Bitcoin mining explained 2017

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WATCH RELATED VIDEO: What is Bitcoin Mining?

Electricity needed to mine bitcoin is more than used by 'entire countries'

Cryptocurrency is attracting the attention of many disciplines. Based on a systematic literature review, the state of art of academic research on cryptocurrency was investigated, demonstrating its complexity and the lack of consensus about several issues, as its definition, its operation without a financial institution, the impacts on economy and its future developments.

Considering these issues, Actor-Network Theory was selected as a theory that can provide methods, such as controversy mapping, to understand this complex subject.

The article analyzes this scenario, presenting a set of research topics that can be considered to study controversies related to cryptocurrency.

Cryptocurrencies such as Bitcoin, Ethereum or Litecoin have been attracting the attention of information technology professionals, economists, investors, banks, government, and even the police.

This technological novelty has increased over the last years due to its innovative features, simplicity, transparency, high market price and popularity Moore, Moore, T. The promise and perils of digital currencies. International Journal of Critical Infrastructure Protection, 6 , The inefficiency of Bitcoin.

Economics Letters , , Cryptocurrencies challenge the current financial systems and conventional forms of currency Bjerg, Bjerg, O. How is Bitcoin Money? An analysis of high-frequency cryptocurrencies prices dynamics using permutation-information-theory quantifiers.

Chaos, 28 7 , 7. Deflationary policy under digital and fiat currency competition. Research in Economics, 72 2 , Plos One, 12 5 , 1. Ieee Communications Surveys and Tutorials, 18 3 , These areas focus on understanding this innovation, proposing its definition, studying its benefits, risks, and impacts, its behavior - especially in market and economy - and its usefulness.

Attempting to contribute with this debate, we analyze the state of art of the research on cryptocurrency identifying key topics to be studied considering the method of controversy mapping Venturini, Venturini, T. Diving in magma: how to explore controversies with actor-network theory.

Public understanding of science , 19 3 , This article aims to answer the questions: a what are the main topics presented in the literature on cryptocurrencies? Considering cryptocurrency is a hot topic in the academic literature and in the nonacademic world, many questions have been raised as, for instance, if it will be considered or replace the currencies that we know, if is legal or not to use it or if is a good option to invest due its market price, among other several questions.

However, no previous study has been found so far presenting the state of art of the literature on cryptocurrencies neither presenting the discussions and controversies about this issue. So, this study contributes to the literature about cryptocurrency, given an overview of the state of art and presenting new research opportunities that may explore the discussions and controversies around this subject.

This article is organized into four sections. In section 2 we present a literature review on cryptocurrency and the method used in this study; in section 3 we show the theoretical background - ANT, and in section four, we analyze key controversies on cryptocurrency developing questions for future research.

In the last section, we make concluding remarks. The definition of cryptocurrency is still under discussion. The origin, classification and utility of Bitcoin. Can bitcoin become a major currency? Annals of Financial Economics, 12 1 , Bitcoin: A peer-to-peer electronic cash system. Social Semiotics, 23 2 , According to Tschorsch and Scheuermann Tschorsch, F.

Bitter to better-how to make bitcoin a better currency. Nakamoto Nakamoto, S. The blockchain is a public distributed ledger computer file that saves the information of all cryptocurrencies' transactions and is stored on thousands of computers spread across the world, connected to the cryptocurrency network Bjerg, Bjerg, O.

A summary explaining how cryptocurrency works is presented in Figure 1. Figure 1 How cryptocurrency works. All you need to know about blockchain, explained simply. Basically, the transaction is sent and validated by several computers in the cryptocurrency network. Technology and Culture, 58 2 , Computer, 50 9 , However, as highlighted by Reid and Harrigan Reid, F.

An analysis of anonymity in the bitcoin system. In Security and privacy in social networks pp. Cryptocurrency schemes provide an incentive a fee to encourage miners to spend electricity and CPU resources in counterpart.

According to Zimmer Zimmer, Z. Considering this system, instead of a centralized authority that validates the transactions, the validation is distributed decentralized along the cryptocurrency network, executed by the "miners". Also, the blockchain technology ensures the anonymity of the cryptocurrency owners and their transactions through the cryptography system.

In the absence of this central authority, cryptocurrencies are free from government regulation, taxation, and fees from financial institutions Kim, Kim, T. Plos One, 10 4 , Nevertheless, an incentive is necessary to keep the miners working and therefore ensure the reliability and security of the payment system Kim, Kim, T. Bitcoin beyond ambivalence: Popular rationalization and Feenberg's technical politics.

