Professional Traders Show Interest in Bitcoin • Hacker News Board

Re: Professional Traders Show Interest in Bitcoin

#41

Post by user0398 » Mon, Apr 02, 2012, 5:35 AM UTC

jakejake wrote: post #35

I've read about Bitcoin various times and I'm confused about what "mining" is. Maybe somebody could set me straight? Are Bitcoins currently generated by anybody who wants by solving difficult math problems? If so, is this CPU power being used for something, or just a way to tie the value of the currency to something tangible?

The CPU cycles are contributing to global warming, and are a means for controlling the rate at which new coins are mined. Unless you have a large dedication to hardware tuning and a decent amount of real money, attempting to mine is of no use unless of course your heater is broken and you need your computer to keep you warm.

Re: Professional Traders Show Interest in Bitcoin

#42

Post by stevenwagner » Mon, Apr 02, 2012, 5:36 AM UTC

jakejake wrote: post #35

I've read about Bitcoin various times and I'm confused about what "mining" is. Maybe somebody could set me straight? Are Bitcoins currently generated by anybody who wants by solving difficult math problems? If so, is this CPU power being used for something, or just a way to tie the value of the currency to something tangible?

https://en.bitcoin.it/wiki/Mining

Re: Professional Traders Show Interest in Bitcoin

#43

Post by kylebrown » Mon, Apr 02, 2012, 5:42 AM UTC

dsrguru wrote: post #30

"The Royal Canadian Mint ... said Bitcoin's biggest problem was that it is not backed by anything." I don't think that's why consumers would fear it being unstable. It's probably more that they're afraid most of the current users aren't using it for its intrinsic advantages over regular currencies, but are rather investing in it as speculators (and will, therefore, eventually pull out). Since it was designed in a way…

> it lends the appearance of being the very kind of investment bubble that Bitcoin advocates criticize the banking industry for creating.

The quote encoded in the genesis block by Satoshi (creator of bitcoin) was probably a criticism of fractional reserve banking rather than investment bubbles per se. "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"

But there are plenty of bitcoin advocates who tirelessly criticize bitcoin speculators for causing its price volatility. Not that price volatility is unique to the bitcoin market (its the same with oil, stocks, gold/silver, commodities in general, real estate, bonds, etc. etc.).

Re: Professional Traders Show Interest in Bitcoin

#44

Post by dfc » Mon, Apr 02, 2012, 5:44 AM UTC

3pt14159 wrote: post #9

Bitcoin is mathematically flawed. There are at least two attack vectors that someone with a million bucks or less could pull that would require manual overrides on the code, which, as nobody likes to talk about, is possible. edit: Disclosure: I made a bunch of money getting in on bitcoin early and then selling out at around $22. It was at that point where I looked at the whole system and determined the attack vector.…

So you are sitting on two closehold, major 0days in bitcoin? I do not mean any disrespect but why would we believe you?

Unrelated Question: Why do you have a pgp cast5 encrypted message in your profile?

Re: Professional Traders Show Interest in Bitcoin

#45

Post by user0398 » Mon, Apr 02, 2012, 5:45 AM UTC

Bitcoin has already served it's purpose anyway. It already is a currency that people exchange for goods and other government issued currencies. It doesn't really metter what anyone thinks. Bitcoin has already succeeded. The only question that you need to ask is; Is it something you should invest in?

My personal answer? No. But who cares what I think. It's simply non productive, and frankly non-scientific, to stand up and say "Here's why bitcion is going to fail..." because it doesn't matter, it has already served its purpose.

Re: Professional Traders Show Interest in Bitcoin

#46

Post by Animus7 » Mon, Apr 02, 2012, 5:47 AM UTC

jakejake wrote: post #35

I've read about Bitcoin various times and I'm confused about what "mining" is. Maybe somebody could set me straight? Are Bitcoins currently generated by anybody who wants by solving difficult math problems? If so, is this CPU power being used for something, or just a way to tie the value of the currency to something tangible?

Mining is peculiar in that is serves multiple goals.

On the one hand, it solves the problem of seeding the network with coins. Otherwise, how could you kick this off in a fair way?

Secondly, mining "solidifies" transaction blocks, which acts as transaction verification for the network. Mining basically acts as prevention of "double spending" of coins.

Finally, mining keeps the money supply scarce (necessary for any currency) because despite everything just being bits, you can't just fake new coins without expending enormous amounts of computing power -- you need to prove you've done the work by solving hashes.

