Of course, with all that is going around the world of Cryptocurrencies, you’re also asking yourself how you can Mine Bitcoins too. And is mining it Profitable or Worth it? Well, the Short Answer is Yes! But, the Long Answer is that it’s a little bit Complicated. Since it all depends on a variety of factors.
Bitcoin mining began as a well-paid hobby for early adopters who had the chance to earn 50 BTC every 10 minutes, mining from their bedrooms. Successfully mining just one Bitcoin block, and holding onto it since 2010 would mean you have $450,000 worth of bitcoin in your wallet in 2020.
Ten years ago, all you needed was a reasonably powerful computer, a stable internet connection, and the foresight of Nostradamus. These days, thanks to industrial Bitcoin mining operations, it’s not such a level playing field.
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For a lot of people, it makes more sense to simply buy some bitcoin on an exchange like Coinbase. Whereby, it’s the easiest place to Buy and Sell Cryptocurrency as I will elaborate further.
While also, bearing in mind, as of today, you can now Buy and Sell Digital Currencies using over 350 different payment methods. For instance, you can get your Paxful Account as well. In order to start accepting payments and sending money to 5 million people just like you.
Not forgetting, you can also Buy Crypto with top payment methods in Kenya. Either through Bank Transfer, MPesa, or even PayPal as such. But first, let’s have a look at a few key terms below.
What are Bitcoins?
Bitcoins are a form of decentralized digital currency. You can buy, sell and exchange them directly, without an intermediary like a bank. Bitcoin’s creator, Satoshi Nakamoto, originally described it very simply.
As the need for “an electronic payment system based on cryptographic proof instead of trust.” Each and every Bitcoin transaction that’s ever been made exists on a public ledger accessible to everyone, making transactions hard to reverse and difficult to fake.
That’s by design: Core to their decentralized nature, Bitcoins aren’t backed by the government or any issuing institution. In addition, there’s nothing to guarantee their value besides the proof baked in the heart of the system.
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And “the reason why it’s worth money is simply that we, as people, decided it has value — same as gold.” Since its public launch in 2009, Bitcoin has risen dramatically in value.
Although it once sold for under $150 per coin, as of March 1, 2021, one Bitcoin now sells for almost $50,000. Because its supply is limited to 21 million coins, many expect its price to only keep rising as time goes on. Especially, as larger institutional investors begin treating it as a sort of digital gold to hedge against market volatility and inflation.
How do Bitcoins work?
In the streets of eCommerce, Bitcoin is built on a distributed digital record called a blockchain. As the name implies, blockchain is a linked body of data, made up of units called blocks. These blocks contain information about each and every transaction.
Including date and time, total value, buyer and seller, and a unique identifying code for each exchange. And in particular, entries are strung together in chronological order, creating a digital chain of blocks. Once a block is added to the blockchain, it becomes accessible to anyone who wishes to view it.
Henceforth, it acts as a public ledger of Cryptocurrency transactions. Fortunately, Blockchain is decentralized, which means it’s not controlled by any one organization. It’s like a Google Doc that anyone can work on.
In addition, nobody really owns it. But, anyone who has a link can contribute to it. Different people keep updating it too. And in return, your copy also gets updated.
Learn More: Blockchain Vs Database: Understanding The Difference
Of course, the idea that anyone can edit the blockchain might sound risky, yes. But, it’s actually what makes Bitcoin trustworthy and secure.
Whereby, in order for a transaction block to be added to the Bitcoin blockchain, it must be verified by the majority of all Bitcoin holders. Thereafter, the unique codes are used to recognize users’ wallets and transactions. And as a result, they must all conform to the right encryption pattern.
These codes are long, random numbers, making them incredibly difficult to fraudulently produce. In fact, a fraudster guessing the key code to your Bitcoin wallet has roughly very less chances. Since they are the same odds as someone winning a Powerball lottery nine times in a row.
