Mining - What is it and what is the point?

[Blueprint]

I remember asking this question a while back and don't remember getting the answer I was looking for. 

 

What is actually being mined when coin mining? I've heard you mine a block from a pool to get bitcoins, but what is actually being mined? What is being solved/worked out?

 

Thanks,

Blueprint

[Samfisher]

What is being solved/worked out?

 

Thanks,

Blueprint

 

Cryptography problems that don't do anything except give you those coins.

[techguru]

home users can't really do it anymore anyway...need massive farms to be able to mine anything

[Blueprint]

Cryptography problems that don't do anything except give you those coins.

So where do the bitcoins come from? How do they have any value?

[Enderman]

big big big math equations

in return you get paid in virtual coins

 

unless you have a custom programmed ASIC, mining is unprofitable

[zlolslavez]

So where do the bitcoins come from? How do they have any value?

They have value because people just say they do (and due to the difficulty it is to receive them later-on, people kind of just go with it). 

Think of it as a non-backed currency which existed at one point. (physically)

[Blueprint]

They have value because people just say they do (and due to the difficulty it is to receive them later-on, people kind of just go with it). 

Think of it as a non-backed currency which existed at one point. (physically)

So if this currency exists, how is it translatable into real money (for use across the globe for anything)? Normally to have money, you would need to exchange something for it that is useful for someone else such as working for someone or giving them an item. So how are these people making these cryptography problems able to give away bitcoins which can be exchanged into real money?

[Samfisher]

So where do the bitcoins come from? How do they have any value?

 

Value is determined purely by the buyers,sellers and miners.  You exchange bitcoin at a BTC exchange.  Or use BTC to purchase stuff from vendors that accept BTC as a payment option.

[kittsykat]

barnacules has a really good video that talks about it here (its a tad long):

 

 

the point though is mainly to make $$$$$

[Blueprint]

Value is determined purely by the buyers,sellers and miners.  You exchange bitcoin at a BTC exchange.  Or use BTC to purchase stuff from vendors that accept BTC as a payment option.

That still makes no sense to me. What is actually being produced to have any value? I understand the value is determined by the buyers. sellers and miners but what is being traded for bitcoins? Who is benefiting from the mining? It makes no sense that people can make money yet nobody else is gaining from it somewhere else. It would be like me making a notepad file that is huge and takes about a year to download and then once someone has the entire notepad file downloaded they can exchange that for a bitcoin which is directly translatable into real money. How in any way would I be benefiting by giving them cryptocurrency for downloading the file? I would be giving them money for downloading a file in which no way benefits me or anyone else.

[Vavetti]

-snip

It's actually just like real currency, it hasn't got any real value.

Just like a dollar bill isn't worth a thing it's just a piece of paper, but we collectivly say it's worth a dollar and you can buy stuff with it.

It's the same with bitcoin because people want it so there's some value to it, while it's just a string of digits. 

We want real money and so there are people that want bitcoins. 

Also if it weren't for the limited supply of bitcoin's they probably wouldn't be worth a thing. 

 

Hope this helps somewhat, it makes sense in my head but it kinda hard to write it down. 

[Blueprint]

It's actually just like real currency, it hasn't got any real value.

Just like a dollar bill isn't worth a thing it's just a piece of paper, but we collectivly say it's worth a dollar and you can buy stuff with it.

It's the same with bitcoin because people want it so there's some value to it, while it's just a string of digits. 

We want real money and so there are people that want bitcoins. 

Also if it weren't for the limited supply of bitcoin's they probably wouldn't be worth a thing. 

 

Hope this helps somewhat, it makes sense in my head but it kinda hard to write it down. 

So it's essentially a very hard and expensive way of printing money?

[Samfisher]

So it's essentially a very hard and expensive way of printing money?

Yes.  At one point 1 BTC was "worth" upwards of $600 per.