Bitcoin is the first cryptocurrency and the first independent peer-to-peer payment network that is powered by its users with no central authority. It was the first practical application and is currently one of the most used triple entry bookkeeping system in the world. A Bitcoin is a form of digital money that uses encryption to secure transactions and control the creation of new units.
When creating Bitcoin, the aim was to form a currency not controlled by governments or businesses, that you could trade globally with no cost and without having to reveal your identity. Both the success and acceptance of Bitcoin has led to many other cryptocurrencies called “altcoins” being created. The first Bitcoin spec and proof of concept was published in 2009 by an unknown individual under the pseudonym Satoshi Nakamoto. He has revealed little about himself and left the project in late 2010. The Bitcoin society has since grown hugely.
Satoshi’s anonymity often raises worries due to the misconception of Bitcoin’s open-source nature. Everybody has access to all the source code any time and most developers can review or modify the software code.
There has been over one billion dollars of investment into Bitcoin and blockchain from in thousands of companies and individuals from around the world.
How Bitcoin mining works
Bitcoin crypto mining is legitimate and is consummated by running double hash verification processes to validate Bitcoin transactions and provide the valid security for the public register of the Bitcoin network. The speed at which you mine Bitcoins is calculated in hashes per second.
The Bitcoin network rewards miners for their effort by delivering bitcoin to those who supply the needed computational power. This results in the form of both newly issued bitcoins and from the transaction fees included in the transactions validated when mining bitcoins. The more computing power you contribute, the greater your share of the profits.
Bitcoin mining hardware
There are 3 main hardware groups for bitcoin miners: GPUs, FPGAs, and ASICs. Let’s take a closer look at them.
CPU/GPU Bitcoin Mining
The most necessary bitcoin mining hardware is your personal computer. You could use your own computer’s CPU to mine for bitcoins, but this will be so slow that there really is not any point.
You can augment your bitcoin hash rate by including graphics hardware to your personal computer. Graphics cards feature graphical processing units, and these are designed to give a heavy mathematical boost, so they can calculate all the sophisticated polygons needed in high-end videogames. This makes them particularly good at the SHA hashing mathematics necessary to solve transaction blocks.
The best GPUs that you can buy are ATI and Nvidia. High-end graphic cards can cost hundreds of dollars, but also give you a significant advantage over CPU hashing. For example, an ATI 5970 graphics card can give you over 800 MH/sec compared with a personal computer, which will commonly give you no more than 10 MH/sec.
One of the nice things about GPUs is that they also leave your choices open. These units can be used with other cryptocurrencies like Litecoin for example. Litecoin uses a different algorithm to bitcoin called Scrypt. This has been enhanced to be friendly to CPUs and GPUs, making them a good option for miners who want to choose between different cryptocurrencies.
Bitcoin Mining Software
Depending on which hardware you choose, you will need to run software to use it. There are a lot of programs out there that can be used for cryptomining, but the most popular are CGminer and BFGminer, which are command line programs.
Usually you will need a host computer running two things; the standard bitcoin client and the mining program.
Standard bitcoin client
This software connects your PC to the network and sets up interactions with the bitcoin clients, promoting transactions and keeping path of the block chain. It will take some time for it to load the entire bitcoin block chain so that it can start. The bitcoin client effectively delivers information between miner and the bitcoin network.
Bitcoin mining software
A bitcoin mining software is what guides the hardware to do the all the work, passing through transaction blocks for it to figure out. There are a variety of software available depending on your operating system. This could be Windows, Mac OS X, or various others.
You will also need mining software for your ASIC miner too. Some brand-new models guarantee to sell with everything pre-configured, including a bitcoin address, so that all you need to do is plug and play.
Bitcoin Mining Pool
Once you’re ready to mine bitcoins, we recommend joining a Bitcoin mining pool. Bitcoin mining pools are groups of Bitcoin miners engaged together to solve a block and share in its rewards. Without a Bitcoin mining pool, it is quite likely that you will be mining for over a year and still not earn anything. It’s far more acceptable to share the effort and share the reward with a much larger crowd of Bitcoin miners. Some options can be found below:
- CK Pool
- Slush Pool