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in the simplest possible terms please. Cheers.
it's been around for years. Did you see that video on the Guardian website? Embarrassing. Anyway it's beyond me, all I know is that it's an unregulated, decentralised currency, and that people spend thousands on computer set ups to 'mine' bitcoins, then you can spend them on stuff, but i'm guessing that some of the attention they're getting focuses on the TOR network (which has also been around forever), and sites that accept bitcoins in return for drugs/prostitutes/extreme porn/snuff videos/instructions on how to make bombs/hitmen/other stuff that 4chan users find fascinating but is in reality either made up or quite boring.
but I'm intrigued as to how they are 'mined' - what purpose do these algorhythms serve? The value of them seems to be going up and up, and I want to get in on the action before its too late.
every transaction in the network is recorded in every wallet, and the processing serves to concurrently confirm new transactions as they take place.
The analogy would be that if you want to spend a fake £20 note, you only have to fool the person you're paying. With bitcoins, you have to fool the most of the economy.
And when whatever piece of the puzzle is solved, you receive a bitcoin?
Surely then there has to be a purpose as to the algorithms people are solving, like pieces to a puzzle? That's the bit I have trouble understanding.
a very very small one, for each transaction you confirm.
like is this code the meaning of life or something?
but I'm genuinely intrigued, and nowhere seems to have the answer.
a 'puzzle' gets harder and harder as more power is devoted to solving it, meaning that the number of 'puzzles' solved stays at a mean 6 per hour, while the reward for solving a puzzle halves each year, and eventually reaches a point where something like 21 million bitcoins exist. (there are about 11 million today)
That's what I'm struggling to understand. When we do work we're providing a service, and we expect payment for doing whatever it is we do. But it's not exactly work to just let your computer solve a few puzzles - I just don't see how people actually benefit. On the assumption that these people use their bitcoins to buy stuff, what exactly have they done to earn them? What's the catch?
receives a reward for solving the 'puzzle'
it's currency supply not computer science
think of it as gambling with constantly diminishing rates of return
Once the bitcoins exist in the market, they're traded for goods and services like any other currency
a computer does.
Argh it's hurting my brain to understand how people benefit. It just sounds like some sort of bizarre social experiment. Like, the more astute bitcoin miners will invest in more and more computers to do the job and eventually when the 21 million limit is reached someone is gonna be the king of bitcoinsville.
however the point where the cost of electricity and computing required has already far surpassed the point where that isn't really profitable.
No matter how many people are involved, it's 6 an hour, and each of those 6 is currently worth a reward of 25 coins (or 12.5, can't recall). So, no matter how much power is pumped at solving blocks, only 6 an hour are solved. Or, only 150 bitcoins per hour are created. So, with ALL the computing power in the world at your disposal, you can only earn what is currently at a never before seen peak of $1200 an hour.
It's a control on creation of new currency not the devotion of computing power to anything useful.
and it'll be like that episode of the Simpsons where everyone starts their own newspaper.
I think my questions re: Bitcoins have been answered now, and I'm both perturbed and relieved at the same time.
there's another factor, controlled currency supply
basically this http://codinginmysleep.com/bitcoin-mining-in-plain-english/
because their 'value' per coin was below $20 since creation (well below, usually), but has rocketed to above $70 in the last week or two.
Over $6m were traded today.
Some geeks are getting hella rich.
Deflationary currency. Odd. So if we assume that in the future it becomes a powerful currency then all the geeks in at the beginning will be the new rich bastards controlling all of us.
the current peaks are due to techy Europeans pulling their money out of € into BTC, rapidly inflating the currency for what is inevitably a short time, artificially peaking the market cap at just under $1bn.
Definitely deflationary though. Sort of wish I'd pooled a few hundred a few years ago.
read the wikipedia page.
i still have no fucking clue what a bitcoin is.
i'm like an old woman eating a vhs
It's spiking and crashing too frequently to be useful, and people hoarding bitcoins make that more likely to happen.
There are only ever going to be a finite number of bitcoins so if you have some you should keep hold of them since they will become more valuable, supposedly.
why do they have value?
governments, countries,the gold standard, shit like that.
whats backing up bitcoins?
has someone just made a new currency? just like that?
I don't understand
it seems quite quite mad
It is a form of faith, although clearly we all want a society that functions so it's not like we ever are going to say, "Fuck this, burn it all," and let it all collapse.
I think it's best to think of it more like gold or diamonds rather than a currency. After all, there are a finite number of bitcoins that can ever exist and, much like gold or diamonds, there isn't really a reason for them to be worth anything except that people have decided they're worth something.
Diamonds aren't a great analogy in reality, apparently. But, yeah, it's almost like the concept of Bitcoins kinda lays bare the thin premise of the value of the money that we take for granted.
Personally, I'm putting my life savings into Linden Dollars.
Can you see it yet?