I have been talking with an offshore bank in the British Virgin Islands about possibly accepting bitcoins.  They are not surprisingly uninterested however the discussions were useful because they did provide information on forming a finance company in the BVI.  The finance company could open an account with the offshore bank and create sub-accounts for clients of the finance company.   The finance company would be able to accept bitcoins and fiat currency deposits and offer currency (including Bitcoin) exchange services.

To clarify is this wouldn't be a "bank" in the traditional sense.  It wouldn't offer loans, offer interest, or engage in fractional reserve banking.  It would merely provide demand (deposit) accounts.

Potential account options:
* online banking with hardware 2 factor authentication.
* irreversible account to account transfers.
* debit card with ATM access.
* bank wires to "onshore" banks (financial privacy protected incoming and outgoing bank wires use a single-use transaction ID not an account number or account holder's name).
* access to offshore brokerage services.

The account to account transfer option (initiated by the sender) is interesting because they are irreversible and that could form the basis for a secure person to person trading/conversion.  As an example Joe needs 1000 BTC and Jane is willing to sell them.  Jane sends coins to the finance company acting as an escrow agent (or even a third party escrow agent).   Joe transfers $10,000 to Jane's sub-account and coins are released to Joe from escrow.

Just an idea at this point.  Comments?

Bitcoins Direct (run by Tangible Cryptography LLC) allows cash deposits at any Wells Fargo or Bank Of America branch.
Minimum deposit is $500 but there are no fees and the exchange rate is 1% BELOW MtGox last.

No it is still down, probably a very bad sign.  Our company has a small amount on there.

It does show the strength of Bitcoin though.  LR was a completely opaque and centralized system.   It is entirely possible that they got greedy and decided to introduce some fractional reserve system.  More profits, more leverage, more fun.  Or they had some fraud/theft and hid that by simply inflating the amount of LR (in fiat currencies undetected counterfeiting adds to inflation).  Such a system could work fine for months or years unless you get a large imbalance of withdraws vs deposits.  Then you have a bank run ... well unless you have a 2 hour, 3 day, 8 day "scheduled" maintenance.

Damn speculators are driving up the popcorn price.  You should see the bid walls on MtPop.

I will do it for cost (including shipping) + $20 in BTC at MtGox last.

I bought one for myself from Google already.  Awesome phone.
I will try to see if google will let me ship it directly to the address of your choice (saves on the double shipping).  If they don't I will reship it.  It should fit in standard USPS medium flat rate box which is ~$10 for 2-3 day service.

PM me if interested.

Yeah I am not completely sure if the interest compounds daily or "only" weekly.  Given that I based my estimate on the more conservative weekly.  Since Pirate advertised it as 7% per week I assume it is weekly.  Daily makes it a little worse (1% compounded daily is 7.21% compounded weekly) but it doesn't really matter.   The numbers get huge real quick. 

Electrical costs make it a non-perfect competition.  Even if hashing power was deployed perfectly the input costs of participants is unequal.  I took great strides to test and perfect rigs which had a high electrical efficiency (MH/J).  That combined with below average electrical costs means my (and others) cost per hash.    While some miners were slapping together sloppy 1.5 to 2 GH/s rigs at <2MH/J and $0.24 per kWh I was building standardized 3.2 GH/s rigs @ 4 MH/J & $0.07 per kWh.  When the margins got squeezed there was a lot of gnashing of teeth about how mining was unprofitable but it wasn't by me (and other high efficiency miners).

For a miner what matters the most is not difficult or price but difficult/price.  When difficulty/price spiked I made less but the "marginal miners" would be operating at a loss and they would quit and difficulty/price would fall.  When it fell enough other "marginal miners" would join in and the cycle would continue.  The "marginal miners" saw continually feast or fammine.  Those with below average costs were never forced out.  There is a lag before hashing power is deployed or taken off line.  Those who could operate 24/7 profitably benefited from that lag.

Now FPGA and looming ASICs make a lot of this planning obsolete. They are the next evolution but my rigs are surprisingly still efficient despite being based on ancient 5970 GPUs.  They are less efficient and overall hashing power is declining as the rigs reach end of life.  Eventually I will need to shut them off.

Long story aside the mining economy will never be perfect because that would require perfectly competitive input costs AND perfect investors.  Given some investors are willing to build marginal rigs there will always be opportunities for those who run operations with higher than average efficiency.

Full disclosure:  
I am not buying any FPGA or ASICS and will eventually wind down all mining operations.  While not perfect mining is getting more and more competitive and as Bitcoin gets older the "risk premium" awarded to miners will decline.  Mining will become more commercial where only those with sufficient capital, solid business plans, and ability to operate in low cost environments will profit. The margins are just not as interesting.  My time is better spent in financial services where a significant risk premium is still paid.

