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There are over 30 currency exchanges that trade in Bitcoins. So that's simply false.

Wow there's more currency exchanges for Bitcoins than merchants that accept them!

There are over 30 currency exchanges that trade in Bitcoins. So that's simply false.

if you leave your life savings in cold hard cash on the living room table you are effectively one burglary away from losing everything.
But just as you put your savings in a bank, you can put your bitcoins in another account. Extract from https://en.bitcoin.it/wiki/Securing_your_wallet :
"A good practice is to keep at least two wallets, one as a "current account" for everyday transactions and one as a "savings account" where you store the majority of your Bitcoins.
The "savings account" wallet should be backed up in encrypted form only and all plaintext copies of this wallet should be erased. In case someone gains unauthorised access to your computer (either by physically stealing it or by exploiting a system vulnerability via the internet), they will only be able to spend the coins in your "current account" wallet."

It's not perfect anonymity, but there are ways to stay safer by using multiple BTC addresses and such.

https://en.bitcoin.it/wiki/Anonymity

https://en.bitcoin.it/wiki/Myths

What are the other technical limitations?
BitCoins are divisible to eight decimal places: https://en.bitcoin.it/wiki/Myths#21_million_coins_isn.27t_enough.3B_doesn.27t_scale

Required reading:
https://en.bitcoin.it/wiki/FAQ

The other inherent problem, is the protocol design tries pretty hard to make the rate of BTC production mostly constant over time.

Actually, the system has been designed to reduce the production/time to 50% of what it used to be (25BTC instead of 50BTC/10 min IIRC) pretty soon.

https://en.bitcoin.it/wiki/FAQ#What.27s_the_current_total_number_of_Bitcoins_in_existence.3F

"Think about what you just wrote. Why do you have to worry about whether your savings will randomly vanish due to no fault of your own? You say that banks "provide the guarantee that any money you give them, is money you'll get back" and then immediately admit that this very limited guarantee is actually provided by the government, which pays for it with bonds, which tend to be bought by central banks that inflate the currency in order to do so. This framework of guarantees and regulations is only necessary because banks spend your money (loan it out), then turn around and claim via your bank balance that they didn't. "

The most fundamental reason to worry is theft, the most basic service the bank provides is that they'll keep your money safe and in return they get to use it until you want it back. Like many other things Bitcoin doesn't do much to alter this relationship since stealing Bitcoins is easy (It made the headlines of Slashdot a while ago when a fortune of Bitcoin was stolen).

"Bitcoin solves this problem by letting you be your own bank."
You don't -want- to be your own bank, because that's risky. You could try to insure the risk, but at that point you've basically made the insurance company your bank again.

"The other problem with living a cash-based life is that currencies inflate pretty fast. In the west we tend to think we have it good because we see only a compounded 2-4% inflation rate, but in some countries like Russia it is as high as 10% or even higher. All of these rates are pretty huge measured over a lifetime. Bitcoin is designed to enforce limited inflation. Right now its inflation rate is also very high (it's actually hyperinflating) but that rate is also fairly predictable over the long run."
What you want from a currency is stability. Bitcoin isn't designed to enforce limited inflation, it's designed to be scarce. Specifically, it's designed to -deflate-. And that's the -worst- thing a currency can do, the reason that we have 2-4% inflation in most countries is because the government is keeping the inflation up on purpose to combat deflation.

What Bitcoin is doing is not hyperinflation, it's hyperdeflation. It's making people invest in the coins themselves which is ludicrous, it makes Bitcoin into a goods rather then a currency.

