Two magical ways to turn your spare time into crypto

April 14, 2018 flippener

When most people think about earning money in crypto, they think of two common activities: investing and mining. Both can be costly and time consuming endeavours. But growing your cryptocurrency stash doesn’t have to be either of these things.

There are several less explored pathways to crypto-gains. In this article we’ll cover:

1. How your coins can work for you with Proof of Stake
2. How applications in this ecosystem can help you earn money

Let’s get started.

Getting started with Proof-of-Stake

Proof of stake is an alternative to cryptocurrency mining that doesn’t require hardware or crazy amounts of electricity. Instead investors who hold coins are gradually rewarded with more coins.

Cryptocurrency Art Gallery: Litecoin, Ether, Ripple, Bitcoin and Namecoin (Image: Namecoin/Flickr)

Think of it like interest in a bank account, but with cryptocurrency. All you need to get started is a proof-of-stake cryptocurrency and a computer

Major coins like NEO, LISK, and Stellar Lumens are built on proof of stake models. And other major coins like Ethereum have announced their intention to adopt it.

How can I use PoS to start making money?

You can use PoS today with nothing more than your laptop and a stable internet connection. Although, you’re going to have to let it run 24/7 so you might want to use an old laptop.

The Bullish Case for Bitcoin

April 13, 2018 flippener

With the price of a bitcoin surging to new highs in 2017, the bullish case for investors might seem so obvious it does not need stating. Alternatively it may seem foolish to invest in a digital asset that isn’t backed by any commodity or government and whose price rise has prompted some to compare it to the tulip mania or the dot-com bubble. Neither is true; the bullish case for Bitcoin is compelling but far from obvious. There are significant risks to investing in Bitcoin, but, as I will argue, there is still an immense opportunity.

Genesis

Never in the history of the world had it been possible to transfer value between distant peoples without relying on a trusted intermediary, such as a bank or government. In 2008 Satoshi Nakamoto, whose identity is still unknown, published a 9 page solution to a long-standing problem of computer science known as the Byzantine General’s Problem. Nakamoto’s solution and the system he built from it?—?Bitcoin?—?allowed, for the first time ever, value to be quickly transferred, at great distance, in a completely trustless way. The ramifications of the creation of Bitcoin are so profound for both economics and computer science that Nakamoto should rightly be the first person to qualify for both a Nobel prize in Economics and the Turing award.

Bitcoin Cryptocurrency (Image: MaxPixel)

For an investor the salient fact of the invention of Bitcoin is the creation of a new scarce digital good?—?bitcoins. Bitcoins are transferable digital tokens that are created on the Bitcoin network in a process known as “mining”. Bitcoin mining is roughly analogous to gold mining except that production follows a designed, predictable schedule. By design, only 21 million bitcoins will ever be mined and most of these already have been?—?approximately 16.8 million bitcoins have been mined at the time of writing. Every four years the number of bitcoins produced by mining halves and the production of new bitcoins will end completely by the year 2140.

Experiments in Crypto Mining 8: Initial Performance

April 8, 2018 flippener 1 Comment

Following my initial attempts at mining I had decided to stick with NiceHash on my old PC as a good compromise between mining performance and convenience. Therefore it was natural to move straight to mining with NiceHash on The Beast.

Earnings

Initial results have been largely encouraging – as might be expected given its impressive performance. Certainly it can mine profitably: as I write this it has Daily Estimated Earnings of about 0.0004 BTC, currently worth about £2 per day.

Nicehash Mining with The Beast April 2018 (Image: BIUK)

I have a screenshot from back in February showing a slightly greater Bitcoin earning rate of 0.00048 BTC:

Nicehash Mining with The Beast February 2018 (Image: BIUK)

But because of the volatile nature of Bitcoin value we can see that only two months ago that was worth nearly £3.50 per day. Because of this volatility I try not to focus too much on the fiat earnings but instead on the Bitcoin earnings, since I think long term that’s what matters.

I use a Kill-a-watt style meter to see how much electricity the PC is using – and currently it’s 400W. Though that’s not all spent on mining, since the PC gets used for other things (like this blog) it’s a good enough approximation. So in the worst case, over 24 hours this PC will use 24 x 0.4 = 9.6 kWh. At about 15p per kWh that would cost £1.44 – so definitely I’m into profit.

In fact it’s much better than that:

During the daylight hours our roof generates a lot of solar, so in that period the electricity is effectively free.
For seven hours during the night we run on Economy 7 electricity at approximately half price.
I recently had a home battery installed to power the house from our solar once the sun has gone down (one of these: PowerBanx).

