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Ripple Mining Explained: Why It Can’t be Done

  • Vera Thornpike
    📚 WikiCoin

    Being a top cryptocurrency, Ripple appeals to both corporate and individual investors, but can it really be mined?


Ripple Mining Explained: Why It Can’t be Done
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Contents

The cryptocurrency market is thriving, and all major players are doing everything possible to get the piece of the market cap pie which was, by the way, worth $1 trillion at the beginning of 2018. Thanks to technological advances, Ripple (XRP) has made its way to the top: it’s the 3rd most popular crypto asset in the world. If this currency has piqued your enthusiasm, it’s time to find out how to mine XRP (spoiler alert: it’s impossible).

Why mining is so attractive

As the prices of cryptocurrencies started going up, investors started trying every trick in their repertoire to obtain the coins. Mining is one of the most widely used methods: you can add to your crypto riches by using the computing power of your hardware. No strenuous efforts are required, you just need to install the mining rig, provide electricity and cooling on a 24/7 basis, and wait. The computational power is used to perform certain sophisticated mathematical calculations and generate the blocks for crypto transactions to be executed.


Why mining is so attractive

However, the difficulty of these computations is growing at an exponential rate, so Bitcoin and Ethereum mining requires juggernaut servers and mining rigs for outperforming rivals. For this very reason, crypto enthusiasts switch their attention to different altcoins. Wonder if there’s a chance to mine XRP? It’s time to set the record straight.

Cryptocurrency

Price as of Dec. 31, 2017

Profit in 2017

Ripple

$1.96

35,000%

Bitcoin cash

$2,379

840%

Litecoin

$224

5,300%

Is mining Ripple possible?

So, can you mine Ripple to join the rows of crypto owners? That may sound disappointing, but there’s simply no way.

Why has the team behind XRP decided to sidestep Ripple mining?

  1. Ripple was primarily created as a digital currency for banks rather than individual users. Despite the fact that many banks can use their own Blockchain technologies and avoid using this cryptocurrency, having a universally acceptable cryptocurrency is easier. That’s why over 100 banks are already adopting this asset. Ripple is making its way to the top, thanks to financial institutions mostly.

  2. While digital cryptocurrencies are decentralized, Ripple takes a slightly different approach. Although third-party validating nodes authorize transactions, Ripple Labs is still in charge of operations.

  3. The main reason why you cannot mine Ripple is the fact there’s nothing to mine: the entire stock of coins has already been released.

The company behind Ripple explained why it doesn’t need Ripple coin mining. According to Ripple Labs, the amount of emitted coins is enough to sustain normal circulation of assets within the following five years, and the existing track of investments and transactions proves that the current amount of XRP is enough to sustain an optimal functioning of the infrastructure.

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How does it work?

As we’ve already mentioned, mineable cryptocurrency becomes available to those who show Proof of Work to receive block rewards. As the difficulty of calculations grows and we approach the maximum available supply, the expansion of the coin slows down.

The main benefit of this system is that the market can partially control the amount of effort put into block generation. When prices are low, the cost of mining can be higher than the value of the obtained coins, which leads to less mining activity. The rise in prices triggers a higher mining activity, and that’s what we witnessed a year ago.

How does it work?

When it comes to Ripple, there’s no need to leverage XRP mining: its market cap belongs to banks rather than individual users. The supply of 100 bln XRP has already been emitted. The founders have kept 20 bln of Ripple to themselves, and the remaining 80 bln XRP was contributed to the company. In December 2017, Ripple Labs distributed 38.7 bln XRP and put 55 bln XRP in an escrow account.

The escrow system is pretty simple. One of 55 escrow contracts expires within a month. Every contract covers 1 bln XRP and becomes available to Ripple Labs for sale to banks or reward to market contributors. If one month’s Ripple supply isn’t used, it goes back into the escrow. With this approach, the circulating supply of Ripple will double within the next 3.5 years. According to Ripple labs, during the last 1.5 years, 300 mln XRP were used every month. With such rates, the entire Ripple supply will go through the escrow in 14–18 years.

Ripple’s development will depend on how fast the financial institutions adopt this cryptocurrency and use it as a medium of exchange. Individual users and payments made through Ripple Labs don’t play as much role here.

