Can someone comment on how we can compare Mining vs Buying a cryptocurrency?
I understand it is the same difference between a Manufacturing profit vs Trading profit.
But I am not able to build an argument on how Mining is more profitable or more better than Buying a coin directly in the market.
Also can somebody explain all the different types of Mining algorithms used in the coins and the different types of equipment required for these types?
Here's how I see it.
Profitability in mining is directly linked to the price of your hardware, electricity costs and all side costs that might arise. You can use a number of profit calculator that, based on your hardware and electricity costs will give you an estimate of your potential earnings at any given point in time. The main interest is your time to ROI. If you spend 1500$ on a rig that, after your calculation, will pay itself off in 2 months, then once you've mined for 2 months, everything else you mine is pure profit (minus electricity costs etc.). The advantages of this:
-Fixed initial cost
-Pretty much anyone can set up a rig and mine away, you don't need have +100 nerd/geek perks
-You have a constant income of coins that you can hold, sell to pay of your electricity or a new bag or pair of shoes for the wife
-You can resell your hardware on the second hand market which means your initial investment isn't a total loss, even if mining gets impossible
Think of it as a low risk/low-medium reward way of going about this (sort of, 1500-2000$ is still a lot of money).
On the other hand, profitability in trading requires a bit more knowledge. It has its learning curves, knowing when to buy and when to sell, analyzing the market to purchase the right coin at the right time...it can return a lot more profit very quickly just as it can ruin you very quickly also. This is more of a high risk/high reward kind of game.
The later is only more profitable if you really know what you're doing and buy large quantities of coins. Mining is really profitable only when you can mine a lot of a coin that has a high value (like Ether in the past 3-4 months).
I'm not going to respond to the question of algorithms as this is beyond my understanding.
Just my 2 cts.
