Partial Transcript: Episode 49: (Bitcoin)
Nick: Bitcoin is more like “bullshit coins.”
Andrew: Why do you hate them so much?
Nick: I don’t hate them. I just don’t get them.
Virginia: I’m actually impressed with the potential for another form of currency that does not involve animals feathers or teeth.
Nick: The problem is it’s already an asshole to people who don’t have money. It’s so expensive to build and run a system.
Andrew: Let me first explain what Bitcoin is for people who don’t know. Bitcoin is a peer-to-peer, decentralized, crypto-currency. That’s a lot of buzzwords, but basically, it’s a open-source, peer-to-peer system where people can have digital currency that can’t be forged or stolen. As long as you protect your wallet, you’ve got your money.
Nick: You can have your money taken if the chain that’s being followed comes under suspicion.
Andrew: No. Only those transactions in that chain. But, your transactions would eventually be integrated into the chain. As long as you’re holding onto your wallet and no one is compromising your wallet, then you’re fine. As long as you hold onto that wallet, it’s just like physical cash. You can only get screwed if someone sends you money for a physical good and you don’t wait for a confirmation before you ship. You get confirmation within minutes that the block included your money. It only takes about six minutes for that to happen, and six blocks is the standard for verification. You get about sixty minutes after the transaction where it’s unlikely the transaction would be reversed.
Nick: They don’t often back up six blocks?
Andrew: Even if they did, the transaction would only be invalid would be in there was a blockchain fork. That’s pretty rare. All you have to do is be barely aware of what’s going on. I think it’s happened four times total. Recently there was a fork, and it was fixed within minutes. The kind of situation that you’re talking about just doesn’t happen.
Nick: Based on if you can wait sixty minutes?
Andrew: Yeah. It’s better than the real world. Think about PayPal. You might wait a week for confirmation, and even then, you could still have the transaction reversed.
Virginia: Because PayPal sucks.
Andrew: You can’t reverse a Bitcoin transaction. You just can’t. What I like about it is that no one can freeze my account. I’ve got 138 Bitcoins. No one can freeze my account. At best, they can get my wallet and steal my money. But, that’s no different than physical realities. There are other ways to secure your wallet like adding passphrases or backing them up on flash drives. There are really good safeguards in effect. I think Nick is angry because it takes money to buy hardware to mine Bitcoins.
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