Bitcoin Mining

[TrainTrackHack]

Its real? I didnt realize that when a computer solves a "math problem" its result becomes real and in physical form. Real involves having 3 dimensions. The bitcoin does not.

Oh, and you meant "has no value". Not little. None. Zero.

Its real in the same sense that GTAV money is real. Its the EXACT same concept.

wut

It is real. A thing does not need physical form to be real. Thoughts and the text I'm writing are real but they definitely aren't three-dimensional and have no physical form. Computer programs and information are real. And I didn't say "has no value" - I said has little intrinsic value.

And yes, any competent mathematician or computer sciencist will agree that solutions to computational problems are indeed real.

And, again, yes, it is real in the same sense that GTAV money is real. The difference is that bitcoin was made to be used in the real world, and has been built around this (can be securely transferred, prevents double-spending, has limited supply and so on); as such, people are willing to use it as a medium of trade and value it.

 

[Darren]

That's like saying this forum isn't real because it's not 3 dimensional. I get that you don't see the use/feasibility of the currency but your arguments are pretty flawed.

 

[G80FTW]

That's like saying this forum isn't real because it's not 3 dimensional. I get that you don't see the use/feasibility of the currency but your arguments are pretty flawed.

Yes, how ever when your dealing with money it helps if its real. Virtual currencies have no value and even less so than a fiat currency since they cost nothing to produce. The Dollar has a value in the sense that it cost money to produce and its limit is set by the government of the country its used in. The Bitcoins limit is set by its program nd is only limited by the people who use it. Like said, the limit of the bitcoin can easily be increased if the majority see fit.

If people want to use bitcoin as a currency thats fine, i dont see it ever becoming a popular currency because its value drastically changes every day making it a highly unstable currency.

 

[TrainTrackHack]

Yes, how ever when your dealing with money it helps if its real. Virtual currencies have no value and even less so than a fiat currency since they cost nothing to produce. The Dollar has a value in the sense that it cost money to produce and its limit is set by the government of the country its used in. The Bitcoins limit is set by its program nd is only limited by the people who use it. Like said, the limit of the bitcoin can easily be increased if the majority see fit.

The buying power of dollar is not related to the cost of producing the physical currency, though, so I don't think that's a terribly strong point to make. And bitcoins do cost money to produce - why do you think this thread got started? Even though nothing physical is produced, it still takes time and energy to create bitcoins.

If people want to use bitcoin as a currency thats fine, i dont see it ever becoming a popular currency because its value drastically changes every day making it a highly unstable currency.

It's unstable because it's fairly new and currently has a higher ratio of speculators/investors to "ordinary users" than conventional currencies (I mean ordinary users as in people who use it primarily to buy stuff.)

 

[G80FTW]

The buying power of dollar is not related to the cost of producing the physical currency, though, so I don't think that's a terribly strong point to make. And bitcoins do cost money to produce - why do you think this thread got started? Even though nothing physical is produced, it still takes time and energy to create bitcoins.

It's unstable because it's fairly new and currently has a higher ratio of speculators/investors to "ordinary users" than conventional currencies (I mean ordinary users as in people who use it primarily to buy stuff.)

If you want to believe that.

 

[TrainTrackHack]

Has nothing at all to do with what I want to believe.

 

[G80FTW]

Has nothing at all to do with what I want to believe.

Perhaps I should specify my post.

When I was referring to the value of the Dollar, the Dollar does have its own initial "value" given by its cost to produce. The Bitcoin does not as there are no resources put into producing Bitcoins other than processing power, which is essentially free. Unlike the Dollar which requires several different physical resources and machines to produce. No, the buying power of the Dollar is not connected to its manufacturing cost, but I am sure at one time it was taken into account. If you are producing a currency which has less buying power than it cost to produce, that would be counter-productive in my opinion. Im not saying its buying power is more than its production cost, Im saying it has to be taken into account. Which is why the government was considering getting rid of the actual paper $1 bill in favor of coins to lower the production cost of money. As paper bills do not last forever, they eventually have to be replaced by new ones.

