[pont3]

Anybody here want to be the professor and educate us from ground level? Data mining to earn a coin? What constitutes the value of that coin? Buying a percent of a coin? A couple of years ago Bitcoin was around 17k, today it's at 47k!

I've spent considerable time just trying to understand this concept but can't seem to grasp it.

Holding a bitcoin in your hands means what, exactly?

[yahooskidoo]

You cant physically hold a bitcoin, can you?

[pont3]

Originally Posted by yahooskidoo

You cant physically hold a bitcoin, can you?

I don't know, that's why I'm asking. From what I understand, is that 81 million coins will be produced, and no more. Those coins will go to those that spend many hours and dollars through the mining process. But, yes, you can hold a physical bitcoin, but the value is not in the coin itself. Seems to me (and I have actually seen and inspected a bitcoin) that it's something of a computer chip with codes imbedded within it, that similar to a debit card you can insert the coin into a machine that tells you how many dollars you have access to.

I am probably totally off base here as I'm only guessing. This is very complicated and I am a fairly simple person.

[66sprint6]

Digital currency has been around for some time. For anyone with a Social Security Number and direct deposit, it's been the way you've been doing it for decades now. Paying with debit or credit, e-transfer, etc.
The bottom line with Bitcoin is that you need to buy it to invest in it. That whole data mining thing is a joke, in my opinion. You need racks and racks of equipment, all of the related electrical requirements, and an HVAC system designed to cool Death Valley. I know of a few people that do it. They may create a little bit of money, but it's mostly a liability. And how could they compete with some massive domestic or offshore installations, operating on an industrial scale.
So in my mind, it's just like the stock market. I don't know if I'll ever buy it. The thing is that they always put the the ultimate value of it, when quoting it, in good old US Dollars.

[JLMounce]

At its core, Bitcoin is designed to be an end around fiat currencies controlled by a central entity. Bitcoin has no corporation running it, does not run on a central computer and has no centralized organization making decisions about how or when it can be used.

It works on the concept of "proof of work." In order to mine individual coins, real work has to be done. That work is primarily by computers, but running those computers takes energy in the form of electricity, which is generated from various sources that require human input.

It has a limited supply. Only 20 million bitcoin can ever be mined. There's somewhere around 19.5 million coins in existence now, but at current pace, it will take another 120sih years to mine the last coin. That means it's scarce and can't be created out of thin air and inflated away like fiat currency.

It can't be dismantled or regulated in any meaningful way. The only way to get rid of it would be to complete terminate the internet as a whole, including all intranets and local networks. Since nobody runs it, there's nobody to go after to regulate it.

That's pretty much the basics of it. I recommend reading the white paper for more.

[Half-Inch Stud]

No product with digital currency, so by definition is a ponzi scheme.

so the "mining" has got to boil down to many calculations on currency exchange activities, whereas the trow of new investors pump up the original, prior investors.

My guessing. So if i'm wrongk, then please make-clear how.

[poncho-mike]

Bitcoin is a digital currency that was created by an individual or group, which I think is independent of any government. Most currency in use is fiat money, meaning it has nothing more than the power of the military of the issuing country to back it up. Bitcoin only has value as long as there are people willing to give it value. It can be used for transactions that are outside of government control, which is why I'm a little surprised that a bitcoin ETF was approved recently. There were actual bitcoins made by some company or companies, but they are just tokens representing the digital currency. I think they have less value than an actual bitcoin.

[Singleton]

I still don't get it. Dumb it down, wayyyy down...

[ta6point6]

It is like any other product you buy low and hope it goes up in value and then you can sell for a profit. It is the pet rock of the digital realm

[JLMounce]

The trap here is that most people are thinking of and using Bitcoin as an asset, like a stock. That's not what it was designed for. It's designed to be disruptive to fiat currency.

It has an extremely limited supply and doesn't require a federal system like SWIFT to negotiate payments between two individuals.

Right now it's used as an asset, but it's importance starts as fiats fail. It's better to think about bitcoin as an individual currency. Instead of dollars and cents you have coins and satoshis (the smallest unit of measure).

[Jonsie]

you should be aware it's highly speculative, pet rock analogy is right-on

[poncho-mike]

Originally Posted by Jonsie

you should be aware it's highly speculative, pet rock analogy is right-on

This is the best analogy I have heard. Bitcoin is something somebody created and it caught on as a way for black market entities to engage in financial transactions without being tracked by the government. I suppose you could track the transaction where a fiat currency is used to buy the bitcoin (unless you mine it yourself, which is cost prohibitive), but after the initial purchase I don't think Bitcoin transactions are trackable by the government. I could be wrong on this, but I don't think I am.

