Bitcoin Mining Reward About To Halve 600
First time accepted submitter ASDFnz writes "The reward for successfully completing a block (also called mining) is about to halve from 50 bitcoins to 25. From the article: 'Bitcoin is built so that this reward is halved every 210,000 blocks solved. The idea is as bitcoin grows the transaction fees become the main part of the reward and the introduction of new bitcoins slows down to a trickle. This also means that there will only ever be 21,000,000 bitcoins in circulation.' You can watch the countdown here."
Austrian economics (Score:5, Interesting)
Re:Austrian economics (Score:5, Interesting)
Sounds questionable to me. Going by the definition on wikipedia:
"A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price.
If nobody is really pricing goods in bitcoins and nobody is getting paid in bitcoins, how could the feedback cycle that would normally cause a deflationary spiral exist? Even if bitcoins deflate massively, I don't think that necessarily proves the Keyensians right.
Re:who cares? (Score:5, Interesting)
Additionally (Score:5, Interesting)
Re:who cares? (Score:5, Interesting)
There are also a few VPS and VPN providers who accept bitcoins for the same reasons, and because now they can sell their services to customers anywhere in the world without being limtited by the legacy banking system's inability to process payments from certain places.
Re:Additionally (Score:3, Interesting)
I think it will tell us that even in the most optimistic scenerio where Bitcoin achieves 100% market penetration, some people will go to their graves insisting that it won't work, isn't really money, and is all just a ponzi scheme.
Re:Bitcoins built-in failure (Score:5, Interesting)
1) One BitCoin and one account is as good as the other, so you can swap them outside the system. I can send you 100 BTC from my account A to your account B, then get back 50, 25 and 25 BTC back randomly delayed from your other account C to my other account D. Sure, all the transactions are public record but there's no link between the 100 BTC I used to have in A and the 100 BTC I have now in D. Only the swapping service could possibly link those transactions together.
2) If you can both acquire and spend your money anonymously then the transactions are meaningless, say you do anonymous rent-a-coder work for BTC and use those BTC to pay for web hosting that you only access anonymously. That's the essence of a currency right there, you can make money for doing work and then spend it on what you choose. Yes if any point you're tied to an identity they can try rolling transactions both forwards and backwards to see where you got money from and what you spent money on.
That's not really one of the problems with BitCoins, the main reason is exactly this that the supply is diminishing. Hoarding old coins from when they were easy to make only seems like a better and better idea, unless of course the BitCoin economy collapses because everyone's hoarding. I bet a lot of the people that offer services for BitCoin are the same as those hoarding large BTC reserves, the pyramid game only works if they can sucker more people to join in.
I'm a Happy Camper (Score:5, Interesting)
I wonder... (Score:5, Interesting)
I'm no crypto expert; but it was my layman's understanding that the bitcoin setup is(barring presently unknown attacks) unforgeable; but that there is nothing particularly special about the "Genesis block" [bitcoin.it] at the beginning of the bitcoin block chain, aside from mutual acceptance of it.
Given that, while it is not possible to forge a bitcoin or to produce more than 21,000,000 of them, it should be possible for anybody who feels like it to simply define a new Genesis block and go hashing merrily away. The products of this block chain will be distinguishable from the products of any other block chain; but user convention could assign them value in exactly the same way as it did the old ones(or, more probably, they would trade at a discount against the 'original' bitcoins).
Any speculation on whether the people-who-care-about-bitcoins of the world are sufficiently rabid about some sort of deflationary theory of currency to prevent that, or will we start seeing N different distinct block chains trading between one another as well as select real world commodities?
Who cares, the mining game is over anyways. (Score:5, Interesting)
I used to be big on the BTC mining thing. These days, however, it just doesn't matter anymore.
I got into BTC fairly early, back when it was profitable to run the mining software on a single workstation to suck up unused cycles. At that time, it was actually profitable to invest in dedicated hardware to mine coins- so I (and a lot of other people) eventually did. My first dedicated rig was a HP ML350 G5, which set me back about $4000. It ran two 8 core processors and basically sat around all day mining bitcoins.
Later on when the GPU accelerated mining took off, I bought and built four systems from off the shelf components, and the ML350 was rededicated to running ESXi with a bunch of VMs for mining and managing the four slaves. Each slave had 3x ATI GPUs, later those were swapped out for NVidia GPUs for other various software reasons.
