The Bitcoin Thread

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Keeper

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#1


I've been getting a lot of PM's asking questions about Bitcoin, so I thought it would be better to start a thread and put all info here.

[video=youtube;f39ULNjGnqg]http://www.youtube.com/watch?v=f39ULNjGnqg[/video]


What is Bitcoin?

I recommend watching the videos from this guy:
http://www.youtube.com/channel/UCgo7FCCPuylVk4luP3JAgVw/videos
Everything is explained for the layman and there really is a goldmine of information over many topics.


Why Bitcoin?

Bitcoin is a digital currency that has many advantages over gold, cash, credit cards and even paypal.
  • It's fast. You can send R1,500,000,000.00 (1.5 Billion Rand) worth of bitcoin across the globe in a matter of seconds.
  • It's cheap. There are no paypal fee's, no bank fee's, no SWIFT fee's when owning bitcoin or sending it across the globe.
  • It's secure. Your credit card can be used easily if someone has cloned your card. Nobody can do anything with your bitcoin address and you can share it online without worrying.
  • It's safe. If you get spoofed and send a payment to a phishing site, all they get is the 20 bucks you sent - not the ability to empty your account like a credit card.
  • It's anonymous and private. You can subscribe to a porn site for example, without your credit card bill being assigned to your name. There are a million other reasons, but this is just one example.
  • It cannot be inflated on a whim. As there can only exist 21 million, there is no inflation. The longer you save the more it will buy in the future, not less (Prices of food/etc goes down, not up).
  • There are no requirements or age limit to get a wallet or an "account" - anyone can get a bitcoin wallet and start sending money to people around the globe, instantly. No waiting period!
  • It's safe from bank crashes & bailouts, where they might give your account a "haircut" and take anything over 100,000 of your own money, as seen happen in Cyprus last year.
  • It's safe from "freezing" your account, like Paypal is a fan of doing.
  • It's completely fungible.
  • Transactions cannot be reversed (by default) that creates chargeback fraud. (although it can be built on top of bitcoin by a 3rd party, if preferred)
  • It cannot be forged/counterfeit like gold or cash.
  • It's extremely divisible, up to 8 decimals. Think micropayments - no other payment systems are feasible to send 1/50th of a cent (to read an article, for example)
  • The bitcoin network doesn't "close" like banks, it's always online, 24/7/365.
  • It can exist in many places at once, unlike cash.
  • It's insanely portable.

Where do I buy Bitcoin?

1. You can buy straight from an exchange.
This is the cheaper option. We have two local exchanges in SA:
BitX.co.za
ice3x.com
*You will need to verify and provide some documentation/identification before you can buy from an exchange.

2. You can buy from other people, directly.
There might be a higher markup here. You can do person-to-person transactions, and also in cash. This is an global website but there are people in SA selling.
localbitcoins.com
*This is a person to person transaction based website, and as such make sure the person can be trusted by looking at their ratings.


How do I store Bitcoin?

There are many ways. You can store Bitcoin on your PC, on a phone/tablet, on a web wallet, on a paper wallet, or even in your brain.
http://bitcoin.org/en/choose-your-wallet
For the PC, I recommend MultiBit because you don't need to download the blockchain, which can be a few gigabites in size - it's user friendly and easy to use.

it's a little tougher at this point in time for iPhone/iPad users as Apple feels Bitcoin is a threat to their way of business (Bitcoin bypasses their In-App purchase system where they take 30% of profits)
If you have an Android though, you are golden.


What does a Bitcoin cost?

http://bitcoinity.org/markets/mtgox/USD1
http://bitcoin.clarkmoody.com (Good website with up the the minute feed - works only on Chrome though)


Bitcoin is too expensive!

You don't need to buy a full bitcoin, you can buy 0.1 or even 0.00000001 bitcoin
A single Bitcoin can be divided into 100 million pieces, called "satoshi's".

Think of 1 Bitcoin as a bar of gold - You don't really need to buy a full bar to own gold or trade it.
There will only be 21 million bitcoin by 2140, and if everybody on earth had an equal share, they would each only own 0.003 bitcoin. (or, 300 000 satoshi's)
It's impossible for everyone to own a full bitcoin, just like it's impossible for every person to own a bar of gold.


