NattyLight Posted January 23, 2014 Share Posted January 23, 2014 Whats up Tailgate, Since the Redskins offered little to no excitement this year, I decided to take a risk / investment into cryptocurrency, specifically LTC. My hobby has extended from getting smart about how it works, investing in a boatload of mining gear, and started to do some inter-currency transfers at exchanges. The aspect I like most about it is that it aligns with me on a philosophical level, specifically with extending the freedoms of the market place, taking back (a little of) the power that mega-banking firms (to include to FED, of cource) have been weilding upon the populous for almost a century, and believe we could be on the precipous of a revolution. I'd also like to make money of course. I like to think back when I was in grade school and actually had to thumb through encyclopedias to write a paper. I didn't even send an email until I got to college. The information age is at a feaver pitch; quelling the most inane curiousity. What's next? I always would argue energy. Energy on tap. Pretty big leap I know. Then after looking into cyrptocurrency, seemless and almost instantaneous peer-to-peer transactions seemed like a good bridge to whatever the "ultimate" goal may be; up to including a clearer vision on the future of energy. Knowing that there's all types of folk that frequent this board, I was just curious if anybody else is into this or at least has an opinion on it. Peace. Link to comment Share on other sites More sharing options...
chipwhich Posted January 23, 2014 Share Posted January 23, 2014 It's an industry ripe for corruption, hacking. Good luck. Link to comment Share on other sites More sharing options...
NattyLight Posted January 23, 2014 Author Share Posted January 23, 2014 And our current monetary system is not? I'd also argue, that it is WAAAAAYYY less hackable than say 1/1000 chance of exploiting your ATM pin with a magnetic strip reader. Link to comment Share on other sites More sharing options...
chipwhich Posted January 23, 2014 Share Posted January 23, 2014 And our current monetary system is not? I'd also argue, that it is WAAAAAYYY less hackable than say 1/1000 chance of exploiting your ATM pin with a magnetic strip reader. Not talking in terms of that, of course if your ATM pin is hacked you have protection. It's kind of like surfing internet porn, you tend to end up at some unsavory sites that put bad things on your computer. You are venturing into the underworld. Better have strong security on your PC. Link to comment Share on other sites More sharing options...
techboy Posted January 23, 2014 Share Posted January 23, 2014 There are three major things I'd be concerned about, from the little I've read: 1. The algorithms are now so complex that some people unknowingly spend more money on electricity than they make from the coins they generate. 2. Governments are starting to take an interest, due to the increasing popularity of these with criminal enterprises. If they decide to actively combat it, that could be a problem. 3. They appear to be very prone to bubbles, so "investors" should be wary, especially since they have no intrinsic value, no fundamentals, and no government backing them. Link to comment Share on other sites More sharing options...
dfitzo53 Posted January 23, 2014 Share Posted January 23, 2014 There are three major things I'd be concerned about, from the little I've read: 1. The algorithms are now so complex that some people unknowingly spend more money on electricity than they make from the coins they generate. 2. Governments are starting to take an interest, due to the increasing popularity of these with criminal enterprises. If they decide to actively combat it, that could be a problem. 3. They appear to be very prone to bubbles, so "investors" should be wary, especially since they have no intrinsic value, no fundamentals, and no government backing them. Considering how little electricity it costs (relatively speaking) to run a modern computer, I'm a little bit surprised at this. If the electricity cost is enough to put you in the red it was probably never even worth thinking about in the first place. Link to comment Share on other sites More sharing options...
techboy Posted January 23, 2014 Share Posted January 23, 2014 Considering how little electricity it costs (relatively speaking) to run a modern computer, I'm a little bit surprised at this. It surprised me too, but it's true. From Tech Crunch: While it might be easy to look at those numbers and think it’s NBD to just like, extract value out of thin air, Bitcoin mining isn’t as lucrative as it seems. Regular users hoping to use their regular computers to mine shouldn’t expect to just start making money by setting aside a few compute cycles to dig up Bitcoins. That’s generally reserved for special mining computers that do nothing BUT mine for Bitcoins using custom encryption processors. As Biggs points out in his article, “While you could simply set a machine aside and have it run the algorithms endlessly, the energy cost and equipment deprecation will eventually cost more than the actual Bitcoins are worth.” That’s been confirmed by my colleague Matt Burns, who wrote in our internal message board that “after mining for a few days, the energy required to run my computer at full tilt was far greater than the Bitcoins I mined.” Link to comment Share on other sites More sharing options...
