Lately, I&rsquo,ve bot attempting to earn some money by mining the Bitcoin alternatives, Litecoin, Feathercoin and Terracoin. After spending the entirety of last week attempting to get free money, I may have succeeded, to an extent. This introductory article covers how I got embarked mining cryptocoins and which coin provides the best comes back on investment, for beginners. It&rsquo,s shockingly effortless.
If you know nothing about Bitcoins and virtual currencies then here&rsquo,s a brief primer: Bitcoin is an uncollateralized digital cryptocurrency subject entirely to the market coerces of supply and request. Spil long spil individuals request it, it will wield value, albeit that value will fluctuate insanely. It establishes ownership through a peer-to-peer network, which keeps track of who possesses what, known spil a &ldquo,Blockchain&rdquo,.
For those of you not familiar with the mining process, here&rsquo,s a plain explanation of how it works: All cryptographic coin networks structure themselves around blocks, which contain hashes. A hash is an encrypted chunk of information that, when successfully solved, or decrypted, awards the cracker a number of coins &ndash, the precies amount varies by the type of cryptocurrency. The network registers coin ownership through the Blockchain, which records all transactions on the network. You can then trade thesis coins for other currencies or goods. On the downside, Bitcoin alternatives are not universally accepted at all exchanges, so mining an unpopular currency may simply waste your time and money.
For those of you willing to take a risk, proceed reading.
There are five essential elements of the mining process that you voorwaarde familiarize yourself with:
The Blockchain, The Wallet, The Proxy, Scrypt, Pooled Mining and GUIminer
The Blockchain: The Blockchain stores all the transactions made on a cryptographic currency network. It&rsquo,s a database containing information pertaining to &ldquo,who&rdquo, wields &ldquo,what&rdquo,. When you very first commence the client, it will download the entirety of the Blockchain, which can take several hours, depending on the network. All Blockchains distribute via peer-to-peer networks, so there&rsquo,s little difficulty te acquiring it.
The Wallet ( or client): Your specific coin&rsquo,s client also functions spil a wallet. For all three kinds of currencies reviewed ter this article, there&rsquo,s a single Wallet interface, which includes your address, and a unique identifying number linked to currency transfers. Whenever you mine for currency, or have it transferred to your address, all clients recognize this ownership. Many alternative wallets exist, including mobile and web wallets.
Ter a nutshell, inwards your client will be an address, which permits you to receive coins.
Pooled Mining: Because of the enhancing complexity of mining, individual miners, also called &ldquo,solo miners&ldquo,, may find it difficult successfully solving a block. This leads to pooled mining, which is a snaak effort of numerous miners attempting to solve a block. When each block is successfully solved, it distributes the coinage among all miners involved, according to several different distributional methods. Many pooled mining services exist. Te this article, I use Coinotron because it pools miners for a multitude of cryptocoins, but many alternatives exist, such spil Litebonk.
The Stratum Proxy: The Stratum proxy is the coordinating software which permits numerous miners to attack one block. It reduces network traffic and increases (supposedly) hashrates. This is a required software for many mining pools &mdash, fortunately it comes prepacked with the mining software used ter this article, GUIminer (see below).
Scrypt VS SHA-256: Scrypt is the hash function that alternative cryptocurrencies use. SHA-256 is used te Bitcoin. Unluckily, because ASIC miners ruined the profitability of GPU mining, any cryptocurrency using SHA-256 suffers from a difficulty level that the vast majority of desktop machines, even with high-end graphics cards, will find unprofitable for mining.
GUIminer: A diversity of mining software exists that can solve hashes. My dearest is GUIminer, albeit it takes some tweaking before it will provide optimized hash rates. Te a nutshell, the mining software will attempt to solve a block through brute force methods &mdash, i.e. throwing a bunch of numbers at a problem until it&rsquo,s successful. If you&rsquo,ve decently configured the miner for pooled mining, whenever a block is solved, the mining pool will register this and distribute the coins accordingly.
You don&rsquo,t actually need to know this information to get commenced cracking blocks and making money, but it helps.
What is Litecoin?
Litecoin&rsquo,s creation harkens back to the good ol&rsquo, years of 2011, before the Bitcoin boom. The currency caught on rapidly spil it wasgoed less difficult to mine than Bitcoin and paid out at four times its rate for solving blocks. Unlike Bitcoin, it doesn&rsquo,t use SHA-256, so ASIC miners &ndash, machines customized to solve SHA-256 hashes &ndash, do not exist for it. Litecoin presently is among the least difficult of all the cryptocurrencies to mine. When all blocks are solved, 84 million Litecoins will exist. Because its extant coinage will exceed Bitcoin&rsquo,s, speculators assume that it will eventually have 1/4th the total value. So if Bitcoin rises to $100, Litecoin may rise to $25. Also, Litecoin&rsquo,s security, te theory, is better than Bitcoin&rsquo,s.
