Bitcoins

[Herr Tubthumper]

keeping Bitcoin in any exchange is kinda defeating half the purpose of them.

I did plan to use them but had not got round to figuring out how to buy stuff with them. It took me some time just to buy my Bitcoin. And I am at a complete loss as to what to do now.

 

[Triggaaar]

Funny that because I havent heard of anyone losing £300k on bitcoins but I have heard several that lost their savings and pension money when their bank account got raided.

How about now?

Why not invest in property? It won't fall in price provided you invest in the long-term

Property prices are inflated. Low interest rates increased demand in housing, increasing the price. Those interest rates have not been allowed to correct, bad debt has not been liquidated, and house prices have not come down.

When interest rates eventually rise (which they must), the increase in the cost of borrowing will reduce demand in housing, then prices will fall and many home owners will have their equity wiped out. The increased interest rates will also cause mortgages holders to struggle to meet their repayments, many will want/need to sell as their mortgages become unaffordable. This will drastically increase the supply of properties on the market, at the exact time when demand is diminished due the cost of borrowing.

Anyone who thinks property prices can continue to rise, or even sustain themselves in the medium/long term, is in fantasy land.

While house prices are hugely affected by interest rates, as you describe, that will cause short and medium term house price crashes. If you think that nominal house prices here won't go up in the long term, it's you that's in fantasy land.

keeping Bitcoin in any exchange is kinda defeating half the purpose of them.

Rather unlike a stock exchange, where you simply trade the shares back and forth but hold them off the exchange, the Bitcoin exchanges also act as deposit accounts. essentially a bank, an unregulated, insecure, unaudited bank. the main purpose of Bitcoin was to decentralise money, but people then go and hold their money in centralised pots.

Thanks. So with normal currency, we have to trust the government of the country that controls the currency, to pay us our money. And we trust that other united countries will help back them up. We know that it is in the interest of those countries to keep the currency working. If we choose a currency from a large, prosperous country, it's a fairly safe investment. Whereas with Bitcoins, we have to trust some unknown people in an unknown land, not to walk off with all our money. That sounds pretty ****ed up.

 

[Uncle C]

I am at a complete loss.

There you go, sorted it for you.

 

[beorhthelm]

...Whereas with Bitcoins, we have to trust some unknown people in an unknown land, not to walk off with all our money. That sounds pretty ****ed up.

nearly. the intention of Bitcoin is that its peer-to-peer, you are supposed to keep a local wallet secured with a private key. a public key is broadcast as an address of the bitcoin and tracked in the blockchain ( a large online ledger). for "convenience" some have offered online wallets within the exchanges, subverting the original purpose. its not a problem with bitcoin per se, but people's use of it (hark here i am defending it).

 

[seagullsovergrimsby]

It only takes an instant to go from Bitcoin to Shitcoin

 

[Triggaaar]

nearly. the intention of Bitcoin is that its peer-to-peer, you are supposed to keep a local wallet secured with a private key. a public key is broadcast as an address of the bitcoin and tracked in the blockchain ( a large online ledger). for "convenience" some have offered online wallets within the exchanges, subverting the original purpose. its not a problem with bitcoin per se, but people's use of it (hark here i am defending it).

Thanks. So re people that had their Bitcoins with MtGox: could they have also kept a local wallet secured with a private key, or does using MtGox mean that you can't do that? Also, if you have a local wallet with a key, how do you sell your Bitcoins (or use them to buy something), without keeping your local wallet & key (and therefore the coins)?

 

[beorhthelm]

you can keep your bitcoins local and have a MtGox or other exchange account. you just transfer out of the exchange to your local wallet. just as shares work you have some in an account with bank or broker and they move in and out of the stock exchange as required. really the only point of the exchange is to put money into the bitcoin eco-system, though you can do that privately too. and even on exchanges its a pain as most dont have proper bank accounts setup.

to buy items with coins, you transfer a number of your coins from wallet to another wallet address, be that another person, a business, an exchange. the balance of your wallet is updated. this is all tracked in the block, which is confirmed through mining - this is the special sauce, that ensures you don't spend the same bitcoins twice. MtGox has gone pear shaped because they had a bug that meant someone could claim they didnt receive coin and get a resend. this has led to a large gapping hole in their bitcoin holdings. or... they've just taken it and bunked off, who knows. the fact they've completely shut down rather than try and resolve and restore coins to those unaffected, suggests to me it may not just be the bug they claim.

 

[Uncle C]

The current exchange rate is 1 bit coin equals 2 tulip bulbs

http://my.chicagobotanic.org/wp-content/uploads/tulip-bulbs.jpg

 

[Notters]

It only takes an instant to go from Bitcoin to Shitcoin

You say that, but I think the price is holding up remarkably well (currently $571) considering what was the biggest exchange is currently not operating.

