Best Of

@primesuspect said:
Thanks @Myrmidon. I didn't intend for this post to turn into a mining post because I know NOTHING about currency mining, but of course I am talking to a community of PC-building geeks so of course it will turn to that, and I'm very glad to defer to people who know what they're talking about on the mining aspect. I was talking more about BTC and cryptocurrency basics (101 level).

I probably did emphasize the 'mining' part of what I do a little much. See? threadjacking. But to even it out... trading is really easy and much faster than stock market trading! 10/10 would recommend!

@keto said:
Just make sure you report your net profits to the Feds on your taxes, that's where it has the most potential to get ugly (other than making stupid decisions and losing your shorts trading), sounds like you are keeping excellent records which is either a really good or really bad idea

Wisdom. So far my records are in fact excellent, BUT I haven't cashed out for $, which means I am not liable for taxes... yet. My biggest concern is figuring out how to report the ~$40 I spent on steam games last year with bitcoin. This might be a good year to start looking into charitable donations to offset BTC gains...

@CrazyJoe said:
Why would you want to keep your currency on an exchange rather than in a wallet unless you were trading/selling?

The time it takes to trade from your wallet to an exchange, then from an exchange to dollars can be the difference between jumping on a good sell price or not - not to mention having to be focused for that long. The difficulty in setting up a wallet is already a bit much for someone who doesn't already know crypto, and even if you DO, it's still extra steps to do a thing - yes, it's simple, but you know how the layman is with computers. We still have people reusing passwords. Additionally, EMT noted - every transaction takes a fee. Usually the fee is pretty small, though, since it's a fee based on amount of data transferred, not amount of money transferred. Look up 'dust transactions' for a really interesting look at this... there are transactions so small that the fee to transfer them in a reasonable amount of time would cost more than the transaction (and this problem should get fixed in time).

@drasnor said:
How do you spend your cryptocurrency on goods and services?

There exists a third party payment processor called BitPay. Steam was using this processor for a while. After purchasing a game, Steam would redirect to BitPay, who would provide a temporary wallet address, and say 'I have to see a payment of 0.xxx BTC within 15 minutes.' If they saw the payment, they'd put the transaction 'in escrow' until the payment was fully confirmed on the network (once fully confirmed, the transaction was greenlit). If they didn't see the payment, the transaction was canceled.

Without a payment processor, it's a little more like using something like Google Wallet or VenMo to pay someone. You tell the person over whatever medium to send you money, you provide the public key to your wallet (analogous to your gmail address for Google Wallet), and you wait for funds to show up. The 'buyer' can tell you where the funds are coming from if they like (by providing their own public key).

@EMT said:
It costs like a $1+ fee (lately) to move any BTC to a different address or wallet, or to pay for anything, right?

Yeah, but the fee is set by the sender. It's actually one of the more clever parts of the technology - there's incentive to keep your miner going even once the blockchain is all mined out - your miner will continue validating these transactions, and get paid by that fee. Miners traditionally validate the higher-fee transactions first, so if you don't need to send IMMEDIATELY, you can save a couple bucks with a low fee. The more people use the network, the more 'high-fee' senders will show up, and the higher the fee will get... thus incentivizing more people to buy miners to get in on the easy money, thus increasing the throughput of the network, thus reducing the amount of transactions waiting on the network, thus reducing the fee. Although I'm not a HUGE free-market fan, this is basically free market for fees... fee market.

...I'll show myself out.

@EMT said:
How far does everyone trust their cryptocurrency to be kept safe from theft?

Alright, this is one I can answer

There is some confusion about the difference between cryptocurrency accounts and wallets.

You can TRADE cryptocurrency on simple sites and apps like Coinbase or (soon) Robinhood, but you have to understand something fundamentally important: THEY are holding on to your currency (like a bank), but UNLIKE banks, they are not regulated or protected or insured... so if your currency gets stolen (and this has happened more times than you'd probably like to know), you are fully exposed to loss. See Mt Gox as one example of a currency exchange getting screwed over and tons of people losing their shorts in the mess...

To keep your currency safe, you should get a digital wallet (like Electrum or Blockchain). YOU are responsible for your own currency and you hold it with your own keys, etc. The chances of you personally getting hacked are infinitesimally smaller than a big, juicy exchange being targeted.

That means when you want to trade currency, you take it out of your wallet and move it INTO the exchange to trade... On the flip side, if you want to pull currency from the exchange, you would pull it FROM the exchange into your wallet.

It's much safer if you're holding onto it rather than letting it sit on somebody else's exchange.

I'm going to hijack your thread a little bit, @primesuspect (although I prefer to think of it as augmentation):

I purchased two of @Thrax 's vidja cards a while back to put into an ethereum miner that I built out of a milk carton and some plywood. It was a fairly difficult project (mostly just getting ubuntu to recognize the video cards), but I'm happy I did it. While I had previously purchased BTC for $, this was my first attempt at a crypto miner, and I learned a ton. Would definitely suggest. I find myself understanding a lot more about crypto and being far less scared to trade, plus, to me it's still all 'fun money.' I don't have the drive to 'make a good investment' that I had when originally purchasing BTC with $.

