When I decided to figure out what bitcoins are, I spent a long time searching for information all over the Internet. But all the “simple words” explanations only created even more confusion in my head. And then I did my own research.
And if you now, like me once, do not understand the essence of Bitcoin - is it a scam or not, and is it possible to make money on it, and how does it all work - then spend five minutes on this article. I promise you won't have any more questions.
And let's first deal with the materiel. Where do Bitcoins come from and what is it? Who “prints” them? And if no one, then why is all this devilry called currency?
What are Bitcoins in simple terms?
Essentially, Bitcoin is an ordinary computer program. Only it is not located on any single computer or server, but on millions of computers at once, which directly communicate with each other through this program.
Torrents work on a similar principle. You install a program on yourself, and someone else does the same. You can then transfer files directly to each other, without the involvement of any servers, and with virtually no control. It is this feature that has made torrents the main breeding ground for piracy on the Internet.
The Bitcoin system works exactly the same way. The only task of this program is not to transfer files between users, but to give them “virtual glasses”.
What do you need to mine?
Let's take one Bitmain Antminer S19 Pro (110Th) - one of the standard bitcoin miners of the current generation. And now in the last 24 hours he has been mining (0.0011 BTC) or $11.26. Without electricity metering.
Mining on this ASIC will cost two and a half thousand dollars.
Keep in mind that the complexity of the Bitcoin mining network increases in any unclear situation and this is historically true.
The difficulty continues to go up and up, it is constantly growing with only a couple of small failures when ASICs were flooded in China, and other force majeure circumstances.
But even with a small drop, we are back to the all-time high very quickly.
So keep in mind, even in the future when you read this article, the difficulty will always increase and mining 1 Bitcoin will be even more difficult.
Where do bitcoins come from?
Would you keep an extra program on your computer that doesn't give you anything? Hardly. Therefore, the program “encourages” those users who keep the entire system on their computers. She encourages them by issuing virtual “points” (or points), which are called bitcoins.
That is, this is an interesting phenomenon. The program doesn't do anything useful. It “lies” on users’ computers and gives them virtual money for having it there. At the same time, the program gives out its points for a reason.
The whole system has a limitation. It can only give out 21 million virtual points (bitcoins), and no more. At the same time, more and more new users are connecting to the program every day. And do you know what the only action this system is programmed for? It makes it difficult to get bitcoins if there are too many users. Or, on the contrary, it simplifies it if there are suddenly fewer of them.
What are bitcoins given for?
People who maintain the system through their computers are called “miners.” And the entire process of “extracting” bitcoins is “mining”. This is not from the word “money” (money), but from the word “mine” - “to carry out excavations”.
The entire mining process boils down to the following: the program creates tasks that the miner’s computer must calculate, and for this he is given virtual money. That is, the program literally generates a series of tasks, such as how many will be:
- 34*54 = ?
- 57+(43-21) = ?
- 12*34*76 = ?
- …
This is a hypothetical example, of course. The problems there are much more complex, and even the computer has to spend time and the power of the processor and graphics card to solve them. And these tasks are becoming more and more difficult, because there are more and more miners. But the program does not issue more than 3600 virtual coins per day.
Accordingly, she regulates herself and makes sure that the tasks are sufficiently complex. Miners, on the other hand, assemble more and more powerful machines in order to be the first to solve the problem and get Bitcoin, ahead of other miners. They lovingly call their problem-solving machines “farms.”
One of the largest Bitcoin farms in the world
This is what it looks like to chase your own tail. Miners connect increasingly powerful computers to the system to make them count faster. And the system comes up with more and more complex tasks in order to issue no more than 3,600 coins per day.
That's actually all that the Bitcoin system is. On the one hand, there is ordinary code that comes up with mathematical problems. On the other hand, there are geeky “miners” who solve these problems and receive virtual bitcoin points for this.
But the most interesting thing is that these “geeky miners” then sell their virtual coins on electronic exchanges for very real money. And they buy it! For a minute, the cost of these “virtual coins” has already exceeded the cost of gold. How did this happen?
