On November 14th, block height 709,632, Bitcoin’s Taproot upgrade was activated. The update brings with it improvements to the flexibility, security, and efficiency of bitcoin transactions. And as Bitcoin’s first protocol upgrade in … Continue reading Bitcoin Taproot→
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Bitcoin Halving What Is a Bitcoin Halving? Bitcoin’s most recent halving occurred on May 11, 2020. To explain what a Bitcoin halving is, we must first explain a bit about how the Bitcoin network operates. … Continue reading Bitcoin Halving→
What Is a Block Reward? Bitcoin block rewards are new bitcoins awarded to cryptocurrency miners for being the first to solve a complex math problem and creating a new block of verified bitcoin … Continue reading Block Reward→
On November 14th, block height 709,632, Bitcoin’s Taproot upgrade was activated. The update brings with it improvements to the flexibility, security, and efficiency of bitcoin transactions. And as Bitcoin’s first protocol upgrade in over four years, it’s a major milestone in the development of the network.
Below, we outline the Taproot upgrade, what it changes, and how it will impact the bitcoin network going forward.
Three interconnected upgrades, deployed simultaneously
The Taproot upgrade is actually an umbrella term referring to three interconnected Bitcoin Improvement Proposals (BIPs) set to activate simultaneously:
BIP 340, or Schnorr. This proposal introduces Schnorr signatures, a digital signature scheme that is faster, more secure, and less data-intensive than the cryptographic method currently in use (Elliptic Curve Digital Signature Algorithm, or ECDSA).
BIP 341, or Taproot. This proposal defines Pay-to-Taproot (P2TR), a new way to send bitcoin that enhances privacy and flexibility for users. It also implements Merklized Alternative Script Trees (MAST), which compress complex Bitcoin transactions into a single hash. This reduces transaction fees, minimizes memory usage, and improves Bitcoin’s scalability.
BIP 342, or Tapscript. This proposal defines Tapscript, an update to Bitcoin’s original scripting language that enables P2TR transactions, leverages Schnorr signatures’ improved efficiency, and allows for more flexible upgrades going forward.
Taproot adoption timeline
On June 12th, 2021, these upgrade proposals reached a 90% consensus among miners, thus locking in their November activation as a soft fork to Bitcoin’s protocol. As a soft fork, the Taproot upgrade is backwards compatible with older versions of bitcoin and does not create a separate, parallel blockchain, as was the case with Bitcoin and Bitcoin Cash.
Adoption of taproot is expected to grow slowly over a period of years, just as it did with SegWit, the last major Bitcoin upgrade. Two years after SegWit’s activation, roughly 50 percent of transactions used it; today, four years after, that proportion is 80 percent. The main reason for this slow rate of adoption is that cryptocurrency wallets and service providers choose to opt-in on their own schedule.
Taproot’s impact
The Taproot upgrade will improve Bitcoin in a number of ways, such as:
Lower fees: Since the data size of complex transactions will be reduced, transaction fees will decline proportionally.
Improved lightning network efficiency: Taproot will make transactions on the Lightning Network cheaper, more flexible and more private.
Enhanced smart contract functionality: With Taproot, Bitcoin will be able to host smart contracts with any number of signatories while retaining the data size of a single-signature transaction. This lays the technical foundation for DeFi on the Bitcoin network.
In other words, the Taproot upgrade is a massive improvement to the Bitcoin protocol.
Lightning network improvements and expanded smart contract capabilities will improve bitcoin’s utility; meanwhile, lower transaction fees and increased network speed will improve its scalability.
For this reason, we’re thrilled to welcome BIP 340, 341, and 342 at block height 709,632 and beyond.
On November 14th, block height 709,632, Bitcoin’s Taproot upgrade was activated. The update brings with it improvements to the flexibility, security, and efficiency of bitcoin transactions. And as Bitcoin’s first protocol upgrade in … Continue reading Bitcoin Taproot→
ALT Coin Stores and Services List This page is to promote actual stores and people who sell services for ALTcoins. What is most important, is to spread the word and make people aware of the widespread … Continue reading AltCoin Stores→
Bitcoin Halving What Is a Bitcoin Halving? Bitcoin’s most recent halving occurred on May 11, 2020. To explain what a Bitcoin halving is, we must first explain a bit about how the Bitcoin network operates. … Continue reading Bitcoin Halving→
What Is a Block Reward? Bitcoin block rewards are new bitcoins awarded to cryptocurrency miners for being the first to solve a complex math problem and creating a new block of verified bitcoin … Continue reading Block Reward→
Bitcoin’s most recent halving occurred on May 11, 2020. To explain what a Bitcoin halving is, we must first explain a bit about how the Bitcoin network operates.
Bitcoin’s underlying technology, blockchain, basically consists of a collection of computers (or nodes) that run Bitcoin’s software and contain a partial or complete history of transactions occurring on its network.
Each full node, or a node containing the entire history of transactions on Bitcoin, is responsible for approving or rejecting a transaction in Bitcoin’s network.
To do that, the node conducts a series of checks to ensure that the transaction is valid. These include ensuring that the transaction contains the correct validation parameters, such as nonces, and does not exceed the required length.
A transaction occurs only after all the parties operating in Bitcoin’s network approve it within the block on which the transaction exists. After approval, the transaction is appended to the existing blockchain and broadcast to other nodes.
The blockchain serves as a pseudonymous record of transactions (i.e., its contents are visible to everyone, but it is difficult to identify transacting parties in the network). This is because the blockchain assigns encrypted addresses to each transacting party in the network. That said, even those who do not participate in the network as a node or miner can view these transactions taking place live by looking at block explorers.
More computers (or nodes) added to the blockchain increase its stability and security.
There are currently 12,035 nodes estimated to be running Bitcoin’s code. Though anyone can participate in Bitcoin’s network as a node, as long as they have enough storage to download the entire blockchain and its history of transactions, not all of them are miners.
KEY TAKEAWAYS
A Bitcoin halving event is when the reward for mining bitcoin transactions is cut in half.
This event also cuts in half Bitcoin’s inflation rate and the rate at which new bitcoins enter circulation.
Both previous halvings have correlated with intense boom and bust cycles that have ended with higher prices than prior to the event.
Bitcoin last halved on May 11, 2020, around 3 p.m. EST, resulting in a block reward of 6.25 BTC.
Bitcoin Mining
Bitcoin mining is the process by which people use their computers to participate in Bitcoin’s blockchain network as a transaction processor and validator.
Bitcoin uses a system called proof of work (PoW). This means that miners must prove they have put forth effort in processing transactions to be rewarded. This effort includes the time and energy it takes to run the computer hardware and solve complex equations.
Faster computers with certain types of hardware yield larger block rewards and some companies have designed computer chips specifically built for mining. These computers are tasked with processing Bitcoin transactions, and they are rewarded for doing so.
The term mining is not used in a literal sense but as a reference to the way precious metals are gathered.
Bitcoin miners solve mathematical problems and confirm the legitimacy of a transaction. They then add these transactions to a block and create chains of these blocks of transactions, forming the blockchain.
When a block is filled up with transactions, the miners that processed and confirmed the transactions within the block are rewarded with bitcoins.
