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#44591 - 05/15/17 10:30 AM Bitcoin
artie505 Online


Registered: 08/04/09
I know nothing about bitcoin, so this may be naive, but does something like "WannaCry", that causes a demand for it, cause its cost to rise?
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#44593 - 05/15/17 12:31 PM Re: Bitcoin [Re: artie505]
joemikeb Offline
Moderator

Registered: 08/04/09
Loc: Fort Worth, Texas
Knowing little or nothing about Bitcoin myself, I went looking for more information and found this Wikihow on "How to use Bitcoin". According to that article
Originally Posted By: Wikihow
Since there are only 21 million bitcoins that will ever be created, each bitcoin should rise in value over time
Basic economic theory then kicks in and would hold that given a limited or fixed supply of an item any increase in demand will be accompanied by a corresponding increase in the value or cost of the item.

According to the Bitcoin Calculator the current price of a bitcoin is $1666.45 USD. That yields the total Bitcoin economy at a value of $34,995,450,000 USD. The answer to your question then becomes, will Wanacry ransom payments rise to a level sufficient to have an effect on a $35 Billion dollar economy. (That places Bitcoin as roughly the 96th largest economy in the world and larger than 115 or 116 nations.) I will leave it to you to guesstimate what if any effect Wanacry would have on the Bitcoin economy.
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#44594 - 05/15/17 12:35 PM Re: Bitcoin [Re: artie505]
grelber Offline


Registered: 08/05/09
Loc: North of 49th ||
Yes, its underlying mechanism very much resembles the vicissitudes of the stock market.
If you're not really savvy about Bitcoin use, it behooves you to treat it like a very hot iron.
Bitcoin aficionados often find themselves under scrutiny by "authorities" vis-à-vis money laundering, terrorism, etc etc.

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#44596 - 05/15/17 12:58 PM Re: Bitcoin [Re: grelber]
joemikeb Offline
Moderator

Registered: 08/04/09
Loc: Fort Worth, Texas
Originally Posted By: grelber
Yes, its underlying mechanism very much resembles the vicissitudes of the stock market.

I would say Bitcoin is closer to commodities futures trading except even in commodities futures investors are betting on the production of something with an intrinsic value. With Bitcoin you are betting on the value of Bitcoin which has no underlying intrinsic value other than a transaction record on a computer somewhere.
Originally Posted By: grelber
If you're not really savvy about Bitcoin use, it behooves you to treat it like a very hot iron.
Bitcoin aficionados often find themselves under scrutiny by "authorities" vis-à-vis money laundering, terrorism, etc etc.
SCARY 👹
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#44597 - 05/15/17 01:05 PM Re: Bitcoin [Re: joemikeb]
grelber Offline


Registered: 08/05/09
Loc: North of 49th ||
Originally Posted By: joemikeb
Originally Posted By: grelber
Yes, its underlying mechanism very much resembles the vicissitudes of the stock market.

I would say Bitcoin is closer to commodities futures trading except even in commodities futures investors are betting on the production of something with an intrinsic value. With Bitcoin you are betting on the value of Bitcoin which has no underlying intrinsic value other than a transaction record on a computer somewhere.

Point taken: I was just trying to draw a simple/general comparison; commodities futures would be just one type of more specific example within that realm.

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#44607 - 05/16/17 12:21 AM Re: Bitcoin [Re: joemikeb]
artie505 Online


Registered: 08/04/09
Originally Posted By: joemikeb
Knowing little or nothing about Bitcoin myself, I went looking for more information and found this Wikihow on "How to use Bitcoin". According to that article
Originally Posted By: Wikihow
Since there are only 21 million bitcoins that will ever be created, each bitcoin should rise in value over time
Basic economic theory then kicks in and would hold that given a limited or fixed supply of an item any increase in demand will be accompanied by a corresponding increase in the value or cost of the item.

