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Bitcoin Mining Reward About To Halve

samzenpus posted about a year and a half ago | from the wage-reduction dept.

Bitcoin 600

First time accepted submitter ASDFnz writes "The reward for successfully completing a block (also called mining) is about to halve from 50 bitcoins to 25. From the article: 'Bitcoin is built so that this reward is halved every 210,000 blocks solved. The idea is as bitcoin grows the transaction fees become the main part of the reward and the introduction of new bitcoins slows down to a trickle. This also means that there will only ever be 21,000,000 bitcoins in circulation.' You can watch the countdown here."

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600 comments

Quick, calculate me another way to profit. (5, Funny)

Anonymous Coward | about a year and a half ago | (#42089897)

My parents won't let me mooch off their electricty forever.

Re:Quick, calculate me another way to profit. (2, Informative)

Anonymous Coward | about a year and a half ago | (#42089971)

You can get them for free at http://www.bitvisitor.com

Online advertising is just one of many industries that bitcoin is disrupting. (Bitcoin is perfect for such micro-transactions).

Quick find all the people that care (0, Troll)

Anonymous Coward | about a year and a half ago | (#42089995)

and get them to exchange their gold and silver (actual resources with actual industrial use and hence value) so they can use this crappy fisherprice currency supported by grown up fisherprice playing spineless virtual beings.

Re:Quick find all the people that care (1, Insightful)

Anonymous Coward | about a year and a half ago | (#42090163)

Gold isn't that rare, they drag more of it out of the ground everyday. There is a max of 21,000,000 bitcoins. Enjoy your inflationary yellow rocks, chump.

Re:Quick find all the people that care (5, Informative)

Anonymous Coward | about a year and a half ago | (#42090201)

Gold has actual mechanical uses (electrical contacts.) It also has bauble value.

BitCoins have zero intrinsic value, and they require electric and Internet connectivity to be used. Gold requires a civilization level just a step above pure anarchy to be useful.

IMHO, it is sort of suspicious that there is this ramp where early adopters get these bonuses, and people hopping on late end up having to put a lot more resources in for the same coins... that combined with the value of the currency going up/down in insane swings, makes it useless as anything other than a novelty.

Re:Quick find all the people that care (3, Insightful)

wmbetts (1306001) | about a year and a half ago | (#42090225)

Gold is even useful in a real anarchistic society.

Re:Quick, calculate me another way to profit. (4, Informative)

cultiv8 (1660093) | about a year and a half ago | (#42090177)

So rent an apartment where electricity is included; most rental agreements don't have anything that specifically forbids bitcoin mining.

Bitcoins built-in failure (1, Troll)

girlintraining (1395911) | about a year and a half ago | (#42089899)

If there's only 21 million bitcoins that can be made, then if a lot of people started using them, they'd have to share them. There's something to be said for currency that has a indivisible limit -- for example, the smallest unit of currency in the US is the penny, though everything is typically counted in dollars. But while bitcoins can be divided, it adds a lot of complexity to the system and extra tracking and auditing. And it's main feature, anonymity, isn't really all that anonymous -- cash has serial numbers but there's no log of transactions built into the dollar. Bitcoins require that transaction log. In a lot of ways, it's about as anonymous as using a credit card.

Re:Bitcoins built-in failure (0)

Anonymous Coward | about a year and a half ago | (#42089943)

Read up on Bitcoin a little bit. You're misinformed about how it works, so it may seem to you like there's nothing anonymous about it at all. You need to do more than just use bitcoins.

Re:Bitcoins built-in failure (5, Informative)

francium de neobie (590783) | about a year and a half ago | (#42089959)

A BitCoin can be divided up into 8 decimal digits. So one BitCoin contains 1 billion discrete units that can be used for transactions.

Re:Bitcoins built-in failure (2)

francium de neobie (590783) | about a year and a half ago | (#42090029)

Correction: It should be 0.1 billion, or 100 million discrete units, for each BitCoin. Anyway, it's enough granularity for most practical purposes.

Re:Bitcoins built-in failure (3, Insightful)

betterunixthanunix (980855) | about a year and a half ago | (#42090061)

So what you are saying is, if I happen to have some Bitcoin units, I should hang on to them as long as possible, because eventually people will have divided Bitcoin units up to the point where the handful I saved up will be worth a fortune? Sounds like a great currency (except for the whole "this is going to fail" part)!

Oh God No... (5, Funny)

hawks5999 (588198) | about a year and a half ago | (#42090077)

Get rid of them now. I suggest you send any bitcoins you have to this wallet address: 1AeCTNhF3Sovi8fkjq7Buy8sYoc2C4xoo4

Re:Bitcoins built-in failure (5, Insightful)

LordLucless (582312) | about a year and a half ago | (#42090137)

Yep. That's a feature of any currency without inflation, and why inflation is actually a good thing. It discourages hoarding. Neutral or deflationary currencies are only good for the people who already have a lot of them.

