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James R. Davis
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Posted - 01/17/2016 :  7:36 AM Follow poster on Twitter  Join poster on Facebook as Friend                        Like
It's been 6 months since we mentioned bitcoins here and a great deal has happened during that time relative to that commodity. I thought you might like a brief summary of what has been happening and a little perspective about what's next.

To begin with, the value of bitcoins has been extremely volatile. Six moths ago a bitcoin (BTC) was worth about $240 and had been trading in a quite stable range between $230 and $250 for a few months. Then the price of a BTC rose dramatically and reached more than $500 for a couple of weeks only to fall last week back to around $370.

Lots of profits (and losses) are available in a volatile market.

But the focus of venture capitalists shifted from bitcoins to the underlying technology - the blockchain - upon which bitcoins were built. Indeed, over $1 BILLION of venture capital was put into blockchain startup companies last year - dwarfing the amount put into purely bitcoin ventures.

The blockchain is merely a decentralized ledger that provides immutable proof of the status of bitcoins and that operates WITHOUT THE NEED OF A TRUSTED INTERMEDIARY (such as a bank).

Banks, accounting firms, art, real estate, attorneys, technology companies like IBM, and many more have realized that blockchain technology enables capabilies only dreamed of without it. The Internet of Things (IoT), proof of ownership, smart contracts, virtually instantaneous (essentially free) funds transfers, the ability to understand corporate ownership dynamics (voting blocks, merger and acquisition efforts, etc.), and much much more is enabled via the blockchain technology.

Bitcoins have been used as value respositories facilitating very rapid and cheap value transfers (i.e., digital currency). As such, they perform very well. But they are limited. Bitcoins could never, for example, replace credit card transaction volumes without a major change in the blockchain technology unique to it (though there are efforts underway to do just that).

The bitcoin blockchain technology doesn't just happen to exist. It consists of a large number of computers located all over the world that each play a part in verifying the integrity of the data and replicating it throughout the world, and not incidentally, creating bitcoins. Bitcoins are used to compensate the owners of those computer owners so that they continue to exist and make the protocol work. Each transaction (transfer of ownership of bitcoins from one owner to another) includes a trivial fee (about $0.03) and the opportunity to earn 25 BTC (now) by solving cryptography problems. That last is called 'mining'.

Only recently has it become apparent that the use of bitcoins to support (pay for) the blockchain existence and operation is more than a trivial value of bitcoins because bitcoins have been so successfully used to transfer value ala currencies.

But those other blockchain ventures being funded by venture capitalists are not likely to be using bitcoins. A smart contract, for example, requires the ability to identify who is involved in the transactions along with the terms of that agreement. While the bitcoin blockchain maintains ONLY a trivial amount of information (quantity and wallet address of BITCOINS, for example), a smart contract (or copyright, or patent, etc.) would contain a great deal more information that has nothing to do with bitcoins.

Still, there must be incentives to pay for the blockchain creation and operation. Those incentives COULD be paid using bitcoins, but much more likely will consist of something specifically designed to support blockchains in general - what is essentially the 'gas' that powers the technology.

Most likely, that 'gas' will be a different digital currency than bitcoins. The leading candidate, so far, is called ETHEREUM.

Let me try to make that a little more clear. If an attorney wished to create a 'smart contract', or a corporation wished to do a stock transfer, or a real estate title needed to be transferred, or a performance royalty was to be distributed to the owners of a work of art - all using some form of blockchain ledger system, each of those transactions would have to be paid for with a small amount of ethereum.

You can, TODAY, acquire as much ethereum as you want - using dollars or bitcoins or virtually any other currency, or you can mine for some similar to how bitcoins are created. Indeed, about $1 MILLION worth of ethereum transactions PER DAY are being made. Each ethereum is currently worth about $1.00, up from about $0.50 just last week.

Interesting, no?

James R. Davis
Male Administrator
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Houston, TX
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Honda

GoldWing 1500

Posted - 01/25/2016 :  10:40 AM Follow poster on Twitter  Join poster on Facebook as Friend  
Until last week LTC (LiteCoin) was far and away the second largest market capitalized alt-currency behind BTC (Bitcoin).

Ethereum (ETH) has quickly replaced LTC as the second largest market capitalized alt-currency.

In the last three days ETH has risen in value from about $1.00 per ETH to $2.85 per.

Remarkable!
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James R. Davis
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Houston, TX
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Posted - 02/09/2016 :  4:43 PM Follow poster on Twitter  Join poster on Facebook as Friend  
Maybe I'm just posting to myself here. It's astonishing, to me, that such an enormously significant development in the cryptocurrency arena seems to go virtually unnoticed or is of no interest to intelligent people at large.

