Bitcoin, the Funny Money of this decade

[Andrew Noel Schaefer]

And this is why pure ayn-randian zero-enforcement capitalism is not the best of ideas, folks. You get stuff like this.

 

[Springblossom]

Long story short. "Bitcoin" isn't a lolcow. Everything and everyone that uses and believes in it is. .

Fittingly, Wizardchan loves the shit out of bitcoin. Every few weeks, someone starts talking about building bitcoin mining rigs or how to get more bitcoins or shit like that. I wonder how much of their disability checks they've sunk into these.

 

[EI 873]

Long story short. "Bitcoin" isn't a lolcow. Everything and everyone that uses and believes in it is. .

Fittingly, Wizardchan loves the shit out of bitcoin. Every few weeks, someone starts talking about building bitcoin mining rigs or how to get more bitcoins or shit like that. I wonder how much of their disability checks they've sunk into these.

Bitcoin mining is free money - money for nothing! When has such a scheme ever gone awry?

(Serious question: Does anyone have an idea if miners are actually turning a profit, accounting for electricity and hardware costs, and assuming they could actually sell their nerdpoints at the claimed market value? I have a hard time imagening that.)

 

[Null]

(Serious question: Does anyone have an idea if miners are actually turning a profit, accounting for electricity and hardware costs, and assuming they could actually sell their nerdpoints at the claimed market value? I have a hard time imagening that.)

Considering that a single bitcoin is now worth $800, yes.

I guess everyone automatically despises the idea of a cryptocurrency because it's just a program that runs on a computer, not actual work. There's obviously no know-how that goes into selecting hardware to set up a rig and keeping your devices cool so that they run efficiently while simultaneously mining enough to cover costs. Not to mention it's absolutely brainless to select a proper pool that doesn't tax you into oblivion while still yielding your share of the profits.

And really, there is no point. Cryptocurrency is essentially worthless, unlike all fiat currencies which are based on the trust of government. See, the idea that a hash can only generate a finite amount of coins and that once a currency starts getting mined out it becomes harder and harder to actually yield any of that coin -- unlike real money which you can just print more of, assuring fairness. There's also no point of having a currency that exists outside of the government. A commodity without physical basis that exists outside of the taxable realms is craziness and sure to fail -- that's why the federal government has tried to gain control of the Bitcoin network as it has with Tor.

Basically stupid shit for lolcows and wizards, really.

Also, relevant:
[youtube]000al7ru3ms[/youtube]

 

[EI 873]

(Serious question: Does anyone have an idea if miners are actually turning a profit, accounting for electricity and hardware costs, and assuming they could actually sell their nerdpoints at the claimed market value? I have a hard time imagening that.)

Considering that a single bitcoin is now worth $800, yes.

Doesn't neccessarily mean it's worth it, but that does improve the odds a little. Thank you for the information.

(Also, there are many valid criticisms that can be made that have nothing to do with prejudice, but that's neither here nor there.)

that's why the federal government has tried to gain control of the Bitcoin network as it has with Tor.

It has? I'd be quite interested in reading up on that, if you have any links to news articles or similar at hand. I mean, I noticed the attack on the Tor network - that was impossible to miss, really - but if there was something targetting Bitcoin as well, I missed it.

 

[Smutley]

(Serious question: Does anyone have an idea if miners are actually turning a profit, accounting for electricity and hardware costs, and assuming they could actually sell their nerdpoints at the claimed market value? I have a hard time imagening that.)

Considering that a single bitcoin is now worth $800, yes.

It's actually really damaging to the nascent cryptocurrency movement to have people tie them with existing money models because
1) they're not money, they're a speculated commodity
2) the only thing they are worth is trading them out for fiat currency and
3) It's a legal pyramid scheme because it's not a currency. The huge majority of people making money are those that got in on the ground floor.

There's no intrinsic value in these objects at all. Even gold, which is a silly thing for the average consumer to invest in, can be turned into plating for cables, connectors in motherboards, and jewelery for old ladies

When you mine bitcoins, you don't just get a "coin", you get a small percentage of the amount of "bitcoins" that are mined during a specific time frame that everyone is currently crunching away on the gibberish math problems. A days worth of work running your rig at 100% may have had the accumulated effect of netting "2 bitcoins" for the world or whatever, but the average sperg running 2 ATI video cards strapped to plywood is probably only going to make significantly less.

