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Sinkhole Sucks Brains From Wasteful Bitcoin Mining Botnet

Unknown Lamer posted about 10 months ago | from the so-that's-why-the-computer-lit-on-fire dept.

Bitcoin 203

judgecorp writes "A sinkhole has taken a quarter of the bots out of the ZeroAcess botnet which was making money for its operators through click fraud and Bitcoin mining. This particular Bitcoin mining operation was only profitable through the use of stolen electricity — according to Symantec, which operated the sinkhole, ZeroAccess was using $561,000 of electricity a day on infected PCs, to generate about $2000 worth of Bitcoin."

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203 comments

RoI (3, Insightful)

Thanshin (1188877) | about 10 months ago | (#45000099)

" ZeroAccess was using $561,000 of electricity a day on infected PCs, to generate about $2000 worth of Bitcoin/"

Just as with government spending, the important the RoI must take into account the origin of each money input.

i.e.: The $2,000 must not be compared to the $561,000, but to the cost of developing/acquiring the botnet.

Re:RoI (5, Interesting)

Vintermann (400722) | about 10 months ago | (#45000165)

It would if we were interested in the botnet owner' profit margin. However, we're more interested in what costs the botnet owner impose on society in comparison to his private gains. Someone who would smash a $1000 computer to gain $1000 for himself is deemed less contemptible than the one would do it for $1 for himself.

Re:RoI (5, Interesting)

Chrisq (894406) | about 10 months ago | (#45000351)

It would if we were interested in the botnet owner' profit margin. However, we're more interested in what costs the botnet owner impose on society in comparison to his private gains. Someone who would smash a $1000 computer to gain $1000 for himself is deemed less contemptible than the one would do it for $1 for himself.

I'm not sure about that. There was an article in a local paper about someone who did £1,000 worth of damage breaking into a soft-top sports car to steal a pack of biscuits on the seat. The general consensus was that he was a loser and a moron but he got a lower fine than someone stealing £1,000 worth of goods woula have done.

Re:RoI (0, Flamebait)

Anonymous Coward | about 10 months ago | (#45000711)

The moron was the owner of the car.

Speaking as an old California boy, who has always had convertibles... anyone who locks the doors of a convertible deserves what they get.

Re:RoI (3, Informative)

Chrisq (894406) | about 10 months ago | (#45001067)

The moron was the owner of the car.

Speaking as an old California boy, who has always had convertibles... anyone who locks the doors of a convertible deserves what they get.

Not necessarily in the UK, where leaving a car unlocked can be grounds for the insurance refusing to pay out if it gets stolen. -- ~~~~

Re:RoI (1)

Anonymous Coward | about 10 months ago | (#45001241)

Well, I guess if I had a convertible in the UK, I'd lock it then. But I'd leave the windows rolled down, or somesuch. But first I'd speak to my insurance company - I have a difficult time believing that there are no special rules/exemptions for convertibles. They would seriously demand that you lock your doors to protect fifty bucks worth of groceries, AND be fully prepared to pay for the replacement of your top when somebody sliced it to open the door lock and get at those groceries? Somehow I doubt that.

Whatever you might keep in your car (and if you own a convertible you tend to be careful about that), it's just not worth having your thousand-dollar top slashed so that a thief can gain entry.

Fascinating that my previous post got down-modded. What's wrong with reality... with how the world actually works?

Re:RoI (2)

Chrisq (894406) | about 10 months ago | (#45001305)

I have a difficult time believing that there are no special rules/exemptions for convertibles. They would seriously demand that you lock your doors to protect fifty bucks worth of groceries, AND be fully prepared to pay for the replacement of your top when somebody sliced it to open the door lock and get at those groceries?

I don't know about every policy, but this is typical [diamond.co.uk] :

What is not covered?
...
* loss or damage caused by theft or attempted theft or fire if your car has been unlocked and unattended or the keys have been left in or on your car
...
* property from an open and/or unlocked convertable car, unless the property was locked in the boot or glove compartment

Re:RoI (2, Insightful)

drinkypoo (153816) | about 10 months ago | (#45001355)

They would seriously demand that you lock your doors to protect fifty bucks worth of groceries, AND be fully prepared to pay for the replacement of your top when somebody sliced it to open the door lock and get at those groceries?

You have no idea how mandated insurance works, do you? They don't really pay for the replacement of your top. You and all the other insured do that. Since you're required by law to have car insurance, you're still going to get the insurance even though it's unfair. And because it's mandated, all the insurance companies can abuse you, because there's more money in it than being the one that doesn't — who will quickly find themselves put out of business by all the others one way or another. Maybe buying legislation to make them act like assholes, for example.

Re:RoI (2)

bmuenzer (557506) | about 10 months ago | (#45001243)

In Germany, leaving your car unlocked can cost you a fine of up to 2000 EUR (see StVO 14.1; StVO 49.1.14, StVG 24. In addition, you will lose your insurance coverage.

Re:RoI (1)

interkin3tic (1469267) | about 10 months ago | (#45001821)

You're honestly blaming the victim and saying he or she "deserved" it? Jesus, that's some just world fallacy you've got there.

