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

Criminal miners pay nearly nothing for the 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 just 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 price, is free of regulation (for the moment), allows for completely anonymous ownership, and is both highly rewarding and nearly free to produce (if you are willing to break the law).

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There is no doubt the bitcoin has staying power, but whether that's only among criminals (and those who would like to traffic with them, such as 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 simple: follow the bitcoin. There's no doubt that more and more criminals will be using bitcoin to generate profit as well as cover their tracks. Whenever you see a stash of bitcoin and possess judicial permission to follow the footprints, do this.

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

Here is the vital take-away: bitcoins are becoming the"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 attraction for many investors interested in cryptocurrency. This might be because entrepreneurial types see mining as pennies from heaven, such as California gold prospectors in 1848. And if you are technologically inclined, why not take action

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Well, before you invest time and equipment, browse this explainer to see whether mining is really for you. We'll 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 also buy crypto using fiat currency (USD, EUR, JPY, etc); you can exchange it on an exchange such as Bitstamp using other crypto (instance: Using Ethereum or NEO to purchase Bitcoin); you even can earn it by playing video games or by publishing blogposts on platforms that cover its consumers official website in crypto.

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

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

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Aside from the short-term Bitcoin payoff, being a miner can give you"voting" power when changes are proposed in the Bitcoin protocol. In other words, a successful miner has influence on the decision-making process on these matters as  forking.

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

When Bitcoin was first mined in 2009, mining one block could earn you 50 BTC. In 2012, this was halved to 25 BTC. In 2016, this was why not find out more halved into the current level of 12.5 BTC. In 2020 or so, the reward size will be halved again to 6.25 BTC.

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If you want to keep tabs on 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 maintain Bitcoin users honest, and was conceived by Bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the"double-spending issue."