Bitcoin Mining for Fun and Profit

[Storm]

It looks like the price has gone parabolic, its over $70 now!  Get ready for the inevitable crash.

There's also a fork in the blockchain because a large block was mined with v.8 that is incompatible with v.7.

They resolved that fork.  I agree, it's gotten too valuable, too fast.  It might crash again.  But, long term, it seems like a good store of value.

[Storm]

What's the best way/place to just buy a few bitcoins every so often?

I think coinbase.com is a pretty good place to buy them.  They charge a 1% fee for buying or selling, and you don't need to worry about the spread.

[Storm]

Sadly, my brother lost about $65,000 worth of bitcoins because he accidentally deleted his encrypted wallet from DropBox because he didn't recognize the funny filename he had given it and was trying to clear space.

With memory as cheap as it is these days, wouldn't it make sense for DropBox to periodically archive everything and keep it around for a little while? I have a hard time believing that if a DropBox user deletes a file, it's immediately deleted forever.

You're right, Tortoise, they do keep backups for a limited time, however, my brother didn't realize he had deleted his encrypted wallet until a few months later, and it was already too late for their system to recover.  Believe me, he checked.  At the time BTC was only worth about $35, but still, if you lost $35,000, you'd probably make a few customer service calls and do your best to recover it as well.

[dualstow]

I'd probably keep a thumb drive in a safety deposit box with the gold coins. (Someone probably mentioned that on one of these many pages).

Or maybe I should just wait a couple years for the Bitcoin CurrencyShares ETF. :-)

[Storm]

And... Spanish Senate just announced a proposed 0.2% tax on deposit accounts.  Fire up those Bitcoin clients in 3, 2, 1...

[Storm]

As much as I like the concept of bitcoin, it's vulnerable to a majority attack.  It's too easy to implode the economic value of a bitcoin.  As it gets bigger and larger transactions take place, it only gets worse :/

You do realize that as it gets more and more popular, it would be increasingly difficult for this to happen, right?  Essentially, you would have to take over 51% of the computers in the mining network.  Since there is currently 90 teraflops per second mining, you would have to have at least 45.1 teraflops of computing power at your disposal.  That's 45 billion floating point operations per second...  Good luck with that!

[Storm]

I'd probably keep a thumb drive in a safety deposit box with the gold coins. (Someone probably mentioned that on one of these many pages).

Or maybe I should just wait a couple years for the Bitcoin CurrencyShares ETF. :-)

I keep my wallet backed up to a thumb drive, as well as an external hard drive.  Anything worth more than a paycheck deserves at least this much...

[MachineGhost]

I keep my wallet backed up to a thumb drive, as well as an external hard drive.  Anything worth more than a paycheck deserves at least this much...

I have a lot of sore experience with never backing up or sync apps messing up.  So, what I've settled on so far is this procedure:

Using a separate hard drive to store all data.
Weekly archiving portions of the data hard drive (including encrypted wallets) to an encrypted compressed file image on the thumb drive.
Weekly backing up the entire thumb drive to an encrypted cloud (after the above).
Semi-Annually imaging the entire OS and data drive to encrypted DVD+R.

All of this is automated short of having to stick in the DVD discs.  I backup to DVD+R because all it will take is one EMP explosion and...

I actually don't like the lack of instant sync ability to the cloud, but I've had too many scary close calls and it finally happened a few months ago and wiped out all my local files because it confused sync with backup only when the remote was emptied to reclaim slack space.  I just can't take that risk anymore.  Fortunately, I had forgotten to transfer my Bitcoins from the exchanger to my local wallet or I would have jumped off the cliffedge!!!

[dualstow]

Gosh, this sounds complicated.
Present: elderly people don't know how to use cell phones.
Future: elderly people don't know how to use money.

