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Online Cash Bitcoin could Challenge Governments, Banks

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Re: Online Cash Bitcoin could Challenge Governments, Banks

#71

Post by JeremyBanks »

joeyh wrote: post #65
bonzoesc wrote: post #27

Earlier quoted context omitted.

Don't bother trying to get lucky on the 50BTC block bounty; join a pool that splits the winnings. Pools provide well over half the calculation capacity of the Bitcoin system, most are free to join and ones worth joining don't have any real requirements. I make about 1 BTC per day just with spare GPU cycles on my desktop; it's not a substantial amount by any means, just a test pool for experiments and playing with sof…

AFAICS, the benefit to being in a mining pool is you can make some bitcoins immediately, rather than waiting for a big, rare payout. There's no increased probability of winning due to pooling resources is there?

Your expected gain is the same, but it has a smaller margin of error.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#72

Post by pnathan »

bonzoesc wrote: post #27
pnathan wrote: post #16

Bitcoin is really cool. I just wish I knew what to sell to get some. My dabbling with mining bitcoins has convinced me it requires a on-all-the-time setup to mine with any prayer of success. Last time I looked, there didn't seem to be a real economy, just people trading bitcoins. ~.~

Don't bother trying to get lucky on the 50BTC block bounty; join a pool that splits the winnings. Pools provide well over half the calculation capacity of the Bitcoin system, most are free to join and ones worth joining don't have any real requirements. I make about 1 BTC per day just with spare GPU cycles on my desktop; it's not a substantial amount by any means, just a test pool for experiments and playing with sof…

What pool do you recommend?

Re: Online Cash Bitcoin could Challenge Governments, Banks

#73

Post by lambda »

AndrewMoffat wrote: post #28

Why is Bitcoin a good currency again? If I understand how it is distributed correctly, those with higher/more computational power receive more of the finite bitcoins. How does that not favor the already rich?

Well, it favors people who invest a little time and effort into mining (it's still relatively cheap to do, if you assume that bitcoins will continue to be valuable), and especially favors those who get in early to help support the currency in its formative stage (which is good for the value of the whole bitcoin economy).

You need to distribute the initial bitcoins somehow, and these people are putting value in by protecting the network from scammers (the reason for mining is that you're doing a lot of hard work to validate transactions, forming a long chain of valid transactions, such that it would be quite difficult to form an alternative chain in which an attacker spends money differently). So, miners are providing the security of the network, and helping roll out the currency slowly and smoothly, as well as speculating on the future value of bitcoins, so they do deserve to receive some compensation for their efforts.

If you feel like bitcoins will be valuable in the future, and don't want to get into mining, then sell some goods or services for bitcoins. If you happened to have sold a loaf of bread for BTC 50 last October (about $2.50 back then), you could now trade that for $50; that's a pretty good return on your investment. Don't worry about the miners are getting money for nothing; they are help making the whole system work, and there are plenty of ways of earning bitcoins besides mining.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#74

Post by bonzoesc »

phillmv wrote: post #34
bonzoesc wrote: post #19

Earlier quoted context omitted.

Those are the first uses because online gamblers and muckraking NGOs are the ones most desperate for an alternative to a government-issued currency. If the average person was unable to function with inflationary currencies, they'd find an alternative.

Inflationary currencies? I'm pretty sure every form of currency is subject to inflation.

Bitcoin is resistant to centralized inflation due to currency supply increases because CPU power votes on new currency entering the system.

If I make a block that gives me a 100 BTC bounty instead of the current 50 BTC, no other nodes will make blocks dependent on mine, meaning that it didn't happen.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#75

Post by kd0amg »

cwp wrote: post #30
AndrewMoffat wrote: post #28

Why is Bitcoin a good currency again? If I understand how it is distributed correctly, those with higher/more computational power receive more of the finite bitcoins. How does that not favor the already rich?

