New to bitcoin - page 2. | Bitcointalksearch.org

Public Service Announcement (For Anyone Here Who Is Actually New):

All individuals considering spending any amount of money purchasing bitcoin critically need to understand several important key things about what bitcoin is and how and what other individuals with vested interest in bitcoin will say on this and other forums and "trollboxes" aka exchange chat rooms. The first thing to understand about bitcoin is that millions of bitcoins were produced or "mined" by a very small group of individuals in the first year to two years since the release of the bitcoin software, which was not widely publicized. During this time there was basically no wide scale press announcements, no merchant acceptance, and zero to little monetary value, in fact there were actually no exchanges whatsoever, and there was not any specialized hardware to produce bitcoins with. Of course, it became evident to some that it would be possible to use bitcoin as a "pump and dump" finance mechanism, since bitcoin is denominated in units as other real commodities are, and had a very low value when compared to other commodities. Some primitive exchanges were introduced at this time, and the very beginnings of merchant acceptance began popping up, as the price actually was pushed to dollar equivalency using real money. The first legitimate bubble took the price quickly from $1 to $2 to $32, and then in short order back to $2. It took another 3 years for the price to recover to around $20 in value, as public awareness of the existence of bitcoin slowly grew, and new money flowed in. It was during this time that a darkweb site known as "Silk Road" was operated based on bitcoin, which sold illegal drugs, weapons, child pornography, prostitution, assassinations for hire, and quite possibly funded terrorism. The price rose to roughly $100 per bitcoin as the demand for these horrific products and services was satisfied, and drug money was pumped back into bitcoin. This is also when the computational arms race truly kicked into high gear and powerful gaming rigs with multiple graphics cards dedicated to producing bitcoins were replaced by application specific integrated circuits, or ASICs as they are commonly known. Thankfully, the Silk Road was eventually shutdown - the price of the bitcoin dropped immediately and sharply (though today reincarnations of this dark bazaar now exist). The next critical step forward for bitcoin came in the form of an exchange known as MtGox, which was operated out of Japan by an individual by the name of Mark Karpeles. It was, at the time, the world's largest bitcoin exchange. In the fall and winter of 2013 MtGox fraudulently used an estimated one billion dollars in falsified capital (fake money) injected into their own exchange to illegally purchase an estimated 650,000 bitcoins from their customers off of their own books, and subsequently drove the price from roughly $100 to over $1200 per bitcoin. The exchange closed, citing "hacking" as the reason for their failure to continue to operate, and has to this date not returned to their customers any of their national currencies or bitcoins. At the time of the exchange closure, the approximate "real" market value of the stolen bitcoins approached $700,000,000. Mark Karpeles remains at large. In the aftermath of this massive scandal, the price of the bitcoin plummeted, and has been in a continuing downtrend ever since. To date there have been dozens of other real and alleged hacks and exchange closures frauds and ponzi schemes based on bitcoin, with losses to consumers in the tens of millions of dollars. The true identity of the creator of the bitcoin software is unknown and has been the topic of much debate. It is estimated that this individual possesses nearly 1 million bitcoins, of the roughly 13 million currently in existence, and 21 million total that will ever be produced.

In regards to what people on this forum, other forums, and chat rooms aka "troll boxes" will say to you, it is important to understand that there are a small number of individuals who have made ungodly sums of money from this thing, and there are others who have lost severely. Those with large sums of coins and have the most to gain and to lose with bitcoin typically acquired their bitcoins by purchasing them in the single digit $ range, or by producing them for free within the first year of the release of the software, when it was possible to produce hundreds of bitcoins per day with a simple laptop, or they spent a great deal of money acquiring their coins and may or may not be at a profit at this point in time - these individuals want for bitcoin to gain in value and for you to pay them for the coins they wish to sell, some out of a desire for continued profit, and some out of a desperate desire to recoup losses. Also, it is important to note that at this time, bitcoin is allowed to be traded with "short" and "long" positions on some exchanges, which to put simply means to place a bet leveraged or otherwise on whether the price will move upwards or downwards, much as derivatives markets are traded, and therefore some individuals actually stand to make a profit from the price of the bitcoin going down. Also of critical importance to potential investors is to note that bitcoins are being produced daily, at an exact rate of 3600 coins per day - if all of these produced coins are sold daily it represents a sell pressure of 3600Xcurrent market value, a not insignificant amount. Also of important note to potential investors, is today's prevalence of "bot traders" - put simply, there are automated trading programs being run on each and every exchange currently in operation, which buy and sell 24/7/365, some with deep pockets and large amounts of bitcoins. The people and bots being run by people (and some would argue, bots being run by the exchanges themselves) who possess large amounts of bitcoin and or huge fiat capital are capable of supporting and moving markets. A good piece of advice at this point to anyone interested in bitcoin is trust no one. Trust only what facts you are able to independently verify through your own research.

Topic: New to bitcoin - page 2. (Read 2056 times)