Bitcoins have been around for a few years now. However, most people do not know what Bitcoins are, how they can get them and where you can use them. In this blog post, I am going to write about all the above and everything else I have learned about them over the past year.
Bitcoins are crypto currency (also known as digital currency). A process called Bitcoin mining creates Bitcoins. Bitcoin mining is a process in which individuals use their computers to provide computing power by either using their GPU (common) or CPU (uncommon) to verify and record payments into a public ledger. In exchange, individuals will receive transaction fees and newly minted Bitcoins.
I recommend for new starters to Bitcoin mining to join a pool. A pool is a group of users that combine their computing power to mine Bitcoins. The main reason not to go alone is because Bitcoins are rewarded in blocks (around 50 at a time) and the chance to get them when doing this alone are very low unless they are using a dedicated machine build for Bitcoin mining.
A user will need a Bitcoin wallet to use their bitcoins online or in public stores. A Bitcoin wallet is what allows users to transact with other users. All Bitcoin wallets can be interoperating with each other. There are three main types of wallets:
- Desktop Wallets – These are installed on a computer and give the user complete control over their wallet. They are responsible for protecting their Bitcoins and doing backups.
- Mobile Wallets – These are installed on mobile devices (such as smartphones and tablets) and allow users to carry their Bitcoin wallets with them. They can be used in selected physical stores by scanning a QR code or using NFC (Near Field Communication).
- Web Wallets – These allow Bitcoins to be used on a web browser on any type of device. However, with this method the user must choose carefully who hosts their web wallet, as it will contain all their Bitcoins. If the web wallet gets hacked they will not be able to claim back the Bitcoins.
Bitcoin is not the only cryptocurrency on the market. It is just the most popular and well known among general consumers. Currently there are over 200 cryptocurrencies on the market. Market share, value, and information about them all can be found on Crypto-Currency Market Capitalizations.
Personally, I would not recommend anyone getting into Bitcoin mining unless they have been invested in it since inception. This is mainly due to how difficult mining is, where it can take more than three years to generate enough Bitcoins that will exceed the equipment and energy costs.