Mining on ASICs
Let's now look at the example of ASICs.
BTC coin ranks first in market capitalization. And quite often in the first places in profitability calculators.
How many coins have already been mined out of a possible 21 million?
Everyone loves Bitcoin and is currently trading at the following rate:
BTCUSD chart courtesy of TradingView
Let's first look at how many Bitcoins have been mined to date.
A little over 18 million coins have already been mined. By the way, many of these coins were irretrievably lost. For example, they were sent to the wrong address, etc.
According to the data, since 2008, the total amount of Bitcoin mined has reached the threshold of 87% of the total supply of 21 million. At the same time, 900 bitcoins are currently mined per day.
So there are less than three million coins left to mine.
What is actually interesting is that every day new 900 Bitcoins are being released, but to be specific, it means that new blocks are being solved in the cryptocurrency network.
In the network, there is a previous block on the right in the chain, and then it moves further along the chain, to greatly simplify it, this is blockchain technology, when each subsequent block moves the entire blockchain with all the data forward. However, the article is not about the principle of blockchain operation, but it is important to understand this for future calculations.
Each time a block is mined, which averages out every 10 minutes, 6.25 hundredths of new coins are added to the network.
The network has a reward for a mined block, and it decreases every 4 years. This is called halving. (We had a separate article about halving).
It turns out that the network is going to reduce this daily coin production from 900 (nine hundred) to 450 (four hundred and fifty) in May 2024.
But there is a way to get more than 1 Bitcoin in even less than an hour. Moreover, this does not require ASICs or any other expensive hardware. Even an iOS or Android phone is enough. You just need to download the Matbea application on it.
In general, “Matbi” is an exchanger-wallet that has been operating since 2014. The upper limit for a one-time purchase amount on it is 3 million rubles. To implement this, you must register by phone number or email, and also undergo identity verification.
In addition to Bitcoin, Matbi also offers a number of other cryptocurrencies. All of them are available for purchase and sale in automatic mode around the clock, that is, without the participation of a human operator. The sale is carried out from the exchanger’s own reserves.
The purchased cryptocurrency goes to the user’s wallet in “matbi”. Then the person decides for himself what to do with the coins: send them to another wallet or leave them here, protected by three-factor authentication. It means that withdrawal of funds is possible only if you know three types of codes:
- pin;
- from SMS;
- from email.
You can control your savings and conduct transactions through the application. You can download it from the Apple Store or from the Play Market if you have Android.
All transactions are processed instantly and automatically. If the user has any questions, the Matbi team has prepared detailed video instructions.
Why is Bitcoin more expensive than gold?
The price of any product or service in the world depends on only two factors - supply and demand. If the price rises, it means supply is not keeping up with demand. That is, there are many more people who want to buy bitcoins than there are these same bitcoins.
That is, to answer the question why these virtual, fake coins are so expensive, we need to answer two questions:
- Why do they have such a small offer?
- Why such high demand?
By the way, we have already dealt with the proposal above. The system cannot issue more than 3600 coins per day and 21 million coins in total. This is actually a brilliant solution. If bitcoins were issued without restrictions, they would never reach such a value.
The situation with demand is much more interesting. Why more and more people want to buy these bitcoins even for crazy money. Get ready, it's going to be hot.
Why are people buying all the bitcoins?
I’ll say right away that the demand for bitcoins is actually not that great. That is, of the total number of people on Earth, only a very small percentage buys, stores and resells these bitcoins. But in relation to the meager supply (3600 coins per knock) - yes, the demand is simply gigantic. That's why the price is gigantic.
And the demand is so great for three reasons. And you won't like any of them.
Reason #1 – Beautiful legend
Any program has a creator, a living person, made of flesh and blood, with his own sins and shortcomings. But the Bitcoin system does not have it. More precisely, of course he exists, but no one knows exactly who it is.
There is only the mythical “Satoshi Nakamoto”, who first launched the system in 2008. But no one knows who this is, whether it is a person or a group of people, or a huge corporation. Accordingly, such mystery gives the whole system a very attractive ambiance. Judge for yourself.