This news, published today, for example, is mind-boggling to me:

quote:
The rise of Ethereum just keeps going, as the price of the cryptocurrency sets new records. Only yesterday the market capitalization of Ether reached a quarter of a billion dollars for the first time and now it is even higher. More than just the figure, at about $283 million, Ether is again beating Ripple as the second biggest cryptocurrency by market cap.

The price of Ether rose over 69% in the past week, jumping about 21% in the last twenty-four hours alone to above 0.0098 BTC ($3.68). Supporting the rise of Ether?s price were large trading volumes, about $14.4 million in the last twenty-four hours ? over a quarter of bitcoin?s daily trading volume ($55.3m ADV).



I brought Ethereum to your attention when it was trading for about $1.00 per with trading volumes of less than $1 million per day. Now it is trading for about $3.80 on volumes in excess of $14 million per day.

It's possible that you are not investment minded. But surely the fact that 13 of the largest banks in the world are testing an Ethereum based distributed ledger system along with over a Billion Dollars of Market Capitalization suggests that this is not merely an interesting minor technological development that merits your further interest.
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wmcooper
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perry, ga
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Posted - 02/09/2016 :  5:07 PM
I trade real currencies, i.e. Forex. Crypto currencies have too much volatility and I haven't analyzed s/r behavior on any of them. I'm surprised that in the U.S that the treasury department or whatever agency is responsible for currency would allow this sort of thing anyway. Since it's not legal currency. You know the government has to be in control of things like that, uncle Sam, big brother, nanny state and all.
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James R. Davis
Male Administrator
17294 Posts
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Houston, TX
USA

Honda

GoldWing 1500

Posted - 02/09/2016 :  7:05 PM Follow poster on Twitter  Join poster on Facebook as Friend  
While Ethereum is classified as a crypto currency, it is NOT, like bitcoins, a store of value that is easy to transfer. Well, they could be that, but the reason there is 'value' attributed to the Ethereum 'coin' is that they are extremely well designed for use as the 'gas' that drives blockchain transactions. Essentially, that means that they are used to 'pay for' transactions.

Bitcoins do that as well, but ONLY for the bitcoin blockchain while Ethereum is used for very many other blockchains.

I've had a huge number of bitcoins transactions and can tell you that each one has cost approximately $0.03 (in bitcoins) per transaction. I've had a small number of Ethereum transactions and each one has averaged approximately $0.01 (in Ethereum) per transaction.

Transaction fees are paid to miners for validating the transactions and placing them on the blockchain.

About 'a store of value' ... A US Dollar bill is worth $1.00 and can be transferred (spent) virtually anywhere. If that dollar bill is destroyed, its value disappears. There is no question that it is a store of value - although there is always the question of whether or not it is a real US Dollar (not a counterfeit).

A bitcoin is also clearly a store of value. Unlike a dollar bill, it cannot be destroyed, NOR CAN IT BE COUNTERFEITED. Its value is market determined and can be expressed in US Dollars or EUR or any other currency.

So what about the Ethereum (ETH)? Try this as an example ... If you want to use your Visa card to pay for something, that card is NOT a store of value, but it has access (if the network is up), to a payment provider that can transfer US Dollars as a result of the use of that card.

Now what if you want to use that same card to 'spend' bitcoins? Actually, you can do so if the payment provider has made the arrangements to do so. The card connects with a provider that honors a bitcoin transaction because it, via a blockchain, verifies that you own enough BTC and what the market value is of each BTC.

Without bothering you with the details, just know this ... it takes about 10 minutes to get a confirmation from the bitcoin blockchain. That's TOO LONG to make a customer wait to see if the card will honor a transaction. But by using a Ethereum transaction with an interfacing blockchain (between the bitcoin and another blockchain), the transaction can be verified in moments.

Thus, the Ethereum itself is not the 'store of value', but it facilitates the transaction.

As to the government being in control... NO!

Fiat currencies are controlled by governments. Cryptocurrencies are NOT CONTROLLED (manipulated). They are 'trustless' (meaning they require NO TRUSTED INTERMEDIARIES (brokers, banks, etc.) to work.

This is NOT a US phenomenon. 40% of bitcoin transactions are Chinese, for example. They are international.

And, the IRS in the United States has ruled that bitcoins are NOT currency, but are 'commodities'.
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James R. Davis
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Houston, TX
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Posted - 02/11/2016 :  6:28 PM Follow poster on Twitter  Join poster on Facebook as Friend  
In case you've not been paying attention.

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James R. Davis
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Houston, TX
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Posted - 03/03/2016 :  8:00 AM Follow poster on Twitter  Join poster on Facebook as Friend  
Still not paying attention?



When Microsoft endorses something like Ethereum, like they did, people pay attention.

This is NOT a recommendation to buy Ethereum! Instead, it is an attempt to awaken your interest generally.

Do you have the slightest idea of what a 'smart contract' is? Do you know what crowd funding is? Ever heard of the Internet of Things (IoT)?

