What is Cloud Mining?
A technique to earn cryptocurrencies without owning any hardware. This method helps miners source hardware equipment, i.e., the mining rigs from any facility. A cloud miner simply registers the hardware in their name remotely or virtually and gets started with the minting process.
But before that, let’s understand Blockchain
In simplest terms, a blockchain is a decentralized ledger for all transactions made across a P2P network. Usually publicly available, and the nodes can generally be operated worldwide. Blockchain is completely transparent as everyone in the network owns the data. It is impossible to modify data without catching attention. Blockchains are immutable; once a transaction is made, it is added to the ledger permanently, solving the double-spending problem.
What is a Cryptocurrency model?
Cryptocurrency is a digital coin graded with encryption, and each such coin has a business model. There are millions of crypto-driven small businesses with a unique value proposition. Cryptocurrency acts as a medium of exchange explicitly created to transact in the blockchain network, and bitcoin stands as the first representation.
How does crypto mining work?
Crypto mining is a process of adding blocks to the network by solving complex mathematical equations. Like mining in rigs, crypto miners are responsible for solving such cryptographic equations with the help of high-powered computers.
Miners are in a race against each other to solve the problem, the first to get a fraction as a reward. A new set of coins is introduced into the network for every successful completion by miners.
How does cloud mining work?
Cloud miners work similarly, but they outsource their computing needs to avoid the hassle and avoid overhead costs of maintaining the equipment.
Pros of using cryptocurrency
- Secure encrypted end-to-end transactions
- Individual ownership
- Removal of added middlemen costs
- Adaptive networks
- Global access.
- Volatile markets
- No ownership and authority
- Exposure to illegal payment activities
- The risk of loss is high
Major organizations worldwide are now looking into adopting the crypto-financial ecosystem. Also, financial bodies are keen to enable smooth transactions for customers worldwide.
- DeFi(Decentralized Finance) was introduced recently to facilitate financial transactions by using smart contracts. DeFi has witnessed exponential growth by registering contracts valuing $15 billion in 2020.
- Rise of Decentralized exchanges- Data accumulated in the past year showed decentralized exchanges were responsible for transacting above $50 Billion. Paypal/ Venmo, CoinDesk, and others are growing in volumes of newly registered users.
- NFTs- With NFT, you can now own certificates of ownership of any digital entity, which can be traded into fractions. NFT transactions have made many people financially profitable this year.
In recent times, hackers used Google cloud to gain unauthorized access and mine cryptocurrencies. Exposing the system’s vulnerabilities and highlighting customer security lapses by falling prey to third-party applications.
Some cryptocurrencies have already been affected by such attacks; here are some notable aspects-
Missing credentials- User identity can be manipulated, and accounts can be accessed by stealing private keys and digital signatures.
Code exploitation- Ethereum recorded a loss of $ 60 Million as hackers managed to break into the system, exposing the vulnerable side of the blockchain network.
Future of cloud mining
Cloud mining has gained extreme popularity in the past few years, and cloud mining platforms have enabled users to earn coins without any equipment. Mining is still profitable if done smartly. A significant chunk of miners have witnessed increased expenses with power usage and supporting hardware. As each coin has a capped limit, miners should be aware that the reward size will continue to depreciate as they get close to the number.
Profitability in today’s time is still variable concerning the coin, cost of power, hash rate, time, and the coin value.