What is Feathercoin?
Feathercoin klapper cryptocurrency exchanges very recently, coming out te 2013. It produces 16 times spil many coins vanaf block solved spil Bitcoin and will have, when all of its coins are discovered, around 336 million coins. Relative to many other cryptocurrencies, it has a low level of difficulty for solving blocks and with the same security spil Litecoin.
What is Terracoin?
Terracoin released ter 2012 and uses the SHA-256 hash algorithm &ndash, which means that after a year of being mined by ASIC machines, it has a very high difficulty level for solving blocks, unlike those currencies using the Scrypt-based algorithm.
How Do Terracoin, Litecoin, and Feathercoin Compare?
The largest difference inbetween Terracoin, Litecoin and Feathercoin is ter value, ease of mining, and security. Whereas Terracoin uses the SHA-256 algorithm found ter Bitcoin, Litecoin and Feathercoin use Scrypt. The differences inbetween Scrypt and SHA-256 form the most salient reason to avoid Terracoin &mdash, it&rsquo,s almost unlikely to mine on SHA-256 coinage because of the level of difficulty involved if the currency has bot out for a brief while.
Spil miners increasingly detect the &ldquo,effortless&rdquo, coins, mining becomes less profitable and more difficult. Eventually the slower miners get left ter the dust &mdash, particularly, if you&rsquo,re rivaling against ASIC machines, which suck up the effortless coins very rapidly. To illustrate the relationship inbetween the difficulty level of a coin and its profitability, on a 250 KH/s machine I pulled about 7 Feathercoins and almost a single Litecoin vanaf day of mining. With Terracoin, after five hours of mining I netted absolutely zero coins, despite using a mining pool. Sadly, Terracoin&rsquo,s utterly high difficulty rating made it unlikely to use on lower end machines. However, you may want to read this article on the most efficient Bitcoin mining GPUs How Can I Identify The Best GPUs For Bitcoin Mining? How Can I Identify The Best GPUs For Bitcoin Mining? Fairly recently, I wrote an article exposing the disadvantages to Bitcoin mining. More precisely, a major disadvantage to the actual mining process is the cost vs. revenue battle, where you may be spending more money. Read More .
I should note, tho’, that technically SHA-256 is lighter to mine, since it requires less overheads than Scrypt. Ter reality, the switch sides is true.
How to Mine Litecoin, Feathercoin, and Terracoin
Before getting commenced, very first go through the mining profitability rekenmachine. Te order to determine whether mining will netwerk profits, you will need to know the hashrate of your pc, how much you pay vanaf kilowatt hour and the wattage draw of your laptop at maximum flow. For mij, my laptop draws around 200-300 watts at max draw and produces a maximum hashrate of around 250 KH/s for Scrypt. Keep te mind that the cryptography used by Terracoin is SHA-256, which produces a higher hashrate. However, Terracoin&rsquo,s difficulty is much higher than Scrypt based cryptocoinage.
Before getting began you will need three essential lumps of software and web accounts:
The mining process remains the same for each of the alternative currencies:
Very first, setup a client such spil Terracoin, Feathercoin, or Litecoin. Any cryptocurrency will do, albeit you may need to do extra research for a coinage not covered te this article. For a accomplish list of the available cryptocurrencies, check out this list on Wikipedia.
Setting up the cryptocoin client only requires that you download the software and run its executable. Some clients are installable files, whereas others are simply executables, nested within the downloaded folder. Don&rsquo,t worry about that, however. The difference inbetween installed clients and an executable is negligible.
The client can perform several essential deeds: It can both send and receive its respective coin. Most significant, the client will sync the Blockchain, which records ownership of the currency. The syncing process may take some time spil it downloads the network&rsquo,s transactional database, also known spil a Blockchain. For example, Bitcoin has an exceptionally long Blockchain at 8 gigabyte ter size. For the currencies listed here, fortunately, you won&rsquo,t overeenkomst with such a large download.
While waiting for the client to sync, you may want to examine your address, which is located under the &ldquo,Receive&rdquo, tabulator te the spijskaart tapkast. You won&rsquo,t need this until you set up your account with a mining pool &ndash, just keep ter mind where it is.
