Bit coins????

solosuperia

As a trailer on here mentions a lad becoming a millionaire because of his investment in "bit coins".
Two questions from yours truly....
How do you acquire bit coins
How do you spend bit coins
I really don't understand the concept
Can someone explain in words of one syllable how it works

singleton

It's a digital currency.
https://en.wikipedia.org/wiki/Bitcoin

meanredspider

SoloSuperia wrote:

Can someone explain in words of one syllable how it works

I don't think that this is answered by this

Singleton wrote:

It's a digital currency.
<span class="skimlinks-unlinked">https://en.wikipedia.org/wiki/Bitcoin</span&gt;

I like to think that I'm reasonably technically savvy but I still haven't quite got my head around how bitcoin works.

TheBigBean

Think of it like gold:

- If you do lots of work down a gold mine, you might get lucky and find some gold
- Most people are a bit lazy, so just buy the stuff in a nice market place. £ are swapped for gold.
- You can spend it by going to the same market place and swapping it for £, but that defeats the point. Some people just accept gold directly. Increasing numbers of people will let you do things like swap gold for a pint of beer.
- There is a finite amount of gold in the world. How much of the stuff is available and is still stuck in the ground is known exactly.
- All gold transactions are recorded in a public record, so when you buy your pint with gold, it is noted that SoloSuperia paid TheBigBean some gold. Everyone in the world knows this transaction took place. Because of that, TheBigBean can't run around afterwards claiming that the gold was fake, because it has been dutifully recorded and appeared in TheBigBean's pocket.

TheBigBean

- Gold mining these days is no longer a thing for amateurs. The glory days of the gold rush are over. Those lucky folk who made their millions with no experience and everyday household equipment are long gone. These days you need high tech high powered manchinery. The gold is very deep and hard to find.

meursault

SoloSuperia wrote:

As a trailer on here mentions a lad becoming a millionaire because of his investment in "bit coins".
Two questions from yours truly....
How do you acquire bit coins
How do you spend bit coins
I really don't understand the concept
Can someone explain in words of one syllable how it works

You can acquire bitcoin by exchanging them or producing them. Exchange in the familiar capitalism way. To produce you need a computer to solve mathematical equations. Requires very large processing capabilities in an ever decreasing output of coin.

You spend them out of your digital wallet.

It is a cryptocurrency out of the realm of traditional banks.

https://tim.blog/2017/06/04/nick-szabo/

meanredspider

So it's a bit as if prime numbers were suddenly currency - small prime numbers are easy but big primes get harder and harder to find. By the very nature of these things, the limited supply makes them valuable?

joncomelately

meanredspider wrote:

So it's a bit as if prime numbers were suddenly currency - small prime numbers are easy but big primes get harder and harder to find. By the very nature of these things, the limited supply makes them valuable?

Although there are supposed to be an infinite number of primes, so 'limited' supply in the sense that new ones entering the market (so to speak) become increasingly rare (but never stop).

meanredspider

Joncomelately wrote:

meanredspider wrote:

So it's a bit as if prime numbers were suddenly currency - small prime numbers are easy but big primes get harder and harder to find. By the very nature of these things, the limited supply makes them valuable?

Although there are supposed to be an infinite number of primes, so 'limited' supply in the sense that new ones entering the market (so to speak) become increasingly rare (but never stop).

Yup - by "limited" I didn't mean "finite" - just, as time goes on, it takes more and more effort to find new primes

joncomelately

I find it hard to understand where the value in the system is, other than the fact some people deemed the coins to be valuable. I know that applies a lot to hard currency as well, but you can equate the hard work mining a chunk of gold to its perceived value; the hard work of mining of a bitcoin seems to be part of the book-keeping process rather than outputting work, so the value seems much more artificial (not meant in a perjorative way).

lesfirth

OK Solosuperior. Have you got your head around that?

orraloon

I've got some which I can sell you. All you need to do is send me your bank details...

meanredspider

Joncomelately wrote:

I find it hard to understand where the value in the system is, other than the fact some people deemed the coins to be valuable. I know that applies a lot to hard currency as well, but you can equate the hard work mining a chunk of gold to its perceived value; the hard work of mining of a bitcoin seems to be part of the book-keeping process rather than outputting work, so the value seems much more artificial (not meant in a perjorative way).

