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What are the advantages of mining Bitcoin over buying them?

What are the advantages of mining Bitcoin over buying them?

What is Bitcoin?

Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men meaning no banks.

Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because Bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy Bitcoins as an investment, hoping that they'll go up in value.

Buying Bitcoin

Buying Bitcoinis an investment strategy where an investor buys a commodity and holds them for an extended duration. This is based on the notion that in the long run, financial markets give a good rate of return even with the commodity experiencing a degree of volatility. This is a common practice for stocks, bonds and certain commodities, and requires that the investor has strong holding power.

The purchase transaction can be entered into by wire transfers, debit and credit cards, other crypto-currencies and hard cash money as well. You can also purchase Bitcoin from people holding the same in a way similar to other commodities. Bitcoins were introduced to carry out independent and decentralised peer-to-peer transactions and hence, Bitcoins can also be bought directly from people holding Bitcoins on a peer-to-peer basis.

Mining Bitcoin

Bitcoin mining is the process by which the transaction information distributed within the Bitcoin network is validated and stored on the blockchain. It is a term used to describe the processing and confirmation of payments on the Bitcoin network.

Bitcoin mining is a process that anyone can participate in by running a computer program. In addition to running on traditional computers, some companies have designed specialised Bitcoin mining hardware that can process transactions and build blocks much more quickly and efficiently than regular computers. The process of validating transactions and committing them to the blockchain involves solving a series of specialised math problems.

Advantages of buying Bitcoins over mining

  • Mining can get really expensive. Costs include buying the miner (a dedicated machine) itself, accounting for its storage, security, electricity costs and even internet costs, its maintenance and the long duration of time and efforts. Therefore, with the amount of initial investment, there are no extra profits.
  • The value of Bitcoins can fluctuate while mining. Bitcoins can deflate in value and remain unstable in cases of technical glitches with the system or Bitcoin exchange markets.
  • It's instant even the best Bitcoin miners can take hours or days to mine their Bitcoins. Buying on the other hand?—?is instant since you’re picking up pre-existing Bitcoins.
  • The transaction fee is negligible compared to the costs for hardware, electricity etc. that you have to bear when mining your own coins.

Advantages of mining over buying Bitcoins

  • Bitcoin mining allows users to keep a track of their transactions. The Bitcoins are untainted.
  • There is no extra fee that is charged for acquiring the coin apart from the investment in hardware (this itself may be substantial though).

Looking for a Bitcoin training courseto help with understanding how Bitcoin works? Find out more about the Bitcoin coursewe offer at London TFE and book onto our Bitcoin training.

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