What Is Cryptocurrency/Bitcoin Mining? How Does It Work?

What Is Cryptocurrency/Bitcoin Mining?

Cryptocurrencies have become a wave since the past few years, and many have successfully ridden it, making millions in the process. ‘Disruptors’ as they are known have started companies in the blockchain that offer financial services and monetary exchange in return for the hottest cryptocurrencies available today. An independent system that runs parallel to the mainstream financial world offers a promise of a bright future for those who will invest their trust in this otherwise unconventional electro-monetary market.

However, without being backed by gold or any other standard with intrinsic value, the cryptocurrency market sometimes feels like a castle builds on a heap of sand.

What Is Cryptocurrency/Bitcoin Mining?

The cryptocurrency network is completely decentralized which renders it no regulating authority to formulate its rule or conduct some basic checks and balances to keep investor’s trust in the system. This is actually a positive side of the cryptocurrency network as it allows more and more people to participate and contribute to the market.

And if at all you are still wondering about ‘where does it get its intrinsic value from?’ it is the technology behind those cryptocurrencies that renders them a monetary significance.

This is where cryptocurrency mining comes into the picture. Or to say Bitcoin mining since both the terms have become synonymous with each other.

Solve The Math, Generate Your Cryptocoins

Now here comes the core of the ‘intrinsic value’ factor of those cryptocurrencies. Most of the cryptocurrencies work on the double SHA 256 algorithm, where a crypto miner has to solve a mathematical encoding algorithm that is used for encrypting files in a network. Hash function in computer world means a program that converts an input to randomly generated characters.

For example,

Message: Steve sent 0.1 bitcoin to Michael
Hash Value: 46550fef sdf345 dfgdfg345 ddfgdfgd 9513291c 

 

To put in laymen’s terms, cryptocurrency mining is a process of solving a complex mathematical problem using computing resources to create a block in the blockchain network. The person who joins the network with his computing resources is called a miner. For bitcoin or any cryptocurrency to operate we need a network of miners to help the transactions going and new coins will be generated in this process. Since the miner is providing computing resources, for every successful block creation, he will be rewarded with new coins (For bitcoin it is ~12.5 bitcoins). More computational resources a miner has, the faster he will solve the mathematical problem.

The process begins with mining a block. Here, the miners collect new transaction into a solving block. Then the miner hashes the block to get a 256-bit hash value. For bitcoin, the hash value should start with several zeros (According to the bitcoin protocol).  If it gets solved, the hash value becomes the identifier of the block. When the hash is not successful, the block is modified and re-tried.

So on what basis the miners will try to find the hash? it’s complete guessing. Yes! it is guessing. That’s the reason, miners use a lot of computers to guess this hash value that starts with several zeros.

A rough estimate states that one block is created every 10 minutes. However, the number of Bitcoins (or any other cryptocurrency for that matter.) contained inside a block keeps changing from time to time. Once a block of cryptocoins is mined, it is sent to the Blockchain network. Other miners in the network will verify the hash value of the block and its transactions. This is called Proof Of Work (POW). Once verified, the block will be added to the blockchain network.

So that says it all. It is solving a mathematical encryption riddle by trying combinations of hash functions for the block.

An example bitcoin transaction diagram created by Patricia is shown below.

what is cryptocurrency mining

Crypto-Mining Resources: Tools Used For Mining Cryptocurrencies

Computers:

As obvious it must be, computers are the most basic tool that is required for cryptocurrency mining. You don’t need to have a complex and powerful computing machine for doing all the mining job, although one that is powerful will do better. There are companies that are dedicated towards mining Bitcoins or other crypto coins. An internet connection is another obvious requirement in the list.

GPUs:

Or Graphic Processing Units are just powerful CPUs, the microprocessors that run computers. GPUs are used for gaming which makes them powerful and stands apart from CPUs. The specialized nature and power delivered by GPUs render them useful for Bitcoin mining as they have a high data processing power as compared to CPUs.

However, people eventually realized the GPUs were not good enough too and burnt out faster. This led to GPUs being substituted with…

ASIC:

If you have an ASIC, you don’t need to use a GPU. Application Specific Integrated Circuits are needed for processing complex data and making the difficult calculations pertaining to the hash functions. As the name explains it all, ASICs are specifically made for crypto mining operations. AntMiner is one such ASIC box that many quality Bitminers prefer.

Bitcoin/Crypto Mining Software:

While ASIC is the hardware that you need, you are still going to need a software is required for mining crypto coins. The software provides you an interface to view the mining process and helps you stay in the loop of progress.

