Mining Bitcoins

Bitcoin is a decentralized peer to peer crypto-currency, and the first of its kind. It is one of the most fascinating innovations in finance in at least the last hundred years. Bitcoin is completely determined by an algorithm and everything is open-source so there are no surprises. No central agency can control the supply of Bitcoin, unlike fiat currencies or even materials like gold. The world can only ever see a total of 21 million Bitcoins in existence.

Like any new disruptive innovation, Bitcoin has a fiercely loyal core group of supporters and followers who are passionate about the idea. They are the ones who take it forward and spread the idea and take it to the next level. Bitcoin has plenty of enthusiasts who are excited about the idea and how it can shape the future of finance, giving the power of money back to the masses instead of under a central control.

It is not just a passing fad. Bitcoin is here to stay. Miners are gearing up for the best of the best equipment to mine Bitcoin more effectively. Exchanges are investing heavily in the security and efficiency of the Bitcoin system. Entrepreneurs are taking their chances and building great businesses around this idea. Venture capital funds are beginning to support projects that revolve around Bitcoin (Coinbase just raised a $5 million venture fund from some of the best VCs, including the team that backed Tumblr).

There are plenty of scenarios, black swan and otherwise where Bitcoins can become a dominant force in the financial industry. There are plenty of doom and gloom scenarios you can think of where Bitcoin will retain it's worth and value as hyperinflation consumes the fiat currency of a weak central government (there has been at least one recorded case in Argentina where a person sold his house for Bitcoin). However, that’s being too pessimistic. Even without anything bad happening, Bitcoin can happily live alongside the traditional currencies of the world.

Some of the greatest advantages of Bitcoin are realized in efficient markets. It can be broken down into a hundred million parts, each called a satoshi, as opposed to fiat that usually can be broken down only into a hundred parts. Also, transactions over this network are essentially free or sometimes need a small transaction fee to induce the miners. By small, we are talking about less than a tenth of a percent. Compare this to the 2-4% fee charged normally by the credit card companies and you being to see why this concept is so attractive.

So now that you're convinced that Bitcoin is here to stay for the long run, how to make use of this? It is still in very early stages of development and there are plenty of places where you can make some Bitcoin. Faucets, for example, are supported solely by advertising and captchas and don't have any catch - you enter your wallet id and you get free Bitcoins.

There are several other concepts from the Get-Paid-To world translated and made especially for the Bitcoin economy. For example, there are several ways in which you can take surveys, watch videos, and visit advertiser websites, all in exchange for some Bitcoins. This being new, it is a great way to test out the waters and secure some of these in the process. Remember that it is far easier to give away Bitcoins because micro-transactions are so convenient. There doesn’t have to be a real minimum payout and even when there is, it is usually very minimal.

In order to participate in the Bitcoin economy, you don’t need to be a technical expert or even delve very deep into the workings of the currency. There are several services you can use to make the process as simple as possible. It is all up to you to take that leap of faith and stay in the game for the long run.

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April 2014
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1 BTC = $133.35 USD  (via Mt. Gox)
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