Re:RoI (1)

Big Hairy Ian (1155547) | about 10 months ago | (#45001259)

Personally I liken these muppets to the idiots who steal Henry Moore sculptures and melt them down for scrap!

Re:RoI (1)

Pseudonym Authority (1591027) | about 10 months ago | (#45001825)

People who steal food aren't viewed so terribly. Most can kinda empathize with that, if not condone it. If that guy had stolen a CD or something, I bet it wouldn't he would have been punished much more harshly.

If I can reference fiction: Even Jean Valjean was sent to prison because he broke the window, not for stealing the bread.

Re:RoI (1)

rolfwind (528248) | about 10 months ago | (#45001605)

Someone who would smash a $1000 computer to gain $1000 for himself is deemed less contemptible than the one would do it for $1 for himself.

I don't see why that is. You're still costing someone $1000, theft, fraud, whatever you like to call it. What the thief makes in end effect should be irrelevant. It's not like Bernie Madoff is a better guy because he got away with only a fraction of what his pyramid scheme stole.

Re:RoI (2)

kieran (20691) | about 10 months ago | (#45000257)

No, the $561,000 should be compared to the cost of smashing the botnet. What the botnet arseholes make is of purely idle interest.

Re:RoI (1)

benjfowler (239527) | about 10 months ago | (#45000905)

Probably done by spammers.

E.g. Creating huge amount of damage for other people to clean up, to collect a few illicit pennies for yourself.

This is typical spammer MO.

Re:RoI (5, Insightful)

bluefoxlucid (723572) | about 10 months ago | (#45001421)

This is a good illustration about how wealth transfer works, though. Each economic activity has a cost. Economic activities which are rent-seeking--which draw increased revenue without increasing actual value--are damaging in this way. Economic waste is also damaging in this way.

This is why, for example, overpricing the market by artificially limiting supply (labor i.e. electricians and plumbers, goods i.e. diamonds, etc.) makes some people rich but has a disproportionate cost--the profiteers gain $100,000, but the net economic impact is $150,000 or so, and so the economy is $50,000 less wealthy but these folks don't care because they're $100,000 more wealthy and fuck everyone else.

This is also how churn of goods works. Tearing down a bridge that needs $1M of work to remain viable for 10 years to instead rebuild a $100M bridge in its place doesn't make the economy stronger; it temporarily creates jobs at the expense of whoever's paying for the bridge (usually taxpayers), who end up poorer, thus don't spend as much in their local economy or in the wider (national, global) market, weakening the economy overall by reducing its ability to respond to new opportunities and instead diverting money to bridge builders.

Also like the bridge, buying a new iPhone every 3 months--a more personal decision, but one with the same impact, and one that's not "DEH GUBERMENT SHUDNT BE SO SOZIALIST!" Yes, we can have that same socialist wealth destruction in a completely capitalist free market by people being idiots. On the other hand, handing down that iPhone to someone who has less money and will get it free or at a discount will keep the wealth in society. That's why I encourage people to donate their old goods to i.e. Good Will or such, rather than trashing them. Those things still useful retain value, and passing them on at steep discount to those who cannot afford such goods will enrich society by retaining wealth that would otherwise be lost to landfilling or re-processing (recycling, etc., investing more labor) perfectly useful goods.

In this case, a lot of folks are poorer and a lot of resources are wasted; but power companies are a good deal richer, and the botnet operators have more money. Society is poorer, a few players are richer. The botnet operators are as a small boy who walks through the town periodically breaking random windows so that the glazier can retain his job... and he's coming to break your window, at $50 a pane to replace.

Re:RoI (1)

Zencyde (850968) | about 10 months ago | (#45001707)

You get it, I see. Why aren't you in a power of decision making?

Re:RoI (2)

Zencyde (850968) | about 10 months ago | (#45001685)

This is a joke, right? Economics are not always about individual profits. We only have so much production capacity and the economy is a way to organize that production. It's like when someone breaks into a car by smashing the window to steal a stereo that they then get, at best, 50 dollars for. So, for a 100+ dollar stereo and a 200+ dollar window repair, that 50 bucks took a lot of destruction to pull out. Overall loss to society? 250+ dollars worth of goods and services. If you were to get robbed in the street and have 50 bucks stolen from you without any destruction required to get it, you'd have suffered a far lesser economic loss for just as much gain on the thief's end. How is this not obvious to you???

In other words, mining for bitcoin is not at all.. (0)

Anonymous Coward | about 10 months ago | (#45000109)

For it to take over $500k in electricity and to only mine about $2000 worth of coins, there's absolutely no reason to be mining for fish.

Re:In other words, mining for bitcoin is not at al (1)

somersault (912633) | about 10 months ago | (#45000183)

Except that it must still be profitable to do it with ASICS or whatever it is they're using these days. Eventually that will be a waste of time too.

Re:In other words, mining for bitcoin is not at al (0)

Anonymous Coward | about 10 months ago | (#45000453)

At which point either the value of a bitcoin will increase to approximately the cost to produce it (driven by scarcity of bitcoins otherwise) or the scarcity of bitcoins will lead to people stopping use it and it will die.

