by pippi Sat Mar 15, 2014 1:06 pm
Hey @luvtoread - Here's a little more info for the ol' gray matter.
1. Bitcoins are derived from finding mathematical algorithms. Each bitcoin has a unique algorithm/mathematical/number identifier, and there is a finite number of bitcoins that can ever exist
. (this last part is important)
2. The internet is based on math. (We'll stop there, as that's all I can explain.)
3. 1 + 2 = 3, but I have no real understanding of how the maths can change the internet.
I should have written more about #4. Sorry.
4. You are right - Fiat currency is a system that uses fiat money as its legal tender. Fiat Money
is money that derives value from government regulation or law
. It is not backed by a physical commodity. (Physical commodity being something like gold, silver, shells, wood - something tangible
) It's called fiat from the Latin "it shall be". Therefore, the government declares that $1 = $1; that is a derived decision. To keep $1 = $1, the government treasury will print more or less money. The money has value because the state government (by state I mean governmental entity, not US state) has the "credit" to back that money (i.e. "full faith and credit of the US Government"). The actual money is worthless (Ever heard the saying "Your money isn't worth the paper it's printed on"?) Bitcoin is not a fiat money, so it provides an interesting counterpoint to study.
Does this help or make things worse?
We've exhausted my ability to explain! I promise the conversation was really fascinating.
Now let's get back to gaming.