Bitcoin mining made easy

[cheapsheep]

Invest in Bitcoin with the expectation that it will not make you profits, it will only protect you from inflation and provide you with capabilities that you did not have access to before. You will probably not be disappointed, and there is a chance you will be very glad in the future.

Don't make such claims, because:
1) you can't guarantee it
2) it gives credibility to some detractors

Do you make a difference between "invest in bitcoins" and "invest in Bitcoin"? As an investor, I'd rather do the latter. As an individual, I keep my mined coins... those that I do not spend.

People here should probably read that:
How the Bitcoin protocol actually works
Its way more interesting to understand the system than to make predictions about the price of a bitcoin. Its not because the underlying system is "math-based" that economic predictions are more scientific.

And you can join #bitcoin in the lobby...

[Cheesecan]

Only 21 million bitcoins can be mined. But there can exist any number of bitcoins in practice. Simply let wallets store smaller and smaller units of bitcoin. Today you can have 21 billion coins in circulation (mBTC). The nominal bitcoin will of course go the way of the dodo. You can then rename them.

The "mining" analogy in reference to gold or other precious metals is intended to falsely give the impression that there is a finite supply of bitcoins, to fool people into believing they must be valuable. Substitute U.S dollars with bitcoins and U.S government with anonymous while reading this:

Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

You do this by owning bitcoin and destroying them (effectively by never selling or literally lose the wallet). As the coins vanish from the market, the remaining coins gain value. Until finally there are so few left that your network begins trading in a tiny unit which you alone, or a few others, control. Rinse and repeat. The symptoms of this attack are what you would see right now i.e consolidation among a select few who don't sell. And voila you have a currency run by anonymous central bank.

[tzaeru]

Exactly. Finite amount of money is hugely problematic, as it actually makes it easier for a single group to control its value. A market where the possible buying power very vastly exceeds the maximum supply of products traded on the market under the current prices, is doomed to fail and suffer massive distrust as it becomes controlled by those who have decided to store their moniez.

This does happen with the traditional currencies, too, but controlled inflation was supposed to be one of the failsafe mechanism to protect from it. While its implementation has been done poorly and with greed, BitCoin wholly lacks any such system, which makes it completely inappropriate from the perspective of offering a fair alternative currency.

But since I've done so much bashing at BitCoin, I do have to say that there are good things about it. To me, it seems that it has helped enormously in aiding otherwise oblivious people to better understand how currencies and markets work and how value is created. It has given nice examples of do's and don't's, what goes to the creating of new alt currencies. So, probably, in the end, BitCoin has been a good thing - though I hope enough people don't take it too seriously.

[cheapsheep]

Only 21 million bitcoins can be mined. But there can exist any number of bitcoins in practice. Simply let wallets store smaller and smaller units of bitcoin. Today you can have 21 billion coins in circulation (mBTC).

I guess in your mind, 1 meter is an infinite distance, because you can divide this distance in millimeter, micrometers, etc. Rrright...

The "mining" analogy in reference to gold or other precious metals is intended to falsely give the impression that there is a finite supply of bitcoins, to fool people into believing they must be valuable.

This conspiracy tone is not warranted. How the system works is clearly laid out. "Intended to falsely give the impression that there is a finite supply"? Are you implying that computers do not follow the algorithm and do something that is not in the source code? Please explain yourself.

You can debate whether the chosen deflationary money supply model is the best choice that could be made for Bitcoin to serve as a "mean of exchange". Current choice appear as if the "store of value" function of money was favored. I can follow you there. But do not make ridiculous statements (above) regarding how the system works if you want to discuss how things should be improved in an alt-coin.

I only read the last 3-4 pages of this thread, and I must say that criticism is so misguided that it is hard to take seriously. It is clear that detractors of Bitcoin appear no smarter than the fiercest btc evangelists. I'm not impressed to see what 20 pages of this thread has been able to produce.

