OT: What the heck is a crypto currency mine?
- Thread starter HI Cock
- Start date
Lets use a simple example. Lets say you run a business and you keep your books 100% accurate, right down to every single penny. Now lets say you give somebody across the city, state, country or world the authority to add or subtract from those books. IE: that person made a 'transaction' in your ledger. Can you trust them?
When a transaction is made like that, not only do you get to see it but the other person gets to see it too and in the case of cryptocurrencies, they rest of the world can see it too. The only problem is the calculations SOON become complex. 'Mining' is simply everyone being plugged into your ledger. When a transaction is added or subtracted the miners use computing power to make sure the transaction is authentic, and correct. The first miner to 'confirm' the transaction as being authentic and correct gets a reward in said cryptocurrency, and is thus paid.
Then another miner, somewhere else in the world will also confirm that the transaction is correct and then the next miner does too and so on and so on....... each transaction ultimately goes into a 'block' of data and each block makes up a chain in the blockchain. It can't be reversed, tampered with, covered up, altered, etc by anyone. Ever. Forever. 1+1 = 2. Forever. The miners keep the books straight so to speak.
I have some people close to me who are passionate that this is the future and other close to me in the world of finance who swear the limitations and other factors like lack of regulation in crypto will never let it catch on fully.
It's super volatile, that's just not my game.
I had someone swear to me it'd be at $30k at about this point (almost a year from its jump)....I'm glad I didnt get on that ship, I remember it was already back down to $15k when that convo happened
It's super volatile, that's just not my game.
I had someone swear to me it'd be at $30k at about this point (almost a year from its jump)....I'm glad I didnt get on that ship, I remember it was already back down to $15k when that convo happened
Hyper Volatile Asset at this point but also the best performing asset of all time. It's 10 years old and the first purchase was for pizza in Jacksonville. 10,000BTC for one pizza. BTC almost hit 20k last year - from one pizza to 200mil in 9 years. It's bottoming out now - likely ready for another run next year and/or 2020 with "the halvening."
Your peeps in the world of finance either do not understand the technology or are flat out lying to you. The whole 'regulation' of crypto is a take it or leave it scenario. The option is up to you. Whether you believe that or not is entirely up to you.
Maybe you don't understand. With the current system we have paper money and the government and central banks control it all. With crypto, we the people control it and there isn't a damn thing they can do about it. Period. That scares the hell out of them. It should. Why do you think they are poo pooing it soooooo hard???
Next ask your finance friends how long it would take to send $100 to a friend in Moscow and how much it would cost. While they are calculating the fees (high fees) and long wait times (days), I could have sent that $100 to Moscow in literally 30 seconds for pennies. I think I read somewhere recently that someone had made a $100 million dollar transaction recently and paid about .75 cents for the whole deal. Not bad.
Paper money is dead. They just don't want to accept that just yet. And I enjoyed the hell outta the ride from $500 up to $19,981.
If you think governments can’t eventually take control of crypto currencies, you are mistaken. Besides, the cost of mining Bitcoin has made the crossover where it is not economically worthwhile to mine it. It loses value everyday because of simple supply and demand determinants.
Hell, I can't argue with either point(s)!! Y'all keep us posted!! Some of us have been silently watching crypto currency options, but just don't feel comfortable enough to "jump in" just yet!
Just another shady pipeline into Newspring/IPTAY
Apparently, they are building another one in the old mining town of Annaconda, MT as well.
Like William Devane, I still like the feel of cold hard gold coins. It gives me a real sense of freedom.
Both points untrue. Governments can't touch it. Only way remotely possible is to turn off the internet and even if they did that, it can still be done on paper.
As far as it not being economically worthwhile to mine, for one thing you're talking about Bitcoin, which is only one of a vast majority of 'coins' out there and you're not taking into account the 'difficulty' factor.
When the calculations become harder and harder, the electricity needed to 'mine' the coins increases. Supply and demand as you correctly pointed out.
What you failed to mention is that when demand goes lower (as it is now) the difficulty also DECREASES. It adjusts. All by itself. It's built into the code. When the difficulty decreases, less power is needed to mine the coins. In short, in terms of raw money, it's a wash.
But the government/s shutting down or taking it over made me chuckle. Can't be done. Worst case scenario they figure out you have / had a block-chain account at one time and they want your 'key' so they can get into your account to figure out all the moves you've made.
Response: "What key?" It's very much akin to the analogy of the gun owners losing their guns in a boating accident. Gone. Forever. Soooo sad.
