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How exactly does bitcoin mining work?

#1ThisGuy101Posted 8/13/2014 5:39:17 PM
I don't understand the concept. And everything I've read hasn't helped to explain it.

I know the basics-- Build a super strong computer to join a mining pool, and get bitcoins.

That's as far as my knowledge goes.
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#2akl1515Posted 8/13/2014 5:47:56 PM
Basically think of it like an infinite number that's determined by an algorithm and assigned a value based on a decentralized market. It's like this piece of data is now worth a certain amount of money and you can trade it the same way you trade paper.

Mining is essentially running the algorithm. So why doesn't everyone do it? At the rate which you can run this algorithm, there does not exist a system that can do this and break even due to the cost of electricity, etc. You're better off begging for money on the street at this point.
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#3ThisGuy101(Topic Creator)Posted 8/13/2014 5:50:50 PM
akl1515 posted...
Basically think of it like an infinite number that's determined by an algorithm and assigned a value based on a decentralized market. It's like this piece of data is now worth a certain amount of money and you can trade it the same way you trade paper.

Mining is essentially running the algorithm. So why doesn't everyone do it? At the rate which you can run this algorithm, there does not exist a system that can do this and break even due to the cost of electricity, etc. You're better off begging for money on the street at this point.


I see.

So let's say I plugged in at a local McDonald's for two weeks...

Kidding lol. My rig wouldn't be able to do it effectively at all. Whenever someone mentions a "mining rig," they normally say something along the lines of "5 290x's" or some crazy thing like that.
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#4WyzeGyePosted 8/13/2014 5:54:15 PM
Five 290x cards would take something like 12 years to mine a single bitcoin.

Just to give you a rough idea
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#5KURRUPTORPosted 8/13/2014 5:55:49 PM
I could never really wrap my head around how they just made up a new form of currency. I'm no economist but the idea of that always kinda blew my mind that you can just make something like that up and people suddenly decided they wanted it and assigned real money value to it.
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#6Garage_ManPosted 8/13/2014 5:58:10 PM
You used to be able to make decent money with it. A friend and I did it for a few months and I was amazed at the potential. I had cards all setup mining litecoin. THEN this thing called feathercoin came out. HA you could mine thousands of these things a day and then trade for LTC. Together we drove up and down the market and made decent. It was hilarious. I eventually stopped because the time wasted wasn't worth it. Also the difficulty of the coins shot sky high and I went from mining 10LTC a day to 1....not worth it.

If you want to make money you trade like stocks. We made more in a few hours of that then days of mining.
#7ThisGuy101(Topic Creator)Posted 8/13/2014 5:58:39 PM
KURRUPTOR posted...
I could never really wrap my head around how they just made up a new form of currency. I'm no economist but the idea of that always kinda blew my mind that you can just make something like that up and people suddenly decided they wanted it and assigned real money value to it.


Even a dollar bill only has value BECAUSE we say it does. Funny how that works. Money is inherently worthless until assigned a value. It's hard to wrap your head around.
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#8WyzeGyePosted 8/13/2014 6:02:55 PM
Garage_Man posted...
If you want to make money you trade like stocks. We made more in a few hours of that then days of mining.


I traded in some btc in for 10k feathercoins. I'd trade them between 0.00051 and 0.00049 2-3 times a day. quick way of making some cash. I've still got my btc stash. 6.337btc to be exact. cashing out in january or when it tops 1000 USD again... whichever comes first.
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#9DAP1MP13Posted 8/13/2014 6:02:55 PM
Saving my bottle caps for fallout IRL….
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#10WyzeGyePosted 8/13/2014 6:03:06 PM
Same time post FTW
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