Transactions of greater monetary value require more confirmations to ensure security. This process is called mining because the work performed to get new bitcoins out of the code is the digital equivalent to the physical work done to pull gold out of the Earth.
El Salvador made Bitcoin legal tender on June 9, 2021. It is the first country to do so. The cryptocurrency can be used for any transaction where the business can accept it. The U.S. dollar continues to be El Salvador’s primary currency.
Bitcoin Halving
After every 210,000 blocks mined, or roughly every four years, the block reward given to Bitcoin miners for processing transactions is cut in half.
This cuts in half the rate at which new bitcoins are released into circulation. This is Bitcoin’s way of using a synthetic form of inflation that halves every four years until all bitcoins are released into circulation.
This system will continue until around the year 2140.
At that point, miners will be rewarded with fees for processing transactions, which network users will pay. These fees ensure that miners still have the incentive to mine and keep the network going. The idea is that competition for these fees will cause them to remain low after the halvings are finished.
The halving is significant because it marks another drop in the rate of new Bitcoins being produced as it approaches its finite supply: the total maximum supply of bitcoins is 21 million. As of October 2021, there are about 18.85 million bitcoins already in circulation, leaving just around 2.15 million left to be released via mining rewards.
In 2009, the reward for each block in the chain mined was 50 bitcoins. After the first halving, it was 25, and then 12.5, and then it became 6.25 bitcoins per block as of May 11, 2020.
To put this in another context, imagine if the amount of gold mined out of the Earth was cut in half every four years. If gold’s value is based on its scarcity, then a “halving” of gold output every four years would theoretically drive its price higher.
Coin Metrics logarithmic chart of Bitcoin price action following halvings.
Halving Implications
These halvings reduce the rate at which new coins are created and thus lower the available amount of new supply, even as demand might increase.
This can cause some implications for investors as other assets with low or finite supply, like gold, can have high demand and push prices higher.
In the past, these Bitcoin halvings have correlated with massive surges in Bitcoin’s price.
The first halving, which occurred on Nov. 28, 2012, saw an increase from $12 to $1,217 on Nov. 28, 2013.
The second Bitcoin halving occurred on July 9, 2016. The price at that halving was $647, and by Dec. 17, 2017, a bitcoin’s price had soared to $19,800. The price then fell over the course of a year from this peak down to $3,276 on Dec. 17, 2018, a price 506% higher than its pre-halving price.
The most recent halving occurred on May 11, 2020. On that date, a bitcoin’s price was $8,787. On April 14, 2021, a bitcoin’s price soared to $64,507 (an astonishing 634% increase from its pre-halving price). A month later, on May 11, 2021, a bitcoin’s price was $54,276, representing a 517% increase that seems more consistent with the behavior of the 2016 halving.
On May 12, 2021, Elon Musk, CEO of Tesla, announced that Tesla would no longer accept Bitcoin as payment, resulting in further price fluctuations.
In the week that followed Musk’s statements, the price of a bitcoin plunged below $40,000 after Chinese regulators announced restrictions banning financial institutions and payment companies from providing cryptocurrency-related services.
Though these two announcements may have temporarily created a price drop in Bitcoin, there is the potential that the price fluctuations are more related to the halving behavior we have observed previously.
The theory of the halving and the chain reaction that it sets off works something like this:
The reward is halved → half the inflation → lower available supply → higher demand → higher price → miners incentive still remains, regardless of smaller rewards, as the value of Bitcoin is increased in the process
In the event that a halving does not increase demand and price, then miners would have no incentive. The reward for completing transactions would be smaller, and the value of Bitcoin would not be high enough.
To prevent this, Bitcoin has a process to change the difficulty it takes to get mining rewards, or in other words, the difficulty of mining a transaction.
In the event that the reward has been halved, and the value of Bitcoin has not increased, the difficulty of mining would be reduced to keep miners incentivized.
This means that the quantity of bitcoins released as a reward is still smaller, but the difficulty of processing a transaction is reduced.
This process has proved successful twice. So far, the result of these halvings has been a ballooning in price followed by a large drop.
The crashes that have followed these gains, however, have still maintained prices higher than before these halving events.
For example, as mentioned above, the 2017 to 2018 bubble saw the value of a bitcoin rise to around $20,000, only to fall to around $3,200. This is a massive drop, but a bitcoin’s price before the halving was around $650.3
Though this system has worked so far, the halving is typically surrounded by immense speculation, hype, and volatility, and how the market will react to these events in the future is unpredictable.
The third halving occurred not only during a global pandemic, but also in an environment of heightened regulatory speculation, increased institutional interest in digital assets, and celebrity hype. Given these additional factors, where Bitcoin’s price will ultimately settle in the aftermath remains unclear.
What Happens When Bitcoin Halves?
The term “halving” as it relates to Bitcoin has to do with how many Bitcoin tokens are found in a newly created block.
Back in 2009, when Bitcoin launched, each block contained 50 BTC, but this amount was set to be reduced by 50% roughly every four years.
Today, there have been three halving events, and a block now only contains 6.25 BTC.
When the next halving occurs, a block will only contain 3.125 BTC.
When Have the Halvings Occurred?
The first bitcoin halving occurred on Nov. 28, 2012, after a total of 10,500,000 BTC had been mined. The next occurred on July 9, 2016, and the latest was on May 11, 2020. The next is expected to occur in early 2024.
Why Are the Halvings Occurring Less Than Every Four Years?
The Bitcoin mining algorithm is set with a target of finding new blocks once every 10 minutes.
However, if more miners join the network and add more hashing power, the time to find blocks will decrease.
This is remedied by resetting the mining difficulty (or how hard it is for a computer to solve the mining algorithm) once every two weeks or so to restore a 10-minute target.
As the Bitcoin network has grown exponentially over the past decade, the average time to find a block has consistently remained below 10 minutes (roughly 9.5 minutes).
Does Halving Have Any Effect on the Bitcoin Price?
The price of Bitcoin has risen steadily and significantly from its launch in 2009, when it traded for mere pennies or dollars, to April 2021 when the price of one bitcoin traded for over $63,000.3
Because halving the block reward effectively doubles the cost to miners, who are essentially the producers of bitcoins, it should have a positive impact on price because producers will need to adjust their selling price to their costs.
Empirical evidence does show that Bitcoin prices tend to rise in anticipation of a halvening, often several months prior to the actual event.
What Happens When There Are No More Bitcoins Left in a Block?
Around the year 2140, the last of the 21 million bitcoins ever to be mined will have been mined.
At this point, the halving schedule will cease because there will be no more new bitcoins to be found.
Miners, however, will still be incentivized to continue validating and confirming new transactions on the blockchain because the value of transaction fees paid to miners is expected to rise into the future, the reasons being that a greater transaction volume that has fees will be attached, plus bitcoins will have a greater nominal market value.
