Operation Wants To Mine 10% of All New Bitcoins

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Operation Wants To Mine 10% of All New Bitcoins

Posted by Soulskill on Wednesday March 26, 2014 @06:10PM from the go-big-or-go-home dept.

An anonymous reader writes: "Mining new Bitcoins is computationally expensive — you can't expect to do much on your standard home computer. Many miners have built custom rigs to mine more efficiently, but it was only a matter of time until somebody went industrial. Dave Carlson's goal is to mine 10% of all new Bitcoins from now on. He's built literally thousands of units. They collectively use 1.4 million BitFury mining chips, which are managed by a bunch of Raspberry Pis. 'The current rigs each contain 16 boards, with each board containing 16 BitFury chips, for a total of 256 mining chips on each rig. Carlson said about 90,000 processor boards have been deployed, which would put the number of rigs at about 5,600. A new board [being designed] will have 756 chips on each rig instead of 256.' Carlson says his company spent $3-5 million to get everything set up. They current generate 7,000 — 8,000 Bitcoins per month, which, at current rates, would be worth over $4 million."

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much industrial by SublimeCreditor · 2014-03-26 18:14 · Score: 3, Funny

very wow many btc
1. Re:much industrial by mx_mx_mx · 2014-03-26 19:18 · Score: 1
  
  I would mod you funny, but something inside me cries, as your words are so true.
  
  --
  Linux forever
2. Re:much industrial by unixisc · 2014-03-27 07:58 · Score: 1
  
  Sounds like a good application for the Itanic
I admire their spunk, but... by SpectreBlofeld · 2014-03-26 18:22 · Score: 4, Insightful

My friends and I have already switched to Dogecoin. Sorry. And when you start mining that, we'll move again, etc.
I'm not serious, I haven't invested in any virtual currency. But isn't this a sort of problem? When it looks like a Major Player moves in and starts dominating the generation of your pet virtual currency, why wouldn't you just jump ship to the next one, where you can stand a chance to make money in the early days of generation?
It's not like mining gold. Gold is gold and there's only so much of it, and it's there or it's not. These virtual currencies only have value due to consensus, and can be abandoned on a whim, especially when some guy comes in with his 1.4 million mining chips and upsets everything. I know there's a limited number of bitcoins available before computation is done, so in that sense it's 'limited' like gold and thus perceived to be a scarce valuable item, but unlike gold, the users can just up and quit Bitcoin forever, especially when they sense 'unfairness' in the operation.
1. Re:I admire their spunk, but... by mister_playboy · 2014-03-26 18:32 · Score: 4, Insightful
  
  When I see how much hardware and electricity is being wasted on these various mining processes, I can only shake my head.
  I'm not sure when BTC is slated to have all of its coins mined, but it will be instructive to see what happens to it at that point.
  
  --
  Do what thou wilt shall be the whole of the Law ::: Love is the law, love under will
2. Re:I admire their spunk, but... by phantomfive · 2014-03-26 18:54 · Score: 3, Insightful
  
  I know it's a hard concept to understand, but gold only has its value based on consensus as well.
  
  A more precise way of saying it: the value of gold varies according to the supply and demand curves. Bitcoin will vary the same way.
  
  --
  "First they came for the slanderers and i said nothing."
3. Re:I admire their spunk, but... by giorgist · 2014-03-26 18:57 · Score: 1
  
  Same goes for bitcoin. There is so much of it to go around ... just like Gold, although we know how many bitcoins there are. There are miners and there are non miners. You are a non-miner.
4. Re:I admire their spunk, but... by mwvdlee · 2014-03-26 19:15 · Score: 1
  
  Gold has supply and demand.
  Regular currency is linked to the supply and demand of gold.
  Wasted electricity has no demand.
  Bitcoin is linked to the supply and demand of WHAT exactly?
  
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5. Re:I admire their spunk, but... by phantomfive · 2014-03-26 19:27 · Score: 2
  
  Regular currency is not linked to the supply and demand of gold, and hasn't been for ~80 years in the case of the US dollar.
  
  Bitcoin has its own supply and demand curve, like every other currency in the world.
  
  --
  "First they came for the slanderers and i said nothing."
6. Re:I admire their spunk, but... by Afty0r · 2014-03-26 19:41 · Score: 1
  
  Why do you believe "unlike gold, the users can just up and quit Bitcoin forever"?
  I don't use, mine, or own Bitcoin - but it's fairly obvious that beyond the use of Gold for conducting materials, it has little to no intrinsic value - it's almost identical to Bitcoin.
  Everyone invested in Gold could decide tomorrow to shift their investments to Aluminium...or Dogecoin. This would leave Gold almost worthless. The same is true of Bitcoin - but why do you feel one is more likely than the other?
  I think you do not understand how currency works...
7. Re:I admire their spunk, but... by LordWabbit2 · 2014-03-26 19:41 · Score: 4, Interesting
  
  When I see how much hardware and electricity is wasted digging chunks of hardened carbon out of the ground, I can only shake my head.
  
  When I see how much hardware and electricity is wasted jumping out of perfectly good airplanes, I can only shake my head.
  
  We humans tend to do things because we want to, not because it makes sense to you.
  
  --
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8. Re:I admire their spunk, but... by fox171171 · 2014-03-26 19:51 · Score: 1
  
  I know it's a hard concept to understand, but gold only has its value based on consensus as well.
  Largely true, but not entirely true. Gold is useful, and therefore valuable for that reason alone.
9. Re:I admire their spunk, but... by Jack+Griffin · 2014-03-26 19:59 · Score: 5, Insightful
  
  Stupid analogy.
  Chicks love shiny things, Guys want chicks. Anything that impresses chicks has value.
  Dorks love BTC, nobody cares what dork think. See it doesn't really work the same way.
10. Re: I admire their spunk, but... by AudioEfex · 2014-03-26 20:30 · Score: 1
  
  Right there with you. Wasting such resources on on computations explicitly designed to tax equipment for what amounts to a hardware pissing contest, burning actual finite resources to do so (metals, coal for electricity, etc.).
  As to the posting, it was only a matter of time before disruptive forces like this began to pop up. One way or another, in order for BitCoin to become what it wants to become (a legitimate currency) it's has to succumb to the very thing it was trying not to be (at the mercy of "big business"/corporatiszation and government regulated like the new IRS rules regarding it).
11. Re:I admire their spunk, but... by jandersen · 2014-03-26 20:31 · Score: 1
  
  I can't claim to understand bitcoin (or virtual currency in general), but as far as I can make a mildly educated guess, the value stems from the fact that the work required to produce them is so great that it has to be a collective effort. If it somehow becomes easy, then they are no more than a form of pyramid scheme.
  Other currency standards are based on things of tangible value - even gold or diamonds have a practical value far beyond being pretty. Bitcoins, on the other hand, have no intrinsic value - we could wipe them out completely today, and the world would be no poorer in real terms.
12. Re:I admire their spunk, but... by Hategrin · 2014-03-26 20:44 · Score: 1
  
  I dunno, maybe because Gold is what sparked the idea for currency based trade, and since the dawn of civilization it has withstood the test of time whereas other forms of currency far more creditable in their time than bit-coin haven't? At the end of the day you can always say "you never know what tomorrow may bring", but have some common sense / verisimilitude, or maybe we should all start investing in embalmed foreskins because hey they might become a major currency some day? YOU NEVER KNOW MAN!
13. Re:I admire their spunk, but... by Rich0 · 2014-03-26 20:47 · Score: 1
  
  When it looks like a Major Player moves in and starts dominating the generation of your pet virtual currency, why wouldn't you just jump ship to the next one, where you can stand a chance to make money in the early days of generation?
  Well, generation of US Dollars has been monopolized by the US Government for over 200 years, and I don't see anybody in a rush to jump ship to the South Sudanese Pound.
  Bitcoin was designed to be a currency - not a way to make money. The hype factor has caused value to surge, which largely limits its actual value as a currency. At some point value will stabilize and mining/etc will become economically efficient, and at that point nobody will make significant money off of mining or trading Bitcoin, but it will be far more useful as a currency.
14. Re:I admire their spunk, but... by delt0r · 2014-03-26 20:56 · Score: 3, Informative
  
  Gold is not a superconductor at any temperature. Its not even a great conductor. It is soft and makes good "push" connections, hence its use in connectors.
  
  Also most of golds value has nothing to do with its usefulness. About 10% of mined gold is used. The rest is hoarded for perceived value based historically on the fact that its shiny when not many things where.
  
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15. Re:I admire their spunk, but... by inasity_rules · 2014-03-26 21:15 · Score: 4, Insightful
  
  Hardened carbon does have industrial uses. Jumping out of aeroplanes has military applications. Not sure what applications bitcoin mining has apart from an expensive to run currency. Maybe worthwhile for just that, I don't know.
  
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16. Re: I admire their spunk, but... by Anonymous Coward · 2014-03-26 21:23 · Score: 1
  
  Validiation of Bitcoin is the very definition of a waste of electricity and hardware
17. Re:I admire their spunk, but... by pantaril · 2014-03-26 21:41 · Score: 4, Funny
  
  When I see how much hardware and electricity is being wasted on these various mining processes, I can only shake my head.
  The hardware and alectricity is no more wasted than hardware and electricity and employees used by your bank to secure your account.
  
  I'm not sure when BTC is slated to have all of its coins mined, but it will be instructive to see what happens to it at that point.
  The last BTC should be mined sometimes in 2140 but the miners will carry on because they are needed to verify transactions. The'll get their profit from transaction fees.
18. Re:I admire their spunk, but... by pr100 · 2014-03-26 21:53 · Score: 1
  
  A lot of the value of gold is simply because people want gold. In that sense it's no different from bitcoins.
  Of course additionally it has practical uses in industry, but if that was all there was to it then it wouldn't be stockpiled as a store of wealth the way it is now; and its value would be less.
  It's not clear that there is a limited supply... depends on whether you believe the universe to be finite. I'm not being entirely facetious - we could well see commercial asteroid mining operations in our lifetimes.
19. Re: I admire their spunk, but... by cmdr_tofu · 2014-03-26 22:45 · Score: 1
  
  what about usd? doesn't their production, maintenance and operation require large amounts of resources. What with counterfeiters getting more sophisticated, maintenance of the currency amounts to a "press technology and police pissing contest"
  I still wouldn't accept payment in the form of bitcoins.
20. Re:I admire their spunk, but... by Joce640k · 2014-03-26 22:47 · Score: 1
  
  I know it's a hard concept to understand, but gold only has its value based on consensus as well.
  
  Yes, but gold is pretty.
  It has other values. It's been used as a display of wealth since prehistoric times.
  Bitcoin? Not so much.
  
  --
  No sig today...
21. Re:I admire their spunk, but... by geekmux · 2014-03-26 23:06 · Score: 1
  
  Stupid analogy. Chicks love shiny things, Guys want chicks. Anything that impresses chicks has value. Dorks love BTC, nobody cares what dork think. See it doesn't really work the same way.
  Seriously? Damn, talk about stupid analogy. You don't even get what all of these things have in common, which is money.
  "Dorks" don't love BTC. Dorks love what BTC can BUY, which is attention from "chicks" that love "shiny things".
22. Re:I admire their spunk, but... by TeethWhitener · 2014-03-26 23:37 · Score: 4, Interesting
  
  This is the main problem I have with Bitcoin. Here we have a brilliant opportunity to harness computing power to solve a socially or scientifically relevant problem, and instead we waste it on solving random meaningless math problems. In my book, an ideal cryptocurrency would use that computing power to solve a protein folding problem, or a plasma physics problem, or any other number of things. You wouldn't need an artificial upper limit like BTC has, because in generating a new block of currency, you'd actually be creating something of value to society. Riecoin approaches cryptocurrency from this point of view (albeit still with an asymptotic limit on the number of total currency units, and only applied specifically to computations of potential counterexamples to the Riemann Hypothesis), as does IBM's World Community Grid to a certain extent (albeit without the ability to easily and securely transfer the virtual cash generated), but I'd really like to see it take off.
23. Re:I admire their spunk, but... by SuricouRaven · 2014-03-26 23:48 · Score: 1
  
  Gold actually isn't that good a conductor. It's worse than copper. It does make a superior conductor under chemically harsh conditions though, as it's almost corrosion-proof.
24. Re:I admire their spunk, but... by Jesrad · 2014-03-26 23:49 · Score: 1
  
  And part of these industrial uses are related to making the chips able to mine bitcoins faster.
  I'm not sure you know what your final point is.
  
