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Author Topic: Are Bitcoins Worthwhile?  (Read 1676 times)
JohnnyCash
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January 22, 2012, 11:30:22 AM
 #1

Entirely new to bitcoins here. I don't even have a wallet set up yet or a single smidgen of a coin to my name.

What I'd like to know before I get started is whether it's worth it. Is it lucrative? Or at least, is it lucrative enough considering the effort in mining them or working for them?

Yeah, I've read about the technology and it seems impressive. But what have you specifically been able to buy with your bitcoins? I'm hoping to get some anecdotal stories. I'm probably not going to bother with bitcoins if I can't actually spend them on something useful. I get the feeling a lot of people are hoarding them in hopes they'll be valuable sometime in the future, and fewer actually using them, but that might be a false impression.

I guess what I'm asking for is someone who knows what they're talking about to explain why a complete newbie should get involved with this currency.
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January 22, 2012, 11:41:34 AM
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Entirely new to bitcoins here. I don't even have a wallet set up yet or a single smidgen of a coin to my name.

What I'd like to know before I get started is whether it's worth it. Is it lucrative? Or at least, is it lucrative enough considering the effort in mining them or working for them?

Yeah, I've read about the technology and it seems impressive. But what have you specifically been able to buy with your bitcoins? I'm hoping to get some anecdotal stories. I'm probably not going to bother with bitcoins if I can't actually spend them on something useful. I get the feeling a lot of people are hoarding them in hopes they'll be valuable sometime in the future, and fewer actually using them, but that might be a false impression.

Depends what you're looking for.  The trade page on the wiki is a good place to start:
https://en.bitcoin.it/wiki/Trade
From Amazon to Video Game keys, there are many ways to spend bitcoins.

I've personally bought papa john's gift cards and some mail-order food.  I've also bought some USDs to cover the hardware I purchased and to diversify some of my profits.

As for mining, use the GPU you have, and invest in FPGA miners if you are confident you can run them.  The window for GPU mining is closing unless you have very cheap power.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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P4man
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January 22, 2012, 11:47:30 AM
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3 reasons you ought to be interested in bitcoin.

1) speculative. If bitcoin gets more widespread adoption, its value could potentially explode. Its a gamble, because it could go either way, and bitcoins might become close to worthless a year from here, no one really knows, but it seems more likely in the long run (a few years) the value will go up substantially. This is a good reason to buy a  limited amount of coins and hope for the best.

2) mining is profitable if you have cheap electricity and/or efficient hardware. Its easy to calculate, use any bitcoin calculator and check your electricity prices. You will need efficient hardware though, that means recent ATI videocards or FPGAs. Mining is a zero sum game, the amount of coins to be mined is fixed, so compete will all other miners. If you dont have more efficient hardware or cheaper electricity, it will not be profitable for you.

3) use it to transfer funds across the globe with minimal/no fees, just like you might use paypal or western union. This doesnt require you hold a lot of coins, you can buy them just before you need them.

As for being able to buy stuff with bitcoins; sure, you can. To name just one excellent way:
http://spendbitcoins.com/

I use it to buy stuff on amazon. Zero fees.


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January 22, 2012, 11:50:26 AM
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It's a new technology/discovery. I think of it like calculus or oil. It took awhile for people to figure out how to make internal combustion engines or moon rockets that wouldn't work without them. We haven't figured out as a civilization how to use Bitcoin. Using it just to buy stuff is like only using petroleum to light oil lamps. We already have monies to do that. Bitcoin is capable of so much more. At the very least, buying Bitcoin is like buying the mineral rights to an oil field in the early days of wildcatting.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
JohnnyCash
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January 22, 2012, 11:58:57 AM
 #5

Thanks for the answers so far!

One thing that bothers me is that bitcoin isn't backed by anything, other than the fact that it was the first crypto currency (or at least the first one to achieve this kind of fame). And just browsing around a teeny bit, I can see there are many other rival currencies starting up. What prevents them from taking over? Sure, being first is an advantage, since it's more established and has more people willing to accept it. But it'd seems without some inherent value it'll eventually bleed out buyers/sellers.
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January 22, 2012, 12:04:46 PM
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Thanks for the answers so far!

One thing that bothers me is that bitcoin isn't backed by anything, other than the fact that it was the first crypto currency (or at least the first one to achieve this kind of fame). And just browsing around a teeny bit, I can see there are many other rival currencies starting up. What prevents them from taking over? Sure, being first is an advantage, since it's more established and has more people willing to accept it. But it'd seems without some inherent value it'll eventually bleed out buyers/sellers.

Another cryptocurrency could only displace bitcoin if it offered a significant advantage that overcame a significant issue.  No coin to date has made any revolutionary leap forward, and I doubt we'll see such a leap before the initial shock of cryptocurrencies in general wears off.  Nobody understands this concept well enough to improve on it yet (other than the ongoing multi-signature work, which will improve bitcoin directly).  It's mindblowing.

https://www.bitcoin.org/bitcoin.pdf
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cbeast
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January 22, 2012, 12:08:47 PM
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It costs <$7 to buy into one Bitcoin. No big risk. Get them while they are cheap.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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January 22, 2012, 12:41:10 PM
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Another thing worth mentioning:
  • Sell things and offer services accepting bitcoin as payment. No fees, no chargebacks and since we're still at the early days you will get free publicity.

