I have bought a lot of bitcoins from Circle. They are very convenient. The drawback is that you give them direct access to your bank account.

I cannot recommend Coinbase because they track you and they will ban you if they don't like what you are doing with your bitcoins.

As for a wallet, Bitcoin Core is not a great choice. Before using it, you have to download the block chain (which can take days). And every time you start it up, it has to validate its database and sync the block chain (which takes several minutes).

I recommend Airbitz on your phone because it is very easy to use and very secure, and Electrum on your computer.

Well, it is a day later and I was really hoping for an answer to my question: Why would Bitcoin FRB need deposit receipts (or Bitcoin IOUs) that are considered money?

The purpose of randomness (entropy) in cryptography is unpredictability. If everyone uses the same stream of random bits, then it is not secure because it is predictable. It's like always setting the seed of a PRNG to 0.

Please help me understand why Fractional-Reserve Banking with Bitcoin would require deposit receipts that are treated as money. I don't think that is the case, but people (including economists) that I believe should know the answer do.

My understanding of Fractional-Reserve Banking is that it basically (though not actually) works like this:

Assuming a 10% reserve ratio, banks take in deposits and then loan out 90% of those deposits. The loaned money is deposited back into banks, which then loan out 90% of those deposits, and so on. Eventually, the apparent money supply is 10 times the base money supply.

This scenario does not require deposit receipts that are treated as money, so what am I not getting?

FRB actually works more like virtual particles on the event horizon of a black hole, where a bank creates money by creating a loan. It can't work that way with Bitcoin because banks can't create bitcoins, but wouldn't the basic scenario that I outlined above work?

The best method from start to finish:

1. Plug a Mycelium Entropy into the USB port of your printer.
2. Print.

Paper wallets are used for storing bitcoins in an address that has never been exposed to the internet. It is not necessarily the best way to store bitcoins.

Being on paper means that it is not susceptible to electronic failure or degradation. A properly protected paper wallet has a much longer lifetime than a USB stick or hard disk.

There is also no danger that the device that the keys are stored on becomes obsolete. Imagine that you stored valuable information on an 8 inch floppy disk 30 years ago!

The number of bitcoins has no effect on the viability or sustainability of Bitcoin. There are 21 million bitcoins. There could be 21 quadrillion or just 21. It is an arbitrary number. It doesn't make a difference.

However, as pointed out by Amph, the bitcoins are not gone forever. They will be spent eventually. Otherwise, what is the point of saving them? The question is moot.

The difference between an interest-bearing loan and buying a share of a company is just the structure of the investment, primarily in the assignment of risk. In the end, the results are the same for the investor: they give some money to someone and they get it back later with a bonus.

It seems to me that there needs to be a distinction between "running a full node" and running Bitcoin Core.

There may have been 370k people running Bitcoin Core, but how much benefit were they providing to the network? Running Bitcoin Core long enough to sync the block chain and send some bitcoins or view your balance provides very little benefit, especially if you haven't opened port 8333.

That is a common fallacy. Consider this:

Price lower, then buy
then price goes lower: bad for buyers
then price goes higher: good for buyers

Price higher, then buy:
then price goes lower: bad for buyers
then price goes higher: good for buyers

As you can see, whether it is good for buyers has nothing to do with the price before the bitcoins are bought. It is completely dependent on what happens after the bitcoins are bought.


A common response is that the price is expected to rise in the long run, so waiting for a lower price is better. But, assuming that you expect the price to rise, waiting for a price drop means betting against your own expectation as well as believing that you can predict short-term price fluctuations.

The supply will not be halved.

The supply of new bitcoins will be halved, but that is not the same as the money supply or the supply of bitcoins for sale, which is more accurately described as the supply curve w.r.t. supply and demand.

My point is that there is no 7-year pattern. You chose the events that fit a 7-year pattern and ignored the rest. That's called selection bias.

That's not quite true. They want the price to go down before buying and then to go up after buying. It is one thing to hope that it goes down, or to hope that it goes up, but hoping that it goes down and then it goes up ... that sounds more like wishful thinking.

The FED also does not directly control the American stock markets (1973 and 1987),

I have never heard anyone call it a "package" before. "Block" is more accepted.

Selection bias.

What about 1990 (recession), 1997 (Asian crisis) and 1998 (Russian crisis)?

A transaction is "confirmed" when it is added to the block chain. Only miners can do that. Full nodes also validate transactions, but it is not the same. A full node may accept a transaction that will never be added to the block chain.

Signatures are used to verify transactions. This page explains transactions: https://en.bitcoin.it/wiki/Transaction

Basically, someone that wants to spend bitcoins sent to an address creates a transaction providing the public key of the address and signs the transaction using the private key. The address, public key, and signature are validated.

I don't have enough money to buy a Tesla, but that doesn't make it any more difficult to buy a car. The units are arbitrary. I would rather buy 1000 bitcoins than 0.01, but that doesn't make it any more difficult to buy bitcoins.

Bitcoins are no more difficult to buy at $1000 or $10,000 than at $200. You don't have to buy 100 million satoshis at a time. You can easily buy 1 million satoshis or 100 thousand satoshis.

If Bitcoin is as cheap and efficient to use as people say, then the demand will plummet because people don't need to hold it in order to use it.