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Why is the adoption of cryptocurrencies is slow?

Author: LB 2021-01-21 318

How can you make money with cryptocurrencies? I think this is one of the most common questions we hear when beginners are asking experts about cryptos. And then we start talking about Bitcoin, or Ethereum and other altcoins. And I guess this is the main problem we have to solve, because I naive investment in cryptos can generate not only serious losses, but skepticism too. In this article I am going to introduce a new concept that could possibly speed up the adoption of cryptos.


When I am talking to wealthy people and I mention the word "cryptocurrency" I can tell that they get goose bumps. This is a natural reaction, because they had amassed their wealth before Bitcoin was born and they do not feel like investing their money in intangible assets. There is nothing wrong with this attitude and I completely understand them. So when I am having these conversation with older investors, I come off as a pimp who is trying to sell them something shady. What the hack is going on here?


1. Why did they invent Bitcoin?


Well, we could draw an analogous example with Airbnb for example, which had been developed to share your couch when you are away, or if you have a spare space that you would not be using anyway, to accommodate guest. The initial founders of Airbnb might have not even thought of their break-neck growth in the future and that the platform itself will give a huge impulse to the world's travel economy.


The situation is somewhat similar with Bitcoin and other altcoins as well. So basically, these coins were invented so that users can transfer funds in an anonymous fashion using an asset that is protected against inflation, because only a certain amount of currency will be in circulation in the future.


That fact that Bitcoin's market price surged over the $10.000 level was hardly anticipated and the current price rally is most likely not more than mere market manipulation.


How many times do you see Bitcoin investment related ads on YouTube? How many channels are there on YouTube with self-proclaimed cryptocurrency experts who are trying to convince you that time has come? Whether they have a solid knowledge base to rely to when they make these statements, I do not know... But most importantly, buzz words sound were professional and whoever has some spare case at home gets convinced to buy not only lottery tickets, but Bitcoin too. I think this is a huge problem, because 99% of these people are not familiar with the concept of cryptos at all. Most of these crypto investors have never heard of cryptocurrency mining. But if we listen to for example Warren Buffet's advice on how to invest, he will tell you that you should only invest in something that you know and understand. So why does everybody buy Bitcoin? Because everyone suddenly became BTC experts. I doubt it.


So I think these issues are causing a very significant slowdown in the adoption of cryptos.


Nevertheless the idea itself is ingenious and what a pity that market speculation is preventing the wide spread adoption of cryptos. I don necessarily mean that we should have BTC ATMs all around us or retails stores should accept cryptocurrency based payment methods. Budapest for example has many locations with Bitcoin ATMs already and they are very convenient if you want to buy and sell cryptos in the Hungarian capital. Notwithstanding the large number of Bitcoin ATMs in Hungary, I do not think that Hungarian citizens know a lot about crypto assets. And also, we have already learned that Bitcoin suffers from several very serious drawbacks, so we would not even benefit a lot from a very widespread adoption anyway. I think what is more important here is education. So when you mention "cryptocurrencies" to someone, you would not trigger flashing price charts in your partner's mind, because these are already well known from the stock market and we tend to associate these charts with losses and misfortune.


So what kind of image should appear in one's mind when we start talking about cryptos?


The image should be about a decentralized financial system, which enables any mortal citizen to become a participant. Just as you would use Airbnb, when you upload you free space or rent your dream home. Well, maybe this is not the best time of the year to mention Airbnb, but the model itself works very well. These are the peer-to-peer systems, adored by many of us. So the idea would be the following. When I want to transfer funds to the guy who is living next door, I do not always want to go to the bank to deposit funds, then use my bank account to send my money to my friend, because this is kind of painful. Back in the day, I was able to do that, because I just had to ring the bell on his door and hand over some cash. Why is it so difficult now? Why do we need a third party when I could just give him the money in person? Well, this might have been an exaggerated example, but cryptocurrencies have been invented to solve this issue.


When I was a teenager, Kazaa was very big. We loved it, because we could download music for free. This was made possible by a peer-to-peer network and participants were sharing their music on the network. I guess due to copyright issues, the platformed shut down in 2012, but whoever used it has very nice memories of this convenient peer-to-peer platform. Hopefully cryptocurrency platforms will not have to shut down.


2. Safety concerns for crypto miners


So I think we all understood that cryptocurrency networks welcome everybody, just like Kazaa did, but instead of music we transfer money on these.


