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

Criminal miners pay virtually 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 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 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 violate the law).

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

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My advice to law enforcement is simple: follow the bitcoin. There is no doubt that more and more criminals will be using bitcoin to generate profit in addition to 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 large correlation between bitcoin ownership and criminal activity. Notably since bitcoins are becoming every more rewarding to criminal malware seeders and botnet operators while concurrently becoming ever less profitable 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 has a magnetic attraction for many investors interested in cryptocurrency. This may be because entrepreneurial forms see mining as pennies from heaven, such as California gold prospectors in 1848. And if you are technologically inclined, why not do it

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

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

In addition to lining the pockets of miners, mining serves a second and vital purpose: it's the only way to release new cryptocurrency into circulation. In other words, miners are basically"minting" currency. For instance, as of the time of writing this piece, 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'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 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 suggested in the Bitcoin protocol. In other words, an effective miner has influence on the decision-making process on such matters as  forking.

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

When Bitcoin was first 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 occur, you can consult with the Bitcoin Clock, which upgrades this information in real time.

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Miners are getting paid for their work as auditors. click to investigate They are doing the job of verifying previous 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."