2nd, you will need to join a mining pool. Spil mentioned earlier, a pool will coordinate the efforts of numerous miners ter cracking a block &ndash, once a pool solves a block, the coins distribute among the miners te the pool according to several schemes:
For beginners, pay vanaf share and round based pay vanaf share are the most straightforward payment systems (and they&rsquo,re also the only payment schemes that work with Litecoin and Feathercoin at Coinotron). RBPPS offers the lowest total payout to the mining pool at 2%.
Te the tutorials I read, Coinotron receives a superb overeenkomst of praise for its ease of use spil a mining pool. To get began:
Very first, Sign up for an account and then, if you are not signed ter, sign into your account.
2nd, navigate to the &ldquo,My Account&rdquo, tabulator te the menukaart brochure.
At this stage, it&rsquo,s not yet necessary for you to input a payout address &ndash, just recall that you will want to eventually pack that portion out. Albeit, you can optionally input your payment address, you won&rsquo,t have any coins until you actually mine some coins. Also, the pools charge varying rates for each currency. For example, using the Litecoin pool costs inbetween Two and Five procent of your income, depending on your payout scheme.
Then pack out the &ldquo,Add Worker&rdquo, opbergruimte ter the middle of the &ldquo,My Account&rdquo, pagina with the following information:
- Your username,
- Create a name for your worker (you will reuse this information straks on),
- Create a password (you will reuse this straks),
- Choose the kleintje of coin that you want to make from this, either LTC (Litecoin), TRC (Terracoin) or FTC (Feathercoin).
Third, you will need to configure the mining software. For this example, I will use GUIminer for its ease of configuration. Danny Steiben wrote an excellent introductory article, covering GUIminer&rsquo,s features guiminer – An Extensive Instrument For Bitcoin Mining guiminer – An Extensive Device For Bitcoin Mining Spil of late there’s bot a bot a good whirr going around about Bitcoin, the latest P2P digital currency. One of the main activities of getting Bitcoins is through a process called mining. No need. Read More . Download the GUIminer zipped verkeersopstopping here, for Litecoin or Feathercoin.
Unzip and then run GUIminer&rsquo,s executable verkeersopstopping (GUIminer.exe) from within the unzipped folder.
Ter the main window you&rsquo,ll notice several elements:
- Host: This is going to be &ldquo,coinotron.com&rdquo,.
- Username: Input your username from Coinotron and the name of your worker, separated by a period. For example, if your username is &ldquo,wayne&rdquo, and your worker&rsquo,s name is &ldquo,bruce&rdquo, you would inject &ldquo,wayne.bruce&rdquo,.
- Device: Select your graphics card from this list. Be aware it will use a code name for your card.
- Thread concurrency: Input &ldquo,8000&rdquo, here. It&rsquo,s supposedly the amount of RAM being used, but no other value designated te multiples of 64KB would work for mij.
- Vectors: Any number inbetween 1 and Four should work. You may attempt different values to squeeze more spectacle out of your machine, but te my practice this value didn&rsquo,t matter.
- GPU threads: If your GPU is capable of numerous threads, you can attempt. Mine were not.
- Port: This indicates which coin you&rsquo,ll be mining. For Litecoin 3334. For Feathercoin: 3337. For Terracoin: 8322 or 9322.
- Password: Reuse the password you entered te the mining pool.
- Strength: This value determines how hard your miner will work, higher numbers result te firmer work. A good commencing value to use is around 12. I warn you to never exceed Legitimate, spil you might harm your pc through overheating.
- Stratum proxy: You will want to select &ldquo,Yes&rdquo,. Before getting embarked, run the Stratum proxy from within your GUIminer folder &mdash, it&rsquo,s located te the Stratum proxy folder.
After you&rsquo,ve inputted all the information, succesnummer the embark button to start mining. Because I use a relatively exotic dual GPU system (also known spil &ldquo,CrossFire&rdquo, or &ldquo,Dual Graphics&rdquo,), I had to setup two different GPU miners. You will likely need to use only one. However, if you do have a CrossFired or SLI What Is SLI &, How Can It Improve Gaming Show? What Is SLI &, How Can It Improve Gaming Spectacle? Sometimes a niche term is taken for granted. Wij have some such terms ter the world of computing hardware, and one of them is SLI. It&rsquo,s bot around for so long that geeks take it. Read More setup, you will need to run two different instances of the mining software, one example for each of your GPUs.
You can use the same configuration options spil above. Just go to &ldquo,Verkeersopstopping&rdquo, and &ldquo,Fresh miner&rdquo,. Then if you have a Radeon card, select &ldquo,CGminer&rdquo,. The fresh miner will showcase up spil a tabulator. You can switch inbetween GPU miners by clicking on the tabulator. If you have an Nvidia card, choose &ldquo,Fresh CUDA miner&rdquo,.
