How Do You Make Change with BitCoin

Okay so I apologise for starting yet another BitCoin thread, but this question has been bugging me for months, and people in the other threads would get pissed if I asked this question there, cause I suspect there's a bunch of other people that don't know either, but want to. So this thread could get busy.

So if BitCoin is this mathematical number, and you supposedly "own" the number, how can you prove it? What I've heard is that there is some kind of agency that decides who first finds the block of BitCoins, and so I assume they get recorded as the owners of the BitCoins, but then what?

Say you buy some heroin with some BitCoin. Now you got heroin, and the heroin dealer has your BitCoin. How did the transfer take place? I assume the computer-in-the-sky is going to have to say that Nigel no longer has his BitCoin and the heroin dealer does, but then how does the heroin dealer prove this when he wants to buy some cocaine? So he tells the computer-in-the-sky that now the cocaine dealer has his BitCoin, and so now the computer-in-the-sky has to be informed of the transaction.

Does the computer-in-the-sky keep a record of every single transaction that has taken place in the history of ever, or does it only remember the last one. Can Nigel get busted and sent to jail when the cocaine dealer tries to buy Meth from the DEA, because the computer-in-the-sky ratted him out?

Do I have to whack someone so that they sleep with the fishes in order to prevent the computer-in-the-sky from ratting me out, or do I have to whack the computer-in-the-sky?

Okay, so say instead of Meth, the Cocaine dealer buys a prostitute for an hour. An ugly one, she's not worth the $750 of a full BitCoin. Let's see he only wants a half and half for $75.00 (I said she was ugly). How does the Cocaine dealer pay the prostitute 1/10th of his BitCoin? Does the computer in the sky have to me informed that 1/10th of the BitCoin that started out as Nigel's, but then it became the Heroin Dealer's, and now 90% of it is the Cocaine Dealer's, but 10% of that BitCoin now belongs to the prostitute?

Okay, so then let's say the prostitute with the 1/10th of a BitCoin wants to buy a rock of crack for $20 which let's say is 1/4 of 1/10 of a BitCoin. Again, does the computer-in-the-sky keep track of this?

So, let's say the Crack Dealer has been selling crack all night long, and he's got 1/4th of 1/10th of a whole bunch of people's BitCoins, and when they add all up, the equal 1 full BitCoin. Does the Crack Dealer have 1 BitCoin, or 40 pieces of BitCoins?

Someone should make a YouTube video showing all of this, because it's very confusing. Something with pictures of computers, and wallets and Mt. Gox, etc... and drug dealers and prostitutes.

And another thing. How do you "steal" BitCoin. Don't you have to go through the computer-in-the-sky? Couldn't the computer just say "No". How do we know it's not the computer-in-the-sky that is stealing the BitCoins anyways. Those computers are frickin' SMART, and some of them have shifty, beady eyes like they are planning something sneaky.

What about theft insurance. Couldn't someone tell the computer-in-the-sky that Nigel is planning on saving his BitCoins until the year 2500, when they will be worth 7% of the total value of the entire planet of the earth, so that his descendents will rule over all the descendents of today's lesser people that spent their BitCoins on drugs and prostitutes. You could call it "BitCoin Theft Insurance". You could charge people for this, and "officially register" their BitCoins as being "non-transferable" like that clickie button thingie you do at Network Solutions so that you can transfer your domain name away from those evil motherfuckers.

Nigel wonders if there isn't a whole BUNCH of ancillary services that people could start building to service the BitCoin industry, like banks service the fiat currency industry. He' like to think about all of THAT, but he's stuck on the stupid chump-change of BitCoin.

Bitcoin is not a 'mathematical number'. It is not run by a 'computer in the sky'. It is a peer to peer network. Every computer running the Bitcoin client is part of the network. If you run the Bitcoin client, your computer is part of the network too.

If you know what BitTorrent is, then you can think of it as torrents but with money. There is one file that is shared across the network called the 'blockchain'.

