Before you start mining, you need to do some research. It isn't as simple as you think.
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Recently, someone demonstrated that they could crack the security of a Casascius coin. The risk is very low now, but at some point, provenance (authentication through a documented chain of ownership) will become necessary for earlier coins.
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Ever heard of difficulty? It adjusts so that coins are found at the same rate again.
You are both right. Difficulty adjustments always lag the actual network hash rate. If the hash rate increases, blocks will be found more quickly until the difficulty adjusts enough to match the new hash rate. The rate at which blocks are found depends on the ratio of the hash rate to the difficulty, not just one or the other. This is a myth. Price does not depend on difficulty. Instead, difficulty depends on price. Looking at your graph, I don't see a lot of correlation, except that both price and difficulty are rising, ... ... and that bump in June 2011. Notice that the difficulty lags the price at that bump. This lag indicates that difficulty depends on price and not the other way around. Currently, the difficulty is going through the roof while the price has been very flat, contradicting "price grows as difficulty grows". At some point in the next year, the energy costs of mining will put a ceiling on the difficulty that will follow the price, just as it did in June 2011. I am involved with Bitcoin for 3 years now, the price of Bitcoin is largely controlled by miners.
Things have changed in the last 3 years. The contribution of the block reward to the bitcoin money supply is getting smaller. The amount of the block reward is less than 5% of the total volume on the currency exchanges. Miners no longer have a significant effect on the price of bitcoin.
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Anyone else having deposit issues this morning? I sent a deposit and it's had 3 confirmations, but isn't showing in my wallet on btct.co.
Thanks, Dave
Click the refresh button next to your balance on the Wallet page. BTCT is sometimes a bit slow to update your balance after the 3 confirms. I've seen that before, but this time the pending deposit notification disappeared after 3 confirmations. I mentioned this to burnside before and he explained that the "pending" disappears automatically after 3 confirmations, but the money isn't credited until a cron job is run.
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Mining is not for newbies.
Successful and profitable mining takes experience, capital, and a solid understanding of the economics of mining.
On the other hand if you don't mind spending a lot more time and money to mine bitcoins than it would cost to just buy them outright, then go for it!
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Rannasha, I agree with most of what you wrote, but I disagree with these: Value != price.
Price certainly does equal value. Price expresses the value that the market participants give it. If it did not, then the participants would trade until it did. This assumes that the price also reflects transaction costs and liquidity. I don't know the right value price for DMS.mining. A right value price could be 0.002 BTC per share based on the block eruptor blade pricing at BTC guild. (not available for international shipment)
The right price of MINING does not depend on what the competing hashing-related stuff is doing. The only thing that should influence pricing for DMS.MINING is the expected dividend-payments (and the speed with which they come). And this in turn depends on the difficulty evolution. There is no "right" price. The value you are describing is the present value of all the anticipated dividend payments. That is an excellent way to assign a value, but it is not the only way. Please note that you are forgetting to specify a discount rate. Your discount rate is what might cause your valuation to be very different from other valuations. Now, this value is not the only thing that affects the price. Competing opportunities such as the price of a block eruptor blade certainly can have an effect on the price of DMS.MINING. If the alternative is cheaper, then people will switch, and then the demand for DMS.MINING will drop and so will the price.
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We will see, but I don't think that people coming today are still early adopters.
I agree. Bitcoin is totally mainstream now. Bitcoin has been around so long that even my grandmother has a wallet. Bitcoin is so last decade.
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Well, seeing how it is right outside of a church, my guess is that it is a naked altar boy running for his life after the priest has done God-knows-what to him.
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You haven't touched your bank account in 20 years, We are going to take your money give it to the people maintaining the banking system.
Actually, in the U.S. it is 3 - 5 years (depending on the state), but the money goes to the state. For most states, a bank account is generally presumed abandoned if it is unclaimed by the apparent owner after three or five years. ...
edit: added link
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I was curious if anyone was interested in doing a simple investment.
The market is changing and people who are pulling little Mh/s and small Gh/s simple are going to get cut out. So why not team together? We all know what pool mining it, but let's take it a step further.
The idea is simple: an investor sends money along with the bitcoin address to pay the bitcoins out to, the investor receives a percent of the total investment owned, the person who money was sent to buys a large mining rig better than most others, mining rig is received to the person who the money was sent to, the person sets up the mining rig and begins mining. Every two weeks the money is calculated like such...
This already exists. Take a look at the Mining Contract and Revenue Sharing sections here: https://btct.co/security. Also, google "perpetual mining bond". A warning: people that invest in these rarely make a profit because they don't know how to determine the value and they pay too much.
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I really think its time for Burnside to consider taking some action regarding labcoin.
