Can You Make Money Bitcoin Mining?

Updated on January 6, 2017
aa lite profile image

aa lite is a self-confessed geek and gamer fanatic who has put together her own gaming rigs for the past 15 years.

The bitcoin is a cryptocurrency, first suggested by Satoshi Nakamoto.  Will this be how we pay for everything in the future?
The bitcoin is a cryptocurrency, first suggested by Satoshi Nakamoto. Will this be how we pay for everything in the future? | Source

What is Bitcoin Mining?

Lately I've been investigating bitcoin mining as a source of passive income. I've decided that this is very different from trying to make money by publishing online content. To have a chance of earning anything at all, it requires a fairly big initial investment.

Most people are now familiar with bitcoins, even if they've never used them, as the new virtual currency. It is the first currency to be controlled by a cryptographic protocol rather than a central bank. Basically you pay for something by sending BTC from a virtual wallet in your computer to the merchant's computer.

So how can you make money from this?. Well, theoretically, your computer can become a node in the network that processes and verifies the transactions. With every blockchain that is processed a new block of 25 coins, worth around $2500 at today's prices, is created. This is known as bitcoin mining.

Update Jan. 2014. The mining difficulty has increased 50x since I wrote this article. Today it stands at 1.4 billion. This means that if my pool found a block once a day in July, it now takes over a month. This makes mining with anything but the most powerful ASICs completely pointless.

The price of BTC has skyrocketed (close to $1000 today), however it doesn't quite make up for the rise in difficulty. According to the profit calculator mining at 5 GH/s will get you $1.50 a day. But check for yourself because it can change dramatically.

If you want to get into crypto currencies, you might want to consider Litecoin rather than Bitcoins. Find out all about it here.

With the right hardware bitcoin mining is pretty much like having a money printing machine, except that it is perfectly legit.
With the right hardware bitcoin mining is pretty much like having a money printing machine, except that it is perfectly legit. | Source

What You Need to Start Bitcoin Mining

Technically all you need to become a node in the network, and to start printing your own virtual mone,y is a computer with internet access. You can download a free wallet to your computer, one of several free miner programs, and join in.

Sounds great doesn't it? The problem is that the computer power required is phenomenal. If you work by yourself, with only a personal computer, it might be years before you see your first block. For this reason most miners join a pool, where the work and rewards are shared.

In a pool, when a block is solved and new coins created, you will only get a tiny fraction of a coin. But usually several blocks are solved in a day. The person running the pool takes a small percentage as a fee (say 3%), but you get (almost) instant gratification.

One important aspect of mining is that the difficulty of solving the blocks increases with time.

So can you make money bitcoin mining with a personal computer? It does depend on how good your PC is. Strangely enough the processing needed for BTC mining is much better done by a graphics card (GPU), rather than a CPU. So unless you have a gaming computer with a good dedicated graphics card, well you can do it, but you will mine so little that it will hardly make a difference.

There are two GPU manufacturers that provide the chips for all graphic cards, Ati Radeon and Nvidia. It turns out that Radeon cards are much better at bit mining than Nvidia cards. Something to do with the cards' architecture that doesn't really make a difference in rendering graphics in games, but makes a huge difference in mining.

My Nvidia GTX 660 Ti video card.  Great for gaming, rubbish at mining BTC.
My Nvidia GTX 660 Ti video card. Great for gaming, rubbish at mining BTC. | Source

My Experience Mining with an Nvidia GPU

I've decided to try bitcoin mining with my gaming PC, which unfortunately has an Nvidia card (GTX 660Ti) if you are interested. The efficiency of your setup is expressed in megahash per second (Mh/s). My card appears to work at around 100 Mh/s.

I've had some teething problems with the client (I keep being thrown out of the pool) so I have not mined for a full 24 hours, but I've managed to generate 0.002BTC. That is worth about 20 cents. I suspect that a full 24 hours of mining would yield closer to 30 cents.

Also this is very variable, when mining as a pool, which has a collective power of 3000 Gh/s, we sometimes hit the payload in 10 hours, if we are unlucky, and sometimes in less than an hour. Over time it this evens out.

But remember the increased electricity used by heavily using your graphics card full time. Also the wear and tear on a card probably means it will not last as long as it normally would.

It is possible that mining with my setup will lose me money rather than earn it.

You might be able to do 3-5x better with a Radeon card. Even better if your PC has two cards running in crossfire mode. But honestly it hardly seems worth the trouble.

