Contest Winner Announced!

A couple weeks ago I decided on a little Bitcoin contest where I invited Bitcoiners to predict the BTC price at the end of July; today at 10:00 pm EST.

The VirtEx price today at 10:00 pm was $93.80 CAD.

Congratulations to GEOFFREY with the winning prediction of $94. You have won 0.2 BTC, which will be sent momentarily to the address you provided.

Unbelievably, an hour ago TA MASTER was exactly right with a prediction of $99 — Wayne Gretzky would be proud. Sorry about the tough break.

Future Bitcoin Contests?

I would love to give away free Bitcoin every month. To make that happen, I currently need donations. If you would like to support future Bitcoin contests, please send donations to the following wallet address:

16hdfuSDpqC89YDzbDMyx5iKc2d2UkDR3i

Thank you to everyone who made a prediction in this contest, and make sure to check back in periodically for the next one…

Litecoin for Beginners

litecoinlogo

Litecoin Basics

So what is Litecoin? I’ve already written about Bitcoin basics and provided a Bitcoin glossary for digital currency virgins, but this is my first post on Litecoin, because I believe the timing is right.

Litecoin has often been described as the digital silver to Bitcoin gold. Many cryptocurrency fans will tell you that mining or investing in Litecoin right now is a great decision, and will be more profitable than if you did the same with Bitcoin under current circumstances.

Here are 5 facts about Litecoin that give a good overview of the subject.

1. Litecoin is a decentralized cryptocurrency, just like Bitcoin (BTC), not tied to any national government or bank.

2. There is a finite supply in circulation that will total 84 million Litecoin (LTC), exactly four times the Bitcoin cap.

3. The current value of a Litecoin is about 3% of a Bitcoin, at roughly $2.70 USD, compared to BTC at about $95 USD.

4. Litecoin is mined or minted in larger blocks than Bitcoin, and dispersed more often, every 2.5 mins or so, compared to Bitcoin every 10 mins. Bitcoin is released in blocks of 25, where Litecoin is at 50.

5. Litecoin can be efficiently mined with consumer-grade hardware, whereas most people would argue that to mine Bitcoin effectively you need to invest in highly specialiazed (and relatively expensive) hardware to mine BTC.

 

 

Word Puzzle Books for Sale for Bitcoin

niwuzzles2I’ve never sold a physical product before with Bitcoin, so I thought I would try an experiment to see how it goes. I’ve published two volumes of Niwuzzles, which are unique nine-letter word puzzles that I created. Niwuzzles are great for those who enjoy crosswords, jumbles, Scrabble, Boggle, word searches, or general trivia in a wide range of subjects.

I’ve decided to sell Volume 2 for Bitcoin. The book normally sells for about $6 CAD, but I’m making it available for 0.04 BTC (currently about $3.68 CAD, a savings of about 40%) and I will cover the shipping (in Canada) for FREE!

I won’t make any money on this (especially if you’re in Yellowknife), but I wanted to try selling a unique creation of mine for BTC. Plus, your purchase will help fund future contests on this blog. If you’re interested, email me with the address you would like the Niwuzzles book(s) shipped, and send 0.04 BTC per book to the wallet address below.

My email:  bread84@cloak.gli.ph

Bitcoin wallet address:  14WQxxAijvKcSx4yPLuKYLLwjADhX5PkqP

Niwuzzles Volume 1 is available for iPhone/iPod in the app store here. The puzzles are challenging, but you can turn hints on in the options menu. Thanks for your support. Happy solving!

Top 10 Terms for Bitcoin Beginners

I created the following Bitcoin glossary for newbies. The article below is original content of mine, but first appeared at skybin.net.

Techies are like superheroes to me. They have special powers and speak a foreign language. Computer gurus are not actually geeks, but gods of the information age, and I feel inferior in their presence, like I need to kneel and bow or something. Tech-savvy individuals possess a powerful and intimate knowledge of the cyber-universe, and although I can’t prove it, I think many of them make love to their computers at night.

I’m an elementary teacher by day, and a Bitcoin enthusiast by night—after the kids are asleep of course. I’m comfortable teaching a room full of 8-year olds hands-on strategies for solving math problems, but when I first entered the mysterious realm of Bitcoin, it was more like high school calculus. I was lost most of the time, but what I did understand was actually pretty cool.

The following little glossary is for people like me with zero technical computer knowledge (I think I Googled megabyte once) and are brand new to Bitcoin.

