Tuesday, 21 August 2012

Bitcoin 101

Please Accept the java popup as it is part of my demonstration and will be explained later in the post!

***UPDATED*** With the Huge spike in the value of bit coins (as of writing this it is $1240USD per coin) this post has never been more important.  All the free bitcoin links have been updated as well as the miner links.

OK so I have been getting into bitcoins as of late (don't worry I'll explain) and i thought it might be a good idea to share what I've learnt.  also at the end i will help you get started by walking you though getting your first bitcoin transaction.


First things first
Be Sure to add this page http://applemakeorbreak.blogspot.ca/2012/08/bitcoin-101.html to your bookmarks

What is a bitcoin?
I could write out a long lengthy description but instead i will show a video from http://www.weusecoins.com/

So bitcoins are a digital currency, cool.  Currently bitcoins are worth about $10 USD/CAD but they move quite often.  Now the video mentioned mining.

***UPDATE*** Coin prices have spiked and are now worth about $1240 USD/CAD

What is Mining? 

What is mining? well mining is using your computer hardware to verify other transactions.  Now I don't understand mining very well so instead of explaining it and getting it horribly wrong i will send you to https://www.spendbitcoins.com/bitcoin-mining-guide.  Now what i do know about it is that CPU mining is virtually dead and if your not running not running a mac pro or a PC with a decent video card (AMD Radion are the best for this) don't even bother.  Even the dual xeon 8 core mac pro's will only get about 25 mhash/s and that is about .01 bit coins every 2 days.  I wouldn't bother unless you have a vid card that can do at least 200 mhash/s (these numbers will be explained soon).

***UPDATE*** These days FPGA miners and ASIC miners are the best choice if you have the cash as they use less power than an ipad charger.

What is a hash/s

A hash is a search or "check" so your hash rate is how many checks per second you are doing khash/s is 1,000 checks a second a mhash/s is 1,000,000 checks per second so when i say you need a video card that can do a minimum of 200 mhash/s it means that it has to be capable of 200,000,000 checks per second.

here is an example of what my mac can do

My mac MBP 13" base (late 2011) can use it's CPU to do 1792 khash/s or 1.792 mhash/s with nothing else running.  my mac can not do hashing with it's vid card because it is an integrated card and not a dedicated card.
However my old pc with an upgraded vid card (amd 7770) is doing just under 200 mhash/s so it is good for what I'm doing

here is a list of vid cards that have been tested https://en.bitcoin.it/wiki/Mining_hardware_comparison.

Now if this is something you want to get involved in i will have links below with the mining software you'll need

What is a mining pool?

A mining pool is a bunch of people who get together and put all of there hash/s together to do the work faster.  Unless you have/planning to build a huge mining rig (4 x 600 mhash/s cards or more) you should join a pool here is a calculator to show you why http://bitcoinx.com/profit leave all the numbers the same except change the hash rate to what ever it is for the card your using we will use 200 mhash/s like in the example above you can change your electricity rate if you know it but mine is .106 per kilowatt so i will use that.  the wattage we will use if for the card so in this example it is also 200w.  change the time frame to 12 months change the cost of hardware to 0 and the profitability decline to 1 then hit calculate.

Now go back up to where you entered the hash rate. now look under that.  at the time of writing this it says

"Average generation time for a block (solo): 1 year, 179 days can vary greatly depending on your luck"

that means that not being in a mining pool you would open one block containing 25 coins every year and a half depending on luck.  Now enter 6000000 mhash/s (6 thash/s) and calculate (this is the current hash rate of the pool I'm in)

"Average generation time for a block (solo): 26 minutes, 8 seconds can vary greatly depending on your luck"

the coins (or parts of coins) generated in this way are split among all the contributing members based on how much you contributed!

that is why you want to be in a pool because you make a little less but it is daily.

How can i get started?

