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9 Main Barriers to Widespread Cryptocurrency Adoption

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This article was originally published on coincentral.com the 20th of August 2018

Like any nascent technology, cryptocurrency has to go through its paces before becoming widely used. Theories on electricity were published as far back as the 1600s, but electricity didn’t arrive into homes until the late 1800s. Even today, there are still around one billion people around the world who live without it. It’s not surprising, then, that in just one-decade mass cryptocurrency adoption is still a long way off.

So why is there so much pressure on cryptocurrency and the powerhouse technology behind it? We’ve reached the peak of inflated expectations with blockchain being touted as a solution to all the world’s ills. In fact, one of the main barriers to mass cryptocurrency adoption may simply be that we’ve marketed it too much–with little substance to back up our claims.

According to a recent survey by Deloitte, “blockchain fatigue” is starting to set in around the world. But beyond the fact that people are bored of hearing about this digital money they don’t fully understand, there are plenty of other barriers to mass cryptocurrency adoption. Let’s take a look at the top nine.

1. Lack of Clarity

When we hear claims that blockchain is immutable, then later read that it isn’t really, or that Bitcoin is anonymous, but not as anonymous as we thought it was, blockchain becomes shrouded in mist. There’s a lack of clarity from the cryptocurrency community and regulatory indecision isn’t helping.

If the people in charge of protecting investors can’t decide what to call the tokens they’re regulating, how is the public supposed to know? What’s the difference between a utility token, security token, and equity token, anyway–and why do you have to store your invisible money in a physical hardware wallet?

A lot of these questions are hard for crypto insiders to answer, let alone the layperson who’s receiving a watered-down version of explanations.

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Smaller countries like Malta are launching programs to educate the general public, particularly the people who will use blockchain tech on a daily basis, such as government employees.

Other countries, including Ireland and Australia, are working to create Ph.D.s and other university courses in blockchain technology. They’re also going into schools at an early age to encourage children to spark an interest in programming. And companies like ConsenSys are offering crossover courses in the Ethereum blockchain to developers, mathematicians, computer scientists, and enthusiasts from other disciplines who want to explore this new technology.

There are also a number of courses online, including free podcasts, and YouTube tutorials. But until we can tighten the narrative, stop selling the emperor’s new clothes, and start on useful education initiatives to provide much-needed clarity, widespread cryptocurrency adoption is still a long way off.

2. An Overwhelming Amount of Cryptocurrencies

There’s something like 1,800 cryptocurrencies currently listed on Coinmarketcap. Not all are created equal, nor intend mass adoption (some are for gamers, others for agriculture, others still for music or art). Many of them show extraordinary promise and rock-solid theories, use cases, and community support. But there are plenty more companies launching tokens purely to raise funds.

Until we cut out the useless cryptos and improve interoperability between blockchains, mass cryptocurrency adoption will be hard. With so many on offer, how do people with little experience know which ones to buy or whether one will emerge stronger than the rest? 

Moreover, if the point of cryptocurrency was to allow for borderless, frictionless, peer-to-peer payments, why do we need so many? There are only 180 government-issued currencies, so aren’t we complicating things a little too much?

3. Usability

If you’ve ever shown your Grandma how to send a text or stop your parents signing off with their name on Facebook, you’ll know that getting them to save private keys and public addresses may be a little hard.

The majority of the crypto community may not mind the complexities of entering in 42-character addresses or securing private keys. But the wider public does. The reason the cybercrime industry is so prolific is that we continually opt for convenience over security. We choose simple passwords that are easy to crack, stay logged into our sessions, or sign up for new accounts using Facebook.

Making cryptocurrency transactions smoother and account creation simpler remains a barrier to mass cryptocurrency adoption. Many people are currently put off by having to upload a selfie with their ID card, but as regulators get tougher on KYC/AML requirements, usability will continue to be a hurdle.

4. Scalability

Scalability is a thorn in many a developer’s side, and an extremely prickly one at that. The Ethereum network can still only support around 15 transactions per second. Bitcoin’s maximum transaction processing capacity is somewhere between 3-7 per second. While other blockchains such as NEO or non-blockchains like the DAG are offering new solutions, they don’t come without their own challenges.

We can’t support mass adoption of cryptocurrencies when it takes 10 minutes or more for a transaction to clear. Scaling to onboard more users is one of the greatest challenges there is.

