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Week 5 [13-19.11.17] How does bitcoin work?

Bitcoin, does that name sound familiar to you? It might due to recent events. On the 9th of November, 1 bitcoin was worth almost 7900$. This might not be shocking on a first look, but comparing to 1000$, which bitcoin was worth on the beginning of 2017, it is quite an achievement. 790% profit return in a year sounds brilliant, but how about that. If you spend 1000$ on bitcoin in 2010, you would now have about 333k bitcoins, which is about 2,63mld $!.  So what is bitcoin and how does it works?



Questions:
Do you own any cryptocurrency?
Do you think bitcoin is a bubble like famous tulip mania in 17th century?
Do you think in few years we will use bitcoin rather than dollar or euro in daily activities?

Comments

Unknown said…
I do not own any cryptocurrency. This topic isn’t something new for me and I’ve heard about it few times. Honestly in my opinion things like bitcoin are dangerous because. I agree, you can earn a lot of money but the risk is also great and it grows all the time because everyone want to earn more and more. I also think that earning money in normal ways like hard working builds persons priorities pyramid and character. You can try to earn from bitcoin but I think that major income should be from normal work, it is simply safer. I don’t think that bitcoin will replace normal currencies.
If you ask me about cryptocurrency today,i would say without any hesitation that i know everything about it. Yesterday we had a discussion about bitcoin and cryptocurrency, how it works, why you need to buy it,why not and etc. And we get 2 points of views.
The first one is about bitcoins as recognized currency in China. All were agreed that it is a strong PR run from people who created bitcoin. If you want that country such as China recognize some kind of unknown currency, what a powerful source it must be.
And the second thing that we were agreed with that it is a ponzi scheme. What would be in the end,when all the bitcoins were sold? Nothing. Of course, you can earn money now, maybe, without any risk taken.
I bought 2 years ago some bitcoins.
I hope and believe that in one day will everthing change, there won't be a competition between countries(between dollars and euros) and we will enjoy one national currency, but certainly, not bitcoin. It can be called xCOIN or something like that
Bitcoins and artificial intelligence are one of the most trendy things in IT right know. What they have in common? A lot of people who do not have an idea what they are talking about are fans of it. I personally do not own any cryptocurrency. Right now, bitcoins are not very popular and sometimes it's real challenge to buy something using them. For now, i do not see a chance that bitcoins would replace dollars/euros etc.
To be fair it's hard to say what will happened to bitcoins. None of us here is a some kind of expert in that field, so it's hard to get some trusted data. IMO, everything may happen do bitcoin, but my guess it's that will just be as it is and it's value will decrease.
Maciej Główka said…
Many people forget about it, but buying cryptocurrency is like playing in any other currency market. You shouldn't place money you can't afford to lose. I believe we are in the beginning of revolution, just like beginning of the internet in the beginning of the century and that's why it is very good opportunity to earn some extra money. All in all, I agree with you, that most of your income should be earned from safer places.
Maciej Główka said…
If you've kept those bitcoins until now, lucky you ;) I agree, that currently technology behind bitcoin isn't ready to replace normal currencies like dollars or euros. However, with all that hype which is now, technology will speed up and in few years cryptocurrency will be something normal for everyone.
Maciej Główka said…
Yeah, currently bitcoin sometimes suffer from enormous amount of transactions and it slows really down. I think even experts in cryptocurrency don't know what will really happen in next few years. Bitcoin might go up to 50000$ or 0$. As a cryptocurrency holder, I believe it will go up ;)
I do not own any cryptocurrency. It is a pity. If I would only knew, when it was easier to mine it, that it value will be so high...
It is hard to foretell what will happen with bitcoin. It was mostly used in darknet to avoid banks, but now it is treated more like gold than a currency.
Unknown said…
Top 3 cryptocurrency it's Bitcoin, Ethereum and Dash.
I had watched quite a few videos and read multiple articles on Bitcoin but never quite understood how it works. This video is the first one that made some sense.
Today bitcoin cost 7740$ ... when maybe 3 month ago was 3000$ .
I think yes, in the future we will be using crypto currency.
Foodocado said…
I do own cryptocurrencies. I only invest money that I can afford to lose. Many people often forget about that. I believe that with a good research and a lot of time spend on investigating the market it might be a really profitable.

