Current Events > I still don't understand the fundamental concept of Bitcoins.

(+) Yeah! (+)

Why does the so-called currency have any value whatsoever? I don't think you can actually buy anything with it, just convert it back into dollars, pounds, Euros, or whatever. I know that certain things, like gold bars, cannot buy things directly, and all types of money and currency are only valuable in the sense that we say they are (although in some cases, like specific metals, their rarity gives them value), but...Bitcoin appears to have no actual use at all.

I'm so confused. Please lead me out of my Sunhawk-type ignorance. If that's even possible.

---

Sunhawk posted...

I don't think you can actually buy anything with it,

you can. Though businesses that accept it in the wild are rare. There are some btc to dollar atms at some gas stations. Ive seen one before.

some websites accept it. The porn user here got hella rich because he loaded up on BTC to buy porn subscriptions, and this just happened to be before its value skyrocketed

it has value for the same reason any fiat currency has value. People say it does.

---

Sunhawk posted...

Why does the so-called currency have any value whatsoever?

The same reason any currency has value, its ability to be traded for a commodity among a large group of people. Its representation of X amount of a certain good.

Sunhawk posted...

I don't think you can actually buy anything with it

You can buy many things with it if the vendor accepts it as a form of currency.

Ponzi scheme

---

All currency is founded on an innate trust it has value. People just value it as something with worth, with people behind the scenes trying to best manipulate its flow (as with all currency).

how does mining it even work

You install some app and it pounds your gpu
It processes some algorithms... for who? For what reason? And that generates money how?

---

The Bitcoin plays a strong role in being a hedge against a falling currency. In Venezuela, their currency went through hyperinflation a few years back. People from the US attempting to send remittances to support their Venezuelan relatives would have to jump through hoops to send their money down. Going through the typical banking system, it takes days to clear and the Venezuelan government would take an exorbitant amount, say a 30% cut, of the remittance transaction entering their national banking system. With the bitcoin network, it takes minutes to transfer, and the relative would cross over to Argentina and to a BTC ATM. And there were a number of other places and contacts to trade their BTC back to their currency for local use.

People have also used the BTC to hedge their wealth the same way Argentina and Lebanon.

To understand and appreciate the significance of the BTC, you have to learn about the US dollar and what gives it its value (the US military). All our wars in the past 20 years or so have been about maintaining our sovereignty and the BTC was first theorized and began development as a response to the 2008 financial crisis.

---

Rika_Furude posted...

how does mining it even work

You install some app and it pounds your gpu
It processes some algorithms... for who? For what reason? And that generates money how?

https://www.youtube.com/watch?v=bBC-nXj3Ng4

---

Choco posted...

https://www.youtube.com/watch?v=bBC-nXj3Ng4

it needs 26 minutes to explain?

---

ThyCorndog posted...

it needs 26 minutes to explain?

Imagine being so intellectually lazy that you expect that a new and innovativr type of technological currency should be easily explained by fucking Big Bird and the Count.

Blue_School posted...

Imagine being so intellectually lazy that you expect that a new and innovativr type of technological currency should be easily explained by fucking Big Bird and the Count.

that would be p lit tho ngl

---

I have you tagged as "kid watcher" TC. You're probably interested in Bitcoin so you can do some creepy shit.

---

Rika_Furude posted...

how does mining it even work

You install some app and it pounds your gpu
It processes some algorithms... for who? For what reason? And that generates money how?

So you wanna know about mining, or proof of work, eh?

The way it works is that your node on the network takes a number and hashes it using the SHA-256 algorithm into a long string of fairly random characters. For example, running 118 through that algorithm outputs:

00cc2e9f7a37a0fdf0fc99d8fa0c7ce8f7cae298854c8581886c66dc1776fd00

But here's the kicker what makes this so cool. What miners are looking for is to check for the number of zeroes prefacing the rest of the hash. Here, the 2 zeroes preface the rest of the hash. So the miner that found this hash would broadcast to the network that this "nonce" (an integer used once), 118, produces the hash above. Everyone else verifies that 118 outputs the above string from the algorithm, verifies that 118 hasn't been used before and boom, they'll use that hash for the header of the block for all the log of all transactions that occurred from when the last header was found to this new header to add to the blockchain and a new bitcoin is minted and awarded to the node that found the nonce. Then the rest of the network moves on as each node goes looking for a new number that produces a hash of at least 2 zeroes.

But here's the interesting part, if it's too easy, they'll amp up the difficulty of the hash, i.e. demand more zeroes prefacing the hash. It took me .00023 seconds to find 118 that gives me 2 zeroes prefacing the hash. This is on a 2014 15 inch Macbook Pro. I'm running a script right now simulating the proof of work algorithm and it took me 21 seconds to find a nonce that hashes into a string with 6 zero starting bits. 8 zero starting bits? That's gonna take a few hours on my computer. As you can see, it going from .00023 seconds -> 21 seconds -> HOURS, it's exponential. Checking the latest header on blockchain.com, the header is

0000000000000000000944ecde6d106ce0025743e2f375aa3731426f92f96f15

Where they are looking for output strings that have at least 19 zeroes prefacing the string. So you can see how simplistic this strategy is to mine yet how secure it is. It's bloody ingenious. I implore anyone to read Satoshi Nakamoto's whitepaper and test out the proof of work algorithm on your computer so you can have an appreciation for mining.

Anyone, feel free to correct me if I messed up on the explanation.

---