What is Ethereum Block Chain
In the last decade, you have probably heard of things like Bitcoin, Ethereum, Dogecoin, cryptocurrency, and blockchains. However, you may have no idea what cryptocurrencies and blockchains really are, how cryptocurrencies differ, how they can be used in your daily life, or where you even get them.
If this, is you, don’t worry? You are among the majority. While Bitcoin has been making news with its impressive stock market gains over the past year, the uptake of cryptocurrency has been relatively slow by most of the world’s population.
Nigerians have the highest percentage of the population using cryptocurrency, at 32%, but America is close to the bottom, with just 6% of the population using it. According to https://statista.com here is how the world’s top 10 crypto countries rank in terms of percentage of the population currently using them:
- Nigeria: 32%
- Vietnam: 21%
- Philippines: 20%
- Turkey: 16%
- Peru: 16%
- Switzerland: 11%
- India: 9%
- China: 7%
- US: 6%
- Germany: 5%
- Japan: 4%
The good news is that you aren’t in the minority right now. However, you may still be in the dark, while those in the know are busy acquiring valuable cryptocurrency and setting themselves up for a future where it is an important part of the economy. Just think if you’d started mining Bitcoin at the beginning in 2009. Mining around thirty Bitcoin back then would make you a millionaire today at the current price of $34,077.50 per Bitcoin as of 2021 but this might have changed by time of reading.
Now, arguably, Bitcoin, being at the high point it is today, is both an expensive and risky investment and very hard to mine. I won’t go into the specifics of that here, but there is lots of competition for mining Bitcoin, and you can’t even mine one coin anymore, just a block of a coin.
Moreover to that, there is still ample opportunity to get into the market at a relatively low point with the second-largest cryptocurrency, Ethereum. In fact, now is a great time to start mining it, as in the first quarter of 2021, Ethereum’s growth, at 324%, outpaced Bitcoin’s growth at 110%. Throughout the rest of this book, I will tell you what Ethereum is, what you can do with it, and why you should mine it. Cryptocurrency has been around for over a decade now, and it is here to stay. Don’t miss out on the next big up-and-coming cryptocurrency opportunity. In ten years, you could be looking back, with a smile on your face, a drink in your hand, on some beautiful beach, glad that you took the step today to securing your financial future. “Cryptocurrency is not going away, just like gold is not going away
Ethereum is a blockchain, which is a decentralized, distributed ledger that contains the source of a digital asset. The easiest way to explain it is to use an example like Facebook. All of the data that goes back and forth on Facebook is stored in one place, by one “person,” Facebook. However, with a blockchain, the data is not kept in one place, but spread over a wide number of different nodes. As opposed to Bitcoin, which is meant to be a store of value, Ethereum is meant to decentralize things like apps, social media, and even financial agreements and other contracts. However, Ethereum can also be used to transfer and store value globally, without third-party oversight. This type of value exchange is the main way Ethereum is used currently, using its coin, ether. Ethereum’s main philosophy is to give users more control over their online data through the decentralization we talked about earlier. It aims to create apps like Facebook and Google, without any “governing authority” to collect user’s data or censor information. This makes the data users share more secure and less likely to be stolen, sold, leaked, or used for other purposes. The overall idea for Ethereum is that bits of data from such apps will be stored on volunteers’ computers all over the world, creating a network that some have called “a world computer.” While this is an ambitious goal, if achieved, it will be a major disruption to the current internet.
Why Should I Mine It?
The main reason people mine Ethereum, obviously, is to make money. Every time you mine a block of Ethereum, you earn ether that you can either spend, sell, or save for future gains. Mining, versus buying, allows you to acquire Ethereum without having to risk your own money on the actual currency. Economic motivations aside, if the notion of more control over your data is important to you, it only makes sense to start mining Ethereum, so you can start using their apps. Each time you use an Ethereum app, such as post on a social media app or comment on a blog, you must pay ether.
Ether also allows you to use certain functions of apps or even access certain apps. Further, many people mine ether just to help Ethereum expand, some even at a loss, because they identify with the mission of creating a decentralized internet and want to be a part of that movement. On the other end of that, think of how many other people would agree with that notion of wanting more security online. As more people have their data stolen and accounts hacked and they start to learn of the security something like Ethereum provides, Ethereum becomes even more valuable, even if you don’t want to use their apps.
