Slashdot Mirror
Mint It Yourself With a Browser-Based Bitcoin Miner
An anonymous reader writes "There's a popular discussion happening at the Bitcoin forums about a new browser-based bitcoin miner released today. This lets people mine for bitcoin straight from the browser. There's talk of making an embeddable version. How long until websites start using CPU power from their users to create Bitcoin for their owners?" As Bitcoin gets more attention, I foresee malware with payloads promising to do the same thing.
Bitcoin Slashvertisements remind me too much of Glen Beck's gold hocking. Have fun with that.
What exactly gives a Bitcoin its value? At least with a dollar, I can pay my taxes and not be imprisoned.
Palm trees and 8
+5 Funny.
The level of slashvertisement on these things is seriously getting retarded. Stop publishing this crap!
At some point or another, you have to interface with the Real World (TM), do you not?
Or will you pay your rent/mortgage/food in Bitcoin, too?
That's where they'll get you. Or Visa/Mastercard will stop processing for wherever bitcoin.org is hosted after a friendly call from a Senator.
I'm not a lawyer, but I play one on the Internet. Blog
The podcast called Security Now featuring Leo Laporte and Steve Gibson (famouse for that the "Shields Up!" web page) dedicated episode 287 entirely to bit coin.
I thought steve gave an incredibly well thought out, clear, concise explanation of what bit coin is why it is apparently impossible to "game" the system in anyway. The following episode (288) was the "listener feedback" episode with many listeners expressing doubt and even more excellent explanations from Steve.
Here are the convenient transcripts of these episodes, linked here in the hopes perhaps it will be useful to the slashdot community.
http://www.grc.com/sn/sn-287.htm - main episode
http://www.grc.com/sn/sn-288.htm - Q-and-A episode
In my mind if Steve says it's trustworthy and not a scam, that's good enough for me. But then I've listened to all 300+ episodes and am a big fan so I may be biased.
In fact there was a spike in use after the SN bitcoin episode. It may be wholly or partially due to Steve's apparent endorsement (he says he's going to make his software purchasable via bitcoin).
"UNIX is very simple, it just needs a genius to understand its simplicity." -Dennis Ritchie
What's this thing with regular promotion of bitcoins on /.? Shouldn't it be in advertising box or something?
Only just today? Are you SURE?
This has been happening for days at least, already. (Look at the first post date, and there's another older thread at the same site.)
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.
So, essentially, we're burning CPU cycles (and thus, electricity, and thus, fossil fuels in most cases) simply to give an electronic currency scarcity?
Sounds like a fine use of resources to me!
I run: Windows, OS X, Linux, FreeBSD. Just because you have a hammer, doesn't mean everything is a nail.
Mod parent up. These are interesting questions that I would also like to hear answers to.
1. The former is outside the context. Bitcoin in and of itself doesn't deal with fractional reserve banking.
2. That kind of transaction shuffling doesn't add much in the way of work really. The transaction list in a block is only hashed once, then that hash is included in the repeating hash calculation, which cycles millions/billions/trillions of times before a valid block is found.
3. Amount of value added is not fixed. It decreases over time, specifically every 210,000 blocks (about every 4 years. It'll happen for the first time sometime between mid 2012 and early 2013), the block subsidy (the 50 BTC) is cut in half (25, 12.5, 6.75, 3.3525, and so on) and eventually caps off at roughly 21 million. At an intermediate time, transaction fees will become the dominant means of paying the miners.
upon the advice of my lawyer, i have no sig at this time
The same thing that happens in the normal banking system. it's called a "run on the bank" and if the bank can't borrow money to pay off the debts it collapses. We just count on that not happening. that is not everyone takes out there money at once. When it does happen the appropriate agencies step in and seize the bank. the assets (the loans) get sold to a larger bank with sufficient reserves to cover the withdrwals. The FDIC sweetens the deal to make it worth while for the other bank. Because of the reserve holding the size of the problem never becomes unmanageable.
With bitcoin as far as I know there is no govt agency to handle that, nor an FDIC nor a reserve to prevent infinite expansion.
Some drink at the fountain of knowledge. Others just gargle.
For some reason, the only way I can analogize bitcoin to people is "it's what you'd get if you explained Star Trek's energy credit system to a stoner, who then ran for US congress and implemented it." I write science fiction constantly and would be hard pressed to come up with a zanier scheme.
Great Intellect...
If the puzzles it solves meant cpu cycles farmed out, that had a demand, in an open market place, then yes, I could see this having some value. But the abstract is to abstract. What are these puzzles? A better idea would be.. if I could become a bitcoin affiliate and make money by getting others to sell bitcoin! Now you are talking!
Generating 0.00019867 BTU per payout
Getting 1 payout an hour
1 BTU = 7 USD
Therefore your computer is generating 0.14 cents per hour
Seems like you could be doing some more useful for your CPU.
