How to get Bitcoins

How to get Bitcoins explained in this article, Bitcoin is the first decentralized peer-to-peer payment network that is powered by its users with no central authority. It is created and held electronically. Each Bitcoin is subdivided down to eight decimal places, forming 100,000,000 smaller units called satoshis.

When someone pays for something using Bitcoin or gets paid, the transaction is recorded in the record book called blockchain. This blockchain is publically available for anyone to check any transaction that has ever been held using bitcoin.

Computers around the world compete to confirm that transaction by solving complicated mathematical problems and in turn the winner gets rewarded with a very small portion of a Bitcoin. This process is known as mining.

There are two ways you can acquire bitcoins; mining and buying.

What is Bitcoin mining

Back when bitcoin had just launched, one could mine bitcoins using their smartphone, but now the mathematical problems have gone exponentially more complex, hence enormous computing power is required to solve them.

It isn’t recommended to mine bitcoins anymore because it requires huge initial investment. To give you some perspective, there are mining farms in China spread in acres of land with thousands of ASICs.

Mining is accomplished by running SHA256 double round hash verification processes in order to validate Bitcoin transactions and provide the requisite security for the public ledger of the Bitcoin network. Speed at which you mine Bitcoins is measured in hashes per second. The more computing power you contribute, the greater will be your share of the reward.

As of now, mining only makes sense if you plan to do it for fun or to support the security bitcoin. Price volatility and increasingly complex mathematical equations makes it impossible to churn out profits. If you still want to go ahead with it, you’ll need to understand the technicality behind it.

Technical Information

When you mine, your Bitcoin mining hardware runs cryptographic hashing function (two rounds of SHA256) on block header.

For each new hash that is tried, the mining software will use a different number as the random element of the block header, this number is called the nonce.

The hashing function will be a hexadecimal number:

93ef6f358fbb998c60802496863052290d4c63735b7fe5bdaac821de96a53a9a

To ensure that blocks are found roughly every ten minutes, there is what’s called a difficulty target. In order to create a new valid block the miner will need to find a hash that is below the difficulty target.

The target is a number with tons of digits. To simplify this number is called the mining difficulty.

Mining difficulty shows how much difficult the current block is to generate compared to the first block. So a difficulty of 5000 means to generate the current block you have to do 5000 times more work than Satoshi Nakamoto had to do generating the first block.

The blocks need to keep coming after every 10 minutes. To achieve this the difficulty is adjusted using a shared formula every 2016 blocks. The network tries to change it such that 2016 blocks at the current global network processing power take about 14 days.

This is why when the network power rises, the difficulty rises with it.

Once you understand this, all you now need to do is follow these steps:

Step 1 – Buy Mining Hardware

Your options: AntMiner S7, AntMiner S9 or AntMiner S9

They are all available on Amazon with complete details on capacity, efficiency, weight, price etc.

Step 2 – Download Bitcoin Mining Software

There are many programs out there that can be used for Bitcoin mining, but the two most popular are CGminer and BFGminer which are command line programs.

If you’re a GUI guy, try EasyMiner.

Step 3 – Join a Bitcoin Mining Pool

Bitcoin mining pools are a way for Bitcoin miners to pool their resources together and share their hashing power while splitting the reward equally according to the amount of shares they contributed to solving a block.

Without a Bitcoin mining pool, you may keep mining Bitcoins for years but will never earn any Bitcoins.

For fully decentralized pool, go for p2pool. Other options include:

BTCC: BTCC is a Bitcoin exchange, wallet, and mining pool located in China. Its mining pool currently controls around 15% of the network hash rate.

Slush Pool: Slush Pool is run by Satoshi Labs, a Bitcoin company based in the Czech Republic. Slush Pool was the first mining pool and maintains around 7% of the network hash rate.

Antpool: Bitmain, one of China’s largest Bitcoin companies, operates Antpool. It is currently the largest Bitcoin pool and has around 30% of the network’s hashrate under its control.

Step 4 – Set Up A Bitcoin Wallet

This is a no brainer. You need a Bitcoin wallet to keep your hard earned Bitcoins. You could use your existing wallet (if you have one) to keep these Bitcoins.

For added security, Bitcoin hardware wallets are also available.

It is always a good idea to secure your wallet from potential threats by enabling two-factor authentication or keeping it on an offline computer that doesn’t have access to the Internet.

Step 5 – Stay Up To Date With Bitcoin News

It is very important to stay up to date with Bitcoin related news to maximize your mining profits.

How To Buying Bitcoin

Buying bitcoin is much more easier than mining. The best way is to buy through a local exchange in your country.

Using an exchange that is based in your home country has its perks. It will not only support your local fiat currency, but also save you a lot of money in unnecessary fees. Although you might have to pay a slight premium depending on the country you’re in.

If you’re in a country that has doesn’t have a bitcoin exchange, you’re in luck – use localbitcoins and buy bitcoin from other people using cash or national bank transfer. Localbitcoins is an escrow service which helps to match buyers and sellers. Most of the sellers advertise whichever payment method they prefer.