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8 things you need to know about mining cryptocurrency

In 2009 a new form of digital currency came online, which was designed to democratise finance and remove the controls and excessive fees that banks and governments have imposed over generations. Known as Bitcoin, this first cryptocurrency anonymised transactions, and provided a new alternative to traditional cash.

1. How do you get hold of cryptocurrency?

Getting hold of cryptocurrency can be done in one of two ways: you either buy currency such as Bitcoin through an online broker like BittyBot; or you mine your own.

2. How does it work?

As with gold, there are a finite number of bitcoins that can be mined (around 21 million), 15 million of which have already been found. And the cryptocurrency systems use a similar scenario to more traditional mining, albeit in a digital context, where ‘proof of work’ has a bearing on how successful your efforts are.

You set your CPU or GPU to work, solving block hashing algorithms, and as they are successfully completed, bitcoins are issued. And, whichever you choose to do, you will also need a cryptocurrency wallet along the lines of Blockchain, in which to store your funds.

Bitcoin gallery
Bitcoin isn’t the only cryptocurrency in town. Rivals include Litecoin, Ethereum and Namecoin.

3. Why bother with cryptocurrency?

Firstly, cryptocurrency doesn’t require the identification checks put in place by traditional financial institutions, making it perfect for the sale of illegal items, such as drugs, weapons, and beyond. But it isn’t all about the darker side of human nature, and many respectable businesses now accept Bitcoin.

4. Is it the perfect currency?

The jury is still out, but as we have seen over recent decades, so-called safe currencies have fluctuated greatly, and sometimes collapsed, based on circumstances beyond the control of most people.

Bitcoin, though, has no central bank or overriding government control, and is becoming more popular an alternative means of payment. This isn’t to say that Bitcoin hasn’t fluctuated, though; but given its relative nascence, it has quickly established a foothold, and created a host of millionaires among early adopters. It’s here to stay.

Get into cryptocurrency with the Mining Series of optimised GPU cards from ASUS

5. Will Bitcoin make ME a millionaire?

Put simply, no it won’t. The reason many of those people that originally got into cryptocurrency are now so wealthy is twofold. Firstly, cryptocurrency has jumped in value in recent years, with a single bitcoin now valued at £3,124, and secondly, the equipment now needed to mine cryptocurrency is not only expensive, but also uses up a huge amount of power, which makes the cost/return ratio of Bitcoin unviable for most people.

The days of successfully mining bitcoins on a homemade machine are long gone, but do not despair…

6. Should I mine for bitcoin?

Bitcoin was the first, and is still the most successful cryptocurrency at the time of writing, but others have emerged. And although it won’t make you any money, we’re not going to categorically say that you shouldn’t try mining bitcoins, but you need to be aware that the power and hardware requirements now needed to do it well could put you in some serious debt. The most sensible option, though, is to look at other, emerging cryptocurrencies, and start doing it as a hobby, which just might provide some financial reward in years to come.

Litecoin logo
Litecoin is similar to Bitcoin in many respects, but it is faster and has zero payment costs.

7. What are the alternatives to Bitcoin?

With a good GPU, such as the Mining Series from ASUS, you can build a rig that will give you the potential to break even, or even earn a few thousand pounds a year from your efforts (though much hinges on energy prices and on the currency you opt for). And of all the alternatives, we’d suggest Litecoin as a good place to start (it is often referred to as the ‘silver to Bitcoin’s gold’).

Maximum hashrate performance graph
The faster your mining hardware, the higher your hash rate, increasing your chances of finding the next block.

8. How do I mine bitcoin?

Should you choose to start mining bitcoin, here is a simple checklist of what you will need to do:

  • Get yourself a wallet
  • Buy or mine? Make your choice
  • Decided how you are going to mine (CPU, GPU, or both)
  • Install a miner. More details can be found here
  • Ensure you have a backup. Cryptocurrencies store vital info on your PC or Mac
  • Be secure. Here are some things to consider
 
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Image credits: Bitcoin photo by www.cafecredit.com is licensed under CC BY 2.0

 
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