Then the FPGA (and later ASIC) players came into the game. It started with development boards (FPGA boards purchased direct from the chip manufacture), but later spiralled into custom FPGA boards in nice cases that you could stack or keep around on a metal shelving system easily enough. Now, the custom FPGA boxes for BTC mining basically put the GPU miners out of business- the introduction of FPGA hardware increased the BTC mining difficulty to the point that it was pointless wasting the power mining with anything other then.
The problem was that by the time the FPGA market exploded, it was *barely* worth investing in the hardware to get in that late in the game. Previously, buying a few PCs and loading them with GPUs was a cheap way to make some extra cash. FPGAs however cost a hell of a lot more and the difficulty of mining BTCs had increased so much that you would barely break even, and you'd be bloody lucky if you actually made any money in the end.
But FPGAs weren't good enough. People started thinking that they could build silicon to do things even faster, and thus the ASIC market started to emerge and take off. The problem here is that while an ASIC kicks the shit out of an FPGA (and anything that came before the FPGAs)- they're so expensive and the BTC difficulty has been bumped up so much by the initial ASIC wave and the FPGAs before it... That... Wait for it...
Investing in ANY form of ASICs to make **any** kind of reasonable money... Means that you'll never actually break even.
That's right, the ASICs they've got out there are so powerful and the BTC chain is becoming so difficult to mine, that if you invested $10K+ (which is what you'd have to spend) for a reasonable ASIC setup- you would never actually make any money. If your ASIC box is profitable, it won't be for long since the more ASIC miners join in on the party- the more difficult it becomes to mine BTCs.
So the whole system has kind of spiralled into nothing. Mining isn't profitable anymore. Even if you invest in serious hardware. It just doesn't matter anymore, and now that the "reward" for mining BTCs is about to halve- it's even more of a waste of time then it was before. You could have made money in the beginning if you were there, but if you weren't- it's not worth investing even a dollar into hardware to mine BTCs anymore. That train has long since departed.
BTC is basically just a currency now. Mining is vastly irrelevant and always will be, now that we've got FPGAs and ASICs flying around.
-AC
They're just used as a transaction mechanism (Score:3, Interesting)
The reality is that all these sites are using Bitcoin for is a transaction mechanism. They are not keeping their rake in bitcoins, they are exchanging it for cash because that is what the real world operates in. Similarly, the people making the wagers are exchanging their cash for bitcoins in order to play the game. In essence bitcoins are just being used as a payment processor for these sites.
Also, people who think bitcoins are not under government control are woefully mistaken. Aside from the pittance of coins one can mine, how do you propose to get any substantial amount? You need to go to an exchange. How do you purchase using that exchange? Using your credit card. Which is easily regulated.
IE - government can force Visa and Mastercard to shut down all bitcoin exchanges whenever they want to, effectively killing the currency for all intents and purposes. They only reason they don't do this is because it is not relevant enough to care.
Re:Who cares, the mining game is over anyways. (Score:5, Interesting)
I don't know, at least for me, bitcoin mining is still paying part of my electricity bill. I live in Quebec and, like 90% of Quebecers, I use electricity to heat my house. That means that in winter, 100% of the heat generated by the card to compute bitcoins is used to heat the house. With the mining running, the house electric heaters need to start less often, so the mining is essentially free for me.
I'm using my 3 years old ATI 5870 card to mine the bitcoins, and I get about 4 bitcoins per month, which is roughly $45 at the current rates. I bought the card for gaming originally, and that's what it's still mainly used for. I only mine during the 6 months which require heating (november to april), so essentially, the bitcoin mining is free money. I made about $600 last year and I'll probably make $300 this year. For cases like mine, bitcoin mining is pure profit with no downsides at all.
Re:ugh only 21 million? (Score:4, Interesting)
How on Earth does SETI@Home benefit society? Even if by some bizarre coincidence, we actually detected evidence of intelligent life outside of the solar system, the likelihood that society would benefit by that is basically nil.
Directly, on the positive side, it would pretty much kill some religions, or at least transform them into less harmful variants that don't preach that humans are unique and masters of everything.
On the negative side, it would probably trigger some new ones. If people can believe in Xenu, Kolob, Ezekiel or John's revelation, they most certainly would be able to start cults based on extrasolar intelligence too. Hopefully, most of them will put on their Nike sneakers and leave us.
Indirectly, it would likely renew interest in space exploration, which I think might benefit us all, and especially our descendants and their chance of survival.
