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Bitcoin

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Xymurgy

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Joined
Jul 7, 2003
Location
New Hampshire, USA.
I've been hearing about Bitcoin for a few weeks, and finally put in the effort to research what it's doing. It's essentially a decentralized "bank" where all the distributed clients crunch hashes to verify the "bank's" transactions of Bitcoin currency (BTC), and rewards the client that verifies the transaction with BTC (which in turn can be used for other monetary transactions, requiring further hash verifications).

It's not quite a personal printing press, though. It sounds like the difficulty of verifying hashes scales with the gross output of the clients. So with increasing popularity, "mining" BTC becomes less lucrative. There's probably more benefit in actually using the currency rather than generating it. Nonetheless, I think it's fascinating and want to see what the future holds for the project (especially with the negative press fiat currency and fractional-reserve banking has been receiving hyukhyukhuk).

I'm also curious to see what others' thoughts are.

http://en.wikipedia.org/wiki/Bitcoin
http://www.bitcoin.org/
 
I personally believe that Bitcoin can have a greater net benefit on society than the rest of the distributed computing programs combined. This is of course only my opinion.

Thomas Jefferson said:
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

Politics aside:

There was a thread on the anandtech distributed computing forums posted some time ago when bitcoins were worth very little (.03 USD each iirc). Most of the replies were derogatory. Bitcoin is currently trading at 1.40 USD each. I posted a response (when bitcoins were trading at .80 USD each) suggesting that I wish I had known about it when some of the posters were making such comments. I was accused of "mining" the forums and not much has come from it since.

I do wish I had known about bitcoin earlier. I'm hoping that I'm early enough to continue being profitable processing the transactions. It is extremely competitive. Those with lower electricity costs have the edge.

One person has made custom ASICs to "mine" more efficiently and it has been suggested that is where the future of mining lies.

AMD gpus are the king. 6xxx not being much of an improvement over 5xxx. Down-clocking RAM to save energy and heat is common.

There is a growing community at bitcoin.org and I'm hoping that it continues. Anyway, it's an interesting and fun ride. :)
 
I'm still not sure how to "farm" it. I'd like to run it on multiple servers, but I have no idea whether their output will be combined, or even how "accounts" work. How do I know when I've generated a coin, and then how do I put them all together?
 
I read the website, but I still fail to see how this generates value. From what I understand, our currency is based off actual objects (metals, etc). I just don't see how this works.
 
I read the website, but I still fail to see how this generates value. From what I understand, our currency is based off actual objects (metals, etc). I just don't see how this works.

Maybe they plan to sell the CPU time eventually. Got some super-heavy-duty calculating to do? Buy your processing power with BitCoin.
 
I read the website, but I still fail to see how this generates value. From what I understand, our currency is based off actual objects (metals, etc). I just don't see how this works.

the dollar hasn't been backed by anything real since the 70s (though it started its weening in the 60s). the US is a fiat currency which basically means a dollar is worth a dollar only because you and i think its worth a dollar.

so this works in the same vain. bitcoins are worth money because people say they are and other people will accept them as such. is it stable as a currency, is another discussion however.
 
Basically a currency was designed from the ground up. It has all the right features that one would want in a currency.

It's durable, bitcoins can't really be destroyed (although if you lose your wallet file, you lose access to the coins that are stored on it, forever).

It's divisible, currently down to eight decimal places.

It's rare, after the 21million coins are "mined" no more will ever be created (no inflation).

It's secure, without going into much detail, you can't really counterfeit a bitcoin.

It's decentralized, there is no central bank that contols the money (again no inflation).

It's easy to exchange, you get someone's bitcoin address and send them as much as you'd like. As soon as the next block is written into the chain (10 minutes), they receive the bitcoins in their bitcoin application.

No charge backs, once the money is sent, it's sent. Someone can't claim they didn't receive their goods and take their money back. This puts the trust in the hands of the users, not some corporation / bank.

Consider it like digital gold minus the industrial uses.

Check out bitcoin.org if you want to know more. Or read the pdf from the creator. http://www.bitcoin.org/bitcoin.pdf

The more you read about it, the more you see it's usefulness. It really is better than any form of currency currently in use.

Yes it's new, and that has drawbacks. The economy is small, but it's growing fast. It's volatile, one rich person can buy enough bitcoins to make the price fluctuate. If a major government decides they don't like bitcoin interfering with their control over money, it could be criminalized. I doubt they would be able to shut it down, as the network that secures the block-chain is p2p.

