Wednesday, August 17, 2011

How to make a bit of money using bitcoin.

Alright, well chances are if you go to any tech forum or blog, you have heard something about bitcoins. if you haven't, that's fine too.
Basically, a 'bitcoin' is an online currency. for all you economic buffs out there, its a fiat currency, which means it fluctuates with demand. This is great if your into making micro transactions... which if done correctly can lead to some good profit. (i made over $300 in a month!)



There is 2 ways to profit off of bitcoins, the first is a method called 'mining' and the second is to buy some and hope their value goes up.  in this post, ill mainly cover the first.

ok, so we need a few things to get off the ground.... the bitcoin program, the mining program we will be using, and an account on a pooling website. don't worry, these will all be explained.

  1.  Bitcoin client: this can be downloaded on the bitcoin website this contains your wallet id and the interface for sending and receiving bitcoins.
  2.  guiminer: this is the mining program we will be using. mining is the process of generating bitcoins by calculating hashes, this will be covered more in depth later, but for now - download it from the bitcoin forum.
  3.  a pooling website: the process of generating bitcoins can take months if you are working alone. by using a pooling website you combine processing power with others and then split the profits later on.
there are multiple pooling websites, and there are tons of threads out there explaining the differences. i used btcguild.com, but there are tons of other websites like beepbit.net and mining.bitcoin.cz. pick the website you want to use and create an account. its going to ask for a bitcoin wallet id or wallet address, to get this, open the program you installed off of bitcoin.org, its the large string of numbers and letters.


the next step is to open up guiminer, pick the website from the drop down, and then fill in your credentials. guiminer uses your graphics card to generate bitcoins, which is MUCH faster than your cpu. hit start mining and your ready to go!


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helpful resources:
  • mining hardware comparison: https://en.bitcoin.it/wiki/Mining_hardware_comparison
  • profit calculator: http://www.alloscomp.com/bitcoin/calculator.php
  • exchange website: mtgox.com (useful to get the btc to usd conversion)
note: mtgox can be used to trade btc for usd, however it uses dwolla instead of paypal (paypal doesnt like bitcoin trading)... however, there is an irc channel called bitcoin-otc that has btc to paypal-usd trading.

vidio guide: http://www.youtube.com/watch?v=NP43xJh_ad0  [watch on youtube, and view in 1080 so you can read the text]


5 comments:

Pat said...

Nice post... honestly, a friend mentioned something to me about bitcoining and I told him it was a ridiculous idea. This post actually cleared it up a bit, I'll do some more research and hopefully make a profit from this.

Thanks,
Pat

Liaata said...

bitcoins are awesome to trade with, nice speculation!

Rifle said...

I'm very interested in your post and in this kind of making money. In the next month I will be a new pc with a good graphic card. With my current pc the costs of electricity would be higher then income.

Vince said...

This sounds pretty sweet.

Astatine said...

So.. after a few months, How are you finding this working out for you?

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