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Bitcoins - anyone else mining? (1 Viewer)
- Thread starter Charlie Frown
- Start date
Rohn Jambo
Footballguy
Ouch
Rohn Jambo
Footballguy
Cliff notes is that some tech geeks released a relately cool concept called digital currency. The idea is that the currency would be backed by "digital gold" that you mine, and there would be a fixed amount of this that would be able to be mined. The mining process is essentially them tossing out a math problem to solve, first person's computer to solve it wins that round and gets some "money". Since the amount that can be mined is fixed, this is in theory better than having some central bank issue notes and drive down the value of what you own bailing out a bunch of rich banker buddies.
They made it extraordinarilly easy to mine the currency in the start giving these geeks a relative monopoly on the currency. Once they had a ton of it, they started letting a lot more people know about it and set a really low rate on the "currency" just to try and get some of it moving. But they only moved tiny bits of this because it was going to be extraordinarilly valuable should this ever be "the new world money system", but in the meantime we need to move small bits or it'll never get there. Once the community started to grow and they got people to buy into it with ever increasing amounts of still small money - 10x increase to .60. Another 2x increase giving it "parity with the dollar" and giving it all sorts of great pub. Now it started a virtual gold rush of people that could essentially print this stuff up at "profit" and maybe even be mega uber rich when it takes over the money supply and is worth 10 million a piece. So people started dumping thousands of dollars into video cards, actually creating a worldwide shortage of video cards, so they could mine for this stuff and make tons of money and be super rich.
Price shot up to $33, but eventually crashed because once there was some actual money involved a hacker took over their exchange and set the price to .01 to try and steal a bunch. People started stealing wallets. People started writing viruses to steal wallets, or put bots on your computer to mine for them. There were also some other things like drug dealers being the main ones actually using it as currency. At one point someone found a way to make an infinite amount and gave themselves a few billion. So anyways people lost confidence and it crashed. After the crash you still had a bunch of people that wanted to be rich though, and they were oh so close to actually being rich. So they mined and they mined (and horded) and the price stayed just high enough so you could make small amounts of money while burning piles of electricity and slowly built the price and confidence back up some over a year. Then they started making extravagant hardware to mine it which could "make your money back in 9 days" and a whole new level of arms races kicked off and people dumped more millions into said hardware. Time does an article on it at this point, all sorts of places get in on the act of mining this, hyping it, etc , and the 2nd wave of gold rushing begins driving the price until it hits $1000. All for something that's essentially worthless - it's prohibitively difficult to actually use as currency and there's about 20 knock offs out there now - but is going to be worth millions each coin when it actually takes over as currency. At some point in the future that no one really knows, because right now you actually have to store it on a ####### USB stick that you never let connect to the internet to make sure that some hacker doesn't steal all of your money. And guard the USB stick with your life in case someone decides to show up with an Uzi to extract it from you or something. And back up the USB stick several times, each stored in a different geographic area with sharks and laser beams. But assuming you keep those USB sticks safe, mark my words, you will be rich.
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Ray Karpis
Footballguy
That was the Cliff Notes?! 
Thanks for the explanation.
Thanks for the explanation.
Here's the historical charts BTW. This doesn't cover 2009 because there was no exchange yet, but it does go back to the .06 a piece era. http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zv
There were only a couple thousand being traded each day at those rates. 6 million in circulation, but the horders were only willing to release a couple K...
And the truth is, you don't even know how many of these transactions are legitimate. You can have as many addresses as you like, so it's entirely possible for me to pay myself an ever increasing amount to just transfer it between a bunch of addresses. Or just do it between me and another creator. I'll buy 1000 of these from you at .06. Great, next month I'll give you back .07 for them. Awesome, and now you have to give me .08 a piece. You also have no idea as to how much anyone actually holds - there's charts out with the "top 100 addresses", but if I were one of the top holders of this thing I wouldn't want that known and would have 500 or so addresses. A stack of USB sticks with 1,000 a piece on them each or something. That's part of what made this thing so easy to manipulate.
There were only a couple thousand being traded each day at those rates. 6 million in circulation, but the horders were only willing to release a couple K...
And the truth is, you don't even know how many of these transactions are legitimate. You can have as many addresses as you like, so it's entirely possible for me to pay myself an ever increasing amount to just transfer it between a bunch of addresses. Or just do it between me and another creator. I'll buy 1000 of these from you at .06. Great, next month I'll give you back .07 for them. Awesome, and now you have to give me .08 a piece. You also have no idea as to how much anyone actually holds - there's charts out with the "top 100 addresses", but if I were one of the top holders of this thing I wouldn't want that known and would have 500 or so addresses. A stack of USB sticks with 1,000 a piece on them each or something. That's part of what made this thing so easy to manipulate.
