back to article Altcoins will DESTROY the IT industry and spawn an infosec NIGHTMARE

Much has been written about how Bitcoin will affect libertarian society, banks, money and government, but there are some other effects that bear consideration: what it will do to the IT industry. Imagine you've always lusted after the highest of high end graphics cards. Why pay £500 for something that's only for improving the …

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  1. lurker

    Valid Points

    I think though that to say that they (graphics cards purchased for mining) 'will not have a resale value' is an exaggeration.

    It's almost certainly true however that the resale value of cards will be affected by the glut of cards which are purchased for mining and then dumped onto the second hand market when they quickly become obsoleted by a newer card. So it's true that people buying such cards would be wise to expect to be selling them for considerably less than the current going rate.

    Which is potentially good news for gamers looking for second hand cards in a few month, although the question arises: do you want to buy a card which has been nuked at maximum load 24/7 for the last six months?

    1. Anonymous Coward
      Anonymous Coward

      Re: Valid Points

      A lot of miners do it because they had the video card for gaming anyway - so when it becomes unprofitable they will just stop mining and the cards will just be used for gaming. I'm sure some GPUs will have been bought purely for mining but even there it depends on a lot of factors - some people may keep them running for longer if their other costs (electricity mainly) are cheaper than others.

      We are also a long way off the electricity costing as much as the (alt)coins are worth - even where electricity is expensive here in the UK and (although certainly illegal) I am sure there are people who are mining this stuff on someone else's electricity bill - so for them the economics are completely different.

      1. h4rm0ny

        Re: Valid Points

        >>"I am sure there are people who are mining this stuff on someone else's electricity bill - so for them the economics are completely different."

        By "someone else", do you mean parents? Cause I have a sneaking suspicion that a lot of the bitcoin mining going on is by live-at-home kids - people who have the free time and subsidised living costs. I imagine there will be a few raised voices when the electricity bill comes in!

    2. Anonymous Coward
      Anonymous Coward

      Re: Valid Points

      The cards all have thermal controls and (should) operate within their design parameters - so I would think a card used 24x7 as a miner is still perfectly good after 6 months - they run hot all the time but that's probably no worse than the thermal stress of heating up / cooling down that would happen in a normal machine. Many of these cards will have multi-year warranties anyway.

      1. lurker

        Re: Valid Points

        I know that in theory they should be fine, however the truth is that they are not really designed, as gaming GPUs, to run 24x7.

        Given the choice between one which had seen normal use, and one which has had it's nuts clocked off and then been run with a custom water block at the absolute thermal limit for 2000 hours without a break, I'd choose the former, all else being equal. Perhaps that's just my suspicious nature.

        Quite right about the warranties, but having to return stuff is hassle I prefer to avoid.

        1. Aldous

          Re: Valid Points

          That's why you don't run them to maximum, you run them at around 75% fan speed and keep the temps below 90 (i use 80). I have not had any issue with graphics cards in 1.5 years of mining bitcoins then alt coins.

          I did resell the cards and mentioned the period of their usage. Also the assumptions in this article are wrong, miners are always shifting cards on ebay and these often go to games machines or other miners. There won't be a glut in the market as scrypt based alt coins pop up and fizzle away continuously. If you know what you are doing you then use a multipool which mines the most profitable coin and then auto transfers to an exchange which auto sells for BTC which then auto deposits to your BTC wallet.

          Doing it that way you never really reach a point where it costs more power then it does to continue mining which is usually the only thing that forces an upgrade. In my case it's kept me in high end gaming cards as between the resell value+coins mined and sold- electricity i am still making a clear profit each month and heating my office nicely. The machine sits mining and i can stop it when i want to game and restart afterwards. using a coinswitching pool means i don't have to care too much about what coin the flavor of the month is as my holdings are auto cashed out and make a tidy profit for doing nothing. The only issue is in the summer getting the heat out can be a pain (no aircon) but there are ways around that.

          The cards all hit ebay at different times so there is never really a glut. There has been a shortage of some models of new cards that has been attributed to miners but other then that it does not affect the normal pc buying world in the slightest.

  2. Frankee Llonnygog

    And ...

    Financial services regulation will destroy the alternative coins industry. But not before some massive frauds are perpetrated

    1. This post has been deleted by its author

      1. Simon Rockman

        Re: And ...

        Who? People, like Cypriots, who don't trust their governments and financial institutions.

        1. Jason Hindle

          Re: And ...

          "Who? People, like Cypriots, who don't trust their governments and financial institutions."

          Better a few gold coins in an Oxo tin under the bed, than placing one's wealth in the latest web driven bullshit boom.

          1. NumptyScrub

            Re: And ...

            quote: "Better a few gold coins in an Oxo tin under the bed, than placing one's wealth in the latest web driven bullshit boom."

            Right up until the price of gold tanks, of course, and those few coins in the tin become worth less than the paper cloth already in your wallet.

