Whenever you ask how to make money, you tell me that literal
"making money" is somehow not approved of. But I found a method that
doesn't look to be against laws of nature, and it's something I can do with
computation cycles I have access to: Bitcoin.
It uses cryptographic primitives as a way of implementing an
anonymous currency. Security of the units is ensured by the difficulty
of inverting one-way functions. Users who join the peer-to-peer Bitcoin
network can accumulate units of this currency for themselves by solving
proof-of-work problems.
You pass on a money unit through a cryptographic protocol. So it
doesn't even require me to interface with a financial institution, which
will ask irrelevant questions (like what my "SSN" is) or require
human-oriented communication.
How come none of you suggested this to me before?
Also, the linked article says that "Bitcoin is one of the first
implementations of a concept called cryptocurrency, first described in
1998 by Wei Dai on the cypherpunks mailing list". Is that "Wei Dai" the
same as User:Wei_Dai?
Friday, January 17, 2014
Thursday, January 16, 2014
How to get started with your bitcoins
Step 1 - Get a wallet
There are many wallets to choose from and here is my recommendation:Web Wallets - Web wallets are the easiest & most convenient to use, but are potentially less secure than wallet software run on your own computer.
- Blockchain (Recommended)
- Coinbase
- Coinjar
- Coinpunk
- BitcoinQT - The original Satoshi wallet from bitcoin.org
- Armory - (Recommended) Armory is the most mature full featured wallet. It rocks!
- Multibit - This is the easiest to use because it doesn't require a full download of the blockchain.
- Blockchain (Recommended)
- CoinJar
- Coinpunk (Use as a web application on iphone & Android)
Step 2 - Get Bitcoins
Purchasing Bitcoins - Although it's not yet easy to buy bitcoins, it's getting simpler every day. Here are our recommendations:- LocalBitcoins.com - This fantastic service allows you to search for people in your community willing to sell bitcoins to you directly.
- How To Buy Bitcoins - An international directory of bitcoin exchanges.
- Cash Into Coins - Recommended for fast, simple service.
- Coinbase - Bitcoin exchange based in the United States. (Highly rated).
- BitStamp - A multi currency bitcoin exchange based in Slovenia. (Highly rated).
- MtGox - A multi currency bitcoin exchange based in Japan
- CoinJar - CoinJar allows direct bitcoin purchases on their site. They're based in Australia but serve an international clientele.
To make it easy, you may want to sign up for a bitcoin merchant account which allows you to send invoices and integrate bitcoin payments into your online order pages for most of the popular shopping cart systems.
- BitPay - (Highly Recommended) - Merchant account services
- CoinBase - Merchant account services
- Coinkite - Merchant Terminal / POS system
It's important to point out that bitcoin mining is highly competitive and risky for would be participants. Please see this bitcoin mining page for more detail.
The manufacturers who have successfully shipped bitcoin mining hardware in volume are:
- Butterfly Labs
- Avalon
- BitFurry
- KNC
- AsicMiner
Step 3 - What can I do with my bitcoins?
Bitcoins can be used to purchase just about anything you want. Dental services, a brand new car, travel and even luxury real estate.We recommend searching the merchant directories below to locate the merchants you're interested in. You can buy gift cards with bitcoin and spend them in most of the stores you already use.
Merchant directories
- coinmap - Find bitcoin friendly merchants near you
- bitpay merchant directory - Over 12,000 businesses and charities.
Bitcoin Store - Electronics & everything else for Bitcoin
Charity
- Bitcoin Foundation - The Bitcoin Foundation standardizes, protects and promotes the use of Bitcoin cryptographic money for the benefit of users worldwide.
- BitGive - BitGive is a non-profit foundation that is accepting donations from the Bitcoin community and providing charitable gifts to environmental and public health causes worldwide.
- Bitcoin Development Fund - A charity devoted to helping further the development of bitcoin, the open source community and causes of humanity.
