Interesting company / "press release". So their CTO is named "Nasser G", their contact is named "Nick W". They have venture capital funding by an unnamed "private equity group". According to their website, they are based in Kansas City, Missouri but if you search the states business register there is no "Butterfly inc." The trademarks “Butterfly Labs” and “BitForce SC” do not exist in the USPTO database either...
Doesn't this seem a bit unusual for a company promising to deliver a $29,899 product?
They claim 832 Mhash/s at 80W for the Singles. And, yes, my units match these characteristics.
It is worth pointing out that before they had a Single prototype, 6 months ago, they had pre-announced 1000 Mhash/s at 20W... which turned out to be off by 5x in terms of Mhash/Joule. I think there is a fair chance that this ASIC pre-announcement will also fail to reflect the actual numbers. By how much? Who knows.
Perhaps the greatest contribution the Bitcoin experiment will make to humankind is to teach you and me and our neighbors more about the realities of economics. Many of the ideas about how to mine Bitcoins, store Bitcoins, and trade with Bitcoins as a medium of exchange illustrate both the strengths and weaknesses of any other medium of exchange in a world full of human beings. Seeing the discussion of Bitcoins here on Hacker News reminds me of the last time that the price of gold (in United States dollars) crashed, and the arguments beforehand that such an occurrence was impossible, for instance. "The market can remain irrational longer than you can remain solvent" is still an important principle of investment.
I think they're using easic.com, which lets you build an ASIC(or something reasonably close to an ASIC in price and performance), with small minimum orders, and low cost design tools.
They start at minimum of 45 chips for 45K$ including the tools, and the price gown down from there.
With the minimum quantities needed in order to justify manufacturing an high end ASIC rising dramatically, this seems like something that would disrupt the ASIC and some of the FPGA business.
I looked into bitcoin mining before as a possible hackish investment, but there seemed to be anniversary where they made mining twice as hard. As it stood when I checked it out (few months ago) you would only make a buck or two a day with a top of the line graphics card, counting in cheap electricity but NOT the price of the hardware. I cant imagine what happens if they continue doing that (making it more difficult)
How do we determine 'popular', though? According to http://bitcoincharts.com/bitcoin/ there were 3.5M Bitcoins sent in the last 24 hours. MtGox has them at $6.50 each at the moment.
I wouldn't consider $22M worth of transactions in the last 24 hours 'unpopular'...
So, if i move my funds between bank accounts a few times a day i can create a popular multi million euro economy? I don't think 3,5m * $6,50 is the correct measurement of popularity.
I guess if you think that people are just moving Bitcoins around to bump up those numbers, then maybe it's not really measuring anything...
I honestly don't know the best way to measure popularity, but I'd love to hear a good way to do so. Until then, well, for me at least, that seems to be the best way to try and work it out. How else do you judge popularity of a currency other than by how much it's being used?
Popularity relates to total value so ~9million coins * 6$ a coin = 54 million in total value which is minuscule in therms of global finance. But, number of places you can spend it also counts and there is just not many places selling bit-coins. Even though it would seem like an easy way to launder drug money it's still just a toy.
I don't want to sound as though I'm arguing for arguments sake, and I really have no dog in this fight. But using the argument of 'size in terms of global finance' would surely render most currencies other than say USD, the Euro and a couple of Asian currencies as 'not popular', wouldn't it?
To be honest, I look at the total above of $54M and think "transactions over 24 hours worth $22M for a currency whose entire value is $54M... that seems liquid at least" (for my pathetic understanding of economics). To me, it seems as though there is a lot of activity within the currency itself, which to me says its popular in the circles that use it. Arguing that it's not popular because of its size, despite the activity, would probably mean that something like the New Zealand dollar would be unpopular. But again, I bet that most NZers would disagree.
So then it just comes full circle and again, I just don't know if I believe it's not popular... just maybe, it's 'nichey'?
Their M3 is also over 200 billion. I am not sure if that's in NZD or USD but 1 NZD = 0.7901 USD so the difference is not that important. http://en.wikipedia.org/wiki/Money_supply
Fair point. To be honest, I just picked the first smallish country I could think of with a stable economy.
Thanks for that data. I guess I still just see tens of millions of dollars movement everyday and think "hey, it's obviously popular somewhere". C'est la vie.
And it won't become popular, because it attracts the wrong kind of people - speculative investors and bitcoin miners dreaming of becoming rich. It does not attract real buyers or sellers...
Nope, there are cliffs where the total number of bit-coins produced per day drop off a cliff. It's a silly idea designed to make early 'investors' lot's of money at the cost of making the entire system be less stable, and worth less money.
You realise there is no central control, right? The system can lag though, and if someone build a large rig and turned it on, that might have had an effect.
Why was it setup like that? Well it was decided rather than having a fixed rate of supply though time there would be a target number of total bitcoins and early miners would get a free pass: https://en.bitcoin.it/wiki/Controlled_Currency_Supply
A more rational setup would be a fixed rate of supply though time, so in 2750 the % increase in supply is a tiny fraction of overall supply but the absolute number would be the same as 2012. Instead they picked a fixed target number of bit-coins which eventually creates deflation as bitcoins can be lost which destroys them.
Every 210,000 blocks the mining reward is cut in half. At current rates, the mining reward will drop from 50 to 25 btc around December 2012. This is separate from the difficulty updates that occur every couple weeks.
