Can you explain how bitcoin works?

[disneysteve]

When reading about an extortion scheme that requires payment in bitcoin, I just learned that bitcoin payments are irreversible.

Well it wouldn't make much sense if they were reversible. Maybe I'm missing your point here.

If I walk into a store and pay for my purchase with bitcoin, I shouldn't be able to walk out with the stuff and then reverse my transaction.

[jIM_Ohio]

Are there any developed countries where the currency is "backed" by something? If so, what is that something?

I know that the US ended the gold standard in the early 70s. But what did backing the currency by gold really mean anyway? I never really understood that. You say that the only reason our currency has value is because we say it does. The same could be said for gold. It's just a shiny rock that we dig up out of the ground. It's not worth anything. It only has value because we say it does.

Going off gold standard gives more control to federal reserve
if on gold standard, we can only print money we have the gold to back up, keeps currency in short supply.

The federal reserve is NOT federal. It is a group of privately owned banks
now these banks can print money whenever they want, causing bubbles (remember 1997??) and bursting them (remember 2008) for their own profit.

[disneysteve]

Going off gold standard gives more control to federal reserve
if on gold standard, we can only print money we have the gold to back up, keeps currency in short supply.

When we were on the gold standard, was the price of gold pretty stable? Or did it fluctuate wildly like it does now?

[disneysteve]

The federal reserve is NOT federal. It is a group of privately owned banks
now these banks can print money whenever they want, causing bubbles (remember 1997??) and bursting them (remember 2008) for their own profit.

I don't believe this is true, Jim.

The Federal Reserve was created by the Federal Reserve Act of 1913. The Board of Governors is appointed by the President. Their salaries are set by the federal government and the federal government receives the profit generated by the Federal Reserve System (minus a dividend that is paid to member banks).

[jIM_Ohio]

I don't believe this is true, Jim.

The Federal Reserve was created by the Federal Reserve Act of 1913. The Board of Governors is appointed by the President. Their salaries are set by the federal government and the federal government receives the profit generated by the Federal Reserve System (minus a dividend that is paid to member banks).

The Federal Reserve derives its authority from the Congress, which created the System in 1913 with the enactment of the Federal Reserve Act. ... Some observers mistakenly consider the Federal Reserve to be a private entity because the Reserve Banks are organized similarly to private corporations.

https://www.federalreserve.gov/about...rve-system.htm

[disneysteve]

The federal reserve is NOT federal. It is a group of privately owned banks
now these banks can print money whenever they want, causing bubbles (remember 1997??) and bursting them (remember 2008) for their own profit.

The Federal Reserve derives its authority from the Congress, which created the System in 1913 with the enactment of the Federal Reserve Act. ... Some observers mistakenly consider the Federal Reserve to be a private entity because the Reserve Banks are organized similarly to private corporations.

You seem to be contradicting yourself. First you said it isn't federal but rather a group of privately owned banks. Then you said people mistakenly consider it to be private.

[scfr]

Well it wouldn't make much sense if they were reversible. Maybe I'm missing your point here.

If I walk into a store and pay for my purchase with bitcoin, I shouldn't be able to walk out with the stuff and then reverse my transaction.

Sure it makes sense to have reversible payments. Would you order an expensive item on-line and pay by bitcoin?

Would you book your next Disneyworld VRBO at a place that required payment by bitcoin? Or would you use your credit card, so that you could dispute the charges if you showed up for the start of your vacation and the home you thought you were going to stay in was occupied by homeowners who like you were also victims of a scam and had been dealing with tourists showing up expecting to stay at their house for months?

Heck, even checks offer a very limited window of protection (the ability to stop payment if, for example, you buy a car, write a check, and it turns out to be a total lemon breaking down on the way home).

[disneysteve]

Sure it makes sense to have reversible payments. Would you order an expensive item on-line and pay by bitcoin?

Sorry. I wasn't thinking when I responded. No, that all makes sense. So with bitcoin there is no way to avoid getting scammed. That's certainly a huge reason to never use it for anything other than small purchases.

[rennigade]

I don't believe this is true, Jim.

The Federal Reserve was created by the Federal Reserve Act of 1913. The Board of Governors is appointed by the President. Their salaries are set by the federal government and the federal government receives the profit generated by the Federal Reserve System (minus a dividend that is paid to member banks).

Jim is correct on this one Steve. The federal reserve is not a federal agency. This shouldnt even be debatable as its not even a secret. Private sector corporations make up the federal reserve although im not sure if there is a real public list that says who makes this up and what portion they represent...the obvious ones you always see are jp morgan, BoA, Citigroup and some other power houses.

[disneysteve]

Jim is correct on this one Steve. The federal reserve is not a federal agency. This shouldnt even be debatable as its not even a secret. Private sector corporations make up the federal reserve although im not sure if there is a real public list that says who makes this up and what portion they represent...the obvious ones you always see are jp morgan, BoA, Citigroup and some other power houses.

It's really kind of a hybrid public-private endeavor. The Board of Governors IS a government agency. The member banks are private and hold "stock" in the Federal Reserve, but it isn't stock in the sense that it can be bought and sold or used as collateral for a loan. It's really more of a membership fee.

The Federal Reserve banks are not for profit. After expenses and paying dividends to member banks, all net proceeds must be returned to the US Treasury. In 2016, $92 Billion was paid to the Treasury by the Federal Reserve.

[Gailete]

And here is a cautionary tale about Bitcoins!:

https://www.msn.com/en-us/money/pers...cid=spartanntp

[james.hendrickson]

Bitcoin Down 40%

By way of a bit of follow up on this, bitcoin is down 40% to $10,000 in volatile trading.

From the CNBC:

* Bitcoin briefly plunges more than 40 percent from its all-time high reached Sunday, according to Coinbase.
* Trading on Coinbase was disabled for more than two hours in the middle of the day.
* CME's bitcoin futures expiring in January reached 'limit down,' off 20 percent.
* Stocks that have soared dramatically on speculation around their connection to bitcoin and its underlying blockchain technology also fall.

Linky

[Sam1000]

How bitcoins work?

Bitcoins are completely virtual coins designed to be 'self-contained' for their value, with no need for banks to move and store the money.

Once you own bitcoins, they behave like physical gold coins: they possess value and trade just as if they were nuggets of gold in your pocket. You can use your bitcoins to purchase goods and services online, or you can tuck them away and hope that their value increases over the years.

Bitcoins are traded from one personal 'wallet' to another.

A wallet is a small personal database that you store on your computer drive, on your smartphone, on your tablet, or somewhere in the cloud.

For all intents, bitcoins are forgery-resistant. It is so computationally-intensive to create a bitcoin, it isn't financially worth it for counterfeiters to manipulate the system.

[Spiffster]

So some guy named Roger Ver says Bitcoin Cash is going to replace Bitcoin and everyone sells. LOL. I realize the price of Bitcoin may seem based in fantasy land but a sell off due to some guy's revelation is not a rational sell off. Although I guess I should thank this guy because I was able to buy more at WAY below last weeks prices.

Probably a good time to buy if your were waiting to get in. The sell off was a joke. You want to talk about problems with Bitcoin? Lets talk regulation... Lets talk about a million other things... But "Bitcoin Jesus" saying Bitcoin Cash is replacing Bitcoin. LOL... ridiculous.

This is not Ver's first attempt to replace Bitcoin... probably wont be the last either. As I always say, be very careful with any crypto investments.

[Ashleylarson]

Great Thread.