The ENTIRE POINT of Bitcoin (the first, original) was to empower the people to do exactly what it is succeeding in doing now. Stripping the monetary control AWAY from the big governments and central banks and giving that power to the people.....and oh by the way, as I touched on earlier, NO block-chain or coin can be tampered with or altered. Do you really believe the US government spends $300 for a hammer? Of course not. They only bill $300 and pay $10.00 / funneling the other $290 to some shadow project or lining their own pockets outright. Can't do that with block-chain. Not even a little bit. Another reason they hate it. Ask all the questions you want. (anyone) I'm expert level = ridiculous in this small area of knowledge.
Make sure you buy foreign gold / silver. If you buy US gold, the government can legally confiscate it at any time. (it's in the law) Foreign? Can't touch it. Legally anyway.
It would be extremely difficult for the governments to do anything about it. China might have been able to up until recently b/c they had a large concentration of the mining there, but that has recently changed.
Additional developments that would also lead me to believe that isn't the case:
- NYSE is creating the cryptocurrency trading platform Bakkt in collaboration with Microsoft and Starbucks with physically backed Bitcoin futures contracts.
- Fidelity is offering it to its clients starting in 2019 and has been mining it since 2015.
- Jamie Dimon, tells all that it Bitcoin is a “fraud” and that if he catches any employees who own it he would fire them, while in the background JP Morgan and Morgan Stanley bought Bitcoin ETNs.
- Yale’s endowment invested $400 million in cyptoasset funds.
- Jack Dorsey, CEO of Twitter and Square, thinks Bitcoin will be the main currency of the future.
- Goldman-Sachs backed Circle launched a crypto finance company.
- Square’s Cash App allowed users to buy and sell Bitcoin.
- Robinhood offers the purchase of cryptos commission-free.
- Rockefeller-owned Venrock is investing in cryptocurrency.
- 2nd largest German Exchange is now full crypto
- Ohio is going to accept taxes in Bitcoin
And there's plenty more....Bitcoin is the true honeybadger.
Currently, the best option for US Investors is Coinbase. They offer the best current custody solutions if you don't want to learn all of the in's and out's of private storage.
Next year usage should really start to pick up with everything that I mentioned in previous post. But honestly, it doesn't have to become that to be successful.
If it just gets a piece of the offshore business and/or becomes Gold 2.0 - which most people think might happen - the price will eventually hit several hundred thousand.
IMO, Bitcoin's biggest strength is scarcity, it has a fixed supply (17-18mil) and that can never increase. It's conception was on the heels of the 2008 debacle. And ironically, we've been printing money ever since then to prop up the economy so the use case for Bitcoin has never been greater. Plus, it's a global currency.
If it just gets a piece of the offshore business and/or becomes Gold 2.0 - which most people think might happen - the price will eventually hit several hundred thousand.
IMO, Bitcoin's biggest strength is scarcity, it has a fixed supply (17-18mil) and that can never increase. It's conception was on the heels of the 2008 debacle. And ironically, we've been printing money ever since then to prop up the economy so the use case for Bitcoin has never been greater. Plus, it's a global currency.
Thanks. Didn't clear it up one bit (why would I as a business allow anyone else to look at my ledger), but I appreciate the attempt. And why does it take so much energy?
It takes so much energy because the calculations are so complex and people are running mining "farms" which are banks of high powered computers maxing out their capabilities with their video cards.
OK. But what does it mean to mine for Bitcoin?
Does it mean you're trying to legitimize a transaction and be part of a "chain"? And because there are so many going on all at once that you have to run so many calculations all at once that it take so much energy?
(even if what I wrote above is remotely correct, I still don't understand)
@Wiles2 - a small-ish counter argument to your "China could do something cause they have a large / majority portion of the miners." ........Ehhh, true / false.
True in this sense: Let's say China decides to ban all miners in their country and used the military to raid everyone and confiscate all the mining equipment. The price of Bitcoin would immediately tank ---- for a little while. (not long in a hot market) False in the sense: because Bitcoin by design is decentralized, AND THE 'DIFFICULTY' factor I mentioned earlier......the difficulty would drop to the correct proportions so the other miners all over the rest of the world would pick right up and not really miss a beat.
@king ward , I would agree with Wiles2 that currently, Coinbase is probably the easiest and for that matter safest for newbies. I would advise you to not wait. Setting up an account is really not hard at all. There is no minimum to open an account that I know of. It's free. Get you an account set up and buy $20 worth of Bitcoin. I think you'll be surprised at how easy it really is.
