Crypto currency discussion

[MHenry600]

What does the mining process "produce" in the end? I understand that you end up with coins for your troubles, but what does it produce for the organization that is giving you the coins in exchange for the mining process?

Is it a matter of mining some kind of data (names, addresses, etc), or what is the end game here? I guess that's the biggest part I don't get...

[jasnmar]

Bitcoin is a little weird in that people get paid for work, not results. Miners may spend all of their processor power on things that don't produce a good result, but get rewarded the same as if they did (other coins have different models).

For all the murky detail see Bitcoin mining the hard way: the algorithms, protocols, and bytes

[TheIglu]

I admit I'm pretty ignorant when it comes to this crypto stuff. It seems that using a CPU to "mine" a coin to create wealth is a bigger scam then trickle down economics. Madoff must be so proud of whoever came up with this stuff!

Yes, your first statement is backed up by your second.


I guess anyone who works for a living by doing work is a scam too.

[TheIglu]

What does the mining process "produce" in the end? I understand that you end up with coins for your troubles, but what does it produce for the organization that is giving you the coins in exchange for the mining process?

Is it a matter of mining some kind of data (names, addresses, etc), or what is the end game here? I guess that's the biggest part I don't get...

"Mining" is simply processing transactions of coins for existing coins, and doing complex math problems that when solved, result in additional coins becoming available in the ecosystem.

[e30addict]

Yes, your first statement is backed up by your second.


I guess anyone who works for a living by doing work is a scam too.

I think you're over simplifying it with your last statement.

I haven't read much on it, but it's hard for me to wrap my head around a computer doing math and magically coming up with something that may or may not have any tangible value when the bubble bursts.

[jasnmar]

Lol. Well, ignoring the bubble part...

It's called crypto currency because it's backed by cryptography. In this case computers are "guessing" numbers that can be used to "secure" a block of data (transactions). In this case guessing the number is very hard, but once guessed, it's very easy to verify.

Mostly computers are guessing numbers then testing to see if the number is right.
In the article I linked it's described kind of like guessing which grain of sand, of all of them on earth is the right one, every 10 minutes.

[TheIglu]

Think of it this way:


When you write a check, and the bank processes the transaction, verifies you have enough in your account, moves the money into another account once the check is cashed, and verifies that account, are they scamming you for doing that work? Or is that a tangible work with value? Do you then pay them (in sorts) using those same dollars they keep track of?


It's basically the same thing.

[TheIglu]

The real scam is hard currency. The Fed can just magically decide to devalue a dollar anytime it wants. Print more money. Destroy more money. No work done of value in either case. THAT is the scam.

The point of cryptocurrency is that there is no single entity in charge. Value is irrelevant when it can not be manipulated by a controlling entity. The system cannot be changed by a single player unilaterally.

[JettaJayGLS]

Watch the imitation game and listen to this podcast.

What Is Mining? by CRYPTO 101 | Free Listening on SoundCloud

You'll get it once you let go of the fact you won't understand how the 0's and 1's work and that people build their lives around understanding the 0's and 1's.

[MHenry600]

Ok, I was still a bit lost, but I think it "clicked".

I was hung up on the part where normally, someone earns money by providing a product or service that actually results in something happening. In this case, you're guessing random numbers, but in the end not really accomplishing anything that directly relates to the general going-on of the public (other than freeing up this "coin").

But I think the key is that there's two pieces. The mining process is a way for the "mint" to create the currency. Therefore it gets more difficult as time passes, making the influx of more currency slow down as time passes.

Once the currency is available, (in theory) it can be used to pay for goods or services. That's about as far as I've got, but sound about right?

One of my concerns, which is really similar to the current condition, is that it takes money to make money (literally and figuratively). You need to be able to afford the high end computing systems in order to profitably produce coins. Otherwise you are just burning time and resources to not gain any net effect, which doesn't seem worth it. Unless I'm lost again...

[JettaJayGLS]

One of my concerns, which is really similar to the current condition, is that it takes money to make money (literally and figuratively). You need to be able to afford the high end computing systems in order to profitably produce coins. Otherwise you are just burning time and resources to not gain any net effect, which doesn't seem worth it. Unless I'm lost again...

