Cryptocurrencies have become incredibly popular-largely because of bitcoin (Bitcoin) In just a year, its value has increased from $1,000 to $15,000, and currently it ranges from $6,000 to $12,000, while the scope of daily movements is very large. This is a potentially profitable, but also a risky investment, given the novelty of the concept of cryptocurrencies. In addition to trading, consumers are increasingly paying attention to the mining process of generating new digital coins. However, the culture of mining is changing rapidly.
What is mining?
Before you understand how cryptocurrency mining is changing, you should remember where it all started and at what stage we are currently.
Most cryptocurrencies are issued in a limited volume for the sake of maintaining value, and they need some primary distribution (as in the case of conventional money). The system relies on a peer-to-peer network (hundreds or thousands of computers) that checks all transactions. In other words, all computers on the network must confirm the transaction before it is included in the block and included in the blockchain.
Mining solves both problems. The computer network validates transactions by finding some 64-digit hexadecimal hash key. Once it is found, the block joins the blockchain, and the node that solved the problem first receives a fixed reward in cryptocurrency.
Finding solutions requires a lot of computing power, efficient graphics cards and processors, fine-tuning equipment and, of course, huge amounts of electricity. However, this does not stop millions of people from participating in mining in the hope of getting cryptocurrency.
The increasing demand and popularity
Watching the rapid rise in price of bitcoin, people began to realize the profitability of mining. As a result, the number of miners is constantly growing. Not to say that it's bad, but at the same time there are some serious side effects.
First of all, the cost of graphics cards is growing rapidly. A year ago, Nvidia GeForce GTX 1060 cost only $200, today these GPUs are sold at $400-800. Graphics cards are an integral part of mining farms, but they are also used for computer games and other applications. Thus, consumers who are not interested in mining are forced to overpay.
A large number of miners reduces the likelihood that your computer will be the first to pick the right key and reduces the probability of winning. You can mitigate the negative impact of this factor by working in pools.
Pools and attacks 51%
To increase the probability of earnings, many users are combined into mining pools. These pools combine the computing power of all members, pay regular fees, and charge a small management fee.
At the same time pools open doors to attack of 51%. It happens when a user takes control of 51% of the computers on the network. Using a dominant position, it confirms it profitable transaction.
Other security threats
The popularity of cryptomining leads to the emergence of new, previously unknown threats, as attackers in any way trying to access the computer power and use them for extraction.
For example, in some cases, hackers or even ordinary employees was adjusted for mining on corporate computers. It ate resources, has led to the slow processors and reduced their service life.
Thus, the owners/managers of companies have to spend time and money to install special programs to combat clandestine mining.
New law
The legal status of bitcoin and cryptocurrency now depends on the country. Some States, for example, the United States treat digital currencies quite liberally, in other countries, such as Russia, the status of cryptocurrencies is not quite clear.
In any case, new laws regulating the extraction and exchange of cryptocurrencies are gradually beginning to appear. For example, Russia is going to introduce a single tax rate on all operations for the extraction of cryptocurrencies.
New rules and regulations can significantly affect the profitability of crypto-mining and cool the ardor of miners.
Global implications
- The change in the cost structure
Today, creating your own mining farm is not as easy as before. Costs are higher, profitability is lower, and the situation will only worsen in the future. However, mining is necessary for cryptocurrencies, and if it becomes too expensive, the whole structure of the cryptocurrency world will weaken.
- The increasing number of threats
The popularity of mining leads to the emergence of new unique problems related to the safety of miners and society as a whole. Too high miner activity can pose a threat.
- Community development
The type of people engaged in cryptocurrency mining is changing. Some are more interested in the process, others leave mining because of the changing dynamics.
Future
Cryptocurrencies with us for a long time — this fact will not affect even the tightening of regulation in different countries. Their popularity will only grow.
The future of mining will depend not only on global trends, but also on the answers to a number of questions. What happens when the cryptocurrency reached the maximum value? Which of them will survive and which will cease to exist? What place will they take in our lives?
It will be an interesting journey for investors, tech entuziast and economists, no matter how long and dangerous it turns out to be.
Translated from russia community http://telegra.ph/Kak-menyaetsya-kultura-majninga-kriptovalyut-03-21 by Damir Koshkarov