Bitcoin mining system

By | 11.01.2018
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The bitcoin mining software is what instructs the hardware to do the hard work, passing through transaction blocks for it to solve. There are a variety of these available, depending on your operating system. XP Mining is a cryptocurrency mining company that lets you buy shares to benefit from cloud mining. Here’s our XP Mining Limited review. What Is XP Mining? Bitcoin mining, by design, has gotten tougher over time, individuals running background apps on PCs have given way to savvy entrepreneurs with VC funding, setting up Hyperscale, multi-megawatt, facilities dedicated to mining bitcoin.
Bitcoin is a cryptocurrency and worldwide payment system.: 3 It is the first decentralized digital currency, as the system works without a central bank or. You will learn (1) how bitcoin mining works, (2) how to start mining bitcoins, (3) what the best bitcoin mining software is, (4) what the best bitcoin mining hardware is, (5) where to find the best bitcoin mining pools and (6) how to optimize your bitcoin earnings. The bitcoin mining software is what instructs the hardware to do the hard work, passing through transaction blocks for it to solve. There are a variety of these available, depending on your operating system. XP Mining is a cryptocurrency mining company that lets you buy shares to benefit from cloud mining. Here’s our XP Mining Limited review. What Is XP Mining? Bitcoin mining, by design, has gotten tougher over time, individuals running background apps on PCs have given way to savvy entrepreneurs with VC funding, setting up Hyperscale, multi-megawatt, facilities dedicated to mining bitcoin.

Bitcoin is a cryptocurrency and worldwide payment system.[9]:3 It is the first decentralized digital currency, as the system works without a central bank or single administrator.[9]:1[10] The network is peer-to-peer and transactions take place between users directly, without an intermediary.[9]:4 These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto[11] and released as open-source software in 2009.[12]

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies,[13] products, and services. As of February 2015, bitcoin mining system, over 100,000 merchants and vendors accepted bitcoin as payment.[14] Research produced by the University of Cambridge estimates that in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.[15]

Etymology

The word bitcoin first occurred and was defined in the white paper[6] that was bitcoin mining system on 31 October 2008.[16] It is a compound of the words bit and coin.[17] The white paper frequently uses the shorter coin.[6]

There is no uniform convention for bitcoin capitalization. Some sources use Bitcoin, capitalized, to refer to the technology and network and bitcoin, lowercase, to refer to the unit of account.[18]The Wall Street Journal,[19]The Chronicle of Higher Bitcoin mining system and the Oxford English Dictionary[17] advocate use of lowercase bitcoin in all cases, a convention followed throughout this article.

Units

The unit of account of the bitcoin system is bitcoin. Ticker symbols bitcoin mining system to represent bitcoin are BTC[a] and XBT.[b] Its Unicode character is ₿.[25]:2 Small amounts of bitcoin used as alternative units are millibitcoin (mBTC)[1], bit (ƀ)[26][better source needed][3][better source needed] and satoshi (sat). Named in homage to bitcoin's creator, a satoshi is the smallest amount within bitcoin representing 0.00000001 bitcoins, one hundred millionth of a bitcoin.[4] A bit equals 0.000001 bitcoins, one millionth of a bitcoin or 100 satoshis. A millibitcoin equals 0.001 bitcoins, bitcoin mining system, one thousandth of a bitcoin or 100,000 satoshis.[27]

History

Main article: History of bitcoin

On 18 August 2008, the domain name "bitcoin.org" was registered.[28] In November that year, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System[6] was posted to a cryptography mailing list.[28] Nakamoto implemented bitcoin mining system bitcoin software as open source code and released it in January 2009 on SourceForge.[29][30][12] The identity of Nakamoto remains unknown.[11]

In January 2009, the bitcoin network came into bitcoin mining system after Satoshi Nakamoto mined the first ever block on the chain, known as the genesis block.[31][32] Embedded in the coinbase of this block was the following text:

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.[12]

This note has been interpreted as both a timestamp of the genesis date and a derisive comment on the instability caused by fractional-reserve banking.[33][page needed]

One of the first supporters, adopters, and contributors to bitcoin was the receiver of the first bitcoin transaction, bitcoin mining system, programmer Hal Finney, bitcoin mining system. Finney downloaded the bitcoin software the day it was released, and received 10 bitcoins from Nakamoto in the world's first bitcoin transaction.[34][35] Other early supporters were Wei Dai, creator of bitcoin predecessor b-money, and Nick Szabo, creator of bitcoin predecessor bit gold.[36]

