No need to copy-paste and plagiarize the article. A link would suffice !
I agree
and also, it's too long to keep me interested in the article..
I'm too lazy to google it, but it seems like this is copied from the official wikipedia..
Topic: Bitcoin 101: What you need to know about Crypto Currencies (Read 1422 times)
I agree
and also, it's too long to keep me interested in the article..
I'm too lazy to google it, but it seems like this is copied from the official wikipedia..
Thanks for sharing.
No need to copy-paste and plagiarize the article. A link would suffice !
Good resume. Thanks for share!
Very interesting text. Thanks for sharing it.
I am new here and its has too much information for me thanks for this
Good work beause it was interesting read for me. TY for sharing
Very interesting text. Thanks for sharing it.
I apperciate your all effort for this good work
Very well written 
Crypto currency has taken the world by storm, quickly transforming from an underground niche to a news-headlining, digital stock market on steroids with investors begging to buy in. Bitcoin announced itself to the world with a meteoric rise to $266 per coin. However, this was quickly followed by a spectacular fall to $60. Since then the market has calmed down and settled on a price around the $80 mark.
There are numerous stories of average people mining Bitcoin (more on this below) in the early days and returning to find they were millionaires when the coin went mainstream. Others invested at the right time and made profitable trades during the huge price swings, which at times fluctuated up to 200 per cent a day.
In late 2011, when a friend first introduced me to Bitcoin, I didn't understand exactly what I was doing but I enthusiastically built a computer system out of old parts and started mining. Over the course of the following two years I collected coins and was ecstatic when I sold them at $13 each. However joy turned to despair when the Bitcoin bubble hit and prices went from a meagre $10 a coin to a peak of $266 in a few short months.
Detractors will say digital currencies have no intrinsic value and all investments are overvalued or worthless. Backers will tell you that the rapid adoption indicates digital currencies are undervalued and growth will continue over the coming years. Both have valid arguments, but it is clear to see that these currencies are growing in real world uses. Most people have heard of the drugs and weapons available for purchase on sites such as Silk Road, but there are a plethora of other businesses accepting Bitcoin. Everything from pizza to clothing is available for purchase and with Bitcoin ATMs already in production there are promising signs for a bank-free future. However this is only a drop in the ocean of what is required to break free from government controlled currencies.
Origins
Bitcoin was architected and created by someone using the pseudonym Satoshi Nakamoto. His major motivation appears to be his dis-trust of the way traditional currencies are managed using a centralized model. Bitcoin is the proposed solution to his problem. Satoshi released a very complete and functional Bitcoin 0.1 beta in 2009, but by mid-2010 he had begun preparing Gavin Andresen as his successor. Then as if satisfied that his job was complete, he simply walked away. Investigations haven't successfully uncovered Satoshi's identity, but many theories exist as to who the mystery mathematical genius might be. Potential Satoshi candidates include Andresen himself, any number of international governments attempting to undermine other currencies and, more interestingly, Shinichi Mochizuki.
Mochizuki is a mathematical genius who claimed to solve the audaciously difficult ABC Conjecture and, just like Satoshi, he's both a fluent English speaker and walked away after publishing his proof. Whether or not Mochizuki or Andresen are Satoshi might never be known, but whoever Satoshi is might be sitting on a fortune. In the first year of Bitcoin production nearly a quarter of the coins produced have never been used, this is equivalent to a mind blowing one million Bitcoin's or 132 million Australian dollars at the current exchange rate. Some or all of these coins may be waiting to be claimed by Satoshi, if he should ever return.
Beyond Bitcoin
Bitcoin is not the only digital currency; there are a number of other coins offering twists on the de-centralized ideas first introduced by Satoshi. All crypto coins work in a similar way, a mathematical proof of work - called a block - it's then posed to a de-centralized network of clients, called miners. The miner that solves the block first gets sent the block reward; this is how the currency is printed. To prevent the currency being printed too quickly, a difficultly component regulates how hard each block is to solve. The difficulty is adjusted based on how fast blocks are solved over a predefined time period. If a large number of miners are mining, blocks are solved more often and the difficulty is increased. If mining is then reduced, the difficulty is lowered as each block is taking longer to solve. All crypto coins are a limited resource; once all the coins have been mined, no more currency is generated. However, each coin can be subdivided an almost-limitless number of times.
Transactions
When money is sent from one person to another a transaction occurs. This transaction is not instant but requires confirmations from the network of other peers; this is how crypto currencies achieve a de-centralized design. Each time a block is solved, a confirmation occurs. Bitcoin requires 120 confirmations for new blocks to be confirmed at which time the coins can be spent. If John sends Jane one coin, it requires 120 blocks to be solved before the coin can be spent from the wallet of Jane. Jane doesn't have to spend her coin all at once, she can spend fractions of them in independent transactions. The smallest possible transaction is one hundred-millionth of a coin named a Satoshi. The wallet itself is based on public key infrastructure, the wallet address is the public key while the owner keeps the private key encrypted to protect any coins inside.
