Bitcoin / Cryptocurrency Mining – Complete Beginner's Guide

Bitcoin / Cryptocurrency Mining – Complete Beginner’s Guide

Posted on March 15th, 2018 by Quertime Writer in Cryptocurrency

The ‘Bitcoin‘ trend is growing every day but not everyone really understands what it is and why we need it. Let’s try to find out.

What is Bitcoin?

Bitcoin is the first of the virtual currencies that is protected against cracking by a number of encryption (cryptographic) methods. In 2008, a person or a group of people under the name of Satoshi Nakamoto voiced the concept of currency. This electronic currency is actually a mathematical code, which, as they said, cannot be tampered with or abducted. With its help, you can make purchases and other transactions, exchange for another currency and so on.

What are the Advantages of a Virtual Currency?

Bitcoin cannot be falsified and it is programmed for a limited amount, so it is not vulnerable to inflation. One of the key benefits is its decentralized support. That is, there is no structure that can “print” bitcoins and there is no single server where “all would be lying”. Instead, it’s a database that simultaneously supports and syncs thousands of computers. So, for example, to block a transaction, it must be done simultaneously on thousands of devices around the world.

The peculiarity of transactions is that network transfers occur without an intermediary – it eliminates the possibility of blocking. Transactions always have a low standing commission regardless of the amount of transmitted bitcoins. If a transaction is in the network, then the information about it remains open for everyone and forever. However, the network does not record any names, only bitcoin code.

Bitcoins are stored in an open database – BlockChain, that is a decentralized public registry. In essence, it is a kind of electronic accounting book, a copy of which is simultaneously stored on thousands of computers. Blockchain contains only the bitcoin address in its code form. In order to remove them or to conduct a transaction, you must have a special access – a private key owned solely by the owner of the asset. Therefore, you can track all the transactions that were performed on the system at any time.

How to Get the “Magic” Bitcoins?

Bitcoins receive by extraction – a property that occurs through solving computer tasks. In fact, it is said that in order to get a cryptocurrency, the computer calculates the task. In the end, when the system solves a number of tasks, there is a reward in the form of bitcoin.

The main feature of creating this cryptocurrency is the constant complication of calculations, so for the extraction of each next bitcoin, one needs more time and resources.

The amount of this currency that can be obtained at any time is foreseen – 21 million. New bitcoins arise only after the opening of certain blocks, and through each of 210 thousand units the remuneration is halved – if in 2009 for the opening of the block it was possible to earn 50 bitcoins, but now – 12, 5.

Is it Possible to Extract Bitcoins Yourselves?

The first bitcoins could really be extracted using a regular computer – the tasks were simple. However, with the discovery of an increasing number of task blocks, complications have arisen, so today very powerful equipment is used for extraction.

Therefore, the easiest way for an average citizen to get bitcoins is to buy a cryptocurrency, keep it in a special wallet, and expect when it’d be the most expensive. The wallet can be downloaded free of charge from the official site of the bitcoins, and it can generate addresses for which you can count the cryptocurrency.

What Not to Do Entering The Game

1. Purchase on a Loan

The biggest mistake of a person who is deals with a cryptocurrency is to invest the last money in this business. Don’t do it on the last funds, selling houses or borrowing because of the desire to buy cryptology. The market is unstable, there can always be nuances. And instead of profits, you can get into debt.

2. Do Not Bargain but Save

Often beginners, taking over bitcoins, begin to “sell”, that is, to trade. In fact, it is profitable to buy a crypto cheaper and sell more, but without knowing the intricacies of business you are at serious risk.

In addition, there is a lot of fraud on the market, so inexperienced people can get into unpleasant situations. These are, for example, the risks of new startups, that are too active on the market and promise “golden mountains”.

3. Be Careful

Frauds also pay attention to the excitement around Bitcoin, therefore, every time the new schemes of “breaks” come up, they are tied to a fashionable word.

What Determines the Course of Bitcoin

The value of bitcoin is actually due to interest in it because this cryptocurrency is not backed up with material resources. Therefore, in fact, as much people buy this particular cryptocurrency, as much its course grows.

Therefore, the course of this cryptocurrency is relatively unstable. The interest in the exchange of bitcoins is also heated by players who own high assets of cryptocurrency- after the fall of the course, they buy up a virtual currency, creating a boom. Inexperienced participants are also in a hurry to buy an asset at a higher cost. Subsequently, the same “crypto magnets” at peak prices sell assets.

Irreversible Transactions

Bitcoin transactions are irreversible, that is why it is virtually impossible to buy Bitcoins with PayPal or credit cards. Many call the Bitcoin Network a pyramid or bubble, but in reality, it is not. Bitcoin has no central coordinating body, no promise of multiplication of funds; in contrast to the pyramids, not only the early participants but also the late, get. You can also call the pyramid of the shares of Apple or Google, because those who bought them for several tens of dollars per piece, also received a huge profit.

Summing up, we can conclude that Bitcoins are rather not electronic currency, but electronic gold: the resource is exhaustive, the more it is extracted – the harder it is to get further. The amount of gold in the world is also limited, and due to its rarity, the complexity of counterfeiting and receipt, it has a high value, that made it possible to use it as the main currency for many centuries in a row.

Author: Mariia Hepalova
Mariia Hepalova is a content writer on DesignContest.com. She has written for various online publications and blogs. With an equal passion for both design and marketing, she strives to produce content that is informative yet easy to understand.