Thesis Eleven, 1 , A systematic literature review is an essential work for the dissemination of knowledge, supporting the understanding of concepts and the construction of theories, as well as the dissemination of new research areas. Analyzing the past to prepare for the future: Writing a literature review. MIS quarterly, xiii-xxiii. This literature review follows the steps summarized in Figure 2 based on Sampaio and Mancini Sampaio, R.

Revista brasileira de fisioterapia, 11 1 , Based on the research questions defined in this article, a search in the Web Of Science database was performed in October 16th, , limited to "Articles" as the document type. The words "bitcoin" and "bitcoins" were also included due to the relevance of Bitcoin as the first cryptocurrency created. Figure 2 Design of the systematic literature review process.

Source: developed by the authors based on Sampaio and Mancini Sampaio, R. The search resulted in articles. Figure 3 Cryptocurrency research by year. Source: Web of Science. The search results were exported to Microsoft Excel tool, and two researchers reviewed the Title and Abstract and the full text when needed of each one of the articles in order to select only the articles that have cryptocurrency as the main subject.

Each researcher performed the categorization separately, and then both compared and discussed the differences found. Based on this first analysis, articles were excluded because their purpose was not directly related to cryptocurrency, they have only cited cryptocurrency as an example for other subjects 62 articles , or their focus was on the blockchain technology 96 articles or the full text was not available for further analysis 4 articles.

Besides this, 44 articles discuss the technology blockchain with focus on cryptocurrency as enhancements for this technology and were also excluded. The remaining articles were downloaded and their content was categorized in the topics listed in the following section, that emerged during the analysis according to the purpose of the article. In Chart 1 below, an overview of the state of art of cryptocurrencies studies is presented, as found in this review.

The number of articles found per topic was also delimited. Law and regulation are also addressed topic 3 as crimes related to cryptocurrency topic 4 and the security, privacy and anonymity concerns topic 5. Besides this, the future of this technology topic 6 is also a key topic identified. Together, articles are related to the definition and economics of cryptocurrency topics 1 and 2 in Figure 4.

As explained by Fry and Cheah Fry, J. Negative bubbles and shocks in cryptocurrency markets. International Review of Financial Analysis, 47, Money can be defined in terms of three characteristics: a medium of exchange, store of value and unit of account Bjerg, Bjerg, O. Cigarettes, dollars and bitcoins - an essay on the ontology of money. Journal of Institutional Economics, 12 2 , Some stylized facts of the Bitcoin market. Physica a-Statistical Mechanics and Its Applications, , Bitcoin: Medium of exchange or speculative assets?

However, there is no agreement about the store of value and unit of account. Smit et al. Others, as Bariviera et al. Swartz Swartz, L. What was Bitcoin, what will it be?

The techno-economic imaginaries of a new money technology. Cultural Studies, 32 4 , Bitcoin: Economics, Technology, and Governance. Journal of Economic Perspectives, 29 2 , Analysis on the influence factors of Bitcoin's price based on VEC model vol 3, 3, Financial Innovation, 3 1 , 1.

How cryptocurrency mining works: Bitcoin vs. Monero

Downpours transform the mottled landscape into lush emerald, while azaleas bloom and migrating cranes and storks begin the long journey back north. The rainfall also brings trucks stacked with computers to hydropower dams, where entrepreneurs can tap cheap electricity for mining bitcoin—the arcane process that accumulates the cryptocurrency using huge amounts of computing power to solve equations. Cryptocurrency mining requires huge amounts of computing power, making energy consumption a major overhead for the industry. Local governments will often offer power for pennies—or even free—to attract jobs and get a painless boost to their gross domestic product figures.

The cryptocurrency sector has been under heavy scrutiny in China since , when regulators started to ban initial coin offerings and shut.

A beginner's guide to bitcoin and cryptocurrency

Bitcoin mining likely uses more energy than it takes to keep New Zealand's lights on. Keep up to date with the latest coronavirus news via our live blog. Follow our live blog. The recent upsurge in the price of Bitcoin seems to have finally awakened the world to the massively destructive environmental consequences of this bubble. These consequences were pointed out as long ago as by Australian sustainability analyst and entrepreneur Guy Lane, executive director of the Long Future Foundation. In recent months, the Bitcoin bubble has got massively bigger and the associated waste of energy is now much more widely recognised. In essence, the creation of a new Bitcoin requires the performance of a complex calculation that has no value except to show that it has been done. The crucial feature, as is common in cryptography, is that the calculation in question is very hard to perform but easy to verify once it's done.

