Seahawk

Two days ago I gave into my curiosity and decided to experiment mine Dogecoin.
Knowing that it'd be extremely unlikely for me to solve a blockchain with my old computer, I joined a mining pool (nimblecoin.us) and a GPU miner, and put my Nvidia GT 440 to work. I average 30k hashes a second. So far I've got 30 Doge.

I can't help but feel like any sort of cryptocurrency is kind of a giant waste of time and energy.

I understand the appeal. It's an escape to government issued currency which some people don't have any faith in. I get that.

However, I don't see how crypto addresses the alleged shortcomings of these currencies in any meaningful way.
All of them are tied directly to an exchange rate based on government issued currency. Wherever crypto is accepted, the pricing or amount taken is based on the current exchange rate to another currency. With that being true, the only difference I see is the medium of payment is different, as well as the verification, but otherwise it'd be the same as giving an equal amount of the government currency.

Crypto also seems to be very inaccessible for people to get into. The current largest crypto currency (and the only one I've heard as being accepted for payment) Bitcoin requires insane computational resources to even have a chance at getting any. Check out rigs for mining Bitcoin. These are EXPENSIVE setups for the equipment alone, not even considering power demands and cooling solutions to keep them running. This makes it possible for only those already wealthy in other currency to get in, and create more wealth for themselves out of thin air.
A related problem is the system of increasing difficulty. This biases it towards those who start in the beginning. Bitcoin is over 600USD at this moment, if you nonchalantly mined some back in 2010 you could be exceptionally rich right now if you could find someone to convert it to cash.
It would also be possible for the creators of a cryptocurrency to mine before releasing it to the general public, creating significant value for themselves if their currency takes off. Although, no crypto other than Bitcoin has actually risen in value.

The hard cap on the about of issued crypto exists to create an eventual scarcity, but this also creates the problem of unavoidable loss. If a wallet key is lost, then all the crypto in that wallet is lost forever, leading to further scarcity.

There are other issued which aren't related to the concept of a currency, but are still related.
-They seem extremely volatile, with value changing by the minute, making pricing difficult.
-Most big players in crypto seem to be into it for the purpose of hoarding coins, and then dumping them when the value is high, instead of using it as an actual payment method.
-Exchanges offer no protection for users. Mt.Gox collapsed recently when it was unable to service users converting BTC to cash en masse, a virtual bank run. It also undermines the entire libertarian concepts behind a crypto currency when users who lost their money immediately ask the big bad governments worldwide for assistance.
-This is a personal issue, but the total energy expended worldwide for digital currency is HUGE! Look at the rigs before and imagine the energy spent, heat produced, for something which may or may not have value in the future...


What are your opinions? Sorry if I sounded super serious.

CrispyChicken

I'm sorry, I really have nothing to offer in this conversation. I just like Doge.

Seahawk

The first 5 people to post wallet codes get 1 Dogecoin each.

Dudebro

It seems like a scam to get items for fake money. If they get enough people to mine coins it will make it seem legit, then places start accepting it to ride the hype train and move merchandise.

I don't see how any sane person could have any trust in it either. If the system fails somehow or someone "steals" it, like with Silk Road recently, everyone is just out of luck.

ebinsugewa

It's very often a waste of time an energy if you don't get in on the ground floor. Bitcoin has long since been unprofitable for GPU miners due to rising difficulty (all cryptocoins are awarded based on solving mathematical problems, graphics cards are very good at this.) Dogecoin is based on the scrypt algorithm, meaning that it is not mineable by the FPGA/ASIC miners that have been specially created to mine bitcoins. It's theoretically possible to make a dedicated miner for the scrypt algorithm that will make GPU mining obsolete, but it hasn't happened yet.

I think you misunderstand the fundamental purpose of cryptocurrency. It gives people a way to easily and quickly transfer small sums of value, which is what the initial use of doge was - to 'tip' people based on informative/funny/useful etc posts. It also eliminates the middleman - no Paypal jacking fees, and in a lot of places, things like Western Union are rife with fraud or don't exist at all. Crypto fills a lot of niches like that. It's unavoidable that an unregulated currency with no central authority is going to attract money launderers, criminals, and libertarians/anarchists/what have you, but that's not really the point.

