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Old 13-04-2014, 21:45
pfgpowell
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Can someone please explain what bitcoins are? Yes, I know they are 'virtual currency', but that doesn't explain anything. Even more puzzling is that they ARE used to buy and sell stuff. But how can they be? How can they be created? I can't suddenly 'invent' a new currency and then use it to pay for stuff. At the very least other people must share in my belief that the new currency has some kind of worth, but at some point comes payback time when the are cashed in.

So what are bitcoins?
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Old 13-04-2014, 23:16
dd68
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I can't grasp the concept myself
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Old 14-04-2014, 00:49
Microkorg
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Showbiz?

really?
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Old 14-04-2014, 09:25
pfgpowell
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Well, only in the sense that if bitcoins are worthless and would easily take the place of washers, I can think of several singers, actors and various zelebs who should be paid in bitcoins. But you're right, this was intended for the General forum and I cocked up posting it.
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Old 14-04-2014, 09:44
flagpole
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Can someone please explain what bitcoins are? Yes, I know they are 'virtual currency', but that doesn't explain anything. Even more puzzling is that they ARE used to buy and sell stuff. But how can they be? How can they be created? I can't suddenly 'invent' a new currency and then use it to pay for stuff. At the very least other people must share in my belief that the new currency has some kind of worth, but at some point comes payback time when the are cashed in.

So what are bitcoins?
you can use anything to pay for things. gold, silver, iTunes gift cards. the only real requirement is that people will accept it.

but there are some other things that it's nice to have with money. classically there are 6 requirements: Durability, portability, divisibility, uniformity, limited supply, and acceptability.

Durability - means it wont go off. rot, go mouldy.
portability - is obvious.
divisibility - if we used cows it would be difficult to buy a loaf of bread
uniformity - another problem with cows is that they come in different shapes and sizes, so 10 of one cow is not always worth as much as 10 other cows.
acceptability - that people will take it
limited supply or scarcity - the clever bit.

the reason why you can't use water, or sand, or air is because there is plenty of it. it's not scarce. the reason why you can use gold is that there is considerable effort involved in extracting it from the ground. that provides scarcity. that it takes so many men so many hours to mine so much gold brings the value more closely to something we recognise.

the genius of bitcoin is that you have to mine it. there is a computer program that runs a calculation and the more maths it can do the more bitcoins it can generate. people use specialist hardware, supercomputers to mine bitcoins.
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Old 14-04-2014, 10:21
codeblue
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Can someone please explain what bitcoins are? Yes, I know they are 'virtual currency', but that doesn't explain anything. Even more puzzling is that they ARE used to buy and sell stuff. But how can they be? How can they be created? I can't suddenly 'invent' a new currency and then use it to pay for stuff. At the very least other people must share in my belief that the new currency has some kind of worth, but at some point comes payback time when the are cashed in.

So what are bitcoins?
Every currency is virtual, pounds, dollars and euros - the lot.

In the past, coins were made of gold and silver - precious metals that were desirable - they had an intrinsic value.

Eventually these gold coins were replaced with notes that could be exchanged for the gold at a bank.

However once banks realized that they could have more promissory notes than gold, they printed more. This works until everyone asks for their gold at the same time.

(this is effectively what happens when there is a run on a bank)

A currency only has value if it can be exchanged for gold/ goods/ services.

At the moment, Bitcoins have a perceived value and are every bit as real as the or dollar.

If the exchange rate of bitcoin drops so low that they are worthless, nothing will happen, there are no banks, countries or governments that HAVE to support this. All investors will lose their "money", or rather their ability to change bitcoins for goods.

Bitcoin is interesting as there is a clear pathway for "printing" more currency, the more there is, the harder it is to make them.

This is in contrast to say the pound. When the government is short of money, it literally prints more - we call it "quantitative easing". when this happens, it devalues all the existing notes.
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Old 14-04-2014, 17:32
Ruthven
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I don't get how 1 Bitcoin can be valued at nearly 300 though... What if the item you want costs less than 300? Is there a "pence" in Bitcoin world?
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Old 14-04-2014, 19:22
flagpole
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I don't get how 1 Bitcoin can be valued at nearly 300 though... What if the item you want costs less than 300? Is there a "pence" in Bitcoin world?
Yeah, you can trade down to one satoshi.

100,000,000satoshi=1bitcoin
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Old 14-04-2014, 22:01
pfgpowell
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I was with you until this point. In fact, I know things get their value from scarcity, which is why diamonds are rationed (i.e. kept off the market). But

the genius of bitcoin is that you have to mine it. there is a computer program that runs a calculation and the more maths it can do the more bitcoins it can generate. people use specialist hardware, supercomputers to mine bitcoins.
what does this mean? Maybe I'm just thick. Is there a computer program for that?
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Old 19-04-2014, 11:22
groovesection
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People need to wake up to Bitcoin, it is part of the agenda to completely remove cash meaning EVERY transaction will be logged.
HMRC will know everything about how much tax you should pay, no need for accountants or self assessment.
And if you want to take it to the next logical step, RFID implanted chips.
Bitcoin is the perfect currency because it relies on an Internet connection and continuous hashing.
It is the perfect crypto currency for an implanted RFID chip.
Do you really think the DSO was about TV signal quality and more choice? - NO
It was about upgrading the TX's to use packed bitstreams, the smart grid!

But of course this is all conspiracy
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Old 19-04-2014, 12:26
JamieHT
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I still don't understand. What? Why? Who?
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Old 19-04-2014, 12:30
2shy2007
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My son started off with bitcoins, but there are other coins( litecoins I think is one) that are easier to mine and quicker to get a half decent amount in, I dont really understands what he does to mine them,but its money for nothing ( apart from my electric bill,lol)
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