When I first encountered bitcoin it was early on, I had stumbled on this site called MtGox. It was short for Magic The Gathering Online Exchange. They offered this digital currency called bitcoin for virtual cards. Intrigued I decided to look into exactly what these bitcoins were and I could get them. The rabbit hole was deep and I had better things to do at the time. The long of the short of it is MtGox was the only place that you could even use these bitcoins at. I left the site and never gave it a second thought.
Time went on technology changed and in January 2013 I heard the name bitcoin again. Hmm, I wonder what this bitcoin is. I decided I’d look into it. I found out that bitcoin was this fascinating digital currency, with high aspirations of replacing traditional government backed currency. That was all fine and good but at about $10 a piece I wasn’t about to invest. My next question was where do these bitcoins come from? Then I remembered years ago this was the rabbit hole I never went down. I thought myself smarter now maybe more patient so down I went.
How are bitcoins made?
Bitcoins, similar to gold or silver are mined. Wow, it would be like my own personal Gold Rush, a show I was previously obsessed with at the peak of the gold frenzy. However, the word mining was the only thing the two shared. The truth is that you set a computer against a complex equation and when it solves part of the equation you get a pay off of coins. The pay off varied depending upon the difficulty of this equation. When I first learned this it was 50 coins for each problem solved.
Mining coins? I can do that! I’m a nerd I like computers what do I need to do? Further down the rabbit hole I went. Well, when mining first started all you needed was a computer with a killer processor. Then someone discovered graphics cards, the same ones gamers’ use, were waaay more efficient! How much more efficient? It was the difference between a horse and buggy and Porsche 911. Ok, I thought I can do that I got a decent graphics card.
How do I get my started?
That was a little more complicated than I thought, it involved using text commands on mac or linux. No thanks, i’m not that interested. Thus, I shelved my interest in bitcoin again. Six months passed and I was reading about bitcoin again. This time it was how people were starting to make serious money on it. Bitcoin had topped to $200 then crashed down. I thought if it had potential to go this high maybe it can again. Knowing more about mining than I did months ago, I decided to find alternate ways to earn me some bitcoins. With a little googling I found it. he ebay of auction sites BitMit. I was good at selling on eBay and had been doing so since 1999 surely it couldnt be much harder on BitMit.
I signed up for an account, I even took the time to verify my ID. It was just like eBay in the early days. People were hesitant to trust each other with purchases, and bitcoin replaced PayPal. For those who remember, PayPal was once the bleeding edge of services and even the most savvy of web users were hesitant to trust such a company with their money. The internet moves fast and the people selling on BitMit were there for the same reason. To get their hands on bitcoins. I had this idea that I needed whole bitcoins. 1 Coin no more no less. I sold books, toys, electronics, collectibles, whatever had been sitting around my house.
A Bitcoin Wallet? What is that?!
The first transaction was thrilling, someone sent me 1.2 coins and it was held in escrow on the site. There it was my first bitcoins, I shipped the items, and the seller released the funds. In the two weeks it took to sell and ship the item bitcoin had jumped from $50 to $100. I was elated! Now I had my 1.2 bitcoins sitting on this site. Just one problem. How do I get them and what do I do with them? I remembered a mining site I had found a while back had information on storing them in a wallet. Made sense to me.
Except, a wallet is just a metaphor for an encrypted address. It is typically 27-34 characters and they are a combination of letters and numbers. Nothing you can easily memorize. To top it off it was recommended to have multiple wallets! Multiple wallets how do I manage all of this? I was overwhelmed but knowing I had those 1.2 coins waiting and another sale now pending, I was bound to find out.
I figured having multiple wallets was just paranoid. I went back to the source of my education bitcoin.org, and they had plenty of information on wallets even where to get one. I got one at blockchain.info, it seemed safe enough and I could even back it up! This is the part where you might expect me to say I should have been more paranoid and my wallet was hacked. Well, then you’d be wrong, because this is when I transferred my coins to this new wallet. There was a moment of panic as i copy and pasted my new address and hit submit. The coins instantly disappeared from BitMit. I was worried. Once the coins were gone they were gone for good, no undos, no take backs, it was digital cash. Three minutes went by and the coins had not showed up in my wallet. Oh no! What was I… oh, wait nevermind they are right there! Just like that they showed up. The best part is that this BitMit had no fees like eBay or Paypal, it was near all profit!
