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Bitcoin Mining Reward About To Halve
First time accepted submitter ASDFnz writes "The reward for successfully completing a block (also called mining) is about to halve from 50 bitcoins to 25. From the article: 'Bitcoin is built so that this reward is halved every 210,000 blocks solved. The idea is as bitcoin grows the transaction fees become the main part of the reward and the introduction of new bitcoins slows down to a trickle. This also means that there will only ever be 21,000,000 bitcoins in circulation.' You can watch the countdown here."
My parents won't let me mooch off their electricty forever.
Bitcoin is the greatest real-world experiment in Austrian economics. For once we'll get to actually see if a "deflationary spiral" will actually occur when the rate of money creation slows, or if the Keyensians were just full of it. Whether bitcoin actually succeeds or not, we'll at least get some really good data.
Yea it's too bad nobody ever though of that or else they might have made sure each one is divisible to eight decimal places or something.
A BitCoin can be divided up into 8 decimal digits. So one BitCoin contains 1 billion discrete units that can be used for transactions.
It's the same as setting cash on fire. If you lost your private keys the unspent outputs they control can never be spent.
It's a proof-of-work calculation that records a transaction history. Basically, it's to prevent double-spending; if someone attempts to transfer the same bitcoin to two different people, the person who gets it is the person who had more computational effort go into recording them as having it. If the amount of computational effort in recording transaction histories were low enough, someone could double-spend by recording an alternative history on a powerful computer and having it supersede the transaction history everyone thought they were using.
In order to encourage people to put effort into recording the history, there's a reward for doing so. This lead (perhaps predictably) to "mining", where people race to record the transaction history first in order to get the reward.
So there is a purpose to mining, but it's only to keep the Bitcoin system itself running. If people stopped mining (perhaps because the reward got low enough), Bitcoin would collapse. (It's envisaged that once the mining reward gets low enough, people transferring bitcoins will pay a transfer fee to the miners to encourage them to keep mining, and they'd get their income that way instead.)
(1)DOCOMEFROM!2~.2'~#1WHILE:1<-"'?.1$.2'~'"':1/.1$.2'~#0"$#65535'"$"'"'&.1$.2'~'#0$#65535'"$#0'~#32767$#1"
So what you are saying is, if I happen to have some Bitcoin units, I should hang on to them as long as possible, because eventually people will have divided Bitcoin units up to the point where the handful I saved up will be worth a fortune? Sounds like a great currency (except for the whole "this is going to fail" part)!
Palm trees and 8
They're being used quite a bit for online gambling because they allow for instant deposits, instant withdrawals, zero risk of charge-back, and for some online casinos, provably fair wagering.
Bitcoin will let us see if money is something that can truly exist without government, or if the anarchists were full of it. Bitcoin's success or failure will almost certainly tell us more about this than about deflationary spirals.
Palm trees and 8
Get rid of them now. I suggest you send any bitcoins you have to this wallet address: 1AeCTNhF3Sovi8fkjq7Buy8sYoc2C4xoo4
There are also a few VPS and VPN providers who accept bitcoins for the same reasons, and because now they can sell their services to customers anywhere in the world without being limtited by the legacy banking system's inability to process payments from certain places.
Here's the highest-level view possible: a bunch of anarchists thought that an interesting cryptographic trick would let them have money without government, and then a bunch of opportunists realized that they could scam people with Bitcoin much in the same way that bankers scam people with unusual investments.
Palm trees and 8
1) One BitCoin and one account is as good as the other, so you can swap them outside the system. I can send you 100 BTC from my account A to your account B, then get back 50, 25 and 25 BTC back randomly delayed from your other account C to my other account D. Sure, all the transactions are public record but there's no link between the 100 BTC I used to have in A and the 100 BTC I have now in D. Only the swapping service could possibly link those transactions together.
2) If you can both acquire and spend your money anonymously then the transactions are meaningless, say you do anonymous rent-a-coder work for BTC and use those BTC to pay for web hosting that you only access anonymously. That's the essence of a currency right there, you can make money for doing work and then spend it on what you choose. Yes if any point you're tied to an identity they can try rolling transactions both forwards and backwards to see where you got money from and what you spent money on.
That's not really one of the problems with BitCoins, the main reason is exactly this that the supply is diminishing. Hoarding old coins from when they were easy to make only seems like a better and better idea, unless of course the BitCoin economy collapses because everyone's hoarding. I bet a lot of the people that offer services for BitCoin are the same as those hoarding large BTC reserves, the pyramid game only works if they can sucker more people to join in.
