What is cryptocurrency and how is it mined. What is cryptocurrency in simple words: types, pros and cons of cryptocurrencies. What does cryptocurrency look like?

Hello! In this article we will talk about cryptocurrency and try to give all the most important information about it.

Today you will learn:

1. What cryptocurrencies exist?
2. Why are they so popular?
3. How can you make money on them?

What is cryptocurrency

Let’s figure out what is hidden under the term “cryptocurrency”, what it is in simple words, and why it is called that way. The name Crypto Currensy itself, meaning “cryptocurrency,” appeared in Forbes magazine in 2011. And since then the name has firmly entered into everyday use.

Cryptocurrency called a special type of electronic payment instrument. Strictly speaking, this is a mathematical code. It is called that because when circulating this digital money, cryptographic elements are used, namely an electronic signature.

The unit of measurement in this system is “coins” (literally “coins”). Cryptocurrency has no real expression such as metal coins or paper banknotes. This money exists exclusively in digital form.

The fundamental feature that distinguishes crypto money from real money is the way it appears in the digital space. Thus, real means of payment must first be deposited into a specific account or online wallet, and cryptocurrency units appear in electronic form.

The “issue” of digital money occurs in various ways: this is ICO (initial coin offering, system), and mining (maintaining a special platform for creating new crypto-money), and forging (formation of new blocks in existing crypto-currencies). That is, cryptocurrency literally emerges “from the Internet.”

Another important difference from conventional currency is the decentralization of issue. The issuance of electronic currency involves the generation of a mathematical code followed by an electronic signature.

Only the Central Bank has the right to issue real money, but anyone can issue crypto money. In order to make transactions using cryptocurrency, you do not need to contact any third-party organizations (banks).

Payments using digital money are carried out in exactly the same way as regular electronic transfers via a cashless payment system. The only exceptions are exchanges through which crypto money can be monetized, that is, converted into regular means of payment.

The circulation of such currency occurs according to the “blockchain” system (literally “closed chain” in English). This system is a database distributed across millions of personal computers around the world. At the same time, the storage and recording of information when circulating cryptomoney occurs on all devices at once, which guarantees absolute transparency and openness of the transactions performed.

Why is cryptocurrency so popular?

The popularity of cryptocurrency is due to the demands of the time. In the age of ubiquity information technologies There is an extremely high demand for universal means of payment, which could be used to pay in the electronic space without being tied to a specific country or institution. Cryptocurrency became such a means.

For payments with virtual money, only their number is used, so the cryptocurrency does not need real expression. Digital means of payment are protected by cryptographic code, which makes them more reliable than “real” money. And due to the absolute decentralization of the emission of virtual coins, they can neither be counterfeited nor banned.

Another feature that contributes to the popularization of crypto payments is complete anonymity. When conducting transactions, no one will receive any information about the payer or recipient; of all the data, only the electronic wallet number will be used.

And also the attractiveness of cryptocurrency is that you can get it yourself. That is, digital currency can be obtained almost out of thin air. But you can also buy and sell, as well as invest in cryptocurrency. At the same time, crypto money can be exchanged for traditional cash, as a result of which they are able to generate quite tangible income.

Types of cryptocurrencies

Digital money first appeared in 2008, and by now there are already several thousand varieties of it. There is a large category (almost 50%) of crypto money that is actually not backed by any content. These are the so-called soap bubbles. Let's not take them into account.

The most common types of cryptocurrency:

1. (BTC, bitcoin, at the moment one bitcoin is equivalent to 4200 US dollars). Bitcoin cryptocurrency, in simple words, is the very first digital currency, on the basis of which all subsequent ones were developed. Bitcoin developer (developer group) – Satoshi Nakamoto. This currency has a stated quantity limit of 21,000,000, however, it has not yet been reached.

2. Ethereum(etherium, equal to 300 US dollars). This is the development of Russian programmer Vitaly Buterin. This currency appeared relatively recently – in 2015. Now it is quite popular along with bitcoins.

3. Litecoin(litecoin, LTC, equal to 40 US dollars). The currency was developed by programmer Charlie Lee and has been issued since 2011. Litecoin is considered an analogue of silver among cryptocurrencies (and Bitcoin is an analogue of gold). The issue of litecoins, like bitcoins, is also limited and amounts to 84,000,000 units.

4. Zee-cash(Z-cash, 200 US dollars).

5. Dash(dash, $210).

6. Ripple(Ripple, $0.15).

In addition to the indicated names, Darkoin, Primecoin, Peercoin, Dogecoin, Namecoin and many others are also used in electronic circulation.

The most popular of all cryptocurrencies is Bitcoin. Its name is made up of the words “bit” - the smallest unit of information and “coin”, which means “coin” in English. For BTC, or bitcoin, not only a program has been created, but also a special digital wallet in which this currency can be stored.

In addition, now there are even special ATMs where you can transfer bitcoins into regular paper money, and a number retail chains and stores accept this currency for payments along with regular bills and coins.

Advantages and disadvantages of cryptocurrencies

According to its main characteristics, digital money differs significantly from conventional money. This entails not only continuous advantages, but also some disadvantages for users.