Step 4 - Keeping up to date with bitcoin
Here are some good places to keep up with bitcoin news and discussion:- r/bitcoin - Bitcoin links and discussion by the Reddit community
- Coindesk - An excellent source of bitcoin news
- Bitcoin Magazine - Insightful articles with deep technical credentials
- BitcoinX - Bitcoin headlines, market rates & charting resources
- The Video - An excellent primer for anyone curious to understand the bitcoin phenomenon
Some Disadvantages to using Bitcoins
...and the follow up post; disadvantages to using bitcoin currency.
Like any currency, there are disadvantages associated with using Bitcoin:
Like any currency, there are disadvantages associated with using Bitcoin:
- Valuation Guarantee
Since there is no central authority
governing Bitcoins, no one can guarantee its minimum valuation. If a
large group of merchants decide to “dump” Bitcoins and leave the system,
its valuation will decrease greatly which will immensely hurt users who
have a large amount of wealth invested in Bitcoins. The decentralized
nature of bitcoin is both a curse and blessing.
- Wallets Can Be Lost
If a hard drive crashes, or a virus
corrupts data , and the wallet file is corrupted, Bitcoins have
essentially been “lost”. There is nothing that can done to recover it.
These coins will be forever orphaned in the system. This can bankrupt a
wealthy Bitcoin investor within seconds with no way form of recovery.
The coins the investor owned will also be permanently orphaned.
- Bitcoins Not Widely Accepted
Bitcoins are still only accepted by a very
small group of online merchants. This makes it unfeasible to completely
rely on Bitcoins as a currency. There is also a possibility that
governments might force merchants to not use Bitcoins to ensure that
users’ transactions can be tracked.
- Bitcoin Valuation Can Fluctuate
The value of Bitcoins is constantly
fluctuating according to demand. As of June 2nd 2011, one Bitcoins was
valued at $9.9 on a popular bitcoin exchange site. It was valued to be less than $1 just 6 months ago.
This constant fluctuation will cause Bitcoin accepting sites to
continually change prices. It will also cause a lot of confusion if a
refund for a product is being made. For example, if a t shirt was
initially bought for 1.5 BTC, and returned a week later, should 1.5 BTC
be returned, even though the valuation has gone up, or should the new
amount (calculated according to current valuation) be sent? Which
currency should BTC tied to when comparing valuation? These are still
important questions that the Bitcoin community still has no consensus
over.
- Risk of Unknown Technical Flaws
The Bitcoin system could contain
unexploited flaws. As this is a fairly new system, if Bitcoins were
adopted widely, and a flaw was found, it could give tremendous wealth to
the exploiter at the expense of destroying the Bitcoin economy.
- Has Built in Deflation
Since the total number of bitcoins is
capped at 21 million, it will cause deflation. Each bitcoin will be
worth more and more as the total number of Bitcoins maxes out. This
system is designed to reward early adopters. Since each bitcoin will be
valued higher with each passing day, the question of when to spend
becomes important. This might cause spending surges which will cause the
Bitcoin economy to fluctuate very rapidly, and unpredictably.
- Buyer Protection
When goods are bought using Bitcoins, and
the seller doesn’t send the promised goods, nothing can be done to
reverse the transaction. This problem can be solved using a third party
escrow service like ClearCoin,
but then, escrow services would assume the role of banks, which would
cause Bitcoins to be similar to a more traditional currency.
- Physical Form
Since Bitcoins do not have a physical
form, it cannot be used in physical stores. It would always have to be
converted to other currencies. Cards with Bitcoin wallet information
stored in them have been proposed, but there is no consensus on a
particular system. Since there would be multiple competing systems,
merchants would find it unfeasible to support all Bitcoin cards, and
therefore users would be forced to convert Bitcoins anyway, unless a
universal system is proposed and implemented.
Advantages to using bitcoins
I spent some time thinking about it and came up with some advantages and disadvantages to using bitcoins over other versions of currency. Please comment with your thoughts, below.
