Get Started With BitCoins

Understanding the Types of Mining

Now that we understand what bitcoins are from the last post Understanding Bitcoins. Now have a wallet set up to store them, and have made a small amount of bitcoins to test our wallet, we're set to start making some real amounts of bitcoins.

The way we do this is by mining for them.  Mining is a way of verifying bitcoin transactions made by other people in return for new bitcoins (given right to your wallet).

There are two main types of mining: solo and pool.  Solo mining is done on your own.  With the hardware of an everyday person, it would take years to get earn acutal bitcoins.  But once you succeed, you get 50 bitcoins (worth about 15,000 US dollars).  This takes too long, so in this tutorial, we are not going to cover this method.

The method we are going to use is called pool mining.  It involves signing up for an account with any one of many different companies.  Using their own software and hardware, they group together the mining efforts of lots of people's computers.  Every person gets a small number of bitcoins (quite often decimals of a bitcoin).  As a person with a modest computer, this is the only way to go.

Step 1: First Get a BitCoin Wallet

The quickest and most user friendly wallet to setup is CoinBase. It works much like PayPal and allows you to Send/Receive BitCoin payments as well as Buy/Sell BitCoins. Start by setting up an account HERE.

Their site is perfect for those new to BitCoin and not too into the technically side but rather looking for a quick and easy setup.

Once you're signed up,

1. Click Account Settings on the LEFT side bar.

2. Click BitCoin Address at the top menu.

3. Click the + Create New BitCoin Address button.

You'll see a new BitCoin address pop up below.

It will look something like this: 1KHPYQMnHxFoUGK2bCfKFtEuLtH88PYPXG

Select that text and copy it to your clipboard.

Step 2: Setting up a Mining Account

After trying a few different mining pools, the one that I really liked was BitMinter.  It is, by far, the easiest to use.  It comes with its own software, making things so much easier.  Below are the few parts that involve the creation and setup of your account.

1) Open up a web browser and navigate to the BitMinter log in (https://bitminter.com/login).
2) Choose your account you'd like to link with BitMinter.  Log in with this account.  BitMinter uses a log in service called OpenID, which is a futuristic way of logging in with an already-existing account to eliminate the need to remember yet another password.
3) Set the main settings as according to the picture:
          - Set your email address.
          - Set your auto cash out threshold to a reasonable amount.  Mine is set to 1 BTC (approx. $400).  This means that when I mine 1 BTC, I will receive it into my bitcoin wallet, just like the test, but with a higher number of bitcoins.
          - Set your "Pay to address" to the wallet address you receive on Coinbase.  This is the address that all of your bitcoins are sent to, in case you haven't figured that out yet.

Step 3: Setting up the Workers

Each computer needs its own worker to connect to on the BitMinter server.  The software (in the next step) on each computer will each be set up to a different worker so that the BitMinter server doesn't have trouble transmitting and receiving mining work.

While still logged into the BitMinter website, hover over "My Account" at the top of the page. Then click on "Workers".

Near the bottom of the page, there are two fields under the "Name" and "Password" headers.  Give your new worker a name like "Laptop", or "New Dell".  Create a short password.  Remember the password for the worker.  Then click "Add".

Click "Home" in the navigation bar at the top of the page.

Step 4: Install Java

Most people already have Java installed, but if you don't, follow this step.

1) Go to www.java.com/download.
2) Click "Free Java Download".
3) Click "Agree and Start Free Download".
4) Depending on your opperating system, a different version of the file will download.
5) Follow the onscreen instructions to continue installing the software.
6) Click finish and be done installing.  Continue on to the next step to set up a miner.

Step 5: Download the BitMinter Client

Download the BitMinter Client for your operating system under the TOOLS drop down menu.

