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57

If you bought a bar of gold at $1200 / ounce, then the price of the gold drops to $600 / ounce, you wouldn't actually lose any money at all unless you decided to sell your gold at that time. However, if you wait until the price of gold rises to $1800 / ounce, then sell it, you will gain money. The key is an ounce of gold is still an ounce of gold, ...


28

If you bought one bitcoin and the price goes down, you still have one bitcoin. If the price goes up...still one bitcoin. This is just like everything else, including groceries, gasoline, gold, stock certificates, etc... Measurements of value in fiat (such as dollars) does not affect the amount something you own, only the price at which you will be able to ...


25

The Scenario is confused, because it assumes that there is only one side to a trade. The scenario assumes that the money goes "into the Bitcoin economy" when people buy bitcoins. This is confusing, because it sounds as if there were only one side to the trade. You will find that the scenario doesn’t imply Bitcoin to be a Ponzi scheme, once you take a closer ...


13

tl;dr- This is called a capital loss. You're said to realize the capital loss if you sell the Bitcoins at the lower price, such that you lost money due to having bought/sold them. However, note that this isn't legal advice and I'm unsure about what the current legal statutes are surrounding Bitcoin. Bitcoin's a capital asset (at least conceptually; dunno ...


11

The answer is not unique to bitcoin. It would be the same if you're dealing with (non-crypto) foreign currency, stock, a stock derivative or commodity or commodity futures. When you buy something like the above, you are giving up your "real money" (fiat currency) to take possession of said commodity/stock/bitcoin/etc (let's call these assets in general). ...


10

This more of a question about excel than it is actually about Bitcoin. But the answer is actually pretty easy. The first thing is that the data that you want to import from the web may not be easily isolated, so you might have to import much more data than you want into a second excel sheet, then link the cell with the data you are interested to a cell in ...


10

Bitcoins are no different from any other commodity in this regard. We say that the price of a car is $45,000, but that doesn't guarantee that you can sell one for $45,000 unless you can find someone willing to buy one for $45,000. When we say some particular number is the price, we mean that's basically the number that buyers and sellers both agree that it ...


9

Yes, you lose a quantity of your money, at the time you gave it away in exchange for the bitcoin you received. Subsequent changes in the exchange rate only vary the hypothetical value of what you would get if you wanted to trade back.


8

This is really asking about basic trading economics: if I have some new product X, what price does it have? I can set a price and see if anyone buys it. If not, I might lower the price or auction it to see what someone might pay for it. That is the starting value, but it doesn't really mean much as it hasn't been field-tested (so to speak). If others think ...


7

Bitcoin is a decentralized digital currency. It is meant to be resistant to corruption and external control. That is the reason it was created. Bitcoin achieves this only through the approach where consensus of the ledger is achieved by performing work. Bitcoin is vulnerable -- this consensus mechanism can be blocked by anyone with 51% of the mining ...


7

There are really only two things driving the increase in price you are talking about. Supply and Demand Greed and Fear Supply and demand is simple, there is a virtuous cycle at work here: Increasing demand drives price increase due to limited supply Increasing price drives increasing demand as knowledge spreads in the media Repeat Greed and Fear are ...


7

A Ponzi scheme is characterised as follows (this is according to Wikipedia, rather than for example the US Department of Justice, which would focus more on the criminal culpability in its definition): A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital ...


6

As famous as it is, I believe Silk Road isn't the reason for Bitcoin's existence or its success. There are plenty of private individuals who value Bitcoin for international money exchange, its low cost trading capability, its irreversability, its lack of a central authority and its upper limit on the number of bitcoins. If you analysed the transactions ...


6

If the global network difficulty is D and the difficulty of shares in the pool is d, then the probability that a share will lead to a valid block is d/D. The reward in this case is B, so the average reward per share is B*(d/D). If the operator's average fee is f (so for example f=0.01 means 1% fee), the average reward miners get per share submitted is (1-f) *...


6

Whether it fluctuates or not depends on how you express value. If you happen to be one of them American folks, who use dollars to express value, then a fixed amount of money in other currencies (such as euros or bitcoins) will fluctuate. But similarly, a $10 dollar bill will fluctuate in value, if you express value in euros or bitcoins (basically, that is ...


