If you're just speculating on the price going up, and don't actually want to use coins to pay for something, it might be worth having a look at these charts before you do buy any:
by the time mainstream publications like the BBC are reporting on spectacular gains in an asset, it's far too late to invest speculatively in the hope of finding a greater fool and cashing out before the inevitable crash, even if you believe in the long-term future of this currency.
Disagree. When I can get a bank account with a UK bank denominated in bitcoin (at whatever cost), then it's too late to invest speculatively. Until then, the barriers to entry are exerting downward pressure on the price.
+1. In my opinion, the Chinese government has effective control over the price of bitcoins right now. Obviously they can't dictate the price but, if they decide to restrict bitcoin trading, the price would plunge.
Putting their wealth into Bitcoin isn't putting it into USD - on the contrary. The Chinese exchanges are all in CNY, dollar isn't mention there at all, which creates a number of issues like psychological levels being different and CNY/USD ratio varying on its own.
China has implemented capital controls to prevent individuals from moving large amounts of wealth out of China. See http://www.globalpost.com/dispatch/news/regions/asia-pacific... for some background (or just do a Google search for china capital controls).
A Chinese citizen could conceivably bypass those controls by (1) depositing renminbi (i.e. CNY) into a BitChina account, (2) buying bitcoins, (3) transfering them to a non-Chinese exchange (e.g. MtGox, BTC-e, BitStamp), where they (4) sell them for USD.
This is true, but both BTCChina and OKCoin have no option, but to start working with the Chinese government (BTCChina already started) and will provide control mechanisms, which isn't necessarily a bad news for Bitcoin as people try to present it. Also, due to major mining operations happening in China, there's inflow of capital to China, so, I don't think the government will have a problem with that.
Coinbase.com is by far the easiest to simply buy or use Bitcoin if you have a US bank account (and it is a YC company). Unlike MtGox.com (originally the most popular) the site is fast, stable, well designed, and can connect directly with your US bank account. They've also got a set of merchant tools and APIs.
The only downside is that it's not a real time trading platform / you wouldn't want to do day trading of BTC on it.
This link will give us both $5 in BTC if you buy 1 BTC.
Coinbase is nice, but dealing with their support is not a fun experience at all. For about a month they held about $2000 of my funds due to one of my purchases being marked as high-risk. Support took anywhere from three to five business days to respond to each email. I eventually got my money back after threatening with legal action. Would not do business with them again.
In case you are European, I can highly recommend bitcoin.de for hassle-free, legit buying and selling of Bitcoin. Similar to Coinbase, they're less a day-trading platform and more a place to buy and sell Bitcoin within a few days. They have a partnership with a "real" German bank (Fidor) which makes them highly unlikely to have regulation issues any time soon.
I have had no issues with them, was about 48 hours after signing up to get my first Bitcoins. Supports 24 hour bank transfers or 1 hour cash deposits if you need them fast.
For those who've been involved in this for some time: Do you think it's too late to get into mining Bitcoin (or other cryptocurrencies) to make any significant payoff? I've been looking to get into Litecoin and others because I think I may have missed out on Bitcoin (and buying them at the current value just isn't feasible), and I'm trying to assess whether this bubble/trend/fad/craze will extend to other cryptocurrencies and if going in early now on them will be worth it. I know I'm asking you to look into a crystal ball, but anyone who's been in this game from early on knows much more than I do.
These are benchmarks of Bitcoin mining hardware. GPU's outperform CPU's by a large margin, then FPGA's outperformed GPU's and now ASICs (programs on a chip) absolutely kill everything else. Look at Xtreme Miner's "The Lion" specifically. It's only going to (alegedly) be available in Jan/Feb time, but the benchmarks they're claiming are scary.
Also there are some very very large ASIC data center deployments being worked on in China with some fairly innovative stuff like teflon shelves to avoid rack/rails and innovative cooling systems all designed to provide higher ROI per watt and capital invested. China really seems to be leading the field in mining.
Also keep in mind that as coins dry up they will be replaced by you collecting transaction fees. So it's not all about getting coins.
If I were to start mining today, and I believed Feathercoin and other smaller variants have promise (which I do) I would buy a dedicated ASIC box that can do SCrypt hashing (keep in mind you'll need more memory than dedicated ASICs for BTC) and give that a shot. With Bitcoin you're up against some very serious players at this point and the fact that ASIC boxes have a bigger advantage with Bitcoin than they do with Litecoin or Feathercoin makes it less attractive.
