This is the central mechanic behind the bitcoin economy, and mining is used to keep transactions secure and reliable. Bitcoins are stored in digital wallets that are encrypted to protect your money. These wallets can be stored either locally or online. Online services are generally considered less secure as your money could potentially be lost if something catastrophic happens on their end.
Local wallets typically require verifying the entire blockchain, which is the history of all bitcoin transactions. Hosting a blockchain is what helps keep Bitcoin running and secure. Syncing this blockchain for the first time can take a day or more. Popular local wallets include BitcoinQT, Armory, and Multibit.
Multibit does not require downloading the entire blockchain. You can also get wallet apps for your mobile device. These do not require downloading the entire blockchain. If you lose your wallet, you lose your money! Since there is no “ownership” when it comes to wallets, anyone who gains access to your wallet can use your coins as they please.
Choose a cloud mining service provider. Over time, the process of mining Bitcoin requires more and more processing power. Today, it is impractical for many users to invest in the equipment needed to mine Bitcoin personally. Typically, you will be payed in Bitcoin. After you decide on a cloud mining service provider, you will need to choose a cloud mining package. To choose a package, you will need to decide how much you are willing to pay, and see how much hashing power that will give you.
Many cloud mining companies will give you an estimate of your return based on the current market value of Bitcoin. Most cloud mining companies will ask you to join a mining pool. This is standard practice if you are cloud mining, or mining Bitcoin yourself. It increases your chances of earning Bitcoin. It is recommended that you join a well established and proven pool. When joining a pool, you will need to create a “worker”. This is a subaccount which is used to track your contributions to the pool.
You can have multiple workers at once. Put your earnings in your own secure wallet. It is recommended that as soon as you start to see a return on your investment, that you withdraw your earnings and put them in your own secure wallet. When Bitcoin first started, it was possible to mine using only your desktop’s CPU and GPU. You will be spending far more on electricity than you will earn mining coins. As Bitcoin mining difficulty increases, more and more powerful hardware is needed to mine Bitcoin. Efficiency: ASIC miners consume a lot of electricity.