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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 nearly nothing for its production of new coins, outsourcing the job to hapless victim machines the world over. Criminal bitcoin thieves don't incur the exchange rate cost 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 of regulation (for the moment), allows for completely anonymous ownership, and is both highly profitable 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 whether that is only among criminals (and those who wish to traffic with them, like the Silk Road medication sellers and customers), or if it will become a valuable trading commodity for the rest of us remains unclear.

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My advice to law enforcement is easy: follow the bitcoin. There's no doubt that more and more criminals will be using bitcoin to generate profit as well as cover their tracks. Whenever you find a stash of bitcoin and possess judicial permission to follow the footprints, do so.

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While bitcoin usage is not limited to criminals, there is an undeniably high 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 rewarding for traders that are valid.

Here is the vital take-away: bitcoins are becoming the most"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 includes a magnetic draw for many investors interested in cryptocurrency. This might 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 take action

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

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By mining, you can earn cryptocurrency without having to put down money to this. Nevertheless, you certainly don't have to be a miner to own crypto.   You can even purchase 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 simply by publishing blogposts on platforms which cover its users in crypto.

In addition to lining the pockets of miners, mining functions a second and critical purpose: It is the only way to discharge new cryptocurrency into circulation. In other words, miners are basically"minting" currency. By way of example, at the time of writing this bit, there were approximately 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 Happens 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 called"blocks." At the time of writing, the reward for completing a cube is 12.5 Bitcoin. At today's price of about $10,000 anonymous each Bitcoin, this means you'd earn (12.5 x 10,000)$125,000.

When Bitcoin was 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 degree 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 the Bitcoin Clock, which updates this information in real time.

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Miners are getting paid for their work as auditors. They are doing the job of verifying preceding Bitcoin transactions. This convention is meant to keep Bitcoin users honest, and has been conceived by Bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping prevent the"double-spending issue."