Is it worth buying mining machines, quotas, and CoinList accounts for Swarm?

Original author: Deepchain Liuliu, Deepchain Finance

Original editor: Menren, Deepchain Finance

The Chia mining craze has lasted less than a month, and another mining project has become popular.

Swarm, a distributed storage project claimed to be initiated by the Ethereum Foundation and promoted by Ethereum founder Vitalik, has attracted a lot of attention in recent times.

"The era of big data has arrived, and now is the era of a lot of hot data", "How many times has FIL increased? How many times has Chia increased?", "Private placement of 0.3DAI, it rose to 1600U at the opening." In the WeChat group, Swarm's "believers" can be seen everywhere actively preaching, and it is even said that some former Filcoin miners have converted their Filecoinc IDC computer rooms into Swarm IDC computer rooms.

However, it cannot be ignored that although Swarm is very popular, there are also many chaos and problems.

There are already countless Swarm mining machines on the market, even though the mainnet has not been launched and the official has not given the corresponding recommended configuration. Although Swarm still has various concerns, it is still as popular as Filecoin and Chia in the early days. In addition to the overwhelming publicity of mining machines, some people are looking for channels to obtain CoinList's KYC account, intending to compete for the upcoming public offering quota of BZZ (Swarm token); others are spending a lot of money to buy a large amount of BZZ worth $50 from the OTC market; in addition, on some exchanges, the futures price of BZZ is high, and it has now reached a maximum of $255... What exactly is Swarm? Why is it so popular? What traps are there behind the popularity?

What is Swarm?

In fact, the concept of Swarm was proposed by the three founders of Ethereum, Vitalik, Gavin Wood, and Jeffrey Wilcke, as early as early 2015. At that time, in addition to founding Ethereum, Vitalik and his team also tried to create a non-stop, zero-failure, and censorship-resistant peer-to-peer storage and service solution, and on this basis, to create an economic incentive system to promote the exchange of resource value. This is the prototype of Swarm, and as everyone knows, it is a distributed storage project.

At the beginning, Swarm was considered as a part of the Ethereum ecosystem, after all, it was proposed and developed by the Ethereum Foundation. In addition, the Ethereum Foundation also allows Swarm mining pool storage, bandwidth and computing power resources to support the overall development of the Ethereum network. For this reason, Swarm was initially seen by the outside world as one of the three pillars of Web 3.0 components along with Ethereum and Whisper. Of course, this also gave many current Swarm mining machine dealers excellent promotional copy: another king-level mining project incubated by the Ethereum Foundation, developed by V God himself, and assisted by Polkadot founder Gavin Wood. However, Swarm was later separated from the Ethereum Foundation and a special Swarm Association was established in Switzerland.

Although Swarm has been confused with Filecoin, Chia and other projects in the market, Swarm is actually very different from the latter two. Swarm is not a public chain, but a smart contract that exists in the Ethereum ecosystem. Although calling Swarm contracts often means high gas fees, it also facilitates the access of other applications in the Ethereum ecosystem. From the Swarm timeline, we can see that since the project was founded in 2015, there has been no news. The test network was not announced until February 14 this year. The main network has not yet been launched. It is expected to be launched this month, but it has not yet been fixed.

For investors, the most important thing may be the project's token.

The name of Swarm's token is BZZ, and the initial public offering is currently 62.5 million. Among them, 50% will be allocated to early fundraisers, 20% will be held by the team, and the remaining 30% will be allocated to foundations in different proportions. At present, Swarm has received investments from many well-known institutions such as ALPHEMY CAPITAL, bitscale capital, DFG, KR1, HASHKEY, NGC Venture, Lede Capital, P2P CAPITAL, Waterdrip Capital, White Paper Capital and YBB Foundation LTD. According to the information disclosed by KR1, the private placement price of BZZ is about 0.25U, and the tokens allocated in the private placement round are about 23.91 million, accounting for about 38.3% of the initial issuance.

What is mining?

