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Gold, Silver and Bitcoin: The ultimate interview by VisionVictory

This is a most excellent interview where Trace Mayer interviewed by VisionVictory uses excellent analogies and explanations in order to help people grasp what is Bitcoin and bitcoins and how it works and why you should care. I highly recommend spending these 30min and learning this information:

http://youtu.be/OtN9YUvh_XM

http://www.futuremoneytre...

In this interview we sat down with Trace Mayer of Run To Gold & How To Vanish and discussing the very interesting topic of the acceleratingly popular alternative currency known as Bitcoin.

QUOTES:

5:27: Regarding the Bitcoin code, "It's open source; so far there hasn't been anyone that's able to compromise the code"
6:13: "It allows for capital to be accumulated and be saved and stored in a much better way I think than necessarily gold or silver"
6:51: "Currently the bitcoin network is secured by processing power. Approximately 250 petaFLOPS. The department of Energy just built a supercomputer for $1.2 Billion that has 15 petaFLOPs"

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exactly

One of the main questions hasn't been answered.
The same question that has devalued the USD.
'Who determines how many bitcoins are in circulation? and what guarantees these standards?

gold is restricted by its rarity and rate of production/mining.

even fiat currency WAS restricted by the rate of the printing press, now they just type in a trillion units. How is this any different?

someone created this out of thin air, someone can just create more out of thin air... the only protection seems to their word of honor???!!!

estanislao

JixMainstream is correct

It's important to understand that Bitcoin is now released into the wild. It is now totally supported by the free market. And it's a voluntary currency.

Even the creator(s) of Bitcoin whover that is (or are) can't stop Bitcoin or change it now. Bitcoin is simply governed by all the people that use it, and computers check that everyone is following the same rules using impartial and indisputable math.

As for why pick 21 million coins? You're right. That's an arbitrary number. It could be more or less. It doesn't matter. The only thing that matters is that people KNOW how many there are so they can assign value to them accordingly (and that this number can't be changed/inflated).

Bitcoin is a protocol

Bitcoin is also a "protocol" - an agreement between devices. If you use the Bitcoin protocol, the rules are that only 21M BTC will be generated, no exceptions. If someone decided that there should be 40 million BTC, it would be rejected by the network, as it is not part of the Bitcoin protocol.

Still, one could attempt to create an alternate currency similar to Bitcoin with 40 million units, but those coins would be incompatible with the Bitcoin network. For the new protocol to succeed, it would have to attract users, and essentially replace BTC in popular support. Highly, highly unlikely. And if it were to become reality, it would be because users chose the alternate currency, not because of a nefarious entity.

Protocols can be changed

Here's a thread about it:
https://bitcointalk.org/index.php?topic=79937.0

The key point is that there's nothing stopping protocol changes on a technical level. One protocol change that already happened is mentioned there. I saw another thread yesterday about proposed changes to address the "51% attack" vulnerability. A change to raise the 21 million limit is no harder than those, it just requires that enough people support the fork with the change. Whether or not the 21 million limit changes is purely a matter of consensus.

The argument is not that it can't change, but that it's politically *unlikely* to change because "such a change would undermine all confidence in the currency." And we all know that group consensus never leads to actions that are not consistent with everyone's long-term interests, right?

Also: "... it would have to attract users, and essentially replace BTC in popular support. Highly, highly unlikely." LOL that *so* takes me back to the days of people pumping stocks in the dot com bubble.

Yes

You are right that the protocol can change technically.

But I'd say you're wrong about why it's *unlikely* to change. It's not because a change would undermine all confidence in the currency. It's because a majority of people will probably not support changes that are non-beneficial.

Take the 21 million coin limit, for example. Here, of all places, it should be obvious why having a set non-inflationary/non-changeable limit is desirable by people holding a currency.

Let's say someone proposed a protocol change to double that to 42 million. Do you really think a majority of people will agree to inflate the currency they own so that their holding is worth half its value? That doesn't make sense. In other words, the reasons people like bitcoin is for the rules it already has.