Edit: Jan 2014, it is definitely not worth it now. The difficulty is 50x what it was in the summer!

In the summer this little jalapeño ASIC promised to make lots of coins.  Today it mines 0.002 BTC per day.
In the summer this little jalapeño ASIC promised to make lots of coins. Today it mines 0.002 BTC per day. | Source

The New Mining Hardware, Dedicated ASICs

On the other hand, there is the possiblity of buying an ASIC (application-specific integrated circuit), a piece of electronics, dedicated to bitcoin mining, that you connect to your computer. The smallest of the ones now being produced by Butterfly Labs works at 5Gh/s (That's 500 times better than my card). They are also developing 50 Gh/s ASICs.

According to a new post from the manufacturer, the miners will draw 5W per Gh/s that they hash. For comparison a 42" LCD TV is rated at about 200W. So the 5Gh/s Jalapeno miner will use 0.6 Kilo watt hours per day, while the 50GH/s big boy will use 3 kWh.

If you pay 15 cents for a Kwh, operating the biggest ASIC miner will add about $10 to your monthly electricity bill.

The BTC mining profitability calculatorestimates that you will earn $17 a day with the 5Gh/s Jalapeno ASIC, and $170 with the 50Gh/s ASIC, after factoring in electricity usage. [Edit Nov. 2013: Now the estimate is $3 for a Jalapeño and $30 for the 50Gh/s ASIC.]

They are not cheap, the 50GH/s one comes at $2,500. However, according to the calculator, it would "pay for itself" in 15 days. And then you are basically printing money. The operation requires no more effort than signing in to an exchange once in a while to sell the coins that you've mined.

Edit Jan 2014: It is hardly worth mining with my 5Gh/s Jalapeño now, I reckon I'm making only a bit over a dollar a day (unless the price of BTC goes up even more that is). It is probably as profitable to mine with the 50Gh/s ButterflyLabs single now, as it was with the Jalapeño in the summer (around $15 a day).

See what the 5 Ghash/s Jalapeno looks like

Other ASIC Manufacturers

Incidentally Butterfly Labs are not the only ASIC manufacturers. In fact the other company "Avalon" managed to produce and sell ASICs earlier this year.

However they only sell batches of the miners, and only to people on the waiting list, so if you want to buy from them now, you will not get your device immediately.

There is also the option of getting the little Block Erupter USB ASICS, which do 336 Mh/s. I have 6 of these mining right now, they use little electricity and don't slow down your computer, so are superior to a graphics card.

The Problems with ASICs

Looking at it like this, buying the equipment and becoming a virtual money miner seems like a no-brainer. However, there is a catch, of course there is, otherwise I wouldn't be telling you about this. At the moment you can't just go online and buy these lovely miraculous money making machines.

When Butterfly Labs first got into producing them, they raised the money from pre-orders. People paid up to be the first to get the miners, and the money was used to develop and make them. But of course there were hitches and delays along the way.

The bottom line is that the smallest Jalapenos have just started to be shipped to the people who placed orders months ago. Apparently by now (July 2013), they have caught up with orders paid for at the beginning of November last year.

Technically shipment of the bigger miners has started, but they've been shipping the Singles (50 GH/s) from the first day of pre-orders, 23rd June 2012, the whole months, and with the Little Singles (25Gh/s) they have only reached 24th June pre-orders. I have seen people predicting that orders placed now, will not be fulfilled till next year.

Although one would hope that now that they've started shipping the smaller ones, the path forward will be smoother and they will be able to produce them at a decent rate.

I enjoy mining with my USB Block Erupter ASICS, connected to my computer via a USB hub, but if the difficulty keeps rising, they will not be very useful in a year's time.
I enjoy mining with my USB Block Erupter ASICS, connected to my computer via a USB hub, but if the difficulty keeps rising, they will not be very useful in a year's time. | Source

The ASICs Will Become Less Profitable With Time

This is not just a problem of delaying the fabulous earnings. Remember that the difficulty of mining increases with time. So the supermachine that can get you 1.6 BTC per day now, will produce significantly less in a year's time.

That might seem like an acceptable risk, if you could get your hands on them right now, since they should pay for themselves within a couple of weeks. Unless you are very unlucky and the crypto-currency crashes right after you buy them, you should be ok.

But if you have to part with a large sum of money now, and not start earning for months to come, the risk is obviously much more significant.

