Bitcoin - do you understand it

BillN_33

BillN_33

Messages
12,660
Edit My Images
No
B of E ....... have now mentioned it .... and have said that they are taking it seriously

Buy "gold" instead?

now 100,000 "merchants" who accept bitcoin
 
Last edited:
Gold is a good investment.
 
BillN_33 said:
B of E ....... have now mentioned it .... and have said that they are taking it seriously

Buy "gold" instead?

now 100,000 "merchants" who accept bitcoin
Click to expand...
No, even more confused by bit coin mining.
 
I cannot comrehend the idea of bitcoin..... what is it exactly? do you have to spend real money to own it? or do you just make it up..... I watch a bitcoin exchange in action the other day and I was like "what the f***!" :confused:
 
No idea here as well - but apparently it has increased in value by 5000%, that 5 thousand percent, since it started
 
archangel said:
I cannot comrehend the idea of bitcoin..... what is it exactly? do you have to spend real money to own it? or do you just make it up..... I watch a bitcoin exchange in action the other day and I was like "what the f***!" :confused:
Click to expand...
Well it seems you have a better idea of what it is than I then :D
 
Essentially you mine bit coin by letting your computer solve complex equations (layman terms).

You generally need a very powerful computer and have it running 24/7 for a very long time just to generate 1 bit coin.

Cost of electric to power the computer will be large too (the more CPU/gpu usage used the more watts needed).
 
Last edited:
neil_g said:
Essentially you mine bit coin by letting your computer solve complex equations (layman terms).

You generally need a very powerful computer and have it running 24/7 for a very long time just to generate 1 bit coin.

Cost of electric to power the computer will be large too.
Click to expand...

I thought that you now bought them using "real money" - $ £ Euros on the internet ………. so if I want some should I ask my computer to "mine" a few
 
Last edited:
neil_g said:
Essentially you mine bit coin by letting your computer solve complex equations (layman terms).
Click to expand...
That kinda rings a bell (y)
Something like this has been around a lot of years,
but you never got "paid" for it in the past IIRC?
 
BillN_33 said:
I thought that you now bought them using "real money" - $ £ Euros on the internet ………. so if I want some should I ask my computer to "mine" a few
Click to expand...

Not sure but I think now they're recognised as tradable?

Cobra said:
That kinda rings a bell (y)
Something like this has been around a lot of years,
but you never got "paid" for it in the past IIRC?
Click to expand...

People have been doing it for ages but I think only recently (last couple years?) they've been given a value. Initially they were worth a lot but as more people did it the value dropped.
 
The equation and its solutions are such that there will only ever exist 21 million bitcoins.

As it is slowly solved it gets increasingly harder.

It is now virtually impossible to solve it on an ordinary PC and most "miners" are now using ASIC machines and ultra fast video cards:

http://www.butterflylabs.com

It is called "Mining" because like the old gold rush days the first person to solve the (current) equation has to register it online by pasting the solution, and once it has been verified you get a bitcoin, or part thereof if you are in a syndicate.

Now only syndicates have the power to mine bitcoins and reap the rewards.
.
 
petersmart said:
The equation and its solutions are such that there will only ever exist 21 million bitcoins.

As it is slowly solved it gets increasingly harder.

It is now virtually impossible to solve it on an ordinary PC and most "miners" are now using ASIC machines and ultra fast video cards:

http://www.butterflylabs.com

It is called "Mining" because like the old gold rush days the first person to solve the (current) equation has to register it online by pasting the solution, and once it has been verified you get a bitcoin, or part thereof if you are in a syndicate.

Now only syndicates have the power to mine bitcoins and reap the rewards.
.
Click to expand...

I have still no idea what it's all about Pete ……… can it's use ever be banned by Western Governments if they feel that there is a threat because of what is happening

I cannot see me ever using it
 
BillN_33 said:
I thought that you now bought them using "real money" - $ £ Euros on the internet ………. so if I want some should I ask my computer to "mine" a few
Click to expand...
You are way too late to mine a few on your computer. Maybe 1% of one if you leave your computer on 24/7 for many days and have a modern high powered ATI graphics card and use a GPU mining program. It will run the GPU flat out (better if you can overclock it to just below where the display starts to malfunction) and cost you way more in electricity than the value of the (part of a ) bitcoin you mine.