Re:In other words, mining for bitcoin is not at al (0)

Anonymous Coward | about 10 months ago | (#45000735)

Seeing as how there will eventually be ~21 million bitcoin in existence, and each of them divisible to eight decimal places into the smallest unit of account (the satoshi), it's hard to understand how there could ever be any "scarcity of bitcoins".

That's one huge amount of units of account...

Re:In other words, mining for bitcoin is not at al (1)

h4rr4r (612664) | about 10 months ago | (#45001341)

I believe he means scarcity of minable bitcoins. Once you can't mine them why would I or anyone not already in on the scheme want in?

They can be divisible to 1000 decimal points, if the only way in is to buy something you generated for a couple cents of power for real money I won't bother.

Re:In other words, mining for bitcoin is not at al (1)

Joce640k (829181) | about 10 months ago | (#45001135)

Bitcoins will only be desirable so long as people can get them for 'free'.

After that, what's the point? It's just another exchange medium. Not going to revolutionize anything.

Re:In other words, mining for bitcoin is not at al (1)

Joining Yet Again (2992179) | about 10 months ago | (#45000189)

Capitalism works because it is easy to convince people that they need/want to be exploited.

Well, it's even easier to convince a computer that they "should" be doing something.

Re:In other words, mining for bitcoin is not at al (2, Insightful)

Joce640k (829181) | about 10 months ago | (#45000499)

A few months ago I mentioned that botnets would be used for bitcoin mining and everybody was all over me saying it could never work because people would be suspicious of their machines running at 100% all day and start running scans. Yet here we are...

Re:In other words, mining for bitcoin is not at al (5, Insightful)

Anonymous Coward | about 10 months ago | (#45000619)

A few months ago I mentioned that botnets would be used for bitcoin mining and everybody was all over me saying it could never work because people would be suspicious of their machines running at 100% all day and start running scans. Yet here we are...

No, no-one except for a troll was all over you, to everyone else that was obvious and they didn't care about your post.

Re:In other words, mining for bitcoin is not at al (1)

Joce640k (829181) | about 10 months ago | (#45001173)

The assertion was that botnets were more valuable for doing other things, that drawing attention to yourself by mining (using 100% CPU) was counterproductive.

Assertion error. (0)

Anonymous Coward | about 10 months ago | (#45001695)

" (using 100% CPU)" is a risible and ridiculous assertion. Maybe those who ridiculed you were doing so because of that fatuous and ignorant assumption.

Re:In other words, mining for bitcoin is not at al (1)

omnichad (1198475) | about 10 months ago | (#45001935)

That might be true - if they can get a binary onto your system that uses CUDA, that doesn't show up as 100% CPU usage at all. But you might as well use 100% of the CPU as well. Put it at the lowest priority but eat every remaining cycle. Look for taskmgr.exe and decrease production when that task is running.

Re:In other words, mining for bitcoin is not at al (2)

DrXym (126579) | about 10 months ago | (#45000967)

It's fairly obvious that botnets could be used for mining.

For that matter, any popular website could be used for mining via page hits e.g. a site could throw a hash computation into every page served, store the result in a cookie and return the result with the next request. It'd probably happen so fast people wouldn't even notice their CPU cycles being stolen. Perhaps some sites are already do this.

Re:In other words, mining for bitcoin is not at al (0)

Anonymous Coward | about 10 months ago | (#45001799)

You'd probably waste more on developing and maintaining this than it would ever pay back with current rates.

Google gets several billion page hits _per day_. A BtC mining script on your puny blog will get you a million hashes daily. A modern ASIC miner calculates tens and hundreds billions hashes _per second_.

Re:In other words, mining for bitcoin is not at al (1)

TheRealMindChild (743925) | about 10 months ago | (#45001353)

The deal is with CPU mining, they are SO SLOW that even one unit of work done is almost definitely stale by the time it is submitted. That is, it is no good.

Trust (0)

Anonymous Coward | about 10 months ago | (#45000187)

$2000/day? Sure beats the NSA using bots to do their distributed crypto cracking.

Kill the zombies (1)

Psilax (1297141) | about 10 months ago | (#45000217)

Why don't people still not kill the zombie computers when a botnet is discovered and they have control over a Command Server?
In my perspective that would teach the people that security is more important than they realize.
And yeah i know that could kill some essential piece of hardware. And to that my response is. WTF. Why is an essential piece of hardware on the internet and not secure? This isn't 1970 when the internet was 2 computers and they had line of sight to validate trust.

Re:Kill the zombies (1)

mwvdlee (775178) | about 10 months ago | (#45000289)

Why don't people still not kill the zombie computers when a botnet is discovered and they have control over a Command Server?
In my perspective that would teach the people that security is more important than they realize.
And yeah i know that could kill some essential piece of hardware. And to that my response is. WTF. Why is an essential piece of hardware on the internet and not secure? This isn't 1970 when the internet was 2 computers and they had line of sight to validate trust.

So what you are saying is that you deserve to be punished every time you accidentaly hurt yourself?