In fact Bitcoin is also extremely volatile, having no mechanisms whatsoever to keep the value stable, which is the purpose of the Central Bank. The Bitcoin wiki states this themselves:
https://en.bitcoin.it/wiki/Ideal_Properties_of_Digital_Commodities

"Another criticism of a Bitcoin economy I see is that without banks, credit would be harder to obtain. But that isn't necessarily true. Minimizing trust through cryptography increases competition, and why not for credit as well? Think about how using smart property as collateral for a loan can bring about a quantum leap in the competitiveness of the credit markets."
Smart property has the following issues.
1) It will never get implemented
2) There exists no method to verify the value of the collateral (All you get is data signed by a key created by a car company, if the key still is in the car or ever was is not something you can verify cryptographically)
3) There exists no method to collect the collateral. (You gain ownership over a Bitcoin token with no verifiable connection to the real world)
4) There exists no method to verify the trustworthiness of the debtor.

The most fundamental aspect of Banks is the guarantee that any money you give them, is money you're going to get back, even if the bank goes bankrupt, you'll still get your money(up to a certain amount).

I agree that Bitcoin doesn't solve all issues that caused the recession, it is not a silver bullet. But Bitcoin does solve the issue of "will I get my money back" quite directly.

Think about what you just wrote. Why do you have to worry about whether your savings will randomly vanish due to no fault of your own? You say that banks "provide the guarantee that any money you give them, is money you'll get back" and then immediately admit that this very limited guarantee is actually provided by the government, which pays for it with bonds, which tend to be bought by central banks that inflate the currency in order to do so. This framework of guarantees and regulations is only necessary because banks spend your money (loan it out), then turn around and claim via your bank balance that they didn't.

Bitcoin solves this problem by letting you be your own bank. It's infeasible today because even if you want to live an entirely cash-based life (you don't), nobody else you interact with does. They want electronic payments via the banking system because cash is inconvenient. With Bitcoin, your "wallet" is just a file. It can be encrypted, secured, backed up however you like. You can pay somebody else to do it for you, or do it yourself, as you see fit. Think about that not just in consumer terms but from the perspective of a large business.

The other problem with living a cash-based life is that currencies inflate pretty fast. In the west we tend to think we have it good because we see only a compounded 2-4% inflation rate, but in some countries like Russia it is as high as 10% or even higher. All of these rates are pretty huge measured over a lifetime. Bitcoin is designed to enforce limited inflation. Right now its inflation rate is also very high (it's actually hyperinflating) but that rate is also fairly predictable over the long run.

People tend to see Bitcoin in terms of one problem or the other, ie, "that is a bad idea because when the banks need bailing you, you can't inflate Bitcoin to pay for it!" - except that you shouldn't be needing bank bailouts in a hypothetical Bitcoin economy because the only money that is invested is money you specifically chose to invest, knowing the risks. You are never 'forced' to invest merely through the act of depositing money.

Another criticism of a Bitcoin economy I see is that without banks, credit would be harder to obtain. But that isn't necessarily true. Minimizing trust through cryptography increases competition, and why not for credit as well? Think about how using smart property as collateral for a loan can bring about a quantum leap in the competitiveness of the credit markets.

At any rate, whilst it's fascinating to think about these topics, it's worth remembering that Bitcoin is an interesting exercise just as a payments system for the internet. It doesn't actually need to be adopted wholesale by a country in order to prove useful.

I think the outlines of a convincing alternative are coming into view.

The sources of the worlds current problems are complicated and messy. But there are two big themes.

One is that democracy increasingly feels undemocratic, a hobsons choice between two nearly identical sets of alternatives. Party democracy was for the longest time the only reasonable way of doing things, but modern technology offers us the potential for something better, namely delegated voting. By allowing people to automatically delegate their votes by topic, it gives decisions much greater democratic legitimacy and consequently reduces the power of "bad" lobbying (as opposed to "good" lobbying, ie, persuasion of the people through education and argument). This isn't directly related to the financial crisis. But societies current problems aren't purely about finance. They're about a feeling of powerlessness, a feeling that a small elite runs the show for their own benefit. And in the USA perhaps a feeling that politics is getting ever crazier and more influenced by lobbyists.