How to turn bitcoins into cash!
Now that the bitcoins were in my control, I needed to turn these into cash, I had already made a profit, $60, it seemed like a lot at the time. The first site i found was MtGox , but knowing it’s nerdy past was in trading digital cards and not managing money I passed. I was left scractching my head. I guess I could buy something on Bitmit with them. So, I did I bought myself a silver dollar. That made sense trade one commodity for another. I did the bitcoin wallet swap and just like magic I had traded my old books into bitcoins into silver.
Since that I sold a few more items and bitcoin prices were even higher at $140 each! I needed to unload my coins and quickly before the price dropped. The search continued and after much diligent research and digging I found the holy grail of bitcoin exchange companies, Coinbase (this is an affiliate link, if you buy bitcoins i get some bits too). Coinbase had two step verification and a professional looking site. Hint: Good design goes a long way with a designer. Joining Coinbase was just like signing up for an online bank account. Within 20 minutes I had transferred my bitcoins and sold them at a profit. But, I had to wait 5 days. It was perfect timing because at the end of the 5 days my coins dropped down to $80 but I still got the higher value.
I kept selling items here and there on Bitmit, but no where near the profits i’d experienced before. I was happy with my experience with bitcoin but ran out of stuff to sell. Thus, I forgot about it for a few months. Then it happened, bitcoin started rising rapidly in price. First it was $200 then $400, I had to stop watching it. It was too painful knowing how much it was worth. It was now December 2013, and I was reading about the titanic values bitcoin achieved; over $1200! I knew I had to try mining again, and get serious quick I was not going to let this opportunity slide by.
The Bitcoin Mining Bug Bites Hard!
I started by getting two of these tiny usb Asic miners. (insert photo) They were twice as powerful as my computer! I plugged them in and started this plug and play app called Bitminter and let those babies churn. Well, let’s see, if I look at these statistics I should make… My face went blank, my heart sank. The total was 1/10000 a coin a day, what the hell?! Back to researching bitcoin mining I went. There it was, as more coins are mined, the problem difficulty increases, and the coins are halved now at 25. This won’t do this won’t do at all. I didn't have the money now to straight up buy a bitcoin, but I could throw a couple hundred at a better miner.
Bitcoin mining is challenging, expensive, and there are no reliable companies that produce mining hardware. They are often delivered late, damaged, or not at all. I went to eBay, and got a small miner called a Jalapeno after reading this dated article. Just like my tiny USB miners this was plug and play, and it was loud, I was taken aback at how loud the fan was. I kind of felt like I jumped back in time to 2001 with my super large desktop computer and CRT monitors. Now, I would be rolling in the Bits! Let’s see what this says… oh my face was blank again. Only, 1/1000 a day. I will never make back my money I thought. But, I knew going into this I would not get a return on investment It was about the potential, the potential for the value to go up to $10,000 by the end of the year. I’d seen too many tech trends pass by me that turned into big bucks down the road. I’m in, all in! I called the one person as crazy as I was about a gamble, my dad.
I told him my plan, and we went in and bought a serious mining rig. It actually just arrived yesterday. The beast is loud!!! It’s like a jet plane in my office. Based on my calculations, I should make 20 Bitcoins a year, well that is if I didn’t forget about electricity costs and difficulty increasing, again. Which, is just what it did. But, I am ok with that, this is about chance and the amazing potential that comes with risk. This is about Bitcoins, something I realized I am passionate about. This is a passion I didn’t know I had until I wrote this.
So, I hope you learned a little bit (pun intended) about bitcoins, by reading this. Sure, there is a chance it could all come tumbling down, but technology has an incredible way of being disruptive. Look at the print industry, the video and music industry, the telecommunications industry, next look at the banking industry. Those who are able to adapt and change will thrive, those that cannot will fall by the wayside.
That is my bitcoin story in a nut shell, I hope you enjoyed it. Join my crazy hunt for Bitcoins http://bitcoin23.triplemining.com and mine with me.
UPDATE: Since I took on this endeavor, I have given up mining. The difficulty increased exponentially. The good news I broke even. The bad news Bitcoin is worth half what it was when I started. All hope is not lost though there is still Dogecoin….
