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If you want to join in the bitcoin frenzy with no simply buying the digital currency at the inflated prices, then bitcoin mining is another way to become involved. But, mining bitcoins does include expenses -- and dangers -- of its own. And the more popular bitcoins become, the harder it is to mine them profitably. .

Unlike paper currency, that is printed by both governments and issued by banks, bitcoins do not come in any physical type. That creates a significant risk, as hackers can theoretically create bitcoins from nothing. Bitcoin mining is the way the bitcoin network retains its transactions secure.

Bitcoin transactions are secured with blockchains, which make up a public ledger of transactions. Due to how blockchain transactions are structured, they're extremely tough to change or compromise, even by the top hackers. But in order to protect those transactions, someone needs to dedicate computing power to verifying the activity and packaging the details in a block that goes into the bitcoin ledger.

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As a reward for doing the job to monitor and secure transactions, miners earn bitcoins for every block that they effectively procedure. .

The bitcoin founders have put a limit of 21 million bitcoins available for mining. Once that total is reached, miners will still have the ability to benefit from transaction fees, but they won't be granted bitcoins as a reward for their work. As of mid-January 2018, approximately 16.8 million of the 21 million bitcoins have been mined.  Assuming the bitcoin mining industry doesn't change radically, it looks like we won't hit the 21 million-bitcoin restrict until the year 2140. .

During the early days of bitcoin mining, miners would often download a software package designed to allow their computers to process bitcoin transactions in the background. Unfortunately, that is no longer practical, because solving bitcoin transactions is becoming too hard for your computer to manage.

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The bitcoin network is designed to make a certain number of new bitcoins each 10 minutes. If only a few people have been bitcoin mining at any given time, then the network will be generous and discuss bitcoins readily in order to reach the predetermined number. But now that bitcoin mining has become so prevalent, the network is now much stingier about handing out bitcoins into miners.

These days, in order to have a chance in being profitable, miners need to adopt one of two strategies: 1) buy specialized hardware (aka a bitcoin mining rig) or 2) join a cloud mining pool. .

To get started with your own mining rig, you purchase hardware designed for mining bitcoin (or some other digital currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a steady stream of payments without your needing to get involved.

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While it's fairly simple to establish and use a bitcoin mining rig, really making money on the process is something of a challenge. Since more and more people are signing up to mine bitcoins, the mining process continues to have more difficult and will probably keep doing this for a while.

And because bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for your hardware, or several times that for a top notch rig -- having to replace it every year or 2 takes a huge bite out of any gains you make from mining. Plus, most mining channels consume enormous amounts of electricity, so you also need to subtract that expense in the bitcoins you earn to determine your profits. .

If buying and maintaining your own mining hardware doesn't appeal to you, then cloud mining may be the best way to go. Cloud mining companies invest in enormous mining channels, often filling entire data centers with the hardware, and then sell subscriptions to individuals interested in dipping a toe into bitcoin mining.

The biggest challenge facing cloud mining readers is avoiding fraud. The field is rife with pseudo-companies which sell thousands of multiyear subscriptions, cover for a couple of months, and then disappear into the sunset. If you decide to try cloud mining, do your homework in advance and confirm that the company that you're dealing with is a true cloud miner and not a scheme.

Avoid companies with anonymous domain registration (you can look up their registration info Read Full Article Network Solutions), in addition to any mining company that"guarantees" profits or provides huge incentives for referring new customers; anything above a 10% referral commission is profoundly suspicious, because legitimate mining pools just don't generate a large enough profit margin to pay huge commissions. .