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CoinPoker Explained

CoinPoker Explained

CoinPoker is a blockchain technology-based poker platform that uses USD pegged stablecoin USDT as the in-game currency and the CHP token is the currency of the CoinPoker economy.

Everyone knows that gambling is of course, well… a gamble and that the odds are rarely in the player’s favour. 

This doesn’t ever stop people from gambling of course. 

Real-life gambling in a casino, not a roulette table or slot machine but a card game like poker presents less of a risk when it comes to the cards that are dealt. 

The player can see the cards being shuffled and dealt in front of their eyes and it is purely down to chance what cards the player and dealer get and then a mixture of chance and skill when the poker hand is played.

When it comes to online poker this is not the case, it’s software that handles the dealing of cards and software is of course programmed and programmers can make the software perform however they want it to perform. 

This makes things way less certain for players, add to this the fact that online poker is big business and operated by large organisations whose aim is to make money it may understandably create some doubts amongst the player community.

In online poker players watch a shuffling animation on screen and have to believe in the poker room’s integrity.

In an industry where cheating on both sides is accepted as part of the cost of doing business any form of transparency surely has to be welcome, for players at least. 

 

Could crypto and blockchain technology bring more integrity to the online poker game?

Crypto and blockchain technology is able to provide the kind of secure underpinning required for such an endeavour. 

With this in mind, CoinPoker is out to level the playing field so to speak using crypto blockchain technology. 

CoinPoker recently released their decentralised random number generating (RNG) software to combat one of the most prevalent issues in gambling, a lack of transparency in in-game mechanics.

Over 60,000 users have played on CoinPoker since their launch in November 2017 and over 56 million hands have been played. 

While ultimately growth is a key driver for CoinPoker as with most businesses, the community is at the heart of CoinPoker’s key strategic decisions, very much in line with many of today’s top crypto projects where the community at large is actively involved. 

This is a far cry from the centralised online gaming platforms where there is the provider (the business) and the customers (the players). 

By investing in innovative blockchain and cryptographic technology CoinPoker can offer a potentially more transparent and perhaps fairer platform on which players from all over the world can participate and the platform can be held accountable at least to a certain degree.

 

Coinpoker uses the same cryptographic hash function as used on the Ethereum network, KECCAK-256

The technology behind CoinPokers’ decentralised random number generator (RNG) uses the same cryptographic hash function used on the Ethereum network, KECCAK-256 to securely transmit card shuffling information to players which can thereafter be verified via a validation tool.

Applying the KECCAK-256 cryptographic hash function to their random number-generating algorithm makes CoinPoker’s new RNG module virtually impossible to reverse engineer.

In addition, it includes the involvement of all the players at the table in the shuffling process as opposed to solely the poker room behind the scenes. 

In essence, the players can choose whether to participate or not at the start of each hand, as soon as they choose to participate, a secret seed value is generated and sent to all the players and also CoinPoker behind the scenes. 

CoinPoker then uses the values to generate a final seed value which acts as the input for the random number generator (RNG) and this results in the final order of the card deck. 

After a hand is played, the players can verify the randomness of the deck and also see the undealt cards that would have been in play.

 

Currently, CoinPokers CHP tokens are listed and available on KuCoin, HitBTC, ForkDelta and Yobit net. 

CoinPoker users can deposit their tokens on the CoinPoker platform or in their private wallets. As CHP is an ERC-20 token it makes it compatible with most Ethereum wallets

Coinpoker uses USD pegged stablecoin USDT as the in-game currency. Transactions can be made using USDT, ETH, BTC or CHP tokens.

 

Conclusion

Crypto and blockchain technology is disrupting many industries and online gaming is no exception! The underlying technology and genuine community-driven approach so common in the crypto world looks to be a refreshing change in the world of online gaming.

 

Disclaimer: This article is in no way an endorsement of Coinpoker or online gaming. It’s simply information about what Coinpoker is and the technology and business model behind it.

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HODL Explained , hold on for dear life on the roller coaster

HODL Explained

HODL is a term very commonly used by cryptocurrency investors and refers to a person holding on for dear life in a bear market

The world of crypto uses a huge amount of slang when compared to other technologies from the past such as personal computers or the internet. 

Both have had their fair share of course, like WYSIWYG, which stands for What You See is What You Get on a screen as an example. 

Yet, crypto is full of strange words and acronyms and it’s only just over 12 years old. 

It’s likely that in the future there will be dictionaries dedicated to the strange and wonderful language of crypto. 

Today we’re looking at the word HODL which originated from a misspelling of the word HOLD.

 

The origins of the now-famous HODL

The word HODL came into being by accident when a BitcoinTalk user by the name of GameKyuubi wrote on the thread “I AM HODLING” on December 18 2013

GameKyuubi wrote:

I AM HODLING

“I type d that tyitle twice because I knew it was wrong the first time. Still wrong, BTC crashing WHY AM I HOLDING? I’LL TELL YOU WHY. It’s because I’m a bad trader and I KNOW I’M A BAD TRADER.”

And so it was that the word HODL suddenly came into being during a drunken, self-deprecating rant and is now a well-used term in the crypto investment world. 

HODL has taken on so much significance in the crypto community that December 18 is known as HODL day in homage to the day that the “hodl” post was now famously written and yet another crypto legend and acronym was born.

Since those early days when the word HODL just meant holding, the term has evolved so to speak and the crypto community converted HODL from a simple spelling mistake to the acronym 

‘Hold On for Dear Life’ very much describes the roller coaster emotion behind hodling.

 

So what is hodling exactly?

In the simplest terms, it’s when a person holding crypto holds on for dear life during a downturn in price and refuses to sell even as the price continues to plummet. 

It is an investment strategy that is also known as buy and hold in traditional investment circles.

When we talk about hodling we are looking at a buy and hold strategy and are effectively talking about holding onto crypto although it could also be a stock for the long-term regardless of the prevailing market volatility. 

