“So how are they created? Is there anything of lasting, stable value assuring they have a value?”
The creation process for BitCoins involves computers running algorithms. I’m sure you could find volumes about the process with Google, but it will all boil down to that.
There is absolutely nothing of lasting, stable value about BitCoins. If some Russian hacker figures out how to crack their system and counterfeit them their value could go to zero in minutes.
What is it that you think gives the US dollar intrinsic value? It has lost 95% of its purchasing power since the early 1900s. The dollar used to be backed by gold, but now it is backed essentially by the international community being willing to accept it in trade and as a “reserve currency”.
I don't particularly. But I think that unless government collapses completely and we're back to the barter system, it will be used for exchange. People are programmed to accept money. I really can't think of anything that's practical and nearly 100% believable with verifiable value except for old silver dollars.
Jon Paulos, a very readable mathematician, wrote about a scheme to create money. That would that when expressing money in decimal form, the value has to be cut off at some point, assume it's at thousandths. All of those cut-off miniscule amounts add up. Programmed by someone very devious and tech savy, could sweep those cut off decimals and accumulate it into an account. It would add up very quickly. I think a scheme along these lines is what started the mutual fund crisis at Putnam.
Could the bitcoin algorithm be something like that?