A Word About Mining.
On November 15th, Hcash announced that tokens can be mined via the mobile wallet.
It’s almost the end of the year, and concerns pertaining to the cryptocurrency market and its sentiment, from a company’s point of view, have arisen.
For the most part, it seems that people aren’t involved with the intention of participating in technological innovation — they just want to make a killing.
The Amount of Currencies
There is already a huge number of cryptocurrencies on the market, and the number is ever growing, which means the actual revenue of an individual gained from mining is falling. The time it takes to penetrate the industry as a company can largely account for this.
Due to a growing interest in GPU mining, hashrates are becoming faster, which in turn increases the difficulty of mining, and causes a decrease in the speed at which miners can receive rewards. As mining costs increase, choosing a new cryptocurrency with promising prospects can open up new opportunities for miners.
Uncapped tokens
The creation of currency without careful thought, and the deformation of technical and economic structures will lead to the imbalance of the economy of a token with an unlimited supply as a whole. In the long term, inflation will inevitably lead to the distortion of price signals. However, the possible adverse effects can be lessened by the ongoing reduction of the total amount of currency in circulation.
Having a Voice
Without going into technical details, one of the key differences between PoW (Proof of Work) and PoS (Proof of Stake), is that, using PoS, the future of a project is decided by both miners and currency holders. The purely PoW mechanism implemented in Bitcoin, despite its benefits, however, does not allow this autonomous decision making.
This year, bitcoin forked, separating itself into three separate currencies Bitcoin Cash (BCH), Bitcoin Gold (BCG), and the original Bitcoin (BTC). This means miners, users, and the system are becoming more and more fragmented, and the expressed concerns of holders of currency are overlooked. There is no right to have a say in decisions or vote — currency holders can only voice their opinions and hope it gets through to developers. Bitcoin communities with serious conflicts in their interests have almost no chance of reaching a consensus — it therefore seems that forks are becoming synonymous in the Bitcoin community. The PoS consensus mechanism can greatly increase the chances of solving frequent bifurcation issues.
Hcash makes a good compromise, in this respect, by implementing a hybrid PoW+PoS consensus mechanism, allowing voting, whilst maintaining the benefits of PoW. Using this, once a vote is passed, all decisions are recorded in the blockchain and set to be executed. This allows decision problems caused by disagreements between miners, mining pools, exchanges, and wallet service providers to be solved.
The path which Hcash is taking, in terms of user input, seems to be the logical route for a decentralised cryptocurrency. In fact, Ethereum is soon to implement its new “Casper” system, which will transition their cryptocurrency from purely PoW, to a hybrid PoW+PoS scheme, with the same benefits outlined previously.
Decentralisation
A key idea behind Bitcoin’s Blockchain ecosystem is decentralisation. This being said, Zhuoer Jiang from BTC.TOP, Hanhan Wu from AntPool, Bobby Lee from Bitcoin China, and Chun Wang from F2Pool collectively account for more than half of bitcoin’s hashing power. This comes as no surprise, as the SHA256 hash algorithm used by Bitcoin inevitably lends itself to domination by large amounts of computing power — which can readily be purchased. This comes about as ASICs (Application Specific Integrated Circuits) can be relatively easily optimised for the hashing algorithm, increasing mining efficiency is several orders of magnitude as compared to regular GPUs. This effectively rules out the average GPU miner from the Bitcoin mining ecosystem. A PoS consensus mechanism can reduce domination of the market by ASICs in many ways.
Speculative Trading
Inexperienced investors can fall victim to the assumption that short term speculation using the general rule of “buying low and selling high” is sustainably profitable. These individuals, in fact, are those who have been suffering the worst losses. People who regularly profit from similar tactics have the financial knowledge and experience required, and use futures contracts and inefficiencies in the current market to make capital gains. For individuals without a similar, detailed understanding of the market, it is suggested that day-trading should be avoided, potential losses be considered, and making careful purchase decisions, after conducting proper due diligence, be pursued. For those, however, unwilling to participate in high-risk cryptocurrency trading, there is a way of earning a constant, passive income using Blockchain technology.