The idea being that over the long term investment assets tend to trend upwards and so just by hodling and riding out the bumps we should in theory still come out ahead and often tends to be the case.

Those that are highly experienced traders be that in crypto, stocks or other commodities can strategically and cleverly ride the bumps and profit with the goal to get in and out at the exact right time as often as possible. 

There are no guarantees of course but it is at least possible with enough knowledge and risk tolerance. 

On the other side of this coin are the completely inexperienced investors who have bought into a crypto or other asset and are tracking the price daily. 

The moment the crypto or asset starts dropping in price they panic and may sell off all or part of their holdings in order to stem the losses. 

Inevitably though, many times, prices level off and after some time may start to climb again and even end up higher than when the storm hit leaving those that sold rather frustrated. 

For this category of investor, a hodl strategy could make more sense as long as they stick to holding on for dear life no matter what happens. 

Of course, it’s easier said than done but is probably a wiser overall strategy when compared to panic buying and selling which rarely ends well for anyone!

 

There is another hodl which is actually a crypto token

It’s worth noting that there is an actual cryptocurrency token called HODL.  That HODL operates on the Binance smart chain and shouldn’t be confused with the general crypto term HODL that we are speaking about here.

 

Knowing when it’s time to HODL

When we look at long-term investing or hodling in general we have to make a clear distinction between traditional investing, blue-chip stocks like Apple, commodities or even FIAT currencies and crypto trading. 

While nothing is of course certain and anything could indeed happen, the likelihood of a company like Apple suddenly going kaput is pretty unlikely. 

It could be a safe, if not very exciting investment for the long term as Apple is well established, is very liquid and operates in a highly regulated market. 

One could therefore buy Apple stock and hold onto it for 10 years without too much worry. 

The same cannot be said with as much conviction about crypto. 

Crypto is highly volatile and still very much in its infancy. A crypto could rise exponentially in ten years or disappear from the face of the earth with equal probability. 

This, therefore, makes crypto hodling quite different to a traditional buy and hold strategy with stocks. 

Naturally, it’s important to do as much research and due diligence as possible before making an investment decision and not having all the eggs in one basket would certainly minimise the risk. 

It’s probably fair to say that the most natural hodlers are those that believe in the long-term future of crypto and perhaps have a decent understanding of the crypto universe and how all the pieces of the jigsaw puzzle fit together. 

This can help the investor make slightly more informed decisions and keep their nerves steady as they are holding on for dear life during a freefall!

 

Conclusion

HODL is not just a bit of fun crypto folklore, it stands for an investment strategy of sorts where it could make sense to hodl and just hold on for dear life when things begin to look grim, think 2022 & 2023!

Quite possibly the storm will come to an end and things will eventually bounce back with vigour. 

Of course, nobody knows for sure and in the world of crypto with its wild volatility, it can take nerves of steel to hodl, especially when the amounts involved are significant! 

Whatever the case, it may make more sense to stay calm and hodl rather than panic sell and come to regret it later.

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Altcoin Explained

Altcoin Explained

An altcoin is any type of crypto that is not bitcoin. The word altcoin is made from the portmanteau of the words alternative and coin

Once upon a time not so long ago there was this one lone cryptocurrency called bitcoin. 

It was a strange new creation by a mysterious person or group of people who went by the name Satoshi Nakamoto. 

Even with the huge amount of interest in crypto and the level of information we have available to us, nobody to this date knows who Satoshi Nakamoto is, that’s pretty astounding! 

For a while, at least, bitcoin was this strange new digital currency that few people really understood or even cared about. 

Fast forward to today and crypto is big business, there are literally thousands of crypto coins and tokens out there and it’s growing by the day.

 

What is an altcoin?

The clue is in fact in the name, altcoin stands for alternative coin. 

Going back to the early days of crypto when there was only bitcoin, the lone cryptocurrency, people began to recognise the potential of blockchain technology beyond what bitcoin was doing or offering. 

So new coins began to appear and these new coins, basically anything that wasn’t Bitcoin began to be referred to as an altcoin or alternative coin to bitcoin. 

 

A simple analogy to understand what altcoins are and how they came about

We can liken the current crypto craze to that of the birth of the internet in the 1990s. 

Let’s imagine the internet starts with a single website, it’s pretty basic compared to today’s websites but functional. 

That one initial website could be thought of as Bitcoin. 

The whole concept is new, there is a basic browser and people can access and use this one site from anywhere. 

So, some people began to see the potential of the internet and its underlying technology and began to create websites of their own, let’s call them “altsites”. 

Now there are an estimated 1.86 billion websites out there or 1.86 billion “altsites” out there.

In much the same way, bitcoin was the pioneer that created the first crypto and its underlying blockchain technology, since those days over 9000 altcoins are out there and this number is going to keep rising as it did with websites.

 

The history of altcoins

In 2009 bitcoin arrived on the scene, what happened next? Well around 2011 the first altcoins appeared running on the bitcoin blockchain.

The very first altcoin was Namecoin. Namecoin was based on Bitcoin’s code and arrived in April 2011. 

Namecoin demonstrated that there was space for more coins beyond bitcoin and from there the race to build more altcoins began.

 

An altcoin is not second best

It may seem obvious but we must also understand that the first is not necessarily the best, just like the first automobile cannot be compared to the automobiles of today. 

The first car simply paved the way for others and validated a need, utility and demand. 

In much the same way, using the internet example again, today’s websites are far superior to the very first websites. 

The first websites indeed played a huge part in the development of the internet but they are not superior. 

This is a very important thing to keep in mind as sometimes we can think of an alternative as maybe being second best. 

This is definitely not the case with altcoins. They are simply alternatives or derivatives of Bitcoin in some way.

If we look at Ethereum, it is an altcoin. 

Ethereum however serves a very different purpose to that of bitcoin. 

