What I have learned about Cryptocurrency so far
There are many crypto currencies other than just Bitcoin. I found a new interest in this topic when I read a reddit post that If I had invested just Rs. 10000 back in 2010, It would have become 27 crore INR. That’s huge returns.
Since then I am doing research on cryptocurrencies and how-to dive into this pool.
What I have learned so far
Bitcoin is the first crypto-currency and was launched in 2009 by Satoshi Nakamoto. This is a decentralized currency which means there’s no control of any government over this and there’s no one to investigate fraud. Basically, cryptocurrency does not work like Banks.
You can create your own cryptocurrency account without any ID proof or anything. When there was a ransomware in early 2017, hackers demanded the ransom through Bitcoin wallet address. No one can trace your bitcoin wallet address which opens the gates for evils too.
Growth: There has been a sudden rise in 2017 whereas in last five years it didn’t increase much. I am referring to BTC~USD. There are many other crypto-currencies which are also known as altcoins that are growing along with Bitcoin. Some of them are Ethereum, Zcash, Litecoin, Dash under popular ones.
Because cryptocurrency’s source code is open, any one can create their own crypto currency. Every crypto currency can generate a certain number of coins over the years. There’s no hard and fast rule to mine any number above the normal mining. More the miners in the world, more there’d be difficulty to mine and less will be the profit.
How to make money in Cryptocurrency-line?
That’s hard to tell if one can make good profit in this business or not. The rates have risen suddenly and all the cryptocurrencies are volatile. There are two ways to jump into crypto-currency, btw.
1. Buy cryptocurrency.
2. Mine cryptocurrency.
For both, you’ll need a wallet. A wallet is just like your bank account which has your coin address (encrypted) (just like your bank account number). There are many online wallets out there.
Buy Cryptocurrency: The first one is very simple. Pick a cryptocurrency and invest in it with an expectation of higher returns (just like share market, but global). At the time of writing this note in Trello*, 1BTC = ~$4600 which had fallen down from ~$5000. So if someone had bought at the rate of $5000, he is in loss right now.
But recently I found a post on reddit with image. Just look at this image and start drooling.
The second one is very very technical and I am still very new in this. MINING. This is what I read somewhere on the internet: “Mining is basically converting electricity into money”. Back in the early days, it was feasible to mine using a powerful CPU (i7 or i5), later it moved to Gaming PCs (GPUs) (and they are still at this) and now the game is much more advanced, ASICs. Let’s discuss Mining in detail.
Cryptocurrency Mining
Mining is not for everyone and this is not something which is going to make anyone millionaire overnight. And you need to have latest technology to mine a cryptocurrency efficiently. Like I have written that earlier CPUs could mine but even the best CPU available to date is not suitable for mining in present scenario. People started using GPUs for crypto-mining which raised the prices of graphics cards globally (Demand > Supply).
What do the miners do?: They solve mathematical problems to decrypt and verify the transaction which is essential for any block chain network.
Now what is Blockchain? A block chain is just like a ledger where transactions are recorded. For crypto-currencies, transactions are not written at just one place as it can be hacked, but on numerous machines so that it cannot be manipulated. A transaction is verified through all the blockchain networks so it’s kind of secure too.
This is a serious business today. Even in Jaipur, when I was sitting at a shop in Rairsar Plaza, Jaipur, the shop manager showed a bill of Rs. 44 lacs. He told me that a guy bought hardware from that shop worth that amount for bitcoin mining. I was not skeptical anymore. But I didn’t bother to look into this as I was busy building a gamezone for me.
One can still mine using CPUs today but that’s simply not profitable as you don’t get the required hash rate and you end up wasting more electricity than revenue generated from mining. So CPUs are not for mining anymore.
GPUs: They are still in wide usage. There’s a millionaire miner who owns a secret location in Iceland to run a ‘factory’ of mining with 10000 GPUs. Their electricity bill is around ~$1M. That company now offers cloud mining from their website: Genesis Mining (link deliberately removed) and there are many such cloud mining companies. Hashnest, Hashflare to name a few more.
I tried mining Bitcoin from my gaming PCs. I have 11 Nvidia 1050 Ti 4GB GPUs. That could offer me only around ~$6–7 per day with 24 hours operation. That was very low so I stopped mining from the PCs.
How do others mine using GPUs: Well they don’t build a complete PC for each graphics card but install 6 GPUs in one rig. To have 6 GPUs installed you need to have a Motherboard which can fit 6 GPUs and they cost somewhere around Rs. 20000 each. Powerful CPU is not required, some even use Celeron. 4 GB of Ram is enough. Power supply unit depends on the cards you are using. If each card draws 100W, then it’s 100Wx6 = 600W of power usage from GPUs alone, so 750W SMPS should fit to power the MBO and CPU as well. You also don’t need a large storage media, just 320GB HDD would do in case you want to mine on a Windows 10 rig.
Exclusively for Ethereum mining, There’s a Linus-based ethOS which can be installed on a 32GB pendrive and can be run via plug and play. No hard disks required. Neat.
Even GPUs are not enough so Chinese companies have manufactured ASIC hardwares. ASIC means Application Specific Integrated Circuit. The role of the ASIC miners is to just mine. Other than mining they are just a brick of silicon. They are so powerful and efficient that a cheaper 6-GPU rig is expensive opposite to it.
Best examples are Bitmain Antminer S9 for Bitcoin, Bitmain Antminer D3 for Dash mining, Bitmain Antminer L3+ for Litecoin mining. They are being sold like hot cupcakes and in the grey markets they are sold at more than twice or thrice the MSRP. The D3 can payoff its rate in 8 days. Yes, its ROI is just 8 days. Now that’s what I call money-minting.
*Trello: Yes, I was actually writing this post in Trello but later I found it interesting to some readers to considered it as my first ever medium post. Let’s see how many claps do I get for this one.
