What is a blockchain?
A blockchain is a ledger system which records transactions between users. For example, whenever a Bitcoin (BTC) transaction is processed on the Bitcoin blockchain network, the value of the transaction is transferred from one user to another. Because transactions over this network need to be recorded, the ledger needs to be synchronized amongst all entities. This process is not done by individuals or organisations, but by many computers all over the world. These computers are known as “miners”.
How do Bitcoin transactions work?
At the heart of the Bitcoin network, transactions are quite complex. Every Bitcoin transaction is publicly shared via the Bitcoin blockchain. This blockchain contains the history of every Bitcoin transaction ever made. These transaction histories are thus completely transparent for all users on the network to see. High-end hardware users, such as MineBox, aim to process as many of these transactions as possible in order to be rewarded with Bitcoin. This is known as “mining”. However, for the end user, making a Bitcoin transaction is very simple. It could be through software on their computer or an app on their phone. This software can send and receive Bitcoin to and from their “wallet” over the Bitcoin network. This wallet contains a large string of characters which are unique to it. These software platforms often make use of QR codes to make transactions even simpler as they allow the user to send Bitcoin without the need to manually enter a wallet address.
Who is in control of Bitcoin?
Bitcoin is not controlled by any single entity. It is decentralised and thus no government or organisation has sole authority over it. Bitcoin is controlled by the people and businesses that invest in it, mine it or use it for purchases. Bitcoin was developed in a specific way. In order to use Bitcoin, you need to have a compatible version of software which complies to Bitcoin’s rules. The developers of Bitcoin’s software are constantly improving the code and making Bitcoin even more secure. Since the users are in control of which protocol and versions of the software they want to use, the developers can’t just force changes to major aspects of the Bitcoin code. The only way that the Bitcoin software will work correctly is if users and the developers adhere to a complete consensus amongst each other, thus it is in the best interest of everyone to protect this consensus.
Isn’t Bitcoin just another Ponzi scheme?
A Ponzi scheme is a deceitful investment operation where returns are distributed to its investors from newly generated capital by other new investors. This is not profit earned through a legitimate investment. Those who run Ponzi schemes usually coax unsuspecting investors by offering higher pay-out on their investment in the form of short-term pay-outs that are usually abnormally high. Unlike a Ponzi scheme, Bitcoin is an open source and free project without a central authority. Simply put, there isn’t anyone in control of Bitcoin that could gain from a Ponzi scheme, as the whole system is run by its users and everything that goes into Bitcoin code is also controlled by its users. Since each transaction can be easily traced and verified, users would have noticed if something strange was going on a long time ago. It should be noted that there are several websites which pose as cryptocurrency exchanges offering extremely high and fast pay-outs for simply investing in Bitcoin for a short period of time. Be warned as there are many scams to look out for.
What is the future of blockchain and crypto?
Some predict that the next few years will see a big change in crypto as institutional money enters the market. This means that those with big enough investments can really take the revolution forward. The number of daily crypto interactions has increased year on year, showing signs of strong growth.
How are Bitcoins generated?
The process known as “mining”, is very competitive and rewards you with Bitcoins after a full calculation is completed. With the help of optimised hardware, Bitcoin miners process transactions and secure the Bitcoin network in exchange for new Bitcoins. The open source code of Bitcoin is designed in such a way, that a fixed amount of coins are generated when calculations are completed, making mining very competitive. As more miners join the network, the difficulty of mining increases. All Bitcoin nodes are cross-referenced against the Bitcoin protocol and anything that doesn’t fit the expected rules is rejected by the network. In other words, there is no way to cheat the system in order to generate more coins than you have mined. Bitcoins are generated at a predictable rate, which is slowly decreasing over time. The reward for completing a block on the blockchain is halved every time 210 thousand blocks are calculated and until there are a total of 21 million Bitcoins in total. At that point, rewards for block calculations will stop. Once rewards for block calculations have stopped, it is believed that fees will take over as payments for ensuring transaction validity.
What is the future of crypto mining?
Crypto mining has been around for more than 10 years now but its future is still up for grabs. Neither home mining nor derivatives nor large-scale mining are in range for the average user. The future seemingly belongs to the large-scale crypto mining companies who are willing to relocate to regions of the world where energy is cheap, in order to reduce operating costs. However, decentralised options have been developed which offer ways of make crypto mining more accessible, cheaper, easier, less risky and more profitable for the average user.
Why does cloud mining have a bad reputation?
Cloud mining offerings consist of centrally hosted mining infrastructures in which the service provider sells a portion of their total capacity. The challenge with these offerings is that customers are often offered unrealistic returns. As these returns are not forthcoming, customers have no visibility of how revenue is generated. This results in the customers being unaware as to whether or not they are truly receiving what they have paid for. The MineBox solution is owned by the customer and is totally transparent.
Can anyone mine crypto?
Apart from your initial investment, you’ll need access to cheap power. Crypto mining requires a large amount of computational power. This means that costs may outweigh revenue generated, leaving you with a net loss. Joining a “mining pool” will help cover the costs and reduce initial investment, but will reduce overall profit. The takeaway? Anyone can mine, but it may not be worth the cost for most people.