Bitcoin - Scam or Legitimate Currency

[Arsenal1982]

You can buy them with another currency, you can sell things and ask for bitcoins in payment, or you can mine for them. It's an involved number crunching situation, involving buckets of processing power, that seems to involve looking at Bitcoin transaction data and "discovering" stuff, but it's about as clear as mud to me. Every time you do it right, you get a certain number of bitcoins. It's how they release new ones into the system, and if I'm reading correctly, the sole purpose of mining is to release new Bitcoins at a very slow, controlled rate.

I still don't trust it. I mean, from reading the (a?) Bitcoin site, the originator or originators is still this shadowy existence who hasn't been seen. That's just not something that I'm comfortable with, nor that gives me confidence. And I still think that, if it hasn't been hacked, it will be, and that's not like having money in a bank covered by the FDIC or insurance. You're on your own -- tough luck, cookie.

The odds of anyone on this board successfully mining a Bitcoin are about as strong as winning PowerBall.

 

[jenm2878]

The odds of anyone on this board successfully mining a Bitcoin are about as strong as winning PowerBall.

Not true. My husband is a computer whiz and he and his friends have done some successful mining.

 

[FlightlessDuck]

"Tulips"? Can someone explain?

As for bitcoin, it's not a scam. But I doubt it stays legal much longer.

 

[FlightlessDuck]

"Tulips"? Can someone explain?

Never mind.

I agree it's a bubble. I don't think that means it's a scam.

 

[timmac]

It's not hard to mine bitcoins by becoming part of a "pool" that all works together in a sense. A pool is much larger than any individual entity and as such, has much greater likelihood of successfully mining the bitcoins. The downside is that, then, the proceeeds are split among all members. What one ultimately gets, unless you are using very specialized hardware, is almost certainly worth less than the cost of running your computer to do the mining in the first place.

As for the issue of "hacking the system" or stealing someone else's bitcoins, that's largely covered by the technical nature of the way the crypto system works, as well as the fact that the transaction history is publicly available. Lack of a central authority means that there is nowhere to even "hack". Actually defeating the system requires computational throughput to crack the encryption, the kind of which is not likely to be realized in our lifetime.

Now, with all that said, I'm not necessarily an advocate for or against bitcoin, and I don't own any myself, however I find it very interesting. I merely balk a bit about technical inaccuracies or fundamental misunderstandings of how it works.

 

[mill4023]

I'm a Computer Science major and have been in the software business for a long time.
The whole bitcoin thing is still pretty confusing to me, although I understand the basic idea.
I'm actually very fascinated by the concept of an unregulated (or self-regulated) electronic currency. I think there is a good chance that this could end up being the future of commerce, but how far out that future is, I don't know.

 

[DeaverTex]

It's not hard to mine bitcoins by becoming part of a "pool" that all works together in a sense. A pool is much larger than any individual entity and as such, has much greater likelihood of successfully mining the bitcoins. The downside is that, then, the proceeeds are split among all members. What one ultimately gets, unless you are using very specialized hardware, is almost certainly worth less than the cost of running your computer to do the mining in the first place.

As for the issue of "hacking the system" or stealing someone else's bitcoins, that's largely covered by the technical nature of the way the crypto system works, as well as the fact that the transaction history is publicly available. Lack of a central authority means that there is nowhere to even "hack". Actually defeating the system requires computational throughput to crack the encryption, the kind of which is not likely to be realized in our lifetime.

Now, with all that said, I'm not necessarily an advocate for or against bitcoin, and I don't own any myself, however I find it very interesting. I merely balk a bit about technical inaccuracies or fundamental misunderstandings of how it works.

The Ultima code was unbreakable, the Titanic was unsinkable, and bumble bees can't fly.

 

[timmac]

The Ultima code was unbreakable, the Titanic was unsinkable, and bumble bees can't fly.

Fair point, I suppose. Rather than a pedantic rehash of why the above examples were largely misquotes, I'll instead explain from a different angle: A technological or intellectual breakthrough that defeats the security behind bitcoin would ipso facto mean that the security behind just about all of our other financial records and communications was likewise useless at that point. The issue that bitcoin is no longer secure would be largely irrelevant, since none of our other financial systems were secure either.

