[Rathji]

First off, what are bitcoins? They have been mentioned here before and I spent quite a while looking into it to understand the details behind it. If nothing else, it is a really interesting look at distributed hashing, which is something that has relevance in the tech world today. For example, torrents use it and even Amazon uses it for their database functionality.

From Wikipedia:

Bitcoin (sign: BTC) is a decentralized digital currency based on an open-source, peer-to-peer internet protocol. It was introduced by a pseudonymous developer named Satoshi Nakamoto in 2009.

A simple explanation - If you have no idea what I am talking about, watch this video:



A much more in detail explaination, from the TWiT network podcast Security Now (Start at 41:57)



Bitcoins are currently worth $140 each, with a global market cap of over 1 billion, rising from $40 each in the last few weeks that I have been paying attention.



From the New Yorker

. The value of the currency has risen astronomically in a short period of time—it’s increased by a factor of ten this year alone—driven by uncertainty about the euro, coupled with new regulations from the Financial Crimes Enforcement Network that solidifies the legal standing of Bitcoin

You can buy lots of things with bitcoins, and the number is growing every day. Both POS machines and Internet checkout options are available and NFC devices will allow 'tap and pay' solutions to be plausable. There is an ebay for bitcoins, and you can even order pizza. A more complete listing is available here.

Heard a bit about this over the last couple weeks, and know that some people here (used to) mine them. Thought this might generate a little interesting discussion and let people know who are holding onto them what is happening.

Also relevant to the discussion is the imminent release of affordable dedicated ASIC Bit Coin mining machines, which will essentially raise the computational power available per dollar invested by a large factor (well over 30 times, in my opinion).

This is important because the difficulty of creating mining a bitcoin block (currently 25 bitcoins) is related to how much computational power is working on it. That is, because there can only be a certain amount of coins created - currently 25 coins every 10 minutes, increasing in difficulty until the year roughly 2140, when it will cap at 21 million bitcoins.

From Wiki

To compensate for increasing hardware speed and varying interest in running nodes over time, the proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour. If they're generated too fast, the difficulty increases

Currently a roughly $150 video card currently produces about 200 Mega Hashes/second, and the new equipment claims 4.5 Gigahashes per second (about a 22x increase), with a drastically reduced power consumption.

So with the drastic increase in value, the likely increase in difficulty to mine without purchasing specific hardware and the increasing acceptance of law enforcement, does this become a viable thing to do?