BitCoin

Quote: PokerGrinder

Imagine if you hadn’t sold so much... 😂

Imagine if you bought when I did. I still have plenty, so don't you worry about it.

Want to lock in 10k more at the current price?

Quote: MichaelBluejay

Glad you liked the article!

The article does have a whole section on Risks, identifying different risks for different kinds of wallets. I don't know any more about that than what I included in the article. If you come across info on wallet risks that I don't cover, I'll see about adding it.

I have opinions and observations about three wallet types, which I've used. Actually, I suspect Michael has slightly mis-stated something about hardware wallets.

Hosted Wallets, such as that supplied by CoinBase
I'll explain that when your coins are with a hosted exchange, you entrust control over them completely. All you get is a promise to return the same VALUE at a later time.
When you set up a Coinbase account they create little sub-accounts for each of your currency types. Looking at the Bitcoin account, they tell you your balance. If you want to receive some coins into your account, they will tell you AN address to send them to. BUT, when the coins reach CoinBase, they mix them into their own funds. Subsequently when you want to send, spend or sell some coins, Coinbase will deduct an amount from what they have logged as your BitCoin Balance. They then send coin from their own reserves. It's a bit like paying cash into a bank in that when you withdraw, you don't get the same dollar bills and all the time the exchange holds your funds, they can do what they want with them, such as lending them out. One issue with a hosted wallet is that when you send or spend coins, the exchange usually decide what miner fee will be sufficient to get a timely transition. Some exchanges let you choose a priority level, but not all do. That can introduce expense to you.

Hardware wallets, such as Trezor One ( about $50)
These little USB devices hold your Private key only. When you initialise the device, it creates a 24 word passphrase that you write down and keep VERY safe. The Trezor can also use a numeric pin to authenticate when you use it. The Trezor itself has very little storage and though it can store 10 private keys, it has no capacity for notes, so it offloads note keeping to an optional associated DropBox account. A bit clunky IMHO. I think Michael said that the wallet stores public addresses, but I understand that it just reads them back from the blockchain as required*
Typically, when you plug the Trezor into your pc, it opens up a trezor.io web-page as your user interface and will request your pin and will connect to the blockchain from which it can present your entire transaction history. If you wish to transact then the trezor will generate addresses to give out or will verify your permissions on the blockchain. The Trezor will permit and maintain some text notes and transaction records in your personal DropBox account. Nothing too precious is stored in DropBox. Just text notes.

Quote: https://wiki.trezor.io/Private_key

Private keys are generated locally on your Trezor device and never leave the device. Private keys for Trezor devices are generated based on a recovery seed and (optional) passphrase. In addition to creating and signing transactions, private keys can be used in the Trezor Wallet to sign messages from a specific address to prove ownership of that address.

Note that the Trezor one can hold 10 'accounts' which can be one type of crypto currency each.
If your Trezor wallet ever gets destroyed or lost in the ocean, you use the 24 word passphrase to initialise a new one. The new trezor will allow you visibility of all prior transactions from you old lost trezor, hence proving they are restored from the blockchain. If someone has stolen or found your first trezor, they are just a pin entry away from all your Bitcoin associated with your replacement Trezor.

Software wallets: Such as Electrum. (free)
Can be a linux or windows computer program or a mobile phone app. Just like a hardware wallet, the software wallet these store your private key and when initialised, it generates a 24 word pass-phrase, as your ultimate backup. Electrum maintains your textual transaction notes in locally stored files (Easier than dropbox, IMHO.
Note that the 24 word passphrase from a hardware wallet can be used to intialise Electrum and one from Electrum can be used to initialise a hardware wallet. So you COULD connect your Bitcoin to Electrum wallet and Trezor wallet at the same time.

Many/most hardware and software wallets have QR barcode features to save you having to transcribe complex addresses.

