BitCoin Mining

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You have most likely heard Bitcoin mentioned on TV or the Internet over the past few months. So what exactly are bitcoins and why have they suddenly become so popular? Bitcoins are not based on any commodity currently used in the real world. They are not technically cash. They are virtual tokens that you are able to trade for services and goods from online trading houses, contractors and select retailers. Bitcoins are exchanged from one person to another, instead of going through a financial institution. ‘Mining’ is the term that is being used for the art of securing them. So how can you become part of the bitcoin rush?

There are three main ways that you can get bitcoins: mining for new ones, accepting them for goods and services or buying them on an exchange. In reality, mining a bitcoin is basically the process of verifying a transaction using a bitcoin. For example, Steve buys a guitar from Mike using a bitcoin. As a way of verifying that the bitcoin is real, miners start the verification of the transaction. However, there are many transactions they are trying to verify, not just one. Every transaction is collected and put into boxes containing virtual padlocks known as “block chains.”

Bitcoin miners use software in an attempt to locate the key that can unlock the virtual padlock. If they are able to locate it, the box will open and all of the transactions will then be verified. As a reward for locating the key to the box, the bitcoin miner is rewarded with 25 bitcoins that have just been generated. According to information on Blockchain.info, it currently takes roughly 1,788,535,912.06 attempts to locate the right key. Even though so many attempts are required, a reward of 25 bit coins is given out roughly once every 10 minutes.

A computer novice can start mining for bitcoins using specialized hardware and basic software. The software that is needed is free to download and run. A bitcoin wallet is needed. This is an online bank account that is encrypted to put your bitcoins in. GUIMiner is the most popular mining software. When the program is opened, it will start to mine by itself. It will keep running until it finds the combination that is needed to unlock the virtual padlock. The faster that a person’s computer is, the faster bitcoins can be mined.

More about BitCoins:

The History of BitCoins

What are BitCoins

3 Responses to BitCoin Mining

  1. Charlotte says:

    Business Insider pointed out, the US government recently stated that it would be applying money-laundering rules to virtual currency, which means that the government does, in some respect, care enough about virtual currency to try to police it, Just matter of time until Bitcoins popularity with mainstream US based stores with n online presence will come to fruition, thats when the US Govt will shut it down.

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