Next, the reason he said another protocol version replacing Bitcoin is "Highly, highly unlikely" is not because he's trying to "pump" anything backed by nothing but words. He is using logic. Bitcoin as I said attracts people because of the rules it has, and an economy and infrastructure is already being built up around it (there is even a stock exchange!). Something would have to surpass Bitcoin in this regard by being better somehow for people to switch horses. I believe that's highly unlikely.

But

Two problems with that. One is you're defining "beneficial" in a long-term sense. People often make decisions that are very short-sighted. Two, it's not a "majority of people" that need to agree but (correct me if I'm wrong) a majority of *miners*. The longest block chain is defined to be the "official" fork.

(Which is why, as I understand it, there's always a risk of any transaction being accidentally nullified, as the FAQ points out. https://en.bitcoin.it/wiki/FAQ Say what? You agree to sell someone a tube of 20 gold eagles for 3,000 bitcoins, all anonymously, the bitcoin transfer appears to go through, they drive off with your gold, and then the bitcoin transaction might accidentally be nullified? "Transactions can be accidentally nullified" is not what I really want to read in the FAQ about a currency if I were going to use it for transactions of any significant size.)

Anyway, back to protocols. Bitcoins get harder and harder to mine as you get closer to the limit. The people who got in early did great, like that one guy who had so many bitcoins he had a standing offer to give 10,000 bitcoins to anyone who would arrange for two pizzas to be delivered to his house. But now, not so much. And the people who have bitcoins in their wallets certainly don't want to raise the limit. But they don't get a vote because it's not a "majority of people" who determine when a protocol changes.

In practice, apparently, there are people who control enough of the system to un-do anything like that. There was one article about a potential 51% attack that someone took seriously enough to checkpoint the block chain so they could roll everything back to a known good point to recover from a successful attack. Ummm, they have the ability to roll back all transactions to a previous point? Yeah, that's the kind of power you want someone to have over an economic system.

Next, the reason he said another protocol version replacing Bitcoin is "Highly, highly unlikely" is not because he's trying to "pump" anything backed by nothing but words. He is using logic. Bitcoin as I said attracts people because of the rules it has, and an economy and infrastructure is already being built up around it (there is even a stock exchange!). Something would have to surpass Bitcoin in this regard by being better somehow for people to switch horses. I believe that's highly unlikely.

I understand the logic, I really do. Yes, geocities accounts for a significant percentage of internet traffic all by itself, I don't deny that. And yes there are many millions of users, and tens of millions of user-generated pages. And no real competitors in this space at the moment. I don't deny that geocities has a *huge* first-mover advantage in this space. Huge. And they've got cash, and can raise more, to make it hard for anyone else to move in. The infrastructure for geocities is already built up and proven to scale, and it would cost a lot to duplicate. I don't deny any of those things. And I'm not saying that geocities won't be around at all in ten years, *that* seems unlikely! But although the barriers to entry are large and geocities has a lot of first-mover advantages there are bound to be some competitors, and some of those competitors might just come up with some features that will draw off a significant percentage of users, and it's *possible* that in ten years they won't be the dominant player. So the future isn't *quite* as clear as your logic would make it seem.

Oops, sorry, channelling the year 1999 a bit there.

And by the way, moving a web site from geocities to a competitor wasn't easy. Moving funds from bitcoin to a competitor would be as easy as exchanging bitcoins for dollars or any other currency, i.e., something that someone could do in under a minute.

doggydogworld I appreciate

that you are at least taking time to research into Bitcoin. :)

I need to correct a few misconceptions you have.

First, about "beneficial in the long/short term" I was saying beneficial either way. Long or short term. Doubling the 21 million limit aka inflating a currency doesn't seem beneficial in a long or short term to people holding it.