  --
  Maybe we deserve this world ?
25. Re:I admire their spunk, but... by TheRaven64 · 2014-03-26 23:49 · Score: 4, Insightful
  
  If the value of gold were tied solely to its utility, it would be about 10-20% of what it is today. If the value of Bitcoin were tied solely to its utility, it would be 0% of what it is today.
  
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  I am TheRaven on Soylent News
26. Re:I admire their spunk, but... by IamTheRealMike · 2014-03-26 23:53 · Score: 5, Interesting
  
  When I see how much hardware and electricity is being wasted on these various mining processes, I can only shake my head.
  Bitcoin developer here. Yes, by all means shake your head, it's clear that the current level of mining is a large waste of resources. Nobody has been reporting double spends caused by hashpower attacks, which is what mining is designed to stop, suggesting that right now there's too much security.
  But what else would you expect? Inflation causes misallocation of resources. This is basic economics and is the reason Bitcoin is designed to eventually target a stable monetary base. Yet you cannot create a new currency from scratch without inflation, by definition, because the money has to come from somewhere. What's more you can't create a currency fairly if you simply give yourself all the money (pre mining), so there has to be a fairly long drawn out allocation process so everyone gets a chance of taking part in that initial inflation.
  This initial misallocation of resources towards excessive security is annoying, but tolerable - existing currencies inflate all the time and this causes huge misallocation of resources towards things like asset bubbles. If we're going to misallocate towards something, more security against rollback attacks is perhaps not the worst thing we could want, especially as market incentives should push people towards using renewable power over the next few years.
  
  I'm not sure when BTC is slated to have all of its coins mined, but it will be instructive to see what happens to it at that point.
  The rate halves every four years. It rounds to zero in 2140 but will presumably become irrelevant long before that. How irrelevant really depends on Bitcoin's long term value in dollar/euro/fiat terms though, which is impossible to predict.
  At that point mining will be supported entirely by fees. How much mining takes place will depend on how much security the Bitcoin user community really needs, which I am expecting to be determined by letting it fall until double spending attacks start to become commonplace and an actual risk to business. Then the game theory becomes quite complicated because mining is a public good, but I'm expecting merchants and other big sellers who need the security to form assurance contracts with each other to incentivise mining. In theory this solves the problem of people not wanting to subsidise their competitors, but the use of assurance contracts for continuous goods like hash power is a rather under-researched area. I'm looking forward to reading papers written by academic economists and game theorists over the coming years to learn more about what the post-inflation world will look like.
27. Re:I admire their spunk, but... by inasity_rules · 2014-03-27 00:02 · Score: 1
  
  My point? Simply that a lot of the things we do "because we want to" have other purposes that might be useful in an objective sense beyond fulfilling "because we want to." Parachuting and diamond mining are bad examples of things we " tend to do things because we want to, not because it makes sense [poster]." I am fairly confident the poster would see the sense in them.
  
  --
  I have determined that my sig is indeterminate.
28. Re:I admire their spunk, but... by Anonymous Coward · 2014-03-27 00:16 · Score: 1
  
  The point is that bitcoin cryptography seems like an inefficient use of resources.
  For jumping out of planes, I'd say that moreso than military application, it has a human entertainment application. That's the main reason it's done.
  The main reason to mine bitcoins is to generate money. Most things that can be done to generate money in society have societal side-effects that are good to at least one person other than the person who gets money. A stock investor, for instance, has propped up a company by giving them money (if the company continues to issue stocks, anyway -- argument gets more complicated in the secondary market). Somebody who plays a sport or sells art has generated entertainment. If you get paid to work at McDonald's, then somebody who wanted a shitty hamburger got the shitty hamburger they asked for. Etc.
  Somebody who generates bitcoins has generated bitcoins. There is no obvious beneficial side-effect. I get that it's really a way to control the monetary supply, but it seems like an extremely inefficient one, and makes you wonder if we could generate something that had a beneficial side-effect, even if it's a minor benefit like proving obscure math theorems; or alternatively, if we could get one where the initial seed supply of money was generated more easily and was distributed in some fair way (either by temporarily pinning it to a dollar value, or by just saying "everybody alive on Earth today gets exactly one FairCoin", or whatever) yet was still cryptographically secure, eliminating a bunch of up-front costs for makework.
  As an engineer, these are extremely unsatisfying costs. I would be interested in a comparative analysis of these costs vs. currency as we use it today (which is really mostly credit card, debit card, or ACH transactions, as I understand it).
  Jewelry diamonds do indeed have a particularly distorted market as well. I don't see how pointing that out says anything good about bitcoins.
29. Re:I admire their spunk, but... by PopeRatzo · 2014-03-27 00:18 · Score: 3, Funny
  
  It's not about Satan. It's about Pussy!
  There's a difference?
  
  --
  You are welcome on my lawn.
30. Re:I admire their spunk, but... by deadweight · 2014-03-27 00:21 · Score: 2
  
  Gold is something I can hold in my hand. It will NEVER be worth nothing - it has value in industrial processes and making wedding rings. BitCoin could very very easily be worth exactly as much as my collection of old Word 2.0 documents overnight.
31. Re:I admire their spunk, but... by Mr+D+from+63 · 2014-03-27 00:26 · Score: 3, Insightful
  
  I don't know why gold is the comparative of choice. Nobody is using gold currency. How about paper currency? That would be a more appropriate comparison. Paper currency is worth a lot more than the paper its printed on. There is added cost in producing paper that is 'secure' (hard to reproduce), but its value is much greater than what it takes to produce it, and its not based on gold or any other physical material.
32. Re:I admire their spunk, but... by TeethWhitener · 2014-03-27 00:32 · Score: 1
  
  Dude, take like 20 seconds to do some basic research on what you're talking about: https://secure.worldcommunityg... "What's the answer to the protein folding problem?" - "42, now give me my money." "Um, everyone else says it's 38, so no, I won't give you your money." When have you ever done an experiment just once? Also, with regard to hashing, I'm trying to think of another system that's hard to do and easy to verify....Oh wait, like every differential equation known to physics.
33. Re:I admire their spunk, but... by AmiMoJo · 2014-03-27 00:49 · Score: 2
  
  You can buy stuff with Bitcoin, so that seems like a fairly worthwhile application. There must be a lot of pissed off miners out there though because at this point anything that isn't an ASIC isn't worth running, and people who spent thousands of Euros on ASIC miners are about to see their investments devalue even faster. At this point even most ASIC rigs aren't worth it and may never pay for themselves, let alone turn a profit.
  
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34. Re:I admire their spunk, but... by Anonymous Coward · 2014-03-27 00:50 · Score: 1
  
  BTC can buy attention from chicks? "Walk up to the club like 'Yo, I've got a biii-tcoin'"? Make it rain Satoshis!
  No, seriously, while GP's throwing immature insults, you're not making it better either by swallowing that bait whole.
35. Re:I admire their spunk, but... by Dagger2 · 2014-03-27 01:28 · Score: 1
  
  because the graph that represents all transactions ever made continues to grow exponentially and is increasing the complexity of cracking each transaction which requires more computing power and thus more energy.
  No, that's not how it works: miners only have to consider the transactions they want to put into the block they're working on, not any of the transactions already in blocks. (I don't think their work even scales with the number of transactions they're considering, because an obvious optimization is to save the state of the SHA256 hashing code after you've fed the transactions in, rather than recalculate it each time.)
36. Re: I admire their spunk, but... by Dagger2 · 2014-03-27 01:32 · Score: 1
  
  Really? It allows Bitcoin to provide the same general service that companies like Paypal do, and a lot of people do use Paypal, which suggests they find it useful for something.
37. Re:I admire their spunk, but... by Dagger2 · 2014-03-27 01:33 · Score: 1
  
  Bitcoin mining has a beneficial side-effect: it makes it hard for somebody to double-spend their coins. If this wasn't hard, people could spend their coins, get whatever they paid for, then unspend their coins (by overwriting the original transaction with one where they paid those coins to themselves). Having this be hard is beneficial for a payment system.
38. Re:I admire their spunk, but... by 1s44c · 2014-03-27 01:41 · Score: 1
  
  How much electricity does the conventional banking system use? And computer games? And street lights?
  BTC mining will be profitable on transaction fees once the coin generation stops. Miners will drop out until it's profitable thus making all remaining miners more profitable. The sliding difficulty scale doesn't just go up you know.
39. Re:I admire their spunk, but... by dbIII · 2014-03-27 01:42 · Score: 1
  
  There must be a lot of pissed off miners out there though because at this point anything that isn't an ASIC isn't worth running
  I'm waiting for it to make the jump to distributed malware.
  It's an obvious step and shouldn't be long now.
40. Re:I admire their spunk, but... by dbIII · 2014-03-27 01:45 · Score: 1
  
  Or since about when Newton ran the Royal Mint.
41. Re:I admire their spunk, but... by 1s44c · 2014-03-27 01:45 · Score: 1
  
  Actually it's a cheap to run currency. How much do you think is spent on printing, securely transporting, validating, and counting banknotes? Or on the VISA or Mastercard networks? Or on the various costs banks have running and stocking ATMs, websites, call centers, and so on?
42. Re:I admire their spunk, but... by rolfwind · 2014-03-27 01:47 · Score: 1
  
  These virtual currencies only have value due to consensus
  That's the value of everything. Say a nuclear holocaust happens, 90% of people die. What do you think happens to the value of gold or coca cola stock?
  You can move to dogecoin or whereever, but bitcoin has the same value as ebay. Firstmover status. Do you know any online auctions? Because I do. Places like epier or ioffer. None of them are inherently less valuable than ebay in its early days, but people just don't use them. So their entire value (or lack of) comes from a network effect that isn't easily duplicated once an equitable service is in effect.
43. Re: I admire their spunk, but... by 1s44c · 2014-03-27 01:47 · Score: 2
  
  You could equally say the same about all the infrastructure needed to validate USD.
44. Re:I admire their spunk, but... by inasity_rules · 2014-03-27 01:59 · Score: 1
  
  To be honest, I haven't quantified either figure, so it may then be a well worthwhile investment. Though having an engineering leaning, while I understand the value, I often wonder if we couldn't extract useful work as a byproduct of the mining process. Riecoin and primecoin may do this, but I question the practical uses of their results...
  
  --
  I have determined that my sig is indeterminate.
45. Re:I admire their spunk, but... by FishTankX · 2014-03-27 02:13 · Score: 1
  
  Perhaps somebody should create a folding at home/cancer research coin, that gives each person who dedicates CPU time a folding coin, with increasing difficulty. Once any research is commercialized with the results of the computations, a 50% share of the patent is disbursed to the coin holders. CPU calculations and GPU calculations would be separated and compensated differently. Like a CPU computation is worth 20x more than a GPU computation, because GPU computations can only solve certain problems and CPU computations are still needed.
  If the bitcoin/litecoin swarm were dedicated like this to a research cause, the coins would gain inherent value once a commercialized therapy were implemented, like stocks, and would probably pay dividends, supporting a minimum price floor and adding a concrete value to the calculation based coins for the first time. No?
46. Re:I admire their spunk, but... by careysub · 2014-03-27 02:13 · Score: 1
  
  I know it's a hard concept to understand, but gold only has its value based on consensus as well.
  Largely true, but not entirely true. Gold is useful, and therefore valuable for that reason alone.
  Expanding on the OPs point: the investment of resources into extracting gold from the Earth is unrelated to any "practical" (industrial) use. The world's current gold stock is 170,000 tonnes, but consumption by industry is about 300 tonnes, so we have a 600 year industrial supply on hand right now, even with no recycling. The price/value of gold is determined entirely by gold investors, not by industrial or even purely ornamental use*. It is only the consensus value for investment that motivates mining.
  *Most "ornamental" gold is actually a form of investment.
  