Considering that Bitcoin can be a money laundering tool because of its anonymity is about as stupid as saying that criminals wearing gloves do not hinder investigations, because fingerprints are anonymous, people do not have their name embossed in their fingerprints anyway. People who have a decent understanding of Bitcoin have a different view:
http://miki.it/articles/papers/#bitiodine

Real criminals use real banks to launder money. HSBC does a good job in this area.
http://www.forbes.com/sites/timworstall ... egulation/
http://www.huffingtonpost.com/marni-hal ... 31412.html

In the meantime, there are real advantages to a system such as Bitcoin. Read that and tell me what these people are doing wrong when they consider using Bitcoin:
http://www.reddit.com/r/Bitcoin/comment ... g_bitcoin/

But maybe you are too happy congratulating yourselves about finding out about buttcoins and Tulip Mania 2.0. This thread seems like the opposite of r/Bitcoin circlejerk. Same amount of brain power, but applied to criticism of Bitcoin...

[FireStorm_]

The Libertarian Idea Of Paradise

What is this even supposed to mean?
To me that sounds like a statement from someone who doesn't know the definition of Utopia.

But do not make ridiculous statements (above) regarding how the system works if you want to discuss how things should be improved in an alt-coin.

What if I think the system will not work as described, and want to make statement about that? Would that be allowed?

Considering that Bitcoin can be a money laundering tool because of its anonymity is about as stupid as saying that criminals wearing gloves do not hinder investigations, because fingerprints are anonymous.

What? You don't see an (at least occasional) relation between criminal behaviour and anonymity?

(but applied to) criticism of Bitcoin

Is that considered a bad thing?

[varikonniemi]

Most people are yet to understand how disruptive this technology is.

https://www.youtube.com/watch?v=RRqgrCrzTJA

I think this is a very insightful quick look into the future of Bitcoin. I highly recommend it if you want to know what Bitcoin can eventually evolve into.

[cheapsheep]

But do not make ridiculous statements (above) regarding how the system works if you want to discuss how things should be improved in an alt-coin.

What if I think the system will not work as described, and want to make statement about that? Would that be allowed?

I made an analogy between doubting that there is a finite amount of bitcoins that will ever be mined (just because you can switch units) and considering that 1 meter is an infinite distance because you can subdivide it.
If your statement about Bitcoin's limited supply is of the same nature, you are allowed to make it. It is just ridiculous and I don't feel like debunking it further, my analogy does that pretty well.

If your criticism is different, please state it. It may be justified.

Considering that Bitcoin can be a money laundering tool because of its anonymity is about as stupid as saying that criminals wearing gloves do not hinder investigations, because fingerprints are anonymous.

What? You don't see an (at least occasional) relation between criminal behaviour and anonymity?

You obviously don't know what anonymity is. You don't read blogs such as 33bits.org, you didn't read the papers I linked or the bitcoin paper and you didn't understand my point that a fingerprint is also anonymous, because you don't have your name embossed in it.

Good thing is, criminals don't either... and they will be caught.

(but applied to) criticism of Bitcoin

Is that considered a bad thing?

I guess you didn't understand my point because of sarcasm.
Criticism is of course a good thing... unless it is as misguided as the most naive pro-Bitcoin discourse.

[FireStorm_]

a fingerprint is also anonymous

Ah, that's what you meant. I get it now. (thought, I think that is a bit of a strong statement)

...doubting that there is a finite amount of bitcoins that will ever be mined (just because you can switch units) and considering that 1 meter is an infinite distance because you can subdivide it.

I don't get this though.
I doubt that there is a finitepredetermined amount of bitcoins that will ever be mined.
And I doubt that there is a finite amount of bitcoins 'encryption-coins' that will ever be mined.
Kind of because of the reasons you named.

So I'm afraid my criticism might not be perceived different, yet I don't see how bitcoin is especially different form other trade-able stuff.

[cheapsheep]

a fingerprint is also anonymous

Ah, that's what you meant. I get it now. (thought, I think that is a bit of a strong statement)

It is a strong statement. A "bitcoin" do not exist as such. There is no "bitcoin" token in the system. There are only transactions which have inputs and outputs. Any bitcoin which appear in your wallet balance is linked to every past transaction, up to the coinbase transaction (mining). The blockchain is public and contains all transactions. Thus, you can follow where your bitcoins comes from. No sane LEA (law enforcement agency) would stand in the way of such a system.

And when money laundering was mentioned in this thread, I suspect it was by people who misunderstand what it is. Laundering money is not about hiding where it is coming from (which bitcoin do not help anyway). It is about justifying where it is coming from. Bitcoin doesn't help here. Its actually a burden more than a useful tool.