So having some Ethereum stashed away can’t be a bad idea. Plus, as I’ve already mentioned, Ethereum is currently the second- largest cryptocurrency in the world, yet its price is still relatively low compared to Bitcoin’s. If you are kicking yourself for missing out on the Bitcoin explosion, mining Ethereum is your chance to get in on the next potential cryptocurrency explosion.
When you have ether, you can start using Ethereum’s decentralized apps, called dapps. These are just like the apps we have today, without the intermediaries (third-party vendors who often misuse data, censor, or leak data). Some of the apps already available include the following:
- CryptoKitties: This is a game about collecting and breeding funny-looking digital cats. A neat thing about games in Ethereum is, when you collect something, like one of these cats, it can never be deleted. The “asset” is yours to keep, even if the company that runs the app shuts down.
- PeepEth: This is the decentralized equivalent to Twitter. Twitter can delete accounts and tweets they don’t agree with. With PeepEth, there are moderators who make sure content is appropriate and not spammy, but otherwise “peeps” posted to PeepEth can’t be deleted.
What Can I Do with Ether?
DeFi stands for decentralized finance.
Within Ethereum, there are several different apps for things like mortgages and investments, all decentralized. You can also use ether to buy a wide variety of other coins that work within Ethereum, so on all accounts, ether is essential for using the platform. 1 https://www.coindesk.com/learn/ethereum-101/how-to-mine- ethereum
Before you start mining ether, it is a good idea to have a place to put it. In the cryptocurrency world, coins or other digital money are kept in things called wallets. These wallets are like other online banking accounts. They usually use apps that you can access on either your phone or computer. Ethereum wallets use private keys, which are like long passwords, to access your ether. Here is an example of what a private key might look like: 8da4ef21b864d2cc526dbdb2a120bd2874c36c9d0a1fb7f8c63 d7f7a8b41de8f When you set up your wallet, it will store your private key.
Only you, the owner of the key, can use it to spend your ether. These Ethereum wallets come in several different types to choose from:
• Desktop wallets:
• Mobile wallets:
Mobile wallets can be used on a smartphone, and some can be used on both desktop and mobile. If you tend to use apps in a variety of places, consider one with more flexibility. Mobile-only wallets include Samsung Blockchain Wallet, Linen, and Dharma, while those that work across devices include TokenPocket , https://www.myetherwallet.com and Coinomi.
Some people prefer not to have their private keys anywhere online, for an added layer of security. These people use what is referred to as a hardware wallet, which is simply a small electronic device like a thumb drive that holds the private key for you. This option is harder to hack, offers more privacy, can be used offline, and is great for those who have a lot of money in crypto. It can be stored in a physical lockbox for added security. The only issue with this type of wallet is that if you lose it or lose your key, you won’t be able to access your cryptocurrency. If this sounds like viable option for you, Ledger is a popular brand that sells their devices online. Others can be found on Amazon.
• Paper wallets:
Another physical storage option for your private key is a paper wallet, which is exactly what it sounds like: You print your private key or write it on a piece of paper. If this is the option you like best, consider making a couple of copies and putting them somewhere safe, like in a safety deposit box or a fire-proof safe.
The final option is to use MyEthereumWallet (MEW). This generates key pairs directly on your computer, not on a website server. This means that your private key won’t be able to be accessed by a third party or left vulnerable to hackers. Take the time to consider each option and pick the one that seems the most secure and easy to use for your needs. Just remember, the easiest to use does not equal the most secure, and vice versa. However, you do risk losing your key, having it destroyed, or having it stolen if you decide to have a physical key, so backups might be a good idea. From here now henceforth Here is the thing to remember: If you lose your private key, you lose your cryptocurrency. There is no way to get it back. There is no help desk or third party who can help you recover it, so it is important to know this and strategize accordingly before you start mining. This could mean the difference between a very fruitful payout and a total waste of time. I suggest having multiple ways to store your key, both digitally and physically.
How Do I Mine Ethereum?