Next, about a protocol change. It's not agreement of a majority of miners. A successful protocol change requires everybody - merchants, miners, and users - to upgrade/switch to the changed version. Any protocol changed version is NOT compatible with the old version, i.e. not the same coin. The people that switch are on a new system, although they can use the blockchain from the old system if they desire, to determine who has what coins. This comment explains it well.

Next, bitcoins don't get harder to mine as you near the 21 million limit. The "difficulty level" of the computational mining problem is adjusted so that bitcoin creation roughly follows this inflation schedule. As more or less computers work on the same problem the difficulty is adjusted so that the same coin creation rate happens regardless of total computing power.

Next, you mentioned "checkpoints" for the system. From what I understand there is a checkpoint placed in every released upgrade (non-protocol changes) to the Bitcoin client software. This can be thought of like a fire extinguisher. It's nice to have, but you hope you never have to use it. If you do have to use it at least it can help limit the total damage that can be done, in this case from a successful 51% attack. Nobody has the ability to roll back transactions to a prior point. You would have to agree/opt-in to going to that checkpoint.

Next, regarding nullifying transactions, that happens with a successful 51% attack. Please see my comment here regarding that.

Lastly, you're talking about the likelihood of people switching away from Bitcoin to something else, possibly better. There have already been other crypto-currencies launched. Some have been around many many months now, and nothing is even close to Bitcoin. At some point in the future there may be something that actually is better than Bitcoin. That's perfectly fine. Bitcoin is governed by the free market and people can switch as they desire. Same with gold. It's arguable that dollars might have been a better money system than gold if Congress controlled them and they were never inflated, right? And people could have switched or held gold as they pleased.

Protocol questions

Thanks for the pointers on the protocol issue. When I have time I'll try to go back and look more, but isn't the point of the 51% attack that the miner(s) who control 51% of the mining capacity (even if that's just one person) can generate the longest block chain and then, unless the bitcoin ptb roll back to a checkpoint, that becomes *by definition* the "official" block chain?

Also I think you're wrong about the possibility of nullified transactions being about the 51% attack vulnerability. A 51% attack wouldn't be an "accidental" nullification, it would be a malicious nullification. The accidental nullification can occur (correct me if I'm wrong) because the transaction might be on a branch that is superseded by a longer bitcoin chain. From the FAQ:

As a consequence of the block chain structure, there may at any time be many different sub-branches, and the possibility always exists of a transaction being over-written by the longest branch, if it has been recorded in a shorter one. The older a transaction is though, the lower its chances of being over-written, and the higher of becoming permanent. Although the block chain prevents one from spending more Bitcoins than one has, it means that transactions can be accidentally nullified.

The point

of a 51% attack is to generate the longest blockchain, yes. Please see here under "attacker has a lot of computing power"

https://en.bitcoin.it/wiki/Weaknesses#Segmentation

A 51% attacker has to maintain enough computing power to beat the network to continue the attack. It would be pretty obvious quickly if such an attack started. Although I don't mine, even I'd jump in with other "bitcoin defenders" for example to increase "honest network" computing power. At some point I think it will be infeasible for any single entity to amass enough resources to beat the world population using/defending Bitcoin.

Transactions would be disrupted during a 51% attack, but the "official blockchain" is really only what all users say it is. By default it's the longest chain. Upon an attack people might agree to go back to the block just before the attack, or if need be, back to a checkpoint.

You're right about a difference between accidental and malicious transaction nullification. To address "accidental" ones it's common knowledge not to consider a network transaction valid until it has 6 confirmations. It's exceedingly unlikely a transaction can be nullified after 6 confirmations, however, you can wait even more if desired. The higher the number of confirmations the more unlikely it can be nullified.

Bitcoin competitors

Lastly, you're talking about the likelihood of people switching away from Bitcoin to something else, possibly better. There have already been other crypto-currencies launched. They have been around many many months now, and nothing is even close to Bitcoin. At some point in the future there may be something that actually is better than Bitcoin.

