3 ms·

Bitcoin right now as it stands is a cash cow for everyone but the miners.

by knodi 13y ago

diycoin 13y ago
The only miners making a profit either already have theirs in hand or will have the next-gen's by end of this next week. Difficulty has risen to 4PT in a span of three weeks when it took years just to reach 1. HashFast's "Miner Protection Program" is the only offering at least promising returns. The rest of the miners were rushed to market and skipped a number of standard steps in their design, testing, and manufacturing processes. I'd buy straight bitcoin if I were anyone seriously considering an investment.
pcrh 13y ago
I don't really understand how bitcoin works.. however is there a point where generating the new coins or doing the computations required is no longer profitable. At that point, how would the bitcoin system survive if no one is willing to provide the necessary computational power?
- pilaf 13y ago
  Most bitcoin transactions include what's called a "miners' fee", an arbitrarily small amount put there as an incentive for miners to include your transaction in the blockchain, therefore speeding up the verification of said transaction. These fees will be there even after the last bitcoin has been mined, so there will always be an incentive to mine (provided that bitcoin is still in use by then). https://en.bitcoin.it/wiki/Transaction_fees https://en.bitcoin.it/wiki/Transaction_fees
- schoen 13y ago
  Transaction fees, which are specified by the sender of a transaction at the time that it's sent and are collected by the miner of the block that incorporates it.
- kbaker 13y ago
  There is a fixed curve that determines the rate that new Bitcoins come into the Bitcoin economy. Right now, that adds 25 BTC per block (or about 3600 BTC per day, or $720,000 USD/day). The number of coins added per block halves about every 4 years, and has halved once already. This is the primary method of introducing a sort of 'inflation' to the economy to help bootstrap the Bitcoin economy and the miner network. [1] The other method of rewarding miners to perform block hashing proof-of-work computation is through transaction fees; even now some (most?) miners do not accept transactions without a small fee attached, currently an equivalent of a few USD cents per transaction. The idea is that at some point, transaction fees will have to take over from the block reward as motivation for mining. Regardless of the costs involved, since the work factor corrects for the amount of mining activity, even a single interested person mining is enough to keep the Bitcoin network going (though that invites some bad scenarios - a group of people is much better...) As things are going and with ASIC mining becoming commonplace there will definitely be enough interest to keep things going on the technical side for the far future. [2] [1] https://en.bitcoin.it/wiki/Controlled_Currency_Supply https://en.bitcoin.it/wiki/Controlled_Currency_Supply [2] https://en.bitcoin.it/wiki/Mining https://en.bitcoin.it/wiki/Mining also, the FAQ: https://en.bitcoin.it/wiki/FAQ#How_does_the_halving_work_when_the_number_gets_really_small.3F https://en.bitcoin.it/wiki/FAQ#How_does_the_halving_work_whe...

Bitcoin right now as it stands is a cash cow for everyone but the miners.

by knodi 13y ago

Bitcoin right now as it stands is a cash cow for everyone but the miners.

The only miners making a profit either already have theirs in hand or will have the next-gen's by end of this next week. Difficulty has risen to 4PT in a span of three weeks when it took years just to reach 1. HashFast's "Miner Protection Program" is the only offering at least promising returns. The rest of the miners were rushed to market and skipped a number of standard steps in their design, testing, and manufacturing processes. I'd buy straight bitcoin if I were anyone seriously considering an investment.

pcrh 13y ago

I don't really understand how bitcoin works.. however is there a point where generating the new coins or doing the computations required is no longer profitable. At that point, how would the bitcoin system survive if no one is willing to provide the necessary computational power?

pilaf 13y ago
Most bitcoin transactions include what's called a "miners' fee", an arbitrarily small amount put there as an incentive for miners to include your transaction in the blockchain, therefore speeding up the verification of said transaction. These fees will be there even after the last bitcoin has been mined, so there will always be an incentive to mine (provided that bitcoin is still in use by then). https://en.bitcoin.it/wiki/Transaction_fees https://en.bitcoin.it/wiki/Transaction_fees
schoen 13y ago
Transaction fees, which are specified by the sender of a transaction at the time that it's sent and are collected by the miner of the block that incorporates it.
kbaker 13y ago
There is a fixed curve that determines the rate that new Bitcoins come into the Bitcoin economy. Right now, that adds 25 BTC per block (or about 3600 BTC per day, or $720,000 USD/day). The number of coins added per block halves about every 4 years, and has halved once already. This is the primary method of introducing a sort of 'inflation' to the economy to help bootstrap the Bitcoin economy and the miner network. [1] The other method of rewarding miners to perform block hashing proof-of-work computation is through transaction fees; even now some (most?) miners do not accept transactions without a small fee attached, currently an equivalent of a few USD cents per transaction. The idea is that at some point, transaction fees will have to take over from the block reward as motivation for mining. Regardless of the costs involved, since the work factor corrects for the amount of mining activity, even a single interested person mining is enough to keep the Bitcoin network going (though that invites some bad scenarios - a group of people is much better...) As things are going and with ASIC mining becoming commonplace there will definitely be enough interest to keep things going on the technical side for the far future. [2] [1] https://en.bitcoin.it/wiki/Controlled_Currency_Supply https://en.bitcoin.it/wiki/Controlled_Currency_Supply [2] https://en.bitcoin.it/wiki/Mining https://en.bitcoin.it/wiki/Mining also, the FAQ: https://en.bitcoin.it/wiki/FAQ#How_does_the_halving_work_when_the_number_gets_really_small.3F https://en.bitcoin.it/wiki/FAQ#How_does_the_halving_work_whe...