Bitcoin stand

Mining is the process of spending computing power to process transactions, secure the network, and keeps everyone in the system synchronized together. It can be perceived like the Bitcoin data center except that it has been designed to be fully decentralized with miners operating in all countries and no individual having control over the network.

This process is referred to as "mining" as an analogy to gold mining because it is also a temporary mechanism used to issue new bitcoins. Unlike gold mining, however, Bitcoin mining provides a reward in exchange for useful services required to operate a secure payment network. Mining will still be required after the last bitcoin is issued.

How does Bitcoin mining work?

Anybody can become a Bitcoin miner by running Bitcoin mining software and Bitcoin mining modules with specialized Bitcoin mining hardware. Mining software listens for transaction broadcasts through the peer-to-peer network and performs appropriate tasks to process and confirm these transactions. Bitcoin miners perform this work because they can earn transaction fees paid by users for faster transaction processing, and newly created bitcoins issued into existence according to a fixed formula.

For new transactions to be confirmed, they need to be included in a block along with a mathematical proof of work. Such proofs are very hard to generate because there is no way to create them other than by trying billions of calculations per second. This requires miners to perform these calculations before their blocks are accepted by the network and before they are rewarded. As more people start to mine, the difficulty of finding valid blocks is automatically increased by the network to ensure that the average time to find a block remains equal to 10 minutes. As a result, mining is a very competitive business where no individual miner can control what is included in the block chain.

The video below of a Bitcoin mining farm in China will give you a better idea of just how competitive Bitcoin mining has become:

The proof of work is also designed to depend on the previous block to force a chronological order in the block chain. This makes it exponentially difficult to reverse previous transactions because this requires the recalculation of the proofs of work of all the subsequent blocks. When two blocks are found at the same time, miners work on the first block they receive and switch to the longest chain of blocks as soon as the next block is found. This allows mining to secure and maintain a global consensus based on processing power.

Bitcoin miners are neither able to cheat by increasing their own reward nor process fraudulent transactions that could corrupt the Bitcoin network because all Bitcoin nodes would reject any block that contains invalid data as per the rules of the Bitcoin protocol. Consequently, the network remains secure even if not all Bitcoin miners can be trusted.

Isn't Bitcoin mining a waste of energy?

Spending energy to secure and operate a payment system is hardly a waste. Like any other payment service, the use of Bitcoin entails processing costs. Services necessary for the operation of currently widespread monetary systems, such as banks, credit cards, and armored vehicles, also use a lot of energy. Although unlike Bitcoin, their total energy consumption is not transparent and cannot be as easily measured. The total Bitcoin network hash rate is publicly available and can be used to estimate the network's total electricity costs.

Bitcoin mining has been designed to become more optimized over time with specialized hardware consuming less energy, and the operating costs of mining should continue to be proportional to demand. When Bitcoin mining becomes too competitive and less profitable, some miners choose to stop their activities. Furthermore, all energy expended mining is eventually transformed into heat, and the most profitable miners will be those who have put this heat to good use. Some miners, for example, [use the heat generated by bitcoin miners to supplement regular heating systems](http://www.waters.nyc/writing/325).

An optimally efficient mining network is one that isn't actually consuming any extra energy. While this is an ideal, the economics of mining are such that miners individually strive toward it.

How does mining help secure Bitcoin?

Mining creates the equivalent of a competitive lottery that makes it very difficult for anyone to consecutively add new blocks of transactions into the block chain. This protects the neutrality of the network by preventing any individual from gaining the power to block certain transactions. This also prevents any individual from replacing parts of the block chain to roll back their own spends, which could be used to defraud other users. Mining makes it exponentially more difficult to reverse a past transaction by requiring the rewriting of all blocks that occurred after the target transaction.

What do I need to start mining?

In the early days of Bitcoin, anyone could find a new block using their computer's CPU. As more and more people started mining, the difficulty of finding new blocks increased greatly to the point where the only cost-effective method of mining today is using specialized hardware.

What does MH/s, GH/s mean?

These abbreviations stand for the hashing power that your miner is generating. MH/s stands for megahash per second and GH/s stands for gigahash per second. There is a direct correlation between how fast your miner works and how profitable it will be.

What does W/Gh and W/Th mean?

W/Gh and W/Th are abbreviations for watts per gigahash and watts per terahash. These metrics calculate how many hashes a miner can run per watt of electricity. Mining hardware with lower W/Gh and W/Th are more efficient. Currently, the Antminer S7 and Avalon6 are the most efficient miners available for purchase, at 0.25 W/Gh and 0.29 W/Gh, respectively.

How do I calculate my Bitcoin mining profitability?

You can use bitcoin mining profitability calculators to calculate the profitability of mining under a variety of circumstances, to include difficulty increases, power consumption, and average hashrate, for example.

What does hashing mean?

The term "hashing" means how quickly your hardware is processing data from the Blockchain and solving the complex mathematical equations that are required to earn bitcoins.

What is a Bitcoin mining pool?

A mining pool is a group of miners who have shared their hashing resources to solve blocks together and the rewards are then distributed amongst the members.

Let's say Bob runs a Bitcoin mining farm with 1% of the Bitcoin network hash rate. His machines only find, on average, one out of every 100 blocks. Bob becomes impatient and wants more frequent payouts. He joins a mining pool with 20% of the network hash rate. Instead of getting paid on average once per 100 blocks, Bob now receives smaller but more frequent payouts every five blocks.

What does GPU stand for?

A Graphics Processing Unit powers most computer video cards and can be used to mine Bitcoins.

What is a Bitcoin mining share?

A share is merely an accounting method to keep the miners honest and fairly divide any rewards earned by the pool.

What is a Bitcoin mining module?

A Bitcoin mining module is usually a worker as assigned in the Bitcoin mining software. For example, four GPUs are plugged into the motherboard constituting the Bitcoin mining hardware. Then the Bitcoin mining software identifies each GPU as a unique worker. So, this small Bitcoin mining rig would be composed for four Bitcoin mining modules.

