There is alot of confusion around block chain and bitcoin in this thread. Unlike Ray, I actually do understand the technology. Bitcoin was NEVER intended to be a real investment, it was a proof of concept of block chain technology that the "geeks" found overly successful so it evolved into a POSSIBLE on line currency. When you invest, what you are essentailly doing it betting that blockchain gets proven AND bitcoin actually catches on.
So some answers:
- Can you actually buy stuff with bitcoin? Yes and no. You can at any place that accepts it. These are VERY few and far between.
- Is there anything behind it to give it funding? Yes and no. It's as valuable as the world lets it be. Just like any monetary system. Bitcoin is not backed by any government, but by the technology itself. Which spins the financial models on their head.
- If it's money, why do you buy it/value it with US dollars? Because you are investing US dollars into the possible future. If you invest in it in another country it would be in that countries currency. You aren't buying bitcoin, you are buying into it's future use. As to why it goes so wild? Most likely people, like Ray, who don't understand what it is and isn't.
- How does block chain work? Hmmm, very long, complex answer, but essentially a block chain is "chain" of computers that all agree that it exists. Since the computers are not commonly owned by any one group, and they all have to agree, it's theoreticaly "safe". This is where "mining" comes in, essentially you join the chain and are assigned some "money", that comes with an unhackable GUID (ID number essentailly), that you can store on a thumb drive and poof you have "money". That's overly simplistic, but it's a cool, but expensive and time consuming technology.
Using it, theoretically, is just like using a debit card, you insert the "card" into a machine, and it processes it. Except today your debit card is backed by your bank, while online currency would be backed by block chain technology.
I PERSONALLY don't see "money" going away, but cash going away. Cash itself is expensive to build, distribute and has a limited lifespan. Money that is nothing more than bits on the internet, will happen. Soon. It won't be bitcoin ,and those in bitcoin are going to have to time the bail out correctly.
Very interesting post.