Decentralisation
The peer-to-peer distributed nature of crypto currencies makes them hard to shut down. Like BitTorrent, as long as peers can connect to each other, the network continues to run. This makes it mostly immune to Denial Of Service attacks. While the network is resistant to attacks, the coin exchanges and overall coin prices are not.
Denial of service attacks have been successfully used to manipulate the price of Bitcoin, allowing attackers to take advantage of market instability. First attackers knock an exchange offline, investors then panic and sell their currency. These panic sales lower the overall currency price and attackers then buy the coin at reduced prices. When the attack stops, investors buy more coins and the price gradually stabilizes at which time attackers sell their coins at a higher price. These attacks were evident during the huge market swings of early April 2013 when the biggest exchange, Mt. Gox, was offline for sustained periods.
Mining
Before coins can be transferred to exchanges they must first be mined. There are two main ways to mine coins, the first is to solo mine, which involves a single miner solving the block and taking the entire block reward. The more popular method is to pool mine which involves individual miners working together to solve the block. Pool mining works by splitting the block up into thousands of individual shares, the reward is then distributed to the miners proportionate to the amount of shares each miner contributed to solving the block. When the difficulty is low, solo mining is a popular option as blocks can be solved quickly and the miner can take the entire block reward for themselves. As the difficulty rises it takes longer to solve the block and pooled mining is much more profitable.
Mining is possible with both regular computer processors (CPUs) and graphics cards (GPUs). However CPU mining has become unprofitable in recent times. GPU's are able to mine faster than CPU's by a factor of 10 or more. For example, when mining Bitcoin, an Intel Core i7 2600K CPU can achieve around 50 'mega hashes per second' (MH/s) while a GPU like the AMD 7950 can achieve around 600 MH/s. 'Hashes' is the term used to define the block-solving power of a device or the combined power of devices.
In recent times application-specific integrated circuits (ASICs) have come into play. These ASICs are specifically designed for mining Bitcoin, making them much more efficient than even the most powerful GPU's on the market. Currently ASICs are capable of hash rates of over 50 GH/s, a ridiculous 700x faster than an AMD 7950. Their impact on Bitcoin has been huge: the hash rate of Bitcoin almost doubled between February 2013 and April 2013. The massive spike of the network hash rate sharply increased the difficulty - making it nearly impossible for GPU miners to compete. The knock on effect has been a large redirection of GPU mining towards alternate currencies.
Of all the alternate coins released, Litecoin is undoubtedly the most successful. Others to achieve moderate success are Feathercoin and Freicoin, although both have had their problems. Freicoin introduced some innovative concepts but isn't overly profitable and Feathercoin is mined sporadically during peaks and troughs of difficulty after a promising start.
Boom and bust
Names like YAC (yet another coin), BBQ and Nibble sound more like hungry animals than digital currencies, but these are real names of recent alternate coins. Most new coins are clones of Litecoin, using the same "scrypt algorithm" with small changes of difficultly, block reward, currency cap and transaction time. Although there has been some innovation with Freicoin utilizing demurrage in attempt to promote circulation of the currency and PrimeCoin introducing a prime number generating proof of work.
A large number of these new coins are referred to by insiders as "pump and dump" coins. This implies that the coins aren't designed for long term use but instead make their creators a quick buck. The average peak lifetime of most new coins is around two-to-four weeks. A new coin is released and heavily mined for the first week while the difficultly is low: this is the pump stage. The coins are then sold dirt cheap in huge amounts: this is the dump. After 2 weeks of this cycle the coin is abandoned in favour of the latest currency, some don't even have solid support for a week. With so many coins being dumped and so few buyers, simple economics dictates the price will go down, and it does, rapidly. The crypto coin community has a negative view towards the flood of new coins as it's widely believed having too many coins will devalue Litecoin and Bitcoin.
The great leveller - power consumption
Anyone toying with the idea of mining crypto currency needs to take a few things into consideration and most important for those in Australia is power consumption. With electricity prices rapidly increasing and the growing difficulty of most currencies, power costs can eat away over 80 per cent of potential profits. For example an AMD 7950 generating 600 MH/s might earn $58 a month but uses roughly 175W of power. In Adelaide the power cost would be $41.58 based on 33c per kWh, this leaves an actual profit of only $16 per month.
Choosing the right graphics card is critical to maximizing mining profits. If you are running a small system, buying older 5000 and 6000 series AMD cards might be the cheapest option. However more serious miners may choose GPUs such as AMD 7950 cards as they generate large hash rates, consume less power and come with a warranty.