Also bitcoin mining cannot go on forever. A limit is set into the system, with the block size being halved every 4 years, so the increase in total currency is limited. In a few year's time there will be far fewer new coins generated than there are now.

The 1 Million Dollar Pizza

In 2010 bitcoins were used by a small number of people, and their value was often negotiated between buyer and seller individually.

One famous case involves the sale of a pizza for 10,000 BTC. At today's exchange rate that is the equivalent to over $1,000,000.

I hope the pizza was worth it!

Will Bitcoins Become a Mainstream Currency, or Will They Disappear?

There is always the inherent risk of dealing with bitcoins, whose price is very volatile. Earlier this year it rose to the insane heights of $260, then in April fell to $50. It seems to have stabilised in the last few weeks at around the $100 mark. Since their supply is strictly limited by the algorithm, it is hoped that if they become used by more people their price will rise.

But it is equally possible that it will fall, or they will become completely worthless in a few months time.

Should bitcoins crash, there will be no IMF rescue, and no meetings of G8 leaders trying to save the currency.

Having said that, there are a lot of investors who are hoarding BTCs counting on their price rising in the future. These people are usually taking much bigger risks than people spending $300-$2500 on an asic. On the other hand, if you want to invest some money in the hope that bitcoins will be worth more in the future, you could just buy coins on an exchange, rather than mining them.

Is it Worth Buying BFL ASICs on eBay?

Now there is a way of getting the Jalapeno, and sometimes even the bigger ASIC faster. Some people who are on the waiting list already, are selling them on eBay.

Or to be more precise, they are selling their place in the queue. You pay the money now (and obviously you pay more than if you bought it straight from Butterfly Labs, but the seller doesn't actually have the miner in his possession yet. They will ship the item as soon as it is shipped to them by the manufacturer.

It does mean, however, that you will get your (virtual) money printing equipment faster than if you place the order with a manufacturer. At least with the Jalapenos now shipping you should not have to wait too long for your order. Probably.

One of the problems of people getting these very efficient miners is that the difficulty level is likely to rise quickly once they join the network, since the protocol is set up to produce a new block of 25 coins about every 10 minutes. This will make BTC mining much less efficient.

On the other hand there is the possibility that as mining using simpler devices becomes far less profitable, people without ASICs are going to stop doing it. Presumably most of the people doing it don't use these expensive and hard to get devices.

There are other risks of buying on eBay. Some offers are apparently fraudulent.

One notable eBay auction involved somebody buying an Avalon ASIC worth $1500 for over $20,000!

So what do you think, is buying an ASIC on ebay and bitcoin mining wise?

See results

Questions & Answers


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      • doubleklm profile image

        doubleklm 2 months ago

        Good article!! I think a combination of both an investment in Bitcoin, plus some mining of bitcoin is a good way to go. I'd only invest money you can afford to part with as crypto is a risky business (see hub You can get started investing at and pick up an extra $10 worth of bitcoin while doing so. Minergate is a simple mining software tool that allows you to do CPU mining, meaning you don't need expensive GPU cards in your machine to get started. You can set up an account and get started mining there using .

        Good luck!!!! You have to be in it to be part of the excitement!!!!

      • profile image

        Mary Smith112 2 months ago

        i think it is easier to just buy the bitcoin.

        you can use your credit card or bank account (will take few days to verify and have funds available) here:

        there you can purchase bitcoin, litecoin, bitcoin cash.

        if you want to buy other alt coins you can transfer from the mentioned coins from coinbase to binance link here:

      • profile image

        fsmedia 3 months ago

        5 Weeks ago I mentioned a way to get free Bitcoin and since then the price shot from $10K a Bitcoin to $19K and now back down to about $13K. I know about 90 people followed my link and advice (you can see it below in the comments) and even in 5 weeks, a few of them managed to grab free Bitcoin AND cash in and make about $10 of profit. You can still grab free Bitcoin and hope for the next big rise in value by grabbing them here:

        but the reality is that you need to get in quickly and grab them fast while the value is low, to allow the value to rise and your free bitcoins to be worth so much more.

        Now everyone is talking about Ripple (XRP) which just before Xmas was worth $0.34 a Ripple, and in less than 2 weeks has shot up to $3 a Ripple. And they reckon it could be worth $300 a Ripple by next Xmas, so obviously it would be ideal to grab as much Ripple as possible now and wait for 12 months to make big profits? But did you know, like Bitcoin, you can get them FREE and right now, when value is low is the ideal time to grab as much as you can before it is too late.

