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A beginner’s guide to getting started in the cryptocurrency world

453 points by sherm8n 9y ago

soVeryTired 9y ago
Is there a cryptocurrency out there that doesn't hand outsize rewards to early adopters? I feel like I could get much more excited about something like that.
- tromp 9y ago
  Grin is trying to discourage speculative investing by having a linear emission curve, a decision that is frequently questioned, see e.g. this discussion https://www.reddit.com/r/Mimblewimble/comments/7dlcol/grin_unlimited_supply/ https://www.reddit.com/r/Mimblewimble/comments/7dlcol/grin_u...
  - bitxbit 9y ago
    What’s a good “paid-in capital” estimate of bitcoin?
    - tromp 9y ago
      Do you mean the sum over all blocks of block reward times bitcoin price at time of mining?
    - irickt 9y ago
      I've been wondering this too and haven't been able to find any estimates. By "paid-in capital" I think you are trying to get at how "leveraged" the holders of bitcoin are, or how much non-cryptocurrency was used to buy the bitcoin relative to current "market cap". This is complicated by the mining costs incurred and by the fact that trade for other cryptocurrencies obscures the source of funds. But understanding the distribution of how rich bitcoin holders feel would help a lot to understand the market.
      - bitxbit 9y ago
        Yep. It would be an interesting exercise. IMO bitcoin valuation is more or less btc-based assets minus discounted cost of btc network. Me thinks it’s negative right now.
- vminkov 9y ago
  Maybe USDT (Tether) if you feel foolish enough to ignore the fraud alerts...
  - philipwhiuk 9y ago
    So basically dollars. I'm not sure but I think that already has a wealth inequality problem.
- mtgx 9y ago
  You'd probably have to find a cryptocurrency that has an extremely high inflation rate. There's no other way around it. So let's say initially 1 million "coins" are created and people put $1 million in total in them, so each are worth $1. To keep that $1 price, you'd have to increase the amount of coins each time more people want to buy more such coins. So if new people put another $1 million into the cryptocurrency, you'd have to automatically generate another 1 million coins. So you'd maintain, roughly, that $1 per coin value. Otherwise, with any relatively finite amount of coins in a cryptocurrency, you're going to see an exponential rise in their values, as more people get interested in that cryptocurrency. It doesn't matter if you create 1 million or 1 trillion coins initially. If the inflation rate is "only" say 10% per year, but millions of dollars, and then tens of millions of dollars, and then billions of dollars are put into that cryptocurrency within a relatively short amount of time, its value is going to explode.
  - dominotw 9y ago
    >So if new people put another $1 million into the cryptocurrency, you'd have to automatically generate another 1 million coins. So you'd maintain, roughly, that $1 per coin value. Price doesn't depend purely on number of available units.
- Drdrdrq 9y ago
  I don't think so - that wouldn't make sense. Any cryptocurrency's survival depends on early adopters, so it makes sense to award them. Note that their risk is higher too. Don't believe that? Join them. :)
  - spookthesunset 9y ago
    That is cool and all, but if bitcoin was ever even close to being "mainstream" you can bet your ass there would be a bazillion articles, FB posts, tweets, etc from people who do not like the idea of being locked out of the economy unless they buy "the future of money" from a relative handful of early adopters. Such an idea is, to be blunt, complete horseshit. The idea that every person on earth needs to first purchase Bitcoin from a handful of early adopters in order to continue to participate in the economy is flat out loony-toon nuts. No matter how Bitcoin evangelists try to frame it, it's just not gonna happen. Don't think that the lack of discussion about this means it isn't an issue. It is a massive, massive showstopper to Bitcoin adoption. The reason you don't see more people talking about this is because Bitcoin is absolutely nowhere near becoming the default currency used by anybody. Much easier to beat up on all the other massive technical flaws in Bitcoin...
    - craigc 9y ago
      I am not sure that long term BTC will actually replace USD or another government backed currency. I think it would take a LOT for that to happen. If that does happen then that means the value of the USD and every other currency will decline at the same time as the value of BTC increases which could lead to a global financial collapse. That said, if it were to happen, I don’t think you will have to buy bitcoin from a handful of early adopters. It is more likely that your employer would start paying you in Bitcoin when it becomes inevitable. Those same early adopters who hold a lot of the wealth will likely use their wealth to invest in startups/charities/companies/etc. the same way as entrepreneurs and rich people do today.
      - johnny22 9y ago
        and from where would they get the bitcoin?
- thisisit 9y ago
  Serious question - why will you get more excited about something like that? This is like saying I might want to invest in a company which didn't favor seed investor. If you were excited about a coin and you wanted to invest - wouldn't you want more coins? If the reward is skewed in favor of later reward, why would anyone bother at all? In case you are serious about this you might want to check Peercoin. While it doesn't have the skew you want, the supply is designed to attain an annual inflation of 1% instead of deflation in bitcoin.
  - UncleMeat 9y ago
    Because you aren't investing in a company. You are using infrastructure. I'm not super excited about a new system that has even less wealth equality than we currently have.
- anonymous5133 9y ago
  Everyone currently buying crypto is an early adopter right now
- kekeblom 9y ago
  There is a project called Basecoin. Here is an article about it: https://www.coindesk.com/basecoin-revealed-a16z-metastable-seek-crypto-holy-grail-stable-token/ https://www.coindesk.com/basecoin-revealed-a16z-metastable-s... Unfortunately, I don't know much more about that project at this point.
- acover 9y ago
  There are several universal basic income coins. The issue is why use them? The bootstrap problem.
- AgentME 9y ago
  There aren't good ways of making a decentralized cryptocurrency that scales its minting/inflation rates with its current market value (what specific market is the "decentralized" software coded to trust?), so unless a cryptocurrency exactly predicts its future adoption/demand rates and fits its minting schedule to that, then it's very unlikely to give only "reasonable-sized" returns to its early adopters.
- stordoff 9y ago
  Is that even possible without rapidly inflating the currency (which could well mean it never gets the early adopters at all)? It seems to me almost inherent that as a currency becomes more useful it will become rapidly more valuable, thus disproportionately rewarding early adopters.
- Frogolocalypse 9y ago
  Risk = reward.
cvsh 9y ago
I don't get how one can be a self-proclaimed "HODLer" and also preach about how cryptocurrency is the future of money. Assets you can reasonably call "currency" and assets you speculatively buy and hold seem like fundamentally incompatible categories. BTC or something like it may indeed be the future of currency, but that certainly won't happen until the current speculative mania reaches some kind of equilibrium.
- hndamien 9y ago
  You are misunderstanding the nature of the system and infinite divisibility. Wealth created essentially gets stored in a “bank”. Buying allows others to withdraw. The more holding the higher the price, the more everybody can withdraw. This is equity based money. And a bank, with no staff or “money”.
  - tcbawo 9y ago
    Is it really infinitely divisible when the transaction costs are fixed and high relative to the values being transferred?
    - tazard 9y ago
      I don't know about that, but it's not infinitely divisible. The smallest unit is 1 satoshi
      - Mtinie 9y ago
        Today that is true. Keep in mind though, there are already factions within the Bitcoin community already discussing how to seek consensus and affect a protocol change once the value of a single satoshi “grows large enough.” Only time will tell if the proponents of such action are forward-thinking or delusional.
        antonvs 9y ago
        The idea that they might be delusional is misguided. It's simply a fact that if Bitcoin achieves much wider adoption, the value of a satoshi will necessarily become "large enough." The current exchange rate is already about 66 satoshi to a US cent, and mass-market adoption is currently, to a first approximation, nonexistent. You don't have to be certain that Bitcoin will achieve the necessary adoption in order to plan for the eventuality. As such, "forward-thinking" is the correct characterization.