Re:Bitcoins built-in failure (1, Insightful)

VortexCortex (1117377) | about a year and a half ago | (#42090227)

Neutral or deflationary currencies are only good for the people who already have a lot of them.

Nope. You think I use US currency because I like it? Because I think it has value over any other currency? Nope. It's because that's what I get paid in, its the money they accept at the stores I go to. I put it to you that no matter what price it's trading at, if I want to exchange money into Bitcoin I'll be able to. Why would I do such a thing? Because it's the currency that some people accept, and it has far less transaction fee than a wire transfer. You think I wouldn't just use USD for that if I could? You see, I just showed you that this deflationary currency is good for even people who only have few of them. Your move.

Re:Bitcoins built-in failure (1, Insightful)

LordLucless (582312) | about a year and a half ago | (#42090257)

You see, I just showed you that this deflationary currency is good for even people who only have few of them.

What you posted has nothing to do with what I posted, and you showed nothing. Your logic does not resemble our earth logic.

Re:Bitcoins built-in failure (2)

loneDreamer (1502073) | about a year and a half ago | (#42090351)

Depends if you consider "hoarding" to be a bad thing in itself. Some of us just call it "saving". Such a currency would put a break at the constant need to invest in stocks and other stuff, as well as the need for governments to promote savings/insurance/retirement artificially. It would diminish the risk and eliminate a lot of compulsive consumption (better spend it right now in any way than to loose it to inflation right?).

I'm not saying that you are wrong though, just saying, that every coin has two sides, and bit-coins seem no exception.

Re:Bitcoins built-in failure (1)

TheGavster (774657) | about a year and a half ago | (#42090383)

The OP's point is actually a misunderstanding of how the division works. The Keysian notion that spending in excess of tax revenue will cause goods and services to magically emerge from the ether in perfect proportion to demand doesn't enter into it (in reality, the effect of inflation is just a wealth tax on savings that is difficult both for a government to accurately set and for savers to predict, both largely due to the political idiocy present in any non-theoretical government).

Re:Bitcoins built-in failure (0)

Anonymous Coward | about a year and a half ago | (#42090289)

How could this even be a sustainable currency with only 21,000,000 units in circulation at a time. Couldn't more people than this use this currency? It is a straight up pyramid scheme, benefiting primarily those that created it.

Re:Bitcoins built-in failure (0)

Anonymous Coward | about a year and a half ago | (#42090327)

2.1 quadrillion units.

Re:Bitcoins built-in failure (1)

fustakrakich (1673220) | about a year and a half ago | (#42089983)

Yeah, it looks like we'll never get a true P2P, online/offline, anonymous system that uses regular currency. Bitcoin is a half-assed effort. Better to just use prepaid credit cards, and barter when it's convenient.

Re:Bitcoins built-in failure (4, Interesting)

Kjella (173770) | about a year and a half ago | (#42090125)

1) One BitCoin and one account is as good as the other, so you can swap them outside the system. I can send you 100 BTC from my account A to your account B, then get back 50, 25 and 25 BTC back randomly delayed from your other account C to my other account D. Sure, all the transactions are public record but there's no link between the 100 BTC I used to have in A and the 100 BTC I have now in D. Only the swapping service could possibly link those transactions together.
2) If you can both acquire and spend your money anonymously then the transactions are meaningless, say you do anonymous rent-a-coder work for BTC and use those BTC to pay for web hosting that you only access anonymously. That's the essence of a currency right there, you can make money for doing work and then spend it on what you choose. Yes if any point you're tied to an identity they can try rolling transactions both forwards and backwards to see where you got money from and what you spent money on.

That's not really one of the problems with BitCoins, the main reason is exactly this that the supply is diminishing. Hoarding old coins from when they were easy to make only seems like a better and better idea, unless of course the BitCoin economy collapses because everyone's hoarding. I bet a lot of the people that offer services for BitCoin are the same as those hoarding large BTC reserves, the pyramid game only works if they can sucker more people to join in.

Re:Bitcoins built-in failure (0)

Anonymous Coward | about a year and a half ago | (#42090133)

Wrong:

BitCoin
bItcoin
BitcoIn
BitcoiN

Right:

Bitcoin

Re:Bitcoins built-in failure (-1, Flamebait)

AK Marc (707885) | about a year and a half ago | (#42090283)

What about BitCon?

Seems like the limit is too low for a viable (0)

Anonymous Coward | about a year and a half ago | (#42089903)

currency.

