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Not quite sure what the appeal is here? Low transaction fees are nice but why not use something like Dwolla which is dollar denominated? The "mining" concept

• sgornick 16y ago
  Dwolla is great, ... but for smaller amounts their $0.25 per-transaction fee is a limiting factor. Especially if what you want to buy is only $0.99, for instance. Also, when you receive Dwolla as payment and want to spend that money using your bank ATM/debit card, after you withdraw funds it then takes a couple days for those funds to reach your bank (via ACH). For now, Dwolla is available for U.S. accounts only as well. Bitcoin has no such limitations -- it is just software and a network protocol.
• kiba 16y ago
  The "mining" concept also confuses me. Is the currency backed by CPU cycles? If so, what are the CPU cycles being used for? Bitcoin is not backed by anything. CPU cycles are used to ensure the security of the system. Low transaction fees are nice but why not use something like Dwolla which is dollar denominated? That's like comparing eggs to chickens. Bitcoin is more than just a transaction clearing house, but also a currency that is completely separated from the control of governments and traditional banking institution. The advantage of bitcoin is that anybody on the planet can use it. I can send you bitcoin just as easily across the street or halfway around the world. Bitcoins cannot be frozen as easily as your bank accounts can be frozen. There's also the fact that bitcoin cannot fail due to one single company. Not quite sure what the appeal is here? It appeals a lot to technogeeks who happens to also be libertarians, people who worries about economic policies of governments, and so on. But bitcoin in my opinion can facilitate greater efficiency in the world economy by making it easier to transfer capitals across border. That alone is valuable.
  • sausman 16y ago
    _It appeals a lot to technogeeks who happens to also be libertarians, people who worries about economic policies of governments, and so on._ I fit that description and agree that private currencies such as Bitcoin would be awesome, but aren't there laws in place to secure the government's monopoly on money? ( http://www.lewrockwell.com/paul/paul619.html http://www.lewrockwell.com/paul/paul619.html ) Does Bitcoin circumvent these laws by being completely virtual?
    • maurycy 16y ago
      It is impossible to have monopoly on money. Simply put, money is whatever market participants agree on.
      • michael_dorfman 16y ago
        Sure. But the government can still insist that all transactions paid in BitCoin are subject to a sales tax, which is payable only in legal tender (not BitCoin). Money is whatever the market participants agree on, and laws are whatever the government agrees on.
        • maurycy 16y ago
          It requires cheap trackability to tax. Of course, BitCoins are easily trackable, thus doomed. It was possible, though, to design them without this property, ensuring that costs of tracking offset the potential tax gains. EDIT: It would be fun to consider the arbitrage opportunities rendered possible by such sales tax.
          • canadaduane 16y ago
            My understanding is that it's easy to track the transfer of bitcoins to accounts, but very difficult (impossible) to figure out who is behind an account unless they choose to reveal their identity. Since accounts can be generated on a whim, and with no identification, the upshot is that taxation would be unenforceable.
• sgornick 16y ago
  Mining is the method how transactions on the Bitcoin payment network get processed and stored. The only reason you would mine is if you wish to invest the significant amount of time, equipment and electricity necessary to do so. Compensation for the mining activity comes from "rewards" in the form of new bitcoin currency that is issued. The more cryptographic hashing calculations that your hardware can perform, the more likely you'll earn the currency "generation" reward. The reward is issued roughly once every ten minutes. All the miners are competing to become the recipient of that next reward. Because there is no central authority, the currency is protected by the network. The more mining activity, the less likely an adversary could mess with the payment network's transactions. Now that Bitcoin is among the largest distributed computing networks that exist, corralling the necessary computing power to act as an adversary is becoming something that is more and more difficult.
  • sausman 16y ago
    Okay that makes sense, thanks for the clarification.
• rmc 16y ago
  Is the currency backed by CPU cycles? Essentially yes. If so, what are the CPU cycles being used for? Essentially nothing. Just doing time consuimg calculations. Makes it hard to fake.
• wladimir 16y ago
  why not use something like Dwolla which is dollar denominated One of the big advantage of bitcoin as I see it is that it is not pinned to a single country, it is a truly international currency. Pegging it to the dollar would reduce its attractiveness for many people.