            The gold standard has come and gone, allowing the price of gold to fluctuate as wildly as any other commodity. Thus gold (and by extension platinum, diamonds, and other "precious" items) are no longer guaranteed to be worth the same in the future as they are now. The UK famously sold off half its gold reserve when gold was at a low, in order to finance the purchase of... foreign currencies.

            I'm not saying your experience will be the opposite (buying high and finding the price tanks from $1200/oz. back to $300/oz.) but I also cannot guarantee that it won't fall back to those levels, since nobody uses the gold standard any more there are no real limits on the price variance. Gold is now only worth what someone will pay for it, rather than defining the value of other items :'(

      2. Anonymous Coward
        Anonymous Coward

        Re: And ...

        The issue is 'the people' may not trust their governments to manage money - current fiat money is typically not backed by anything other than a promise and they can be easy to break if times get tough.

      3. Tom 13

        Re: And ...

        The legitimate use case is that these crypto currencies are in some sense like gold: their rarity isn't controlled by governments, but by natural availability. They attempt to correct for the one problem of gold in that their rate of discovery is reliably predictable. Diamonds have an even worse problem than gold in that that their production is known to be controlled by a small number of suppliers.

        Personally, I don't see it happening. I believe the author should have written 'Libertarian' instead of 'libertarian' because it's the hard core crackpots who push this ideologically. The crooks have thrown in precisely because it so far is anonymous and the cops haven't figured out a way to control it (I think they will, and I think the pressure point is actually fairly obvious). And the opportunists are looking to make a quick buck/pound/yen while the making is good.

        Now the knock on effects described in the article are a different story. At some point the tulip bulb market in graphics cards will implode. So long as you haven't actually mortgaged the house to buy one, I don't regard that as a bad thing. But the advancements in password cracking are a whole other story.

        1. Tom 13

          Re: I think the pressure point is actually fairly obvious

          and the very day I post that comment they were busy working that very pressure point:

          http://www.theregister.co.uk/2014/01/27/feds_collar_bigname_bitcoin_trader_in_moneylaundering_investigation/

      4. NumptyScrub

        Re: And ...

        quote: "The thing is, who other than criminals or speculators really want Bitcoins? If somebody could come up with a legitimate use that can't be fulfilled with existing currencies, surely the answer is to find a way of generating a financial product to fulfil that need. Bitcoins are basically a replacement for diamonds, and there are reasons why diamonds have never become widespread currencies.

        Rather than downvote, explain why I'm wrong."

        Currency is currency; barter tokens to enable the exchange of goods or services, and a "valid" currency is one accepted by both vendor and purchaser. We already have multiple currencies with variable exchange rates, so why would one more (or less) be an issue? If I am already at liberty to purchase goods for GBP, EUR, USD or CHF, why is BTC somewhow different? Since I live in the UK I'd struggle to find a "legitimate" use for EUR or CHF with local vendors. Doesn't stop them being "legitimate" currencies though, widely accepted (in certain geographic regions) and with published exchange rates for those geographic regions they are not accepted in.

        If multiple vendors are willing to accept BTC, then BTC is a valid currency for those vendors, much like the Tongan pa'anga or Azerbaijani marat are accepted by some vendors, but not others.

        The reason diamonds are not a widespread currency is also fairly obvious; we no longer use gold or silver directly as currency, so the inherent value of the tokens are irrelevant. All that is important is the stated value of the token, so there is little point trying to fit an appropriately sized diamond into something to give it value. If we move back to coins being made of something worth exactly the stated value, then I could see a point for diamonds, but that concept hasn't been used for some time.

      5. Necronomnomnomicon

        Re: And ...

        As well as getting round governments, they also get around the Visa/Mastercard/Paypal monopoly.

        Say you want to donate money to Wikileaks (don't ask me why, but for our purpose you do). Because their actions have been deemed unsavoury, you can't donate with your Visa or Mastercard because Visa and Mastercard are refusing to let you do that. Ditto for Paypal*. Now you can either send your pound notes in the post and hope the postman doesn't nick them, or you can use bitcoin. There is the value.

        Of course, that's not likely to be an everyday scenario for anyone. But where other payment options have failed, bitcoin will be there and it can't really be blocked. Therein lies the value. You might be supporting freedom of speech advocates in Iran, or it might be NAMBLA, but it's your call and The Man can't stop you.

        *Disclaimer - I'm not sure if this is still true, it certainly was at one point

        1. Frankee Llonnygog

          Re: "The Man can't stop you"

          They certainly could if they wanted to but they may just choose to keep monitoring and manipulating a compromised system

      6. Suricou Raven

        Re: And ...

        There's a lot of interest from political enthusiasts. The libertarians view it as a way to escape the tyranny of government control and usher in a new economic utopia, while the usual anti-corporate types see the potential to escape from the corrupt clutches of the financial industry.

  3. Anonymous Coward
    Anonymous Coward

    This one will run and run....

    ... until they run out of mugs to buy the coins.

    1. Anonymous Coward
      Anonymous Coward

      Re: This one will run and run....

      Are you kidding? The market is going *UP* and will never crash!