Litecoin is better for GPU mining, although the exchange rate to BTC has gone down and now there are scrypt ASICs out there it will likely go down further.
 
onomatopoeia said:
You are way too late to mine a few on your computer. Maybe 1% of one if you leave your computer on 24/7 for many days and have a modern high powered ATI graphics card and use a GPU mining program. It will run the GPU flat out (better if you can overclock it to just below where the display starts to malfunction) and cost you way more in electricity than the value of the (part of a ) bitcoin you mine.

Litecoin is better for GPU mining, although the exchange rate to BTC has gone down and now there are scrypt ASICs out there it will likely go down further.
Click to expand...

I don't really want or need any ……… I just will never be able to understand it
 
neil_g said:
Essentially you mine bit coin by letting your computer solve complex equations (layman terms).

You generally need a very powerful computer and have it running 24/7 for a very long time just to generate 1 bit coin.

Cost of electric to power the computer will be large too (the more CPU/gpu usage used the more watts needed).
Click to expand...

That bit i understand.

With traditional currencies, i perform a service of value to somebody, or create an item of value to somebody.
I then exchange that item or service for a token, which i can then use to exchange for more goods or services.

So what is the service or item that is being exchanged for a bitcoin following bitcoin mining? AFAIK, mining is just solving an abstract problem that is of no financial value to anybody. That's the piece i don't understand.
 
Rapscallion said:
That bit i understand.

With traditional currencies, i perform a service of value to somebody, or create an item of value to somebody.
I then exchange that item or service for a token, which i can then use to exchange for more goods or services.

So what is the service or item that is being exchanged for a bitcoin following bitcoin mining? AFAIK, mining is just solving an abstract problem that is of no financial value to anybody. That's the piece i don't understand.
Click to expand...
You can now use bitcoins in exchange for services (I'm sure I read about a newagent who now accepts them!).
But in terms of mining you shouldn't equate it exchanging money for a service, it is likened to mining for gold - you put in effort to find something of which there is a limited amount.
It's the fact there is a limited amount which gives it some sort of value but it did require someone in the first place to decide that it had any value at all - and this can be taken away at any point by everyone deciding that its a stupid idea and shouldn't have a value. Because you don't have anything physical to show for it you could be left very much empty handed!
 
"The equation and its solutions are such that there will only ever exist 21 million bit coins."

When it is finalised, presumably it is a bit like when there was a proper "Gold Standard" supporting currencies

"Fixed" supply of gold and no messing around with printing paper money

Fixed in the sense that if you wanted some more you had to "mine" it but it could be controlled by Governments

Until some smart "geek" comes along and fiddles the system ……… or should I say "banker"

IMHO very doggy and a problem for the future if it continues to "take off"
 
Just sold what I mined a while back for a few hundred quid.

It's stabilised in value since the crazy bubble period. Stability is leading to more uptake. The basic principle of Bitcoin is an open transaction processing network that is not controlled by any one entity (I.e. banks). Very cheap way of transferring money internationally if you get a good fx rate at each end.

FWIW I don't think it will last. The energy consumed to mine (which effectively powers the network) is a terrible waste.not to mention the block chain (which every bit coin wallet needs) is over 22GB already.
 
I do not understand WHY a bitcoin is worth anything at all. What is it about a bitcoin which makes it valuable.
If I trade in gold, silver, platinum or diamonds, then I know that it is something tangible which has a value placed on it because of its rarity/usefulness. The same applies to trading in oil, coal and gas.
I also understand the financial basics of federal reserves, individual currencies and the World bank - but I cannot even begin to understand why a bitcoin has any value.
 
andy700 said:
I do not understand WHY a bitcoin is worth anything at all. What is it about a bitcoin which makes it valuable.
If I trade in gold, silver, platinum or diamonds, then I know that it is something tangible which has a value placed on it because of its rarity/usefulness. The same applies to trading in oil, coal and gas.
I also understand the financial basics of federal reserves, individual currencies and the World bank - but I cannot even begin to understand why a bitcoin has any value.
Click to expand...

Totally agree - it is strange, by maybe I'm just too old!!

(I cannot get out of my mind that it must be a big "con")
 
andy700 said:
I do not understand WHY a bitcoin is worth anything at all. What is it about a bitcoin which makes it valuable.
If I trade in gold, silver, platinum or diamonds, then I know that it is something tangible which has a value placed on it because of its rarity/usefulness. The same applies to trading in oil, coal and gas.
I also understand the financial basics of federal reserves, individual currencies and the World bank - but I cannot even begin to understand why a bitcoin has any value.
Click to expand...
Yeah you are right that it has no intrinsic, it's valuable because people want to use it because of it being anonymous and outside of any jurisdiction. Don't forget that currencies like the pound sterling are no longer linked to gold reserves (or anything with a physical worth), one difference with bit coin is that there is a definite and finite number of them - there won't be any bit coin quantative easing!
 