When you send Bitcoin with your hardware or software wallet, you can set the miners fee that you wish to pay to get your transaction confirmed. It's not a science, but the more you bid, the faster your transaction will be confirmed. Set it too low and your funds can take days or weeks to transfer (OK if just sending them to yourself) If you set the fee bid too low, your transaction can take 'forever' to confirm, BUT if the recipient has a trezor wallet, there is a feature for the recipient to top up the fee of the sender. A clever feature of Electrum called 'Child pays for parent'
If you send from your hosted account, they might just decide a high bid for the fee which is wasteful.

Fundamental difference between your own wallet and a hosted wallet is one of control. With a hosted wallet, you yield absolute control of your bitcoin to the hosting exchange. If they get hacked or run off with your Bitcoin, then tough luck (It happens). The Exchange can/will also make you jump through AML processes, they will share your personal and transaction details with whatever authorities they wish to. Zero secrecy or prvacy for you.
With a self hosted wallet, you have total control and with that comes great responsibility. If you lose your pass-phrase or hardware wallet, or your device gets hacked, then you have no redress. Do the storage carefully and your funds are as private and secure as a Swiss bank account or big safe in your basement. You funds will be as anonymous as can be.
Personally, I use exchanges for exchange features only and I keep all control with a matched pair of Trezors. A few hundred dollars worth stored with electrum for minor transactions. Trezors and pass phrases locked up securely in two places. Notes left for my benefactors to extract value when I die.

Quote: AxelWolf

Imagine if you bought when I did. I still have plenty, so don't you worry about it.

Want to lock in 10k more at the current price?

Lol you haven’t learned have you?

Quote: AxelWolf

Want to lock in 10k more at the current price?

I might be interested in buying a few.

Quote: OnceDear

I might be interested in buying a few.

Let's have a bidding war.

Quote: OnceDear

Fundamental difference between your own wallet and a hosted wallet is one of control. With a hosted wallet, you yield absolute control of your bitcoin to the hosting exchange. If they get hacked or run off with your Bitcoin, then tough luck (It happens). The Exchange can/will also make you jump through AML processes, they will share your personal and transaction details with whatever authorities they wish to. Zero secrecy or prvacy for you.
With a self hosted wallet, you have total control and with that comes great responsibility. If you lose your pass-phrase or hardware wallet, or your device gets hacked, then you have no redress. Do the storage carefully and your funds are as private and secure as a Swiss bank account or big safe in your basement. You funds will be as anonymous as can be.
Personally, I use exchanges for exchange features only and I keep all control with a matched pair of Trezors. A few hundred dollars worth stored with electrum for minor transactions. Trezors and pass phrases locked up securely in two places. Notes left for my benefactors to extract value when I die.

Thank you. One question, what is meant by "matched pair of Trezors"? What is benefit/difference from using one hardware wallet? In your case, have you set it up where you NEED two hardware wallets?

You mentioned losing my USB in the ocean followed up by saying my keys were recoverable. And then it appears you mention if I lose my USB, I am out of luck. Where did I go wrong in my interpretation?

"...they are just a pin away..." -- by pin, do you mean needing the 24 word passphrase?

If I buy my cryptocurrency via exchange, how do I get it to a hardware wallet? If that possible? Typically, are there fees?

For perspective, I am dipping my toe in crypto for educational purposes at this point. Learn how to swim before jumping in the deep end. I own <0.02 BTC. And it's all on/in a hosted wallet at this point. Again, thanks for your post.

Quote: AxelWolf

Let's have a bidding war.

$20 is my bid

I've had more than one flash drive die, same with hard drives.

Quote: PokerGrinder

$20 is my bid

Too rich for me !

Quote: ChumpChange

I've had more than one flash drive die, same with hard drives.

If.that's a reference to potential failure of hardware or software wallets, it's not an issue. When you have your 24 word recovery phrase , you have nothing to worry about.

Quote: OnceDear

If.that's a reference to potential failure of hardware or software wallets, it's not an issue. When you have your 24 word recovery phrase , you have nothing to worry about.

