Bitcoin Discussion Thread Part 2

Lorien

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Lightly searched the thread and saw no mention of it. You can now purchase gift cards with bitcoins for a wide variety of retail and online stores on Gyft.com

Taken from their site and there are more, too many to list.
szTYlHY.jpg
 

jedimasterben

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Started mining Dogecoins on my two 6970s the other day. Took about an hour to get an account created on a mining pool and get guiminer scrypt going, and after calculating power costs (power consumption was over 150w more than mining Bitcoins due to using the GPU VRAM unlike Bitcoin where you could downclock it to 250MHz or so), it looks like I'd make only about $60 in profit monthly at current rates AND could not touch the computer it is running on (which is my gaming PC that I use every day) or else it will crash. Very different from mining Bitcoins using guiminer, I could use the computer, game, encode stuff on the CPU, do anything else I wanted to and it would not lag in anything and just slow down mining while the GPUs were doing something else. Not worth it, IMHO, so I stopped after a couple of hours lol
 

jojo69

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Lightly searched the thread and saw no mention of it. You can now purchase gift cards with bitcoins for a wide variety of retail and online stores on Gyft.com

Taken from their site and there are more, too many to list.
szTYlHY.jpg

but...but...

tulips
 

Zepher

[H]ipster Replacement
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I may cash out my partial bitcoin for an amazon card on gyft.com.
I wish I had mined a bit more back in the day, I just mined for a few hours to see what it was about and that little bit of mining is worth almost $130 today.
 

Lorien

Supreme [H]ardness
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but...but...

tulips

All we need now is a big retailer to accept them directly. Overstock.com and zynga are a great start but one of the big boys like Walmart would take us to the moon.
 

Pitbully

[H]ard|Gawd
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All we need now is a big retailer to accept them directly. Overstock.com and zynga are a great start but one of the big boys like Walmart would take us to the moon.

This...


I keep hoping Amazon will jump on the bandwagon, they usually seem ahead of the curve on stuff like Bitcoins.
 

nvgrim

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I may cash out my partial bitcoin for an amazon card on gyft.com.
I wish I had mined a bit more back in the day, I just mined for a few hours to see what it was about and that little bit of mining is worth almost $130 today.

you made $130 worth of BTC in a few hours? do you have an ASIC?
 

leeleatherwood

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"Back in the day" (meaning a few years back) you could mine serveral BTC coins PER day with AMD gpus...

Yep, I mined about .6 BTC in about 8 hours on my wifes laptop (CPU Mining) when I was just playing around with it and was curious.

I traded it in when BTC was $110, made like 58 bucks.
 

atp1916

[H]ard|DCoTM x1
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2014 will be the year of the Bitcoin.

Mark my words now.

Overstock will show all the retail markets how it can be done. Everyone else will follow shortly.
 

CounTDookU23

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I searched and searched for an explanation to how Bitcoin works. Sorry if this has been posted somewhere but I figured it might be use to somebody unsure like me as to what exactly the value of the data is. This was posted by eMansipater
Sr. Member at Bitcointalk.org. All credit for this fine answer to him!!! :)

Re: What is BitCoin Data Used For???
April 06, 2011, 03:06:45 AM
#17
Some people skills, anyone? Treating newcomers as opponents without taking the time to figure out what they're saying is pretty early on the list no matter where or how you learn them.

@al_capwn Don't treat those few responses as representative. I will be happy to answer your questions--no one should be expected to magically understand something as complicated as BitCoin without some detailed, patient feedback. BitCoin does work, it just takes a little while to fit into your head exactly how. Don't give up yet--I wouldn't want you to miss out on something this cool just because you didn't get your questions answered by the right people.

Your question about what miners are doing is perfectly legitimate, and I agree with you that very few sources on bitcoin explain this properly--it's one of my pet peeves, though I also understand that most BitCoin early adopters aren't exactly customer service professionals.

In order to answer it effectively, let me first explain what BitCoin is and what problem it solves. These two things are not typically well explained on most websites, and it is difficult to appreciate just how effective BitCoin is until they are understood.

What BitCoin is: An agreement amongst a community of people to use 21 million secure mathematical tokens--"bitcoins"--as money, like the Iroquois used wampum. Unlike wampum, there will never be more bitcoins, they are impossible to counterfeit, they can be divided into as small of pieces as you want, and they can be transferred instantly across great distances via a digital connection such as the internet. This is accomplished by the use of powerful cryptography many times stronger than that used by banks. Instead of simply being "sent" coins have to be cryptographically signed over from one entity to another, essentially putting a lock and key on each token so that bitcoins can be securely backed up in multiple places, and so that copying doesn't increase the amount you own.

