A Beginner’s Guide to Buying, Selling, Using, and Mining Novacoin:
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Go to any news website, and one of the headlines will probably be about Bitcoin. The cryptocurrency’s incredible run over the past few years has once again raised the oft-heard question, “What is a cryptocurrency’s intrinsic value?”
This question certainly isn’t easy to answer, but one thing is for sure. Like gold and the US dollar, Bitcoin’s value comes from consensus. Gold is valuable because societies for ages have ascribed value to it. The U.S. dollar has value because it is backed by the full faith and credit of the United States government. But other than that, it is simply a piece of paper. Likewise, gold is just metal that can be melted and fashioned into other objects like jewelry or utensils.
In a similar way, the value of cryptocurrencies comes from external factors like their uses and advantages over traditional fiat currencies. One coin in particular, Novacoin (NVC), has a seven-year track record as a pioneer in the blockchain industry.
Fundamentally, Novacoin (NVC) is a blockchain. Blockchains are defined as decentralized ledgers or databases that store a record of all transactions that occur on a network. Because the Novacoin blockchain is decentralized, all users can view and audit it. The blockchain’s decentralized nature also means that no central authority, be it a government, institution, or bank, can control its operations.
Further research about Novacoin can be found online. One particularly helpful resource is the Novacoin reddit page. It contains a wide variety of discussions, forums, and news updates, as well as expanded definitions and explanations.
Novacoins can be purchased in the open market through a compatible cryptocurrency exchange. First, users must register an account with the exchange and then fund the account with cash or with a credit card. From there, they can purchase Novacoins directly with U.S. dollars. Those who don’t have U.S. dollars must first purchase another cryptocurrency like Bitcoin or Litecoin, then convert those coins into Novacoins.
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The cash out process is very simple. First, users must convert their Novacoins into a fiat currency of their choice. For USD holders, this means selling Novacoins for dollars. For users of other fiat currencies, this means first converting Novacoins into Bitcoins or Litecoins, and then turning these coins into a fiat currency. Once the exchange has taken place, the money can be transferred to a traditional bank account. Then the funds can be withdrawn from an ATM in cash.
One of Novacoin’s primary uses is as an investment vehicle. There are two main strategies that investors can use to maximize their gains (though future returns aren’t guaranteed). The first strategy is a buy and hold strategy, whereby users buy Novacoins and simply hold them in their wallets. Over the long term, the expectation is that the coins will rise in value, and the investor can then sell it to realize a capital gain. Another strategy is to trade more actively, hoping to capitalize on shorter-term price movements.
One reason to use Novacoin as an investment vehicle is that it is decentralized and therefore free from central bank manipulation. The free market and blockchain users control its price, while miners determine how many coins are minted, not a central authority. What’s more, the exchange rate risk that results from central bank policy doesn’t directly affect Novacoin. Investors can buy and sell as they please, knowing that it can’t be controlled by governments or banks.
Cryptocurrency miners are tasked with verifying groups of transactions called blocks and adding them to the ledger. Miners are rewarded for solving a block, typically with the coins of the blockchain they’re mining. They can use mining calculators to determine the profitability of a given block.
Mining can be done solo or in groups called mining pools. Mining solo yields a higher profitability ratio since there is no one else to split the reward with. However, overall computing power is typically lower. On the other hand, mining in pools comes with higher computing power, but the profitability is usually lower, depending on the number of miners and the mining pool’s fees.
Novacoin runs a hybrid Proof-of-Work / Proof-of-Stake protocol. The two protocols are designed to work on par with each other, so both PoW mining and PoS mining can generate new blocks. With PoW mining, miners use computing power to solve an arbitrary problem. The computing systems use an algorithm to offer solutions on a trial-by-error basis. Once the block is solved, it is added to the blockchain.
PoS mining requires much less computing power and mines based upon ownership rather than processing power. So, a user who owns 1% of all Novacoins can mine 1% of the transactions. What’s more, Novacoin PoS mining doesn’t require special algorithm-creating software. Instead, users simply leave their wallets running and the process takes place automatically. The more coins one owns, the bigger the stake, and the more likely the chances of being selected. In this case, PoS mining is a lot like playing the lottery.
First, miners need to download compatible mining software. This depends on the user’s mining setup (e.g. if they are using a CPU, GPU, or ASIC). Next, if applicable, they need to register an account with a mining pool and configure their mining console accordingly. Once the software is ready, users can begin the mining process.
Proof-of-stake mining differs from Proof-of-Work mining in that large amounts of processing power aren’t required. With PoS mining, all coin holders have to do is hold their coins without selling them, thereby initiating a stake.
As new coins are minted, Novacoin’s market cap will increase, assuming the price stays constant. If the price appreciates in value, miners will experience exponential profitability growth--not only can they increase the number of coins they hold, but their coins can also appreciate in value.
Novacoin’s blockchain is specifically designed to experience dynamic inflation, meaning that it will yield a theoretically infinite amount of coins. This results from the PoS mining process combined with the scaling of mining difficulty as the coin grows in popularity. In terms of blockchain scalability, the combination of PoS and PoW mining could help the blockchain process transactions faster. Like other cryptocurrencies, however, Novacoin still has a long way to go in comparison to traditional payment methods. If the coin’s marketcap and trading volumes increase, scaling developments may eventually be necessary.