There must be some good way to screw things up. What about one of those spike wave things from an overhead nuclear blast that’s suppose to fry computer equipment. I think a very rare powerful solar flare might do similar.

Quote: rxwine

There must be some good way to screw things up. What about one of those spike wave things from an overhead nuclear blast that’s suppose to fry computer equipment. I think a very rare powerful solar flare might do similar.

LOL. If you are subject to nuclear attack, or a meteor strike, you could be in trouble and indeed have something to worry about.
Or maybe an overnight drop in value of about 6% could sting a bit ( as happened in the last 24 hours) Of course, in such an instance, just average in.

Quote:

Binance Holdings Ltd., the largest cryptocurrency exchange, is being investigated by the Commodity Futures Trading Commission over concerns that it allowed Americans to place wagers that violated U.S. rules, according to people familiar with the matter.

The CFTC is seeking to determine whether Binance, which isn’t registered with the agency, permitted U.S. residents to buy and sell derivatives that the regulator polices, said the people, who asked not to be identified because the probe is confidential. Binance, which has an office in Singapore but says it lacks a single corporate headquarters, hasn’t been accused of misconduct and the investigation may not lead to an enforcement action.

The scrutiny is the latest sign that market watchdogs may thwart the crypto industry’s ambitions of becoming more mainstream for U.S. investors. The CFTC considers virtual currencies like Bitcoin and Ether to be commodities and claims jurisdiction over their futures and other derivatives. That means crypto platforms face strict customer protection and oversight demands if Americans are trading on them -- regardless of where exchanges are based.

https://www.bloomberg.com/news/articles/2021-03-12/crypto-exchange-binance-investigated-by-u-s-over-who-s-trading

Apparently some woman I met has a few bit coins she won in online poker games and she is trying to recover them. She is kind of ditzy, at the time, she said they weren't worth much and she didn't do anything with them. Apparently she is going to have her old laptops scoured and is contacting the site to see what email she was using. I think she is going to be SOL. Any advice to give her?

Quote: onenickelmiracle

Any advice to give her?

Beware of any organisation that claims to offer recovery assistance.
Ditzy or not, she should know what sort of wallet address she asked the BTC to be sent to. Did she open an exchange account such as coinbase? If she did, she should surely recall the onerous KYC hoops she had to jump through. If it was coinbase, wish her luck in trying to get their customer support.
Maybe the touney organisation is holding them for her?

From what I can tell, Coinbase offers something called "Coinbase Vault" in addition to their hosted wallet. Does anyone here have experience, or thoughts, around the Coinbase Vault?

Quote: IndyJeffrey

From what I can tell, Coinbase offers something called "Coinbase Vault" in addition to their hosted wallet. Does anyone here have experience, or thoughts, around the Coinbase Vault?

https://www.coinbase.com/vault
It's still the case that CoinBase own and control the keys. With this product they put a few extra security restrictions in front of any transactions on your account. E.g. requiring extra authentication.

I just started to mine Bitcoin, really wish I had done it sooner.

It’s impossible to buy graphics cards at a reasonable price right now, but I purchased a GTX 1060 in 2016 for $270 (they now go for over $400 on eBay).

It nets about $2.50 per day after electricity costs. While that isn’t a whole lot, it’s $75/month for having a computer plugged in and running. Took about 5 minutes to set up.

More powerful video cards like the new GTX 3080, which retails for $800 (good luck finding one), would net around $300/month.

Quote: gamerfreak

I just started to mine Bitcoin, really wish I had done it sooner.

It’s impossible to buy graphics cards at a reasonable price right now, but I purchased a GTX 1060 in 2016 for $270 (they now go for over $400 on eBay).

It nets about $2.50 per day after electricity costs. While that isn’t a whole lot, it’s $75/month for having a computer plugged in and running. Took about 5 minutes to set up.

More powerful video cards like the new GTX 3080, which retails for $800 (good luck finding one), would net around $300/month.

If it's profitable why not scale up?