On November 14th, block height 709,632, Bitcoin’s Taproot upgrade was activated. The update brings with it improvements to the flexibility, security, and efficiency of bitcoin transactions. And as Bitcoin’s first protocol upgrade in … Continue reading Bitcoin Taproot→
ALT Coin Stores and Services List This page is to promote actual stores and people who sell services for ALTcoins. What is most important, is to spread the word and make people aware of the widespread … Continue reading AltCoin Stores→
Bitcoin Halving What Is a Bitcoin Halving? Bitcoin’s most recent halving occurred on May 11, 2020. To explain what a Bitcoin halving is, we must first explain a bit about how the Bitcoin network operates. … Continue reading Bitcoin Halving→
What Is a Block Reward? Bitcoin block rewards are new bitcoins awarded to cryptocurrency miners for being the first to solve a complex math problem and creating a new block of verified bitcoin … Continue reading Block Reward→
Bitcoin block rewards are new bitcoins awarded to cryptocurrency miners for being the first to solve a complex math problem and creating a new block of verified bitcoin transactions.
The miners use networks of computers to do this, and every time a new block is created it is verified by all the other competing miners. Then a new math problem is introduced and the miners start over.
KEY TAKEAWAYS
A block reward refers to the number of bitcoins you get if you successfully mine a block of the currency.
The amount of the reward halves after the creation of every 210,000 blocks, or roughly every four years.
The amount is expected to hit zero around 2140.
Understanding Block Rewards
Block Reward Halving
The block reward provides an incentive for bitcoin miners to process transactions made with the cryptocurrency. Creating an immutable record of these transactions is vital for bitcoin to work as intended.
The blockchain is like a decentralized bank ledger—one that can’t be altered after being created. The miners are needed to verify the transactions and keep this ledger up to date. Block rewards, and to a lesser extent, transaction fees, are their payment for doing so.
Bitcoin was designed so that new bitcoins are created at a consistent pace. So the difficulty of the math problem is adjusted every two weeks to ensure a steady output of new bitcoins—roughly one block of transactions every 10 minutes.
Bitcoin’s Block Rewards Vs. Ethereum’s
Ethereum, bitcoin’s main competitor as a cryptocurrency, also relies on block rewards to provide incentives to miners. With Ethereum, the reward is a digital token called “ether,” which is rewarded each time a miner succeeds in providing the mathematical proof of a new block. As with bitcoin, miners are also awarded a transaction fee, known as a “gas” fee.
Unlike with bitcoin, there is no limit on the number of Ethereum ether tokens that can be created, and they are created at a much faster pace—in seconds, versus about 10 minutes. So the total number of blocks in the Ethereum chain is larger than in the bitcoin chain.
The Future of Bitcoin Block Rewards
To limit inflation, bitcoin creator Satoshi Nakamoto designed bitcoin to ultimately have only 21 million bitcoins.
This is why the size of bitcoin block rewards is halved after the creation of every 210,000 blocks, which takes around four years.
At bitcoin’s inception in 2009, each block reward was worth 50 BTC.
In May 2020, the block reward was halved a third time to 6.25 BTC.
And as of May 2021, there were already 18.7 million bitcoins in existence, or nearly 90% of the total planned supply.
Ultimately, the block reward is scheduled to reach zero around May 2140, but mining will likely no longer be profitable long before that date is reached.
As of April 2039, about 99.6% of bitcoins will already have been issued, and the block reward will be just 0.19531250 bitcoin.
Along the way, transaction fees are expected to become the primary incentive for bitcoin miners
On November 14th, block height 709,632, Bitcoin’s Taproot upgrade was activated. The update brings with it improvements to the flexibility, security, and efficiency of bitcoin transactions. And as Bitcoin’s first protocol upgrade in … Continue reading Bitcoin Taproot→
ALT Coin Stores and Services List This page is to promote actual stores and people who sell services for ALTcoins. What is most important, is to spread the word and make people aware of the widespread … Continue reading AltCoin Stores→
Bitcoin Halving What Is a Bitcoin Halving? Bitcoin’s most recent halving occurred on May 11, 2020. To explain what a Bitcoin halving is, we must first explain a bit about how the Bitcoin network operates. … Continue reading Bitcoin Halving→
What Is a Block Reward? Bitcoin block rewards are new bitcoins awarded to cryptocurrency miners for being the first to solve a complex math problem and creating a new block of verified bitcoin … Continue reading Block Reward→
If you love working from home, then you should consider starting an internet based business.
One of the businesses that you can easily start at home with a computer and mining rigs is bitcoin mining.
Simply put, bitcoin is a digital currency that operates independently of any country’s central bank. In order to get an updated value of the worth of a bitcoin, you can make use of Google’s currency converter; it is a reliable platform to know the value of bitcoin each time.
If you are interested in mining bitcoin, then you have two options to follow.
You can choose to mine a block of bitcoins from the computer or you can choose to pool.
If you want quick returns on your investment, then joining a pool is your best option because mining a block of bitcoins from your computer may take you a month or more before you get any return on your investment.
Please note that if you join a pool, you will only get smaller payments, but you can be rest assured that you will get them at a regular basis.
Starting a bitcoin mining business can be rewarding but you would have to compete with other well established bitcoin miners on the World Wide Web. The fact that you will be competing with people from all over the globe is enough reason for you to be result oriented and at the same be creative with your bitcoin mining business.
So, if you have done the required online or offline bitcoin mining related courses, then you might want to venture into this business.
Starting a Bitcoin Mining Business – A Complete Guide
Industry Overview
Bitcoin mining in its simplest term is the practice of adding transaction records to Bitcoin’s public ledger of previous transactions or block chain.
This ledger of previous transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place.
As a matter of fact, Bitcoin miners help keep the Bitcoin network secure by approving transactions.
Mining is indeed an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and highly secured.
Bitcoin mining as the name implies is similar to the mining of other commodities: it requires deliberate and calculated effort and it slowly makes new currency available at a rate that looks like the rate at which commodities like gold and copper et al are mined from the ground. Mining is also a mechanism used to introduce Bitcoins into the system.
Bitcoin is a type of digital currency that is created and held electronically; it is a cryptocurrency and a digital payment system that is invented by an unknown programmer, or perhaps a group of programmers. No one controls it.
Unlike Dollars, Euros, Pounds and other currencies, bitcoins are not printed, they are produced by people and businesses running computers all around the world, using software that solves mathematical problems.
If you want to start mining bitcoin, you would need an online wallet where your bitcoins will be stored.
There are several wallet options available online for bitcoin mining. The rule of thumb to follow before choosing an online wallet for your bitcoin mining is to choose a wallet that will allow you save bitcoins, buy bitcoins, use bitcoins and also accept bitcoins as a means of payment.
The Bitcoin (cryptocurrency and a digital payment system) industry is indeed a large internet based industry and pretty much active in countries such as United States of America, United Kingdom, France, Italy, Nigeria, Sweden, Australia, Japan, China, Germany, and Canada et al.
Despite the fact that the bitcoin mining business is still much of a green business, the business will continue to blossom because more and more users will embrace the use of bitcoins in the nearest future.
So, if you have an entrepreneurial mentality and you wish to join a massive technological revolution, you can start your own bitcoin mining business.
The truth is that you can build a bitcoin mining business even if you are not too ICT savvy and have limited capital to invest in software development and infrastructure, as long as you have internet access and you know how to use the internet.
Some of the factors that encourage entrepreneurs to start their own bitcoin mining business could be that the business is easy to set up and the startup capital is indeed affordable; you can actually start your own bitcoin mining business from the comfort of your house.
All you need to do is to create an office somewhere in your house. You don’t necessarily need to see the people you are doing business with since you can transact bitcoin mining business with clients from any part of the world.