The other big theme is of course the financial system itself: how it seems to be constantly on the verge of collapse, how it went so wrong that the world entered recession and how nobody seems to have any ways to fix it. I know there are a lot of skeptics on Slashdot, but I think together Bitcoin and Ripple are the most concrete proposals for an alternative financial system. Banks and the financial system are so powerful today because they are trust aggregators and we cannot currently do without that, the result being that they cannot be allowed to fail. This results in the well known "moral hazard" - the profits are privatized but the risks are socialized, and nobody can opt out.

The underlying principle of Bitcoin is minimizing the need for trust. There's a lot more to Bitcoin than just sending and receiving payments. It's a complete framework for distributed contracts, an HTML of transactions if you will. The potential of the protocol is still being explored, but what's clear is that where previously you may have needed large, 'trustable' institutions to perform various kinds of of trades, now you can do them with cryptography instead. This in turn makes finance more competitive and thus democratic, by reducing the barriers to entry and allowing smaller lesser-known companies to compete on an equal footing. The 99% have a chance at doing the work of the 1%, which means the inequalities between finance and the rest of us should even out somewhat.

Are these proposals perfect? No. They are, however, concrete and specific ideas that can be debated on the details, rather than merely slogans to be thrown around.

This is actually mentioned in the bitcoin wiki, here: https://en.bitcoin.it/wiki/Deflationary_spiral, but the author of that page doesn't think it will be a problem. Obviously you(and I) disagree.

The fact that they don't see this as a problem, while stating that "Bitcoins only deflate in value when the Bitcoin Economy is growing" shows just how delusional the strongest bitcoin supporters are. The bitcoin economy must always grow if it is to continue to be valuable to anyone. However, if it does continue to grow, it faces the very real, very large problem of being in a deflationary spiral.

Well obviously there is price deflation. That's sort of a requirement for any new currency. But you're welcome to print up twenty million of your own dollars with your face on them and see how much demand you get. Something tells me it wouldn't be nearly as successful.

Frankly, I don't have the time right now to correct every wrong assertion that Krugman makes about Bitcoin right now. At first glance, though, it's as though he did absolutely no research whatsoever. He read the main page and saw "limited quantity of Bitcoins" and then went off on another ridiculous aspie rant spouting his usual nonsense.

Here is a list of Bitcoin merchants in wiki form. You can look back through the history and see that real "gross Bitcoin product" has risen significantly, not fallen as he claims. Total "market cap" has risen as well. The value of a Bitcoin in terms of Dollars has only fallen due to the aforementioned 30% inflation rate.

Bitcoin is a great alternative. Bitcoin wiki has a huge list of stores and services from wide array of areas that accept BitCoin.

That said, I bet you could find *someone* who wanted to part with money in exchange for a certain amount of Bitcoins.

The value derived from that is limited due to the difficulty of finding someone. Once more well-known merchants start accepting BTC payment for goods, the value proposition might become easier to see. Let me know when that has happened.

Per the Bitcoin FAQ
https://en.bitcoin.it/wiki/FAQ#Is_it_not_a_waste_of_energy.3F

Is it not a waste of energy?
Spending energy on creating a free monetary system is hardly a waste. Also, services necessary for the operation of currently widespread monetary systems, such as banks and credit card companies, also spend energy, arguably more than Bitcoin would.

I call BS! It's certainly a waste of energy.

Why don't we use calculations that are also useful for some other purpose?
To provide security for the Bitcoin network, the calculations involved need to have some very specific features. These features are incompatible with leveraging the computation for other purposes.

Certainly they could encapsulate those "specific features" within the data stream and be stripped back off when importing the data for research. Right? That may or may not be possible depending on the premise and foundation of the protocol. But it doesn't seem like they even wanted to make the attempt here.

People will just move to namecoin, first site admins and then the general populus (just as it happened 35 years ago with ip protocol) and centrally operated DNS will just become obsolete...

DNS is dead
Long live namecoin!