That not even one bitcoin per person in the world, or even many countries.

Re:Seems like the limit is too low for a viable (5, Informative)

Wonko the Sane (25252) | about a year and a half ago | (#42089957)

Yea it's too bad nobody ever though of that or else they might have made sure each one is divisible to eight decimal places or something.

Re:Seems like the limit is too low for a viable (1)

hawks5999 (588198) | about a year and a half ago | (#42089967)

Each coin is divisible to 8 decimal places. There's 21 trillion coins if you leave the last two decimal places for "cents" function. If we don't have "cents" there are 2.1 quadrillion units.

Re:Seems like the limit is too low for a viable (1)

joelpt (21056) | about a year and a half ago | (#42090309)

Also, they're just floating-point numbers. Should the need arise they could be subdivided indefinitely with only minor alterations to the existing Bitcoin protocol.

Re:Seems like the limit is too low for a viable (1)

AK Marc (707885) | about a year and a half ago | (#42090369)

No, that doesn't change the number of bitcoins. You might as well be saying that there are enough US pennies on the planet for everyone to share because if you run out, you can divide the last few into 1,000,000,000 pieces. Sure, you could, but it is less than one per person, the initial complaint.

It's much like the psychology behind stock splits. As stock splits aren't based in economics (Apple at $571 isn't different than 5 shares at $571/5).

first post (-1)

Anonymous Coward | about a year and a half ago | (#42089911)

first post

Austrian economics (4, Interesting)

dytin (517293) | about a year and a half ago | (#42089913)

Bitcoin is the greatest real-world experiment in Austrian economics [wikipedia.org] . For once we'll get to actually see if a "deflationary spiral" will actually occur when the rate of money creation slows, or if the Keyensians were just full of it. Whether bitcoin actually succeeds or not, we'll at least get some really good data.

Re:Austrian economics (4, Interesting)

Dast (10275) | about a year and a half ago | (#42090011)

Sounds questionable to me. Going by the definition on wikipedia:

"A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price.

If nobody is really pricing goods in bitcoins and nobody is getting paid in bitcoins, how could the feedback cycle that would normally cause a deflationary spiral exist? Even if bitcoins deflate massively, I don't think that necessarily proves the Keyensians right.

Re:Austrian economics (1)

Anonymous Coward | about a year and a half ago | (#42090175)

Great point. Things can be bought and sold in Bitcoin, but the prices tend to be anchored loosely around the local currency to Bitcoin conversion rate.

Re:Austrian economics (0)

Anonymous Coward | about a year and a half ago | (#42090043)

For once we'll get to actually see if a "deflationary spiral" will actually occur when the rate of money creation slows, or if the Keyensians were just full of it. Whether bitcoin actually succeeds or not, we'll at least get some really good data.

Only if people start using it for real transactions. What problem does it solve for normal people?

Re:Austrian economics (1)

hawks5999 (588198) | about a year and a half ago | (#42090059)

Wordpress.com hosting isn't a real transaction?

Re:Austrian economics (2)

MMC Monster (602931) | about a year and a half ago | (#42090079)

Not for most people.

Call me when I can pay for my Amazon.com cart (or other physical items from a well known store) in bitcoins.

Re:Austrian economics (0)

Anonymous Coward | about a year and a half ago | (#42090343)

Call me when I can pay for my True Scotsman.

Re:Austrian economics (1)

Wonko the Sane (25252) | about a year and a half ago | (#42090065)

What problem does it solve for normal people?

It allows them to escape from this [dailywealth.com] . It removes the possibility that a third party can enforce rules about what they are and are not allowed to do with their money.

Re:Austrian economics (2)

dadioflex (854298) | about a year and a half ago | (#42090193)

You're conflating economies and currencies there. Also, there's nothing stopping a "third party" Government ruling that bitcoin is illegal. It's largely off the legislative table the same way it's off most people's radar. Once it gets noticed it could easily get put up on the same shelf as file-sharing and hacking. Or if you prefer a historical example it could be made illegal the exact same way gold-hoarding has been declared illegal in the past. What? Who would do anything so tyrannical as forbid the possession of more than a small amount of gold? USA, baby [wikipedia.org]

And this is not even considering how vulnerable to exchange rates an artificial currency is. Like banks which exist on collective goodwill, fairy dust and rainbows, an artificial currency has nothing backing it. Faith in a real currency is, to an extent, faith in the actual country backing that currency. Real currencies can collapse when the economic situation in the issuing country enters crisis, whereas an artificial currency is going to be an order of magnitude more vulnerable to rumours and sentiment. An actual effective hack of the peer to peer system will render Bitcoin valueless.