  --
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47. Re:I admire their spunk, but... by FishTankX · 2014-03-27 02:14 · Score: 1
  
  If the BTC were used to purchase a lambo or tesla roadster, it would probably get someone's attention..
48. Re:I admire their spunk, but... by wrook · 2014-03-27 02:32 · Score: 5, Insightful
  
  Random guy here. I may be wrong, but I think you are confusing inflation with deflation. The value of BTC is rising against real goods. So in other words, it costs less in BTC to buy things today than it did last year. This is deflation.
  I have been watching Bitcoin with interest to see what it will do. In hindsight, if I were to criticise Bitcoin, I would say that it is too difficult to receive BTC. It is interesting that the very thing that makes it secure has the potential to limit its distribution. As the price of BTC goes up, it becomes more lucrative to mine. This increases interest in mining and encourages people to invest in hardware to mine. This, in turn, increases the difficulty, raising the barrier to entry. So new BTC are likely to remain in a relatively small group of people.
  Of course, people can buy BTC, but if they do so speculatively, they may be loath to part with the BTC until they have made a profit. This can further limit the spread of BTC. In other words, you could get into a situation where people holding BTC are largely those who have spent a large amount of money mining it, and those who are speculating on its value. For those who wish to use BTC as a token of exchange for goods and services, it can be difficult/expensive to acquire in any quantity.
  I think it would have been better to encourage inflation. In an inflationary system, currency essentially expires. The longer you hold it, the less value it holds. This is an excellent feature because it encourages the use of the currency, allowing it to get into the hands of people who will use it for true growth (i.e., producing something that has tangible value to someone else). If I can not get my hands on currency, or the barrier to entry to getting currency is too difficult, then my potential productivity is wasted. I can't obtain the resources I need to do my work. The currency has failed to do its job.
  Obviously this topic is too broad to discuss intelligently in a /. post. However, I would encourage Bitcoin developers to look at modern economics with a more critical eye. I think many people are unwisely discarding a lot of economic theory without really understanding it properly.
49. Re:I admire their spunk, but... by FishTankX · 2014-03-27 02:33 · Score: 1
  
  Unless you're Australia.
50. Re:I admire their spunk, but... by Oligonicella · 2014-03-27 02:34 · Score: 1
  
  Iff
51. Re:I admire their spunk, but... by Oligonicella · 2014-03-27 02:40 · Score: 1
  
  His listed benefits were outside their 'systems'. The computation involved with creating a BitCoin is internal to their 'system', providing no external benefits.
52. Re:I admire their spunk, but... by Oligonicella · 2014-03-27 02:50 · Score: 1
  
  Bullshit. Unlike you, people can review my history and see that I spent my career in banking. Not only do individual banks implement security to keep your account safe, they're required to provide a minimum by mandate. I repeat, bullshit.
53. Re:I admire their spunk, but... by swillden · 2014-03-27 02:56 · Score: 2
  
  Gold is something I can hold in my hand. It will NEVER be worth nothing - it has value in industrial processes and making wedding rings.
  Sure, but on the other hand, how would you like to exchange your gold for an equal weight of aluminum -- which is also not worth nothing, but until the late 19th century was more valuable than gold. . Or silicon, which is also valuable in industrial processes, particularly in the manufacture of semiconductors, but only after tremendous work has been done to purify it?
  The fact that some physical substance always has some utility doesn't mean all that much. The actual industrial value of gold is not nothing, but neither is it all that large. Further, it's possible that in the not too distant future we could be mining gold from asteroids and shipping millions of tons of it per year to Earth. Or we could find a cost-efficient and safe way to manufacture gold, by transmuting other metals. Or we could just become better at finding it and digging it up. In any of those scenarios, dramatically-increased supply will cause the value to fall, probably even more dramatically, since much of gold's current price is driven by the expectation that it will always be valuable and evidence that that is untrue will quickly erase the speculative drivers of gold's current high price.
  About the only thing I can think of which truly has intrinsic value is energy, since it is the necessary input to all productive processes. It's hard to store in a vault, though, physical or electronic.
  
  --
  Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
54. Re:I admire their spunk, but... by DerekLyons · 2014-03-27 03:27 · Score: 1
  
  At this point even most ASIC rigs aren't worth it and may never pay for themselves, let alone turn a profit.
  When you go into business "going broke and losing your shirt" is one possible and quite valid outcome - and if you're buying rigs with the intention of making a profit, you're unquestionably in business.
55. Re:I admire their spunk, but... by hodet · 2014-03-27 03:44 · Score: 1
  
  No utility for you so 0 value for you. Others do benefit from bitcoin today.
56. Re:I admire their spunk, but... by chihowa · 2014-03-27 03:51 · Score: 1
  
  At that point mining will be supported entirely by fees.
  Maybe you can help me understand this because I can't seem to find it stated clearly anywhere...
  Aren't the fees payed to the original miner of a specific block in exchange for continuing to validate transactions derived from that block? What happens to the transactions derived from a block when the original miner stops validating transactions (which is sure to happen by 2140) and what incentives do others have to validate transactions if the fees will just be going to the long dead original miner?
  (If that's what happens to fees, then the end result will be a slow condensation of all bitcoins into the unspendable wallets of the long dead original miners. But first, people will stop wasting electricity validating transactions which only benefit them by keeping the whole system from collapsing.)
  If that's not true and anyone can collect fees by validating transactions, and if the fees aren't tied to mining difficulty, at what point does it make more sense to just validate transactions in exchange for fees than to actively look for more coins?
  
  --
  If you want a vision of the future, imagine a youtube comments section scrolling - forever.
57. Re:I admire their spunk, but... by brunes69 · 2014-03-27 03:54 · Score: 1
  
  You are touching on some very, very good points on inflation, and why comp-sci majors should learn more about economics before going all balls-out making a new currency.
  The whole idea that BTC can't inflate past a certain point is why it is guaranteed to fail. Fiat currency and inflation **is not bad**, it is in fact good for many reasons when it is under control. You outline one of those reasons above - inflation encourages people to spend money, thus keeping the economy alive. Another reason inflation and fiat currency is required is because the GDP of the planet is not some static sum. Every day the earth spins around, there is another day of work that needs to be quantified. The currency that quantifies that day of work has to come from somewhere. Where does it come from when you can't make more currency? You need to devalue all other existing currency. How do you do this without inflation?
58. Re:I admire their spunk, but... by IamTheRealMike · 2014-03-27 03:55 · Score: 1
  
  Random guy here. I may be wrong, but I think you are confusing inflation with deflation. The value of BTC is rising against real goods. So in other words, it costs less in BTC to buy things today than it did last year. This is deflation.
  One of the reasons this topic is so hard to debate is people using the same words to mean different things. In my post above, read inflation to mean "the creation of money" independent of prices. This is not how statistical agencies use it, but in the context of mining it's the one that makes the most sense.
  Yes, as it happens, last year the price rose significantly and BTC became worth a lot more. However this is not guaranteed by Bitcoin's design and in fact this year the price has mostly fallen and thus prices have risen (price inflation). Whether Bitcoin prices are rising or falling varies over time.
  
  In other words, you could get into a situation where people holding BTC are largely those who have spent a large amount of money mining it, and those who are speculating on its value. For those who wish to use BTC as a token of exchange for goods and services, it can be difficult/expensive to acquire in any quantity.
  Miners have bills to pay and hardware to purchase, so they tend to immediately sell the bitcoins they earn in order to pay their costs. Mining is a highly competitive business with low barriers to entry (though they are rising fast along with the general level of professionalism involved), so over time profits should be thin. And this is indeed what we see.
  For people who are holding bitcoins to speculate with them, all it means is that the price rises but that doesn't make bitcoins harder to acquire. The unit we call the "bitcoin" is entirely arbitrary: they are subdivisible into 100 million pieces. Satoshi could have placed the decimal point anywhere and it'd still work the same way. I've been using Bitcoin for years and the difficulty of doing so has never been lower.
  
  In an inflationary system, currency essentially expires ..... this is an excellent feature because it encourages the use of the currency, allowing it to get into the hands of people who will use it for true growth
  You're parroting the standard line sold to people by central bankers, yet under their watch the world has experienced a series of massive booms and busts. One of the most natural words that follows "financial" is "crisis". So be more skeptical!
  Consider the following scenario. You have some savings in a currency with a stable monetary base, no new money is being created and none is being destroyed. Let's also say the economy is stagnant and not growing or shrinking. We would expect in such an environment that prices remain stable. Now someone comes to you and says they have a great business idea: he's going to knit little coats and put them on penguins in Antarctica, then charge tourists to visit and take photos. He wants you to invest in his business.
  Perhaps you think that this is a remarkably stupid business idea that is unlikely to turn a profit, so you politely decline his generous offer. You would rather keep the money as savings for retirement instead.
  Now reconsider the same scenario, but in a world where your savings are being confiscated at 2%-5% per year. Recall that due to the mathematics of compounding, at a relatively modest sounding 5% price inflation rate, after 20 years $1 has turned into just 0.35 cents: you lost most of it. Very small changes in the CPI can create huge changes in how much you end up with when you're old. In this world, you listen to the penguin pitch with interest. Sure, you think, it's very unlikely that tourists will pay large sums of money to go to Antarctica just to see slightly cuter penguins, but if you do nothing you're guaranteed to lose more than half your money. If you pay for penguin coat knitting, you'll probably lose more than half your money,
59. Re:I admire their spunk, but... by sylvandb · 2014-03-27 04:01 · Score: 1
  
  Stupid analysis.
  Use your bitcoin to buy all the shiny you want: https://www.bitpremier.com/
60. Re:I admire their spunk, but... by Immerman · 2014-03-27 04:05 · Score: 1
  
  Fair enough. And bitcoin permits money transfer between any two people in the world without requiring any trusted intermediaries (aka banks) and tiier extreme fees. Ever try to transfer money internationally? Even from the US to UK you're probably looking at 10-20% fees, versus maybe 1-2% buying bitcoin, transferring it, and the recipient selling it at the other end - the stated application for Bitcoin. The usage as a standalone currency sort of grew up around that eminently-functional core.
  
  --
  --- Most topics have many sides worth arguing, allow me to take one opposite you.
61. Re:I admire their spunk, but... by Immerman · 2014-03-27 04:07 · Score: 1
  
  Bitcoin was created to allow normal people to transfer wealth anywhere in the world without incurring ridiculous banking fees, which can easily reach 10-20%. There's your real-world usage.
  
  --
  --- Most topics have many sides worth arguing, allow me to take one opposite you.
62. Re:I admire their spunk, but... by kharchenko · 2014-03-27 04:13 · Score: 1
  
  Inflation causes misallocation of resources. This is basic economics and is the reason Bitcoin is designed to eventually target a stable monetary base.
  