All clients should have the exact same copy. Every time you send/receive money, it is recorded in the blockchain. That is how you know if someone has sent you Bitcoins. You can view EVERY transaction anybody has ever made in history, whether it is one fraction of a cent, or a billion dollars. However, bitcoin is pseudonymous (people can see the money you send, but they dont know WHO is sending it unless you tell people that a wallet belongs to you)

You might ask "what if someone decides to steal money, and records a transaction that never took place"? This is in fact impossible. Bitcoin relies on the strongest cryptography we have today. This is the stuff that protects banks, government networks, your computer, and everything that requires security today.

There is something called "bitcoin mining", where you run software to do complicated calculations on your computer. It is where all bitcoins originate from.

Miners are rewarded with BTC by the network (every single computer, not a magic computer in the sky) every time a 'block' (group of transactions) is added to the blockchain. Mining has an important purpose: it ensures that transactions cannot be reversed. All of the miners have a combined processing power 250+ times faster than the world's top 500 supercomputers combined.

If you think it is possible to say "no", or steal bitcoins, you are going to need a hell lot more processing power than that (at least 51% of the network). Good luck with that.

ps: illegal stuff is illegal, dont do it

ps2: bitcoin is divisible into small units. If you receive 10x 0.1 btc, then you have 1btc. Just like if you receive $0.10 in paypal ten times, then you have a dollar.

Nigel Farage said:

So if BitCoin is this mathematical number, and you supposedly "own" the number, how can you prove it? What I've heard is that there is some kind of agency that decides who first finds the block of BitCoins, and so I assume they get recorded as the owners of the BitCoins, but then what?

Click to expand...

There is no agency. There are miners, and miners join pools. So the pool finds the block first, and they are rewarded 25 btc + transaction fees for all the transactions in the block. As more miners find the block, they the number of confirmations per transactions increase.

Nigel Farage said:

I assume the computer-in-the-sky is going to have to say that Nigel no longer has his BitCoin and the heroin does, but then how does the heroin dealer prove this when he wants to buy some cocaine? So he tells the computer-in-the-sky that now the cocaine dealer has his BitCoin, and so now the computer-in-the-sky has to be informed of the transaction. Does the computer-in-the-sky keep a record of every single transaction that has taken place in the history of ever, or does it only remember the last one.

Click to expand...

This is the blockchain. When a transaction takes place, it is publicly recorded on the blockchain, going from A to B. Look at this for example: https://blockchain.info/address/1LdDiQfMTdMhZZ7yfHRhXS2w42cc7myMTY That shows all of the transactions for that particular address. Noone knows who owns that address, unless the owner makes that public. Contrary to popular belief, Bitcoin is not 100% anonymous, its pseudo anonymous, in the sense that if the address can be linked to you, so can the transaction.

Nigel Farage said:

How does the Cocaine dealer pay the prostitute 1/10th of his BitCoin?

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One bitcoin is divisible into 8 decimel places. 0.00000001 is the smallest unit of Bitcoin. You can send however much you want, not always a full bitcoin.

Nigel Farage said:

And another thing. How do you "steal" BitCoin.

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The only way to steal Bitcoin is to obtain someones private key. There is public address, and private key. Consider the public address your email address, and the private key your password. If someone has your password, they can send emails out (transactions) but if someone only has the email address (public key) they can only send you emails (transactions).

Very vivid examples to explain your questions. Everything you need to basically know is put out on the table by the two gentlemen above me. If you wish to find out more, there are amazing videos and wikis out there.

Biznik said:

There is something called "bitcoin mining", where you run software to do complicated calculations on your computer. It is where all bitcoins originate from.

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Well it's really hard to take you seriously when you first tell me that it's not a mathematical number and there's no computer-in-the-sky, but then you say this. That sounds like the computer-in-the-sky and a mathematical number to me.

I appreciate the effort, but I'm not getting it. Call me dumb. Also call me a representative sample of the average person that's not all geeked about this stuff. Who says a BitCoin can't be divided more than 8 decimals places? Do Police show up and kick down your door and arrest you for illegal BitCoin decimal place dividing? And if you steal someone's BitCoin, how do they prove it? Is there a law against BitCoin stealing? I own the air in this room, right here. And if any of you people try to breathe my air, I'm calling the cops and having you put in jail.

