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Trying Out Bitcoin

Today I decided to give Bitcoin a try – thought I would share some initial thoughts from a newbie perspective. Many of my readers are probably ahead of me on this so can skip reading, but note that you can now donate me some Bitcoins to play with… please. :)

I’ve read some of the papers on Bitcoin but haven’t actually tried it til now. I’m not a wealthy person by any means so I don’t play with money much except for essentials, but I figured it was time I tried it. I’m glad I did – it’s interesting to see how it’s handled and some of the services springing up around it.

If you’ve never tried it, I strongly recommend freeing up a little cash and giving it a try. If nothing else, it’s cool to learn about, and it’s cool to handle a crypto-currency first-hand, a currency that isn’t centrally controlled. You really do ‘own’ it. You can be like me and not take it too seriously. Would I invest huge amounts in it even if I had it? Probably not. While the concepts are sound, it’s still experimental in the real world, and the central banking thugs will probably find ways to attack it, from theft to attempts at regulation. But I think it’s great to get to know it in a hands-on way.

The recent MtGox theft seems to have frightened some people, but I say “duh!” To me the whole point of a crypto-currency is distribution. Hold it in your own hands (PC). If you keep your coins in someone else’s possession, essentially a bank, you’d better hope they have good vaults and aren’t thieves, and to me that defeats the purpose. From what little I know of it, MtGox was a good lesson on how not to use crypto-currency. And I think that Bitcoin survived that heist says a lot. It was basically a bank robbery – shows it has real value. :)

So I discovered a few services. Coinbase is sort of like Paypal for US customers, you can buy Bitcoins by transferring US dollars from a bank account, and can receive Bitcoins from a Donate button like the one I now have here on the blog, and can then convert them back to dollars in your bank account. No fees involved, and some of the people from Paypal seem to be involved. Reviews are mostly positive. (There is a lot of FUD on Bitcoin in general, so read deeply – TPTB don’t want you using something they can’t control.)

To me though, it’s less interesting to see everything in terms of exchange rates, and just work with Bitcoins themselves as a means of exchange. I just need to get some to try it out a bit, so currency conversion is a starting point. I think the whole racket of trying to make money by selling high and buying low is useless, as it is in general. Try providing real services instead of just milking the system. Yet given the number of people trying to play it like a scam, Bitcoin has held up well. Regardless of exchange rates, 1 BTC == 1 BTC, and that should remain true for quite some time. I think it’s cool to own a few.

I’m also trying out the Electrum python-based client for Linux, right in Debian’s repos. Looks pretty well designed, and people seem pretty well-informed in the community. But I don’t have any BTC yet so it’s kind of boring. MultiBit is popular too, but Java is a turn-off for me. The advantage to using your own client is that it’s like holding cash in your wallet – you’re not going through a bank or central service. It’s as secure as your computer in general, which is good enough for something at least. No currency is guaranteed – it’s only money, people. Use it to exchange some stuff, but don’t obsess over it in any form. Keep it real.

There’s also blockchain.info, where you can keep a wallet online and make transactions for free, encrypted with a password that allegedly they can’t access. But the whole javascript interface doesn’t scream security to me. I think your own client is better, and that it’s better for the currency itself to keep it all non-centralized/distributed. That’s the real power and stability of crypto-currency – give up the centralized dependency habits. But blockchain.info is worth looking over and maybe trying too – they do make an effort to make it non-centralized, and it’s free.

There are other digital currencies, but from what I understand not many are like Bitcoin – they are centrally controlled and can be printed at will, etc. Bitcoin is based on some sound mathematics. Even if it doesn’t survive, I think it’s worth being part of, at least in a small way, even as a global experiment that may evolve into its successor. It has an exciting feel to it and people seem to be enjoying learning about its ups and downs.

For those who don’t know, much human suffering has been created by centralized banking – the banksters who rob and control whole nations. I think the concepts of crypto-currency deserve participation for what they can become. Actually quite a few online stores and brick-and-mortar stores are accepting Bitcoin now. The merchant services are becoming streamlined. I think the services are worth exploring and using in limited ways, but learning how to use a client like Electrum and maintaining your own wallet directly is worth learning too – it’s easy.

So I hope you give Bitcoin a try with me for the experience itself, and don’t believe all the FUD – the Bitcoin FAQ is a good read. It’s actually a pretty cool thing. No, it won’t make you rich, and yes, it’s somewhat unstable in terms of exchange rates. But it is what it is, and it seems to have a solid start. I’ll let you know how I’m doing with it, and feel free to share your experiences.

