Please explain Bitcoin to me

[DonkeysNotDisney]

I've googled it before anyone posts that helpful suggestion, however all the articles, even the one from the BBC, seem to expect some level of pre knowledge.

I don't understand it, they use words like mine, but mine what, why do they need so many computers, how do you plug in computers (or hijack them) and make something that has value irl, and how do you make it have value irl.

Please if someone could explain in the most basic sense I would really appreciate it. The level I'm looking for is along the lines of Poppy and Sam in the Osborne books, bitcoin for dummies is probably too advanced.

Bitcoin was originally designed for privacy and security, so there was not a public record of what was bought/sold as there would be with a bank transfer. It has now turned into an investment venture for some, as well as other crypto currencies. Regarding your question, why does it have value- it does because people are willing to pay for it, some because they are security freaks, some so they can use it for somewhat dodgy purposes…

Bitcoins made using blockchain technology, where information is recorded in a way which can’t be tampered with at all. In order to record them on the blockchain, the computer needs to be programmed to solve what is essentially a super complicated maths equation.

If one person with one computer attempted to do this- they would maybe make .00000000000000000001 BC (may be off here, but you get the gist). This is why you have countries using insane amounts of electricity to mine them- more programmers, more computers, more BC.

Does that make sense?

‘Mining’ just means recording them on the blockchain by the way!

@Suprima

Bitcoin was originally designed for privacy and security, so there was not a public record of what was bought/sold as there would be with a bank transfer. It has now turned into an investment venture for some, as well as other crypto currencies. Regarding your question, why does it have value- it does because people are willing to pay for it, some because they are security freaks, some so they can use it for somewhat dodgy purposes…

Bitcoins made using blockchain technology, where information is recorded in a way which can’t be tampered with at all. In order to record them on the blockchain, the computer needs to be programmed to solve what is essentially a super complicated maths equation.

If one person with one computer attempted to do this- they would maybe make .00000000000000000001 BC (may be off here, but you get the gist). This is why you have countries using insane amounts of electricity to mine them- more programmers, more computers, more BC.

Does that make sense?

Sorry I need more basic, I mean I'm not stupid but I just can't grasp this concept at all. What's block chain technology and what information would people want recorded? And what is the question that the computer has to solve, and why does it solve it? Once it has solved it how is it worth money?

Thank you so much for taking the time, I really have tried to read up on it but I'm just in a confused loop

I’m with you op. I just do not get it. At all.

People talk about mining Bitcoin which I sort of half understand, but why is that worth money, If I had enough bitcoin could I buy a house? Could I go to the bank and change it into say euros, if not, how is it worth anything.

@Aposterhasnoname

I’m with you op. I just do not get it. At all.

People talk about mining Bitcoin which I sort of half understand, but why is that worth money, If I had enough bitcoin could I buy a house? Could I go to the bank and change it into say euros, if not, how is it worth anything.

Thanks, the media reports seem to expect the reader to understand, maybe the journalist doesn't get it either.

It was hearing that you can buy a Tesla with bitcoin that made me interested (although I don't believe you can anymore due to the environmental impact) I get that you need lots of computers and thus lots of energy and that these computers 'mine information' but I don't understand what is meant by this phrase.

There are sites on which you can sell/exchange bitcoin for actual money. Bit coin is finite. The more that is sold, the less there is available and the higher the price goes. That's how people have made so much money on it.

I’m sure you aren’t stupid- it’s just so hard to understand as it’s not something you can see!

This has quite a good summary- www.google.co.uk/amp/s/www.freecodecamp.org/news/how-bitcoin-mining-really-works-38563ec38c87/amp/

You only need lots of computers if you want mine big bucks. You could set up your own computer (assuming the specs were high enough) to mine bit coin and make a few quid a month. I know college kids who built mining computers from their old gaming rigs and make £££ per month from them.

I don’t have a clue but I just purchased some yesterday 😂🙈

@Frequency

There are sites on which you can sell/exchange bitcoin for actual money. Bit coin is finite. The more that is sold, the less there is available and the higher the price goes. That's how people have made so much money on it.