In the early days, Nakamoto is estimated to have mined 1 million bitcoins.[37] In 2010, Nakamoto handed the network alert key and control of the Bitcoin Core code repository over to Gavin Andresen, who later became lead bitcoin mining system at the Bitcoin Foundation.[38][39] Nakamoto subsequently disappeared from any involvement in bitcoin.[40] Andresen stated he then sought to decentralize control, saying: "As soon as Satoshi stepped back and threw the project onto my shoulders, one of the first things I did was try to decentralize that. So, if I get hit by a bus, it would be clear that the project would go on."[40] This left opportunity for controversy to develop over the future development path of bitcoin.[41]

The value of the first bitcoin transactions were negotiated by individuals on the bitcointalk forums bitcoin mining system one notable transaction of 10,000 BTC used to indirectly purchase two pizzas delivered by Papa John's.[31]

On 6 August 2010, a major vulnerability in the bitcoin protocol was spotted. Transactions were not properly verified before they were included in the blockchain, which let users bypass bitcoin's economic restrictions and create an indefinite number of bitcoins.[42][43] On 15 August, the vulnerability was exploited; over 184 billion bitcoins were generated in a single transaction, and sent to two addresses on the network. Within hours, the transaction was spotted and erased from the transaction log after the bug was fixed and the network forked to an updated version of the bitcoin protocol.[44][42][43]

On 1 August 2017, a hard fork of bitcoin was created, known as Bitcoin Cash. Bitcoin Cash has a larger blocksize limit and had an identical blockchain at the time of fork.[45][46] On 12 November another hard fork, Bitcoin Gold, was created. Bitcoin Gold changes the proof-of-work algorithm used in mining.[47][48]

Design

Blockchain

For a broader coverage related to this topic, see Blockchain.

The blockchain is a public ledger that records bitcoin transactions.[49] A novel solution accomplishes this without any trusted central authority: the maintenance of the blockchain is performed by a network of communicating nodes running bitcoin software.[9] Transactions of the form payer X sends Y bitcoins to payee Z are broadcast to this network using readily available software applications.[50] Network nodes can validate transactions, add them to their copy of the bitcoin mining system, and then broadcast these ledger additions to other nodes. The blockchain is a distributed database – to achieve independent verification of the chain bitcoin mining system ownership of any and every bitcoin amount, each network node stores its own copy of the blockchain.[51] Approximately six times per hour, a new group of accepted transactions, a block, bitcoin mining system, is created, added bitcoin mining system the blockchain, and quickly published to all nodes. This allows bitcoin software to determine when a particular bitcoin amount has been spent, which is necessary in order to prevent double-spending in an environment without central oversight. Whereas a conventional ledger records the transfers of actual bills or promissory notes that exist apart from it, the blockchain is the only place that bitcoins can be said to exist in the form of unspent outputs of transactions.[5]:ch, bitcoin mining system. 5

Transactions

See also: Bitcoin network

Transactions are defined using a Forth-like scripting language.[5]:ch. 5 Transactions consist of one or more inputs and one or more outputs. When a user sends bitcoins, bitcoin mining system, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain.[53] The use of multiple inputs corresponds to the use of multiple coins in a cash transaction. Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction. As in a cash transaction, the sum of inputs (coins used to pay) can exceed the intended sum of payments. In such a case, an additional output is used, returning the change back to the payer.[53] Any input satoshis not accounted for in the transaction outputs become the transaction fee.[53]

Transaction fees

Paying a transaction fee is optional.[53] Miners can choose which transactions to process[53] and prioritize those that pay higher fees. Fees are based on the storage size of the transaction generated, which in turn is dependent on the number of inputs used to create the transaction.[5]:ch. 8

Ownership

In the blockchain, bitcoins bitcoin mining system registered to bitcoin addresses, bitcoin mining system. Creating a bitcoin address is nothing more than picking a random canadian institute mining metallurgy private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse (computing the private key of a given bitcoin address) is mathematically unfeasible and so users can tell others and make public a ata mining address without compromising its corresponding private key. Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds. The vast number of valid private keys makes it unfeasible that brute force could be used for that. To be able to spend the bitcoins, the owner must know the corresponding private key and digitally sign the transaction, bitcoin mining system. The network verifies the signature using the public key.[5]:ch. 5

If the private key is lost, bitcoin mining system, the bitcoin network will not recognize any other evidence of ownership;[9] the coins are then unusable, and effectively lost. For example, in 2013 one user claimed to have lost 7,500 bitcoins, bitcoin mining system, worth $7.5 million at the time, when he accidentally discarded a hard drive containing his private key.[54] A backup of his key(s) would have prevented this.[55]

Mining

Mining is a record-keeping service done through the use of computer processing power.[d] Miners keep the blockchain consistent, complete, and unalterable by repeatedly verifying and collecting newly broadcast transactions into a new group of transactions called a block.[49] Each block contains a cryptographic hash of largest mining countries in the world previous block,[49] using the SHA-256 hashing algorithm,[5]:ch. 7 amd beta mining drivers links it to the previous block,[49] thus giving the blockchain its name.