Whilst bitcoin is purely a digital currency, a way of holding and transferring value, Ethereum is a cryptocurrency with its own powerful ecosystem capable of a lot more applications such as decentralised finance.

 

Altcoins can be highly experimental and volatile!

If we go back once again to the Internet analogy and think about e-commerce, there are limitless possibilities to sell things online. 

Some make a lot of sense and will take off and succeed like Amazon but there are also millions of others that just won’t make it. 

Putting money into altcoins can be very risky, especially very new ones as there’s no guarantee of success, just like investing in a brand new startup that sounds promising but could eventually implode or of course, become mega-successful. The same with altcoins!

 

The technology behind all altcoins

Just like the core technology behind all websites is basically the same, we can say the same with crypto. 

All cryptos run on something known as a blockchain. Call that the “internet of crypto”. 

Blockchains are literally chains made up of blocks. 

In the case of Bitcoin these blocks are mined using something called proof of work (PoW), validated and added to the chain, each time a new block is added to the chain, the miner receives coins in payment. 

All altcoins use some form of blockchain. 

Ethereum has its own blockchain that currently also works using proof of work although that is likely to change soon but that’s a separate topic. 

For now, though, it’s important to understand that the core technology or principles that drive Bitcoin form the basis or foundation of all altcoins in some way.

 

Conclusion

In summary, the vibrant and diverse world of crypto that we see today started out with a single coin, bitcoin. 

Everything that has followed ever since is referred to as an altcoin. It’s not conceivable that at some point, perhaps even now, the term altcoin will not be very relevant and go out of use. 

For now, all you need to know is that an altcoin is any coin that is not bitcoin, easy enough!

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Tokenomics Explained

Tokenomics Explained

Tokenomics is a combination of the words “token” as in crypto token and “economics” and is about understanding the economics and fundamentals of a crypto token.

Economics is at the root of our lives and always has been. 

Whilst today’s economies are way more complex and sophisticated than from the days of our ancestors the basics still remain the same. 

There is always some form of demand and supply, some form of value measurement and some form of exchange like a currency or barter system to facilitate transactions.

Today’s economies are highly complex and fast-moving, economists, governments and businesses need to understand the trends and in the case of businesses navigate the economy for maximum benefit.

In much the same way, investors, traders and others interested in crypto need to be able to understand the fundamental economics behind the tokens they are interested in in order to be able to ascertain if they are wise investments. 

Tokenomics is the study of the economics and fundamentals of a crypto token.

 

What are tokens?

The first thing we need to look at and understand is what are tokens?

A crypto token can typically represent an asset or a utility that resides on a blockchain, allowing for the user to use it as an investment or for economic purposes. 

In the non-digital world, one could imagine a piece of gold as a token, as it could be used as a means of pure investment, i.e. hold onto it and let it appreciate in value, as a currency, pay for something with gold, not common nowadays but technically still possible or you could turn the gold into a piece of jewellery which can be considered a form of utility, a piece of jewellery to wear. 

If we looked instead at a $1 banknote, it serves no other purpose other than as a way to hold and transfer value, there’s nothing else you can actually do with it. 

These two examples could be used to crudely illustrate the difference between a crypto coin such as Bitcoin or a token just to be able to understand what a crypto token in fact is. 

In more specific terms a coin is native to the blockchain, for example, ETH or Ether is the native coin for the Ethereum blockchain whereas a token is not native to a blockchain such as Ethereum but independently operates on the Ethereum blockchain and provides some form of utility or service.

 

Let’s examine some token types so as to see how this fits into tokenomics?

There are four principal types of crypto tokens, these are:

Payment tokens – payment tokens are generally coins and their primary purpose is to act as a medium of exchange, a way to hold value or as a unit of account. In economic terms, the price of the payment token is highly influenced by supply and demand, just as in fiat currencies like the EURO, GBP or USD.

Security tokens – security tokens are similar to securities in the world of stocks and shares. If one owns shares in a company they can use their shares to vote for actions, hold onto the shares as investments in the hope the price will rise and also be able to enjoy a share of profits in the form of dividends. In a similar way, security tokens come with certain rights, privileges and means to earn money beyond simply the appreciation of the price of the token

Utility tokens – utility tokens give the holder access to a blockchain-based product or service. Where security tokens have some form of money-making at their core, utility tokens provide some form of utility hence the name. Imagine a piece of software like WinZip, it compresses and decompresses files on a computer, you cannot make money with it. However, you could buy shares in the company behind WinZip which would be a security token in this case. WinZip itself would be a utility token.

Non-fungible tokens – all crypto coins and most tokens are interchangeable, my one bitcoin is exactly the same as your one bitcoin. Just like my €20 banknote is worth exactly the same as yours. Non-fungible tokens (NFTs) are different as these tokens can represent a unique item, property or asset such as the deeds of a particular house, a piece of artwork or a collectible, no two are the same. The NFT can be considered as the legal title or deed to that asset, much like the deeds to a property.

 

What is tokenomics in crypto?

Okay, so now we have an understanding of what tokens are and the common types of crypto tokens out there. 

How does tokenomics fit into the picture? 

As we determined at the very beginning of this article, demand and supply are at the root of all economic systems, they in most cases determine the supply and the price. 

If the demand for something is high and there is limited supply the price will go up, if demand is low and/or the market is flooded then we can expect the price to come down. 

In much the same way, in tokenomics, we need to study the demand and supply of a crypto amongst other things in order to get at the fundamentals and determine if it’s a good buy or simply goodbye!

 

Below are some of the fundamentals we would be looking at in tokenomics

Allocation and distribution of tokens – how are the tokens being distributed, there’s a fair launch in which case the token is mined, owned, earned and governed by the community at large without any pre-release. 

On the other hand, some tokens can be pre-mined and issued to developers and early investors in an ICO for example. Imagine there’s a wallet with a huge amount of tokens sitting there, the owner of this huge amount of tokens could dump them on the market and cash in causing the price to plummet, this would represent a significant risk to the other token holders. 

