Blockchain and mining are the hot topic nowadays. Cryptocurrencies conquer media space, and the talks of the GPU crisis are known to everyone, not just PC enthusiasts.
Let’s start at the beginning. Blockchain is the technology that became popular thanks to another invention: it functions as a platform for cryptocurrency, such as Bitcoin. As we’re working in mobile industry, we’re interested in a technology that isn’t limited by cryptocurrencies, because right now many big companies and governments are researching the blockchain. In this article we’re delving deep into this technology but, before we do that, we must first understand what is the blockchain and how the first bitcoin was invented.
This landmark event happened in 2009 with the launch of the first Bitcoin Network and the creation of the first Bitcoin Wallet. Earlier on October 31 in 2008 Satoshi Nakamoto published his work “Bitcoin: A Peer-to-Peer Electronic Cash System” in a cryptography mailing list, where he defined bitcoin as a peer-to-peer version of electronic cash that functions without the involvement of third parties. All of the transactions between the network users are available to everyone. The concluded transactions are non-reversible, and online transfer between the two parties is done without the involvement of the third. It was Satoshi Nakamoto who acquired the first 50 bitcoin, and the price of one bitcoin today is 150 000 rubles.
How bitcoin is generated and what is mining?
Bitcoin generation is decentralized, this process cannot be manipulated, and the amount of emission is known beforehand.
The transactions form blocks, the information within them is not hidden, and every payee can recheck it as many times as they want.
Hashing is the process of transforming the data into a bit string of set length.
Blocks can be arranged into a single data chain with information on all transactions in the history of bitcoin.
The standard number of new bitcoin is added to the sum of transaction fees included in the next block. The user who creates the new block in the transaction database receives the final sum. This only happens after the previous block is completely filled with information.
The first emission amounted to 50 bitcoin. Every 4 years it reduced by half, and by 2031 the user creating the block will get less than one bitcoin. Should the bitcoin generation rate remain the same, the final sum will amount to 10−8 BTC by 2140, which is impossible, so chain users will have to settle for commissions only.
The process of the block generation is called mining — the reason why hundreds of shops around the world are sold out on GPUs.
Why GPUs are better for mining?
At first CPU was actively used in searching for hash of the new block header.
The chance to create a new block is very small because it is calculated as ratio of a single computer’s capacity to the capacity of the whole network. Those who want to make money by mining try to increase the capacity of their rig at all costs.
The largest mining farm in Russia uses 4500 kW per hour and 3 240 000 kW monthly. The owners of the farm have to pay 6,5 million rubles every month. The farm connects more than 3000 working miners ‘Antfarm S9’ with total hash power of 38 PH/s (this monster computes 38,000,000,000,000,000 hashes per second!). The location of the farm is unknown, however, we know that it generates 20 bitcoin daily or 600 bitcoin monthly (the numbers are from 2017).
So why the video cards? It’s important to point out that GPU (Graphics Processing Unit) is the video card’s core, and while both GPU and CPU are processing units each performs different tasks. This is why GPU is more effective at mining bitcoin.
As of 2011, CPU manufacturers create chips with 6, 8 and 12 cores and over 2000-3000 MHz frequency. However, Radeon HD 5970 (with 750 MHz) is 5 times faster than four 12-core CPUs clocked at 2,3 GHz.
In order to start mining from scratch, you will need a powerful rig that costs from 100k to 200k rubles, and GPU will pay for itself only after 155 days.
Where and how can you exchange bitcoin for cash?
There is a whole network of bitcoin ATMs, mostly in Europe and Asia. This one is in Singapore:
Here you can find a full list of Lamassu ATMs.
In Russia it’s more complicated. We don’t have such ATMs and according to Russian Federation regulation (article 75 of the Russian Constitution) all the monetary surrogates are banned in Russia. The government cannot approve cryptocurrency for the following reasons:
- Bitcoin isn’t tied to a certain bank.
- The currency does not have real value.
However, it’s Russia where we currently have GPU crisis and everyone suddenly building mining farms. How do people exchange cryptocurrency they generate?
Did you know? The first bitcoin exchange happened in May of 2010 in America. Laszlo Hanyecz bought 2 pizzas for 10 000 bitcoin. It should be pointed out, that today this sum would amount to 1 500 000 000 rubles.
There are enough bitcoin exchanges today. The most popular one localbitcoins.net has already opened a mirror after its main site .com was blocked.
Did you know? There are several bitcoin splits, also known as forks. Fork is a project, which is based on another project’s source code. By growing independently, each fork creates opportunities that the main code does not have. However, bitcoin always remains as a base for the forks.
We won’t delve too deep into mining and cryptocurrency exchange in the network. Instead, let us take a look at a more relevant and interesting topic for mobile marketing users — blockchain technology.
Blockchain network capabilities
So what is a blockchain? It is literally the chain of blocks, and the technology got its name from the way its algorithms function. Many technologies of tomorrow are being built using these algorithms.
The client identification happens via videochat recording in the blockchain. This project was developed by Igor Barinov, Block Notary startup founder. The client receives a link in the mail that leads to the videochat. In a private video conversation the client tells his personal information, it is then saved in the blockchain, after which it can no longer be updated. Such catalogue is more capable, and the blockchain protects the information more vigilantly than any other technology as the recording time and authenticity are recorded in it. Igor got the support of specialists from Microsoft, Citigroup, NASDAQ, Goldman Sachs and Morgan Stanley.
Together with his team, Igor developed a system capable of identifying car numbers by using traffic cams. This information is saved in the blockchain. The app records time spent by a card on a toll road, then finds the car number in the register and offers the driver to pay for the time spent on a tollway. The system allows to eliminate human element and other limiters such as tollbars.
Blockchain makes it possible to establish relations with individuals and companies who are not yet credible but make good strategic partners. Mathematical algorithm provides fraud protection and can confirm entries for all the network members.
Japanese airlines Peach Company will start selling tickets for bitcoin soon.
Blockchain capabilities are limitless. Bitnation, a startup from Brazil, advised European governments to implement this technology to handle the refugee problem more efficiently. As they do not have documents, Bitnation would provide them with virtual citizenship registered in the blockchain. Other governments that also accepted this proposal will be able to recognize these documents.
Sounds like a fantasy but this can happen in the next five years. The first agreement was established with Estonia — it came into force December 1 of 2015. The refugees are able to receive identifications and birth certificates, and get married.
American startup Everledger plans to keep a register of unique definitive features of diamonds. Should the jewelry be stolen, the register will be able to provide indisputable proof of ownership.
Social networks that utilize blockchain are already out there. A good example is Nimses, which defines user time as currency. The developers plan to make it possible to buy or sell goods for Nims, the app’s currency. They even have subscription for their own music service, which is very useful considering what’s been happening with licensing recently.
Mobile marketing and blockchain
“We read it, so what?” some will ask. How will this affect mobile marketing and its progress? Have you ever thought how many partners you work with? You trust some, and some — don’t. All the partner networks and agencies… By having a single blockchain aggregation of all the partners, you will be able to create trust network with every single visible transaction between the partners in the network, and connect more people to it. No shaving, fraud and other tensions between the partner and the client. You will have one hundred percent transparency.