What does ASIC stand for?

An Application-Specific Integrated Circuit is a special chip designed specifically for mining Bitcoin and is much more energy-efficient and faster than GPU or FPGA mining.

What does FPGA stand for?

A Field-Progammable Gate Array was already an established hardware product that can be used for different purposes, but in this case the technology was repurposed for mining Bitcoin.

Where can I view mining data about each block?

The mining rewards and transaction fees for each block can be viewed online with any block explorer.

In the example above, we get information on block #408450:

• Number of transactions: Block #408450 contained 185 transactions.
• Transaction fees: There were 0.05502059 BTC worth of transaction fees in block #408450. The miner or mining pool (explained below) that mined this block receives the entirety of these fees.
• Height: Height is another name for block number. The first block mined was block #1 and is called the Genesis block.
• Relayed By: This block was successfully solved by Antpool, which is a Bitcoin mining pool.
• Block Reward: This block contained a 25 BTC reward, which is fully rewarded to the miner that relayed the block--in this case Antpool.

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Will the Real Bitcoin Please Stand Up?

The great Bitcoin fork of 2017—when the original blockchain split last August to create Bitcoin Cash—appears to have ended pleasantly, at least for investors. The sum of the parts turned out to be greater than the whole: Within a week of the split, the two assets together were worth more than $15 billion in additional market value that didn’t exist prior to the fork.

Far away from Wall Street, however, the schism—which came about when two factions couldn’t agree on whether to speed up transaction times by expanding the size of units on the blockchain (Bitcoin Cash favoring larger blocks)—is still seething. There are signs the rift is growing more acrimonious, threatening to polarize the Bitcoin community around the world.

I witnessed the bitterness of the so-called scaling debate when I visited Tokyo in late March to report on new twists in the saga of Mt. Gox, the hacked Bitcoin exchange, for my latest magazine feature, “Mt. Gox and the Surprising Redemption of Bitcoin’s Biggest Villain”. There I found that much of the once tight-knit community had since become alienated by the Bitcoin Cash split.

I’m not going to analyze the technical merits of the scaling debate—regarding the speed and cost of transactions—here today, both for the sake of brevity and because the latest flare-ups have been less technological and more philosophical: The Bitcoin-Bitcoin Cash battles are now often over ethics, censorship, transparency, and even the political parties of their supporters.

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Case in point: Coincall, a portfolio tracking site for cryptocurrency investors, this week labeled Bitcoin Cash a “shitcoin” for “intentionally misleading newcomers to believe it’s the ‘real’ Bitcoin, for example by misusing bitcoin.com and the @bitcoin Twitter handle.” (Last month, scandal arose after the @bitcoin account appeared to endorse Bitcoin Cash, and was subsequently suspended by Twitter.) But even if those criticisms are accurate, they have nothing to do with whether or not Bitcoin Cash is actually faster, cheaper or easier to use than Bitcoin.

In Tokyo, however, Bitcoin Cash now seems to dominate the Bitcoin scene: Supporters have their own meetups; their own bars accepting Bitcoin Cash—they even have their own Satoshi Nakamoto, an Australian named Craig Wright. (Wright, though, has failed to irrefutably prove that he is the mysterious creator of Bitcoin—and others have offered evidence debunking Wright’s claims.)

My trip coincided with the Satoshi’s Vision Conference, an event that makes the case that Bitcoin Cash is the true Bitcoin. At a happy hour following the conference, people exclaimed “Make Bitcoin great again!” One guest called out to a woman carrying a baby: “Future big-blocker right there!”

They aren’t joking around. “This is war,” said Aaron Gutman, an organizer of the Tokyo Bitcoin Cash meetup. Proponents predict the coming of what they call “the flippening”—when Bitcoin Cash will displace Bitcoin as the most valuable cryptocurrency, and be recognized as the “real” Bitcoin. They claim they’ve been unfairly persecuted by the Bitcoin majority, that their posts about Bitcoin Cash have been deleted from the main Reddit Bitcoin forum.

At the center of the controversy is Roger Ver, an early Bitcoin evangelist living in Tokyo and CEO of Bitcoin.com who has now thrown the full weight of his support behind Bitcoin Cash. “They called him the ‘Bitcoin Jesus,'” says J. Maurice, who runs the Tokyo-based Bitcoin mining company WIZ, and used to consult for Ver, but has since become estranged. “Now he’s like the Bitcoin Judas.”

To see how the Tokyo rift is spreading, look no further than a CNBC article from a couple of weeks ago bearing the headline, “Forget bitcoin. Now is the time to buy bitcoin cash: Crypto trader.” The article is based on an interview with Brian Kelly, CEO of investment firm BKCM. But Kelly didn’t actually advise against Bitcoin, and in fact owns both it and Bitcoin Cash. “I’m not taking sides,” he said in the same interview. “I just want to make money.”

He has that in common with most New York crypto investors I know. And if your goal is purely to make money, Bitcoin Cash has lately been a better bet than Bitcoin: In the past month, the Bitcoin Cash price is up some 115%, while the Bitcoin price has risen 30% by comparison.

But as for the potential flippening, it still seems a long way off: Today the value of Bitcoin Cash is worth just under 16% of the total value of Bitcoin—barely more than the 14% it was worth when it was created. I won’t say it can’t happen. But first it would help to at least have an open and honest debate.

This article originally appeared in the The Ledger, Fortune’s weekly newsletter on the intersection of finance and tech. Subscribe here.

How to Set Up a Bitcoin Miner

Last updated: 26th November 2013

There are three main categories of bitcoin mining hardware, each more expensive and more powerful than the last. This guide to setting up a bitcoin miner explains each of them, and talks about how to make them work.

