Bitcoin, a Beginner’s Guide to Investing

By The Standard and Newsday | Feb. 8, 2022 | 3 Min read

Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency that is powered by an open-source peer-to-peer network. The concept of Bitcoin was introduced in 2008 by a pseudonymous developer named Satoshi Nakamoto who released the idea for an e-currency that is really hard to mine and there would be […]

Bitcoin is a digital currency and a payment system invented by an unidentified programmer, or a group of programmers, under the name Satoshi Nakamoto. It was released as open-source software in 2009. A process called `mining’ generates new bitcoins using computer power. Users send payments by broadcasting digitally signed messages to the network. Bitcoins are not issued or backed by any banks or governments. There are currently about 12 million bitcoins in circulation, with a total market value of more than $8 billion (USD).

Introduction: How to Mine Bitcoins

Bitcoin mining refers to using computer processing power to compete with other bitcoin miners running software on computers around the world, racing to solve difficult mathematical problems, in order to win bitcoins from block rewards. You can do this simply by working out how many blocks you want your miner program to calculate before stopping it (with q ). This number will depend on your hardware’s hash rate and the average number of hashes each machine on the network can produce every second.

Bitcoin mining is difficult to do profitably but if you try then this Bitcoin miner is probably a good shot. Mining uses the hashcash proof-of-work function. An S9 will use around 1300–1400 watts at its peak (~3750 megahashes/sec or ~500 GH/s). You need to also allow for cooling, as the S9 runs very hot. Cooling can be substantial in winter where it is usually 20 degrees C outside! So if you live in a cold place it will pay to be inefficient so that you can spend more on electricity bills. An efficient Bitcoin miner should have a hash rate/watt ratio of around 0.33. This means that the miner produces 33% more hashes per watt of power than other miners.

To get started mining bitcoins, you’ll need to acquire bitcoin mining hardware. During the early days of bitcoin, it was possible to mine with your computer CPU or high speed video processor card. Today that’s no longer possible. Custom Bitcoin ASIC chips offer performance up to 100x the capability of older systems that have come to dominate the Bitcoin mining industry.

How Do Bitcoins Come Into Existence?

Bitcoin is mined on a distributed computer network of users running specialized software; the network solves certain mathematical proofs and searches for a particular data sequence (called a “block”) that produces a particular pattern when the BTC is converted to hexadecimal. A match produces a bitcoin. It’s complex and time- and energy-consuming.

Today, though, you need specialized hardware, for which you’ll have to shell out thousands of dollars. But this raises the question: how does new currency come into existence in the first place?

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The answer, at least for now, is that miners are rewarded with bitcoins. It’s not exactly clear why Nakamoto set things up this way—only bitcoins can be mined; there’s an upper limit of 21 million coins (about 12 million are currently in circulation); and historically, the bitcoin reward has decreased geometrically, with a 50% reduction expected in late 2016.

Conclusion: Can Cryptocurrency be a Good Investment?

Cryptocurrency has been around for a while now, and there are many different types of cryptocurrency. Bitcoin is the original cryptocurrency, and it is still the most popular. Ethereum is another type of cryptocurrency that is gaining in popularity. Cryptocurrency can be a good investment if you know what you’re doing. There are risks associated with investing in cryptocurrency, but there are also rewards. If you’re willing to take the risk, then cryptocurrencies can be a great investment option.