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    What is Crypto-Currency and Why You Should Accept It


    You've heard of it on the news, in the papers, and online. It created overnight millionaires while making others broke. Governments are afraid of it and the public is confused by it. But it is here to stay.

    What am I talking about, you ask?  Crypto-currency

    In 2009, an anonymous online entity, going by the name of Satoshi Nakamoto, released a tremendously well-researched and thought out paper;explaining how an online, peer-to-peer, currency which would not be regulated or backed by any government could change the face of world finance. Shortly after, he released the first example of such a currency, Bitcoin.

    Due to the technical and anonymous nature of Bitcoin (and crypto-currency in general), the digital currency adoption started out slow and within more "internet advanced" circles of people. After a few years and a minuscule adoption rate, Bitcoin started to gain notoriety. This was mainly due to the creation of a "dark-net" marketplace, The Silk Road, in 2011. Unfortunately, this marketplace seemed to specialize in nefarious and illegal activities such as drug dealing and weapons trafficking. The users of the marketplace used Bitcoin as the go to currency for transactions because its use was anonymous and incredibly difficult to track.

    Fast forward to 2013; The Silk Road was shut down but Bitcoin knowledge started to go mainstream. Services like exchanges, payment processors, and wallets (coin storage) began to spring up. The tech world seemed to catch a crypto-currency fever and it hasn't looked back since. In November and December of 2013 the value of Bitcoin sky-rocketed to $1200 per coin. People became millionaires in the blink of an eye.

    Today, there are many more varieties of crypto-currency. These currencies, such as Litecoin and Dogecoin, were created to improve on Bitcoin's original code and theory. And they are also gaining an incredible amount of traction in the financial world.

    My personal favorite crypto-currency is Dogecoin. It is the second largest coin in terms of transaction volume and active users, only behind Bitcoin. It has a massive community behind it and is gaining wide-spread, mainstream acceptance as it is easy to get into and learn.

    Now, why should you consider selling your LEGO sets for crypto-currency? There are many reasons, but for the sake of brevity in today's introduction, I will give you two.

    • It is a brand new technology and you would have a chance to get in on the ground-floor on something that is shaping up to change the world. Only a relatively small portion of the population is using crypto-currency today, but as more merchants accept it, more people will use it.
    • With the creation of online and in-store payment processors there is absolutely zero risk.

    These payment-processors (think "Visa" or "American-Express"), make it absolutely painless to accept crypto-currency. Many of them, such as Coinbase and Moolah, automatically transfer crypto-currency to other more "common" currency such as USD or EUR. This makes it so that you can reach an even larger audience than you are today; the people using government-backed currency and the people who are using crypto-currency.

    This is only the first post of an entire blog in which I am to educate all off you about the benefits and processes of accepting digital currency. If you have any specific questions or would like to learn more about a certain topic, don't hesitate to ask!

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    Great post. This is something I know little about, and am eager to learn more. First question - where can I sell that I can take this? I am guessing Bricklink is a possibility.

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    Many people are just like you; they've never used crypto-currency, but they've heard of it, and are extremely curious to learn more. Heck, I just got into crypto roughly 3-4 months ago (my first crypto currency was Dogecoin and I advise you to check it out. It has a massive community behind it and is one of the easiest to learn). In terms of places to sell your sets while accepting Bitcoin and other currencies, the easiest and quickest way, right now, is to use an already existing service. For example, I use a merchant account at http://moolah.com. You can painlessly set up a storefront and they even offer instant crypto-to-USD conversion. I literally just went live with a store on their platform about 5 hours ago and have already sold over $1000 worth of sets. I will be blogging about this topic actively and will help the community with any questions they have! I haven't been around in a while, but I'm back! Haha.

