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Everywhere I go, I see Bitcoin popping up more and more. Many web services accept payments in the form of Bitcoin, and some even sell their homes for the stuff. I know it's a digital currency, but where does it come from and how is its value determined? More importantly, should I bother earning it and using it for any reason?
As you've noted, Bitcoin is a digital currency used to pay for a variety of goods and services. In many ways, it works the same as paper money with some key differences. Although physical forms of Bitcoin exist, the currency's primary form is data so you trade it online, peer to peer, using wallet software or an online service. You can obtain Bitcoin's either by trading other money, goods, or services with people who have them or through mining. The mining process involves running software that performs complex mathematical equations for which you're rewarded a very small portion of a Bitcoin. When you actually have some of the currency, you can then use it to purchase anything that accepts it. In some cases, Bitcoin is the only accepted form of payment and you'll have to acquire it in order to complete a transaction. While this basic explanation might answer most of your initial questions, it likely brings up quite a few more. Let's discuss how you can acquire Bitcoin and why you'd use it.
Getting your hands on even a single Bitcoin can take a bit of work, but you have a few options. Purchasing Bitcoin takes less effort than mining it, but obviously comes at the cost of your hard-earned cash. Mining, on the other hand, takes computer processing power and often bears very little fruit. First, let's talk about how you can buy a Bitcoin and then look at the mining process.
As previously mentioned, storing and using Bitcoins requires wallet softwareor an online service. The wallet software requires quite a bit of disk space and you have to find a Bitcoin seller in order to acquire any of the actual currency. An online wallet, on the other hand, makes the entire process much easier. As a result, we're going to focus on that process. To set up an online wallet and purchase your first Bitcoin, just follow these steps:
The purchase process doesn't take much effort, but rather just involves a lot of waiting. The Bitcoin exchange rate changes over time, so while at the time of this writing you have to spend $75.93 USD for just one you may find them cheaper next month. Of course, you can come across Bitcoin for the cost of your CPU cycles by engaging in the mining process instead.
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