There is plenty of documentation out there on it, if interested you could search.

Simplified Short answer (from what I remember): your computer gets to compute hashes. Don't think of it as solving a math equation, think of it as looking through lots of junk. There is a certain probability that you will find "gold" in this junk and you get bitcoin in return. These hashes get more difficult with time and hence the probability of finding "gold" gets lower. Note that the time isn't relative to you, every one gets the same difficulty, the difficulty is based on the time the bitcoins were created long ago, i.e. when the currency was invented.
We're at a point where it is not feasible to mine by yourself (personal computers not strong enough), so people mine in groups. You can join a group and you'll get a cut in relation to how much computing power you provided. Mining using CPUs proved inefficient, so GPU computing is preferred.

Mining will use-up electricity more than you will earn (every where, not just in Lebanon). If you're interested in bitcoins, look at it from the investing in currency perspective like arithma did. Don't think that by mining you're going to make free money.

The whole point is a decentralized anonymous monetary system. .
Yes, but when you're making more bitcoins than what you're spending for power consumption, that's when you start making "free money". The break-even is calculated based on the power efficiency of the hardware in question with respect to the performance it's churning out. Else there wouldn't be that interest in bitcoin mining.
yasamoka wroteYes, but when you're making more bitcoins than what you're spending for power consumption
It's late where I am and it's been long time since I've read on bitcoin (it's really not that new). But I'm pretty sure you'll find similar information if you google the subject (really research, not just a casual one)

Think of it this way: the goal of bitcoin is to a create a new currency. Currency (or any commodity for that matter) have their value from their scarcity i.e. you can't get it for free.
The difficulty of mining is continually increasing, therefore it is very likely that any super-tweaked rig that you have will lose efficiency real fast.

My belief is that the situation at some point will reach the following, some entity will mine bitcoins at a loss, just to create the currency (like governments do now e.g. a penny costs more than a penny to make) People will revert to working for bitcoin or investing in it.


Here's a discussion that is covering both sides from what I can see https://bitcointalk.org/index.php?topic=6566.0
The hardware aspect just made it an idea for an interesting hobby actually, is there a bit-coin mining app that can run on Linux? Imagine building your own group of hundreds of miners out of raspberry Pis that work simultaneously day and night looking for bit-coins. the Pi's GPU is pretty decent actually.

One huge custom built super computer residing in your room processing data day and night as you make a fortune. Oh boy... :P
it may sound good but the Pis are no where near the processing power needed for mining, and those hundreds of Pis would cost a fortune and they don't even have the power of a single 7970 not to mention that their Gpu's dont work with opencl in the first place. :p
-DNA- wroteit may sound good but the Pis are no where near the processing power needed for mining, and those hundreds of Pis would cost a fortune and they don't even have the power of a single 7970 not to mention that their Gpu's dont work with opencl in the first place. :p
That's exactly what I wanted to say. the amount of 7970s you can buy for the price of those Pi's is like 7 lol and 2 would outperform the pis if they scaled perfectly while consuming the same amount of power.

EDIT: sorry, calculation mistake. I was discussing Radeon 7970 DP performance vs. expected Rpi SP performance. Radeon 7970's SP performance is 4 times DP performance. That makes half a 7970 as powerful as 100RPis, if each GPU has around 24GFLOPs single precision. At 1/4th the power consumption too.
Yes! Very much into it! Thing is though, I dont think mining is going to be feasible anymore now, i.e. the rewards to finding a complete sequence has been halved and whatnot. however, investing in bitcoins I believe is a very interesting prospect now. I fully support its philosophy and truly believe they (or us!) can pull it off and become a fully recognized international currency.

P.s: I know I prolly didnt explain any of why i believe what i wrote but i just woke up and cant be arsed to link articles and whatnot. might do some of that later.

Cheers!
yasamoka wrote
-DNA- wroteit may sound good but the Pis are no where near the processing power needed for mining, and those hundreds of Pis would cost a fortune and they don't even have the power of a single 7970 not to mention that their Gpu's dont work with opencl in the first place. :p
That's exactly what I wanted to say. the amount of 7970s you can buy for the price of those Pi's is like 7 lol and 2 would outperform the pis if they scaled perfectly while consuming the same amount of power.