        I just grab free Ripple (XRP) from a site like:

        Might not be worth much today but grab plenty of them this year and wait 2 or 3 years until the value rises and it could be worth hundreds or even thousands.

        Especially as experts are saying that Ripple will actually grow bigger than Bitcoin, especially as Banks are already associated with it and have accepted this little known currency and so with the banks on board (they dislike Bitcoin) it has much greater chance of taking off and raising in high value.

        Okay, it's not going to make you millions like it could by investing in them, but if you want to play around and learn Bitcoin or Ripple without spending real money, it can certainly pay for a holiday in a year or two if it does rise, and if the bubble bursts and it flops...... you lost nothing!

      • profile image

        fsmedia 4 months ago

        There is a very simple way of earning free bitcoin now without doing the Mining yourself.

        You can earn a small fraction of Bitcoin (called Satoshi) every hour by quick sign up at this link:

        You only need a Bitcoin Wallet address to have payments sent, and then click a single button once every hour to receive a few Satoshi (about 50 - 70 Satoshi is worth $0.01 at the moment).

        It rolls a random number on the button press, between 1 - 10,000 and if it lands on 1- 9885 you receive around 20-30 Satoshi but if you land on higher than 9885 you get much bigger payouts, as many as 2,000,000 satoshi.

        I have been doing it for around 4 months now and although it takes around 3 hours (3 random number rolls) to make about 1 cent's worth of Bitcoin, I have been surprised how often you can win bigger amounts by hitting the highest prize numbers (so far I have hit the 9885+ numbers around 7 or 8 times over the past 4 months) AND the most important thing is that when I started the Bitcoin price was around $2,500 a bitcoin, but now it's almost hitting $10,000 a bitcoin, so my overall balance is now worth quadruple what it was 4 months ago, so its a fantastic investment because my balance I have earned is now worth 4 times more than it was 4 months ago.

        I wouldn't say that it is something that will get you rich. But if you work on a computer a lot (it can also be done on an ipad!) then having the page open in a background tab/window and clicking the button every hour it soon racks up around 2-3 cents worth of Bitcoin over 6 - 8 hours, and then that 2-3 cents grows day by day with the rapidly increasing price of Bitcoins.

        Also, there are options to gamble your balance on a simple HI-LOW game, where you bet 1+ Satoshi on whether a dice roll will be low number or high number, and a successful roll wins you double your stake.

        Playing this Hi-Low game I have managed to earn around 500 Satoshi over the course of an hour, so there are chances to earn even more than what you do per hour. Some people are actually managing to earn 2-3 Bitcoins a month just by having a system for the Hi-Low game that works for them, which means they are earning between $10,000 - $20,000 a month, but I have to admit I have not been brave enough to stake more than a couple of Satoshi at a time.

        If you want to sign up, visit this link:

        And like I said, its not a "get rich scheme" but it is a very simple, easy thing to earn a few Satoshi every hour which although may not be a lot of value in itself, seem to be skyrocketing in value the more Bitcoin rises in value. I read somewhere last week that they think 1 Bitcoin could be worth $1M by 2019. If that is true (and it's only a analysts prediction), then 20 Satoshi you earn in 1 hour now, could be worth $30 in 18 months time. And if you have over 100,000 Satoshi like I have got after 4 months of doing this. I could be sat on $150,000 worth of Bitcoin, all for free and just 1 click of a button every hour! So grab some FREE BITCOIN right now. :)

      • profile image

        Yeah 10 months ago

        The pizza is now more than 20 million dollars.

      • yecall profile image

        yecall 2 years ago from California

        I find Bitcoin very interesting and promising. I think also that it is quite hard to understand it, not being a "techie" sort of person at all. I like the idea of its privacy and I do think it will be quite an important currency in the future.

      • moviesreviews profile image

        Billy Taylor 3 years ago from NY

        Well put together article. Whoever paid 10,000 BTC for the pizza must be kicking themselves in the foot lol.

        I hope you and your mining endeavors continue to see a profit.

        I was wondering if you foresee the BTC price to rise in the future? If so, how high do you think? I know the Winklevoss Twins predict upwards of 10,000 - Does it really have a shot?

      • profile image

        ericpfdz 3 years ago

        Nice article!