Yeah - there's no more value in a £50 note than a £5 note other than because it's been decided that there is. Whoever came up with the idea of Bitcoins for the electronic world was pretty clever.

solosuperia

lesfirth wrote:

OK Solosuperior. Have you got your head around that?

Jesus I wish I never asked........
I was about to ask for clarification on a couple of points.
But a Road to Damascus moment told me not to go there..........

joncomelately

meanredspider wrote:

Yeah - there's no more value in a £50 note than a £5 note other than because it's been decided that there is. Whoever came up with the idea of Bitcoins for the electronic world was pretty clever.

Indeed. I think the idea of 'mining' coins is a bit misleading; I think it's more analogous to printing notes or minting coins. The whole system is set up without a central authority, so the Royal Mint has been devolved - the complex calculations are more akin to making sure your stamp/press or whatever is accurate and will produce an acceptable note/coin; if you're good enough, you've earned the right to produce some currency.

meursault

Any currency has to be agreed by at least two parties, if it is to be used as a mode of exchange. Bit coin is no different in that respect.

I'm not sure how relevant prime numbers are, apart from how they are alreadyused in financial security. My understanding is, that a computer processes complex math problems. Problems that require immense processing power, to generate the cryptocurrency. There is some controversy over why such a pointless and wasteful exercise should generate the coin as opposed to something useful, like seti (arguably)for example, but there you go.

surrey_commuter

Never invest in anything you do not understand is wise advice

kingstongraham

https://blockgeeks.com/guides/what-is-b ... echnology/

I've tried to understand, but I still don't fully. I think it's a mindset - I don't get why you should trust "the internet" more than the Bank of England/the Fed. (However little you trust the US government.)

DeVlaeminck

meanredspider wrote:

I like to think that I'm reasonably technically savvy but I still haven't quite got my head around how bitcoin works.

No more complicated than Di2 really

meanredspider

DeVlaeminck wrote:

meanredspider wrote:

I like to think that I'm reasonably technically savvy but I still haven't quite got my head around how bitcoin works.

No more complicated than Di2 really

Very simple then

TheBigBean

KingstonGraham wrote:

https://blockgeeks.com/guides/what-is-blockchain-technology/

I've tried to understand, but I still don't fully. I think it's a mindset - I don't get why you should trust "the internet" more than the Bank of England/the Fed. (However little you trust the US government.)

It depends what you are looking for with trust. Many people consider QE and capital controls a breech of trust, so look for something else.

Everyone that uses Bitcoin is aware that there could be a collapse in its value by loss of confidence. A lot of this relates to governments (e.g. when it was banned in China), but also cyber security and the current technical problems they have.

Finally, I think my explanation in terms of gold is sufficient. You don't need to be able understand SHA-256 to use Bitcoin any more than you do when you make a bank transfer which also uses SHA-256.

meursault

TheBigBean wrote:

KingstonGraham wrote:

https://blockgeeks.com/guides/what-is-blockchain-technology/

I've tried to understand, but I still don't fully. I think it's a mindset - I don't get why you should trust "the internet" more than the Bank of England/the Fed. (However little you trust the US government.)

It depends what you are looking for with trust. Many people consider QE and capital controls a breech of trust, so look for something else.

Everyone that uses Bitcoin is aware that there could be a collapse in its value by loss of confidence. A lot of this relates to governments (e.g. when it was banned in China), but also cyber security and the current technical problems they have.

Finally, I think my explanation in terms of gold is sufficient. You don't need to be able understand SHA-256 to use Bitcoin any more than you do when you make a bank transfer which also uses SHA-256.