Then you have Bitcoin which only has a resource requirement of processing power to "produce". I quote produce since there is no actual product being produced in the end. The cost of processing power is nill. If you had your own wind turbine (there are still some old ones working in Kansas) or solar panels(some homes have them), it would be absolutely free. But for the paper money you see now, in order for its production cost to be nill you would need alot more than a wind turbine....

Which is why I see no value in virtual currencies at all. I have no idea how anyone can value them period. There is little to no cost to obtain them. Only time. Whereas to get money, generally you have to work in exchange for it (some may be more fortunate). I see no value in something that can easily be obtained just by sitting and waiting for it. And once the rest of the world catches on to that, it will become useless is what Im saying. Right now, Im thinking the only reason it has any value is because everything today revolves around the internet and pop culture. To me, the Bitcoin is just a fad. People got into it because it was new and knew nothing about it and that gave it value. In the end, they may or may not come to realize its completely worthless. I dont see it surviving for very long. And even if it does, as I said, the governments WILL begin to regulate it as a normal currency defeating the entire purpose of it. At which point, it will become no different than the Dollar once it is behind government control.

 

[Okedokey]

Perhaps I should specify my post.

When I was referring to the value of the Dollar, the Dollar does have its own initial "value" given by its cost to produce. The Bitcoin does not as there are no resources put into producing Bitcoins other than processing power, which is essentially free. Unlike the Dollar which requires several different physical resources and machines to produce. No, the buying power of the Dollar is not connected to its manufacturing cost, but I am sure at one time it was taken into account. If you are producing a currency which has less buying power than it cost to produce, that would be counter-productive in my opinion. Im not saying its buying power is more than its production cost, Im saying it has to be taken into account. Which is why the government was considering getting rid of the actual paper $1 bill in favor of coins to lower the production cost of money. As paper bills do not last forever, they eventually have to be replaced by new ones.

Then you have Bitcoin which only has a resource requirement of processing power to "produce". I quote produce since there is no actual product being produced in the end. The cost of processing power is nill. If you had your own wind turbine (there are still some old ones working in Kansas) or solar panels(some homes have them), it would be absolutely free. But for the paper money you see now, in order for its production cost to be nill you would need alot more than a wind turbine....

Which is why I see no value in virtual currencies at all. I have no idea how anyone can value them period. There is little to no cost to obtain them. Only time. Whereas to get money, generally you have to work in exchange for it (some may be more fortunate). I see no value in something that can easily be obtained just by sitting and waiting for it. And once the rest of the world catches on to that, it will become useless is what Im saying. Right now, Im thinking the only reason it has any value is because everything today revolves around the internet and pop culture. To me, the Bitcoin is just a fad. People got into it because it was new and knew nothing about it and that gave it value. In the end, they may or may not come to realize its completely worthless. I dont see it surviving for very long. And even if it does, as I said, the governments WILL begin to regulate it as a normal currency defeating the entire purpose of it. At which point, it will become no different than the Dollar once it is behind government control.

Man there is so much wrong with this i give up.

 

[G80FTW]

Man there is so much wrong with this i give up.

Why? You seem to enjoy telling me im wrong and then saying the same thing i did.

 

[Darren]

I rarely fully agree with Okey but he's right. Your logic is flawed. The whole production cost of a bill is totally negligible. When I get a 20 dollar bill I don't look at it and think "Wow, this cost the government (not me mind you) to make. It must be valuable and that's why I can go buy a game with it or some food." That's not how you think about it. You think, "Wow, this has value because I can go somewhere and trade it for something valuable." If people accept Bitcoins, they've valuable. Whether or not they're regulated doesn't affect if something is valuable. The dollar is regulated and it has value.

Your logic just doesn't make sense in general.

Also, you hook a wind turbine up to a power outlet and it's not going to power your computer. It has to be converted in to power and it's pretty inefficient right now. That conversion costs money and you have to pay for that electricity. Wind turbines are out here in Kansas, but since you're in the KC area if I remember correctly, you're most likely getting your power from a resource that you have to buy, which you in turn pay for the electric service.