Re:Austrian economics (1)

Wonko the Sane (25252) | about a year and a half ago | (#42090231)

Government ruling that bitcoin is illegal.

Did you not notice the fact that right now, at this very moment, the average person in Argentina doesn't give a shit about what their government says is illegal and actively ignores and works around every law implementing currency controls?

That's what happens when a national currency fails.

Additionally (5, Interesting)

betterunixthanunix (980855) | about a year and a half ago | (#42090075)

Bitcoin will let us see if money is something that can truly exist without government, or if the anarchists were full of it. Bitcoin's success or failure will almost certainly tell us more about this than about deflationary spirals.

Re:Additionally (2, Interesting)

Wonko the Sane (25252) | about a year and a half ago | (#42090097)

I think it will tell us that even in the most optimistic scenerio where Bitcoin achieves 100% market penetration, some people will go to their graves insisting that it won't work, isn't really money, and is all just a ponzi scheme.

Re:Additionally (1)

Anonymous Coward | about a year and a half ago | (#42090217)

Well, it has some ways to go given that right now it has zero market penetration.

I live in a city of half a million people. I recon there is not a single store in the entire city that accepts bitcoins. Neither can I do any of my online shopping with it, such as use it at Newegg or Amazon.com, nor can I use it to pay my utility bills.

Wake me up when, say, 1% of the world's vendors accept it. Until then, it might as well not even exist.

Re:Additionally (1)

PCM2 (4486) | about a year and a half ago | (#42090303)

True story: I have some friends who operate a retail store that sells pricey imported bicycles. The bikes there go from around $1,300 to upwards of $4,000. One day, a guy walked in off the street, expressed some interest in buying a bike, but explained (long story short) that he was one of these "fiat currency" nuts and he didn't like to do business in U.S. dollars. Instead, he proposed to buy a bike using a certain amount of pure gold, and he took a little gold bar out of his pocket for proof.

My friends declined. It seems that, to them at least, the so-called fiat currency actually has more value than gold.

I'm not sure what the guy with the gold might have been up to, exactly. Maybe he really did think he could go around using gold as currency. Maybe he was a swindler. It would be a lot more interesting if it was all part of some long experiment he was conducting and he planned to publish his results, though.

Re:Additionally (5, Insightful)

PCM2 (4486) | about a year and a half ago | (#42090273)

I think it will tell us that even in the most optimistic scenerio where Bitcoin achieves 100% market penetration, some people will go to their graves insisting that it won't work, isn't really money, and is all just a ponzi scheme.

Conversely, if Bitcoin is around for 100 years and nobody but a handful of extreme-right libertarians thinks it's worth so much as a wooden nickel, we will have learned empirically that some people will always go to their graves still wishing for a pony.

Re:Austrian economics (1)

Alomex (148003) | about a year and a half ago | (#42090093)

Actually bitcoin claims that they are not a good test case for a deflationary spiral. Have a look at what they have to say about it/a>. [bitcoin.it]

Not necessarily (1)

cultiv8 (1660093) | about a year and a half ago | (#42090123)

If you believe the mhash/s speeds of (yet to be released) ASIC hardware [bitcoin.it] , as well as decentralized P2Pool mining [bitcoin.it] , then you'll need to factor in the effect of disruptive technologies on "deflationary spirals". Bitcoin mining was something I was recently evaluating and decided against after researching [bitcoinx.com] and factoring in the effects of profitability decline per year on revenue, especially if ASIC hardware delivers as specced.

Re:Austrian economics (0)

Anonymous Coward | about a year and a half ago | (#42090239)

except that "austrian economics" is a political theory not an economic one, carrying about at much weight with actual economists as creationism does with geologists and biologists

Re:Austrian economics (0)

Anonymous Coward | about a year and a half ago | (#42090241)

Austrian economics is about as realistic as Marxist economics. Grow up, get an education, and stop listening to wacko cranks.

Re: Austrian economics (0)

Anonymous Coward | about a year and a half ago | (#42090247)

Many Austrian economists are skeptical of bitcoins. Unlike gold or seashells, which can be used for jewelry, a bitcoin cannot be employed for anything but exchanging. It has no path to becoming money according to Von Mises's regression theorem.

Re:Austrian economics (1)

Kergan (780543) | about a year and a half ago | (#42090249)

What you'd theoretically end up having, bitcoin or not, with an absolutely fixed amount of money and credit in circulation, is deflation if the population grows. The operating word here is money and credit.

The real question is whether bitcoin will get an kind of banking system from this or that point forward. If not, then deflation it will be, because more goods will be chasing less money; if so, then expect booms and busts like with any other fiat money, because bankers will be creating and destroying money in cycles.

