDMI, USB, Thunderbolt, or DisplayPort. The reduced footprint and power consumption also enable more channels to be combined into a single cable to further increase bandwidth and reduce cost."
the links I provided DO substantiate the claims. It's a fucking OPTICAL CHIP you dimwit.
I think you are perhaps too dim to understand lots of other optical chips have been made.
IT'S AN FPGA CHIP.
Field programmable gate array.
That means the cells can be programmed to connect & reconnect in any configuration that fits it to emulate any other chip needed (like your silly non-optical bitcoin hashing ASICs).
You ever programmed an FPGA before? You even have an inkling of what it is? It's a chip that can be any other chip ON DEMAND.
You're a fucking tool.
You're boring me.
That's because you're stupid. Stupid people are easily bored by complicated matters of electrical engineering, physics, optics, and of course, evidence that proves you are a dunce.
As someone who actually works on technology beyond using a browser or spreadsheet program, I know that the government can shutdown BTC if they want. It really wouldn't be that hard. Every protocol has a signature. Every packet has to pass through backbone routers. Block BTC packets by signature and viola, no more BTC. You don't even need a Staples "That was easy" button. Then there also DNS tricks they can play if they just want to mess with you. Maybe they don't want to stop it but rather co-opt it - MITM, which is something the NSA is already doing with other traffic, could be the way to go. Oh but BTC is encrypted! The NSA poops on your encryption. Where do you think your encryption came from? If it goes on the internet, they pwn it if they want to.
If you believe in BTC as a power to the people kind of mechanism you might as well believe in the flying spaghetti monster or whatever that cult is about. BTC is only valid as a short term high risk speculatory issue. It will never be a viable people's currency or any of the other BS promises people are making.
The difference between an encrypted bit-stream and white noise is more subtle than you think it is.
well no, not GnuPG / PGP's evolved offspring, but you have to maintain system integrity at all times, physical & connected. For most people commenting here, I'd assume they're pooched.
+1
also i made a post with a link to a youtube video of the easy button about this very thing... how apt. :)
Bottom line is I understand technology well enough to know that money should function without any.
"As someone who actually works on technology beyond using a browser or spreadsheet program"
Let me guess. You're the guy who vacuums the carpet in the server room. You are either a complete moron or goobermint troll. More and more traffic every day is encrypted you dimwit and no, encryption is not some magical thing that the NSA controls. It is MATH you moron, and no one controls math. Get it? Quit pretending you know what you are talking about and go empty the garbage cans in the bathrooml.
The Bitcoin Channel
It's amazing how well the bullshitter's "I speak from authority" line works on people around here.
It must make them feel better about being on the losing side of the trade.
Block BTC packets by signature and viola, no more BTC.[..] there also DNS tricks they can play if they just want to mess with you.
Wow. You figured it out. It's just that easy isn't it? Yea, sure, it's just the flip of a switch and you can turn all the world's core routers into packet filters. Just like that!
Oh, and sure, poisoning DNS, worldwide, to stop a virtual currency is just as easy. Yes of course all the organizations who actually provide the root servers will be aok with all that no worries.
it's called QoS & firewalling.
It's not that hard.
Well, it must be hard for you - to understand how things actually work.
Hardly. Computer Scientist here. Filtering out packets by their headers & contents is easy as pie. It literally is the job OF the Internet at some level to do only this - we call it routing but filtering packets entirely is another part of it. Are you like a used car salesman or secretary or something who fashions herself a computer genius?
Oh, I should have known it.
Sorry about your inability to find work, mr computer scientist.
all those big fancy investor calls with facebook, Goldman, Wells Fargo, etc., are run by someone.
I'm that someone. That's what I do for work. You would only wish you had a single job putting you in place to hear everything I hear.
I see. A 'computer scientist' who runs conference calls.
Congrats on your tremendous success.