Yes I agree. My issue was ALWAYS theft. Who is to keep the original developer from stealing it/changing it to steal it?
I’ve been told by knowledgeable folks that the public publication of the coins makes that impossible. But, I think someone smart enough to create cryptocurrency can certainly hack the underlying encryption ( or numerous computers together can hit it pretty hard).
You receive a private key and that private key is the only way to access/move your Bitcoin. The risk of theft comes from how/where you store your Bitcoin - not from the encryption technology. If you do not keep your private key in a secure location, then potentially others can access it and steal your Bitcoin. If you store your Bitcoin on the internet (for example, at a place like Coinbase), then there is a risk that the platform where you are storing it can be hacked and your Bitcoin stolen that way. Some people choose to avoid this risk by storing their Bitcoin off the internet in a cold wallet.
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I would love an actual physical Bitcoin…
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A powerful quantum computer can figure out your private key (regardless where it’s stored) from the public key.
@1NJParent I don’t think that’s possible. They aren’t connected. The folks who use bitcoin often connect to larger networks to mine bitcoin. If using a quantum computer was possible it would have been broken. What makes you say this and can you describe an example of this having happened?
Public-key/private-key encryption is based on factoring very large number into primes in a reasonable amount of time, a task that’s nearly impossible for any classical computer but trival for a suitably-equipped quantum computer. The public key is revealed in any Bitcoin transaction. Once a thief obtains the public key, s/he can use the quantum computer to “infer” your private key, breaking the encryption. No such quantum computer yet exists, but there’s a global race on that front.
Interesting. Will get the low down frim my nephew who has his entire retirement jn bitcoin.
I just don’t see why the private key would be related to the public key seeing as bitcoin inventors naturally inferred computing power increasing dramatically ( and quantum computers and other powerful computing has been around a long time). I worked for Thinking Machines part time when I was in college decades ago and even then computers could work in parallel.
That’s ok. I’ll ask my bitcoin expert about the security mechanism. I have the feeling the private key isn’t related to the public and is randomly generated. But I want to mnow how it works.
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Quantum computers can use what’s called Shor’s algorithm (which doesn’t work on classical computers) to factor integers into primes exponentially faster. The relationship between the public key and the private key isn’t random. They’re mathematically related. The derivation of one from the other is through factorization of very large integers (a very difficult and time-consuming process for classical computers).
It’s both reckless and arrogant to think that no one could (maybe not currently so “could” vs. “can”) hack / steal a private key. Not to long ago when the whole tech wasn’t discovered. What will the next tech enable? The time it takes to create new tech is drastically compressed and will only continue to be so.
Now that doesn’t mean bitcoin is less safe than others. Someone could steal your gold or cash too.
I view bitcoin more as a security than a currency. Currencies store value. A coin is worth X. Securities change value by the day / minute/ second/ etc. So purchasing a home requires actual money / currencies. You agree to pay $X. If you want to fund that with bitcoin, X will require a vastly different amount of bitcoin today vs. 2 yrs ago vs. 2 yrs from now. Far more variance than typical inflation / deflation forces. Similar to funding the purchase with the sale of stock.
Don’t think there’s anything wrong with it if you consider bitcoin to be another potential highly speculative piece of your overall portfolio. Problem is that many view it as a surefire get rich quick scheme. We don’t really know the safety behind it. We don’t know when / if it will transform into a mainstream currency. So if you choose to invest in it, do so with caution and with a very small percentage of your total investable assets.
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I appreciate everyones attempt to explain Bitcoins fluctuating value. However, I am no closer to understanding it. on Dec 17 bitcoin was at $17,500
This morning its value is $34,100
What transpired over 2 weeks to double its value? No clue
Nothing has changed to increase its value. Essentially it is operating in hysteria. No different than TSLA increasing form 300 to 3500 split adjusted in a few months. The market is an auction. Things are worth what people are willing to pay. Think of it like a rising housing market on steroids. In roaring markets houses sell above asking price and very quickly, sometimes hours after they’re listed. Bidding wars happen. What’s a little unique about bitcoin is it is finite. Only so many coins available. With historically low interest rates, some are using bitcoin as a hedge (or simply an alternative) against the stock market which is receiving a ton of inflow from traditional fixed income vehicles. They feel the stock market is too heated and they want another place to invest.
