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

Criminal miners pay nearly nothing for its production of new coins, outsourcing the work to hapless victim machines the world over. Criminal bitcoin thieves don't incur the exchange rate cost 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) with a current value, is free from regulation (for the moment), allows for completely anonymous ownership, and is both highly profitable and almost free to create (if you are willing to break the law).

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There is no doubt that bitcoin has staying power, but whether that is only among criminals (and those who wish to traffic with them, such as the Silk Road medication sellers and customers), or whether it is going to become a valuable trading commodity for the rest of us is unclear.

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My information to law enforcement is simple: 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 usage is not limited to criminals, there's an undeniably large correlation between bitcoin ownership and criminal activity. Especially since bitcoins are becoming every more profitable to criminal malware seeders and botnet operators while concurrently becoming less rewarding for traders that are valid.

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

Cryptocurrency mining is painstaking, expensive, and only sporadically rewarding. Nonetheless, mining includes a magnetic draw for many investors interested in cryptocurrency. This may be because entrepreneurial types 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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Well, before you invest the time and equipment, read this explainer to see whether mining is for you. We will focus mostly on Bitcoin. (Related: How Bitcoin Works and our helpful infographic, What's Bitcoin)

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By mining, you can earn cryptocurrency without having to put down money to it. That said, you certainly don't need to be a miner to own crypto.   You can even buy crypto using fiat currency (USD, EUR, JPY, etc); you can exchange it on an exchange like Bitstamp using other crypto (instance: Using Ethereum or NEO to purchase Bitcoin); you even can earn it by playing video games or even by publishing blogposts on platforms which cover its users in crypto.

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

In the absence of miners, Bitcoin would nevertheless exist and be usable, but there would never be any additional Bitcoin. There'll come a time when Bitcoin mining ends; each the Bitcoin Protocol, the number of Bitcoin will likely be capped at 21 million. (Related reading: What Happens Bitcoin learn this here now After All 21 Million are Mined).

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Aside from the short-term Bitcoin payoff, being a miner can give you"voting" electricity 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 price of about $10,000 each Bitcoin, this means that you'd earn (12.5 x 10,000)$125,000.

When Bitcoin was mined in 2009, mining one block would earn you 50 BTC. In 2012, this was halved to 25 BTC. In 2016, this was halved to the current level 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 track of exactly when these halvings will happen, you can consult with the Bitcoin Clock, which updates this information in real time.

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