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January 22, 2012, 01:21:05 PM
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Thanks for the answers so far!

One thing that bothers me is that bitcoin isn't backed by anything, other than the fact that it was the first crypto currency (or at least the first one to achieve this kind of fame). And just browsing around a teeny bit, I can see there are many other rival currencies starting up. What prevents them from taking over? Sure, being first is an advantage, since it's more established and has more people willing to accept it. But it'd seems without some inherent value it'll eventually bleed out buyers/sellers.
And your beloved dollars/euros are backed by... by?
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January 22, 2012, 01:25:37 PM
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 Speculation... is generally one of mankinds enemy. Stablised price fluctuations on the one hand but it's generally known as a major problem in life for everything else from raising food prices to pump and dump. I wouldn't call it an advantage.

 I wouldn't call it lucrative but it's worth a punt.

 For real advantages see my sig.
JohnnyCash
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January 22, 2012, 05:22:35 PM
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Thanks for the answers so far!

One thing that bothers me is that bitcoin isn't backed by anything, other than the fact that it was the first crypto currency (or at least the first one to achieve this kind of fame). And just browsing around a teeny bit, I can see there are many other rival currencies starting up. What prevents them from taking over? Sure, being first is an advantage, since it's more established and has more people willing to accept it. But it'd seems without some inherent value it'll eventually bleed out buyers/sellers.
And your beloved dollars/euros are backed by... by?

By raw governmental power. Or more accurately, by the fact the government will accept it as valuable, and assist people who have it or jail people who don't pay their taxes with it. True fiat currency has nothing physical backing it, but it's basically secure as long as its government remains in power and doesn't start printing money to pay off debts.

True there are downsides to that. There could be a coup, or unwise economic policies, or something else that affects the currency's valuable. And an unjust law can seize your money unfairly. But as long as the government is reasonably powerful and stable your money should retain value. It's a bit like buying stock in a company. Your Apple stock is probably secure bet, your Pets.com stock from 1999 probably not as wise.

cbeast
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January 22, 2012, 06:00:17 PM
 #12

Thanks for the answers so far!

One thing that bothers me is that bitcoin isn't backed by anything, other than the fact that it was the first crypto currency (or at least the first one to achieve this kind of fame). And just browsing around a teeny bit, I can see there are many other rival currencies starting up. What prevents them from taking over? Sure, being first is an advantage, since it's more established and has more people willing to accept it. But it'd seems without some inherent value it'll eventually bleed out buyers/sellers.
And your beloved dollars/euros are backed by... by?

By raw governmental power. Or more accurately, by the fact the government will accept it as valuable, and assist people who have it or jail people who don't pay their taxes with it. True fiat currency has nothing physical backing it, but it's basically secure as long as its government remains in power and doesn't start printing money to pay off debts.

True there are downsides to that. There could be a coup, or unwise economic policies, or something else that affects the currency's valuable. And an unjust law can seize your money unfairly. But as long as the government is reasonably powerful and stable your money should retain value. It's a bit like buying stock in a company. Your Apple stock is probably secure bet, your Pets.com stock from 1999 probably not as wise.

And a government adopting Bitcoin has the best of both worlds.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
JohnnyCash
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January 22, 2012, 06:44:23 PM
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And a government adopting Bitcoin has the best of both worlds.

True, but which government would? They need control over currency in order to seize it for taxes and what not.

What makes more sense is a corporation selling their own stock directly and the stock itself being crypto-currency.

For example let's say OmniCorp divides itself into 50,000,000 crypto-coins of stock and offers them online. They need USD and euros and other regular currencies to pay for factories and salaries and whatnot, so you offer them regular money in exchange for them giving crypto-coins to you.

Although OmniCorp issues the stock (no mining at all) once the coins are given out they lose control over them. Encryption keys are still used to trade the stock, and omnicorp has no way of recalling it. And they can't generate more without breaking various legal contracts.

Crypto stock would have several advantages over bitcoins. First off, it would entitle you to dividends. Owning a OmniCorp coin would allow you to claim a bit of regular money every so often. It would also give you a vote in the company's affairs. Essentially, it does everything a regular stock does but also can be tradeable.

Now, one company can fail or have swings in value. So eventually people might create a mutual fund crypto-coin that contains a tiny bit of stock in several different blue chip companies.

What would be needed is some kind of software that allows companies to issue crypto-coin stock, then allow people to use their coins to claim dividends in regular money and send in votes. And it would also need to be compatible with other corporations' crypto-coins, so users can "mint" custom coins consisting of whatever combinations of stocks in whatever amounts they want.


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January 22, 2012, 06:45:14 PM
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You will regret not getting a few Bitcoins while they are cheap if/when they go up.

There has never before been any other currency on earth where you can see every single bit of it and know its impossible to fake.

With which you can be your own bank.

Ask yourself, how much did a bottle of milk cost 20 years ago? 40 years ago? 60 years ago? 100 years ago...
As you clearly see your money decrease in value for every year.