Pros:

1. Anyone can get this kind of money through specially organized activities (mining). Since there is no single emission center and no bodies controlling this process, no one can prohibit ordinary citizens from obtaining crypto money online.
2. All operations with cryptocurrencies (so-called transactions) occur completely anonymously. The only open information in this case is the electronic wallet number. And all information about its owner is closed.
3. Decentralized issuance, in addition to the possibility of everyone earning money, also determines the lack of control over this process.
4. Each type of cryptocurrency has an issue limit. Thus, excess emission is impossible and, as a consequence, there is no inflation in relation to this money.
5. The cryptocurrency is protected by a unique code like , so it is copy-protected and therefore cannot be counterfeited.
6. There are practically no commissions for transactions, since when conducting transactions using cryptocurrency, the role of a third party in the relationship - banks - is excluded as unnecessary. Therefore, such payments are comparatively cheaper than using regular cash.

With all the variety of positive characteristics, cryptocurrency also has disadvantages.

Minuses:

1. If a user has lost the password for his electronic wallet, this means for him the loss of all funds in it. Since there is no control over transactions using digital money, there are no guarantees of their safety.
2. Cryptocurrency is characterized by high volatility due to the specifics of its circulation (volatility means frequent changes in its value).
3. In relation to cryptocurrencies, various negative impacts may be attempted by national regulators of monetary circulation (for example, the Central Bank of the Russian Federation).
4. As the process of mining cryptocoins becomes more and more complicated over time, mining using the equipment of individual users becomes less and less profitable.

Each of existing species Cryptocurrency has both advantages and disadvantages inherent in them all together.

In general, all crypto currency units are characterized by the same features as modern money, namely:

• They are versatile;
• They are a means of exchange;
• They can be accumulated;
• Perform a calculation function.

The value of digital money varies depending on supply and demand.

How to make money on cryptocurrency

Currently, there are a number of ways to make money on bitcoins and other virtual currencies:

1. Buying and selling cryptocurrency. This is done on special exchanges or exchangers electronic money. The principle of operation is to buy a currency when its value decreases, and sell when it increases. Most often, such trading is associated with bitcoins, since their cost is higher than other types of cryptocurrency.

2. Cryptocurrency investments. are made by transferring a certain amount of electronic money from one person in trust to another. Usually questions trust management brokers do it.

3.Extraction of electronic money (mining). Cryptocurrency mining, in simple words, is the process of extracting cryptocurrency using special software. It will not be possible to produce large volumes of cryptocurrencies on an ordinary home computer; quite significant power is required, and, consequently, the purchase of additional equipment. A powerful video card and processor are required. In addition, special devices are used - so-called mining farms, which produce cryptocurrency.

4. Mining in the cloud. For such digital currency production, you do not need to buy additional devices. For this purpose, there are special services where you can sell and purchase computing power. That is, the service generates cryptocurrency for you, and you pay for the power expended.

5. Cryptocurrency giveaway. Such services are usually provided for attracting referrals or entering letters from pictures (captcha), that is, in fact, for increasing site traffic. These are the so-called gateways, taps or distributors. There are also special Bitcoin games in which you can earn electronic money. Earnings on such services are small: a small portion of Bitcoin (Satoshi) is distributed per hour.

Conclusion

Thus, cryptocurrency is a new word in money circulation. Its emergence is due to the needs of the time. Despite the fact that crypto money has no real expression, it can participate in various market transactions almost on a par with traditional currency units.

Currently, there are a number of ways to earn cryptocurrencies, as well as options for making a profit from them, which is what the most advanced users use.

In general, cryptocurrency in its characteristics is largely similar to traditional money, however, it also has a number of fundamental differences that allow digital money to increasingly gain popularity in the modern information space.

Find out what cryptocurrency is, what its essence is and how it can be mined, as well as on what principles its exchange rate is based.

The discovery of cryptocurrency was the greatest breakthrough in technology, forever changing the world, whose financial system will never be the same. Its main advantages over fiat money are: complete decentralization, which means the absence of high commissions, bureaucratic costs, as well as a high level of reliability, ensuring absolute anonymity of users, open source code of the program, which can be altered, creating more and more advanced versions of products, and, of course, complete transaction security. In addition to the well-known ones, Ethereum, Ripple, Bitcoin Cash, Litecoin and a great many other digital currencies are now quite popular, which change their positions in the TOP rating literally every day.

Cryptocurrency is a digital currency that is completely decentralized. That is, it does not have a single center that would issue it. In other words, it is virtual digital money. They cannot be touched; there is no bank that would issue them.

The issuance and functioning of cryptocurrency (in common parlance, crypts) is carried out thanks to the work of many computers around the world with a program installed on them. The essence of cryptocurrency is based on the calculation of complex mathematical algorithms, and it is users’ computers connected to the Internet that solve this problem.

