Also, since the entire block chain must be downloaded to a local machine before that machine can acquire a bitcoin address and utilize a wallet, it seems that some sort of "practical maximum" of the block chain should be defined, or at least thought about.
...
What am I missing here?
Lightweight clients can utilize a wallet without having the block chain. If it's the miner, could an entity set up a massive supercomputer, mine most blocks and then set the transaction fees to 99%?
Yes. Note that they won't make it 99% because then people will stop using Bitcoin, their price will collapse and the miner will not have any revenues. This has been discussed before, and IMO it is a vulnerability that will need to be patched. (But as others said the miner doesn't "set" the fee, they just exclude all transaction that don't give the fee they want.) |
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Selling small amounts of bitcoins isn't what it used to be ever since CoinCard shut down. But you can contact BitcoinExchange, who offers his services in this thread. |
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The block reward is nominally constant, but proportionally to the total supply is in fact decreasing as the total supply increases. Once the maximum supply is out there, the proportion of the total annual reward compared to the total supply is constant and equal to the demurrage rate. If each year we erase 3% of the supply, the total annual reward will be equal to 3% of the total supply, forever.
That's correct. With 3% demurrage and constant block reward, the total annual reward is equal to 3% of the total supply. With no demurrage and 3% yearly increase in block reward, the total annual reward is equal to 3% of the total supply. Hence, the two are equivalent. |
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The nonce is a 32-bit integer which means its value goes up to 4 billion. When all those values are tried, the server needs to give a new work unit where some irrelevant stuff are altered in the generation transaction, thus changing the Merkle root. The "useless relic" in the client still has a chance (even if it's low) to generate a valid hash, doesn't it?
Yes, but it's so low it's not worth considering. I could be wrong on this as I don't know the technicals, but the way I believe it works is that the merkle root is the previous block hash, and when you get an invalid hash (or rather, one that doesn't meet the difficulty requirement) the nonce is incremented by one.
No, the Merkle root is the hash at the root of the Merkle tree of the transactions in the current block. The previous block hash is another part of the header which also goes into the current block's hash. |
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The purchasing power will stay the same if growth equals monetary inflation?
This. You're making this more complicated than it is. All I said is that erasing 3% of all existing coins each year is equivalent, in real terms, to increasing the block reward by 3% each year. |
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So, pooled mining has become a pretty common and smooth operation, and I certainly enjoy it. But I've picked up a few pieces of hardware and based on rough calculations it seems like in theory it should be more profitable if I were to go solo, but this all relies on calculations using Hash/sec values of a bunch of cards combined.
So my question is, how do you set all your rigs to collectively work on a single block?
Or am I misunderstanding how the whole process works?
You need to run a Bitcoin daemon and point all your machines to it - instead of using a pool's url and login details, you use your server's IP address and the login details you configured for it. I mined solo with 1 GHash/s but couldn't handle the pressure so I came back to a pool. |
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First I'd like to clarify: The "Generate coins" option in the client is a useless relic and you should not activate it. If you want to mine, you need specific hardware and software.
Now what does that mean?
It means creating a hash of the previous block that starts with at least a bunch of zeroes.
A few other things go into the hash, such as the merkle root of the transactions.
What is it good for?
To enable a new transaction (only one?)
To prove that some work was put into validating a specific timeline, to prevent people from altering it willy nilly. Every block contains several transactions. Are they stored somewhere?
Only if it hits the target, esp. that there are enough leading zeroes. Then it's transmitted to the network and used for a transaction.
Right, but it's not "used for" as much as it "verifies", and it's several transactions.
Who would need so many hashes?
Everyone who wants to make a transaction
Or to verify that some specific order of events is the established timeline.
Hashes of what?
Of the previous block plus that ominous nonce. The nonce is changed every time you fail to compute a useful hash, which means it has not enough leading zeroes.
Plus some other stuff. With everyone in the world producing huge amount of hashes, wouldn't all hashes of all sorts be produced at some time, breaking every encryption system?
Yes?
No. How many transactions can be validated with one block?
AFAIK currently each block is limited to 1MB which is about 1000 transactions. This may change in the future. What is the chance for me to find a valid block which won't be accepted (and rewarded) by the network?
That depends, but I'd say a found block has about 1% chance to eventually be rejected. |
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So is there any way to actually get my money from bitcoin account? Actually I need this money asap and since I can't just 'start an order' I need to say I'm pretty screwed  What do you mean by "get my money from bitcoin account"? Do you have bitcoins you wish to send to someone? |
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@Holy-Fire
I don't understand why you call it inflationary if the monetary base is constant. The point is to charge hoarding to make transactions cheaper. I must admit that I cannot think of a demurrage rate/units generated per block that is not arbitrary.