Token supply – the supply is probably one of the biggest factors when it comes to the ongoing price of the token, there’s circulating supply, the amount of the token currently in circulation potentially available to buy and sell, there’s the max supply which is the maximum amount of the token that will ever be produced and there’s total supply which is the total amount of tokens out there excluding any that may have been burned.

Market capitalisation – the market capitalisation of a token is similar to that of a company, it’s basically the price of a share multiplied by the number of issued shares. In the same way, it’s the price of the token multiplied by the number of tokens in circulation. The higher the market capitalisation the more solid the token, or in theory at least.

Inflationary or deflationary token type – a token is deemed to be deflationary if there is a limit to the total supply, for example, there will only ever be 21 million bitcoin, no more can be produced and this should lead to an increase in value in the long run due to the ultimate scarcity, just as with oil or gold, there’s only so much out there and this keeps the price up. An inflationary coin is the opposite, there is no upper limit to the amount that can be created, very much like fiat currencies like the EUR or USD, in these cases, oversupply can force the price down and this means that each token has less buying power or inflation as it is known in economic terms.

 

Conclusion

In summary, tokenomics is about understanding the fundamentals of a token in order to be able to determine if it is a potentially good investment. 

Just as government and business economists study economic fundamentals and patterns the same is true with tokenomics when it comes to crypto.

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fiat money explained

Fiat Money Explained

Fiat money is a currency that is backed by a government or central authority but not backed by a valuable commodity such as gold or silver.

If you’re wondering if fiat money has anything to do with the famous Italian car manufacturer Fiat, the answer is no, although you would certainly use fiat money to buy one.

The term fiat money derives from the latin word ‘fiat’ which literally means, “let it be done” and when pronounced by a figure of authority could be interpreted nowadays as “consider it done” or “done deal”.

As a society, we have always needed some form of exchange of value, whether that be bartering where we exchanged one thing for another, for example, bread for vegetables or a commodity-based value of exchange like in a prison where cigarettes have been commonly used as a form of currency as once gold, silver, tobacco and other valuables were. 

We eventually switched away from using commodities to using a form of paper money or coins that have no intrinsic value but were instead backed by physical gold sitting in a vault, the gold standard. 

This gave people the required confidence to use this money as a means of payment and provided a far simpler, more portable means of storing and transferring value. 

The gold standard eventually came to an end in 1971 and led to our current fiat money system. 

The fiat money system is backed entirely by the government and this is sufficient for people to gladly accept it as payment without worrying that it will lose value or fail to be accepted.

 

What is fiat money?

Imagine you walked into a store, took out a blank piece of paper and wrote an IOU promising to pay for the goods at a later date. 

It’s very unlikely you will get very far unless you know the owner of the store very well and he or she trusts you. 

On the other hand, if you handed over a €50 note as a stranger, the €50 note is still a piece of paper, and you’ll no doubt walk out with the goods minutes later. 

So why is the second piece of paper acceptable whereas the first isn’t?

It comes down to one word, confidence.

The store owner or clerk will happily accept the €50 note as they have absolute faith that the €50 note represents 50 euros of value. 

There is no doubt at all. The reason for this absolute confidence is because the government has issued this note as legal tender and promises to honour the value of the €50 note.

It’s literally based on confidence in the government. 

Now, let’s imagine, we are in a war situation and the government is collapsing. 

The €50 note could actually become totally worthless very very fast. 

This example demonstrates the importance of confidence in the issuing entity, in this case, the government. 

Without this confidence, you are left with worthless sheets of paper and bits of metal.

Thankfully this is not a situation that we are in and we have faith in our government systems when it comes to our money at least. 

So, this is effectively what fiat money is, “let it be done” or if I receive this €50 note it represents a value of no more or no less than €50. 

The store owner or clerk accepts this piece of paper due to absolute confidence in what it represents as it’s backed by our government.

Nowadays we are moving further away from fiat notes and coins to entries in a bank account, we do not even see the actual money although we could. 

When we swipe or touch our card to make a purchase, our money in digital form is removed from our account and sent to the other person’s account, neither party will generally see the actual notes and coins. 

It’s not inconceivable to imagine a society where notes and coins are no longer used. We can already see glimpses of these in urban transport systems where cashless payment systems like the Oyster card in London are used and it’s actually no longer possible to pay a bus driver with cash money.

 

Fiat vs crypto?

As we have determined, the only reason fiat money is widely accepted and trusted is because it is issued and backed by the government as legal tender. 

We have absolute faith in its value. So how would crypto differ from fiat money?

Where fiat money is underpinned, supported, and backed by our government, crypto is instead underpinned by something known as a blockchain. 

There is no intrinsic value or any government supporting it, far from it in fact.

A blockchain is effectively very sophisticated software running on a decentralised network of computers that records transactions in a chain made up of something called blocks, hence the name. 

As this article is about fiat money we won’t go into the details of how crypto works and what blockchains are but in its simplest form, a blockchain is a digital ledger that has been designed to be decentralised, i.e. there is no central body in control and has been designed to make the blockchain virtually unhackable or tamper-able. 

These are virtues every financial system should have at its core.

So where the government and their respective central banks issue, guarantee and support our money, crypto is entirely decentralised and highly accountable as every single transaction is recorded on the blockchain and is there for anyone to see. No government or bank affords anywhere near this level of transparency.

 

The advantages of crypto when compared to fiat money

  • The fact that crypto is decentralised is a big deal, there is no central entity with an agenda or undue influence.
  • Blockchain technology is pretty robust and the risk of a complete failure is quite minimal.
  • Cryptocurrencies are unlikely to suffer from hyperinflation as unlike our fiat money there is usually a maximum amount of a cryptocurrency that will or can ever be produced. If we use bitcoin as an example, there will only ever be 21 million bitcoin produced. It’s not possible to create more. This creates a level of scarcity that can help to sustain the value. Fiat money on the other hand can be endlessly issued and this can lead to the currency losing some of its buying power, otherwise known as inflation.
  • Lastly, cryptocurrency transactions are relatively immediate, you don’t need to wait for days to get your money.