Need an investor? U know my number.

In 2014, we were looking into creating and selling the hardware for bitcoin mining. We jobbed out the creation of the chip and the total costs were in the area of twelve million because we wanted to develop something that was so far ahead of anything that was out there. AT THAT TIME in very early 2014, we wanted to develop a new ASIC at 16nm with a speed well above 7.5 TH/s. I just pulled and took a look at all the emails I wrote about the project from 7 years ago or so.
We were about to put up the money just somehow never actuated the project. Then by 2018, bitcoin started coming down and interest in all that mining hardware waned.

At the height of the mining craze, you could pre-sell the hardware at $20K a pop without even having anything ready to sell. Our business model involved pre-selling the fastest mining hardware out there at $30K.

I haven't kept track of any of that since then, I assume we are well beyond 16nm and 7.5 TH/s now? but every time I drive by this certain building which houses the firm we were looking to hire, where we had some meetings, at least until we found a better one overseas, to design and build the ASIC, I think about that project.

Quote: AxelWolf

If it's profitable why not scale up?

Need an investor? U know my number.

Acquiring the hardware, especially in quantity, is pretty much impossible even on eBay.

If you google GTX 1070/1080/2070/2080 you will see what I mean.

They are so hard to purchase because of the Bitcoin mining that nvidia artificially throttled crypto mining on some of their new GPUs in an attempt to cool the market down.

Just like most other things in life, I feel like I’m about 5 years late to the party to earn any real money from this. But if the GPU market ever cools down I would definitely be interesting in scaling things up.

Quote: MDawg

In 2014, we were looking into creating and selling the hardware for bitcoin mining. We jobbed out the creation of the chip and the total costs were in the area of twelve million because we wanted to develop something that was so far ahead of anything that was out there. AT THAT TIME in very early 2014, we wanted to develop a new ASIC at 16nm with a speed well above 7.5 TH/s. I just pulled and took a look at all the emails I wrote about the project from 7 years ago or so.

Hmmmmmf. MDawg, this post seems somewhat out of character. Has your account been hacked?
$:o)

Quote: gamerfreak

Acquiring the hardware, especially in quantity, is pretty much impossible even on eBay.

If you google GTX 1070/1080/2070/2080 you will see what I mean.

They are so hard to purchase because of the Bitcoin mining that nvidia artificially throttled crypto mining on some of their new GPUs in an attempt to cool the market down.

Just like most other things in life, I feel like I’m about 5 years late to the party to earn any real money from this. But if the GPU market ever cools down I would definitely be interesting in scaling things up.

Is it that the cost is too high, or that no one is selling them?

There are no other options? A few years back I was interested in mining, however, whenever the subject came up I kept hearing it wasn't really cost-effective here.

Quote: AxelWolf

Is it that the cost is too high, or that no one is selling them?

There are no other options? A few years back I was interested in mining, however, whenever the subject came up I kept hearing it wasn't really cost-effective here.

NV Energy's rates aren't great for it. But a cheaper power market shows a return - Illinois, Ohio, western PA, VA, (usually) TX...

Quote: rdw4potus

NV Energy's rates aren't great for it. But a cheaper power market shows a return - Illinois, Ohio, western PA, VA, (usually) TX...

Would it be possible to do off grid via solar?

Quote: billryan

Would it be possible to do off grid via solar?

You don't have to go off-grid to do solar. You install solar, and any excess you generate, you sell back to the utility. The catch is that in some areas, the utilities pay you a fair bit less for the energy you generate, than the energy they sell you.

You could try solar, or wind, or geothermal. The on-site solutions do sometimes have net-metering issues where there's a cap on the amount you can sell back or the sell back price is artificially low. You'd also need to do solar plus a battery if that was your solution for all hours. It might work, but the payback on the Capex is usually over a decade so you'd need confidence in the long term value of the mined crypto. The other issue is scale. You want to do a couple server racks in your basement? Just buy tesla's roof and batteries. You want a bigger server farm? You need land. Lots of it. You can get 200-600kw/acre. A mid-size data center has a demand in the 5000-10000kw range.