Now that you have a general idea about what Ethereum is and why you should mine it and you have your Ethereum wallet set up, it is time to get ready to mine some ether. The first thing you will need is a specialized computer setup to mine the ether. This computer will perform computations that will create new tokens on the blockchain. As it does this, you will “mine” or unlock ether. Why Is Mining Necessary? Mining is required for many cryptocurrencies, including Ethereum. It ensures that the network comes to consensus on every change made in the system. Remember when we talked about how Ethereum isn’t just a means of storing and transferring data, but also a platform that runs decentralized apps? Well, while the apps you are probably familiar with, like Facebook and Twitter, run on internet servers run by third-party intermediaries, apps on Ethereum run on decentralized computers all over the world, in the “world computer.” The miners are part of this world computer, and they are paid by the work their computers do, with ether. Simply put, they set up their computers so they can do cryptographic computations. After doing so many of these computations, they “mine” or unlock ether. The problem here is that your regular old computer or laptop straight from a local store can’t do these types of computations. As more ether is mined on major public blockchains, more powerful hardware is needed. At the same time, as more people invest in this hardware, it gets harder to mine the ether, as the calculations become more complex. This means that those with slower computers can’t compete and rarely earn ether.
How It Works
The way Ethereum is currently set up, a block of ether can be mined every twelve to fifteen seconds. If the system sees that ether is being mined faster or slower than this, the algorithm is adjusted so the time always stays in that range. Lots of miners work on mining the same block of ether at the same time. If a certain miner finds a hash that matches the current target, that miner gets the ether in that block. Then the network lets all the other miners know, so they will stop work on that block and go to the next block, repeatedly. Choosing the Right Hardware To get started with mining ether, you need to make an upfront investment in the right hardware. This will include a special computer that you use solely for the purpose of mining. The three choices for this are as follows: • A CPU (not highly recommended): A CPU is a central processing unit, which is used in most basic computers for home or office use. Check https://pcpartpicker.com/ for more details
• A GPU
(faster than CPU and can be used with Ethereum but not Bitcoin): A GPU is a graphics processing unit, which is used in more powerful and more expensive gaming computers and laptops.
(fastest option and can be used with both Ethereum and Bitcoin): An ASIC is an application-specific integrated circuit, which is a microchip designed for a specific application, like mining. To break these options down, using a CPU is basically not an option anymore, so you will need to invest in either a GPU or ASIC. Both options have more computational power, so they can work through the puzzles very quickly. Between the two options, an ASIC is probably the easier option, as it is already set up to mine.
However, it is about three times as expensive as a GPU setup, being around $9,000–$10,000 versus around $3,000– $4,000 per unit. It is also good to know that Ethereum is considering an update, ProgPoW, that would basically prevent more powerful miners (those using ASICs) from mining ether. It is not set in stone yet but know that the possibility is there. It is more complex to set up a GPU, and it is best to get one of the most profitable ones, which is determined by how many hashes (computations) per second it can compute, along with how much power and the initial investment it requires. If you want to go all out with your mining setup, you might even want to set up what is called a mining rig.
This is a machine that has multiple GPUs running at once and can greatly improve your profitability because you can cut down on the amount of power required. Installing the Ethereum Client Software Once you have your mining hardware set up, you will need to install the software that will run on the computer to mine the ether.
The first thing you will need is an internet connection. Without that, your node won’t be able to do anything. Then you need to install an Ethereum client on your computer.
This will allow you to connect to Ethereum’s network. If you know how to use a command line, you can install Geth, Parity, or OpenEthereum. Once you have your client installed your network will be able to communicate with the other nodes in the Ethereum network, and you are almost ready to start mining.
Installing the Ethereum Mining Software Once the client is installed, you also must install the mining software—
Once you do this, your node is part of the Ethereum network, and you are ready to mine. Mining in a Mining Pool Most miners don’t mine alone, because it is much easier to mine in a group, “pooling” all your computational power together. When you join a pool, your computer contributes a part of the overall power needed to solve the puzzles to unlock ether. When your pool can earn ether, it is then split based on how much each computer contributed in proportion to the others in the group. Joining a mining pool isn’t quite as simple as just jumping in.