In fact once someone has one of your Bitcoin addresses, they'll be able to see and track all transactions involving that address, including "shuffling" into new addresses. One can even construct a whole graph of transactions starting from some known bitcoin address since the chains of transactions are absolutely transparent for everyone. I guess it's a dream come true for the intelligence and data mining agencies.

And yes, the only way to opt out of that transparency is to use the laundry and mixing services - the chain of transactions ends once you put your sum into the service and retrieve them back - since you (most probably) will get other people's coins. Just be careful not to put too much since you may get back your own coins. Also, such mixing service may not be free.

This article discusses transparency and anonymity issues well:
https://en.bitcoin.it/wiki/Anonymity

It is designed for rewarding early investors. It even has a built-in diminishing return per investment

Bitcoin "mining" is about preventing counterfeiting. The longest set of bitcoin blocks is the "valid" one, and "mining" lengthens that chain. It favors early adopters because lengthening an already long chain is more difficult than lengthening a short one, and your own individual efforts contribute relatively less as more people mine.

You're encouraged to find new investors in order to drive up the value of your (meager) holdings (and the substantial holdings of early players).

That's true of anything people care to speculate on, including gold, the US dollar, and beanie babies.

Once it bursts, there will be little to no value to recover, because there are no real assets reflecting the investments

You seem to have confused "bitcoins" with "real estate." They're money . Like they teach in econ 101, bitcoins have value for the same reason dollars and euros do - because they serve as

• a store of value
• a medium of exchange
• and a unit of account

You might not think bitcoin is destined for much success as a currency, and it probably isn't. But that doesn't make it any more of a "con" or a "pyramid scheme" than, say, Timucua scrip.

If it pays your [bills], it's because someone else put in money into the system, which means that they are in the negative

Bitcoin mining isn't some kind of "pyramid scheme" - it's a kind of integrity check that makes it harder to double-spend the same bitcoin. Think of it as preventing counterfeiting.

This is necessary because there is no central authority managing bitcoin transactions - anyone sufficiently devious could put together their own set of false transactions. However, the longest chain is assumed to be the legitimate one, and "mining" blocks to add to that chain keeps it that way.

The "reward" for mining the block is the valid bitcoins you discovered in the process. It incentivizes what hackers would be doing, but puts it toward productive ends - the currency is over if someone puts together enough computing power to out-hash the miners and make a longer chain.

Notice how now part of the process involves a miner making money by taking more from someone below him then he paid to someone above him. This means that as much as it may not be your preferred currency, it certainly is not a pyramid scheme.

I think that if there's any likelihood of Bitcoin becoming significant, there's also going to be an increasing likelihood of someone dividing the problem space in such a way that it's addressable with appropriately-designed FPGAs and thereby killing that likelihood of significance. Right now it's unlikely to be worth anyone's time & money (unless it's being examined in classes), but if there are significant $ there someone's going to be pursuing them.

There is no way to know without doing the FPGA design, at least at a high level. What you might make up for in one area, you might lose in another. The fact that the AMD's run at such a high clock rate with so many ALU's makes me doubt it would be worth it - but again, there is no way to know for sure without doing considerable work. Just going on number of ALU's (which is not really a proper way to compare, but is the only thing we for this discussion), only the latest HUGE and really expensive Virtex 7 parts have more DSP's.

      Marc

Ref:
http://www.xilinx.com/publications/prod_mktg/Virtex7-Product-Table.pdf vs.
https://en.bitcoin.it/wiki/Why_a_GPU_mines_faster_than_a_CPU#Why_are_AMD_GPUs_faster_than_Nvidia_GPUs?