Crypto does make a pretty strong case, but for now, fiat money is still king!

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GPU crypto mining explained

GPU Mining Explained

GUP mining is the mining of cryptocurrencies using a GPU (Graphics Processing Unit) to solve complex mathematical calculations called “hashes’ instead of purely using the CPU as was more common in the early days of crypto.

 

Before we get into the specifics of what GPU mining is, we should briefly cover what crypto mining is, for those that may be new to crypto and are still learning. 

Mining is the way that new crypto is created by cryptos that use what is known as proof of work (PoW). 

Very simply proof of work (PoW) is the solving of complex mathematical puzzles or hashes as they are known and being rewarded in coins. 

Bitcoin uses proof of work as does Ethereum at the moment, although this is likely to change soon. 

However, we won’t go into that. For now, it’s important to understand what mining is and what proof of work is in order to be able to understand what GPU mining is.

 

The basics, what is a central processing unit (CPU)

In any computer, whether that be a Mac, PC or any other type of computer there sits a CPU or central processing unit. 

This is effectively the brains of the entire computer. The CPU handles calculations and the use of the computer’s resources. 

 

GPU vs CPU mining

In the early days of Bitcoin, it was possible to mine Bitcoin using a relatively modest computer and the CPU was capable of handling the task of solving complex mathematical puzzles or ‘hashes’ pretty easily. 

As the number of miners exploded it became ever more competitive and the computing power naturally increased as each miner competed with other miners to solve the puzzle first and be rewarded with coins and transaction fees. 

The race for higher computing power and the need to solve the hashes or mathematical puzzles faster led to the discovery of using a GPU or Graphics Processing Unit to take over the heavy lifting from the CPU and do a way better job.

 

What is a GPU?

A GPU stands for Graphics Processing Unit and is a piece of hardware that is either a separate card or is part of the motherboard and is responsible for rendering complex graphics. 

The GPU is used heavily in gaming and video rendering. 

The GPU says to the CPU, “hey, leave those heavy mathematical calculations to me, it’s what I’m good at, you worry about the other stuff”. 

Okay, the GPU doesn’t talk but if it did it would probably say something like that. 

So the GPU is a dedicated piece of hardware that is capable of over 800 times the processing power of a CPU. 

You can see straight away why the GPU became attractive to crypto miners. 

The GPU is solely responsible for video-rendering or mathematical problem-solving in the case of crypto mining, whereas before the CPU handled it all. 

By bringing in a dedicated resource, the CPU has to work less hard and has a better qualified and more capable resource, the GPU to take care of the complex problem-solving.

 

What is GPU mining?

Very simply, GPU mining is the mining of crypto using a graphics processing unit (GPU). This would be as opposed to CPU mining, where the central processing unit (CPU) is handling the mathematical puzzle-solving as well as ensuring that the computer as a whole is functioning.

 

What are the advantages of GPU mining?

The primary advantages of GPU mining are:

  1. Speed
  2. Easy maintenance and upgrades
  3. Better energy efficiency
  4. Handle complex calculations better

 

Speed

A GPU-based mining rig can be up to 800 times faster than a CPU-based one, additionally, it is common for mining rigs to use more than one GPU to provide even more power, it’s not uncommon for a GPU mining rig to have three powerful GPUs. 

This will blow a single CPU-based mining rig out of the water!

 

Easy maintenance and upgrades

A separate GPU generally tends to have updates and can more easily be exchanged for a replacement unit if it fails or can later be easily upgraded for a newer, more powerful model. 

This is not so easy or generally possible with CPUs.

 

Better energy efficiency

Graphics Processing Units (GPUs) provide a more energy-efficient way to mine crypto when compared to CPU mining. 

GPUs conserve energy better. High energy use is a common issue and criticism of crypto mining.

Handles complex calculations better

Whilst you can throw complex problems at CPUs they will get hot and this could cause problems and even lead to a system failure which is the last thing a crypto miner needs. 

A powerful GPU or series of GPUs on the other hand is way more efficient and better suited for a demanding and intensive task like crypto mining.

 

What about alternatives to GPU mining?

While GPU mining has no doubt superseded CPU mining, GPU mining is still utilising hardware actually designed for gaming and graphics-intensive applications like video editing or gaming. 

An alternative is ASIC, which stands for Application-Specific Integrated Circuit. 

Instead of using general-purpose integrated circuits for mining, ASICS are integrated circuits specifically designed and optimised for the demanding task of crypto mining. 

They are literally designed for the job. ASICS generally beat CPUs and GPUs when it comes to reduced energy consumption and computing capacity.

 

Conclusion

Crypto mining is still very much in its infancy in relative terms, let’s face it, bitcoin only appeared on the scene in 2009 and in those days almost any half-decent spec computer could be used for mining. 

Fast forward to today, the stakes are way higher leading to intense competition amongst miners and an endless technological race for faster and more powerful mining rigs that can complete the hashes the fastest and claim the rewards. 

The GPU has certainly played its part and still continues to be used, although more dedicated ASIC-based mining hardware is generally favoured for serious mining rigs. 

For now, though GPU mining can still be considered valid although it’s fair to say that its days could be numbered.

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oversold in crypto explained

Oversold Explained

A crypto can be considered oversold if a large amount of selling has pushed the price down over a period of time but in fact, the price does not reflect the true value, meaning the crypto could actually be undervalued and likely to go up.

 

Stock, crypto or the speculation of any other asset or commodity is neither pure science, pure art or guesswork, but rather a blend of all three. 

Nobody knows for sure where anything is going. 

In the film, The Wolf of Wall Street the trading manager played by Matthew McConaughey in the famous chest-bumping scene tells Leo Dicaprio that nobody knows where the price is going, up, down, sideways or in circles, not least the traders. 