It’s this level of statistical randomness for blockchain verification codes that are needed for every transaction. Whilst, greatly reducing the risk anyone can make fraudulent Crypto transactions.
How a Blockchain helps Mine Bitcoins
For those interested or still new in Crypto Mining, before you start to Mine Bitcoins, it’s important to first understand something first. And that’s the Cryptocurrency mining process. Forthwith, as an example, we’ll consider Bitcoin mining.
We define Bitcoin mining as the process of adding new transactions to a Crypto Blockchain. Crypto Mining is a tough job though. And now, with that in mind, people who choose to Mine Bitcoins use a process called Proof of Work.
Learn More: Proof of Work vs Proof of Stake: What’s The Difference?
To enumerate, by Proof of Work (PoW), it means deploying computers in a race to solve mathematical puzzles that verify transactions. And as a result, the Bitcoin code rewards miners with new Bitcoins.
This is so benefactor as it helps entice miners to keep racing. As they try to solve the puzzles and support the overall system. Overall, this is how new coins are created. And each time, new transactions are added to the Blockchain too.
It’s estimated that by 2140, all Bitcoins currently under reserve will have entered full circulation. Meaning, the Bitcoin mining code will release no new coins. Instead, miners may have to rely on transaction fees.
Useful Tools to Mine Bitcoins and other Cryptos
In the early days, it was so easy and possible for the average person to mine Bitcoins. But, that’s no longer the case anymore. Technically, because the Bitcoin code is always rewritten. Making solving its puzzles more and more challenging over time.
For this reason, that’s why it requires more and more computing power and resources. So, as of today, if you want to mine Bitcoins, you’ll require an autonomous and powerful computer. In addition to access of massive amounts of cheap electricity to be successful.
On the contrary, as you mine Bitcoins or other Cryptos, it’s good to know that the mining process pays less than it used to. Making it even harder to recoup the rising computational and electrical costs. You can learn more about How to Get Established as a Cryptocurrency Miner.
Get Started: Download Free Bitcoin Mining Software
Back in 2009 — when this technology first came out — every time you got a Bitcoin stamp, you’d get a much larger amount of coins than you do today. Meaning, there’re more and more transactions now. So the amount you get paid for each stamp is less and less by day.
Once you’re ready with a Bitcoin wallet and free mining software to mine Bitcoins, you should join a Bitcoin mining pool. A group of Bitcoin miners working together to solve a block is called the Bitcoin mining pool. The mining pool shares the rewards received after creating a new Bitcoin block.
A mining pool such as Slush is needed to reduce the time of an individual miner. Because without a Bitcoin mining pool an individual miner might take over a year to mine a single Bitcoin and will never earn any Bitcoins.
It’s far more convenient to share the work of each miner in a pool and split the reward with the members in a much larger group of Bitcoin miners.
How to Mine Bitcoins
Right now, whether you Buy or Mine Bitcoins, it’s still as profitable as ever. But with a long-term view, a miner who really believes that Bitcoin Cash can outperform Bitcoin can migrate their equipment to position around that currency.
In any case, right now, the Cryptocurrency sector is experiencing convulsive moments. Blockchain technology is on everyone’s lips, but with Bitcoin Cash new paths are opened that are real alternatives to traditional Bitcoin, and you will have to see how it affects the whole industry.
Bitcoin enthusiasts around the world can obtain it in three primary ways. They can buy Bitcoins on a cryptocurrency exchange; accept Bitcoins as payment for goods and services, and through mining new Bitcoins. The Bitcoin Mining process signifies the discovery of new Bitcoins by solving complex mathematical problems.
Paxful: Buy and Sell Cryptocurrency Instantly
The process is very hard just like digging the ground to find gold. In fact, miners need to set up a node (network) of high-powered computers to simply find out the verification key of Bitcoin transactions.