  I don't know what "basic economics" you've been taught at the Bitcoin developer crashcourse, but as is, Bitcoin has been a highly deflationary currency, and at best, at some point in the future it will become mildly deflationary.
  The whole thing is pretty much construed to protect against inflation. From an economic standpoint deflation is terrible. Most obviously it discourages investment (you're better off sitting on your money, and you're in a bind if you take out a loan since its real value will continually increase). Protecting against deflation is one of the key reasons why most countries manage their currencies.
  This is not a problem intrinsic to cryptocurrency itself, and the folks who designed it must have known all that. So I think that either Bitcoin was designed with the aim of short-term profit goal of a pyramid-like scheme, or it was designed by some economic idealists who thought gold standard was too liberal in upholding the status quo of the moneyed class.
63. Re:I admire their spunk, but... by sylvandb · 2014-03-27 04:13 · Score: 1
  
  During that "career in banking" Oligonicella must have been too close to the forest to see the trees. Either that or his verbage is careful sophistry...
  Of course banks "implement security" for the right definition of "security", that was never the issue. The issue is how much security. Banks at best are just like any business -- they determine the minimum to get by, maybe add a little for show, and that is all they implement.
  Banks do the normal cost vs. benefit analysis on their security. They implement the minimum security to balance the equation. If they implemented all possible security they could not afford to operate (cost and convenience) so they always implement less than the maximum security.
  Before any further denial, or any more vapid claims of bank security, to have any credibility you have to excuse/explain existing bank security flaws. The first that come to mind include why have U.S. banks not yet switched to chip and pin or at least some similar or better level of proof that the user of the credit card is authorized? And why do they not require an auth token (e.g. secureID or other hardware/software equivalent) for online access?
64. Re:I admire their spunk, but... by deadweight · 2014-03-27 04:22 · Score: 1
  
  In the Peter Hamilton sci-fi books currency is defined as a unit of helium or tritium or something like that that is mined around gas giants and sold for fusion reactor fuel. This is a perfect "energy currency". You could have an "oil dollar" that is backed by 1 gallon of crude oil or a "coal dollar" backed by a pound of coal or a silver dollar made of silver - I have a few of those. This is real valuable property that will never just lose all value overnight. Modern currencies usually are not backed by anything except the force of billions of people and nation states that have all decided that these are a way to store value. I guess the population could wake up tomorrow and decide funny green artwork on paper is not worth a thing, but odds are very very low for that happening. As for BitCoin, this is a weird niche idea that could evaporate any second.
65. Re:I admire their spunk, but... by sylvandb · 2014-03-27 04:22 · Score: 1
  
  You really need to read at least the white paper or the code. It's been out for years now. The obvious questions like this are long since easily answered and so far the non-obvious ones also.
  I don't think it correct to say the "hash" is "mined" but rather the block is mined. But whatever.
  The hash validates the block, and in turn the hash must be valid or the other miners will refuse to accept the block.
  The block contains a time stamp, a nonce, transactions, etc. Time stamps are required to be in sync within specified tolerance, and the earliest block wins.
66. Re:I admire their spunk, but... by Jesrad · 2014-03-27 04:23 · Score: 1
  
  There is no such thing as "an objective sense of being useful". There are only things that we subjectively consider useful to us.
  Well, except for delaying the heat death of the Universe.
  
  --
  Maybe we deserve this world ?
67. Re:I admire their spunk, but... by sylvandb · 2014-03-27 04:29 · Score: 1
  
  I think it would have been better to encourage inflation. In an inflationary system, currency essentially expires. The longer you hold it, the less value it holds. This is an excellent feature because it encourages the use of the currency, ... I would encourage Bitcoin developers to look at modern economics with a more critical eye. I think many people are unwisely discarding a lot of economic theory without really understanding it properly.
  You are obviously the one who needs to "look at modern economics with a more critical eye" especially re. that thoroughly debunked view of inflation.
  The view of inflation espoused by modern Keynesian economics is wrong and benefits primarily the issuers of money and those nearest to them. Inflation hurts everybody else.
  If all you see are the economic papers supporting your view of inflation, you need to broaden your horizons -- try a different school.
68. Re:I admire their spunk, but... by epiccollision · 2014-03-27 04:45 · Score: 1
  
  While gold is a physical commodity...I assume you are making this comparison because the value of gold is used as some sort of standard of investment and you are trying to compare how scarcity can affect value...that would be relevant if the amount gold that actually exists(mined/processed) exceeded the amount sold on the market. Currently the "ownership" of gold(including silver and a few other commodities) meaning someone has purchased interest in gold held by a 3rd party, exceeds the actual amount of gold that has been mined, ever.
  Most countries have rules regarding the amount of gold you can physically possess(ex. order 6102, and the like), there is little recourse for someone to see "their" gold. So, while gold's value could be related to actual scarcity theres no way to prove the amount of gold being "held" is not the same gold someone else has purchased interest in. At this point of obscurity and public ignorance gold might as well be bitcoins ...excuse me while I go start a gold exchange...when are the suckers born again?
  Gold may be gold, but we don't actually sell gold do we?(yes I know there's a gold bullion vending machine in Dubai, thats a novelty not an investment vehicle)
69. Re:I admire their spunk, but... by Demonantis · 2014-03-27 05:07 · Score: 1
  
  Most of those industrial uses are fulfilled using synthetic diamond. Jewelery diamonds have a high value from aggressive marketing convincing people to hoard them and be interned with them. Its a sellers market with a ludicrous markup to show for it.
70. Re:I admire their spunk, but... by IamTheRealMike · 2014-03-27 05:27 · Score: 2, Insightful
  
  Inflation means your purchasing power goes down, deflation means your purchasing power goes up. It's the only definition that makes sense, and per that definition BTC has been, on the whole, experiencing deflation.
  Alright. If you insist on that definition please re-read my post substituting the word inflation for money supply growth.
  
  The "central bankers" say this because it is true. Deflation encourages people to hold their currency.
  
  Does it? Who told you that? Central bankers?
  Here's some economists who tested the data and found it lacking in this regard. The consumer electronics industry is another market that's been in permanent extreme deflation since basically forever and yet is doing just fine. Having something today instead of tomorrow has real value.
  But regardless, the argument is circular - if a closed economy used Bitcoin and prices fell because the economy grew and the money supply didn't, then if the hoarding theory was right the economy would stop growing and prices would stop falling. There'd be an equilibrium point.
  
  Not every company which acquires capital is as useless as a company which makes coats for penguins. Consider most companies which manufacture electronics.
  Such companies should make for good investments even when there's no inflation: if your option is to do nothing with your money and either get no return (but also no loss), or more generally a return that's no better than the general rate of economic growth, then you should still want to invest. The only kind of investments that inflation can trigger are investments that people would have left on the table, except having their money vanish was even worse. These are not the kind of "investments" our society needs.
  
  Finally, if the goal of BTC is to avoid "massive booms and busts", I'd say that it has failed thus far. In fact, BTC is much more volatile than the national economy. If that is your criticism of the current financial system, what good is BTC?
  Give it time. BTC is volatile because nobody knows its future. It could be anything from "world governments ban it" to "the future currency of humanity". In such an environment it's natural you'll get massive speculation, especially because there aren't many high risk/high yield investments kicking around right now. 10 years from now Bitcoin's future will be much clearer. Government policy will have stabilised, Bitcoin's competitiveness vs the current system will be much more established, it won't be covered in the press every day and in general will be boring. Then I'd expect the currency to be rather stable.
71. Re:I admire their spunk, but... by OneAhead · 2014-03-27 05:39 · Score: 1
  
  Never mind that, already happened. What I'm waiting for is the distributed malware creators realizing they can't keep up with the ASICs and using the malware to attack the bitcoin network itself instead. It doesn't even need to be as spectacular as a true 51% attack; just having the ability to induce jerks in the bitcoin price opens the door to "insider financial speculation" and profit. In fact, there are good indications *that* already happened / is happening, too.
  Even if not, an instructive example is that Tor incident that was on /. a few months ago. An interesting (or should I say "chilling"?) observation that was not in the summary is that Tor developer Jacob Appelbaum believed that the malware creators had a sufficient share of the Tor nodes in their hands to fatally compromise Tor's security. There are good reasons to speculate they didn't have a deeper motive than using Tor for controlling their botnet, but it's still food for thought, especially for those who believe (like me) that Tor was designed more with security in mind than Bitcoin...
72. Re:I admire their spunk, but... by Agent0013 · 2014-03-27 06:03 · Score: 1
  
  For those who wish to use BTC as a token of exchange for goods and services, it can be difficult/expensive to acquire in any quantity.
  I like the critical thought you have put into your post. I just have one issue or question about your statement above. If you want to use a currency as a token of exchange then it doesn't matter how expensive they are to acquire. You buy the BTC you need, trade them for what you want and your are done. It is no different from going to mexico and getting a bucket of beer by changing 3 USD into whatever number of Pesos you can get and giving those Pesos over for the beer. Whether that is 10 Pesos or 100 does not matter. The exchange rate does not matter as long as you can actually get some Pesos and you find the price of what you want to buy to be worth what it costs.
  The only time the value of the BTC matters is when you are speculating on them as a direct money making process. In that case you don't actually want to spend the BTC on anything. You just want to buy them cheap, hold on to them, and sell them at a profit. Eventually, if BTC becomes a truly successful currency, the speculators will go away or at least reduce to the same amount that we have in currency exchange speculation, and it will be used primarily as the currency it was meant to be.
  I would imagine that having the speculators involved now will only help BTC to become a more real currency in the future. It leads to more people buying and trading them, and all these people have an interest in the value of their BTC not disappearing.
  
  --
  
  -- ssoorrrryy,, dduupplleexx sswwiittcchh oonn.. -Quote found on actual fortune cookie.
73. Re:I admire their spunk, but... by Agent0013 · 2014-03-27 06:09 · Score: 1
  
  I can pick up a plain boring old rock in my hand. I don't see many people that will buy that rock from me as they can just pick up one of their own. So wouldn't it be worth nothing then? Or are you considering that I could use it to build a rock fence, or I could shoot it from a slingshot or something to give it worth? What about the dead fish that has been sitting on the shores of the river for a few weeks, is that worth something also? What about all the leaves that fall in autumn, or the rest of the trash I haul out to the curb? I have to pay people to come pick them up. What worth are those to me? These are all examples of things I can hold in my hand.
  
  --
  
  -- ssoorrrryy,, dduupplleexx sswwiittcchh oonn.. -Quote found on actual fortune cookie.
74. Re:I admire their spunk, but... by JesseMcDonald · 2014-03-27 07:26 · Score: 1
  
  Wasted electricity has no demand.
  Bitcoin is linked to the supply and demand of WHAT exactly?
  That electricity isn't "wasted"; it goes to validate blocks of transactions. Achieving world-wide consensus on who has how many bitcoins is a service which provides value, which is the reason for the transaction fees. (The exponentially decreasing block reward is primarily a decentralized way to distribute bitcoins as fairly as possible.)
  Of course, it's not the supply and demand of bitcoin mining which is important here, but rather the supply and demand of bitcoins. The supply follows a known formula over time, with an ultimate limit at 21 million bitcoins. The demand, as for any currency, is determined by a combination of direct use, marketability and speculation, with an emphasis on marketability. Relative to the dollar, gold has more demand for direct use and bitcoin has more demand for speculation, but in all three cases the main source of demand is the fact that you can trade them for other goods and services later.
  
  --
  "The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
75. Re:I admire their spunk, but... by Karl+Cocknozzle · 2014-03-27 07:47 · Score: 1
  
  When I see how much hardware and electricity is being wasted on these various mining processes, I can only shake my head.
  I'm not sure when BTC is slated to have all of its coins mined, but it will be instructive to see what happens to it at that point.
  Its value will plunge precipitously. There simply isn't enough money "processing transactions" for other people for a reasonable "business" to be run doing so, and that is all that would be left for "miners" once all the bitcoins are found. So "processors" will start disappearing almost immediately. This will in turn drastically reduce the ability to spend your bitcoins which will in turn demolish their "value."
  All of that is to say "Dump them now, avoid the rush, maybe get some of your money back."
  
  --
  Who did what now?
76. Re:I admire their spunk, but... by david_thornley · 2014-03-27 07:53 · Score: 1
  
  It seems to me that there's some problems with your argument.
  If BTC are used only as a transfer mechanism, I really don't see how it's going to catch on. It may be cheaper to send money to somebody in Kazakhstan now by buying BTC here and shipping them over there, but that's going to put pressure on the banking system to make overseas money transfers cheaper. The bankers can do it cheaper than the Bitcoiners, because they have most of the infrastructure and don't need to spend a lot of computrons making hashes. The transfer to my Kazakh friend requires three wallet transfers, all of which have to be validated by mining, and two transactions at exchanges, who will want compensation. The reason the banking system charges more is not so much as it has to as that it can.
  Moreover, in this case, the exchanges have to hold the money, and so they have to get paid for not only doing the exchanges but for the risk involved in keeping volatile currency around.
  Not to mention that there seems to be some problem in finding good currency exchanges. Mt. Gox was the most well-known one until it started going flaky. If I send $150 to an exchange to get BTC, how do I make sure that I either get the BTC or my dollars back?
  
