You can mine your own but mining has become very difficult over the years. Back when I did it I was able to use a standard desktop computer with a really good video card and I earned more than the value of the entire machine and all the electricity it used just letting my machine crunch away on blocks 24x7 for several months.
But a built-in safeguard against inflation makes it exponentially harder and harder to mine coins as more are put into circulation. Today the same computer would only yield pennies per month, less than the electricity it used.
Serious miners today use ASIC rack mount clusters with immense processing power that cost thousands of dollars per unit and consume tons of electricity. It is an investment, with much risk, that miners have to make today to get started. But so is opening up a donut store on the corner or going down into a literal mine with a pickaxe and shovel.
So, to answer Lukeinva’s question: the normal way to get Bitcoins is to buy them on-line. If you were in the Netherlands, I’d recommend bitonic.nl. In the US, Coinbase seems to have a good reputation but I can’t vouch for them personally. Stay away from MtGox.
I strongly urge, beg people not to mine bitcoins. It is a monumental waste of resources. It’s a slap in the face to all the projects that could actually be using that computer processing power for benevolent purposes.
I used to mine bitcoins too. I probably had about $900 in today’s market (I deleted my wallet and everything when I swore them off).
Bitcoins are pretty much the most evil thing you could think to do with computer processing power and energy.
I dunno… all this talk prompted me to fire up the old bitcoin client again and I still have 0.6 BTC left. In today’s market that’s like 500 bucks. Free money, baby!
Yes, and I know about the history of forks when there were multiple incompatible versions being used. I don’t disagree with your claim that it’s complicated, but I don’t think it’s a showstopper.
As was pointed out by someone else, they can see both transactions floating around on the network. You might get lucky and have them not notice it without computing power, and you might get away with it once or twice for small values. How often do you think that’s going to work given, as you point out, that transactions are traceable. Someone intent on defrauding shops for small amounts is going to have much more luck with
Walk into a store
Pick something
Walk out of store
Yes, I agree, if you are paid in dollars and want to buy something from someone who wants to receive dollars, it’s pretty silly to convert to Bitcoin in between in most cases.
But if Bitcoin were a major currency, then perhaps one or both parties would prefer to have bitcoins. Then it starts to make more sense. Or perhaps the two parties want different national currencies because they live in different countries.
Or perhaps one of them is an organization like Wikileaks, which is unable to use standard because powerful governments are leaning on them.
Clearly it isn’t yet useful for everyone to use. But there are clearly people for whom it makes sense, and if people keep iterating on the software and the protocol, it’s possible that it could enter more general use.
I’m not sure I agree with this. Security is always an arms race. Credit card companies used to mail out books with cancelled numbers, and people used those ca-chunk machines to make duplicate receipts. Attackers figured out holes in that system, so they upgraded to connections over the phone network. And attackers now hack into systems with card databases to get numbers. So now credit card companies use sophisticated algorithms to spot suspicious purchase patterns. There’s still a lot of money at stake, and the holders of it need to spend enough to beat the highly motivated attackers.
But perhaps you are right that it’s more efficient to do it all in one place. Back of the envelope calculations:
Bitcoin currently does ~60k transactions per day, at an electricity cost of ~$12 million ($15 million in electricity - about $3 million in bitcoin generated) = $200 per transaction
Visa does ~150M transactions per day, at a cost of ~$4 billion/year, which works out to about $13.50 per transaction.
So, clearly, Visa is more efficient currently. It’ll be interesting to see if Bitcoin efficiency will increase or decrease over time.
You missed a factor of 365 in your Visa calculation. From those numbers, Visa is at seven cents a transaction. Compared with $200. For a tiny decentralized network that doesn’t benefit from economies of scale.
Here’s something I don’t understand about those figures. I thought that credit card transaction fees were something like $0.25 + a percentage of the amount transferred. But if that were the case, and Visa’s total operating budget only amounts to $0.07 per transaction, shouldn’t that mean that their profit margin is like 200%?
So, I must be confused about the credit card fee structure?