And where are all these wonderful graphics and videos that are supposed to show what BitCoin is and how it works. I ask about A, B, and C and I get information about D, E, and F and someone tells me about the YouTube video G they watched once, and they say it's "out there, somewhere".

I'm starting to not believe in BitCoin. I get the same kind of answers from the people that are over-enthusiastic about religion. And I know all about P2P. You should see how much porn I download. And yet, not one of this hot and aching ghetto bangers have ever come to life, turned real and jumped out of my computer, and yet I'm supposed to believe that people are sharing real money via P2P, but it's not a mathematical number, and there's no computer in the sky.

And besides all of that, I have more questions. Like why is it that if I look at Mt. Gox's ticker it says BTC is at 750 USD, but on BTC-E the price might be 725? Isn't there some kind of "Unified Field Theory" for BitCoin, so that everyone knows what everyone is paying? I don't see the point of buying BTC at a place that's more expensive. It makes no sense to me.

And another thing. I want to buy BitCoin. How do I do that? I can't send my Franklins over P2P. I need a computer-in-the-sky, right? And a mathematical number. What keeps someone from just saying they have 100 million BitCoin if there's no computer-in-the-sky?

One of my friend is going crazy about Bitcoin so i will put an eye on this thread ?

Have you considered writing for movies . You seem to have a good storytelling capability.

Nigel Farage said:

Well it's really hard to take you seriously when you first tell me that it's not a mathematical number and there's no computer-in-the-sky, but then you say this. That sounds like the computer-in-the-sky and a mathematical number to me.

I appreciate the effort, but I'm not getting it. Call me dumb. Also call me a representative sample of the average person that's not all geeked about this stuff. Who says a BitCoin can't be divided more than 8 decimals places? Do Police show up and kick down your door and arrest you for illegal BitCoin decimal place dividing? And if you steal someone's BitCoin, how do they prove it? Is there a law against BitCoin stealing? I own the air in this room, right here. And if any of you people try to breathe my air, I'm calling the cops and having you put in jail.

And where are all these wonderful graphics and videos that are supposed to show what BitCoin is and how it works. I ask about A, B, and C and I get information about D, E, and F and someone tells me about the YouTube video G they watched once, and they say it's "out there, somewhere".

I'm starting to not believe in BitCoin. I get the same kind of answers from the people that are over-enthusiastic about religion. And I know all about P2P. You should see how much porn I download. And yet, not one of this hot and aching ghetto bangers have ever come to life, turned real and jumped out of my computer, and yet I'm supposed to believe that people are sharing real money via P2P, but it's not a mathematical number, and there's no computer in the sky.

And besides all of that, I have more questions. Like why is it that if I look at Mt. Gox's ticker it says BTC is at 750 USD, but on BTC-E the price might be 725? Isn't there some kind of "Unified Field Theory" for BitCoin, so that everyone knows what everyone is paying? I don't see the point of buying BTC at a place that's more expensive. It makes no sense to me.

And another thing. I want to buy BitCoin. How do I do that? I can't send my Franklins over P2P. I need a computer-in-the-sky, right? And a mathematical number. What keeps someone from just saying they have 100 million BitCoin if there's no computer-in-the-sky?

Click to expand...

1. The 'computer in the sky' is comprised of every computer running the Bitcoin client. Think of it as the collective 'hive mind'. No one person controls it.

2. The Bitcoin software you run on your computer is part of the network, like I said before. It is programmed to reject impossible transactions, like dividing more than 8 decimal places. Everyone runs the same software, so the whole network will not accept it. It simply would not show up on the blockchain, because the majority says so.

If there was an update to Bitcoin which allowed 9 decimal places, and mostly everyone updated, then this would be the new rule. The few old nodes still on 8 decimal places would still try to reject transactions with 9, but their vote would not count. Bitcoin is democratic, and the majority wins.