Correct me if I'm wrong, but isn't Bitcoin designed to be botnet proof? Sure - the more recourses you have, the more bitcoins you will mine, but also the overall difficulty of mining bitcoins increases for the entire network as a whole! (Here is a wiki entry https://en.bitcoin.it/wiki/Difficulty graphs of current difficulty here http://bitcoin.sipa.be/)
Another overlooked factor is that the network capacity is important too - it's whoever has the longest proof of work wins.
The gold rush days of bitcoin will soon be over. What we will see next is the value of bitcoins rise, and get divided into smaller portions, eg. bitcents, bitmils, etc.
Both as a technical concept and as a social phenomena. Quite a lot of people using Bitcoin are not doing so for practical benefits.. they're installing the software and promoting the concept as a sort of protest against the fiat banking system. Oh, and because they hate paypal.. but that's mutual.
http://susansayler.wordpress.com/2011/05/16/bitcoin-p2p-currency-the-most-dangerous-project-weve-ever-seen/
That's a pretty interesting article.. and it demonstrates the power of portraying yourself as persecuted to attract new members.
However, I think they're pretty delusional about the robustness of the system. From the paper that started it all:
This obviously assumes the attacker is interested in profits that can be extracted from the system. An attacker who is already wealthy, and has a greater interest in undermining the system than extracting profit from it, can trivially overwhelm the network by assembling processing power - especially if the attacker already has a stockpile of processing power.
National governments obviously fall into this category, so if they ever decide to destroy Bitcoin they won't need to issue any bans or even tell anyone.
I'm sure you can think of some other potential attackers who have the capability.
How we know is more important than what we know.
A bitcoin youtube? And running with the flash plugin? Oh... god...
"A major function of the federal reserve is to prevent the infinite expansion of the M1/M2 money supply. I don't understand how Bitcoin prevents this. Is there a mechanism?"
Yes, only 21 million coins can be created. Dun dun dun.
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There is a JavaScript miner as well.
A simple Google search provides these links:
Bitcoin JavaScipt Miner on Github
Slush made one too
But what would be the point of actually using one? They'd be too slow.
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What can I buy with bitcoins? Food, housing, software anything? For the articles it looks like you can trade US dollars for bitcoins and bitcoins for us dollars. And that the $7.70 you put in two days ago is worth $7.10 today.
Would it not be possible to link these calculation speed to anything useful, let's see folding@home or the likes, or anything like good old seti@home? I would gladly make my server run a little hotter while doing something useful WHILE minting some bitcoin...
my 2€ct..
Trading visitors' CPU power for access to web applications/content might be worth something. Perhaps not so much with BitCoins but instead with some other calculations. The more CPU power you give the better service/experience in return.
The calculations does not have to be for the service provider's own needs. There can very well be a third party involved in this transaction, perhaps one that aggregate CPU power from visitors on many sites (similar to ad companies today). It might be sold as cloud computing power or something to other companies.
If you don't pay with verifiable computations then you don't get any content. No Adblock can save you there. On the other hand it's no effort on the user and no extra pay wall steps to take manually.
So Bitcoin is basically a mechanism for converting electricity into an asset which is worth less than the cost of the electricity used to produce it, and which can only be used in trade with other people who are stupid enough to have not thought this through? I think I'll pass.
I don't see enough people ever taking it seriously enough to matter. I ignored BitCoin entirely for a year, simply because they did such a poor job of explaining (in user-facing content, at least) just exactly what the fuck the clients were doing and the fundamentals of the process. You can watch their promotional video, which amounts to "install a client that does magic and makes money appear".
The reason I ignored it for over a year is that it just instantly hit me as a garbage. As a scam. As those companies that used to ask you to install a client that would do distributed work and would pay you for your CPU usage, but never really actually accomplish enough work per user to ever bet any money back (especially when counting the energy your system used to do the work). With this, the starting user is left wondering "okay, what am I doing? is my client doing computational work that is being sold by bitcoin to companies and institutions and they're giving my bitcoins in return for that?" but you never really know, until you start digging around in white papers - which most users aren't going to do.
And if you check out the forums, there's even more scammy sounding things. Like advertising sites that sell pre-built computers made just for running your own bitcoin farming machine. Or guys offering to contract to you for a certain amount of work, etc, etc. It all just rubs even the experienced person as shady and scammy. You really have to overcome a lot of mental hurdles to stop and give it a real look.
I've been seeing bitcoin mentioned here and there for a few weeks now.
With this FA, I've been introduced to the concept of "mining" Bitcoin. (It seems I'm a few months late, perhaps -- and yes, you can get off my lawn.)
Which, I must say, is interesting -- if people are willing to pay for it.
But in my own preliminary experience, I will generate two 10,000ths of a bitcoin per hour on my Intel Core2 Quad Q6600. (I found it interesting that all 4 cores were appropriately maxed out with in-browser Java, and that the system still seemed as responsive as always.)
But that's for my years-old CPU, which everyone seems to agree is the wrong way to mine Bitcoin. And while I can harness my GPU(s) to do the work considerably faster, given appropriate kit, here's something I've been so far completely unable to figure out:
What in the fuck are these cycles being used for? Is there some problem being solved? Is it just a measure of masochistic tolerance? What's going on here?