Can I create Bitcoin myself?

Yes you can - it's called mining and is the only way to introduce the coins into circulation. (sort of like "minting", only at a controlled pace determined by math)
It is pretty much unfeasible to mine bitcoin at this stage, but if you want to know more there is a discussion going on in this thread.
 
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Keeper

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#2
FAQ

Q: Bitcoin is too volatile to be used as a currency!
A: It won't always be like this, it's only because bitcoin is new and therefore has a small market cap (+- $10 Billion). Business can also choose to use BitPay, who will immediately convert and send you the cash value if you prefer, hence there is virtually no risk due to market fluctuations.

Q: Bitcoin is too difficult, nobody is going to use this.
A: the same could have been said for the early internet, where all we had was IRC and "dumb" websites - Bitcoin is still in it's infantsy which is why it might be a great investment.

Q: Bitcoin is a scam/Pyramid Scheme/Ponzi, only early adopters benefit from newcomers.
A: Well then Google stock, Apple stock or Microsoft stock is also a pyramid scheme. Early investors carry the risk, and therefore get the rewards. laggards do not carry any risk and therefore don't get such reward. That's just how it works unfortunately.

Q: It's too late to get into Bitcoin.
A: It most certainly is not, we are still somewhere in the early adopter phase and are nowhere near the "vertical" on the well known adoption S-curve

Q: Can't I just buy/mine alt-coins instead of bitcoin? I'd have much more!
A: Yes you can, but as bitcoin is still always a risk, betting your money on alt-coins is an even bigger risk. There are MANY reasons why bitcoin is better, which I've talked about right here.

Q: What can I do with my Bitcoin?
A: You can spend it, send it, or keep it. There are more and more merchants accepting it.
You can buy games from humblebundle.com, domains & hosting from domaincheap.co.za, order biltong, buy airtime, or subscribe to a usenet provider such as usenet bucket, or even book a ticket into space with Virgin Galactic if you have [-]285[/-] [-]270[/-] 240 bitcoins (Roughly R2.5 Million). There is a comprehensive list over here

Q: How secure is Bitcoin really?
A: Extremely. Unless they have your wallet, it is virtually unbreakable. To understand why, you can view this very interesting series on crpytography. You should encrypt you wallet with a password though, to increase security (should someone steal you wallet file, they can't spend it)

Q: What happens when someone who owns bitcoin dies, without giving their family access to the bitcoin wallet/password?
A: Everyone else owning bitcoin becomes just a little bit richer.

Q: How do Paper wallets work?
A: Check out this video

Q: Can I give out my Bitcoin Address to people?
Sure you can, nobody can do anything with your address (Public Key) - Just don't share your Private Key (wallet.dat)

Q: What if I type the wrong address when sending coins?
You shouldn't ever have to type an address, use Copy & Paste or QR-Codes which will type it for you when scanning it.
Bitcoin does have error detection though, if you accidentally miss a letter or write a letter or two wrong.
 
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Keeper

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#5
If anyone has anything I could add to the OP or any other questions, i'll be happy to answer them.

Bitcoin is a Black Swan event not many people will understand, until it's too late.
If you disagree though, and have the balls, you can post your predictions >here<
 

Fulcrum29

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#6
Hi Keeper,

What is your view on Bitcoin Commodity Exchanges where you can buy/sell (trade) GHS?
 

Keeper

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#8
I don't know much about Commodity Exchanges and ETF funds/etc, and would advise against daytrading bitcoin or any other crypto for that matter unless you know what you're doing.
Buying expensive mining gear is also a large risk, as the ASIC chip designers take forever to ship, and by the time you receive your unit, it's not feasible to mine anymore.

I'm more of a "Buy Bitcoin low, sell it high" kind of guy - that's the easiest and best way to make money if you want to (over a month or two period, no day trading)
Best advice would just be to buy and hold. That has worked exceptionally well for bitcoin users but is easier said than done (it's extremely tempting to cash out when your money quadrupels over a short amount of time!)

