Learn about Inflation Folks!



What Is Inflation?


Inflation definition

Inflation is a rise in prices, which can be translated as the decline of purchasing power over time.

The rate at which purchasing power drops can be reflected in the average price increase of a basket of selected goods and services over some period of time.

The rise in prices, which is often expressed as a percentage, means that a unit of currency effectively buys less than it did in prior periods.

Inflation can be contrasted with deflation, which occurs when prices decline and purchasing power increases.

KEY TAKEAWAYS

  • Inflation is the rate at which prices for goods and services rise.
  • Inflation is sometimes classified into three types: demand-pull inflation, cost-push inflation, and built-in inflation.
  • The most commonly used inflation indexes are the Consumer Price Index and the Wholesale Price Index.
  • Inflation can be viewed positively or negatively depending on the individual viewpoint and rate of change.
  • Those with tangible assets, like property or stocked commodities, may like to see some inflation as that raises the value of their assets.

Understanding Inflation

While it is easy to measure the price changes of individual products over time, human needs extend beyond just one or two products.

Individuals need a big and diversified set of products as well as a host of services for living a comfortable life.

They include commodities like food grains, metal, fuel, utilities like electricity and transportation, and services like healthcare, entertainment, and labor.

Inflation aims to measure the overall impact of price changes for a diversified set of products and services. It allows for a single value representation of the increase in the price level of goods and services in an economy over a period of time.

Causes of Inflation

An increase in the supply of money is the root of inflation, though this can play out through different mechanisms in the economy.

A country’s money supply can be increased by the monetary authorities by:

  • Printing and giving away more money to citizens
  • Legally devaluing (reducing the value of) the legal tender currency
  • Loaning new money into existence as reserve account credits through the banking system by purchasing government bonds from banks on the secondary market (the most common method)

In all of these cases, the money ends up losing its purchasing power. The mechanisms of how this drives inflation can be classified into three types: demand-pull inflation, cost-push inflation, and built-in inflation


Here is an interesting collection of books about inflation:

https://www.infobooks.org/free-pdf-books/business/inflation/


“According to Cantillon, the beneficiaries from the expansion of the money supply are the first recipients of the new money, who are able to spend it before it has caused prices to rise.

Whoever receives it from them is then able to spend it facing a small increase in the price level.

As the money is spent more, the price level rises, until the later recipients suffer a reduction in their real purchasing power.

This is the best explanation for why inflation hurts the poorest and helps the richest in the modern economy.”

Saifedean Ammous, “The Bitcoin Standard: The Decentralized Alternative to Central Banking”

“It is much more difficult to see how it will ever be possible to abandon a system of provision for the aged under which each generation, by paying for the needs of the preceding one, acquires a similar claim to support by the next.

It would almost seem as if such a system, once introduced, would have to be continued in perpetuity or allowed to collapse entirely.

The introduction of such a system therefore puts a strait jacket on evolution and places on society a steadily growing burden from which it will in all probability again and again attempt to extricate itself by inflation.”

Friedrich A. Hayek, “The Constitution of Liberty”

What with the doctrines that are now widely accepted and the policies accordingly expected from the monetary authorities, there can be little doubt that current union policies must lead to continuous and progressive infl ation.

The chief reason for this is that the dominant “fullemployment” doctrines explicitly relieve the unions of the responsibility for any unemployment and place the duty of preserving full employment on the monetary and fiscal authorities.

The only way in which the latter can prevent union policy from producing unemployment is, however, to counter through inflation whatever excessive rises in real wages unions tend to cause.”

Friedrich A. Hayek, “The Constitution of Liberty”

“Inflation destroys the value of your savings while Bitcoin protects them.”

Olawale Daniel

“To accumulate any wealth, you must invest at a growth rate higher than inflation.”

Naved Abdali

“An ounce of gold will always be an ounce of gold regardless of the length of possession.

The short-term value will go up or down, but gold prices will follow the general inflation rate in the long run.”

Naved Abdali

“… The Banks, as we now all too well know, must be rescued no matter what.

‘The value of commodities is thus sacrificed in order to ensure the fantastic and autonomous existence of this value in money.

In any event, a money value is only guaranteed as long as money itself is guaranteed.’

Inflation, as we also know, must be kept under control at all costs.

‘This is why many millions’ worth of commodities have to be sacrificed for a few millions in money.

This is unavoidable in capitalist production and forms one of its particular charms.’