If my current gaming computer was turned into a mining rig, I'd be throwing 1200 watts of power and 2 high-end ATI graphics card at it, and a rough estimate is I'd be projected to earn BTC 0.00024940.

That's like, $0.17 a day. My estimated power consumption for this is $2.59 a day for running my computer and crunching their problems. When you start getting into the fabled ASIC machines that can literally ONLY mine bitcoins, you still lose money because ASIC miners are acting like it's the cold war and stockpiling more machines with more power. This article from Forbes has them calculating $15million a day in energy costs, though they do admit no one really knows because like everything related to bitcoins the exact numbers are obfuscated and misrepresented by the people who gain to profit: read, the people making ASIC miners.

Because obviously if this system worked and this wasn't a big ol' fuck you got mine libertarian cheat, what would make you more money? Selling a warehouse full of computers that can only solve 1 math problem to multiple people, or running a warehouse full of computers that can only solve 1 math problem which just so happens to magically create binary-gold from air?

You don't make money mining bitcoins. You make it cheating others or by having lucked into it at the beginning.

(notes: I'm basing this on my local rate of 9cents per Kwh, and using this http://btcserv.net/bitcoin-mining-calculator bitcoin calculator with a hash rate of 1300 for my two graphics cards)

(Because I'm a child, everyone should go listen to the sound of buttcoins because it makes me laugh very hard)

 

[Smutley]

Some exciting new developments in the land of funny money!

Mt. Gox, the largest exchange based on digital Magic the Gathering trading cards, has completely vanished. But best of all, Japan doesn't give a shit because it would be like if you paid a ton of money to Zyanga for goofy Farmville stuff and then Zyanga said, "Well, we're shutting down Farmville now to promote Farmville 2. Everything you bought is now dust on the wind."

Because companies can do that with virtual products, when the time to end them comes up. Mt. Gox's now vanished CEO has either "lost" or stolen 700,000 bitcoins and skipped town. This has helped Bitcoin prices go into freefall, from a high around $850 down to $536. That's a 37% decrease in value - something everyone wants with their investments. Some exchanges are showing prices as far down as the $100's before Mt. Gox shuttered itself, but no one is really sure anymore what the prices actually are.

Now I know what you might say, "But those swings work both ways! the volatility in price means that you can make a killing if you predict the markets and invest accordingly!"

And that would be true, assuming you had the investment capital and computational power to high frequency trade. That's how people in that business make money, by reacting quicker than any human could to infinitesimal fluctuations in the market. But remember, Bitcoins have a 10-minute trading delay at the very start, and that's before you get into artificially longer delays due to lag / shady companies slowing down or halting trades.

Edit:

I've been clicking through to some links about all this, and it's hysterical the mental hurdles people jump through to defend their lifestyle currency betting choices.

It's really easy in all of this to pile a bunch of hatred on Mark Karpeles, but please, everybody remember that he is a human being, with real human emotions, and that those things really do hurt.
--
MtGox was (past tense is probably appropriate here, but for the sake of anybody who had coins there, I hope not) a startup that failed spectacularly, and publicly, and took a TON of peoples' money with it.
The transaction malleability thing was poor programming on the part of gox. Remember that we have ALL fucked up at some point, just luckily for most of us, "fucking up" doesn't mean losing than much of other peoples' money.
Mark, I doubt you read hacker news, but if you do: it's alright, dude. You bastard.

It's okay guy. You're a bastard but you're a Free Market Capatalist who got his, so don't let the haters get you down.

https://news.ycombinator.com/item?id=7295929

People aren't hating Mark Karpeles because he messed up, but because of the completely absurd response to this situation.
Optimal response: A message to the customers as soon as the issue is noticed: "Due to a technical problem we lost X amount of Bitcoins, which means we currently can't cover all of the deposits. Trading has been disabled while this issue is investigated. [Some external financial company] is in charge of coordinating withdrawals of existing customer funds."
Actual response: Blaming the issue on the Bitcoin protocol. Trading stays active althought the price tanks. Customers can still deposit funds although it's clear that they won't be able to withdraw it. Released announcements try to hide information about insolvency and try to give hope to the customers.
I didn't have any deposits at MtGox. As a customer I would probably have forgiven them losing the funds (if it was a technical issue), but I wouldn't have forgiven them they way how they handle public communication. Such a behavior is not acceptable.