      Trust me. I'm A. Tulip, former real estate manager.

      1. Michael H.F. Wilkinson Silver badge
        Coat

        Re: This one will run and run....

        Tulip? Where's mister Pin then?

        Where's my -ing coat, the one with "The Truth" in the pocket?

        1. Mike Timbers

          Re: This one will run and run....

          I always think of them when I see adverts for ING Direct. I just wish ING would put the missing word back into their company name. It would be a great name actually. Look at us! We're -ing Direct!

  4. Tom 13
    Black Helicopters

    So what you're saying here

    The combined Bitcoin world is generating over 14,000,000,000,000,000 codes a second. Devices which can generate 10,000,000,000 hashes a second now fit on a USB stick.

    Bitcoin, and all the other alt-coins, is training a skillset for building password-cracking hardware that is both powerful and portable.

    Is that this is yet another fiendishly clever NSA program that has stupendously backfired?

    1. Anonymous Coward
      Black Helicopters

      Re: So what you're saying here

      You think those are bitcoins you are working on.....meh, that is mealy the cover story.

    2. Anonymous Coward
      Anonymous Coward

      Re: So what you're saying here

      re: "Devices which can generate 10,000,000,000 hashes a second now fit on a USB stick."

      Shouldn't that says 'programs' instead of 'Devices'?

      Doesn't matter to me, I have enough trouble with real money.

    3. Aldous

      Re: So what you're saying here

      nope, the vast majority of bitcoin miners plug their device in, run cgminer and leave alone. It is no different to installing a game and requires no crypto knowledge.

      Only a few people are actually writing software or building hardware and these tend to be the people that are already doing it. i.e electronics engineers and security students.

    4. Anonymous Coward
      Anonymous Coward

      Re: So what you're saying here

      "Bitcoin, and all the other alt-coins, is training a skillset for building password-cracking hardware that is both powerful and portable."

      Although, the use of GPUs for encryption cracking isn't new. It was quite popular for cracking satellite TV encryption codes, before P2P and the like made downloading TV and films more accessible.

  5. Pete 2 Silver badge

    The new renaissance

    The article boils down to the point that manufacturing always lags demand. Then it overcompensates, floods the market, crashes the price and starts lagging when the next fad arrives. So far, so normal.

    What is interesting is the realisation that there is mind-numblingly fast processing power available - with more to come. None of which is encumbered by operating systems (which have been described as a way of slowing down a computer to a manageable speed) and/or the massive overheads of securing the whole mess..

    Perhaps, when all the fuss over bitcoin dies down, all this excess power can be harnessed into something useful. My proposals would be proper speaker-independent voice recognition and maybe the ability to do some real-time processing on HD video streams. You know the sort of thing: replace the news-reader's head with a talking cat, remove all their clothes, have yourself playing centre-forward for your favourite football team.

    I can see that this could well be the next phase of software development. Let's face it: operating systems have been, essentially, stagnant for the past 20 years (merely adding new polish to the UIs and support for new hardware). Office apps likewise - after formatting and spell checkers, how many features does the average user need, want or use. Games? Well, someone who was frozen in time for the nearly 40 years since Wack-a-Mole would instantly recognize todays FPS games as kin, even if the graphics has changed for the prettier. So maybe all this superfluous computing power can be put to some new and original uses. After all, has anyone ever found a Bitcoin?

    1. Primus Secundus Tertius

      Re: The new renaissance

      @Pete2 14:04

      You are right about the poor quality of voice recognition technology. National press (Telegraph) and trade press (Register) are full of woeful errors. For example, people pour over documents to tow the line.

      OCR is pretty good with modern typefaces on clean documents, but is weak with old fashioned typed documents.

      The average typist, e.g. me, is not very good. I do find the coloured squiggles of MS Word to be generally helpful, but some people don't seem to bother.

      We need a software kit that quells / The prevalence of awfull spells / And so it needs a lot of bells / and whistles till the answer gels.

      Fast hardware may help.

      1. Graham Dawson Silver badge
        Coat

        Re: The new renaissance

        I had my red pen out to correct you when I realised what you meant.

        I'll just... be over there.

      2. Stoneshop

        Re: The new renaissance

        ITYM: OCR is pretty good with modem typefaces on dean documents, but is weak with old fashionecl typed docurnents.

    2. Charles 9

      Re: The new renaissance

      Perhaps, when all the fuss over bitcoin dies down, all this excess power can be harnessed into something useful. My proposals would be proper speaker-independent voice recognition and maybe the ability to do some real-time processing on HD video streams. You know the sort of thing: replace the news-reader's head with a talking cat, remove all their clothes, have yourself playing centre-forward for your favourite football team.

      We're working on the voice recognition part. I think the stumbling block here is the "intuition" factor: being able to make accurate educated guesses based on incomplete data. That's a "hard" problem right now because the human brain and a deterministic computer don't work the same way. We've made progress in the field using neural nets, but translating this progress to discrete computers again isn't as easy as it sounds.