In real life, in order to have any kind of success in trading or investing, you clearly have to have some idea, otherwise, financially at least, it will be game over really fast.

The name of the game is to somehow anticipate if a crypto or stock is undervalued or overvalued and trade accordingly.

In the very simplest of terms, a stock, crypto or other asset or commodity will either be temporarily overvalued in which case the price may correct and come down, temporarily undervalued and likely to go up or correctly valued or at fair value and not going anywhere anytime soon. 

When a stock or crypto is considered by traders as undervalued at its current price, this is known as being oversold.

 

What is oversold in crypto?

Let’s take bitcoin as an example as it’s the most well-known cryptocurrency and let’s face it, a lot of people are in it. 

Is bitcoin overvalued and the price is going to come crashing down or is it currently undervalued and likely to keep going up? 

If it’s undervalued it is oversold, literally meaning that it has been “over” “sold” due perhaps to negative sentiments which has driven the price down due to excessive selling. In fact, the price should be higher and perhaps there is an upward correction coming in which case it could be a good time to buy.

 

What is fair value?

In order to understand if a crypto coin or token is oversold or undersold, it’s helpful to know where the middle is, 

This ‘middle’ is the fair value and in the world of stocks, traders will usually make calculations based on things like earnings per share and the price-to-earnings ratio. 

These figures can help a trader get an idea of if the stock is undersold or oversold when compared to competitors in the same industry and based on this information make a decision whether to buy, sell or ignore.

 

What is the opposite of oversold?

The opposite of oversold is unsurprisingly, overbought. In much the same way it literally means that. It has been “over” “bought” and could see a downward correction.

 

How can we tell if a crypto is oversold, overbought or at fair value?

Crypto is generally way more difficult to accurately predict as it doesn’t have the history or the same traditional fundamentals that traders can use to evaluate a stock or commodity like profits, dividends, market data, economic conditions and so on. 

Crypto is highly volatile and so one of the only real indicators is past price performance, demand and supply dynamics and expected returns, looking to the future to anticipate future growth and of course some instinct for what may happen in the future. 

If we look at bitcoin again, it’s not a company per se and doesn’t actually own the infrastructure, the computers that support the blockchain and is purely a cryptocurrency and blockchain. 

So how can we determine if bitcoin is likely to go up or down in the future? 

We would need to look at bitcoin’s position and importance in the larger crypto universe, where does bitcoin fit now and how could bitcoin and its blockchain fit into the overall crypto space in the future?

How will governments deal with crypto in the future and how about its network effect? 

We could do the same with Ethereum, the second-largest crypto after bitcoin. 

Ethereum is more than a cryptocurrency, it’s an entire ecosystem. Will this ecosystem continue to be a major player in DeFi for example or are there competitors lurking on the sidelines that could knock Ethereum off its perch? 

Let’s use this example to imagine an oversold scenario for Ethereum. 

Imagine, there’s talk of Ethereum losing its hold on the DeFi space and people start selling in droves, this drives the price down. 

In fact, however, this sentiment has been total FUD (fear, uncertainty and doubt) and now Ethereum is in fact trading lower than it should be and could be likely to correct and go back up. This would be a case of being oversold. 

 

What is an oversold indicator?

There are some technical methods used by traders to try and ascertain if a crypto, stock or commodity is oversold, overbought or at fair value. 

A couple of methods used include using relative strength index (RSI) and Bollinger bands. 

The RSI indicator looks at the pace of recent price changes to try and determine if a crypto is oversold, overbought or at fair value whereas the Bollinger bands consist of lower, middle and upper bands. 

The middle band reflects the cryptos moving average position while the lower and upper bands measure and record price deviations relative to the middle band. 

A crypto would be considered to be oversold when the values shift towards the upper band, the contrary would be true if the values shift towards the lower band in which case a crypto could be showing signs of being overbought.

 

Conclusion

In the world of traditional trading, it’s difficult enough to know in which direction a stock or commodity is likely to head, in crypto it’s perhaps even more difficult. 

In its most basic form, the most important thing to be able to understand is if a stock or crypto is overvalued (overbought), undervalued (oversold) or in fact where it should be (fair value).

If you are able to determine if a crypto is in fact oversold, it could be the perfect time to jump in!

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BUIDL in crypto

BUIDL Explained

BUIDL is a warp of the word build and is a movement of sorts that encourages the building of the entire crypto eco-system as opposed to purely investing in and holding crypto for personal gain.

The world of crypto is full of slang and strange terms like ‘HODL’ which stands for Hold On for Dear Life when a person buys crypto and holds on to it without buying more or panic selling or ‘Lambo’ when a crypto holder becomes rich enough to buy a Lamborghini or say ‘Mooning’ when the price of a crypto is skyrocketing and heading for…well the moon. 

In much the same way there is ‘BUIDL’ which is a warping of the word ‘build’.

What is BUIDL in crypto speak?

The crypto universe attracts a whole host of character types, those that are in it to make a quick buck, those that join the crypto bandwagon because everyone else seems to be and the purists.

These purists for want of a better word are in it beyond solely personal gain and believe in a much bigger idea. 

They see crypto changing the world, challenging the status quo and hopefully bringing about greater equality in the world. 

This group and perhaps also the developers want the crypto ecosystem to grow, to infiltrate all aspects of society one day, they are builders or ‘buidlers’ in crypto terms. 

These buidlers encourage people from all walks of life, techies and non-techies alike to contribute to the growth of crypto as a whole. 

This could mean simply using crypto-based services based on smart contracts, writing about crypto as we are, using crypto wallets, playing blockchain-based games and so forth.

The importance of buidling and not just hodling

If we look at our societies the majority of us exist within the system, contribute taxes and perhaps support some social causes dear to us but for the most part, we are not really involved in what happens in our local neighbourhoods.

We are not building, we are existing, using and consuming what is available to us. 