As a guideline of potential mining profits we have compared an Intel 2600K, Gigabyte 7950 OC, Gigabyte 7790, Gigabyte 6950 OC, Gigabyte 5850 and Gigabyte 680 OC. At the moment AMD graphics cards are much more efficient than Nvidia cards, but we have included a Gigabyte 680 OC for comparison sake. The hash rates are recorded from our testing system. Exact hash rates may vary depending on configuration and hardware. The profit per month has been formulated using Litecoin at the exchange rate of $2.81, difficulty of 883 and power at 33c per kWh.
http://www.abc.net.au/technology/articles/2013/09/25/3855973.htm
There are numerous stories of average people mining Bitcoin (more on this below) in the early days and returning to find they were millionaires when the coin went mainstream. Others invested at the right time and made profitable trades during the huge price swings, which at times fluctuated up to 200 per cent a day.
In late 2011, when a friend first introduced me to Bitcoin, I didn't understand exactly what I was doing but I enthusiastically built a computer system out of old parts and started mining. Over the course of the following two years I collected coins and was ecstatic when I sold them at $13 each. However joy turned to despair when the Bitcoin bubble hit and prices went from a meagre $10 a coin to a peak of $266 in a few short months.
Detractors will say digital currencies have no intrinsic value and all investments are overvalued or worthless. Backers will tell you that the rapid adoption indicates digital currencies are undervalued and growth will continue over the coming years. Both have valid arguments, but it is clear to see that these currencies are growing in real world uses. Most people have heard of the drugs and weapons available for purchase on sites such as Silk Road, but there are a plethora of other businesses accepting Bitcoin. Everything from pizza to clothing is available for purchase and with Bitcoin ATMs already in production there are promising signs for a bank-free future. However this is only a drop in the ocean of what is required to break free from government controlled currencies.
Origins
Bitcoin was architected and created by someone using the pseudonym Satoshi Nakamoto. His major motivation appears to be his dis-trust of the way traditional currencies are managed using a centralized model. Bitcoin is the proposed solution to his problem. Satoshi released a very complete and functional Bitcoin 0.1 beta in 2009, but by mid-2010 he had begun preparing Gavin Andresen as his successor. Then as if satisfied that his job was complete, he simply walked away. Investigations haven't successfully uncovered Satoshi's identity, but many theories exist as to who the mystery mathematical genius might be. Potential Satoshi candidates include Andresen himself, any number of international governments attempting to undermine other currencies and, more interestingly, Shinichi Mochizuki.
Mochizuki is a mathematical genius who claimed to solve the audaciously difficult ABC Conjecture and, just like Satoshi, he's both a fluent English speaker and walked away after publishing his proof. Whether or not Mochizuki or Andresen are Satoshi might never be known, but whoever Satoshi is might be sitting on a fortune. In the first year of Bitcoin production nearly a quarter of the coins produced have never been used, this is equivalent to a mind blowing one million Bitcoin's or 132 million Australian dollars at the current exchange rate. Some or all of these coins may be waiting to be claimed by Satoshi, if he should ever return.
Beyond Bitcoin
Bitcoin is not the only digital currency; there are a number of other coins offering twists on the de-centralized ideas first introduced by Satoshi. All crypto coins work in a similar way, a mathematical proof of work - called a block - it's then posed to a de-centralized network of clients, called miners. The miner that solves the block first gets sent the block reward; this is how the currency is printed. To prevent the currency being printed too quickly, a difficultly component regulates how hard each block is to solve. The difficulty is adjusted based on how fast blocks are solved over a predefined time period. If a large number of miners are mining, blocks are solved more often and the difficulty is increased. If mining is then reduced, the difficulty is lowered as each block is taking longer to solve. All crypto coins are a limited resource; once all the coins have been mined, no more currency is generated. However, each coin can be subdivided an almost-limitless number of times.
Transactions
When money is sent from one person to another a transaction occurs. This transaction is not instant but requires confirmations from the network of other peers; this is how crypto currencies achieve a de-centralized design. Each time a block is solved, a confirmation occurs. Bitcoin requires 120 confirmations for new blocks to be confirmed at which time the coins can be spent. If John sends Jane one coin, it requires 120 blocks to be solved before the coin can be spent from the wallet of Jane. Jane doesn't have to spend her coin all at once, she can spend fractions of them in independent transactions. The smallest possible transaction is one hundred-millionth of a coin named a Satoshi. The wallet itself is based on public key infrastructure, the wallet address is the public key while the owner keeps the private key encrypted to protect any coins inside.
Decentralisation
The peer-to-peer distributed nature of crypto currencies makes them hard to shut down. Like BitTorrent, as long as peers can connect to each other, the network continues to run. This makes it mostly immune to Denial Of Service attacks. While the network is resistant to attacks, the coin exchanges and overall coin prices are not.