Cooling Fans and Gels:

Even though your ASIC is running hard and high, you are still going to need cooling devices, or else your whole system might come crashing due to the heat. The amount of heat generated by those processing devices while they solve these hash functions is tremendous. You won’t forget the heat if you ever hold your hand closer to one such computing device.

Cooling gels applied on the fans can be an add-on advantage to sooth the heat generated by all the data processing.

All that being said, crypto mining can also be done on the cloud. Also known as Cloud Mining, it is when you mine crypto coins without having to invest in all the hardware and software on your own machine and in your own room.

You can also join the crypto mining pool which works like a carpool. You can pool down all your resources in a crypto mining endeavors alongside others who are willing to do the same and share the bounty.

Besides, there are also applications online where you can do a cost-benefit analysis of all your crypto investments in hardware and software and measure them against the gains you have in your cryptocurrency earnings.

List of Best Altcoins Based on Project and Popularity

Top Best Altcoins

Before we begin, for the sake of some of our viewers here who might be perplexed about the term, altcoin and other akin terms, let’s briefly redefine this concept before discussing the best altcoins.

What is Altcoin?

Basically, altcoin is a designate for ‘alternative to Bitcoin‘ which is also a form of digital cryptocurrency (just like the Bitcoin). It is a quite different from the radical concepts portrayed by that of a Bitcoin because it follows a peculiar standard paradigm or actually initiates and develops a typical concept in cryptocurrency. However, most prevalent altcoins tend to undergo similar fundamental building blocks like the Bitcoin itself. This is merely due to a way of attaining the simple approach rendered free by the open source platform on Bitcoin.

Also, altcoins are said to depict a healthy competition with Bitcoin because, in one way or the other, they intend to improve, enhance or replace various components offered by Bitcoin. Nonetheless, many altcoin critics feel that to an extent, altcoins are somewhat irrelevant to cryptocurrency, especially since Bitcoins facilitate optimal services in this field already.

How to Decide the Best Altcoins to suit Preference

For starters, you need to be much acquainted based on the altcoin’s project protocols and predominance (if necessary). You will also have to consider its concept, paradigms and potential so as to suit, say, your investment processes. You can start by reviewing the Coin Market Cap since it depicts the price, circulating supply and relative volume- the Market Cap is the product of the circulating supply (the best estimate of the number of coins involved in circulation in the market) and the price. The volume, however, is the amount of dollar based on a crypto traded during a specific period. Try to also look at the relative features that the altcoin offers particularly- what solution does it covey? What significant value does it add? Or what are the rate of validity and the credentials deemed by the team behind the scheme?

Lastly, I infer you observe the charts and search for critical comments about the altcoin just to be certain its system goes with what you’re looking for.

In addition, below is an evaluated content list of some top and ideal altcoins today!

Top 10 Best Altcoins You Can Find In Market

I don’t think we can all agree on a classification of altcoins in the form of hierarchy because we consider preferences and tastes, so we’d be looking at these from a holistic perspective

#1 Ethereum

The Ethereum platform offers a methodology that chiefly decentralizes applications on its blockchain. These applications tend to function precisely as facilitated in order to have zero traces of third party interference, sources of dilatory activities or counterfeit of any kind. With the highly developed blockchain(for conveying values and property ownership), the smart wallet enables one to use the ether and related crypto-assets with full security and engage in deploying processes, as well as smart contracts.

#2 Litecoin

Litecoin is a decentralized cryptocurrency that uses a peer-to-peer infrastructure and open-source blockchain protocol to enhance protected transaction processes on its platform. Its key improvement (when compared to bitcoin) is its short time interval when generating blocks. Consequently, it offers a greater volume of transactions due to its rapid block generation.

#3 Zcash

This is an altcoin cryptocurrency that is peculiar to its high protection services that include privacy of transactions even without cognition on cryptography. The payments involved are published on the platform’s blockchain. However, the core processes of the transaction are kept confidential all through- this is a system used to depict its transparency in subsequent transactions.

#4 Ripple

It is a cryptocurrency (conspicuously similar to Bitcoin) that enables an aspect of digital currency as well as open payment network within which a particular currency can be transferred. It mainly specializes in developing its approach to decentralized digital currency and optimizing monetary transaction flow. It also offers secure activities such as prevention of counterfeit coins and intervention of third-party software.

#5 Siacoin

The Siacoin (aka Sia) is a prominent altcoin that tends to raise and enhance the blockchain technology so as to employ flexible distribution of networks in reaching consensus with optimal security. It ensures that there is no form of interference within the platform by third-party software with the aid of its cryptographically protected contracts. It also facilitates faster and cheaper cloud storage platform as its key function.

