Tuesday, 9 April 2013


"[Bitcoin is] completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust. The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts… With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless." src: Satoshi Nakamoto at p2pfoundation.net/bitcoin.

The virtual currency Bitcoin (own wiki page | wikipedia) has gotten a lot of attention lately, and the currency has skyrocket. This is said to be partly due to the economic crisis we've got in Europe, and the problems with Cypriot banks (src: The New Yorker). As a result investors have started speculating in Bitcoins, which has pushed the prices. Just a few months back, in mid-January, Bitcoins were traded for 4 - 12 USD. At the time of writing you can buy Bitcoins for $174, and it seems not to stop there.

src: bitcoincharts.com

There is a solution to get hold of some Bitcoins without buying them though. You can actually use your computer(s) to mine for bitcoins. This takes time, and the more that does this the harder it becomes to get any coins. Many of those who mine are also spending quite a lot of money on mining machines, just check out the search term "bitcoin mining rigs" on YouTube.com. However, if you want to play with some mining here is a very short tutorial on how to do it. I'm also attaching some links to other resources if you want to learn more about Bitcoin, and how it works. To check out how profitable mining is, check out this handy calculator.

Get started with Bitcoins
Get a Bitcoin wallet
You need a wallet to store your Bitcoins. On bitcoin.org you can chose your wallet.  I went for the Electrum wallet, just for the simplicity of it.

Start mining
I found a good page describing how to get started with mining, namely the page startbitcoin.com. I followed their recommendation, so here is just a short list of what is described in more detail on that page.

Join a pool
I signed up at mining.bitcoin.cz to join the slush's pool.

Get mining software
I went for the GUIMiner, but there might be other more efficient miners to chose (check out the list at deepbit.net).

Start mining
It's just a matter of adding your account info from slush's pool to the GUIMiner and start earning.

Mining for Bitcoins.

Start earning
In a while you will earn some bitcoins as well. With a slow machine it will not be much, but at least it is a start to a world of a virtual currency.

Rewarded with 0.0009503 BTC.

MtGox seems to be the biggest exchange for Bitcoin trading. So if you want to get some coins, and reckon mining is too inefficient you can also buy some coins there.

There are alternatives to Bitcoin, like Litecoin. However it seems like Bitcoin is winning the race of becoming the de facto standard as a virtual currency.

Don't forget
"I still tell people that Bitcoin is an experiment: only invest time or money you can afford to lose, because Bitcoin is still an experiment." src: Gavin Andresen at newyorker.com.

Learn more
Below are some resources if you want to learn more about Bitcoin, and how it works.
Check out a 1:44 minutes long introduction video.
Visit the page www.weusecoins.com.
Check out SecurityNow's more technical video on how Bitcoin works.
Read The New Yorker's The future of Bitcoin.
Read The New Yorker's The number: $141.

1 comment:


    Live chart of the value of BTC:

    Bitcoin crashes, losing nearly half of its value in six hours:


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