At the current time, you're correct, crypto's value is often tied to fiat currency exchange. There are plenty of places that accept crypto as payment, as well, and as it gains more acceptance, that list will grow as well. This is a major stumbling block, as it gives undue attention to fluctuations in value in the way of negative press etc. and it gives people the wrong impression about the purpose of crypto. Many people don't see that the difference between fiat currency and crypto is essentially zero. Both are arbitrary units we've assigned value to and are only as good as the backing of the organization that says it's worth something. Sure, there's not a great chance of the US government going bankrupt or being overthrown or some such, but the crypto protocols (as long as precautionary measures are taking, such as not letting one node control more than half of the transactions) are just as strong.

You're right about mining - as I mentioned earlier, the chances for people to get in during the mining phase of bitcoin are long over. That doesn't mean the currency is invalid or worthless. Say the supply of gold stopped, and there was no more mineable gold on the whole of the earth. Gold still has utility as a tool and also as jewelry etc. even if there were none left.

Scarcity and the hard cap is a bit of an issue yes - it can cause deflation, meaning the value of all of those coins rise. That might not sound like a problem, but it can lead to people hoarding coins (like is so often the case with BTC) instead of spending them, leading to a shortage of supply and a stagnating economy. This is one issue I'm not sure how to solve, and I think the hard cap model is antiquated and needs to be improved upon.

You mention the issue of creation of wealth out of thin air - this is essentially a problem no matter the currency. Once you reach a certain plateau of wealth, you often no longer have to do any 'useful' work to maintain or increase your wealth. Banks solely exist to charge interest on various commodities and contracts. This is clearly a useful service, as it extends the availability of capital to people who might not be able to access it otherwise, but self-interest and the necessity to answer to shareholders means that the incentive for the bank is not to help the consumer but to charge them as much as they can reasonably get away with. The creation and distribution of wealth is a very complex and storied problem, both crypto and fiat currencies are not immune to it so it seems an odd criticism to raise.

Your summaries are mostly valid, important critiques.
-Prices are volatile because cryptos are such a niche market. Markets are volatile no matter the commodity, but this effect is exacerbated by the small number of participants - a person with a large position in crypto or fiat can move the price very easily either way without more traders.
-I've mentioned the hoarding mentality, and I agree with you here. Until they have more mainstream acceptance, cryptos will always have this problem.
-Exchanges/security etc. are the tradeoff you make for the ability to send coins unfettered all over the world without many fees or worries. You can't have it both ways. If you want to be involved with cryptos you have to take many, many precautions and be careful. It's maybe a bit crass, but with mtgox's track record and public statements, anyone who lost coins from there deserved it. No one in the community thought they were reputable. In general, don't ever keep anything in an exchange you can't afford to lose. Until the coins are in your personal wallet, they might as well not exist. People have too much faith in ewallets and exchanges because they are not fully learned about the system and place too much trust in these things as a method of convenience.
-I think that more green energy sources are sensible and eventually necessary for life on this planet to continue, but think about the amount of energy expended playing video games or facebooking or calling people on the phone. All human activity is essentially "worthless" or "meaningless" in the grand scheme of things, so the amount expended on mining is almost certainly hundredfolds less than many other similarly pointless things.

I think cryptos are interesting and useful, and wanted to respond with a bit more information about them and to maybe get some posters to think about the issue in a different way. If you want more info or clarification about certain things, just ask.

Kong

I have about 6,000Kh/s. If anyone has questions on how to start I can help you.

I don't know enough to comment on ebinsugewa hard cap deflation problem so I will ignore that point in the wall of text below. It might negate some of my points though.

@The shortcomings of gov currency
1. Inflation caused by an infinite supply. The gov can print new money. This is non-transparent. To insert the newly printed money into the economy it has to be given to someone. The person (company) that receives it most likely did not earn it in any real sense and they receive it pre-inflation. Inflation occurs only after the new money is spent. Currently printed money is causing a 5% inflation tax which trickles down and ultimately hits the middle class the hardest. That means if you save $100 today then in one year it will be worth $95. That lost $5 value doesn't just disappear, it ends up in someone's pocket. Someone high up on the banking food chain. In this system, people like you and I will always be losing that 5% while someone else much higher up will be gaining it.

That is the chief problem of gov money.

Alt coins have a finite supply. There is an end date at which point no new coins will be made.

In theory that is. The problem is while each alt coin is finite the number of alt coin "brands" is currently infinite. This is the exact same problem as printing new money. It is adding new currency to the supply.

In order to work long term there has to be a monopoly - one coin to rule them all. As it stands bitcoin is by far the major contender but it isn't decided yet so for now, problem not solved.

An unresolved problem today does not mean it will always be that way.

2. People want to be in control of their own fate. The rules that govern printed money creation are out of the hands of the people that use it.

