With bitcom, my understanding is, there is no real money as people originally earn 'bitcoms' in a virtual reality computer game
A) it's Bitcoin not bitcom
B) I think you are confusing mining for Bitcoin with the game Minecraft or similar
C) you can buy Bitcoin using real dollars using a Bitcoin broker. You can then convert your Bitcoin back to local currency using a Bitcoin broker. Consider it just like buying a foreign currency using an FX broker. Similar process.
D) "Mining" for Bitcoin is a process by which people run a program on their computers which calculate large hash values (similar to that used in computer security). This serves no purpose other than making the miner do "work" (of no other value) in order to "earn" their coins. This is to ensure scarcity of the coins - you can't just go and invent more Bitcoin and flood the market with it (like a central bank can do!!!!).
Note that in many cases, the cost of mining the coins actually outweighs the returns (depending on the cost of your equipment, cost of electricity, etc ... since the mining operation is VERY power hungry). The people making real money mining Bitcoin are using specially designed computer components called ASICs which do the job faster with less power usage.
There is a lot of money to be made in designing, building and selling (or renting) ASICs to do mining with. Just like in the gold rush era - the people selling mining equipment often did better than those doing the prospecting.
somewhere along the line, someone has been conned into giving over real money, but where, or who, is the 'bank' - no-one has ever been able to find out.
It's like a peer-to-peer system with people participating in the network validating the transactions rather than an institution such as a bank. That is the point - removing the large institutions from the equation and building a system whereby people develop trust relationships which allow them to exchange virtual currency in return for goods/services.
I am stunned to learn you can withdraw real money from an atm.
It's not that different to being able to withdraw real money from an ATM using a piece of plastic and a 4-digit number.
The bank doesn't actually have your cash sitting in a vault which you can then walk into a branch to request that you withdraw it - it's all virtualised. Data in a computer at the bank which says you have $$$ in your account.
That plastic and number you use now at an ATM creates a trust relationship between you and the financial institution which holds your money and they allow the machine to give you real cash in return for adjusting the balance in your account (ie changing the data in the computer) so that they now own the money that was in your account corresponding to the cash you withdrew.
It's about trust.
With a Bitcoin ATM, it's simply a different trust mechanism - the owner of the ATM is operating as a broker and is giving you cash based on the transfer of your virtual currency to their account, which they can then use for other purposes (perhaps to sell other people virtual currency).
It's not really any different to what happens now with a bank.
If you want to really understand more about virtual currency - have a close look at how the smaller institutions work - eg, credit unions and such - they quite often don't actually have money anyway, they rely on a large institution to do all the work for them. The world of banking is already very virtualised.
The main difference is in how we police these trust mechanisms and how trusted they are.
In the end though, there is no way i am accepting 'bitcoms' for the sale of my home.
Of course, the trust people have for the "trust systems" used for any financial transaction are what determine people's willingness to engage in that transaction. We universally accept pieces of flexible coloured plastic (they still use paper in some countries) with pictures of famous people on them as a mechanism for exchange - because we are confident that if someone gives us some of these bits of plastic in return for our services or products, that someone else will in turn be happy to take our bits of plastic in return for other goods or services we require.
If I wasn't sure that anyone would accept my bit of plastic with famous people on it when I needed to buy something, then I would be nervous about accepting it as payment for my work.
This is where we are at with virtual currencies like Bitcoin - if you get paid in Bitcoin, but then can't use it to buy the goods and services you need, then it's not a very good means of exchange. The more people who accept it, the more people will accept it.
Of course, then there is the whole issue of the "value" of bitcoin. The perception of the value of Bitcoin is directly correlated to well known currencies - since that is how we currently measure the value of something. A Big Mac or a can of Coke is worth $X ... thus we work out how many Bitcoin we need to be able to purchase the same thing and that gives the perceived value.
But when that value actually fluctuates wildly (due to scarcity, nervousness, risk appetite, availability of brokers, etc etc), then the value starts to become extremely difficult to calculate and perceive.
If I worked for a month and got paid a certain number of Bitcoin for my effort (because we agreed in advance to the number of Bitcoins I would get paid) ... and then needed to go buy groceries at the supermarket, only to find that the fluctuation in the value of my Bitcoin meant that my month's pay only lets me buy a litre of milk rather than all the food I need to feed my family - then I'm going to be pretty upset about that.
Similarly, I'd be pretty annoyed if I spent all my Bitcoin buying a house, only to find that the value of the Bitcoin I used to have now skyrockets and I could have bought several houses for the same value!
It's similar to the currency fluctuations we experience here in Australia (except that the swings are currently much larger and much faster). Only a few years ago, my AU$1 would only buy US$0.55 ... so it was really expensive to buy things from the US. But then, we got to the point where the AU$1 I earned would now buy me nearly US$1.10 ... suddenly buying things from the US was much cheaper than it was before! If I was getting paid in AUD but having to buy everything in USD, the fluctuations in currency would make me nervous.
So as a trusted means for exchange - Bitcoin and other virtual currencies have got a long way to go.
It is quite valid to assert that you would not accept Bitcoin as payment for something like a house - the risk profile of virtual currencies is currently extremely high (due to fluctuation in value) and you need to be extremely careful about how you deal with that risk.
An interesting argument about the "legality" of virtual currencies and the (lack of) ability of governments' to trace financial transactions used to fund crime or terrorism etc ... there is already an anonymous means of exchange which is entirely untraceable (when used carefully) and already commonly used by criminals and terrorists all over the world and has been for a long long time. It's called cash.