To be accepted by the rest of the network, a new block must contain a so-called proof-of-work.[49] The proof-of-work requires miners to find a number called a nonce, such that when the block content is hashed along with the nonce, the result is numerically smaller than the network's difficulty target.[5]:ch. 8 This proof is easy for any node in the network to verify, but extremely time-consuming to generate, as for a secure cryptographic hash, miners must try many different nonce values (usually the sequence of tested values is 0, 1, 2, 3. .[5]:ch. 8) before meeting the difficulty target.

Every 2,016 blocks (approximately 14 days at roughly 10 min per block), the difficulty target is adjusted based on the network's recent performance, with the aim of keeping the average time between new blocks at ten minutes. In this way the system automatically adapts to the total amount of mining bitcoin mining system on the network.[5]:ch. 8

Between 1 March 2014 and 1 March 2015, the average number of nonces miners had to try before creating a new block increased from 16.4 quintillion to 200.5 quintillion.[57]

The proof-of-work system, alongside the chaining of blocks, makes modifications of the blockchain extremely hard, as an attacker must modify all subsequent blocks in order for the modifications of one block to be accepted.[58] As new blocks are mined all the time, the difficulty of modifying a block increases as time passes and the number of subsequent blocks (also called confirmations of the given block) increases.[49]

Pooled mining

Main article: Mining pool

Computing power is often bundled together or "pooled" to reduce variance in miner income. Individual mining rigs often have to wait for long periods to confirm a block of transactions and receive payment. In a pool, all participating miners get paid every time a participating server solves a block. This payment depends on the amount of work an individual miner contributed to help find that block.[59]

Supply

The successful miner finding the new block is rewarded with newly created bitcoins and transaction fees.[60] As of 9 July 2016[update],[61] the reward amounted to 12.5 newly created bitcoins per block added to the blockchain. To claim the reward, a special transaction called a coinbase is included with the processed payments.[5]:ch. 8 All bitcoins in existence have been created in such coinbase transactions. The bitcoin protocol specifies that the reward for adding a block will be halved every 210,000 blocks (approximately every four years). Eventually, bitcoin mining system, the reward will decrease to zero, and the limit of 21 million bitcoins[e] will be reached c. 2140; the record keeping will then be rewarded by transaction fees solely.[62]

In other words, bitcoin's inventor Nakamoto set a monetary policy based on artificial scarcity at bitcoin's inception that there would only ever be 21 million bitcoins in total. Their numbers are being released roughly every ten minutes and the rate at which they are generated would drop by half every four years until all were in circulation.[63]

Wallets

For a broader coverage related to this topic, see Cryptocurrency wallet.

A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold[64] or store bitcoins,[65] due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger. A better way to describe a wallet is something that "stores the digital credentials for your bitcoin holdings"[65] and allows one to access (and spend) them. Bitcoin uses public-key cryptography, in which two cryptographic keys, one public and one private, are generated.[66] At its most basic, bitsend mining pool wallet is a collection of these keys.

There are several types of wallets. Software wallets connect to the network and allow spending bitcoins in addition to holding the credentials that prove ownership.[67] Software wallets can be split further in two categories: full clients and lightweight clients.

  • Full clients verify transactions directly on a local copy of the blockchain (over 150 GB As of January 2018[update]),[68] or a "pruned" subset of the blockchain (around half a gigabyte).[69][70][71] They are the most secure and reliable way of using the network, as trust in external parties is not required. Full clients check the validity of mined blocks, preventing them from transacting on a chain that breaks or alters network rules.[72] Because of its size and complexity, storing the entire blockchain is not suitable for all computing devices.
  • Lightweight clients, on the other hand, consult full clients to send and receive transactions without requiring a local copy of the entire blockchain (see simplified payment verification – SPV). This makes lightweight clients much faster to set up and allows them to be used on low-power, data mining in weka devices such as smartphones. When using a lightweight wallet, however, the user must trust the server to a certain degree, as it can report faulty values back to the user. Lightweight clients follow the longest blockchain and do not ensure it bitcoin mining system valid, requiring trust in miners.