So yeah, it does cost to produce a bitcoin. Processing power isn't free either. You kind of have to like, buy the processor and video card.

 

[TrainTrackHack]

Denther already covered what I wanted to say pretty well, but I'll add a few things: only a small fraction of world's cash exists as physical currency (most of it is just as virtual as bitcoins), and time is a resource too (and quite valuable one at that.) And the initial investment of your solar panels and wind turbines is going to cost you too. That's not the only flaw with the "sit back and wait" argument either; firstly, even though (after the initial investment and ignoring the fact that mechanical devices do need to be maintained) the electricity produced by your wind turbine might be free, that does in no way imply that it is no longer valuable; people still use it and are willing to pay for it. Also, humans are not necessary for creating wealth or something of value; even if something like assembly line only requires 5% human intervention to produce useful goods, we don't say that the goods are "essentially 95% free", and the machines involved in the production won't get any of the money for themselves.

In practice, it's going to be very difficult to regulate too, much harder than government-issued money, so whatever regulation might be imposed on it, it's never going to be practical to enforce regulations to the extent that bitcoin becomes "no different than the Dollar."

 

[G80FTW]

Denther already covered what I wanted to say pretty well, but I'll add a few things: only a small fraction of world's cash exists as physical currency (most of it is just as virtual as bitcoins), and time is a resource too (and quite valuable one at that.) And the initial investment of your solar panels and wind turbines is going to cost you too. That's not the only flaw with the "sit back and wait" argument either; firstly, even though (after the initial investment and ignoring the fact that mechanical devices do need to be maintained) the electricity produced by your wind turbine might be free, that does in no way imply that it is no longer valuable; people still use it and are willing to pay for it. Also, humans are not necessary for creating wealth or something of value; even if something like assembly line only requires 5% human intervention to produce useful goods, we don't say that the goods are "essentially 95% free", and the machines involved in the production won't get any of the money for themselves.

In practice, it's going to be very difficult to regulate too, much harder than government-issued money, so whatever regulation might be imposed on it, it's never going to be practical to enforce regulations to the extent that bitcoin becomes "no different than the Dollar."

What fraction of the worlds currencies exist virtually? The 2 or 3 undeveloped countries using Bitcoin as their currency because they have no economy anyway? Bitcoin is the first currency to my knowledge that is virtual and useable in the real world. Name 1 developed country that uses a virtual currency system.

If the government cannot regulate it like they can the dollar, what makes you think it will be usable as legal tender in the US? As of now, its technically not because you can only use it online here (on few select sites at that). Until its able to be used in a physical store, I wouldnt say its legal tender. In fact, I think our government decided that it wasnt.

Time in this instance is not as valuable as you think....because it is not YOU that is wasting it, its your computer. You can spend your time as you please while your computer works away. I wouldnt even consider time as a true cost because your really not spending it just sitting and waiting. And if you are, I suggest a life.

As for the whole "free electricity" argument. Yes, you could put in the initial cost of such items and maintenance of them in the cost to create a Bitcoin. However here is the problem, your "free" electricity is not solely being used to create Bitcoins its also being used to power your house and things in it. Meaning, you have the initial cost and maintenance of such items whether you were creating Bitcoins or not. So if you choose to use a turbine or solar panels as the power source for your residence (alot of people do) then the cost of such things is not related to the creation of Bitcoins. And the cost of such things will not increase while creating Bitcoins. If it did, then I would consider it the cost to produce Bitcoins.

I rarely fully agree with Okey but he's right.

He also said that Bitcoin was not a good investment.

The difference between me and him is that I explain my argument, he does not.

What it really all boils down to is that I am against this whole idea of virtual currencies. And I have explained why. Its a bad idea in general, and can very easily lead to hyper inflation making it more worthless than it already is.

If people want to value something that does not exist, let them. But dont take all the work out of getting that something that doesnt exist. All it really does is show how fast our once intelligent society has gone down the drain. The movie Idiocracy comes to mind. I for one would not be surprised if the world came to that given some of things I have seen even today.

