It has a certain Frankensteinian feel to it - like, a monster has been created, and nobody really knows what it's going to do, but it's crashing around the room and going totally out of control. The very fact that it's decentralised and nobody's in control, means that in some respects it's like a rogue algorithm. Scary, if you ask me.

I doubt it'll break $20K. Pixie dust will only sell to the extent that people believe in pixie dust and crucially also believe that other people believe in it. The current boost has been driven by positive mainstream news headlines that suggested there was money to be made in BTC and blogs all over the internet that suggested the same (probably self-servingly in most cases). But at this point with the media already turning to mostly bubble talk it's a case for any investor with their eyes even half open of "I know the guy is naked but just how blind is the rest of the crowd?"

(I don't think that has much to do with its intrinsic worth as a currency tool btw as any intrinsic worth it has from that perspective is still going to be closer to $1 per unit than even $100).

Finally got approved. CoinBase sucks. £11 transfer fee sending £39 worth of Bitcoin to Bittrex (currently I have a £50 weekly limit). Ugh. Hopefully one of the other ones are much cheaper (when I'm finally approved).

Edit: There's a workaround to avoid transfer fees. Damn. If only I'd seen this sooner.

The only case where it makes sense really is for illegal activities. Drugs, arms trading, etc. — Agustino

That's not the case. It's a great way to standardise structured products for instance and sell them to interested parties. Value of the crypto currency could then be related to the underlyings - or you could just use the block chain technology and not the crypto currency itself and still handle "cash" normally.

I saw that Bitcoin had $2500 negative bounce yesterday. Perhaps that bounce was due to ]article ] news of the introduction of a futures market in Chicago on Sunday Evening. Derivatives work well when there is a lot of volatility. Opening of a futures market in Bitcoin will open it up in many ways:

The derivatives contracts should thrust bitcoin more squarely into the realm of regulators, banks and institutional investors. In addition to the contracts at Cboe and CME, which will start trading Dec. 18, Cantor Fitzgerald LP won approval from regulators to trade binary options, and LedgerX, a startup exchange, already trades bitcoin options.

I also read about Lightning Network, which is apparently is producing software that customers can run along the Bitcoin network and which will speed up transactions, the test runs have worked.

Rather than updating bitcoin's underlying software (which has proven to be a messy process), Lightning essentially adds an extra layer to the tech, one where transactions can be made more cheaply and quickly, but with, hypothetically, the same security backing of the blockchain.

introduction of a futures market — Cavacava

I saw a video where they pointed out that shorting bitcoin futures is a perfectly sensible hedging tactic for bitcoin miners. It costs a lot in electricity to mine bitcoin, and if the price drops you're essentially losing money just running the computers. By buying short contracts (bets the price will go down) they can stabilize their mining business by protecting it against drops in the price of bitcoin. I thought that was interesting. It's basically what the wheat and soybean farmers have been doing for decades.

I also read about Lightning Network — Cavacava

This actually concerns me. If you have a communication protocol that is so slow and clunky that it needs an auxiliary protocol for it to work, there's something wrong with the design. If the Lightning network is secure, why do we need the underlying bitcoin layer at all? Maybe it makes sense to scrap bitcoin and build the next generation cryptocurrency directly on some variant of the Lightning network.

I'm trying to learn more about the Lightning network to see if my impression is correct. On the other hand if Lightning actually works and scales up, it could solve a lot of the bitcoin scalability issues.

Thank you for sharing your knowledge with me. It gives me a sense of comfort knowing I am around people smarter than I. (Y) — ArguingWAristotleTiff

Heh, I didn't mean to sound like a preachy douche, but after years of conspiracy theorists telling me that the American government owes $1.50 for every $1.00 the Zionist owned Federal Reserve "lends" them, I've been eager to put my research to work.

IIRC the idea of a state incorporating private banks into national services in this manner began with the bank of England. Wiki notes:

England's crushing defeat by France, the dominant naval power, in naval engagements culminating in the 1690 Battle of Beachy Head, became the catalyst for England's rebuilding itself as a global power. England had no choice but to build a powerful navy. No public funds were available, and the credit of William III's government was so low in London that it was impossible for it to borrow the £1,200,000 (at 8% p.a.) that the government wanted.