      • aa lite profile image

        aa lite 4 years ago from London

        Hi f hruz and thanks for reading. I've also seen the amazing price rise recently. The problem is that since I've written this, the difficulty has risen by about 30x. The price has risen roughly 9x. According to the profitability calculator, you can make 0.04 BTC in a day if you have the 50Ghs miner from butterfly labs. Apparently you would make $32 a day with it, which is nothing to laugh at.

        The problem is getting hold of it today. And predicting how much the difficulty will rise in the future. If you get the small Jalapeño miner today, it will make you about $3 a day. So it depends on how much a Jalapeño (5Ghs) would cost you, and also whether you think this high BTC price will hold, and how much the difficulty will rise in the future months. The fact that the price is so high, will get more people into mining.

      • f_hruz profile image

        f_hruz 4 years ago from Toronto, Ontario, Canada

        Last I checked, the price was US$843.34 - how does this change the equation in the cost of mining?

        In any case, thanks so much for presenting all the details on ASIC's and how they are used as part of the cryptic creation and control process ... a complex mathematics / logic dream land.

        I'm sure, it's high time the whole fractional reserve banking system and the US buck as a global reserve currency be removed from the face of the earth ...

      • aa lite profile image

        aa lite 4 years ago from London

        Yep it's definitely not worth it. The difficulty has skyrocketed in the past few weeks because of all the ASICs on the market. I think it grew 10 fold, so if you could mine 0.1Btc a day with an ASiC (for example) you will now mine 0.01Btc a day.

        Last time I looked btc price was rising nicely, but nowhere near as much as the difficulty so the ROI of an Asic would become years rather than months. Should really update the article with this information.

      • profile image

        Andrew 4 years ago

        Any update on your mining so far...?

      • aa lite profile image

        aa lite 4 years ago from London

        Thanks Kathryn. I found bitcoin fascinating, but to be honest the difficulty of mining has jumped so much recently, that I can't imagine it is profitable to get into it right now.

      • Kathryn Stratford profile image

        Kathryn 4 years ago from Manchester, Connecticut

        I must be completely in the dark, because I have never heard of this! Fascinating, but too complicated and risky for me.

        I came here after seeing the interview of you on HubPages' newsletter. You sound interesting.

        Thanks for sharing this, and have a great night.

        ~ Kathryn

      • aa lite profile image

        aa lite 4 years ago from London

        I agree Hollie. I guess the question is whether bitcoin is the best crypto currency we can invent or whether there is something better out there.

      • HollieT profile image

        HollieT 4 years ago from Manchester, United Kingdom

        Going back a few points, I've not read all the comments, but in terms of criminality, we can't ignore the fact that major banks have laundered the proceeds of cocaine on a vast scale. This is not an "alleged" occurrence, it happened. I also think it would be naïve of us to believe that vast and phenomenal sums of money made from all types of trafficking; prostitution, drugs and arms do not some how make their way through our banking "cartels" There is absolutely no way these illicit businesses could prosper and grow otherwise. And then, of course, these "legal" speculators also cause famines, poverty, war (in their greedy attempts to grasp whatever resource they deem profitable) I'm not, of course, condoning any proceeds of criminality which might be laundered through Bitcoin. I'm merely stating that we need to be realistic. If we are comparing the proceeds of illicit acts which have been laundered through Bitcoin to that of those which have been laundered through the "ethical" (?) system, pound for pound, is there really any comparison?

        As for wasting our precious resources, how could we possibly compare the over consumption of electricity for mining bitcoin with the mass manufacture of plastics and all the resources used therein: water, coal, gas and then there's the pollution of our precious air? Perhaps that's a study waiting to happen(not)?

        Bitcoin is unstable (so is fiat currency), bitcoin is used to launder money (so is our global banking system) Our energy supplies our pillaged to mine bitcoin (so is every resource we have to manufacture and produce practically every product we buy)

        The question is, which currency creates the least havoc?

        I'm not completely convinced by bitcoin, but I do believe it has potential- if the speculators don't get there first.

      • aa lite profile image

        aa lite 4 years ago from London

        Thanks for commenting just-about. Until recently I'd vaguely heard about bitcoin, but never really paid attention to it, and certainly didn't know that you could (potentially) make money mining it.

        I also found the whole subject pretty fascinating. I couldn't really put all the information about how the system works in the hub. I strongly recommend reading more on this subject.

        From a practical point of view, a crypto currency is great in many ways. The problem is its great instability, I guess.

