So I'm curious exactly how Bit coins make any sense whatsoever. I've always thought currency had to be backed up by gold or silver but bit coins are an online currency with a specific signature to prevent duplication. But my question is how does it make any sense? I read recently that someone actually bought a Tesla with bit coins.
I have read a little bit about it but it honestly just doesn't make sense at all to me.. Anyone else understand it and maybe wants to explain it to me? lol
BitCoins are crypto currency, doesn't have to be backed by gold or silver.
You mine the BitCoins using your CPU/GPU.
You'r basically helping solve really hard hashes.
That's why you get paid.
There are many other crypto currencies out there.
It's still confusing to me, I understand why they get paid now but what's still confusing is who decides the currency is actually worth anything? If its not backed by literally anything then I could basically just create my own currency in which I have people solve rediculous things to earn it? But it'd be difficult thus giving it value?
Nobody "Decides" how much the currency is worth, its based on actual values that people accept for it.Originally Posted by Makebank1
For example, when the "Crypto-currency" of bitcoin began, they were generally worthless. They slowly started to become worth something, when people started to accept them as actual currency. People we're selling things for bitcoins, essentially setting their "own price" for their items.
Because they we're being accepted for items, they began having an actual value. As more and more people allowed payments through bitcoins, again price's rose.
Now companies like Zavvi, etc accept BitCoin, it is essentially those companies setting the price, as now a company is accepting BitCoins, no one can really try to beat their prices, so its based on what they accept.
Price of bitcoins is mainly determined by emotion. They're worth as much as people think they're worth. That's why it's an unstable currency and a risky investment.
You could argue that it's backed up by the cost of electricity, though.
To be honest if it wasn't for all of the illegitimate uses of Bitcoin and how easy they are to launder I doubt they'd have been adopted as widely as they so far have.
The currency is unstable, you can Google for graphs and charts showing it's fluctuations and you can't really mine them anymore with normal computers, you need some special little devices or some monster power systems to even break even at some point and as others have said they are a speculative currency, meaning, their worth is determined by what people think they're worth and some people do have a hard time selling them to get other more legitimate currency back.
I think that's not true. Bitcoins are generated by the power of electricity and thus the costs for this affect the bitcoin value aswell (at least it should) but backing up a currency means you have some item/material or anything that still exists when the currency's value vanishes (sorry my english isn't perfect), some sort of "counter-value". But since this electricity is already used you can't really back it up, also probably the electricity costs are pretty small for 1 single bitcoin.
The part I had written before that extract was the quintessence of my statement. All in all I agree with you, though.
The "backing up" thing is not that simple.
Let's pretend the dollar is backed up by gold. What is the gold backed up by then? It does not have a high value, because aside from jewellery and a few other applications it's not too useful.
The price is not that high because of its real value, but because people think it's worth that much.
It's especially questionable if you consider the fact that it might be possible to artificially create gold more efficiently (because less costly) someday.
Yeah I've read in numerous places that the idea of bit coin being tied in with electricity is a common misconception. I guess I see where @jmagz is going with it. I know there was a website (due to come back online) called silk road or something that allowed u to buy illegal drugs via the internet and they sent it in old gaming systems, and weird shit like that but the currency they accept is bit coin. Its a weird concept to me but I'm starting to understand, thanks everyone
The guy who was running that website was caught and is/has been charged.Yeah I've read in numerous places that the idea of bit coin being tied in with electricity is a common misconception. I guess I see where @jmagz is going with it. I know there was a website (due to come back online) called silk road or something that allowed u to buy illegal drugs via the internet and they sent it in old gaming systems, and weird shit like that but the currency they accept is bit coin. Its a weird concept to me but I'm starting to understand, thanks everyone
He managed to make 9.5 million BitCoins, in sales which equated to 600,000 bitcoins for the creator.
Ross Ulbricht is his name if your interested.
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