techupcian 9y ago
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dmitrygr 9y ago
"a beginners guide to buying while I pump and dump"
rblion 9y ago
This is how you know a bubble is coming, when you start seeing articles like this. It's starting to feel like 1999.
- etr-strike 9y ago
  For the first time in history people can decide which characteristics they desire in their money. People look at bitcoin and see money that can be sent anywhere without needing approval from anyone. They can store their money themselves. They can program their money. They know the supply of their money can’t discretely change underneath them. Some people are opting to change their dollars to btc. Some are opting to hedge a small amount into this new system in case recent monetary experiments explode. Some people are speculating (as they do in forex markets today). Just because more people want to explore this brave new world doesn’t mean it’s a bubble.
  - rblion 9y ago
    I'm not knocking the concept of cryptocurrencies as a whole, just like I would never knock the Internet as a whole. However, I would say that a lot of people speculating with stars in their eyes without understanding the underlying technology makes me wonder when a market correction event is going to happen. Currently on my Facebook feed there is a kid I know who is a tech support agent but now posting pictures as a "Bitcoin daytrader" and now offering classes on the subject. There is another girl who is a model for rap videos in Detroit and she posts screenshots of Bitcoin prices to show how well off she is now. I've read about hackers walking away with millions of dollars in a cryptorobbery (now a real thing). The next thing is an Ocean's 11 sequel where George Clooney and Brad Pitt pull off a cryptoheist. I think the real innovation is blockchain and that there will be a major cryptocurrency to rise out of one of the smaller markets. I get the feeling (just a hunch) that Bitcoin will be lycos/altavista/yahoo that will inspire a Google. Maybe that company already exists (Ethereum?), maybe not.
    - rafiki6 9y ago
      Probably not. Currency isn't a search engine. It's a fundamental piece of an efficient economy. There's a reason we went to fiat currencies. I like a lot of things about bitcoin actually. I want to see an energy based currency evolve (without the actual expenditure of energy). That currency can basically be a formula that calculates value based on energy consumption and output. I think something like that would allow for a more sustainable economy. Electricity Backed Currency: https://papers.ssrn.com/soL3/papers.cfm?abstract_id=1802166 https://papers.ssrn.com/soL3/papers.cfm?abstract_id=1802166
cowpig 9y ago
Having been introduced to cryptocurrencies the technical route, I'd never really been exposed to the brand of hype in these Andreas Antonopoulos videos before. I guess I've never watched a televangelist either, but I imagine this would be the equivalent. This piece of bullshit in particular stood out to me: > Where were you when libor was fixed? Where were you when gold markets were fixed? When high-frequency traders used front-running... It's odd that he uses these examples to support the "trustless" blockchain architecture, because blockchain does nothing to improve any of these. The opposite is true: it makes it far easier to manipulate markets because all transactions are anonymous, censorship-proof, and it's impossible to recover funds from bad actors. Not having to trust a central authority for the ledger does nothing to prevent collusion or frontrunning in markets. From what I've seen, cryptocurrency markets are constantly being manipulated in ways that are both unethical and illegal. > Bitcoin vs Ethereum is like Sharks vs Lions... He claims that Bitcoin specializes in ways that Ethereum does not, but this isn't true: effectively, Bitcoin is a subset of Ethereum. He claims that Ethereum "scales 10x worse" than Bitcoin, but I don't know where he got that number from: the reality is more nuanced, but by any practical measure, Ethereum is already better-equipped to scale and the protocol is actively evolving (as opposed to Bitcoin's, which is immutable as long as its community remains as toxic as it currently does). If he means the size of the full blockchain, in practice Ethereum implements compression techniques that make it much more compact--the Bitcoin blockchain is currently at about 100gb, while the uncompressed "archival" version of Ethereum is at 300gb but the standard compressed version only requires about 15gb. In terms of transaction throughput, Bitcoin has a stupid hard limit of 1mb per 10mins of data, and so Ethereum far outscales it in that regard. If you hear the term "lightning network" as a counterargument, you can ignore it: the lightning network doesn't yet exist, and when it does, it will have several practical problems, including that it requires onchain scaling to work[1]. [1] http://cowpig.github.io/bitcoin/cryptocurrency/2017/06/24/Segwit-and-Lightning-Network/ http://cowpig.github.io/bitcoin/cryptocurrency/2017/06/24/Se...
- Kiro 9y ago
  What's your opinion on Raiden then?
  - 9y ago
brndnmtthws 9y ago
I'll go ahead and plug my project (which just hit 100 stars on GitHub): https://github.com/brndnmtthws/optimal-buy-gdax https://github.com/brndnmtthws/optimal-buy-gdax It's a tool for buying from GDAX, which if used correctly will result in close to 0 in fees paid to Coinbase/GDAX (it's the same entity).
- bcongdon 9y ago
  Cool! I've been looking for something that does just this
- EarthIsHome 9y ago
  how well has this worked for you personally?
gaetanrickter 9y ago
More guidance here too "It’s Not About the ICO, It’s About the Trading Vehicle" https://medium.com/@gaetanconsulting/its-not-about-the-ico-it-s-about-the-trading-vehicle-38fa3425e9e3 https://medium.com/@gaetanconsulting/its-not-about-the-ico-i...
kjrose 9y ago
I love it from the perspective as a gamble. However, I get myself stuck on how difficult it is to get cash out of bitcoin. I wonder if the price pressure is due to that.
- Slartie 9y ago
  I recently pulled out my initial investment by using Kraken (in EUR via SEPA bank transfer, so my experiences only apply to that), and it was super-easy and fast. Deposits usually took 2 days to clear; the withdrawals took just one business day until they showed up on my bank account. So it was even faster to get money out of it than to get it in. Kraken's trading engine is utter crap, but as an on- or off-ramp for fiat it seems to be worthwhile. I guess for USD it should work just as well, though GDAX/Coinbase seems to be the most-used on/off-ramp there.
  - kjrose 9y ago
    In Canada I’m having a harder time to find a liquid exchange to go back to CAD.
- AgentME 9y ago
  I know you said you're in Canada, but for anyone else reading this in the United States, Gemini and Coinbase are widely-available and dependable for transfers in either direction between Bitcoin and USD. (Maybe they're available outside of the US too, I have no idea. It's a shame that it's apparently so hard to make transfers between countries with the regular banking system.)
option_greek 9y ago
I'm currently reading Digital Gold by Nathaniel. As I progress, its clearer that bitcoin might or might not be a great economic tool but its an awesome case study in game theory. I think the real innovation of Satoshi (whether he intended it or not) is to keep the players (how ever big or small they are) chained up to the eco system. At every level of new expansion, new players (usually bigger than current ones) join in the game and gets entrapped in the net. Then the game uses these players's strength to pull it self forward. There are real risks to bitcoin at points of these expansions. My guess is that if too strong players join at a time when the net is not yet ready for them, there is a risk that they break free of the net and destroy bitcoin. Here too game theory comes to its rescue. Assuming the net is not strong enough at any given time, there is little chance that the whole thing attracts stronger players. This is why I believe bitcoin has better chances of success than other crypto currencies. Its a constantly evolving monster that will gobble up everything eventually (Isn't it beautiful :))
- roymurdock 9y ago