5

A Bitcoin can be used to permanently trace the association between different public keys. For example a user can send a transaction to a second user and publicly and permanently link the accounts. This may have utility in Web Of Trust scenarios. The low value bits of an individual bitcoin can cheaply store metadata. Saving them as a collectors item Sharing ...


5

Basing on this set of data from XKCD, world's GDP is $62,900,000,000,000, If all of it was expressed in 21 million bitcoins, then each bitcoin would be worth $2,995,238.10, so roughly 3 million dollars.


5

Taking your questions in order: How yet another "currency" will solve anything, or what Bitcoin is supposed to be solving? Because this is a currency that has different properties that avoid the properties of other currencies that create these problems. For example, the supply of Bitcoins is fairly precisely defined and nobody can devalue them through ...


5

I think a more reliable way is to compare it to gold, since the exact value of currency in the world is very difficult to calculate. It's estimated that 171,300 tonnes of gold have been mined in human history, which is roughly equivalent to 5.5 billion troy ounces. 5.5 billion oz/21 million bitcoin = 261.9 oz/bitcoin The value of one ounce of gold is ...


4

It's a chicken vs egg problem. If only one person had ever mined, or that one person only enable a small number of people to mine, Bitcoin would have likely never grown at the rate it has. We'd call it a centralized system, and it'd be little different from any other centralized currency contrived in the past several decades. Its electronic transmission ...


4

The system is protected by an incentive mechanism. As Satoshi said in the paper itself: He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth. This means that if someone has access to a supercomputer, more ...


4

Amounts in a Bitcoin transaction are set in bitcoin. That is, if you want to receive $5, when the current bitcoin price is $234.97/bitcoin, then you might make a request for 0.0212 bitcoin inside the QR code. If the price changes between you making the request and the other person sending bitcoin, then you will still receive 0.0212 bitcoin, but it might be ...


4

You seem to have a misunderstanding: anyone could create an infinite quantity of their own cryptocurrency right now This is not accurate. The breakthrough that enabled Bitcoin (and other cryptocurrencies) was the ability to make a digital asset scarce without trusting a central authority. In the past, currencies (digital and otherwise) have required an ...


4

not sure what you mean by logarithmic graph. The time in a logarithmic scale, or the value? On both, there is a "log" button below the graph. And you can export as CSV or JSON: https://blockchain.info/de/charts/market-price?timespan=all or alternativly: https://coinmarketcap.com/currencies/bitcoin/


3

That's the thing with a pseudonymous digital currency. It is not knowable to you and me. The larger pool operators might be able to look at their withdrawals to see if they are being re-spent but there's no way to tell definitively if the withdrawal was for a hosted (shared) EWallet (e.g., Mt. Gox) or to the miner's local wallet. With ASIC hardware, the ...


3

Sign messages ensuring that the message came only from the owner of that address.


3

Well, first of all, there are the physical Bitcoins for one thing, which can be collected and traded neatly. If you wanted to trade such historical Bitcoins, you'd probably need to follow some rules. For example, if you were interested in having pure Bitcoins and as close to the original transaction as possible: Any Bitcoin that is a part of a given ...


3

Bitcoins are traded on many different exchanges. The prices are varying constantly just like any currency. As an example: at this time three rates are Mt.Gox - $143.0983; CampBX - $125.8000; and BTC-E - $124.0000 (all USD). As I learn more, and become familiar with the exchanges, I may try some arbitrage. I have a feeling there are problems, or people ...


3

No, at least not for the original Bitcoin and all those altcoins that do not change this aspect. But you are almost correct: Each Bitcoin is divisible into 0.1 billion (which is 100 million or a 1 followed by 8 zeros) actual units, called Satoshi after the pseudonym of Bitcoin's creator. In fact, the protocol only uses these; displaying them as Bitcoin is ...


3

Recognizing that Bitcoin has no INTRINSIC value, we look for its USE value, so to speak. The primary value of BItcoin is the reliable and indefeasible transfer of property title (money) between two users. Ever since the first use of the Nakamoto protocol in Jan 2009, there has been a proof-of-concept that has remained valid for almost five years and ...


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