However, miners do not just verify one Bitcoin transaction; they constantly try to verify many of them at the same time. A ledger network called Blockchain keeps all these transactions virtually locked after gathering them into boxes known as hashes. Miners only run the software to find out the key that can open the box.
As soon as a computer in the node finds the key, the box or hash pops open and the transactions are verified. Miners need to solve thousands of incorrect puzzles to find out the correct one. The process becomes as hard as finding a needle in a packed pile of hay.
So, after successfully creating a Bitcoin block, the miners get rewarded with 25 newly generated Bitcoins.
How to Buy Bitcoin
Most people buy Bitcoin via exchanges, such as Coinbase. Exchanges allow you to buy, sell and hold cryptocurrency, and setting up an account is similar to opening a brokerage account. Whereas, you’ll need to verify your identity and provide some kind of funding source. Such as a bank account or debit card.
Major exchanges include Coinbase, Kraken, and Gemini. You can also buy Bitcoin at a broker like Robinhood. Regardless of where you buy your Bitcoin, you’ll need a digital wallet in which to store it. This might be what’s called a hot wallet or a cold wallet.
A hot wallet (also called an online wallet) is stored by an exchange or a provider in the cloud. Providers of online wallets include Exodus, Electrum, and Mycelium. A cold wallet (or mobile wallet) is an offline device used to store Bitcoin and is not connected to the Internet. Some mobile wallet options include Trezor and Ledger.
Bitcoin Price | BTC Price Index and Live Chart — CoinDesk 20
A few important notes about buying Bitcoin: While Bitcoin is expensive, you can buy fractional Bitcoin from some vendors. You’ll also need to look out for fees, which are generally small percentages of your crypto transaction amount but can really add up on small-dollar purchases.
Finally, be aware that Bitcoin purchases are not instantaneous like many other equity purchases seemingly are. Because Bitcoin transactions must be verified by miners, it may take you at least 10-20 minutes to see your Bitcoin purchase in your account.
What is Bitcoin Cash?
Bitcoin Cash is an alternative to the traditional base Cryptocurrency, Bitcoin, and has emerged as a result of several conflicts in the cryptocurrency world in August 2017. During this time, the community developers were not able to come to an agreement on the most appropriate update of the Bitcoin protocol.
And as a result, a new separate group of developers was formed, with Roger Ver as its leader. The event also gave rise to a whole wave of mostly unsuccessful hardforks — changes in the program code of Bitcoin. That lead to a drastic change in its block structure, with Bitcoin Cash as its final successful result. Bringing instant profit to its users.
Bitcoin Cash as a virtual currency shares the block history of the base Cryptocurrency, but, like any hardfork, it uses a different blockchain. Beyond the fundamental differences, their operation at the investment level is similar. Mainly, the changes are its potential as the Cryptocurrency of the future.
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The biggest problem with Bitcoin is that it is a slow technology. Since Bitcoin transactions take an average of 10 minutes to process and, as the number of users grows, the time needed increases exponentially. In addition, more machines are needed to maintain a high speed.
Over time, the block size in Bitcoin was proven to be insufficient, it was slower and less scalable for use in everyday operations. The Bitcoin Cash developers were able to maximize the original block size and make it eight times bigger — the first alternative used an 8 MB one, and the size is being increased ever since.
This allows to speed up the blockchain verification process and optimizes the speed of transactions, regardless of the number of miners who support it. This is the big advantage of Bitcoin Cash over the prime currency. On the contrary, one disadvantage of Bitcoin Cash is that, due to using larger blocks, its security is theoretically less.
How to Buy Bitcoin Cash
It’s important to realize, the operation of Bitcoin Cash is similar to that used to Mine Bitcoins. However, Bitcoin Cash uses wallets that store the Cryptocurrencies you have purchased. Either by mining or buying them on various platforms.
Such platforms include Bitfinex, Kraken, Bittrex, OKCoin, HitBTC, Bithumb, Livecoin, or Allcoin. In other words, they’re the main exchange houses. There you can buy Bitcoin Cash just like you would buy any virtual currency, Bitcoin included.
