Bitcoin - digital currency reaches dollar parity

[stoneFree]

Amazing, yes! in many ways. Let me tell you, I have more faith in bitcoin than Federal Reserve money. I trust open-source apps, cryptography, and mathematics more than a central banker.

TREEFARMER: We got caught up here with mining bitcoin, which gets technical; sorry about that. You don't need to mine (generate) bitcoin to use it.

WHAT IS BITCOIN?

Bitcoin is a digital currency that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network. Bitcoins can be easily exchanged to common currencies by several exchange services.

To answer your question, a bitcoin is just data, bits on a computer, 0s and 1s. We talk about Bitcoin the software system, and then bitcoin the currency. One bitcoin currently trades for about $12 USD. One can download the bitcoin client, install it, and then you'd have a digital bitcoin wallet and access to the Bitcoin network (allow several hours for it to sync up). There is no account to setup.

Here's a nice eBook You Can Learn Bitcoin: http://www.lulu.com/shop/david-r-ste...-20423608.html
http://www.coindl.com/page/item/391
http://itunes.apple.com/us/book/you-...in/id569230042

And here is Scientific American: http://www.scientificamerican.com/ar...gains-momentum

Another fun way to learn is setup an account at Bitmit, the eBay of bitcoin. They give you a bitcoin wallet and anything you sell puts bitcoin (BTC) into your wallet. It's a fairly new site with not a lot of users - good for buyers, maybe not so good for sellers.

[Treefarmer]

Amazing, yes! in many ways. Let me tell you, I have more faith in bitcoin than Federal Reserve money. I trust open-source apps, cryptography, and mathematics more than a central banker.

TREEFARMER: We got caught up here with mining bitcoin, which gets technical; sorry about that. You don't need to mine (generate) bitcoin to use it.

WHAT IS BITCOIN?
To answer your question, a bitcoin is just data, bits on a computer, 0s and 1s. We talk about Bitcoin the software system, and then bitcoin the currency. One bitcoin currently trades for about $12 USD. One can download the bitcoin client, install it, and then you'd have a digital bitcoin wallet and access to the Bitcoin network (allow several hours for it to sync up). There is no account to setup.

Here's a nice eBook You Can Learn Bitcoin: http://www.lulu.com/shop/david-r-ste...-20423608.html
http://www.coindl.com/page/item/391
http://itunes.apple.com/us/book/you-...in/id569230042

And here is Scientific American: http://www.scientificamerican.com/ar...gains-momentum

Another fun way to learn is setup an account at Bitmit, the eBay of bitcoin. They give you a bitcoin wallet and anything you sell puts bitcoin (BTC) into your wallet. It's a fairly new site with not a lot of users - good for buyers, maybe not so good for sellers.

No need to apologize to me, because I'm the one that specifically asked about the mining.
The ebook Introduction To Bitcoin Mining, found on this website, answered some of my questions.
According to that ebook, the process of "mining" bitcoins generates computing power which supports the bitcoin network and other software operations of an unspecified nature.

In the Chapter entitled What is Mining? it says:

"Bitcoin is really three things. First it is a protocol (or set of rules)
that defines how the network should operate. Second it is a
software project that implements that protocol. Third it is a network
of computers and devices running software that uses to [sic] protocol to
create and manage the Bitcoin currency.

Mining is defined in the protocol, implemented in software, and is
an essential function in managing the Bitcoin network. Mining
verifies transactions, prevents double-spending, collects transaction
fees and creates the money supply. Mining also protects the
network by piling tons of processing power on top of past
transactions.

Mining verifies transactions by evaluating them against the
transactions that happened before. Transactions cannot spend
bitcoins that do not exist or that were spent before. They must send
bitcoins to valid addresses and adhere to every rule defined by the
protocol.

With a frequency that is targeted at every 10 minutes, mining
creates new blocks from the latest transactions and produces the
amount of bitcoins defined by the current block reward (50 BTC until
late 2012). Miners also verify blocks produced by other miners to
allow the entire network to continue building on the blockchain."

It looks to me like bitcoin mining is a good way to support the computer industry.
It encourages people to buy more computer equipment to support their mining operations, without which it appears that bitcoin would not exist.

Apart from the unusual "mining" process, bitcoin looks like any other token currency to me, which can be exchanged for other useful currency, whose value depends entirely on its perceived usefulness in the minds of the users.

