Bitcoin has become increasingly popular over the past few years, yet many people have no idea what it actually is or how to obtain it. Bitcoin, simply put, is a digital currency in which all transactions are recorded on a public ledger called the blockchain that can be viewed by anyone in real time. And bitcoin mining is the process by which more bitcoins are created, which involves recording transactions into the blockchain by solving complex mathematical problems with high-powered computers.
What is Bitcoin?
Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Bitcoin was created by Satoshi Nakamoto, who published the invention on 31 October 2008 to a cryptography mailing list, and released as open-source software in 2009. The system is peer-to-peer, and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called the blockchain, which uses bitcoin as its unit of account.
If you’ve heard of bitcoin but don’t know much about it, you’re not alone. The virtual currency has gained media attention over the past few years because of its rising value (it’s currently at $6,200 per coin) and relative anonymity when compared with other online payment methods. But what exactly is it? And how can you use it? Let’s break down everything you need to know.
Why would I want to mine bitcoins?
Mining bitcoins isn’t free money. It takes a lot of resources, time, and hardware just to earn a small amount of bitcoin each day. What if I told you there was a way to mine bitcoins for free? Well, there is. If you’re willing to put up with ads while your computer runs, have no problem waiting hours at a time while your PC sits idle doing nothing but thinking, then mining bitcoins can be done cheaply—theoretically speaking—with zero investment required.
So, you might be asking, why would anyone want to do that? Well, bitcoin’s value has skyrocketed in recent years. At time of writing one bitcoin is worth $621 USD. If you’re able to earn bitcoins through mining effectively, it can be a great way to get free bitcoins with minimal investment. Just remember that it does take some effort and patience. The fact that it’s a free way to mine bitcoins doesn’t mean it will be easy by any means!
It isn’t all bad: The good news about mining for bitcoins from your PC is that there are several advantages as well.
The mining process
The only way to earn bitcoin (or other cryptocurrencies) through mining is by purchasing specialized hardware called an ASIC (application-specific integrated circuit). This type of chip does one thing well: mine Bitcoins. Because ASICs are expensive, it makes more sense—both in terms of costs and time—to purchase them with your own money. If you can afford a $2,000 graphics card (GPU), you can probably afford a $2,000 ASIC; if not, that’s cool too. The point here is that even though there may be some upfront costs involved, you’ll be making back your investment in no time. You need to calculate how much money you’re spending on your operation per day in order to determine whether or not it’s worth it over time.
Mining bitcoin isn’t a get-rich-quick scheme. It requires an investment of both time and money, as with any serious business. That said, if you have excellent skills, ample patience, innovative ideas about mining rigs or mining pools—or you just happen to be in possession of several pre-built ASICs—there’s a lot of money to be made in bitcoin mining. The main thing you need to know about mining is that it doesn’t involve digging or drilling for bitcoins; rather, miners are creating them through computational equations. In short: miners are getting paid transaction fees and newly minted bitcoins (known as block rewards) by helping verify transactions on various exchanges. Once they solve an equation they receive a predetermined amount of bitcoins as reward.
Learning from the best
One way to quickly learn how to mine bitcoin, how to earn bitcoin free, what is bitcoin, and even how blockchain works is by learning from those who are already experts. Check out their website or send them an email asking how they do what they do best; chances are, they’ll be more than happy to teach you a thing or two.
There are a number of resources out there that offer in-depth instruction on how to earn bitcoin free, what is bitcoin, how blockchain works, and so much more. Here are a few helpful links for your consideration:
CoinDesk – The world leader in news, prices and information on bitcoin. It also offers an API that you can use.
Coindesk Explore – Interactive charts exploring how bitcoin & digital currencies are distributed
The Daily Chain – A curated collection of daily blockchain research , articles & technical notes from leading industry experts
How Do I Use Ethereum? Guide Anonymously on TOR – TorGuard How To Send Bitcoin Through TOR – Black Belt Security How to Buy Bitcoins Anonymously with Cash or Cash Deposit (No Verification)
How to Buy Bitcoins with Cash or Cash Deposit (Verification Required)
How To Earn Bitcoins Playing Fun Games (No Deposit Needed!)
How To Earn Bitcoins Playing Fun Games (Deposit Needed!)
How To Buy And Sell Bitcoin For Profit! Beginners Guide! How To Make Money Trading Cryptocurrency! Beginners Guide!
