it contains a built-in miner, which uses your CPU to generate coins.
Mining is currently mainly done using certain high-end GPU's, which are way faster at this than CPU's.
So it uses CPU's or GPU's?
BitCoin.exe will only use your CPU, but more advanced mining programs like poclbm
, which is available with a graphic interface
, use the parallel processing power of GPU's to far outperform them. Because mining is essentially a competition, this is why it has become so difficult to earn bitcoins this way.
Without knowing its actual speed, I think it is safe to say that generating coins now using that will at least take a few years, sorry if you had your hopes up.AMD Athlon 64 x2 (2.11 ghz) [Dual Core]
Based on other people's numbers
it looks like your total generating capacity would be only 1-2 "MHash", which equates to earning one 50 BTC reward every 11 years
. These days the most powerful mining is done with leading edge AMD graphics cards where the owner of an AMD Radeon HD 6990
will get a 50 BTC reward about every 6 days if mining continuously. But competition is always reducing the rate people earn, like Ricochet explained.
PS: could you tell us where you got the information about 50 coins every 6 hours, or that it only requires 1.3GHz of your CPU?
Found it somewhere last night- not sure if I can locate again but if I do I will let ya know.
Thanks humphrey--we like to track down misinformation whenever we can. It sounds like those numbers were either very out of date or a misunderstanding.
you should know right off the bat that you don't need to know anything about mining to use bitcoins.
Mhmm- btw sent u 5 coins. Thnx for the reply.
. Tips always make my day
. By the way, I'm always curious to ask where people got their first bitcoins, since it used to be quite difficult but is getting easier and easier all the time. Was it from CoinPal, or a friend, or something else (if you don't mind my asking)?
Because this market is so competitive, you're unlikely to earn much from turning on that option for your CPU--most mining these days is done on high-end graphics cards and returns an income relatively close to the costs involved, such as electricity and time.
So you can use either the CPU or GPU to (GPU being better) to mine?
Yes, exactly--see above.
What BitCoin is: An agreement amongst a community of people to use 21 million secure mathematical tokens--"bitcoins"--as money, like the Iroquois used wampum. Unlike wampum, there will never be more bitcoins, they are impossible to counterfeit, they can be divided into as small of pieces as you want, and they can be transferred instantly across great distances via a digital connection such as the internet.
So there are only 21 million available bitcoins in this network?
That's correct. It's the limited amount that gives bitcoins their value--if there were an unlimited number there wouldn't be any competition to own them and it would be foolish to treat them as money. Wampum, for example, started being mass-produced by dutch settlers and was ruined as money.
What happens when they run out?
The initial 21 million are going to be very gradually distributed
, mostly over the next few decades, instead of running out. But you will always be able to get bitcoins by trading goods, services, or other money for them with other people, just like you would get any other kind of cash. Similarly, the total amount of gold in the world doesn't tend to change very much but instead the existing gold is just traded around and re-used. Unlike paper currencies, bitcoins don't wear out so this isn't a problem.
What if someone has a majority of these coins and never uses them?
Trying to buy up the majority of bitcoins would be like trying to buy up the majority of gold in the world--it would soon get very expensive, and all the remaining bitcoins would increase greatly in value. So in short--they would make everybody else rich. As far as technically, having less bitcoins isn't a problem because unlike normal banknotes they can be divided into as small of pieces as you need. The entire bitcoin economy could run on a single bitcoin if it needed to, because you could just transfer .0000001 btc at a time, for example. For the time being we only use amounts as small as .01, but we can change that as bitcoin becomes more valuable.
Because bitcoins are given their value by the community, they don't need to be accepted by anyone else or backed by any authority to succeed. They are like a local currency except much, much more effective and local to the whole world. As an example of how effective the community is at "backing" the bitcoin, at the beginning of this week someone sold 30,000 bitcoins on the largest exchange, consuming nearly all "buy" offers on the order book and dropping the price by nearly 1/3. But within a couple of days, the price on the exchange has fully rebounded and bitcoins are again trading at good volumes, with large "buy" offers slowly replacing the ones consumed by the trade. The ability of such a small economy (there are only 5 million out of the total 21 million bitcoins circulating so far, or about 3.75 million USD worth at current exchange rates) to absorb such a large sell-off without crashing shows that bitcoins are already working beautifully.
DAMN!! (aka amazing)
Yes, it is very impressive! And it's also a great sign for BitCoin's future.
This also explains what "miners" are doing--they are processing transactions for the BitCoin network, and securing it against attack.
So basically the people that are running the bitcoin exe are the "miners" which is just a term used to explain that they are allowing the bitcoin network to secure itself threw them?
Right--the underlying mathematics of how mining works is ingenious, but intricate! I would be happy to explain it if you're interested.
They do this through working on "blocks" but actually generating a block is quite rare,
So what does it mean to work on a block?