According to the Bitcoin Calculator the current price of a bitcoin is $1666.45 USD. That yields the total Bitcoin economy at a value of $34,995,450,000 USD. The answer to your question then becomes, will Wanacry ransom payments rise to a level sufficient to have an effect on a $35 Billion dollar economy. (That places Bitcoin as roughly the 96th largest economy in the world and larger than 115 or 116 nations.) I will leave it to you to guesstimate what if any effect Wanacry would have on the Bitcoin economy.

Thanks for the link, although, as you said, it provides only a framework, not an answer to my question, nor does Bitcoin's Recent Price Dive: Did WannaCry Malware Cause It? do a much better job of answering it.

And Bitcoin Mining, which apparently explains from where Bitcoins come is about as clear as mud: if I'm understanding it, no entity owns the unissued Bitcoins, rather they're "prizes" in some sort of contest. confused

Can anybody clarify or expand?

Thanks.
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The new Great Equalizer is the SEND button.

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#44615 - 05/16/17 07:58 AM Re: Bitcoin [Re: joemikeb]
Virtual1 Offline


Registered: 08/04/09
Loc: Iowa
Originally Posted By: joemikeb
Originally Posted By: grelber
Yes, its underlying mechanism very much resembles the vicissitudes of the stock market.

I would say Bitcoin is closer to commodities futures trading except even in commodities futures investors are betting on the production of something with an intrinsic value. With Bitcoin you are betting on the value of Bitcoin which has no underlying intrinsic value other than a transaction record on a computer somewhere.

So it's similar to say, gold futures? (although gold does have an intrinsic value, that is far less than its value as a jewelry or currency/wealth placeholder)
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#44616 - 05/16/17 08:18 AM Re: Bitcoin [Re: artie505]
Virtual1 Offline


Registered: 08/04/09
Loc: Iowa
Originally Posted By: artie505
And Bitcoin Mining, which apparently explains from where Bitcoins come is about as clear as mud: if I'm understanding it, no entity owns the unissued Bitcoins, rather they're "prizes" in some sort of contest. confused

Can anybody clarify or expand?

I can try. Each bitcoin is a unique "very special number". Numbers that are very large and meet very specific criteria. Figuring out if a number meets these criteria is somewhat time-consuming, but not something a computer can't do fairly fast, as long as there aren't too many to check. But that's the problem, the criteria are tricky and only a very very small percentage of numbers meet the criteria. And there's no way to predict which ones will without actually having to test it. So if you want to find one, you have to test A LOT of them before you find one. And this turns out to be very computer-intensive.

This creates "scarcity", and it's not an "artificial scarcity". Once you find a new number that no one has found before, it's VERY easy for others to check to verify that it's a "special number". (since they only have to test ONE number, not millions or billions) It's a bit like checking to see if a number is prime. You simply have to have a list of all the primes that are lower than it, and check to see if it divides evenly by any of them. (and as a shortcut, only needing to test those that are half the size or less) So verifying a number is prime is monumentally easier than finding a new undiscovered prime.

As time goes on, the numbers get larger, the time to check a new number goes up. Also, since the criteria scale linearly but the processor power of computers does not, the rules also state that the value of each new coin goes down periodically. So a new coin found today may be worth only 50% of what a coin mined last year was worth. (making that up as an example, I don't have hard numbers offhand) But this means that coins continue to be scarce and thus hold their value, even as computers get more powerful.

