Best Of

@primesuspect said:
Thanks @Myrmidon. I didn't intend for this post to turn into a mining post because I know NOTHING about currency mining, but of course I am talking to a community of PC-building geeks so of course it will turn to that, and I'm very glad to defer to people who know what they're talking about on the mining aspect. I was talking more about BTC and cryptocurrency basics (101 level).

I probably did emphasize the 'mining' part of what I do a little much. See? threadjacking. But to even it out... trading is really easy and much faster than stock market trading! 10/10 would recommend!

@keto said:
Just make sure you report your net profits to the Feds on your taxes, that's where it has the most potential to get ugly (other than making stupid decisions and losing your shorts trading), sounds like you are keeping excellent records which is either a really good or really bad idea

Wisdom. So far my records are in fact excellent, BUT I haven't cashed out for $, which means I am not liable for taxes... yet. My biggest concern is figuring out how to report the ~$40 I spent on steam games last year with bitcoin. This might be a good year to start looking into charitable donations to offset BTC gains...

@CrazyJoe said:
Why would you want to keep your currency on an exchange rather than in a wallet unless you were trading/selling?

The time it takes to trade from your wallet to an exchange, then from an exchange to dollars can be the difference between jumping on a good sell price or not - not to mention having to be focused for that long. The difficulty in setting up a wallet is already a bit much for someone who doesn't already know crypto, and even if you DO, it's still extra steps to do a thing - yes, it's simple, but you know how the layman is with computers. We still have people reusing passwords. Additionally, EMT noted - every transaction takes a fee. Usually the fee is pretty small, though, since it's a fee based on amount of data transferred, not amount of money transferred. Look up 'dust transactions' for a really interesting look at this... there are transactions so small that the fee to transfer them in a reasonable amount of time would cost more than the transaction (and this problem should get fixed in time).

@drasnor said:
How do you spend your cryptocurrency on goods and services?

There exists a third party payment processor called BitPay. Steam was using this processor for a while. After purchasing a game, Steam would redirect to BitPay, who would provide a temporary wallet address, and say 'I have to see a payment of 0.xxx BTC within 15 minutes.' If they saw the payment, they'd put the transaction 'in escrow' until the payment was fully confirmed on the network (once fully confirmed, the transaction was greenlit). If they didn't see the payment, the transaction was canceled.

Without a payment processor, it's a little more like using something like Google Wallet or VenMo to pay someone. You tell the person over whatever medium to send you money, you provide the public key to your wallet (analogous to your gmail address for Google Wallet), and you wait for funds to show up. The 'buyer' can tell you where the funds are coming from if they like (by providing their own public key).

@EMT said:
It costs like a $1+ fee (lately) to move any BTC to a different address or wallet, or to pay for anything, right?

Yeah, but the fee is set by the sender. It's actually one of the more clever parts of the technology - there's incentive to keep your miner going even once the blockchain is all mined out - your miner will continue validating these transactions, and get paid by that fee. Miners traditionally validate the higher-fee transactions first, so if you don't need to send IMMEDIATELY, you can save a couple bucks with a low fee. The more people use the network, the more 'high-fee' senders will show up, and the higher the fee will get... thus incentivizing more people to buy miners to get in on the easy money, thus increasing the throughput of the network, thus reducing the amount of transactions waiting on the network, thus reducing the fee. Although I'm not a HUGE free-market fan, this is basically free market for fees... fee market.

...I'll show myself out.

@EMT said:
How far does everyone trust their cryptocurrency to be kept safe from theft?

Alright, this is one I can answer

There is some confusion about the difference between cryptocurrency accounts and wallets.

You can TRADE cryptocurrency on simple sites and apps like Coinbase or (soon) Robinhood, but you have to understand something fundamentally important: THEY are holding on to your currency (like a bank), but UNLIKE banks, they are not regulated or protected or insured... so if your currency gets stolen (and this has happened more times than you'd probably like to know), you are fully exposed to loss. See Mt Gox as one example of a currency exchange getting screwed over and tons of people losing their shorts in the mess...

To keep your currency safe, you should get a digital wallet (like Electrum or Blockchain). YOU are responsible for your own currency and you hold it with your own keys, etc. The chances of you personally getting hacked are infinitesimally smaller than a big, juicy exchange being targeted.

That means when you want to trade currency, you take it out of your wallet and move it INTO the exchange to trade... On the flip side, if you want to pull currency from the exchange, you would pull it FROM the exchange into your wallet.

It's much safer if you're holding onto it rather than letting it sit on somebody else's exchange.