There are still bunches of people who haven’t heard of Bitcoins – there are no coins involved. What there is instead is an agreed upon growing ownership of Bitcoins and a public ledger that both prevents fraud and rewards the accountants with Bitcoins thereby adding to the total and creating yet another transaction to solve and reward. It’s funky and even most Bitcoin miners (the people with computers that work the ledger) are not totally sure what’s up. As it turns out, history holds a great example.
There was a group of islanders who had no precious metals to forge and nothing but some limestone quarries far away with which to mint coins for themselves. They would create expeditions, build ships, gather workers and leave the comfort of their tropical islands to make coins. These coins were anywhere from three to ten feet in diameter! Workers used the ships to bring the hulks back to the island and then, there the coins sat (and still sit) in strange places. The family that funded the expedition, built the ships, etc. owned the coin and everyone knew it – a public ledger. If that family wanted land or cottages or something else pricey, they would announce very publicly that their coin now belonged to whom ever sold them whatever they were buying. The coin remained stationary but a transaction had taken place.
With Bitcoins, the value of what a transaction can buy is fluctuating famously and has drawn more people to the concept. The amounts are still in decimals to the eighth place – so you can have .00000001 Bitcoins. I’ve thought about this and to help finish making Bitcoins a little more understandable, I considered Kilos of gold. The Gold Standard fluctuates and massive economies rise and fall on its value. If a Kilo of Gold is $42,000 dollars and that is a rough approximation, then 42-cents is a .000042 of some Kilo of Gold somewhere that’s under lock and key and vaulted. You’ll never touch the gold, but you can spend what little of you own. SO, minus any possible complications, Bitcoins begin to make more sense.
Finally, as flaky as these things are, what if they become something in the future!? Then, by looking at the Gold Standard concept and knowing that Bitcoins break to eight decimals (the Kilo broke to six), then there could be a day when .00000042 Bitcoins could match that 42-cents. And that makes a Bitcoin upwards of $4,200,000 million dollars in value to carry the value of denominations below it. For now? They’re $800 hundred bucks. But as simple theories go, what if? …