Were you around in the late 90's, and paying any attention to the internet stock bubble and the kind of arguments that were made for stocks like geocities? Geocities is just a convenient example, one of many, but you're using exactly the same kind of arguments that were used around 1999 to pump geocities stock by arguing that it was highly, highly unlikely that any competitor could come along and take away its dominance in that space. It had the infrastructure (far more significant than the infrastructure needed to support a new virtual currency), it had basically no competitors, it had huge popularity at the time (which looks far less impressive compared to facebook and so on now, but the total bitcoin "economy" is tiny now too), the barrier to change was high for its users (but switching to a bitcoin competitor would be trivial), etc.

You point out that competitors to bitcoin have been around many months. An argument about the long-term viability of bitcoin that's based on a track record of only months of competition is really, really weak. Whatever the competition is going to look like, it really hasn't started yet, much like geocities in 1999. There were some competitors to geocities that had been around for months, and some for years, but none came close to the dominance of geocities in the social networking space. Ten years later, of course, things looked much different.

Same with gold. It's arguable that dollars might have been a better money system than gold if they were never inflated, right? And people could have switched or held gold as they pleased.

Same with gold? There you go again trying to find an equivalence between an arbitrary set of integers selected by an algorithm and valued because of consensus alone, and a physical element valued because of its inherent physical properties and very much *not* arbitrary because its existence, and uniqueness, are facts of nature.

Dollars might have been better money than gold if they hadn't been inflated? Wow. Pieces of paper don't become "like gold" just because you control the money supply by limiting the number of pieces of paper that are designated to be currency. Neither do arbitrarily-defined sets of integers. I think that point pretty much zeros in on where we're disagreeing about the nature of money, and why gold has been money for millennia, and how that's different from anything you can say about bits of paper or arbitrarily-defined subsets of the integers.

Your comparison

about geocities is not a good one IMO, because geocities is just one enitity, one stock. Bitcoin is a protocol, just like IP is the protocol which the Internet runs on. Guess what, there are flaws with IP and many ways it could be made more efficient given how the Internet is used now versus when IP first started. Do you really think the Internet is going to change from people using IP addresses anytime soon? Highly, highly, unlikely.

Litecoin started October 2011, so that's almost a year. Bitcoin started January 2009, which is less than 4 years ago.

I didn't say dollars would have been like gold; I said they could have been a better money system. Guess what? Congress does have the power to coin money and regulate the value thereof. That means Congress can create paper dollars. The catch is that the States can only make gold or silver legal tender. That means a national currency couldn't be legal tender unless it was gold/silver. Congress could do either. They could create totally paper dollars, but they couldn't force anybody to accept them. That's the key. Their paper currency would have to get value from people assigning value to it voluntarily, i.e., be a free market currency.

Yes, that national paper might be a better money system than gold if managed correctly (limited inflation). There are problems transacting gold in practice. Gold is heavy, and soft metal which wears down on pocket linings/skin; it's hard to make change for; and possible to fraud with lead/tungsten and shaving; and hard to transfer over distance.

I love gold, and think the world should use it as the foundational store of wealth... but then exchange it into other currencies better suited to transactions as needed. Dr. Paul advocates competing currencies.

When bitcoin is as widely used

as the Internet Protocol (IP), then you'll have a case for it being pretty well established and hard to displace.

For now, the comparison between the bitnet protocol and IP is a stretch, to put it mildly. I think competition between bitcoin and future competitors will be a lot like competition between social networks, because they have a lot in common, except that with digital currencies the barriers to users switching are almost entirely gone so when the momentum shifts it can shift very, very quickly.

But if you want to look at protocol analogies, clunky protocols do get replaced by ones that offer better features, address security flaws, etc. For example, "Gopher" was a popular 1990s protocol. http://en.wikipedia.org/wiki/Gopher_(protocol)
Initially it was widely adopted, but it's hardly used these days.

