Crypto Conversation

[OldPhiKap]

http://money.cnn.com/2013/11/26/tech...day/index.html

Someone has to help me understand Bitcoins.

I understand (I think) that since we went off the gold standard, our U.S. currency (like many others) is basically a fiat currency that depends on the belief of its value. It is, to some extent, a virtual currency -- but it is backed by the full faith and credit of the government, with a history of repayment and with a regulated producer of the currency. (PLEASE NOTE this question/post is an economic inquiry, not an invitation for political commentary which will lurch us into verboten PPB issues).

So, how do Bitcoins have any marketable value? What prevents the market from being flooded (i.e. a devaluation) by whoever "produces" them? How does one even obtain them, let alone assure that they are not counterfeit?

Here is a chart of their "value" from today:

http://money.cnn.com/2013/11/27/inve...000/index.html

How is this different than tulips in Holland, back in the day?

Signed, confused with modern economics.