MCguidance
Footballguy
cstu
Footballguy
Re: Anyone know what happened to knightmb and his 371,000 BTC?
June 19, 2012, 05:09:43 AM
#197
Well, here goes a long spiel.Probably the last that anyone had heard from me before a few days ago was dated September, 2011 according to my profile stats. So it has been a long time of me just lurking around from time to time.
I can't remember exactly when, but some story broke on the Internet about my bitcoin collection and shortly afterwards things got crazy.
The first thing that happened was my inbox here at the forum exploded with people asking for a loan of anywhere from 10k to 100k bitcoins to start the next big market place. I had a few people message me here that they had been burned by a hacker or some website that had their wallet information and asked for anywhere from 100 to 1k bitcoins as a way to help them recover their loss. I always wanted to help people, but there is no well to tell if these were sincere request or just someone out to make a quick bitcoin scam. Some of those I did help people I did help just to be nice, but word must have gotten around quick.
I had to step back from the forums for a while as it was a good place for people to chase me down. All the questions of what I would do with it or how did I get it, was I the one that hacked XYZ website and that's why I have so many, etc. Somewhere in this topic I think, is a another long explanation of how I came into possession of it all. Long story short, I was in bitcoin early when the network was small and basically used a lot of Amazon processing power to load up a ton of bitcoin miners all at once in their clusters (Amazon) using a custom compiled version of the CentOS bitcoind source files. Amazon had a big price difference between running a lot of windows sessions and running a lot of Linux sessions. Turns out, the Linux sessions were running kind of an old version of CentOS as well as I couldn't even get the compiled binaries to run.
Well, a lot of money was spent to generate that chunk of bitcoins, but not so I could posses it all, there were plans to use it as a backing for re-loadable credit cards like service that had bitcoin powering it in the background. Needless to say, that project fell out due to (at least in hindsight) very inept investors. The project floundered and then finally as a way to get out, they (investors) wanted to see what they could sell everything for. It had cost a lot of real money to produce that pile of bitcoins, so I ended up buying it for dirt cheap (at least in terms that bitcoins really had no value to them). Maybe after the 7 year NDS I signed expires, the world will know who it was, but for now I can't name anyone or business.
Once the market value was shooting up to space, the pile of bitcoins was worth a small fortune in theory at least.
A lot of bitcoins were spread around the community to help people at first, but it kind of got out of hand.
Ultimately, a large portion ended up being donated to wikileaks.org, so I'm certainly not the person sitting up top a large pile of bitcoins anymore. The rest went to paying off small debts and the very last of it was just recently donated to wikileaks.org again. I never had any intention of trying to crash the bitcoin market with a large sell-off as many theorized I would do. So sleep safe that there is one less person like me in the bitcoin kingdom.
So, no matter what legend has built up, nothing amazing or exciting has happened to the bitcoins I once had. No buying a Country or purchasing Islands of the sort. Just trying to help out where I could instead. The only thing I have left is old screenshots and empty wallet files now.
A large portion of my past time has actually been invested in the creation of an alternate digital currency for the last few years because I always thought there was a better way to do it. So that's where I spend all my time now, at timekoin.org
I was great to catch up with everyone though, hopefully the story wasn't too boring. Maybe not as exciting as some had hoped.
Yeah, I could definitely see myself getting caught up in this whole thing to some extent had I put in some more research back when I found out about it - it was most definitely late 2011, and I'm obviously rather anti-government and all of that jazz so this would have been very appealing for just a few bucks a piece. (Though all of these charts would have been a bit of a turnoff). At that price it can actually maybe be what it was "intended to be". Unfortunately I was trying to be productive and learn things so I was pretty busy at the time. I mentioned it to one of my tech geek buddies that works at the stock exchange (in one of my pro Ron Paul rants), but he's not rich either.
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cstu
Footballguy
I understand, but do not agree with the complaints against the Fed from libertarians like Paul (even read his book for fun).
However, why would a currency controled by a handful of self-interested individuals be superior to one controled by a "democratically" elected government? The decentralized aspect was never going to be true.
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Very little. For instance, I've seen humorous exercises on this even today which throw economics out the window and make a case for these to go way higher. One article basically went like this:
Bit coins will be at least 10,000. Why? Well, they're only worth 12 billion overall today. Amazon does 60 billion a year alone, so there's no way we could make it so you can buy stuff on Amazon with these. But if they were 10,000 now Amazon could use them.
