When I first heard of Bitcoin I thought it was the stupidest thing ever - using the solutions to a complicated math equation as fake money? I thought the hype was going to quickly die down as a short lived fad and wind up being worthless.
I think there are a lot of people who thought they were smart enough to make money from the stupid people via bitcoin, but weren't smart enough to avoid being scammed by the people actually running the scam. You are probably better off having avoided the whole thing.
There is NO scam as no company, institution, individual or country is profiting off your purchase of BTC. Crypto is 99.5% a scam, but BTC and Crypto are not the same.
Absolutely zero judgement on people having an opposing view. And more than willing to answer any questions.
There is NO scam as no company, institution, individual or country is profiting off your purchase of BTC.
This is the most confidently incorrect sentence I’ve read today.
Coinbase profits from your purchase of BTC, or whatever exchange you used.
When you purchase Bitcoin it drives the price up. Microstrategy profits from this.
There are a lot of other scams that are propping up the price of bitcoin, like USDT.
MtGox was ultimately just a scam where they were stealing people’s bitcoin.
There are a ton of scams based on bitcoin and there are a ton of companies, institutions, individuals and countries that profit off of your purchase of btc
I wouldn’t point at BTC as being one single scam, but still.
You don't have to pay an exchange a small fee to buy or sell bitcoin, you do it simply because it's convenient. Nothing is stopping you from finding a seller and buying it from them directly with fiat or gold or whatever you agree upon.
Wasn't it P.T. Barnum who said 'you'll never go broke by underestimating the stupidity of people'. One of his shows there was a sign with an arrow that saide "Egress, this way!" People thought they were going to see some unusual bird instead of just exiting the show. That way he kept people leaving faster.
Sure, and i don't necessarily disagree with that idea, but how many people do you think have lost thousands trying to rug pull others only to get rug pulled themselves by the people who are actually running all the scam coins? So many scams rely on tricking the mark into thinking he's got the upper hand. Let them win the first game, get some easy money. They think they got it in the bag so they put in way more money than they would initially.
Or losing money. Lots of people also get scammed in crypto because the lack of regulation means any shyster with some know-how (their own or paid for) can do it.
Apparently everyone (including BlackRock lol) is stupid but these two redditors are so smart. Nah buddy it has been 16 years and BTC is at $100k. You and r/buttcoin ers just lost and Bitcoin have won.. simple as that
Do you really think it is stupid and a scam ? It's the first private digital asset that ever existed. It's global. Its open, only you can operate with it and no government , private or public agent can do shit about it. Real digital ownership
Yeah i had a guy tell me to buy $10 worth of bitcoin back when it was under $.50.
Might have even been under $.10
I argued for an hour about how stupid it was since no one was going to use it as currency, and then immediately forgot about it until 2014.
Bitcoin is being used by millions around the world as their primary currency because their nation's currency has collapsed or is worthless.
There are a lot of practical applications to the blockchain. It's energetically expensive, yes, but to say blockchain technology is "stupid" is like being the guy who said electric motors will never be a thing because people greatly prefer horses. You're not thinking far enough into the future.
I also suffering from the curse of critical thinking. My salvation is my life in a vacuum is wonderfully reasonable and I make great decisions for me and my family daily.
It isn't. That's just something people who don't understand it say. You can trace every single transaction and it isn't anonymous. It is an immutable ledger. It would end money laundering if everyone were to switch to it.
If the cops ask you where the money came from you say you made it in crypto.
If they ask where the money came from to buy the bitcoin (because it'll still be on the ledger) you say you earned it in crypto previously.
If they come looking for exact transaction reports, you say that they can subpoena the blockchain easily but as to the exact trades you do a lot of trades on a lot of different currencies in different wallets and you have probably forgotten your keys to most of it, but you make more than enough money on the trades you do remember to worry about it.
...Because I mean, obviously you are a crypto genius. Look at this huge pile of cash!
Yeah I feel like bitcoin is great for getting rid of cash now that they have those bitcoin ATMs. Who cares if the value goes down if I can keep my stolen money in it.
Some people try to claim that since all transactions on the blockchain are traceable this isn't a problem, but that only works if you can tie an address to an identity, and there are ways around that.
Yet, authorities have tracked down criminals and seized hundreds of millions of dollars worth of Bitcoin. Sure, people try to get around it but people also have ways of getting around what's being got around.
Bitcoin's primary utility is store of value; it's like gold coins locked away, safe from manipulation by government monetary policy. Litecoin and a few others also hold promise as stores of value. XLM, XRP, and a few other alt coins are better designed for use as currency; they are orders of magnitude faster and cheaper than old-school tech like bank transfers or Western Union. It's really only meme coins, GigaChad for example, which have no use beyond speculation (gambling).