There are different payout structures, pools form and then break up constantly, and the proportion that you are contributing changes as people enter and leave the pool. Today the top three mining pools are as follows: • Sparkpool (24% of market share) • Ethermine (21% of market share)
(9.5% of market share) Mining pools generally have a signup process on their website where miners can connect to the pool and begin mining. Powering Your Mining Setup After the initial setup, one of the biggest expenses will be the electricity you need to power your equipment. To be profitable, you need to pay 12 cents per kilowatt hour or less, or 6 cents to be highly profitable. https://cointelegraph.com/ethereum-for-beginners/how-to- mine-ethereum-guide-for-beginners Some of the most profitable miners search for the cheapest ways to power their setup. Some options are as follows:
• Tap into renewable energy (Highly Recommended ) for example Hydro Energy, Geothermal Energy ,Windy Energy or Solar Energy) This will greatly conserver our environment and still build a decentralized world .
• Set up operations where electricity is cheaper
• Partner with electric co-ops or find other ways to get cheaper rates This point, though it seems minor, is a big one to consider when trying to squeeze out extra profits. Don’t neglect to investigate it. Facts about Mining Ethereum Now that you have some insight into setting up your mining system, you may be wondering if you can truly be profitable and if jumping into Ethereum is something you really want to commit to. In this section, we will cover some of the most asked questions about Ethereum to try to set your mind at ease.
Can I Make Money Mining Ethereum?
The short answer is, yes, you can make money mining Ethereum. The same is true for almost every other business venture. However, if you want to make money, you can’t operate like it is your hobby. You must make wise decisions and run it like a business. First, you much consider the upfront costs, like your computer setup. Then you must consider the price of energy. There are many profitable calculators out there, like I mentioned before, that can help you determine what you need to do to be profitable. Will the ProgPoW Update Impact Mining? One thing we haven’t discussed that you need to know is that there are often changes to cryptocurrency structures that can affect your profitability over time. Proof of work is one such update that has miners on alert. However, this update probably won’t hurt you. In fact, it will likely help you. It is an update that is meant to slow down the most powerful miners, to keep the network decentralized.
If any one person or entity gets too much power, it defeats the overall philosophy of Ethereum. (Important Note above) What this update would mean is that those using the most powerful computers, the ASICs, would no longer be allowed to mine ether, leveling the playing field for those only using GPUs. This change might affect what computer setup you decide to buy, as we discussed earlier.
Will Ethereum 2.0 Affect Mining?
Unlike the ProgPoW update, the Ethereum 2.0 upgrade might be something to be concerned about, as it is meant to totally eliminate miners in the name of energy efficiency. It will employ a new means of verifying transactions—proof of stake—that differs from the current proof of work, where a puzzle has to be solved. However, there’s no reason to stop the mining yet. The 2.0 upgrade was rolled out in December of 2020, but it won’t go into full effect for the next several years. On top of that, many industry experts are skeptical it will even work and that it will be more prone to attacks. That means there is still a prime opportunity and plenty of time left to get in on this minable cryptocurrency with lots of potential—but the time to start is now! But who knows what the future holds!
How Do I Find Out about Other Issues that Might Affect Mining?
As you can probably guess, changes are always happening in the mining world, and it is good to stay that you will want to run your mining operation like a business where a business is a risk of which it can either fail or succeed. Mining pools come and go, mining tools become popular and then become obsolete, rules change, and the list goes on. One of the best places to keep up to date with the latest news about the industry is on CoinDesk. Here you can learn about any new updates as well as increase your knowledge on the crypto industry.
Now that you have a great base of information about the world of cryptocurrency and mining Ethereum, I encourage you to go out there and get started as part of this new world of decentralization. Not only can you impact your bottom line, but you can help the world as a whole progress, with safer data transfer, less censorship, and decentralized banking. This shifts the power of few to many. There are currently more than four thousand cryptocurrencies in existence, but Ethereum offers is the largest and most well- established, open-ended decentralized software platform in the world. It enables users to send smart contracts; build decentralized applications that can be run without any downtime, fraud, control, or interference from a third party; and even build other decentralized cryptocurrencies on top of it. Think of great scenarios which we will talk in the next chapter like Coffee Farmers, Real estate buying, Music Royalties etc. Plus, with its relatively low price compared to Bitcoin, fast growth over the last quarter, and stability, Ethereum is a good bet for the long term with potential for faster payoffs as well. But remember, the landscape in crypto is always changing and these fertile conditions won’t last forever, so the best time to get started is now. Happy mining!