But if we think back to electricity, then that’s actually okay. After all, we’re still waiting to connect the rest of the world to the energy grid. 2 billion people around the globe are still waiting for an internet connection. So, it’s unlikely that mass cryptocurrency adoption will happen any time soon. The technology needs time to mature and figure out solutions to its problems first.

5. Scams & Hacks

Just as bad news always makes the headlines, the media is filled with stories of cryptocurrency exchanges being hacked and investors losing their funds. Since there’s no insurance policy on most exchanges or clear regulation in place, your money could be there one day and gone the next. Think Mt. Gox, Bitfinex, or The DAO.

Then there are the ICO scams happening on a far-too-frequent basis. OneCoin will go down in history as one of the most sophisticated Ponzi schemes ever invented and exit scams are rife.

The SEC is trying to educate people in the US on these types of problems through initiatives such as the HoweyCoin scam. This is to show investors the possible red flags to watch for when backing an ICO. Tighter regulation will weed out more fake ICOs. In fact, Malta’s latest laws have some of the strictest requirements for white papers out there to purposely remove bad actors from the space.

6. Volatility

You may be a fan of BitcoinEthereumLitecoin, or Cardano. But you have to admit, none of them come close to being effective as a means of everyday currency. Even Dash still fluctuates far too much to make large purchases with confidence (unless you’re living in a country with hyperinflation). 

If we’re to use cryptocurrency as a currency and not an investment vehicle, we need to lose the volatility. 

7. Criminal Association

Bitcoin was part of the reason that the Silk Road grew to its dizzy heights of fame selling drugs, weapons, and even hitmen online. Thanks to money laundering, terrorist financing, and other criminal activity, Bitcoin earned a sketchy reputation

In fact, Bitcoin was also the most popular payment method for cybercriminals in Ransomware attacks in 2017. And now cryptojacking is the biggest cyber threat this year, growing by 8,500 percent in Q4 of 2017.

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While it’s true that not all ICOs are scams, not all cryptocurrency funds are hacked, and most criminals prefer the US dollar to launder money, the negative associations still linger on.

8. Regulation

Regulation, or rather, lack of regulation is still keeping many people away. We’ve seen some major moves this year from ICOs to STOs, and new legislation from smaller countries like Malta, but there are still far too many gray areas. And of course, there’s too much disagreement between jurisdictions. 

While setting a global standard in regulation may not be possible (or even desirable), at least a basic agreement on KYC/AML practices could prevent further crime and encourage more people to enter the space.

9. Environmental Impact

Nearly three in four millennials would pay extra for sustainable goods. There’s never been a generation as conscious about the environment as millennials. But while reports of Bitcoin mining’s disastrous effects on the environment and draining natural resources are rife, crypto remains a hard sell.

Sustainable mining is another problem developers are working on. Proof of Stake could be a viable solution, but it’s less secure and more prone to centralization than Proof of Work. 

While countries like Canada and Iceland allow for cryptocurrency mining using sustainable energy resources, we need to do a better job of reducing the amount of computational power that blockchains need to run.

Mass Cryptocurrency Adoption Is Still a Ways Off

There are plenty of barriers to mass cryptocurrency adoption. Even just changing a mindset and a culture takes time. Blockchain may be slow and clunky right now, but it’s only been just over a decade since the smartphone appeared on the scene (remember your Nokia brick?). Cryptocurrency will enter the mainstream, but the technology needs to be better, faster, more sustainable, and easier to use before it does.

How Antminer Became the Best Bitcoin Mining Hardware in Less than Two Years

This article was originally published on coincentral.com

Bitmain currently dominates the mining sector. The company’s Antminer line is consistently ranked among the best Bitcoin mining hardware available. This secretive Chinese company has managed to secure their position through a combination of tactics which include strong positioning and consistent development of their product line.  Let’s take a moment to examine how this mining giant was able to climb to the top in such a competitive era.

Huge Profit Margins

Bitmain is raking in huge profits every quarter.  According to a recent CNBC report, Bitmain is now earning more profit than the hugely popular GPU card developer Nvidia.  Bitmain currently enjoys a 65% profit margin on their products. The report concluded that Bitmain achieved profits as high as $4 billion in 2017.

Antminer Bitcoin Mining Hardware

These huge profit margins have helped Bitmain develop their Antminer Bitcoin mining hardware line into one of the most advanced miners on the market.  By doing so, Bitmain has also raised the hashing power of the entire BTC network; which has increased the difficulty for miners. In turn, this has forced more miners to purchase ASIC mining rigs to stay relevant in the mining space.

