A few questions about Bitcoin

I'm finally getting into this kind of currency. It's a hell of a lot to absorb and I've many questions remaining. After much research I've come to some understanding (someone correct me if I'm wrong on any of this). Sorry for the length but there's a lot to cover:

Bitcoin (BTC) is crypto-currency, which is essentially Internet money with no authority creating and regulating it. Transactions occur directly between seller and buyer. It's created by "mining" and purchased from an exchange through websites (akin to stock brokers). Once purchased, it can be transferred to a digital wallet (such as Electrum). "Seeds" are 12 word random phrases that are a direct link to the wallet's money. Payment is made by copying random alpha-numeric addresses taken from the seller and pasting them into a wallet send function and then sending it. The "block-chain" is one massive transactional log...like a comprehensive online receipt of all BTC activity at any given time.

I just need some further clarification that I'm struggling to find an in-depth explanation for online:

1) So, BTCs are moving in and out of the block-chain to constantly be crunched by many computers on the network to verify the amount out there available? Is the block-chain synonymous with the exchange?

2) Only around 21 million BTCs will ever exist, and it's required to mine for their creation? How is this done and why is it necessary? Why can't they just be created instantly as they are digital? I heard massive computing power is required, so what precisely are they doing when mining?

3) What about people losing their seeds? Wouldn't that relegate active BTCs permanently dormant, and hence continually increase the valuation of the remaining due to supply/demand? If no more than 21 million are ever to be made yet seeds are constantly being lost, then it strikes me BTC is a very prudent long-term investment.

4) I read that BTCs are anonymous, but after further research that seems to be a common misconception. It's possible to "tumble" them (essentially laundering), but I've read this is illegal. I've also read it's not. Which is it? Wouldn't it be possible to cross buy crypto-currency to the same result (unfortunately dealing with exchange rates) or setting up more than one wallet to layer their trail? Will it always leave one? Are BTC ATMs good avenues for anonymity?

5) To build on the above, similar to how each dollar has a (unprovable and untraceable) transaction history behind it, BTC also does, yet since it's electric it can be traced and proven. How am I to know that when I buy some I'm not inheriting someone's past illegal activity? Can I be tied to that by LE? As the addresses for each BTC are changed each time they change hands it goes to reason it would be completely anonymous. So how exactly can they be tracked? I've read a bit about block analysis but that's not about leaving a trail so much as it is pattern recognition.

I have a few more but this is long enough. I really appreciate any answers you guys can provide, learning all about this has been a headache.

to be a currency, it should be used to conduct transactions...

these days that isn't happening so much.

https://finance.yahoo.com/news/bitcoin-payments-distant-dream-usage-dries-124105660--sector.html

Quick tip: don't invest.

Virtual currency might always be around in some form, however, current bitcoin is coming under more and more scrutiny by the day (ignoring the other 99% of virtual currency that is now extinct). The FTC is starting to launch investigations into price manipulation which inflated prices in 2017. As you've pointed out, a mining limit will be reached...and then what? Do we have a limited virtual gold standard, or will some anonymous group of people dictate an increase in capacity?

Additionally, the notion that bitcoin is decentralized is a myth. Mining and exchanges are all held in what could essentially be described as a virtual currency cartel. A more accurate representation is that it seeks to exchange control from government bodies to private bodies, there is nothing inherently democratic as to it's structure. The main difference is that private entities don't usually require transparency or regulation to level the playing field.

If you're looking for long term investment, you want stability and a system that isn't potentially rife with fraud (see market manipulation), both of which bit coin fails at miserably.

Don't bump old threads.