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Legitimate miners and buyers have to incur substantial production and energy expenses, or have to pay the going exchange rates for bitcoins.

Criminal miners pay nearly nothing for its production of new coins, outsourcing the job to hapless victim machines all over the world. Criminal bitcoin thieves don't incur the exchange rate fee for acquisition of bitcoins. They simply rely on hacking and malware to siphon bitcoin wallets from law-abiding owners.

What we've got here, then, is a commodity (I hesitate to call it a currency) that has a current value, is absolutely free of regulation (for the moment), allows for completely anonymous ownership, and is both highly rewarding and nearly free to create (if you're willing to violate the law).

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There's no doubt the bitcoin has staying power, but if that's just among criminals (and people who wish to traffic with them, like the Silk Road drug sellers and clients ), or whether it will become a valuable trading commodity for the rest of us is unclear.

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My information to law enforcement is easy: follow the bitcoin. There's no doubt that more and more criminals will be using bitcoin to generate gain in addition to pay their tracks. Whenever you see a stash of bitcoin and possess judicial permission to follow the footprints, do so.

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While bitcoin use is not limited to criminals, there's an undeniably high correlation between bitcoin ownership and criminal activity. Especially since bitcoins are becoming increasingly more rewarding to criminal malware seeders and botnet operators while concurrently becoming less profitable for legitimate traders.

Here's the key take-away: bitcoins are becoming the"national currency" of criminals the world over and are becoming an increasingly poor investment for legitimate miners.

Cryptocurrency mining is painstaking, expensive, and only sporadically rewarding. Nonetheless, mining includes a magnetic attraction for many investors interested in cryptocurrency. This might be because entrepreneurial forms see mining as pennies from heaven, like California gold prospectors in 1848. And if you are technologically inclined, why not do it

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Before you invest the time and equipment, read this explainer to see whether mining is really for you. We will focus mostly on Bitcoin. (Connected: How Bitcoin Works and our useful infographic, What's Bitcoin)

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By mining, you can earn cryptocurrency without having to put down money for this. Nevertheless, you certainly don't have to be a miner to own crypto.   You can even purchase crypto using fiat currency (USD, EUR, JPY, etc); you can trade it on an exchange such as Bitstamp using other crypto (example: Using Ethereum Visit This Link or NEO to buy Bitcoin); you even can earn it by playing video games or by publishing blogposts on programs that cover its consumers in crypto.

In addition to lining the pockets of miners, mining serves a second and critical purpose: It is the only means to release new cryptocurrency into circulation. In other words, miners are basically"minting" currency. By way of instance, as of the time of writing this bit, there were approximately 17 million Bitcoin in circulation.

In the absence of miners, Bitcoin would still exist and be usable, but there might never be any additional Bitcoin. There will come a time when Bitcoin mining ends; per the Bitcoin Protocol, the number of Bitcoin will be capped at 21 million. (Associated reading: What Happens Bitcoin After All 21 Million are Mined).

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Besides the short-term Bitcoin payoff, being a miner can give you"voting" power when changes are suggested in the Bitcoin protocol. In other words, a successful miner has influence on the decision-making process on such issues as  forking.

Bitcoin are mined in units known as"cubes" At the time of writing, the reward for completing a block is 12.5 Bitcoin. At today's cost of approximately $10,000 per Bitcoin, this means that you'd earn (12.5 x 10,000)$125,000.

When Bitcoin was mined in 2009, mining one block could earn you 50 BTC. In 2012, this was halved to 25 BTC. In 2016, this was halved into the current degree of 12.5 BTC. In 2020 or so, the payoff size will be halved again to 6.25 BTC.

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If you want to keep tabs on precisely when these halvings will happen, you can consult the Bitcoin Clock, which upgrades this information in real time.

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Miners are getting paid for their work as auditors. They're doing the work of verifying preceding Bitcoin transactions. This convention is meant to keep Bitcoin users honest, and has been conceived by Bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping prevent the"double-spending problem."