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So, I can never be a Ripple miner?

No, but you still have the opportunity to be a proud XRP owner. There’s only one way of doing it: purchase the coins on trading platforms. Instead of searching for a Ripple coin mining pool, find reliable cryptocurrency exchange websites and buy XRP for fiat or other cryptocurrencies.

Having some XRP in your portfolio is always a good idea because:

  • It’s one of the most reliable crypto assets with a high profitability potential.

  • Ripple is in demand: it’s easy to sell it whenever you want.

  • In the nearest future, it will be possible to make international transactions with minimal fees. From an individual user’s standpoint, Ripple is a nice alternative to Western Union and services alike.

So, I can never be a Ripple miner?

There’s no such thing as mining the XRP coin!

Whenever you see headlines and ads like “Ripple mining software,” “Ripple mining hardware,” or “I will show you how to mine Ripple on PC,” keep in mind that this is a trap. There are no Ripple mining pools, no cloud Ripple XRP mining, and no machines doing that.

If you see a cloud mining website that offers XRP mining, there’s a 99.9% chance it’s a scam.

Bottom line

So, how to mine Ripple? There’s NO way of doing it. Since the entire XRP supply was emitted right in the beginning, this is one of few semi-decentralized cryptocurrencies that doesn’t have such feature. However, there’s still a chance to own the coins: they can be bought on cryptocurrency exchange platforms. Ripple is widely present in the vast majority of leading crypto exchange websites, so it’s easily available.

P.S. If you’re a mining geek and accept only this way of obtaining coins, there’s always an alternative. Although you cannot mine Ripple, there’s a myriad of mineable altcoins, and they can all be easily exchanged for Ripple. And if you monitor the market closely, you may be lucky to profit from a favorable exchange rate.

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SegWit Explained: What Is Bitcoin's Segregated Witness?


SegWit Explained: What Is Bitcoin's Segregated Witness?
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Segregated Witness (SegWit) is an implemented protocol update that solves the problem of the Bitcoin’s blockchain transaction malleability. The point is in one of the transaction components. The first part is the Basic information (the sender, the amount, the recipient). And the second part — Witness — carries a special cryptographic signature (code). This code is a confirmation of the virtual transaction in Bitcoin currency.

Witness’ signature creates difficulties for the blockchain because the form can be changed after the appearance in the block. Bitcoin will still reach the addressee, but the construction of new transactions will be complicated because they all go along the chain. Unconfirmed transactions slow down the speed of new ones, reducing the overall Bitcoin network performance due to pulling data from a past virtual transaction.


The current Bitcoin protocol makes it difficult to implement large-scale updates, as well as to conduct fast transfers. The problematic network feature is called the “transaction malleability”. Against this background began the movement for the introduction of SegWit.

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The goals of SegWit

Segregated Witness must restore the Bitcoin network and adapt the blockchain technology to new realities. The main task is to solve transaction malleability and scalability. SegWit optimizes the transaction process and creates conditions for the subsequent increase in virtual block size. SegWit has to solve such problems and questions:

  • If Witness signature is segregated from a block of Bitcoin increases size and bandwidth of the entire network.

  • The transaction size is reduced by 2 times.

  • Reducing the blockchain size, which saves disk virtual space for nodes.

  • Starting and synchronization of nodes speed up significantly.

  • The enhanced spam protection mechanism of Bitcoin currency.

It follows that SegWit addresses the most important aspects for Bitcoin: scalability, protection level, transactions speed, and interaction with new protocols.

The story of Segregated Witness

The first talk about the need to modernize Bitcoin’s protocol and about possible ways to solve the transaction malleability problem appeared in 2012. Bitcoin-Core developers Russell O’Connor, Luke Dashir, Gregory Maxwell and others became initiators. Active actions for the currency began in the summer of 2014, when Maxwell, Pieter Wuille and cryptographer Adam Back launched the blockchain research company called Blockstream. In this environment, they found a solution to Bitcoin’s problem. It was decided to separate special cryptographic signature from the main part of the transaction. They called this function Segregated Witness.

