Bitcoin and Bitcoin Mining
Introduction
This is why I have decided to describe to you, the very basics of bitcoin mining!
I am not going to cover the concepts of mining on your own computer. It is rather pointless unless you use specialized hardware (FPGAs are a must nowadays due to low power consumption). I will however tell you how you can mine using the GPU and CPU of the slaves in your botnet to turn an easy profit.
History
The Bitcoin currency was initially created by an anonymous person or group (Not known) under the pseudonym “Satoshi Nakamoto”. The New Yorker and Fast Company have been investigating the real identity of Satoshi. A connection had been found between the domain bitcoin.org and a patent described somewhat similar to the paper published on The Cryptography Mailing List at metzdowd.com which described the first bitcoin protocol. The patent (#20100042841) describing the cryptography behind the bitcoin network had been filed by Neal King, Vladimir Oksman and Charles Bry on August 15, 2008. All of the three denied the identity.
What is a bitcoin?
Advantages:
- There is no company that controls the payments or transfer logs
- Your data is encrypted and can ONLY be read by you
- Your data is verified by thousands of computers before being processed
Disadvantages:
- Payments take long to verify (6-24 hours usually)
- Data can be tampered (But the nature of bitcoins prevent this, more on that under bitcoin mining)
- Your wallet file can be stolen by virii. Use offline wallets to prevent it, such as Armory (Explained later)
You may have noticed things like "Donation wallet: 1CTgYxMTY5j6SLytKeMsBWA322c6yNfcAe" in some peoples signatures.
These are their bitcoin wallets. You can simply pay bitcoins to these addresses without ever disclosing anything else than your own bitcoin address.
A final noteworthy thing about bitcoin is, that absolutely no data is stored about you. Once you start the bitcoin wallet, you will be given an address on which you can recieve and send bitcoins (If you have some of course). This makes it ideal for high-privacy payments on Hackforums. Additionally, since noone is controlling the transfers of bitcoins, you don't have to fear chargebacks from the buyers side.
Does this sound like something for you? Then let me show you...
Get started with bitcoin trading
Getting a bitcoin wallet
First off, you would need to download the bitcoin application. It is compatible with most popular systems, including Ubuntu, Mac OS X and Windows. Now, I mention Ubuntu and not Linux because they only provide binaries for Ubuntu. You can still compile from source code if you are running any other Linux-based distribution.
This is Bitcoin-qt which was the original wallet application. Since then, even more different applications have been developed, including one for smartphones.
Please note, that I will be using Bitcoin-qt for Windows in my examples. I will try to help you as much as I can with the other clients, but I have no experience with them. Now, lets fire up the bitcoin wallet.
You will be greeted by something like this:
One of the first things you may notice, is that the wallet says "Synchronizing with network". In order to use the wallet, you need it to be fully synchronized. Please note that this can take a very long time, I left it running overnight, I suppose it took around 16 hours or so for me.
The graphical interface is quite simple, really. On the left, you can see how many bitcoins you have on your account (All addresses joined together) both confirmed and unconfirmed.
Like I mentioned earlier, your transactions have to be confirmed by a bitcoin miner.
On the right you will find your 3 most recent transactions. I can show you an example from my mining wallet (This wallet is danish).
Enter a passphrase, as long as possible, and one you can remember. The longer the passphrase, the better the encryption. You only need this password when opening the wallet on another computer, so you might want to save the password somewhere such as LastPass or KeePass.
Now, all you need to do is to fetch your bitcoin address, and begin taking payments.
This is extremely simple as well. First off, click the "Recieve coins" tab, then right click the address and click edit. Now you can assign a label (i.e. a name) for the addess so you know what you use each address for.
It may seem pointless to give a name to a single address, but you can have multiple addresses that you can give out.
For instance you can have an address for mining, and an address for payments on HF. This way you can easily see wether the payment is from a miner or a customer. Additionally, if people were to google one of your addresses, they will not see that you also have addresses for hackforums and for mining, only the one you use for their kind of payments.
Sending coins
When you buy something, you would of course need to send them some coins.
Head to the "Send coins" tab, and enter the destination address and amount.
You can also enter a label/name to save the address for later payments.
Finally, just hit send, and that's it!
Moving your wallet
At some point in time, you might end up having to move your wallet. This could be because you are reinstalling your operating system or getting a new computer.
Using bitcoin-qt, this is fairly simple to do.