Poman Posted January 23, 2014 Share Posted January 23, 2014 From the link above As explained here, Bitcoins are “mined” by unlocking blocks of data that “produce a particular pattern when the Bitcoin ‘hash’ algorithm is applied to the data.” It seems simple enough, but the cost of Bitcoin mining is greater than one might expect. The more Bitcoins are mined, the more difficult it becomes to find the next block. Unless the miner is using the latest specially-designed mining rigs, the computers used often sport high-end graphics cards (since the GPUs are more efficient than CPUs for mining application). And running those computers requires a lot of power. This paragraph made my head explode. I feel like I'm rubbing two sticks together but everybody else has a Zippo. Link to comment Share on other sites More sharing options...
Springfield Posted January 23, 2014 Share Posted January 23, 2014 I'm intrigued. I think this could be the next bubble or even already is. Is it possible to just "buy" bitcoin with the intention of selling it later? Link to comment Share on other sites More sharing options...
PokerPacker Posted January 23, 2014 Share Posted January 23, 2014 Considering how little electricity it costs (relatively speaking) to run a modern computer, I'm a little bit surprised at this. If the electricity cost is enough to put you in the red it was probably never even worth thinking about in the first place.The more coins are mined, the more intensive it gets to mine coins. At this point, the calculations have become so intensive that it takes a long time to mine a single coin, thus that's a lot of energy being expended searching for it when using a general purpose machine such as a PC, which is why people are working on FPGAs for mining as that will be hardware designed specifically for the purpose of running these hashing functions making them much more efficient than a PC could hope to be. Link to comment Share on other sites More sharing options...
TimmySmith Posted January 23, 2014 Share Posted January 23, 2014 From the link above This paragraph made my head explode. I feel like I'm rubbing two sticks together but everybody else has a Zippo. major graphics cards makers have jumped on board. The rub is this, those cards are impossible to find, and if you can find one, it has been marked up to double the suggested retail price. In essence, the mining cards have become a commodity. Link to comment Share on other sites More sharing options...
NattyLight Posted January 23, 2014 Author Share Posted January 23, 2014 There are three major things I'd be concerned about, from the little I've read: 1. The algorithms are now so complex that some people unknowingly spend more money on electricity than they make from the coins they generate. This is true, but industry is responding with ASIC's that provide orders of magnitude more computer power at the fraction of the cost. GPU's do take a lot of power, that's why it is so important to find a place (or a provider) that has competitive energy rates. The good thing about litecoin, as compared to bitcoin, is that the complexity under certain conditions can go down. That will occur this week by about 17%, or what is was at the beginning of December which is nice. 2. Governments are starting to take an interest, due to the increasing popularity of these with criminal enterprises. If they decide to actively combat it, that could be a problem. There was a single publicized instant of funding a "criminal" enterprise. Let's be real, criminal enterprises are funded with every currency on the globe. And I agree, the government can completely impose big sanctions and realistically completely crush all digital currency in the US and abroad...they could also embrace it (especially if lobbyist are getting reimbursed handsomely for it)...that's the risk right? I see it as all or nothing. If it works out to be the future, I'll be a happy camper. If not, I didn't invest anything I wasn't prepared to lose. 3. They appear to be very prone to bubbles, so "investors" should be wary, especially since they have no intrinsic value, no fundamentals, and no government backing them. They, specifically with people that artificially inflate the price of lower-level coins (pump) then sell them for a profit. This is harder (a much larger financial risk) to do with a coins that are have exhibited stability like BTC/LTC. While the coins don't have a government backing them (as this is a bad thing) “I believe that banking institutions are more dangerous to our liberties than standing armies.” – Thomas Jefferson That is true, because it's new. But I will disagree on the fundamentals, both BTC and LTC exhibit: durability, portability and divisibility. The other characteristics are uniformed*, limited supply and acceptability**. *Depends on definition. **We're getting there with the overstock, google taking suggestions, and amazon working on accepting BTC. I'm intrigued.I think this could be the next bubble or even already is.Is it possible to just "buy" bitcoin with the intention of selling it later? Yes. I buy them at coin.mx. The fees are a tad higher (3.5%) than some of the bigger brokers, but it's just so easy. Link to comment Share on other sites More sharing options...