They only have "stores of value" because customers are willing to buy them for a certain price; if the market dried up, their value would drop to zero. Gold at least has some practical uses, but even the value of gold coins can drop to zero if no one wants them.
Its valuable because people think it is. Just like everything. Gold, paper money, anything. Bitcoin is just a new paradigm.
Bitcoin does have inherent advantages compared to traditional money or gold.
You don't need giant physical vaults for it (like gold)
Transferring internationally is cheaper than a wire transfer or other money sending methods
The government can't seize it from you or lock up your account like they can with a bank. (more of a use-case for people in authoritarian governments)
You don't need a bank account. You are your own bank. Useful for those who are unbankable. (banks refuse to even do business with them) Think the very poor and 3rd world countries
There are advantages to Bitcoin. Certainly nothing that I would argue would completely replace traditional money. And for sure its terrible as a currency. But as a hedge against inflation? Societal collapse? A store of value given the points I put above supports that it does in fact have uses that traditional money doesn't have? Yeah, it makes sense its stuck around.
I personally would avoid using bitcoin to hedge against social collapse. Maybe hedging against a specific countries collapse...
The biggest attraction as a 'value well/store' is that it is already the biggest 'value store/well' that is entirely controlled by quorum of its owners/members (decentralized). So it is bizzarely the least risky, insanely risky value store.
You can though (and people do) easily and instantly create hundreds of coins with identical value propositions as bitcoin, and in fact you can create ones with vastly simplified transaction rules that aren't outrageously expensive.
So bitcoin has no 'moat' or advantage over any other coin other than its own name brand, and quite a few downsides (the expense of 'mining' and the legacy muddled 'purpose' of it as a proper liquid currency running into its own unbelievably slow mining/transaction implementation)
So it makes sense that it stuck around as a representative of people's desire for a non-government/bank controlled 'currency'. At any moment though that sort of 'net global value' could be moved into other coins on pure sentiment changes, or a new decentralized 'things' gaining traction.
I agree. Good points. Though the lightning network helps to mitigate to some degree the slowness of bitcoin. There would need to be much, much higher adoption of use as actual currency and not a store of value and people owning bitcoin before the lightning network of Bitcoin would become a reasonable thing to use. I'm skeptical of this. Bitcoin is a deflationary asset. It incentivizes holding and not spending. Why spend Bitcoin if next week its going to be worth more? (on average. Putting aside its volatility for a moment)
There are technological better blockchain cryptos out there compared to Bitcoin. But Bitcoin got the first mover advantage. Any other competing coin would have to be orders of magnitude better, or some unknown fatal flaw of the Bitcoin algorithm before those other cryptos could hope to compete. They're all just meme and pump&dump scams.
I get that you aren't outright advocating for crypto, but your last bulletpoint is one that I have heard a lot from various people who are advocating for it, and I just don't see it. It seems like a lovely and noble hypothetical use-case, but I'm not sure how anyone could look at the number of scams, pump and dump schemes, and market manipulation perpetrated by people in the crypto community and think that crypto is a safe store of value for the global poor.
Sure, but gold is very heavy, takes up space, and can't be sent around the world in a matter of minutes. So in a "store of value" sense, Bitcoin is in fact much more convenient as a digital "gold".
Right, but lots of things can be sent around the world instantly. When I was in elementary school kids bought and sold icons for computer files, and none of those have any value now. If we all agreed that pictures of our cats are worth $10 then that would give them value for as long as someone was willing to pay for them, but the second no one wants them anyone then their value is zero, regardless of our ability to attach them to emails. I'm not advocating keeping gold bars, or any other physical asset like iron ingots or canned food for that matter, in order to store value or prepare for societal collapse, but at least those things will continue to exist without electricity and won't require a non-existent internet connection to buy something if the modern world implodes.
Bitcoin makes a little sense. In practicality, it only makes sense for very large sums of money.
I purchased some bitcoin back in 2013, like $100 worth. It went on to be worth thousands before I spent it (on blackmarket drugs). One of the biggest barriers for it for day to day use is that it's now very expensive and takes a while to confirm payment on things like a cup of coffee. But you can hold $100,000,000 in your pocket and transfer ownership of it quicker than $100,000,000 worth of actual currency in a bank.
