Author Topic: Bitcoins  (Read 2142 times)

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Fay

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Bitcoins
« on: Feb 04, 2014, 18:17:42 »
no matter how much i read abut the above, i still dont understand it.

do you buy them, as a serial number,  with £ and then spend on what you want, leaving no trace of your transactions
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mickw

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Re: Bitcoins
« Reply #1 on: Feb 04, 2014, 18:34:02 »
From what I can make out, bitcoins allow you to be robbed without knowing who did it and with no way of getting your money back.

I'd rather pay the extra on plastic and at least be able to phone someone when it goes tits up - even if it is in India
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Fay

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Re: Bitcoins
« Reply #2 on: Feb 04, 2014, 18:35:07 »
 :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol:
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Mike

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Re: Bitcoins
« Reply #3 on: Feb 04, 2014, 19:16:16 »
Fay I did a lot of reading about Bitcoin. I even tried 'mining' them for a while, which after months of work was fruitless. Even considered buying one of these ASIC Miner boxes:



Despite all that, I still don't really understand it all.

Like Mick said, there have been many horror stories about them too which puts you off.
We live in a society exquisitely dependent on science and technology, in which hardly anyone knows anything about science and technology. Carl Sagan

MarkS

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Re: Bitcoins
« Reply #4 on: Feb 04, 2014, 19:50:06 »
Interesting.

I just looked online and they quote the power(?) of these boxes in GH/sec.

What is GH/sec?

For instance a box consuming 1kilowatt of power will yield 120GH/sec

Given the average rate of bitcoin "discovery" is it possible to recover your electricity costs or the hardware costs?

Mark

Fay

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Re: Bitcoins
« Reply #5 on: Feb 04, 2014, 20:04:54 »
well whatever they are, they seem to be getting very popular. i assume they are not physical but you must spend money on purchasing their unique numbers. it all sounds like a big online game or con
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MarkS

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Re: Bitcoins
« Reply #6 on: Feb 04, 2014, 21:55:58 »
You are right Fay.  They are effectively only "numbers" in a computer and they only have any value to those who believe they have value.  They could become valueless overnight but on the other hand they could become a very important virtual currency and the early adopters could become rich.

Consider black tulips.  They're worth nothing nowadays but during the craze they were worth a fortune.  Sufficient people thought they were valuable.

At the end of the day, what is the value of those bits of paper in your pocket with £10, £20 or £50 written on them?  Are they any more secure than bitcoins?  If the big meteorite hits tomorrow then the only thing left with any value would be food and guns.  Oh dear, I've launched off into apocalyptic mode again ...

Fay

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Re: Bitcoins
« Reply #7 on: Feb 04, 2014, 22:20:31 »
You are right Mark. Value is a weird thing, we could all come to our senses and realise its all made up, for the moment. The story of The emperors new clothes comes to mind here
« Last Edit: Feb 05, 2014, 16:36:46 by Fay »
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Mike

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Re: Bitcoins
« Reply #8 on: Feb 04, 2014, 23:19:15 »
....but on the other hand they could become a very important virtual currency and the early adopters could become rich.

http://www.theguardian.com/technology/2013/nov/27/hard-drive-bitcoin-landfill-site
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Mac

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Re: Bitcoins
« Reply #9 on: Feb 05, 2014, 07:31:54 »
I believe he is still digging the landfill looking for the drive. :lol:

Mac.
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MarkS

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Re: Bitcoins
« Reply #10 on: Feb 05, 2014, 08:15:28 »
It seems it is possible to buy specialised hardware (since PCs and Graphics cards are now too slow) for the bitcoin calculations and make money i.e. the mined bitcoins will be worth more than the hardware and electricity costs.
Even if they are not worth more then you might take the view that the investment potential is worth it but that seems to be a more tenuous argument.


GH/sec is giga hashes / sec.  A hash is the fundamental unit of work in the cryptographic algorithm so GH/sec is a measure of "how much cryptography" can be performed in one second.

Mark

Fay

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Re: Bitcoins
« Reply #11 on: Feb 05, 2014, 09:02:00 »
if you get them for nothing, just by generating them, does that mean anything you buy, you get free?
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MarkS

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Re: Bitcoins
« Reply #12 on: Feb 05, 2014, 11:02:31 »
Quote from: Fay
if you get them for nothing, just by generating them, does that mean anything you buy, you get free?

Yes - that's my understanding.  The way I see it is that "they" are paying you (in BitCoins) to do complicated calculations on your computer hardware.  If the value of the BitCoins is greater than the costs (in real money) of doing those calculations (hardware purchase and electricity) then you are in profit.


mickw

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Re: Bitcoins
« Reply #13 on: Feb 05, 2014, 11:30:02 »
So "somebody" has access to your PC to carry out a process or processes then transfer "imaginary money" in or out.

Sounds a bit like a botnet
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Fay

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Re: Bitcoins
« Reply #14 on: Feb 05, 2014, 13:04:24 »
Question is who are "they" ?
I reckon it has all been set up by the utility companies!

Question 2, why am i trying to understand something that even Mark or Mike does not understand?   :o
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MarkS

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Re: Bitcoins
« Reply #15 on: Feb 05, 2014, 14:33:28 »
Quote from: Fay
Question is who are "they" ?
I reckon it has all been set up by the utility companies!

You could always run it off solar panels!
Hence the well-known proverb: "Make Bitcoins while the sun shines"

Mac

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Re: Bitcoins
« Reply #16 on: Feb 05, 2014, 15:50:09 »
Quote
So "somebody" has access to your PC to carry out a process or processes then transfer "imaginary money" in or out.