Quote: AxelWolf

Is it that the cost is too high, or that no one is selling them?

There are no other options? A few years back I was interested in mining, however, whenever the subject came up I kept hearing it wasn't really cost-effective here.

Both, very few come up for sale and the ones that do go for crazy amounts.

There is purpose built mining hardware called ASIC miners that I have started to look into.

Quote: rdw4potus

NV Energy's rates aren't great for it. But a cheaper power market shows a return - Illinois, Ohio, western PA, VA, (usually) TX...

Not sure what power costs in NV but I pay around $0.12/kWh in eastern PA.

I would bet that the issue in NV wouldn’t be the cost to run the mining hardware itself, but to cool down the space they are running in. It generates quite a bit of heat.

Quote: gamerfreak

Not sure what power costs in NV but I pay around $0.12/kWh in eastern PA.

I would bet that the issue in NV wouldn’t be the cost to run the mining hardware itself, but to cool down the space they are running in. It generates quite a bit of heat.

You can set it up in my basement and use it October through April.... Don't worry about the extra heat it generates... It will be ok.....

How many Bitcoins are still available to be mined?

Quote: DRich

How many Bitcoins are still available to be mined?

About 18.5 million bitcoins have been mined out of a maximum of 21 million that can exist.

It’s expected to take until 2140 for all 21 million bitcoins to be mined, because every 4 years the reward for mining a block is cut in half.

Originally the reward for mining an entire block was something like 50 bitcoins, now it is down to 6.

Quote: gamerfreak

About 18.5 million bitcoins have been mined out of a maximum of 21 million that can exist.

It’s expected to take until 2140 for all 21 million bitcoins to be mined, because every 4 years the reward for mining a block is cut in half.

Originally the reward for mining an entire block was something like 50 bitcoins, now it is down to 6.

This is all interesting. I would like to encourage you to share your experiences and knowledge.

Quote: gamerfreak

Not sure what power costs in NV but I pay around $0.12/kWh in eastern PA.

I would bet that the issue in NV wouldn’t be the cost to run the mining hardware itself, but to cool down the space they are running in. It generates quite a bit of heat.

I think you're right about the heat. In PA, you'd want West Penn Power or maybe Duquesne as the utility & not PPL or PECO.

WaPo reports that the energy that goes into a single Bitcoin transaction could power the average U.S. household for a month.

https://www.washingtonpost.com/opinions/2021/02/18/bitcoin-emissions-pollution-tesla/

Quote: MichaelBluejay

WaPo reports that the energy that goes into a single Bitcoin transaction could power the average U.S. household for a month.

https://www.washingtonpost.com/opinions/2021/02/18/bitcoin-emissions-pollution-tesla/

I read that they used rather obtuse maths to derive that and that estimates vary wildly.

https://digiconomist.net/bitcoin-energy-consumption#assumptions

I agree it's too much, though and I hope we get some sort of redesign or alternative soon.... That doesn't devalue my holding.

Here is an article that should be of interest to this thread's participants:

"Coinbase Users Say Crypto Start-Up Ignored Their Pleas for Help"
https://www.nytimes.com/2021/03/24/technology/coinbase-bitcoin-complaints.html?smid=url-share

Quote: NY Times

Mr. Pierre, 47, a lawyer and onetime Coinbase employee, began urging his former colleagues to investigate the episode and to compensate him for the missing cryptocurrencies, which would be worth more than $400,000 today. He received little assistance, he said. So in January, he sued Coinbase, accusing the company of negligent security measures and failing to protect his money.

Oh Boy! Just seen the Bitcoin price.

$48,154.40
-3,662.18 on the day... And that's just today.

OUCH!
So much for hodling.
Even worse having actually paid fiat for some.

https://cryptodaily.co.uk/2021/04/Why-Crypto-market-slide

I know... It's just ordinary Bitcoin volatility. I can live without that kind of excitement.