#6 Stratis

This is a formidable and exclusively flexible altcoin cryptocurrency platform for blockchain development, specifically created for financial services and relative transaction processes for various organizations that want to carry out and develop certain activities on the blockchain. Its services make it easy for developing blockchain applications and speeds up the development lifecycle for projects tested on the blockchain. All these processes for testing, deploying or developing are performed with free security guarantee as well.

#7 WINGS

It is basically, a decentralized crypto-platform used to create, join or manage certain projects. WINGS offers the capability to share rewards, that is, the token holders can forecast on various projects and also be eligible to obtain tokens offered by future campaigns. TransparencyDAO ownership is fully protected by smart contracts and blockchain technologies. Thus, the WINGS platform’s open source facility is based on secured public ledgers around.

#8 Ardor

This is a blockchain service platform that employs one to maximize and utilize the blockchain technology with the aid of childblockchains. Slightly different from bitcoin, all coins are said to come from NXT (a cryptocurrency with program code) initially. It seems to have also added a feature recently which is known as, Testnet, and is available to all individuals or organizations. The key is to enable users to test all kinds of features from Ardor’s platform so that its development team can work and improve its crypto-database to be more efficient to the users.

#9 Golem

Golem is another powerful altcoin cryptocurrency that has become significantly valuable as a digital currency platform and relative popularity. It genuinely intends to develop its global network and extend its facility as an open sourced platform. Also, it renders intensive cryptography projects to maximize its efficiency.

#10 Gnosis

The last, but maybe not the least is this altcoin, Gnosis, a decentralized cryptocurrency that is actually based on the Ethereum Protocol which mainly focuses primarily on forecast trade and marketing. The team behind the platform have modified an online crypto-platform to allow the provision of steady information based on the results of events within the network- the better the exchange of information, the greater the chances of boosting business. This is also the apt cryptocurrency mostly used by individuals who engage in trading related to virtual securities.

The best altcoins list ends here. We will udpate this list based on new project, the problem it solves and the adoption rate. Subscribe to our email list to get the latest updates.

Going All Digital With Ethereum? Here Are The Top Five Best Ethereum Wallets

Best Ethereum Wallets

Ethereum has emerged as a tough contender in the world of cryptocurrencies, threatening the position of Bitcoin as the number one. There are speculations that Ethereum may even successfully replace Bitcoin from its position and enjoy the number one spot for quite some time. This strong trust that many cryptocurrency enthusiasts and investors have laid on Ethereum is the main driving force, the propellant that is making it a force to reckon with.

However, with a growing trend of buying Ethereum based coins, investors should also ensure that they are going for the most trustworthy and best Ethereum wallets. This would ensure them a safe, secure and powerfully encrypted Ethereum trading tool, which will effectively keep out malware and hackers reaching their Ethereum deposits.

Best Ethereum Wallets

We have brought you a list of top five, the best Ethereum wallets and hopefully even for the next year that will provide you with all the security and transactional features.

You Might Like: Best BitCoin Wallets

Let us take a look at who they are and what features they provide you.

For The Beginner, For The Simple User: Ethereum Wallet By Coinbase:

Go To: Coinbase Wallet

If you are a beginner to the cryptocurrency world and do not want to face complexities in setting up your Ethereum wallet, this is the best option that you can go for. It is effortless to set up, along with its security settings.

However, it comes with some issues. First, the company Coinbase holds your private key, which means that you are not in the control of your Ethereum account. So they may shut your account down for any possible reason. And this has happened to some before.

Also, it does not support Ethereum Classic. There you go another inconvenience if you are an Ethereum Classic currency holder.

For The Security Obsessed: Hardware Wallets:

Yes, we realize that this is not one single brand and a category. But the whole category is so peculiar that it deserves to be explained as one. If you are extremely particular about the security of your Ethereum account and cannot trust software based sources for security, you better go for a hardware wallet. The best Ethereum wallets in hardware are:

  1. Ledger
  2. TREZOR
  3. KeepKey

The tradeoff here are the prices. These hardware wallets cost anywhere from $50 to $100, not including the shipping charges. So if you are ready to shell this much moolah, go ahead! Also, if you lose them, times are going to be hard.

For Those Who Already Coinbase: Jaxx Ethereum Wallet:

Go To: Jaxx Wallet

Why the title, you may ask. The reason is quite evident that the features provided by Jaxx are the exact opposite of those provided by Coinbase, except for its simple interface. This wallet supports Bitcoins as well as Altcoins, which is in itself a big deal. On the other hand, its user interface is quite easy to use, even for cryptocurrency noobs.

