Bitcoins/Litecoins/Virtual Currencies

Tripamang

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#1
We had a thread for this previously on foh~ Not really sure if this should be in general or technology, this seems as good a place as any.


Bitcoins just hit $17.40 US today passing their 2012 high of $16. Theres now a few thousand vendors taking bitcoins as payment, as well as word press now accepting them. It's now possible to have a bank account in the EU (France specifically) backed by bitcoins and places like Iran have citizens bank their money away in bitcoins as a way of protecting them against inflation. The currency by all accounts seems to be taking off with 2013 being a huge year for it.

Next-gen mining hardware (ASICs) is starting to ship with Avalon shipping a couple units of their 66Gigahash, but who knows when the rest will ship. Mid-Feb should see all the different butterfly labs hardware shipping to initial pre-orders. I have myself setup to get a Single SC (60Gigahashs). Over the next couple months this is going to be insanely disruptive to coin generation and effectively destroy GPU mining.

Litecoins are also taking off as well as an alternative to bitcoins, and I imagine it'll get even more people backing it as GPU mining will still be profitable. (ASIC miners can't do the math for litecoin generation).

It's definitely interesting times ahead in terms of online currencies.
 

Drinsic

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#3
wut
 

Void

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#4
I suppose I could do some research and find out, but this just doesn't make much sense to me. Doesn't there have to be someone paying standard currency for all these "number crunches"? I mean, I thought the theory was that they were using excess computing power to solve various problems that would have taken far too much time on some other, more important system. So someone, somewhere needs these problems solved. Are they the ones paying in real dollars, and bitcoin generators are just benefiting through a transferal system? It can't be that people are just running random problems through their systems, because that would essentially be creating money out of nothing, someone somewhere has to need them and pay for them. Right?

Given that I don't understand it at all, obviously...why don't they just pay normal money? I mean, I get that this has become the new way to buy weed online and shit, but that couldn't have been the original intent. Someone please explain to me how this makes sense as a currency vs. just giving you $.03 for X cycles, for example. If it is truly that profitable you know even this will eventually get taxed as income, and nothing is truly anonymous if they want to start cracking down on the weed, it is just under the radar for now is all.

Or am I horribly misinformed about how this works? I have no intention of jumping on the bandwagon (I would have done it last year when everyone was doing it if I had any inclination), just curious because it makes no sense to me at all.
 

Tripamang

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#5
I suppose I could do some research and find out, but this just doesn't make much sense to me. Doesn't there have to be someone paying standard currency for all these "number crunches"? I mean, I thought the theory was that they were using excess computing power to solve various problems that would have taken far too much time on some other, more important system. So someone, somewhere needs these problems solved. Are they the ones paying in real dollars, and bitcoin generators are just benefiting through a transferal system? It can't be that people are just running random problems through their systems, because that would essentially be creating money out of nothing, someone somewhere has to need them and pay for them. Right?

Given that I don't understand it at all, obviously...why don't they just pay normal money? I mean, I get that this has become the new way to buy weed online and shit, but that couldn't have been the original intent. Someone please explain to me how this makes sense as a currency vs. just giving you $.03 for X cycles, for example. If it is truly that profitable you know even this will eventually get taxed as income, and nothing is truly anonymous if they want to start cracking down on the weed, it is just under the radar for now is all.

Or am I horribly misinformed about how this works? I have no intention of jumping on the bandwagon (I would have done it last year when everyone was doing it if I had any inclination), just curious because it makes no sense to me at all.
This article does a pretty good non technical explanation:http://blog.zorinaq.com/?e=66

One thing it's missing is that the act of mining coins, also doubles as the verification for all transactions within the network. So it's not all "for nothing". In terms of taxing them, I believe that all exchanges require you to verify your information to cash out your coins, and in doing so would report it as income to your respective government. So theres no way to evade taxes here unless you shelter all your money in bitcoins, which would limit what you can do with them. Things like the silk road (the drug site) are a small part of the bitcoin enconomy, with speculation, gambling and transferring money being the bigger uses. Right now to transfer money from Canadian Dollars to some other nation in a different currency it's pretty expensive through something like western union, but it's a lot cheaper to send it via bitcoins.
 

Void

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#6
Ok, I read that, but it still doesn't fully make sense to me. And I'm not trying to be a jerk or anything, I genuinely have never understood how this made any sense.

If I have this straight, essentially someone somewhere decided that there were going to be a certain number of bitcoins in the world (a quadrillion?). They just made them up out of thin air (I understand that paper money is basically made up too, so I'm not disparaging it). At first everyone was understandably cautious about shit made up out of thin air, but eventually someone gave pizzas in exchange for them, which lead to more people taking them, and more, etc. And so, in theory, everyone could simply stop accepting them once again and they would be worth nothing (the dollar could do the same obviously, but momentum is in its favor), because they don't actually represent anything beyond an arbitrary task completion.

So let me see if I have that part right. The "puzzle solving" isn't actually helping someone somewhere with dollars save any of those dollars, like I thought it was. It is simply an artificial barrier to gaining the bitcoins, determined by some arbitrary means. Like, if I could earn a dollar simply by writing my name on the blackboard one hundred times. If I could get faster at it, I could earn that dollar faster, and if I could automate it with a machine, I could get it even faster. But no one is actually gaining anything by me writing my name a hundred times, it is just something to slow down the acquisition of bitcoins so someone can't just walk up and ask for them. Or more accurately I suppose, someone is handing me a list of every single bitcoin transaction and asking me to hand write it on the blackboard to ensure the math is correct, as a check, as well as writing my name a hundred times.

