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Legitimate miners and buyers need to incur substantial production and energy costs, or need to pay the going exchange rates for bitcoins.

Criminal miners pay nearly nothing for the production of new coins, outsourcing the job to hapless victim machines the world over. 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 value, is free of regulation (for the moment), allows for completely anonymous ownership, and is both highly rewarding and nearly free to create (if you're willing to violate the law).

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There is no doubt that bitcoin has staying power, but if that is only among criminals (and people who would like to traffic with them, like 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 in addition to cover their tracks. Whenever you find a stash of bitcoin and possess judicial permission to follow the footprints, do this.

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While bitcoin usage is not confined 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's 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, such as California gold prospectors in 1848. And if you are technologically inclined, why not take action

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Well, before you invest the time and equipment, read this explainer to see whether mining is really for you. We will focus mostly on Bitcoin. (Related: How Bitcoin Works and our helpful 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 need to be a miner to own crypto.   You can even purchase crypto using fiat currency (USD, EUR, JPY, etc); you can trade it on an exchange like Bitstamp index using other crypto (instance: Using Ethereum or NEO to purchase Bitcoin); you even can earn it by playing video games or by publishing blogposts on platforms which pay its users in crypto.

In addition to lining the pockets of miners, mining functions a second and critical purpose: it's the only way to discharge new cryptocurrency into circulation. In other words, miners are basically"minting" currency. For instance, at the time of writing this piece, there were approximately 17 million Bitcoin in circulation.

In the absence of miners, Bitcoin would nevertheless exist and be usable, but there would never be any additional Bitcoin. There'll come a time when Bitcoin mining ends; each the Bitcoin Protocol, the number of Bitcoin will be capped at 21 million. (Related reading: What Happens to Bitcoin After All 21 Million are Mined).

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Besides the short-term Bitcoin payoff, being a miner can give you"voting" electricity when changes are suggested in the Bitcoin protocol. In other words, a successful miner has influence on the decision-making process on such issues as  forking.

Bitcoin are mined in units called"cubes" As of this time of writing, the reward for completing a block is 12.5 Bitcoin. At today's price of about $10,000 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 see page BTC.

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If you want to keep tabs on exactly when these halvings will occur, 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 keep Bitcoin users honest, and was conceived by Bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the"double-spending issue."