Online black market/dark web drug dealers and purchasers use bitcoins as a way to buy and sell off the grid.
I've been paying a lot more attention to this bitcoin business the last couple of days. Kind of interesting.
Lol, yep and every other kind of currency imaginable including barter. Sure a lot of people on Youtube that mess with it that turned into millionaires over the last few weeks and days from the boom in it's price. Good for them. Some gambled big, some worked really hard at it over years and some just got flat lucky but it's still kind of neat to watch someone realize they just hit it big.
Cryptocurrency is a type of digital currency, and Bitcoin is one of many cryptocurrencies. Bitcoin mining or hash mining are just a fancy terms for a computer or hardware like a series of processors and the miner is paid in cryptocurrency for their processing power to confirm the validity of Bitcoin transactions on the Internet. Basically, transactions are categorized into a ledger called a blockchain made up of a series of blocks of transactions. When a new set of transactions are complete and there is enough to make a block, the block is added to the blockchain. Since transactions of cryptocurrency, essentially a "fake" (not really since it is backed by real money but kinda) currency, can be fraudulent, transactions have what is called a proof which requires a formula and processing power to solve which turns into a series of numbers and letters. That series of letters and numbers is called a hash. It's similar to providing the last 4 digits of your social, the 3 digits on the back of your credit card, or even those images where you have to type out the letters/numbers to prove you aren't a bot, but the proof is much much more complex. When a new block is compiled, it becomes available for Bitcoin miners to validate the transactions within that block. Here's where the processing power comes into play. The Bitcoin miner's hardware processes the proof over and over until it gets the hash. Your hardware may be wrong on all it's guesses when trying to solve a proof but each time you are wrong you are closer to solving the problem because it rules out the previous guess. The way it tries to solve the proof is by taking a random piece of data called a "nonce" and executes it against a formula until it successfully outputs the correct format. When the proof is solved and a hash is confirmed, depending on the difficulty, time spent, and processing power provided, the Bitcoin miner is paid in Bitcoins/fractions of Bitcoins for their work to confirm the transactions. Then it waits for the next block of transactions. The more miners there are the faster Bitcoin transactions are validated. The blocks are linked together by confirmed hashes and if someone tries to fake a transaction by changing a previous hash, it would change the data on the newest block and a Bitcoin miner's processor is able to recognize the previously confirmed hash and will toss out the fake transaction. Bitcoin miners compete against each other because it's basically a problem solving scratch off lottery ticket. I'm sorry that I understand this but I'm a computer engineer and I hate that I get it. I'm not a Bitcoin miner but I know a few people who have been lucky enough to make a little money doing it. You have to spend money to make money. You have to spend some money to get good enough hardware to be able to process fast enough or you aren't going to make much money. You are all correct though, it's certainly in a bubble but not in the exact same way as what your typical stocks are. Bitcoin itself could crash or continue to skyrocket and it's pretty volatile, but it's volatile in terms of inflation and deflation. The value of Bitcoin could change drastically at any given moment but the transactions won't stop until people stop accepting Bitcoin which would have to be an abrupt decision by millions of entities to stop accepting Bitcoin as a method of payment and therefore the Bitcoin mining will still be required to process transactions. Could that happen, sure, but most of those who accept it as a method of payment also use it for method of payment too. That's why you will hear/see lots of people with lots of Bitcoins but most are afraid to sell their Bitcoins to make real money as per the example of the guy who used Bitcoins to buy pizzas but could have saved them for a while and made millions.
Thanks Doug, I pretty much followed that. I read somewhere that Japan made it an officially accepted currency. Seems like bitcoin is growing up quickly now. We'll see but it seems like it may even out a little and drop some of it's notorious volatility. Of course that same volatility is partially what makes it exciting. It's not much fun to trade in things that move by an unch per week, margins are stupid small that way. I'm not defending it or supporting it, I've never paid any attention to it until a couple days ago. I don't trade or invest currently so no dog in the fight but it's been interesting to learn about and to follow simply because it's made a lot of people pretty wealthy almost overnight. I'm certainly not brave enough to invest in it at the moment. Cloud mining looks pretty interesting but again it's extremely volatile and dangerous. Most of the guys I've seen that got wealthy this past week have done it by starting with a mall investment and holding and reinvesting over a long period. They were doing okay and then when the value spiked they were rich overnight. It was just fun to watch. Of course they could wake up busted just as easily.
English man, English! J/K! I kinda get this. I get what cryptocurrency is but the thought of people making a little, or a lot, of money because they have a giant super computer in their garage solving math problems is a still weird. So if I understand this somewhat correctly, owning one Bitcoin is like owning one stock option in Google? But people can trade that Bitcoin, or one stock, for goods and services like buying groceries or getting you oil changed. Is that right?
Sounds about right except most of the time you're trading (spending) a fraction of that "stock" or bitcoin rather than the whole thing. Also you're trading it based on the value of it at any given second. I think your digital wallet calculates the proper exchange rate at the time of any transaction and uses whatever percentage of coin/s is needed. So say you spent a single dollar, that would be a very small fraction of one bitcoin worth $14,000. (or whatever the current price is) The mining computers aren't necessarily huge super computers, they're just custom made to accomplish a specific task. People are building them with normal graphics cards (GPU's). The big "farms" that are mining on a large scale just operate a lot of them.
I seriously thing the next big investment trend will be with companies that are investing in block chain technology as well as companies investing in A.I. And the hardware behind it. A lot of these small companies that are starting to evolve around block chain are really cheap right now too. Like under $3 a share.