Lastly, starting a bitcoin mining business requires professionalism, advanced mathematics skills and a good grasp of how cryptocurrency and the digital payment system works on a global platform.
Besides, you would need to get the required certifications and license and also meet the required standard for such business before you can be allowed to start a bitcoin mining business in the United States.
Starting a Bitcoin Mining Business – Market Research and Feasibility Studies
Demographics and Psychographics
The demographic and psychographic composition of those who require the services of bitcoin miners are not restricted to bitcoin exchange and trading companies and bitcoin traders, people and organizations that make online transactions in your immediate community or state, but it cuts across people on the cyber space who make use of bitcoins from all over the world.
This is so because bitcoin is a cryptocurrency and a digital payment system used basically on the internet hence the leverage to work for people and organization all across the globe.
So, if you are looking towards defining the demographics of your bitcoin mining business, you should make it all encompassing. It should include bitcoin exchange and trading companies and bitcoin traders, programmers, investors, and internet – business oriented people and organizations within and outside the United States.
List of Niche ideas Within the Bitcoin Mining Business That You Can Specialize in
Most bitcoin mining companies tend to operate the general bitcoin mining business that a standard bitcoin mining poll/company is expected to offer, that is why it seems like there are no niche areas in the industry.
But on the other hand, some bitcoin mining company may decide to major in some key areas such as:
Bitcoin cloud mining
Bitcoin cloud hashing
Providing other related bitcoin, cryptocurrency and digital payment system consulting and advisory services
The Level of Competition in the Bitcoin Mining Services Industry
The level of competition in the cryptocurrency and a digital payment system industry does not in any way depend on the location of the business since most people that mine bitcoin can operate from any part of the world and still effectively compete in the bitcoin mining line of business cum cryptocurrency and a digital payment system industry.
When it comes to bitcoin mining, distance is never a barrier when competing for clients especially international clients.
What most clients want is result, hence they are ready to make use of bitcoin miners or bitcoin mining platforms no matter the part of the world they operate from as long as they have good track record and can deliver excellent results when it comes to mining and selling bitcoins to them.
There are several bitcoin miners and bitcoin mining pools scattered all around the United States and in the cyber space.
So, if you choose to start your own bitcoin mining company in the United States, you will definitely meet stiffer competitions not only amongst bitcoin mining companies in the United States, but also all over the globe especially if you choose to specialize in cryptocurrency and digital payment system.
List of Well – Known Brands in the Bitcoin Mining Business
In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long time, while others are best known for the results they deliver.
These are some of the leading bitcoin mining companies (bitcoin mining pools) in the United States of America and also in the globe:
Economic Analysis
As an ICT aspiring entrepreneur who is looking for a business that requires programming and mathematics skills and perhaps minimal startup capital to start, then you can consider starting a bitcoin mining pool.
The cost of running a standard bitcoin mining pool when compared to the turnover you get can be poles apart (this is applicable when you have been able to establish your feet in the industry).
One thing is certain when it comes to the bitcoin mining business and most internet based businesses, you are sure of making profits when you successfully produce results that are measurable.
As a matter of fact, the cost of running the business from start to finish could be restricted to the cost of making phone calls, transportation and internet subscriptions, PR and of course bitcoin mining and hashing hardware and software et al.
Starting Your Bitcoin Mining Company from Scratch vs Buying a Franchise
When it comes to starting a business of this nature, it will pay you to start from the scratch as against buying a franchise.
First and foremost, it is your ability to mine or hash bitcoin that matters not a brand name.
Except you want to join a well-established bitcoin mining pool that fits into your business ideology.
Unfortunately, you can hardly find a franchise of a bitcoin mining pool – company to purchase meaning that if you want to own a bitcoin mining (pool) business, then you must be ready to start from the scratch.
This is so because the business is easy to start if you have the required expertise and it is still pretty much thriving and there are loads of opportunities available to aspiring entrepreneurs that are interested in the industry.
The truth is that it will pay you to start your bitcoin mining company from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before choosing a location to launch the business.
Please note that most of the big and successful bitcoin mining companies around started from the scratch and they were able to build a solid business brand.
Possible Threats and Challenges You Will Face When Starting a Bitcoin Mining Business
If you decide to start your own bitcoin mining business today, one of the major challenges you are likely going to face is the presence of well – established bitcoin mining companies who are offering same services that you intend offering. The only way to avoid this challenge is to create your own market.
Some other threats that you are likely going to face as a bitcoin mining company operating in the United States are hosting issues, installation or upkeep troubles, heat, unfavorable government policies, and global economic downturn which usually affects purchasing/spending power. There is hardly anything you can do as regards these threats other than to be optimistic that things will continue to work for your good.
Starting a Bitcoin Mining Business – Legal Matters
Best legal entity to use for this type of business
Generally, you have the options of either choosing a general partnership, limited liability company which is commonly called an LLC, or a sole proprietorship for a business such as a bitcoin mining company.
Ordinarily, general partnership should have been the ideal business structure for a small – scale bitcoin mining business especially if you are just starting out with moderate startup capital.
But people prefer limited liability Company for obvious reasons. As a matter of fact, if your intention is to grow the business and have clients both corporate and individual from all across the United States of America and other countries of the world, then choosing general partnership is not an option for you. Limited Liability Company, LLC will be highly suitable for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your bitcoin mining (pool) business; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities to use for your bitcoin mining business, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
Catchy Business Name ideas Suitable for a Bitcoin Mining Company
Generally, when it comes to choosing a name for a business, it is expected that you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
Insurance Policies
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is imperative to create a budget for insurance policy covers and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your bitcoin mining business.
Here are some of the basic insurance policy covers that you should consider purchasing if you want to start your own bitcoin mining business in the United States of America:
General insurance
Health insurance
Liability insurance
Workers compensation
Overhead expense disability insurance
Business owner’s policy group insurance
Payment protection insurance
Intellectual Property Protection/Trademark
If you are considering starting your own bitcoin mining business, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Is Professional Certification Needed to Run a Bitcoin Mining Business?
Apart from the results you produce, professional certification is one of the main reasons why most bitcoin mining companies stand out.
If you want to make an impact in the Bitcoin industry, you should work towards acquiring all the needed certifications in your area of specialization.
Certification validates your competency and shows that you are highly skilled, committed to your career, and up-to-date in this competitive market.
These are some of the certifications you can work towards achieving if you want to run your own bitcoin mining company:
Certified Bitcoin Professional (CBP) | Crypto Currency Certification
Blockcerts Certification
Cryptocurrency certification
Ethereum certification
Blockchain professional certification
List of Legal Documents You Need to Run a Bitcoin Mining Company
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own bitcoin mining business in the United States of America:
Certificate of Incorporation
Business License and Certification
Business Plan
Non – disclosure Agreement
Employment Agreement (offer letters)
Operating Agreement for LLCs
Insurance Policy
Contract documents
Online Privacy Policy Document (basically for online payment portal)
Company Bylaws
Memorandum of Understanding (MoU)
Apostille (for those who intend operating beyond the United States of America)
Financing Your Bitcoin Mining Company
Aside from the amount required to purchase bitcoin mining software and hardware, bitcoins and of course cryptocurrency and other forms of digital payment required to trade with, starting a bitcoin mining business can be cost effective especially if you choose to run the business from your home, share office space with a friend or make use of a virtual office.