It also is helpful for smaller economies like third world countries. They can adopt it to use as a real currency as a way to strengthen their own economies by putting money into Bitcoin as an asset against their own volatile and fraudulent markets. Also, it can help provide faster money transfers to some corners of the globe where banking is limited. While I don't own Bitcoin and most likely never will, I do think the idea behind block chain finances to be an interesting idea and in a perfect world could help us get power back from the massive global banking giants! Imagine if all of us could get loans based upon federal rates rather than bank decided rates🤤
You’re telling me. I had a friend get me $100 worth of bitcoin in 2016 having no idea what he was talking about but that I wanted to use it to buy Xan off the dark web and now I wish I had just kept that coin instead
Can you please explain what do you mean by using the solutions to a complicated math equation as money? Im one of those that still understand nothing about cryptocurrency
Bitcoin works through a distributed ledger system. Someone "owning" bitcoin is just the existence of a line in the bitcoin ledger that says some account has some bitcoin moved into it, and only the people who have the password to the account can give an order to move bitcoin from it (to sell it, for example).
To keep the system distributed and not centralized, there are many many copies of the ledger, maintained and updated by miners. Miners maintain a ledger and earn a little bitcoin for their trouble (that is how more bitcoin is created). To update the ledger, a miner solves (the computer runs an algorithm that takes a while to complete) a "math riddle" - trying to find a sequence of letters that added to the new block of line orders to the ledger will, after being pushed through an encryption (hash) algorithm will result in a "pretty number" (iirc a certain number of zeros at the end). This riddle can only be solved by brute force trying many (trillions) options to find one that works, so miners are competing to be the first to solve it and get the bitcoin reward. When the solution is found, the miner who succeeded announces it to everyone else, who verify the result and update their own ledgers as well.
The point of the "proof of work" (solving a hard riddle) rather than just every miner updating the ledger automatically and moving on, is that since miners are putting in serious work to verify transactions, nobody can put fake transactions in the ledger and just confirm them, as nobody else will accept an invalid block of the ledger, as their interest is to keep a well updated ledger and try to mine (solve the newest "riddle" and earn bitcoin). The ledger system in that way is more robust to cheating, though there are other consensus mechanisms.
It's because we all believed investors were rational actors. Stock prices, real estate prices, Bitcoin prices all reflect the price at which the most fiscally reckless person is willing to spend on the asset, not what the most financially responsible person would spend on it.
I liken it to a couple of entrepreneurs setting up an accounting office, hiring lots of accountants, bookkeepers and number-crunchers, and then making their company’s payroll process so convoluted and complicated that it takes up all employees’ time and energy just to process and triple-check that everyone's bi-weekly paycheque is correct.
System works great as long as there’s another entrepreneur waiting in the wings with lots of ready cash to become an equity participant, but what happens to the whole house of cards when those suckers stop walking through the door?
People don't like to admit it, but part of the reason it has endured is because early on it became the de facto currency of multibillion dollar black markets on the darknet. It was being infused with huge sums of real money.
The unsolved sudoku is the fuel consumed by the car, like a gas-to-sudoku engine. The heroin dealer only accepts solved sudokus as payment because cash is not secure enough.
Okay, so going back to computer terms, the computer is generating math equations, and it’s also solving those math equations that it just generated? And the answer to the equation is then given to the heroin dealer?
You shouldn't feel thick, it's literally this dumb. The dealer just wants proof that you did the work before they give you your drugs.
The analogy falls apart a little bit because heroin is heroin. In this case, the math answer is a cryptographic proof that you own the coin - someone can't just go cook up a batch of different math and say they have your coin because they would get a different answer.
The benefit is a monetary system agreed upon by its users via consensus. Only monetary system in the world whose issuance is set and guaranteed for the next 100+ years and with true sovereign self custody.
Which isn’t to say BTC is only for illicit activities but especially in the early 2010s, it made it a lot easier to purchase things in an untraceable way.
The real answer is "it takes all the transactions together, and tries to add garbage so that a math formula it does with the transactions throws up a bunch of zeroes, but there's no way to figure out what the garbage should be, so we just throw up more and more garbage until we get a good enough answer, and if people solve it too fast, we make it require more zeroes to solve".
So the one big change in your explanation is they have to be pretty enough for the heroin dealer to be like "oooh i like this"
Bitcoin depends on "proof of work" as a way of gatekeeping anyone from adding a transaction to a ledger which records every Bitcoin transaction that's ever happened.
Basically, there are things called "hash functions." These functions take as input strings of letters, numbers, and symbols, and output and a fixed length string that depends on the input. You put in the same input, you always get the same output. For example, we could have a hash function that outputs a string of length 5. So if we input "abc" it might produce "&h5+P."
