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What is Bitcoin Cloud Mining and is it a Good Investment?

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Bitcoin Cloud Mining

Bitcoin mining refers to the use of your computing power to process transactions on the bitcoin blockchain for which you get returns (in the form of new bitcoins). Bitcoin Cloud Mining refers to the process of ‘mining’ bitcoins with the use of a remote datacentre that has a processing power that is shared. With cloud mining, you don’t need to manage mining hardware. The miner might get lower returns as cloud mining is a service, hence there is a cost involved. Cloud mining enables to people earn bitcoins without the hassle of having to buy and maintain mining hardware.

Genesis Mining is currently the largest provider of bitcoin mining. It is the safest way to purchase hashpower as it doesn’t require any software and hardware set up.

Some of the advantages of bitcoin cloud mining are:

  • No excess heat to endure.
  • Zero costs of electricity.
  • No problems of ventilation when handling hot equipment.
  • There will be no cases of suppliers failing to deliver on time.

One of Genesis Mining’s most popular cloud mining contracts is the unlimited bitcoin mining contract, which will run indefinitely as long as the price of bitcoin does not drop to a level where the costs of mining exceed the revenues it generates. If that occurs, machines are shut down and the mining contract ends. Hence, cloud mining is only profitable as long as the price of bitcoin maintains an upwards (or at least sideways) trend.

WATCH OUT FOR SCAMS

Unfortunately, it is important to note that mining scams are on the rise like the possible $500,000 bitcoin cloud mining Ponzi scheme that was uncovered. Potential buyers of cloud mining services need to be extremely careful before purchasing any bitcoin mining contracts as companies posing as bitcoin cloud mining providers are one of the most common scams in the bitcoin economy. Hence, when choosing a bitcoin cloud mining operator, you need to be very careful and always consult community forums, such as bitcointalk.org, to receive information about the cloud mining company you plan to use.

One of my favourite bitcoin publications, BTCManager, has an excellent bitcoin cloud mining comparison site that can help choose a bitcoin cloud mining service, should you decide to purchase cloud mining contracts.

IS BITCOIN CLOUD MINING A GOOD INVESTMENT?

Well, the answer is yes and no. Since the mining difficulty of bitcoin has increased substantially in the last few years, mining at home using bitcoin mining hardware has become unprofitable for individuals as they can not compete with large international mining operations that own warehouses full of bitcoin mining machines.

In terms of bitcoin cloud mining, since the price of bitcoin has continuously increased in recent years, cloud mining contracts have been profitable investments and will stay profitable as long as bitcoin continues to gain in value. Having said that, historical data shows that investors who simply bought and held bitcoin made higher returns than those who invested in bitcoin cloud mining contracts.

Hence, it is up to you to decide whether you prefer to invest a larger amount once to then receive smaller daily or weekly bitcoin payouts “indefinitely” or do you prefer to buy and hold bitcoin and benefit purely from the capital gains of the digital currency?

There is an excellent article on how long it will take you to generate a return on investment using the most prominent cloud mining provider Genesis Mining by 99Bitcoin’s Ofir Beigel on Finance Magnates. If you are considering investing in a cloud mining contract, you should read this post first.

WHY I CLOUD MINE BITCOINS

Personally, I cloud mine bitcoin using Genesis Mining for idealistic reasons. I purchased their cheapest lifetime bitcoin mining contract (for $30) as I want to play my small part in ensuring that the bitcoin network continues to operate effectively. To get a return on investment it will take me well over a year, provided the price of bitcoin stays stable. Having said that, I am not too fussed about $30 should I not break even on this “investment” anytime soon. 

While you may like the idea of receiving regular passive income payments in bitcoin (I know I do!), you will most likely generate a much better return on investment by investing bitcoin peer-to-peer loans or simply buying and holding various promising cryptocurrencies (such as Dash, ether or everyone’s favorite bitcoin) as long-term investments.

 

Bitcoin

Nigeria Wants Regulatory Framework for Cryptocurrencies

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Nigeria Regulatory Framework Cryptocurrencies

With cryptocurrency adoption soaring in Nigeria, it is no surprise that on April 25, 2018, members of the House of Representatives, urged the Central Bank of Nigeria (CBN) and the Nigerian Deposit Insurance Commission (NDIC) to create a legal framework for the regulation of blockchain technology.

The resolve was passed following the adoption of a continuous motion titled ‘Need to regulate blockchain applications and Internet technology’, which was supported by Solomon Adaelu, who emphasised the innovation that the blockchain brings such as the potential to accelerate payments in the country’s financial services industry.

Adaelu said: “Blockchain as a digital and decentralisation ledger technology that records all transactions without the need for financial intermediary bank is new to humanity and can be a core payment facilitator for financial services industry. A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.”

The blockchain was invented in 2008 for the cryptocurrency bitcoin. Since its establishment, it has helped solve the issue of double spending on digital currency transaction without the need for a central server or trusted authority.

