Can Someone Explain This to Me?

This is thread to ask questions you want answers to. Here’s my first question:

Why does bitcoin use so much electricity? (I haven’t really looked hard for an answer, but I’m looking for a quick and simple explanation, if possible.)

16 thoughts on “Can Someone Explain This to Me?

  1. Because mining Bitcoin and any cryptocurrency is the act of completing a difficult series of mathematical problems. If I ask you what 7 plus 22 is, you can spit the answer out almost without thinking about it. If I ask you what 137 plus 822 is, it takes you a bit longer, because there are more steps, because there’s more room for error, and because you probably don’t have much of it memorized, so you can’t take shortcuts.

    If I ask you what 137 TIMES 822 is, you can probably do that too, but your brain will work harder and the answer will take longer to arrive upon.

    Computers do this too, much much much much more quickly, but the concept is the same. They require more thinking power for more complicated problems. Computers don’t think; they process. And processing requires electricity. More processing requires more electricity.

    Also, more elecricity generates more heat, which is a big issue when mining cryptocurrency. You have to have good cooling, which adds to the expense.

  2. Wait, back up–what exactly is “mining Bitcoin?” It sounds like every time bitcoin is spent or used, that complicated math problem has to be solved. Am I on the right track?

  3. Mining Bitcoin is the computer process of discovering it — the way gold miners look for and find gold in rivers and mountains. One way to earn Bitcoin is to trade something in exchange for it, but it has to originate somewhere. That somewhere is in the process of doing these math problems.

    1. This is fascinating and weird. Bitcoin is like gold that one must find? It’s not like paper currency that people make? That doesn’t sound right. Why is Bitcoin such a complex thing to make?

      1. Remember that paper currency used to represent some amount of gold. You were trading the value of the gold, not the paper itself.

        Today, the paper really represents some amount of earned value, like X hours worked, or Y cans of tomato sauce sold.

        The value of Bitcoin comes from successful solving of these math problems, but it’s more involved than that. There are thousands of computers working these problems at the same time; they don’t all just earn Bitcoin because of it. The distribution is random. It’s one way to create value and scarcity.

        Also, the math problems aren’t just math problems. The computers working the problems are actually verifying the exchange of Bitcoin from person to person, contributing to the decentralized nature of the currency. Their reward for participating in the process of verifying transactions is the occasional fraction of a Bitcoin.

        It’s complicated. I don’t fully grasp it myself. I’m hoping to get in on an application of cryptocurrency that I believe in, party in hopes of being involved from the beginning to see how it all works.

      2. Why is Bitcoin such a complex thing to make?

        The main reason is that it’s decentralized. Our government controls our money, to some extent. Other factors come into play, too, but there’s a reason that when a nation collapses, so does the value of its currency.

        Bitcoin was created out of nothing, so there had to be a plan for creating and distributing it fairly, then a way to validate transactions that was unhackable. This second part isn’t part of traditional currency. The proof that I sold you that bucket of oranges is right here: the twenty bucks I’m holding in my hand.

        But if I sell you a bucket of oranges for some amount of Bitcoin, that Bitcoin has to show up in my virtual possession. My possession is legitimized by the confirmation of all those people running computers to validate it and hopefully earn some Bitcoin in the process. All those computers working independently to confirm the transaction is how we prevent me from faking my ownership of the Bitcoin. Once the transaction is logged, nobody can change it because there’s no central record. Instead, the record exists on those thousands of computers. You can hack the ledger in one person’s computer, but you can’t do it in thousands of computers.

        At least in theory.

  4. But yes, every time Bitcoin changes hands, there are some of these processes as well, but not necessarily on the computer of people doing the trading.

  5. Is Bitcoin used in retail? What is an example of something you can buy with Bitcoin? Like Reid I probably could look it up, but at this point, Bitcoin seem just a way to invest like stocks.

  6. Speculation is the biggest driver of its value right now. But yes, there are Bitcoin-friendly retail establishments, and they’re growing in number. My coworker’s boyfriend on Kauai has a tow truck business, and he once accepted Bitcoin as payment for a tow, a few years ago. He’s pretty happy about it today, I gather.

    10,000 Bitcoin was good for two Domino’s pizzas in 2010. That Bitcoin was worth $100,000,000 when this article was published in February. http://fortune.com/2018/02/26/laszlo-hanyecz-pizza-bitcoin

  7. But if a Bitcoin is worth $5000 (probably more), how do you buy something worth $10 with it now? Is that still possible? Can I spend .2% of my Bitcoin?

  8. Yes, people trade in fraction of bitcoint all the time, and I don’t think there’s a minimum on the size of the fraction, but I can’t say that for sure. People who mine Bitcoin are receiving fractions of it at a time.

  9. Can someone explain this passage from the Atlantic, Email is Dangerous:

    That brings us back to last week, and the release of Efail. The hack is simple and brilliant: It uses the fact that your email client thinks it’s a web browser. An attacker sending mail can steal the content of secret messages you may have sent or received. It works like this: An email client running OpenPGP (the current standard of PGP) or S/mime decrypts messages when it receives them, and since the clients are also web browsers, they fetch things from the web for displaying them to you in the email you open at the same time. So what if you happened to open an email, which decrypts whatever message it may have inside, even a hidden one, while the same email also tells your email client to fetch an image off the web whose name is now the entire contents of a message it just decrypted? It would just do it, invisibly, sending the now easily readable message anywhere on the net without you ever knowing it happened. Sure, an image named “Meet me at the park on Sunday at 3 a.m. and we’ll make plans from there come alone.jpg” would never load on your screen, but you’ll have invisibly asked for it, and that ask will now be recorded in whatever computer out there the person who sent the mail wanted it recorded on. And that mail could have just as easily said it was from your spouse or boss as God or Santa Claus.

    The email client would be an entity like yahoo or gmail? The attacker is the hacker that is posing as a browser? Even if the answers are yes, I’m still pretty confused about what’s going on.

  10. No, an email client is a non-web-based email application that lets you read your email, such as Outlook, Eudora, or what you might be using for your work emails.

    When you get an email in Outlook (for example) if it has a link to a web page or maybe an embedded image, when it shows you the linked image, it’s going out into the web to fetch that image so it can display it for you. This is not necessarily so, depending on your settings. Remember the good old days when all emails were completely textual, with no sound or graphics? Those were days when something like this couldn’t really be pulled off.

    The part I don’t understand is how the email would name an image with the entire contents of the actual email message. That must be in the paragraph before. Which I don’t have a moment right now to look at.

    1. We use Outlook at work, and embedded images are by default not displayed. If we get an email with images inside it, Outlook prompts us, asking if we want to download the images — this is true even of emails we get from within our own email domains, from people in our contacts. It’s a way to prevent this kind of thing from happening, although I had no idea this kind of thing was happening.

    2. Amended: Apps you use on your mobile device, such as the Gmail app or the Yahoo app, are also email clients. I’m trying to figure out why this hack would work in a client and not in a web browser. Maybe I do have time to read that article.

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