Someone explain bitcoins to me

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M

mikegg

Golden Member
Jan 30, 2010
1,975
577
136
1. When you mine bitcoins, is your computer actually benefiting society? IE. your computer is doing calculations for SETI and you get bitcoins for using your hardware.

2. If your computer is not doing anything useful and it's just doing random stuff, isn't it terribly wasteful to spend energy and resources to do random stuff?
 
Crusty

Crusty

Lifer
Sep 30, 2001
12,684
2
81
It is not doing random stuff, it is calculating the block chain, which is where every single bitcoin ever created is stored and tracked.
 
M

mikegg

Golden Member
Jan 30, 2010
1,975
577
136
Crusty said:
It is not doing random stuff, it is calculating the block chain, which is where every single bitcoin ever created is stored and tracked.
Click to expand...

So basically, it contributes nothing but only waste a massive amount of electricity and energy?
 
ultimatebob

ultimatebob

Lifer
Jul 1, 2001
25,134
2,450
126
Heh... I think that even the Bitcoin supporters at this point think that the currency is overvalued right now that that it's going to crash soon.

Until then, I bet that you could make some good money day trading this stuff. Sure, it's pure gambling at this point... but is day trading GOOG and trying to make a profit off of $5 daily price swings any different?
 
Crusty

Crusty

Lifer
Sep 30, 2001
12,684
2
81
senttoschool said:
So basically, it contributes nothing but only waste a massive amount of electricity and energy?
Click to expand...

No, the block chain is what makes bitcoin secure, read what I wrote again.

The entire history of a bitcoin is contained in the block chain. Miners around the world compete to mine a block that contains all the current outstanding transactions thus storing them permanently in the block chain. If you as a miner do enough work fast enough you are rewarded with creating a new block, and(currently) are rewarded with bitcoins that are contained in the newly created block(note: this will change at some point as there will be no more bitcoins to give out after a certain point).
 
TwiceOver

TwiceOver

Lifer
Dec 20, 2002
13,544
44
91
That's the part I couldn't get past. It seems like it's just some massive puzzle/scheme that some guy created and everyone is trying to solve.

So is scientific research. At least using processing power to crunch that is doing something useful.
 
D

drebo

Diamond Member
Feb 24, 2006
7,034
1
81
You're probably bruteforcing encrypted data for this guy and he's rewarding you with more or less nothing.

I bet this guy's making out like a bandit selling this unencrypted data to unscrupulous people.
 
J

j&j

Senior member
Oct 10, 2011
246
0
0
you guys are fools, bitcoin is a legitimate currency used for illegitimate means, I used one a while back to pay for my membership to a nzb search service.

i also mined tons of them back in the day, sold over 600 at 20 bucks each and thought I was god, turns out I made a bad choice.
 
Jeffg010

Jeffg010

Diamond Member
Feb 22, 2008
3,435
1
0
Crusty said:
No, the block chain is what makes bitcoin secure, read what I wrote again.

The entire history of a bitcoin is contained in the block chain. Miners around the world compete to mine a block that contains all the current outstanding transactions thus storing them permanently in the block chain. If you as a miner do enough work fast enough you are rewarded with creating a new block, and(currently) are rewarded with bitcoins that are contained in the newly created block(note: this will change at some point as there will be no more bitcoins to give out after a certain point).
Click to expand...

What happens to bitcoins after they are all mined? The problem I see with bitcoins is no one is using them for any goods. The only thing they seem to be used for is trading like the stock market. I think once they are all mined the interest in them will drop to the point that no one will care about them any more.

It seems people have the hardest time contemplating how bitcoins are created. It is kind of the same thing with the printing press. The printing press makes a dollar, the computer makes a bitcoin.

The thing that made bitcoins gain some popularity was the way it was being created. It was the same as a slot machine pull that lever and maybe hit the jack pot/get a Bitcoin. The problem to me is when all the bitcoins are created then it will be over. There is no market out there to fuel the desire for them.
 