It is not difficult to guess that the name cryptocurrency comes from “cryptographic currency.” Cryptography is a science that studies methods of encrypting information. So what do ciphers have to do with it, and who is “encrypted” from whom? These scientific methods are used to protect the most important information - the database of performed transactions. The transaction chain, which includes all information about the sender and recipient, the transfer amount, date, time, is encrypted in a special way and, when compressed, takes up very little space. Therefore, it is easy to store, starting from the very first transaction made with a certain currency, to this day. This can be done by technology, on the basis of which all cryptocurrencies operate.

Blockchain is a distributed database, or literally a chain of blocks. That is, the encrypted data is arranged in a certain logical sequence, and it is noteworthy that it is not stored in one place, but on each user’s computer, that is, distributed throughout the network. They are classified and can only be accessed to their own transactions, while information about other participants remains confidential.

This is simply cryptocurrency mining. But how do you receive the treasured coins? By solving complex mathematical problems, the goal of which is to unravel the answer - the “hash”. This happens by analyzing the multimillion-dollar number of combinations and finding the only correct one. The user whose computer did this first is the lucky one who wins a reward in the form of a given amount of crypto coins. Then a new round of this “game” begins, which goes on continuously.

The essence of cryptocurrency is that each of its varieties has its own algorithm (program of action) inherent in it initially. For example, Bitcoin and its successors are designed in such a way that the number of bonus coins decreases over time, the number of miners increases, and the task becomes increasingly difficult.

1. Ordinary, classic, when a person, using the capabilities of his computer, mainly a powerful video card or processor, connects to the program, and the technology itself performs the calculations necessary to receive a reward in the form of digital coins. Usually one video card is not enough, so, as a rule, users create entire mining farms consisting of a large number of video cards.
2. Cloudy. This is when, lacking their own capacity, a person turns to the website of a company that provides mining capacity for rent for a certain fee.
3. Mining pools. Users, due to the lack of capacity of their equipment, unite into groups (pools) and mine together, and the mined amount of coins is divided among everyone, depending on the contribution of each participant to the common cause.
4. Cryptocurrency faucets are sites where you can get a small amount of crypto coins for free, or supposedly for free, in exchange for registering and performing similar actions, such as watching ads, etc.

Bitcoin is the very first cryptocurrency that was released in 2008. At that time, only a few knew about it, but in 10 years it has gained such momentum that now almost everyone is talking about Bitcoin.

Are Bitcoins subject to inflation? Definitely not, and this is another advantage of digital currency over fiat currency. Everyone knows that in the case of ordinary money, the state can turn on the printing press at any time and issue a certain number of banknotes.

Unlike fiat currency, digital currency is not produced on a real printing press, but exists only on the Internet. Its release is carried out by a special program, and the number of coins is strictly determined in advance. For example, Bitcoin has 21 million. Moreover, over time, less and less are produced.

The algorithm is designed in such a way that at certain intervals the number of coins decreases. In Bitcoin, 10,500,000 coins were issued in the first 4 years, then this number decreased by 2 times, and over the next 4 years of the project, 5,250,000 coins were already produced. In another 4 years, this figure will turn into 2,625,000, and this will continue until 2140, since it is known that it is then that the issue of coins will automatically stop, having reached the maximum specified quantity.

Bitcoin initially had a very correct idea - to make the resource limited. As planned, this could create a good demand for coins, and due to the limited resource, everyone will want to have them, and the price will begin to rise. That's exactly what happened. Therefore, a parallel can be drawn with gold, which is a generally recognized value in modern world. If there was a lot of it, then it would not cost so much money for 1 gram, and everyone could afford to buy as much as they wanted. For example, there were times when a commodity such as salt was very expensive for a number of reasons, such as long and difficult shipping. Now it’s simply funny for us to hear this, since salt costs mere pennies.

But the question is that not all things in limited quantities are valuable. If gold can at least somehow be used to make jewelry, then the same paper money, not to mention virtual, is certainly useless in everyday life. But they have high value. Why? And who endowed them with such value? The answer is the people themselves. Roughly speaking, by agreeing among themselves that certain banknotes can be exchanged for all existing goods at a given rate. The same thing happened with Bitcoin.

But the next logical question arises - why, then, any internal game currency, present in almost every computer game, of which there are now an incalculable number, has not achieved such success and cannot be considered a means of payment in the real world? You can top up your game account with real money by receiving game gold. But it doesn’t work in the opposite direction, and you can’t top up your Internet account with tokens from your favorite shooter, you can’t use them to pay for a purchase in an online store, or you can’t order pizza delivery.

Stop. Or will you still order? American gamer Laszlo Hanyeks came up with exactly this idea back in 2010, which he jokingly voiced on a gaming forum: “I pay 10,000 Bitcoins to anyone who orders me 2 pizzas.” And such a person was found who, for the sake of a joke, fulfilled his promise.

As it turns out, this is also possible with play money. And why not, if a person, for example, was still going to top up his gaming account with currency, then it makes no difference to him whether he makes a transfer to the administration of the gaming site or pays for pizza. It turns out that this can be beneficial to both parties. Since then, Bitcoin has grown not just strongly, but incredibly, incredibly and almost fantastically strongly. Just imagine how much that pizza would cost now if at the beginning of 2018 the Bitcoin rate was approximately 10 thousand dollars. If you do the math, it's about $100 million.