Top 10 Terms for Bitcoin Beginners

  1. Crytpocurrency: a term for a digital currency like Bitcoin, based on cryptography, which means communication and transactions occur based on computer science and mathematical theory.
  2. P2P: stands for peer-to-peer, the network structure of Bitcoin where individuals share the workload of monitoring, confirming, and recording Bitcoin transactions.
  3. Wallet: the place your Bitcoins are stored, either on a personal computer, secured website, or mobile device. You can have many Bitcoin wallets and all are compatible.
  4. Mining: the process where computer software, or sophisticated hardware, solves mathematical problems in an effort to discover or mint new Bitcoins. They are released in blocks, approximately every 10 minutes somewhere in the world.
  5. Blockchain: the entire database of Bitcoin transactions, which is essentially public knowledge. I have it on my Kindle for when I’m really bored.
  6. BTC: the short form for Bitcoin currency, like CAD, USD, or EUR.
  7. Satoshi: the pseudonym of the alleged inventor of Bitcoin, Satoshi Nakamoto. A satoshi is also the smallest fractional unit of Bitcoin, 0.00000001 BTC (eight decimal places).
  8. Bitcoiner: any Bitcoin user or fan. I have no idea who, ahem, coined the term.
  9. ASIC: a top brand of Bitcoin mining equipment, which stands for Application Specific Integrated Circuit.
  10. Difficulty: the Bitcoin difficulty level refers to how challenging it is to mine new blocks of Bitcoins, which is currently at 26,162,876. That’s a really big number and I have no clue what it actually means.

Do any of my technologically literate comrades have other basic Bitcoin terms to add?

Top 10 American Bitcoin Businesses

americanbitcoinswebsitesIf I took a Bitcoin holiday and travelled the U.S., where would I spend my Bitcoins?

With Independence Day behind us, and our great southern neighbour now into its 238th year, I thought I would salute my American friends with my list of the top places I personally would use my BTC.

Top 10 American Bitcoin-Friendly Businesses

  • Lucid Guitar Lessons – I bought a guitar a couple years ago, and I currently stink. It’s not even funny. My clumsy, useless fingers fumble between chords like I’m trying to find a light switch in the dark. I would love to find the time to take some authentic guitar lessons, paid for with Bitcoin.
  • Cabin Rental – Our family is pretty big, and this sweet cabin rental in Idaho would be an amazing vacation destination that would accommodate all of us, and provide wonderful family memories.
  • Planet Linux Caffe – I’m a black coffee drinker—I have one at dawn and dusk. This looks like an awesome place to hit up, buy a cup of java with digital money, and discuss life with friends.
  • Draper University – I’m a life-long learner myself, and this environment of higher education accepts BTC for tuition payment. If I couldn’t take a short course, maybe I would just stop in to visit.
  • Cafe Berlin – What happens with Bitcoin in Vegas, stays in Germany, I mean, Vegas. I have some German blood in me, so the thought of sausage, sauerkraut, and beer with BTC makes me drool, times drei.
  • Cups and Cakes Bakery — For dessert I would check out this little sweet-tooth heaven in San Fransisco. Would love one of these:
bitcoincupcakes

Photo credit: Cups and Cakes Bakery

  • Caring Dentists – Of course, after too many cupcakes I would want to make sure I had a good dentist that accepts BTC to help me out with my oral hygiene. Can I get virtual gold fillings?
  • Pacific Tradewinds Backpacker Hostel — Another little gem in San Fran to visit if I was travelling solo. Very affordable, close to many attractions, and you never know who you might meet there.
  • Bear and Birch — Guess what this is. Restaurant? B and B? Yep, a Russian Banya and Spa in New Jersey. I thought a Banya was a funny Seinfeld character. You learn something new every day.
  • Greene Ave. Market — Fresh, organic veggies. Not much else to say. Delicious.

Any of my American friends have a Bitcoin business they like?

Bitcoin Mining, Digging Deeper

The following is a guest post by Max Skybin, author of SKYBIN.NET.

There are many ways to obtain Bitcoins. You can buy them at online exchanges, such as MtGox or CaVirtEx. You can knit socks and sell them for Bitcoins. Or you can buy a special gold coin that carries a Bitcoin balance. But how do Bitcoins get there in the first place? What is this omnipotent force that creates new Bitcoins? And who is the initial receiver of the newly minted virtual cash?

