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It is said that during a gold rush, the people who make the real money are the ones selling the spades. The same appears to be true with Bitcoin, judging by the whacking great revenues announced by a firm which makes computers dedicated to mining the cryptocurrency. KnCMiner, a Swedish manufacturer of Bitcoin mining machines …. I tried it, when I was renting a flat with bills included yes, they still exist a year or so back.
I sold the cards for about half price when I moved out, and the bitcoins gained in that time are approximately the same value now. I've been wishing I was on the Bitcoin track for some time but clearly I missed the bus.
I'm wondering who is actually making the money here? Maybe if you had a solar panel on the roof this could work out quite well? I may be a bit out of touch, but wouldn't it be cheaper for the miners to invest in multiplexing cheaper rigs together to number crunch? Didn't someone mananage to do this with a bunch of PS3's a while back? Admittedly it would be more costly power-wise, but you could probably more than offset the cost with the increased processing ability.
You're about 6 years out of touch, you can buy a much better graphics card for less than the price of a PS3 now. Shame the electric bill will probably cause me to be in debt rather than "in the money". The newer ones which can theoretically perform 2. Unless you have serious cash, or bitcoins to burn, then you have pretty much missed the boat, although you can always be like Lando Calrission and do a spot of Cloud Mining.
I see it ending as a waste for many. If BCs grow rapidly and threaten the various nation's currencies, then one of two thing will happen. Those nations will ban BCs or they will throw their weight into the mining. The latter means that the world's top supercomputers will mine nearly all of the BCs and nobody else will have a chance.
Better get them while the getting is good and convert to real currency as quickly as possible. Your probably mean theoretically perform 2. I'm confused how this all works. What hashes are you solving and why does this make you money? Is it in some way illicit or is "printing your own money" the way BitCoin works? I always thought they were just an electronic currency that could be transferred between owners, all this talk of mining is bewildering and just sounds like something out of a MMO Briefly, the "mining" is cryptographically provable work done, which is used to "sign" the network's view of who owns which coins.
It takes time to understand. Nothing you try and reason about the BitCoin algorithm will be correct without fully understanding how it works. It is a totally new category of substance, unlike anything else. It can also be extended and used in other unusual ways, not just a currency.
See this talk at a BitCoin London conference to get a feel for that. In my view, if you're in IT or finance and you don't understand the BitCoin algorithm, the world will rapidly become a deeeply mysterious place to you over the next 20 years. It is a totally new category of substance, unlike anything else Scams have been around for centuries.
In simplest terms, the coins you get by "mining" are payment for helping to operate the Bitcoin network, validating transactions and updating the shared ledger specifically. The hashes are an arbitrary challenge by which people compete for that privilege. This is intended to keep any one person from easily seizing control of the network. But I agree with Francis Irving, if Bitcoin intrigues you at all, you really should read all the technical details, it's interesting stuff.
For a currency to work it must be basically impossible to forge, so each bitcoin must be very strongly protected in terms of signing, and that signing process must keep up with computing power. So strong that it would be impossible for any one outfit to produce enough bitcoinage to be useful, so the process is farmed out to, well, anyone that wants to do the work.
Their reward is the same as goldminers': Just like goldminers, there is a financial cost involved. When people say that you can't mine bitcoins with a GPU anymore what they actually means is that doing so would cost you more in electricity than the coin would be worth.
You could solve that by using, say, solar power but even then the difficulty will eventually increase until the depreciation in value of your equipment will balance the value of the coins made, so each new generation of bitcoin mining machines goes from profitable to obsolete in a more or less predictable curve of profitability during which the coinage supply gets boosted. Like gold, bitcoins have no inherent value i. If it were not for the question mark of quantum computing, bitcoins would absolutely replace all "real" currencies online as well as gold offline pretty well immediately as they are otherwise superior in every way.
As long as there is still a deeply entrenched crooked banking system in place, IT or finance won't change all that much over BitCoin! The JPM Reg article today is a reminder on how special interests protect the crooked banking system.
