Bitcoins (Digital Currency) Overview

Lately, I've became interested in Bitcoins. Has anyone used them? It seemed that a guy under the name 'Satoshi Nakamoto' created them and released the source code under a Cryptography mailing list back in 2009. I'm curious about how it works and about a new trend called 'Mining Bitcoins'.

But, I still can't understand exactly how can someone just invent money? For example, you can have your own PayPal account and have money in there but what the heck is Bitcoins? I read that these coins are unique and form what's called a 'Block-Chain' but don't have a good understanding what exactly this really is. Can someone shed some more light on this and explain in simple terms how it works and how can coins could be programmed?
 

Agent Smith

Well-Known Member
Answer the question FFS.

All I know is that it's a cryptographic hash worth money and there's way more to it than that.

You can mine with bitcoin mining hardware, but you need at least $1000 for a good mining device to yield any profit. People still use top of the line video cards to do this. The bitcoin mining hardware is called a ASIC (Application Specific Integrated Circuit). You can also pay a company that has a warehouse full of miners to make money for you. And there are mining pools where everyone shares in the profit.
 

TrainTrackHack

VIP Member
Just about all money is invented. Anyway, bitcoin, unlike PayPal and such (which only store common state-backed currencies) is an actual new form of currency itself. The blockchain is simply a chain of transactions - each block contains a bunch of transactions, and the chain of transactions is in effect used to keep track of who has what. Everyone has the blockchain (well, all miners do anyway - IIRC they developed a feature where you don't need to have the whole blockchain on your machine if all you're doing is making transactions), and basically the system works by consensus (so you can't spend bitcoins you don't have - you can do anything you like with your copy of the blockchain, but if you're making invalid transactions or otherwise playing foul, everyone is simply going to reject you). New bitcoins are created by miners - to add a block to the blockchain, a miner takes a bunch of transactions, creates a new block, "works" on it, and once the "work" is complete, sends it out to everyone, at which point they check if it's a legit block, and if it is, it's accepted as a part of the blockchain. The miner also receives a bunch of new bitcoins as a reward.

The coins themselves aren't "programmed".
 
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