mt. gox

[calapine]

Well, if the Mt. Gox disaster means "working as intended" that's not exactly a ringing endorsement..

[Chimpy]

Of course it worked as planned. The founders made themselves a pretty penny off of a bunch of plebs who were dumb enough to allow MtGox to handle their "money".

[Strazos]

While I find all of this interesting, I'm not going to lie - totally don't understand how this works. Why aren't more people mining coins on the side for easy money?

[Chimpy]

While I find all of this interesting, I'm not going to lie - totally don't understand how this works. Why aren't more people mining coins on the side for easy money?

Because at this point, it does not actually make money unless you spend pretty ridiculous amounts on custom hardware. The power usage cost outweighs the amount earned for most people.

[Trippy]

While I find all of this interesting, I'm not going to lie - totally don't understand how this works. Why aren't more people mining coins on the side for easy money?

The way the mining process works it's gets harder and harder to mine bitcoins over time (each bitcoin mined makes subsequent bitcoins harder to mine). Originally you could just use your CPU and have a reasonable chance of mining coins. Once it got too hard to do it on CPUs people switched to video card GPUs. Now it requires specially programmed chips (FPGAs or ASICs) to be able to mine semi-efficiently:

http://www.tomshardware.com/reviews/bitcoin-mining-make-money,3514-5.html

[MahrinSkel]

There's also an absolute limit, sometime between 2025 and 2030, the very last Bitcoin will be calculated and there will be a fixed number from that point forward (this is why it is inescapably deflationary).

--Dave

[Lightstalker]

While I find all of this interesting, I'm not going to lie - totally don't understand how this works. Why aren't more people mining coins on the side for easy money?

If you are buying hardware today you probably can't recover the initial investment before the difficulty gets high enough that the energy cost of solving (or contributing) a block exceeds the reward.  I've 'made' $450-600 since Christmas (depending on exchange rate, which is highly variable) on hardware I happened to already have (Nvidia GTX 780 + 2x ATI 6970s).  I'm spending about $15 a month on electricity, and bought some components to run the video cards in a box that is destined to serve as a media server in the living room once the difficulty on popular/exchangeable alt-coins gets too high (probably this summer, though the next Dogecoin might push the 'fun' out further).  Indeed, many graphics cards are more expensive now used than they were new (the three cards I have would be about $1,400 to purchase today).  The people making 'real' money are the guys selling hardware, they've been able to use that hardware when the difficulty was lower and then can resell it once it is no longer viable because people are slow to cotton on to the difficulty curve making their 'investment' obsolete.

Bitcoin is an interesting beta release for digital currency.  It is a solution to the byzantine generals problem, but not necessarily a viable currency as it stands (currency has utility in exchange, the current implementation leads to hoarding). 

The wait time for transactions should not be the same for all transaction values.  For small quantities a few confirmations are sufficient, for large values many more confirmations are required.  All you are doing is calculating how much it would cost for bad actors to overpower your transaction (in computation), comparing that to the value of your transaction, and looking for +1 confirmation to call it good.  Someone could 'cheat' you out of your money, but they'd be spending more to do it than they'd get from succeeding in reversing the transaction (overpowering the network).  The system is probably geared for one huge rollback against a hard confirmation limit e.g. someone accepting 20 confirmations for arbitrarily sized transactions, but thereafter no one would trust the entire system with anything of value and all the investment in building a pool big enough to beat the entire system would be lost - it would have to be a really big transaction to be worth the risk.  Far easier to 'make money' here by taking it from other humans the traditional way.

Most of what you see about bitcoin 'cheating' in the news is good old fashioned social engineering and scam artistry clustering around the newest fad.  The Mt. Gox thing in particular looks to have been an implementation error compounded by poor customer service planning (trusting the client and not resending the 'same' coins that were reported 'not sent').  Bad actors simply told the Mt Gox that "no, we haven't been paid yet, try sending again" and the Mt. Gox servers sent it again, and tried sending coins from a different account.  Basically, any shopping cart exploit you can remember from the early web days is likely to work on one coin exchange or another - these guys aren't rocket surgeons.