Transferring Coins to Your Address
After you mine coins, the pool can transfer them to your account via your address. The address, spil mentioned above, exists within your client&rsquo,s Wallet. To access this, simply open the client and click on &ldquo,Receive&rdquo, te the tabs. You can then copy and include te your pool&rsquo,s payout method.
Reminisce to set a &ldquo,Payout threshold&rdquo,. Coinotron by default doesn&rsquo,t setup automatic transfers to your Wallet. To receive coins, input a number. Make sure you set this number above the Ondergrens Withdrawal Threshold, or otherwise you&rsquo,ll take a penalty.
Other Points of Note
Security: It&rsquo,s bot suggested that everyone using a digital currency should encrypt their private keys. A key unlocks your coins so that they can be spent. If this is everzwijn lost or stolen, you will lose access to the currency. Your address is linked to this private key. Whenever you switch computers, you will also want to invoer your key.
Your private key stores itself inwards the &ldquo,wallet.dat&rdquo, verkeersopstopping. You can locate this verkeersopstopping simply by using a search instrument. Once you&rsquo,ve located the verkeersopstopping (ter Windows, it&rsquo,s typically located ter your appdata directory). You can read more about encryption or using a paper wallet. A paper wallet stores the private key on paper, which reduces the likelihood of your keys getting lost or stolen.
PayPal: Spil a word of caution, you should never buy or sell cryptocurrencies via PayPal because of PayPal&rsquo,s chargeback policy. If you exchange coins for metselspecie, a disreputable buyer can then verkeersopstopping a optie against you &ndash, and PayPal will liquidate the money from your account with the buyer keeping your currency.
Buying and Selling: Spil of 2013, the largest, most reputable exchange, Mt. Gox, doesn&rsquo,t trade ter cryptocurrencies other than Bitcoin. It did announce plans to start the trading of Litecoin, but due to a massive distributed denial of service attack against it, Litecoin trading wasgoed shelved indefinitely. Consequently, I signed up for an account with Vircurex, albeit it should be mentioned that Vircurex has bot hacked ter the past. Te fact, most of thesis exchanges have bot hacked and the accounts of its holders compromised. Theft within the world of cryptocurrencies remains a common event.
The advantage of Vircurex is that it trades ter a ample number of alternative currencies. Albeit at present, you can&rsquo,t trade for any fiat money, you can trade for other cryptocurrencies, which can then be transferred to Mt. Gox and converted into metselspecie. The process feels much like a stock exchange where each currency possesses an &ldquo,ask&rdquo, (asking price) and a &ldquo,buy&rdquo, or a buying price. You simply indicate the amount of a currency you&rsquo,d like to purchase and the price at which you are willing to purchase. The exchange then connects buyers with sellers. On the downside, adding USD to a Vircurex account became unlikely due to their business fucking partner which treats their money shutting down .
Fortunately, MakeUseOf reader Rodrigo Graç,a introduced mij to the BTC-E exchange, which permits the onmiddellijk transfer from LTC, TRC and FTC into hard currencies, such spil USD, Rubles and more. BTC-E charges a 0.2% toverfee on all transactions. Spil of 7/20/13, BTC-E takes all major credit cards te addition to debit cards and canap transfers.
For extra exchanges:
Ripple: A relatively exotic means of exchanging Bitcoin worth examining is Ripple (not to be confused with Ripple the cryptocurrency) which (when ready) distributes coin through a decentralized peer-to-peer system, obviating the need for a centralized exchange. Unluckily, its current path of development will lead it to trade only ter Bitcoin. Additionally, there are fairly a few questions spil to the security and function of this sort of distributed exchange system.
I didn&rsquo,t expect Terracoin to yield any profits because of its difficulty level and use of SHA-256, meaning I competed against ASIC miners with a relatively pathetic machine. The reality proved even worse: After around five hours of mining, I failed to receive even a fraction of a Terracoin. On the other forearm, both Litecoin (trading inbetween $Five and $Three vanaf coin spil of 7/11/2013) and Feathercoin (trading at 8 cents) netted a superb overeenkomst of value for a GPU miner. Albeit for mij, Feathercoin&rsquo,s value doesn&rsquo,t presently exceed the cost of power by much, if you expect the future value of thesis currencies to rise, then you might be willing to take a kasstuk on power costs.
My overall impression is to stay away from any cryptocurrency using SHA-256. Terracoin te my opinion isn&rsquo,t worth the mining effort, unless you have an ASIC miner.
Does anyone else love mining cryptocurrencies? Let us know te the comments.