Mining them requires very high powered hardware, using multiple GPU’s.. And yes, the power consumption outweighs the financial gain now. The trouble is, every time one is mined, it’s a block added to the string, so it’s growing and growing. The bubble will burst in the end, it has to.
I had a few bitcoins, purchased pretty cheap at the time *£30 a piece*, and slowly started spending them. They are now worth nearly £1,000 a coin..
Explaining them in full wouldn’t be easier. The simplest way would be to think of it like this,
You have a “virtual wallet”, you want to put a “coin” in your wallet. Someone will give you this coin, but it will cost you “£x”, you pay you money, you get a coin. Now, you can spend this coin. There are many places to spend them.
The beauty (if you see it this way) about BitCoins, is they are pretty anonymous, you don’t have to give real details to get a virtual wallet, and you can’t buy them using PayPal (so no trace with that). You can do it via bank transfer, and though several websites that handle the money for you (escrow) then pass it on. You don’t mention BitCoins when you buy them (all the traders I bought from asked me not to mention it, and instead claim the payment was for something else, like manuals, and crap like that).
As the Coins just go to a virtual address, and once the block has been “mined” it moves on to the next stage in the block, and to trace where the last x amount of BitCoin transfers went the Blockchain has to be taken apart again, from what I know, that is virtually impossible, and as such, no one can tell who sent who coins… You can also have them laundered…
That’s as much as I know anyway…..