Use values are sacrificed and destroyed no matter what is the social need.

How insane is that?”

David Harvey, “Marx, Capital and the Madness of Economic Reason”

“For one thing, this steady devaluation of the dollar is a new practice, relatively speaking.

For most of our country’s history, the dollar gained value.

The dollar was worth 75 percent more in 1912 than it was worth in 1800.

You know those stories your parents or grandparents tell about how they used to buy a sandwich and a fountain soda for a dime?

How everything was so much cheaper back in the day?

If you were around in 1900, for instance, the old folk didn’t tell those sorts of stories.

What cost a dime in 1900 probably cost fifteen cents in 1875, and twenty cents in 1800.

Of course, since 1912, the dollar has lost more than 95 percent of its value….

You will remember what happened in 1913: the Fed was created.”

Peter Schiff, “The Real Crash”

“We have gold because we cannot trust governments”

Herbert Hoover

“Inflation is taxation without legislation.”

Milton Friedman

“Inflation is always and everywhere a monetary phenomenon.”

Milton Friedman, “Money Mischief: Episodes in Monetary History”

“The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislature.

The inflation tax has a fantastic ability to simply consume capital.

It makes no difference to a widow with her saving in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation, or pays no income taxes during years of 5 percent inflation.

Either way, she is ‘taxed’ in a manner that leave her no real income whatsoever.

Any money she spends comes right out of capital.

She would find outrageous a 120 percent income tax, but doesn’t seem to notice that 5 percent inflation is the economic equivalent.”

Warren Buffett

“Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.”

Ronald Reagan

“The natural tendency of the state is inflation.”

Murray Rothbard

“The first panacea for a mismanaged nation is inflation of the currency; the second is war.

Both bring a temporary prosperity; both bring a permanent ruin.

But both are the refuge of political and economic opportunists.”

Ernest Hemingway

“Whoever controls the volume of money in our country is absolute master of all industry and commerce…when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.”

James A. Garfield

“Continued inflation inevitably leads to catastrophe.”

Ludwig von Mises

“The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.”

Ludwig von Mises

“Continued inflation inevitably leads to catastrophe.”

Ludwig von Mises

“When a business or an individual spends more than it makes, it goes bankrupt.

When government does it, it sends you the bill.

And when government does it for 40 years, the bill comes in two ways: higher taxes and inflation.

Make no mistake about it, inflation is a tax and not by accident.”

Ronald Reagan

“Inflation is not caused by the actions of private citizens, but by the government: by an artificial expansion of the money supply required to support deficit spending.

No private embezzlers or bank robbers in history have ever plundered people’s savings on a scale comparable to the plunder perpetrated by the fiscal policies of statist governments.”

Ayn Rand

“Monetary inflation not only raises prices and destroys the value of the currency unit; it also acts as a giant system of expropriation.”

Murray Rothbard

“Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel.

These once unthinkable dosages will almost certainly bring on unwelcome after-effects.

Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation.”

Warren Buffett

“I believe that banking institutions are more dangerous to our liberties than standing armies.”

Thomas Jefferson

The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.

There is no safe store of value.

Deficit spending is simply a scheme for the hidden confiscation of wealth.

Gold stands in the way of this insidious process. It stands as a protector of property rights.

If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

Alan Greenspan

“I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”

Friedrich August von Hayek

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency.

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.

By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.

The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.”

John Maynard Keynes

“Printing money creates inflation, which weakens an economy.

Unfortunately, this kind of common-sense thinking never seems to penetrate academic circles.”

Peter Schiff

“It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less.

[I]f the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with ‘free banking.’

The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy.”

Paul Volcker

“Most people will see declining returns [due to inflation].

One of the great defenses if you’re worried about inflation is not to have a lot of silly needs in your life – you don’t need a lot of material goods.”

Charlie Munger

“Inflation is the true opium of the people and it is administered to them by anticapitalist governments and parties.”

Ludwig von Mises

“There are two main drivers of asset class returns – inflation and growth.”

Ray Dalio

“It’s hard to build models of inflation that don’t lead to a multiverse.

It’s not impossible, so I think there’s still certainly research that needs to be done.

But most models of inflation do lead to a multiverse, and evidence for inflation will be pushing us in the direction of taking [the idea of a] multiverse seriously.”

Alan Guth

“If the governments devalue the currency in order to betray all creditors, you politely call this procedure ‘Inflation‘.”