Even though you lost 700,000 bitcoins that could have theoretically been $595,000,000 to people who had stored them there, everyone's mad because of the way he PRESENTED the news, not because he lost

https://news.ycombinator.com/item?id=7295538

haberman 12 hours ago | link
Yes, if I have any schadenfreude here it's not for him. It's for all of the people who smugly told us for years that Bitcoin is superior to our "legacy" fiat managed and regulated monetary system system in every way, and anyone who can't see that is an idiot.
reply

panarky 11 hours ago | link
Don't equate Bitcoin the protocol with dodgy websites.
Unlike cash, radical transparency is entirely possible with Bitcoin.
Bitcoin the protocol is as strong as ever, but customers of other sites should demand proof that their exchanges and online wallets actually control 100% of the BTC they claim to have in their custody.

just lol

 

[EI 873]

Gee, it's almost like financial markets are regulated for a reason.

That's like, $0.17 a day. My estimated power consumption for this is $2.59 a day for running my computer and crunching their problems. When you start getting into the fabled ASIC machines that can literally ONLY mine bitcoins, you still lose money because ASIC miners are acting like it's the cold war and stockpiling more machines with more power. This article from Forbes has them calculating $15million a day in energy costs, though they do admit no one really knows because like everything related to bitcoins the exact numbers are obfuscated and misrepresented by the people who gain to profit: read, the people making ASIC miners.

That's what I was wondering about, yeah; people keep saying that BTC are worth "$X00", but that number's meaningless without looking at the costs, or how many bitcoins one can actually realistically mine. Thanks! It's true what they say; in a gold rush, the money's in selling picks.

 

[Watcher]

 

[Carlson]

Gee, it's almost like financial markets are regulated for a reason.

That's like, $0.17 a day. My estimated power consumption for this is $2.59 a day for running my computer and crunching their problems. When you start getting into the fabled ASIC machines that can literally ONLY mine bitcoins, you still lose money because ASIC miners are acting like it's the cold war and stockpiling more machines with more power. This article from Forbes has them calculating $15million a day in energy costs, though they do admit no one really knows because like everything related to bitcoins the exact numbers are obfuscated and misrepresented by the people who gain to profit: read, the people making ASIC miners.

That's what I was wondering about, yeah; people keep saying that BTC are worth "$X00", but that number's meaningless without looking at the costs, or how many bitcoins one can actually realistically mine. Thanks! It's true what they say; in a gold rush, the money's in selling picks.

And just like in a gold rush, eventually the mining is done. It'll take over a hundred years for every bitcoin to be mined out at the current rate, but it gets slower and slower to mine as time goes on (this is what kept every coin from being mined out already). If Bitcoin survives for the next few decades (I'll be legitimately surprised), it'll become so slow to mine them that I can't imagine anyone being able to profit off of it. Which brings up the question of just who's going to be mining them.

 

[Smutley]

OH MY GOD GUYS OH MY GOD THIS IS UNPRECEDENTED IN SCOPE AND SCALE AND SIZE AND MEANING AND HUMAN UNDERSTANDING

Mt. Gox is filing for Bankruptcy

Mark Karpeles, the doughy muppet who convinced a bunch of people to give a nerd trading magic cards all their fake money, is begging the Japanese government to grant him bankruptcy.

Because see, Government is bad. Freemarket good. Regulation is the devil. Computer Science FTW.

But as soon as he fucks up and people want their goddamned money back, he and every cold-war-bunker MRI-eating hate them feds and dumbocrat libertarians want to make sure the government they actively hate and try to cheat and dismantle is still there to protect them.

Because nothing says "math-backed open-source currency of the future" like trying to convince the same government you're cheating out of taxes so your funny money can launder drugs, guns, and stolen credit cards to wave a magic wand and disappear all your debts.