Bitcoin for sure is a bubble, but it will be still growing for many years. Nowadays there is a hype on cryptocurrencies.

There is a project called "TenX" which allows you to pay in 200 countries by using cryptocurrency, but I don't think that people will do it. That's because of fluctuations in exchange rates. It's more likely people will start using them about 5 years from now.
Unknown said…
I don't own any cryptocurrency, as i don't feel the need to have it. Simple right? i do believe though that it's something similar to the tulip mania from 17th century. While the hype about bitcoin and other cryptocurrencies is rising i don't believe that we will be using them widely.
I don't have any criptocurrency and when I look at the value of bitcoin I'm sad about it.
It is really hard to predict the future of bitcoin. When I first heard about it a few years ago I though about it as a currency for some dirty businesses like drug dealing and then I couldn't even think that something like this can be used outside darknet and be recognized as some kind of good investment and regular currency.
Nowadays bitcoin has great value but many people says that it is a bubble and it will break sooner or later but I'm not sure if this opinion is based on some math, statistic and ecomonic knowledge or they just jelaous and they hope that bitcoin will fall.
I don't think that cryptocurrencies will replace regular currencies. People want to feel safe with their money and coutries are creating those feeling of safety. Something like this is really difficult for cryptocurrencies because people have a problem with finding the origin of the value of CC. CC looks like a wild element (look at the value changes of Bitcoin. BC is changing it value so fast).
Unknown said…
I think that he reason it's so hard for most people to understand Bitcoin is that most people don't really understand how money works. Money is an accounting system used to facilitate the exchange of wealth. Many people are put off by the fact that Bitcoins are 'just data'. But that's what ALL money is! !
In fact Bitcoin is the first currency in the world that is both decentralized and digital. It is more more private and transactionally efficient than "modern" digital banking. This is why people are excited about bitcoin, it has the potential to be completely revolutionize money.
I don't own any cryptocurrency nor do I plan to acquire any in the future. Of course it's a bubble, just like everything else in our late stage capitalism economy. Ever since we stopped using gold as standard for our currencies we entered the period of decline, where distribution of wealth is becoming more and more unequal and everything is debt driven. We live in a big Ponzi scheme, which is not possible to thrive much longer, simply because there are limits to growth. Will digital currencies replace physical ones? There is a possibility, but I don't think it will take place. When the energy crisis arise, it won't be a feasible way of paying for things considering that one bitcoin transaction uses as much energy as an average American household in a week.
Alicja said…
Bitcoin is a weird and fascinating phenomena. Decentralized, non-regulated and private digital payment system that bypasses financial institutions.
I'm really curious if they continue to gain even more influence as they are transforming from an obscure dark web marketplace payment system to another modern way of payments. It is amazing how Bitcoin has spread. Today there are Bitcoin ATMs and the investment funds who are considering whether it would be worth to invest on Bitcoin market (still not, but the fact they even talk about it shows Bitcoin's growing importance). Bitcoins are still too volatile and have no stable ecosystem behind them to be worth the risk for the investment funds. There is also an issue with their privacy. I heard that Monero is gaining traction right now, because it guarantees better privacy than Bitcoin. Bitcoin has also a problem with FBI which has managed to penetrate Bitcoin transactions pretty effectively. They took down AlphaBay and Hansa. I am anticipating more troubles for Bitcoin from the USA, especially if it happens to be a used for funding terrorist activities.
No, unfortunately i do not own any cryptocurrency. But, If I could change the past, I would buy a lot of bitcoins when they were at 1 USD per unit and sell them now when they're at 8000 USD per unit! Looking at the fact how quickly bitcoins bitcoins have grown over the years i think that yes, it will burst like a bubble. No, I don't think that bitcoin or any cryptocurrency will become more popular than traditional currencies, at least not within a few years.
Nope, I never had any of cryptocurrency. I don't think I ever will. Im totally not into it. First I don't think bitcoin will grow even more in value especially with so many miners in there. Second I'm not investing in any risky way of income.
About the last question. Couple years? No way, there are huge problems with creating one universal currency among the world so how cryptocurrency can replace it. And you will still need some pennies to pay for parking or flower that some grandma sales on street. There are many others problems with it even bigger than those I have mentioned.
Unknown said…
This comment has been removed by the author.
Unknown said…
I don't have any cryptocurrency. It's just because I don't trust "digital money".
I'm really suspicious when it comes to the Bitcoin. Creator is unknown, bitcoin online wallets aren't safe at all, keeping wallet on your PC/drive isn't comfortable and safe as well. I don't want to say it's a bubble or not but I wouldn't advice anyone to invest in cryptocurrencies.
I don't think that we will use Bitcoin because it's not profitable for banks and governments. Also it takes too much time to process the transaction. Maybe it's going to change in a few years. However I like the blockchain technology and I'm curious how Russian CryptoRuble will work in real life.
Marcin Górski said…
I do not own any cryptocurrency and I think that is not for me. Secondly, I've never read about tulip mania but I don't want to take a part in bitcoin project. In my opinion everybody has own brain and should think about his money.
About the last question. I think dollar and euro has good position and bitcoin can't be opposition for them in few years. Bitcoin need a lot of time for making his position on currency market.
Jakub Lisicki said…
I don't own any cryptocurrency right now and I'm not really sure I would need that anytime soon. It's really unstable and no one knows what future lays ahead of it. It may become stable one day or may simply cease to exist.
I don't think that we would use it in our everyday lives because it's too difficult to track, not profitable for governments and mostly used to pay for the things we generally don't want anyone to know that we paid for. The really great argument to use it for us, the users, is that payments in bitcoins doesn't involve any taxes.
While buying into crypto-currencies we have to remember one thing: that they are not stable and vulnerable. Since to gather any funds in those we have to use e-wallets which as any online service are vulnerable to hacks,attacks and usual scams. Another issue with them is that everybody who owns them has to treat them like gambling, everything u think u own can dissapear in minutes if the value of this particular currency crashes. I do not own crypto-currency anymore i decided to sell all i had when i thought the so called "bauble" was big enough to soon become unstable and burst leaving me with nothing. Bitcoin is no longer a bauble but many new currencies are. There is a long road for us to switch to crypto-currencies a a widely accepted payment method in the world, and even more so in Poland.
Filip Sawicki said…
I unfortunately do not own any cryptocurrency. However, I had an opportunity 3 years ago to buy large number of bitcoins but decided not to do so. As you already know this was quite a big mistake, I don’t even want to think about the opportunity I have missed.
