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If you want to join in the bitcoin frenzy with no simply buying the digital currency in today's inflated prices, then bitcoin mining is another way to get involved. However, mining bitcoins will include expenses -- and dangers -- of its own. And the more popular bitcoins become, the harder it is to mine them profitably. .

Unlike paper currency, which is printed by governments and issued by banks, bitcoins do not arrive in any physical type. This creates a significant hazard, as hackers can theoretically produce bitcoins from nothing. Bitcoin mining is how the bitcoin network retains its transactions secure.

Bitcoin transactions are secured by blockchains, which make up a public ledger of transactions. Due to the way blockchain transactions are structured, they are extremely tough to change or compromise, even by the best hackers. However, in order to protect these transactions, someone needs to dedicate computing power to verifying the action and packaging the facts in a block which goes into the bitcoin ledger.

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As a reward for doing the job to track and secure transactions, miners earn bitcoins for each block that they successfully process. .

The bitcoin founders have put a limit of 21 million bitcoins available for mining. Once that amount is reached, miners will continue to have the ability to benefit from transaction fees, but they won't be granted bitcoins as a reward for their job. As of mid-January 2018, roughly 16.8 million of the 21 million bitcoins have already been mined.  Assuming the bitcoin mining industry doesn't change radically, it seems like we won't reach on the 21 million-bitcoin restrict until the year 2140. .

During the early days of bitcoin mining, miners would often download a software package designed to allow their computers to process bitcoin transactions in the background. Unfortunately, that is no longer practical, because solving bitcoin transactions has become too hard for your computer to manage.

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The bitcoin network is designed to produce a certain number of new bitcoins every 10 minutes. If only a couple men and women are bitcoin mining at any given time, then the network will be generous and share bitcoins readily in order to reach the predetermined number. But now that bitcoin mining has become so widespread, the network is now much stingier about handing out bitcoins to miners.

These days, in order to have a chance in being rewarding, miners need to adopt one of two approaches: 1) buy technical hardware (aka a bitcoin mining rig) or 2) join a cloud mining pool. .

To begin with your own mining rig, you buy hardware designed for mining bitcoin (or some other virtual currency), set it up, and let it run 24/7 solving bitcoin transactions. Ideally, this will result in a continuous stream of payments with no needing to get involved.

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As soon as it's fairly easy to establish and utilize a bitcoin mining rig, actually making money on the course of action is something of a challenge. Since more and more people are signing up to mine bitcoins, the mining procedure continues to get more difficult and will probably keep doing so for a while.

And since bitcoin mining rigs aren't cheap -- expect to pay at least $1,000 for the hardware, or several times that to get a top notch rig -- having to replace it every year or two takes a huge bite from any gains you earn from mining. Plus, most mining rigs consume enormous amounts of electricity, which means you also have to subtract expense in the bitcoins you earn to determine your profits. .

If buying and maintaining your own mining gear doesn't attract you, then cloud mining might be the way to go. Cloud mining companies invest in huge mining rigs, often filling entire information centers together with all the hardware, and then market subscriptions to individuals interested in dipping a toe into bitcoin mining.

The biggest challenge facing cloud see post mining subscribers is avoiding fraud. The field is rife with pseudo-companies that sell thousands of multiyear subscriptions, cover for a couple of months, and then vanish into the sunset. If you decide to try cloud mining, do your homework in advance and confirm that the company that you're dealing with is a true cloud miner and not a strategy.

Avoid companies with anonymous domain registration (you can look up their registration info Network Solutions), in addition to any mining company that"guarantees" gains or provides enormous incentives for referring new clients; anything over a 10% referral commission is profoundly suspicious, because valid mining pools just don't generate a large enough profit margin to pay huge commissions. .