I the Idea of a Crypto Currency is a relatively simple one. simply put you pore a shit load of computing power into reversing an extremely long hash and the result is that a block chain with proof of work starts to
build up. If you start awarding units of value for each block successfully generated and you have yourself a currency, one that's impossible to forge and where all transactions with it must be independently varifyed and are part of the public record. and most impotently, it's completely decentralized and thus resilient to malicious market manipulation.
That was what Bitcoin tried to do. sadly it fell victim to hardware specialization. as it stands now it's only profitable to mine Bitcoin if 1) you have 20k worth ASIC hardware, 2) a space with enough power to run that hardware AND keep it cool that doesn't cost you an arm and a leg to maintain, and 3) your pointing your miners at an extremely large mining pool in which case your going to be generating about 100-200 dollars a month. that is for the next half a year or so. because, you see, the rate at which the difficulty is increasing that same hardware is only going to be able to generate about $10-$20 once ASIC hardware has flooded the market and raises the global hashrate by by 10x.
The end result is that in another year only really big mining operations and pool operators will actually make any profit off bitcoin mining and so it seems that Bitcoin has failed at the one major thing it tried to acheave, decentralization of currency generation, true I guess 20 organisations is better than 1 but that not what it was supposed to be.
All this I discovered when I finally got fed up with hearing the hype and decided to do my own research.
now of course Bitcoin isn't the only cryptocurency there are close on 20 different variants that have sprung up in the last year all with different features that try to improve on bitcoin and the other variants.
One of these is Litecoin a Variant of Bitcoin that trouts that it is impervious to hardware specialization (at least for the time being) because it uses a significantly more ram and CPU intensive algorithm incited of just running off massive amounts of operations/s. Litecoin seems more stable in the long run compared to bitcoin. not only can transactions be confirmed faster but there will eventually be 81 million litecoins incited of Bitcoin's limit of 21 million of course litecoins are worth about $3 USD as opposed to Bitcoins $120USD so you need a lot more of them them to feel rich but hey, that's how the cookie crumbles. funny enough Litecoins are more profitable to mine from the typical end user standpoint when you take into account USD exchange value profit minus the electrical cost to generate 1 coin.
I decided to do an experiment in mining Litecoins. I gathered all my computational power together, fired up some workers and pointed them all at a mining pool and achieved a mediocre 220 Khash/s hashrate (note that were I mining bitcoins the hash rate would be an order of magnitude higher do to algorithm complexity, but at the same time the rate would be an order of magnitude worse when compared to how much USD it could generate)
12 hours later and I had myself a whooping 0.15 LTC to my name that's right folks a whole $0.45. by this metric I can generate about .3 LTC every 24 hours or about 60 cents. about $18 a month. coesadently it would take about $12 worth of electricity to make that $18 where I live bring my net profit to a whopping $6,
$72 in a year. and all I have to do is dedicate 3 grand worth of hardware and hope none of it breaks from over use as it will be pushed to it's limit 24/7 for that entire year. and this doesn't even take into account the fact the difficult rises by about 7% every 7 days or so. so realistically I'm looking at closer to $10 profit in that year and a loss there after.
This is fools gold people. Fools, gold.