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Bitcoin & Bitcoin Mining

  • Thread starter Thread starter kfc1
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I think it's at the point where you spend more money on the power used than what they are worth... Unless you have a solar power set up or something.
 
Bitcoin mining is done to ensure integrity of the bitcoin blockchain.

integrity to the blockchain ensures that people can't double spend their bitcoins, and that every transaction is completed successfully.

To do this a computer (or more accurately, a group of computers) need to perform a series of algorithms.

What's the best way to get people to use their computers to perform these tasks? well the prospect of a reward. And every 10-15 minutes 25 bitcoins are released to the into the blockchain and given to the computer (or shared between the computers) that first performs these algorithms. It was originally 50 bitcoins, and soon enough it will become 12.5 bitcoins. The amount decreasing every few years, so that eventually the number of bitcoins will max out at around 22 million. It is currently on around 11 millions.

What are these algorithms? I have no ****ing idea. It's basically covered in the "hash" part of the article you linked.
kfc1 said:
Anyone dabble in bitcoin mining?
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I looked into and did for a while just for the craic but not really worth it.

You really need to have a dedicated GPU (not CPU) to mine effectively, and even now there a specific ASIC processors being built purely for bitcoin mining.

You'd also be best to join a bitcoin mining pool where you are a part of a team of computers performing these algorithms and if your team "wins" then the bitcoins are split amongst the pool according to how many calculations your computer performed as a % of the entire pool.

In the few days that I had my machine at home as part of a pool (which is a very high end laptop) bitcoin mining i think i made about $15 worth of bitcoin.
 

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The Passenger said:
lolwut?
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It maxes out the CPU/GPU processing which puts an incredible strain on a system.

If I caught people doing it to computers they didn't own I'd come down on them. That's just me personally.
 
Juggalo Balla said:
It maxes out the CPU/GPU processing which puts an incredible strain on a system.

If I caught people doing it to computers they didn't own I'd come down on them. That's just me personally.
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ok i see what you mean - referencing the guy using his works computers. i thought you were talking about the concept of bitcoin as a whole.

yeah ethically it's probably questionable. i wouldn't be too bothered if i saw it though but that's just me.
 
The Passenger said:
Bitcoin mining is done to ensure integrity of the bitcoin blockchain.

integrity to the blockchain ensures that people can't double spend their bitcoins, and that every transaction is completed successfully.

To do this a computer (or more accurately, a group of computers) need to perform a series of algorithms.

What's the best way to get people to use their computers to perform these tasks? well the prospect of a reward. And every 10-15 minutes 25 bitcoins are released to the into the blockchain and given to the computer (or shared between the computers) that first performs these algorithms. It was originally 50 bitcoins, and soon enough it will become 12.5 bitcoins. The amount decreasing every few years, so that eventually the number of bitcoins will max out at around 22 million. It is currently on around 11 millions.
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Yeah this is what I didn't understand first up - "mining" bitcoins sounded to me like money laundering of some sort before I learnt what it was about.

Your explanation makes some sense, and the explanation that I read was that the creator(s) set it up this way deliberately in order to steadily release more currency without causing inflation and without the need for a reserve bank or equivalent.

What I don't get is that when we get to the point where all 22 million bitcoins are in circulation, who is going to commit their spare processing power to do the transactions?

I was reading through some of the cryptology chat before and it dead set made my head spin. Obviously not an area I'd ever have any hope of being any good in.
 
kfc1 said:
What I don't get is that when we get to the point where all 22 million bitcoins are in circulation, who is going to commit their spare processing power to do the transactions?
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Have thought of this myself and have no idea. It's questionable how the network will even operate as bitcoin is a protocol in much the same way as http, https, ftp or bittorrent is a protocol... will we even be using the same protocols in 100 years time? those protocols will be so outdated by then it's not even funny.
 
^ I do recall actually reading something about "transaction fees" - so I suppose theoretically the people using their computers to process transactions will get some of fee that makes it worthwhile (e.g. the way EFTPOS skims a % off your transactions to pay for the service/their profits).
 
I'm thinking of loading up on some cryptocurrency in a week or two.

Worst that can happen is it goes bust and I lose a few hundred dollars.

Bitcoins seem a bit pricey at $350 a pop. Then again, that gives Bitcoins a market capitalisation (I don't know the equivalent word for this in currency so I'm going with the word used for stocks, maybe they are the same anyway whocaresbut) of 21m x 350 = ~7.4b. There's about a trillion dollars worth of USD M0 out there, which is only going to rise. Much of it is in the hands of the Chinese who seem to be driving much of the rise in Bitcoin. Seems to this uneducated halfwit that there is potential scope for Bitcoin to rise another 100-fold in the medium-term.