  --
  "When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
77. Re:I admire their spunk, but... by kharchenko · 2014-03-27 07:57 · Score: 1
  
  It's value keeps going up compared to the cost of the products. That's how it's defined.
78. Re:I admire their spunk, but... by Agent0013 · 2014-03-27 08:22 · Score: 1
  
  Yes, having good and trustworthy exchanges has been a problem lately. The transfer seems less of a problem to me. In your example, of sending money to a friend, you could just email the wallet itself to them with the $150 in it. That is one less transaction. But going from cash to BTC and back would still be two transactions to deal with. Currently that is covered by the miners getting their new BTC out of the deal. In the future there is imagined to be an extra bit added to the transaction that goes to the miners. You could try to do it without the transaction fee and perhaps after a while your transaction will get included. At this point it is hard to say how well this part will work since it is still a far way off. I don't really see that the existing banking system will be cheaper though. It may be, but they also have large systems of computers and networks and have to inter-operate with each other for transfers. Bitcoin has decentralized this to a peer network. The peer networks work very cheaply for getting movies, tv shows, music, and software for completely free. Banks will always have a cost that another bank wants to charge to handle a transfer, they are in it for profit. But again, it's hard to say for sure since it is quite a way off into the future.
  
  --
  
  -- ssoorrrryy,, dduupplleexx sswwiittcchh oonn.. -Quote found on actual fortune cookie.
79. Re:I admire their spunk, but... by deadweight · 2014-03-27 08:23 · Score: 1
  
  I just paid money for 2,000 pounds of rocks to be delivered to my house. Rocks are not free. Everyone has agreed I can use US dollars to exchange for these rocks. This has been true for over 200 years now. I have no confidence at all bitcoins will be able to be exchanged for ANYTHING in 5 years, let alone 200.
80. Re:I admire their spunk, but... by david_thornley · 2014-03-27 08:47 · Score: 1
  
  First, gold isn't currency. It's a commodity. Second, gold is something physical. You can hold gold in your hand. I've got some around my finger right now. Bitcoins can never be more than account entries. Third, gold has a long tradition of being valuable, and has distinctive properties you aren't going to get with other substances, while Bitcoin's only advantages over potential competitors is that it has some popularity now and appears to be reasonably well-designed.
  
  --
  "When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
81. Re:I admire their spunk, but... by hottoh · 2014-03-27 09:14 · Score: 1
  
  Gold is in the same Ohm magnitude as is Ag and Cu. Au is in third place, Ag first and Cu is second. Point being Au is a great metallic conductor. It is nearly always alloyed with other metals. Sometimes the Au alloy is a better conductor of electrons, other times less of one than is pure gold.
  
  The softness helps, but the primary 'help' is that Au is *highly resistant to oxidization* [aka corrosion], which is a key improvement over Cu or Ag. So your point of it being soft is hardly the primary reason for the desirability of Au alloy electrical contacts.
82. Re:I admire their spunk, but... by Kalriath · 2014-03-27 09:31 · Score: 1
  
  I'm not sure $5 is a ridiculous banking fee (what I pay to send money overseas).
  
  --
  For a site about things like basic rights, Slashdot users sure do like to censor "dissent".
83. Re:I admire their spunk, but... by swillden · 2014-03-27 09:40 · Score: 1
  
  Modern currencies usually are not backed by anything except the force of billions of people and nation states that have all decided that these are a way to store value.
  And, at the end of the day, even the opinion of the nation states is meaningless if the people stop believing.
  
  I guess the population could wake up tomorrow and decide funny green artwork on paper is not worth a thing, but odds are very very low for that happening.
  Agreed.
  
  As for BitCoin, this is a weird niche idea that could evaporate any second.
  While the odds of that are hugely greater than the odds of people deciding dollars are no longer worth anything, I don't think evaporation is at all likely. Time will tell.
  
  --
  Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
84. Re: I admire their spunk, but... by Agent0013 · 2014-03-27 09:45 · Score: 1
  
  Just because you paid money for the rocks does not mean you could get money for them in the future. It is quite possible that in getting rocks you are actually paying for the services performed moreso than the rocks themselves. These rocks have been sorted by type, color, and size, they have been cleaned as they are not mixed in with a large amount of dirt, and they have been delivered. If rocks have any inherant worth on their own then there would be people who would find it worthwhile to steal them from gravel roads so they can resell them the same way people do with copper wire and pipes.
  
  --
  
  -- ssoorrrryy,, dduupplleexx sswwiittcchh oonn.. -Quote found on actual fortune cookie.
85. Re:I admire their spunk, but... by SpectreBlofeld · 2014-03-27 10:50 · Score: 1
  
  The world had one tenth of its current population sometime around the early 1800's, and gold was very much valued long before then.
86. Re:I admire their spunk, but... by phantomfive · 2014-03-27 13:58 · Score: 1
  
  Now you are looking at utilitarian terms but that is still a matter of supply and demand.
  
  To understand why, think of what is most valuable to you beyond anything, and air will be high on the list. Without it, you will die quickly. And yet, it has very little monetary value.
  
  In other words, when you say, "gold will always have value," what you are really predicting is that demand will always be high enough, and supply low enough, that it will maintain value. This might be a valid assumption, but if someone ever figures out a way to print gold, it will become as valuable as dirt (which you can also hold in your hand).
  
  --
  "First they came for the slanderers and i said nothing."
87. Re:I admire their spunk, but... by TheRaven64 · 2014-03-27 21:34 · Score: 1
  
  It doesn't allow exchange of funds, it allows the updating of a ledger. The problem is that there's no stable mechanism for getting value in and out of system. Modern currencies do this by creating money for loans. Money is created to generate liquidity from an asset. When someone goes to a bank and asks for a mortgage on a house or a loan on a new business, the bank (in collaboration with the central bank) can inject new money into the system to reflect the fact that the asset that is backing the loan (e.g. the house) is now part of the system of value backing the currency. Then either the person pays back the loan and the money is removed from the system (effectively destroyed), or the person defaults on the loan and the bank repossesses and sells the house, repaying the loan and having the same effect on the money supply.
  In bitcoin, the mechanism for adding value to the system is tied to the transaction processing and is completely independent of anything else. This makes it very difficult to map any real economic system to bitcoin.
  
  --
  I am TheRaven on Soylent News
88. Re:I admire their spunk, but... by Karl+Cocknozzle · 2014-03-28 06:54 · Score: 1
  
  Yeah man totally. VISA and Mastercard won't be able to maintain their business model of processing transactions much longer.
  Apples to zebras, my friend: VISA and MasterCard process transactions in hundreds of currencies. Even if one of those currencies (or even ten) were to simply become worthless it wouldn't really do any damage to them: They'd just figure out how to process Visa card transactions in the currency that replaced whatever disappeared.
  Bitcoin processors are basically fucked. Maybe they can repurpose some of their uber-expensive GPU rigs to mine other currencies, too.... But maybe not.
  I think it would be hysterical if, in three years, eBay had 10,000 auctions running for these overpriced "GPU in a box" rigs that were selling like hotcakes last year before the late-adopters figured out BitCoin wasn't really a workable currency.
  
  --
  Who did what now?
89. Re:I admire their spunk, but... by delt0r · 2014-03-30 22:21 · Score: 1
  
  Same magnitude but not the same. Its not used because of a conductivity. Silver is both much cheaper and a better conductor.
  
  --
  If information wants to be free, why does my internet connection cost so much?
What about the alternative virtual coins ? by Anonymous Coward · 2014-03-26 18:22 · Score: 1

Other than bitcoins, are other virtual coins worthless ?
1. Re:What about the alternative virtual coins ? by lister+king+of+smeg · 2014-03-26 18:59 · Score: 2, Interesting
  
  Bitcoin is the most valuable but is I were this guy I would do merged mining where you mine several crypto currencies on the same hardware simultaneously.
  
  --
  ---Saying gnome 3 is better than windows 8 not so much a compliment as it is damning with light praise.
2. Re:What about the alternative virtual coins ? by SuricouRaven · 2014-03-26 19:35 · Score: 4, Informative
  
  Litecoin has just enough credibility to have people trading it for non-trivial amounts of real money. The rest are generally worthless.
3. Re:What about the alternative virtual coins ? by SuricouRaven · 2014-03-26 19:36 · Score: 4, Informative
  
  You'd be limited to SHA256 based coins. Most altcoins are scrypt based.
4. Re:What about the alternative virtual coins ? by gnupun · 2014-03-26 22:40 · Score: 3
  
  Does someone know what a single unencrypted bitcoin looks like? For eg, what is the length of a btc coin, in bits? What are the main components of a bitcoin expressed in the form of a C language struct?
5. Re:What about the alternative virtual coins ? by fisted · 2014-03-26 23:14 · Score: 1
  
  Made my day.
  
  --
  CLI paste? paste.pr0.tips!
6. Re:What about the alternative virtual coins ? by fisted · 2014-03-26 23:17 · Score: 1
  
  Oh wait, you're being serious? Bad news: There are no bitcoins; they don't manifest as tokens of data. Transactions do, (ending up in the blockchain)
  
  --
  CLI paste? paste.pr0.tips!
7. Re:What about the alternative virtual coins ? by gnupun · 2014-03-26 23:52 · Score: 2
  
  Then what exactly are these so-called mining computers producing after spending millions of dollars in computing power and electricity? Smoke and mirrors?
8. Re:What about the alternative virtual coins ? by vbraga · 2014-03-26 23:58 · Score: 2
  
  SHA256 hashes. It keeps trying to find a hash that satisfy some boundary conditions.
  
  --
  English is not my first language. Corrections and suggestions are welcome.
9. Re:What about the alternative virtual coins ? by Anonymous Coward · 2014-03-27 00:34 · Score: 1, Informative
  
  They are producing pages in global Bitcoin ledger that keeps track of who owns how many Bitcoins.
  Bitcoins they "mine" are basically bookkeeping fees agreed upon by the network - for succesfully adding a new page they get the right to add "Also I now own 25 (for now, IIRC) Bitcoins more" to other transactions on that page.
10. Re:What about the alternative virtual coins ? by gnupun · 2014-03-27 01:13 · Score: 1
  
  I'm not interested in the ledger because it simply records who owns what. I'm more interested in how the "what" (bitcoin in this case) came into existence.
  I'm assuming a mining computer is similar to a govt. mint. A mint prints currency where each currency note is different from other notes based on its unique serial number. In a similar fashion, do these mining computers generate a coin which has a unique random number to differentiate it from the random numbers of other bitcoins? Is a bitcoin a random number with special attributes?
11. Re:What about the alternative virtual coins ? by NFN_NLN · 2014-03-27 01:31 · Score: 2, Informative
  
  THERE IS NO BITCOIN. Definitely not physical, but not even virtual! The closest thing is a wallet.
  Bitcoin is nothing more than a ledger of transactions. You can't own a bitcoin. You can only own a wallet that has transactions associated with it. You create a wallet with a public and private key. The public key is what people use to increase your ledger count. The private key is what you use to decrease your ledge count by increasing someone else's ledger count..
  It's like a fancy excel spreadsheet that tracks debits and credits.
  Every time you close off a group of transactions in the ledger there is a pre-determined reward for the group that finds the hash. That reward is an increase in there ledger. That is the ONLY time new ledger entries are allowed that don't have an equal decrease in someone else's wallet.
12. Re:What about the alternative virtual coins ? by 1s44c · 2014-03-27 01:31 · Score: 1
  
