Is mining Bitcoin similar to mining wealth?
Bitcoin is the most popular term in today’s world. It is a digital currency under no governmental supervision, started as a peer-to-peer electronic cash system. With market value of approximately $2000 per Bitcoin as of now, it is making headlines day by day. Making people richer as well lose money instantly just like the money market highs and lows.
Since, Bitcoin is just a digital currency unlike other currencies i.e., INR, USD etc., it cannot be printed. Bitcoin can only be mined. Now this emerges another question- “What is Bitcoin Mining?”
It is one of the ways to earn money with Bitcoin. Let’s first get the insight about Block Chain.
To put simply, Block chain is as a encrypted ledger of all the historic transactions happened on the Bitcoin network by and between the peers. Just like a bank ledger which has all the records of accountholders transactions. Difference being Block chain’s public availability.
What Bitcoin miners do?
Bitcoin is created using certain algorithms. This means if you can solve an algorithm, a block will be created and added to the block chain. That’s when you will be rewarded for creating the block. There are many softwares available to help solving the mathematical algorithm too.
Mining in Pool- “Preferable road to mine”
Bitcoins are available in a finite number. Only 21 million Bitcoins can be mined in total. 16+ million mined till now and the complexity increases as more miners dig in. It has become a more difficult task to solve the algorithms now. Thus, this can be done with team or pool which can end up in solving multiple blocks in a day and rewards are distributed proportionately.
What are the major pitfalls of Bitcoin mining?
- Hefty investment in mining hardware
- Delayed returns when mining alone
- Smaller or at times negligible returns when mining in pool
- Increasing complexities of algorithms
- Pool downtime that can result in the loss of individual mining time
Points to consider before or while mining
Here are some points to consider to save your hard earned digital money:
- Give detailed attention while selecting mining hardware, check for the options and don’t just purchase at once. Ensure the warranty too
- Ensure the proper installation instructions are followed. Check whether proper cabling, power supplies are being used
- Don’t store bitcoins in online wallet. We are talking about long term. This only considers the fact that perhaps the provider of money can be hacked and so your online money
- Set up two step login to your online wallet as a safety caution
- It is advised to trade smaller amounts of Bitcoins at a time
- Always back up recovery seeds or private keys as even a causal computer failure can cause loss of data which may include Bitcoins
Considering the hard earned pros and initially costly cons, one may also consider other effective ways to earn money with Bitcoin. Investing in Bitcoins, buying and selling products, lending Bitcoins, and Bitcoin faucet are such other ways to choose from.
Happy money making!