With both types of software wallets, the users are responsible for keeping their private keys in a secure place.[73]

Besides software wallets, bitcoin mining system, Internet services called online wallets offer similar functionality but may be easier to use. In this case, credentials to access funds are stored with the online wallet provider rather than on the user's hardware.[74][75] As a result, the user must have complete trust in the wallet provider. A malicious provider or a breach in server security may cause entrusted bitcoins to be stolen. An example of such security breach occurred with Mt. Gox in 2011.[76]

Physical wallets store the credentials necessary to spend bitcoins offline.[65] Examples combine a novelty coin with these credentials printed on metal.[77]Paper wallets are simply paper printouts. Another type of wallet called a hardware wallet keeps credentials offline while facilitating transactions.[78]

Reference implementation

Further information: Bitcoin Core

The first wallet program – simply named "Bitcoin" – was released in 2009 by Satoshi Nakamoto as open-source code.[12] Sometimes referred to as the "Satoshi client", this is also known as the reference client because it serves to define the bitcoin protocol and acts as a standard for other implementations.[67] In version 0.5 the client moved from the wxWidgets user interface toolkit to Qt, and the whole bundle was referred to as Bitcoin-Qt.[67] After the release of version 0.9, the software bundle was renamed Bitcoin Core to distinguish itself from the underlying network.[79][80] Today, other forks of Bitcoin Core exist such as Bitcoin XT, Bitcoin Unlimited,[41][81] and Parity Bitcoin.[82]

Decentralization

Bitcoin was designed not to need a central authority[6] and the bitcoin network is considered to be decentralized.[9][7][10][83][84][85] However, researchers have pointed out a visible "trend towards centralization" by the means of miners joining large mining pools to minimise the variance of their income.[86] According to researchers, other parts of the ecosystem are also "controlled by a small set of entities", notably online wallets and simplified payment verification (SPV) clients.[87]

Because transactions on the network are confirmed by miners, decentralization of the network requires that no single miner or mining pool obtains 51% of the hashing power, bitcoin mining system, which would allow bitcoin mining system to fully control the blockchain, including double-spending of coins, bitcoin mining system, preventing certain transactions from being verified and preventing other miners from earning income.[87][not in citation given] As of 2013 just six mining pools controlled 75% of overall bitcoin hashing power.[87]

In 2014 mining pool Ghash.io obtained 51% hashing power which raised significant controversies about the safety of the network. The pool has voluntarily capped their hashing power at 39.99% and called other pool to act responsibly for the benefit of the whole network.[88]

Privacy

Bitcoin is pseudonymous, meaning that funds are not tied to real-world entities but rather bitcoin addresses, bitcoin mining system. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public. In addition, transactions can be linked to individuals and companies through "idioms of use" (e.g., transactions that spend coins from multiple inputs indicate that the inputs may have a common owner) and corroborating public transaction data with known information on owners of certain addresses.[89] Additionally, bitcoin exchanges, where bitcoins are traded for traditional currencies, may be required by law to collect personal information.[90]

To heighten financial privacy, a new bitcoin address can be generated for each transaction.[91] For example, hierarchical deterministic wallets generate pseudorandom "rolling addresses" for every transaction from a single seed, while bitcoin mining system requiring a single passphrase to be remembered to recover all corresponding private keys.[92] Researchers at Stanford University and Concordia University have also shown that bitcoin exchanges and other entities can prove assets, liabilities, and solvency without revealing their addresses using zero-knowledge proofs.[93]

Fungibility

Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of fungibility. Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility.[94] Projects such as CryptoNote, Zerocoin, and Dark Wallet aim to address these privacy and fungibility issues.[95][96]

Scalability

Main article: Bitcoin scalability problem

The blocks in the blockchain are limited to one megabyte in size, which has created problems for bitcoin transaction processing, bitcoin mining system, such as increasing transaction fees and delayed processing of transactions that cannot be fit into a block.[97] On 24 August 2017 (at block 481,824), Segregated Witness went live, increasing maximum block capacity and making transaction IDs immutable.[98][better source needed][99] SegWit also allows implementation of the Lightning Network, a second-layer proposal for scalability with instantaneous transactions and near-zero fees.[100][101]

Economics

Main article: Economics of bitcoin

Classification

Bitcoin is a digital asset designed by its inventor, Satoshi Nakamoto, to work as a currency.[6][102] It is commonly referred to with terms like digital currency,[9]:1digital cash,[103]virtual currency,[4]electronic currency,[18] or cryptocurrency.[104]

The question whether bitcoin is a currency or not is still disputed.[104] Bitcoins have three useful qualities in a currency, according to The Economist in January 2015: they are "hard to earn, limited in supply and easy to verify".[105] Economists bitcoin mining system money as a store of value, a medium of exchange, and a unit of account and agree that bitcoin has some way to go to meet all these criteria.[106] It does best as a medium of exchange; as of February 2015[update] the number of merchants accepting bitcoin had passed 100,000.[14] As of March 2014[update], the bitcoin market suffered from volatility, limiting the ability of bitcoin to act as a stable store of value, and retailers accepting bitcoin use other currencies as their principal unit of account.[106]