Kid-proof tablet..
Usually, the cost of destroying something is much cheaper than creating it. That's why terrorism can work. The cost of attacking is not that large compared to fear, destruction and cost of guarding. 9/11 proved it very well. In case of Bitcoins, obtaining 50% of the network compute speed required for completely disrupting the Bitcoin network grows with Bitcoin size. When Bitcoin network compute speed crossed the fastest supercomputer Tianhe-1A, it is no longer that easy. Destroying Bitcoin economy is roughly as costly as the Bitcoin economy size and if it grows, it will become even more costly.
Save the bandwidth. Don't use sigs!
and so forth. in short order M bitcoins becomes K*M bitcoins in circulation.
It doesn't. You still have M bitcoins in circulation - the same original ones you've got from A1. You have K*M in debts payable to you, but it's not the same thing.
Thanks for your insightful post. As someone who's researched bitcoin (and who should have put that $500 in at the $.20 mark...) I find your post to be the only one so far that actually gives some context about this development and what it means to bitcoin, both to those new to the concept and for those who have been out of the loop for over a year. I'm certainly no expert, but I know enough that I was hoping an explanation like yours would show up earlier in the discussion for those who might not know about the futility in mining with a single CPU beyond just learning about the system, so the conversation could take a more productive direction rather than correcting myths and wild guesses about the system again and again.
I think the actual "problem" being solved, is the code/encryption for each "coin" that is made.
It took me some time to understand what BitCoin actually is.
Basically, BitCoin network is a big transaction database.
One transaction is: "transfer X amount of BitCoins from account Y to account Z." This 'database', or transaction log is replicated and stored on all participating users' computers.
You can be sure a (your) transaction has been recorded, because you can check with many other peers who will verify that it is.
Of course, the inner parts are more complex, and there's a way to generate new BitCoins (but over time you can generate less and less, so it's a finite amount in total).
(I forgot to login before my comment, so i'm posting it again.)
"CryptNet is just a simple, innocuous tuple-processing collective, man."
Shhh this is something computer geeks thought out... Economics need not apply!
Sorry for being too cynical. But as somebody who makes his living managing his own money the problems you alluded to are the problems I saw when I read the theory behind BitCoin. BitCoin like Gold is tilted to favor those who are in the best position to exploit it. Namely those with the resources. It screws over everybody else...
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
BS!
I have read the FAQ as well, and it does not address the posters points!
The FAQ is a techie FAQ, it is not an economics based FAQ!
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
What in the fuck are these cycles being used for? Is there some problem being solved? Is it just a measure of masochistic tolerance? What's going on here?
It's basically trying to generate a block of data such that the hash is not less than the current (network-wide) difficulty value. So it is a "problem solved", but it does not carry any inherent utility outside of BitCoin. The only point of making you do this work is so that it can be later be verified that the coin was indeed generated by doing the work, and not conjured out of thin air (thus keeping the total supply at check).
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
"I assumed blithely that there were no elves out there in the darkness"
The few people who found out about bitcoin back in 2009 were able to mine a very significant percentage of all the bitcoins that will ever be created, just because there was no competition yet (back then you could create a block with on average 4 billion sha-256 hashes; now it's about a quadrillion). If they hold on to their bitcoins, and bitcoin trading becomes big, they'll be filthy rich just because they found the website before slashdot did.
I'll be staying away from doing any bitcoin transactions. Humanity does not need any more undeserving elites.
That would get people's attention and get a bit of runtime.
It's not the same thing, but it's close. The point is that you can sell the debt claim as well. That way, you can use the debt claim almost as if it were money itself. So the effective amount of money has increased.
The Tao of math: The numbers you can count are not the real numbers.
There's nothing productive happening. You're effectively flipping a coin over and over and over again (as fast as your rig can), until you happen to be the first to hit.
Unfortunately the workload isn't doing protein folding or anything. Though that woulda been cool.
What in the fuck are these cycles being used for? Is there some problem being solved?
Yes: put simply, the problem being solved is generating authentication codes for transactions that require enough CPU time to generate that it's infeasible for an attacker to generate them themselves. On a technical level, you're searching for random numbers that can be added to a transaction list and the hash of the last transaction list block which makes the SHA256 hash match a certain pattern.
Does that help?
For reasons unclear to me, Java is rather a dog to load; which makes it largely uncompetitive with JS or flash for light web stuff(never mind JS's easy integration with page elements, or Flash's artist-friendly authoring tools); but the actual speed of the crunching that goes on inside the JVM is very competitive. I leave the question of just exactly how close something in a JVM is or isn't to a native compiled C thing to those who care more than I do; but Java is almost certainly the fastest easily-embedded-in-a-webpage crunching environment, even if it does seem to take the same 15 seconds to start up that it took in the late 90s...
The point is that there's no legitimate way to turn a Bitcoin "debt claim" into new Bitcoins, unlike some less-scrupulous currency systems.