Great, so what's to stop Amazon from hording up all of your coins in a year or two? Or whatever rich person you give them to to provide you goods and services? Bottom line is that people need to eat, they want goods from Amazon. People know how to make and deliver food at profit to you. Amazon is great at getting goods to you really cheap and fast at a profit. And that's not going to change because of the bitcoin or any other method of payment. All you've done here is given them another avenue (which is very easy to manipulate with its market cap) to rip you off. The rich guy is going to keep bending you over until we as a people say with our money "stop doing this! We demand you treat us better with our dollars and actions!" They just play all of us against each other over a few dollars and sit back and laugh and watch the carnage, and we all participate in that.
There's also the fact that there are real threats to the currency that haven't been realized because there's still more profit in bending you over from it. In 2012 there was a bot net that took over 15% of the network. You need > 50% to be able to blow it up, but a government agency could pull this off. When there's enough value in breaking the encryption it uses, that will happen too. This is a beta that is going to help us move the technology forward, but anyone that thinks this can stand the test of time as is is fooling themselves completely.
But it was really easy to get rich off of this if you saw the very easy to read signals. Maybe not creator rich, but not having to work ever again rich. Completely brilliant in retrospect. And I'm sure they didn't get too many poor people caught up in this. It was mostly people that have money to invest, and Chinese people that are known to trade organs for ipads and stuff, so at least there's that.
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It's definitely decentralized to an extent at this point. The main idea behind the decentralization aspect is more technical - that's to make it less susceptible to attack. Someone needs to control over 50% of the network to be able to take control of the chain. When it was discussed in 2008 on the cryptography mailing list someone used a reference to Nero and Rome or some crap - something about wishing Rome only had a single neck to cut, so having many necks makes it less likely someone can take it out. Like I said in the last post - early in 2012 someone was banging at this with a bunch of bots and got to 15%. It created a bit of a scare among some of the techie types, and a big battle over their math skills. "To get 50% they need 10 times more power - not 3x you math challenged #######". ArtForz was the first guy to kick off GPU mining in July of 2011, there wasn't public code for that until like October. He says he controlled 25% of the network at one point, but says he now only has 1%. So someone making a giant technological breakthrough and keeping it to themselves could do it - GPU mining was 100x more powerful than CPU mining, and these ASIC's are 100's of times more powerful than GPU mining. So in some ways the people that make these ASICs actually have significant control over how the power in the network is distributed. The claim is that ASIC is the end of line for what's possible, but I'm not comfortable making that assumption with how fast technology changes. People are going to be pretty inclined to make said breakthrough and horde it if "all of the world's currency" is at stake. Nowadays it's all done in pools, and if enough of them combined they could do it. So in addition to the guys making the ASICs these pool owners have a pretty significant amount of control. A giant disruption to the internet itself could wreak havoc. Bottom line though is that some giant entity or group of uber hackers is going to be able to take this whole thing down at some point in the future if there's enough interest in doing so, that's almost certain. But right now it makes more sense to use that power to take money from people - by making millions selling ASICs, or making millions selling these coins you print up to people that are caught up in the hype but don't have the same financial or technological advantages. Or making big money stealing them from the less tech savy or whatever.
This is why this absolutely needed to grow slowly for success, with improved security and ease of use being the main focus points as it grew. Scalability is a concern on this whole thing as well, which really hasn't been addressed. If people did try to use this as currency at mass scale I'm guessing it would make the Obamacare website look like a gigantic success. The algorithm to distribute them should have been much more steady over time rather than giving early adopters some gigantic advantage and stake in hyping it. The clear focus has been more on how to get a giant pile of it, then how to get people to perceive it being worth something, rather than how we can improve and make it more viable. You can't envision the amount of effort and resources someone is willing to throw at this to do bad things and rip you off when there's enough interest in doing so. You can't envision what rich people are going to do to your fragile market when there's enough opportunity for them to do so. Especially when you simply want to make it "worth something" as fast as you possibly can first and foremost. And it's clear this has been entirely under estimated in the past on these things with the attacks and concerns that have already happened in its short lifetime with even a pretty small amount of the world's wealth at stake.
The main idea as far as the currency and value is that currency issued at a finite and known rate is superior to currency that gets printed up trillions at a time by some "central authority" that is controlled by a select group of individuals, on a whim, devaluing the assets of anyone that held that currency. The early discussions were all very rooted in Austrian economics. This is pretty much the idea, in cartoon form:
http://www.youtube.com/watch?v=ZPWH5TlbloU
(Rob, rob, rob, rob, rob)
This "currency" didn't execute on much very well. All they did was take a theoretical concept that was put out in 1998 and found the exact opportune time and place to execute this. They designed it in a way that it could appreciate in value rapidly based on the increasing competition and difficulty to mine it, was nearly impossible to track, horded a pile of it, and intentionally created an artificial gold rush. But it doesn't really do much to demonstrate anything in the whole Austrian vs Keynesian battle.
