Bitcoin Mining Tests On 16 NVIDIA and AMD GPUs

Vigile writes "For users that have known about the process of bitcoin mining the obvious tool for the job has been the GPU. Miners have been buying up graphics cards during sales across the web but which GPUs offer the most dollar efficient, power efficient and quickest payoff for the bitcoin currency? A series of tests over at PC Perspective goes through 16 different GPU configurations including older high-end cards through modern low-cost options and even a $1700+ collection with multiple dual-GPU cards installed. The article gives details on how the mining programs work, why GPUs are faster than CPUs inherently and why AMD seems to be so much faster than NVIDIA."

Comments

$1700+?

[bennomatic]

How much is that in Bitcoins?

Re:$1700+?

[Charliemopps]

About 121 bitcoins at the current exchange rate.

Re:$1700+?

[Charliemopps]

121 bitcoins at current exchange rates. It'd take you about 4 months to make that using that machine. Of course, that all depends on the market for bitcoins which is anyones guess.

Re:$1700+?

[HisMother]

Plus the electricity, to run that machine flat out for four months, which I imagine will be way more than pocket change.

Re:$1700+?

[WaywardGeek]

I built a bitcoin mining machine two weeks ago. There's more you should know that TFA only hints at. First, check out these graphs. The total CPU power competing for the 50 BTC generated every 10 minutes has increased 10X every quarter for 6 quarters, and soon, it will drop to 30 BTC every 10 minutes. If you think you can make money given that bitcoin value is flat or falling, while you have to split pay outs with more miners every day, well... ha ha! That's a good one.

That said, I'm a happy miner. I was looking for an excuse to build a gaming machine anyway, and I was able to do a decent machine for about $430, with an HD5770 doing just over 200 MH/s. Even if I earn nothing for mining, I'm still glad I built the machine. I needed another Ubuntu server anyway, and the mining only loads the CPU 1%. Next year, I plan to put Windoz on it and give the machine to my son. I can hardly wait to see what he thinks of the graphics.

how much are they paying for these?

[Anonymous Coward]

How much *official currency* are they paying for all these bitcoin articles?

Thank god

[Anonymous Coward]

Did you know that it's been nearly a week since the last Bitcoin story on Slashdot? I was worried that the standards were changing and blatant slashvertisements for bitcoin were no longer getting through! Never been happier to be proved wrong.

Re:Thank god

[geekd]

Bitcoin is the PERFECT Slashdot topic:

Open Source
Peer to peer
Cryptography
Computer Hardware
Libertarian

THAT'S why it shows up so much. What's not to like?

Re:Thank god

[DriedClexler]

And before that, the last article was two weeks previous.

Seriously, people are exaggerating how often we get a bitcoin story. Yes, for a short period we got them near daily, but now they're a lot more infrequent.

Re:Thank god

[DriedClexler]

Using the Phoenix miner with optimum settings and overclock, perhaps? (I get 380 MHash/s on 5870s and made a rig with 4 on one motherboard ... yeah you're damn right I had to set up liquid cooling...)

Re:Thank god

[blackfrancis75]

+1

I never understood why so many /.'ers speak so vehemently against Bitcoin, which has so many interesting comp sci. aspects, or even just social experiment. No-one's going to force them to go out and exchange any of their 'real' money for BTC.
I figured in the end it was so they can be in the elite, cynical 'I told you so!' chorus if it fails.
According to some, even the stories about MtGox being hacked were somehow "slashvertisments" for BTC

Re:Thank god

[Trogre]

All those wasted CPU/GPU cycles that could have gone towards something actually useful, like F@H.

Re:Thank god

[Goaway]

When was the last time those issues were the main topics on slashdot? 2003? These days, its mostly focused on inflammatory YRO articles, and how the evil government is trying to take you down.

Right, libertarians. Right there on the list, see?

Re:Thank god

[PopeRatzo]

How long before you've made enough money to pay for that machine.

Did you buy it with bitcoins perhaps?

You're dead serious aren't you. You're actually running the expensive setup to mine bitcoins as if there was free money lying around to be harvested for non-bankers?

I'm flabbergasted.

Re:Thank god

[geekd]

Loose money *is* easy to lose.

Re:Thank god

[arth1]

Several reasons:
- It is designed for rewarding early investors. It even has a built-in diminishing return per investment.
- The value of bitcoins can only increase as long as there is an influx of new investors who are willing to purchase them.
- 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).
- Once it bursts, there will be little to no value to recover, because there are no real assets reflecting the investments.

I'm as nerdy and liberal as they come, which is exactly why I see this for what it is. Bitcon.

If it makes you happy to play this game, by all means go ahead, but do yourself a favour and don't invest more than you can comfortably afford to lose.

Re:Thank god

[arth1]

Bitcoin isn't going to pay everyone's bills. That's impossible. If it pays yours, it's because someone else put in money into the system, which means that they are in the negative. If it pays theirs, it's because even more people put in money into the system, which means that they are in the negative.
Sooner or later you are going to run out of willing investors, at which point there will be a great number of losers and a small number of winners. Chances are that you're not going to be one of the winners -- even if you run in black right now, have you subtracted the cost of all your investments (computers, electricity, time)? If so, you have been one of the early players who are the only ones who will go in black.

Re:Thank god

[Bengie]

The same arguments can be made about Gold/USD/Euro/etc.

You better bring something better to the argument.

Re:Thank god

[DriedClexler]

I've already made more than the machine/electricity costs -- and keep in mind I can still use it as a gaming rig -- or sell it, and increase my profit.

Believe it or not, there *is* free money lying around in this world -- it's how entrepreneurs exist in the first place. Do you avoid picking up $20 bills on the ground, thinking that, "There is no free money lying around!"?

Sometimes opportunities stare us all in the face, waiting for someone to say, "oh shit, I can actually do this". I could have waited weeks to set up and the market *still* wouldn't have yet saturated.

Re:Thank god

[ceoyoyo]

A country's currency is backed by the country itself. There is something real behind it.

Gold is a shiny metal. If you like shiny metal, by all means, buy it up. You'd be insane to buy significant quantities of gold at the current price, which is far above the level at which shiny metal is normally valued.

Re:Thank god

[DriedClexler]

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

Wow, just like stocks!

- The value of bitcoins can only increase as long as there is an influx of new investors who are willing to purchase them.

Wow, just like stocks!

- 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).

Wow, just like stocks!

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

Wow, just like stocks whose issuers go bankrupt!

If it makes you happy to play this game, by all means go ahead, but do yourself a favour and don't invest more than you can comfortably afford to lose.

Wow, just like stocks!

I'm as nerdy and liberal as they come

Ah, that's why you don't like stocks. Those evil pyramid schemes that just enrich the folks that got in on the ground floor, require sustained interest to gain value, motivate their holders to promote them, and leave you with nothing if it all goes bust.

(Don't bother listing the differences between stocks and bitcoins -- yes, they exist, but the two are not different *with respect to the issues you just grounded your argument on*.)

Re:Thank god

[Dalambertian]

Protein folding doesn't require a supercomputer. Check out Fold.it

Re:Thank god

[Anonymous Coward]

Because snake oil is still snake oil, even if it has an electronic stopper on the bottle.

Because a pyramid scheme is still a pyramid scheme, even if the pyramids blocks are made of silicon.

You may somehow like everything just because there is a tech angle to it. Some of us see that even some tech things are bogus/wrong.

Re:Thank god

[arth1]

The same arguments can be made about Gold/USD/Euro/etc.

No, it' can't. A real currency is linked to the sum of goods and services in the countries using that currency. By having your hair cut or harvesting your apples, you help shore up the value of the notes in everybody's wallets.
BItcon is only backed by speculation value. There is no relation to the GNP, because there is neither N nor P.

Re:Thank god

[PopeRatzo]

Great topic, I concur! I've got one dedicated mining rig with two 6870's. I'm getting more than 300Mhash a card, but that's tweaks I can't talk about. :)

Listen pal, I'm talking to you as a friend here.

You need to get out and mine for some pussy instead. I realize the odds are just as bad but you never know when you run into some gal just on the edge of alcohol poisoning and you might end up with a little something... At most it'll cost you $100 (plus the antibiotics a few days later) which is a lot less than a pair of 5870s and SSD drives and all that bitmining kit.

And you never know. It's how I met my wife 21 years ago.

(Hey, I'm just kidding, hon. Having a little fun with the slashdot fellas. I realize I was the one on the verge of alcohol poisoning and you were the one trying to empty my wallet while I was passed out.)

Re:Thank god

[arth1]

Yes, the stock market, or rather capitalism is pyramid based gambling too. It's just less so than Bitcon, due to multiple reasons:
The majority of companies having actual assets.
The majority of companies paying out dividends.
Companies you invest in differ - some are unique.

Bitcoin is like a stock market with a single stock, for a company with no assets, and paying no dividends. Would you rush to pour your money into that?

Re:Thank god

[DriedClexler]

... and bitcoin is also linked to the sum of goods and services in the (enclaves of) countries using that currency. By buying a haircut with bitcoins, you help shore up the value of bitcoins in everyone's wallet files.

The Euro is only backed up by speculation value. There is no relation to Gross Bitcoin Product, because there is no B or P. (???)

Seriously, do you have any understanding of the things you just tried to talk about? Because it sounds like you're just parroting soundbites.

Re:Thank god

[WaywardGeek]

Since I have thought about it (a total waste of time, but fun!), I can confirm with my half-assed unprofessional opinion that it is in fact a ponsi scheme (similar to pyramid but different). It's super cool stuff. First, the world needs bitcoin, or something like it, a lot. We need real cash we can spend on the Internet, not just Paypal. Much of the world doesn't have access to credit, and bitcoins could work for them. It's fun to imagine a world where 2 billion people take part in a bitcoin based economy. There are several ways to estimate what a bitcoin would be worth then, and I come up with anywhere from $2000 to $250,000 per BTC.

However, here's why it's a ponzi scheme. Some a-hole reading slashdot is going to come up with a better system than bitcoin, and then all of us geeks will naturally switch over to it. At that point, demand for bitcoins will decline, and all the early miners will panic and dump their coins on the market, crashing the price to zero. All the guys manipulating the market prices will laugh all the way to the bank while the rest of us realize our investment is worth nothing.

Re:Thank god

[WaywardGeek]

This is a really interesting point. If we could put those cycles to good use, we'd do the world some good while at the same time contribute to the stability of Internet cash transactions. So, how can we do massive competitive proof of work calculations based on protein folding?

Re:Thank god

[hedwards]

F@H? I need those cycles for pr0n.

Re:Thank god

[eparker05]

You aren't entirely correct there. The fact that you pay for goods and services with money is what gives it value. You got that part right.

But currency is not linked to 'sum of goods and services'. If it was linked, then money could be printed and the amount of goods/services available would increase. Sadly this is not the case, as post WWI Germany found. Money only has value because we think it has value. Furthermore the value a dollar has is equal to what we collectively think it is worth. This is as true for government issued currency as it is for bitcoins.

Take a look at either of these articles if you are still clinging to the notion that your money has real value
http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil
http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money

Re:Thank god

[Wandering Idiot]

I've already made more than the machine/electricity costs

In actual widely-accepted money, or bitcoins? Because if you haven't traded the latter in for the former, you haven't actually "made" anything. If the bitcoin market crashed completely, you'd be left with a bunch of worthless pseudo-random numbers.

Re:Thank god

[DriedClexler]

You're really going to ground your entire criticism on whether I personally have cashed out? It's not like I have enough to really move the market or anything, so it's not some kind of invalidation of the profitability of this endeavor.

Keep in mind, nothing in this was certain: when I figured it all out, I was shocked that something like this could work, and figured I must be missing something (I've certainly screwed up on amateur entrepreneurism before...). So there was definitely risk -- it wasn't free in that sense.

Re:Thank god

[Z34107]

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.

Re:Thank god

[Z34107]

Snake oil: A substance with no real medicinal value sold as a remedy for all diseases

Pyramid scheme: A system of selling goods in which agency rights are sold to an increasing number of distributors at successively lower levels

There's no hierarchy of "agency rights", and, even metaphorically, bitcoins have never been sold as "a remedy for all diseases." It's like kids don't know what words mean.

Re:Thank god

[Z34107]

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.

Re:Thank god

[tlhIngan]

By buying a haircut with bitcoins, you help shore up the value of bitcoins in everyone's wallet files.

And you'd be an idiot to spend bitcoins.

There are a fixed number of bitcoins that will ever be in circulation. This is by design. By definition, adding more people wanting bitcoin drives up its value, which means a haircut that cost 2 bitcoins will cost less in the future.

Thus, your best bet with bitcoins is to not spend it, but to hoard it, which means all you have are a bunch of people invest by mining and keeping, knowing they will go up in the future. And this is a problem - and why governments are deathly afraid of deflationary economic environments.

The fact that it's so volatile should be an indication - people come in, buy them cheap and sell 'em expensive. It's basically the stock market, except at least with stocks you hold a part of something tangible.

Someone could come up with Bitcoin2.0 and see the value of the original Bitcoin vanish overnight. In fact, once you get near the end of the mining, it'll be held completely by speculators. Hell, you can expect that there will other Bitcoin like things set up once the speculators start coming in en masse and making money (we had this during the dot-com boom - many companies created virtual currencies for microtransactions. All folded). After all, all you need is some code and a website.

Hell, Bitcoin might very well be the IT industry's $cientology. It too was created by an awful sci-fi author and got tons of people believing in it.

Re:Thank god

[mandark1967]

Great topic, I concur! I've got one dedicated mining rig with two 6870's. I'm getting more than 300Mhash a card, but that's tweaks I can't talk about. :)

Listen pal, I'm talking to you as a friend here.

You need to get out and mine for some pussy instead. I realize the odds are just as bad but you never know when you run into some gal just on the edge of alcohol poisoning and you might end up with a little something... At most it'll cost you $100 (plus the antibiotics a few days later) which is a lot less than a pair of 5870s and SSD drives and all that bitmining kit.

And you never know. It's how I met my wife 21 years ago.

(Hey, I'm just kidding, hon. Having a little fun with the slashdot fellas. I realize I was the one on the verge of alcohol poisoning and you were the one trying to empty my wallet while I was passed out.)

Hell, that's how I met your wife last night.

Re:Thank god

[shawn(at)fsu]

BS! I read stories from a lot of different aggregators and the only one that talks about bitcoins AT ALL is slashdot.
I hardly think it's because of the system trying to keep the power from the people I think more likely the other sites aren't staffed with people telling us how we need to buy in to this scam. It's quite sad to see this happening to /

Re:Thank god

[beelsebob]

That may be the kind of news that one particular nerd likes (hell, probably many nerds). Other nerds are more intelligent and don't want to be spammed with shit about a pyramid scheme.

Re:Thank god

[AC-x]

Yeah bitcoins definitely looks like it's suffered a bubble, but if bitcoins is used properly there is no need to "find new investors" (ala pyramid scheme) as you are principally using it as a free money transfer medium, not just as a way to make more money.

I just spent £120 on a new 5870, if it can pay for itself in bitcoins I'll be happy.

Re:Thank god

[Anonymous Coward]

near-anonymous - so not-anonymous
free - except the standard transaction fees
global - until countries start banning it
quick transactions - if by quick you mean ten minutes or more

Guess where else I can do non-anonymous, free except for small fees, global and actually quick transactions, with act? Oh right, every payment processor on the planet. If that's the only value Bitcon has, it truly is a sucker investment, though I can see some crazy Randian types clinging to it serious investors & merchants will never appear.

Re:Thank god

[FhnuZoag]

Wrong. At the end of the day, there's a cashflow. Some people make a profit, and because there is no room within the system for actual value to be created, this means that for every person that profits from mining bitcoins, there must necessarily be people that lose money to fund them. This is actually independent of the inefficiencies in the system like wasted electricity.

Re:Thank god

[PopeRatzo]

You're really going to ground your entire criticism on whether I personally have cashed out?

What better measurement is there? Nothing like direct experience.

And I guess that means the answer to his questions is that all of your profits is still in bitcoins.

See, that's how schemes like this work. The first group of bitcoin miners cashed out in 2009 and the last of you will watch their value crash to nothing. The guys that developed the mining software got paid.

Now bitcoins are not a classical Ponzi scheme - that's not my point here. It's a classical short-term bubble. You would think that news we read every day would be enough to make you lose your taste for bubbles. But human nature being what it is, it does not surprise me that the notion of "free money" endures in the hearts of certain people. According to science, there is one born every minute.

Plus, I'd feel a little better if "Satoshi Nakamoto", the inventor of bitcoins, was more than an anonymous email account.

Re:Thank god

[emt377]

Several reasons: - It is designed for rewarding early investors. It even has a built-in diminishing return per investment. - The value of bitcoins can only increase as long as there is an influx of new investors who are willing to purchase them. - 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). - Once it bursts, there will be little to no value to recover, because there are no real assets reflecting the investments.

I'm as nerdy and liberal as they come, which is exactly why I see this for what it is.

BTC isn't dependent on "an influx of new investors"; it's simply enough for the existing investors to hold currency for it to retain value. This by itself indicates it's not a pyramid scheme.

The remaining bullet points are all true for ANY investment - that doesn't make BTC a pyramid scheme. However, there's no underlying equity or real estate, which makes it pure speculation. But speculation doesn't imply pyramid scheme, except in a sort of leftie-liberal anti-capitalist polemic sense. But in a discourse where words have meanings it's not a pyramid scheme.

Re:Thank god

[Bengie]

"A country's currency is backed by the country itself. There is something real behind it."

Umm, no.. Under what law of physics does this give the USD value? None.. It's a social thing. If you took a history class in school, you should've read about the experiment where the government gave out dollars in exchange for gold. Not many people trusted the dollar back then. After a long while, people started to trust it and look where it is now.

Inflation occurs because of the lack being of backed-up. The value of the USD is falling because other people place less and less trust in it. The only thing that gives it value is trust. Like I said, it's a social thing, nothing intrinsic.

Go read up on the history of currency/money. Damn near anything can be used, so long as it's generally hard to acquire and is "safe".

Re:Thank god

[horza]

It is designed for rewarding early investors

Doesn't this describe every single business opportunity?

The value of bitcoins can only increase as long as there is an influx of new investors who are willing to purchase them.

But the idea isn't for the value of bitcoins to increase, the goal is to have something stable. The idea isn't to have investors, it is to have people that want to use it as a currency. And unlike a pyramid scheme you don't have to find new investors in order to make a profit, bitcoins can openly be traded on exchanges.

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

It will not burst as long as there are people that assign it some value. First of all it is clearly not a pyramid scheme. Secondly I can see where you are coming from but try looking at bitcoin as a currency rather than an investment vehicle.

Phillip.

Re:Thank god

[blackfrancis75]

don't invest more than you can comfortably afford to lose.

Like most here, all I've "invested" is the cost of a new, awesome graphics card bought from independent retailers.