- Close the wallet application
- Go to %APPDATA%\Bitcoin\ and copy wallet.dat on the old computer
- Put it in the same folder on the new computer
- Right click the bitcoin shortcut in the start menu and click properties
- In the field named "Target", add -rescan to the end of the line
- Start bitcoin from the shortcut you just edited
Remember to remove -rescan from the shortcut after doing this.
That's it, your wallet has been moved!
Exchanging money for bitcoins
You may not be taking payments for anything at all, which in turn means that your wallet is empty.
Don't worry, you can buy bitcoins using Paypal, Liberty Reserve and bank transfer.
Head to MtGox, and begin trading bitcoins for dollars or pounds or whatever currency you want.
There are other sites which you are free to use. Just go ahead, but I never used these services, so don't ask me.
Bitcoin mining
Explained in this chapter
Finally! The chapter you were looking for... No, I don't think it is.
Now I am going answer the following questions:
- What happens when I mine bitcoins?
- Is it profitable?
- How much do I earn?
- Why should I care?
What happens when I mine bitcoins?
Like I told you from the very beginning, mining bitcoins is a way of verifying payments.
The following text is copied from the english bitcoin wikipedia: https://en.bitcoin.it/wiki/How_bitcoin_works
Bitcoin.in Wrote:First is public key cryptography. Each coin is associated with its current owner's public ECDSA key. When you send some bitcoins to someone, you create a message (transaction), attaching the new owner's public key to this amount of coins, and sign it with your private key. When this transaction is broadcast to the bitcoin network, this lets everyone know that the new owner of these coins is the owner of the new key. Your signature on the message verifies for everyone that the message is authentic. The complete history of transactions is kept by everyone, so anyone can verify who is the current owner of any particular group of coins.
This complete record of transactions is kept in the block chain, which is a sequence of records called blocks. All computers in the network have a copy of the block chain, which they keep updated by passing along new blocks to each other. Each block contains a group of transactions that have been sent since the previous block. In order to preserve the integrity of the block chain, each block in the chain confirms the integrity of the previous one, all the way back to the first one, the genesis block. Record insertion is costly because each block must meet certain requirements that make it difficult to generate a valid block. This way, no party can overwrite previous records by just forking the chain.
Both the chaining, and the difficulty, are achieved via the SHA256 cryptographic hash function. The hash function essentially takes a block of data, and transforms it, in an effectively-impossible to reverse or to predict way, into a large integer. Making the slightest change to a block of data changes its hash unpredictably, so nobody can create a different block of data that gives exactly the same hash. Therefore, by being given a short hash, you can confirm that it matches only a particular long block of data. This way, Bitcoin blocks don't have to contain serial numbers, as blocks can be identified by their hash, which serves the dual purpose of identification as well as integrity verification.The difficulty factor is achieved by requiring that this integer is below a certain threshold - the data in the block is perturbed by a nonce value, until the data in the block hashes to produce an integer below the threshold - which takes a lot of processing power. This low hash value for the block serves as an easily-verifiable proof of work - every node on the network can instantly verify that the block meets the required criteria.With this framework, we are able to achieve the essential functions of the Bitcoin system. We have verifiable ownership of bitcoins, and a distributed database of all transactions, which prevents double spending.
This might not make a lot of sense to you (And I don't know how to explain it in plain english), but simply put, the bitcoin miners do calculations necessary to solve the blocks. Once enough miners have solved the block (120), all the transactions within the block will be verified.
Solving blocks is normally done using the graphical processing unit (GPU), since they are a lot faster for repetitive tasks than the computational processing unit (CPU).
No reason to reinvent the weel, read the article on bitcoin.in:
Why a GPU mines faster than a CPU
Later on FPGA mining will probably get cheaper (And they are definitely faster than GPUs at extremely low power usage (500 MH/s at around 17 watts, my GPU runs 650 MH/s at approx. 350 watts)
Can I limit CPU/GPU utilization?
Like I mentioned before, it is important that you don't use 100% of the CPU or GPU, since your slaves will notice.
Which pools are supported?
Some mining pools require you to run a sub-pool on your own computer, such as P2Pool does. Some pools also have an abstract way of dealing with the bitcoins. Make sure your favorite pool is supported.
Is it a builder or a bin?
Since you may eventually get banned from a pool, you will have to build a new miner bin for the new pool information. This is a good idea to take into consideration when buying a miner for botnets mining in public pools
Is it a downloader?
Some of the programs claiming to be miners are actually just downloaders that enable you to install a miner on the computer, please be aware of that
Can I crypt it/Is it FUD?
Miners running in the background are usually seen as virii, so it has to be undetected. Make sure it is supported by your crypter.
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