[AgAuMoney]

I have a lot of sore experience with never backing up or sync apps messing up.  So, what I've settled on so far is this procedure:

Using a separate hard drive to store all data.
Weekly archiving portions of the data hard drive (including encrypted wallets) to an encrypted compressed file image on the thumb drive.
Weekly backing up the entire thumb drive to an encrypted cloud (after the above).
Semi-Annually imaging the entire OS and data drive to encrypted DVD+R.

That does sound complicated.  But that isn't the most important.  The most important is to find something that works for you.  So good for you.  Some additional ideas for readers...

Some people like to use an external hard drive.  I try to get them to dedicate that drive to backup, and to have two such drives that they switch out every week or so.  Even better is if they can store a drive somewhere else.  E.g. take a drive to work every monday.  Bring it home on friday and exchange it for the one on the computer.  Keep the "other" drive in the car over the weekend and take it to work on Monday.  Or if you have a trustworthy neighbor or a safe deposit box, swap it there.  The key is convenient enough the swap happens frequently.

I have a home network, and one system on that network has a bunch of hard disk space.  Everything else is backup'd to that system, either when that system pulls every night (mac and linux systems) or when other systems push to it (windows, and irregular image backups of everything).

For extra critical stuff (bitcoin wallet, password file) I encrypt and make copies on multiple systems here at home, and push copies to my directory at homes of other family members and sometimes to a locally attached flash drive.

For extra, extra important and "in case of death or serious injury" stuff, I print out on paper, date, sign, and seal in an envelope that is also dated and signed.  That envelope is placed with other critical papers.  Some of the information on paper is my password list (esp. critical for financial sites) and a reference to where copies of the password file are stored (and their encryption key) as they are typically more current than the paper.  Life and other insurance information, financial accounts, etc. Investing strategy and status and who might be suitable to help with that.  Reference to the current financial spreadsheets.  Reference to the will, where copies are stored and the lawyer who did it.  I've left a copy of this envelope in my brother's safe.  He knows it is there, and I generally trust him not to open it and to keep it out of other's hands.  But accidents can happen so everything there is traceable should something happen.

A paper key for the bulk of my bitcoins might belong in that envelope, but I am concerned about security on that one as it isn't traceable or recoverable.  I will probably use Shamir's Secret Sharing algorithm to deal with security, but have not as yet done so.  The run up in bitcoin prices was a bit of a surprise. 

[AgAuMoney]

Future: elderly people don't know how to use money.

There are bitcoin credit cards on the horizon and it is entirely possible for banks to make bitcoin work just like most money works today.

[MachineGhost]

Keep tabs on http://blockchain.info/pools?timespan=48hrs

I find it interesting that the largest pools seem to offer unimpressive benefits vs the smaller ones.  If this were a market-cap weighted index, I wouldn't be happy about having to buy the trash.  But I digress...

I suspect Unknown is simply p2p mining pools which is what I prefer rather than centralized operations.

[Storm]

What's the best way/place to just buy a few bitcoins every so often?

I think coinbase.com is a pretty good place to buy them.  They charge a 1% fee for buying or selling, and you don't need to worry about the spread.

I just wanted to give a disclaimer here - it seems that Coinbase is currently dealing with a lot of technical issues and people's BTC and USD transactions have been delayed for over a week in some cases.  You're probably better off going with mtgox.com until Coinbase irons out their technical issues.

They have a great concept - using Bitcoin like Paypal and linking it to your checking account for easy buying and selling, however, they are a startup and in "beta" right now, which concerns me.  Any system processing financial transactions should not be considered beta...

[flyingpylon]

What's the best way/place to just buy a few bitcoins every so often?

I think coinbase.com is a pretty good place to buy them.  They charge a 1% fee for buying or selling, and you don't need to worry about the spread.

I just wanted to give a disclaimer here - it seems that Coinbase is currently dealing with a lot of technical issues and people's BTC and USD transactions have been delayed for over a week in some cases.  You're probably better off going with mtgox.com until Coinbase irons out their technical issues.

They have a great concept - using Bitcoin like Paypal and linking it to your checking account for easy buying and selling, however, they are a startup and in "beta" right now, which concerns me.  Any system processing financial transactions should not be considered beta...