  Bitcoin doesn't really work like that. A bitcoin is a generation event plus a chain of transactions, it's not a chunk of self contained data. You can read the original paper for the details.
  https://bitcoin.org/bitcoin.pd...
13. Re:What about the alternative virtual coins ? by 1s44c · 2014-03-27 01:37 · Score: 2
  
  The ledger and the mining process are not separate things. Each ledger entry has a generation of 25 coins plus a long list of transactions affecting existing coins. You need to generate a hash within strict conditions in order to create a valid ledger block and the difficulty of that task adjusts to ensure a consistent block generation rate.
  The original paper will explain all this better than I ever could.
  https://bitcoin.org/bitcoin.pd...
14. Re:What about the alternative virtual coins ? by ribuck · 2014-03-27 01:47 · Score: 1
  
  A bitcoin is a unit of measurement. It's no more meaningful to ask what a bitcoin looks like than to ask what a centimeter (or an inch) looks like.
  The global shared ledger of the Bitcoin system, the "block chain", holds transactions. Each transaction contains inputs and outputs. All inputs must be valid outputs of a previous transaction. Inputs and outputs have a size specified in bitcoins (with the base unit being 0.00000001 bitcoin, also known as a "satoshi"). All outputs are labelled with a bitcoin receiving address, which is the hash of a public key. The receiving address was generated by the holder of the corresponding private key, who can spend the corresponding output as the input to a new transaction.
  A miner collects unprocessed transactions and attempts to get them accepted into the block chain. By consensus (enforced through software), each block is accepted if accompanied by a valid hash whose value is less than a certain limit. Miners compete against each other to be first to find a suitable hash for a new block, because each block is allowed to include a reward for the miner. The reward is a freshly minted output.
  The consensus (enforced through software) is that the block reward halves approximately every 4 years, such that the total bitcoins issued will asymptotically approach a fixed maximum of 21 million. Currently the reward is 25 bitcoins per block.
  The threshold for a valid hash adjusts approximately every 10 days to ensure that new blocks are produced approximately every ten minutes. This is expressed as the "difficulty factor", and will rise as more hashing power joins the network.
  
  --
  Paid Q&A/Research
15. Re:What about the alternative virtual coins ? by gnupun · 2014-03-27 04:04 · Score: 1
  
  THERE IS NO BITCOIN. Definitely not physical, but not even virtual! ... Bitcoin is nothing more than a ledger of transactions.
  Okay, but a transaction is a process, (a machine, an algorithm). And a process needs input(s) to produce output(s). So inputs and outputs in the previous sentence are nouns and a transaction is a verb. What are these nouns in the bitcoin world? Putting this another way, if you go to a grocery store, you can exchange cash (a thing, a noun) for a loaf of bread. The exchange is a transaction and you get a record of the transaction as a sales receipt and the grocery store keeps another copy. But no one confuses cash for a transaction (receipt). If you were to use bitcoin system instead of cash, then how would it go? You can't exchange a transaction (bitcoins) for a loaf of bread.
  
  The public key is what people use to increase your ledger count.
  
  Ledger count is cash? Public key used by others to add cash (ledger count) to your wallet?
  
  The private key is what you use to decrease your ledge count by increasing someone else's ledger count..
  
  Private key used by you to spend cash (ledger count) to buy real world things/services?
16. Re:What about the alternative virtual coins ? by Qzukk · 2014-03-27 04:05 · Score: 2
  
  how the "what" (bitcoin in this case) came into existence.
  It's a number, written in on the ledger. Just like how when the fed wants to give a bank a few billion dollars some zeroes appear in their computer.
  The way bitcoin works is ALL in the blockchain. Each block consists of:
  
  [data from previous block] Qzukk gives himself 0.x BTC for solving this block Bob gave 1.2 BTC to Dave Sam gave 0.8 BTC to Bob James gave 0.9 BTC to Bob [variable data]
  
  In order for this block to be valid, Qzukk has to find [variable data] that makes the SHA-256 of the block be 0x0000000000... (the number of zeroes in the hash is how the "speed" of mining is set. Because of the "Qzukk gives himself x" transaction, everyone is working on a different block (yours would say "gnupun gave himself..."). Furthermore, because of the data from the previous block being used, whoever solves the block and gets it in the blockchain first means everyone else has to start over on the next block, which is why it's pointless for small fry to try and mine now.
  
  --
  If I have been able to see further than others, it is because I bought a pair of binoculars.
17. Re:What about the alternative virtual coins ? by gnupun · 2014-03-27 04:19 · Score: 1
  
  When you're transferring $10 from one bank account to another or sending those via PayPal, that $10 doesn't have any "unique random number", it's just subtraction from your account balance and addition to another.
  
  Sorry, it's not just addition and subtraction if the sender's bank is different from the receiver's bank. The sender's bank has to send the $10 to the receiver's bank (or remaining part after balancing other account transactions).
  If sender and receiver belong to the same bank, then its just addition and subtraction as you say. But now, virtually speaking, a pointer in the bank record that used pointed you to the $10 now points the receiver to the same $10.
18. Re:What about the alternative virtual coins ? by gnupun · 2014-03-27 04:29 · Score: 1
  
  I get it now... bitcoins do exist but not uniquely like currency notes. They exist as "account balance or number of bitcoins" in your e-wallet. So, you have 2.9 bitcoins in the above block chain and this block chain's transactions is proof to others that you are the rightful owner of 2.9 bitcoins. Right?
19. Re:What about the alternative virtual coins ? by NFN_NLN · 2014-03-27 05:01 · Score: 1
  
  Physical money isn't used very much even in real life. Less than 5% of US dollars are represented as cash/coins. It is mostly a ledger at a bank (bank account) and the banks are regulated and trusted entities not to cheat or tamper with the ledger (bank accounts).***
  If you start with debit/credit cards as your model then Bitcoin is nothing more than a decentralized version of this.
  Or another way to put it. If you were really poor and had no physical money. You could pay someone in an IOU and write it in a ledger. That person can pay you back in an IOU as well, but part of the IOUs would cancel out. No money ever changes hands because it never existed. It was just a ledger recording who owed who what.
  This explains everything:
  http://www.youtube.com/watch?v...
20. Re:What about the alternative virtual coins ? by master_kaos · 2014-03-27 05:14 · Score: 1
  
  thanks for dumbing it down. I have always been curious myself, but was always confused because everyone would get in the technical nature of it and go over my head, but assuming your post is accurate I think I finally understand it.
21. Re:What about the alternative virtual coins ? by lurker5 · 2014-03-27 07:16 · Score: 1
  
  > You can't exchange a transaction (bitcoins) for a loaf of bread. Yes, you can. When you pay with a credit card, what exactly have you exchanged?
22. Re:What about the alternative virtual coins ? by david_thornley · 2014-03-27 07:17 · Score: 1
  
  I go to the grocery store. I charge my purchase. End of billing period, I get a statement from the credit card people and write a check, from the account my salary is direct-deposited to.
  There are no physical things involved here (unless I use a physical check instead of an echeck or bank transfer, which, to be honest, I normally do). The credit card company increases the number that says what I owe them, and the number that says what the store gets. Then they decrease the number that says what I owe, while the bank manipulates numbers reflecting our account balances (well, the banking system does, probably not just one bank). Everything here is numbers in a series of ledgers.
  This is all in dollars, but there's nothing inherent in dollars that makes this possible. (There are very good reasons to use USD in the US, but that has nothing to do with the accounting.) Think of making a diagram of this, then scratching out "dollar" wherever it appears and writing in "bitcoin" in crayon. It would work exactly the same.
  
  --
  "When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
23. Re:What about the alternative virtual coins ? by ultranova · 2014-03-27 07:19 · Score: 1
  
  I'm not interested in the ledger because it simply records who owns what. I'm more interested in how the "what" (bitcoin in this case) came into existence.
  
  A Bitcoin is a unit of measurement of the magnitude of an account balance (to be exact, transaction inputs and outputs) in the Bitcoin network (distributed ledger system), not a discrete object. It has no identity. Saying "I have 4 Bitcoins" is the same type of statement as saying "my speed is 65 mph".
  As for how they come into existence, in the current bootstrapping phase of Bitcoin network it lets you increase the balance on one account more than another is decreased in certain situations (mining), thus increasing the total combined magnitude of all accounts. Calling this "creating" Bitcoins is misleading, but a convenient shorthand for those already familiar with the underlaying technology.
  
  --
  Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
24. Re:What about the alternative virtual coins ? by ncc74656 · 2014-03-27 07:43 · Score: 1
  
  Other than bitcoins, are other virtual coins worthless?
  
  Mining many scrypt altcoins and immediately trading them for Bitcoin can net 40-50x or more what the same hardware would deliver mining for Bitcoin directly. CoinChoose will show you what's most profitable. You can set up CryptoSwitcher (disclaimer: I'm a contributor) to manage pool switching and exchange operations, or you can mine someplace like WeMineAll that manages all of that for you.
  
  --
  20 January 2017: the End of an Error.
25. Re:What about the alternative virtual coins ? by gnupun · 2014-03-27 08:01 · Score: 1
  
  Yes, you can. When you pay with a credit card, what exactly have you exchanged?
  When using a credit card, you're borrowing money (at around 10-20%/year interest rate) from the credit card company and using that pay for the product/service. But that's real money, created by the feds and distributed by major banks. It seems to me bitcoins appear out of thin air when you do the bitcoin system "favors" such as mining (i.e. finding the number X which when appended to a newly minted bitcoin block results in sha256(block) == 0x00000).
  If total USD currencies are valued around $1 trillion (hypothetically), and BTC around $200 billion, won't having two sets of fiat currencies depreciate the value of fiat currencies in general and place a inflationary burden of 15-30% on people who don't own bitcoins and have never used it?
26. Re:What about the alternative virtual coins ? by Qzukk · 2014-03-27 10:02 · Score: 1
  
  Yes. To prove that you have 2.9 bitcoins, you start at the beginning of the blockchain and add up all the transactions putting money into your bitcoin wallet and subtracting money from it to get a total.
  This is also why the currency isn't exactly anonymous. Everyone can trace everywhere you've sent bitcoins to and everywhere you've gotten them from.
  
  --
  If I have been able to see further than others, it is because I bought a pair of binoculars.
27. Re:What about the alternative virtual coins ? by fisted · 2014-03-28 17:30 · Score: 1
  
  The sender's bank has to send the $10 to the receiver's bank?
  And in order to do that, the sender's bank has to physically haul a 10 $ note over to the receivers bank? (And then, is a 10$ note actually the same as ten dollars?)
  Protip: No, and no.
  
  --
  CLI paste? paste.pr0.tips!
how by phantomfive · 2014-03-26 18:23 · Score: 2

How do they know the current value of BitCoin? Who is considered the primary exchange now? Are there any that are considered even remotely trustworthy?

--
"First they came for the slanderers and i said nothing."
1. Re:how by pantaril · 2014-03-26 21:49 · Score: 2
  
  How do they know the current value of BitCoin? Who is considered the primary exchange now? Are there any that are considered even remotely trustworthy?
  The value is determined on exchanges by suply and demand. You can use site like bitcoinaverage to get price index based on more exchanges and their volume.
  There is no exchange considered primary at this time. The biggest ones are probably: bitstamp, btc-e, huobi and btcchina.
Why? by Hognoxious · 2014-03-26 18:28 · Score: 5, Funny

Why mine them? It's much easier to set up an exchange and just steal them.
Also, FP.

--
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
1. Re:Why? by kharchenko · 2014-03-27 04:18 · Score: 1
  
  "customer-mediated mining"
First step of a virtual central bank ? by Taco+Cowboy · 2014-03-26 18:45 · Score: 2

What we need now is not more "exchanges" for virtual coins but a "central bank" in charge of the virtual coins.
If they are successful in accumulating 10% of all Bitcoins they may want to use them as the base of the first ever Virtual Central Bank
As the central bank for virtual coins, they can function much more than the "exchanges" that we've heard so much about.
They can manipulate the value of any virtual coins via "buying" and "selling".

