Cryptocurrency and blockchain is moving at a breakneck speed, thanks to the various innovations that happen every day...
Bitcoin started with the first ever Proof of Work SHA256 mining algorithm, people needed to solve mathematical puzzles before to discover blocks and add them to the blockchain.... Initially problem solving difficulty was very low so most people could even mine bitcoin using simple pen and paper also! Interesting huh?
So as more and more miners joined and started mining, the algorithm adjusted itself automatically and mining difficulty increased. As mining difficulty increased, it took more time to explore new blocks... Pen and paper were replaced by computers in a few weeks.... Then day by day as difficulty increased, more powerful computers were required, and at one point of time even computers were inefficient, so they were gradually replaced by more powerful 'mining rigs'.
Okay so let me clear one thing, mining rigs have powerful GPUs inside them, since mining via CPU is not that efficient.
Image source: google images
As a normal user with a pretty basic laptop/desktop, or even a high end gaming laptop, we wont be able to mine even 1 bitcoin in 1 year ....!
And if you look 10 years down the line difficulty level of mining Bitcoin will reach so high it will be virtually impossible to gain new coins from mining... Most of the coins nowadays are not considering proof of work since they consume a large amount of electricity.
FYI, ethereum is also using Proof of Work algorithm now (Ethash) but they have a planned hard fork to the future proof and robust Proof of Stake mining algorithm very soon....
Introduce Proof of Stake, Proof of Importance, and so on!
If you are new to cryptocurrency, these might sound like jargons, but I'll explain in lay man terms as much as possible..
Proof of stake solves the underlying wastage of energy by 'staking' coins.
Proof of stake is one way where a person earns or rather mines, not due to the amount of hashpower, or rather the computing power he or she holds, but by the amount of coins. The first cryptocurrency to adopt this PoS method was Peercoin. Nxt, blackcoin, shadowcoin followed suit.
Several other coins like Neo (previously antshares), NEM, OK cash, Gridcoin, Nav coin, Ardor, Bitshares, Reddcoin, Dash, Komodo and a lot of coins have come up with the novel concept.
Get the entire list from the below link:
So if you hold any of the above coins, you can earn a tidy sum through mining or rather staking. However, it is a bit slow, but it is worth it in the long run.
Ethereum will be moving to the more future proof method in a very planned and systematic hard fork very soon, so people holding ethereum can also mine that way.
However, if you study about Proof of Stake, you will find several drawbacks, and I have inferred that by this method, the rich gets richer, and majority of the people holding less coins ( like us :P ) will stay as it is.....
NEM has come up with a much more novel Proof of Importance, which addresses this issue..... It is much better than ethereum.... Do check it out....
https://steemit.com/nem/@rahulbasu/nem-xem-should-you-invest-or-not
And visit nem.io to check more about the coin.
You can harvest coins if you hold 10k or more coins...
Same for Cardano, I have made an extensive research on it.... They have also come up with a similar concept, where coin holders will have authority to form a concensus on future hard forks also.
Don't be discouraged by the Jargons still because you just need to vote by understanding the drawbacks ....nothing else...
Let's take an example of a particular coin and how to earn from it...... I am taking the example of Blackcoin as of now. I will write about all other coins in future!
Website: blackcoin.co
Users who keep their wallet open to the secure network via staking will get an interest varying from 1% to 8% per year, which varies according to the network weight. So no power hungry and costly equipment is required.
So in layman terms, the interest you receive is compounded, so if you have lets say 1000 blackcoin, you get 70 blackcoin in a year. (Taking 7% average into consideration). In the next year, you have 1144.9 coins, In the third year, you have 1225 coins and so on. This will be feasible only if you plan to HODL(Hold On for Dear Life) for very long term.
Also take one more thing into consideration... The value of Cryptocurrency is never constant like fiat currency.... It always rises or falls. If the value of Blackcoin rises, your profit percentage will become exponentially high...
Blackcoin is a Scrypt based coin which was first released as a proof of work coin, but they changed to the proof of stake in only a week!
There is a built in 1% inflation rate of the coin, which means that you will earn a minimum of 1% blackcoin no matter what.
Staking takes 8 hours to begin once you download the wallet and put coins in it.
Official wallet can be downloaded from tbe blackcoin website, and is available for linux, windows and mac os.
This is how the blackcoin mining pool looks like:
If you use a windows os, you need to first allow access through the firewall.
After allowing, you will see that the wallet will start to synchronise with the network, which may take time depending on network speed.
I would personally recommend an internet connection with an unlimited download/upload plan, since these processes will consume a lot of data!
So now you have the blackcoin wallet interface which looks something like this:
Encrypt your wallet by clicking on settings> encrypt
Set a password, and store your password somewhere offline, and DONT EVER FORGET YOUR PASSWORD
If you forget your password, it means yo lose all your coins. This is a drawback of using blockchain, but since they are much more secure, they never store passwords on their servers, which means that you have to take care of your password only. This happe s in case of any coin.
(Even steem users cant misplace their passwords right? 😉)
Second step what you can do is to backup the wallet.dat file and store it in a secured oen drive or hard disk or anywhere you wish! The goal is to store it somewhere which cannot be accessed by anyone else and keep passwords with you.
Go to file> backup.... I have posted another image on the process
So it will by default get saved in the documents folder if you are using windows
After completing the steps, now its time to send some Blackcoins to the wallet for staking!!
Open "receive address" to view your address. This address will be the public address.
Buy from any exchange,
On the exchange make a withdrawal request of Blackcoin, and enter the wallets receiving address there.
So in about 10-15 seconds, blackcoin will be debited from the exchange and get credited to your wallet.
Similarly, sending coins is also pretty straightforward, you directly open the "send" button, and put the receiving address, enter the password or passphrase, pay the fees and hit send!
Its simple...
Fees help the miners who help in confirmation of the transactions. And do remember if you stake coins, you are also a miner, but you can't process your own transactions :)
This image represents how to send, similarly if you click on the receive tab, you will get the receive address and receive coins.
Transactions require about 10 confirmations, but its pretty quick, takes nearabout 10-12 seconds...
Lets now come to staking. As i told, staking will take at least 8 hours to start, so have some patience. Go to settings-> unlock wallet.
Go to help>debug and select the console option.
In the console, type the following: walletpassphrase (YourPassphrase) 9999999 true
So in the brackets, add the passphrase you gave while creating the wallet.
9999999 refers to the amount of time you want to keep the wallet open for staking in seconds.
This is the console where you can enter the command.
After 2-3 seconds, clear the screen and close the console.
Come to the wallet overview and you will see that your wallet is encrypted, but is still staking.
So thats all about how you can stake a coin.
The more coins you have, the more will be the weight in the network, and the more you will be able to earn.
Similarly, you can try with other coins and let me know in the comments below!
Dont forget to upvote, comment and resteem and follow me!
And Let's build a community together of all steemians on t.me/st33m and help each other out with valuable information.