BillN_33 said:
Totally agree - it is strange, by maybe I'm just too old!!

(I cannot get out of my mind that it must be a big "con")
Click to expand...
I think the same thing that it seems like a con, there are regular comparisons to the Dutch tulip scenario which is an interesting bit of history I didn't know until recently.
 
mid_gen said:
Just sold what I mined a while back for a few hundred quid.

It's stabilised in value since the crazy bubble period. Stability is leading to more uptake. The basic principle of Bitcoin is an open transaction processing network that is not controlled by any one entity (I.e. banks). Very cheap way of transferring money internationally if you get a good fx rate at each end.

FWIW I don't think it will last. The energy consumed to mine (which effectively powers the network) is a terrible waste.not to mention the block chain (which every bit coin wallet needs) is over 22GB already.
Click to expand...

I've got a friend who's built himself a bitcoin mine in the cellar, he's looking at ways of piping the heat round the house now, reckons it could save a fortune in heating bills.
 
Steep said:
I've got a friend who's built himself a bitcoin mine in the cellar, he's looking at ways of piping the heat round the house now, reckons it could save a fortune in heating bills.
Click to expand...

In September?
 
"Winter is Coming"
 
Steep said:
I've got a friend who's built himself a bitcoin mine in the cellar, he's looking at ways of piping the heat round the house now, reckons it could save a fortune in heating bills.
Click to expand...

The problem with bitcoin mining is that it's an arms race. Any mining hardware you buy one day will be worthless in a few months once the difficulty increases.
 
The biggest problem which I can see about Bitcoin, is that it is not regulated and the person who dreamed (Nakamoto) it up does not even use his real name.
The hardware to mine the Bitcoins seems to be selling at around £4500 a time at the moment, so I reckon Nakamoto may have introduced all this stuff himself.
 
andy700 said:
The biggest problem which I can see about Bitcoin, is that it is not regulated and the person who dreamed (Nakamoto) it up does not even use his real name.
The hardware to mine the Bitcoins seems to be selling at around £4500 a time at the moment, so I reckon Nakamoto may have introduced all this stuff himself.
Click to expand...

He has nothing to do with the hardware, he just came up with the original concept and algorithms required to make it work. He also holds hundreds of millions of dollars of Bitcoin. I'll try and explain how it works...there are two types of people involved in Bitcoin. All users are constantly connected to each other in a P2P network (like torrents).

1) Users, people with Bitcoin wallets, making transactions, buying selling etc. Transactions are spread out across the network.

2) Miners, people running hardware that is solving difficult algorithmic problems, the result of which is a 'proof of work'. It's this number-crunching which validates the transactions people are making. In return for running this electricity hungry hardware, miners are rewarded with a new block of 50 BitCoin every 10 minutes. Obviously, free money for running a computer is appealing, so *lots* of people are buying and running mining hardware. To compensate for this, the difficulty of the mining algorithms is automatically adjusted to ensure a new block is generated every 10 minutes.
 
mid_gen said:
He has nothing to do with the hardware, he just came up with the original concept and algorithms required to make it work. He also holds hundreds of millions of dollars of Bitcoin. I'll try and explain how it works...there are two types of people involved in Bitcoin. All users are constantly connected to each other in a P2P network (like torrents).

1) Users, people with Bitcoin wallets, making transactions, buying selling etc. Transactions are spread out across the network.

2) Miners, people running hardware that is solving difficult algorithmic problems, the result of which is a 'proof of work'. It's this number-crunching which validates the transactions people are making. In return for running this electricity hungry hardware, miners are rewarded with a new block of 50 BitCoin every 10 minutes. Obviously, free money for running a computer is appealing, so *lots* of people are buying and running mining hardware. To compensate for this, the difficulty of the mining algorithms is automatically adjusted to ensure a new block is generated every 10 minutes.
Click to expand...

But if I run my computer for hours and hours, it just wastes electricity, it does not create wealth …….. if anything it destroys wealth as it uses up resources without any output

If I run a machine to dig for coal or minerals …… the value I get from what I mine is greater than the cost of mining it, hopefully, so value has been added

I reckon that it is popular only because it can be used as a medium of exchange for what would otherwise be illegal transactions ….. so one day the circle will have to stop

But I do not know much about economics and these guys who are making money from it are far clever than I will ever be …. as was Ponzi until he got caught
 
You must log in or register to reply here.
Back
Top