That's a "flaw" I've been looking into, and the answer is actually kind of simple. Mining is a market. When it becomes too expensive to mine, you stop. As more and more people stop, mining becomes more lucrative. People start to mine again. It should find an equilibrium. Mining of the major currencies will be ran by large companies and pools of individuals, but that is okay. Individuals can still mine newer altcoins where there is less competition and are providing a major service to the industry by doing so.

The major flaw I see is that if you mine over 50% you can manipulate the data anyway you please. Its feasibly impossible to mine over 50% if there is competition and your end goal is to make profit. There is no financial gain to mining over 50% because if that were to happen the currency would lose all value as it would no longer be trustworthy. But, if your motive is to cause chaos...

[number9]

The real scam is hard currency. The Fed can just magically decide to devalue a dollar anytime it wants. Print more money. Destroy more money. No work done of value in either case. THAT is the scam.

Money is a creation. Fiat currency, crypto currency; it is a creation. Humans have been using fiat money for about 1,000 years, so let's give it a little bit of credit...

One of my concerns, which is really similar to the current condition, is that it takes money to make money (literally and figuratively). You need to be able to afford the high end computing systems in order to profitably produce coins. Otherwise you are just burning time and resources to not gain any net effect, which doesn't seem worth it. Unless I'm lost again...

Think about the relative value of the currency and the relative expense to mine it.

In the beginning, when coins were easy to mine, it was financially viable to mine them even though the currency had little value. Low cost, small benefit (so to speak). Now, the currency is extremely valuable, but also very difficult to mine. High cost, big benefit (so to speak). If the price of Bitcoin were to plummet to a hypothetical $1/coin, then yes, it would cost you far more than $1 to mine a $1 coin, so the net effect would be you losing money.

[tsorfas]

Bitcoin on another raise

[TheIglu]

Holy shit ETH is runnin.

From my simple mining/grinding operation, I'm into XMR, ETH and SIA for well over a grand now in USD.

Only cost me some Kwh.

[capitalcrew]

Eth is looking great. I'm not in it at all right now though.

I moved all of my btc to xrp. Hoping it is one of the new coins that gets listed on coinbase.

[Chippertheripper]

I’d be pumped if Coinbase expanded their offerings. As a technotard, I find it much more usable than kraken, forex, and the like.

[capitalcrew]

I'm pretty sure they're rolling out some new stuff for 2018. I just REALLY hope xrp is on the list lol

[Chippertheripper]

Lots of naysayers out there clamoring for a crash it seems. What gives?
I’m only into crypto for a couple hundred, so I don’t really have too many fucks wrapped up in this, but what’s the long term here??

[capitalcrew]

Btc maybe. Eth has a legitimate use case. So does XRP. Ltc wants to be what btc was supposed to be..

I wouldn't be terribly surprised to see btc go down honestly. How far? I dunno. Btc doesn't do anything particularly well, while other coins do. Crypto as a whole isn't going to die, but btc might.

I am completely out of btc if that means anything to you.

It shouldn't tbh lol

[Karaya One]

I don't pretend to understand it, but one of my dealers recently took BC to pay for a new KTM. Said he got it converted and was paid into his bank account.

[Falko]

BTC will probably drop. There's been a huge influx of trading driving it up. It will soon be too tempting for the long termers not to cash out. It'll bottom and rebound slower. Now that I've been doing some reading, I do not think Crytpo is going away, but the big question is which ones will survive.

[jasnmar]

There are companies like BitPay who's goal is to make it easier for business to accept things like BTC as payment.

BitPay – Get Started with Bitcoin Payments

[TheIglu]

The giant bank UBS decided last week to use ETH for internal transactions. That's why it's doubled in value in a week.

[TheIglu]

Basically, I lucked into having the "perfect" mining rig/gaming dual use machine. Nvidea GTX1070 hashrate is amazing, and the GTX1080 is actually slower due to changes with memory allocation.

[Falko]

The giant bank UBS decided last week to use ETH for internal transactions. That's why it's doubled in value in a week.

I am surprised a large bank would use something so volatile as an internal value holder. I do understand though that many banks want to begin to step away from the US$ as a standard of currency. Our currency has been pillaged beyond repair at this point. I think the coming couple year are going to be a huge indicator of how the world currency markets will be shaped for the future.