Re:Thank god

[tehcyder]

Bitcoin is the PERFECT Slashdot topic:

Open Source Peer to peer Cryptography Computer Hardware Libertarian

THAT'S why it shows up so much. What's not to like?

That it's a totally retarded Ponzi scheme?

Re:Thank god

[tehcyder]

Now bitcoins are not a classical Ponzi scheme - that's not my point here. It's a classical short-term bubble.

That's just splitting hairs. It looks pretty much like a Ponzi scheme to me, but if you'd rather compare it to Tulip Fever or the South Sea Bubble, (with the difference that the original "inventors" knew exactly what they were doing rather than just getting caught up in the excitement of the thing) that's fine by me.

Re:Thank god

[Shrike82]

I know what he meant and I suspect that most other /. readers do too. I'm all for correct use of language and such, but the definitions you've given are somewhat narrow and I think you know it. Now, before I post my next bit, I want to make it clear - my feelings on Bitcoin are irrelevant to this post. I am neither supporting nor bashing Bitcoin here.

Another definition taken from Wikipedia (the fountain of all human knowledge don't you know):

A pyramid scheme is a non-sustainable business model that involves promising participants payment, services or ideals, primarily for enrolling other people into the scheme or training them to take part, rather than supplying any real investment or sale of products or services to the public. Pyramid schemes are a form of fraud.

I suspect tthat this kind of definition was what the AC was going for. Probably the same for snake oil. Again the limited defintion you gave is at best outdated, at worst deliberately misleading given the popular usage of the phrase "snake oil".

Re:Thank god

[horza]

Thus, your best bet with bitcoins is to not spend it, but to hoard it

Your argument defies reality. Every currency has the problem of what happens if people hoard currency. It's why we hear in the news reports about "consumer spending" all the time. The fact is much as we would all like to sit on a big pot of gold and hope it goes up in value the fact is we need goods and services to live. Plenty of people sold bitcoins at $1, at $2, at $5. They didn't 'lose' anything because it's now $14 or whatever. As for people knowing it will go up in the future, people said the same about house prices.

The fact that it's so volatile should be an indication

It's an indication that it's a small but growing market, where due to the low volume of trades single investors can still cause swings.

It's basically the stock market, except at least with stocks you hold a part of something tangible

But you don't. Due to different class shares and large institutions being preferential creditors, if a company goes bankrupt then as a private investor you end up holding a useless piece of paper. You are not totally wrong in that you could view bitcoin as yet another stock on the stock market. That is how some people treat it even though it's not the purpose of bitcoin.

Someone could come up with Bitcoin2.0 and see the value of the original Bitcoin vanish overnight

The source code is available. Why don't you try it?

In fact, once you get near the end of the mining, it'll be held completely by speculators.

I don't think you've actually thought that one through. See your previous sentence. Unless they think there will be a souvenir market for 'original' bitcoins on ebay.

Phillip.

Re:Thank god

[tehcyder]

The same arguments can be made about Gold/USD/Euro/etc.

You better bring something better to the argument.

My argument is simple: anyone who falls for the bitcoin shill game/pyramid schem/con trick is a total fucking idiot who probably shouldn't be allowed near a computer in case he electrocutes himself by sticking his dick in the power supply because he thinks it will let him jizz out electric currency.

Re:Thank god

[tehcyder]

Furthermore the value a dollar has is equal to what we collectively think it is worth. This is as true for government issued currency as it is for bitcoins.

Yes, but everyone"collectively agrees" that if I do ten hours work for you and get a hundred pounds/dollars/euros, I have cash in my pocket that I can swap for real goods in any real shop in the country. If you give me a hundred bitcoins I can't go to my local supermarket and buy food. The only use (*) of bitcoins is if you can convert them into a real currency.

On a more general level, the only reason that I don't come and steal all your bitcoins by torturing your bitcoin password out of you( or however it works) is that as a society we "collectively agree" to have enforceable laws about stealing, physical assault and so on. There's nothing "real" or "true" about those laws either. They're just man-made constructs.

(*) Outside the purchasing of child pornography or malware kits from Albania.

Re:Thank god

[tehcyder]

Comparing them to a stock market that is basically run like a big roulette game is not a great recommendation of the value of bitcoins as a viable alternative currency.

Most people would not want to put their entire salary straight into highly volatile stocks each month, they just want to know they can buy food and so on.

Re:Thank god

[tehcyder]

But I'm glad you at least admit that your criticism is ultimately coupled to rejection of a major part of capitalism, rather than some novel insight about some problem specific to Bitcoin.

And I'm glas you at least admit that your defence is ultimately coupled to an equation of high risk stock investments with bitcoins, rather than some novel means of producing an alternative currency.

Re:Thank god

[tehcyder]

It is designed for rewarding early investors

Doesn't this describe every single business opportunity?

Having a currency isn't a "business opportunity". When I get paid this week, I don't want the excitement of knowing that my bank balance may buy me either a Ferrari or half a loaf of bread depending on how the market is going.

Any excess/savings that I invest in business opportunities is a diferent matter, as with gambling I just put in what I can afford to lose. But I thought bitcoins were supposed to be about establishing an alternative currency, not making a quick buck? Oh silly me.

Re:Thank god

[tehcyder]

F@H will not pay my bills like bitcoin does.... So there is no wasted GPU cycles....

The rest of the world might disagree with your estimation of when something is a waste.

Re:Thank god

[zevans]

That's right. Making money is much more important than saving lives. Oh yes.

Re:Thank god

[PhreakOfTime]

You're really going to ground your entire criticism on whether I personally have cashed out?

Yes. Because this is just about the first lessons learned by anyone who has ever traded a financial instrument of some sort. There is even a easy to remember phrase associated with the idea;
If you don't take your profits, someone else will

Re:Thank god

[Yunzil]

I was shocked that something like this could work, and figured I must be missing something

It can't and you are.

Re:Thank god

[Yunzil]

But that doesn't make it any more of a "con" or a "pyramid scheme" than, say, Timucua scrip [yolasite.com].

Actually, yes it does.

Re:Thank god

[arth1]

Like most here, all I've "invested" is the cost of a new, awesome graphics card bought from independent retailers.

You've invested neither time nor electricity?

Re:Thank god

[blackfrancis75]

The time it takes to kick off a command on the console?
I have a Watt-Meter on my PC. Power cost is negligible (especially overnight).
Sidenote: Not relevant to the 'scam' discussion - or is it the evil BTC overlord's aim to lure me into buying a GPU, wasting my time, or consuming power?

Re:Thank god

[pdbaby]

Just dipping in here but I think the poster's point was not that a Dollar has inherent value, but that a large government with a lot of power is prepared to enforce the use of the Dollar for the payment of all debts within the borders of its country. Personally (and this isn't very extensively thought out because I don't really care about this topic in the grand scheme of things) I don't know how useful something like Gold is as a currency - yes, it has some inherent value for manufacturing but if the global economy crashes (which seems to be the argument of people who want to use gold for everything) then surely crops and livestock are what people will want to trade for? And Gold isn't that useful in creating ploughs...

Re:Thank god

[this great guy]

Thus, your best bet with bitcoins is to not spend it, but to hoard it, which means all you have are a bunch of people invest by mining and keeping, knowing they will go up in the future. And this is a problem - and why governments are deathly afraid of deflationary economic environments.

This argument does not work. In fact you can use it against either inflationary or deflationary economics:

• Inflation entices sellers to sell later (but buyers to buy now).
• Deflation entices buyers to buy later (but sellers to sell now).

In reality they have equivalent positive and negative effects.

Re:Thank god

[johnwbyrd]

God save us from programmers pretending to be economists.

Bitcoin is not a proven store of value. The tech is less than three years old. All the other stores of value have ages in millennia.

Timucua scrip is backed by world reserve currency. Bitcoin isn't.

There are people who have dedicated their lives to studying economics. You haven't. You are spamming Wikipedia links as evidence for your attempts to increase the value of Bitcoin. You are trying to make money by spreading incomplete and incorrect information. That is Evil. Stop immediately.

Re:Thank god

[arth1]

Sidenote: Not relevant to the 'scam' discussion - or is it the evil BTC overlord's aim to lure me into buying a GPU, wasting my time, or consuming power?

It's in their interest to get you to spend time advocating Bitcoin and drive the prices up. They hold a lot more Bitcoins than you do, and even a modest price increase means lots of money for them.

Re:Thank god

[makomk]

Inflation entices sellers to sell later (but buyers to buy now).

Only if the sellers can't find something to invest their money in that'd give a better return than simply sitting on their goods. That's incredibly unusual, especially as many goods actually depreciate in value if you hold onto them. If you think about it, there's basically no-one that only sells stuff - businesses have capital and raw material and wage expenses, they're looking to expand into new markets and come up with more efficient ways of doing things, etc...

Re:Thank god

[DriedClexler]

Why not, and what did I? I've made a profit. Sorry.

Re:Thank god

[DriedClexler]

And you'd be an idiot to spend bitcoins.

And you'd be an idiot to stay on topic and reply to the actual arguments I made, because every refutation you attempt ends up to be fundamentally wrong.

Which, I guess, is why you changed topics ... again.

Re:Thank god

[Bengie]

Yes, the stock market, or rather capitalism is pyramid based gambling too. It's just less so than Bitcon, due to multiple reasons:
The majority of companies having actual assets.
The majority of companies paying out dividends.
Companies you invest in differ - some are unique.

Bitcoin is like a stock market with a single stock, for a company with no assets, and paying no dividends. Would you rush to pour your money into that?

1) Assets that hold no intrinsic value outside of what some people are willing to pay for with money, which also has no intrinsic value
2) They pay people dividends of play money called USD/Euro/etc, which has no intrinsic value

First off, BitCoin isn't a stock. Some people are treating it like a stock, but you can do that with ANY currency.

Other objects used as money in the past: Corn, beads, shells, boulders, tabaco, wheat, barley, small rocks, cigarettes, and lots of other things.

Anything that can't be easily created and other people are willing to trade services and/or items for, is valid money.

Re:Thank god

[makomk]

Assets that hold no intrinsic value outside of what some people are willing to pay for with money, which also has no intrinsic value

That's fairly obviously not true in general. For example, a bicycle factory has intrinsic value because you can use it to build bicycles, and the bicycles have intrinsic value because you can use them to get places. Likewise, a design for a microprocessor has value because you can build microprocessors from it which can be used in all sorts of applications that need one.

They pay people dividends of play money called USD/Euro/etc, which has no intrinsic value

Kind of. The money is obviously only worth something if other people will accept it, but in a sense it's just a convenient way of distributing the actual value the company created by taking some assets and making use of them in a productive way to shareholders.

First off, BitCoin isn't a stock.

For some reason, Bitcoin supporters keep on comparing it to one in order to justify its legitimacy, though. Probably because it really doesn't act like a currency at all.

folding@home etc

[jaymz2k4]

With all that computation power being used I can't help but think about projects like Folding@Home and think it's a bit wasted on the sort of margins you'd be getting back - even at the optimistic high end (which don't factor in power costs).

Re:folding@home etc

[Anonymous Coward]

Well, maybe bitcoin will open people's eyes to the amazing computational power of their GPUs, while encouraging graphics companies to make their graphic processors more general purpose so people can easily exploit them. Go look at the linux source code for one of the GPU mining programs. The program that does the hashes on the GPU is shockingly small and easy to understand, A whole generation of hackers are being introduced to dirt-cheap parallel processing. Isn't that virtue enough?

Re:folding@home etc

[Vigile]

We did a follow up based on finding out how much it costs to run these Bitcoin operations and looked at retail energy prices across the US! I think the results are a big hindrance for mining... http://www.pcper.com/reviews/Graphics-Cards/Bitcoin-Mining-Update-Power-Usage-Costs-Across-United-States

Re:folding@home etc

[Shaterri]

Strange, then, that the 'bitcoin isn't worth the energy it's minted on!' article isn't the one that made Slashdot headlines...

Re:folding@home etc

[brim4brim]

Exactly what I was thinking ever since I heard of the idea although I stopped contributing to F@H since losing my job although my computer isn't that big a loss :P

Re:folding@home etc

[Trogre]

That's what bugs me about Bitcoin. Perfectly good CPUs and GPUs that people are willing to run at full pelt are wasted. Instead of contributing something useful to society (like with F@H as you mentioned), these processors are participating in nothing more than a lottery.

Re:folding@home etc

[Pentium100]

If I run F@H or other distributed computing software on the GPU I waste power and get nothing in return. For now, at least, it seems that bitcoin mining can at least pay for the electricity (and I get to play with new hardware and think about how I can use the CPU/RAM/hard drives of the computer that is mining and pays for its power, since mining only uses the GPUs).

If I see that mining no longer pays for the electricity, I'll shut down that PC, place the video card in my main PC and will enjoy better graphics in games (and GPU based video encoding/decoding).

Re:folding@home etc

[Trogre]

My point wasn't so much about what you directly get in return, but the potential benefits to society, through better understanding of protein folding.

Re:folding@home etc

[BeanThere]

Mining right now definitely costs more in energy than the value of the bitcoins generated, yes. And yet still people are mining more than ever. I presume that means one (or more) of several things:
1. People expect the bitcoin price to go much higher later, than the current price of electricity to generate a bitcoin
2. People can't do basic math
3. People are too lazy to do the math
4. People are mining for fun, at an expense
5. People expect all currencies other than bitcoins to devalue
6. A sizable portion of people may be mining on excess low-marginal-cost capacity e.g. solar
7. Miners are shifting costs onto unsuspecting victims, e.g. IT admin mining on university lab computers or corporate desktops, or a teenager letting their folks pay the energy bill
8. Some miners are focused in countries with low electricity costs (though I suspect the current differential makes all countries unprofitable to mine)
9. GPU vendors are putting their Kool Aid in the water supply
10. ??

Re:folding@home etc

[ShakaUVM]

>>We did a follow up based on finding out how much it costs to run these Bitcoin operations

This should have been obvious after that one story about the guy running up a four digit power bill in order to mine a handful of bitcoins.

Re:folding@home etc

[ElGanzoLoco]

11. Profit!
12. People are using bitcoins to fund illegal online purchases, and are willing to accept the extra cost to obtain "black-market", untraceable currency. After all, mafias are willing to declare revenue on empty restaurants/hotels as a way to launder money.

Re:folding@home etc

[gparent]

No, it's because people like you don't read the actual article and people like the GP spout off bullshit. It's only costly if you use a Nvidia GPU or your CPU. If you're using an ATI videocard, you're going to make money in the end.

People have done the math already; the people from pcper.com are definitely not the first ones to do so. And yes, including power draw per GH and what not. There's a net gain right now.

Re:folding@home etc

[seanadams.com]

It isn't supposed to be. It's not a store of energy. The energy cost is there to enforce the scarcity of the currency. Like gold, to get more you have to expend energy to mine it. Contrast US dollars which can be instantiated by the trillion with a few keystrokes. Yes the miners are presently being irrational (or stealing electricity) but they aren't going to keep losing money at it forever. If the price of bitcoins does not rise to parity with the energy input then mining activity will decrease - exactly the way the mining of anything is done.

Re:folding@home etc

[BeanThere]

Kooool Aiiid ...

Here's the thing, it was profitable until about a month ago. I have actually done the math, and I have followed the prices very closely. Around the beginning of May, there was a huge increase in the number of miners that joined the system. For a while, the average BTC price tracked the average energy costs very closely ... until the mini-bubble peaked, mtgox.com was hacked, and a few other negative bits of news broke (e.g. senator announcing he was going after bitcoin, allinvain got robbed, and wallet.dat stealing malware came out). The the price tanked WELL below production cost, and then restabilized at slightly below production cost. However, all through all of this, the number of miners joining the system has just continued to increase.

Then finally, you don't also need to cover your marginal operating costs (energy) - you actually need to recover your capex costs. If your mommy and daddy bought you a nice machine with a fast GPU, or you bought one for some other purpose anyway like gaming, then you don't need to worry about that cost, but purchasing for mining right now? You'd be crazy or stupid.

Re:folding@home etc

[BeanThere]

A few other things not factored in: Bitcoin market volatility. Number of miners will continue to grow (as many miners will indeed just run at a loss, due to the reasons in the list I've mentioned). Energy cost inflation. Hardware failures. The number of new BTC's generated will shrink over time. The cost of the computer around the video card. Your time. Market risk (e.g. bitcoin might get banned). The only way you might make money is if you happen to live in a place with cheap electricity and mine in bulk (but then there are scale costs e.g. facility costs, cooling, electricity infrastructure) .. very very risky. If you're not mining in scale, then you're unlikely to be making much anyway. Sorry, unless you got in early, BTC mining is mostly just idle entertainment for people with disposable income. But good luck and all the best if you're mining.

Re:folding@home etc

[black soap]

Now what if someone finds a way to get useful information out of the calculations everyone is doing? A mathematical transform that turns the product of the calculation into something useful?

Misleading Article

[OverlordQ]

Given that the difficulty increases exponentially you're not going to be making their calculated B$/day for the whole year, so while the quickest to pay of is 70 days if the difficulty increases at the usual rate, you'd probably want to add on another month or two.

For the ones taking nearly half a year to pay off at the current rate, you'll probably spend closer to a year before you'll even break even.

Re:Misleading Article

[cheater512]

But the value of a Bitcoin can vary with the difficulty. Right now its about 1 B$ = 14 USD but if the difficulty doubled the value could double to 28 USD.

Re:Misleading Article

[Anonymous Coward]

According to that graph, difficulty is doubling every ~50 days. That means that if a card takes 70 days to pay off at current rates, it will *never* payoff at time-discounted rates.

That's exactly what you'd expect, of course. In efficient economy, the value of non-productive activity is equal to 0.

Re:Misleading Article

[Anonymous Coward]

No, the exchange rate of Bitcoins varies with the supply and demand, which has nothing to do with difficulty. Difficulty exists to keep the rate of new Bitcoin creation constant. If what you were claiming was true, then the exchange rate should've doubled since hit $30, since difficulty has more than doubled since then; however, the exchange rate has actually halved.

Re:Misleading Article

[DriedClexler]

I thought the same way, back in the good ol' days (March of this year...). I figured that the increase in difficulty would kill my profits, but a while later it turned out that the dollar price of bitcoins increased right in step with the difficulty so that the dollar return each day stayed roughly constant. (On 1.6 GHash/s, it hovered around $40/day despite huge increases in difficulty.) This persisted until about a few weeks ago, when it seemed to stick around $14/BTC.

I agree that it's less certain that this relationship will hold in the future, as more professional, optimized mining farms come online, but you're right that there's significant danger in assuming a constant difficulty or BTC value. But then, the risk goes both ways -- if bitcoins catch their "big break" and make it mainstream, the value can go up (again) faster than the difficulty.

So, if you're in it for the money, just be aware of how highly speculative this is. Don't pull a Rick Falkvinge and put all your savings in bitcoins, that's for damn sure.