Many experts consider such a high price to be nothing more than an inflated soap bubble, which can burst enchantingly at any moment, and the price will rapidly collapse. However, until recently the system worked. Although literally in early February, such a collapse, not the first of its kind, did occur. The Bitcoin rate, which reached its highest level of approximately 20 thousand dollars per unit in December 2017, jumped in the range from 10 to 16 thousand dollars back in January 2018, and in recent days has fallen to the level of 8 thousand US dollars per 1 BTC. Absolutely everyone, and especially Bitcoin holders, are very interested in watching what will happen to the exchange rate next. We do not undertake to make forecasts, since this is a thankless task, and in this area even seasoned specialists can make mistakes.

American macroeconomist Henry Mankiw gave the following definition of the term Money: “Money is considered to be what people recognize as a means of payment.” In the current period, the opinions of politicians, economists and ordinary citizens regarding cryptocurrency are divided. Some recognize virtual assets as money and actively use them in mutual settlements, while others are impatiently waiting (for 10 years now) for the “soap bubble” to finally burst. What is the reason for the skeptical and often outright hostile attitude towards digital currencies? In the conservatism of human psychology, a biased attitude towards innovation and reluctance to make big changes. The main arguments of opponents of cryptocurrencies.

Virtual networks cannot be controlled. Well, this is a problem that primarily concerns the powers that be. Control over the financial system is power over the world. Who would want to lose her? And regular economic crises, the main reason for which is precisely the problems in the banking sector - this is the problem of ordinary people.

Cryptocurrencies are used for illegal transactions, including terrorist financing. A number of Western experts suggest that Bitcoin is a project of some powerful mafia clan. Rothschild family or Al-Saud dynasty? Why should they rebuild? financial system they are doing well anyway. Cryptocurrency is an invention of human genius, created to pull humanity out of the global crisis.

An argument against the use of cryptocurrencies, which can most often be heard from ordinary people. Cryptocurrency is not money because it cannot be touched or put in your pocket. But traditional money also exists in electronic form, and not only on credit card. Payment systems such as Qiwi or Perfect Money make it possible to make purchases from a computer or mobile phone. Opponents of cryptocurrencies will answer that these financial assets are regulated by the state, and virtual coins can be “printed” by anyone.

And now we come to consider the main, although far from the only, technology for creating new blocks of virtual coins to ensure emission; it is called cryptocurrency mining. There are also alternative methods for generating structural units of a cryptoplatform, such as forging and , but a story about them is a topic for a separate article. In this review, we will try to explain what mining is and how asset blockchain technology works.

The term mining is borrowed from the English language in the literal sense (mining) is the extraction of mineral resources. Therefore, a set of equipment for generating cryptocurrency blocks is often called a drilling rig. In the language of blockchain engineers, mining is supporting the functionality of a cryptographic network by creating blocks in Blockchain using computer technology. GPUs and integrated circuit devices are best suited for these operations. The crypto miner uses the power of computer hardware to solve the cryptographic equation that will close the block.

This is what the block hash function looks like:

SHA-256(“The quick brown fox jumps over the lazy dog”)= D7A8FBB3 07D78094 69CA9ABC B0082E4F 8D5651E4 6D3CDB76 2D02D0BF 37C9E592

The miner who finds the digital signature is paid a certain amount of digital coins. Cryptocurrency mining guarantees the integrity of the blockchain ecosystem; miners control the movement of assets, protecting the network from double-spending.

Bitcoin mining

Ten years ago, few people knew what cryptocurrency was. Bitcoin mining was easy to run on a dual-core processor. But, according to Satoshi Nakamoto’s idea, after every 2016 decrypted crypto blocks, the difficulty of mining increases. Difficulty is a system parameter that indicates the degree of difficulty in calculating the hash function that will be the next proposed target of the network. Once miners find 21,000 new blocks, halving occurs. This term is also an Anglicism, the word halving means halving, that is, the reward for the owners of drilling rigs is halved. Halving and controlled emission (Bitcoin has a size of 21,000,000 cryptoblocks) relieve blockchain networks from the problems inherent in paper money. No one will be able to turn on the printing press uncontrollably; all emission restrictions are included in the project’s program code.

Thus, the difficulty of mining BTC gradually increased, and the reward for the created block decreased and the time came when using the CPU became unprofitable. The time has come for graphic adapters; soon they learned how to assemble mining rigs from them. For some time, FPGA devices tried to compete with them, but then both of them supplanted .

But cryptocurrency mining on video cards has not stopped. New crypto networks have appeared that are inaccessible to ASICs, and gpu rigs continue to successfully work on creating digital coins to this day.

The main methods of mining cryptocurrency

Let's list all the available methods for earning virtual coins.

Cloud mining

Mining can be done in the cloud. You rent a certain amount of computing power (hashrate) over the Internet in a remote data center and receive a reward in cryptocurrency. Some services rent out not only hashrate, but also physical units of equipment (ASICs), with subsequent purchase or transfer of ownership after the rental period expires. There are platforms for buying and selling computing power from individuals, such as and.

