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THE HOW TO’S OF BITCOIN MINING FOR PROFIT AND FUN

Bitcoins are the talk of the town . I heard about bitcoins back in 2010 and thought of it to be something like the virtual money we use in Facebook and online games . Moreover back then it was only in the Tor network ( Its a dark corner of the web to trade drugs , weapons etc. ) .  So I didnt give much attention to it . But Man !  in just 2 years it has grown to be the costliest currency in the world ( More than the dollar , Euro or the Dinar ! ) – a bitcoin as of today costs a whooping $142.8 ( a month back it was $46 )

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source : www.economist.com

When I was reading about bitcoins in 2010 you could get near 1300 bitcoins for just $1 ( Only if I would have invested $10 back then – today I would have got a return of $1856400 ( ie.  1.8 million USD -or- Rs 10,2102000 … near 10 Crore 21 lakh Rs ) .

Experts expect the Bitcoin to touch $400 in 2 years !

o lets talk about it :)  Here are the chapters covered in this article :

– What are Bitcoins ?

– What is bitcoin mining

Bitcoins are virtual currency . They are decentralized and anonymous . By anonymous I mean that no legal body owns the system nor it is printed and generated by any country . It resides on the web and created via. Peer-to-peer networks .  You can also compare it to a virtual commodity like e-Gold , that raises in value ( which can be bought with real money and once it appreciates can be converted to real money instantly ) .

The whole concept of Bitcoins was created in 2008 by an anonymous person called Satoshi Nakamoto . He published a paper online detailing the process of how it should be generated and circulated . None at present know who this Satoshi Nakamoto is or if it was a group ( there are literally no information about him anywhere in the world )  .

One of the main advantage of using Bitcoins is that your purchase is totally anonymous and against any taxes . Bitcoins have attracted lot of entrepreneurs to start business ideas based on Bitcoins and many VC’s are interested in startups modeled around the Bitcoins . Read a recentTechcrunch article on VC interest in Bitcoins based startups and opportunities in the Bitcoin space .

Can Bitcoins be made into real money ?

Yes . The bitcoins you have can be instantly converted to your local currency via. a Bitcoin exchange ( The famous one right now is MTGOX) . As of today many shopping carts and services have already started accepting Bitcoins as a mode of payment as well . Some of the famous well known services 9flats , Expensify , Amazon , Reddit gold etc.  and many more accept Bitcoins as a payment option . So this is completely legal and has come into mainstream usage & its serious stuff :)

So How to do get Bitcoins ?

The 2 ways to get bitcoins are :

(1) Use your computer for mining Bitcoins

(2) Buy it for real money

(1) Mining Bitcoins :

This is very interesting and you just need a computer to start mining Bitcoins ( Yes – you dont need any tech knowledge , all you need is to get your computer work for you and mine this valuable commodity ) . First lets see how Bitcoins are created .

Bitcons are nothing but 64 digit numbers . By installing a software in your computer you can get your computer to solve some complex puzzles and generate this 64 digit number . Once your computer generates a number – you get 25 Bitcoins instantly ! This process is called Mining Bitcoins .

But be aware that the puzzles your computer will be solving are Super Complex puzzles and require lot of computing power to generate that 64 digit code . Owing to this there are many mining pools on the internet , that you can become part of ie. You become a part of a group of bitcoin miners each employing their computer to solve the puzzle . Once a bitcoin is generated everyone in the group shares the money ( Dont worry , all this process has been so automated that all you need to do is just join the Pool and lend your un-used resources in your computer and everything happens automatically ) . So as you keep doing your daily work , your computer makes money for you – pretty cool huh ?

If you feel you cant share , you can run your own mining software in your computer and take all the share for yourself . In this section I will show you the step by step process for setting up each of these methods . Here we go !

Bitcoin mining via. joining a pool

Step 1 : A Bitcoin wallet .