I don’ think that bitcoin will cease to exist in the future, but rather its value won’t grow as much as it used to. Also, bitcoin won’t replace any national currency, because there is no sensible reason for people to use it in typical situations. I guess it will be only used if there is a low trust between two parties.
Vladlen Kyselov said…
In my opinion, bitcoin will never be used as the main currency, and it will even disintegrate sooner and will not be worth much after a while, which is exactly difficult for me to say, because I am not interested in the topic of crypto currency despite its popularity today. Maybe I'm wrong, but it seems to me that in 5 years bitcoin will already lose its popularity and, accordingly, the cost in the market and after a certain time after that the cost will only decrease.
Maciej Główka said…
I think you are not the only one who regret not buying bitcoins few years ago ;)
Maciej Główka said…
I agree with you first two top cryptocurrencies. In my opinion it is really hard to tell which crypto is in third place. Some say Dash, others say Ripple or Litecoin. Third place is really dynamic in cryptocurrencies.
Maciej Główka said…
I've never heard of TenX project, sounds really interesting. I agree with you, that because of big fluctuations it is quite hard to use crypto as real currency. I hope that in few years it will calm down.
Maciej Główka said…
Simple as it can be. No one knows what will happen in next few years with cryptocurrency market. However, you can now use bitcoin and pay with it in many places and I think the amount of such places will increase in a future. Maybe bitcoin won't replace dollars or euros, but I think it will treated like normal currency in few years.
Maciej Główka said…
Growth of bitcoin is unprecedented. Maybe that's why people believe it is a big bubble that's going to explode. To be honest, during last few months bitcoin had some corrections. When China banned bitcoin, value dropped about 20-30%. Few days later, it came back to value before ban. I think that bubble don't behave like that.
Maciej Główka said…
I 100% agree with you. Very good point about what money really is.
Maciej Główka said…
Quite pessimistic point of view. I agree with you, that amount of energy needed for bitcoin transaction is enormous. This is a drawback. I hope that it will be reduced or there will be good ways to reuse energy from calculating bitcoin transaction.
Maciej Główka said…
I agree with you. With increasing bitcoin popularity, more and more countries will try to put some regulations on it. China already banned bitcoin, Russia starts to talk about cryptocurrency regulations. I hope that bitcoin will stay decentralized and non-regulated currency.
Maciej Główka said…
I think many people would like to go back in time and buy a lot of bitcoins ;) We would be sitting right now on some tropical island with millions in accounts...
Maciej Główka said…
I think that paying with cryptocurrency in day activities would be even easier than real money. All you would need for that is an app in your phone with QR code which parking machine or cashier would scan to get money from you. This scenario is showed in latest episodes of Mr. Robot.
Maciej Główka said…
Maybe we should use currency which is profitable for us, not banks ;) I agree with you, that investing in bitcoin now is very risky. Increasing transaction's speed is the biggest problem bitcoin must face in near future.
Not yet. We all have to consider why would we need this before we will buy some. I was reading an interesting topic couple weeks ago and there they texting smth like "There are lots of ways to change antique money on the black market - you can launder it, go to some underground collector, or use bitcoin." But otherwise, the bitcoin market fluctuates so dramatically that this many bitcoins could very easily be worth over a million dollars in the very near future.
Unknown said…
There is a sad story behind bitcoin and me. I have had around 10 bitcoin few years ago when it was worth almost nothing(I belive that I bought one for around 50 zloty.) I invested because I read some opinions that it is the future and I wanted to put my money to good use(I was too young to buy stock etc.) Why is it a sad story? Because the price didn't rise as much as I wanted, I have spent it on video games.
Unknown said…
Unfortunately, I do not own any cryptocurrency. I've been reading about it a lot as I've seen this as a good opportunity, I never did get the courage to actually get into it though. I do regret it more and more for each year, seeing what I lost, but on the other hand, I have a feeling that the bubble will blow sooner than later, and it is too risky to invest in this now, especially that the prices are getting extremely high. A few years ago I was doing some stock trading (which is to some extent similar to the topic of this post) and found, that for each month and each year the outcomes are harder to foresee, good and abd news for the company do not directly reflect on its share prices, which was the case a few years ago. The same goes for conventional currencies, and the same will apply to cryptocurrencies. This is the reason why I find it a bit too risky to invest in them, especially at the point when 1BTC is slowly reaching $10k.
Unknown said…
Do you own any cryptocurrency?
I actually do not own any, but I consider to get some. I think owning it is like an other investments with big risk. Also there are a lot of new cryptocurrencies with different dynamics and the choice is hard.
Do you think bitcoin is a bubble like famous tulip mania in 17th century?
It is hard to say that is a bubble like tulip mania, it could be but not having to. Risk is big, but this system is powerful. Also many people who invest are “new date”, and no centralized institution does not control it, what could be considered as advantage.
Do you think in few years we will use bitcoin rather than dollar or euro in daily activities?
In a few years I think no, maybe in future. Right now is like electronic financial investment product. Maybe when it will be more stable and people will be have more trust to this, then maybe consider as normal currency.
Unknown said…
My friend has few mining stations. I was never a fan of cryptocurrency but true is that you could earn a lot of money on it. Nowadays it is not so easy but still profitable. All in all it is very simillar to playing on stock market.
I don't think it will in nearest future replace "real" currency as banks/companies won't allow it but it can exist as support currency.
Unknown said…
1. No, I don’t own any cryptocurrency. Well, that’s a pity, that I haven’t heard about it in 2010. 1000$ spent and 2,63mld$ profit sounds great, but you have to be careful.
2. Yea, I can agree it’s kinda bubble. It’s all because of the cryptocurrency hype.
3. In few years - maybe, but for now I don’t think so. We still have problem with our currencies. I just think, that world isn’t ready now for such a big change.
Tomasz Morawski said…
I don't own any cryptocurrency yet but I have plans to invest some money in it. I think it may be interesting experience and bring some money.
Bitcoin is not much different from currency we use nowadays, since it's also mostly electronic and the cash is only some part of it (it's not even backed by the gold at the moment). The only difference is that "real" money is centralized but let's be honest - many economies crashed due to inappropriate money handling by central banks. Maybe it's better to leave it to computer algorithm?
I don't think we'll use bitcoin as a currency on daily basis but I'm sure another cryptocurrency will be used if government's regulations or propaganda don't stop it.
Unknown said…
I remember first time when i heard about bitcoin. It was years ago but i thought that there is no chance to pay with it in future. At the beggining bitcoin was cheap but each year it was more expensive. Every year i was like "No way its maximum value of it" and i was wrong. Thats why i dont have any bitcoins in my wallet. Now its worth a lot but who could know? I think that bitcoin have potential now and in few years we will use bitcoin in daily activities.
Bitcoin is the future.