I have more and more clients asking me about bitcoin today. Frankly a little scary as these people don’t know enough about traditional markets but are looking to allocate large sums to something I feel is still quite speculative (defined by that massive growth in 2 weeks).
Well Bitcoin is certainly up a lot.
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What can you buy with Bitcoin? I’m guessing I cannot use it to purchase something on Amazon? I cannot walk into a bank and try to trade it in for cash? Can I go buy a car with it? If it is not ‘traceable’ then where would you buy something where there wasn’t a trace? Besides drugs on the street or something?
Do you go onto some type of Bitcoin bank website and try to sell your bitcoin to someone for cash? Who regulates that? Guessing it’s like Paypal instant transfer or something.
The whole part of buying something with Bitcoin is the part I don’t understand
Quite a lot. Just a random Google pick:
Besides supply & demand, what (or how) creates value in bitcoin ?
Bitcoin can be regulated through indirect avenues such as taxing authorities and legal systems which regulate its use. Both types of regulation can be ignored, but such action or inaction might constitute an illegal act.
The whole point of Bitcoin is to avoid tracking ( and taxes). While there might be questions now on the IRS form about cyber-currency, this is much like cash. That’s why it makes governments and international organizations so nervous ( and is being used specifically not to track things).
IMO, the world is getting too much info. So tracking everything and everyone will be met with new technologies to counter this trend. It’s not just for illegible stuff ( which naturally I don’t condone). It’s also for privacy. There are important reasons for folks to want private transactions. The Swiss get this 
When Paypal first came out, many used it for private transactions until they started to report the transactions.
I was just reading a Swiss web site and they were discussing how to make bitcoin payments via a service to go into a Swiss bank account. This was for a Swiss permit. So people must be using it a lot. There are also more and more retailers who accept bitcoin. My kids got a present this year paid for by bitcoin. That’s a first. It was listed on the receipt.
While we have bitcoin, we’ve never spent it or done anything with it. I’d bet many are using it very differently.
Thank you for your response, but it does not answer my question about how value is created in bitcoin beyond supply and demand.
Indirect regulation can be accomplished not only by taxing authorities, but also by any regulation which address requirements or prohibitions for dealing in bitcoin. Examples might be money laundering laws and eligibility for holding a business license.
Well, if currency regulation is the norm and cybercurrencies are the only alternative, then a large part of the value is intrinsic. How much is it worth to you to have no tracking or accountability (in more ways than one). Supply and demand is just the basics (of price) but other things get factored into any financial instrument. The intangible of someone buying a hot IPO gets reflected in the price but may be “unreasonable” to many. Bitcoin is quite different in this case.
i think you are confusing price (based on supply and demand) with “perceived” value. I’ve seen huge variables not based on anything reasonable to me in prices for some stocks. But someone is willing to pay it.
Bitcoin is an interesting side note. You can’t really put it in the same category as stocks or bonds or other vehicles. The supply is extremely limited and the demand might be completely elastic in that at some point everyone might want it due to underlying changes in the economic and political systems worldwide.
The wild swings we are seeing likely are based on people who think that the intrinsic value is extreme. They are willing to pay for this or get locked out of a fixed market ( which Bitcoin purports itself to have created).
I understand that supply & demand are the main factors in establishing a price of something that already has intrinsic value. Nevertheless, when I ask what makes up the intrinsic value of bitcoin, I am usually told that it is supply & demand.
Privacy–no tracking or accountability–is not something that establishes intrinsic value. Privacy can enhance value, but not create it.
Likewise, intangible value in a hot IPO does not create intrinsic value.
I think you are trying to use definitions which don’t fit Bitcoin. It’s fine. Not sure what you are trying to get at other than trying to fit bitcoin into an economic definition which likely won’t fit because bitcoin is different in so many respects. Not sure where you have been told about supply and demand as it relates to Bitcoin. Maybe someone else can bite on that. Not my idea of open thinking. Would be interesting if someone can actually build on that.
This doesn’t make sense:
“intangible value…in a hot IPO …does not create intangible value” But still I’m going to let you alone in your economic thinking.