Princess Amy":3u7kfrob said:
I don't understand mining.
How can.. how can dogecoins just... appear o.O
You invest computer power and time into mining them, after a month you might get a doge-penny, this is to give the currency a value based on rarity, then people sell them for their own real-world currency at a value they believe is fair (And the buyer believes is fair) and the buyer can collect the currency and spend it in accepting locations or whatever.
A good comparison for it would be the Steam item market place, log into Steam and put a TF2/CSGO item on the market, you will be shown a chart of how much people would pay their real-world (Actually Steam) money for these game items, the more common the item, the lower the exchange rate, so you'll see a chart where the price falls and falls until it settles around a fair value (Usually a couple of pence, which is how much I would actually value common virtual items).
The Steam mining system is basically how much gaming hours you put in to get the trading items, not too different to bitcoin/dogecoin mining where it's how much computer power and time you put in.
Steam shows where the system is weak though as Valve directly manipulate the exchange rate by remove items and adding "Special" versions of items, at any moment they can devalue an item or make an item worth a bang, who's to say that the creator of dogecoin won't just wait until a doge-penny is worth £50 and then give themselves 50 doge-pennies and sell them at once to gain real-currency?
The whole thing is based around faith, whereas real currency is based on buying and selling gold, so the mint prints out money and goes to a bank and says "Can we buy your gold?" and they give them the money they just printed for some gold, that money they give them is the PREVIOUS value of that gold, now that the money is in circulation, that gold has dropped in value the moment the buying occurred, I believe the mint sells the gold to banks in other countries at their accepted exchange rates, the whole thing is super complicated and I'm not qualified to explain it, but you can see how the value of money is set against a physical common metal, whereas dogecoin is set at the value of how funny the doge meme is against how long it will last and the effort it takes for a computer to mine a doge penny.