George Bernard Shaw

“The illusiveness of this concept of national income is to be seen in its dependence on changes in the purchasing power of the monetary unit.

The more inflation progresses, the higher rises the national income.”

Ludwig von Mises

“The gold standard did not collapse. Governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion, policemen, customs guards, penal courts, prisons, in some countries even executioners, had to be put into action in order to destroy the gold standard.”

Ludwig von Mises

“The idea that when people see prices falling they will stop buying those cheaper goods or cheaper food does not make much sense.

And aiming for 2 percent inflation every year means that after a decade prices are more than 25 percent higher and the price level doubles every generation.

That is not price stability, yet they call it price stability.

I just do not understand central banks wanting a little inflation.”

Paul Volcker

“Inflation is the fiscal complement of statism and arbitrary government.

It is a cog in the complex of policies and institutions which gradually lead toward totalitarianism.”

Ludwig von Mises

“To reverse the trend and reduce the role of government in our lives, and thus alleviate the government deficit and inflation pressures, is a giant educational task.

The social and economic ideas that gave birth to the transfer system must be discredited and replaced with old values of individual independence and self-reliance.

The social philosophy of individual freedom and unhampered private property must again be our guiding light.”

Hans F. Sennholz

“What I’m trying to say is that for the average investor, what I would encourage them to do is to understand there’s inflation and growth – it can go higher and lower – and to have four different portfolios essentially that make up your total portfolio that gets you balanced.”

Ray Dalio

“If government manages to establish paper tickets or bank credit as money, as equivalent to gold grams or ounces, then the government, as dominant money-supplier, becomes free to create money costlessly and at will.

As a result, this ‘inflation’ of the money supply destroys the value of the dollar or pound, drives up prices, cripples economic calculation, and hobbles and seriously damages the workings of the market economy.”

Murray Rothbard

“We are now speeding down the road of wasteful spending and debt, and unless we can escape we will be smashed in inflation.”

Herbert Hoover

“Inflation is probably the most important single factor in that vicious circle wherein one kind of government action makes more and more government control necessary.

For this reason all those who wish to stop the drift toward increasing government control should concentrate their effort on monetary policy.”

Friedrich August von Hayek

“Big business is not dangerous because it is big, but because its bigness is an unwholesome inflation created by privileges and exemptions which it ought not to enjoy.”

Woodrow Wilson

“Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth.

Gold stands in the way of this insidious process.

It stands as a protector of property rights.”

Alan Greenspan

“Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like management consulting and investment banking.

For the privilege of being turned into conformists, students (or their families) pay hundreds of thousands of dollars in skyrocketing tuition that continues to outpace inflation.

Why are we doing this to ourselves?”

Peter Thiel

Having examined the nature of fractional reserve and of central banking, and having seen how the questionable blessings of Central Banking were fastened upon America, it is time to see precisely how the Fed, as presently constituted, carries out its systemic inflation and its control of the American monetary system.

Murray Rothbard

“Inflation, being a fraudulent invasion of property, could not take place on the free market.”

Murray Rothbard

“No central banker would disagree with the proposition that inflation is primarily a monetary phenomenon.

Not one of them will disagree that every inflation has been accompanied by a rapid increase in the quantity of money and every deflation by a decline in the quantity of money.”

Milton Friedman

“The drum-fire of propaganda that the Fed is manning the ramparts against the menace of inflation brought about by others is nothing less than a deceptive shell game.

The culprit solely responsible for inflation, the Federal Reserve, is continually engaged in raising a hue-and-cry about ‘Inflation,’ for which virtually everyone else in society seems to be responsible.

What we are seeing is the old ploy by the robber who starts shouting ‘Stop, thief!’ and runs down the street pointing ahead at others.”

Murray Rothbard

“I think democracies are prone to inflation because politicians will naturally spend [excessively] – they have the power to print money and will use money to get votes.

If you look at inflation under the Roman Empire, with absolute rulers, they had much greater inflation, so we don’t set the record.

It happens over the long-term under any form of government.”

Charlie Munger

“Government policies try to prevent the emergence of serious unemployment by credit expansion, i.e., Inflation.

The outcome was rising prices, renewed demands for higher wages and reiterated credit expansion; in short, Protracted Inflation.”

Ludwig von Mises

“Inflation is essentially antidemocratic.”

Ludwig von Mises

“Inflation has always been an important resource of policies of war and revolution and why we also find it in the service of socialism.”