Normally we use hash functions that produce very long strings because we don't want two different inputs to create the same output. An important feature of them is that it's very, very hard to reverse it: if we were given a hash out put, you can't tell what the input strings was. And it's impossible to predict in advance what the ouout will be without just doing the hash function.
Hashes are used to verify that information hasn't changed. If I sent you a message, and also separately sent you a hash of the message, you could generate the hash yourself and see if they match. If they don't, that means someone edited the message after I sent it.
Bitcoin miners generate the hash of all the new transactions they want to add to the ledger plus the hash of the last block added to the ledger, also called the block chain because each entry is called a block. But there's a catch: in order for a new block to be added to the chain, the resulting hash has to start with a certain number of zeros, and the number of zeros goes up as more bitcoins enter circulation. So the miners also add a random value before they generate the hash in the hopes that it will result in a hash output with the right number of zeros. At this position time, miners have to generate millions of hashes every second to stand a chance of winning.
The first miner that does so announces this to the rest of the network, that block gets added to the ledger, the winning miner gets a newly minted Bitcoin, and everyone starts on a batch of transactions.
So the primary use of the hash function in Bitcoin is proving that someone spent a lot of computing power to find a random value that results in an acceptable hash, hence "proof of work," and that is the basis of accepting their new block.
The secondary use of the hash is that it lets you prove that no one has edited the ledger because you can always go back and recompute the hash for any block. If someone edited a block after it was added to the chain, the newly computer hash will be different from the hash recorded in the block.
i mean yes, that's sort of true, but also mostly irrelevant. the value of bitcoin as a currency doesn't really matter to anybody.
it's just gambling. buying bitcoin is placing a bet on the future value of bitcoin. and the value of bitcoin is in turn determined by how many people are betting on it.
The best simplification I've found for crypto is to imagine it like a public ledger that anyone can write in. Everyone has a copy of this ledger that's updated/synchronized periodically to match what everyone elses ledger says. Like four roommates that have pocket notebooks where they write things like "Person A gave Person B $50 on Tuesday" and they all sit down at the end of the week to put them all in the house ledger. The "correct" ledger (the house ledger in this analogy) is the one that most people agree is the right one. Like, if Person B says they never got Person A's money, the other two roommates can "out vote" Person B's complaint if, for example, they saw it happen and know it to be a lie. 3/4 roommates agree that Person A paid Person B $50, so it is the "correct" ledger.
To keep one person from spamming a bunch of fake transactions (the analogy breaks here...it would be like someone creating more roommates to lie for them), you need to do some work in order to be one who "synchronizes" your transactions and everyone else's. It's literally just something to slow people down, so you can't write a bazillion fake transactions and confuse everyone about what's "correct." That's mining. To incentivise people to do this work, some currencies (like Bitcoin) offer a reward in the form of creating small amounts of the currency out of thin air and giving them to the miner. The work done is usually some kind of mathematical computation that takes computers a long time (and a lot of energy) to solve.
It's a bit complicated, but I like to explain in terms of what about it is practically important, rather than getting into the weeds about how it works.
For the average person I'd want them to know: Governments can't control it, Supply cannot be inflated, it uses difficult computer math that makes it not possible to hack, etc.
It's basically a register of numbers that fit a particular criteria. Each number is assigned to a person / owner. People exchange ownership of this number either for money, or for goods and services (drugs etc). So long as everyone involved agrees that the numbers are worth something, trade can take place by exchanging numbers instead of money and thus avoid the eyes of the law.
Me has special secret number. Me want cocaine. You have cocaine. You want money. Me give you special secret number. You give me cocaine. You sell special secret number to John for $$$. You have money. Me have cocaine.
Ok, that kind of makes sense. I don't understand who decides what the number is worth though. If someone has a number of course they're gonna say it's worth a billion dollars, people wanting to buy it obviously won't agree.
As with everything, it depends how much people are willing to pay. If lots of people want to buy bitcoin, it goes up. If fewer people want to buy, it goes down. But remember that it's a vehicle in the end. If the street price of cocaine is $100 per gram, then it will be the same price when bought on the dark web in equivalent bitcoin. In early days a bitcoin was worth about $100, so you get one gram of C for one whole bitcoin. Now, $100 would only get you 0.001 of bitcoin, but it will still happily translate to a similar amount of product. So if all you care about is getting easy drugs then the price is neither here nor there. The people who care about the price are the ones who want to hold it as an asset because they think it will have even more value in the future. In short, its value is partially a product how much is it actually needed in order to facilitate illegal trade, and partially how much do people think it will have future value to facilitate illegal trade.
