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Legitimate miners and buyers have to incur substantial production and energy costs, 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 fee 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 absolutely free from regulation (for the moment), allows for completely anonymous ownership, and is both highly rewarding and almost free to produce (if you are willing to break the law).

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There is no doubt that bitcoin has staying power, but if that's just among criminals (and people who wish to traffic with them, such as the Silk Road drug sellers and clients ), or if 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 is 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 have judicial permission to follow the footprints, do this.

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

Here is the key 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 draw for many investors interested in cryptocurrency. This might be because entrepreneurial forms see mining as pennies from heaven, like California gold prospectors in 1848. And If You're technologically inclined, why not take action

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Well, before you invest useful site time and equipment, read this explainer to see whether mining is really for you. We will focus mostly on Bitcoin. (Connected: How Bitcoin Works and our useful infographic, What is Bitcoin)

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By mining, you can earn cryptocurrency without having to put down money to this. That said, 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 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 pay its consumers in crypto.

In addition to lining the pockets of miners, mining functions a second and critical purpose: It is the only means to release new cryptocurrency into circulation. In other words, miners are basically"minting" currency. For example, at 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 will come a time when Bitcoin mining ends; per the Bitcoin Protocol, the number of Bitcoin is going to likely be capped at 21 million. (Associated reading: What look at this now Happens to Bitcoin After All 21 Million are Mined).

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Besides the short-term Bitcoin payoff, being a miner can provide you"voting" power when changes are proposed in the Bitcoin protocol. In other words, an effective miner has influence on the decision-making procedure on these issues as  forking.

Bitcoin are mined in units known as"blocks." At this time of writing, the reward for completing a cube is 12.5 Bitcoin. At today's cost of approximately $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 could 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 reward size will be halved again to 6.25 BTC.

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If you want to keep tabs on precisely when these halvings will happen, 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. They're doing the job of verifying preceding Bitcoin transactions. This convention is meant to maintain Bitcoin users honest, and has been conceived by Bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping prevent the"double-spending problem."