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Bitcoins/Silkway

V-PV-P State College, PA Member
edited Jun 2011 in The Pub
Heard of em'? Thoughts? I just setup my computer to do some mining and setup a temp TOR network to check out Silkroad (just curious, I swear).

Comments

  • RootWyrmRootWyrm Icrontian
    edited Jun 2011
    Research into Bitcoins has found some ugly facts. Like:
    - The supposed "creator" doesn't actually exist. At all. It's a completely fake identity.
    - It has all the hallmarks of a Ponzi scheme; "proprietary" method, unrealistic returns for "minimal" investment (buy video card, make thousands in Bitcoins!), the "external audit" confidence trick, and an early investor - with no idea who it is - just collapsed the market by dumping on MtGox last week.
    - The value of Bitcoins is pretty much headed for zero, see the recent crash and continuing collapse of value at MtGox.

    So the verdict from a very large number of security and IT professionals is: Bitcoin is a Ponzi scheme, period. It's not worth the time or effort, and you'll end up holding the bag no matter what you use them for or with.
  • primesuspectprimesuspect Beepin n' Boopin Detroit, MI Icrontian
    edited Jun 2011
    Eh. Read both sides of the argument. There are plenty of articles explaining how cool it is, but this also provides an interesting counterpoint:

    http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-good-idea

    Me personally, I just don't get it. I can't muster up enough energy to investigate it and form an educated opinion. I do find the "we use your CPU cycles" thing to be suspicious, mostly because there is no clear answer as to what they're "computing" or who "they" are. They claim they use the CPU cycles for some kind of security key number-crunching. That could mean almost anything. For all we know they could be using it to crack encryption.

    I find the lack of transparency and lack of clear explanation to be enough to make me go "meh, who cares."
  • V-PV-P State College, PA Member
    edited Jun 2011
    RootWyrm wrote:
    - It has all the hallmarks of a Ponzi scheme; "proprietary" method, unrealistic returns for "minimal" investment (buy video card, make thousands in Bitcoins!), the "external audit" confidence trick, and an early investor - with no idea who it is - just collapsed the market by dumping on MtGox last week.
    Well fortunately I haven't bought a new video card to do this. I just set it up on my current laptop to see what kind of results I get. I'm going to keep going for a week or two and see what happens. Worst comes to worst, I'll pay an extra $10 in electricity this month.
    ...mostly because there is no clear answer as to what they're "computing" or who "they" are.
    This is something I've been trying to figure out also. I've read the wiki, forums, and checked out the youtube videos about bitcoins but no one has explained what exactly is being "solved" and why or how the difficulty level increases over time. Also, they said they've made the source code available which seems odd. The source code for the actual client? The code for the miners? The entire thing is just really puzzling but it is very interesting to me.
  • primesuspectprimesuspect Beepin n' Boopin Detroit, MI Icrontian
    edited Jun 2011
    Also; Silk Road is basically a big illicit drug buying site, isn't it? o.O
  • ThraxThrax Professional Shill, Watch Slut, Mumble Hivemind Drone Austin, TX Icrontian
    edited Jun 2011
    The difficulty increases over time because the currency is hard-code to cap at 21 million units. That means every allocation of coins, A) Inflates the value of the money and B) Reduces the statistical probability that anyone will receive the next payout.
  • RootWyrmRootWyrm Icrontian
    edited Jun 2011
    Eh. Read both sides of the argument. There are plenty of articles explaining how cool it is, but this also provides an interesting counterpoint:

    http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-good-idea

    A number of us on Twitter, including a couple of the Clouderati, did some serious distributed digging. What we found is that continually, the only folks who were arguing for Bitcoin, were the ones who were heavily invested emotionally or financially. Companies that accepted Bitcoin were among some of the worst offenders.
    Me personally, I just don't get it. I can't muster up enough energy to investigate it and form an educated opinion. I do find the "we use your CPU cycles" thing to be suspicious, mostly because there is no clear answer as to what they're "computing" or who "they" are. They claim they use the CPU cycles for some kind of security key number-crunching. That could mean almost anything. For all we know they could be using it to crack encryption.

    See "confidence trick." They've been claiming now that Bitcoin code has been "audited" by third parties who have said it's totally legit and nothing untoward going on there, not at all. However, none of these third parties have come forward, and these claims come from the developers.
    The "lead" developer and creator has been proven to be a complete fraud as well - there is no such person as Satoshi Nakamoto. Which in and of itself should be a huge red flag. Prior to about 3 months before the release of Bitcoin, nobody had ever heard of him, his PGP key was only created when he started pumping Bitcoin, and there is no evidence that any such person exists.
    The argument that it's "open source" and therefore "anyone can verify it" is of course, the typical garbage excuse. Do you want to learn C++ and deal with obfuscated code to try and figure out if they're doing something legitimate? Even the anonymity is a lie; how's someone going to ship a product or deliver a service to you, without knowing who you are?
    I find the lack of transparency and lack of clear explanation to be enough to make me go "meh, who cares."