"I assumed blithely that there were no elves out there in the darkness"
What happens when A1,A3,A5 decide to withdraw the M bitcoins?(since the bank has only M bitcoins, and it would require 3M bitcoins if they withdrew)
The bank collapses. This has happened to a few banks during the banking crisis. The Dutch DSB bank died this way because some people were explicitly calling for a run on the bank.
Oh yeah, everybody who didn't get their money out in time, loses it. Unless the government decides to reimburse the people, which usually happens when the bank and the account holders are based in the same country. But when IceSave collapsed, the (small) Icelandic government didn't want to put themselves deeply into debt in order to reimburse lots of Dutch and British account holders, and politicians are still bickering about that.
Of course anyone who owed the bank any money still owes it. Only now to someone who bought that debt from the bank on the moment it collapsed. Or to the curator, or whoever. Trade in debts is one of the major causes of the banking crisis.
As bitcoins are based on cryptographic technology, I wonder if quantum computing can render my bitcoins invalid?
If Pandora's box is destined to be opened, *I* want to be the one to open it.
If anything, your example serves as an illustration of how BitCoin works better than the Federal Reserve. The Federal Reserve's fractional lending requirements are somewhat of a joke because, as you illustrated, the funds loaned can eventually be deposited which allows the bank to loan ten times that amount back out. The bank, with one stroke of a pen (or keyboard), creates money that gets put into the economy. BitCoin, OTOH, requires processing power to create new money. So it doesn't matter that there's no central authority tracking it, the banks can only lend what is deposited or what they mine themselves.
You're missing the point about how bank loans really work. The real, physical money in existence may still be very limited, but banks create many times that amount in virtual money based simply on promises that you'll get your deposit back, and that loan will be repaid.
What's to stop a BitCoin bank from accepting a deposit of X BTC from Alice, giving the Alice an account with X BTC on it, then loaning those X BTC to Bob, who then deposits them in exchange for X BTC on his account, so the bank can loan out the BTC again. Those accounts aren't boxes with real BTCs in them; they're virtual money, created by the bank. It's a promise that if you withdraw it, you'll get X BTC from the bank. Not the same ones you deposited, just X BTC that the bank happens to have access to at that moment. If everybody withdraws all money from their accounts, the bank won't have enough BTC to give everybody their money, and collapses, just like in the real world.
This is called banking, and from what I've seen, there's nothing in BitCoins that prevents it. The number of real BTCs being limited is irrelevant. The banks just create the promise of more.
The big problem, however, is that the gold rush is over and a small handful of people control the vast majority of BitCoins. It will be impossible to convince the majority of the population to switch to using it as a currency and thereby making a few people vastly wealthy. This is a problem with traditional currency, which is why we hear so much about how much "the 1%" control, but there's little chance of switching to a new currency if it just creates a new, different, 1%. This is especially true considering how much of the current government is controlled by that 1% and how much they'll do to retain control. Basically, if BitCoin starts becoming too popular, it will be banned.
Even if it's not banned, it won't take off, simply because few people will want to switch from one economy owned by others to a less certain economy that's every bit as much owned by others.
That won't stop banks from creating more. The (virtual) money supply in the real economy is far bigger than the amount of money that has actually been printed by governments.
Except if you have a network of zombie bots doing the work for you. BitCoin seems to be a perfect way for worm writers to monetize their zombies, *much* easier than stealing and selling credit card numbers or other personal info.
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.
Stopping Content Restriction Annulment and Protection means not calling it DRM.
I'm seeing a lot of conversation regarding the economics and tech of bitcoin itself, but what about Bitcoin Plus? That is to say, is it a better or worse proposition to join up with Bitcoin Plus, than it is to run any of the other Bitcoin miners? It appears that Bitcoin Plus actually is some sort of distributed computing project, in that you actually aren't signing up to mine bitcoins directly to your account as with other miners, but rather that you are agreeing to give your CPU power to the fellow that runs Bitcoin Plus for some sort of distributed operation, in return for (hopefully, if he's honest) Bitcoin rewards? Now, the FAQ page has something about 50 Bitcoins, and I'm not sure if that is an arbitrary number for example, or something having to do with payout etc... are you given BCs YOU find, or is it that every 50 Bitcoins found on the network lead to a payout of..X BC's to everyone involved?
Next, I'd also be interested to know in the type of miner this is. From what I've read, GPU mining is MUCH faster than CPU mining, but the basic miners are only CPU etc.. can this web-based miner really use GPU as well as the standalone options, if it uses it at all? I can't imagine so, unless it somehow interacts with CUDA or (Better) AMD Stream. If I remember correctly, the AMD 5000 and 6000 series high ends are the fastest bitcoin miners around, so I'd like to put my 6970 to use!
Remember it's not a dupe any more, it's a ReSlash.
To me, smells a lot like the fear of fiat money.
