08.02.11
Bitcoin kooks
File this one with the fiat money fear and loathers. The difference is that Bitcoin fans are obsessed libertarian young tech geeks as opposed to obsessed old nuts GOP/Tea Party white guys hoarding gold, heeding the commercial advice of Gordon Liddy and convinced the US dollar is going to turn into a one trillion Zim note.
If you download the Bitcoin software and read through the on-line site you’ll be tempted to try some bitcoin mining. Don’t bother.
I did it a couple months ago. You can leave your processor on for a century and maybe see the equivalent of a few bucks worth of bitcoins. Even semi-hard days of mining them are well over.
Think of it as the citizen’s gold mining crew shown in Pale Rider, except there’s no chance you’ll find the big rock like Spider Conway before he was gunned down by Stockburn and his marshals. And no Clint Eastwood as “Preacher,” either.
Bitcoin is all now Coy LaHood.
Maybe that will change.
But the info from F-Secure that a ‘bot controlling a Bitcoin mining operation was using purloined Twitter accounts certainly isn’t good news.
“Last month Symantec blogged about the potential of creating botnets used to mine bitcoins, without the computer owner ever knowing,” reads something from the Internets.
Security, liquidity and stability are now things one does not associate with Bitcoin. Which would seem to be very bad news, if not a death knell, for the currency. Readers searching through Google will find some wags have already come up with the new name — shitcoins.
If you have a lot of them, they’re allegedly worth something. If not, ehhh.
Bitcoins are generated all over the Internet by anybody running a free application called a bitcoin miner. Mining requires a certain amount of work for each coin. This amount if automatically adjusted by the network, such that the bitcoins are always created at a predictable and limited rate.
Believe this and you waste your time. Bitcoin exploitation is now the domain of speculators who can buy significant sums of them in the belief that value will appreciate according to the graph here. Or that value can be accumulated by exploiting Bitcoin exchange problems which cause rapid fluctuation in the currency’s value.
Unfortunately, practical bitcoin mining, which comes as a “feature” in every downloaded copy of the Bitcoin software, is totally out of reach
of Joe Average User now. (Somehow the “good boy” at the Atlantic never deigns to mention it.)
So as a currency, it’s no longer of any value to a middle class (indeed, there’s no compelling reason for anyone from the middle or lower classes to even believe in Bitcoins) — which would seem to be a requirement for the success of any newish money.
“Sounds like a Ponzi scheme,” said my friend Don, as I explained it to him at a small party a couple weeks ago.
“You should accept Bitcoins,” he added.
If you have a Bitcoin wallet, Bitcoin.org used to (at least about a month ago) suggest going to the Bitcoin Faucet (you can Google it) for some shards of the virtual currency. This to get you started and whet the whistle.
DD didn’t have much luck with that. “Sent!” said the Bitcoin Faucet, in metering out my milibits of a Bitcoin. No transactions, hours later, in the ol’ Bitcoin wallet. Not even an atom of a crumb.
Another fly in the ointment is the necessity of keeping up with everything happening re Bitcoins and the troubles of the sites built to service the networked currency. If everyone was faced with a similar but limited thicket of interesting dysfunction and intriguing trouble when using real money the homeless would rapidly become the largest segment in the American economy.
João said,
August 2, 2011 at 4:44 pm
To do some real mining you need a good graphics card (and your parent to pay for the power bill).
I think its cheaper to leave your computer asleep.
And yes, why not accept Bitcoins?
Peace and keep rocking
J.
BitMan said,
August 3, 2011 at 12:03 am
Wow, there are so many things factually WRONG about this article. Anyone reading this do your own research instead of listening to this charlatan.
George Smith said,
August 3, 2011 at 7:20 am
The Bitcoin fan boy arrives. First time I’ve been called a charlatan. This month.
This has gotta hurt.
Ouch, too, from June:
The fragility of the Bitcoin peer-to-peer crypto-currency has been thrown into sharp relief when a large sell transaction sent the trade value of Bitcoins to zero.
According to the Mt Gox exchange, the sell order came from a compromised account. Mt Gox has taken its exchange offline (however, a screen grab of Bitcoins’ collapse is here) and is attempting to recover.
Its approach is to roll back all transactions to their state before the sell order was placed …
This attack on the Bitcoin follows increasing instability in the crypto-currency. After quietly making its own way in the world for a couple of years, sudden attention from mainstream media started driving large rises and falls in Bitcoin value..
And from el Reg, more recently:
Bitcoin’s small size – and consequent low liquidity – creates two problems. The first is that large trades can exceed the liquidity of the exchange, which creates the second problem, that an individual with large holdings can use large trades to manipulate prices.
stewart anderson said,
August 5, 2011 at 12:00 am
I have been looking at this recently and I see a lot of people going to a huge length to get the best performance from their “rig” and some people spending upwards of $30,000 dollars to build their own farms
I have also read of evidence of bot makers taking the time to have machines in the botnet mine for them.
there are plenty of place to spend them and yo can exchange them for “real currency”
So it appears to be being used as currency, certainly in the uk its as valid as the GBP since our dear gov flogged our gold at the bottom of the market.
What I can’t see clearly is stated gains made by bitcoin miners at the various levels.
I’m not surprised in the least the you did not make any gains Dick, in my view the only way to do it now is to have a large farm with a mimimum of 20 rigs all part of a single pool and you have to run it somewhere like Poland where electricity is cheap.
George Smith said,
August 5, 2011 at 7:57 am
and some people spending upwards of $30,000 dollars to build their own farms
Quite an investment. Poland, eh? Other countries were power is cheap could expect to be Bitcoin mines, too, then, I suppose.
http://bitcointalk.org/?topic=2895.0
I see they’ve already thought of this.