I certainly don't 'trust' any of the coin sites; when/if my cash-out account gets burned I've just lost my hardware upgrade fund and nothing that can compromise my life.

[Morat20]

I still don't get the point of Bitcoin.

What's it do that cash doesn't? Heck, what is a utopian perfect future release of Bitcoin supposed to do that cash doesn't?

Besides, you know, waste a ton of electricity.

[KallDrexx]

I still don't get the point of Bitcoin.

What's it do that cash doesn't? Heck, what is a utopian perfect future release of Bitcoin supposed to do that cash doesn't?

Besides, you know, waste a ton of electricity.

It's digital cash, meaning it's much easier to quickly transfer from one entity to another (which isn't as easy with cash because it requires you to physically hand over). 

Of course, the digital aspect makes it much less secure than cash as well.

[HaemishM]

... THE FUCK?

[Numtini]

I still don't get the point of Bitcoin.

What's it do that cash doesn't? Heck, what is a utopian perfect future release of Bitcoin supposed to do that cash doesn't?

It's a libertarian gold bug thing. It's not fiat currency, it's based in processing power. LOL.

[HaemishM]

It's not fiat currency, it's based in processing power. LOL.

I did not know that.

I think I have officially found the STUPIDEST THING EVER. 

[tazelbain]

Ya, but so is the internet.

[calapine]

And there we go...again! 

[Sky]

Biggest mistake was not calling it Cloud Cash. I'm copyrighting that shit.

No I'm not.

[calapine]

Biggest mistake was not calling it Cloud Cash. I'm copyrighting that shit.

No I'm not.

If I was to be cynic I'd say the true success will belong to iCoin. Not sure I am joking even... Douchebags all around the world would fall over themselves to own the hip new Apple currency.  

[naum]

rainnwilson:

Bitcoins are now worth the same as Schrute Bucks.

[Merusk]

I still don't get the point of Bitcoin.

What's it do that cash doesn't? Heck, what is a utopian perfect future release of Bitcoin supposed to do that cash doesn't?

Besides, you know, waste a ton of electricity.

Illegal activity.  You can transfer lots of liquid assets without "the government" being all over it, OR having to move literal tons of physical currency.

[Jeff Kelly]

I still don't get the point of Bitcoin.

What's it do that cash doesn't? Heck, what is a utopian perfect future release of Bitcoin supposed to do that cash doesn't?

Besides, you know, waste a ton of electricity.

Don't confuse Bitcoin with an actual currency, everybody keeps saying that it is but the way it is designed means that it's really not and that it cannot ever be one. It's the implementation of the wet dream of internet libertarians. The digital equivalent of the 'gold standard' or at least what those dimwits think the gold standard was and entailed.

Bitcoin was designed with three main goals.

- act 'gold-like'. In the minds of most gold bug libertarians the western world was a capitalist utopia when the gold standard was still in place and the end of Bretton Woods signalled the end of national economies acting  'responsibly' and 'fiscally conservative' because they could simply print money and they no longer needed to back the 'virtual' value of their currency with 'actual' value like gold. They usually throw the term 'fiat money' in there somewhere for good measure. So Bitcoin is inherently deflationary.

- make it impossible or infeasably hard for a single nation to control the supply, transfer or trade of Bitcoins. Everyone can trade Bitcoins with everybody else all over the world. You technically need no bank or exchange, the infrastructure to transfer funds is built into the Bitcoin system. So it's virtually impossible (short of completely outlawing Bitcoin itself) to keep track of or control the flow of Bitcoins. This also means that it's hard to prevent people from transferring funds and it's also hard to tax those funds. It also ties into the first point because with Bitcoin 'printing money' is impossible so no pesci govermnet threatens the 'value' of your wealth by increasing the money supply.