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Wilfredo Ledezma
Footballguy
How does one "accumulate more at zero-cost" that makes no sense with a commodity, even less so with a currency.
I'm not sure how one does so today, but part of the early hype machine involved just giving tiny amounts of them away to people. There was a website called bitfaucet that grabbed up like 10K of them and made it rain in bitcoins. And it seems the creators would give people tiny gifts of them in their initial attempts to get a community of rabid supporters. "What's your address?" from one of the bitcoin moguls was apparantly bitcoin speak for "I'm going to send you a gift of a couple bitcoins".How does one "accumulate more at zero-cost" that makes no sense with a commodity, even less so with a currency.
Wilfredo Ledezma
Footballguy
Ive actually just read a bunch on this "mining" and find it oddly fascinating. Can anyone just mine em now, or is the proliferation of these mega groups overtaken everything...I'm not sure how one does so today, but part of the early hype machine involved just giving tiny amounts of them away to people. There was a website called bitfaucet that grabbed up like 10K of them and made it rain in bitcoins. And it seems the creators would give people tiny gifts of them in their initial attempts to get a community of rabid supporters. "What's your address?" from one of the bitcoin moguls was apparantly bitcoin speak for "I'm going to send you a gift of a couple bitcoins".How does one "accumulate more at zero-cost" that makes no sense with a commodity, even less so with a currency.
To get any appreciable amount you're going to need to get an ASIC miner which goes for a few thousand. Here's one coming out from Butterfly labs which is a pretty nice bang for the buck: https://products.butterflylabs.com/600-gh-bitcoin-mining-card.htmlIve actually just read a bunch on this "mining" and find it oddly fascinating. Can anyone just mine em now, or is the proliferation of these mega groups overtaken everything...I'm not sure how one does so today, but part of the early hype machine involved just giving tiny amounts of them away to people. There was a website called bitfaucet that grabbed up like 10K of them and made it rain in bitcoins. And it seems the creators would give people tiny gifts of them in their initial attempts to get a community of rabid supporters. "What's your address?" from one of the bitcoin moguls was apparantly bitcoin speak for "I'm going to send you a gift of a couple bitcoins".How does one "accumulate more at zero-cost" that makes no sense with a commodity, even less so with a currency.
Here's a profitability calculator: http://www.bitcoinx.com/profit/
You can also rent cloud mining from them at like 10.83 / Gh / s.
Problem is that the difficulty is increasing exponentially since these ASICs hit the market as well. So by the time you get this ASIC in February (it's on back order) you might get a lot less out of it than that calculator shows. Because now there's a pile of other people that have them too.
CPU mining is a waste, you'll burn way more in electricity than they're worth. It seems GPU mining might still be profitable, but now your power is measured in Mh / s and you'll use way more electicity than ASICs. You'll barely get any coins, but if they're worth a million each you'll make some money. Of course, you could have done way better buying them at $1000 each if they actually do go to a million a piece, but that's a personal call.
Here's a guide that gives the MH / s you get out of various video cards. You can plug that into the profitability calculator and see how much you can make this route. https://en.bitcoin.it/wiki/Mining_hardware_comparisonLitecoins is another alternative. That was initially made to be more resistant to the arms race and was all CPU mining, but now it's moved to GPU mining and has created a shortage of GPU cards just like Bitcoin did.
It's more profitable to mine these and some other alt coins and then trade them for bitcoins. I've got some world coins, some digi coins, some bullion coins, some lite coins. And then I stopped because I might as well just buy up some Litecoins if I actually believe they'll be worth anything.
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Kool-Aid Larry
Footballguy
theoretically, anybody can mine, but in actual practice you're just scrounging crumbs at this point.
you could maybe buy dedicated hardware with much greater computing power, but usually by the time it ships it isn't as effective, as it becomes increasingly more difficult to mine these things.
this is why these people form mining groups --- it's like everybody at work pitching in 10 bucks to try and win the powerball.
here's a list of other currencies that might be easier to mine, but I wouldn't have any idea.
you could maybe buy dedicated hardware with much greater computing power, but usually by the time it ships it isn't as effective, as it becomes increasingly more difficult to mine these things.
this is why these people form mining groups --- it's like everybody at work pitching in 10 bucks to try and win the powerball.
here's a list of other currencies that might be easier to mine, but I wouldn't have any idea.
This is the site I was using to play around with it. http://www.multipool.us
They figure out what's most profitable based on current exchange rates and amount of coins they're getting, and you can either mine for a specific coin or hop around to whatever's most profitable that second.
Everything I got over the weekend was in the 20's. Looks like there's big money in DOGE coins today!!!!! Woot!!!!
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Wilfredo Ledezma
Footballguy
This is way confusing. Certainly seems like it takes a lot of money to lay out for questionable and declining returns.