The main advantage of this type of virtual coin mining is the absence of noise in your apartment. You do not need to buy and configure equipment, or monitor its operation around the clock. Pay once and receive coins in your crypto wallet for the entire duration of the contract. Disadvantage cloud mining is high risk loss of invested money due to a large number of scam projects in this sector of digital asset mining.

Mining on video cards

Mining on video cards is a fairly popular and cost-effective way to earn cryptocurrency. ASIC miners are, of course, more productive, but video cards have a three-year warranty and are quite easy to reconfigure to a different algorithm.

Old models such as these are still relevant for mining and are relatively inexpensive. And, most importantly, one ASIC produces louder noise than a farm of 6 video cards. The latest version of the popular Ether mining utility Claymore dual miner allows you to work on AMD GPUs without flashing the BIOS. Set up the executive file and mine on the stock BIOS with the maximum hashrate without losing the right to warranty service.

Special equipment for mining

ASIC is a compact and energy-efficient device whose sole purpose is to mine cryptocurrency using a specific algorithm. For example, the model runs on the SHA-256 algorithm. On this device you will be able to mine 35 coins, including:

• Bitcoin;
• Bitcoin Cash;
• Bitcoin SV;

It is impossible to reprogram an ASIC created for Bitcoin mining for Zcash, Litecoin, or Sia. But one such miner weighing 5-6 kg and consuming 2-2.5 kW can bring its owner $300-400 net profit per month.

The Innosilicon company is developing the G32 1800 ASIC to work on the Cuckatoo31(GRIN.) algorithm. At the current coin exchange rate and the price of electricity of $0.06, it will generate $211 per day. ASICS miners have made ASICS miners quick payback, small size and relatively low energy consumption. But they have one serious drawback: high noise level. It is almost impossible to operate ASICs in an apartment. Those wishing to mine cryptocurrency using integrated circuit devices will need a special room or mining hotel.

Mining in the browser

Mining in the browser is ineffective; by installing a JavaScript application, you risk catching another virus.

Hard drive in mining

Crypto coins Storj, Burst, Sia can be earned using free space on the HDD. You will need a computer with a hard drive capacity of at least 3 TB and special software. This mining method does not bring big dividends, but does not require high costs.

Processor of a regular PC in mining

The most famous mining algorithm on the central processor is Randomchash (Pascal, Wownero coins). A complete list of coins that are mined exclusively on the CPU is available on the service Miningpoolstats, In chapter CPU-Variable Algo.

Masternodes

In some blockchain ecosystems, for example, DASH is required to make the system work. This is the name of the main nodes of the network, endowed with special powers. When a new block is created, masternode owners receive rewards on an equal basis with miners.

To start a masternode you need:

• Purchase a certain number of coins and freeze them in a local wallet or hardware safe.
• Install and configure software that ensures the functioning of the main node on your PC or remote server.

Server equipment

Server mining is not a separate method of mining virtual coins. On a remote server, you can rent computing power or use it to run a masternode. Owners of ASICS miners and GPU rigs use remote servers for collective mining.

Mining algorithms

“The strength of cryptocurrencies is their diversity,” said the creator of the Ethereum ecosystem, programmer Vitalik Buterin, recently. Blockchain engineers have developed over fifty mining algorithms. The most popular ones are shown in the table.

Coin	Cryptographic algorithm	Consensus algorithm
Bitcoin	SHA256	POW
Ethereum	Ethash	POW
Litecoin	Scrypt	POW
Zcash	Eqihash	POW
Monero	Cryptonight	POW
Dash	X11	POW/POS
Verge	Lyra2Rev2	POW
Siacoin	Blake2B	POW

PoW(Proof of Work) is translated as proof of work. The encryption algorithm sets the parameters for creating crypto blocks, but it cannot fully guarantee the integrity of the network. Miners and coin owners are participants in the network and can make changes to the blockchain by generating new blocks and making transactions. To control changes in the structure of the ecosystem, special consensus algorithms are used. Most networks use Proof-of-Work and Proof-of-Stake.

PoW, or as it is also called “Nakamoto consensus,” guarantees fair distribution of assets in the network and protects the blockchain from potential threats. The miner’s profit depends on the power of the equipment (hashrate). If the rig's hashrate is equal to 0.1% of the network's power, then most likely you will create 0.1% of crypto blocks and receive a corresponding reward. Miners process transactions, including them in a new block.

PoS (Proof of Stake) is a distributed consensus solution based on an investment opportunity. Its essence can be formulated as follows: “money makes money.” Your profit does not depend on the power of the mining farm, which is not needed at all for the PoS algorithm, but on the number of coins in your wallet. The only condition is the constant synchronization of the crypto storage with the network. And the longer the asset is held, the higher the dividends. All these properties are built into the program code.

Some networks, such as Dash, use a combined consensus algorithm. Less popular methods of protecting blockchain have also been developed, which are highly specialized solutions for specific projects.

Platforms and services that beginners need

If you decide to start mining cryptocurrency, you need to develop a business plan. Determine what cryptocurrency you will mine, the amount of investment and the profitability of the business. To do this, you need to calculate the current mining profit and the prospects of the selected coin for long-term storage. Resources will help with this:

• WhatToMine Internet cryptocurrency mining calculator.
• rating of cryptocurrencies and online trading platforms.