The Legend of Satoshi
There is a very cruel and unfair world around us. Normal boys (like you and me) are forced to work every day to feed themselves. While bankers, financial magnates, and owners of foreign exchange funds are fattening simply due to the fact that they have a money dispensing tap in their hands.
They control everything and rip off each of us. They also control all our money, and we are completely dependent on them. They said - pay 25% for the loan, we will pay. They said that a dollar today will cost 70 rubles - and we can’t do anything about it.
And now the Chosen One comes to this terrible world. He rebelled against the system. He taught people to make money themselves, bypassing all these financial bloodsuckers.
There is no single control center for bitcoins, which means no one can take them away from you. The money now belongs to the people, not to the ten richest families in the world. This is a new financial and economic system that will free people from constant “running on a wheel” and make them free and happy.
And no one knows the true name of the Chosen One. Nobody knows what he looks like. He does this not for his popularity and his own good, but for the sake of Humanity. He, like Neo, fights against the Matrix for the sake of our happiness.
This is such a beautiful idea. I don’t know about you, but it probably gives “miners” goosebumps. They see themselves as the future rulers of this new economy.
Imagine the computer nerds who spent all of high school with their heads in the toilet. Now imagine that they are offered a new system of world control, where they are the stars of the first magnitude. They will try to make it so.
Such a beautiful legend increases the motivation of miners, and makes the idea of Bitcoin popular “among the people” (even if no one there understands what it is). But there is a second, even more prosaic reason.
Reason #2 – Get rich quick
What do you think happens to a product whose price rises quickly and can be quickly resold at a higher price? That's right, more and more people want to buy it in order to sell it at a higher price later.
That is, the true value of the product does not play any role here. It all depends solely on how many new people are willing to repurchase and then resell at a higher price. This rise in prices is called a financial bubble.
Financial bubbles have always arisen in all ages. Back in 1636 there was the so-called “tulip mania” or “tulip fever”. There, prices for tulip bulbs grew even faster than today for bitcoins.
And also simply because a lot of people wanted to buy them, not in order to benefit from their purchase (to grow for their own pleasure or to eat), but in order to resell them at a higher price the next day.
The same thing occurs when the price of any currency begins to rise sharply. The dollar was 30 rubles. - grew to 50 rubles, everyone ran to buy dollars, and as a result it grew to 100 rubles, everyone ran to buy even faster. And so on until the price reaches its peak.
There is a limit above which people will not pay for either tulip bulbs or bitcoins. At a certain point, some part of the currency holders will decide that the price is already high enough and they need to sell. But there will be no buyers. This always happens.
Then they will lower the price a little so that they buy. Then a little more. And as a result, the financial bubble will burst in an instant. Bulbs no one needs will float along the waters of the Julian Canal, merchants will litigate among themselves, and those who did not manage to get rid of the bulbs will lose their money forever.
All this is called in a simple word - “acquisitiveness”. And buying something with the expectation that the price will rise further and we will be able to sell it for more than we bought is called the game of “last one is the fool.”
Reason #3 – Network Marketing
How did you even know about the existence of Bitcoins? Most likely, one of your “friends” on social networks posted a post about such a cool thing - a new world currency. And what he has already bought, and now you can become incredibly rich by following his link and buying yourself a whole bitcoin or part of it.
Networkers immediately really liked the idea of distributing bitcoins for commissions. There is no need to deliver anything, meet anyone, or “recruit” anyone. Just spread the word that Bitcoin is already more expensive than gold, and that this is just the beginning - that's all. The human thirst for easy money will do the rest for them.
By the way, the most angry comments under this article, like “the author is an asshole who doesn’t understand anything and is deceiving people, and he’s a fraudster!!!!!!111” will be left by networkers. They earn their bread by attracting new customers. And believe me, they are trying very hard.
Accordingly, the information that Bitcoins are the future of the whole world is spreading very quickly through thousands and thousands of voluntary heralds.
To be fair, I will say that not all networkers like such “pyramids”. And in general, network marketing is actually a very good thing. I wrote about this in the article “Internet business from scratch - where to start step by step.” But we need to distinguish between “networkers” and “hype people”.