      As for video encoding, this has been asked about ever since GPGPU computing has appeared. One problem: motion estimation, probably the most computationally-intensive task of modern lossy video encoding, doesn't suit well to GPGPU because it has a divergent workload: that is, in worst case, it can end up branching into more subtasks than you have compute units on the GPU, and if you have to shuffle the subtasks, you usually end up better off sending it back to the CPU which sees things more generally and has a more direct line to the main memory. I've seen the x264 forums discussing this aspect.

    3. Anonymous Coward
      Anonymous Coward

      Re: The new renaissance

      "... when all the fuss over bitcoin dies down, all this excess power can be harnessed into something useful ..."

      Machines blocking every possible pathway you may be hiding in ...

  6. Bucky O' Hare

    I'm mining Litecoins as we speak...

    ... and also Dogecoins too on another PC.

    Collectively, my mining PC's have a KHash rate of about 2000, and they're making coins all the time, which are worth real money. Yes their value fluctuates heavily, and their maybe a crash at some point. Their may also be another bull run.

    Roll back 5 years to when Bitcoins first came out, and nobody would have predicted their rise. Fast forward to today where we have 100's of other alt-coins and again in a few years nobody can predict what will happen. Personally I think half of the current alt-coins will fall by the wayside, but others will prosper.

    It's a really interesting market thats developing.

    1. Anonymous Coward
      Anonymous Coward

      Re: I'm mining Litecoins as we speak...

      The difficulty is going up but so is the price so it balances out - it's still profitable - well at the moment.

    2. Spiracle

      Re: I'm mining Litecoins as we speak...

      Personally I think half of the current alt-coins will fall by the wayside

      Half? Read up on the Network Effect. Think 99%.

      I think that the thing most likely to kill BTC is its own success. Should it ever get to a position where World+Dog is buying their beer and gum using it then the blockchain may well be so silted up that the verification lag per transaction will become unacceptable for larger sums.

      1. Dave 126 Silver badge

        Re: I'm mining Litecoins as we speak...

        Iitecoins were designed to not hand a massive advantage to specialist hardware over CPUs, but due to how it implemented the Scrypt proof-of-work GPUs are still faster.

      2. Charles 9

        Re: I'm mining Litecoins as we speak...

        I think that the thing most likely to kill BTC is its own success. Should it ever get to a position where World+Dog is buying their beer and gum using it then the blockchain may well be so silted up that the verification lag per transaction will become unacceptable for larger sums.

        This more than anything else has been what's turned me off Bitcoin. Keeping up with the block chain was actually seriously eating into my network bandwidth.

    3. Syren Baran

      Me too

      Free pizza and game codes. Hope this lasts for a while.

  7. ElectricFox
    Mushroom

    "You don't want to be left with all the cards at the end of the game."

    Brilliant line!

  8. Brian Miller

    All your passwords are belong to us!

    The guys who will really go for the used video cards are the ones who can profit the most from them. Got a database full of "encrypted" passwords? Not for long! Then they will be plain text passwords.

    Of course, all of these video cards could be scarfed up by science! Yes, you have a research budget, but no supercomputer. What to do? Lay your hands on that cheap post-coin goodness!

    1. Charles 9

      Re: All your passwords are belong to us!

      That will depend on the algorithms used to encrypt them. Some of them are still computationally infeasible even with modern tech (a matter of degree), barring exploits (a matter of kind).

      As for the laboratories, I'm sure cheap GPUs will start being looked at by universities interested in a HPC cluster (since they've been using hybrid kits for a few years now).

      1. Nick Ryan Silver badge

        Re: All your passwords are belong to us!

        Universities are already using cheap GPUs in various forms for cluster based processing.

        As far as I understand it, currently not often specifically as large HPC clusters but certainly for smaller systems with 10s of cards rather than 100s. You'd be surprised at what gets done on a limited budget and the innovation this forces.

        1. tojb
          Thumb Up

          Re: All your passwords are belong to us!: not just UNIs

          A mate went freelance as a drug design consultant, a couple of years ago now. No wet lab, no supercomputer, just a couple of machines with not-even-top-of-the-range Nvidia cards (plus his biocad subject knowledge, of course).

          He reckons that he has customers and is doing OK: this kind of proposition would not have been tenable pre GPU computing, but it will become increasingly common as people realise that they don't need the mainframe in the basement of their company/university to convert their science knowledge into cash.

    2. Alan Brown Silver badge

      Re: All your passwords are belong to us!

      "Of course, all of these video cards could be scarfed up by science! Yes, you have a research budget, but no supercomputer. What to do? Lay your hands on that cheap post-coin goodness!"

      In the meantime those of us who do science are being hamstrung by the inflated price of GPUs, and grant money has a nasty tendency to come with strings requiring it be spent _now_, not when prices crash.

  9. Anonymous Coward
    Anonymous Coward

    All that effort

    Instead of mining, crack the passwords that protect coins already mined.