Jeffg010

Jeffg010

Diamond Member
Feb 22, 2008
3,435
1
0
j&j said:
you guys are fools, bitcoin is a legitimate currency used for illegitimate means, I used one a while back to pay for my membership to a nzb search service.

i also mined tons of them back in the day, sold over 600 at 20 bucks each and thought I was god, turns out I made a bad choice.
Click to expand...

That about all I ever seen for a bitcoin was being used for shady places like drugs and the alike. I don't think this will be enough to sustain them.
 
T

Train

Lifer
Jun 22, 2000
13,584
81
91
www.bing.com
Jeffg010 said:
What happens to bitcoins after they are all mined? The problem I see with bitcoins is no one is using them for any goods. The only thing they seem to be used for is trading like the stock market. I think once they are all mined the interest in them will drop to the point that no one will care about them any more.

It seems people have the hardest time contemplating how bitcoins are created. It is kind of the same thing with the printing press. The printing press makes a dollar, the computer makes a bitcoin.

The thing that made bitcoins gain some popularity was the way it was being created. It was the same as a slot machine pull that lever and maybe hit the jack pot/get a Bitcoin. The problem to me is when all the bitcoins are created then it will be over. There is no market out there to fuel the desire for them.
Click to expand...

This post is chock full of misinformation and assumptions pulled out of thin air.
 
G

Greenman

Lifer
Oct 15, 1999
22,186
6,411
136
It's another fiat currency. Subject to all the manipulation and questionable practices that surround every other fiat currency. There only value comes from the belief in them.
 
Crusty

Crusty

Lifer
Sep 30, 2001
12,684
2
81
Jeffg010 said:
What happens to bitcoins after they are all mined? The problem I see with bitcoins is no one is using them for any goods. The only thing they seem to be used for is trading like the stock market. I think once they are all mined the interest in them will drop to the point that no one will care about them any more.

It seems people have the hardest time contemplating how bitcoins are created. It is kind of the same thing with the printing press. The printing press makes a dollar, the computer makes a bitcoin.

The thing that made bitcoins gain some popularity was the way it was being created. It was the same as a slot machine pull that lever and maybe hit the jack pot/get a Bitcoin. The problem to me is when all the bitcoins are created then it will be over. There is no market out there to fuel the desire for them.
Click to expand...

When the supply of bitcoins runs out but the demand stays the same or increases the price of a whole bitcoin will go up. Since bitcoins are digital, by design they are divisible. You can have transactions with tiny amounts of bitcoins, currently down to 0.00000001.

It is also possible to modify the protocol in the future to allow for smaller divisions. Technically, bitcoins are infinitely divisible, it's just down to what the protocol and network is willing to support and at the moment that's only 0.00000001 BTC.

So even though the total amount of coins is finite, the amount you can split those coins up is infinite. There's a lot more economic details that I've glossed over, but the gist is that people think that overtime bitcoins will suffer steady deflation, but the protocol has been designed around that by the fact that it is infinitely divisible.
 
Jeffg010

Jeffg010

Diamond Member
Feb 22, 2008
3,435
1
0
Crusty said:
When the supply of bitcoins runs out but the demand stays the same or increases the price of a whole bitcoin will go up. Since bitcoins are digital, by design they are divisible. You can have transactions with tiny amounts of bitcoins, currently down to 0.00000001.

It is also possible to modify the protocol in the future to allow for smaller divisions. Technically, bitcoins are infinitely divisible, it's just down to what the protocol and network is willing to support and at the moment that's only 0.00000001 BTC.

So even though the total amount of coins is finite, the amount you can split those coins up is infinite. There's a lot more economic details that I've glossed over, but the gist is that people think that overtime bitcoins will suffer steady deflation, but the protocol has been designed around that by the fact that it is infinitely divisible.
Click to expand...

Tell oh wise one where can I use bitcoins to buy stuff? Give a me list of websites that have goods that I can buy with them.
 
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