--
Muchas Gracias, Señor Edward Snowden !
1. Re:First step of a virtual central bank ? by phantomfive · 2014-03-26 18:56 · Score: 1
  
  What benefit would a central bank provide? (other than for itself)
  
  --
  "First they came for the slanderers and i said nothing."
Current value of Bitcoin by billstewart · 2014-03-26 18:55 · Score: 4, Insightful

I'd strongly recommend that they start selling enough now to pay off their hardware and debts in the first couple of months. Maybe gamble on keeping half the take for future appreciation, but if they're mining it this fast they ought to nail down their initial stake quickly in case the Bitcoin ecosystem colllapses.

--

Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
1. Re:Current value of Bitcoin by phantomfive · 2014-03-26 19:28 · Score: 1
  
  What's the point of keeping any of it if you can mine it that easily?
  
  --
  "First they came for the slanderers and i said nothing."
2. Re:Current value of Bitcoin by SuricouRaven · 2014-03-26 19:46 · Score: 2
  
  It's like much in finance: Sophisticated gambling. You can sell now and get your money, or you can wait and gamble on the price change. You might make more that way, or you might make less. The bitcoin price is ridiculously volatile, as there are so many speculators involved and comparatively little business being conducted in it.
3. Re:Current value of Bitcoin by jon3k · 2014-03-27 01:28 · Score: 1
  
  Depends on the cost of the loans compared to what you could do with the cash. Worst case scenario the whole thing collapses and you fold up shop and go home. I'm sure it's incorporated, he won't be personally liable for the debt. Just pay yourself a nice salary while you're at it in case everything goes tits up.
Re:Fantastic ROI by phantomfive · 2014-03-26 19:25 · Score: 1

When he tries to convert that $4million to cash his 'investment' will flop.

--
"First they came for the slanderers and i said nothing."
Re:Fantastic ROI by Rick+in+China · 2014-03-26 19:27 · Score: 1

You're also ignoring the fact that as more coins flow into the BitCoin economy - ignoring the fact it's already lost a ton of confidence due to a series of community upsets, etc - the more liquidity/supply to meet a questionable demand. Will the demand increase to meet the faster incoming supply? I'm betting no. I know also though that the cost of the power/cooling/maintenance/etc is ENORMOUS for this type of operation, and you're also ignoring the fact that the exponentially harder mining calculations will slow their production immensely the faster they mine, so jumping to a "1200% per annum" ROI is ludicrous and missing so many important factors. It's going to bomb. Be surprised if this guy ends up with anything but massive loss at the end of the day - especially if exchanges continue to implode and people continue to abandon the currency.
Not even one of the biggest by Animats · 2014-03-26 19:47 · Score: 4, Informative

All serious Bitcoin mining is now industrial-scale using custom ASICs. CPU-based and GPU-based mining are dead. They can't even cover their own power bill. This guy's setup is primitive compared to this large high-density liquid-cooled mining facility in Hong Kong. The two biggest mining pools control over half of the mining power, and the biggest, "ghash.io", would have over half if they hadn't deliberately split up to avoid that happening.
The thing to remember about Bitcoin mining is that all miners are in competition for a fixed number of Bitcoins produced each week. More mining does not mean more Bitcoins are generated.
1. Re:Not even one of the biggest by TCM · 2014-03-26 21:45 · Score: 2
  
  If you don't increase your mining more and more, others will do it and your global share of future Bitcoins shrinks and shrinks, since more and more mining power means less and less Bitcoins per GH/s due to difficulty adjustment.
  
  --
  Of course it runs NetBSD. BTC: 1NT7QvbetmANwaMzhpVL6
2. Re:Not even one of the biggest by geekmux · 2014-03-26 23:15 · Score: 1
  
  All serious Bitcoin mining is now industrial-scale using custom ASICs. CPU-based and GPU-based mining are dead. They can't even cover their own power bill. This guy's setup is primitive compared to this large high-density liquid-cooled mining facility in Hong Kong. The two biggest mining pools control over half of the mining power, and the biggest, "ghash.io", would have over half if they hadn't deliberately split up to avoid that happening.
  The thing to remember about Bitcoin mining is that all miners are in competition for a fixed number of Bitcoins produced each week. More mining does not mean more Bitcoins are generated.
  The one other thing to remember is that once a monopoly is stood up of this size and they come in and repeatedly mine the majority of coins all the time, from this or any other virtual currency, people will want to start making this activity illegal by regulation.
  Then it's going to get really ugly.
3. Re:Not even one of the biggest by david_thornley · 2014-03-27 08:53 · Score: 1
  
  One of the ideas behind Bitcoin is that it really can't be regulated. What a monopoly mining concern could do is make Bitcoin less popular and hence less valuable.
  
  --
  "When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
Re:Fantastic ROI by Frobnicator · 2014-03-26 20:27 · Score: 1

That's why his plan is to covert it all to bars of Xanax.
Stockpiling a prescription anti-anxiety drug?
Unless he is planning on some massive illegal drug parties or become a dealer of some sort I don't see how that would be a good investment.

--
//TODO: Think of witty sig statement
Re:Fantastic ROI by JaredOfEuropa · 2014-03-26 21:03 · Score: 1

Out of interest, has anyone tried to cash in amounts like these after the recent hype died down? During the hype I remember people finding some old BTC behind the sofa as it were, and cashing them in the $100k and even $1M ranges. What is the BTC to $ trading volume these days?

--
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Re:They aren't worthless... by khallow · 2014-03-26 21:10 · Score: 2, Insightful

That depends to some degree on what they plan to do with the bitcoins. If they hold them, then they are exposed to more risk than if they sell them as soon as they compute them.
Re:it is all right by tigersha · 2014-03-26 21:16 · Score: 1

It is immoral to let a sucker keep his money

--
The dangers of excessive individualism are nothing compared to the oppressiveness of excessive collectivism
Re:They aren't worthless... by ls671 · 2014-03-26 21:31 · Score: 1, Insightful

Supply and demand, if many do like this guy, chances are the market will be flooded with bitcoins and the value will go down.
https://en.wikipedia.org/wiki/...

--
Everything I write is lies, read between the lines.
Re:Go DogeCoin! by davidhoude · 2014-03-26 22:27 · Score: 1

I was able to make $2,000 off dogecoin in the first 24 hours, it was amazing. Talk about the right place at the right time, I don't even own a decent video card.
I realize this is nothing next to HFT, but by Truth_Quark · 2014-03-26 22:34 · Score: 4, Insightful

what a wonderful way to utilise $3-5M to the advancement of society, produce a valuable commodity and generally bolster the economy in these times of decreasing worth.
1. Re:I realize this is nothing next to HFT, but by Racemaniac · 2014-03-27 04:40 · Score: 1
  
  I've recently been wondering: isn't this exactly what most of the economy is about these days?
  Just look at where most of the money is, it's all virtual things, why the hell is facebook worth billions? What does it physically produce or add to this economy?
  Want to get rich? forget about actually making stuff, try to get into the next virtual bubble (or go along in many of the existing ones). When it's all virtual, and you don't really need to make something, perpetual exponential increase suddenly is possible (until it collapses that is, but who saw that coming?), but there just is no hard limit. and since it's coupled with money, if you're lucky you'll make a fortune.
Re:Fantastic ROI by deroby · 2014-03-26 23:05 · Score: 2, Insightful

Quite informative IMHO

It's paid itself off [in bitcoins] many times over already."
Call me when it has paid itself off IN DOLLARS many times over.
Dumping a gazillion btc on the market will likely push the price down and hence the profit.. It must be nice being able to dump a couple of million$ into a "hobby" project like this; but really... the only ones making a profit out of this IMHO are those who fabricate the boards/cables/etc... Off course he's going to say he makes huge profits, after all he is trying to lease out (a portion) of his infrastructure... which in itself already indicates how 'worthwhile' running the setup really is.
(if only they would/could recuperate some of the heath being produced I'd be less sad about it.. right now all I see is 3MW of energy being wasted by a ton of PCB's that will end up in a landfill somewhere in the next years... and apparently this is only 5.6 percent of what is being 'mined' around the world, the proverbial tip of the iceberg... humanity deserves to die...)

--
If there is one thing to be learned on slashdot, it has to be sarcasm.
Re:They aren't worthless... by Joce640k · 2014-03-26 23:21 · Score: 3, Insightful

Bitcoin is designed so the market can't flood.
The work needed will go up if more people do like this guy (and his investment will be worthless...)
.

--
No sig today...
You forgot by justthinkit · 2014-03-26 23:51 · Score: 4, Interesting

You forgot to mention gold's inertness. Yes, copper and silver conduct better than gold but both of them corrode like fiends. To combat this you have to alloy, or coat. You don't need this with gold, and combined with its "softness" (better described as extreme ductility), you can lay down a very thin layer indeed. "Atoms" thick, vs "fractions of an inch" thick. Ask someone designing a satellite which is more valuable. Or a jeweler. Or a circuit board maker.

--
I come here for the love
1. Re:You forgot by delt0r · 2014-03-27 00:04 · Score: 1
  
  This is true. In fact if gold was cheaper.. It would probably find a lot more uses that it currently does.
  
  --
  If information wants to be free, why does my internet connection cost so much?
2. Re:You forgot by njnnja · 2014-03-27 01:57 · Score: 1
  
  Gold is worth as much as it is because the qualities that make gold useful for so many products also make it useful as a material for currency. A material used for currency should have the following properties: it can be made into various forms useful for trading (such as coins or bars), it does not oxidize or otherwise decompose over long periods of time, it is rare enough but not impossible to find, it is relatively dense so you can efficiently measure by weight and not volume, and it would be nice if it even looked nice and shiny and pretty. You would be hard pressed to invent a physical material that satisfies the use cases of a currency as well as gold does. So any material that had the qualities that make gold useful in so many ways would probably get used as a currency first and foremost, driving the price up beyond its use in other applications.
3. Re:You forgot by epiccollision · 2014-03-27 05:22 · Score: 1
  
  Who exactly is trading physical gold? I know there are companies who have gold reserves as bullion, banks, mining companies etc. The amount of gold that has ever been extracted/mined is estimated to be quite modest compared to other metals like silver, copper or iron. Those metals are used to construct buildings,commodity goods and uses a fleet of ships to get around...while all of the gold mined in a year could probably fit in one ship container, it would not be easy to move it once full but it would fit inside quite easily. Gold's scarcity may be a contributing factor to its value, but this is pure speculation, all we see is a price reported to us to by a self- interested 3rd party. When we buy gold from the market we don't get a corresponding shipment of it in 3-5 business days(unless you are a bank or have permission from a government to posses gold), someone else has possession of it you just buy certificates. So if some entity, or group of, sells more certificates then they actually have who is going to know? By all estimates the interest(not futures, but actual commodity sales) in gold has outstripped the actual supply of gold for quite sometime...so what are they selling??
  Now what are comparing and contrasting to BTC?
What if by StripedCow · 2014-03-26 23:55 · Score: 1

What if 10 other people also decide to mine 10% of all bitcoins?

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If Pandora's box is destined to be opened, *I* want to be the one to open it.
1. Re:What if by Goaway · 2014-03-27 01:43 · Score: 1
  
  Difficulty rises until they all get about 5% of all bitcoins and the previous people get their share of the remaining 50%.
Actually... by justthinkit · 2014-03-26 23:56 · Score: 1

Actually, aluminum corrodes (i.e. oxidizes) very readily. It just so happens that the coating -- a mix of Al & O atoms -- takes up the same space as pure Al atoms. So the surface Al oxidizes to Al2O3, and once the surface is covered with the oxide, O can not get through to react with the Al. End of "corrosion" but very much an oxide surface. Oxide surface = not attractive in jewelry (just like what happens to silver). Also, absorbing Al through the skin contact is not a good idea.