...doubting that there is a finite amount of bitcoins that will ever be mined (just because you can switch units) and considering that 1 meter is an infinite distance because you can subdivide it.

I don't get this though.
I doubt that there is a finite amount of bitcoins that will ever be mined.
And I doubt that there is a finite amount of bitcoins 'encryption-coins' that will ever be mined.
Kind of because of the reasons you named.

So I'm afraid my criticism might not be perceived different, yet I don't see how bitcoin is especially different form other trade-able stuff.

In this case, it is Bitcoin specific. Other alt-coins have different supply (mining) algorithm and there is nothing preventing an alt-coin from having a constant supply or other features (such as demurrage as in Freicoin).

21 million bitcoin is fixed. Argue all you want that you can switch to mBTC unit, it doesn't change the amount of bitcoins. 21 billion mBTC == 21 million BTC. It is fixed.

Only people who believe that a "bitcoin" is a token (see above my note about transactions/inputs/outputs for why its incorrect) will believe that there can be more "tokens" than 21 million and thus, it is not limited. It is a naive criticism based on incorrect premises and beliefs. And beliefs do not have their place when we talk about an algorithm and publicly disclosed sources. Just read the source, or a paper describing how it works if you are lazy.

1 meter is a fixed distance. The fact that you switch to 1000 millimeters do not change the distance. It does not change the finite nature of this distance either.

Discussing whether this 21mio cap is a good thing or not is IMO a worthy debate. Which is what I was implying in a previous post. The supply curve of bitcoin favors its "store of value" function over its "mean of exchange" function (my opinion). Any criticism in this area is about economics and economics is not hard science. So of course, criticism is ok and nobody can pretend to have the right point of view.

[tzaeru]

Kinda screwed system when the best move you can do is to try to avoid spending.

I was going to write a longish post to one of my websites about why I think that BitCoin would be a terrible unit of account and not-so-optimal alternative currency, but this thread convinced me otherwise - it'd be a bit like arguing theology on the premise that the Bible is wrong.

[zwzsg]

Real criminals use real banks to launder money. HSBC does a good job in this area.
http://www.forbes.com/sites/timworstall ... egulation/

This article says quite the contrary. It shows how too harsh anti-laundering laws have evil side-effects.

no one ever actually did prove that it shifted around money for Mexican drug dealers and all the rest. Rather, that it’s internal documentation processes were inadequate to show that it had not been doing so. It was not a $1.9 billion fine for laundering money: it was a $1.9 billion fine for not following the regulations about how to monitor and or prevent money laundering.
[...]
The rules and regulations we’ve imposed to stop the drug money laundering mean that it’s not worth providing the service to Somalia. The costs of running the regulatory system are simply too high.

[FireStorm_]

21 billion mBTC == 21 million BTC. It is fixed.

I must admit this one is kinda below the belt ... but: Are you sure?

[zwzsg]

Yes, it's in the design of bitcoin to be capped at 21 million.

And it's in the definition of the milli prefix that a billion milli-something is a million something.

[FireStorm_]

milli prefix

Ah. I must admit I missed that.

Bah. Now I have to read-up on this bitcoin-blabla to find out why there are people who think it's possible to have an alternating number of transaction-units, while it also being a fixed number...

Before I do, anyone ever heard of quantum computing?

[cheapsheep]

Real criminals use real banks to launder money. HSBC does a good job in this area.
http://www.forbes.com/sites/timworstall ... egulation/

This article says quite the contrary. It shows how too harsh anti-laundering laws have evil side-effects.

My post contained links to 2 articles... the other is important too.
HSBC admitted laundering money previously. Watch this if you have doubts:
https://www.youtube.com/watch?v=aj6h0ik91jQ
I picked HSBC as an example because I thought their involvement in laundering was non-controversial public knowledge. Maybe I didn't pick the best articles... google will find you lots.

Real world/banking system:
- you trust banks will do what they have to do to fight laundering, sometimes they will cause collateral damage by preventing legit transactions
- you believe that banks are not accomplices, you trust them to not falsify their books, yet nothing technically prevent them from doing so, and it has been shown that they sometimes do it

Bitcoins:
- nobody is controlling transactions and is able to prevent them, but all txn are public
- blockchain is not falsifiable
- when you convert fiat->btc or btc->fiat, you "leak" personally identifiable information
This allows LEAs to traverse the blockchain to issue subpoenas to clarify any suspicious move. Also, the blockchain will not go away. How long are banks required to keep their data?

