Bitcoin - What exactly is the big deal?

[SeerSGB]

I've got a couple friends that have heard about Bitcoin and they're trying to talk me into going into "mining" with them. They're whole hog ready to do this, but they say the more people they can get together the more they can make. I understand that basic concept: a internet/cyber currency free of international borders; all though the legality and "value" of such a thing still a bit of a puzzle to me.

Far as I can tell, though you're suppose to pay for goods and services with the coins, most of the "Transactions" are in the form of trading coins and mining. So, I'm sorta of not seeing the real point? It sounds like free "money" but you really aren't able to do much with it but trade it around with out coin holders; If I'm grasping the current way things are right.

Any one on the board with experience with these things? Is it worth my time? Do you end up out of pocket in terms of real money to finance/support your coins? What is even the point to do this?

[sojourner]

I read up about it once and considered using the spare time on my PC to run the mining client. Then I read that at this point the chances of actually "finding" any coins through mining were miniscule unless you are part of a pretty big team and the payout didn't seem worth it considering you would have to split the take with so many people. At this point I don't think you would make back in mining for coins what you'd use in electricity from running your PC.

From what I understand though, like the money in Second Life, you can trade Bitcoins in for cash along with being able to make online purchases from sites that accept them.

[Robert Maxwell]

Mining bitcoins is not very profitable at this point, even in pools. You would be better off buying bitcoins to hold them, as it becomes harder and harder to mine them in the future, which will increase the value of any coins you buy now. You could also buy coins and engage in forex speculation.

[Ian Keldon]

It's an "alt currency" scam and sooner or later the Treasury department is gonna drop the hammer on it HARD. Aside from being an alternative currency, Bitcoin is primarily used to either purchase goods/services that are illegal (such as drugs) or to avoid paying sales and other taxes.

[Robert Maxwell]

Ian Keldon wrote:

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It's an "alt currency" scam and sooner or later the Treasury department is gonna drop the hammer on it HARD. Aside from being an alternative currency, Bitcoin is primarily used to either purchase goods/services that are illegal (such as drugs) or to avoid paying sales and other taxes.

It's not a scam, and the Treasury department can't do anything about it, because it's not centrally owned or controlled by anyone.

Legitimate services also accept bitcoins, too, by the way. But yes, I am aware that it is currently the currency of choice for online black market purchases.

Full disclosure: I do not own any bitcoins nor do I participate in any mining operations.

[SeerSGB]

So far my take away with this is: Not really worth the time, and don't get into think big pay out.

[publiusr]

And stupid me was calling it Big Coin. I think it was on NPR

[STR]

Robert Maxwell wrote:

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You would be better off buying bitcoins to hold them, as it becomes harder and harder to mine them in the future, which will increase the value of any coins you buy now.

You assume that the bottom doesn't fall out when people stop mining. Mining isn't just a way to restrict supply, it's lending the power of your PC to authenticate BitCoin transactions. If the payout drops, and people stop mining, then the network collapses.

Ian Keldon wrote:

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It's an "alt currency" scam and sooner or later the Treasury department is gonna drop the hammer on it HARD.

It's a pyramid scheme with a useful ability to launder money and liquidize black markets. Early users ended up with a massive chunk of all BTCs that will ever be created.

The US Treasury doesn't handle BTCs, or XBox Points, or any other currency not issued by the US Treasury. The US government does not outlaw unofficial currencies, even fatally deflationary ones. The government just won't accept them to pay off tax and legal debts.

[Robert Maxwell]

STR wrote:

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You assume that the bottom doesn't fall out when people stop mining. Mining isn't just a way to restrict supply, it's lending the power of your PC to authenticate BitCoin transactions. If the payout drops, and people stop mining, then the network collapses.

The payout is already a fraction of what it used to be. It takes exponentially more power to mine now than it did when Bitcoin started. It's already to the point where it is not practical for individuals to mine anymore, unless they have massive hardware on which to do it. Otherwise, people have to pool, or they completely waste all the cycles they spend mining.

It's a pyramid scheme with a useful ability to launder money and liquidize black markets. Early users ended up with a massive chunk of all BTCs that will ever be created.

The US Treasury doesn't handle BTCs, or XBox Points, or any other currency not issued by the US Treasury. The US government does not outlaw unofficial currencies, even fatally deflationary ones. The government just won't accept them to pay off tax and legal debts.

Certainly true. I don't think Bitcoin is all that good of an idea, personally, to either mine or to hold. I just think holding to sell later is the better deal at this point.

[SeerSGB]

That's what I'm getting as I look more into this: It's a colossal waste of time. Maybe if you were on the front end of it, it's fine. But it seems (1) too good to be true (2) really overly dependent on people not up and getting bored. Why waste the time and energy to earn 0.0001 of a bitcoin? And adoption of it as an online payment method doesn't seem widespread enough to justify putting out the energy.

[STR]

Robert Maxwell wrote:

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The payout is already a fraction of what it used to be. It takes exponentially more power to mine now than it did when Bitcoin started. It's already to the point where it is not practical for individuals to mine anymore, unless they have massive hardware on which to do it. Otherwise, people have to pool, or they completely waste all the cycles they spend mining.

If that's the case, then it probably isn't feasible to do at a large scale either. It was always iffy as to whether or not you could make enough BTCs to break even on electricity and hardware. We've probably gone way past that point already.

Sidenote: THIS ARTICLE that I pulled up while trying to figure out how well BTC mining scales is probably the best layman explanation of a CPU and GPU I've ever read. They break it down very well.