If you plug the numbers in you'll see that to all intent and purposes, private mining for BTC is now useless unless you invest in a USD$5K+ ASIC mining rig and even then the rewards are not guaranteed as the overall network difficulty (how hard it is to find a block) keeps jumping every few days (see http://bitcoindifficulty.com). Basically, you'll end up underwater if the value of BTC drops from its current high.
I also missed the BTC mining boat and instead have decided to mine Litecoin (working on the assumption that a rising speculative tide floats all ships).
Litecoins use a different hashing algorithm (scrypt) which is designed to prevent a mining arms race and keep it feasible for CPU miners to continue finding blocks.
I joined the liteguardian.com pool 5 days ago and have three servers mining (each has an Intel Xeon CPU E31245) and I will have made 1LTC tomorrow. At the moment 1LTC is trading at just over $40. It was $6 a week ago.
Another option which I discovered yesterday is http://www.kraken.com - they appear to be a fully fledged FX platform that allows margin/leverage trading on BTC. Risky though unless you know what you're doing (I don't).
Edit: have just sent you an invite to the liteguardian pool in case LTC mining interests you.
Mining bitcoin is thoroughly impractical. It would cost you significantly more in electricity than you would make in bitcoin. The only effective way to do it is with specialized hardware built specifically for mining bitcoins.
It's not too late to buy bitcoins, though: you don't need to buy a whole one. For example, if you think bitcoin will double in price over the next month, you can easily buy 0.1 bitcoins for about $100 and sell it next month for $200.
One of the benefits of bitcoin is that it's highly divisible- the idea of "1" bitcoin doesn't really matter for most purposes. If Bitcoin becomes commonly used as an actual currency, people will almost never deal in whole bitcoins (any more than they would deal with $10k bills if they existed). You'd buy a loaf of bread with 0.0001 bitcoins, for example.
So, if you think the trend/fad/craze will continue, you might as well buy fractions of a bitcoin. I can't speak to the alternate crypto currencies, though.
Technically, you're right; the electricity used over an ASIC miner's lifetime is very little. The OP has the right idea though, even though the reasoning is wrong. It actually comes down to whether your mining unit can cover its capital investment.
If it weren't for the huge price increases, all the people who bought ASIC miners would be underwater right now.
I have a 60GH/s BFL miner. It uses about 350W or so. The fans are LOUD. When I get home the room it's been running in is noticeably warmer.
They don't generate as much BTC as one might think - just 0.04 / day at current difficulty and this is decreasing at a rapid clip (1 month ago or so it was 0.11 / day).
As an aside, I've always wondered if one day all heating will be computational waste heat. You could almost give away ASICs (whether for mining or other purposes) to people in cold countries and subsidise their electricity when they run their heater...
> You could almost give away ASICs (whether for mining or other purposes) to people in cold countries and subsidise their electricity when they run their heater...
Just recently an article at Spiegel Online (main German news site) claimed something along the line of: Bitcoin now passed the valuation of 1.000 USD. For comparision, the price of gold is at 1.300 USD at the moment. As if something magical would happen if Bitcoin would pass Gold. Strange stuff ...
Too many people dont realize that while it might be hard to invest 50$ in Apple, investing 50$ in Bitcoin is always possible - no matter the current price.
The fact that bitcoin is so divisible might be its true weakness in terms of adoption (given huge value of a single Bitcoin).
Imagine prices in shop given as 0.000132 BTC, 0.000123 BTC, 0.0000132 BTC or even worst 0.0009999, 0.000999, 0.009999 - looks similar and it is easy to be mislead and pay for something much more then expected. People would need to get use to count zeros after decimal point. This hardly matters with any real currency.
You don't have to represent BTC amounts as fractions of a whole. 0.000132 BTC is 132 µBTC, 0.0000132 BTC is 13.2 µBTC, or 1320 satoshi. It's likely we'll be seeing more talk of milli-BTC and micro-BTC, and hey why not nano-BTC while we're at it ...
That's really not a big deal. If it was truly popular and highly priced relative to everyday purchases, we'd just invent names for fractions thereof, and use those for pricing, as we do in reverse for currencies like dollars or pounds. They already have satoshis etc.
Far more important limitations:
Built in deflation - that it is seen as a one-way bet with ever-increasing value and an ever more limited supply would cause problems if used as a currency (though not obviously as a store of value). The problem for it as a store of value is that the value is entirely predicated on it being a successful currency.
Volatility - if prices change rapidly, that would make use in retail almost impossible, and as a store of value dangerous. Many of the places which say they take Bitcoin right now simply move the money immediately to another currency to avoid this issue - that's not going to work if it is actually used as a currency and to store value long-term. Imagine it replacing the USD for example and remaining volatile...