We know how the good old loonie gets created. Government prints it. Literally. They take sheets of paper (or pieces of metal) and put numbers on them. The numbers say just how much monetary value is assigned to each bill or coin. Government then distributes the money to people through banks and other financial institutions. In order for me to get my hands on some money, I need to provide a proof of entitlement, for instance a proof of work that I have done for my employer. My employer then instructs the bank to transfer money from their bank account to mine. Conventional money therefore heavily relies on government and banking system to mediate financial transactions.

By contrast, Bitcoin is a decentralized system that doesn’t rely on government, or financial institutions, or any other central authority to operate. Instead, it is run by a global distributed network of computers, each contributing a share of processing power. The network is governed by a complex mathematical algorithm that controls how many new Bitcoins get released into the wild. Today, 25 new Bitcoins get created roughly every 10 minutes. The number of new Bitcoins decreases overtime, so that somewhere around the year 2141 creation of new Bitcoins will cease. In total, there will be 21 million Bitcoins ever created. We’ll all be dead by then. Yay.

As different as Bitcoin’s distributed system is from government issued money, it still relies on a similar fundamental concept. In order to obtain Bitcoins, you must provide proof of work to the Bitcoin’s distributed system. In exchange, you get issued reward in Bitcoins. What kind of work one must do to get Bitcoins? Well, if you thought your job as an armpit sniffer would get you virtually rich, you are out of luck. Remember, in order to function, Bitcoin needs contributions of computational power of thousands of computers around the world. The process of performing complex mathematical (to be specific cryptographic) calculations to support Bitcoin network is called mining and it’s precisely the type of work that new Bitcoins are awarded for.

What exactly is mining and why is it so important for Bitcoin? The technical definition of mining is “scanning for a value that when hashed twice with SHA-256, begins with a number of zero bits.” Sounds more incomprehensible than beauty pageant babble, doesn’t it? Well, it’s actually pretty simple. Let’s look at how Bitcoin system works. You are John and you just had a brilliant idea to send 1 Bitcoin to Sally for her birthday. After all, what girl wouldn’t prefer becoming the owner of virtual money over getting a new diamond ring or a pair of shoes? In order to advise the Bitcoin network of your noble intention to perform a Bitcoin transaction with Sally, your Bitcoin wallet broadcasts it. The network waits for a certain number of transactions to appear and then bundles them together in a block. The blocks get recorded sequentially in a global ledger called the blockchain.

But before a block can be recorded in blockchain, it needs to be universally accepted as valid. This is where miners come in. All miners on the network rush in to solve or find the block, which means come up with that very special number that will uniquely identify the block on the network. Remember the number that “hashed twice with SHA-256, begins with a number of zero bits”? That’s the one.

Once the block is solved, other miners validate the solution, which in itself is a very fast mathematical calculation. The block then gets universally accepted and recorded in the blockchain. The miner who found the block gets a reward. The reward is currently set at 25 newly created Bitcoins. What do all the other miners get for their work on solving the block? Nada. Zilch. Nothing. Finding a block is a competitive game and only one lucky bastard wins. At the current price of Bitcoin hovering around $100 mark, the stakes are very high. That’s why many people invested tens of thousands of dollars in specialized mining equipment. Access to faster hardware means better chance (or higher statistical probability, in geekspeak) of solving blocks.

Because of how mining algorithm is designed, the Bitcoin blocks become increasingly hard to solve as more people mine them. The mining process requires computers to perform billions of special cryptographic calculations (such as previously mentioned SHA-256) per second to find a block. If you thought you could use that shiny new computer you just bought from Best Buy or Future Shop to solve a block, think again. At the current level of difficulty, it would take years for a general purpose PC to find even a single block.

Over the years, people have designed and used progressively faster and more efficient equipment to mine Bitcoins, from very powerful video cards to arrays of programmable chips, called FGPAs, to specially designed integrated circuits, called ASICs. They also found a way to combine computational power of computers into groups where many individual miners work together to solve blocks. This approach, called pooled mining, has become pretty much the only way to mine Bitcoins these days. Pooled mining allows folks with slower hardware compete in the block solving race by performing a fraction of overall workload necessary to find blocks. In return, they receive a share of Bitcoin rewards proportional to their contribution.