- make it easy to track transactons but make it hard to identify individual owners of Bitcoins. You can always see and track every bitcoin and every trasnaction that was ever done since Bitcoin started but it's very hard to identify the real world person that ownas them. Another precaution to prevent a government from identifying you and taxing you.

Bitcoin is basically gold but without the need to physically store and protect it and a sort of gold that is much easier to transport, transfer and hide from the IRS. They've also managed to design something that they call a 'currency' but that lacks every aspect necessary for a thing with value to actually work as a currency and worse features design tradeoffs that actively prevent it from ever becoming one.

It's design means that you can't really use it to pay for stuff so it's hard for Bitcoin to establish a semi-stable inherent value. Combined with it's deflationary nature it lead to Bitcoin always being more attractive as speculative investment than as currency. This has further hampered any push to use Bitcoin as actual curency and so the Bitcoin value has always been tied to an actual currency and exchange rate. Just like any other sort of derivative.

Since no nation can back it or regulate it even if they wanted to, you have no central bank, no banking system, no deposit insurance and no FDIC. This means nobody that uses Bitcoin for anything can have any assurance of anything and has no legal recourse. You can theoretically store your Bitcoins on your own computer but then it's even more pointless as a currency but since exchanges and 'Bitcoin banks' aren't legally required to be banks they face no regulation and can basically do whatever the fuck they want.

I don't think that this was unintentional either. Bitcoin was designed with a libertarian mindset. Free market, no government control, acts as gold-ersatz, no devaluation by irresponsible entities, hard to track, hard to tax. Is deflationary.

This means Bitcoin has a first mover advantage (aka Ponzi scheme), it legalizes fraud (unregulated market) and it has become a bonanza for money launderers, and as a method to transfer funds gained via all kinds of ilegal activities. All on the back of wild-eyed internet libertarians and greedy fucks looking for an easy way to get rich.

I'd say that it is working as intended

[schild]

I think we need to stop looking at people who want an easy way to get rich as greedy. An "easy way to get rich" is the holy grail of the current state of our planet. Anyway, greed isn't bad. Insatiable greed that leads to corruption is bad.

I wish I had bought bitcoins when I first heard about them at ~$8 and sold them for 100x that. Tons and tons and tons of them. Doing so would have been smart business, not greed.

Anyway, Bitcoin is still stupid and should have NO value whatsoever.

[schild]

http://www.dailymail.co.uk/news/article-2573863/Bitcoin-exchange-CEO-dead-home-suspected-suicide-age-28.html

lol

edit: I'm sorry, death isn't funny but bitcoin and everything around it still is andddddddddddd this is related to bitcoin. Ergo, a somber lol.

[Phildo]

Why are all the Bitcoin CEO-types Americans living Asia?

[schild]

weaboos

[Ironwood]

I think we need to stop looking at people who want an easy way to get rich as greedy.

No.  We don't.  They are.

 An "easy way to get rich" is the holy grail of the current state of our planet. Anyway, greed isn't bad.

Are you fucking kidding, yes it is.

 Insatiable greed that leads to corruption is bad.

I wish I had bought bitcoins when I first heard about them at ~$8 and sold them for 100x that. Tons and tons and tons of them. Doing so would have been smart business, not greed.

Anyway, Bitcoin is still stupid and should have NO value whatsoever.

Man, this sums up exactly what the fuck is wrong with 'the state of our planet'.  Retarded.

[schild]

I think we need to stop looking at people who want an easy way to get rich as greedy.

No.  We don't.  They are.

 An "easy way to get rich" is the holy grail of the current state of our planet. Anyway, greed isn't bad.

Are you fucking kidding, yes it is.

 Insatiable greed that leads to corruption is bad.

I wish I had bought bitcoins when I first heard about them at ~$8 and sold them for 100x that. Tons and tons and tons of them. Doing so would have been smart business, not greed.

Anyway, Bitcoin is still stupid and should have NO value whatsoever.

Man, this sums up exactly what the fuck is wrong with 'the state of our planet'.  Retarded.

