Bitcoin was only the begining. Currency was only the begining. Blockchains are creating a new world.

mrees999
By mrees999 on Fri, Mar 4, 2016 - 2:12pm

In 1975 we ushered in the new era. It was called the "personal computer era" and it began to change the world.

20 years later we decided to hook them together to communicate and share. A new era was born called the "Internet Era"

 

20 Years later - the evolution of creating trust on the internet. Thus started the next era called "the blockchain era". In this era we will create trust without a central authority, government, corporation. It allows trust to be a commodity.  This is the first post for a new group that is designed to discuss the process of the complex technology so nontechnical can begin to gain an understanding. 

 

Imagine being able to monetize data packets on the internet. We call these packets "tokens". They are there - each packet being unassembled and reassembled on the receiving end and they don't need travel the same route but still get routed to the destination. This is TCP/IP. The packets are free but their functional allows amazing technology leaps that allowed video \ voice communication \ email, and changed the world.

 

Blockchain tokens are created as a protocol too but stored on a shared public record that exists nowhere and everywhere at once. It is unchangeable because it lives everywhere. The tokens are created in a manner that forces them to be rare and thus valuable because of it's shared and accepted use that becomes a source of trust. You can buy these tokens.  Each blockchain has their own and you cannot interchange them. Critical mass will develop and accepted standards will be agreed world-wide just as the world eventually agreed to use TCP/IP as the standard method for communication on the internet.

 

I'll be your guide walking the tricky paths while exploring this new world. The landscape is riddled with traps, gangsters, and scams for the unaware and unexperienced.  You will need a guide if you want to remain relatively safe and possibly become prepared early. Those that arrive early to any new paradigm shift have time to adapt and profit before the rest of the world follows.

Do you want to take this journey?

 

 

34 Comments

HughK's picture
HughK
Status: Platinum Member (Offline)
Joined: Mar 6 2012
Posts: 764
Sure! What about Ethereum?

Sounds good, mrees!  I'd love to hear more.  

One of the biggest concerns I have with regards to cryptocurrencies is the danger of certain trading platforms collapsing (e.g. Mt. Gox).

If you could tell us more about how to best hold cryptocurrencies, that would be helpful.  

What about Ethereum, for example?  If I wanted to take a small position in this, what would be the simplest way to do so while exposing myself to the least amount of risk in terms of unreliable trading platforms?

I am skeptical, as I'm still not sure if these blockchain-based alternative currencies are a fad or if they really do have potential to hold some value.  But I'd certainly be willing to risk a Benjamin or two in for the possibility of some gains.  We don't have cable bills or car payments, so our budget could handle that.

Thanks,

Hugh

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Etherem is the way to go. UP nearly 1,200% this year as of today

Ethereum has in my opinion,  the most potential of all the crypto-curries right now.  Its blockchain is now offered as part of a live service from Microsoft called "Blockchain as a Service". This new development is helping dozens *if not hundreds* of companies prepare to use private blockchains to revolutionize their business processes.

The other is the banking consortium of R3 CEV. This has membership of 55 of the world's biggest banks looking and adopting Ethereum (other non-ethereum blockchains are also being evaluated) as the back-bone of all settlement and movement of funds between banks world-wide. This would replace ACH and SWIFT. This is intended to make settlements in trade reduced from days to seconds. 

You are smart to be skeptical. Keep that view and be very careful.  My advice is to not trust any exchange. Wise people inside the bitcoin community did not lose any money from Mt Gox because we didn't trust them and rumors were that it might have gotten hacked and  were going down had been discussed a full year before it actually imploded. Almost all of the money lost was from people with little knowledge trying to just ride the wave without any effort to get knowledge of their own. It pays to have a contact \ friend with a good deep knowledge on your side. That's one of the reasons I've created this group - to help newbies stay safe and get crypto -smart.

Move bitcoin to the exchange just long enough to make your purchase then move your ethereum to your own private wallet using easy ethereum software. Then use that software function to make a backup to store on a usb key. There is even software to print a 'paper wallet' and you can send funds to the paper and store in your safe completely off-line. (there are cautions to this too however).

To buy etheruem tokens you must own bitcoin first.  Bitcoin is your conduit to buy ethereum (the tokens are called 'ether". There are still only very few exchanges that have added ethereum to their list of support as it is fairly young only being available to purchase starting last July. There are a LOT of garbage and scam copy-cat "alternative coins" that people need to stay away from so it's taken a while for ethereum to rise above the garbage. Working with big name companies and having a huge network effect of people consolidating to the new technology is bringing the awareness I've expected. In full disclosure I was one of the many who 'kick-started' etheuem to begin the movement and pay the early core developers that were spending 60+ hours a week bringing it to reality. My investment was limited to one bitcoin (about 400 dollars at the time). They only held the crowd sale for a few weeks before closing it and went out of their way to prevent large corporations and big money investors limited by setting a maximum purchase quantity so regular people had an equal opportunity.  

Ethereum is an open protocol and it is open-source with hundreds of developers. You can download the ethereum program on your own PC and run it. You should probably be comfortable enough installing software. You can download the open source software wallet that comes include with the ethereum program. It's all free. When you install it - it will require you set up a password, do something with 10 - 15 characters (hints to make that easy - Make a password look kind of like a website address... something like "www.Mywallet99.com" - 18 character password that is easy to remember and type.... and could take a computer thousands of years to break).

Once you own some ethereum, transfer from the exchange it your own personal wallet that you stored on your pc (there are also other ways to make an ethereum wallet that I'll discuss in later posts).

One function of the etheruem wallet is to do a backup.  Really this is just copying one small directory on your pc to "drop box, google drive, a usb stick or whatever location you prefer (I like to make several copies and put them in various places).  These small files are encrypted so they won't do anybody any good without the password you set in the process I described before.

One of the only places in the US that you can buy ethereum in a market right now that I recommend and use personally is at poloniex.com out of Montana. They've got a very good reputation and comply with the USA regulations for "Know your Customer" and Anti-money laundering laws so you will have to provide ID if you want to open an account with them.  But remember you must own bitcoin first and transfer to your account with them.

A good moto for owning gold and silver is that if you don't hold it you don't own it.  The same is true with blockchain currencies. You must have the 'private key' to it in your possession for protection. Only use an exchange as an exchange, not a bank or storage location. Keep your risk low by keeping it in your possession.

More to come.

 

 

.

 

 

 

 

 

 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
How is Ethereum created?

Thank you for the discussion of Blockchain mrees... how do Ethereum coins come into being?  Are there limits to how much will exist?  If so, how are the limits encoded/enforced?   

