should i trust bitcoin with my life blood?

[ardouronerous]

I'm a little skeptical of Bitcoin, it's probably because I'm a little hesitant of change, I mean, we've been using physical currency such as dollars, euros, pesos, yens, etc, since the dawn of time, and here comes a digital currency, so I'm a little resistant of accepting this.

Unfortunately, we live in a world where money is our life blood, I personally wish we lived in the Star Trek universe where money doesn't exist and every man, woman and child would get his or her fair share of the world's resources, but since we don't live in a world like that yet, money is no laughing matter, can I actually trust Bitcoin with my life blood?

[TheFu]

No, but what do you mean by "life blood?"

Should you avoid bitcoin? I wouldn't. But I wouldn't have more than I could happily lose either.

And when I say bitcoin, I mean all crypto currencies combined. They are all prone to being hacked and just because you have a coin, doesn't mean anyone will accept it. Some coins are banned forever, which makes them worthless.

OTOH, if you look at the price history for many of these currencies, it is hard not to speculate a small amount. Saw a presentation that claimed $1000 in BC from 2009 is worth over $1M now. Hard to argue with that, but some people have been burned. The current pricing seems 80% too high to me (only looked at a price chart for about 20 seconds). I'm not an expert in BC pricing charts.

I wouldn't bet my life savings or even 1% of them. I'm fairly diversified in US and international stocks, real estate, and other commodities - like gold-pressed latinum.

Reasonable, steady, growth, with a long history of management producing those results is how I invest. I don't pick stocks with a dart-board or based on the personality of the CEO or President.

Hope some others will respond too. Just be aware of some overzealous people trying to say that history leads to future results. That is NOT true.

[ardouronerous]

No, but what do you mean by "life blood?" What I mean by that is since we cannot really live without money, so money is our life blood. Thanks for all the info, a lot of seep in. Waiting for others replies. :)

[TheFu]

BC definitely is not "life blood" level here. I use cash for anything under $30 and credit cards for things over that in-person. Still use checks for bill payment to companies, if they don't accept electronic payments directly from the bank. All Govt payments are by check too. I hate, hate, hate, convenience fees as required to pay govts with a credit card.

I don't have a debit card - due to the long period of time where they didn't offer the same legal protections as ATM cards. That has changed in my jurisdiction. I don't like to use debit cards at retail PoS - they get direct access to your bank account and TAKE your money. If there is any issue, they have your money already and you have to beg to get it returned. With a credit card, they do not have your money and they have to negotiate with a huge credit company, not little-ole-me. I treat credit cards as sub-30 day loans. Last time I didn't pay off any credit card monthly was in 1989 and it took 2 months to pay in full.

Your location might have different laws with greater or lesser protections. Most places in the world have less credit card protections than where I live. Any payment made while overseas usually means the money is gone with zero legal protections.

When I want to spend money anonymously, I take the 8+% hit and buy a pre-paid gift card with cash being cautious about my OpSec for the purchase and all use of the card. I think this is more anonymous than using cash, actually.

Bitcoin exchanges have been hacked or "lost" millions of coins. The currency itself is well-designed, but spending it brings added risks that might not be desirable.
South Korea (https://www.bleepingcomputer.com/news/security/hacked-south-korean-bitcoin-exchange-loses-5-5-million/) $5.5M
Hong Kong (https://www.bloomberg.com/news/articles/2016-08-07/hacked-bitcoin-exchange-users-to-lose-36-will-receive-tokens) $66M
and I've seen 10+ others.
Japan (https://www.wired.com/2014/03/bitcoin-exchange/) - $465M!

[Bucky Ball]

Should you avoid bitcoin? I wouldn't. But I wouldn't have more than I could happily lose either.

^^^
Exactly this. Have a dabble with some spare cash, if you have it, but don't invest your life savings. Are you a gambler? You will be if you start buying Bitcoin as it is a gamble. The value of a bitcoin can rise and fall rapidly and drastically. Unless you are willing to keep an eye on things and buy and sell your BCs when appropriate, then there is the potential to lose the lot, or close.