    1. Marcelo Rodrigues

      Re: All that effort

      "Instead of mining, crack the passwords that protect coins already mined."

      There are none. Well, not in the blockchain. The blockchain is made of transaction after transaction, in such a way that the later validates the previous. One could try to break this - but he would need MORE hashpower than the rest of the network combined.

      At he moment the hashrate of the Litecoin network is =~ 68,9 gigahashes. To put it in perspective: a Radeon 7970 has about 750 kilohashes of processing power. To succeed at a 51% atack, one would have to get 51% of the processing power of the ENTIRE network. That means his own machines count too.

      68,9 gigahashes are about 91258 Radeons 7970. Add enough boards that this one person would have 51% of ALL. It is feasible, but hardly lucrative. Especially since the heist wouldn't go unnoticed, and either the coin would crash or the problem solved.

  10. Pierre Castille
    Stop

    Popular delusions and the madness of crowds

    I am currently reading 'Popular Delusions And The Madness Of Crowds", (1841) C MacKay

    We have been here before, many many times.

    1. Jonathan 29

      Re: Popular delusions and the madness of crowds

      Please bear in mind that Mackay's book is extremely biased overall, uses a plagiarized account of the tulip bubble and the book itself was written to help pump up a bubble in railway stocks which Mackay was invested in. The best way to explain why railway stocks weren't a bubble was to discuss previous bubbles and why this time was apparently different.

      1. Philip Lewis

        Re: Popular delusions and the madness of crowds

        I recommend ploughing through this masterpiece of research.

        http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691152640

        It turns out, that it never is "different". Same old same old ...

  11. Anonymous Coward
    Anonymous Coward

    What the writer of the article did not realize is that new altcoins are created regularly. So while ASICs are now being created for LTC, graphics cards will stay relevant for other altcoins. Same story like the one that happened to bitcoin. Nobody uses graphics cards for that anymore.

    1. Charles 9

      I recall Litecoin was specifically designed to not be GPU-friendly. Other coin proof-of-work algorithms could be tailored to make other specialized computations less optimal, although the AS part of ASIC means they can ALWAYS create a specialist unit. Question is, at what point does the algorithm make ASIC not worth the specialization vs. a general-purpose CPU?

      1. Dave 126 Silver badge

        In cryptography, scrypt is a password-based key derivation function created by Colin Percival, originally for the Tarsnap online backup service. The algorithm was specifically designed to make it costly to perform large-scale custom hardware attacks by requiring large amounts of memory. In 2012, the scrypt algorithm was published by IETF as an Internet Draft, intended to become an informational RFC, which has since expired. A simplified version of scrypt is used as a proof-of-work scheme by a number of cryptocurrencies, such as Litecoin and Dogecoin.

        http://en.wikipedia.org/wiki/Scrypt

    2. Marcelo Rodrigues

      "So while ASICs are now being created for LTC, graphics cards will stay relevant for other altcoins. "

      Not quite. The others altcoins (well, most of them) use Scrypt, just like Litecoin. The specialized Litecoin hardware would be quite happy to mine others Scrypt based coins.

      In fact, they are MORE profitable than Litecoin. They may be unstable, they will probably die on the long run. But it doesn't matter, as we mine and sell them at once.

      The site called "coinwarz" has a comparative between various altcoins, with profitability included.

  12. clocKwize

    Dedicated mining ASIC chips etc won't crack passwords without modification

    Unless the host computer gives it a list of every hash to try, which would be horribly inefficient as it could probably try them faster than its given them.

    the code that mines basically double SHA256's a few parameters joined together to see if it gives back the correct result. Its the previous hash, a nonce and a timestamp (my rough interpretation, probably wrong but along the right lines), and from those parameters it can iterate through many inputs.

    To actually turn an ASIC chip in to something to brute force a password would require changing the ASIC chips in a big way, I'd guess. Not to say someone (read: NSA) wouldn't do that.

    1. Brian Miller

      Re: Dedicated mining ASIC chips etc won't crack passwords without modification

      To actually turn an ASIC chip in to something to brute force a password would require changing the ASIC chips in a big way, I'd guess. Not to say someone (read: NSA) wouldn't do that.

      An ASIC can be altered by the person implementing it. There are many different types of ASICs, from ones that must be fabbed, to ones that must be programmed by a device programmer, to ones that can have their logic changed in the field. When the Opteron first came out, there was a compatible FPGA chip that could be dropped into a second socket, and could be reprogrammed for specialized tasks rather quickly.

      As for breaking passwords, there was an article a while back on Ars Technica about using video cards for that task. So between rainbow tables, known passwords, dictionaries, and brute force, it's a bad time for conventional passwords. Especially 123456!

      1. Roland6 Silver badge

        Re: Dedicated mining ASIC chips etc won't crack passwords without modification

        >it's a bad time for conventional passwords. Especially 123456!

        Only if you can offload a password file and process it off-line.