Adaelu went on to state that the deadline for a unified cryptocurrency regulation had been set for July 2018 following the G20 Finance Ministers’ meeting in March.

He further added: “Countries such as the USA, the UK, Russia, Venezuela, and Kenya have [already] provided [a] framework for the regulations of this emerging technology,” and believes that Nigeria should be next in line to do so.

Other lawmakers supported the motion while acknowledging the warning given by the NDIC to be careful when trading cryptocurrencies, given the complexity and uncertainty surrounding them.

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Binance Partners with Blockchain Innovation Hub in Uganda to Promote Economic Development

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Binance in Uganda
Image by Binance

Binance, a global cryptocurrency exchange, has partnered with Crypto Savannah, Made in Africa initiative, and Msingi East Africa to promote economic development and youth employment in Uganda using blockchain technology. The partnership aims to achieve these goals by “creating thousands of jobs and bringing investments to Uganda.”

Made in Africa initiative and Msingi East Africa are organisations that are dedicated to the economic transformation of African countries while Crypto Savannah is a newly created African blockchain innovation hub.

According to Trading Economics’ data, the employment rate in Uganda stood at 47.80 percent in 2012 compared to 88.30 percent in 2009. The broad use cases for blockchain technology have the potential to change these statistics for the better by providing innovation opportunities for young people.

Changpeng Zhao, CEO and founder of Binance, announced these plans on Twitter and hinted at the possibility of Binance getting more involved in African projects.

Binance’s initiative is believed to have peaked at a recent meeting with the Blockchain Association of Uganda (BAU) where Zhao interacted with the local blockchain community and promised to support and train young entrepreneurs leveraging the blockchain. He also advised young entrepreneurs to offer solutions that are going to improve the lives of the society.

“Binance is tailor-making partnerships according to the environment. We want to understand the landscape and grow our understanding of the market.”

Zhao’s meeting with BAU will be followed by the Africa Blockchain Conference 2018 which will be held in Kampala in May.

Blockchain Technology is Gaining Momentum in Africa

The Binance initiative is just one of the several upcoming blockchain-based projects that are taking place in Africa. For instance, the World Food Program recently announced a partnership with Devery to make food delivery to Tunisian school children safe. Furthermore, the World Blockchain Summit held in Nairobi last month has helped to open doors for global blockchain companies to establish themselves in Africa.

In view of the Binance initiative, Africa could attract more global blockchain companies in the future as the technology continues to take root on the continent.

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BitMari Conducts First Test Remittance on the Bitcoin Lightning Network

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BitMari Bitcoin Lightening Network

Zimbabwean startup BitMari has managed to successfully conduct its first Bitcoin Lightning Network test transaction with Tanjalo, a bitcoin startup from Lagos, Nigeria. The transaction signals a shift for remittances in Africa as users can soon expect almost instant low-cost bitcoin remittances.

Fast Transactions, Low Fees

BitMari is a Zimbabwe-based bitcoin company that leverages blockchain technology to expand into new remittance markets for the African diaspora. The startup was founded in 2015 by Sinclair Skinner and Christopher Mapondera to address the challenges faced by Zimbabweans when sending money overseas and vice-versa. In 2017, the company made history by becoming the first bitcoin enterprise to receive a money transfer license from the Reserve Bank of Zimbabwe. The company also formed a strategic partnership with Agribank to handle remittances for their customers using bitcoin.

Tim Akinbo, the co-founder and CTO of Tanjalo, was able to transfer $15 from Nigeria to a recipient in Zimbabwe through the BitMari platform using bitcoin. He believes the almost instantaneous money transfer will be instrumental in transferring value and promote cohesion by bridging local communities. The company is excited about the new development especially after successfully setting up the Lightning nodes.

Skinner, who is an ardent supporter of the adoption of bitcoin and blockchain technology in Africa to solve everyday challenges, stated:

“BitMari’s quick adoption of Lightning is active use of Bitcoin and Blockchain technology to solve real World challenges facing Africans on the continent and in the diaspora; such as costly remittance fees.”

The Bitcoin Lightning Network

The Bitcoin Lightning Network (LN) is a system built on top of bitcoin that enables people to send and receive payments instantly, and lower transaction costs by bypassing the blockchain. The Lightning Network’s use of payment channels lets users transact with each other directly without having to broadcast their business to the entire network. Currently, the Lightning Network is growing after being launched a short while ago on main-net by the Lightning Labs team.

BitHub Africa, a Nairobi-based blockchain accelerator of which BitMari is a member, has published a guide on how someone can go about setting up a Bitcoin Lightning Node on a cheap computing device called Raspberry Pi. The device can be used to process transactions by anyone with the resources and skills to host the node.

For now, BitMari is searching for other Lightning nodes to connect to their own. The company is also focusing on improving its user experience to increase adoption of its services and pass on the benefits of fast and affordable remittances to its customers.

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