The ASIC or Application Specific Integrated Chips used in the Antminer line are designed to handle the SHA-256 hash code used by BTC.  These advanced mining chips produce far more hashing power than GPU or CPU mining efforts. In many instances, ASIC chips are capable of calculating the Proof-of-Work 100,000 faster than their GPU counterparts. Today, you will need an ASIC mining rig if you intend on successfully mining BTC on a large scale.

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Mining Pools

Bitmain also controls numerous mining pools.  A mining pool is a network of computers which combine their hashing power. Mining pools have become hugely popular as they allow almost any individual to get in on mining BTC.  The profits from the joint mining venture are split up between the members of the pool according to their hash contributions. 

Mining pools are one of the best ways to start mining BTC in today’s competitive ecosystem.  Unfortunately, these pools are also centralizing a large portion of the BTC network. This has resulted in Bitmain gaining even more control over the mining sector.  

Conservative estimates by the accounting firm Bernstein have put Bitmain’s market share at 70%-80%.

Bitmain currently owns or operates a number of the world’s largest mining pools. These include Antpool and BTC.com. The reclusive company also operates several cloud mining divisions in addition to these hardware-based mining pools.  Hashnest, Suanlibao, and BW.com are three of the biggest cloud mining operations in existence today.  All of which are controlled, by Bitmain.

Supplying Mining Pools with Bitcoin Mining Hardware

Antminer rigs are now the industry standard.  Bitmain has further capitalized on their positioning by providing competing mining pools with access to their Bitcoin mining hardware in exchange for a percentage of the pool’s profits. This has been a hugely successful venture.  It has also resulted in the growing demand for Antminer Bitcoin mining hardware in the industry.

Bitcoin Mining Hardware Data Centers

Bitmain has pioneered the shared data center business structure and currently, anyone can rent out additional hash power form one of their centers to increased their mining capabilities.  These data centers are often located in parts of the world where renewable or very low-cost energy is present. This is the case with their Inner Mongolia location. Bitmain is able to increase their profits even further by positioning their data centers in these regions.

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New Bitmain Ventures

Bitmain is aware that the market is constantly shifting. Chinese officials have been vocal on their distrust of the cryptocommunity and last year the country implemented a ban on ICOs.  This prompted the Bitmain executives to expand their operation globally. Today, Bitmain operates subsidiary mining farms in Israel, Switzerland, Canada, and Singapore. 

Is Bitmain to Big?

Bitmain has managed to secure their position as the industry leader by providing the miners with more powerful ASIC mining options.  This has also given Bitmain incredible power within the BTC network. Bitmain now controls the destiny of BTC in terms of development. Any changes to BTC’s protocol must be approved by the mining community. This means that Bitmain has the ability to weigh heavily on future protocol updates.  

Experts put Bitmain’s network control at around 51%. This means that Bitmain is now large enough to ensure that BTC developments fall in line with their company’s products.  This has led many people in the cryptospace to criticize the firm’s hawkish tactics. Any mining pool with 51% control over the network gains the ability to reject transactions aimed at certain addresses.  In this way, Bitmain is able to further their profits while reducing their competition.

Antminer Continues to Rising

Critics of Bitmain are going to have to take a backseat for the time being.  The company continues to develop their Antminer line and push the hash power of the BTC network even further.  In addition to mining BTC, Bitmain has also started developing ASIC chips for other Proof-of-Work coins such as Ethereum.  This has also increased the difficulty experienced by miners within the ETH blockchain network

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Antminer Continues to Reign Supreme    

The competition is steep in the cryptocurrency mining sector, and Bitmain is keen on staying on top of the market.  This company has managed to position their firm perfectly within the cryptocommunity. The company’s founders, Micree Zhan and Jihan Wu, are vocal in the cryptocommunity, and you can continue to expect them to weigh in on any crypto issues that could potentially diminish their control over the market. 

Developers are watching the situation as it unfolds.  Many are looking to new proof methods such as Proof-of-Stake to help alleviate their concerns. Unfortunately, any changes will require a consensus by the mining community, which, in its current state, is controlled by Bitmain.  Hopefully, in the near future, there will be a push to decentralize BTC’s mining sector. For now, you better get an Antminer if you want to mine BTC successfully.