        I suspect that even with a USB mounted cracker will still have problems getting into a Windows host set to lock an account after three failed login attempts and that is before we consider the effects of HD encryption. So I suspect that the normal ways into a host are still necessary ie. malware injection, so that a password file can be off-loaded for remote/off-host processing.

        The real question is how secure is the authentication DB on an AD server...

        1. Joe Montana

          Re: Dedicated mining ASIC chips etc won't crack passwords without modification

          // The real question is how secure is the authentication DB on an AD server...

          Not very... and windows passwords don't even need to be cracked, you can authenticate using the encrypted hash without ever knowing the plaintext.

  13. Vociferous

    Aren't the ASICs so fast because they're, well, ASIC?

    As in "application specific"? Can they really be repurposed as general code-cracking machines?

    As for the graphics cards, nVidia and AMD both cripple their floating point maths performance because they want to sell their (much pricier) computing cards which use the same chips. That is, even if nVidia Titan got so common that second hand prices were forced down, it's not really all that hot when it comes to cracking codes.

    EDIT: Also I'm not at all sure there are all that many miners compared to gamers. But what do I know.

    1. Tom Womack
      Boffin

      Re: Aren't the ASICs so fast because they're, well, ASIC?

      Yes: the high speed of an ASIC hash engine comes because it's a pipelined implementation of SHA with the try-next-nonce code baked in, whilst a password-cracking engine needs a much more complicated next-trial-password unit

      The Titan does not have crippled floating-point performance; the GTX 780 range of cards does

      You don't need floating-point arithmetic to crack codes

    2. Charles 9

      Re: Aren't the ASICs so fast because they're, well, ASIC?

      It's not so much that as it is that, given the knowledge you got from making mining ASICs, you can make a codebreaking ASIC, tape it and such in a short period of time. IOW, it's becoming a lot quicker to turn out NEW ASICs because the Bitcoin boom forced everyone to find ways to speed up IC development.

      1. d3rrial

        Re: Aren't the ASICs so fast because they're, well, ASIC?

        "It's not so much that as it is that, given the knowledge you got from making mining ASICs, you can make a codebreaking ASIC, tape it and such in a short period of time. IOW, it's becoming a lot quicker to turn out NEW ASICs because the Bitcoin boom forced everyone to find ways to speed up IC development."

        SHA256 is an openly specified algorithm. Many papers exist about optimized sha256 implementations. If you know even the tiniest amount about Verilog, you can make a Bitcoin ASIC. I have worked on a Bitcoin ASIC for a friend a while ago and they just taped out. And I had 0 prior knowledge about SHA256 or ASIC development.

        Then you have to consider that cracking passwords is a whole other deal than mining for bitcoins. It may look like the couple bitcoin ASICs hashing at 19 peta-hashes per second are doing a lot. But they really really aren't. SHA256 is a 256 results are 256 bit long numbers. That means that there are 1.1579208923731619542357098500868790785326998466 × 10^77 different possible outcomes. And thats not the smallest number I've ever seen. so at 19 petahashes per second, at pure brute force it will take roughly 1.9324963489898961825344299081532201769952132344 × 10^53 years to calculate all possible hashes. Have fun mate.

    3. Anonymous Coward
      Anonymous Coward

      Re: Aren't the ASICs so fast because they're, well, ASIC?

      >EDIT: Also I'm not at all sure there are all that many miners compared to gamers. But what do I know.

      I would imagine that there are more gamers, currently. However, it doesn't seem implausible that some of these miners have lots of GPUs, whereas gamers can't really use more than two or three GPUs at the same time.

      1. Syren Baran

        Re: Aren't the ASICs so fast because they're, well, ASIC?

        "I would imagine that there are more gamers, currently. However, it doesn't seem implausible that some of these miners have lots of GPUs, whereas gamers can't really use more than two or three GPUs at the same time."

        On the big mining pools you usually see a couple of guys topping the list well above 100MH/s. To put that in perspective, guys with like 150 Radeon R9 290x. Dont think thats gonna be a gamer. But you see a whole lot of people, as in really many, with hash rates in ranges indicating that they have like one high end card to a dual crossfire setups. Seems like the total hash rates are fairly evenly split between a smaller group of "pro-miners" having several dedicated mining boxes and large group of gamers doing this more hobby like. Kinda makes sense, you can buy steam codes directly for altcoins after all. Thats like two top tier titles per month basicly free of charge for running your crossfire rig while not gaming ...

  14. Mage Silver badge

    Come and get them

    I have some lovely colours of Tulips.

    1. Dani Eder

      Re: Come and get them

      I hope you realize that floriculture (growing of flowers for money), including tulips, is a $100 billion business worldwide. Just because there was a bubble in tulips once, and US housing more recently, does not mean the underlying asset is worthless. People just get overexcited sometimes and drive the price above it's fundamentals.

      What are the fundamentals of a distributed payment network? In the case of bitcoin, it can move money internationally faster and cheaper than the alternatives (Western Union, PayPal, bank wires). Those features create demand to use the network. Since the bitcoin currency unit is necessary to move balances between users, that demand also gives the units a value. But you cannot separate the units from the network that moves them. Without the network they are immobile and useless.

