Daily Archives: May 7, 2014

Security researcher Sergio Demian Lerner estimates that Satoshi - the pseudonymous creator of the currency, mined around 1,000,000BTC in the early days, but has never spent any. At a price of around $400 each, that would make him worth around $400 million.

Libertarians have some good points. I certainly believe that people should have as much liberty and freedom to choose and freedom to act as is possible, while compatible with a society that is in other ways fair and functional. But the notion that they can free currency from governments is really misguided. One of the few functions of government that I thought was unassailable was providing a stable currency.

What is a stable currency? It used to be a currency that was either made up of or backed by gold or silver. In modern era its more a currency thats backed by the full faith and credit of the government. Bitcoin is backed by the full faith and credit of wasted computer time.

Wasted computer time. Its like stock in a company that doesnt do anything. One of these totally speculative IPOs. Its a promise. I think its a distraction.

I think the enthusiasm for Bitcoin will, if were lucky, will help us make some progress towards a more rational digital currency. Ultimately the providers of those currencies are probably going to be governments.

Borenstein awknoledges that many people have made their fortunes on the huge price fluctuations seen by Bitcoin in recent years, he says it is nothing more concrete than the tulip bubble seen in the Netherlands around 1637. In March that year a single bulb of one species of tulip was being traded for around ten times the income of the average skilled craftsman.

"I have no doubt that not only have people made a fortune on Bitcoins, but some people in the fortune will make a fortune on Bitcoins, because it's a speculation. Some people will lose a fortune. At the level of an investment it may be a little more than tulips but on the level of a technological indicator it may be a pointer towards a multi-currency digital future," he said.

First Virtual took initial funding, including from established firms like GE Capital, and floated in a 1996 IPO. It was later bought out by DoubleClick in the dot com crash.

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Bitcoin 'a distraction', says online payment pioneer

Who isnt curious about Bitcoin, the virtual currency whose origin story is rife withunderground marketplaces, instant millionaires, and massive scams? And the best way to learn more is to start participating yourself.

Sure, you could hit up an exchange and drop four hundred dollars or more on a single bitcoin, but you can also get in for free by mining the coins yourself. Bitcoin has become too hard for regular people to mine, but the world of bitcoin-like altcoins is still wide-open to hobbyist miners. Here's everything you need to know to get started mining altcoins.

This article assumes youve at least heard of Bitcoin, but you might not have heard of altcoins. Altcoin is a catch-all term for cryptocurrencies based on the Bitcoin system, which arent actually Bitcoin. Because Bitcoin is open-source software, anyone with some development experience can copy it and create their own currency.

The Dogecoin logo.

Of course, like Bitcoin, the value of any altcoin is equal only to how much someone will pay you for it. Some altcoins, such as Litecoin, Peercoin, and even Dogecoin have active communities and economiesyou can view a list of altcoins sorted by market cap herebut currently none are even a tenth as valuable as Bitcoins. Many altcoins have a devoted following, but be wary of anyone aggressively hyping a new altcoin or trying to convince you to get in on the ground floorit could just be a modern version of the pump and dump scam thats been around for decades.

The Bitcoin software works this way: Every time somebody spends a bitcoin, that transaction is recorded in a public ledger. For example, if you have 10 bitcoins in your wallet and send 7 to someone else, that transaction goes in the ledger, and everyone knows that your wallet only has 3 bitcoins now. If you try to send somebody else 5 bitcoins tomorrow, that transaction will be rejected because its a matter of public record that your wallet doesnt have the coins.

For the system to work, the public ledger has to be completely trustworthy. It has to be impossible for anyone to record a fraudulent transaction. Bitcoin accomplishes this using cryptography (hence the crypto in cryptocurrency), in a process that requires many computers, all connected in a single peer-to-peer network. In order to incentivize people to participate in this transaction-verifying network, bitcoins are periodically generated and awarded to the machines engaged in maintaining the public ledger.

As bitcoin values have soared over the last couple of years, bitcoin mining has become a very lucrative business. As a result, companies have designed chips solely for running the cryptographic algorithms bitcoin uses for mining. These chips, called ASICs, are so good at mining that its pretty much impossible for normal, general-purpose hardware to compete. Even the burliest desktop PC with huge gaming GPUs wont be able to generate enough money mining bitcoin to cover the cost of the electricity used in the process.

Its still possible to be successful at altcoin mining using traditional PC graphics cards, like AMDs Radeon R9-280.

Because altcoins are less popular, and because many altcoins use a different kind of mining algorithm called scrypt that cant be solved by the ASIC boards, you can still feasibly earn these altcoins by running the mining program on your personal computer. You can then spend the altcoins or swap them for bitcoins at a cryptocurrency exchange.Unlike most altcoins,bitcoins can be spent at a number of e-tailers like Overstock.com and Tiger Direct.

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Beginner's guide to mining Litecoin, Dogecoin, and other Bitcoin variants