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Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
A.H.K.
Tetrahedral Poster
User ID: 162521
04-15-2013 03:06 AM

Posts: 13,138



Post: #1
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
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As the title says, can someone explain me in layman's terms what Bitcoin Mining is?

Are people "making" bitcoins from the "thin air"? How and why does that works?
What does that means in the long term, if, let's say, some guy with a lot of resources, can make millions of bitcoins through this method every few days?

Is/will be there such thing as bitcoin inflation / hyper-inflation?

Scratchinghead
(This post was last modified: 04-15-2013 03:09 AM by A.H.K..) Quote this message in a reply
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A.H.K.
Tetrahedral Poster
User ID: 162521
04-15-2013 03:20 AM

Posts: 13,138



Post: #2
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
Where are all the bitcoin Gurus when one needs them?

Kkqqcpdh
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seasnake
Registered User
User ID: 67904
04-15-2013 03:26 AM

Posts: 9,396



Post: #3
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
I view bitcoins as a made up virtual currency, as such it makes no sense to me why it has value at all whether or not they limit the total maximum amount of it or not. Unless someone can explain to me what gives bitcoins any value I will never understand this.
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A.H.K.
Tetrahedral Poster
User ID: 162521
04-15-2013 03:30 AM

Posts: 13,138



Post: #4
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
seasnake  Wrote: (04-15-2013 03:26 AM)
I view bitcoins as a made up virtual currency, as such it makes no sense to me why it has value at all whether or not they limit the total maximum amount of it or not. Unless someone can explain to me what gives bitcoins any value I will never understand this.

I bet someone could come with a complex economical juggling that would answer that.
My main distrust (well, one of them) is that as far as I can see, anyone with enough resources can start making bitcoins out of nothing, meaning that the number of bitcoins will grow independently of how it is traded.
It's like paying with electronic grass.

I'm just waiting for someone to explain me and make me understand that I'm wrong about that and that's not exactly how it works
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Looky
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User ID: 160843
04-15-2013 03:30 AM

Posts: 11,128



Post: #5
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
https://en.bitcoin.it/wiki/Mining

More at link


Quote: Introduction

Mining, or generating, is the process of adding transaction records to Bitcoin's public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to respend coins that have already been spent elsewhere.

Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block.

They say that patience is it's own
REWARD,
while this is wise and true,
with enough patience comes
COMPASSION
and this always seem
TO BE THE ANSWER.
[Image: RIPomega2_zps25014a7e.png]
Quote this message in a reply
Looky
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User ID: 160843
04-15-2013 03:33 AM

Posts: 11,128



Post: #6
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
seasnake  Wrote: (04-15-2013 03:26 AM)
I view bitcoins as a made up virtual currency, as such it makes no sense to me why it has value at all whether or not they limit the total maximum amount of it or not. Unless someone can explain to me what gives bitcoins any value I will never understand this.

All currencies are faith based. As long as someone will trade good and services) for your currency it has value. The higher the demand for your currency the greater the value. It makes less sense to me to have the greatest crime syndicate control all the values of all the currencies.

They say that patience is it's own
REWARD,
while this is wise and true,
with enough patience comes
COMPASSION
and this always seem
TO BE THE ANSWER.
[Image: RIPomega2_zps25014a7e.png]
Quote this message in a reply
A.H.K.
Tetrahedral Poster
User ID: 162521
04-15-2013 03:34 AM

Posts: 13,138



Post: #7
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
Looky  Wrote: (04-15-2013 03:30 AM)
https://en.bitcoin.it/wiki/Mining

More at link


Quote: Introduction

Mining, or generating, is the process of adding transaction records to Bitcoin's public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to respend coins that have already been spent elsewhere.

Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block.

Yes, I've read that before, in many different ways.
Still, can't understand how that system can work in a long term.
Being resource-intensive means nothing nowadays. Someone will gather enough resources to make it as hard as blinking eyes, and technology will advance towards the point that anyone (or at least some chosen ones) will be able to generate more bitcoins than molecules of O2 in a room per hour.
Bitcoin farming seems to be already being exploiting the power of the GPU cards to process data. How long before huge beast bitcoin-farming machines?
So... I'm still boggled... how can this work?
Infinite bitcoins in a so-not-far-future for everyone?
(This post was last modified: 04-15-2013 03:36 AM by A.H.K..) Quote this message in a reply
seasnake
Registered User
User ID: 67904
04-15-2013 03:39 AM

Posts: 9,396



Post: #8
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
Looky  Wrote: (04-15-2013 03:33 AM)
seasnake  Wrote: (04-15-2013 03:26 AM)
I view bitcoins as a made up virtual currency, as such it makes no sense to me why it has value at all whether or not they limit the total maximum amount of it or not. Unless someone can explain to me what gives bitcoins any value I will never understand this.