Mining popular coins does not always give the maximum profit. Mainers can make money on any project, the main thing is to exchange little-known coins for more reliable assets such as Bitcoin or Ethereum in a timely manner.

How to start mining yourself?

Before you begin the process of preparing to launch a rig, realistically assess your capabilities. A person who cannot independently change a PC video card and reinstall Windows has nothing to do in mining. Minimum computer literacy and basic knowledge of English required. And, of course, the starting capital is equivalent to at least $1200. You can build a more budget mining rig or buy a used ASIC, but you will earn mere pennies, and equipment purchased on the secondary market will quickly break down.

Purchase and nuances when assembling rigs

To assemble a mining farm on video cards you need:

1. A set of graphics processors, preferably of the same type (AMD or Nvidia). Unlike gamers, who prioritize performance, it is important for a miner to correctly calculate the payback period of the device. A top-end video card with a high hashrate can bring net profit later than an inexpensive model. But keep in mind that not all budget GPUs are suitable for mining. Video cards weaker than Rx 560 and GTX 1050TI are not suitable at all.
2. The motherboard must have at least 4 PCI-E slots. There are expansion cards that can be used to connect several risers to one PCI-Express.
3. These are extension cords for running video cards outside the case. Without them, it is impossible to assemble a GPU mining farm. The number of risers must correspond to the number of graphics adapters in the rig. The best option is a riser with molex power supply.
4. The processor does not play a serious role; you can use any model that is compatible with the motherboard.
5. A hard drive is required to install WINDOWS and mining software, as well as to increase virtual memory. Minimum HDD capacity 50 GB.
6. RAM must be at least 4GB.
7. Always buy a power supply with a power reserve. For example, in Riga there are 6 cards with a mining consumption of 100W each, for a total of 600W. We add 150W to the remaining nodes of the system, we get 750W. You must buy a 1000W Bronze standard PSU.
8. The mining rig frame is quite easy to make. On our website you will find instructions and drawings.

Well, that’s almost all, all that remains is to buy a power button and a monitor to start and configure the rig, assemble the farm, install the operating system and crypto-mining software.

Which cryptocurrency to choose

A virtual coin is selected before purchasing mining equipment. If you want to mine Bitcoin or altcoins that are unprofitable for GPU farms, for example, Litecoin, buy an ASIC. But keep in mind the level of noise and vibration of the ASIC miner exceeds sanitary standards for residential premises. You can mine coins available for mining on video cards and exchange them for BTC. At the time of writing, the most profitable cryptocurrency:

• For mining on AMD GPUs - Ethereum Classic.
• For mining on NVIDIA - Beam GPUs.

But please note, this data may change at any time, please visit Whattomine and other cryptocurrency mining sites regularly. Also pay attention to liquidity. Little-known altcoins can be quite profitable, but it will be very difficult to exchange them for another cryptocurrency, and over time the price may fall. However, such coins are not published on Whattomine.

Pool selection

When setting up the software, you will definitely encounter the problem of choosing a pool. A pool is a server for collective mining, everyone works in a common wallet and shares the reward according to the percentage of contribution to the decryption of a cryptocurrency block. Just like under socialism: “From each according to his ability, to each according to his work.”

When choosing a pool, first of all, see if it works with the coin you are interested in. Check the reputation of the service, and also check:

• Number of participants;
• Commission size;
• Minimum withdrawal threshold.

Data on collective mining resources can be found on the website Miningpoolstats.

Storage wallet

It is impossible to start cryptocurrency mining without a wallet address for payment of rewards. True, on pools with mandatory registration, the address in the executive settings file replaces the login, but you will still need a wallet to withdraw earned coins. Crypto wallets are divided into the following types.

1. Hardware safes are mini-computers designed for one purpose, to protect your assets from intruders. The device resembles a flash drive with a small display. Hardware safes from companies have proven themselves well. Trezor And Ledger.
2. Local wallets are installed on your hard drive. They can be “thick” (the entire blockchain is downloaded) and “thin” (synchronized with a remote server).
3. Online wallets work through a browser. To enter the service you need a private key and password.
4. Mobile applications are installed on a smartphone or tablet. They work on the same principle as “thin” local wallets.

When choosing a wallet for storage, remember that the safety of your money primarily depends on you. Never store private keys and passwords in electronic form and do not share this data with third parties. To send you a transaction, you just need to know the public address.

Platforms for exchange and trading

For those who mine Bitcoin or Ethereum trading platforms some may not be needed if they do not engage in crypto trading to increase profits. But, you can exchange digital coins for traditional money only on stock exchanges or online exchangers. The rating of cryptocurrency exchanges is published on Coinmarketcap.

Mining Law and Regulation

Mining can be prosecuted in Nepal and Bolivia. In Russia, as in many other countries, legal status digital assets has not yet been defined. But, there is a draft law according to which all owners of gpu rigs that exceed social energy consumption standards will be classified as private entrepreneurs. In Ukraine and Belarus, cryptocurrency mining is recognized as a legal activity that does not require a license from the state.