Again, the idea of using an unregulated computer program to produce a currency is just idiotic. I guess people forgot how easily computer programs can be manipulated. Thats kinda what they are designed for....

 

[Okedokey]

When Germany accepts bitcoins as legal tender, i think your argument goes up in smoke.

 

[G80FTW]

When Germany accepts bitcoins as legal tender, i think your argument goes up in smoke.

Dont see how. Even if the US accepted it as legal tender all the negatives i have pointed out will still exist....
Having it accepted as legal tender does not change how it is obtained and what it is, or isnt...

 

[TrainTrackHack]

What fraction of the worlds currencies exist virtually? The 2 or 3 undeveloped countries using Bitcoin as their currency because they have no economy anyway? Bitcoin is the first currency to my knowledge that is virtual and useable in the real world. Name 1 developed country that uses a virtual currency system.

Howstuffworks says only 8% exists as physical currency. I got a little graph

:

Where M1 is the total physical currency in the US plus some more (and M3 is of course shown only up to when its publication was discontinued.) I think US makes a fine example.

If the government cannot regulate it like they can the dollar, what makes you think it will be usable as legal tender in the US? As of now, its technically not because you can only use it online here (on few select sites at that). Until its able to be used in a physical store, I wouldnt say its legal tender. In fact, I think our government decided that it wasnt.

Of course, whether US thinks it's legal or not probably won't have great effect on its usability.

Time in this instance is not as valuable as you think....because it is not YOU that is wasting it, its your computer. You can spend your time as you please while your computer works away. I wouldnt even consider time as a true cost because your really not spending it just sitting and waiting. And if you are, I suggest a life.

This makes no sense. It doesn't matter who or what is using (or wasting) time. If I own a factory to make certain goods, their value depends only on what people are willing to pay for them, not whether I personally invested my time into producing them or if I bought a machine/assembly line to do all the work for me while I sit around and wait. Time is not a resource only humans are capable of expending.

As for the whole "free electricity" argument. Yes, you could put in the initial cost of such items and maintenance of them in the cost to create a Bitcoin. However here is the problem, your "free" electricity is not solely being used to create Bitcoins its also being used to power your house and things in it. Meaning, you have the initial cost and maintenance of such items whether you were creating Bitcoins or not. So if you choose to use a turbine or solar panels as the power source for your residence (alot of people do) then the cost of such things is not related to the creation of Bitcoins. And the cost of such things will not increase while creating Bitcoins. If it did, then I would consider it the cost to produce Bitcoins.

And this makes even less sense. I'm not sure what point you're trying to make. Of course the panels/turbines cost regardless of what I use the electricity for. How is this relevant? They don't generate infinite amounts of electricity; if you use a certain amount electricity for bitcoin mining, you won't be able to use that electricity for the rest of the household, so either you make up for it for buying electricity off the grid (i.e. running the rest of the household WILL cost more), or you simply live with the fact that the amount of electricity for the rest of the household is reduced, in which you simply have less value (for the rest of the household) for the same initial investment, which again means that it does cost more.

And in any case, I repeat that the cost of creating bitcoins (or any fiat money) has little relation to its value. I'm simply pointing out that the "creating bitcoins is free" argument is fallacious.

What it really all boils down to is that I am against this whole idea of virtual currencies. And I have explained why. Its a bad idea in general, and can very easily lead to hyper inflation making it more worthless than it already is.

But you don't seem to accept the fact that the money you normally use is no less virtual.

If people want to value something that does not exist, let them. But dont take all the work out of getting that something that doesnt exist. All it really does is show how fast our once intelligent society has gone down the drain. The movie Idiocracy comes to mind. I for one would not be surprised if the world came to that given some of things I have seen even today.

"Does not exist".

Yes it does. I already went though this once. Now you're just deliberately ignoring arguments. Not something you should be doing if you want to comment on the intelligence of the society, mind you.

Again, the idea of using an unregulated computer program to produce a currency is just idiotic. I guess people forgot how easily computer programs can be manipulated. Thats kinda what they are designed for....