Time to process transactions - takings minutes to verify a transaction is not going to work -it'd need to be on the order of seconds, and for a digital currency it really should be as fast as the network.
Lack of regulation - again retailers/consumers should be nervous if their financial institutions have no regulations or guarantees that the money they say they hold actually exists at all. Some exchanges have reported a massive theft and walked away with no liability, others impose arbitrary limits on withdrawals etc - this really is wild-west finance and in a crash or bubble you can expect extreme fraud to go on undetected because there are no independent auditors, regulations or laws which govern these activities.
Lack of ties to identity - without verified accounts it's far too easy to commit fraud or theft - very like paper money which everyone is moving away from.
Lack of reversibility - it doesn't let you roll back transactions, though one could work around this by keeping a ledger and rolling the ledger positions back by transferring coins back and forth. If you're going to do that though and trust the bank/exchange to regulate transactions, why bother with the cryptocurrency bit at all?
Lack of transparency in the management process - who decides on the rules of the game here? If the official clients suddenly change rules in concert - existing bitcoin holders would have to just go along with this if the majority voted with it - when large amounts of money are involved, this sort of thing becomes very important. e.g. we hit the existing 21m limit, and those controlling the software decide to up the limit to 30m - suddenly lots of assumptions about value would be questioned. I'd be very nervous about the lack of regulated control.
Lack of backing by a government, corporation or trading bloc - when the market attacks government currencies, governments are able to expend extreme resources to mitigate outright panic and collapse. When the market sharks get interested in Bitcoin and attack it in the same way as they attack say the Euro, there will be no such backup, just a freely floating rate which is open to manipulation and depends entirely on public confidence.
I do think it has some interesting properties and is a useful experiment, but have extreme reservations about this being the actual digital currency which makes it into use as a global exchange mechanism.
i wont respond to every point but transactions can take between 10 and 60 inutes to verify, however you can accept a 0 confirmation transaction relatively safely if you were selling a coffee. The resources required to double spend against a sale of $5 is just not worth it. When it comes to larger items such as buying a car or a house then waiting 1 hour is not a problem as the whole process takes longer than an hour anyway so waitng for 6 confirmations is not too much of a burden.
"Lack of transparency in the management process" the official client is open source, any changes would have to be agreed by the development team but they would only come into effect if all miners (or at least 51%) agreed to the change.
It seems your points show you dont really understand what bitcoin is. Requiring it to be backed by a corportation or a government is exactly the oppositte of what bitcoin set out to be.
You should read more on it before making suggestions such as these.
however you can accept a 0 confirmation transaction relatively safely if you were selling a coffee.
What does relatively safely mean? I'd prefer transactions to be guaranteed and accounts to have a verifiable amount of funds in them - the currencies/banks we have now do this in seconds for small transactions.
the official client is open source, any changes would have to be agreed by the development team but they would only come into effect if all miners (or at least 51%) agreed to the change.
There's definitely space for conflict there. If the official client and/or lots of the miners decide something, it's going to be hard to get momentum in another direction, and as a small holder you will have no say at all. Given the huge vested interest of developers and miners, that seems ripe for abuse.
It seems your points show you dont really understand what bitcoin is.
If that's the case, it should be easy to rebut them. That you have replied with non-rebuttal rebuttals on two points and snide remarks for the rest doesn't give me much confidence.
What additional properties do you think are necessary to have a "digital currency which makes it into use as a global exchange mechanism." ? (full disclosure: I work on such a project)
Personally I think it requires identity verification and secure reversible transactions, and probably some central point of control rather than a distributed network (so that confirmation can be almost instant). That's what I get with current fiat currencies and I wouldn't want to give it up.
I also find the deflation built into Bitcoin worrying, esp. accompanied by the unquestioning cheerleading from many proponents of it.
I had a look at your website, and it looked really interesting - http://evr.gr/.
That's basically what passed through my mind a year ago when I started working on my own project. It seems crossing the channel from "good idea" to secure, trusted payment mechanism is more difficult than I thought, but I'm still convinced it's the right way forward. Feel free to email me for more details if interested.
If they are built separately, as I said in the OP, there isn't much point in the cryptographic nature of bitcoin. If you require people to trust those holding the ledgers of transactions you could just use any unit of account, as we do with national currencies.
Mining bitcoin isn't worth it and has not been for quite some time (from a newbie perspective looking to jump in.) I did some Litecoin mining about 6 mos ago, and experimented with: a) firing up EC2 clusters with MIT StarCluster http://star.mit.edu/cluster/ (which is awesome for other reasons) b) buying my own rigs with expensive, high-end AMD GPUs. It was worth it for a while. I also pre-ordered some Butterfly Labs HW, but bailed on it when they couldn't produce a timely delivery.
tl;dr: it is fun for dorks like us, but at this point, don't expect to build your retirement nest egg mining -- just buying coins on an exchange is going to have a much better chance at ROI.