Re:Kill the zombies (2)

Psilax (1297141) | about 10 months ago | (#45000325)

if that hurting yourself brings other people in danger, yes.
Some people are that stupid that this is the only way of learning from their mistakes.

I can go and discuss a lot of reasons why this is off course stupid but if people already read my post that means they probably are smart enough to see that this is not realistic with current laws and consequences but hell, somebody had to say it.

Re:Kill the zombies (3, Informative)

dimeglio (456244) | about 10 months ago | (#45000357)

For the same reason, drunk driving (or DUI) isn't tolerated on the roads. It's harmful for the entire system, not just to one individual.

Re:Kill the zombies (0)

Anonymous Coward | about 10 months ago | (#45000865)

Except they don't fly a helicopter armed with missiles over the average drunk driver to take them out, but instead find other ways to stop the problem.

Re:Kill the zombies (1)

X0563511 (793323) | about 10 months ago | (#45001739)

No, but they do revoke your privileges to drive...

Re:Kill the zombies (1)

fredklein (532096) | about 10 months ago | (#45001397)

DUI, per se, that is, driving with a BAC over a certain number, is not harmful. Getting into an accident is harmful. And there is some evidence that people who DUI have a higher chance of getting into accidents.

Of course, there is just as much evidence that being fat/out of shape due to poor eating/exercising habits is harmful. For instance, it takes real time and money to send an ambulance out when you get a heart attack (caused by cholesterol caused by poor eating). Government mandated diets and exercise regimens for everyone!! And the cops should have the right to warrantlessly search your kitchen to make sure you don't have unhealthy food!

Re:Kill the zombies (2, Interesting)

Anonymous Coward | about 10 months ago | (#45000505)

On the uni network I was plugged into some years ago infected machines were redirected to a quarantine page that said "You are infected. Fix it and tell us about it. After that we'll restore your normal access to the network". I think the quarantining was automated, the unquarantining was not. This could go a long way without breaking machines.

Re:Kill the zombies (1)

DrXym (126579) | about 10 months ago | (#45000997)

So what you are saying is that you deserve to be punished every time you accidentaly hurt yourself?

Infected PCs are not just hurting themselves. They're putting an uncessary burden on the PC, potentially compromising any other PC on the same network, and potentially compromising any other person the owner has a relationship with.

At the very least I think ISPs should be well within their rights to disable access to the subscriber if there was cause to believe the machine was infected.

Re:Kill the zombies (0)

drinkypoo (153816) | about 10 months ago | (#45001365)

So what you are saying is that you deserve to be punished every time you accidentaly hurt yourself?

If someone steals your car and runs someone over, your culpability is determined by whether you left the car unlocked and the keys in the ignition. Why shouldn't computers be treated the same way?

Re:Kill the zombies (1)

Sockatume (732728) | about 10 months ago | (#45000305)

That's like arguing that the solution to a 'flu outbreak is to just kill all the people with 'flu. The benefit gained is small compared to the cost.

Re:Kill the zombies (5, Funny)

oobayly (1056050) | about 10 months ago | (#45000731)

To be fair, killing people with flu would reduce healthcare costs, and would increase the number of jobs available (or reduce the state pension costs if the person is retired). The undertaking business would also boom during Winter months, and inheritance tax income would be higher because people would be more likely to have higher savings due to dying early. Of course it would increase training costs for companies whose employees have been killed, so it's not all good news. Also, it might upset some family members.

Re:Kill the zombies (1)

Sockatume (732728) | about 10 months ago | (#45001025)

What a modest proposal.

Re:Kill the zombies (-1)

Anonymous Coward | about 10 months ago | (#45001619)

so, in other words, OBamaCare?

Re:Kill the zombies (1)

Anonymous Coward | about 10 months ago | (#45001703)

Yes, that's a valid comparison if you're mentally deficient.

Re:Kill the zombies (1)

bluefoxlucid (723572) | about 10 months ago | (#45001505)

The benefit would probably be there with HIV, especially if we nipped it early on.

Re:Kill the zombies (1)

gl4ss (559668) | about 10 months ago | (#45000331)

because it would jail them in prison.

simple.

legally it's pretty iffy, since if you said that it was ok to hack command&control and then to do anything you want with them.. would be akin to hacking steam servers and using all the steam clients to do whatever you want.

Re:Kill the zombies (0)

Anonymous Coward | about 10 months ago | (#45000459)

well, some people belong in prison, for example, Bernie Madoff, Jeffery Epstein, Ben Bernanke...

terrible thing, that, squandering electricity!
shux, might as well throw Mark Zuckerbooger, the entire boards of amdocs and akamai... then throw away the key, then make them walk the plank (board), so they can swim (water) with the shark race!

oh shit, i forgot the chances of them swimming to their offshore tax-free data base in the easternmost coast of the medi-terror-annean sea..
oh, nevermind, juST BRING BACK THE CHAIR!

