Cryptocurrency & Mining: A beginner’s guide

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Cryptocurrency has existed for many years now, being defined as: a digital currency in which transactions are verified and records maintained by a decentralised system using cryptography, rather than by a centralised authority. Meaning that, unlike fiat (traditional) currencies, the companies that run said currencies are not nations but instead are individuals and organisations. Operating in a similar way to stocks and shares, the value of each currency is variable and will go up and down depending on the number of stakeholders. The only time this doesn’t happen is when a self-burning system is used. This is where, to keep the value of a currency relatively constant, the value of the currency will decrease over time in a similar rate to the increase of stakeholders, meaning that the overall value will ultimately end up the same.

The main concept of cryptocurrency is that each user will have a long hashed public key to which other users are able to send money. A hash is a process used to be able to make a variable length input into a fixed length output using an algorithm in a one way process. A public key is a string of data used to encrypt data for a specific recipient, which can then only be decrypted using a private key (the one belonging to the receiver). However, this process is done completely automatically, the user transmitting money only needs to know the other user’s address, similarly to how a bank account number and sort code would be needed for a traditional transfer. This works using asymmetric encryption to be able to transfer the hashes which represent the portion of the currency. The key idea is that you cannot send a certain currency to another currency’s address, otherwise it would be lost to the void of the cybersphere, not a good look for a multi-million dollar business transfer!

This, somewhat controversial, form of currency is generally taken as an opportunity for making money, with users often starting with either money that they can afford to lose or begin from scratch using cryptocurrency mining, which I will go onto speak about shortly. This is due to the greatly fluctuating value on these styles of currency. Once again, this is due to the number of stakeholders and will increase rapidly when there is a low supply to meet demand.

There are many different ways to mine bitcoin. However, most require a complicated setup process or questionable behind the scenes practices. In some cases owners have even faked their own death to prevent having to pay back the community for any accidental losses of their earnings. Luckily, however, this style of incident is few and far between. There are many different levels to enter the mining community ranging from complex farms with many networked computers all targeting the same mining pool, or as simple as an individual user leaving their own computer on overnight with some basic software installed to be able to recuperate some of the money spent on their computer.

Personally, I have only just started mining as a way to earn back some of the money spent on my computer parts. Thankfully nothing like the ridiculous scalper graphics card prices that can be seen at the moment. Fortunately I had upgraded my card just before the introduction of the new series of GPUs and as such (by a few days) missed the skyrocketing prices. I personally decided to use NiceHash’s new quick miner as despite it not being the most efficient means of mining, it is quick to set up (…like really quick, about 5 minutes in comparison with the hours others can take) and it also doesn’t require disabling your computer’s firewall (unlike many other miners), which is definitely a good benefit when you are using your main (or only) computer to do the mining!

A worthwhile note may be that some currencies are beginning to flatten out, however, I would take this with a pinch of salt, as, knowing the internet, it will only take one person on reddit with a big enough mouth to say something negative and it could all come crashing down. As a wise person once said: “If someone tells you to invest in something it’s already too late”, so I don’t in fact suggest that you to try using cryptocurrency or mining. That is of course unless you do have a relatively high-end graphics card, low power prices, a bit of financial wiggle-room and a bit of free time it might just be worth checking out the possibilities for mining that are available.