By this stage, you will understand how bitcoin works, and what mining means. But we need to get from theory to practice. How can you set up a bitcoin mining hardware and start generating some digital cash? The first thing you're going to need to do is decide on your hardware, and there are two main things to think about when choosing it:

This is the number of calculations that your hardware can perform every second as it tries to crack the mathematical problem we described in our mining section. Hash rates are measured in megahashes, gigahashes, and terahashes per second (MH/sec, GH/sec, and TH/sec. The higher your hash rate (compared to the current average hash rate), the more likely you are to solve a transaction block. The bitcoin wiki's mining hardware comparison page is a good place to go for rough information on hash rates for different hardware.

Energy consumption

All this computing power chews up electricity, and that costs money. It's worth looking at your hardware's energy consumption in watts, when making your choice. You want to make sure that you don't end up spending all of your money on electricity to mine coins that won't be worth what you paid.

Use these two factors to work out how many hashes you're getting for every watt of electricity that you use. To do this, divide the hash count by the number of watts.

For example, if you have a 500 GH/sec device, and it's taking 400 watts of power, then you're getting 1.25 GH/sec per watt. You can check your power bill or use an electricity price calculator online to find out how much that means in hard cash.

However, there's a caveat here. In some cases, you'll be using your computer to run the mining hardware. Your computer has its own electricity draw on top of the mining hardware, and you'll need to factor that into your calculation.

Bitcoin Mining Hardware

There are three main hardware categories for bitcoin miners: GPUs, FPGAs, and ASICs. We'll explore them in depth below.

CPU/GPU Bitcoin Mining

The least powerful category of bitcoin mining hardware is your computer itself. Theoretically, you could use your computer's CPU to mine for bitcoins, but in practice, this is so slow by today's standards that there isn't any point.

You can enhance your bitcoin hash rate by adding graphics hardware to your desktop computer. Graphics cards feature graphical processing units (GPUs). These are designed for heavy mathematical lifting so they can calculate all the complex polygons needed in high-end video games. This makes them particularly good at the SHA hashing mathematics necessary to solve transaction blocks.

You can buy GPUs from two main vendors: ATI and Nvidia. High-end cards can cost hundreds of dollars, but also give you a significant advantage over CPU hashing. For example, an ATI 5970 graphics card can give you over 800 MH/sec compared with a CPU, which will generally give you less than 10 MH/sec.

One of the nice things about GPUs is that they also leave your options open. Unlike other options discussed later, these units can be used with cryptocurrencies other than bitcoin. Litecoin, for example, uses a different proof of work algorithm to bitcoin, called Scrypt. This has been optimized to be friendly to CPUs and GPUs, making them a good option for GPU miners who want to switch between different currencies.

GPU mining is largely dead these days. Bitcoin mining difficulty has accelerated so much with the release of ASIC mining power that graphics cards can't compete. If you do want to use them, you'd best equip yourself with a motherboard that can take multiple boards, to save on running separate PSUs for different boards.

FPGA Bitcoin Mining

A Field Programmable Gate Array is an integrated circuit designed to be configured after being built. This enables a mining hardware manufacturer to buy the chips in volume, and then customize them for bitcoin mining before putting them into their own equipment. Because they are customized for mining, they offer performance improvements over CPUs and GPUs. Single-chip FPGAs have been seen operating at around 750 Megahashes/sec, although that's at the high end. It is of course possible to put more than one chip in a box.

ASIC Bitcoin Miners

This is where the action's really at. Application Specific Integrated Circuits (ASICs) are specifically designed to do just one thing: mine bitcoins at mind-crushing speeds, with relatively low power consumption. Because these chips have to be designed specifically for that task and then fabricated, they are expensive and time-consuming to produce - but the speeds are stunning. At the time of writing, units are selling with speeds anywhere from 5-500 Gigahashes/sec (although actually getting some of them to them to ship has been a problem). Vendors are already promising ASIC devices with far more power, stretching up into the 2 Terahashes/sec range.

In September 2015, 21 released its 'Bitcoin Computer', which houses a mining chip and retails for around $400. It is aimed at developers to build applications with and not those wishing to mine bitcoin for profit.

21's 'Bitcoin Computer', which is aimed at developers and retails for $400.

Calculate mining profitability

Before making your purchase, calculate the projected profitability of your miner, using the excellent mining profitability calculator from The Genesis Block or this one. You can input parameters such as equipment cost, hash rate, power consumption, and the current bitcoin price to see how long it will take to pay back your investment.

One of the other key parameters here is network difficulty. This metric determines how hard it is to solve transaction blocks, and it varies according to the network hash rate. Difficulty is likely to increase substantially as ASIC devices come on the market, so it might be worth increasing this metric in the calculator to see what your return on investment will be like as more people join the game. Use this guide on calculating mining profitability for more information.

Once you have chosen your hardware, you'll need to do several other things:

Download the software

Depending on which equipment you choose, you will need to run software to make use of it. Typically when using GPUs and FPGAs, you will need a host computer running two things: the standard bitcoin client, and the mining software.

Standard bitcoin client

This software connects your computer to the network and enables it to interact with the bitcoin clients, forwarding transactions and keeping track of the block chain. It will take some time for it to download the entire bitcoin block chain so that it can begin. The bitcoin client effectively relays information between your miner and the bitcoin network.

Bitcoin mining software

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. They are available for Windows, Mac OS X, and others.

You may well need mining software for your ASIC miner, too, although some newer models promise to ship with everything pre-configured, including a bitcoin address, so that all you need to do is plug it in the wall.

One smart developer even produced a mining operating system designed to run on the Raspberry Pi, a low-cost credit card-sized Linux computer designed to consume very small amounts of power. This could be used to power a USB-connected ASIC miner.

Join a pool

Now, you're all set up. Good for you. I bet you thought you were going to be mining more bitcoins than the Federal Reserve prints dollars, didn't you? Sadly not. You will stand little chance of success mining bitcoins unless you work with other people. You can find out more about that in our upcoming guide on how to join a mining pool.

How to use Bitcoin for Stand-up Comedy

“Loved your jokes. Here’s some bitcoins.”

