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In plain English, what is Bitcoin?


klmama
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It's more like you treat it like any other foreign currency.  There are exchanges, and exchange rates.  There is not (yet?) a lot of trust in this currency, though -- since there is nothing backing it there is nothing to really guarantee any value.  

 

I don't know of any real need the common person has to get involved in bitcoins.  Most anything one purchases (online or anywhere) should be able to be handled with more usual funds that one already understands.  If someone decides to get involved in bitcoins it will behoove that person to become very familiar with how the currency works first, and thoroughly understand the nature of any transaction being considered.

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So, does one buy it with real currency, then use it somehow to spend online?

My DS13 was explaining bitcoin mining to me so basically you can get free bitcoins but it’s not easy.

 

Explanation from CNBC https://www.cnbc.com/2014/01/23/cnbc-explains-how-to-mine-bitcoins-on-your-own.html

“It's not just one transaction individuals are trying to verify; it's many. All the transactions are gathered into boxes with a virtual padlock on them—called "block chains."

 

Miners run software to find the key that will open that padlock.

 

Once their computer finds it, the box pops open and the transactions are verified. For finding that "needle in a haystack" key, the miner gets a reward of 25 newly generated bitcoins.

 

The current number of attempts it takes to find the correct key is around 1,789,546,951.05, according to Blockchain.info—a top site for the latest real-time bitcoin transactions.

 

Despite that many attempts, the 25-bitcoin reward is given out about every 10 minutes. In 2017, the bitcoin reward for verifying transactions will halve to 12.5 new bitcoins and will continue to do so every four years.â€

 

CNBC December 2017 article on where you can pay with bitcoins. https://www.cnbc.com/2017/12/07/heres-how-you-can-and-cant-spend-bitcoin.html

“Over 100,000 merchants worldwide accept bitcoin. Notable ones include Microsoft and Expedia, as well as the online electronics retailer Newegg.

...

Many major retailers such as Walmart and Amazon have yet to sign off on bitcoin as an accepted method of payment, but the mobile gift card app Gyft offers one way around that. You can use bitcoin to buy a gift card and then shop at those retailers or another one of the 200-some that they work with, including giants like Nike, Target and Starbucks.â€

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Internet currency.  Not issued by any government or other agency that has gold or other precious substances to back it.  

 

Yes, it is an 'internet' currency-- but there are bitcoin ATM's that can convert from bitcoin to/from US dollars (and other currencies from around the world).

 

The US currency is NOT backed by gold or precious substances-- and has not been for years !

 

My DH has investments in cryptocurrencies and his investments did very well last year... just like any other investment (like the stock market) you have to watch and know when to buy in and get out.

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There are a lot of new digital currencies that use more secure technologies than are currently used in banking. Blockchain, the technology which is what bitcoin is based on, is one of them.

 

There are different theories behind bitcoin and other currencies.  I first heard about bitcoin around 2010, after the economic crash.  Despite being socially liberal, the technology in the bay area has led to there being a lot of paper millionaires and billionaires who believe there are serious issues with United States currency. As a bit of a hedge against the government printing money and eventually leading to the sorts of economic collapse Rand Paul and Glenn Beck love to warn against, Bitcoin has certain rules in place:  There are a limited amount of bitcoins to be made, after which there will never be another one again. So this has led to two types of investors:  People who buy and hold Bitcoin with the idea it will eventually go up.  And others who day trade it, which is one of the reasons the value is so volatile.

 

The initial idea was for businesses to take bitcoin online, like papal.  But because the value is so volatile fewer stores are doing so.  There are other digital currencies (Ethereum and Litecoin being two of the more popular ones) that are designed to be more stable, to lack the scalability issues with bitcoin, and one of which has a good shot at actually being more accepted in the long term.

 

 

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My DS13 was explaining bitcoin mining to me so basically you can get free bitcoins but it’s not easy.

 

Explanation from CNBC https://www.cnbc.com/2014/01/23/cnbc-explains-how-to-mine-bitcoins-on-your-own.html

“It's not just one transaction individuals are trying to verify; it's many. All the transactions are gathered into boxes with a virtual padlock on them—called "block chains."

 

Miners run software to find the key that will open that padlock.

 

Once their computer finds it, the box pops open and the transactions are verified. For finding that "needle in a haystack" key, the miner gets a reward of 25 newly generated bitcoins.

 

The current number of attempts it takes to find the correct key is around 1,789,546,951.05, according to Blockchain.info—a top site for the latest real-time bitcoin transactions.

 

Despite that many attempts, the 25-bitcoin reward is given out about every 10 minutes. In 2017, the bitcoin reward for verifying transactions will halve to 12.5 new bitcoins and will continue to do so every four years.â€

 

CNBC December 2017 article on where you can pay with bitcoins. https://www.cnbc.com/2017/12/07/heres-how-you-can-and-cant-spend-bitcoin.html

“Over 100,000 merchants worldwide accept bitcoin. Notable ones include Microsoft and Expedia, as well as the online electronics retailer Newegg.

...

Many major retailers such as Walmart and Amazon have yet to sign off on bitcoin as an accepted method of payment, but the mobile gift card app Gyft offers one way around that. You can use bitcoin to buy a gift card and then shop at those retailers or another one of the 200-some that they work with, including giants like Nike, Target and Starbucks.â€

 

It's not really free to mine bitcoin.  You must have a fast internet connection and fast computers to use to mine it, and you must pay for the electricity.  If you live in an area with cheap electricity and fast internet and you already have the hardware to mine it, it will likely still cost more than $1500 per bitcoin to mine.

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Avoid. 

 

In a way, it's kind of like an MLM..... it only has value if people who have it convince other people that it has value.

Which doesn't mean it's a bad investment , necessarily. It's not a scam. But there isn't really any reason to engage.

 

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