Cryptocurrency
The math, cryptography and computing involved in cryptocurrency is fascinating. I’ve been studying Bitcoin the last few days–reading and watching videos--and I have a few questions. About how many miners of bitcoin are there right now? If they are all trying to figure out the hash and the first miner to stumble on the correct sequence gets rewarded in bitcoin, wouldn’t it be possible for a miner to go so long without being the first to solve an algorithm that they wouldn’t make any money (bitcoin)? The larger mining operations can churn out the algorithms faster so how can the guy with a $5,000 rig compete? How long does it take nowadays to cash out $5000 in bitcoin, or $100,000 in bitcoin? Do you sell it for the current going rate or can you place your offer to sell it at a rate you are willing to sell for?
I remember the pyramid parties that swept the nation in 1980. Once you got 16 people to buy into the pyramid for $1,000 each the one at the top got $16,000. And then when the supply of people willing to participate was exhausted the pyramids collapsed. And they usually collapsed right after the guy at the top got paid, because anyone entering the pyramid knew that it was not only they that had to join but 15 others too. I think most of the individual pyramids died at this critical juncture.
But not so with cryptocurrency. There is no particular position like needing 16 new people to join that inhibits the desire to join.
Here are a couple videos that I found very interested.
https://www.youtube.com/watch?v=JyxRH18YlpA
https://www.youtube.com/watch?v=bBC-nXj3Ng4
Quote: GreasyjohnBuying cryptocurrency is gambling. You're taking a chance to make a profit. For someone to make x dollars someone has to lose x dollars. Not right away, of course, but eventually; because there are no tangible assets. You are buying nothing. You only make money because other people are willing to pay something for nothing.
The math, cryptography and computing involved in cryptocurrency is fascinating. I’ve been studying Bitcoin the last few days–reading and watching videos--and I have a few questions. About how many miners of bitcoin are there right now? If they are all trying to figure out the hash and the first miner to stumble on the correct sequence gets rewarded in bitcoin, wouldn’t it be possible for a miner to go so long without being the first to solve an algorithm that they wouldn’t make any money (bitcoin)? The larger mining operations can churn out the algorithms faster so how can the guy with a $5,000 rig compete? How long does it take nowadays to cash out $5000 in bitcoin, or $100,000 in bitcoin? Do you sell it for the current going rate or can you place your offer to sell it at a rate you are willing to sell for?
I remember the pyramid parties that swept the nation in 1980. Once you got 16 people to buy into the pyramid for $1,000 each the one at the top got $16,000. And then when the supply of people willing to participate was exhausted the pyramids collapsed. And they usually collapsed right after the guy at the top got paid, because anyone entering the pyramid knew that it was not only they that had to join but 15 others too. I think most of the individual pyramids died at this critical juncture.
But not so with cryptocurrency. There is no particular position like needing 16 new people to join that inhibits the desire to join.
Here are a couple videos that I found very interested.
https://www.youtube.com/watch?v=JyxRH18YlpA
https://www.youtube.com/watch?v=bBC-nXj3Ng4
Once you can wrap your head around it being an actual currency, it makes it easier to understand. There’s no inherent value of a $1 USD bill. But everyone agrees it’s worth “this much”.
Idk how long it takes to make X in BTC from mining. But many small miners join groups. So when someone in the group solves the puzzle, everyone in that group gets a cut.
RE gambling: So is much of life. Buying this house vs that house vs renting another, it can be considered gambling. Same with the stock market.
Nobody has to “lose” with BTC. But chances are, there will be big winners and losers. It could work out such that everyone’s net worth was essentially transferred from USD into BTC. But it’s not like the system is based on some losing so others will win, like a pyramid scheme.
But dice setting? :)
If you want to start out independently then ASIC's (application-specific integrated circuit) devices, which are specifically built for the purpose, would offer the most efficiency for computing. If you are going all in and have the bankroll, this would be the best bet.
On the second tier is use of the graphic processing units (GPU) on high end video cards. It is hard for gamers to get high end video cards now because the miners are snapping them up as fast as they can be produced. A typical mining rig will have several graphics cards installed - six or more is not unusual. There are many pre-build mining rigs available for sale. (btw, take care in purchasing used video cards - many of them are burnt out from mining operations.)
Other than raw computing ability, power consumption is a major factor. The biggest mining operations are located in places that offer cheap electrical power, such as the Pacific Northwest and China. I recently read an article about MIT students who are mining as a hobby. They are using the "free" unmetered power provided to their dorms to make the effort profitable. You just have to be willing to live in a room with the heat produced by computers consuming a steady 3000 watts of power.
As RC stated, there are communities that pool computing resources for mining and split the profits. If you want to stick your toe into this swamp, that would have the least capital expenditure and risk. This arrangement would be similar to the SETI (search for extrateresstial intelligence) effort that was popular a few years ago. The computational resources of your equipment in excess of what you use would be used for the group effort. I hear that the returns are paltry.
There are other crypocurrencies in play. As newer entries the computing power needed to solve hashes is less. Of course, the profits are less. Cryptocurrrencies are designed with a finite number of possible hashes, and the effort needed to discover new ones increases as the count of remaining undiscoverd ones decreases.
Very smart people and big money control mining at this point. I haven't heard, but I would not be surprised to find out nation-states are throwing resources into the ring. The middle men are making out right now, selling rigs and skimming their take off group efforts.
Judge your odds, and good luck if you decide to play.