To induce subscription to the loan, the subscribers were to be incorporated by the name of the Governor and Company of the Bank of England. The Bank was given exclusive possession of the government's balances, and was the only limited-liability corporation allowed to issue bank notes.[15] The lenders would give the government cash (bullion) and issue notes against the government bonds, which can be lent again. The £1.2m was raised in 12 days; half of this was used to rebuild the navy. — wiki

The Federal Reserve doesn't print actual money though, it lends digital credit to it's member banks and charges them variable interest rates (which makes the member banks more financially secured, and influences the interest rates they charge as a regulatory force). So rather than the FED banks lending to the American government in the way the BoE lent to the King, they lend to banks who lend to the public in order to positively influence overall stability. Without the FED, banks at large might start drastically altering interest rates in response to perceived economic crises, which can create a genuine crisis in and of itself.

Apparently there are over 10 trillion US dollars in existence, but most of them are digital. Only about 1.2 trillion in US cash physically exists. If more US cash is to be printed, the US treasury will be the ones to actually print it, but they too have more than a fiduciary responsibility to ensure economic stability. Even if they went wild and printed a trillion in cash for the US government it would only inflate the currency by about 10%.

Crypto-fanatics rightly understand that faith and trust is the bedrock of any currency, even gold, but they don't seem to understand what makes institutions and foreign governments actually have faith and trust in the American dollar.

http://m.futuresmag.com/2017/11/15/dangers-clearing-bitcoin-and-cryptocurrency-derivatives-same-clearing-organization-other

Heh, I didn't mean to sound like a preachy douche, but after years of conspiracy theorists telling me that the American government owes $1.50 for every $1.00 the Zionist owned Federal Reserve "lends" them, I've been eager to put my research to work. — VagabondSpectre

I was serious in my Thanks and I hope you took it that way as that is how it was intended. I feel a great deal of comfort in surrounding myself with people that are smarter than I, in fields I know a little to none of, than faking that I know something. I am here to learn and I appreciate you taking the time to explain it to me.

The Federal Reserve doesn't print actual money though, it lends digital credit to it's member banks and charges them variable interest rates (which makes the member banks more financially secured, and influences the interest rates they charge as a regulatory force). So rather than the FED banks lending to the American government in the way the BoE lent to the King, they lend to banks who lend to the public in order to positively influence overall stability. Without the FED, banks at large might start drastically altering interest rates in response to perceived economic crises, which can create a genuine crisis in and of itself. — VagabondSpectre

I wish the banks were not as large as they are. I have been named in 4 class action lawsuits with Wells Fargo and when they charged the loan to my ranch, I was a victim of predatory lending. My husband and I filled out our paperwork, came into sign the final copy and between the time I filled out the paperwork and the final copy prepared, I was marked as being a Latino and so was then charged an increase in mortgage rate for 10 years. I get one letter from the Department of Justice asking two questions and in answering them I would be paid the difference between a normal loan and a Latino loan, in the amount of $9k to $13k. Two questions: Have you been the owner of the said address for the last 5 years or more. Yes. Question: Are you Latino? Ummm, well my file has been handled as a Latino, I have been screwed over by Wells Fargo like the Latinos, so no I am not Latino but I have been handled as one.

After months of debate with Wells Fargo and DOJ, the bottom line was, that even though I DID NOT mark myself as Latino, the final paperwork I signed said I was Latino and that was the final determination. So I said okay than pay my rightful claim as a Latino and the DOJ said I could not be included in the class action because I was not Latino and I would need to sue Wells Fargo on my own. After a year of this pursuit I stopped banging my head on the wall.

The next letter I get from Wells saying I am a participant in the latest class action, I am walking into my branch and asking for a Punch card because surely after your 6th Class action lawsuit you should at least get a toaster, right?

I thought I heard that BitCoin was going to be traded on Chicago's Mercantile Exchange starting tomorrow 12.11.17 but I read now it is set for next Monday.
Does that mean that if we are going to invest in BitCoin as opposed to Ethereum we should do it by next 12.18.17?