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In parallel with Segregated Witness, the idea of ​​optimizing Bitcoin’s blockchain by increasing the block size (the default is 1 megabyte) appeared. It could be realized only through a hard fork — a rigid network separation through the introduction of changes incompatible with the current protocol. SegWit, on the contrary, was a soft fork or partial update of Bitcoin’s protocol. To implement it, the Witness’s signature must be segregated in a new part of the virtual block. And its anchor (Merkle Root) recorded in the transaction of miners’ fees. As a result, more space remained in Bitcoin’s block, and its size increased without actually increasing. This result allowed us to solve the problem of the Bitcoin network scalability, which was also quite acute.

After the appearance of the second idea, a real war broke out, including among the developers of Bitcoin currency. Miners and pools couldn’t come to a consensus from 2015 to August 2017. As a result, SegWit was accepted and activated. A special code called BIP91, developed by Bitmain engineer James Hilliard, turned out to be the best compromise among all the proposals received over several years.

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The main advantages of Segregated Witness

The list of benefits which will be received by the Bitcoin network with the introduction of SegWit is very large, we focus the main ones:

  1. The third party will lose any options of signature’s changing, which will facilitate the development of new smart contracts.

  2. Dividing special cryptographic signature from Basic data will significantly increase transaction size and Bitcoin’s blockchain bandwidth, and the average virtual block size will be 1.7-2 MB.

  3. With Segregated protocol, transactions in Bitcoin currency will remain available to participants who have accepted SegWit, and those who refuse to do so. At the same time, users with an updated protocol will work with smaller commissions.

  4. The adoption of SegWit greatly simplifies the implementation of new soft forks, allowing to introduce new ideas to improve the security of Bitcoin currency.

  5. The block validation rate and transaction security will increase due to a change in the signature hash function from linear to exponential.

  6. A segregated signature will reduce the currency’s charging fees.

  7. SegWit will have a positive impact on the Bitcoin ecosystem here and now, as well as create a springboard for further development.

Arguments against SegWit

Even today, Segregated Witness is not fully accepted by the Bitcoin network. Sceptics believe that this will take years because the number of nodes has already exceeded 10,000. An increase in the number of participants and a virtual transaction will result in a Bitcoin’s block size of 2 MB is small for the needs of the ecosystem.

Partial centralization of Bitcoin’s system due to the implementation of the SegWit protocol will increase the number of unconfirmed transactions, which will strip the network and make currency vulnerable to hacker attacks.

Some Bitcoin developers and pools believe the adoption of SegWit is dictated by the economic gain of Blockstream, which owns the Lightning Network protocol. Its technical implementation in the Bitcoin network without Segregated Witness is almost impossible.

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Will the time come for SegWit2x?

Speaking about the implementation of Segregated Witness and Bitcoin currency, it is impossible not to mention the postponed indefinitely SegWit2x. The agreement was the result of heated discussions and a search for consensus. It was decided to make a hard fork, after which the block size should increase to 2 megabytes. The split was scheduled for mid-November 2017. In fact, Bitcoin would split into two networks with its own coin, rules, signatures and standards.

However, the idea was not destined to come true. Firstly, the negative attitude of the developer community and the launched NO2X campaign did not play into the hands of the “Segregated” protocol. Secondly, BIP91 was implemented earlier and it was successful.

As a result, on November 8, 2017, the complete closure of the project was announced. But there were people who positively evaluated the results for Bitcoin. For example, the head of Blockchain.info, Peter Smith, who initially supported the Segwit2x idea, spoke as follows:

“We’re relieved. The goal of the NYA was to bring the community together and keep the majority of the users on the same chain for at least a little while longer.”

SegWit usage metrics
Image by 123rf

Results for Bitcoin and blockchain

From the moment of implementation of Segregated Witness, a year and a half has passed, but the protocol is not accepted by 70%. Many large services have not yet implemented it into their processes. However, positive changes are already visible, especially for ordinary users. Now the average transaction cost with confirmation within 20 minutes, according to Bitcoin Core Fees, is estimated at 5 satoshi/byte, that is, about $ 0.08 for the entire virtual transaction.

Spam attacks on the Bitcoin network have also stopped, the mempool remains free, and the average block size has exceeded 1 MB. In addition, the activation of SegWit has opened the doors to the implementation of new solutions and prospects for Bitcoin and cryptocurrency in general.

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