See, I have held out posting this until I decided on a new name as I knew that the replies would make me seem even more dim.

How can it be finite when it's mined information?? I mean this has confused me even more. What is it that they are selling though? I've learnt it can be held in a computer as I read about the man that threw his hardrive away which apparently was worth millions.

[quote Suprima]I’m sure you aren’t stupid- it’s just so hard to understand as it’s not something you can see!

This has quite a good summary- www.google.co.uk/amp/s/www.freecodecamp.org/news/how-bitcoin-mining-really-works-38563ec38c87/amp/[/quote]
This looks good thanks. I shall work through it and be back later

Miners are basically in competition to solve this maths problem as quickly as possible, they don’t do this with pen and paper- they set up their computers to run lengths of code to find the answer to the problem. Once it has been solved, it is recorded on the blockchain and then new BC has been born.

You can view blockchain technology as a very secure database, made up of virtual blocks that can be shared directly with others.

When it was created, the code was written so that there are only 21 million coins in the block (the database) that are available to be mined.

I can’t explain mining, but I can explain block chain and the basics of Bitcoin.

Bitcoin is a crypto currency. There are several out there. As someone said, there are finite bitcoins available, hence the value increase as they are, like most commodities, rare, therefore valuable through the nature of being finite, just like oil or gold.

The benefits of crypto currency are to have a decentralised currency not linked to any other currency and not regulated.

Blockchain is the ledger to record the transfer of the crypto- poppy sells one coin to Sam, block chain records the transaction like when you transfer cash to your friend on your banking app. This allows for a record of the transfer and avoids the issue of reselling existing bitcoins or other crypto currencies.

Block chain can be explained as having several people in a room all agree poppy sold to Sam. It’s a mathematical solution on how to record it. Up till then, it was dodgy (still can be).

It also solves problems of sustainably sourced goods. By selling via Bitcoin using block chain, you can guarantee no tampering with the product or value (bit more complicated than that, but check this out online if you like).

Bitcoin can be lost. People have misplaced hard drives with the coin details and, poof! It’s gone.

Does this help at all?

Really glad someone else started this chain. I like to think of myself as quite bright and work in a high profile job but every time someone tries to explain blockchain to me I feel like a 100 year old trying to work TikTok! It's not just you OP!!

I read that mining was using computers to generate trillions of random numbers and if there was a match, you earned a bit coin - the one you had mined?

Have you been reading that story about how police broke into a house that was stealing thousands of pounds of electricity expecting to find a cannabis farm and found a bitcoin mine instead?

www.bbc.co.uk/news/uk-england-birmingham-57280115

* When it was created, the code was written so that there are only 21 million coins in the block (the database) that are available to be mined.*

So they are solutions to puzzles? How do these solutions have any value?

I read that mining was using computers to generate trillions of random numbers and if there was a match, you earned a bit coin - the one you had mined?

But how can you earn something that doesn't exist?

So, did someone hide real money in BitCoin in the beginning? Or is it a bit like, look I found a BitCoin who will pay me for it?

I don't trust it at all. I also don't get the non-fungible token thing. I'm in my forties but I feel so old.

So they are solutions to puzzles? How do these solutions have any value?

Because they are useful as a form of money. Or rather, because enough people believe they are useful as a form of money.

Full disclosure - I don't really understand the ins and outs of everything about crypto although I do have coins and have had for years now.

But, do I need to? Does everyone need to? I do not understand how or why Pound Sterling really works either, other than the basics of people trust it works, the value always seems to go down (because they can make as much as they want?) and it's either paper in my hand or a number on a screen and isn't backed by gold.

What is really interesting is the technology behind the blockchain, and what it means for the future.

https://www.notboring.co/p/who-disrupts-the-disrupters?utmsource=morningg_brew&fbclid=IwAR1VZg3UN0xJjzqpeXjPO3vSKYXvy0wy-NOwBcg4OJFMQroVrKYalNe0ADA

This is pretty simple and asks a question that you might not have asked: what happens next?

