A Guide To Bitcoin For Beginners

If you're looking for a general not to technical introduction to help you get started with Bitcoin then the information below might help.

What Is Bitcoin?

Bitcoin is a digital currency (or more precisely a cryptocurrency) that uses peer-to-peer technology (a network of computers that allows files and resources to be shared). There are no banks or central authorities and no one controls Bitcoin. Bitcoin is open-source and publicly available and Bitcoins are issued by the Bitcoin network. Transactions such as the sending and receiving of Bitcoins are also managed by the network.

Getting Started With Bitcoin - The Bitcoin Wallet

What do you need to get started with Bitcoin? First you need a Bitcoin wallet. This is the digital equivalent of a real world wallet and is used to store Bitcoins. The wallet allows you to send and receive Bitcoins and view your Bitcoin balance. There are a number of Bitcoin wallets available (desktop, mobile and web based) ,but for security reasons and for ease of use it is best to start off with a software wallet called Bitcoin-Qt which you can download to your computer (see the Bitcoin resources section at the end of this post for the Bitcoin-Qt download link).

Getting Bitcoins - Bitcoin Mining & Bitcoin exchanges.

Now that you have a Bitcoin wallet the next thing you need to do is fill it with Bitcoins. You can do this by selling products and services and accepting Bitcoins as payment or by buying Bitcoins from a Bitcoin exchange such as MT. Gox. You can also make your own Bitcoins using what is known as a Bitcoin mining program. All Bitcoins are produced using Bitcoin mining programs. Basically, these software programs solve complex mathematical problems and Bitcoins are issued when the problems are solved correctly.

So, assuming you want to create your own Bitcoins you need to download Bitcoin mining software. As with wallets, there are a number of Bitcoin miners around, but GUIMiner is probably the best one to start off with. This Bitcoin miner is able to use the GPU (Graphics Processing Unit) or the CPU (Central Processing Unit) to mine Bitcoins. However, GPU processing is much faster than CPU processing so, if you can, use the GPU option.

You can download GUIMiner from Shoptagon using the "Download GUIMiner" menu tab above or alternatively use the download link in the Bitcoin resources section below.

Bitcoin Mining Pools

Now that you've got a Bitcoin wallet and miner you can,  in theory, go ahead and create Bitcoins using your own computing resources. However, if you only use the processing power of your individual system it might take a long time to generate even a modest level of income (even with the current high Bitcoin exchange rates). The best thing to do is to join other people who are also mining for Bitcoins, known as joining a Bitcoin mining pool, and use the combined processing power of all the computers in the pool  to mine Bitcoins collectively. You can then take a share of the total Bitcoins mined by the pool as a whole.

There are several Bitcoin mining pools that you might wish to consider joining such as  Deepbit or Slush's pool. A comparison of the main pools is given in the resources section below.

How Much Can You Earn From Bitcoin Mining - Bitcoin Mining Calculators.

A useful quantity to know in Bitcoin mining is your system's hash rate. The hash rate is a measure of the processing power of the individual computer or network used to generate Bitcoins. In general, a higher hash rate means that Bitcoins can be created quicker. Once you know the system hash rate as well as the price and power consumption of the hardware used to generate Bitcoins, you can then use an online Bitcoin mining calculator (see resources below) to work out your likely earnings over a period of time.

The video below gives a good introduction to Bitcoin.

Bitcoin Alternatives
Although Bitcoin is the most popular cryptocurrency at the moment, there are alternatives. The most well known of these are Namecoin, Litecoin and PPCoin. There are numerous other smaller currencies and Amazon has just released its own digital currency called Amazon Coin.


Bitcoin Resources
Below is a list of useful Bitcoin resources including links to wallets, mining software and Bitcoin exchanges:

Bitcoin.org - Main Bitcoin Website
Bitcoin Wallet
Bitcoin Mining Software - GUIMiner
Bitcoin Mining Pools Comparison
Mt. Gox - Bitcoin Mining Exchange
Bitcoin Charts - Bitcoin Financial & Technical Data
Bitcoin Currency Converter & Exchange Rate
Bitcoin Calculator
Bitcoin Mining Hardware Comaprison - Hash Rate Info
Bitcoin Wiki - In Depth Information About Bitcoin
ICBIT - Bitcoin Exchange And Futures Market
Bitcoin Alternatives
Blockchain - Bitcoin Transaction Information