Bitcoin mining or Crypto mining – an investment that becomes more and more popular. Firstly, it was a geeky thing relatively limited only to the tech-savvy around the world. Today, it brings money in many average-human’s pockets.
But, what does it give cryptocurrencies the value? How do Bitcoin mining and Crypto mining work? And, how can I earn real money with mining Bitcoins and other Cryptocurrencies?
These were the thoughts I got whenever I faced the Bitcoin mining term on the internet. And, I am pretty sure that these are the front-line questions in your mind right now. Well, in today’s article from my Crypto-journey series, I will cover these and all other things that I wish I knew before starting the mining game. So, this is your chance to pack up everything you need and start your own Crypto mining-journey. Let’s begin.
What Gives Cryptocurrencies the Value?
Bitcoins do NOT have value as a physical commodity (like gold). They also are NOT widely accepted as legal tender (like dollars). However, Bitcoins have value for their own reasons. The following features are the leading factors of Bitcoin value. However, Bitcoin’s value is not limited to these.
- Bitcoin is a decentralized currency. No government or person control it.
- Banks and governments do NOT tax or trace Bitcoin transactions. One user can send and receive any amount of Bitcoins without paying any commissions or taxes.
- The amount of Bitcoins is limited. Unlike any other fiat currency, there is a cap set on total Bitcoins produced (21 Million Bitcoins). That limits how much Bitcoin can devalue through inflation.
- Bitcoin acts like an equity investment. The swings that Bitcoin’s market value has makes it convenient for investing and trading.
- The Bitcoin community is widespread. It works like a vast social network, which shares information with users.
- The utility of Bitcoin in the world raises. Every day new stores accept Bitcoin payments.
- People willing to buy Bitcoin at the price set gives the Bitcoin value. As a lot of people wanting to buy Bitcoins, the demand raises. When the demand is high and the produced amount limited, the price goes up.
If you have read my previous Cryptocurrency Introductory Article, you know that Bitcoin is just one cryptocurrency. There are numerous alternatives to Bitcoin out there called altcoins. Their market prices usually follow Bitcoin’s price.
What Caused the Creation of Other Altcoins?
Altcoins generally are created as better substitutes for Bitcoin. Majority of altcoins are trying to target any perceived limitations that Bitcoin has. Altcoins come up with perceptively better features and competitive benefits. Here are the most noticeable differences between various cryptocurrencies.
- Different (better) parameters and monetary policy.
- Differences from a technical perspective.
- Additional security and privacy features.
- Various platform or contract features.
Most altcoins are built up on the same framework provided by Bitcoin. They provide peer-to-peer transactions, involve a mining process, and offer efficient and cheap ways for storing and relocating.
How Bitcoin and Crypto Mining Works
Bitcoin mining is a process of solving math problems that delivers fractions of Bitcoin to the miners in exchange. The simplest explanation of how Bitcoins mining work would be if we compare it with gold mining. There is only a limited amount of Bitcoins (21 million Bitcoin). The more people take out, the harder it becomes to find. However, when people mine Bitcoins, it doesn’t necessary mean that they create ones. Their mining activity may also be used for validating Bitcoin transactions. And, fractions of Bitcoin are given to miners as a reward for their work. Click here to see how many Bitcoins have already been mined.
How Does Mining Work From the Miner-Side?
The process of mining Bitcoins requires huge computing power and special software. Miners use the software and a lot of their computer resources to compete with other miners in resolving the mathematical problems. Every ten minutes, the mining power is used to solve a block that contains the latest transaction data in it. Once, when the miner software is set up, it does all the mining processes automatically.
What About the Crypto Mining?
Crypto mining is a broader term that Bitcoin mining, and it refers to mining various types of Cryptocurrencies. While the Bitcoin mining applies only to mining Bitcoins, Crypto mining refers to mining a variety of Crypto coins like Ethereum, Zcash, Bitcoin, Litecoin, Bitcoin Gold, etc.
All the characteristics explained in the section Bitcoin mining, also apply for the Crypto mining. And, as you are stepping deeper in the Crypto mining-world, you will see how mining alternative Crypto-coins can be significantly more profitable than mining actual Bitcoins. Now, let’s see how can you benefit from Crypto mining.
How Can You Earn Real Money With Crypto Mining?
I know that right now you have a thousand of question marks above your head. And, as you are moving into the Cryptocurrency world, more and more questions will appear. But, do not worry, we will get to each of them. For now, this might be the most crucial thing you want to know if getting into the Crypto mining game.
All you need to start earning real money with Crypto mining is a computer with internet access. Yes, you read it right. That is your starting point.
First, you need to get a free Cryptocurrency wallet on it. And second, you need to install a free mining program. In most cases, mining programs offer you a free online Cryptocurrency wallet. As soon as you got these things ready, you can start mining and earn your first Crypto-money. Once you have them on your Cryptowallet, you can easily convert them into real cash. Sounds great, doesn’t it?
The problem here is that Crypto mining requires vast computing power. And, using your personal computer for mining might result in a very unprofitable outcome, when including the electricity cost. OK, getting a new PC would solve the problem, right?
Well… YES and NO. The power that Crypto mining requires from your hardware is not the same as the one used for performing your everyday tasks like copying files and browsing the internet. In most cases, Crypto mining uses the GPU (graphics card) power of your machine. So, you need to get a specific computer hardware with a plenty power in the graphic-card department.
How to Choose the Right Hardware for Building Your Mining Rig?
To make things easier for you, I’ve made an exclusive guide where you can learn how to build your own mining rig. In the following article, you can find all the hardware parts that I’ve used, and all the techniques that I wish I had known when building my first mining rig. For the full article with detailed instructions, click the following link. How to Build Your First Mining Rig.