How to start Bitcoin mining for beginners (SUPER EASY) - ULTIMATE GUIDE
So how does someone get into the current bitcoin rush? Getty Images Here's how it's done.
How many bitcoins are there? When the algorithm was created under the pseudonym Satoshi Nakamoto—which in Japanese is as common a name as Steve Smith—the individual s set a finite limit on the number of bitcoins that will ever exist: 21 million.
July 15, How long does it take to mine 1 bitcoin?
Currently, more than 12 million are in circulation. That means that a little less than 9 million bitcoins are waiting to be discovered. Sincethe number of bitcoins mined has skyrocketed.
That's the way the system was set up—easy to mine in the beginning, and harder as we approach that 21 millionth bitcoin. At the current rate of creation, the final bitcoin will be mined in the year Read more: What is bitcoin?
CNBC Explains: How to mine bitcoins on your own
What exactly is mining? There are three primary ways to obtain how to get one bitcoin buying on an exchange, accepting them for goods and services, and mining new ones.
In reality, it's simply the verification of bitcoin transactions.
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For example, Eric buys a TV from Nicole with a bitcoin. In order to make sure his bitcoin is a genuine bitcoin, miners begin to verify the transaction.
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It's not just one transaction individuals are trying to verify; it's many. All the transactions are gathered into boxes with a virtual padlock on them—called "block chains.
Once their computer finds it, the box pops open and the transactions are verified. For finding that "needle in a haystack" key, the miner gets a reward of 25 newly generated bitcoins.
How Does Bitcoin Mining Work?
The current number of attempts it takes to find the correct key is around 1, Despite that many attempts, the bitcoin reward is given out about every 10 minutes. Inthe bitcoin reward for verifying transactions will halve to How do you mine on a budget?
Bitcoin mining can be done by a computer novice—requiring basic software and specialized hardware. The software required to mine is straightforward to use and open source—meaning free to download and run.
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A prospective miner needs a bitcoin wallet—an encrypted online bank account—to hold what is earned. The problem is, as in most bitcoin scenarios, wallets are unregulated and prone to attacks.
When bitcoins are lost or stolen they are completely gone, just like cash. With no central bank backing your how to get one bitcoin, there is no possible way to recoup your loses.
The second piece of software needed is the mining software itself—the most popular is called GUIMiner. When launched, the program begins to mine on its own—looking for the magic combination that will open that padlock to the block of transactions.
The program keeps running and the faster and more powerful a miner's PC is, the faster the miner will start generating bitcoins. That's the way the system was set up—easier to mine in the beginning, harder to mine as more bitcoins are generated.
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Over the last few years, miners have had to move on to faster hardware in order to keep generating new bitcoins. Today, application-specific integrated circuits ASIC are being used. Programmer language aside, all this means is that the hardware is designed for one specific task—in this case mining.
Read more: How to make your email as stealth as Edward Snowden There is a way around such a hefty investment: joining mining pools. Pools are a collective group of bitcoin miners from around the globe who literally pool their computer power together to mine.
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Popular sites such as Slush's Pool allow small-time miners to receive percentages of bitcoins when they add their computer power to the group.
The faster your computer can mine and the more power it is contributing to the pool, the larger percentage of bitcoins received. Bitcoins can be broken down into eight decimal points.
Like wallets, pool sites are unregulated and the operator of the pool—who receives all the coins mined—is under no legal obligation to give everyone their cut.
How to use Bitcoin Inform yourself Bitcoin is different than what you know and use every day.
Joining a pool means you can also use cheaper hardware. Currently, profits outweigh money spent on the energy needed to mine. Again, that could quickly change due to the volatile price of bitcoin. It's not mining or investors that are causing the radical highs and lows in the currency's value, it's the media, he said.
Khadija Khartit is a strategy, investment and funding expert, and an educator of fintech and strategic finance in top universities. Article Reviewed on April 22, Khadija Khartit Updated April 22, Bitcoin may be a useful way to send and receive money, but cryptocurrency isn't created for free.
The difficulty in mining is not the highest correlation in bitcoin value.