As transactions are processed and verified on the BitCoin network, they are put into blocks
and an SHA256 checksum is computed of the whole block. This is so that those transactions cannot be changed later. However, the p2p network of bitcoin clients won't accept just any
checksum, or hash
, for a block. Only hashes starting with a certain amount of zeroes are accepted (the number of zeroes depends on how fast blocks are appearing on the network), so if the first hash calculated doesn't work the block has to be changed slightly by adjusting a number called a nonce
, and the hash calculated again. This process gets repeated many, many times until the miner randomly finds a hash that starts with enough zeroes. Because this block will now be accepted by the network, we call this "finding a block". So the work a miner is doing is to first doublecheck all the transactions it has seen recently to make sure they are valid, then put them all in a block and try using different nonces many many times until they find a block with enough zeroes in its hash to be accepted by the network. The difficulty in finding a hash guarantees that no one can just make up their own blocks to try and change the official record of transactions. And, because each block also includes the hash of the previous block, these blocks together form an unbreakable series called the blockchain
. As long as a client connected to the BitCoin network uses the most computationally difficult blockchain, they will know they that the list of transactions in it is the "official" one and can be trusted.
Confused? It's a little complicated, but once you understand it this is the underlying reason that BitCoin doesn't have to trust anyone, and why it would be very expensive for a fraudster to try and "write two cheques on the same bank account" in a double-spend attack. Feel free to ask for more clarification. The BitCoin wiki
, which I keep linking to, is also a great source of detailed information.
how many coins do you get for generating a block?
The reward for generating a block (which is included as a transaction to themselves by the miner who finds the block, and accepted as valid by the rest of the network as long as they follow the rules) follows a set schedule and is currently 50 bitcoins. Miners also earn any transaction fees paid by transactions they process (you can pay a fee to to jump to the head of the line, which is important if the bitcoin network ever starts to fill up with more transactions than can be processed for free). The set schedule will reduce the reward over time to gradually approach that magical 21 million bitcoin total, and as the reward decreases it will be replaced by transaction fees to ensure people keep mining for ever without any new bitcoins having to be created. By this time, if it is successful, the bitcoin network will probably have so
many transactions on it that the fee will be very low but still create an incentive for miners to keep joining.
The more people start using bitcoin, the more bitcoins become worth (due to the limited number), and thus the more valuable block rewards become. More miners join in the competition to find blocks, the network adjusts the number of zeroes needed for a block to count, and bitcoin becomes more secure. So what this means is, the more people use bitcoin, the more secure it becomes. Isn't that ingenious?!! BitCoin is incredible.
and how long does it take to create a block using a great computer setup?
Well, if you have a $700 graphics card
you will find one, on average, every 5-6 days of continuous mining--though it's random when it actually occurs. If you have a $100 graphics card
you will find one every 24 days of continuous mining on average (For mining AMD cards tend to outperform NVIDIA cards due to their differences). Because of the randomness and the long waits, some people choose to join a mining pool
where they mine together with a large group of people and split the proceeds. Most mining pools charge a small fee for the server, so in the end the $100 graphics card tends to make a more consistent 2 BTC per day or so. Of course, as new miners are always entering, this will go down over time with the increased competition.
By the time you pay for the electricity, the graphics card, and the time spent on it, nobody's really making a whole ton of bitcoins this way. The best and simplest way to get bitcoins is simply to buy them, which is what most people do. For smaller amounts CoinPal
works well off a verified PayPal account. For larger amounts most people do a bank transfer to a BitCoin exchange like Mt. Gox
. In both cases there will be a slight fee for exchange because of either the expense involved or the risk of fraud (people will do crazy things for bitcoins because they're so secure and they're basically digital cash).
You can also sell something
or work for bitcoins
, just like any other kind of cash!
Does that make sense? I'm sure you have lots of questions so feel free to ask away.U have no idea
Also, you mentioned a key "direct access to their keys." what key exactly?
When you use the normal bitcoin client, this happens behind the scenes. What's going on is that a person's public address, like the one in my signature, is where coins are sent to
. But only the person who holds the private encryption key to that address can spend
them. These keys are normally stored in a file on your computer called your "bitcoin wallet" and then used by bitcoin.exe every time you send coins. If someone gets these keys they can steal your bitcoins, so be careful to protect them! You should also make a backup of them
in case your computer crashes. Right now making a secure backup is a little intricate, but it will probably be much easier in a future edition of the bitcoin client.
also also, if i lose the wallet- the coins are gone for ever?
If i take my address from one computer to another (by adding the address with bitcoins to the address i get bitcoins at on another machine?)
Yes, if the private keys in your wallet are lost and you don't have a backup, no one will ever be able to spend those bitcoins and they will be essentially lost. The simplest way to move bitcoins from one address to another is simply to send them like a normal transaction--then you will only need the new
private keys in the new
wallet file to spend them, no matter what happens to the old computer.
I hope that answers some of your questions