[stoneFree]

Nice find Treefarmer. That mining ebook is somewhat outdated now, FGPA technology has surpassed GPU mining as the most efficient way to mine, and ASIC miners should surpass that once they start shipping (any day now).

The European Central Bank has released this 55-page book: VIRTUAL CURRENCY SCHEMES with case studies on Bitcoin and Second Life (a computer game using "Linden Dollars"):

http://docs.google.com/viewer?url=ww...es201210en.pdf

[Noah]

I am looking at this with interest...

However, Michael Parsons, a former executive with Emirates Bank (Dubai), Moscow Narodny Bank, and KPMG Moscow, believes that those efforts will prove futile and he explains, "Bitcoin is 'regulated' by its peers and mathematics. And Bitcoin is not a currency like fiat money. It is a value transfer system which is given value only by its users. So the ECB, FED, etc. have no mandate to control a 'virtual currency' just because they call it (bitcoin) that! It will just go underground. Bitcoin is like Light and Air. Free to use and transfer. Owned and issued by the people and NOT the State!"

It evokes an image of central bankers huddled comfortably on the safe shoreline as they look out into the horizon and see the dangerous, unstable virtual currencies approaching. The opposite is actually the truth because it is the central bankers who are floating precipitously out at sea. As James Turk famously said about bitcoin's analog cousin, "When standing in a boat and looking at the shore, it is the boat (currencies) - and not the land (gold) - that is bobbing up and down."

http://www.forbes.com/sites/jonmaton...-of-economics/

[stoneFree]

BREAKING NEWS:

Jeff Garzik has just received the first ASIC mining computer to hit the consumer market, and has confirmed on Bitcoin IRC that the machine functions as expected.

http://bitcoinmagazine.com/working-a...sic-confirmed/
68GH per second! ASIC refers to the new IC technology, a chip specifically designed to mine bitcoin at a rate approximately 20 times faster than the previous generation FPGA chips. What does this mean? It means Jeff's ASIC miner will earn over $200 per day; the box will pay for itself in about a week. With 2 companies (Avalon & BFL) putting up big money for a custom chip-run, it means bitcoin is becoming mainstream - a serious currency - a real alternative to central bank fiat-fraud debt-as-money (a/k/a FEDERAL RESERVE notes).

Before you get $ signs in your eyes ... realize that Avalon is producing only small batches of a few hundred units and the first batch sold out in 20 minutes. Butterfly Labs appears poised to ship in larger quantities, but they haven't received chip yets; if you order a BFL ASIC unit today it will likely ship about May when difficulty will likely be much higher (smaller profit), and who knows where the value of bitcoin will be. One Bitcoin currently trades for about $20 USD.

[walter]

Bitcoin Should Get Ready for an Attack

http://oneradionetwork.com/latest/bi...attack-articl/

[stoneFree]

Great article; thanks. Here's the original: http://www.freemansperspective.com/b...for-an-attack/

We've already seen DDoS attacks on many BTC-related sites yet bitcoin keeps chuggin' along. The banking cartel is getting hit from all sides now - a beautiful thing to behold. I don't think they'll make it more than a month.

Thank you all!

[Treefarmer]

I like what Paul Rosenberg said on Free-Man's Perspective dot com:

The following is a copy and paste of the article:

Bitcoin: The Tyranny Test
FREEMANSPERSPECTIVE · May 20th, 2013

An increasing number of people have complained about governments and central banks in recent years, even using the word “tyranny” to describe them. They are, of course, called names in the establishment press: conspiracy theorists, mainly.

Calling someone a name, however, does not erase their argument (at least not among rational people) and both the governments and the big banks stand accused.

Up till now, however, these accusations were never accepted by the general public. The average guy really didn’t want to hear about the evils of government money. After all, that was the only thing he had ever used to buy food, clothes, gasoline, cars, and so on. He didn’t want to acknowledge the accusations because he feared what might happen to him without his usual money.

Now, however, we have a brand new currency (called Bitcoin) available to us: something radically different. This gives us a new way to directly address the subject of monetary tyranny, providing a clear test for the governments and money masters of the world:

If they are truly NOT tyrannical, they will leave this new currency alone.
If they ARE tyrannical, they will attack the new currency because it eats into their scam.
In other words, Bitcoin is a test for “the powers that be.” The way they deal with this new method of exchange will reveal their true nature.
If they ignore Bitcoin, they refute the charges of tyranny. If they attack it, they verify those charges.