Is that more or less accurate?
 

Tripamang

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#7
Pretty much, the algorithm that generates bitcoins limits it to generating a block every 10mins (a block is currently 25 coins+transaction fees) and will self adjust it's difficulty after 2016 blocks to ensure it stays at that rate. Every time a block is generated all the transaction associated with that block are verified, it usually takes 6 blocks (60mins) to ensure that a transaction was successful. It does this to prevent double spends, or where someone tries to send the same bitcoin to more one recipient. The reward for solving a block is halved every four years or 210,000 blocks. Eventually we'll get down to 0 coins as the reward, with the only the benefit to mining being the transaction fees. Since every coin is divisible down to 8 decimal points, there is tons of head room for the price of a single coin to rise to while still providing a great deal of liquidity even while people might potentially hoard them and never spend.
 
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#8
What isn't clear to me is why they wouldn't start shifting the decimal point. It's a bitch to work with 0.01 bitcoints, for example, as a commonly used currency - and it's only going to get worse with time as the artificial constraint (max number of bitcoins) start to bind. It really doesn't matter if you have 10 bitcoins or 1000 new bitcoins - that's not inflation in any meaningful sense of the term.

It seems to me that someone missed this concept and thought large numbers = inflation, when it's rather the change in numbers that signifies a problem. The limit, by the way, may also encourage people to hoard bitcoins, when they really should want a lot of people to spend a lot of bitcoins so the currency can gain traction.

I think bitcoins have their problems, but overall the idea of a cryptocurrency seems pretty good. The internet is key to free speech, but that only gets you so far if you're capital movements are limited. With governments around the world ever more closely regulating financial systems, there may be a time when we're glad to have this underground currency. Think about sites like wikileaks, for example... being able to anonymously donate to them (and for them to be able to accept it without relying on credit card companies) can be a huge boon to transparency. How many people would not donate to such an organization for fear of being linked to them in some database?

I wouldn't put my retirement savings in it, of course, but I'm also not from a country likely to be afflicted by civil war, authoritarian regimes, or a corrupt central bank. In many parts of the world, this may not be the worst option.
 

kegkilla

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#9
does open CL work with nvidia yet?
 

Tuco

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#10
What capacity does bitcoins have for increasing the supply dramatically in case its use becomes more common?
 

Arative

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#11
What capacity does bitcoins have for increasing the supply dramatically in case its use becomes more common?
None, its coded to generate a block on average every 10 minutes.
 

kegkilla

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#12
What capacity does bitcoins have for increasing the supply dramatically in case its use becomes more common?
they're divisible down to like 8 decimal places.
 

gogusrl

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#14
Trying to mine for bitcoins on CPU's won't even pay for 20% of the power they'd use. These days with FPGAs everywhere and the ASICs around the corner, it's tough to cover the cost of electricity even mining with the best btc/W cards available. So unless that mainframe is running AMD videocards from the last 3 generations, it won't do you much good.

Actually, if you have access to a top 50 supercomputer, you can make anywhere between 50k to half a mil a month but I'm pretty sure those weren't build to be kept idle not to mention justifying the 0.5-10 MW of power that they use.
 
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#15
Any details on ASICs? I understand that is hardware especially designing for one purpose (in this case bitcoin mining)?

If so, what price range are we talking here? Commercially available or built by enthusiasts?

I don't see it as a way of making money, but I very much like the idea of bitcoins. Maybe a small buy-in wouldn't be a bad idea just to stay interested in following developments.
smile.png


Given the current price of a bitcoin, though, I can't help but think "bubble." But that's ok, a bitcoin doesn't have to be worth $30 for the currency to serve a purpose. In fact, the USD exchange rate doesn't seem all that relevant, as long as it can reach some kind of relatively-stable exchange rate in the near future.


edit: ok, some googling returns this thing for $150:http://products.butterflylabs.com/ho...oin-miner.html
It's about 100 times as fast as my GPU... yeah. There's one about 7 as fast for 4x the cost. Probably a good deal for people way more serious about this than me.
tongue.png
 

YoZ

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#16
Processing Power: 4.5 GH/s (+/- 10% running variance) with the power consumption ofpproximately 4.5 Watt??
Thats very low cost for a very high processing power.. Its like getting lambo with 1000hp that makes 1 gl/62miles
 

iannis

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#17
When you get right down to it, all legit money is backed by the promise of goods and the threat of violence. Cybermoney is only halfway there.

The entire thing just seems like a terrible idea unless it's backed by some authority with access to guns. And the guys with that kind of authority, they issue their own money.

Cyber-barter. Company scrip. Nothing wrong with it I guess. Have fun stormin' the castle.
 

gogusrl

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#18
But it's a decentralized system, no one can invade you and take your bitcoins or shutdown the network in any way (think TOR). Guess they could blow a few hundred million $ to rape the price but it's no guarantee that it won't get back up.
 

Alkorin

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#19
The entire thing just seems like a terrible idea unless it's backed by some authority with access to guns. And the guys with that kind of authority, they issue their own money.
How's that working out for the US Gov't? Aren't you guys about a quadrillion dollars in debt?
 

iannis

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#20
How's that working out for the US Gov't? Aren't you guys about a quadrillion dollars in debt?
A quintillion I'm pretty sure.

And the money still spends.

That's the point.