Bitcoin if still here will not decrease in the long run but increase.
So while your other money decrease your Bitcoin money will increase.

The longer Bitcoin lives, the more its value increase, because the more people understand its here to stay.

Dont miss the rocket...

Bitcoins - Because we should not pay to use our money
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January 22, 2012, 07:00:29 PM
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And a government adopting Bitcoin has the best of both worlds.

True, but which government would? They need control over currency in order to seize it for taxes and what not.

What makes more sense is a corporation selling their own stock directly and the stock itself being crypto-currency.

For example let's say OmniCorp divides itself into 50,000,000 crypto-coins of stock and offers them online. They need USD and euros and other regular currencies to pay for factories and salaries and whatnot, so you offer them regular money in exchange for them giving crypto-coins to you.

Although OmniCorp issues the stock (no mining at all) once the coins are given out they lose control over them. Encryption keys are still used to trade the stock, and omnicorp has no way of recalling it. And they can't generate more without breaking various legal contracts.

Crypto stock would have several advantages over bitcoins. First off, it would entitle you to dividends. Owning a OmniCorp coin would allow you to claim a bit of regular money every so often. It would also give you a vote in the company's affairs. Essentially, it does everything a regular stock does but also can be tradeable.

Now, one company can fail or have swings in value. So eventually people might create a mutual fund crypto-coin that contains a tiny bit of stock in several different blue chip companies.

What would be needed is some kind of software that allows companies to issue crypto-coin stock, then allow people to use their coins to claim dividends in regular money and send in votes. And it would also need to be compatible with other corporations' crypto-coins, so users can "mint" custom coins consisting of whatever combinations of stocks in whatever amounts they want.



There have been several threads about how a government can adopt bitcoin. There have also been threads about pinning bonds to Bitcoin. The best part is that it has an open ledger which is very easy to audit. Smart contracts are an evolutionary step beyond stocks and bonds. Bitcoin makes them all possible and much more.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
JohnnyCash
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January 22, 2012, 07:09:56 PM
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There have been several threads about how a government can adopt bitcoin. There have also been threads about pinning bonds to Bitcoin. The best part is that it has an open ledger which is very easy to audit. Smart contracts are an evolutionary step beyond stocks and bonds. Bitcoin makes them all possible and much more.

But why would they use bitcoin instead of establishing their own crypto-currency? I could see banks and companies and governments using crypto-coins someday. But it seems more likely that they would establish their own currency.

Adopting bitcoin basically makes a lot of people on the internet quite rich, those who invested in it early. But why would a powerful organization want these strangers to be wealthy, when it could by establishing its own currency instead make itself more wealthy?
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January 22, 2012, 07:13:04 PM
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There have been several threads about how a government can adopt bitcoin. There have also been threads about pinning bonds to Bitcoin. The best part is that it has an open ledger which is very easy to audit. Smart contracts are an evolutionary step beyond stocks and bonds. Bitcoin makes them all possible and much more.

But why would they use bitcoin instead of establishing their own crypto-currency? I could see banks and companies and governments using crypto-coins someday. But it seems more likely that they would establish their own currency.

Adopting bitcoin basically makes a lot of people on the internet quite rich, those who invested in it early. But why would a powerful organization want these strangers to be wealthy, when it could by establishing its own currency instead make itself more wealthy?
Basically for the same reason there aren't multiple world wide webs. Anyone could create their own protocol, but try getting anyone to run it unless it had something much better to offer.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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January 22, 2012, 07:18:25 PM
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I think it is more likely that banks and governments will join the bitcoin network and make my pitiful mining rig worthless. There are still almost 13 million bitcoin left to mine and rather than buy mine, they will just claim the rest.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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January 22, 2012, 07:49:39 PM
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By raw governmental power. Or more accurately, by the fact the government will accept it as valuable, and assist people who have it or jail people who don't pay their taxes with it. True fiat currency has nothing physical backing it, but it's basically secure as long as its government remains in power and doesn't start printing money to pay off debts.

This is not quite accurate. Fiat money valuation is based on nothing but demand and supply; same as bitcoin. The difference you are alluding to is that fiat money is legal tender; that says nothing about its value, only that one is forced to accept fiat money to settle debts. So when you get an invoice for whatever, say your utility bill, you can pay it with euro's if you live in the euro zone. You can not use dollar, roebel, gold, bread or bitcoins, unless your supplier voluntary accepts it . Thats basically the only difference here.

Granted, the fact fiat money is legal tender does ensure to some extend a steady demand, but it does nothing to protect its value.

As for something backing it; I think its good BTC is not backed by anything. If you back a currency by something, be it another currency, gold, oil or whatever, it means the value of the currency is also dependent on the value of the commodity backing it, even though that can fluctuate independently for completely unrelated reasons. I dont see how thats an advantage; it helps no one if a currency suddenly appreciates or depreciates because of change in supply or demand of the underlying commodity.

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January 22, 2012, 08:33:53 PM
 #20

1.) Bitcoins are fun.
2.) They are revolutionary.
3.) Bitcoins are the future.

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