3. Search for we use coins

4. There isn't a computer in the sky when you download torrents. It's shared across all of the peers. That's how peer to peer works.

Bitcoin is the same thing, except the only file is the blockchain. It is a list which records all the transactions. When you send 1 btc, you subtract 1 btc from your account and add 1 btc to the other person's. The magic of crypto ensures that you cannot cheat the system.

5. The price is different based on the exchange. Simple supply and demand. The price of gold varies in each store too. This is nothing new.

6. Cryptography. You can tell the world that you have 100 million BTC, but the network will not believe you unless there is mathematical proof that this is true. This is advanced cryptography, and I do not even understand it fully myself. For all purposes, you can assume that it is impossible to cheat the network.

Nigel Farage said:

So if BitCoin is this mathematical number, and you supposedly "own" the number, how can you prove it? What I've heard is that there is some kind of agency that decides who first finds the block of BitCoins, and so I assume they get recorded as the owners of the BitCoins, but then what?

Click to expand...

There is no agency, it 's peer to peer based. In other words, other miners verify the fact that you got it. Once it 's verified, it goes into the public (shared) ledger and everyone knows it 's yours.

Say you buy some heroin with some BitCoin. Now you got heroin, and the heroin dealer has your BitCoin. How did the transfer take place? I assume the computer-in-the-sky is going to have to say that Nigel no longer has his BitCoin and the heroin dealer does, but then how does the heroin dealer prove this when he wants to buy some cocaine? So he tells the computer-in-the-sky that now the cocaine dealer has his BitCoin, and so now the computer-in-the-sky has to be informed of the transaction.

Click to expand...

A new entry is recorded into the public ledger that records the transaction.

Does the computer-in-the-sky keep a record of every single transaction that has taken place in the history of ever, or does it only remember the last one. Can Nigel get busted and sent to jail when the cocaine dealer tries to buy Meth from the DEA, because the computer-in-the-sky ratted him out?

Click to expand...

Everyone has a full copy of the ledger.

Do I have to whack someone so that they sleep with the fishes in order to prevent the computer-in-the-sky from ratting me out, or do I have to whack the computer-in-the-sky?

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You are ratted by design If the ledger could be tampered with, one could steal your coins that way.

Okay, so say instead of Meth, the Cocaine dealer buys a prostitute for an hour. An ugly one, she's not worth the $750 of a full BitCoin. Let's see he only wants a half and half for $75.00 (I said she was ugly). How does the Cocaine dealer pay the prostitute 1/10th of his BitCoin? Does the computer in the sky have to me informed that 1/10th of the BitCoin that started out as Nigel's, but then it became the Heroin Dealer's, and now 90% of it is the Cocaine Dealer's, but 10% of that BitCoin now belongs to the prostitute?

Click to expand...

1 BTC can be divided up to 10^8 pieces.

Okay, so then let's say the prostitute with the 1/10th of a BitCoin wants to buy a rock of crack for $20 which let's say is 1/4 of 1/10 of a BitCoin. Again, does the computer-in-the-sky keep track of this?

Click to expand...

A new transaction on the ledger.

Someone should make a YouTube video showing all of this, because it's very confusing. Something with pictures of computers, and wallets and Mt. Gox, etc... and drug dealers and prostitutes.

Click to expand...

It is, that 's why I 'd bet that lots of explanatory videos are already out there

And another thing. How do you "steal" BitCoin. Don't you have to go through the computer-in-the-sky? Couldn't the computer just say "No". How do we know it's not the computer-in-the-sky that is stealing the BitCoins anyways. Those computers are frickin' SMART, and some of them have shifty, beady eyes like they are planning something sneaky.

Click to expand...

You can game the ledger if you own more that 50% of the bitcoin p2p network.

What about theft insurance. Couldn't someone tell the computer-in-the-sky that Nigel is planning on saving his BitCoins until the year 2500, when they will be worth 7% of the total value of the entire planet of the earth, so that his descendents will rule over all the descendents of today's lesser people that spent their BitCoins on drugs and prostitutes. You could call it "BitCoin Theft Insurance". You could charge people for this, and "officially register" their BitCoins as being "non-transferable" like that clickie button thingie you do at Network Solutions so that you can transfer your domain name away from those evil motherfuckers.

