Bitcoin Mining for Fun and Profit

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Re: Bitcoin Mining for Fun and Profit

Post by rocketdog » Wed Apr 10, 2013 2:37 pm

Jake wrote: Looks like today will end in tears for some and riches for others in the Bitcoin world.
Ah yes, the way all bubbles end.  Always with a bang, never a whimper.
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Re: Bitcoin Mining for Fun and Profit

Post by melveyr » Wed Apr 10, 2013 3:05 pm

Reading reddit.com/r/bitcoin is kind of a trip right now. There are lots of people getting out of debt by speculating in bitcoins and thinking about quitting their jobs. I get an insanely strong cult-like vibe from discussions there. Who knows where and when this gravy train will end, but lots of people are going to get burned.

To paraphrase hyman minsky: creating money is easy, the trick is getting it accepted. The combination of no intrinsic value, no forced gunpoint forced demand (you have to pay taxes in fiat money or else you go to jail), and low barriers to entry indicate to me that bitcoin is nothing special.
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Re: Bitcoin Mining for Fun and Profit

Post by Storm » Wed Apr 10, 2013 3:32 pm

MachineGhost wrote: The risk of holding Bitcoins to do exchanges into other currencies.  Don't they have to hedge the value of Bitcoins so they don't have profits or losses in currency terms?
The only thing MtGox has to do is hold a small amount in it's wallet account to cover withdrawals.  They also have to hold a small amount of USD and EUR to cover bank transfers as well, and if they are smart they are hedging all of their currency risks.
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Re: Bitcoin Mining for Fun and Profit

Post by Storm » Wed Apr 10, 2013 3:33 pm

Wow:

Image
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Re: Bitcoin Mining for Fun and Profit

Post by stone » Wed Apr 10, 2013 3:43 pm

I guess that has hit a rebalance band for the bitcoin permanent portfolio :)
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Re: Bitcoin Mining for Fun and Profit

Post by rocketdog » Wed Apr 10, 2013 3:46 pm

stone wrote: I guess that has hit a rebalance band for the bitcoin permanent portfolio :)
D'OH! LOL  ;D
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Re: Bitcoin Mining for Fun and Profit

Post by MachineGhost » Wed Apr 10, 2013 4:40 pm

I feel peeved I confused exchangers with a money changer and not a broker.  D'oh!

Nice tank!  But I missed the entire froth. :(
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Re: Bitcoin Mining for Fun and Profit

Post by rocketdog » Thu Apr 11, 2013 2:22 pm

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
- H. L. Mencken
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Re: Bitcoin Mining for Fun and Profit

Post by melveyr » Thu Apr 11, 2013 2:27 pm

Desert wrote: We have some bitcoin holders on this board. One recently claimed to have a year's salary in bitcoins. This is very strange. It all sounded too strange to believe, but I figured I was just getting old.
Even worse I heard that some posters keep 25% of their wealth in a shiny pieces of yellow metal  ;)

Honestly though this bitcoin phenomenon is insane. I thought lots of people were going to get burned, I just didn't know it happen so soon. People are stupidly thinking that scarcity = value. That's such a primitive view of markets, even predating economists as far back as Karl Marx.
Last edited by melveyr on Thu Apr 11, 2013 2:31 pm, edited 1 time in total.
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Re: Bitcoin Mining for Fun and Profit

Post by moda0306 » Thu Apr 11, 2013 2:39 pm

Melveyr,

You should read "Influence: the psychology of persuasion."

One of the most interesting chapters is the one on scarcity.  Insane.
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Re: Bitcoin Mining for Fun and Profit

Post by rocketdog » Thu Apr 11, 2013 3:01 pm

moda0306 wrote: Melveyr,

You should read "Influence: the psychology of persuasion."