Securing a standard office is part of what will consume a large chunk of your startup capital, but if you choose to start the business on a small scale, you may not have the need to go source for fund to finance the business.
When it comes to financing a business, one of the major factors that you should consider is to write a good business plan.
If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start – up capital for your bitcoin mining/trading business:
Raising money from personal savings and sale of personal stocks and properties
Sell of shares to interested investors
Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
Source for soft loans from your family members and your friends
Choosing a Suitable Location for your Bitcoin Mining Business
Bitcoin mining business and most internet service based type of businesses do not require that you see physically with your clients, hence the location you chose does not necessarily need to be top-notch.
But the fact that you can operate your bitcoin mining business from your home does not mean that location has little influence on the success of a bitcoin mining company.
If you have taken your time to study the bitcoin mining and other internet based businesses, you will realize that they are willing to pay expensive rents in order to stay in an ICT hub; a place with pretty strong internet network and of course a place where ICT activities are at its peak.
It is important to note that a business facility in a good location does not come cheap hence you should be able to allocate enough fund for leasing/renting in your budget.
If you are new to the dynamics of choosing a location for a business such as bitcoin mining business, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city and perhaps country you intend starting your company.
So, if you are looking for a location for your bitcoin mining company, ensure that it is a place that is located in an ICT hub; a place with pretty strong internet network and of course a place where ICT activities are at its peak.
Of course, you would not want to locate this type of business in the outskirts of town or a place without strong internet network. Your clients should be able to drive down and locate your office with little or no difficulty.
Starting a Bitcoin Mining Business – Technical and Manpower Details
In order to successfully launch a bitcoin mining business, you will definitely need bitcoin mining software apps and hardware such as Application-specific integrated circuit (ASIC) machines and other cryptocurrency and digital payment system related software apps and wallet.
So also, you will need computers, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves).
When it comes to choosing between renting and leasing an office space, the size of the bitcoin mining company you want to build, and your entire budget for the business should influence your choice.
If you have enough capital to run a standard bitcoin mining company, then you should consider the option of leasing a facility for your office.
As regards the number of employees that you are expected to kick start the business with, you would need to consider your finance before making the decision.
Averagely, you would need a Chief Executive Officer or President (you can occupy this role), an Admin and Human Resource Manager, Bitcoin Miners and Hashers, Programmers and Software Developers, Business Development Executive/marketing Executive, Customer Service Officer or Front Desk Officer, and Accountant.
Over and above, you would need a minimum of 8 key staff to effectively run a medium scale but standard bitcoin mining company.
Please note that there will be times when you are expected to go out of your way to hire experts to help you handle some high – profile internet based currency consultancy contracts especially from big corporations.
If you are just starting out, you may not have the financial capacity or required business structure to retain all the professionals that are expected to work with you which is why you should make plans to partner with other programmers and software app developers and computer engineers that operates as freelancers.
The Service Delivery Process of a Bitcoin Mining Company
It is the tradition in the cryptocurrency industry for bitcoin miners to help keep the Bitcoin network secure by approving transactions.
The truth is that mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure.
In the cryptocurrency and other forms of digital payment system industry, bitcoin miners use special software to solve math problems and are issued a certain number of bitcoins in exchange. This provides a smart process of issuing the currency and also creates an incentive for more people to mine.
For instance, when a block is discovered, the miners are rewarded a certain number of bitcoins, which is agreed-upon by everyone in the network.
Currently the reward is 6.25 bitcoins and this value will halve every 210,000 blocks.
Additionally, the bitcoin miner is awarded the fees paid by users sending transactions. The fee is an incentive for the bitcoin miner to include the transaction in their block.
It is important to state that a bitcoin mining (pool) company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated business cum services process is not cast on stone.
Starting a Bitcoin Mining Business – The Marketing Plan
Marketing ideas and strategies
As a bitcoin mining company, you would have to prove your worth over and over again before you can be awarded any bitcoin mining and hashing contracts from corporate clients.
So, if you have plans to start your own bitcoin mining company, it will pay you to first build a successful career in the digital payment system industry.
People and organizations will hire your services to help them handle all their bitcoin mining and hashing needs if they know that they are going to get good returns on their investment.
So, when you are drafting your marketing plans and strategies for your bitcoin mining company, make sure that you create a compelling personal and company profile.
Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to the cryptocurrency industry and the organizations you have worked for in time past.
This will help boost your chances in the market place when sourcing for bitcoin mining and hashing contracts.
Businesses these days are aware of the power of the internet and which is why they will do all they can to maximize the internet to market their services.
In other words, a larger percentage of your marketing efforts should be directed to internet users.
Here are some of the platforms you can utilize to market your bitcoin mining company:
Introduce your business by sending introductory letters alongside your brochure to all the bitcoin exchange and trading companies and bitcoin traders, programmers, investors, and internet – business oriented people and organizations within and outside the United States
Promptness in bidding for bitcoin mining and hashing contracts from bitcoin exchange and trading companies cum bitcoin traders, programmers, investors, and internet – business oriented people and organizations within and outside the United States
Advertise your business in relevant programming magazines, radio and TV stations (make yourself available for bitcoin mining and cryptocurrency related talk shows and interactive sessions on TV and Radio)
List your business on local directories
Attend international bitcoin mining and cryptocurrency related seminars and business fairs
Create different packages for different category of clients in order to work with their budgets
Join related associations around you with the main aim of networking and marketing your services; you are likely going to get referrals from such networks
Engage the services of online marketing executives and business developers to carry out direct marketing
Factors That Will Help You Get the Right Product Pricing
Some of the key factors that will help you mine or hash bitcoin in a profitable pricing system is to ensure that you work with highly talented programmers and mathematicians in your bitcoin mining pool.
You should also ensure that you get your bitcoin mining software and hardware at good deal not forgetting to run your maintenance as at when due.
Another strategy that will help you offer your bitcoin mining and hashing services at the right price is to ensure that you cut operational and maintenance cost to the barest minimum, and channel your efforts towards marketing and promoting your brand name.
Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.
Strategies to Boost Your Bitcoin Mining Brand Awareness and Create Your Corporate Identity
If your intention of starting a bitcoin mining company is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.
In promoting your brand and corporate identity, you should leverage on both print and electronic media and also social media (the internet).
As a matter of fact, it is cost effective to use the internet and social media platforms to promote your brands, besides it is pretty much effective and wide reaching.
Another strategy is to sponsor relevant programmer/ICT based programs, TV and radio programs, advertise your business in relevant magazines and newspapers. Below are the platforms you can leverage on to boost your brand and to promote and advertise your business.
Place adverts on ICT magazines and related newspapers, radio and TV stations
Encourage the use of word of mouth publicity from your loyal customers
Leverage on the internet and social media platforms like YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Badoo, Google+ and other platforms to promote your business
Ensure that you position your banners and billboards in strategic positions all around your city
Distribute your fliers and handbills in target areas in and around our neighborhood
Contact bitcoin exchange and trading companies cum bitcoin traders, programmers, investors, and internet – business oriented people and organization within and outside the United States by calling them up and informing them of your organization and the bitcoin mining and hashing services you offer
Advertise your business in your official website and employ strategies that will help you pull traffic to the site
Brand all your official cars and ensure that all your staff members wear your branded shirt or cap at regular intervals.
