Posted on 10/27/2017 2:43:21 AM PDT by Logicbox
If that’s the case, maybe Peter can talk to his friends over at Ebay about converting our E-Bucks Rewards over to BitCoins...that can be used on PayPal, or a converter on PayPal that can pull the E-Bucks over and convert them to BitCoins or any currency.
The blockchain records relatively small transactions, not a lot of data. It records who is giving up their bitcoin, by address, and who is getting them, by address. The address of the bitcoin being given up is already on the blockchain. There can be N address inputs and M address outputs where N and M are 1 or more. There are potential complications that make it more useful like requiring multiple signatures for the seller (the buyer doesn't sign anything). In that case two or more sellers have to sign with their private keys in order for the bitcoin to be transacted.
Signatures are the heart of the blockchain. You have a private key on your person. Can be on the computer, phone or encoded on a small piece of paper. It's just 256 bits (32 bytes) so very short. But it can't be guessed or derived from the public key or from the address which is made public on the blockchain and derived from the public key.
When someone transacts some bitcoin to your address and that transaction gets placed on the blockchain, you are identified, essentially anonymously, by that address on the blockchain. Proof of your identity is the private key corresponding to that address, unless your private key has been stolen or you lost it. Security is important and backups are important, but they are relatively easy to accomplish. To prove you have the private key and you "are" the address derived from the private key, you can sign a transaction. The most obvious is to sign away some of your bitcoin that was transacted to your address. But there are more modern ways to prove your identity with new derivations of blockchain. But they all involve signing with your private key.
This simple fact and the indelible nature of the blockchain has created a slew of new opportunities for business recording, transaction recording, record keeping, etc. I'm not fully up on the latest, but it's really just getting going.
My thought exactly
The government can follow it, with some difficulty. The government can also regulate the heck out the exchanges that trade bitcoin into government currency on the outside of the bitcoin ecosystem. If it were possible to eat bitcoin then the government would not be able to track it. But as soon as a farmer takes bitcoin and hands over some corn, the government can go to that farmer and demand the Know Your Customer records. That farmer can be thrown in jail.
So the tracking relies on the usual strong arm tactics but it can be done.
Actually it would need to be many button pushes. If the US govt were to decide the dollar is worthless they could theoretically push one button. But there would be some residual momentum as people would still gladly give up their Venezuelan dollars for US dollars to trade for food since the farmer would still take them and not the V$. But the world would slowly switch to something else.
In the case of bitcoin there is nobody in the world who can press a button. All the miners (or 50% plus one) could potentially do that, but so far they haven't. It is too lucrative for them. The exchanges that will turn your bitcoin into "real" money and wire that money into your account make fees on doing that. They could all be shut down but again that is many button pushes.
What happens when the gov and the "invisible hand" finds a way to bring it down? Will it have a doomsday impact on the global banking fake-money system? And, oh yeah, is there a way to do some short-term investing in companies that are making profits from blockchain platforms?
The only remaining issue is what happens in the short run in terms of overt regulation and taxation. I think it's too small for the authorities to care about and once it gets larger the providers will figure out ways for people to voluntarily give up tax information. For those that don't it will be like the cash economy which will always be there but gets the heavy hand treatment when the government feels like it.
There won't be a doomsday impact on fiat any more than gold has an impact. The issue is fiat getting diluted by the government and the government manipulating gold to the extent they can to hide the fact of dilution. While bitcoin can't be as easily manipulated, it may be manipulated upwards already for all we know. In that case it can easily be manipulated downward.
The short term investments are probably all private, but short term speculation is possible in ICOs where someone invents a new, absolutely worthless bitcoin alternative, ties it to a service, and pretends it's worth something. I have not looked at that market, but it's on the list of things to do. But it is 100% speculation.
Perhaps the best way to invest in the blockchain is to consider it to be a new internet bubble and get in on some momo stocks. They will be ridiculously overpriced. There will be articles on how overpriced they are. Then buy them as other people short them. Late 90's, all over again.
There were unlimited numbers of tulips.
Not so of bitcoin.
My mind cannot grasp how bitcoin is much else. I’ve come to think of it as more of a virtual bartering system with some very smart people upfront making up something, the rules for acquiring their made-up stuff, and getting lots of people to fall in line and barter with their “currency”.
Wealth is a difference issue. Wealth is stored for the future or used to create more wealth.
America is spending their wealth like a drunken sailor.