One of the most interesting chapters is the one on scarcity.  Insane.
I'll have to check that out too.  I like books on human psychology geared towards the layman.
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Re: Bitcoin Mining for Fun and Profit

Post by rocketdog » Thu Apr 11, 2013 3:39 pm

When chuckleheads like these two start muscling in on the action, you know trouble's ahead:

http://finance.yahoo.com/news/big-inves ... 14595.html
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Re: Bitcoin Mining for Fun and Profit

Post by AgAuMoney » Thu Apr 11, 2013 8:02 pm

Desert wrote: We have some bitcoin holders on this board. One recently claimed to have a year's salary in bitcoins. This is very strange. It all sounded too strange to believe, but I figured I was just getting old.
Back down to about one year's gross again.  :)

Frankly, I don't trust the exchanges enough, nor is there enough liquidity to move those kind of numbers fast enough.  Also, I've already pulled out far more than I put in.  I'd like to pull out more, but I think at this point I'm going to wait for the FinCEN position to clarify before doing any moves with potentially large tax or legal implications.

And this market activity is nothing new.  bitcoin has tanked like this before.

I think from the peak of about $266 down to about $60 was the range this time.  Call it about 75% drop.

In late 2011 it went from $33 or so down to $2.  The dollars aren't as big, but the percentage is much bigger.

With DDOS attacks and simple under capacity many people are going to panic and try to sell.  Oh well.  One of these times it might never come back.  Maybe this time.  Maybe not.
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Re: Bitcoin Mining for Fun and Profit

Post by MachineGhost » Thu Apr 11, 2013 8:54 pm

Storm, did you get everything out in time???
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

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Re: Bitcoin Mining for Fun and Profit

Post by stone » Fri Apr 12, 2013 2:10 am

rocketdog wrote: When chuckleheads like these two start muscling in on the action, you know trouble's ahead:

http://finance.yahoo.com/news/big-inves ... 14595.html
For their part, the Winklevoss twins have used some of their bitcoin to pay for the services of a Ukrainian computer programmer who has worked on the site of their venture capital firm.
If he has a wage contract that is denominated in bitcoins then that is the sort of thing that could start to give some sort of price stability.
When people offer stuff for sale in bitcoin, do they keep rapidly altering the advertised price? It will only start to act like a currency if they don't. I suppose a large stock of debts denominated in bitcoin would make it more like a currency. Imagine taking on a bitcoin denominated mortgage now  ::) .
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Re: Bitcoin Mining for Fun and Profit

Post by Pointedstick » Fri Apr 12, 2013 8:58 am

stone wrote: When people offer stuff for sale in bitcoin, do they keep rapidly altering the advertised price? It will only start to act like a currency if they don't.
FWIW, I don't. But then again I haven't had many Bitcoin customers. I think people have mostly been saving rather than spending.
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Re: Bitcoin Mining for Fun and Profit

Post by rocketdog » Fri Apr 12, 2013 11:16 am

stone wrote:
rocketdog wrote: When chuckleheads like these two start muscling in on the action, you know trouble's ahead:

http://finance.yahoo.com/news/big-inves ... 14595.html

For their part, the Winklevoss twins have used some of their bitcoin to pay for the services of a Ukrainian computer programmer who has worked on the site of their venture capital firm.
If he has a wage contract that is denominated in bitcoins then that is the sort of thing that could start to give some sort of price stability.
When people offer stuff for sale in bitcoin, do they keep rapidly altering the advertised price? It will only start to act like a currency if they don't. I suppose a large stock of debts denominated in bitcoin would make it more like a currency. Imagine taking on a bitcoin denominated mortgage now  ::) .
Good point and good question.  I was wondering the same thing.  It's strange to watch a "currency" whose value is so closely tied to another currency's value.  Imagine if every time you bought something with FRNs the store had to check to see how they were faring against another currency.  It just feels weird that you don't know how many bitcoins something is worth unless you first know how many FRNs a bitcoin is worth. 
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
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Re: Bitcoin Mining for Fun and Profit