DO NOT INVEST YOUR LIFE SAVINGS IN BITCOIN! At least, not at this point in its development. Sure, one day analogue money will be a thing of the past, but that day has not yet arrived. ;)

(PS: I'm looking to put some savings somewhere so did a fair bit of research on Bitcoin as I thought it might have potential for savings. Definitely not an option at this point unless I don't mind the possibility of losing my 'life blood'. I do mind!)

[lisati]

Haven't had a need to invest in BC here. For most things I do, cash or POS using my regular ATM card. For online stuff, I have a debit card. I haven't written out a cheque since the 1980s, or used a credit card for at least five years.

[ian-weisser]

[C]an I actually trust Bitcoin with my life blood?

I think you should not.
You seem to be considering investing.

Real investing means a clear, thorough understanding of the investment, and controls to minimize risk.
Without that understanding and those controls, it's not 'investing'. It is merely 'speculating' (or 'guessing' or 'hoping')

[LastDino]

BC investing in 2012-13 would've made sense with spare cash, it was the new thing back then and wasn't attracting ill views, more like no one was taking it too seriously. It was then governments started to discover its real threat/potential like that of underground transactions. Alas, you can be sure that it will attract more restrictions in future, so the million dollar question, is it good investment?

When making an investment, we always check "Risk to reward ratio", if you check BC chart (See attachments)


from 2013 it has came a long way, even since Jan 2017 it has more than doubled, a strong uptrend, a strong over-valuation and possible strong correction around the corner. Pay attention to words strong over-valuation and correction, as valuation is mostly "perceived" as there is no real physical equal measure like gold or bonds is used for its production, you run a risk of losing quite a lot of your money in case of adverse news, as it is now open for speculation and worse, no guarantees as no government backs it.

Then there is problem of its actual use, limited acceptance and its digital nature making it open for cyber robberies. Clearly not yet something for everyone. And this is explained better here already.

Personally, I wouldn't even bother with it using my spare money, as I've no use of it nor find risk to reward feasible. It is however good chart to trade on intra-days, no investments, you have simply missed the bus.

[Bucky Ball]

Then there is problem of its actual use, limited acceptance and its digital nature making it open for cyber robberies.

Blockchains have been called the 'silver bullet' for security. They are extremely secure. I don't know of anyone hacking a blockchain or Bitcoin, but I haven't managed to read everything ever published on everything everywhere.

I have read about the security of blockchains and bitcoins though and am in the process of trying to find that link to post here ... :)

Put it this way, it's not like having a bank account at an institution that can be hacked. A transaction is a totally private thing between two individuals, the details of which are ONLY available for view to those two individuals. There is separate encryption at each end, if you follow me. I'm no cyber security expert, so not a great explanation. Perhaps someone else can elaborate.

Understanding the nature of a blockchain and how it works will go someway towards understanding the security of blockchains (bitcoins). ;)

[LastDino]

If it exists and connected through Internet, all silver bullets are taken by me with grain of salt. They taste little salty, but better to be safe. Though, from what you described, I admit it is far better than what your bank would do for you. Still salt, its life.

:p

[1clue]

I hate people who suggest googling it, but there are literally hundreds of discussions about 'pros and cons of cryptocurrency' at the top of your favorite search engine.

The one that gets me is both a strength and a weakness. Paper currency is tied to a single government's economy, and as such there are genuine economic forces unrelated to currency which work upon it. Cryptocurrency has no such ... momentum? It's an artificial currency not tied to any particular economy or real-world unit of work.

I'm not fluent in the language of investments or trading, so I'm nervous about any sort of 'trading' whether on paper or electronic format. That said, most of my bills are paid electronically and most of my purchases are electronic. It's not the electronic nature of the transaction or the fact of $USD being stored as an electronic number that scare me, it's the ways in which cryptocurrency is different from normal currency.

