Where do Bitcoins come from?

Now in my last post I talked about Bitcoins and their creator, plus the uses and the fact that the Chinese government has taken an odd interest in them, but how do they work? While one of the reasons that bitcoins actually have a lot of value is because they are limited. There is only 21 million bitcoins in exist and most of them have not been found yet. The reason for the limiting is so it can still hold a value. Because they are limited in the amount it means each bitcoin is harder to found then the next. It is predicted that the last bitcoin will be mined in 2140, so there is still plenty left to mine.

There are three distinct ways to mine bitcoins. You can purchase them from any sort of exchange that sells bitcoins or you can exchange services for bitcoins. The second way is where bitcoins come from, and that is using programs and algorithms that are endless, and your computer processes the data searching for parts of blocks. Once the blocks are put together it forms a total block, and that is a bitcoin. The problem is because there are a lot of bitcoins out on the market, it can a long time for one bitcoin to be mined, with an average computer it could upwards of 3 years to mine a full bitcoin, which would not be even close to profitable. There are computers that are being build to mine bitcoins but a good one can cost about twelve thousand dollars.

The final and most popular way to mine bitcoins is called poolmining, where you sign up and rent out your computers power and processing abilities to a group or company that over the internet uses your computer along with dozens or hundreds of other computers and you make money on the percent of blocks mined, it pay is based of the amount of work your computer did processing. But once again the amount of money make is no where near the cost of maintaining and powering your computer. So there are points when the cost of bitcoins make it worth the price of mining them, but most of the time it is people doing it for a hobby. I have given pool mining a try over a weekend, and made myself about a dollar fifty, so no not worth my time but it was a interesting experience.