Live today, because you never know what tomorrow brings
Yep. That's a feature of any currency without inflation, and why inflation is actually a good thing. It discourages hoarding. Neutral or deflationary currencies are only good for the people who already have a lot of them.
Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face
Since now they girls doing video clips for bitcoins! http://www.videos4btc.info/
I'm no crypto expert; but it was my layman's understanding that the bitcoin setup is(barring presently unknown attacks) unforgeable; but that there is nothing particularly special about the "Genesis block" at the beginning of the bitcoin block chain, aside from mutual acceptance of it.
Given that, while it is not possible to forge a bitcoin or to produce more than 21,000,000 of them, it should be possible for anybody who feels like it to simply define a new Genesis block and go hashing merrily away. The products of this block chain will be distinguishable from the products of any other block chain; but user convention could assign them value in exactly the same way as it did the old ones(or, more probably, they would trade at a discount against the 'original' bitcoins).
Any speculation on whether the people-who-care-about-bitcoins of the world are sufficiently rabid about some sort of deflationary theory of currency to prevent that, or will we start seeing N different distinct block chains trading between one another as well as select real world commodities?
Gold has actual mechanical uses (electrical contacts.) It also has bauble value.
BitCoins have zero intrinsic value, and they require electric and Internet connectivity to be used. Gold requires a civilization level just a step above pure anarchy to be useful.
IMHO, it is sort of suspicious that there is this ramp where early adopters get these bonuses, and people hopping on late end up having to put a lot more resources in for the same coins... that combined with the value of the currency going up/down in insane swings, makes it useless as anything other than a novelty.
Apart from silk road, bitcoins have practically zero value in the vast majority of financial transactions
"Apart from the types of situations that it's useful in, it's not useful in any situations."
Gold is even useful in a real anarchistic society.
"Ubuntu" -- an African word, meaning "Slackware is too hard for me". - stolen from Dan C alt.os.linux.slackware
I used to be big on the BTC mining thing. These days, however, it just doesn't matter anymore.
I got into BTC fairly early, back when it was profitable to run the mining software on a single workstation to suck up unused cycles. At that time, it was actually profitable to invest in dedicated hardware to mine coins- so I (and a lot of other people) eventually did. My first dedicated rig was a HP ML350 G5, which set me back about $4000. It ran two 8 core processors and basically sat around all day mining bitcoins.
Later on when the GPU accelerated mining took off, I bought and built four systems from off the shelf components, and the ML350 was rededicated to running ESXi with a bunch of VMs for mining and managing the four slaves. Each slave had 3x ATI GPUs, later those were swapped out for NVidia GPUs for other various software reasons.
Then the FPGA (and later ASIC) players came into the game. It started with development boards (FPGA boards purchased direct from the chip manufacture), but later spiralled into custom FPGA boards in nice cases that you could stack or keep around on a metal shelving system easily enough. Now, the custom FPGA boxes for BTC mining basically put the GPU miners out of business- the introduction of FPGA hardware increased the BTC mining difficulty to the point that it was pointless wasting the power mining with anything other then.
The problem was that by the time the FPGA market exploded, it was *barely* worth investing in the hardware to get in that late in the game. Previously, buying a few PCs and loading them with GPUs was a cheap way to make some extra cash. FPGAs however cost a hell of a lot more and the difficulty of mining BTCs had increased so much that you would barely break even, and you'd be bloody lucky if you actually made any money in the end.
But FPGAs weren't good enough. People started thinking that they could build silicon to do things even faster, and thus the ASIC market started to emerge and take off. The problem here is that while an ASIC kicks the shit out of an FPGA (and anything that came before the FPGAs)- they're so expensive and the BTC difficulty has been bumped up so much by the initial ASIC wave and the FPGAs before it... That... Wait for it...
Investing in ANY form of ASICs to make **any** kind of reasonable money... Means that you'll never actually break even.
That's right, the ASICs they've got out there are so powerful and the BTC chain is becoming so difficult to mine, that if you invested $10K+ (which is what you'd have to spend) for a reasonable ASIC setup- you would never actually make any money. If your ASIC box is profitable, it won't be for long since the more ASIC miners join in on the party- the more difficult it becomes to mine BTCs.
So the whole system has kind of spiralled into nothing. Mining isn't profitable anymore. Even if you invest in serious hardware. It just doesn't matter anymore, and now that the "reward" for mining BTCs is about to halve- it's even more of a waste of time then it was before. You could have made money in the beginning if you were there, but if you weren't- it's not worth investing even a dollar into hardware to mine BTCs anymore. That train has long since departed.