But to me, the key difference is that unlike Bitcoin, fiat money has the power of a sovereign state, including its monopoly on violence, behind it. I can pay my tax obligation to the sovereign state on whose land I reside with fiat money but not with Bitcoin. But I'd love to be proven wrong with examples of people who use one currency just for paying tax and another currency in daily life, especially without a well-defined means of exchange between the two.
There's an intrinsic value to a currency which is hard to trace and hard to tax and liquid across international borders. Satoshi engineered a nice exit strategy for himself. I don't know why you call it "gamed". It's a damn sight more clever than anything Bezos ever patented.
Most of Satoshi's personal profits will ultimately come from the robber barons of the black economy, such as Nigerian 419 scammers. Is that a bad thing? For pillaging the Philippine nation, there's the Swiss banking system; for everything else, there's Bitcoin.
I know this is a bit too abstract for many, but an accurate and reliable and relatively private score-keeping system is an intrinsic good in human affairs. It doesn't need to be backed by any other form of value.
What the ultimate market cap in Libertarian cachet?
Wampum, dollars, giant stone wheels, pieces of eight, bitcoins, -- if enough people believe they have value, they have value.
But as of 2011, not enough people with weapons believe Bitcoin has value. I'll believe Bitcoin has value as soon as A. governments start accepting it for tax payment or B. I can exchange it for a currency that governments accept for tax payment. And for me right now, that's dollars.
How so? The bitcoin makers are no law makers, so how are they going to forbid me to say "OK, I've got this debt claim, I'll give you that if you give me the bitcoins/something else I want to have"? There are at that time no bitcoin transactions involved, so the bitcoin system doesn't even come into play until the debt is paid back, and then the only information available to the bitcoin system is that the money goes to the other party (but it can't even know that it is the payback of the debt). In some way, selling a debt claim is like getting a credit with the debt claim as security, except that the risk of the debt not being paid back is with the buyer of the claim, instead of the seller.
And actually, buying on credit also increases the effective amount of money (because you buy with money you don't have yet).
The Tao of math: The numbers you can count are not the real numbers.
It seems I can't get away from the pump-and-dump of bitcoin. It's all over the place on certain websites as a new form of spam. This is part of the pump.
The dump is when we get the first people selling into the bubble and then it's a race to the bottom as sellers can to try to beat everyone else. Those that didn't sell are known as bag holders.
I see all sorts of justification for the trading on the "exchange" which is entirely unregulated and full of wash trades and other manipulation nonsense. Why people even trust the market is beyond me. It's trades in a vacuum - based entirely on the greater fool theory of value. Just like tulips. But with tulips, if you are starving, at least you can eat them. You can't eat bitcoins.
The above doesn't even take into the account the fucked up economics of bitcoin. With built in deflation, if this was ever adopted as a real currency, the dumbest thing you could ever do is take out a mortgage in bitcoins for a house, even at a rate of 0 percent interest. Proof of built in deflation is that there are roughly 21 million bitcoins maximum, that if they become a valid currency, become fewer and fewer (they can be destroyed and gone forever) while chasing more actual goods and services as economies grow. This benefits hoarders and nobody else. Deflation is bad. It gums up the works of functioning economies, like sand in the gears of a transmission.
But that's if it ever becomes viable. There are no advantages to it at all beyond what we have right now for electronic transactions. Even the most credit-unworthy can waltz into a bank and get a secured credit card and be protected from online fraud in purchases or if the card is stolen. Bitcoins give you no such protection. If your bitcoins are stolen or you are defrauded, they are gone for good. It's as if you've used a debit card over the net.
I see no advantages. Only pitfalls.
This is so unworkable that it must be for another purpose entirely - money laundering. Make successive wash trades (illegal in real exchanges like NYSE, Chicago, NASDAQ, etc) in the market and voila, your formerly dirty money is now untraceable and "clean."
I can't wait until bank accounts are frozen and people go to jail over this. It will be delicious to watch.
I'm getting popcorn.
--
BMO
No /. discussion is complete without the bad car analogy:
I see this as being a similar false economy to the plug-in hybrid that people drive to work and charge for "free."
At this very moment, my work computer has all 4 cores pegged, generating one bitcoin every 45 minutes (except when the java periodically hangs up...) So, I'm using my employer's landlord's electricity (which my employer gets for a fixed price in the lease) to generate bitcoin. I win, but ultimately, somebody else is paying the price.
Really, it's the landlord's own fault, the air-conditioner is from the 1960s and only has one setting which results in about 64F at my desk, if I weren't generating bitcoin, I'd be doing un-necessary FPGA compiles to keep warm.
Can anyone help me get bitcoin for my left over flooz?
how are they going to forbid me to say "OK, I've got this debt claim, I'll give you that if you give me the bitcoins/something else I want to have"?
You can sell your claim to bitcoins to anyone who will accept it, but not to anyone who accepts bitcoins. This is a major split from fiat currency where, thanks to the involvement of the government, a claim on a dollar "deposited" in a bank is a dollar. The private bank has the government-given right to print new dollars, where as in the bitcoin system no one can fool the crypt algo - not even the creators themselves.
