Does anyone actually use Bitcoin to pay for things?

tecate said:
The general advice is don't hold cryptocurrency in an exchange account for longer than you have to (move it out to your own wallet) and the same with FIAT.
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So how does it work in practice if I want to buy a pizza with Bitcoin?

Do I bring my wallet with me and pay for it out of my wallet?

Or do I need to use an exchange?

Brendan
 
Brendan Burgess said:
So how does it work in practice if I want to buy a pizza with Bitcoin?

Do I bring my wallet with me and pay for it out of my wallet?

Or do I need to use an exchange?

Brendan
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If you purchase bitcoin through an exchange, you transfer FIAT into the exchange and purchase immediately. Upon receipt of your bitcoin, you transfer the bitcoin out of their system into either a hardware or software wallet. Significant amounts of bitcoin you would place in cold storage i.e. a hardware wallet. For day to day use, (i.e. your example of buying a pizza), you would have loaded some funds into a software wallet on your mobile.

Exchanges are a point of weakness. The fact that they are relatively new and the tech is nascent (together with the nature of the tech) means that it's not good practice to entrust your wealth in their care.
 
Thanks

I get it now.

The only need for an exchange is when you are buying or selling Bitcoin?

The exchange is not involved in my transaction with Pizza Hut? Even if it were, it wouldn't be a big issue, as I presume it's like having my current account in the bank cleared out. I wouldn't like it, but I would not lose my life's savings.

When these hacked Mount Gox and Coin Base, how come they got so much money if everyone moves their cryptos out of the exchange?

Brendan
 
Brendan Burgess said:
I get it now. The only need for an exchange is when you are buying or selling Bitcoin?
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Precisely.
Brendan Burgess said:
The exchange is not involved in my transaction with Pizza Hut?
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Correct. If you use your own software wallet, then they don't have to be. The only difference is personal responsibility. It's decentralised so if you lose the seed key for your wallet, you lose those funds. If you leave them on the exchange, then they can assist you in re-establishing access to your funds (in the same way as a bank would).

Brendan Burgess said:
Even if it were, it wouldn't be a big issue, as I presume it's like having my current account in the bank cleared out. I wouldn't like it, but I would not lose my life's savings.
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True - although you don't even have to risk those funds either (by using your own wallet. You can install a wallet on your phone in a couple of minutes).

Brendan Burgess said:
When these hacked Mount Gox and Coin Base, how come they got so much money if everyone moves their cryptos out of the exchange?
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Mt. Gox was a particularly acute hack as that exchange dealt with 80% of all exchange transactions at that point in time. The Coincheck hack is no small thing. However, the cryptocurrency ecosystem has moved on - meaning that although it's significant, it's not as detrimental to the sector overall (proportionately).
As regards why there's funds there to be stolen, I'd say that's 2 fold;
1. Regardless of how savvy you operate, if you use an exchange you are going to put your funds at the mercy of the exchange for a certain period of time at least. Therefore, there's always going to be a certain level of funds held by an exchange.
2. I'd imagine that a lot of folks have not cottoned on to good practice in this regard. Perhaps they are concerned about taking responsibility for their own crypto wallet or they just assume that it won't happen to their funds and their exchange.
 
tecate said:
More cash has been money laundered than bitcoin. Things can be used for good or bad - that shouldn't mean that we throw the baby out with the bath water.
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100% agree, but it's false to say there have been no Bitcoin fraud convictions, 10 seconds on Google will point to other examples.

I believe cryptos have a future, but I'd like to see them move in the direction where they make the likes of fraud and money laundering more difficult. There's an opportunity here for an evolution beyond the flaws of the past, should we be happy with a solution that just mimics fiat's weak points? It seems some of the cryptos that have emerged since Bitcoin are deliberately heading down a path that will greatly enhance their appeal to criminals.
 