I'm hardly an expert in bitcoins, but: simply having more computational power isn't enough, you have to use it. That computational power is valuable; if you're mining bitcoins you're not using it for whatever it is that you bought all that capacity for in the first place. I doubt that Google or Amazon or the NSA are going to abandon what they're doing now to mine bitcoins.

simply having more computational power isn't enough, you have to use it

You can say that about any resource. It's still generally easier for someone who's wealthier to put up more of that resource.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#76

Post by pyre »

originalgeek wrote: post #62

> Because Bitcoin is an open-source project, and because the database exists only in the distributed peer-to-peer network created by its users, there is no Bitcoin company to raid, subpoena or shut down. Which will leave only Bitcoin users to raid, subpoena and shut down.

And that worked so well for copyright piracy! I'm glad we live in a world without pirated music and movies!

Re: Online Cash Bitcoin could Challenge Governments, Banks

#77

Post by fauigerzigerk »

weavejester wrote: post #44
quanticle wrote: post #35

Earlier quoted context omitted.

And how exactly would you exchange bitcoin for dollars? Presumably, you'd have to go through a bank, or PayPal, or a regulated brokerage house of some kind. To keep bitcoin from taking off, all the US government would have to do is pass a law or put pressure on the financial industry to not allow that exchange.

That's a valid strategy, and one the US government may even employ. However, other countries would have to agree to similar restrictions, otherwise you could trade dollars for euros, then euros for bitcoins. It also wouldn't prevent over-the-counter exchanges between individuals. The US government would also run into opposition from groups like the EFF, and I think it would be difficult to word the law to ban bitcoin…

That's completely unrealistic. There is very tight cooperation between the major currency blocks when it comes to the crackdown on anonymous payments and on everything anonymous for that matter.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#78

Post by ZitchDog »

Bitcoin is a fantastic idea, with one crucial mistake: the finite nature of bitcoins. The fact that coins will one day "run out" will almost certainly lead to increased speculation, which will in turn lead to a deflationary spiral, followed by a "bubble burst" when speculators sell all their bitcoins and average coin holders are left holding the bag.

Infinite coins would tie the value to the opportunity cost of computation, which is actually a really cool idea. Inflation based on the log of moore's law would ensure a steady inflationary rate based on computing power. This would deter speculators and incentivize innovation in computing power in order to more efficiently mine currency.

My hunch is that an uncapped bitcoin competitor would have a more difficult time getting off the ground, since the finite nature of bitcoins favors the first mover.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#79

Post by shazow »

joeyh wrote: post #65
bonzoesc wrote: post #27

Earlier quoted context omitted.

Don't bother trying to get lucky on the 50BTC block bounty; join a pool that splits the winnings. Pools provide well over half the calculation capacity of the Bitcoin system, most are free to join and ones worth joining don't have any real requirements. I make about 1 BTC per day just with spare GPU cycles on my desktop; it's not a substantial amount by any means, just a test pool for experiments and playing with sof…

AFAICS, the benefit to being in a mining pool is you can make some bitcoins immediately, rather than waiting for a big, rare payout. There's no increased probability of winning due to pooling resources is there?

There is a small increase in probability because the pool is aware of the participants and thus reduces redundant work done by each participant. It becomes a slightly-less-than-random brute force operation.

If you mine on your own, then your targets are effectively random.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#80

Post by tarkin2 »

I don't think Bitcoin solves the main problem of new currencies: confidence of their acceptance.

John Law introduced paper money into France by getting the government to accept it for paying taxes. Every Frenchman and woman was confident the state, no matter who took over, would still collect taxes. And the state, knowing the currency was valuable to everyone--even foreigners, could also use it.

Where's my confidence that people will desire a bitcoin in future? Even if, say, every Starbucks in every country started accepting them, it'd only be as valuable as the trend for coffee and the stability of Starbucks. Could I, when planning a mortgage, bet on Starbucks' popularity over 25 years?

I can see how game currencies can come about. But the market for these games is limited and ephemeral in the long run. If you want to compete with banks, you need to think about long term confidence. I've yet to hear how Bitcoin, or any other startup currency, solves this problem.

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