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Iago

The devastating bit coin bubble

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Rick

2. I am not sure what to make of it. Seems like 2 hacks that amount to hundreds of thousands of dollars would have been the end of it. :S



Several hundred "MILLION". Mt Gox lost 460 million.

looks like Quade beat me to the post
I promise not to TP Davis under canopy.. I promise not to TP Davis under canopy.. eat sushi, get smoochieTTK#1

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The largest thing that BitCoin has going for it is the anonymity that it can offer. When Silk Road was online it was the preferred method of payment since anyone could put money in without it being linked to a bank account, transfer it a dozen times in various transactions everywhere and get it to someone selling your drug of choice and never had to do any direct money laundering yourself. The ability to transfer money from one person to another with out having any government see it from a tax standpoint is huge. Its also why most countries are now crafting laws that are going after this as another tax basis that has to be reported and will provide an avenue for their treasuries to start investigating it at a deep level looking for tax fraud and money laundering.

I don't see it as anything more than a lot of people looking to get around tax laws and looking for another way to launder money in most cases. As the block chain gets harder to solve for in a few months the value of solving each block gets halved again so all the fancy Butterfly Labs ASCI miners will have to work twice as long to solve the same block so things like electricity costs, purchase cost and actual fixed cost start to really add up so unless Moore's law kicks in again the number of blocks getting solved goes down and inflation kicks in again.
Yesterday is history
And tomorrow is a mystery

Parachutemanuals.com

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it is also not insured. if someone steals your money from a bank you are insured by FDIC. more realistically the bank goes under but if Bonnie and Clyde 2.0 clean out the bank you are safe. Same with a brokerage account with SIPC.

i am willing to speculate on investments but i would like to think i can only lose my money due to my own stupidity. not because someone can literally steal it from me. thats not a small thing. id say that adds an entire new level of speculation to the equation.
"The point is, I'm weird, but I never felt weird."
John Frusciante

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PhreeZone

The ability to transfer money from one person to another with out having any government see it from a tax standpoint is huge. Its also why most countries are now crafting laws that are going after this as another tax basis that has to be reported and will provide an avenue for their treasuries to start investigating it at a deep level looking for tax fraud and money laundering.



Those tax laws always applied; these efforts are just to remove any vagueness factor and claims of ignorance. So long as people have to convert to "real money" to take their gains, it will be easy to get caught and I think we'll see it in the next year.

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Rick

for a currency that's big selling point is security it does not seem very secure.



It's secure for the recipient (thieves)! No way to take back the money once transferred. But there's always an audit trail. Seems like the MtGox theft should be like a stolen Picasso - you can hide it, but how do you use it?

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Since all transactions are broadcast to the entire community its possible to see who how how much in their wallet at any given time:

http://bitcoinrichlist.com/top100

The issue is when you steal a couple of hundred coins how do you ditch them if there is an audit trail showing where every block was and where it came from?

For example #81-112 and #190-230 are all suspected to be the same party that is trying to break their stash of coins into smaller groups. At their current value the owner is looking at having $267,602,000 worth of Bitcoin. Basically this person is suspected of possessing 400,000 out of the 12,475,000 bitcoins (3.2%) that will ever be.

Issue is no matter how he tries to move it or further split it the transaction is there in the clear for it to be tracked and validated. If he tried to convert it to cash he would have to either pass the private key to the wallet over to the new owner or would need to move the bitcoin to a market to convert it and then it becomes something that could be tracked, taxed or seized.
Yesterday is history
And tomorrow is a mystery

Parachutemanuals.com

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What stops this person from creating 2nd, 3rd, 4th ... wallets, each with their own anonymity, feeding them portions of the bitcoins, then on and on hundreds upon hundreds of times all under automation.

After a lot of permutations of this, how would it be possible for any law enforcement agency to know for a fact this or that bit coin was the result of the theft of MtGox?

I realize you might believe you've just explained it, but you're only talking about a couple of wallets. To me the issue is this appears as if it can all be automated and done hundreds upon hundreds of times. This is significantly different than say, shifting money from one brick and mortar bank to another.
quade -
The World's Most Boring Skydiver

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Not really since each block being solved can have the entire history of it being documented. Think of it as every time a dollar passed through a cash register you had to record the serial number of the dollar bill and then published a list of all the serial numbers as well as who paid it to you. Even if you try to split the dollar into smaller ones hundreds of times I still have the audit records that show that the dollar went from wallet to wallet and when the transaction occurred.

Basics ignoring some of the tech details

I pay Bob's Drugs and Shrooms wallet (1zxydrug) 1 BTC (btcbtcbtc) with a transaction number of abc123. That Transaction then gets published for all wallets to now be aware that the 1 BTC (btcbtcbtc) is now in a wallet (1zyxdrug) and it can only exist in a single wallet at that time. If I try to spend that BTC again the network identifies that the BTC does not belong in the spending wallet and tells the client to reject it since its an invalid transaction. Issue is that it could take 10-40 minutes for the confirmation to be returned to the client.

Bob moves that 1 BTC via 4 .25 BTC transactions to different wallets and they get assigned transaction numbers that are published as well as the unique values for those new mini bitcoins. Everyone gets notified of all the transactions and where the money moved to. Any further action in those wallets gets logged and published also so all you have to do is pull the logs and see when money came in and when it left and where did it go to.

