Today we’re going to discuss Bitcoin mining, but for new readers, let’s briefly touch on what Bitcoins are, exactly:
Bitcoins are a relatively new form of “digital” currency. They’ve been catching the interest of stay-at-home economists and programmers alike, along with some other comparatively big economic players.
This new form of currency is completely open source and generated by everyday computer users—just like you—all over the world. Because Bitcoins are not owned by any banking institution or generated by any federal governments, they present a highly unregulated, low-fee currency that can be traded for any national currency in the world.
While the currency itself is exciting enough, what makes Bitcoin really interesting is that anyone can produce them simply by running software on any high-end computer. This process is called mining.
Bitcoin Mining In a Nutshell
Bitcoin are generated through a process called “mining”. Bitcoin mining consists of using a combination of high-end hardware and free software to decrypt long series of complex algorithms. While this process is more suitable for expensive computer software, Bitcoin mining is technically achievable with any regular computer.
However, Bitcoin mining is a very resource-intensive process and can easily utilize all resources on a typical home computer, so it would be wise to run the software at night, while you are away from home, or on a dedicated computer set aside specifically for mining.
Individual VS Pool Mining
Bitcoin mining can be performed in one of two ways: Either on a dedicated machine run by a single person, or on a collective group of computers that are volunteered for computing power via mining exchanges, such as Slush’s Pool or the Eclipse Mining Consortium.
When performed by an individual, that person can expect to make more money per each successful algorithm decryption, but will not be able to do so as frequently as a pool. In contrast, a pool of miners can expect to receive a more frequent payout at the expense of sharing that revenue with each member of the pool.
How To Get Involved
In order to get started with Bitcoin mining, you will first need to setup a Bitcoin Wallet in order to store the Bitcoin you generate. Afterwards, you can download the full Bitcoin client in order to decrypt the Bitcoin blockchain that generates new Bitcoin. Beware that the client is over 4 GB in size, so be sure that you have enough bandwidth and storage space before starting the download. Expect the download and synchronization to take a full day before you are able to start generating Bitcoin. Once the software is installed, you can either run the software by yourself or join one of the mining pools mentioned above.
Keep in mind that this is just a basic introduction to Bitcoin mining. If you are interested in participating in Bitcoin mining as a serious business, you would be wise to do further research into how Bitcoins work, the safety precautions every Bitcoin user should take to secure their funds, and various hardware that will speed up the mining process.