Well maybe if you had read Takki's answers you'd see a list of places you can buy and sell bitcoins for other currencies.
What backs bitcoins? SCIENCE! (and math [and crypto])

https://en.bitcoin.it/wiki/Trade

New coins are generated by a network node each time it finds the solution to a certain mathematical problem (i.e. creates a new block), which is difficult to perform and can demonstrate a proof of work. The reward for solving a block is automatically adjusted so that in the first 4 years of the Bitcoin network, 10,500,000 BTC will be created. The amount is halved each 4 years, so it will be 5,250,000 over years 4-8, 2,625,000 over years 8-12 and so on. Thus the total number of coins will approach 21,000,000 BTC over time.

- https://en.bitcoin.it/wiki/FAQ

1. The wallet in bitcoin is not encrypted. It's plaintext.
2. The wallet is stored in a predictable location, %APPDATA%/bitcoin/wallet.dat
3. There is nothing tying the wallet to a particular machine (e.g. encryption).

As such all one would need to do is steal the wallet, either through a trojan or possibly even a browser exploit (which guessed the APPDATA path by trying someone's likely login id) and that is that. Their copy of the wallet can initiate the transaction as readily as the original.

Frankly this is shoddy security and makes you think what else is not right about Bitcoin. At the very least the wallet should consist of a plain text receivables tray and an encrypted savings tray(s). When money is received it sits in receivables until the user types the password and the money moves over to the encrypted portion. Stealing the file only exposes what is in the receivables which hopefully isn't much for most people. But also the path name to the wallet should be randomized (like in a Firefox profile) and some other measures could be employed to strengthen the software such as second level security about all send operations.

Bitcoin also runs in an RPC server mode for people running Bitcoin miners. The server hands out work to the miners and they report back. Unfortunately the RPC also contains handy APIs that let the miner transfer arbitrary chunks of money even when it runs on a separate machine. I wonder if this theft is just small potatoes to what could happen. How hard would it be to con people to try out a new bitcoin miner? Maybe it would even play nice for a fixed period of time (for word of mouth to spread) before switching to robbery mode.

These sorts of things are not a surprise either. Anyone who has looked at the code could tell in an instant how bad it is in places.

Hm, he should have read this:

https://en.bitcoin.it/wiki/Securing_your_wallet

"A good practice is to keep at least two wallets, one as a "current account" for everyday transactions and one as a "savings account" where you store the majority of your Bitcoins.

The "savings account" wallet should be backed up in encrypted form only and all plaintext copies of this wallet should be erased. In case someone gains unauthorised access to your computer (either by physically stealing it or by exploiting a system vulnerability via the internet), they will only be able to spend the coins in your "current account" wallet. "

Why would any individual gain any advantage by participating in bitcoin, except that some early adopters may have been able to realize profits at the expense of later adopters? The closest the bitcoin FAQ seems to come to answering this is:

Is Bitcoin a Ponzi scheme? [...] Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters profit from the usefulness of a stable and widely accepted p2p currency.

The final sentence is what is supposed to make it not a Ponzi scheme. Let's break that down into pieces:

Stable: I live in the US, so this doesn't do much for me. The dollar has had a relatively low inflation rate for decades now, whereas bitcoin could become completely worthless at any time. Even if I was living in a country like Venezuela, which has crazy inflation, I would be foolish to hold any significant portion of my assets as bitcoins. I'd be much better off stuffing US currency in my mattress. If I was the type of libertarian who gets upset about "fiat currency," I could put my money in real estate or gold coins.

Widely accepted: It's not widely accepted, and I don't think it's plausible that it ever will be.

P2P: Why is this a good thing?

The point is that while it's not untraceable, it can be anonymous, given the correct precautions.

AIUI If you override the difficulty you can mine blocks more quickly, but those blocks won't be accepted by the rest of network - so they'll be worthless.

(this first link is in a bit of an odd place, being under "Weaknesses" but under subsection "Definitely not a problem")
https://en.bitcoin.it/wiki/Weaknesses#Generate_valid_blocks_with_a_lower_difficulty_than_normal

Similarly when you mine a block you are allowed to create a transaction giving yourself a specific reward, which is currently 50 coins and halves every four years. If you award yourself a different amount then that transaction will be considered invalid by the rest of the network and will be worthless.

https://en.bitcoin.it/wiki/Introduction#Creation_of_coins

AIUI If you override the difficulty you can mine blocks more quickly, but those blocks won't be accepted by the rest of network - so they'll be worthless.