That short email was where it all started. Some stranger was sending me some bitcoin because he liked my routine about fiat currency .

It was a short stand-up piece that I’d performed on an Australian TV show and then posted on YouTube. I bashed fiat pretty hard and it must’ve hit a chord because I got quite a few emails.

One of them was from this guy sending me bitcoins…

I was vaguely aware of Bitcoin, but didn’t really know too much about it.

But now someone was offering me some of this strange new currency I started getting curious.

Clicking on the link in the email took me to coinapult. This guy was sending me 0.007 of a Bitcoin, which at the time was about $2. Eventually I figured out how to set up a wallet and accept this small change.

I’m not sure if it was the process of figuring out how to set up a wallet, or the fact I now owned a bitcoin (well, 0.007 of one), but from that point on…

I had bitcoin fever. Bad.

Over the next few months I read everything about bitcoin I could find.

All the problems I hated about fiat currency bitcoin solved: private, practically no transaction fees, no government or bank interference – it was all so perfect.

I knew I had to do a stand-up routine on bitcoin.

If you’re not a comedian that might seem like a strange thought, but all my best routines have been on topics I’m passionate about.

Writing a stand-up routine about decentralized cryptocurrency wouldn’t be easy, but I thought if I could figure it out it might be a really great routine.

I also realised something else…

Even though I’d spent hours researching bitcoin and watching bitcoin related YouTube clips for days I’d never seen a stand-up bit about it.

Stephen Colbert had done a pretty funny report on bitcoin and in a Q&A Josh Blue had said mining bitcoin was a hobby, but as far as I could tell nobody had done what I was trying to do.

Was that because bitcoin is still so new and I was the first to get to the topic?

Or was it because it’s such a complex topic that “writing a funny Bitcoin stand-up routine is impossible?

I perform regularly on an Australian community TV show (it’s called Live on Bowen. Imagine a low budget Letterman).

I realised if I came up with some jokes and performed it on the show, I’d be the first comedian to ever do a bitcoin stand-up routine (on TV at least).

“I have to do a segment on Bitcoin.”

Every Monday the writers and I meet up to plan out the segments for the show. When I walked in and said that things got weird.

Usually one of us pitches a topic, say “iphones”, and the writers will throw out jokes and ideas for the next fifteen minutes.

“What the hell is a bitcoin?” someone asked.

We spent the next forty minutes discussing cryptocurrencies, mining and who Satoshi Nakamoto is.

I think I gave them a good education on what Bitcoin is, but we didn’t come up with any jokes.

These are writers who regularly come up with sketches along the lines of “What if the president of France was a watermelon?” but getting their heads around a decentralised cryptocurrency was too much.

Maybe writing a comedy routine about bitcoin was impossible…

If I couldn’t get the writers to understand Bitcoin in a forty minute meeting, how could I explain it to an audience in a three minute TV spot?

Still, I had about three weeks to come up with a routine about bitcoin and I wasn’t about to quit now…

The race was on…

I started writing jokes about bitcoin and performing them at comedy clubs. At first I got a lot of blank stares.

Imagine explaining Bitcoin to your parents. Now imagine they’re drunk and expect you to be funny.

Other comedians suggested I drop the routine, which is crazy because comedians are a pretty forgiving bunch.

If I was trying to develop a routine about Hitler they would’ve told me to keep trying, but one joke about SHA256 dies and they’re telling me to give up.

In the end this doubt was what pushed me to keep going. Now I had to prove to them (and myself) that I could write a routine about bitcoin.

Bitcoin became my Moby Dick.

I kept performing the routine, rewriting it and performing it again.

I’d go home after shows to read bitcoin blogs in the hope that I’d pick up just one little angle that could help me improve this routine.

I also kept looking for any other comedians doing bitcoin routines. It looked like nobody was.

Apart from a few memes, and some fairly amateur sketches, I couldn’t find any bitcoin comedy.

I just prayed another comedian wouldn’t come up with a bitcoin routine first…

Then as the day when I’d have to perform the routine on TV drew closer, another thought hit me…

I’d rewritten the routine about a hundred times by then and it was getting laughs at comedy clubs, but those audiences didn’t know about bitcoin.

How could I be sure the stuff I was saying in the routine was factually correct?

If only there were some experts I could test my stuff on…

Then, the day before the taping of the show, I was browsing meetup.com and saw there was a Melbourne Bitcoiner’s group.

They were meeting that night!

It was like a sign from God.

I shot the organiser an email “Hi, Can I come perform a stand-up comedy routine about Bitcoin at your meeting?”

I was fully prepared for them to write back asking if this was a prank, but instead I got a reply saying they’d let me give it a shot.

That night, after a fairly heated discussion about alt coins, Asher Tan (CoinJar co-founder and organiser of the Melbourne Bitcoin meetup) handed me the mic.

“I hope you know what you’re doing…” he said.

“Me too!” I thought.

I walked out to about a hundred bemused stares, but when my first joke got a wave of laughter I knew this was going to be OK.

After the show I sat around with some of the nicest people I’ve ever met sharing bitcoin stories and listening to their suggestions about how to improve my routine.

Twenty-four hours later I was on stage in front of a live studio audience.

The host gave me an introduction, the camera swung onto me, and it was show time.

How did the world’s first ever bitcoin stand-up routine go?

Well, I think it went great, the studio audience seemed to like it, and I’ve had nice feedback from viewers, but don’t take my word for it.

Like Bitcoin I don’t expect you to trust a third party – go watch the routine on YouTube and make up your own mind.

Where Bitcoin Mining Pools Stand on Segregated Witness

For the first time, bitcoin miners have been able to signal support for Segregated Witness this past week. Developed as a soft fork, the proposed centerpiece of Bitcoin Core’s scalability roadmap requires 95 percent of all blocks within a single two week difficulty period to signal readiness for the change. If the threshold is reached, the solution is activated two weeks later, realizing an effective block size limit increase, a malleability fix and more.