Re:Misleading Article

[Anonymous Coward]

No it didn't. One exchange was hacked and things in their database got all screwy for a little while. MtGox is not the sole arbiter of what people think a Bitcoin is worth.

Re:Misleading Article

[Mike Buddha]

The hacking is not what caused the the price to tank. The sell off was spurred by their moronic decision to shut the exchange off when they noticed a large sale of stolen coins.

Re:Misleading Article

[Kjella]

But then, the risk goes both ways -- if bitcoins catch their "big break" and make it mainstream, the value can go up (again) faster than the difficulty.

Except that it's all a bunch of guys sitting around saying "Pretty please start using our money, we've now printed trillions of monopoly money but are ready to sell you a hundred dollar bill" - you have to be pretty stupid to realize you will get screwed. And the longer it goes on and the less coins - compared to all the "old money" - you get, the harder you'll be screwed. Unless you can find a bigger sucker and get out in time. Pyramid schemes look good too, until the bottom falls out.

Re:Misleading Article

[Archangel Michael]

OR, the alternative is to buy bitcoins on the market and watch their value go up exponentially as the difficulty rises and the idiots spend 1700 on a rig that will break even in 5 months. Take that same 1700 and put it into bitcoins NOW and if the market is as the guys spending the $ on computers to mine it is really accurate, in 4 months the value of the bit coins will be greater than 1700, and you'll already be ahead of the game.

I'm not a "math" guy, I'm just quick with figuring the odds (poker) and I can see that I would much rather put 1700 in bit coins than in a computer to mine them, at current expectations of those putting 1700 into rigs to mine bitcoins.

Now bring in leverage (real money loans to buy Bitcoins) speculating on ever increasing value and you begin to see where the real danger lies. Can anyone say "Bubble"??

Deflationary currency (such as Bitcoin) has inherent problems that most people have never seen, and are totally unprepared for.

Re:Misleading Article

[Anonymous Coward]

It has never fallen to 0. There was a hack at one of the exchanges that made it look like 0, temporarily, but those weren't real prices.

Re:Misleading Article

[Feinu]

Yes, the exchange rate varies with supply and demand, but the supply and demand is in turn affected by difficulty. Difficulty increases as a response to increased overall demand (overall mining rate), and it serves as a means to make supply grow slower than demand. In addition, an increase in difficulty makes it less energy efficient to mine bitcoins, which increases the demand to buy it with conventional money.

This by no means implies that a doubling in difficulty will result in a price doubling. Supply and demand is affected by much more than just difficulty, which is why we see market variations such as the $30 peak and the subsequent crash and drop in volatility.

Re:Misleading Article

[drinkypoo]

OR, the alternative is to buy bitcoins on the market and watch their value go up exponentially as the difficulty rises and the idiots spend 1700 on a rig that will break even in 5 months.

If your goal is to get the computer for free then it seems a bit brilliant if you know for sure you can sell your bitcoin.

Deflationary currency (such as Bitcoin) has inherent problems that most people have never seen, and are totally unprepared for.

All currency should have built-in devaluation to prevent hoarding. Trickle-down economics only work when money is in motion, employing people.

Re:Misleading Article

[tehcyder]

Isn't the real point that the primary purpose of a currency is to help actual economic activity, not provide an alternative market to gamble on?

The fact that people do make/lose money on international currency speculation has nothiing to do with how people decide to invest real money in business, savings or whatever.

Re:Misleading Article

[makomk]

By the way, you do know the coins weren't just stolen from some random rich account holder like Mt Gox originally claimed, right? They were essentially created from thin air by a hacker that'd gained write access to the DB. If they hadn't shut things down promptly it's likely they'd have ended up not actually having enough real bitcoins to cover everyone's bitcoin balances; that's also why they insisted on rolling back the trades.

This was obvious for a while because half a million bitcoins were sold and based on examining the public record in the blockchain they didn't seem to actually have that many, but they did admit it in the end. It's fairly clear they must've known all along too; there's no way they could honestly have claimed that it was just a single account's bitcoins that were stolen and that they had enough bitcoins to cover their deposits.

Why should we care?

[Anonymous Coward]

Other than being a decent applied cryptography experiment, BitCoin has no real use in the real world. It isn't anonymous, it isn't backed by anyone that matters. The currency is too unstable to trust for anything. Its architecture gives a lot more power to people who come on early, and whom likely are going to cash out if people catch on.

I'd rather hear about an Amiga emulator, checkered ball spinning while formatting an 880K floppy disk running on the nVidia hardware than yet another BitCoin article, because BitCoin reminds me a lot of the old MAKE.MONEY.FAST posts of yore.

Re:Why should we care?

[mysidia]

Other than being a decent applied cryptography experiment, BitCoin has no real use in the real world. It isn't anonymous, it isn't backed by anyone that matters. The currency is too unstable to trust for anything. Its architecture gives a lot more power to people who come on early, and whom likely are going to cash out if people catch on.

More power to people who come early.... sounds a lot like the domain name system....

Speaking of which, perhaps Bitcoin transactions could be used to facilitate a replacement for hierarchical DNS, due to the public and forever verifiable nature of Bitcoin transactions, you have a distributed database much like DNS, that is also peer-to-peer and universally verifiable, a technology like Bitcoin would always be able to "prove" who asked to register for a name first, and if a bitcoin transaction was required for it to happen, the registration action be free, abuse/squatting would be self-limiting, "expiration" after X years of registration would not be required, and it could be made impossible for a central authority to revoke a name registration based on "legal" demands, DMCA, etc....

Re:Why should we care?

[drooling-dog]

Bitcoin has one characteristic that could make it desirable and useful. It is a non-inflatable currency.

It's deflatable as hell, though. Not sure why anyone would think it was a good idea for a growing economy.

Re:Why should we care?

[fuzzyfuzzyfungus]

Strictly speaking, Bitcoins are only kind of non-inflatable:

Each bitcoin is mathematically verifiable, so you can't just print a duplicate or 10,000 duplicates, and each chain yields only a finite number of them(presumably a slowly-shrinking pool; because some will be lost to bit-rot over time).

However, there isn't any particular reason why you couldn't start additional chains. The products of such would be distinguishable as children of different chains that the original bitcoins(just as many bills/coins have their year and origin printed on them, only cryptographically verifiable).

With the sole advantage of cryptographic security(which is certainly a nice feature) "Bitcoins are non-inflatable" is true in the same sense that "Dollars printed in 1988 are non-inflatable".

Re:Why should we care?

[SilentChasm]

Speaking of which, perhaps Bitcoin transactions could be used to facilitate a replacement for hierarchical DNS, due to the public and forever verifiable nature of Bitcoin transactions, you have a distributed database much like DNS, that is also peer-to-peer and universally verifiable, a technology like Bitcoin would always be able to "prove" who asked to register for a name first, and if a bitcoin transaction was required for it to happen, the registration action be free, abuse/squatting would be self-limiting, "expiration" after X years of registration would not be required, and it could be made impossible for a central authority to revoke a name registration based on "legal" demands, DMCA, etc....

Namecoin

Looking at that, it looks like it could actually work if adopted. They've got most of the basics down as far as I can tell, and what they really need now is user-friendly interfaces (currently CLI only).

Re:Why should we care?

[fireteller2]

Interestingly bitcoin is working despite all the arguments for or against it. The only valid question with regard to the viability of bitcoin as a currency today, is "Is it a currency today?" and the answer is without question YES.

Aside from the uses, for which there are now many (I have personally paid for survives, from freelancers around the world with bitcoin), approximately 7200 new bitcoins are introduced into the supply every day, and yet the value of the bitcoins has be rising over the past months. Even lately with the price off it's highs the constant influx of new bitcoins is not causing the bitcoin to lose significant value.

Fairness of early adopters doesn't enter into it. Early adopters helped to lay the foundation of the security which backs bitcoins, and were compensated for that service. You can participate and be compensated for that service too.

I would love to have been an Apple stock, gold or even U.S. dollar early adopter. But just because I wasn't doesn't me I should adopt now.

If you don't like the idea of it as a currency, or a commodity, then just think of it as a software tool that allows you to move money electronically without friction (unlike any other monetary device in the world), and therein you will find it's value.

Re:Why should we care?

[DanTheManMS]

As they mentioned, Namecoin is still in its infancy but serves exactly that purpose. There's even one (maybe two) Bitcoin/Namecoin exchange sites out there. Right now there's a fee to register domains, to discourage initial domain squatting, and those coins are lost forever into the ether, but that fee will eventually dwindle down to zero (no clue what the timeframe is though).

Re:Why should we care?

[fuzzyfuzzyfungus]

They would indeed be incompatible(and would, conceivably, trade at floating values against one another, forint style). My point was merely that while cryptographic currencies have the advantage of being essentially unforgeable(unlike, say, 1988 dollars, which the US Mint could conceivably print more of, if people started responding to inflationary pressures by valuing older bills more and only paying taxes in the new ones); but that there would be no particular obstacle to running any arbitrary number of Bitcoin chains concurrently(it might bloat the clients by a few hundred K; but who cares?). There is nothing magic about the starting constants of "the" bitcoin chain. If you wanted an inflationary policy in the world of bitcoins, you could just initiate new roots. Because individual bitcoins are cryptographically identifiable, you could not use the new roots to forge coins purporting to be from old ones, and so you couldn't easily force people to accept them; but you can have as many Bitcoin v. Ns as you wish to compute.

Re:Why should we care?

[Kjella]

Bitcoins is still far more speculative than the worst of the dotcom stocks, that it has a small market where other speculators will work or provide services for bitcoins - or simply to "prove" they're not worthless - doesn't make it a currency. That imaginary value will disappear in an instant when the bubble bursts. I don't claim to predict when or how it'll happen, but it will. Though I suppose if you can time it correctly, you can turn into a millionaire like many of the dotcom founders...

Re:Why should we care?

[arth1]

Bitcoin has one characteristic that could make it desirable and useful. It is a non-inflatable currency. There is no central bank that can manipulate the currency by printing large amounts of it for their friends

Oh, but it does. The Bitcoin is useless without a transaction, and nothing prevents the hubs from rejecting new coins from enemies and only accepting them from friends, or a combination of adding a transaction fee to non-friend transactions while at the same time moving the decimal point of the smallest legal transaction. The latter has already happened once.

Re:Why should we care?

[hedwards]

It's a pump and dump scam and it's mostly a matter of the number of suckers out there that still don't realize that it's just a scam. It will eventually tank, the only question is when.

Re:Why should we care?

[arth1]

Interestingly bitcoin is working despite all the arguments for or against it.

So did Bernard Madoff Investment Securities LLC and StockGeneration. Until they stopped working, when enough people heard the child commenting on the emperor's wardrobe malfunction that it no longer could be ignored.

I think schemes like these are a good thing. It is evolution in practice -- those who can't adapt to new schemes and avoid being suckered are the ultimate losers, and they're selected against. And I get the satisfaction of saying "told you so" a year or two later. It won't make me friends, but it will make me feel better.

Re:Why should we care?

[fireteller2]

Bitcoin is not a scam. Have you reviewed the while paper, or the source code? I have. I cannot find a flaw not that I'm anyone important. More importantly I can't find anyone else who can find one either. Not one person mind you. Much less an intention to defraud people.

Oh sure I can find people who haven't even read the FAQ spout volumes about what's wrong with it. But I can't find a single knowledgeable person who can find a single real world flaw.

So now, would you now kindly explain what emperor's wardrobe you are referring too with regard to bitcoin. I actually want to know what's wrong with it. I've been working on that problem for a while.

Re:Why should we care?

[Jeremi]

Too bad Bitcoin will always have a demand imbalance compared to currencies that can be used to pay taxes.

OTOH, to the extent that Bitcoin can act as way for people to avoid paying taxes, it might just as easily become more valued instead.

Re:Why should we care?

[Nursie]

True.

If bitcoin does really take off as a currency, expect governments to become very interested in this, all of a sudden.

Re:Why should we care?

[fireteller2]

"The original players are able to mine coins quite easily while people coming on later will be hard pressed to mine coins, and eventually newcomers won't be able to."

This is not accurate. The difficulty is the same for everyone, it is hard now for everyone, it was easier before for everyone. There are more ways to make bitcoin then mining it. New miners are not "punished" any more then no buyers of a popular stock.

"Money for nothing for the early adopters, while the newcomers coming to BitCoin having to exchange real goods for the currency. Sounds great for currency speculation, and I'm sure that once the currency gets enough suckers^Wpeople coming in, the early adopters can just dump their holdings and cash out."

This is true of any stock. Early adopters may "cash out", though early adopters are people who are the most passionate about it and firmly believe it will become much more valuable. Nevertheless, so what? Who cares if they cash out? Who cares if Steve Jobs sells all his apple stock? Will it reduce the value of the market, a little sure. Will it make using bitcoins less easy in transactions on the internet? No. The system has value independent of the exchange rate.

Don't speculate on the future value of bitcoin. Use it for what it's useful for.

It's not a Ponzi scheme, you really need to do better research.

Re:Why should we care?

[coldsalmon]

I am immensely interested in BitCoin in terms of group psychology and markets. It is useless as a currency, but it is a completely fascinating make-believe market in which people are losing real dollars.

Re:Why should we care?

[Shrike82]

If you want a list of the problems people see with Bitcoin then I suggest you have a look around this thread. There are dozens of recuring criticisms that people bring up and I see the same rebuttals every time, almost as if they're quoting from an FAQ or something. I have no particularly strong feelings about Bitcoin, but I can totally see where the criticisms come from. Botcoin is justified by an argument that "money is only as valuable as people make it" or similar. It requires a degree of faith and willingness to accept paper notes or digital coins as having some value. The major criticism that I can see is that a lot of people are not willing to accept Bitcoin on faith, wouldn't accept a white paper or a cryptography algorithm as proof that the bubble won't burst and than the backing of a government does carry a lot more weight than promises that is cryptographically secure (until we get quantum computing as admitted by the originator).

Re:Why should we care?

[betterunixthanunix]

Bitcoin is not a way to avoid paying taxes, at least not in the United States. Here, you are obligated to pay taxes on barter (which is what a Bitcoin sale amounts to), and failing to do so would be considered tax evasion. Those taxes you are required to pay can only legally be paid in USD, so you can't really avoid anything -- even if you use Bitcoin for all your day-to-day expenses, you would still need to get dollars at some point, or face property seizure and imprisonment.

Yes, you could lie and pretend to have no used Bitcoin at all. People lie on their taxes all the time. People also get caught in audits, and if they lie on their taxes they get in a lot of trouble. Good luck convincing the IRS that you bought your house for $1.

Finally, a lot of businesses take out loans as part of their normal operation (small, medium, and large businesses all do this). Those businesses must repay their loans, and in the United States (and many other countries) that is generally going to require government issued currency. Although a bank could conceivably issue a Bitcoin loan, it would be a monumentally stupid thing to do (Bitcoin has high volatility and has undergone significant deflation, both of which make loans very risky), and the banks are not doing it. Consequently, those businesses must find government issued currency, and even if they accept Bitcoin as payment they will be forced to sell those Bitcoins for another currency, creating even more of an imbalance in demand.

I get it

[melikamp]

So now it induces nerds to stock op on GPU hardware? I get it! BitCoin is not currency at all, is just a new game genre: MMOM (pronounced like "mom"), Massively Multiplayer Online Money. The hottest MMOM in town. Spread the word.

Re:I get it

[melikamp]

You had me at "two racks".

Re:I get it

[Dunbal]

Makes no economic sense. If you are "cashing out" of bitcoins, presumably you are taking a profit and leaving someone else with a loss. If the only way to realize your profit with bitcoins is to cash out, everyone who is mining for profit is taking equity out of the system. What happens when everyone decides to cash out at the same time? Oh, it already happened recently...

Re:I get it

[Billly Gates]

Replace bitcoin with housing, gold, or oil in your post? It is no different, heck most stocks dont even pay dividends anymore. People get rich as well as start great recessions and depressions. If the price keeps going up your 14 coins will be worth twice as much. Until wages and jobs reapoear people will try anything to get a buck.

Re:I get it

[Dunbal]

Oil can be burned for energy. Gold is always in demand as a means of exchange, is a de facto symbol of wealth and is used in jewelry and has great use in electronics. Housing has a purpose - shelter. Tell me again what the point of bitcoin is, apart from greed? Even something as silly as a US dollar has more point to it than bitcoin - because people do not acquire US dollars with the intention of dumping their US dollars as soon as some exchange rate reaches a pre-determined level. They see US dollars as a store of value and a means of exchange, not a means of wealth acquisition.

People who are mining bitcoins have the SOLE INTENTION of dumping their bitcoins at some time in the future. They far outnumber people who use bitcoin for everyday trade. Therefore the collapse of the bubble is built in to the inflation of the bubble. The minute sellers > buyers, the price will go down. And the minute the price goes down, everyone who was counting on an ever inflating price is going to panic and try to cash out right away. In fact this has already happened.

Re:I get it

[SpiralSpirit]

most people trading futures in oil, gold, etc never take delivery of any product, never burn oil, and never cast gold into anything. Aside from driving up the price, and creating a lot of paperwork, they never deal in the actual commodities. Their papers are empty promises of buy and sell that are sold on mutual agreement that eventually SOMEONE will actually accept it. and eventually, someone will.

Re:I get it

[Billly Gates]

Agreed, and to answer Dunbai, look up this. People do bet agaisnt currencies with the purpose of getting even MORE MONEY. This man is well hated on Fox news and the Hannity show as someone who bets agaisnt' American and foreign curreinces by shorting it in strange tradings. So yes dollars are being manipulated and traded upon as well in financial products.

I agree with Dunbals postings as it is now gambling rather than investing, but I need money as do many others. Stock market may crash if Moody downgrades the US bond rating. My savings account pays .01% interest! Where do I go next? Bitcoins is the next wave. I personally wont invest in it as I missed the opportunities if I ran my FreeBSD partition and 8 months ago and could have generated a couple hundred dollars of free money.

If real jobs come in with affordab;e gas, housing, and lower debts then I wont have to look into such strange ways to generate income. But everyone else is doing it which means if you are there first you can cash in and make $$$. In Florida I knew people who made $300,000 and are set for retirement just from flipping houses before they were even finished being made. They stopped when it look overheated. Wouldn't you want tha kind of money?

If jobs come back to the US then I think people will act more sensibly. In these times people will always try to make a buck. I laughed at the lawyer copyrighting bitcoins when his wife has a collection.

I do not consider it real currency at all, but an interesting investing experiment.

Re:I get it

[FhnuZoag]

Things like that are damaging and bad, and are generally fought against (to varying degrees of success) by various central authorities. The thing with bitcoins is that behaviour like that is accepted and normal and in fact regarded as the whole point of the system.