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Ethereum Network \ Coin Creation

The blockchain for Ethereum barrows much from the first. - Bitcoin.  It has many improvements on it and many consider it the 'bitcoin 2.0'.

For now, ethereum tokens are 'mined' into the ecosystem. These tokens are issued randomly to computers that process all transactions on the network as incentive to do so. How does it create the randomness? Similar to bitcoin, it requires computers to 'brute force' factoring complex mathematical formulas. Think of a big Sudoku puzzle except the size of the grid might be 100,000 by 100,000. There is only one solution because they deal with very large prime numbers. This is called "Proof of work". It takes computing power to brute force the solutions and processors (miners) compete with each other to find this key. This simulates a lottery to make it far - and does double duty to act as security because in order to have a 'voice' you have to have strong computing power to be the 'lucky one' for each round.

Mining differences to bitcoin: Bitcoin's math allows it to self-adjust the complexity of these puzzles to allow the average time to complete one to be about 10 minutes. During this time all the transaction for bitcoin are compiled where they are signaled to the network as part of the protocol, but they are 'chained' into the permanent blockchain record until the puzzle is solved and the lucky computer gets the honor.  In Ethereum, this is shortened to an average of about 15 seconds and the reward is five ethereum tokens.

The hardware required to do this is very different. Bitcoin uses a process that does not require much memory and dedicated processors have been built to maximize the calculations possible. The combined processing power for the bitcoin network is now about 40,000 times the top 500 super computers of the world combined. But most of the mining now comes from China, with the cheapest hardware and subsidized electricity. This has caused a dangerous centralization.

Ethereum learned from bitcoin problems and built the mathematical cryptographic puzzle formula in a way that it requires a LOT of memory so calculations have to stack and be used in loops. This makes all the hardware built for bitcoin useless for ethereum. The did this so it would be very expensive to build dedicated hardware to run ethereum miners and thus 'hopefully' keep everyday-people competitive. There are Ethereum pools that regular people can point there hardware to share in the risk\reward similar to how people pool money for lotteries. The only hardware necessary is a very good graphics card with a lot of graphics memory. I am currently mining ethereum using the AMD 290x video card.  I'm connected to the etheruem pool here: http://ethpool.org/

There are at least  a dozen different pools around the world that people can join. They don't need to sign up - only have an ethereum wallet (which you can create on-line instantly here: https://ethereumwallet.com/

With a small free mining program, it's as simple as running a little command and include your wallet address and it goes to work. When it's your turn for the reward - they send it directly to your wallet. This means that ethereum miners remain anonymous.  To give you an idea of how profitable (or not) this is currently. I run two computers - each with their own video card and I'm the 'lucky one' in this pool averaging about one block every 4 days or so.  So I average about 1.25 ethereum tokens per day.  At the current price  -this is about $15 per day. This pool is nice that it shows you how well your miners are doing by the hour and estimates your earnings monthly based on difficulty\competition and current price. At this moment, it is predicting a monthly revenue of $385. I'm not sure, but I believe they are discounting that estimate to account for your electricity cost. 

I haven't tried other pools so I can't give an accurate comparison but this has been easy and reliable. The estimate when I first started a few weeks ago was about $200 per month but the prices has went far more than double, but that attracts more people into the mining business and the difficulty goes up with that competition. I won't be quitting my day job to be an ethereum miner.

But, this is where it gets interesting.  Ethereum mining will stop this year as they switch to a different kind of network integrity system called "Proof of stake". This new method won't require expensive processors or graphic cards, but it will require somebody with 'a lot' of ethereum to show they have a stake in the success of the network. The core developers haven't publicly told how much it will take to qualify to claim a 'stake'.  To start this process, there will be a world-wide group chosen to 'put up' a certain amount of their own ether to be able to qualify for this role. If they try to cheat the system - they will loose their staked tokens. This gives incentives to play by the rules. For their trouble, they will be paid a fixed amount of ethereum. The inflation rate will be targeted to match that of new gold discovery...around 1 to 2 percent per year - programmed into the protocol. Once this process is bootstrapped, the protocol rules will determine the most efficient candidates that qualify to run these processor nodes from that point forward.

Ethereum is the only blockchain that I know of that is planning on switching their network consensus method. This in line with one of the main principal values of the network which is to make it un-censorable. We can't have truth if the truth can be censored. Censorship is only possible if there is centralization of power. The entire network is built to avoid and resist centralization.

 

 

If anybody wants to open up a kryptokit ethereum wallet, I'll be generous to send you "a small' bit of ether so you can play with it. You just need to post your ethereum wallet address to this post and watch for it to come in.

https://ethereumwallet.com/

When you set it up, you'll give it a password - then you must bookmark or copy that URL as it will create a unique wallet and URL for only you.  It doesn't ask for name, address, ID or anything - so you can then access that wallet from any device in the world- as long as you remember your password and have that unique URL. You can create as many as you like to play with it.  Until you know what you are doing - only play with small amounts (something less than a dollar).

That should get you started.

 

 

 

 

 

 

 

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
asymmetric encryption, quantum computing

So I've done a bit of reading on quantum computing and its application to machine learning.  They're pretty cool.  On the side, I noticed that a quantum computer will have a much easier time factoring those large prime numbers that assymetric encryption requires to keep everything safe.

In other words, if I have a quantum computer and your public key, I can derive your all-important private key relatively rapidly because existing PK crypto is too easy for the quantum computer to break.

Symmetric encryption is still pretty safe, but the public/private key cryptography (on which pretty much all internet commerce is based these days) will be toast, according to what I read.  Every message previously sent will be decipherable.

Of course everything else that depends on Public/Private keys will also be vulnerable, so basically all internet commerce encryption to be redone if this occurs, but if this blockchain mechanism has a privacy component that depends on public/private keys, that's bad, because the privacy component will be lost.

My sense: don't send messages encrypted by public/private key encryption that you can't handle possibly being revealed at some later date in the future.  If you have such messages you want to keep private "forever", you'd better use symmetric key encryption.  That, or use PK crypto that uses quantum-resistant algorithms.

Not sure if and/or how this PK crypto vulnerability might apply to this new technology or the blockchain mechanism itself; I haven't studied it in any detail at all.

https://www.schneier.com/blog/archives/2015/08/nsa_plans_for_a.html

Unlike most personal and corporate applications, the NSA routinely deals with information it wants kept secret for decades. Even so, we should all follow the NSA's lead and transition our own systems to quantum-resistant algorithms over the next decade or so -- possibly even sooner.

EDITED TO ADD: Seems that I need to be clearer: I do not stand by my 30-40-year prediction. The NSA is acting like practical quantum computers will exist long before then, and I am deferring to their expertise.