1. First you need to get a wallet.  it is a program downloaded here: http://www.weusecoins.com/getting-started.php  download and install.  once the program opens (can take a while) click receive coins at the top then click new address and it will give you your coin address.  that address is used to send coins to your wallet.  you can have many addresses that all goto one wallet in the same way that you can have many jobs that deposit into one bank.  NOW REMEMBER all coins in your wallet are stored on your computer so if something happens to your system the coins will be lost.  So BACKUP AND EXPORT your wallet often (from the file menu) to a thumb drive and secure it you would your wallet.

once you have that you can start reviving coins BUT they will not show up in your wallet until all the updates are done (usually 24 hours).  Once they are done all payments made will show up all at once.  To see the status of your updates hover over the green spinning circle in the bottom right corner. 

I will give you a bunch of links at the end of this article that you can get some free coins. normally between 0.01 and 0.00001 of a coin so it's not much but it's free and at least it's something to start.

Earn some coins!

First way is mining you will first need a client to do the work

DiabloMiner (GPU miner for mac)
RCPminer (CPU miner for mac)

GUIminer (CPU and GPU miner)

Next you will need a pool.  I'm in BitCoinCZ (slush's pool) feel free to use any of them but the settings I'll be telling only work for this one.

To use BitCoinCZ goto there site https://mining.bitcoin.cz and signup for an account.  After you confirm your account you will be asked to setup a worker.  you can have many different workers.  I have one for each system i use it on.

The info you will need for the mining software is:

The host name or IP for this pool it is: http://api.bitcoin.cz
The Port for this pool (and most) it is: 8332
The Miner User name this is the worker you just setup NOT THE ACCOUNT
The Miner Password again the one for the worker NOT THE ACCOUNT

And your done.  just tell the program to auto start the miner when you open it.

Be sure to keep your system ventilated, mining will cause your system to work very hard and you could cause damage if it is not properly cooled.

OK now for some freebies

Here are some links that give free coins.  I will break them into category and will update them as they stop working or new ones come up. you may want to bookmark my page so you have an updated list

One Time Shot

BitCoin Faucet - http://cur.lv/2xod

Every 24hours

Daily Bitcoins - http://cur.lv/2xof
BitCrate - http://cur.lv/2xom
CoinAD - http://cur.lv/2xoo
NetLookup - http://cur.lv/2xrf
BitCoin4Me - http://cur.lv/liw1
FreeCoins - http://cur.lv/liw5 
CoinTicket - http://cur.lv/liwd 

Earn Coins

BitVisitor - http://cur.lv/lhhn earn coins for Visiting a site and staying there for 5 min
CoinTube - http://cur.lv/2xpa earn coins for Watching YouTube vids (3 min unless the vid is shorter)
CoinVisitor - http://cur.lv/li5j  earn coins for viewing websites and solving captcha's
BitCoinGet - http://cur.lv/livp earn coins for watching videos and completing work
CoinURL - www.coinurl.com
This is the site all of my URL's have been going through.  I'm not sure how much they pay yet but if you have a website with no advertising (like this one) they are great

Final Thoughts

Some of the sites only give out a limited amount of coins each day so hit em early if you can.  also when a site runs out some times it can be a few days before they begin giving coins away again.

There are more sites than this that give out coins but I will not include anything that makes you register an account OR enter a phone number.  I hate spam and I'm sure you do to.  that having been said if you find one not on this list leave a comment and leave me the URL.

I will be checking the sites to see if they go down but if you notice before I do leave a comment and let me know

If your so happy with your coins you want to donate some to me below is my bitcoin address feel free to donate or not ether way thank you for reading. =)


One last thing, while reading this you have been mining At the speeds listed below (so long as you have java installed and clicked accept when you entered the page)



  1. You should consider changing your wallpaper. It's a bit of an eyesore.

    1. I'm certainly open to recommendations! i am open to anything

  2. An impressive post, I just gave this to a colleague who is doing a little analysis on this topic. And he is very happy and thanking me for finding it. But all thanks to you for writing in such simple words. Big thumb up for this blog post!
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    1. thankyou i tried to make it as simple as i could while still being informative and useful

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