BitCoin is probably the most exciting thing to happen to money since the history of… money, as off the shelf computer harware, software, cryptographic tools, and p2p internet technology have come together to create a currency that:
- Doesn’t need a bank to be secure or to validate transactions, it’s decentralized.
- Can be transfered to anyone in the planet without central intermediaries or government permissions for very low fees (about $0.25 for a $4 million dollar transaction low enough for you?), and in any amount (no minimums, hello microtransactions, no holdbacks or questions asked by a branch manager if you send too much) creating the potential of bringing every country in the world to participate in global trade without the need for bank accounts or credit cards.
- Requires no human identity, it’s basically anonymous.
- Runs on an open source protocol and open source software.
- There is a controlled and finite amount of Bitcoins available in the market, unlike Fiat currencies, there won’t be central banks printing money out of thin air and the value of the currency will rise as a BitCoin based economy includes more people and more capital (deflationary currency).
This post is essentially to save you the time it took me to find what I consider the most interesting and useful websites today around the currency.
If you want to trade BitCoins for local currencies you will need an exchange, an there’s very different kinds of them, on some they hold your money (both in BitCoin and a hard currency) so you can trade it like you’d trade a commodity on Wall Street, others allow you to transact directly with people willing to buy/sell Bitcoin through bank transfers, money orders, or face to face meetings.
For BitCoin to work without a centralized authority it depends on a vast network of computers volunteers put out to verify each transaction. In this process these volunteers collect fees and mine new BitCoins. These processes are very very computational intensive, but the rewards are enough to process every transaction, and they are commonly known as “mining”. At this point in time, it’s very hard to mine bitcoin on your own so you will be better off joining a pool of miners and sharing the rewards, also you will have to buy specific hardware to mine fast, as mining with CPUs or GPUs is pointless. The difficulty of mining increases linearly as less coins are left to be mined.
Here are my BitCoin Bookmarks
MtGox.com: Japan based company, will have to wire money to bank account in Japan, will be hard to get hard currency out, however it has the highest volume of transaction and the biggest pay per BitCoin, probably due to the difficulty of getting the money out.
BitStamp.net: UK based company,
prices are lower than MtGox, if you set up both accounts you can make good money on the price differences if you time things right.
CoinBase.com: A San Francisco based company, it makes it easy to purchase Bitcoin if you have an US Bank account as they have implemented bank integration in their platform, prices here are considerably lower than MtGox, however it may take 7 days for your purchase to take effect which puts you at risk in case of a probable drop in price during that time.
mcxNOW.com: an exchange that lets you trade not just bitcoin but other cryptocurrencies, you get interest on your deposit. They claim to have written the whole thing entirely in C++ (according to them for speed an security, I bet they didn’t know well written Java can be faster), they have no Google Analytics tracking, and they’ve implemented their own encrypted database. Trade fees of 0.25%, not so friendly user interface.
LocalBitCoins.com Helsinki, Finland based – Trade in any city people to people, probably the simplest way to get cheap coins although it might require getting your ass outside the house to either meet somebody at a Starbucks, Bank, or to send an actual Money Order via Western Union (yes at the office, some buyers are like that, they don’t do Online Money Orders). LocalBitCoins.com will hold the Bitcoins in escrow when you begin a transaction, once the seller receives the funds (be it via cash deposit, cash transaction in person, money order) then LocalBitCoins will release the funds into the buyer’s target wallet.
Paypal would make Bitcoin a lot easier, but they currently seem to be at war against the currency, perhaps because of regulators or banking interests being part of their board, who knows, the thing is that you can’t do anything related to BitCoin with your paypal account or they will freeze your account. They’re missing out on so much, Paypal could be the number one BitCoin exchange and rake in millions of dollars a day on fees.
ICBit, trade Bitcoin futures.
BTOracle.com, Trade BitCoin options.
I’ve tried a few mining pools, but I’ll recommend you my favorite btcguild.com, the others have unclear reporting, seem outdated and shady. If you know of a great mining pool please recommend it.
You can configure your mining software to do multi pool mining, so you can join several of them.
Analytics & Trading Tools
ClarkMoody BitCoin Live Chart & Order Book, the most responsive and simple tool I’ve found so far to check pricing and the order book.
BlockChain.info, this is a great tool to find out information about transactions, wallets and activity, to see how BitCoin transactions are being processed in real time something which is really eye opening when you see people sending tens of thousands of dollars over BitCoin, it will make you a believer. There’s also a section with what I would call “macroeconomics” information about the BitCoin economy like the amount of BitCoin available, Market Cap, Number of Transactions, Hash Rate, difficulty, Mining Operating Margin and many other indicators.
RTBTC: The Real Time Bitcoin Trading Platform, I’ve not tried this yet, but if you’re serious about trading Bitcoin and you have accounts in Mt.Gox and Bitstamp you can trade on both using this tool for about $10 a month on average, payments in Bitcoin.
Mining Software Projects
CGMiner source code on github, very active project lead by Con Kolivas, the best mining tool I found so far.
This is how to build a cgminer binary for windows, you want to make sure you build your own so you’re sure nobody is stealing bitcoins from you, you never know what people may have done to the code before building.
In case you can’t/won’t compile, here’s a CGMiner Binary for MacOSX
You can learn how to mine with an ASIC (Application Specific Integrated Cicuit) hardware with a “cheap” USB Block Erupter. When you mine, you’re basically checking cryptographic hashes for every transaction in the chain of a BitCoin as it moves from wallet to wallet, these little Erupters are able to verify +330 Million hashes per second, or “330 MH/s” (MegaHash per second), if you do the math you will see that the cost of 1 Gigahash per second is quite high with these devices, however, they’re accesible.
If you want to do some serious mining you will need a lot more power and soon you will be needing hardware that can get you close to the Terahash, as the difficulty is increasing and there’s more and more minings competing against you.
If you want faster hardware take a look at what ButterFly Labs has to offer, and divide the price by Gigahash, you will see that the cost per Gigahash is way lower.
If you’re in the US these sites might not be available to you, but basically the idea is your bet some BitCoin, the site “rolls dice” and you either win or lose. I found out about this looking at the transactions feed on BlockChain.info.
I’ve not tried any of these, but I’ve seen transactions going back and forth
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