Bitcoin

[BigChief14]

I know there are some very smart folks on this board that can explain things in plain English.
Someone explain to me what the heck is a Bitcoin and just how is it used as currency?

I know I've never dug one up with my MD-

Sounds like a scam to me! On a related note-if anyone wants to buy some Hog Dollars- send me a silver dime and I'll issue you warrants for 10 Hog Dollars.

 

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[Marchas45]

I would stay away from Bitcoin my opinion is; it's a Ponzi Scheme getting ready to Blow Up In Their Face.

 

[TreasurePirate69]

I'm not an expert on Bitcoin but I agree with Marchas.

As to how it works, it is essentially something kind of like this: Bitcoins are mined by powerful computers that solve mathematical problems. These problems are complex enough that you can't just create bunches of bitcoins without doing a lot of work. So they remain rather scarce. The number of bitcoins is always increasing but at a very slow rate (sort of like mining for gold). People pay money to buy bitcoins off of other bitcoin holders which could be the people who own the mining computers or other people who originally bought bitcoins from a miner and want to sell them. Once I have exchanged cash for bitcoins, I can use those bitcoins to make purchases at retail establishments that accept them. I pay my bitcoins to the retailer and they send me my goods. The retailer now has the choice of using those bitcoins to buy things they need or to sell the bitcoins to someone else for cash.

So on and on it goes. There is a current exchange rate for bitcoins to cash. This rate has continued to rise over the years. However, there is nothing keeping the value of bitcoins from crashing overnight leaving their holders left holding the bag. There is always the possibility that the system could be hacked causing faith in the whole system to fail and resulting in the value of bitcoins going to zero. Several of the bitcoin repositories have been hacked and millions of dollars of bitcoin value have been lost. There was also a case of a flaw in the system resulting in massive fraud going on a few years ago. This was quickly fixed and the fraud reversed. But it does show that the system can be vulnerable. All computer systems can be hacked. It is usually just a matter of difficulty vs. potential reward.

 

[Marchas45]

I'm not an expert on Bitcoin but I agree with Marchas.

As to how it works, it is essentially something kind of like this: Bitcoins are mined by powerful computers that solve mathematical problems. These problems are complex enough that you can't just create bunches of bitcoins without doing a lot of work. So they remain rather scarce. The number of bitcoins is always increasing but at a very slow rate (sort of like mining for gold). People pay money to buy bitcoins off of other bitcoin holders which could be the people who own the mining computers or other people who originally bought bitcoins from a miner and want to sell them. Once I have exchanged cash for bitcoins, I can use those bitcoins to make purchases at retail establishments that accept them. I pay my bitcoins to the retailer and they send me my goods. The retailer now has the choice of using those bitcoins to buy things they need or to sell the bitcoins to someone else for cash.

So on and on it goes. There is a current exchange rate for bitcoins to cash. This rate has continued to rise over the years. However, there is nothing keeping the value of bitcoins from crashing overnight leaving their holders left holding the bag. There is always the possibility that the system could be hacked causing faith in the whole system to fail and resulting in the value of bitcoins going to zero. Several of the bitcoin repositories have been hacked and millions of dollars of bitcoin value have been lost. There was also a case of a flaw in the system resulting in massive fraud going on a few years ago. This was quickly fixed and the fraud reversed. But it does show that the system can be vulnerable. All computer systems can be hacked. It is usually just a matter of difficulty vs. potential reward.

Very Well Explained TP69

 

[Silver Worm]

Can we see a pic of this bit coin?

 

[Marchas45]

Can we see a pic of this bit coin?

NO PICS JUST A DRAWING OF WHAT IT WOULD LOOK LIKE IF WAS REAL. BUT IT HAS A LOT OF 000000000000100000000000000200000000000100005

 

[jeff of pa]

My understanding it is like Buying Points.

So many points are needed to Equal certain amounts.


"Imaginary money"

I agree with Marchas45 100% ! Beware

 

[BigChief14]

I'm not an expert on Bitcoin but I agree with Marchas.

As to how it works, it is essentially something kind of like this: Bitcoins are mined by powerful computers that solve mathematical problems. These problems are complex enough that you can't just create bunches of bitcoins without doing a lot of work. So they remain rather scarce. The number of bitcoins is always increasing but at a very slow rate (sort of like mining for gold). People pay money to buy bitcoins off of other bitcoin holders which could be the people who own the mining computers or other people who originally bought bitcoins from a miner and want to sell them. Once I have exchanged cash for bitcoins, I can use those bitcoins to make purchases at retail establishments that accept them. I pay my bitcoins to the retailer and they send me my goods. The retailer now has the choice of using those bitcoins to buy things they need or to sell the bitcoins to someone else for cash.

So on and on it goes. There is a current exchange rate for bitcoins to cash. This rate has continued to rise over the years. However, there is nothing keeping the value of bitcoins from crashing overnight leaving their holders left holding the bag. There is always the possibility that the system could be hacked causing faith in the whole system to fail and resulting in the value of bitcoins going to zero. Several of the bitcoin repositories have been hacked and millions of dollars of bitcoin value have been lost. There was also a case of a flaw in the system resulting in massive fraud going on a few years ago. This was quickly fixed and the fraud reversed. But it does show that the system can be vulnerable. All computer systems can be hacked. It is usually just a matter of difficulty vs. potential reward.

Thanks for the explanation.

I'm trying to educate myself on currency markets and couldn't wrap my mind around a "digital" form of currency. Still not sure what gives BTC "value". Of course our US Dollar has no real value other than faith someone will exchange it for goods or services.

I read online a poster who was buying Playboy Magazines in bulk for $.50 ea. and selling them individually for $3. In his case the PB Mags were the same as playing the currency market.