Click to expand...

Google "bitcoin cold storage"

Nigel wonders if there isn't a whole BUNCH of ancillary services that people could start building to service the BitCoin industry, like banks service the fiat currency industry. He' like to think about all of THAT, but he's stuck on the stupid chump-change of BitCoin.

Click to expand...

That 's the spirit!

Patel said:

This is the blockchain. When a transaction takes place, it is publicly recorded on the blockchain, going from A to B. Look at this for example: https://blockchain.info/address/1LdDiQfMTdMhZZ7yfHRhXS2w42cc7myMTY That shows all of the transactions for that particular address. Noone knows who owns that address, unless the owner makes that public.

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"Unless the owner makes that public". When there's a transaction from A to B, do B know the address from A and isn't it possible B make that address public?

@biglia

He said who (as in "Brad Pitt"), not the address he transacted with.

LOL

I am going to be of no help on this thread. But your story about heroin and crack is just fucking funny. Thanks for the laugh Nigel.

One of the curious aspects of bitcoins, IMO, is the fact that there is a limited amount of bitcoins possible. I think it's 11 million or something. So once the 11 million bc's are marked as "spent" on the collective blockchain, then the BC economy is dead? Also if each BC is worth 1000, and there are 11 million of them possible, is 11 billion U$ the largest the BC economy can get at any given time? I find this intriguing....

jazzc said:

@biglia

He said who (as in "Brad Pitt"), not the address he transacted with.

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What if Brad Pitt buys something on a webshop, he fills in his full details (name, address, phonenumber, etc) and pays with bitcoin. For legal transfers you need to fill in some personal information. Can the webshop owner reveals his bitcoin identity on the Internet, so everybody can see Brad's previous bitcoin transactions and how many bitcoins he owns?

bartosimpsonio said:

One of the curious aspects of bitcoins, IMO, is the fact that there is a limited amount of bitcoins possible. I think it's 11 million or something. So once the 11 million bc's are marked as "spent" on the collective blockchain, then the BC economy is dead? Also if each BC is worth 1000, and there are 11 million of them possible, is 11 billion U$ the largest the BC economy can get at any given time? I find this intriguing....

Click to expand...

No, then the value of 1 bitcoin will rise. So maybe you can buy a car for 0,001 bitcoin. Like this the BC is never dead.

bartosimpsonio said:

One of the curious aspects of bitcoins, IMO, is the fact that there is a limited amount of bitcoins possible. I think it's 11 million or something. So once the 11 million bc's are marked as "spent" on the collective blockchain, then the BC economy is dead? Also if each BC is worth 1000, and there are 11 million of them possible, is 11 billion U$ the largest the BC economy can get at any given time? I find this intriguing....

Click to expand...

a) When you hand over a dollar to buy a newspaper, does it get marked as "spent" and thrown out of circulation?

b) BTC Price will go up to reflect the total market value; supply & demand style.

biglia said:

What if Brad Pitt buys something on a webshop, he fills in his full details (name, address, phonenumber, etc) and pays with bitcoin. For legal transfers you need to fill in some personal information. Can the webshop owner reveals his bitcoin identity on the Internet, so everybody can see Brad's previous bitcoin transactions and how many bitcoins he owns?

Click to expand...

Yes. Bitcoin does not make anonymity guarantees. You have to take manual steps for that. You need to have multiple wallets and use a bitcoin "washing machine" system. The idea is that you sand others send a sum to such a service and this sum gets sent to multiple other addresses you make in split and not immediately. That makes tracking very hard, despite the fact that all transactions are public. Of course, the process entails the danger of the washing machine operator making a run for it

This can be a really dumb question, but: can i mine with my phone?

teranu said:

This can be a really dumb question, but: can i mine with my phone?

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Too slow, you won't make 1 BTC in 10 years

Thank you so much dude