Re:Kill the zombies (1)

Anonymous Coward | about 10 months ago | (#45000383)

Well, if that essential piece of hardware happens to control a nuclear power plant nearby, I don't care if the nuclear meltdown was caused by hackers intentionally initiating a meltdown, or by well-intentioned hackers trying to kill a botnet. I'd be angry at that asshole which caused the meltdown either way.

And yes, I'd also be angry at the assholes that didn't appropriately secure the system.

Figured it out yet? (0)

Jawnn (445279) | about 10 months ago | (#45000253)

The entire Bitcoin concept is a shiny, hi-tech Ponzi scheme. Those that "invested" by spending CPU cycles (electricty) early made out. By design, no one else ever will unless, of course, they can steal the resources necessary to do the mining.

Re:Figured it out yet? (5, Informative)

Sockatume (732728) | about 10 months ago | (#45000323)

What is it with Slashdot and people using the phrase "Ponzi scheme" to refer to anything they think is a scam?

Yes, Bitcoin mining becomes less profitable over time, because the goal of the system is not to make people money, but to create a sustainable currency. The "gold rush" was engineered in to build up the basic level of hardware needed to make the system useful, and now that there are a lot of bitcoin machines doing transactions we no longer need to hand out a reward for showing up.

Re:Figured it out yet? (1)

Anonymous Coward | about 10 months ago | (#45000431)

Ok, maybe ponzi sceme is not the right word... but try this on for scale: Facebook is a pyramid social network, allowing users to create content (a user who "creates", or posts content to facebook then gives over to the pyramidFB all rights to their "creation"). FB then analyses the user-created data, and "monetizes", or sells, bits of it to third parties. Esentially, FB is a scam, and Zuckerbooger is a artist-scammer/scam-artist.

Where does "intelligence" fit into the pyramid, well, for example the NSA,CIA,FBI,DEA, they eat what they`re fed.

Then theres an anomalous actor in the pyramid-sceme, it`s name is "akamai": akamai purportedly copies EVERYTHING, stores it on servers IN EVRY COUNTRY claiming improved access speeds, and when a user from anywhere in the world logs into their FB account, akami then accesses the user-machine. This is invasion.

If the Swiss got their threat-assessment right, they would freeze the akamai bank accounts and servers.

Re:Figured it out yet? (1)

omnichad (1198475) | about 10 months ago | (#45002027)

Do you know anything about what you're talking about? Facebook is not pyramid-shaped. The one group at the top makes all the money - no promises of money for anyone else. Yes, the everyday user of Facebook is not the customer - they are the product. But that's only a small change to advertiser-supported content going back to the golden age of television.

Akamai is hired to help distribute data. If you feel "invaded" by being directed to Akamai for faster content on Facebook, then your blame should fall on Facebook for hiring them. Akamai doesn't access your machine - your machine submits a request to their machine, which is fulfilled. It's doing what you're asking it to (in proxy for Facebook).

Re:Figured it out yet? (5, Insightful)

rich_hudds (1360617) | about 10 months ago | (#45000473)

I'm probably being naive here, but without the ability to issue new bitcoins isn't the currency doomed?

If all of the bitcoins have been mined then surely either the currency will collapse, or inflation will be rampant. If inflation is rampant then people will just hoard the coins and the currency will collapse. Also I'm guessing bitcoins will be 'lost' in the same way that gold or paper notes are lost, so long term without the ability to mine new coins the total number is gonna go down.

I might be missing something but I have a feeling that a proper currency probably needs new money. A proper useful currency anyway.

(deflation) (2)

AC-x (735297) | about 10 months ago | (#45000575)

You're thinking of deflation [wikipedia.org] , not inflation which is the opposite.

Re:Figured it out yet? (0)

Anonymous Coward | about 10 months ago | (#45000623)

So it's almost as bad as what we have now with dollars? Just the opposite? Is that what you are saying? Almost, because with BC, the ones who use it are in control. With dollars, bankers and corrupt politicians are in control.

Re:Figured it out yet? (1)

Goaway (82658) | about 10 months ago | (#45000993)

Tell me, would you take out a loan of, say, 100 bitcoins?

Re:Figured it out yet? (0)

Anonymous Coward | about 10 months ago | (#45001373)

Sure, with a negative interest rate it would be worth it.

Re:Figured it out yet? (4, Informative)

squiggleslash (241428) | about 10 months ago | (#45000745)

Correct (other than the inflation thing, where you meant deflation). Essentially Bitcoin's "Growth" is (a) engineered to slow down to a standstill in a few years and (b) cannot in any way be related to the growth of the underlying economy. If the economy tries to grow 10% in a year, and would under normal circumstances, assuming there's not already slack in the monetary base, there will not be enough Bitcoins to cover the increased commerce.

About the best you can say about it is that if we had a problem where people are doing too much work, Bitcoins would fix that...