      People are led astray by the "coin" part of bitcoin's name. We are familiar with coins as something in your pocket with an independent existence. Bitcoins are not like that. They are inseparable from the network, because without it, you cannot make and verify payments.

      1. Mark 110

        Re: Come and get them

        But the current value of Bitcoins is based on their uniqueness. They were first. People are using thhem. There is nothing about them that cannot be copied. When they are copied their value will fall. Their value is actually wildly volatile currently.

        It will be interesting to see if a bit/alt coin ever starts to function as a stable currency. Stability is important. You would not put your savings into a currency that might be worth 20% less when you need it, or worthless by the time you retire. Whilst the inherent built in limitations to the supply of Bitcoins, currently, are increasing their value, their is very little to stop a government (China? India? Iran? USA?) building a datacentre the size of ten football pitches, full of BTC asics, hooked up to spare nuclear plant capacity (fairly free) and just owning all of them..

        I doubt this experiment will work. Governments will insist on control of the money. Interesting to see how it pans out though.

        1. lorisarvendu

          Re: Come and get them

          I was watching an article about Bitcoin on BBC News this morning, and it got me thinking. Critics are expecting the Bitcoin price bubble to burst anytime now, and I admit that I was one of them. But if Bitcoin is starting to appear more and more on mainstream News programmes, then it's got a good chance of gaining acceptance as a legitimate mainstream method of payment.

          But if Bitcoin is ever going to be of any use in the world at large, it needs to be accepted and used in millions of financial transactions. The natural limit of 21 Million coins sounds like a lot, but it wouldn't be enough for a worldwide currency. Now Bitcoin already has this covered by making the currency units divisible by up to 8 decimal places. However for the smallest unit (0.00000001 BTC) to be usable, it has to be worth something. So 1 BTC therefore has to have a high enough value for 0.00000001 BTC to be worth anything. At the other end of the scale, there needs to be enough Bitcoins to enable transactions involving very large sums of money to take place. When Bitcoins were worth a dollar it would be impossible to pay someone the equivalent of $21 Million, because there weren't enough coins in existance.

          So to be able to use Bitcoins for transactions at both ends of the scale (selling a loaf of bread or buying a Company), the cost of a single Bitcoin needs to be far higher than the current $900.

          If my calculations are correct, for 0.00000001 BTC to be worth 1 cent (in US currency) a single Bitcoin has to be worth $10M. That would enable the currency to be used across the board.

          In which case, the value of Bitcoin has to continue to increase, with smaller divisions of coin coming into play, until the value stablises somewhere around my hypothetical 1 cent. Any lower or any higher and Bitcoin can't be used for transactions at the very top and bottom of the scale.

          Am I right here? If so, it's still worth buying and mining coin. Even if your mining rig currently makes a loss or breaks even against electrical costs, your coins will continue to increase in value, and you'll get your money back in spades.

          1. d3rrial

            Re: Come and get them

            @lorisarvendu

            I totally agree with you. Bitcoins could still exceed $10m dollars per bitcoin tho and still be very much feasible. The 8 decimal places limit isn't carved in stone by Thors mighty hammer Mjöllnir. If necessary the developers of Bitcoin could enable bitcoin to have 10 or 20 decimal places. This doesn't pose a problem. Bitcoin will take quite a while to hit $10m a piece tho. I'm sure of it.

            1. lorisarvendu

              Re: Come and get them

              It may take a while to hit $10m a coin, but between then and now it'll keep increasing. So 0.01BTC at the moment is a feasible investment (currently £12 sterling) and worth taking a punt at.

        2. NumptyScrub

          Re: Come and get them

          quote: "It will be interesting to see if a bit/alt coin ever starts to function as a stable currency. Stability is important. You would not put your savings into a currency that might be worth 20% less when you need it, or worthless by the time you retire."

          Currencies aren't necessarily stable, and "savings" (investments) are often in objects whose "value can go down as well as up", aka stocks and shares. Transience and devaluation already exist inside the savings mechanisms available; for instance the face value of French Francs is currently irrelevant, they are a collectors item rather than a currency now, even though 40 years ago they'd have been considered as stable as any other.

          Ultimately the "value" of any altcoin is going to be reliant on the confidence in the transaction network, and the perceived utility of it as a payment method. If the transaction network remains stable and secure, and enough vendors accept altcoins, then they are going to retain value, regardless of the actual magnitude of the value (whether 1 DogeCoin is $1 or $1000 is irrelevant, if you have enough to make the transaction).

  15. J.G.Harston Silver badge

    I was watching a BBC News 24 report about bitcoins, and they described them as "a string of unique digits that match the bitcoin algorithm".

    So, surely the easiest way to generate bitcoins is to just generate numbers

    000000000000000000000000000000000000001

    000000000000000000000000000000000000002

    000000000000000000000000000000000000003

    000000000000000000000000000000000000004

    000000000000000000000000000000000000005

    000000000000000000000000000000000000006

    000000000000000000000000000000000000007

    etc.

    and test each number against the bitcoin "is this a valid bitcoin number" database.

