In the last article we explored the different types of Bitcoin wallet and took a look at some recommendations for each of them. However, having a new fangled digital wallet isn't all that exciting if you don't have any bitcoin to store in it!
In this article, we are going to explore the different ways that you can get hold of bitcoin (and by extension, other crypto currencies too).
There are four main ways that you can get hold of crypto currency and bitcoin:
- Be given a small amount via a tip or from a faucet
- Mine as part of a mining pool
- Earn bitcoin as payment for work under taken
- Purchase bitcoin directly
Let's explore each of these in more detail...
Tipping and Faucets
You may have come across users on social media platforms such as reddit.com and twitter.com sending each other digital currency tips. These work through the use of social media bots which allow users to deposit crypto currency to a tipping wallet and then give it out via the social network through commands such as "!tip @Xexr 1 bitcoin". If you are the recipient for one of those tips, you will be directed to create your own wallet through the platform which you can then use to withdraw to your own address.
Bitcoin faucets are websites which dispense tiny amounts of bitcoin to users. In the good old days, they would dispense as much as 1 bitcoin at a time for no more effort than clicking a button. Unfortunately price rises mean those days are long gone and modern faucets typically require you to do a certain amount of "work", e.g. captcha's before paying out tiny amounts of bitcoin. There are many faucets online which you can get to through google, but here is an example to give you an idea.
I've previously explained in detail the concept of digital currency mining in this article, so I'd recommend having a read first and coming back here.
Now for the bad news.
Bitcoin mining has been through a series of evolutions. In the early days of Bitcoin, you could mine significant amounts just by using your computers processor. As more users started mining, the difficulty (which you now understand having read the linked article... right?) increased as designed so it became harder to mine.
Then, a year of so into Bitcoin's existence, a user wrote a piece of software which enabled mining via GPUs (graphical processing units, graphics cards). Graphics cards process information in a massively parallel fashion and so are much more efficient at mining than standard CPU's. Once this software was in common use, difficulty increased again and you needed to purchase high performing computer rigs containing multiple GPUs to mine any reasonable amount.
But that wasn't the end. A few years later, ASICs (application specific integrated circuits) began to appear which are built to specifically run the hashing algorithms intrinsic to mining. They do this at a massive speed increase and for a fraction of the power usage but can be used for nothing else other than Bitcoin mining. As these emerged, the difficulty continued to increase dramatically with each new generation of ASIC. At the time of writing, the most powerful ASICs are now capable of processing c. 15 terrahashes per second.
And what the hell is a terrahash, I hear you cry?
Well sir, one terrahash is the calculation of 1 trillion hashes, every single second. Insansity.
So why is this bad news for you, dear aspiring miner? Unless you have the capital to purchase expensive ASIC's, live in a country with low cost (preferably free) electricity and a cool climate you will not be able to profitably mine bitcoin.
You can of course, still mine bitcoin using your computer as part of a mining pool (where miners join to together to make earning bitcoin more consistent than individually mining and hoping for a block reward which may never come). However, you will spend more on electricity than it would cost to purchase the bitcoins directly in the first place.
Other crypto currencies are still profitable to mine, but that is the topic for another story where we will take a look at how you actually get started mining.
Working for bitcoin
Yes bitcoin is a currency and yes you can be paid directly in bitcoin (or another crypto currency). There have been many stories of people being paid their normal salary directly in bitcoin. Take a look at this article for an example.
However, you don't have to convert your traditional salary to bitcoin to earn some on the side, we after all in the age of the gig economy and what better to way to embrace it than by getting paid in the currency of the future?
If you have a skill that's in demand, you can use it to earn bitcoin, right now.Take a look at some of these websites, which operate much like fiverr.com, but for Bitcoin:
The most common method to acquire Bitcoin today is to purchase it directly, i.e trade fiat currency (GBP, EUR, USD etc) for bitcoins.
There are many methods of actually buying bitcoins, so this will be the subject of my next article.
What do you recommend?
If you are just experimenting, have limited skills or funds, then you can play around with a faucet or mining to acquire small amounts of Bitcoin to tickle your curiosity.
However, if you are at all serious about getting a reasonable amount, the only real options for most people today are to work for it or purchase it directly.
Join me next time to learn how you to actually buy bitcoins.