Experimental protocols rarely get the details right. IP wasn't the first communications protocol, and even though the barrier to change in that case was huge, IP replaced the one that came before it because it offered better features. https://tools.ietf.org/html/rfc801 History isn't on your side if you think that the bitcoin protocol has any realistic chance at all of being the long-term winner.

If you're that

worried Bitcoin will be replaced then put less than 1% (or whatever) of your wealth into Bitcoin at any given time. Keep the rest in gold. That's what I advise anyway.

If someone finds a cost effective way to extract gold from the sea gold prices would plummet too. No store of value is 100% guaranteed. You just go by perceived likelihoods, and that perception can vary among people. Not a problem.

highly, highly unlikely:

As rpcongress stated, computational popular support (miners) is not what is required. Literal popular support would be required.

So let's call the fork that produces 42M units "FourtyCoin", and let's assume that the protocol is identical to Bitcoin in every other way. Vendors who currently accept Bitcoin are not automatically able to accept FourtyCoin because the coins are incompatible. Only vendors who see potential value in the currency would consider adopting it. For a currency that offers no functional advantage over Bitcoin, that is quite a leap to make.

But, for the sake of argument, let's assume that every Bitcoin vendor in existence decides to accept FourtyCoin. Now users have the choice of whether or not to adopt the currency, and at what rate they exchange Bitcoins for FourtyCoins (or they could, of course, try to mine them). Anyone who exchanges at a rate less than two FourtyCoins for every one Bitcoin is voluntarily deflating their money. Again, for a currency that has no other functional benefit over Bitcoin, it makes absolutely no sense to do so.

Now there are alternate currencies out there, some of which do extraordinarily interesting things... one could argue that they are superior to Bitcoin. (There was one such currency, Tennebrix, which was said to have a "laundry" mechanism, in which every transaction was blasted through a number of microtransactions to sufficiently obfuscate the recipient of a given transaction on the block chain, guaranteeing anonymity.) Despite being even more brilliantly designed than Bitcoin, they failed to gain the popular support that Bitcoin has, and have, therefore, faded into obscurity.

In the community, it's pretty well accepted that Bitcoin is a little clunky... (and they're saying this of the most technologically-advanced currency in the existence!). There are a few alts out there that have managed to survive, and it's presumed that there will eventually be a robust alt-coin that becomes the preferred "transacting" currency... Silver to Bitcoin's Gold, if you will. In the meantime, we have competition in currency... exactly what Ron Paul has been speaking to in the physical world. The developers are insanely intelligent, and the community does their research. They are not easily misled (the same can't be said of the coin-traders, but that's a different story). Popular support begins with the miners, who are engaged enthusiasts who believe in a fork.

Anyway, I'm rambling on. If you have any further questions, please feel free to message me. or the other folks on the borad who know their Bitcoin sh!t.

-Jix

You lost me

where you said "it's presumed that there will eventually be a robust alt-coin that becomes the preferred 'transacting' currency... Silver to Bitcoin's Gold, if you will."

If a robust alt-coin becomes the preferred currency for transactions, why in the world would anyone continue using bitcoin?

Excellent question! The alt

Excellent question!

The alt coins seem to all have their own features. Some have fast block-chain confirm times (nice for two parties who don't trust each other), others have the laundry systems (for anonymity freaks), and yet others are easy for the layperson to mine without an expensive mining rig.

They all seem to have a niche. And for all intents and purposes, you have to have BTC to get them.

At present, however, I think the main concern is bringing the concept of cryptocurrencies mainstream, which is why most people are working with Bitcoin. The common objective is breaking the monetary monopoly.

Don't get me wrong, Bitcoin is impressive technology in itself, but once fiat is dethroned, we'll start to see some _really_ interesting coins come into use. At that point, one might be able to make the arguement that an all-in-one-coin may come along to supercede Bitcoin, but more likely than not, there will be a selection of currencies based on their utility, all valued relative to that of a Bitcoin.