      • profile image

        just-about 4 years ago

        You have introduced me to a completely new concept - I had never heard of bitcoins until reading this hub. I'm pretty certain that I've not understood fully how money can be made. However, the idea of a single, worldwide cryptocurrency in the future sounds like a logical development as commerce for most goods and services is becoming borderless. On the other hand, it also sounds a bit sci-fi . . .

        Thank you for getting my brain cells buzzing!

      • SuffolkJason profile image

        SuffolkJason 4 years ago from Ipswich, Suffolk, England, United Kingdom

        I guess all online banks (with the possible exception of bitcoin) are vulnerable to hacking. It happens all too frequently to established banks. They find a way to cover the cost of fraud (LIBOR fixing, PPI mis-selling or ripping-off small businesses).

        I know that Zurker employs pentesters. The advantage that Zurker has is that it controls the Zen, so if somebody can demonstrate that they have been defrauded, then Zurker can just replace the stolen Zen.

        When somebody transfers Zen to your account at Zurker you can, with a few clicks, verify that your account has received them. Similarly if somebody mints a Zen coin, you can "deposit" the coin and check that it's valid.

        When I refer to criminals (I wrote the articles in Zentral but not Preferzen), I don't mean the people using malware. I mean the criminals that use bitcoins to launder money, to trade in drugs and worse.

      • aa lite profile image

        aa lite 4 years ago from London

        Ok I've read the Zen faq. It seems to me that it is "verified" by a central authority rather than cryptography.

        To me it seems like it might lead to a major security problem. As in if the central authority is attacked by hackers. If this hasn't happened yet, it might be because the Zen is simply not important enough.

        The bitcoin protocol is peer to peer. The "ledger" of transactions is on the computer of anybody who uses it. To "cheat" the system, you would need to change the data on most peoples' computers (or for the majority users who probably number in the millions to be complicit on the crime). I think this gives the bitcoin a lot of security.

        I also see that when you refer to criminals you mean the people using malware. This is obviously bad, but it is not terrible. Basically what these people do is subvert the victims' computers to mine for them. The victim provides the electricity and their computer hardware, the criminal gets the bitcoins.

        This is in a way similar to the malware that adds text link ads to websites that don't use them on victims' computers, the malware authors earn from the ads, rather than the site owners.

        Don't get me wrong, I'm not defending malware spreaders. But as criminals go they are not exactly equal to drug dealers, the mafia etc. Who I think might be liking bitcoin because of its anonymity.

      • aa lite profile image

        aa lite 4 years ago from London

        Yep I've just been reading your articles on the site you linked it. But I have to say that as you are obviously invested in Zurker (I think I joined it but haven't done anything with my account, might be much better than other social media, but all my friends are on FB, I don' t think I could move em, and a social network without people you know is not really all that useful).

        I would be interested to know how the Zen is secured, in other words how do you make sure it isn't faked. And if you take part in a transaction with Zens how do you prevent the "double use" problems. I think in Satoshi's original paper about the bitcoin protocol, the need for all the processing is I believe, exactly to prevent that problem.

        I could be wrong, but it seems to me that the question is this: a bit coin is basically a string of code. When you pay for something with your BTC, the code is transferred to another person, but what is there to stop you from using that BTC again. The answer is that with every transaction the code gets changed, in a way that requires a lot of processing power, and the peer-to-peer network lets everybody's wallet know that the old bit of code is no longer valid.

        What is Zen's solution to this? How can I know that the Zen you are offering me in payment is a real Zen? If there is a central body controlling the currency, how do we know we can trust them?

        As to who the bitcoin miners are, well they could be anybody. Yep some of them can be criminals, but as long as they are not the majority, their block chains will not be accepted by the network (from scanning Satoshi's original paper, he says that as long as the majority of the network are honestly, and not trying to attack it, it is secure).

        Anyway I guess the answer to a lot of my questions are to be found in the second link you posted. I will now go and read it.

      • SuffolkJason profile image

        SuffolkJason 4 years ago from Ipswich, Suffolk, England, United Kingdom

        I have high hopes for the Zen ( It's a new digital currency and is regulated by Zurker a democratic, member-owned social network. It's like a revolutionary digital currency founded on a revolutionary social network. I now that it's a bit naïve and idealistic to hold onto these dreams but I'm hoping the latest revelations about the National Security Agency and PRISM will persuade more people to challenge the status quo and look for alternatives.