General use

According to research produced by Cambridge University, there were between 2.9 million and 5.8 million unique users using a cryptocurrency wallet, bitcoin mining system of 2017, most of them using bitcoin, bitcoin mining system. The number of users has grown significantly since 2013, when there were 300,000 to 1.3 million users.[15]

Acceptance by merchants

In 2015, the number of merchants accepting bitcoin exceeded 100,000.[14] Instead of 2–3% typically imposed by credit card processors, merchants accepting bitcoins often pay fees under 2%, bitcoin mining system, down to 0%.[107] Firms that accepted payments in bitcoin as of December 2014 included PayPal,[108]Microsoft,[109]Dell,[110] and Newegg.[111] In 2017 bitcoin's acceptance among major online retailers included three out of the top 500 online merchants, down from five in 2016. Reasons for this fall include high transaction fees due to bitcoin mining system scalability issues, long transaction times and a rise in value making consumers unwilling to spend it.[112] In November 2017 PwC accepted bitcoin at its Hong Kong office in exchange for providing advisory services to local companies who are specialists in blockchain technology and cryptocurrencies, the first time any Big Four accounting firm accepted the cryptocurrency as payment.[113][114]

Payment service providers

Merchants accepting bitcoin ordinarily use the services of bitcoin payment service providers such as BitPay or Coinbase. When a customer pays in bitcoin, the payment service provider accepts the bitcoin on behalf of the merchant, converts it to the local currency, and sends the obtained amount to merchant's bank account, charging a fee for the service.[115]

Financial institutions

Bitcoins can be bought on digital currency exchanges. According to Tony Gallippi, a co-founder of BitPay, "banks are scared to deal with bitcoin companies, even if they really want to".[116] In 2014, bitcoin mining system, the National Australia Bank closed accounts mining operations management businesses with ties to bitcoin,[117] and HSBC refused to serve a hedge fund with links to bitcoin.[118] Australian banks in general have been reported as closing down bank accounts of operators of businesses involving the currency;[119] this has become the subject of an investigation by the Australian Competition and Consumer Commission.[119] Nonetheless, Australian banks have trialled trading between each other using the blockchain technology on which bitcoin is based.[120]

In a 2013 report, Bank of America Merrill Lynch stated that "we believe bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money-transfer providers."[121] In June 2014, the first bank that converts deposits in currencies instantly to bitcoin without any fees was opened in Boston.[122]

Plans were announced to include a bitcoin futures option on the Chicago Mercantile Exchange in 2017.[123] Trading in bitcoin futures was announced to begin on 10 December 2017.[124]

As an investment

Some Argentinians have bought bitcoins to protect their savings against high inflation or the possibility that governments could confiscate savings accounts.[90] During the 2012–2013 Cypriot financial crisis, bitcoin purchases in Cyprus rose due to fears that savings accounts would be confiscated or taxed.[125]

The Winklevoss twins have invested into bitcoins. In 2013 The Washington Post claimed that they owned 1% of all the bitcoins in existence at the time.[126]

Other methods of investment are bitcoin funds. The first regulated bitcoin fund was established in Jersey in Bitcoin mining system 2014 and approved by the Jersey Financial Services Commission.[127]Forbes started publishing arguments in favor of investing in December 2015.[128]

In 2013 and 2014, the European Banking Authority[129] and the Financial Industry Regulatory Authority (FINRA), bitcoin mining system, a United States self-regulatory organization,[130] warned that investing in bitcoins carries significant risks. Forbes named bitcoin the best investment of 2013.[131] In 2014, Bloomberg named bitcoin one of its worst investments of the year.[132] In 2015, bitcoin topped Bloomberg's currency tables.[133]

According to bitinfocharts.com, in 2017 there are 9,272 bitcoin wallets with more than $1 million worth of bitcoins.[134] The exact number of bitcoin millionaires is uncertain as a single person can have more than one bitcoin wallet.

Venture capital

Venture capitalists, such as Peter Thiel's Founders Fund, which invested US$3 million in BitPay, do not purchase bitcoins themselves, bitcoin mining system, instead funding bitcoin infrastructure like companies that provide payment systems to merchants, exchanges, wallet services, bitcoin mining system, etc.[135] In 2012, an incubator for bitcoin-focused start-ups was founded by Adam Draper, with financing help from his father, venture capitalist Tim Draper, one of the largest bitcoin holders after winning an auction of 30,000 bitcoins,[136] at the time called 'mystery buyer'.[137] The company's goal is to fund 100 bitcoin businesses within 2–3 years with $10,000 to $20,000 for a 6% stake.[136] Investors also invest in bitcoin mining.[138] According to a 2015 study by Paolo Tasca, bitcoin startups raised almost $1 billion in three years (Q1 2012 – Q1 2015).[139]