So in practice I’m definitely paying less than half the maximum, and probably less than 50p per day.

Downsides

That’s the good news. The bad news is that there are downsides beyond just the cost of electricity. Specifically The Beast runs hot – I’m monitoring it with MSI Afterburner and in less than an hour after starting mining the graphics cards hit their default maximum temperature of 83° C.

MSI Afterburner showing high graphics card temperatures during mining (Image: BIUK)

The results of this are:

The PC generates a lot of heat, much like having a fan heater running in the room.
The graphics cards are temperature limited and could probably generate more money if they weren’t so hot.
The PC gets noisy as all its fans are running flat out.

The upshot of this is that I’ve bought an extra fan to go into the PC case low down where the graphics cards are. Currently the case has most of its air flow going along the top where the CPU is, but that’s hardly used during mining. I think this is a case where Scan made a mistake in the system design, despite me making it clear the PC was intended for cryptocurrency mining.

I’ll install the new fan as soon as I can and then report back on the results.

[Update: Experiments in Crypto Mining 9: Paying Attention to Cooling]

Blog, Cryptocurrency, Experiments, Mining

Experiments in Crypto Mining 7: Testing The Beast

April 1, 2018 flippener 2 Comments

Once my mining PC (‘The Beast’) had arrived it unfortunately sat around for a while as I was busy on other things (particularly getting my tax return done). Once more time became available the first thing I did was to check out The Beast’s performance.

Having paid out for a high end system I was hoping for great things. I ran two particular suites of tests: 3D Mark and PassMark.

3D Mark

The 3D Mark software is used for evaluating specific 3D graphics card performance – the most crucial element in cryptocurrency mining.

3D Mark works primarily by running the latest version of the Time Spy benchmark at high resolution and with a range of graphical features enabled to determine how well the graphic card(s) can keep up. The benchmark is impressive to watch run with highly complex and challenging scenes running through at an impressive speed.

I’m pleased to say the Beast showed itself off well, with an overall 3D Mark score of 11,589.

Comparing this to all the PCs logged against 3D Mark shows The Beast’s score to be better than 97% of all results.

PassMark PerformanceTest9

The PerformanceTest9 benchmark by PassMark, in contrast, is for bench-marking general PC performance, including CPU, disk and memory speed – although it does also include some graphical tests.

PassMark PerformanceTest Screen (Image: BIUK)

Again The Beast acquitted itself well with 5/5 scores for CPU, 3D Graphics, Memory and Disk (though only 4.5/5 for 2D Graphics).

It achieved an overall score of 6736:

And individual results putting it in the 99th Percentile, against other PCs testing with the same benchmark, for CPU, 3D Graphics, Memory and Disk (though only 90th Percentile for 2D Graphics):

PerformanceTest Comparison (Image: BIUK)

Summary

Overall I was very pleased with the core performance of The Beast, particularly its raw 3D performance which is the key to cryptocurrency mining.

Next I tried it out mining to see if it would live up to the potential it clearly showed on paper – results are here: Experiments in Crypto Mining 8: Initial Performance.

Bitcoin (BTC), Cryptocurrency, Opinion

An Open Letter to Banks about Bitcoin and Cryptocurrencies

March 18, 2018 flippener

Dear Mr Bank Manager,

This is not an easy letter for me to write. I have been a customer of yours for over 20 years. You were there with a loan for me when I bought my first car; you helped arrange the mortgage when I bought my first house, and you even helped me launch my first business. We have been through so much together.

And I’ll let you into a little secret?

You were my first! Don’t worry, I know I wasn’t yours. I think this is why this relationship means so much more to me than you.

You may not have noticed that our relationship has changed, you have been so busy since that big financial crisis that we are doing less together. I got my last loan from my supermarket as they had a better rate and my last mortgage from another bank. These days I am only using you to hold money for me and pay my bills.

We are like passing ships in the night and I am worried that if we don’t talk we might have to separate.

Recently I made this new friend called Bitcoin; a form of Cryptocurrency, I call her Crypto, you have probably heard of her. She is fresh and exciting, and I want you to get to know her too. I want you to make her part of our relationship.

I know I am neither a bank manager nor an economist and you have all these arguments for why Crypto will fail, but I am someone using Crypto in my daily life and I know that this is going to be an ever-increasing need for me, and I want us to share this experience.

I know you are scared, or maybe you just don’t understand it. Maybe you think Bitcoin is a Ponzi scheme and everyone buying it is only doing so to make a quick buck. Sure, some of us are, like some of us who bought shares during the Dot Com boom and lost money when it crashed. But look what happened after that, we got some of the most significant companies in the world: Amazon, Google and Facebook.