Step 6: Set up a Miner

 

 

 

 

 

 

 

 

 

 

 

 

 

Set up the software by linking it to your worker created in Step 3.  "Click Settings" > "Account...".  Beside "User Name:" use the username you created when creating the BitMinter account.  Beside "Worker Name:" and "Worker Password:" enter the worker name and worker password you created in Step 3.
If the window is small, click the button in the bottom right corner of the screen.  Then click the "Engine Start" button beside each of the devices you want to use.  For reference, I get about 65 Mhps (million hashes per second).  1000 Khps = 1 Mhps.  Test all of your devices, but you should really only bother running devices that get you 25 Mhps or above.

You will also want to change a few settings regarding automation.  I leave my computer on all day and all night.  I normally turn off the mining as soon as I get home from work (around 6:00) and have the miner start on its own at night incase I forget to start it when I'm done with my computer.

Go to Settings > Options to change these settings.  Look at the fourth picture to set it up like how I have it set up.  The picture has expainations.

Automated devices are a list of devices that you set so that you can start them on their own automatically when the software starts.  I have selected one of my devices as automated so that when the software starts, only that device starts.  See fourth picture for more details.

Step 7: Mine!

Let your computer run while it mines! Running it at night is a good idea as it will double the amount of money you make.  Good luck making money!

Step 8: Spend Your Bitcoins

What good is a currency if you can't spend it?  The answer is it's not.  There are lots of things you can do. Below is a list:

- Gamble
    - SatoshiDice
    - Bitzino
    - Peerbet
    - RoyalBitcoin
    - And many more
- Buy various merchandise
    - Some online vendors are starting to accept bitcoins as a way of purchasing items
    - Buy Coffee (http://bitcoincoffee.com/)
- Trade it for PayPal money
    - Mt. Gox Bitcoin Exchange

The last one I want to talk about it Mt. Gox.  It is the most common website used to trade (buy or sell) bitcoins for dollars or any other national currency.  You can receive this money through PayPal or many other online currency transfer services.  I am not going to go through the details of this, but to send bitcoins to anyone or any service, follow the instructions in the next step.

Step 9: Send Bitcoins to Someone

To use bitcoins, you must send bitcoins to another address.  To send bitcoins, the service will give you a specific address to send bitcoins to.

Copy this address.  Open up your bitcoin wallet.  Click on the "Send coins" tab.

Enter the address you want to send the coins to in the "Pay to" field.  If you are going to send coins to this person or group multiple times, you can enter a label for this person so that you can find them in your address book again.  Enter the amount in the next field (for easy math, remember that 1 BTC is $400).  Click send when you are done.

If you just want to practice sending bitcoins to someone, you can test sending them to me.  Just send 0.01 BTC to this address 1KHPYQMnHxFoUGK2bCfKFtEuLtH88PYPXG.  Good luck!

Step 10: Done!

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Understanding Bitcoins

Step 1: Understanding Bitcoins

After reading many, many different articles all over the internet, I still didn't have a good idea of what bitcoins were, how they could be made, and if it was possible for the average person to use them.  The first few things I read, they were made out to sound like you had to have a computer science degree to get them.
However, after reading on about them, I learned that they are a type of currency that is 100% virtual.  There is no government that regulates the currency, like almost every other single currency in the world.  Instead, it is all virtual.  The bitcoins that you own are stored on your computer.  You can sell these bitcoins for real US or Canadian dollars.

Below is a YouTube video explaining the whole concept of bitcoins. While good for visual learners, some like to read to learn.

Bitcoins are a virtual currency.  The currency is stored locally between peers.  The currency (bitcoins) is transferred from computer to computer.  Every transaction (transfer of bitcoins from one computer to another) is verified by "mining" for bitcoins.

When first learning about bitcoins, you learn that bitcoins are stored directly on your computer.  So, does that mean that by doing a bit of computer hacking you can give yourself thousands of dollars worth of bitcoins?  The answer to this is NO! The system is worked out so well that hackers cannot do this.  The reason is because for bitcoins to be transferred from computer to computer, the transaction has to be verified.  This verification is done by "mining."  Mining is a process where everyday people like you and I install some software onto their computer   This software is very advanced and hard to understand, but basically it does some high-level computing (SHA256 decoding) to verify transfers of bitcoins.

