What Is Bitcoin, and How Does It Work?
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By Don BauderOct. The first transactions will begin taking place at a launch party late that afternoon at Niagara Avenue. This is online, digital currency — called cryptocurrency — hence is subject to hacking.
Some speculate with Bitcoins, and the price can be volatile. For many, Bitcoins are a gambling mechanism, not a store of value. You can carry millions' worth of Bitcoins in your pocket, but if you lose it, it's not like having your credit card filched or copied and used for a big purchase by an identity thief. In such cases, you can often get your money back. That's not true with Bitcoins. There is a black market for Bitcoins, and they can be used for tax-evasion purposes.
They are often used for drug sales because they are difficult to trace. There is always the question of whether a merchant will accept them. Scammers sell fake Bitcoins. I have to correct you, slightly. First, it's misleading to say there are counterfeit coins in a block chain.
Bitcoin is simply a public ledger. Coins do not exist by themselves. The ledger is a collections of agreements that each address in the system owns some number of coins. The resources to counterfeit this would have to be enormous, and would be very quickly detected. Second, all systems that bitcoin atms how do they work user account access, such as your online bank account, are hackable.
That is not unique to bitcoin. Using public key cryptography, digital signatures, and cryptographic hashing, along with peer-to-peer networking and Merkle trees, the advantage of block chain technology is that everyone can trace every single bitcoin atms how do they work forever and there is no way that any of the data can ever be changed once it is committed into the record. The "chain" cannot be broken. This is not true of traditional banking databases. Additionally, from the macro-economic perspective, a currency independent of central bankers provides protection from governmental currency manipulation.
A risk you didn't mention. Instead the rules for the expansion of any block chain dependent money supply are transparent. Not the same as stable, which is why I own no bitcoins. There's potential application of this technology into many fields beyond currency. Think of land registries and other kinds of ownership assertion currently under governmental monopoly. With the promise of greater transparency, drastically reduced transaction costs, and freedom from politically-based manipulation, there is potential for block chains not just Bitcoin or digital currencies of the month to be revolutionary in the creation, tracking, and maintenance of important records, including those for the notion of storing value as "money".
Yes, your account can be compromised. As with all such systems. And I'll add extra emphasis on your important point that there's as of today no reliable recovery mechanism. You don't even mention some other risks. Yet Bitcoin, as the bitcoin atms how do they work prominent representative of an applied block chain, ought not be so blithely dismissed.
Yes, it's today more a gambling mechanism than a mature currency. Yours is an interesting post. The fact that bitcoin is more a gambling mechanism than a store of value is quite important, I believe. Sure, speculators gamble on the dollar and other currencies, but the values are not as volatile. Does freedom from governmental and central bank manipulation justify a dependence on speculators? Not in my mind, but I won't argue with those who feel otherwise. As an investment proposition, bitcoin certainly is more of a gamble than a prudent investment.
As a technology, online payment mechanism, and economic-political philosophy, bitcoin is, if anything, more conservative than any fiat currency. It is incorruptible, uncounterfeitable, irreversible, uninflatable, has a fixed global supply, is completely decentralized beyond the whims of any central bank, and beyond the confiscatory powers of say Bitcoin atms how do they work or asset forfeiture.
It is truly democratic in that a fully open-source, peer-to-peer network both relays transactions and confirms their integrity using the block-chain mechanism. You do not need a banker's permission to use bitcoin - just a bitcoin atms how do they work or a phone with an bitcoin atms how do they work connection.
When I wrote this, I knew I would get a lot of commentary from those fanatically attached to bitcoins. And I got such comment. I deplore gambling but I wouldn't call a bitcoin speculator a complete idiot. Drug dealers and assorted money launderers -- heavy users of bitcoins -- are vile but they aren't complete idiots. It would be nice if they were. I don't believe the list is yet inclusive enough. But there are a lot of people, as witnessed here, who passionately believe in bitcoin.
Hi Alex and Don, i would argue against your point, bitcoin atms how do they work Bitcoin users are highly educated engineers, there are traders of course but the majority of users are just "Nerds" or people who really need it for different reasons.
Bitcoin is pretty much the same, its instant, worldwide and a programmable for of ASSET or anything that must be written down and never deleted deeds, wills, laws, constitutions, medical procedures its really up to imagination. So there are more nerds than crooks using bitcoins?
That is an intriguing question. I haven't seen any statistics on that. Sorry to have set off some abusive commenters heaping calumny on your innocent head, Don. Forgive them, for they know not of what they speak. Please know that he's one of the best informed and most thoughtful writers on issues of economics. We're lucky to have such a bitcoin atms how do they work write for us.
That doesn't mean that Bitcoin atms how do they work is always right. But unlike most thin-skinned so-called bitcoin atms how do they work, he's willing and able to admit when he's wrong, and he's eager to participate in discussions with commenters.
I would never waste my time correcting most journalists Again, the bit chain is quite interesting. This is a perfectly reasonable stance. The instances of fraud and theft and manipulation that have been reported, even if eliding the difficult bits of the story, cannot be ignored. Bit coin, like any new currency, is inherently risky. It's still a gamble.
I only corrected some technical aspects of Don's article. I agree wholeheartedly with Don's conclusions and recommendation to stay away unless you are willing to gamble.
But again, this isn't due to the underlying technology Articles like this are actually a sign of the interest the technology is generating. So when Don Bauder takes notice, even if he gets some of it wrong, you might take away the message that this will only get bigger, and hopefully much better.
As for the political aspects Again, this doesn't automatically make it suspect or perfect it's just the reality of the world we live in. You could have similarly criticized the 17th century development of stock markets as reactionary in the face of royal manipulations of currencies and contracts Don, one other point I might make By acting as a counter-party to bit coin transactions, they actually reduce the risk of holding bit coins as a currency. Now you can exchange the bit coins for cash.
That strengthens the long term security of the fledgling currency rather than weakening it. So I still urge you to read some more about the math behind bit coins, and consider its potentially disruptive nature. Having an ATM to trade bit coins for cash isn't an invitation for the unwary to be robbed.
It's an expression of confidence and evidence of the real world value of this new way of storing value. Either the author is ignorant or this is a pathetic "hit piece".
A second google search will see that there is more to the one-sided representation put forth here. It's nice to have a free-market alternative to the debt-based 18 trillion! The dollar needs competition and bitcoins are a "tyranny-resistant" option. Fortunately, no one is forced to use or accept them - they are purely voluntary. Bitcoin atms how do they work are for grown-ups who are mature enough to manage their own money and who prefer privacy in their personal finances.
If you need the "nanny state" to bless it for you first, then it is best to stay away from bitcoin. There seems to be a pattern in the responses here, although they admittedly do not represent a scientific sample. It seems clear that the bitcoin users are greatly right wing, anti-government people who don't trust the world's central banks to manage currency intelligently. There is certainly a lot of evidence to support such a point of view.
In fact, I have been writing about incompetent central banks for many decades. But is bitcoin, or any electronic cryptocurrency, the answer?
It certainly is for money launderers and drug dealers. For all their faults, I would rather have the backing of major central banks, especially the U.
