Tag Archives: Litecoin

bitcoin-china-350x233

It has gotten harder to get Bitcoins in China

The news out of China a few days ago cut off third party payment processors from handling Bitcoin transactions. This new restriction is in addition to the the Central Bank of China’s earlier statement barring banks from participating in Bitcoin transaction. Even China’s biggest exchange temporarily halted Yuan to Bitcoin transactions.

The Chinese citizen’s ability to move cash from banks, payment processors, or exchanges to Bitcoins is almost nonexistent. Anyone in China that wants to buy Bitcoins must purchase Bitcoin from private dealers. The immediate reaction to this news in the exchanges was a dump of almost all Ecoins. Also angry Chinese Bitcoiners were blamed for a hacking into the Central Bank of China. The value of the most popular Ecoins dropped as much as over 50% in a day or so.

Was this a Government move against Bitcoin?

The Central Bank of China tightly controls the Yuan value against the Dollar. China does not want currency to leave the country uncontrolled.   Chinese citizens can not freely export currency out of China. This helps China stabilize the value of Yuan against other currencies.  Almost all Yuan currency export happens through the Central Bank of China. When 3rd party payment processors were allowed to do Bitcoin transactions it was easy for Chinese citizens to export Yuan out of the country as Bitcoins.  If too much Yuan value escaped the country in Bitcoin, the value of Yuan would decrease against the other global currencies.

Clamping down on Yuan to Bitcoin exchanges closes this loophole in China’s long establish currency control policy. From this perspective, the most recent announcement and regulations referring to Bitcoin are not a unilateral move vs. Bitcoin by the Chinese Government.  The Chinese Government previously validated Chinese citizen’s right to buy, sell and trade Bitcoins.

While China continues to control it currency there is a general sentiment that China is opening up its markets and currency at a slow and measured pace. As China’s currency becomes liberalized, so to may its regulations around Bitcoin.  It is possible that China’s most recent announcements were more about ‘too much, too fast’ than ‘not now and not ever.’

What does this mean for Bitcoins?

A few days after the most recent announcement, the Chinese exodus appears to more a statement on the health of Ecoins than an early sign of their demise.  Things seem to have stabilized with Bitcoin price over $650 from a low of under $500.

Before the Chinese got big on Ecoins, the price was substantially lower than current value. Seemingly, global demand outside of China continues to increase. If this trend continues, Bitcoin could return to its historical highs in due course. Over time it is also possible that China will see Bitcoin as an asset rather than a threat.

bitcoin-hacker_photobucketEcoin Insurance

When you buy or sell an Ecoin you can use escrow services like Local Bitcoin to increase the likelihood that you will get a fair trade. If a Bitcoin (or other Ecoin) is stolen it is almost impossible to get it back. There is no buyer guarantee, charge back or refund option. Also there is no way to delete the stolen Bitcoin and replace it.  Basically the victim is without recourse.

Hard to hide stolen Ecoins

Unlike cars, jewelry and cash, it is extremely difficult, if not impossible to hide coins from the world and still use them. This is because of the peer to peer block chain. A thief is attempting to do it right now with 96,000 stolen bitcoins. You can actually watch it happen real time on the block chain. The block chain records every Ecoin transaction that has ever occurred.  The entire world knows the exact network location (Bitcoin Wallet) of the stolen Ecoin. The entire world also knows exactly when that Bitcoin or portion of that Bitcoin is moved on the network from one Wallet to another.

Tagging stolen Ecoins

Because every ecoin transaction is recorded, the ecoin can also be tagged as stolen. The tag could follow the stolen Bitcoin around the network. The stolen ecoin index could be available to the entire peer to peer network and ecoin clients could look at the index to determine if a coin that they received is stolen.

How Bitcoin and Ecoin insurance could work

Ecoin holders would pay the insurance premiums with ecoins the same way we buy insurance now. When a ecoin is stolen the victim would make a claim against the insurance similar to claims against ordinary theft insurance. Once the insurer confirms that the coin has been legitimately stolen, the insurer would replace the ecoin. The insurer would become the rightful owner of the stolen ecoins.

The insurer could offer a bounty for the return of the stolen ecoins. The first time the coin is traded or held in an online wallet it would be identified as stolen and could be transferred back to the insurer for the bounty. Once the ecoin is back in the hands of the rightful owner, the stolen tag could be removed and the ecoin recirculated.