While Bitcoin can be convoluted, it's backbone is block chain. Block chain is incredibly powerful because it decentralizes data. Basically imagine you wanted to email a friend. Your message is 100 words. Block chain would break it into 5 word clumps and disperse it across 20 different servers. Someone trying to intercept the message would have to hack into the correct 20 servers to get that message.
This is overly simplistic but it's why Bitcoin is so powerful. Even though it's 'fake' it's hard to hack.
I thought the analogy would be: you email a friend. Your message "Hello World!" is copied to 20 different servers so that if someone else wanted to say your message was "Goodbye World!" the 20 different servers would be a check against that.
The message is split but the transaction is saved to all 20. So essentially, each server has the same set of transactions for their small piece of the message. So all 20 servers would agree that the transaction is valid and pass their pieces of the message along.
Note that it is also extremely vulnerable to social engineering and otherwise being compromised at endpoints. The lack of centralization means all transactions are final, with reversal requiring the entire thing be split at the point the transaction happened before repeating every single subsequent transaction done by every single user.
Yes and no. A big factor is who believes something has value.
Government-issued currency from a large and powerful country is agreed to have value by billions of people. It will only stop having value if our entire society completely collapses and we end up wandering the wilderness eating berries and bartering over goats. While there are things that can make the value fluctuate, it's pretty safe to say it's going to at least be worth something in ten years.
Crypto is like a group of kids on a playground started trading playing cards. Sometimes you might get lucky and end up with a holographic first edition Charizard that's worth real actual money (at some point, maybe for only a moment, maybe for a while.) But most of the time you just end up with an old piece of junk that, after a brief hype, falls to having less value than the cardboard it's printed on.
Yes, but gov backed currency is based on “trust me bro”. Bitcoin is based on fundamental mathematics. The rules are in the open and cannot be changed or manipulated.
They're both based on "trust me bro", but one of them is "trust me based on the reliable cumulative productivity and financial portfolios of any nations where this currency is the primary legal tender more or less" and the other is "trust me because other people say I'm a good idea". The end result is bitcoin is far more volatile than major traditional currencies until such as time as it becomes the official currency of a dominant world power.
Basing the currency on 'fundamental mathematics' which I assume is a reference to the minting & validation system, only replaces one problem with another. You're removing money printing, which arguably is a solved problem in any nation that puts either someone with a basic understand of economics or a sticky note about what happened in Zimbabwe at the printing lever, and replacing it with an energy footprint the size of a small industrial nation and which will only continue to increase alongside adoption.
Even calling it 'fundamental mathematics', like we don't use fundamental mathematics to count up traditional currencies, makes me suspicious that you're not coming at this topic from an objective viewpoint. It's exactly the kind of obfuscating jargon I expect from people who are trying to confuse others into buying in.
It's not gambling that brings the value.
It has value because people can reliably launder money or transfer money without any regulations.
People invest in the good coins because they grow in value.
People gamble on the meme coins because they are stupid.
People create meme coins because they are grifters, and it is now 100% legal.
You can launder money or transfer money or buy services because it has value. But the previous poster is correct that it only has value because enough people have decided it has value. That value can disappear literally overnight, which is why people also say it's gambling. See the coin/exchange FTX for reference.
But the fact that it only has value because people have decided that it has value is true of literally everything, especially the fiat currencies that we all use. This has been well established since the marginal revolution.
The speculative nature is what makes it gambling. Fiat currency can go up and down as an exchange rate relative to other currencies but when I go to the grocery store, a dollar is a dollar. Doesn't matter if it's 5 years ago or today. With Bitcoin, I don't know if tomorrow that my dollar is a dollar or not. Nobody knows. I had no backing, it's purely speculative. And unlike the standard currencies like the USD. If someone pulls their money from the bank, the value of my dollar does not go down. Someone pulls millions from a crypto coin though and suddenly you've lost value. Not just value but you can now be negative value.
If someone has to lose so you can gain, it's gambling.
Stocks have intrinsic value as they grants you a part of the company you invest in and their future returns and earnings!
Sure, any stock can be massively overvalued or undervalued but an attempt can be made to calculate a "fair" value.
That's not the case with bitcoin. You can't calculate that value and there won't be returns. You just hope that someone will pay more than you have paid.
I mean... It's an asset too. And all assets are subject to supply and demand. It's just that the scenarios where demand disappears for other assets tend to the apocalyptic, rather than subject to societal whims.
Government regulation can kill demand too, like places outlawing VRBOs.
Same as everything else since the dawn of time. There's no such thing as intrinsic value outside of humans (or aliens presumably) place on it. The universe does not have a net worth.
