Crypto-currency has seen a steady rise from being an underground internet movement, to being considered a serious currency. The value of a Bitcoin as it stand is around $600. The flip side of Bitcoin’s value, is that it is not as easy to mine as other crypto currencies, and the market may be moving.
It is the community of programmers and miners that form the backbone of the crypto-currency world. Knowledgeable insiders of the relatively new altcoin, Feathercoin, share their views and ideas on Bitcoin, mining, and the aspirations of the crypto-currency communities.
What is your involvement with crypto-currency?
We mine coins, and are heavily involved with the forum communities. We give a lot of advice on the programming, and the technical aspects of Feathercoin.
What is Feathercoin, and why do you not mine Bitcoin?
Feathercoin is a crypto-currency that is in an earlier stage of development. It is nearly impossible now to mine Bitcoin using a standard CPU and graphics card set-up. Many miners turned to Litecoin for that reason. However Litecoin too is forever increasing in difficulty. There are an array of other currencies, but we mostly mine Feathercoin.
What does the mining process involve?
Miners work to crack a block code. They do transactions basically, and support each other; each miner validates other miner’s transactions. The transactions are a result of computational power, which requires electricity, and the coins that are released to the miner’s are like an incentive, or compensation.
Computers can be linked together in guilds, peer-to-peer systems that work together to crack the coin. Joining a peer-to-peer is important. They create a network of computers which increases the hashing power and makes mining easier. The person who actually cracks the block in the guild gets a bit more, but the pool shares the coins that it gains.
The younger currencies can be mined with a CPU and a graphics card, such as an ATI. It is a similar set up as for high-performance gaming. The rest is complicated; but it would be because it involves the printing of money in effect, of course it wouldn’t be easy.
Why is Bitcoin so difficult to mine?
It was always built into the codes that this would be the case. Early on there are less people mining the coin, and more coins are paid out per block. As time goes on less coins are paid out and more people are involved. It is an incentive for early investment, and for mining when a coin is young. Bitcoin has been going a while now, and so is getting increasingly more difficult to crack. That is why Bitcoin is not as easy to mine as other currencies.
At the moment Feathercoin is young, not many people are currently mining, and the difficulty is not high. That means that when we mine, many more coins are paid out in a shorter amount of time, but these coins are not worth as much as Bitcoin. If the coin was to take off they would increase in value dramatically, like what happened in Bitcoin.
So why doesn’t everyone mine the young currencies?
It is a greater risk than mining a more stable coin like Bitcoin or Litecoin, but the potential for payout is greater too. Many crypto-currencies collapse or become victim of an attack, and not all are going to make it into the crypto-currency marketplace on a long-term basis. Some currencies will survive though, and eventually could compliment Bitcoin.
How else do people get involved, other than mining coins?
For serious investors there is a market emerging around Bitcoin services. Cash machines, third-party currency exchanges, and online shops that all take Bitcoin. Anyone who can provide a service around the coins might be onto a winner.
People can also buy crypto-currency off the forums or eBay, or off miners who are selling them. Sometimes miners sell them cheaper than their actual value; they probably need the money to pay their electricity bills! Anyone who plans to accumulate crypto-currency needs a wallet to store them.
So you can spend Bitcoin?
Yes, although it is all in the early stages. Bitcoin can be spent in quite a few places online, and I think you can spend it in some physical stores too. You can also spend some of the smaller currencies. I know you can spend Feathercoin online, exchange it, or spend it in one pub in the UK so far. You will have to do some research to look exactly where.
(Further research shows a surprising number of places where crypto-currency can be spent, including Bitcoin Store, Bitpay which allows thousands of businesses to accept coin, and among others PizzaforCoin, which affords the fortunate holder of Bitcoin access to Dominos pizza. It is the Oxford Blue pub in the UK which accepts the coins, and interestingly Cumbria University accept them for tuition fees.)
What does crypto-currency provide that regular currency doesn’t?
It is a local currency owned by anyone who makes a transaction. It is a distributed currency that is owned by the miners, and is diverged from the control of humanity. Money cannot be steamed off without the community noticing the corrupt transactions. No one can dip their hand in the pot.
The currency is decentralized and does not require the control of the banks and governments. It is built into the codes from the start that only a certain amount of a currency can be mined, so money cannot be created out of thin air past this point, like what tends to happen with the printing of bank notes.
Money could be transferred wallet to wallet using smartphones, making real life transactions possible without the need for a bank. This could be especially promising for countries who do not have currencies, who could adopt crypto-currencies in order to trade. They could trade crypto-currency directly with a person from another country.
What are the disadvantages of owning crypto-currency over normal currency?
It is too early to know what will happen so there is still a risk. No one knows what will happen, when it will take off, or even if it will take off. In some way it already has taken off, it’s just limited at the moment; but you can already transfer it, and you can already spend it.
Bitcoin may be the big coin on the block, but it is not as easy to mine as other crypto-currencies. This being the case more coins are expected to arrive on the scene. It will be interesting to see how the world of crypto-currency develops, the industries that will service it, and how it will impact the world in a wider social-political context.
By Matthew Warburton