Should this be in a different forum too? All my threads are so muddled. Anyway BitCoin
A rhetorical question really 'cause I've already decided to do it. Without your permission. I am looking forward to somebody here telling me 1) what a mistake it is, or 2) how useless it is, or 3) how flawed it is or 4) what a a great idea it is but I'm still an asshole.
If you haven't heard of it, here's the wiki of it.
http://en.wikipedia.org/wiki/Bitcoin
Q. What is Bitcoin?
A. Bitcoin is a peer-to-peer currency. Peer-to-peer means that no central authority issues new money or tracks transactions. These tasks are managed collectively by the network.
Q. How does Bitcoin work?
A. Bitcoin utilises public-key cryptography. A coin contains the owner's public key. When a coin is transferred from user A to user B, A adds B’s public key to the coin, and the coin is signed using A's private key. B now owns the coin and can transfer it further. A is prevented from transferring the already spent coin to other users because a public list of all previous transactions is collectively maintained by the network. Before each transaction the coin’s validity will be checked.
It's all very technical really. I don't get it all. I grok it but I don't understand the finer details.
It's a virtual global currency, more or less the opposite of local currency. Like any currency, its value depends purely upon everybody acting as if it had value.
gnome wrote:Seems blocked at work. I kind of get the distribution method... the collective validation files serve as multiple redundant backups to each other.
How do bitcoins enter circulation?
that would be the part that I have a hard time wrapping my head around.
from an article on it...
Bitcoins are "mined" when you set your Bitcoin client to a mode that has it compete to update the public log of transactions. All the clients set to this mode race to solve a cryptographic puzzle by completing the next "block" of the shared transaction log. Winning the race to complete the next block wins you a 50-Bitcoin prize. This feature exists as a way to distribute bitcoins in the currency's early years. Eventually, new coins will not be issued this way; instead, mining will be rewarded with a small fee taken from some of the value of a verified transaction.
Mining is very computationally intensive, to the point that any computer without a powerful graphics card is unlikely to mine any bitcoins in less than a few years.
so, essentially you get paid for being a bitcoin accountant...kinda.
I was tempted to sign up for bitcoins. I certainly have enough computing power, and I have a tendency to leave the computer on all the time. I heard about from Econ Talk - it's probably worth a listen. I think in the end is was just laziness and I didn't sit down in front of the PC to find the software.
gnome wrote:I don't trust the basic idea--running your CPU at no constructive purpose, and arbitrarily awarding the biggest computing time wasters?
I would think that any system of currency should be based on some kind of wealth creation to accumulate.
well, in mining, the CPU cycle's go to validating transactions so it has a constructive purpose, but I get your drift.
Still, upon what type of wealth creation is your currency based?
I missed that bit. So the CPU cycles go to the functioning of the system as a whole.
US currency is based on wealth created in the economy. The fed actually manipulates the money supply ostensibly to match the current economic environment, in which the creation of wealth matters significantly.
I understand the currency part..worldwide currency...et cetera. They have some way of generating them...K.
But like all currency, it must be translatable...X Yen is worth Y Euros, and so forth.
So 100 bitcoins = ?
I realize currency markets also change. But in estimated figures, or even at a certain date, what's the number?
If it cannot be thus translated, then I think it is a waste of CPU cycles.
If it can be thus translated, then I think it's a very easy way to make money, even if 1000 bitcoins = $.01
https://en.bitcoin.it/wiki/Trade
There are over 100 sites which accept bitcoins, along with some currency exchange sites. I looked at one exchange site, and it looks like the last trade was 7 bitcoins/USD. The chart is not clear on units, so I could be off by orders of magnitude.
Most of the sites look like small businesses with techie-geeky people running them.
I'm actually renewing my point about getting your PC to do something constructive because I realized what bugged me about the answer.
If all the CPU cycle usage is only for sustaining the system that creates and distributes the bitcoins, it is still accomplishing no more than doing nothing. So I'm not sure why bitcoins should be considered valuable except for a curiosity effect.
corplinx wrote:Originally, bitcoins were basically worthless, now they are are about 7 bucks a coin? The rumor is, the creators farmed most of the coins to begin with, and waited for careful astroturfing of sites like slashdot to create interest so they could dump their coins and become millionaires.
I applaud the audacity of such a thing.
The technical discussion on the creation and distribution of bitcoins seems to imply that the rumor cannot be true, but let's say that rumor is true.
