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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.
by 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 agoIt is impossible to have monopoly on money. Simply put, money is whatever market participants agree on.
- michael_dorfman 16y agoSure. 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 agoIt 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 agoMy 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.
- maurycy 16y agoThey do not think so[1]. It is easier to fail than with the old-fashioned money, given that all the transactions are publicly logged. http://www.bitcoin.org/wiki/doku.php?id=anonymity http://www.bitcoin.org/wiki/doku.php?id=anonymity