So, as Scooter sagely advised, I've done some research (I even bought a book).
Short version, crypto, and especially the blockchain technology, is a fascinating new development, made possible by related advances in encryption, networking and computer power. It reminds me of my early days as a developer when we needed to squeeze the life out of every CPU cycle and byte of RAM. As an investment there is probably considerable upside remaining, though the early adopter advantage is largely behind us. The risks are also large, probably no free lunch.
Dipping my toe in I discovered:
- Mining at home. Unless you have a dedicated rig, forget it. You're competing with those that do. I downloaded 'Nicehash', a service that determines the best algorithm for your hardware and pools the results. After running it for 24 hours on 2 reasonably high spec GPU boxes it had accumulated 21p worth of BTC. If you're using your own wallet you have to wait until you have mined .01 BTC (about £21), before payout, which it projects will happen in early October. It doesn't cripple the PC but the fan is running flat out. Much as I like the idea of my hardware whirring away and making me money 'in the background', the electricity cost and increased wear on components almost certainly negates the already tiny profit. I'd rather use my PC for the purposes it was acquired for.
- Cloud mining. I've invested some play money in an open-ended contract with Genesis mining, this bought me 0.7 TH/s which I can allocate to my favourite algorithms as I wish. No payouts yet, I'll report back on profits (if any) when the money starts flowing (if it does). Genesis seem not to publish their mining stats so it's an act of faith that they are actually doing any mining and sharing the proceeds fairly. Also, although the contract is open ended, there is a maintenance fee and as difficulties increase, there will come a point at which the fees outweigh the profits and the contract will be cancelled. Or or course, it could be a massive scam.
Which leads me to conclude that the money to be made, if any, is in simple speculation, buying low, and selling at a profit (Doh!). I'm just starting to DMOR on this, thanks to Scooter, Drei and others for pointers. The volatility, lack of any guarantees or regulation, the fact that your assets are entirely virtual, the fraud and scandals (Mt Gox) indicate to me an immature market with huge risk. Having said that, I'm convinced that the technology will pay a large part in the future of finance and other industries and I'd like some in my portfolio, even if its just the wimp's choice of a few £K worth of Bitcoin.
Short version, crypto, and especially the blockchain technology, is a fascinating new development, made possible by related advances in encryption, networking and computer power. It reminds me of my early days as a developer when we needed to squeeze the life out of every CPU cycle and byte of RAM. As an investment there is probably considerable upside remaining, though the early adopter advantage is largely behind us. The risks are also large, probably no free lunch.
Dipping my toe in I discovered:
- Mining at home. Unless you have a dedicated rig, forget it. You're competing with those that do. I downloaded 'Nicehash', a service that determines the best algorithm for your hardware and pools the results. After running it for 24 hours on 2 reasonably high spec GPU boxes it had accumulated 21p worth of BTC. If you're using your own wallet you have to wait until you have mined .01 BTC (about £21), before payout, which it projects will happen in early October. It doesn't cripple the PC but the fan is running flat out. Much as I like the idea of my hardware whirring away and making me money 'in the background', the electricity cost and increased wear on components almost certainly negates the already tiny profit. I'd rather use my PC for the purposes it was acquired for.
- Cloud mining. I've invested some play money in an open-ended contract with Genesis mining, this bought me 0.7 TH/s which I can allocate to my favourite algorithms as I wish. No payouts yet, I'll report back on profits (if any) when the money starts flowing (if it does). Genesis seem not to publish their mining stats so it's an act of faith that they are actually doing any mining and sharing the proceeds fairly. Also, although the contract is open ended, there is a maintenance fee and as difficulties increase, there will come a point at which the fees outweigh the profits and the contract will be cancelled. Or or course, it could be a massive scam.
Which leads me to conclude that the money to be made, if any, is in simple speculation, buying low, and selling at a profit (Doh!). I'm just starting to DMOR on this, thanks to Scooter, Drei and others for pointers. The volatility, lack of any guarantees or regulation, the fact that your assets are entirely virtual, the fraud and scandals (Mt Gox) indicate to me an immature market with huge risk. Having said that, I'm convinced that the technology will pay a large part in the future of finance and other industries and I'd like some in my portfolio, even if its just the wimp's choice of a few £K worth of Bitcoin.
- without any development news or adopted users. In fact a number of exchanges have publicly stated they'll not recognised it.
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