Sure you can do it at a cost.  Take 500K BTC sell them all, then buy them back.  Guess what you have less than 500K BTC.  Keep doing that and eventually you have 0 BTC.  Idiots lose money in scams all the time.  It is simply a form of economic darwinism.  Money moves to the strong.  Those who do due diligence, require enforceable contracts, and build strong business relationships will accumulate the capital at the expense of those who don't.

Now what is different about Bitcoin is you have a some people who became incredibly wealthy in a short period of time.  A lot of them will lose their coins and they will be transferred to stronger hands.

No it wouldn't.  Internally the GPU checks nonce values and only needs a new header from the CPU once every 4 billion (2^32) nonces checked.

The high CPU usage in some hardware, driver combinations is simply a bug.  Nothing more.  AMD drivers and SDK are horribly bugged.  At one point they had a 100% CPU bug on all hardware running on windows at all times with no possible workarounds and they released a half dozen version of SDK before fixing it.  Another time after fixing the 100% bug they ended up bringing it back in a newer version.  There are certain versions once installed break compatiblity with older versions and make it very difficult to downgrade.

Simple verson:  AMD drivers suck.  There are lots and lots of bugs.

But, I didn't see anything in the change log (or im blind) stating that anything above 9 intensity would consume 100% of my cores as a future proof for ASICs. So, I'm guessing it's a bug. The weird thing is, if i switch to an older cgminer (2.6.1 for instance) the problem does not occur at intensity's higher than 9.

So, I'm not sure what to make of it.







[/quote]

The 5000 series cards used an architecture which was well optimized for mining.  This wasn't intentional it was kinda just pure luck.

For that reason 5000 series cards were preferred over 6000 series cards.  The newer generation did nothing to improve hashing performance and while both cards were available new the 6000 series cards sold at a premium.

Yeah none of that made any sense.

1) The purpose of mining isn't to create coins.  The purpose of mining is to protect the network.  It prevents double spends.  Without mining all the coins are worthless because they can't retain any value.  Currently miners are compensated for this work with a subsidy.  The subsidy declines over time and will be replaced by tx fees. 

The subsidy serves two important purposes:
a) it bootstraps the network making it robust and secure before tx volume and thus tx fee are able to support it.
b) it provides the INITIAL distribution of coins.  However miners trade those coins for other currencies and goods/services.  Miners also lose them in scams and thefts and the current distribution is very dissimilar to the initial distribution.

If you remove mining then how will you ensure transactions are "fair"?  If transactions aren't fair then the coin has no value.

2) Nobody has to have warehouses of GPUs.  You can acquire coins by trade.  Given the number of coins is is finite and the subsidy halves every 4 years, as time goes on mining will be less important to the distribution of coins.  Those with good business operations will accumulate "coin wealth" just as they accumulate other forms of wealth.

3) Your post contained a massive amount of buzz words and feel good concepts without any actual substance.

"I propose a cryptocurrency that is farmed by community "currency collectives" where currency is harvested from the activities in networks of mutual currency exchanges."

How?

" In simple terms: the circulation of local currencies becomes the engine for solving hash algorithms, which offer the same anti-inflationary. "

How? How exactly does local fiat currency "circulating" solve hash algorithms?

"but with the shift of VALUE moved over to CREATING the coin"
There is no value in creating a coin.  Here I just created 80 quadrillion D&T coins how many do you want to buy?  There is value in coins being transferred and exchanged for goods & services securely, quickly, and digitally.  Creating a coin is trivial, getting someone to accept it and trade something of value (either fiat currencies, or goods/services) for it is the challenge.

LiteCoin if you failed big boy math class you shouldn't correct others.
Here I will "show my work" so you can follow along.  Please take out a #2 pencil and a new sheet of paper.

Around the time of the closing Pirate indicates that there were ~500,000 BTC deposited.
Pirate interest obligation is 1% per day until repaid.  That would be roughly 5,000 BTC per day on the 500,000 BTC deposited.  At the time of my post it was roughly 6 days since the trust had been closed but funds not "yet" repaid.

500,000 * 1% * 6 days = 30,000 additional BTC owed.  This evening it will be more like 35,000 BTC.  If Pirate paid back a total of 35,000 BTC this week he would still owe 500,000.  If he paid back 35,000 BTC every week until the end of time he would STILL owe 500,000 BTC.  The only way he can pay down the debt it to repay faster than the rate interest is accruing.  Given he has so far only paid back 100 BTC (or maybe up to 1,500 BTC unverified) the amount he owes has increased >30,000 since the trust was closed.