It is for these three reasons that the demand for bitcoins is so huge. On the one hand, there is a beautiful legend that inspires miners to great deeds. On the other hand, there is greed and the desire to “snatch” and earn money without doing anything. Add to this a very limited supply and the spread of ideas “by word of mouth” by networkers, and you get “virtual coins” at a price higher than real gold.
And in conclusion, let’s put together a small “FAQ” on Bitcoin.
How to get Bitcoin without investment - 4 ways
1 – Earn bitcoins without investment by completing tasks on CoinTiply
CoinTiply is a platform with tasks for which you pay in bitcoins. The site is not translated into Russian. Despite this, CoinTiply's intuitive interface allows you to quickly find the tools you need.
To get started, you will need to register and confirm your e-mail.
Afterwards, the system will give the user access to his personal account, which displays account information and offers for earning cryptocurrency. CoinTiply personal account
On CoinTiply you can earn bitcoins in different ways. For example, surveys and small tasks are available to platform users, for which the system pays in BTC. Including, you can earn money on CoinTiply by watching videos and registering on certain resources.
Interesting fact! The project has a mobile application. With its help, you can earn bitcoins without having a computer at hand.
How many Bitcoins can you earn on CoinTiply
For completing research on CoinTiply they pay about $0.1-1.5, for completing tasks - around $0.1-3. The least amount of money is transferred for watching a video. The price of such tasks varies from $0.02 to $0.05.
You can also earn money on CoinTiply through the “bitcoin faucet” section. In it, the platform prompts you to enter a captcha. After completing the task, the system starts a “roulette”, which determines what reward the user will receive.
According to reviews of CoinTiply online, users of the platform can earn from $1-2 to $5 per hour. The minimum withdrawal amount is $5.
The platform pays in Bitcoin and Dogecoin. The user can choose a convenient cryptocurrency for withdrawal. To receive your earned funds, you will need to enter your crypto wallet address. You can choose the appropriate option for storing digital assets using our review.
2 – Get Bitcoins for shopping through Lolli
Lolli is a browser extension for Google Chrome, with which you can receive cashback in cryptocurrency for online purchases on partner sites. At the time of writing, over 1 thousand stores and trading platforms are connected to the project, including Adidas, Booking.com, Sephora, Walmart and Macy's.
Here's how Lolli works:
- Lolli enters into partnership agreements with online stores, within the framework of which the project attracts buyers to the platforms.
- Partners share a certain percentage of the profits from the purchase with Lolli.
- Lolli gives a portion of its revenue to platform users.
In order to start receiving bitcoins for purchases, you will need to install a browser extension and register. A guide to getting started with Lolli is presented in the video:
How many Bitcoins can you earn with Lolli?
The amount of cashback varies depending on the seller. Some stores offer payments of up to 30% of the purchase amount. Those who want to receive maximum cashback can choose the most profitable offers of the platform.
Lolli transfers payments to users in bitcoins or dollars. The minimum cashback for withdrawal is $15, or the equivalent amount in cryptocurrency. You can transfer funds to a crypto wallet.
Interesting! For withdrawals in dollars, Lolli charges a fee of $0.25. Transfers in Bitcoin are not subject to commission.
3 – Earn Bitcoins for answering questions through Bitfortip
Bitfortip is a platform where you can earn Bitcoin without investment for answering questions. To work on the project, you will need a desktop computer or Android smartphone.
On Bitfortip, individuals and companies can post questions. To get started, they need to deposit at least 0.0001 BTC into their account. Through these means, question authors can choose to reward respondents for the most helpful answers.
To start making money on Bitfortip you will need to register. The system will automatically create a wallet for cryptocurrency transfer.
How many bitcoins can you earn on Bitfortip
The level of earnings directly depends on the user’s activity and the quality of his answers. Unfortunately, it is impossible to predict the approximate level of income from Bitfortip. It can vary from a few cents to a couple of tens of dollars a day.