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I come here for the love
Current rates by symes · 2014-03-26 23:57 · Score: 5, Funny

They current generate 7,000 — 8,000 Bitcoins per month, which, at current rates, would be worth over $4 million
And at tomorrows rates $125, and the day after's rates $1.7 billion, and the day after that...
Re:Fantastic ROI by gnasher719 · 2014-03-27 00:02 · Score: 1

Dumping a gazillion btc on the market will likely push the price down and hence the profit..

It's not exactly a gazillion. They say "7000-8000 bit coins per month", when MtGox just found 200,000 bit coins that they lost behind the sofa. However, I would be worried how much in bit coin is just paper profits, and how hard it would actually be to sell 8,000 bit coins every month. How many people are actually willing to pay high prices for bit coins?
Is this how we're funding science now? by RDW · 2014-03-27 00:11 · Score: 1

Interesting that the main investor in this operation (and apparently the chip design) seems to be an academic bioinformatics institute in Poland: http://bioinfo.pl/
I guess it beats applying for research grants...
1. Re:Is this how we're funding science now? by citizenr · 2014-03-27 02:38 · Score: 1
  
  This "academic bioinformatics institute" is an LCC, not an actual academic institution :) Its a scam.
  
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  Who logs in to gdm? Not I, said the duck.
2. Re:Is this how we're funding science now? by RDW · 2014-03-27 03:08 · Score: 1
  
  This "academic bioinformatics institute" is an LCC, not an actual academic institution :) Its a scam.
  They claim to be a "non-for-profit research and development organization". They have a respectable list of publications, all the way up to co-authorship in a Nature paper, so doesn't look like a scam!:
  http://bioinfo.pl/papers.html
3. Re:Is this how we're funding science now? by citizenr · 2014-03-27 04:29 · Score: 1
  
  People might be real, but the "institute" is a scam. Its very popular in Poland nowadays to create a company for the sole purpose of leeching EU grands, this bioinfo.pl thing, and its parent company 'bib seed capital' is just that.
  
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  Who logs in to gdm? Not I, said the duck.
Re:Fantastic ROI by nomaddamon · 2014-03-27 00:15 · Score: 2

Considering that the daily trading volume of popular exchanges is around 50k BTC / 27m$ at the moment, and that he dumps all coins directly to market, he might lower the price by 0.5% (8/(50*31))!

Doge coin rig, built in December for 850$ has earned 4800$ so far and another ~1200$ is expected before it turns obsolete (cost of power passes turnover). It has paid itself in DOLLARS many times over.

Bigger rigs, like in TFA have a bit longer lifetime and higher profit margins (assuming you use top-of-the line off-the-shelf components and won't start inventing the wheel yourself)
Re:Fantastic ROI by deroby · 2014-03-27 00:32 · Score: 1

OK, I'll prepare for that call that's coming then =)
Anyway, I'm still having a hard time seeing this as anything but a waste of time and resources... The fact that it actually 'makes' money doesn't change that, it makes it all the more saddening to me as more people will jump on the train with bigger rigs .. all out of simple greed...

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If there is one thing to be learned on slashdot, it has to be sarcasm.
Re:They aren't worthless... by phishen · 2014-03-27 00:57 · Score: 2

Most Litecoin (and other crypto currency) miners actually trade all their Litecoin for BTC almost as immediately and exchange their BTC for cash.
Re:Fantastic ROI by Manfre · 2014-03-27 01:31 · Score: 1

They would essentially have to launder the bitcoins to not kill their value. They could do this buy buying lots of random things that can easily get resold from retailers that accept bitcoins.
Re:raytracing coins by Goaway · 2014-03-27 01:33 · Score: 1

No. Proof of work has to be hard to do, easy to check. With raytracing both are essentially equal.
Re:They aren't worthless... by dbIII · 2014-03-27 01:38 · Score: 1

It's just another step in the pyramid pushing the original perpetrators higher.
Re:Fantastic ROI by Bramlet+Abercrombie · 2014-03-27 01:41 · Score: 1

btc volume was 28 million in past 24 hours
Virtual Vapor Pressure by pubwvj · 2014-03-27 02:10 · Score: 1

"They current generate 7,000 â" 8,000 Bitcoins per month, which, at current rates, would be worth over $4 million." ...and at tomorrow's rates will be worth $0. Oops. Virtual evaporation leaving no trace behind, not even a ring around the bathtub.
Porkcoin Mining by pubwvj · 2014-03-27 02:22 · Score: 1

If you send me $30,000 (a pittance compared with $3 million) I'll supply you with pork for life. Real food in the real world which you can really eat. You can also trade your real pork for other real goods with other real people or just serve it up as a delicious meal with real friends in the real world.
Hundreds of real people have send me real money like the above and smaller amounts to get their real pork CSA Pre-Buys. It's real. This money helps us finish building our on-farm USDA/State inspected butcher shop. That's creating real infrastructure in the real world funded by real people at a real farm producing real food.
Be a part of something real and get real benefits.
-Walter Jeffries
a Real Pig Farmer
on a Real Mountain
in the Real State of Vermont
http://sugarmtnfarm.com/
What happens after the last bitcoin is found? by RogueWarrior65 · 2014-03-27 03:00 · Score: 1

This sort of reminds me of the Y2K scares 15+ years ago. Back then, there was a lot of FUD about Y2K and consequentially a lot of money being spent to deal with it. A lot of new equipment was being purchased. A lot of software was being modified along with a lot of older programmers being hired to perform those modifications since nobody else knew how to deal with it. Once Y2K came and went without any catastrophe, all that capital spending evaporated overnight. One could argue that this may have been a catalyst for the dotcom crash but that's a separate issue. My point is that a lot of very expensive equipment is being built to mine bitcoins. A lot of real money and resources, particularly energy, is being spent in an effort to mine something that has no other use besides virtual currency unlike metals. So when the last bitcoin is found, all that capital spending will vanish. Is this hardware good for anything else? If not, there will be residual effects.
1. Re:What happens after the last bitcoin is found? by johnsie · 2014-03-27 05:26 · Score: 1
  
  As long as people break even then the cost of the machinery is unimportant. Of course it may be possible to start mining other currencies aftwerwards, or hire out the processing power of the machinery. For us electric costs are not a problem, because we are at a hydro electric plant.
What Bitcoin might be good for by morgauxo · 2014-03-27 04:00 · Score: 1

Reading many of the comments it would seem people think Bitcoin is nothing other than something to mine for money and then argue it is pointless. Well, yeah, that would be pretty pointless. A few mentioned it's being 'untraceable' and so good for buying drugs. I don't really think so. The record of every transaction is out there for everyone to see. Sure, individual transactions are anonymous but if law enforcement agencies can manage to find out who was involved in one transaction they can start leaning on people until they have the one they are after. I wouldn't recommend using Bitcoin as a way to commit a crime!
Where I see value in bitcoin is the ability to perform transactions with little or no fees. Why do I have to pay on average $3.00 every time I use another bank's ATM? What did the transaction actually cost the 3rd party bank and any other middlemen to complete? That has to be 99.99...% profit. How about credit card merchant fees, Paypal fees when one person sends money to another outiside of Ebay? Don't get me wrong, I'm not against companies getting a profit for providing a service but when the transaction is 100% digital the real cost must be vanishingly close to zero. That means the profit margin these banks are charging must be rediculous! Besides, even if the fees the banks are charging aren't rediculously high (unlikely) If others are willing to provide that service to the community for free or lower cost then why is it worth paying the banks to do so?
That's what I hope to be someday using Bitcoin or some other virtual currency for... real honest day to day transactions. At the moment though I haven't seen the things I normally pay for on a day to day basis available for Bitcoin. Maybe someday...
lies and more lies by slashmydots · 2014-03-27 04:03 · Score: 1

The fastest, cheapest, most efficient systems right now have a payoff period of about 9 months. They're claiming they're doing it in 1 months. They're lying. They're probably not counting electricity or are lying about their efficiency or simply got lucky solo mining.
Also, 25 BTC are created every 10 minutes. There are 4392 sets of 10 minutes in the average month. He wants 10% of the 25BTC so 2.5 BTC per cycle is 10,980. So they're close but just short of it...except it doesn't work that way. You aren't stealing processing ability away from the rest of the network, you're supplementing it. So if the total network speed is like 700,000MH/s, you can't add 70,000 yourself and have 10%. Then you have 70,000 of 770,000 which is 9.09%. Then there's the fact that new miners are adding every day and lowering your profitability. I think it's like 1% growth per day or something so goodbye profits. They basically have a very bad business plan and aren't so great at math.
Re:They aren't worthless... by epiccollision · 2014-03-27 04:11 · Score: 1

it took 3-5mil to build...making 4 mil a month...they paid for their investment if they can/have convert it in the near future
Re:Fantastic ROI by Angrywhiteshoes · 2014-03-27 05:29 · Score: 1

Realistically, you have a small point. It's hard to dump large sums. But I can see you probably aren't in the cryptocoin mining community. When I first came up on my huge dump, I had a problem getting rid of them for what I felt it was worth at the time. So... I traded coin-to-coin evenly for every alt-coin that could be sold for cash and was selling. Then dumped for cash on those markets. Granted, my operation was not up to this scale, but at the time, I was making it rain.
Interesting by mimi4204 · 2014-03-27 06:25 · Score: 1

Made me think of the open hardware Bitcoin miner - https://github.com/GeorgeHahn/.... Anyone had a chance to check that out?
How long does he expect to do this? by djhaskin987 · 2014-03-27 06:33 · Score: 1

The difficulty goes up exponentially with pool size. How long does this guy plan to keep buying up the world's computing resources? Cause he'll have to pretty quick to keep his 10% goal.
Re:They aren't worthless... by ultranova · 2014-03-27 07:34 · Score: 1

If they hold them, then they are exposed to more risk than if they sell them as soon as they compute them.

Of course, a kind of person who puts $5 million into Bitcoin mining equipment might consider risk to be a good thing.

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Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
Re:They aren't worthless... by khallow · 2014-03-27 08:41 · Score: 1

Of course, a kind of person who puts $5 million into Bitcoin mining equipment might consider risk to be a good thing.
Well, the risk premium will be better because the big money won't be competing.
Re:A common misunderstanding by deroby · 2014-03-27 22:43 · Score: 1

Maybe it's a cultural thing and btc did take off on your side of the pond; but from my point of view I can't see any people willing to put down real money in exchange for btc. Sure; we've all downloaded the client, had a bit of fun to see how many hashes our hardware could work through only to realize that in the end the only place where it would leave a mark was on the electricity bill. So from where I'm standing, the only people willing to put 'real value' to btc are either those who have a lot of it and really, really, really would like other people to buy them from them so they get 'real' money. Or those who think that it might be good idea to invest in them now (I'm guessing that if you spend 5m on btc and do it 'smart' that you probably could horde quite an amount of them) in the hope of selling it somewhere in the future for a hefty profit.
Both situations may have the effect of btc getting a perceived increase in value, but I for one expect said bubble to implode 'real soon now' and leave the unlucky behind with a string of worthless hardware and/or bits & bytes.
But that's just my opinion and by observation it does seem that there are quite a few people out there that are making quite a profit (in dollars) on the whole operation right now...
PS: I'm not really against the whole idea of decentralized crypto-currency PAYMENTS (although I do think that the current implementations are painfully slow and scale very badly -- having to download the entire log, really ??). The part I really dislike is the way they are 'mined'... I simply can't find any angle where converting electricity into money by means of specialized (expensive) hardware seems to be a good idea =( At least scrypt tried to work around that but alas the arms-race is on...
But no, I'm not actively taking part in 'the community' and hell what do I know...

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If there is one thing to be learned on slashdot, it has to be sarcasm.
Re:They aren't worthless... by Joce640k · 2014-03-30 21:05 · Score: 1

a) Bitcoin has lost about a third of its value since you wrote that.
b) You can't just press a button and "convert" millions of dollars of bitcoin. There has to be buyers willing to buy them at the price you're asking.

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No sig today...