Post by Storm » Fri Apr 19, 2013 9:57 pm

MachineGhost wrote: Storm, did you get everything out in time???
Yes, I got all $12,000 out in time.  I kind of wish I left some in because I could have stayed in until $260, then bought again at $100, then sold again at $180, then bought again at $60 (two days ago) then sold at $140 today.  It's crazy... if you have time to day trade this shit you can just ride the waves up and down and make a killing...  Too bad I don't have time to daytrade.
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Re: Bitcoin Mining for Fun and Profit

Post by rocketdog » Fri May 24, 2013 8:20 am

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
- H. L. Mencken
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Re: Bitcoin Mining for Fun and Profit

Post by AdamA » Tue Jul 02, 2013 11:45 am

Apparently the Winklevoss twins, of Facebook litigation fame, are trying to create a bitcoin ETF.

Seems like a bitcoin ETF would in part defeat the purpose of using bitcoins.

http://www.bloomberg.com/news/2013-07-0 ... -fund.html
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Re: Bitcoin Mining for Fun and Profit

Post by moda0306 » Tue Jul 02, 2013 11:06 pm

AdamA wrote: Apparently the Winklevoss twins, of Facebook litigation fame, are trying to create a bitcoin ETF.

Seems like a bitcoin ETF would in part defeat the purpose of using bitcoins.

http://www.bloomberg.com/news/2013-07-0 ... -fund.html
Enter "securities lending."

Btw, if anyone needed their moment to get out, a couple guys were trying to sell me on a bitcoin scheme the other night outside a bar. Like literally it was a pyramid scheme if sorts.
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Re: Bitcoin Mining for Fun and Profit

Post by AdamA » Wed Jul 03, 2013 10:37 pm

moda0306 wrote: ...a couple guys were trying to sell me on a bitcoin scheme the other night outside a bar. Like literally it was a pyramid scheme if sorts.
It at least sounds like an interesting bar.
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Re: Bitcoin Mining for Fun and Profit

Post by Storm » Wed Dec 04, 2013 10:38 pm

It's a bit fun going back and reading my initial profit totals back in 2011, when I was selling everything I mined for ~$15 a coin, and marveling at the fact that I was basically flushing away $2,000 a day profit by not holding them...
Gross profit:

5/26/11 - $16.74 (2 BTC)
6/03/11 - $27.58 (2 BTC)
6/10/11 - $38.99 (2 BTC)
6/28/11 - $33.57 (2 BTC)
My story is not all bad though - I have a total of just over $700 in hardware and about $1000 in power bills, but I'm up over $100,000!  I was smart enough to take $5000 of the profit I cashed out, reinvested at $69 a coin, and started holding onto them rather than selling them for a quick profit.  I also invested heavily in Litecoin, an alternative crypto, at around $2 a coin, and it's up over $40 now...

I'm pretty convinced now that Bitcoin is the future, and I'm just going to hang around and see where this ride goes.  More money passes through Bitcoin's network every day than Paypal's.  If even a fraction of the population starts using it as real money, this is going to be a very disruptive thing.  I would encourage everyone to buy a few Bitcoins - you never know where it can go.
Last edited by Storm on Wed Dec 04, 2013 10:40 pm, edited 1 time in total.
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Re: Bitcoin Mining for Fun and Profit

Post by RuralEngineer » Thu Dec 05, 2013 10:13 pm

What are your thoughts on China banning it as a currency?  Apparently they were pretty gung ho about Bitcoin prior to this and that was driving a significant amount of the demand (per the story I read).
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Re: Bitcoin Mining for Fun and Profit

