howtogeek at May 16th, 2013 08:03 — #1
Originally published at: http://www.howtogeek.com/141374/htg-explains-what-is-bitcoin-and-how-does-it-work/
Geeks have had their own “money” for some time, but typically it is within the context of online gaming. While this digital currency does possess intrinsic value, the market for it is usually limited to other gamers. However, 2009 gave rise to another form of digital currency, bitcoin, which has demonstrated some global demand as a medium for exchange.
geek at May 16th, 2013 09:13 — #2
It's worth noting again that we are absolutely not recommending that anybody invest in BitCoins. This is just a look at what BTC is, how it works, and some of the issues surrounding this virtual currency.
If you invest in BitCoin and lose money, don't blame us.
themike at May 16th, 2013 09:16 — #3
i've never even heard of bitcoins until last week when they were talking about it on neowin
nanogeek at May 16th, 2013 12:34 — #4
If you are interested to see how the BitCoin story panned out etc, there are a few good links at
volden at May 16th, 2013 13:19 — #5
I can only attest to the legal sides of bitcoin, but here's my story:
Firstly, I'm from an IT background (software development, system administration).
I have became familiar with bitcoins in 2010. I got involved in mining 1 year later, in 2011 with GPUs. I started to trade them as well, but not on a day-trader level,trading and mining is more like a hobby for me.
Forward time a bit, it's 2013 and now I accept bitcoin in one of my businesses (software development), I still mine, however I use ASICs now, and I still trade time to time.
I do pay my taxes after the income I make on bitcoin, and I would advise anyone involved to do the same.
There have been a surge of businesses accepting BTC in the past years and I find myself buying more and more stuff with it (domain names, vpns, dedicated servers, hardware, precious metals, software, donations, etc)
I would like to see more places to spend bitcoins though, I think it's good for businesses and customers as well.
I have experienced all the major corrections, and panic sells. Personally, I have not suffered loss (btw it's important to risk money what you afford to lose), I know that it can be frustrating to see the price fluctuate, but If you are in the long term it just doesn't matter. If it achieves wider adoption, the price will stabilize. In my experience these are still the early days and I'm optimistic about future improvements both in the protocol and the services built around it.
Having read this article, I feel it's overly biased. Caution is a must, the bitcoin world has it's own risks, but there is also a huge potential. Among many, the payment system aspect is just amazing and works very well.
I think it's a truly revolutionary currency.
As for the silk road concerns, I think it is well over-rated. In my opinion "war on drugs" will never succeed.
I think governments should rethink their stance, they could kill the whole black market, if they would legalize weed, and control the distribution of hard drugs (no dodgy substances, controlled addicts, etc) In this case people would come forward and there would be a chance to get the addicts off their harmful habbits safely. This would net us a safer / better world.
sam_jones at May 16th, 2013 23:14 — #6
I really like How to Geek but this article needs some serious work. There is a lot wrong here, I don't even really know where to start. A bitcoin is not a hash, an address is a hash. The capitalization BitCoin is never used. The 6 confirmation count is completely arbitrary, there is no "final" status granted. The final coins will be generated in 2140, not 2040. The number of nodes has nothing to do with difficulty... please get your information correct, its pretty upsetting seeing that as the headline article on this great site.
geek at May 16th, 2013 23:57 — #7
Thanks for the feedback. We'll go back in and make those changes.
faulkner132 at May 17th, 2013 09:48 — #8
@Sam_Jones - To address a few of your points:
The capitalization BitCoin is never used.
Bitcoin documentation itself uses the spelling "BitCoin". See the 2nd paragraph here: https://en.bitcoin.it/wiki/HashThe article passed through a couple of editing rounds so it just shows people type it different ways. "Bitcoin", "BTC", "BitCoin".
The 6 confirmation count is completely arbitrary, there is no "final" status granted.
See: https://en.bitcoin.it/wiki/ConfirmationYou are correct there is no 'final' flag which gets tagged to a transaction, however the "6 transactions deep" is the defacto standard for 'finalizing' a transaction as it virtually assures that said transaction cannot be undone.
The final coins will be generated in 2140, not 2040.
Yes, that was an oversight which was corrected. Thanks.
The number of nodes has nothing to do with difficulty
The article doesn't say this, it specifically calls out computing power of the collective nodes.
because computing power in the peer-to-peer network can fluctuate as new nodes enter/leave the network and/or computational power of those nodes increase due to hardware improvements, the difficulty of the validation hash has to adjust accordingly.
From what I can see, there is a single mistake - 2040 should have been 2140 (again thanks) - so to call this article a "mess" I think is grossly exaggerating. However, I'm glad you hold us to a high/perfect standard.