I thought I heard that BitCoin was going to be traded on Chicago's Mercantile Exchange starting tomorrow 12.11.17 but I read now it is set for next Monday.
Does that mean that if we are going to invest in BitCoin as opposed to Ethereum we should do it by next 12.18.17? — ArguingWAristotleTiff

Bitcoin FUTURES will be traded. These will be "cash-settled" futures, meaning that no bitcoin are harmed in the making of this motion picture. No bitcoin are ever bought or sold. Rather, you're placing bets on what the price will be. The futures are not backed by bitcoin. The CME and CBOE will decide on their official reference price for the day and the futures contracts will settle with respect to that price.

Nobody has any idea what the futures trading will do to the price of bitcoin. Some say the influence of big money and professional traders will stabilize the price of bitcoin. Others say that the wild fluctuations in bitcoin may bring down some of the smaller futures trading companies and crash the economy. Nobody has any idea what's going to happen.

One of the interesting factors is that the CME and CBOE trade during business hours five days a week, while bitcoin trades 24/7/365. If bitcoin has a big price move over a given weekend, there would in theory be huge arbitrage opportunities on Monday morning.

I'd say just wait it out for a week and see what happens. Or jump in and enjoy the ride.

Bitcoin FUTURES will be traded. These will be "cash-settled" futures, meaning that no bitcoin are harmed in the making of this motion picture. No bitcoin are ever bought or sold. Rather, you're placing bets on what the price will be. The futures are not backed by bitcoin. The CME and CBOE will decide on their official reference price for the day and the futures contracts will settle with respect to that price. — fishfry

Standard thing in any derivatives market. In any commodities market the majority of people aren't there Trading in order to actually buy/sell the actual commodity.

I think the bitcoin mania is just a sign that this bull market is quite old now.

It's a great way to standardise structured products for instance and sell them to interested parties. — Benkei

Could you break this up for me in more detail please? Sorry, but I'm not fully up to speed with all the technology behind it.

↪fishfry Finally got approved. CoinBase sucks. £11 transfer fee sending £39 worth of Bitcoin to Bittrex (currently I have a £50 weekly limit). Ugh. Hopefully one of the other ones are much cheaper (when I'm finally approved). — Michael

I gave up on Coinbase and I'm stuck for days in Gemini's approval process. I'm going to try Cex next. So in the end I'll have to give my personal info to all the exchanges out there and see who finally accepts me. And the exchanges are so insecure that it's just a matter of time till everyone's personal info is hacked.

This system is totally not ready for prime time. The bitcoin bulls say the "herd" is about to show up and boost the price, but there is no way Jill and Joe Public are getting into this thing any time soon. Learning how to use bitcoin and secure your wallet is seriously complicated right now.

So if the public can't get in and can't figure it out, who is moving the prices? Is it two guys in a room trading back and forth before they dump? It's not completely out of the question.

In other news ...

CBOE Bitcoin Futures Site Immediately Crashes.

To be accurate, that headline's a little over the top. They basically had some standard hiccups for a new popular website but they seem to be up and running. The world hasn't ended yet.

I'd say just wait it out for a week and see what happens. Or jump in and enjoy the ride. — fishfry

If I had the money to lose I would be jumping in but my conservative underpinnings keep the dollar earned in my pocket. However my Indian who is only mining might be gently surprised. (Y)

However my Indian who is only mining might be gently surprised. — ArguingWAristotleTiff

I'm pretty sure the electricity cost is going to be more than the amount earned from mining.

I'm pretty sure the electricity cost is going to be more than the amount earned from mining — Michael

;) He is away at college

My only concern is that the college he is at is high tech enough that I worry about the students commandeering farms of computers not in use overnight.

Yes, because that's the worse you have to worry about your teenage son doing at college.