However, for any system or society to thrive and grow there needs to be a group of people that have a broader vision. 

One such proponent and user of the buidl term is Ethereum co-founder Vitalik Buterin who has used the term when referring to the ongoing development of Ethereum.

Let’s use the example of the internet to illustrate the importance of buidling

One of the biggest technological revolutions of modern times and in many ways the precursor to the crypto world now was the arrival of the internet and before that the beginnings of the personal computer revolution. 

They were revolutionary, disruptive and very geeky. 

Just as with crypto. In the early days of personal computing and the internet, it was the techies who were experimenting with the fledgling technology as it was back then. Think of the two Steves in their garage building the Apple 1 or Jeff Bezos turning to selling books on the internet.

If personal computers and internet technology had only stayed within these niche circles they probably would not have gotten to where they are now. 

Nowadays not only techies use personal computers and the internet! 

People from all ages and walks of life use the internet and personal computers without really needing to understand how they work. 

To get to where we are now, people outside of the tech community had to start using early personal computers hence creating demand for manufacturers to make and sell computers. 

Early internet companies created e-commerce websites (Web2) selling all manner of things and people started using them, think of tiny little Amazon.com when it started off selling books online

We could think of those early Amazon customers buying books as buidlers. 

In much the same way, crypto is a little like the early days of the internet and as more and more people use crypto services they are buidling. 

Conclusion

As it stands today anyone who buys crypto or uses a crypto-based service is in some ways a buidler as they are aiding adoption and helping the crypto ecosystem to grow. 

We are buidlers as we are writing about crypto to help people understand what it is. 

The level of buidling, of course, varies depending on the contribution but in the end, it all counts. 

It’s not inconceivable to imagine crypto in another ten or twenty years as an everyday utility as the internet is today, especially with the growth of DeFi. 

So, let’s all get buidling and play our parts in the crypto revolution taking place under our noses right now!

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crypto coin burn

Coin Burn Explained

Crypto coin burn is when crypto coins or tokens are permanently and intentionally removed from circulation in order to help elevate the price by decreasing supply.

 

The crypto market is driven largely by supply and demand economics

Unlike say the money supply which is backed by the government or a commodity such as oil or gold which has an inherent value, there is no such inherent value in crypto. 

If Bitcoin were to collapse, there is no liquidation process where assets can be sold off in order to compensate shareholders and suppliers. 

As demand and supply are the primary levers behind the price, more coins or tokens can be added to the supply which can bring prices down, or coins or tokens are permanently destroyed “burned” in order to drive the price up. 

What is a crypto coin burn?

A crypto coin burn is the intentional permanent destruction of a crypto coin or token by the development team behind the crypto. 

The coin burn removes the desired amount of crypto tokens or coins from circulation. 

It is as permanent as taking a big wad of Euro notes, wildly spraying them with gasoline and setting them on fire. 

Once those notes are burnt, they are totally unusable and out of circulation. 

Well, the same happens with a coin burn, without the gasoline and fire of course!

What is the purpose of a crypto coin burn?

There are a couple of primary reasons why coin burns take place. 

One of them is to help maintain/stabilise the price of a stablecoin. 

Stablecoins are generally pegged to a fiat currency like the US Dollar or to a valuable commodity such as gold or they maintain their price using an algorithm. 

If the price of the coin or token were to fall beyond a certain level a coin burn would take place which would lead to the price going up to the desired price point, for example, to match the price of the US Dollar due to the decreased supply. 

Naturally, the reverse happens should the price be too high, more coins or tokens would be added to the supply. 

A further reason for coin burns is to help push the price upwards by removing coins or tokens from the available circulation. 

The decrease in supply makes each coin more valuable and therefore more attractive to investors. 

Corporations employ a similar technique known as a share buyback, where they are reducing the supply of available shares in the market in order to drive the share price up. 

The key difference is that the shares are not being destroyed, but rather reabsorbed by the corporation. 

The end goal is very much the same though. 

To reduce the supply in the open market and drive the share price up. 

Another example of a similar dynamic is the supply of oil into the market. If the price of a barrel of crude oil drops below a certain level, the oil-producing nations will often restrict supply in order to drive the price back up in order to maximise their profits.

How does crypto coin burn work?

A crypto coin burn is a totally transparent process and anyone can verify the coin burn on the blockchain. 

As dramatic as it may sound, there is no fire or actual burning involved, it’s all happening in the digital realm. 

A crypto coin burn occurs when a predetermined amount of coins or tokens are sent to a special address also known as an “eater address”. 

Nobody has an access key to this address, not even the developers and once the coins or tokens have been transferred there, there’s literally no way of getting them back. 

Think of it like a safety deposit box where you can push valuables in, but you have no way of opening the box to take anything out. 

The valuables remain there. Now, in the case of the safety deposit box, it’s still somehow possible, for example by opening the box by force, no such possibility exists in the crypto world. 

The coins or tokens are technically still accounted for but not available for use. 

It’s worth remembering that coin burn is intentional, it is different to situations where coins or tokens are accidentally sent to the wrong address or a person loses access to their wallet after they have lost their private key and those coins or tokens are no longer retrievable. 

The crypto world is brutally clear and very unforgiving when it comes to lost coins, burned or otherwise.

A couple of high profile coin burn examples

Ethereum, the second-largest crypto after bitcoin undertook a major coin burn event, burning through an eye-watering $144m ETH in 2021 following major network upgrades. 

ETH was being burned at a rate of 3.15 tokens or around $10,000 per minute. Another different coin burn event was by the founder of Ethereum as it happens, Vitalik Buterin. 

In this case, it was a Dogecoin, Shiba Inu. Vitalik burned a staggering 410 trillion SHIB, 90% of what was in his wallet, this drove the price up 40%, as the coins Vitalik burned represented about 40% of the total SHIB supply. 