You can't track the original BTC since its been split and is hash value basically says that it does not exist anymore but you can follow the audit trail and show I transferred money to Bob where it then shows it dies due to getting split, Bob then sent money to a few places, those places then sent it on and eventually it got sent to some place like MtGox where they converted it into US $ (minus their fees).
Yesterday is history
And tomorrow is a mystery

Parachutemanuals.com

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PhreeZone


Issue is no matter how he tries to move it or further split it the transaction is there in the clear for it to be tracked and validated. If he tried to convert it to cash he would have to either pass the private key to the wallet over to the new owner or would need to move the bitcoin to a market to convert it and then it becomes something that could be tracked, taxed or seized.



This is the problem I see. Mt Gox was 7% of the float, the biggest (I think) theft. Seems like there are two types of bitcoins - ones on a stolen history, and the rest. How much is a hot bitcoin worth? Full value, nothing, or somewhere in between?

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Quote

for a currency that's big selling point is security it does not seem very secure. But I notice the value has been trending up the past week or 2. I am not sure what to make of it. Seems like 2 hacks that amount to hundreds of thousands of dollars would have been the end of it.



You're conflating the security of a random website hacked together by people that don't know what they're doing and the bitcoin protocol itself. It's like saying the US Dollar is not secure because a bank with an unlocked vault and no guards gets robbed.

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The largest thing that BitCoin has going for it is the anonymity that it can offer.



I disagree that it's anonymous at all, or that anonymity is the best it offers. You're browser and internet usage isn't anonymous even in incognito mode. Using a "fingerprint" of ip, browser version, OS version, and a bunch of other things they can reliably figure out who you are and most ad networks have that information and by proxy so does the NSA :) That information coupled with the IP address listed in the transaction gives it the most traceable and public currency with which you could come up.

The largest thing it has going for it is the ability to move money across borders frictionless. Sending $100,000,000 to Dubai for a construction project is just as easy and low fee as sending $1 to Africa. Governments will always be able to tax cars, businesses, and property.

I see it as enabling small business ideas quicker without the red tape. You can get away with hiring people or doing business where the government doesn't want you to as long as you're small. Decentralized taxi services, raw milk at farmers markets could all take bitcoin without worrying about their accounts being frozen or even if the bank will give them an account. When they are big enough to lobby city hall they can become legitimate.

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Not really since each block being solved can have the entire history of it being documented



This is done through a Merkel tree and isn't the whole history in each block: http://en.wikipedia.org/wiki/Merkle_tree Every bitcoin client has the whole blockchain and can derive the information from it, which is perhaps what you meant?

The Hash of a block is: SHA256(Random Number + Block Data + Previous Block SHA256). If any block changes in the chain then all the SHAs for blocks that come after would need to be recomputed. The computation is the proof of work.

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I've only been in crypto a few months now, and my investment is one I can afford to lose. But this thread, hoo boy... a bit of an eye-opener... I would KILL to have taken Bitcoin seriously 10 years ago and put some cash into it.
You are playing chicken with a planet - you can't dodge and planets don't blink. Act accordingly.

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base698

$7300 a Bitcoin = a return of 144x return since the thread was started when Bitcoin we're $50 each.

Bitcoin futures upcoming:


http://www.cmegroup.com/media-room/press-releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html/



And yet, when this thread died out (March 2013), it had lost over 50% from it's 2013 peak, and it dropped another 50% thru March 2015, bottoming out in the 200s. And then it meandered.

It finally got back up over $1000 in January this year, in large part to speculation that the US would approve the Winkleloss's trading instrument. The excitement was back, as were the touts. Then lost 30% in a single week. And then came the tear.

For reasons I cannot fathom, Japanese investors became obsessed in the spring, and represent more than 50% of the trading volume for most of the time since. It's a variation on a class short squeeze - lot of people and low liquidity. It's again not based on any sense of value. It reminds me of the way they bought California real estate in the 80s and 90s, with horrible returns. How can a country of investors collectively be so stupid?

As the thread died in 2014, Mt Gox was a spectacular debacle with heavy losses for BTC investors. Fast forward to now - Coinbase is one of the most popular vehicles to hold BTCs and wallet theft remains a common event (See recent Fortune article), even for experienced crypto people. By design, these people are SOL.

I saw a very interesting segment earlier in the year where a person in NYC went a period of time (day or days) only transacting in BTCs. She was able to do a number of commerce events, including eating. However, the spread was atrocious - often paying 30 or 40% more than she would have with dollars.

It also appears that Coinbase will be cooperating with the IRS on trading records. Every time you perform a transaction (like buy lunch) with BTCs, it's viewed no differently than a sale of stock. You need to report the cost basis, the result, and pay taxes accordingly. Fail to do so...serious consequences.

It has been proposed that there should be a floor on transaction amount - e.g. events of less than $200 should not require reporting. That seems quite reasonable, but it is not a reality at present. So long as this remains true, commerce in the US is likely to remain limited, and will decline to zero if the IRS does flex their muscle. I guess that depends on what Trump's buddies at Goldman Sach would like. So we're back to speculative holding of coins.

I think I'd congratulate anyone who bought coins in the hundreds...and encourage you to take (at least most of) those profits (and report them). Maybe time to look at the actual tech and put money there. Ripple in particular seems interesting - built around financial transactions and has been adopted by quite a few banking orgs. Is coin agnostic.

The entire crypto coin realm is up to a couple hundred billion dollars. Still tiny when Vanguard alone managed nearly 5T, but much more substantial than what we talked about 3 years ago. It can keep churning for a while, just like the Nasdaq did in 2000. But still - has to give people pause when every month someone creates yet another set of coins - how different is it really from printing your own monopoly bucks? How is this not the definition of hyperinflation? Don't bet more than you're willing and able to lose.

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