Crypto Coins: All You Need to Know

A coin is a small, usually round piece of money, used as an exchange method. Historically, the first coin is developed around the 7th and the 6th centuries BC. They spread quickly from Greece and Persia further to the Balkans. Nowadays, we mine some coins made of gold or silver, considering it as a national treasure. Today, we’re going to pay attention to the coin’s evolution process. We’re witness of a financial revolution which led the material coin become a digital one. Still mining it but using a computational power, instead of pickaxes, we’re able to gain a lot of its value. Let’s make an overview of the glorious monetary revolution and how exactly we can profit the modern mining process.

A coin always represents a particular currency. Just like the penny is a distributor of the dollar, or the cent diffuses the euro, the coin itself is a digital currency. Available only in a numeric form, the coin possesses the same properties as a physical currency. Similar to traditional money, a coin can be used to buy goods or services. Normally, that kind of currencies are recorded on a stored-value device, which allows you to transfer their value in the network. Anyway, a currency can be either centralized or decentralized, when speaking of the control over the supply. Centralized coins are subordinate to a certain control of one part (a person, community or several people). Decentralized currencies are controlled from various sources, which basically removes the middle man between users and money. There’s no more need of a bank or any other financial institution to handle, manage or use your own resources. Welcome to the 21st century!

But how does all this affect the contemporary economy? As you can imagine, financial institutions aren’t pretty impressed of the digital currency implementation – they keep fighting against it, because it basically steals their authority. If we should define the user’s mood about it, we might simply observe two categories – the one of the enthusiasts, ready to accept and try the innovation, and one of the less open-minded representatives, which aren’t likely to try something new, before being completely sure it is going to work for them. Digital currencies require a lot of information to work with, it isn’t really that simple as using fiat money. Currently, the projects developing coins are trying to make the process of usage simpler by educating users and providing all the necessary information. This way, they hope that the adoption is going to be easily imposed among the community.

Cryptocurrencies are related to the blockchain technology. This is a public ledger, which is registering data on the Internet. Imagine a chain of blocks. The first one is a genesis block, which is provided by a computer code, all the next ones are strictly relied to the very first one. Each of them is a result of the last one. This makes the blockchain irreversible – to change a block, you should first change all the blocks before the one you have chosen. All this means that blockchain is impossible to treat. There are several ways to interrupt its working, but they are mostly theoretical, so we won't really take the time to overview it. Most of the cryptocurrencies are using their own chain. Considering the fact that the blockchain's code is open-sourced, this mean that basically it could be easily stolen. In the crypto sphere, we observe the usage of similar blockchain codes with only few changes – this is called a fork. The meaning behind the term is the changing of rules of the network. If the new version is able to work with the old one – it's a soft fork, if it doesn't – this creates a whole new chain, respectively generates a new coin – a process also known as a hard fork.

Now let’s overview the digital currencies. The very first one, launched in 2009 is the Bitcoin. All other coins appeared after it, are simply called altcoins (alternative coins). The most popular altcoin is the commonly known Ethereum. These two are the giants according to the market capitalization. This is basically a list of all the coins on the market, sorted by their price, volume and supply. You’re able to follow the price’s ups and downs and check out a regular statistic, showing the coin’s trading. There’s a simple rule, when speaking of classification – the more people buy the coin, the more its price grows, if they start selling it, respectively the price goes down. Lots of people are trying to mine coins online. Of course, mining a coin, means gaining profits. Once you successfully mine a coin, you're going to gain a reward for it, which is practically the coin's price.

As you might imagine, you need a machine to mine and a wallet to keep your mined coins. Some of the hardware devices, which mine coins need to be combined with an appropriate software program, others – don’t. Some of them can mine only one algorithm, others are able to be programmed to mine different ones. Normally, not each coin uses a different algorithm, which means that if you’re able to mine a particular one, you can mine all the coins, which use it. Let’s be more specific – for example Ethereum’s algorithm is Ethash. If you purchase a device, which mines this particular algorithm, you’ll be able to mine all the coins supported by it – Ethereum Classic, Ubiq, Expanse, Musicoin, Pirl and a few others. Bitcoin’s algorithm is Sha256, which supports some other coins, but they aren’t likely to be mined a lot.

Anyway, what defines if a coin is mineable or not? It’s the consensus protocol. There are many different types, but the one used for mining is the Proof-of-Work. A concept, which solves a problem on a cryptographic base, using computational power. More than half of the miners should agree to make a change in the network, that’s why it’s called a consensus. And what actual work it represents? The power you invest in the mining process is performing multiple calculations by randomly checking if a number fulfill all the criteria to match the current block of the chain. If it does – the block is considered as mined and all the participants in the network continue to the next one.