How does that impact the value of the currency?
Class-warfare arguments withstanding, so long as people can [and do] buy and sell using the currency, does it matter?
gnome wrote:I'm actually renewing my point about getting your PC to do something constructive because I realized what bugged me about the answer.
If all the CPU cycle usage is only for sustaining the system that creates and distributes the bitcoins, it is still accomplishing no more than doing nothing. So I'm not sure why bitcoins should be considered valuable except for a curiosity effect.
Every currency has to be bootstrapped in some fashion. If you think too hard about any currency you'll always find the smoke and mirrors behind it. It is the 'curiosity effect' that got me to sign up. It doesn't matter how you assign value, so long as value is assigned. What matters is whether or not it is useful and the extent to which it is stable.
gnome wrote:But as bitcoins accumulate and circulate, won't their value degrade over time, with no equivalent of a central bank adjusting the supply?
Deflation! IOW, as more people use bitcoins, and the supply maxes out at 21m, the existing bitcoin holdings become more, not less valuable. Not a scary thing if it is expected. And if each bitcoin can be subdivided indefinitely (not indefinite but close enough) then it doesn't matter.
gnome wrote:But as bitcoins accumulate and circulate, won't their value degrade over time, with no equivalent of a central bank adjusting the supply?
Deflation! IOW, as more people use bitcoins, and the supply maxes out at 21m, the existing bitcoin holdings become more, not less valuable. Not a scary thing if it is expected. And if each bitcoin can be subdivided indefinitely (not indefinite but close enough) then it doesn't matter.
Capture.JPG
Is that 21m a hard limit?
And that dynamic goes to the idea of the earliest people in get the most value.
gnome wrote:But as bitcoins accumulate and circulate, won't their value degrade over time, with no equivalent of a central bank adjusting the supply?
Deflation! IOW, as more people use bitcoins, and the supply maxes out at 21m, the existing bitcoin holdings become more, not less valuable. Not a scary thing if it is expected. And if each bitcoin can be subdivided indefinitely (not indefinite but close enough) then it doesn't matter.
Capture.JPG
Is that 21m a hard limit?
And that dynamic goes to the idea of the earliest people in get the most value.
I realize this isn't explicitly an MLM scheme, but some of the incentives remind me of pyramid marketing. Get in early and spread the word. Mathematically speaking, the longer it goes on and the more popular it is, the less able a new participant is to be able to accumulate the wealth early starters did.
gnome wrote:I realize this isn't explicitly an MLM scheme, but some of the incentives remind me of pyramid marketing. Get in early and spread the word. Mathematically speaking, the longer it goes on and the more popular it is, the less able a new participant is to be able to accumulate the wealth early starters did.
Part of the intention of the generation system was to benefit early adopters. I thought bitcoin generation slows down over time, which long term would even the playing field.
Although another way to collect bitcoins is to sell goods or services and accept bitcoins as payment. Obviously, this is the proclaimed goal.
gnome wrote:I realize this isn't explicitly an MLM scheme, but some of the incentives remind me of pyramid marketing. Get in early and spread the word. Mathematically speaking, the longer it goes on and the more popular it is, the less able a new participant is to be able to accumulate the wealth early starters did.
corplinx wrote:Originally, bitcoins were basically worthless, now they are are about 7 bucks a coin? The rumor is, the creators farmed most of the coins to begin with, and waited for careful astroturfing of sites like slashdot to create interest so they could dump their coins and become millionaires.
I applaud the audacity of such a thing.
You are really, really bad at math.
The only real scam going on is that some of the supercomputer sites have caught staff (or hackers) stealing cycles to "mine" bitcoins.
corplinx wrote:You burn coal for imaginary currency.
what method would you prefer for initial distribution? I think they should have made a deal with some of the big distributed computing organizations (like seti or einstein) but that's just me. still, it's working.
corplinx wrote:You burn coal for imaginary currency.
what method would you prefer for initial distribution? I think they should have made a deal with some of the big distributed computing organizations (like seti or einstein) but that's just me. still, it's working.
and all currency is imaginary.
I would have preferred a distribution method that doesn't start with most of the money in the hands of people that have produced nothing and provided nothing.
gnome wrote:I would have preferred a distribution method that doesn't start with most of the money in the hands of people that have produced nothing and provided nothing.
Alas, that is one of the puzzles of Western Civilization. But this case is particularly clear.