Bitcoin Shopping - The Facts

If you want to join in the bitcoin frenzy without just buying the digital currency in the inflated prices, then bitcoin mining is another way to get involved. However, mining bitcoins does come with expenses -- and risks -- of its own. And also the more popular bitcoins become, the more difficult it is to mine profitably. .

Unlike paper currency, that can be printed by both governments and issued by banks, bitcoins do not arrive in any physical form. This creates a significant risk, as hackers could theoretically produce bitcoins from nothing. Bitcoin mining is how the bitcoin network retains its transactions secure.

Bitcoin transactions are secured by blockchains, which compose a public ledger of transactions. Due to how blockchain transactions are structured, they are extremely difficult to change or undermine, even from the best hackers. However, in order to secure these transactions, someone needs to dedicate computing power to verifying the action and packaging the details in a block which goes into the bitcoin ledger.

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As a reward for doing the job to track and secure transactions, miners earn bitcoins for each block that they successfully procedure. .

The bitcoin founders have set a limit of 21 million bitcoins available for mining. Once that amount is reached, miners will still be able to benefit from transaction fees, however they won't be granted bitcoins as a reward for their job. As of mid-January 2018, approximately 16.8 million of the 21 million bitcoins have been mined.  Assuming the bitcoin mining industry doesn't change radically, it seems like we won't reach the 21 million-bitcoin restrict until the year 2140. .

During the first days of bitcoin mining, miners would often download a software package designed to allow their computers to process bitcoin transactions in the background. Unfortunately, that is no longer practical, because solving bitcoin transactions is becoming too hard for your average computer to manage.

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The bitcoin network is designed to produce a certain number of new bitcoins each 10 minutes. If only a few men and women have been bitcoin mining at any given time, then the network will probably be generous and discuss bitcoins easily in order to reach the predetermined number. But now this bitcoin mining has become so prevalent, the network is now much stingier about handing out bitcoins to miners.

Nowadays, in order to have a chance in being profitable, miners need to adopt one of two approaches: 1) buy specialized hardware (aka a bitcoin mining rig) or 2) join a cloud mining pool. .

To get started with your own mining rig, you buy hardware designed for mining bitcoin (or any other digital currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a continuous stream of payments without your needing to get involved.

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While it's fairly easy to set up and use a bitcoin mining rig, really making money on the process is something of a challenge. Because more and more people are signing up to mine bitcoins, the mining procedure continues to have more difficult and will probably keep doing this for websites a while.

And because bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for the hardware, or several times that for a top notch rig -- having to replace it every year or two takes a huge bite from any gains you earn from mining. Plus, most mining channels consume enormous amounts of power, which means you also have to subtract that expense in the bitcoins you earn to determine your own profits. .

When buying and maintaining your own mining hardware doesn't appeal to you, then cloud mining may be the way to go. Cloud mining companies invest in enormous mining rigs, often filling entire information centers together with the hardware, and then market subscriptions to individuals interested in dipping a toe into bitcoin mining.

The biggest challenge facing cloud mining readers is avoiding fraud. The area is rife with pseudo-companies which sell thousands of multiyear subscriptions, cover for a couple of months, and then vanish into the sunset. In case you decide to try out cloud mining, do your homework in advance and confirm that the company that you're dealing with is a real cloud miner and not a strategy.

Avoid companies with anonymous domain registration (you can look up their registration info at Network Solutions), as well as any mining company that"guarantees" gains or offers huge incentives for referring new clients; anything over a 10% referral commission is deeply suspicious, because legitimate mining pools just don't generate a high enough profit margin to pay big commissions. .