At the heart of any discussion about those topics there should be Ethereum. If I told you that Ethereum is not just an alt-currency, it is the world's first virtual computer, and that ETH (Ether) is the 'gas' that powers that computer, does that get your attention?
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James R. Davis
Male Administrator
17294 Posts
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Houston, TX
USA

Honda

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Posted - 03/03/2016 :  10:09 AM Follow poster on Twitter  Join poster on Facebook as Friend  
A Private Message asked for more information. You can't learn from my PM response, so here is most of it.

quote:
If you know what Bitcoins are, you know a great deal about Ethereum already. Ethereum is a distributed ledger system, meaning there are exact duplicates of the ledger all over the world that CANNOT be falsified or corrupted and NOBODY must exist as a middleman (broker, agent, bank, exchange, etc.) in order to work.

ETH is like BTC (Ether is like Bitcoin) - both are alt-currency. Both are a store of value that can easily by transferred, and cheaply.

The ledger is a blockchain in both cases. But in the case of Ethereum, in addition to wallet id and amount it contains CODE (contracts) and the ability to be either private or public. Ethereum has a language (script) to control its code. That is, Ethereum behaves like a computer - it executes code (contracts).

Etc.
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James R. Davis
Male Administrator
17294 Posts
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Houston, TX
USA

Honda

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Posted - 03/12/2016 :  8:52 AM Follow poster on Twitter  Join poster on Facebook as Friend  
It continues. Ethereum is now worth $13.00 per.

Importantly, two MAJOR exchanges in the alt-currency world (Bitfinex and CHBTC) announced yesterday that they would begin trading ETH starting Monday!

Insider humor: "Satoshi invented BTC in order to have something to buy ETH with."

That, believe it or not, is hilarious!!!!
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James R. Davis
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Houston, TX
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Posted - 03/13/2016 :  1:30 PM Follow poster on Twitter  Join poster on Facebook as Friend  
And now it's worth $15.00. And it's not even Monday yet.
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James R. Davis
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Houston, TX
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Posted - 03/20/2016 :  9:15 AM Follow poster on Twitter  Join poster on Facebook as Friend  
Ethereum has been trading on several major exchanges of late with interesting results. Over the past three months the market price of one ETH (Ethereum 'coin') has risen from about $1.00 to about $15.00, and over the pat week profit taking has resulted in that market price falling to about $10.50.

I've shown you market price charts in the past, but they were always relative to Bitcoins. That is, you can buy or sell Ethereum using US Dollars or Bitcoins (or any other currency via exchanges), and because the vast majority of exchange transactions have been with Bitcoins, I showed the market price of ETH in Bitcoins. Today, however, I will present a market price chart in terms of US Dollars over the last month.



You see at the upper left corner that the market price of ETH was as low an $4.00 one month ago and as high as $15.00 just last week, with the current price of about $10.38. I changed perspectives because most readers here are simply not used to thinking of prices in terms of Bitcoins.

For perspective please note that Ethereum trading is far from trivial and restricted to only a few 'in the know' traders. More than $15,000,000 of trades occur each and every day.

Why? and what does it all mean?

The answers to those questions would take a great deal of time to present here, and those answers would only be my perspective, of course, but they would be well informed answers. I will attempt to at least begin to address them now.

Etherum is based on a distributed ledger system (blockchain) that is absolutely secure, absolutely reliable, absolutely independent of authority, requires no middlemen to provide access or function (such as banks, brokers, agents, governments, etc.), cannot be regulated, cannot be 'intercepted' or spied upon by the NSA or anybody else (meaning that its transactions are essentially anonymous), and much, much more.

It will almost certainly REPLACE the internet that we know of today. It is a platform upon which you can do virtually anything that you now can do on your home computer (or on networked computers systems like Google, or eBay, or iTunes).

That, because Ethereum IS a virtual computer. Bitcoin is the largest existing blockchain system today with more than 6,000 individual computer nodes located all over the world. If even one of those nodes continues to run, the Bitcoin network continues to exist. Ethereum in just two years already has more than 5,000 nodes and it is growing daily.

The Bitcoin network can do only one thing - store and transfer Bitcoins. The Ethereum network can do ANYTHING a computer can do today. That is, Ethereum runs code (programs). That code is in the form of what are called 'SMART CONTRACTS'. Once such a contract exists, it's IMMUTABLE (CANNOT BE CHANGED). Those smart contracts, FOREVER, run on the Ethereum network and are TRUSTLESS - meaning that nobody (no administrator, no business entity, no government, no middleman of any kind) must be trusted to act in good faith to honor that contract's terms and conditions - the Ethereum network, alone controls and runs those smart contracts.

Let me give you a couple of examples ...