 

What is Ecoin Mining

bitcoin-mining-rigMining Bitcoins can be compared to mining minerals like gold, copper silver etc.  The way you mine gold is my digging in the ground, looking for something shiny, then testing to make sure that it is gold.  When you mine Ecoins, your shovel is a computer doing math and your testing kit is all the other computers on the Ecoin peer to peer network.  Instead of digging in the dirt to find something that looks like a Ecoin, your computer tries to solve a difficult math problem.  The math problem that has many correct answers, but not an infinite number of answers.

Since there is a finite number of correct answers to the math problem, as Ecoins are discovered there are less to find.

Mining computers requires a great deal of computing horsepower.  If you do not have a powerful computer and a cost effective power supply, you will not be able to mine Ecoins.  Unfortunately, this describes most of the people living in the world.

bitcoin-mining-rig

The first thing you need to decide is what Ecoin to mine.  You will want to understand how accepted the Ecoin is as a currency, how hard it is to mine and who is leading the evolution of the Ecoin.  Some Ecoins grow and some Ecoins fail.  A successful Ecoin has greater demand than supply, this is often reflected by the value of the Ecoin.  As an Ecoin becomes more valuable it also tends to become harder to mine.  The computing required to find the Ecoin becomes more expensive and more powerful. For example, right now only ASIC computers (computers with custom circuits for mining) will be successful mining for Bitcoin.  GPU (graphic cards) processing based computers are still successful for other Ecoin mining like Litecoins and Feathercoins.   A great shortcut to determine the best Ecoin to mine is to look at the market cap of the Ecoin, the relative difficulty to mine the Ecoin, and the community around the Ecoin.

The market cap of the Ecoin

The market cap of the Ecoin is  how much all the Ecoins in existence are worth (does not include undiscovered Ecoins).  This is important because as you will find out soon enough there are many Ecoin types to choose.  Picking an Ecoin with a reasonable market cap vs. other Ecoins is a quick way to get an idea of value and acceptance.  Also look at the percentage of the Ecoin that has been discovered to get an idea of the maturity of the market.  These are two factors that help to predict which Ecoins are going to grow and which Ecoins are going to perish.

Relative difficulty to mine the coin

The easier it is to mine the Ecoin, the more of it will find with your computer equipment.  Generally, the easier it is to find the Ecoin, the less computers are looking for it. As demand for the coin grows, the mining difficulty increases and so does the market cap.  Also keep in mind, the computer that youa re going to use to mine for eht coin.  if you have a MONSTER system you can go after slightly more mature and valuable Ecoins.  If you are using a typical desktop, it is probably best to Ecoin that is easiest to mine.  Balancing an Ecoin’s market cap and mining difficulty will help you pick the best coin to mine for you.

Ecoin community around the Ecoin

Taking  a look at the community around the Ecoin is sort of like getting to know the people who are building a company.  Most open source Ecoin projects are built and maintained by a core community of developers, enthusiasts and businesses.   Getting to know the team may help you gauge the strength of the coin and its potential for growth.

Lastly, when you are calculating the cost of mining vs. the reward, don’t forget about your power costs.  When you are mining, your computers are basically working full force, full time.  This costs power which is a real cost for mining.

An Ecoin is an electronic currency.  It is also referred to as E-currency or crypto currency.  It is pretty much like cash for the Internet. Ecoins come in two types, closed network ecoins and open network ecoins.  Examples of closed network ecoin networks are the types of ecoins used for virtual goods for games or on social networks.  In game currency like Facebook credits and Gold for World of Warcraft are examples of closed network ecoins.  The other major type of ecurrency is open network systems.  Bitcoins and litecoins are two types of peer to peer, open network crypto currencies.  Bitcoin is the grandfather of these types of ecoins.  Litecoin is the up and comer.  There are many other types of Ecoins as well.  Each coin has its own flavor.  The major type are outlined in the chart below.

Coin name Blocks Difficulty Network GH/sec
Anoncoin

99746

14.1994

0.3388

Bitcoin

271217

609,482,679.89

3,635,705.80

Digitalcoin

558493

2.0761

0.1313

Devcoin

115068

213,289,495.25

1,145,009.74

Freicoin

45381

222,837.03

1,927.45

Feathercoin

119314

139.3644

2.7019

I0coin- DORMANT

964360

4,382,937.16

190,860.24

Ixcoin

174022

168,573,279.37

1,206,694.54

Litecoin

465823

1,486.12

52.7472

Namecoin

147504

456,070,389.19

2,584,537.55

Peercoin

81889

9,726,255.71

95,725.32

Terracoin

216946

114,552.10

2,630.82

Worldcoin

812681

10.3822

1.4399

Primecoin

270885

0

0

A chart of active open source ecoins as of Nov 23 2013

From a user perspective, an ecoin network is just a mobile app, computer program or online account that provides a personal ecoin wallet and allows a user to send and receive ecoins with the wallet.