Quote: OnceDear

Oh Boy! Just seen the Bitcoin price.

$48,154.40
-3,662.18 on the day... And that's just today

I know... It's just ordinary Bitcoin volatility. I can live without that kind of excitement.

So, should one 'dollar cost average' Bitcoin?

Quote: IndyJeffrey

So, should one 'dollar cost average' Bitcoin?

Lol. Dollar Cost Averaging = Marty for investors.

Quote: OnceDear

Lol. Dollar Cost Averaging = Marty for investors.

That’s not true. Dollar cost averaging just means spending the same amount of dollars periodically to invest. So if you by $200 of stock each month, that’s dollar cost averaging. You get more shares when price lower and less shares when price higher.

Quote: unJon

That’s not true. Dollar cost averaging just means spending the same amount of dollars periodically to invest. So if you by $200 of stock each month, that’s dollar cost averaging. You get more shares when price lower and less shares when price higher.

True enough. DCA's little cousin 'Averaging down' into a falling asset price is the real marty for investors.

Aren’t some of the worries coming from perceptions on the potential clampdown on the massive energy cost of BC mining?

Quote: rxwine

Aren’t some of the worries coming from perceptions on the potential clampdown on the massive energy cost of BC mining?

Yes, but also... Not to get into the politics, but as I read it, it is linked to concern about potentially increasing CGT rates, since every BTC transaction is a CGT assessable event, which also makes BTC a non-viable currency.
I personally feel very concerned by the energy sustainability aspect of BTC, but there are moves ongoing to alleviate that.

Quote: OnceDear

Yes, but also... Not to get into the politics, but as I read it, it is linked to concern about potentially increasing CGT rates, since every BTC transaction is a CGT assessable event, which also makes BTC a non-viable currency.
I personally feel very concerned by the energy sustainability aspect of BTC, but there are moves ongoing to alleviate that.

.

If I buy 1000 euros today, and use those euros to buy dollars tomorrow, and I end up ahead $100, is that nothing? Is that ordinary income? Is that a capital gain?

Quote: SOOPOO

.

If I buy 1000 euros today, and use those euros to buy dollars tomorrow, and I end up ahead $100, is that nothing? Is that ordinary income? Is that a capital gain?

UK HMRC treat it as a capital gain, but they do allow aggregation of a whole year's worth of transactions, grouped by currency at average price, for simplicity.
I understand the IRS, does too, but I'm no expert in US taxes.

"HMRC & Bitcoin Bitcoin tax – when might tax be due? CGT will be chargeable on the following taxable events:

A sale of Bitcoin for money;
Exchanging Bitcoin for a different type of cryptoasset;
Using Bitcoin to pay for goods or services; and,
Gifting Bitcoin to another person."

Quote: MichaelBluejay

You don't have to go off-grid to do solar. You install solar, and any excess you generate, you sell back to the utility. The catch is that in some areas, the utilities pay you a fair bit less for the energy you generate, than the energy they sell you.

That's not what I asked.

You’re right. You asked, “Would it be possible to go off grid via solar?” Of course you can, but you’ll need large, expensive batteries. The advantage of not going off-grid is that you save the expense of the batteries, but if you’re determined to go off-grid, then yes, it’s possible.

Looks like someone thinks it's a Ponzi scheme.

https://www.msn.com/en-us/money/markets/bitcoin-is-an-open-ponzi-and-failed-currency-says-black-swan-author-nassim-taleb/ar-BB1g212s?ocid=msedgntp

Well, kind of. The price is racing up because more and more people (and businesses) are pouring new money into it. But at some point, everyone who wanted to buy Bitcoin will have bought it, and then the price won't accelerate any more. So, those who got in early will reap the rewards, those who got in later, not so much. And those who got in at the end...the big question is, once there's no more new money, does Bitcoin just maintain its last price, or does it actually fall? I don't know, but we'll find out.