  I haven't read the book, but this 2013 paper from Princeton economists Kroll, Davey, and Felten [1] describes the game theory that keeps strong players from destroying the network (aka a 51% or "goldfinger" attack): "It is often asserted (for example, in the Bitcoin white paper [22]) that a cartel can double-spend Bitcoins. In a strict sense, this is true: a cartel can spend a Bitcoin by paying it to a player Alice, receiving goods or services, and then shifting the consensus choice of history to a branch where that coin is instead paid to a different player Bob... Bitcoins have value because people are willing to trade them for goods and services. If players were unwilling to accept Bitcoins for trade or unwilling to spend Bitcoins for fear of having their payments nullified, the value of Bitcoins would diminish significantly as players lost confidence in the system... Worse, because players are encouraged to generate a new identity for each transaction and because identities are not linked to any side information, players cannot easily determine whether a proffered payment is coming from the double-spending cartel or an honest user. A rational player should refuse to accept any payments when there is a significant threat of double-spending. As a cartel must outmine the entire Bitcoin network and thus outspend the entire Bitcoin network for as long as it would remain a cartel, we believe it is very unlikely that a cartel could double-spend enough to recover the cost of the attack." The question at this stage, with the price of Bitcoin so high, is if this rationale still holds. What if a cartel were able to double spend one (or multiple) of the big 40 "whale" Bitcoin accounts before destroying the entire network? The one-time billion dollar theft could offset the cost of putting together the computing power to pull off a 51% attach, especially if the cartel assembled that power maliciously through a botnet. [1] http://www.econinfosec.org/archive/weis2013/papers/KrollDaveyFeltenWEIS2013.pdf http://www.econinfosec.org/archive/weis2013/papers/KrollDave...
lproven 9y ago
No, _here_ is the current best guide to cryptocurrencies: https://www.amazon.com/Attack-50-Foot-Blockchain-Contracts-ebook/dp/B073CPP581 https://www.amazon.com/Attack-50-Foot-Blockchain-Contracts-e...
X86BSD 9y ago
No mention of monero? To me that’s a glaring omission in a beginners guide.
- spookthesunset 9y ago
  Hyping Monero won't make Bitcoin go up in price. That's why it isn't included in the beginners guide...
  - X86BSD 9y ago
    This statement completely makes no sense to me. I was not “hyping” monero but merely noting it’s absence in a beginners guide to CC. Nor do I own bitcoin or care what that bubble does.
    - rocqua 9y ago
      You got your parent comment wrong. He was not accusing you of hyping monero. Instead, he was accusing the author of the article of trying to inflate the bubble. Notably, parent thought monero would not fit in the narrative of the author.
down 9y ago
As much as the elitist HR folk like to showcase the shortcomings of bitcoin, fact is that bitcoin is so much better than gold and fiat, which can be mass printed, or have you money blocked in the bank, how it happened in argentina and Greece, Cyprus, where people got a 40% haircut on their deposits over 100k, (check the inflation now in Turkey 13%) the money in the bank, you don't own them, bitcoin is at core a movement against banks, the whole argument against bitcoin is like the people were saying cars are so much worse than horses, because there are no paved roads, you need gas, maintenance, are noisy, can't scale, etc.
- dsacco 9y ago
  > fact is that bitcoin is so much better than gold and fiat, which can be mass printed, or have you money blocked in the bank, how it happened in argentina and Greece, Cyprus, where people got a 40% haircut on their deposits over 100k, (check the inflation now in Turkey 13%) the money in the bank, you don't own them, bitcoin is at core a movement against banks, So many claims in one sentence! Here are a few questions for you, so I can understand your thesis better: 1. How do cryptocurrencies specifically improve upon fiat currencies’ inflation when they are prone to systemic volatility? Bitcoin experienced a 40% swing in price in one day, and frequently moves out of boundaries the CME has stated would cause them to shut down trading on their futures. 2. How do you propose to get a cryptocurrency to a place of price stability without a centralized authority? I’m not saying I don’t think it’s possible, I want to hear your prediction. 3. Implicit in your thesis is the idea that money should not have been mass printed - do you think the government was ignorant of the economic ramifications or made a calculated bet that didn’t work out? How do you expect a given decentralized blockchain to do better based only on the valuation consensus of the market? 4. As it stands, most cryptocurrencies are actually traded in centralized exchanges, where the person doesn’t technically have control or autonomy over their money. How is this meaningfully better than a bank? What do you propose to improve this other than, “people shouldn’t do that?” > whole argument against bitcoin is like the people were saying cars are so much worse than horses, because there are no paved roads, you need gas, maintenance, are noisy, can't scale, etc. 5. It’s easy in hindsight to say that cars are better than horses for mass transportation. This is because the “revolutions” that don’t work out are forgotten. For every example of horses and cars, people actually did know what they want, and it wasn’t the newfangled new thing, which turned out to be a solution looking for a problem. In other words, citing this example without further justification for your point is meaningless. 6. As a matter of fact, no, Bitcoin can’t scale. There are people reporting it can. There are people investigating it seriously. Look into the research - there are cryptocurrencies and blockchains that can scale, but they mostly do not use proof of work consensus systems, and they make trade-offs in Bitcoin’s original goals of decentralization and fault tolerance.
chinathrow 9y ago
I've had multiple non-tech friends coming up to me and asking for my judgement regarding crypto currencies and whether they should invest in Bitcoin now. I asked them whether they invest in managed funds, stocks, foreign currencies and whether they go to the casino. If they answer with four times "no", then I tell them to hold back on the pure greed/fomo/speculation/hype.
kmfrk 9y ago
Getting a wallet always felt like the biggest issue. I looked at Ethereum very early on before it caught on, but the wallet situation for that and zcash is so overwhelming and confusing, especially since a multiplier of 0 for a hacked wallet defeats the purpose. At this point, a wallet for my iPhone that I can back up to say iCloud (accepting the risk that comes with that) and that isn't going to get wiped by accident due to a patch would probably be ideal. I remember trying to get into bitcoin by signing up for Mt Gox, and we all know how that went. "iPhone-hosted" seems like the ideal thing, but I don't know if there's something like that?
- stuxnet79 9y ago
  What is stopping you from using a mobile wallet like MyCelium or Coinomi? Using these wallets you can back up your private keys by using a passphrase. The backup is stored in the cloud and can be easily recovered if you ever lose your phone (just make sure you remember your passphrase).
- krrrh 9y ago
  Hardware wallets like TREZOR are pretty cool for enhancing security (it can also act as a U2F key). A seed is generated in the device and represented by a list of 24 words; your private key never leaves the device. However using the same word list (which you back up on paper) you can recreate the seed and derived keys on software that uses the same key derivation standard. https://doc.satoshilabs.com/trezor-apps/index.html#recovering-funds-without-trezor-device https://doc.satoshilabs.com/trezor-apps/index.html#recoverin... Actually now that I’ve typed that all up, I agree with your initial point. For the average person setting something like this up is still a huge hurdle. It does offer some protection against a hack for the more technically comfortable.
- lucaspiller 9y ago
  I’m in the process of writing up an article that explains what I think is the best way currently: using a wallet supporting BIP32, 39 and 44. A hardware wallet like Trezor or Ledger are the most user friendly ways to do this right now, but yes, to the average user it’s a steep learning curve.
viach 9y ago
I'm afraid, when you read about something in the news, it is already too late to "getting started", meaning investment related activities. Imho after each word , of course.
- nightski 9y ago
  It's gone up in price by a factor of 21 this year. What are you even talking about.
arca_vorago 9y ago
I got into bitcoin in the early days. I'll spare you my whining about how I could have been a millionaire, but I eventually wrote it off. Now, many years later, I remember my reasoning, and to some degree it still stands. Anonymity is the killer feature of a currency. This is why right now I am keeping an eye on Monero more than anything.
- stordoff 9y ago
