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[mainiac]

There is an algorithm that people run in order to administer the bitcoin network.  Running this algorithm also generates new bitcoins for the people running it ("mining").  In theory the system could be compromised if one party was doing more then half the mining but the collapse in value would probably make that not worthwhile until the rewards from mining fall too low.  The algorithm that generates bitcoins generates them at a declining rate.

[Knit tie]

Last question: what ensures the value of this currency? Why are people willing to accept it as payment?

[Sheb]

Nothing. That's why it is considered a Ponzi scheme.

[smjjames]

What about that whole dogecoin thing or was it just a joke based on the bitcoin?

[Baffler]

People mostly use it like reddit gold, from what I've seen, buying it to give to someone they think deserves some kind of recognition. That person can pay it forward or sell it or do whatever else with it from there.

[Mictlantecuhtli]

I fully support dogecoin becoming a true currency, supported by all the central banks of the world. Dear ECB; I want physical dogecoin, okaythanks.

[Knit tie]

Do you have to pay money to use the system, or does running the aforementioned algorithm just gives you new bitcoins for free?

[Sergarr]

Considering that to mine even 1 bitcoin atm you need special rigs working 24/7 which consume more electricity than the value of the said bitcoin, yes.

[Sheb]

It does, but it's created to create diminishing return, so that 'mining' is only profitable with specialized hardware. Even then, it's not clear that you can actually make money off it once the costs of electricity are taken into account.

[mainiac]

Which is when you start worrying that someone might do +50% of the mining and be able to compromise the integrity of the pyramid scheme.  It's alright though, the original founders already made tens of millions from the rubes and cashed out.

[Baffler]

Hence all the hype and optimistic speculation to drive up the price of the things. It makes an interesting study of booms and busts though. Here's a good collection of historical data.

http://www.coindesk.com/price/

[Knit tie]

Back on topic: some old rich white investor guy talks about Russia (in the first few paragraphs).

[alway]

Bitcoin is actually banned in Russia, as it turns out. http://rt.com/business/187440-bitcoin-ban-russia-cryptocurrency/

But anyway, aside from the whole ponzi scheme thing, there are two main draws for cryptocurrencies.
1. Anonymity, sort of. It's a claim which falls flat pretty quick considering any government cybercrime organization could de-anonymize its use if they really wanted to. So for drug dealers and other relatively minor offenders, it's an attraction.
2. You are your own bank. This attracts the gold bug type who think banks and governments are going to magically cease to exist, as well as the criminal type, who want to avoid the legal things relating to banking (fraud reduction measures, asset freezes of suspects, difficulty of laundering money), as well as internet libertarian types who have yet to realize that a bank's fraud detection algorithms are the only thing protecting them from the 1500 people who have all the data necessary to take everything they own.

[Ukrainian Ranger]

Meanwhile there are a firefight in Grozny(Chechnya) with APCs included.

[Knit tie]

Meanwhile there are a firefight in Grozny(Chechnya) with APCs included.

Some local clans grinding axes. Nothing unusual.