Kilmer17 Posted January 23, 2014 Share Posted January 23, 2014 Im still fascinated at the idea of people setting up computers to "find" coins that someone else had to create in the first place, and then assign a random value to them. Tell me why a hacker cant simply counterfeit the coins? Who is controlling the coins at the base level? Link to comment Share on other sites More sharing options...
Ellis Posted January 23, 2014 Share Posted January 23, 2014 It's as if YoVille and MafiaWars have conditioned an entire generation to consider this an acceptable way of earning money. Link to comment Share on other sites More sharing options...
techboy Posted January 23, 2014 Share Posted January 23, 2014 Is it possible to just "buy" bitcoin with the intention of selling it later? Yes. Just keep in mind that bubbles pop unpredictably (otherwise they wouldn't be bubbles), and once they start to deflate it's usually impossible to get out in time. This is true, but industry is responding with ASIC's that provide orders of magnitude more computer power at the fraction of the cost. Just as with the gold rush, the people making the real money are the ones selling the pick axes. Let's be real, criminal enterprises are funded with every currency on the globe. There is a real difference, in that one of the selling points of this virtual currency is anonymnity (even if it's overplayed). That makes governments nervous. Also, if you're into a certain mindset that doesn't trust central banks or government in general (and many of the biggest adherents are), why wouldn't "Big Brother" try to eliminate this obvious attempt to bypass their authority? While the coins don't have a government backing them (as this is a bad thing) Unless you belong to a particular minority view which zoony is so fond of, yes that is a bad thing. A very bad thing. There is a reason that every developed country in the world has a central bank. But I will disagree on the fundamentals That's not what I meant by fundamentals. When I buy real estate, I get land that can produce an income through rents. When I buy stock, I get a share of a company and probably a dividend stream. When I buy a bond, I get a revenue stream and a promise to repay principle from a corporation or government that is using my capital to grow. Bitcoins, on the other hand, are the classic "greater fool" investment. They don't have any value other than that which someone arbitrarily assigns them, and I'm hoping that I can find a "greater fool" who will pay more than I will. This works great unless you happen to be the last "fool". The normal response to this is that government currencies don't have any actual backing either, but they do... the backing of the government itself. I guess we'll see, but this sure feels like tulip bulbs to me. Good luck if you decide to take plunge (or already have). Link to comment Share on other sites More sharing options...
Jumbo Posted January 23, 2014 Share Posted January 23, 2014 Just as with the gold rush, the people making the real money are the ones selling the pick axes. this is a great line you still bring the gold, tb. Link to comment Share on other sites More sharing options...