@Leo: I get what your saying. Yes, there are coins that are truly anonymous eg. Monero & Zcash. It would be correct to say that they are now more likely to be used by those involved in illicit activity. However, they are also used by proponents of privacy. Remember separate from the whole crypto thing, governments were leading us (at varying rates) down the road of a cashless society. Only 2% of transactions in Sweden are now made with cash (expected to be 0.2% by 2020). I don't think it's healthy that every single transaction you make is recorded for posterity - and accessible to authorities. Say you make a donation to some politically sensitive group - as an example.
I get the whole fight against illicit activity - but it needs to be balanced against personal privacy. AML/KYC requirements are a drag for consumers (I can only imagine how much of a headache they are for the entity that is forced to apply these regs). Is there not a point at which the price paid is too much and illicit activity should be combated in another way...
 
Samsung a global giant, is now officially getting into the bitcoin/crypto mining business.
Samsung, the largest company in South Korea which is accountable for a large portion of the country’s economy, has started the production phase of bitcoin and cryptocurrency mining equipment and ASIC mining chips.

Local media outlets reported that Samsung partnered with a Chinese bitcoin mining equipment manufacturer last year and finished the development of its ASIC chips. Samsung, which operates one of the largest semi-conductor manufacturing plants in the world, will manufacture and supply cryptocurrency mining equipment to the Chinese market first.

In the long-term, Samsung plans to expand its mining equipment venture from China to other regions like South Korea and Japan that have a stronger demand for cryptocurrencies than other countries.
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https://www.newsbtc.com/2018/01/30/...pany-manufacturing-asic-chips-bitcoin-mining/
Taken from: http://www.thebell.co.kr/free/content/ArticleView.asp?key=201801290100056740003492

This suggests to me that they know that China is not about to ban bitcoin mining, and they see a future in this asset class and are positioning themselves accordingly.
 
I think China's issue is not with bitcoin itself, but rather it being used as a means to transfer capital out the country. I think they have restrictions on how much money you can take out of the country. Bitcoin provides a convenient way to by pass regulations.
 
Why are Samsung not getting into the mining business themselves? If they truly believed they would keep the technology to themselves and mop up the lion's share of the remaining 5 million bitcoin yet to be mined; that's a seam worth 50bn dollars at today's prices. In fact is this not in general the dog that is not barking? Why are the big guns not getting into bitcoin mining?
 
Duke of Marmalade said:
Why are the big guns not getting into bitcoin mining?
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Because it's highly specialised and very risky. It's not just the risk of Bitcoin succeeding or not. Bitcoin could continue to increase in value and you could still make a loss by mining. You don't know what the future mining difficulty will be among other unknowns, so you can't make any kind of reliable predictions about the return.
 
Duke of Marmalade said:
Why are Samsung not getting into the mining business themselves?
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There's plenty of $ in asic chips - chip manufacturing being a core business of theirs. Mining is not a core activity of theirs. There are plenty of big interests in mining - maybe not of Samsungs size - but big nonetheless (too big in fact).

Brendan Burgess said:
Maybe they just don't have the energy for it?
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Energy requirement is being tackled in innovative ways;
"Oil and gas explorer Iron Bridge Resources Inc. (IBR.TO), for one, recently announced plans to launch a cryptocurrency mining division that will use excess energy from its oil and gas operations in northern Alberta."
The same excess from Quebec Hydro to be utilised in the same way.
Other than that, development of the bitcoin tech will lead to a reduction in the energy requirement.
 
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fpalb said:
Because it's highly specialised and very risky. It's not just the risk of Bitcoin succeeding or not. Bitcoin could continue to increase in value and you could still make a loss by mining. You don't know what the future mining difficulty will be among other unknowns, so you can't make any kind of reliable predictions about the return.
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I would say it's almost infinitely more risky to develop a new processor that has the capability of mining rather than doing the mining activity itself. New chips cost a fortune to develop and roll out.
 
I heard an item on Sean O'R. earlier with two fellahs betting everything they had on the 'sure thing' (the only way is up) cryptocurrency including all salary and OT, I kid you not. In the same program they had a TCD professor warning this was a definite bubble. I wouldn't put my lunch money on them.
 
DeclanDublin said:
I heard an item on Sean O'R. earlier with two fellahs betting everything they had on the 'sure thing' (the only way is up) cryptocurrency including all salary and OT, I kid you not. In the same program they had a TCD professor warning this was a definite bubble. I wouldn't put my lunch money on them.
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I see plenty of fellahs going into the likes of paddy powers every day who do the same not to mention on line betting,
 
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