      • aa lite profile image

        aa lite 4 years ago from London

        You might be right. However, I wonder if any digital currency, by it's very unregulated, anonymous nature, wouldn't be used by criminals. I just think that either you have institutions through which the transactions go, i.e. banks, so it is difficult for criminals to use the money without being traced, or you have a currency without central control, which is great for criminal activity. Not really seeing how you can have an in between state.

        The electricity use worries me. The fact is that if you're using cryptography to control the currency, you have to make it need a lot of processing power to "encode", otherwise anybody could "make money" on their iPhones. As I understand it, what makes bitcoin 'real', is that the effort to fake it is equal to the effort required to make it. In a way you can't fake it, its value lies in the processing power to make it. If you're willing to put in the processing power involved, you are not printing fake money, you are making the currency.

        I am not disagreeing with your points, I'm just saying that I'm not sure you can have a digital currency that is independent of bankers, that wouldn't have these problems. Maybe the bitcoin is the best that is possible. Maybe the whole system just can't work. Which would be a pity.

      • SuffolkJason profile image

        SuffolkJason 4 years ago from Ipswich, Suffolk, England, United Kingdom

        I guess that "normal" currencies do have some environmental impact but you might have hoped that a digital currency, by its very nature, would have a minimal impact and not depend on vast processing power.

        I agree that traditional banks have been a disaster. I'm very much in favor of a universal digital currency so that we can all avoid banks, bankers, transaction fees and currency risks. It's unfortunate that the first digital currency to capture the media's attention was the Bitcoin which (for all the reasons I mentioned above) is of no practical use to ordinary members of the public or businesses.

        Bitcoin's volatility, its association with criminality and its lack of regulation have delayed the digital currency revolution which will see the overthrow of conventional banking.

        Perhaps Bitcoin's value will remain high until an alternative, practical digital currency knocks it off its pedestal.

      • aa lite profile image

        aa lite 4 years ago from London

        Hi Jason, I agree with some of your points. For one thing using up the electricity to make the currency is truly bad for the environment, and i think it is a really bad by-product of the protocol which aims to keep the increase in bitcoins steady. On the other hand, do "normal" currencies not have an environmental impact, I don't know.

        I also think that the fact that it is used by criminal elements (because it is hard, although apparently not impossible, to trace the transactions) is a bad by-product.

        On the other hand, seeing how banks have messed up the world economy, for which ordinary people are suffering, and how the Fed, various national financial authorities or central banks, did nothing to prevent the 2008 crash. I am not sure that fiat currencies are doing so well. I mean look at the euro.

        Whether bitcoin prices are a bubble that will burst destroying its value, or whether its use will become widespread and prices will hold, is the big question. In think it could go either way.

      • SuffolkJason profile image

        SuffolkJason 4 years ago from Ipswich, Suffolk, England, United Kingdom

        In my opinion, even at $100 each, the Bitcoin represents a speculative bubble which will inevitably burst at some point. The Bitcoin is volatile, consumes vast amounts of electricity to "produce", used by cyber-criminals and is not backed by any tangible organization. If you were trying to design a dysfunctional digital currency, I don't think you could do much better! More here:-

      • aa lite profile image

        aa lite 4 years ago from London

        Yep. I guess there is no risk with Adsense. But there isn't much gain either, nowadays.

      • aa lite profile image

        aa lite 4 years ago from London

        collegedad, that is an interesting question, and I'm afraid I don't have an answer, I'm not really sure what the legal definition of a currency is, or US law.

        I guess it is not a 'fiat currency', whatever that is exactly. I suppose it could be described as a token system (although really isn't paper money just a token system really). It's creator described it as "a peer-to-peer electronic cash system".

        I think a Forbes journalist described bitcoins as more similar to rare stamp collecting, rather than currency. I think he was talking more about investors hoarding the coins, hoping that their value will skyrocket at one point

        There is no doubt that it is legal. It is also being taken seriously by the official bodies. Apparently this year anti-money laundering regulations were extended to BTC transactions.

      • WriteAngled profile image

        WriteAngled 4 years ago from Abertawe, Cymru

        Think I'll stick with hoping for the odd Adsense click!

      • collegedad profile image

        collegedad 4 years ago from The Upper Peninsula

        Ok, my first question is how are these bitcoins legal. It's illegal to create currency here in the US so is this a true currency or just a token system of sorts? I'm not trying to be disrespectful. It just doesn't make sense to me.