You just have to say how much you want to invest. Right now buying Bitcoin Cash is very similar to betting on Bitcoin in its beginnings. Only with a little more certainty about the overall future of cryptocurrencies. It is an alternative within the market that solves one of the problems of Bitcoin.
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But no one can assure that it will prevail. Moreover, two alternatives have already emerged. Such as Bitcoin Gold and Segwit2x. The first maintains the Bitcoin block size but makes changes to the mining algorithm. While the second is proposed as a completely different alternative.
The Bitcoin Cash quotes can be tracked through exchange houses. The ones collecting the movements of virtual currencies. Keep in mind that if Bitcoin is volatile, Bitcoin Cash is even more so. This means that the price of Bitcoin Cash can rise and fall sharply in a short time.
How to use Bitcoins
Generally, countries like the U.S use Bitcoins as an alternative investment. While also, helping diversify a portfolio apart from stocks and bonds. You can also use Bitcoin to make some purchases here and there.
But, the number of vendors that currently accept Cryptocurrency is still limited. Some of the big companies that accept Bitcoin include Overstock, AT&T, and Twitch. You may also find that some small local retailers or certain websites take Bitcoin. But you’ll have to do some digging.
That said, PayPal has also announced that it will enable Cryptocurrency too. As a funding source for purchases this year, in financing purchases. By automatically converting crypto holdings to fiat currency for users.
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You can also use a service that allows you to connect a debit card to your Crypto account. Meaning, you can use Bitcoin the same way you’d use a credit card. This also generally involves a financial provider instantly converting your Bitcoin into dollars.
“Crypto.com and CoinZoom are two services that have regulation in the U.S.,” Montgomery says. In other countries — particularly those with less stable currencies — people sometimes use Cryptocurrency instead of their own currency.
You’re already seeing people in countries like Venezuela, Argentina, Zimbabwe — in countries heavily in debt, Bitcoin is getting tremendous traction.
What does the Future of Bitcoins Hold?
In reality, most Cryptocurrency enthusiasts are expecting more from Bitcoin. But, why? Since it has one of the best features in the Cryptocurrency world. Not to mention, over the past several years, public interest in Cryptocurrencies has fluctuated dramatically.
However, with the advent of the 2020s, investor interest in Cryptos has surged. But, the main focus of this interest has been Bitcoin. And now, it has long been the dominant name in Cryptocurrency — not surprising since it was the first digital money to really catch on.
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By the same token, since the founding of Bitcoin in 2009, however, hundreds of other Cryptocurrencies have entered the market too. Increasingly, it has proven difficult for digital coins to stand out given the crowded field. But not for Crypto like Litecoin.
Litecoin (LTC) is one non-Bitcoin Crypto that has managed to stand up to the competition. LTC currently trails behind Bitcoin as the 6th-largest digital currency by market cap (learn more).
One important similarity between Bitcoin and Litecoin is that they are both proof of work ecosystems. On the other hand, one area in which Bitcoin and Litecoin differ significantly is in their market capitalization. Perse, the total dollar market value of all the outstanding coins.
Summary Notes:
- Blockchain is the technology that enables the existence of cryptocurrency (among other things).
- Bitcoin is one of the best-known cryptocurrencies. And the source of Blockchain technology invention.
- Cryptocurrency is a medium of digital currency exchange, such as the US dollar or the Kshs.
- Cryptocurrencies are digital coins that use encryption techniques for users to earn them through mining.
- Crypto Codes are algorithms that control the creation of digital monetary units and also helps verify funds transfer.
So, with that in mind, do you think Bitcoin is here to stay? What do you think about the future of this Crypto? Please feel free to share some of your opinion thoughts, suggestions, contributions, or even questions in our comments section below. You can also Contact Us if you’ll need more support or help in regards to Bitcoin or any other related Cryptocurrency.
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