The next question that often comes up is: Why would anyone want to just give up their computer to help decode these encryption things?  Well, the answer is that you get paid to do it.  Well, you don't get paid, but you get free bitcoins for letting your computer work for you.  This is almost the same as being paid, as you will learn in later steps.  This is the ONLY way that new bitcoins are created.  They can't just come from nowhere, making the system hacker-proof.

Mining can be very simple, but it can also be very complicated.  By following this Instructable, you will learn one of the easiest ways to mine bitcoins and gain money.

For more information, check out the Wikipedia Article, as well as the Official Bitcoin Website.

Step 2: Setting up a Wallet

This step walks you through the process of installing the "Wallet" software.  This software functions as a real wallet: it stores all of your currency, which in this case are bitcoins.

The first part of this step is to download the software.  Go to the Official Bitcoin Website.  In a box at the top of the page, click the software version that applies to your given OS.  The steps are the same for both Mac and Windows users, other than installing different software.  Open the file and follow onscreen instructions.

When it is done, open up the software from the Start Menu.  It will take a few hours to download all blocks to your computer.  You must just sit and wait during this time (see pictures).

When it is done downloading the blocks (don't worry about what this means; it's not important), go over to the "Receive coins" tab up at the top.  Right-click on the one existing list item, and click "Edit".  Give it the label "Main" and hit OK.  Right-click on it again and click "Copy Address".  This is the unique address that your wallet was given.  It is where you receive coins in later steps.

The next step tests out your bitcoin wallet and shows you what a transaction looks like.

Step 3: Test Your New Bitcoin Wallet

This step is for testing purposes only.  Go to Daily Bitcoins (www.dailybitcoins.org).  Near the middle of the page, paste your bitcoin address that you copied earlier.  Uncheck the "Delay payment to minimize transaction fees" check box.  It is to trick people.  Enter the captcha (they are very simple ones on this website), and click Send.  It will tell you that it was successful.  If it didn't, reenter the captcha properly.

Wait ten minutes and then open up the Bitcoin Wallet software again.  Go to the "Transactions" tab up at the top.  In the list, it should have a single transaction of 0.00001 bitcoins (approx...This value goes up and down).  You now have gained a small amount of bitcoins.  The general conversion of bitcoins to USD is times 10, meaning that one bitcoins is ten US dollars (easy for mental math; this number varies greatly over time).  Congrats!  You just made one tenth of a cent! (Todays's rate: 1 Bitcoin = $370)

This is a valid way to gain money.  However, you can only get coins sent once every hour, so it is very slow.  You won't make any money fast with this method.

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The 6 Best Bitcoin Mining Softwares

Are you thinking of joining the Bitcoin mining universe? In case you don’t know, you can either mine on your own or as part of a pool. In terms of profit, there aren’t really many differences: solo mining will give you large and irregular payouts, as pooled mining will result in small and frequent payouts. In the end, they both add up to the same amount.

Whatever your choice might be, remember you need to follow certain steps to successfully mine Bitcoins: get the right hardware, get the best software that matches your needs, arrange a way to receive the profits of mining and start solving algorithms.

This is where you stop and think: but what is the best software for me if I don’t even know them all? Well, let’s make a small list of the most used software and help you choose.

 

1. CGminer

This software is, currently, the most popular GPU/FPGA/ASIC miner. CGminer is an open source GPU miner written in C available for several platforms like Windows, Linux and OS X. One of the things that make it extremely popular is the fact that it’s based on the original code Cpu Miner, which you can discover in Bitcoin Wiki.

This software includes overclocking, monitoring, fans peed control and remote interface capabilities. His other features include self detection of new blocks with a mini-database, binary loading of kernels, multi GPU support and CPU mining support. There are a lot of other characteristics you can discover here, at CGminer official forum.

Download CGminer here.