Conclusion

Whether we like it or not, change is necessary. In twenty years, and maybe even earlier, fiat money will cease to exist, and the Bretton Woods system will sink into oblivion. The era of cryptocurrency will provide endless opportunities for the development of human civilization. In the meantime, there is an opportunity to earn extra money by mining electronic assets. Happy mining!

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Everyone who has access to the Internet has heard more than once about the “magical” world of cryptocurrencies. There ordinary people become real investors and increase their initial capital many times over.

But there are also those who went there indiscriminately: they didn’t know what to buy, where to store or how to use it. Such “investors” quickly lose all their savings and begin to shout that Bitcoin is a scam and, in general, an attempt by global Freemasonry to swindle money from honest people.

Therefore, before you start using cryptocurrency, you need to at least learn the basic principles of working with it. For example, read this article.

Types of cryptocurrencies

Cryptocurrency is a digital currency built on Blockchain. Cryptocurrency is also called “crypto”, “digital coins”, “virtual money” and any other combination of these words. The king of cryptocurrencies is Bitcoin, launched in 2009 by a certain Satoshi Nakamoto. The real name of this person (or group of people) is still unknown.

Australian businessman and scientist Craig Steven Wright has repeatedly hinted that he is Satoshi Nakamoto. Wright's evidence does not inspire confidence.

To get Bitcoin, you need to mine it. Mining is solving complex mathematical problems on computers. In return for their decisions, computer owners receive coins, which are stored as records on the blockchain. Blockchain is like a digital ledger that is stored on all users' computers at the same time.

Blockchain cannot be deceived or counterfeited. Even if you put a computer with a fake entry on the network, other computers will immediately compare it with their own and refuse to accept it. For successful hacking, you need to fill the network with fakes more than half - and this is almost impossible.

What are altcoins

Ethereum and Ripple are the most popular altcoins.

The success of Bitcoin led to the emergence of alternative cryptocurrencies (altcoins). The most important of them are: Ethereum, Ripple, Litecoin and Monero. They are also based on the blockchain, but are independent of the original algorithm. Therefore, they can use other types of encryption and process transactions faster.

As a rule, prices for altcoins depend on the Bitcoin exchange rate. In February 2017, when Bitcoin increased 18 times, altcoins also increased significantly in price. And when Bitcoin began to fall, they fell along with it.

What are coins and tokens

Altcoins are the general name for coins (except Bitcoin) and tokens. But there is still a difference between them.

Coins are a currency. They can be earned (mined) and spent on goods and services. Coins are built on Blockchain.

Tokens - sooner securities(shares) built on a supporting platform - for example, Etherium or Waves. They confirm the presence of a share in a project, and their value depends on the success of the project. Tokens cannot be mined, they can only be purchased. You can’t spend them directly either, you can only sell them for another currency or exchange them for the services of the company that issued them.

Why are tokens no worse than coins?

Coin prices are stable relative to the market and correlate with it. Investing in coins is the same as investing in the market. As it grows, so do your savings. True, slowly.

Tokens are already shares. Their cost is tied to the project they represent. If the project takes off, the price of tokens can increase significantly in a few hours. But if it falls apart, it will fall below the market value.

Therefore, coins are worth buying for those who just want to use cryptocurrency and do not want to take risks. And tokens are suitable for risky investors who want to earn money quickly and immediately.

How to spend cryptocurrency

Most people believe that it is impossible to purchase real goods or services with Bitcoin. But this is no longer a problem. Microsoft, PayPal, Subway, Shopify, Virgin Galactic and dozens of other large companies accept cryptocurrency. Full list .

Even if the company you need does not accept cryptocurrency, you can exchange it for hard, fiat currency - for example, dollars. The easiest way to do this is with a special bank card for cryptocurrencies.

But before you start using the card, you need a wallet.

Choosing a wallet

Cryptocurrency wallet is an application, program or separate device for sending, receiving or storing electronic money. Below are the five types, with a short description of the advantages and disadvantages:

• Software wallet(Bitcoin Core, Exodus). These wallets store crypto directly on your computer. And you need quite a lot of space for this. For example, the minimum installation of Bitcoin Core requires at least 145 GB of hard drive space - and that's just for one currency;
• Online wallet(Blockchain, Wirex). These wallets store your coins in the cloud. You can use them from any device, even your phone. But you need to choose your wallet carefully - if someone hacks it, you will lose all your money. Therefore, carefully read reviews from other customers before making your final decision.
• Hardware wallet(Trezor, Ledger). These wallets are separate devices, making them much more difficult to hack than a regular computer. But you need to carry them with you at all times, and also remember the PIN code. And don’t forget, otherwise you’ll be like Mark Fraunfelder!
• Mobile app(MyCelium,

Out of all this, I advise you to choose an online wallet.

Why online wallets are better

Most newcomers to the crypto market choose online wallets. And that's why:

1. No need to store hundreds of gigabytes of history on your device.
2. The interface is convenient and understandable; there is no need to study it further.
3. The level of security is usually higher than in mobile wallets.
4. You can use it both from a PC and from a mobile phone.