Bitfortip pays in Bitcoin, Bitcoin Cash and NANO. The minimum withdrawal amount is 0.0001 BTC.
4 – Earn Bitcoins through cloud mining StormGain
Typically, entering the cloud mining market requires a small investment. The StormGain platform team decided to take a different route, giving users the opportunity to start earning money without any investment.
Mining is the extraction of cryptocurrencies using computing power. You can learn more about this type of work from our material. The cloud option involves renting equipment, the computing power of which can be used to mine digital assets. The StormGain platform offers favorable conditions for such work. Among its advantages are the following:
- The platform does not charge any commissions. Project representatives explain the decision to refuse to collect fees by the desire to stimulate the development of the digital asset market. The fact is that many users who earn money through the StormGain cloud mining platform subsequently switch to the project’s exchange. As a result, the company can make money from their trading commissions.
- You can get your first profit in just 4 hours.
- The platform has high profitability rates.
- You can work anonymously on StormGain.
Screenshot of the StormGain cloud mining platform
How much income in bitcoins can you get with StormGain?
The platform transfers income into USDT. For a month of work, users receive, on average, the equivalent of $10 in stablecoins. Coins can be transferred to an internal StormGain wallet.
You can learn more about how to start earning cryptocurrency on the Internet without investments from our material.
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Bitcoin Frequently Asked Questions
Are Bitcoins a Scam?
In general, yes. But this is not the type of fraud when someone deceives you and takes money out of your pocket. Here people are great at deceiving themselves. I used to think that people fall into financial pyramids and bubbles out of ignorance and because they were deceived.
In fact, most participants in all pyramids and bubbles consciously or subconsciously understand what they are doing. Namely, they want to get rich at the expense of other people by reselling air. Periodically, such people get together and create a new “hype” until it collapses. And then again in a circle. If you are not one of those people, it is better not to get involved.
Is it possible to make money on bitcoins?
Of course it's possible. You can even earn a lot. By the way, during the peak of “tulip mania,” one tulip bulb cost as much as a large nice house. So Bitcoin certainly has room to grow.
According to experts, the last Bitcoin should be “released” by 2033. That is, until this time it will most likely increase in price. And you still have the opportunity to buy now cheaper and resell later for more. But you won’t be able to buy new karma for yourself with that money.
Why are so many famous people buying Bitcoin?
This is always a sore point. One has only to tell one of his followers that what he is doing is a financial bubble, and they immediately name the names of actors, football players, bankers who are “also in business.” “Herman Gref bought himself bitcoins. He’s probably already smarter than you, what do you think?”
But I think that there is no need to overestimate the mental and moral qualities of famous people. They are just as likely to believe in fairy tales and want easy money as everyone else.
By the way, Sir Isaac Newton lost almost all of his fortune in a financial bubble, which was preserved in history under the name “South Sea Company” (1711 - 1716). But he also didn’t seem to be a stupid guy.
Why is it so difficult to explain what Bitcoins are?
It's not difficult to explain. It’s difficult to explain in a way that people both understand and don’t run away in horror. As soon as you start to look at things honestly, all the charm of Bitcoin disappears. Therefore, in fact, no one is trying to explain to you what Bitcoin is in simple words.
It is more convenient for them to say that this is too brilliant a thing, and ordinary people will not understand the full scope of the thought. This, by the way, is a very common excuse in financial pyramids with “innovative products.”
How long does it take to mine 1 Bitcoin on a video card or processor?
Let's just for fun see how much we will now mine one bitcoin on video cards. Yes, gone are the days when you could mine 50 Bitcoins on weak hardware.
However, it is now possible to use programs that actually mine other (GPU) coins, but with payouts in BTC. For example NiceHash.
On a farm of 6 modern Nvidia 2070 video cards, it will take us 71 months or 6 years to mine 1 Bitcoin.
The days when you could use any computer to mine Bitcoin are gone.
By the way, the first ASICs for mining appeared back in 2012. So you don’t have to worry that you didn’t have time to mine BTC on your PC. It is likely that ASICs went public in 2012, and they could have been used to mine even before 2012.