Re:Austrian economics (2)

jdavidb (449077) | about a year and a half ago | (#42090297)

From what I understand, most Austrian economists dismiss bitcoin because according to Austrian economics, currency must arise from something that is originally useful in the market for purposes besides money. And Austrian economists don't teach that deflationary spirals don't occur; instead what I've heard is that they believe that deflation is not a bad thing.

I'd like to see bitcoin adapted to represent trading units of gold or something else, issued by multiple competing sources and redeemable from the original issuing source. I think that would be a better test of Austrian economic principles.

Re:Austrian economics (0)

Anonymous Coward | about a year and a half ago | (#42090317)

Bitcoin could fail because fails to become liquid enough for widespread acceptance, which would settle nothing between Mises and Keynes.

333.3333... people for every coin (1)

Anonymous Coward | about a year and a half ago | (#42089915)

At 7 billion people, there exists 333 and 1/3rd people for every possible bitcoin.

People say.. well, you can use thouandths of a bitcoin, but is that really enough?

The current estimated wealth of the world is US$200 trillion. To get bitcoins down to dollar granularity, you would need to use 10 millionths of a bitcoin.

Re:333.3333... people for every coin (1)

Anonymous Coward | about a year and a half ago | (#42090019)

The smallest unit in bitcoins is 10^-8.

If bitcoins are wildly successful and replace all the currencies of the entire world 1 USD ~= 10.5 * 10^-8

So you'd have the equivalent of getting rid of the penny and nickle.

Doesn't sound so bad...

Re: 333.3333... people for every coin (0)

Anonymous Coward | about a year and a half ago | (#42090381)

It does not matter if a bitcoin is too unwieldy for ordinary transactions. All you need is an entity such as a government to issue token money comprising smaller units that can be exchanged for bitcoins. With bitcoins, there are much bigger problems to worry about than granularity. For example, adoption.

Re:333.3333... people for every coin (1)

dadioflex (854298) | about a year and a half ago | (#42090205)

If the Bitcoin economy approaches anything like a fraction of the GDP of Somalia then we're in trouble. I don't think lack of Bitcoin is going to be a major headache in the grand scheme of things.

ugh only 21 million? (0)

ThorGod (456163) | about a year and a half ago | (#42089919)

Seriously? And how was this sold as a currency?

Re:ugh only 21 million? (-1, Troll)

viperidaenz (2515578) | about a year and a half ago | (#42089933)

Wasn't it sold as an alternative to *@Home projects?
How to burn CPU/GPU time: SETI@Home, Folding@Home, BitCoin mining.
The difference is BitCoins are pretty much useless, while the others are processing real data in an attempt to benefit society.

Re:ugh only 21 million? (1, Insightful)

betterunixthanunix (980855) | about a year and a half ago | (#42090101)

How on Earth does SETI@Home benefit society? Even if by some bizarre coincidence, we actually detected evidence of intelligent life outside of the solar system, the likelihood that society would benefit by that is basically nil.

Re:ugh only 21 million? (1)

viperidaenz (2515578) | about a year and a half ago | (#42090173)

Still infinitely more beneficial than bitcoins.

Re:ugh only 21 million? (1)

msauve (701917) | about a year and a half ago | (#42089945)

What's the problem, never learned division or fractions in school?

Re:ugh only 21 million? (0)

Anonymous Coward | about a year and a half ago | (#42089981)

Perfect, no more billionaires!

Re:ugh only 21 million? (1)

dadioflex (854298) | about a year and a half ago | (#42090209)

Yeah. A 1%er will be someone with 1% of a whole Bitcoin.

Anarchists (3, Informative)

betterunixthanunix (980855) | about a year and a half ago | (#42090087)

Here's the highest-level view possible: a bunch of anarchists thought that an interesting cryptographic trick would let them have money without government, and then a bunch of opportunists realized that they could scam people with Bitcoin much in the same way that bankers scam people with unusual investments.

Re:Anarchists (0)

Anonymous Coward | about a year and a half ago | (#42090229)

There's a big difference between anarchism and crypto-anarchism. Wikipedia can fill you in.

who cares? (1)

Jailbrekr (73837) | about a year and a half ago | (#42089925)

Oh no, the bitcoin ponzi schemes will have to double their reward in order to be viable!

Apart from silk road, bitcoins have practically zero value in the vast majority of financial transactions, so why do we care about this?

Re:who cares? (1)

msauve (701917) | about a year and a half ago | (#42090027)

bitcoins have practically zero value in the vast majority of financial transactions

Gold has practically no value in the vast majority of transactions (try paying for goods at Target with a chunk of gold). Ditto oil, corn, FCOJ, pork bellies or many other things with recognized value. That's why currencies developed, to serve as a proxy for value. Whether bitcoins will become widely recognized is yet to be see, but they can be traded for hard currency just like the items mentioned above, so they do have recognized value.

so why do we care about this?

