Is NiceHash Worth It?
Originally published at https://branditechture.com on September 13, 2021.
Quick Overview: Ever since the invention of Blockchain by Satoshi Nakamoto in 2009, interest in the technology has steadily risen, particularly towards the opportunities it brought in regards to wealth. At first, early adopters hopped on the opportunity and started making good money from the New Tech by becoming miners for the network and earning commissions. But as more and more people poured into the system, competition would get bloody, and people would start teaming up, and soon things like pools, and consequently, NiceHash would emerge. But, due to high volatility and perilous hacks and thefts, a lot of people are now wary, and super cautious about Startups in the Crypto industry. Hence the question, “is NiceHash worth it?”
What is NiceHash?
NiceHash is a cryptocurrency hash power marketplace that connects sellers of hashing power with buyers of hashing power using the sharing economy approach. The company was founded in Slovenia by Marko Kobal and Matjaž Škorjanc in the year 2014.
The first thing to understand is the nature of the market NiceHash exists in, and the opportunity they leverage to build their business.
The thing is, ever since the invention of Blockchain technology, there has been an increased need for computational power. This is because the current Blockchain framework relies on the ability of a network of computers to process hashed, and decrypt encrypted data — two tasks that are very difficult and exhaustive.
Basically, the Blockchain is a distributed ledger to which anyone in the network has access. However, to maintain the “integrity” of the Blockchain, some users are tasked to do a certain amount of work in order to verify that any new information that is being inputted into the network is authentic. This demand for work is a way the system uses to deter attackers who might have the wish to alter the records.
What is Hashing and Hash Rate?
For the sake of security, information (or Blocks) in a Blockchain Network, are not just encrypted — i.e. made impossible to be understood by anyone for who the information was not meant for — but also hashed.
Ideally, a piece of encrypted information (or block) can be decrypted using an encryption key. But, this also meant that if the key falls into the wrong hands, all the information (or blocks) is compromised. However, when a hashed block is compromised, only a representation of the information (i.e. a Hash Value) is exposed, and not the information in itself.
But that’s not all. The Hash itself is also very tricky to discover. This is because when a piece of information is hashed, and a hashed version of the information is produced, there is no way of getting back, or guessing, the original information from that hashed information — just like you can’t get back wood from its ash. Hence, it takes a lot of trial and errors to guess the right data that generated that Hashed information. This trial and error are called computation, and until the machine “guesses” the correct hash, the Blockchain network would not accept any new block.
That is to say, a Blockchain wraps a piece of encrypted information inside a hash function.
That is why, very powerful computers are usually needed to carry out these iterations — which can run into hundreds of very complicated calculations, most times leading to wrong answers.
Consequently, the hash rate (of a machine or network) refers to the number of times attempts are made to complete those calculations each and every second. This hash rate is measured in Units of hash per second. Machines with a high hash power are highly efficient and powerful and can process a lot of data in a single second. Hence, more hash rates (aka Computational Power, Processors, GPU, etc.), equals more chances of success.
Note: The process of using Machine Processing Power to validate blocks in a blockchain is also referred to as “Proof of Work” (PoW).
Have you heard about Hive OS? Read; Is Hive OS Worth It?
Why Was NiceHash Created?
Due to the nature of the task at hand, miners needed very powerful machines, but they also consumed monstrous amounts of energy in order to carry out these calculations fast. And the problem was, if you are not the first to predict the right hash, and validate the block, then there is no reward for your efforts.
With a lot of Blocks to mine, more and more people poured into the Networks, and they all came with their very, very powerful machines — some even setting up humongous mining rigs (i.e. very powerful machines that are interconnected for the sole purpose of carrying out a difficult computational task).
Soon, it became extremely improbable to be the one to find hash, or validate the blocks first — since much more powerful and faster computers were already in the race.
To counter this, miners started aggregating resources, by forming Pools. That way they were able to have a better chance of being the first to validate more blocks, and also get rewards. This group of miners simply shared the reward according to the amount of computational power each contributed to the Pool.
And remember, since it was getting increasingly difficult to mine, miners were beginning to crave more and more powerful computers to do the mining — it was an uphill battle for everyone.
But NiceHash had other plans. They wanted to make finding hashes nicer for everyone. Hence the name, NiceHash.
The creators of NiceHash thought to themselves, “what if an individual doesn’t have these powerful machines, and didn’t even want to dedicate their personal machines to mining; but wanted to mine blocks and be rewarded in cryptocurrencies, how would they do it?
So, NiceHash came up with an ingenious idea of setting up a sort of “shared economy” and it killed two birds at once.
Side Note: In economics (particularly capitalism), sharing economy refers to a system in which people with the means to do a job (for a client), offer their services (to that client), and are paid for it. That is to say, it enables the sharing (or proper usage) of excess capacity — by giving (the people in need) access to the resources, whilst rewarding the owners of the resources.
That is to say, in a shared economy, Buyers are those who pay for resources (or Capacity), whilst Sellers are those who own the resources (or Capacity).
The idea (for NiceHash) was simple: Buyers decide on their needs (i.e. the specific coin they wish to mine), pick a Pool (i.e. a group of miners) to mine it, then state the price they are willing to pay the Pool for the job. If the Pool accepts the offer, they go ahead and mine the coin. After which the coin would be handed over to the Buyer, and the Money would be handed over to the Sellers.