The notion of monetary expansion cannot be separated from government involvement. A bank accepting bitcoins will not be able to create new bitcoins, and the claims on the deposited bitcoins will be a curency of it's own. Just like in 18th-century United States, where multiple gold-backed dollars where circulated by private banks.
1. The former is outside the context. Bitcoin in and of itself doesn't deal with fractional reserve banking.
Well that's my point. Major currencies have a central bank which implements the fractional reserve. Bitcoin by design has no central bank and thus no fractional reserve.
2. That kind of transaction shuffling doesn't add much in the way of work really. The transaction list in a block is only hashed once, then that hash is included in the repeating hash calculation, which cycles millions/billions/trillions of times before a valid block is found.
There are two problems with the highspeed wash transactions. First it generates large numbers of events that have to be propagated across the whole network. (bitcoin requires all nodes know about every transaction). Second, every transaction causes a work event that generates new bitcoins. Not only can the bots compete for those new coins (which is why the non-sense transaction are useful) but also since the rate of new bit coin production is limited it means that other pending transactions, legitimate ones, are held up in a queue. the queue gets flooded by pending non-sense-transactions.
3. Amount of value added is not fixed. It decreases over time, specifically every 210,000 blocks (about every 4 years. It'll happen for the first time sometime between mid 2012 and early 2013), the block subsidy (the 50 BTC) is cut in half (25, 12.5, 6.75, 3.3525, and so on) and eventually caps off at roughly 21 million. At an intermediate time, transaction fees will become the dominant means of paying the miners.
so at that point you cannot expand the amount of bitcoin. Thus to get bitcoin people will need to borrow it. that is banks will lend it. And without a fractional reserve system it will semi-limitlessly expand the money supply (which history has show always leads to a crash when eventually there is a run on the bank for deposits). As for transaction fees instead of bitcoin mining then the wash transactions I describes are not valuable. Instead the bots will now process the transactions to gain the transaction fee. Now one might say, well good, let the bots do that what harm is that? but the harm is that the cost of processing the transaction is borne by the owner of the computer not the botmaster. I would also predict it would be an unstable source of transaction processors when it became the dominant source since botnets collapse.
Some drink at the fountain of knowledge. Others just gargle.
As Bitcoin gets more attention
That seems unlikely.. outside of the bitcoin forums and slashdot.
I've read that PayPal and Visa have shut down a bunch of BTC exchanges. Google points me to Mt. Gox as the most popular one, but I couldn't find terms of service listed anywhere on the site before signing up. How are USD accounts on BTC exchanges typically funded?
Does anyone know the current Bitcoin to Flooz exchange rate? I imagine it will soon reach parity.
Don't blame me, I voted for Cthulhu.
A while back I tried some flash-based game on facebook and noticed it was causing my browser to eat up nearly 100% of my 3-core cpu. I couldn't tell if the game / flash was just that poorly written or if it was using my comp to do some sort of background processing like some sort @Home software. The game mechanics were designed, too, so that you really needed to leave the browser open w/ the game running to succeed (even when you weren't actively playing).
This is not the greatest sig in the world, no. This is just a tribute.
So, what's the difference between bitcoin and, say, shells on the beach?
Really, look here: I've got a pocketful of pretty shells. I say they're worth something, you agree, we have adopted this as a currency, I give you shells, you give me bread. You give me shells, I give you milk.
Fine.
It's the same with paper dollars. I work at my desk doing "useful things," my boss signs my paper paycheck, and some electrons are transferred to a harddrive at my bank, I take my plastic card to the grocery store to buy bread and milk, I transfer some of the electrons sitting at my bank into the grocers harddrive sitting in his bank. I eat, he eats, we're happy.
So, what's wrong with the currency we already have? I have 200,000-300,000 CPUs at my disposal (I work for the government so really, I do). What's to stop me (or any government agency or OMG, GOOGLE!!) from "mining" BC, flooding the system by giving them away, and devaluating the currency?
My work here is done.
I'm going to go collect some shells on the beach.
There's one thing that don't make sense to me about bitcoins. The whole system relies on the fact that a huge distributed database stores all transactions ever made. So basically, I can get a smallish botnet of 10000 nodes or so, buy/mine a ~1000 BTC, then proceed to make as many transactions between the nodes in my botnet as I can. If I keep at it long enough the size of the database will become so large that noone could possibly store all that data conveniently - and you need to store all transactions ever made to verify transactions - rendering the whole system useless.
And then I haven't even mentioned the insanity that the whole system relies on the fact that there are more honest nodes than dishonest - so just get more dishonest nodes than honest and you can get all bitcoins in existence.
The degree it is accepted in exchange for goods and services.
I'm not trying to be rude but you truly do not understand M0, M1, and M2 measures of currency. Nor do you understand how bank deposits amplify money. nor do you understand the fractional reserve system. Your answers simply don't make sense though I think you think they do make sense. These things are confusion which is why it's worth arguing about them to solidify one's understanding through socratic dialog. But this can't be done in this case because you don't grasp how M1 and M2 are created from M0.