You will need to setup a Bitcoin wallet for yourself first ( to hold the Bitcoins you are gonna mine ) . Its a very easy process . Goto walletbit.com and you can get your own Bitcoins wallet instantly . You will be getting a Bitcoin address ( which you will be sharing to get Bitcoins to your account in future ) . My address is URI19QnwnEaJtYBX7Z3EW2N469nqTc2B1TUjb

Step 2 : Join Bitcoin plus . Once you join , just click ” Start generating ” and your computer has entered a pool of Bitcoin miners to generate and mine Bitcoins . Once a Bitcoin is mined you will get your share of money credited to your wallet .

Bitcoin plus also gives you options to ask your friends to mine Bitcoins for you ( by just sharing a link ) . Here is my link : http://www.bitcoinplus.com/generate?for=23569879  – clicking on it your computer will start helping me to mine Bitcoins as well :)

Here is something cool . If you own a website , you can monetize it by making your visitors mining Bitcoins for you :) Everytime a visitor sees your page – the page will use the visitors spare computer resources to mine Bitcoins for you in your Bitcoin plus account . You can achieve this by just copy pasting a simple line of code . If you own a wordpress blog there is a WordPress plugin for it – to set it up instantly .

You can download this Bitcoin miner WordPress plugin HERE

 

Dedicated Bitcoin mining :

Not satisfied with a wide shared pool ? Want to give more muscle to your bitcoin mining ? Here is the dedicated method .

One of the other more POWERFUL Bitcoin mining pool is called the Slush’s Pool . In this method you will have your own dedicated Bitcon miner running in your system that solves puzzles with more computational power thus earning you more Bitcoins . You can join ithere

Once you have signed up and verified your email ID . You will get your unique Worker Login & Worker Password ( Please store it for future use )

In your account settings page you can keep track of your balance and earnings . Also you will get notifications when the system sends

Now you will need to download a dedicated Bitcoin Miner . You can use the Diablo Miner and its available for FREE from Github . DownloadHERE

The Bitcoin miner you have downloaded can be run on various environments ( Has options for Windows as well ) . The command prompt asks you to login . Provide the Host name as api.bitcoin.cz and8332 as the port number .  The next screen will ask for the worker Username & Password ( Key in the values you have stored in the previous step ) . Now you can set the Bitcoin miner to run automatically when ever your system starts . So every time it runs it will start working on the numbers and solving the complex puzzles for you to generate Bitcoins

Once your Bitcoin miner starts running and mining Bitcoins , you will see your account balance increasing in your Bitcoin wallet :)  You can check the current rate of a Bitcoin at Preev.com

2) Buy Bitcoins for real money

The straight forward method to buy Bitcoins is to Buy it for real cash . Many traders have already started trading with Bitcoins as with real stocks . The advantage is you have real great fluctuations – so you can earn money as in the normal day trading manner ( At the time of me starting to write this post the rate of a Bitcoin was $148.57 – right now its $145  – for sure in another hour it will be $149 ) .  So if I buy 10 bitcoins at this moment and sell it in another hour , I would easily make $40 profit ! So how do you buy Bitcoins ?

Bitcoins cant be bought by using credit cards ( as it defeats the over all purpose of being anonymous on your spending and purchase ) . There are many ready made exchanges to buy Bitcoins online ( By Googling you can find quite a lot of services , even country specific services ) . Bit coin exchanges are places where you can trade ( Buy – sell ) Bitcoins in any currency you require . But the big name right now is Mt Gox . You can also check out Bit Stamp or Intersango

Inside you will find options to directly Wire money from your bank to your exchange . Or if you feel un-comfortable to give your bank information in these exchanges you can use other services like Bit Instant to pay money via. various other ways . Bit Instant has really nice and diverse options for you to pay ( Wallmart , Starter Bros , Coupons , Dwolla etc. ) . Also it allows you to receive the Bitcoins in your place of choice ( To Email , Mt Gox , Paypal  or your wallet via. your Bitcoin address )

Here are a few tips on how you can generate money using bitcoins :

– Setting your work computer to mine bitcoins at the background while you are at work ( All you need is an internet connection . Dont even need to install the software )

– Installing the bitcoin miner in your blog , so people visiting your blog will mine bitcoins for you .

– If you are in school / college asking your friends to mine bitcoins for you .

– Tipping your local Browsing center owner to run Bitcoin miner for you on their PC’s .

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