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Friday, April 13, 2018

The real world of cryptocurrency

Note: I am not a hardcore PC gamer. I am not an expert on Crypto mining. I know just enough to be dangerous, so I make no predictions on how  Cryptocurrencies can be part of a retirement plan.

The idea of Cryptocurrencies is much older than many think. While the idea of a decentralized digital currency first came about in 1998, it wasn’t until January 9, 2009, when the first cryptocurrency was created known as Bitcoin.The lead developer has never come forward to this day. Fast forward to 2018, more than 1,600 cryptocurrencies now exist. Each one has a different origin and characteristics, but all are alike in that they are open-source, digital and attempt to ensure anonymity in transactions.

Confirmation is a very important concept in the world of cryptocurrencies. One can even say that cryptocurrencies are all about confirmation. As long as a transaction is unconfirmed, it is pending and can be faked. So when a transaction is confirmed, it is set in stone. It is no longer forgeable, it can‘t be reversed, it is part of an unchangeable record of historical transactions in the blockchain. Blockchain was invented by Satoshi Nakamoto in 2008 for use with the cryptocurrency bitcoin, as its public transaction ledger.A blockchain consists of a distributed database, and by design, blockchains are completely tamper-proof. Cryptocurrencies use what is known as trusted timestamping, which proves the exact time that data existed along the chain. Any altering or tampering of the timestamp would break the integrity of the digital currency and devalue it to zero.

Only the miners can confirm transactions. That is their role on a cryptocurrency-network. They take transactions, stamp them as legit and spread them in the network. After a transaction is confirmed by a miner, every node has to add it to its database. It has become part of the blockchain. For this job, the miners get rewarded with a piece of the cryptocurrency, for example with Bitcoins. So the miner‘s activity is the single most important part of cryptocurrency-system.

Before cryptocurrency mining. Graphics cards were like any other piece of computer gear. You'd go to the store, pick one up off the shelf, and pay an around the manufacturer's suggested retail price. Even sometimes under MSRP. For those who don't know. The graphics card shortage started happening because high-end graphics cards were the best way to mine Ethereum and other non-bitcoin cryptocurrencies.

Case in point...The NVIDIA's GeForce GTX 1080 Founders Edition, is priced around $699 currently. That's still about $150 over MSRP. The GTX 1080  peaked at $1,200 for a short while in January of this year, we're going for as much as $950 last month. While graphics cards are still selling for above MSRP, prices are trending downward, and in many cases are lower than just a few months ago.

Crypto mining seems to be no longer as profitable on consumer graphics cards because companies like Bitmain Technologies Ltd have built sophisticated custom ASIC-based mining equipment that's way-way more power-efficient. However, Ethereum has a memory-hungry mining algorithm that's resistant to ASIC optimization. That means like it or not mining Ethereum is still practicing with a consumer graphics card if it has more than two gigabytes of memory. Entry-level graphics cards don't have enough memory, but more advanced ones do. Now Bitmain has made a bold claim to have a mining chip designed specifically to process ethereum transactions and claim the protocol's rewards.There are doubts in the ethereum community that Bitmain's mining chip is capable of significant performance increases.The price tag for Bitmain Technologies Ltd killer tech is $800. The E3 miner is about as expensive as just one pair of RX 580 graphics cards, or three GTX 1060s. In theory getting anywhere near the same sort of hash rate for that sort of money with consumer graphics cards would not be possible. Regardless, of ethereum technical roadmap the E3 miner is likely to be popular.For those who don't know, the ethereum technical roadmap includes a planned shift away from proof-of-work, to a Proof-of-Stake (PoS) consensus algorithm. Last week Monero tweaked its mining algorithm to slow any potential threat of ASICs and preserve ASIC resistance. Later Ethereum core developers met to discuss whether they should change Ethereum’s algorithm. But anyway it’s too early to know if whether Ethereum will choose to do the same as Siacoin or Monero. Monero alters its version of the Cryptonight PoW algorithm every six months to inhibit the development of XMR-compatible miners.

Many who might read this believe that cryptocurrencies are for only cyber thugs. Much like handguns are only for bank robbers.The anonymity of cryptocurrencies is one of the greatest aspects for cybercriminals. Let's face it, a digital currency that assures transparency and an easy transaction would seem to be a perfect method of payment for bad actors. Right now pretty much all ransomware attacks ask for payment through Bitcoin or other cryptocurrencies. Just keep in mind there are increasingly more businesses and countries using digital currencies to exchange services or influence the economy in a secure way. Just remember ownership of a handgun and ski mask does not make one a stick-up man.


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