 

2. BFGminer

This software is a derivative of the previous CGminer, designed specifically for FPGA and ASICs, but without the central focus on GPUs like CGminer. The latest update on BFGminer, the 3.1.1 version launched in April 2012, features dynamic clocking, monitoring and remote interface capabilities.

Besides being a super versatile program, BFGminer has really interesting features: vector support, integrated overclocking and fan control, ADL device reordering by PCI bus ID, support for mining with free Mesa/LLVM OpenCL and for getblocktemplate decentralized mining protocol and also crypt mining support for both CPU and OpenCL (GPU).

A little reminder: if you’re mining with a ModMiner, X6500 or ZTEX devices, you need to download bitstreams to make sure BFGMiner 3+ works with your device. You can find them in the official BFGminer forum and check BFGminer’s official website here.

Download BFGminer here.

 

3. BitMinter

We can say that, although BitMinter might not be the most popular mining software, it’s certainly one of the best when it comes to connect with users and potential “clients”. The software’s official website is quite complete and straightforward: for the creators of the program, it’s all about making Bitcoin mining “easy” and winning “high payouts”.

BitMinter is different because it’s a software that belongs to a mining pool, so your initial step is to register and fill in the pool sign-up form. So, it’s a great option if you’re looking for a simple installation.

Besides being available for operative systems like Windows, Linux and Mac OS X, BitMinter assures a good mining speed and long polling in order to reduce stale work. It also allows you to mine on OpenCL-compatible GPUs or ASICs/FPGAs (BFL, Block Erupter and other Icarus-compatible). The official BitMinter forum can be found here.

 

4. BTCMiner

This open source Bitcoin mining software for ZTEX USB-FPGA Modules 1.15 runs on the operative systems Linux and Windows. Yet, Windows users need to install the libusb driver first, which you can find here. The FPGA boards supported by BTCMiner (USB-FPGA Modules 1.15b and 1.15d, USB-FPGA Modules 1.15x and USB-FPGA Modules 1.15y.) have a USB interface, which can be used for communication and programming, allowing the user to build low cost FPGA clusters with standard components (like USB hubs, for instance). In practical terms, this means no JTAG programmer is required and the program allows to run large mining rigs from just one software instance.

The software features a ready-to-use Bitstream, which doesn’t require any Xilinx Software or a license, so this is an advantage. However, its dynamic frequency scaling is based on error measurement: so, BTCMiner automatically chooses the frequency with the highest rate of valid hashes. You can find BTCMiner official website here and discover more about this mining software.

Download BTCminer here.

 

5. Poclbm

Poclbm is a python GPU Bitcoin mining software, which uses the OpenCL framework to perform the hashing computations in a quick way. This framework, which allows programmers to write code that will work across a big variety of hardware, reveals all its potential when used with a modern GPU, producing hash rates of higher magnitude than what can be achieved with a normal CPU.

The program works perfectly with AMD – 4xxx and up, as well as with Nvidia – 8xxx and up (also video cards). According to some users talking in the official Poclbm forum, the software is great for experimentation and also multiple machine mining (not so good for the masses).

Download Poclbm here.

 

6. DiabloMiner

This program is a Java GPU Bitcoin miner that uses the OpenCL framework, like Poclbm. This way, DiabloMiner also allows its users to quickly perform the hashing computations. The software, which is a command line kind of program, works on current Nvidia drivers and ATI Stream SDK 2.1. This characteristic means that the users need to open a terminal (cmd.exe, Terminal.app/iTerm2 or xterm, among others) and run the program from there.

If you’re mining in multiple pools, it’s important to know that DiabloMiner supports unlimited pools and is able to switch to the next pool on connection failure, returning to the first one every 60 minutes, according to information available on the software’s website. To read some opinions of users go to the DiabloMiner official forum.

Download DiabloMiner here.

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After presenting you these different software miners and its characteristics, it’s safe to say one thing: more important than rating them and placing them on a podium, you need to know them to correctly choose the one that’s better for your needs and already available hardware. If you’re looking for a technical comparison, check these tables at Bitcoin Wiki. Good mining!

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