However, the most significant uptick that Jaxx gets is that it supports both Ethereum as well as Ethereum Classic, which makes it an attractive contender on this list despite being new here. Also, the company does not control your private key, unlike Coinbase.

Find A Middle Ground On Desktop – Welcome Exodus Wallet:

Go To: Exodus Wallet

But middle ground from what? Between Coinbase and Jaxx. But before discussing that, let us talk about its core value. Exodus is one of the most trustworthy and highly secure desktop based Ethereum wallet available today. Its simple interactivity, coupled with security helps it get a place on the list.

However, unlike Jaxx, it does not support Ethereum Classic, it supports only Ethereum on your desktop. And unlike Coinbase, it does not store your private with itself, but rather on your machine.

One downside to Exodus Wallet is that it is not open source.

Ethereum On The Web – MyEtherWallet:

Go To: MyEtherWallet

This Ethereum wallet allows the user to manage their Ethereum account online, without having to hand over your private keys to it. So despite being an online service, it still lets you keep your private keys.

When you initially create an account, it asks you the currency of your choice. When you create an account, it will generate public and private keys that will be password protected, password of your choice. The website will also send you a file along with the public-private key for future use.

Therefore, whenever you are storing Ethereum on your online wallet, you will have to upload this file.

Concluding Words

Buying an Ethereum wallet is not much of a head-scratching task at all. If you know what you need and especially what platforms you are fine with to store your Ethereum, you can easily choose your wallet, of course after considering the trade-offs.

Best Cryptocurrency Exchanges: List of Top 10 exchanges

Best Cryptocurrency Exchanges 2018

Cryptocurrency has been a topic of hot debate over the past few months. The value of the two most popular cryptocurrencies, Bitcoin and Ethereum, have seen an unreal surge in value over the past one year, making people pay far more attention to them than before. If you are someone who just got on the bandwagon and are looking to invest in cryptocurrencies using best cryptocurrency exchanges, then you definitely must do a bit of research.

One of the main things you have to research about is the different cryptocurrency exchanges to find out the best one. This article hopes to make that job easier for you. But before you delve further into the article, it is essential to know what a cryptocurrency exchange is.

Cryptocurrency Exchange – What is it?

A cryptocurrency exchange is not dissimilar to a fiat money exchange. Like fiat money exchanges, the ones for cryptocurrency are places where you can buy, sell and exchange cryptocurrency using traditional fiat money.

Types of Cryptocurrency Exchanges

Cryptocurrency exchanges are of different kinds like fiat money exchanges are. It is crucial to understand the difference between each of these exchanges.

Traditional Exchanges: These cryptocurrency exchanges are more or less like their fiat money counterparts. They are a platform for buyers and sellers to trade bitcoins based on the current market value. Such trading platforms charge a nominal fee while other let you trade for free.

Direct Trading Exchanges: – In such exchanges, the trading happens peer to peer. And so there is no fixed price based on market value, but the parties involved themselves set the prices.

Brokers: – These are online services that let users buy and sell bitcoins at a price set by themselves. They usually charge a small fee for every transaction.

Funds: – Cryptocurrency funds are like pools of crypto assets which allows the public to trade cryptocurrencies using the fund money.

Best cryptocurrency exchanges

The following are the top ten best cryptocurrency exchanges in the world. This list was put together after factoring in various data like their reputation, the fees they charge, their verification processes, geographical restrictions, etc.

Coinbase

It is the most popular cryptocurrency exchange in the world with a great user interface. Trusted by many prominent investors, this platform allows users to buy, trade, use and store multiple cryptocurrencies. Ethereum, Bitcoin, and Litecoin can all be purchased using various fiat currencies such as the US Dollar, Pound, Euro, etc.

Buying and Selling are allowed only in few countries. However, you can use their wallets for storing and transacting Bitcoin, Ethereum Litecoin, and Bitcoin cash. Coinbase is my favorite and I personally use it.

Coinbase can be accessed from anywhere in the world using your mobile device. Users can also trade cryptocurrencies with other people from around the world using GDAX, a subsidiary of Coinbase. Transferring your digital money from Coinbase to GDAX is free of cost thus enabling you to trade your cryptocurrency anytime, anywhere.