Bitcoin only has value as long as a trading partner is willing to accept it as a payment for goods or services. It has no intrinsic value.

It is basically a high tech alternative to owning gold bullion, except gold has industrial uses and has to be physically exchanged.

[b-man]

Think about it.

What better way to hide illegal activities.

Trafficking.

Look beneath the surface.

That’s all I’m going to say.

[JLMounce]

Originally Posted by b-man

Think about it.

What better way to hide illegal activities.

Trafficking.

Look beneath the surface.

That’s all I’m going to say.

This argument is used a lot with bitcoin (or any decentralized currency) because the transactions only exist as a consensus on a digital ledger. There's only a record the transaction took place. Nothing about who the participants were or what the transaction was for.

This is unlike the SWIFT system that knows who is involved in the transaction and what goods or services are being transacted for with fairly good granularity.

That doesn't however mean that digital currencies are exclusively used by the scourge of the planet. Plenty of fraud exists within the current banking system. Because of the difficulty in even measuring fraud in an anonymous system like Bitcoin, making such a statement is itself complete speculation.

I would also point out that the same inherent issues occur where cash is transacted.

[MatthewKlein]

Originally Posted by JLMounce

This argument is used a lot with bitcoin (or any decentralized currency) because the transactions only exist as a consensus on a digital ledger. There's only a record the transaction took place. Nothing about who the participants were or what the transaction was for.

This is unlike the SWIFT system that knows who is involved in the transaction and what goods or services are being transacted for with fairly good granularity.

That doesn't however mean that digital currencies are exclusively used by the scourge of the planet. Plenty of fraud exists within the current banking system. Because of the difficulty in even measuring fraud in an anonymous system like Bitcoin, making such a statement is itself complete speculation.

I would also point out that the same inherent issues occur where cash is transacted.

Maybe you're the one to help me understand. So far to me bitcoin seems more fiat than standard dollars.

No one is compelled to take bitcoin as payment for a transaction. I cant buy gas or groceries with bitcoin. To spend a bitcoin legally I need to convert in into dollars.

Outside tax evasion, I don't understand the benefit.

Do you have an idea of what legal transactions are completed daily with bitcoin?

I can understand the desire to give the government a big middle finger, but I don't understand how this can stay viable long term. The government LOVES it's taxes.

thank you

[JLMounce]

Originally Posted by MatthewKlein

Maybe you're the one to help me understand. So far to me bitcoin seems more fiat than standard dollars.

No one is compelled to take bitcoin as payment for a transaction. I cant buy gas or groceries with bitcoin. To spend a bitcoin legally I need to convert in into dollars.

Outside tax evasion, I don't understand the benefit.

Do you have an idea of what legal transactions are completed daily with bitcoin?

I can understand the desire to give the government a big middle finger, but I don't understand how this can stay viable long term. The government LOVES it's taxes.

thank you

Until such time as wide adoption of Bitcoin happens (if it happens at all) it exists in a state of only really being useful as an investment tool as an asset class against dollars.

Peer to peer transactions take place on wallets all the time, but again like cash who knows what’s being transacted.

The problem with trading it is what may or may not happen with the dollar specifically. If the dollar inflates beyond reason, or the government and institutions start restricting what people can and can not do with dollars, then Bitcoins, uses cases broaden.

Guns are always a hot topic, but it’s a good example. There is already ample evidence that payment processors and banks are cutting down on legal purchases of guns and ammunition because of a political agenda. So what do you do if you’re a gun shop owner and now your livelihood is at risk? You can accept payment from a crypto currency like Bitcoin. Because it’s decentralized, there’s nobody that can say no to the transaction.

[MatthewKlein]

Originally Posted by JLMounce

Guns are always a hot topic, but it’s a good example. There is already ample evidence that payment processors and banks are cutting down on legal purchases of guns and ammunition because of a political agenda. So what do you do if you’re a gun shop owner and now your livelihood is at risk? You can accept payment from a crypto currency like Bitcoin. Because it’s decentralized, there’s nobody that can say no to the transaction.

How would a gun shop owner launder bitcoin payments from frowned upon gun sales

Owner of the shop needs dollars to pay the mortgage, utilities, gas, food. If there is an audit he's got to explain its origin

[kingbuzzo]

[carcrazy]

I invested in it several years ago....made a little money and got the hell out. Way too speculative and the model never made any sense to me.

[muscle_collector]

several years ago a guy who worked on my computers tried to get me to invest 5k in it. i had never heard of it and just couldnt wrap my head around it. i kept asking who has my money and questions like that and never got an answer that satisfied me so i passed. he told me that i was making a really monumental mistake. didnt listen and had i listened i wouldve been a billionaire. he on the other hand is living on an island in the bahamas now from what a mutual friend told me.