How Do You Mine for Bitcoin?
See Also:Beyond Silver: A New Mining Industry for N Idaho, Three Things to Understand about Bitcoin
As incredible as it may seem to the less aware, the process of Bitcoin mining, though radically different than that of Gold mining, utilizes much of the same model.
How are Bitcoins Mined?
First you have to understand what a Bitcoin is. Bitcoins first appeared in 2009. They are now the leading form of cryptocurrency, a rather familiar topic in politics, banking, finance and even real estate. This crypto-currency can be used in many places, even to buy a drink at a bar so long as the establishment accepts Bitcoin (and some do).
An entire industry has risen from the world of geeks and internet-savvy entrepreneurs across the entire planet to build and support the conversion and use of Bitcoins just about anywhere normal fiat money is used.
Basically Bitcoins, like all cryptocurrencies, are an algorithmic block-chain of code, individually and automatically being generated until a set limit is reached. It doesn’t take a genius to use the technology but it certainly takes a techno-savvy geek to understand and implement a Bitcoin mining operation.
Bitcoins are mined by massive computer networks using a lot of energy and computer power to sift through the nearly infinite number of possibilities that discover the hidden, coded Bitcoin waiting to be brought forth. I know. It’s hardly understandable. But the fact is: mining Bitcoins, especially with a pool of high-powered computers (think of it as an inter-linked network of computers running 24/7/365) running all the time, can generate considerable amounts of cash value by discovering and isolating these hidden strings of code, all of which are unique unto themselves and can be brought out of the internet and placed into virtual wallets accessible by only those who hold the complex password key to get in.
Bitcoins can be sub-divided
If you hand someone a hundred dollar bill to pay for something of far less value, they give you change, right? Hopefully.
Bitcoins function in the same manner. The technology and infrastructure of this new kind of currency has advanced to the point that wherever Bitcoins are accepted for trade value, even in a low-income third-world country, they can be converted quite easily into the local monetary value…and therefore spent without high-dollar fees.
There are better sites from which to learn how this is done that mine. Try CoinDesk, one of my favorites. There you can see the current conversion value in American, British, Chineese and European cash values.
As Bitcoin gains in acceptance and overcomes earlier levels of fear and concern spawned by lack of understanding and over regulation, which happens to a lot of new technologies, it will become more familiar to everyone. As it overcomes these naturally occurring early-stage obstacles, it’s monetary significance will be more readily understood and therefore more widely used in everyday transactions.
There are now even ATMs operating in many countries that convert Bitcoin into local cash value. Just like accessing your debit card, the holder of a Bitcoin wallet retrieves his or her cash value by entering a complex pin number or password specific to that holder. Bingo! Out pops the converted currency depending on the country where the Bitcoin ATM is located and a comparable deduction is made virtually from the Bitcoin wallet.
One doesn’t have to use an ATM, however as several significant enterprises have risen in the industry, such as BitPay Inc (US), that can convert upwards of several million dollars into US dollars within, generally, 48 hours with very low transaction fees and none on smaller conversions. The conversion amount is determined at the point of entry. BitPay makes the gain or takes the fall if the price goes up or down during the conversion period.
Investments in Bitcoin Mining
Suffice to say, the mining of Bitcoins has proven so lucrative for some that geeks in nearly every country have built, in some cases, massive computer systems to mine them.
Millions of dollars, and by comparison, the equivalent thereof in nearly every currency on the planet have poured into specialized equipment and mining operations for the sake of Bitcoin.
Wouldn’t that tell you that there is something truly significant about cryptocurrency?
Time Will Tell
To date, if my understanding is correct, only about half of the available 21 million Bitcoins have been mined from the worldwide network of computers on the web.
Yeah, my understanding is probably still quite limited. I’m not a Bitcoin miner. At this point I just understand that there is a set limit of Bitcoins and when the final one is brought forth from the hard rock of the Internet, the value of an individual Bitcoinwill rise significantly. That’s one of the reasons the IRS sees it as a commodity. When that happens, many are betting on the possibility that their millions of dollars they’re investing in the infrastructure of mining Bitcoins will pay off rather handsomely.
Futurists will call that a sunrise! Those holding on to the old ways of fiat currency will see it as a sunset.