Economists’ Take on Why It Is (Or Isn’t) Worth Investing After the Bitcoin Dip

 This article was originally published on  concentral.com    Compared to January 2018, cryptocurrency prices have been down somewhat in recent months. The so-called bitcoin dip has created some skepticism amongst some investors. Is this just a short-term hiccup or part of a larger trend?  With constant media coverage about prices “near zero,” many investors are asking themselves, “Is investing in bitcoin worth it?” In this article, we’ll look at a few different stories related to what economists and academics  have to say  about investing in cryptocurrencies. We’ll also try to get a better understanding of what impacts these evaluations.  Can Economists Accurately Predict Cryptocurrency Prices?  Economists play an important role in predicting the future of the global economy. They have traditionally been instrumental in helping governments, businesses, and individuals make decisions that impact the world. Now, many economists are beginning to research and predict what the future of cryptocurrency and  blockchain financial services  will look like.   In the cryptocurrency market, there are a number of factors that go into determining the market outlook. For many economists (as well as investors), price volatility due to technical limitations, regulations, and market adoption has made it quite difficult to predict price changes.  For example, in January 2018, Yale University economics professor  Robert Shiller  said, “[bitcoin] might totally collapse and be forgotten, and I think that’s a good likely outcome, but it could linger on for a good long time, it could be here in 100 years.”   While this prediction is far from certain, it is indicative of how many economists view the cryptocurrency market. We also see that increased pessimism seems to follow recent market trends. 

This article was originally published on concentral.com 

Compared to January 2018, cryptocurrency prices have been down somewhat in recent months. The so-called bitcoin dip has created some skepticism amongst some investors. Is this just a short-term hiccup or part of a larger trend?

With constant media coverage about prices “near zero,” many investors are asking themselves, “Is investing in bitcoin worth it?” In this article, we’ll look at a few different stories related to what economists and academics have to say about investing in cryptocurrencies. We’ll also try to get a better understanding of what impacts these evaluations.

Can Economists Accurately Predict Cryptocurrency Prices?

Economists play an important role in predicting the future of the global economy. They have traditionally been instrumental in helping governments, businesses, and individuals make decisions that impact the world. Now, many economists are beginning to research and predict what the future of cryptocurrency and blockchain financial services will look like. 

In the cryptocurrency market, there are a number of factors that go into determining the market outlook. For many economists (as well as investors), price volatility due to technical limitations, regulations, and market adoption has made it quite difficult to predict price changes.

For example, in January 2018, Yale University economics professor Robert Shiller said, “[bitcoin] might totally collapse and be forgotten, and I think that’s a good likely outcome, but it could linger on for a good long time, it could be here in 100 years.” 

While this prediction is far from certain, it is indicative of how many economists view the cryptocurrency market. We also see that increased pessimism seems to follow recent market trends. 

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What Are Economists Saying After January 2018?

Flash-forward past the January all-time high price point for many cryptocurrencies, and there are many new reports and quotes from economists that look at cryptocurrency in a negative light. What’s important to understand is that some are backed by research. For example, two economists stated in July 2018 that the price per Bitcoin should only be around $20, instead of the $7,000 mark (price in mid-July 2018). 

This number takes a few different factors into consideration like the current supply of Bitcoin in circulation and its daily usage in transactions. According to these two economists, the use of Bitcoin would need to increase 1000x in order for its actual price to equal its current value.

Back in March 2018, Harvard economist Kenneth Rogoff said, “Basically, if you take away the possibility of money laundering and tax evasion, [Bitcoin’s] actual uses as a transaction vehicle are very small.” Rogoff also said that the price of Bitcoin is more likely to be $100 rather than $100,000.

A Matter of Perspective: Bitcoin Bubble or Bitcoin Dip?

One of the biggest questions to ask is whether we are currently in a bitcoin bubble or merely in a bitcoin dip. Many economists and financial experts looked at the price fall that took place in January 2018 as a sign of the big bubble burst. Others, like the above example, look at it as just part of a larger bubble. Still, it’s easier to say that prices will collapse to “near zero” when they’ve been consistently down.

On the other hand, it’s possible to also see the price declines in 2018 as merely a bitcoin dip. It’s important to also share the work being done by economists that is pro-cryptocurrency.

Economist and Mathematician Now Working in the Field of Cryptocurrency 

Myron Scholes

While many economists have denounced all cryptocurrencies as unstable and volatile, Myron Scholes and other big names in traditional finance are taking the opposite stance. Myron Scholes is an economics Nobel laureate who created the Black-Scholes formula, the most well-known model for pricing options and derivatives. 