Some drink at the fountain of knowledge. Others just gargle.
My system is drawing about 100 watts right now in a mostly idle state. The CPU is in its low (1.6GHz) state and it is just running its 3 HDDs and its very high end display adapter. When I fire up linpack, draw goes up to 170 watts. So pretty major increase, even for a system with a lot going on. Now if you take a system that only has 1 HDD, a more moderate display adapter or integrated display, well then it might be more like 50-60 watts up to 120-130.
No it isn't going to make you go bankrupt, but you have to pay for that power and if you live in a warm area you have to pay for the cooling to dissipate the heat it makes.
I don't really care to work out the math (since bitcoins are retarded) but that 70 watts of power (plus cooling) has to be accounted for. My electricity costs me money.
I'll see your strawman, and raise you an ad hominem: You're an idiot. Pray tell, if you knew exactly how the situation with BitCoins would work out, why didn't you invest when they were worth very little and sell now? If you know the BitCoin market is going to crash soon, why don't you short on it? Oh right, you're an idiot.
One convenient locations...in Africa.
Sorry, you must have Javascript enabled to use Mt. Gox
The first time I loaded that page, I got "Sorry, you must have Javascript enabled to use Mt. Gox" and I clicked away before the script managed to load. That's why I assumed at first that one needed to register and log in to view what funding options are available.
http://www.dwolla.org/help/the-famous-faq-section/
In other words, Dwolla appears to be a cheaper alternative to PayPal that goes through ACH instead of the credit card network. So now I think I understand the flow: dollars, paid through Dwolla, exchanged for BTC through Mt. Gox.
And boy how making up a user name and password sure does put that user name and password at risk.
I don't like to sign up for a service without knowing what I'm agreeing to by clicking Register, which is why I just read through Dwolla's TOS. Should I trust Dwolla with my "Social Security number (personal) or EIN / Tax ID (business)"? And how likely is it that Dwolla will shut down Mt. Gox's account for allegedly "transmit[ting] funds in association or for payment of illegal goods or services" such as "pyramid schemes, or any type of money laundering", as Dwolla's TOS puts it?
In a free-banking system, without a central bank or an equivalent of the FDIC, reserve requirements are dictated by the risk of a run on the bank and competition between banks. No bank can easily afford to be proven bankrupt, unable to meet its immediate obligations to its account holders; moreover, a bank which operates with excessively low reserves runs the risk of being deliberately bankrupted by its competitors.
Far from increasing the reserve requirements, typical reserve levels were higher before the Federal Reserve and the FDIC were created to spread out the risk.
This is orthogonal to the bitcoin system, which has the advantage of not needing any banks just to hold bitcoins securely or transfer them over the Internet. If someone were to put their money in a bitcoin bank—for the interest, presumably—I should hope they would recognize that their interest-bearing account is an investment, and carries a corresponding investment risk, as with any other interest-bearing loan.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
Either the java is more inefficient than I figured, you were unlucky during your preliminary testing, or your math is off by about an order of magnitude. A Q6600 should mine about 0.0019 BTC/hour.
As for what the cycles are being used for, basically, it's recording transactions (the block chain is basically a massive accounting ledger, and each block is a section of it) in a manner that makes it near impossible to tamper with. The mining takes a list of transactions, the hash of the previous block, a timestamp, and a nonce (and a couple other things), and hashes those repeatedly, incrementing the nonce each time (which completely changes the hash due to how it works), until it gets a resulting hash value that is less than a certain number (the target) at which point it becomes the next block in the chain, and everyone starts the whole process over again.
upon the advice of my lawyer, i have no sig at this time
I think my rant was a bit unclear, and the accusations are without merit. To summarise, in a gold based system, there's no way to "amplify" phisical gold. The amount of high powered money/MB in the system is thus fixed. The same is true for bitcoin, and not true for fiat currencies.
I'm not saying that banking is impossible with gold (it's how it has originated), or that fractional reserve banking and thus bank runs are not possible. Since there's no central bank to enforce or even verify minimal reserves, there's nothing to stop an infinite expansion. It's however plausible that, assuming a completely unregulated market, that consumers will demand 3rd party auditing for the private banks, and a mutual insurance scheme equivalent to FDIC. This will thus force the banks to maintain minimal reserves and require sound collaterals, which will clearly curb the infinite credit expansion.
There seem to be some misunderstandings here about how bitcoins work:
There are two problems with the highspeed wash transactions. First it generates large numbers of events that have to be propagated across the whole network. (bitcoin requires all nodes know about every transaction).
That isn't strictly true. Every full client does need to know about every transaction which has been accepted and integrated into the block chain. (There is a relaxed form of verification which can work without the full block chain, but at least some of the clients need to have the full list.) However, only the miners really need to know about unconfirmed transactions, and priority for both confirmation and propagation is given to transactions which offer a fee—which these high-speed transactions can't do without breaking the bank. Ergo, most of these high-speed transactions would probably be ignored.
Second, every transaction causes a work event that generates new bitcoins.