Computers fit in your hands. Everything is getting smaller, faster, more powerful. But it's still the same things, just built upon.

Blockchains and crypto let you do things that previous computing paradigms couldn’t, the most important of which, according to Dixon, is that you can “write code that makes strong commitments about how it will behave in the future.”

No one person or company can change the rules. There will only ever be 21 million bitcoin, no matter what anyone tries to do to change that. Strong commitments extend far beyond bitcoin, to Non-Fungible Tokens (NFTs), Decentralized Finance (DeFi), Decentralized Autonomous Organizations (DAOs), and new blockchain-based products no one’s yet dreamed up.

If the code can make strong commitments, you don’t need central platforms to make and enforce the rules. They just create economic drag. Instead, you can allow creators and consumers to share more of the profits that Aggregators.

The article goes pretty in depth into explaining how that could be the next big change. Like the first steam engine, motorcar, personal computer etc.

For me personally, this is where I spend my time reading up on stuff. I did a module on software in my systems engineering course so I'm not a complete dummy (i hope 😂) but the fascinating thing is what it all means

I've read several guides for Bitcoin but, even with the explanation posts here, I still get completely lost within the first few sentences!

I have a stocks and shares ISA I don’t really understand either but I put a lot more money into that. I decided to put an amount I could afford to walk away from in a few different crypto currencies without really understanding them.

I get that money, £, €, $, ¥ etc, doesn't really exist - it's simply a representation of the value people ascribe to something. I could trade babysitting for homemade bread, for example, or I could trade either of them for an amount of ££s that represents a mutually-agreed value.

But that's because babysitting and bread both have value to the people who want them. They are things that exist independently of the ££s paid in exchange for them. The ££s are merely the representation of their value, whether as coins or bank transfer.

Do Bitcoin exist in the same way that, say, artistic talent exists? Not something tangible, and only of calculable value if someone wants what the artist can create? And this 'artist' will only ever create 21 million works.

The first bitcoin was worth £0. There was no demand, so no value. The value was created by creating demand.

In simplest terms possible a very clever programmer told people "I'm gonna create a thing, a string of code. There'll be 21 million blocks of code available to "mine" and one day they'll be worth money".

Then people started wanting them to the point they were willing to exchange goods or cash for them thus creating an actual, measurable value to them.

So, did someone hide real money in BitCoin in the beginning? Or is it a bit like, look I found a BitCoin who will pay me for it?

I think maybe... some of the confusion is by seeing money as "real". It's only real because we allowed it to be real. Because everyone in this country desires it, because other countries trust it. So that is why I can take your milk and hand over my money. Because you trust that you can use that money to buy more cows. And we all trust that the bank will not devalue it. We trust that our life savings are safe as a digital number on a screen i.e "in the bank" even though the banks use our money to make more money and have historically been involved in all sorts (The Big Short movie!)

With bitcoin I believe the intention was to create a trust-less currency. A government cannot demand more is made, a bank cannot use it without your knowledge. It's based on agreement that what happened actually happened, and the agreement is reached via a consensus. It reaches consensus by rewarding the "proof of work" i.e the verification, and all of this is recorded on the chain.

This photo explains what would happen if somebody went rogue and tried to change a previous block.

So it's... a completely different system with completely different fundamental "beliefs(?)" behind it than "real money".

But like I said in my previous post the really interesting thing, to me, is what it all means for the future.

And I feel old a lot too, I'm 29 😂 it's all very complicated but I think everyone owes it to themselves to at least try to learn something. How excluded from society would people be if they had the same thought process with the internet, you know? Zoom, facetime, facebook etc has been a godsend for my elderly shielding relatives, and we only had those opportunities because they embraced it. That will be us in 20, 30 years time. Now, when we hear that the kids are making money and starting tech companies in their bedrooms, we vaguely understand what they're doing. In 20 years if we don't take an interest I think we will be left really far behind.

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