Sunday, December 15, 2013

Mined my first (fractional) bitcoin

With all the chatter about Bitcoin ($1,200!!!), I just had to check it out. Actually, I've been reading the news reports and various stories off and on for months. My original introduction to Bitcoin was the episode of The Good Wife, where her teenage son explains Bitcoin mining to her.
Buying Bitcoins is inconvenient and real mining is expensive, but it turns out that you can dip your toe in the waters with a simple browser-based miner called BitcoinPlus. It's running on my 3-1/2-year old Toshiba notebook PC as I write this and has already mined five fractional Bitcoins in about two hours.
Each fractional Bitcoin in BitcoinPlus is worth 0.00000002 BTC (Bitcoin). The current "value" of a Bitcoin is $862.79 (as per Bitstamp), so my current Bitcoin minings of five of those fractional Bitcoins is worth 5 x 0.00000002 x $862.79 = $0.000086279 or just under 1/100th of a penny. Hey, that's not much, but at least I'm in the game.
Note: I actually tried this a week ago and it ran for three hours and mined a grand total of... zero Bitcoins. The key is that you are solving a fraction of the total calculation which depends on having enough other people mining at the same time in the same "pool", so it depends on the time of day and how many other people are mining using the BitcoinPlus browser app.
Note: I suspect that it costs more for the electrical power to mine these fractional Bitcoins than they are actually worth.
More info:
Personally, I see Bitcoin as an experimental novelty. Not quite a scam, not really a commodity, and less of a store of value than even gold – and not yet a true currency. I mean, the market value of a Bitcoin is quite volatile, even this early in the game. Until the market for Bitcoins is broad enough and deep enough to dwarf the volatility, Bitcoin is a high-risk proposition, although mining is clearly found money. AFAICT, the only way that Bitcoin can become a broad and deep currency would be if the supply increases dramatically and matches a much larger long-term demand, but the implicit limitation on Bitcoin supply growth seems to argue against that.
In terms of speculative investment, there are probably plenty of stocks that have just as good a chance of rising (or falling) in price as much as Bitcoin.
-- Jack Krupansky


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