Yea, and what protects the bitcoin network is not how much effort it took to create them in the past but how much computing power is being used to create them now. As the rate of creation drops the incentive to mine them also drops, eventually the number of miners drops off until it becomes cost effective to rent enough computing power to own the network and give yourself 100x the amount of bit-coins in existence. Cash out and well game over.
As I understand it, the goal of this feature is to drive miners to begin charging transaction fees to mint blocks rather than rely on the reward built into the protocol. The reward was designed as a carrot, but eventually it'll give way to transaction fees. If you study the protocol, transaction fees are built in; early on, however, they weren't used (i.e. spending BTC was free).
However, there is a more interesting question about transaction processing rates and competitiveness. VISA claims processing rates of 10000 transactions/second. BTC is at around ~700 transactions/second.
The problem boils down to this, suppose total bitcoins where worth 1 billion dollars, an average day exchanged 1/10th of that or 100 million dollars worth of transactions. Now suppose a 1% fee per transaction that's 1 million dollars worth of computing power per day or ~41k per hour (assuming mostly rational actors). Now suppose it costs 10x that or 410k per hour to take over the network. Well the 'pot' is worth 1 billion so that's a clear win and someone would do that.
"The best thing about my water cooling and floor heating is that my wife keeps nagging me to buy a second 5970 to make the floor warmer. Beat this with a air cooled system."
Hot water preheat wouldn't be too hard to do, and would save serious money in colder climates. Maybe someone could work a deal with an apartment complex? (Hot water preheat for rent?)
I looked at bitcoin a while back when the hype was at its peak. Sadly though by then mining using normal equipment was impractical, so i just ignored it.
Do people actually use bitcoins nowadays, or is it more of a speculative market?
Interesting that this press release carefully avoids mentioning 'bitcoin' at all...
The other thing that caught my eye is that $30k will supposedly get you 1 Terahash/s. Well, the entire bitcoin network hashrate is currently only 12 Terahash/s which means someone only needs to purchase about 12 of these devices to gain a majority share. That's less than half a million dollars' investment.
So if you bought one of these for $30k and used it for mining you'd get 1/13th of the bitcoins generated? iirc, 50 bitcoins are released every ten minutes? So you'd get mine an average of 550 bitcoins a day. Which are currently worth about $5 each. So it would take about 10 days to recuperate the cost of the server.
[edit] Of course this assumes that nobody else buys one of these servers for bitcoin mining and that using it doesn't cause the value of a bitcoin to drop.
> The main problem is that if you own the majority of the hashing power, you can rewrite history. You can make all the bitcoin ever mined owned by you.
No, this is completely wrong.
If you have majority hashing power, this allows you to
a) entitle yourself to a greater proportion of the newly minted bitcoins (though you actually can not increase the global rate of creation), and
b) undo already "confirmed" transactions, within a small timeframe. This allows for double-spend attacks, but you can only do that if you owned the coins in the first place. Nothing, not even hashing power, lets you use other people's coins.
In particular, you can't "rewrite history" arbitrarily, due to hardcoded hashes in the Bitcoin clients. You also can't "make all the bitcoin ever mined owned by you".
That's incorrect. Having >50% of the hashing power gives you a good chance to double-spend your own coins, but you will never be able to steal money from someone else's wallet without doing a transaction with them.
Edit: Let me clarify, to actually steal coins from someone, you would have to forge a transaction, which takes the same effort as mining say an SSL certificate for google.com.
Assuming the manufacturer has produced 12 of these beasts already, they already possess the power to rewrite bitcoin history.
Instead of selling the machines for $30k a piece, could they not just use the machines themselves to transfer all bitcoins in the world to their own wallet? The total amount of bitcoins mined to this date should value much more than 12*$30k?
Does that mean that the entire bitcoin network should as of today be considered compromised, game over, pack up and go home?
If they did this, the attack would cause a panic, and Bitcoin would likely instantly loose its value, thereby undermining the validity of their own (illegitimately acquired) wealth. Not very smart...
The inventor of Bitcoin once described this scenario, saying it would be smarter and more profitable to simply mine bitcoins legitimately...
"Illegitimate" is the wrong word. I meant wealth acquired without following the proper rules (ie. mining on the longest chain, because the attacker would purposefully try to fork the chain from a past block.)
What if they simultaneously transfer a huge amount of BTC to multiple exchanges (double-spending), exchange to USD everywhere, running away with a bunch of dollars, while the rest of the bitcoin world slowly realizes they've been had?
How would the attacker obtain the "huge amount of BTC" in the first place? If he buys it, sells it, then executes his double spend and Bitcoin loses its value, the attacker would have made no profit.
A double spend attack only allows an attacker to double his BTC before the block chain has to be forked, and before the whole community notices the attack. You can't send the same BTC to multiple exchanges. You have to execute one double spend attack for each exchange. But the community would detect the attack after the first one.
(Double spend attacks would be noticed when multiple blocks in a row are replaced or, in Bitcoin's terminology, when a reorganization occurs: http://blockexplorer.com/q/reorglog)
There's really no value in doing that though as the bitcoins you steal will suddenly have no value as everybody exits the network and stops accepting them. unless your goal is to destroy the network of course.
You'd have to expend as much hashing power as has already been expended. Trying to do something like that is something that would take months (or year), and it would be visible to everyone on the network, and they would be able to react.
If you were mining bitcoins fast enough to overtake the natural growth of the network and selling them to profit from this activity, you would be creating a tremendous amount of downward pressure on the dollar value of a bitcoin, rendering your operation less profitable. Therefore you can't assume the current price of $5.
Doesn't this seem a bit unusual for a company promising to deliver a $29,899 product?