If you are like my kids, and like to whine on occasion, you might ask a somewhat obvious question: “Daddy, why does mining have to be so hard?” Well, my little ones, that’s because daddy said so! “Daddy” in this case is not yours truly, but the mysterious creator of Bitcoin protocol, known only by the pseudo name of Satoshi Nakamoto. Satoshi designed the system in such a way that it takes combined power of many thousands of computers to generate new blocks. Looking at it another way, it would be extremely hard for a single person to amass enough computational capacity to take over the creation of new blocks. If that were to happen, it would be a very bad situation as one miner could abuse the system by generating rogue blocks containing double spend transactions. It would allow John to send the same Bitcoin not only to Sally but also to Maria, Jennifer, and Helen. Whoever Satoshi Nakamoto might be, he is clearly not a proponent of such digital promiscuity.

If you want to calculate how profitable your mining will be, you need to use the following formula:

bitcoinformula

You know I am messing with you. You don’t need the formula. Just remember that mining profitability is a trade-off between your hardware’s power consumption vs. its mining speed. The speed is expressed as the number of cryptographic calculations (hashes) a mining rig can perform per second. Common notations are KH/s (kilohash per second), MH/s (megahash per second) and GH/s (gigahash per second). The faster the rig, the more Bitcoins it will yield in a given timeframe. To calculate profitability, you can simply use one of many free online calculators. I like the one at BitcoinX, because it factors in profitability decline due to rising difficulty, which allows for a more accurate prediction.

So here we are. I can’t believe you’ve actually read the whole article. It’s time for me to shed an appreciative tear and say good bye. But before I do, I’d like to make one final note. Mining can be a very exciting endeavor. In the past year, I’ve gone from CPU, to GPU, to ASIC mining and I can tell you I am hooked. To me, mining is not only about potential financial rewards. It is also about being a part of a community that can fundamentally transform the way we handle money. Make it better, faster, cheaper and more convenient for businesses and individuals. You should give mining a try someday. It will make you a better person. Also, you will become irresistibly attractive to the opposite (or the same) gender. Seriously, I promise.

Make a Prediction, Win Free Bitcoin!

Free Bitcoin Contest

Think you can predict what the BTC price will be at the end of the month? Closest prediction will win 0.2 BTC.

Rules:

You must comment on this post with a prediction of the Bitcoin price in CAD, by Friday, July 12, noon EST. One prediction per person/IP address, and you must include a Bitcoin wallet address in your comment. I will check the BTC price on July 31, 10pm EST, and the VirtEx price will be the official price used for this contest.

Note: I will not be approving comments/predictions until after the deadline, so nobody will have the advantage of seeing other predictions and guessing one cent higher/lower, for example.

Total bragging rights and 0.2 BTC could be yours. Good luck!

How Big is the Bitcoin Gender Gap?

femaleAll the Bitcoiners I know are dudes; both the ones I know personally and the ones I’ve met online. Why is that? I hate to fan the stereotypical flames, but it seems most fans of Bitcoin are male computer gurus. How true is this? I decided to investigate the Bitcoin gender gap a bit deeper, with a little quasi-scientific research.

Bitcoin Meetup Groups

I searched the memberships of 3 North American groups and 1 Asian group, for a cross-cultural comparison. I only did a quick scan of member profiles, and there were some cases where the gender was ambiguous, so the actual percentages could be slightly higher. Nevertheless, the statistics are remarkably similar. Where gender is concerned, Bitcoin is a rare, one-sided coin.

  • Toronto: 4 females out of 154 members — 2.6%
  • Vancouver: 4 females out of 164 members — 2.4%
  • Los Angeles: 2 females out of 84 members — 2.4%
  • India: 3 females out of 134 members — 2.2%

Let’s Talk Bitcoin

One person representing the female side of the Bitcoin is Stephanie Murphy, co-host of Let’s Talk Bitcoin. She brings a refreshing and articulate voice to the digital currency world. She’s an informed freedom fighter, and the global Bitcoin community could really use more people with her talent and experience.

The Bitcoin Wife

I couldn’t post about Bitcoin and gender without mentioning The Bitcoin Wife. This chick totally rocks. Check these out:

bitcoincookies

Photo credit: The Bitcoin Wife

Mmm, crypto-cookies. They’re digi-licious…

The Bitcoin Wife is lucky I’m happily married. Otherwise I doubt she would be able to resist my Canadian charm and chicken legs. I keep wondering what The Bitcoin Husband is like. Probably some massive, hulk of a man, pumped full of steroids he bought on the Silk Road or something. I wonder I if I could take him (I have baby spit-up on my shoulder, and I’m drinking a glass of sauvignon blanc as I write this). Tough call.