3. Historically it has typically been both a great short and long term investment. If you had invested money in bitcoins at any point in the past 8 years with the exception of the last quarter of last year you would have made ENORMOUS profits. With very few exceptions the same is also true of a short term investment for most of that time as well.

4. Hides money from gov. Mostly this would be for people committing crimes - drug selling, tax evasion etc but also for people that are just hard core anti-gov or pro-privacy. Ironically politicians accept bitcoins to hide campaign contributions.


There currently is over 7.7 Billion dollars in the Bitcoin economy. That is people have spent nearly $8B in real world money to buy bitcoins. Bitcoin is 75% of the alt coin market. In total altcoins are worth $10 Billion. By worth I mean that is how much money people have sold their mined coins for. That does not count coins that have been mined but never sold and does not count the money spent on hardware and electricity.

Over 2 Million additional dollars are added to bitcoins every day.

You can sit back and watch and laugh and call it a scam all you want but the mountain is growing $2 million a day. I'm sure at some point in time there were more than a few guys laughing at people exchange paper for gold.


@The burst bubble last December.
From Jan 2013 to Dec 2013 bitcoins went from $12 each to $1200 each. Then in just a couple days dropped to $500. Then leveled at about $600 where they are today.

By itself that sounds mysterious and volatile but there was a reason for it.

China started heavily investing in BTC in mid 2013. It is difficult to invest, export or import Chinese money. The Yaun is not very liquid and it is heavily taxed so Chinese business people switched to Bitcoins for foreign transactions. In December 45% of all bitcoins were purchased with Chinese Yaun. 45% were purchased with USD. The other 10% was for the rest of the world. Then China created a new law and made Bitcoin very difficult for Chinese to use and as unliquid as their own currency. And the bubble burst.

The bubble happened because a large group of people had a legitimate use for the product. The bubble burst because a government used tyrannical control to secure a monopoly on money.

People always find ways around prohibition. Prohibition eventually fails every single time. Eventually China and other countries will over come the great firewall and the bubble will inflate again.

Currently 85% of the over 2Mill new dollars dumped into Bitcoin every day are USD. A very large chunk of that is speculation investment, both short and long, but another large chunk is people finding an immediate legitimate use in it. Some people get in for novelty and curiosity but I imagine that is a very small %.

Technically they are tied to the exchange rate of BTC. BTC is tied to USD but that is irrelevant. Gold, Euros and laptops are also tied to the exchange rate of USD. The easiest analogy is to think of it as gold and gold is most commonly priced in USD but that doesn't mean it suffers from the inflation of USD.

Yep. That is currently is a huge hurdle keeping it from becoming mainstream. Give it time. It took computers 70 years to replace the typewriter. People are working on it and that is not an overly difficult problem to solve.

Mostly true but several others are accepted as payment at many places as well.

Most of those are GPU minners. GPUs haven't been used for bitoins since 2012. For Bitcoin search for "ASIC Miner". The rigs are generally much more organized and manageable. They are in square cases with a single wire or often just a USB stick. They don't consume nearly as much electricity.

You are right that bitcoin requires an insane computational resource from a NORMAL computer. That is why people don's use normal computers to mine bitcoins anymore. You have to use special made ASIC chips. If you have one then the computational power is no longer insane. It is still huge, your point is valid, but with the proper hardware it isn't as insane as the number sounds if you were talking about GPUs. An ASIC chip is about 1K-10K times more efficient than an equivalent GPU at finding bitcoins.

Sorta true. I think you were thinking of using a regular computer for Bitcoins though. That isn't possible and not what miners do anymore. Again think of it as gold. Not everyone got rich during the gold rush but some people certainly did.

The buy-in isn't that prohibitive. If you know what you are doing then $1,000 worth of hardware will produce about $10 per day. Your hardware is paid for in 100 days. What I'm trying to do is sell the hardware instead of actually mining myself which is more profitable.


Again same as gold. If you lived in California in 1849 you would have a big leg up on everyone that showed up in 1850.

That is no problem.

It is open source and fully transparent. You can tell when this happens and some of the alt coins have tried this. Some of them made money that way too. That just shows you should do your research before you buy something you've never heard of before. Bitcoin didn't pre-mine though.

Totally not true at all. None have risen to quadruple digits but several have had huge price rises.

Same as gold. If a pirate ship full of gold is sunk, all other gold becomes worth more. If a bank catches fire more money is printed and all other money becomes worth LESS! Think about that. It is a major point in all of this. Finite supply is MUCH better for the users.