Mining can be done solo, but you are competing against everyone else in the network. If you have enough power, solo might be OK, but there is a lot of variance. Most miners join pools that split the 50 coin reward for finding the next block. They use a score base system that rewards you for how much hashing power you add to the pool. This provides you a steady flow of coins. You run one miner for each GPU that you have. You can have as many GPUs mining as you like. CPU mining is not very efficient.

The coins are currently trading 1.72-1.79 USD each. Yes, people are paying USD for bitcoins right now.

I've been mining for almost a month now and have earned a nice stack of bitcoins for myself.
 
ive done reasearch for the last hour on this and it still makes no sense to me... how would you collect the bitcoins for physical cash and how can you spend them?
 
ive done reasearch for the last hour on this and it still makes no sense to me... how would you collect the bitcoins for physical cash and how can you spend them?

You can spend them if you find someone selling items for bitcoins. This isn't all that common, as I said it's a new economy. There is a marketplace on the forum where people list stuff they are willing to sell for bitcoins. Obviously getting a major online retail to accept bitcoins would create a huge boom in the economy (and drive up the price of bitcoins in the process).

There are several ways to exchange your bitcoins for cash. One person offers cash through the mail. Another offers paypal payment for bitcoins. And of course there is the marketplace where people buy and sell bitcoins all day long. http://www.mtgox.com/trade/history There are also other ways, through the forum, or on an IRC channel.
 
i looked into this a few months back too and i've had trouble understanding it also. Basically my understanding is 1 computer = 1 account. To have them work "together" you need to Pool them. You can also Pool with other users, some think this increases your chance of obtaining an actual bitcoin. It seems there are tons of different clients too.

That's as far as i got. It doesn't seem as nice or easy to run as WCG, Boinc, or F@H.
 
Here's my understanding of it....

Where gold and silver have intrinsic value, bitcoin tries to generate intrinsic value by the computing power present in a PC. It creates money when you successfully 'verify' said transaction.

So basically, if you can verify the stuff quickly, you generate money.... and as time passes, the verification will require more computing power.

So, it seems like the 'easy' ones have been verified already, in other words the gold-rush for this has ended just recently and only lasted a short time....

However, it can be used like Paypal, but without the fees or fear of getting your account frozen for stupid reasons.
 
Posted on 4/26/2011...
The coins are currently trading 1.72-1.79 USD each. Yes, people are paying USD for bitcoins right now.

I've been mining for almost a month now and have earned a nice stack of bitcoins for myself.

I was checking the Mt. Gox Bitcoin exchange today and they are now trading at: Last Price: 8.7 High: 8.92 Low: 8.35

Your stack of bitcoins seems to have appreciated nicely over ~ a month!

I think perhaps that the bitcoin mining heydays may have already passed by.
 
Yup, and the people that got on early are the new 'landed elite.'

I'm not investing in this ponzi scheme
 
Posted on 4/26/2011...

I was checking the Mt. Gox Bitcoin exchange today and they are now trading at: Last Price: 8.7 High: 8.92 Low: 8.35

Your stack of bitcoins seems to have appreciated nicely over ~ a month!

I think perhaps that the bitcoin mining heydays may have already passed by.

If you are immediately converting your Bitcoins to other currencies at the end of each day, mining today is more profitable than it was when I started.
 
I'm not investing in this ponzi scheme

I certainly would suggest that you do not invest as Bitcoin is extremely high risk, but...

I don't understand how a voluntary, p2p, decentralized, open source, digital currency project that has a complete and total history of all transactions and is openly traded on public exchanges could possibly be misconstrued as a ponzi scheme. Anyone who does is either ignorant or dishonest (perhaps both). No offense intended.
 
I know of 3 people selling coins for USD daily.. They are fetching 25 bucks. Word of advice, if you have a 5870 or a 5970 even and you want to unload it for some serious money, do it now. These are the best mining hardware out there.
 
I read the website, but I still fail to see how this generates value. From what I understand, our currency is based off actual objects (metals, etc). I just don't see how this works.

You are mistaken. The US$ is not back by anything anymore. It was at one point backed by gold via a gold standard. These bitcoins are just as valuable as US$.
 
*Update* for those of you who own amd 5xxx cards, I just sold my 2 5870s for 525.00! Unload them sooner than later to the bitcoiners if you want some cash out of them! :)
 
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