  I did similar - mined ~50BTC and sold them almost immediately for little over 1USD each. Stings a little TBH, but I stand by my reasoning at the time (cash now is more valuable than potential cash in the future [I was broke at the time], and I didn't expect Bitcoin to be more than a bubble). I do now have a server mining Monero which I'll probably hold on to for a longer term though (I'm paying a fixed fee per month for it, so when it's otherwise idle it doesn't cost anything extra to start it mining).
- aphextron 9y ago
  >Anonymity is the killer feature of a currency. How is Bitcoin any more anonymous than cash?
  - 7171u 9y ago
    He meant Monero not Bitcoin.
juanmirocks 9y ago
Also note that coinmarketcap lists for every token, which markets (i.e. exchanges) have it. Example for Cardano (ADA): https://coinmarketcap.com/currencies/cardano/#markets https://coinmarketcap.com/currencies/cardano/#markets
zamazingo 9y ago
It's all good and what not but how do you buy bitcoin without either giving away all sorts of private information about you to a website or having to meet strangers?
- antonvs 9y ago
  You can use a Bitcoin ATM: https://coinatmradar.com/ https://coinatmradar.com/ Warning, the exchange rates and/or fees tend to be exorbitant.
lee101 9y ago
Great starter guide, i also like to recommend the getting started page in the Reddit https://www.reddit.com/r/Bitcoin/ https://www.reddit.com/r/Bitcoin/ thread. As people have already pointed out there are some things @aantonop says that aren't true like that bitcoin doesn't suffer from pump and dumps or front running, often exchanges not only run their own front running market making bots that get priority if they are the same price as other orders in the orderbook, but there are massive scandals without transparency & truth like the whole tether debacle, no one knows so you can assume the worst... Extreme volatility right now to checkout our live forecasts/charts for pro traders: https://bitbank.nz https://bitbank.nz currently based on poloniex data. We also have a referral program where you can earn .003 BTC every paying user. Theres also an API/bulk data for those technical HN types so you can build HFT systems on our platform.
- FireBeyond 9y ago
  > the getting started page in the Reddit https://www.reddit.com/r/Bitcoin/ https://www.reddit.com/r/Bitcoin/ thread. That page is actually https://bitcoin.org/en/getting-started https://bitcoin.org/en/getting-started and has nothing to do with Reddit. Even the FAQ videos are heavily, heavily biased towards the /r/bitcoin mantra/meme "hodl! hodl!" position.
EGreg 9y ago
I like Bitcoin except for the Proof of Work part. It has led to an arms race which causes tons of electricity to be wasted around the world. I think the only reason for Proof of Work is to make it seem like "mining" is some expensive activity. But it doesn't have to be. It's a bit silly, actually. In practice, PoW just winds up "electing" the next miner who you hope will compile all the transactions they see into a block. That's a single point of failure, they can charge inordinate fees, they can be DDoSed, and so on.
- philipwhiuk 9y ago
  I love how mining is essentially transaction clearing but nobody calls it that because it might sound like there was actually just a proxy for financial system at the bottom. Miners are just another form of payment system like Visa. You have to pay them transaction fees to process your payment. Sometimes it's reasonable, sometimes it's insane. Bitcoin has solved exactly zero problems.
  - AlwaysBCoding 9y ago
    >Bitcoin has solved exactly zero problems Sending an infinite amount of money anywhere in the world 24/7 in less than an hour from your command line for a couple of dollars.
  - AgentME 9y ago
    The benefit is the miners are fungible. If one miner wants to enforce unusually high fees or restrictions on what kinds of transactions can be sent (such as which countries can send funds between each other, etc), then it just means that if that miner mines a block, some transactions have to wait an extra block to get mined by a miner without those extra restrictions. And it will be more profitable for that miner because of the extra transaction fees, so in practice miners don't impose extra limits.
    - EGreg 9y ago
      And how many extra blocks will they have to wait when a cartel of mining pools controls most of the hashrate?
chx 9y ago
Here's a much better primer: https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/ https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/ The Problem with Calling Bitcoin a “Ponzi Scheme” Much shorter and by the time you finish you will have a firm knowledge of what to do with crypto"currencies".
- CloudYeller 9y ago
  Interesting read.
djhworld 9y ago
The article links to a guide on how to mine Ethereum on your PC, is it really viable to do this these days?
- lucaspiller 9y ago
  If you already have a GTX 1060 or RX 470 and above, then yes you can probably still turn a small profit. However if you are looking to invest, it’s probably going to more profitable to buy coins than to buy mining hardware (at least for ETH).
anigbrowl 9y ago
Good summary for hackers, but I wanted to raise one point: No, seriously, please read it! The Bitcoin white paper should be required reading before anyone is allowed to interact with this technology. What the fuck no. If you want to build something yeah maybe, but this is exactly what's wrong with cryptocurrencies at the moment - it's somewhere in between a cult and a club for insiders. This is why we have shitty wallet software and lots of existential uncertainty, rather than products that regular people can use with confidence without needing to understand how they work. You don't require kids to read Adam Smith on the fundamentals of fiat currency before they learn how to buy candy. But when you go to the Bitcoin Website you're offered some 10 different wallets and told to 'educate yourself' with hardly any further help. This approach is extremely exclusionary. When you write a beginner's guide, your job is not to mint a new cryptocurrency expert, it's to help someone understand why they might want to use cryptocurrency, get a wallet, put something in it, and complete a transaction (eg by getting them started with some low-risk variant like DogeCoin). I've been following Bitcoin since shortly after it got started and the biggest hurdle to cryptocurrency adoption is the 'secret handshake' mentality that aspires to make a special currency for people in the know for private advantage, rather than offering simple, reliable, and accessible tools to people who need an alternative to the official economy (as much because of poverty or social exclusion as ideology). All people need to know about cryptocurrency theory is that it's secure, whether or not it's private, and how volatile it is.
- philipwhiuk 9y ago
  It's not a good summary for hackers. It tells you sweet nothing about how Bitcoin actually works in practice. Where's the information on SegWit or the block size or in practice how the protocol works? Nowhere. It's a hash together of what the author has seen on Bitcoin and thinks is cool. It's an attempt to convince an idiot that's it's really complicated and they should BUY BUY BUY HODL HODL. It's a terrible article and Bitcoin is a terrible mix of core developers who are innovating crazy solutions on top of crypto with spurious documentation, server farms run on cheap electricity in various places of a disreputable nature and college kids investing their student loans on internet money. Plus, now, a small amount of the general public who read an article or two and are playing the high stakes casino tables with their savings/rainy day money.
jorgec 9y ago
Bitcoin in a nutshell: A small group of companies decide the price of bitcoin arbitrary, the price is not backed by real money or a commodity but thin air. The price is not even decided by supply and demand.
659087 9y ago
I think the current Bitcoin hype cycle is ultimately going to be damaging to the future of the sector as a whole. Bitcoin's capability to actually be used as it was supposed to be is currently a terrible joke, and thousands of people who couldn't grasp the most basic concepts about it even if they tried are throwing large amounts of money at something they don't understand at all. The current state of Bitcoin tech is so far behind what the hype would have you believe. The number of posts from people who delusionally believe Bitcoin is a sure thing, "safer than a savings account", and has nowhere to go but up has increased exponentially in recent weeks.. along with posts from people taking out loans to "invest". That's going to leave a bad taste in the mouths of many new 'adopters' (speculators) when the rate of incoming greater fools slows down and the market takes a massive downturn. This won't end well.