Of all mining pools accounting for at least one percent of hash power on the network, four have been signaling support for Segregated Witness so far, together accounting for about 26 percent of all newly mined blocks.

Here is a brief overview.

19 percent hash power)

AntPool, the main mining arm of China-based ASIC-producer Bitmain, has not been signaling support for Segregated Witness so far.

At the “Bitcoin Roundtable” in Hong Kong last February, Bitmain and AntPool representatives signed a letter supporting Segregated Witness, in return for a hard fork proposal to increase the block size limit from the Bitcoin Core developers present at the meeting. This hard fork proposal was scheduled to be presented within three months after the release of Segregated Witness — originally set for April. Due to a delay of Segregated Witness, however, the developers technically have until late next January to present the proposal.

Much has happened since the Hong Kong meeting, however, and interpretations of the agreement vary. Several of the signatories — including Bitmain CEO Jihan Wu and several Bitcoin Core developers — (seemingly) accused others of not upholding their part of the deal. Whether the developers will present a finished proposal before the end of January is uncertain.

Speaking to Bitcoin Magazine in May of this year, Wu said his pool will not support Segregated Witness unless and until Bitcoin Core implements a block size hard fork. This currently seems unlikely to happen any time soon.

14 percent hash power)

The operator of the Chinese mining pool F2Pool, Wang Chun, signed onto the Hong Kong Roundtable consensus as well. Though he did not comment on the status of the agreement, Chun told Bitcoin Magazine that he is currently experiencing technical difficulties keeping him from signaling support.

“Since our system cannot build C++11, I would like put this on hold for a while, until we can get our new servers online up and running,” Chun said. “Next spring, maybe.”

11 percent hash power) signals support

China-based Bitcoin exchange, wallet service and mining pool BTCC signed the Hong Kong Roundtable letter. The company is one of the most outspoken proponents of Segregated Witness and is currently the biggest mining pool signaling support.

Speaking to CoinTelegraph last week, BTCC COO Samson Mow explained:

“SegWit is great for Bitcoin. It brings more transaction throughput, fixes malleability, defrags the UTXO set, makes hardware wallets more secure and most importantly, it enables lightning, which will bring instant low cost Bitcoin transactions to the world. The team at BTCC have been working hard at making our exchange and mining pool services SegWit-ready.”

10 percent hash power)

BW Pool, China’s fourth biggest mining pool and another signatory of the Hong Kong Roundtable letter, is currently not signaling support for Segregated Witness.

Earlier this week, the mining pool did send out a tweet stating: “Mining Pools Should Remain Neutral.” This is in agreement with Slush Pool’s policy to let individual miners connected to the pool decide whether they want to signal support in blocks they find, rather than having the pool decide for them.

In response to a query from Bitcoin Magazine, BW Pool angel investor, Chandler Guo, confirmed the pool will let individual miners decide. Guo did not reveal further specifics, however, such as activation dates or potential default settings.

7 percent hash power) signals support

BitFury, a full-service Blockchain technology company and mining pool with roots in the Republic of Georgia, is currently the second largest pool signaling support for Segregated Witness.

Representatives from BitFury also signed the Hong Kong Roundtable letter. And commenting on the block size issue at a conference in London, BitFury CEO Valery Vavilov stated the “block size should be increased, but in a smart way,” adding that “the solution which was deployed is pretty good: Segregated Witness.”

6 percent hash power)

Of all mining pools, the relatively new Chinese mining pool ViaBTC is perhaps the strongest opponent of the Segregated Witness soft fork. In an interview with Bitcoin Magazine published last week, ViaBTC CEO Haipo Yang explained he will reject the proposed soft fork in favor of a block size limit increase hard fork.

“My goal is not really to block Segregated Witness in and of itself, but to work towards a Bitcoin version I think is better,” Yang said.

6 percent hash power)

Representatives from HaoBTC, the Chinese exchange, wallet service and mining pool, signed onto the Hong Kong Roundtable consensus.

In June of this year, the company published an open letter urging the Bitcoin Core developers present in Hong Kong to uphold their part of the deal — and asking for clarity. While the letter was quickly unpublished, the original content suggests HaoBTC was not fully happy with the (lack of) progress on the hard fork proposal. (Additionally, the original letter is said to have included positive remarks concerning Segregated Witness.)

HaoBTC is currently not signaling support for Segregated Witness, however.

6 percent hash power) partially signals support

Prague-based Slush Pool, Bitcoin’s oldest mining pool, will let individual hashers decide whether or not to signal support for Segregated Witness.

In an article published on Bitcoin Magazine last week, pool operator Marek “Slush” Palatinus explained he wants to remove himself from the equation as a decision maker: “Satoshi’s idea was not to have a few entities control the network. As a mining pool we shouldn’t rule.”

Slush Pool will signal support for Segregated Witness by default, but users can opt out if they want. This solution isn’t quite ready yet at the moment, however. As a temporary solution, only users that “vote” in support of Bitcoin Core automatically vote for Segregated Witness.

5 percent hash power)

BTC.com, a block explorer, wallet service, API-provider and open source mining pool owned by Bitmain, is currently not signaling support for Segregated Witness.

Speaking to Bitcoin Magazine, BTC.com’s mining pool operator, Kevin Pan, indicated that, in the short term, it will not signal support for Segregated Witness but will instead await further community consensus. Like AntPool, BTC.com’s decision will most likely also depend on Bitmain’s preference.

3 percent hash power)

India-based GBMiners, another relatively new mining pool, is not signaling support for Segregated Witness. In an interview with CoinJournal, the mining pool did indicate that it is in favor of the Bitcoin Core fork Bitcoin Unlimited, which has no plans to support Segregated Witness.

Update: In reply to a query on Facebook on October 20, GBMiners representative Sanjay Goswami indicated (mirror) that his pool would would signal support for Segregated Witness.

3 percent hash power) signals support

Bitclub Network is the fourth largest mining pool currently signaling support for Segregated Witness. Not much else is known about this pool.