Now, Scholes is getting involved in the world of cryptocurrency with the launch of a new stablecoin, Saga. Since stablecoin prices are intended to be stable, it’s not important that investors invest during a bitcoin dip or a bull market.

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Even though investors can’t expect to make large profits from investments in stablecoins, these projects help the overall cryptocurrency market mitigate price volatility issues.

Additionally, Scholes’ decision to work on a cryptocurrency project represents the possibility that economists, who have mostly lived in a fiat economy, are starting to work on the creation of a new cryptocurrency economy. Scholes and other crypto economists are beginning to work on innovative projects that solve many of the issues with traditional finance and centralized banking systems.

Charles Hoskinson

Charles Hoskinson is an example of a mathematician/technologist who believes in the development of cryptocurrencies. While Scholes started to work on cryptocurrency projects in 2018, Hoskinson has been working on big-name projects for a few years. Hoskinson, one of the eight original co-founders of Ethereum and the founder of Cardano, is one of the biggest names in cryptocurrency. 

According to Hoskinson’s LinkedIn, he studied analytic number theory, mathematics, and cryptocurrency. He has worked on complex mathematical problems such as the Goldbach Conjecture. Hoskinson’s story is proof that someone starting out in academia can make a career transition towards entrepreneurship and have a significant impact on cryptocurrency. 

 

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Conclusion: Will More Economists Support Cryptocurrencies in the Future?

When considering that many economists are skeptical of cryptocurrencies in 2018, we need to dissect why this has been the case. It’s important to understand whether or not economists invest in cryptocurrencies. Regardless if one invests in the bitcoin dip or not, it’s essential for any researcher to view the market as objectively as possible. 

First, price volatility and general market unpredictability do make investment risky. Anyone can say that prices will rise and fall. However, economists generally try to be more precise with numbers that are backed by extensive data and research. The reality is that it is difficult to predict if or when solid data will exist to make the cryptocurrency market more predictable for economists. 

Lastly, it’s possible that some economists make decisions based on what the current market is doing rather than where the market can go in the future. If we continue to see advances in user adoption, usability, scalability, and more, it’s possible that more economists, mathematicians, and others in academia will become optimistic about why cryptocurrencies are worth investing in.

How to Get into a Bitcoin Business that Works

This article was original published by David Hamilton on coincentral.com the 19th of July 2018.

Blockchain technology is expanding at an astonishing rate. This technology is creating a prosperous environment for entrepreneurs seeking to start a Bitcoin business. It has been an exciting ride for BTC investors, and over the last nine years, considerable growth has occurred in the crypto space. Today, there are numerous Bitcoin business opportunities to consider.

Homework Time

Your quest for the perfect BTC business should start with research. Bitcoin business opportunities are everywhere, but it is important to remember that not all countries are pro-bitcoin. China allowed only one BTC ATM to operate until banning ICOs in the country last year. Today, that BTC ATM sits in the lobby of the headquarters of BTCC, decorated like a Christmas tree, with no BTC available.

Lawyer Time

To avoid losing your investment, you should consult your local legislation before choosing a particular business model. Countries vary on their crypto legalities. To avoid a worst-case scenario, such as getting thrown in jail and having all of your crypto confiscated, you need to consult with your local government. A lawyer can make this part of the process easier. 

Some lawyers specialize in cryptocurrency related manners, such as Lee Schneider from the prestigious law firm McDermott Will & Emery. Mr. Schneider explained how his practice is now solely dedicated to blockchain technology in a recent interview with theinformation.com. He’s not alone either. There are a growing number of law firms turning to the budding crypto market in search of new clientele.

Consider Your Funding

Your available funding will play a crucial role in determining what business model best fits your criteria. Not all Bitcoin businesses cost the same. There are various low cost start up BTC businesses, such as BTC ATMs and merchandise. You can start either of these businesses for under $20,000.  

There are also BTC businesses that require very large investments. You will need significant capital if you are considering opening a sizable mining operation. ASIC mining rigs are expensive to purchase and operate. You could very easily spend a significant amount of your funding on mining rigs alone.

For example, the current industry standard is the Antminer s9. These units cost $698. A large size mining operation could easily consist of one hundred Antminer s9s. Many large mining farms even include thousands of mining rigs. A mining farm of this size would require a $700,000 investment before any other costs involved with the business, such as location, staffing, and installation.   