453 points by sherm8n 9y ago

Is there a cryptocurrency out there that doesn't hand outsize rewards to early adopters? I feel like I could get much more excited about something like that.

tromp 9y ago
Grin is trying to discourage speculative investing by having a linear emission curve, a decision that is frequently questioned, see e.g. this discussion https://www.reddit.com/r/Mimblewimble/comments/7dlcol/grin_unlimited_supply/ https://www.reddit.com/r/Mimblewimble/comments/7dlcol/grin_u...
- bitxbit 9y ago
  What’s a good “paid-in capital” estimate of bitcoin?
  - tromp 9y ago
    Do you mean the sum over all blocks of block reward times bitcoin price at time of mining?
  - irickt 9y ago
    I've been wondering this too and haven't been able to find any estimates. By "paid-in capital" I think you are trying to get at how "leveraged" the holders of bitcoin are, or how much non-cryptocurrency was used to buy the bitcoin relative to current "market cap". This is complicated by the mining costs incurred and by the fact that trade for other cryptocurrencies obscures the source of funds. But understanding the distribution of how rich bitcoin holders feel would help a lot to understand the market.
    - bitxbit 9y ago
      Yep. It would be an interesting exercise. IMO bitcoin valuation is more or less btc-based assets minus discounted cost of btc network. Me thinks it’s negative right now.
vminkov 9y ago
Maybe USDT (Tether) if you feel foolish enough to ignore the fraud alerts...
- philipwhiuk 9y ago
  So basically dollars. I'm not sure but I think that already has a wealth inequality problem.
mtgx 9y ago
You'd probably have to find a cryptocurrency that has an extremely high inflation rate. There's no other way around it. So let's say initially 1 million "coins" are created and people put $1 million in total in them, so each are worth $1. To keep that $1 price, you'd have to increase the amount of coins each time more people want to buy more such coins. So if new people put another $1 million into the cryptocurrency, you'd have to automatically generate another 1 million coins. So you'd maintain, roughly, that $1 per coin value. Otherwise, with any relatively finite amount of coins in a cryptocurrency, you're going to see an exponential rise in their values, as more people get interested in that cryptocurrency. It doesn't matter if you create 1 million or 1 trillion coins initially. If the inflation rate is "only" say 10% per year, but millions of dollars, and then tens of millions of dollars, and then billions of dollars are put into that cryptocurrency within a relatively short amount of time, its value is going to explode.
- dominotw 9y ago
  >So if new people put another $1 million into the cryptocurrency, you'd have to automatically generate another 1 million coins. So you'd maintain, roughly, that $1 per coin value. Price doesn't depend purely on number of available units.
Drdrdrq 9y ago
I don't think so - that wouldn't make sense. Any cryptocurrency's survival depends on early adopters, so it makes sense to award them. Note that their risk is higher too. Don't believe that? Join them. :)
- spookthesunset 9y ago
  That is cool and all, but if bitcoin was ever even close to being "mainstream" you can bet your ass there would be a bazillion articles, FB posts, tweets, etc from people who do not like the idea of being locked out of the economy unless they buy "the future of money" from a relative handful of early adopters. Such an idea is, to be blunt, complete horseshit. The idea that every person on earth needs to first purchase Bitcoin from a handful of early adopters in order to continue to participate in the economy is flat out loony-toon nuts. No matter how Bitcoin evangelists try to frame it, it's just not gonna happen. Don't think that the lack of discussion about this means it isn't an issue. It is a massive, massive showstopper to Bitcoin adoption. The reason you don't see more people talking about this is because Bitcoin is absolutely nowhere near becoming the default currency used by anybody. Much easier to beat up on all the other massive technical flaws in Bitcoin...
  - craigc 9y ago
    I am not sure that long term BTC will actually replace USD or another government backed currency. I think it would take a LOT for that to happen. If that does happen then that means the value of the USD and every other currency will decline at the same time as the value of BTC increases which could lead to a global financial collapse. That said, if it were to happen, I don’t think you will have to buy bitcoin from a handful of early adopters. It is more likely that your employer would start paying you in Bitcoin when it becomes inevitable. Those same early adopters who hold a lot of the wealth will likely use their wealth to invest in startups/charities/companies/etc. the same way as entrepreneurs and rich people do today.
    - johnny22 9y ago
      and from where would they get the bitcoin?
thisisit 9y ago
Serious question - why will you get more excited about something like that? This is like saying I might want to invest in a company which didn't favor seed investor. If you were excited about a coin and you wanted to invest - wouldn't you want more coins? If the reward is skewed in favor of later reward, why would anyone bother at all? In case you are serious about this you might want to check Peercoin. While it doesn't have the skew you want, the supply is designed to attain an annual inflation of 1% instead of deflation in bitcoin.
- UncleMeat 9y ago
  Because you aren't investing in a company. You are using infrastructure. I'm not super excited about a new system that has even less wealth equality than we currently have.
anonymous5133 9y ago
Everyone currently buying crypto is an early adopter right now
kekeblom 9y ago
There is a project called Basecoin. Here is an article about it: https://www.coindesk.com/basecoin-revealed-a16z-metastable-seek-crypto-holy-grail-stable-token/ https://www.coindesk.com/basecoin-revealed-a16z-metastable-s... Unfortunately, I don't know much more about that project at this point.
acover 9y ago
There are several universal basic income coins. The issue is why use them? The bootstrap problem.
AgentME 9y ago
There aren't good ways of making a decentralized cryptocurrency that scales its minting/inflation rates with its current market value (what specific market is the "decentralized" software coded to trust?), so unless a cryptocurrency exactly predicts its future adoption/demand rates and fits its minting schedule to that, then it's very unlikely to give only "reasonable-sized" returns to its early adopters.
stordoff 9y ago
Is that even possible without rapidly inflating the currency (which could well mean it never gets the early adopters at all)? It seems to me almost inherent that as a currency becomes more useful it will become rapidly more valuable, thus disproportionately rewarding early adopters.
Frogolocalypse 9y ago
Risk = reward.

cvsh 9y ago

I don't get how one can be a self-proclaimed "HODLer" and also preach about how cryptocurrency is the future of money. Assets you can reasonably call "currency" and assets you speculatively buy and hold seem like fundamentally incompatible categories. BTC or something like it may indeed be the future of currency, but that certainly won't happen until the current speculative mania reaches some kind of equilibrium.

hndamien 9y ago
You are misunderstanding the nature of the system and infinite divisibility. Wealth created essentially gets stored in a “bank”. Buying allows others to withdraw. The more holding the higher the price, the more everybody can withdraw. This is equity based money. And a bank, with no staff or “money”.
- tcbawo 9y ago
  Is it really infinitely divisible when the transaction costs are fixed and high relative to the values being transferred?
  - tazard 9y ago
    I don't know about that, but it's not infinitely divisible. The smallest unit is 1 satoshi
    - Mtinie 9y ago
      Today that is true. Keep in mind though, there are already factions within the Bitcoin community already discussing how to seek consensus and affect a protocol change once the value of a single satoshi “grows large enough.” Only time will tell if the proponents of such action are forward-thinking or delusional.
      - antonvs 9y ago
        The idea that they might be delusional is misguided. It's simply a fact that if Bitcoin achieves much wider adoption, the value of a satoshi will necessarily become "large enough." The current exchange rate is already about 66 satoshi to a US cent, and mass-market adoption is currently, to a first approximation, nonexistent. You don't have to be certain that Bitcoin will achieve the necessary adoption in order to plan for the eventuality. As such, "forward-thinking" is the correct characterization.