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Online)
Joined: Jun 25 2014
Posts: 916
Dave, calm down about quantum computing.

Dave, quantum computing isn't the only computer out there. Read up on physical computers.

No, even better, make one.

take a board and pound a bunch of nails in it. these nails represent cities on a map. Then make yourself a solution of Joy detergent and water bubble mix. Dip the board into the soap, draw it out, and you see a map of how your telecom should most cheaply wire up the cities.

Of course, that model doesn't include incentives, sales, kickbacks. Either You'll have to figure out a modification of your physical computer to handle the brave new world, or you'll have to just take that information into account.

The key takeaway here is that the hardest part is figuring out how to make the physical computer or quantum computer match the actual problem you want to solve.

Get a really good model, and your quantum computer solves it in one clock cycle.

So back to the public key / private key. If I were with the NSA, I would long ago have mnde a physical computer based on difraction and the single slit experiment. And I would let the bright fringes tell me where to search for the solution first.

Or if I were into bitcoin mining, I'd make a physical computer to tell me where to look for my blockchains.

A quantum computer is no different.

oh, and BTW... I rather suspect that a physical computer based on single-slit diffraction IS a quantum computer.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
and so the takeaway is...

MR-

So I read your email twice, and I'm still looking for the money shot.

Let me try again.

Are you saying

a) Quantum Computing isn't a threat to PK Crypto and that I should calm down, and that Bruce Schneier and the NSA are just confused?  Or,

b) it IS a threat to PK crypto, that the NSA (probably) already has such a computer in operation by constructing something from nails and some soap (and that presumably, everyone else under the sun will have one relatively soon, given the payoff for getting one working is basically the keys to the kingdom, and that nails and soap are pretty cheap), but for some inexplicable reason, you counsel me to remain calm anyway and ignore the existential threat to both commerce and privacy?

See, I got the calm down part.  I'm just not sure why I should remain calm.

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Etherum's built in quantum computer resistance

As these digital currencies are build upon the backbone of cryptography the world's best cryptographers are heavily involved in this new science. The invention of the blockchain is their new playground and reading forum posts from several of them that spend their time on the various crypto-forums they are quite cavalier about the time and effort it would take to make it quantum proof. They seem doubtful there is a workable Quantum computer that poses a threat in the physical world  any time soon but scoff that it would be difficult to guard against using one-way functions. (Lamport Signatures)

I attempted to post an answer to this question last night an included links to youtube where the founder gave a presentation for it that was filmed. The Peak Prosperity moderators likely must review any links posted to outside sources to verify they don't point somewhere bad. So my full post reply may be in queue waiting for review. You can do youtube search for "quantum" and the founder of ethereum's name, Vitalik Buterin, and you will see several references.

Ethereum is currently in beta called (Frontier). In Mid March they upgrade to production version of the operating system "Homestead".  Later this year, in the fall, they are scheduling the 3rd release called "Serenity" This is the point where they end the "proof of work" mining. In this release they address the change in standard transaction to include the 'quantum proof' signatures.  I've copied one of the relevant conversations about it.  most of the post is very technical and goes into code samples but I've copied and pasted the summary: I can send you the link to the full forum entry in a private message that won't be censored if you like.

 

Rationale

This allows for a large increase in generality, particularly in a few areas:

  1. Cryptographic algorithms used to secure accounts (we could reasonably say that Ethereum is quantum-safe, as one is perfectly free to secure one's account with Lamport signatures). The nonce-incrementing approach is now also open to revision on the part of account holders, allowing for experimentation in k-parallelizable nonce techniques, UTXO schemes, etc.
  2. Moving ether up a level of abstraction, with the particular benefit of allowing ether and sub-tokens to be treated similarly by contracts
  3. Reducing the level of indirection required for custom-policy accounts such as multisigs

It also substantially simplifies and purifies the underlying Ethereum protocol, reducing the minimal consensus implementation complexity.

Implementation

Coming soon.

 

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Inflation rate of Ethereum

I mentioned the target of 1 -2 % for new coins entering the system each year. This in effect will likely keep the amount of coins in circulation about the same as we can logically expect that because these tokens are cryptographically password (private key) protected - there are likely tol be many instances were people loose their keys as such happens in life.  People might die and not tell their survivors where to find the keys, for example.

Without the keys one is unable to transfer the value and all transactions that had been conducted using the token are frozen in time - it's history still available for inspection on the blockchain for eternity.

 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
Thank you mrees (and Dave)

for the excellent discussion.  It sounds like Ethereum will be a deflation-biased currency, like Bitcoin.. i.e. that as it gains popularity, the value of a single unit can simply increase based on the market (supply vs demand) to adjust, and that this adjustment will likely favor the saver, i.e. the holder of the Ethereum.. as it should be.  

I am not sure I understand why one has to have Bitcoin first in order to get Ethereum.. is that somehow by design?  

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Online)
Joined: Jun 25 2014
Posts: 916
dave, it's kindof like this.

Chicken Little: "Aaah-! the sky is going to fall!"

Ducky Lucky: “Relax, remember the hailstorm yesterday? It already fell."

Chicken Little: umm... so does that mean that I don't have to worry?

Ducky Lucky: "No, it means that when you see it looking like stormclouds, you come in. You don't want a second egg on your head, do you?"

What I am saying, Dave, is that the cryptography is probably already breakable. I don't think it requires quantum computers--physical computers can do the job, and I rather suspect that someone with your skills could actually hack one. If someone with your skills can, then others can too. So you limit your exposure. I, for one, wouldn't waste too much time on crypto currencies. Want to play? that's fine: it's 100% bubble and no substance, kindof like a not-yet-illegal ponzi chain letter. But if you want to play, then play.

Or... spend the time to understand the mining algorithm, and then see if you can come up with a physical computer to accelerate the search. Ruin the game, and enjoy yourself, and make a profit in the meantime.

For myself, I don't have the time to play. I'll be focusing on family, job, three E's, community, resiliance.

But it does look like it could be a fun game, nonetheless.

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Michael - join this group

If you still doubt the idea of blockchains and crypto currencies, you're exactly the kind of person I want to be part of this group and challenge me with your questions and doubts. We all have our bias's of course and I realize we are more stubborn to change our minds if we've staked our claim of being correct and don't want to 'lose face'.  I get that.  But - everybody I know was critical and doubting of the technology at first until they make and effort to understand it.

I predict it won't take long of teaching you before you realize why this is important and a paradigm shift rather than a fad.  As I've given presentations I've had hundreds request I teach courses and I'm using this forum and group to create my material and need hard questions from my audience.  You might find it interesting and fun to try and stump me. I might also learn from you about things I might not have thought about.