Are you using the royal "we" (I don't care if you care - but why did you expand the topic and take the time to post), or are you professing to speak for all /.ers (you don't).

Re:who cares? (5, Interesting)

Teppy (105859) | about a year and a half ago | (#42090071)

They're being used quite a bit for online gambling because they allow for instant deposits, instant withdrawals, zero risk of charge-back, and for some online casinos, provably fair wagering.

Re:who cares? (4, Interesting)

Wonko the Sane (25252) | about a year and a half ago | (#42090085)

There are also a few VPS and VPN providers who accept bitcoins for the same reasons, and because now they can sell their services to customers anywhere in the world without being limtited by the legacy banking system's inability to process payments from certain places.

Re:who cares? (3, Insightful)

Anonymous Coward | about a year and a half ago | (#42090219)

Apart from silk road, bitcoins have practically zero value in the vast majority of financial transactions

"Apart from the types of situations that it's useful in, it's not useful in any situations."

only ever be 21,000,000 bitcoins (0)

Anonymous Coward | about a year and a half ago | (#42089939)

Am I the only one that has a problem with this syntax?

Re:only ever be 21,000,000 bitcoins (1)

joelpt (21056) | about a year and a half ago | (#42090357)

They are just numbers. Bitcoins could therefore be subdivided as small as is reasonable or required for actual usage. For example, the main Bitcoin client currently allows you to display bitcoin figures in BTC, mBTC (1/1000 BTC), or BTC (1/1000000 BTC).

I believe the current Bitcoin protocol supports subdivisions up to 8 decimal places. Apparently this can be extended further with minor alterations to the existing Bitcoin protocol.

Re:only ever be 21,000,000 bitcoins (1)

joelpt (21056) | about a year and a half ago | (#42090375)

Sorry that should have read (nano)BTC (1/1000000 BTC) -- Slashdot ate my unicode character.

What does it calculate? (0)

Anonymous Coward | about a year and a half ago | (#42089955)

Can someone explain me what kind of calculation is done by BitCoin client in the process of "mining"? I have yet to find this information or receive an answer anywhere on the web.

If this is just abstract algorithm solving with no purpose whatsoever, I'd say that in terms of real world economy bitcoins are utterly worthless.

Re:What does it calculate? (2, Funny)

Anonymous Coward | about a year and a half ago | (#42089975)

The answer was cleverly hidden on their public wiki, the last place anyone would ever think to look!

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

Re:What does it calculate? (0)

Anonymous Coward | about a year and a half ago | (#42089987)

It was my understanding that the calculation being performed was somehow relevant to the encryption and decryption of transactions being made with bitcoins.

Re:What does it calculate? (1)

hawks5999 (588198) | about a year and a half ago | (#42089989)

It's validating transactions in the block.

Re:What does it calculate? (4, Informative)

ais523 (1172701) | about a year and a half ago | (#42089999)

It's a proof-of-work calculation that records a transaction history. Basically, it's to prevent double-spending; if someone attempts to transfer the same bitcoin to two different people, the person who gets it is the person who had more computational effort go into recording them as having it. If the amount of computational effort in recording transaction histories were low enough, someone could double-spend by recording an alternative history on a powerful computer and having it supersede the transaction history everyone thought they were using.

In order to encourage people to put effort into recording the history, there's a reward for doing so. This lead (perhaps predictably) to "mining", where people race to record the transaction history first in order to get the reward.

So there is a purpose to mining, but it's only to keep the Bitcoin system itself running. If people stopped mining (perhaps because the reward got low enough), Bitcoin would collapse. (It's envisaged that once the mining reward gets low enough, people transferring bitcoins will pay a transfer fee to the miners to encourage them to keep mining, and they'd get their income that way instead.)

Re:What does it calculate? (1)

Agent ME (1411269) | about a year and a half ago | (#42090259)

Is the money that spends on its own infrastructure utterly worthless when similar services already exist?

If not, then why is bitcoin's mining process (which maintains the security of the blockchain) utterly worthless?

Re:What does it calculate? (1)

Agent ME (1411269) | about a year and a half ago | (#42090261)

... efff, the reply system ate a word because I surrounded it with greater than and less than symbols for emphasis. Let's try this again:

Is the money that *random commerce company* spends on its own infrastructure utterly worthless ...

Whoops (1)

Enry (630) | about a year and a half ago | (#42089977)

I think I mined part of a bitcoin then lost the files I used to generate them. Does that mean they're permanently out of circulation? How do they handle such a situation?