techupcian 9y ago

Hi everyone, I have a vital information I wish to share about where I had my crypto currency help and he also recover my missing BTC bitcoins for me. You can reach him at hackerdanielssmith@gmail.com Good luck

dmitrygr 9y ago

"a beginners guide to buying while I pump and dump"

rblion 9y ago

This is how you know a bubble is coming, when you start seeing articles like this. It's starting to feel like 1999.

etr-strike 9y ago
For the first time in history people can decide which characteristics they desire in their money. People look at bitcoin and see money that can be sent anywhere without needing approval from anyone. They can store their money themselves. They can program their money. They know the supply of their money can’t discretely change underneath them. Some people are opting to change their dollars to btc. Some are opting to hedge a small amount into this new system in case recent monetary experiments explode. Some people are speculating (as they do in forex markets today). Just because more people want to explore this brave new world doesn’t mean it’s a bubble.
- rblion 9y ago
  I'm not knocking the concept of cryptocurrencies as a whole, just like I would never knock the Internet as a whole. However, I would say that a lot of people speculating with stars in their eyes without understanding the underlying technology makes me wonder when a market correction event is going to happen. Currently on my Facebook feed there is a kid I know who is a tech support agent but now posting pictures as a "Bitcoin daytrader" and now offering classes on the subject. There is another girl who is a model for rap videos in Detroit and she posts screenshots of Bitcoin prices to show how well off she is now. I've read about hackers walking away with millions of dollars in a cryptorobbery (now a real thing). The next thing is an Ocean's 11 sequel where George Clooney and Brad Pitt pull off a cryptoheist. I think the real innovation is blockchain and that there will be a major cryptocurrency to rise out of one of the smaller markets. I get the feeling (just a hunch) that Bitcoin will be lycos/altavista/yahoo that will inspire a Google. Maybe that company already exists (Ethereum?), maybe not.
  - rafiki6 9y ago
    Probably not. Currency isn't a search engine. It's a fundamental piece of an efficient economy. There's a reason we went to fiat currencies. I like a lot of things about bitcoin actually. I want to see an energy based currency evolve (without the actual expenditure of energy). That currency can basically be a formula that calculates value based on energy consumption and output. I think something like that would allow for a more sustainable economy. Electricity Backed Currency: https://papers.ssrn.com/soL3/papers.cfm?abstract_id=1802166 https://papers.ssrn.com/soL3/papers.cfm?abstract_id=1802166

cowpig 9y ago

Having been introduced to cryptocurrencies the technical route, I'd never really been exposed to the brand of hype in these Andreas Antonopoulos videos before. I guess I've never watched a televangelist either, but I imagine this would be the equivalent. This piece of bullshit in particular stood out to me: > Where were you when libor was fixed? Where were you when gold markets were fixed? When high-frequency traders used front-running... It's odd that he uses these examples to support the "trustless" blockchain architecture, because blockchain does nothing to improve any of these. The opposite is true: it makes it far easier to manipulate markets because all transactions are anonymous, censorship-proof, and it's impossible to recover funds from bad actors. Not having to trust a central authority for the ledger does nothing to prevent collusion or frontrunning in markets. From what I've seen, cryptocurrency markets are constantly being manipulated in ways that are both unethical and illegal. > Bitcoin vs Ethereum is like Sharks vs Lions... He claims that Bitcoin specializes in ways that Ethereum does not, but this isn't true: effectively, Bitcoin is a subset of Ethereum. He claims that Ethereum "scales 10x worse" than Bitcoin, but I don't know where he got that number from: the reality is more nuanced, but by any practical measure, Ethereum is already better-equipped to scale and the protocol is actively evolving (as opposed to Bitcoin's, which is immutable as long as its community remains as toxic as it currently does). If he means the size of the full blockchain, in practice Ethereum implements compression techniques that make it much more compact--the Bitcoin blockchain is currently at about 100gb, while the uncompressed "archival" version of Ethereum is at 300gb but the standard compressed version only requires about 15gb. In terms of transaction throughput, Bitcoin has a stupid hard limit of 1mb per 10mins of data, and so Ethereum far outscales it in that regard. If you hear the term "lightning network" as a counterargument, you can ignore it: the lightning network doesn't yet exist, and when it does, it will have several practical problems, including that it requires onchain scaling to work[1]. [1] http://cowpig.github.io/bitcoin/cryptocurrency/2017/06/24/Segwit-and-Lightning-Network/ http://cowpig.github.io/bitcoin/cryptocurrency/2017/06/24/Se...

Kiro 9y ago
What's your opinion on Raiden then?
- 9y ago

brndnmtthws 9y ago

I'll go ahead and plug my project (which just hit 100 stars on GitHub): https://github.com/brndnmtthws/optimal-buy-gdax https://github.com/brndnmtthws/optimal-buy-gdax It's a tool for buying from GDAX, which if used correctly will result in close to 0 in fees paid to Coinbase/GDAX (it's the same entity).

bcongdon 9y ago
Cool! I've been looking for something that does just this
EarthIsHome 9y ago
how well has this worked for you personally?

gaetanrickter 9y ago

More guidance here too "It’s Not About the ICO, It’s About the Trading Vehicle" https://medium.com/@gaetanconsulting/its-not-about-the-ico-it-s-about-the-trading-vehicle-38fa3425e9e3 https://medium.com/@gaetanconsulting/its-not-about-the-ico-i...

kjrose 9y ago

I love it from the perspective as a gamble. However, I get myself stuck on how difficult it is to get cash out of bitcoin. I wonder if the price pressure is due to that.

Slartie 9y ago
I recently pulled out my initial investment by using Kraken (in EUR via SEPA bank transfer, so my experiences only apply to that), and it was super-easy and fast. Deposits usually took 2 days to clear; the withdrawals took just one business day until they showed up on my bank account. So it was even faster to get money out of it than to get it in. Kraken's trading engine is utter crap, but as an on- or off-ramp for fiat it seems to be worthwhile. I guess for USD it should work just as well, though GDAX/Coinbase seems to be the most-used on/off-ramp there.
- kjrose 9y ago
  In Canada I’m having a harder time to find a liquid exchange to go back to CAD.
AgentME 9y ago
I know you said you're in Canada, but for anyone else reading this in the United States, Gemini and Coinbase are widely-available and dependable for transfers in either direction between Bitcoin and USD. (Maybe they're available outside of the US too, I have no idea. It's a shame that it's apparently so hard to make transfers between countries with the regular banking system.)