Please consider joining the group.

 

Thanks!

 

Edwardelinski's picture
Edwardelinski
Status: Gold Member (Offline)
Joined: Dec 23 2012
Posts: 338
mrees999

I won't comment on what I have yet to understand but i just finished reading an article by Simon Johnson that might interest you.Is Blockchain the beginning of the end for megabanks? Johnson said,"Blockchain technology has the potential to reduce substantually,or even eliminate,the value of being a trusted intermediary such as a large bank. The article was in the Peteterson Institute for International Economics.If you google The End of Big Banks by Simon Johnson it can be found

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Exactly - Blockchains will disrupt ..well.. everything.

Hi Edward, you've just scratched the surface. This group will show you why and how it is a hurricane and most of the world doesn't yet understand they better batten down the hatches - or get under it quickly to profit from it.

We will soon see white-collar jobs  by the tens of millions made obsolete by smart contracts. Many Contract Lawyers, auditors, accountants, stock brokers, and pretty much anybody whose job it is to verify ownership of money, property, and the money trail are likely going to have to find a new line of work. It will be automated and verified in real time everywhere around the world.  Many people don't understand yet that they can be replaced by a few lines of computer code.  Governments now are trying to figure out what they are going to do with displaced workers.

Very, very few people in the world understand this fact yet.  You will be one of the .0000001% to be there first and plan ahead.  Make sure to join this group as I'm going to explain everything and it will be very tough to catch up. I find we need to understand this technology in manageable bursts so as to not get overwhelmed.

Thanks!

 

 

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Why do you need bitcoin to buy ethereum? answer:

Ethereum is traded on exchange markets that are rather small in the big scheme of things. They don't have the millions in capital and size yet to be registered with the Federal and State laws that regulate money flows and property exchanges. Each state has their own banking requirements as well. The CFTC has ruled digital tokens as commodities and claim jurisdiction.  However there is a 'loophole'.  Digital currencies can be bought with other digital currencies as no digital currency has been yet deemed "legal tender".  This just means in a court of law, dollars are legally recognized as payment in full for all debts. British pounds are not legal tender in the US. Digital currencies are also considered a foreign money in this way.National currencies loose their legal status once they cross borders. Bitcoin has no borders but is also not backed by any nation (yet).

So... You can buy bitcoin with dollars through registered agents that have the proper licensing in the US. The biggest are coinbase.com and circle.com and various trusts and funds on Wall Street including the ETF offered by Gemini.

But these bitcoin banks do not yet support any other currency yet.  Ethereum has had only nine months in the open market and just a tiny fraction of market cap and processing throughput so it's had very little liquidity that has built up for bitcoin over seven years. With recent stories about it being used by very big companies and getting market traction, it is exploding currently and it is becoming obvious that it may be the 'bitcoin 2.0' everybody has been expecting for years. So the few licensed operators that can sell bitcoin are likely only now starting to create a roadmap now that they see a market.

On the coinmarketcap.com website you can see the market price and if you click the price link you will see the exchanges where you can buy it. See the poloniex has by far the most market and transactions. This one market is likely responsible for the price. If you wish to trade for ethereum, you must do it with another digital currency and they offer an assortment (Stay away from the others on the list for now). 

You will see that there are other markets and some of the other exchanges do business in dollars or Euros but those are not in the US.  I hear great things about Kraken and they've been around for a while and have a good reputation. They may be a good option if you are not in the US.

If you like, send me a private message and I will send you a referral link to coinbase and you and I will both receive free $10 in bitcoin when you sign up. (this is how PayPal started)

 

 

 

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
PK breakable

So if PK crypto is at this moment trivially breakable, then pretty much every transaction currently being conducted on the internet might as well be done in the clear.

And this is no big deal to you?

Let's just say I find this to be an extraordinary claim all around.

Besides your nails-and-soap example, do you have any evidence of anyone cracking PK crypto using a computer of this nature?

Edwardelinski's picture
Edwardelinski
Status: Gold Member (Offline)
Joined: Dec 23 2012
Posts: 338
Blockchain

They say an expert is someone who has the ability to make the complex simple.I hope you are that guy.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
Thank you mrees...

You have really reinvigorated discussion of Bitcoin, and now the Blockchain in general, here at PP.com.  This is a very important conversation for those of us who think about money.. what it has been, and where it's going.  Many commentators recognized early on (Stephan Molyneux, etc) that it was really the blockchain, and the embodiment of triple-book accounting, that made Bitcoin stand out.  

Thanks also for explanation of why Bitcoin is needed to buy Ethereum.. for now, this will create something of a hurdle to more general interest..  at least I would think.  When do you think Ethereum will evolve to the point of being directly exchangeable for dollars?  BTW, do you know of anyone who will take Gold for Ethereum   : )   

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
That's my goal.

Let me know how I'm doing. I don't think I'll be able to make it so simple that I can get to "Explain it like I'm five'  But maybe I can get to  'explain it to me like I'm 15".  

smiley

 

I've had good reactions from others I've given in presentations but this will be the first time I go into depth. I'll likely cover one topic a week and allow everybody to ask questions about that topic and let it soak in before going onto the next topic. Other courses I've seen from Princeton University did it over 12 lectures so the will be my target length.  They explained it and a University level.

Stanford University is also offering an on-line course that I've signed up for so I'll see how they do in comparison.  I've give everybody here the watered down version for beginners.

 

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Online)
Joined: Jun 25 2014
Posts: 916
It's not that it's no big deal.

First, PK crypto is not trivially breakable.  To say that I think you might be able to do it, is not to say that it's trivial. You have to first model the system you're trying to brute-force.  Then you have to see how your analog (I called it physical, because I don't mean mechanical, and analog doesn't do it justice) physical computer can model its solution.  Then you have to see how much of your problem you can cram into the analog solution, and how to use the output from the analog to get it to the digital computer, to finish the problem off. That isn't trivial.

But for starters, let's look over at wikipedia.

  http://en.wikipedia.org/wiki/Analog_computer

Down at the bottom, you'll see that as late as 2005, they were publicly working on analog computers for the solution of unsolvable systems of ODE/PDEs.  Want to bet that that includes solutions to the elliptic equation (RSA)?

Now, you have to take (for example) the water wave equation, and see how it behaves in a wave tank under diffraction and refraction.  Or maybe you want to use light in a multiple slit experiment.  Or maybe you wnat to use an analog LRC circuit.  So then you have to look at how to make logic gates.  They won't necessarily be and/or/nor/xor.  They'll be something different. You have to see how they actually behave, and then turn around and see what you can do with them, to get a massively parallel partial solution. 