Yes, because that's the worse you have to worry about your teenage son doing at college. — Michael

Geez I hope so. :-O

I find the entire space hugely interesting. The price action of bitcoin is all the public knows about. It's a tremendous distraction. Distributed ledger technologies -- that includes blockchain and some non-blockchain solutions that are out there -- are going to be the greatest force for disintermediation since the Gutenberg Bible.

Or do you think the Powers that Be will simply co-opt and crush it, like they've done with everything else?

I find the entire space hugely interesting. The price action of bitcoin is all the public knows about. It's a tremendous distraction. Distributed ledger technologies -- that includes blockchain and some non-blockchain solutions that are out there -- are going to be the greatest force for disintermediation since the Gutenberg Bible. — fishfry

Can you explain what value the distributed ledger technologies have in clear terms? I've been asking many people this, and so far nobody has given a very clear and satisfying answer.

Because it's hard to explain. Just read the original white paper: Bitcoin: A Peer-to-Peer Electronic Cash System

Also, I'm not investing a dime until these things are secure against quantum computer brute force attacks.

Thanks.

Can you explain what value the distributed ledger technologies have in clear terms? I've been asking many people this, and so far nobody has given a very clear and satisfying answer. — Agustino

The key concept is distributed trust. Consider our conversation. How do you know that I'm me from day to day, and how do I know that you're you? We both store a public handle and a secret password in a centralized database managed by the operators of this website. In other words we rely on a trusted third-party intermediary.

Using blockchain technology, we would not need a trusted third party. I could cryptographically sign my post and publish it to the blockchain. Everyone on the network gets a copy and verifies that my signature is valid. The network's consensus protocol allows the network to collectively decide that my post is valid. There is no need for a centralized database. There go web forums, Craigslist, and Reddit. You don't need them because you no longer need third-party centralized databases.

This is why some people think cryptocurrencies are a threat to the banks. If I want to send you money over the Internet I have to do it via an electronic exchange through my bank. We need a trusted intermediary. But I can send you a bitcoin directly, with no need for a bank. The entire network sees that (1) I own sufficient bitcoins to be able to send you one; and (2) I'm the one sending it; and (3) I'm not sending the same coin to two different people. Everyone on the network comes to consensus that I have transferred ownership of one bitcoin from me to you.

Of course the problem comes when we want to exchange bitcoin for dollars. The banks control that aspect of it. But in the future, perhaps some cryptocurrency (most likely not bitcoin) is accepted worldwide as an actual currency. Then the banks are toast. And the banks are not happy about this prospect.

Some other use cases. In a real estate transaction we must pay a title company to verify that we own the asset that we are claiming to sell. On the blockchain, the ownership history of a piece of land is certified without the need for title companies. Likewise escrow. Two or more parties can put assets into escrow and the funds can be released automatically when certain criteria are met. This is the concepty of smart contracts. Each blockchain transaction consists not only of an asset, but also a little computer program that can be executed by the network. The cryptocurrency Etherium (#2 in market cap after bitcoin) is the underlying network for many such experimental ventures. Title companies and escrow agencies are toast. No longer needed.

Corporations. There's an idea called the distributed autonomous organization, or DAO. You could run a company in which assets and decision making are on the blockchain. There's no need for central authority.

How about starving artists? If you're a kid with a guitar and a voice and some songs you wrote, you can languish in obscurity or you can sign with a mega music label. Using blockchain, you can distribute your music and receive micropayments from your fans. Goodbye music industry.

Micropayments may well be the solution to the problem of how to compensate content providers. Traditional newspapers are dying because we can all read them for free. Yet professional reporting costs money. The ecosystem of bloggers in their pajamas depends on actual professional journalists going out and digging up stories. How can the journalists get paid? Blockchain might be the answer. The newspapers will die yet journalism will thrive.

Voting. Someone's doing it. https://followmyvote.com/

Sports gambling. XWIN is doing it. https://cointelegraph.com/news/ico-explores-completely-uncharted-waters-of-sports-betting

What is Amazon? They're a centralized database of buyers and sellers. Same as eBay. With blockchain, why do we need a centralized database? We don't. I don't think Amazon's going out of business anytime soon, but long term we have to ask ourselves why we need centralized databases anymore.