Ludwig von Mises





With 🧡

Running bitcoin – Hal Finney


Wonder In Peace Bright Mind

Join Honorary Chair Fran Finney and the Running Bitcoin Challenge Committee as we honor legendary cypher punk, Hal Finney.

This is THE EVENT that combines Hal Finney’s love of running and Bitcoin and is raising funds and awareness to help defeat ALS, which ultimately claimed his life in 2014.

You are challenged to run (or walk, roll, or hike) the equivalent of a half marathon — cumulatively or all at once — by the end of January 10, 2023.

From wherever you are, spread the word about Bitcoin, participate in a healthy activity, feel good about doing your part to defeat ALS, and start the year off right


Hal Finney, one of the earliest bitcoin contributors, died eight years ago from complications of nervous system disease amyotrophic lateral sclerosis (ALS).

His spouse, Fran Finney, is now organizing a half marathon to raise funds for ALS research via bitcoin.



The “Running Bitcoin Challenge” is set to take place between Jan. 1 and Jan. 10. The timing of the occasion leads up to the anniversary of Hal Finney’s “Running bitcoin” tweet, in which Finney famously disclosed he was deploying a Bitcoin node.

There is no set location — participants can choose to join anywhere they wish. Players are encouraged to either run, walk, roll or hike the equivalent of a half marathon (Hal’s favorite distance) either in one go or over the entire 10-day period.

Donors contributing at least $100 will receive an official shirt with the half marathon’s logo, while the event’s top 25 fundraisers will get a Hal Finney collectible signed by his wife.

As of Wednesday morning, the event has already managed to secure nearly $10,000 in bitcoin donations.

An advocate of cryptography and digital privacy, Finney was the recipient of the first-ever bitcoin transfer from the network’s pseudonymous creator Satoshi Nakamoto.

The bitcoin community often suspected Finney was Nakamoto, a claim he consistently denied. He reportedly found out about his condition in 2009 and decided to move away from the project.

Hal’s name is high in the Bitcoin pantheon as one of the first people to voice support for Satoshi Nakamoto’s invention and for being the first person to receive a Bitcoin transaction from Satoshi.

He was, for a time, considered one of the top contenders on the list of potential Satoshis himself (many in blockchain who reject Dr. Craig Wright’s statements still falsely believe Finney to be Bitcoin’s real creator).

Hal, who referred to himself as a “cypherpunk,” was a cryptographic activist who went from developing video games to working on the Pretty Good Privacy (PGP) project in the 1990s. He described his PGP work as “dedicated to the goal of making Big Brother obsolete.”

PGP creator Phil Zimmerman hired Hal as his first employee when PGP became PGP Corporation in the early 2000s. He described Hal as a “gregarious man” who loved skiing and long-distance running.

Despite gradual paralysis that eventually forced him to stop working, Hal continued to code software and follow the Bitcoin project.

Almost as famous as his 2009 tweet is his “Bitcoin and me” post on BitcoinTalk.org in March 2013, the last he’d ever make.

It’s a long post, and Hal was “essentially paralyzed” at the time, using an eye tracker to type. Forum stats show the post has been read over 278,000 times.

“When Satoshi announced the first release of the software, I grabbed it right away,” he wrote. “I think I was the first person besides Satoshi to run bitcoin. I mined block 70-something, and I was the recipient of the first bitcoin transaction when Satoshi sent ten coins to me as a test.

I carried on an email conversation with Satoshi over the next few days, mostly me reporting bugs and him fixing them.”

Hal himself always denied being Satoshi Nakamoto, adding later that he’d sold most of the Bitcoins he mined (at pre-2014 prices) to pay for his treatments. He also mentioned putting some in a safe deposit box for his children.

“And, of course, the price gyrations of bitcoins are entertaining to me.

I have skin in the game.

But I came by my bitcoins through luck, with little credit to me.

I lived through the crash of 2011.

So I’ve seen it before.

Easy come, easy go.”

Hal Finney

www.runningbitcoin.us

Admiration and great Respect


With 🧡

Seven common mistakes crypto investors and traders make


Cryptocurrency markets are volatile enough without making simple, easily avoidable mistakes.

Investing in cryptocurrencies and digital assets is now easier than ever before. Online brokers, centralized exchanges and even decentralized exchanges give investors the flexibility to buy and sell tokens without going through a traditional financial institution and the hefty fees and commissions that come along with them.