Re:Whoops (3, Informative)

Wonko the Sane (25252) | about a year and a half ago | (#42089993)

How do they handle such a situation?

It's the same as setting cash on fire. If you lost your private keys the unspent outputs they control can never be spent.

Re:Whoops (1)

Anonymous Coward | about a year and a half ago | (#42090207)

This is how the government will kill bitcoin. Buy them all (at tax payer expense) and then throw away the key. I mean how much would it cost to buy all 21,000,000 bitcoins right now? Probably less than a month in Afghanistan.

Re:Whoops (0)

Anonymous Coward | about a year and a half ago | (#42090299)

If a great enough number of bitcoins are lost the algorithm could be changed by simply updating greater than 50% of the mining pool to a new algorithm that allows larger block rewards, delays the halving of the reward or increases the divisibilty of bitcoins by allowing more decimal places (which would mean changing some other things such as the block size and so on)

Of course the mining pool suffers from a massive case of the prisoner's dilemma and the community suffers heavily from the Dunning-Kruger effect so it'll never happen.

Re:Whoops (0)

Anonymous Coward | about a year and a half ago | (#42090307)

This assumes everyone will sell to them.

Also - whatever FUD is used to justify the takedown will be applied by proxy to the legislators -

e.g.: "Congress gives billyuns to Tearrists!"

Re:Whoops (1)

tehniobium (1042240) | about a year and a half ago | (#42090355)

Two things:

Firstly, if they try to do this, the price of bitcoins will rise wildly as they do so (they cant buy them all at once, and as more bitcoins are taken out of circulation, they will presumably become more valuable). This means that everyone who has bitcoins will make money - nothing lost as far as i can tell.

Secondly, what's to prevent a second issuing - say "Bitcoin 2.0" - from occuring, and the whole thing from starting over? The technology still works, and all that would need to happen would be an announcement on the bitcoin website. I'm pretty sure the government would be concerned about this if they are going to pump a whole load of cash into buying all of them.

Re:Whoops (1)

hawks5999 (588198) | about a year and a half ago | (#42090009)

If you lose them they are out of circulation. It is likely we will never have 21 million BTC in circulation due to loss.

Re:Whoops (1)

Vahokif (1292866) | about a year and a half ago | (#42090015)

It's pretty bad in the long term, according to this guy [youtu.be] from last year's Chaos Communication Congress.

Re:Whoops (0)

Anonymous Coward | about a year and a half ago | (#42090311)

They are out of circulation until the cryptographic method currently used is broken enough (maybe many decades from now if/when decent quantum computers are developed) for the addresses to be cracked and cleaned out.

It can be argued that losing coins presents a problem. Of course, when some coins are lost, remaining coins become more valuable and are likely to be better protected and distributed, but granularity is lost. If we assume that the divisibility of a single coin is fixed (currently 8 decimal places) and a fixed percentage of bitcoins are lost every year we see an unforgiving exponential decay reduce us to a single tradable unit (currently the "satoshi") in a matter of decades. However, it seems likely that if Bitcoin reaches the point where the smallest tradable unit is too large for many purposes then enough pressure will amass (forgive my mixed units) to increase the divisibilty.

I can't answer "How do they handle such a situation" because the "they" is a sizable and growing internet community and, to my knowledge, such a thing has never been challenged with a task quite like this.

Re:Whoops (1)

Wonko the Sane (25252) | about a year and a half ago | (#42090341)

If the loss of granularity ever becomes a problem it could be change by updating the protocol to allow for more divisibility. It's not likely that a majority of users will agree to any other change, like increasing the block reward. People who are adopting bitcoin are doing so precisely because of its feature of not having unlimited issuance. If enough people are using bitcoin such that divisibility is a problem they aren't likely to want to go back to the current status quo.

F Bitcoin (-1)

Anonymous Coward | about a year and a half ago | (#42090035)

F Bitcoin

I'm a Happy Camper (5, Interesting)

johnnysmith2012 (2781279) | about a year and a half ago | (#42090139)

Since now they girls doing video clips for bitcoins! http://www.videos4btc.info/ [videos4btc.info]

Re:I'm a Happy Camper (-1)

Anonymous Coward | about a year and a half ago | (#42090293)

How many bitcoins for a hot asian chick with a shaved pussy to shit into my mouth?

I wonder... (4, Interesting)

fuzzyfuzzyfungus (1223518) | about a year and a half ago | (#42090145)

I'm no crypto expert; but it was my layman's understanding that the bitcoin setup is(barring presently unknown attacks) unforgeable; but that there is nothing particularly special about the "Genesis block" [bitcoin.it] at the beginning of the bitcoin block chain, aside from mutual acceptance of it.