Therefore this systems are pretty dangerous.


Cryptocurrency mining is basically series of mathematical operation to validate cryptocurrency transactions on the blockchain. If you are mining Bitcoin, you have to calculate simple hash values, if you are mining Ethereum, you have to do similar calculations on DAGs (directed acyclic graphs) and if you are a Monero miner, you have to initialize virtual machines and run them with random data to validate your blocks. Mining digital coins is not too difficult, but understanding the mining algorithms is no easy task.


When you want to become a Bitcoin miner, you have to invest huge amounts of money into powerful hardware, so it might be expedient to look for other coins and mine those. These are called altcoins and besides Ethereum, Monero is also a representative member of the altcoin lineup. When you are mining cryptocurrencies, you need to pay for electricity and you need cash to do that. Depending on the area where you live, you might find Bitcoin ATMs nearby and you can sell your digital money to withdraw cash from these machines. I have already introduced a few of these Bitcoin ATMs located in Budapest, in Vienna, in Prague, in Bratislava, in Košice, Slovakia and in Salzburg, Austria.


These days, mining Bitcoin on an office PC is an unreallistic quest, because the network's hashrate has grown way too large and the probability of a common PC to mine a block is very close to zero. But woebegone expressions aside! Ethereum mining on videocards is still profitable and as long as the Ethereum ecosystem uses POW and does not completely switch to POS, you can use your GPU to mine Ethereum.


Following the birth of Ethereum and Bitcoin, crypto enthusiasts understood that it would be expedient to have a cryptocurrency that can only be mined on CPUs, because such a currency would remove the barrier that prevented amateur users from joining the network. This would result in a much more stable network, because the risk of 51% attacks could be mitigated. The cryptocurrency, which solves this problem has been christened Monero.


3. Mining cryptos in the basement?


So if you have a spare server in your basement, you can wipe off the dust from its rack and utilize it to mine Monero to generate some crypto revenue. This is not going to be a fortune, but only for the sake of learning, you can make a few experimental runs. For this purpose Monero is the best cryptocurrency in 2021.


When you want to launch a miner, you have to download a mining software from the Internet. There is nothing wrong with this, as long as you know what you are doing and what you are installing on your machine, however I think nobody can guarantee you that the program will work as advertised. When you are reading a cryptocurrency mining for beginners tutorial you are usually instructed to download a miner software from GitHub. So everyone reading such a tutorial would download a program from GitHub without knowing what the program is about to do on the machine? Is not this scarry?


When Monero was released, something very interesting happened. So when a coin is released to the market, the inventors publish a white paper and tell us how to mine the coin. Then developers get together and they start working on a miner. Obviously, they are not responsible for the quality of the miner. It might be fast, and it might be slow too. Who could ever guarantee that the developers have given us the most efficient version of the miner and they have not kept a faster one for themselves? And if you want to increase your hashrate you either buy more hardware or optimize your miner.


4. Earning fortunes only with a few lines of C?


Well, let us not buy a more powerful miner for now, and focus on optimization. So in theory, it might happen that the developers deliberately leave some imperfections in the source code of the miner and let the unsuspecting users download the flawed software, while they are waiting for their time to come in the background. While they are waiting, they get their credit cards ready to rent AWS instances, because these highly scaleable resources are perfect for running hundreds of highly effective miner processes. If the developers are sincere, their desires are satisfied with a few hundred thousand dollars of crypto profit merely from mining, however if they are more of a malicious kind, they can freely 51% attack the network and destroy the entire system. Read more on this issue here: Minting Money with Monero ... and CPU vector intrinsics.


So what is important to understand here is the following. As the miners are usually open source, if you know how to modify the source code, you are free to come up with a more efficient solution, as long as your miner mines valid blocks and you can verify transactions with it. This implies that if you are honest and clever, you can earn serious money with cryptocurrencies. If you are clever and your hands are controlled by the devil, then you have the option to destroy entire cryptocurrency networks, but do not forget to consider the legal consequences of such an act (if any). So if your a conspiracy theory supporter, I think this short article might have given you a different insight into the world of cryptocurrencies and if more people read this article, there will be less who think that Bitcoin is part of a conspiracy theory executed by the CIA, North-Korea or China. Thank you for reading!


Author: LB


Illustration: pixabay.com

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