One of the features of cryptocurrency is there is no need for government intervention or approval. They are outside the establishment.

kingstongraham

TheBigBean wrote:

KingstonGraham wrote:

https://blockgeeks.com/guides/what-is-blockchain-technology/

I've tried to understand, but I still don't fully. I think it's a mindset - I don't get why you should trust "the internet" more than the Bank of England/the Fed. (However little you trust the US government.)

It depends what you are looking for with trust. Many people consider QE and capital controls a breech of trust, so look for something else.

Everyone that uses Bitcoin is aware that there could be a collapse in its value by loss of confidence. A lot of this relates to governments (e.g. when it was banned in China), but also cyber security and the current technical problems they have.

Finally, I think my explanation in terms of gold is sufficient. You don't need to be able understand SHA-256 to use Bitcoin any more than you do when you make a bank transfer which also uses SHA-256.

Can you explain mtgox and what happened there? I don't understand that.

meursault

KingstonGraham wrote:

TheBigBean wrote:

KingstonGraham wrote:

https://blockgeeks.com/guides/what-is-blockchain-technology/

I've tried to understand, but I still don't fully. I think it's a mindset - I don't get why you should trust "the internet" more than the Bank of England/the Fed. (However little you trust the US government.)

It depends what you are looking for with trust. Many people consider QE and capital controls a breech of trust, so look for something else.

Everyone that uses Bitcoin is aware that there could be a collapse in its value by loss of confidence. A lot of this relates to governments (e.g. when it was banned in China), but also cyber security and the current technical problems they have.

Finally, I think my explanation in terms of gold is sufficient. You don't need to be able understand SHA-256 to use Bitcoin any more than you do when you make a bank transfer which also uses SHA-256.

Can you explain mtgox and what happened there? I don't understand that.

Google says they were a digital currency exchange, that was half inching the coin.

TheBigBean

KingstonGraham wrote:

TheBigBean wrote:

KingstonGraham wrote:

https://blockgeeks.com/guides/what-is-blockchain-technology/

I've tried to understand, but I still don't fully. I think it's a mindset - I don't get why you should trust "the internet" more than the Bank of England/the Fed. (However little you trust the US government.)

It depends what you are looking for with trust. Many people consider QE and capital controls a breech of trust, so look for something else.

Everyone that uses Bitcoin is aware that there could be a collapse in its value by loss of confidence. A lot of this relates to governments (e.g. when it was banned in China), but also cyber security and the current technical problems they have.

Finally, I think my explanation in terms of gold is sufficient. You don't need to be able understand SHA-256 to use Bitcoin any more than you do when you make a bank transfer which also uses SHA-256.

Can you explain mtgox and what happened there? I don't understand that.

I'm not sure if this a serious question, but I will answer. Mtgox ran an exchange, so very much like a gold market. Buyers and sellers would swap their cash for bitcoins. For the convenience of the buyer and sellers Mtgox also allowed the buyers and sellers to deposit cash and bitcoins within their vaults. Much like a bank account / vault. The problem was that Mtgox wasn't as secure as it should have been so someone helped themselves to these deposits. The equivalent of digging a tunnel into a bank vault or slowly pilfering from the till.

sungod

KingstonGraham wrote:

https://blockgeeks.com/guides/what-is-blockchain-technology/

I've tried to understand, but I still don't fully. I think it's a mindset - I don't get why you should trust "the internet" more than the Bank of England/the Fed. (However little you trust the US government.)

