Bitcoin - a new kind of currency

[Peter-Jan]

Taking out your money in a way that is impossible to regulate is quite easy. Simply do a btc transfer from your exchange's wallet / user account to your own btc wallet (free to download and you can story it on any CPU you have). This transfer takes less than an hour and nobody will be able to come and take it (except if governments start doing police style home searches to confiscate PCs) .

The centralized money on the exchanges itself is only the amount you need for trading, which granted can be much if you do arbitrage but your profits are final once taken out of the exchange trading system.

 

[Andy D.]

So to generate the bitcoins through mining, is their some kind of spec/api for writing code against?

 

[Peter-Jan]

NewHavenCT: https://en.bitcoin.it/wiki/FAQ#Mining

Unless you want to invest in servers, the best option is to join a mining pool.

 

[TBeas]

My ROI thus far has been fine. We have only been mining and not trading, and we broke even earlier this month. Since there is a group of 3 of us, profits will obviously be split, but we stand to come out with a couple hundred USD per person once we are done mining and sell off the cards. Mining is beginning to get to the point where it isn't super profitable like it used to be. If we had jumped into mining just a few short weeks earlier, we probably would have doubled our money. In May, BTC was at its best; it has only been less exciting since then really. I'm still happy with where we are at as it is basically another weeks pay added on to my summer. Once I figure out this new api for our exchange, then I can begin work for our trading algo which we hope will earn us even more.

 

[Peter-Jan]

TBeas: What's the name of your exchange? Ours is BitFlow. Launching beta in a few weeks.

 

[Andy D.]

Peter-Jan

Thanks. So I presume if you had the infrastructure e.g. HPC lab at a university, you could in theory generate a fair amount of bitcoins?

 

[Peter-Jan]

Yes. Those with the most efficient setup, win.

 

[D C]

TBeas :: how many hours have you put into generating those couple hundred?

 

[Andy Nguyen]

Since there is a group of 3 of us, profits will obviously be split, but we stand to come out with a couple hundred USD per person once we are done mining and sell off the cards.

Is this per person per month or in total since you started? How much time you spent on this each month? Will you be able to scale this up? Or outsource this? Or automate this?
This sounds like a good project for intellectual curiosity but it does not sound efficient effort/reward, let alone replacing your day job.

 

[Peter-Jan]

For those interested in making a living out of Bitcoin mining, please see www.bitdriller.com (Canadian company) and http://mining.mainframe.nl/ (Dutch company in partnership with UK server company) for examples of businesses doing exactly that.

 

[TBeas]

You guys have it all wrong. This is a hobby - not something that you would do to make a living. I suppose if you were an early adopter and you saved your BTC then you could retire early (some people who joined early got a bunch of BTC, so they are sitting on a couple hundred thousand USD), but now it is nothing more than something that will help you kill time. The total time I've spent on this? A lot. Maybe 100 hours. Maybe more. How much do I stand to make? Each of us will probably walk away with $200+ pure profit. We put about $600 total in to it in the beginning, and once we sell off our hardware we should end up with at least $1200. So that works out to $200/person. Certainly not a lot of money, but enough to cover the cost of upgrading a few computer components. And I learned all about Linux while doing it (had very little experience before) and I am using it to make my first trading algo (had no previous coding experience at all), so while I have only made maybe $200 it has been well worth it in my opinion.

Once we got the miners set up and running, there wasn't much invested time after that. You just need to check them every once in a while to make sure they didn't randomly crash. A normal person who didn't have a lot of time on their hands could easily invest just 2 hours per week into this and be fine.

I use the MtGox exchange, but I wish you the best of luck with yours. If your fees are low, I'm sure you will get plenty of business. I would probably be willing to test it out for you. What sets you apart from all of the other new exchanges popping up? How do you plan to steal business from MtGox, who obviously owns the market. My biggest advice for you is to keep your exchange professional. MtGox got lucky that they just became the default because IMO they don't even look that professional (though since the hacking they have certainly upped their game). A lot of the other exchanges don't look professional, and while I know that looks can be deceiving, if you delivered on a site that didn't look like it was going to steal my money, that would be a huge plus.

 

[Peter-Jan]

TBeas,

We have a special product planned that we hope will rock the bitcoin world. Can't say much about it at the moment, but it's a new service and the idea is why my founding team is so excited to work on BitFlow at below market rates (I am the original founder and still own the majority of the shares). We will launch our innovation a few weeks after launching the bitcoin exchange itself.

We are also well financed, fully legal and will do all the security measures that are affordable at this level of maturity of the bitcoin market (certainly matching what users are used to today). We're a team of 5, three full time and two who lend a hand part time. We have experience in financial services consulting, tech startups and web security (still looking for design person although we keep UI/UX in mind already).

Regarding price: Our financing will allow us to offer a lowest commission guarantee. If you find us a professional exchange with lower commissions, we lower our commissions immediately and pay back the amount our users overpaid. (Obviously we will also monitor the market ourselves.) Most likely though we will enter way below 0.6% and not even sure whether we will charge commissions for the first few months. Much will depend on how certain we can be of not having to cope with chargebacks.

I agree that MtGox needs to get its act together- we do like TradeHill though and certainly don't mind some decent competition. After all the bitcoin exchanges are the most centralized node in the btc value chain and some fragmentation here makes bitcoin more resilient as a network.

Last but not least thanks a lot for the interest in BitFlow! I will let you know when we start inviting alpha users.

 

[TBeas]

It certainly sounds like you have something big planned, I can't wait to find out.

 

[Dibbs]

http://www.betabeat.com/2011/08/02/digital-derivatives-bitcoin-markets-wall-street-bankers/

 

[Andy Nguyen]

Just as the first phase of Bitcoin was dominated by nerds and hackers attracted to the technology, the second is being shaped by finance professionals fascinated by the new market.

“Bitcoin is like Wall Street was 15 to 20 years ago when I entered,” he said. “Fragmented markets, wide spreads, manipulation, the trading stone ages.”

Anyone feels like putting what they learn about options/hedging to practice?
Throw up a few hundred dollars and learn. I bet you can learn as much and may make money.

Disclaimer: should not be taken as an endorsement for bitcoin. Please seek professional financial advice.

 

[D C]

This begs the question - how in the hell do you properly price a BTC Call/Put??

Anyone with experience on this have any input?

 

[Andy Nguyen]

This begs the question - how in the hell do you properly price a BTC Call/Put??

Somebody is going to come up with a Black-Scholes equivalence. In the mean time, enjoy the mispricing. That is potentially where the money is.
The gist I get from reading this is we are on the cusp of the second phrase where derivatives and trading would take center stage. When will you ever see someone with a few thousands dollars that can do something big.

That, of course, is on the premise that BTC market will not disappear overnight in the next few years. People are saying the same thing about the global financial market so as far as doom day goes, it's minor thing.

My angle is that this is a good way to learn an evolving market if you accept the downsides and enter this with a curious mind and some cash.

 

[Andy Nguyen]

https://en.bitcoin.it/wiki/FAQ

 

[D C]

Don't get me wrong but if bitcoin is backed by the exclusivity of computer-generated solutions and computers are getting more powerful at an exponential rate, wouldn't that make all your "bitcoins" virtually worthless in a few years?

What do you mean by 'a few years'? Money is being made right now.

 

[TBeas]

Ah, I see. In that case, the true value in this system would be hacking it... lol.

This is the truth. Hack the system, or gain a majority, and you can potentially create or "print" all of the BTC you want without being detected.