100%agree I'm curious what actions you think burnside should take.
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I strongly disagree. There is no need for this. If you don't trust an issuer or you don't like the lack of financial information, then don't buy the shares.
How could more information for investors possibly be a bad thing? There are certainly valid arguments against the idea (mostly from the issuers' perspective), but the "if you don't have blind faith, don't buy" bit of sophistry is not one of them. I don't believe that more information is a bad thing. I believe that requiring more information is a bad thing. In my opinion, regulations should only be applied as a last resort because they generally cause more problems than they solve. Regulations are certainly the worst response to problems like this that are not well-defined.
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Any chance exchanges starting to demand regular financial reporting from issuers? Seriously, this will help everyone. (I have asked this several times in last year or so) I think that "They will choose another exchange" excuse has become irrelevant. Why? Because BTCT has the highest volume and best interface, with all the bells and whistles issuer or investor can ask for.
I think it'd be awesome to do an SEC style requirement that assets upload financials to the site at regular intervals. (quarterly?) It's quite a bit of work unfortunately to make sure that uploaded files don't become vectors for virus infections or other attacks. You should implement this immediately.. it's not just a good idea, it's what you need to do..now.. ![Smiley](https://bitcointalk.org/Smileys/default/smiley.gif) I strongly disagree. There is no need for this. If you don't trust an issuer or you don't like the lack of financial information, then don't buy the shares.
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Thanks for the response BitCoiner2012. I understand the value of privacy and that buying/selling locally is totally legal, it just seems like an inconvenient and potentially sketchy thing to do for all of one's exchanges compared to buying/selling through a major exchange. Aren't you still required to pay taxes on any profits? How private is that?
I sell a lot of bitcoins on LocalBitcoins. Most of my buyers are first-time buyers or BitInstant refugees. LocalBitcoins is the best method if you don't intend to buy regularly, or if you just don't know where to start. My repeat buyers generally come back for many different reasons: it is convenient, they don't have a bank account, they don't trust the exchanges, they don't trust the banks, they don't trust the government, anonymity, etc.
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A truly representative poll will show that, of the people that have played, slightly more than 50% have lost and slightly less then 50% have won.
I don't think so. Most people who have played have played more than once. The longer you play, the greater the chance that you're down not up. A month or so ago I looked at the stats for Just-Dice.com. There were about twice as many losers as winners, and the house edge there is about half that of SatoshiDice at just 1% compared to SD's 1.9%, so I imagine the ratio of winners to losers is even lower at SD. Hmm, I think you are right. The more someone plays, the closer they get to the expected value. That will narrow the distribution, putting more people on the losing side.
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It got Satoshi's name wrong both times (and different each time):
"Created anonymously by the pseudonym Shinto Nakamoto in 2008, ..."
"Shatoshi Nakamoto (Bitcoin’s anonymous creator) argues that ..."
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A truly representative poll will show that, of the people that have played, slightly more than 50% have lost and slightly less then 50% have won. There is no such thing as a "winning strategy", and you can only "stop while you are ahead" if you stop gambling forever.
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I'm a novice and I suppose I'm asking you guys if its worth buying stock.
But you've answered the question nicely.
I'll keep an eye on the prices and buy a small amount.
MINING will generally act like a 5MH/s PMB, so if you just want cheap PMBs, buy it. SELLING requires some reading first. LOL. You are implying that buying a PMB requires no knowledge or skill -- and that is completely wrong. Most people investing in mining are losing tons of money because they are not doing the necessary research and are generally ignorant of the economics of mining.
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Thanks for all the good responses, after we got past the first few trollish posts, this became a good topic. ![Smiley](https://bitcointalk.org/Smileys/default/smiley.gif) By "trollish", I assume you mean posts that say that there is no problem, but other than the posts claiming that lost coins create uncertainty, nobody has yet even stated what the problem is. Now, regarding the uncertainty argument. I'm not convinced that the uncertainty is really a problem. Knowing the size of the money supply is important to those who manage the money supply, but nobody manages the bitcoin money supply, so the importance of knowing its true value is low. The scenario where someone discovers/recovers the key to a huge number of bitcoins is possible, but it is extremely remote. It is interesting to note that the plundering of the gold in the Americas by Spain had major economic effects on Europe. The effect would be similar in this scenario. Also, I want to to clarify that the uncertainty is not caused by lost coins. It is caused by the inability to determine which coins are lost. A fixed block reward does not remove or lessen this uncertainty. Since it cannot be determined which coins are actually lost, the only way to eliminate the uncertainty of lost coins is to declare that certain coins are lost (whether they are or not), and then make them permanently and explicitly unspendable. The problem becomes one of how to decide which coins should be declared lost.
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