Cryptocurrencies were designed to operate in a decentralized manner. This means that while they’re an innovative avenue for global peer-to-peer value transfers, there are no trusted authorities involved that can guarantee the security of your assets. Your losses are your responsibility once you take your digital assets into custody.

Here we’ll explore some of the more common mistakes that cryptocurrency investors and traders make and how you can protect yourself from unnecessary losses.

Losing your keys

Cryptocurrencies are built on blockchain technology, a form of distributed ledger technology that offers high levels of security for digital assets without the need for a centralized custodian. However, this puts the onus of protection on asset holders, and storing the cryptographic keys to your digital asset wallet safely is an integral part of this.

On the blockchain, digital transactions are created and signed using private keys, which act as a unique identifier to prevent unauthorized access to your cryptocurrency wallet. Unlike a password or a PIN, you cannot reset or recover your keys if you lose them. This makes it extremely important to keep your keys safe and secure, as losing them would mean losing access to all digital assets stored in that wallet.

Lost keys are among the most common mistakes that crypto investors make. According to a report from Chainalysis, of the 18.5 million Bitcoin (BTC) mined so far, over 20% has been lost to forgotten or misplaced keys.

Storing coins in online wallets

Centralized cryptocurrency exchanges are probably the easiest way for investors to get their hands on some cryptocurrencies. However, these exchanges do not give you access to the wallets holding the tokens, instead offering you a service similar to banks. While the user technically owns the coins stored on the platform, they are still held by the exchange, leaving them vulnerable to attacks on the platform and putting them at risk.

There have been many documented attacks on high-profile cryptocurrency exchanges that have led to millions of dollars worth of cryptocurrency stolen from these platforms. The most secure option to protect your assets against such risk is to store your cryptocurrencies offline, withdrawing assets to either a software or hardware wallet after purchase.

Not keeping a hard copy of your seed phrase

To generate a private key for your crypto wallet, you will be prompted to write down a seed phrase consisting of up to 24 randomly generated words in a specific order. If you ever lose access to your wallet, this seed phrase can be used to generate your private keys and access your cryptocurrencies.

Keeping a hard copy record, such as a printed document or a piece of paper with the seed phrase written on it, can help prevent needless losses from damaged hardware wallets, faulty digital storage systems, and more. Just like losing your private keys, traders have lost many a coin to crashed computers and corrupted hard drives.

Fat-finger error

A fat-finger error is when an investor accidentally enters a trade order that isn’t what they intended. One misplaced zero can lead to significant losses, and mistyping even a single decimal place can have considerable ramifications.

One instance of this fat-finger error was when the DeversiFi platform erroneously paid out a $24-million fee. Another unforgettable tale was when a highly sought-after Bored Ape nonfungible token was accidentally sold for $3,000 instead of $300,000.

Sending to the wrong address

Investors should take extreme care while sending digital assets to another person or wallet, as there is no way to retrieve them if they are sent to the wrong address. This mistake often happens when the sender isn’t paying attention while entering the wallet address. Transactions on the blockchain are irreversible, and unlike a bank, there are no customer support lines to help with the situation.

This kind of error can be fatal to an investment portfolio. Still, in a positive turn of events, Tether, the firm behind the world’s most popular stablecoin, recovered and returned $1 million worth of Tether (USDT) to a group of crypto traders who sent the funds to the wrong decentralized finance platform in 2020. However, this story is a drop in the ocean of examples where things don’t work out so well. Hodlers should be careful while dealing with digital asset transactions and take time to enter the details. Once you make a mistake, there’s no going back.

Over diversification

Diversification is crucial to building a resilient cryptocurrency portfolio, especially with the high volatility levels in the space. However, with the sheer number of options out there and the predominant thirst for outsized gains, cryptocurrency investors often end up over-diversifying their portfolios, which can have immense consequences.

Over-diversification can lead to an investor holding a large number of heavily underperforming assets, leading to significant losses. It’s vital to only diversify into cryptocurrencies where the fundamental value is clear and to have a strong understanding of the different types of assets and how they will likely perform in various market conditions.

Not setting up a stop-loss arrangement

A stop-loss is an order type that enables investors to sell a security only when the market reaches a specific price. Investors use this to prevent losing more money than they are willing to, ensuring they at least make back their initial investment.