This isn't trivial. 

But I rather suspect you could do it.  And if you could do it, so could someone sponsored by the NSA.

On the other hand, what is the implication for your computer transactions?  The NSA isn't going to want to blow their cover to steal $150000 from your bank account.  They have bigger fish to fry.  So to a huge approximation, your money and your i-commerce are safe.  On the other hand, you need to keep your eye open for developments, not believing that security really is secure.  And if it does break down, as someone over at the black-hat convention demonstrates a little handheld crypto-breaker...  try not to be holding too much of a crypto-cash bag at that time. 

One thing especially to watch out for, is when the number of published articles in a field falls dramatically.  That might indicate that enough of a breakthrough occurred that something became "classified". Take warning:  that is how Sakharov was able to tell the Soviets that the US had a working hydrogen bomb.  He was right: we did.

So aside from that, the same policy for all other investments applies here:  diversify, keep alert to developments, and consider how you want to be allocated.  Put some of your assets in "risky but profitable", and then move the profits out regularly into "safe and secure".

I don't really see a problem. 

Especially for someone like me, with very little to lose financially speaking.

A little for someone like you, but... no different than investing in gold/miners/phys versus stocks/etfs/ etc..

Edwardelinski's picture
Edwardelinski
Status: Gold Member (Offline)
Joined: Dec 23 2012
Posts: 338
Good enough for me.

First question, from the little that i know Blythe Mathers formerly J.P.morgan is the creator of credit default swaps from back in the day.She is heavily involved in the blockchain.I believe Morgan is testing it right now and I think the Australian Stock Exchange is involved as well.Aside from throwing out millions of back office jobs,how will they benefit from the endeavor? Second,will society benefit?

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
ok i think i got it

Here's my first level assessment.

Main vulnerability of blockchain is the underlying hardware and OS of the collection of blockchain nodes.

If you can own the underlying OS that 51% of the nodes are running on, you own blockchain. 

If we actually put real value - as in, hundreds of billions of dollars in value - onto blockchains, the incentive for some organization to construct zero-day bugs into a large enough collection of operating systems becomes perhaps high enough to make this happen.

Either recruit, deploy, or suborn key OS developers at the critical OS manufacturers; Microsoft, Apple, and Open Source Land.  There are other approaches that are hardware related that come to mind too - attacks on the main OS from purpose-built "best of breed" trojan horse peripherals (ethernet controllers, bluetooth chipsets, etc).

Own enough of the boxes = own the blockchain.  You just need to own 51% of the boxes.

Bottom line: blockchain is only as secure as the underlying OS running on the nodes.  And the problem is, law of big numbers doesn't help.  While the OS isn't a complete monoculture, its not a very big culture.  Hosing perhaps three or four OS versions would probably do the trick.

That's the biggest risk I see off the top of my head.

A part of me wonders if China has done this already: come up with really awesome and cheap ethernet chips (or SOC components) that end up making it into every single device made over the next five years.  And then when the Chinese decide they don't like how things are going, the Packet o Death gets sent out...only processed by those not in the ".cn" domain...

And you 9/11 Truthers thought YOU were the nervous nellies!

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Some good points, off on others

As far as the OS is concerned, it doesn't really matter, it's running fine on linux, mac and windows. The communication all has to be verified and agreed on by the others so the underlying OS isn't a factor - the work is done through verifying the blockchain itself which is stored on tens (or hundreds) of thousands of computers.

Owning 51% of the computing power that does the calculations and encryption would buy you the consensus which is the rule that the blockchain follows. But as it is now as powerful as the top 500 supercomputers combined times 40,000, that would be very expensive so you would have to plan ahead because the nework keeps growing faster 10 to 20 percent a month.  Still a large nation state could probably do that. I would imagine the NSA could pull it off if they wanted. But the blockchain has proven to be very useful to them for monitoring. Notice how they caught the two Secret Service agents who busted the dark web market "Silk Road". Everything people do is traceable if they know who owns the private key.  It usually wouldn't take much to figure that out as most people leave that kind of information online where they can monitor it (a word file?). They probably would save their time and horsepower going after the worst bad apples. But notice how they don't raise any objections about bitcoin? That is telling.

 

But what would be their motivation?  As more central banks and governments study it, the more they like it and many plan on offering their own digital currencies based on blockchain. China recently announced they would as they can stop corruption through the transparency.  The UK is also looking into it.

Really more dangerous right now is that because over 50% of the miners are in China, the Chinese leaders could, if they wanted, issue a ruling that all the Chinese miners had to run a new version of the code with new rules that would benefit them. This would spook the market and the price could crash. This would not benefit them and a fork would be created immediately that routed around the Chinese miners and continue on... But the confidence in the market might take years to come back.  It is a real concern.  

But increasingly the miners aren't the only voice. Anybody that is not running a full node, such as phone wallets and light wallets all over the world would reject the new blockchain with different rules. Everybody has to upgrade including non full-chain nodes, markets, banks, exchanges etc.  So we've moved past the miners having the only vote.

Other blockchains don't use the proof of work consensus. The R3 banking consortium is doing several experiments with permission trusted proof of stake validates. The idea is to let in vetted banks that would act as validations and use a shared ledger and instant verification. The ethereum blockchain was the main blockchain technology there. Ethereum allows any company or individual to use the open source operating system to build their own token and create a side-chain.  There is expected to be thousands of these that run in their own eco system buy will need to use and peg to the ethereum token to transfer value between them.

Ethereum itself will be moving to 'proof of stake' too later this year. Where the majority of nodes validating the network have to risk or be 'bonded' with a large quantity of ether tokens that can be taken by the other nodes if any attempt is made to alter the consensus record.

Much more to come on that.

 

 

 

 

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Online)
Joined: Jun 25 2014
Posts: 916
Here's the pseudocode

Jumping around, it looks like the Bitcoin hash basis is the SHA-2 (256) .

https://en.wikipedia.org/wiki/SHA-2#Cryptanalysis_and_validation

There is pseudocode that shows how the hash works.

Suppose I wanted to build an analog computer based on water wave dynamics.

If I were to design my gates with bidirectional holographic principles, then in theory I could set the input and output values I wanted, and through interference read the required values you didn't know. Those values then would tell you what to set your counter to

So then, what would it take? Looking at the pseudocode, one would have to develop an analog physical gate for: add/adc, And, XOR, Rot, ASL.

