How To Mine Ethereum Part 1: Super Basic

Ethereum (aka Ether) is a cryptocurrency (like bitcoin, but any cryptocurrency besides bitcoin is called an altcoin) but it works on a very different algorithm that was designed for smart contracts that are always executed correctly because they are part of a public ledger, so one party cannot disrupt the contract. Ether is the currency with which the contracts can be executed. Ether is the second "biggest" cryptocurrency, so it's the "biggest" altcoin (Litecoin, Dash, and Siacoin are others, but there's like 1200 different cryptocurrencies, including meme-based one like Dogecoin...yeah...meme-based).

That's all well and good, but how will it make me rich? Chances are, it won't. The value of Ether (and all other cryptocurrencies) is super speculative, so you kind of just need to buy a few coins, get lucky and ride a wave until you get scared and then sell them. Not too much different from penny stocks. Really, the main difference between altcoins (bitcoins is accepted by some vendors, so it's kind of becoming a real currency) and penny stock is that you can min for altcoins. All you need is a sieve and...jk you need a GPU. If you don't know what a GPU is, you should probably stop reading and not worry about mining. Huh...still there? Okay. A GPU is a graphics processing unit (aka graphics card) that is normally used for rendering games or models or art and other graphic-y things. But you can also use it to compute things, kind of like a CPU (central processing unit, the main "brain of your computer. But GPUs compute things much faster than CPUs and you can have up to 7 of them on a single motherboard, instead of just one CPU. So, you can compute the Ether blockchain algorithm that needs to be processed to keep the Ether network secure, and then you get rewarded for it! In Ether! So, mining is just this process of running the blockchain on your computer and then getting paid for it. You can also mine with a CPU but they're super slow and you won't make any money because it will cost you more in electricity than you will make mining Ether.

I have to take the Dog for a walk, so part 2 will be coming soon.

LiteCoin Mining

I started looking into mining LiteCoin. I'm not too sure that it will be profitable, but I thought I'd give a shot with an old computer that goes completely unused. I installed Ubuntu 12.04 LTS (long term support) because Windows XP is not going to be supported by Microsoft after April 8, 2014. I downloaded the LiteCoin wallet and the bootlogger quick sync file. The syncing was only supposed to take an hour, but it took about four. Good start. Guess that's what I get for using a 10 year old computer. Anyschmows, I still have to download a mining program (pooler's cpuminer) and join a mining pool. I could go it alone, but it's practically impossible to get any coins by yourself. An analogy to the way LiteCoin (and BitCoin and all other altcoins) are mined is everyone is throwing darts trying to hit the LiteCoin and whoever hits it, wins. So my slow computer is a tiny dart and fast computers are machine guns. So, to distribute the effort and end up with a partial coin instead of nothing, pools were formed and the more computing power you contribute to the pool, the larger of a percentage of the LiteCoin you'll get when your pool wins. Kind of like a lottery pool.

Interestingly, mining is what keeps the network safe, as the math that your computer is doing is checking the validity chain of other people's transactions. Neat stuff.