Bitcoin Lending Services

Bitcoin lending specializes in providing startup capital. These services can bolster your funding significantly when used correctly. Bitcoin lending services can be a great way for you to start a Bitcoin business without spending all of your hard earned crypto. One example of a Bitcoin lending platform is Unchained Capital

Unchained Capital will lend you USD and allow you to use your Bitcoin or Ethereum as collateral. Users are permitted to borrow up to 50 percent of the value of their crypto collateral. And, the loans are available for three-month and two-year terms. The downside is that you’re looking at a ten to fourteen percent interest rate on your loan. But, you may find that your potential business can accommodate for these interest rates and still produce a sizable profit. 

Popular Bitcoin Businesses to Consider

There are a number of popular types of BTC businesses flourishing across the globe. You will find that some of these are better suited to your location than others. There is no one-size-fits-all when discussing Bitcoin businesses. Only research will help you to determine the best investment options. Let’s take a moment to look at a couple of the most popular BTC business models seen today. 

BTC ATM

Bitcoin ATMs are starting to become more popular. These devices allow users to purchase, send, and sell BTC anonymously. The cost for this anonymity comes in the form of transaction fees that are much higher than online alternatives such as Coinbase. A BTC ATM can provide you with a significant income if placed in the right location. You will want to verify their legality in your country before purchasing a unit.

The advantage of a BTC ATM is that it is an automated business system, which only requires you to keep the machines hot wallet stocked with BTC. The downside is that price fluctuations can affect the value of the BTC in your hot wallet. In many countries, such as the US, your BTC ATM will only be permitted to sell BTC to users. Selling BTC directly for fiat without KYC compliance is illegal in the US because of the fiat currency laws. Customers can buy all the BTC they want from your machines, but they will have to go somewhere else to sell it.

BTC Remittance

Bitcoin remittance firms are booming across the globe. Remittance firms send money internationally. Nations such as India and South Africa rely heavily on remittance payments. BTC remittance firms can provide these clients with a cost-effective alternative to the traditional process of sending money internationally. Crypto remittance services provide clients with instant transactions and reduced rates. A crypto remittance company can be a smart Bitcoin business to consider if you live in an area where remittance payments are a key component of the local economy.

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Mining Operations

BTC mining is still profitable thanks to the development of high-powered mining rigs and mining pools. Mining pools combine the processing power of every user on the network. The added leveraged hash power gives mining pools the ability to increase the effectiveness of all the miners involved. The miners split their profits earned according to their hash contributions. 

Today, Application Specific Integrated Chips (ASIC) mining rigs are the best option for mining BTC. These chips are thousands of times more effective at calculating BTC’s Hash-256 algorithm than GPUs or CPUs. ASIC rigs are going to take up a considerable amount of your investment, though.

You will also need to consider your operating costs. Regions with inexpensive or renewable energy options are better suited for mining operations. You may find that you’re not making a profit if you set up a mining operation in an area with high electricity costs. There are less than four million BTC to be mined. This scarcity should help to drive the demand for BTC up, and its price should increase accordingly. The last BTC is estimated to be mined by 2140.

Bitcoin Business Opportunities

It’s exciting to see how blockchain technology is providing the world with a plethora of new business opportunities. Many people in the crypto space believe the decentralized market will continue to see growth for many years to come. By opening a Bitcoin business now, you are positioning yourself wisely in this digital economic revolution.

The 7 Biggest Bitcoin Mistakes of All Time

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This article was originally published on coincentral.com the 29th of June 2018.

It was once said, a dumb person doesn’t learn from their mistakes, a smart person learns from their mistakes, and a genius learns from other people’s mistakes. This age-old saying rings ever true in the crypto market. Nobody’s perfect, and your Bitcoin mistakes can end up costing you big time. There are no refunds or take-backs on the BTC blockchain.  

Everyone makes mistakes. In terms of cryptocurrency, they can range greatly in their repercussions. In many instances, a Bitcoin mistake is small enough to recover from, but that’s not always the case. As you’re about to learn, even a small typo can end up costing millions of dollars when you’re dealing with BTC. Here are seven of the biggest Bitcoin mistakes ever made.

Mt. Gox Incidents

The now infamous Mt. Gox story reflects the importance of working with a team of accomplished developers on your project. Initially, Mark Karpeles saw great success working as the only developer for what had grown into the largest BTC exchange in the world. Unfortunately for him, his luck quickly changed after a hacker was able to infiltrate the auditing system of the exchange and slash the price of BTC down to pennies. Consequently, the price of BTC plummeted for months following this incident.