Users with bit mining hardware try to coordinate their search a little bit, because it's a waste of your time and resources to search a range of numbers that someone has already searched. (whether or not they have found anything) It wouldn't be smart for them to fail to register a new find, because anyone else could later on and then you'd have lost all your time invested in when you were looking for it. (also older coins are easier to find due to the advance in computer hardware) So everyone is "staking a claim" in regions of numbers and searching them, hoping to find a special number in their block. After they've searched it, they simply request a new claim area to search and continue. You're certainly free to search any block you want to, but if others have already claimed to have searched and not found anything, you're probably just wasting your time. Several companies now sell dedicated hardware that is designed to very efficiently and very quickly search for new coins, at a low cost per CPU. ("ant miner" is a name that comes immediately to mind) Part of what makes the coins valuable is the investment required to find them. Hardware can get expensive, it can require a good deal of electricity to really jack up your utility bill, and there's your time invested in the work of managing it too. So you can't just mine for free, it's not "free money". Even if it's "busywork" or "an endeavor with no physical reward", it still is consuming resources and has a tangible benefit, so it has value.

So you "register" this new coin that you have "mined" (discovered) and it is now owned by you. Your ownership of the new coin is rapidly distributed to lots of people so no one can claim ownership of it later. Now the entire economy is tracking who owns this coin, (anonymously) and you can sell it (or part of it) using some cryptographic signing magic. The initial registration of the coin creates a signature that only you have the key to, so only you can sell it, even though others can easily verify if you are the owner when you try to spend it or split it up for smaller transactions. (read up on "asymmetric keys / public-vs-private-keys)

On an interesting side-note, if you lose your private key to the coin, (lose your bitcoin 'wallet') then the coin is lost forever, no one can use it ever again. It's like tossing a benjamin into a fire. And conversely, if someone "steals your wallet" (where the private keys to all your coins and parts of coins are), then they can spend them just as easily as you can (assuming you still have your wallet) If someone spends your coin before you do, you can't spend it again. Its like someone stealing your check book, they can write checks and spend down your bank account just like you can, until you have no money in the account anymore anyway wink And that's caused an interesting turn in malware... malware is almost exclusively driven today by their ability to monetarist it. (make money via theft, fraud, deception, etc) So there's a number of malware out there that is written to (in part or exclusively) try to hack computers and copy their bitcoin wallets. Several bitcoin exchanges have claimed to have been hacked and had their wallet stolen, thus causing everyone with bitcoins on deposit at the exchange to lose them as they are quickly all transferred to some other owners and used to purchase easily fenced goods. But it's difficult to say for certain if the exchange owner was the thief or not, due to the ability to spend bitcoins anonymously. But this would certainly make a bitcoin exchange a very attractive target for spearphishing and hacking, so it's very plausible.
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#44620 - 05/16/17 09:06 AM Re: Bitcoin [Re: Virtual1]
grelber Offline


Registered: 08/05/09
Loc: North of 49th ||
And there you have it!

WannaCry ransomers have to be dumber than a sack of hammers. Probably upwards of 99% of the world's population has never heard of Bitcoin, much less has a clue how to manipulate same.

As Trevor Noah (The Daily Show) opined on last night's broadcast — worth a boo on Comedy Central — the ransomers would need a helpline to walk potential ransom-payers through it.

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#44624 - 05/16/17 09:45 AM Re: Bitcoin [Re: Virtual1]
Ira L Offline


Registered: 08/13/09
Loc: California
Originally Posted By: Virtual1

You simply have to have a list of all the primes that are lower than it, and check to see if it divides evenly by any of them. (and as a shortcut, only needing to test those that are half the size or less) So verifying a number is prime is monumentally easier than finding a new undiscovered prime.


Actually you only need to test primes up to the square root of the number you are checking. Numbers up to half the size could include divisors with prime factors you have already checked. grin
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#44629 - 05/16/17 11:02 PM Re: Bitcoin [Re: grelber]
artie505 Online


Registered: 08/04/09
Originally Posted By: grelber
And there you have it!

WannaCry ransomers have to be dumber than a sack of hammers. Probably upwards of 99% of the world's population has never heard of Bitcoin, much less has a clue how to manipulate same.

As Trevor Noah (The Daily Show) opined on last night's broadcast — worth a boo on Comedy Central — the ransomers would need a helpline to walk potential ransom-payers through it.

You're confusing bauxite with aluminum.