I appreciate the heads-up.  The amounts I'm looking at are tiny, and I just connected it to a small account I use for spending money so I'm okay with a beta status and enduring the inevitable issues that crop up.  Of course I hope things don't just go "poof" but if they did it certainly wouldn't be the end of the world.

[frugal]

For one arriving today, what shall I do with bitcoin business?

Tks

[Storm]

For one arriving today, what shall I do with bitcoin business?

Tks

I'm not sure what your question is?  If you're running a business, and would like to accept Bitcoin, there are a number of ways you can setup your website to do so.  If you're looking to do ForEx trading with Bitcoin, you can also do this using a number of exchanges.

There are several advantages to accepting Bitcoins, as a merchant:

• Very low transaction fees - equivalent to just a few cents per transaction.
• No chargebacks.
• No need to comply with burdensome regulations like PCI and Verified by Visa.
• Transactions clear rapidly, compared to traditional credit card networks.

Please note that I said transactions clear rapidly.  You can receive notification of a transaction within seconds, and the transaction will be completely cleared and verified by the blockchain in less than an hour.  This is compared to days with the traditional credit card processors like Visa.

Some people do have the impression that Bitcoin takes 10 minutes for a transaction to be approved.  That is because the blockchain is updated every 10 minutes when miners complete a new block and permanently record all of the transactions in that new block.  This is not the same as a transaction being approved.  A merchant can receive almost instantaneous notification of incoming money, and after the 10 minute block has been recorded, you actually have the money.  Compare this to Visa and you need several days to actually receive the money, after a transaction has been approved.

[Storm]

So, it appears to have maintained it's parabolic trajectory - I went to bed last night and it was $75 per BTC.  Woke up this morning, and it is $87.50...  This is crazy.

[MachineGhost]

Since the extralegal gambling outfit SatoshiDice is driving 70% of Bitcoin transanctions, is it having an influence on the price?

EDIT: I'm out for a 565% net gain.

[Libertarian666]

Pyramid schemes are so much fun!
Until they crash, of course...

[AgAuMoney]

So, it appears to have maintained it's parabolic trajectory - I went to bed last night and it was $75 per BTC.  Woke up this morning, and it is $87.50...  This is crazy.

Not parabolic yet.  Look at a log scale chart.

Oh, and well over $90 atm...  Cyprus and Spain and the Euro zone in general seem to be the hot spots this month.

[AgAuMoney]

Since the extralegal gambling outfit SatoshiDice is driving 70% of Bitcoin transanctions, is it having an influence on the price?

Not likely, IMHO.  There are several other gambling establishments with more traditional games that would be more likely to have a price impact and might be if we assumed the base of U.S. gamblers was large enough and aware enough of bitcoin to be buying in just to play those games.

[AgAuMoney]

EDIT: I'm out for a 565% net gain.

If you don't mind telling...

What transfer mechanism did you use to get money into and more intersting, out of the bitcoin universe?

Was the amount significant relative to your regular monthly income?

If it was significant, how did you come to trust the coparties involved to believe that you would receive your money?

[MachineGhost]

I used Mt. Gox and that's all I'm saying! 

[HB Reader]

Wow, what a ride! I just sold about half of my bitcoin stash at Mt. Gox at a very good profit and am playing with "house money" now.  I plan to hold a few hundred offline and see how it shakes out long term.  Even if it crashes tomorrow, this is the best VP return (percentage wise) I've ever fully realized in such a short period.  Better than gold in the late 1970's.

I am a little amazed at how smoothly it all functions now, especially after the exchange hacking incident back in 2011.  I hope it doesn't all blow up, but won't be terribly surprised if it does one way or another.  I wouldn't recommend entering the market now, but it sure has lots of momentum and some intriguing long term prospects.   

[MachineGhost]

Dwolla has been down all day.  I wonder if that is related to a record number of transanctions to/from Mt. Gox?