Bitcoin

Maybe folks should re-think that. Another major theft of Bitcoins was reported today. This article also lists two other recent and even larger thefts, and notes that North Korea is stepping up its game at trying to thieve it:

NiceHash: Millions of dollars may have been stolen in bitcoin hack - Dec. 7, 2017

Here is an actual news link:
Bitcoin: Nobel winner says digital currency should be 'outlawed' - Dec. 1, 2017

 

real test will come with the next economic crash.

 

That's irrational exhuberance personified. The new tulip rush?

If it was mainstream, wouldn't this just be runaway inflation??

 

i mean, if the economy crashes, will bitcoin go with it, or rise above? lots of things have had staggering increases in the last 5 years, means nothing really, except to the people who cash in before they go back down.

 

they can trust them until they can't. who owns/operates this thing?

 

No, it is the opposite. Bitcoins are gaining value. With runaway inflation, the currency loses value. The nation prints ever increasing amounts of currency with no upper llimit, while Bitcoins have a pre-established limit on the total quantity.

This non-expandable upper limit is very certainly a major problem in a very large -- and continually expanding -- economic 'universe'.

For reference, total worldwide hard and paper currencies (all of them, not just the US dollar) are now equivalent to about US $7 Trillion.
All the world's above-ground gold is about the same (and far more is still buried un-mined).
All the world's stock market valuations are about $70 Trillion.
All the world's money supply, including non-physical forms such as checking and savings accounts in banks, is about $90 Trillion.
All the world's real estate is something over $200 Trillion.

All of these measures keep expanding along with growing populations and economies. I don't see how a cryptocurrency with a hard limit of 21 million units can stably handle such economies. The ever-rising value of the currency encourages deflation, and hoarding in place of economic activity.

 

Anyone else in this thread, beside @ETC(SS) (who MAY have net worth rivalling Bill Gates), invested in bitcoin, or etherium?

I have not, but one our sons is really gung-ho, easy enough when it's not his money. I'm nowhere near bright enough to understand it, even have an inkling.

 

Note that granularity wasn't my concern. The effective deflation of the currency is what grabs my attention.

A mild, steady, predictable currency inflation encourages economic activity, which generally leads to growth. The currency itself is not an investment, because it slowly loses value. So instead of hoarding it under the mattress, people have strong incentive to spend it now while it still has its value, or invest it in something that creates better value in the future. Both of these create economic activity that leads to increased value in other things.

Deflation encourages people to hoard the currency, not spend or invest it, because the currency itself will have greater value in the future. This tends to shut down other value-creating economic activity. Without that activity, trade and economic and technological progress slow down, poverty expands, more people starve.

In a universe of population growth that needs to be accompanied by economic expansion, the cap on Bitcoin units effectively forces deflation.

 

$80,000,000. worth of bitcoins 'stolen'?

 

Note that this isn't the first time it has happened.

Nor second. Nor even third. A few years ago, the Mt. Gox exchange lost 850,000 bitcoins.

 

did they ever find them?

 

The anonymity built into the system is designed to prevent anyone from identifying who else has them.

 

I have several rather basic questions about bitcoin. I don't understand where my bitcoin information is, or how to buy/sell bitcoin. I did sign up on my PC, and I have a "wallet". But what are the mechanics of the buy/sell operation?

There is an ATM at a local shopping mall that sells bitcoin. It has a screen, a slot to insert currency, and what I guess is a place to put your cellphone. That's not going to reach my PC with my wallet. And their prices are about 20% over the general bitcoin quotes. And they only sell bitcoin - I'll have to look elsewhere for a place to convert bitcoin to currency.

The best prices seem to be personal trades. So I guess I find someone on Craigslist who has bitcoin to sell, and meet up with them somewhere such as a local Starbucks. Ech. Or I could pay more to a service that takes PayPal, or even more to a service that takes credit cards.

I ran into a several year old story about how someone's bank shut down their checking account for dealing in bitcoin. A bank that just happens to be my financial hub... I certainly don't need my bank cutting me off just because I buy/sell bitcoin. So it looks like I need to get currency from my bank, and trade it somehow at the local Starbucks.

So where is my account data? If my PC dies does my bitcoin value die with it? What/where is the identifying information about my wallet? What do I back up or duplicate to guard against loss? What do I have to protect against theft? Can I have the same wallet on multiple PCs/cellphones? Does every transaction require an internet connection? Could I do a transaction just between cellphones without an internet connection?

So I'm quite a ways from even worrying about the value of bitcoin. I know how to use cash and credit cards. Bitcoin is a mystery.