In several cases, investors have experienced huge losses because of incorrectly setting up their stop losses before asset prices dropped. However, it’s also important to remember that stop-loss orders aren’t perfect and can sometimes fail to trigger a sale in the event of a large, sudden crash.

That being said, the importance of setting up stop losses to protect investments cannot be understated and can significantly help mitigate losses during a market downturn.

Crypto investing and trading is a risky business with no guarantees of success. Like any other form of trading, patience, caution and understanding can go a long way. Blockchain places the responsibility on the investor, so it’s crucial to take the time to figure out the various aspects of the market and learn from past mistakes before putting your money at risk.





21M or Death


21 Million or Death
Arise…

The supply of Bitcoin is fixed at 21 million BTC, and as a hard coded monetary policy of the protocol, the fixed supply of the dominant cryptocurrency cannot be altered.

Former Google Product Director Steve Lee stated that only 1 percent of the world’s population can own more than 0.28 BTC, due to the fixed supply of Bitcoin.

In late 2017, Chainalysis, a blockchain forensics company that monitors and investigates cryptocurrency transactions, revealed in a research paper that up to four million BTC are permanently lost on the blockchain as a result of theft, loss of wallets and private keys, and the dormant wallet of Bitcoin creator Satoshi Nakamoto, which experts have said is no longer accessible.

Kim Grauer, Senior Economist at Chainalysis, said at the time, that the lost supply of BTC is not taken into consideration by the market cap.That means, the real price of BTC could be substantially higher, as 4 to 6 million BTC are estimated to be lost.

Based on the estimate that the supply of Bitcoin is around 17 million, only 0.8 percent of the world population can own more than 0.28 BTC and less than 0.2 of the world population can own more than 1 BTC.

The 0.28 BTC figure introduced by Lee assumes the supply of Bitcoin to be 21 million, as it divides 21 million by 0.28 and divides the outcome of that by the world population that is 7.442 billion. If the research of Chainalysis is accurate and that 4 to 6 million BTC are lost on the blockchain, the supply of Bitcoin should be closer to around 16 to 17 million

The fact that any investor in the global market can be within the 1 percent of the world population with a $1,830 investment demonstrates that the cryptocurrency market is still at its early phase, and in terms of adoption, market development, infrastructure, and regulation, the sector can still grow significantly in the mid to long-term.


Hal Finney

There is no “Whole Coin”





First Time/Small Miner

First time/Small miner reference
for getting started.

If you want to start mining here is what you need… and what you need to know.

This is written for home miners/small farms, but can be used as a guideline for most operations. Use this as a reference for what you need to research, or what questions you need to ask before jumping in.

What you need to mine can be broken down into the following categories:

  • Hardware
  • Electricity
  • Location
  • Internet connection
  • Information

Mining BITCOIN is done exclusively with dedicated BITCOIN mining hardware based on ASICs: https://en.wikipedia.org/wiki/Application-specific_integrated_circuit .

You CAN NOT meaningfully mine bitcoin today with CPU, GPU or even FPGAs. Bitcoin difficulty adapts to match the amount of mining done on the network and has reached levels trillions of times too high to mine meaningfully with PCs, laptops, tablets, phones, webpages, javascript, GPUs, and even generalised SHA hardware.

Even if you combined all the computers in the world, including all known supercomputer, you would not even approach 0.1% of the bitcoin hashrate today.

There isn’t any point attempting to mine bitcoin with CPU or GPU even in the interests of learning as it shares almost nothing with how bitcoin is mined with ASICs and will not teach you anything.

Hardware

Asic Miner:

Here is a list of the companies currently manufacturing Miners for public purchase.

Each one has their Pro’s and Con’s it is up to you to do your research and decide what is best for you.

A few points to consider while researching are :

  • efficiency
  • reliability
  • warranty period/policy
  • power draw

Each company has a different way of handling warranty repairs, depending on your situation and the policy repairs can become cost prohibitive. I will touch more on efficiency and power draw in the electricity section.

• Current list of competitive hardware

Power supply: You will need to purchase a power supply to run your miners. You will find ATX and Server grade PSU’s, the latter being preferred for mining BTC. 

When it comes to selecting a PSU purchase something with a capacity 25% higher than your miner is rated to draw. This will have you operating within the 80% rule.(explained further in the electricity section)

EX. Miner draws 1000 PSU should be able to provide 1250W.

