Menu Sign In Contact FAQ
Banner
Welcome to our forums

Bitcoin

Isn’t most paper cash now serialised in some fashion which can be read and tracked by the note counting machines?

Cash has always had serial numbers; the problem is that they are not tracked across transactions. They are recorded when the notes are printed, so the central bank knows which serial numbers went to which institution, but after that the trail is lost.

If you kidnap somebody, you will get the ransom paid in notes whose serial numbers have been very carefully recorded This will be the case whether they are new in bundles, or old mixed-up ones. Google for that story of the guy who parachuted out of an airliner with a cash ransom.

Asking for it to be paid in used notes doesn’t help much because the police will still record the numbers. So you will have to spend the money “slowly”, which is difficult if you have millions. You can probably still get rid of €500 notes in S. Europe, on avgas (I used to know somebody who had a stack of them) but if you want to spend millions you will want at least a 421C

I have no idea how bitcoin works (maths was never my strong point; I would fall asleep when it got to Bessel functions) hence I asked the Q. I remember the early days of cryptocurrencies, about 25 years ago, where each “piece of money” could be a totally standalone token, signed by a central bank, and various chips were developed to support the “wallets”, but the govts squashed all such proposals because there was no trail so money laundering was trivial. Also if anyone found a fast way to factorise large numbers they would break RSA and then could generate their own money, without any limit, and while this has been a challenge unbroken since the ancient Greeks, there is no forward assurance on it.

Administrator
Shoreham EGKA, United Kingdom

I don’t understand bitcoin mining. Is the calculation performing a valuable function for someone, or is it just to restrict the number of bitcoins produced?
If the latter, in Smithist/Marxist Capitalism it’s a con, adding nothing to the Wealth of Nations.

Maoraigh
EGPE, United Kingdom

Maoraigh wrote:

it just to restrict the number of bitcoins produced?

Yes.

ESKC (Uppsala/Sundbro), Sweden

I thought bitcoin mining was a process to find more of the currency.

Like running a currency printing press, except that printing your own cash is not allowed, whereas anybody can do bitcoin mining.

I read somewhere that it is using up so much electricity that it is becoming a significant CO2 generator.

Administrator
Shoreham EGKA, United Kingdom

Peter wrote:

I thought bitcoin mining was a process to find more of the currency.

No, it is not! It is solving an arbitrary (but hard) calculation problem just to prove that you are trying hard. It’s an artificial hurdle to prevent inflation. (And btw. the difficulty of the calculation problem you have to solve is adjusted automatically to total computing power that is used to solve it. Therefore if people double the computing power there will not be more bitcoin “mined” in the same time.

Peter wrote:

Like running a currency printing press, except that printing your own cash is not allowed, whereas anybody can do bitcoin mining.

It’s more like you print random 10.000 digit numbers on paper and the number you print is compared to a secret “solution number”. Whoever can present a printed paper with the secret solution number on it first is awarded one bitcoin and then a new secret number is chosen and the printing starts again – as you can imagine many people have to print many 10.000 digit numbers on paper until someone “finds” the right one. The only difference is that it is electronic so no paper is wasted but "only " electricity.
And as said above: When the total numbers of global printers used for this “game” is increased, so is the number of digits of the solution number you have to “find”.

Peter wrote:

I read somewhere that it is using up so much electricity that it is becoming a significant CO2 generator.

Estimates have wide spread but the global CO2 emissions of bitcoin are somewhere between the fossil CO2 emissions of Ireland and Sweden.
As transactions are linked to Bitcoin mining (for every newly found bitcoin there is only a certain umber of transactions that can be done) a single bitcoin transaction (so when you transfer some fraction of a bitcoin from your wallet to mine) has approximately the same Carbon footprint as an economy flight from London to New York.

Last Edited by Malibuflyer at 10 Jun 20:36
Germany

Peter wrote:

I thought bitcoin mining was a process to find more of the currency.

It’s a process facilitating transactions with some new currency being “mined” as a reward. There is an algorithmic limit of how much bitcoin will ever be “mined.”

YouTube has loads of videos explaining how it works.

ESME, ESMS

Dimme wrote:

It’s a process facilitating transactions with some new currency being “mined” as a reward.

Constantly requiring more and more processing power to add new transactions to the chain…

LDZA LDVA, Croatia

One question then: when/if mining is not economically viable, it becomes impossible to transact ?

EGTF, LFTF

Maoraigh wrote:

I don’t understand bitcoin mining. Is the calculation performing a valuable function for someone, or is it just to restrict the number of bitcoins produced?
If the latter, in Smithist/Marxist Capitalism it’s a con, adding nothing to the Wealth of Nations.

The latter. I don’t know the exact number by memory but the max bitcoins in existence is limited to something around 21million. We are now between 18-19million. As we approach the limit, the effort to mine new coins gets harder (read: more expensive) and the revenue for miners is reduced (the “halving”). Like approaching infinity. Since the quantity is limited, as new coin mining slows bitcoins become more “scarce” and the value will rise, similar to gold in that respect. But the value of bitcoin, gold, or fiat is not intrinsic.

Regarding the con part, how is printing money adding to the “Wealth of Nations”? Dollars are not scarce because the US government generates them at will without any corresponding new wealth.

LSZK, Switzerland
Sign in to add your message

Back to Top