In this case, his motives were different, but, the end result was as expected, the removal of a significant number of coins from circulation, made the remaining coins more valuable, well, for some time at least.

Conclusion

Demand and supply dynamics drive the crypto market, pure and simple. 

As non-stablecoin crypto typically does not have an inherent value and is not generally backed by anything or anyone, there are not many levers that can be intentionally pulled to somehow control the price. 

Coin burning is one useful lever available to all crypto coin developers and also communities. 

By reducing supply via a coin burn event the price can be artificially driven up thus making existing coin and token holders happier and making the coin or token more attractive to new investors.

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Crypto layer-2

Crypto Layer-2 Explained

Layer-2 is a scaling solution to enable faster and lower-cost transactions on a blockchain network like Bitcoin or Ethereum.

As crypto has exploded in popularity it has inevitably stretched the capabilities and limitations of the major blockchain crypto networks like Bitcoin and Ethereum.

You could imagine the early days of crypto like a shiny new three-lane highway, freshly tarmacked for a smooth ride and almost no traffic due to the relatively small number of cars. 

Fast forward to today and that same highway is bursting at the seams just as our real highways are. 

It’s not easy or sometimes even possible to add a new lane to ease the traffic. Crypto networks like Bitcoin and Ethereum face a similar dilemma.

The limitations of layer-1 when it comes to transaction speed

The core blockchain network is what is known as Layer-1. 

In the case of crypto, one major problem with layer-1 is the relatively slow speed at which transactions can be confirmed. 

Take the case of the credit card company Visa, it is capable of processing up to 20,000 transactions per second (TPS).

Bitcoin on the other hand is capable of 3 to 7 transactions per second on the main blockchain. 

This is a gigantic difference and poses serious scalability issues. 

The reasons why are too complex to get into here but in essence, Visa uses a centralised system whereas Bitcoin uses a completely decentralised system where every single transaction needs to be verified by every node on the blockchain. 

This produces a highly secure, cost-effective and super-resilient network but this security and robustness comes at the cost of lower transaction speeds. 

Layer-2 is one solution to the problem of scaling

As a result technologists in the crypto world have been exploring ways to ease this congestion and layer 2 is one such solution.

To illustrate what layer-2 is we can use a different analogy this time. That of banking. 

Imagine a major bank like HSBC or Barclays. It has a centralised technology or systems that store all the balances and transactions for thousands or maybe even millions of customers. 

Every time money is deposited, withdrawn or transferred by an account holder the information is updated on the central network and most often in real-time. So far so good. 

Now imagine we didn’t have online banking or ATMs and like the old days of banking, every single customer would have to physically visit a branch office and conduct the desired transaction no matter how small. Imagine the queues! 

Well, this is what layer-1 kind of looks like. 

As you can imagine, even with lots of branches it would take a lot of time to get things done. 

Banking solved much of this problem by going online and by offering ATMs. 

This has resulted in a huge amount of daily transactions being removed from the workload of branch offices. We could think of ATMs and online banking as layer-2 in crypto.

Now that we have an idea of what layer-1 and layer-2 are we can go a little deeper into what they are in crypto terms

Blockchain networks like Bitcoin and currently Ethereum, (although this will change), use what is known as a Proof of Work (PoW) consensus mechanism. 

In simple terms, every time a transaction or “block” is recorded on the blockchain a miner has to solve a highly complex computational puzzle first by beating other miners and winning the opportunity to record the new block and in return earn some coins and corresponding transaction fees. 

This transaction has to be verified by the entire blockchain network and then it is set in concrete so to speak. 

This process takes time and energy, literally. If this proof of work consensus mechanism didn’t exist, say in the case of Visa, a transaction could be recorded instantly and naturally 20,000 transactions per second are possible. 

In the case of Bitcoin, it is a physical limitation due to how the blockchain was originally conceived and developed. 

Layer-2 is designed to divert transactions from the layer-1 network onto a faster network

What layer-2 does in very simple terms is “divert” a transaction away from the main layer-1 network, process it on a faster separate layer, “layer 2” and then when the transaction has been completed punch it back into the main layer 1 and set it in concrete so to speak. 

This results in a reduction in small transactions occurring on the main layer 1 of the blockchain but still recording the final transaction with the same level of surety. 

In addition to reducing congestion layer-2 also helps by offering lower transaction fees which are essential for very small transactions or micro-transactions where high fees simply wouldn’t work.

We could go back to the highway analogy again to illustrate layer-2 as well. 

Imagine the main highway as layer-1, the primary blockchain of say Bitcoin or Ethereum. 

Layer-2 could be an exit onto a separate super wide and fast stretch of road that leaves the main highway and then rejoins again several junctions later. 

Now if we imagine a lot of these separate stretches of road in existence that are diverting traffic away we could expect a reduction in traffic on the main layer-1 highway. 

Of course, it’s not as simple as that but hopefully, the analogy makes it easier to understand the issue and how layer 2 can ease congestion.

The Lightning Network is an example of a layer 2 crypto scaling solution for Bitcoin

One example of a layer-2 scaling solution is the Lightning Network on the Bitcoin blockchain. 

The Lightning Network simultaneously takes transaction loads from the Bitcoin layer-1 and reports to it as well. 

This results in an increase in processing speed on the Bitcoin blockchain. In addition to this, the Lighting Network brings smart contract capabilities to the Layer-1 Bitcoin blockchain. 

This is pretty major as the layer-1 Bitcoin blockchain, unlike Ethereum, does not inherently support smart contracts. 

Smart contracts, in very simple terms, are automated contracts that allow for more complex possibilities on a blockchain beyond the storing and transferring of cryptocurrencies. 

Conclusion

As with almost all new technologies that experience mass adoption, like banking or cars, there is inevitably going to be a scaling problem. 

Crypto is experiencing this scaling problem right now. In order for crypto to truly go mainstream robust solutions will be needed. 

Layer-2 is one such solution trying to help ease congestion and keep traffic moving!

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