It may be possible to profitably mine Bitcoin using ASICs if you time it right, however you have to ask: why would mining hardware companies sell machines that can literally print money when they could run them themselves?
Hardware manufacturers are likely well aware they're dumping more hardware on the market than Bitcoin can profitably absorb. They're enabled by customers willing to preorder hardware months in advance who are essentially gambling that the mining difficulty won't rise too quickly to make their brand new hardware unprofitable.
Those are actually producing something useful. Bitcoin miners only produce highly volatile virtual currency which no serious business would want to rely on. Selling them to speculants for a stable currency is logical.
And as a hedge against a BTC price crash, or a huge jump in mining difficulty, or etc. If you're doing nothing but mining then you've got all your eggs in one basket.
hah yah i can very easily imagine them in a museum one day in the "History's Greatest Pranks" exhibit
I think another factor to consider is that for the companies to use the ASICs themselves -- even if they felt they could eke out a slightly bigger profit (though I bet they know they can't), it would require faith in Bitcoin. By selling them its cash upfront, which is how real-ass businesses (hardware manufacturers being a major type) operate. The business model is reliable and 1000x simpler.
Yeah. The network currently is crunching at the equivalent of 6 exaFLOPS. Pretty ridiculous. I can easily imagine a story like that on the pages of a science fiction book! As in 'A Deepness in the Sky' or alike...
Unless you are in the business of chip design/manufacturing, it is too late to get into Bitcoin mining. However, due to a rapid price increase in Litecoin, it's actually pretty profitable to mine them with an ATI GPU at the moment. On the order of $10-20/day per high end ATI GPU. However, this is only likely to last a couple days until the difficulty catches up to the price. If you have free electricity, you'll probably still be able to make a few dollars per day long term with litecoin, but not if you have to pay for it.
I'd say it's really not worth it as an individual these days unless you're just doing it for fun. I sold my miner and bought some stock in a mining operation instead. Beware that there's plenty of scams! https://bitcointalk.org/index.php?board=78.0
If you can afford an ASIC then no: it's not late, although is not really simple...
GPU mining on Litecoin is still profitable since it uses scrypt, making the processing power of an ASIC or FPGA not that significant. Some people mine Litecoins just to sell them for Bitcoins, you may do it as well :)
Fairly early miner here, I turned off my GPU miners months ago. It's really not worth it unless you have ASICs, but even then it comes down the electricity cost and the increase in difficulty now that ASICs are available.
I would only advise you to buy an ASIC if you live an area with extraordinarily cheap power. In the US this means probably somewhere between $0.05 and $0.10 per kWh.
Even then, its impossible to know how much the difficulty will increase.
because its proof of work relies on memory bandwidth, as I understand it. ASICs are possible (and in development) but are intrinsically more expensive to produce because of memory requirements.
I would just like to mention, that "buying at the current value isn't feasible" is only your opinion, and might be wrong. I for example buy BTC even now, since I think the value in the future will be much higher. (but I also might be wrong).
If you have the skills and capital to design and fab your own bitcoin mining chip you can make money mining. There is nothing you can buy off the shelf though that will make you more profit than just buying and holding Bitcoin.
It's too late to realistically mine Bitcoin (save highly specialized hardware). It's not too late for some of the alternative cryptocurrencies. Litecoin, for example, has gone up at an incredible rate.
It's probably not worth your time. They might generate a penny or two worth per day. This assumes you're not paying for electricity. If you are paying for it, you will just lose money.
It's interesting how the negativity on Bitcoin on Hacker News has from "that's a cute little experiment" to "it's too late to get in". But negativity it is.
Regarding BTC-e and it being a shady site: no matter what they say it is the only exchange able to really properly trade into other currencies. Quick. I made a few thousand minute-trading between btc-ltc-ftc-nc et cetera. Got to love the bubble.
Yes I agree. The lack of data makes it seem shady - that's really what I was trying to get across. But I use it and love it too. Love the range of currencies, the interface is very responsive, trades execute quickly and when I make a deposit I can trade within minutes after it's confirmed. Besides the Bulgaria jurisdiction and lack of data on who owns it, it's absolutely awesome.
What about Kraken for trading? They support a number of altcoins and a few fiat currencies (I believe USD, EUR, and KRW). They seem to be a whole lot less shady than BTC-E.
What about trying to buy Bitcoins from a country that isn't the US? I shouldn't have to send you the left arm of my first-borne to verify I'm a human being and then be limited to performing any transaction in dollars.