Re:Additionally (Score:5, Interesting)
And yet I have more than a few friends who actively replace their surplus currency with gold, whenever they can
Those are two big differences, as they say in Odessa [wikipedia.org]. Purchasing physical gold from a reputable dealer (and taking delivery) is entirely unlike accepting a bar of unknown yellow metal from a stranger who just walked into your business and left with an expensive product just minutes later, never to be seen again.
But I understand what you (and your friends) want to say. Unfortunately, preparing for TEOTWAWKI is counter to preparing for normal life. Your purchases are basically reversed. Most people cannot afford the bunker mentality, just because they need income from investments, they need to buy luxury items for their family, toys for their children, non-MRE food for everyday eating. There must be a balance, an exact instant in time when you understand that the life as you know it is not in the cards - and then you flip the bit and start working for the cellar.
I personally don't believe gold will be valuable after the SHTF. You cannot eat gold - and food will be the top priority, competing for the first place with means of protection (weapons and ammo.) Gold cannot be sold after SHTF because there will be no market. You can always exchange a .223 round for a few cigarettes, and that barter does not require a market because both goods are directly usable. Gold is not usable, unless you need sinkers for fishing. Gold has to be exchanged on a market for something else that you need.
My personal theory is that after SHTF there will be only two universal currencies: food and ammo. Nothing else will be even close. Perhaps ammo will be even more valuable because you cannot eat if you are dead; but if you have ammo you can get food (in the forest or elsewhere.) Additionally, food can be produced - cows don't read newspapers and they will continue their lifecycle. But ammo is a high-tech product, it cannot be easily put together even if you are into reloading. Once you run out of good cartridges and primers you are done for, even if you can cast your own [low quality] bullets.
I have had no more success trying to convince them that conducting an economy based on precious metals after the collapse of American society will be difficult
As you see, I'm not disagreeing with you here.
the collapse of society -- for which they have also been stockpiling assault rifles, BTW -- is unlikely to occur in their lifetimes.
That is not under our control. Do you think Syrians or Libyans or even Egyptians expected the Spanish Inquisition just a few years ago? But here they are now, in the midst of a civil war, or on ruins of a wealthy oil state, or preparing for said ruins to be made. Do not forget that the fall of USSR was news to places like CIA - which should have known; but they missed that and more. After USSR disintegrated several civil wars have broken out; some are still simmering. And if you look back into 1990-2000 you will see rich, happy Yugoslavia going up in smoke.
The USA has a very fragile economy. First, it's an oil-based economy. No food can be grown or delivered without oil. Significant amounts of that oil come from abroad. There are needs that cannot be cut, so even a 20% cut in supplies will send the prices of gas to the sky - and the prices of food will follow. Oil is bought for dollars, and dollars are borrowed. Same happens with much of everything else that we currently receive on ships from China. This means that the country lives on credits - and the creditors may not be willing to finance this economy forever. In essence, not only I and you are not in control of the exact date of TEOTWAWKI, but even the government is not in control. The USA has too few native industries with exportable products to finance purchase of foreign energy; and domestic energy production is limited. I do not know for how long this economy will last, but it cannot last
Re:Quick find all the people that care (Score:2, Interesting)
According to various types of political anarchist (there's more than one group communist anarchist, ancap, etc) living in an anarchist society would be an improvement to civilization and not the fall of it. The view of a society is subjective. Some people place personal freedom above all else. In order for them to have the personal freedom they want a central government can't exist. They view the government as an entity that exists solely to rob, murder, and kidnap anyone who doesn't agree with their arbitrary laws.
In their society there would still be a need for money, because they would still be doing business with each other. Money is anything someone else places a value in. If you want to come work for me then we'd sign a contract that outlines what your job is and what compensation you require. I could pay you in gold, silver, goats, beads, etc.
What I said probably only pertains to ancap, because that's the only group I've actively read anything on. I plan to get to the other groups though.
If you or I believe that's a viable political structure is a different conversation.
Re:Bitcoins built-in failure (Score:5, Interesting)
The main advantages of Bitcoin over other types of "real" money:
* it's censorship resistant (can't be shut down, just like bittorrent)
* it has low transaction costs and low barrier to entry (freedom of economic transaction)
* it can be transmitted via the internet globally in short time (max 1 hour)
* it's cheap and easy to secure against theft and loss
The additional advantages of Bitcoin over FIAT currencies:
* the supply is limited
* it's open source and not controlled by banking cartel or government, open to anyone
The disadvantages of Bitcoin:
* its acceptance is very low, to say the least
* it's hard to understand and therefore hard to trust
* it offers an ideal playground for criminals and scammers
* you can add your own criticism here