The bitcoin wiki has pretty good technical explanations of all of this.

Re: Professional Traders Show Interest in Bitcoin

#47

Post by [deleted] » Mon, Apr 02, 2012, 5:47 AM UTC

jakejake wrote: post #35

I've read about Bitcoin various times and I'm confused about what "mining" is. Maybe somebody could set me straight? Are Bitcoins currently generated by anybody who wants by solving difficult math problems? If so, is this CPU power being used for something, or just a way to tie the value of the currency to something tangible?

[deleted]

Re: Professional Traders Show Interest in Bitcoin

#48

Post by Animus7 » Mon, Apr 02, 2012, 6:05 AM UTC

skylan_q wrote: post #23

unimpressive wrote: post #17

Earlier quoted context omitted.

The cost of such attacks will go down as bitcoin ages. As I understand it the bitcoin rewards of mining go down over time. If the rewards go down over time, eventually it won't be profitable to mine bitcoin. So the speed of transactions goes down and the network becomes weaker because theres less cooperating computer time on it. Maybe I just don't get bitcoin. But if true that seems like a fundamental problem.

"If the rewards go down over time, eventually it won't be profitable to mine bitcoin." Yes. The idea is the following: If the amount that can be mined per unit of computation is decreased, then fewer will be created. And if there are less of them being created and more of them demanded, then their value increases. So this balances out. Also, computational power gets cheaper with the passage of time. The largest cavea…

I detect confusion here, and I'd recommend you take some time on the bitcoin wiki to clarify:

> "If the rewards go down over time, eventually it won't be profitable to mine bitcoin." > Yes.

No. Because the other part of mining is that you get transaction fees for it. Mining isn't a luxury, it's necessary for the network to function (otherwise double-spending isn't prevented). So as time goes on and less coins can be made by mining, transaction fees will increase to compensate and keep mining profitable.

> Also, computational power gets cheaper with the passage of time.

But, mining does not get cheaper because the network (by design) adjusts the mining difficulty to keep the incoming block rate constant. So in relative terms, mining will never become significantly more or less expensive with time.

> The largest caveat I see there is the part about more of them being demanded.

Not a problem. This is solved because bitcoins are infinitely divisible (up to 8 decimal places currently and this can be extended if needed). So if there's more demand, the value of coins increases but you can still trade them in whatever meaningful quantities you like. This isn't something you can do with cents, but you can trade one millionth of a BTC just fine.

Re: Professional Traders Show Interest in Bitcoin

#49

Post by jakejake » Mon, Apr 02, 2012, 6:08 AM UTC

Animus7 wrote: post #46

jakejake wrote: post #35

I've read about Bitcoin various times and I'm confused about what "mining" is. Maybe somebody could set me straight? Are Bitcoins currently generated by anybody who wants by solving difficult math problems? If so, is this CPU power being used for something, or just a way to tie the value of the currency to something tangible?

Mining is peculiar in that is serves multiple goals. On the one hand, it solves the problem of seeding the network with coins. Otherwise, how could you kick this off in a fair way? Secondly, mining "solidifies" transaction blocks, which acts as transaction verification for the network. Mining basically acts as prevention of "double spending" of coins. Finally, mining keeps the money supply scarce (necessary for any c…

thanks for the info, i guess i was wondering if all the computational power was being used for some purpose like the SETI project. It sounds like at least part of it is used for maintaining the bitcoin network itself.

Re: Professional Traders Show Interest in Bitcoin

#50

Post by qixxiq » Mon, Apr 02, 2012, 6:18 AM UTC

jarek wrote: post #38

ewillbefull wrote: post #25

Earlier quoted context omitted.

I don't know if this is a troll post, but I'll humor it anyway. > The first is that it is insecure. As seen by the constant incidents of stolen and lost bitcoin's. If this is the standard by which you deem a currency insecure, you may want to be more specific. Physical goods are also susceptible to theft. > Physical currency is much more secure than a string of bits sitting on a hard drive This isn't really substanti…

> But you're also ignoring another useful characteristic of bitcoin: coins cannot be counterfeited, unlike any other currency. They are crytographically ensured. That's not a useful feature for me. Receiving counterfeit currency is very low on my list of concerns in life. It is a useful feature for governments, who would no longer need to ensure its currency isn't being counterfeited, but governments don't like this…

Counterfeit currency is only low on your list because the governments are working hard to prevent it.

If it was possible to print notes that could not be easily detected as counterfeit -- millions would be printed and it would devalue the entire currency.