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    Might I suggest a blog about the risks? The recent closure of Mt Gox for example. Or the many instances of people's digital wallet being stolen. If you're going to dive into crypto currency, one also needs to be aware of the failures and risks. Mt Gox is a perfect example. At the moment, millions in dollars of BitCoins have been lost probably never to be recovered. As crypto currency becomes more mainstream, theft and corruption will surely become a major problem. And since governments are not backing these currencies, currently they are also not interested in policing them so you have to police and protect yourself. Always transferring your crypto-currency balance to real government currency is one way, but it has it's drawbacks too (you lose $ in the conversion every time). Anyways, food for thought.

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    What's the benefit to this digital currency? Why should I take the risk that Bitcoin or any other crypto-currency tanks leaving me with next to nothing when I can use USD that carries so much less risk of losing value? There is no compelling case to carry the risk to use it in your article other than "it will gain popularity (i.e. legitimacy) if you use it too". You and the Winklevoss twins can enjoy carrying the risk of wide fluctuations in the value of a currency backed by a bunch of bits of metal with no intrinsic value. I prefer my currency to have a track record and the backing of the largest tax base in the world.

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    If anybody is looking for information on cryptos I HIGHLY encourage you to check out thebitcoinchannel.com and check out the youtube channel, thebitcoinchannel. Since I used to be in bitcoin for five figures I will give my two cents on what I feel is going on w/ cryptos. If you're looking to get rich quick with BTC, your too late. I'm sorry but it's true. Since BTC hit $1,200 in less than only a few years of existence a lot has happened. The Mt. Gox exchange filed for bankruptcy recently and lost over 400 million worth of BTC's. I only had 1 BTC with them so I was out only $900 and I don't see myself ever getting that money back. Various governments have instituted capital controls on banks to prevent people from transferring their worthless debt back dollars for BTC. Cryptos are and should be the death to the dollar and central banking. Trying not to completely ramble here, even though I had a good amount of money in it at one time (I put in $12k, made $14k in four days, would have made $600k in nine months if I would have stayed in but cashed out and came out even with no regrets.) I HIGHLY encourage you to put money into it that you wont mind losing if things go south. Cyrpto are extremely volatile because that is what a free market is suppose to look like. A rigged market is a market that continues to go up even when the unemployment is at a all time high and people have bought in to this false recovery. Sound familiar? Once the dust clears w/ Mt Gox and a few other things, I definitely see cryptos going higher but not anytime soon. BTC hit $100 when ever the country of Cyprus seized all of it's citizens money. Once the United States government starts seizing pensions, 401k's, and suckers people into enrolling in MyRA plans cryptos should go through the roof. Oh, and NEVER sell Legos from cryptos. If your one of those on here that are like, will somebody please tell me what Lego set to buy, you will definitely lose your shirt w/ cryptos. Cryptos have fluctuated up and down hundreds of dollars in just one day. It will separate the men from the boys and women from the girls.

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    The benefit of digital currency is that it's anonymous and portable. If you're taking a flight from New York to Paris and you walk into the airport with $50k in a suitcase you will get a lot of people excited. If you walk into the airport with a key chain that has a flash drive on it with $50k worth of bitcoins nobody will notice. Pretty nice huh? :) You can also attach your BTC wallet to an email and have access to it where ever you have wifi. Remember USD's still do carry risks especially when the crash happens and your bank account goes to zero because you bailed out the government. Bitcoin is also anonymous. If I wanted to buy a Lego set from you all I need to do is send you some BTC's peer to peer and you mail me the set. The US government has no laws that recognize BTC as money so YOU don't have to pay any taxes at the end of the year.

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    This is very interesting stuff. I don't know a ton about it other than having read a bunch of articles. Guess I am just skeptical, as it seems that with no regulation the large players (like Chinese government) could manipulate the value at will. That makes it scary for me to want to be invested in. I guess I am not the guy that walks around with $50K in a suitcase...wish I were though. I will try to keep an open mind though, and will definitely read Exobro's Blog with much interest.

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    I'm a fan of Bitcoin and have quite a few of them. It's very risky, considering it could lose all of its value overnight, but high risk = high reward...