The process V1 described is how Bitcoin is "mined", i.e. created and put into circulation in the first place, whereas buying Bitcoin involves no more than visiting one of these websites, and isn't terribly complicated.

The ransomers appear to have to have collected only about $60-70,000, but with no reported data recovery...the result of initial confusion about how to pay, compounded by the ultimate revelation that payment is futile, I imagine.
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The new Great Equalizer is the SEND button.

In Memory Of Harv: Those who can make you believe absurdities can make you commit atrocities. ~Voltaire

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#44630 - 05/17/17 12:02 AM Re: Bitcoin [Re: Ira L]
artie505 Online


Registered: 08/04/09
Originally Posted By: Ira L
Actually you only need to test primes up to the square root of the number you are checking. Numbers up to half the size could include divisors with prime factors you have already checked. grin

I must be missing something... A number that's got a whole number square root can't be prime, by definition.
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The new Great Equalizer is the SEND button.

In Memory Of Harv: Those who can make you believe absurdities can make you commit atrocities. ~Voltaire

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#44632 - 05/17/17 12:24 AM Re: Bitcoin [Re: Virtual1]
artie505 Online


Registered: 08/04/09
Wow! I actually pretty much understood that. THANKS!!! laugh

Originally Posted By: V1
As time goes on, the numbers get larger, the time to check a new number goes up. Also, since the criteria scale linearly but the processor power of computers does not, the rules also state that the value of each new coin goes down periodically. So a new coin found today may be worth only 50% of what a coin mined last year was worth. (making that up as an example, I don't have hard numbers offhand) But this means that coins continue to be scarce and thus hold their value, even as computers get more powerful.

That's not clear: how can "the rules" affect the value of a publicly traded "commodity"?

Aren't all Bitcoins, whenever they were mined, worth the same amount today?

(The £625m lost forever - the phenomenon of disappearing Bitcoins is a gut-wrenching read.)
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The new Great Equalizer is the SEND button.

In Memory Of Harv: Those who can make you believe absurdities can make you commit atrocities. ~Voltaire

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#44633 - 05/17/17 12:24 AM Re: Bitcoin [Re: artie505]
grelber Offline


Registered: 08/05/09
Loc: North of 49th ||
Originally Posted By: artie505
The process V1 described is how Bitcoin is "mined", i.e. created and put into circulation in the first place, whereas buying Bitcoin involves no more than visiting one of these websites, and isn't terribly complicated.

Grandma might disagree.
But I'll be glad to stipulate your contention if you go ahead and buy a (fraction of a) Bitcoin and relay the explicit procedure for doing so.

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#44634 - 05/17/17 12:40 AM Re: Bitcoin [Re: grelber]
artie505 Online


Registered: 08/04/09
Originally Posted By: grelber
Originally Posted By: artie505
The process V1 described is how Bitcoin is "mined", i.e. created and put into circulation in the first place, whereas buying Bitcoin involves no more than visiting one of these websites, and isn't terribly complicated.

Grandma might disagree.

That's gratuitous in its not having cited some basis, authoritative or otherwise, for Grandma's disagreement.
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The new Great Equalizer is the SEND button.

In Memory Of Harv: Those who can make you believe absurdities can make you commit atrocities. ~Voltaire

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#44635 - 05/17/17 01:05 AM Re: Bitcoin [Re: artie505]
grelber Offline


Registered: 08/05/09
Loc: North of 49th ||
Originally Posted By: artie505
Originally Posted By: grelber
Originally Posted By: artie505
The process V1 described is how Bitcoin is "mined", i.e. created and put into circulation in the first place, whereas buying Bitcoin involves no more than visiting one of these websites, and isn't terribly complicated.

Grandma might disagree.

That's gratuitous in its not having cited some basis, authoritative or otherwise, for Grandma's disagreement.