[ardouronerous]

Thanks for the advice! So don't invest your life savings on Bitcoin.

Do you think one day Bitcoin will replace paper and plastic currency eventually? Being not fluent in economy, I found economy class to be very boring, how would Bitcoin do that, replace our current form of money?

[LastDino]

That one day is not going to come anytime soon. Idea of bitcoin is itself pretty much threat to how economics behind currencies work, and it may flourish as underground currency, it is very unlikely to see daylight as an official one for any foreseeable future.

Lets look at it like this, bitcoin has no real relation to your gdp, CAD, employment data, consumption & housing data, meaning no real relation to the actual economic health/resources/utility/consumer confidence of the country. Which is usually base for one countries demand and supply system against other, provoking exchange and determining exchange rates. Bit coin is more towards I want->I mine/buy, not earn by contributing towards your actual desired economic output.

Not to say idea in itself is not useful, it is, and we may see many usage, but an official nod will never come unless it is somehow accommodated into traditional economic laws. One can not have free floating currency as an official one

[TheFu]

Do you think one day Bitcoin will replace paper and plastic currency eventually? Being not fluent in economy, I found economy class to be very boring, how would Bitcoin do that, replace our current form of money?

No. Govts will not allow that. It removes too much power from them. It won't happen in my lifetime or the lifetime of my kids-kids.

The only places it may happen is where the govt is so inept as to have completely failed to provide a stable currency.

[Bucky Ball]

No. Govts will not allow that.

Unsure how they'd stop it. If you investigate how Bitcoins/blockchains work, fairly tricky, to say the least. Wasn't aware they have any control over it, or could if they wanted to, now.

Virtual money will replace analogue money (IMHO). Inevitable, but I very much doubt it will be Bitcoin. Whatever system does replace analogue money probably doesn't exist yet.

[TheFu]

Govts have guns and "laws." If any cryptocurrency becomes too popular, some laws will necessarily be passed around the use. It will be about taxation and tracking. There are current laws around both already which are being ignored by most people. Guns and threatened penalties are used to enforce "laws."

That won't stop all "illegal" activities, but it will make it impossible to use in public. When the US IRS accepts BCs, then I'll agree that I'm beat. For now, they get quarterly checks from me and my businesses, in USD.

Govt manipulation of currencies has been used for centuries. They won't give that up. They might mandate that all BC use must go through govt run exchanges, so they can track transactions easier. Heck, US$20+ bills are tracked today every time they are deposited at a bank.

If I were a bank, I'd be looking at crypt-currencies very closely. If I were visa/mc/amex then I'd already have a way to use them with a mixed credit card, assuming it is legal.

Virtual money only works in places with connectivity. There are many places in the world without that, today. I don't see that changing in parts of Nepal. Places in Colorado are still on dial-up internet connections too, though they use satellite for downstream.
There are places near my home in the USA that don't accept credit cards either, much less, any crypto-currency. I'd have more luck walking into those places with some gold flakes to get my lunch than a credit card.

IMHO.

[Bucky Ball]

@TheFu: Absolutely. All great points.

Don't get me wrong, not flame-baiting. Just discussing. What the future holds is both exciting and often hypothetical, but discuss we should. ;)

The accelerating rate of automation in the work place and the expanding diversity of its capabilities a current favourite. That's a curly one with multiple consequences. :-k

Maybe that's where the nefarious virtual money comes in big time! But I digress ...

[LastDino]

For interested parties, slightly different concept but

https://ripple.com/

also quite interesting project. 2 years ago did project on this particular group for my Uni assignment, and there are many other contenders. BC just happens to be most known name atm.