I don't own any cryptowalut, but it is very interesting how fast it gets different market. In the near future it will not replace real money, but it's very similar to credit card payments.
Unknown said…
Great that you put here such article - bitcoin is popular, but many people have got no idea about it. I remember when I heard about it for the first time and I thought it won't work - I was very wrong. If I bought even one bitcoin then I would be very rich.
Andrzej Gulak said…
This comment has been removed by the author.
sasha | s14611 said…
I think in few years bitcoin won't be so popular as today and we will forget about it. It's not stable, and you don't know what to expect from this currency. I wanted to buy 1 bitcoin for fun at the begining of this year. Now I'm really upset that I didn't do that. And when I read phrase ' If you spend 1000$ on bitcoin in 2010 you would now have about 333k bitcoins' I wanna cry :(
Unknown said…
I don't own any cryptocurrency. I think it can't be any "bubble". We have 21th century and a lot of cryptographic algorithms, even from 60's(TDES), are still not broken. And I think many people would like to crack bitcoin, but it would be too hard. I don't think BitCoin will be used in real life shops. I heard that it can be produced only by doing some math calculations. If we all started doing bitcoins instead of working who would work? Robots?
Unknown said…
Do you own any cryptocurrency?
>Yup, I remembered about it just few weeks ago, when I saw some bitcoin-related post. It turned out that a friend of mine paid me in bitcoins in 2015, back when it was about 250$/BTC, now its about 7,5k$/BTC, so I got some "free cash".