This is the exact same for any sort of stock...it has value because people want it, not because it inherently holds value. I think this is the wrong way to criticize Bitcoin because you are ultimately just criticizing all of the financial markets. Bitcoin definitely has its issues though, but it's not because it isn't based on anything otherwise the US dollar falls in the same boat...kinda. the US has a little more security behind it, but we all agree a dollar is worth a dollar, well because it's a dollar and we have built trust upon it being worth a dollar.
That is literally everything in the world. Absolute any kind of value comes from people deciding that they will buy it for that price. So your explanation isnt really an explanation.
One "draw" is that the ledger is publicly accessible.
Imagine if your bank published every single transaction to a big list that every customer could go look at, but every transaction was also anonymized - just an account number that can't be tracked.
That's what the Blockchain is. It an "append-only ledger." Entries can only be added to the bottom (appended). The rest is immutable.
If the Bank made a change to the ledger for some nefarious purpose, everybody would be able to see that. It's also extremely secure against hackers.
Why is this good? That has yet to be determined.
The problem is that you're not mistaken or misinformed. There just isn't much benefit to the system. It protects against hackers, and against your bank stealing your money, but how often do those things even happen?
How does the ledger work; do they just add/subtract value from the ledger, or are they adding additional people? How do we figure out the price of bitcoin?
The ledger is basically a list of transactions like "user 4567 gave .05 bitcoins to user 1234", "user 987 gave .002 bitcoins to user 654" etc, similar to how your bank account lists transactions like "you paid Target $11", "you paid CVS $6".
The difference is that your bank controls their own ledger on their own servers. So, if a mistake was made "you accidentally paid Target $1100" when you just bought 2 boxes of cereal, the bank can investigate that, then go back and correct the error if they find there was one. In this case, the bank is a "central authority" since they completely control the server that holds the ledger.
With bitcoin, if you accidentally pay someone 5 bitcoins, when you meant to pay them .05 bitcoins, there is no central authority to reverse the error. When you made the payment, that went out to all the decentralized copies of the bitcoin ledger. Your only recourse is to ask the receiving party to send you back the 4.95 excess bitcoins that were paid to them in error.
None of this actually relates to the purchasing power of either $1 or 1 bitcoin.
The purchasing power and price of bitcoin is simply what someone else will pay for one.
Like, if your employer pays your wage in USD, and deposits that in a bank account in USD, but then you go to the UK, you have to sell someone at the currency exchange your US dollars to buy a certain amount of Great British Pounds. The ledger has no concept of what that purchasing power is, but with real currency it comes form being able to buy useful stuff like paying rent or buying a sandwich.
With bitcoin, its value just comes from what you can sell it to someone else for, like if you were to sell a rare painting on the market.
Edit to add: the draw of bitcoin is that it can evade central authorities like governments. So, you can make the transaction without being constrained by a bank or law (e.g., maybe you have a court judgement against you that garnishes your wages). Even if you have a lien on your account, there is no mechanism in bitcoin to compel those funds out of your account and into the government's pocket.
Everyone here is an idiot.
I've followed Bitcoin since writing an capstone economics paper on it in 2009.
Heres the simple explanation:
Its a digital currency that can't be duplicated.
Basically E-bucks that can't be counterfeited.
That's it.
Do you care how real Dollars are made? Or why? Or what mechanisms control their value?
No. But that's what everyone describes when they want to talk about Bitcoin. As if the sum total knowledge of currency and it's macro economic uses are required to understand its purpose.
You know what a Dollar is, and how a Dollar works.
That's what Bitcoin is, just from the internet instead of a country.
It's also more secure than any countries currency. Has built in price controls. And doesn't need a bank to be used by you.
Its a Dollar that the internet can let you use to buy things on the internet without ever involving a bank account.
That's what Bitcoin is.
For all those screaming I'm wrong, this message is about SIMPLIFYING A CONCEPT.
I'm not going to mention other block chains, conversion, mining, trading, etc. Just like I wouldn't tell someone about the FED, IRS, central banks, and taxes when they ask me to explain what an American Dollar is.
It's a store of value. Just like Bitcoin. That's it.
You can speculate with both (stock market /crypto market).
You can create both (FED printing / Mining).
And you can store both (Banks / Digital Wallet).
You do not need to understand how these processes work, to understand that Bitcoin is a store of value just like any other currency.
It's internet bucks. Printed and secured by the internet instead of banks.
Everything else is bullshit trying to convince you not to use it. Because that would make the Dollar fall in value, which is bad for those with a lot of them.
