Nowadays, many people intend to participate in mining, including some newbies with limited knowledge of crypto mining. Today, EastShore will introduce ten traps worth to be vigilant by the new mining workers!
We hope that all newbies will never make similar mistakes in the future. After all, to invest on mining, we should take every aspect into careful consideration!
Now, let’s have a discussion about the 10 traps!
Trap 1: Bitcoin is equivalent to currency.
From the perspective of currency nature, bitcoin is not a specific physical commodity. It is similar to credit currency, but it does not have its full features, that is, bitcoin is not issued by the authorities without any monetary attributes, such as legal repayment, mandatory as well as legal status, so it is not equal to currency. From this perspective, bitcoin is at most a kind of asset instead of a currency.
Trap 2: There’s a centralized server for bitcoin.
One of the biggest features of cryptocurrency including bitcoin is the distribution without centralized management. The recording blocks of bitcoin connect all the transactions by means of authentication.
Such blockchain is called “shared ledger” or “distributed accounting”. Anyone in the network can participate in the accounting and check the trading information of other digital wallets. It’s a distributed rather than centralized management, so there does not exist any centralized server.
Trap 3: The authority can directly control cryptocurrency.
Cryptocurrency is not subject to centralized management of specific servers or any individuals and institutions, so theoretically speaking, the authority cannot control cryptocurrency. What they can control is only the trading platform. However, even the trading platform is prohibited in certain country, the netizens can still theoretically conduct trading on other platforms which are not prohibited in other countries.
Trap 4: Mining.
Many people believe bitcoin mining is a kind of behavior of exchanging power consumption for bitcoins. In fact, mining is a behavior of accounting and mathematic calculations, and each miner acts as one center and every miner is just like a bank. Since there are countless people participating in the accounting, so there is no centralized ledger which is called decentralization.
Trap 5: No more than one bitcoin should be purchased because the price is too high for investment.
The direct impression of bitcoin on the newbies is a shining coin worth over 4000USD, so they believe it’s too expensive for them to conduct investment. In fact, bitcoin can be purchased in the segmentation approach. Currently, the minimum unit on bitcoin trading platform is 0.01BTC.
Trap 6: One can harvest bitcoin once participating in bitcoin mining.
In fact, most of the mining workers participate in mining in the pools instead of being alone, because the joint hashrate worldwide is very huge compared to the individual hashrate, so the chances of independent harvest are similar to that of lottery jackpot. However, once participating in the mining pool, the daily revenue will be guaranteed. For those in independent struggles, they may harvest nothing within even several years.
Trap 7: The higher hashrate the better.
In fact, when choosing the bitcoin miners, although the hashrate should be mainly considered, it’s not the only prerequisite. We should take other factors into consideration, such as the miner power and electricity price as well as the value of bitcoin itself. All these issues will affect the final revenues.
Trap 8: Return period can be calculated by static revenues.
We have discussed about such issue in our previous articles. In bitcoin mining, we should not calculate the cost return cycle based on static revenues because many data are not constant and the gains will gradually decrease with increasing hashrate difficulties.
Trap 9: Once bitcoin is obtained, it will never get lost.
In fact, bitcoin can be lost and such tragedy can absolutely occur. The wallets used to store bitcoin adopt military-grade encryption, which can make it impossible for hackers to steal them away.
In addition, the bitcoin wallet requires the user to set two keys, a public key and a private key. The public key enables the user to receive bitcoin. To withdraw or transfer bitcoin from the account, the user needs to use private key. Obviously, private key is more important. Once private key is forgotten, bitcoin will be lost.
Trap 10: No costs for cryptocurrency.
Although cryptocurrency is just a pile of numbers, it’s hard to imagine that it has the attribute of values. However, to obtain new cryptocurrency demands a long period of mining and calculations, which will consume a lot of power and labor costs. In fact, it embodies the cost of cryptocurrency issuance and indicates that cryptocurrency has a certain attribute of values.
Fully understanding the 10 traps mentioned above, we can avoid many unnecessary losses and troubles in the future. We sincerely hope this article will help your mining careers in the future!
A series of articles on cryptocurrency mining for beginners on EastShore:
- A Brief History of the Cryptocurrency Miners | EastShore Mining Devices
- To trade crypto coins or to mine crypto coins? | EastShore Mining Devices
- What happens when 21 million bitcoins were exhausted? | EastShore Mining Devices
- Know the currency you are mining: find useful info in the white paper | EastShore Mining Devices
- Ten Traps to Avoid If You Are Newbie to Crypto Mining | EastShore Mining Devices
- How to Select Cryptocurrency Mining Pools? | EastShore Mining Devices
- How do I choose my miner? | EastShore Mining Devices