Crypto Coins?

As a cipher punk I am aware of some of the cryptography behind it. It's definitely sound. But my worry is I don't know how verifying the block chain or general ledger generates value. How do people have faith in the currencies?

 

I only understood about three words you just said...and two of them were 'the' and 'some'

such confusion...much wow

 

I think its Currency Trading.. I'm not sure.

 

What was the third word?

 

lol..."of"

but seriously...I have read about crypto curency and I still don't quite get it. Does it hold real value in the market of today? Can it be traded for real tangible money? What does it mean to 'mine' cryptocurrency? And how safe and protected is cryptocurrency?

 

i am very suspicious of bitcoins, which i assume is the same as cryptocoins.

i have heard people buy it with real currency, and they also do some mining. like one of the posters, i don't think that digitally mining cryptocoins generates any real value.

one of my friends in fb, got his bitcoins stolen/hacked. he checked his account only to find no more. someone used his bitcoins to purchase stuff online. he was able to track the ip address last i heard.

 

The best way to think about them, is like investing in a stock.

Basically, there are 21 million "lucky numbers" out there. There are also sophisticated computer programs that find these lucky numbers. These lucky numbers take computers worth a lot of money to find - thousands or even millions of dollars - and most of the value these lucky numbers have comes from how hard they are to get. Just like any other stock, most of their value comes from how much people are willing to pay for them.

The reason they became popular is because anyone in the world could look for them. It became a way for computer people to make money in their spare time. They invested not just money, but time and energy, and became emotionally attached and valued their bitcoins more after working for them. Again, things are only worth what people think they are, so when people started holding on to them instead of trading them, they went up in value, just like an old comic book.

Recently their value took a huge dive because one of the most popular places to trade bitcoins, called Mt. Gox, got hacked. Basically, there's a way to trade Bitcoins with people that prevents them from being re-used. And that broke. So basically, hackers started to be able to copy bitcoins just as easily as files on your computer. That's just like minting your own money, and any time that happens, your currency devalues. Now the place to trade these coins that got hacked has shut down, but no one knows how many fake transactions there were.

To make things worse, the problem is what we call in information security a "zero day" attack. Basically the way these work is, let's say you make door locks for a living. And you're in a town full of people that don't understand how master keys work. You could at your leisure, rob everyone in the town, any time you wanted to. The day you decide to rob everyone, the town will have no time - or "zero days" - to prepare, or figure out how to react.

So this means that it's likely the attackers were sitting on this secret for a long time in just the same way. Which also means they not only duplicated a lot of transactions themselves, but they also bought a lot of "real" Bitcoins from other markets after the price of Bitcoin dropped a lot.

So that is where things are at now. Something that used to cost $2,000 now costs about $600. But this is also something that a few years ago cost $20.