Because bitcoins are given their value by the community, they don't need to be accepted by anyone else or backed by any authority to succeed. They are like a local currency except much, much more effective and local to the whole world. As an example of how effective the community is at "backing" the bitcoin, at the beginning of this week someone sold 30,000 bitcoins on the largest exchange, consuming nearly all "buy" offers on the order book and dropping the price by nearly 1/3. But within a couple of days, the price on the exchange has fully rebounded and bitcoins are again trading at good volumes, with large "buy" offers slowly replacing the ones consumed by the trade. The ability of such a small economy (there are only 5 million out of the total 21 million bitcoins circulating so far, or about 3.75 million USD worth at current exchange rates) to absorb such a large sell-off without crashing shows that bitcoins are already working beautifully.

What problem BitCoin solves: Mathematically, the specific implementation of the bitcoin protocol solves the problem of "how to do all of the above without trusting anyone". If that sounds amazing, it should! Normally a local currency has to trust all kinds of people for it to be able to work. So does a national currency. And in both cases, that trust is often abused. But with bitcoin, there's no one person who can abuse the system. Nobody can print more money, nobody can re-use the coins simply by making a copy, and nobody can use anyone else's coins without having direct access to their keys. People who break its mathematical "rules" simply end up creating a whole different system incompatible with the first. As long as these rules are followed by someone, the only way bitcoin can fail is for everyone to stop using it.

This marvelous quality of not having to trust anyone is achieved in two ways. First, through the use of cutting-edge cryptography. Cryptography ensures that only the owner of the bitcoins has the authority to spend them. The cryptography used in BitCoin is so strong that all the world's online banking would be compromised before BitCoin would be, and it can even be upgraded if that were to start to happen. It's like if each banknote in your pocket had a 100-digit combination lock on it that couldn't be removed without destroying the bill itself. BitCoin is that secure.

But the second way of securing the system, called the "blockchain", is where the real magic happens. Even with top-notch digital encryption, if there was no central registry to show that certain bitcoins had already been "paid" to someone else, you could sign over the same coins to multiple people in what's called a "double-spend attack", like writing cheques for more money than you have in your account. Normally this is prevented by a central authority, the bank, who keeps track of all the cheques you write and makes sure they don't exceed the amount of money you have. Even so, most people won't accept a cheque from you unless they really trust you, and the bank has to spend a lot of money physically protecting those central records, even if they are kept in a digital form. Not to mention, sometimes a bank employee can abuse their position of trust. And, in traditional banking, the bank itself doesn't have to follow the rules you do--it can lend out more money than it actually has.

The blockchain fixes all these problems by creating a single master registry of the already-cryptographically-secured bitcoin transfers, verifying them and locking them down in a highly competitive market called "mining". If you're interested I'll be happy to explain specifically how this happens, but this is the work bitcoin miners are doing--they're not doing any other work for anyone else, and it is very easy to check this both in the sourcecode and also just by observing a running miner carefully, because this is the only data that enters and leaves the program. In return for this critical role, the bitcoin community rewards miners with a set amount of bitcoins per block, taken from the original limited quantity on a pre-agreed schedule. As that original amount gradually runs out, this reward will be replaced by fees paid to prioritise one transaction over another--again in a highly competitive market to ensure the lowest possible cost. The transactions are verified and locked in by the computational work of "mining" in a very special way that means no one else can change the official record of transactions without doing more computational work than the cumulative work of all miners across the whole network.

This means that no matter where or how you process bitcoin transactions, the network remains secure. Which is incredible--no one else has ever tried to create a system that worked this way! All previous monetary systems have relied on trusting somebody, whether it was the king, town hall, the federal reserve, or banks. BitCoin doesn't. So it's very fair to ask what amount of energy goes into securing the bitcoin network, but you need to understand what BitCoin gets in return for this. And as someone who's worked extensively in IT, I have to say that all security costs money. I strongly doubt, however, that a bank could afford to secure their financial systems as cheaply as BitCoin has, nor as effectively. And unlike banks, every element of BitCoin is laid bare for people to look at. If there is any way to attack BitCoin profitably, people are welcome to try. At least 3.75 million dollars' worth of trust is sitting there saying it can't be done. And as BitCoin scales up, the coins become worth more--thereby leading to higher and higher security. BitCoin truly is a beautiful technology.