    Unfortunately, a large number of people got taken in by the absurd claims of making big money with Bitcoin. There's a page (I won't link to it) that falsely claims with Bitcoin you can make a Radeon HD6970 pay for itself in 9 days. (Obviously, this claim is completely absurd and factually false unless the mining does not become "harder" over time - and if that's the case, all claims and arguments are rendered moot.) A large number of "Mining Pool" services that were "paying" users for GPU/CPU time used for Bitcoin mining were exposed as total frauds that never pay out. The exchanges like MtGox et al are now being looked at very hard by various governments since they're basically engaging in unlicensed, unregulated financial trading on top of harboring/enabling illegal activities.
  • V-PV-P State College, PA Member
    edited Jun 2011
    Also; Silk Road is basically a big illicit drug buying site, isn't it? o.O

    Well, that's what I read on the only article I could find that actually talks about silkroad. Google searches of "silkroad" or anything similar are riddled with the game Silk Road. I was able to look up a cached page on TOR and saw that other than drugs there are also categories for "Money," "Digital," and "Lab Supplies." Admittedly it looks like it's built completely around substances but I'm curious to know what's in those three categories, especially the "Digital." Unfortunately the only way to do that is to register a new account on silkroad because Google hasn't cached those pages yet. Also, it seems silkroad has closed registrations of new users (5-0 on their tail all of a sudden maybe? :wtf:)
    Thrax wrote:
    The difficulty increases over time because the currency is hard-code to cap at 21 million units.

    Another point I don't quite understand. If the currency is limited to 21 million units, what's the incentive for mining after all 21 million units are in "circulation." As far as I understand the system, no mining equals no transactions (I read on the bitcoin wiki that after production is complete mining will still be needed because it 'signs' the transactions) equals no value.
  • TushonTushon I'm scared, Coach Alexandria, VA Icrontian
    edited Jun 2011
    RootWyrm wrote:
    So the verdict from a very large number of security and IT professionals is: Bitcoin is a Ponzi scheme, period.

    That is all you need to know.
  • ThraxThrax Professional Shill, Watch Slut, Mumble Hivemind Drone Austin, TX Icrontian
    edited Jun 2011
    V|P wrote:
    Another point I don't quite understand. If the currency is limited to 21 million units, what's the incentive for mining after all 21 million units are in "circulation."

    There is none. It's a landrush. The people with the most compute power early on get the lion's share, and the latecomers (you) get to squabble over table scraps.
  • CantiCanti =/= smalltime http://www.youtube.com/watch?v=y9K18CGEeiI&feature=related Icrontian
    edited Jun 2011
    Also; Silk Road is basically a big illicit drug buying site, isn't it? o.O

    I thought Silkroad was a Korean MMORPG....which is basically like a drug.
  • V-PV-P State College, PA Member
    edited Jun 2011
    Canti wrote:
    I thought Silkroad was a Korean MMORPG....which is basically like a drug.

    That's what makes it very difficult to google search for info on the other silkroad. The illegal-ish kind that is....
  • MalpercioMalpercio Greater St. Louis Area
    edited Jun 2011
    Replace the .onion with a .tor2web.org.

    I've been mining, but only because I'm away from my personal computer quite often. For about (currently) every 4 24-hour days, I'm generating one BitCoin with my 5770. I'm not too serious about it, I usually sell the BTC and withdraw the USD out ASAP, I don't invest USD or stockpile BTC. Just take advantage of where the market is at the time I have a BTC. Sold one for $30 before they dropped again.

    Once I stop making more that $10 for a BitCoin, I'll probably stop mining and start folding again.
  • RootWyrmRootWyrm Icrontian
    edited Jun 2011
    Malpercio wrote:
    For about (currently) every 4 24-hour days, I'm generating one BitCoin with my 5770.

    ... consider "increasing complexity" disproven. Given how many people have jumped on the bandwagon, especially with absurd rigs with multiple HD6990's, you should have seen an increases by this point. If we presume 50,000 miners doing at least 1 coin per 4 days we find that for 21 million coins it takes 1680 days at a constant rate. Or about 4.6 years. If we cut it to 25,000 miners that doesn't help enough. And we know there are plenty of folks with faster hardware (hence the 50K to sort of give an average.)
    In order to maintain the alleged runout point at 40 years you would have HAD to see an increase in time between 'mined' coins at this point.
  • SnarkasmSnarkasm Madison, WI Icrontian
    edited Jun 2011
    They say that when half the blocks have been mined, the time required to compute a block (and thus generate another 50 BTC) is increased, and when half of the remainder are mined, it increases again, etc etc etc. We haven't, from what I've seen, reached the first cutoff for blocks - at 50BTC per block and 130k or so blocks (I checked into it and tried it out for like 10 minutes last night to do some quick math), we're still only at 6.5m BTC in circulation so far.

