In 2018, the major decision that many people will have to make is whether to mine Bitcoins or to trade them. Both mining and trading have their advantages and disadvantages, and we’ve already covered them in an article. However, this article is about just one thing. In this year, which of the two will be the best route to success?
Let’s recap what mining really is. Mining is a process of validating cryptocurrency transactions. This creates new currency that is added to the record, and this is what creates the wealth you later own
Trading is buying one currency, then switching to another at the right time to get maximum profit.
Pros and Cons of Each
To be a miner, one must have a mining rig. This is a GPU set-up that is powerful enough to solve blocks using a mining software. To solve a block, several miners work together have to crack hash values and the first one to do so would get coins as reward. This means that mining requires a starting investment and also requires a lot of patience and hard work.
Trading is performed on an online exchange site where other traders purchase coins of their interest. You will want to buy coins that will rise in value. However, the more favored a token gets, the more it is susceptible to market vulnerability.
Mining versus Trading
Mining is proven to be best when investing in long-term. The average mining rig costs around 40000 Rand and can generate a few thousand Rand a month, depending on which network it is mining from. In most cases, miners will gather up with their mining rigs to do pool mining. This is where they combine their computing power to solve blocks. Miners are then rewarded based on what they have agreed upon. This means that the rewards are distributed but they are also gained a lot, lot faster.
On the flip-side, trading is much more cheaper. Opening a crypto wallet won’t be as difficult and as expensive as building a mining rig. There is also more support material and help dedicated to crypto trading. Joining online communities on Bitcointalk, Reddit, and Cryptocurrencytalk can help teach someone who likes to start trading. Nevertheless, investing in cryptocurrency through trading would require a lot of guts. Cryptocoin prices fluctuate like crazy, making it very difficult to predict, so timing is very crucial in this one.
The issue comes down to knowledge. Even the most seasoned traders can not always accurately predict the rise and fall of a currency. In mining, you rely on creation of new coins for your wealth, and the steady increase in value of the currency is just an added bonus. In trading, you can lose a lot just by buying the wrong currency.