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Author Topic: Some more questions, I appreciate all help  (Read 705 times)
Icy-
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June 09, 2011, 05:07:32 PM
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What exactly are blocks and how are they valuable, what are they used for? Won't there eventually be so many blocks that it takes months to download them all? It took my PC a few hours but mine is more powerful than most with a very high speed connection...

Also what is this currency backed up? The USD is apparently backed by gold, but what gives value in this currency?

Thanks.
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Icy-
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June 09, 2011, 05:08:33 PM
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Also, how does this program work? Can't the creator give himself 10000000000000000000 bitcoins?
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June 09, 2011, 05:11:00 PM
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start here. this should answer the majority of your questions. http://forum.bitcoin.org/index.php?topic=9430.0

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June 09, 2011, 05:13:54 PM
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Blocks are containers for transactions. Blocks are difficult to create and chained together, which means each block found serves to protect all the transactions that came before. In the future, you may not have to download full blocks or any blocks at all, as there are ways for a modified Bitcoin to function without them.

USD is not backed by gold. It used to be, but now it is only backed by the promise that the government will pay its debts. What gives Bitcoin its value is that other people are willing to trade goods and services for it. Exactly the same as with gold, just a shorter history.

No, in a sense. Anybody can "give themselves" as many bitcoin as they want, but the rest of the network won't see that as valid. Satoshi and the other early adopters had to mine every bitcoin the old fashioned way, though at an admittedly low difficult compared to today's.
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June 09, 2011, 05:25:45 PM
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Blocks are containers for transactions. Blocks are difficult to create and chained together, which means each block found serves to protect all the transactions that came before. In the future, you may not have to download full blocks or any blocks at all, as there are ways for a modified Bitcoin to function without them.

USD is not backed by gold. It used to be, but now it is only backed by the promise that the government will pay its debts. What gives Bitcoin its value is that other people are willing to trade goods and services for it. Exactly the same as with gold, just a shorter history.

No, in a sense. Anybody can "give themselves" as many bitcoin as they want, but the rest of the network won't see that as valid. Satoshi and the other early adopters had to mine every bitcoin the old fashioned way, though at an admittedly low difficult compared to today's.

Okay, but what gives bitcoins value? We would still need USD/EUROS, ect otherwise for it to work, right? I'm having a hard time explaining this to others like my family as I hardly understand it myself even after reading those long wikipages.
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June 09, 2011, 05:37:47 PM
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Nothing gives it value.

Bitcoin gets it's value because a) it's rare and b) people are willing to exchange it for goods/services/other currencies.  People are willing to do b because they think that they themselves will be able to exchange it for goods/services/other currencies,  perhaps getting even more in the future than they're giving you for it now. 

Keep in mind that most currencies today aren't backed by anything.  The main differences in that sense between bitcoin and some fiat currency is that a government controls the supply of the fiat currency and usually there's a law saying that you must accept the local fiat currency to settle an existing debt.  The second part is important, and it's something that fiat currencies have but bitcoin doesn't. 
BitterTea
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June 09, 2011, 05:40:00 PM
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Okay, but what gives bitcoins value? We would still need USD/EUROS, ect otherwise for it to work, right? I'm having a hard time explaining this to others like my family as I hardly understand it myself even after reading those long wikipages.

It's the same thing that gives gold value, that people trade their goods or services in exchange for bitcoins/gold. No other currencies are necessary in order to determine the value of a bitcoin, it's just that right now merchants still pay their expenses in dollars. This means that they set their price in dollars and then convert to bitcoins based on exchange rate. In the future, it could be that most merchants pay most of their bills with bitcoin, so they can price directly in the currency as opposed to dealing with exchange rates.

The only reason people want dollars is so they can pay for things they need or want. The same is true for bitcoin, except it's also a good vehicle for storing value (saving).
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