3 percent hash power)

Chinese mining pool 1Hash is currently not signaling support for Segregated Witness. Not much else is known about this pool.

2 percent hash power)

The new Bitcoin.com mining pool, operated by well-known Bitcoin angel investor and entrepreneur, Roger Ver, is currently not signaling support for Segregated Witness. Ver told Bitcoin Magazine that his pool “isn't actively supporting or blocking SegWit,” but will only support Segregated Witness if and when it is clear to him there is community consensus for the soft fork.

Ver also addressed what he considers to be the lack of opportunity for uncontested dialogue about the soft fork within popular Bitcoin forums r/bitcoin and Bitcointalk:

“The problem with all the censorship that's been going on is that no one knows what the community consensus actually is.”

2 percent hash power)

Kano CK Pool is not signaling support for Segregated Witness. In a comment on Bitcointalk, Kano CKPool operator “kano” recently indicated the pool will keep mining standard Bitcoin blocks; blocks that do not support changes to the protocol.

“No random attempts at changing BTC . and also no SegWit indicators,” kano said when asked which software the pool supports. “So I guess that means ‘core’ without SegWit voting.”

Bitcoin Magazine reached out to (representatives from) AntPool, BTCC, BitFury, HaoBTC, Bitclub Network, GBMiners, 1Hash and Kano CK Pool, but received no response at time of publication.

This article has been updated with information regarding GBMiners.

Cryptocurrency Investing: What is a Healthy Portfolio and Where Does Bitcoin Stand

December 25, 2017

Over the past 12 months, year-to-date, bitcoin has fallen behind Ripple, Litecoin, and Ethereum in terms of price growth.

Bitcoin’s Year-to-Date Return

Bitcoin still has recorded a massive price increase of 14-fold, from $1,000 to $14,000. But, other cryptocurrencies in the market such as Ripple have recorded a staggering 163.5-fold increase in value. Merely a $1,000 dollar investment in Ripple in the beginning of 2017 would have led to a profit of $162,500, while an investment in bitcoin would have led to $14,000.

Yearly bitcoin price growth provided by Coinbase

The top three cryptocurrencies in the market bitcoin, Ethereum, and Bitcoin Cash have less potential to increase by large margins in comparison to cryptocurrencies with market valuations of less than $10 billion. Unless the entire cryptocurrency market surges exponentially and the valuation of the market grows to many trillions of dollars by the end of 2018, in the short-term, it is unlikely that leading cryptocurrencies including bitcoin, Ethereum, and Bitcoin Cash will record an astronomical surge in value, by more than 100-fold.

Billionaire hedge fund investor Mike Novogratz, Fundstrat’s Tom Lee, and highly respected financial analyst Max Keiser have established an interim price target of bitcoin at around $50,000, which would place the market valuation of bitcoin at $1 billion. Solely in terms of price growth, a $50,000 target would be a 3.5-fold increase in value over a 12-month period.

Consequently, many investors in the market have started to diversify their investments into other cryptocurrencies, and the trend has been evident in the decline of the dominance index of bitcoin. Three cryptocurrencies at the top of the market are considered as reserve assets or safe haven assets. They have low risk but low returns. That is, a low return relative to other cryptocurrencies in the market. Bitcoin, Bitcoin Cash, and Ethereum have drastically outperformed all of the currencies and assets in the traditional finance sector year-to-date.

Investors like CNBC analyst Brian Kelly and cryptocurrency-focused hedge funds spread out their funds across many cryptocurrencies with strong technologies, active developer communities, solid markets, and applicability.

John McAfee for instance, has emphasized the necessity of private or anonymous cryptocurrencies like Dash, Monero, and Zcash, as in the future, more investors will seek out for cryptocurrencies that are capable of providing a high level of confidentiality.

Combination of Low-Risk and High-Risk Cryptocurrencies

A healthy portfolio of cryptocurrencies would be a certain amount of funds spread across both strong low-risk cryptocurrencies like bitcoin, Ethereum, and Bitcoin Cash, and high-risk cryptocurrencies with lower market caps like Monero, Zcash, and Dash.

Squeeze, a prominent cryptocurrency trader, noted that price is not an accurate representation of the size of a cryptocurrency. Rather, investors should consider the market valuation of a cryptocurrency to decide its potential and space to grow.

“For new investors in crypto, think in market cap. Not price per coin. Market cap gives an estimate of the potential growth. Price per coin doesn’t mean anything as the supply for each altcoin differs $0.1 per coin doesn’t mean it’s cheap $100 per coin doesn’t mean it’s expensive,” said Squeeze.

An example of a high market cap but low price cryptocurrency is Ripple. The market valuation of Ripple is at nearly $40 billion but its cryptocurrency remains at $1. Meanwhile, Dash, Litecoin, and Monero have tokens valued at more than $300. Yet, their market valuations are substantially lower than that of Ripple.

For investors and bitcoin holders that have seen significant returns over the past few years, diversifying funds across unique and potent cryptocurrencies could lead to better returns in the short-term.

Featured image courtesy of Shutterstock.

What 12 major analysts from banks like Goldman, JPMorgan, and Morgan Stanley think of bitcoin

• Jan. 18, 2018, 7:55 AM
• 18,612

REUTERS/Neil Hall

A bloodbath gripped the crypto markets this week, with virtually every single major cryptocurrency taking significant losses, but huge amounts of excitement remains about the space from all corners of society.

Bitcoin, the first, biggest, and most recognisable cryptocurrency, has been at the heart of much of that excitement, with acolytes touting it as the future of global finance, and some even suggesting that it could replace fiat currencies like the dollar and the pound.

Bitcoin's rise has been so rapid and so aggressive that the market's more established institutions and figures have been simply unable to ignore it.

There is a big spread of opinion across the sector, with some seeing cryptocurrencies as a possible driver of a fundamental shift in the global financial system, others disliking bitcoin, but having some faith in the blockchain technology that underlines it, and others just seeing crypto as, basically, a complete waste of time.

