What is it
I started investigating Bitcoin when it was worth just over $1000 a bitcoin. I was interested in what it was and how it worked. A lot of people are saying we missed the boat, but I believe that everyone should at least try put a little money in now, or at least use a faucet (see below) to make a little micro-currency.
You can read a Wiki article about bitcoin and its history etc. But what you need to know is that it is a currency, that is independent of country. No one really knows who invented the concept of a cryptocurrency since the person who published the paper used a nom de plume.
All new cryptocurrencies work more or less the same way as Bitcoin. So as I explain below I interchange these terms. Bitcoin is the original cryptocurrency.
How Bitcoin works
The currency releases a coin based on a mathematical formula. There will never be more than 21 million bitcoins (other cryptocurrencies do not work like this). Each bitcoin can have divided into one hundred millionth of a bitcoin which is called a satoshi. As a bitcoin or part of a bitcoin is traded, a journal entry for the trade is created in a blockchain journal that is replicated to anyone that currently has a bitcoin wallet. So every transaction exists in every journal.
This takes quite a bit of computer power to calculate and is called a hash table. So that every transaction is verifiable.
The important thing to know is that no single person owns the journal each bitcoin user has a copy of the journal.
No government controls the currency, however the US federal reserve, the UK reserve bank and other large national reserves have recognized it as an official tradable currency. Some countries restrict its use but all recognize it. This applies to all cryptocurrencys
Wallets and micro-wallets
To store your bitcoins or similar cryptocurrency you need a software or hardware wallet. You can download your own software wallet, but most people use a cloud based wallet (so it exists on some companyâ€™s server). The wallet allows you to send and receive the cryptocurrency from and to. Each wallet has what is called a public key that is used as the Wallet ID, to receive money into. You can own as many wallets as you like (see below for mining).
This means you can have a cloud wallet, and hardware wallet. Cloud wallets also allow you to access your cryptocurrency on your phone, and there are also wallets that work only on your smart phone.
A micro-wallet is used for storing bits of a cryptocurrency. They are used to â€œsaveâ€ parts of the major currency without attracting mining fees. Money from a micro wallet is virtual it does not really exist until it is moved to a real wallet. This will attract a fee as it means that a journal entry was created.
A cloud wallet that is well known is Luno, you can buy and sell bitcoin using rands. You need a micro-wallet if you are collecting micro portions of a cryptocurrency. The microwallet you use is linked to how you get the cryptocurrency since it does not attract fees. Two that I have used are Coinpot micro-wallet, and faucethub.io microwallet.
For every real send and receive transaction, this transaction has to be added to the hash table of the block chain of that currency, and distributed to all holders of the share journal.
This obviously takes computer power, and this costs money to own and run. The devices that do this transaction are called miners. The â€œmineâ€ the transactions and do so for a fee.
You can own a miner, or there are miners that sell off their transaction time that run on the internet. If you buy mining time from these miners they reward you with a percentage of the fee they charge.
This is like investing in a bank, so that you can get a portion of the fee they charge to anyone that banks with them.
Cloud mining is something that has become quite popular, but it is recommended that you use a reputable miner since there is a chance that the miner you investing in will no longer exists, or no longer be able to process the hash table, due to lack of power.
The cloud miner that I use is Genesis-mining, you need to purchase quite a bit of hashpower to get larger payout, but if you start with a little then you get some payment as their own micro-wallet is filled to a minimum amount.
I have been told that the mining may be a ponzi-scheme, but I have had some success so far.
There are places selling it via credit card, but I have avoided them, as I have received warnings that this can be fraudulent.
What to look out for
What you need to look out for is any offer that is too good to be true, these normally are hoaxes, like with anything involving money or time, if it sounds too good to be true it is.
How to make Bitcoin
There are a few ways to make bitcoin
- One is to find a faucet that pays out portions of cryptocurrency into a micro-wallet, that you can accumulate and then spend. To do this, will cost nothing, only your time. See below.
- Buy bitcoin or another cryptocurrency (at the moment you can mainly buy bitcoin) and watch the price change as it is traded by the over 3 million people that are trading it. This is like any type of Forex Trading. I am no expert but there are a few people that have YouTube videos on it.
- You can buy into a cloud mine, or setup your own mine, but this is considered too risky. I have bought a little hash power from Genesis (as discussed above). There are people that have claimed Genesis is a scheme, but so far I am receiving payouts and it seems okay. But if you do not trust them dabble with a bit of money.
- Trade it. Buy and sell the currencies when like you would shares. I have not tried this as I think this takes time and a lot of graphing. There are a number of products that do this, including Luno.
- There are a few cryptocurrency banks now that pay interest, I have not worked with these.
There are also people claiming they can make money for you with bitcoin, personally I do not recommend working with these people, as I have no reference point.
Making Micro-currency for free
This is what I would recommend most people do. It is a risk-free way to get into the cryptocurrencies without spending money, rather spending time.
What you need to do is access a website or app that collects the micro-currency into a micro-wallet. These are called faucets. Essentially imaging a tap dripping slowly. You collect the water into a small bucket (a micro-pool) and then add it to a pool one bucket at a time. The more taps you have the quicker you fill the pool.
Most of the faucets need a micro-wallet so here are a few.
Create a Coinpot micro-wallet, then all the faucets below feed into this microwallet:
- moonbit.co.in – for micro bitcoin (satoshi ).
- moondoge.co.in – for micro dogecoin – but you can exchange it.
- moonliteco.in – for micro litecoin (litoshi) – but you can exchange it
- bitfun.co – for micro bitcoin (satoshi )
Also on your smartphone you can access, bitcoingameapps â€“ download the app and starting playing. Payout is only once every 20,000 satoshi it takes a month of clicking to get there, but it is free.
Cryptocurrencies are country and reserve bank independent, so they are a safe haven for ForEX.
For free microcurrency you need a microwallet. The best one for me has been Coinpot micro-wallet, then all the faucets below feed into this microwallet:
If you want to buy and sell Bitcoin then use Luno.
Please use the links I have provided since they give me a small referral fee.