Do you think bitcoin is a bubble like famous tulip mania in 17th century?
Its hard to say, but I think not - it became popular, but its rather a long-term growth. Even in the last drop (around 11.11), when it came to 5,5k$/BTC, it didn't broke through growth trend boundaries (i.e even with that value, which dropped from about 8k$, the predicted trend was growth)
Do you think in few years we will use bitcoin rather than dollar or euro in daily activities?
I'd rather not - now its not being managed by any government (at least politically, as any govt. can buy/sell hundreds of bitcoins to speculate the price) and I'd prefer it to stay like that.
Maciej Główka said…
I recommend reading some articles about tulip mania. It shows very good how bubble is being created and than how it bursts.
Maciej Główka said…
I think next few years won't stable bitcoin value. In my opinion, the whole beauty of bitcoin is that it is quite hard to track someone. There are all transactions publicly available, but it is hard to track whose those addresses are.
Maciej Główka said…
You can always use hardware or paper wallets, which are much more safer than online wallets. I agree with you, that there are many fake coins creating on cryptocurrency hype. Buying cryptocurrency is in my opinion similar to play in forex for example. You should not use money you can't afford to lose.
Unknown said…
I do not you own any cryptocurrency currently and I have never joined this game. This is why I think bitcoin is a bubble like famous tulip mania in 17th century. The more people know about it, the less chance you have to earn a dime and we are now living in the echo of the big wave called Bitcoin. Although, I am not suggesting Bitcoin is going to die, but it is rather stabilizing than empowering. I can't imagine this perspective that in few years we will use bitcoin rather than dollar or euro in daily activities. As we could see in attached video, Bitcoin and other cryptocurrencies are decentralized and untraceable. Moreover, there is no owner or institution to decide about amount of this currency in the market, therefore there is no country that would ever want to do this.
Maciej Główka said…
I believe bitcoin will be treated as digital gold. I think blockchain technology isn't perfect to be used as normal currency.
Maciej Główka said…
I hope you are wrong, but we will see who's right in few years ;)
Maciej Główka said…
Oh, that must hurt quite bad now. Who knew, that bitcoin will reach such values?
Maciej Główka said…
Yeah, there are still many people with lots of bitcoins. They can easily manipulate market right now. That's why it is very risky to get into world of cryptocurrency right now.
Maciej Główka said…
If you want to minimise risk, you should buy bitcoin or ethereum. In my opinion they are the most stable coins right now. There is also a lot of money in those markets, so they won't disappear so quick.
Maciej Główka said…
Does he keep those stations in his house? He can probably save a lot of money on heating ;)
Maciej Główka said…
Very good point about centralized money! You should invest as quick as you can, there are many predictions that bitcoin will reach 10k$ this year.
Maciej Główka said…
You are not the only one who regret this ;)
Unknown said…
I have heard some informations about a bitcoin but it is still a kind of magic for me. I would prefer to get to know more about it. I have a friend which has some money in cryptocurrencies but he invests his money without any knowledge about it and his investments are very similar to investing money in casino. What is weird for me...it is profitable for him and he usually wins. After this presentantion I think that I will get to know more about cryptocurrencies and I will invest a little money in this. I feel that as a programmer I should have a such knowledge. I think that now is a hype for bitcoint and in fact it's not worth it such a lot of money. It is really hard to me to understand that and I think that not only for me but even for people with knowledge about an economics. I don't think that such currency can replace normal currencies because it is too unstable for some investors.
Patryk Pohnke said…
I don't have any cryptocurrency. I don't belive that they are trustworthy. For example Bitcoin is increasing its value all the time. Its value will decrease one day for sure. Beside that there are a lot of technical difficulties when paying with cryptocurrency. You have to have charged electronic device with internet connection. It is much easier to pay with cash, that's why I think it won't become as popular as normal currencies any time soon.
Unknown said…
I don"t use cryptocurrency though i've heard about it. I think that it's like with new technologies. Firstly, everybody have fun with it but it isn't nessecery. Then time passes and that new thing is more popular in normal live. I think that the same will be one day with cryptocurrency. Now it's kind of bubble but who knows... maybe one day it will be more comfortable to use that way of payment.
Do you own any cryptocurrency?
Had it and really lost it - but really small amount.

