BitCoins: The New Internet Currency

Today, I'm going to tell you about a new Internet currency called BitCoin.

Basically, BitCoin is a new type of internet currency that is starting to get more and more popular online.  It's the first peer-to-peer currency.  That means people can transfer BitCoins without going through a middle-man, like the bank or PayPal and they endure no fees when transferring BitCoins.  Many people have started using BitCoin as it is a legal in the US(as of June 2011) and it's easy to transfer and use as money online.

The MyBitCoin.com Registration Page.  Photo Credit: N/A

Before you do anything else, you need to get a "online wallet" for your BitCoins.  You can do that at MyBitCoins.com.  There you can get a account to store your BitCoins in that is totally free.  Find a other list of services like MyBitCoins here if you want a alternative.  There is also the BitCoin software that you can download here.

Now you might be asking, how do people get bitcoins?  Well, you do a process called BitCoin mining.  BitCoin mining is when your computer solves a mathematical "proof-of-work" problem and once it solves that problem, you get some BitCoins.  The proof-of-work problem is based on current transactions in the BitCoin system and all of the past transactions.  To start mining, you can join a pool of miners (like BitCoinPlus.com) or download mining software and try to do it on your own.  The best way to start is using a pool as most home computers aren't powerful enough to mine BitCoins on their own.

The easiest to use mining pool(and the one I recommend) is BitCoinPlus.com.  On BitCoinPlus, you register a account and then you go to the "Generate" page and click "Start Generating".  After that, just let it run in the background until you've gotten 1 to 2 "payouts".  If you can, try to leave it running all day/night when you aren't home or you are asleep.  That way, you'll mine more BitCoins.  Just make sure to set your computer not to go to sleep go it keeps mining.  Once you've gotten enough, transfer them out of your account by going to the My Account page and selecting "Send Money".  On the Send Money page, type (well, copy and paste) your BitCoin Address(the same BitCoin address MyBitCoin will give you after you sign up), the amount you want to transfer out and then click on "Preview Transfer".  Then, send out the BitCoins.

After you have some BitCoins, you can spend them at different websites.  You can find a large list of websites that accept BitCoins here.  You can find a list of BitCoin exchanges here (the most popular one is MtGox).

What do you think?  Post it in the comments!

Photo Credit: Wikipedia

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