How does an online wallet work?

Online wallets do not store cryptocurrency. They only store public and private keys to your money.

The public key is the address to which other users send you money. In principle, it is similar to email.

A private key is a set of letters and numbers that allows you to access money. If the public key is email, then the private key is the password for it.

Some people don't like the fact that an online wallet has their private key. But it is needed so that they can confirm your identity. It's like complaining that Google knows your Gmail password - how else can you prevent other users from reading your correspondence?

How to choose an online wallet

Getting an online wallet is a matter of a couple of minutes. But first you need to find a reliable service. One that won’t lose users’ money or run away with it to Thailand.

Before creating a wallet, make sure that your coins will be stored in a “cold” wallet - storage that is not connected to the Internet. This one is harder to hack

Study the company, its team, reviews about it. Finally, make sure you are willing to trust a third party with your money. And only then create a wallet.

How to exchange cryptocurrency for fiat money

Fiat money is regular, hard money issued by a government. For example, dollar or ruble. And since many services do not yet accept cryptocurrencies, we still need fiat money.

There are three main ways to transfer money from crypto to fiat:

1. Cryptocurrency exchangers(Coinbase, GDAX). You should choose an exchanger just as carefully as you choose an online wallet. Check the safety, read reviews and reviews of other people who understand this. One unpleasant story that happened with the large exchange Mt.Gox has already been discussed on Habré.
2. Cryptocurrency trading platforms. On these sites, sellers can find buyers - and vice versa. After the initial “meeting” on the site, users decide for themselves how they will transfer funds to each other. Usually they meet in person or use bank transfers.
3. Cryptocurrency cards(Bonpay, Spectrocoin). Special bank cards to pay directly or withdraw money from an ATM.

Maps are currently not available for Europe and the CIS countries because the only map provider in Europe has ceased to exist. But many companies promise to release new ones in the next few months.

Why you shouldn't trust trading platforms

Trading platforms are very safe. But only at first glance. In fact, this is the riskiest method of working with cryptocurrencies.

There have already been cases where thieves received bitcoins and did not send fiat transfers - and vice versa. Or they used someone else’s cards for this and the real owner later disputed the transfer. And during a personal meeting, users were pointed at with a gun and forced to transfer bitcoins for free.

Therefore, cryptocurrency trading platforms are the last place where you should change your currency.

What you need to know before entering the cryptocurrency market

The world is still trying to understand what kind of beast this “cryptocurrency” is. Therefore, you should prepare for a variety of surprises. The entire market is downright volatile, with prices changing hourly.

For example, in February 2014, when Mt.Gox crashed, the price of Bitcoin fell by almost half from $837 to $439 within a month. And in December 2017, the price of Bitcoin rose from $10,000 to $19,000, thanks to hype and high demand. In both cases, there were players who made fortunes from it - but there were also those who went bankrupt.

On the thirtieth anniversary of Black Monday - the day when stock market fell by 28% - Alexander Tapscott said: “In the crypto market it would just be called Monday.”

The price of cryptocurrencies is highly dependent on the media. News about regulations, quotes from famous personalities and other publications greatly influence the market course. For example, negative comments from the Indian Finance Minister led to a drop in the exchange rate by $500.

Even so-called “experts” are often wrong. Therefore, it is important to have your own opinion and deeply analyze everything that happens in the market.

How to learn more about cryptocurrency

Before entering the market, I advise you to read a couple of books to understand why cryptocurrencies were created, how they work and who the key figures in this area are. One such book is Digital Gold by Nathaniel Popper. This book is remarkable because it is easy to read and tells a fascinating story about how and why it all began almost ten years ago, and who the people were at the origins of Bitcoin.

Also choose tools that will help you keep up to date with events: news sites (Forklog, Bits.media), mobile applications for convenient search for information and tracking changes in the market (Blockfolio, CoinCap), charts and statistics (Coinmarketcap).

How to safely store cryptocurrency

Some useful rules that will help keep your funds safe:

• Always make a backup copy of your private key. You can store it on a USB flash drive, but be careful, as there are many cases where such a flash drive has been lost or damaged due to children or pets. Or write the private key on paper (it is not recommended to use a printer or print it out), but, again, keep this record in a safe place. The Winklevoss brothers, famous crypto-billionaires, used this method, but in a more sophisticated form: they cut the key printed on paper and stored it in different cells in the bank.
• Typically, private keys can be recovered using a passphrase, which consists of 12 or 24 words. Make a copy of this phrase as well.
• Create a mailbox that you will use only for this wallet. Only for THIS WALLET.
• Use two-factor authentication wherever possible. Just install an application that will generate a password for your accounts and enjoy another level of protection.
• Choose reliable exchanges and exchangers with a good reputation to avoid unpleasant consequences.
• Update software regularly and install latest version wallet you are using.

Conclusion

Cryptocurrency is not just money, but technology, innovation and business. Blockchain gives us an amazing technology whose potential we have yet to unlock. It gives us the opportunity to build a completely new world, where freedom, privacy and protection of people's rights are indispensable components of everyday life. Investing in cryptocurrency can be a smart step towards this future.