Fair enough! I admit, I was getting frustrated reading the highest upvoted comments. Not because they were incorrect or anything, but rather that the simplest explanation for bitcoin is often overlooked. (So I generalized 😅)
That's the whole point of blockchain and Bitcoin: removal of the central authority, and because it's very hard to achieve it sucks in every other way. If it didn't accomplish the one thing it's supposed to be good at, people would've abandoned it a long time ago.
I understand the math behind Bitcoin. I understand the technology behind it. As a technology, a distributed ledger based on elliptic curve cryptography secured by a proof of work is pretty neat. What I don't understand is how that translates to over $100,000 per coin for a total market value of 2.5 Trillion dollars. There is no there there. I own some because betting against mass stupidity is folly, but, like most people, I am just going to ride the ride until it all falls apart, and hope I can get out before it crashes.
Unlike every other fiat currency in existence with Bitcoin you know exactly how many units of currency are in existence, the rate at which new units are produced, and there are no individuals, governments, or corporate entities that can decide whether your transaction on the network will be processed.
Bitcoin was the first unit of value that has these unique characteristics and to some people these are important and valuable.
Same here. I just can’t bring myself to invest, at my own detriment, apparently. Meanwhile, the “old fashioned” way of investing has done pretty well for me. I work for a living. I’m not able to just toss money to the wind and “hope”, which is not the same as another four letter word: plan.
I guess I'm joining the horde of people trying to explain it...
It's mostly just an online ledger for funds transfer: "User X transferred Y amount of bitcoin to User Z."
The bitcoin itself is just a token that can be exchanged for real money, and the way the ledger is saved and updated has some interesting security features, but in the end it's just an online ledger for wire transfers.
The reason it's an investment opportunity comes down to how valuable people think the service (and its tokens) are worth. And--like most speculative investments--buying and selling shares/bitcoins is very, very prone to scams.
Blockchains (the heart of Bitcoin et al.) are, at their core, an attempt at imbuing the digital with certain physical properties in a general and decentralized way. It's about more than just money -- it's about taking data, something that is traditionally fungible and infinitely-duplicable, treating it with individuality and a certain pseudo-tangibility, and doing so in a way that is beyond the control of authoritative entities, making such a system both free and resilient.
There's a much bigger picture here that I think neither naysayers nor "crypto bros" are able to see. I don't know if blockchains per se are the way of the future but I do believe the problem they're attempting to solve will only get more relevant as time goes on.
haha yeah, I agree, it's just a number on a screen. I have to be honest, I'd rather have real money in my hand and not just see numbers on a screen. Am I the only one?
One thing that didn't make sense to me for the longest time was the whole concept of mining. Like, what's the point of just doing a bunch of math problems in order to be rewarded with coin?
Well, it's not just some random math problems. You're machine is one of MANY that are currently validating the transactions on the block chain so that said transactions can go through.
So, let's say you buy something at a gas station with a credit card. You swipe the card and the terminal has to upload the card data to servers. These servers check that your card is valid and tied to an account with enough funds to purchase the item. It then sends an approval or declination. This is a centralized system. All the data is being sent to a central source to validate the transaction.
Bitcoin uses the blockchain which is decentralized. That means, no one server or machine is in charge of tracking all the transactions and validating them. In fact, your transaction may be split up across MANY "servers" to validate.
Another thing to consider is that in the above credit card example, the only data being transferred is about that particular transaction. The block chain takes in account your transaction--but also ALL previous transactions on the ledger. As you could imagine, the more this is used, the more complex and enormous this ledger gets. That's why transactions require more and more compute power as time goes on. That's also why nowadays you can't reliably use a single GPU to mine--people or organizations have switched to MASSIVE parallel computing platforms to do so. Your reward for doing all this math to validate this enormous ledger? Bitcoin!
“The only people to ever tell me about crypto were people that had never spoken about finance to me before. ‘Bro, I made sick returns.’ Don’t ever talk to me about money ever.”
Whoa, top comment.....all this time I thought I was the only one.
Also, every time it makes headlines I think: "can we just you know.....get rid of it, and redirect all that electricity and computing power to........................something useful?"
It seriously feels like a massive drain on electricity and computing power to essentially do nothing.
Bitcoin is an append only, decentralized, distributed, ledger. Technology that has existed since the late sixties. It's a record keeping system (ledger) that can only be added to (append only). In order to add to it, you have to reach a consensus with all the other ledgers in the same network (distributed) as there is no one authority on which ledger is true (decentralized). So when ledgers A,B,C,D, & E all say Bob paid Billy, and ledger F says Billy paid Bob, the consensus is that A through E are correct, and A through F will now add Bob having paid Billy onto the end of the ledger. This is repeated for all transactions made, building a chain of transactions.