If you ask for non-US based services, it's probably worth specifying where you are. BTC exchange services are very jurisdiction-specific at the moment.
Kraken, an EU exchange, allows you to trade up to $10,000.00 a month without scanning in your ID; just need to put in your name, DoB, phone number, and address. The downside is that not many people trade on it.
Used https://bittylicious.com/ for small amounts (UK, NL, CZ, used to have KR but seems like not anymore). The price was 20-30% higher than Bitstamp, but that got covered by the increase, and at least I don't have register my bank account, wait few days, then denied (language barrier here in Taiwan) like they did.
Edit: Well, currently they seem 50% overpriced, so maybe this is not such a good idea, unless you really just want "some" BTC to use instead as an investment.
In Europe you may want to use Bitstamp, otherwise I would suggest you to buy through LocalBitcoins (as the blogpost says), or if you understand the concept of WoT then you can try with Bitcoin-OTC :)
You can use Virwox, but it's a bit expensive unless you live in Argentina. If you happen to live in Argentina, you can get the cheapest BTC on the world by buying with your credit card in Virwox.
There is a ~24% gap between the price you pay in ARS for credit card purchases in USD and what the USD sells for in the black market. This opens up all sorts of arbitrage opportunities that the government struggles to plug.
If you have USD in cash, you can sell them for close to 10 ARS and then buy BTC at about 7.34 exchange rate.
Credit card purchases are charged the official USD exchange rate ~6 ARS + ~20% (the real exchange rate, or the one everyone accepts in the streets is ~10 ARS). The government will pay the difference for no logical reason, consider it an irrational player. And for even stranger reasons people don't realize this, and they also think Bitcoin is a scam, no matter what you tell them. Therefore nobody does this Virwox trick and it stays under the radar, undetected for years.
Yep, I find coinbase really easy for buying / selling. Before coinbase, selling bitcoins was such a hassle...
For buying, I use to just buy through blockchain.info, once you created a wallet, you could just put an amount you wanted to add in and run down to the nearest moneygram / western union. The process was fairly painless, took me 20 minutes. You type in the number of bitcoins you want, print out a piece of paper with instructions. Head down to moneygram or western union, follow the instructions of hand it to the person there, they do everything for you, you pay in cash. Refresh your bitcoin wallet and you should see your coins there shortly.
Credit card transactions are reversible and the numbers are easy to steal, so it would be too easy to scam an exchange in this way. It's just as hard to convert local currency into any other currency, so it's not really unique to Bitcoin, and it probably won't get much more "effortless".
It is easier to write anti-fraud algorithms for other goods: If you want to buy stuff and ship to Romania with a US credit card, that will raise a lot of read flags I'd imagine.
You also have to resell the goods which is probably quite a hassle. There are of course a things that are almost as good as money, like gold and stuff, but the sellers of that probably have their algos set for very few false positives.
I think the way you could probably do this is that you could let people buy using credit cards, but then not actually give them the bitcoins until the credit card chargeback timeline expired. The risk is obviously that as the exchange operator you become a bitcoin speculator because you're holding bitcoins that may not end up being paid for by a customer, so not a good idea with the volatility we are seeing, but I think that's the only way credit cards would work.
I think it depends on why people are buying the coins. If they are buying them to hold them, then it does not really matter. I think there are a lot of people out there who just want to quickly grab some Bitcoins and hold them for the long term. Often times for those people their biggest concern is getting in before it goes up any more, so this would be a solution for them.
But if you're going to be holding onto them for years, an extra couple minutes to link your bank account to Coinbase shouldn't be a big deal. The difference in price over the initial two day validation period is going to be negligible over the course of 5 years.
Sometimes it's easy to buy Bitcoins with local payment methods. Here in the Netherlands you can buy them with ideal and receive them immediately: https://bitonic.nl/
Any way to buy Bitcoins through a bank in Mexico? I can't find any. I'm surprised that even though Mexico is so close to US, there's still no practical way to buy Bitcoins yet (other than person to person).
Thanks. I tried to reproduce this in Chrome and Firefox but it works for me. I'm not using anything sneaky or that modifies browser history so not sure why you're seeing this. Which browser are you using?
http://bitcoincharts.com/charts/mtgoxUSD#rg360zigDailyztgSzm...
http://bitcoincharts.com/charts/mtgoxUSD#rg730zigDailyztgSzm...
by the time mainstream publications like the BBC are reporting on spectacular gains in an asset, it's far too late to invest speculatively in the hope of finding a greater fool and cashing out before the inevitable crash, even if you believe in the long-term future of this currency.