Satoshi Nakamoto created the algorithm with a set limit on bitcoins to only 21 million. To date, more than 12 million are still in circulation which means around 9 million are waiting to be mined. It was easy to mine in the first few years since it has been introduced in the market in 2009; but it has now become challenging. With the rate things are going, the last bitcoin is said to be mined in 2140.
Bitcoin valuation have been fluctuating recently especially with the dizzying craze that associated to this cryptocurrency.
What are Bitcoins?
Bitcoins are virtual tokens which can be exchanged for varied goods and services from selected online traders and retailers online. The exchange does not need any third-party institutions like banks because transactions are done directly by one person to another.
The value of bitcoins deviate from the standards set on real world community and is based primarily on the law of supply and demand which is prone to fluctuations and shift changes every now and then
How Do You Mine Bitcoins Online?
Mining pertains to discovering new bitcoins which is similar to mining gold. In simpler terms, this would mean the verification of every transaction that involves bitcoin.
There are three ways to generate bitcoins. You can buy from an exchange, mine new bitcoins, and accept them as payments for goods and services. With verifying bitcoin transactions, you aren’t just verifying one transaction but all transactions segregated into padlocked boxes called block chains. Miners then have to run software to spot the key that can open the padlock.
At the onset of mining, a regular PC can do the job fairly well with generating bitcoins. That is essentially how the system was designed. It is relatively easier to mine in first few years then it would consequently get more challenging to do so as more and more bitcoins are continuously generated over time. In order to cope, miners had to acquire faster hardware that can keep up with the tempo of generating bitcoins. Today, miners are now using application-specific integrated circuits (ASIC) to ensure that bitcoins are generated at a faster rate. In fact, if you ask miners, a full mining rig that can discover new bitcoins would cost around $12.
Well, for those who can’t get afford this investment, there is a way around the system. You can generate bitcoins by joining mining pools. These pools refer to groups of bitcoin miners from all points of the world who would literally mine together by combining their computer power which an advantage especially to small-time miners.
Essentially, the faster your computer is able to mine bitcoins, the more power it contributes to the main pool which guarantees a large share or percentage of bitcoins. When you join these mining pools, you can use cheaper hardware but these are still unregulated so the operator of the mining pool not legally bound to give people their share – which is one downside of joining these pools. This is practically the reason why a lot of miners would rather invest on their own rigs.
The currency rate of bitcoin is highly volatile which isn’t dependent on mining, hardware, or investors but specifically on media cycles.