The future belongs to cloud mining, say many financial experts.
Nowadays, Bitcoin is the most popular cryptocurrency used as an alternative to traditional payment systems. All Bitcoin transactions must be verified by miners, in a process called mining.
This process is done by a software that accesses the CPU’s processing capacity to solve transaction-related algorithms. Originally, bitcoin mining was conducted on the CPUs of individual computers. Nowadays, to insure enough processing power, it is done in big data centers.
Not everyone can own a big data center, obviously, and that’s why recently a new type of mining has been gaining popularity– cloud mining.
Cloud mining allows users, instead of using their own machines, to buy mining power from the hardware placed in remote data centres. All bitcoin mining is done in the cloud, without any offline hassle, such as electricity bills, hosting, or installation and upkeep trouble.
Cloud mining offers a mining system with a low entry cost, minimal risks and expenses; it is just the opposite of traditional models of mining that involve procurement, maintenance and configuration of highly specialized hardware.
Traditional mining, in fact, needs to maintain the frequency of “closing” blocks at ten-minute mark. The increasing number of miners results in a difficulty of growth – the block is processed within 10 minutes; a number of miner decreases followed by the drop of difficulty and the close time of a block still takes about 10 minutes, according to Ben Hortman of cloud mining company Bet Capital LLC.
The reasons for cloud mining trending popularity are many, as Mr. Hortman explains:
“Cloud mining allows the hiring specialized equipment and teams of professionals to maintain them, so you are not limited by the capacity of a real miner; you can get your rates immediately, without any need to wait for delivery; you don’t need to worry about servicing of equipment or the replacement of broken parts”.
This all seems to be a simple way to earn bitcoins from cloud mining, as all you really need to do is sign into the project, choose the rate according to the size of your investments, and pay for it by any means available. 24 hours later, you will receive and be able to withdraw the profit (the minimal amount is currently 0.0004 BTC, since the commission fee is 0.0003 BTC — but this is expected to change rapidly.)
The basic nuts and bolts
To verify that the virtual money transactions take place in a legal and safe manner, a process of verification is naturally required. If a user buys an item and pays in bitcoin, algorithms check whether the bitcoins spent are taken from his wallet, avoiding the phenomenon called double spending.
This verification, along with the spread of bitcoin always requires more computing power, is called mining. The so-called miners provide the computing power of their computer to run these verifications. In return, they receive free bitcoin, until bitcoin reaches a current ceiling of 21 million units.
Hortman summarizes the process this way: “Cryptocurrency mining is basically the process of finding solutions to compose blocks in the blockchain. Blocks consist of transactions that bitcoin netizens conduct with each other. The best way to minimize risks in cryptocurrency mining is to stick the known and proven cloud mining companies, such as Bet Capital.”