“Mining is controlled by an elite. We don’t think that is reasonable and we think it is an impediment to scaling crypto. Our business is 100% about democratising the process”
I’m baffled and cynical, but I’m also intrigued and excited by this parallel digital universe.
Chatting to friends and colleagues of my vintage, they are similarly mind-blown.
There’s also a whole mythology (most of it rubbish) around this emerging industry. Stray into more exotic areas such as crypto mining, and you tend to be met with blank stares.
So, before I kick off with this article on new London stock market listing, , I want to start with an explainer: All you wanted to know about crypto currencies and were too afraid to ask.
Ten years ago, Satoshi Nakamoto came up with a peer-to-peer network that prevented double spending: it was completely decentralised with no server or central authority. With this Bitcoin was born.
Nakamoto was a nom de plume, and nobody knows who he, she or they are.
But what was bequeathed has spawned into an industry worth more than US$200bn.
Cryptocurrencies such as Bitcoin, Ethereum and Litecoin use cryptography (complex mathematics and computer science) to secure and verify transactions as well as to control the creation of new units.
In essence, they are limited entries in a database that no one can change unless specific conditions are fulfilled.
A defining feature of virtual currencies, and arguably their most endearing allure, is their organic nature; they are not issued by any central authority, rendering them (theoretically at least) immune to government interference or manipulation.
The creation of so-called alt-coins is nothing like the printing of money. There’s no central authority that issues new notes. Instead, these are generated through a process known as ‘mining’.
So, what is mining?
Before we get to that it’s perhaps worth doubling back to talk about blockchain, which was mentioned in passing above.
Blockchain technology supports almost every cryptocurrency, offering a central virtual ledger of each transaction.
These bargains are then assembled into what are called blocks, which are verified by crypto miners all over the world to ensure they are legitimate.
Once these checks are made, the next sequential transaction block is connected to it. This is how cryptocurrencies are created and how new cryptocoins are made.
In return for investing in and deploying expensive computing equipment complete with the highest available hardware (including top spec cards originally designed for gaming PCs), miners are awarded a newly generated quantity of coins plus transaction fees.
Myth versus reality
While anyone with a computer, electricity and some knowledge of software could try their hand at becoming a miner, the reality is that more than 90% of the mining is done by scale.
“This completely flies in the face of crypto’s ethos, which is de-centralisation,” says Jonathan Bixby, executive chairman and co-founder of .
Why is this the case? Put simply, the equipment required for mining and the electricity needed to keep it running are prohibitively expensive for the likes of you and me.
And even if the costs were more acceptable, it’s not simply a case of buying a box and switching it on – an MIT computing graduate might struggle with it, as did Bixby, a Canadian-born tech-wizard when he first started to explore this sector five years ago
Bixby and Argo president Mike Edwards have been down this route. In fact, it was the inspiration for the UK-based company they are listing on .
Headquartered in London and with a brand-new data centre based in Quebec, Canada running off cheap and…