Although they are often mentioned together, Swarm, Filecoin and Chia differ in their mining methods.

The Filecoin network has two roles: storage miners and retrieval miners, so miners can earn income regardless of whether they provide data storage or data query. In addition, Filecoin requires collateral to mine. Chia, on the other hand, requires users to plot the hard disk and then submit it to the Chia main network for verification. If the verification is successful, they can get block rewards. For details, please refer to Deepchain Finance's previous article "Unveiling Chia Mining: Is "Green Bitcoin" just speculating on hard disks?" If CPU and packaging speed are the most important parameters in Filecoin mining, Chia mining pays more attention to hard disk size and P disk efficiency.

In Swarm mining, network bandwidth and hard disk storage become the most important metrics.

In Swarm, there are two roles: data submitter A (temporarily replaced by 35 queen bee nodes during the testnet stage. In the testnet, users can only obtain valid credentials by interacting with these 35 nodes) and data storer B. User A transmits data to user B and hands it over to user B for storage. When user B completes the data storage, user B will send a storage feedback to user A. User A will judge user B's network bandwidth and storage performance based on this feedback. After that, user A will send a voucher to user B: qbee. User B, who is responsible for the storage task, can exchange BZZ with this voucher. In this process, user B is constantly responding to data transmitted by applications from all directions. And after user B is responsible for storage, he will send the storage feedback back to each application and obtain the corresponding income voucher.

This process is Swarm’s mining behavior.

Although Swarm mining seems to have a lower threshold and is simpler than Filecoin and Chia mining, there are still many issues to be aware of. The main network has not yet been launched, and the official has not given the corresponding recommended configuration, but there are countless Swarm mining machines on the market, and various mining services are emerging in an endless stream. Amid the complicated propaganda, is Swarm mining really that good?

Where is the pit?

If we compare them, we can find that whether it is Filecoin, Chia or the current Swarm, they have many similarities, such as they are all developed by overseas teams and have excellent backgrounds.

Filecoin has always been praised as a "king-level storage project"; Chia is blessed by "Bitorrent founder's new project" and "Coinbase investment". And V God, Gavin Wood, etc. have always been the biggest halo of Swarm. But if you only rely on these "halos" to invest, you may step on a lot of pits. After all, in the process of selling mining machines of Filecoin and Chia, mining machine scams have appeared without exception. Whether it is the Interstellar Snail that "sells dog meat under the guise of sheep" by Filecoin, or the Chia miners who played a sloppy game in the P disk process when selling mining machines, these have caused the majority of users to suffer unnecessary losses. Nowadays, various advertisements selling Swarm mining machines have emerged in the market. Will Swarm mining machines also be scams?

The answer seems self-evident. Besides, does Swarm mining require mining machines? This is still a question...

In fact, strictly speaking, users who want to mine can build mining nodes at home, and do not need a dedicated Swarm mining machine. In addition to personal mining, there are also institutions on the market that specialize in selling Swarm mining services. Generally speaking, there are two mining methods launched by mining institutions. One is cloud node: Swarm is built and configured on cloud servers rented in the cloud, such as Alibaba Cloud, Tencent Cloud, etc. Servers directly rent and deploy Swarm cloud nodes for test network mining. The other is physical node: The current status of physical nodes refers to the Swarm mining machine built by buying a "whole machine server". This is a Swarm node built by a server composed of a series of computer-related accessories such as CPU, memory, and hard disk. The better the network bandwidth, the more qbees miners can mine, but this does not mean that they can get more BZZ rewards.

As mentioned above, although the 35 randomly changing queen nodes prevent malicious ticket manipulation, they also increase the uncertainty of user rewards. Just like buying lottery tickets, choosing a cloud node will only increase the probability of a user "winning", but it does not guarantee that the user will "win".

