To buy and sell cryptocurrencies, you'll need direct access to an exchange. If you're unfamiliar with how they work, this brings its own steep learning curve: you'll need to get to grips with the technology involved, as well as learn how to make sense of the data.
You'll also need your own account to trade on an exchange. These exchange accounts can be:
• Slow to acquire: getting an account generally takes a few days, as you'll join a queue of people waiting for manual approval
• Restrictive to use: as a new account-holder, you'll likely be limited to a deposit of a few hundred pounds a week
• Expensive to maintain: funding and withdrawals generally incur fees, while some large exchanges also only accept bank transfers - which can take days to go through
Plus, without the infrastructure built up over years of business, these young companies can be slow to resolve even straightforward customer service issues.
What is cryptocurrency mining?
Mining is the process by which recent cryptocurrency transactions are verified and new units are released.
As a miner, your goal is to compile recent transactions into 'blocks' - that is, a cluster of verified transactions - and find a solution to a complex algorithm. Do this and you'll earn yourself a 'block reward', or a set amount of cryptocurrency. This amount varies depending on which cryptocurrency you're mining: bitcoin's block reward, for example, is currently 12.5 bitcoins.
Solving these algorithms is a continuous process, and depends on the results of previous algorithms in order to make the next calculation. Similarly, the difficulty of the algorithm can be - and is - regularly adjusted, with the aim of keeping block discovery constant, even as computing power improves. This means it resembles the rate at which commodities like gold hit the market - hence the name 'mining'.