Bitcoin Will Be the ‘One Online Equivalent to Gold’

March 16, 2018 flippener

Peter Thiel has once again endorsed bitcoin, which he recently argued is tantamount to digital gold.

And much like gold, the billionaire co-founder of PayPal conjectures that the cryptocurrency is destined to be a store of value rather than a means of payment.

“It’s like bars of gold in a vault that never move,” he told a CNBC reporter during a conversation at the Economic Club of New York last week, adding

“It’s sort of hedge of sorts against the whole world falling apart.”

He also struck a bullish tone on bitcoin in particular – versus other cryptocurrencies – suggesting that the largest cryptocurrency by market capitalization will maintain its position.

“There will be one online equivalent to gold,” he reportedly claimed, “and the one you’d bet on would be the biggest.”

Cryptocurrencies as Portfolio Diversification

March 15, 2018 flippener

As Bitcoin and cryptocurrencies gain more and more media coverage, investors who have never been involved in crypto are increasingly asking the question of whether cryptocurrencies could provide meaningful portfolio diversification to the traditional portfolio asset allocation.

In order to answer this question one must look both backwards and forwards: backward looking to determine past correlations and risk-reward profile; and forward looking to understand the real risk of central bank policy mistakes and government debasement of fiat currencies.

Open bank vault (Image: ahobbit/Pixabay)

Diversification of portfolio focuses on how the volatility of an underlying security plus their correlation with core market assets impacts a portfolio’s risk-return characteristics over the long-term or during periods of extreme macroeconomic or market stress.

Diversification drivers

The main reasons why Bitcoin provides portfolio diversification are: investability, politico- economic features, correlation of returns, and risk-reward profile.

Google To Ban All Crypto-Related Ads Starting June 2018

March 14, 2018 flippener

Google will ban all cryptocurrency-related advertising of all types in June 2018, according to a recent update to their Financial Services policy.

The news of a crypto ad ban comes just days after crypto advertisers using Google Adwords noticed a drastic drop in the number of views of their advertisements, according to posts on the Adwords support pages. However, Google Adwords had at that time denied any change in their Financial Services regulations that would block cryptocurrency or Initial Coin Offering (ICO) related advertisements.

Under Google’s newly updated financial products policy, no advertisements for “cryptocurrencies and related content (including but not limited to initial coin offerings, cryptocurrency exchanges, cryptocurrency wallets, and cryptocurrency trading advice),” will be accepted.

Florida State Employee Arrested for Allegedly Mining Crypto at Work

March 14, 2018 flippener

A state employee at Florida’s Department of Citrus (FDoC) has been arrested for allegedly using official computers to mine cryptocurrencies.

According to the Tampa Bay Times, the Florida Department of Law Enforcement (FDLE) has jailed Matthew McDermott, IT manager for the state government agency that oversees Florida’s citrus industry. He is reportedly being held pending trial, with bail set at $5,000.

Cryptocurrency Mining Farm (Image: M. Krohn/Wikimedia)

The FDLE alleges that McDermott used computers in the department to mine cryptocurrencies including bitcoin and litecoin, and has charged him with grand theft and official misconduct, according to the report.

An investigation further indicated that the utility bill of the department had surged by over 40 percent from October 2017 to January 2018, as cryptocurrency mining requires significant amounts of electricity due to its high processing demands.

BCS Northampton: Blockchain Lecture

March 13, 2018 flippener 2 Comments

This evening I attended an interesting lecture on Blockchain at the University of Northampton, presented by Drs Ali Al-Sherbaz and Scott Turner. It covered the basics of blockchain, include hashing, mining, signing, creating blocks, and so on.

It then covered particular examples of blockchain projects within the University, including one on social interactions and one on network activity logging. Apparently Blockchain is one of the key topics the University will be addressing in its future development strategy.

What wasn’t covered, however, was Bitcoin and in general most comments were dismissive of cryptocurrency. I think that will prove to be shortsighted. Most of the criticisms and limitations levelled at Bitcoin and other cryptocurrencies during the event were demonstrably false or at least incomplete and a more detailed discussion would have demonstrated that.

Personally I think cryptocurrencies are here to stay, with Bitcoin taking the role of the reserve cryptocurrency, and their positions will get stronger and stronger over time. Whether they will eventually replace fiat currencies is less clear, but I certainly wouldn’t dismiss the possibility.

For sure they will massively disrupt the banking and financial sectors (see, for example, Bank Of America: Our ‘Inability To Adapt’ Could See A Failure To Compete With Crypto).

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