Criminal cartels didn't wait for bitcoins to engage in their activities. When you have a decent amount of money to launder, the problem is not to move it around (which btc helps), the problem is to justify where it is coming from, using accounting tricks. And Bitcoin may be used against the criminals, because the accounting tricks will not match what can be seen in the blockchain.

For smaller amounts, cash and a retail store/restaurant/carwash (!) is the way to go.

[Cheesecan]

Only 21 million bitcoins can be mined. But there can exist any number of bitcoins in practice. Simply let wallets store smaller and smaller units of bitcoin. Today you can have 21 billion coins in circulation (mBTC).

I guess in your mind, 1 meter is an infinite distance, because you can divide this distance in millimeter, micrometers, etc. Rrright...

What is stopping a small percentage of Nouveau Riche bitcoiners already sitting on the majority of coins from buying the rest out and issuing only tiny denominations like say nBTC? They can then control inflation and deflation by issuing more or buying back nBTC respectively. The supply will be raised by as much as their unit allows it to.
Especially since we don't know who owns every wallet, one person could own many wallets. This is why allowing smaller units is a problem.

[cheapsheep]

Only 21 million bitcoins can be mined. But there can exist any number of bitcoins in practice. Simply let wallets store smaller and smaller units of bitcoin. Today you can have 21 billion coins in circulation (mBTC).

I guess in your mind, 1 meter is an infinite distance, because you can divide this distance in millimeter, micrometers, etc. Rrright...

What is stopping a small percentage of Nouveau Riche bitcoiners already sitting on the majority of coins from buying the rest out and issuing only tiny denominations like say nBTC? They can then control inflation and deflation by issuing more or buying back nBTC respectively. The supply will be raised by as much as their unit allows it to.
Especially since we don't know who owns every wallet, one person could own many wallets. This is why allowing smaller units is a problem.

You haven't read the next posts? Where I explain that people do not "issue" tokens, that there are no bitcoin tokens (and by extension, there is no mBTC or nBTC token). Do you think a millimeter is a different kind of physical entity than a thousands of a meter? Are you creating ("issuing") a new distance when you convert a meter into 1000 millimeters?!

You are making conspiracy out of an algorithm and simple unit prefixes. I don't understand you.

Maybe you should stop being angry at the "Nouveau Riche bitcoiners" and read that http://www.michaelnielsen.org/ddi/how-t ... lly-works/

Understanding what you criticize will make your criticism more pertinent.

EDIT: maybe the distance example is too hard to understand. If you go to a shop to make a purchase, and the cashier gives you back 2 x 0.50euro coins in change because that's all he has... will you make a scandal because he owes you 1 euro, and not 100 cents?

[very_bad_soldier]

How does it even make sense to compare 1 bitcoin to 1 meter? A Meter has by definition a fixed value (aka length) while a bitcoin's value is not fixed at all.
If bitcoin's value raises by a factor of 1000 then one millibitcoin is worth what a bitcoin was before. But you have 1000 times more of it now.

[varikonniemi]

No, you have the exact same amount of bitcoin as before. A meter does not change in length just because you call it 1000 millimeters. A bitcoin does not change in value just because you call it 1000milliBitcoin or 100Million satoshis.

[klapmongool]

Weird discussion guys.

I think it is pretty simple:

There is a fixed total possible amount of bitcoins (21 million). Since you can make smaller portions of a bitcoin like milibitcoin etc (and there is no technological limit to this?) you potentially have an unlimited amount of 'coins'. The fact that the total amount of bitcoins doesn't change only makes this system more fucked up. This just means that all the ´value´ that the world is going to subscribe to bitcoin in the future will go straight into the pockets of the bitcoin owners.

This just means that bitcoin owners like those 47, in that chart in my previous post, people who currently own 28.9% of all 'mined' bitcoins are going to get 'i-own-a-quarter-of-the-world-rich'. No ideology, philosophy or practical advantages are going to be able to make that right, varikonniemi. Never.