Behind the scenes, the ecoin network is sharing a public ledger called the “block chain”. This ledger contains every transaction ever processed, allowing your computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending ecoins from their own ecoin addresses. In addition, anyone can process transactions using the computing power of specialized hardware and earn a reward in ecoin for this service. This is often called “mining”.

Every ecoin or fraction of an ecoin starts life the same way – as a hidden number that must be “found” by a computer that is mining (doing calculations) to find the ecoins.  Once an ecoin is found it is placed in a digital “wallet”.   It stays in the digital wallet.  If the owner wants to sell, give or trade the ecoin (or fraction of the ecoin), they will send the number of ecoins to the recipient’s ecoin wallet address (likely a long string of numbers and digits).

There are many reasons cited as benefits for buying and selling with ecoins rather than currency or credit.  Some of the most popular are:

(1)  The buyer can remain anonymous to the seller.  In the “real” world you can walk into a store, buy something with cash and remain anonymous.  This is not really an option online since almost all transactions you to create an account and use a credit card or bank account.  Ecoins and other crypto currencies allow the buyer to pay for goods and services online without revealing his or her identity to the seller.

(2) Transaction fees are typically less than other digital or credit options.  Credit card and debit transactions fees can range from 2% to 10% of the actual purchase.  Ecoins transaction fees are typically less than 1%.  Many are as low as .02%.  Basically ecoins cut out the banks in the middle and the transaction fees that come with them.

(3) It is extremely (if not impossible) to counterfeit ecoins because validity requires over 50% of all the computers on the peer to peer network to agree that the ecoin is real.  That is like waking into your local store, paying with a $100 bill and having every person in the U.S. look at the bill and only if a majority agree will it be considered a “real” $100 dollar.

 

An Ecoin is an electronic currency.  It is also referred to as E-currency or crypto currency.  It is pretty much like cash for the Internet. Ecoins come in two types, closed network ecoins and open network ecoins.  Examples of closed network ecoin networks are the types of ecoins used for virtual goods for games or on social networks.  In game currency like Facebook credits and Gold for World of Warcraft are examples of closed network ecoins.  The other major type of ecurrency is open network systems.  Bitcoins and litecoins are two types of peer to peer, open network crypto currencies.  Bitcoin is the grandfather of these types of ecoins.  Litecoin is the up and comer.

Open ecoin networks are called peer to peer because all the computers that are mining for crypto currency are in a peer to peer network which allows them to easily talk to one another.  This tool is used to validate transactions.  It is called crypto currency (cc) because of how it is acquired.

Crypto currency in an open network is originally acquired by having very powerful computers solve match problems.  Crypto currency can be compared to minerals like gold, copper silver etc.  The way you mine gold is my digging in the ground, looking for something shiny, then testing to make sure that it is gold.  To mine crypto currency your shovel is a computer that can add/subtract/multiple and divide and your testing kit is an internet connection so that your computer can talk to all the other computers that are also mining in the peer to peer network.    Instead of digging in the dirt to find something that looks like a ecoin, your computer tries to solve a pretty difficult math problem that has many correct but not an infinite number of correct answers.  Since there is a finite number of correct answers, every ecoin that is found means there is one less ecoin to find.  Over time this creates a decrease in supply and also makes it harder to find the remaining ecoins.   If demand for an ecoin increases overtime, the value of the ecoins may increase because supply of new ecoins will decrease by design.

Once your computer thinks that it has found a correct answer, it will ask all the other computers that are also mining in the peer to peer network to confirm that it has found a correct answer to the math problem.  When 51% of the mining computers agree that an answer is correct, the mining computer is awarded an ecoin by the network.  Once validated, every individual transaction is permanently recorded in a public ledger known as the blockchain.

Here is an example.  Let’s say that the correct answer to match question to be awarded a ecoin is “What is a whole number between 1-99 that ends in a zero.”  The correct answers would be 10,20,30,40,50,60,70,80,90.  If our computer started mining, in this case counting from 1-99, when it hit 10 it would realize that it found a correct answer.  It would then ask all the other computers that are mining in the peer to peer network if 10 is a correct answer.  Once a majority of those computers agree that 10 is a correct answer, your computer would get a ecoin and no other computer could ever be awarded a ecoin for finding 10.