Thinking out loud about Bitcoin

[Herzogovian]

I find bitcoin quite interesting although I have to admit to still being quite skeptical.

Assuming one can find someone to buy your bitcoins at an exchange with "real currency", it seems that generating income is "free" except that creating coins cost computational time and energy.

in some cases, people may have access to compute capacity for which they are not financially responsible. For example at the University I attend, I can sit in a lab of 60 desktops each with a Core 2 Duo sitting idle the vast majority of the time. Similarly there are large multi-core machines for student projects which are 99% idle. There is also to a lesser extent GPU devices available.

In other settings, Sysadmins in a company may have access to a large number of desktops or people may have access to large botnets.

So, for example, if I assume one Core 2 Duo operates at 5 Mhash/s, http://www.alloscomp.com/bitcoin/calculator.php tells me this is worth around $4 a month. But if I can execute on 60 such machines, this would be worth $240, for nothing other than a bit of scripting and babysitting on my part.

Ignoring the obvious moral implications, I have the following questions:

1) Do my figures above add up?
2) Is there anything in Bitcoin's nature to prevent this?
3) Is cashing out this amount of Bitcoin a month viable given the current state of the Bitcoin eco-system?

Just to stress, these are hypothetical questions, but I'd be interested to know if anyone finds that this affects the legitimacy of bitcoin at all.

[edd]

3) Is cashing out this amount of Bitcoin a month viable given the current state of the Bitcoin eco-system?

Depends on how much you're willing to accept in trade.

[davout]

Doesn't affect "legitimacy" at all.

The bitcoin calculator doesn't take into account the future difficulty jumps, so you'd generate 2$ the first two weeks and then less every 2016 blocks.

1. The figures probably add up, can't be bothered to check
2. No, why would there? You'd like the network to somehow guess that the computational power is "legitimate"?
3. Define "viable"

[Herzogovian]

Depends on how much you're willing to accept in trade.

Assuming it was being done with the express interest to convert bitcoin to cash, one would presumably be prepared to low-ball a little to ensure a trade, given the bitcoins cost nothing in the first place.

Wouldn't it be possible to simply match the orderbook from an exchange such as https://britcoin.co.uk/?page=orderbook to ensure a sale?

[goatpig]

1) No. Only until block 127,000 or so (10-15 days from now). Then difficulty will readjust and you'll have to lower down your expectations. There's also no telling where the price is going, although the general expectation is up.

2) No. This isn't in anyway malicious or harmful to the network. The guy paying for the electricity might have some beef with you, but that's your business solely.

3) For the past 30 days, about 4.2 million dollars worth of Bitcoins were traded. I think you're $240 a month will sell just fine. (http://bitcoincharts.com/markets/)

[Herzogovian]

Doesn't affect "legitimacy" at all.

The bitcoin calculator doesn't take into account the future difficulty jumps, so you'd generate 2$ the first two weeks and then less every 2016 blocks.

1. The figures probably add up, can't be bothered to check
2. No, why would there? You'd like the network to somehow guess that the computational power is "legitimate"?
3. Define "viable"

Viable means achievable in a suitably short amount of time on an existing exchange, that is, not generating a bunch of coins and then finding out they're effectively impossible to sell.

Regarding legitimacy, if it is commonly observed that a currency is easily created "for free", even in a limited amount, this could reduce society's willingness to accept it as currency. If the aim is to have bitcoin widely used (don't know if this is the case or not) then these kind of things will affect that.

[Ian Maxwell]

Some workplaces are just easier to steal from than others.

[goatpig]

Regarding legitimacy, if it is commonly observed that a currency is easily created "for free", even in a limited amount, this could reduce society's willingness to accept it as currency. If the aim is to have bitcoin widely used (don't know if this is the case or not) then these kind of things will affect that.

Yet society has no problem using dollars, euros, yens, pounds and others. Every single one of these currency are made out of thin air, at a key stroke. Intrinsic value doesn't define market value.

[Cryptoman]

Yet society has no problem using dollars, euros, yens, pounds and others. Every single one of these currency are made out of thin air, at a key stroke. Intrinsic value doesn't define market value.

You could also argue that the resources to produce and distribute these currencies are stolen from taxpayers, analogous to how the OP describes stealing the resources to produce Bitcoins.

[MoonShadow]

1) Do my figures above add up?

Possiblely, but they will change again with each difficulty adjustment and trade price change.

2) Is there anything in Bitcoin's nature to prevent this?

No, why would there be?  It's not our problem if you are immorally stealling clock cycles from your university.  Don't be expecting sympathy if you get kicked out of school over this.

3) Is cashing out this amount of Bitcoin a month viable given the current state of the Bitcoin eco-system?

Depends on what one considers "viable", but trading bitcoins for actual stuff is pretty easy.

Just to stress, these are hypothetical questions, but I'd be interested to know if anyone finds that this affects the legitimacy of bitcoin at all.

I'd doubt that anyone on this forum is going to pin your crimes upon Bitcoin.

[MoonShadow]

Doesn't affect "legitimacy" at all.

The bitcoin calculator doesn't take into account the future difficulty jumps, so you'd generate 2$ the first two weeks and then less every 2016 blocks.

1. The figures probably add up, can't be bothered to check
2. No, why would there? You'd like the network to somehow guess that the computational power is "legitimate"?
3. Define "viable"

Viable means achievable in a suitably short amount of time on an existing exchange, that is, not generating a bunch of coins and then finding out they're effectively impossible to sell.

Then yes, it's viable.

[Herzogovian]

1) Do my figures above add up?

Possiblely, but they will change again with each difficulty adjustment and trade price change.

2) Is there anything in Bitcoin's nature to prevent this?

No, why would there be?  It's not our problem if you are immorally stealling clock cycles from your university.  Don't be expecting sympathy if you get kicked out of school over this.

3) Is cashing out this amount of Bitcoin a month viable given the current state of the Bitcoin eco-system?

Depends on what one considers "viable", but trading bitcoins for actual stuff is pretty easy.

Just to stress, these are hypothetical questions, but I'd be interested to know if anyone finds that this affects the legitimacy of bitcoin at all.

I'd doubt that anyone on this forum is going to pin your crimes upon Bitcoin.

I have no intention of committing "crimes" and getting kicked out of school nor does my question about legitimacy relate to someone pinning hypothetical crimes on bitcoin, which since it is P2P rather than a distinct entity wouldn't make any sense. What I meant is that is there a risk that a perceived ease of creating free money limit bitcoins acceptability as a main stream currency.

[edd]

What I meant is that is there a risk that a perceived ease of creating free money limit bitcoins acceptability as a main stream currency.

Does the ease with which current paper money is printed limit its acceptability?

[BitterTea]

I have no intention of committing "crimes" and getting kicked out of school nor does my question about legitimacy relate to someone pinning hypothetical crimes on bitcoin, which since it is P2P rather than a distinct entity wouldn't make any sense. What I meant is that is there a risk that a perceived ease of creating free money limit bitcoins acceptability as a main stream currency.

Does the ease of (the federal reserve/government) creating new dollars limit the dollar's acceptability as a mainstream currency?