JMS Posted January 23, 2014 Share Posted January 23, 2014 Considering how little electricity it costs (relatively speaking) to run a modern computer, I'm a little bit surprised at this. If the electricity cost is enough to put you in the red it was probably never even worth thinking about in the first place. Yes, Techboy is being silly. In reality Bitcoins have become something of a collector’s item such that folks are collecting them just as souvenirs... virtual souvenirs. This has caused a massive inflation in the value of bitcoins. Such that the few venders who do accept bit coins are seeing the value of those coins increase exponentially as they hold them months and years. 2009 $1 = 1,309.03 BTC 2014 $825.60 = 1 BTC So if you openned up retail shop ( pizza, coffee) and accepted bit coins for food... You are doing extremely well right now as your primary source of income has come from the price of the bit coins going through the roor. Since they only created about 20 million dollars worth of bit coins initially and those coins are all out in cerculation.. The market is setting the price.. and the market is dominated right now by demand. Link to comment Share on other sites More sharing options...
JMS Posted January 23, 2014 Share Posted January 23, 2014 Im still fascinated at the idea of people setting up computers to "find" coins that someone else had to create in the first place, and then assign a random value to them. Tell me why a hacker cant simply counterfeit the coins? Who is controlling the coins at the base level? Nobody can counterfeit the coins because of the encryption algorithms. Bit coins are much better protected from counterfeits than say US or EU currency. Who is controling the coins...There is a central board of governors who set policy such as how many bitcoins they are going to create... The initial number was several milion dollars worth.. and I don't think that's changed. The real answer is nobody controls the bit coins once they get into the market... literally the market controls them.. the way the technology works is every transaction the coin participates in is recorded and becomes part of that coins verification system.. If you want to convert your coins to dollars or purchase more coins their is a central site to do so where suppy and demand set the exchange rates. Also every transaction the bit coin participates in gets recorded and becomes part of the bit coins authenticity algorithm and also that record also is distributed and tracked independently through across the folks with bit coin wallets. Link to comment Share on other sites More sharing options...
KuNiT21 Posted January 23, 2014 Share Posted January 23, 2014 Bitcoin and Litecoin are the past.....Alt Coins are the next upcoming (Dogecoin). Dogecoins are going to be enormous in the coming months, it just sent the Jamaican Bobsled team to the Olympics. However if the Feds get involved, that would be the only issue. Retailers are starting to accept it as a form of payment and it won't be long until the major retailers (Walmart, Amazon, ect) start accepting it as well. To the moon baby. Link to comment Share on other sites More sharing options...
dfitzo53 Posted January 23, 2014 Share Posted January 23, 2014 Just for the sake of clarity, let me state first that I'm not endorsing bitcoins. I just want to explore the math a little bit. You can run a powerful computer with two high-end graphics cards for less than 1kW. Let's round to 1kW just to make the math simple. Assume an electricity price of $0.10/kWhr, which is a little more than I'm paying right now. That means it costs $0.10 or less per hour to run the mining rig. A whopping $2.40 per day. If that's an obstacle to your mining operation, then bitcoin was going to make you less than $1000 per year in the first place. If that's true (and I have no idea exactly what the estimated income per unit time is for bitcoin mining) then the problem is not expensive electricity, it's very low returns from mining. You'd be better off taking the time you spent researching the whole endeavor and getting a part time job for a week or two. Link to comment Share on other sites More sharing options...
KuNiT21 Posted January 23, 2014 Share Posted January 23, 2014 Just for the sake of clarity, let me state first that I'm not endorsing bitcoins. I just want to explore the math a little bit. You can run a powerful computer with two high-end graphics cards for less than 1kW. Let's round to 1kW just to make the math simple. Assume an electricity price of $0.10/kWhr, which is a little more than I'm paying right now. That means it costs $0.10 or less per hour to run the mining rig. A whopping $2.40 per day. If that's an obstacle to your mining operation, then bitcoin was going to make you less than $1000 per year in the first place. If that's true (and I have no idea exactly what the estimated income per unit time is for bitcoin mining) then the problem is not expensive electricity, it's very low returns from mining. You'd be better off taking the time you spent researching the whole endeavor and getting a part time job for a week or two. It's not about making 1k-2k a year.....people are doing it because of bitcoin value. Imagine mining a few hundred thousand coins 5 years ago and realizing they are worth $50 million today (Bitcoin). Will Alt Coins make people millionaires....not likely but Dogecoins are sticking right now and are the next bubble. Animal Shelters are using them because of the meme, overstock is accepting them, ect. Link to comment Share on other sites More sharing options...