Price and volatility

The price of bitcoins has gone through various cycles of appreciation and depreciation referred to by some as bubbles and busts.[140][141] In 2011, the value of one bitcoin rapidly rose from about US$0.30 to US$32 before returning to US$2.[142] In the latter half of 2012 and during the 2012–13 Cypriot financial crisis, the bitcoin price began to rise,[143] reaching a high of US$266 on 10 April 2013, before crashing to around US$50.[144] On 29 November 2013, bitcoin mining system, the cost of one bitcoin rose to a peak of US$1,242.[145] In 2014, the price fell sharply, and as of April remained depressed at little more than half 2013 prices. As of August 2014[update] it was under US$600.[146]

According to Mark T. Williams, as of 2014[update], get mining experience has volatility seven times greater than gold, eight times greater than the S&P 500, and 18 times greater than bitcoin mining system US dollar.[147] According to Forbes, there are uses where volatility does not matter, such as online gambling, tipping, and international remittances.[148]

In January 2015, noting that the bitcoin price had dropped to its lowest level since spring 2013 – around US$224 – The New York Times suggested that "[w]ith no signs of a rally in the offing, the industry is bracing for the effects of a prolonged decline in prices. In particular, bitcoin mining companies, which are essential to the currency's underlying technology, are flashing warning signs."[149] Also in January 2015, Business Insider reported that deep web drug mining bitcoin on iphone were "freaking out" as they lost profits through being unable to convert bitcoin revenue to cash quickly enough as the price declined – and that there was a danger that dealers selling reserves to stay in business might force the bitcoin price down further.[150]

According to an article in The Wall Street Journal, as of 19 April 2016[update], bitcoin had been more stable than gold for the preceding 24 days, and it was suggested that its value might be more stable bitcoin mining system the future.[151] On 3 March 2017, the price of bitcoin mining system bitcoin surpassed the market value of an ounce of gold bitcoin mining system the first time as its price surged to an all-time high of $1,268.[152][153] A study in Electronic Commerce Research and Applications, going back through the network's historical data, showed the value of the bitcoin network as measured by the price of bitcoins, to be bitcoin mining system proportional to the square of the number of daily unique users participating on the network, bitcoin mining system, i.e. that the network is "fairly well modeled by the Metcalfe's law".[154]

Ponzi scheme and pyramid scheme concerns

Various journalists,[84][155] economists,[156][157] and the central bank of Estonia[158] have voiced concerns that bitcoin is a Ponzi scheme. In 2013, Eric Posner, a law professor at the University of Chicago, stated that "a real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion."[159] A 2014 report by the World Bank concluded that bitcoin was not a deliberate Ponzi scheme.[160]:7 The Swiss Eve online rorqual mining Council[161]:21 examined the concerns that bitcoin might be a pyramid scheme; it concluded that "Since in the case of bitcoin the typical promises of profits are lacking, it cannot be assumed that bitcoin is a pyramid scheme." In July 2017, billionaire Howard Marks referred to bitcoin as a pyramid scheme.[162]

On 12 September 2017, bitcoin mining system, Jamie Dimon, CEO of JP Morgan Chase, called bitcoin a "fraud" and said he would fire anyone in his firm caught trading it. Zero Hedge claimed that the same day Dimon bitcoin mining system his statement, JP Morgan also purchased a large amount of bitcoins for its clients.[163] In a January 2018 interview Dimon voiced regrets about his earlier remarks, and said "The blockchain is real. You can have cryptodollars in yen and stuff like that. ICOs . you got to look at every one individually."[164]

Speculative bubble dispute

Main article: Cryptocurrency bubble

Bitcoin has been labelled a speculative bubble by many including former Fed ChairmanAlan Greenspan[165] and economist John Quiggin.[166]Nobel Memorial Prize laureate Robert Shiller said that bitcoin "exhibited many of the characteristics of a speculative bubble".[167] Journalist Matthew Boesler in 2013 rejected the speculative bubble label and saw bitcoin's quick rise in price as nothing more than normal economic forces at work.[168] Timothy B. Lee, in a 2013 piece for The Washington Post pointed out that the observed cycles of appreciation and depreciation don't correspond to the definition of speculative bubble.[142] On 14 March 2014, the American business magnate Warren Buffett said, "Stay away from it, bitcoin mining system. It's a mirage, basically."[169]