** Many current generation miners are now being manufactured with Integrated PSU. Again do your research to see if your unit comes with or without. Generally you will still need to source a power cable.**

Auxilliaries – Avalon miners require an external controller, 1 per 20 miners. You may have to run additional fans for intake and exhaust depending on your location.

PSU’s can be purchased large enough to run 2 Miners; or the opposite 1 Miner fed by 2 PSU’s. Ensure the PSU you have selected will have the correct amount of PCI-E connectors required to operate your miner(s)

You can also find a large supply of used miners and PSU’s. Again it’s up to you to do your research as these often are a no return transaction.

Electricity

Follow all local codes and regulations

This is the number 1 factor in whether mining is right for you. As discussed with Miners being a 24/7 machine drawing power those costs will make it cost prohibitive for some people to mine. You need to be aware of what your costs/kWh are and run the numbers.

This will be done in a profitability calculator. This is just an example of 1 there are many out there.

( Miner usage in kW ) * ( Hours run per day ) 24 * ( Cost/kWh ) = Cost per Day to Operate

( Ideally less than the FIAT value of BTC mined )

The second part to the electrical requirements of mining is the available service; written for North America.

You will need to figure out the amperage you can spare, what circuits and receptacles you have in place, are you setting up on 220V or 110V. You will need to make sure that you have the right cord end for your PSU to match the receptacle, picking the wrong one can cost you a few days of mining if it has to be shipped.

If you can try and set up on a 220V circuit for 2 reasons :

– You will pull half the amps, and it is more efficient.

– Doing so requires 2 breaker spaces in your panel. Breaker sizing will depend on how many miners you plan to run. Here is the formula for calculating amps.

Watts / Voltage = Amps

Here is where you will bring the 80% rule back into play by sizing the continuous miner load to 80% of the breaker rating. 12 Amps on a 15 Amp breaker, 16 Amps max on a 20 Amp breaker, 24 Amps on a 30 amp breaker.

If/when you increase the amount of miners you are running you may want to look into PDU’s, as opposed to more receptacles. 

Location

This is something that is often overlooked to the headache and frustration of many would be miners. These machines are loud and hot .
You essentially have an electric heater that also uses an industrial fan to keep it from melting itself. This space will need to have the electrical requirements as discussed previously.

So make sure you have a space that is well ventilated with a plan to exhaust heat, and bring in fresh dust free air. I say this as using AC to cool the room will eat into your profits and may even make mining unprofitable.

The noise issue is a consideration you can sort out depending on whats available. (garage, basement, remote building)

Both of these issues can be handled with hosting, which is further explained in the information section.

Internet connection

Some miner setups have the option to use wifi. It is advisable to use a wired connection where available. This will provide a more stable connection and ensure you are submitting the expected amount of shares which is directly related to your payouts.

Please note that mining uses a negligible amount of bandwidth, and will not affect your other internet usage.

Information

You can use this information in this post as a good baseline to get you going. In addition to this you will want to research network difficulty; this readjusts every 2016 blocks to maintain a 10 minute block time on average. While this can go down it generally increases.

Solo or Pool?

You can solo mine but this is essentially a lottery even as a large scale miner. Should you chose this you can check this out as a starting point.

solo.ckpool.org 1% fee solo mining USA/DE 250 blocks solved!

Odds are most of you will join a pool. I will only say that it is in your best interest to mine at a pool that pays transaction fees (miner rewards). Then you will want to consider the fees associated with the pool.

When it comes to these pools you want them to be large enough that they are getting at least 1 block every Difficulty adjustment period. Larger pools will offer smaller rewards paid out more frequently, and vice versa.





Seven common mistakes crypto investors and traders make


Cryptocurrency markets are volatile enough without making simple, easily avoidable mistakes.

Investing in cryptocurrencies and digital assets is now easier than ever before. Online brokers, centralized exchanges and even decentralized exchanges give investors the flexibility to buy and sell tokens without going through a traditional financial institution and the hefty fees and commissions that come along with them.

Cryptocurrencies were designed to operate in a decentralized manner. This means that while they’re an innovative avenue for global peer-to-peer value transfers, there are no trusted authorities involved that can guarantee the security of your assets. Your losses are your responsibility once you take your digital assets into custody.

Here we’ll explore some of the more common mistakes that cryptocurrency investors and traders make and how you can protect yourself from unnecessary losses.