(this first link is in a bit of an odd place, being under "Weaknesses" but under subsection "Definitely not a problem")
https://en.bitcoin.it/wiki/Weaknesses#Generate_valid_blocks_with_a_lower_difficulty_than_normal

Similarly when you mine a block you are allowed to create a transaction giving yourself a specific reward, which is currently 50 coins and halves every four years. If you award yourself a different amount then that transaction will be considered invalid by the rest of the network and will be worthless.

https://en.bitcoin.it/wiki/Introduction#Creation_of_coins

Food, Clothing, Software, Server hosting, etc. No housing yet, though I suspect that may just be a matter of time before someone starts offering to rent apartments for bitcoin.

Food, Clothing, Software, Server hosting, etc. No housing yet, though I suspect that may just be a matter of time before someone starts offering to rent apartments for bitcoin.

Food, Clothing, Software, Server hosting, etc. No housing yet, though I suspect that may just be a matter of time before someone starts offering to rent apartments for bitcoin.

https://en.bitcoin.it/wiki/Trade

Also, drugs, apparently.

Ah! So you can homeopathic medicine with bitcoins now?

I just started reading up on the BitCoin infrastructure and it's quite fascinating. I have some education in economics, but economy is not my main field, so cut me some slack. From what I understand, this shouldn't be a problem and here's why I think so.

While what you're saying is true for "real" economy, it's quite different for BitCoin. When someone's suddenly dumping a lot of currency, greatly devaluating it, you have a reason to believe that this currency suddenly became less scarce. (Alchemists discovered a way to turn lead into gold, gold miners found rivers of gold, USA is printing dollars like there's no tomorrow, whatever.) So you want to get rid of the currency based on reasonable expectation, that it will never return to previous value and dumping it will provide you more benefit.

The key here is you predict the currency will *keep* devaluating until it's no longer useable. However with BitCoins you are not left in the dark and there's no central authority that can screw you up. You *know* the rate at which they are created, because it's governed by two unchangeable variables:

• 50 BitCoins per block (for first 210k blocks, decreasing after that, read FAQ)
• and 6 blocks per hour (self-regulating by the adjustable difficulty of making the blocks)

Furthermore there's a hard cap of 21 million BTC, so there's no way for someone to mint more than that.

Link on topic: https://en.bitcoin.it/wiki/Deflationary_spiral
And FAQ: https://en.bitcoin.it/wiki/FAQ

I just started reading up on the BitCoin infrastructure and it's quite fascinating. I have some education in economics, but economy is not my main field, so cut me some slack. From what I understand, this shouldn't be a problem and here's why I think so.

While what you're saying is true for "real" economy, it's quite different for BitCoin. When someone's suddenly dumping a lot of currency, greatly devaluating it, you have a reason to believe that this currency suddenly became less scarce. (Alchemists discovered a way to turn lead into gold, gold miners found rivers of gold, USA is printing dollars like there's no tomorrow, whatever.) So you want to get rid of the currency based on reasonable expectation, that it will never return to previous value and dumping it will provide you more benefit.

The key here is you predict the currency will *keep* devaluating until it's no longer useable. However with BitCoins you are not left in the dark and there's no central authority that can screw you up. You *know* the rate at which they are created, because it's governed by two unchangeable variables:

• 50 BitCoins per block (for first 210k blocks, decreasing after that, read FAQ)
• and 6 blocks per hour (self-regulating by the adjustable difficulty of making the blocks)

Furthermore there's a hard cap of 21 million BTC, so there's no way for someone to mint more than that.