As for "paying interest" on bitcoin - whoever claims to provide that is using some scheme because bitcoin doesn't pay interest. I wouldn't trust my bitcoin with them.

As for any type of "shares" in bitcoin type of thing, I would just buy my bitcoin outright and own it instead of a company giving me an IOU paper claiming I own bitcoin, on paper.
 

Fulcrum29

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#9
I don't know much about Commodity Exchanges and ETF funds/etc, and would advise against daytrading bitcoin or any other crypto for that matter unless you know what you're doing.
Buying expensive mining gear is also a large risk, as the ASIC chip designers take forever to ship, and by the time you receive your unit, it's not feasible to mine anymore.

I'm more of a "Buy Bitcoin low, sell it high" kind of guy - that's the easiest and best way to make money if you want to (over a month or two period, no day trading)
Best advice would just be to buy and hold. That has worked exceptionally well for bitcoin users but is easier said than done (it's extremely tempting to cash out when your money quadrupels over a short amount of time!)

As for "paying interest" on bitcoin - whoever claims to provide that is using some scheme because bitcoin doesn't pay interest. I wouldn't trust my bitcoin with them.

As for any type of "shares" in bitcoin type of thing, I would just buy my bitcoin outright and own it instead of a company giving me an IOU paper claiming I own bitcoin, on paper.
We share the sentiment I bolded. Apparently this is to do with peer to peer lending where you only trust the Bitcoin Bank (burrower) so it is an high risk, but steady income where you can lose everything.

I know some local people involved with Community Exchanges, but they Farm on a large scale with a couple ASIC miners hosted in Europe. I started with CEXIO (cex.io) but only keep a minimum there due to me still seeing scams everywhere...

Buy low, sell high then...
 

Keeper

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#10
We share the sentiment I bolded. Apparently this is to do with peer to peer lending where you only trust the Bitcoin Bank (burrower) so it is an high risk, but steady income where you can lose everything.
Yep, it's possible to do "fractional reserve banking" on bitcoin as well in fact, but I don't see that as very sustainable as the "bank" here has no control of the minting like traditional currency.
They simply can't just print as much as they feel like.

Besides, why not just own the real bitcoin yourself?
I mean, I can understand gold, where it's easier to just move the stock/representation as it's more frictionless than the actual gold - but with Bitcoin it's already frictionless.
 

Mister 44

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#11
Thanks for the thread, Keeper.
Here are a few links that those people that are into mining may find useful.

Middlecoin.com is an anonymous pool where you mine the most profitable scrypt coins but get paid in bitcoin. It is apparently much more profitable than mining bitcoins directly. Haven't tried it yet myself, so any feedback would be great.

And here are two sites that compares mining difficulty of crypto coins:

http://www.coinchoose.com/

http://www.coinwarz.com/cryptocurrency
 

Fulcrum29

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#13
@ Keeper

How long does it normally take to receive BTC when requested? I have never done this between my own wallets.
 

Keeper

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#14
@ Keeper

How long does it normally take to receive BTC when requested? I have never done this between my own wallets.
From bitcoin wallet to bitcoin wallet... about 2 or 3 seconds?
Confirmations take about 60 minutes. (for 6)
 

KingBel

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#16
Which is the best wallet to go for, if my plan is to mine alt coins? Apparently Multibit only works for bitcoin?
 

Keeper

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#17
I think they are working on a multi coin wallet called "MultiCoin" but for now you would have to install the QT version for each coin you mine.

I personally extract them all to subdirectories in one main folder. They don't all need to be running 24/7 - just run the ones you currently mine on.
 

KingBel

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#18
Bitcoin-QT? Would I need to download the full block chain for each alt I want to download then?
 

[XC] Oj101

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#19
They only use 100-300 MB of RAM each, rather leave them all open. I used to only open them as needed (once a week or so) but it's annoying having to wait for the wallet to catch up with the network before you can send coins. Leave them open and up-to-date :)
 

Keeper

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#20
Bitcoin-QT? Would I need to download the full block chain for each alt I want to download then?
Yes, of course.

The coins are never really "on your computer" they are in the blockchain.
You may have the keys to them, though.

If you mine new coins though, the blockchain size would be very small and quick to download.
 
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