Takeaway: If you purchase cryptos for $100 from Coinbase, you will get $10 worth of bitcoin. Claim your $10 free bitcoins now

Cex.io

Cex.io is a platform that supports the exchange of both Crypto to Fiat money and Fiat to Crypto money. You can buy bitcoins using a credit card from this platform. It supports the trading most of the most popular cryptocurrencies in the world at present. Cex.io is a great platform for both beginners and experienced professionals.

Beginners can avail the brokerage service, where seasoned cryptocurrency experts advise how to invest your money in crypto money. At the same time, experienced professionals can make use of the different trading features such as marginal trading, and personalized trading dashboards.

You can withdraw your money as USD or to the supported cryptocurrency wallets. I use CEX for bitcoin transactions through credit card. It offers a great user experience with an easy to use UI.

buy bitcoin through credit card - cex.io

Poloniex

Poloniex is quite a new company. It was founded in the year 2014, and it has since gone on to become one of the leading trading platforms for bitcoins. Poloniex is an excellent platform for both beginners and advanced traders. It is user-friendly and charges very little money for trades made through the service. The best thing about Poloniex is its high trading volume; it means that you can always buy or sell cryptocurrencies at a rate that is desirable to you.

CoinMama

CoinMama is a brokering platform that has been around for a long time. Users can buy Bitcoin or Ether using credit cards, cash or even money transfers via the Western Union or MoneyGram. The website cannot be used to sell bitcoins or Ether but can be only used to buy them. The exchange rates are fair, and it has a user-friendly interface. CoinMama is currently available in some different countries in both English and their local language.

 

Kraken

Kraken is an exchange that is mainly used to buy, sell or exchange Bitcoin for fiat currency. No other cryptocurrency can be traded via Kraken. It is the reason why it is one of the largest Bitcoin exchanges by volume of transactions made. Kraken also lets you trade other cryptocurrencies such as Ethereum, Ethereum Classic, Monero, Dogecoin, Zcash, Litecoin, Augur REP Tokens, Stellar and Ripple. You can exchange these cryptocurrencies for normal fiat currencies such as US dollars, Pound, Yen, etc. depending on your geographical location. Kraken is a really good platform for experienced traders as it has a lot of different trading features like margin trading. Also, the exchange rates are always good and the transaction fee minimal.

ShapeShift

ShapeShift allows the trading of some different cryptocurrencies such as Bitcoin, Ethereum, Zcash, Monero, Dogecoin, etc. ShapeShift does not support the exchange of cryptocurrency for fiat money. In fact, you can only buy, sell or trade one cryptocurrency for the other. It is an effective medium for those people who just want to convert their existing cryptocurrency to another one. It is ultra fast and requires little or no verification.

 

Bitsquare

Bitsquare is not a traditional Bitcoin exchange, rather it is a peer to peer exchange. Bitsquare allows users to buy or sell Bitcoins for fiat money and other cryptocurrencies. Some call Bitsquare as the ultimate Bitcoin exchange as it follows the essence of the Bitcoin technology by being completely decentralized. There is no centralized authority here, and all exchanges take place directly between the buyer and the seller. This is a good platform for advanced traders as they can negotiate prices with their peers, unlike other platforms where the rate is fixed based on the market price.

Gemini

This is a company founded by the famous Winklevoss twins, Tyler and Cameron. They have been supporters Bitcoins for a long time and quite famously bought 1% of all bitcoins in the market a few years ago. Gemini is a fully licensed US Bitcoin and Ethereum exchange; this means that Gemini has to follow all the regulations that a normal bank has to follow. It is one of the reasons why it is highly trusted by its users. Both deposits and withdrawals are free of charge on this platform. The only drawback of Gemini is that it is only available in a select few countries apart from the United States.

Bitstamp

Bitstamp is based in the European Union that was founded way back in the year 2011 when most cryptocurrencies were only in their nascent stages. Bitstamp is especially popular among cryptocurrency traders for the high level of security it provides. The security features include a two-step verification process, cold storage for all deposits that are completely insured and a Multisig technology for its wallets service. The opening of an account is free, but the deposit fee is quite high compared to most other cryptocurrency exchanges. Bitstamp also provides 27/7 support for its users making it one of the most user-friendly exchanges around.

LocalBitcoin

LocalBitcoin is another peer to peer Bitcoin exchange that connects traders from some different countries around the world. The platform is completely decentralized is one of the few Bitcoin exchange platforms that allow payment outside of the service. You can pay cash, or deposit it in banks or even pay through PayPal. LocalBitcoin uses a rating platform to provide security to users. Traders are rated by other peers based on their dependability and other past activities. The website also has a support team that is always ready to help in settling conflicts between buyers and sellers.