Wilfredo Ledezma
Footballguy
I had no idea how deep the rabbit hole was. So now we have 100's of speculative currencies, backed by nothing other than peoples desire to have them, being propagated and mined all over the world? WTF is going on here? Currencies are usually backed by something of value. What is it that is backing any of these currencies. Also how do you spend any of these currencies. I imagine most places online haven't even heard of any of them save bitcoin.
At this point, yes. The window of opportunity was late 2011 to mid 2012. After that first crash the amount of power being thrown at this actually declined for a while. You were probably still better off just tossing a couple K to get yourself a few thousand coins rather than waste a bunch of money on a mining rig, but anything you mined at that point you would make a pretty nice profit off of (if you held).
culdeus
Footballguy
Don't worry about that part. I've been assured that being able to spend them is not a big deal. When is the last time you paid for something with a gold coin?
Wilfredo Ledezma
Footballguy
Why Bitcoin Will Never Be a Currency—in 2 Charts
Bitcoin could be Paypal 2.0, but it will never be the dollar 2.0. Not when prices would have had to fall 98.5 percent the past year if they'd been set in terms of Bitcoin.
http://www.theatlantic.com/business/archive/2013/12/why-bitcoin-will-never-be-a-currency-in-2-charts/282364/
Found this. Pretty interesting.
They wouldn't. Researchers found that 64 percent of bitcoins are in accounts that have never been used. And the ones that are being used aren't being used more. You can see that in the chart below from Jason Kuznicki, which looks at the dollar value of all bitcoin transactions each day divided by the dollar value of all bitcoins each day. It's hard to see any pattern here—and that's the point. If people were using bitcoins more, this ratio would be going up. It's not.
Bitcoin won't work as a currency as long as it's so deflationary. Why spend bitcoins today when they might be worth much more tomorrow? The only reason would be to buy or do things online that you can't buy or do with dollars (or euros or yuan)—something illegal. Now, black markets can be big markets, especially when it comes to evading capital controls, but not so big that Bitcoin would ever become more than a niche "currency."
What Bitcoin really needs is a central bank to stabilize its value. When the demand for Bitcoin goes up, they need to print more to keep it from skyrocketing. That is, they need to decide whether they want Bitcoin to be a Ponzi scheme for techno-libertarians or an actual medium of exchange. See, the technology of Bitcoin really is revolutionary, but the currency of Bitcoin is holding it back. In other words, Bitcoin really could have use as a payments system if it had a stable value. But it doesn't, so it's just a dotcom stock. And one that could be co-opted by banks that take its technology and use it with dollars instead.
Bitcoin could be Paypal 2.0, but it will never be the dollar 2.0. Not when prices would have had to fall 98.5 percent the past year if they'd been set in terms of Bitcoin.
http://www.theatlantic.com/business/archive/2013/12/why-bitcoin-will-never-be-a-currency-in-2-charts/282364/
Found this. Pretty interesting.
They wouldn't. Researchers found that 64 percent of bitcoins are in accounts that have never been used. And the ones that are being used aren't being used more. You can see that in the chart below from Jason Kuznicki, which looks at the dollar value of all bitcoin transactions each day divided by the dollar value of all bitcoins each day. It's hard to see any pattern here—and that's the point. If people were using bitcoins more, this ratio would be going up. It's not.
Bitcoin won't work as a currency as long as it's so deflationary. Why spend bitcoins today when they might be worth much more tomorrow? The only reason would be to buy or do things online that you can't buy or do with dollars (or euros or yuan)—something illegal. Now, black markets can be big markets, especially when it comes to evading capital controls, but not so big that Bitcoin would ever become more than a niche "currency."
What Bitcoin really needs is a central bank to stabilize its value. When the demand for Bitcoin goes up, they need to print more to keep it from skyrocketing. That is, they need to decide whether they want Bitcoin to be a Ponzi scheme for techno-libertarians or an actual medium of exchange. See, the technology of Bitcoin really is revolutionary, but the currency of Bitcoin is holding it back. In other words, Bitcoin really could have use as a payments system if it had a stable value. But it doesn't, so it's just a dotcom stock. And one that could be co-opted by banks that take its technology and use it with dollars instead.
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Wilfredo Ledezma
Footballguy
https://en.bitcoin.it/wiki/FAQ#Where_does_the_value_of_Bitcoin_stem_from.3F_What_backs_up_Bitcoin.3F
Where does the value of Bitcoin stem from? What backs up Bitcoin?
Bitcoins have value because they are useful and because they are scarce. As they are accepted by more merchants, their value will stabilize. See the list of Bitcoin-accepting sites.