Hcash’s PoS mining mechanism.
PoS
Hcash recently introduced PoS mining. There are several ways to choose from:
The desktop application can be found on the front page of h.cash
This wallet supports Linux, Mac and Windows. This desktop application allows for individual staking and storage of coins
The mobile application can be found at https://h.cash/down_wallet
The wallet can be accessed on both IOS and Android. There are two kinds of mobile applications that are going to be released, being:
§ On-chain wallet; and
§ Off-chain mobile wallet
Currently, the Off-chain version has been released. This allows users to stake and hold coins which are attached to accounts that include the users email address and password. This means that those users who previously may have forgotten their private keys can now re-download the application on any device and login for instant access to their coins.
At the beginning of POS mode, everyone used HShare QT to mine on a computer. This is a solo mining, which means they mines by themselves. They use their own number of coins to compete for proof of entitlement. If successful access to the account then you can package the transaction and broadcast, after confirmed by other nodes, all the rewards in that block will belong to you. Similarly, if you did not mine any blocks, you will receive nothing. The SOLO mode requires to contesting with each other. If the holder has less currency, it is hard for him to mine a block.
Additionally, occasionally a ‘no block’ situation that occurs in Solo mode. In the bottom left corner of the screen there will be a green arrow which shows the added value and expected time needed to obtain the block. Many people have asked why, when the estimated time period has elapsed, there is no block. This is because the figure here is a probabilistic estimate based upon the total number of participants in the network and equity you currently hold. This figure is only an estimate and does not mean you will get a block when the time period shown has elapsed. Additionally, you may ‘get the block’ but see a grey question mark — and not actually receive the reward. This is because that block has already been generated by someone else and their version has been accepted by more nodes — perhaps due to poor network conditions from your end. As such, you lose the reward and the block you have created will become a lone block outside of the current chain.
In order to solve this issue of unstable income as it affects solo miners you can now opt to mine in third-party mining pools. Current HSR mining pools adopt a PPLNS revenue model. By virtue of a large deposit amount, the rate of blocks mined per day is relatively stable. The pools then redistribute output according to the proportion of weight within the mining pool, allowing you to receive a stable PoS enabled revenue. However, there are some obvious shortcomings that arise from this mining pools for PoS mining. Due to the need for centralised hosting, it is inevitable that there will be risk control mechanisms such as cash withdrawal auditing, which will increase the time needed for users transferring funds. It is advised to beware of security weaknesses in third-party PoS mining pools, thus, participation is to be done at the user’s own risk.
The Hcash wallet has officially launched PoS mining, and will charge a 2% fee based on the PPLNS mode to carry out mining services. This is to say that when miners have found a block, the share of the block will be allocated based on the individual’s personal “stake”, or amount of Hcash they already own. This method of settlement differs from block to block and is also based on amount of mining done, or “proof of work”. For example, if it was found that a certain investor did not contribute to the mining of a certain block, that investor will not be allocated any block reward. Some level of luck is necessary when mining using the PPLNS mode. To illustrate, beside depending on “proof of work” and “proof of stake” to derive the block reward, the number of blocks that are found is also of importance. There is no specific pattern indicating the number of blocks that can be found a day, as such; there will be days when many blocks can be found (which translates to more block rewards) and days when little to none can be found (no block reward).
We are ushering in an era of digital currencies and Blockchain technology that is evidently becoming unstoppable. Even in the event of a severe market down-cycle, the technology will still survive and continue to grow, albeit with many obstacles to overcome. Through the introduction of the credit-level DPOS consensus algorithm and “side-chain” technology which already operate at an efficient level, the vision of a decentralised, efficient and transparent digital currency economic system is steadily being realised. We must begin to rethink traditional job functions such as accounting, law and regulations which will all be replaced by a series of concise codes.