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On November 14th, block height 709,632, Bitcoin’s Taproot upgrade was activated. The update brings with it improvements to the flexibility, security, and efficiency of bitcoin transactions. And as Bitcoin’s first protocol upgrade in … Continue reading Bitcoin Taproot→
ALT Coin Stores and Services List This page is to promote actual stores and people who sell services for ALTcoins. What is most important, is to spread the word and make people aware of the widespread … Continue reading AltCoin Stores→
Bitcoin Halving What Is a Bitcoin Halving? Bitcoin’s most recent halving occurred on May 11, 2020. To explain what a Bitcoin halving is, we must first explain a bit about how the Bitcoin network operates. … Continue reading Bitcoin Halving→
What Is a Block Reward? Bitcoin block rewards are new bitcoins awarded to cryptocurrency miners for being the first to solve a complex math problem and creating a new block of verified bitcoin … Continue reading Block Reward→
How can I calculate how many hashes I generate per second?
I have a function which generates hashes from a string:
string GenerateHash(string plainText);
I generate as many hashes as possible with 4 threads.
How do I calculate how many hashes (or megahashes) I generate per second?
Your problem breaks down nicely into 3 separate tasks
Sharing a single count variable across threads
Benchmarking thread completion time
Calculating hashes per/second
Sharing a single count variable across threads
public static class GlobalCounter { public static int Value { get; private set; } public static void Increment() { Value =GetNextValue(Value); } private static int GetNextValue(int curValue) { returnInterlocked.Increment(ref curValue); } public static void Reset() { Value = 0; } }
Before you spin off the threads call GlobalCounter.Reset and then in each thread (after each successful hash) you would call GlobalCounter.Increment – using Interlocked.X performs atomic operations of Value in a thread-safe manner, it’s also much faster than lock.
Parallel.ForEach will block until all threads have finished
Calculating hashes per second
... sw.Stop(); var hashesPerSecond = GlobalCounter.Value / sw.Elapsed.Seconds;
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On November 14th, block height 709,632, Bitcoin’s Taproot upgrade was activated. The update brings with it improvements to the flexibility, security, and efficiency of bitcoin transactions. And as Bitcoin’s first protocol upgrade in over four years, … Continue reading Bitcoin Taproot→
ALT Coin Stores and Services List This page is to promote actual stores and people who sell services for ALTcoins. What is most important, is to spread the word and make people aware of the widespread adoption of the … Continue reading AltCoin Stores→
Bitcoin Halving What Is a Bitcoin Halving? Bitcoin’s most recent halving occurred on May 11, 2020. To explain what a Bitcoin halving is, we must first explain a bit about how the Bitcoin network operates. Bitcoin’s underlying technology, blockchain, … Continue reading Bitcoin Halving→
What Is a Block Reward? Bitcoin block rewards are new bitcoins awarded to cryptocurrency miners for being the first to solve a complex math problem and creating a new block of verified bitcoin transactions. The miners … Continue reading Block Reward→
“ It might make sense just to get some in case it catches on.
If enough people think the same way, that becomes a self fulfilling prophecy.
Once it gets bootstrapped, there are so many applications if you could effortlessly pay a few cents to a website as easily as dropping coins in a vending machine. ”
Get some in case it catches on
“ In this sense, it’s more typical of a precious metal.
Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes.
As the number of users grows, the value per coin increases.
It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value. ”
Potential for a positive feedback loop
“ Maybe it could get an initial value circularly as you’ve suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some)
Maybe collectors, any random reason could spark it.
I think the traditional qualifications for money were written with the assumption that there are so many competing objects in the world that are scarce, an object with the automatic bootstrap of intrinsic value will surely win out over those without intrinsic value.
But if there were nothing in the world with intrinsic value that could be used as money, only scarce but no intrinsic value, I think people would still take up something. (I’m using the word scarce here to only mean limited potential supply) ”
“ A rational market price for something that is expected to increase in value will already reflect the present value of the expected future increases. “
Rational market price
” In your head, you do a probability estimate balancing the odds that it keeps increasing. ”
Probability
“ I’m sure that in 20 years there will either be very large transaction volume or no volume. ”
In 20 Years
“ Bitcoins have no dividend or potential future dividend, therefore not like a stock.
More like a collectible or commodity.“
Collectible vs Commodity
” [Lengthy exposition of vulnerability of a systm to use-of-force monopolies ellided.]
You will not find a solution to political problems in cryptography.
Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years.
Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own. “
Pure P2P networks
” It’s very attractive to the libertarian viewpoint if we can explain it properly.
I’m better with code than with words though. “
Libertarian Viewpoint
” The proof-of-work is a Hashcash style SHA-256 collision finding.
It’s a memoryless process where you do millions of hashes a second, with a small chance of finding one each time.
The 3 or 4 fastest nodes’ dominance would only be proportional to their share of the total CPU power.
Anyone’s chance of finding a solution at any time is proportional to their CPU power.
There will be transaction fees, so nodes will have an incentive to receive and include all the transactions they can.
Nodes will eventually be compensated by transaction fees alone when the total coins created hits the pre-determined ceiling. “
Transactions Fees
” Right, it’s ECC digital signatures.
A new key pair is used for eveey transaction.
It’s not pseudonymous in the sense of nyms identifying people, but it is at least a little pseudonymous in that the next action on a coin can be identified as being from the owner of that coin.”
Pseudonymous
Bitcoin is a new electronic cash system that uses a peer-to-peer network to prevent double-spending.
It’s completely decentralized with no server or central authority
New electronic cash system
Total circulation will be 21,000,000 coins.
It’ll be distributed to network nodes when they make blocks, with the amount cut in half every 4 years
first 4 years: 10,500,000 coins
next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
next 4 years: 1,312,500 coins etc…
When that runs out, the system can support transaction fees if needed.
It’s based on open market competition, and there will probably always be nodes willing to process transactions for free.
Open Market Competition
” I would be surprised if 10 years from now we’re not using electronic currency in some way, now that we know a way to do it that won’t inevitably get dumbed down when the trusted third party gets cold feet.
It could get started in a narrow niche like reward points, donation tokens, currency for a game or micropayments for adult sites.
Initially it can be used in proof-of-work applications for services that could almost be free but not quite.
POW applications
It can already be used for pay-to-send e-mail.
The send dialog is resizeable and you can enter as long of a message as you like.
It’s sent directly when it connects.
The recipient doubleclicks on the transaction to see the full message.
If someone famous is getting more e-mail than they can read, but would still like to have a way for fans to contact them, they could set up Bitcoin and give out the IP address on their website. “
Pay-to-Send Email
“Send X bitcoins to my priority hotline at this IP and I’ll read the message personally.”
Send bitcoin
You can securely control neither your land nor your digitally centralized financial assets without the help of government. Thus the locality & importance of legal ownership in these things. You can securely control your globally seamless Bitcoin without the help of government.
