Who isnt curious about Bitcoin, the virtual currency whose origin story is rife withunderground marketplaces, instant millionaires, and massive scams? And the best way to learn more is to start participating yourself.
Sure, you could hit up an exchange and drop four hundred dollars or more on a single bitcoin, but you can also get in for free by mining the coins yourself. Bitcoin has become too hard for regular people to mine, but the world of bitcoin-like altcoins is still wide-open to hobbyist miners. Here's everything you need to know to get started mining altcoins.
This article assumes youve at least heard of Bitcoin, but you might not have heard of altcoins. Altcoin is a catch-all term for cryptocurrencies based on the Bitcoin system, which arent actually Bitcoin. Because Bitcoin is open-source software, anyone with some development experience can copy it and create their own currency.
The Dogecoin logo.
Of course, like Bitcoin, the value of any altcoin is equal only to how much someone will pay you for it. Some altcoins, such as Litecoin, Peercoin, and even Dogecoin have active communities and economiesyou can view a list of altcoins sorted by market cap herebut currently none are even a tenth as valuable as Bitcoins. Many altcoins have a devoted following, but be wary of anyone aggressively hyping a new altcoin or trying to convince you to get in on the ground floorit could just be a modern version of the pump and dump scam thats been around for decades.
The Bitcoin software works this way: Every time somebody spends a bitcoin, that transaction is recorded in a public ledger. For example, if you have 10 bitcoins in your wallet and send 7 to someone else, that transaction goes in the ledger, and everyone knows that your wallet only has 3 bitcoins now. If you try to send somebody else 5 bitcoins tomorrow, that transaction will be rejected because its a matter of public record that your wallet doesnt have the coins.
For the system to work, the public ledger has to be completely trustworthy. It has to be impossible for anyone to record a fraudulent transaction. Bitcoin accomplishes this using cryptography (hence the crypto in cryptocurrency), in a process that requires many computers, all connected in a single peer-to-peer network. In order to incentivize people to participate in this transaction-verifying network, bitcoins are periodically generated and awarded to the machines engaged in maintaining the public ledger.
As bitcoin values have soared over the last couple of years, bitcoin mining has become a very lucrative business. As a result, companies have designed chips solely for running the cryptographic algorithms bitcoin uses for mining. These chips, called ASICs, are so good at mining that its pretty much impossible for normal, general-purpose hardware to compete. Even the burliest desktop PC with huge gaming GPUs wont be able to generate enough money mining bitcoin to cover the cost of the electricity used in the process.
Its still possible to be successful at altcoin mining using traditional PC graphics cards, like AMDs Radeon R9-280.
Because altcoins are less popular, and because many altcoins use a different kind of mining algorithm called scrypt that cant be solved by the ASIC boards, you can still feasibly earn these altcoins by running the mining program on your personal computer. You can then spend the altcoins or swap them for bitcoins at a cryptocurrency exchange.Unlike most altcoins,bitcoins can be spent at a number of e-tailers like Overstock.com and Tiger Direct.
Read more:
Beginner's guide to mining Litecoin, Dogecoin, and other Bitcoin variants
