Chad's News

Things I learned about bitcoin mining today:

1. All bitcoin transactions are recorded via a system called Blockchain. The “mining” process you hear about is something you must do in order to add new blockchain entries (blocks) to record the transactions. This cannot be done by the casual user—adding an entry is very, very computationally intensive. So there are dedicated bitcoin miners who do it for you.
2. Successful miners are rewarded with a number of bitcoins in addition to any transaction fees they charge. Currently, however, the bitcoin reward is so lucrative that transaction fees are typically less than a dollar.
3. About every 4 years the number of bitcoins you get from mining a block is cut in half. Right now it’s 12.5. It’s been at that level for about 2 years and is expected to drop to 6.25 in the 2020-2021 timeframe.
4. Eventually the system will get to the point where mining bitcoins won’t provide enough of them to be cost-effective, and the miners will get their profit solely from charging transaction fees.
5. The maximum number of bitcoins that will ever exist is about 21 million. Currently about 17.5 million have been mined (~ 85% of the total).
6. The difficulty level of the bitcoin mining calculations is adjusted approximately every two weeks to account for changes to the amount of processing power applied to the system. The goal is to make it average 10 minutes per block. So the system adjusts for advances in hardware or increases in the number of computers used, and the problem is just as time-consuming today as it was 5 year ago, and will be the same 5 years from now.
   • Note: For the technically inclined, the mining computations just require you to generate a hash code that, when interpreted as a number, is less than a specified value. So the hash must have a bunch of leading zeroes. Normally you will have to run the hash algorithm many times before you get a value that meets the criteria. The adjustment that occurs is to simply change the target number.
7. In December 2017, a miner using poorly-written custom mining software had a situation where his software neglected to tell the blockchain system to give him the reward. He mined the block, inserted it into the blockchain, and got nothing in return. At the time, the 12.5 bitcoin he lost was worth about $200,000. These bitcoins are lost forever, as effectively as if they’d been physically destroyed.

Here at Chad’s News we’ve previously discussed the bitcoin virtual currency. But the linked article is a good non-technical look at the currency, its history, and its current status.

Link: http://www.newyorker.com/…
(via Kim Komando)

The US government has come out with a new design for the $100 bill, one that incorporates even more security features. There’s a blue strip woven into the bill with bells that turn into “100”s as you move the bill one direction, and moving bells/100s as you shift the bill in another direction. The bill also has an inkwell with a bell inside that changes color as you move the bill, such that it seems to appear and disappear. Really fancy stuff.

The new bills have not been officially released. This is because there is a production problem that didn’t show up in the test phase. Some of the bills have creases in them and are unusable. They only discovered this after printing a billion of the new notes, which (at this time) will all have to be manually checked before being released. They’re trying to find a way to automate the checking process, for obvious reasons.

And on a side note, have you ever wondered how many $100 bills are printed each year? In the last fiscal year (October 1st, 2011 to September 30th, 2012) the US government printed 3 billion of them.

Thanks to Josh for this topic and the links.

Link #1 (the new 100): http://www.newmoney.gov/…

Link #2 (creases; video): http://www.newmoney.gov/media/…

ATM card skimming is where a thief goes to an ATM and attaches a card reader on top of the real reader. This fake reader, or skimmer, passes cards on to the ATM, but in the process it gets the card information and stores it for later retrieval. In addition, the thief installs some type of hidden camera to record videos of the cardholders typing their PINs. These two items (the card info and the PIN) are all a criminal needs—he creates a duplicate card and has the PIN to go with it. The bank thinks it’s you. What I find most interesting are the sophistication of the skimmers and how realistic they look. It can be very difficult to spot a fake. The linked article discusses card skimming in detail, and I recommend reading it.

Link: http://arstechnica.com/…

The linked article debunks three common economic misconceptions made by Americans. I believed all three and was surprised to find out they were wrong. Normally I take this type of article with a grain of salt, but the source is solid. Here are the misconceptions:

1. Most of what Americans spend their money on is made in China.
2. We owe most of our debt to China.
3. We get most of our oil from the Middle East.

Thanks to John LaRoche for this link.

Link: http://www.dailyfinance.com/…

Here at the Chad’s News network command center, we think the penny and dollar bill should be abolished, and we do our part by making an effort to use two-dollar bills and dollar coins. What a simple way for the government to save money—according to the first linked article, it costs 2.3¢ to mint a penny. The Canadians, and even the US military, are ahead of us in this respect

Thanks to Josh for this link.

Link #1: http://www.chicagotribune.com/…

Link #2: http://www.shopmyexchange.com/…

Bitcoin is a digital currency first issued in 2009. The system uses peer-to-peer networking and cryptography, without a central authority. Bitcoins are created by a process called “mining”, where users perform work and receive Bitcoins as payment. To prevent long-term inflation, the total number of Bitcoins will cap at 21 million. And yes, you can actually use Bitcoins to purchase stuff from some retailers who accept them.

Bitcoin is, however, having some problems. Hackers have had some success (link 1, link 2) at stealing the digital currency, and there’s also a piece of malware that uses compromised computers to mine Bitcoins. (Note that these hackers aren’t attacking Bitcoins themselves, which are protected by strong cryptography; instead, they’re going after the software that people use to manage their Bitcoins.) Of more import is the wildly-fluctuating exchange rate against the dollar. What’s the point of purchasing Bitcoins with cash, only to subsequently have their value plummet? Of course, this is a problem with any currency, but Bitcoins have had some severe drops.

Update: Not everyone agrees with my assessment that Bitcoin is failing. See the comments for details.

Update #2: I’ve modified the title of this post, as well as the first sentence of the second paragraph, to do away with the notion that Bitcoin is failing. I still think, however, that it has been having problems.

Link #1 (Bitcoin explained): http://arstechnica.com/…

Link #2 (Bitcoin articles at Ars Technica): https://www.google.com/…

I’ve never understood the US government’s reluctance to retire the $1 bill in favor of the $1 coin. The GAO estimates this would save $5.5 billion over 30 years. And while we’re discussing money, wouldn’t it make sense to kill the penny as well—inflation has made them pretty useless, and they cost more than a cent to manufacture.

Link: http://consumerist.com/…

While money can’t buy happiness, lack of money can definitely cause unhappiness. Researchers Angus Deaton and Daniel Kahneman have determined that the cutoff point above which more money doesn’t matter for day-to-day happiness is a salary of $75,000 per year.

Link: http://blogs.wsj.com/…
(via Lifehacker)

Ever wondered just how much television actors make? The linked article shows the top earners. Oprah Winfrey wins by a landslide ($315 million per year), and Charlie Sheen comes in second with $1.25 million per episode. As astronomical as these may seem, average salaries are lower than they used to be. For example, the final season of Friends had all six cast members making $1 million per episode.

Thanks to Mike P. for this link.

Link: http://www.tvguide.com/…

Health reform is now law in the United States, but it’s a far cry from the government-run healthcare that exists in the United Kingdom and Canada. It boils down to this:

• Private insurance companies are restricted in their ability to discontinue or deny care.
• Employers must offer health insurance.
• Medicare and Medicaid are expanded.
• Everyone is required to have health insurance.
• Taxes are increased.

Link #1: http://krugman.blogs.nytimes.com/…

Link #2: http://www.salon.com/…

Starting this year US pennies have a new design on the back, with a shield instead of the Lincoln Memorial. The previous time it changed was back in 1959. And based on what happened with the old wheat pennies, it wouldn’t hurt to save a few hundred dollars worth of the memorial pennies as a long-term investment.

Link: http://www.usmint.gov/…
(via The Consumerist)