Calling all Bitcoin Babes

Ladies, we need our compañeras in the Bitcoin revolution. If you’re a female fan of Bitcoin, I’d love to hear your story about how you got into it. These two questions are for you: How big is the Bitcoin gender gap? And does the size actually matter?

 

 

 

 

 

Bitcoin Wallet Review: MultiBit

multibitappMultiBit is a desktop Bitcoin wallet that is simple to download and begin making transactions with. You can easily add numerous wallets, name them, and send and receive Bitcoins. You can set a password on your wallets, and change some preferences like the default transaction fee (0.005 BTC). The current Virtex and MtGox prices and displayed, and checking your wallet balances and transaction history is intuitive. MultiBit is not the most visually stunning wallet, if that is important to you. And sometimes when you go to send Bitcoins, the wallet address for your previous recipient remains in the display field, which you need to delete before adding a new one. Overall, MultiBit is a very good lightweight Bitcoin wallet. I give it 4 stars.

4stars

Does Bitcoin Supply Matter?

So I’m thinking about booking a vasectomy soon. We have three amazing kids, and I just thought you would like to know that little personal anecdote. I like my children the way I like my Bitcoins—a controlled, finite supply.

The total number of Bitcoins in global circulation will reach a limit of 21 million, reportedly by the year 2140. We’ll all be dead by then, but are the numbers important today? What’s the significance of a capped currency? Let’s consider the basic reality of supply and demand.

Supply

Part of the definition of economics includes, the choices humans make to deal with scarcity. When something of value is scarce, its value increases, so the theory goes. Consider gold, a somewhat scarce precious metal. The current price per ounce is quite remarkable when you think about it, even though it has dropped in recent months. Why has the price of gold dropped? There is a finite amount on the planet. Has mining increased the supply too much? gretzkyrookiecardConsider the various choices humans make to deal with the scarcity of a valuable commodity. In the case of gold, people might invest in silver because it’s cheaper, or an international fiat currency, or perhaps they need to buy something else so they sell off their gold. Fifteen or twenty years ago, a Wayne Gretzky rookie card was selling for about $1000. I used to go to sports card shows with my dad long before eBay. Today the same card might fetch a few hundred dollars. However, an individual collector might pay thousands for one in mint condition. Since Gretzky rookie cards in mint condition are scarce, they could be worth much more, if societal trends and economic factors increase the demand, the second part of the equation.

Demand

Remember Pogs? For some reason the demand for Pogs spiked and they sold like Tickle Me Elmos that one Christmas. Does a finite supply of anything matter, if the demand for it is unpredictable or nonexistent? The supply of Bitcoin is predictable and limited, but so what? If nobody knows about it or wants it, is it actually worth anything? The past few days have seen the price of BTC drop significantly, and there are numerous theories to explain away this drop, often followed up by predictions that the decrease is temporary, to ease the minds of Bitcoin advocates and investors. But what if the price keeps dropping because people don’t care. I love Wayne Gretzky, but I wouldn’t pay a thousand bucks for a piece of cardboard with his picture on it. The Great One can’t pay the bills or put bread on the table for my family. Is it the same with Bitcoin? Do people (the ones that know about it) believe you can’t actually do anything with it? Is Bitcoin used mostly for drugs and online gaming, or stuffed under virtual mattresses to see what happens to the price in the future? The supply is a non-issue if general awareness and confidence isn’t boosted, and the demand for Bitcoin isn’t secured and consistent.

Fallacy of Composition

Another economic principle is the fallacy of composition, which basically states that what’s good or true for an individual, is not necessarily good or true for the economy as a whole. Could this be a factor affecting Bitcoin? Some people love and use Bitcoin a lot, but does that mean it would be a good thing if everyone did, or if it was the only currency in existence? Is Bitcoin destined to remain on the fringes or in the underground? Would mainstream acceptance of the digital currency cripple other important aspects of life as we know it? These and others are important questions for us to ask.

The demand for Bitcoin is unpredictable, and that’s precisely one reason that makes it so fascinating. At least we know the supply is controlled. And like getting a vasectomy, nothing is for sure. I’m hoping, with Bitcoin that is, for a pleasant surprise in the future. Like most Bitcoin fans, I predict that a finite supply of Bitcoin in circulation will make a vas difference.