How bitcoin miners work

"[B]itcoin likely can't work as a currency, " Goldman Sachs wrote in a 20-page research report titled 'All About Bitcoin' published this week.

But there's a sense that the "ledger-based technology that underlies it could hold promise, " the banking giant concludes.

Some background

Before 2013, Bitcoin was on few people's radars. Designed around 2007 by someone named Satoshi Nakamoto (it's still unclear ), the currency's value measured in US dollars went from about 5 cents per bitcoin (BTC) to around $13 in late 2012.

But the virtual currency hit the mainstream in 2013 and just a few months later was trading for more than $100 per BTC. It breached the $1, 000 mark at its peak in November. Today it's valued at around $600.

Bitcoins are created with extremely powerful computers that run algorithms to 'mine' for bitcoins. Anyone with the right equipment and know-how can become a Bitcoin 'miner' but there's a predetermined number of coins that can ever be created.

The main appeal behind Bitcoin is that when you trade bitcoins you're pseudonoymous and you pay practically no fees. Most importantly, the system is safe – though this idea has been seriously challenged by the recent collapse of the currency's largest trading platform, MtGOx. The currency is also free from central bank and government control, which is why some see it as a good store of wealth.

Some, including economist Nouriel Roubini, have called the whole thing a Ponzi scheme.

'All About Bitcoin'

In its latest Top of Mind report, Goldman Sachs speaks with various experts on the topic of virtual currencies.

"[S]ome of the fiercest believers seem to grab on to the ideology of Bitcoin as providing an escape from centralized control, in particular viewing bitcoin as a new currency free from the grips of any government or central bank, " Allison Nathan, editor of Top of Mind wrote.

"On the other hand, some of the deepest skepticism surrounds the viability of bitcoin as a currency."

Two interviewees, Dominic Wilson and Jose Ursua of Goldman Sachs’ markets research team point to the currency's volatility as a major issue.

"The volatility of bitcoin prices so far has greatly exceeded the volatility of other currencies and gold, " the Wilson and Ursua write, "…because its supply is ultimately limited, prices will need to vary to accommodate shifts in demand, not the other way round. Unlike gold, bitcoin also has no fundamental value from alternative uses that could anchor its price."

I'm now $0.02 USD richer. Thx Bitcoin!

2013-11-22 17:12:04 by Boilerplate

Https://trybtc.com/
From other links:
Accept Bitcoin with BitPay
Accept payments from anywhere.*
No chargebacks, ever.
No volatility risk.
Settle in cash.
*In the Universe.
Bitcoin Mining
Perhaps the best way to describe Bitcoin mining to the layman would be to say that it is somewhat like a cross between the California Gold Rush and the lottery. No one is given Bitcoins per se. You've got to earn them

The math provides a way to prevent...

2014-02-25 09:37:37 by -

..double spending.
Suppose I sent you 10.5 BTC and turned around and sent that same 10.5 BTC to somebody else (perhaps one of my own wallet addresses)?
Who does it belong to?
The answer to that question depends on the Bitcoin blockchain.
Typically, the second transaction will get rejected by the entire network.
There may be cases where approximately half of the network thinks the coins belong to you, and the rest of the Bitcoin network thinks the 10.5 BTC belongs to the other address.
At this point, we say the blockchain has "forked"

Power usage/cost and mining

2013-03-27 11:07:23 by -

I found this quote earlier and though i would share. it seems that there is a point where the cost of bitcoin mining outweighs the benefit.
"I've done some testing. I tried to create conditions for success.
1. I had handy an M18 R2 - with dual 7970s.
2. I work a lot of hours and my kit is used by my employer. In trade off I use some juice for testing.
3. CPU bitcoining is worthless - just forget about it totally. Anyone telling you that only high power GPUs, FPGAs or ASICs offer a return are correct, and thats before ever discussing power.
4. I am vaguly able to generate 0

Bitcoin Miner worker

How does Bitcoin miners work?

How Bitcoin mining Works

How Bitcoin Miners work