If we are talking about being accepted by governments, I would likely bet on this one than BC. They talk about involving existing infra of BANKs and what not as well.

https://ripple.com/technology/

Much more feasible, but even this is not happening for at least one or two generations


Just got this article in google search, at least good name thrower if not anything else
http://www.influencive.com/move-bitcoin-4-cryptocurrencies-making-mark-ethereum-stratis-ripple-siacoin/

[1clue]

A sovereign government has the right to manipulate its own currency. It can and generally does refuse to deal with any currency not its own. In that sense, you could say that Euros are illegal in the USA, and generally speaking you could have a stack of Euros in the USA and won't be able to buy anything with it. Likewise, offering bitcoin or any other cryptocurrency to the hardware store down the street will get you a blank stare but you'll leave without the stuff you wanted to buy.

Manipulating currency is one of the tools a government can use to stabilize its economy. When it's done right, it's a good thing for everyone. While crazy profits can happen during wild market swings crazy losses can too, and the one who understands it all the best is usually the winner. Statistically speaking, nobody reading this thread will be the winner. When done poorly, the value of the unit of currency swings wildly and then plummets because nobody trusts it.

Cryptocurrency is treated as any other foreign currency within the market, except that the people who deal with traditional currencies may or may not refuse to deal with cryptocurrency. People who do not trade in currencies will only do business in their nation's currency, which covers at least 99% of businesses everywhere.

I can see people in a poorly managed economy wanting to use something else, but I see these guys going back to pre-currency barter systems rather than cryptocurrency. It's easy to understand trading a bag of grain for a couple of chickens. You see what you're getting and what you're giving, and it's inherently a stable transaction. People who understand currency transactions may choose a cryptocurrency, but in doing so they also contribute to the destabilization of their nation's economy.

[LastDino]

Problem with barter system and as to why it was replaced by first salt then valuable metals and finally currency is there is no way to maintain standards and it is "very easy" to take advantage of the others situation. It depends on the perceived value, which is subject to change from person to person and situation to situation.

One trading chicken for bag of grain might have a tough time if no one wants the chicken or simply doesn't find chicken worth the trade. But yes, poorly manged economies may see this kind of exchange happening even now.

Forget about poorly managed, some villages may prefer to trade this system in period of harvesting, especially when they are running short on money and prefer not to take loans to buy fertilizers and grains for harvest.

[TheFu]

Travelers keep up with currency exchange:
An article about currency in Argentina where cash is king:
https://www.milevalue.com/argentina-money-situation-2016-dollar-blue-credit-card-atm-bank-cash/

I actually plan vacations around weak currencies to get the most bang for my USD. I've been to many world "hot spots" just prior to huge international events. And sometimes during. Being tear gassed isn't fun. Learning about killings a mile from your vacation/apartment isn't fun either.

[Bucky Ball]

Being tear gassed isn't fun. Learning about killings a mile from your vacation/apartment isn't fun either.

At least with a good exchange rate you didn't pay much for the experience. :)

[simplydt]

I haven't been able to trust bitcoin or any crypto currency and often I get the sucky feeling I'm missing out on something big for being too cynical. However, here are my reasons:

a) I've gotten hacked myself with one "alt" coint losing around $1.5k. I have a honors degree in Computer Science and I am pretty good security wise, yet I still fell for it.

b) I know another CS guy who got hacked for $10k+...

If we above the average computer literate people fall for this, how is the laymen ever gonna be protected without some sort of centralization? And if things are centralized and one big company holds all the coin.. does that not defeat the bloody purpose?

Thoughts? :) I'll continue ruing missing the huge uplift from $170 when I could have held to $3k. Ah well. Haha.

[Bucky Ball]

Welcome. What's an 'alt' coin? Were you using Bitcoin or no?

[TheFu]

Bill proposed in US to have all visitors declare their bitcoin holdings, even if the blockchain isn't traveling with them:
"Travelers To The US Might Soon Be Required To Declare Their Bitcoin"
http://www.ubergizmo.com/2017/06/travelers-to-us-declare-bitcoin/

Don't know if people are following Venezuela financial crisis at all - lots of people there are moving from the local currency into bitcoin (http://www.aljazeera.com/indepth/features/2017/04/venezuelans-turned-bitcoin-mining-170415124105593.html).