    I still don't understand a lot of it, but what I do understand is this - there's no point to CPU mining anymore, since the calculations have gotten harder due to higher numbers of miners, and GPU mining is the only real way you'll end up with anything, and even with two 6950s, I will guarantee that I'll burn out one of my cards before I generate enough BTC to pay for its replacement. It's crap. If you got in on the ground floor, maybe you're the guy who just got $500k in BTC stolen from him, but if you're coming in now, it's completely pointless.
  • RootWyrmRootWyrm Icrontian
    edited Jun 2011
    Snarkasm wrote:
    They say that when half the blocks have been mined, the time required to compute a block (and thus generate another 50 BTC) is increased, and when half of the remainder are mined, it increases again, etc etc etc. We haven't, from what I've seen, reached the first cutoff for blocks - at 50BTC per block and 130k or so blocks (I checked into it and tried it out for like 10 minutes last night to do some quick math), we're still only at 6.5m BTC in circulation so far.

    Actually, the return is supposed to diminish every 210K blocks with a maximum of 50K blocks per year. That's per the developers, I'll add; found it in a forum posting. That said, it was in December 2010 with claimed ~1M in circulation. Thus, we find that in <6 months an additional 4M+ coins have been added to circulation.
    It's a mathematical impossibility if any of the claims are true. Not "some," not "a subset." Any single claim by itself is invalidated by the results. In fact, it is flatly stated that based on block generation, no single user can expect to generate a block per year past a certain number of miners/mining workers. Plus early adopters saw an insane 50BTC per block reward. (These are the people cashing out.) If we accept the 50K blocks per year and an average reward per block of 1BTC then we find that the maximum for all of 2011 was passed in January based on 50K blocks per year.
    Instead, they basically did a classic Ponzi trick and opened the floodgates. The "inflation control" is entirely imaginary. The only thing they're doing is continually reducing the rewards for newcomers after removing limits on how much you can "invest." The more they have in "circulation" the more they can abuse it. And because of the way it's built, there's no way to prove or disprove that certain miners are or are not receiving higher rewards for their successfully mined blocks.

    Even if the reward reduces every 210K, at 6.2M in circulation, the average reward should be <0.2BTC and falling weekly. Instead, we find that many users are still averaging 1-0.5BTC. If we presume a constant generation rate for the past 6 months (~1 per successfully mined block, 1 in 10 blocks rewarding BTC) we find that 400 MILLION blocks have been generated at a minimum in just 6 months. As compared to the claimed 50K blocks per year.

    Also, to further prove how broken and Ponzi it is? MtGox is now closed indefinitely. Their coffers were completely emptied by one person cashing out a huge number of coins, including fraudulent ones, and succeeding enough to zero out the value. They'll only open up again when they can pretend that mass sale didn't happen and reset the value even lower than it was, to $17.50USD/1BTC. (Less than 2 weeks ago they were $27-30.00USD/1BTC.)
  • SnarkasmSnarkasm Madison, WI Icrontian
    edited Jun 2011
    From the documentation (which naturally assumes the documentation is accurate, which is no guarantee), every successfully mined block generates 50BTC - the difference between the beginning and now is that now, almost no individuals compute a block - they're all found by pooling resources, which is why the 50BTC gets parsed out to the contributors as a fraction of that.

    At any rate, this is just what I can glean from the few hours I've checked into it. The supply of new BTCs is supposed to cap at 21 million, and they're supposed to release 50BTC to the successful person/group who "computes" the new block, so that's what I was basing my math on.
  • V-PV-P State College, PA Member
    edited Jun 2011
    Well, I only ended up mining for a day then I got annoyed with the amount of resources it took. That aside, the idea of a worldwide currency does sound appealing in this day and age. Why not work toward something like this? It doesn't have to be completely electronic (because of obvious flaws of that kind of system) but it's a step in the right direction. Discuss.
  • RootWyrmRootWyrm Icrontian
    edited Jun 2011
    V|P wrote:
    Well, I only ended up mining for a day then I got annoyed with the amount of resources it took. That aside, the idea of a worldwide currency does sound appealing in this day and age. Why not work toward something like this? It doesn't have to be completely electronic (because of obvious flaws of that kind of system) but it's a step in the right direction. Discuss.

    Because:
    http://www.eubusiness.com/news-eu/greece-eeurope.2p4
    http://www.theregister.co.uk/2011/06/16/bitcoin_theft_claims/
    http://www.theregister.co.uk/2011/06/19/bitcoin_values_collapse_again/
    https://support.mtgox.com/entries/20208066-huge-bitcoin-sell-off-due-to-a-compromised-account-rollback
  • ZanthianZanthian Mitey Worrier Milford, OH Icrontian
  • ThraxThrax Professional Shill, Watch Slut, Mumble Hivemind Drone Austin, TX Icrontian
    It all just seems too good to be true, and that is why I'll never invest myself in one of these currencies.
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