To post in our Book Club, please log in or sign up for an account here.
Just wondered what your thoughts are on Bitcoin....
Saturday 23 July 2011 07:28:47 pm
I was wondering the same thing. Perhaps someone with some understanding of or experience with Bitcoin might offer some comments here.
Sunday 24 July 2011 11:41:29 am
Bitcoin is a Internet currency that is backed by a p2p network and is generated at a predictable interval. Advantages are that there is no central authority that issues Bitcoin, transactions are fairly anonymous, and transactions fees are very small. Its supposed to be something similar to cash, but primarily for online usage which reduces the need for services like PayPal. It makes international trade easier as well since you wouldn't have to worry about converting between US Dollars and Canadian Dollars for example. I've seen all kinds of goods being offered in exchange for some bitcoin. Everything from grass fed beef, to crystal meth. Some of the appeal may also come from the fact that there are no regulations on Bitcoin at the moment. There has been a bit of a bitcoin bubble recently but the price seems to have stabilised at 1 BTC = 13 USD.
The two ways that one can acquire bitcoin seems to be through trading or through a process called mining. Trading is pretty straightforward. Just like a proper currency, You can gift someone bitcoin, offer services and goods in exchange for bitcoin, or buy some at a bitcoin exchange site. The other method is by mining. You start by running mining software on your computer. Then the software uses your processor to try and brute-force a complex algorithm. Once the software cracks it, you get rewarded 50 bitcoin. This process can take weeks so many people have pooled their efforts to generate bitcoin at a more regular interval.
The problem with mining bitcoin is you need some expensive and power hungry computer hardware to mine effectively. I've seen people go all out and buy multiple computers to stick in their garages just to generate some bitcoin. If you are serious, the power consumption that you would use doing this could exceed 1000 watts per machine which wouldn't be ideal in a collapse environment. Also as more people start mining, it gets more difficult to generate bitcoin. As people have become aware of Bitcoin, The profitably of bitcoin mining has already gone down dramatically. If you live in a state like Hawaii where power is very expensive, or the SF Bay area in California where power prices are tiered based on usage, you could spend more on your energy bill than you would get from mining bitcoin. Ideally you would need to leech power from someone (storing your computers at a data center comes to mind), generate alot of your own power, or move to an area of the world where power is cheap i.e. Canada.