Post by Storm » Sat Dec 07, 2013 1:56 pm

RuralEngineer wrote: What are your thoughts on China banning it as a currency?  Apparently they were pretty gung ho about Bitcoin prior to this and that was driving a significant amount of the demand (per the story I read).
I think the US media mistranslated the press release.  Here is something I read that seems to more accurately describe the situation:
It's times like these that you are glad that you can read Chinese, and not have to deal with clueless English newspapers. I summarized the PBC announcement
@Is the news out of China about banks & bitcoins good or bad news?
It's excellent news for bitcoin. Essentially bitcoin exchanges in China and bitcoin itself is going to be treated as a "commodity" rather than a "currency" and therefore not going to be subject to banking and currency control regulations. The only restrictions on bitcoin exchanges is that they will be subject to the standard internet censorship rules and they will need to get the identity of all users to prevent money laundering. Existing financial institutions will not be able to trade bitcoin, but this is a great thing for entrepreneurs.
Also, more excellent news out of Hong Kong. An HK bitcoin exchange basically shutdown and stole everyone's money. This is excellent news because within days, they have been caught and are likely going to go to jail. I'm very, very optimistic about Hong Kong "leading the way" for bitcoin.
The other good news is that the Chinese government understands bitcoin. According to the notice.
Bitcoin has the following four characteristics:
1) there is no central issuing authority 2) the total amount is limited 3) it is not geographically limited for acceptance 4) it is anonymous
According to the PBC, bitcoin is not a "true" currency because
1) there is no central issuing authority 2) there is no legal requirement that anyone accept bitcoin
Bitcoin is therefore a virtual commodity, and therefore is not subject to the laws regarding currency transactions, nor should circulate as a currency.
Also here are his thoughts on the overall climate in China regarding Bitcoin:
1) The PBC has basically given the green light for bitcoin trading and exchanges. They are trying to keep bitcoin trading "separate" from the other parts of the financial system so that if bitcoin blows up, then nothing bad will happen. The thing that I think they are worried about is a Lehman style situation in which something blowing up in derivatives brings down the rest of the economy.
The strategy of creating a ring fence around new markets is a very standard one in China. Hong Kong is an entire city that is ring fenced.
2) Not terribly much. It only started to get on the radar screen a month ago.
3) The main driver is that there are tons of money in China and no one knows what to do with it all. The traditional investments (real estate and stocks) have been closed off by government action since the government has made it clear they will kill any bubble in the real estate and stock markets. So the money is going into all sorts of "non-traditional" investments. Bitcoin is just one of them.
4) Geeks. So far it's not the type of thing that random people will buy.
5) It's not very mainstream. However, its taken the Chinese geek community by storm and there are a lot of geeks in China. As with a lot of Chinese things, the fraction of people in China who are geeks is small, but a small fraction times a billion is a lot of people.
6) No harder than it is to buy anything else online.
Bitcoin has not gotten much mainstream attention and its still something that is with geeks, but you have the perfect storm of a lot of other things. The main thing is that bitcoin has hit China exactly at the time where China is looking at restructuring its entire economy and financial system to move out of low tech industries into high tech ones. It also hit China at just the right time in the credit cycle. China has recovered from the 2008 crash and is just starting to enter into another boom phase (which will last about two to three years before the economy crashes again).
EDIT: Source
http://www.quora.com/China/What-is-the- ... mS&share=1 and http://www.quora.com/China/How-will-Chi ... eph-Wang-9
EDIT #2: From comments below: both Baidu and China Telecom are regulated by the Ministry of Industry and Information Technology (MIIT). Which is now the same regulator for BTC. Until MIIT tells them (and other tech companies) HOW to go about accepting this "virtual commodity," they ARE running afoul of their regulator by accepting BTC. It's not illegal for China Telecom and Baidu to accept BTC, but why would they continue to do so in the same manner as they have in the past? Last week, there was no regulator. Today, there is. It would be idiotic and very much unlike how China works, if they continued to accept BTC w/o guidance from the MIIT.
The specific verb used by Baidu Jiasule, '??' means to 'temporarily suspend' or 'pause'. It's not how they would usually express a permanent end to the service.
A temporary pause could turn out to be a permanent halt, but that isn't the message they wanted to put out at this time.
A reasonable explanation for this is that they're being careful, because they don't know, yet, how the new rules will be interpreted. So they're waiting to see what happens.
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