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    I would imagine for the vast majority of Lego investors, the benefits of accepting BitCoin (or any other crypto-currency) would be far outweighed by the risk of devaluation. I don't know many Lego investors that need to carry $50,000 in money around. Most can function fine with credit cards, PayPal and wire transfers. My big issue is that publishing an article that states "With the creation of online and in-store payment processors there is absolutely zero risk" is not only factually inaccurate, but could be dangerous advice to an seller ignorant of crypto-currency's risks, the exact type of person who will be reading this article. In fact, there is a lot of risk to accepting BitCoin including its most critical aspect for sellers - its value. I have no issue if someone wants to invest in it - by all means, go for it. It's not for me, but that doesn't mean there isn't an opportunity to make money. However, I don't think anyone should be advocating crypto-currency as a means to be paid for goods and services unless they understand and are willing to accurately state the full risks. The article above not only doesn't address these risks, but claims accepting BitCoin is "risk-free" which is patently false.

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    Hi Quacs. You are a prime example of the people I am trying to educate with these type of blog posts. This will be an on-going series. In fact, I am creating this blog specifically to address crypto-currency and it's benefits (and risks) for LEGO investors like us. With that in mind, I do take offense to the combative and (arbitrarily) snit-crypto stance it seems you have already taken up. This blog series is about learning; ask questions and I will answer them. But I do feel you need to keep an open mind and wait for my next installment.

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    I'm glass you will be following! And I totally understand that not many people fully comprehend what crypto actually is at this point. This is the exact reason I have decided to start this blog. :)

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    So, I'm making some assumptions based solely on what I've read here and about 5 min. poking around. 1. Is the main reason there are price/value fluctuations in Bitcoin'ish currency because it is unregulated? 2. What drives the fluctuations, supply vs. demand, popularity, acceptance, etc.?

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    Instead of "unregulated" I personally would like to use the word unmanipulated. When Cyprus fell you saw bitcoin shoot to $100 but you didn't see any other equities or dollars shoot up that high. That's because Bitcoin is what a true free market is suppose to look like. Right now silver should be at $400 an ounce and gold WAY higher than $1,350 but you don't because that is a rigged market...Now to answer your second question I'll just say all of the above. There are so many cyrto currencies out there now with different rules for each one so I'll just stick to bitcoin for this example. You can not just print unlimited amounts of Bitcoins like the FED doeas dollars. There will only ever be 20 million bitcoins out there. Period! So supply and demand can be a huge part of the value of bitcoin. Popularity is a big part also. Bitcoin ATM's are starting to pop up so the more mainstream is gets the more decentralized it becomes. Also keep in mind this is just the beginning. Before bitcoin there was e-gold. E-gold did not gain traction and there were a few issues with it. With these cryptos most of those issues have been resolved but I wouldn't be surprised if something else came out in the next couple years that would even become more mainstream. One other thing I'd like to address because there are many people out there that don't understand this, If a merchant accepts bitcoins they do not actually receive them. They can if they want but what almost all merchants do is have a merchant account set up with various eCommerce companies. So if I was a merchant and I accepted bitcoins, that bitcoin price is immediately frozen to the current fixed price and the merchant will receive the cash the next day. Kind of how a credit card turns credit into cash for a merchant. So many people don't understand this. If they did you would see more merchants out there accepting BTC's then there are now. What costs 1 bitcoin at the beginning of the day may cost 1.25 at the end of the day and that's ok because the merchant still receives the same amount at midnight. This is how competing currencies are suppose to act like. Some people say that we need to return to the gold standard but that's just crazy. Who had all the gold? You? Me? All of the central banks have all the gold so why would you want to go back to a gold standard that all the little people like you and me have no control over?

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    Then educate me on how this statement can actually be true: "With the creation of online and in-store payment processors there is absolutely zero risk." Even LegoSteve who understands and has used Bitcoin in the past cautions Lego resellers to stay away, presumably because this currency is inherently risky.

