Posted on 12/20/2013 10:16:42 AM PST by Errant
Overstock.com – the American internet retailer with over a billion dollars per year in sales – will accept Bitcoin starting in 2014.
As Overstock CEO Patrick Byrne told the Financial Times:
I think a healthy monetary system at the end of the day isn’t an upside down pyramid based on the whim of a government official, but is based on something that they can’t control.
If there’s going to be some part of the population which adopts it… I think that we’ll get that business. And the people who switch to it will respect that we started adopting it.
Europe has rolled out its first Bitcoin ATM. And a bitcoin ATM in Vancouver, Canada did $1 million dollars worth of transactions within the first 29 days.
Mobile gift card company Gyft – which allows users to purchase gift cards at more than 50,000 retail locations in the U.S., including Brookstone, Lowe’s, GAP, Sephora, Gamestop, American Eagle, Nike, Marriott, Burger King and Fandango – partnered with BitPay earlier this year to start accepting bitcoins within its app.
According to the Bank of England’s Chief of Financial Stability, this may be a big step towards breaking up the monopoly of the too big to fail banks.
For the love of Pete! I still am unable to understand the bitcoin concept.
What is it you don’t understand?
It was really confusing to me as well. But I saw one of those chocolate candy coins at the store really cheap and I couldn’t figure out if somebody bit into one that it would be worth more. Just doesn’t make sense.
Is there anything of value tied to bitcoin? Like how the US dollar used to be tied to gold?
What prevents similar problems to what we have now from hurting bitcoin?
What IS it?
Do you have to swap dollars to get some bitcoin? ... whatever it is? What do the bitcoin folks do with the dollars they receive in payment for bitcoin?
Supposedly it uses a fixed schedule for currency issuance and total currency in circulation. It’s issuance is also public and people can ‘mine’ bitcoins (become bankers) contribute to its appeal.
The fixed issuance allows very accurate settings for demand-side, aka market valuations. This is opposite to issuer-based currencies which are often abused by the issuer resulting in inflation.
Like gold it’s a finite currency which anyone can mine and has a fixed, absolute quantity.
Is there going to be a point where it’s all been mined and no more can be introduced to the market?
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What is it you don’t understand?
Yes supposedly. But the ‘market’ has already encountered this when there weren’t enough bitcoins to support transactions. People use bitcoin fractions like .00001 etc. for transactions. The supply/demand issue is, IMO, the main driver of many of its wild price fluctuations. The overstock.com annoucement should cause its value to spike since it indicates increased demand and decreased supply.
As I understand it, it is another Ponzi Scheme. There is no value.
How are new bitcoins created?
Number of bitcoins over time, assuming a perfect 10-minute interval. New bitcoins are generated by the network through the process of "mining". In a process that is similar to a continuous raffle draw, mining nodes on the network are awarded bitcoins each time they find the solution to a certain mathematical problem (and thereby create a new block). Creating a block is a proof of work with a difficulty that varies with the overall strength of the network. The reward for solving a block is automatically adjusted so that roughly every four years of operation of the Bitcoin network, half the amount of bitcoins created in the prior 4 years are created. 10,500,000 bitcoins were created in the first 4 (approx.) years from January 2009 to November 2012. Every four years thereafter this amount halves, so it will be 5,250,000 over years 4-8, 2,625,000 over years 8-12, and so on. Thus the total number of bitcoins in existence will never exceed 21,000,000. See Controlled Currency Supply.
Blocks are mined every 10 minutes, on average and for the first four years (210,000 blocks) each block included 50 new bitcoins. As the amount of processing power directed at mining changes, the difficulty of creating new bitcoins changes. This difficulty factor is calculated every 2016 blocks and is based upon the time taken to generate the previous 2016 blocks. See Mining.
https://en.bitcoin.it/wiki/FAQ
There are very few electronic means of transmission that would allow such a means of exchange to escape governmental intervention if they so chose. If it gets big enough, they’ll so choose.
There is a big cost to produce (mine) them now, in the same sense that there is a cost in mining "new" gold. This is contrary to the fact that the cost to produce fiat currency "out of thin" air devalues fiat already in existence.
What prevents similar problems to what we have now from hurting bitcoin?
Only about 1 Bitcoin every 10 minutes is able to be mined. Contrast this with central banks deciding how much to QE at their next meeting. What IS it?
http://www.youtube.com/watch?v=Um63OQz3bjo
Do you have to swap dollars to get some bitcoin?
You can trade fiat for Bitcoin and visa versa, or you can mine them.
What do the Bitcoin folks do with the dollars they receive in payment for Bitcoin?
Use them for anything they can't now use Bitcoin for. ;)
Very much like the Federal Reserve Note.
For scary, ask how new FRNs are created.
/johnny
How does a bitcoin ATM work? Does a withdrawal from one go to your cell phone or other electronic device?
Essentially, someone set up a program that uses peer-to-peer technology to allow people from all over the globe to use their computers to solve math problems which create data files. These files represent money. Then they all send information back and forth between one another to keep track of which files (money) belongs to who.
Do you have to swap dollars to get some bitcoin? ... whatever it is? What do the bitcoin folks do with the dollars they receive in payment for bitcoin?
People with high powered computers "mine" the bitcoin by having the computers solve complex math problems. Anyone can setup a computer to do so. Once the bitcoin has been "mined" (created from the ether) it can be sold for whatever someone will pay for it. It can be sold for gold, USD, Euros, pumpkins, back rubs, widgets, kitty cats, whatever...
What prevents similar problems to what we have now from hurting bitcoin?
Per the program, there are only a set number of bitcoins that can ever be created. Once they have all been created nobody can decide to create more and devalue it.
The part I don't fully understand is that I think the act of "mining" the bitcoins and keeping track of what belongs to who is the same thing. I don't understand what will keep it going when all of the coins have been created. Maybe someone can help me out with this.
I have also been told that they can be mined.
Both are true. The system was design so that only about 22 million are possible to be mined.
"Mining" is a term used to solve crypto algorithms whereby Bitcoins are "found". The system is set so that only about 1 every ten minutes is produced. This is controlled by changing the difficulty level of the "mining" process.
And who thinks that more won’t be made?
Somebody promised not to?
lol
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