Once you ensure a coin is minable, you may proceed to choose a mining device to get the power mentioned earlier. Some time ago, computers were able to mine without an additional machine. This process is no longer profitable, since technology develops every day and many other opportunities are already on the market. You’re able to mine using one or multiple graphic cards. Here, you’ll need a software to configurate your hardware device (GPU). The other option is buying an ASIC, which is a specific machine, not requiring a software to work on. Ultimately, both of these are able to mine one algorithm, but the newest possibility on the market is the FPGA – a still a device, but it might be programmed to work on multiple algorithms. It’s a more expensive, but imagine that you want to switch the algorithm, because of another coin – you’re supposed to sell your equipment and buy a completely new one. FPGAs helps you to avoid that kind of issues. Of course, the hardware is just a gadget – don’t forget it requires some cares. You’re supposed to think of all the effects of its work, such as noise, heat and cleaning necessities.

You have to place those coins somewhere, right? You definitely need a wallet to store your coins. The wallet itself doesn’t keep the coins inside it, but saves the keys, which are giving you access to it. There are multiple wallet options to choose between, but you should pay attention mostly to security and privacy level to avoid scams and phishing. Basically, you’ll find out that wallets are either hot or cold. The hot ones aren’t completely secure, because they store your keys on the internet, which isn’t safe anyway. Cold storages stock information, but they aren’t connected to the internet at all, so there’s no risk of actually suffer a steal. Pay attention to wallets supporting multiple coins in it, if you’re willing to mine more than one at a time. Follow the rule that you shouldn't put in more than you're ready to lose. Use hot wallet for daily transactions and small amounts, if you have lots of coins, we strongly recommend the cold wallet option.

Even in the Snow-White story, miners aren’t alone. Mining alone might be very hard and for sure it’s less profitable. You’re not able to provide a high speed to compete with a team of miners. You perform slowly and it’s more difficult to achieve good results. That’s the reason we recommend mining in a pool. This is actually a team of miners, which cooperate by combining their power and achieving a result faster, respectively easier. Each mining pool has a particular rewarding system, which let the miners gain a certain amount, which is proportionally split between them in return of their work. When choosing a mining pool, should think also for the fees, required to maintain and handle it. Another crucial factor is the number of servers and their location – this might be important for your connection. Usually, when setting a pool configuration, you are supposed to subscribe more than one, so if the first one's work is interrupted for some reason, the software jumps directly to the second one, and so one – this avoids lags of no mining ability.

Well, let's resume now. In order to practice a contemporary mining of a digital currency, you have to choose the proper mining hardware (and software if needed), think of a secure wallet and decide if you're going to mine individually or in a pool. You must be wondering 'How am I supposed to choose a coin?' - always use a mining calculator when making that call. By entering a few parameters of your mining equipment, you'll be able to have a rough estimation of what's your profit going to be for a certain time frame (hour, day, week, month, year).

And what if all this configuration thing isn't for you? You don't feel like the technical kind of a person, who's more likely to jump into the thematic? There's always a plan B. Cloud mining is your solution. This is a process which lets you rent mining power to mine a certain algorithm's coins. You're paying a monthly fee when you sign a contract and the provider is making It all for you. No hardware choices, no software configurations – nothing to deal such as noise, heat or setup. It's quite easier for newbies. One of the most recommended cloud mining providers is NiceHash. Consider also Hashing24 of MiningRigRentals, which might guide you when you onboard the mining process.

Being more precise, we'll provide two examples.

The best Bitcoin mining hardware is an ASIC one, in particular, we recommend the Bitmain's machines. The S9 model offers nice characteristics for the power he gives in return. Now, if you mine solo with this device, it will take you about three years to mine a single Bitcoin. That's a good example why you should consider joining a mining pool.

The most effective mining hardware when speaking of Ethereum is either using an ASIC or a mining rig (multiple GPUs). Let's consider the ASIC of Bitmain, model E3 – its speed is equal of the one provided by 6 GPUs model RX 580. Generally, it will be more energy efficient and cheaper to choose the ASIC, when compare to the sic graphic cards rig. Using the mentioned ASIC will take you about 3 months to mine one Ether – once again it's preferable to join a pool.

The final question – why to mine? Mining will bring you small profits every day. Even considered as one of the oldest professions on Earth, it has been modified to persist the technology's development and resist the time's collapses. The contemporary mining process is for sure the base of an upcoming financial revolution in the future of currencies.