After all, what honest reason could there be to attack an inherently peaceful tool for transferring value?

Prospective Reasons

Reasons to attack Bitcoin have recently appeared in the “public square.” Here are the three most popular ones, each followed with some analysis:

It can be used for money laundering.

Of course it can be used for money laundering — ANY currency can be used for money laundering. Currencies are neutral — that is their purpose! Currencies are valuable precisely because they can be exchanged for anything else — that’s why we use them!

Moreover, dollars and Euros and Pounds are used for money laundering every day. Consider the recent money laundering crimes of HSBC and Wachovia/Wells Fargo. These banks laundered hundreds of billions of dollars for violent drug cartels. And consider that this amount of laundered money is several hundred times the value of every Bitcoin in existence.

No one from either bank went to jail. Neither bank was shut down. Neither bank suffered more than a minor fine. So, how much of a concern can money laundering really be to governments and banks? Clearly not much.

But, since they accuse Bitcoin of being used for bad things, let’s be clear about the situation:

Every mafioso uses government money.
Every drug smuggler uses government money.
Every terrorist uses government money.
Every pornographer uses government money.
Every criminal of every type uses government money.

They also use the telephone system and the mail and banks and a wide variety of government services. But government money is good and Bitcoin is bad?

The argument fails.

It could destabilize the current system.

A tiny, new currency is a threat to the long-established king of the hill? Comparing Bitcoin to dollars, Euros and Yen is like comparing an ant to a dinosaur. This is a threat?

Please understand also that no one is forcing anyone to use Bitcoin. If you don’t think it’s a great idea, you don’t have to use it. If its price movements (relative to dollars) bother you, you don’t have to use it. How is that destabilizing to the current system? It is entirely separate.

And what of the current system? It was falling apart on its own before the Bitcoin program was ever written. And I could go on at length on the insane levels of government debt, hundreds of trillions in derivatives, rehypothecation, and innocent people being forced to bail-out failed banks.

The current system has massive problems, but none of them can be blamed on Bitcoin.

This argument fails also.

Bitcoin provides no customer protection.

Well, no, it doesn’t. Bitcoin is a currency, not a legal system.

What is implied by this argument is that the government banking system does protect customers. That is an outright lie. People are ripped-off via the banking system every day. And more than that, consider what happened just a month ago in Cyprus: Thousands of innocent people were ripped-off BY the banking system — purposely — all at once and without recourse. This argument is, really, an insult to one’s intelligence.

And I should add something else: If Bitcoin is used properly, the crime of identity theft (a big problem with government money) vanishes – there is no identity available to be stolen.

So, again, the argument fails. Only those people who believe anything a government says will buy it.

In the End

In the end, it is said, we judge ourselves. Bitcoin has now put governments and banks in the position of judging themselves. They will write their own verdicts.

It should be interesting to watch.

Paul Rosenberg
FreemansPerspective.com

[walter]

http://innovatedeconomy.com/uncatego..._lsa=646d-4771

The bitcoin network is more powerful than the top 500 supercomputers combined

Add up the combined computing power of the 500 fastest supercomputers in the world—that’s billions upon billions of dollars worth of hardware—and stack it up against to the raw processing power of every computer currently producing the alternative currency bitcoin, and what do you get?

The network of computers “mining” bitcoin is more powerful—eight times more powerful, in fact.

And that’s not all: The bitcoin network also qualifies as the world’s first exascale computer, meaning it’s capable of a quintillion floating point calculations per second. Some people argue that exascale computing will make possible everything from predicting the effects of climate change to producing energy with fusion. Supercomputers aren’t expected to achieve that speed until sometime around 2020.

However, bitcoin mining is distributed among the multitude of machines that devote computing power to the network, helping to solve cryptographic puzzles every 10 minutes, for which they are sometimes rewarded with new bitcoins. And the bitcoin network has become so specialized that much of it cannot be used for any other purpose. So what bitcoin has wrought is the world’s fastest supercomputer that can only be used to mine bitcoin.

Add this to the $150,000 a day bitcoin miners are collectively spending on electricity to produce about half a million dollars worth of bitcoin, and the scale of the computing resources currently devoted to producing the virtual currency really comes into perspective.

[EZrhythm]

U.S. Shuts Currency Exchange Allegedly Tied To $6B In Money Laundering

http://www.forbes.com/sites/jonmatonis/2013/05/28/u-s-authorities-close-another-digital-currency-exchange/