There have been MANY web sites that provided 'on-line gambling' services (legal and illegal). Many have been shut down by various governments because of unfair practices (controlling outcomes or siphoning (stealing) user's money, for example) while other have simply disappeared along with their user's money. When you used those sites you had to trust the programmers and administrators of the sites along with their hardware and software.

A gambling application in the form of a smart contract can be created on Ethereum that requires no trust at all. It will perform EXACTLY as 'promised' by the smart contract.

For years I've been a borrower. I have agreed to pay anyone who lends me money 11% interest per year, payable DAILY (0.03013699% PER DAY). Obviously I do this because I earn more than 11% on my money. People who have lent me money have done so because they trust me.

I could prepare a smart contract on Ethereum that promises to do the same thing - pay 0.03013699% per day on funds paid into it. NO TRUST WOULD BE REQUIRED to participate by lenders. Lenders could check balances and payment history and status at any time (do an audit). They could withdraw their money along with earned interest within 17 seconds without having to ask for permission to make that withdrawal or having to wait until the borrower (me in this example) could round up adequate funds to make good on that withdrawal demand. Etherum's smart contract does it all without human intervention. And that contract can be viewed on-line by anybody at any time. (Remember, it CANNOT BE CHANGED, EVER, once it exists.)

If you were a musician who owned a percentage share of the profits (in other words, a royalty) of a piece of music, that royalty contract could be made to exist on Ethereum and NOBODY could short-change you or fail to make good on that contract.

As to that musician ... today, every piece of music sold by iTunes or other on-line store has a small piece of the price paid removed as a 'fee' paid for selling that music. Profit to iTunes, etc., instead of the musician. If those sales were made via smart contracts on Ethereum, however, those fees could be reduced to almost nothing and the musicians would all share in a larger piece of the action.

Anyway, this has been ramblings and is enough for now.

Ask if you are interested in more.

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James R. Davis
Male Administrator
17294 Posts
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Houston, TX
USA

Honda

GoldWing 1500

Posted - 05/07/2017 :  9:51 AM Follow poster on Twitter  Join poster on Facebook as Friend  
I'm curious. After a year of comments and tracking the performance of Ethereum, how many of you bothered to take a chance and buy even a small amount of it?

When I first introduced you to this cryptocurrency it was trading for $1.00. Since then it has grown in value by over 9,700% and now sells for $97.00.

A $100 investment a year ago is worth almost $10,000.

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James R. Davis
Male Administrator
17294 Posts
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Houston, TX
USA

Honda

GoldWing 1500

Posted - 05/21/2017 :  8:26 AM Follow poster on Twitter  Join poster on Facebook as Friend  
I remain curious.

Two weeks ago I showed that a $100 investment in Ethereum made one year ago would be worth almost $10,000. That is growth that is almost unbelievable, and like any market, what goes up can go down.

Today, that $100 investment made a year ago would be worth almost $14,000. The price of a single Ethereum 'coin' has grown to $138.

Two weeks ago they were being traded for $97. In two weeks they grew by 42%!

For perspective, Bitcoins were trading for about $800 one year ago. Today a single Bitcoin is worth $2,055.

Admittedly these gains are extraordinary. But how can you ignore them?

I'm NOT advocating such an investment! But I'm curious about why these opportunities are being ignored?

You do NOT have to buy whole 'coins'. That is, If you wanted to buy $100 worth of Ethereum, you would simply buy 0.72 coins. Or if you wanted to buy $100 worth of Bitcoins, you would simply buy 0.04861
coins. So it's not a matter of being a market reserved for big money players. Anybody can play.

Let's put some of this together in another way. Let's assume you are hugely risk averse. (Strange thought since motorcyclists are not generally thought to be hugely risk averse - but when it comes to money, its possible.) You can't stand the idea that you might lose money in an investment, but one year ago you decide you had $100 of 'burn' money that you were willing to risk and bought 100 Ethereum when it was trading at about $1.00 each.

Two weeks ago I woke you up to realize that your investment was worth almost $10,000. You still owned 100 Ethereum. Why not sell 2 of them at $97 and put almost $200 into your pocket? You would then own 98 Ethereum worth about $9,500, would have recovered the $100 you invested plus have made nearly a 100% profit. Now you have NO RISK whatsoever and those 98 Ethereum you own are worth over $13,000!!

Oh yeah, inflation is still about 2%.
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James R. Davis
Male Administrator
17294 Posts
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Houston, TX
USA

Honda

GoldWing 1500

Posted - 05/21/2017 :  8:30 PM Follow poster on Twitter  Join poster on Facebook as Friend  
What's another day worth?

Ethereum is now selling for $148.
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James R. Davis
Male Administrator
17294 Posts
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Houston, TX
USA

Honda

GoldWing 1500

Posted - 05/22/2017 :  6:33 AM Follow poster on Twitter  Join poster on Facebook as Friend  
Shockingly, another day finds the price of Ethereum at $176.
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