Nick Szabo
From the People For the People !!! Be your Own Bank !!! REVOLUTIONARYIMMUTABLE PUBLIC COLLABORATIVE OPEN RESISTANT DECENTRALIZED
Made with 💚 by Free Spirit
✌ & 💚
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If so, please consider a donation to help the evolution and development of more helpful articles in the future, and show your support for alternative articles.
On November 14th, block height 709,632, Bitcoin’s Taproot upgrade was activated. The update brings with it improvements to the flexibility, security, and efficiency of bitcoin transactions. And as Bitcoin’s first protocol upgrade in … Continue reading Bitcoin Taproot→
ALT Coin Stores and Services List This page is to promote actual stores and people who sell services for ALTcoins. What is most important, is to spread the word and make people aware of the widespread … Continue reading AltCoin Stores→
Bitcoin Halving What Is a Bitcoin Halving? Bitcoin’s most recent halving occurred on May 11, 2020. To explain what a Bitcoin halving is, we must first explain a bit about how the Bitcoin network operates. … Continue reading Bitcoin Halving→
What Is a Block Reward? Bitcoin block rewards are new bitcoins awarded to cryptocurrency miners for being the first to solve a complex math problem and creating a new block of verified bitcoin … Continue reading Block Reward→
Finance, like most human inventions, is constantly evolving.
In the beginning it was basic: food was traded for livestock, and livestock for resources like wood, or maize. It progressed to precious metal, such as silver and gold. And now, the next step in financial evolution has come to light.
This new form of currency has been constantly evolving over the past decade, developed by an unknown person and maintained by a collective group of the brightest minds in technology.
It’s a new form of money that is created and held digitally, and the most important part, of course, is that no government owns it, or decides its value – the peer-to-peer network community does.
We call this new money, ‘Bitcoin’.
Historically, U.S. currency has been based on gold – you could give a dollar to the bank and receive a set amount back in gold. In contrast, Bitcoin isn’t based on silver or gold – it’s based on mathematical proofs validated by a public ledger called blockchain technology.
Bitcoin is generated through a complex sequence of mathematical formulas that run on computers; the network shares a public ledger using blockchain technologies that record, and validate, every transaction processed.
A single institution, such as the government, does not control the Bitcoin network.
The idea behind the technology has always been – and remains – one of decentralization – that is, remaining completely independent of a central authority, like a bank, a government, or a country.
Anyone can access the open-source software that makes Bitcoin work, and its those individuals interested that maintain it.
But, who invented Bitcoin? Is it a valid and legitimate currency like USD? And why did nobody think of this before?
But before we begin, let’s talk about the creator of Bitcoin – or rather, the anonymous pseudonym that first published a concept.
How Did Bitcoin Start?
There are many questions about Bitcoin, but the most common one to be asked is, “Who created it?”
That answer is not straightforward, because the identity of the creator remains a mystery. All we have is a pseudonym – Satoshi Nakamoto.
The accounts are no longer active; the coins in his wallet have never been spent.
Satoshi Nakamoto has disappeared from the world, or so it would seem.
Fast Company recently published an article suggesting that Satoshi Nakamoto could be a group of people, including Neal King, Vladimir Oksman, and Charles Bry. Apparently, these three people filed for a patent related to secure communication just two months prior to the purchase of the Bitcoin.org domain. Perhaps it’s a coincidence; perhaps it’s not.
What we do have, however, are facts:
On October 31st, 2008, “Bitcoin: A Peer-to-Peer Electronic Cash System” was posted to a cryptography mailing list, published under the name “Satoshi Nakamoto”. The whitepaper outlined the foundation of how Bitcoin would operate.
On August 18, 2008, an unknown person or entity registered the Bitcoin.org domain.
On January 8th, 2009, the first version of Bitcoin is announced, and shortly thereafter, Bitcoin mining begins.
The mystery that surrounds Satoshi Nakamoto is fitting; privacy was a key value for both Bitcoin, and its users.
Others have tried to claim his mantle – most recently an Australian man named Craig Wright, who has since withdrawn his claim.
While we may never know who first created Bitcoin, we do know that the technology he started has left ripples in the financial industry.
Bitcoin has risen to fame thanks to individuals such as the Winklevoss twins controlling and growing the market, and major events that have defined this new technology’s existence such as the Mt. Gox Ponzi scheme disaster.
The people involved and the events that occur are a constant reminder that this market is unregulated and seem to fall in line with Satoshi Nakamoto’s goal of creating a decentralized network.
What is Bitcoin Used For?
Currency must have value to ensure stability.
The most common way for a person to judge a currency’s value is what they can use it on; Bitcoin is no different, and a host of vendors and merchants now accept it alongside, or in place of, fiat money.
One early adopter of Bitcoin was the computer retailer Dell. In fact, when Dell started accepting Bitcoin, it became one of the largest companies to do so internationally.
While the digital currency may total for just a fraction of the retailer’s total transaction volume, there are other key reasons why the growth of Bitcoin could be aboon for the retailer.
Dell reported earnings of $59 billion during 2015. Traditional transaction fees range from 2 to 3 percent of the purchase price – with Bitcoin, it’s much, much lower, nearing non-existent – saving the retailer a lot of money in the future.
Other companies, such as Expedia and Cheapair, have also started accepting Bitcoin, along with technology conglomerate Microsoft : users can add funds to their accounts with Bitcoin to purchase apps, games, and other types of digital content.
The acceptance of Bitcoin is a strategic decision on the part of these companies, most of which are reaching out to solidify their position with tech-savvy audiences.
There’s a lot of benefit to Bitcoin, and a variety of reasons for its use, including :
Faster Payment: Accepting wire transfers and checks is time consuming, and it can take several days for payment to clear. Bitcoin is faster and can take a matter of minutes, rather than days to process payment.
Lower Transaction Fees: The cost to accept Bitcoins is lower compared to other payment methods, such as credit cards or Paypal.
Independent of Governments: Since Bitcoin is decentralized, you own it – no authority has the right to take away your Bitcoin. People with concerns about mainstream banking systems unravelling find this a major benefit.
Elimination of Chargebacks: Once Bitcoin is sent, that’s it – you can’t chargeback, like you would with a credit card payment, which eliminates ‘chargeback fraud’ often used by criminals and scammers.
Protection Against Inflation: With a fiat currency, the government can print as much money as it desires – this drastically decreases the value of currency, and may result in inflation. In contrast, Bitcoin has a fixed number – after they have all been ‘mined’, no more Bitcoins will be created. Scarcity is an important aspect of currency which protects it from inflation.
Ownership of Currency: With Bitcoin, you own your coins. With other forms of digital fiat – such as Paypal – your assets may be held, and your account eventually suspending, locking you out of your earnings. Bitcoin puts you in control.
Is Bitcoin a Commodity, or a Currency?
Bitcoin is both. While it can be used to purchase items from major retailers, it’s also treated as property by government jurisdictions, such as the IRS.
The IRS issued a guide on Bitcoin for tax purposes, stating it will treat virtual currencies as property for federal purposes. They go on to state that:
In some environments, virtual currency operates like “real” currency — i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance — but it does not have legal tender status in any jurisdiction.
The notice provides that virtual currency is treated as property for U.S. federal tax purposes.
Typically, property is almost always something tangible that can be held in the physical realm.