Another way to look at it is the amount Pirate owes increases by roughly $2,083 every hour, $34.67 every minute, $0.57 every second.    Just in the time it took me to write this post Pirate's debt has increased by another $100 or so.  Given your poor math skills by the time you actually understand this his debt will have increased by a couple hundred dollars more.

Get a lawyer.  It is possible you could word the contract in such a way that you aren't accepting coin deposits merely offering secure storage of the user's coins.  That combined with using physically isolated wallets should be sufficient however if you likely would want a lawyer to be sure.  The fun thing is this is all new area for the law.   Likely a lawyer who is familiar with bullion storage may have some insight into how to word the contracts. 

Even there funds aren't kept physically separate.  When a trust account gets a deposit it gets recorded on the ledger and the cash put in the banks vault with all other deposits.  There is no account in any bank where your funds are held seperate.  Banks work on the principal of fractional reserves.  Funds which can't be borrowed against to create new money out of thin air aren't very useful to banks.


A trust/escrow account simply means there are certain increased accounting and reporting requirements (as well as legal penalties) at the physical level they work exactly the same as any other account.

The only concept in a bank which would be completely separated funds would be a safety deposit box.  However that really isn't banking honestly you are just renting some private space in a vault.  It doesn't even require a bank there are private safety deposit box companies too.

Well that requires 0.0 KH/s.  Not sure where you get the idea that a pool is needed or even useful in any way to validate tx?
We buy 25,000 BTC per month.  We validate all tx using a bitcoind.  Even if you wanted redundancy you could put multiple bitcoind nodes on multiple servers around the world but a pool wouldn't help that either. 

Utterly false statement if true then all miners on the planet regardless of hardware are continually and perpetually mining at a loss.  Do you really believe that?  

If so then close this post and make what about what you really are trying to ask:   "So like ... I don't get Mining ... can someone explain it to me?"

Hint:
My mining operation has been very positive ROI (and thus had a positive NPV at the time of creation).  If I had sold a mining bond at cost for my rigs then obviously it also would have the same ROI% and the same positive NPV.  Nobody had even thought of it at the time but had I sold bonds at a premium (but not too high of a premium) both I and the investors could have both profited (although obviously the combined profit would be the same as the underlying hardware).

It works exactly like a bank ledger does.

If you have address 1234 which is account A and address 198765 which is account B then

if you receive 10 BTC @ address 1234 the BALANCE (nothing more just the balance in the ledger) for account A is increased.
if you receive 5 BTC @ address 198765 the BALANCE (nothing more just the balance in the ledger) for account B is increased.

If you then spend 5 BTC from account A the BALANCE is reduced from 10 BTC to 5 BTC but the actual coins can come from any valid output in the wallet (i.e. the 10 BTC to 1234 may not be used).  If you then spend 10 BTC from account A again the balance will reduced from 5 BTC to -5 BTC and the actual coins can come from any valid output in the wallet.

Once again exactly how a bank ledger works.

Owed at shutdown:
~500,000 BTC (per Pirate statement)

Paid since shutdown:
100 BTC verified (possibly as much as 1,500 BTC unverified)

Interest accumulated (if Pirate claim of 500K BTC is accurate) since shutdown:
30,000 BTC
(500,000 * 1% per day * 6 days = 30,000 BTC)


Net obligation change:
+ 29,900 BTC
(- 100 BTC + 30,000 BTC = 29,900 BTC)

So in 43 weeks when Pirate owes more Bitcoins than are in existence I wonder if people will accept that they aren't going to get their funds back.


On edit:
clarified and "showed my work" since apparently math is hard.

Nope.  It comes up at least 2-3 times per month.  Sometimes involves heated debates but they work exactly the same as any "mixed funds" banking system works.  Honestly I don't know of any enterprise which uses them.  Most people who think it would be useful for their needs end up thinking that based on a mistaken understanding of how they work.

Accounts in the Satoshi wallet don't work that way.  They are meaning an accounting mechanism.  When you deposit $100 at your local bank and the teller increases the balance on your account they don't hand carry your $100 bill and place it in your personal vault so when you withdraw $100 the next day you get the same bill back.  They just give you any depositors bill and deduct $100 from your account balance.  The satoshi wallet account system works exactly the same way.  If a wallet had 500K BTC and 250K BTC were stolen there would be no way to determine "who's" 250K was stolen. 

Ironically I have never ever seen someone use an example involving accounts which wasn't completely inaccurate.