Some of the following are major advantages of using Bitcoin versus other currency systems in the world:
Some of the following are major advantages of using Bitcoin versus other currency systems in the world:
- Taxes
There is no way for a third party to
intercept transactions of Bitcoins, and therefore there is no viable way
to implement a Bitcoin taxation system. The only way to pay a tax would
be, if someone voluntarily sends a percentage of the amount being sent
as tax.
- Third-Party Seizure
Since there are multiple redundant copies
of the transactions database, no one can seize bitcoins. The most
someone can do is force the user, by other means, to send the the
bitcoins to someone else. This means that governments can’t freeze
someone’s wealth, and thus users of Bitcoins will have complete freedom
to do anything they want with their money.
- Bitcoins Cannot be Stolen
Bitcoins’ ownership address can only be
changed by the owner. No one can steal Bitcoins unless they have
physical access to a user’s computer, and they send the bitcoins to
their account. Unlike convential currency systems, where only a few
authentication details are required to gain access to finances, this
system requires physical access, which makes it much harder to steal.
- Transaction Costs
Sending and receiving Bitcoins requires
users to keep the Bitcoin client running and connected to other nodes.
Essentially, by using bitcoins users will be contributing to the
network, and thus sharing the burden of authorizing transactions.
Sharing this work greatly reduces transaction costs, and thus makes
transaction costs negligible.
- Tracking
Unless users publicize their wallet
addresses publicly, no one can trace transactions back to them. No one,
other than the wallet owners, will know how many Bitcoins they have.
Even if the wallet address was publicized, a new wallet address can be
easily generated. This greatly increases privacy when compared to
traditional currency systems, where third parties potentially have
access to personal financial data.
- Risk of “Charge-backs”
Once Bitcoins are sent, the transaction
cannot be reversed. Since the ownership address of Bitcoins will be
changed to the new owner, once it is changed, it is impossible to
revert. Since only the new owner has the associated private key, only
he/she can change ownership of the coins. This ensures that there is no
risk involved when receiving Bitcoins.
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Can you (Clippy) or someone else give me an estimate of how much bitcoin can be generate per some standard unit of CPU time? Or a link to such?
I also assume that there is no convenient way to trade bitcoin for, well, actual mainstream money.... Can you confirm that? What resources can Clippy expect to be able to buy with bitcoins? Apart from Free Software Foundation donations that is.
Here is the real deal:
Okay guys.... here it is... the ultimate guide on how to make money with bitcoin.
I strongly believe the value of bitcoin will reach 10,000 USD. All bitcoin will be mined at some point.
That's how the experiment was set up, and it's going to hit it. Whether or not you believe me, fine.... this is how to make money with bitcoin without any risk of loss.
Are you ready for it?
First, stop trying to mine bitcoin. You are wasting your time. You will never make real money doing this. Your computer isn't powerful enough, and if it was, it would be draining electricity from your entire power grid.
Why is this? I don't want to get into the math of it... but basically, this was set up to be harder and harder to mine as more gets mined, just like gold. It's basically electronic gold.
Okay, so really, how do you make money?
Simple.
Accept payments for services through bitcoin.
Save the bitcoin in your wallet.
Sell all of it when it hits 10k USD.
This way, you're not losing money, just your time. You don't have to spend money, so it doesn't take any capital investment.
Someone pays you .5 bitcoins for a backlink blast. (about 100 bucks this morning).
Imagine if they paid you .1 bitcoins for the same service in 6 months? (pure speculation)
Imagine if they paid you 10 bitcoins 6 months ago.
Get it?
You can't chargeback a bitcoin.
If you tumble it correctly, no one will ever know where it went.
If I'm wrong, sell it when the price starts to go down. A savvy investor will ride out the waves.
If you have the bank roll to invest in bitcoin, go for it. But expect a very rocky road to 10,000 USD per bitcoin