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    In-store payment processors absolutely do have zero risk. Let me explain, merchants do not just collect bitcoins and hold them. As I just mentioned in a previous post, merchant account systems are already in place to lock in the price you are selling an item for. For example. A the new LEGO Millennium Falcon for $130. That price will always be $130. The bitcoin price may be .25 at the beginning of the day or .33 at the end of the shopping day but the merchant will always receive $130 in cash the next day. As all of you know, the USD fluctuates every day but you don't think about it that much because in just one day the fluctuation is minimal so you don't notice anything at the time but it still does. About ten years ago I had a friend that was leaving to Scotland for his masters degree and he kept moaning to me about how his tuition keeps on going up because the USD was falling and the Euro was gaining (More like pumping). So I guess that is an example on the USD over a three month period. The USD is risky too, especially now adays, just like bitcoin. I do want to make clear that I am absolutely NOT attempting to steer away people from bitcoin. It's just that the get rich quick days are over. To be quite honest and this is the only time I'm going to say this on this blog, I'm a survivalist that is extremely anti-government so the concept of bitcoin put me in euphoria because this is the closest thing that has been invented that could possibly crash the whole system. Boy I feel so good just thinking about it. I am by no means a anarchist. I'm just anti-bankster and the bankster are the ones that have controlled this country since Johnson was President. Anyway, just think of bitcoin as another tool available to you if you need it. Example: At the beginning of the year no banks wanted to do business with marijuana businesses in Colorado and Washington. That's okay, enter bitcoin into the picture to introduce a free market crush and crush all non-free markets. I honestly believe that the banks caved in to the pot community because bitcoin was such a threat. I remember when bitcoin was only $5 and I was screaming off of rooftops hoping somebody would assist me in acquiring bitcoin, I would have paid $1k an hour for that info. I finally figured out how to get in at $75 which was only 9 months ago, I think, some time during the first half of the year. Bitcoin is an awesome concept, there is just a lot of external things that are trying to bring it down which I never expected. Instead of bringing bitcoin down with derivatives (Bringing bitcoin down with derivatives is impossible because it is decentralized.) like all the other equities out there, they brought it down by blacking bitcoin out in some areas, and passing laws to not except them in other countries. Inclosing, this will be my last comment on the subject in this forum. I feel that I have somehow highjacked this blog from the original poster so I'm done. This is his post not mine but I do highly appreciate the blog post. It was well done!!!

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    What makes these so secure from a coding standpoint? What I mean is what keeps some programmer from just faking a bunch of these, even if the fakes are easy to spot, once people lose faith in a crypto it's done.

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    Rather than repeat the technical reasons it can't, I highly suggest you read some of the great information already out there. http://bitcoin.stackexchange.com/questions/181/can-bitcoins-be-counterfeited Now... In English. The algorithm used to produce bitcoins during the "mining" process will only produce a finite amount of them, each with their own digital characteristics & history. You can fake a bitcoin, but you can't fake it's history. So if you try to spend a fake, the history won't match up and they'll refuse the transaction. Now if you manage to steal them by stealing their digital wallet & password... then spend that bitcoin, you've placed your piece of history into the bitcoin and the person it was stolen from loses it forever. Will somebody ever break them? Maybe, but the difficulty level of the cryptography used makes it unlikely in any of our lifetimes.

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    This is exactly one of the reasons I have avoided bitcoins and any of it's competition (some of which are just fancy pyramid schemes like that ripple coin or whatever it was). I was late to the game (young family means I had other worries and responsibilities) and with all of the resistance of world banks and governments against crypto currencies, it just didn't seem worth the risk. These commerce companies that convert your bitcoins to cash and vice versa take a little for their own troubles just like credit card companies do when converting currencies. Correct me if I'm wrong, but isn't the real way to make money with bitcoins, and obviously the most risky, simply to buy and sell them just like stocks?

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    Haha! I was waiting for somebody to go there. I knew Rand when he was just a eye doctor in Bowling Green. I'm a gold and silver guy that recently became a Lego investor by complete accident. Now I'm hooked. This is just like buying Ag and Au at a discount. I'm really looking forward to a couple years from know when I unload all my R2D2's and convert them in to REAL physical money.

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