While the "who has power in Bitcoin?"discussion was taking place yesterday, Stephen Pair, CEO at BitPay, a large but beleaguered Bitcoin payment processor, posted something titled "Miners Control Bitcoin."That post opens up with the false premise that to "take" control out of miners' hands would necessarily lead to a centralized system, and gets better from there, with some muddled arguments about how miners control the coin entirely, but must compete to provide a "good service at a competitive price point."First of all, if miners actually controlled Bitcoin, it'd be impossible to take control away from them by definition.Just the fact that his friends are suggesting the idea should have tipped him off that perhaps there is something wrong with the world view that miners control the blockchain.Second, centralized control is not the diametrical opposite of, or the sole alternative to, being puppet-mastered by the miners.The miners already do not control Bitcoin, and we did not have a Central Planning Board or a Five Year Plan last I checked.

The consumers (users and merchants alike) who wield power are themselves a decentralized bunch.I won't go through the rest of the post in detail.The dead giveaway that something is fundamentally wrong is evident from the phrasing that miners have to compete to provide a "good service at a competitive price point."Think about the things over which you have control.What you cook for dinner.What doodles you draw on paper.Where you drive your car.Or think about the things over which someone else, whether singular or an ensemble, has full control.litecoin hash rate historyThe speed of your Internet connection, if you live in the US.bitcoin dllWhether or not you get pulled aside by TSA agents for additional screening.fbi bitcoin virtual currency

In none of these cases, do the people who are in control have to compete with anyone.By definition, they are in control.They determine the rules.The miners have to compete for your wealth because they are not in control.They seek something that only the customers have -- your cash, and its concomitant ability to affect change in the real world -- in return for an intangible and highly replaceable commodity they produce that is trapped in the virtual realm, namely, digital blocks.bitcoin met idealI won't go into further detail because my previous post already discussed the specifics.how to buy litecoin from ukThe customers do need to work with miners to deter attacks and the developers to maintain a healthy community, but they are far from weak, powerless players.bitcoin wallet public key

I'm not sure what's up with CEOs in this space, and why they all exhibit learned helplessness, but we made some progress with the Coinbase CEO Bryan Armstrong yesterday.Come join our ranks!Bitcoin users aren't lemmings who will just adopt the longest datastructure just because it's long!There is nothing desirable about a long chain trapped in a machine in a world where anyone can make an alternative chain on her machine.Meanwhile, the real-world cash and goods that exchanges and payment processors bring into the ecosystem have tangible value.It can actually affect change and touch lives, something no datastructure can do.And that's why the users lead, and miners follow.The requested URL was not found on this server.If you entered the URL manually please check your spelling and try again.If you think this is a server error, please contact the webmaster.The first thing I needed to do was to set up a wallet, or a place to keep my bitcoins.A wallet lets you engage in Bitcoin transactions—it lets you create Bitcoin addresses you can share and that people can send money to.

In addition to being able to send and receive bitcoins to and from other Bitcoin users, you need a wallet so that you've got somewhere to keep the bitcoins you generate through mining.I wound up creating my wallet at Blockchain.info, though there are many alternatives.Once you've got a wallet, you really ought to join a mining pool because Bitcoin mining is best done with shared labor.Nothing at all forbids you from striking out on your own, but the nature of the entire virtual currency system is such that by sharing the work required for "discovering" the currency, you share in the reward as well.Understanding how bitcoins are brought into being requires understanding the network behind the currency.Briefly, the entire record of every Bitcoin transaction ever made stretching back to the currency's beginning is public.This is called the block chain.Bitcoin mining involves confirming those transactions by collecting several of them together into a group called a block and running specific cryptographic functions on it.

The chain concept comes into play because every time a bitcoin is "spent," the spender appends a hash to the bitcoin derived from his or her own cryptographic private key, the previous transaction's hash, and the recipient's cryptographic public key.As each bit of data added to Bitcoin's history of transactions is cryptographically derived from previous data, altering earlier data would invalidate the entire chain.When a collected block of transactions is confirmed by a Bitcoin miner—that is, when the SHA-256 hashing that the miners are doing on a transaction results in a very specific value that starts with a number of zeros—the block is said to have been "mined."The winning miner is allowed to reward itself with some number of bitcoins.That number is currently 25, and it decreases by 50 percent in intervals over time.If you're mining in a pool, you split the reward with the other members of your pool based on the pool's specific rules.If you're mining by yourself, you keep the entire payout.

The issue with mining by oneself is that it's very likely to take you much, much longer to confirm a block than it would with an entire pool's resources.Joining a pool is the way to faster payouts of bitcoins.Because I can never do anything the easy way, I wasn't content with getting the BFL box working under Windows, which is a well-documented and fairly straightforward process.No, I wanted to make it work under OS X. That required a bit of help.I spent quite a bit of time talking with John O'Mara, creator of the MacMiner application for mining bitcoins on a Mac.MacMiner is a FOSS GUI wrapper that uses another FOSS application, bfgminer, to tell the mining hardware (be it video cards or separate ASIC-based boxes) what to do.In the end, the solution involved a lot of work on John's part and not really that much on mine, except for me running commands and reporting back their results.Because Butterfly Labs miners are still relatively scarce in the wild, John didn't have one to test with.