BTC is basically just a currency now. Mining is vastly irrelevant and always will be, now that we've got FPGAs and ASICs flying around.
-AC
Maybe, but I still think the more likely scenario is that nobody but those who are already using them will ever use them. They will be held onto with people talking about their potential value as everyone else goes on with their day-to-day business.
How on Earth does SETI@Home benefit society? Even if by some bizarre coincidence, we actually detected evidence of intelligent life outside of the solar system, the likelihood that society would benefit by that is basically nil.
Directly, on the positive side, it would pretty much kill some religions, or at least transform them into less harmful variants that don't preach that humans are unique and masters of everything.
On the negative side, it would probably trigger some new ones. If people can believe in Xenu, Kolob, Ezekiel or John's revelation, they most certainly would be able to start cults based on extrasolar intelligence too. Hopefully, most of them will put on their Nike sneakers and leave us.
Indirectly, it would likely renew interest in space exploration, which I think might benefit us all, and especially our descendants and their chance of survival.
OMG you're right. I can't believe all the people who've been working on this project for the last three years missed these numerous fatal flaws.
Please, go onto the Bitcoin forums and let them know what you've discovered right away so they all know it's time to give up and go home.
Yes. You can charge 0.00000001 Bitcoins. (Although it would generally take a much larger fee than that to get timely transaction processing)
If more divisibility than this were ever required, this could be migrated to, provided the majority of network participants agreed. Increasing the divisibility this way would probably be uncontroversial if ever it were in such widespread use that it made sense - but other features such as the 21 Million limit would never get majority consensus to be changed.
There is a major difference between political anarchy and chaos. In political anarchy you still have order, but instead of a central government controlling everything it's done with voluntary contracts at the individual level. One of the core beliefs an anarchist has is personal freedom via volunteerism is the only real kind of freedom. There will still be a need for money in a society like that. It could be gold, silver, beads, goats, or whatever the two people doing business agree on.
If you or I believe that's a viable political structure is a different conversation.
"Ubuntu" -- an African word, meaning "Slackware is too hard for me". - stolen from Dan C alt.os.linux.slackware
Gold has actual mechanical uses (electrical contacts.) It also has bauble value.
BitCoins have zero intrinsic value, and they require electric and Internet connectivity to be used. Gold requires a civilization level just a step above pure anarchy to be useful.
IMHO, it is sort of suspicious that there is this ramp where early adopters get these bonuses, and people hopping on late end up having to put a lot more resources in for the same coins... that combined with the value of the currency going up/down in insane swings, makes it useless as anything other than a novelty.
I find it pretty unfair that the early gold miners got such large bonuses. It's much harder to mine gold nowadays. No more standing by the river with a sieve will do it :-(
People already pay mining fees, typically 0.0005BTC / transaction. Right now you get about 0.1 BTC in mining fees from a block, and 50 BTC from the built-in reward (which functions a a way of distributing bitcoin initially). As the reward halves every 4th year and number of transactions supposedly rises, a higher percentage of a miners income will stem from tx fees.
You can make a transaction without paying a fee, but not all miners will include your transaction in their block, and thus your transaction may take a long time to be confirmed.
What?
The main advantages of Bitcoin over other types of "real" money:
* it's censorship resistant (can't be shut down, just like bittorrent)
* it has low transaction costs and low barrier to entry (freedom of economic transaction)
* it can be transmitted via the internet globally in short time (max 1 hour)
* it's cheap and easy to secure against theft and loss
The additional advantages of Bitcoin over FIAT currencies:
* the supply is limited
* it's open source and not controlled by banking cartel or government, open to anyone
The disadvantages of Bitcoin:
* its acceptance is very low, to say the least
* it's hard to understand and therefore hard to trust
* it offers an ideal playground for criminals and scammers
* you can add your own criticism here
I can't see any reason for the parent comment to be at -1, that seems like a moderator with an agenda at work. So I'll use my excellent karma to repeat what roman_mir says here:
Except one can not buy bitcoins with a credit card or paypal,
1. because these companies hate bitcoin and what it represents for them
2. because of a high chargeback risk no one who doesnt trust you would sell you bitcoins for paypal
"There is a major difference between political anarchy and chaos. In political anarchy you still have order, but instead of a central government controlling everything it's done with voluntary contracts at the individual level. "
There is no difference. In a real anarchy you pay for 'protection' to your local gang, which replace the government quite quickly.