Every aspect of the Bitcoin network depends on one thing: mining. Mining provides the network with the means to verify transactions, controls the currency supply and provides the miner coin for their effort. Say again? Mining makes you money and it makes you money with very few requisites. You don’t have to have special knowledge to mine Bitcoin and you don’t have to do any physical work to mine. Right now you are going to gain basic knowledge of what Bitcoin mining is and how you can get started. (A more in-depth analysis of Bitcoin mining is presented in my book Bitcoin: A Basic Explanation of Everything)
So you want to make some coins and you want to make them fast. You need computational power, electricity and a connection to the internet to start mining. Since you are reading this it’s likely that you already have those things. Now, Bitcoin mining is the process of your computer solving a problem (hash) that is required to be solved in order for blocks to be posted to the block chain. Blocks contain records of Bitcoin transactions. The network will search for blocks. If your computer finds the answer to a problem within the block, you are rewarded Bitcoin and you would have done your part in maintaining a system of anonymous transaction verification. All Bitcoin originate by being mined.
Since you already have the basic requisites, you need to use those tools to accumulate more tools. The first thing you need to get is a wallet. A wallet gives you a place to store your Bitcoin and provides you the addresses that you need. After acquiring a place to put your Bitcoin you need to find a place to mine for them. The best option for the beginner is the mining pool option. In a mining pool a lot of individuals put their computing power together and get rewarded together. When a block is solved the coinbase reward is the profit (currently 25 BTC per block).
There are several different methods used by mining pools. Two basic methods include the proportional approach and the pay-per-share approach. The proportional approach pays miners based on the amount of computing power submitted and requires a block to be solved. Basically, you join one of these and if you along with everyone else find the solution you all get paid based on the amount of computional work. What if your pool happens to be unlucky and doesn’t find the solution? There is no payment if a proportional payment pool doesn’t solve blocks. The proportional method puts all the risk on the miner so the pool operator charges a lower fee.
The pay-per-share pool mining approach pays miners a fixed amount of coin for the amount of shares (hashes) submitted to the pool. What if your shares don’t solve the block? You still get paid. The pay-per-share method puts all the risk on the operator so more fee is applied. Miners get the benefit of knowing they will be paid for work. Pool operators suppose a certain amount of reward will be paid per amount of hashes. If the pool operator is wrong, they will pay out all their Bitcoin for computer power that didn’t achieve anything.
A good place to start proportional mining is at BitcoinPool (BitcoinPool.com). If you’re considering the pay-per-share option you can start at 50Bitcoin (50Bitcoin.com). Both routes are good for beginners. Pay-per-share will start to earn you Bitcoin immediately. Just follow the steps on the website and you will be able to get your mining career started today.
While you are already searching for the different modes to mint bitcoins, there is another fascinating option at hand. You can avail the complete amount minted if you are the sole player. Yes, having individual hardware set up might also help you mint coins easily. You can start with affordable and eco-friendly minting hardware from legitimate vendors like CoinMiningDirect.
You have now learned the basics of Bitcoin mining and how to get started. The obvious personal benefit: your computer runs a program in the background and you earn money. The network benefit: the Bitcoin system is maintained with no central institution to check transactions. With an understanding of pool mining you understand the current most popular approach to mining. So what are you waiting for? The tools to start mining are right at your fingertips.