Given that, while it is not possible to forge a bitcoin or to produce more than 21,000,000 of them, it should be possible for anybody who feels like it to simply define a new Genesis block and go hashing merrily away. The products of this block chain will be distinguishable from the products of any other block chain; but user convention could assign them value in exactly the same way as it did the old ones(or, more probably, they would trade at a discount against the 'original' bitcoins).

Any speculation on whether the people-who-care-about-bitcoins of the world are sufficiently rabid about some sort of deflationary theory of currency to prevent that, or will we start seeing N different distinct block chains trading between one another as well as select real world commodities?

Re:I wonder... (1)

Wonko the Sane (25252) | about a year and a half ago | (#42090165)

There are already several alternate blockchains, but almost nobody uses them.

Given the choice between holding currency that does not artificially devalue, and holding currency that does artificially devalue, who is going to choose the latter?

What about loss? (0)

Anonymous Coward | about a year and a half ago | (#42090211)

I confess to not understanding how it works too well, but what if I accumulate a bunch of bitcoins and then just lose all their details (ie, delete them, throw them away, whatever). Surely, as people lose, forget or just misplace them (and this happens with real money, too) this will lead to a number below 21,000,000 and eventually quite a lot fewer?

Re:What about loss? (1)

LodCrappo (705968) | about a year and a half ago | (#42090265)

losing a bitcoin works a lot like losing the paper bills used in some other currencies, although its easy (and perfectly fine) to copy or back up your bitcoin wallet, whereas most older systems frown on "backing up" paper currency.

the number will indeed go lower than 21 million due to loss. there are quite a few lost already, so I suppose there will never actually be 21 million in existence at once.
it doesn't make a real difference in the big picture. even if 99% of all bitcoins were lost, we'd only effectively be losing one decimal place.

Who cares, the mining game is over anyways. (5, Interesting)

Anonymous Coward | about a year and a half ago | (#42090251)

I used to be big on the BTC mining thing. These days, however, it just doesn't matter anymore.

I got into BTC fairly early, back when it was profitable to run the mining software on a single workstation to suck up unused cycles. At that time, it was actually profitable to invest in dedicated hardware to mine coins- so I (and a lot of other people) eventually did. My first dedicated rig was a HP ML350 G5, which set me back about $4000. It ran two 8 core processors and basically sat around all day mining bitcoins.

Later on when the GPU accelerated mining took off, I bought and built four systems from off the shelf components, and the ML350 was rededicated to running ESXi with a bunch of VMs for mining and managing the four slaves. Each slave had 3x ATI GPUs, later those were swapped out for NVidia GPUs for other various software reasons.

Then the FPGA (and later ASIC) players came into the game. It started with development boards (FPGA boards purchased direct from the chip manufacture), but later spiralled into custom FPGA boards in nice cases that you could stack or keep around on a metal shelving system easily enough. Now, the custom FPGA boxes for BTC mining basically put the GPU miners out of business- the introduction of FPGA hardware increased the BTC mining difficulty to the point that it was pointless wasting the power mining with anything other then.

The problem was that by the time the FPGA market exploded, it was *barely* worth investing in the hardware to get in that late in the game. Previously, buying a few PCs and loading them with GPUs was a cheap way to make some extra cash. FPGAs however cost a hell of a lot more and the difficulty of mining BTCs had increased so much that you would barely break even, and you'd be bloody lucky if you actually made any money in the end.

But FPGAs weren't good enough. People started thinking that they could build silicon to do things even faster, and thus the ASIC market started to emerge and take off. The problem here is that while an ASIC kicks the shit out of an FPGA (and anything that came before the FPGAs)- they're so expensive and the BTC difficulty has been bumped up so much by the initial ASIC wave and the FPGAs before it... That... Wait for it...

Investing in ANY form of ASICs to make **any** kind of reasonable money... Means that you'll never actually break even.

That's right, the ASICs they've got out there are so powerful and the BTC chain is becoming so difficult to mine, that if you invested $10K+ (which is what you'd have to spend) for a reasonable ASIC setup- you would never actually make any money. If your ASIC box is profitable, it won't be for long since the more ASIC miners join in on the party- the more difficult it becomes to mine BTCs.

So the whole system has kind of spiralled into nothing. Mining isn't profitable anymore. Even if you invest in serious hardware. It just doesn't matter anymore, and now that the "reward" for mining BTCs is about to halve- it's even more of a waste of time then it was before. You could have made money in the beginning if you were there, but if you weren't- it's not worth investing even a dollar into hardware to mine BTCs anymore. That train has long since departed.

BTC is basically just a currency now. Mining is vastly irrelevant and always will be, now that we've got FPGAs and ASICs flying around.

-AC

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