Having a completely virtual currency is a concept that would sound completely unsustainable as recently as 10 years ago. Though the concept was originally suggested in 1998, the first implementation did not occur until January 2009 with BitCoin.
What Is BitCoin?
BitCoin describes a system of crypto-currency that is free from regulation and open to the public for trading and exchange. BitCoin uses a currency known as bitcoin to trade for goods and services. In recent years, the popularity and availability of bitcoin has greatly increased.
Where to Start?
To get started using bitcoin, the first step is to purchase a virtual wallet, which will allow for the storing of this encrypted currency. From here, there are multiple options that a user can take to start obtaining bitcoin. One option is to simply purchase the desired amount of bitcoins, but in reality, this is hardly a cost effective idea. After all, there is virtually nothing around that solely accepts bitcoin, so there is no point in buying the currency to spend on goods you could buy with your existing money.
Instead, one method that has become popular in the BitCoin world is the idea of bitcoin mining. Bitcoin mining acts as the checks and balances system to an otherwise unregulated currency. In this, a bitcoin miner actually verifies and publically records transactions made online. Like a payroll processing company, the bitcoin miner is paid for each transaction that he/she records.
If BitCoin mining was easy, everyone would be doing it. To explain most simply, bitcoin exchanges are done in blocks. For each transaction, there is a block that is used, but with encryption that occurs any one bitcoin miner has a pretty low probability of actually picking up a block. The more miners that join the system, the more difficult it becomes.
Once a block is picked up, the transaction is recorded and verified and the miner is credited with new bitcoin of his/her own. Again, the difficulty lies in actually catching the block, so the more complex the setup, the better the chances of getting a match. In other words, a very skilled bitcoin miner will have set up a large amount of blocks and have a wider net, which allows him or her to pick up more transactions and make more bitcoin.
Like any payroll processing system, there is special hardware that is needed to set up a proper BitCoin mining system. Originally, BitCoin was small enough that anyone with a computer could merely use his/her own CPU to create blocks and use it for bitcoin mining. As the system has grown, there is now a need for specialized hardware. Whereas the software required for bitcoin mining is free, the hardware is not. There are options out there to get efficient hardware, but the systems are usually not cheap.
If you do wish to get started in bitcoin mining, the best thing to do is to purchase the best hardware available and put the mining software to use. Pretty much any will do. Finally, join a mining pool, which is basically a consortium of miners who work together to share the profits. Without all of these steps, you are likely to find that your efforts are in vain. On the other hand, if you do go about it properly, bitcoin mining can be very profitable.