Can anyone join mining pools and make Bitcoins?

30 January, 2014

Bitcoins were introduced by an unknown figure in 2008 that could have been an individual or a group. The most interesting aspect of bitcoins is that the ownership is completely anonymous despite of the fact that they are infinitely traceable unless you mine them yourself.

The total value of bitcoins currently used around the world is $11 billion and the value of each bitcoin is constantly on the rise. There can only be around 21 million bitcoins in total. The responsibility of this peer to peer transfer network is to distribute digitally signed payment messages across the globe which is later verified by a decentralized computer network. The people who operate this network are termed as 'miners' and are rewarded for their work also giving birth to the "Bitcoin Mining". i

What is Bitcoin Mining?

Those people who are already involved in Bitcoin Mining consider it a rather difficult but very interesting and possibly rewarding hobby. According to some, it is something that has the characteristics of both lottery and the gold rush. ii The Bitcoin mining process demands you to put in a lot of time, effort and most importantly, be little lucky to succeed because bitcoins are extremely difficult to obtain. iii Sometimes the rate of success becomes very irritating for newbie miners. Therefore, the job of miner is far from easy as it becomes more and more difficult to mine Bitcoins due to competition and complicated procedures.

How to Start Bitcoins Mining?

You need to do a lot of things to start mining bitcoins. It is a digital currency and therefore, you need to create an online wallet to store the virtual coins. You just need to choose and download the Bitcoin client compatible to your operating system and install it.

Then you also have to download a very large block-chain file that can be bigger than 6GB. It is actually this block-chain that is the log of all the transactions you have completed with bitcoins. The most important thing to remember here is that losing your online wallet is similar to losing your physical wallet as it contains evidences of your transactions. Therefore, it is important for you to make a backup of wallet files and also print them out in case you lose the online file.

The Mining Pools

The next step is a bit more complicated and somewhat difficult to understand for you if you are not a tech savvy. However, you need not to worry about it because there are tons of mining pools that can come to your rescue. In fact, joining a Bitcoin Mining pool is the easiest method of making money if you have a client and a wallet.

Working of Bitcoin Pools

There are different varieties of bitcoin pools available to join. The members of these pools collectively make more bitcoins by combining their computing powers. Subsequently, these bitcoins are distributed among the participants according to their contribution. The best thing about bitcoin pools is that they award bitcoins in "blocks" making it more sensible option for beginners as the pool you have joined can split the profit.

The Block

The block is actually a cryptographic task that the graphic card and CPU of participant has to solve. Every solution offered by these CPUs is considered as a "solution" regardless of whether it is right or wrong and subsequently dispatched to the pool server. The role of pool server is to count the total solutions sent by you. At least one of these solutions will definitely meet the minimum requirements of Bitcoin algorithms. Hence, your mining pool will receive 25 MTC for each "good" solution.

Distribution of Bitcoins

The mining pool will start distributing the earned bitcoin among its members as soon as it receives a good solution according to algorithms. The distribution formula is quite simple that each member will receive the bitcoin share that is calculated according to the total number of possible solutions sent by his or her CPU. Simple enough, you get more coin if your computer mines more.

Importance of Pool Mining

If you are a person who has found a correct solution for a block, the bitcoins will be emitted on 25 BTC payment for you. However, you have to compete with a lot of people to obtain the emitted bitcoins if you decide to mine alone and it will also take you a long time to get to 25 BTC. That is exactly where bitcoin pools will help you in earning quick bitcoins as they support cooperation with other members and aggregate computational resources.

You will accumulate bitcoins slowly but quite regularly, by joining a mining pool. As a matter of fact, joining these pools is the only method to earn bitcoins through mining if your CPU and graphic card are not powerful enough.

Does Pool Mining Really Work

The final question is whether the pool mining really worth it and the answer is yes. You will be rewarded for each and every solution you provide and the pool will never steal your award. The number of people indulging in pool mining is on the rise indicating that this system is not only purely legitimate but extremely productive as well.

It takes a lot of effort and hard work to fully grape anything and same is the case with bitcoin pool mining. However, if you manage to master this particular bitcoin mining procedure, you will really find it exciting and fun to implement the process and actually mine more and make a lot of money.

Just like the famous Fed Chairman Ben Bernanke said "they (bitcoins) may hold long-term promise"!