"Unregulated computer program"

It is regulated; it just isn't regulated by the government. And what does easy to manipulate have to do with this? Yea, you can do that, but the protocol works by consensus, and your "easy modifications" are WORTHLESS unless you can get a people to use your modified protocol. Again, I've been through this. You still seem completely unaware of how the protocol actually works, and given that it's already been explained in this thread with plenty of links to more in-depth material, it's as though you're being deliberately and wilfully ignorant.

 

[G80FTW]

Howstuffworks says only 8% exists as physical currency. I got a little graph

:

Where M1 is the total physical currency in the US plus some more (and M3 is of course shown only up to when its publication was discontinued.) I think US makes a fine example.

Of course, whether US thinks it's legal or not probably won't have great effect on its usability.

This makes no sense. It doesn't matter who or what is using (or wasting) time. If I own a factory to make certain goods, their value depends only on what people are willing to pay for them, not whether I personally invested my time into producing them or if I bought a machine/assembly line to do all the work for me while I sit around and wait. Time is not a resource only humans are capable of expending.

And this makes even less sense. I'm not sure what point you're trying to make. Of course the panels/turbines cost regardless of what I use the electricity for. How is this relevant? They don't generate infinite amounts of electricity; if you use a certain amount electricity for bitcoin mining, you won't be able to use that electricity for the rest of the household, so either you make up for it for buying electricity off the grid (i.e. running the rest of the household WILL cost more), or you simply live with the fact that the amount of electricity for the rest of the household is reduced, in which you simply have less value (for the rest of the household) for the same initial investment, which again means that it does cost more.

And in any case, I repeat that the cost of creating bitcoins (or any fiat money) has little relation to its value. I'm simply pointing out that the "creating bitcoins is free" argument is fallacious.


But you don't seem to accept the fact that the money you normally use is no less virtual.

"Does not exist".

Yes it does. I already went though this once. Now you're just deliberately ignoring arguments. Not something you should be doing if you want to comment on the intelligence of the society, mind you.

"Unregulated computer program"

It is regulated; it just isn't regulated by the government. And what does easy to manipulate have to do with this? Yea, you can do that, but the protocol works by consensus, and your "easy modifications" are WORTHLESS unless you can get a people to use your modified protocol. Again, I've been through this. You still seem completely unaware of how the protocol actually works, and given that it's already been explained in this thread with plenty of links to more in-depth material, it's as though you're being deliberately and wilfully ignorant.

And all of this is why i fear for the future.

 

[Okedokey]

The irony is that the US dollar and economy is screwed, and you worry about a non-government regulated currency???

 

[G80FTW]

The irony is that the US dollar and economy is screwed, and you worry about a non-government regulated currency???

The economy here actually isnt that bad anymore. The Dollar isnt worth any less than it was 10 years ago, and plenty of jobs here at least in my area. While our government struggles to do anything except sabatoge themselves it doesnt seem to be effecting me quite yet.

But yes, i am worried about society in general becoming less intelligent by the minute. Besides its already proven a government regulated currency is far more stable than a non regulated one. For very obvious reasons.

 

[TrainTrackHack]

And all of this is why i fear for the future.

But yes, i am worried about society in general becoming less intelligent by the minute.

Care to elaborate? I know it's easy to ignore arguments, remain wilfully misinformed, make fallacious arguments and then finish off with something glib like "I'm worried about intelligence", but it really doesn't reflect very well on you.

Besides its already proven a government regulated currency is far more stable than a non regulated one. For very obvious reasons.

I'd like to see that proof.

 

[G80FTW]

Care to elaborate? I know it's easy to ignore arguments, remain wilfully misinformed, make fallacious arguments and then finish off with something glib like "I'm worried about intelligence", but it really doesn't reflect very well on you.

I'd like to see that proof.

Already provided it. I have provided all the evidence needed to back up my argument.

I see nothing wrong with pointing out all the negative flaws in something, someone needs to. If no one else wants to see them i really dont care.

Feel free to read back through the thread for anything you may have missed but im done here. Good luck on your bitcoin investments.