The IRS goes on to state that:
General tax principles that apply to property transactions apply to transactions using virtual currency. Among other things, this means that:
Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply. Normally, payers must issue Form 1099.
The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.
Bitcoin has garnered a lot of attention over the past decade, despite constant declarations of its death – 99 Bitcoins keeps a running tab of ‘Bitcoin obituaries’.
Despite all of this, Bitcoin’s future has remained bright. Greater adoption rates, and an increasing number of brands accepting the currency (you can get a full list qui) means the long-term view on Bitcoin is that it will see market maturity as time progresses.
Mainstream investing vehicles, such as exchange-traded funds (ETFs) and Futures trading, including Bitcoin will be a major help to reaching that market maturity. Bitcoin Futures are already trading on the Chicago Mercantile Exchange (CME), and legislation to create a crypto ETF is in the works.
These securities will help stabilize cryptocurrency prices and mitigate volatility, which will help the public’s confidence grow in favor of Bitcoin.
It’s important to understand that, much like the early days of 1992, Bitcoin is a new technology – and new technologies can take decades to reach critical mass.
But, much like the Internet, no one wants to miss out on the ‘next big thing’ – and Bitcoin is the biggest thing yet. Constant updates are occurring to Bitcoin thanks to what is called a “hard fork”.
These constant updates ensure that digital currencies continue to experience growth through technological development.
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On November 14th, block height 709,632, Bitcoin’s Taproot upgrade was activated. The update brings with it improvements to the flexibility, security, and … Continue reading Bitcoin Taproot→
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Return on investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.
ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.
To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.
KEY TAKEAWAYS
Return on Investment (ROI) is a popular profitability metric used to evaluate how well an investment has performed.
ROI is expressed as a percentage and is calculated by dividing an investment’s net profit (or loss) by its initial cost or outlay.
ROI can be used to make apples-to-apples comparisons and rank investments in different projects or assets.
ROI does not take into account the holding period or passage of time, and so it can miss opportunity costs of investing elsewhere.
How to Calculate Return on Investment (ROI)
The return on investment (ROI) formula is as follows:
“Current Value of Investment” refers to the proceeds obtained from the sale of the investment of interest. Because ROI is measured as a percentage, it can be easily compared with returns from other investments, allowing one to measure a variety of types of investments against one another.
Understanding Return On Investment (ROI)
ROI is a popular metric because of its versatility and simplicity. Essentially, ROI can be used as a rudimentary gauge of an investment’s profitability. This could be the ROI on a stock investment, the ROI a company expects on expanding a factory, or the ROI generated in a real estate transaction.
The calculation itself is not too complicated, and it is relatively easy to interpret for its wide range of applications. If an investment’s ROI is net positive, it is probably worthwhile. But if other opportunities with higher ROIs are available, these signals can help investors eliminate or select the best options.
Likewise, investors should avoid negative ROIs, which imply a net loss.
For example, suppose Bill invested $1,000 in New Wave AI Corp. in 2017 and sold the shares for a total of $1,200 one year later.
To calculate the return on this investment, divide the net profits ($1,200 – $1,000 = $200) by the investment cost ($1,000), for a ROI of $200/$1,000, or 20%.
With this information, one could compare the investment in New Wave AI with any other projects.
Suppose Bill also invested $2,000 in Web Pirates Inc. in 2014 and sold the shares for a total of $2,800 in 2017. The ROI on Bill’s holdings in Web Pirates would be $800/$2,000, or 40%.
Limitations of Return on Investment (ROI)
Examples like Bill’s (above) reveal some limitations of using ROI, particularly when comparing investments. While the ROI of Jo’s second investment was twice that of the first investment, the time between Jo’s purchase and sale was one year for the first investment but three years for the second.
Bill could adjust the ROI of the multi-year investment accordingly. Since the total ROI was 40%, to obtain the average annual ROI, Bill could divide 40% by 3 to yield 13.33% annualized.
With this adjustment, it appears that although Bill’s second investment earned more profit, the first investment was actually the more efficient choice.
ROI can be used in conjunction with the rate of return (RoR), which takes into account a project’s time frame.
One may also use net present value (NPV), which accounts for differences in the value of money over time, due to inflation.
The application of NPV when calculating the RoR is often called the real rate of return.
Developments in Return On Investment (ROI)
Recently, certain investors and businesses have taken an interest in the development of a new form of the ROI metric, called “social return on investment,” or SROI.
SROI was initially developed in the late 1990s and takes into account broader impacts of projects using extra-financial value (i.e., social and environmental metrics not currently reflected in conventional financial accounts).1
SROI helps understand the value proposition of certain environmental social and governance (ESG) criteria used in socially responsible investing (SRI) practices. For instance, a company may decide to recycle water in its factories and replace its lighting with all LED bulbs. These undertakings have an immediate cost that may negatively impact traditional ROI—however, the net benefit to society and the environment could lead to a positive SROI.
There are several other new flavors of ROI that have been developed for particular purposes. Social media statistics ROI pinpoints the effectiveness of social media campaigns—for example how many clicks or likes are generated for a unit of effort. Similarly, marketing statistics ROI tries to identify the return attributable to advertising or marketing campaigns.
So-called learning ROI relates to the amount of information learned and retained as a return on education or skills training.
As the world progresses and the economy changes, several other niche forms of ROI are sure to be developed in the future.
Frequently Asked Questions
How do you calculate return on investment (ROI)?
Return on investment (ROI) is calculated by dividing the profit earned on an investment by the cost of that investment.
For instance, an investment with a profit of $100 and a cost of $100 would have a ROI of 1, or 100% when expressed as a percentage.
Although ROI is a quick and easy way to estimate the success of an investment, it has some serious limitations.
For instance, ROI fails to reflect the time value of money, and it can be difficult to meaningfully compare ROIs because some investments will take longer to generate a profit than others.
For this reason, professional investors tend to use other metrics, such as net present value (NPV) or the internal rate of return (IRR).
What is a good ROI?
What qualifies as a “good” ROI will depend on factors such as the risk tolerance of the investor and the time required for the investment to generate a return.
All else being equal, investors who are more risk-averse will likely accept lower ROIs in exchange for taking less risk.
Likewise, investments that take longer to pay off will generally require a higher ROI in order to be attractive to investors.
What industries have the highest ROI?
Historically, the average ROI for the S&P 500 has been about 10% per year. Within that, though, there can be considerable variation depending on the industry.
For instance, during 2020, technology companies such as Apple Inc., Microsoft Corp., and Amzon.com Inc. generated annual returns well above this 10% threshold.
Meanwhile, companies in other industries, such as energy companies and utilities, generated much lower ROIs and in some cases faced losses year-over-year.
Over time, it is normal for the average ROI of an industry to shift due to factors such as increased competition, technological changes, and shifts in consumer preferences.
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🔹️ Be sure to keep track of what’s happening in the cryptocurrency world, if you aren’t doing so already. If a coin has problems, it will definitely affect the price and mining profitability, and may even prevent you from selling mined coins.
How to Calculate Mining Profitability: Top 6 Mining Calculators
Before we can even start mining, we should use one of the many profitability calculators online, that should give us beforehand a better ubderstanding if the GPU, FPGA, ASIC we choose to mine with will be profitable or not!
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