Digital Currency for Dummies

[Teallaura]

I don't think I get this - anyone care to explain the basics or just post a link that does? I'd appreciate the help!

[Truthseeker]

I think we should start with an economy that does not use money. All trading is done by bartering. A typical trade would involve Teal and Red. Say Teal has a bushel of apples. Red has some cheese. It so happens that Teal feels like having some of the cheese even if she gives up some of her apples to Red. Lo and behold, Red wants some apples even if he gives up some of the cheese to her.

You follow so far?

[Irate Canadian]

I think we should start with an economy that does not use money. All trading is done by bartering. A typical trade would involve Teal and Red. Say Teal has a bushel of apples. Red has some cheese. It so happens that Teal feels like having some of the cheese even if she gives up some of her apples to Red. Lo and behold, Red wants some apples even if he gives up some of the cheese to her.

You follow so far?

No.
This does not explain anything about how cryptocurrencies work...
I will do so in a explaination that I will write soon.

[Manwë Súlimo]

....everyone knows what bartering is, you patronizing git.

[Irate Canadian]

The idea of having digital money on the internet has floated around for around a good 10 years before it got a proper implementation. This first implementation was called Bitcoin. It was developed by an anyonymous person who took the name Satoshi Nakamoto. He developed the main software for trading and creating this currency. Cryptocurriences are created through a process called Mining. Mining is a process that involves your computer calculating hard equations. The difficulty level of these questions scaled as more miners joined. All transactions are recorded in a public ledger called the Blockchain. Instead of having a account system, you have an address system. Want to transfer money without someone looking at your main address, just make a new one. When you make a transaction, a small amount is subtracted out to make it a legitimate transfer. Due to its anonymity level being quite high, many criminals started using it, which hurt Bitcoin's reputation quite a bit. However, more and more sites begin to accept these currencies as valid, and IIRC the U.S goverment has made it a taxable "investment". Since the Bitcoin source code is open source, it has allowed other coins to join the crypocurrency movement. Some of these make the code more secure, or make the mining process easier for computers. Some (other) popular coins are : Dogecoin( named after a meme), Litecoin, and Feathercoin.

[Irate Canadian]

....everyone knows what bartering is, you patronizing git.

It's still fiat currency to me... I don't see how that's bartering.

[lilpixieofterror]

....everyone knows what bartering is, you patronizing git.

Besides, bartering will not work, on a large scale anyway.

[Jedidiah]

Digital currency is superior because it puts the money where others can control it. Others being government.

[Raphael]

The idea of having digital money on the internet has floated around for around a good 10 years before it got a proper implementation. This first implementation was called Bitcoin. It was developed by an anyonymous person who took the name Satoshi Nakamoto. He developed the main software for trading and creating this currency. Cryptocurriences are created through a process called Mining. Mining is a process that involves your computer calculating hard equations. The difficulty level of these questions scaled as more miners joined. All transactions are recorded in a public ledger called the Blockchain. Instead of having a account system, you have an address system. Want to transfer money without someone looking at your main address, just make a new one. When you make a transaction, a small amount is subtracted out to make it a legitimate transfer. Due to its anonymity level being quite high, many criminals started using it, which hurt Bitcoin's reputation quite a bit. However, more and more sites begin to accept these currencies as valid, and IIRC the U.S goverment has made it a taxable "investment". Since the Bitcoin source code is open source, it has allowed other coins to join the crypocurrency movement. Some of these make the code more secure, or make the mining process easier for computers. Some (other) popular coins are : Dogecoin( named after a meme), Litecoin, and Feathercoin.

adding to the fact that at the current exchange rate, mining for bit coins isn't really economically viable right now (i.e. the electricity used to do the mining costs more than the bitcoins are worth)

[Truthseeker]

....everyone knows what bartering is, you patronizing git.

I thought I should start with the basics. That was meant to lead up to an answer to the question of why do we use money so often.

[Truthseeker]

Besides, bartering will not work, on a large scale anyway.

Yes; I am trying to explain why we use money so often.

[JonathanL]

I thought I should start with the basics. That was meant to lead up to an answer to the question of why do we use money so often.

[Truthseeker]

The idea of having digital money on the internet has floated around for around a good 10 years before it got a proper implementation. This first implementation was called Bitcoin. It was developed by an anyonymous person who took the name Satoshi Nakamoto. He developed the main software for trading and creating this currency. Cryptocurriences are created through a process called Mining. Mining is a process that involves your computer calculating hard equations. The difficulty level of these questions scaled as more miners joined. All transactions are recorded in a public ledger called the Blockchain. Instead of having a account system, you have an address system. Want to transfer money without someone looking at your main address, just make a new one. When you make a transaction, a small amount is subtracted out to make it a legitimate transfer. Due to its anonymity level being quite high, many criminals started using it, which hurt Bitcoin's reputation quite a bit. However, more and more sites begin to accept these currencies as valid, and IIRC the U.S goverment has made it a taxable "investment". Since the Bitcoin source code is open source, it has allowed other coins to join the crypocurrency movement. Some of these make the code more secure, or make the mining process easier for computers. Some (other) popular coins are : Dogecoin( named after a meme), Litecoin, and Feathercoin.

I don't see that you have answered the question of why we use money so often and what exactly is money (or, how to define it). Also, the trade (with or without money) is a basic event of economics.

[Raphael]

I don't see that you have answered the question of why we use money so often and what exactly is money (or, how to define it). Also, the trade (with or without money) is a basic event of economics.

That wasn't the question. Teal was wanting to know about cryptocurrencies (which she called digital currency). having lived on this planet for a reasonable length of time, she already knows what money is and why we use it so often.

[JonathanL]

I don't see that you have answered the question of why we use money so often and what exactly is money (or, how to define it). Also, the trade (with or without money) is a basic event of economics.