The miner is now mining ZEC, which I then turn around and trade for BTC, ETH, and Siacoin. At this point, the miner has paid for itself and is pure profit - although that took a solid few months, more than I expected. I also have the added benefit of being allowed to run the miner at work, as we pay for power by the circuit as opposed to by the kWh.

At the time, our landlord also was looking to get rid of some Antminer S7s, so I picked those up from him. Although they don't mine very quickly, I found myself making a couple hundred bucks every few weeks. Nothing to sneer at.

Worth pausing to discuss our landlord - he runs a MASSIVE mining rig out of his side of the datacenter. It stands taller than a man, and is just a nightmare conglomerate of GPUs. I'm not sure what he mines, at the moment.

About a month later, I managed to purchase an Antminer S9 straight from Bitmain. This constituted a fairly sizable investment for a pure hobbyist, so there was definitely a little unpleasant feeling that I had to get over. However, I consoled myself with the knowledge that the S9 was going through third party channels for three times the price I was paying, so while the worst case scenario was 'lose all your money,' the second worst case scenario was 'get the miner and sell it for three times the price you bought.' I figured I could take that risk.

I have had the S9 running since... what, September? And even with the 'bitcoin crash' recently, I have made six times my money back. Again, though, remember that I am being granted free power, and this is liable to change at any time.

Fairly recently (as alluded above), I began trading BTC, ETH, ZEC, and SC back and forth using Shapeshift. During this most recent 'crash,' I have managed to 'save' 3% - including all the fees of trading (which are infinitesimal compared to trading stocks). So, I'm no genius or anything... but I am struck with how EASY it is to get going. I keep a google spreadsheet of all my transactions, all the money I've lost to fees, all the money I've gained/sheltered (already counting the loss from fees), and how much each transaction netted/lost.

My total investment was something approaching $2000 - the etherum miner was $600, and the Antminer S9 was ~$1200 or $1300 at the time, and I probably spent another $100 somewhere, because my stupid brain has a tendency to round down ($1297? that's practically $1200!).

The only major concern I have is that I am treating BTC like a commodity instead of a currency. The pragmatic side of me knows that it CAN'T be a currency right now due to its volatility, and that I should go ahead and trade and gamble and play... but the idealistic side of me knows that the more we treat it like a commodity, the less chance it has of BECOMING a currency some day - and the more we think of it as a commodity, the more we're willing to accept government regulation on it (whereas we might not be so accepting of government regulating a currency that doesn't belong to them). Since an ideal crypto has a very good chance of taking financial control AWAY from the government, my idealistic (and partially conspiracy-theory) side gets worried whenever I play into what the government wants me to do... worried that I'm contributing to a long term plan to dismiss, devalue, and ultimately eliminate cryptocurrencies from the realm of stable, mature financial tools.

Finally... one of the things I find when discussing crypto is that the EXTREMELY uninformed tend to come out of the woodwork and present themselves as experts. I've been dismissively told 'what's the big deal? I have paper that I can spend right here in my pocket' (the question being why do we need crypto, the bias being 'because I can't think of a reason, there mustn't be one'). I've been told 'bitcoin can't be stable because it's not directly attached to a commodity' (when examples of stable currency unattached to commodities exist and indeed thrive). I've been told that bitcoin is not fungible (maybe I just misunderstand the definition? It's not like each individual BTC has its own unique name...). I've been told that bitcoin has proven itself to be too unstable to use as a currency (implying that BTC is fully mature and done growing into its stability). I've been told that 'mining' is a silly concept in general because the total amount of currency could be released all at once for ease's sake (totally ignoring... well... there are a LOT of problems with that statement, too big for a parenthetical summary).

So... this is a fantastic hobby. I have a lot of fun with it, and I don't need to be hands on all the time. It's mostly automated, and is available when I WANT to play with it... but - this post aside - I tend to stay fairly quiet about it, given how much people seem to already 'know' about it.

@primesuspect said:
Essentially, that's it: BTC and other cryptos have value because others think they do.

That's the highest level. The next level down is: They have value because exchanges exist with sufficiently low skills necessary where people will agree to convert it to other currencies at a given rate.

Coins spike in value when major exchanges add support for them. Otherwise, trading them is sufficiently difficult that their value is depressed. Higher liquidity = higher value.

DISCLAIMER: My BTC, ETH, and LTC trading are at what I would call a noob level, but that is at least better than knowing nothing about it. I've been dabbling in BTC and other cryptocurrencies for a bit and made a tiny bit of money doing such, so I'm willing to answer any basic questions if you have any.

I don't recommend crypto trading on a large scale. I've kept my trading pool under $100 just for fun and learnings.

The #1 thing anyone here needs to know about crypto: use NiceHash. Easy GUI. Automatically selects the most profitable algo every day. Easy to cash out your bux. Even a $250 graphics card can easily make $100+ a month, factoring in a 10 cent/kWh power bill.

The days of complicated command lines and hand-picking your cryptocurrency are done.

NiceHash. Learn more.

//EDIT: No, you cannot mine BTC with a graphics card. It is not profitable. That's why all the other coins exist! You are also not likely to escape the IRS if you generate or obtain sums of money you would deem useful or exciting.