Bitcoin Mining

bitcoin mining explained 2017

Summer on Seneca Lake, the largest of the Finger Lakes in upstate New York, is usually a time of boating, fishing, swimming and wine tasting. But for many residents of this bucolic region, there's a new activity this season — protesting a gas-fired power plant that they say is polluting the air and heating the lake. They have increased the electrical power output at the gas-fired plant in the past year and a half and use much of the fossil-fuel energy not to keep the lights on in surrounding towns but for the energy-intensive "mining" of bitcoins. Bitcoin is a cryptocurrency — a digital form of money with no actual bills or coins.

The financial world can't stop talking about bitcoin. In recent weeks, the headlines of business journals and finance sections have covered everything from the importance of investing in bitcoin to how the bubble is about to burst within days of bitcoin futures hitting the stock exchange.

The Political Geography and Environmental Impacts of Cryptocurrency Mining

Bitcoin and other prominent cryptocurrencies have gained much attention since the last several years. Globally known as digital coin and virtual currency, this cryptocurrency is gained and traded within the blockchain system. The blockchain technology adopted in using the cryptocurrency has raised the eyebrows within the banking sector, government, stakeholders and individual investors. The rise of the cryptocurrency within this decade since the inception of Bitcoin in has taken the market by storm. Cryptocurrency is anticipated as the future currency that might replace the current paper currency worldwide. Even though the interest has caught the attention of users, many are not aware of its opportunities, drawbacks and challenges for the future.

Cryptocurrency Might be a Path to Authoritarianism

Written by Rommel Vergara. As a keen observer of the cryptocurrency craze that's happened in and will likely continue in the foreseeable future, it is important to have some understanding of the internal workings of Bitcoin before considering putting your money into it. Have you ever wondered how bitcoins are created and what the rules are for doing so? Here is an attempt to explain it so that even a 5 year old can understand! In this game, suppose we start with two players. The game has unlimited rounds. In the first round, the players need to guess a number between 0 and

Mining is the process by which bitcoins are created. () develop a game theoretic model to explain the strategic behavior of miners and users.

Bitcoin mining likely uses more energy than it takes to keep New Zealand's lights on

I give you a slip of paper or, more likely these days, a piece of plastic. You hand me eggs or butter or a White Chocolate Mocha Frappuccino, and we both walk away satisfied. With cryptocurrency, the arrangement is more like a shared metafiction, and the instability of the genre is, presumably, part of the thrill.

How cryptocurrency has created a new generation of 'miners'

RELATED VIDEO: What is Bitcoin Mining? (In Plain English)

The annual carbon footprint of Bitcoins is almost equivalent to that of Mumbai, or to put it to a global perspective, as high as the carbon footprint of Slovakia. A recent study by Alex de Vries, a Dutch economist, has shown that Bitcoins leave behind a carbon footprint of Vries has been able to create a Bitcoin Energy Consumption Index, one of the first systematic attempts to estimate the energy use of the bitcoin network. As mining provides a solid source of revenue, people are willing to run power-hungry machines for hours to get a piece.

Notwithstanding recent fluctuations in its price, interest remains strong in the original cryptocurrency, which was launched in One question everybody has is what is the process of 'mining' that creates new Bitcoins and how does the blockchain technology underpinning the cryptocurrency really work.

Bitcoin mining powers the system that oversees transactions and creates new bitcoins

There will only ever be 21 million Bitcoins in existence. The current state of who owns how much Bitcoin is kept on a public ledger that anyone can access. There is a halving event every 4 years reducing the reward miners get. If this falls below ten minutes due to better computer processing power in the future, it will complicate the mathematical equation to get it back to the average minute mark. In order to be able to attach a new block to the blockchain and earn the block reward, miners have to solve extremely tricky mathematical puzzles. Blocks process all transactions on the Bitcoin network at the same time.

Of all the potential implications of blockchain for the energy sector, the energy use of cryptocurrencies — and bitcoin in particular — has captured the most interest. With bitcoin value tripling in recent months and Facebook announcing its new Libra coin, interest in the energy use of cryptocurrencies is again on the rise. In this commentary, we explain why and how bitcoin uses energy; dig into published estimates of bitcoin energy use and provide our own analysis; and discuss how these trends might evolve in the coming years.

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