When we say that a currency is backed up by gold, we mean that there's a promise in place that you can exchange the currency for gold. Bitcoins, like dollars and euros, are not backed up by anything except the variety of merchants that accept them.
It's a common misconception that Bitcoins gain their value from the cost of electricity required to generate them. Cost doesn't equal value – hiring 1,000 men to shovel a big hole in the ground may be costly, but not valuable. Also, even though scarcity is a critical requirement for a useful currency, it alone doesn't make anything valuable. For example, your fingerprints are scarce, but that doesn't mean they have any exchange value.
Alternatively it needs to be added that while the law of supply and demand applies it does not guarantee value of Bitcoins in the future. If confidence in Bitcoins is lost then it will not matter that the supply can no longer be increased, the demand will fall off with all holders trying to get rid of their coins. An example of this can be seen in cases of state currencies, in cases when the state in question dissolves and so no new supply of the currency is available (the central authority managing the supply is gone), however the demand for the currency falls sharply because confidence in its purchasing power disappears. Of-course Bitcoins do not have such central authority managing the supply of the coins, but it does not prevent confidence from eroding due to other situations that are not necessarily predictable.
Where does the value of Bitcoin stem from? What backs up Bitcoin?
Bitcoins have value because they are useful and because they are scarce. As they are accepted by more merchants, their value will stabilize. See the list of Bitcoin-accepting sites.
When we say that a currency is backed up by gold, we mean that there's a promise in place that you can exchange the currency for gold. Bitcoins, like dollars and euros, are not backed up by anything except the variety of merchants that accept them.
It's a common misconception that Bitcoins gain their value from the cost of electricity required to generate them. Cost doesn't equal value – hiring 1,000 men to shovel a big hole in the ground may be costly, but not valuable. Also, even though scarcity is a critical requirement for a useful currency, it alone doesn't make anything valuable. For example, your fingerprints are scarce, but that doesn't mean they have any exchange value.
Alternatively it needs to be added that while the law of supply and demand applies it does not guarantee value of Bitcoins in the future. If confidence in Bitcoins is lost then it will not matter that the supply can no longer be increased, the demand will fall off with all holders trying to get rid of their coins. An example of this can be seen in cases of state currencies, in cases when the state in question dissolves and so no new supply of the currency is available (the central authority managing the supply is gone), however the demand for the currency falls sharply because confidence in its purchasing power disappears. Of-course Bitcoins do not have such central authority managing the supply of the coins, but it does not prevent confidence from eroding due to other situations that are not necessarily predictable.
See, I'm just not ready to say even this quite yet. It's promising, and it's definitely something that's worth advancing further. But we have no idea how much stress it can handle long term, that's all theoretical.
Also, on the whole declining returns thing - this is again a part of the beauty of their plan. People aren't going to unload this currency at a loss - they're not going to spend $3 to mine a coin to unload it at $2. They might continue to mine at a loss based on speculation - there's only so many of these and eventually it will have been profitable - but they'll literally hang onto it until the price meets a reasonable profit for them. So the more competition to get them, combined with an increase in mining difficult increases the cost of electricity to make them which gives you a built in mechanism for justifying an increase in value.
And when you start making stuff that mines them more efficiently so electricity isn't the driver (like with the ASICs), the cost of the hardware needed to keep up with the joneses still gives you a built in mechanism for increase.
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cstu
Footballguy
927 people own half of all bitcoins.
Even more incredible is that 47 people own 28.9%, which at the peak of $1200 was worth over $4 billion. The average owned by those 47 was $85 million.
My question is who are these 47 and are they "Satoshi Nakamoto"?
Even more incredible is that 47 people own 28.9%, which at the peak of $1200 was worth over $4 billion. The average owned by those 47 was $85 million.
My question is who are these 47 and are they "Satoshi Nakamoto"?
He/she/it's a part of it. But as a whole those are mostly the people that mined the 6 million in the first year and a half of the thing when the difficulty was like 1 or 2. It's something like 9 million now.cstu said:
There was a single entity that mined a million of these in the first year and only made a single transaction, a 500 coin transfer to Hal Finney. Finney was the guy that put out the "amusing thought exercise". People speculate that was this "Satoshi" entity. That's basically 5% of all of the currency that would ever exist, in the hands of one person. No one in the world holds even close to that much wealth today.
Now there aren't any accounts that have close to a million at this point, so I'm not sure if that's spread among a number of addresses or whatever or if they've unloaded a good amount of them. You can't even say for certain that this is all those 47 people own of it either. Again, you can have as many addresses as you like. And if I had a few hundred thousand of them I certainly wouldn't have them all in one account....I'd had several hundred accounts.