Now, in fairness, I should point out that Bitcoin's defenders here normally argue that it's all OK because what can happen is banks can issue tokens equal in value to a single Bitcoin, backed by a smaller number they'd have in reserve combined with themselves (because they're effectively loans of one bitcoin to the person who takes one.) This is called Fractional Reserve Banking, is used in the real world, works well, and has the itty-bitty problem that virtually all the people who seem to be obsessed with Bitcoins really, really, really, don't like FSB, considering it a form of fraud. It isn't, it's a quirk of accounting, but it's hard for many people to get their heads around as is the fiat money system, so they get upset and start saying "What we need is something backed by something real", "Oh, I know, what about a whole load of computational power that's lost when making the coins", "Yes, great idea, even though it doesn't make sense because you can't turn the coin back into that computational power so it isn't, actually, backed by anything after all", and then this happens.

Re:Figured it out yet? (1)

Anonymous Coward | about 10 months ago | (#45000777)

It is impossible for their to be "not enough bitcoins" because they are infinitely divisible (the number of decimal places is determined by computer code).

Re:Figured it out yet? (0)

Anonymous Coward | about 10 months ago | (#45001329)

Go retake macroecon 101.

Re:Figured it out yet? (0)

Anonymous Coward | about 10 months ago | (#45001351)

you missed the point of deflation. you'd like to buy a house today for say N bit coins. you KNOW that in a year, there will be *less* bit coins, so the same house will cost N*0.9 bit coins, so you decide to wait (after all, why pass up an opportunity to save 10%?). Then the situation repeats every year. You sit on your money---leading to no economic activity due to deflation.

or lets say you're borrowing to buy that house. say at 10% a year interest. as soon as you borrow the coins, you owe *more* (in real terms) than what you've borrowed---making it next to impossible for you to pay off the debt (after all, the following year you'd owe even *more* in real terms than this year).

Re:Figured it out yet? (2)

BlueMonk (101716) | about 10 months ago | (#45001647)

Doesn't that just mean that the interest rate is bad. 10% per year on a currency in deflation is ridiculous. The interest rate on such a currency should be 0% or less because the mere fact that the currency is gaining value would represent its own interest.

Re:Figured it out yet? (0)

Anonymous Coward | about 10 months ago | (#45001987)

Give it to you at 0%? Why would I do that unless you're my best buddy? Bothering with all the book-keeping and shit, when I could just keep it in my vault and look how it gains value on its own!

And I'm not even talking about negative rates...

Re:Figured it out yet? (1)

BlueMonk (101716) | about 10 months ago | (#45001781)

Saying that you owe more than you borrowed in real terms doesn't introduce anything new into the financial services economy. Everyone is charging interest to make money, which means you always owe more than you borrowed. How does anyone pay off their debt with interest? They have to earn it from outside sources.

Re:Figured it out yet? (4, Informative)

IamTheRealMike (537420) | about 10 months ago | (#45002053)

This crap is so old it's actually mentioned in the bitcoin FAQ:

http://bitcoin.org/en/faq#wont-bitcoin-fall-in-a-deflationary-spiral [bitcoin.org]

There is lots of academic research that indicates the "deflationary spiral" doesn't happen like that.

Bitcoin having a fixed final size is just fine - it means when the economy grows, everyones money becomes worth a little bit more, i.e. prices fall a bit. Things get cheaper. That's sort of what you expect from progress, isn't it?

Re:Figured it out yet? (2)

BlueMonk (101716) | about 10 months ago | (#45001577)

I think you need to review the purpose or meaning of having a currency "backed" by something. The whole point is that the real value is in the scarcity of the currency or resource backing the currency. Anything that is truly scarce can "back" a currency because it represents an expenditure of resources that can't be counterfeited. This is why gold has value. Mining gold takes resources (time, transportation, and exposition of which are the most difficult to come by -- merely finding the gold) which you never recover, but the gold itself is the valuable asset that backs itself and/or other currencies. Bitcoin, then, could be viewed similarly. You spend the resources to acquire a new bitcoin by "mining" it, which you should never expect to get back, just like you can never expect to get back the time and other resources you spend to mine gold. Bitcoin, like gold, retains its value in its quality of scarcity. You can't get another one without expending resources relative to its value. That's why the existing bitcoins retain their value and new bitcoins add value to the bitcoin economy. They don't need any external backing because they are scarce and represent a past expenditure of resources, just like gold.

Re:Figured it out yet? (3, Informative)

bluefoxlucid (723572) | about 10 months ago | (#45001579)

The problem with Fractional Reserve Banking is that there is no real money. Fiat currency is by nature imaginary; but in this case fiat currency isn't printed and spent into the economy, but rather loaned into existence. That means every piece of currency in existence is basically owed to someone else, with the caveat that it's probably not in the hands of the debtor who owes it to said creditor.

On top of this, loans necessarily incur interest, meaning more money is required to pay off the loan than borrowed, meaning inflation, meaning that every piece of currency that comes into existence causes inflation and immediately creates a need for more currency to come into existence at a later date. It's not that predictably later we will need more currency because of another action, but that the event of currency becoming accessible creates the situation that more currency needs to be made accessible.

In essence, each unit of currency loaned into existence causes inflation by increasing the money supply ("printing money") and by increasing the amount of money owed (monetary demand to pay off the interest). We operate on a negative currency system, where the system becomes more and more poor as the amount of currency increases. Our entire economy is continuously indebted, and the growth of the money supply is accomplished by the growth of debt and the continuous loss of wealth.

