Bitcoin Mining for Fun and Profit

[AgAuMoney]

Bitcoin is decentralized and totally immune to any government shutdown.

Except where bitcoin connects with the world of regular currencies.

[dualstow]

Despite the title, I guess the correct term is "minted" not "mined."
Right? 

[Storm]

A friend of mine bought one of those machines that makes them. ("Mines" them?)

Needless to say, I keep an offline encrypted wallet now, because I don't want to lose that money due to a virus or hacker.

That *is* a concern. It's enough trouble keeping an eye on my credit cards. Bitcoins seem like they were made to be stolen by hackers, made for this very purpose. Still, I'm intrigued.

Right, you just have to treat Bitcoins like gold coins that live on your computer.  You can transfer them to an offline wallet, which you store on a USB thumb drive (better make 2 copies, just in case one gets fried) and bury them in a PVC pipe in your back yard, if you really want them to be safe.  Bitcoins are the closest digital alternative to gold because they are spendable by anyone that gets a hold of your wallet.

[Storm]

Despite the title, I guess the correct term is "minted" not "mined."
Right? 

The correct term is actually mined.  Bitcoins are mined by performing very complex cryptographic calculations using a computer.  These cryptographic calculations are used to verify the authenticity of transactions, essentially, every Bitcoin miner is checking to make sure that every transaction that happens, ie, transfer of Bitcoin from person to person, is legitimate.  The reason why it is secure is that you would have to have more computing power than every other person mining bitcoin in order to create a fraudulent transaction (spend coins that you don't own).  There are also a finite amount of bitcoins created every 10 minutes that are awarded to bitcoin miners in a lottery type fashion - the miner that guessed the right number wins.  Miners that are able to guess more numbers faster are more likely to win (more computing power).

Here is a video that shows how it works:

http://www.youtube.com/watch?v=Um63OQz3 ... r_embedded

[BearBones]

Just watched that video again, and I still don't fully get this. If I want to buy something at the grocery store or online, say at Amazon, how would I use bitcoins? Don't I have to exchange into currency?

[dualstow]

Just watched that video again, and I still don't fully get this. If I want to buy something at the grocery store or online, say at Amazon, how would I use bitcoins? Don't I have to exchange into currency?

Yes, for now, you don't want to bother with that. There are certain vendors that already accept bitcoins but like Paypal it may take some time to become ubiquitous.

I'm wondering how you can store the same bitcoins on more than one drive, but I'm not going to ask unless I still don't know the answer after I read through this thread and view the video. I'm guessing it's kind of like buying concert tickets and getting a pdf with a barcode. You can make copies, but once it's scanned (used), that unique ticket (or "coin") is done...except the bitcoin lives on when the recipient goes to spend it. There must be some central house that keeps track of whose bitcoins are whose. But, then we wouldn't need to store them on a drive. Ok, I'll read up on it.

[Pointedstick]

Every client stores the entire transaction history of every Bitcoin transaction. That's why you can't use them more than once.

Not coincidentally, I just added Bitcoin as a payment method to my store.

[dualstow]

Every client stores the entire transaction history of every Bitcoin transaction. That's why you can't use them more than once.

Not coincidentally, I just added Bitcoin as a payment method to my store.

I thought you shuttered your business. 

[Pointedstick]

Nah, I opened it again! I was mostly overwhelmed by new fatherhood, but things are a bit easier now, and it seemed silly to just throw away a viable business.

[MachineGhost]

I gave up mining Freicoins.  I don't think the market likes the concept.

[dualstow]

Nah, I opened it again! I was mostly overwhelmed by new fatherhood, but things are a bit easier now, and it seemed silly to just throw away a viable business.

Cool. Maybe you can print some diapers on those machines of yours.

[Pointedstick]

No, but it's gonna be great for children's toys. Here's a Star Destroyer I modeled and printed:

[Pointedstick]

Much more primitive than SLS; that's the output from a self-built FDM machine. Cost me less than $700 to make!

[Pointedstick]

Selling parts to make the printers. I'm working on putting together full kits. I also sell custom prints.

I highly recommend teaching your kids about 3D printing. It's fantastic introduction to mechanics, electronics, computer-aided design, and programming--valuable skills that will serve them well.

[dualstow]

Beautiful Star Destroyer.

Was it easy to add bitcoins as a payment method?
Let us know if/when there is a sudden uptick in customers using bitcoins. It's interesting.