The ASL and ROT are trivial. If you array your bits in a circle, then just reorienting your zero angle solves the ROT. I suspect that the ADD/ADC is also easy. XOR is not likely to be trivial, but if you follow the gate construction of XOR in logical design (itself a trivial process), it may be possible to design an XOR analog gate.

The thing to do woud be to develop each gate, then test that it worked both forwards and backwards, and then work it together with other gates to mimic each phase of the SHA-2 (256) hash.

BTW... MRees999 is taking about as sensible an attitude to this as I would think can be. Yes, there are valid security concerns, and he is aware that the thing can be broken. But no, he isn't expecting the breakage to exceed cost-benefit limits.

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
gold for ethereum...no

There are many places to buy gold with bitcoin. Providence for example. Hardly anyone knows what ethereum is yet. You folks are now on the inside. This is where the future multimillionaires are made if it works out and us as revolutionary as I think. I am not an investment advisor so I'm just giving background education for you to make your own desisions.

I think most of us can see what is going in with the current banking system and its future... blockchains may be the plan b nobody saw coming. Which history repeatidly shows is exactly how paradigm shifts happen.

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
gold for ethereum...no

There are many places to buy gold with bitcoin. Providence for example. Hardly anyone knows what ethereum is yet. You folks are now on the inside. This is where the future multimillionaires are made if it works out and us as revolutionary as I think. I am not an investment advisor so I'm just giving background education for you to make your own desisions.

I think most of us can see what is going in with the current banking system and its future... blockchains may be the plan b nobody saw coming. Which history repeatidly shows is exactly how paradigm shifts happen.

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Why banks are forced to use the blockchain.

The blockchain will have the power to verify all trades in securities, insurance, property, money, debt etc to be verified in real time.  It currently takes 3 to 5 business days for most of these kinds of trades to finalize. They see the writing on the wall. The blockchain will not be un-invented.  The smart banks would rather be the Nefflix, rather than the Blockbuster.

They understand it's "adapt or die". So it didn't take them long to go from laughing at it and calling it a ponzi scheme in 2013 to rushing to be there first in 2016.  That's the nature of this hurricane. Massive paradigm shifts can sweep the world very quickly.

Masters - did create the credit default swap or as Warren Buffet called them "Financial Weapons of Mass Destruction" because of the fact it became practically impossible to know who really owned them as they were collaterized and traunched repeatedly.  Masters had to be one of the first to be thinking - "what went wrong and how could it have been fixed"?

The blockchain is about tokens. These are considered digital property and identifiable down the 100,000,000 units in the case of bitcoin. Each of those sub pieces can be identified, time-stamped and have their own unique key that represents ownership.  If there was a token created for each property - the issue of who owned each property it could be found in microseconds. Perhaps the meltdown of 2008 might not have happened as there was a run on the banks and nobody trusted each other. A public  blockchain could  create transparency which creates trust. 

The problem is that the big banks want their own version of a blockchain that requires permission. So that also means it will be private. Privacy can also mean selected permission for who gets to audit it (who gets to know who owns which keys)? I see a power struggle that might develop and it becomes political for which of the banks maintains the powerbases to make these calls. They won't want to share all their data with their competitors so they have to discover how to keep private data and public transperency at the same time.  One thing is for certain - the nature of banking is going to radically change. The nature of pooled lending using the blockchain and automated payouts with smart contracts can further erode the need for a public bank. This frightens them.

It will be interesting to see how this develops. Some think it is like AOL or CompuServe or even Microsoft's MSN which was a private closed network at first. They tried to build their own private Internet to compete with the public internet, but they were walled gardens. The open internet and the World Wide Web consortium didn't require permission to innovate. Innovation and the best and fastest moving technology went to the permissionless route of the environment of the open Internet and AOL and CompuServe languished. All the exciting new applications and inventions from the internet happened in the open source.  

It's good to be where you are and can put the proper context into what happens next.  The next few months could be very interesting. Consider getting some blockchain tokens and some popcorn to see what happens next. 

 

 

 

 

Edwardelinski's picture
Edwardelinski
Status: Gold Member (Offline)
Joined: Dec 23 2012
Posts: 338
Terrific stuff mress999

You have it covered from the simple to the complex.The Institutional Investor ran a few pieces on the subject last week.The CEO of Depository Trust and Clearing weighed in.Looks like it may be hard to separate fact from fiction.When profits are threatened,all bets are off.Thank you.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
os vulnerability

mrees-

Value of ownership of the OS for the 51% of nodes meant they could add apparently valid transactions to their own local blockchain if they wanted to, and if enough nodes agreed, the item would indeed be valid.  "Mr Rees, I just transferred all your coins to Robert Mugabe's bitcoin wallet."

Practically speaking, of course, this would be sorted out, but if the goal was to more or less drive a stake into the heart of blockchain technology, it wouldn't be particularly hard to do.  And if this "virus" program injected different transactions into each of the block chains being submitted, there would be total chaos.

Motivation?  Well let's imagine there was a competing technology, say developed by a central bank who wanted to maintain the monopoly on money creation (and/or the value of banks or other official entities as intermediaries).  They're a pretty jealous bunch.  Doing it by stealth is probably more effective than simply outlawing it - and put the blame on chinese hackers or russian mafia, etc.

This blockchain stuff threatens the status quo.  It also depends on the security of just a few operating systems that we know are vulnerable to ownership by the national security apparatus of the various nations.

It only takes one zero day bug per OS to drop something like this into place.  Couple-million dollars and you're good.  Don't even need root, all you need is permission to inject new transactions into the "valid transaction stream" and you can impose your will internationally.

Heck, it might even be worthwhile to do this for someone who just happened to have a large short position on bitcoin.  They have ETFs now, right?  Call it a few million bucks for a couple of zero day bugs, some clever engineers, and - think a trader might be able to make 100 million from bitcoin going to $20 after massive blockchain chaos?

I'm really not a nay-sayer, but I spent a fair amount of time trying to visualize how to secure software running on a general purpose operating system.  I concluded that without hardware assist, you were only as secure as your OS.  And since we know for a fact they aren't secure...

Passing around songs on Napster-equivalents is all well and good because the value is low enough that nobody cares to attack them.  But now we're talking about real money, and the more realer the money gets, the juicier the target becomes.  And Ma & Pa Kettle are the ones engaged in firewalling and securing these nodes...

You can't make a PIN pad out of a general purpose computing device.  Not and keep that PIN secure.  And pretending you can do this by having a collection of insecure general purpose computers voting on what they all think the PIN should be only makes the attack somewhat more difficult.

If your only remaining defense is, "well gosh nobody has a motive"...back in the early days of the Internet, there was no spam, because all the nodes were known to one another, and the answer to spam was simple: phone up your friend, who was the sysadmin at the offending site, and have the account shut down.   Result: no spam protection built into the protocol.  Most importantly, nobody could imagine anyone could make money from spam - there was no motive.