Sounds a bit like a botnet

Nope.

The idea behind it is this.
Companies want a lot of computer calculations carried out.
1) It would take them a long time to achieve this. Millions of years.
2) Why not get millions of people to do the calculations for them. In return we will pay them for their time and effort and a virtual currency called a bitcoin.
3) A single individual would not benefit as it would take them to long to achieve anything as they normally only pay bitcoins in groups of 50 coins, so you would normally have to join a syndicate and then share.
4) When it first started you could earn a bitcoin very quicky, now it takes ages, Months as opposed too hours.
5) You normally install a piece of software that contacts a server to download a block of work. Once this block has been processed, its uploaded and the next one is downloaded.
Its similar to Seti@home, but you get paid to do the work.

Mac
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If you argue with an idiot, there are two idiots.

mickw

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Re: Bitcoins
« Reply #17 on: Feb 05, 2014, 16:13:24 »
Cheers Mac



We're not worthy
 
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Fay

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Re: Bitcoins
« Reply #18 on: Feb 05, 2014, 16:37:45 »
so how come that chap with the lost hard drive had so much on there if they are hard to aquire?
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Mac

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Re: Bitcoins
« Reply #19 on: Feb 05, 2014, 16:46:03 »
They are hard to acquire now taking months of hard CPU time (normally a GPU), but when they first started, you could earn a coin quite quickly,
maybe after a days work or so, because it was new.

Also there is a finite limit of how many Bitcoins can be issued.

Its only now that they are worth something.

When i first started Seti@Home, I had 3 pc's running 24/7 and at one point i was in the top 10%.
Havent looked at this for years though.

Even the playstation has caught up with this free processing lark.

Mac.
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If you argue with an idiot, there are two idiots.

Ian

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Re: Bitcoins
« Reply #20 on: Feb 05, 2014, 23:00:07 »
except if I understand it correctly you're not doing any useful work mining bitcoins other than the maths required to create them. The sums to do so get increasingly difficult the more bitcoins there are in circulation and at some point in the near future they will either have all been created or the ability to create them will be removed. At that point it will be the trade in Bitcoin that drives circulation (mostly through Silk Road if you believe the hype) not it's creation.

The ability to get something for nothing (or cost of power plus hardware) has a limited life and that is now a boat that's definitely sailed.

The guy behind me in the office is into it. His PC looks like a FOREX trader.

We've come to the conclusion (those who sit near said chap) that it's been put together by the same wizard brain that came up with Credit Default Swaps (wasn't you Mark was it? ;) ) with about the same expected outcome for those heavily invested in it.

Even if it becomes wildly successful, it could still fail because of it's intrinsic untraceability. Banks can't trade it, and governments will legislate against it. If you need to use untraceable currency, you must be doing something nefarious.

MarkS

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Re: Bitcoins
« Reply #21 on: Feb 06, 2014, 08:30:57 »
That's right - the bitcoin calculations are not anything externally useful - they are simly encrypting and hashing the transaction record - this work is paid in Bitcoins.   The only way to make money mining them is to buy specialised ASIC hardware.   The computational difficulty is now so high that graphic card GPUs and even FPGAs are no longer viable.

The big question is:
1) If you want to invest in a virtual currency should you choose Bitcoin or one of its competitors.  Which is more likely to succeed?  
2) Assuming Bitcoin, are you better off paying $1500 for an ASIC to generate Bitcoins or simply investing $1500 directly into Bitcoins?

The online calculators suggest you can currently spend $1500 on a ASIC box and this will replay the investment in 30-60 days (at the current Bitcoin exchange rate) and then you can carry on generating $1500 every 30-60 days for ever (assuming the Bitcoin exchange rate remains the same).  But they fail to take into account the exponential nature of the increase in total hardware power which means your actual Bitcoin income decreases week by week (because the problem difficulty increases along with the growth in total hardware) and by the end of 12 months it might be useless.  You might order an ASIC today and it might not be delivered for 3 months and then it might already be too late to ever repay the investment.  Delivery timescales are notoriously bad in this field because it is cutting edge technology.

Also, as Ian says, regulation could kill Bitcoin completely - especially if is perceived to be a vehicle for Drugs, Money Laundering and Terrorism.
« Last Edit: Feb 06, 2014, 10:17:02 by MarkS »

Mike

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Re: Bitcoins
« Reply #22 on: Aug 18, 2014, 21:14:35 »
Mark, just curious - Did you ever buy an ASIC in the end?
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MarkS

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Re: Bitcoins
« Reply #23 on: Aug 19, 2014, 06:12:11 »
No - I decided it was too high risk.  Mt Gox went down just as I was making the decision.  Together with the associated price collapse, it was the final nail in the coffin for me.

RobertM

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Re: Bitcoins
« Reply #24 on: Aug 19, 2014, 19:00:50 »
Partly due to that fiasco a friend of mine keeps his stash on dedicated hardware that isn't connected to the internet.  At least that way they aren't easily stolen albeit that does increase the complexity sumwhat.

Robert

Mike

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We live in a society exquisitely dependent on science and technology, in which hardly anyone knows anything about science and technology. Carl Sagan

Mac

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Re: Bitcoins
« Reply #26 on: May 25, 2017, 18:50:50 »
Time to cash mine in  :cheesy:

See you in the Bahamas
 
Mac.
Never, ever, argue with an idiot. They'll drag you down to their level and beat you with experience.
If you argue with an idiot, there are two idiots.