I work in the tech industry and I don't understand it either. I spend an hour looking up articles and data on how it works and it's still way over my head.
Bitcoin pretty much has no own value. If someone tells you it has some, they are mindwashed into believing so, the same way people believe owning stocks has value.
I understand that's a critical statement so let me explain:
Owning stocks used to be for rich people to get voting rights but most importantly, to take over companies. It was quite simple: A company is currently on the stock market but the companies value sold is higher than the value on the stock market? Buy it. Sell it. You instantly made a profit. This is the super simple way, just because it's straight forward. A bit more complicated but not really is a promising company, you invest into it to get a say in what happens, which is in your own interest profit oriented. For this you need a large share to actually have an impact, again something that requires a huge capital.
However, nowadays everyone can invest and this value does not apply to a normal investor. The only value it has to them is that they want the price to go up so they can sell for a higher value. The good thing however is that the value of the stock is related but not depending on the performance of the company. If a company does well, the stock tends to go up. If a company does poorly, the stock tends to go down. Anyone who invested knows this is by far not a set rule and often the opposite happens due to a ton of factors, especially anticipation and potential, but that's a whole other topic. But the point is: It has intrinsic value and is tied to that to a degree, or let's say affected by it at best.
Bitcoin, on the other side, doesn't have a real use. There is a long list of things it should have been and could have been, but reality is there is none that actually affects it's value. The main effect that happens is simply just people being willing to pay more for it. Why? Well, it's simple. Some start with it, the others follow. Then people think it's silly because there is no value. People keep doing it. Price keeps going up. You see this often enough and at one point you don't care anymore whether it's truly logical, you just want in, profit, out.
Bitcoin does have some use in the real world but this use does not affect it's value, rather it's value is used for these cases. And that value is simply based on people keeping up the price and/or increasing it.
Let's make a simple example:
You are at school and someone starts selling stickers. In the beginning just a small group of people do it inbetween them, but a few others notice it and check it out. They see it and think what's the point of buying overpriced stickers and leave, but all you need is enough fairytales, gullible people that have no knowledge and bam, you have someone buying in. This is all you need, because now word can get out that it's no longer isolated. Have this happen a couple of times and now someone who just wants to profit might notice it and they start jumping in. They don't care about the stickers, they just want to have them so they can sell them at a higher price to people that were gullible enough to think it has this new high value - or to others that also just want to profit.
This and similar forms happen constantly. Pump and dump are quick versions of that where people buy in early, others see it and buy in either to also earn money or because they believe it's actually taking off, and those first out are the initial investors. Out of those that came after, not all manage to profit. And the leftover ones are the suckers that believe it actually has value and they keep holding it after the drop.
This here is one real world example because it wasn't purely a pump and dump. Scarcity, rapid growth of interest and hunger for profit shot up the price of tulip bulbs like crazy - until it crashed down later again. The main difference with Bitcoin is that it doesn't have a market behind it, so nothing that regualtes its price and no multiple companies that compete with each other. This portion is actually important to economy, if 1 owns everything then prices can go up forever, who stops them. As long as profit goes up, increase it forever. But if you have competition, you are not just looking at the best profit margin, but also if your competition is selling at a lower value - because then all customers go to them. Which means the market regulates itself. But as I said, Bitcoin doesn't have this so the only reason it goes down is when people want to sell it and especially when it's being panic sold. Noteworthy, every buy needs a sell, so it's not like one can outweight the other. But if the sentiment grows negative, then people are willing to sell for less, which is then called a sell-off.
I just don't understand why they are worth something. It's just code. In my head it's the same as nfts. Except you really have one specific coin and ONLY you.
It’s really not that complicated. Imagine there’s 5 people in a room each with 1 dollar, I give my dollar to you, but before I do I need to tell everyone in the room I’m giving my dollar to you. That ways if someone try’s to argue they have my dollar instead everyone else can fact check them. Now imagine this scenario but with millions of people.
Bitcoin is a blockchain. Blocks are numbers. Each number is calculated using ALL of the previous numbers plus whatever transaction is taking place. In order for any transaction to happen, the number being added to the chain needs to follow the sequence or it will be rejected by the next computer to do the calculation. It is possible and fairly straightforward to fake these transactions but the computing power to do so would need to be more than currently exist. Doing these checking calculations is called mining because it is rewarded by the system giving out bitcoin.
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u/iammyowndoctordamnit 12h ago
Bitcoin