Losing your keys

Cryptocurrencies are built on blockchain technology, a form of distributed ledger technology that offers high levels of security for digital assets without the need for a centralized custodian. However, this puts the onus of protection on asset holders, and storing the cryptographic keys to your digital asset wallet safely is an integral part of this.

On the blockchain, digital transactions are created and signed using private keys, which act as a unique identifier to prevent unauthorized access to your cryptocurrency wallet. Unlike a password or a PIN, you cannot reset or recover your keys if you lose them. This makes it extremely important to keep your keys safe and secure, as losing them would mean losing access to all digital assets stored in that wallet.

Lost keys are among the most common mistakes that crypto investors make. According to a report from Chainalysis, of the 18.5 million Bitcoin (BTC) mined so far, over 20% has been lost to forgotten or misplaced keys.

Storing coins in online wallets

Centralized cryptocurrency exchanges are probably the easiest way for investors to get their hands on some cryptocurrencies. However, these exchanges do not give you access to the wallets holding the tokens, instead offering you a service similar to banks. While the user technically owns the coins stored on the platform, they are still held by the exchange, leaving them vulnerable to attacks on the platform and putting them at risk.

There have been many documented attacks on high-profile cryptocurrency exchanges that have led to millions of dollars worth of cryptocurrency stolen from these platforms. The most secure option to protect your assets against such risk is to store your cryptocurrencies offline, withdrawing assets to either a software or hardware wallet after purchase.

Not keeping a hard copy of your seed phrase

To generate a private key for your crypto wallet, you will be prompted to write down a seed phrase consisting of up to 24 randomly generated words in a specific order. If you ever lose access to your wallet, this seed phrase can be used to generate your private keys and access your cryptocurrencies.

Keeping a hard copy record, such as a printed document or a piece of paper with the seed phrase written on it, can help prevent needless losses from damaged hardware wallets, faulty digital storage systems, and more. Just like losing your private keys, traders have lost many a coin to crashed computers and corrupted hard drives.

Fat-finger error

A fat-finger error is when an investor accidentally enters a trade order that isn’t what they intended. One misplaced zero can lead to significant losses, and mistyping even a single decimal place can have considerable ramifications.

One instance of this fat-finger error was when the DeversiFi platform erroneously paid out a $24-million fee. Another unforgettable tale was when a highly sought-after Bored Ape nonfungible token was accidentally sold for $3,000 instead of $300,000.

Sending to the wrong address

Investors should take extreme care while sending digital assets to another person or wallet, as there is no way to retrieve them if they are sent to the wrong address. This mistake often happens when the sender isn’t paying attention while entering the wallet address. Transactions on the blockchain are irreversible, and unlike a bank, there are no customer support lines to help with the situation.

This kind of error can be fatal to an investment portfolio. Still, in a positive turn of events, Tether, the firm behind the world’s most popular stablecoin, recovered and returned $1 million worth of Tether (USDT) to a group of crypto traders who sent the funds to the wrong decentralized finance platform in 2020. However, this story is a drop in the ocean of examples where things don’t work out so well. Hodlers should be careful while dealing with digital asset transactions and take time to enter the details. Once you make a mistake, there’s no going back.

Over diversification

Diversification is crucial to building a resilient cryptocurrency portfolio, especially with the high volatility levels in the space. However, with the sheer number of options out there and the predominant thirst for outsized gains, cryptocurrency investors often end up over-diversifying their portfolios, which can have immense consequences.

Over-diversification can lead to an investor holding a large number of heavily underperforming assets, leading to significant losses. It’s vital to only diversify into cryptocurrencies where the fundamental value is clear and to have a strong understanding of the different types of assets and how they will likely perform in various market conditions.

Not setting up a stop-loss arrangement

A stop-loss is an order type that enables investors to sell a security only when the market reaches a specific price. Investors use this to prevent losing more money than they are willing to, ensuring they at least make back their initial investment.

In several cases, investors have experienced huge losses because of incorrectly setting up their stop losses before asset prices dropped. However, it’s also important to remember that stop-loss orders aren’t perfect and can sometimes fail to trigger a sale in the event of a large, sudden crash.

That being said, the importance of setting up stop losses to protect investments cannot be understated and can significantly help mitigate losses during a market downturn.

Crypto investing and trading is a risky business with no guarantees of success. Like any other form of trading, patience, caution and understanding can go a long way. Blockchain places the responsibility on the investor, so it’s crucial to take the time to figure out the various aspects of the market and learn from past mistakes before putting your money at risk.