Re:Figured it out yet? (1)

Sockatume (732728) | about 10 months ago | (#45001023)

Yes, that's an issue they'll have to face that fiat currencies do not. It'll be interesting to see what happens, if it lasts that long.

Re:Figured it out yet? (1)

Anonymous Coward | about 10 months ago | (#45000485)

It's the same reason every vulnerability is a "0-day" and every time you can't figure out an argument it's a "strawman." Buzzwords make you sound like you know what you're talking about while asking for a definition of a buzzword makes you sound dumb so you're less likely to be questioned.

Re:Figured it out yet? (0, Insightful)

Anonymous Coward | about 10 months ago | (#45000501)

Ponzi scheme - Wikipedia, the free encyclopedia [slashdot.org]

A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors

A ponzi-scheme is any system that uses the profits generated from new subscribers to pay the promised outrageous return on investment of early investors.

  - Bitcoin user A is an early adopter that mined 1000 bitcoins when they were worthless just a few weeks after launch.
  - Bitcoin user B is a late adopter that bought 1000 bitcoins when they spiked up in value after everything but ASIC mining became unprofitable.

All of user A's profits are a result of user B's entry into the game, with sole except of the "mystery" charges that allegedly get paid out to the computers processing the transaction.

By definition, bitcoin is a ponzi-scheme.

Re:Figured it out yet? (1)

zAPPzAPP (1207370) | about 10 months ago | (#45000661)

By that definition any currency which undergoes deflation at some point is a ponzi scheme.

Or really any currency. After all, if no user B ever shoes up to take those dollars from you in exchange of wares, they are worthless.

Re:Figured it out yet? (1)

Prof.Phreak (584152) | about 10 months ago | (#45001441)

if no user B ever shoes up to take those dollars from you in exchange of wares,

The issue with deflation is that YOU wouldn't give away dollars in exchange for wares. If you know your dollars will be worth more in the future, there's no reason not to sit on them and do nothing. (e.g. why invest and take risks when your dollars [err...bitcoins] are worth more every day without you doing anything!?).

Re:Figured it out yet? (0)

Anonymous Coward | about 10 months ago | (#45000683)

No this does not fit the definition of a ponzi-scheme. B is not buying bitcoins because he expects to make a profit later, but because he intends to spend the bitcoins on goods and services.

Any investment relies on being able to sell it at some point to realize profits from increased value, that does not make all investments ponzi-schemes.

Re:Figured it out yet? (0)

Anonymous Coward | about 10 months ago | (#45000841)

I tried to bitcoin the term Phonzi-scheme but it didn't catch on.

Re:Figured it out yet? (0)

Anonymous Coward | about 10 months ago | (#45000937)

I tried to bitcoin the term Phonzi-scheme but it didn't catch on.

Maybe you'd have better luck with Fonzie-scheme.

Re:Figured it out yet? (1)

omnichad (1198475) | about 10 months ago | (#45002067)

I think this chain of jokes has jumped the shark.

Re:Figured it out yet? (0)

Anonymous Coward | about 10 months ago | (#45001009)

Any investment relies on being able to sell it at some point to realize profits from increased value,

Wrong. An investment in a company typically relies on expecting the company to earn a lot of money, from which you get your share. The company itself may, but need not become more valuable in the process. The important thing is that the money you get is more than the money you put in.

that does not make all investments ponzi-schemes.

Speaking of those investments which do work the way you claimed all of them do: Legally they're not Ponzi schemes. However in practice, I'd say many of them are.

Re:Figured it out yet? (1)

Ash-Fox (726320) | about 10 months ago | (#45002061)

B is not buying bitcoins because he expects to make a profit later

I actually know a few people who are mining Bitcoin because they expect to make a profit.

Re:Figured it out yet? (1)

nedlohs (1335013) | about 10 months ago | (#45001141)

If one entity was marketing and selling all the bitcoins and claiming the returns were generated by something else, then sure.

But since that isn't the case it's just a normal bubble. Or just a normal reasonable increase in asset valuation. Depending on whether you think the actual asset in question justifies the increase in value.

Re:Figured it out yet? (1)

Sockatume (732728) | about 10 months ago | (#45001715)

By your definition, all startups are Ponzi schemes. To make the necessary correction:

A Ponzi scheme is a system where only the revenue added by new subscribers pays the return on investment of early investors.

Re:Figured it out yet? (0)

Anonymous Coward | about 10 months ago | (#45000641)

I am not a bitcoin advocate, however I believe our current monetary system with its requirement for growth is closer to a Ponzi scheme than bitcoin.
David Stockman, Reagan's budget director agrees, he actually calls it a Ponzi

See here : https://www.youtube.com/watch?v=uF9UJh8bU70)

Re:Figured it out yet? (1)

TheloniousToady (3343045) | about 10 months ago | (#45000875)

The "gold rush" was engineered in to build up the basic level of hardware needed to make the system useful, and now that there are a lot of bitcoin machines doing transactions we no longer need to hand out a reward for showing up.