Blocks, which award bitcoins to the miners which generate them, are created about every ten minutes. This interval is regulated by periodically adjusting the difficulty threshold by consensus, and is independent of the number of pending transactions. When a block is generated, the miner that finds it decides which transactions it includes; if there is insufficient room for all the known transactions, they will typically be prioritized based on the fee offered (which goes to the miner). Real transactions will thus crowd out the "fake" high-speed ones which offer no fee.
...but the harm is that the cost of processing the transaction is borne by the owner of the computer not the botmaster.
Well, true, but the answer to that is to secure your own computer. Would you prefer that the botnet's CPU time be spent cracking people's bank account passwords instead? At least processing transactions is a useful and perfectly legitimate service, even if the cost is externalized.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
Do people know what these puzzles are? Is there a chance this could be used as a botnet, or to break catchas and do spamming, or something like that?
A 21st century issue: the irony of technologies of abundance in the hands of those still thinking in terms of scarcity.
Why would anyone ever deposit bitcoins in a bank? You don't need a checking account to use bitcoins, nor an ATM. There are no physical bitcoins, so you don't need a vault to store them. The only reason to give them to a bank would be explicitly invest in the loan side of the bank, and then you are speculating and should be aware that you may lose everything if somebody defaults on their loan.
Bitcoin, if successful, eliminates the need for banks, except as a third party clearing house for loan activity.
Rather than a virtual currency backed by computational complexity, I suggest one backed by labor. The standard unit is 1 hour of unskilled labor. Other labor is negotiated at some multiple of that unit. So programmer time might be valued at 10 or 20 units per hour. Whoever you do work for pays you with a promise to supply the negotiated units in return. The promise goes into an electronic system with cryptographic security, etc. Now you can trade your positive promise balance to other people for whatever it is they supply. The person who made the original promise extinguishes it when they do something for someone else. They can use the units they get to extinguish the units they owe.
I'm not saying that banking is impossible with gold (it's how it has originated), or that fractional reserve banking and thus bank runs are not possible. Since there's no central bank to enforce or even verify minimal reserves, there's nothing to stop an infinite expansion. It's however plausible that, assuming a completely unregulated market, that consumers will demand 3rd party auditing for the private banks, and a mutual insurance scheme equivalent to FDIC. This will thus force the banks to maintain minimal reserves and require sound collateral, which will clearly curb the infinite credit expansion.
Oh is that how things worked before the FDIC in America? Oh wait, that isn't how it worked. What happened is that banks in fact did lend out money they didn't have, all without insurance, and people took those loans and made those deposits and got screwed for their own shortsightedness. It wasn't until we protected ourselves from our own stupidity that we institutionalized these sorts of banking protections. Why do you suppose people will be more rational with this monetary system without regulatory oversight?
Hah! now i know the *Real* reason sony disabled all those connectable PS3's.. how does it go.. the average PC would take *years* to produce an appreciable amount of bitcoins? But what about a couple hundred original playstations?
Why would anyone ever deposit bitcoins in a bank?
Interest. Banking is older than checking accounts.
There seem to be some misunderstandings here about how bitcoins work:
Second, every transaction causes a work event that generates new bitcoins.
Blocks, which award bitcoins to the miners which generate them, are created about every ten minutes. This interval is regulated by periodically adjusting the difficulty threshold by consensus, and is independent of the number of pending transactions. When a block is generated, the miner that finds it decides which transactions it includes; if there is insufficient room for all the known transactions, they will typically be prioritized based on the fee offered (which goes to the miner). Real transactions will thus crowd out the "fake" high-speed ones which offer no fee.
The only reason to create fake transactions is to keep this pipeline full. If it's already full of real transactions then the bot miners will mine those. But the proceeds go to the bot masters not the people paying for the computing power. It does no good to dismiss this with a wave saying tough luck to those who got themselves rooted.
...but the harm is that the cost of processing the transaction is borne by the owner of the computer not the botmaster.
Well, true, but the answer to that is to secure your own computer. Would you prefer that the botnet's CPU time be spent cracking people's bank account passwords instead? At least processing transactions is a useful and perfectly legitimate service, even if the cost is externalized.
Some drink at the fountain of knowledge. Others just gargle.
The only reason to create fake transactions is to keep this pipeline full. If it's already full of real transactions then the bot miners will mine those.
To what end? You don't need fake transactions to mine bitcoins. A block with no transactions apart from the 50 BTC reward is perfectly valid.
But the proceeds go to the bot masters not the people paying for the computing power. It does no good to dismiss this with a wave saying tough luck to those who got themselves rooted.
I'm not simply dismissing the problem, but it's hardly specific to bitcoins. Any profitable and CPU-limited task is a candidate for botnet activity. If those bots couldn't mine bitcoins they would spend their illicit CPU time on other problems. Compared to most of the alternatives, mining bitcoins is positively benign.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
Sure, it requires a lot of CPU and electricity... but who says it has to be yours? With us now in the studio is Shady Russian Botnet Guy...
EOM.