I needed a new graphics card and all I got were these lousy bitcoins!

I really did need a new graphics card, and for reasons that will become clear, that lent itself to learning about “bitcoins” which are monetary units of the bitcoin currency system:

“Bitcoin is a peer-to-peer currency. Peer-to-peer means that no central authority issues new money or tracks transactions. These tasks are managed collectively by the network.” — http://bitcoin.org

And beyond that it is cryptographically secure, math based (vs gold based) and anonymous.

Coins are produced in the system by being able to prove you have solved a math problem of particular difficultly.  For each proof of work  you demonstrate to the network you are rewarded with a set of amount of bitcoins (the reward for the proof of work diminishes over time so there will be a fixed amount of bitcoins in existence.)  To prevent someone from trying to blow through the whole problemspace the difficulty factor for the problems scale in relation to the total amount of computational power currently being used in the network to try and solve problems – this results in coins being handed out at a relatively fixed rate.  They have some intrinsic value because they require a certain amount of time an electricity to actually solve, and the people creating them wouldn’t want to trade them away for things with less value.

How does all this tie to my graphics card?  Currently high end graphics cards are by far the most efficient way to ‘mine’ bitcoins – they are the fastest at solving the problems used for proof of work in the system.  So when I’m not using my new graphics card for something graphic intensive – it works away trying to generate bitcoins.

All that probably made little enough sense, but if you are interested:

https://en.bitcoin.it/wiki/Introduction

Bitcoins can be exchanged for real money on numerous exchanges http://mtgox.com is probably the most used USD exchange.

At this point you might be thinking, hey I should buy some graphics cards and rake in the cash – well there are lots of costs to consider and someone already has a calculator to see if it is worth your time: http://bitcoinx.com/profit/index.php (don’t forget the more people mining coins, the higher the difficultly value goes up, which reduces your payout.)

Of course if you already have a nice card it might be profitable to run the client anyway, here is a breakdown of current card performance: https://en.bitcoin.it/wiki/Mining_hardware_comparison

How many people are mining coins over time? Again someone has already done the work of collecting the publicly available data:  http://bitcoin.sipa.be/