-Jix

I'm still not following your argument

The alt-coins I've seen have been based on bitcoin, but that doesn't mean that future ones will be also. And they've been "niche" currencies in the sense that they (from what I've seen) each seem to have been designed to address one particular issue. One was supposed to defeat GPU mining, but it turned out not to even do that. One was supposed to address the 51% attack, but the rationale for that sounded iffy to me and it's dead anyway.

All of this is bringing back memories of the 1990s for me, so sticking to that analogy, there were geocities competitors that were similar "niche" kinds of competition. Tripod was one, and I don't remember the names of any others right now but there were a bunch. But if you look at what facebook is today (or what myspace was, or friendster(?) and so on) there's been a lot of innovation since those early experimental days.

But when you talk about bitcoin being dethroned eventually, rather than the others being the "silver" to bitcoin's "gold," I'm not sure we're really disagreeing. I do agree that bitcoin is some impressive technology, and I think digital currencies can serve a good purpose, but the eventual winner(s) will be the one(s) somewhere down the road that address the security issues, and the clunkiness, and the anonymization issues, that people can use without being technically savvy, that you can spend on amazon.com, etc.

It's hard to see how any digital currency, backed by nothing but consensus, could be a desirable place to park money for anything other than short-term usage. Consensus can be very fickle, especially when switching is easy.

The limitations

The limitations you mention aren't necessarily an issue with Bitcoin itself. There just isn't a lot of infrastructure built, and the trust network isn't there.

I maintain my belief that Bitcoin is very, very secure, so I don't know what your complaints are there. As far as individual wallets go, that could be much, much better. But that's another one of those infrastructure things.

Thanks for posting, but

I think I now understand less about bitcoin than I did before.

I'm suspicious of VisionVictory because of his distant association with Jonathan Lebed, too, so I think I'm going to wait before sticking my toes in.

I sell lots of small items on my webstore using PayPal, and they go all over the world. PayPal charges me to do the secure translation from one country's currency to another. This is a valuable service to me, because PayPal is taking the risk of owning amounts of various currencies and giving me the currency I prefer. Understand that exchanging currencies is an ultimately losing game, if you accept all currencies, since they will almost all fail. The service PayPal provides by doing all of my currency exchanges is worth the money.

On the other hand, I would hope that PayPal considers using Bitcoin in its system in one way or another, if it's superior to the existing exchange protocols.

Michael Nystrom's fists can punch through FUD.

On your

first point about Vision Victory, perhaps it was a mistake to use THIS video to try introducing Bitcoin because Bitcoin has nothing to do with Vision Victory.

Please see my comment here:

http://www.dailypaul.com/comment/2747535

Bitcoin has nothing to do with ANY organization or person. It's completely decentralized. NOBODY controls it. Even I don't have any more to do with it than you do. I just happen to have been around it long enough to have learned about it.

As for PayPal adopting it that probably depends on enough people putting pressure of them to do it :) That may happen some day.

Regarding usefulness to business you may want to watch this video where Roger Ver of Memory Dealers a business based out of China explains how Bitcoin is quite useful to him.

http://live.huffingtonpost.com/r/segment/5037b5b402a76066bd0...

VisionVictory wasn't

VisionVictory wasn't compensated for producing a promotional video for Bitcoin?

I have no idea

about the origin of this video.

But it's certainly possible somebody paid for it to be produced. That doesn't mean anything. A company called BitInstant put up a giant Bitcoin billboard near a freeway in California from what I understand.

BitInstant, like I and any others that believe in Bitcoin want to see knowledge about it spread. Some people may do that different ways. But that's no different than me advising some old convalescent home residents to use the Internet because I believe in it, and think it would be a great experience for them. That doesn't mean I control or am behind the Internet. Make sense?

Bitcoin has about as much affiliation with Vision Victory (or ANYBODY) as the Internet has with them. Nobody controls the Internet, and nobody controls Bitcoin.

Paypal will never use Bitcoin

Because although bitcoins (units of account) are a digital currency, Bitcoin on the other hand is open source software and a payment system much like paypal and therefor it's competition. It just wouldn't be good business to do so.