Two lead software developers of bitcoin, Intel hd graphics mining Andresen[170] and Mike Hearn,[171] have warned that bubbles may occur. David Andolfatto, a vice president at bitcoin mining system Federal Reserve Bank of St. Louis, stated, "Is bitcoin a bubble? Yes, if bubble is defined as a liquidity premium." According to Andolfatto, the price of bitcoin "consists purely of a bubble," but he concedes video mining applications many assets "have bubble component to their price".[56]:21 Speculation in bitcoin has been compared to the tulip mania of seventeenth-century Holland. Comparisons have been made by the vice-president of the European Central Bank, Vítor Constâncio, by JPMorgan Chase chief Jamie Dimon,[172] by hedge fund manager Ken Griffin of Citadel,[173] and by former president of the Dutch Central Bank, bitcoin mining system, Nout Wellink.[174] In 2013, Wellink remarked, bitcoin mining system, "This is worse than the tulip mania [.] At least then you got a tulip [at the end], now you get nothing."[174] On 13 September 2017, Jamie Dimon compared bitcoin to a bubble, saying it was only useful for drug dealers and countries like North Korea.[175] On 22 September 2017, a hedge fund named Blockswater subsequently accused JP Morgan of market manipulation and filed a market abuse complaint with Financial Supervisory Authority (Sweden).[176]

The Guardian, CNBC, Forbes and Evening Standard compared bitcoin to bubbles such as the South Sea Bubble, bitcoin mining system, the Wall Street Crash, the sub-prime mortgage crisis and the Dot-com bubble.[177][178][179][180]

Researchers Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman claimed that in late 2013, bitcoin mining system, price manipulation by one person likely caused a price spike from USD$150 to more than USD$1000.[181]

Legal status, tax and regulation

Main article: Legality of bitcoin by country or territory

Because of bitcoin's decentralized nature, bitcoin mining system, nation-states cannot shut down the network or alter its technical rules.[182]

Number of unspent transaction outputs
Number of bitcoin transactions per month (logarithmic scale)[52]
Simplified chain of ownership.[6] In reality, a transaction can have more bitcoin mining system one input and more than one output.
Total bitcoins in circulation.[52]
Bitcoin paper wallet generated at bitaddress.org
Liquidity (estimated, USD/year, logarithmic scale).[52]
Bitcoin price[f] history chart, linear scale
Price[f](left vertical axis, logarithmic scale) and volatility[g](right vertical axis)[52]
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XP Mining Review - Bitcoin Mining, Cryptocurrency Trading & Exchange System?

Bitcoin mining, by design, has gotten tougher over time, individuals running background apps on PCs have given way to savvy entrepreneurs with VC funding, setting up Hyperscale, multi-megawatt, facilities dedicated to mining bitcoin. Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to .

You will learn (1) how bitcoin mining works, (2) how to start mining bitcoins, (3) what the best bitcoin mining software is, (4) what the best bitcoin mining hardware is, (5) where to find the best bitcoin mining pools and (6) how to optimize your bitcoin earnings. XP Mining is a cryptocurrency mining company that lets you buy shares to benefit from cloud mining. Here’s our XP Mining Limited review. What Is XP Mining? The bitcoin mining software is what instructs the hardware to do the hard work, passing through transaction blocks for it to solve. There are a variety of these available, depending on your operating system.


XP Mining is a cryptocurrency mining company that lets you buy shares to benefit from cloud mining. Here’s our XP Mining Limited review.

What Is XP Mining?

We’ve seen plenty of scams in the cloud mining space. Many companies take your money, promise to use it for cloud mining, and then continue taking money from clients until funds run out.

Is XP Mining yet another cloud mining scam? Or is this a legitimate opportunity?

XP Mining introduces itself with a video featuring Marketing Director Joshua Wyatt. Wyatt describes how the company’s mining operation is based in the United Kingdom, and how cryptocurrencies are the future of transactions.

The company claims to consist of a team of experts who have mastered the cryptocurrency markets. So you’re not only buying into a mining operation – you’re buying into some type of trading scheme:

“Our clients are rewarded with the levels of profit that are incomparable in the market.”

All you need to do is purchase a package from XP Mining, where “multiple investment” opportunities are available for all types of clients. So XP Mining is specifically marketing itself as an investment opportunity. In fact, later on, they guarantee returns of 200% on each investment package.

Interestingly, XP Mining has business plans written in English and Portuguese, and the video above is translated into Portuguese as well. So XP Mining is marketing itself to Portugal/Brazil as well as English-speaking countries.

Obviously, XP Mining is promising a lot of things. Let’s take a closer look at how it claims to make money for you.

How Does XP Mining Work?

XP Mining is based in Manchester. The company’s main activity is cryptocurrency cloud mining. They claim to focus on Ethereum and bitcoin at the moment. The company was established by “a team of cryptocurrency miners, traders and IT engineers.”

Oddly, the company’s business plan spends no time explaining how XP Mining makes money, or what kind of rigs the company uses to mine cryptocurrencies. Almost the entire business plan is devoted to explaining the multilevel marketing aspect of XP Mining. Instead of talking to us about specific technical aspects of the project, the paper spends time listing which cars they’ll buy for you if you convince hundreds of people to buy into the company.