 

[Watcher]

But as soon as he fucks up and people want their goddamned money back, he and every cold-war-bunker MRI-eating hate them feds and dumbocrat libertarians want to make sure the government they actively hate and try to cheat and dismantle is still there to protect them.

Libertarian philosophy is all well and good til you've reached too far into the cookie jar you need government assistance in order to get your hand unstuck.

 

[Smutley]

But as soon as he fucks up and people want their goddamned money back, he and every cold-war-bunker MRI-eating hate them feds and dumbocrat libertarians want to make sure the government they actively hate and try to cheat and dismantle is still there to protect them.

Libertarian philosophy is all well and good til you've reached too far into the cookie jar you need government assistance in order to get your hand unstuck.

See that's the thing, man. I have a buddy who considers himself "libertarian". And while he has some views that I find... kind of unusual, he's mostly realistic and pragmatic. But from what I've witnessed, he's the anomaly. He understands the needs for state-funded police and fire fighters, he knows he has to pay taxes so that pot holes get fixed. But he's also a believe that there should never have been a "ban" on gay marriage, because seriously, what the fuck? Who cares about gays and doing dudes in butts, why aren't we pulling all our troops back from everywhere in the world and securing our borders and focusing on the development of newer energy sources so that we are no longer reliant on terrorist oil?

Like I said. Pragmatism with some unusual views. Honestly, the "libertarian" belief is something I could get behind if it wasn't co-oped by all the crazies. Because how can you disagree with, "smaller government, community focused, keeping your nose out of peoples private business"? That's all reasonable! That's stuff EVERYONE should be for.

Not for this, "I'm going to make fake monies and steal real money from other people but as soon as I get caught I'm going to cry to Papa-san and beg him to make the bad men go away."

 

[Carlson]

Speaking of Bitcoin and black markets, it's extremely popular for illegal purchases. Bitcoins are only sent to and from anonymous addresses made from a random alphanumeric string, with no identifying marks and (as far as I know) no way to simply grab the identity behind an account even if you've got a warrant. Tracking Bitcoins requires following the money and hoping that you can find clues as to who did what, and it's terribly tedious.

I've gone so far as to dip into this realm myself and look at what's on Silk Road, the biggest online black market. They've got drugs out the yin-yang, exclusively sold through Bitcoin. Pretty much every drug you could ever desire on Earth, plus a system where they hold Bitcoins in escrow until you release them yourself so that you can get your money back if you don't receive the product. The Hidden Wiki provides even more links to just about every service you can find: assassins for $10,000 a hit (17.988 Bitcoins as of a few seconds ago; it fluctuates badly enough that the dollar amount changes as I do a single division to get the value), pistols and ammo in Great Britain. I even found a guy claiming to sell a .44 Magnum Desert Eagle for a little over 1000 Euros. I should emphasize right now that I haven't bought anything or made contact with anyone for services. I just wanted to see exactly what was out there.

Bitcoin is probably the single greatest facilitator of illegal services right now.

 

[Andrew Noel Schaefer]

Speaking of Bitcoin and black markets, it's extremely popular for illegal purchases. Bitcoins are only sent to and from anonymous addresses made from a random alphanumeric string, with no identifying marks and (as far as I know) no way to simply grab the identity behind an account even if you've got a warrant. Tracking Bitcoins requires following the money and hoping that you can find clues as to who did what, and it's terribly tedious.

I've gone so far as to dip into this realm myself and look at what's on Silk Road, the biggest online black market. They've got drugs out the yin-yang, exclusively sold through Bitcoin. Pretty much every drug you could ever desire on Earth, plus a system where they hold Bitcoins in escrow until you release them yourself so that you can get your money back if you don't receive the product. The Hidden Wiki provides even more links to just about every service you can find: assassins for $10,000 a hit (17.988 Bitcoins as of a few seconds ago; it fluctuates badly enough that the dollar amount changes as I do a single division to get the value), pistols and ammo in Great Britain. I even found a guy claiming to sell a .44 Magnum Desert Eagle for a little over 1000 Euros. I should emphasize right now that I haven't bought anything or made contact with anyone for services. I just wanted to see exactly what was out there.

Bitcoin is probably the single greatest facilitator of illegal services right now.