All currencies are faith based. As long as someone will trade good and services) for your currency it has value. The higher the demand for your currency the greater the value. It makes less sense to me to have the greatest crime syndicate control all the values of all the currencies.

Currencies at least are of countries. What the hell is bitcoins of, digitial nonsense? Supply and demand I understand, virtual made up currency makes no sense to me.
Quote this message in a reply
Looky
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User ID: 160843
04-15-2013 03:39 AM

Posts: 11,128



Post: #9
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
Ahkronn  Wrote: (04-15-2013 03:34 AM)
Looky  Wrote: (04-15-2013 03:30 AM)
https://en.bitcoin.it/wiki/Mining

More at link


Quote: Introduction

Mining, or generating, is the process of adding transaction records to Bitcoin's public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to respend coins that have already been spent elsewhere.

Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block.

Yes, I've read that before, in many different ways.
Still, can't understand how that system can work in a long term.
Being resource-intensive means nothing nowadays. Someone will gather enough resources to make it as hard as blinking eyes, and technology will advance towards the point that anyone (or at least some chosen ones) will be able to generate more bitcoins than molecules of O2 in a room per hour.
Bitcoin farming seems to be already being exploiting the power of the GPU cards to process data. How long before huge beast bitcoin-farming machines?
So... I'm still boggled... how can this work?
Infinite bitcoins in a so-not-far-future for everyone?
Look at the hardware link on that page. What makes this so unique is that as the tech evolves so does the bitcoin. There will be new unimaginable ways to obtain new coins, but it will also require validation from the group, something we do not have with federal reserve notes.

They say that patience is it's own
REWARD,
while this is wise and true,
with enough patience comes
COMPASSION
and this always seem
TO BE THE ANSWER.
[Image: RIPomega2_zps25014a7e.png]
Quote this message in a reply
Looky
PRO-NAPPER
User ID: 160843
04-15-2013 03:41 AM

Posts: 11,128



Post: #10
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
seasnake  Wrote: (04-15-2013 03:39 AM)
Looky  Wrote: (04-15-2013 03:33 AM)
seasnake  Wrote: (04-15-2013 03:26 AM)
I view bitcoins as a made up virtual currency, as such it makes no sense to me why it has value at all whether or not they limit the total maximum amount of it or not. Unless someone can explain to me what gives bitcoins any value I will never understand this.

All currencies are faith based. As long as someone will trade good and services) for your currency it has value. The higher the demand for your currency the greater the value. It makes less sense to me to have the greatest crime syndicate control all the values of all the currencies.

Currencies at least are of countries. What the hell is bitcoins of, digitial nonsense? Supply and demand I understand, virtual made up currency makes no sense to me.
What is the value of an mp3 or an e-book or an .avi?

I might be missing your question and I am by no means a bit coin guru, I just see it.

They say that patience is it's own
REWARD,
while this is wise and true,
with enough patience comes
COMPASSION
and this always seem
TO BE THE ANSWER.
[Image: RIPomega2_zps25014a7e.png]
Quote this message in a reply
A.H.K.
Tetrahedral Poster
User ID: 162521
04-15-2013 03:44 AM

Posts: 13,138



Post: #11
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
Looky  Wrote: (04-15-2013 03:39 AM)
Ahkronn  Wrote: (04-15-2013 03:34 AM)
Looky  Wrote: (04-15-2013 03:30 AM)
https://en.bitcoin.it/wiki/Mining

More at link

Yes, I've read that before, in many different ways.
Still, can't understand how that system can work in a long term.
Being resource-intensive means nothing nowadays. Someone will gather enough resources to make it as hard as blinking eyes, and technology will advance towards the point that anyone (or at least some chosen ones) will be able to generate more bitcoins than molecules of O2 in a room per hour.
Bitcoin farming seems to be already being exploiting the power of the GPU cards to process data. How long before huge beast bitcoin-farming machines?
So... I'm still boggled... how can this work?
Infinite bitcoins in a so-not-far-future for everyone?
Look at the hardware link on that page. What makes this so unique is that as the tech evolves so does the bitcoin. There will be new unimaginable ways to obtain new coins, but it will also require validation from the group, something we do not have with federal reserve notes.