I know that one of the creators is this Jeff Garzik guy. Here's his Linkedin profile: http://www.linkedin.com/profile/view?id=235234855&authType=NAME_SEARCH&authToken=CQyu&locale=en_US&srchid=201561771387498547859&srchindex=1&srchtotal=1&trk=vsrp_people_res_name&trkInfo=VSRPsearchId%3A201561771387498547859%2CVSRPtargetId%3A235234855%2CVSRPcmpt%3Aprimary He was a software engineer for Red Hat for over a decade. He quit in May and now works for "Bitpay, Inc." along with being the CEO of "Dunvegan Space Systems". The website for that it this shoddy piece of crap that looked like it was made in 1993 claiming to be about putting people in near space orbit. http://www.dunveganspace.com/
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And yeah, I would have my bots trading a hundred thousand of these back and forth a day among many of my accounts. Another article I saw from last year done by one of the guys that helped create the RSA encryption algorithm indicated that almost all large transactions for these originated back to a single 90K transfer. That was transferred all over the place between a large number of accounts before all making it back to the original account they came from. It seems pretty clear that a lot of this is artificial...cstu said:
I did way too much research into this. But it is most definitely rather fascinating. Honestly, there's really almost no proof that the pizza transaction even occurred. A guy put out an offer in a tiny community and "didn't have any takers", then took a picture of a pizza. Another user claims he paid for the pizza. The thread is still there and has stood in bitcoin lore forever, it's awesome to talk about the "20K pizza", then the "100K pizza", then "500K pizza" and "million dollar pizza" but how can anyone even be certain that it ever really happened and wasn't all part of a set up for an elaborate hoax? It's not hard to transfer some money between a few of my addresses and take a picture of a pizza. And why aren't there hundreds of examples like this that this pizza keeps getting mentioned?
A lot of these gigantic dips and all of that stuff could very well be getting controlled by these guys as well. I make it climb to "30" and people eagerly pile in their money, now I drop it back and you guys give me all of the coins back for a fraction of what you paid me since you're all scared. Now let's run it up to 100. Great, now I need to drop this back to 60 and get a bunch of people to freak out and give them back to me. Now let's run it up to 260 on the day there's economic stress in Europe. And we'll drop it back to 130 the next day so I get them all back at half again....etc, etc....
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Actually, here's the original paper by the RSA guys.
http://www.loper-os.org/pub/bithogs.pdf
Page 11 talks about basically every large transaction stemming from a single 90K transaction made on November 10th 2010.
Other findings (Page 7):
- 78% were in savings accounts that never did any transactions.
- 36% of all owners recieved less than 1 BTC in their lifetime, 52% fewer than 10, and 88% fewer than 100.
- 4 owners received over 800,000 BTC's and 80 received over 400,000. And based on the findings from that 90K transaction, those owners seemed to like to pass around large amounts of them back and forth, never letting them hit the general public.
I wonder if there's any way to bring these guys up for fraud if they can prove they intentionally swindled people out of piles of money...and actually prove who this "Satoshi" entity is...
http://www.loper-os.org/pub/bithogs.pdf
Page 11 talks about basically every large transaction stemming from a single 90K transaction made on November 10th 2010.
Other findings (Page 7):
- 78% were in savings accounts that never did any transactions.
- 36% of all owners recieved less than 1 BTC in their lifetime, 52% fewer than 10, and 88% fewer than 100.
- 4 owners received over 800,000 BTC's and 80 received over 400,000. And based on the findings from that 90K transaction, those owners seemed to like to pass around large amounts of them back and forth, never letting them hit the general public.
I wonder if there's any way to bring these guys up for fraud if they can prove they intentionally swindled people out of piles of money...and actually prove who this "Satoshi" entity is...
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Interesting. I'm wondering how the cryptography mailing list messages read from this perspective...
Kool-Aid Larry
Footballguy
Kool-Aid Larry
Footballguy
this thread's gettin' good now........
Kool-Aid Larry
Footballguy
what do you guys think is going on with litecoins, et al?
is that just all public speculation based on bitcoin news?
is that just all public speculation based on bitcoin news?
cstu
Footballguy
This would be a great topic for a reporter to research. A lot of it leads to Hal Finney - who happens to be the first person to download the software and the first to be sent a bitcoin from Satoshi.
Someone also claims to show that the first bitcoin (Satoshi) and a million more were all mined from a single computer.
