If you’re a novice when it comes to cryptocurrency trading, there’s a lot you need to learn if you want to be successful. If you’re new to the financial markets completely, you definitely need to learn the ropes – just to make sure you don’t make any otherwise avoidable mistakes.

Best known as the immutable database that runs underneath cryptocurrencies like Bitcoin and Ethereum, blockchain is poised to play a critical role in every industry imaginable as businesses seek ways to cash in on the distributed ledger technology’s promise of enabling a “trustless” consensus to validate transactions.

Earnings in the past year

Smart miners need to keep electricity costs to under $0.11 per kilowatt-hour; mining with 4 GPU video cards can net you around $8.00 to $10.00 per day (depending upon the cryptocurrency you choose), or around $250-$300 per month.

Chart shows our earnings in the past year.

Financial transactions are typically guaranteed by a trusted third party (such as PayPal) and blockchain can be used to automate that process, reducing overall costs by cutting out the middleman with autonomous smart contracts acting as trusted intermediaries between parties on the network.

A blockchain,^[1][2][3] originally block chain,^[4][5] is a continuously growing list of records, called blocks, which are linked and secured using cryptography.^[1][6] Each block typically contains a cryptographic hash of the previous block,^[6] a timestamp and transaction data.^[7] By design, a blockchain is inherently resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”.^[8] For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.

Mining cryptocoins is an arms race that rewards early adopters. You might have heard of Bitcoin, the first decentralized cryptocurrency that was released in early 2009. Similar digital currencies have crept into the worldwide market since then, including a spin-off from Bitcoin called Bitcoin Cash. You can get in on the cryptocurrency rush if you take the time to learn the basics properly.

Which Alt-Coins Should Be Mined?

If you had started mining Bitcoins back in 2009, you could have earned thousands of dollars by now. At the same time, there are plenty of ways you could have lost money, too. Bitcoins are not a good choice for beginning miners who work on a small scale. The current up-front investment and maintenance costs, not to mention the sheer mathematical difficulty of the process, just doesn’t make it profitable for consumer-level hardware. Now, Bitcoin mining is reserved for large-scale operations only.

How Cryptocoin Mining Works

Let’s focus on mining ‘scrypt’ coins, namely Litecoins, Dogecoins, or Feathercoins. The whole focus of mining is to accomplish three things:

• Provide bookkeeping services to the coin network. Mining is essentially 24/7 computer accounting called ‘verifying transactions’.
• Get paid a small reward for your accounting services by receiving fractions of coins every couple of days.
• Keep your personal costs down, including electricity and hardware.

As a hobby venture, yes, cryptocoin mining can generate a small income of perhaps a dollar or two per day. In particular, the digital currencies mentioned above are very accessible for regular people to mine, and a person can recoup $1000 in hardware costs in about 18-24 months.

There’s a lot of hype with Cryptos. Why? Because most do not know what they’re investing in and would rather listen to the crowd. What happens then? Prices crash once you’ve bought into it. Taking a loan or using all your life savings can be hugely risky, especially if you do not have the prerequisite knowledge on the tech and the coins. Be informed. Ask the right people. Arm yourself with knowledge before jumping on the hype-wagon. This would significantly reduce your risk and most importantly, position you to invest in the long-term fundamentals of the technology.

There are plenty of opportunities to make lots of money in the crypto market, and you should be patient and wise to acquire the right knowledge before investing. Don’t be the person that invests based on the current hype. Do your research first. If it’s too complex, look for answers. The cryptocurrency community is filled with awesome individuals that can simplify things and help you along the way.

Financial experts seem to agree: Bitcoin is volatile. CNBC’s Jim Cramer and self-made millionaire Tony Robbins both compared investing in it to gambling in Vegas. Billionaire Mark Cuban said buying the currency would be like “throwing a Hail Mary.”

It’s probably safe to assume that Bitcoin is here to stay. Yes, it’s a bit volatile and yes, other cryptocurrencies are a lot easier to mine and a lot cheaper to buy, but the ever-growing number of ways to spend bitcoins – plus the fact that it’s still around after being proclaimed dead numerous times over the past few years – is a testimony of the resilience of the world’s most popular, and polarizing, cryptocurrency.

Thing is though, this doesn’t mean that you should blindly jump into Bitcoin. Aside from the high price of entry, a string of events over the past year have shown that while the Bitcoin protocol itself may be secure, the wallets and services used to store and exchange Bitcoin may not.