Litecoins seem an easier way for a mug punter like me to get into the game. And, really, that's all I'm interested in: having some skin in the game to make following it more fun. Like buying a share in a race horse syndicate, you only do it if you are happy to lose money in the long-term and are more interested in the fun of having something to cheer for. Same applies to sports betting imo but I digress. I'm thinking of buying $500 worth of Litecoins (they are trading for ~$4 at present so I'll end up with ~100-120 or so if I buy soon) and promising myself to sit on them for 12 months come what may. That money would just be sitting in a bank earning ~$25 for the year, so I might as well be having some fun with it.

Anybody else in the cryptocurrency game? Any hot tips on up-and-coming alternatives to big boy Bitcoin? Anybody know anybody who bought in low and is now sitting on a goldmine?
 
The problem with Litecoin is it's pretty much identical to Bitcoin, just far less successful. To me that's like buying Betamax shares.

If I was to invest in cryptocurrency right now I would probably look at something like Peercoin, which was released last year and has grown rapidly. It's based on Bitcoin but its inflationary controls are more sophisticated. It is not completely decentralised right now, but that is the ultimate intention. I take that as a positive, because it shows that the creators are interested in building a large, stable monetary base.
 

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Caesar said:
The problem with Litecoin is it's pretty much identical to Bitcoin, just far less successful.
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Where you see a problem, I see an opportunity.

There are about four times as many Litecoins to be found (ever) as there are Bitcoins. Ceteris paribus they ought to trade four about one quarter the price. As you've rightly noted, they are nowhere near that (hence your claim that they are 'less successful'). There are several reasons as to why, of which I can see a few changing over the next year or two.

The first is that Bitcoin has been in the market much longer than Litecoin (around 58 months vs 26 months at present). This means that as time goes on, the relative time-in-market advantage of Bitcoin will necessarily decrease, as will the advantages that come with this.

The second is that Bitcoin is much more useful as a form of currency (rather than a speculative commodity, which is what Bitcoin has arguably become - more on this in a moment), as several vendors accept payment in it and there are even ATMs popping up, whereas Litecoin is a effectively a no-show on this front. But there is good reason to think that this will change over time.

The third, which links in with the other two, is that Litecoin is, theoretically, arguably more suited to use as a currency than Bitcoin at present, because it hasn't yet become the speculative commodity that Bitcoin seems to have become - which means fewer price fluctuations. Obviously it can only be used as a currency where there are traders who accept it and this has yet to come about, but the point is that there is good reason why this should take place. It goes without saying that this factor will be canceled out if and when Litecoin gains the kind of adoption which Bitcoin has experienced, but by then the capital increase which I'm hoping for will have already taken place.

Of course, as I said earlier, I can foresee me losing every cent I invest in Litecoins. But the currency's similarities to Bitcoin make it more attractive to me as an option rather than less so. In saying that, I can see why others would take the opposite view. Each to their own.

:thumbsu:
 
The success of Litecoin really depends on how quickly demand for cryptocurrency grows. You would need the use of it to explode in order for Litecoin to trade anywhere near par with Bitcoin, presuming that Bitcoin retains its value.

Perhaps I'm wrong but I can't see it happening any time soon. The security of government-backed currency is significant, and the way that it can be used online is becoming more and more sophisticated. Which is why I'd be betting on next-gen currencies.
 
Caesar said:
The success of Litecoin really depends on how quickly demand for cryptocurrency grows. You would need the use of it to explode in order for Litecoin to trade anywhere near par with Bitcoin, presuming that Bitcoin retains its value.
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I cannot see Litecoin ever trading at more than 1/4 of Bitcoin values, no matter how many things go in its favour (other than Bitcoin collapsing, but even then, if Bitcoin collapses then why wouldn't Litecoin either follow suit or even precipitate the fall?).
Perhaps I'm wrong but I can't see it happening any time soon, which is why I'd be betting on next-gen currencies.
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Well we ought to have some fun with this. In a week or so I will invest $x (I'm thinking maybe $500) in Litecoin, you ought to invest the same amount in any other cryptocurrency of your choice. We will follow results in this thread or one made specifically for the purpose. We can nominate high/low sell thresholds if we like (although I'm keen to hang on to mine for the full twelve months so I don't end up sweating the markets like a mate of mine seems to).

Let's put some cryptomoney where our mouths are brah :thumbsu:
 

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Im semi interested but not yet, want to do a lot of researching/learning. If anyone here can give me some shortcuts on where I should go for good explanations/information on it all it would save me some googling

I'm half familiar with bitcoin but not so much litecoin and other cryptocurrency plus I bet on anything so why not internet currency
 

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