option_greek 9y ago

I'm currently reading Digital Gold by Nathaniel. As I progress, its clearer that bitcoin might or might not be a great economic tool but its an awesome case study in game theory. I think the real innovation of Satoshi (whether he intended it or not) is to keep the players (how ever big or small they are) chained up to the eco system. At every level of new expansion, new players (usually bigger than current ones) join in the game and gets entrapped in the net. Then the game uses these players's strength to pull it self forward. There are real risks to bitcoin at points of these expansions. My guess is that if too strong players join at a time when the net is not yet ready for them, there is a risk that they break free of the net and destroy bitcoin. Here too game theory comes to its rescue. Assuming the net is not strong enough at any given time, there is little chance that the whole thing attracts stronger players. This is why I believe bitcoin has better chances of success than other crypto currencies. Its a constantly evolving monster that will gobble up everything eventually (Isn't it beautiful :))

roymurdock 9y ago
I haven't read the book, but this 2013 paper from Princeton economists Kroll, Davey, and Felten [1] describes the game theory that keeps strong players from destroying the network (aka a 51% or "goldfinger" attack): "It is often asserted (for example, in the Bitcoin white paper [22]) that a cartel can double-spend Bitcoins. In a strict sense, this is true: a cartel can spend a Bitcoin by paying it to a player Alice, receiving goods or services, and then shifting the consensus choice of history to a branch where that coin is instead paid to a different player Bob... Bitcoins have value because people are willing to trade them for goods and services. If players were unwilling to accept Bitcoins for trade or unwilling to spend Bitcoins for fear of having their payments nullified, the value of Bitcoins would diminish significantly as players lost confidence in the system... Worse, because players are encouraged to generate a new identity for each transaction and because identities are not linked to any side information, players cannot easily determine whether a proffered payment is coming from the double-spending cartel or an honest user. A rational player should refuse to accept any payments when there is a significant threat of double-spending. As a cartel must outmine the entire Bitcoin network and thus outspend the entire Bitcoin network for as long as it would remain a cartel, we believe it is very unlikely that a cartel could double-spend enough to recover the cost of the attack." The question at this stage, with the price of Bitcoin so high, is if this rationale still holds. What if a cartel were able to double spend one (or multiple) of the big 40 "whale" Bitcoin accounts before destroying the entire network? The one-time billion dollar theft could offset the cost of putting together the computing power to pull off a 51% attach, especially if the cartel assembled that power maliciously through a botnet. [1] http://www.econinfosec.org/archive/weis2013/papers/KrollDaveyFeltenWEIS2013.pdf http://www.econinfosec.org/archive/weis2013/papers/KrollDave...

lproven 9y ago

No, _here_ is the current best guide to cryptocurrencies: https://www.amazon.com/Attack-50-Foot-Blockchain-Contracts-ebook/dp/B073CPP581 https://www.amazon.com/Attack-50-Foot-Blockchain-Contracts-e...

X86BSD 9y ago

No mention of monero? To me that’s a glaring omission in a beginners guide.

spookthesunset 9y ago
Hyping Monero won't make Bitcoin go up in price. That's why it isn't included in the beginners guide...
- X86BSD 9y ago
  This statement completely makes no sense to me. I was not “hyping” monero but merely noting it’s absence in a beginners guide to CC. Nor do I own bitcoin or care what that bubble does.
  - rocqua 9y ago
    You got your parent comment wrong. He was not accusing you of hyping monero. Instead, he was accusing the author of the article of trying to inflate the bubble. Notably, parent thought monero would not fit in the narrative of the author.

down 9y ago

As much as the elitist HR folk like to showcase the shortcomings of bitcoin, fact is that bitcoin is so much better than gold and fiat, which can be mass printed, or have you money blocked in the bank, how it happened in argentina and Greece, Cyprus, where people got a 40% haircut on their deposits over 100k, (check the inflation now in Turkey 13%) the money in the bank, you don't own them, bitcoin is at core a movement against banks, the whole argument against bitcoin is like the people were saying cars are so much worse than horses, because there are no paved roads, you need gas, maintenance, are noisy, can't scale, etc.

dsacco 9y ago
> fact is that bitcoin is so much better than gold and fiat, which can be mass printed, or have you money blocked in the bank, how it happened in argentina and Greece, Cyprus, where people got a 40% haircut on their deposits over 100k, (check the inflation now in Turkey 13%) the money in the bank, you don't own them, bitcoin is at core a movement against banks, So many claims in one sentence! Here are a few questions for you, so I can understand your thesis better: 1. How do cryptocurrencies specifically improve upon fiat currencies’ inflation when they are prone to systemic volatility? Bitcoin experienced a 40% swing in price in one day, and frequently moves out of boundaries the CME has stated would cause them to shut down trading on their futures. 2. How do you propose to get a cryptocurrency to a place of price stability without a centralized authority? I’m not saying I don’t think it’s possible, I want to hear your prediction. 3. Implicit in your thesis is the idea that money should not have been mass printed - do you think the government was ignorant of the economic ramifications or made a calculated bet that didn’t work out? How do you expect a given decentralized blockchain to do better based only on the valuation consensus of the market? 4. As it stands, most cryptocurrencies are actually traded in centralized exchanges, where the person doesn’t technically have control or autonomy over their money. How is this meaningfully better than a bank? What do you propose to improve this other than, “people shouldn’t do that?” > whole argument against bitcoin is like the people were saying cars are so much worse than horses, because there are no paved roads, you need gas, maintenance, are noisy, can't scale, etc. 5. It’s easy in hindsight to say that cars are better than horses for mass transportation. This is because the “revolutions” that don’t work out are forgotten. For every example of horses and cars, people actually did know what they want, and it wasn’t the newfangled new thing, which turned out to be a solution looking for a problem. In other words, citing this example without further justification for your point is meaningless. 6. As a matter of fact, no, Bitcoin can’t scale. There are people reporting it can. There are people investigating it seriously. Look into the research - there are cryptocurrencies and blockchains that can scale, but they mostly do not use proof of work consensus systems, and they make trade-offs in Bitcoin’s original goals of decentralization and fault tolerance.

chinathrow 9y ago

I've had multiple non-tech friends coming up to me and asking for my judgement regarding crypto currencies and whether they should invest in Bitcoin now. I asked them whether they invest in managed funds, stocks, foreign currencies and whether they go to the casino. If they answer with four times "no", then I tell them to hold back on the pure greed/fomo/speculation/hype.

kmfrk 9y ago

Getting a wallet always felt like the biggest issue. I looked at Ethereum very early on before it caught on, but the wallet situation for that and zcash is so overwhelming and confusing, especially since a multiplier of 0 for a hacked wallet defeats the purpose. At this point, a wallet for my iPhone that I can back up to say iCloud (accepting the risk that comes with that) and that isn't going to get wiped by accident due to a patch would probably be ideal. I remember trying to get into bitcoin by signing up for Mt Gox, and we all know how that went. "iPhone-hosted" seems like the ideal thing, but I don't know if there's something like that?

stuxnet79 9y ago
What is stopping you from using a mobile wallet like MyCelium or Coinomi? Using these wallets you can back up your private keys by using a passphrase. The backup is stored in the cloud and can be easily recovered if you ever lose your phone (just make sure you remember your passphrase).
krrrh 9y ago
Hardware wallets like TREZOR are pretty cool for enhancing security (it can also act as a U2F key). A seed is generated in the device and represented by a list of 24 words; your private key never leaves the device. However using the same word list (which you back up on paper) you can recreate the seed and derived keys on software that uses the same key derivation standard. https://doc.satoshilabs.com/trezor-apps/index.html#recovering-funds-without-trezor-device https://doc.satoshilabs.com/trezor-apps/index.html#recoverin... Actually now that I’ve typed that all up, I agree with your initial point. For the average person setting something like this up is still a huge hurdle. It does offer some protection against a hack for the more technically comfortable.
lucaspiller 9y ago
I’m in the process of writing up an article that explains what I think is the best way currently: using a wallet supporting BIP32, 39 and 44. A hardware wallet like Trezor or Ledger are the most user friendly ways to do this right now, but yes, to the average user it’s a steep learning curve.

viach 9y ago

I'm afraid, when you read about something in the news, it is already too late to "getting started", meaning investment related activities. Imho after each word , of course.

nightski 9y ago
It's gone up in price by a factor of 21 this year. What are you even talking about.

arca_vorago 9y ago

I got into bitcoin in the early days. I'll spare you my whining about how I could have been a millionaire, but I eventually wrote it off. Now, many years later, I remember my reasoning, and to some degree it still stands. Anonymity is the killer feature of a currency. This is why right now I am keeping an eye on Monero more than anything.