    1. d3rrial

      That is pretty much how it not works.

      If you want to learn how it actually works, look here: https://en.bitcoin.it/wiki/Block_hashing_algorithm and here: https://en.bitcoin.it/wiki/Getwork

      Other great ressources are http://bitcoin.org/ and http://coindesk.com/

      Regards

    2. Roland6 Silver badge

      Re: J.G.Harston

      Basically what you say is the method being used, only the database is a formula that generates a particular result with numbers having a certain property. So rather than looking a number up we have to test it (by running it through the formula) to see if it exhibits the desired property.

      We could liken this property to being prime, in the low number ranges it is fairly easy to test a number and confirm whether it is or isn't prime, but in the higher ranges more computation is needed. However, I suspect that the distribution of numbers that satisfy the bitcoin formula is more like the distribution of fibonacci numbers - many in the low number ranges, but becoming more spread out in the higher ranges. (With fibonacci numbers, the first ten are found within the first 55 numbers, the next ten within the next 6710 numbers and the next 10 within the next 825275...)

      With circa 12.3M bitcoins in circulation out of an estimated 21m, we are almost certainly well out of the low number ranges which we would expect to have a high density of suitable numbers. So the challenge now (for the miner) is finding a number range that isn't being mined and hoping that within it there are a few bitcoin's lurking and that you will find them in a reasonable length of time and before someone else... The fact that early miners are sitting on significant numbers of bitcoins and that current miners are effectively only locating sufficient bitcoins to do slightly better than break even on their 'expensive' dedicated mining rigs also tends to support this viewpoint.

    3. Anonymous Coward
      Anonymous Coward

      This is correct, however private keys are 256 bit random numbers - that's an unsigned integer which is 32 bytes long. That's one massive number : from 0 to 2 to the power of 256.

      The chances of finding a valid key which is in use by someone else are infinitesimally small.

  16. <shakes head>

    silly question

    the end result of all of the computation is heat?

    if you have a large heat requirement, then it is possible to meet that load and make money on the side?

    1. d3rrial

      Re: silly question

      Yes, we've been thinking about stuffing a shipping container full of ASICs or GPUs and renting it out to people in need of heating (like a festival or something), I don't know, for really cheap.

    2. Alan Brown Silver badge

      Re: silly question

      "the end result of all of the computation is heat?"

      Low grade heat - which makes it pretty much useless for most purposes unless you setup some kind of heatpump to bring the hot side up substantially - and at that point it's more efficient to just use a bigger heat pump.

      (I've just been scoping trying to repurpose 100kW of waste heat from our datacentre. It's barely economic to use the output for building heating at this level and bumps up implementation cost by at least £100k)

  17. Adrian 4

    So, the graphics card industry is going to collapse because of a temporary surge in demand ..

    Chicken Licken, the sky is falling !

  18. JustNiz

    GPUs are already not cost effective for Bitcoin mining anymore.

    Its ASICs or nothing these days.

  19. Anonymous Coward
    Anonymous Coward

    Synthetic Currencies

    Currencies are worth what someone will pay for them. Synthetic currencies like BTCs have no backing, while, say, Euros are backed by the ECB (and behind the ECB by a pile of meatbags in the EU).

    The problem with synthetic currencies is the value is unstable. You can speculate, but you might want to think twice about having your retirement 20 years from now based on one, unless you believe in infinitely inflating bubbles.

    The value of synthetic currencies seems to be more in reducing transaction costs skimmed by various interested players (they don't like you, they just like your money). For transactions, the synthetic currency has to be held only a short time therefore reducing speculative exposure.

    Right now there are a lot of people out there with more money than brains chasing the synthetic currency fad, willing to trade a currency backed by taxpayer labor for a currency backed by ... well, nothing. Great, as they say, mine coins while the marks line up to buy them. The steady state value has yet to be determined for any synthetic currency, maybe you'll win... or cling to the currency as it vanishes into history when the hot cash mob moves on.

  20. Anonymous Coward
    Anonymous Coward

    Reality

    So the upshot is :

    - People just starting with bitcoins have to be aware of loosing lots of money.

    - Everyone has to actually think about security because passwords that we thought were secure aren't really secure to someone that wants to break them, but then again never were anyway - this has just highlighted what people were able to do but no-one ever cared about.... and the 4 digit PIN for your credit card now only takes a fraction of a second to crack rather than 1-2 seconds.

    - Graphics cards manufacturers have to save their profit for the inevitable drop in turnover or go bust, which means their management teams have to be aware of their retail business customers - so we will see if AMD / ATI have good or bad management teams.

    - It made some sit-at-home computer nerds learn how to program ASIC's, which means we will all get better embedded technology products.

    - In a years time we can all buy really cheap graphics cards for our PC's and become recluses playing virtual world games until the next get-rich-quick scheme!

    I guess there are a few negatives as well ;)

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