A New Wave of Pioneers: Mining the Unknown

I am reposting articles I wrote in 2014 here to Steemit because this platform rocks! I wrote these articles to compare the Crypto Rush to the Gold Rush, and now that we have seen the miners responses to various crises, it's important to know how much we want to rely on those types of individuals to support a large scale network. Is it GOOD that people who have no interest in something are the ones supporting the security? Isn't that where hiring mercenaries has always backfired?

A New Wave of Pioneers: Mining the Unknown

Originally published "April 16, 2014"

The comparison of the Crypto Rush to the Gold Rush has been made on numerous occasions over the past years. It’s clearly the most appropriate comparison, both metaphorically, and literally.

Unfortunately, many of the people who compared cryptocurrency to gold have pessimistic views on crypto’s future— plagued with an inability to see beyond the looming threat of taxation from the US government and threat of Russian and Chinese bans on their official use in commerce.

For once, these three superpowers agree on something. Unfortunately, it’s their dislike of Bitcoin.

For some speculators/economists, these government attitudes signal the end of the Crypto Rush. When these speculators/economists attempt to draw parallels between the Crypto Rush and the historic Gold Rush, they are engaging in the age-old exercise of actively and knowingly cherry picking their comparisons to bolster their argument.

But if we compare the current state of cryptocurrency to the Gold Rush’s economic impact, we can see the potential cryptocurrency has. The rapid innovation taking place within cryptocurrency communities may make the Industrial Revolution look like a trivial episode in the world of technological and economic development.

This is the first in an eight-part series on how cryptocurrencies relate to the past, and how they can help shape the future. We’ll discuss the concerns around the current Crypto Rush, demonstrate how it can bring the same economic and technological benefits the Gold Rush did more than a century ago, and describe the relationship between coin developers (coders), miners, panhandlers (the people getting free coins), and merchants in the cryptocurrency world.

The History of The Gold Rush
Let’s start with the history of the Gold Rush and establish context for why the Crypto Rush has so much potential for economic change.

California, one of the most prosperous and densely populated states in the union, owes a part of that to the Gold Rush. San Francisco, for example, grew from around 1,000 people to more than 20,000 within only two years.

Most of these people were gold prospectors, looking to earn their fortune. But as more and more people arrived, it became harder and harder to find gold. If you were serious about it, you needed better technology.

While the big investors were able to afford hydraulic drills, that didn’t stop panhandlers from making the potential six-month trek in hopes of getting rich.

Ultimately, tensions over increasing scarcity came to a head when miners from China started showing up in California for gold too, and consequently a “foreigner’s tax” was imposed.

Who Gets Richest From Mining? It’s Not The Miners…
Miners aside, though, the long term economic implications of the Gold Rush lie in the fact that the merchants who set up shop around the miners were the same people to walk away with the most profits from the era.

While the miners put the most effort and energy into retrieving the gold from the Earth, the driving reason they did it was so they could have capital and be able to purchase tangible items or pay for manpower.

With gold, a person could get a house built, buy a cow, or simply buy more mining equipment. The gold rush for a short time was an ecosystem driven by the miners, but once the gold ran out, the merchants were left with the gold and with thriving businesses.

What Does This Have To Do With The Crypto Rush?
Besides these more obvious parallels, new adaptations to mining are happening today as a direct result of the Crypto Rush.

I speak, of course, of the ever-changing mining hardware that miners use as a result of the competitive environment of the crypto-currency world. A preliminary list of the different mining hardware types can help illustrate the often convoluted intricacies of the field of mining-tools (digital pick-axes, if you will): CPU, GPU, FPGA, ASIC, Cloud, and proxy by contract.

Some of the hardware has become obsolete, while other hardware resurged from obsolescence. The mining community doesn’t take well to drastic changes in hardware, but that’s mostly because of the obvious loss of investment that comes with obsolete technology.

The miners want to be compensated for their investment and their energy input, but since the companies that create the hardware are not vested in any one coin, they try to make their hardware work for as many coins as possible.

This causes some friction between the mining communities, the exchange communities, the hardware companies, and the developers. For example, look at the large number of ASIC resistant coins that came about from the desire to take the advantage away from ASIC mining machines.

This doesn’t keep hardware developers from wanting to capitalize off these increasingly frequent hardware arms races, though, and in turn they make hardware that can mine the aforementioned ASIC resistant coins.

The new hardware then perpetuates the so called “fair distribution” communities and new forms of distribution are invented to overcome inevitable hardware changes. While this friction may cause hiccups in the short term relationship between the miners, merchants, and panhandlers, the constant attempts to make improvements will cause progress to happen at an unprecedented rate.

The crypto-currency world is full of ebbs and flows of resistance and improvement, but everyone is looking to make progress. Thus, while miners don’t like to see their hardware become obsolete, that sudden obsolescence usually signifies a new major development in mining hardware or cryptocurrency software. This cumulative advancement will contribute to greater long-term effects unimaginable in an environment dictated by the simultaneous desire for economic stasis and the potential for personal wealth.

In the next part of this series, we will take a more in depth look at the mining equipment to see how the Crypto Rush moved from pick-axes to hydraulic drills, and what that implication means for the Crypto Rush.