Because what matters is the amount of money you store relative to the total money in existence. This varies in the same way whether new money is generated or your own money decays. But with a fixed monetary base, there is not likely to be price inflation. If the growth (which leads to price deflation) equals the demurrage, the purchasing power of your money would remain constant. If the demurrage were less than the growth, your purchasing power would increase with time. The same will happen if the growth equals the inflation. Hence, demurrage is equivalent to inflating the block reward. |
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fledgling currency
its up over 400% in 2 weeks, and people are calling for $10 to $100 within weeks or months. im just questioning the valuation. You don't need to have an opinion about the valuation. You can programmatically sell bitcoins on mtgox immediately when you receive payment. What you gain by it is offering your customers a convenient payment method without fees and chargebacks. As Bitcoin becomes more established you will need to worry less about fluctuations in the exchange rates, and use it as a currency on its own without conversions. im not a merchant, im a trader. I bought some BTCs, but I am now starting to question its valuation, and its viability as a currency. "You" can be the merchant who you worry will not be able to use Bitcoin as a currency. Let's put it this way. When I purchase in USD, I make a quick calculation to convert it to ILS. Does that mean USD is not a viable currency? No, it only means that USD is not my local currency. The hope is that in the future, Bitcoin will be everyone's local currency. Until then, it will be a currency for those who wish to view it as such, and an incredibly superior payment method for others. |
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Pooled Mining Questions? My cpu is nothing, and I can live with my gpu being tied up completely. When I rpc connect to the server, does that sever need to be generating to be sending and receiving work to my network remote (gpu)computers ? when connected they show they are crunching at X rate.
No, don't enable coin generation on the Bitcoin server. That's for CPU mining with the built-in inefficient miner. |
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fledgling currency
its up over 400% in 2 weeks, and people are calling for $10 to $100 within weeks or months. im just questioning the valuation. You don't need to have an opinion about the valuation. You can programmatically sell bitcoins on mtgox immediately when you receive payment. What you gain by it is offering your customers a convenient payment method without fees and chargebacks. As Bitcoin becomes more established you will need to worry less about fluctuations in the exchange rates, and use it as a currency on its own without conversions. |
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There should be no reason (unless approved by a mod to be a stickied/updating post) to edit your post after 24 hours.
That's silly, I edit my posts all the time. Of course I try not to make changes incompatible with the rest of the conversation. |
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but to be a real currency in itself, merchants and consumers would need to be thinking in BTCs and not constantly converting it to a local currency. this can only happen if merchants expenses are in BTCs and consumers costs-of-living are also paid in BTCs. (Another major hurdle is paying taxes in BTCs)
Of course. That's why it's a fledgling currency and not a well-established one. As more shops and service providers accept Bitcoin, it will become a real possibility to have all expenses in Bitcoin and denominate prices in bitcoins. Until then, making the conversion on the fly will have to do. |
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You don't get everything. In fact you get almost nothing. You can rewrite recent blocks which just means that you can unpay coins you already had control of. Or you could refuse to put transactions in blocks or to build off of anyone who does effectively a DOS. But you don't get $20M by any means.
How about if someone with a lot of bitcoins rented a machine like that out for a short period? You could then cash in on the bitcoins several times over? What would/could happen to bitcoins after such an attack? You need to distinguish honest mining from hostile mining. Honest mining is when you always build on the longest block chain. Hostile mining is when you reject blocks for nefarious reasons. If someone rents some hardware and mines honestly, that's great, he strengthened the network and is rewarded for it. Note that when the mining reward will consist only of transaction fees, speeding up block generation will cause each one to be worth less. If someone used the computing power to reject blocks, there's little he could do to profit from it. He can damage the network, but not catastrophically. |
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@Holy-Fire
I don't understand why you call it inflationary if the monetary base is constant. The point is to charge hoarding to make transactions cheaper. I must admit that I cannot think of a demurrage rate/units generated per block that is not arbitrary.
Because what matters is the amount of money you store relative to the total money in existence. This varies in the same way whether new money is generated or your own money decays. |
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your going to need a bigger power supply.
I tried to run 5870s on a 650 watt. Burned out in a hr.
I went with a 900 watt from best buy. That held up.
c-rock
Are you sure you used a real PSU and not something generic? What PSU was it? |
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Thanks for replying so quickly!
Am I correct to assume that those exchange rates are only valid for those exchangers? Do they usually equalize each other?
I have no experience trading bitcoins, so is there some kind of a rule of thumb I can safely go by?
For better or worse, the rates at mt gox are considered the de facto rates of exchange. There just isn't enough volume in the other exchanges. I'm fairly sure MyBitcoin uses mtgox's rates too. As you can see here the exchange rate is known to have sextupled in a 3-week period, so I'd say there's no rule of thumb. Just use the latest mtgox rates. |
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Hi there, first post  The problem I seem to find no solution for: if I want to integrate BTC into my webshop, I'd like to charge the same amount of "real" money in BTC (or a bit less, to incentivise bitcoin usage, doing my part and such  ) that a user would pay for my goods any other way, such as paypal or moneybookers. At least, the amount of BTCs should reflect the *current* amount (say, at the time he checks out his goods at the webshop) of real money that a user would need to procure the required amount of bitcoins. Anyone getting that? I know that the exchange rate fluctuates, but there must be some way to display an amount that reflects the current exchange rate to "my" currency. Is there any solution to that problem? If not, I'm not sure how bitcoin will move beyond speculation and drug trade :/ Thanks for any insight into this matter! Welcome to Bitcoin. This should be easy to do. You can programmatically access http://mtgox.com/code/data/ticker.php which gives the current exchange rates in JSON format, and use it to make the conversion during checkout. Or you can use MyBitcoin's shopping cart integration toolkit which has BTC-to-other-currency conversion functionality. |
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