EDIT: sorry, calculation mistake. I was discussing Radeon 7970 DP performance vs. expected Rpi SP performance. Radeon 7970's SP performance is 4 times DP performance. That makes half a 7970 as powerful as 100RPis, if each GPU has around 24GFLOPs single precision. At 1/4th the power consumption too.
Yes indeed, but I didn't know that the mining needed that much processing power. A Pi would have been much more reasonable economically if it was up to the task.
FYI: Even GPU mining has been superseded by FPGU's and ASICs with ASICs winning recently (bulk performance and efficiency).
Checkout these: http://launch.avalon-asics.com/
Those companies are smart and are selling the miners in BTC which will reinforce the currency.

The interesting thing for Lebanon is that it can potentially solve our online transaction troubles. This allows us to evade all government regulations and move money freely, and build business fast.

I can imagine pirates making tip jars where people chip in with a BitCent, and these tip jars could be distributed between content sharers and producers. This will shut up all those corporations trying to kill the internet.
your right but remember that these ASICs are dedicated for mining you can not do anything else with it so i don't thing any regular person will take it as an alternative for GPUs. i agree with you that bitcoin may be a solution for many of the problems being a p2p digital currency but i believe its still not mature enough and risky.
Does anyone know how much Lebanese Pounds are in circulation. It would be a good measure to compare against Bitcoins. I believe bitcoins easily surpass single digit percentage of this indicator of Lebanese economy.
Am not a financial expert, but I do believe if that's the case, it can indeed be more safe than Lebanese Lira's to begin with or just as safe...
A bit of googling:
Total Bitcoins: ~11,000,000 BTC ~ $500M
GDP Lebanon: $42B
Ratio = 1.19%
Not bad in my books.
I'll try and get a figure tomorrow.
It's 2011.
The volatility of the currency has decrease a lot. The reason the currency crashes was because one of the markets still had some security problems (not the protocol itself, but one of the popular exchanges). The exciting thing is, BTC after having reached $30 in the past has crashed into $2 and now has reverted and overshoot to ~$50.

I think it's an early adopter market, and worth investing in. Nevermind the miners, that's a solved problem, and is already marginally profitable for a niche of people. The currency by itself has growth value at the moment.

You'd never know. BTC have a non-zero chance of always crashing if everyone decides to sell. This http://mtgoxlive.com/orders can give you an idea of how much bitcoins need to be sold in order to decrease the value of bitcoins to what...
I had my eye on those bitcoins since they were around $20 and was trying the mtgox route back then. Couldn't make myself go through all the loops.
Being in Michigan, it's easier than you can imagine. I used coinbase.com which is a YC startup graduate.
Hey guys, for buying bitcoins in Lebanon and Africa you can use https://bitcoinnordic.com/ ( also there is the method of CashU but its a hassle to wait 48hr to receive the bitcoins)
They offer services for our region.
I was into bitcoins a while ago coz of its anonymity and safe undetected transactions online used in .THOR based hidden services. When i was buying bitcoins it was at still 28$ and man its getting popular now. I wish i stalked up some and started trading now :) but i was just using my bitcoins to purchase online.
Anyways hope for success for all of you who want to enter this market its definitely booming. Word of advice, don't buy and trade bitcoins with individuals online before you thoroughly understand the methods, there are many scammers and thiefs who're taking advantage of this trading. Be sure, if you're going to trade wallet details and such, to reasearch fully and read all reviews about the trader your going to do transactions with. Reputation is very important in bitcoins, when you build up a good one you can control the Lebanese bitcoin market ;)

Good luck folks.
Wow, to think they were worth $5ish some 6 months ago ... this is crazy. Also, IIRC, the amount of bitcoins that can be mined is limited to a certain number with the current system, at that point it would be interesting to see the value of the coins (or am I missing something fundamental?)

also worth checking out : https://en.bitcoin.it/wiki/Weaknesses
9 days later
So let's say you want to go with this kind of investment. How many bitcoins is safe to purchase? Is this considered a serious investment plan? Do you recommend to give it a try by purchasing a couple of bitcoins or just go large?
5 days later
What the heck! It's for $64.992 now!