[Pointedstick]

It wasn't too challenging. My shopping cart doesn't have it natively built in, so I needed to upload a Bitcoin-handling module to my site and rejigger one of the payment methods to point to that, but it wasn't too bad and the instructions were nice and clear. I haven't received any Bitcoin orders yet, though.

[MachineGhost]

If anyone would like to receive some free Bitcoins, you can get some at http://netlookup.se/free-bitcoins/245101 for which I get a 20% finder's fee.  Don't expect to be able to buy fries with it.

Here's another: http://www.bitvisitor.com/

[Storm]

Bitcoin is roughly $65 today.  My paltry wallet is now worth $8,450.  Sadly, my brother lost about $65,000 worth of bitcoins because he accidentally deleted his encrypted wallet from DropBox because he didn't recognize the funny filename he had given it and was trying to clear space.  Personally, this hasn't been a bad investment for me given $700 startup costs and $100 in electricity per month for the last 18 months.

I only wish I had gotten ahead of the game and purchased an ASIC miner - some of the new miners are coming online and one guy mentioned he paid for his in 9 days, and it's now making $hundreds a day profit for him.

[flyingpylon]

What's the best way/place to just buy a few bitcoins every so often?

[dualstow]

Bitcoin is roughly $65 today.  My paltry wallet is now worth $8,450.  Sadly, my brother lost about $65,000 worth of bitcoins because he accidentally deleted his encrypted wallet from DropBox because he didn't recognize the funny filename he had given it and was trying to clear space. 

Oh my. Isn't this the one "currency" one can back up?
In college, I accidentally wrote my bibliography file over a very long paper that I had written over the course of a night. It sucked, but it wasn't quite as painful as losing 65K would be.

As for your profit, sounds good but is it fair to say that, like with FXF (Swiss franc etf) or gold, it's an unrealized gain that could disappear tomorrow?

[Tortoise]

Sadly, my brother lost about $65,000 worth of bitcoins because he accidentally deleted his encrypted wallet from DropBox because he didn't recognize the funny filename he had given it and was trying to clear space.

With memory as cheap as it is these days, wouldn't it make sense for DropBox to periodically archive everything and keep it around for a little while? I have a hard time believing that if a DropBox user deletes a file, it's immediately deleted forever.

[AgAuMoney]

Dropbox could, but how much would you be willing to pay for them to provide you with a recycle bin aka trash can that would hold your deleted files?  Or a person to go and retrieve that file from backup?

It was just carelessness that lost the wallet.  It could have been kept as a digital backup.  But there are many ways to protect your bitcoins, because all you need to have is the private key(s) whose public portion received coins.  The wallet just contains a record of the private key(s) which have received coins.  All transactions are recorded in the block chain so if you have the private key(s) you can recreate the wallet).  It could have been kept as a "paper wallet" (a printed representation of a private key, often with QR code).  It could have been kept as a mental wallet (a memorized phrase that converts to a private key).

I'm wondering how much of my bitcoin to keep, and how much to cash in...  And if I'll have enough for that Jeep I've had my eye on. 

[Storm]

Bitcoin is roughly $65 today.  My paltry wallet is now worth $8,450.  Sadly, my brother lost about $65,000 worth of bitcoins because he accidentally deleted his encrypted wallet from DropBox because he didn't recognize the funny filename he had given it and was trying to clear space. 

Oh my. Isn't this the one "currency" one can back up?
In college, I accidentally wrote my bibliography file over a very long paper that I had written over the course of a night. It sucked, but it wasn't quite as painful as losing 65K would be.

As for your profit, sounds good but is it fair to say that, like with FXF (Swiss franc etf) or gold, it's an unrealized gain that could disappear tomorrow?

Yes, it's quite tragic because it proves that data loss is more likely than theft.

You're right; it's just a paper gain.  I'm holding onto this long term and see where we are in 10 years.  Bloomberg is reporting that due to the Cyprus bail-in, a surge of people are downloading bitcoin clients in Spain now.

[Reub]

"Web Money Gets Laundering Rule"

WSJ:

"The U.S. is applying money-laundering rules to "virtual currencies," amid growing concern that new forms of cash bought on the Internet are being used to fund illicit activities."

[MachineGhost]

It looks like the price has gone parabolic, its over $70 now!  Get ready for the inevitable crash.

There's also a fork in the blockchain because a large block was mined with v.8 that is incompatible with v.7.