I am reading about bitcoin for the past month and guess what. I still have number of questions
1. Energy efficiency
There is number of posts stating that mining Bitcoin is the biggest energy waste ever. I tend to agree to that as there is number of pools competing for the discovery of the same block and current hashing power surpassed world's top 500 supercomputers, so probably electricity use as well. Perhaps there should be an effort made for users to use just a single pool?
2. Transaction fees
It is said they go to miners, but in what way? Is it enough I join a certain pool to mine and get some of that money? Do I really need to be running original bitcoin-qt client for it or one of the
3. Network hashing power vs Time of transactions
It is said that fees can speed up an transaction, but seems to me that with all that hashing power transaction should be processed and confirmed in matter of seconds anyway. Is it true or I am missing something?
4.cqminer/bfqminer or other
Which mining application is the best as the seems to be several of them , or it is not relevant as one get get just as good hashing rate from anyone of them as they do not take much or the PC resources anyway?
5. Stale/invalid during mining
What is the difference between those two an why does one get one every now and then. As a newcomer for now I am using only GUIMiner to mine as it probably was easiest to set up. Some might come from overcloking but all of them?
6. If I run bitcoin-qt as the client and it has somewhere between 20-30 peer connections does that mean I am helping the network to propagate the blockchain or just create unnecessary additional network traffic
7. Safety of exchanging money to fiat currencies [USD, EUR or other] and back to BTC
What is a safe way. There has been some news that several money transfer services has been suspended in the USA (maybe other places as well just didn't make the news around the world). Does that mean that those that had their fiat currency accounts in there lost the access to their money as well or that precedence did not take place yet?
Thanks for all the answers
1) The Bitcoin network is growing at an exponential rate, in terms of hash rate, as not only do more people get involve, but as a community the engineers here create and make use of more advance technology. It started off on CPU's, moved to using GPU's, then FPGA's and now ASIC. In the earlier days, many people dual purposed their machines, so efficiency is moot, as they moved into FPGA's and ASIC they became an order of magnitude more efficient than most out there but dedicated machines.
Most of recent increase is being achieved by the currently most efficient form of technology possible - ASIC. Super computers generally use a combination of CPU's and GPU's an order of magnitude less efficient, which is two steps away from ASIC's with FPGA's in between. Super computers are not efficient, far from it, the Bitcoin network however once the majority of it moves over to using ASIC will be one of the most efficient high power networks in the world, which it can probably already claim that title.
The only people who claim it wastes energy, don't see the usefulness in Bitcoin, thus any energy spent, is a waste of energy.
Using a single pool would not really help energy efficiency, you'd just end up using a similar number of servers, to cope with the immense load of the entire network trying to connect and mine via that point. It also be totally against the principles in security to avoiding any node having more than 50% of the total network.
2) If you mine via a pool, when a block is found, the block reward (25Btc) + transaction fees is paid out, to the pools wallet. It is up to the setup of the pool, if the pool operator gets the transaction fees, or it's shared like the block reward is (which of course there is various methods of being paid when mining).
It varies, some pools do, some don't, just like fees varies on every pool, so does this. Transaction fees at the moment are not worth very much, it's usually under 1% of the block reward at the moment. If you check the Bitcoin wiki, for the pool, I believe there is an area for this that lists which pools pay out the transaction fees as well to their % cut. Generally those that do, take a higher % out of the block reward, so it's not always worth it.
Which Bitcoin client you run, is a personal preference, I do recommend the original client, but it doesn't effect you mining as long as you have a bitcoin address to receive funds to.
3) It does speed up a transaction being included in the next block (part of the confirmation process), as it is a criteria to be consider to fit into a block does sometimes come down to if you included a fee or not. This is not always important on very simple (small sized) transactions, but on large or complex ones, it is a necessity it's not worth risking it.
4) I've always preferred Cgminer (for my GPU's) and MPBM (for my FPGA's). Their is few differences between cgminer and bfgminer, as bfgminer is a fork of cgminer more or less. If I remember rightly, the dev team got split at one point and they work separately now, the core code is very similar between to two still and there is still some collaboration. MPBM has some features useful for my FPGA boards, that allow it to throttle up and down and as one of the first mining software to implement it, I continue to use it 6 months later, even if cgminer later put it in too.
5) Stale means, it is technically was a valid, but someone else found it first. Invalid means, it thought it was valid, but another verify proved it was not, for what ever reason. Invalid shares can sometimes occur more frequently during over-clocking, Stale shares sometimes incur more frequently if you just have a bad internet connection.
It's quiet normal to get stale shares from time to time, not much you can do about it.
6) Yes you are helping the network and we wish there was more people like this out there who operate like a full node, with that many connections.
7) Most recently I have been in favour of using Exchanges like localBitcoin and bitbargin (link in signature), who allow the option of escrow only the Bitcoins, not fiat currency. This is beneficial, as seizing their accounts, does not effect their customers. Most of the problems with exchanges has with how they have handled fiat currencies, not Bitcoins, so by avoiding handling fiats themselves, these exchanges stay off the radar of regulators.
Both are quiet popular in the UK, were there are not many reliable currency exchanges, due to tough financial regulations on those that handle fiat currencies themselves.
Where fiat gets seized (during a suspension), it is often just time consuming to get back, but will occur eventually.
Best tip for exchanging BTC/Fiat currency, only keep btc or fiat with them, what you need for trade at the time, do not use it for storage.
