Quote:
Originally Posted by Fuzz
If you don't have a currency backed by something, then its only value is what people perceive it to be which leaves it open to massive value fluctuations. That works against the fundamental purpose of a currency, which is stability. The weird thing about bitcoin is you have to invest massive amounts of real money to mine it, so you spend real money to get something with no intrinsic value.
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"Mining coins" is actually a really poor metaphor for what is actually going on, because it suggests you're just putting in a lot of work to find a new coin.
What these computers/nodes are doing is maintaining the public ledger and verifying new transactions to make sure they are not fraudulant and getting a reward for doing so.
The way bitcoin does it with their proof of work algorithm is really inefficient, but one could argue that what it's doing is still valuable.