Can you make money bitcoin mining 2016
Bill Buchanan argues that the cryptocurrency, bitcoin, will soon undergo a major change, and explains why no one knows what will happen next. Imagine being told that your wage was going to be cut in half. The current expected date for this change is 11 July Many see this as the day when Bitcoin prices will rocket and when Bitcoin owners could make a great deal of money. Others see it as the start of a Bitcoin crash. At present no one quite knows which way it will go.
Bitcoin was created in by someone known as Satoshi Nakamotoborrowing from a whole lot of research methods. It is a cryptocurrencymeaning it uses digital encryption techniques to create bitcoins and secure financial transactions.
Conventional currencies usually have a central bank that creates money and controls its supply. The algorithm behind Bitcoin is designed to limit the number of bitcoins that can ever be created. All Bitcoin transactions are recorded on a public database known as a blockchain. Every time someone mines for Bitcoin, it is recorded with a new block that is transmitted to every Bitcoin app across the network, like a bank updating its online records.
Mining increases the money supply. Unlike with traditional currencies, which can have their money supply reduced by central banks can you make money bitcoin mining 2016 prevent too much inflation, a bitcoin will stay in circulation forever unless it is accidentally deleted which should be rare. An over supply of any currency can weaken its value so economists try to carefully balance the supply of cash with the demand. Without a central bank to do this, Bitcoin has an absolute limit built into the system.
There are currently around In order to put off the day when there is no Bitcoin left to be mined, mining becomes more difficult as time goes on. The system is also designed to halve the value of what you earn from mining on a specific date. This is expected to be on 11 Julybased on the number of new transactions for bitcoins and the estimated rewards for can you make money bitcoin mining 2016 the new ledger entries. Many believe that this halving could have a strong effect on the value of Bitcoin as a whole.
If lots of people decide it is no longer worth mining Bitcoin and give up on the system, it could cause the currency to lose its value and start a crash. But if it just helps to limit the supply of Bitcoin while demand stays the same, its value will increase. Mining Bitcoin gets ever can you make money bitcoin mining 2016. What seems most likely is that Bitcoin mining will become increasingly centralised, carried out by a few big organised mining groups comprising companies and multiple users pooling their resources, while individual miners exit the market.
More computing power will be can you make money bitcoin mining 2016 to produce the same value of Bitcoin and the bigger pools will be more likely to bare the cost of this while small miners may decide it is no longer economically viable.
The problem is that a more centralised mining network will be open to attack because there are fewer users to go after.
Hacking, extortion or even failures in critical infrastructure could bring down large swathes of the mining market in one move. No one knows for sure what will happen and the answer may even be nothing at all. The price of another cryptocurrency, Litecoincan you make money bitcoin mining 2016 remained untouched after its recent halving process. But Litecoin has a considerably smaller scope and limited effects on the global economy.
All we know for sure is that we are entering a new phase of discovery for Bitcoin. This article was originally published on The Conversation. By Bill Buchanan - 11 July World economy, trade and finance. View the discussion thread.