Link on topic: https://en.bitcoin.it/wiki/Deflationary_spiral
And FAQ: https://en.bitcoin.it/wiki/FAQ

There is nothing inherit bitcoin to force banks to keep a reserve, but neither is there with physical cash. There's no reason a government couldn't impose the same restrictions on a bitcoin bank operating in it's country. Of course, bitcoin makes it easier to run a bank like this, but it also provides a way for anyone to check how much BTC they actually have in reserve.

Of course, this isn't the only way to generate 'money' like that. Admittedly my understanding of this is only basic, but I thought most governments had given up trying to control the money supply anyway? That they couldn't control it because there was always new ways of creating cash substitutes?

For your second question, each bitcoin transaction has a transaction fee associated with it (which can be zero). It is up to each individual miner to decide which transactions to include in the block, and currently they give a higher priority to ones with a higher transaction fee. As to who gets this fee? The miner who solves the block gets all of the transaction fees as well as the new coins. My understanding is that even now, free transactions are on the way out. The current standard fee is 0.01 BTC for reference. The idea is that as time goes on, most of the reward will switch to transactions fees over new coins.

As for bots, it's not true to assume that there is no opportunity cost for mining. As they mine, it becomes more likely that they will be detected. Every 10 minutes or so, you need to start working on the latest block (or else everyone else will ignore your chain). Then there is the increased resource usage (most malware tries to stay under the radar so it doesn't get noticed and removed). They could mine slowly of course, but this makes it easier for the legitimate network to outhash them.

If we look here: https://en.bitcoin.it/wiki/Mining_hardware_comparison an E7300 can do 7.8 Mhash/s. That's running fult tilt, and it would be very noticable if your PC was doing that 24/7. Let's say that you can run it at 10%, and the computer is on for half the day, so 5% (keep in mind laptops are outselling desktops, so I don't think this is so unreasonable). Now we're down to 400 khash/s. The total current network hashing power is roughly 2 Thash/s now, and increasing rapidly. You'd need 5,000,000 bots to equal that, and even then the reward would only reduce by half. Now CPU mining is very inefficient compared to GPU mining, but high performance GPUs are rare and most of your bots won't have them. It would certainly reduce that figure though. The point I'm trying to make, is that it's not as easy to do as you might think at first.

What in the fuck are these cycles being used for? Is there some problem being solved?

Yes, you are basically verifying transactions. This ensures the cryptographic integrity of Bitcoins.

https://en.bitcoin.it/wiki/Category:Mining

https://en.bitcoin.it/wiki/Trade Also, drugs, apparently.

Site uses only CPU mining, and I can guarantee you that you will be spending more on electricity than gaining in bitcoins with the current valuation. You need a powerful GPU or some other specialized hardware to do it profitably. It's cheaper and easier to just buy bitcoins.

That said, if it works as a steppingstone for you to get interested in Bitcoin, and actually familiarize yourself with the system, before coming to the wrong conclusion about its validity, then go for it.

Here are some places you can start with:
http://www.bitcoin.org/bitcoin.pdf for the original whitepaper that everything is based on (internalize this)
https://en.bitcoin.it/wiki/Myths for some of the more common myths flying around about bitcoins
https://en.bitcoin.it/wiki/Weaknesses for some ACTUAL weaknesses in the system, so you don't have to come up with the same old false ones that come up with these thread all the time.

Site uses only CPU mining, and I can guarantee you that you will be spending more on electricity than gaining in bitcoins with the current valuation. You need a powerful GPU or some other specialized hardware to do it profitably. It's cheaper and easier to just buy bitcoins.

That said, if it works as a steppingstone for you to get interested in Bitcoin, and actually familiarize yourself with the system, before coming to the wrong conclusion about its validity, then go for it.

Here are some places you can start with:
http://www.bitcoin.org/bitcoin.pdf for the original whitepaper that everything is based on (internalize this)
https://en.bitcoin.it/wiki/Myths for some of the more common myths flying around about bitcoins
https://en.bitcoin.it/wiki/Weaknesses for some ACTUAL weaknesses in the system, so you don't have to come up with the same old false ones that come up with these thread all the time.

