There are three ways a person can acquire bitcoins: receiving them as a payment for products or services, buying them on a bitcoin exchange, and through the process called bitcoin mining. As of 2014, the primary means of acquiring bitcoins is through mining. This process involves validating bitcoin transactions on the bitcoin network by using the processing power of a person’s computer.Continue Reading
The compensation a person earns for the computational power he lends to the bitcoin network comes in the form of freshly issued coins, or transaction fees, for the transactions that were validated. To engage in bitcoin mining, a person needs to have access to software and hardware specifically tailored for that purpose. The software is open-source, meaning that it’s free to download and use. The two pieces of software a miner needs are a bitcoin wallet, which is an encrypted online account that holds the bitcoins, and a mining program, the most popular of which is GUIMiner.
During the early years of bitcoin mining, average hardware configurations could lend enough power to accomplish the mining procedure. However, since the system was designed to increase mining difficulty over time, a person needs a specialized and powerful configuration to accomplish the same in 2014. Such configurations utilize application-specific integrated circuits, meaning that they’re designed for a singular purpose: mining. As of 2014, an average ASIC rig costs about $12,000.Learn more about Currency & Conversions