The current exchange rate is 1 bit coin equals 2 tulip bulbs.

You've clearly been going to the wrong garden centre.

 

[seagullsovergrimsby]

You say that, but I think the price is holding up remarkably well (currently $571) considering what was the biggest exchange is currently not operating.

Now the other exchanges know they can get away with it I would say the risk is even greater.

 

[Uncle C]

Now the other exchanges know they can get away with it I would say the risk is even greater.

+1

There is no legislation and no compensation scheme.

 

[Triggaaar]

to buy items with coins, you transfer a number of your coins from wallet to another wallet address, be that another person, a business, an exchange. the balance of your wallet is updated. this is all tracked in the block, which is confirmed through mining - this is the special sauce, that ensures you don't spend the same bitcoins twice.

That all makes sense. What I don't get, is the point of leaving your wallet with a company like MtGox. Meaning that should there be a problem with the company, you can lose your coins. What is the advantage of leaving the coins with them?

you can keep your bitcoins local and have a MtGox or other exchange account. you just transfer out of the exchange to your local wallet. just as shares work you have some in an account with bank or broker and they move in and out of the stock exchange as required.

But with shares, a broker may have them on their books, but if the broker disappears, they're still your shares, registered to you. That sounds ok with Bitcoins when they're in your local wallet, but not when they're with an exchange account.

 

[Herr Tubthumper]

That all makes sense. What I don't get, is the point of leaving your wallet with a company like MtGox. Meaning that should there be a problem with the company, you can lose your coins. What is the advantage of leaving the coins with them?

But with shares, a broker may have them on their books, but if the broker disappears, they're still your shares, registered to you. That sounds ok with Bitcoins when they're in your local wallet, but not when they're with an exchange account.

I guess many people, me included, did not realise MtGox had this hole in its security. A month ago had you sought advise many advised going with them as they had a good and long proven history and were well known. Proven exchange or private wallet made no difference to me.

 

[beorhthelm]

But with shares, a broker may have them on their books, but if the broker disappears, they're still your shares, registered to you. That sounds ok with Bitcoins when they're in your local wallet, but not when they're with an exchange account.

yeah, cause brokers are sensible like that. and probably some regulation that makes them do so. MtGox isnt so sensible, but then they started out trading Magic the Gathering cards, hence the odd name.

I guess many people, me included, did not realise MtGox had this hole in its security. A month ago had you sought advise many advised going with them as they had a good and long proven history and were well known. Proven exchange or private wallet made no difference to me.

there's been various issues with MtGox for months if not years, this particular issue poped up around 7th and they suspended withdrawals on 11th.

 

[hybrid_x]

i said it would be crashed and was called a conspiracy theorist.

 

[Herr Tubthumper]

there's been various issues with MtGox for months if not years, this particular issue poped up around 7th and they suspended withdrawals on 11th.

I personally wasn't aware of any major issues "for months, if not years."

 

[symyjym]

This Bitcoin has always sounded as water tight as a Pyramid Marketing Scheme.

 

[AZ Gull]

i said it would be crashed and was called a conspiracy theorist.

But you ARE a conspiracy theorist, aren't you?

 

[Triggaaar]

I guess many people, me included, did not realise MtGox had this hole in its security.

I don't see it as a hole in their security, it's a hole in the idea of leaving your money with any company that could just walk off with it. If it's a few grand, I can understand treating it as a punt, and not fully investigating the system. But some people have lost hundreds of thousands. Perhaps they're so rich, that's just a punt to them - in which case, fair enough. But no one should be putting an amount of money they consider important into something like this without knowing the deal.

yeah, cause brokers are sensible like that. and probably some regulation that makes them do so.

Yeah I'd think it's the regulations that count. We know that banks can fail, but in the hundreds of years they've been going, it doesn't happen much, and we know that a fair sized deposit is covered by our government (for some banks). We also know, that even a crook within the bank would be hard pushed to walk off with your money.

Although I don't know the ins and outs of Bitcoin trading, I am surprised their value hasn't fallen further with this recent news.

 

[hybrid_x]

But you ARE a conspiracy theorist, aren't you?

"Anyone who doesn't buy into an arbitrarily established story is marginalized and demonized, and called either crazy, a conspiracy theorist, or even a terrorist ("You're either with us or you're with the enemy"). Such a group consensus about the nature of reality gets increasingly hard to sustain as time passes, however, as, like a house of cards ready to collapse at any moment, its vision of the world is based on the fundamental error of not being true." Dispelling Wetiko by Paul Levy