April 19, 2014 - Posted by | Tips

9 Comments

  1. try out dogecoin. it has a very welcoming community over on reddit and dogecoins a relatively easy to get. i’d donate you some.

    to the moon :)

    cheers

    Comment by Anonymous | April 21, 2014

    • Thanks I’ve seen some positive mention of dogecoins. I haven’t looked into all the details but may give it a try too. From what I’ve seen, I don’t see as much wisdom in its design. It seems more centrally controlled, and is prone to inflation. Inflation can be good though in terms of keeping circulation available. One weakness I see in Bitcoin is that big banks could effectively take most of it out of circulation (and maybe are?), especially if it’s used for daily transactions. But allowing people who control it to print it at will can be problematic too, unless that control is well distributed (I notice the dogecoin ‘owner’ decided to make it continue to inflate, which seems to mean central control). I’m not sure dogecoin will have the life expectancy of Bitcoin, despite the Ponzi-like bubble that may be seen in early stages. But I’d like to read up on it more – I’m sure all of this has been discussed in detail. :)

      Comment by IgnorantGuru | April 22, 2014

      • I really like the lightheartedly approach of Dogecoin. That is why i chose Dogecoin to learn about the technical details of crypto currencies. Afaik it works the same as Bitcoin (except for proof of work and blockreward).

        In theory it cannot be controlled by a single entity. The devs (or anybody else) can only fork the blockchain, but the community has to adopt the changes for them to take effect. As the community grows and more clients emerge it gets harder and harder to fork the blockchain.

        I’m not an economist and do not really know very much about economy. I think (moderate) inflation is a good thing and needed for a healthy economic cycle. Also there should always be enough currency available for trading. Dogecoin’s 10k fixed blockreward ensures that there will always be plenty available. Bitcoins will become fewer and fewer because wallets get lost.

        Dogecoin is still young. Let’s see how it developes.

        Comment by Anonymous | April 22, 2014

  2. I think Bitcoin is a PsyOp/scam to wean people from real cash (especially metallic currency). I don’t believe the story of this anonymous inventor trying to save the world from the big bad banks. It’s basically the wet dream of any socialist regime: Every transaction is public, ready to be taxed or seized otherwise.

    This thing is also flawed technically in many ways. Transaction processing is slow (takes minutes), the blockchain always gets larger and harder to manage. And of course the inventor generated a lot of bitcoins for himself before releasing the thing into the public.

    So instead of depending on banks, you depend on the “network” acknowledging your transfers. Without it, your PC “wallet” is completely worthless. Everyone who controls at least 51 percent of the “network”, can usurp everything. This is a huge counterparty risk.

    Real money doesn’t have a counterparty (risk), but inherent value instead, it is anonymous, can be hidden from anyone and used everywhere without the Internet. Of course, one should not confuse Fed paper money with real money. :-)

    Comment by Anonymous | April 21, 2014

    • No man – banksters would rather just chip everyone, like cattle!

      Comment by Jan | April 21, 2014

    • I’m not fully qualified to debate this, but I’ll be a good sport and respond from what I know/believe on this…

      > So instead of depending on banks, you depend on the “network” acknowledging your transfers. Without it, your PC “wallet” is completely worthless. Everyone who controls at least 51 percent of the “network”, can usurp everything. This is a huge counterparty risk.

      Any system must have a level of control. The advantage to this system is that if there is widespread partiticipation globally, it is very difficult to get 51% control. Even if one party did, any changes they instituted would likely be rejected by the true majority using the currency. The bank system you refer to is controlled by oligarchy, wealth-in-place. It is a system of enslavement, basically. And it doesn’t take 51%. They can (and do) push the button anytime to collapse a currency, etc. Ask people in South America that saw over 10,000% inflation. Your money is prone to this too – study history.

      > Real money doesn’t have a counterparty (risk), but inherent value instead, it is anonymous, can be hidden from anyone and used everywhere without the Internet. Of course, one should not confuse Fed paper money with real money. :-)

      Precious metals and other commodities are subject to brute force. People with guns (war, legal action, etc) can simply take them. Further, most such metals are largely owned already, creating the present imbalance in wealth, where you have a small percentage of the world’s people controlling everyone’s resources through them, and from isolated parts of the world. They’re not going to give up most of it to circulate among the people – they just throw enough coins to the peasants to keep them working and fighting for them. They hold most of the coins, and can thus exploit the system as they please.

