Cryptocurrency 101 for the uninitiated

Posted on June 24, 2021 by Vauxhall Advance

By Kenyon Stronski
Local Journalism Initiative Reporter
reporter@tabertimes.com

So what is a cryptocurrency? Well, to understand a crypto, first it’s important to understand what they’re made of.

Taking bitcoin (BTC) as an example, BTC is made up of what’s called a blockchain. What’s a blockchain? Well, exactly what it sounds like. It’s a block, and a chain.

Data is stored in things called blocks — which are then chained to other blocks of data in chronological order — making one long line of blocks and chains. There are more than just a crypto that can be stored in a blockchain, but as of writing this — the most common use of a blockchain is for ledgering transactions.

In BTC’s example, everything is decentralized, so no one individual has control over the blockchain. Instead, it is controlled collectively, which is part of what makes it so secure.

A blockchain is just a database, which is just a collection of information — which allows for easier searching and filtering for information. How a blockchain differs is a database labels everything into tables, while a blockchain connects everything together. Every block of data has an exact timestamp on it when it was added to the chain.

The reason this makes everything so secure is, it’s extremely difficult to alter the contents of a block — unless the majority of blocks have reached a consensus, which means a hacker must simultaneously control and alter at least 51 per cent of the blockchain, so their new version is considered the majority. Given the size and scope of BTC’s network, it would cost a nearly insurmountable amount of money to pull off, and would ultimately be worthless — as it would cause BTC to crash.

BTC has given rise to other nefarious schemes however, with one of the more prevalent ones being known as cryptojacking.

With BTC and other crypto, you have the ability to mine them — which is basically just using your computer to solve extremely complex math problems until “boom” — you have 0.00001 BTC. Nowadays, its widely-accepted that to mine BTC yourself would be a fruitless effort. You’d spend more on your electricity bill than you would actually make, and it greatly, greatly reduces the life of your hardware.

This led to cryptojacking, which is when a hacker cryptojacks your computer and uses it to mine BTC or other crypto for them. They usually gain this control through the use of phishing e-mails or false advertisements, with some browser add-ons being infected, as well. Even some websites.

You can detect this in a couple of ways, but the most reliable is recognizing if your computer is running hotter or slower than usual. This is important, because high heat can ruin systems like CPUs, fans and graphics cards — or just reduce the lifespan of the equipment. If you’ve recognized a website or add-on you believe to be cryptojacking you, either immediately kill the website or purge your browser extensions. Cryptojacking is hacking and still very illegal.

Earlier, I spoke about the ability to mine BTC, and other ‘proof of work’ crypto, so how does that work?

Well, the easiest way to explain it is imagine if you have a few friends, and you tell them you have a number between one and 100 you have sealed away. Your friends need to guess either the exact number or a number that is lower in value with no limit on guesses. Whoever guesses the exact number or the closest below it gets rewarded with the coin.

Easy. You can get mining right away, right?

Well, it’s more complicated than that. Imagine millions of different computers trying to mine the same BTC — we say mining, but it’s really just validating transactions in a block — and your computer has to come up with a 64-digit hexadecimal number that either is exact or the closest hexadecimal below to get your BTC. Little more complicated, right?

There are ways to boost the chances of being the one to guess that number, with the simplest being just having more computers mining at the same time — which is why cryptojacking has become more popular, and why new graphics cards are always so hard to obtain. But, even that isn’t proven to give any return on investment. Mining is mostly just luck, it’s like winning the lottery — but not quite as extreme, and far, far more costly.

Now onto the mining hardware, and more specifically, graphics cards.

The company Nvidia has just recently released a new graphics card series known as the “30 series.” These things are powerful, whether you’re a gamer or a BTC miner. Your mouth waters at the thought of obtaining them, and with an MSRP of $330 USD, thats not a bad price. The problem comes with the supply, and the lack thereof.

With the crypto-miners and all the gamers wanting the new and powerful hardware, this creates a middle-person who’s only interest is making money. They buy these cards in bulk, using any way they can to get some supply, and then crank the price up to two or three times their normal value. We call these people scalpers.

Once upon a time, this wasn’t much of an issue. There was no rush to mine BTC and there was no real reason to scalp, given the supply. But with some major BTC miners having rigs that incorporate hundreds of graphics cards, well you can see where the problem comes in.

In the digital day and age, it’s important to stay safe and to always be careful what sites you visit and what ads you click on. You don’t want your computer to be the reason for some hackers’ next paycheque, would you?