Denial of service attacks have been successfully used to manipulate the price of Bitcoin, allowing attackers to take advantage of market instability. First attackers knock an exchange offline, investors then panic and sell their currency. These panic sales lower the overall currency price and attackers then buy the coin at reduced prices. When the attack stops, investors buy more coins and the price gradually stabilizes at which time attackers sell their coins at a higher price. These attacks were evident during the huge market swings of early April 2013 when the biggest exchange, Mt. Gox, was offline for sustained periods.
Mining
Before coins can be transferred to exchanges they must first be mined. There are two main ways to mine coins, the first is to solo mine, which involves a single miner solving the block and taking the entire block reward. The more popular method is to pool mine which involves individual miners working together to solve the block. Pool mining works by splitting the block up into thousands of individual shares, the reward is then distributed to the miners proportionate to the amount of shares each miner contributed to solving the block. When the difficulty is low, solo mining is a popular option as blocks can be solved quickly and the miner can take the entire block reward for themselves. As the difficulty rises it takes longer to solve the block and pooled mining is much more profitable.
Mining is possible with both regular computer processors (CPUs) and graphics cards (GPUs). However CPU mining has become unprofitable in recent times. GPU's are able to mine faster than CPU's by a factor of 10 or more. For example, when mining Bitcoin, an Intel Core i7 2600K CPU can achieve around 50 'mega hashes per second' (MH/s) while a GPU like the AMD 7950 can achieve around 600 MH/s. 'Hashes' is the term used to define the block-solving power of a device or the combined power of devices.
In recent times application-specific integrated circuits (ASICs) have come into play. These ASICs are specifically designed for mining Bitcoin, making them much more efficient than even the most powerful GPU's on the market. Currently ASICs are capable of hash rates of over 50 GH/s, a ridiculous 700x faster than an AMD 7950. Their impact on Bitcoin has been huge: the hash rate of Bitcoin almost doubled between February 2013 and April 2013. The massive spike of the network hash rate sharply increased the difficulty - making it nearly impossible for GPU miners to compete. The knock on effect has been a large redirection of GPU mining towards alternate currencies.
Of all the alternate coins released, Litecoin is undoubtedly the most successful. Others to achieve moderate success are Feathercoin and Freicoin, although both have had their problems. Freicoin introduced some innovative concepts but isn't overly profitable and Feathercoin is mined sporadically during peaks and troughs of difficulty after a promising start.
Boom and bust
Names like YAC (yet another coin), BBQ and Nibble sound more like hungry animals than digital currencies, but these are real names of recent alternate coins. Most new coins are clones of Litecoin, using the same "scrypt algorithm" with small changes of difficultly, block reward, currency cap and transaction time. Although there has been some innovation with Freicoin utilizing demurrage in attempt to promote circulation of the currency and PrimeCoin introducing a prime number generating proof of work.
A large number of these new coins are referred to by insiders as "pump and dump" coins. This implies that the coins aren't designed for long term use but instead make their creators a quick buck. The average peak lifetime of most new coins is around two-to-four weeks. A new coin is released and heavily mined for the first week while the difficultly is low: this is the pump stage. The coins are then sold dirt cheap in huge amounts: this is the dump. After 2 weeks of this cycle the coin is abandoned in favour of the latest currency, some don't even have solid support for a week. With so many coins being dumped and so few buyers, simple economics dictates the price will go down, and it does, rapidly. The crypto coin community has a negative view towards the flood of new coins as it's widely believed having too many coins will devalue Litecoin and Bitcoin.
The great leveller - power consumption
Anyone toying with the idea of mining crypto currency needs to take a few things into consideration and most important for those in Australia is power consumption. With electricity prices rapidly increasing and the growing difficulty of most currencies, power costs can eat away over 80 per cent of potential profits. For example an AMD 7950 generating 600 MH/s might earn $58 a month but uses roughly 175W of power. In Adelaide the power cost would be $41.58 based on 33c per kWh, this leaves an actual profit of only $16 per month.
Choosing the right graphics card is critical to maximizing mining profits. If you are running a small system, buying older 5000 and 6000 series AMD cards might be the cheapest option. However more serious miners may choose GPUs such as AMD 7950 cards as they generate large hash rates, consume less power and come with a warranty.
As a guideline of potential mining profits we have compared an Intel 2600K, Gigabyte 7950 OC, Gigabyte 7790, Gigabyte 6950 OC, Gigabyte 5850 and Gigabyte 680 OC. At the moment AMD graphics cards are much more efficient than Nvidia cards, but we have included a Gigabyte 680 OC for comparison sake. The hash rates are recorded from our testing system. Exact hash rates may vary depending on configuration and hardware. The profit per month has been formulated using Litecoin at the exchange rate of $2.81, difficulty of 883 and power at 33c per kWh.
http://www.abc.net.au/technology/articles/2013/09/25/3855973.htm
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