Blockchain is the underlying technology for bitcoin. It is easier if you think of block chain as an old passbook or ledger that has some additional protections. In this analogy, each block is a VERIFIABLE (cant be faked) and NON-REPUTABLE (cant be denied) entry on the book. To follow the analogy, consider a passbook or ledger where every entry has a public notary stamp.
These two capabilities are protected by cryptographic hash functions which secure the transaction. It is not possible to alter the transaction as the each transaction can be verified by running the hash program. If the hash returns a different value, then the block and possibly the whole chain is broken. The hash functions are very mathematically difficult and are one way hashes. Meaning that there is an easy way to calculate the hash but there is no easy way to go from the hash, back to the original.
This check is performed at the time of the transaction and in the case of bitcoin, prior to accepting payment (transfer of bitcoin).
Block chain can and is, used for other things than crypto currency. Further, when you are saying bitcoin, you are really saying “A block chain composed of SHA-256 hashes that we agree to represent a value, i.e currency”. Other crypto currencies use other hash algorithms and have other names.
When the lines go down bitcoin ceases to exist.
“In comparison few actually use it as money”
in effect, no one who matters uses it as real money, as all retailers who purport to accept payment in bitcoin IMMEDIATELY convert it to “real” money. Almost no one sees bitcoin as a store of wealth, which is the primary purpose of “money”.
As has been pointed out, most who actually hold bitcoin are simply speculators. They might as well just be speculating in rotten sardines or tulips for all practical purposes.
Non-refutable, due to the blockchain being immutable.
See Balding Eagle's post 28 above. Rotten sardines and tulips can be created at will. Bitcoin cannot. I am one of the lucky speculators. Yes, it is speculation, not a currency to any practical extent. Nor is it a store of value like gold. But it is designed to simulate a store of value like gold except with even more limited new supply than gold. As a simulation it has worked well so far.
Something new will replace after a while. This is inevitable since the ECDSA and SHA256 protecting the private key and public key respectively are going to be compromised sooner or later. Imagine if you knew for virtually certain that your gold will turn into water in 50 years. Maybe 20 years, nobody really knows. Would that be a good store of value?
I will be buying the replacement. I might even help invent it (obvious pipe dream). But either way people will still be here yabbering about how it is all just speculation, ignoring the excellent work it took to simulate store of value relatively flawlessly.
Handy medium of exchange if you happen to spend a lot of time or business online. The notion that it's supposed to be some sort of hedge against SHTF scenarios is a little silly. That's right, if there's no Internet you can't use it. If you're dumb enough to leave your wallet on a single hard drive without backing it up you're at risk as much as if you do that with any vital data. So don't do that.
A lot of the confusion stems from the concept of Bitcoin "mining" being free money - it isn't. You're donating your computer resources to the upkeep of a distributed database and being compensated for it, that's all it is. Most of the time the juice isn't worth the squeeze.
Thank you both for your detailed blockchain answers.
At the heart of the issue is the difference between commodity and currency.
Paper currency is not much different than digital currency. Paper currency has little value in of itself. Paper plus ink ain’t worth much. I doubt anyone would argue that $100 bill is worth $100 in paper and or ink. However, as a society, it is easier to use currency than carting around gold coins.
Digital or electronic currency was the next step. Enter Visa and debit accounts. For a long time, the currency transaction means was conducted through checks. Now it is more done by debit cards because it is more convenient. The next step in that evolution is crypto currency.
Thus enters bitcoin and litecoin, and dash and a dozen others.
Not entirely true. The bitcoin exists, but cant be traded without power. Direct phone to phone transfer is possible and does not require a middle man like a bank. It is POSSIBLE that in a disaster where self electrical generation is possible (solar, diesel, genset, etc) that bitcoin might be the ONLY means of transaction due to the limited availability of cash.
You sir, insult drunken sailors, who are at most only capable of spending their own pay check.
The only problem is you can't verify the transaction in the blockchain. A full node wallet can do some verification but no phone wallets will have all those GB of blockchain data.
Another possibility is to transfer physical private keys sealed onto tokens under tamper proof stickers. You can't verify that the address on the token has been transacted the amount that the owner says was transacted. But you can look at the sticker and see it wasn't removed so the private key was not used and nothing was spent from that address. You also have to trust the vendor of the token. But you can get high denominations, as high as you want. I have physical with $5800 (at last check) that can theoretically be traded for something.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.