Miners who have been arrested have been charged with tax fraud, money laundering, electricity theft and other crimes. though mining bitcoins is not illegal in Venezuela.

[QIII]

Take care, folks!

Although TheFu's post was a non-political and a dispassionate description of laws that directly relate to the OP's question, let's not go political from here. That is, don't make this a soap box for "should or should not be" partisan pontification or speculation about the motives and methods of any government.

Too many good discussions have gone down that road and have ended up closed and/or removed from public view.

[1clue]

Reversing the posts I'm responding to:

Take care, folks!

Although TheFu's post was a non-political and a dispassionate description of laws that directly relate to the OP's question, let's not go political from here. That is, don't make this a soap box for "should or should not be" partisan pontification or speculation about the motives and methods of any government.

Too many good discussions have gone down that road and have ended up closed and/or removed from public view.

+1. While I don't see my response as political rather than technical, any moderator should feel free to modify my post to remove offensive material. I don't want to be "that guy."


Bill proposed in US to have all visitors declare their bitcoin holdings, even if the blockchain isn't traveling with them:
"Travelers To The US Might Soon Be Required To Declare Their Bitcoin"
http://www.ubergizmo.com/2017/06/travelers-to-us-declare-bitcoin/

Don't know if people are following Venezuela financial crisis at all - lots of people there are moving from the local currency into bitcoin (http://www.aljazeera.com/indepth/features/2017/04/venezuelans-turned-bitcoin-mining-170415124105593.html).
though mining bitcoins is not illegal in Venezuela.

Technically speaking, this sort of monitoring and regulation would require a level of government paranoia yet to be acknowledged so far in the world. I'm positive that right now, at an international airport, your passport gets scanned and they get data held by the country of origin's database AND by the database of whatever country the traveller just entered. I'm positive they also search some sort of terrorist watch list and criminal/interpol/whatever database. I'm reasonably sure that some countries add a few more searches into the mix, especially with respect to political activism or some such. All of this can be easily done in the name of national security for pretty much any country.

To hook into financial holdings is a whole new level of searching. Aside of the invasion of privacy (which I'm not addressing but simply acknowledging) the complexity of this would be stunning. The way I understand it, determining a billionaire's net worth is a huge undertaking. Presumably doing so with a less wealthy individual might take just as long, unless the cryptocurrency network has some sort of global search engine connecting all cryptocurrency to a single site. While I confess to not knowing how it works I seriously doubt it would gain traction if that were the case. If it were then I can imagine theft would be much simpler too.

[jeremy2017]

I think you should not. It's highly risky since the price of bitcoin is rising so fast in such a short time. Do you remember tulip mania?

[simplydt]

Welcome. What's an 'alt' coin? Were you using Bitcoin or no?

Hi, thanks for the welcome!

Yes, I used, held, bought, sold bitcoin. When it was around $170 to $700 up and down. Then a bit this year but got out of it (not much time).

Altcoins are the smaller coins that claim to offer improvements and to be the next big thing. Many of them that I could have held and according to todays prices made a small fortune (probably including the one that got hacked!).

ETH was one such altcoin, and last I checked it is now probably going to be the new main coin.

All my concerns are still valid, how is a non CS degree going to hold crypto without getting hacked and without giving up the money to some central control which again could turn out malicious/hacked. In my time at least two trusted crypto exchanges I used had huge drama.

Thoughts?

[1clue]

I guess I don't know whether you intend to use cryptocurrency as a pure currency or as an investment target? It probably matters.

If you're just trying to bank your money, you generally want something that's both stable and predictable. IMO this makes cryptocurrency a bad choice. If you want to invest/profit, then volatility is a good thing, to a certain extent.

If you're investing and depending on that volatility, then you're certainly going to need to pay attention or you'll be disappointed.