To find out where the industry's big players stand on the cryptocurrency world, Business Insider looked back through recently published analyst notes from major investment banks, research houses, and asset managers.

You can see what staff from the likes of Goldman Sachs, Morgan Stanley, and JPMorgan think below:

James Faucette, Morgan Stanley: Bitcoin is worth $0.

Bullish or bearish?: Bearish

What they say: Faucette's issue with the currency is that it is incredibly hard to value, and that it also very hard to determine what kind of an asset it is.

As BI's Jim Edwards wrote back in December when the note was first released:

"Morgan Stanley analyst James Faucette and his team sent a research note to clients a few days ago suggesting that the real value of bitcoin might be . $0.

"That'sВ zeroВ dollars. (Bitcoin stood at around $14,400 at the time of writing.)

"The paper (titled "Bitcoin decrypted") did not give a price target for bitcoin.

"But in a section titled "Attempts to Value Bitcoin," Faucette described why it is so hard to ascribe value to the cryptocurrency. It's not like a currency, it's not like gold, and it has had difficulty scaling."

Chief Investment Office team at UBS: Crypto is a bubble but blockchain is important technology.

Bullish or bearish?: Bearish on bitcoin, reasonably bullish on blockchain.

What they say: "Cryptocurrencies have soared in popularity since 2008, with more than 1,000 in existence today and an aggregate value greater than the market capitalization of IBM. But we are highly doubtful whether they will ever become mainstream currencies," a note from the Swiss bank said back in October 2017.

"The need for companies and individuals to pay tax receipts in government-issued currency, and the potentially unlimited crypto-money supply, pose significant barriers to widespread adoption. We think the sharp rise in crypto-currency valuations in recent months is a speculative bubble."

"But while we are doubtful cryptocurrencies will ever become a mainstream means of exchange, the underlying technology, blockchain, is likely to have a significant impact in industries ranging from finance to manufacturing, healthcare, and utilities."

Nikolaos Panigirtzoglou, JP Morgan: Futures contracts for bitcoin have the "potential to elevate cryptocurrencies to an emerging asset class."

Bullish or bearish?: Bullish

What they say: Panigirtzoglou and his team believe that the recent introduction of futures contracts for bitcoin have the "potential to elevate cryptocurrencies to an emerging asset class."

"The value of this new asset class is a function of the breadth of its acceptance as a store of wealth and as a means of payment," Panigirtzoglou and his team said in the note back in December.

"Simply judging by other stores of wealth such as gold, cryptocurrencies have the potential to grow further from here."

Zach Pandl and Charles Himmelberg, Goldman Sachs: Bitcoin has uses in developing nations.

Bullish or bearish?:В Cautiously bullish

What they say:В Goldman's analysts said earlier in the month that bitcoin can become a "legitimate and widespreadВ form of money" in the future, especially in developing countries, according to BI's Akin Oyedele.

"The widespread use of the dollar outside the US — and full dollarization in some countries — suggests there is already demand for an internationally accepted medium of exchange and store of value," Zach Pandl and Charles Himmelberg wrote in a note to clients.

"In those countries andВ corners of the financial system where the traditional services of money are inadequately supplied, bitcoin (and cryptocurrencies more generally) may offer viable alternatives."

Quinlan & Associates: One bitcoin is worth no more than $1,780.

Bullish or bearish?: Very bearish

What they say: It's safe to say that Quinlan & Associates, a major Wall Street consultancy, does not like bitcoin one single bit.

In a report titled "Fool's Gold: Unearthing The World of Cryptocurrency" the firm argued that bitcoin could drop as low as $1,800 by the end of this year, an 82% drop from its current price.

"As an asset, we valued Bitcoin using a cost of production approach and a store of value approach, resulting in values of USD 2,161 and USD 687 respectively. To value BTC as a currency, we estimated its utilization for both legal, retail transactions payments, as well as payments in the black market. After significant testing, we calculated the price of BTC 1 to be USD 1,780."

Mitch Steves, RBC Capital Markets: Bitcoin is a global store of value, like gold.

Bullish or bearish?: Bullish

What they say: "While the Crypto-Currency space has many risks, the opportunity appears vast with constant technology updates. With a rapid rise in prices we outline the bull case for building a decentralized future," Steves wrote in a note on January 3.

His case centres around several different uses of bitcoin and ethereum, including as a global store of value.

"The current market capitalization of gold is

$8 billion and the total amount of capital held in offshore banking accounts was estimated to be around

$21 trillion (according to 2013 study
from the Guardian)," Steves wrote.

"Offshore tax havens include the Cayman Islands, Switzerland and several private banks. With a new digital store of value that cannot be seized, crypto currencies have unlocked a large market opportunity for the first viable use case: a store of value.

"We can see the use case as material since the crypto currency now travels with you to any place with an internet connection: your phone to a laptop. This store of value cannot be seized without your private keys."

Belinda Boa, BlackRock: "Bubble-like" valuations.

Bullish or bearish?: Bearish

What they say: "We are seeing sort of bubble-like valuations. BlackRock’s view is that this isn’t a financial asset like we would trade in terms of equities and fixed-income instruments," Belinda Boa, BlackRock’s head of active investments for Asia-Pacific recently told reporters.

Lilian Chovin, Coutts: "Nothing but sentiment" backing cryptocurrencies.

Bullish or bearish?: Bearish

What they say: Private bank Coutts said early in December that it has no plans to invest in bitcoin because the cryptocurrency has "nothing but sentiment" behind it.

Lilian Chovin, investment strategist at Coutts Bank — which is known as the bank of choice for the Royal Family, as well as many of the UK's wealthiest people — said cryptocurrencies "have nothing but sentiment backing them up, are vulnerable to government sanctions and lack the kind of data we look for to gauge value."