Do you think bitcoin is a bubble like famous tulip mania in 17th century?
Time will tell. But it has big potential and a very wide range and possibility of use so I think no is the correct answer.


Do you think in few years we will use bitcoin rather than dollar or euro in daily activities?
That is one of the possible scenario - people will always search for the way to hide money for others not to see (especially IRS etc.). Just look at the panama scandals. This money has to move somewhere.
KamilG said…
I don't own any cryptocurrency and never before I bought it. I remember that once I and my mate tried to put into our computer the AMD Radeon HD 6950 graphics card to "dig" Litecoins. We had a very low computing power in our current card, so it took a lot of time to dig up the coin. It also consumed a huge amount of electricity, so not long time after we resigned from further digging. It's a pity that this happened, because nowadays at stock exchange one litecoin is equal $70.
Answering to the last question, at present, there is a great interest in this currency what is confirmed by
high listing at stock market. I think it's possible that we'll use cryptocurrency as a mean method of payment in the future.
Unknown said…
I've talked with my father about the cryptocurrencies an we both decided that now it is an easy way to earn some money on a currency differences, but later it will be a dead old idea.
Unknown said…
Unfortunately I do not own any cryptocurrency. Too bad because I remember when it was around 80$ for one bitcoin. Today it's almost 100 times more. It's kinda of a phenomenon really. Smart designed but really unpredictiable. I like it that's free, open, not in anyones hands, free of government or a bank. Makes me laugh out loud hearing from wall street sharks that bitcoin is a big fraud or a gigantic bubble. Maybe it is but it sounds funny from coming from their mouths.
Unknown said…
I think cryptocurrency is good investment on future. Our world is addicted from computers and internet so that money should still grow up. Personally i invest in one of cryptocurrency which called GAME. Its cryptocurrency only for game and very easy to implement. To implement that you should write only 3 lines of code and you have one wallet for whole games which implement that.Its also very cheap to pour this money to other account .I think cryptopcurrency is future and can replcae current money.

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