      The power of a crypto-currency, at least in theory and thus far in practice, is that it is less easy to brute force it. Rather than being based on materials that can be stolen, it is based on mathematics that can stand up to world powers. Cryptography in general is like this – it is a balancer of power because you can use a PC to create a strongbox that even a supercomputer cannot open. Normal money doesn’t have this property.

      You are basically defending the status quo, so I suspect you are one of the people who currently believes you benefit from it. Your vision may lack maturity. Yours may well be the next group sentenced to poverty at the whim of oligarchs, at which time your views may change. You probably like metals because you own them and think this gives you an advantage. Me, I don’t want an advantage over others, and I don’t want anyone to have such an advantage. I want to see resources distributed equitably. I don’t think your money has done that at all. We have different motives – I’m not trying to get rich and exploit others. Most people in the world have never had the opportunity to touch the precious metals you’re speaking of.

      > Every transaction is public, ready to be taxed or seized otherwise.

      I actually believe in transparency. I think such a system is the only one that can create fairness. You’re right that in our current world this can lead to unfair treatment as well. Money can’t solve every problem by itself. Yet imagine if politicians and corporations were forced to use transparent accounting as well. I think they would be changing their behavior fast, or would lose support. Much that is hidden in our world is corruption.

      As for it being ‘virtual’ vs real, I see all money as virtual. It is representative – a system of token to represent exchange. (Try eating your metal coins.) If you’re going to use such a system, make it a strong, distributed one that can’t be hacked. Your system has been and is hacked, pwned. Right now you think this is working for you, but you’re deceived.

      Bitcoin is not a perfect technology, but it’s a start, and it is founded on some strong principles. It’s a tool. It’s not going to create world peace and abundance by itself, but if people have a genuine will to create that world, I think tools like Bitcoin can play an important role in realizing that vision. That’s the difference.

      Comment by IgnorantGuru | April 22, 2014

  3. One further thought I’ve had on the use of Bitcoin… I wonder how it could be/is being used to counteract inflation of other currencies. One thing that does people in, is that any money they hold can be devalued by large banks/interests, even gold, etc., on demand. The classic picture is of Germans in WWII pushing cartfuls of cash to the grocery story to buy just a bit of food, or people jumping to their deaths in the US when the stock market crashed (was ‘crashed’). And other countries have seen their currency hit over 10,000% inflation.

    Bitcoin has weaknesses when used for daily spending – it’s slower for one thing. It also becomes vulnerable to banks buying it up this way and giving people cash for it (which they have an unlimited, printable supply of). I think that may explain all these startups suddenly interested in Bitcoin – beware. Perhaps it’s best to use local currencies for daily spending. Yet if people hold Bitcoins as a kind of savings against inflation, this could be a powerful practice. For example, if the US dollar collapses (as many people are afraid of now), the value of a Bitcoin in USD would go up tremendously. Same for any other inflation. It’s truly a global currency, or it seems it can be.

    Anyway, just a thought. I’ve always found it strange that countries go through upheaval just because paper or metal loses value. Did the sun stop shining? Did the rain stop? I could see these things causing real problems (in which case it’s good to have friendly neighbors in other parts of the world), but when it comes to money alone crashing society, I think that is a symptom that people are artificially controlled, and not to our benefit.

    Comment by IgnorantGuru | April 22, 2014

  4. Somewhat related, a former Oracle developer and researcher into financial markets reports: The Dow Jones Index is the Greatest of All Ponzi Schemes

    Personally I have never understood how people expend so much energy discussing economic forecasts and such, when clearly it’s a rigged, arbitrarily influenced system. You can’t predict something that is manipulated, unless you merely know the designs and plans of the manipulators. People are finally figuring this out. Here’s my economic prediction: You’re pwned!

    Comment by IgnorantGuru | April 22, 2014

  5. This new article: Bitcoin for activists — what you need to know was an interesting read, mostly for how it describes a changing role these technologies are playing. It also brings up machine-readable/executable crypto-contracts in addition to crypto-currencies, replacing human bureaucrats in contract interpretation and enforcement. Not sure I understand that but will read up on it.

    Comment by IgnorantGuru | April 22, 2014


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