Greed, much like most things, isn't as black and white as you make it out to be. Wanting to be rich is a solely selfish affair no matter how you couch it. Considering greed at its most base level is a selfish desire to be rich, I find it hard to fault most people who want as much given the current structure of society. When that greed turns you into a unreasonable awful asshat, that's when things get sketchy. The mere desire to be personally wealthy, however, is not something I find "evil."

[HaemishM]

I think the problem with greed is that by its nature, it is insatiable. Because once you have SOME, why not have MORE?

[Phildo]

I think the problem with greed is that by its nature, it is insatiable. Because once you have SOME, why not have MORE?

Was just about to post that.  The desire for wealth isn't necessarily a bad thing, but greed by definition means "excessive or rapacious desire."  Match that up with the ideas that money is power, and power corrupts, and you have a Bad Thing.

[schild]

I think the problem with greed is that by its nature, it is insatiable. Because once you have SOME, why not have MORE?

Was just about to post that.  The desire for wealth isn't necessarily a bad thing, but greed by definition means "excessive or rapacious desire."  Match that up with the ideas that money is power, and power corrupts, and you have a Bad Thing.

¯\_(ツ)_/¯

[Phildo]

I can't decide how to interpret that, please explain your answer.

[schild]

I don't know whats confusing about one of the greediest modern humans who became probably the best philanthropist in the history of the world once he acquired all that wealth and power.

[Numtini]

make it easy to track transactons but make it hard to identify individual owners of Bitcoins. You can always see and track every bitcoin and every trasnaction that was ever done since Bitcoin started but it's very hard to identify the real world person that ownas them. Another precaution to prevent a government from identifying you and taxing you.

This has always amused me. If the government really couldn't track who was transferring all that money, I am absolutely sure they would have been shut down long long ago. The fact that they haven't been and there has been some overt acceptance of something that could be used to launder money so easily tells me that there's some guy in Treasury with a list of every single transaction on his monitor.

[Paelos]

When did Schild become an unemployed Gordon Gekko?

[naum]

The Winklevii bought their spaceship tickets with bitcoin…

There was a time when news that Tyler and Cameron Winklevoss just bought spaceship tickets using Bitcoin would have been completely surprising. That time is long, long gone.

[Sky]

Biggest mistake was not calling it Cloud Cash. I'm copyrighting that shit.

No I'm not.

Wait, no....titcoins!

[Goumindong]

Why are all the Bitcoin CEO-types Americans living Asia?

Generally more lax currency laws i am guessing. Mt Gox for instance got hit with U.S. currency transfer laws (which basically require them to know who you are and report transactions over 10k) and had been trying to get around it.

Not all of them are in Asia of course, its suspected that the people who run BTC-e(now the largest market) are Russian but no one actually knows who they are.

make it easy to track transactons but make it hard to identify individual owners of Bitcoins. You can always see and track every bitcoin and every trasnaction that was ever done since Bitcoin started but it's very hard to identify the real world person that ownas them. Another precaution to prevent a government from identifying you and taxing you.

This has always amused me. If the government really couldn't track who was transferring all that money, I am absolutely sure they would have been shut down long long ago. The fact that they haven't been and there has been some overt acceptance of something that could be used to launder money so easily tells me that there's some guy in Treasury with a list of every single transaction on his monitor.

So the long answer is that you can attack accounts to faces but its not particularly easy. The government certainly has the resources to do so if it so chooses. There absolutely is a "list of every single transaction ever" but mining the transaction data to determine who owns an account is technically difficult because its easy to tumble coins around to various accounts, which if done well, should be indistinguishable from a "legitimate transaction" though this does make actual transactions harder.

Its one of the reason why Russia and China have banned BTC businesses. Why hasn't the US? Possibly a couple of reasons. China and Russia don't have nearly so large a population of libertarians and they certainly don't have any in office. Its probably much easier for the US to track BTC transactions. The US has a "wait and see" culture with regards to these types of things. Figuring out who has authority over the system enough to ban it (minus legislation which can't pass because of Republicans) in our current system is probably difficult.