My interpretation was that he was asking "What is this and why should I care?" and I answered with that in mind. The Bitcoin wiki contains a great deal more information on the details behind it, the cryptology used, the technical reasons why double-spending cannot occur and why it's virtually impossible for an attacker to compromise the entire network with CPU power, etc. But there's no point in going into that much detail if the basic premise of "it's online cash" isn't understood.

This might be interesting as well: - https://en.bitcoin.it/wiki/Freenet Bitcoin over freenet. Makes it even more harder to track down people and nodes. Yes unless all isps are instructed to not only filter bitcoin but freenet (and tor) traffic as well.

Well, GPGPU in the sense of "Bitcoin mining" which involves caculating huge numbers of SHA256 hashes. Check out the mining hardware comparison chart. AMD beats the hell out of the nVidia counterparts.

Incidentally, notice the comparison between the ATI Radeon HD5870 vs 5970. The 970 is a lot faster, sure, but they're selling for $920 now, while the 870s (which I put four of on my motherboard) are only $220 ($250 when I got them).

You say that Bitcoin is elegant, but solves the wrong problem. I disagree. Read some of the introductory material that explains the flaws of the existing currency models that Bitcoin is trying to address:

• https://en.bitcoin.it/wiki/Introduction
• http://www.bitcoin.org/sites/default/files/bitcoin.pdf (just read the Introduction)

Yes, there is a public list of all transactions. But it is transactions between bitcoin addresses. You don't have to make public that you are the owner of a bitcoin address. You can create new bitcoin addresses at will.

A: Bitcoin utilises public-key cryptography. A coin contains the owner's public key. When a coin is transferred from user A to user B, A adds B's public key to the coin, and the coin is signed using A's private key. B now owns the coin and can transfer it further. A is prevented from transferring the already spent coin to other users because a public list of all previous transactions is collectively maintained by the network . Before each transaction the coin's validity will be checked.

You are correct that bootstrapping a currency is the most difficult step. However it appears to have done just that: it went from zero to hundreds of merchants in a little over a year: https://en.bitcoin.it/wiki/Trade

Of course, there is still a long way to go (most of them are individuals or very small shops), but the very fact it has already grown so quickly and so fast is very encouraging. It was possible because of its truly unique and revolutionary features that really no other currency provide, notably the combination of: absence of middlemen, anonymity, cryptographically irreversible money transfers.

I like to tell people that when they first hear about Bitcoin, they will either instantly dismiss it as something that could never work, or they will immediately understand its large potential :)

The goldrush is certainly not over.

It is at the moment still quite profitable to mine on AMD GPUs, assuming your electricity costs are about $0.10/kWh. You will easily recoup at the very least half the price of a high-end video card if you jump in right now. Also the network continuously self-adjusts itself to distribute coins over a long period of time, as this graph shows: https://en.bitcoin.it/wiki/File:Total_bitcoins_over_time_graph.png As you can see, we have only generated about 5 million coins so far, out of 21 million. Additionally, many expect the value of 1 Bitcoin to continue to rise, significantly, on the various exchanges over the next few years.

That's the nice thing about Bitcoin: it is less dependent on trust than all other payment systems.

Most significantly, as a Bitcoin user, you do not have to trust a central authority or 3rd party (eg. Paypal or a bank) that may initiate chargebacks, or freeze your accounts, because there is no middleman in Bitcoin.

Of course you need to trust the Bitcoin design itself. But the system has proven its robustness so far, and will (hopefully) continue to do so. If you are curious you may find a list of attacks or flaws, that the Bitcoin network has successfully repelled so far here: https://en.bitcoin.it/wiki/Incidents Personally I have rarely found an open source community that was so full of smart people. And I say this with 13+ years of using and contributing to a lot of open source projects.