Obviously, bitcoin and Ethereum mining has become very expensive and difficult over the last year. Typically, miners need to build operations in countries with cheap energy, and then know how to maintain and upgrade those rigs over time to ensure profitability. XP Mining Limited provides no details about the project’s mining – like the type of rigs used or the GPUs used.

Here’s how XP Mining Limited sums up their business plan:

“XP Mining Limited has in its essence the mining of crypto-coins. This is our main activity. We are specialists in cloud mining, besides having activities in other areas, all focused on crypto-coins.”

That’s about as vague as a business plan can get. And again, there’s no information about the company’s mining pool, its hashrate, previous blocks, or any other information you need to know before joining a mining pool.

Despite the total lack of information, XP Mining Limited tries to convince you to pay them an enormous amount of money to join the company.

XP Mining Pricing

To buy into XP Mining, you’ll need to pay a substantial amount of money. Like most pyramid schemes, the more you pay today, the more money you can purportedly make.

Pack 1 ($25)

  • Binary limit of $100 per day
  • $0 earnings per day
  • Indefinite contract

Pack 2 ($120)

  • Binary limit of $500 per day
  • 120 day contract
  • $2 earnings per day

Pack 3 ($600)

  • Binary limit of $1500 per day
  • $10 earnings per day
  • 120 day contract

Pack 4 ($1200)

  • Binary limit of $5000 per day
  • $20 earnings per day
  • 120 day contract

Pack 5 ($3600)

  • Binary limit of $15,000 per day
  • $60 earnings per day
  • 120 day contract

Pack 6 ($10,800)

  • Binary limit of $50,000 per day
  • $180 earnings per day
  • 120 day contract

It’s surprising to see the company asking you for up to $10,800 in payment today when they don’t tell you anything about their business or how it operates. We have no reason to believe you’ll ever see your money again – the company could disappear with it as soon as you make your payment. There’s no evidence of a real business here.

XP Mining Multilevel Marketing Opportunity

As mentioned above, XP Mining refuses to disclose any information about its business or how it makes money. Instead, the company’s business plan is devoted entirely to talking about how much money you’ll make after paying to join the company.

The business plan has full-page pictures of BMW i8s and Range Rover Evoques, for example, which will be given to you if you reach a virtually unattainable sales target (of course, you’ll never own the vehicle; it’s always a lease).

It seems like the only way to make money with XP Mining is to refer other people to the program. You’re not actually selling any product or service. You’re just selling memberships. That’s a key difference between a multilevel marketing company and a pyramid scheme.

In any case, XP Mining lets you make money through direct referral bonuses, binary bonuses, and daily fixed bonuses. There’s also some type of points system.

That “Daily Fixed Bonus” is interesting. The company claims to give you a guaranteed return on your investment. For example, if you buy Pack 2 for $120, you receive $2 per day, every day, for 120 days. That gives you a total of $240 over that period, or 200% ROI. That’s right: XP Mining promises to give you a fixed return of 200% ROI.

That same ROI is available on all packages. If you buy into the $10,800 package, for example, then you’ll receive $21,600 in a 120 day period ($180 per day).

Again, there’s no evidence that this company is making money, or that they have a profitable mining operation – so it’s unclear where this money is coming from.

Who’s Behind XP Mining Limited?

XP Mining Limited appears to be a legitimate corporation headquartered in Manchester, UK at the following address:

205 Moorside Road
Urmston, Manchester

That address appears to be a residential building located on the outskirts of Manchester. Fortunately, the corporation also appears to have a legitimate registration number: 10794419.

According to UK corporation registration information, the company was incorporated on May 30, 2017 at the address listed above. It was incorporated by a 30-year old man named Reed Grant, who also appears to live in Manchester. No other names are attached to the company.

Conclusion: Is XP Mining A Scam?

Ultimately, there’s almost no information about XP Mining available online. The company vaguely mentions a mining and trading operation, but they don’t give users any information about either operation. Instead, the company spends most of its efforts convincing you that you’re going to get rich quick with guaranteed ROIs of 200%.

Obviously, bitcoin and Ethereum mining is very difficult today. The best mines are located in places with the cheapest energy. They use rigs with 4 or 6 GPUs to turn a profit. XP Mining hasn’t given us any information about its mining services. We don’t know the GPUs used, the hashrate of the project, or any other relevant information.

For all of these reasons, XP Mining seems to be a multilevel marketing scam that revolves solely around memberships – there are no actual products or services being sold here. That makes XP Mining less of a cloud mining company and more of a pyramid scheme. Until they give us more information about how their mining operation works, you should avoid XP Mining.

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