if you fancy a gamble you can speculate, but ffs don't trust it

one day someone defined a method of mining (i.e. producing) bitcoins, and a way of (more or less anonymously) holding and exchanging them (or bits of them), all based on computationally expensive mathematics

some people were cunning enough to swap 'real' money, goods, or services, for bitcoins, and gain publicity for it, the gravy train was off

there're other similar schemes that have been created, but bitcoin is the one most people are aware of

the cost (in terms of computational resource and energy bills) of mining new bitcoins rises over time, there's built in artificial scarcity, i.e. it costs 'real' money to make bitcoins, it costs more than a bitcoin to make a new bitcoin

early miners could make a killing if they held onto their cheaper to produce bitcoins, it was in their interests to drive demand and look for opportunities to make bitcoin exchangeable for government backed currencies or other stuff

mining new bitcoins is much more expensive these days, though malware to steal compute power (and electricity) from other peoples' computers may offer criminals a way to create bitcoins while leaving the victims with the cost

you could pull the same trick with any scarce thing, the advantage that bitcoin had is the enabling methods for holding and exchanging it over the internet


hipsters hopped on the bandwagon deluded by the idea they were sticking it to 'the man', but of course the man had found a new way to make money out of them

speculators saw opportunity in the gullible and speculated, criminals found it a handy way to trade in illegal stuff with a payment method that's harder to trace than traditional banking channels, others looked for ways to create new bitcoins at lower cost than they could be exchanged for

as you'd expect, between fashion, speculation and criminality, there can be massive volatility in the value, and there've been some large frauds/thefts, some financial institutions have developed ways to make money out of it, some have walked away

it recently 'split' following failure to agree on fundamental changes, now there's bitcoin and bitcoincash

some of the principles involved have other applications, long term that may be far more useful than bitcoin itself

verylonglegs

Isn't one of Buffet's maxims applicable here, paraphrased a little...if you don't fully understand it then don't put your money into it.

TheBigBean

verylonglegs wrote:

Isn't one of Buffet's maxims applicable here, paraphrased a little...if you don't fully understand it then don't put your money into it.

It's easier to understand Bitcoin than many more common investments. For example, I understand more about bitcoin than my pension investments.

kingstongraham

TheBigBean wrote:

KingstonGraham wrote:

TheBigBean wrote:

KingstonGraham wrote:

https://blockgeeks.com/guides/what-is-blockchain-technology/

I've tried to understand, but I still don't fully. I think it's a mindset - I don't get why you should trust "the internet" more than the Bank of England/the Fed. (However little you trust the US government.)

It depends what you are looking for with trust. Many people consider QE and capital controls a breech of trust, so look for something else.

Everyone that uses Bitcoin is aware that there could be a collapse in its value by loss of confidence. A lot of this relates to governments (e.g. when it was banned in China), but also cyber security and the current technical problems they have.

Finally, I think my explanation in terms of gold is sufficient. You don't need to be able understand SHA-256 to use Bitcoin any more than you do when you make a bank transfer which also uses SHA-256.

Can you explain mtgox and what happened there? I don't understand that.

I'm not sure if this a serious question, but I will answer. Mtgox ran an exchange, so very much like a gold market. Buyers and sellers would swap their cash for bitcoins. For the convenience of the buyer and sellers Mtgox also allowed the buyers and sellers to deposit cash and bitcoins within their vaults. Much like a bank account / vault. The problem was that Mtgox wasn't as secure as it should have been so someone helped themselves to these deposits. The equivalent of digging a tunnel into a bank vault or slowly pilfering from the till.

Was serious.

Why did people need a vault to put bitcoins in?

verylonglegs

TheBigBean wrote:

verylonglegs wrote:

Isn't one of Buffet's maxims applicable here, paraphrased a little...if you don't fully understand it then don't put your money into it.

It's easier to understand Bitcoin than many more common investments. For example, I understand more about bitcoin than my pension investments.

Not the best example, I think most people have as much grasp on the cosmos as they do on pension investments!

kingstongraham

verylonglegs wrote:

TheBigBean wrote:

verylonglegs wrote:

Isn't one of Buffet's maxims applicable here, paraphrased a little...if you don't fully understand it then don't put your money into it.

It's easier to understand Bitcoin than many more common investments. For example, I understand more about bitcoin than my pension investments.

Not the best example, I think most people have as much grasp on the cosmos as they do on pension investments!

It shouldn't be an investment should it? It's a currency in theory. Its aim should be stability.