Not that that's at all relevant to the topic (ie, waiting for the Bitcoin to drop), but let's just say that Grandma is quite unsophisticated in the ways of the Web.
For the sake of argument: She can barely manage email, cannot manage at all ordering a book on Amazon and managed to fall prey to WannaCry because she knows nothing about protecting against such.

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#44636 - 05/17/17 01:35 AM Re: Bitcoin [Re: grelber]
artie505 Online


Registered: 08/04/09
OK, that quantifies the question: she's dead meat, because she quite obviously doesn't back up, either.
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The new Great Equalizer is the SEND button.

In Memory Of Harv: Those who can make you believe absurdities can make you commit atrocities. ~Voltaire

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#44641 - 05/17/17 08:55 AM Re: Bitcoin [Re: artie505]
Ira L Offline


Registered: 08/13/09
Loc: California
Originally Posted By: artie505
Originally Posted By: Ira L
Actually you only need to test primes up to the square root of the number you are checking. Numbers up to half the size could include divisors with prime factors you have already checked. grin

I must be missing something... A number that's got a whole number square root can't be prime, by definition.


Clearly, but you still can check prime numbers up to the square root of the number. Say the square root is the irrational number 7.94... . Then you would only need to test primes up to and including 7.
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#44643 - 05/17/17 09:20 AM Re: Bitcoin [Re: Ira L]
artie505 Online


Registered: 08/04/09
Thanks; that's what I figured.

As presented, the concept is confusing, but I guess concepts such as this are generally presented to people who can think their way around them.


Edited by artie505 (05/17/17 09:51 AM)
Edit Reason: Clarify
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The new Great Equalizer is the SEND button.

In Memory Of Harv: Those who can make you believe absurdities can make you commit atrocities. ~Voltaire

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#44669 - 05/19/17 09:18 AM Re: Bitcoin [Re: Ira L]
Virtual1 Offline


Registered: 08/04/09
Loc: Iowa
Originally Posted By: Ira L
Originally Posted By: Virtual1

You simply have to have a list of all the primes that are lower than it, and check to see if it divides evenly by any of them. (and as a shortcut, only needing to test those that are half the size or less) So verifying a number is prime is monumentally easier than finding a new undiscovered prime.


Actually you only need to test primes up to the square root of the number you are checking. Numbers up to half the size could include divisors with prime factors you have already checked. grin
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#44672 - 05/20/17 07:56 AM Re: Bitcoin [Re: Virtual1]
Ira L Offline


Registered: 08/13/09
Loc: California
Originally Posted By: Virtual1
Originally Posted By: Ira L
Originally Posted By: Virtual1

You simply have to have a list of all the primes that are lower than it, and check to see if it divides evenly by any of them. (and as a shortcut, only needing to test those that are half the size or less) So verifying a number is prime is monumentally easier than finding a new undiscovered prime.


Actually you only need to test primes up to the square root of the number you are checking. Numbers up to half the size could include divisors with prime factors you have already checked. grin


OK. What "those" referred to was unclear to me. Even so, primes up to the square root of n are fewer in number than primes half the size or less than n, so it would be a "shorter cut":

"The simplest primality test is trial division: Given an input number n, check whether any prime integer m from 2 to √n evenly divides n (the division leaves no remainder). If n is divisible by any m then n is composite, otherwise it is prime."
Primality Test

"Half the size or less" is a useful shortcut if you want to check all the potential divisors of a number and eliminate the non-prime ones.

For example, is 17 prime? 17/2 = 8.5 so check 2,3,4,5,6,7,8. Eliminate evens (because 17 is not even—not divisible by 2—so an even cannot divide it) and check 2,3,7.

OR

√17= 4-ish, so check 2,3,4; eliminate the even 4 and check 2 and 3. Fewer checks.

When testing large numbers, the "fewer checks" can be considerable.

Perhaps Virtual1 was saying the same thing; I just needed to see it in more detail, so all of you reading this benefit/suffer from my examination. grin
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