The problem is the OS monoculture, the market for zero-day bugs, and the lack of a hardware assist.

Of course if you have hardware assist, problem goes away.  Assuming you trust the hardware vendor.  But that's the approach the industry took for PIN pads.  It was "good enough".

And I suppose if the nodes were more securely/professionally maintained, that would help some too.

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Sorry Dave but you're no subject matter expert on security.

WIth respect, it sounds as if you still don't have the a complete understanding for how blockchains work it is becoming immediately clear.

When you tell me about trading and markets and that with what you have a seemly good background I take your advice and would defer to you. But when it comes to security and the ability to hack the blockchain, I will put weight behind the world most renowned security experts. 

Dan Kaminsky has the international and respected credentials as perhaps the most respected security and virus researcher in the world.

Here are is credentials:

https://en.wikipedia.org/wiki/Dan_Kaminsky

Here is his view on the blockchain:

http://www.businessinsider.com/dan-kaminsky-highlights-flaws-bitcoin-2013-4

The name of the article in case you choose not to follow it is:

"I tried to hack bitcoin and failed" which was written in "Business Insider" but copied by several news organizations.

The problem quickly points to your lack of understanding between bitcoin wallets and exchanges that store private keys CAN be hacked. But the blockchain itself build cryptographic hashes of each block - layers ontop of 256 bit hashes of the previous block. You seem to continue to make the assertion that 256 bit encryption is today hackable but have not shown proof of this. In fact, bitcoin uses the exact same encryption as all the major banks and the US military. Will trillions of money at stake in the world banking system, there are much bigger fish to fry and bitcoin would be the least of your worries. 

As you offer no proof you are exercising the logical fallacy "Appeal to the stone":

Appeal to the stone (argumentum ad lapidem) – dismissing a claim as absurd without demonstrating proof for its absurdity

Also in this same arguement you demonstrated:

Argument from (personal) incredulity (divine fallacy, appeal to common sense) – I cannot imagine how this could be true, therefore it must be false.

and

Argument from silence (argumentum ex silentio) – where the conclusion is based on the absence of evidence, rather than the existence of evidence

and

Essentially you are saying everything can be hacked: you used:

  • Circular reasoning (circulus in demonstrando) – when the reasoner begins with what he or she is trying to end up with; sometimes called assuming the conclusion.

Because you've seen wallets and exchanges hacked, you associate that with the bitcoin protocol and blockchain you suffered from :

Correlation proves causation (post hoc ergo propter hoc) – a faulty assumption that correlation between two variables implies that one causes the other

I could go on but you get the idea. Objective observation from reasonable people likely indicates your reasoning was faulty on multiple levels.

If you don't mind - as you seem to have differing opinions - so we can compare the credentials of which one of you to believe. Please give us your credentials for computer security so that we can weigh the usefulness or credence of your opposing views.

Each coin must have a historical root based on Merkel tree. You can't rewrite history that had a beginning and through each transaction created a linked history. Any break in that change will be immediately rejected. It sounds like you are attempting to build a straw-man defense which is a logical fallacy.

I'll make it easier for you to verify you aren't using more logical fallacies before you being typing by giving you a website with a large list of common logical fallacies here:

 

https://en.wikipedia.org/wiki/List_of_fallacies

 

Many people use logical fallacies and believe others won't detect it. I've studied logical fallacies for years so I will likely catch you in each one you attempt if you are going to try. If you are going to debate the matter and use critical thinking that is great that allows me to weed out the common criticisms but as you make these assertions double check the list of logical fallacies because I will call you out and you might lose your credibility.

I appreciate your input and look forward to hearing more from you as we discuss this.

 

 

 

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Sorry Dave but you're no subject matter expert on security.

WIth respect, it sounds as if you still don't have the a complete understanding for how blockchains work it is becoming immediately clear.

When you tell me about trading and markets and that with what you have a seemly good background I take your advice and would defer to you. But when it comes to security and the ability to hack the blockchain, I will put weight behind the world most renowned security experts. 

Dan Kaminsky has the international and respected credentials as perhaps the most respected security and virus researcher in the world.

Here are is credentials:

https://en.wikipedia.org/wiki/Dan_Kaminsky

Here is his view on the blockchain:

http://www.businessinsider.com/dan-kaminsky-highlights-flaws-bitcoin-2013-4

The name of the article in case you choose not to follow it is:

"I tried to hack bitcoin and failed" which was written in "Business Insider" but copied by several news organizations.

The problem quickly points to your lack of understanding between bitcoin wallets and exchanges that store private keys CAN be hacked. But the blockchain itself build cryptographic hashes of each block - layers ontop of 256 bit hashes of the previous block. You seem to continue to make the assertion that 256 bit encryption is today hackable but have not shown proof of this. In fact, bitcoin uses the exact same encryption as all the major banks and the US military. Will trillions of money at stake in the world banking system, there are much bigger fish to fry and bitcoin would be the least of your worries. 

As you offer no proof you are exercising the logical fallacy "Appeal to the stone":

Appeal to the stone (argumentum ad lapidem) – dismissing a claim as absurd without demonstrating proof for its absurdity

Also in this same arguement you demonstrated:

Argument from (personal) incredulity (divine fallacy, appeal to common sense) – I cannot imagine how this could be true, therefore it must be false.

and

Argument from silence (argumentum ex silentio) – where the conclusion is based on the absence of evidence, rather than the existence of evidence

and

Essentially you are saying everything can be hacked: you used:

  • Circular reasoning (circulus in demonstrando) – when the reasoner begins with what he or she is trying to end up with; sometimes called assuming the conclusion.

Because you've seen wallets and exchanges hacked, you associate that with the bitcoin protocol and blockchain you suffered from :

Correlation proves causation (post hoc ergo propter hoc) – a faulty assumption that correlation between two variables implies that one causes the other

I could go on but you get the idea. Objective observation from reasonable people likely indicates your reasoning was faulty on multiple levels.

If you don't mind - as you seem to have differing opinions - so we can compare the credentials of which one of you to believe. Please give us your credentials for computer security so that we can weigh the usefulness or credence of your opposing views.

Each coin must have a historical root based on Merkel tree. You can't rewrite history that had a beginning and through each transaction created a linked history. Any break in that change will be immediately rejected. It sounds like you are attempting to build a straw-man defense which is a logical fallacy.