Re:I get it

[Dunbal]

But futures (your example not mine) represent an obligation to fulfill a contract for real goods at some future date. There will always be a real demand for futures besides sheer traders for profit - corporations who actually use those products, investors who need to hedge other trades, etc. Futures contracts also expire. This is what happens to all the futures that are NOT "accepted by someone". A pre-determined penalty is paid, and the contract is buried, unfulfilled.

But with bitcoin you have a cryptographic key whose exchange rate is based solely on the greed of people who acquire it with the intention of making money with it. Thus bitcoin itself has no inherent value at all. While fiat currency has no inherent value either, it is usually backed by central banks and governments with police forces, armies, real estate and other assets, and these governments usually have a vested interest in not seeing their economies fail. What is bitcoin backed by? Greedy nerds that will dump it when they believe themselves to be rich, or when they feel their "profits" are threatened. Combine this with the fact that because of the nature of the bitcoin graph (a log function), most of the bitcoins that will ever exist already exist. So if anyone is going to get filthy rich, it's not going to be you.

Re:I get it

[Shrike82]

I personally wont invest in it as I missed the opportunities if I ran my FreeBSD partition and 8 months ago and could have generated a couple hundred dollars of free money.

And that RIGHT THERE, is the problem. It is NOT free money. For you to make some money from BC someone else would have to pony up those dollars. Not free! It's at the expense of someone else who is probably hoping that their investment will make them money at yet another person's expense.

Re:I get it

[FhnuZoag]

Yes, futures have legitimate uses. But speculation in futures do have well documented distorting effects on those markets.

Slashgold?

[MikeTheGreat]

I keep wondering why do BitCoin articles keep showing up here. Any given article doesn't really seem quite nerdy enough to be real 'News For Nerds' (and yes, I agree that most of the articles here haven't been News For Nerds for a quite some time), and it's kind of a weird topic.

I kinda feel like "BitCoin articles is to Slashdot as gold advertisements is to the Fox News Network".

So I'm going to coin a term that we can add to the Slashdot Taxonomy (or the 'slashonomy', as I like to call it: :) ): Slashgold!

As in:
Random dude: "So, was the article good?"
You: "Naw, it was just another fluff piece promoting slashgold"

Re:Slashgold?

[Subura]

I hope we can all work together and tag every bit-coin article "Slashgold"

Factoring in energy costs...

[allanw]

I've always thought Bitcoin was stupid, but let's do some more analysis on the energy costs here, which this site really should have included.

The best GPU perf/watt was the 5870x2 (Ares OC) at 1.584 (Mhash/s)/watt. Not sure where they got their total watt figures from, but from a review site, it is 500W, unoverclocked. This site says it's 50W more overclocked. I'll be generous and not include this since the CPU isn't being taxed as much. So 500W power consumption.

So, typing 500 watts * 1 year * (10 cents / (kilowatt*hour)) into Google: about $482. Taking their $1,666 one year profit figure (mining profits - cost of card), it is now really a cost of $1,184. Which isn't as bad as I thought it'd be.

They didn't include the effect of increasing difficulty on decreased mining speed, but theoretically the currency should become more valuable as it goes on.

Re:Factoring in energy costs...

[allanw]

Sorry, a few typos: 500 watts -> $438 per year in energy costs, which makes for a total profit of $1,228.

Re:Factoring in energy costs...

[betterunixthanunix]

the currency should become more valuable as it goes on.

That is a bad thing. Deflation has very destructive effects on an economy.

Re:Factoring in energy costs...

[allanw]

No comment about that. I was just pointing out that profitability should theoretically be the same as time goes on. Of course, whether it does will have a huge effect on the long-time viability of bitcoin mining for profit. Even if it only lasts a few more years, you can still make 100% returns on investment in only a year which is pretty good.

Re:Factoring in energy costs...

[Anonymous Coward]

Deflation has very destructive effects on an economy.

Only if you borrow money.

Re:Factoring in energy costs...

[Pentium100]

Because those have actual physical units which can be used for various purposes. Melt down coins and build something. Use paper money as toilet paper, things to write on, fuel for fires, etc. Bitcoins...? Just seems like a progression of fiat money.

The paper of a 500EUR bill is worth so much less than the 500EUR that if you take away the paper, the value will not change.

What's preventing counterfeit bitcoins from being made? Oh, the fact that no one's cracked the algorithms used for cryptography? What happens once those are cracked?

It will be bad for bitcoin and everyone else that uses SHA256 and other cryptographic algorithms used in bitcoin (or at least those that are cracked) and bitcoin can probably be updated to use different algorithms.

How do you even prove that once the 21 million bitcoins are in circulation that it really is only 21 milion (or less given probable bitcoin loss)?

The block chain includes every transaction from the beginning and every transaction references previous transactions. Coins are generated in blocks of 50 (later it will be less), this is the first transaction for these coins. Later transactions will state that, you take some coins away from those generated (and miners will verify whether there are enough left) and transfer them to one or more addresses. Then the person who received your coins will say that he takes the coins he got from you (and maybe others) and transfers them to someone else.
Miners and clients verify whether all transactions are valid, for example, if your balance does not become negative. Then the transaction gets put in a block which will be verified by the guy who makes another block on top of this one in the chain.
For example, I can generate a block giving myself 100BTC instead of 50, however, others will not accept it and will continue the chain ignoring my block, so nobody will accept the coins that were supposed to be generated in that block.

Re:Factoring in energy costs...

[Pentium100]

Then do not use AC - use a fan to pull colder air from outside. I have one, it uses only ~60W and keeps my room ~5C warmer than outside, given that the total power consumption of my PCs is 1.5-1.7kW.

Re:Factoring in energy costs...

[Tokolosh]

This is probably not true anymore, but at some point about 2/3 of all electricity generated in the whole of Africa, was generated in South Africa. Of this, about 2/3 was used to cool gold mines.

I once had a conversation with a Texan, who bragged about how deep they drilled for oil. He was crestfallen when I told him the South Africa had people working routinely at the same depths.

Anyway, power for bitcoin mining is trivial.

Re:Factoring in energy costs...

[emt377]

So, typing 500 watts * 1 year * (10 cents / (kilowatt*hour)) into Google: about $482. Taking their $1,666 one year profit figure (mining profits - cost of card), it is now really a cost of $1,184. Which isn't as bad as I thought it'd be.

You mean it's a profit of $1182.

Problem is, $1182 is in the "hobby" domain, and not really enough to be considered an investment. If you think it's fun or interesting, do it. If not, don't bother since $1182 over a year isn't going to be worth the trouble.

To actually run it as a business, you'd deal with boxes like this by the 100s. You have real estate costs, heat to get rid of, infrastructure, and wages. (If you make $150k/yr as a senior eng or manager someplace, this is the wage you should consider since it's what you forego.) To make this doable, you'd have to locate someplace with cheap power and cheap real estate. And cheap, moderately skilled labor. (Need to be able to assemble and manage racks and racks of PCs.) You can probably save on the hardware costs as well since you can negotiate volume pricing. Personally, I'd put it in Washington.

As for someplace to spend money I think this is a minor concern. Heck, if I were to sit on a ton of BTC or run a large-scale mining operation I'd open a store myself if nobody else does. It would instantly increase the value of my hoard. This tells me once there's enough BTC out there this is going to happen.

Even if a mine isn't profitable today, it could be when combined with a retail business, and if BTC takes off you have a very valuable company. (Not a 'cashflow' business, but a 'stategic value' business.) OTOH, I suspect if you're not out there building a business this _today_ you've already missed the boat.

GUIMiner is most likely optimized for AMD cards

[robbyjo]

The performance of GPU-based codes is highly dependent on the video cards. I highly doubt the dismal performance of NVIDIA cards. I think the authors most likely optimized the kernel code to AMD cards. This is evident when you look at the CL kernel code and you see that there are so many hardwired constants and fixed arrays (aligned to 128 ints or longs). Moreover, the authors GUIMiner don't seem to take advantage of NVIDIA's more local workthreads (compared to AMD's).

I'd say that declaring AMD a victor is premature.

Re:GUIMiner is most likely optimized for AMD cards

[Anonymous Coward]

There's a simple, technical reason why AMDs GPUs are faster for Bitcoin Mining:

They can do 32 bit rotations in a single instruction while NVIDIA needs three: shift left, right and or.

Re:GUIMiner is most likely optimized for AMD cards

[jojoba_oil]

The number of instructions does not directly equate to the computing time required to perform the operations.

Re:GUIMiner is most likely optimized for AMD cards

[makomk]

I think AMD cards can pull more instructions/second on this kind of workload too; NVidia users lose out both ways.

Re:GUIMiner is most likely optimized for AMD cards

[jojoba_oil]

I think AMD cards can pull more instructions/second on this kind of workload too; NVidia users lose out both ways.

It doesn't matter how many instructions per second... Different instructions will take different numbers of CPU/GPU cycles to perform.

The AC poster would have a better point if he said something like NVidia's 3 instructions to rotate also take more GPU cycles to perform than the AMD 1-instruction equivalent. As it stands, I don't know which one uses more GPU cycles in bit rotating, nor do I know what frequency the GPUs are running at. Without knowing those, it's impossible to estimate the speed at which each GPU would rotate bits and properly compare the GPUs.

Re:GUIMiner is most likely optimized for AMD cards

[makomk]

It doesn't matter how many instructions per second... Different instructions will take different numbers of CPU/GPU cycles to perform.

All arithmetic instructions used by this code execute in a single cycle on modern AMD GPUs. (In fact, basically all their arithmetic instructions do.) That's not an entirely useful metric, because AMD GPUs are a VLIW architecture and it depends how many execution units you can saturate, but IIRC Bitcoin mining wins here too.

As it stands, I don't know which one uses more GPU cycles in bit rotating, nor do I know what frequency the GPUs are running at.

NVidia GPUs run at a higher frequency, but they're a lot less area-efficient so in the end that doesn't help them.

Re:Really?

[click2005]

Yes mostly. Your best bet at this point if would be to (in true Slashdot list style)

1. Create a rival currency.
2. Get a lot of 'miners' to jump aboard hoping to get in early enough and maximize profits.
3. Dump your hidden cache of new-bitcoins oops I mean ????
4. Disappear with your profits

Nobody cares about bitcoin

[Anonymous Coward]

Nobody cares about bitcoin. We don't give a rat's ass about bitcoin. Please stop posting stories about bitcoin. I don't know how many other ways there are to say it, but we don't give a fsck about bitcoin.

Re:Nobody cares about bitcoin

[Dunbal]

They have to keep the hype going, it's the only way to feed the bubble.

Re:Nobody cares about bitcoin

[Anonymous Coward]

I've felt the same way about Linux, "SCO", and open source for years. Who cares about that crap? But they just keep posting don't they.

Re:Nobody cares about bitcoin

[Dalambertian]

Glad you're here to speak for the rest of us, anonymous coward. As a physicist and longtime slashdotter, I've always been willing to learn about new tech. I may be young, but this is the most impressive thing I've seen FOSS do in my lifetime. Anyone who thinks bitcoin is unfair/a ponzi scheme, or whatever, then by all means release your source code - show us the "correct" way to build a new currency and I'm sure people will use it.

Re:Nobody cares about bitcoin

[arth1]

Nobody cares about bitcoin. We don't give a rat's ass about bitcoin. Please stop posting stories about bitcoin. I don't know how many other ways there are to say it, but we don't give a fsck about bitcoin.

Obviously, we do, based on the number of posts here.

I can't say why others do, but in my case it's pure schadenfreude, seeing grown men go "I want to believe!" and setting themselves up for losing their money, and inventing the weirdest explanations for why this is not a zero-sum game doomed to collapse.

In short, it's amusing to see just how many are born every minute.

Re:Nobody cares about bitcoin

[bjourne]

I care about bitcoins. It's a welcome change from the usual apple evangelism.

Re:Nobody cares about bitcoin

[pantaril]

I care about bitcoin so you are wrong. Why do you read threads about bitcoin and even post into them if you don't care about it? Personaly i don't care about frequent apple product articles but it doesn't mean i pollute discussions about them with my disaproval.

Re:Nobody cares about bitcoin

[horza]

I find it amusing all these stories about Columbus about to set sail for the New World. After all, we all know his ship is going to fall off the end the earth when he reaches the edge.

Phillip.

Re:Nobody cares about bitcoin

[arth1]

I find it amusing all these stories about Columbus about to set sail for the New World. After all, we all know his ship is going to fall off the end the earth when he reaches the edge.

He never set sail for the New World.
He didn't know where he was going, and when he got there, he didn't know where he was. Even when pointed out to him, he refused to believe it.

Yes, I see the parallels.

Re:Nobody cares about bitcoin

[Have Brain Will Rent]

Then stop reading the articles. Geez.

I'm going to issue my own Fiat currrency

[istartedi]

I'm going to issue my own Fiat currency, backed by Fiats (the automobile). I still haven't worked out how much the average Fiat should be worth. There's no real purpose in this, other than to confuse the hell out of people who think I'm issueing a fiat currency (illegal) rather than a Fiat currency (perfectly legal, AFAIK). BTW, I'm not even sure if Fiat is still making cars, and they have a repuation for being a real POS. Therefore, it shouldn't be too hard for me to fill a lot with rundown Fiats to back my currency.

Re:I'm going to issue my own Fiat currrency

[HornWumpus]

Just for a baseline I paid $400 for a 69 Fiat 850 sport convertible with a VW drive train incompetently retrofitted.

That's about -$300 value for the Fiat. The 1600 dual port and IRS trans is worth more then the car with it in it. But that's because the guy who did the install was a moron. After I rip it out and redo it (by welding the top of the Fiat to a bug pan) it will pull 1/8 mile wheelies. Maybe not with the 1600...

If I didn't live in CA the sound of rust from my driveway would keep me awake at night. I own two Italian cars bodies, no Italian drive trains.

Re:I'm going to issue my own Fiat currrency

[istartedi]

Oh noes! I've been heckled on the Internet and caught totally flat-footed. I'm dyin' up here.

Re:I'm going to issue my own Fiat currrency

[Anonymous Coward]

A Fiat currency is probably not legal either since it would be a trademark violation when capitalized...

Re:I'm going to issue my own Fiat currrency

[dbIII]

Not a bad idea to have a Fiat currency now that half of congress is trying to make the US dollar look like Lada currency.
To explain the joke, imagine a Fiat 124 knockoff made in the USSR just as that empire was falling apart. That's a Lada. They inspired jokes about heated rear windows so your hands wouldn't get cold pushing them.

Re:I'm going to issue my own Fiat currrency

[ratnerstar]

BTW, I'm not even sure if Fiat is still making cars ....

Yeah, but they're called Chryslers now.

Re:I'm going to issue my own Fiat currrency

[Type44Q]

You know what F.I.A.T. stands for, right? "Fix it again, Tony!"

Question

[geekoid]

What's to stop a large corporation with a lot of computing power to generate bitcoins? What if I have a cluster doing the work?

Re:Question

[Wesley Felter]

Nothing would stop them. They'd make money, other miners would make slightly less money, and Bitcoin would go on.

Re:Question

[Aranykai]

Assuming it was substantial enough of a cluster, it would push the difficulty of generating them even higher.

Essentially its setup so that there is a set number of them created in a given time. The more people trying to make them, the more computer power required to make one. So, if you double the amount of people trying to make coins, you also double the amount of computer time needed to make one. Thusly, the more people who join this fad, the less anyone is going to make.

Re:Question

[Anonymous Coward]

The fact that it's a waste of effort and basically just a way for older kids to "justify" GPU purchases, which are only "incidentally" to be used for Crysis 2?

Re:Question

[BeanThere]

The biggest hindrance would be that the electricity cost to generate a Bitcoin is more than the value of a Bitcoin, meaning, you'd literally make an immediate operating loss on every Bitcoin generated. And that's before you even factored in other overhead costs like the IT administrator's hours and increased MTBF and possibly cooling costs and additional accounting costs and complexity and possibly (for any sizable cluster) upgraded electricity infrastructure/capacity.

Re:Question

[geekoid]

But if Bitcoin actually took off, it would be worth it to other governments, or any large group, to spend the money if it devalues a competitors worth.

Bitcoin Mining Is Not Profitable

[geekd]

Please don't start mining Bitcoin. You will not turn a profit. It's hard work. It's no fun. Don't do it.

(the difficulty is high enough, we don't need another influx of miners)

Re:Bitcoin Mining Is Not Profitable

[Anonymous Coward]

Certainly could use an new influx of rubes to buy the coins..

Re:Bitcoin Mining Is Not Profitable

[Anonymous Coward]

Please don't start mining Bitcoin. You will not turn a profit. It's hard work. It's no fun. Don't do it.

(the difficulty is high enough, we don't need another influx of miners)

Said the bottom of the pyramid.

Re:You know how much polar bears die per bitcoin?

[Abstrackt]

It is goatse. It's always the same link or an easily recognizable variation of it.

you forgot about the power use cost

[Joe_Dragon]

you forgot about the power use cost

Re:you forgot about the power use cost

[Vigile]

Check this update out: http://www.pcper.com/reviews/Graphics-Cards/Bitcoin-Mining-Update-Power-Usage-Costs-Across-United-States

That's precisely what it is

[Sycraft-fu]

All this hype is not coincidence, and it is not because bitcoins became useful suddenly. It is people hyping it to try and get others in to the market. They want to cash out, but can't in any large amount without tanking the value. Need to get new suckers lined up.

Re:That's precisely what it is

[fireteller2]

That's a theory. I have a theory too. People who poo poo bitcoin despite it's obvious success, haven't actually done their due diligence on what it is and how it works.

Bitcoin works for me. I use it to get work done and buy things. I can do this now, I don't need you to be involved, and I don't need to "cash out."

Re:That's precisely what it is

[GrumblyStuff]

Ah, so it's like the stock market expect people can make money with it?

Wow. You just described the S&P 500

[Colin Smith]

Rival currency being share certificates.
Miners being traders leveraged to their eyeballs.

It's all a big ponzi.

FPGA compatibility?

[Fencepost]

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.

Re:FPGA compatibility?

[geekd]

People are on it: http://forum.bitcoin.org/index.php?topic=22426.0

Re:FPGA compatibility?

[allanw]

I wonder if they know that FPGA's are typically only half the online price listed if you talk to a distributor. I'm not sure what kind of minimum order quantity you need though.

Re:FPGA compatibility?

[mrand]

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?

Re:FPGA compatibility?

[ceoyoyo]

Hm. I wonder if you could pay for an FPGA dev kit by putting it to work mining bit coins, before the bottom fell out? You'd wind up with a nice toy for free.

Re:FPGA compatibility?

[makomk]

Nah, all the FPGA dev kits big enough to mine Bitcoins at a decent rate are far too expensive to make this viable as far as I can tell.

Re:FPGA compatibility?

[makomk]

Except that's a totally irrelevant metric - you can (and probably should) implement all the logic required for a Bitcoin miner on just the FPGA logic elements without even touching the special DSP slices. A very rough ballpark figure is around 75,000 LEs for a design achieving 1 hash per clock cycle, with actual usage and clock speed depending on the FPGA. I haven't synthesised a miner for Xilinx 7-series FPGAs so I can't give more exact estimates.

Re:FPGA compatibility?

[makomk]

OK. If I'm reading this timing report correctly it looks like Xilinx's tools can fit a 150 MHash/sec bitcoin miner onto the smallest Kintex-7 FPGA (the XC7K70T) without even really trying. That roughly corresponds to a slightly overclocked Radeon 5750, which isn't great, though it's probably possible to achieve better performance.

Re:FPGA compatibility?

[TeknoHog]

If you are referring something that people have already been running for a few months, you probably mean this. The modular miner thread seems to focus on raw price/performance, ignoring factors like the freedom to program the said FPGA without expensive licenses.

Re:FPGA compatibility?

[TeknoHog]

My GPUs paid for a nice FPGA devkit, after paying for themselves. If Bitcoin continues this way, the devkit may end up paying some more, as it is much more power efficient.

Fairness is irrelevant

[fireteller2]

The assertion that early adopters have an unfair amount of bitcoins is on the one hand completely irrelevant to the issues of usability, and on the other hand is completely typical of all inventions, commodities and the world in general.

This continued repetition of this idea stems from the misconception that Bitcoin is a Ponzi, pyramid or other type of scheme designed with the intent to defraud later adopters. That is not the design intent of bitcoin. It is an online medium of exchange that compensates people who improve it's security. The fact that people improved the security early on helps the security for everyone later. They got paid pennies at the time, and people who are helping now are getting paid pennies too. It has turned out that those pennies (if they kept them) have become valuable now. This is EXACTLY like being an early adopter of Apple stock, and could just as easily not have happened.

The reason bitcoin is being talked about so much is not because someone is trying to scam you and "cash out" their early adopter advantage. People are talking about it because regardless of the value of a bitcoin, it is a frictionless* way to exchange value over the internet. You needn't hold bitcoins to participate in bitcoins. You can change them to cash the second you receive them. Bitcoins are useable now. They are a currency now.

I would respectfully recommend that people who want to talk about what's wrong with bitcoin do their due diligence, before commenting on something that they clearly have little understanding of.

*frictionless means: 1) you can open a business and start excepting payments this very second anywhere in the world, with customers anywhere else in the world, (excepting money is no more difficult then paying money - try that with credit cards), 2) money you transfer to anyone in the world is instantaneous, in as little as an hour you can be 100% sure that you have received bitcoins that can never be taken away from you or reversed in any way. 3) It cost almost nothing to pay anyone any amount with bitcoins.

All of these elements provide value whither you call it currency, commodity or just software. I use it to do work, and I find that valuable to me right now. The value of bitcoins is not a theory, predictions of it's failure are what is theoretical.

Re:Fairness is irrelevant

[geekd]

^^ what he said.

If you don't mind, I'm going to use that response in the future.

Re:Fairness is irrelevant

[Animats]

stems from the misconception that Bitcoin is a Ponzi, pyramid or other type of scheme designed with the intent to defraud later adopters. That is not the design intent of bitcoin.

That wasn't the original intent. That's just how it turned out.

The concept was supposed to be that Bitcoin would be a widely used currency for micropayments. In practice, the Bitcoin world is mostly speculators and "miners"; its use as a medium of exchange is trivial.

It takes about $100,000 per day in new cash to keep up the price of Bitcoins as more are "mined". So there's considerable interest among current holders in finding new suckers before the whole thing goes bust.

Re:Fairness is irrelevant

[Nursie]

Right, the fact that any one of the early adopters sitting on a few thousand coins (or 'Satoshi' and his millions) could destroy the market in seconds, that's not an issue for you? The complete lack of stability implied by that?

An effect that can and will become worse over time as bitcoin prices rise and bitcoin generation for new entrants generates ever smaller amounts.

And that's leaving out the general idiocy of building in such a tiny limit to the currency and ensuring massive deflation over time.

Also this -

"money you transfer to anyone in the world is instantaneous, in as little as an hour..."

Is self contradictory and you know it. The value of bitcoins is a consensual delusion (like other money). Predictions of its failure are interesting, it just remains to be seen which one comes true.

Re:Fairness is irrelevant

[fireteller2]

It is a misconception that Bitcoins are good for are where ever intended to be used as micro-payments. As little as it is there are still fees involved, and although they are optional now it is a part of the design that all transactions will eventually required fees. The features of bitcoin lay elsewhere as I have discussed.

It is also a misconception that the only use of bitcoins now is as a commodity. That is increasingly less true, and soon will be the smaller part of the bitcoin economy, because of the value of using bitcoins to facilitate trade that persists regardless of the stock price.

It is true that there will be people who have interest in seeing the value of bitcoins go up. As is true of the motivations of anyone who holds stock in anything. But it is incorrect to assume that that is it's only value or that everyone who is interested in and talking about bitcoins are holding them for speculation as apposed to just using it as a tool. I use bitcoin as a tool, I don't particularly care what the exchange rate is. I exchange the appropriate amount to do what I need to do, and bitcoin makes what I need to do easier. I want more people to use bitcoin like I wan't more people to accept my debit card brand, it makes things easier for me, it does not necessarily make me any richer.

Approximately 7200 bitcoins are introduced to the supply every day, but this will slow and eventually stop, so in fact it will "turn out" quite the opposite of what you say and people will be less and less motivated to sell you bitcoins to raise the price of bitcoins, while more and more people will find the value of using them preferable to more expensive and more difficult means of online exchange.

Re:Fairness is irrelevant

[fireteller2]

Distributing a large volume of bitcoins would crash the market, but it would not remove the value of bitcoins. In fact it would spread the currency to more participants who would be naturally motivated to see the value go back up. The top 100 largest bitcoin holders could make a big impact in the markets (below that it would not be much of an impact) but they can only sell out once, and once the currency is distributed it will become increasingly stable, as it will be very difficult to cause such a crash in value again. Saturating the order book is not the same thing as making an asset worth nothing.

There is a limited amount of gold, but no one has ever had a problem seen that as a currency. The argument that bitcoins are deflationary, which is by design, is a bad thing and will at some as yet unspecified date stall the economy has yet to be compelling.

"as little as an hour" in monitory transfer terms IS instantaneous. In case it wasn't completely clear the transfer is instantaneous, it takes as little as an hour to be 100% sure that it is completely irreversible.

Predictions of it's failure are not interesting, because they are not well argued due to lack of knowledge. I would truly like to find someone who does actually understand bitcoins make a well considered argument against them. I've been trying to do that myself. However, dissipate the number of arguments I have yet to see one that is. Not one. This is of course why bitcoins hold any exchange value at all there has yet to be a compelling argument of a flaw, as soon as there is no one would buy one.

Re:Fairness is irrelevant

[ian_from_brisbane]

Also this -

"money you transfer to anyone in the world is instantaneous, in as little as an hour..."

Is self contradictory and you know it.

Not at all. You get the money instantly, but it takes "as little as an hour to confirm it to be irreversible".

Compare that to receiving credit card payments, which take 6 months to confirm it as irreversible (prior to that the buyer can do a chargeback).

Re:Fairness is irrelevant

[ceoyoyo]

"2) money you transfer to anyone in the world is instantaneous, in as little as an hour you can be 100% sure that you have received bitcoins that can never be taken away from you or reversed in any way."

As a buyer, THAT sounds just fantastic. Count ME in.

Re:Fairness is irrelevant

[Nursie]

Transfer is instantaneous, chargeback is a different phenomenon. You're talking about an hour in which you have no idea if you've just been defrauded.

And as someone that is a buyer more often than a seller, let me say this - chargeback is a feature, not a bug.

There's a reason that there are consumer protection laws on the books. doing away with them is not a useful idea.

Re:Fairness is irrelevant

[Nursie]

"There is a limited amount of gold, but no one has ever had a problem seen that as a currency."

Gold is a terrible currency!

"The argument that bitcoins are deflationary, which is by design, is a bad thing and will at some as yet unspecified date stall the economy has yet to be compelling."

Then read harder! There are lots of compelling arguments about this out there, the fact you ignore them is up to you.

Re:Fairness is irrelevant

[fireteller2]

The misunderstanding of the facts continue.

Chargebacks are not a different phenomenon, if a chargeback is applied to your transaction then it never happened, that's as directly related as I can imagine. You can't chargeback with cash and people rather appreciate that feature. Chargebacks are not a consumer benefit they are a way for fanatical institutions to avoid liability.

"You're talking about an hour in which you have no idea if you've just been defrauded." Not true we're talking about an hour in which you become increasingly sure that you have received money permanently. However this could be said of paypal or credit cards. You have no idea, some times for months, if you where defrauded.

"There's a reason that there are consumer protection laws on the books."
And there is nothing about bitcoins that causes these laws not to apply. You can always demand a refund just like you can with cash, but you cannot force a chargeback.

(Notice how every argument you present has a compelling counter argument, does it not make you just a little suspicious that perhaps you could learn a little more about the subject? I can make much better arguments against bitcoin then this, but I have yet to find one that does not have a compelling counter.)

Re:Fairness is irrelevant

[Nursie]

"You can't chargeback with cash and people rather appreciate that feature."

Merchants.

People rather like it, drop in to a thread about credit vs debit cards some day, and the superior consumer protection they provide.

Not true we're talking about an hour in which you become increasingly sure that you have received money permanently.

Yes, an hour in which you're not sure if you've been defrauded.... not sure how rewording helps here. And we've dealt with the permanent aspect.

And there is nothing about bitcoins that causes these laws not to apply. You can always demand a refund just like you can with cash, but you cannot force a chargeback.

Demanding a refund forces the vendor to be involved. Rogue traders are one of the reasons that we have chargeback. Fake goods, or goods not delivered, and a vendor that disappears into the ether, these are real phenomena. Bitcoin makes it easy, expect it to rise if bitcoin does.

Notice how every argument you present has a compelling counter argument, does it not make you just a little suspicious that perhaps you could learn a little more about the subject?

I can make much better arguments against bitcoin then[sic] this too.

Re:Fairness is irrelevant

[fireteller2]

"Gold is a terrible currency!"

Yeah, well, that's just like, your opinion, man. Got any facts to go with that?

"Then read harder! There are lots of compelling arguments about this out there, the fact you ignore them is up to you."

As far as I can tell I'm the one who's been doing the reading. Tell you what, why don't we return to this topic when deflationary stalling actually starts having an effect on Bitcoin. Then at least more then one of us will be using facts.

In fact there is very little in the way of compelling arguments with respect to deflation of bitcoin. It was designed to work as a "scarce commodity," much like gold, and gold is still a medium of exchange the world over, while it continues to gain in value as it always has. There are very few real world examples of catastrophic deflation. In every example I'm aware of there was no real alternative to trade in a fixed geographic area so with no alternative way then the deflationary currency to transmit value the economy stalled. Also a primary factor was the indivisibility of the currency. These are not the case with bitcoin, it is divisible, and it is not the only medium of exchange in any geographic area, so someone needs to argue a different mechanism by which bitcoin's become useless (i.e. no value) by becoming increasingly highly valued. No one has done so. The fact you find those arguments compelling points to your lack of understanding of bitcoin.

Re:Fairness is irrelevant

[Nursie]

Yes, that's right, gold always appreciates, always. Just put all your money into gold, you can't possibly lose!

*facepalm*

Re:Fairness is irrelevant

[fireteller2]

"Merchants."
I am not a merchant, I do not want people to be able to pull back money they have given me. And interestingly enough it's hard for me to accept credit cards too.

"Yes, an hour in which you're not sure if you've been defrauded.... not sure how rewording helps here"

Agreed, an hour vs. six months, the rewording is not helping you.

"Demanding a refund forces the vendor to be involved." - Exactly so.

  "Fake goods, or goods not delivered, and a vendor that disappears into the ether, these are real phenomena." - indeed don't do business with shady people. And know who you're doing business with so that you can involve the law if you need to.

In a transaction between two people that goes bad it is not objectively known who the defrauder is. They will both blame the other. Facts must be properly investigated. This is what the legal system is for. Chargebacks avoid the legal system.

"I can make much better arguments against bitcoin then[sic] this too," Then by all means please do. I truly want to see some good arguments against it. However, so far you appear to be poorly qualified. Let me guess, you're not really left handed.

Re:Fairness is irrelevant

[fireteller2]

Yep that was the argument. You win.

Re:Fairness is irrelevant

[Nursie]

"I am not a merchant, I do not want people to be able to pull back money they have given me. And interestingly enough it's hard for me to accept credit cards too."

If you are a seller, you're a merchant. That's generally why people give you money. Or at least it's why people with an unknown trust relationship to yourself give you money. Plus accepting credit cards through paypal is easy...

"Agreed, an hour vs. six months, the rewording is not helping you."

Card payments are processed immediately, so you know the money exists. You don't even know this with bitcoin. Conflating out and out fraud (possible with bitcoins in a payment scenario in which instant payment is needed) with the chargeback policy is duplicitous nonsense.

indeed don't do business with shady people.

Ah, the libertarian answer to everything! I don't need no government involvement in food standards because if I get food poisoning and die I'm never going to eat there again!

And know who you're doing business with so that you can involve the law if you need to.

And immediately the success of likes of ebay become impossible. As a society we have taken steps to ensure that buyers do not need to do this because history shows us that it can and will be abused.

In a transaction between two people that goes bad it is not objectively known who the defrauder is. They will both blame the other. Facts must be properly investigated. This is what the legal system is for. Chargebacks avoid the legal system.

This is why chargebacks are subsequently investigated by the card schemes and charges of fraud can be brought against people who abuse it. The buyer is given the initial benefit of the doubt because there are hundreds of years of history pointing to unscrupulous sellers ripping people off left right and centre, and the buyer is the one typically left without goods or cash.

The fact that this mechanism exists is one of the major reasons people trust credit card systems and internet commerce as a whole.

Then by all means please do. I truly want to see some good arguments against it.

Oh for god's sake... I'm not going to go into this in depth, but here's a list:

• Instability for multiple reasons
• No real economy, just speculation
• No security, your wallet gets compromised you're screwed
• Massive deflation punishing new entrants. You think inflation steals from your savings? I think deflation steals from the productive economy.
• Less features than current solutions

"Let me guess, you're not really left handed."

???

Look, you indulge in your btc fantasy all you like, but don't expect other people not to point and laugh as you ignore history and a plethora of perfectly valid criticisms.

Re:Fairness is irrelevant

[DanielRavenNest]

""as little as an hour" in monitory transfer terms IS instantaneous. In case it wasn't completely clear the transfer is instantaneous, it takes as little as an hour to be 100% sure that it is completely irreversible."

In paper check terms, the transit time to the payee is seconds, the time for the transaction to clear is an hour. Bitcoin beats the heck out of PayPal, which has much higher fees, and still takes several days to get a withdrawal into my checking account (from a supposedly electronic system).

I think what is needed is the other half of a transaction system. Bitcoin handles the secure transfer of account balance from one person to another, but we need a secure way to ensure the delivery of whatever it is you are buying with the coin. Something like a cryptographically signed delivery contract which replaces old style paper contracts as proof of what was agreed to. The signed contract gets delivered first, then the coins and whatever goods are being traded get delivered.

Re:Fairness is irrelevant

[fireteller2]

"If you are a seller, you're a merchant. That's generally why people give you money."

You're kidding. Really? That's your argument. Wow, I got the money I have in the bank by being a merchant, who knew. Thank god people are protected from my evil merchant ways buy being able to charge back on me... Oh wait no they can't I don't take credit cards.

"Plus accepting credit cards through paypal is easy..." Yeah that's why everyone takes credit cards.

"Card payments are processed immediately, so you know the money exists."

I'm sorry, but no they don't. That's just a flat out factual error. You do not ever with any credit card provider receive cash deposits into your corporate account "immediately".

"You don't even know this with bitcoin."
Yes you do. Look it up. Since we're down to "yes it does"/"no it doesn't" now clearly you simply don't believe me, that's an easy thing to address. Try it. Read the available literature. I'm not the only person who understands how it works.

" Conflating out and out fraud (possible with bitcoins in a payment scenario in which instant payment is needed) with the chargeback policy is duplicitous nonsense." -

I'm sorry I'm not sure now if we're on the same planet togeather. http://www.merchantcouncil.org/merchant-account/fraud-chargeback/chargeback-fraud-illegitimate.php

"Ah, the libertarian answer to everything! I don't need no government involvement..."
Quite the opposite, I specifically pointed out that I want the government involved. If I have a problem with a transaction I want the legal system involved, no the customer services department of Visa.

"And immediately the success of likes of ebay become impossible." Perhaps you're right I can't comment I don't use ebay because of excessive fraud.

"As a society we have taken steps to ensure that buyers do not need to do this because history shows us that it can and will be abused."
I'm not sure who's point your arguing here, sounds like mine.

"here's a list:"
I thought the premise here was that you where going to provide good arguments here?

"Instability for multiple reasons" - Instability of the value of bitcoin does not mean that bitcoin as a system has no value, it's value is unstable. At this point in time you should not speculate in the future value of bitcoin. Some people do, I do not recommend it, it is very high risk. However using bitcoin as a way to transmit value is very useful and you can avoid the risk of speculation by immediately transferring any bitcoins you receive to cash which is easy to do.

"No real economy, just speculation" - The economy is growing, several online stores have opened, and the number of businesses and individuals accepting bitcoin has increased moth over month no indications that will slow.

"No security, your wallet gets compromised you're screwed" - This is absolutely true, and a big issue (wow, this is like 1 to what 20?, but hey at least you don't leave the field with 0). No built in security, you are responsible for your own security at the moment. Worse, you don't necessarily know you've been compromised, years down the road someone who has a copy of your wallet file could spend your money. This is supposedly being addressed in the next release of the client. Meanwhile you should encrypt your wallet, you can receive bitcoins to it at any time, but you only need it decrypted to spend money. Many people are creating offline "savings" wallets for added security.

"Massive deflation punishing new entrants." - Factual error, currently the bitcoin money supply is inflationary to the tune of ~7,200 bitcoins a day.

"I think deflation steals from the productive economy." - As I've pointed out using facts, what you 'think' is not a compelling argument.

"Less features than current solutions" - Factual error here is an incomplete list of features that my be interesting t

Re:Fairness is irrelevant

[Pranadevil2k]

You seem informed enough on this subject for me to get a good answer here... Assume I've been living under a rock and have no clue what a bitcoin is. Wikipedia tells me that it's a crowd-sourced cryptography experiment that somehow turns into money because a few websites will pay you for them. Computers do crypto stuff and solve problems.. problems go into blocks.. blocks go into chains.. 2016 blocks equals 50 bitcoins.. every 2016 blocks it gets harder to make more blocks.. and there's something about transaction fees that pay bitcoins to whatever crowdsourced computer is lucky enough to handle the transaction.

That's nice and I mostly understand it, but where you lose me is the part about turning bitcoins into useful money. If I let my computer number crunch for a few weeks and get X bitcoins (which I presume would be based on the number of blocks I have finished) I can just go to a website and say "Give me [exchange rate] for X coins" and it becomes actual folding dollars? Who decides what it is worth? What happens when it becomes so difficult to make a bitcoin that it just can't be done anymore (say NASA put some supercomputers on coin mining duty) and everyone who doesn't have a supercomputer can't make them anymore? OR when there are 21 million coins and production stops completely? I'm not trying to challenge the validity of bitcoins, I'm just genuinely uninformed slash curious.

Re:Fairness is irrelevant

[Nursie]

You're kidding. Really? That's your argument. Wow, I got the money I have in the bank by being a merchant, who knew. Thank god people are protected from my evil merchant ways buy being able to charge back on me... Oh wait no they can't I don't take credit cards.

Not sure what you're on about here. If the money in your account isn't subject to chargeback then why is chargeback such a concern?

Chargeback is useful for consumers and consumer confidence.

"I'm sorry, but no they don't. That's just a flat out factual error. You do not ever with any credit card provider receive cash deposits into your corporate account "immediately"."

No, but the transaction is processed and the fund are allocated, immediately. I've worked on CC authorisation systems, believe me when I say I know this part of it. You know there and then that the transaction is going through ok. In principle, unless you still accept magnetic stripe cards of course, but the identity of the person performing the transaction is a separate security issue to whether or not the money exists/is available in the account.

Yes you do. Look it up. Since we're down to "yes it does"/"no it doesn't" now clearly you simply don't believe me, that's an easy thing to address.

So you're saying there's no growing certainty of transaction period, during which it could theoretically turn out the coins were spent twice, and in fact all bitcoin transactions are instantaneously performed and validated? This is not the impression I had of the system.

I'm sorry I'm not sure now if we're on the same planet togeather. http://www.merchantcouncil.org/merchant-account/fraud-chargeback/chargeback-fraud-illegitimate.php

We have hundreds of years of history pointing us to the fact that rogue traders rip off consumers and disappear, en mass, given a 'balance'. A lot of people are happy that the current balance lies where it does. The article you link to even ends by advising traders to document sales properly - i.e. do things properly and you'll be ok. Banks do not (as that article implies) unwittingly facilitate fraud here. They deliberately protect consumers from unscrupulous merchants and they protect their own bottom line here - in many countries the chargeback from consumer to bank is part of the law. It's no wonder they write the ability to do that same thing into their contracts with merchants. Consumers that invoke the right fraudulently are criminal.

My exhortation was not to conflate purchase time double spending, a purely fraudulent activity possible in the bitcoin scheme, with consumer protection measures that have an overwhelmingly positive effect.

"Factual error here is an incomplete list of features that my be interesting to some people:"

Bitcoin has no chargeback, therefore it's a non-starter for me. Chargeback, like it or not, is a feature. Factual error yourself.

"Massive deflation punishing new entrants." - Factual error, currently the bitcoin money supply is inflationary to the tune of ~7,200 bitcoins a day.

Deflation is an increase in value of currency compared to goods over time over time. If bitcoin is successful it is necessarily deflationary.

"I think deflation steals from the productive economy." - As I've pointed out using facts, what you 'think' is not a compelling argument.

On the contrary, it's a very compelling argument to me, your facts have been nothing more than your opinions anyway. If btc enter serious large-scale use there will be deflation. Deflation is the money sitting unused gaining value because other people are performing economic work. Not a system I wish to support.

Instability of the value of bitcoin does not mean that bitcoin as a system has no value, it's value is unstable.

It means that a merchant of any size taking btc is screwed as they hit withdrawal and exchange limits, relyi

Re:Fairness is irrelevant

[fireteller2]

Ok, here's some clarification.

First of all every block equals 50 bitcoins. It's called bitcoin "mining", but what it really is is a "proof or work" that contains all of the transactions for the last 10 minutes or so. At this point it is VERY hard to do this proof of work even for only 1 block.

"I can just go to a website and say "Give me [exchange rate] for X coins" and it becomes actual folding dollars?" - Yes. And very quickly too. In fact because of the nature of bitcoins it is _much_ easier to move bitcoins to a currency exchange and transfer to dollars then it is to do the opposite. Within 30 minutes to an hour you can set up an account at any of the currency exchanges send your bitcoins in, sell them on the market, and transfer the cash out to a service that can do direct deposits to your checking account.

"Who decides what it is worth?" Just like any stock, commodity or currency exchange thousands of traders trade tens of thousands to hundreds of thousands of bitcoin per day. The buyers and sellers in these markets define the 'value'.

"What happens when it becomes so difficult to make a bitcoin that it just can't be done anymore (say NASA put some supercomputers on coin mining duty) and everyone who doesn't have a supercomputer can't make them anymore?"

This is not quite how bitcoins mining works. The system auto load balances. It ALWAYS takes about 10 minutes system wide/world wide to generate a block. If it becomes harder to find a block then 10 minutes, then the system makes the "proof-of-work" easier, and vice versa. Also it is unlikely that even NASA has the computing power to make a significant impact to the difficulty level of bitcoin mining. The current bitcoin network processing speed is 145898 TeraFLOP/s. This is an unbelievable number to put it in perspective the top 100 super computers in the world right now combined do 51184 TeraFLOP/s that's only 35% the computing power of the bitcoin network. Nevertheless, to answer your question if your participation in the network is so small that you can hardly make any bitcoins, there are still ~7,200 bitcoins being introduced every day because the difficulty is balanced to the system performs such that 1 block is solved every 10 minutes or so and each block is worth 50 bitcoins to the computer that solved it. It's like a lottery that happens every 10 minutes how many tickets you have is based on how much of the total computing power of the network you contribute.

The amount of bitcoins being produced will be reduced at a schedule proscribed by the protocol until in the end there will only EVER be 21 million bitcoins. When this happens, nothing happens. People will be trading with the bitcoins that already exist. Bitcoins can be divided to 8 decimal places so the fact that there are only 21 million could mean there are 21 dollars worth of bitcoins or 1,000,000,000,000,000 dollars worth of bitcoins, it only depends on the market for bitcoins. It will still be easy to do transactions with bitcoins at whatever unit is convenient, say 0.0001 bitcoins is worth about a dollar, no problem the system can work that way.

I think it's probably not worth mining bitcoins now unless you have access to more the a few graphics cards. A better way to make bitcoins is just download the client and accept them for what ever you want, services used stuff, whatever. I do not recommend that you speculate on bitcoins. Trade them immediately for your currency and transfer that to your bank. It's just another way for you to accept payment, and easier then credit card.

"when there are 21 million coins and production stops completely?" Yes, miners (who are the security back bone of the system) will be rewarded by transaction fees instead.

"I'm not trying to challenge the validity of bitcoins, I'm just genuinely uninformed slash curious."

Please do challenge the validity of bitcoins. It is an interesting idea, if it works it will be because smart people have done everything they can to defeat it and failed, if they find a flaw then they will save everyone after them from loosing on a broken system, and my highlight the one thing that if fixed could make it work for version 2.

Re:Fairness is irrelevant

[ian_from_brisbane]

No, but the transaction is processed and the fund are allocated, immediately.

Likewise with Bitcoin. It takes literally less than 2 seconds to see the funds allocated to you and appear in your account.

You've obviously never used it nor read the docs.

Re:Fairness is irrelevant

[makomk]

I can just go to a website and say "Give me [exchange rate] for X coins" and it becomes actual folding dollars?

Assuming someone's willing to buy them off you, sort of. You can convert them to virtual dollars that exist as a number in Mt Gox's database (which recently got hacked by a combination of a trivally-exploited SQL injection and the fact that the original site owner had a DB account with full access under the same username and easily-cracked password as his account on the site - after which they lied to everyone repeatedly until well after the point their story was obviously false).

What you'll have trouble doing is converting those virtual dollars into actual dollars. People have found their attempts to cash out repeatedly delayed no matter which method they use, and anyone in Europe is almost totally screwed - due to a combination of factors, including black hats stealing money from people's bank accounts by phishing and using Mt Gox to launder it through bitcoins their European bank account has been closed, and all the other exchanges don't have enough volume to sell large amounts of bitcoins.

There's also persistent rumours that Mt Gox doesn't actually have enough US dollars to back its clients' USD deposits as a result of criminals transferring in stolen money from other people's bank accounts and converting it to Bitcoins, and the transactions getting reversed later. These rumours predated Mt Gox admitting that this was in fact happening.

Re:Fairness is irrelevant

[fireteller2]

Well unforttunalty it seems you've devolved into a nearly indecipherable bundle of factual errors and opinion. You can certainly hold your opinion, and I wouldn't argue that. You think chargebacks are a essential feature of a monitory system, fair enough. I don't. Unsurprisingly neither do any governments I'm aware of as no national currency supports that feature. Nevertheless to each his own.

On the issue of factual errors, read up. You will be happier if you can argue your position with greater command of the facts. Learn bitcoin if only to provide intelligent and witty pronouncements of it's imminent demise.

I agree that some of the proponents of bitcoin are complete loons, but so too with apple stock. It has nothing to do with the validity of the underlying technology.

Re:Fairness is irrelevant

[makomk]

Several days? Bah - if you read the forums, people have been waiting for weeks for money from Bitcoins to transfer into their USD or EUR current account. Fees for converting between Bitcoins and USD on the exchange with 90% of the volume (which is the one you probably want to use) are also usually 1.3% - half of which is payed by each party, but it still works out as costing 1.3% in total. Then there's the fees for getting your USD in and out: the cheapest option is Dwolla at a $0.25 flat fee. Dwolla are basically a US-only online payment provider like Paypal, so if both parties are using them why not just cut out the middleman? The other alternatives are Liberty Reserve (2% fee, kinda shady), and for EU residents direct transfer to a bank account in the SEPA region (2% fee, assuming they manage to get this up and running again - it's not currently available).

So basically that works out as a 3.3% fee normally for anyone not living in the US. The exchange has temporarily halved its exchange fees to discourage all its customers from running away after a serious security incident, but even that only reduces it to 2.7%. There are one or two much smaller alternative exchanges that don't have such high fees, but they also don't have enough volume to convert more than a small amount of Bitcoins on them.

That's not counting any fees your buyer had to pay to get the Bitcoins in the first place! (At some point in the future you're going to have to start paying fees to transfer Bitcoins from one person to another too.)

Re:Fairness is irrelevant

[Yunzil]

Yeah, well, that's just like, your opinion, man. Got any facts to go with that?

Well, there's a reason nobody's on the gold standard anymore.

Re:Fairness is irrelevant

[geekoid]

There are serious problem with the gold standard. look up 'Nixon Shock' and 'Bretton-woods', and look at the factor that cause Nixon to leave the gold standard.

The peopel who didn't like leaving the gold standard where people who owned gold. Because it didn't only mean money, it meant a level of control in the nations economy. Meaning every every once you own gives you what ever percentage that is to the total gold in the country

Re:Fairness is irrelevant

[makomk]

Ah. I remember now: bitmarket.eu was one of the quirky sites. Rather than just executing trades for you semi-automatically, it requires you to pick out a particular set of outstanding orders up to the amount you want to trade, then either manually send them the money or wait for them to manually send you the money. At that point, the party selling the Bitcoins is meant to release them and hope that the half of the transaction paying them doesn't later get reversed (for example, because the user paid using a stolen Paypal account or card). The person attempting to get money for their bitcoins takes on all the risk in the transaction.

Re:Fairness is irrelevant

[fireteller2]

"So far as I can tell it's a combination of the worst of all of the above."

Yes perhaps this is true, if these are features you don't like about those things. Some people don't like these features, some people do. I guess we'll find out who's in the majority.

"On my "factual errors", you might be better received if you stopped passing off your opinions as facts."

Factual errors are factual errors it is immaterial how they are received. I have being trying to give people facts, not opinions. If I've made a mistake I'd like to know where.

"So far as I can tell it's a combination of the worst of all of the above."
Is an opinion.

"You can send them in any amount to anyone on the internet, and with almost no fees."
Is a fact.

Re:Fairness is irrelevant

[Nursie]

I have being trying to give people facts, not opinions. If I've made a mistake I'd like to know where.

Several places. One of them was asserting that chargeback was a negative, and calling it a factual error to say it's a feature.

"You can send them in any amount to anyone on the internet, and with almost no fees."
Is a fact.

Yeah... no it's not, it's been pointed out to you several times before that it's not anyone, it's anyone with a wallet, and even if there are no fees now there will be later on.

Your repetitive shilling is entertaining, but misguided.

Cryptographically signed /. First Posts are my new

[Dast]

currency! First one to post a verifiable signature on a Slashdot story gets a Slashcoin. Taco and crew are then our new federal reserve--they can inflate the currency to pay our debt to China by posting more duplicate stories!

Our problems are solved!

Re: What are bitcoins? Do they have any value?

[Goaway]

You can buy drugs with them, and also socks with the bitcoin logo on them.

Their value is backed by internet drama.

Honest men never love a scam

[Anonymous Coward]

...even when they're not its victims.

I have a question

[Sirfrummel]

So as I've been reading on bitcoin for the last hour - I think I realized something that I have not heard really in the criticism of it yet.

So - a lot of people are thinking bitcoin will be REALLY huge in the future, so let's pretend it does get really huge - let's say it's the only currency that the entire world uses, for example. What would happen is... as soon as I do a single transaction with an individual, I would be able to use sophisticated software (just bear with me) to figure out their entire self-worth by looking at the database-thing, is that correct? Because you could see the entire bitcounts that have went to, and came from that address.

Wouldn't this be a single point of failure for bitcoin - because most people probably wouldn't want their entire self-worth being on display for the whole world to see.

Any thoughts?

Re:I have a question

[DriedClexler]

No, the database just tells what address has how much, when. If you do a transaction with someone, all you can look up is how much that address currently has. Since anyone can have any number of addresses, all that does is give you a lower bound on their holdings ... which becomes useless the moment that address is emptied and the bitcoins transferred to other addresses, which may or may not be owned (i.e private key known) by the same person.

You can do more sophisticated strategies, like tracing the paths of known addresses, but it's not like what you've described, and any such technique is quickly dulled by the ability to shuffle into new addresses, as well as the use of "bitlaundry" services that cycle coins through different holders and otherwise leave you with dead-end addresses.

Re:I have a question

[kmike]

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

Re:I have a question

[fireteller2]

True, but it should be pointed out that ""shuffling" into new addresses" is indistinguishable form "spending."

I agree, people have it wrong if they think that bitcoin is a good way to do illegal things. With appropriate resources a state agent can "follow the money."

This is a good thing. -- opinion

Re:I have a question

[Sirfrummel]

Okay - but how would bitcoin handle debt and interest? -- also, I read that a 3% inflation is a sign of a healthy economy, and someone else mentioned that deflation is harmful to an economy - so wouldn't bitcoin eventually stop being inflated because of the set # of bitcoins?

Really? It's working

[Sycraft-fu]

I see no evidence of this at all. No major stores take it, so you can't use it for any kind of serious commerce. It isn't exchanged on any reputable currency exchange. I've seen nothing done to address some serious flaws brought up (like the possibility of spending a coin multiple times before it is noticed or the built in deflation). I've seen no analysis of the cryptography by leading authorities.

All I see is speculators playing around and people who think Cryptonomicron is an instruction manual not an entertainment novel.

You compare it to Apple stock, I compare it to Flooz.com stock. Sure, there was a time when it was "worth" something and if you had gotten in and out in the right time you could make money. However as it was a stupid idea with nothing really behind it, it collapsed to nothing.

Re:Really? It's working

[fireteller2]

I take it your concept of success is not very incremental. An all or nothing kind of thing. I on the other hand see a technology that has only moved forward in terms of its uptake and usability, the exchange rate is immaterial to that although it as also moved up.

I agree I would love to hear Bruce Schneier give it a bit of a public go over, but it is open source and anyone can review the code and the white paper. Many people have so far and no one has published a flaw. You can't double spend, don't know where you're getting that from. That's a core design element. Explain where you think there is a flaw and I can try to clarify.

I'm not as quick as you to say that a few tens of thousands of computer geeks and a number of core developers are completely technically incompetent.

Flooz failed because it was backed by a company when the company failed the currency had no infrastructure to function within. Other virtual currencies have also failed, because of single points of failure. Addressing these issues is part of Bitcoin's design. Bitcoin is not a company, it would be easer to shutdown torrent at this point, and we've seen how easy that is.

It might be better to think of it as software that helps you move money across the internet. If you are suspicious about it's future, don't hold it, but as a tool it's very useful. As I've said elsewhere the value of bitcoins is not a theory, predictions of it's failure are what is theoretical.

j

Bitcoin has lost its relevance

[Theovon]

Actually, I'm not sure it ever HAD relevance, but I think that it could possibly have gained some. But then we got reports about people's bitcoin purses stolen. Now, maybe that was due to lax security on the part of the older of the purse. Or perhaps it was a flaw in the design of the bitcoin system. Either way, all of those organizations that were once dabbling with bitcoins have since changed their minds. They have no real-world monitary value. At one time, I was considering doing a bit of bitcoin creation of my own, on my own computers. Now, what's the point?

Re:Bitcoin has lost its relevance

[Troed]

If someone steals your physical wallet, with physical notes in it, is that due to lax security or flaws in the system? Does it change the value of the notes?

A Bitcoin wallet holds private keys to your coins (simplified). Don't lose the private keys. Store them as you would store other things of value.
 

Re:How to program GPU's?

[Nursie]

Hey there, one of the the few technical posts and you get all but ignored!

I started looking at this a little while ago for the purposes of drawing fractals. I haven't yet got great results (I do have results) but I'm still learning.

There are two major technologies I know of - OpenCL and CUDA. They are pretty similar. CUDA is nVidia specific, OpenCL is more cross-vendor and is a partner to OpenGL. OpenCL is the one I started with. If you use Linux then install your distribution's OpenCL packages, on windows I'm not sure, you probably want to go to your vendor's website for drivers.

OpenCL is a language by itself, and an API in other languages. You write coordinating code in whichever language it is you do your project in (C for me), and you also write code in OpenCL ( which is C-like) you then compile OpenCL into 'kernels' and run it on the GPU. you can run them on the CPU as well but that's a whole other driver setup issue...

The main pain point for all this is poor documentation and poor error reporting. Sometimes your OpenCL code doesn't run and nothing will tell you why. I recommend getting the OpenCL sample programs from nVidia and Apple to take a look at how they work.

CUDA I haven't played with much. Maybe the error reporting is better. Maybe the error reporting on OpenCL is better under Windows or Mac, I just don't know.

Good luck.

What, precisely?

[Sycraft-fu]

Where can I spend bitcoins? The places I shop online, Amazon, Newegg, Steam, they don't take them. None of the stores I shop at take them, none of the companies I pay my bills to take them. So where should I spend these?

Then the next question is why? Why would I want to use them instead of a credit card? A credit card offers me a good deal of known security, there's a lot of legislation that protects purchases with it and Visa really is "Everywhere I want to be." Why should I use bitcoins to purchase things, particularly in light of their heavy price volatility?

Re:What, precisely?

[fireteller2]

Here are some of the features of bitcoin and reasons why you, or a merchant might find bitcoins interesting.

You can send them in any amount to anyone on the internet, and with almost no fees.
Your customer base is therefore the entire world not just people with your "coin of the realm"
If a customer pays you the money it's yours they can petition or sue you for a refund, but they can not issue an automatic charge back.
No third parties are involved, there is no one else to trust or pay fees too.
You needn't hold bitcoins, there are a number of markets, as well as real world people who can change your bitcoins to cash in moments.
Transactions happen very quickly compared to wire transfers, checks, paypal and credit cards.
It is as easy to accept bitcoins as it is to spend them, unlike credit cards.
They are very portable. While it would be difficult to travel with more then 10 thousands dollars of anything, you could easily hold millions of dollars on a micro SD.

There are disadvantages too, and you should make yourself aware of them, however these do not include a weakens in the protocol or being a system designed to defraud you as some argue.

You should probably not speculate on the future value of bitcoins. If you accept them do so at the current exchange rate, and then immediately cash them out for your currency of choice. In that way it's just another tool to get paid.

Re:What, precisely?

[Sycraft-fu]

Sorry, I find those arguments highly uncompelling.

First off, no I can't send them to almost anyone. I can send them to almost noone. Ok well let's be a bit more precise: I can PAY them to almost no one. Money is only money if you can spend it, and nobody I wish to spend money with accepts bitcoins.

In terms of currency, that is not an issue. Credit cards are global and my bank will convert currency on my behalf, in realtime. I've used my cards in other countries with ease.

The no chargeback/third party is a disadvantage, not an advantage. I have no one to help protect me and my money. If my credit card is compromised somehow, I bear no financial responsibility. If someone across the world rips me off, I have a recourse. I have none of that with bitcions. They get stolen, I'm SOL. If someone outside of the laws of my country screws me, I can do nothing.

Credit card transactions happen in seconds these days.

It is NOT easy to spend bitcoins. You can only spend a currency people take. I know of NOWHERE that I shop that takes them.

Your portability argument is extremely silly. why the hell would I want to keep millions on an easily lost, stolen, or damaged SD card? Part of the usefulness of digital banking is money is secure in databases, you don't actually carry it with you. I carry the means to access all my wealth (passwords, SecureID tokens, ID cards, etc) with me. However the money itself is tracked in banks, so that it cannot be easily taken.

As for the disadvantages, I've seen no response. Where is the cryptographic analysis? Let's see some analysis from people like Schneier and Rijmen. Let's see the reports from institutions like the NSA and IBM? Crypto takes a long time and a lot of analysis to prove. AES went through 5 years of evaluation by the top minds before becoming a standard.

Also, please tell me how it at all prevents a multiple-spending attack: Someone sends bitcions to multiple different entities, in rapid succession. How do you verify this doesn't happen? I understand that yes, eventually this can be traced, I mean as the person accepting them, how do you make sure this didn't happen and you aren't stuck holding the bag?

You've said a lot about what you'd like bitcoins to be. That changes nothing of what they are.

Re:What, precisely?

[fireteller2]

"Sorry, I find those arguments highly uncompelling."

Ok, many people find these features to be compelling, you certainly don't have to. I personally don't find Rubles compelling, never had even one, no idea what I'd spend it on if I did.

"I can PAY them to almost no one. Money is only money if you can spend it, and nobody I wish to spend money with accepts bitcoins."

I'm sorry but that's just not true. There is a difference between markets that use a currency and a feature of a currency. There are few markets that use bitcoin currency, but it _is_ a feature of bitcoins that you can pay them to anyone anywhere in the world who has a computer and in internet connection. Tell them to download the bitcoin client, have them give you their address, send them bitcoins - DONE. It's easier then e.mail. It can't even remotely be compared to the difficulty of accepting credit cards for any given person in the world.

"The no chargeback/third party is a disadvantage, not an advantage. I have no one to help protect me and my money."

You have a legal system instead of the help desk of Visa. It took me a bit to be convinced about the charge back issue too, but now I realize that it is better not to have a mechanism in which someone can take back money you think you have, even if it is in blatant violation of a contractual agreement, without any legal system intervention.

You do have to protect your bitcoins form illegal activity, I don't disagree, but that is possible to do, and similar to what you have to do with money kept elsewhere.

"Credit card transactions happen in seconds these days."

Not really. It seems that way to consumers, but it isn't that way to sellers. Plus there are significant fees. However, the advent of bitcoin does not mean that credit cards are suddenly going away, and bitcoin does not need them too to be successful.

"Your portability argument is extremely silly."

It's not an argument it's a feature. Perhaps not a feature for you, but nevertheless a feature. Just because you have a encrypted wallet file on a SD card doesn't mean that you don't have another copy any number of other places. Some people in some countries are not as confident as you that their money will remain available when they cross the border.

"As for the disadvantages, I've seen no response. Where is the cryptographic analysis? Let's see some analysis from people like Schneier and Rijmen. Let's see the reports from institutions like the NSA and IBM? Crypto takes a long time and a lot of analysis to prove. AES went through 5 years of evaluation by the top minds before becoming a standard."

I don't know what you're talking about. Cryptio is _never_ proven it is defeated. How soon that defeat is published is how long that crypto has useful life. Bitcoin does not introduce ANY new crypto. It's a protocol. It uses SHA256 and standard public key cryptography. There is a massive amount of literature on those subjects. Nevertheless a protocol can use secure crypto in insecure ways, but so far not one person has found one. All an expert can say is they either did or didn't find an flaw, they can't prove that it's flawless.

I would like to hear some more analyses too, but so far not one flow has been found.

"Also, please tell me how it at all prevents a multiple-spending attack: Someone sends bitcions to multiple different entities, in rapid succession. How do you verify this doesn't happen? I understand that yes, eventually this can be traced, I mean as the person accepting them, how do you make sure this didn't happen and you aren't stuck holding the bag?"

Okay this is a good question, here's how it works. Everyone in the bitcoin network (clients, and minors) has a copy of the complete general ledger. This tracks the movement of every bitcoin from inception to the account that currently holds it. I can pay you a bitcoin, but if I try to pay that bitcoin again (by restoring a backup of my wallet file say) everyone on the network will disagree wi

Re:What, precisely?

[fireteller2]

Edit:
"All an expert can say is they either did or didn't find an flaw, they can't prove that it's flawless."

With the exception of a one time pad, or course.

Re:What, precisely?

[fireteller2]

"See.. it may be a feature of the "currency" of bitcoin that anyone in the world can pick up the client and accept/send bitcoin to anyone else in the world (with the client, anyway).. But that is a USELESS FEATURE if it is not also a feature of bitcoin that everyone in the world already HAS THE CLIENT."

That is a bold assertion that I don't agree with (opinion). My position is that if the client is free, and can be downloaded in moments. The the distance between "I can't accept bitcoins" to "I can accept bitcoins" is trivial to the point of being a non issue. Where as "I can't accept credit cards" to "I can accept credit cards" is ridiculously non-trivial.

"If I am in, say, the middle of Brazil, I can still GIVE USD to anybody standing around. It just does me zero fucking good. Kinda like bitcoin, except that bitcoin makes practically everywhere is like being in the middle of Brazil without any real."

Hum no, that is in fact one of the values of bitcoin. You can at this moment exchange bitcoin to currencies all over the world. You may still have to use a local currency at any given shop, but that is not the same thing as saying the currency you are holding is not "valuable".

"(although how chargebacks don't lead to legal action when legal action is called for, you haven't explained...)"

They may do. However finding a business that just sold you a defective TV, is somewhat easier then finding the customer that just walked out with a TV and charged it back.

" but the legal system is of no value for people who cross borders and expect to have their money. Way to stay internally consistent."

Two un-related features. Although I do business over seas, I wonder if they will honor our contract...

"You mean I can travel across borders without having all my cash money on me,"

No I'm saying you can travel across borders and have ALL of your cash money on you. In fact you can have your total net worth on you.

"If I have access to the internet, I have access to my actual currencies."

Really? I'm guessing you're not from an oppressive government.

"I have zero access to bitcoin, despite having my encrypted wallet on me. If I am imprisoned, rightly or wrongly, I have zero access to both."

And yet when you come out your bitcoins will still be there, your credit cards will not.

"Not being one, I don't give a shit."

Which takes you out of that argument. Let's see if someone who is, does.

"If a merchant accepts bitcoin and wants to be paid in bitcoin because it pays no fees, it has to induce customers to use bitcoin."

No it doesn't. It can continue to conduct business with credit cards and cash like any business. But when a customer who would like to use bitcoin comes in it's just one more way to get paid. Just like Meze Grill does right now in New York. (http://tech.fortune.cnn.com/2011/06/17/the-clock-is-ticking-on-bitcoin/)

"Credit and debit systems offer protection to the consumer (and can offer other benefits to the consumer). If a merchant wants me to discard those protections and benefits for an exchange system that really only benefits the merchant, he is going to have to offer me an incentive."

And maybe he would, or maybe he'd give you a choice, that they currently do with cash vs. CC.

"accepting bitcoin is adding overhead"

No it isn't. Unless you just mean cognitively.

"For the tl;dr people.. The fact that you advocate cashing out bitcoins to currency basically immediately upon receipt is really all I need to know about the system. Bitcoin is Western Union, but cheaper and less handy."

Yes like wester union, but cheeper, more handy, and more widely available.

We should care because ...

[dbIII]

We should care because it has all the potential to be a pyrimid scheme that will suck in the technophillic and may cost them a lot of real money, resources or jobs. For an example of harm it's already causing, an IT guy at a TV station near me will probably lose his job very soon for getting caught using the studios servers to make bitcoins and getting the incident mentioned in the press. If I ran the cluster here flat-out making bitcoins and drove up the power bill I would deserve to be dumped into deep shit.
Burning a bit of extra coal to drive a pyramid scheme seems to be a bit irresponsible to me even if you own the equipment and pay the power bill yourself - it may be a truly elegant and geeky way to rip off suckers but it is still the age old crime of fooling others to give you something of real value for nothing but a dishonest promise.

Re:We should care because ...

[horza]

Are you serious?? "Man misuses company resources and gets fired" is a fault with bitcoin? Might as well say pens are an ill in society as it encourages people to steal them from the stationary cupboard.

Phillip.

BitCoin relevance

[Johnny Mnemonic]

Can a true believer help me out here--why on earth would I, after performing a service for you, take payment in the form of bitcoins instead of the legal tender for the country in which the service was performed?

I mean, seriously. Until I can purchase groceries, or pay my mortgage or utility bill, with this stuff, it's about as useful to me as WoW gold.

I've heard a lot of stories about people hoarding and collecting bitcoins, but few about anyone selling something with bitcoins. And zero about people exclusively accepting bitcoins, meaning I can still choose instead to pay with the coin of the realm. You may as well try to pay me with fairie kisses for services rendered, I'm still going to call the cops.

Re:BitCoin relevance

[fireteller2]

I am not a true believer, I am a sceptic. I come across as a true believer because I have done a lot of research on bitcoin, and I now believe I understand how it works. I have not found a flaw. More importantly I can't find anyone who has. Not one person. I am however, still skeptical and would love for someone to step forward with an actual real world flaw. I continue to investigate and will report back if I find anything.

Meanwhile, you are absolutely right that bitcoins are accepted by few places, but what is interesting is that they are accepted by more people, and merchants this month then they where last month. And this has been consistent month over month. Which implies that this will continue to grow. There have already been cragslist listing for apartments that can be rented for bitcoin.

Here are some of the features of bitcoin and reasons why you, or a merchant might find bitcoins interesting.

You can send them in any amount to anyone on the internet, and with almost no fees.
Your customer base is therefore the entire world not just people with your "coin of the realm"
If a customer pays you the money it's yours they can petition or sue you for a refund, but they can not issue an automatic charge back.
No third parties are involved, there is no one else to trust or pay fees too.
You needn't hold bitcoins, there are a number of markets, as well as real world people who can change your bitcoins to cash in moments.
Transactions happen very quickly compared to wire transfers, checks, paypal and credit cards.
It is as easy to accept bitcoins as it is to spend them, unlike credit cards.
They are very portable. While it would be difficult to travel with more then 10 thousands dollars of anything, you could easily hold millions of dollars on a micro SD.

There are disadvantages too, and you should make yourself aware of them, however these do not include a weakens in the protocol or being a system designed to defraud you as some argue.

You should probably not speculate on the future value of bitcoins. If you accept them do so at the current exchange rate, and then immediately cash them out for your currency of choice. In that way it's just another tool to get paid.

Re:BitCoin relevance

[Nursie]

I am not a true believer, I am a sceptic.

This is becoming a more and more obvious lie.

Re:BitCoin relevance

[gregrah]

As a seller you would accept payment in the form of bitcoins in the hopes that it will drive incremental sales from buyers who would prefer to use bitcoins (either for the convenience or the novelty) over credit cards or paypal. It's the same reason that the mom and pop store down the street accepts credit card payments even though each transaction costs them a pretty penny.

You would convert those bitcoins to real cash as soon as possible to avoid accumulating large quantities of bitcoins and putting yourself at risk of market fluctuations.

Re:BitCoin relevance

[DanielRavenNest]

As a buyer you would pay for an item with bitcoins if the seller had something you wanted enough. I have made money the last 5 years in two virtual worlds with electronic currencies, mostly Second Life on that basis. That the currencies are not backed by anything is irrelevant. Convertibility is what matters. As long as the currency does not fail between the time the buyer exchanges "real money" for the electronic currency, and the time I exchange it back to real money, we are happy.

Bitcoin having a distributed P2P verification system and multiple exchanges means it is more resistant to failing than those virtual worlds, which depend on a single company to operate the currency. Note that national currencies have failed too.

Re:BitCoin relevance

[Pranadevil2k]

You could feasibly ask the same question for -any- valuable object. "Why would I accept gold bullion instead of cash?" As near as I can tell, the idea of bitcoins is almost exactly the same as any other commodity; There is a finite quantity of X, therefore X is worth Y actual cash based on some crazy economagics. Comparing Bitcoins to gold is actually somewhat apt. Consider the early phases of Bitcoin mining when it was simple and people made thousands of them quickly and now there is an explosion of bitcoin miners but it's becoming more and more difficult to create them, and eventually mining will have to stop completely because there simply won't be any left. It's like a gold rush happened, and eventually the mines run dry but gold is still worth money because it's rare. The main difference between gold and bitcoins is that you can actually DO things with gold, like make gold stuff. What will probably determine the cash value of bitcoins in the long term will be what happens when mining becomes prohibitively expensive or the 21 million coin limit is reached.

Re:BitCoin relevance

[DrKnark]

I mean, seriously. Until I can purchase groceries, or pay my mortgage or utility bill, with this stuff, it's about as useful to me as WoW gold.

Yup, agreed. Doesn't mean it doesn't have a future though. Might not be likely, but not impossible either.

Re:BitCoin relevance

[DrKnark]

will be what happens when mining becomes prohibitively expensive or the 21 million coin limit is reached.

When the limit is reached, there will still be coin to be made from mining (though it wouldn't really be mining) from transaction fees. When mining become prohibitively expensive people will stop mining, which will decrease the difficulty and make it (slightly) profitable again. Either that or people don't stop mining and operate at a loss. Neither scenario has any impact on the usability of bitcoin.

Re:BitCoin relevance

[makomk]

Second Life's Linden dollars have things you can spend them on that justify the price - virtual things, sure, but still things - and most purchasers of L$ are buying them to spend on stuff. There's really not much you can spend Bitcoins on. If you look at the trading forum on the official site, most of the activity is buying and selling speculation-related items like mining rigs, and that's after discounting all the Ponzi schemes and scams!

Re:BitCoin relevance

[Shrike82]

You copy pasted that list above and some of your points have been fairly successfully rebutted, particularly the flip side of the "can not issue an automatic charge back" which screws me as a buyer if the seller is a fraudster. Anyway, I don't want to hear your arguments again since I saw them higher up in the thread.

What I'd like to know is how many Bitcoins you have, and can you honestly say that your defense of it is totally independent of this fact? Don't worry about actually replying with a number since theres very little point. The current captain of the Bitcoin boat publically stated "I have X amount of BC" which was about as verifiable as my declaration of the number of atoms in my body.

Re:BitCoin relevance

[fireteller2]

Odd, I don't see that a single one of my posts have been even remotely successfully rebutted. Your national currency allows charge backs? Really? That's cool, where do you live I what to come there and see how they do that with cash. Your version of the perfect digital currency is that it must allow automatic chargebacks? Odd, but ok, wait until that shows up and use it.

I have at no time advocated that anyone go out and speculate on bitcoin, quite the opposite. So even if I where speculating, which I'm not, I'm not giving the right advice for building the value of bitcoin.

To be crystal, I do not recommend that anyone speculate on Bitcoin. It is very unstable and may lose massive value at any time. Full Stop.

However as a tool for transmitting value across the internet it is very useful. Think software; email, web browser. It's a tool not a political party. This is something that bitcoin can be used for, is designed for, and can happen regardless if the value of bitcoin is $0.00001, or $1,0000.0. Not for you, no problem, that's easy DON'T USE IT. Even if you do decide to use it, buy which I primarily mean allowing people to pay you small low risk amounts with it, I say change them out to your currency immediately. Don't hold them. Don't speculate on the future value of bitcoin. You can easily test it out without risking more then a few pennies. Why all the anger? Just learn about it.

What is frustrating are the people going around talking about how evil it is and they 'know' it's a Ponzi scheme. When in fact they haven't even cracked the FAQ, and have no understanding of how it actually works. People are spreading FUD, instead of facts. You got good facts to argue against it? Great! Lets hear them.

Learn about it, if for no other reason then to have competent arguments against it. Hell, as I've said elsewhere, I want to find out what's wrong with it. Save us all a lot of bickering.

Re:BitCoin relevance

[Yunzil]

I have not found a flaw. More importantly I can't find anyone who has. Not one person.

I guess you haven't looked very hard then?

Re:BitCoin relevance

[ShooterNeo]

Actually, there's something else you can buy : http://www.wired.com/threatlevel/2011/06/silkroad/

And the big advantages of bitcoins? Let's go over the advantages, shall we :
(advantages list taken from another post)
You can send them in any amount to anyone on the internet, and with almost no fees.
  - International drug lords can be paid from anywhere

Your customer base is therefore the entire world not just people with your "coin of the realm"
-makes it easy to launder that drug money

If a customer pays you the money it's yours they can petition or sue you for a refund, but they can not issue an automatic charge back.
-very helpful for someone selling illegal goods

No third parties are involved, there is no one else to trust or pay fees too.
-a HUGE advantage for illegal goods transactions

You needn't hold bitcoins, there are a number of markets, as well as real world people who can change your bitcoins to cash in moments.
-Can cash out that money the moment it is convenient

Transactions happen very quickly compared to wire transfers, checks, paypal and credit cards.
-great for street corner dealing!