Last thing for this post kingward, you can get a "Shift" card (google it) for like $5 I think it is....it may even be free. Anyway, you get your Shift card in the mail very quickly. (days) It's exactly like a credit card but you connect it to your Coinbase Bitcoin account. So, you have your Shift card, you have your coinbase account, and you just bought $20 worth of Bitcoin.
Go to the store, gas station, any restaurant, movies, etc..anywhere a regular credit card is accepted. Swipe it and pay. You just purchased something with Bitcoin instantly. It's happening NOW.
From a technical standpoint though, by doing that, you're "selling" your Bitcoin and the government considers that a taxable event. Total BS I know.....but perhaps that is for another post.
Thank You! I downloaded coinbase about 30 minutes ago. Preesh the Shift card recommendation!
Ok, let's try it this way: A more direct, to the point way.
Remember earlier when I said transactions make up a 'block' of data? So basically, let's say 100 transactions make up 1 'block' of data. Once the 'block' is full it gets sent out on the Bitcoin network and all the transactions inside that 1 block have to be 'confirmed' for accuracy. (confirmed by the mining computers)
So what is the incentive to do this?
Answer: Block Rewards.
What are Block Rewards?
Answer: If your computer solves ALL the transactions in 1 block of data, the 'block reward' is currently 12.5 Bitcoins. You would receive 12.5 bitcoins for your trouble. At a current price of $3500 per Bitcoin, you would be able to cash in roughly $43,750.
This is the genesis for NEW Bitcoins to be created and circulated on top of not a bad way to earn $43,750.
That in a nutshell is what it means to "mine" for bitcoin. (or any other coin really. Basically the same model with variations.)
Google Play store > "Coinomi" wallet. Download it and install it and create a "NEW" wallet..... it will display 12 words for you to write down. WRITE THEM DOWN!!! Get in and play around with it for a bit. Very intuitive. Very simple. Now pretend you just deposited $1 million dollars in Bitcoin to it. Now delete it from your phone. Yeah, delete it.
Download it again. Choose "Existing account" (or whatever the option is to bring up an existing account) It will ask you to plug in your 12 words. 12 words entered correctly = access to your $1 million.
Oops...er..I mean....what key? Remember, your VALUE / Money is LOCKED IN to the BLOCK-CHAIN.....NOT your phone. Set and forget it. Just for the Love of God don't lose your key. (12 words)
And that's how you move your Bitcoin to a private wallet where YOU hold the keys to entry. Not a 3rd party like Coinbase. Although again, maybe getting a bit advanced but you can't go wrong downloading the app and playing around with it.
Thanks for this. That's the first time I've even begun to understand the value of this commodity in practical terms. Something's going to have to be done about that tax angle. It's not as if you had bought in with money that was tax-deferred. You could be actually getting taxed twice.
Agree. I should have been more clear with the China miners. There was a concern that they could raid the mines, hold hostage and wreck havoc since they held more than 70% of hashrate at one point. That could have put Bitcoin back in the stone ages at best (in terms of perception and confidence) but no longer a threat.
ALWAYS get investment advice from free internet sports forums. You will end up with the most money
Ha - Very true. Obviously, do your own research. I view it as a nice hedge against all other commodities moving forward. The world is overpriced and things are beginning to split at the seams.
Thanks for trying to help me - afraid there's no hope. I still don't get what a transaction is, how it's verified (and why it's necessary), what it means to "solve" a transaction (seems like solve and verify are the same), etc. I get the trade part... and now I understand the mining part (sort of). Do people write their own algorithms to mine with?
Blockchain is the key and will drive how supply chain and ledger keeping is driven. Focus on that more than the crypto-currencies. Who knows what the ultimate winner will be and how it will be regulated. But the technology behind them is the block chain technology and that will be the winner regardless due to its wide-ranging applications.
I strongly suggest that no one invests their hard earned money into crypto currencies and bitcoin. If you ask any finance expert what the heck is this stuff, no one can give you a clear definitive comprehensible answer. Ask 10 people and you will get17 different answers. The stuff reeks of fraud - period.
I'm not suggesting anyone invest or not - but a fraud? The best institutions in the world are working on it. Below is Stanford U.. They are working on Bitcoin Lightening along with other projects. https://cbr.stanford.edu/
Lol. And man will never learn to fly. Lol. Classic "I don't understand it so I will poo poo the whole idea." Anyhow, too late. The genie is out of the bottle.
Similar threads