Kilmer17 Posted January 23, 2014 Share Posted January 23, 2014 The whole thing just seems like a scavenger hunt. Some entity made up fake money on line, and if you can solve the math problem, you can have some. And some other person isnt willing to do that problem, so they will pay you for the ones you already found. Link to comment Share on other sites More sharing options...
PokerPacker Posted January 23, 2014 Share Posted January 23, 2014 The whole thing just seems like a scavenger hunt. Some entity made up fake money on line, and if you can solve the math problem, you can have some. And some other person isnt willing to do that problem, so they will pay you for the ones you already found. How else would you initially distribute a new currency? The way the government distributes new currency is by printing the money for itself and paying its debts with the new money making themselves the benefactors of the influx of dollar bills. Bitcoin just sends them out into the world waiting to be discovered by whomever is searching for them. And it's not like the Dollar Bill has any more real value than Bitcoins. Neither are backed by any real commodities, thus their value is based purely on other people deciding they have value. Link to comment Share on other sites More sharing options...
Predicto Posted January 23, 2014 Share Posted January 23, 2014 Yes. Just keep in mind that bubbles pop unpredictably (otherwise they wouldn't be bubbles), and once they start to deflate it's usually impossible to get out in time. Just as with the gold rush, the people making the real money are the ones selling the pick axes. There is a real difference, in that one of the selling points of this virtual currency is anonymnity (even if it's overplayed). That makes governments nervous. Also, if you're into a certain mindset that doesn't trust central banks or government in general (and many of the biggest adherents are), why wouldn't "Big Brother" try to eliminate this obvious attempt to bypass their authority? Unless you belong to a particular minority view which zoony is so fond of, yes that is a bad thing. A very bad thing. There is a reason that every developed country in the world has a central bank. That's not what I meant by fundamentals. When I buy real estate, I get land that can produce an income through rents. When I buy stock, I get a share of a company and probably a dividend stream. When I buy a bond, I get a revenue stream and a promise to repay principle from a corporation or government that is using my capital to grow. Bitcoins, on the other hand, are the classic "greater fool" investment. They don't have any value other than that which someone arbitrarily assigns them, and I'm hoping that I can find a "greater fool" who will pay more than I will. This works great unless you happen to be the last "fool". The normal response to this is that government currencies don't have any actual backing either, but they do... the backing of the government itself. I guess we'll see, but this sure feels like tulip bulbs to me. Good luck if you decide to take plunge (or already have). I love every bit of this post. Don't be surprised when you end up with a closet full of Beanie Babies. Link to comment Share on other sites More sharing options...
techboy Posted January 23, 2014 Share Posted January 23, 2014 Yes, Techboy is being silly. To be honest, I'm not surprised you're on this side of the discussion, given that we've had almost the exact same conversation on the investment value of gold, the main difference being that gold has some intrinsic value to industry. Bitcoins is basically gold on steroids, and there seems to be a large overlap in the demographic interested in each. I don't listen to Glenn Beck. Have the bitcoin ads started there yet? Just for the sake of clarity, let me state first that I'm not endorsing bitcoins. I just want to explore the math a little bit. Here's what I can tell you. The topic of bitcoins came up on bogleheads a little while back, and I read that thread and little bit elsewhere because I was curious. What I have read, in several independent and reliable sources, is that for many people bitcoin mining costs as much or more in electricity than they make in bitcoin value. My (limited) understanding is that this is because with the severely limited number of bitcoins being released, and the complexity of algorithms increasing tremendously over time, it's very difficult for individuals to even get them, because if your computer is not the first to solve the algorithm, you get nothing. It doesn't seem intuitive to me either, but I've read it multiple places from people who would be in a position to know. Link to comment Share on other sites More sharing options...
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