Ask me anything you need to about the parts you don't understand. I'll be happy to explain them to you.
 

mkrohn

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the best explanation is that one gox put together that has pictures. Pictures are always better
 

Schro

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Tiger Direct accepting BTC!!

I'm concerned that this mass adoption will put downward pressure on pricing. After Overstock went live on Coinbase, their exchange rate has been significantly trailing GOX (averaging $100-130 lower) instead of the previous $50-75 lower. In many cases, they're exchanging at rates below BTC-E. I assume it is for currency hedging purposes due to market liquidity... so I hope more cash starts streaming in to give us more options in the US for cash out...
 

oblox

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I'm concerned that this mass adoption will put downward pressure on pricing. After Overstock went live on Coinbase, their exchange rate has been significantly trailing GOX (averaging $100-130 lower) instead of the previous $50-75 lower. In many cases, they're exchanging at rates below BTC-E. I assume it is for currency hedging purposes due to market liquidity... so I hope more cash starts streaming in to give us more options in the US for cash out...

Foolish to even use Mt.Gox for pricing as it is hard as hell to get your money out. Between Bitstamp and BTC-e, you usually have a good idea of the going rate of one BTC with coinbase selling coins to you at a higher price and buying coins at a lower price than the exchanges (this is basic business). Coinbase will always give you modestly less per coin and sell you coins for modestly more in order to make a profit on the spread. Since no mainstream derviatives exist for crypto, hedging is left to spread differences.
 

Schro

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Foolish to even use Mt.Gox for pricing as it is hard as hell to get your money out. Between Bitstamp and BTC-e, you usually have a good idea of the going rate of one BTC with coinbase selling coins to you at a higher price and buying coins at a lower price than the exchanges (this is basic business). Coinbase will always give you modestly less per coin and sell you coins for modestly more in order to make a profit on the spread. Since no mainstream derviatives exist for crypto, hedging is left to spread differences.

I make the assumption that it is impossible to get USD out of Gox, but since it is fairly liquid to other currencies, however, I do see it as an indicator as to the direction the other exchangers/exchanges will be moving. For example, when Gox is climbing quickly, Coinbase will usually follow at a higher spread to shield against a fast drop. When Gox starts to stabilize, I typically see the Coinbase price rise to the 50-75 under Gox, but lately, that simply hasn't happened. Since Coinbase has Overstock and TD on board now, at least in the short term, they will have to maintain lower rates due to the potential sell volume that the two stores could generate.

The point I'm trying to make is that until a week or two ago, Coinbase typically priced their buy/sell mark right in between Gox on the high end and BTC-e/Bitstamp on the low end. Now they're down with BTC-e and Bitstamp.
 

Pitbully

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I've noticed about all the sites always seem to be $75-100 lower than MtGox. I've never tried to get any money out of Gox, has anyone else?
 

wolfofone

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I've noticed about all the sites always seem to be $75-100 lower than MtGox. I've never tried to get any money out of Gox, has anyone else?

I used to do Mt-Gox to Dwolla to my bank account but afaik that method has not worked for a long time.
 

wolfofone

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So, is there any such thing as an entry level BTC-mining ASIC? And if so, are they worth it to have something low power that I can just plug in and have it chug away on the network profitably? Or has the ASIC arms race made such a scenario impractical? Thanks, I've been out of the BTC game for a long time and was just curious.
 

elite.mafia

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wolfofone

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CEX.io seems neat if a bit less fun than playing with the hardware myself. Then again, they get to be the ones to deal with issues and that might be worth the maintainence fees.
 

elite.mafia

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CEX.io seems neat if a bit less fun than playing with the hardware myself. Then again, they get to be the ones to deal with issues and that might be worth the maintainence fees.

Yeah but you can buy and sell the hashing power and make some extra coin like that. Right now it's really low so it'd be a good time to buy.
 

jojo69

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there was some kind of dif increase factored into that but when a new gen of ASICs hit LOL it just goes nuts

not really, now that we are on custom bare metal the easy gains are had

from here on we have die shrinks and incremental tweaks to architecture, expect future gains more in line with Moore's law, not the kind of quantum leaps we saw from CPU to GPU to ASIC

I fully expect to purchase 28-25nm 4u rack infrastructure late this summer that will operate profitably, albeit marginally so, for 3 years or better.
 

atp1916

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13MH/s of GPUs going manual on new scrypt coins coming out.

3 days. ASICs can kiss it.

28gtc8k.jpg
 
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