The dust will eventually settle. There will be huge waves when economies the size of China jump in and then get booted out. It will take a long time to balance itself but eventually it will.

That sounds like a guess. I'm going to guess you are wrong but still just a guess either way.

True but banks didn't offer any insurance until 1930 and now they only insure up to 250K. My personal bank went bankrupt 2 years ago. I only had a couple hundred dollars in it so I was covered by FDIC but if I had had $300K in it I would have lost $50K. People treat exchanges like banks but that is not what they are meant to be. Alt coins don't need a bank. Though some kind of interest earning institution would be handy just know that it will probably not be insured and be aware of the risk that involves.

If it defeats inflation I would argue it is worth it. Compare to gold. The effort people went through to mass gold over the past 2K years is mind blowingly cruel. To this day diamond trade very often involves slave trade and murder. Just because attaining gold and diamonds is horrible doesn't mean wasting electricity is OK, but my point is establishing a stable currency is not easy or pretty or quick. I'm not even sure if it is worth it but people are more than prepared to be wasteful if it means getting rich.

TL;DR



---------- Post added at 02:02 AM ---------- Previous post was at 01:50 AM ----------

Bitcoin is 75% of the market - $7.7Billion. People that use altcoins as a currency deal almost entirely in bitcoins.

In second place with 10% of the market is Ripple. It is a special circumstance coin that was funded by companies and investors so it doesn't really work the same as the others.

100 other coins share the remaining 15% of the market. Doggecoin is 6th place with $50K

The other coins are mostly purchased as investments, either short day trades or long term speculation that it has potential to become a mainstream currency similar to bitcoin.

Most altcoin investors think Bitcoin has established itself as the gold standard and the other coins are fighting it out to become silver and copper. Often when people buy the other coins they are trying to make a long term bet on the odds of their coin earning second or third place.

Comments

epic post

RU Joe

Holy monster walls of text!
I'm intimidated and admit I only skimmed through but this point jumped out at me:

Someone certainly thinks there is; apparently it's impossible to cash a cheque from the USA at a bank in Canada now.
This information came from a bank, FYI.

Kong

Anyone want to buy my minners?

david man45

I think bitcoin is the wave of the future, I love the fact that its decentralized and I agree almost entirely with kong. gold is good for nothing, theres a finite amount, that's why its such a good currency. Ive been getting into storing wealth in bitcoin and I love how the system is a 'no trust system'. You can keep your fund so secure that the most cost efficient way for someone to steal your funds is to beat the information out of you. Also, a lot of people think its a scam because of the volatility and the amount of scams that've been happening. Bottom line is that none of those scams are bitcoin's fault and you shouldn't keep your money on an exchange, its not a bank, like Kong said. A friend of mine has been depleting his Coinbase account because he doesn't want to get "gox'd". Im in the process of creating a split cold storage system to completely secure any funds I have.


On a side note, has anyone been getting into GPG signing? There's this cool website called Keybase that lets you assign your GPG to aliases that you have like a twitter account so that people can recognize the message as being signed by you easier, and also creates incentive not to scam because it'd destroy your reputation. Also GPG's can let you encrypt messages so that the only person who can decrypt it is the user who signed with their key. Cool way to keep incognito.


Im rather fresh to this but I have a friend who is already heavily into all of the technical know-how so he acts as a guide through all of it.

As far as your miners Kong, what exactly are they? And how much are you selling them for? And how are you getting them? You can easily advertise on different Bitcoin forums, but I could ask a friend if he's be interested. Ill look into it and all and see if it would be cost efficient for a few of my friends to start our own local pool.

Kong

They are scrypt miners. Not bitcoin. They mine coins like doge, litecoin etc.

One is 2.8mh/s.
The other is 1mh/s.
All good quality nearly new parts. No crashes. Never ran hot.

I am moving this week and could use more cash and less stuff. If you are seriously interested I can get some pics and more details for you.

Kugyince

Seahawk

I've got 1,637.93477464 doge now which comes up to around .75USD.

Comments

Rolling in the dough

david man45

interested only in bitcoins sorry man

Kong

I have it set up to automatically convert everything into bitcoin. Mines scrypt base coins then trades them for bitcoins about every 30 minutes.

david man45

where would it be trading them and to whom?

ebinsugewa

There are mining pools that will automatically mine the most profitable coin and autotrade them when they hit a certain threshold to your separate brokerage account.

RU Joe

Money for nothing?

Comments

never change jg