In short, everywhere modern society requires a trusted intermediary to maintain a centralized authoritative database, the blockchain can replace that intermediary. The blockchain lets you prove who you are and what you own without the need for any central authority. That's disintermediation on a massive scale.

Also, I'm not investing a dime until these things are secure against quantum computer brute force attacks. — Benkei

Interesting point. A crypto called IOTA claims to be quantum safe. Meaning that even if there are practical quantum computers, IOTA's cryptographic protocol is still secure. IOTA is a very interesting example of a crypto that's not a blockchain. They use a data structure called a directed acyclic graph. They are targeted to the application of the Internet of Things (your lightbulbs will talk to your refrigerator while the CIA and the Chinese hackers listen in. Awful idea but it's inevitable). They can scale to high transaction volumes. They don't have miners, which is a big improvement over bitcoin.

There are a lot of other interesting experiments going on. As I say, the price movement in bitcoin is a distraction. If someone made millions, good for them. Meanwhile the really important developments in the distributed ledger space are going on elsewhere.

Yes, I was reading about it a bit. Basically eliminates the need for trust in transactions, since everything is automated by what is essentially software. Trust is no longer needed to make the system work.

OMG I finally got approved at Coinbase. I gave up on them last week when they told me they could not possibly verify my account. I've spent about a week trying to get approved at Gemini. They told me repeatedly they could not verify my account and that I'd have to send in a wire transfer. And the Gemini subreddit is full of complaints about Gemeni losing people's wire transfers.

For the hell of it I went back to Coinbase today and re-uploaded my documents. They wanted the front and back of my driver's license. I uploaded photos and they said they could not verify me. I did this about three times, each time without success.

Just now I got an email that I'm approved at Coinbase. I went to the site, successfully added my credit card, and bought ten bucks worth of bitcoin. I'm not trying to get rich or ride the frenzy. I'm only trying to learn the mechanics of wallets and using cryptos. Buy a little, sell a little, see if I can actually get my USD out of the system, learn how it all works.

I started this process a few days before Thanksgiving. So it took me three weeks to get US dollars into the bitcoin system. And bitcoin is complicated. Even an educated consumer is going to find themselves in a thicket of technical jargon. This thing is in no way ready for prime time.

So if the public can't get in and the price keeps going up, who's making the price go up? I saw a Youtube video that said that the top 96% of the entire wealth of the bitcoin blockchain is held by 3% of the wallet addresses. That's striking if true. It means that this truly is a massive pump-and-dump, an artificial inflation of the price by insiders. Basically two guys in a room selling each other the same pencil back and forth to push up the price of pencils. Old stock market trick.

A crypto called IOTA claims to be quantum safe. Meaning that even if there are practical quantum computers, IOTA's cryptographic protocol is still secure. — fishfry

It isn't. I can't find the article at the moment but I read in a university paper it won't be. They made a change or will make a change as a result but not sure about the details anymore. Some Russian scientists managed to make something that cannot be decrypted provided less than a third of users are fraudulent (double spending), it falls apart above that.

So if the public can't get in and the price keeps going up, who's making the price go up? I saw a Youtube video that said that the top 96% of the entire wealth of the bitcoin blockchain is held by 3% of the wallet addresses. That's striking if true. It means that this truly is a massive pump-and-dump, an artificial inflation of the price by insiders. Basically two guys in a room selling each other the same pencil back and forth to push up the price of pencils. Old stock market trick. — fishfry

Probably. Also, I don't see how people could cash out easily with market caps at levels we're currently seeing. I can sell a couple of million in Dutch bonds without affecting price but I doubt there's a lot of liquidity in bitcoin-currency pairs. Would be interesting to test what the maximum size of a bitcoin-currency trade could be without affecting the exchange rate of a bitcoin.

If you plan to transfer the Bitcoin to something like Bittrex so that you can buy more than just the three currencies on Coinbase, don't send them directly from Coinbase (big transfer fees). Use gdax.com (if you're signed into Coinbase you'll automatically sign into GDAX). Transfers from Coinbase to GDAX and from GDAX to anywhere else are free.