Whats funny about the deepweb is how simple it is to get into. Ill admit that I have taken a quick journy there because I was bored. If you want to go on this epic quest too, its a google search away to get yourself some china cat

Not that theres really anything of note besides illicit things. More then likely, half the stuff on the deepweb are FBI Honeypots, as if I could find out how to connect to the deepweb in 5 minutes, the FBI probobly has a close eye on it already.

Just some food for thought. I actually am a pretty free market person, but buttcoins and mtgox kinda prove that you need a goverment to (in this case) monitor currency and protect against fraud. This was with some cryptocurrency with no intrinsic value besides what some gold diggers put up for it, imagine if this kinda thing happend with real

 

[Carlson]

One of the biggest criticisms of online black markets is actually that people are afraid that they're all scam sites: you send money for drugs, they keep it and you have no recourse in getting it back. You used Bitcoins, which were sent from one anonymous account to another, so no tracing or ID available. And you can't exactly admit to being out to buy drugs and illegal firearms when you got scammed.

 

[Andrew Noel Schaefer]

Well yeah, thats the trouble with black markets. Because of zero protection against it, you are very likely to get ripped off

 

[Smutley]

Speaking of Bitcoin and black markets, it's extremely popular for illegal purchases. Bitcoins are only sent to and from anonymous addresses made from a random alphanumeric string, with no identifying marks and (as far as I know) no way to simply grab the identity behind an account even if you've got a warrant. Tracking Bitcoins requires following the money and hoping that you can find clues as to who did what, and it's terribly tedious.

I agree with everything you typed up Carlson, with one small caveat: This was all accurate a few months ago, but there's been a giant game changer in place.

Silk Road was taken down by the FBI, and Dread Pirate Roberts, the guy who runs it, was arrested.

Everyone is hush-hush about how this actually took place. Because the options are either that TOR itself was hacked (unlikely), or that the FBI and NSA colluded to put a man-in-the-middle in place. By running their own compromised TOR hops that potential black market targets would connect to before moving on to their darkweb destination, they can effectively track the flow of data and bitcoins and build their own database of users doing illegal activity.

It's also how it's suspected they managed to bust the largest facilitator of child porn to date.

I'm not saying the darknet is ineffective, because it totally isn't. In fact, it's contributed to a huge increase in identity and credit thefts across the world, along with money laundering and gun/drug sales. But this is about bitcoin, which isn't an anonymous currency for 99% of users is completely traceable.This was the other big part of the Silk Road bust - for every crazy paranoid guy selling heroin on the site, you have 50 idiots who read about Silk Road on gawker, did the bare minimum work to sign up, and have their money traceable from the very second they bought 0.001BTC on Mt. Gox. Those 50 people are traceable from the second they made a Mt. Gox account, and that money is able to be traced through the InterTubes until it reaches it's destination to Big Time Heroin Dealer.

Than all 51 people are arrested in the shutdown because they have evidence against the dealer, too. And this is all tied to the piece of programming that makes bitcoins work: the blockchain. Every single online transaction ever made goes through the blockchain and is saved in it and is never erased. And all those goofy strings of randomly generated numbers are in there, but they're all consistent. Because your wallet doesn't change. You can have multiple public/private wallets, but even that is suspect. If you only buy shit on your public wallet, and then transfer everything to your private one, that's cool. No one knows where you STORE your money.

But the blockchain knows where you sent it. And if you can match up the transactions with the wallet ids, you could theoretically trace someones entire bitcoin history with a simple text search. Nevermind the specialized analytic tools in place by law enforcement and government agencies.

 

[Carlson]

For someone who did his research, you missed one vital bit: Silk Road has been back up and operating.

 

[Andrew Noel Schaefer]

For someone who did his research, you missed one vital bit: Silk Road has been back up and operating.

Spoiler

Honeypot = FBI
Honey = Silkroad/Drugs/"Honey"
Tigger = People using the new silkroad

But then again, thats just speculation. However, with the types of goods on the darkweb and the reletive ease of getting onto it, I am pretty sure there must be a branch of the FBI that deals with shutting down blackmarkets on there. After all, this is seriously where your tax dollers go (and I say that without a hint of irony)