Anybody here 'mine' bitcoins?

[AA999]

I got my wallet set up, just in case I ever need to have one, and then I got interested in doing a bit of 'mining'.
The price of a single bitcoin is quite large these days, some say it is hyper-inflated and will drop in the future, but putting that aside, mining allows you to use your own PC to create yourself some wealth.
Or so I thought..... you actually need some hefty processing power in order to see any decent returns on mining. A hefty processor costing in the £thousands. Then there is the cost of overheads (electricity etc.) to run your PC while it is mining.


So to make a 'profit' you need to spend a sizable amount. Fair enough I guess.


The question I have is, how is the generation of new bitcoins governed?
I take it there will most likely be large corporations that have the ability to spend millions on processing power to mine bitcoins at a rapid rate. But then there is also the individual who can mine bitcoins from anywhere on the planet.
As processing power increases with technology, how is the mining going to be 'controlled'?

There has to be a controlled finite amount of bitcoins in order they retain their currency 'value' right?

[Magic919]

There have been a few threads on this very topic. Would be worth searching for those.

[AA999]

Ah cheers, will have a search. I don't often visit the 'finance' section, most times its too scary

[BlackLabel]

Here is a recent thread.

http://www.pistonheads.com/gassing/topic.asp?h=0&a...

[Oakey]

Http://www.beepboopbitcoin.com

[AA999]

fairly harsh overview Oakey....

I don't know all the ins and outs of how bitcoin works but is it the exchanges that act like banks in that they hold/gamble people's wallet values?
Just wondering how people/organisations can walk away with people's bitcoins when they are 'held' within personally controlled wallets?

[wheelerc]

The more processing power on the network, the harder it becomes to mine new coins. It's calibrated so that one 'block' (currently 25 coins) is mined on average every 10 minutes. You need a heck of a lot of power to make any money mining on your own, but you can join a 'pool' where proceeds get split. You still need dedicated hardware for that, as mining with a PC won't be anywhere near profitable.

If you look after your Wallet your self (properly), your coins are very secure. If you send your coins to an exchange, or online wallet service, or 'bank', and they get hacked, or the owner decides to run off with your coins, they are gone forever.

[Shaoxter]

You're a bit late to this party, bitcoins are extremely difficult and non-economical to mine with a personal computer nowadays.

I think we're past the mania phase already...

[Oakey]

AA999 said:

fairly harsh overview Oakey....

I don't know all the ins and outs of how bitcoin works but is it the exchanges that act like banks in that they hold/gamble people's wallet values?
Just wondering how people/organisations can walk away with people's bitcoins when they are 'held' within personally controlled wallets?

If you want to buy and sell bitcoins I believe you use the exchanges. The problem that people are finding is actually turning their bitcoins into real money. There's a pretty amusing video of a bitcoin ATM here;

https://www.youtube.com/watch?feature=player_embed...

[Bradgate]

Oakey said:

If you want to buy and sell bitcoins I believe you use the exchanges. The problem that people are finding is actually turning their bitcoins into real money.

Exactly.

Until Bitcoins are accepted as payment by Amazon, McDonalds, Tesco and Mr Patel's corner shop, they will remain a plaything for speculators.

Given the recent volatility in the Bitcoin price and the collapse of various exchanges, that day is a very long way off.

[hornet]

Bradgate said:

Exactly.

Until Bitcoins are accepted as payment by Amazon, McDonalds, Tesco and Mr Patel's corner shop, they will remain a plaything for speculators.

Given the recent volatility in the Bitcoin price and the collapse of various exchanges, that day is a very long way off.

There are an increasing number of vendors starting to accept bitcoin. Mostly still US-centric, but it is happening, and it's not just niche businesses. The idea is slowly gaining a foothold, but would agree it's a way off mainstream acceptance. That said, I'm not sure it needs mainstream acceptance to be a valid technology, it just needs a large enough pool of people who consider it useful. Volatility is still a problem, but that's as much due to uncertainty about legal status as it is the protocol itself. There are widely differing regulatory opinions from country to country, which is undoubtedly delaying the wider business take-up that would help calm down volatility and drive out the more speculative elements. In terms of cashing out, there are a few ATMs starting to appear in London, but personally I'd look at something like the pock.io giftcards for bitcoin service. Granted, you'll pay a fee, but strikes me as a reasonably quick way of converting gains to cash without the worry or hassle of online exchanges.

Personal view is to use it more as a means of transmission rather than a speculative instrument. I have a small amount in a Multibit wallet that I use for things like podcast donations and to play with other currencies, but we're talking sub-£50. Certainly wouldn't put anything I couldn't afford to lose in there, that's for sure. I have some sympathy for those who lost funds in the Mt Gox collapse, but at the same time, it's a trustless system by design, so placing your trust in one entity in an unregulated space does seem a touch foolish. Actually quite telling to see how many of the people who were hailing bitcoin as the way to crash the banks and "sock it to the man" are now screaming for legal action to get their funds back. The appetite for cryptoanarchy does rather seem to depend on how much money you can make out of it. Also interesting to note how many characters in the bitcoin space were hardcore precious metal advocates until fairly recently, which I think brings their motives into serious question. It's certainly an exciting technology, but like 3D printing, I think it's going to be woven in to day to day life rather than fundamentally change it. The distributed ledger concept can have some very interesting functions built on top, and I think that's where a lot of the genuinely interesting development is going to happen.

[AA999]

wheelerc said:

The more processing power on the network, the harder it becomes to mine new coins. It's calibrated so that one 'block' (currently 25 coins) is mined on average every 10 minutes. You need a heck of a lot of power to make any money mining on your own, but you can join a 'pool' where proceeds get split. You still need dedicated hardware for that, as mining with a PC won't be anywhere near profitable.

If you look after your Wallet your self (properly), your coins are very secure. If you send your coins to an exchange, or online wallet service, or 'bank', and they get hacked, or the owner decides to run off with your coins, they are gone forever.

Ah I see....so even if a huge banking corporation attempts to use their network of computers to mine all the future wealth from the bitcoin 'mine' they still won't be able to compete with the entire internet.... is that how it is intended to work?
And the fact that the rate at which bitcoin can be mined is governed by the 'code'?

Removing the currency from the control of big banks and government?

[wheelerc]

AA999 said:

wheelerc said:

The more processing power on the network, the harder it becomes to mine new coins. It's calibrated so that one 'block' (currently 25 coins) is mined on average every 10 minutes. You need a heck of a lot of power to make any money mining on your own, but you can join a 'pool' where proceeds get split. You still need dedicated hardware for that, as mining with a PC won't be anywhere near profitable.

If you look after your Wallet your self (properly), your coins are very secure. If you send your coins to an exchange, or online wallet service, or 'bank', and they get hacked, or the owner decides to run off with your coins, they are gone forever.

Ah I see....so even if a huge banking corporation attempts to use their network of computers to mine all the future wealth from the bitcoin 'mine' they still won't be able to compete with the entire internet.... is that how it is intended to work?
And the fact that the rate at which bitcoin can be mined is governed by the 'code'?

Removing the currency from the control of big banks and government?

Yes, that's the idea. If one group gets control of more than half of the processing power, there are possibilities for them to do some bad things. They could essentially control which transactions go through and which don't.

There is already a lot of processing power behind it - here is a private setup somewhere in the US - http://youtu.be/5CjldZLXiAU?t=3m10s - I expect there are more like this, plus of course many many more smaller setups