stordoff 9y ago
I did similar - mined ~50BTC and sold them almost immediately for little over 1USD each. Stings a little TBH, but I stand by my reasoning at the time (cash now is more valuable than potential cash in the future [I was broke at the time], and I didn't expect Bitcoin to be more than a bubble). I do now have a server mining Monero which I'll probably hold on to for a longer term though (I'm paying a fixed fee per month for it, so when it's otherwise idle it doesn't cost anything extra to start it mining).
aphextron 9y ago
>Anonymity is the killer feature of a currency. How is Bitcoin any more anonymous than cash?
- 7171u 9y ago
  He meant Monero not Bitcoin.

juanmirocks 9y ago

Also note that coinmarketcap lists for every token, which markets (i.e. exchanges) have it. Example for Cardano (ADA): https://coinmarketcap.com/currencies/cardano/#markets https://coinmarketcap.com/currencies/cardano/#markets

zamazingo 9y ago

It's all good and what not but how do you buy bitcoin without either giving away all sorts of private information about you to a website or having to meet strangers?

antonvs 9y ago
You can use a Bitcoin ATM: https://coinatmradar.com/ https://coinatmradar.com/ Warning, the exchange rates and/or fees tend to be exorbitant.

lee101 9y ago

Great starter guide, i also like to recommend the getting started page in the Reddit https://www.reddit.com/r/Bitcoin/ https://www.reddit.com/r/Bitcoin/ thread. As people have already pointed out there are some things @aantonop says that aren't true like that bitcoin doesn't suffer from pump and dumps or front running, often exchanges not only run their own front running market making bots that get priority if they are the same price as other orders in the orderbook, but there are massive scandals without transparency & truth like the whole tether debacle, no one knows so you can assume the worst... Extreme volatility right now to checkout our live forecasts/charts for pro traders: https://bitbank.nz https://bitbank.nz currently based on poloniex data. We also have a referral program where you can earn .003 BTC every paying user. Theres also an API/bulk data for those technical HN types so you can build HFT systems on our platform.

FireBeyond 9y ago
> the getting started page in the Reddit https://www.reddit.com/r/Bitcoin/ https://www.reddit.com/r/Bitcoin/ thread. That page is actually https://bitcoin.org/en/getting-started https://bitcoin.org/en/getting-started and has nothing to do with Reddit. Even the FAQ videos are heavily, heavily biased towards the /r/bitcoin mantra/meme "hodl! hodl!" position.

EGreg 9y ago

I like Bitcoin except for the Proof of Work part. It has led to an arms race which causes tons of electricity to be wasted around the world. I think the only reason for Proof of Work is to make it seem like "mining" is some expensive activity. But it doesn't have to be. It's a bit silly, actually. In practice, PoW just winds up "electing" the next miner who you hope will compile all the transactions they see into a block. That's a single point of failure, they can charge inordinate fees, they can be DDoSed, and so on.

philipwhiuk 9y ago
I love how mining is essentially transaction clearing but nobody calls it that because it might sound like there was actually just a proxy for financial system at the bottom. Miners are just another form of payment system like Visa. You have to pay them transaction fees to process your payment. Sometimes it's reasonable, sometimes it's insane. Bitcoin has solved exactly zero problems.
- AlwaysBCoding 9y ago
  >Bitcoin has solved exactly zero problems Sending an infinite amount of money anywhere in the world 24/7 in less than an hour from your command line for a couple of dollars.
- AgentME 9y ago
  The benefit is the miners are fungible. If one miner wants to enforce unusually high fees or restrictions on what kinds of transactions can be sent (such as which countries can send funds between each other, etc), then it just means that if that miner mines a block, some transactions have to wait an extra block to get mined by a miner without those extra restrictions. And it will be more profitable for that miner because of the extra transaction fees, so in practice miners don't impose extra limits.
  - EGreg 9y ago
    And how many extra blocks will they have to wait when a cartel of mining pools controls most of the hashrate?

chx 9y ago

Here's a much better primer: https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/ https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/ The Problem with Calling Bitcoin a “Ponzi Scheme” Much shorter and by the time you finish you will have a firm knowledge of what to do with crypto"currencies".

CloudYeller 9y ago
Interesting read.

djhworld 9y ago

The article links to a guide on how to mine Ethereum on your PC, is it really viable to do this these days?

lucaspiller 9y ago
If you already have a GTX 1060 or RX 470 and above, then yes you can probably still turn a small profit. However if you are looking to invest, it’s probably going to more profitable to buy coins than to buy mining hardware (at least for ETH).

anigbrowl 9y ago

Good summary for hackers, but I wanted to raise one point: No, seriously, please read it! The Bitcoin white paper should be required reading before anyone is allowed to interact with this technology. What the fuck no. If you want to build something yeah maybe, but this is exactly what's wrong with cryptocurrencies at the moment - it's somewhere in between a cult and a club for insiders. This is why we have shitty wallet software and lots of existential uncertainty, rather than products that regular people can use with confidence without needing to understand how they work. You don't require kids to read Adam Smith on the fundamentals of fiat currency before they learn how to buy candy. But when you go to the Bitcoin Website you're offered some 10 different wallets and told to 'educate yourself' with hardly any further help. This approach is extremely exclusionary. When you write a beginner's guide, your job is not to mint a new cryptocurrency expert, it's to help someone understand why they might want to use cryptocurrency, get a wallet, put something in it, and complete a transaction (eg by getting them started with some low-risk variant like DogeCoin). I've been following Bitcoin since shortly after it got started and the biggest hurdle to cryptocurrency adoption is the 'secret handshake' mentality that aspires to make a special currency for people in the know for private advantage, rather than offering simple, reliable, and accessible tools to people who need an alternative to the official economy (as much because of poverty or social exclusion as ideology). All people need to know about cryptocurrency theory is that it's secure, whether or not it's private, and how volatile it is.

philipwhiuk 9y ago
It's not a good summary for hackers. It tells you sweet nothing about how Bitcoin actually works in practice. Where's the information on SegWit or the block size or in practice how the protocol works? Nowhere. It's a hash together of what the author has seen on Bitcoin and thinks is cool. It's an attempt to convince an idiot that's it's really complicated and they should BUY BUY BUY HODL HODL. It's a terrible article and Bitcoin is a terrible mix of core developers who are innovating crazy solutions on top of crypto with spurious documentation, server farms run on cheap electricity in various places of a disreputable nature and college kids investing their student loans on internet money. Plus, now, a small amount of the general public who read an article or two and are playing the high stakes casino tables with their savings/rainy day money.

jorgec 9y ago

Bitcoin in a nutshell: A small group of companies decide the price of bitcoin arbitrary, the price is not backed by real money or a commodity but thin air. The price is not even decided by supply and demand.

659087 9y ago

I think the current Bitcoin hype cycle is ultimately going to be damaging to the future of the sector as a whole. Bitcoin's capability to actually be used as it was supposed to be is currently a terrible joke, and thousands of people who couldn't grasp the most basic concepts about it even if they tried are throwing large amounts of money at something they don't understand at all. The current state of Bitcoin tech is so far behind what the hype would have you believe. The number of posts from people who delusionally believe Bitcoin is a sure thing, "safer than a savings account", and has nowhere to go but up has increased exponentially in recent weeks.. along with posts from people taking out loans to "invest". That's going to leave a bad taste in the mouths of many new 'adopters' (speculators) when the rate of incoming greater fools slows down and the market takes a massive downturn. This won't end well.