That's true

If enough people use Bitcoin it makes PayPal (and banks!) irrelevant.

30 billion to compromise Bitcoin

not much of a stretch for the powers that take trillions with ease.

I have to look into this more but on the surface I have a few problems.

1. it CAN be compromised (at least he said it can with $30B)
2. ability to be anonymous, I struggle with how an anonymous transaction can take place with bitcoin.

haze is close

with his answer but let me try to clarify.

Point 1: Attack vectors

There are currently two perceived attack vectors for people wanting to kill Bitcoin. One is called a 51% attack (gaining more computing power than the network), which is what haze is talking about. The other involves using a quantum computer to break Bitcoin's cryptography.

The 51% attack is indeed possible (especially early on) but it couldn't kill Bitcoin. The goal of such an attack would be to undermine confidence in Bitcoin, thereby dropping the exchange rate. However, nothing would "break" with bitcoin. Think of it, in the worst case, like the stock market crashing. Does that mean people never get involved with stocks again? Gold prices can plummet too for different reasons. Really there is no such thing as any 100% guaranteed money system. It's believed that at some point so many people will use bitcoin the cost to overcome the network computing power would be infeasible to anyone to try. I recommend holding the majority of your wealth in gold and convert as much to bitcoins as you need/feel comfortable with at a time. I predict a majority of the world will eventually use Bitcoin because it's a superior money system.

As for quantum computing breaking the algorithm all such discussion is theoretical and not currently perceived to be a threat.

Point 2: Anonymity

There are ways to use the Internet anonymously, including use of the Tor network which Bitcoin supports. People anonymously buy drugs using bitcoins on the site Silk Road, and have done so for well over a year now.

Trace made a small mistake with that statement

1) it can't be compromised in the sense that the rules that govern Bitcoin would change or that someone could take your money.. all $30billion dollars would get you is to seriously disrupt the currently smooth flow of transactions because you could block some or add in fake ones which, yes, is a problem but wouldn't be the end of Bitcoin

2) even though every transactions is public, there are ways how you can hide who made those transactions.. It's kind of like sending an email from a random email you just created and no one knows it belongs to you.. To achieve this in Bitcoin is not easy and you need to know your stuff..

I could be wrong, but

it is my understanding that a corrupted BitCoin Wallet ends with you loosing your "coins" unless you can have those with whom you dealt "re-scan" the transactions. This seems dangerous to me. Can anyone explain how easy or difficult it is to have a wallet become corrupted?
I am interested in trying bitcoin, but also leary of loosing my fiat dollars.

I'd rather have a bottle in front o' me than a frontal lobotomy
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Very good question

Anyone getting involved in Bitcoin should be careful. There is a learning curve to securing them properly yourself. For example, many people are not computer/tech savvy enough to know why they get viruses/malware on their computer. If such people use bitcoins, it's easy for them to lose their coins. There are hackers already targeting stealing bitcoins.

I recommend people use an eWallet like blockchain.info to get started, and until they learn how to secure them correctly. Here is a great getting started/buying bitcoins video:

https://www.bitinstant.com/howitworks

On the other hand, if you know how to secure your computer from viruses then using bitcoins is very simple an secure. All you need to do is back up your wallet file (wallet.dat) which is the same as backing up any ordinary file. You can use a USB stick, burn it on a CD, or even use software to print out a paper copy.

LoL this guy on the right

Just can't get his head around it. He doesn't understand that his money right now is nothing more then pieces of code stored on a computer system somewhere. Bitcoin is unique to this because each unit, or coin is individually encrypted. No 2 of the same Bitcoin can exist. This encryption is backed up by thousands and thousands of computers participating in the Bitcoin network everyday. AND ANYONE WITH COMPUTER AND THE INTERNET CAN JOIN AND EARN BITCOINS.*just get a decent graphics card, you'll need the gpu.