Here's what appears to be a nice archive of the original cryptography mailing list discussions:
http://search.gmane.org/?query=Nakamoto&author=&group=gmane.comp.encryption.general&sort=revdate&DEFAULTOP=and&xP=Zsatoshi&xFILTERS=Gcomp.encryption.general---A
I like #6 from "Satoshi":
http://search.gmane.org/?query=Nakamoto&author=&group=gmane.comp.encryption.general&sort=revdate&DEFAULTOP=and&xP=Zsatoshi&xFILTERS=Gcomp.encryption.general---A
I like #6 from "Satoshi":
Code:
The fact that new coins are produced means the money supply increases by a planned amount, but this does notnecessarily result in inflation. If the supply of money increases at the same rate that the number ofpeople using it increases, prices remain stable. If it does not increase as fast as demand, there will bedeflation and early holders of money will see its value increase.Coins have to get initially distributed somehow, and a constant rate seems like the best formula.
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Rohn Jambo
Footballguy
Yes, the only thing I was interested in about Bitcoins is who is Satoshi.
Kool-Aid Larry
Footballguy
17 is pretty good as well. Hal Finney in response to someone talking about the need for everyone to play nice for this work, #3 is pretty great:
> And then on top of that we need everyone to have a> motive to behave in such a fashion that agreement> arises. I cannot see that they have motive when I do> not know the behavior to be motivated.
and then:
> And then on top of that we need everyone to have a> motive to behave in such a fashion that agreement> arises. I cannot see that they have motive when I do> not know the behavior to be motivated.
Code:
I am somewhat less worried about motivation. I'd be satisfied if thesystem can meet the following criteria:1. No single node operator, or small collection of node operatorswhich controls only a small fraction of overall network resources,can effectively cheat, if other players are honest.2. The long tail of node operators is sufficiently large that no smallcollection of nodes can control more than a small fraction of overallresources. (Here, the "tail" refers to a ranking based on amount ofresources controlled by each operator.)3. The bitcoin system turns out to be socially useful and valuable, sothat node operators feel that they are making a beneficial contributionto the world by their efforts (similar to the various " <at> Home" computeprojects where people volunteer their compute resources for good causes).
Code:
In this case it seems to me that simple altruism can suffice to keep thenetwork running properly.
Code:
> 3. The bitcoin system turns out to be socially useful and valuable, so> that node operators feel that they are making a beneficial contribution> to the world by their efforts (similar to the various " <at> Home" compute> projects where people volunteer their compute resources for good causes).> > In this case it seems to me that simple altruism can suffice to keep the> network running properly.It's very attractive to the libertarian viewpoint if we can explain it properly. I'm better with code thanwith words though.Satoshi Nakamoto
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So the first 24 or so posts there are a gigantic technical discussion about the feasability, which just about everyone seems to agree is uncertain except for Satoshi. And Hal thinks this will probably work out anyways based on "simple altruism". A heavy cryptography and security guy believing this will work on people just being nice - kind of a total joke.
And then in post 25 and 26 "Satoshi" is releasing this and Hal is responding. And rather than Hal worrying about the technical feasibility of the whole thing now that he has this alpha code on the table he thought was a great idea to analyze the whole idea further, his first concern is how to value this new currency of which there will only be 21,000,000 of and could eventually replace all money (while operating on "simple altruism"). Nevermind all of the scalability issues that were pointed out or anything like that for it to even function as such.
And Satoshi puts out a mining algorithm for it which he admitted in #6 would be completely deflationary for early adopters because the system and currency needs to scale gradually as new users come on.
You'd also think that Hal might offer some of his past work on this, considering he clearly had worked on a concept that was basically identical and even had the same name as this project he "found" on Sourceforge. But no mentions of any of that in any of his posts.
Yeah, it does make a lot of sense when you think that Satoshi actually is Hal.... there's almost no other reasonable explanation for this correspondence given Hal's background and earlier work.
And then in post 25 and 26 "Satoshi" is releasing this and Hal is responding. And rather than Hal worrying about the technical feasibility of the whole thing now that he has this alpha code on the table he thought was a great idea to analyze the whole idea further, his first concern is how to value this new currency of which there will only be 21,000,000 of and could eventually replace all money (while operating on "simple altruism"). Nevermind all of the scalability issues that were pointed out or anything like that for it to even function as such.
And Satoshi puts out a mining algorithm for it which he admitted in #6 would be completely deflationary for early adopters because the system and currency needs to scale gradually as new users come on.
You'd also think that Hal might offer some of his past work on this, considering he clearly had worked on a concept that was basically identical and even had the same name as this project he "found" on Sourceforge.
But no mentions of any of that in any of his posts.Yeah, it does make a lot of sense when you think that Satoshi actually is Hal.... there's almost no other reasonable explanation for this correspondence given Hal's background and earlier work.
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Yeah. The system is basically identical to the Bitcoin except that it has a 2.5 minute block time (4 times as fast), makes 84 million coins (4 times as many), and was designed to be more resistant to an arms race (algorithm needs a lot of memory). The whole thing is still entirely deflationary towards early adopters, and it appears the gold rush there is missed too.