Straw man fallacy – an argument based on misrepresentation of an opponent's position

 

I'll make it easier for you to verify you aren't using more logical fallacies before you being typing by giving you a website with a large list of common logical fallacies here:

 

https://en.wikipedia.org/wiki/List_of_fallacies

 

Many people use logical fallacies and believe others won't detect it. I've studied logical fallacies for years so I will likely catch you in each one you attempt if you are going to try. If you are going to debate the matter and use critical thinking that is great that allows me to weed out the common criticisms but as you make these assertions double check the list of logical fallacies because I will call you out and you might lose your credibility.

I appreciate your input and look forward to hearing more from you as we discuss this.

 

 

 

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Where to sell gold and silver for bitcoin

After looking into the question of if you can sell gold or silver directly for bitcoin - I actually found a place that will do it. Veldt Gold.

 

There may be others but this is the first I've heard of it.  I've not used the service so I cant vouch for them. 

https://veldtgold.com/sell-us/

 

If anybody else has experience with them, that would be good to know.

 

skipr's picture
skipr
Status: Silver Member (Offline)
Joined: Jan 9 2016
Posts: 167
ethereum wallet and mining basics

I'm still in the learning phase with bitcoin and hopefully ethereum soon.  The bitcoin wallets I have seen all get into specifics on how to control your private keys.  I have an encrypted drive on my laptop that I back up the wallets and keys to.  I have even bought a Trezor.  So far I haven't seen any ethereum wallets that have the same level of control.  Am I missing something?  I have about a dozen bitcoins that I want to move over to ethereum.  

I'm also interested in mining.  I have a 64 core computer with a Quadro K6000 GPU.  I use it for some heavy duty engineering analysis (ANSYS FEMs etc).  Some of those runs can take a couple of days to finish.  I can only access 8 cores during those runs so I have 56 cores and a GPU free for mining.  If I'm going to burn up all of that electricity I might as well do some ethereum mining too.  I use Win 2012 Server since some other software I use is only written for Windows.  How do I set up an ethereum miner on it?  I also need a stable system.  Is there a possibility of gumming it up with this mining software?

One other software package I use can access all 64 cores, so mining when I'm using it is probably not worthwhile.  Then again that GPU is still idle.  Would it be worth mining with only that GPU?

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 431
Answers to SkipR

Hi SkipR sorry for the delay in my response.

 

The biggest component in mining is the GPU. It won't matter how many cpu cores you have it won't utilize them nearly as much as one AMD GPU that run thousands of mini CPU's on chip running in parallel - Specifically the AMD 290x or the 390x. Not even the best Nvidia GPUs can keep up.  Even then you must have economies of scale so you would need at least three cards. This requires a specialized motherboard with three pci-e video cards slots - and enough power to feed them all - which is about 1200 watt.

Even then - at the current rate you'll only earn about $200 per month profit at the current cost of etherum. This will only cover the cost of one of the video cards let alone the power\mother board. You profit margin decreases quickly as big commercial miners get on board. Generally you have less than six months to recoup all of your investment money as the "sharks circle" - You might be able to extend that out by mining for the coin "Dash". That will also require those video cards and is growing much more slowly and isn't as popular as Ethereum.  I don't recommend mining unless you really want to get into the nuts and bolts of digital currencies. Unless one already has the video cards that aren't being used 100% for something else (playing video games).  Although you could re-purpose those video cards for the new high-end virtual reality machines from Oculus and HTC\Vive beginning this summer.

For the wallet, you want to go to ethereum.org and download the MIST wallet. This will run on your PC and will allow you to set up contracts and store other derivative coins tokens for businesses like "The DAO" which is a crowdfunded project that runs on the ethereum network and act soft of like voting shares in a corporation and will provide cash flow. The DAO acts like a venture company that works only for new types of businesses that live only in 'the cloud' without borders so it's very new concept for the next 50 years.  The DAO tokens are expected to go up in value 1000% this year so I think it's a good investment.  However it's currently a little confusing as you have to own ethereum and exchange them for DAO tokens. Others will follow.  This is much better cost-effective way than mining and you get them much faster. The cost of the DAO goes up significantly beginning next week and they will only sale for three more weeks in total so you have to move fast.  A new Wall Street company "Gemini" are going to begin to sell ethereum direct to those that have an account with them. There are others that require you own bitcoin to exchange for ethereum - that you then exchange for DAO. That's confusing enough that only "insiders" are likely to understand enough to profit the quickest.  The crowd fund is similar to how ethereum itself got started but it's even bigger.

Getting help from the community of Ethereum might be your quickest way to get up to speed - check out reddit.com/r/ethereum and read the forum \ ask questions etc. Then if you want to get ahead of the curve check out https://ethereum.org/dao

Ethereum acts like "Oil" for the network needed to transfer value between companies that build on its network. (I like to think of it as a body - and ethereum is the circulatory system  - its 'blood cells' or the currency token "eth"). Then in the body you have specialized organs that perform functions (heart, lungs, liver etc). The are Decentralized Autonomous Organizations or DAO. There will be a lot in this 'body' of the future in computing. These organizations can be set up by people and companies using contracts and they can pay out the profits to the investors that own the tokens for them and even if the physical company goes out of business - the autonomous contracts will live on if people find them useful and the contracts will pay out (potentially infinitely)  For example - say somebody programs a "March Madness" contract that people can access to make their predictions for who will win it all. This could live on the network and be available world-wide and people will trust it year to year as it will clear out the previous year winner once it has paid out based on pre-programmed rules. There is nobody to trust as it is a computer program that can't be changed. The program would be written in open-source language so anybody can read it and verify the math to make sure it is fair. 

But that contract could live as a 'company' in the future that requires no up-keep and could catch on and be "The" March Madness DAO. It would have a nice easy interface and perhaps show expected odds.  Then after each game it could check the results of each game by accessing an "Oracle" which is a 'proof of truth' company that records "EVERYTHING" current state and stores it in an immutable database "See Factum" for one example. The preprogrammed rules might be set so each correct game prediction pays a certain percentage until each game is complete. For those 'owners' of the crowd-source tokens that funded the original project - a certain profit fee would be paid back to them for their investment each year. Thus those ownership tokens will have real value and can be traded just like company stock. This might be how all companies\banks\financial investment firms work in this century and this is just the beginning when you think of all the kinds of future companies will utilize this efficiency that requires no humans to keep it running and skim profit and fairness is guaranteed be the "Smart Contract" that makes it work year after year. 

*By the way - I don't know if anybody is working on a project like this yet*.

Things like this are why the smartest people on earth are getting excited and the first (The DAO) might become the Goldman Sachs \ JP Morgan of the next century).

 

 

 

 

 

 

 

 

 

 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments