Bitcoin Questions

[lukesterboy]

Recently I've been looking into bitcoin and the mining side of it really excites and interests me but before i go into my detail and look whether it is profitable for me i want to understand a few things about bitcoin first so here are my questions.

 

1) The money you exchange into bitcoin, where does it go? For example i change £100 into 0.23242394 bitcoin for example, where does that £100 go to since there is no government or bank?

 

2) Where does the money come from that miners are paid, since there are no transaction fee's etc.

 

3) I've heard that bitcoin will end or fail/run out of money in 2140 why and how is this?

[Sunshine1868]

It is no longer worth it* to mine bitcoin as a result of huge, powerful mines/mining farms doing the majority of the work around the world.

 

*The cost of the power the machine consumes will outweigh the profit you'd make as a minor by multiple factors of 10.  

[lukesterboy]

It is no longer worth it* to mine bitcoin as a result of huge, powerful mines/mining farms doing the majority of the work around the world.

 

*The cost of the power the machine consumes will outweigh the profit you'd make as a minor by multiple factors of 10.  

Ok well if mining isn't then is investing in bitcoin and selling when the value is up a good way of making money?

[Sunshine1868]

Ok well if mining isn't then is investing in bitcoin and selling when the value is up a good way of making money?

 

That's a question for financial analysts, not IT people on the LTT Forum

 

Doing that is like playing the stock market... you could make a little money, but you could also lose some. Totally up to you.

[Coaxialgamer]

 

Recently I've been looking into bitcoin and the mining side of it really excites and interests me but before i go into my detail and look whether it is profitable for me i want to understand a few things about bitcoin first so here are my questions.

 

1) The money you exchange into bitcoin, where does it go? For example i change £100 into 0.23242394 bitcoin for example, where does that £100 go to since there is no government or bank?

 

2) Where does the money come from that miners are paid, since there are no transaction fee's etc.

 

3) I've heard that bitcoin will end or fail/run out of money in 2140 why and how is this?

 

1) Bitcoins go into what is called a "wallet", software you install on your computer.

 

Some websites also provide that service, sometimes in exchange for a small fee.

 

2) Miners earn money when finding "blocks", basically your hardware does solves cryptographic problems , and once it has found the solution , you get rewared by a block (25 bitcoin).

 

However , it is unlikely to find a block on your own , even with powerful hardwrae ( depends a lot on your luck).Mining with a gpu ( for example , my r9 290x overclocked ( gcn is better than kepler and maxwell at mining), has a hashrate of 900 megahash ( how fast it mines) , very slow) will take me about 5161509.58 days , aka 1 414 112 years to find a block .

 

3)The bitcoin mining system ( and in fact every cryptocurrency system) , relies on miners to keep it going.

 

There is a finite amount of bitcoins , and to make sure they aren't all used up quickly , the dificulty rises every ( right now , every few days) .

 

When the difficulty rises , you will need more processing power to get the same amount of bitcoins , so miners need to invest in larger more powerful machines.

To keep being profitable , they also need to use the same amount of electricity, therefor , they need more efficient machines.

 

Gpus these days are just not anywhere near profitable these days , and miners ( large corporations )use efficient machines made just for mining called ASIC's ( application specific integrated circuits), who have a hashrate measured in terahash ( even dozens of them ).

[lukesterboy]

1) Bitcoins go into what is called a "wallet", software you install on your computer.

 

Some websites also provide that service, sometimes in exchange for a small fee.

 

2) Miners earn money when finding "blocks", basically your hardware does solves cryptographic problems , and once it has found the solution , you get rewared by a block (25 bitcoin).

 

However , it is unlikely to find a block on your own , even with powerful hardwrae ( depends a lot on your luck).Mining with a gpu ( for example , my r9 290x overclocked ( gcn is better than kepler and maxwell at mining), has a hashrate of 900 megahash ( how fast it mines) , very slow) will take me about 5161509.58 days , aka 1 414 112 years to find a block .

 

3)The bitcoin mining system ( and in fact every cryptocurrency system) , relies on miners to keep it going.

 

There is a finite amount of bitcoins , and to make sure they aren't all used up quickly , the dificulty rises every ( right now , every few days) .

 

When the difficulty rises , you will need more processing power to get the same amount of bitcoins , so miners need to invest in larger more powerful machines.

To keep being profitable , they also need to use the same amount of electricity, therefor , they need more efficient machines.

 

Gpus these days are just not anywhere near profitable these days , and miners ( large corporations )use efficient machines made just for mining called ASIC's ( application specific integrated circuits), who have a hashrate measured in terahash ( even dozens of them ).

This doesnt answer my questions at all.

[monjanger]

1. I will try to answer this question to the best of my knowledge. Sites such as this one allow users to make market post, offering to buy or sell bitcoins for a certain price. The site charges a small fee. 

 

2. Today, most miners operate in pools. When a miner discovers/gets a bitcoin, it is divided into the group, and your are given a small amount of the bitcoin based on the power of your mining unit. The pools charge a small fee (4%). If you are mining alone, you get the bitcoin in which you solve the problem for, for no fee. When mining/verifying transactions, there are small fees. These fees are given to the miners.

 

3. If there was a endless supply of bitcoins, there would be no demand which in return would lower the price tremendously. There will be no more then 21 million bitcoins available in the whole world. Read more about the supply here https://en.bitcoin.it/wiki/Controlled_supply

 

If you have any questions be sure to ask, it's kind of hard to explain in words for me

[Coaxialgamer]

This doesnt answer my questions at all.

what do you mean ?

[lukesterboy]

1. I will try to answer this question to the best of my knowledge. Sites such as this one allow users to make market post, offering to buy or sell bitcoins for a certain price. The site charges a small fee. 

 

2. Today, most miners operate in pools. When a miner discovers/gets a bitcoin, it is divided into the group, and your are given a small amount of the bitcoin based on the power of your mining unit. The pools charge a small fee (4%). If you are mining alone, you get the bitcoin in which you solve the problem for, for no fee. When mining/verifying transactions, there are small fees. These fees are given to the miners.

 

3. If there was a endless supply of bitcoins, there would be no demand which in return would lower the price tremendously. There will be no more then 21 million bitcoins available in the whole world. Read more about the supply here https://en.bitcoin.it/wiki/Controlled_supply

 

If you have any questions be sure to ask, it's kind of hard to explain in words for me

Yes this helps, thanks for helping me to understanding some more.

[SansVarnic]

3 words;