This meant, Buyers didn’t have to have powerful Machines to mine coins anymore, and Miners are assured a fair wage for their powerful computers — i.e. their assets. Of course, in all these NiceHash, being the aggregator/platform would charge both Buyers and Sellers a small fee.
In simple terms; NiceHash serves as an online marketplace for buying and selling of computer processing/hashing power.
NiceHash launched in April 2014 and has quickly grown to become the largest hash power marketplace in the world, with more than 170,000 miners, 3.3 million orders served, and over 181,000 BTC paid out.
The question now is, is it worth Buying or Selling on NiceHash?
Objectively looking at the platform, you will find that it offers a wide range of services and features to make things very easy for both Buyers and Sellers.
Some of its features include:
- Compatibility: users do not need dedicated crypto mining hardware because it can utilize the little GPU/CPU/Processing power that their Personal Computers already have. If you own an AMD or Nvidia card, all you need to do is to install the free NiceHash Miner software.
- Ease of Usage: The service is intuitive and easy to use; This very feature is mostly appreciated by users who are entirely new to crypto mining and trading.
- Neat Interface: The simplicity of the User Interface is also commendable. It is uncluttered, comprehensive, and also intuitive. The central dashboard shows you your current mining activities, devices connected, and even your balances, giving you an at-a-glance overview of your portfolio.
- Initial set up: The process of registering, and setting up a NiceHash account is simple, and can be done within 15 minutes
- Anonymity: Sellers don’t even need to register at all if they prefer to remain anonymous. And Buyers are able to begin ordering hashpower immediately after they register.
- Profitability Calculator: The website also includes a profitability calculator. This calculator can help you predict the amount of mining you can practically carry out, hence allowing you to better weigh your options.
- Autopilot: After initial setup, the system can pretty much work on its own — needing almost no monitoring.
- Automatic Switching: The software also has a brilliant algorithm that automatically determines which coins are worth mining based on their profitability (at a particular time).
- Quick And Easy Exchange: Users can also sell their coins on an integrated exchange that is available on NiceHash, thereby eliminating the need to transfer their funds to an external exchange before carrying out transactions or trading.
- Access To Extra hash power: If you have a huge target to hit and need a lot of hashpower, you do not have to get an expensive dedicated machine to do it, as NiceHash enables you to rent additional hash power without needing to upgrade your hardware.
- Assorted Pools: Thanks to the popularity of NiceHash, Buyers can easily find a wide range of Pools dedicated to mining several types of coins.
- ASIC support: If you have the money to get dedicated mining hardware, you’d also be glad to know that NiceHash supports it.
Other Factors To Consider About NiceHash:
- Virus Threat: Trying to install the NiceHash software on your Personal Computer will most likely bring up the Virus Threat notification. But this is only because Anti-Virus Programs usually flag CPU mining software like Viruses, due to past histories of Malwares secretly installing CPU miners in order to use people CPU’s (for mining) without their permission — slowing down their devices in the process.
- NiceHash Fees: As stated earlier, certain fees are charged for carrying out transactions within the platform (this is what keeps the platform running). To prevent spamming, a fee of 0.0001 BTC is first charged for each transaction, plus 3% of the total amount spent on the order. But for a sale of power, if the balance is less than or above 0.1 BTC, 5%, or 3% are charged respectively. Please note that these fees may change from time to time.
- NiceHash Affiliate Program: NiceHash also has an Affiliate program available to users. However, you would have to go through rigorous scrutiny before being accepted, and given the materials to work with. Anyway, your potential earnings will be about 5% of all funds generated by the people you invited. There are also bonuses available in the Affiliate program.
How Long Will GPU Mining Be Profitable? (Would NiceHash Be Profitable In 2022, And The Future?)
The future of Blockchain technology indicates a shift from “Proof of Work” to “Proof Of Stake”. This implies that the major commodity traded on the platform — i.e. Hashing Power — might be obsolete in the not so far future. The result would be a dramatic decline in demand (Buyers), as well as supply (Sellers). The business model of NiceHash would be effectively dead by then.
However, there is still hope. If NiceHash figures out a way to also switch up the commodity being traded — i.e. to start selling Stakes, rather than Hashing Power — they may still have a chance.
But don’t fret, I think 2022 is still too close…
Is NiceHash Reliable? (My Verdict on NiceHash)
On the 6th of December, 2017; roughly 63 million US Dollars were stolen from NiceHash’s account by hackers. Two weeks later, users of NiceHash discovered (to their shock) that Matjaž Škorjanc (the Company’s Chief Technology Officer), was once arrested, and imprisoned (for almost 5 years), after committing multiple Cybercrimes — including the creation of Mariposa (Aka Butterfly Bot), a virus that infected over 1 million computers (monitoring and stealing passwords, bank credentials, and credit card details).
Just as the news (about the hack and crimes) was beginning to make headlines, the CEO and co-founder of the company, Marko Kobal, resigned.
This resulted in a lot of users losing trust in the company — and a lot of users are still very cautious to date. Needless to say, the platform offers a lot of benefits, but in a market where things move quickly, and anonymity is common, one needs to thread as though the floor were a layer of thin ice.
In the end, the worth of the company is based on your level of experience and needs. That is to say if you are interested in mining and trading cryptocurrencies, but lack experience — and just wish to get your feet wet — then NiceHash is likely worth your consideration.
Originally published at https://branditechture.com on September 13, 2021.