As a result, she said, Coutts has no current plans to include cryptocurrencies in its investment strategies.В

Viktor Shvets, Macquarie: Bitcoin is a technological leap as important as the mass production of cars in the early 20th century.

Bullish or bearish?:В Bullish

What they say: Earlier in January Shvets — an analyst known for his bold, often off the wall commentary — published a somewhat esoteric note comparing the rise of bitcoin and cryptocurrencies to the industrialisation of the auto manufacturing process in the early 20th century.

Shvets' basic argument is that both represent a major technological advance with the potential to fundamentally alter society.

"The key that links cryptos with Henry Ford and the main difference between (say) bitcoin and tulips is thatВ cryptocurrencies are based on sustainable and evolving technological foundations (just as cars were in the early 20th century).В

"To argue that the blockchain is good but cryptos bad is to forget that without various forms of ledger balances (or cryptocurrencies), blockchain is an empty vessel," he wrote.

Teunis Brosens, ING: Bitcoin will return to being a "niche product for enthusiasts."

Bullish or bearish: Bearish

What they say: As BI's Oscar Williams-Grut wrote in December, Brosens believes that bitcoin has drifted too far from its original goal of being a decentralized payment system and its recent price rises are unsustainable.

"Bitcoin has little to offer to a wider audience, and will likely return to being a niche product for a select group of enthusiasts," Brosens wrote.

"One day, beyond the hype, Bitcoin will return to being the niche product that it was in its initial years. Users will include tech nerds, people obsessed about their privacy, people afraid for (hyper)inflation in traditional currencies, and people wanting to circumvent central banks for ideological or criminal reasons."

Jamie Dimon, JPMorgan: "The currency isn't going to work."

Bullish or bearish?: Bearish, but sorry for what he said.

What they say: JPMorgan's CEO has a very public and very strong dislike of cryptocurrencies like bitcoin, saying back in 2017 that he believed bitcoin is a "fraud."

В "The currency isn't going to work. You can't have a business where people can invent a currency out of thin air and think that people who are buying it are really smart," he said in September.

Dimon has since rowed back on those comments, saying he regrets using the word fraud. He remains, however, completely uninterested in bitcoin.

Warren Buffett, Berkshire Hathaway: "What's going on definitely will come to a bad ending."

Bullish or bearish?: Bearish

What they say: As probably the most famous investor in modern history, it is worth getting the thoughts of Berkshire Hathaway's legendary founder, Warren Buffett.

It is safe to say Buffett isn't a fan of cryptocurrencies, and earlier in January he told CNBC that bitcoin is set for a "bad ending."

"We don't own any; we're not short any," Buffett said. "We'll never have a position in them."

Of options trades that would profit from price declines, he added: "If I could buy a five-year put on every one of the cryptocurrencies, I'd be glad to do it but I would never short a dime's worth."

"What's going on definitely will come to a bad ending," he said.

Here's where all the UK's major banks stand on buying bitcoin

Reuters

As bitcoin and other cryptocurrencies rise in popularity and their prices swing wildly, so too are they entering the consciousness of mainstream financial institutions.

Not only are big banks looking at the applications of bitcoin and the blockchain technology attached to it, so too are they worrying about the impact the volatility could have on their customers.

This is particularly true when it comes to people using credit cards to speculate on bitcoin.

Although there is only anecdotal evidence of this, there is believed to be a growing number of people maxing out their credit cards to buy cryptocurrencies in the hope that their price will appreciate.

Banks are concerned that wild swings in cryptocurrency prices will expose their customers to heavy losses, making them unable to repay their credit card debts.

As such, some lenders have barred their customers from using credit cards to buy cryptocurrencies, with American banksВ JPMorgan Chase, Bank of America, and CitigroupВ leading the way. A number of UK banks have now followed suit, but which ones?

Business Insider asked all the UK's major high street banks for their positions on allowing customers to buy cryptocurrencies on credit. Check them out below.

Lloyds Bank: BANNED

"Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies."

A В В spokesman for Lloyds said the decision was made to "protect customers"В from making unaffordable losses on Bitcoin.

Barclays: ALLOWED

"We constantly review our protections for customers as a responsible bank and lender, and are keeping this matter under close review.

"At present UK customers can use both their Barclays debit card and Barclaycard credit card to purchase cryptocurrency legitimately. We take precautions to assess affordability before extending credit, flag and prevent any suspicious transactions and also closely monitor credit risk."

Royal Bank of Scotland: ALLOWED

"We constantly review transactions but do currently accept credit card transactions for cryptocurrencies," a spokesperson for the RBS group told Business Insider.

TSB: ALLOWED

"We don’t block payments for customers wishing to purchase cryptocurrencies when they use a TSB credit card or debit card, however we continue to monitor the use of cryptocurrencies and we will review our position on an ongoing basis," a TSB spokesperson told Business Insider.

Virgin Money: BANNED

"I can confirm that customers will no longer be able to use their Virgin Money credit card to purchase crypto-currencies," a spokesperson told Business Insider.

Natwest: ALLOWED

As it is wholly owned by RBS, Natwest's position is the same as its parent, and it currently allows customers to buy bitcoin on its credit cards.

Santander: ALLOWED

"We will continue to monitor crypto-currencies as we do with any other factors that could impact our customers," a Santander spokesperson said.

"At Santander we apply rigorous lending criteria and monitor customer spending. If we feel someone is at risk of getting in to financial difficulty we have support measures in place to help them."

HSBC: ALLOWED

"HSBC currently allows its customers to purchase digital currencies using their debit and credit cards. Our credit policies remain under constant review and we monitor individual credit card transactions in line with our usual procedures."

Capital One: BANNED

"Capital One has started declining credit card transactions to purchase cryptocurrency due to the limited mainstream acceptance and the elevated risks of fraud, loss, and volatility inherent in the cryptocurrency market," a spokesperson for Capital One said.

"Capital One continues to closely monitor developments in cryptocurrency markets and exchanges and will regularly evaluate the decision as cryptocurrency markets evolve."

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