Compared with cloud nodes, there may be more pitfalls in physical nodes. Since the only factors for Swarm mining are network bandwidth and storage configuration, the so-called physical mining machine is more like a server. The physical mining machines on the market are currently priced at around 20,000 RMB. In the current electronics market, the price of a brand new server is only a few thousand yuan, and even the price of a second-hand server on Xianyu is only a few hundred yuan. In addition, the Swarm mainnet has not yet been launched, and there is no clear definition of the standards for Swarm mining. In addition, unlike traditional mining, Swarm's characteristics based on the Ethereum ecosystem may require it to pledge a certain amount of ETH in the subsequent mining process to be used as the cost of contract calls and expensive gas fees. What's more, a Swarm mining machine seller told DeepChain Finance that after the Swarm mainnet is launched, users still need to pledge if they want to participate in mining. Although this pledge is not locked, if users do not pledge, then like Chia and Filecoin, the mining efficiency will decrease accordingly.

Therefore, Swarm mining may not be as good as imagined.

In fact, in addition to the pit of mining, there are also risks in the amount of BZZ purchased. At present, the price of BZZ in the early private placement is only $0.25, but it has been hyped up to about $50 in the over-the-counter market. Compared with the previous and the latter, the early private placement participants have already made a profit of 200 times.

Planning for the long term? Or buying at a high position? This may require players to think seriously.

Perhaps for players who want to join Swarm, participating in the CoinList public offering on June 15th will be a good choice. After all, Swarm's public offering price is only $1.92, which is very affordable compared to the current "sky-high" over-the-counter price. However, the prerequisite is to handle CoinList's complex KYC. For this reason, in recent times, various information about the acquisition of CoinList accounts has emerged in Moments and Weibo. Even if you get the account, there are some risks: Will the account be banned by CoinList officials? Can you definitely grab it if you spend money to buy the account?

Why the rush to Swarm?

Although the Swarm mainnet has not yet been launched, many people are still flocking to it: buying mining machines, buying quotas, buying CoinList accounts... What is the reason?

First of all, the two well-known names of Vitalik Buterin and Gavin Wood are enough to attract a large number of followers in the industry.

Secondly, and more importantly, is the potential wealth effect behind Swarm. On March 19 this year, the Chia mainnet was launched. At that time, the over-the-counter price of XCH was about $25. But when Huobi launched XCH on May 14, its price soared to a maximum of $2,149, a difference of nearly 86 times. Coincidentally, in July last year, the market's forecast for FIL futures prices rose to more than $20, but in April this year, FIL rose to a historical high of $237, a price difference of nearly 12 times. It is worth noting that the lowest price of Filecoin's public and private offerings in the early days was $0.75. If calculated at this price, the highest return of FIL is about 316 times.

With the "beautiful examples" of Filecoin and Chia, the market has the same expectations for Swarm. The price of BZZ's early private placement was only $0.25. Some people deduce from the trend of Filecoin and predict that the price of BZZ may be around $100. What's more, Swarm's founding team is more glamorous than Filecoin and Chia, and the price of BZZ will only go higher, not lower. In addition, in recent times, the world has been emphasizing low-carbon and environmental protection. The once popular Bitcoin and Ethereum mining have suffered a blow due to electricity problems, and traditional miners are facing the dilemma of withdrawal. The relatively energy-saving and environmentally friendly Chia and Swarm have become one of the choices for some miners to transform at this time.

In addition, some miners who have tasted the sweetness of selling Filecoin and Chia mining machines have chosen to switch to Swarm, and participants who have missed Filecoin and Chia mining before are also eager to seize the opportunity of Swarm. For example, miners such as 1475, which previously focused on Filecoin mining, have launched corresponding Swarm mining hosting services. In addition, compared with the price of Filecoin mining machines of tens of thousands or hundreds of thousands and the complicated P disk process in Chia mining. Swarm mining is more approachable in terms of cost and difficulty, which has also attracted the active participation of many users inside and outside the circle.

However, as mentioned above, Swarm mining has its advantages as well as many problems. If users want to participate in it, the first thing they need to do is to open their eyes and think carefully.