What Is Steemit? How Does It Work? How To Get Started With Steemit How To Transfer From Coinbase to Bittrex – YouTube Video Tutorial How To Transfer From Coinbase to Poloniex – YouTube Video Tutorial Top 100 Cryptocurrencies by Market Capitalization Investopedia Top 100 Blockchain Organisations: From CoinDesk to BitPay BuiltInNYC How do smart contracts work? Understanding how smart contracts work is key to understanding how Ethereum works. Smart contracts are automated pieces of code which execute when certain conditions are met. This means they can be used as escrow services, allowing two parties who don’t trust each other to exchange money, property or shares online without fear of fraud or third party interference.
The most common questions people ask me
How do I mine bitcoin for free? How do I earn bitcoins? How can I get some bitcoins in my wallet? How to start mining bitcoin? What is bitcoin mining? Isn’t mining coins illegal?, and so on. Let me explain you what mining is all about, how it works and why it’s interesting. It will take some time, but once you’re done reading you should have a decent understanding of everything related to bitcoin mining. In fact, if you already know how mining works (or even if you don’t), skip ahead to part 2 – where we talk about how to mine bitcoin for free! If not, read on…
The first thing we need to understand is that there are two types of mining: hardware-based and software-based. Hardware-based mining involves using your computer’s processor (CPU) or graphics card (GPU) to mine bitcoin, while software-based mining uses special bitcoin mining software on your computer. Today, most people use specialized computers designed specifically for bitcoin mining (called ASIC miners), but you can still do it with your own computer, albeit at a much slower rate.
A Brief History of Mining Hardware
Mining was once done primarily by CPUs in normal desktop computers because they were able to hash data 50 to 100 times faster than GPUs could. However, as more people started mining and difficulty increased, CPUs became too slow resulting in a lot of wasted time and money on electricity bills. This led miners to use GPU cards that were originally intended for graphics processing (hence their name). They have since become so popular that GPUs are now used exclusively for mining, even though there are other uses for them. Today’s bitcoin miners can be broken down into three categories: CPU/GPU miners, FPGA miners and ASIC miners. Let’s look at each one individually…
Mining with your computer’s processor (CPU) or graphics card (GPU) used to be an effective way of earning bitcoins but has largely been superseded by ASIC technology.
Is it safe?
Cryptocurrencies were made to be decentralized, meaning that nobody owns them or controls them. This can make them a riskier investment than cash—one that could collapse in value without warning. However, cryptocurrencies are also more secure than traditional payment systems because it’s nearly impossible to counterfeit a bitcoin (which gives users peace of mind). If you’re thinking about how to earn bitcoin free, then let your friends know first—because if they mine any coins before you do, you might never see your gift.
How to mine bitcoin. Finding a good bitcoin-mining deal involves estimating how much power you’re willing to dedicate toward mining, as well as how many coins you think you can find before they run out. Remember that unlike traditional money systems, cryptocurrencies are constantly being created through a process called mining—something most people can do at home or with specialized equipment.
Should I invest in a mining rig?
If you want to invest in bitcoin mining without all of that hassle, there are companies you can buy shares from. One of them, called CloudHashing, lets you purchase a portion of its mining power. As of May 4, 2014 it charges about $4 per Gh/s (1 Gh/s equals 1 billion hashes per second) with a minimum investment amount of $20. If you want to know more about cloud hashing check out our guide here. Link #8 Sign up for a new job! To give yourself some extra motivation why not sign up for a new job? A lot of people get stuck in their current position because they don’t want to look for another one but if you just get into a routine where every day or every week you’re looking at different jobs then before long you will find something better. Of course if your current employer has good benefits or pays well then I wouldn’t recommend leaving immediately but there are plenty of other things that could be motivating enough such as wanting to work closer to home or simply wanting to do something different than what you have been doing.
Can I do this with my CPU or GPU?
In theory, yes, but in practice it takes a lot of effort. It’s similar to asking can I dig up gold with my shovel? if you don’t happen to have a backhoe. Sure, you can dig up some dirt—but it’s not easy. If you have the resources (CPUs, GPUs) and time (tens of hours or days), go for it! You might end up with some digital gold! To make things easier on yourself, you can take advantage of free cloud mining services like NiceHash or Hash Flare.
Can I do mining with my computer? If you’re reading anything about how cryptocurrency works, someone, at some point, will mention mining. If you don’t know what that means, don’t worry—it doesn’t actually have anything to do with physical digging. Mining refers to a process where people use high-powered computers solve complex mathematical problems in order add transactions to a digital ledger of past transactions (called a blockchain). Think of it like stamping receipts at a grocery store—except instead of printing out a receipt for each transaction and manually entering them into an account book, you’re using your computer’s CPU power to quickly solve math problems online. Think of it as adding numbers together really fast until you get one big number.