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Thanks for your response. But my doubts are still there. From your response I understand that running a process on a computer would let you to 'emit' a limited

Thanks for your response. But my doubts are still there. From your response I understand that running a process on a computer would let you to 'emit' a limited amount of currency with a general cap of 21MM. I am not doubting of your words, just trying to make sense in my mind, but if that's true that means that earlier adopters can generate coins for free and hence easy money. If I have a big enough cluster of computers, I can then generate enough proof of work in a cheap manner. Is that true?

jerguismi 14y ago
> that earlier adopters can generate coins for free Never for free. For a much smaller cost, yes. It always required the computation or at least the effort to turn the the mining software on. The thing in the start was that nobody believed in the currency, therefore bitcoins were practically free. After some time people started using & believing in bitcoin concept, and from there on the currency started gaining value. Same as with traditional stocks. https://en.bitcoin.it/wiki/Controlled_supply#Projected_Bitcoins_Long_Term https://en.bitcoin.it/wiki/Controlled_supply#Projected_Bitco...
Nursie 14y ago
More or less free, yes, and some of the early adopters are likely still sitting on masses of them. You can't generate a 'enough proof of work in a cheap manner' because the rate at which currency is handed out is fixed. You can only fight other people for the currency being generated by having more computers than them. IMHO this puts BTC in the 'massive waste of electricity' camp.
- jerguismi 14y ago
  > IMHO this puts BTC in the 'massive waste of electricity' camp. You don't see any value in a currency that can't be counterfeited, manipulated by a central bank and also enables great privacy & low-fee transactions?
  - Nursie 14y ago
    I don't see much value in the proof-of-work concept attached to BTC, no. I know that the PoW is somehow bound up with the security and counterfeit-protection side of the whole system, is PoW mathematically necessary to this? If so then how much of it? Because if not then it's really doing work for the sake of it, to fight (ever harder) for a slice of the pie. The work done is lost to heat, not somehow forever bound to the bitcoin. And really I rather like the idea of a central bank that is able to help stabilise currency by taking various actions, but then I'm not someone that gets upset at inflation 'stealing' value from my savings. Governments and central banks can help keep money and food prices relatively stable. The privacy, yeah, good I guess. Low-fee... don't really care. The lack of any sort of chargeback facility makes the entire system very unattractive for someone who is not an online seller.
    - zargon 14y ago
      Yes, the computing resources are required to secure the block chain. How much? The network needs to have at least twice the computing power of an attacker to prevent that attacker from taking over the block chain. Although there are some ideas about how to reduce the amount of computing the network needs to prevent an attacker from forking the block chain: http://gavintech.blogspot.com.ar/2012/05/neutralizing-51-attack.html http://gavintech.blogspot.com.ar/2012/05/neutralizing-51-att... Another social advantage of bitcoin is that you can make transactions without being at the mercy of a payment processor. Wikileaks vs. visa and mastercard, for example.
      - Nursie 14y ago
        Yes that's not a bad thing, side-stepping the likes of visa. There are certainly some advantages to BTC as a payment method, and there are some advantages to it as a digital investment. However I don't think it covers all the cases for a payment method, and as I say, I quite like some of the features of centrally controlled currency.
juan_juarez 14y ago
While there's a hard cap on coins, they are usable in increments as small a 1E-8. As for mining... yes. Early adopters got 'free money' for buying into the system. Those with lots of computing power can more easily mine but, at present, in order to be cost effective, serious miners have had to move to custom designed hardware. It takes a serious investment and a large ongoing electrical bill to compete.
IanCal 14y ago
> If I have a big enough cluster of computers, I can then generate enough proof of work in a cheap manner. Is that true? Yes and no. Yes, you can get money doing this, but many people are. Because of this, the difficulty has increased to a point where it's fairly hard to make money (you've got to consider the electricity costs, for example). GPUs are the minimum you need, many people use FPGAs. Recently released are the first custom ASIC chips designed solely to mine bitcoins, which will drive up the difficulty extremely sharply and push GPUs and FPGAs out of the market.

jerguismi 14y ago

> that earlier adopters can generate coins for free Never for free. For a much smaller cost, yes. It always required the computation or at least the effort to turn the the mining software on. The thing in the start was that nobody believed in the currency, therefore bitcoins were practically free. After some time people started using & believing in bitcoin concept, and from there on the currency started gaining value. Same as with traditional stocks. https://en.bitcoin.it/wiki/Controlled_supply#Projected_Bitcoins_Long_Term https://en.bitcoin.it/wiki/Controlled_supply#Projected_Bitco...

Nursie 14y ago

More or less free, yes, and some of the early adopters are likely still sitting on masses of them. You can't generate a 'enough proof of work in a cheap manner' because the rate at which currency is handed out is fixed. You can only fight other people for the currency being generated by having more computers than them. IMHO this puts BTC in the 'massive waste of electricity' camp.

jerguismi 14y ago
> IMHO this puts BTC in the 'massive waste of electricity' camp. You don't see any value in a currency that can't be counterfeited, manipulated by a central bank and also enables great privacy & low-fee transactions?
- Nursie 14y ago
  I don't see much value in the proof-of-work concept attached to BTC, no. I know that the PoW is somehow bound up with the security and counterfeit-protection side of the whole system, is PoW mathematically necessary to this? If so then how much of it? Because if not then it's really doing work for the sake of it, to fight (ever harder) for a slice of the pie. The work done is lost to heat, not somehow forever bound to the bitcoin. And really I rather like the idea of a central bank that is able to help stabilise currency by taking various actions, but then I'm not someone that gets upset at inflation 'stealing' value from my savings. Governments and central banks can help keep money and food prices relatively stable. The privacy, yeah, good I guess. Low-fee... don't really care. The lack of any sort of chargeback facility makes the entire system very unattractive for someone who is not an online seller.
  - zargon 14y ago
    Yes, the computing resources are required to secure the block chain. How much? The network needs to have at least twice the computing power of an attacker to prevent that attacker from taking over the block chain. Although there are some ideas about how to reduce the amount of computing the network needs to prevent an attacker from forking the block chain: http://gavintech.blogspot.com.ar/2012/05/neutralizing-51-attack.html http://gavintech.blogspot.com.ar/2012/05/neutralizing-51-att... Another social advantage of bitcoin is that you can make transactions without being at the mercy of a payment processor. Wikileaks vs. visa and mastercard, for example.
    - Nursie 14y ago
      Yes that's not a bad thing, side-stepping the likes of visa. There are certainly some advantages to BTC as a payment method, and there are some advantages to it as a digital investment. However I don't think it covers all the cases for a payment method, and as I say, I quite like some of the features of centrally controlled currency.

juan_juarez 14y ago

While there's a hard cap on coins, they are usable in increments as small a 1E-8. As for mining... yes. Early adopters got 'free money' for buying into the system. Those with lots of computing power can more easily mine but, at present, in order to be cost effective, serious miners have had to move to custom designed hardware. It takes a serious investment and a large ongoing electrical bill to compete.

IanCal 14y ago

> If I have a big enough cluster of computers, I can then generate enough proof of work in a cheap manner. Is that true? Yes and no. Yes, you can get money doing this, but many people are. Because of this, the difficulty has increased to a point where it's fairly hard to make money (you've got to consider the electricity costs, for example). GPUs are the minimum you need, many people use FPGAs. Recently released are the first custom ASIC chips designed solely to mine bitcoins, which will drive up the difficulty extremely sharply and push GPUs and FPGAs out of the market.