Can anyone explain bitcoins to me?

I’m just not understanding the concept of bitcoins - what it is (what they are?), how bitcoins work, that sort of thing. I read the entry in Wikipedia, but I’m still not getting it. Does anyone want to take a stab at fighting my ignorance?

If you do a search in General Questions, there are many threads about them. Here’s one to get you started.

I’m going to take a look at some of those threads. I’m looking for an explanation of a specific question, which both Amateur Barbarian and I brought up in the nearby Mt. Gox thread (Posts #6 and 7):

Given that all transactions are meticulously tracked in a distributed database with multiple redundancy, does this mean there is a complete chain of custody for every bitcoin for fraction thereof? And given all that tracking, how is it anonymous?

While I’m poking through those threads, can somebody beat me (and Amateur Barbarian) to it with at least a dummies-level answer here?

< . . . pause for brief homework break . . . >

Okay, peeking back at the Mt. Gox thread, I see some discussion there. I’ll go read that now.

Whenever you want to have a concept explained, it is much more efficient to use Google and search for it.

If the info can be found using Google, it’s really not fair to expect other people to spend their time to write you an explanation. It’s a waste of their time and the OP rarely even thanks people who go to that trouble for them.

Did you try to Google bitcoins? There are hundreds of entries there.

Thank you, Charlie Wayne. That address my question very well.

Don’t say I never thanked anybody.

Yes. You can even see them in real time.

It’s not, in the sense that every transaction is written in a publicly-accessible ledger. But it is, in that nobody is going to make you use your real name in that ledger. And there are people who will be happy to exchange your bitcoins for other items of value (like cash or drugs) that are not so easily tracked.

So it’s more accurate to say that it’s pseudonymous.

Wait a minute, let me get this straight. We shouldn’t ask for an explanation of something in GQ because the information could be googled? But that applies to practically all questions. Why then do we have a GQ forum? Perhaps because often Dopers can provide a far clearer and more cogent summary than is readily available elsewhere? And because the various responses can sometimes illumine different facets of a question by approaching the answer from different angles?

I too am confused about bitcoins and having looked at several webpages I’m still confused. I’m just saying that we have a wealth of experience and information onhand in Dopers. We shouldn’t be hesitant in using it.

With MtGox going down, does anyone still trust this system? I quote:

*"Dear MtGox Customers,

In the event of recent news reports and the potential repercussions on MtGox’s operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.

Best regards,
MtGox Team"*


From the General Questions rules.

While we do ask people to Google for simple answers, I don’t think bitcoins are that simple. In any case, Charlie, it’s not your place to chastise someone for asking a question here. I note that you have asked a few questions in GQ that were considerably easier to figure out by Googling than bitcoins are.

General Questions Moderator

Trust? Hardly. But since it’s the best way to anonymously purchase drugs, hitmen and kitty porn, it’ll have to do until something better comes along.

Why bitcoins when we can use dogecoins

Because people need to have heard of a currency for it to be useful, and far more people have heard of bitcoins than dogecoins.

This being General Questions, how about explaining why we should?

The Bitcoin exchange rate has been surprisingly resilient to this news. According to the NY times Mt. Gox lost 6% of outstanding bitcoins.

The thing I don’t understand about the Mt. Gox problems is why people were storing their coins with Mt. Gox or any other exchange. I thought a big point of bitcoins were that you could store them personally without the need for entities like Mt. Gox. Shouldn’t you only be giving coins to Mt. Gox when you want to exchange them with others or for other currency.

This is fascinating. I am interested to see what is going on here but it scrolls through faster than I can track it. After clicking on a few transactions I am led to conclude that most of the transactions are re-transacted again within a few seconds. (Is that a word?)

I noticed one for 0.00005603 BTC. Now I have got to ask, given that this works out to be about 3.1 cents US, what is possible value does it really gain for its owner? Is this a purchase of some kind? If so, what item of value was sold?

I am going to assume that the majority of these transactions are automated and that the trading is proceeding according to some kind of algorithm. this would seem to be an attempt to capitalise on the rise and fall in value of the currency. But again, what is being purchased in these transactions?

So, someone please tell me what is going on here.

In a possibly unrelated question, If I decided to try my hand at bitcoin mining, how many hours of computer time would it take before I could expect to earn myself one shiny bitcoin? I have a single laptop provided by my workplace which I am free to use for some personal activities. But I have almost no knowledge of the practicalities of trading or of the intricacies of the bitcoin system. Would it be worth the effort? What would it take?

It wouldn’t be worth the efforts anymore, although it was at the beginning of bitcoins. Now mining takes far more computing power to be useful at such a small scale.

The Wikipedia page on micropayments has some suggestions.

If you store them personally, you could lose all of your bitcoins when your hard drive crashed. You could maintain your own backups, but people aren’t so good at that. It’s like anything else, big companies do a better job of redundancy and backups. Cloud storage and all that.

It’s the cat’s meow.

Kitty porn? People are selling pictures of cats having sex!? Oh the humanity!