So, in short, the richer will obtain bitcoins more easily than the poor due to hardware limitations.
Is hardware prices going to adjust to the bitcoin mining difficulty, or is this one more "the rich will be richer and the poor will stay poor" kinda thing?
Quote this message in a reply
seasnake
Registered User
User ID: 67904
04-15-2013 03:47 AM

Posts: 9,396



Post: #12
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
Looky  Wrote: (04-15-2013 03:41 AM)
seasnake  Wrote: (04-15-2013 03:39 AM)
Looky  Wrote: (04-15-2013 03:33 AM)
All currencies are faith based. As long as someone will trade good and services) for your currency it has value. The higher the demand for your currency the greater the value. It makes less sense to me to have the greatest crime syndicate control all the values of all the currencies.

Currencies at least are of countries. What the hell is bitcoins of, digitial nonsense? Supply and demand I understand, virtual made up currency makes no sense to me.
What is the value of an mp3 or an e-book or an .avi?

I might be missing your question and I am by no means a bit coin guru, I just see it.

you are telling me bitcoins have value cause other things have value, that is not a good arguement... mp3's and ebooks have value cause there is a product behind them, what is behind bitcoins?
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Looky
PRO-NAPPER
User ID: 160843
04-15-2013 03:48 AM

Posts: 11,128



Post: #13
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
Ahkronn  Wrote: (04-15-2013 03:44 AM)
Looky  Wrote: (04-15-2013 03:39 AM)
Ahkronn  Wrote: (04-15-2013 03:34 AM)
Yes, I've read that before, in many different ways.
Still, can't understand how that system can work in a long term.
Being resource-intensive means nothing nowadays. Someone will gather enough resources to make it as hard as blinking eyes, and technology will advance towards the point that anyone (or at least some chosen ones) will be able to generate more bitcoins than molecules of O2 in a room per hour.
Bitcoin farming seems to be already being exploiting the power of the GPU cards to process data. How long before huge beast bitcoin-farming machines?
So... I'm still boggled... how can this work?
Infinite bitcoins in a so-not-far-future for everyone?
Look at the hardware link on that page. What makes this so unique is that as the tech evolves so does the bitcoin. There will be new unimaginable ways to obtain new coins, but it will also require validation from the group, something we do not have with federal reserve notes.

So, in short, the richer will obtain bitcoins more easily than the poor due to hardware limitations.
Is hardware prices going to adjust to the bitcoin mining difficulty, or is this one more "the rich will be richer and the poor will stay poor" kinda thing?
No different than real world mining.. but you seem to get it. As far as the richer poorer thing.. the current currency game is so rigged that only the rich can make money, at least with bitcoin or other cryptocurrencies the rules are the same for everyone.

They say that patience is it's own
REWARD,
while this is wise and true,
with enough patience comes
COMPASSION
and this always seem
TO BE THE ANSWER.
[Image: RIPomega2_zps25014a7e.png]
Quote this message in a reply
absurdious
Regressing to the Mean
User ID: 27152
04-15-2013 03:49 AM

Posts: 19,162



Post: #14
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
Don't worry about the why's and how's, just jump on the bandwagon already...!
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A.H.K.
Tetrahedral Poster
User ID: 162521
04-15-2013 03:50 AM

Posts: 13,138



Post: #15
Bitcoin Mining - Can someone explain me, in layman's terms, what that is?
Looky  Wrote: (04-15-2013 03:48 AM)
Ahkronn  Wrote: (04-15-2013 03:44 AM)
Looky  Wrote: (04-15-2013 03:39 AM)
Look at the hardware link on that page. What makes this so unique is that as the tech evolves so does the bitcoin. There will be new unimaginable ways to obtain new coins, but it will also require validation from the group, something we do not have with federal reserve notes.

So, in short, the richer will obtain bitcoins more easily than the poor due to hardware limitations.
Is hardware prices going to adjust to the bitcoin mining difficulty, or is this one more "the rich will be richer and the poor will stay poor" kinda thing?
No different than real world mining.. but you seem to get it. As far as the richer poorer thing.. the current currency game is so rigged that only the rich can make money, at least with bitcoin or other cryptocurrencies the rules are the same for everyone.

The big difference here is that the rich will make bitcoins out of thin air and if you want to use it, you'll need a safe electronic way of transaction. Sounds like a dream for the ones that want everyone and everything under their control.
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