That same year saw the demise of Mt. Gox but not until after it was revealed that another mysterious hacker reportedly made off with $340 million in BTC. The shadowy intruder had been siphoning crypto from the platform, unnoticed, for years. To make matters even worse, the Mt. Gox system interpreted the hack as deposits. This caused the system to then begin crediting individuals with free crypto. One wallet received 40,000 in extra BTC. Ultimately, there was a total of 850,000 BTC lost in the incidents, which resulted in the bankruptcy of the exchange.

Mt. Gox from the Grave

It turns out that the ghost of Mt. Gox wasn’t done plaguing the market, and, in 2014, Mt. Gox struck again. This incident was far more innocent but still resulted in major losses for one individual. The losses occurred when an unknown crypto investor accidentally sent 800 BTC to the exchange’s wallet. In a heartfelt Reddit post the individual explains:

“messed up big time. I sent this address 800 bitcoin:

113MmkyjjH6zS9VMvbwrhBNoMe6upzdvNC.”

As it turns out, the address was already stored in the investor’s wallet because they had sent Mt. Gox BTC in the past. The Reddit community came to the aid of the individual and helped him to track the mysterious address to the now-defunct Mt. Gox, but he was never able to retrieve his crypto. All of this has further fueled the aura of bad luck surrounding this infamous exchange. 

Send Me Over Your Private Keys Real Quick

What would you do if someone sent you an email claiming to be your friend and asking for your private keys? It would probably be a good idea to verify that person’s identity before sending the requested information. Unfortunately, not everyone has the same level of common sense when dealing with the protection of their crypto.  

The firm Canadian Bitcoins lost 149 BTC last year when an unnamed individual sent a simple request for access to the server. When he contacted the company’s data center, the hacker claimed to be Canadian Bitcoin’s CEO, James Grant. At that time, the company’s data was being migrated to a new provider, Rogers Data Centre. All it took was one email, and the new data firm sent over the information.

Would You Like Some Mastercoin? 

The platform Fyfe was billed as the decentralized version of the internet. This project had seen extensive development over the last eight years, and this year saw the launch of their second stage ICO. Interested parties could invest in the platform by using either BTC or Mastercoin. The latter turned out to be a huge mistake. Mastercoin is a little-known altcoin that lost huge amounts of market value since the ICO date.  

Maidsafe, the firm behind the Fyfe project succeeded in raising millions, but, since most of the crypto gathered was Mastercoin, the firm’s funds have now since dwindled. Till this day, no one can explain why or how Mastercoin became involved in this ICO but one thing is for sure, Maidsafe learned an expensive lesson about accepting unknown and obscure altcoins. 

Never Complain About Fees

Bitcoin fees have been the subject of discussion in the crypto community ever since scalability issues began to emerge in 2016. At the peak of hysteria and volume, BTC users were paying substantial fees for their transfers. None of that compares to what one UK resident did in September 2013: accidentally input 80 BTC as his transaction fee.

To add insult to injury, the individual only wanted to send 0.01 BTC to the address in question. This mistake is more common than you would imagine. A similar incident occurred in July of 2013 when another BTC investor accidentally input 30 BTC as their transaction fee. Talk about inspiration to double check your transaction before pressing send.

Trashcoin

The decentralized nature of BTC makes it crucially important that you maintain control over your private keys. You can lose access to your BTC forever if you lose these all-important codes. That’s exactly what happened to Wales native James Howells when he accidentally threw out a hard drive that contained the private keys to 7,500 BTC.

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Mr. Howell mined BTC from 2009 – 2013. It was in 2013 that his laptop suddenly quit working and he was forced to discard it. In an interview with Telegraph, he explains how he accidentally placed the hard drive (HD) in the rubbish during a spring cleaning. The story made international headlines, and James even offered the landfill a reward if they were able to locate the HD. Considering that these coins hold a market value of $48,975,000 today, it would have been much cheaper for James to have purchased the landfill.

Lessons Learned

In the end, all of these incidents could have been avoided had the individuals involved chosen to follow a stricter protocol when dealing with their crypto. The immutable and unalterable nature of blockchain technology makes it perfect for most financial tasks. However, these same strengths can also become weaknesses when combined with human error and lackadaisical business practices.