It is as easy to accept bitcoins as it is to spend them, unlike credit cards.
-ditto

They are very portable. While it would be difficult to travel with more then 10 thousands dollars of anything, you could easily hold millions of dollars on a micro SD.
-This is HUGE. The current drug currency of choice, the $20 and $100 bill have a massive problem : over the years, as deflation has occurred, you need more and more of it to represent a significant amount of money. A large drug business needs to move huge amounts of currency around, and micro SDs (that can be BACKED UP) are perfect. Even better, you can send huge sums of money around the world just by

Downsides : transactions are not anonymous, even though the identities of the parties are. A large drug business would be forced to use cutouts - people who act like hubs, conducting large numbers of transactions between bitcoins and real world currency (it need not be physical) and then back again. These people would not keep records of their transactions and would be based in 'liberal' jurisdictions in the world where the authorities don't give a shit.

All the arguments above also apply perfectly to the other 2 major vices - gambling and hookers. Bitcoins are a perfect way to do internet gambling, secure from the moralizing of the big credit card processors. You could do transactions with your bookie safely and securely. Hookers, same thing.

This part bugs me. I'm considering mining for a little coin, hoping I can at least pay back the cost of the hardware. But the big reason to go to BTs for people is to do transactions that can't be reversed and have no fees.

Re:BitCoin relevance

[DanielRavenNest]

There was not much to spend L$ on when Second Life was two months old. Because the mining pool for bitcoins has been growing exponentially, the *average* miner has only been at it for two months. In it's early days, Second Life paid people in game money simply for having an account, or literally for hanging around a location in the game (that was called "dwell"). Those initial efforts seeded the economy by giving people non-zero game money balances. Once there was a way to cash out the game money, which came a little later, now people had an incentive to offer products and services.

I see bitcoin as in that early seeding of the economy, getting balances in people's hands. The exchanges are already in place to enable cashing out (there is even one offering to exchange bitcoins for L$). The offering of products and services is only just starting, and takes a while to set up. I do graphics design and 3D modeling, and currently take payment via Paypal, Linden Dollars, and Blue Mars Dollars. I'll be happy to take bitcons too, once I have verified the path to cashing out works. To do that, I am mining a little each day at the moment, and when it's accumulated to enough to bother, I will test one of the exchanges. If it works, it will be the fourth electronic currency I deal in.

Re:BitCoin relevance

[DanielRavenNest]

"I mean, seriously. Until I can purchase groceries, or pay my mortgage or utility bill, with this stuff, it's about as useful to me as WoW gold."

Considering I paid for this computer, and the one before that, with money I made in Second Life using their virtual currency, I find game money quite useful. What made that possible is Linden Lab (the owners of Second Life) cashes out game money to PayPal. As long as there is a path to getting your local currency, someone will take bitcoins for goods and services.

abuse?

[orange47]

hm, could someone abuse the CPU power of bitcoin botnet to crack passwords, or find hash collisions or similar?

What about taxes?

[wanzeo]

I have mixed feelings about bitcoin. On one hand, I really like the (supposed) anonymity, distributed infrastructure, and open source nature of bitcoin. However, I cannot pay my property tax with bitcoins. And as much as I love the romantic notion of a society totally free of government control, the reality is that we really do need some form of central organization to administer justice. And that organization must collect taxes in order to function.

So the question is, do I ignore alternative currencies and use the dollar for better or worse because that is what they collect taxes with, or do I go off the libertarian deep end and totally embrace bitcoin just because I like the implementation?

Re:What about taxes?

[Ogi_UnixNut]

Why not use both? Nothing prevents you from converting one to the other, keep using government money for paying tax/rent/etc... and use bitcoins for other things/small purchases, whatever you want really. It's not an either/or option.

Great to watch.

[forgotten_my_nick]

I think it is great to watch a Ponzi scheme in action without being directly connected.

Thank God!

[glwtta]

Well, finally! It feels like it's been almost 24 hours since the last BitCoin story.

Probably hasn't, but you know, feels like it.

Number 2 is your answer

[Sycraft-fu]

People aren't good at math and they don't consider all the costs. They see a get rich quick scheme and/or think that Cryptonomicron will be a reality and forget to check their figures and make sure all costs are accounted for.

I'm amazed how many people forget power costs for things. I've got that for things like F@H and distributed.net. People will say I should do it because I have a very high end computer at home, or suggest I set the lab system at work to do it at night. They can't understand why not since I've "Already bought the hardware." The idea of power never seems to occur and they usually say "But it can't cost that much." I explain that when you take in power usage, and then again more usage for cooling costs, it adds up fast. It is not a cost I care to bare.

Re:Number 2 is your answer

[DocSavage64109]

Not just the electricity costs, but I can imagine running higher end GPUs 24/7 would cause much earlier hardware failures that, even if covered under warranty, involve downtime and shipping charges.

My concept of success would include three things

[Sycraft-fu]

1) A system that was financially sound. Deflation, which is guaranteed in a fixed quantity system, is not. A currency with built in deflation is not useful. If you do not understand the reasoning then I suggest you retake ECON 200. So for any sort of success, I first need to see a solid system, from a financial sense behind it.

2) A solid security analysis. If there is to be no agency that monitors everything, I have to be absolutely convinced it is secure. When there is no one to mind after things, the system must be perfect. You'll also have to forgive me if I've enough experience with human endeavors to be very suspicious of claimed perfection and need a lot of proof.

3) Most importantly though, I'd need to be able to use it. I'd need some demonstration that it could actually function as a currency for me, which means I could spend it on something I'd want. Money is only money if you can spend it. Doesn't matter how much value something supposedly has, if you can't spend it it isn't money. Nowhere I shop takes bitcoins.

Success isn't a bunch of hype on tech sites. Success is when it is useful.

What are dollars? Do they have any value?

[migloo]

What are dollars? Do they have any value (like being able to exchange them for gold or bitcoins)?

Re: What are bitcoins? Do they have any value?

[Nazlfrag]

So, the value is limitless? BUY BUY BUY!!!

Bitcoin vs Gold/Platinum/Palladium

[migloo]

The obvious reason for BC's attraction is that it shares the same properties as gold: limited supply, inoxydable, barely falsibiable (except for gold plating of tungsten ingots).
*PLUS*
In some respects, BC is even better than gold: zero weight, invisible, unseizable.
It can still be (slowly) mined at no cost, in winter as a byproduct of heating.
It is a tax haven, immune to government greed.
*BUT*
Unlike precious metals, BC is artificial: Science and technology will never create new precious metals, but Computer Science can create infinitely many clones of bitcoin, so that the claimed rarity is an illusion.
I expect the birth, within a few months, of some new BC look-alike, easier to mine, backed by some wealthy individual able to offer a large choice of goods and services: enough to start a real ecosystem, but of course, imitations will emerge to compete.
The original Bitcoins will then be forgotten, and by the way, so will be the dollar.

My two cents ...

Re:Bitcoin vs Gold/Platinum/Palladium

[ShooterNeo]

Possibly...but for instance SILVER has basically the same advantages that gold has, but it was decided not to base currencies off of it. It's possible that if BT were ever big enough, 'lock in' would cause people to use it for a long time. Gold, despite the deflationary problems it has, remained the official support of currencies for centuries. It did work, although possibly not as well as today's 'fiat' currencies.

Slashgold? Are you taking the piss?

[dbIII]

The name makes sense I suppose but has a different sort of meaning if you consider the British slang that has spread to everywhere that BBC TV programs have gone.
When I go for a slash I expect the liquid to be gold.

Correction.

[denzacar]

Pyramid scheme: A system of selling goods in which agency rights are sold to an increasing number of distributors at successively lower levels

http://en.wikipedia.org/wiki/Pyramid_scheme

A pyramid scheme is a non-sustainable business model that involves promising participants payment, services or ideals, primarily for enrolling other people into the scheme or training them to take part, rather than supplying any real investment or sale of products or services to the public. Pyramid schemes are a form of fraud.

No real investment, products or services? Check.
Promising participants payment? Check.
Priority in enrolling other people into the scheme? Check.
Non-sustainable business model?
Hmmm... Converting electricity into ones and zeroes of highly volatile value and no practical use beyond said value, which can't be readily converted to goods, services or even monetary units...? Oh, SO check.

There's no hierarchy of "agency rights", and, even metaphorically, bitcoins have never been sold as "a remedy for all diseases." It's like kids don't know what words mean.

Seriously?
You'll be the one to pull the "kids don't know what words mean" AND "metaphorically" card(s)?
When arguing about lite-FUCKING-ral meaning of a meta-FUCKING-phor for a FUCKING SCAM?

For fucks sake... Kids these days...

Re:Correction.

[rcb1974]

What do you think our current fiat money system is? That's right, one big pyramid scheme. The Federal Reserve Bank creates money out of nothing at essentially zero cost, and then LOANS it to the government. The only reason why people want Federal Reserve Notes is because everyone else wants them. At least with bitcoin there is a real cost associated with creating bitcoins -- you have to pay for the electricity used to mine them. So in that one sense, bitcoin is superior to federal reserve notes (or any other debt based currency). Also Bitcoin is not a debt based currency, so it doesn't have a problem by design with inflation. If anything Bitcoin should eventualy have a problem with deflation, since there is a upper limit to the number of bitcoins that will ever be created.

Re:Correction.

[idontgno]

What do you think our current fiat money system is? That's right, one big pyramid scheme. The Federal Reserve Bank creates money out of nothing at essentially zero cost, and then LOANS it to the government.

Hey, you know the difference between a unicorn and a horse? One has a horn on its head, and the other exists.

You forgot...

[denzacar]

Pyramid scheme. On a computer.

I wonder if someone will be able to successfully sue Slashdot for promoting this particular pyramid scheme once the bottom falls out of it?
Now THAT would be a perfect Slashdot story.

Well... if it somehow managed to include Apple and Microsoft hate and Linux. In that order.

Ha ha ha..bitcoin

[Sqreater]

Look, Bitcoin is just an excuse for busytechers to do busytech. And you people overanalysing their activities are busythinking the busytechers. If all the thinking power put into this useless subject could be harnessed, Amazon would not need a single server farm power supply.

GPUs are not inherently faster than CPUs

[rbarreira]

why GPUs are faster than CPUs inherently

I hear this a lot, but it's not true. They are faster at highly parallel tasks (like mining Bitcoins I guess), slower at highly serial tasks. They're simply tuned differently.

For example, CPUs have a lot of transistors dedicated to cache memory. This is because they can't know in advance what data they'll need, the instruction which computes an array index may be right before the access to the array.

On the other hand, GPUs rely on highly predictable code, where threads in the same group are all doing the same thing at the same moment. Memory operations always have a very high latency on GPUs, but they hide these latencies by switching the core to running another thread while the memory operation is pending. Latency doesn't matter much for GPU operations, there are thousands of threads waiting to run to cover the latency. This is definitely not the case on a CPU, instruction latency is very important there and this takes extra hardware.

GPUs are not inherently faster, they're simply oriented towards different tasks.

Teach Yourself ECON 200

[tepples]

A currency with built in deflation is not useful. If you do not understand the reasoning then I suggest you retake ECON 200.

I never got that far in economics when I was in college; I majored in something else. Can you recommend a freely available ECON 200 textbook on the web for me to look through tonight?

Nowhere I shop takes bitcoins.

Have you mentioned Bitcoin to the small independent online stores that you use most frequently?

Re:Teach Yourself ECON 200

[Sycraft-fu]

I'll do you one better: I'll link you to the course site of a great economics professor: http://www.u.arizona.edu/~swansong/. You can read his notes/assignments online, and the syllabus recommends further reading.

I have not mentioned bitcoins to anywhere I shop because, as is obvious, I deeply mistrust them. I do not believe they are a good idea so I would not recommend people use them.

Which in turn gives rise to another new acronym

[sean.peters]

MMILF

Realistically, though...

[sean.peters]

... deflation is probably not a big deal unless you have a loan denominated in Bitcoins, and none of those are likely to be made, well, ever. Which leads to the larger point: there's never going to be a Bitcoin dominated economy. To provide sufficient money supply to do anything with, you need demand deposits, which means you need banks that deal in Bitcoins. But Bitcoins were designed to cut banks out of the picture, so no checking accounts, so not very much money supply, so no possibility of a Bitcoin economy of any size.

The whole saga of Bitcoins is a classic example of developer hubris. Nakamoto didn't really know anything about economics, but hey, he was a hotshot programmer, how hard could it be? Bitcoin could have been a much bigger deal if it had been thought out more, but as it is, it won't amount to much beyond a pyramid scheme combined with a method of buying weed online.

Yesterday's high in DC: 102F

[sean.peters]

Riiiight, I just won't use my AC. Got it.

Re:Yesterday's high in DC: 102F

[Pentium100]

Well, that sucks. The highest I get is about 34C, then my room is ~40C. It was like that for 3 days last year.

Still, AC uses too much power for me, It would probably double what I pay for electricity and I already pay a lot, using more than 1000kWh/month and all.

let's be careful

[slashdotjunker]

I feel that Bitcoin discussions always fall apart because people cannot make a distinction between the Computer Science of Bitcoin and the Economics of Bitcoin.

The Bitcoin Algorithm is a peer-to-peer transaction protocol. The algorithm was self-published by S Nakamoto as "Bitcoin: A peer-to-peer electronic cash system" in 2008. To my knowledge, the paper has not been accepted in a peer reviewed Computer Science journal. Nevertheless, there appears to be growing acceptance that the underlying technology is sound. However, that says nothing about the validity of applications based on the peering transaction protocol.

The Economics of Bitcoin is about how the original coins are generated, how new coins are minted, how the currency is regulated, etc. Nakamoto's paper has nothing to say about these issues. In particular, many people feel that Bitcoins have been distributed in a manner that makes them a Ponzi scheme. I am not aware of any paper published in a peer reviewed Economics journal that contradicts this.

The lack of a peer reviewed CS publication is terrible, but not fatal. Bitcoin has enough popularity now that we can expect crypto researchers to be looking at it as an easy target for a quick pub. The lack of a pub on a flaw in the technology of Bitcoin is not bad. This technology might be useful for something.

However, the lack of a peer reviewed Economics pub addressing the Ponzi Scheme issue is fatal. In addition, I'm pretty sure that there are other important things that need to be investigated by Economists. I can't say much more about this since I am a computer scientist.

I hope people will understand that there is a distinction between Bitcoin technology and Bitcoin coins. It is possible to have a different opinion on each and an opinion on one does not imply anything about the other. I urge people in future Slashdot discussions to take care to make it clear in their posts whether or not they are talking about the technology or the coins. Thank you.

Re:let's be careful

[fireteller2]

Agreed. Very good.

I don't understand the singling out of the ponzi scheme assertion though. There are a number of assertions about the economic failures of bitcoin. There aren't any peer reviewed economics papers on bitcoin being a ponzi scheme for that matter. I'd like to see a credible paper on _any_ aspect of bitcoin.

Why is theran assum ption

[geekoid]

that the algorithm used by bitcoin won't be outdated by advanced computer power?

The Ponzi scheme argument

[fireteller2]

Since I can't seem to engage anyone on the issue of _why_ bitcoin is a ponzi scheme other then "early adopters get a huge advantage over later adopters" which does not uniquely define ponzi schemes, I will try to argue it myself. Please help me find my errors. I’m am not being facetious, this is a real argument that I’ve outlined for myself. I did not cut out any counter argument that I could think of.

First. What is a ponzi scheme?

[Wikipedia]
"A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors."

As I understand it this means:

Person A buys $10 of a Ponzi scheme X,
Person B then buys $10 of X.
X has $20. (and is only worth $20, because it doesn’t do anything)
X pays it’s owners $1.
X pays Person A $1 (dividend interest).
X pays Person B $1.
X has $17.

This can go on for a while if no one withdraws their capital, but at some point someone is going to have to buy $10 worth of X to pay A or B. If it doesn’t happen it collapses. Ok, I think that’s clear, and correct.

Now let me see if I can understand how this differs from say Apple stock.

Person A buys $10 of Apple stock
Person B buys $10 of Apple stock
Apple has $20.
Apple pays it’s expenses
Apple earns profits from doing things.
Apple’s worth is it’s profits minus it’s liabilities.
Apple is profitable, so apple has $21

However, Apple does not pay dividends. How does Person A or Person B make money from investing in Apple? At some point someone is going to have to buy $10 worth of Apple to pay A or B. That is A and B need a third party to realize the value of their investment. Ok, this is confusingly similar, let’s me see if I can understand the differences.

1) X pays dividends, Apple does not.
2) When you buy shares of X you buy them from X, when you buy shares of Apple you buy them from A or B, i.e. other share holders.
3) So this means that there is no set number of shares of X, X wants to keep selling as much as it can. There is a fixed number of shares of Apple.
4) Apple makes a profit, and therefore has a ‘demonstrable’ value. X can only operate at a loss, it’s value is it’s total deposits minus payments.

Ok I think I understand some differences, but what if Apple was operating at a loss? How is that not like X? I guess because each share of Apple is a fixed percentage of the total value of Apple, whereas you don’t have any real percentage of X. So if Apple operated at a loss your share value would go down. That means that another key feature of Apple is that it is transparent, you know it’s value, you know how many shares there are and you know how many shares you have. With X you don’t know it’s value, the number of shares there are or the number of shares you have.

I think I understand these differences. Do I have something wrong?

So which of these two systems is bitcoin most like?

1) Bitcoins do not pay dividends.
2) You buy them from other holders, there is no X to buy them from.
3) There is a set number of them.
4) It is transparent, you know how many shares there are and you know how many shares you have.

This all looks like Apple stock to me. That seems to leave the issue of value.

X is only the value of all deposits minus payments.

This does sound a bit like bitcoin without the payments part. Isn’t bitcoin just the value of all the money that’s been put into it? No wait, there is no X in which all the money spent on bitcoin is being held. Hmm this is a tough one, does that mean that bitcoin is actually worse then a Ponzi scheme? let me try it with apple.

Apple’s value is what it does.

This sounds like bitcoin too. Bitcoin is software that has some unique features. So then is bitcoin m

The real problem is the pyramid

[dbIII]

It's a shiny attractive pyramid scheme with a price of entry out of reach without misusing company resources and currently seen as enough of a grey area that such a thing is seen as a minor corner to cut instead of a potential crime. The real problem of course is the whole idea of selling something of no intrinsic value to enough suckers until money is made.

Thank you.

[denzacar]

Hey, you know the difference between a unicorn and a horse? One has a horn on its head, and the other exists.

Nicely put.