Wednesday, 2 May 2012

Why do People Mine Alternate Coins?

Bitcoin is at an extremely high level of difficulty, whereas for alternative coins, when they first started, their difficulties are quite low.   It is attractive to mine them to exchange for Bitcoins.   In fact this is the killer part of it.  When people mine alternate coins, they do so not for trading or saving but to exchange for Bitcoins.  As the selling continues, the prices drop until it is no longer profitable and the alternate coins die away.   The situation now with merged mining is the opposite, you can mine Bitcoins with alternate coins.   Therefore using the hash rates of Bitcoins, it artificially inflates the difficulty of the alternate coins being merged mined.   Therefore no one is likely to mine alternate coins alone but as a by product of Bitcon merged mining causing the prices to go near 1 Satoshi for some of the coins.

1 comment:

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