Tag Archives: Mining

protoshares

Protoshares is an Ecoin that is directly tied to the value of the work being performed by the computers in the peer to peer network.  Computers that are mining for the Ecoin and processing transactions for the Ecoin are entitled to a proportional amount of the value derived from these activities.  Protoshares are actually the precursor to Bitshares which will be the ‘stock’ in a Distributed Autonomous Corporation (DAC).  The DAC is a peer to peer cloud computing company that in a sense is for hire.  The owners of the DAC are the holders of the Ecoin associated with the DAC.  For this initial DAC, the company that is launching it, is trading Protoshares for other Ecoins to provide seed capital to build the DAC.  The initial DAC is being developed by a company called Invictus Innovations Incorporated.

The DAC is conceived to be be a flexible peer to peer network for hire. For most other Ecoins, the mining computers only mine for the Ecoin and/or process transfers of the Ecoin.  The vision of the DAC is compensate the holders of the Ecoin proportionally to their coin holding for the mining, processing and other tasks being performed by the network.  Anyone may acquire shares in the DAC by mining or trading for Photoshares now and Bitshares later.

Once the company launches the DAC, the Protoshare holders will exchange their Protoshares for shares of the DAC called Bitshares.  The value of the Bishares is backed by the processing work of the DAC network computers.  Some of these services could include payment processing, asset trading, domain name services (DomainShares), and in the future any service that benefits from peer to peer network computing.  It is possible that in the future a DAC could operate like a cloud computing solution like Amazon Web Services and become a very strong wealth generator.

When a computer is mining ecoins, it is factoring extremely large numbers in an effort to match an RSA like encryption. Ecoins are rewarded to a computer when the computer solves the encryption problem and proves it to the network. Recently software engineer and Founder’s Dojo member Raj Shah explained hashing and quantum security and its relationship to bitcoins.

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.