 

[PrincessKsMom]

Found this in an article today:

A pair of major European-based bitcoin exchanges aren't allowing their customers to make withdrawals. Both Bitstamp and BTC-e have been hit by denial-of-service hacker attacks, overwhelming their websites. This comes just days after Japanese-based Mt. Gox cut off withdrawals. They all blame software problems, but the moves are shaking confidence in the alternative currency.

As many have said, I would not trust an imaginary currency that basically only exists online.

 

[JanaDee]

Found this in an article today:

A pair of major European-based bitcoin exchanges aren't allowing their customers to make withdrawals. Both Bitstamp and BTC-e have been hit by denial-of-service hacker attacks, overwhelming their websites. This comes just days after Japanese-based Mt. Gox cut off withdrawals. They all blame software problems, but the moves are shaking confidence in the alternative currency.

As many have said, I would not trust an imaginary currency that basically only exists online.

I read a couple days ago Bitcoin values crashed and thought of this thread. It still sounds like play/imaginary money to me.

 

[FireDancer]

Anything is legitimate currency if someone is willing to accept it as such. BitCoin isn't a scam but it very well might be a bubble. It wouldn't be the first one and surely wouldn't be the last one.

If anyone is interested in the crypto behind BitCoin check out Security Now expisode 287. Audio or Video is here and the transcript is available here.

As Tim said above, if the crypto involved in BitCoin is cracked all transactional security is essentially no longer relevant. That goes for transactions involving traditional currency too. The only way that wouldn't be the case is if it was the implementation of the crypto as opposed to the crypto itself that was faulty but that is true of everything.

 

[NaLisa]

All I know about Bicoin I learned from Stephen Colbert.

http://www.colbertnation.com/the-colbert-report-videos/425561/april-17-2013/bitcoin-plunge

"The online currency Bitcoin joins a rich tradition of made-up currencies like Camel Cash and the Euro."

 

[teller80]

Considering that the US Government owns the biggest Bitcoin wallet, legit.

Well, after this morning maybe not so much.

http://money.cnn.com/2014/02/25/technology/security/mtgox-bitcoin/

 

[JanaDee]

Bitcoin has imploded.

http://money.cnn.com/2014/02/25/technology/security/mtgox-bitcoin/index.html?hpt=hp_t1

 

[wiigirl]

The Ultima code was unbreakable, the Titanic was unsinkable, and bumble bees can't fly.

 

[PrincessKsMom]

I learned my lesson when I spent a fortune collecting Beanie Babies. Thought it would put my daughter through college. First and only time I'll buy into a new trend that promises big rewards.

 

[manning]

The code is unbreakable.

What's that saying "never say never".

 

[Geoff_M]

Bitcoin has imploded.

http://money.cnn.com/2014/02/25/technology/security/mtgox-bitcoin/index.html?hpt=hp_t1

That's a bit of an exaggeration... Bitcoin hasn't imploded... one Exchange has. That's like saying that the NYSE "imploded" when Lehman Brothers went "Boom!". This isn't the first time confidence in the currency has been shaken and value has fallen as a result. Will this be fatal? Too early to say. It's recovered before.

 

[The Mystery Machine]

I learned my lesson when I spent a fortune collecting Beanie Babies. Thought it would put my daughter through college. First and only time I'll buy into a new trend that promises big rewards.

I still am holding out hope for when I am in the nursing home.

 

[TinkerBelled]

That's a bit of an exaggeration... Bitcoin hasn't imploded... one Exchange has. That's like saying that the NYSE "imploded" when Lehman Brothers went "Boom!". This isn't the first time confidence in the currency has been shaken and value has fallen as a result. Will this be fatal? Too early to say. It's recovered before.

I think the thing that will be the roughest for the currency as a whole is that Japan seems to have no interest in helping investors seek restitution, as the currency is in no way backed by the government. Bitcoin and its traders were very keen on governments having no authority in its creation or distribution, but that also means it's much harder to enforce any kind of responsibility.

It looks like the very thing people found attractive about bitcoin will, in the end, be the unmaking of it.