Very good point. But I suspect the "gold rush" also was engineered to make the (still anonymous) originators of the system very rich. It's a beautiful thing to not just discover, but to actually *create* a gold mine, then to engineer it to make the initial gold mining far cheaper than for those who follow. In this case, though, the initial "gold" becomes valuable only after a critical mass of miners shows up.

Re:Figured it out yet? (1)

Ash-Fox (726320) | about 10 months ago | (#45001985)

Seems like a pyramid scheme to me.

Bitcoin mining becomes less profitable over time, because the goal of the system is not to make people money, but to create a sustainable currency.

Or the goal is to make the original creator involved rich, like other schemes.

and now that there are a lot of bitcoin machines doing transactions we no longer need to hand out a reward for showing up.

Or maybe they do, because with out them...

Re:Figured it out yet? (0)

Anonymous Coward | about 10 months ago | (#45000517)

If you invested in Bitcoin you are a gambler. But the concept isn't a Ponzi. It's a currency.

Re:Figured it out yet? (1)

zAPPzAPP (1207370) | about 10 months ago | (#45000635)

Isn't the idea to use it as currency?
There is no 'making out' involved in exchange of currency, just a transfer of values.

The whole printing money out of cpu cycles thing was odd anyways and seemed more like a built in fundraiser/motiviation to get the thing started in the first place.

Re:Figured it out yet? (4, Insightful)

X.25 (255792) | about 10 months ago | (#45000639)

The entire Bitcoin concept is a shiny, hi-tech Ponzi scheme. Those that "invested" by spending CPU cycles (electricty) early made out. By design, no one else ever will unless, of course, they can steal the resources necessary to do the mining.

For some reason, you seem to only look at BitCoin as some kind of an 'investment' tool.

No wonder you see Ponzi schemes everywhere if fast buck is all you care about.

Re:Figured it out yet? (3, Informative)

hibiki_r (649814) | about 10 months ago | (#45001203)

Well, it doesn't have most of the characteristics that make a currency work, the main one being that it's inherently deflationary. This is a terrible thing for a currency, due to this psychological phenomenon called money illusion. This makes the monetary base shrink over time, instead of grow, turning said prospective currency into an investment vehicle. It's just natural behavior when something increases its value when you hold it. This makes most of the currency be there as a holder of value than as a method of exchange, increasing the demand of money over time.

Just pick any model of a currency that we have, and insert the parameters required to make it behave like bitcoin, and see what it does. It's not pretty.

Re:Figured it out yet? (1)

jbssm (961115) | about 10 months ago | (#45001001)

Could say exactly the same about gold and diamonds... heck I could even say the same about printed money. Non basic goods have exactly the value that society as a group accepts they have. This goes for absolutely any non basic goods.

So, a public/private partnership (0)

Anonymous Coward | about 10 months ago | (#45000281)

Sounds like practically any of those. Stick the public with the losses, give some company the profits. Only the scale is lacking. To play in the big league, they'd have to do billions of damage to create millions of profit.

you 6fa1l it (-1)

Anonymous Coward | about 10 months ago | (#45000871)

Numbers (0)

Anonymous Coward | about 10 months ago | (#45000965)

"ZeroAccess was using $561,000 of electricity a day on infected PCs, to generate about $2000 worth of Bitcoin."

Inaccurate. Conceivably these machines are powered on would be consuming electricity even if not infected.

The actual impact is probably more lost productivity for users who experience delay on the machines and thus take longer to do whatever they are trying to do.

Re:Numbers (1)

Anonymous Coward | about 10 months ago | (#45001061)

It's been a very long time since a PC consumed a constant amount of power no matter what it is doing. Today a PC running at 100% CPU or GPU is using -more- power than a PC sitting on but idle. The processors don't even run at the same clock speed when they're idle any more.

Re:Numbers (1)

nedlohs (1335013) | about 10 months ago | (#45001209)

The rest of us upgraded to computers that use more power when they work harder than when they are idle long, long ago.

And thus if something causes my computer to do any extra work that will result in more power consumption than otherwise. It doesn't make a different whether that also slowed down the work I was doing on it or whether the machine was completely idle at the time (well the former case may cause even higher power consumption if it triggers lots of swapping, etc).

numbers perspective (0)

Anonymous Coward | about 10 months ago | (#45001161)

a cheap home pc such as you might find for $400-500 at walmart might draw a max of 120 watts under full load, have the cpu power that might reach that of a quad core athlon, and won't have a discrete gpu... fine for surfing the internet or doing school work, but it is not a bitcoin mining powerhouse. that system at a utility cost of $0.15/kwh would generate less than $2.00 worth of bitcoin in a year (at a rate of about 11 mhash/sec, and current estimated exchange of $133 ea) while costing around $150 to operate during that time.

the current difficulty of mining has made ordinary home pc worthless for mining... and is why the electric costs estimated by symantic look so far fetched compared to amount of bitcoins generated by the botnet.

Another story about Bitcoin and illegal acts (0)

kaizendojo (956951) | about 10 months ago | (#45001321)

When will we see a postive story about Bitcoin's usefulness? Oh right, there really ISN'T any news on that front.
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