They can leverage exotic derivatives off the back of BitCoin in a heartbeat, and if they choose to, they can screw the little guy in under ms! But this won't make it grow, it will make it more volatile!
Half the trading desk is filled with ex-math geniuses. Exotic options models are more complicated than BitCoin math! But banksters have little interest at present, because QE is a much greater scam, because it has much better leverage.
I worked as a derivates developer on an Fixed Income Trading Desk, so I recognise how easily Banks can dominate Bitcoin if they choose to When someone can filch them and be impossible to trace inclines me to award the superiority badge to the bag of brass implementation for trading tokens.
Well, unless you are already very rich, if you try to destabilise the US dollar, the American government will attempt to kill you or have you arrested. This is one of the things that makes me almost completely certain that the US dollar will be worth roughly the same next week as this week, and not too much different next year. I have almost no idea what a Bitcoin will be worth next week. If there's yet another attempt to destabilise it, it could be halved or doubled, depending on just when you're talking about.
Bitcoins will never replace real currencies as government wouldn't be able to print off a heap more when they need more money. I did say for online purposes. They're certainly no easier to steal than "real" money or plastic. My wife's credit card details were stolen recently and used to buy things in the US. While we didn't lose anything from it, someone ie, Visa did and that happens all day every day without anyone claiming that credit cards are worthless.
Saddam Hussein was very rich and decided to do just that. He announced that he was no longer going to sell oil in dollars. But I think the real reason is it's like those spades sold during the gold rush referred to in the article. You can only put so many of these rigs in the backroom before you need to upgrade your own power line. You can sell the remaining rigs out of the batch a little delayed and give your own rigs a good head start.
Perhaps the mining rigs depreciate in value faster than the hard currency for which they are being sold? Or it could simply be that not a lot of places accept bitcoins as payment. Earning a million easily spendable dollars might be perceived to be better than earning the equivalent of two million dollars in not so easily spendable bitcoins.
Or to use the Reg's own analogy, why don't the people selling spades use the spades themselves? Clearly, the spades must be a scam! The flaw in this argument is ignoring the timescale - the machines are expensive, so my understanding is you will have to mine for some period of time to start making a profit. Perhaps the companies making these machines do keep some back for their own long term money, but their gain is making money in the shorter term.
There's also the speculation in Bitcoin as an investment - the people buying these machines are hoping Bitcoin will be worth a lot more in future, where as the people selling these machines aren't in it for investment, they're a business who want to make a guaranteed sale today. Then again, what if IBM's Watson is doing the same?
What if the Chinese and US governments turn their many giant supercomputers into miners? Then those with these fancy new rigs will be using a spade whilst those governments and large corporations are strip mining with giant nuclear powered bulldozers.
II think the end game was always to replace current currencies by forcing governments to mine their own and subsequently get the lion's share.
Of course, they could always take the easy way out and just declare them illegal. Built by AsicMiner - who make and sell mining hardware. Or is the potential keyspace so large that you're unlikely to trip over someone elses? In fact that always happens. Bitcoin mining is competitive. Each block has only one winner although people can and do pool their efforts and then split the prize if they win. From what I understand, currency came about as a way to pay for things using something that had value, for example.
So person B swaps his wood for some currency from person C which B can then swap with person A for his furs. Leaving person C with wood, person B with furs, and person A free to swap the currency for a dragon ride. What is the value of a Bitcoin? How do you determine its value? At what point am I able to convert Bitcoins into actual money? The value of bitcoin is based on the shared belief that it has value. Which is why, in the early days when it was just nerds playing around with it, it was virtually worthless.
You could have bought thousands for a dollar. But now, since a sufficient number of people on the planet are willing to accept bitcoins in exchange for goods, services, or other currencies, you end up in a situation where it aquires a value and takes on the characteristics of a currency.
And the more people in the world that agree that bitcoin has value, the more value it will possess, in a rather nice positive feedback loop. And you're pretty much spot on.