Still, using me as a (dumb) remote manipulator, we eventually got the BFL box correctly hooked up and mining.The release version of MacMiner supports the Butterfly Labs ASIC miners now, but since I had gotten it working first on the command line, that's what I stuck with.In fact, once it worked, it was a little anticlimactic.I typed in the command and the bash prompt to kick the miner off.Rather than spitting out an error like it had been doing, the screen lit up in a deliciously cryptic display.Lots of numbers everywhere.I stared at it for long seconds, watching the updates crawl upward from the bottom of the screen.Am I actually mining?I envisioned my little MacBook Air lighting up like a slot machine if I found an actual block.Would sirens go off?Would money shoot out?I quickly shared a screenshot with the rest of the Ars team in IRC.No one really knew.I kept staring at the numbers, not yet willing to glance at bfgminer's documentation to see what they meant.All I knew is that there were lots of counters and things on my screen, and I wanted them to be higher.

I had a sudden flashback to my first job out of college in 2000, when I dragged 20 unused Pentium II PCs into a corner and rigged them all up with the SETI@Home client and briefly became an ET-searching superstar.The BFL miner does precisely one thing: compute SHA-256 hashes as fast as it can.So from a benchmarking perspective, the main question to answer is whether or not it hits its rated target of five billion hashes per second.When hashing, the BFL miner actually hovers at between 5.4-5.6GH/sec, delivering a bit more than its rated amount of hashes per second.The device pulled about 30 watts of power when idle and 50 watts of power when actively hashing.It reported internal temperatures as high as 80C.Some back-of-the-napkin math based on my Kill-a-Watt meter's readings show that the device would consume a bit under $100 per year in electricity.However, at current Bitcoin mining difficulty levels, it produces about 0.1 BTC about every 12 hours.It's impossible to speculate on BTC-to-dollar rates in the future since they're so volatile.

But at the exchange rates that were current as I was piecing this article together, the miner had repaid its purchase price within ten days.If the value and difficulty of BTC holds, an ASIC-based miner like this could generate thousands of dollars of revenue per year.After a couple of days tinkering with the box to actually get it mining, it was kind of a letdown.The box made noise and consumed a bit of electricity; every 12 hours or so I would get a notice in e-mail from Blockchain.info, letting me know that another ~0.1BTC had been deposited into my account thanks to the combined efforts of me and the rest of the pool I'd joined.It was not a scam.It was a legitimate 5GH/s miner.The Ars editorial team had resolved even before I plugged in the device that we'd be donating any monies it generated to the EFF.So after I'd gotten a representative sample of bitcoins, I was ready to stop and donate.However, there was still one major aspect of Bitcoin mining that wasn't terribly clear to me.How, exactly, does one cash out?

Before I donated the fruits of the miner's labor, I resolved to actually take the bitcoin generation through to the end I'd been wondering about.At this point, which was the last week in May, the little BFL box had generated precisely 2.90220929 BTC.I would take those bitcoins and turn them into cold, hard cash.I quickly learned that transforming BTC into USD wasn't a single-step process.There's no "cash out" button; rather, you must either arrange a transaction yourself with a private party or sell your BTC through an exchange.I started with the list of exchanges on the Bitcoin wiki to get a feel for my options.The most famous exchange is MtGox, but looking at its options for withdrawing funds quickly turned me away.Most exchanges allow you to sell your BTC for US dollars, but few provide a way to retrieve your dollars that I felt comfortable using.Many allow you to transfer dollars to a PayPal account, but I don't use PayPal.Others let you pull money directly into a personal checking account via ACH or wire transfer, but I wasn't willing to share my bank account details or open a new throwaway checking account.

Some exchanges, including MtGox, allow you to withdraw dollars using Dwolla (no thanks) or Liberty Reserve (too late).Finally, a little way down the list, I noticed one exchange with the option to withdraw funds in the form of USPS money orders: Camp BX.I popped over to its site and established an account, then I generated an address to receive the bitcoins.Back over at my Blockchain.info wallet, I clicked the "Send Money" option, entered the address I'd generated for my Camp BX account, selected my entire store of 2.90220929 bitcoins, and hit "Send Payment."The transaction went through.I'd just created some work for the legions of other Bitcoin miners to verify.Several minutes later, the balance showed up in my Camp BX account.Somewhere else, a new block of 25 bitcoins was awarded and spread around as incentive for helping validate my transaction.I was far more concerned at this point with actually getting some money out of the infernal machine.Without being too terribly sure what I was doing, I clicked "TRADE NOW" and then initiated a "Quick Sell" order.

The ticker at the top of the screen informed me that the current bid price for bitcoins was $129.52 per, and it recommended that I sell my BTC at that rate.So I gamely typed in my maximum amount of BTC, entered the suggested rate of $129.52, and previewed the order."You are about to execute a Quick Sell order," the site informed me, showing me the details I'd entered on the previous screen.Feeling every bit the Internet tycoon, I clicked "EXECUTE SELL."The next screen informed me that my sell order had gone through immediately.Camp BX kept a bit over $2 in commission, and I suddenly had $374 in my Camp BX account.Next, I clicked "TRANSFER" and initiated the withdrawal process.There's a $20 fee for pulling out funds in the form of a USPS money order, as well as a maximum daily withdrawal of $1,000.I didn't mind giving up $20 of what was essentially free money anyway if it meant I didn't have to give out my checking account information.I punched in my information and requested the withdrawal.